Lease_with_Alameda_Business_Centre.pdf

MR

AIR COMMERCIAL REAL ESTATE ASSOCIATION

STANDARD INDUSTRIAL/COMMERCIAL

MULTI-TENANT LEASE - GROSS

1. Basic Provisions ("Basic Provisions").

1.1 Parties: This Lease ("Lease"), dated for reference purposes only March 31, 2014 , is made by and between ALAMEDA BUSINESS CENTRE, LTD

("Lessor") and YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF GREATER LOS ANGELES, a C a l i f o r n i a c o r p o r a t i o n .

("Lessee"), (collectively the "Parties", or individually a "Party").

1.2(a) Premises: That certain portion of the Project (as defined beiow), including all improvements therein or to be provided by Lessor under the terms of this Lease, commonly known by the street address of 2501 S. Alameda Street , located in the City of Los Angeles , County of Los Angeles , State of C a l i f o r n i a , with zip code 90058 as outlined on Exhibit A attached hereto ("Premises") and generally described as (describe briefly the nature of the Premises): an approximately 10, 968 sq. f t .

u n i t i n the Alameda Business Centre.

In addition to Lessee's rights to use and occupy the Premises as hereinafter specified. Lessee shali have non-exclusive rights to any utiity raceways of the building containing the Premises (''Buiiding")and to the Common Areas (as defined in Paragraph 2.7 below), but shall not have any rights to the roof, or exterior walls of the Building or to any other buildings in the Project. The Premises, the Building, the Common Areas, the land upon which they are located, along with ali other buildings and improvements thereon, are herein collectively refeired to as the "Project" (See also Paragraph 2)

1.2(b) Parking: 10 unreserved vehicle parking spaces . (See also Paragraph 2.6)

1.3 Term: 5 years and IH months ("Original Term") commencing A p r i l 15, 2014

("Commencement Date") and ending May 31, 2019 ("Expiration Date"). (See also Paragraph 3)

1.4 Early Possession: ("Early Possession Date"). (See also Paragraphs 3.2 and 3.3)

1.5 Base Rent: $ 8, 884 . 00 per month ("Base Rent"), payable on the 1st day of each month

("Due Date") commencing through May 31, 2015; then $9,150 per month through May 31, 2016; then $9,425.00 per month through May 31, 2017; then $9,708.00 per month through May 31, 2018;

then $10, 000.00 per month, t h e r e a f t e r . The BasexRent f o r the p e r i o d A p r i l 15, 2014 through May 14, 2014 s h a l l be abated.

. (See also Paragraph 4)

0 if this box is checked, there are provisions in this Lease for the Base Rent to be adjusted.

1.6 Lessee's Share of Common Area Operating Expenses: two & 15/100 percent ( 2.15 %) ("Lessee's Share").

Lessee's Share has been calculated by dividing the approximate square footage of the Premises by the approximate square footage of the ProjecL in the event that that size of the Premises and/or the Project are modified during the temn of this Lease, Lessor shall recaicuiate Lessee's Share to refiect such modification.

1.7 Base Rent and Other Monies Paid Upon Execution:

(a) Base Rent: $ 13, 326. 00 for the period May 15, 2014 t h r u June 30, 2014 .

(b) Common Area Operating Expenses: $ for the period .

(c) Security Deposit: $ 8, 884.00 ("Security Deposit"). (See also Paragraph 5)

(d) Other: $ for .

(e) Total Due Upon Execution of this Lease: $ 22,210.00

1.8 Agreed Use: General o f f i c e operations, warehousing & t r a i n i n g f a c i l i t y f o r the YWCA's HBI Job Corps program

. (See also Paragraph 6)

1.9 Insuring Party. Lessor is the "Insuring Party". (See also Paragraph 8)

1.10 Real Estate Brokers: (See also Paragraph 15)

(a) Representation: The foilowing real estate brokers (the "Brokers") and brokerage relationships exist in this transaction (check applicable boxes):

0 S t e r l i n q I n d u s t r i a l Properties represents Lessor exclusively ("Lessor's Broker");

0 CBRE represents Lessee exclusively ("Lessee's Broker"); or

• represents both Lessor and Lessee ("Dual Agency").

(b) Payment to Brokers: Upon oxecution and dolivory of this Leaso by both Parties, Lessor shail pay to the Brokers the brokerage fee agreed to in a separate written agreement (or if there is no such agrooment, tho cum of or % of tho total Base Ront for tho brokorago sorvicos rondorod by the Brokers).

4r44 Guarantor. The obligations of the Lessee under this Loase are to be guarantood by —

("Guarantor"). (See also Paragraph 3?)

1.12 Attachments. Attached hereto are the following, ail of which constitute a part of this Lease:

INITIALS INITIALS

©1998 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTG-3-12/04E

• an Addendum consisting of Paragraphs through

• a site pian depicting tiie Premises;

• a site plan depicting tiie Project;

• a current set of the Rules and Regulations for the Project;

• a current set of the Rules and Regulations adopted by the owners' association;

• a Work Letter;

0 otiier (specify); E x h i b i t "A"

2. Premises.

2.1 Letting. Lessor hereby ieases to Lessee, and Lessee hereby ieases from Lessor, Uie Premises, for the tenn, at the rentai, and upon ail of tiie temns, covenants and conditions set forth in tiiis Lease. Unless otherwise provided herein, any statement of size set fortii in this Lease, or that may have been used in calculating Rent, is an approximation which tiie Parties agree is reasonable and any payments based tiiereon are not subject to revision whetiier or not the actual size is more or less. NOTE: Lessee is advised to verify the actual size prior to executing this Lease.

2.2 Condition. Lessor shall deliver that portion of the Premises contained within tiie Building ("Unit") to Lessee broom clean and free of debris on ttie Commencement Date or the Early Possession Date, whichever first occurs ("Start Date"), and, so long as tiie required service contracts described in Paragraph 7.1(b) beiow are obtained by Lessee and in effect within tiiirty days following the Start Date, wanrants that tiie existing eiectricai, plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems ("HVAC"), loading doors, sump pumps, if any, and all otiier such elements in the Unit other than those constructed by Lessee, shall be in good operating condition on said date, that the structural elements of the roof, bearing walls and foundation of the Unit shail be free of material defects, and to the best of Lessors knowledge, that Uie Unit does not contain hazardous levels of any moid or fungi defined as toxic under applicable state or federal law. If a non-compliance with such wananty exists as of tiie

Start Date, or if one of such systems or elements should malfunction or fail within tiie appropriate warranty period. Lessor shali, as Lessor's sole obligation with respect to such matter, except as otherwise provided in this Lease, promptiy after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, malfunction or faiiure, rectify same at Lessor's expense. The warranty periods shall be as follows; (i) 6 montiis as to tiie HVAC systems, and (ii) 30 days as to the remaining systems and other elements of the UniL If Lessee does not give

Lessor the required notice within the appropriate wananty period, con-ection of any such non-compliance, malfunction or failure shall be the obligation of

Lessee at Lessee's sole cost and expense (except for the repairs to the fire sprinkler systems, roof, foundations, and/or bearing wails - see Paragraph

7). (continued in Paragraph 52.)

2.3 Compliance. Lessor wan-ants that to ttie best of its knowledge the improvements on the Premises, other than those constructed by a previous tenant or by Lessee or at Lessee's direction and the Common Areas, comply with Uie building codes that were in effect at the time tiiat each such improvement, or portion thereof, was consttucted, and also with all applicable laws, covenants or restrictions of record, regulations, and ordinances in effect on the Start Date ("Applicable Requirements"). Said warranty does not apply to the use to which Lessee VJ\\\ put the Premises, modifications which may be required by the Americans with Disabilities Act or any similar laws as a result of Lessee's use (see

Paragraph 49), or to any Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or to be made 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 that past uses of the Premises may no longer be allowed. If tiie Premises do not comply witii said vrarranty. Lessor shail, except as otiierwise provided, promptiy after receipt of written notice from Lessee setting forth with specificity tiie nature and extent of such non-compliance, rectify the same at Lessor's expense. If Lessee does not give Lessor written notice of a non-compliance witii this warranty within-6 months 2 months following the Start Date, con-ection of that non-compliance shall be the obligation of Lessee at Lessee's sole cost and expense. If the Applicable Requirements are hereafter changed so as to require during the term of this Lease the construction of an addition to or an alteration of tiie Unit, Premises and/or Building, the remediation of any Hazardous Substance, or tiie reinforcement or other physical modification of ttie Unit

Premises and/or Building ("Capital Expenditure"), Lessor and Lessee shall allocate the cost of such wori< as follows;

(a) Subject to Paragraph 2.3(c) below, if such Capital Expendihjres are required as a result of tiie specific and unique use of Uie

Premises by Lessee as compared with uses by tenants in general. Lessee shail be fully responsible for the cost Uiereof, provided, however, that if such

Capital Expenditure is required during the last 2 years of this Lease and the cost thereof exceeds 6 months' Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in writing, within 10 days after receipt of Lessee's termination notice that Lessor has elected to pay the difference between the actuai cost thereof and the amount equal to 6 months' Base Rent if Lessee elects termination. Lessee shail immediately cease

Uie use of the Premises which requires such Capital Expenditure and deliver to Lessor written notice specifying a termination date at ieast 90 days thereafter. Such termination date shall, however, in no event be eariier than the last day that Lessee couid legally utilize the Premises witiiout commencing such Capital Expenditure.

(b) If such Capital Expenditure is not the result of tiie specific and unique use of tiie Premises by Lessee (such as, govemmentally mandated seismic modifications), then Lessor and Lessee shail allocate Uie obligation to pay for the portion of such costs reasonably attiibutable to Uie

Premises pursuant to the formula set out in Paragraph 7.1(d) a formula based on the useful life; provided, however, that if such Capital Expenditure is required during the last 2 years of tiiis Lease or if Lessor reasonably determines that it is not economically feasible to pay its share tiiereof. Lessor shall have the option to terminate this Lease upon 90 days prior written notice to Lessee unless Lessee notifies Lessor, in writing, witiiin 10 days after receipt of Lessor's termination notice that Lessee will pay for such Capital Expenditure, if Lessor does not eiect to terminate, and fails to tender its share of any such Capital Expenditure, Lessee may advance such funds and deduct same, witii Interest, from Rent until Lessor's share of such costs have been fully paid, if Lessee is unable to finance Lessor's share, or if the balance of the Rent due and payable for the remainder of tills Lease is not sufficient to fully reimburse Lessee on an offset basis. Lessee shall have tiie right to terminate this Lease upon 30 days written notice to Lessor.

(c) Notwittistanding the above, the provisions concerning Capital Expenditures are intended to apply oniy to non-voluntary, unexpected, and new Applicable Requirements. If the Capital Expenditures are instead tiiggered by Lessee as a result of an actual or proposed change in use, change in intensity of use, or modification to the Premises then, and in that event. Lessee shall either (i) immediately cease such changed use or intensity of use and/or take such other steps as may be necessary to eliminate the requirement for such Capital Expenditure, or (ii) complete such Capital Expenditure at its own expense. Lessee shall not have any right to terminate this Lease.

2.4 Acknowledgements. Lessee acknowiedges tiiat (a) it has been advised by Lessor and/or Brokers to satisfy itself with respect to the condition of the Premises (including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements and tiie Americans with Disabilities Act), and their suitability for Lessee's intended use, (b) Lessee has made such investigation as it deems necessary with reference to such matters and assumes ali responsibility therefor as the same relate to its occupancy of the Premises, and (c) neittier Lessor, Lessor's agents, nor Brokers have made any oral or written representations or wananties witii respect to said matters other than as set forth in this Lease, in addition. Lessor acknow/ledges tiiat; (i) Brokers have made no representations, promises or vrananties conceming Lessee's ability to honor the Lease or suitability to occupy the Premises, and (ii) it is Lessor's sole responsibiiity to investigate ttie financiai

( i f PAGE 2 OF 18 capability and/or suitability of all proposed tenants.

2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall be of no force or effect if immediately prior to the Start Date Lessee was the owner or occupant of the Premises. In such event, Lessee shali be responsible for any necessary con-ective wori<.

2.6 Vehicle Parking. Lessee shall be entitled to use the number of Pari<ing Spaces specified in Paragraph 1.2(b) on those portions of the Common Areas designated from time to time by Lessor for parking. Lessee shali not use more parking spaces than said number. Said partying spaces shall be used for parking by vehicles no larger than full-size passenger automobiles or pick-up trucks, herein called "Permitted Size Vehicles."

Lessor may regulate the loading and unloading of vehicles by adopting Rules and Regulations as provided in Paragraph 2.9. No vehicles other than

Pemiitted Size Vehicles may be parked in the Common Area without the prior written permission of Lessor. In addition:

(a) Lessee shall not permit or allow any vehicles that belong to or are controlled by Lessee or Lessee's employees, suppliers, shippers, customers, contractors or invitees to be loaded, unloaded, or parked in areas other than those designated by Lessor for such activities.

(b) Lessee shall not service or store any vehicles in the Common Areas.

(c) if Lessee pennits or allows any of the prohibited activities described in this Paragraph 2.6, then I t shall be a material Default of th is Lease, and Lessor shall have the right without notice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor.

2.7 Common Areas - Definition. The term "Common Areas" is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Project and interior utility raceways and installations within the Unit that are provided and designated by the Lessor from time to time for the general non-exclusive use of Lessor, Lessee and other tenants of the Project and their respective employees, suppliers, shippers, customers, contractors and invitees, including parking areas, loading and unloading areas, trash areas, roadways, walkways, driveways and landscaped areas.

2.8 Common Areas - Lessee's Rights. Lessor grants to Lessee, for the benefit of Lessee and its employees, suppliers, shippers, contractors, customers and invitees, during the terni of this Lease, the non-exclusive right to use, in common vwth others entitled to such use, the

Common Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by Lessor under the terms hereof or under the ternis of any njles and regulations or restrictions governing the use of the Project Under no circumstances shall the right herein granted to use the

Common Areas be deemed to include the right to store any properiy, temporarily or permanently, in the Common Areas. Any such storage shall be permitted only by the prior written consent of Lessor or Lessor's designated agent which consent may be revoked at any time. In the event that any unauthorized storage shall occur, then Lessor shall have the right without notice, in addition to such other rights and remedies that it may have, to remove the property and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor.

2.9 Common Areas - Rules and Regulations. Lessor or such other person(s) as Lessor may appoint shall have the exclusive control and management of the Common Areas and shall have the right from time to fme, to establish, modify, amend and enforce reasonable rules and regulations ("Rules and Regulations") for the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or tenants of the Building and the Project and their invitees. Lessee agrees to abide by and conform to ail such Rules and Regulations, and shall use its best efforts to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and confomi. Lessor shall not be responsible to Lessee for the non-compliance with said Rules and Regulations by other tenants of the ProjecL

2.10 Common Areas - Changes. Lessor shall have the right in Lessor's sole discretion, from time to time:

(a) To make changes to the Common Areas, including, without limitation, changes in the location, size, shape and number of driveways, entrances, partying spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility raceways;

(b) To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Premises remains available;

(c) To designate other land outside the boundaries of the Project to be a part of the Common Areas;

(d) To add additional buildings and improvements to the Common Areas;

(e) To use the Common Areas while engaged in making additional improvements, repairs or alterations to the ProjecL or any portion thereof; and

(f) To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Project as

Lessor may, in the exercise of sound business judgment deem to be appropriate.

3. Term.

3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as specified in Paragraph 1.3.

3.2 Early Possession. If Lessee totally or partially occupies the Premises prior to tiie Commencement Date, the obligation to pay

Base Rent shall be abated for the period of such eariy possession. All other terms of this Lease (including but not iimited to the obligations to pay

Lessee's Share of Common Area Operating Expenses, Real Property Taxes and insurance premiums and to maintain the Premises) shail be in effect during such period. Any such eariy 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 tiie Commencement Date. If, despite said efforts. Lessor is unable to deliver possession as agreed. Lessor shall not be subject to any liability therefor, nor shall such failure affect ttie validity of this Lease or change the Expiration Date. Lessee shall not however, be obligated to pay Rent or perform its otiier obligations until Lessor delivers possession of the Premises and any period of rent abatement ttiat Lessee would ottierwise have enjoyed shali njn from the date of the delivery of possession and continue for a period equal to what Lessee would otherwise have enjoyed, but minus any days of delay caused by the acts or omissions of Lessee, if possession is not delivered within 60 days after the Commencement Date, Lessee may, at its option, by notice in writing within 10 days after tiie end of such 60 day period, cancel this Lease, in which event the Parties shall be discharged fi-om all obligations hereunder. If such written notice is not received by Lessor witiiin said 10 day period. Lessee's right to cancel shall tenninate. Except as otiienn/ise provided, if possession is not tendered to Lessee by the Start Date and Lessee does not terminate this Lease, as aforesaid, any period of rent abatement that Lessee would othenAnse have enjoyed shall run from the date of delivery of possession and continue for a period equal to what Lessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of

Lessee. If possession of the Premises is not delivered within 4 montiis after tiie Commencement Date, this Lease shali terminate unless ottier agreements are reached between Lessor and Lessee, in writing.

3.4 Lessee Compliance. Lessor shall not be required to tender possession of the Premises to Lessee until Lessee complies witii its obligation to provide evidence of insurance (Paragraph 8.5). Pending delivery of such evidence. Lessee shall be required to perfomi all of its obligations under this Lease from and after ttie Start Date, including tiie payment of Rent notwithstanding Lessor's election to withhold possession pending receipt of such evidence of insurance. Further, if Lessee is required to perfomi any other conditions prior to or concurrent witii ttie Start Date, tiie Start Date shall occur but Lessor may elect to witiihold possession until such conditions are satisfied.

4. Rent

4.1. Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease (except for the Security Deposit) are deemed to be rent ("Rent").

4.2 Common Area Operating Expenses. Lessee shall pay to Lessor during the term hereof, in addition to the Base Rent, Lessee's

Share (as specified in Paragraph 1.6) of att the increases only, in the Common Area Operating Expenses, as hereinafter defined, during each calendar year of the term of this Lease, in accordance with the following provisions:

(a) "Common Area Operating Expenses" are defined, for purposes of this Lease, as all costs incurred by Lessor relating to the ownership and operation of the Project including, but not limited to, the following:

(i) The operation, repair and maintenance, in neat clean, good order and condition, but not the roplacemont (seo subparagraph (e)), of the following:

(aa) The Common Areas and Common Area improvements, including parking areas, loading and unloading areas, trash areas, roadways, parkways, walkways, driveways, landscaped areas, bumpers, irrigation systems. Common Area lighting facilifies, fences and gates, elevators, roofs, and roof drainage systems.

(bb) Exterior signs and any tenant directories.

(cc) Any fire sprinkler systems.

(ii) The cost of water, gas, electricity and telephone to sen/ice the Common Areas and any utilities not separately metered.

(iii) Trash disposal, pest control services, property management, security services, owner's association dues and fees, the cost to repaint the exterior of any structuresand the cost of any environmental inspections.

(iv) Reserves set aside for maintenance and , repair and replacement of Common Areas and Common Area equipment

(v) Any increase above the Base Real Property Taxes (as defined in Paragraph 10).

(vi) Any "insurance Cost Increase" (as defined in Paragraph 8).

(vii) Any deductible portion of an insured loss conceming the Building or the Common Areas.

(viii) Auditors', accountants' and attomeys' fees and costs related to the operation, maintenance, repair and replacement of the Project.

{vitt)(ix) The cost of any Capital Expenditure to the Building or the Project not covered under the provisions of

Paragraph 2.3 provided; however, that Lessor shall allocate the cost of any such Capital Expenditure over a 12 year period and Lessee shall not be required to pay more than Lessee's Share of 1/144ai of the cost of such Capital Expenditure in any given montii.

(x) Any other services to be provided by Lessor that are stated elsewhere in this Lease to be a Common Area

Operating Expense.

(b) Any Common Area Operating Expenses and Real Property Taxes that are specifically attiibutable to the Unit, the Building or to any otiier building in the Project or to the operation, repair and maintenance tiiereof, shail be allocated entirely to such Unit Building, or other building.

This allocation includes any damage caused t o the Common Areas or Buildings by Lessee, Lessee's vendor's. Lessee's Invitees and guests. However, any Common Area Operating Expenses and Real Property Taxes tiiat are not specifically attributable to the Building or to any otiier building or to the operation, repair and maintenance thereof, shall be equitably allocated by Lessor to all buildings in tiie Project

(c) The inclusion of tiie improvements, fecilities and services set fortti in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor to either have said improvements or fecilities or to provide those services unless the Project already has the same. Lessor already provides Uie services, or Lessor has agreed elsewhere in this Lease to provide the same or some of them.

(d) Lessee's Share of Common Area Operating Expenses is payable monthly on Uie same day as ttie Base Rent is due hereunder.

The amount of such payments shall be based on Lessor's estimate of the annual Common Area Operating Expenses. Wittiin 60 days after written request (but not more than once each year) Lessor shall deliver to Lessee a reasonably detailed statement showing Lessee's Share of the actual

Common Area Operating Expenses incurred during Uie preceding year. If Lessee's payments during such year exceed Lessee's Share, Lessor shall credit the amount of such over-payment against Lessee's future payments. If Lessee's payments during such year were less Uian Lessee's Share, Lessee shall pay to Lessor the amount of the deficiency within 10 days after delivery by Lessor to Lessee of the statement

(e) Except as providod in paragraph 4.2(a)(viii), Common Area Operating Expenses shall not inolude the cost of replacing equipment or capital components such as tho roof, foundations, exterior walls or Common Area capital improvements, such as the parking lot paving, elevators?

fences that have a useful life for accounting purposes of 5 yoars or more.

(f) Common Area Operating Expenses shall not include any expenses paid by any tenant directiy to third parties, or as to which Lessor is otherwise reimbursed by any third party, other tenant or insurance proceeds.

4.3 Payment Lessee shall cause payment of Rent to be received by Lessor in lawful money of Uie United States, without offset or deduction (except as spedfically 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 statement or invoice prepared by Lessor is inaccurate such inaccuracy shall not constitute a waiver and Lessee shall be obligated to pay tiie amount set forth in this Lease. Rent for any period during the term hereof which is for less than one full calendar montii shall be prorated based upon tiie actual number of days of said month. Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or place as Lessor may from Ume to Ume designate in wriUng. Acceptance of a payment wrhich is less than the amount then due shall not be a waiver of Lessor's rights to the balance of such Rent, regardless of Lessor's endorsement of any check so steting. In Uie event tiiat any check, draft or otiier instiument of payment given by Lessee to Lessor is dishonored for any reason. Lessee agrees to pay to Lessor the sum of $25 in addition to any

Late Charge and Lessor, at its option, may require all future Rent be paid by cashier's check. Payments will be applied first to accrued late charges and attorney's fees, second to accrued interest then to Base Rent and Common Area Operating Expenses, and any remaining amount to any other outstanding charges or costs.

5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for Lessee's faithful performance of its obligations under this Lease. If Lessee fails to pay Rent or otherwise Defeults under ttiis Lease, Lessor may use, apply or retain all or any portion of said Security Deposit for ttie payment of any amount due Lessor or to reimburse or compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by reason ttiereot If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall within 10 days after written request therefor deposit monies witti Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. If tiie Base

Rent increases during the term of tiiis Lease, Lessee shall, upon written request from Lessor, deposit additional monies witti Lessor so that the totel amount of the Security Deposit shall at all times bear the same proportion to the increased Base Rent as the initial Security Deposit bore to the initial

Base RenL Should the Agreed Use be amended to accommodate a material change in the business of Lessee or to accommodate a sublessee or assignee. Lessor shail 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 thereot If a change in control of Lessee occurs during Uiis Lease and foiiowing such change the financial condition of Lessee is, in Lessor's reasonable judgment significantiy reduced. Lessee shall deposit such additional monies with

Lessor as shall be sufficient to cause the Security Deposit to be at a commerdaliy reasonable level based on such change in financial condition.

Lessor shall not be required to keep the Security Deposit separate from its general accounts. Witiiin 14 days after the expiration or terminatiod of this

Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and othenwise within 30 days after the Premises have been vacated pursuant to Paragraph 7.4(c) below. Lessor shall retum that portion of the Security Deposit not used or applied by Lessor. No part of the Security Deposit shall be considered to be held in trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease. Lessee hereby grants to L655or a security interest in the Security Deposit in accordance with applicable provisions ofthe California Commercial Code.

Lessee hereby waives the provisions of Section 1950.7 o f t h e California Civil Code and all other provisions of law, now or hereafter In effect, which (i) establish the tme frame by which Lessor must refund a security deposit under a lease, andlor (ii) provide t h a t

Lessor may claim from the Security Deposit only those sums reasonably necessary t o remedy defaults in the payment of rent, t o repair damage caused by Lessee or t o clean the Premises, i t being agreed t h a t Lessee may, in addit ion, claim those sums specified in th is Section 5 andlor those sums reasonably necessary t o compensate Lessor for any loss or damaqe caused by Lessee's breach of th is Lease or the ac t s or omission of Lessee or any employee, agent, contractor or Invitee of Lessee.

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 the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of or causes damage to or interference with neighboring businesses, uti l i t ies, 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 Building or the mechanical or electrical systems therein, and/or is not significantly more burdensome to the ProjecL If Lessor elects to withhold consent Lessor shall vnthin 7 days after such request give written notification of same, which notice shall include an explanation of Lessor's objections to the change in the Agreed Use.

6.2 Hazardous Substances.

(a) Reportable Uses Require ConsenL The term "Hazardous Substance" as used in this Lease shali mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials expected to 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 govemmental authority, or (iii) a basis for potential liability of Lessor to any govemmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products or fractions thereof. 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) wnth ail Applicable

Requirements. "Reportable Use" shall mean (i) the installation or use of any above or below ground storage tank, (ii) the generation, possession, storage, use, transportation, 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 govemmental authority, and/or (iii) the presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be given to persons entering or occupying the Premises or neighboring properties.

Notwithstanding the foregoing. Lessee may use any ordinary and customary materials reasonably required to be used in the normal course of the

Agreed Use, ordinary office 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, Project or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition. Lessor may condition its consent to any Reportable Use upon receiving such additional assurances as Lessor reasonably deems necessary to protect itself, 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 or termination) of protective modifications (such as concrete encasements) and/or 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 in, on, under or about the Premises, other than as previously consented to by Lessor, Lessee shall immediately give written notice of 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 Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Lessee's sole cos t and expense.comply with all te rms of th is Lease and Applicable Requirements and take all investigatory and/or remedial action reasonably recommended, whether or not fomnally ordered or required, for the cleanup of any and ali contamination o t and for the maintenance, security and/or monitoring of the Premises, Project or neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or involving any

Hazardous Substance brought onto the Premises during the term of this Lease, by or for Lessee, or any third pariy. The standard of remediation shall be in a manner and to a level sat is factory t o Lessor in i t s sole discretion, but in no event t o a level and in a manner less than which complies with all Applicable Reciuirements and does not l imit any future uses o f t h e Project or req^uire the recording of any deed restr ict ion (regardless of existing zoning), notice regarding the Project, or engineering controls.

(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 attomeys' 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 this Lease with respect to underground migration of any Hazardous Substance under the Premises from areas outside of the Project not caused or contributed to by Lessee). Lessee's obligations shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease wnth respect to 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 the cost of remediation, which suffered as a direct result of Hazardous Substances on the Premises prior to Lessee taking possession or which are caused by the gross negligence or vinllful misconduct of Lessor, its agents or employees. Lessor's obligations, as and when required by the Applicable Requirements, shall include, but not be limited to, the cost of investigation, removal, remediation, restoration and/or abatement and shall survive the expiration or termination of this Lease.

(f) Investigations and Remediations. Lessor shall retain the responsibility and pay for any investigations or remediation measures required by governmental entities having jurisdiction witii respect to the existence of Hazardous Substances on the Premises prior to Lessee taking possession, unless such remediation measure is required as a result of Lessee's use (including "Alterations", as deflned in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for such payment Lessee shall cooperate fully in any such activities at the request of Lessor, including allowing Lessor and Lessor's agents to have reasonable access to the Premises at reasonable times in order to carry out Lessor's investigative and remedial responsibilities.

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(g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e)) occurs during the term of this

Lease, unless Lessee is legally responsible therefor (in which case Lessee shall make the investigation and remediation thereof required by the te rms of th is Lease and the Applicable Requirements and this Lease shall continue in full force and effect, but subject to Lessor's rights under Paragraph

6.2(d) and Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect or (ii) if the estimated cost to remediate such condition exceeds 12 times the then monthly Base Rent or $100,000, whichever is greater, give written notice to Lessee, wnthin 30 days after receipt by Lessor of knowledge of the occun-ence of such Hazardous Substance Condition, of Lessor's desire to terminate this Lease as of the date 60 days following the date of such notice. In the event Lessor elects to give a termination notice. Lessee may, wflthin 10 days thereafter, give written notice to Lessor of Lessee's commitment to pay the amount by which the cost of the remediation of such Hazardous Substance Condition exceeds an amount equal to 12 times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with said funds or satisfectory assurance thereof within 30 days foilowing such commitment. In such event this Lease shall continue in full force and effect and Lessor shall proceed to make such remediation as soon as reasonably possible after the required funds are available. If Lessee does not give such notice and provide the required funds or assurance thereof within the time provided, this Lease shail terminate as of the date specified in Lessor's notice of tennination.

6.3 Lessee's Compliance with Applicable Requirements. Except as otherwise provided in this Lease, Lessee shall, at Lessee's sole expense, fully, diligently and in a timely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Lessor's engineers and/or consultants which relate in any manner to such

Requirements, without regard to whether said Requirements are now in effect or become effective after the Start Date. Lessee shall, within 10 days after receipt of Lessor's written request provide Lessor with copies of all pennits and other documents, and other information evidencing Lessee's compiiance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, waming, complaint or report pertaining to or involving the feilure of Lessee or the

Premises to comply with any Applicable Requirements. Likewise, Lessee shall immediately give written notice to Lessor ot (i) any water damage to the

Premises and any suspected seepage, pooling, dampness or other condition conducive to the production of mold; or (ii) any mustiness or other odors that might indicate the presence of moid in the Premises.

6.4 Inspection; Compliance. Lessor and Lessor's "Lender" (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 otherwise at reasonable times after reasonable notice, for tiie purpose of inspecting tiie condition of the Premises and for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid by Lessor, unless a violation of Applicable Requirements, or a Hazardous Substance condition (see Paragraph 9.1) is found to exist or be imminent or the inspection is requested or ordered 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 related to tiie violation or contamination. In addition. Lessee shall provide copies of all relevant material safety data sheets (MSDS) to Lessor within 10 days of the receipt of written request therefor.

7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.

7.1 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), 7.2 (Lessor's Obligations), 9 (Damage or Destiuction), and 14 (Condemnation), Lessee shall, at Lessee's sole expense, keep the

Premises, Utility Installations (intended for Lessee's exclusive use, no matter where located), and Alterations in good order, condition and repair

(whether or not the portion of the Premises requiring repairs, or the means of repairing tiie same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee's use, any prior use, tiie elements or the age of such portion of the Premises), including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment electiical, lighting facilities, boilers, pressure vessels, fixtures, interior walls, interior surfaces of exterior wails, ceilings, floors, windows, doors, plate glass, and skylights but excluding any items which are the responsibility of Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good order, condition and repair, shall exercise and periderm good maintenance practices, specifically including the procurement and maintenance of the service contracts required by Paragraph 7.1(b) below.

Lessee's obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements Uiereon or a part thereof in good order, condition and state of repair.

(b) Service Contracts. Lessee Lessor shall, at Lessee's sole expense, procure and maintein contracts, with copies to Lessor, in customary form and substance for, and with contractors specializing and experienced in tiie maintenance of the following equipment and improvements, if any, if and when installed on the Premises: (i) HVAC equipment (ii) boiler and pressure vessels, (iii) clarifiers, and (iv) (ii) any other equipment if reasonably required by Lessor. Howovor, Locsor rosorvos tho right upon notico to Loeseo, to procuro and maintain any or all of such service contracts, and Lessee shall roimburso Lossor, upon demand, for tho cost thoroot

(c) Failure to Perform. If Lessee feils to perform Lessee's obligations under this Paragraph 7.1, Lessor may enter upon tiie

Premises after 4© 5 days' prior written notice to Lessee (except in tiie case of an emergency, in which case no notice shall be required), perfonn such obligations on Lessee's behalt and put the Premises in good order, condition and repair, and Lessee shall promptiy pay to Lessor a sum equal to 115% of the cost tiiereot

(d) Roplacomont. Subjoct to Lossoe's indemnification of Lossor as sot fortii in Paragraph 8.7 below, and without relieving Lossoo of liability resulting from Lossee's failure to oxoroise and perform good maintonance practices, if on item described in Paragraph 7.1(b) cannot bo repaired othor than at a cost which is in oxcoco of 50% of the cost of replacing such itom, tiien such item shall be roplacod by Loscor, and the cost thoroof shall bo prorated between tho Parties and Lessoo shall only bo obligated to pay, each month during tho romaindor of the torm of this Loaso, on the date on which Baso Ront is duo, an amount oqual to the product of multiplying the cost of such roplacemont by a fraction, the numerator of which is ono, and tho donominator of which is 144 (ie. 1/1 '14th of tho cost per month). Lessee shall pay intorost on tho unamortizod balance but may prepay its obligation at any time.

7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Common Area Operating

Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to

Paragraph 4.2, shail keep in good order, condition and repair the foundations, exterior walls, sti-uctural condition of interior bearing walls, exterior root fire sprinkler system. Common Area fire alann and/or smoke detection systems, fire hydrants, parking lots, walkvrays, parkways, driveways, landscaping, fences, signs and utility systems serving Uie Common Areas and ail parts thereot as well as providing the sen/ices for which Uiere is a

Common Area Operating Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to paint ttie exterior or interior surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or replace windows, doors or plate glass of the Premises. Lessee expressly waives Uie benefit of any statute now or hereafter in effect to Uie extent it is inconsistent with the terms of this Lease., including Sections 1941 and 1942 of the California

Civil Code, or t o terminate th i s Lease because of Lessor's failure t o keep the building. Industrial Center or Common Areas in good order, condition and repair.

7.3 Utility Installations; Trade Fixtures; Alterations.

(a) Definitions. The tenn "Utility Installations" refers to all floor and window coverings, air and/or vacuum lines, power panels, PAGE 6 OF 18 d 1 electrical distribution, security and fire protection systems, communication cabling, lighting fixtures, 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 tenm "Alterations" shall mean any modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned Alterations and/or Utility Installations" are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a).

(b) Consent. Lessee shall not make any…