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HomeMy WebLinkAbout08-23-2017 Steering Committee Agenda Packet.pdf Orange County Sanitation District Wednesday, August 23, 2017 Regular Meeting of the ^" 5:00 P.M. STEERING COMMITTEE Administration Building Conference Rooms A & B 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 AGENDA CALL TO ORDER DECLARATION OF QUORUM: Clerk of the Board PUBLIC COMMENTS: If you wish to address the Committee on any item, please complete a Speaker's Form (located at the table at the back of the room) and submit it to the Clerk of the Board or notify the Clerk of the Board the item number on which you want to speak. Speakers will be recognized by the Chairperson and are requested to limit comments to three minutes. REPORTS: The Committee Chairperson and the General Manager may present verbal reports on miscellaneous matters of general interest to the Directors. These reports are for information only and require no action by the Directors. Strategic Planning Process CONSENT CALENDAR: The Consent Calendar Items are considered to be routine and will be enacted, by the Committee, after one motion, without discussion. Any items withdrawn from the Consent Calendar for separate discussion will be considered in the regular order of business. 1. APPROVAL OF MINUTES (Clerk of the Board) RECOMMENDATION: Approve Minutes of the Regular Meeting of the Steering Committee held on July 26, 2017. NON-CONSENT: 2. BANDILIER CIRCLE PROPERTY LEASE (Rob Thompson) RECOMMENDATION: Recommend to the Board of Directors to: Approve the Lease Agreement with the Dickler Corporation, DBA Chefs Toys, for Orange County Sanitation District's real property located at 18484 Bandilier Circle, Fountain Valley, California, in an as-is condition, commencing August 24, 2017 through 08/23/2017 Steering Committee Agenda Page 1 of 4 March 31, 2019, at a lease rate of $13,500 per month for the first 12 months, and increasing to $15,000 per month for the balance of the term, in a form approved by General Counsel. INFORMATION ITEMS: None. CLOSED SESSION: During the course of conducting the business set forth on this agenda as a regular meeting of the Board, the Chairperson may convene the Board in closed session to consider matters of pending real estate negotiations,pending orpotential litigation, or personnel matters,pursuant to Government Code Sections 54956.8, 54956.9, 54957 or 54957.6, as noted. Reports relating to (a)purchase and sale of real property; (b) matters of pending or potential litigation; (c)employment actions or negotiations with employee representatives;or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Board during a permitted closed session and are not available for public inspection. At such time as the Board takes final action on any of these subjects, the minutes will reflect all required disclosures of information. CONVENE IN CLOSED SESSION. (1) CONFERENCE WITH LEGAL COUNSEL RE EXISTING LITIGATION (Gov. Code Section 54956.9(d)(1)) — 1 case Roy Handy, Melissa Forman-Woodbridge v. Orange County Sanitation District, Superior Court of California, County of Orange, Case No. 30-2017-00934699 (2) CONFERENCE WITH LEGAL COUNSEL RE ANTICIPATED LITIGATION Initiation of litigation (Gov. Code Section 54956.9(d)(4))— 1 case (A) Potential eminent domain action Property Owner: Sukut Real Properties LLC. Properties: 18429 Pacific St. Fountain Valley, CA, APN No. 156-163-09; 18410 Bandilier Cir. Fountain Valley, CA, APN No. 156-163-10; 18368 Bandilier Cir. Fountain Valley, CA, APN No. 156-163-11. (3) CONFERENCE WITH REAL PROPERTY NEGOTIATORS (Government Code Section 54956.8) Property: 10950 Virginia Cir. Fountain Valley, CA-APN No.156-165-05; 10870 Spencer Ave. Fountain Valley, CA -APN No.156-163-07; 18480 Pacific St. Fountain Valley, CA - APN NCA 56-165-04; 18430 Pacific St. Fountain Valley, CA -APN NCA 56-165-06; 0812312017 Stearns Committee Agenda Page 2 of 4 18370 Pacific St. Fountain Valley, CA - APN No.156-165-08; 18429 Pacific St. Fountain Valley, CA - APN No.156-163-09; 18410 Bandilier Cir. Fountain Valley, CA- APN No.156-163-10; 18368 Bandilier Cir. Fountain Valley, CA- APN No.156-163-11; 10700 Spencer St. Fountain Valley, CA -APN No.156-163-16; 10700 Spencer Ave. Fountain Valley, CA - APN No.156-154-07; 18350 Mt. Langley St. Fountain Valley, CA -APN No.156-154-08; 18386 Mt. Langley St. Fountain Valley, CA -APN No.156-154-06; 18385 Bandilier Cir. Fountain Valley, CA- APN No.156-163-12; 18401 Bandilier Cir. Fountain Valley, CA- APN No.156-163-13; 18424 Mt. Langley St. Fountain Valley, CA -APN No.156-154-05; 18435 Bandilier Cir. Fountain Valley, CA- APN No.156-163-14; 18475 Bandilier Cir. Fountain Valley, CA- APN No.156-163-15; 10725 Ellis Ave. Fountain Valley, CA -APN No.156-154-04; and 10540 Talbert Ave. Fountain Valley, CA -APN No.156-151-03 Agency negotiators: General Manager, Jim Herberg; Assistant General Manager, Bob Ghirelli; Director of Finance and Administrative Services, Lorenzo Tyner, Director of Engineering, Rob Thompson; Engineering Managers, Kathy Millea and Jeff Mohr; CIP Project Manager, Tom Grant; Kevin Turner and John Gallivan, Cushman and Wakefield. Negotiating parties: Valley, Business Park, APN Nos. 156-165-05, 156-165-06, 156-163-07; DK-USA LLC, APN No.156-165-04; Fountain Valley Industrial Parcel 13, APN No.156-165-08; Sukut Real Properties LLC, APN Nos. 156-163-09, 156-163-10, 156-163-11; The Ins Trust Shabtai, Nevon, APN No. 156-163-16; The Ins Trust, APN No. 156-154-07; K &A Investments LP, APN No. 156-154-08; Fountain Valley Star LLC, APN No. 156-154-06; TN Sheet Metal Inc., APN No. 156-163-12; 18401 Bandilier LLC, APN No. 156-163-13; Phone Lilly Lin-Lin TR, APN No. 156-154-05; JDK Partners, APN No. 156-163-14; Chandler Real Properties, APN No. 156-163-15; Ellis Avenue LLC, APN No. 156-154-04; and SFII Fountain Valley LLC, APN No. 156-151-03 Under negotiation: Instruction to negotiator will concern price and terms of payment. RECONVENE IN REGULAR SESSION. CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED SESSION: 08/23/2017 Steering Committee Agenda Page 3 of 4 OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS IF ANY: ADJOURNMENT: To the Steering Committee meeting scheduled for Wednesday, September 27, 2017 at 5:00 p.m. Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation District Clerk of the Board's office at (714)593-7433 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested. Agenda Posting: In accordance with the requirements of California Government Code Section 54954.2,this agenda has been posted outside the main gate of the Sanitation District's Administration Building located at 10844 Ellis Avenue, Fountain Valley, California, and on the Sanitation District's website at www.ocsd.com, not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda item, including any public records distributed less than 72 hours prior to the meeting to all,or a majority of the Board of Directors, are available for public inspection in the office of the Clerk of the Board. Aaenda Description: The agenda provides a brief general description of each item of business to be considered or discussed. The recommended action does not indicate what action will be taken. The Board of Directors may take any action which is deemed appropriate. NOTICE TO DIRECTORS: To place items on the agenda for a Committee or Board Meeting, items must be submitted to the Clerk of the Board 14 days before the meeting. Kelly A. Lore Clerk of the Board (714)593-7433 klore(o3ocsd.com For any questions on the agenda,Committee members may contact staff at: General Manager Jim Herberg (714)593-7300 iherberoGDomd.com Assistant General Manager Bob Ghirelli (714)593-7400 rohirelli[&,ocsd.com Director of Engineering Rob Thompson (714)593-7310 rthomoson(clocsd.com Director of Environmental Services Jim Colston (714)593-7450 icolston(docsd.com Director of Finance and Lorenzo Tyner (714)593-7550 Itvner(Momd.com Administrative Services Director of Human Resources Celia Chandler (714)593-7202 cchandleraocsd.com Director of Operations&Maintenance Ed Torres 714 593-7080 etomes ocsd.com 08/23/2017 Steering Committee Agenda Page 4 of 4 ITEM NO. 1 MINUTES OF THE STEERING COMMITTEE Orange County Sanitation District Wednesday, July 26, 2017 at 5:00 p.m. A regular meeting of the Steering Committee of the Orange County Sanitation District was called to order by Chair Sebourn on Wednesday, July 26, 2017 at 5:05 p.m. in the Administration Building of the Orange County Sanitation District. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: Greg Sebourn, Board Chair Jim Herberg, General Manager David Shawver, Board Vice-Chair Bob Ghirelli, Assistant General Manager Chad Wanke, Administration Committee Celia Chandler, Director of Human Chair Resources John Withers, Operations Committee Jim Colston, Director of Environmental Chair Services Ellery Deaton, Member-At-Large Rob Thompson, Director of Engineering Tim Shaw, Member-At-Large Ed Torres, Director of Operations & Donald Wagner, Member-At-Large Maintenance Lorenzo Tyner, Director of Finance & COMMITTEE MEMBERS ABSENT: Administrative Services None Kelly Lore, Clerk of the Board Janine Aguilar Al Garcia Tom Grant Laurie Klinger Tina Knapp Kathy Millea Jeff Mohr Andrew Nau Man Nguyen OTHERS PRESENT: Brad Hogin, General Counsel Kevin Turner, Cushman &Wakefield John Gallivan, Cushman &Wakefield PUBLIC COMMENTS: No public comments were provided. 07/2W2017 Steering Committee Minutes Page 1 of 5 REPORTS: Chair Sebourn announced the dates and times of the upcoming legislative tours for Senator Josh Newman (August 2 at 1:00 p.m.) and Assembly Member Phillip Chen (August 4 at 1:30 p.m.) and announced a Save the Date for the OCSD State of the District, which will be held on Friday, November 17 at 8:00 a.m. at the Mile Square Golf Course in Fountain Valley. General Manager Herberg reported on the following: a recent operational issue with equipment at Plant No. 2, tour with Assemblymember Sharon Quirk-Silva and Vice-Chair Dave Shawver, and tomorrow's "Take Your Kid to Work Day" at OCSD. Mr. Herberg also stated that the Operations and Administration Committees are dark in August. He then provided a brief overview of the forecasted items that will proceed directly to the Board. Mr. Herberg reminded the Committee of the upcoming ACC-OC sponsored OC Leadership Symposium, which begins on October 6 and runs consecutively for five weeks. He also announced that staff will take extra precautions with operations and maintenance in the area of next week's US Open of Surfing. CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED, AND DULY CARRIED TO: Approve Minutes of the Regular Meeting of the Steering Committee held on June 28, 2017. AYES: Deaton; Sebourn; Shaw; Shawver and Wanke NOES: None ABSTENTIONS: None ABSENT: Wagner and Withers NON-CONSENT: Director Wagner arrived at 5:14 p.m. 2. TITLE XVI BUREAU OF RECLAMATION FUNDING OPPORTUNITY FOR (SP-173) THE EFFLUENT REUSE STUDY PROJECTS (Robert Ghirelli) Assistant Manager Bob Ghirelli provided a brief overview of the application and usage of this grant. MOVED. SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Adopt Resolution No. OCSD 17-12 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District approving and authorizing the application for the Title XVI Water Recycling Projects under the 07/25/2017 Steering Committee Minutes Page 2 of 5 Water Infrastructure Improvements for the Nation (WIIN) Act Effluent Reuse Feasibility Studies Program Grant funds and the execution of grant documents with the United States Department of the Interior, Bureau of Reclamation." AYES: Deaton; Sebourn; Shaw; Shawver; Wagner and Wanks NOES: None ABSTENTIONS: None ABSENT: Withers Director Withers arrived at 5:15 p.m. 3. ORANGE COUNTY SANITATION DISTRICT RESPONSE TO GRAND JURY REPORT (Jim Herberg) Mr. Herberg provided a brief history of the initial Grand Jury request, subsequent responses, and legal findings. General Counsel Brad Hogin also responded to questions regarding the proposed Resolution and related precedence. MOVED. SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve the Orange County Sanitation District response to the Orange County Grand Jury Report entitled, 'Pension Enhancements: A Question of Government Code Compliance" published May 17, 2017; and B. Adopt Resolution No. OCSD 17-13 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District establishing a procedure to ensure compliance with Government Code section 7507 transparency requirements." AYES: Deaton; Sebourn; Shaw; Shawver, Wagner, Wanke and Withers NOES: None ABSTENTIONS: None ABSENT: None 4. APPRAISAL TO ACQUIRE REAL PROPERTY (Rob Thompson) Director of Engineering Rob Thompson provided an informative PowerPoint presentation with a chronological timeline of the potential and completed acquisitions of nearby Fountain Valley property. Mr. Thompson introduced contracted brokers, Kevin Turner and John Gallivan (Cushman & Wakefield), and also responded to questions from the Committee regarding city heighttstory restrictions and variances. The Committee delayed voting on this item until after Closed Session. 07/25/2017 Steering Committee Minutes Page 3 of 5 MOVED. SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Authorize the General Manager to enter into an agreement with George, Hamilton, Jones, Inc. Real Estate Appraisers & Consultants to conduct an appraisal of real property located at 18429 Pacific Street,18410- 18436 Bandilier Circle, and 18368-18375 Bandilier Circle to prepare the Orange County Sanitation District to initiate negotiations to acquire the same property in compliance with Government Code section 7267.1. AYES: Deaton; Sebourn; Shaw; Shawver; Wagner; Wanke and Withers NOES: None ABSTENTIONS: None ABSENT: None INFORMATION ITEMS: None. CLOSED SESSION: CONVENED IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTIONS 54956.9(d)(4), 54956.8. 54956.9(d)(1) & 54957(b)(1): The Committee convened in closed session at 5:31 p.m. to discuss four items. Confidential minutes of the Closed Session have been prepared in accordance with the above Government Code Sections and are maintained by the Clerk of the Board in the Official Book of Confidential Minutes of Board and Committee Closed Session Meetings. RECONVENED IN REGULAR SESSION: The Committee reconvened in regular session at 6:01 p.m. CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED SESSION: General Counsel Brad Hogin did not provide a report. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: None. 07/2W2017 Steering Committee Minutes Page 4 of ADJOURNMENT: Chair Sebourn declared the meeting adjourned at 6:02 p.m. to the next Steering Committee meeting to be held on Wednesday, August 23, 2017 at 5:00 p.m. Submitted by: Kelly A. Lore Clerk of the Board 07/2W2017 Steenng Committee Minutes Page 5 d 5 STEERING COMMITTEE Melting Dat0 TOBE.Or Dir. os/zs/I7 oB/zs/v AGENDA REPORT ItemNumber Item Number z Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: BANDILIER CIRCLE PROPERTY LEASE GENERAL MANAGER'S RECOMMENDATION Approve the Lease Agreement with the Dickler Corporation, DBA Chefs Toys,for Orange County Sanitation District's real property located at 18484 Bandilier Circle, Fountain Valley, California, in an as-is condition, commencing August 24, 2017 through March 31, 2019, at a lease rate of $13,500 per month for the first 12 months, and increasing to $15,000 per month for the balance of the term, in a form approved by General Counsel. BACKGROUND In February 2017, the Orange County Sanitation District (Sanitation District) purchased the property at 18484 Bandilier Circle in Fountain Valley across the street from the current Administration Building. The property is currently vacant. Staff was approached with an unsolicited offer from Chef's Toys, represented by Lee and Associates, through the Sanitation District's representative Cushman & Wakefield, to lease the warehouse space for a term of just over 19 months. The lease rate would be $13,500 per month for the first 12 months, increasing to $15,000 per month for the balance of the term. The total projected revenue is $270,483.87. The tenant will accept the building in an as-is condition. The tenant will pay all utilities and provide its own janitorial services and alarm system. The Sanitation District will continue to provide landscape maintenance in conjunction with its other property. The tenant would be prohibited from any and all public uses, warehouse sales, or public cash and carry sales. RELEVANT STANDARDS • Protection of Orange County Sanitation District assets PROBLEM Vacant properties invite opportunities for vandalism and other security problems. The Sanitation District has experienced several incidents in its short term of ownership of this parcel. Additionally, the property is not realizing its potential revenue generation without a tenant. Page 1 of 2 PROPOSED SOLUTION Leasing the building would increase visibility of activity and discourage vandalism and loitering in the area. The tenant would be responsible for all security and interior janitorial services. In addition, the Sanitation District would be collecting revenue while eliminating security and janitorial services. The timing and length of the lease work well with future demolition and construction timelines. TIMING CONCERNS The proposed tenant would like to take possession of the warehouse as soon as possible and has requested occupancy immediately following approval by the Board of Directors. RAMIFICATIONS OF NOT TAKING ACTION The proposed tenant would have to make alternative plans for warehouse space and the Sanitation District could lose a viable tenant. PRIOR COMMITTEE/BOARD ACTIONS November 2016 — Property acquisition for 18475 Pacific Avenue and 18484 Bandilier Circle, Fountain Valley, California. ADDITIONAL INFORMATION The assessor parcel is 18484 Bandilier Circle; however, the street address and utility connections are associated with 18480 Bandilier Circle. CEQA N/A FINANCIAL CONSIDERATIONS The Sanitation District will provide a one-time commission fee of$16,229.03 (6%) of the total lease value of$270,483.87, with an equally agreed upon split between the two real estate firms. This request complies with authority levels of the Sanitation District's Purchasing Ordinance. ATTACHMENT The following attachment(s)is included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.corn with the complete agenda package: • Commercial Lease Agreement between Orange County Sanitation District and Chef's Toys Page 2 of 2 OCSD COMMERCIAL LEASE- BANDILIER PROPERTY LEASE BY AND BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE DICKLER CORPORATION,DBA CHEFS TOYS 1. General Provisions("General Provisions"). 1.1. Parties: This Lease ("Lease"), entered into this day of TWENTY-FOURTH (24T") day of August 2017,is made by and between the Orange County Sanitation District("Lessor")and The Dickler Corporation, dba Chef's Toys ("Lessee"). Lessor and Lessee shall be referred to herein collectively as the"Parties,'or individually as a"Party". 1.2. Premises: That Certain real property, including all improvements thereon, under the terms of this Lease,and commonly known as 18484 Bandilier Circle,located in the City of Fountain Valley,County of Orange, State of California, commonly referred to as 18480 Bandilier Circle, comprised of a part of a commercial building approximately 24,073 square feet ("Premises"), a depiction of which is attached hereto as Attachment"1." 1.3. Term: Nineteen(19)months and eight(8)days("Original Tenn")commencing on August 24,2017 ("Commencement Date")and ending March 31,2019("Expiration Date"). 1.4. Rent: Lessee shall pay to Lessor rent on a modified gross basis in the amount stated in the table below ("Monthly Base Rent") which excludes payments for building utility costs, security, and janitorial costs, all of which are the responsibility of the Lessee. All monetary obligations of Lessee to Lessor as described in this Paragraph are deemed to be and shall be referred to herein as rent ("Rent"). DATE MONTHLY BASE RENT August 24,2017—August 31,2017 $3,483.87 or$435.48 per day) September 1,2017—August 31,2018 $13,500 or$450.00 per day) September 1,2018—March 31,2018 $15,000 1.5.. Initial Rent and Security Deposit Paid Upon Execution: Lessee shall deposit with Lessor the Monthly Base Rent for last eight days of August 2017 and the Monthly Base Rent for September 2017 in the total amount of sixteen thousand nine hundred eighty-three dollars and eighty-seven cents ($16,983.87) and a Security Deposit in the amount of fifteen thousand dollars $15,000.00 ("Security Deposit")upon execution of the Lease Agreement 1.6. Agreed Use: Lessor agrees to Lease the Premises to Lessee for the sole purpose of a warehouse for storage of restaurant equipment and for any related uses thereto. (See also Paragraph 5). Any and all public uses,warehouse sales,or public cash and carry sales are strictly prohibited. 1.7. Real Estate Brokers: (a) Representation: The following real estate brokers represent Lessee exclusively ("Lessee's Broker"). Lessee's Broker can be contacted at: Brokerage Firm: Lee 8 Associates Attn: Jim Snyder Title: Senior Vice President Address: 100 Bayview Circle Newport Beach,CA 92660 Telephone: (949)724-4731 Facsimile: (949)623-6331 Federal ID No: 01197433 Broker/Agent DIRE Lic. #00872220 1262100.1 The following real estate brokers (Lessor's Brokers) represent Lessor exclusively ("Lessor's Broker").Lessors Broker can be contacted at: Brokerage Firm: Cushman&Wakefield Attn: John Gallivan Title: Executive Director Address: 2020 Main Street, Suite 1000 Irvine, CA 92614 Telephone: (949)955-7647 Facsimile: (949)474-0405 Federal ID No: 13-2899582 Broker/Agent ORE Lic. #01096309 (b) Payment to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor shall pay a total brokerage fee of six percent (6%) %)of the total Monthly Base Rent payable for the Original Term which shall be divided three and one quarter percent(3.25%) to Lessee's Broker,for the brokerage services rendered by Lessee's Broker, and two and three quarters percent (2.75%) to Lessor's Broker for the brokerage services rendered by Lessors Broker. 2. Premises. 2.1. Leasing.Lessor hereby leases to Lessee,and Lessee hereby leases from Lessor,the Premises,for the Term, at the Rent, and upon all of the terms, covenants and conditions set forth in this Lease. While the approximate square footage of the Premises may have been used in the marketing of the Premises,the Base Rent stated herein is NOT tied to square footage and is not subject to adjustment should the actual size be determined to be different.Lessee is to verify the actual size of the Premises prior to executing this Lease. 2.2. Condition. Lessee acknowledges and accepts the Premises in an "AS-IS" condition. Unless otherwise stated in Paragraph 2.5 herein, Lessor shall deliver the Premises to Lessee in an"AS- IS"Condition on the Commencement Date so long as the required service contracts described in Paragraph 6.1(b) below are obtained by Lessee and in effect within thirty days of the Commencement Date. Lessor makes no warranties (a)that the existing electrical, plumbing, fire sprinkler,lighting,heating,ventilating and air conditioning systems("HVAC"),loading doors,sump pumps,if any,roofing,and all other such elements in the Premises,are in good operating condition on said Commencement Date, (b) that the structural elements of the roof, bearing walls and foundation of any buildings on the Premises(the"Building")are free of material defects,or(c)that the Premises do not contain hazardous levels of any mold or fungi defined as toxic under applicable state or federal law. 2.3. No Warranties.Lessor makes no warranties conceming the improvements on the Premises.Lessee shall be responsible for any modifications which may be required by the Americans with Disabilities Act or any similar laws as a result of Lessee's use, or to any Alterations or Utility Installations (as defined in Paragraph 6.3(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 Lessee is required to make any changes or modifications to the Premises so as to comply with building codes, applicable laws, covenants or restrictions of record, regulations and ordinances during the Term of this Lease ("Capital Expenditure"), Leases shall be fully responsible for the cost thereof. 2.4. Acknowledgements. Lessee acknowledges that: (a) it has been given an opportunity to inspect, evaluate and measure the Premises, (b)it has been advised by Lessor and/or Brokers to satisfy itself with respect to the size and condition of the Premises(including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with applicable laws and regulations and the Americans with Disabilities Act), and the suitability of the Premises for Lessee's intended use, (c) Lessee has made such investigation and evaluation as it deems necessary with reference to such matters and assumes all responsibility therefor as the same relates to its occupancy and use of the Premises,(d)Lessee is not relying on any representation as to the size or condition of the Premises made by Brokers or Lessor, (e) the square footage of the Premises was not material to Lessee's decision to lease the Premises and pay the Rent stated herein,and(f)neither Lessor,Lessor's 1262100.1 agents, nor Brokers have made any oral or written representations or warranties with respect to the above referenced matters other than as set forth in this Lease.In addition,Lessor acknowledges that(i) Brokers have made no representations,promises or warranties concerning Lessee's ability to honor the Lease or Lessee's suitability to occupy the Premises;and(ii)it is Lessofs sole responsibility to investigate the financial capability and/or suitability of Lessee. 2.5. Lessor's Responsibility. Lessor is leasing the Premises in an"AS-IS"condition. Lessor takes no responsibility for the condition of the Premises or any repairs or maintenance required for the allowed use of the Premises by Lessee. Unless otherwise specified herein, Lessor shall not be responsible for any other repairs or improvements to the Premises. 2.6. Lessee's Responsibility.Lessee is leasing the Premises in an"AS-IS"condition.Lessee may repair and maintain the Premises at its own cost. 3. Term. 3.1. Term.The Commencement Date, Expiration Date,and Original Term of this Lease are as specified in Paragraph 1.3. Lessor and Lessee may mutually agree in writing, signed by both Parties, to terminate this Lease prior to the Expiration Date. 3.2. Delay In Possession.If Lessor is unable to deliver possession by the Commencement Dale,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 obligated to pay Rent or perform its other obligations until Lessor delivers possession of the Premises 3.3. Lessee Compliance.Lessor shall not be required to deliver possession of the Premises to Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8). Pending delivery of such evidence,Lessee shall be required to perform all of its obligations under this Lease from and after the Commencement Date, including the payment of Rent, notwithstanding Lessor's election to withhold possession pending receipt of such evidence of insurance. Furthermore, if Lessee is required to perform any other conditions prior to or concurrent with the Commencement Date,the Commencement Data shall occur but Lessor may elect to withhold possession until such conditions are satisfied. 3.4. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. In the event that Lessee continues to occupy the Premises beyond the expiration or terrnination of the Lease,then Lessee shall become a tenant-at-sufferance only,and the Base Rent shall be increased to either 150%of the Base Rent applicable immediately preceding the expiration or termination of the Lease, or 150%of the market rental rate for the Premises,whichever is greater. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee,and Lessee shall be responsible for all damages to Lessor caused by any such holdover(including consequential damages). 4. Rent. 4.1. Rent Defined.All monetary obligations of Lessee to Lessor under the terms of this Lease as set forth in Paragraph 1.4 herein are deemed to be Rent. 4.2. Payment. Lessee shall pay Lessor Rent on or before the day on which it is due,which is no later than the first day of each month.All Rent payments shall be made in the amounts stated in Sectiori above. Rent for any period during the Term of this Lease, which is for 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: Orange County Sanitation District Attn:Angela Brandt Post Office Box 8127 Fountain Valley,CA 92728-8127 Lessor may,from time to time, designate in writing a different person or place to make payments. Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessor's rights to the balance of such Rent, regardless of Lessofs endorsement of any check so stating. 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 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 1262100.1 will be applied first to accrued late charges and attorneys'fees, second to accrued interest,then to Base Rent,and any remaining amount to any other outstanding charges or costs. 4.3. Late Charge.Lessee acknowledges that late payment of Rent or other sums due will cause Lessor to incur costs, the exact amount of which will be difficult to ascertain. Accordingly, if any Rent payment or any other sum due from the Lessee is not received by Lessor within ten (10) days of the date on which it is due, Lessee shall pay to Lessor, in addition to the Rent due and any other amounts owing, the lesser of the maximum amount allowed by law or ten percent (10%of such overdue amount. In addition,Lessee shall pay Lessor any attomeys'fees or notice/process service fees incurred by Lessor by reason of Lessee's failure to pay Rent or other charges when due hereunder. In addition, all unpaid amounts shall accrue interest at the lesser of the maximum rate allowed by law or 10%per annum until paid. S. Use. 5.1. Use.Lessee shall use and occupy the Premises only for the Agreed Use,or any other legal use which is reasonably comparable to the Agreed Use,and for no other purpose.Lessee shall not cause or permit the Premises to be used in any way which (i) constitutes a violation of any law, ordinance, or governmental regulation or order regulating the manner of use by Lessee of the Premises (including, without limitation,any law ordinance,regulation or order relating to Hazardous Materials),(it)constitutes a nuisance or waste,or fill)increases the cost of any insurance relating to the Premises paid by Lessor. Lessee shall obtain,at its sole cost and expense,all governmental permits,licenses and authorizations of whatever nature required by any governmental agencies having jurisdiction over Lessee's use of the Premises. Further, Lessee, at its sole cost, will comply with all applicable governmental laws and regulations in connection with its operations within the City of Fountain Valley. Lessee will also comply with any and all reasonable rules and regulations promulgated by Lessor.No signage shall be installed on the Premises or within the City of Fountain Valley without receipt of the prior written approval of Lessor.Other than guide,signal and seeini dogs,Lessee shall not keep or allow in the Premises any pets,animals,birds,fish,or reptiles. 5.2. Hazardous Substances. (a) Reportable Uses Require Consent.The term"Hazardous Substance"as used in this Lease shall mean flammable items, explosives, radioactive materials, hazardous or toxic substances, material or waste or related materials, including any substances defined as or included in the definition of"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic substances" now or subsequently regulated under any applicable federal, state or local laws or regulations, including without limitation petroleum-based products, hydrocarbons,gasoline, and/or crude oil, paints, solvents, lead, cyanide, DDT, acids, pesticides, ammonia compounds and other chemical products, asbestos, PCBs and similar compounds, by-products or fractions thereof, and including any different products and materials which are subsequently found to have adverse effects on the environment or the health and safety of person,and 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 governmental authority, or(ill) a basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. 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)with all applicable laws and regulations. "Reportable Use" shall mean (i) the installation or use of any above or below ground storage tank, (ill 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 fled with,any governmental authority, and/or (ill)the presence at the Premises of a Hazardous Substance with respect to which any applicable laws and 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 laws and regulations, 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 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, 1262100.1 contamination, injury and/or liability, including,but not limited to,the installation(and removal on or before the expiration or termination of the Lease) of protective modifications (such as concrete encasements). (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 Remedialion.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 expense,comply with all applicable laws and regulations and take all investigatory and/or remedial action reasonably recommended,whether or not formally ordered or required,for the cleanup of any contamination of,and for the maintenance, security and/or monitoring of the Premises 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 party.The obligations contained in this Paragraph shall survive the expiration or termination of this Lease. (d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its directors,officers,agents,employees,lenders and ground lessor,if any,hamiless 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 this Lease with respect to underground migration of any Hazardous Substance under the Premises from adjacent properties 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 with respect to Hazardous Substances, unless specifically so agreed by both Parties in writing at the time of such agreement. (a) 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, claims, and/or actions, including the cost of remediation,which result from Hazardous Substances which existed on the Premises prior to Lessee's occupancy or which are caused by the gross negligence or willful misconduct of Lessor, its agents or employees. Lessor's obligations,as and when required by the applicable laws and regulations,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 Remedialions.Lessor shall retain the responsibility and pay for any investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous Substances on the Premises prior to Lessee's occupancy, unless such remediation measure is required as a result of Lessee's use(including"Alterations",as defined in paragraph 6.3(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 Lessors agents to have reasonable access to the Premises at reasonable times in order to carry out Lessors investigative and remedial responsibilities. 5.3. Lessee's Compliance with Applicable Laws and Regulations. Except as otherwise provided in this Lease,Lessee shall,at Lessee's sole expense,fully,diligently and in a timely manner,materially comply with federal, state, and local laws, regulations, and ordinances ("Applicable Requirements"), the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Lessors engineers and/or consultants,without regard to whether such Applicable Requirements are now in effect or become effective after the Commencement Dale. Lessee shall,within 10 days after receipt of Lessors written request, provide Lessor with copies of all permits and other documents, and other information evidencing Lessee's compliance 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, warning,complaint or report pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable Requirements.Likewise,Lessee shall immediately give written notice to Lessor 1262100.1 of: (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 mold in the Premises. 5.4. Inspection; Compliance. Lessor and Lessors agents and/or consultants shall have the right to enter into and upon the Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable notice,for the purpose of inspecting the condition of the Premises and for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid by Lessor. In the event an inspection is required as a result of a violation of Applicable Requirements, or a Hazardous Substance on, in, under, or upon the Premises is found to exist or be imminent, or the inspection is requested or ordered by a governmental authority, Lessee shall upon written request by Lessor, reimburse Lessor for the cost of such inspection, so long as such inspection is reasonably related to the 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 a written request therefor. 6. Maintenance; Repairs,Utility Installations;Trade Fixtures and Alterations. 6.1. Lessee's Obligations. (a) Unless otherwise expressly provided for herein, Lessee shall be responsible for utility costs for electricity and water and shall provide its own security for the Premises, and, 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 the 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 or any prior use), including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities, fire protection system, fixtures, walls (interior and exterior), foundations, ceilings, roofs, roof drainage systems, floors, windows, doors, plate glass,skylights,landscaping,driveways, parking lots,fences,retaining walls,signs,sidewalks and parkways located in,on,or adjacent to the Premises.Lessee,in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices, specifically including the procurement and maintenance of the service contracts required by Paragraph 6.1(b) below. Lessee's obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order,condition and state of repair. Lessee shall, during the term of this Lease, keep the exterior appearance of the Building in a first-class condition (including, e.g. graffiti removal) consistent with the exterior appearance of other similar facilities of comparable age and size in the vicinity, including, when necessary,the exterior repainting of the Building.Lessee may,upon written consent of Lessor,make changes and/or alternations to the interior and exterior portions of the Building consistent with all Applicable Requirements. Lessee may return the Premises in the same condition as received. Lessee is not responsible for any structural failure or subfloor plumbing failure if failure is related solely to age and/or circumstances entirely outside of Lessee's control. (b) Service Contracts. Lessee shall, at Lessee's sole expense, procure and maintain contracts, with copies to Lessor, with contractors specializing and experienced in the maintenance of the following equipment and improvements, if any, if and when installed on the Premises: (i) HVAC equipment, (ii) fire extinguishing systems, including fire alarm and/or smoke detection, (III) landscaping and irrigation systems, (iv) roof covering and drains, and (v) clarifiers. However, Lessor reserves the right, upon written notice to Lessee,to procure and maintain any or all of such service contracts,and Lessee shall reimburse Lessor,upon demand,for the cost thereof. (0) Failure to Perform. If Lessee fails to perform Lessee's obligations under this Paragraph 6.1, Lessor may enter upon the Premises after 10 days' prior written notice to Lessee (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Lessee's behalf,and put the Premises in good order,condition and repair,and Lessee shall promptly pay to Lessor a sum equal to 115%of the cost thereof. 6.2. Lessors Obligations.Other than maintenance of landscaping or as expressly provided herein, it is intended by the Parties hereto that Lessor have no obligation or responsibility, in any manner whatsoever,to repair and maintain the Premises, or the equipment therein,all of which obligations are intended to be that of the Lessee. It is the intention of the Parties that the terms of this Lease govern the respective obligations of the Parties as to maintenance and repair of the Premises, and 1262100.1 they expressly waive the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease. 6.3. Utility Installations;Trade Fixtures;Alterations. (a) Definitions. The term "Utility Installations" refers to all floor and window coverings, air and/or vacuum lines, power panels, 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 term"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 6.4(a). (b) Consent. Lessee shall not make any Alterations or Utility Installations to the Premises without Lessor's prior written consent. Lessee may, however, make non-structural Alterations or Utility Installations to the interior of the Premises (excluding the roof) without such consent, but upon notice to Lessor, as long as they are not visible from the outside,do not involve puncturing, relocating or removing the roof or any existing walls, will not affect the electrical, plumbing, HVAC, and/or life safety systems, and the cumulative cost thereof during this Lease as extended does 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. Notwithstanding the foregoing, Lessee shall not make or permit any roof penetrations and/or install anything on the roof without the prior written approval of Lessor. Lessor may, as a precondition to granting such approval, require Lessee to utilize a contractor chosen and/or 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 form with detailed plans.Consent shall be deemed conditioned upon Lessee's:(i)acquiring all applicable governmental permits, (ii)furnishing Lessor with copies of both the permits and the plans and specifications prior to commencement of the work,and(III)compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built plans and specifications. For work which costs an amount in excess of one month's Base Rent, Lessor may condition its consent upon Lessee providing a lien and completion bond in an amount equal to 150% of the estimated cost of such Alteration or Utility Installation. (c) Liens; Bonds. Lessee shall not permit to be placed against the Premises, or any part of the Premises, any mechanics', materialmen's, contractors, subcontractors' or other liens. Lessee shall indemnify, defend (with counsel acceptable to Lessor) and hold Lessor harmless from all liability for any and all liens, claims and demands, together with the costs of defense and reasonable attorneys'fees related to same.Lessor reserves the right,at any time and from time to time,to post and maintain on the Premises,any portion thereof or on the improvements on the Premises any notices of non-responsibility or other notice as may be desirable to protect Lessor against liability. In addition to and not in limitation of Lessor's other rights and remedies under this Lease, should Lessee fail, within ten (10) days of a written request from Lessor, to discharge any lien or claim related to Lessee's use of the Premises,or to indemnify,hold harmless and defend Lessor from and against any loss, damage, injury, liability or claim arising out of Lessee's use of the Premises as provided herein,then Lessor, at its option, may elect to pay any lien, claim, loss, demand, injury, liability or damages, or settle or discharge any action or satisfy any judgment and all costs, expenses and attorneys' fees incurred in doing so shall be paid to Lessor by Lessee upon written demand, together with interest thereon at the rate of ten percent (10%)per annum(but in no event more than the maximum interest rate permitted by law)from the date incurred or paid through and including the date of payment.If Lessee shall contest the validity of any such lien,claim or demand,then Lessee shall,at its sole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof.If Lessor shall require,Lessee shall furnish a surety bond in an amount equal to 150%of the amount of such contested lien, claim or demand, indemnifying Lessor against liability for the same. If Lessor elects to participate in any such action, Lessee shall pay Lessors attorneys'fees and costs. 1262100.1 6.4. Ownership; Removal;Surrender;and Restoration. (a) Ownership.All Alterations and 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 Owned Alterations and Utility Installations. Unless otherwise instructed per paragraph 6.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall,at the expiration or termination of this Lease,become the property of Lessor and be surrendered by Lessee with the Premises. (b) Removal. By written notice to Lessee from Lessor, no earlier than 90 days and not later than 30 days prior to the Expiration Date of the Lease, Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without Lessor's consent as required herein. (c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier termination date,with all of the improvements, parts and surfaces thereof broom clean and free of debris,and in good operating order,condition and state of repair,ordinary wear and tear excepted."Ordinary wear and tear"shall not include any damage or deterioration that would have been prevented by good maintenance practice. Lessee shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations and/or Utility Installations,furnishings,and equipment as well as the removal of any storage tank installed by or for Lessee. Lessee shall completely remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee,or any third party(except Hazardous Substances which were deposited via underground migration from areas outside of the Premises)even if such removal would require Lessee to perform or pay for work that exceeds statutory requirements.Trade Fixtures shall 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 deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 6.4(c)without the express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 3.5. In the event Lessee makes any changes and/or alterations to the interior or exterior portions of the Building consistent with Applicable Requirements as provided in Paragraphs 6.1(a) and 6.3 (b), Lessee shall not be required to restore the Building to the original configuration upon the expiration or termination of this Lease. 7. Insurance;Indemnity. 7A. Payment For Insurance.Except as expressly provided herein, Lessee shall provide and maintain at its own expense during the term of this Lease the following insurance covering its operations and activities under this Lease. Such insurance shall be provided with insurers licensed to do business in the State of California,with a rating of at least WWI,"according to the latest Best's Key Rating Guide. Evidence of such insurance shall be delivered to Lessor on or before the effective date of this Lease. The Certificate of Insurance shall specifically identify this Lease and shall contain express conditions that Lessor is to be given at least thirty(30)days advance written notice by the insurer,of any material modification in ortennination of insurance.Such insurance,shall be primary to and not contributing with any other insurance maintained by Lessor, and shall name the Lessor, and its directors,officers,agents and employees as additional insureds.Premiums for policy periods commencing prior to or extending beyond the Lease term shall be prorated to correspond to the Lease term. 7.2. Liability Insurance. (a)Carried by Lessee.Lessee shall obtain and provide during the Term of this Lease the following insurance: (i) General Liability Insurance.Comprehensive general liability insurance covering the Premises in contractual, broad form property damage, and personal injury, with a combined single limit of not less than two million dollars ($2,000,000.00) per occurrence.Lessee shall be responsible for the costto obtain and provide General Liability Insurance coverage for the Premises. ("GL Insurance Coverage Cost"). The GL Insurance Coverage Cost stated herein does not include Lessee's responsibility for obtaining insurance coverage for Lessee's operations and activities, including but not limited to,Lessee's Utility Installations or Trade Fixtures.Lessee shall be solely responsible for all costs to obtain and provide insurance for Lessee's operations and activities. 1262100.1 till Workers Compensation Insurance.Workers compensation insurance in an amount and form meeting all applicable requirements of the California Labor Code, covering all persons providing services by or on behalf of Lessee and all risks to such persons with a minimum limit of$1,000,000.00. (III) Fire and Extended Coverage Insurance.A standard form all-risk policy for the actual cash value covering fire and extended coverage,theft, burglary,vandalism, malicious mischief, sprinkler leakage and other perils of direct physical loss or damage insuring the personal property,trade fixtures, equipment, and improvements of Lessee. lb) Carried by Lessor. Lessor shall pay any amount exceeding the GL Insurance Coverage Cost for the Premises up to but not exceeding three thousand dollars($3,000.00).Lessor shall not be responsible for paying any liability insurance coverage for Lessee's operations and activities, including, but not limited to Utility Installations and Trade Fixtures. Lessor may elect to maintain separate liability insurance, in addition to, and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein. (c)Proof of Coverage:The Vendor shall furnish OCSD with original certificates and amendatory endorsements effecting coverage. Said policies and endorsements shall conform to the requirements herein stated. All certificates and endorsements are to be received and approved by OCSD before work commences. OCSD reserves the right to require complete, certified copies of all required insurance policies, including endorsements,affecting the coverage required,at any time. The following are approved forms that must be submitted as proof of coverage: • Certificate of Insurance ACORD Form 25 or other equivalent Certificate of Insurance form. • Additional Insured (ISO Form)CG2010 1185 or the combination of(ISO Forms)CG 2010 10 01 and CG 2037 10 01.All other Additional Insured endorsements must be submitted for approval by OCSD, and OCSD may reject alternatives that provide different or less coverage to OCSD. • Additional Insured Submit endorsement provided by carrier for OCSD approval. • Waiver of Subrogation State Compensation Insurance Fund Endorsement No. 2570 or equivalent. • Cancellation Notice State Compensation Insurance Fund Endorsement No. 2065 or equivalent. 7.3. Failure to Maintain Insurance.Failure by Lessee to procure or maintain required insurance as specified in Paragraph 7.2 above shall constitute an event of default, upon which Lessor may immediately terminate this Lease.Lessee's operations shall be subject to suspension by Lessor during any period Lessee fails to maintain required insurance in full force and effect. 7.4. Risk of Loss. Lessor shall not be liable for any injury to Lessee's business or loss of income therefrom or for injury to any person or for any damage to personal property, good, wares, or merchandise sustained by Lessee or others that are caused by any defects in said Premises,crony service facilities or due to the happening of an accident,including any damage caused by water,wind storm, or by any gas, steam, electrical wiring, sprinkler system, plumbing, heating or conditioning apparatus,or acts or omissions of co-Lessees or other occupants of the Premises,if any,or hereafter occurring therein or due to any part or appurtenance thereof,including any and all furniture,fixtures, and equipment of Lessee becoming out of repair,or from any act or omission of Lessee. 7.5. Waiver of Subrogation.Lessee hereby releases Lessor from liability and waives all right of recovery against Lessor for any loss in or about the Premises from perils insured against Lessor under its fire, property,or liability insurance contracts, including any all risk endorsements thereof,whether due to negligence or any other cause,provided that this Paragraph shall be inapplicable if it would have the effect,but only to the extent it would have the effect,of invalidating any insurance coverage of Lessor or Lessee. Nothing herein shall relieve Lessee of its obligation to request and procure,to the extent 1262100.1 available on a commercially reasonable basis,the necessary endorsements required to validly waive subrogation in accordance with this Paragraph. Lessee shall, at the request of Lessor, execute and deliver to Lessor a Waiver of Subrogation in the form and content as reasonably required by Lessor's insurance carrier. To the extent Lessee fails to maintain the insurance required under the terms of this Lease,such failure shall be a defense to any claim asserted by Lessee against Lessor by reason of any loss sustained by Lessee due to circumstances that would have been covered had such required insurance been maintained. 7.6. Lessor's Substitute Performance. If Lessee fails to procure, maintain and pay for, at the times and for the durations specified in this Lease, any insurance required by this Lease or fails to carry insurance required by law or governmental regulation, Lessor, at any time or from time to time and without notice, may,at its option, procure such insurance and pay the premiums therefore, in which event Lessee shall repay all sums so paid by Lessor, together with interest thereon as provided in the Lease,and any costs or expenses incurred by Lessor in connection therewith within ten(10)days following Lessors written demand to Lessee for such payment. 7.7. Indemnity.Lessee,as a material part of the consideration to be rendered to Lessor, hereby agrees that it will defend (with counsel acceptable to Lessor), indemnify, and hold harmless Lessor and all of its directors, officers, employees, agents, and independent contractors thereof from any loss, damage, injury, accident, casualty, liability, claim, cost or expense (including, but not limited to, reasonable attorneys'fees)of any kind or character to any person or property(collectively,"Claims") arising from or related to Lessee's use and occupancy of the Premises, the conduct of Lessee's business, and/or any act or omission of Lessee, its employees, agents, contractors, or invitees. Lessee shall not be liable for such Claims to the extent and in the proportion that the same is ultimately determined to be attributable to the sole gross negligence or intentional misconduct of Lessor. Lessee hereby assumes all risk of damage to property or injury to person in or about the Premises from any cause, and Lessee hereby waives all claims in respect thereof against Lessor. Lessor shall not be liable for any loss or theft of any property on the Premises. The indemnity obligations contained herein under this Paragraph shall survive the expiration or termination of this Lease. 7.8. Exemption of Lessor and its Agents from Liability. Notwithstanding the sole gross negligence, intentional misconduct or breach of this Lease by Lessor or its agents,neither Lessor nor its directors, officers,employees,agents,and or independent contractors shall be liable under any circumstances for(1) injury or damage 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 damage or injury is caused by or results from fire,steam,electricity,gas,water or rain, indoor air quality, the presence of mold or from the breakage, leakage,obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause,whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the building of which the Premises are a part,or from other sources or places, (ii) any damages arising from any act or neglect of any other Lessee of Lessor or from the failure of Lessor or its agents to enforce the provisions of any other lease,or(III)injury to Lessee's business or for any loss of income or profit therefrom. Instead,it is intended that Lessee's sole recourse in the event of such damages 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 herein. 8. Damage or Destruction. 8.1. Insured Loss. In the event the Premises shall be totally or partially destroyed by a risk covered by insurance required by this Lease, Lessor shall be entitled to make the loss adjustment with the insurance company insuring the loss and receive payment of the proceeds of insurance. 8.2. Damage.If the damage to the Premises cannot lawfully and reasonably be repaired within thirty(30) days after the date of damage,this Lease may be terminated by written notice of either Party. If the Premises can reasonably be repaired within the thirty (30) day period, or if this Lease is not terminated in accordance with this provision, Lessee may opt to restore the Premises. In the event Lessee chooses to restore the Premises,said insurance proceeds,if any,shall be held by Lessor for the benefit of Lessee and shall be disbursed in installments as construction progresses for payment of the costs of restoration or reconstruction,upon satisfactory performance of the work required,and release of mechanics liens by all persons furnishing labor and materials thereon. If the insurance proceeds are insufficient to pay the actual costs of restoration or reconstruction,Lessee shall deposit the amount of the deficiency with Lessor upon demand by Lessor, and said sums shall be held for payment of said costs and disbursed in the manner heretofore provided. 1262100.1 8.3. Lessee Restoration.If Lessee elects to restore the Premises,written plans,specifications, and construction cost estimates for the restoration shall be prepared by Lessee and forwarded to Lessor for approval prior to the performance of any work.Said documents shall be prepared and submitted in a timely manner following adjustment of the loss and receipt of the proceeds of insurance by Lessor. The required construction shall be performed by Lessee and/or licensed and bonded contrector(s),who shall be required to carry comprehensive liability and property damage insurance, workers compensation insurance, and standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements,during the period of construction,in amounts equal to insurance limits required herein,or in greater amounts if otherwise reasonably required by Lessor. Said construction shall be commenced promptly following approval by Lessor, the issuance of applicable permits and posting of the construction site by Lessor with notice of non-responsibility, and shall be diligently prosecuted to completion.All work shall be performed in accordance with the approved plans and specifications, unless changes are approved in writing, in advance, by Lessor. Lessee agrees that Lessor may have on the site at any time during the construction period, an inspector who shall have the right to access the Premises and the work occurring thereon. Lessee, at the commencement of the construction work,shall notify Lessor in writing of the identity, place of business, and telephone number or responsible person(s) in charge of construction. Lessee shall ensure that all construction shall be performed in a good and workmanlike manner.Upon completion of the restoration, Lessee shall immediately record a notice of completion with the Orange County Recorder. In the event Lessee makes any changes and/or alterations to the interior or exterior portions of the Building as provided in this Paragraph 8.3,Lessee shall not be required to restore the Building to the original configuration upon the expiration or termination of this Lease. 8.4. No Insurance Coverage. In the event the Premises shall be totally or partially destroyed by a risk for which insurance coverage is not required or provided herein, Lessor, in its sole discretion, may either restore the Premises or terminate this Lease by providing notice to Lessee. 8.5. Insurance Proceeds. If Lessee elects not to restore the Premises, the insurance proceeds shall be first used to demolish and clearthe Premises.Thereafter,following Lessor's compensation for any amounts remaining owing to Lessor pursuant to this Lease, Lessee shall be entitled to the remainder of the insurance proceeds. 8.6. No Obligation of Lessor. Under no circumstances shall Lessor have any obligation to restore or reconstruct the Premises. In the event Lessor elects to repair any damage or destruction,such repair shall be to the Premises,but not Lessee's trade Fixtures or Lessee Owned Altemations and Utility Installations. 9. Real Property Taxes. 9.1. Definition.As used herein, the term "Real Property Taxes"shall include any form of assessment, including,but not limited to,real estate,general,special,ordinary or extraordinary,or rental levy or tax,any improvement bond,and/or license fee imposed upon or levied against any legal or equitable interest in the Premises by any authority having the direct or indirect power to tax and where the funds are generated with reference to the Building address and where the proceeds so generated are to be applied by the city,county or other local taxing authority of a jurisdiction within which the Premises are located. Real Property Taxes shall also include any tax, fee, levy, assessment or charge, or any increase therein: (i)imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Premises, and (if) levied or assessed on machinery or equipment (other than "Personal Property Taxes" as described in Paragraph 10.3 below). 9.2. Payment of Real Property Taxes.Lessor shall pay any and all Real Property Tax installments. 9.3. Personal Property Taxes. Lessee shall be solely responsible for paying, prior to delinquency, all taxes assessed against and levied upon Lessee Owned Alterations, Utility Installations, Trade Fixtures,furnishings,equipment and all personal property of Lessee.When possible, Lessee shall cause its Lessee Owned Alterations and Utility Installations,Trade Fixtures,furnishings,equipment and all other personal property to be assessed and billed separately from the real property of Lessor. 10. Utilities and Services.Lessee shall be responsible for and pay all utilities for the Premises during the use and occupancy of the Premises by Lessee during the Term of the Lease. Lessee's responsibility to pay all utilities include,but are not limited to,water,gas,heat,light,power,telephone,trash disposal and other utilities and services supplied to the Premises,together with any taxes thereon.If any such services are not separately metered or billed to Lessee,Lessee shall pay a reasonable proportion,to be determined by Lessor,of all charges jointly metered or billed. 1262100.1 B9606.2 it. Assignment and Subletting.Lessee is prohibited from assigning this Lease or subletting the Property. 12. Default;Breach; Remedies. 12.1. Default;Breach.Failure by the Lessee to comply with or perform any of Lessee's obligations under the terms,covenants,or conditions of this Lease shall constitute a"Default."Lessee is in"Breach" of this Lease when Lessee fails to cure any such Default within any applicable period of time specified herein or within the applicable grace period,if any.The following shall constitute an event of Default and Breach by Lessee: (a) Lessee's failure(i)to make payments under this Lease,including Rent,when due, or(it)to provide reasonable evidence of insurance or surety bond.THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR'S RIGHTS, INCLUDING LESSOR'S RIGHT TO RECOVER POSSESSION OF THE PREMISES. (b) Lessee's failure to operate in the manner required by this Lease, where such failure continues for more than ten(10)days following receipt of written notice from Lessor to cored the condition therein specified. (c) Lessor's failure to maintain the Premises and Improvements in the state of repair required under this Lease, and in a clean, sanitary, safe, and satisfactory condition, where such failure continues for more than ten(10)days following receipt of written notice from Lessor to correct the conditions therein specified. Where fulfillment of said maintenance obligation requires activity over a period of time and Lessee shall have immediately, following receipt of notice, commenced whatever action may be required to cure the particular Default and continued such performance diligently,said time may be waived in writing in the manner and to the extent determined by Lessor. In the event Lessee fails to correct any maintenance or repair deficiency within the prescribed time, Lessor may, at its option,exercise its rights of entry and repair and/or terminate this Lease. (d) Lessee's failure to keep, perform, and observe any other promises, covenants, conditions, and agreements set forth in this Lease,where such failure continues for more than ten (10)days after receipt of written notice from Lessor to correct the condition therein specified.Where fulfillment of any maintenance or repair obligation requires activity over a period of time and Lessee shall have immediately,following receipt of notice, commenced whatever may be required to cure the particular Default and continued such performance diligently,said time may be waived in writing in the manner and to the extent determined by Lessor. (a) The fling of a voluntary petition in bankruptcy by Lessee; the adjudication of Lessee as bankrupt; the appointment of a receiver or trustee of Lessee's assets; the making of a general assignment for the benefit of creditors; a petition or answer seeking reorganization of Lessee under any Federal reorganization act;the occurrence of any act which operates to deprive Lessee permanently of the rights, powers, and privileges necessary for the proper conduct of its operations under this Lease;the levy of any attachment or execution which substantially interferes with Lessee's operations under this Lease and which is not vacated,dismisses,stayed,or set aside within a period of sixty(60)days;or a reasonable determination by Lessor that Lessee is insolvent. (f) The failure to submit written plans for the Improvements on or before the times designated in this Lease for submission thereof. (g) Lessee's abandonment of the Premises prior to the expiration or termination of the Lease without prior notice or agreement of Lessor. (h) The discovery that any financial statement of Lessee or any information or representation given to Lessor was materially false. 12.2. Remedies.If Lessee fails to comply with or perform any of Lessee's obligations under the terms, covenants,or conditions of this Lease, within 10 days after written notice from Lessor (or in case of an emergency, without notice), Lessor may, at its option, perform such duty or obligation on Lessee's behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. Upon written demand or presentation of an invoice, Lessee shall pay to Lessor an amount equal to 115% of the costs and expenses incurred by Lessor in such performance. In the event of a Breach, Lessor may, with or without further notice or 1262100.1 demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach: (a) Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease shall terminate on the date specified in a notice of termination, Lessee shall immediately surrender possession to Lessor,all rights of Lessee under this Lease and in and to the Premises shall expire and terminate, and Lessee shall remain liable for all obligations under this Lease arising up to the date of such termination;or (b) If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit. If a notice and grace period required under Paragraph 12.1 was not previously given, a notice to pay rent or quit,or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 12.1.In such case,the applicable grace period required by Paragraph 12.1 and the unlawful detainer statute shall run concurrently,and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute. (c) Without terminating this Lease, declare immediately due and payable all Rent, Taxes, and other amounts due and coming due under this Lease for the entire remaining Term hereof, together with all other amounts previously due, at once; provided, however, that such payment shall not be deemed a penalty or liquidated damages but shall merely constitute payment in advance of rent for the remainder of said term;or (d) Allow the Premises to remain unoccupied and collect rent from Lessee as it comes due;or (a) Pursue such other remedies as are available at law or equity. The expiration or termination of this Lease and/or the termination of Lessee's right to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the Term hereof or by reason of Lessee's occupancy of the Premises. 12.3. Breach by Lessor. (a) Notice of Breach. Lessor shall not be deemed in Breach of this Lease unless Lessor fails,within a reasonable time,to perform an obligation required to be performed by Lessor. A reasonable time as used in this Paragraph shall in no event be less than 30 days after receipt by Lessor of written notice specifying any act or obligation that Lessor has failed to perform; provided, however, that if the nature of Lessor's obligation is such that more than 30 days are reasonably required for its performance,then Lessor shall not be in breach if performance is commenced within such 30 day period and thereafter diligently pursued to completion. (b) Performance by Lessee on Behalf of Lessor. In the event that Lessor fails to cure said breach within 30 days after receipt of said notice,or if having commenced said cure,Lessor fails to diligently pursue it to completion,then Lessee may elect to cure said breach at Lessee's expense and offset from Rent the actual and reasonable cost to perform such cure; provided, however, that such offset shall not exceed an amount equal to the greater of one month's Base Rent, reserving Lessee's fight to seek reimbursement from Lessor for any such expense in excess of such offset. Lessee shall document the cost of said cure and supply said documentation to Lessor. 13. Condemnation. 13.1. Total Taking. If, after the execution of this Lease and prior to the expiration of the term hereof,the whole of the Leased Premises shall be taken under power of eminent domain or condemnation by any public or private authority,or conveyed by Lessor to said authority in lieu of such taking,then this Lease and the term hereof shall cease and terminate as of the date when possession of the Leased Premises shall be taken by the taking authority and any unearned rent or other charges, if any, paid in advance, shall be refunded to Lessee. 13.2. Partial Taking.g,after the execution of this Lease and prior to the expiration of the term hereof, any public or private authority shall, under the power of eminent domain or 1262100.1 condemnation,take,or Lessor shall convey to said authority in lieu of such taking,property which results in a reduction by fifteen (15%) percent or more of the area in the Leased Premises, or of a portion of the Leased Premises that substantially interrupts or substantially obstructs the conducting of business on the Leased Premises;then Lessee may,at its election,terminate this Lease by giving Lessor notice of the exercise of Lessee's election within thirty(30)days after Lessee shall receive notice of such taking. In the event of termination by Lessee,this Lease and the Term hereof shall cease and terminate as of the date when possession shall be taken by the appropnate authority of that portion of the Entire Premises that results in one of the above takings, and any unearned rent or other charges, if any, paid in advance by Lessee shall be refunded to Lessee. 13.3. Restoration.In the event of a taking,Lessor and Lessee may terminate the Lease. 13.4. The Award.All compensation awarded for any taking,whether for the whole or a portion of the Leased Premises,shall be the sole property of the Lessor whether such compensation shall be awarded for diminution in the value of, or loss of,the leasehold or for diminution in the value of,or loss of,the fee in the Leased Premises,or otherwise.The Lessee hereby assigns to Lessor all of Lessee's right and title to and interest in any and all such compensation. However, the Lessor shall not be entitled to and Lessee shall have the sole right to make its independent claim for and retain any portion of any award made by the appropriating authority directly to Lessee for loss of business, or damage to or depreciation of, and cost of removal of fixtures, personality and improvements installed in the Leased Premises by, or at the expense of Lessee, and to any other award made by the appropriating authority directly to Lessee. 13.5. Release. In the event of any termination of this Lease as the result of the provisions of this Paragraph concerning Condemnation, the Parties, effective as of such termination, shall be released,each to the other,from all liability and obligations thereafter arising under this Lease. 14. No Relocation Benefits or Loss of Goodwill from Lessor.Lessee expressly waives any and all relocation assistance, relocation benefits, or compensation for loss of goodwill, known or unknown, to which it is or might be entitled upon the expiration or termination of this Lease or sublease, including the provisions of California Civil Code Section 1542. In no event will Lessor be obligated to pay any costs or charges related to costs, expenses,damages, or other charges Lessee might incur as a result of its move to or from the Premises, securing new facilities, or maintaining customer relations. 15. Severablllty.Whenever possible, each provision of this Lease shall be interpreted in such a manner as to be effective and valid under applicable law,but if any provision of this Lease shall be invalid under the applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity,without invalidating the reminder of that provision,or the remaining provisions of this Lease. 16. Days. Unless otherwise specifically indicated to the contrary, the word "days" as used in this Lease shall mean and refer to calendar days. 17. Limitation on Liability.The obligations of Lessor under this Lease shall not constitute personal obligations of Lessor or its directors,officers,employees,or agents,and Lessee shall look to the Premises,and to no other assets of Lessor for the satisfaction of any liability of Lessor with respect to this Lease,and shall not seek recourse against Lessors directors,officers,emplogyees,agents,or any of their personal assets for such satisfaction. 18. Time of Essence.Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease. 19. No Prior or Other Agreements.This Lease contains all agreements between the Parties with respect to any matter mentioned herein,and no other prior or contemporaneous agreement or understanding shall be effective. 20. Notices.All notices or other communications required or permitted hereunder shall be in writing,and shall be personally delivered or sent by registered or certified mail, postage prepaid, return receipt requested, delivered or sent by electronic transmission, and shall be deemed received upon the earlier of(1)the date of delivery to the address of the person to receive such notice if delivered personally or by messenger or overnight courier; (ii)three (3) business days after the date of posting by the United States Post Office if by mail; or(III)when sent if given by electronic transmission. Any notice, request, demand, direction, or other communication sent by electronic transmission must be confirmed within forty-eight (48) hours by letter mailed or delivered. Notices or other communications shall be addressed as follows: 1262100.1 To Lessor: Orange County Sanitation District Attn:Angela Brandt Post Office Box 8127 Fountain Valley,CA 92728-8127 To Lessee: The Dickler Corporation chat Chefs Toys Attn: Steve Dickler, President 18430 Pacific Street Fountain Valley,CA 92708 Either party may, by written notice to the other, designate a different address, which shall be substituted for that specified above. 21. waivers. (a)No waiver by Lessor of the Default or Breach of any term,covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition hereof. Lessors consent to, or approval of,any act shall not be deemed to render unnecessary the obtaining of Lessors consent to, 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,or any portion thereof,by Lessor shall not be a waiver of any Default or Breach by Lessee.Any payment by Lessee may be accepted by Lessor on account of moneys or damages due Lessor,notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment. 22. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 23. Covenants and Conditions: Construction of Agreement.All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. In interpreting this Lease,all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Lease.Whenever required by the context, the singular shall include the 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 if both Parties had prepared it. 24. Binding Effect;Choice of Law.This Lease shall be binding upon the Parties,their personal representatives, successors and assigns and be governed by the laws of the State of California. Any litigation between the Parties hereto concerning this Lease shall be initiated in the County of Orange. 25. Subordination.This Lease shall be subject and subordinate to any ground lease, mortgage,deed of trust, or other hypothecation or security device (collectively, "Security Device"), now or hereafter placed upon the Premises, to any and all advances made on the security thereof,and to all renewals, modifications, and extensions thereof. 26. Attorneys'Fees.If any Party brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party in any such proceeding, action, or appeal thereon,shall be entitled to costs and reasonable attorneys'fees,whether or not such action or proceeding is pursued to decision or judgment. In addition, Lessor shall be entitled to attorneys'fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith,whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach. 27. Lessors Access to Premises.Lessor and Lessors agents shall have the right to enter the Premises at any time,in the case of an emergency,and otherwise at reasonable times after reasonable prior notice for the purpose of showing the same to prospective purchasers,lenders,or Lessees,and making such alterations,repairs,improvements or additions to the Premises as Lessor may deem necessary or desirable and the erecting, using and maintaining of utilities, services, pipes and conduits through the Premises and/or other premises as long as there is no material adverse effect to Lessee's use of the Premises. All such activities shall be without abatement of rent or liability to Lessee. 1262100.1 28. Signs. Lessor may place on the Premises ordinary"For Sale"signs at any time and ordinary"For Lease" signs during the last 6 months of the term hereof. Except for ordinary"for sublease"signs,Lessee shall not place any sign upon the Premises without Lessors prior written consent.All signs must comply with all Applicable Requirements. 29. Consents.Except as otherwise provided herein,wherever the consent or action of a Party is required,such consent or action shall not be unreasonably withheld or delayed. Lessors actual reasonable costs and expenses (including but not limited to architects',attorneys',engineers'and other consultants'fees)incurred in the consideration of,or response to, a request by Lessee for consent or action, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance,shall be paid by Lessee upon receipt of an invoice and supporting documentation. Lessor's 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 deemed a waiver of any then existing Default or Breach,except as may be otherwise specifically stated in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessors consent shall not preclude 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. 30. Estoppel Certificates.At any time and from time to time, Lessor and Lessee each agree, upon request in writing from the other,to execute, acknowledge and deliver to the other or to any person designated by the other a statement in writing certifying that the Lease is unmodified and is in full force and effect, or if there have been modifications,that the same is in full force and effect as modified(stating the modifications),that the other party is not in default in the performance of its covenants hereunder,or if there have been such defaults,specifying the same,and the dates to which the rent and other charges have been paid. 31. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisions on Lessee's part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the Term hereof. 32. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or other security measures,and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties. 33. Reservations. Lessor reserves to itself the right,from time to time,to grant,without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights, dedications, maps and restrictions do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement rights,dedication,map or restrictions. 34. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof,the Parry against whom the obligation to pay the money is asserted shall have the right to make payment "under protest" and such payment shall not be regarded as a voluntary 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 adjudged that there was no legal obligation on the part of said 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 required to pay.A Party who does not initiate suit for the recovery of sums paid "under protest"with 6 months shall be deemed to have waived its right to protest such payment. 35. Authority; Multiple Parties; Execution. (a) If either Party hereto is a corporation,trust,limited liability company, partnership, or similar entity, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. (b) If this Lease is executed by more than one person or entity as "Lessee", each such person or entity shall be jointly and severally liable hereunder. It is agreed 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 named Lessees,and Lessor may rely on the same as if all of the named Lessees had executed such document. (c) This Lease may be executed by the Parties in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 36. Amendments.This Lease may be modified only in writing,signed by the authorized representatives of both Parties. 1262100.1 37. Americans with Disabilities Act. 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 additions to the Premises in order to be in ADA compliance, Lessee agrees to make any such necessary modifications and/or additions at Lessee's sole expense. 38. Counterparts.This Lease may be executed in counterparts,each of which shall be deemed an original,but all of which together shall constitute one and the same instrument. 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 AND VOLUNTARY CONSENT THERETO. IN WITNESS WHEREOF, this Lease Agreement has been executed in the name of the Orange County Sanitation District by its officers,thereunto duly authorized,and executed by the The Dickler Corporation, dba Chefs Toys as of this day of August,2017. ORANGE COUNTY SANITATION DISTRICT THE DICKLER CORPORATION, dba CHEF'S TOYS By By Greg Sebourn Steve Dickler Chair, Board of Directors President By Kelly Lore Clerk of the Board APPROVED AS TO FORM: Bradley R. Hogin General Counsel 1262100.1 18484 BANDILIER CIRCLE FOUNTAIN VALLEY, CA ATTACHMENT "1 " IIIIIIIIIIIIIIIII �IIIIIIIIIIIIIIIII I I I A IIIII MIIWINE 911T, GL I GL a)D OPq SHWOOMI CE Am s SUBJECT =eE NOTA m m G 1BUILDIN PART T I IT, ' HR HH I I � ELLIS AVENUE ►` WOODRUFF,.SFRADLIN&SMART CLOSED SESSION 1 555 ANTON BOULEVARD, BUITC1200 C.sIA MNsA, CA 92626-7670 (714)556-0000 MEMORANDUM TO: Hon. Chair and Members of the Orange County Sanitation District Steering Committee FROM: Bradley R. Hogm, Esq. General Counsel DATE: August 16, 2017 RE: Closed Session Items The Steering Committee desires to hold a closed session on August 23, 2017 for the purpose of conferring with its legal counsel regarding existing litigation to which the District is a party. The title of the case is Heady,Forman-Woodbridge v. OCSD. Orange County Superior Court Case No. 30-2017-000934699. The closed session will be held pursuant to the authority of California Government Code Section 54956.9(d)(1). Respectfully submitted, By l , BradIA6y R.Hogh General Counsel 1114541.1 ►r WOODRUFF,.SPRADLIN&SMART CLOSED SESSION 2 555 ANTON BOULEVARD, BUITC1200 COsIA MNsA, CA 92626-7670 (714)556-0000 MEMORANDUM TO: Hon. Chair and Members of the Orange County Sanitation District Steering Committee FROM: Bradley R. Hogin, Esq. General Counsel DATE: August 14, 2017 RE: Closed Session Items The Steering Committee desires to hold a closed session on August 23, 2017 for the purpose of conferring with its legal counsel regarding a potential eminent domain action. Based on existing facts and circumstances,the Committee is deciding whether to initiate litigation against another party. The closed session will be held pursuant to the authority of California Government Code Section 54956.9(d)(4). The facts and circumstances are as follows The Board may consider filing an eminent domain action against Sukut Real Properties LLC for the properties 18429 Pacific St. Fountain Valley, CA,APB No. 156-163-09: 18410 Bandilier Cit. Fountain Valley, CA,APN No. 156-163-10: and 18368 Bandilier Cit. Fountain Valley, CA, APN No. 156-163-11. Respectfully submitted, By Bradle . Hogin, Cenral Counsel 1114541.1 WOODRUFF SPRADLIN&SMART CLOSED SESSION 3 • A 555 ANION BOULEVARD, SUITE 1200 COSTA MESA, CA 92626-7670 (714)556-7000 MEMORANDUM TO: Hon. Chair and Members of the Orange County Sanitation District Steering Committee FROM: Bradley R. Hogin, Esq. General Counsel DATE: August 14, 2017 RE: Closed Session Items The Steering Committee will hold a closed session on August 23, 2017 for the purpose of conferring with its negotiators regarding the purchase of real property. The negotiating parties and properties are as follows: Valley Business Park,APN Nos. 156-165-05, 156-165-06, 156-163- 07; DK-USA LLC,APN No.156-165-04;Fountain Valley Industrial Parcel 13,APN No.156-165- 08; Sukut Real Properties LLC, APN Nos. 156-163-09, 156-163-10, 156-163-11; The Ins Trust Shabtai,Nevon, APN No. 156-163-16; The Ins Trust, APN No. 156-154-07; K&A Investments LP,APN No. 156-154-08;Fountain Valley Star LLC,APN No. 156-154-06; TN Sheet Metal Inc., APN No. 156-163-12; 18401 Bandilier LLC,APN No. 156-163-13;Phone Lilly Lin-Lin TR,APN No. 156-154-05; JDK Partners, APN No. 156-163-14; Chandler Real Properties, APN No. 156- 163-15; Ellis Avenue LLC, APN No. 156-154-04; and SFII Fountain Valley LLC,APN No. 156- 151-03; 7311 Doig Drive Garden Grove,CA,APN No. 131-654-20. The District's negotiators are Jim Herberg, Rob Thompson,Kathy Millea and Jeff Mohr, Wendy Sevenandt, Kevin Turner and John Gallivan, Cushman and Wakefield. Said closed session will be held pursuant to authority of California Government Code Section 54956.8. Respectfully submitted, By. /f BradleY R. Hogin, Vieneral Counsel 11921611 ORANGE COUNTY SANITATION DISTRICT Agenda Terminology Glossary Glossary of Terms and Abbreviations AQMD Air Quality Management District ASCE American Society of Civil Engineers BOD Biochemical Oxygen Demand CARS California Air Resources Board CASA California Association of Sanitation Agencies CCTV Closed Circuit Television CEQA California Environmental Quality Act CIP Capital Improvement Program CRWQCB California Regional Water Quality Control Board CWA Clean Water Act CWEA California Water Environment Association EIR Environmental Impact Report EMT Executive Management Team EPA US Environmental Protection Agency FOG Fats, Oils, and Grease gpd gallons per day GWRS Groundwater Replenishment System ICS Incident Command System IERP Integrated Emergency Response Plan LOS Level Of Service MGD Million Gallons Per Day NACWA National Association of Clean Water Agencies NPDES National Pollutant Discharge Elimination System NWRI National Water Research Institute O & M Operations & Maintenance OCCOG Orange County Council of Governments OCHCA Orange County Health Care Agency OCSD Orange County Sanitation District OCWD Orange County Water District OOBS Ocean Outfall Booster Station OSHA Occupational Safety and Health Administration PCSA Professional Consultant/Construction Services Agreement PDSA Professional Design Services Agreement POTW Publicly Owned Treatment Works ppm parts per million PSA Professional Services Agreement RFP Request For Proposal RWQCB Regional Water Quality Control Board Glossary of Terms and Abbreviations SARFPA Santa Ana River Flood Protection Agency SARI Santa Ana River Interceptor SARWQCB Santa Ana Regional Water Quality Control Board SAW PA Santa Ana Watershed Project Authority SCADA Supervisory Control And Data Acquisition SCAP Southern California Alliance of Publicly Owned Treatment Works SCAQMD South Coast Air Quality Management District SOCWA South Orange County Wastewater Authority SRF Clean Water State Revolving Fund SSMP Sewer System Management Plan SSO Sanitary Sewer Overflow SWRCB State Water Resources Control Board TDS Total Dissolved Solids TMDL Total Maximum Daily Load TSS Total Suspended Solids WDR Waste Discharge Requirements WEF Water Environment Federation W ERF Water Environment & Reuse Foundation WIFIA Water Infrastructure Finance and Innovation Act WIIN Water Infrastructure Improvements for the Nation Act W RDA Water Resources Development Act Activated sludge process — A secondary biological wastewater treatment process where bacteria reproduce at a high rate with the introduction of excess air or oxygen and consume dissolved nutrients in the wastewater. Benthos —The community of organisms, such as sea stars, worms, and shrimp, which live on, in, or near the seabed, also known as the benthic zone. Biochemical Oxygen Demand (BOD) — The amount of oxygen used when organic matter undergoes decomposition by microorganisms. Testing for BOD is done to assess the amount of organic matter in water. Biogas—A gas that is produced by the action of anaerobic bacteria on organic waste matter in a digester tank that can be used as a fuel. Biosolids—Biosolids are nutrient rich organic and highly treated solid materials produced by the wastewater treatment process. This high-quality product can be recycled as a soil amendment on farmland or further processed as an earth-like product for commercial and home gardens to improve and maintain fertile soil and stimulate plant growth. Glossary of Terms and Abbreviations Capital Improvement Program (CIP) — Projects for repair, rehabilitation, and replacement of assets. Also includes treatment improvements, additional capacity, and projects for the support facilities. Coliform bacteria—A group of bacteria found in the intestines of humans and other animals, but also occasionally found elsewhere, used as indicators of sewage pollution. E. coli are the most common bacteria in wastewater. Collections system— In wastewater, it is the system of typically underground pipes that receive and convey sanitary wastewater or storm water. Certificate of Participation (COP)—A type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues. Contaminants of Potential Concern (CPC) — Pharmaceuticals, hormones, and other organic wastewater contaminants. Dilution to Threshold (DIT) — The dilution at which the majority of people detect the odor becomes the D/T for that air sample. Greenhouse Gases (GHG) — In the order of relative abundance water vapor, carbon dioxide, methane, nitrous oxide, and ozone gases that are considered the cause of global warming ("greenhouse effect'). Groundwater Replenishment System (GWRS) — A joint water reclamation project that proactively responds to Southern California's current and future water needs. This joint project between the Orange County Water District and the Orange County Sanitation District provides 70 million gallons per day of drinking quality water to replenish the local groundwater supply. Levels Of Service (LOS) — Goals to support environmental and public expectations for performance. N-Nitrosodimethylamine (NDMA) — A N-nitrosamine suspected cancer-causing agent. It has been found in the Groundwater Replenishment System process and is eliminated using hydrogen peroxide with extra ultra-violet treatment. National Biosolids Partnership (NBP)—An alliance of the National Association of Clean Water Agencies and Water Environment Federation, with advisory support from the US Environmental Protection Agency. NBP is committed to developing and advancing environmentally sound and sustainable biosolids management practices that go beyond regulatory compliance and promote public participation to enhance the credibility of local agency biosolids programs and improved communications that lead to public acceptance. Plume — A visible or measurable concentration of discharge from a stationary source or fixed facility. Glossary of Terms and Abbreviations Publicly Owned Treatment Works (POTW) —A municipal wastewater treatment plant. Santa Ana River Interceptor(SARI) Line —A regional brine line designed to convey 30 million gallons per day of non-reclaimable wastewater from the upper Santa Ana River basin to the ocean for disposal, after treatment. Sanitary sewer—Separate sewer systems specifically for the carrying of domestic and industrial wastewater. Combined sewers carry both wastewater and urban runoff. South Coast Air Quality Management District (SCAQMD) — Regional regulatory agency that develops plans and regulations designed to achieve public health standards by reducing emissions from business and industry. Secondary treatment — Biological wastewater treatment, particularly the activated sludge process, where bacteria and other microorganisms consume dissolved nutrients in wastewater. Sludge—Untreated solid material created by the treatment of wastewater. Total Suspended Solids (TSS)—The amount of solids floating and in suspension in wastewater. Trickling filter — A biological secondary treatment process in which bacteria and other microorganisms, growing as slime on the surface of rocks or plastic media, consume nutrients in wastewater as it trickles over them. Urban runoff—Water from city streets and domestic properties that carry pollutants into the storm drains, rivers, lakes, and oceans. Wastewater—Any water that enters the sanitary sewer. Watershed—A land area from which water drains to a particular water body. The Orange County Sanitation District's service area is in the Santa Ana River Watershed.