Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
2012/06/12 Item 05
CITY COUNCIL AGENDA STATEMENT ~~~ CITY OF CHULAVISTA 6/12/12, Item ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A LEASE AGREEMENT WITH SOUTH BAY COMMUNITY SERVICES FOR ACITY-OWNED BUILDING AND APPURTANANCES LOCATED AT 430 F STREET AND PAYMENT OF COMMISSION ASSOCIATED THEREWITH SUBMITTED BY: DIRECTOR OF PUBLIC WORKS ~j~ ASSISTANT DIRECTOR OF ENG EEIt~ yQ'J REVIEWED BY: CITY MANAGER r/~ ASSISTANT CITY NAGER ~~ 4/STHS VOTE: YES ^ NO SUMMARY Over the past several years the City of Chula Vista has undergone significant downsizing. As a result, the City currently has office space significantly in excess of the capacity needed to conduct day-to-day business. Staff has specifically identified the Ken Lee Building located at 430 F Street as a site that is not needed for City operations now or in the near future. Council authorized retaining a Real Estate Broker to market the site on May 22, 2012. The broker, Voit Real Estate Services has presented the City with a proposal from South Bay Community Services (SBCS) to lease this site. ENVIRONMENTAL REVIEW The Development Services Director has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity qualifies for a Class 1 categorical exemption pursuant to Section 15301 (Existing Facilities) of the State CEQA Guidelines because the activity consists of approval of a lease agreement involving existing city owned property and facilities. Thus, no further environmental review is required. RECOMMENDATION Council adopt the resolution. BOARDS/COMMISSION RECOMMENDATION Not applicable. 5-1 6/12/12, Item ~J Page 2 of 3 DISCUSSION Over the past several years, the City of Chula Vista has undergone significant downsizing. As a result the City currently has office space significantly in excess of the capacity needed to conduct day-to-day business. Non-safety employee operations have been largely consolidated to the City Hall campus and the west half of the Lippitt Operations Center. In analyzing the City's remaining space, staff has specifically identified the Ken Lee Building located at 430 F Street and approximately 10,000 square feet office space at the Lippitt Public Works Center located at 1800 Maxwell Road as sites that are not needed for City operations now or in the near future. While the future need for these facilities is uncertain, the City is still incurring cost for maintenance, upkeep and utilities. In order to offset these costs while still keeping open the option of re-occupying these spaces at a later date, Council authorized retaining a Real Estate Broker to market these sites on May 22, 2012. The broker, Voit Real Estate Services has presented the City with a proposal from SBCS to lease the Ken Lee site. SBCS is anon-profit organization that provides a variety of services to those in need in the South Bay. Some of these services include family wellness, youth and family development, child well being, domestic violence resources and food programs. Currently, their offices are located on the bayfront; however, their current lease expires on June 30, 2012. They were previously located on the site of the Fourth Avenue Police Station. The lease proposal presented by SBCS is for $0.90 per square foot of net usable area for five years with two three-year options to renew. The proposed rental rate will be increased annually based upon Consumer Price Index (CPI) with a cap of two percent per year. The rental rate cannot go down. The net leasable building area, accounting for equipment rooms, partitions, and a conference room that SBCS is proposing to improve and make available for civic groups, totals about 5,400 square feet. This would give the City a gross rental of $4,860 per month ($58,320/year). Additionally, the City would no longer be responsible for maintenance or utilities, bringing the net benefit to the City up to about $60,000 per year. The lease would become effective July, 1 2012 with SBCS being given access no later than June 15 to begin their site preparations. The City is to certify that all electrical, lighting, plumbing, and HVAC systems are in good working order and SBCS would be responsible for all tenant improvements. SBCS would also be allowed up to two modular buildings on site for additional office/storage, subject to the normal City review and approval process. These buildings would be SBCS's property and would be removed at their expense at the conclusion of the lease. Finally, the City would be allowed to use some of the on-site parking for overflow during evening functions at City Hall. The site is currently zoned for public/quasi-public uses, which is consistent with the operations and services provided by SBCS. They have been informed throughout the negotiations that staff is not supportive of them providing their food distribution services at this site. These services consist of one large (400+/- people) distribution per month and a smaller (30-40 people) distribution three days a week. Staff has agreed to work with them to come up with alternative locations for these services should the City move forward with the Ken Lee lease. Staff is asking that Council approve a lease agreement with SBCS for aCity-owned building and appurtanances located at 430 F Street. 5-2 6/12/12, Item Page 3 of 3 DECISION MAKER CONFLICT Staff has reviewed the property holdings of the City Council Members and has found that Councilman Castaneda has property holdings within 500 feet of the boundaries of the property which is the subject of this action. CURRENT YEAR FISCAL IMPACT Per the agreement with Voit Real Estate, they will be paid $14,500 if the lease agreement is approved. This expenditure will be made from the Public Works budget in the current fiscal year. This one-time cost is more than offset by the revenue generated through the lease agreement. ONGOING FISCAL IMPACT In Fiscal Year 2012-13, the City will realize $58,320 in lease revenue and save approximately $1,680 in utility and maintenance costs -these changes result in a positive fiscal impact of approximately $60,000. If approved, the lease agreement would generate a minimum of $58,320 annually for five years for a total of $291,600 in new revenues. ATTACHMENTS Lease Agreement Prepared by: Rick Ryas, Real Property Manager, Public Works Engineering J.' IEngineerlAGENDAICAS2012106-12-121Southbay Community Services Lease AgendaREVFINAL2. doc 5-3 THE ATTACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALLY SIGNED UPON APPROVAL BY Dated: ~ ! I I Z LEASE AGREEMENT WITH SOUTHBAY COMMUNITY SERVICES AND THE CITY OF CHULA VISTA FOR ACITY-OWNED BUILDING AND APPURTANANCES LOCATED AT 430 F STREET 5-4 Citty Attorney AIR COMMERCIAL REAL ESTATE ASSOCIATION STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE --GROSS (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS( 1. Basic Previsions ("Basic Provisions"). 1.1 Parties: This Lease ("Lease"), tlated for reference purposes only June 5, 2012 is made by and between City of Chula Vista, a municipal chartered corporation of the State of California ("Lessor') antl South Hay Community Services ("Lessee"), (collectively the "Parties," or intlividually a "Party'). 1.2 Premises: That certain real property, indutling all improvements (herein or to be provided by Lessor under the terms of this Lease, and commonly known as 430 F Street, Chula Vista located in the County of San Diego ,State of Cal i£o rnia and generally describetl as (describe briefly the nature of the property antl, R applicable, fhe "Project", if the property is located within a Project) approximate 5 900 SE net useable -- ("Premises"j. (See also Paragraph 2) 1 3 Term: Five (5) years antl 0 months ("Original Term^) commencing July 1, 2012 ("Commencement Dale") antl entling June 30, 2017 ("Expiration Date"). (See also Paragraph 3) 1.4 Early Possession: If the Premises are available Lessee may have non-exclusive possession of the Premises commencing June 15, 2012 ("Early Possession Date'). (See also Paragraphs 3.2 and 3.3) LS Base Rent: $4, 8"00.00 per month("Base Rent"), payable on the first (1st) day of each month commencing July 1, 2012 (See also Paragraph 4) D If this boz Is checked, there era provisions in this Lease for the Base Rent to be adjusted. See Paragraph 51 6 52 1 6 Base Rent and Other Monies Paid Upan Ezecution: (a) Base Rent: $9, 860.00 tar me period July 1, 2012 - duly 31, 2012 (b) (c) (d) (e) ToUI Due Upon Ezecution of this Lease: $9, 720.00 1.7 Agreed Usa: general office and counseling services for SBCS programs (See also Paragraph 6) 1.8 Insuring Party: Lessor is the "Insoring Party". The annual "Base Premium" is $to be provided (See also Paragraph 6) 1.9 Real Estate Brokers: (See also Paragraph 15 and 25) (a) Representation: The following real estate brokers (the "Broken") and brokerage relationships exist in this transaction (check applicable boxes): O VOit Real Estate Services represents Lessor exclusively ("Lessor's Broker"); 0 Lessee represents itself represents Lessee exclusively ("Lessee's Broker')', or ^ represents both Lessor and lessee ("Dual Agency"). (b) Payment to Brokers: Upon execution antl delivery of this Lease by both Parties, Lessor shall pay to the Brokers for Ne brokerage services rendered by the Brokers the fee agreed to in the attached separate written agreement or rf no such agreement is attacheq the sum of $19, 580.00 or % of the total Base Rent payable for the Original Tenn, Ne sum of or 3$ of the total Base Rent payable tluring any period of time Nat the Lessee occupies the Premises subsequent to the Original Term, antl/or the sum of or 9 % of the purchase price in the event that the Lessee or anyone affliatetl with Lessee acquires from Lessor any rights to the Premises. 1.10 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by N/A ("Guarantor"j. (See also Paragraph 3]) 1.11 Attachments. Attached hereto are the (allowing, all of which constitute a part of this lease: ~ an Addendum consisting of Paragraphs 51 through 55 ~ a plot plan depicting the Premises; Exhlbix A ^ a cunent set of the Rules and Regulations; ^ a Work Letter, D other (specify): Notice to Owners, Buyers and Tenants Regarding Environmental Matters, Americans with Disabilities Act, Flood Disclosure, Zoning/Use Disclosure and Alquist-Pxiolo Special Earthquake Fault ZoninS Act (EXHIBIT B) PAGE 1 OF 13 INITIALS INITIALS ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STG-14.3110E 5-5 Secudry Deposit: $9, 860.00 ("Security Deposit"). (See also Paragraph 6) Association Fees: $N/A Por the period Other: $N/A for 2. Premises. 2.1 Letting. Lessor hereby leases to Lessee, antl Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon all of the Perms, covenants antl conditions set fortM1 In this Lease. While the approximate square footage of the Premises may have been usetl in the marketing of the Premises for purycses of comparison, the Base Rent stated herein is NOT tied to square footage and is not subject to atljusfinenf should the actual size be determinetl to be tlifferent. Note: Lessee is advised to verify the actual size prior to ezecudng this Lease. 2.2 Condition. Lessor shall tleliver the Premises to Lessee broom clean and free of debris on the Commencement Dafe or the Early Possession Oate, whichever lust occurs ("Start Date"), and, so long as the required service contracts tlescribed in Paragraph ].i(b) below are obtained by Lessee antl In effect wihin thirty days fpllowin9 the Stad Dale, warrants that fbe existing eleari<al, plumbing, fire sprinkler, lighting, heating, entilating and air conditioning systems ("HVAC"), tootling tloors, sump pumps, d any, antl all other such elements in the Premises, other hen those constructed by Lessee, shall be In gootl operating contlition on saitl tlate and that the surface and structural elements of the roof, bearing walls antl fountlatipn of any builtlings on the Premises (the "Building") shall be free of material tle(ects, antl that Ne Und tloes not contain haaartlous levels of any moltl or fungi defined as toxic under applicable state or fetleral law. If anon-compliance with said warranty exists as of the Start Date, or rf one of such systems or elements shoultl malfunction or fail within the appropriate wananty period, Lessor shall, as Lessors sole obligation with respect tc such matler, except as otherwise provitled in this Lease, promptly after receipt of written notice from Lessee setting forth with specifcity the nature and extent of such non-compliance, malfunction or failure, rectify same at Lessor's expense. The wananty periotls shall be as follows'. (i) 24B months as to the HVAC systems, antl (ii) 780 2g days as to the remaining systems and other elements of the Building. If Lessee does not give Lessor Me required notice within the appropriate warranty period, cprtectipn of any such non-compliance, malfunction or failure shall be the obligation of Lessee al Lessee's sole cost and expense, except for Me roof foundations, antl bearing walls wMCh era hantlletl as provitletl in paragraph ]. 2.3 Compliance. Lessor warrants that to the best of its knowledge the improvements on Ne Premises comply with the builtling codes, applicable laws, covenants or restrictions of record, regulations, and ordinances ("Applicable Requirements") that were In effect at the time That each improvement, or portion thereof, was constucted. Saitl wananty does not apply tc the use to which Lessee will put [he Premises, modifications which may be requiretl by the Americans with Disabilities Act or any similar laws as a result of Lessee's use (see Paragraph 50), or to any Alterations or Utility Installafions (as tlefined in Paragraph 7.3(a)) matle or tc be matle by Lessee. NOTE: Lessee is responsible for determining whether or not the Applicable Requirements, and especially the zoning, are appropriate for Lessee's intended use, and acknowledges [hat past uses of the Premises may no longer be allowed. If the Premises tlo not comply with saitl warranty, Lessor shall, a cept as omerwise provitled, promptly after receipt pf written notice from Lessee setting forth with specificity Ue nature antl extent of such noncompliance, rectify the same at Lessors expense. If lessee does not give Lessor written notice of a noncompliance with [his wananty within 6 months following the Start Date, c rection of that non-compliance shall be the obligation of Lessee at Lessee's sole cos[ and expense. If the Applicable Requirements are hereafter changed so as to require during the tens of this Lease the construction of an addition to or an alteration of the Premises antllor Building, Ue remediation of any Hazartlous Substance, or the reinforcement or other physical motlifcation of the Unit, Premises antllor Building ("Capital Ezpenditure"J, Lessor and Lessee shall allocate the cost of such work as follows: (a) Subject to Paragraph 2.3(c) below, if such Capital Expentlitures are requiretl as a result of [he specific antl unique use of Ue Premises by Lessee as compared with uses by tenants in general, Lessee shall be fully responsible for the cost thereof, provided, however that rf such Capital Expentliture Is requiretl during the last 2 years of [his Lease and the cost thereof exceetls 6 months' Base Rent, Lessee may insteatl Terminate this Leaseunless Lessor notifies Lessee, in writing, within 10 tlays after receipt of Lessees termination notice [hat Lessor has elected to pay the tlifference Cetween the actual cost thereof and an amount equal to 6 months' Base Rent If Lessee elects termination, Lessee shall immediately cease the use of the Premises which requires such CapHal Expenditure and deliver to Lessor written notice specrfying a termination date at least 90 tlays thereafter. Such termination tlate shall, however, in no event be earlier than the last day that Lessee coultl legally utilize [he Premises wiNOUt commencing such Capital Expentliture. (b) I( such Capital Expentliture is not the result o(the specifc antl unique use of the Premises by Lessee (such as, governmentally mantlated seismic modifications), then Lessor shall pay for such Capital Expenditure and Lessee shall only be gbligaletl to pay, each month tluring the emainder of the term of [his Lease or any extension thereof, on the tlata that on which the Base Rent Is due, an amount equal to 11144th of the portion of such costs reasonably attributable to the Premises. Lessee shall pay Interest on the balance but may prepay its obligation at any time. If, however, such Capital Expentliture is required during the last 2 years of [his Lease or if Lessor reasonably tletermines that it is not economically feasible to pay' its share (hereof, Lessor shall have the option to terminate this Lease upon 90 tlays prior written notice m Lessee unless Lessee nobles Lessor, in writing, wihin 10 days after receipt of Lessors termination notice that Lessee will pay far such Capital Expenditure. If Lessor tloes not elect to terminate, and fails to tender its share of any such Capital Expenditure, Lessee may atlvance such funds antl deduct same, wRh Interest, from Rent until Lessors share of such costs have been fully paitl. If Lessee Is unable fo finance Lessor's share, or B the balance of the Rent tlue antl payable far Ue remainder of this Lease Is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right to terminate this Lease upon 30 days written notice to Lessor. (c) Notwithstantling the above, the provisions concerning Capital Expentlitures are intendetl to apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital ExpentltUres are instead triggered by Lessee as a result of an actual or proposetl change in use, change in intensity of use, or mod cation to the Premises then, and in that event, Lessee shall either (i) immediately cease such changetl use or intensity of use antllor take such other steps as may be necessary to eliminate the requirement for such Capital Expentliture, or (ii) complete such Capital Expenditure at its own expense. Lessee shall not, however, have any right to terminate this Lease. 24 Acknowledgemenss. Lessee acknowledges that: (a) it has been given an opportunity to Inspect antl measure the Premises, (b) d has been advisetl by Lessor antllor Brokers to satisfy itself with respect to the size antl contlition of the Premises (indutling but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements and the Americans with Disabilities Act), and their suitability for Lessee's intentletl use, (c) Lessee has matle such investigation as it tleems necessary wiU reference to such matters and assumes all responsibility therefor as the same relate to its occupancy of the Premises, (tl) it is not relying on any representation as to the size of the Premises made by Brokers or Lessor, (e) the square footage of Ue Premises was not material tc Lessee's decision to lease the Premises and pay the Rent statetl herein, antl (f) neither lessor, Lessors agents, nor Brokers have made any oral or writen representations or warranties with respect to saitl matters other than as set forth in this Lease. In atltlition, Lessor acknowledges that (i) Brokers have made no representations, promises or warranties concerning Lessee's ability to honor the Lease or suitability to occupy Ue Premises, antl (ii) i[ is Lessors sole responsibility to mvastigate the financial capability antl/or suitability of all proposetl tenants. 2.5 Lessee as Pdor Owner/OCCUpanL The wartanties made by Lessor in Paragraph 2 shall be of no force or effect rf Immediately prior to the Start Date Lessee was the owner or occupant of the Premises. In such event, Lessee shall be responsible for any necessary corrective work. 3. Term. 3.1 Term. The Commencement Date, Expiration Date antl Original Term of this Lease are as specifetl in Paragraph 1.3. 3.2 Early Possession. Any provision herein granting Lessee Early Possession of the Premises is subled to antl contlHionetl upon the Pram lses being available for such possession prior to the Commencement Date. Any gran) of Early Possession only conveys anon-exclusive right to occupy the Premises. If Lessee totally or partially occupies the Premises prior to [ha Commencement Date, the obligation to pay Base Rent shall be abaletl For the period d such Early Possession. All other terms of this Lease (indutling but not limited to the obligations to pay Real Property Taxes and insurance premiums and to maintain [he Premises) shall be in effect during such periotl. Any such Eany Possession shall not affect the Expiration Date. 3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to deliver possession of the Premises to Lessee by the Commencement Date. If tlespile said efforts, Lessor is unable to tleliver possession by such tlate, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or change the Expiration Date. Lessee shall not, however, be obligaletl to pay Rent or perform its other obligations until Lessor tlelivers possession of the Premises and any periotl of rent abatement that Lessee would otherwise have enjoyed shall mn fromfhe date of delivery of possession and continue for a periotl equal to what Lessee woultl oNerwise have enjoyed untler the terms hereof, but minus any days of tlelay causetl by the acts or omissions of Lessee. If possession is not delivered within 60 days attar the Commencement Data, as the same may be extentled untler [he terms of any Work Letter executed be Parties, Lessee may, at its option, by notice in writing within 10 days after the end of such 60 day pericq cancel this lease, in which event the Parties shall be discharged from all obligations hereunder. If such written notice is not received by Lessor within said 10 day periotl, Lessee's right [o cancel shall terminate. If possession of Ue Premises Is not delivered within 120 days after the Commencement Date, this Lease shall terminate unless other agreements are reachetl behveen Lessor and Lassae, in writing. 3.4 Lessee Compliance, Lessor shall not be requiretl to tleliver possession of [he Premises to Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph B 5). Pending tlelivery of such evidence, lessee shall be required to perform all of its obligations untler [his Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessors election to witnhcld possession gentling receipt of such evidence of insurance. Further, if Lessee is requiretl to pertortn any other conditions prior tc or concurrent with the Start Oate, Ue Start Date shall occur but lessor may elect to withhold possession until such wnditions are satisfetl. 4. Rent PAGE 2 OF 13 INITIALS ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION INITIALS FORM STG-143/10E 5-6 4.1. Rent Defined. All monetary obligations of Lessee to Lessor untlar the terms of this Lease (except for the Security Deposit) are deemed to be rent ("RenC'). 4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States, without offset or deduction (except as specifcally permitted In this Lease), on or before the day on which it is due. All monetary amounts shall be rounded to the nearest whole dollar. In the event that any invoice prepared by Lessor is inaccurate such inaccuracy shall not constitute a waiver and Lessee shall be obligated to pay the amount set forth in this Lease. Rent for any period during the term hereof which is far less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Lessor at Rs address stated herein or to such other persons or place as Lessor may from lime to time designate in writing. Acceptance d a payment which is less than the amount then due shall not be a waiver of Lessors rights to the balance of such Rent, regardless of Lessors endorsement of any check sq staling. In the event that any check, draft, or other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay la Lessor the sum of $25 in addition m any Late Charge and Lessor, at its ppfion, may require all future payments to be made by Lessee to be by cashiers check. Payments will be applied frst to accued late charges and attorney's fees, second to accrued interest, then tq Base Renl, Insurance and Real Property Taxes, and any remaining amount [o any other outstanding charges or costs. 4.3 Association Fees. In addition to the Base Rent, Lessee shall pay to Lessor each month an amount equal to any owners association or condominium fees levied or assessed against the Premises. Said monies shall he paid at the same time and in Oe same manner as the base Rent. 5. Security Deposit Lessee shall deposit with Lessor upon execution hereof the Security Deposit as securky for Lessee's faithful pertormance of its obligations under this Lease. It Lessee fails to pay Rent, or otherwise Defaults untlar this Lease, Lessor may use, apply or retain all or any portion of said Security Deposit for the payment of any amount already due Lessor, for Rents which will be due in the future, antll or to reimburse or compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by reason thereat. If Lessor uses or applies all or any portion of Ne Security Deposit Lessee shall within 10 days after written request therefor deposit monies with Lessor suHlcient to restore said SewrHy Deposes lq the full amount required by this Lease. If the Base Rent increases during [he term d this Lease, Lessee shall, upon written request from Lessor, deposit additional monies with Lessor so that the total amount of the Security Deposit shall at all times bear the same proportion to the Increased Base Rent as [he initial Security Deposit bore to the Initial Base Rent. Should the Agreed Use be amended [o a<commotlate a material change in the business of Lessee or to accommodate a sublessee or assignee, Lessor shall have the right to increase the Security Deposit to the extent necessary, In Lessor's reasonable judgment, to account for any increased wear and tear That the Premises may suffer as a result thereof. If a change in control of Lessee occurs during This Lease and following such change the financial condition of Lessee is, in Lessors reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based on such change in fnancial condition. Lessor shall not be required to keep the Security Deposit separate fmm its general acccunYS. Within 90 days after the expiration or termination of this Lease, Lessor shall return that portion of the Security Deposit not used or applied by Lessor. No part of [he Security Deposit shall be considered to be held in frost, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease. 6. Use. - - 6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit Ne use of the Premises In a manner that is unlawful, creates damage, waste or a nuisance, qr that disturbs occupants of or causes damage [o neighboring premises or properties. Other than guide, signal and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets, animals, birds, fish, or reptiles. Lessor shall not unreasonably withhold or delay its consent to any written request for a modification of the Agreed Use, so long as the same will not impair the structural integrity of the improvements on the Premises or the mechanical or electrical systems therein, and/or is not signifcantly more burdensome to the Premises. If Lessor elects [o withhold consent, Lessor shall within ]days after such request give written notiFlCation of same, which notice shall include an explanation of Lessors objections to the change in the Agreed Use. 6.2 Hazardous Substances. (a) Reportable Uses Require Consent The term "Hazardous Substance" as used in This Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itseH or in combination with other materials expected fo be on the Premises, is either (i) potentially injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (Iii) a basis for potential liability of Lessor tc any governmental agency or third pally under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited lo, hydrocarbons, petroleum, gasoline, and/or crude oil or any protluds, by-products or fractions [hereof. Lessee shall not engage in any activity In or on the Premises which constitutes a Reportable Use of Hazardous Substances without the express prior written consent of Lessor and timely compliance (at Lessee's expense) wiN all Applicable Requirements. "Reportable Use" shall mean (i) the installation or use d any above or below ground storage tank, (iij the generation, possession, storage, use, transportatioq or disposal of a Hazardous Substance that requires a permit from, or with respect to which a report, notice, registration or business plan is required to be filed with, any governmental authority, and/or (iii) the presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires [ha[ a notice be given to persons entering or occupying the Premises or neighboring properties. Nohvithstantling the foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use, ordinary oRice supplies (copier toner, liquid paper, glue, etc.) and common household cleaning materials, so long as such use is In compliance with all Applicable Requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In adtlitigq Lessor may condition Its consent fo any Reportable Use upon receiving such additional assurances as Lessor reasonably deems necessary to prated dselt the public, the Premises and/or the environment against damage, contamination, injury and/or liability, including, but not limited to, the installation (and removal on or before Lease expiration ar termination) of prgledive modifications (such as concrete encasements) antllor increasing the Security Deposit. (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located iq on, under or about the Premises, other than as previously consented to by lessor, Lessee shall immediately give written notice d such fact to Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which it has concerning the presence of such Hazardous Substance. (c) Lessee Remediaticn. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, untlar, or about the Premises (including through Ne plumbing cr sanitary sewer system) and shall promptly, at Lessee's expense, comply with all Applicable Requirements and take all Investigatory and/or remedial adion reasonably recommendeQ whether or not formally ordered or requireQ far the cleanup of any contamination of and for the maintenance, security and/or monitoring of [he Premises or neighboring properties, That was caused or materially contributed Iq by Lessee, or pertaining lp or involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or for Lessee, or any Ihirtl party. (d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents, employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys' and consultants' fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Lessee, or any third party (provided, however that Lessee shall have no liability under [his Lease with respect m underground migration of any Hazardous Substance under the Premises horn adjacent properties not caused or conhibutetl to by Lessee). Lessee's obligations shall Include, bui not be limited to, the effects of any contamination or injury to person, properly or the environment created or suReretl by Lessee, and the cost of Investigation, removal, remediation, restoration antllor abatement, and shall survive [he expiration or termination of [his Lease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect [o Hazardous Substances, unless specifically so agreed by Lessor in writing at the time of such agreement (e) Lessor Indemnification. Lessor and its successors and assigns shall indemnify, defend, reimburse and hold Lessee, its employees and lenders, harmless from and against any and all environmental damages, including fie cost of remediation, which result from Hazardous Substances which existed on the Premises prior to Lessee's occupancy or which era caused by [he grass negligence or wilHul misconduct of Lessor, its agents or employees. Lessofs obligations, as and when required by the Applicable Requirements, shall include, but not be limited to, the cast of Investigation, removal, remediation, restoration antllor abatement, and shall survive Ne expiration or lennination of this Lease. (fl Investigations and Remediations. Lessor shall retain Ne responsibility and pay for any investigations or remediation measures required by governmental entities having judstlidign with respect to Ne existence of Hazardous Substances on [he Premises prior to Lessee's occupancy, unless such remedation measure is required as a result of Lessee's use (including "Alterations", as defined in paragraph ].3(a) below) of the Premises, in which even[ Lessee shall be responsible for such payment Lessee shall cooperate /idly In any such adivHias at the request of Lessor, including allowing Lessor and Lessors agents to have reasonable amass to the Premises at reasonable times In order to carry out Lessors Investigative and remedial responsibilities. (g) Lessor Termination Option. If a Hazardous Substance Condition (sae Paragraph 9.1 (e)) occurs during [he [enn of this Lease, unless Lessee is legally responsible therefor (in which rose Lessee shall make [he investigation and remediation thereof required by the Applicable Requirements and Ihls Lease shall continue in full force and effect, but subject to Lessors rights under Paragraph 6.2(tl) and Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and remetlia[e such Hazardous Substance Condition, if requireQ as soon as reasonably possible at PAGE 3 OF 13 INITIALS INITALS ©2001 -AIR COMMERCIAL REAL ESTATE ASSOGIAT7ON FORM STG-143110E 5-7 Lessofs expense, in which event this Lease shall continue in full farce and effect, or (ii) if the estimated cast to ramedlate such contliticn exceeds 12 times the then monthly Base Rent or $100,000, whichever is greater, give written notice to Lessee, within 30 tlays after receipt by Lessor of knpwletlga of the occurrence of such Hazartlous Substance Condition, of Lessofs desire tp terminate this Lease as of the tlafe fi0 tlays fallowing the tlate of such notice. In the event Lessor elects to give a termination notice, Lessee may, within 10 days thereafter, give written notice to Lessor of Lessee's commitment to pay the amount by which the cost of the remetliation of such Hazartlous Substance Contlifion exceetls an amount equal to 12 times the then monthy Base Renl or $100,000, whichever is greater. Lessee shall provitle Lessor wdh said funds or satisfactory assurance thereof within 30 days following such commitment. In such event, [his Lease shall continue in full force and effect, antl Lessor shall proceed to make such remetliation as reasonably possible alter the required funtls are available. If Lessee tloes riot give such notice and provide the requlretl funtls or assurance thereof within the time pmvitled [his Lease shall terminate as of the date specifed in Lessofs notice of termination. 6.3 Les s Compliance with Applicable Requirements. Except as otherwise provitletl in this Lease, Lessse shall, at Lessee's sole expense, fully, tliligently antl in a timely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire insurance underwriter or rating bureau, antl the recommentlations of Lessofs engineers andlor wnsultants which relate In any manner to the such Requirements, without regard to whether such Requirements are now in effect or become effective after [he Start Date. Lessee shall, within 10 days offer receipt of Lessor's written request, provide Lessor with copies of all permits and other documents, and other infprmaticn evidencing Lessee's compliance with any Applicable Requirements specified by Lessor, antl shall immediately upon receipt, notify Lessor in writing (with copies of any documents involvetl) of any threatenetl or actual claim, notice, citation, warning, complain[ or report pertaining to or involving the failure of Lessee or [he Premises tc comply with any Applicable Requirements. Likewise, Lessee shall immetliately give written notice to Lessor of (i) any water tlamage to the Pramises and any suspected seepage, pooling, dampness or other contlition contlucive to [he protluc[ion of mold; or (ii) any mustiness or other otlors that might indicate the presence of mold in the Premises. 6.4 Inspection; Compliance. Lessor antl Lessofs "LendeY' (as defined in Paragraph 30) and consultants shall have the right to enter into Premises at any time, in the case of an emergency, and othervuise al reasonable times after reasonable notice, far the purppse of inspecting the condition of the Premises and far verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paitl by Lessor, unless a violation of Applicable Requirements, or a Hazartlous Substance Condition (see paragraph 9.1).is fountl to exist or be imminent, or Ne inspection is requestetl or orderetl by a governmental authority. In such case, Lessee shall upon request reimburse Lessor for the cost of such Inspection, so long as such Inspection is reasonably relatetl to the violation or contamination. In addition, Lessee shall provide copies of all relevant material safety data sheets (MSOB) to Lessor within 10 days of the receipt of a written request therefor. Z Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations. ].1 Lessee's Obligations. - (a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable Requirements), Z2 (Lessor's Obligations), 9 (Damage pr Destruction), antl 14 (Condemnation), Lessee shall, at Lessee's sole expense, keep Ne Premises, Utility Installations (in[entletl for Lessee's exclusive use, no matter where located), and Alterations in good oMer, contlition and repair (whether or not the portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Lessee, antl whether or no[ the need for such repairs occurs as a result of Lessee's use, any prior use, the elements or the agepf such portion of the Premises), including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facili(ibs, boilers, pressure vessels, fire protection system, fixtures, walls (interior and exterior), Ceilings, Floors, windows, Floors, plate glass, skylights, landscaping, tlriveways, parking lots, fences, retaining walls, signs, sitlewalks and parkways located in, on, or atljacent to the Premises. Lessee is also responsible for keeping the roof antl roof tlrainage clean and free of debris. Lessor shall keep the surace and structural elements of the roof, foundations, antl bearing walls in gootl repair (see paragraph ].2). Lessse, In keeping the Premises in goad omer, condition antl repair, shall exercise antl pertorm gootl maintenance practices, specifically including the procurement and maintenance of Ne service contracts required by Paragraph ].1(b) below. Lessee's obligations shall include restorations, replacements or renewals when necessary to keep the Premises antl all improvements thereon or a part thereo! in gootl order, contlition and state of repair. Lessee shall, during the term of this Lease, keep [he exterior appearance of the Building in a frst-class contlitipn (indutling, e. g. grafFlli removal) consistent with Ne exterior appearance of other similar facilities of comparable age and size in the vicinity, Including, when necessary, the eMedor repainting of the Building. (b) Service Contracts. Lessee shall, at Lessee's sole expense, procure and maintain contracts, with copies to Lessor, in customary Porn antl substance for, antl with contractors specializing antl experienced in the maintenance of the following equipment and Improvements, if any, if and when installed on the Premises: (ij HVAC equipment, (ii) boiler, and pressure vessels, (iii) fire extinguishing systems, including fre alarm antllor smoke tletection, (iv) lantlscapinq and Imga[ion systems, and (v) darfliers. However, Lessor reserves the right, upon nptice to Lessee, to procure and maintain any pr all of such service contracts, and Lessee shall reimburse Lessor, upon demantl, for the cost thereof. (c) Failure to Pertorm. If Lessee fails to pertorm Lessee's obligations under this. Paragraph ].1, Lessor may enter upon the Pramises after 10 days' prior written notice to Lessee (except in the case of an emergency, in which case no notice shall be required), pertorm such obligations on Lessee's behatt, antl put the Premises in gootl ortler, contlition and repair, antl Lessee shall promptly pay to Lessor a sum equal to 115% of the cost Hereof. (tl) Replacement. Subject to Lessee's indemnification of Lessor as set fonh in Paragraph 8] below, antl without relieving Lassen of liability resulting from Lessee's failure to exercise and perform gootl maintenance practices, d an dem tlescribetl in Paragraph 7.1(b) cannot be repaired other than at a cost whkh is in excess of 60% of the cost of replacing such item, Then such item shall be replacetl by Lessor, and the cost thereof shall be prorated between the Parties and Lessee shall only be obligated to pay, each month tluring the remainder of the term of this Lease, on the date on which Base Renl is due, an ampunt equal to the product of multiplying the cost of such replacement by a fraction, the numerator of which is one, antl the denominator of which is 144 fie. 1/144th of the cost per mpnth). Lessee shall pay Interest on the unamortized balance but may prepay its obligation at any time. ).2 LessoYS Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14 (Cpntlemnation), it is intendetl by the Parties hereto that Lessor have no pbliga[ipn, in any manner whatsoever, to repair antl maintain the Premises, pr the equipment thereiq all of which obligations are intendetl to be that pf the Lessee, except for the surface and structural elements of the roof, foundations antl bearing walls, the repair of which shall ba the responsibility of Lessor upon receipt of written nptice That such a repair is necessary. It is the intention of the Parties that the terms of this Lease govern the respective obligations of the PaRies as to maintenance antl repair of the Premises, antl they expressly waive the benefit of any statute now or hereafter in effect to the extent It Is inconsistent with the lertns of this Lease. 7.3 @ility Installations; Trade Fixtures; Alterations. (a) DeFnidons. The term "Utility Installations" refers m all floor and window coverings, air andlor vacuum lines, power panels, electrical distribution, security antl fire protection systems, communication cabling, IigMinq fMures, HVAC equipment, plumbing, and fencing in or on the Premises. The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can be removed without doing material damage to the Premises. The lertn "Alterations" shall mean any modification of the improvements, other Nan Utility Installations or Trade Fixtures, whether by addition or tleletion. "Lessee awned Alterations andlor Utility Installations" are tlefinetl as Alteratigns and/or Utility Installations matle by Lessee that are not yet owned by Lesspr pursuant to Paragraph ] 4(a). (b) Consent Lessee shall not make any Akerafipns or Utility Installations to the Pramises without Lessofs prior written consent. Lessee may, however, make noo-structural Alterations or Utility Installations tp the interior of the Premises (exdutling the roof) without such consent but upon notice [o Lessor, as long as they are not visible from the ou[sitle, do not involve puncturing, relocating pr removing [he roof or any existing walls, will no[ affect the electrical, plumbing, HVAC, andlor I'rfe safety systems, antl the cumulative cost thereof during this Lease as exlentletl tloes not exceed a sum equal to 3 month's Base Rent in the aggregate or a sum equal to one month's Base Rent in any one year. No[withs[antling the foregoing, Lessee shall not make or permit any roof penetrations antl/or install anything on the roof without the prior written apprpval of Lessor. Lessor may, as a precpntlition to granting such approval, require Lessee to utilize a contractor chpsen antllor approved by Lessor. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written farm with detailed plans. Consent shall be tleemed conditioned upon lessee's (ij acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits antl the plans antl specifications prior tp commencement of the work and (iii) compliance with all conditions of saitl permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or UtilRy Installations shall be pertormed In a workmanlike manner with good and sufficient materials Lessee shall promptly upon completion famish Lessor with as-built plans and specifmalions. For work which costs an ampunt in excess of one month's Base Rent, Lessor may condition its consent upon Lessee providing a lien antl completion bond in an ampunt equal tp 150% of the estimated cost of such Alteration pr Utility Installation and/or upon Lessee's posting an atltlitional Security Deppsit with Lessor. (c) Liens; Bontls. Lessee shall pay, when tlue, all claims for labor or materials furnishetl or alleged to have been famished to or for Lesses at or for use on the Premises, which claims are or may be secured by any mechanics or materialmen's lien against the Premises pr any interest [herein. Lessee shall give Lessor not less Nan 10 days notice prior to the commencement of any work In, on or about the Premises, and Lessor shall have the right to post nplices of non-responsibility. If Lessee shall contest [ha validity pf any such lien, claim or demand, then Lessee shall, at its sale expense tlefentl antl prptect itself, Lessor antl [he Premises against Ne same antl shall pay antl satisfy any such adverse jutlgment That may be renderetl thereon before the enforcement thereof. If Lessor shall require, Lessee shall famish a surety bond in an amount equal m 150% of the amount of such contested lien, claim or demanq indemnrfying Lessor against liability (or the same. If Lessor elecs to panicipate in any such action, Lessee shall pay Lessofs attorneys' fees and costs. PAGE 4 OF 13 INITIALS ©2001 -AIR COMMERCIAL REAL ESTATE A$BOCIATION 5-S INITIALS FORM STG-14-3110E 7 4 Ownership; Removal; Surrender, and Restoration. (a) Ownership. Subject to Lessors right IO require removal or elect ownership as hereinafter provitleQ all Alterations antl Utility Installations made by Lessee shall be the property of Lessee, but considered a part of the Premises. Lessor may, at any time, elect in writing to be the owner of all or any specified part of the Lessee Ownetl Alterations and Utility Installations. Unless otherwise instmctetl per paragraph ].4(b) hereof, all Lessee Ownetl Alterations antl Utility Installations shall, at the expiration or termination of this Lease, become the property of Lessor antl be surrenderetl by Lessee with the Premises. (b) Removal. By tlalivary to Lessee of wrinen notice from Lessor not earlier than 90 antl not later than 30 tlays prior to the antl of the term of this Lease, Lessor may require Inal any or all Lessee llwnetl Alterations or Utility Installations be removetl by the expiration or termination of this Lease. Lessor may require the removal at any time of all or any part of any Lessee Ownetl Alterati0ns or Utility Installations made without the requiretl consent. (c) Surrender; Restoration. Lessee shall surrentler the Premises by the Expiration Date or any earlier termination tlate, with all of the improvements, parts and surtaces (hereof broom clean antl free of debris, antl in good operating order, condition antl state of repair, ordinary wear antl tear exceptetl. "Ortlinary wear antl tear" shall not inclutle any tlamaga or daterioretion that would have been prevented by gootl maintenance practice. Notwithstanding the foregoing, 'rf this Lease Is for 12 months or less, then Lessee shall surentler the Premises In the same contlRion as delivered to Lessee on the Start Oate with NO allowance for ordinary wear and tear. Lessee shall repair any damage occasionetl by the installation, maintenance or removal of Tratle Fixtures, Lessee ownetl Alterations antllor Utility Installations, furnishings, antl equipment as well as the removal of any storage tank installetl by or for Lessee. Lessee shall wmplelely remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except Hazartlous Substances which were tleposded via untlergrountl migration from areas outside of the Premises) even if such removal would require Lessee to pertortn or pay for work that exceeds statutory requirements. Trade Fixtures snail remain the property of Lessee and shall be removed by Lessee. Any personal property of Lessee not removed on or before the Expiration Date or any earlier termination date shall be tleemed to have been abantloned by Lessee antl may be tlisposetl of or retainetl by Lessor as Lessor may tlesire. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph ] 4(c) without the express vrtitten consent of Lessor shall constitute a holtlover under [he provisions of Paragraph 26 below. 8. Insurance; Indemnity. 8.1 Payment of Premium Increases. (a) Lessee shall pay to Lessor any insurance cos[ increase ("Insurance Cost Increase") occurring tluring the term of this Lease. Insurance Cost Increase is defnatl as any increase in the actual cos[ of Me insurance requiretl untler Paragraph $.2(b), 8.3(a) antl 3.3(b) ("Required Insurance'), over antl above the Base Premium as hereinafter tlefned calculatetl on an annual basis. Insurance Cost Increase snail inclutle but not be limitetl to increases resulting from the nature of Lessee's occupancy, any act or omission o} Lessee, requirements of the holder of mortgage or tleetl of tmst covering the Premises, Increasetl valuation of the Premises antl/or a premium rate increase. Tne parties are encouragatl to fill in the Base Premium in paragraph 1.8 with a reasonable premium for the Required Insurance based on the Agreed Use of the Premises. If the parties fail to insert a tlollar amount in Paragraph 1.8, then the Base Premium shall be the lowest annual premium reasonably obtainable for Ne Required Insurance as of the commencement of the Original Tenn for the Agreed Use of the Premises. In no event, however, shall Lessee o¢?esponsible for any portion of the increase in the premium cast attributable to liability insurance carrietl by Lessor untler Paragraph 8.2(b) in excess of $2,000,000 per ocwnence. (b) Lessee shall pay any such Insuance Cost Increase to Lessor within 30 days after receipt by Lessee of a copy of the premium statement or other reasonable evitlence of the amount tlue. If the insurance policies maintainetl hereuntler cover other property besitles the Premises, Lessor shall also tlelivar to Lessee a statement of the amount of such Insurance Cost Increase attributable only to the Premises showing in reasonable tlelail the manner in which such amount was cOmputetl. Premiums for policy periotls commencing prior to, or extentling beyontl the term of this Lease, shall be proratetl to conespontl Yo the term of this Lease. 8.2 Liability Insurance. (a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability policy of insurance protecting Lessee and Lessor as an atltlitional insured against claims for bodily injury, personal injury and property damage basetl upon or arising out of the ownership, use, occupancy or maintenance of the Premises antl all areas appurtenant thereto. Such insurance shall be on an occurrence basis provitling single limit coverage in an amount not less than 81,000,000 per occunence with an annual aggregate of not less than $2,000,000. Lessee shall atltl Lessor as an atltlitional insuretl by means of an entlorsemenl at least as broatl as Ne Insurance Service Organization's "Atltlitional Insured-Managers or Lessors of Premises" Entlorsement. The policy shall not contain any intro-insured exclusions as between insured persons or organ¢alions, but shall inclutle coverage for liability assumed under this Lease as an "insuretl contract" far [he pertormance of Lessee's intlemnity obligations under this Lease. The limits of said insurance shall not, however, Ilmit the liability of Lessee nor relieve Lessee of any obligation hereuntler. Lessee shall provitle an entlorsement on its (lability policy(ies) which provitles that its insurance shall be primary to antl not contributory with any similar insurance canied by Lessor, whose insurance snail be considered excess insurance only. (b) Cabled by Lessor. Lessor shall maintain liability insurance as describetl in Paragraph 8.2(a), in atldilion to, and not in lieu of, the insurance requiretl to be maintainetl by Lessee. Lessee snail not be named as an atltlitional insured Uterein. <,E55Of Shari haVC the right to Self insure for these coverages. 8 3 Property Insurance -Building, Improvements and Rental Value. (a) Building and Improvements. The Insuring Party shall obtain and keep in force a policy or policies in the name of Lessor, with lass payable to Lessor, any ground-lessor, antl to any Lender insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full insurable replacement cost of the Premises, as the same shall exist From time to time, or the amount required by any Lentler, but in no event more than the commercially reasonable antl available insurable value thereof. Lessee Ownetl Alterations antl Utility Installations, Tratle Fixtures, and Lessee's personal property shall be insuretl by Lessee not by Lessor. If the coverage is available antl commercially appropriate, such policy or policies shall insure against all risks of tlirect physical loss or damage (except the perils of Oootl and/or earthquake unless required by a Lentler or indudetl in the Base Premium), inclutling coverage far tlebris removal antl the enforcement of any Applicable Requirements requiring the upgratling, tlemolition, reconstruction or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreetl nation provision in lieu of any coinsurance clause, waiver of subrogation, antl Inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than Ne atljustatl U.S. Department of Labor Consumer Price Intlex for All Urban Consumers for the city nearest to where the Premises are locatetl. If such Insurance coverage has a tletluctible clause, the tletluctible amount shall not exceetl 35,000 per occunence, antl Lessee shall be liable far such tletluctible amount in the event of an Insuretl Loss. (b) Rental Value. The Insuring Party shall obtain antl keep in farce a policy Or policies in the name of Lessor with loss payable to Lessor antl any Lender, insuring the loss of the full Rent for one year with an extentletl period of intlemnity far an atltlitional 180 tlays ("Rental Value 1034[¢Lti')- Said insurance shall contain an agreetl valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be atljustatl annually to reflect the prolectetl Rant otherwise payable by Lessee, for the next 12 month period. Lessee snail be liable for any tletluctible amount in the event of such lass. (c) Adjacent Premises. If the Premises are part of a larger builtling, or of a group of builtlings ownetl by Lessor which are atljacent to the Premises, the Lessee shall pay for any increase In the premiums for the property insurance of such building or builtlings if saitl increase is causetl by Lessee's acts, omissions, use or occupancy of the Premises. 3.4 lessee's Property; Business Interruption Insurance; Worker s Compensation Insurance. (a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee's personal property, Trade Fixtures, and lessee Owned Alterelions antl Utility Installations. Such insurance shall be full replacement cost coverage with a tletluctible of not to exceed $1,000 per occunence. Tha proceetls from any such insurance shall be usetl by Lessee for the replacement of personal property, Tade FiMUres and Lessee Owned Alterations and Utility Installations. Lessee shall provide Lessor with written evidence that such Insurance is in force. (b) Business Intemupdon. Lessee shall obtain antl maintain loss of income antl extra expense insurance in amounts as will reimburse Lessee for tlirect or indirect loss of earnings attributable to all perils commonly Insured against by prutlent lessees In Ine business of Lessee or attributable to prevention of access ip the Premiss as a result of such perils. (c) WorkeYS Compensafion Insurance. Lessee shall obtain antl maintain Worker's Compensation Insurance in such amount as may be requiretl by Applicable Requirements. (tl) No Representation of Adequate Coverage. Lessor makes no representation that the limits or forms of coverage of insurance specifietl herein are atlequate t0 cover Lessee's property, business operations or obligations untler this Lease. 8.5 Insurance Policies. Insurance requiretl herein shall be by companies maintaining tluring the policy term a "General Policyholders Rating" of at least A-, VII, as set forth In the mast current issue of "Best's Insurance Guitle", or such other rating as may be requiretl by a Lender. Lessee shall no[ do or permit to be tlOne anything which invalidates the required insurance policies. Lessee shall, prior to the Start Date, tleliver to Lessor certifietl copies of policies of such Insurance or certiFlCates with espies of [he required endorsements evidencing [he existence and amounts of the required insurance. No such policy shall be cancelable or subject to modification except aher 30 tlays prior written notice to Lessor. Lessee snail, at least 10 tlays prior to the expiration of such policies, furnish Lessor with evitlence of renewals or "insurance bintlers" evitlencing renewal tnereo( or PAGE 5 OF 1$ INITIALS INITIALS ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STG-14-3(10E 5-9 Lessor may order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demantl. Such policies shall be for a term of aY least one year, or the length of the remaining tens of This Lease, whichever Is less. If either Party shall fail to procure and maintain the insurance requiretl to be cartied by i[, the other Party may, but shall not be required tc, procure antl maintain [he same. 6.6 Waiver of Subrogation. Without affecting any other rights or remetlies, Lessee antl Lessor each hereby release antl relieve the other, and waive (heir entire right to recover tlamages against the oMer, for loss of or tlamage to its properly arising out of or incident to [he perils requiretl to be Insuretl against herein. The effect of such releases and waivers Is not limitetl by the amount of Insurance cartied or required, or by any deductibles applicable hereto. The Parties agree [o have their respective property tlamage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as [he case may be, so long as the insurance is not invalitlatetl thereby. 6.] Indemnity. Except for Lessofs gross negligence or willful miscontluct, Lessee shall indemnity, protect, tlefend antl holtl harmless the Premises, Lessor antl Its agents, Lessofs master or ground lessor, partners antl Lenders, from antl against any antl all claims, loss of rents anNOr damages W Persons or property, liens, judgments, penalties, attorneys' and consultants' fees, expenses andlor liabilities arising out of, Involving, or in connection with, the use antllor occupancy of the Premises by Lessee. If any action ar pr«eeding is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same a[ Lessee's expense by counsel reasonably satisfactory to Lessor antl Lessor shall cooperate with Lessee in such defense. Lessor neetl not have frst paid any such claim in order to be defended or indemnified. 8.6 Exemption of Lessor and its Agents from Liability. Notwithstanding the negligence ar breach of this Lease by Lessor ar its agents, neither Lessor nor its agents shall be liable untler any circumstances far: (p injury or tlamage to the person or goods, wares, merchandise or other property of Lessee, Lessee's employees, contractors, Invitees, customers, or any other person in or about the Premises, whether such tlamage or Inlury Is causetl by or results from fire, steam, electricity, gas, water or rain, indoor air quality, Ne presence of moltl or from the breakage, leakage, obsWCtion or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whemer the said injury or damage resulFS tram conditions arising upon the Premises or upon other portions of the buil0ing of which the Premises are a part, or from other sources or places, (ii) any tlamages arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor or its agents to enforce the provisions of any other lease in the Protect, or (iii) injury to Lessee's business or for any lass of income or profit therefrom. Instead, it is intended Uat Lessee's sole recourse in Ue event of such tlamages or injury be to file a claim on the insurance policy(ies) that Lessee is required to maintain pursuant to the provisions of paragraph 8. 8.9 Failure to Provide Insurance. Lessee acknowletlges that any failure on its part tc obtain or maintain the in ante requiretl herein will expose Lessor to risks antl potentially cause Lessor to incur costs not contemplated by this Lease. [he extent of which will be eAremely difficult to ascertain. Accordingly, for any month or portion thereof that Lessee tloes not maintain the requiretl insurance antllor tloes not provide Lessor with the requiretl binders or certificates evitlencing the existence of the required insurance, the Base Rent shall be automatically increased, without any requirement far notice to Lessee, by an amount equal to 10% of the then existing Base Rent or $100, whichever is greater. The parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk) costs that Lessor will incur by reason of Lessee's failure tc maintain Ue requiretl Insurance. Such increase in Base Rent shall In no even) constitute a waiver of Lessee's Default or Breach with respect to the failure to maintain such insurance, prevent the exercise of any of the other rights antl remetlies granted hereunder, n_or relieve Lessee of its obligation to maintain the insurance specifetl In this Lease. 9. Damage or Destruction. 9.1 Definitions. (a) "Premises Partial Damage" shall mean damage or tlestmction to the improvements on the Premises, other than Lessee Ownetl Alterations antl Utility Installations, which can reasonably be repaired in 6 months or less tram the date of the tlamage or destruction. Lessor shall notify Lessee in writing within 30 tlays from the tlam of the tlamage or destruction as to whether or not the damage is Partial ar Total. Notwithstanding the foregoing, Premises Partial Damage shall not include tlamage to windows, tlcors, andlor oNer similar items which Lessee has the responsibility to repair or replace pursuant to the provisions of Paragraph ].1. (b) "Premises Total Destruction" shall mean damage or tlestmction to the Premises, other than Lessee Owned Alterations antl Utility Installations antl Tratle Fixtures, which cannot reasonably be repaired in 6 months or less from [he tlafe of the damage or destruction. Lessor shall notfy Lessee in writing wiMin 30 days from [he tlafe of the damage or destruction as to whether or not the tlamage is Partial or Total. (c) "Insuretl Loss" shall mean damage or destruction tc improvements on Ute Premises,~ather than Lessee Owned Alterations and Utility Installations antl Tratle Fixtures, which was caused Dy an event required [o De coveretl by the insurance described in Paragraph 6.3(x), irrespective of any deductible amounts or coverage limits Involved. (tl) "Replacement Cost" shall mean the cost to repair or rebuild the improvements awned by Lessor at the time of the occurrence to their cantlition existing immetliately prior thereto, including demoldion, tlebris removal antl upgratling required by the operation of Applicable Requirements, and without tleduction for depreciation. (e) "Hazartlous Substance Condition" shall mean the occurrence or tliscovery of a contliticn involving the presence of, or a contamination by, a Hazartlous Substance, in, on, or untler the Premises which requires restoration. 9 2 Partial Damage -Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at lessor's expense, repair such tlamage (but no[ Lessee's Trade FiMUres or Lessee Owned Alterations antl Utility Installations) as soon as reasonably passible antl this Lease shall continua in full force antl effect; provitled however, that Lessee shall, at Lessor's election, make the repair of any tlamage or tlestmction the fatal cost to repair of which is $10,000 or less, and, in such event, Lessor shall make any applicable insurence proceeds available to Lessee on a reasonable basis for that puryose. Notwithstanding the foregoing, d the required insurance was not in force or the insurance proceetls are not sufficient to effect such repair, the Insuring Party shall promptly conlrtbute the shortage In proceeds (except as to the deductible which is Lessee's responsibility) as antl when required to complete said repairs. In the event, however, such shortage was tlue to the fact that, by reason of [he unique nature of the improvements, full replacement cost Insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funtls to cover same, or atlequate assurance thereof, within 10 days fallowing receipt of written notice of such shortage antl request thereto[ If Lessor receives said funtls or atlequate assurance thereof within saitl 10 day perioq me party responsiDie for making me repairs shall complete Them as soon as asonably possible and this Lease shall remain in full force and effect. If such funds or assurance are not received Lessor may nevertheless elect by written notice Yo Lessee within 10 tlays thereafter to: (I) make such restoration and repair as is commercially reasonable with Lessor paying any shortage in prpceetls, in which case this Lease shall remain in full force and effect, or (ii) have this Lease terminate 30 tlays thereafter, lessee shall not be entitled to reimbursement of any funtls contributatl Dy Lessee to repair any such damage or tlestmction Premises Partial Damage tlue to flood or earthquake shall be subject tq Paragraph 9.3, notwi[hs[antling that there may be some insurance cgverege, but he net proceeds of any such insurance shall be made available for the repairs if matle by either Pally. 9.3 Partial Damage -Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss «curs, unless causetl by a negligent or wilttul act of lessee (in which event Lessee shall make the repairs at Lessee's expanse), Lessor may either (i) repair such tlamage as soon as reasonably possible at Lessofs expanse, in which event this Lease shall continue in full force and effect, or (ii) terminate this Lease by giving wrtten notice to Lessee within 30 days after receipt by Lessor of knowledge of the occurrence o/ such damage. Such termination shall be effective 60 tlays fallowing the tlafe of such notice. In Ne even[ Lessor elects to tertnina[e this Lease, Lessee shall have the right within 10 tlays after receipt of [he termination notice to give written notice to Lessor of Lessee's commitment tc pay for the repair of such damage without reimbursement from Lessor. Lessee shall provide Lessor wkh saitl funds or satisfactory assurance thereof within 30 tlays after making such commltmant. In such event this Lease shall continue in full force antl effect, and Lessor shall proceed to make such repairs as soon as reasonably possible attar the requiretl funds are available. If Lessee tloes not make the required commitment, this Lease shall terminate as of the tlafe specrfied in the termination notice. 9 4 Total DesWCtion. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this Lease shall terminate 60 tlays following such DesVUdion. If Ue damage or tlestmction was causetl by the gross negligence or wilHUl miscontluct of Lessee, Lessor shall have the right to recover Lessofs tlamages from Lessee, except as provitled in Paragraph 8 6. 9.5 Damage Near End of Term. If at any time during the last 6 months of this Lease there is damage for which lha cost to repair exceeds one month's Base Rent, whether or not an Insured Lass, Lessor may terminate this Lease effective 60 tlays following [he tlafe of occurrence of such damage by giving a written termination notice [o Lessee within 30 days after the date of occurrence of such tlamage. Notwithstanding the foregoing, rf Lessee at that time has an exercisable option to extend [his Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a) exercising such option antl (b) providing Lessor with any shortage in insurance proceetls (or atlequate assurance [hereof) needetl to make the repairs on or before the earlier of (i) the tlafe which is 10 days after Lessee's receipt of Lessofs wridan notice purporting to terminate This Lease, or (ii) [he tlay prior Ip the tlafe upon which such option expires- If Lessee duly exercises such option during such period antl provitles lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessofs commercially reasonable expense, repair such damage as soon as reasonably possible antl this Lease shall continua in full force and effect If Lessee fails to exercise such option antl provide such funtls or assurance during such period then this Lease shall terminate on ma tlafe specifietl in We termination notice and Lessee's option shall be extinguished. 9 6 Abatement of Rent; Lessee's Remedies. (a) Abatement In the event of Premises PaM1ial Damage or Premises Total Destruction or a Hazartlous Substance Condition for PAGE 6 OF t 3 INITIALS ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION 5-10 INITIALS FORM STG-14-3110E which Lessee is not responsible untler Fhis Lease, the Rent payable by Lessee far the period required for the repair, remediation or restoration of such damage shall be abated in proportion fc the tlegree to which Lessee's use of the Premises is impaired, but not to exceed the proceeds received from the Rental Value insurance. All other obligations of Lessee hereunder shall be perfgrmed by Lessee, and Lessor shall have no liability for any such tlamage, tlestruction, rametliaticn, repair or restoration except as provitletl herein. (b) Remedies. If Lessor is obligated tq repair or restore the Premises antl does not commence, In a substantial antl meaningful way, such repair or restoration within 90 days after such obligation shall accme, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessgr and tc any Landers of which Lessee has actual notice, of Lessee's election ro terminate Nis Lease on a tlate not less Nan 60 tlays following the giving of such notice. If Lessee gives such notice antl such repair or restoration is not commenced wkhin 30 days thereafter, this Lease shall terminate as of the date specified in saitl notice. If the repair or restoration is commenced within such 30 days, this Lease shall continue in full force antl effect. "Commence" shall mean either the uncontlitional authorization of the preparation of the required plans, or Ne beginning of the actual work an the Premises, whichever first occurs. 9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph fi.2(g) or Paragmph 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in adtlition, return to Lessee so much of Lessee's Security Deposit as has not bean, or is not then requiretl to be, usetl by Lessor. 10. Real Property Taxes. ID.1 Definition. As usetl herein, the term "Real Property Taxes" shall include any form of assessment real estate, general, special, ominary or ex[ragrtlinary, or rental levy or fax (other than inheritance, personal income or estate taxes); improvement bond', andlor license fee imposed upon or levietl against any legal or equitable interest of Lessor in the Premises or the Project, Lessor's right tc other income therefrom, antl/or Lessors business of leasing, by any authority having the direct or indirect power to tax antl where the funds are generated with reference to the Building adtlress and where the proceeds so generated are ro be applied by the city, county or other local taxing authority of a luristliction wAhin which the Premises are toted. Real Property Texas shall also include any tax, fee, levy, assessment or charge, or any increase [herein'. (i) imposetl by re of events oc<uring during Ne term of this Lease, inclutling but not limited to, a change In the ownership o/ the Premises, and (li) levied or assessed on machinery or equipment providetl by Lessor to Lessee pursuant fo Yhls Lease. 10.2 (a) Payment of Tazes. Lessor shall pay the Real Property Taxes applicable to the Premises provided, however, that Lessee shall pay to Lessor the amount, if any, by which Real Property Taxes applicable to the Premises increase over the fscal tax year tluring which Ne Commencement Date Occurs ("Tax Increase"). Payment of any such Tax Increase shall be made by Lessee m Lessor within 30 tlays after receipt of Lessors written statement setting forth the amount due antl computation Thereof. If any such taxes shall cover any period of time prior to or after the expiration or termination of this Lease, Lessee's share of such taxes shall be prorated to cover only that portion of the tax bill applicable [o the period that this Lease is in effect In the event Lessee incurs a late charge on any Rent payment, Lessor may estimate the current Real Property Taxes, antl require that the Tax Increase be paid in advance to Lessor by lessee monthly in atlvance with [he payment of the Base Rent Such monhly payment shall be an amount equal to the amount of the estimated installment of the Tax Increase divided by the number of months remaining before the month in which said installment becomes tlelinquent. When the actual amount of the applicable Tax Increase is known the amount of such equal monthly atlvance payments shall be adjusted as requiretl Iq provitle the funds needed to pay the applicable Tax Increase. If [he amount collected by Lessor is Insufficient to pay the Tax Increase when tlue, Lessee shall pay Lessor, upon tlemanQ such atlditional sums as are necessary to pay such obligations. Advance payments may be intermingled wiN other moneys of Lessor and shall not bear interest. In the event of a Breach by Lessee in the pertormance of ifs obligations under [his Lease, then any such atlvance payments may be traatetl by Lessor as an atltlitional Security Deposit. (b) AddiHOnal Improvements. Notwithstanding anything fc the contrary in [his Paragraph 10.2, Lessee shall pay to Lessor upon demand therefor the entirety of any increase in Real Property Taxes assessetl by reason of Alterations or Utility Installations placetl upon the Premises by Lessee or at Lessee's request or by reason of any alterations or improvements to the Premises matle by Lessor subsequent to the execution of this Lease by the Parties. 10.3 Joint Assessment If the Premises are not separately assessed, Lessee's liability shall be an equitable proportion of the Tax Increase for all of the lantl and improvements inclutletl within the lax parcel assessetl, such proportion to be conclusively determinetl by Lessor from the respective valuations assignetl in the assessofs work sheets or such other information as may be reasonably available. 1D4 Personal Property Tazes. Lessee shall pay, prior to delinquency, all lazes assessetl against antl levietl upon Lessee Owned Alterations, Utility Installations, Trade Fixtures, fumishings, equipment antl all personal propedy of Lessee. When possible, Lessee shall cause its Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment antl all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lessee's Bald property shall be assessetl with LessoYS real properly, Lessee shall pay Lessor the taxes adributable to Lessee's property within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee's property. 11. Utilities and Services. Lessee shall pay for all water, gas, Heat, Ilght, power, telephone, [rash tlispgsal and other utilities and services supplied to the Premises, together wkh any taxes thereon. If any such services ors net separately metered or billetl to Lessee, Lessee shall pay a reasonable proportion, [o be determined by Lessor, of all charges jointly metered or billetl. There shall be no abatement of rant and Lessor shall not be liable in any respect whatsoever for [he inadequacy, stoppage, interuption or discontinuance of any utility or service due to not, strike, labor dispute, breaktlown, accident, repair or other cause beyontl Lessors reasonable control or in cooperation with governmental request or tlirections. 12. Assignment and Subletting. 12.1 Lessor's Consen[Required. (a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber (collectively, "assign or assignmenC') or sublet all or any part of Lessee's interest in this Lease or in the Premises wiNOUt LessoYS prior written consent. (b) Unless Lessee is a corporation and Rs stock Is publicly traded on a national stock exchange, a change In the control of Lessee shall constitute an assignment requiring consent. The transfer, on a cumulative basis, of 25% or more of the voting control of Lessee shall constitute a change in control for this puryose. (c) The involvement of Lessee or its assets in any transaction, or series of transactions (by way of merger, sale, acquisition, financing, Transfer, leveraged buy-out or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessee's assets occurs, which results or will result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net Worth as it was representetl al the time of the execution of this Lease or al the time of the most recent assignment to which Lessor has consented, or as it exists immetliately prior to said transaction or transactions constituting such retludion, whichever was or is greater, shall be consideretl an assignment of this Lease to which Lessor may withhold its consent. "Net Worth of Lessee' shall mean [he net worth of Lessee (exdutling any guarantors) established untler generally accepted accounting principles. (d) An assignment or subletting without consent shall, at Lessors option, be a Default curable Aker notice per Paragraph 13.1 (dJ (e,, or a noncurable Breach without the necessity of any notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a noncurable Breach, Lessor may either' (i) teim mate this Lease, or (ii) upon 30 days written notice, increase the monthly Base Rent to 110% of the Base Rent then In effect. Further, in the event of such Breach antl rental adjustment, (i) the purchase price of any option to purchase the Premises heltl by Lessee shall be subject to similar adjustment to 110% of [he price previously in effect, and (ii) all fixetl and non-fixed rental adjustments scheduled during the remainder of the Lease term shall be increased [0 110 k of the schetluletl adjusted rent. (Q Lessor may reasonably wilhholtl consent to a proposed assignment or subletting rf Lessee is in Default at the time consent is requested. (g) Notwithstantling the foregoing, allowing a tle minimis portion of Ne Premises, ie. 20 square feet or less, to be usetl by a third party ventlor In connection with the installation of a ventling machine or payphone shall net constitute a subletting. 12.2 Tenns antl Conditions Applicable [c Assignment and Subletting. (a) Regartlless of Lessors consent, no assignment or subletting shall (i) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee untler this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary liability of Lessee for the payment of Renl or far the pertormance of any other obligations to be pertonnetl by Lessee. (b) Lessor may accept Ren[ or pedormance of Lessee's obligations from any person other than Lessee pending approval or tlisapproval of an assignment Neither a tlelay in the approval or tlisapproval of such assignment nor the acceptance of Rent or pertormance shall constitute a waiver or estoppel of Lessor's right to exercise ds remedies far Lessee's Default or Breach. (c) LessoYS consent to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting. (d) In the event of any Default or Breach by Lessee, Lessor may proceetl directly against Lessee, any Guarantors or anyone else responsible for the pertormanw of Lessee's obligations under this Lease, inclutling any assignee or sublessee, without frst exhausting Lessor's remetlies against any other person or entity responsible therefor to Lessor, or any security held by Lessor. (e) Each request for consent to an assignment or subletting shall be in writing, accampanietl by information relevant to Lessors tleterm lnafion as to the financial and operational responsibilRy antl appropriateness of Ne proposetl assignee or sublessee, including but net limitetl to the Intendatl use antl/or required motlifcation of the Premises, if any, together wish a fee of $500 as consmerafion for Lessor's considering and prowssing said request. Lessee agrees to provitle Lessor with such other or atlditional information antllor documentation as may be reasonably PAGE ] OF 13 INITIALS INITIALS ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STG-14-LiOE 5-11 requested. (See also Paragraph 36) (t) Any assignee of, or sublessee untler, this Lease shall, by reason of accepting such assignment, entering into such sublease, or entering into possession of the Premises or any portion [hereof, be deemed to have assumed and agreed [o conform and comply with each and every term, covenant, condition and obligation herein Ic be observed or pertormed by Lessee tluring Me term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consentetl lc in writing. (g) Lessoh consent to any assignment or subletting shall not transfer to the assignee or sublessee any Option granted to the original Lessee by This Lease unless such transfer is spe<ifcally consented to by Lessor in writing. (See Paragraph 39.2) 12.3 Additional Terms antl Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed'mduded In all subleases under this Lease whether or not expressly incoryoraletl therein; (a) Lessee hereby assigns antl transfers to Lessor all of Lessee's interest in all Rent payable on any sublease, and Lessor may collect such Rent and apply same toward Lessee's obligations untler this Lease; provitleQ however, that until a Breach shall occur in the performance of Lessee's obliga[icns, Lessee may collect said Rent. In the event that the amount collectetl by Lessor exceeds Lessee's then outstanding obligations any such excess shall be refundetl to lessee. Lessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemetl liable to the sublessee for any failure of Lessee ro pertorm antl comply with any of Lessee's obligations to such sublessee. Lessee hereby irrevocably authorizes and tlirects any such sublessee, upon receipt of a written notice from Lessor slating that a Breach exists in the performance of Lessee's obligations under this Lease, to pay to Lessor all Ren[ due and to become due under the sublease. Sublessee shall rely upon any such notice from lessor antl shall pay all Rents to Lessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary. (b) In the event of a Breach by Lessee, Lessor may, at ds option, require sublessee to atfom to Lessor, in which event Lessor shall untlertake the obllgaticns of Ue sublessor untler such sublease from the time of the exxcise of said option tc the expiration of such sublease; provitleQ however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor. (c) Any matter requiring the consent of the sublessor untler a sublease shall also require the consent of Lessor. (tl) No sublessee shall further assign or sublet all or any part of the Premises without LessoYS prior written consent. (e) Lessor shall deliver a copy of any notice at Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, if any, specrfled in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults curetl by the sublessee. 13. Default; Breach; Remedies. 13.1 Oefaulp Breach. A "De/auli" is defined as a failure by the Lessee to comply with or pertorm any of the terms, covenants, contliticns or Rules and Regulations untler this Lease. A "Breach" is defined as the occunence of one or more of the following Defaults, and the failure of Lessee to cure such Default within any applicable grace periotl: (a) The abantlonmenl of [he Premises; or the vacating of the Premises without providing a commercially reasonable level of security, or where the coverage of the property insurance describetl in Paragraph 8 3 Is jeopartlizetl as a result thereof, or without providing reasonable assurances to minimize potential vantlalism. (b) The failure of Lessee to make any payment of Rent or any Security Oepasit requiretl [o be made by Lessee hereunder, whether to Lessor or to a third party, when due, to provitle reasonable evidence of Insurance or surety bond, or to fulfill any obligation under this Lease which endangers or threatens life w property, where such failure continues for a period of 3 business tlays following written notice to Lessee. THE ACCEPTANCE 8V LESSOR OF A PARTIAL PAYMENT OF RENT OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANV OF LESSOR'S RIGHTS, INCLUDING LESSOR'S RIGHT TO RECOVER POSSESSION OF THE PREMISES. (c) The failure of Lessee to allow Lessor and/or its agents access to the Premises or [he commission of waste, act or acts constituting public or private nuisance, antl/or an illegal activity on Ne Premises by Lessee, where such actions continue for a period of 3 business tlays following written notice to Lessee. (tl) The failure by Lessee to provitle (i) reasonable written evidence of compliance with Applicable Requirements, (li) the service contracts, (iii) the rescission of an unaufhodzetl assignment or subletting, (iv) an Estoppel Cedrficate or fnancial statements, (v) a requested subortlina[ion, (vi) evidence concerning any guaranty and/or Guarantor, (vii) any tlocumenf requested under Paragraph 42, (viii) material safety tlala sheets (MSDS), or (ix) any other documentation or information which Lessor may reasonably require of Lessee untler the terns of this Lease, where any such failure continues for a periotl of 10 days following written notice to Lessee. (e) A Default by Lessee as to [he terms, covenants, contlitions or provisions of this Lease, or of the rules adoptetl untler Paragraph 40 hereof, other than those describetl in subparagraphs 13.1 (a), (b), (c) or (dJ, above, where such Default continues far a periotl of 30 tlays after written notice; provitled, however, that if the nature o< Lessee's Default is such that more than 30 days are reasonably requiretl for its cure, then it shall not be deemetl to be a Breach if Lessee commences such cure within said 30 day periotl and thereafter diligently prosecutes such cure to completion. (fJ The occunenca of any of the following events; (i) the making of any general arrangement or assignment for the benefit of cretlitors; (ii) becoming a "debtoY' as tlefined in 11 U.S.C. §101 or any successor statute thereto (unless, in me case of a petition filed against Lessee, the same is dismissed within 60 tlays); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee's interest in [his Lease, where possession is not restoretl fo Lessee within 30 days', or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee's assets Ic<atetl at the Premises or of Lessee's interest in this Lease, where such seizure is not tlischarged within 30 days', provided, however, in the event That any provision of this subparagraph (e) is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions. (g) The tliswvery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false. (h) If the performance of Lessee's obligations untler this Lease is guaranteed: O the death of a Guarantor, (ii) Ne termination of a Guarantors liability with respect tc this Lease other than in accortlance wiM the terms of such guaranty, (iii) a Guarantors becoming insolvent or [he subject of a bankruptcy fling, (iv) a Guarantors refusal ro honor the guaranty, or (v) a GOardnlorS breach of its guaranty obligation on an anticipatory basis, and Lessee's failure, within 60 days following written notice of any such event, to provide written alternative assurance or security, which, when coupled with the [hen existing resources of Lessee, equals or exceetls the combined financial resources of Lessee and the Guarantors Na[ existed at [he lime o/ execution of This Lease. 13.2 Remedies. If Lessee fails to perforn any of its affirmative tluties or obligations, within 10 days after written notice (or in case of an emergency, without notice), Lessor may, at tts option, perform such duty or obligation on Lessee's behalf, inclutling but not llmitetl to the obtaining of reasonably requiretl bantls, insurance policies, or governmental licenses, permits or approvals. Lessee shall pay to Lessor an amount equal to 115 % of the costs andexpenses incunetl by Lessor in such pertortnance upon receipt of an invoice therefor. In the event of a Breach, Lessor may, with or wthout further notice or demanQ antl without limiting Lessor in the exercise of any right or remetly which Lessor may have by reason of such Breach: (a) Terminate Lessee's righ[ to possession of the Premises by any lawful means, in which case this Lease shall lertninate antl Lessee shall immediately surender possession to Lessor. In such event lessor shall be entitled to recover from Lessee. (i) the unpaid Ren[ which hatl been earned al the time of termination (ii) the worth at the time of awartl of the amount by which the unpaid rent which wcultl have been earned after termination until the time of award exceetls [he amount of such rental loss that the Lessee proves ccultl have bean reasonably avoideQ (iii) the worth at the lime of awartl of the amount by which the unpaid rent for the balance of the term after [he time of awartl exceetls the amount of such rental loss that the Lessee proves coultl be reasonably avoided; antl (iv) any other amount necessary to compensate Lessor for all the tletriment proximately caused by the Lessee's failure tc pertorm ifs obligations under this Lease or which in the ortlinary course of things would be likely to result therefrom, inclutling but not limifetl to the cost of recovering possession of the Premises, expenses of reletting, Including necessary renovation and alteration of Ne Premises, reasonable attorneys' fees, and that portion of any leasing commission paid by Lessor in connection with this Lease applicable to the unexpired term of Nis Lease. The worth. at the time of awartl of Ne amount refered tc In provision (iii) of the immetliately preceding sentence shall be computetl by tlismunting such amount at the tliscount rate of the Fetleral Reserve Hank of the District within which the Premises are Iccated at the time of award plus one percent. Efforts by Lessor lc mitigate damages causetl by Lessee's Breach of this Lease shall not waive Lessor's right to recover damages untler Paragraph 12. If termination of [his Lease is obtained through the provisional remedy of unlawful tletainef Lessor shall have Ne righ[ to recover in such proceetling any unpaitl Rent and tlamages as are recoverable [herein, or Lessor may reserve [he right to recover all or any part thereof in a separate suit. If a notice and gate period requiretl under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to pertorm or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1. In such case, the applicable grace periotl requiretl by Paragraph 13.1 and the unlawful tlelainer statute shall mn concurantly, antl the failure of Lessee to cure the Defauk within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this lease entitling Lessor fo the remedies providetl for in this Lease antl/or by said statute. (b) Continue the Lease and Lessee's right to possession antl recover the Rent as it becomes tlue, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect [ha Lessor's interests, shall not constitute a lertnination of the Lessee's right to possession. (c) Pursue any other remetly now or hereaffar available untler the laws or judicial decisions of the state wherein the Premises are locatetl. The expiration or termination of this Lease and/or the termination of Lessee's righ[ to possession shall not relieve Lessee from liability under PAGE 8 OF 13 INITIALS p2g01 -AIR COMMERCIAL REAL ESTATE ASSOCIATION INITIALS FORM STG-14-3/1gE 5-12 any indemnity provisions of this Lease as to matters occurting or a<cminq during Ne term hereof or by reason pf Lessee's occupancy of Ne Premises. 13.3 Inducement Recapture. Any agreement for free or abatetl rent or other cnarges, or for the giving or paying by Lessor to or for Lessee of any cash or other bonus, intlucement or consitleratien far Lessee's entering into this Lease, all of which concessions are hereinafter referretl to as "Inducement Provisions," shall be deemed contlitionetl upon Lessee's full and faithful pertormance of all of the terms, covenants and conditions of this Lease. Upon Breach of [his Lease by Lessee, any such Intlucement Provision shall automatically be tleemetl tleleted from this Lease and of no further torte or effect, and any rent, other charge, bonus, intlucement or consideration theretofore abaleq given or paitl by Lessor under such an inducement Provision shall be immediately tlue and payable by Lessee to Lessor, notwithstantling any subsequent cure of saitl Breach by Lessee. The acceptance by Lessor of rent or Ne cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in writing by lessor at the time of such acceptance. 13.4 La[e Charges. Lessee hereby acknowledges [hat late payment by Lessee of Rent will cause Lessor to Incur costs not contemplated by this Lease, the exact amount of which will be extremely tliffcult to ascertain. Such costs indutle, but are not limited to, processing and accounting charges, antl late charges which may be imposed upon Lessor by any Lentler. Accordingly, if any Rent shall not be receivetl by Lessor within 5 tlays after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall immediately pay to Lessor aone-time late charge equal to 10 % of each such overdue amount or $100, whichever is greater. Tha Parties hereby agree Uat such late charge represents a fair and reasonable estimate of the costs lessor will Incur by reason of such late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee's Default or Breach with respect to such overtlue amount, nor prevent [he exercise of any of the other rigMS antl remetlies grantetl hereunder. In the event [hat a late charge is payable hereuntler, whether or not collected, for 3 consecutive installments of Base Rent, [hen notwithstanding any provision of this Lease to the contrary, Base Ren[ shall, at Lessofs option, became tlue antl payable quarterly in advance. 13.5 Interest Any monetary payment due Lessor hereuntler, other than late charges, not receivetl by Lessoq when due as to scheduled payments (such as Base Rent) or within 30 tlays following the tlate on which M1 was tlue for non-schetluled payment, shall bear'rnterest from the tlate when tlue, as to scheduled payments, or the 31st tlay after II was due as to non-schetluletl payments. The Interest ("Interest) charged shall be computetl al the rate of 10 % per annum but shall not exceed the maximum rate allowetl by law. Interest Is payable in atldition to the potential late charge provitled for in Paragraph 13 4. 13.6 Breach by Lessor. (a) Notice of Breach. Lessor shall not be tleemed in breach of this Lease unlesslessor fails within a reasonable time to perform an obligation requiretl to be performetl by Lessor. For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by Lessor, and any Lentler whose name antl adtlress shall have been furnishetl Lessee in writing for such purpose, of written notice specrfying wherein such obligation of Lessor has not been pertormetl; provided, howeveq that if the nature of Lessofs obligation is such that more than 30 days are reasonably required for its pertormance, then Lessor shall not be in breach if pertormance is commenced within such 30 tlay periotl and [hereafter diligently pursuetl to completion. (b) pertormance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breach within 30 tlays after receipt of said notice, or if having commenced saitl cure they tlo not diligently pursue it to completion, then Lessee may elect to cure said breach at Lessee's expense antl offset from Rent the actual antl reasonable cost to perform such cure, pravitletl however,-that such offset shall not exceed an amount equal to the greater of one month's Base Rant or the Security Deposit, reserving Lessee's right to seek reimbursement from Lessor far any such expense In excess of such offset Lessee shall document the cost of said cure antl supply said documentation to Lessor. 14. Condemnation. If the Premises or any portion thereof are taken untler the power of eminent domain or soltl under the threat of the exercise of saitl power (collectively "Condemnation"), this Lease shall terminate as to the pan taken as of the tlate the condemning authorty takes title or possession, whichever first occurs. If more than 10% of the Building, or mare than 25% of that portion of the Premises not occupietl by any building, is taken by Condemnation, Lessee may, at Lessee's option, to be exercised in writing within 10 tlays after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, wdhin 10 days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. H Lessee tloes not terminate This Lease in accordance with the foregoing, this Lease shall remain in lull force antl effect as to the portion of the Premises remaining, except that the Base Rent shall be retlucetl in proportion to the retlutlien In utility of the Premises causetl by such Condemnation Condemnation awartls antllor payments shall be the property of Lessor, whether such award shall be made as compensation for tliminution in value of the IeaseholQ the value of the part taken, or for severance damages; provideQ however, that Lessee shall be entitled to any compensation paid by [he wntlemnor for Lessee's relocation expenses, loss of business goodwill and/or Trade FMUres, without regartl to whether or no[ this Lease is terminatetl pursuant [o the provisions of this Paragraph. All Alterations antl Utility Installations made to the Premises by Lessee, for puryoses of Condemnation only, shall be considered [he property of the Lessee and Lessee shall be entitled to any antl all compensation which is payable thereto[ In the event that this Lease is not [erminatetl by reason of the Contlemnatioq Lessor shall repair any tlamage to the Premises caused by such Condemnation, provided char Lessor has received compeneaxlon £or such eamage from the condemning authonry.. 15. Brokerage Fees. mm~~e_. __..__...,~ _.." _. _. _._~_ __ _.. __. 15.3 Representations and Indemnities of Broker Relationships. Lessee antl Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker or fintler (other than the Brokers, d any) in connection with this Lease, antl that no one other than saitl named Brokers is entitled to any commission or fintlefs fee in connection herewith. Lessee antl Lessor tlo each hereby agree to intlemnify, protect, tlefend antl hold the other harmless from antl against liability far compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, attorneys' fees reasonably incurted with respect thereto. 16. Estoppel CeNficates. (a) Each Party (as "Responding Party') shall wdhin 10 tlays after written notice from the other Party (the "Requesting Party") execute, acknowledge and tleliver to the Requesting Parry a statement in writing In form similar to the [hen mast current "Estoppel Certificate" form published by the AIR Commercial Real Esta[s Association, plus such atlditional information, confrtnation antllor statements as may be reasonably requestetl by Ne Requesting Party. - (b) If the Responding Party shall fail to execute or tleliver the Estoppel Certifcate within such 10 day period, the Requesting Party may execute an Estoppel Certificate stating that (iJ the Lease Is in full force and effect without mod'rfication except as may be represenletl by the Requesting Party, (ii) there are no uncuretl defaults in the Requesting Party's performance, antl (iii) d Lessor Is [he Requesting Party, not more than one month's rent has been paid in advance. Prospective purchasers antl encumbrancers may rely upon the Requesting Party's Estoppel Certifcate, antl the Responding Party shall be estopped from denying the tMh of the facts contained in said Certifcate. (c) If Lessor tlasires to finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantors shall within 10 days after written notice from Lessor deliver to any potential lender or purchaser designatetl by Lessor such financial statements as may be reasonably requiretl by such lender or purchaser, including but not limited to Lessee's fnancial statements for the past 3 years. All such fnancial statements shall be received by Lessor antl such lentler ar purchaser in caMitlenca and shall be usetl only for the puryoses herein eel forth. 17. Definition of Lessor The term "Lessor" as used herein shall mean the owner or owners at the time In question of [he fee title to the Premises, or, if this Is a sublease, of the Lessee's interest in [he prioriease. In the event of a [rensfer of Lessofs title or Interest In the Premises or This Lease, Lessor shall deliver to the Vansferea ar assignee (in cash or by credit) any unused Security Deposit heltl by Lessor. Upon such transfer or assignment and tlelivary of the Security Deposit, as aforesaid, the prior Lessor snail be relieved of all liability with respect to Ne obligations anNOr covenants under this lease thereafter to be pertormetl by the Lessor. Subject to the foregoing, the obligations antllor covenants in this Lease to be pedomtetl by the Lessor shall be binding only upon the Lessor as hereinabave tlefined. 18. Sevarebiliry. The invalidity of any provision of Nis Lease, as tletertninetl by a court of competent juristlictioq shall in ne way affect the validity cf any other provision hereof. 19. Days. Unless oMenvise specifcally Intlicated to the contrary, the word "days" as used in this Lease shall mean and refer to calendar tlays. 20. LimiGfion on Liability. The obligations of Lessor under this Lease shall not constitute personal obligations of Lessor or Its partners, members, directors, officers ar shareholders, antl Lessee shall lock to the Premises, antl to no other assets of Lessor, for the satisfaction of any liability PAGE 9 OF 13 INITIALS INITIALS ©2001 ~ AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STG-t4-3/10E 5-13 of Lessor with respect to this Lease, and shall not seek recourse against Lessors partners, members, directors, officers or shareholders, or any of their personal assets for such satisfaction. 21. Time of Essence. Time Is of the essence with respect to the perfornance of all obligations to be pertormed or observetl by [he Parties under this Lease. 22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties wiN respect ro any matter men[ionetl herein, antl no other prior or contemporaneous agreement or understanding shall be effective. Lessor antl Lessee each represents antl warrants to the Brokers that d has made, and Is relying solely upon, ds own Investigation as to the nature, quality, character and financial responsibility of the other Party m this Lease antl as Yo [he use, nature, quality antl character of the Premises. Brokers have no responsibility with respect thereto or with respect to any tlefault or breach hereof by either Party. 23. Notices. 23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law shall be in writing and may be tlelivered In person (by hantl or by courier) or may be sent by regular, certifetl or registered mail or U. S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, and shall be deemed sufficiently givem'rF servetl in a manner specifed in this Paragraph 23. The adtlresses noted adjacent tc a Party's signature on this Lease shall be that Party's address for delivery or mailing of notices. Either Party may by written notice to the other specify a different atltlress for notice, except that upon Lessee's taking possession of the Premises, the Premises shall constitute Lessee's address for notice. A copy of all notices to Lessor shall be concurrently transmitted to such party or parties at such adtlresses as Lessor may from time to time hereafter tleslgnate in writing. 23.2 Date of Notice. Any notice sent by registeratl or certifietl mail, return receipt requestetl, shall be tleemetl given on the tlate of delivery shown on the receipt cartl, or rf no delivery tlate is shown, the postmark thereon. If sent by regular mail the notice shall be deametl given ]2 hours after the same is adtlressetl as requiretl herein antl mailed with postage prepaitl. Notices delivered by United Slates Express Mail or overnight courier That guarantees next day delivery shall be tleemetl given 24 hours after delivery of the same to the Postal Service or courier. Notices transmittetl by facsimile transmission or similar means shall be deemed tlelivered upon telephone confirmation of receipt (confirmation report from fax machine is sufficient), providetl a copy is also tleliveretl via delivery or mail. If notice is received on a Saturtlay, Sunday or legal holitlay, it shall be deemed receivetl on the next business tlay. 24. Waivers. (a) No waiver by Lessor of Ne Default or Breach of any term, covenant or condition hereof Dy Lessee, shall be tlaemed a waiver of any other term, covenant or contlition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or contlition hereof Lessors wnsent to, or approval of, any ac[ shall not be deemed to render unnecessary the obtaining of Lessor's consent lo, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. (b) The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be acceptetl by Lessor on account of moneys or damages due Lessor, nolwithstantling any qualifying statements or contlitions made by Lessee in connection therewith, which such statements and/or contlitions shall be of no force or effect whatsoever unless_ specifically agreed to in writing by Lessor at or before the time of tleposi[ of such payment. ' (c) THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE. 25. Disclosures Regarding The Nature of a Real Estate Agency Relationship. (a) When entering into a tliscussion with a real estate agent regarding a real estate Transaction, a lessor or Lessee shoultl from the outset untlerstantl what type of agency relationship or representation it has with the agent or agents in the transaction. Lessor and Lessee acknowletlge being advisetl by [he Brokers In this transaction, as follows: (i) LessoYS Aoent. A Lessors agent under a listing agreement with the Lessor acts as the agent for the Lessor only. A LessoYS agent or subagent has the following affirmative obligations: To the Lessor; A fiduciary duty of utmost care, integrity, honesty, and loyalty in tlealings with the Lessor. To the Lessee antl the Lessor a. Diligent exercise of reasonable skills antl care in pertormance of The agent's tluties. b. A tlut of honest antl fair tlealing and goad faith. a A duty to disclose all facts known to the agent materially affecting the value or tlesirability of the property That are not known [o, or wRhin the tliligent attention antl observation of the Parties. An agent is not obligaletl to reveal to either Party any confidential information obtained from the other Pady which tloes not involve Ne affnmative tluties set forth above. (ii) Lessee's Aoant. An agent can agree to act as agent for the Lessee only. In these siWa[ions, the agent is not the Lessor's agent, even if by agreement the agent may receive compensation for services rentlered, either in full or in part from Ue Lessor. An agent acting only for a Lessee has the fallowing affirmative obligations. To the Lessee; A fduciary tlury of utmost care, integrity, honesty, and loyalty in tlealings with the Lessee. To [he Lessee and the Lessor'. a. Diligent exercise of reasonable skills and care in pertormance of the agents duties. D. A duty of honest antl fair dealing and gootl faith. c. A tlury to tlisdose all facts known to the agent materially affecting the value or tlesirability of the property that are no[ known to, or within the diligent attention and observation of, the Parties. An agent Is not obligated to reveal to either Party any confitlential Infortna[ion obtainetl from the other Party which tloes not involve the affrtnative tluties se[ forth above. (iii) A 1 R C B [h L tl L .Areal estate agent, either acting directly or through one or more associate licenses, can legally be the agent of both the Lessor antl the Lessee in a transaction, Dut only with the knowledge antl wnsent of boU the Lessor antl the Lessee. in a tlual agency situation, the agent has the following affirmative obligations to both the Lessor antl the Lessee: a. A fiduciary tlut of utmost care, integrity, honesty and loyalty in the dealings with either Lessor or the Lessee. b. Other duties to the Lessor and the Lessee as stated above in subparagraphs (i) or (ii). In representing both Lessor and Lessee, the agent may not without the express permission of the respective Party, tlisclpse to the other Party that the Lessor will accept rent in an amount less than that intlicated in the listing or that the Lessee is willing to pay a higher rent than That offeretl. The above duties of the agent in a real estate transaction tlo not relieve a Lessor or Lessee from [he responsibility to protect their own Interests. Lessor and Lessee shoultl carefully reatl all agreements to assure that they adequately express their understantling of the transaction. Areal estate agent is a person qualifetl to atlvise about real estate. If legal or taz advice is desired, consult a competent professional. (b) Brokers have no responsibility with respect [o any default or breach hereof by either Party. The PaRies agree that no IawsuA or other legal proceeding involving any breach of duty, artor or omission relating to this Lease may be brought against Broker more than one year after Ue Start Date antl that the liability (indutling court costs antl attorneys' fees), of any Broker wRh respect to any such lawsuit and/or legal proceeding shall not exceed the fee received by such Broker pursuant to [his Lease; provideq however, that the foregoing lim nation on each Broker's liability shall not be applicable to any gross negligence or willful miscontluct of such Broker. (y Lessor and Lessee agrce to itlentify to Brokers as "Confitlential" any communication or information given Brokers that is consideretl by such Party to be conOtleMial. 26. No Right To Holdover. Lessee has nc right to retain possession of the Premises or any part (hereof beyond the expiration or termination of this Lease. In the even[ that Lessee holds over, than the Base Rent shall be increased tc 150% of the Base Rent applicable immediately precetling the ezpiralion or termination. Nothing contained herein shall be construed as consent by Lessor tc any holding over by Lessee. 2]. Cumulative Remedies. No rametly or election hereunder shall be deemetl exclusive but shall, wherever possible, be cumulative wdh all other remedies at law or in equity. 28. Covenants antl Conditions; Construdfon of Agreement. All provisions of this Lease to be observed or perfortnetl by Lessee are both covenants antl contlitions. In consWing Nis Lease, all headings and titles are for the convenience of the Parties only and shall not be consitleretl a part of this Lease. Whenever requiretl by the context, the singular shall indutle Ue plural and vice versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as ff both Parties had prepared d. 29. Binding Effect; Choice of Law. This Lease shall De bihtling upon fie Parties, their personal representatives, successors antl assigns antl be governed by the laws of the State In which the Premises are located. Any litgation between the Parties hereto concerning this Lease shall be initiatetl In Ue county In which hre Premises are located. 30. Subordination; Attommenq Non-Disturbance. 30.1 Subordinaliom. This Lease antl any Option grantetl hereby shall be subject and subortlinate to any grountl lease, mortgage, deed of (rust, or other hypothecation or security tlevice (collectively, "Security Device"), now or hereafter placed upon the Premises, to any and all advances made on [he security thereof, antl to all renewals, motlifications, and extensions thereof. Lessee agrees that the battlers of any such Securely Devices (In [his Lease together referred to as "LentleY') shall have no liability or obligation to perform any of the obligations of Lessor antler this Lease. Any Lentler may elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device by giving wrMen notice thereof to Lessee, whereupon this Lease antl such Options shall be tleemetl prior [o such Security Device, notwithstanding the relative tlates of the documentation or recordation thereof. 30.2 Attomment In the event that Lessor transfers title to the Premises, or the Premises era acquiretl by another upon the foreclosure or [ertnination of a Security Devise to which Nis Lease is subordinated (i) Lessee shall, subject to the nonEisturbance provisions of Paragraph 30.3, PAGE 10 OF 13 INITIALS ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION INITIALS FORM STG-143110E 5-14 attom to such new owner, antl upon request, enter into a new lease, containing all of the terms and provisions of this Lease, with suU n er for the remainder of Me term hereof, or, at the election of the new owner, this Lease will automatically become a new lease between Lessee and such new owner, antl (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new owner shall assume all of Lessor's obligations, except that such new owner shall naC (a) be liable for any act or omission of any prior lessor or with respect to events occurting prior to acquisition of ownership, (b) be subject fc any offsets or tlefenses which Lessee might have against any prior lessor, (c) be bound by prepayment of more Than one month's rent, or (tl) be liable for the return of any security tleposit paitl to any prior lessor which was not paid or cretllled m such new owner. 30.3 Non-Distubance. With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessee's subordination of this Lease shall be subject to receiving a commercialN reasonable non-tlisturbance agreement (a "Nan-Disturbance Agreement") from the Lentler which Non-Disturbance Agreement provitles that Lessee's possession of the Premises, antl this Lease, Including any options to exend the term hereo( will not be tlisNrbed so long as Lessee is not in Breach hereof antl attorns to [he recortl owner of the Premises. Further, within 60 days after [he execution of this Lease, Lessor shall, i( requestetl by Lessee, use its commercially reasonable efforts to obtain aNon-Disturbance Agreement tram the holder of any pre-existing Security Device which is securetl by the Premises. In the even) Uat Lessor is unable to provide the Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee's option, directly contact Lentler antl attempt to negotiate for the execution and delivery of aNon-Disturbance Agreement. 30.4 Self-Executing. The agreements containetl In this Paragraph 30 shall be effective without the execution of any further documents; provitleQ however, that, upon written request from Lessor or a Lentler In connection with a sale, fnancing or refinancing of the Premises, Lessee antl Lessor shall execute such further writings as may be reasonably required to separately document any subordination, atbmment and/or Non-Disturbance Agreement provided for herein. 31. Attorneys' Fees. If any Party or Broker brings an action ar proceedng involving the Premises whether foundetl in tort, contract or equity, or to tledare rights hereuntler, the Prevailing Party (as hereafter tlefned) in any such proceetlinq, action, or appeal thereon, shall be entitled to reasonable attomeys' fees. Such fees may be awarded in the same suit or recoveretl In a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, "Prevailing Party" shall include, without limitation, aParty or Broker who substantially obtains or tlefeats Ne relief sought, as the case may be, whether by compromise, settlement, Judgment, or [he abandonment by the other Party or Broker of its claim or defense. The attomeys' fees awartl shall not be computed in accortlance with any court fee schetlule, but shall be such as to fully reimburse all attorneys' fees reasonably incuretl. In additioq Lessor shall be entitled to attomeys' fees, costs antl expenses incurretl in the preparation and service of notices of Default antl consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such pefault or resuAing Breach ($200 Is a reasonable minimum per occunence for such services antl consultation). 32 Lessor's Access; Showing Premises; Repairs. Lessor antl Lessors agents shall have the right to enter the Premisas at any time, in the case of an emergency, antl oNerwisa at reasonable times after reasonable prior notice for the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such alterations, repairs, improvements or atltlitions to the Premises as Lessor may tleem necessary or desirable and the erecting, using antl maintaining of utilities, services, pipes and conduits through the Prem lses and/or other premises as long as there is no material atlverse effect to Lessee's use of the Premisas. All such activities shall be without abatement of rent or liability to Lessee. 33. Auctions. Lessee shall not conduct, nor permit to be contlucteq any auction upon the Premises witFOdt Lessors prior written consent. Lessor shall not be obligated to exercise any sfantlartl of reasonableness in determining whether to permit an auction. 34. Signs. Lessor may place on the Premisas ortllnary "For Sala" signs at any time antl ortlinary "For Lease" signs during the last 6 months of the term hereof. Except for ortlinary'YOr sublease" signs, Lessee shall not place any sign upon the Premises wiMOUt Lessor's prior written consent. All signs must comply with all Applicable Requirements. 35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrentler of this Lease by Lessee, Ne mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all existing subtenancies. Lessors failure within 70 tlays following any such even( to elect to the contrary by written notice to the holtler of any such lesser interest, shall constitute Lessors election to have such event constitute Ne termination of such interest 36. Consents. Except as otherwise providetl herein, wherever in this Lease [he consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheltl or tlelayed. Lessors actual reasonable costs and expenses (including but not Jim Red Ic architects', attomeys', engineers' and other consultants' fees) incurred in the consitleration of, or response to, a request by Lessee for any Lessor consent, including but not limitetl to consents to an assignment, a subletting or the presence or use of a Hazartlous Substance, shall be paitl by Lessee upon receipt of an invoice and supporting documentation therefor Lessors consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by lessee of this Lease exists, nor shall such consent be tleemetl a waiver of any then existing Default or Breach, except as may be oMenvise specifically staled in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessors consent shall not predutle the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party tlisagrees with any tlelermination matle by the other hereuntler and reasonably requests the reasons for such tletermination, the determining party shall furnish its reasons In writing antl in reasonable tletail within 10 business days following such request. 37. Guarantor. 37.1 Execution. The Guarantors, if any, shall each execute a guaranty in the form mast recently publishetl by the AIR Commercial Real Estate Association. 37.2 Default. It shall constitute a Default of the Lessee d any Guarantor fails or refuses, upon request to provide: (a) evidence of the execution of the guaranty, including the authority of the party signing on Guarantors behalf to obligate Guarantor, antl in the case of a corporate Guarantor, a certified copy of a resolution of its boartl of directors authorizing the making of such guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (tl) written confrmation that the guaranty is still in effect. 38. pate[ Possession. Subject tc payment by Lessee of the Rent and performance of all of the covenants, conditions antl provisions on Lessee's part tc be observed and pertormed under this Lease, Lessee shall have quiet possession antl quiet enjoyment of the Premises tludng the term hereof. 39. Options. If Lessee is gran[etl an Option, as defined below, [hen the following provisions shall apply: 39.1 Definition. "Option" shall mean (a) the right tc extentl or reduce the term of or renew this Lease or to extend or retluce the term of or renew any lease that Lessee has on other preperty of Lessor; (b) the right of first refusal or frst offer to lease either the Premises or other property of Lessor, (c) the right to purchase, the right of first offer to purchase or the right of firs[ refusal tc purchase the Premises or other property of Lessor. 39.2 Options Personal To Original Lessee. Any Option grantetl to Lessee in this Lease is personal to the original Lessee, antl canna[ be assigned or exercised by anyone other than said original Lessee and only while the original Lessee is in full possession of the Premises antl, if requested by Lessor, with Lessee certifying that Lessee has nc intention of thereafter assigning or subletting. 39.3 Multiple Options. In Ne event that Lessee has any multiple Options to extend or renew this Lease, a later Option cannot be exercised unless the prior Options have been validly exercised. 39.4 Effect of Default on Options. (a) Lessee shall have no right to exercise an Option: (i) during the period commencing with the giving of any notice of Default antl continuing until said Default is cured, (ii) during the periotl of time any Rent is unpaid (without regartl to whether notice thereof is given Lessee), (iii). tluring the time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has been given 3 or mare notices of separate Default, whether or not the Defaults are cured, during the 12 month period immediately preceding the exercise of [he Option. (b) The periotl of time within which an Option may be exercisetl shall not be extended or enlargetl by reason of Lessee's inability to exercise an Option because of the provisions of Paragraph 39.4(a). (c) An Option shall terminate and be of no further farce or effect, natwithstantling Lessee's tlue and timely exercise of the Option, if, after such exercise antl prior to the commencement of the extentletl term or completion of the purchase, (i) Lessee fails to pay Rent far a periotl of 30 days after such Rent becomes due (without any necessity of Lessor to give notice thereof), or (ii) if Lessee commits a Breach of this Lease. 40. Multiple Buildings. If the Premises are a part of a group of builtlings controlled by Lessor, Lessee agrees That it will abitle by andconform to all reasonable. roles antl regulations which Lessor may make from time to time for the management, safety, and care of said properties, Including the care and cleanliness of the grountls and indutling the parking, loading and unloading of vehicles, antl to cause its employees, suppliers, shippers, customers, contractors antl invflees to sc abitle antl conform. Lessee also ayrees to pay its fair share of common expenses incurtetl in connection with such rules antl regulations. 41. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereuntler tloes not indutle the cost of guartl service or other security measures, and Nat Lessor shall have no obligation whatsoever to provitle same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents antl invdees and their property from the acts of thirtl parties. 42. Reservadons. Lessor reserves tc ttsalf the right, from time to time, to grant, wiNOUt the consent or jointler of Lessee, such easements, rights antl tledications that Lessor tleems necessary, and to cause the recordation of parcel maps antl restrictions, so long as such easements, rights, dedications, maps antl restrictions do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requestetl by Lessor to effectuate any such easement rights dedication, map or restrictions. PAGE 11 OF 13 INITIALS INITIALS 02007 -AIR COMMERCIAL REAL ESTATE ASSOCIATION ~_ ~ ~ FORM STG-14-3/70E 43. Performance Under Protest. If at any time a tlispute shall arise as to any amount or sum of money to be paitl by one Party to the other untler the provisions hereof, the Party against whom the obligation to pay the money Is asserted shall have the right to make payment "untler protest" and such payment shall nor be regaMetl as a volumary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be atljutlgetl that there was na legal obligation on the paM1 of saitl Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally requiretl to pay. A Party who does not initiate suit for Ne recovery of sums paid "untler protest" within 6 months shall be deemetl to have waivetl its right to protest such payment. 44. AuNOrity; Multiple Parties; Execution. (a) tt either Pally herald is a corporation, Vust, limited liability company, partnersMp, or similar entity, each indlvitlual executing this Lease on behalf of such entity represents antl wanants that he or she is tluly authoriietl to execute and tleliver this Lease on its behalf. Each Party shall, within 30 tlays after request, tleliver to the other Pally safisfadory evidence of such aufhorRy. (b) If this Lease is executetl Dy more than one person or entity as "Lessee", each such person or entity shall be jointly antl severally liable hereunder. It Is agreetl that any one of the named Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary thereto and bind all of the nametl Lessees, and Lessor may rely on the same as if all of Me named Lessees hatl executed such document. (y This Lease may be executetl by the Parties in counterparts, each of which shall be tleemed an original antl all of which together shall constitute one and the same instrument. 45. Conflict. Any conflict between the printed provisions of this Lease and typewritten or handwritten provisions shall be contmlletl by the typewritten or handwritten provisions. 46. Offer. Preparation of this Lease by either Party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Pally. This Lease is not Intentletl to be binding until executed and delivered by all Parties hereto. 4T. Amendments. This Lease may be motlRietl only in writing, signetl by the Parties in interest at the time of Ue modification. As long as they tlo not materially change Lessee's obligations hereunder, Lessee agrees to make such reasonable non-monetary modifcations to this Lease as may be reasonably requiretl by a Lender in mnnedion with the obtaining of normal fnancing or refinancing of the Premises. 49. Arbitration of Disputes. An Atltlendum requiring the Artitration of tliiputes between the Parties antllor Brokers arising out of this Lease ^ is ^ is not attached to this Lease. 50. Americans with Disabilities AcL Since compliance with the Americans with Disabilities Act (ADA) is tlepentlent upon Lessee's specific use of the Premises, lessor makes no warranty or representation as to whether or not the Premises comply with ADA or any similar legislation. In the event that Lessee's use of the Premises requires modifications or atltli[ions Ip the Premises in order to be in AOA compliance, Lessee agrees to make any such necessary modifications andlor atlditions al Lessee's expense. LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED ANO VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE THE THIS LEASE IS E%ECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE ANO EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES. ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BV THE AIR COMMERCIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO: 1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. 2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCILRAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE. WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE BTATE IN WHICH THE PREMISES IS IOCATEO. The parties hereto have executed this Lease at the place antl on the dates specifietl above their respective signatures. Executed aC Executed ac On: On: By LESSOR: By LESSEE: City o£ Chula Vista, a municipal chartered South Bay Community Services corporation of the State of California By' Name Printed: Title: By Name Printed: Title: Name Printetl: Title'. Adtlress'. 276 Fourth Avenue Address: 430 F Street Chula Vista, CA 91910 Chula Vista, CA 91910 Telephone: (_) Telephone: (519)920-3620 Facsimile:( ) Facsimile-.(_) Email: Email: Fetleral lD No. Email: _ Email: Federal lD No. PAGE 12 OF 13 INITIALS 02001 ~ AIR COMMERCIAL REAL ESTATE ASSOCIATION By Name Printetl: Kathryn Lembo Title: CEO 8v: 5-16 INITIALS FORM STG-143HOE BROKER: BROKER: Voit Real Estate Serviee5 Att Tracy Clark Att Title: Senior Vice President Title: Adtlress: 4370 La Jo Lla Village Dr. #990 Address. San Diego, CA 92122 Telephane:(858)958-3339 Telephone:(-) Facsimile:(858)953-1981 Facslmile(_) Email tclark@voitco. com Email: Federal lD No. Federal lD No. BrokerlAgent DRE License #. 00641800 BrokerlAgenl DRE license #'. NOTICE: These forms are often motlifietl to meet changing requirements of law antl Intlustry needs. Always write or call to make sure you. are utilizing the most current forth: AIR Commercial Real Estate Association, 800 W 6th SVeeR Suite 800, Los Angeles, CA 9001]. Telephone No. (21368]-8]T7. Fax No.: (213)68]-6616. © Copyright 2001 - By AIR Commercial Real Estate Association. All rights reservetl. No part of these works may be repmtlucetl in any form without permission in writing. PAGE 130E 13 INITIALS INITIALS m2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STG-14-3110E 5-17 RENT ADJUSTMENT(S) STANDARD LEASE ADDENDUM Dated By and Between (Lessor)city or chula, a municipal chartered corporation of the State of California (Le55ee)SOUth Bay Community Services Address of Premises:93o a street Chula Vista, CA 91910 Paragraph 5 1 A. RENT ADJUSTMENTS: The monthly rent for each month of the adlustment periotl(s)specifetl below shall be increased using [he methotl(s)indi<atetl below: (Check Method(sj to be Used antl Fill in Appropriately) ~ I. Cost of Living Adjustment(s) (COLA) a. On (Fill in COLA Dates): JUly 1, 2013; July 1, 2019; July 1, 2015; July 1, 2016 the Base Rent shall be atljusted by the change, d any, from the Base Month specifetl below, in the Consumer Price Intlex of the Bureau of Labor Statistics of the U.S. Department of Labor for (select oneJ:^ CPI W (Urban Wage Earners and Clerical Workers) or 0 CPI U (All Urban Consumers), for (Fill in Urban Area): (1982-1984 = 100), herein referretl to as "CPI". All Items b. The monthly rent payable in accortlance with paragraph A.La. of this Atldendum shall be calculated as follows: the Base Rent sal forth In paragraph 1.5 of the attachetl Lease, shall De multipliatl by a fraction the numerator of which shall be the CPI of the calentlar month 2 months prior to the month(s) specified In paragraph A.La. above during which the atllustment is to take eflecL antl the benominator of which shall ba [De CPI of the calentlar month which is 2 months prior to (select one): the 0 first month of the term of this Lease as se[ forth In paragraph 1.3 ("Base Month") or ^ (Fill in Other "Base Month"): .The sum so calculatetl shall constitute the new monthly rent hereuntler, Dut in no event, shall any such new monthy rent be less Than the rent payable for the month immediately preceding the rent adlusment. In no event shall any adjustment excecA two percent (2'l.) In any year. c In the event the compilation antllor publication of [he CPI shall be transferred to any other governmental department or bureau or agency or shall be tlis<ontinueq then the indez most nearly the same as the CPI shall be used to make such calculation. In [he event that [he Parties cannot agree on such alternative intlez, [hen the matter shall be submitted for tlacision to the American Arbitration Association in accortlance with the then roles of said Assocation antl the decision of [he arbitrators shall be bintling upon the paM1ies. The cost of said Arbitretion shall be paid equally by the Parties. ff- Ba aFBF6ensuliant'= aaa-.,"~,m.- PAGE 1 OF 2 INITIALS INITIALS ®2000 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM RA-~-SIOOE 5-18 ~- - --- - mA 41f k tetF)# -- -- - -- B. NOTICE: Unless specified otherwise herein, notice of any such atllustments, other than Fixed Rental Adjustments, shall be matla as specified in paragraph 23 of the Lease. C. BROKER'S FEE: The Brokers shall be paid a Brokerage Fee far each adjustment specified above in accordance with paragraph 15 d the Lease or if applicable, paragraph 9 of Me Sublease. NOTICE: These forms era often modified to meat changing requirements of law and industry needs. Always write or call to make sure you era utilizing the mast current form: AIR Commercial Real Estate Association, 800 W 6th Street, Suite 800, Los Angeles, LA 9001]. Telephone No. j210j 68]-ST]T. Fax No.: j213f 6BT-8616. PAGE2OF2 INITIALS INITIALS ©2000 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM RA-3$/OOE 5-19 OPTION(S) TO EXTEND STANDARD LEASE ADDENDUM Dated By and Between (Lessor)city of china vista, a muaicipal chartered corporation of the State of California By and Between (Lessee)south Hav Community Services Address of Premises: a3o s street Paragraph 52 Chula Vista, CA 91910 A. OPTION(S) TO EXTEND: Lessor hereby grants to Lessee the option to extend Ne term of Ihis Lease for two (2) adtlkional thirty-six (36) month period(s) commencing when the prior term expires upon each antl all of the following terms and conditions: (i) In order to exercise an option to extentl, Lessee must give written notice of such election to Lessor antl Lessor must receive the same at least 6 but not more than 12 onths prior to the tlale Nat Me option period would commence, time being of the essence. If proper notifca[ion of the exercise of an option is not given antllor receiveq such option shall automatically expire. Options (if there are more than one) may only be exercised consecutively. (ii) The provisions of paragraph 39, including those relating to Lessee's Default sat font in paragraph 39.4 of this Lease, are contlitions of this Option. (iii) Except for the provisions of this Lease granting an option or options to extend [he term, all of Ne terms antl conditions of this Lease except where specifically modifietl by Ihis option shall apply. (iv) This Option is personal to the original Lessee, antl cannot be assigned or exercised by anyone other than said original Lessee antl only while the original Lessee is In full possession of the Premises antl without Ne intention of thereafter assigning or subletting. (v) The monthly rent for each month of the option perictl shall be wiculated as follows, using the method(s) indicated below'. (Check Method(s) to be Usetl and Fill In Appropriately) ~ 1. Cost of Living Adjustment(s) (COLA) On (Fill in COLA Dates): JU1y 1 2017 July 1, 2018; July 1, 2019; July 1, 2020; July 1, 2021; J ly 1 2022 the ease Rent shall be adjusted by the change, d any, from the Base Month specAietl below, in the Consumer Price Index of the Bureau of Lobar Blatistics of the U. S. Department of Labor for (select one): ^ CPI W (Urban Wage Earners antl Clerical Workers) or 8 CPI U (All Urban Consumers), for (Fill in Urban Area): 5 n Dieg All Items (1982-1984 = 100), herein referred to as "CPI". b. The monthly rent payable In accordance wiN paragraph A.La. of this Addendum shall be calculatetl as follows: [he Base Ren[ set forth in paragraph 1.5 of the attached Lease, shall be multiplied by a fraction the numerator of which shall be the CPI of Ne calendar month 2 months prior to the month(s) specifietl in paragraph A.La. above during which the adjustment is tc take effect, and the tlenominamr of which shall be the CPI of the calendar month which is 2 months prior to (select one): 8 the first month of the tens of this Lease as set forth in paragraph 1.3 ("Base MontH') or ^ (Fill in Other "Base Month"j: The sum so <alculatetl shall constitute [ha new monthly rent hereuntler, but in no avant, shall any such new monthly rent be less Nan the rent payable for the month immetliately precetling the rent adjustment In no evens shall any aAyarmcns cxcccd swo percenx (2l) In any gNCn ycar. c. In the event the compilation and/or publication of the CPI shall be transferred to any other govemmenlal Department or bureau or agency or shall be discontinuetl, then the index most nearly the same as the CPI shall be used to make such calculation. In the event that the Parties cannot agree on such alternative intlex, then the matter shall be submitted for tlecision to the American Arbitration Association in accartlance with the then rules of saitl Association and the tlecision of the arbitrators shall be binding upon the parties. The cost of said Arbitation shall be paid equally by the Parties. PAGE 1 OF 2 INITIALS INITIALS X000 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OE-]41IOOE 5-20 B. NOTICE: Unless specifetl olhenvise herein, notice of any rental adjustments, other than Fixetl Rental Adjustments, shall be made as specrfietl in paragraph 23 of the Lease. C. BROKER'S FEE: The Brokers shall be paid a Brokerage Fee for each atljustment specified above in accortlance wiN paragraph 15 0( the Lease or rf applicable, paragraph 9 of the Sublease. ' NOTICE: These forms are often modified [o meat changing requirements of law and Industry needs. Always write or call [o make sure you are utilizing the most curtent form: AIR Commercial Real Estate Association, 600 W 6th Street. Sulta 800, Las Angeles, CA 9001]. Telephone No. (27368]-8777. Faz No.: (27368]-8676. PAGE2OF2 INITIALB INITIALS 41000 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM 0E-3-8IOOE - 5-21 RIGHT OF FIRST REFUSAL TO PURCHASE STANDARD LEASE ADDENDUM Dated June 5, 2012 By and Between (Lessor) city of Chula Vista, a municipal chartered corporation of the State of California (Le55ee)SOUth Bay Community Services Address of Premises: 930 Paragraph 53 Chula vista, CA 91910 (a) lessor shall not, at any time prior to the expiration of the term of this Lease, or any e#ension thereof, sell the Premises, or any interest therein, without first giving written notice thereof to Lessee, which notice is hereinafter refereed to as "Notice of Sale". (b) The Notice of Sale shall include [he exact and complete terms of [he proposed sale and shall have attached therelc a copy of the bona fde offer antl counteroffer, rf any, tluly executed by both Lessor and the prospective purchaser. (c) For a period of 12 calendar tlays after receipt by Lessee of the Notice of Sale, Lessee shall have the right to give wrNten notice to Lessor of Lessee's exercise of Lessee's right to purchase the Premises, the Interest therein proposed to be solo or the property of which the Premises are a part, on the same terms, price and conditions as set forth in the Notice of Sale. In the event that Lessor tloes not receive written notice of Lessee's exercise of the right herein grantetl within saitl 12 day perioQ there shall be a conclusive presumption that Lessee has elected NOT to exercise Lessee's right hereuntler and Lessor may complete the sale to the prospective purchaser, on the same terms set forth in Na Notice of Sale. (d) In Ne event that Lessee tleclines to exercise its right of first refusal after receipt of the Notice of Sale, and, thereafter, Lessor antl the prospective purchaser motlify by more than 5%, (i) the sales price, or (ii) the amount of tlown payment, or if there is a material Uange In any seller fnancing offered or in [he event that the sale is not consummaletl within 100 tlays of the date of the Notice of Sale, then Lessee's right of frst refusal shall reapply to said trensaction. (e) In the event that Lessee declines tc exercise its right of first refusal after receipt of the Notice of Sale, antl, Iherea8er, the proposed transfer or sale is not consummated, the Lessee's right of frst refusal shall apply to any subsequent Iransatlion. H, however, said transferor sale is, in fact, completed, then said right shall be extinguished and shall not apply to any subsequent transactions. (Q Notwithstantling [he above, [his right of frst refusal is intended to apply only to voluntarytransfers involving thirtl party transferees. This right of frst refusal shall not, therefore, apply: where the Premises are taken by eminent domain or sob untler threat of condemnation, to infra-family or Inter-ownership transfers, to transfers. by Lessor to a trust createtl by Lessor, or, if Lessor is a trust, to transfers to a trust beneficiary. (g) NOTE: This right of frst refusal cannot be exercisetl: (i) tluring the period commencing wRh the giving of any notice of Default antl continuing until saitl Default is cured, (ii) during the period of time any Rent is unpaid (without regard to whether notice (hereof is given Lessee), (iii) tluring the time Lessee is in Breach of this Lease, or (iv) in the event that Lessee-0as been given 3 or more notices of Default, whether or not the Defaults are cureq during the 12 month period immediately preceding the exercise of the right of frst refusal. NOTICE: These forms are often modified [c meet changing requirements of law and Industry needs. Alwaya write or call tc make sure you are utilizing [he most current form: AIR Commercial Real Estate Associaden, 800 W 6th Street. Suite 800, Los Angeles, CA 9001]. Telephone No. 12'13168]-6]]]. Fax No.: 1213)68]d616. PAGE1 OF1 INITIALS INITIALS 02000 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM FRd-8106E 5-22 ADDENDUM TO LEASE DATED JUNE 5, 2012, BY AND BETWEEN CITY OF CHULA VISTA, A MUNICIPAL CORPORATION OF THE STATE OF CALIFORNIA; AS LESSOR, AND SOUTH BAY COMMUNITY SERVICES, AS LESSEE, FOR THE PREMISES LOCATED AT 430 F STREET, CHULA VISTA, CALIFORNIA 91910 54. SHARED USE OF CONFERENCE ROOM: Lessee shall allow the conference room on the north end of the building to be utilized by other civic organizations and city functions during Lessee's normal business hours when said conference room is not being used or needed by Lessee. Outside use of the conference room by other groups or agencies shall be scheduled in advance with Lessee. 55. NO FOOD DISTRIBUTION: Lessee shall not be allowed to operate their food distribution program at the Subject Premises. LESSOR: CHULA VISTA, A MUNICIPAL CORPORATION OF THE STATE OF CALIFORNIA By: Name LESSEE: SOUTH BAY COMMUNITY SERVICES By: Kathryn Lembo, CEO Date: LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES. P'1TRACVl4irtarmsW30 F SVeehLease AtltlerWUm tloc 5-23 EXHIBIT A 430 F Street Chula Vista, CA 91910 11;5'x9' 8`x9' '9.6' 16'x9` 13'x9' x ~1 9 70' X 5' ~~~ ~ 5 9' x 5' 1,~5' z lo' fix' x IC' ~ t 9' x O !o' k v~ i0' x L' B' 9' x B' 8' x 4' ~ B x 9 ~ 4l'X5~--i t5' x 9' i ll,5' x 9' 9' x 9' °' x>' r!5' x 9' Tx5' ~~ ~-- 59'X>' 15'xlo' ~"xlo' O i /9'x70' lo' x !5' x v~ d.B' x "l' 9.5' x 7' "' ~ o 8' Q' 8' 12.5'~~ ~B' x x~s s x 5 xlo 568-181-44 P:\TR4Cri4iROrtnsW30 F Sbeet\Ezbibit A-Site Plartbocx 5-24 Voit REAL ESTATE SERVICES EXHIBIT B NOTICE TO OWNERS, BUYERS AND TENANTS REGARDING ENVIRONMENTAL MATTERS, AMERICANS WITH DISABILITIES ACT, FLOOD DISCLOSURE, ZONING/USE DISCLOSURE AND ALOUIST-PRIOLO SPECIAL EARTHQUAKE FAULT ZONING ACT ENVIRONMENTAL MATTERS It is essential that all parties to real estate transactions be aware of the health, liability and economic impact of environmental factors on real estate. Voit Real Estate Services does not conduct investigations or analyses of environmental matters and, accordingly, urges the parties to a real estate transaction to retain qualified environmental professionals to determine whether hazardous or toxic wastes or substances (such as asbestos, PCB's and other contaminants or Petro-chemical products stores in underground tanks) or other undesirable materials or conditions are present at the property and; if so, whether any health danger or other liability exists. Such substances may have been used in the construction or operation of buildings or may be present as a result of previous activities at the property. Various laws and regulations have been enacted at the federal, state and local levels dealing with the use, storage, handling, removal, transport and disposal of toxic or hazardous wastes and substances. Depending upon past, current and proposed uses of the property, it may be prudent to retain an environmental expert to conduct a site investigation and/or building inspection. If hazardous or toxic substances exist or are contemplated to be used at the property, special governmental approvals or permits may be required. In addition, the cost of removal and disposal of such materials may be substantial. Consequently, legal counsel and technical experts should be consulted where these substances are or may be present. AMERICANS WITH DISABILITIES ACT Please be advised that, as an owner or tenant of real property, you may be subject to the Americans with Disabilities Act (the ADA), a Federal law codifed at 42 USC Section 12101 et seq. Among other requirements of the ADA that could apply to your property, Title III of the ADA requires owners and tenants of "public accommodations" to remove barriers to access by disabled persons and provide auxiliary aids and services for hearing, vision or speech impaired persons by January 26, 1992. The regulations under Title III of the ADA are codifed at 26 CFR Part 36. We recommend that you and your attorney review the ADA and the regulations, and, if appropriate, your proposed lease or purchase agreement, to determine if this law would apply to you, and the nature of the requirements. These are legal issues. Voit Real Estate Services cannot give you legal advice on these issues. FLOOD DISCLOSURE If the premises are located in a Federally Designated Flood Zone, the real and personal property of Lessee situated on or in the Premises is not protected by the hazard insurance policy for the property carried by Lessor. Lessee is responsible far investigating the Flood Zone status of the Premises and obtaining insurance to cover Lessee's property if it so desires. ZONING/USE DISCLOSURE Prior to executing a lease, Lessee is responsible for determining that the zoning applicable to the property and Premises allows Lessee to use the property for its intended use of business, and that all building codes, packing requirements, and other governmental requirements, improvements required, and permits necessary have been met or are available to Lessee. Voit Real Estate Services has made no representations, except in writing, if any, concerning the zoning and allowable use of the Premises and any requirements that may be imposed upon lessee by any governmental agency. If Lessee's use of the Premises requires a Use Permit or other permits from a governmental authority it could take several months to obtain same, and Lessee may still be responsible for the payment of rent and other charges whether or not such permits are ultimately obtained. ALOUIST-PRIOLO SPECIAL EARTHQUAKE FAULT ZONING ACT The property and Premises described above (check which box applies) ^ is; ~ is not; D may or may not be situated in an Earthquake Fault Zone as designated under the Alquist-Priolo Earthquake Fault Zoning Act, Sections 2621-2630 inclusive of the California Public Resources Code; and, as such the construction of development on the property of any structure for human occupancy may be subject to the findings of a geologic report prepared by a geologist registered with the State of California, unless such report is waived by the city or wunty under the terms of that Act. No representations on this subject are made by Voit Real Estate Services, or its agents or employees and the Lessee/Purchaser is advised to make its own inquiry into this situation prior to entering into a lease or sale agreement: P:RRAC1Mirtonns\430 F StreeBNotice to Owners-LessorAOC Page 1 Of 2 5-25 I/oit REAL. ESTATE SERVICES By your signature below, you acknowledge that you have read and understand this disclosure and have received a copy: LESSOR: CITY OF CHULA VISTA, A MUNICIPAL CHARTERED CORPORATION OF THE STATE OF CALIFORNIA Name LESSEE: SOUTH BAY COMMUNITY SERVICES sy: Kathryn Lembo, CEO P:\TRACYl4irtarmsW30 F Streal\Notice to Owners-Lessor EOC Page 2 of 2 5-26 RESOLUTION NO 2012- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A LEASE AGREEMENT WITH SOUTH BAY COMMUNITY SERVICES FOR ACITY-OWNED BUILDING AND APPURTANANCES LOCATED AT 430 F STREET AND PAYMENT OF COMMISSION ASSOCIATED THEREWITH WHEREAS, the City of Chula Vista currently has office space significantly in excess of the capacity needed to conduct the City's day-to-day business; and WHEREAS, staff has specifically identified the Ken Lee Building, located at 430 F Street, as a city-owned building with office space in excess of what is needed for City operations now and in the near future; and WHEREAS, it is desirable to find suitable tenants to occupy, maintain and pay rent and utilities for unused city facilities until such time as they are needed for City operations or can be declazed as permanent excess and disposed of; and WHEREAS, on May 22, 2012, by City Council Resolution 2012-088, the City Council authorized the retention of a Real Estate Broker to market the Ken Lee Building; and WHEREAS, the broker, Voit Real Estate Services, has presented the City with a proposal from South Bay Community Services to lease this site; and WHEREAS, Council has evaluated the proposed lease and found it to be acceptable and in the City's best interest. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby approve a Lease Agreement with South Bay Community Services for City property located at 433 F Street. BE IT FURTHER RESOLVED, that the City Council of Chula Vista does hereby authorize the payment of commission for the services rendered by Voit Real Estate Services in accordance with the Exclusive Listing Agreement with Voit Real Estate Services; entere into May 22, 2012, by Resolution No.2012-088. ~~~ Presented by Appro}/ed ~s to Richard A. Hopkins ~'il'en R. Googins Director of Public Works City Attorney 5-27