Beaumont City Council
April 18, 2023

CITY COUNCIL REGULAR SESSION
AGENDA

Tuesday, April 18, 2023
Regular Meeting: 6:00 PM
550 E. Sixth Street, Beaumont, CA
Materials related to an item on this agenda submitted to the City Council after distribution of the agenda packets are available for public inspection in the City Clerk’s office at 550 E. 6th Street during normal business hours.

MEETING PARTICIPATION NOTICE
This meeting will will be recorded for live streaming as well as open to public attendance. Please use the following link during the meeting for live stream access: beaumontca.gov/livestream Public comments will be accepted using the following options.

1. Written comments will be accepted via email and will be read aloud during the corresponding item of the meeting. Public comments shall not exceed three (3) minutes unless otherwise authorized by City Council. Comments can be submitted anytime prior to the meeting as well as during the meeting up until the end of the corresponding item. Please submit your comments to:
[email protected]

2. Phone-in comments will be accepted by joining a conference line prior to the corresponding item of the meeting. Public comments shall not exceed three (3) minutes unless otherwise authorized by City Council. Please use the following phone number to join the call (951) 922 - 4845.

3. In-person comments are accepted by notifying the City Clerk using a provided Request to Speak Form prior to the start of the Public Comment Period. Public comments shall not exceed three (3) minutes unless otherwise authorized by City Council.

In compliance with the American Disabilities Act, if you require special assistance to participate in this meeting, please contact the City Clerk's office using the above email or call (951) 572 - 3196.

Notification 48 hours prior to a meeting will ensure the best reasonable accommodation arrangements.

Pages

REGULAR SESSION
A.CALL TO ORDER
Mayor Martinez, Mayor Pro Tem Fenn, Council Member Lara, Council Member Voigt, Council Member White
Report out from Closed Session
Action on any Closed Session Items
Action of any Requests for Excused Absence
Pledge of Allegiance
Invocation
Adjustments to the Agenda
Conflict of Interest Disclosure
B.ANNOUNCEMENTS / RECOGNITION / PROCLAMATIONS /

CORRESPONDENCE
World Wish Day Proclamation
C.PUBLIC COMMENT PERIOD (ITEMS NOT ON THE AGENDA)
Any one person may address the City Council on any matter not on this agenda.

If you wish to speak, please fill out a “Public Comment Form” provided at the back table and give it to the City Clerk. There is a three (3) minute time limit on public comments. There will be no sharing or passing of time to another person.

State Law prohibits the City Council from discussing or taking actions brought up by your comments.

D.CONSENT CALENDAR
Items on the consent calendar are taken as one action item unless an item is pulled for further discussion here or at the end of action items. Approval of all Ordinances and Resolutions to be read by title only.

D.1 Ratification of Warrants 7
Recommended Action:

Ratify Warrants dated:

March 30, 2023
April 6, 2023
D.2 Approval of Minutes 44
Recommended Action:

Approve Minutes dated April 4, 2023.

D.3 Approval to Increase Purchase Order 22/231299 to H2O Innovation USA, Inc. in the amount of $40,000 for Reverse Osmosis Chemicals 54 Increase H2O Innovation approved spending by $40,000.

Recommended Action:

Increase Purchase Order 22/231299 by $40,000 to H2O Innovations for a total purchase order amount of $64,900 allocated to 700-4050-7070- 0000.

D.4 Second Reading to Adopt an Ordinance Amending Chapter 3.01 of the Beaumont Municipal Code – Specific Provisions for Bidding, Contracting and Purchases
57 Adoption of an ordinance amending Beaumont Municipal Code Chapter

3.01 Recommended Action:

Waive the second full reading and adopt by title only, “An Ordinance of the City Council of the City of Beaumont, California amending Chapter

3.01 concerning specific provisions for bidding, contracting and purchases of the City of Beaumont Municipal Code.”
D.5 Bond Exoneration for Survey Monuments for Tract Map No. 31462-8 74 Bond Exoneration for survey monuments associated with Tract Map No. 31462-8.

Recommended Action:

Authorize staff to issue a bond exoneration letter for monument bonds for Tract Map No. 31462-8, bond number 0206492.

D.6 Second Amendment of an Agreement to Extend the Contract for Professional Services with Burrtec Waste Industries, Inc. to Provide Sludge Hauling Services for the Wastewater Treatment Plant 112
City staff is requesting approval of the Second Amendment to extend the contract for Sludge Hauling Services with Burrtec Waste Industries.

Recommended Action:

Approve the Second Amendment of an Agreement to extend the existing contract for Professional Services with Burrtec Waste Industries, Inc., to Provide Sludge Hauling Services for the Wastewater Treatment Plant through April 30, 2024.

D.7 FY2022-2023 3rd Quarter Cash and Investment Report 131 Receive and file FY2022-2023 3rd Quarter Cash and Investment Report.

Recommended Action:

Receive and file report.

D.8 FY2022-2023 3rd Quarter Budget Update and Financial Status Report 164 Receive a report on the status of the City’s budget and financial status as of March 31, 2023.

Recommended Action:

Receive and file report.

D.9 Adopt the Resolution for the Authorization and Execution of the Certifications and Assurances and Authorized Agent forms for the Low Carbon Transit Operations Program (LCTOP)
172
Low Carbon Transit Operations Program (LCTOP) for the following project: Discounted Fare Promotion, $323,000.

Recommended Action:

Waive the full reading and adopt by title only “A Resolution of the City Council of the City of Beaumont for Authorization for the Execution of the Certifications and Assurances and Authorized Agent Forms for the Low Carbon Transit Operations Program (LCTOP) for the Following Project:

Discounted Fare Promotion, $323,000”,
Execute the Certifications and Assurances Form, and
Execute the Authorized Agent Form.

D.10 Lease Agreement With 4th Street Industrial Park, LLC for Public Works and Waste Water Temporary Relocation
181
Authorization of Lease Agreement between the City of Beaumont and 4th Street Industrial, LLC for the temporary relocation of Public Works and Waste Water staff.

Recommended Action:

Authorize the City Manager to execute a 3-year lease agreement with an optional 1 year extension, with 4th Street Industrial, LLC for the property located at 252 West 4th Street.

E.YOUTH COUNCIL REPORT
Beaumont Youth Council Report Out and City Council Direction F.PUBLIC HEARINGS
Approval of all Ordinances and Resolutions to be read by title only.

F.1 Public Hearing to Consider an Approval of a Third Amendment to the City’s FY22/23-FY26/27 Capital Improvement Plan
204
Amendments include City-Wide Traffic Signal Upgrade (R-13) and Pennsylvania Widening (2017-009).

Recommended Action:

Hold a Public Hearing, and
Waive the full reading and approve by title only, "Resolution of the City Council of Beaumont Amending the Five-Year Capital Improvement Plan for Fiscal Years 2022/2023-2026/2027.”
G.ACTION ITEMS
Approval of all Ordinances and Resolutions to be read by title only.

G.1 FY2022-2023 Capital Improvement Project Budget Amendment 217 Budget adjustments to add funding to capital improvement projects: R-13 Citywide Traffic Signal Update and 2017-009 Pennsylvania Avenue Widening Project.

Recommended Action:

Approve the recommended budget adjustments as provided in Attachment A.

G.2 Award a Public Works Agreement to Elecnor Belco Electric, Inc. in an Amount Not-to Exceed $203,888 for the Construction of the Citywide Traffic Signal Upgrade at First Street and Beaumont Avenue – Capital Improvement Project No. R-13
219

For construction of Citywide Traffic Signal Upgrade at First Street and Beaumont Avenue.

Recommended Action:

Award a public works agreement to Elecnor Belco Electric, Inc. for construction of the Citywide Traffic Signal Upgrade at First Street and Beaumont Avenue in an amount not to exceed $203,888; and, authorize the City Manager to sign change orders up to an additional $20,512 for a total construction amount of $224,400.

G.3 Fourth Amendment to the Professional Services Agreement with Kimley Horn for the Pennsylvania Avenue Widening Project (CIP 2017-009), in an Amount Not to Exceed $60,940
291
Strategic Plan Priority Level 3, Target 2, Goal 9.

Recommended Action:

Approve a fourth amendment to the professional services agreement with Kimley Horn for the Pennsylvania Avenue Widening Project, in an amount not to exceed $60,940.

G.4 Mayoral Appointment of Liaisons to the Beaumont Library District and the Cherry Festival Association
322
Liaisons will represent the City Council at various meetings of the Beaumont Library District and Cherry Festival Association.

Recommended Action:

Mayoral appointment of liaisons and alternates.

G.5 Consider Approval of the First Amendment and Restated City Manager Employment Agreement
323
The City Council and City Manager engage in labor negotiations on an annual basis as it relates to the anniversary of the appointment date of the City Manager with the City, April 11, 2023.

Recommended Action:

Consider Approval of the First Amendment and Restated City Manager Employment Agreement.

G.6 Approval of City Attorney Invoices for the Month of March 2023 338 Recommended Action:

Approve invoices in the amount of $118,448.10.

H.LEGISLATIVE UPDATES AND DISCUSSION
I.ECONOMIC DEVELOPMENT UPDATE
Economic Development Committee Report Out and City Council Direction J.CITY TREASURER REPORT
Finance and Audit Committee Report Out and City Council Direction K.CITY CLERK REPORT
L.CITY ATTORNEY REPORT
M.CITY MANAGER REPORT

N.FUTURE AGENDA ITEMS
O.COUNCIL REPORTS
White
Voigt
Lara
Fenn
Martinez
P.ADJOURNMENT
The next regular meeting of the Beaumont City Council, Beaumont Financing Authority, the Beaumont Successor Agency (formerly RDA), the Beaumont Utility Authority, the Beaumont Parking Authority and the Beaumont Public Improvement Agency is scheduled for Tuesday May 2, 2023, at 6:00 p.m. unless otherwise posted.

1 CITY COUNCIL CLOSED & REGULAR SESSION

MINUTES

April 4, 2023
Closed Session: 5:00 PM Regular Meeting: 6:00 PM
550 E. Sixth Street, Beaumont, CA

Materials related to an item on this agenda submitted to the City Council after distribution of the agenda packets are available for public inspection in the City Clerk’s office at 550 E. 6th Street during normal business hours _____________________________________________________________________

CLOSED SESSION
A. CALL TO ORDER at 5:00 p.m.

Present: Mayor Martinez, Mayor Pro Tem Fenn, Council Member Lara, Council Member Voigt, Council Member White

B. PUBLIC COMMENTS REGARDING CLOSED SESSION
None.

B.1 Conference with Legal Counsel re Potential Initiation of Litigation Pursuant to Government Code 54956.9(d)(4)
One Potential Case.

No reportable action.

B.2 Conference with Real Property Negotiator Pursuant to Government Code Section 54956.8.

Property Description: Address: 252 W. Fourth Street. Agency Negotiator:

City Manager Elizabeth Gibbs or her designee. Negotiating Parties: City of Beaumont as potential lessee and Fourth Street Industrial Park as potential lessor. Under Negotiation: Price and Terms.

No reportable action.

2 B.3 Public Employee Performance Evaluation Pursuant to Government Code Section 54957 Title: City Manager
Non reportable action.

B.4 Conference with Labor Negotiators Pursuant to Government Code Section 54957.6
Agency designated representatives: Councilmember Jessica Voigt and Mayor Pro Tem David Fenn. Unrepresented Employee: City Manager.

No reportable action.

C. ADJOURNMENT TO CLOSED SESSION

REGULAR SESSION
D. CALL TO ORDER at 6:14 p.m.

Present: Mayor Martinez, Mayor Pro Tem Fenn, Council Member Lara, Council Member Voigt, Council Member White
Report out from Closed Session: see above
Action on any Closed Session Items: None
Action of any Requests for Excused Absence: None
Pledge of Allegiance
Adjustments to the Agenda: None
Conflict of Interest Disclosure: None

E. ANNOUNCEMENTS / RECOGNITION / PROCLAMATIONS /

CORRESPONDENCE
E.1 One Legacy Donation Month Proclamation

F. PUBLIC COMMENT PERIOD (ITEMS NOT ON THE AGENDA)
A. Eventov - Representing So Cal Gas Co. Spoke to the rising costs and the discounts and grants available.

G. CONSENT CALENDAR
Items on the consent calendar are taken as one action item unless an item is pulled for further discussion here or at the end of action items. Approval of all Ordinances and Resolutions to be read by title only.

3 Motion by Mayor Pro Tem Fenn
Second by Council Member Voigt
Approved by a unanimous vote.

G.1 Ratification of Warrants
Ratify Warrants dated:

March 20, 2023
March 24, 2023
G.2 Approval of Minutes
Approve Minutes dated March 21, 2023.

G.3 Authorize Changes to Wastewater Department Position Allocation The Wastewater Department seeks to replace a Wastewater Plant Operator II position with a Wastewater Plant Operator III position.

Approve the elimination of one Wastewater Plant Operator II (WWPII).

Approve the addition of one Wastewater Plant Operator III (WWPIII).

G.4 Second Reading of Proposed Amendments to Beaumont Municipal Code Chapters 13.08.110 and 13.09
Recommended changes to Beaumont Municipal Code Chapter 13.08.110 Maintenance of Sewer Laterals and Chapter 13.09 Fat s, Oils and Grease (F.O.G.) Management in Food Service Establishments to implement the F.O.G. program and Sewer System Management Plan (SSMP).

Waive the second full readings and approve by titles only, “An Ordinance of the City Council of the City of Beaumont Amending Chapter 13.08.110 Concerning Maintenance of Sewer Laterals of the City of Beaumont Municipal Code.”; and
“An Ordinance of the City Council of the City of Beaumont, California Amending Chapter 13.09 Concerning Regulating Fats, Oils and Grease (F.O.G.) of the City of Beaumont Municipal Code.” G.5 Accept Public Improvements and Exonerate Maintenance Bond for Tract No. 37298-1 and Parcel Map No. 36426
Maintenance Bond Exoneration for street improvements associated with Tract Map No. 37298-1 and sewer improvements associated with Parcel Map No. 36426.

Accept the public improvements, authorize the Mayor to sign the Certificate of Acceptance, and authorize staff to issue a bond exoneration letter for maintenance bonds for (Project / Bond Number / Improvement):
 Tract Map No. 37298-1 / CMS331828-M / Street

4  Parcel Map No. 36426 / 107506777 / Sewer
G.6 Set Time, Date and Place for a Special Workshop
Set the time, date and place for a special workshop to discuss the wastewater sewer rate study.

Hold a special workshop on April 10, 2023, from 4:00 – 6:00 p.m.

G.7 National Opioid Settlements – Second Round
Resolution to authorize the City to enter into the participation and allocation agreements for the National Opioid Settlements.

Waive the full reading and adopt by title only, “A Resolution of the City Council of the City of Beaumont Authorizing the City to Enter into the Settlement Agreements with CVS, Allergan, Teva, Walmart, and Walgreens, Agree to the Terms of the Related State-Subdivision Agreements, and Authorize Entry into the Related State-Subdivision Agreements with the Attorney General.”

H. YOUTH COUNCIL REPORT
Beaumont Youth Council Report Out and City Council Direction

I. PUBLIC HEARINGS
Approval of all Ordinances and Resolutions to be read by title only.

I.1 Public Hearing to Consider an Ordinance Amending Chapter 3.01 of the Beaumont Municipal Code – Specific Provisions for Bidding, Contracting and Purchases
Adoption of an ordinance amending Beaumont Code Chapter 3.01.

Public Hearing opened at 6:30 p.m.

No speakers
Public Hearing closed at 6:30 p.m.

Motion by Council Member Lara
Second by Council Member White
Hold a Public Hearing; and
Waive the full reading and approve the first reading by title only, “An Ordinance of the City Council of the City of Beaumont, California, Amending Chapter 3.01 to the City of Beaumont Municipal Code.” with changes to include wording that the purchase must have been included in the Council approved budget. As a procedure, a quarterly report will be brought to the the Financial and Audit Committee for review.

5 Approved by a unanimous vote

J. ACTION ITEMS
Approval of all Ordinances and Resolutions to be read by title only.

J.1 Formation of CFD No. 2023-1 (Fairway Canyon)
Adopt by resolution the City of Beaumont’s intent to establish City of Beaumont Community Facilities District No. 2023-1 (Fairway Canyon) and improvements therein, and to declare intention to incur bond indebtedness within each improvement area.

Motion by Council Member Lara
Second by Council Member White
Waive the full reading and adopt by titles only, “Resolution of the City Council of the City of Beaumont, California, Declaring its Intention to Establish City of Beaumont Community Facilities District No. 2023-1 (Fairway Canyon) and Improvement Areas Therein, to Authorize the Levy of a Special Tax to Pay the Cost of Acquiring or Constructing Certain Public Facilities and Providing Certain Public Services, and Paying for Certain Incidental Expenses and to Pay Debt Service on Bonded Indebtedness" and;
Adopt, "Resolution of Intention of the City Council of the City of Beaumont, California, to Incur Bonded Indebtedness within Each of Proposed Improvement Areas Nos. 1 and 2 of Proposed City of Beaumont Community Facilities District No. 2023-1 (Fairway Canyon).”
Approved by a unanimous vote

J.2 Approval of Fuel Source Technology for the City of Beaumont Transit Zero-Emission Bus Rollout Plan
Review information for discussion and select a Fuel Source Technology to proceed with the Zero-Emission Bus Rollout and Implementation Plans.

Motion by Council Member White
Second by Jessica Voigt
Approve the mixed-fleet fuel source technology as the recommended technology in the development of the City of Beaumont Transit Zero- Emission Bus Rollout Plan.

Approved by a unanimous vote

6 J.3 Economic Development Committee Appointment
Consider applicants for the vacant Business Community Member position on the Economic Development Committee.

Motion by Council Member Lara
Second by Mayor Martinez
To appoint Allen Koblin to the business member seat on Economic Development Committee and Annette Vogt as the Alternate Member.

Approved by a unanimous vote

J.4 Update on Stewart Park Improvement Project – Capital Improvement Project P-10
Provide an update on the status of the Stewart Park Improvement Project.

Strategic Plan Level 3, Target 5, Goal 6
Motion by Council Member White
Second by Mayor Martinez
Receive and file the presentation. Discuss and give direction to staff.

Approved by a unanimous vote

J.5 Consideration of Approval of the 2023 Fourth of July Entertainment, Production and Stage Rental Agreement with Stache Inc. dba The M&M Group and Fireworks Display with Pyro Spectaculars, Inc.

Approve purchase orders and execute Professional Services Agreements with Stache Inc. dba The M&M Group and Pyro
Spectaculars, Inc.

Motion by Council Member White
Second by Mayor Martinez
Authorize the Mayor to execute the Professional Service Agreement with Stache Inc. dba The M&M Group; and
Authorize staff to issue a Purchase Order in the amount of $55,000 issued to Stache Inc. dba The M&M Group.

Authorize the Mayor to execute the Professional Service Agreement with Pyro Spectaculars, Inc.; and
Authorize staff to issue a Purchase Order in the amount of $30,000 issued to Pyro Spectaculars, Inc.

Approved by a unanimous vote

7 J.7 Approve a Purchase Order and Professional Services Agreement with Stache Inc. dba The M&M Group for a Concert in the Park in an Amount Not to Exceed $110,000
Approve a purchase order and professional services agreement for a summer concert series to include two concerts taking place on Wednesday, July 12 and Wednesday, July 19, 2023.

Motion by Council Member White
Second by Mayor Martinez
Authorize the Mayor to execute the Professional Service Agreement with Stache Inc. dba The M&M Group; and
Authorize staff to issue a Purchase Order in the amount of $110,000 issued to Stache Inc. dba The M&M Group.

Approved by a unanimous vote

J.6 Approve a Purchase Order and Professional Services Agreement with Stache Inc. dba The M&M Group for a Concert in the Park in an Amount Not to Exceed $55,000
Approve a purchase order and professional services agreement for one summer concert to take place on Wednesday, June 28, 2023.

Motion by Council Member Voigt
Second by Council Member Lara
Authorize the Mayor to execute the Professional Service Agreement with Stache Inc. dba The M&M Group; and
Authorize staff to issue a Purchase Order in the amount of $55,000 issued to Stache Inc. dba The M&M Group.

J.8 Surplus Frisbee Golf - Parks District Donation
The surplus and donation of current frisbee golf equipment at Nicklaus Park.

Motion by Council Member White
Second by Council Member Lara
Approve the disposal and donation of identified City surplus property.

Approved by a unanimous vote

J.9 Direction to City Staff on Proposed Amendments to Beaumont Municipal Code Section 17.07 - Signs

8 Review of Code Section 17.07 – Signs for compliance with recent case law.

K. Walton - Spoke to concerns of temporary signs and placement thereof.

In depth discussion and direction to staff on changes to research and bring back for a Public Hearing on Municipal Code Section

17.07-Signs.

J.10 Discussion and Consideration of Requested Resolution Opposing Initiative 21-0042A1
Initiative 21-0042A1: A State ballot measure which would restrict voter input and local taxing authority.

Consensus to staff to prepare a letter of opposition.

K. LEGISLATIVE UPDATES AND DISCUSSION
K.1 AB 742
Bill Text - AB 742
Consensus to direct staff to prepare a letter of opposition.

K.2 AB 1708
Bill Text - AB 1708
Consensus to direct staff to prepare a letter of support.

K.3 AB 796
Bill Text - AB 796
City staff will follow this bill.

K.4 AB 804
Bill Text- AB 804
City staff will follow this bill.

L. ECONOMIC DEVELOPMENT UPDATE
Gave a report out from a recent Downtown Business Meeting. Next EDC meeting will be April 12, 2023.

9 M. CITY TREASURER REPORT
Finance and Audit Committee Report Out and City Council Direction M.1 Discussion on Sending the City Treasurer to Washington, D.C. with City Council as Part of the Delegation Team
Discuss adding the City Treasurer to the Washington, D.C. delegation team.

Motion by Council Member White
Second by Mayor Pro Tem Fenn
To welcome Treasurer Patel to the Washington D.C. Delegation Team if paid for out of pocket.

Noes: Lara
Approved by a 4-1 vote

N. CITY CLERK REPORT
No report.

O. CITY ATTORNEY REPORT
Update of current litigation and current projects.

P. CITY MANAGER REPORT
P.1 Parks Update
P.2 Clean Up Event Recap

Q. FUTURE AGENDA ITEMS
 Resource for residents to contact local businesses
 City staff first aid and safety discussion
 Truck routes
 Cherry Festival Sub-committee/AdHoc
 Short-term rentals
 Research the need for more community centers.

10 R. COUNCIL REPORTS
Voigt - No report
White - No report
Lara - Upcoming WRCOG General Assembly
Fenn - Attended Morongo Air and Ambulance ceremony, announced upcoming TNOW Meeting.

Martinez - Attended IOA golf tournament, Vietnam Veteran's Event, Banning City Council Meeting, an RCA Meeting, and roundtable meeting with Congressman Ruiz.

S. ADJOURNMENT at 10:26 p.m.

The next regular meeting of the Beaumont City Council, Beaumont Financing Authority, the Beaumont Successor Agency (formerly RDA), the Beaumont Utility Authority, the Beaumont Parking Authority and the Beaumont Public Improvement Agency is scheduled for Tuesday April 18, 2023, at 6:00 p.m. unless otherwise posted.

Staff Report

TO: City Council
FROM: Thaxton Van Belle, General Manager of Utilities
DATE April 18, 2023
SUBJECT: Approval to Increase Purchase Order 22/231299 to H2O Innovation USA, Inc. in the amount of $40,000 for Reverse Osmosis Chemicals

Description Increase H2O Innovation approved spending by $40,000.

Background and Analysis:

Purchases for goods and services from a single firm that will exceed $25,000 are brought to City Council per section 3.01.050 of the City’s Purchasing Ordinance. In the FY 22/23 budget, a line item in the amount of $24,900 was approved for chemicals related to the operation of the Reverse Osmosis (R.O.) System as provided by H2O Innovation. This amount was only to be used if and when the R.O. system could be brought back online after upstream system improvements. The R.O. system is now up, running, and optimized, allowing staff to properly forecast the chemical consumption for the remainder of the fiscal year, and place a proper request into the next FY budget.

H2O Innovations is the parent company of PWT Chemicals which is the manufacturer of the chemical being purchased which is both proprietary and sole source, meeting the bidding requirements in City Code 3.01.090 D.

The original $24,900 purchase order has been exhausted, with an additional $40,000 needed through the end of the fiscal year.

Fiscal Impact:

The estimated cost to prepare this staff report is $250. There is no fiscal impact to the General Fund. The Wastewater Fund is able to absorb the proposed increase in the approved budget.

Recommended Action:

Increase Purchase Order 22/231299 by $40,000 to H2O Innovations for a total purchase order amount of $64,900 allocated to 700-4050-7070-0000.

Attachments:

A. Sole Source Letter

1048 La Mirada Court, Vista, CA 92081
Toll-free: +1 800.914.9072
genesysro.com • pwtchemicals.com

02/03/23

To whom it may concern,

This letter is meant to affirm that PWT Chemicals is the sole source of SpectraGuard™ 360. It is a proprietary product manufactured and sold by PWT Chemicals and its approved distributors. It is intended for use as an online antiscalant in membrane-based water treatment systems.

SpectraGuard™ 360 is a unique blend of components which offer superior protection against a wide variety of scale forming salts. Due to this unique formulation no alternative suppliers exist for this product. PWT Chemicals has over 20 years of experience providing water treatment chemicals ensuring stable and sustained performance of our customer’s systems.

Sincerely,

Amit Sankhe
Director, Research and Scientific Services
PWT Chemicals

Staff Report

TO: City Council
FROM: Elizabeth Gibbs, City Manager
DATE April 18, 2023
SUBJECT: Second Reading to Adopt an Ordinance Amending Chapter 3.01 of the Beaumont Municipal Code – Specific Provisions for Bidding, Contracting and Purchases

Description Adoption of an ordinance amending Beaumont Municipal Code Chapter

3.01 Background and Analysis:

On April 4, 2023, City Council held a public hearing and waived the first full reading and adopted by title only a proposed ordinance amending Beaumont Municipal Code Chapter 3.01 – Specific Provisions for Bidding, Contracting and Purchases.

Public Works Projects
The proposed amendment included mirroring the language set forth in the State’s Public Contract Code (PCC) Section 22032, which states in part:

(a) Public projects of sixty thousand dollars ($60,000) or less may be performed by the employees of a public agency by force account, by negotiated contract, or by purchase order.
(b) Public projects of two hundred thousand dollars ($200,000) or less may be let to contract by informal procedures as set forth in this article. (c) Public projects of more than two hundred thousand dollars ($200,000) shall, except as otherwise provided in this article, be let to contract by formal bidding procedure.

Staff recommended that City Council modify the BMC to affirm the City Manager’s authority to approve public works contracts by informal procedures as outlined in PCC Section 22032. Additionally, staff recommended that City Council add the following language to Section 3.01.030 as follows:

The City Manager shall report to the City Council all such projects awarded by the public project informal bidding procedure within ninety (90) days of the date of the award.

Non-Public Works Projects
Non-public works projects include maintenance work defined in PCC Section 22002(d).

Staff recommended that non-public works projects follow similar requirements as discussed above under Public Works Projects.

Materials, Supplies, and Equipment
The third area included in BMC Chapter 3.01 is bidding requirements for materials, supplies, and equipment. Like the other two areas, staff recommended that City Council keep consistency with Public Works Projects and Non-Public Works Projects language as outlined above.

During the public hearing, City Council directed staff to further modify the proposed ordinance to include language that affirms the City Manager’s authority only if the proposed contracting and purchases have been previously approved via the adopted budget or adopted capital improvement plan . The following language was added to Sections 3.01.030, 040, and 050 in the attached proposed ordinance (Attachment A):

…so long as the public project funding was previously approved by City Council either in the adopted budget or adopted capital improvement plan.

Finally, as mentioned in the staff report on April 4, 2023, other cities that follow the State’s PCC include Banning, San Jacinto, and Rialto, just to name a few.

The City Attorney has reviewed and approved the additional language to the proposed ordinance.

Fiscal Impact:

The cost to prepare this staff report is estimated at $247.

Recommended Action:

Waive the second full reading and adopt by title only, “An Ordinance of the City Council of the City of Beaumont, California amending Chapter 3.01 concerning specific provisions for bidding, contracting and purchases of the City of Beaumont Municipal Code.”

Attachments:

A. Ordinance with redlines

ORDINANCE NO.

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY

OF BEAUMONT, CALIFORNIA AMENDING CHAPTER

3.01 CONCERNING SPECIFIC PROVISIONS FOR

BIDDING, CONTRACTING AND PURCHASES OF THE

CITY OF BEAUMONT MUNICIPAL CODE

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BEAUMONT DOES ORDAIN AS FOLLOWS:

SECTION 1. CEQA. The City Council finds that the actions contemplated by this Ordinance are exempt from the California Environmental Quality Act (“CEQA”) pursuant to Section 15060 (c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly.

SECTION 2. Severability. The City Council hereby declares that if any provision, section, paragraph, sentence, or word of this Ordinance is rendered or declared to be invalid or unconstitutional by any final court action in a court of competent jurisdiction, or by reason of any preemptive legislation, such invalidity shall not affect the other provisions, sections, paragraphs, sentences or words of this Ordinance, and to this end the provisions of this Ordinance are severable.

The City Council declares that it would have adopted this Ordinance irrespective of the invalidity of any particular portion thereof and intends that the invalid portions should be severed and the balance of the Ordinance enforced.

SECTION 3. Chapter 3.01 are hereby amended and restated in full to read as attached hereto as Exhibit “A”.

SECTION 4. Effective Date and Publication. The Mayor shall sign and the City Clerk shall certify to the passage of this Ordinance and cause the same or a summary thereof to be published within 15 days after adoption in accordance with Government Code Section 36933. This Ordinance shall take effect 30 days after adoption in accordance with Government Code Section 36937.

NOW, THEREFORE, BE IT ORDAINED that the City Council of the City of Beaumont, California, approves this amendment to the City Code.

INTRODUCED AND READ for the first time and ordered posted at a regular meeting of the City Council of the City of Beaumont, California, held on the 4th day of April 2023, by the following roll call vote:

AYES:

NOES
ABSENT:

ABSTAIN

PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Beaumont, California, held on the 18th day of April 2023, by the following roll call vote:

AYES:

NOES
ABSENT:

ABSTAIN

_______________________
Julio Martinez III, Mayor

Attest:

_______________________
Nicole Wheelwright, Deputy City Clerk

Chapter 3.01.000 – Specific Provisions for Bidding, Contracting, and Purchases Sections:

3.01.010 Definitions.

3.01.020 General Purchasing Policies and Procedures.

3.01.030 Bidding Requirements for Public Projects.

3.01.040 Bidding Requirements for Maintenance and General Services.

3.01.050 Bidding Requirements for Materials, Supplies, and Equipment.

3.01.060 Formal Bidding Procedure for Public Projects.

3.01.070 Informal Bidding Procedure for Certain Public Projects.

3.01.080 Formal Bidding Procedure for Non-Public Projects.

3.01.090 Informal Bidding Procedure for Non-Public Projects.

3.01.100 Exceptions to Competitive Bidding on Public Projects.

3.01.110 Exceptions to Competitive Bidding on Non-Public Projects.

3.01.120 City Manager Authorization to Execute Contracts.

3.01.010 Definitions.

Unless otherwise indicated, the following definitions shall apply to all provisions of this chapter:
"Alternative procedure" means purchasing supplies, services or equipment by negotiated contract, purchase order or any other procedure outlined in the City's purchasing and bidding policies and procedures manual approved by the City Manager and consistent with this chapter.

A type of alternative procedure may include, but is not limited to, what will be referred to as a "simplified pricing procedure" wherein the Authorized Contracting Party, or his or her designee, obtains oral price quotes from one or more potential contractors or suppliers, and accepts the quote which is determined to be in the best interests of the City. "Authorized Contracting Party" means the City official or body provided with authority under this chapter by the City Manager to approve a contract or to make a purchase. "City Manager" means the City Manager or person designated by the City Manager to perform all or some of the duties prescribed in this chapter. "Commission" means the California Uniform Construction Cost Accounting Commission created by Division 2, Part 3, Chapter 2, Article 2 of the California Public Contract Code (Section 22000 et seq.).
"Emergency" for purposes of public projects shall have that meaning provided in California Public Contract Code Sections 22035 and 22050. Emergency for all other purchasing or contracting purposes means a situation which makes competitive bidding, either formal or informal, impractical or not in the best interests of the City. "Facility" means any plant, building, structure, ground facility, utility system (subject to the limitation found in California Public Contract Code Section 22002, Subdivision (c)(3)), real property, streets and highways, or other public work improvement. "General services" means all services performed by persons not in a professional occupation, including, but not limited to, contract services for park, electrical and computer

repair, building, facility and vehicle maintenance, recreation programs and other similar services which are not professional services.
"Maintenance work" shall have that meaning provided in Section 22002(d) of the Public Contract Code, as that section may be amended from time to time. In addition and to the extent not inconsistent with Section 22002(d), maintenance work shall include, but shall not be limited to, the following:

A. Routine, recurring and usual work for the preservation or protection of any publicly owned or publicly operated facility for its intended purposes; B. Minor repainting;
C. Street and highway maintenance, including utility patching, skin patching, crack filling, filling of pot holes, slurry sealing, edge grading, street striping, resurfacing of streets and highways at less than one-inch, sign replacement, sidewalk repair and replacement, curb and gutter repair and replacement, and street and traffic light repair and replacement. Maintenance work shall not include striping of a new street or highway;
D. Sewer maintenance, including foaming, videotaping, cleaning and manhole restoration; E. Traffic signal maintenance. Maintenance work shall not include installation of new traffic signals;
F. Storm drain related maintenance;
G. Landscape maintenance, including mowing, watering, trimming, pruning, planting, tree and plant replacement, irrigation and sprinkler system servicing, retrofit and repair and landscape rehabilitation;
H. Maintenance of facilities, including roof repairs or replacements, heating and air conditioning repairs and electric repairs;
I. Vehicle and equipment maintenance and repairs;
J. Work performed to keep, operate, and maintain publicly owned waste disposal systems, including, but not limited to dams, reservoirs and waste treatment systems. "Professional services" means all services performed by persons in a professional occupation, including, but not limited to, consulting and performance services for legal services, accounting, auditing, computer hardware and software support, engineering, architectural, planning, environmental, redevelopment, financial, economic, personnel, social services, animal control, management, solid waste, cable television, communication and other similar professional functions which may be necessary for the operation of the City. Professional Services are governed by chapter 3.02.
"Public project" shall have that meaning provided in Section 22002(c) of the Public Contract Code, as that section may be amended from time to time. A public project shall not include maintenance work. In addition and to the extent not inconsistent with Section 22002(c), public project shall include, but shall not be limited to, the following:

Formatted: Indent: First line: 0.33"

1. Construction, reconstruction, erection, alteration, renovation, improvement, demolition and repair work involving any publicly owned, leased or operated facility;

2. Street or sewer work except maintenance and repair;

3. Painting or repainting of any publicly owned, leased, or operated facility; and

4. In the case of a publicly owned utility system, public project shall include only the construction, erection, improvement, or repair of dams, reservoirs, and wastewater treatment plants.
"Public project formal bidding procedure" means the procedure provided for in Section

3.01.060 which meets the requirements of state and local law, including Public Contract Code Section 22037, this chapter and any policies and procedures approved by the City Manager consistent with this chapter.
"Public project informal bidding procedure" means a procedure provided for in Section

3.01.070 which meets the requirements of state and local law, including Public Contract Code Section 22034, this chapter and any policies and procedures approved by the City Manager consistent with this chapter.
"Purchasing Officer" means the City Manager or his or her designee(s) as provided in Section 3.00.020. Pursuant to Section 3.00.020, the City Manager may change his or her designation at any time.
"Non-public project formal bidding procedure" means the procedure provided for in Section 3.01.080 which meets the requirements of state and local law, including the Public Contract Code, this chapter and any policies and procedures approved by the City Manager consistent with this chapter.
"Non-public project informal bidding procedure" means the procedure provided for in Section 3.01.090 which meets the requirements of state and local law, including the Public Contract Code, this chapter and any policies and procedures approved by the City Manager consistent with this chapter.

3.01.020 General purchasing policies and procedures.

A. The City shall secure supplies, services, and equipment at the lowest total cost commensurate with the quality and scope needed, and subject to any limitations imposed by state law.

B. The Purchasing Officer shall develop, for approval by the City Manager, such policies and procedures as are necessary to implement the provisions of this chapter. The policies and procedures shall be written and implemented in such a way to encourage open and competitive bidding, where appropriate, provide equal opportunity based on merit, make each selection process free of invidious discrimination, provide for efficient and timely acquisition of needed supplies, services and equipment, and provide effective fiscal controls.

C. In purchasing, supplies, services and equipment, the City shall make use of competitive bidding, both formal and informal, whenever required by law, this chapter or any policies and procedures approved by the City Manager consistent with this chapter.

D. Formal and informal competitive bidding is not required, for instance, when an emergency is declared pursuant to this chapter.

E. Except in cases of emergency or unless specifically authorized by resolution or minute order of the City Council, the Purchasing Officer shall not issue a purchase order for supplies, services or equipment involving any project or purchase unless there exists an unencumbered appropriation in the fund account against which such purchase is to be charged.

F. The City shall comply with all federal and state bidder's security and bonding requirements and all prevailing wage laws applicable to each contract or purchase.

G. The Purchasing Officer, with approval of the City Manager, may provide written authorization to any department director to conduct a bidding process outside of the centralized purchasing system; provided, however, that such bidding process and the resulting contract or purchase shall otherwise comply with the requirements of this chapter.

The Purchasing Officer, with approval of the City Manager, may rescind such authorization in writing at any time and for any or no reason.

3.01.030 Bidding requirements for public projects.

A. Alternative Procedure (up to $60,000) (Administrative Approval). Public projects with cost estimates of $60,000) or less may be awarded by the City Manager, upon recommendation of the director of the department responsible for the project, by any alternative procedure as defined in Section 3.01.010.

B. Informal Procedure (more than $60,000 —less than $200,000). Public projects with cost estimates of more than $60,000, but less than, or equal to, $200,000 shall, except as otherwise provided in this chapter or the Public Contract Code, be awarded by the City Manager pursuant to the public project informal bidding procedure in Section 3.01.070, so long as the public project funding was previously approved by City Council either in the adopted budget or adopted capital improvement plan..

The City Manager shall report to the City Council all such public projects awarded by the public project informal bidding procedure within ninety (90) days of the date of the award.

If all bids received are over $200,000, the City Council may, with the approval of a four- fifths vote of those members present, award the contract in an amount not exceeding $212,500 to the lowest responsive and responsible bidder, so long as the City Council also determines that the City's cost estimate for the project was reasonable.

C. Formal Procedure (more than $200,000). Public projects with cost estimates of more than $200,000 shall, except as otherwise provided in this chapter or the Public Contract Code, be awarded by the City Council pursuant to the public project formal bidding procedure in Section 3.01.060.

D. City Engineer Review. The City Engineer or his designee shall review the working details, drawings, plans and specifications prepared for every maintenance project and other general services project which may affect the design or operation of public improvements and which may bring into question the City's liability for dangerous condition of public property.

E. City Council Approval. The City Council shall review and approve the working details, drawings, plans and specifications prepared for every public project of more than $200,000.

F. Award. Contracts for public projects of $60,000 or less may be awarded in the best interests of the City. Contracts for public projects of more than $200,000, if awarded, shall be awarded to the lowest responsive and responsible bidder. If two or more bids are the same and the lowest, the Authorized Contracting Party may accept the one it chooses in his or her sole and absolute discretion.

G. Dollar Limits and Change Orders or Amendments. The dollar limits indicated herein shall apply to the original contract and to any amendments or change orders. To this end, therefore, unless an exception provided in Section 3.01.100 applies, any contract amendment or change order which would increase the contract amount above any threshold stated herein shall comply with the requirements applicable to the increased contract amount.

H. No Bid Splitting. The City shall not split a project, work, service or purchase into smaller projects, works, services or purchases for the purpose of avoiding any bidding or contracting requirements of this Code. 3.01.040 Bidding requirements for maintenance and general services.

3.01.040 Bidding requirements for maintenance and general services.

A. Alternative Procedure (up to $60,000) (Administrative Approval). Maintenance work and other general services projects with cost estimates of $60,000 or less may be awarded by the City Manager, upon recommendation of the director of the department responsible for the project, by any alternative procedure as defined in Section 3.01.010.

B. Informal Bidding Procedure (more than $60,000 —up to $200,000). Maintenance work and other general services projects with cost estimates of more than $60,000, but less than or equal to $200,000 shall, except as otherwise provided in this chapter, be awarded by the City Manager pursuantManager pursuant to the non-public project informal bidding procedure contained in in Section 3.01.090, so long as the public project funding was previously approved by City Council either in the adopted budget or adopted capital improvement plan.
.

The City Manager shall report to the City Council such maintenance work and other general services projects awarded by the informal bidding procedure within ninety (90) days of the date of the award.

C. Formal Bidding Procedure (more than $200,000). Maintenance work and other general services projects with cost estimates of more than $200,000 shall, except as otherwise provided in this chapter, be awarded by the City Council pursuant to the non-public project formal bidding procedure contained in Section 3.01.080.

D. City Engineer Review. The City Engineer or his designee shall review the working details, drawings, plans and specifications prepared for every maintenance project and other general services project which may affect the design or operation of public improvements, and which may bring into question the City’s liability for dangerous condition of public property.

E. Purchasing Officer Approval. The Purchasing Officer, or his or her designee, shall review and approve the working details, drawings, plans, and specifications prepared for every maintenance work and other general services project.

F. City Council Approval. The City Council shall review and approve the working details, drawings, plans and specifications prepared for every maintenance work and other general services project of more than $200,000.

G. Award. Contracts for maintenance work and other general services projects of $60,000 or less, if awarded, may be awarded in the best interests of the City. Contracts for maintenance work and other general services projects of more than $60,000, if awarded, shall be awarded to the lowest responsive and responsible bidder. If two or more bids are the same and the lowest, the Authorized Contracting Party may accept the one it chooses.

H. Subsequent Contract Awards, Amendments, Extensions or Renewals. Notwithstanding anything herein to the contrary, the City Manager shall not award a subsequent contract to the same individual or entity for the same or similar services on the same project, or amend, extend or renew such a contract, without City Council approval, when the award, amendment, extension or renewal will result in the City paying an aggregate amount of more than $200,000 to the individual or entity in any given fiscal year. For purposes of this section, the phrase "same project" shall include an on-call or as-needed contract.

I. Term Limitation. No maintenance work or other general services contract, except for contracts for solid waste services, may extend for longer than a three-year initial term with a maximum of two, one-year extensions each of which must be approved by the City Council.

J. No Bid Splitting. The City shall not split a project, work, service or purchase into smaller projects, works, services or purchases for the purpose of avoiding any bidding or contracting requirements of this Code.

3.01.050 Bidding requirements for materials, supplies and equipment.

A. Alternative Procedure (up to $60,000) (Administrative Approval). Purchases of materials, supplies and equipment of $60,000 or less may be awarded by the City Manager, upon recommendation of the director of the department responsible for the project, by any alternative procedure as defined in Section 3.01.010.

B. Informal Bidding Procedure (more than $60,000 —less than $200,000). Purchases of materials, supplies and equipment of more than $60,000, but less than or equal to $200,000 shall, except as otherwise provided in this chapter, be awarded by the City Manager pursuant to the non-public project informal bidding procedure provided for in Section

3.01.090, so long as the public project funding was previously approved by City Council either in the adopted budget or adopted capital improvement plan. .

The City Manager shall report to the City Council such purchases of materials, supplies and equipment awarded by the informal bidding procedure within ninety (90) days of the date of the award.

C. Formal Bidding Procedure ($200,000 or more). Purchases of materials, supplies and equipment of more than $200,000 shall, except as otherwise provided in this chapter, be awarded by the City Council pursuant to the non-public project formal bidding procedure provided for in Section 3.010.080.

D. Department Director Approval. The director of the appropriate department shall review and approve the specifications prepared for every purchase of materials, supplies and equipment.

E. Purchasing Officer Approval. The Purchasing Officer, or his or her designee, shall review and approve all contracts for the purchase of materials, supplies and equipment.

F. City Council Approval. The City Council shall review and approve the specifications prepared for every purchase of materials, supplies and equipment of more than $200,000.

G. Award. Contracts for the purchase of materials, supplies and equipment of $60,000 or less, if awarded, may be awarded in the best interests of the City pursuant to Section 3.01.040.G.

Contracts for the purchase of materials, supplies and equipment of more than $60,000, if awarded, shall be awarded to the lowest responsive and responsible bidder pursuant to Section 3.01.040.G. If two or more bids are the same and the lowest, the Authorized Contracting Party may accept the one he or she chooses in his or her sole discretion.

H. Local Bidder Preference. In order to promote the economic health of the City and to encourage local participation in the procurement of materials, supplies and equipment, the City may take into consideration the sales tax to be returned to the City as a result of an award in determining the lowest responsive and responsible bidder. This section shall not be effective unless and until the City Manager adopts a written policy to implement its provisions.

I. No Bid Splitting. The City shall not split a project, work, service or purchase into smaller projects, works, services or purchases for the purpose of avoiding any bidding or contracting requirements of this Code.

3.01.060 Formal bidding procedure for public projects.

A. Uses of Formal Bidding Procedure. This formal bidding procedure shall be used whenever formal bidding is required for a public project.

B. Required Process. The formal competitive bidding procedure shall comply with all aspects of state and local law governing formal competitive bidding, including, but not limited to, the California Public Contract Code, California Government Code, California Labor Code, resolutions of the City Council as may be adopted from time to time, and policies and procedures as the City Manager may approve from time to time.

C. Notice Inviting Formal Bids. Notice inviting formal bids shall be provided. The notice inviting formal bids shall comply with Public Contract Code Section 22037, as such section may be amended from time to time. Notices shall state the time and place for the receiving and opening of sealed bids and distinctly describe the project. At a minimum, the notice inviting formal bids shall:

1. Describe the project;

2. State how to obtain more detailed information about the project;

3. State the date, time and place for the submission of sealed bids; and

4. Include any other information required by state or local law, as determined by the City Attorney.

D. Published Notice. The notice shall be published at least 14 calendar days before the date of opening the bids in a newspaper of general circulation printed and published in the City, or, if there is no such newspaper, in a newspaper of general circulation which is circulated in the City.

E. Distribution of Notice Inviting Formal Bids. The notice inviting formal bids shall also be sent to those construction trade journals specified in Public Contract Code Section 22036 at least 30 calendar days before the date of bid opening.

F. Additional Notice. The City shall also provide any additional notice as it deems proper.

G. Contents of Remaining Bid and Contract Documents. The contents and form of the bid and contract documents shall be approved by the director of the appropriate department, as well as the City Attorney.

H. City's Authority. The City may reject any or all bids received, and may waive any minor irregularities in each bid received.

I. No Bids Received. If no bids are received, the Authorized Contracting Party may award the contract by any alternative procedure.

J. Award of Contract. The contract shall be awarded in accordance with Section 3.01.030. If two or more bids are the same and the lowest, the City may accept the one it chooses in its sole and absolute discretion.

K. Rejection of Bids. The City may, in its sole and absolute discretion, reject any bids presented. If after the first invitation of bids all bids are rejected, after reevaluating its cost estimates for the project, the City shall have the option of any of the following:

1. Abandon the project; or

2. Re-advertise for bids in the manner described in this chapter; or

3. By passage of a resolution by a four-fifths vote of the City Council, declare that the project can be performed more economically by the employees of the City and have the project done by force account.

3.01.070 Informal bidding procedure for certain public projects.

A. Uses of Public Project Informal Bidding Procedure. This informal bidding procedure shall be used when a public project is involved, and informal bidding is permitted by this chapter.

B. Distribution of Notice Inviting Informal Bids to Contractor List. The Purchasing Officer shall provide a notice inviting informal bids not less than ten calendar days before the bids are due. The notice inviting informal bids shall be mailed or provided to all construction trade journals specified in Public Contract Code Sections 22034 and 22036.

C. Contents of Notice Inviting Informal Bids. At a minimum, the notice inviting informal bids shall:

1. Describe the project in general terms;

2. State how to obtain more detailed information about the project;

3. State the date, time and place for the submission of sealed bids; and

4. Include any other information required by state or local law, as determined by the City Attorney.

D. Proprietary Projects or Products. If the director of the appropriate department certifies that, to the best of his or her knowledge, the product or service is proprietary in nature and can be obtained only from a limited number of contractors, and that no equivalent products or services are available, the notice inviting informal bids may be sent exclusively to such contractor or contractors.

E. Contents of Remaining Bid and Contract Documents. The contents and form of the remaining bid and contract documents shall be approved by the director of the appropriate department, as well as the City Attorney.

F. City's Authority. The City may reject any or all bids received, and may waive any minor irregularities in each bid received.

G. No Bids Received. If no bids are received, the Authorized Contracting Party may award the contract by any alternative procedure.

H. Award of Contract. The contract shall be awarded in accordance with Section 3.01.030.F. If two or more bids are the same and the lowest, the City may accept the one it chooses in its sole and absolute discretion.3.01.080 Formal bidding procedure for non-public projects.

3.01.080 Formal bidding procedure for non-public projects.

A. Uses of the Non-Public Project Formal Bidding Procedure. A formal bidding procedure shall be used whenever formal bidding is required by this chapter and the project does not involve a public project.

B. Distribution of Notice Inviting Formal Bids or Request for Proposals. A notice inviting formal bids or a request for proposals, as appropriate, shall be published at least 14 calendar days before the date of opening the bids or proposals in a newspaper of general circulation printed and published in the City, or, if there is no such newspaper, in a newspaper of general circulation which is circulated in the City. The notice inviting formal bids or request for proposals may also be provided directly to vendors or contractors. The City shall endeavor to receive formal bids or proposals from at least three vendors or contractors. A notice inviting bids shall be used whenever the project or purchase must be awarded to the lowest responsible and responsive bidder. A request for proposals may be used whenever the project or purchase is not required to be awarded to the lowest responsible and responsive bidder. If the Purchasing Officer and the director of the appropriate department certify that, to the best of their knowledge, there is no local source or local provider available for the project, the notice inviting bids or the request for proposals, as appropriate, may be distributed to a list of qualified vendors maintained by the Purchasing Officer and/or published in a trade journal appropriate to the project, in lieu of publication in a newspaper of general circulation.

C. Contents of Notice Inviting Formal Bids or Request for Proposals. At a minimum, the notice inviting formal bids or request for proposals shall:

1. Describe the project or purchase in general terms;

2. State how to obtain more detailed information about the project or purchase;

3. State the date, time and place for the submission of bids or proposals; and

4. Include any other information required by state or local law, as determined by the City Attorney. Bids for purchases of more than $200,000 shall be sealed bids.

D. Proprietary Projects or Sole Source Products. If the director of the appropriate department certifies that, to the best of his or her knowledge, the product or service is proprietary in nature and can be obtained only from a limited number of vendors or contractors, and that no equivalent products or services are available, the notice inviting formal bids or request for proposals may be sent exclusively to such vendor(s) or contractor(s).

E. Contents of Remaining Bid and Contract Documents. The contents and form of the remaining bid and contract documents shall be approved by the director of the appropriate department, as well as the City Attorney.

F. City's Authority. The City may reject any or all bids or proposals received, and may waive any minor irregularities in each bid or proposal received.

G. No Bids Received. If no bids are received, the Authorized Contracting Party may award the contract by any alternative procedure.

3.01.090 Informal bidding procedure for non-public projects.

A. Uses of Non-Public Project Informal Bidding Procedure. This informal bidding procedure shall be used whenever informal bidding is allowed for a purchase which does not involve a public project.

B. Distribution of Notice Inviting Informal Bids or Request for Proposals. A Notice inviting informal bids or request for proposals, as appropriate, shall be provided. The notice inviting informal bids or requests for proposals shall be provided to at least three vendors or contractors, and the City shall endeavor to receive informal bids or proposals from at least three vendors or contractors. A notice inviting bids shall be used whenever the project or purchase must be awarded to the lowest responsible and responsive bidder. A request for proposals may be used whenever the project or purchase is not required to be awarded to the lowest responsible and responsive bidder.

C. Contents of Notice Inviting Informal Bids or Request for Proposals. At a minimum, the notice inviting informal bids or request for proposals shall:

1. Describe the project or purchase in general terms;

2. State how to obtain more detailed information about the project or purchase;

3. State the date, time and place for the submission of bids or proposals; and

4. Include any other information required by state or local law, as determined by the City Attorney. Bids for purchases of more than $60,000 shall be sealed bids.

D. Proprietary Projects or Products. If the director of the appropriate department certifies that, to the best of his or her knowledge, the product or service is proprietary in nature and can be obtained only from a limited number of vendors or contractors, and that no equivalent products or services are available, the notice inviting informal bids or request for proposals may be sent exclusively to such vendor(s) or contractor(s).

E. Contents of Remaining Bid and Contract Documents. The contents and form of the remaining bid and contract documents shall be approved by the director of the appropriate department, as well as the City Attorney.

F. City's Authority. The City may reject any or all bids or proposals received, and may waive any Minor irregularities in each bid or proposal received.

G. No Bids or Proposals Received. If no bids or proposals are received, the Authorized Contracting Party may award the contract by any alternative purchasing procedure.

3.01.100 Exceptions to competitive bidding on public projects.

In addition to the situations described in Section 3.01.030, competitive bidding, either formal or informal, is not required for public projects in the situations provided for in this section. Under such conditions, the alternative procedure may be used.

A. Emergencies. In situations determined by the City Manager to constitute an emergency for repair or replacement of a public project pursuant to Public Contract Code Section 22035 and Public Contract Code Section 22050, the City Council hereby delegates to the City Manager the power to declare a public emergency and take any directly related and immediate action required by the emergency, up to a total of $200,000, pursuant to California Public Contract Code Section 22035 and California Public Contract Code Section 22050. Emergency expenditures of more than $200,000 shall first be approved by the City Council. Work may be performed without the benefit of competitive bidding, either formal or informal, only so long as necessary under those sections.

For projects of more than $60,000, a report on the emergency and work performed shall be provided at the next regular meeting of the City Council, and then at every meeting thereafter required by California Public Contract Code Section 22050. At such meetings, the City Council shall determine, by a four-fifths vote, that there is a need to continue the action without the benefit of informal or formal competitive bidding in accordance with California Public Contract Code Section 22035 and California Public Contract Code Section 22050. The City Council shall terminate the emergency action at the earliest possible date that conditions warrant, so that the remainder of the emergency action may be completed pursuant to a formal bidding procedure or other applicable procedure.

For projects of $200,000 or less, the City Manager shall determine, on his or her own as the action continues, whether there is a need to continue the action without the benefit of the applicable bidding procedure. The City Manager shall terminate the emergency action at the earliest possible date that conditions warrant, so that the remainder of the emergency action may be completed pursuant to the applicable bidding procedure.

B. No Competitive Market. When the City Council determines, in accordance with applicable law, that a competitive market does not exist and that no competitive advantage will be gained by the public bidding process.

C. No Bids Received. When no bids are received pursuant to either the public project informal bidding procedure or the public project formal bidding procedure the Purchasing Officer may proceed by the alternative procedure.

D. Otherwise Authorized. When otherwise authorized by this chapter or applicable law including, but not limited to Public Contract Code Section 22160 et seq. concerning design build.

3.01.110 Exceptions to competitive bidding on non-public projects.

In addition to the situations described in Sections 3.01.090 through 3.01.100, competitive bidding, either formal or informal, is not required for non-public projects in the situations provided for in this section. Under such conditions, any alternative procedure, including no bidding, may be used with the City Manager's approval.

A. Emergencies. In situations determined by the Authorized Contracting Party to constitute an emergency, as defined in Section 3.01.010.

B. No Competitive Market. When the City Council determines, in accordance with applicable law, that a competitive market does not exist and that no competitive advantage will be gained by the public bidding process.

C. Competitive Bidding Already Completed. When the Authorized Contracting Party determines that a competitive bid procedure has been conducted by another public agency (e.g., through CMAS or GSA) and the price to the City is equal to or better than the price to that public agency.

D. State Purchase. When the purchase is made on behalf of the City by the State Department of General Services.

E. Purpose of Bidding is Otherwise Accomplished. When the City Manager determines that it is in the best interest of the City and its administrative operations to dispense with public bidding for non-public projects under this chapter. Prior City Council concurrence with the City Manager's determination shall be required for non-public project purchases over $200,000.

F. No Bids Received. When no bids are received non-public project formal or informal bidding procedures.

G. Expenses. The reimbursement or payment of travel expenses and other employee expenses.

H. Insurance. The payment of any insurance premiums or claims, including employee medical payments.

I. Real Property. The purchase or lease of real property with City Council approval.

J. Banking. Banking services.

K. Otherwise Authorized. When otherwise authorized by this chapter or applicable law.

3.01.120 City Manager authorization to execute contracts.

Pursuant to the California Government Code, the Mayor must execute all contracts on behalf of the City, unless another City officer or employee is authorized to do so. The City Manager and his or her designees, as explicitly set forth in this chapter and the administrative policies implementing this chapter, are hereby authorized to execute contracts on behalf of the City.

Staff Report

TO: City Council
FROM: Robert Vestal, Assistant Public Works Director
DATE April 18, 2023
SUBJECT: Bond Exoneration for Survey Monuments for Tract Map No. 31462-8

Description Bond Exoneration for survey monuments associated with Tract Map No. 31462-8.

Background and Analysis:

The City requires all developers to provide security for public improvements consisting of, but not limited to, sewer, street, storm drain, utility, and survey monuments per City of Beaumont Municipal Code 16.56.010. Survey monuments do not require a maintenance period and are generally not publicly maintained.

D.R. Horton (Tract Map No. 31462-8)
The principal, Western Pacific Housing, Inc., dba D.R. Horton is requesting that the monument bonds listed in Table No. 1 be exonerated. City staff has verified that th e survey monuments were installed per the approved Tract Map.

Table No. 1 – Summary of Monument Bonds to be Exonerated.

Project Bond Number PW
Number Principal
Tract Map No.
31462-8 0206492 PW2020-
0525
Western Pacific Housing,
Inc. dba D.R. Horton

Fiscal Impact:

The cost of preparing the staff report is estimated to be $350. There are no maintenance cost associated with survey monuments.

Recommended Action:

Authorize staff to issue a bond exoneration letter for monument bonds for Tract Map No. 31462-8, bond number 0206492.

Attachments:

A. PW2020-0525 - TR 31462-8 Monument Bond 0206492 Exoneration Packet

Staff Report

TO: City Council
FROM: Thaxton Van Belle, General Manager of Utilities
DATE April 18, 2023
SUBJECT: Second Amendment of an Agreement to Extend the Contract for Professional Services with Burrtec Waste Industries, Inc. to Provide Sludge Hauling Services for the Wastewater Treatment Plant

Description City staff is requesting approval of the Second Amendment to extend the contract for Sludge Hauling Services with Burrtec Waste Industries.

Background and Analysis:

The City issued a request for proposals (RFP) on January 28, 2019, to interested firms qualified to provide sludge hauling services for the WWTP. Burrtec Waste Industries, Inc. was selected to provide sludge hauling services for the WWTP for a three -year contract with the option to extend for two additional one-year periods, paid at the rate of

56.60 per ton of sludge which adjusts annually, each July 1, by a flat 3% escalator. This contract was executed on May 1, 2019 (Attachment A).

In March 2020, both parties entered into a letter agreement, whereby Burrtec agreed to suspend the automatic 3% escalator in costs under the agreement until January 31, 2021. This letter agreement delayed the implementation of the escalator due to the first wave of Covid and the unknowns both parties faced.

In February 2022, the First Amendment was approved with an increase of 3% from $60.08/ton to $61.88/ton beginning July 1, 2022, through April 30, 2023 (Attachment B).

Burrtec Waste Industries provided a “Request for Extension Letter” (Attachment C), to extend the term of the Agreement and agreeing that the escalator shall remain the same. Burrtec has performed well, and staff is recommending this extension.

Fiscal Impact:

The fiscal impact for Sludge Hauling Services for the WWTP is an increase of 3% ($61.88/Ton to $63.74/Ton) beginning May 1, 2023, from account 700 -4050-7068-0000.

This contract is budgeted for in the current fiscal year and can absorb the percentage increase and will be budgeted for accordingly in the next fiscal year.

The cost to prepare this report is estimated at $1,200.

Recommended Action:

Approve the Second Amendment of an Agreement to extend the existing contract for Professional Services with Burrtec Waste Industries, Inc., to Provide Sludge Hauling Services for the Wastewater Treatment Plant through April 30, 2024.

Attachments:

A. Original Agreement for Professional Services by Independent Contractor.

B. First Amendment Agreement for Extension of Professional Services.

C. Burrtec Request for Extension Letter.

D. Second Amendment Agreement for Extension of Professional Services .

Burrtec Landfill Division
Contractor’s License #791805
9400 Cherry Avenue, Building C ● Fontana, California 92335 ● 909-743-6319 ● Fax 909-714-1776

Ms. Sunshine Sanchez March 29, 2023
Management Analyst
City of Beaumont
550 E. 6th Street
Beaumont, CA 92223

Re: BioSolids Management

Dear Ms. Sanchez:

As a follow up to our conversation, Burrtec Waste Industries, Inc., is pleased to provide this letter confirming our desire to extend the Agreement for Professional Services, to provide Non- Hazardous Sludge Hauling Services, dated May 1st, 2019 for the second of the two potential one-year extension periods.

As discussed, we agree to extending the existing Terms of the Agreement as follows:

• The Effective Date of the original Agreement shall remain May 1, 2019. • The termination date of the second extension period shall be April 30, 2024. • All other components of the Agreement including those outlined in Paragraph 2 - Services to be Performed, and Paragraph 4 – Compensation, shall remain the same.

If our terms for extension are agreeable to you, please provide written notice of the City’s intent to exercise its option to extend the term of the contract as provided for in Paragraph 1 of the Agreement for Professional Services, dated May 1st, 2019.

We continue to appreciate the opportunity to serve the City of Beaumont.

Please call if you have any questions.

Sincerely,

David S Brischke

David S Brischke, P.E.

Regional General Manager

SECOND AMENDMENT TO AGREEMENT FOR INDEPENDENT CONTRACTOR

THIS SECOND AMENDMENT TO AGREEMENT OF SERVICES BY INDEPENDENT CONTRACTOR (“Amendment”) is made and effective as of the 1st day of May 2023 by and between the CITY OF BEAUMONT (“CITY”), a general law city, and Burrtec Waste Industries, Inc., a California Corporation (“CONTRACTOR”) in consideration of the mutual promises and purpose contained herein, the parties agree as follow:

RECITALS

This Amendment is made with respect to the following facts and purpose that the parties agree are true and correct:

A. On May 1, 2019, the CITY and CONTRACTOR entered into that certain agreement entitled “Agreement for Professional Services by Independent Contractor” (“Agreement”) for non-hazardous sludge hauling services.

B. In June 2020, the parties entered into a letter agreement, whereby Contractor agreed to suspend the automatic three percent (3%) escalator in costs under the agreement until January 31,2021.

C. Contractor had provided a Letter of Extension dated December 2, 2021, to extend the term of the Agreement and to include Services to be performed and Compensation to remain the same.

D. On May 1, 2022, the City and Contractor entered into the “First Amendment to Agreement for Professional Services by Independent Contractor”.

E. Contractor provided a “Request for Extension Letter” to extend the term of agreement with the agreeance of the automatic 3% cost escalator.

AMENDMENT

Section 1. Term of Agreement In accordance with Section 1 of the Agreement, the parties agree to extend the term of the Agreement by one (1) year. Notwithstanding anything in this Agreement to the contrary, this Agreement shall automatically terminate April 30, 2024, unless earlier terminated by the parties in accordance with the Agreement or extended by the parties with the approval of the City Council of the City.

Section 2. The recitals to this Amendment are deemed incorporated herein by this reference. All other terms of the Agreement not expressly amended by this Amendment shall remain in full force and effect. In the event of a conflict between the Agreement and this Amendment, this Amendment shall control.

[Signatures on following page]

SIGNATURE PAGE TO

CITY OF BEAUMONT

SECOND AMENDMENT

CITY:

CITY OF BEAUMONT

By: ________________________________
Julio Martinez, Mayor
CONTRACTOR:

BURRTEC WASTE INDUSTRIES, INC., a

CALIFORNIA CORPORATION

By: ______________________________

Print Name: _______________________

Title: _____________________________

ATTEST:

By: ______________________________
Nicole Wheelwright, Deputy City Clerk
APPROVED AS TO FORM:

By: ___________________________
John O. Pinkney, City Attorney

Staff Report

TO: City Council
FROM: Jennifer Ustation, Finance Director
DATE April 18, 2023
SUBJECT: FY2022-2023 3rd Quarter Cash and Investment Report

Description Receive and file FY2022-2023 3rd Quarter Cash and Investment Report.

Background and Analysis:

In accordance with Government Code Section 53646(8)(1) and per the City’s Investment Policy, the City Treasurer through the Finance Department shall submit to the Finance Committee a quarterly report that will then be taken to the City Council.

Staff has prepared the investment reports and certification as of quarter ending March 31, 2023. A summary of bank activity by each month in the quarter is provided below.

Bank Name Beginning Bank
Balance
January 1, 2023
Deposits Payments Ending Bank
Balance January
31, 2023
Wells Fargo Checking 12,909.00 30,578,253.53 30,576,768.53 14,394.00 Wells Fargo - Sweep 13,003,745.63 23,624,965.94 3,044,941.46 33,583,770.11 Bank of Hemet - Payroll 1,240,262.64 2,500,000.00 1,740,427.82 1,999,834.82 Bank of Hemet - Gas Tax 4,173,614.73 337,969.09 - 4,511,583.82 Bank of Hemet - Evidence and Seizure Fund 344,163.39 30.17 - 344,193.56 Bank of Hemet - Workers Comp 37,450.48 - - 37,450.48 Bank of Hemet - Construction 8,473,914.85 742.92 - 8,474,657.77 Grand Total 27,286,060.72 57,041,961.65 35,362,137.81 48,965,884.56

Bank Name Beginning Bank
Balance
February 1,
2023
Deposits Payments Ending Bank
Balance
February 28,
2023
Wells Fargo Checking 14,394.00 19,987,649.09 19,954,061.09 47,982.00 Wells Fargo - Sweep 33,583,770.11 8,931,303.82 9,927,232.69 32,587,841.24 Bank of Hemet - Payroll 1,999,834.82 - 1,450,550.75 549,284.07 Bank of Hemet - Gas Tax 4,511,583.82 100,494.74 4,612,078.56 Bank of Hemet - Evidence and Seizure Fund 344,193.56 26.40 - 344,219.96 Bank of Hemet - Workers Comp 37,450.48 - - 37,450.48 Bank of Hemet - Construction 8,474,657.77 650.11 - 8,475,307.88 Grand Total 48,965,884.56 29,020,124.16 31,331,844.53 46,654,164.19 Bank Name Beginning Bank
Balance March
1, 2023
Deposits Payments Ending Bank
Balance March
31, 2023
Wells Fargo Checking 47,982.00 12,434,348.85 12,370,654.85 111,676.00 Wells Fargo - Sweep 32,587,841.24 5,992,094.37 4,192,722.96 34,387,212.65 Bank of Hemet - Payroll 549,284.07 2,500,000.00 1,428,418.19 1,620,865.88 Bank of Hemet - Gas Tax 4,612,078.56 266,739.11 4,878,817.67 Bank of Hemet - Evidence and Seizure Fund 344,219.96 29.24 344,249.20 Bank of Hemet - Workers Comp 37,450.48 37,450.48 - Bank of Hemet - Construction 8,475,307.88 719.82 8,476,027.70 Grand Total 46,654,164.19 21,193,931.39 18,029,246.48 49,818,849.10

The significant transactions during the quarter were as follows:

 LAIF interest recorded on 1/12/2023 in the amount of $253 ,262.21, in comparison to prior year 2nd quarter payment was $42,983.68.  Net income received for the quarter on the portfolio managed by Public Trust is $145,461.65.
 Interest received for the quarter on the Wells Fargo Sweep account is $290,060.94.
 Bank of Hemet CD matured, received funds and deposited them into pooled cash.
 Closed Bank of Hemet Workers Comp account. It was no longer needed since the City is working with Sedgewick who invoices for any claim costs associated with workers compensation claims.

The March PARS report at the time of preparing this report was not yet available.

CITIBANK ACCOUNTS #January 2023 February 2023 March 2023 Wells Fargo
GENERAL 52455 14,394.00$ 47,982.00$ 111,676.00$ Sweep 33,583,770.11$ 32,587,841.24$ 34,387,212.65$

BANK OF HEMET
PAYROLL 50301 1,999,834.82$ 549,284.07$ 1,620,865.88$ GAS TAX 21901 4,511,583.82$ 4,612,078.56$ 4,878,817.67$ EVIDENCE AND SEIZURE FUND 20042 344,193.56$ 344,219.96$ 344,249.20$ WORKERS COMP 37,450.48$ 37,450.48$ -$ CONSTRUCTION 20048 8,474,657.77$ 8,475,307.88$ 8,476,027.70$ 15,367,720.45$ 14,018,340.95$ 15,319,960.45$

US BANK
INVESTMENT PORTFOLIO 10770 45,266,948.53$ 45,343,509.58$ 45,306,879.74$ LIQUIDITY FUND 13574 35,443,262.13$ 35,560,700.74$ 35,673,649.42$ 80,710,210.66$ 80,904,210.32$ 80,980,529.16$
LAIF 3-056 47,861,014.02$ 47,861,014.02$ 47,861,014.02$ PARS 2,457,629.30$ 2,397,994.88$
BANK BALANCES 3rd QTR FY 22-23

Fiscal Impact:

There is no fiscal impact with this report as it is informational only. The estimated cost to prepare this report is $720.

Recommended Action:

Receive and file report.

Attachments:

A. Pooled Cash Investments Holding Report as of March 31, 2023 B. Pooled Cash Report as of March 31, 2023
C. Investment Certification for Quarter Ending March 31, 2023 D. Wilmington Trust Security Listings as of March 31, 2023 E. Wilmington Trust Maturity Dates
F. Public Trust Advisors Aggregate Portfolio Report

DESCRIPTION OF SECURITYCOUPON RATEMATURITY DATE*INVEST RATINGPURCH DATE COST VALUE MARKET VALUEEstimated Current YieldDeposit AccountsWells Fargo Checking (Pooled Cash) N/A N/A NR N/A 111,676.00        111,676.00           Wells Fargo Sweep Account N/A N/A NR N/A 34,387,212.65   34,387,212.65     4.65Bank of Hemet ‐ Payroll N/A N/A NR N/A 1,620,865.88     1,620,865.88       Bank of Hemet ‐ Gas Tax 0.1 N/A NR N/A 4,878,817.67     4,878,817.67       Bank of Hemet ‐ Evidence and Seizure Fund 0.1 N/A NR N/A 344,249.20        344,249.20           Bank of Heemt ‐ Workers Comp 0.1 N/A NR N/A‐                        ‐                         Bank of Hemet ‐ Construction 0.1 N/A NR N/A 8,476,027.70     8,476,027.70       49,818,849.10     Certificates of DepositBank of Hemet 0.75 3/27/2023 NR 3/27/2019‐                        ‐                         Local Agency Investment Fund (LAIF)N/A Varies NR Varies 47,861,014.02   47,861,014.02     2.624Cash & EquivalentsN/A N/A NR N/A 16,237,971.42   16,237,971.42     Fixed Income SecuritiesVaries Varies Varies Varies 12,438,138.00   12,439,919.21     Cash & EquivalentsN/A N/A NR N/A 35,748,879.05   35,748,879.05     4.4Fixed Income SecuritiesVaries Varies Varies Varies 45,231,650.11   44,616,515.95     2.74Cash & Equivalents2,500,000.00     Cash and Investment Held by Third Party Trustee (PARS Pension 115 Trust)CITY OF BEAUMONTPOOLED INVESTMENT PORTFOLIO HOLDINGSMarch 31, 2023Cash and Investment Held by Third Party Trustee (Wilmington Trust)Cash and Investment Held by Third Party Trustee (US Bank)Page 135 of 350

Pooled Cash ReportFor the Period Ending 3/31/2023Fund (Claim on Cash) Account Name Beginning Balance Current Activity Current Balance 100 General Fund 43,137,857.02     13,361,725.39    58,827,780.75     120 Self Insurance 2,154,138.97       122,228.59          2,276,367.56       200 Highway Users Tax (GAS) (1,361,698.50)      281,274.10          (1,080,424.40)      201 SB1 (1,140,785.03)       ‐                        (1,140,785.03)      202 Measure A 1,672,944.96       886,991.73          2,559,936.69       205 Motor Vehicle Subvention (AB2766) 343,994.88           (85,693.89)           258,300.99           210 Public, Education, Govt (PEG) 23,142.16             10,957.86            34,100.02             215 Community Development/Grants (CDBG) 3,461,595.34       (4,059,244.76)     (597,649.42)         220 Citizen Option Public Safety (COPS) 452,898.86           (8,069.17)             444,829.69           225 Asset Seizures ‐ State 53,808.85             (38,074.32)           15,734.53             230 Asset Seizures ‐ Federal‐                          ‐                         ‐                         240 Other Special Revenue Fund 375,880.29           47,631.25            423,511.54           250 Community Facitlities District (CFD)‐Admin 1,503,574.94       (981,798.61)         521,776.33           255 Community Facilities District (CFD)‐Maint 617,546.73           456,630.98          1,074,177.71       260 Community Facilities District (CFD)‐Public Safety 178,912.11           229,715.58          408,627.69           500 General Capital Projects 7,804,646.66       (3,701,440.41)     4,103,206.25       510 Community Facilities District 13,016,221.01     (26,504.52)           12,989,716.49     550 Other Mitigation 13,420.73             126.49                  13,547.22             552 Basic Services Mitigation 1,448,516.99       201,739.89          1,650,256.88       554 General Plan Mitigation 102,458.95           110,789.94          213,248.89           555 Recreational Facilities Mitigation 2,091,405.45       206,149.79          2,297,555.24       556 Traffic Signal Mitigation 1,712,567.50       86,673.13            1,799,240.63       558 Railroad Crossing Mitigation 2,684,879.09       166,025.27          2,850,904.36       559 Police Facilities Mitigation 1,388,980.70       297,154.93          1,686,135.63       Page 136 of 350

560 Fire Station Mitigation 5,269,321.36       378,850.04          5,648,171.40       562 Road and Bridge Mitigation 13,833,524.87     447,822.49          14,281,347.36     564 Recycled Water Mitigation 4,524,809.40       (62,793.28)           4,462,016.12       566 Emergency Preparedness Mitigation (97,266.00)           687,254.46          589,988.46           567 Community Park Mitigation 1,891,663.93       539,818.34          2,431,482.27       568 Regional Park Mitigation 1,945,796.94       10,623.40            1,956,420.34       569 Neighborhood Parks Mitigation 2,443,206.67       661,778.59          3,104,985.26       570 Pass Thru DIF Fund 6,325,880.15       1,819,953.85       8,145,834.00       600 Internal Service Fund 6,937,761.33       (362,455.10)         6,575,306.23       700 Wastewater 7,256,480.69       1,153,290.29       8,409,770.98       705 Wastewater Mitigation 6,727,391.87       1,681,626.84       8,409,018.71       710 Wastewater Capital Projects (339,330.57)         (4,182,992.37)     (4,522,322.94)      750 Transit 1,230,834.04       (721,774.71)         509,059.33           755 Transit GASB 373,030.97            ‐                        373,030.97           760 Transit Capital Projects (365,393.39)         (67,292.40)           (432,685.79)         840 City of Beaumont CFD 20,899,792.46     (7,827,771.21)     13,072,021.25     850 Beaumont Finance Authority‐                         23,617.21            23,617.21             855 Beaumont Public Improv Authority 0.01                        ‐                        0.01                       860 Evidence 32,250.59             (7,583.10)             24,667.49             160,626,663.98   4,065,160.92       164,691,824.90   Total Claim on CashCash In BankPooled Cash 5,232,350.32       (5,120,674.32)     111,676.00           Sweep‐                         34,387,212.65    34,387,212.65     Investments with Trustee 79,524,222.22     1,456,306.94       80,980,529.16     LAIF 74,763,001.48     (26,901,987.46)   47,861,014.02     Total Cash in the Bank 159,519,574.02   3,820,857.81       163,340,431.83   Due to Other Funds999 Due to Other Funds 6,339,440.28       (4,876,371.21)     1,463,069.07       Total Due to Other Funds 6,339,440.28       (4,876,371.21)     1,463,069.07       Page 137 of 350

Cash in Bank 159,519,574.02   163,340,431.83   Claim on Cash 160,626,663.98   164,691,824.90   Difference (1,107,089.96)      (1,351,393.07)      Pooled Cash 5,232,350.32       111,676.00           Due to Other Funds 6,339,440.28       1,463,069.07       (1,107,089.96)      (1,351,393.07)      Total Difference (0.00)                     (0.00)                     Page 138 of 350

Holdings SummaryFor 613 AccountsAccount Level Detail - Separate Principal and IncomeAs of Date 03/31/2023Comparison Date 03/31/2023Account Portfolio Type/Currency(Local) Security Type Asset Class/IndustryMarketValueMV (%)AccruedIncomeUnknownAccruedIncome?MV w/AccruedIncomeUnknownMV with Acr Inc?Market ValueComparison DateMV (%)Comparison DateCash & Equivalents Taxable 16,237,971.42 21,035.4955,939.82 0.00 16,293,911.24 0.00 16,237,971.42 21,035.49Fixed Income U.S. Tax-Exempt Fixed Income 12,438,138.00 864.51 1,781.21 0.00 12,439,919.21 0.00 12,438,138.00 864.51131715-005 Principal Portfolio - USD Other Insurance 1.00 100.00 0.00 + 1.00 + 1.00 100.00+ Unknown^ IncompleteRun Date 4/5/2023 6:36:44 PMPage 1 of 1Page 140 of 350

City of Beaumont Maturity Dates (all issues)
121031-000 Beaumont CFD93-1 2013A Financing Authority Authority 9/1/2023 121032-000 Beaumont CFD93-1 2013A IA19C CFD 9/1/2023
**Issue pays in full on 9/1/2023**
121035-000 Beaumont CFD93-1 2013A Financing Authority Authority 9/1/2023 121037-000 Beaumont CFD93-1 2013A IA17A CFD 9/1/2023
**Issue pays in full on 9/1/2023**
121041-000 Beaumont CFD93-1 2015A Financing Authority Authority 9/1/2045 121043-000 Beaumont CFD93-1 2015A IA7A1 CFD 9/1/2045
121046-000 Beaumont CFD93-1 2015B Financing Authority Authority 9/1/2035 121048-000 Beaumont CFD93-1 2015B IA19A CFD 9/1/2035
121049-000 Beaumont CFD93-1 2015C Financing Authority Authority 9/1/2034 121050-000 Beaumont CFD93-1 2015C IA18 CFD 9/1/2034
121051-000 Beaumont CFD93-1 2015D Financing Authority Authority 9/1/2034 121052-000 Beaumont CFD93-1 2015D IA16 CFD 9/1/2034
123240-000 Beaumont 93-1 2017A IA6A1 Authority 9/1/2035 123431-000 Beaumont 93-1 2017A IA8 Authority 9/1/2032
123239-000 Beaumont 93-1 2017A IA8A Authority 9/1/2035
123433-000 Beaumont 93-1 2017A IA8B Authority 9/1/2037
120990-009 Beaumont 93-1 2017A IA8C Authority 9/1/2038

123223-000 Beaumont 93-1 2017A IA8D Authority 9/1/2039
123436-000 Beaumont 93-1 2017A 1A14 Authority 9/1/2032
123456-000 Beaumont 93-1 2017A IA14A Authority 9/1/1933 123221-000 Beaumont 93-1 2017A IA14B Authority 9/1/1937 121032-013 Beaumont 93-1 2017A IA19C Authority 9/1/1936 121021-034 Beaumont 93-1 2018A IA7B Authority 9/1/1939
132553-000 Beaumont 93-1 2018A IA7D Authority 9/1/1948
121009-017 Beaumont 93-1 2018A IA8C Authority 9/1/1948
123223-010 Beaumont 93-1 2018A IA8D Authority 9/1/1948
132571-000 Beaumont 93-1 2018A IA8E Authority 9/1/1948
129848-000 Beaumont 93-1 2018A IA17C Authority 9/1/1948 131715-000 Beaumont Pub Imp WW Rev Bds 2018 WasteWater 9/1/1949 136802-000 Beaumont BPIA LRBS Series 2019 Authority 9/1/1932 136797-000 Beaumont CFD 93-1 2019 IA3 CFD 9/1/2032

136798-000 Beaumont CFD 93-1 2019 IA9 CFD 9/1/2032
136799-000 Beaumont CFD 93-1 2019 IA10A CFD 9/1/2032
136800-000 Beaumont CFD 93-1 2019 IA11 CFD 9/1/2032
136801-000 Beaumont CFD 93-1 2019 IA12 CFD 9/1/2032
134436-000 Beaumont 2016-1 (Fariway Cyn) IA 19C 2019 Authority 9/1/2049 136806-000 Beaumont CFD 2016-2 2019 (Sundance) Authority 9/1/2049 138228-000 Beaumont CFD 2016-4 2019 Authority 9/1/2049
141969-002 Beaumont CFD 93-1 2020 IA8F Authority 9/1/2050 143124-000 Beaumont CFD 2019-1 2020 Authority 9/1/2050
142529-000 Beaumont CFD93-1 2020 Financing Authority 9/1/2042 121009-018 Beaumont CFD 93-1 2020 IA8C 9/1/2042
142528-000 Beaumont CFD 93-1 2020 IA17B 9/1/2042
149426-000 Beaumont BPIA LRBS Series 2021 9/1/2039
121021-100 Beaumont CFD 93-1 2021 IA7B 9/1/2039
149424-000 Beaumont CFD 93-1 2021 IA7C 9/1/2039
149422-000 Beaumont CFD 93-1 2021 IA17A 9/1/2034
149421-000 Beaumont CFD 93-1 2021 IA19C 9/1/2036
149425-000 Beaumont CFD 93-1 2021 IA20 9/1/2035

Board PackagePTA-City of Beaumont Aggregate (303582)Month End (M3 Y2023)03/01/2023 - 03/31/2023Dated: 04/04/2023Locked DownPage 144 of 350

Risk Summary (1) (PTA-City of Beaumont Aggregate (303582))1Performance Overview (PTA-City of Beaumont Aggregate (303582))5Index Comparison (PTA-City of Beaumont Aggregate (303582))8GAAP Financials (PTA-City of Beaumont Aggregate (303582))11Current Holdings (PTA-City of Beaumont Aggregate (303582))12Realized Gain/Loss (PTA-City of Beaumont Aggregate (303582))13Income Detail (PTA-City of Beaumont Aggregate (303582))14Issuer Concentration (> $550K) (PTA-City of Beaumont Aggregate (303582))15Historical Trends (PTA-City of Beaumont Aggregate (303582))16Credit Events (PTA-City of Beaumont Aggregate (303582))17Table of ContentsDated: 04/04/2023Page 145 of 350

Cash and Fixed Income SummaryRisk MetricValueCash128,970.82MMFund35,748,879.05Fixed Income44,907,189.73Duration0.980Convexity0.023WAL1.038Years to Final Maturity1.036Years to Effective Maturity1.036Yield4.321Book Yield3.629Avg Credit RatingAAA/Aaa/AAABalance SheetBook Value + Accrued81,552,361.12Net Unrealized Gain/Loss-767,321.52Market Value + Accrued80,785,039.60Issuer ConcentrationIssuer Concentration% of Base MarketValue + AccruedOther0.390%United States42.366%U.S. Bancorp44.252%Toyota Motor Corporation1.202%PACCAR Inc1.943%Federal Home Loan Banks3.330%Farm Credit System1.647%Chevron Corporation1.251%Caterpillar Inc.1.228%Apple Inc.1.167%Amazon.com, Inc.1.224%---100.000%Footnotes: 1,2Asset ClassMarket SectorSecurity TypeRisk Summary (1)PTA-City of Beaumont Aggregate (303582)03/01/2023 - 03/31/2023Return to Table of ContentsDated: 04/04/20231Page 146 of 350

Credit Duration Heat MapRating0 - 11 - 22 - 33 - 44 - 55 - 77 - 1010 - 1515 - 30AAA50.500%24.564%17.858%0.000%0.000%0.000%0.000%0.000%0.000%AA0.000%2.475%0.230%0.000%0.000%0.000%0.000%0.000%0.000%A0.000%2.430%1.943%0.000%0.000%0.000%0.000%0.000%0.000%BBB0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%BB0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%B0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%CCC0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%CC0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%C0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%NA0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%0.000%Time To MaturityCredit RatingDurationRisk Summary (1)PTA-City of Beaumont Aggregate (303582)03/01/2023 - 03/31/2023Return to Table of ContentsDated: 04/04/20232Page 147 of 350

MMF Asset AllocationIndustry SectorIndustry GroupIndustry SubgroupRisk Summary (1)PTA-City of Beaumont Aggregate (303582)03/01/2023 - 03/31/2023Return to Table of ContentsDated: 04/04/20233Page 148 of 350

1: * Grouped by: Issuer Concentration. 2: * Groups Sorted by: % of Base Market Value + Accrued.Risk Summary (1)PTA-City of Beaumont Aggregate (303582)03/01/2023 - 03/31/2023Return to Table of ContentsDated: 04/04/20234Page 149 of 350

SummaryBase ReturnsBeta DistributionPerformance OverviewPTA-City of Beaumont Aggregate (303582)03/01/2023 - 03/31/2023Return to Table of ContentsDated: 04/04/20235Page 150 of 350

Compliance OverviewStatusCompliantAs of03/31/2023Equity SummaryEquity MetricValueEquity0.00Beta---R Squared---Trailing P/E---Dividend Yield---Portfolio SummaryAsset ClassBase Market Value + AccruedCash128,970.82Money Market Funds35,748,879.05Fixed Income44,907,189.73Total80,785,039.60Footnote: 1Reconciliation StatusCustody Reconciliation StatusReconciledCustody Last Reconciled For04/03/2023Trading System Last Reconciled For03/28/2023Cash and Fixed Income SummaryRisk MetricValueCash128,970.82MMFund35,748,879.05Fixed Income44,907,189.73Duration0.980Convexity0.023WAL1.038Years to Final Maturity1.036Years to Effective Maturity1.036Yield4.321Book Yield3.629Avg Credit RatingAAA/Aaa/AAACompliance StatusCompliantAccountPolicy NameTotal RulesCompliant RulesViolating RulesPerformance OverviewPTA-City of Beaumont Aggregate (303582)03/01/2023 - 03/31/2023Return to Table of ContentsDated: 04/04/20236Page 151 of 350

Index: NO BENCHMARK REQUIRED. 1: * Grouped by: Asset Class.Performance OverviewPTA-City of Beaumont Aggregate (303582)03/01/2023 - 03/31/2023Return to Table of ContentsDated: 04/04/20237Page 152 of 350

Index Comparison SummaryIndex Comparison Market SectorIndex Comparison DurationIndex Comparison Credit RatingIndex ComparisonPTA-City of Beaumont Aggregate (303582)03/01/2023 - 03/31/2023Return to Table of ContentsDated: 04/04/20238Page 153 of 350

Index Comparison SummaryRisk MetricPortfolioIndexDifferenceDuration0.980------Yield4.321------Years to Effective Maturity1.036------Years to Final Maturity1.036------Average Credit RatingAAA------Footnote: 1Index Comparison Market SectorMarket SectorPortfolioIndexDifferenceGovernment42.366%------Agency4.978%------Industrial8.245%------Cash44.412%------Footnote: 2Index Comparison DurationDurationPortfolioIndexDifference< 00.000%------0 - 150.500%------1 - 229.470%------2 - 320.031%------3 - 40.000%------4 - 50.000%------5 - 70.000%------7 - 100.000%------10 - 150.000%------15 - 300.000%------30 +0.000%------No Duration0.000%------Footnote: 3Index Comparison Credit RatingCredit RatingPortfolioIndexDifferenceAAA92.921%------AA2.705%------A4.374%------BBB0.000%------Non-Invest0.000%------Not Rated0.000%------Footnote: 4Index ComparisonPTA-City of Beaumont Aggregate (303582)03/01/2023 - 03/31/2023Return to Table of ContentsDated: 04/04/20239Page 154 of 350

Index: NO BENCHMARK REQUIRED. 1: * Grouped by: Risk Metric. 2: * Grouped by: Market Sector. 3: * Grouped by: Duration. 4: * Grouped by: Credit Rating.Index ComparisonPTA-City of Beaumont Aggregate (303582)03/01/2023 - 03/31/2023Return to Table of ContentsDated: 04/04/202310Page 155 of 350

Balance SheetPTA-City of Beaumont AggregateCity of Beaumont Liquid FundCity of Beaumont, CAAs of:02/28/202303/31/202302/28/202303/31/202302/28/202303/31/2023Book Value81,154,471.8781,240,968.0235,673,871.6735,801,994.2145,480,600.2045,438,973.81Accrued Balance252,925.60311,393.100.000.00252,925.60311,393.10Book Value + Accrued81,407,397.4881,552,361.1235,673,871.6735,801,994.2145,733,525.8145,750,366.91Net Unrealized Carrying Value Gain-1,354,921.45-767,321.520.000.00-1,354,921.45-767,321.52Carrying Value and Accrued80,052,476.0380,785,039.6035,673,871.6735,801,994.2144,378,604.3644,983,045.39Income StatementPTA-City of Beaumont AggregateCity of Beaumont Liquid FundCity of Beaumont, CABegin DateEnd Date03/01/202303/31/2023Begin DateEnd Date03/01/202303/31/2023Begin DateEnd Date03/01/202303/31/2023Net Amortization/Accretion Income15,599.430.0015,599.43Interest Income223,119.29128,344.7994,774.50Dividend Income0.000.000.00Foreign Tax Withheld Expense0.000.000.00Misc Income0.000.000.00Net Allowance Expense0.000.000.00Income Subtotal223,119.29128,344.7994,774.50Net Realized Gain/Loss-93,257.070.00-93,257.07Net Holding Gain/Loss0.000.000.00Impairment Loss0.000.000.00Net Gain/Loss-93,257.070.00-93,257.07Expense0.000.000.00Net Income145,461.65128,344.7917,116.86Transfers In/Out-498.01-222.25-275.76Change in Unrealized Gain/Loss587,599.930.00587,599.93Statement of Cash FlowsPTA-City of Beaumont AggregateCity of Beaumont Liquid FundCity of Beaumont, CABegin DateEnd Date03/01/202303/31/2023Begin DateEnd Date03/01/202303/31/2023Begin DateEnd Date03/01/202303/31/2023Net Income145,461.65128,344.7917,116.86Amortization/Accretion on MS-15,599.430.00-15,599.43Change in Accrued on MS-56,673.470.00-56,673.47Net Gain/Loss on MS93,257.070.0093,257.07Change in Unrealized G/L on CE0.000.000.00Subtotal20,984.170.0020,984.17Purchase of MS-5,970,531.250.00-5,970,531.25Purchased Accrued of MS-23,745.770.00-23,745.77Sales of MS5,833,825.200.005,833,825.20Sold Accrued of MS21,951.750.0021,951.75Maturities of MS0.000.000.00Net Purchases/Sales-138,500.070.00-138,500.07Transfers of Cash & CE-498.01-222.25-275.76Total Change in Cash & CE27,447.74128,122.54-100,674.80Beginning Cash & CE35,850,402.1335,673,871.67176,530.46Ending Cash & CE35,877,849.8735,801,994.2175,855.66GAAP FinancialsPTA-City of Beaumont Aggregate (303582)03/01/2023 - 03/31/2023Return to Table of ContentsDated: 04/04/202311Page 156 of 350

* Grouped by: Security Type. * Groups Sorted by: Security Type. * Weighted by: Base Market Value + Accrued. * Holdings Displayed by: Position.Security TypeBase Original UnitsBase Current UnitsFinal MaturityBase Original CostBase Book ValueBase Net TotalUnrealized Gain/LossBase Interest/Dividend DueBase AccruedBalanceMarketPriceBase Market ValueBase Market Value +AccruedAGCY BOND4,050,000.004,050,000.0004/10/20244,037,431.504,041,703.78-58,387.080.0037,767.1998.35663,983,316.704,021,083.88CASH128,970.82128,970.8203/31/2023128,970.82128,970.820.000.000.001.0000128,970.82128,970.82CORP6,790,000.006,790,000.0004/03/20256,678,659.206,709,831.83-113,477.010.0064,449.8397.18136,596,354.826,660,804.66MMFUND35,748,879.0535,748,879.0503/31/202335,748,879.0535,748,879.050.00128,970.820.001.000035,748,879.0535,748,879.05US GOV34,780,000.0034,780,000.0003/07/202534,515,559.4034,611,582.54-595,457.430.00209,176.0897.847534,016,125.1134,225,301.19---81,497,849.8781,497,849.8704/13/202481,109,499.9781,240,968.02-767,321.52128,970.82311,393.1054.806580,473,646.5080,785,039.60Current HoldingsPTA-City of Beaumont Aggregate (303582)Base Currency: USD As of 03/31/2023Return to Table of ContentsDated: 04/04/202312Page 157 of 350

* Grouped by: Security Type. * Groups Sorted by: Security Type. * Weighted by: Ending Market Value + Accrued. * Holdings Displayed by: Lot.Security TypeBS ClassMarket SectorEnding Base Current UnitsBase Disposed Book ValueBase Total Impairment LossBase Net Total Gain/LossEnding Market Value + AccruedAGCY BOND---Agency4,050,000.000.000.000.004,021,083.88CASHRCVCash128,970.820.000.000.00128,970.82CORPLTIndustrial6,790,000.000.000.000.006,660,804.66MMFUNDCECash35,748,879.05-138,998.080.000.0035,748,879.05US GOV---Government34,780,000.00-5,927,082.270.00-93,257.0734,225,301.19---------81,497,849.87-6,066,080.350.00-93,257.0780,785,039.60Realized Gain/LossPTA-City of Beaumont Aggregate (303582)Base Currency: USD 03/01/2023 - 03/31/2023Return to Table of ContentsDated: 04/04/202313Page 158 of 350

* Grouped by: Security Type. * Groups Sorted by: Security Type. * Weighted by: Ending Base Market Value + Accrued. * Holdings Displayed by: Lot.Security TypeBS ClassEnding Base Current UnitsBase Accretion IncomeBase Misc IncomeBase ExpenseBase Interest/Dividend IncomeBase Amortization ExpenseBase Net IncomeAGCY BOND---4,050,000.00737.620.000.0010,265.63-258.0910,745.15CASHRCV128,970.820.000.000.000.000.000.00CORPLT6,790,000.003,719.850.000.0016,411.67-244.7619,886.76MMFUNDCE35,748,879.050.000.000.00128,970.820.00128,970.82US GOV---34,780,000.0012,844.260.000.0067,471.18-1,199.45-14,141.09------81,497,849.8717,301.730.000.00223,119.29-1,702.30145,461.65Income DetailPTA-City of Beaumont Aggregate (303582)Base Currency: USD 03/01/2023 - 03/31/2023Return to Table of ContentsDated: 04/04/202314Page 159 of 350

* Grouped by: Issuer Concentration. * Groups Sorted by: Base Market Value + Accrued. * Filtered By: Base Market Value + Accrued > 550,000.00. * Weighted by: Base Market Value + Accrued.Issuer ConcentrationSecurity TypeEnding Base Current UnitsEnding EffectiveMaturityFinal MaturityBase Net MarketUnrealized Gain/LossBase Net FX UnrealizedSecurity Gain/LossBase Market Value + Accrued% of Base MarketValue + AccruedU.S. BancorpMMFUND35,673,649.4203/31/202303/31/20230.000.0035,673,649.4245.554%United StatesUS GOV32,580,000.0003/19/202503/19/2025-488,882.850.0032,140,181.5141.042%Federal Home Loan BanksAGCY BOND2,700,000.0003/11/202403/11/2024-37,268.140.002,690,378.073.436%PACCAR IncCORP1,600,000.0008/11/202508/11/2025-37,099.330.001,569,895.062.005%Farm Credit SystemAGCY BOND1,350,000.0006/10/202406/10/2024-21,118.940.001,330,705.811.699%Chevron CorporationCORP1,000,000.0011/15/202411/15/2024-8,221.720.001,010,475.101.290%Caterpillar Inc.CORP1,000,000.0005/13/202505/13/2025-14,561.740.00992,104.411.267%Amazon.com, Inc.CORP1,000,000.0004/13/202504/13/2025-13,794.160.00988,883.241.263%Toyota Motor CorporationCORP1,000,000.0010/07/202410/07/2024-17,583.510.00971,308.971.240%Apple Inc.CORP1,000,000.0005/11/202505/11/2025-17,357.480.00942,381.841.203%------78,903,649.4204/09/202404/09/2024-655,887.880.0078,309,963.44100.000%Issuer Concentration (> $550K)PTA-City of Beaumont Aggregate (303582)Base Currency: USD As of 03/31/2023Return to Table of ContentsDated: 04/04/202315Page 160 of 350

* Weighted by: Base Market Value + Accrued.YieldBase Market Value + AccruedPeriod BeginPeriod EndDurationComplex CreditRatingYears to Effective MaturityYears to Final Maturity4.66780,007,866.9503/01/202303/04/20230.878AAA0.9210.9214.53180,266,513.9503/05/202303/11/20230.869AAA0.9130.9134.17080,784,100.0803/12/202303/18/20230.866AAA0.9070.9074.23080,910,304.8303/19/202303/25/20230.856AAA0.8980.8984.32180,785,039.6003/26/202303/31/20230.980AAA1.0361.036Historical TrendsPTA-City of Beaumont Aggregate (303582)Base Currency: USD 03/01/2023 - 03/31/2023Return to Table of ContentsDated: 04/04/202316Page 161 of 350

* Grouped by: Event Type. * Groups Sorted by: Event Type. * Filtered By: Agency ¹ DBRS and Agency ¹ Moodys.AccountIdentifierDescriptionEffective DateAgencyOld ValueNew ValueEvent TypeCredit EventsPTA-City of Beaumont Aggregate (303582)Base Currency: USD 03/01/2023 - 03/31/2023Return to Table of ContentsDated: 04/04/202317Page 162 of 350

Additional Disclosure:This information is for the sole purposes of the client and is not intended to provide specific advice or recommendations. Please review the contents of this information carefully. Should you have any questions regarding theinformation presented, calculation methodology, investment portfolio, security detail, or any other facet of this information, please feel free to contact us.Public Trust Advisors, LLC (Public Trust) statements and reports are intended to detail our investment advisory activity as well as the activity of certain client accounts managed by Public Trust. The custodian bank maintainsthe control of assets and executes and settles all investment transactions. The custodian statement is the official record of security and cash holdings transactions. Public Trust recognizes that clients may use these reports tofacilitate record keeping; therefore, it is recommended that the client reconcile this information with their custodian bank statement. Many custodians use a settlement date basis that may result in the need to reconcile due to atiming difference. The underlying market value, amortized cost, and accrued interest may differ between the custodian and this statement or report. This can be attributed to differences in calculation methodologies and pricingsources used.Public Trust does not have the authority to withdraw funds from or deposit funds to the custodian. Our clients retain responsibility for their internal accounting policies, implementing and enforcing internal controls, andgenerating ledger entries or otherwise recording transactions. The total market value represents prices obtained from various sources; it may be impacted by the frequency at which prices are reported, and such prices are notguaranteed. Prices received from pricing vendors are generally based on current market quotes but when such quotes are not available, the pricing vendors use a variety of techniques to estimate value. These estimates,particularly for fixed-income securities, may be based on certain minimum principal amounts (e.g. $1 million) and may not reflect all the factors that affect the value of the security including liquidity risk. The prices provided arenot firm bids or offers. Certain securities may reflect N/A or unavailable where the price for such security is generally not available from a pricing source. The market value of a security, including those priced at par value, maydiffer from its purchase price and may not closely reflect the value at which the security may be sold or purchased based on various market factors. The securities in this investment portfolio, including shares of mutual funds,are not guaranteed or otherwise protected by Public Trust, the FDIC (except for certain non-negotiable certificates of deposit), or any government agency unless specifically stated otherwise.Clients may be permitted to establish one or more unmanaged accounts for the purposes of client reporting. Clients may also be permitted to provide externally managed assets for the purposes of client reporting. Public Trustdefines unmanaged accounts or assets as one where the investment direction remains the sole responsibility of the client rather than the Investment Manager. Unmanaged accounts or external assets do not receive ongoingsupervision and monitoring services. The Investment Manager does not make any investment recommendations and may not charge a fee for reporting on these accounts or assets. The primary purpose for this service is toinclude unmanaged accounts or assets owned by the client in the performance reports provided by the Investment Manager. The Investment Manager assumes no liability for the underlying performance of any unmanagedaccounts or assets, and it is the client’s sole responsibility for the accuracy or correctness of any such performance.Beginning and ending balances are based on market value plus accrued interest on a trade date basis. Statements and reports made available to the end user either from Public Trust or through the online reporting platformmay present information and portfolio analytics using various optional methods including, but not limited to, historical cost, amortized cost, and market value. All information is assumed to be correct, but the accuracy has notbeen confirmed and therefore is not guaranteed to be correct. Information is obtained from third party sources that may or may not be verified. The data in this report is unaudited and is only applicable for the date denoted onthe report. Market values may change day-to-day based on numerous circumstances such as trading volume, news released about the underlying issuer, issuer performance, etc. Underlying market values may be priced vianumerous aspects as certain securities are short term in nature and not readily traded. Performance results are shown net of all fees and expenses and reflect the reinvestment of dividends and other earnings.Many factors affect performance including changes in market conditions and interest rates and in response to other economic, political, or financial developments. Investment involves risk including the possible loss ofprincipal. No assurance can be given that the performance objectives of a given strategy will be achieved. Past performance is no guarantee of future results. Any financial and/or investment decision may incur losses.The investment advisor providing these services is Public Trust Advisors, LLC, an investment adviser registered with the U.S. Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940, asamended. Registration with the SEC does not imply a certain level of skill or training. Public Trust is required to maintain a written disclosure brochure of our background and business experience. If you would like to receive acopy of our current disclosure brochure, Privacy Policy, or Code of Ethics, or have any questions regarding your account please contact us.Public Trust Advisors717 17th St. Suite 1850Denver, CO 80202Page 163 of 350

Staff Report

TO: City Council
FROM: Jennifer Ustation, Finance Director
DATE April 18, 2023
SUBJECT: FY2022-2023 3rd Quarter Budget Update and Financial Status Report

Description Receive a report on the status of the City’s budget and financial status as of March 31, 2023.

Background and Analysis:

The Fiscal Year 2022-23 3rd quarter financials provide an update to the City’s financial position relative to the FY 2022-23 budget.

Budget Control and Monitoring

The City of Beaumont Budget Policy provides that the Finance Department will maintain a system of tools for departments to manage their budgets and for financial monitoring and control of the City’s budget during the fiscal year. This system will provide t he departments and City Council with information on revenue, expenditures, and budget performance at both the department and fund level.

General Fund Summary

Most of the General Fund revenue budget is from taxes. Property tax is usually recorded in December and May. Sales tax is received in monthly advanced estimated payments and then a quarterly actual clean-up payment. Other taxes include Motor Vehicle In-Lieu, which is received in February and June, as well as Utility Users tax which is received monthly.

General Fund Revenues

As of September 30, 2022, the city has collected 68% of the FY 2023 budgeted revenues. Miscellaneous revenue actuals are higher than budget due to the reversal of prior fiscal year GASB 31 entry. GASB 31 requires an agency to mark its investment portfolio to market which in FY2022 resulted in a unrealized loss of $1,456,063. The entry was reversed in the current fiscal year to put the portfolio to book balance. Other

financing sources actuals are higher than budget due to a sale of land. Below is a table for General Fund Revenues as of March 31, 2023.

General Fund Departments

The table below provides an overview of the general fund department budgets through March 31, 2023.

ORIGINAL
BUDGET
FY2022/23

CURRENT
BUDGET
FY2022/23
ACTUAL
FY2022/23

ESTIMATED
ACTUALS %
Taxes 41,542,397.00 41,588,762.00 27,178,149.33 45,244,421.00 65% Licenses 410,687.00 410,687.00 154,837.01 346,385.00 38% Permits 4,574,641.00 4,574,641.00 3,099,009.93 3,948,252.00 68% Franchise Fees 3,248,286.00 3,248,286.00 2,313,310.98 3,144,804.00 71% Charges for Services 1,273,780.00 1,273,780.00 711,814.36 1,249,178.00 56% Fines and Forfeitures 131,545.00 131,545.00 97,170.48 129,560.00 74% Cost Recovery 498,587.00 498,587.00 165,017.01 365,987.00 33% Miscellaneous 296,068.00 296,068.00 2,905,554.08 1,364,453.00 981% Other Financing Sources 5,000.00 5,000.00 83,671.10 83,664.00 1673% Transfers 8,687,711.00 8,687,711.00 4,304,291.42 8,687,711.00 50% TOTAL REVENUES 60,668,702.00 60,715,067.00 41,012,825.70 64,564,415.00 68%

GENERAL FUND

The City Council approved a budget amendment to appropriate surplus fund balance to many needed capital projects. This adjustment shows in the non -departmental category.

These funds will be moved throughout the year as needed or by year -end. Other departments that have been highlighted include Economic Development, Risk and HR, and Fire. Economic Development has a program budget line of $500,000 to create a Downtown Incentive Program. This program is in progress and funds are expected to be expended soon for this program. Risk and HR is higher than average because the City’s insurance payment is paid in July and is 73% of the total budget. The Fire Department budget is below average due to there has only been one quarter of the fire services contract paid to date.

The table below provides for expenditures by type. Personnel costs make up 62.65% of the actuals to date. Operating costs are 33.24% of actuals followed by capital at 3.61%.

Currently, there are no categories over budget, however, estimated actua ls are putting

DEPARTMENT
FY 2023 ORIGINAL
BUDGET
FY 2023
BUDGET
FY 2023
ACTUAL %
Non-Departmental 7,932,671.00 32,622,888.00 97,635.50 0.3% City Council 51,131.00 51,131.00 30,311.69 59.3% City Clerk 343,242.00 416,441.00 156,372.53 37.5% Administration 1,435,070.00 1,446,309.00 704,289.82 48.7% Finance 1,520,471.00 1,554,873.00 983,291.69 63.2% IT 1,606,874.00 1,889,009.00 1,152,454.91 61.0% Economic Development 1,322,868.00 1,340,426.00 212,569.84 15.9% Risk and HR 2,626,205.00 2,972,085.00 2,667,575.69 89.8% Legal 1,500,000.00 1,500,000.00 751,597.00 50.1% Community Development 783,600.00 965,896.00 456,487.91 47.3% Community Services 1,131,722.00 1,209,284.00 670,601.21 55.5% Animal Control 335,394.00 339,704.00 244,952.89 72.1% Community Enhancement 337,866.00 341,726.00 196,774.46 57.6% OES 162,200.00 162,200.00 80,000.00 49.3% Police 13,982,847.00 14,381,454.00 10,360,610.57 72.0% K-9 9,600.00 9,600.00 4,008.76 41.8% Police Support 2,538,188.00 2,569,829.00 1,513,998.82 58.9% Fire 4,670,961.00 5,223,487.00 1,178,954.85 22.6% Building and Safety 1,542,266.00 1,548,571.00 860,843.62 55.6% Public Works 1,797,804.00 1,687,630.00 839,870.88 49.8% Street Maintenance 2,330,115.00 2,370,777.00 1,471,303.40 62.1% Building Maintenance 1,148,673.00 1,148,673.00 568,315.86 49.5% Parks and Grounds 4,182,002.00 4,699,769.00 2,569,022.98 54.7% TOTAL EXPENDITURES 53,291,770.00 80,451,762.00 27,771,844.88 34.5% General Fund Expenditures

the utilities, fleet costs and other (insurance and equipment leasing and rentals) at risk of exceeding budget. Overall, estimated actuals have revenues coming in $3.8M above budget and expenditures $1.9M below budget for an overall estimated surplus of $5.7M.

Wastewater Fund Summary

Revenues

Wastewater revenues are collected in arrears. The July billing is accrued back to prior FY and the first billing for FY2023 was collected in September. Billing is completed bi- monthly. As of March 31, 2023, the Wastewater Fund has collected 67% of its budgeted revenues. The Cost Recovery Line has collected more than budgeted currently due to a Manhole Repair Agreement with Perricone Juice invoiced and collected. The Miscellaneous revenues category has collected more than budgeted from interest earned on the Wastewater Fund.

EXPENSE TYPE
FY 2023 ORIGINAL
BUDGET
FY 2023

CURRENT
BUDGET FY 2023 ACTUAL

ESTIMATED
ACTUALS %
Personnel
Salaries and Wages 17,938,820.00 18,370,805.00 12,139,805.94 17,914,416.00 66% Benefits 7,376,316.00 7,386,940.00 4,984,841.42 6,722,011.00 67% Other 476,692.00 481,423.00 275,489.84 460,896.32 57% TOTAL PERSONNEL 25,791,828.00 26,239,168.00 17,400,137.20 25,097,323.33 66% Operating
Utilities 1,787,000.00 1,787,000.00 1,352,878.68 2,029,318.00 76% Administration 890,968.00 910,968.00 585,538.05 904,656.00 64% Fleet Costs 664,280.00 664,280.00 502,821.15 829,655.00 76% Program Costs 904,870.00 1,464,870.00 500,351.15 1,414,870.00 34% Repairs & Maintenance 1,062,630.00 1,192,130.00 704,451.72 1,086,232.00 59% Supplies 1,217,830.00 1,462,509.00 533,352.89 1,211,137.00 36% Special Services 517,075.00 517,075.00 198,740.71 464,987.00 38% Contractual Services 8,959,125.00 9,270,880.00 2,585,552.12 8,590,700.00 28% Other 1,967,700.00 2,302,648.00 2,267,431.02 2,323,018.00 98% TOTAL OPERATING 17,971,478.00 19,572,360.00 9,231,117.49 18,854,572.99 47% Capital
Equipment 249,952.00 331,057.00 257,575.46 331,057.00 78% Furniture - - 4,080.12 4,081.00 0% Vehicle 884,854.00 1,225,302.00 585,967.96 1,225,302.00 48% Structure 310,987.00 310,987.00 155,493.50 310,987.00 50% TOTAL CAPITAL 1,445,793.00 1,867,346.00 1,003,117.04 1,871,427.00 54% Contngency
CONTINGENCY 150,000.00 150,000.00 39,837.65 150,000.00 27% Transfers
TRANSFERS 7,932,671.00 32,622,888.00 97,635.50 32,622,888.00 0% Total Expenditures 53,291,770.00 80,451,762.00 27,771,844.88 78,596,211.32 35%

Expenses

Wastewater expenses as of March 31, 2023, total $7,886,839.12 which is 57% of the FY2023 budget. Personnel costs make up 22.17% of the actuals to date, operating costs make up 28.72%, capital costs make up 3.22%, Contingency makes up less than 1% of the budget, and Transfers Out for overhead and debt service make up the remaining 45.7%. The debt service payment on the 2018 Wastewater Revenue Bonds is due 9/1 and 3/1 of each fiscal year. The 9/1 payment consists of principal and interest and the 3/1 payment is just interest. Both debt service payments have been paid.

Currently, no categories are over budget, however, estimated actuals have both utilities and fleet costs potentially going over budget by year-end. Overall, estimated actuals have revenues coming in $241K above budget and expenses coming in $361K below budget for an overall estimated surplus of $602K.

FY 2023

ORIGINAL
BUDGET
FY 2023

CURRENT
BUDGET
ACTUAL
FY2022/23

ESTIMATED
ACTUALS %
Permits - - - 0% Fines and Forfeitures 3,000.00 3,000.00 - 3,000.00 0% Cost Recovery 3,500.00 3,500.00 12,055.00 3,500.00 344% Miscellaneous 30,000.00 30,000.00 63,387.61 126,775.00 211% Proprietary Revenues 12,821,501.00 12,821,501.00 8,641,658.01 12,962,487.00 67% Other Financing Sources - 3,272.00 3,272.00 0% Transfers - 190,787.00 - 190,787.00 0% TOTAL REVENUES 12,858,001.00 13,048,788.00 8,720,372.62 13,289,821.00 67%

WASTEWATER REVENUES

Fiscal Impact:

There is no fiscal impact with this report as it is information only. The estimated cost to prepare this report is $540.

Recommended Action:

Receive and file report.

Attachments:

A. Governmental Funds Activity
B. Proprietary Funds Activity

EXPENSE TYPE
FY 2023

ORIGINAL
BUDGET
FY 2023

CURRENT
BUDGET FY 2023 ACTUAL

ESTIMATED
ACTUALS %
Personnel
Salaries and Wages 1,831,289.00 1,863,975.00 1,290,105.39 1,857,418.00 69% Benefits 674,094.00 675,465.00 433,644.70 590,364.00 64% Other 40,032.00 40,442.00 24,991.30 40,997.00 62% TOTAL PERSONNEL 2,545,415.00 2,579,882.00 1,748,741.39 2,488,779.01 68% Operating
Utilities 928,228.00 928,228.00 742,900.61 1,147,781.00 80% Administration 227,805.00 227,805.00 174,909.23 227,805.00 77% Fleet Costs 44,420.00 44,420.00 48,658.61 78,267.00 110% Repairs & Maintenance 116,200.00 116,200.00 40,131.20 123,508.00 35% Supplies 585,700.00 585,700.00 413,156.80 578,419.00 71% Contractual Services 1,397,360.00 1,397,360.00 733,325.93 1,226,656.00 52% Other 755,872.00 755,872.00 111,988.02 403,308.02 15% TOTAL OPERATING 4,055,585.00 4,055,585.00 2,265,070.40 3,785,744.00 56% Capital
Equipment 167,112.00 167,112.00 63,291.33 167,112.00 38% Vehicle 33,576.00 190,911.00 190,911.30 190,911.00 100% Other - - 0% TOTAL CAPITAL 200,688.00 358,023.00 254,202.63 358,023.00 71% ContIngency
CONTINGENCY 200,000.00 200,000.00 14,806.67 200,000.00 7% Transfers
TRANSFERS 6,585,213.00 6,585,213.00 3,604,018.03 6,585,213.00 55% Total Expenses 13,586,901.00 13,778,703.00 7,886,839.12 13,417,759.00 57% Wastewater Expenses

Beginning Fund BalanceFY 2023 Budgeted RevenuesFYTD 2023 Actual Revenues%FY 2023 Budgeted ExpendituresFYTD 2023 Actual Expenditures%T/D Ending Fund Balance100 GENERAL FUND 43,636,298.50                    60,715,067.00      41,012,825.70      68% 80,451,762.00      27,771,844.88      35% 56,877,279.32      120 SELF INSURANCE 2,154,151.97                      525,000.00            547,957.09            0% 41,056.00              42,572.50              0% 2,659,536.56         200 GAS TAX 69,599.00                            1,459,493.00         956,331.73            66% 1,459,493.00         729,771.50            50% 296,159.23            201 SB1 1,117,898.24                      1,168,504.00         698,406.54            60% 892,435.00            25.00                      0% 1,816,279.78         202 MEASURE A 1,955,121.28                      605,900.00            546,462.26            90% 604,800.00             ‐                          0% 2,501,583.54         205 AQMD 343,994.88                          71,130.00              55,306.12              78% 201,145.00            141,000.01            70% 258,300.99            210 PEG 27,709.97                            22,595.00              9,638.88                43% 12,000.00              3,245.83                27% 34,103.02              215 CDBG/GRANTS (903.49)                                1,826,791.00         127,261.96            7% 2,056,791.00         403,647.22            20% (277,288.75)          220 COPS 452,898.86                          150,751.00            110,856.47            74% 130,721.00            118,925.64            91% 444,829.69            225 ASSET SEIZURES (STATE) 295,024.16                          2,956.00                336.46                   11% 3,300.00                 ‐                          0% 295,360.62            230 ASSET SEIZURES (FEDERAL) 6,036.38                               ‐                          4.58                        0%‐                           ‐                          0% 6,040.96                240 OTHER FUNDS 320,424.80                          78,776.00              76,360.54              97% 72,200.00              33,135.90              46% 363,649.44            250 CFD‐ADMIN 1,407,534.32                      1,908,931.00         61,126.47              3% 1,908,931.00         1,072,958.08         56% 395,702.71            255 CFD‐MAINT SVCS 677,799.38                          3,858,848.00         2,330,520.13         60% 4,358,848.00         1,929,424.00         44% 1,078,895.51         260 CFD‐PUBLIC SAFETY 188,842.16                          911,768.00            596,029.43            65% 911,768.00            588,804.99            65% 196,066.60            500 GENERAL CAPITAL PROJECTS 8,345,916.85                      48,258,364.00      1,728,197.16         4% 45,574,842.00      3,170,779.79         7% 6,903,334.22         510 CFD CAPITAL PROJECTS 13,016,221.01                     ‐                          186,983.12            0% 1,450,000.00         213,487.64            0% 12,989,716.49      550 DIF 6,424.13                               ‐                          126.49                   0%‐                           ‐                          0% 6,550.62                552 BASIC SERVICES DIF 1,347,348.14                      325,677.00            135,211.41            42%‐                           ‐                          0% 1,482,559.55         554 GENERAL PLAN DIF 102,458.95                          27,183.00              110,789.94            408%‐                           ‐                          0% 213,248.89            555 RECREATIONAL FACILITIES DIF 1,902,958.44                      359,663.00            93,314.27              26%‐                           ‐                          0% 1,996,272.71         556 TRAFFIC IMPACT DIF 1,622,130.40                      163,895.00            45,543.89              28% 150,000.00            1,337.80                1% 1,666,336.49         558 RAILROAD CROSSING DIF 2,605,466.00                      178,606.00            124,285.69            70% 1,683,522.00         3,896.90                0% 2,725,854.79         559 POLICE FACILITIES DIF 1,306,700.36                      274,163.00            159,471.97            58% 1,450,000.00         (55,057.20)             0% 1,521,229.53         560 FIRE STATION DIF 5,083,305.95                      325,677.00            283,159.16            87%‐                           ‐                          0% 5,366,465.11         562 ROAD AND BRIDGE DIF 10,564,968.35                    1,513,156.00         396,056.16            26% 6,250,000.00         334,875.11            0% 10,626,149.40      566 EMERGENCY PREPAREDNESS DIF (97,266.00)                          346,593.00            687,254.46            198%‐                           ‐                          0% 589,988.46            567 COMMUNITY PARK DIF 1,891,663.93                      588,630.00            498,780.90            85%‐                           ‐                          0% 2,390,444.83         568 REGIONAL PARK DIF 1,945,796.94                       ‐                          20,354.22              0% 1,000,000.00         9,730.82                0% 1,956,420.34         569 NEIGHBORHOOD PARK DIF 2,443,206.67                      712,342.00            612,116.35            86%‐                           ‐                          0% 3,055,323.02         570 PASS THROUGH DIF‐                                        ‐                          TOTALS 104,739,730.53                  126,380,459.00    52,211,069.55      41% 150,663,614.00    36,514,406.41      24% 120,436,393.67    GOVERNMENTAL FUNDSPage 170 of 350

Beginning Fund BalanceFY 2023 Estimated RevenuesFYTD 2023 Actual Revenues%FY 2023 Budgeted ExpendituresFYTD 2023 Actual Expenditures%T/D Ending Fund Balance564 RECYCLED WATER DIF 4,230,411.43           361,067.00        575,906.05          160% 2,349,077.00     751,975.49        0% 4,054,341.99       600 INTERNAL SERVICE FUND 7,460,855.75           1,217,354.00     613,989.84          50% 2,270,679.00     961,851.89        42% 7,112,993.70       700 WASTEWATER 7,894,606.29           13,048,788.00  8,720,372.62      67% 14,778,703.00  7,886,839.12     53% 8,728,139.79       705 WASTEWATER DIF 5,216,190.14           2,718,679.00     943,894.79          35% 3,650,000.00     215,099.65        6% 5,944,985.28       710 WASTEWATER CAPITAL PRO128,491,042.59      13,034,290.00  (18,644,481.88)    ‐143% 10,235,213.00  5,182,600.40     51% 104,663,960.31  750 TRANSIT 147.61                      2,806,457.00     1,706,388.45      61% 2,806,457.00     1,845,553.26     66% (139,017.20)         760 TRANSIT CAPITAL PROJECTS2,728,822.07           2,290,000.00     370,876.76          16% 2,290,000.00     437,098.25        19% 2,662,600.58       TOTALS156,022,075.88      35,476,635.00  (5,713,053.37)      ‐16% 38,380,129.00  17,281,018.06  45% 133,028,004.45  PROPRIETARY/ENTERPRISE FUNDSPage 171 of 350

Staff Report

TO: City Council
FROM: Kari Mendoza, Administrative Services Director
DATE April 18, 2023
SUBJECT: Adopt the Resolution for the Authorization and Execution of the Certifications and Assurances and Authorized Agent forms for the Low Carbon Transit Operations Program (LCTOP)

Description Low Carbon Transit Operations Program (LCTOP) for the following project: Discounted Fare Promotion, $323,000.

Background and Analysis:

The City of Beaumont Transit Services is eligible for Low Carbon Transit Operations Program (LCTOP) grant funds for FY 2022/2023 in the amount of $323,000 for the Discounted Fare Promotion.

The purpose of LCTOP program is to reduce greenhouse gas emissions and improve mobility with a priority on serving disadvantaged communities. This Discounted Fare Promotion provides an incentive that promotes the use of public transportation and promotes transit connectivity. This project also benefits multiple disadvantaged communities within Beaumont Transit’s service area. The project will provide discounted fares to all passenger types systemwide. This includes local Fixed Routes, Commuter Links and Dial-a-Ride. It is projected that the project will last 3 years; or until funding is exhausted.

To proceed with the project, the City must submit the following documents:

1. Resolution (Attachment A)

2. Certifications and Assurances (Attachment B)

3. Authorized Agent (Attachment C)
Fiscal Impact:

There is no fiscal impact on the general fund.

City staff estimates the cost to prepare this staff report to be $200.

Recommended Action:

Waive the full reading and adopt by title only “A Resolution of the City Council of the City of Beaumont for Authorization for the Execution of the Certifications and Assurances and Authorized Agent Forms for the Low Carbon Transit Operations Program (LCTOP) for the Following Project: Discounted Fare Promotion, $323,000”, Execute the Certifications and Assurances Form, and
Execute the Authorized Agent Form.

Attachments:

A. Resolution
B. Certifications and Assurances
C. Authorized Agent Form

RESOLUTION NO. 2023-

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BEAUMONT FOR

AUTHORIZATION FOR THE EXECUTION OF THE

CERTIFICATIONS AND ASSURANCES AND AUTHORIZED AGENT FORMS

FOR THE LOW CARBON TRANSIT OPERATIONS PROGRAM (LCTOP)
FOR THE FOLLOWING PROJECT:

DISCOUNTED FARE PROMOTION, $323,000

WHEREAS, the City of Beaumont is an eligible project sponsor and may receive state funding from the Low Carbon Transit Operations Program (LCTOP) for transit projects; and

WHEREAS, the statutes related to state-funded transit projects require a local or regional implementing agency to abide by various regulations; and

WHEREAS, Senate Bill 862 (2014) named the Department of Transportation (Department) as the administrative agency for the LCTOP; and

WHEREAS, the Department has developed guidelines for the purpose of administering and distributing LCTOP funds to eligible project sponsors (local agencies); and

WHEREAS, the City of Beaumont wishes to delegate authorization to execute these documents and any amendments thereto to Elizabeth Gibbs, City Manager or her designee; and

WHEREAS, the City of Beaumont wishes to implement the following LCTOP project(s) listed above,

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Beaumont that the fund recipient agrees to comply with all conditions and requirements set forth in the Certification and Assurances and the Authorized Agent documents and applicable statutes, regulations and guidelines for all LCTOP funded transit projects.

NOW THEREFORE, BE IT FURTHER RESOLVED that Elizabeth Gibbs, City Manager be authorized to execute all required documents of the LCTOP program and any Amendments thereto with the California Department of Transportation.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Beaumont that it hereby authorizes the submittal of the following project nomination(s) and allocation request(s) to the Department in FY2022-2023 LCTOP funds:

Project Name: Discounted Fare Promotion
Amount of LCTOP funds requested: $323,000
Short description of project: Discounted Fare Promotion for all passengers systemwide.

Benefit to Priority Populations: Promotion provides incentives to disadvantaged communities and low- income communities, promotes the use of public transportation, and promotes transit connectivity.

Contributing Sponsors: Riverside County Transportation Commission

MOVED, PASSED, AND ADOPTED this 18th day of April, 2023 by the following roll call vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

________________________________
Julio Martinez, Mayor

ATTEST:

________________________________
Nicole Wheelwright, Deputy City Clerk

FY 2022-2023 LCTOP
Certifications and Assurances
Lead Agency: City of Beaumont
Project Title: Discounted Fare Promotion
Prepared by: Matthew Mendoza

The California Department of Transportation (Caltrans) has adopted the following Certifications and Assurances for the Low Carbon Transit Operations Program (LCTOP).

As a condition of the receipt of LCTOP funds, Lead Agency must comply with these terms and conditions.

A. General

1. The Lead Agency agrees to abide by the current LCTOP Guidelines and applicable legal requirements.

2. The Lead Agency must submit to Caltrans a signed Authorized Agent form designating the representative who can submit documents on behalf of the project sponsor and a copy of the board resolution appointing the Authorized Agent.

B. Project Administration

1. The Lead Agency certifies that required environmental documentation is complete before requesting an allocation of LCTOP funds. The Lead Agency assures that projects approved for LCTOP funding comply with Public Resources Code § 21100 and § 21150.

2. The Lead Agency certifies that a dedicated bank account for LCTOP funds only will be established within 30 days of receipt of LCTOP funds.

3. The Lead Agency certifies that when LCTOP funds are used for a transit capital project, that the project will be completed and remain in operation for its useful life.

4. The Lead Agency certifies that it has the legal, financial, and technical capacity to carry out the project, including the safety and security aspects of that project.

5. The Lead Agency certifies that they will notify Caltrans of pending litigation, dispute, or negative audit findings related to the project, before receiving an allocation of funds.

6. The Lead Agency must maintain satisfactory continuing control over the use of project equipment and facilities and will adequately maintain project equipment and facilities for the useful life of the project.

7. Any interest the Lead Agency earns on LCTOP funds must be used only on approved LCTOP projects.

8. The Lead Agency must notify Caltrans of any changes to the approved project with a Corrective Action Plan (CAP).

FY 2022-2023 LCTOP

9. Under extraordinary circumstances, a Lead Agency may terminate a project prior to completion. In the event the Lead Agency terminates a project prior to completion, the Lead Agency must (1) contact Caltrans in writing and follow-up with a phone call verifying receipt of such notice; (2) pursuant to verification, submit a final report indicating the reason for the termination and demonstrating the expended funds were used on the intended purpose; (3) submit a request to reassign the funds to a new project within 180 days of termination.

C. Reporting

1. The Lead Agency must submit the following LCTOP reports:
a. Annual Project Activity Reports October 27th each year.

b. A Close Out Report within six months of project completion.

c. The annual audit required under the Transportation Development Act (TDA), to verify receipt and appropriate expenditure of LCTOP funds. A copy of the audit report must be submitted to Caltrans within six months of the close of the year (December 31) each year in which LCTOP funds have been received or expended.

d. Project Outcome Reporting as defined by CARB Funding Guidelines.

e. Jobs Reporting as defined by CARB Funding Guidelines.

2. Other Reporting Requirements: CARB develops and revises Funding Guidelines that will include reporting requirements for all State agencies that receive appropriations from the Greenhouse Gas Reduction Fund. Caltrans and project sponsors will need to submit reporting information in accordance with CARB’s Funding Guidelines, including reporting on greenhouse gas reductions and benefits to disadvantaged communities.

D. Cost Principles

1. The Lead Agency agrees to comply with Title 2 of the Code of Federal Regulations 225 (2 CFR 225), Cost Principles for State and Local Government, and 2 CFR, Part 200, Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments.

2. The Lead Agency agrees, and will assure that its contractors and subcontractors will be obligated to agree, that:
a. Contract Cost Principles and Procedures, 48 CFR, Federal Acquisition Regulations System, Chapter 1, Part 31, et seq., shall be used to determine the allow ability of individual project cost items and

b. Those parties shall comply with Federal administrative procedures in accordance with 2 CFR, Part 200, Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments. Every sub-recipient receiving LCTOP funds as a contractor or sub-contractor shall comply with

FY 2022-2023 LCTOP
Federal administrative procedures in accordance with 2 CFR, Part 200, Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments.

3. Any project cost for which the Lead Agency has received funds that are determined by subsequent audit to be unallowable under 2 CFR 225, 48 CFR, Chapter 1, Part 31 or 2 CFR, Part 200, are subject to repayment by the Lead Agency to the State of California (State). All projects must reduce greenhouse gas emissions, as required under Public Resources Code section 75230, and any project that fails to reduce greenhouse gases shall also have its project costs submit to repayment by the Lead Agency to the State. Should the Lead Agency fail to reimburse moneys due to the State within thirty (30) days of demand, or within such other period as may be agreed in writing between the Parties hereto, the State is authorized to intercept and withhold future payments due the Lead Agency from the State or any third-party source, including but not limited to, the State Treasurer and the State Controller.

A. Record Retention

1. The Lead Agency agrees and will assure that its contractors and subcontractors shall establish and maintain an accounting system and records that properly accumulate and segregate incurred project costs and matching funds by line item for the project. The accounting system of the Lead Agency, its contractors and all subcontractors shall conform to Generally Accepted Accounting Principles (GAAP) and enable the determination of incurred costs at interim points of completion. All accounting records and other supporting papers of the Lead Agency, its contractors and subcontractors connected with LCTOP funding shall be maintained for a minimum of three (3) years after the “Project Closeout” report or final Phase 2 report is submitted (per ARB Funding Guidelines, Vol. 3, page 3.A-16), and shall be held open to inspection, copying, and audit by representatives of the State and the California State Auditor. Copies thereof will be furnished by the Lead Agency, its contractors, and subcontractors upon receipt of any request made by the State or its agents. In conducting an audit of the costs claimed, the State will rely to the maximum extent possible on any prior audit of the Lead Agency pursuant to the provisions of federal and State law. In the absence of such an audit, any acceptable audit work performed by the Lead Agency’s external and internal auditors may be relied upon and used by the State when planning and conducting additional audits.

2. For the purpose of determining compliance with Title 21, California Code of Regulations, Section 2500 et seq., when applicable, and other matters connected with the performance of the Lead Agency’s contracts with third parties pursuant to Government Code § 8546.7, the project sponsor, its contractors and subcontractors and the State shall each maintain and make available for inspection all books, documents, papers, accounting records, and other evidence pertaining to the performance of such contracts, including, but not limited to, the costs of administering those various contracts. All of the above referenced parties shall make such materials available at their respective offices at all reasonable times

FY 2022-2023 LCTOP
during the entire project period and for three (3) years from the date of final payment.

The State, the California State Auditor, or any duly authorized representative of the State, shall each have access to any books, records, and documents that are pertinent to a project for audits, examinations, excerpts, and transactions, and the Lead Agency shall furnish copies thereof if requested.

3. The Lead Agency, its contractors and subcontractors will permit access to all records of employment, employment advertisements, employment application forms, and other pertinent data and records by the State Fair Employment Practices and Housing Commission, or any other agency of the State of California designated by the State, for the purpose of any investigation to ascertain compliance with this document.

F. Special Situations
Caltrans may perform an audit and/or request detailed project information of the project sponsor’s LCTOP funded projects at Caltrans’ discretion at any time prior to the completion of the LCTOP.

I certify all of these conditions will be met.

Elizabeth Gibbs City Manager
(Print Authorized Agent) (Title)

(Signature) (Date)

FY 2022-2023 LCTOP
Authorized Agent

AS THE Mayor
(Chief Executive Officer/Director/President/Secretary)
OF THE City of Beaumont
(Name of County/City/Transit Organization)

I hereby authorize the following individual(s) to execute for and on behalf of the named Regional Entity/Transit Operator, any actions necessary for the purpose of obtaining Low Carbon Transit Operations Program (LCTOP) funds provided by the California Department of Transportation, Division of Rail and Mass Transportation. I understand that if there is a change in the authorized agent, the project sponsor must submit a new form. This form is required even when the authorized agent is the executive authority himself. I understand the Board must provide a resolution approving the Authorized Agent. The Board Resolution appointing the Authorized Agent is attached.

Elizabeth Gibbs, City Manager OR
(Name and Title of Authorized Agent)
Kari Mendoza, Administrative Services Director OR
(Name and Title of Authorized Agent)
Jennifer Ustation, Finance Director OR
(Name and Title of Authorized Agent)

Julio Martinez Mayor
(Print Name) (Title)

(Signature)

Approved this 18 day of April , 2023

Staff Report

TO: City Council
FROM: Jeff Hart, Public Works Director
DATE April 18, 2023
SUBJECT: Lease Agreement With 4th Street Industrial Park, LLC for Public Works and Waste Water Temporary Relocation

Description Authorization of Lease Agreement between the City of Beaumont and 4th Street Industrial, LLC for the temporary relocation of Public Works and Waste Water staff.

Background and Analysis:

Public Works and Waste Water staff growth has created a need for additional space and accommodations. Currently, the Public Works Street’s Department utilizes existing space for equipment and material storage at City Hall as well as an undersized corporation yard located at the northeast corner of Magnolia Avenue and 7th Street.

Recent growth of the Street’s Department is currently impacting City operations and has exceeded the capacity to accommodate current equipment and material storage needs.

Similarly, the City’s Waste Water Department has limited capacity to house current, and projected staffing needs. Currently, the General Manager of Utilities, the Waste Water Supervisor, and collections staff share a singular office. In order to adequately accommodate the operational needs of the department, expansion is needed.

Ultimately, the City plans to develop the recently acquired property located at the southeast corner of 4th Street and Veile Avenue. The development will include a corporation yard for both the Street’s Department and Community Services, as well as facilities for Transit and Fleet Services. The development will also include a new administration building which will provide office space for aforementioned departments.

Ultimate development of this site is expected in approximately 3 years.

In order to accommodate the current needs of the departments, staff is proposing to lease office and yard space from 4th Street Industrial Park, LLC located at 252 West 4th Street. The site obtains approximately 5,000 square feet of office space, 4,800 square feet of warehouse space, and 1.5 acres of yard/site space. Staff has prepared the proposed office and site layout schematics which are shown in Attachment A.

Additionally, the Police Department has exceeded the capacity of its current facility to adequately accommodate current staff. The FY 22/23 CIP allocated $750,000 to retrofit Building C, located at City Hall directly south of the current Transit parking area.

Building C is antiquated and in need of significant restoration in order to make it habitable for use.

Staff is proposing that the Police Department relocate to Building B (located in between Building C and City Hall) as it is similar in size, and has recently been retrofitted to allow for immediate use. Currently, Public Works staff utilizes this space and should the lease agreement be approved would relocate to 252 West 4th Street. Minimal modifications would be required to accommodate the Police Department which would allow the much needed expansion to happen within 2 months rather than one, to one and a half years required to retrofit Building C. The budgeted amount of $750,000 intended to be utilized is proposed to be reallocated to the future Police Department Headquarters project.

Authorization of the proposed lease agreement will allow City staff to immediately address current space limitations until proposed permanent expansion projects are constructed.

Fiscal Impact:

The estimated costs to prepare this staff report is $250.

The monthly fee associated with the proposed lease agreement is $11,500 per month with a proposed split of $9,857 being paid from the existing Public Works budget, and the remaining $1,643 being paid from the Waste Water budget. Monthly utilities and operational expenses are expected to be $9,750 per month with the General Fund paying an estimated total of $17,164 and Wastewater Fund paying an estimated total of $4,087. Maintenance costs are borne by the lessor.

Recommended Action:

Authorize the City Manager to execute a 3-year lease agreement with an optional 1 year extension, with 4th Street Industrial, LLC for the property located at 252 West 4th Street.

Attachments:

A. Proposed Site and Office Layout
B. Draft Lease Agreement

1.Basic Provisions ("Basic Provisions").

1.1 ParƟes.This Lease ("Lease"),dated for reference purposes only April 5,2023 ,is made by and between 4th Street Industrial Park LLC ("Lessor")and City of Beaumont ("Lessee"),(collecƟvely the "ParƟes",or individually a "Party").

1.2(a)Premises:That certain real property,including all improvements therein or to be provided by Lessor under the terms of this Lease,commonly known as (street address,unit/suite,city,state,zip):252 W 4th Street Unit "E"Beaumont CA 92223 ("Premises").The Premises are located in the County of Riverside ,and are generally described as (describe briefly the nature of the Premises and the "Project"):

Offices/warehouse space,two story building .In addiƟon to Lessee's rights to use and occupy the Premises as hereinaŌer specified,Lessee shall have non-exclusive rights to any uƟlity raceways of the building containing the Premises ("Building")and to the Common Areas (as defined in Paragraph 2.7 below),but shall not have any rights to the roof,or exterior walls of the Building or to any other buildings in the Project.The Premises,the Building,the Common Areas,the land upon which they are located,along with all other buildings and improvements thereon,are herein collecƟvely referred to as the "Project." (See also Paragraph 2)

1.2(b)Parking:28 parking stalls and 1 handicap stall unreserved vehicle parking spaces.(See also Paragraph 2.6)

1.3 Term:5 years and 0 months ("Original Term")commencing May 15,2023 ("Commencement Date")and ending June 1,2028 ("ExpiraƟon Date").(See also Paragraph 3)

1.4 Early Possession:If the Premises are available Lessee may have non-exclusive possession of the Premises commencing May 1,2023 ("Early Possession Date").(See also Paragraphs 3.2 and 3.3)

1.5 Base Rent:$11,500.00 per month ("Base Rent"),payable on the 1st day of each month commencing May 2023 .(See also Paragraph 4)
If this box is checked,there are provisions in this Lease for the Base Rent to be adjusted.See Paragraph Base rent is adjusted on annually with 3%increase starting June 1,2024..

1.6 Lessee's Share of Common Area OperaƟng Expenses:N/A percent (%)("Lessee's Share").In the event that the size of the Premises and/or the Project are modified during the term of this Lease,Lessor shall recalculate Lessee's Share to reflect such modificaƟon.

1.7 Base Rent and Other Monies Paid Upon ExecuƟon:
move in.May will be prorated if move in date is May 15,2023 to $5,750.00,last month $11,500.00,security $5,000.00,totaling $22,250.00 due May 15,2023 .

1.8 Agreed Use:8,500 sq/ft of building and warehouse space,used for business operations .(See also Paragraph 6)

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

1.10 Real Estate Brokers.(See also Paragraphs 15 and 25) agency relaƟonships in this Lease with the following real estate brokers ("Broker(s)")and/or their agents ("Agent(s)"):

Lessor's Brokerage Firm N/A License No.Is the broker of (check one):the Lessor;or both the Lessee and Lessor (dual agent).

Lessor's Agent N/A License No.is (check one):the Lessor's Agent (salesperson or broker associate);or both the Lessee's Agent and the Lessor's Agent (dual agent).

Lessee's Brokerage Firm N/A License No.Is the broker of (check one):the Lessee;or both the Lessee and Lessor (dual agent).

Lessee's Agent N/A License No.is (check one):the Lessee's Agent (salesperson or broker associate);or both the Lessee's Agent and the Lessor's Agent (dual agent).
separate wriƩen agreement (or if there is no such agreement,the sum of N/A or %of the total Base Rent)for the brokerage services rendered by the Brokers.

1.11 Guarantor.The obligaƟons of the Lessee under this Lease are to be guaranteed by ("Guarantor").(See also Paragraph 37)

1.12 AƩachments.AƩached hereto are the following,all of which consƟtute a part of this Lease:
an Addendum consisƟng of Paragraphs see addendum through ; a site plan depicƟng the Premises;
a site plan depicƟng the Project;
a current set of the Rules and RegulaƟons for the Project;

STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE -NET
(a)Base Rent:$11,500.00 for the period June 1,2023 to June 1,2024 . (b)Common Area OperaƟng Expenses:The current esƟmate for the period is . (c)Security Deposit:$5,000.00 ("Security Deposit").(See also Paragraph 5) (d)Other:for .
(e)Total Due Upon ExecuƟon of this Lease:First and last month plus security deposit due at time of (a)RepresentaƟon:Each Party acknowledges receiving a Disclosure Regarding Real Estate Agency RelaƟonship,confirms and consents to the following (b)Payment to Brokers.Upon execuƟon and delivery of this Lease by both ParƟes,Lessor shall pay to the Brokers the brokerage fee agreed to in a

a current set of the Rules and RegulaƟons adopted by the owners'associaƟon; a Work LeƩer;
other (specify):Lessor is responsible for water,sewer,repairs &services on A/C units, and landscape.Lessee is responsible for elevator cost (if chosen to use),all utilities,trash and light bulbs replacements..

2.Premises.

2.1 Leƫng.Lessor hereby leases to Lessee,and Lessee hereby leases from Lessor,the Premises,for the term,at the rental,and upon all of the terms, covenants and condiƟons set forth in this Lease.While the approximate square footage of the Premises may have been used in the markeƟng of the Premises for purposes of comparison,the Base Rent stated herein is NOT Ɵed to square footage and is not subject to adjustment should the actual size be determined to be different.NOTE:Lessee is advised to verify the actual size prior to execuƟng this Lease.

2.2 CondiƟon.Lessor shall deliver that porƟon of the Premises contained within the Building ("Unit")to Lessee broom clean and free of debris on the Commencement Date or the Early Possession Date,whichever first occurs ("Start Date"),and,so long as the required service contracts described in Paragraph 7.1(b) below are obtained by Lessee and in effect within thirty days following the Start Date,warrants that the exisƟng electrical,plumbing,fire sprinkler,lighƟng,heaƟng, venƟlaƟng and air condiƟoning systems ("HVAC"),loading doors,sump pumps,if any,and all other such elements in the Unit,other than those constructed by Lessee, shall be in good operaƟng condiƟon on said date,that the structural elements of the roof,bearing walls and foundaƟon of the Unit shall be free of material defects, and that the Unit does not contain hazardous levels of any mold or fungi defined as toxic under applicable state or federal law.If a non-compliance with such warranty exists as of the Start Date,or if one of such systems or elements should malfuncƟon or fail within the appropriate warranty period,Lessor shall,as Lessor's sole obligaƟon with respect to such maƩer,except as otherwise provided in this Lease,promptly aŌer receipt of wriƩen noƟce from Lessee seƫng forth with specificity the nature and extent of such non-compliance,malfuncƟon or failure,recƟfy same at Lessor's expense.The warranty periods shall be as follows:(i)6 months as to the HVAC systems,and (ii)30 days as to the remaining systems and other elements of the Unit.If Lessee does not give Lessor the required noƟce within the appropriate warranty period,correcƟon of any such non-compliance,malfuncƟon or failure shall be the obligaƟon of Lessee at Lessee's sole cost and expense (except for the repairs to the fire sprinkler systems,roof,foundaƟons,and/or bearing walls -see Paragraph 7).Lessor also warrants,that unless otherwise specified in wriƟng,Lessor is unaware of (i)any recorded NoƟces of Default affecƟng the Premise;(ii)any delinquent amounts due under any loan secured by the Premises;and (iii)any bankruptcy proceeding affecƟng the Premises.

2.3 Compliance.Lessor warrants that to the best of its knowledge the improvements on the Premises comply with the building codes,applicable laws, covenants or restricƟons of record,regulaƟons,and ordinances ("Applicable Requirements")that were in effect at the Ɵme that each improvement,or porƟon thereof,was constructed.Said warranty does not apply to the use to which Lessee will put the Premises,modificaƟons which may be required by the Americans with DisabiliƟes Act or any similar laws as a result of Lessee's use (see Paragraph 49),or to any AlteraƟons or UƟlity InstallaƟons (as defined in Paragraph 7.3(a))made or to be made by Lessee.NOTE:Lessee is responsible for determining whether or not the Applicable Requirements,and especially the zoning are appropriate for Lessee's intended use,and acknowledges that past uses of the Premises may no longer be allowed.If the Premises do not comply with said warranty,Lessor shall, except as otherwise provided,promptly aŌer receipt of wriƩen noƟce from Lessee seƫng forth with specificity the nature and extent of such non-compliance,recƟfy the same at Lessor's expense.If Lessee does not give Lessor wriƩen noƟce of a non-compliance with this warranty within 6 months following the Start Date, correcƟon of that non-compliance shall be the obligaƟon of Lessee at Lessee's sole cost and expense.If the Applicable Requirements are hereaŌer changed so as to require during the term of this Lease the construcƟon of an addiƟon to or an alteraƟon of the Unit,Premises and/or Building,the remediaƟon of any Hazardous Substance,or the reinforcement or other physical modificaƟon of the Unit,Premises and/or Building ("Capital Expenditure"),Lessor and Lessee shall allocate the cost of such work as follows:
(a)Subject to Paragraph 2.3(c)below,if such Capital Expenditures are required as a result of the specific and unique use of the Premises by Lessee as compared with uses by tenants in general,Lessee shall be fully responsible for the cost thereof,provided,however,that if such Capital Expenditure is required during the last 2 years of this Lease and the cost thereof exceeds 6 months'Base Rent,Lessee may instead terminate this Lease unless Lessor noƟfies Lessee,in wriƟng, within 10 days aŌer receipt of Lessee's terminaƟon noƟce that Lessor has elected to pay the difference between the actual cost thereof and the amount equal to 6 months'Base Rent.If Lessee elects terminaƟon,Lessee shall immediately cease the use of the Premises which requires such Capital Expenditure and deliver to Lessor wriƩen noƟce specifying a terminaƟon date at least 90 days thereaŌer.Such terminaƟon date shall,however,in no event be earlier than the last day that Lessee could legally uƟlize the Premises without commencing such Capital Expenditure. (b)If such Capital Expenditure is not the result of the specific and unique use of the Premises by Lessee (such as,governmentally mandated seismic modificaƟons),then Lessor shall pay for such Capital Expenditure and Lessee shall only be obligated to pay,each month during the remainder of the term of this Lease or any extension thereof,on the date that on which the Base Rent is due,an amount equal to 1/144th of the porƟon of such costs reasonably aƩributable to the Premises.Lessee shall pay Interest on the balance but may prepay its obligaƟon at any Ɵme.If,however,such Capital Expenditure is required during the last 2 years of this Lease or if Lessor reasonably determines that it is not economically feasible to pay its share thereof,Lessor shall have the opƟon to terminate this Lease upon 90 days prior wriƩen noƟce to Lessee unless Lessee noƟfies Lessor,in wriƟng,within 10 days aŌer receipt of Lessor's terminaƟon noƟce that Lessee will pay for such Capital Expenditure.If Lessor does not elect to terminate,and fails to tender its share of any such Capital Expenditure,Lessee may advance such funds and deduct same,with Interest,from Rent unƟl Lessor's share of such costs have been fully paid.If Lessee is unable to finance Lessor's share,or if the balance of the Rent due and payable for the remainder of this Lease is not sufficient to fully reimburse Lessee on an offset basis,Lessee shall have the right to terminate this Lease upon 30 days wriƩen noƟce to Lessor.
(c)Notwithstanding the above,the provisions concerning Capital Expenditures are intended to apply only to non-voluntary,unexpected,and new Applicable Requirements.If the Capital Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use,change in intensity of use,or modificaƟon to the Premises then,and in that event,Lessee shall either:(i)immediately cease such changed use or intensity of use and/or take such other steps as may be necessary to eliminate the requirement for such Capital Expenditure,or (ii)complete such Capital Expenditure at its own expense.Lessee shall not have any right to terminate this Lease.

2.4 Acknowledgements.Lessee acknowledges that:(a)it has been given an opportunity to inspect and measure the Premises;(b)it has been advised by Lessor and/or Brokers to saƟsfy itself with respect to the size and condiƟon of the Premises (including but not limited to the electrical,HVAC and fire sprinkler systems,security,environmental aspects,and compliance with Applicable Requirements and the Americans with DisabiliƟes Act),and their suitability for Lessee's intended use;(c)Lessee has made such invesƟgaƟon as it deems necessary with reference to such maƩers and assumes all responsibility therefor as the same relate to its occupancy of the Premises;(d)it is not relying on any representaƟon as to the size 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 agents,nor Brokers have made any oral or wriƩen representaƟons or warranƟes with respect to said maƩers other than as set forth in this Lease.In addiƟon,Lessor acknowledges that:(i)Brokers

have made no representaƟons,promises or warranƟes concerning Lessee's ability to honor the Lease or suitability to occupy the Premises and (ii)it is Lessor's sole responsibility to invesƟgate the financial capability and/or suitability of all proposed tenants.

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

2.6 Vehicle Parking.Lessee shall be enƟtled to use the number of Parking Spaces specified in Paragraph 1.2(b)on those porƟons of the Common Areas designated from Ɵme to Ɵme by Lessor for parking.Lessee shall not use more parking spaces than said number.Said parking spaces shall be used for parking by vehicles no larger than full-size passenger automobiles or pick-up trucks,herein called "PermiƩed Size Vehicles."Lessor may regulate the loading and unloading of vehicles by adopƟng Rules and RegulaƟons as provided in Paragraph 2.9.No vehicles other than PermiƩed Size Vehicles may be parked in the Common Area without the prior wriƩen permission of Lessor.In addiƟon:
(a)Lessee shall not permit or allow any vehicles that belong to or are controlled by Lessee or Lessee's employees,suppliers,shippers,customers, contractors or invitees to be loaded,unloaded,or parked in areas other than those designated by Lessor for such acƟviƟes. (b)Lessee shall not service or store any vehicles in the Common Areas. (c)If Lessee permits or allows any of the prohibited acƟviƟes described in this Paragraph 2.6,then Lessor shall have the right,without noƟce,in addiƟon to such other rights and remedies that it may have,to remove or tow away the vehicle involved and charge the cost to Lessee,which cost shall be immediately payable upon demand by Lessor.

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

2.8 Common Areas -Lessee's Rights.Lessor grants to Lessee,for the benefit of Lessee and its employees,suppliers,shippers,contractors,customers and invitees,during the term of this Lease,the non-exclusive right to use,in common with others enƟtled to such use,the Common Areas as they exist from Ɵme to Ɵme, subject to any rights,powers,and privileges reserved by Lessor under the terms hereof or under the terms of any rules and regulaƟons or restricƟons governing the use of the Project.Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property,temporarily or permanently,in the Common Areas.Any such storage shall be permiƩed only by the prior wriƩen consent of Lessor or Lessor's designated agent,which consent may be revoked at any Ɵme.In the event that any unauthorized storage shall occur,then Lessor shall have the right,without noƟce,in addiƟon to such other rights and remedies that it may have,to remove the property and charge the cost to Lessee,which cost shall be immediately payable upon demand by Lessor.

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

2.10 Common Areas -Changes.Lessor shall have the right,in Lessor's sole discreƟon,from Ɵme to Ɵme:
(a)To make changes to the Common Areas,including,without limitaƟon,changes in the locaƟon,size,shape and number of driveways,entrances, parking spaces,parking areas,loading and unloading areas,ingress,egress,direcƟon of traffic,landscaped areas,walkways and uƟlity raceways; (b)To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Premises remains available; (c)To designate other land outside the boundaries of the Project to be a part of the Common Areas; (d)To add addiƟonal buildings and improvements to the Common Areas; (e)To use the Common Areas while engaged in making addiƟonal improvements,repairs or alteraƟons to the Project,or any porƟon thereof;and (f)To do and perform such other acts and make such other changes in,to or with respect to the Common Areas and Project as Lessor may,in the exercise of sound business judgment,deem to be appropriate.

3.Term.

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

3.2 Early Possession.Any provision herein granƟng Lessee Early Possession of the Premises is subject to and condiƟoned upon the Premises being available for such possession prior to the Commencement Date.Any grant of Early Possession only conveys a non-exclusive right to occupy the Premises.If Lessee totally or parƟally occupies the Premises prior to the Commencement Date,the obligaƟon to pay Base Rent shall be abated for the period of such Early Possession.All other terms of this Lease (including but not limited to the obligaƟons to pay Lessee's Share of Common Area OperaƟng Expenses,Real Property Taxes and insurance premiums and to maintain the Premises)shall be in effect during such period.Any such Early Possession shall not affect the ExpiraƟon Date.

3.3 Delay In Possession.Lessor agrees to use commercially reasonable efforts to deliver exclusive possession of the Premises to Lessee by the Commencement Date.If,despite said efforts,Lessor is unable to deliver possession by such date,Lessor shall not be subject to any liability therefor,nor shall such failure affect the validity of this Lease or change the ExpiraƟon Date.Lessee shall not,however,be obligated to pay Rent or perform its other obligaƟons unƟl Lessor delivers possession of the Premises and any period of rent abatement that Lessee would otherwise have enjoyed shall run from the date of delivery of possession and conƟnue for a period equal to what Lessee would otherwise have enjoyed under the terms hereof,but minus any days of delay caused by the acts or omissions of Lessee.If possession is not delivered within 60 days aŌer the Commencement Date,as the same may be extended under the terms of any Work LeƩer executed by ParƟes,Lessee may,at its opƟon,by noƟce in wriƟng within 10 days aŌer the end of such 60 day period,cancel this Lease,in which event the ParƟes shall be discharged from all obligaƟons hereunder.If such wriƩen noƟce is not received by Lessor within said 10 day period,Lessee's right to cancel shall terminate.If possession of the Premises is not delivered within 120 days aŌer the Commencement Date,this Lease shall terminate unless other agreements are reached between Lessor and Lessee,in wriƟng.

3.4 Lessee Compliance.Lessor shall not be required to tender possession of the Premises to Lessee unƟl Lessee complies with its obligaƟon to provide evidence of insurance (Paragraph 8.5).Pending delivery of such evidence,Lessee shall be required to perform all of its obligaƟons under this Lease from and aŌer the Start Date,including the payment of Rent,notwithstanding Lessor's elecƟon to withhold possession pending receipt of such evidence of insurance.Further,if Lessee is required to perform any other condiƟons prior to or concurrent with the Start Date,the Start Date shall occur but Lessor may elect to withhold possession unƟl such condiƟons are saƟsfied.

4.Rent.

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

4.2 Common Area OperaƟng Expenses.Lessee shall pay to Lessor during the term hereof,in addiƟon to the Base Rent,Lessee's Share (as specified in

Paragraph 1.6)of all Common Area OperaƟng Expenses,as hereinaŌer defined,during each calendar year of the term of this Lease,in accordance with the following provisions:
(a)"Common Area OperaƟng Expenses"are defined,for purposes of this Lease,as all costs relaƟng to the ownership and operaƟon of the Project, including,but not limited to,the following:
(i)The operaƟon,repair and maintenance,in neat,clean,good order and condiƟon,and if necessary the replacement,of the following:
(aa)The Common Areas and Common Area improvements,including parking areas,loading and unloading areas,trash areas,roadways, parkways,walkways,driveways,landscaped areas,bumpers,irrigaƟon systems,Common Area lighƟng faciliƟes,fences and gates,elevators,roofs,exterior walls of the buildings,building systems and roof drainage systems.
(bb)Exterior signs and any tenant directories.
(cc)Any fire sprinkler systems.
(dd)All other areas and improvements that are within the exterior boundaries of the Project but outside of the Premises and/or any other space occupied by a tenant.
(ii)The cost of water,gas,electricity and telephone to service the Common Areas and any uƟliƟes not separately metered. (iii)The cost of trash disposal,pest control services,property management,security services,owners'associaƟon dues and fees,the cost to repaint the exterior of any structures and the cost of any environmental inspecƟons. (iv)Reserves set aside for maintenance,repair and/or replacement of Common Area improvements and equipment. (v)Real Property Taxes (as defined in Paragraph 10).
(vi)The cost of the premiums for the insurance maintained by Lessor pursuant to Paragraph 8. (vii)Any deducƟble porƟon of an insured loss concerning the Building or the Common Areas. (viii)Auditors',accountants'and aƩorneys'fees and costs related to the operaƟon,maintenance,repair and replacement of the Project. (ix)The cost of any capital improvement to the Building or the Project not covered under the provisions of Paragraph 2.3 provided;however,that Lessor shall allocate the cost of any such capital improvement over a 12 year period and Lessee shall not be required to pay more than Lessee's Share of 1/144th of the cost of such capital improvement in any given month.Lessee shall pay Interest on the unamorƟzed balance but may prepay its obligaƟon at any Ɵme. (x)The cost of any other services to be provided by Lessor that are stated elsewhere in this Lease to be a Common Area OperaƟng Expense. (b)Any Common Area OperaƟng Expenses and Real Property Taxes that are specifically aƩributable to the Unit,the Building or to any other building in the Project or to the operaƟon,repair and maintenance thereof,shall be allocated enƟrely to such Unit,Building,or other building.However,any Common Area OperaƟng Expenses and Real Property Taxes that are not specifically aƩributable to the Building or to any other building or to the operaƟon,repair and maintenance thereof,shall be equitably allocated by Lessor to all buildings in the Project. (c)The inclusion of the improvements,faciliƟes and services set forth in Subparagraph 4.2(a)shall not be deemed to impose an obligaƟon upon Lessor to either have said improvements or faciliƟes or to provide those services unless the Project already has the same,Lessor already provides the services,or Lessor has agreed elsewhere in this Lease to provide the same or some of them. (d)Lessee's Share of Common Area OperaƟng Expenses is payable monthly on the same day as the Base Rent is due hereunder.The amount of such payments shall be based on Lessor's esƟmate of the annual Common Area OperaƟng Expenses.Within 60 days aŌer wriƩen request (but not more than once each year)Lessor shall deliver to Lessee a reasonably detailed statement showing Lessee's Share of the actual Common Area OperaƟng Expenses for the preceding year.If Lessee's payments during such year exceed Lessee's Share,Lessor shall credit the amount of such over-payment against Lessee's future payments.If Lessee's payments during such year were less than Lessee's Share,Lessee shall pay to Lessor the amount of the deficiency within 10 days aŌer delivery by Lessor to Lessee of the statement.
(e)Common Area OperaƟng Expenses shall not include any expenses paid by any tenant directly to third parƟes,or as to which Lessor is otherwise reimbursed by any third party,other tenant,or insurance proceeds.

4.3 Payment.Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States,without offset or deducƟon (except as specifically permiƩed in this Lease),on or before the day on which it is due.All monetary amounts shall be rounded to the nearest whole dollar.In the event that any statement or invoice prepared by Lessor is inaccurate such inaccuracy shall not consƟtute a waiver and Lessee shall be obligated to pay the amount set forth in this Lease.Rent for any period during the term hereof which is 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 its address stated herein or to such other persons or place as Lessor may from Ɵme to Ɵme designate in wriƟng.

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 Lessor's endorsement of any check so staƟng.In the event that any check,draŌ,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 addiƟon to any Late Charge to compensate Lessor for addiƟonal Ɵme and expenses incurred in handling the dishonored payment and Lessor,at its opƟon,may require all future Rent be paid by cashier's check.Payments will be applied first to accrued late charges and aƩorney's fees,second to accrued interest,then to Base Rent and Common Area OperaƟng Expenses,and any remaining amount to any other outstanding charges or costs.

5.Security Deposit.Lessee shall deposit with Lessor upon execuƟon hereof the Security Deposit as security for Lessee's faithful performance of its obligaƟons under this Lease.If Lessee fails to pay Rent,or otherwise Defaults under this Lease,Lessor may use,apply or retain all or any porƟon of said Security Deposit for the payment of any amount already due Lessor,for Rents which will be due in the future,and/or to reimburse or compensate Lessor for any liability,expense,loss or damage which Lessor may suffer or incur by reason thereof.If Lessor uses or applies all or any porƟon of the Security Deposit,Lessee shall within 10 days aŌer wriƩen request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease.If the Base Rent increases during the term of this Lease,Lessee shall,upon wriƩen request from Lessor,deposit addiƟonal monies with Lessor so that the total amount of the Security Deposit shall at all Ɵmes bear the same proporƟon to the increased Base Rent as the iniƟal Security Deposit bore to the iniƟal Base Rent.Should the Agreed Use be amended to accommodate a material change in the business of Lessee or to accommodate a sublessee or assignee,Lessor shall have the right to increase the Security Deposit to the extent necessary,in Lessor's reasonable judgment,to account for any increased wear and tear that the Premises may suffer as a result thereof.If a change in control of Lessee occurs during this Lease and following such change the financial condiƟon of Lessee is,in Lessor's reasonable judgment,significantly reduced,Lessee shall deposit such addiƟonal monies with Lessor as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based on such change in financial condiƟon.Lessor shall not be required to keep the Security Deposit separate from its general accounts.Within 90 days aŌer the expiraƟon or terminaƟon of this Lease,Lessor shall return that porƟon of the Security Deposit not used or applied by Lessor.Lessor shall upon wriƩen request provide Lessee with an accounƟng showing how that porƟon of the Security Deposit that was not returned was applied.No part of the Security Deposit shall bear interest or be considered prepayment for any monies to be paid by Lessee under this Lease.THE SECURITY DEPOSIT SHALL NOT BE USED BY LESSEE IN LIEU OF PAYMENT OF THE LAST MONTH'S RENT.

6.Use.

6.1 Use.Lessee shall use and occupy the Premises only for the Agreed Use,or any other legal use which is reasonably comparable thereto,and for no other purpose.Lessee shall not use or permit the use of the Premises in a manner that is unlawful,creates damage,waste or a nuisance,or that disturbs occupants of or causes damage to neighboring premises or properƟes.Other than guide,signal and seeing eye dogs,Lessee shall not keep or allow in the Premises any pets,animals, birds,fish,or repƟles.Lessor shall not unreasonably withhold or delay its consent to any wriƩen request for a modificaƟon of the Agreed Use,so long as the same will not impair the structural integrity of the Building or the mechanical or electrical systems therein,and/or is not significantly more burdensome to the Project.If Lessor elects to withhold consent,Lessor shall within 7 days aŌer such request give wriƩen noƟficaƟon of same,which noƟce shall include an explanaƟon of Lessor's objecƟons to the change in the Agreed Use.

6.2 Hazardous Substances.
(a)Reportable Uses Require Consent.The term "Hazardous Substance"as used in this Lease shall mean any product,substance,or waste whose presence,use,manufacture,disposal,transportaƟon,or release,either by itself or in combinaƟon with other materials expected to be on the Premises,is either:(i) potenƟally injurious to the public health,safety or welfare,the environment or the Premises,(ii)regulated or monitored by any governmental authority,or (iii)a basis for potenƟal liability of Lessor to any governmental agency or third party under any applicable statute or common law theory.Hazardous Substances shall include,but not be limited to,hydrocarbons,petroleum,gasoline,and/or crude oil or any products,byproducts or fracƟons thereof.Lessee shall not engage in any acƟvity in or on the Premises which consƟtutes a Reportable Use of Hazardous Substances without the express prior wriƩen consent of Lessor and Ɵmely compliance (at Lessee's expense)with all Applicable Requirements."Reportable Use"shall mean (i)the installaƟon or use of any above or below ground storage tank,(ii)the generaƟon, possession,storage,use,transportaƟon,or disposal of a Hazardous Substance that requires a permit from,or with respect to which a report,noƟce,registraƟon or business plan is required to be filed with,any governmental authority,and/or (iii)the presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a noƟce be given to persons entering or occupying the Premises or neighboring properƟes.Notwithstanding the foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use,ordinary office supplies (copier toner, liquid paper,glue,etc.)and common household cleaning materials,so long as such use is in compliance with all Applicable Requirements,is not a Reportable Use,and does not expose the Premises or neighboring property to any meaningful risk of contaminaƟon or damage or expose Lessor to any liability therefor.In addiƟon, Lessor may condiƟon its consent to any Reportable Use upon receiving such addiƟonal assurances as Lessor reasonably deems necessary to protect itself,the public, the Premises and/or the environment against damage,contaminaƟon,injury and/or liability,including,but not limited to,the installaƟon (and removal on or before Lease expiraƟon or terminaƟon)of protecƟve modificaƟons (such as concrete encasements)and/or increasing the Security Deposit. (b)Duty to Inform Lessor.If Lessee knows,or has reasonable cause to believe,that a Hazardous Substance has come to be located in,on,under or about the Premises,other than as previously consented to by Lessor,Lessee shall immediately give wriƩen noƟce of such fact to Lessor,and provide Lessor with a copy of any report,noƟce,claim or other documentaƟon which it has concerning the presence of such Hazardous Substance. (c)Lessee RemediaƟon.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 expense,comply with all Applicable Requirements and take all invesƟgatory and/or remedial acƟon reasonably recommended,whether or not formally ordered or required,for the cleanup of any contaminaƟon of,and for the maintenance, security and/or monitoring of the Premises or neighboring properƟes,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. (d)Lessee IndemnificaƟon.Lessee shall indemnify,defend and hold Lessor,its agents,employees,lenders and ground lessor,if any,harmless from and against any and all loss of rents and/or damages,liabiliƟes,judgments,claims,expenses,penalƟes,and aƩorneys'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 migraƟon of any Hazardous Substance under the Premises from areas outside of the Project not caused or contributed to by Lessee).Lessee's obligaƟons shall include,but not be limited to,the effects of any contaminaƟon or injury to person,property or the environment created or suffered by Lessee,and the cost of invesƟgaƟon,removal,remediaƟon,restoraƟon and/or abatement,and shall survive the expiraƟon or terminaƟon of this Lease.No terminaƟon, cancellaƟon or release agreement entered into by Lessor and Lessee shall release Lessee from its obligaƟons under this Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor in wriƟng at the Ɵme of such agreement. (e)Lessor IndemnificaƟon.Except as otherwise provided in paragraph 8.7,Lessor and its successors and assigns shall indemnify,defend,reimburse and hold Lessee,its employees and lenders,harmless from and against any and all environmental damages,including the cost of remediaƟon,which are suffered as a direct result of Hazardous Substances on the Premises prior to Lessee taking possession or which are caused by the gross negligence or willful misconduct of Lessor,its agents or employees.Lessor's obligaƟons,as and when required by the Applicable Requirements,shall include,but not be limited to,the cost of invesƟgaƟon, removal,remediaƟon,restoraƟon and/or abatement,and shall survive the expiraƟon or terminaƟon of this Lease. (f)InvesƟgaƟons and RemediaƟons.Lessor shall retain the responsibility and pay for any invesƟgaƟons or remediaƟon measures required by governmental enƟƟes having jurisdicƟon with respect to the existence of Hazardous Substances on the Premises prior to the Lessee taking possession,unless such remediaƟon measure is required as a result of Lessee's use (including "AlteraƟons",as defined in paragraph 7.3(a)below)of the Premises,in which event Lessee shall be responsible for such payment.Lessee shall cooperate fully in any such acƟviƟes at the request of Lessor,including allowing Lessor and Lessor's agents to have reasonable access to the Premises at reasonable Ɵmes in order to carry out Lessor's invesƟgaƟve and remedial responsibiliƟes. (g)Lessor TerminaƟon OpƟon.If a Hazardous Substance CondiƟon (see Paragraph 9.1(e))occurs during the term of this Lease,unless Lessee is legally responsible therefor (in which case Lessee shall make the invesƟgaƟon and remediaƟon thereof required by the Applicable Requirements and this Lease shall conƟnue in full force and effect,but subject to Lessor's rights under Paragraph 6.2(d)and Paragraph 13),Lessor may,at Lessor's opƟon,either (i)invesƟgate and remediate such Hazardous Substance CondiƟon,if required,as soon as reasonably possible at Lessor's expense,in which event this Lease shall conƟnue in full force and effect,or (ii)if the esƟmated cost to remediate such condiƟon exceeds 12 Ɵmes the then monthly Base Rent or $100,000,whichever is greater,give wriƩen noƟce to Lessee,within 30 days aŌer receipt by Lessor of knowledge of the occurrence of such Hazardous Substance CondiƟon,of Lessor's desire to terminate this Lease as of the date 60 days following the date of such noƟce.In the event Lessor elects to give a terminaƟon noƟce,Lessee may,within 10 days thereaŌer,give wriƩen noƟce to Lessor of Lessee's commitment to pay the amount by which the cost of the remediaƟon of such Hazardous Substance CondiƟon exceeds an amount equal to 12 Ɵmes the then monthly Base Rent or $100,000,whichever is greater.Lessee shall provide Lessor with said funds or saƟsfactory assurance thereof within 30 days following such commitment.In such event,this Lease shall conƟnue in full force and effect,and Lessor shall proceed to make such remediaƟon as soon as reasonably possible aŌer the required funds are available.If Lessee does not give such noƟce and provide the required funds or assurance thereof within the Ɵme provided,this Lease shall terminate as of the date specified in Lessor's noƟce of terminaƟon.

6.3 Lessee's Compliance with Applicable Requirements.Except as otherwise provided in this Lease,Lessee shall,at Lessee's sole expense,fully,diligently and in a Ɵmely manner,materially comply with all Applicable Requirements,the requirements of any applicable fire insurance underwriter or raƟng bureau,and the recommendaƟons of Lessor's engineers and/or consultants which relate in any manner to the Premises,without regard to whether said Applicable Requirements are now in effect or become effecƟve aŌer the Start Date.Lessee shall,within 10 days aŌer receipt of Lessor's wriƩen request,provide Lessor with copies of all permits and other documents,and other informaƟon evidencing Lessee's compliance with any Applicable Requirements specified by Lessor,and shall immediately upon

receipt,noƟfy Lessor in wriƟng (with copies of any documents involved)of any threatened or actual claim,noƟce,citaƟon,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 wriƩen noƟce to Lessor of:(i) any water damage to the Premises and any suspected seepage,pooling,dampness or other condiƟon conducive to the producƟon of mold;or (ii)any musƟness or other odors that might indicate the presence of mold in the Premises.

6.4 InspecƟon;Compliance.Lessor and Lessor's "Lender"(as defined in Paragraph 30)and consultants authorized by Lessor shall have the right to enter into Premises at any Ɵme in the case of an emergency,and otherwise at reasonable Ɵmes aŌer reasonable noƟce,for the purpose of inspecƟng and/or tesƟng the condiƟon of the Premises and/or for verifying compliance by Lessee with this Lease.The cost of any such inspecƟons shall be paid by Lessor,unless a violaƟon of Applicable Requirements,or a Hazardous Substance CondiƟon (see Paragraph 9.1(e))is found to exist or be imminent,or the inspecƟon is requested or ordered by a governmental authority.In such case,Lessee shall upon request reimburse Lessor for the cost of such inspecƟon,so long as such inspecƟon is reasonably related to the violaƟon or contaminaƟon.In addiƟon,Lessee shall provide copies of all relevant material safety data sheets (MSDS)to Lessor within 10 days of the receipt of wriƩen request therefor.Lessee acknowledges that any failure on its part to allow such inspecƟons or tesƟng will expose Lessor to risks and potenƟally cause Lessor to incur costs not contemplated by this Lease,the extent of which will be extremely difficult to ascertain.Accordingly,should the Lessee fail to allow such inspecƟons and/or tesƟng in a Ɵmely fashion the Base Rent shall be automaƟcally increased,without any requirement for noƟce to Lessee,by an amount equal to 10%of the then exisƟng Base Rent or $100,whichever is greater for the remainder to the Lease.The ParƟes agree that such increase in Base Rent represents fair and reasonable compensaƟon for the addiƟonal risk/costs that Lessor will incur by reason of Lessee's failure to allow such inspecƟon and/or tesƟng.Such increase in Base Rent shall in no event consƟtute a waiver of Lessee's Default or Breach with respect to such failure nor prevent the exercise of any of the other rights and remedies granted hereunder.

7.Maintenance;Repairs;UƟlity InstallaƟons;Trade Fixtures and AlteraƟons.

7.1 Lessee's ObligaƟons.
(a)In General.Subject to the provisions of Paragraph 2.2 (CondiƟon),2.3 (Compliance),6.3 (Lessee's Compliance with Applicable Requirements),7.2 (Lessor's ObligaƟons),9 (Damage or DestrucƟon),and 14 (CondemnaƟon),Lessee shall,at Lessee's sole expense,keep the Premises,UƟlity InstallaƟons (intended for Lessee's exclusive use,no maƩer where located),and AlteraƟons in good order,condiƟon and repair (whether or not the porƟon 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,any prior use,the elements or the age of such porƟon of the Premises),including,but not limited to,all equipment or faciliƟes,such as plumbing,HVAC equipment, electrical,lighƟng faciliƟes,boilers,pressure vessels,fixtures,interior walls,interior surfaces of exterior walls,ceilings,floors,windows,doors,plate glass,and skylights but excluding any items which are the responsibility of Lessor pursuant to Paragraph 7.2.Lessee,in keeping the Premises in good order,condiƟon and repair, shall exercise and perform good maintenance pracƟces,specifically including the procurement and maintenance of the service contracts required by Paragraph 7.1(b) below.Lessee's obligaƟons shall include restoraƟons,replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order,condiƟon and state of repair.
(b)Service Contracts.Lessee shall,at Lessee's sole expense,procure and maintain contracts,with copies to Lessor,in customary form and substance for, and 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)boiler and pressure vessels,and (iii)clarifiers.However,Lessor reserves the right,upon noƟce to Lessee,to procure and maintain any or all of such service contracts,and Lessee shall reimburse Lessor,upon demand,for the cost thereof. (c)Failure to Perform.If Lessee fails to perform Lessee's obligaƟons under this Paragraph 7.1,Lessor may enter upon the Premises aŌer 10 days'prior wriƩen noƟce to Lessee (except in the case of an emergency,in which case no noƟce shall be required),perform such obligaƟons on Lessee's behalf,and put the Premises in good order,condiƟon and repair,and Lessee shall promptly pay to Lessor a sum equal to 115%of the cost thereof. (d)Replacement.Subject to Lessee's indemnificaƟon of Lessor as set forth in Paragraph 8.7 below,and without relieving Lessee of liability resulƟng from Lessee's failure to exercise and perform good maintenance pracƟces,if an item described in Paragraph 7.1(b)cannot be repaired other than at a cost which is in excess of 50%of the cost of replacing such item,then such item shall be replaced by Lessor,and the cost thereof shall be prorated between the ParƟes and Lessee shall only be obligated to pay,each month during the remainder of the term of this Lease or any extension thereof,on the date on which Base Rent is due,an amount equal to the product of mulƟplying the cost of such replacement by a fracƟon,the numerator of which is one,and the denominator of which is 144 (i.e.1/144th of the cost per month).Lessee shall pay Interest on the unamorƟzed balance but may prepay its obligaƟon at any Ɵme.

7.2 Lessor's ObligaƟons.Subject to the provisions of Paragraphs 2.2 (CondiƟon),2.3 (Compliance),4.2 (Common Area OperaƟng Expenses),6 (Use),7.1 (Lessee's ObligaƟons),9 (Damage or DestrucƟon)and 14 (CondemnaƟon),Lessor,subject to reimbursement pursuant to Paragraph 4.2,shall keep in good order, condiƟon and repair the foundaƟons,exterior walls,structural condiƟon of interior bearing walls,exterior roof,fire sprinkler system,Common Area fire alarm and/or smoke detecƟon systems,fire hydrants,parking lots,walkways,parkways,driveways,landscaping,fences,signs and uƟlity systems serving the Common Areas and all parts thereof,as well as providing the services for which there is a Common Area OperaƟng Expense pursuant to Paragraph 4.2.Lessor shall not be obligated to paint the exterior or interior surfaces of exterior walls nor shall Lessor be obligated to maintain,repair or replace windows,doors or plate glass of the Premises.

7.3 UƟlity InstallaƟons;Trade Fixtures;AlteraƟons.
(a)DefiniƟons.The term "UƟlity InstallaƟons"refers to all floor and window coverings,air and/or vacuum lines,power panels,electrical distribuƟon, security and fire protecƟon systems,communicaƟon cabling,lighƟng 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 "AlteraƟons"shall mean any modificaƟon of the improvements,other than UƟlity InstallaƟons or Trade Fixtures,whether by addiƟon or deleƟon."Lessee Owned AlteraƟons and/or UƟlity InstallaƟons"are defined as AlteraƟons and/or UƟlity InstallaƟons made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a). (b)Consent.Lessee shall not make any AlteraƟons or UƟlity InstallaƟons to the Premises without Lessor's prior wriƩen consent.Lessee may,however, make non-structural AlteraƟons or UƟlity InstallaƟons to the interior of the Premises (excluding the roof)without such consent but upon noƟce to Lessor,as long as they are not visible from the outside,do not involve puncturing,relocaƟng or removing the roof or any exisƟng walls,will not affect the electrical,plumbing,HVAC, and/or life safety systems,do not trigger the requirement for addiƟonal modificaƟons and/or improvements to the Premises resulƟng from Applicable Requirements, such as compliance with Title 24,and/or life safety systems,and the cumulaƟve 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 penetraƟons and/or install anything on the roof without the prior wriƩen approval of Lessor.Lessor may,as a precondiƟon to granƟng such approval,require Lessee to uƟlize a contractor chosen and/or approved by Lessor.Any AlteraƟons or UƟlity InstallaƟons that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in wriƩen form with detailed plans.Consent shall be deemed condiƟoned upon Lessee's:(i)acquiring all applicable governmental permits,(ii)furnishing Lessor with copies of both the permits and the plans and specificaƟons prior to commencement of the work,and (iii)compliance with all condiƟons of said permits and other Applicable Requirements in a prompt and expediƟous manner.Any AlteraƟons or UƟlity InstallaƟons shall be performed in a workmanlike manner with good and sufficient materials.Lessee shall promptly upon compleƟon furnish Lessor with as-built plans and specificaƟons.For work which costs an amount in excess of one month's Base Rent,Lessor may condiƟon its consent upon Lessee providing a lien and compleƟon bond in an amount equal to 150%

of the esƟmated cost of such AlteraƟon or UƟlity InstallaƟon and/or upon Lessee's posƟng an addiƟonal Security Deposit with Lessor. (c)Liens;Bonds.Lessee shall pay,when due,all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises,which claims are or may be secured by any mechanic's or materialmen's lien against the Premises or any interest therein.Lessee shall give Lessor not less than 10 days noƟce prior to the commencement of any work in,on or about the Premises,and Lessor shall have the right to post noƟces of non-responsibility.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 saƟsfy 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 parƟcipate in any such acƟon,Lessee shall pay Lessor's aƩorneys'fees and costs.

7.4 Ownership;Removal;Surrender;and RestoraƟon.
(a)Ownership.Subject to Lessor's right to require removal or elect ownership as hereinaŌer provided,all AlteraƟons and UƟlity InstallaƟons made by Lessee shall be the property of Lessee,but considered a part of the Premises.Lessor may,at any Ɵme,elect in wriƟng to be the owner of all or any specified part of the Lessee Owned AlteraƟons and UƟlity InstallaƟons.Unless otherwise instructed per paragraph 7.4(b)hereof,all Lessee Owned AlteraƟons and UƟlity InstallaƟons shall,at the expiraƟon or terminaƟon of this Lease,become the property of Lessor and be surrendered by Lessee with the Premises. (b)Removal.By delivery to Lessee of wriƩen noƟce from Lessor not earlier than 90 and not later than 30 days prior to the end of the term of this Lease, Lessor may require that any or all Lessee Owned AlteraƟons or UƟlity InstallaƟons be removed by the expiraƟon or terminaƟon of this Lease.Lessor may require the removal at any Ɵme of all or any part of any Lessee Owned AlteraƟons or UƟlity InstallaƟons made without the required consent. (c)Surrender;RestoraƟon.Lessee shall surrender the Premises by the ExpiraƟon Date or any earlier terminaƟon date,with all of the improvements, parts and surfaces thereof broom clean and free of debris,and in good operaƟng order,condiƟon and state of repair,ordinary wear and tear excepted."Ordinary wear and tear"shall not include any damage or deterioraƟon that would have been prevented by good maintenance pracƟce.Notwithstanding the foregoing and the provisions of Paragraph 7.1(a),if the Lessee occupies the Premises for 12 months or less,then Lessee shall surrender the Premises in the same condiƟon as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear.Lessee shall repair any damage occasioned by the installaƟon,maintenance or removal of Trade Fixtures,Lessee owned AlteraƟons and/or UƟlity InstallaƟons,furnishings,and equipment as well as the removal of any storage tank installed by or for Lessee.

Lessee shall also 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 migraƟon from areas outside of the Project)to the level specified in Applicable 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 ExpiraƟon Date or any earlier terminaƟon 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 Ɵmely vacate the Premises pursuant to this Paragraph 7.4(c)without the express wriƩen consent of Lessor shall consƟtute a holdover under the provisions of Paragraph 26 below.

8.Insurance;Indemnity.

8.1 Payment of Premiums.The cost of the premiums for the insurance policies required to be carried by Lessor,pursuant to Paragraphs 8.2(b),8.3(a)and

8.3(b),shall be a Common Area OperaƟng Expense.Premiums for policy periods commencing prior to,or extending beyond,the term of this Lease shall be prorated to coincide with the corresponding Start Date or ExpiraƟon Date.

8.2 Liability Insurance.
(a)Carried by Lessee.Lessee shall obtain and keep in force a Commercial General Liability policy of insurance protecƟng Lessee and Lessor as an addiƟonal insured against claims for bodily injury,personal injury and property damage based upon or arising out of the ownership,use,occupancy or maintenance of the Premises and all areas appurtenant thereto.Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of not less than $2,000,000.Lessee shall add Lessor as an addiƟonal insured by means of an endorsement at least as broad as the Insurance Service OrganizaƟon's "AddiƟonal Insured-Managers or Lessors of Premises"Endorsement.The policy shall not contain any intra-insured exclusions as between insured persons or organizaƟons,but shall include coverage for liability assumed under this Lease as an "insured contract"for the performance of Lessee's indemnity obligaƟons under this Lease.The limits of said insurance shall not,however,limit the liability of Lessee nor relieve Lessee of any obligaƟon hereunder.

Lessee shall provide an endorsement on its liability policy(ies)which provides that its insurance shall be primary to and not contributory with any similar insurance carried by Lessor,whose insurance shall be considered excess insurance only. (b)Carried by Lessor.Lessor shall maintain liability insurance as described in Paragraph 8.2(a),in addiƟon to,and not in lieu of,the insurance required to be maintained by Lessee.Lessee shall not be named as an addiƟonal insured therein.

8.3 Property Insurance -Building,Improvements and Rental Value. (a)Building and Improvements.Lessor shall obtain and keep in force a policy or policies of insurance in the name of Lessor,with loss payable to Lessor, any ground-lessor,and to any Lender insuring loss or damage to the Premises.The amount of such insurance shall be equal to the full insurable replacement cost of the Premises,as the same shall exist from Ɵme to Ɵme,or the amount required by any Lender,but in no event more than the commercially reasonable and available insurable value thereof.Lessee Owned AlteraƟons and UƟlity InstallaƟons,Trade Fixtures,and Lessee's personal property shall be insured by Lessee not by Lessor.If the coverage is available and commercially appropriate,such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender),including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading, demoliƟon,reconstrucƟon or replacement of any porƟon of the Premises as the result of a covered loss.Said policy or policies shall also contain an agreed valuaƟon provision in lieu of any coinsurance clause,waiver of subrogaƟon,and inflaƟon guard protecƟon causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.S.Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located.If such insurance coverage has a deducƟble clause,the deducƟble amount shall not exceed $5,000 per occurrence. (b)Rental Value.Lessor shall also obtain and keep in force a policy or policies in the name of Lessor with loss payable to Lessor and any Lender,insuring the loss of the full Rent for one year with an extended period of indemnity for an addiƟonal 180 days ("Rental Value insurance").Said insurance shall contain an agreed valuaƟon provision in lieu of any coinsurance clause,and the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable by Lessee,for the next 12 month period.
(c)Adjacent Premises.Lessee shall pay for any increase in the premiums for the property insurance of the Building and for the Common Areas or other buildings in the Project if said increase is caused by Lessee's acts,omissions,use or occupancy of the Premises. (d)Lessee's Improvements.Since Lessor is the Insuring Party,Lessor shall not be required to insure Lessee Owned AlteraƟons and UƟlity InstallaƟons unless the item in quesƟon has become the property of Lessor under the terms of this Lease.

8.4 Lessee's Property;Business InterrupƟon Insurance;Worker's CompensaƟon Insurance. (a)Property Damage.Lessee shall obtain and maintain insurance coverage on all of Lessee's personal property,Trade Fixtures,and Lessee Owned AlteraƟons and UƟlity InstallaƟons.Such insurance shall be full replacement cost coverage with a deducƟble of not to exceed $1,000 per occurrence.The proceeds from any such insurance shall be used by Lessee for the replacement of personal property,Trade Fixtures and Lessee Owned AlteraƟons and UƟlity InstallaƟons.

(b)Business InterrupƟon.Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings aƩributable to all perils commonly insured against by prudent lessees in the business of Lessee or aƩributable to prevenƟon of access to the Premises as a result of such perils.
(c)Worker's CompensaƟon Insurance.Lessee shall obtain and maintain Worker's CompensaƟon Insurance in such amount as may be required by Applicable Requirements.Such policy shall include a 'Waiver of SubrogaƟon'endorsement.Lessee shall provide Lessor with a copy of such endorsement along with the cerƟficate of insurance or copy of the policy required by paragraph 8.5. (d)No RepresentaƟon of Adequate Coverage.Lessor makes no representaƟon that the limits or forms of coverage of insurance specified herein are adequate to cover Lessee's property,business operaƟons or obligaƟons under this Lease.

8.5 Insurance Policies.Insurance required herein shall be by companies maintaining during the policy term a "General Policyholders RaƟng"of at least A-,VII, as set forth in the most current issue of "Best's Insurance Guide",or such other raƟng as may be required by a Lender.Lessee shall not do or permit to be done anything which invalidates the required insurance policies.Lessee shall,prior to the Start Date,deliver to Lessor cerƟfied copies of policies of such insurance or cerƟficates with copies of the required endorsements evidencing the existence and amounts of the required insurance.No such policy shall be cancelable or subject to modificaƟon except aŌer 30 days prior wriƩen noƟce to Lessor.Lessee shall,at least 10 days prior to the expiraƟon of such policies,furnish Lessor with evidence of renewals or "insurance binders"evidencing renewal thereof,or Lessor may increase his liability insurance coverage and charge the cost thereof to Lessee,which amount shall be payable by Lessee to Lessor upon demand.Such policies shall be for a term of at least one year,or the length of the remaining term of this Lease, whichever is less.If either Party shall fail to procure and maintain the insurance required to be carried by it,the other Party may,but shall not be required to,procure and maintain the same.

8.6 Waiver of SubrogaƟon.Without affecƟng any other rights or remedies,Lessee and Lessor each hereby release and relieve the other,and waive their enƟre right to recover damages against the other,for loss of or damage to its property arising out of or incident to the perils required to be insured against herein.The effect of such releases and waivers is not limited by the amount of insurance carried or required,or by any deducƟbles applicable hereto.The ParƟes agree to have their respecƟve property damage insurance carriers waive any right to subrogaƟon that such companies may have against Lessor or Lessee,as the case may be,so long as the insurance is not invalidated thereby.

8.7 Indemnity.Except for Lessor's gross negligence or willful misconduct,Lessee shall indemnify,protect,defend and hold harmless the Premises,Lessor and its agents,Lessor's master or ground lessor,partners and Lenders,from and against any and all claims,loss of rents and/or damages,liens,judgments,penalƟes, aƩorneys'and consultants'fees,expenses and/or liabiliƟes arising out of,involving,or in connecƟon with,a Breach of the Lease by Lessee and/or the use and/or occupancy of the Premises and/or Project by Lessee and/or by Lessee's employees,contractors or invitees .If any acƟon or proceeding is brought against Lessor by reason of any of the foregoing maƩers,Lessee shall upon noƟce defend the same at Lessee's expense by counsel reasonably saƟsfactory to Lessor and Lessor shall cooperate with Lessee in such defense.Lessor need not have first paid any such claim in order to be defended or indemnified.

8.8 ExempƟon of Lessor and its Agents from Liability.Notwithstanding the negligence or breach of this Lease by Lessor or its agents,neither Lessor nor its agents shall be liable under any circumstances for:(i)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,obstrucƟon or other defects of pipes,fire sprinklers,wires,appliances,plumbing, HVAC or lighƟng fixtures,or from any other cause,whether the said injury or damage results from condiƟons arising upon the Premises or upon other porƟons of the Building,or from other sources or places;(ii)any damages arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor or its agents to enforce the provisions of any other lease in the Project;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.

8.9 Failure to Provide Insurance.Lessee acknowledges that any failure on its part to obtain or maintain the insurance required herein will expose Lessor to risks and potenƟally cause Lessor to incur costs not contemplated by this Lease,the extent of which will be extremely difficult to ascertain.Accordingly,for any month or porƟon thereof that Lessee does not maintain the required insurance and/or does not provide Lessor with the required binders or cerƟficates evidencing the existence of the required insurance,the Base Rent shall be automaƟcally increased,without any requirement for noƟce to Lessee,by an amount equal to 10%of the then exisƟng Base Rent or $100,whichever is greater.The parƟes agree that such increase in Base Rent represents fair and reasonable compensaƟon for the addiƟonal risk/costs that Lessor will incur by reason of Lessee's failure to maintain the required insurance.Such increase in Base Rent shall in no event consƟtute a waiver of Lessee's Default or Breach with respect to the failure to maintain such insurance,prevent the exercise of any of the other rights and remedies granted hereunder,nor relieve Lessee of its obligaƟon to maintain the insurance specified in this Lease.

9.Damage or DestrucƟon.

9.1 DefiniƟons.
(a)"Premises ParƟal Damage"shall mean damage or destrucƟon to the improvements on the Premises,other than Lessee Owned AlteraƟons and UƟlity InstallaƟons,which can reasonably be repaired in 3 months or less from the date of the damage or destrucƟon,and the cost thereof does not exceed a sum equal to 6 month's Base Rent.Lessor shall noƟfy Lessee in wriƟng within 30 days from the date of the damage or destrucƟon as to whether or not the damage is ParƟal or Total. (b)"Premises Total DestrucƟon"shall mean damage or destrucƟon to the improvements on the Premises,other than Lessee Owned AlteraƟons and UƟlity InstallaƟons and Trade Fixtures,which cannot reasonably be repaired in 3 months or less from the date of the damage or destrucƟon and/or the cost thereof exceeds a sum equal to 6 month's Base Rent.Lessor shall noƟfy Lessee in wriƟng within 30 days from the date of the damage or destrucƟon as to whether or not the damage is ParƟal or Total.
(c)"Insured Loss"shall mean damage or destrucƟon to improvements on the Premises,other than Lessee Owned AlteraƟons and UƟlity InstallaƟons and Trade Fixtures,which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a),irrespecƟve of any deducƟble amounts or coverage limits involved.
(d)"Replacement Cost"shall mean the cost to repair or rebuild the improvements owned by Lessor at the Ɵme of the occurrence to their condiƟon exisƟng immediately prior thereto,including demoliƟon,debris removal and upgrading required by the operaƟon of Applicable Requirements,and without deducƟon for depreciaƟon.
(e)"Hazardous Substance CondiƟon"shall mean the occurrence or discovery of a condiƟon involving the presence of,or a contaminaƟon by,a Hazardous Substance,in,on,or under the Premises which requires restoraƟon.

9.2 ParƟal Damage -Insured Loss.If a Premises ParƟal Damage that is an Insured Loss occurs,then Lessor shall,at Lessor's expense,repair such damage (but not Lessee's Trade Fixtures or Lessee Owned AlteraƟons and UƟlity InstallaƟons)as soon as reasonably possible and this Lease shall conƟnue in full force and effect; provided,however,that Lessee shall,at Lessor's elecƟon,make the repair of any damage or destrucƟon the total cost to repair of which is $10,000 or less,and,in such event,Lessor shall make any applicable insurance proceeds available to Lessee on a reasonable basis for that purpose.Notwithstanding the foregoing,if the required insurance was not in force or the insurance proceeds are not sufficient to effect such repair,the Insuring Party shall promptly contribute the shortage in proceeds as

and when required to complete said repairs.In the event,however,such shortage was due to the fact that,by reason of the unique nature of the improvements,full replacement cost insurance coverage was not commercially reasonable and available,Lessor shall have no obligaƟon to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same,or adequate assurance thereof,within 10 days following receipt of wriƩen noƟce of such shortage and request therefor.If Lessor receives said funds or adequate assurance thereof within said 10 day period,the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect.If such funds or assurance are not received,Lessor may nevertheless elect by wriƩen noƟce to Lessee within 10 days thereaŌer to:(i)make such restoraƟon and repair as is commercially reasonable with Lessor paying any shortage in proceeds,in which case this Lease shall remain in full force and effect,or (ii)have this Lease terminate 30 days thereaŌer.Lessee shall not be enƟtled to reimbursement of any funds contributed by Lessee to repair any such damage or destrucƟon.Premises ParƟal Damage due to flood or earthquake shall be subject to Paragraph 9.3,notwithstanding that there may be some insurance coverage,but the net proceeds of any such insurance shall be made available for the repairs if made by either Party.

9.3 ParƟal Damage -Uninsured Loss.If a Premises ParƟal Damage that is not an Insured Loss occurs,unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee's expense),Lessor may either:(i)repair such damage as soon as reasonably possible at Lessor's expense (subject to reimbursement pursuant to Paragraph 4.2),in which event this Lease shall conƟnue in full force and effect,or (ii)terminate this Lease by giving wriƩen noƟce to Lessee within 30 days aŌer receipt by Lessor of knowledge of the occurrence of such damage.Such terminaƟon shall be effecƟve 60 days following the date of such noƟce.In the event Lessor elects to terminate this Lease,Lessee shall have the right within 10 days aŌer receipt of the terminaƟon noƟce to give wriƩen noƟce to Lessor of Lessee's commitment to pay for the repair of such damage without reimbursement from Lessor.Lessee shall provide Lessor with said funds or saƟsfactory assurance thereof within 30 days aŌer making such commitment.In such event this Lease shall conƟnue in full force and effect,and Lessor shall proceed to make such repairs as soon as reasonably possible aŌer the required funds are available.If Lessee does not make the required commitment,this Lease shall terminate as of the date specified in the terminaƟon noƟce.

9.4 Total DestrucƟon.Notwithstanding any other provision hereof,if a Premises Total DestrucƟon occurs,this Lease shall terminate 60 days following such DestrucƟon.If the damage or destrucƟon was caused by the gross negligence or willful misconduct of Lessee,Lessor shall have the right to recover Lessor's damages from Lessee,except as provided in Paragraph 8.6.

9.5 Damage Near End of Term.If at any Ɵme during the last 6 months of this Lease there is damage for which the cost to repair exceeds one month's Base Rent,whether or not an Insured Loss,Lessor may terminate this Lease effecƟve 60 days following the date of occurrence of such damage by giving a wriƩen terminaƟon noƟce to Lessee within 30 days aŌer the date of occurrence of such damage.Notwithstanding the foregoing,if Lessee at that Ɵme has an exercisable opƟon to extend this Lease or to purchase the Premises,then Lessee may preserve this Lease by (a)exercising such opƟon and (b)providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof)needed to make the repairs on or before the earlier of (i)the date which is 10 days aŌer Lessee's receipt of Lessor's wriƩen noƟce purporƟng to terminate this Lease,or (ii)the day prior to the date upon which such opƟon expires.If Lessee duly exercises such opƟon during such period and provides Lessor with funds (or adequate assurance thereof)to cover any shortage in insurance proceeds,Lessor shall,at Lessor's commercially reasonable expense,repair such damage as soon as reasonably possible and this Lease shall conƟnue in full force and effect.If Lessee fails to exercise such opƟon and provide such funds or assurance during such period,then this Lease shall terminate on the date specified in the terminaƟon noƟce and Lessee's opƟon shall be exƟnguished.

9.6 Abatement of Rent;Lessee's Remedies.
(a)Abatement.In the event of Premises ParƟal Damage or Premises Total DestrucƟon or a Hazardous Substance CondiƟon for which Lessee is not responsible under this Lease,the Rent payable by Lessee for the period required for the repair,remediaƟon or restoraƟon of such damage shall be abated in proporƟon to the degree to which Lessee's use of the Premises is impaired,but not to exceed the proceeds received from the Rental Value insurance.All other obligaƟons of Lessee hereunder shall be performed by Lessee,and Lessor shall have no liability for any such damage,destrucƟon,remediaƟon,repair or restoraƟon except as provided herein.
(b)Remedies.If Lessor is obligated to repair or restore the Premises and does not commence,in a substanƟal and meaningful way,such repair or restoraƟon within 90 days aŌer such obligaƟon shall accrue,Lessee may,at any Ɵme prior to the commencement of such repair or restoraƟon,give wriƩen noƟce to Lessor and to any Lenders of which Lessee has actual noƟce,of Lessee's elecƟon to terminate this Lease on a date not less than 60 days following the giving of such noƟce.If Lessee gives such noƟce and such repair or restoraƟon is not commenced within 30 days thereaŌer,this Lease shall terminate as of the date specified in said noƟce.If the repair or restoraƟon is commenced within such 30 days,this Lease shall conƟnue in full force and effect."Commence"shall mean either the uncondiƟonal authorizaƟon of the preparaƟon of the required plans,or the beginning of the actual work on the Premises,whichever first occurs.

9.7 TerminaƟon;Advance Payments.Upon terminaƟon of this Lease pursuant to Paragraph 6.2(g)or Paragraph 9,an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor.Lessor shall,in addiƟon,return to Lessee so much of Lessee's Security Deposit as has not been,or is not then required to be,used by Lessor.

10.Real Property Taxes.

10.1 DefiniƟon.As used herein,the term "Real Property Taxes"shall include any form of assessment;real estate,general,special,ordinary or extraordinary,or rental levy or tax (other than inheritance,personal income or estate taxes);improvement bond;and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Project,Lessor's right to other income therefrom,and/or Lessor's business of leasing,by any authority having the direct or indirect power to tax and where the funds are generated with reference to the Project address.The term "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 Project,(ii)a change in the improvements thereon,and/or (iii)levied or assessed on machinery or equipment provided by Lessor to Lessee pursuant to this Lease.

In calculaƟng Real Property Taxes for any calendar year,the Real Property Taxes for any real estate tax year shall be included in the calculaƟon of Real Property Taxes for such calendar year based upon the number of days which such calendar year and tax year have in common.

10.2 Payment of Taxes.Except as otherwise provided in Paragraph 10.3,Lessor shall pay the Real Property Taxes applicable to the Project,and said payments shall be included in the calculaƟon of Common Area OperaƟng Expenses in accordance with the provisions of Paragraph 4.2.

10.3 AddiƟonal Improvements.Common Area OperaƟng Expenses shall not include Real Property Taxes specified in the tax assessor's records and work sheets as being caused by addiƟonal improvements placed upon the Project by other lessees or by Lessor for the exclusive enjoyment of such other lessees.Notwithstanding Paragraph 10.2 hereof,Lessee shall,however,pay to Lessor at the Ɵme Common Area OperaƟng Expenses are payable under Paragraph 4.2,the enƟrety of any increase in Real Property Taxes if assessed solely by reason of AlteraƟons,Trade Fixtures or UƟlity InstallaƟons placed upon the Premises by Lessee or at Lessee's request or by reason of any alteraƟons or improvements to the Premises made by Lessor subsequent to the execuƟon of this Lease by the ParƟes.

10.4 Joint Assessment.If the Building is not separately assessed,Real Property Taxes allocated to the Building shall be an equitable proporƟon of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed,such proporƟon to be determined by Lessor from the respecƟve valuaƟons assigned in the assessor's work sheets or such other informaƟon as may be reasonably available.Lessor's reasonable determinaƟon thereof,in good faith, shall be conclusive.

10.5 Personal Property Taxes.Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee Owned AlteraƟons and UƟlity InstallaƟons,Trade Fixtures,furnishings,equipment and all personal property of Lessee contained in the Premises.When possible,Lessee shall cause its Lessee Owned AlteraƟons and UƟlity InstallaƟons,Trade Fixtures,furnishings,equipment and all other personal property to be assessed and billed separately from the real property of Lessor.If any of Lessee's said property shall be assessed with Lessor's real property,Lessee shall pay Lessor the taxes aƩributable to Lessee's property within 10 days aŌer receipt of a wriƩen statement seƫng forth the taxes applicable to Lessee's property.

11.UƟliƟes and Services.

11.1 Lessee shall pay for all water,gas,heat,light,power,telephone,trash disposal and other uƟliƟes and services supplied to the Premises,together with any taxes thereon.Notwithstanding the provisions of Paragraph 4.2,if at any Ɵme in Lessor's sole judgment,Lessor determines that Lessee is using a disproporƟonate amount of water,electricity or other commonly metered uƟliƟes,or that Lessee is generaƟng suc h a large volume of trash as to require an increase in the size of the trash receptacle and/or an increase in the number of Ɵmes per month that it is empƟed,then Lessor may increase Lessee's Base Rent by an amount equal to such increased costs.There shall be no abatement of Rent and Lessor shall not be liable in any respect whatsoever for the inadequacy,stoppage,interrupƟon or disconƟnuance of any uƟlity or service due to riot,strike,labor dispute,breakdown,accident,repair or other cause beyond Lessor's reasonable control or in cooperaƟon with governmental request or direcƟons.

11.2 Within fiŌeen days of Lessor's wriƩen request,Lessee agrees to deliver to Lessor such informaƟon,documents and/or authorizaƟon as Lessor needs in order for Lessor to comply with new or exisƟng Applicable Requirements relaƟng to commercial building energy usage,raƟngs,and/or the reporƟng thereof.

12.Assignment and Subleƫng.

12.1 Lessor's Consent Required.
(a)Lessee shall not voluntarily or by operaƟon of law assign,transfer,mortgage or encumber (collecƟvely,"assign or assignment")or sublet all or any part of Lessee's interest in this Lease or in the Premises without Lessor's prior wriƩen consent. (b)Unless Lessee is a corporaƟon and its stock is publicly traded on a naƟonal stock exchange,a change in the control of Lessee shall consƟtute an assignment requiring consent.The transfer,on a cumulaƟve basis,of 25%or more of the voƟng control of Lessee shall consƟtute a change in control for this purpose. (c)The involvement of Lessee or its assets in any transacƟon,or series of transacƟons (by way of merger,sale,acquisiƟon,financing,transfer,leveraged buyout or otherwise),whether or not a formal assignment or hypothecaƟon of this Lease or Lessee's assets occurs,which results or will result in a reducƟon of the Net Worth of Lessee by an amount greater than 25%of such Net Worth as it was represented at the Ɵme of the execuƟon of this Lease or at the Ɵme of the most recent assignment to which Lessor has consented,or as it exists immediately prior to said transacƟon or transacƟons consƟtuƟng such reducƟon,whichever was or is greater,shall be considered an assignment of this Lease to which Lessor may withhold its consent."Net Worth of Lessee"shall mean the net worth of Lessee (excluding any guarantors)established under generally accepted accounƟng principles. (d)An assignment or subleƫng without consent shall,at Lessor's opƟon,be a Default curable aŌer noƟce per Paragraph 13.1(d),or a non-curable Breach without the necessity of any noƟce and grace period.If Lessor elects to treat such unapproved assignment or subleƫng as a non-curable Breach,Lessor may either:
(i)terminate this Lease,or (ii)upon 30 days wriƩen noƟce,increase the monthly Base Rent to 110%of the Base Rent then in effect.Further,in the event of such Breach and rental adjustment,(i)the purchase price of any opƟon to purchase the Premises held by Lessee shall be subject to similar adjustment to 110%of the price previously in effect,and (ii)all fixed and non-fixed rental adjustments scheduled during the remainder of the Lease term shall be increased to 110%of the scheduled adjusted rent.
(e)Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injuncƟve relief. (f)Lessor may reasonably withhold consent to a proposed assignment or subleƫng if Lessee is in Default at the Ɵme consent is requested. (g)Notwithstanding the foregoing,allowing a de minimis porƟon of the Premises,i.e.20 square feet or less,to be used by a third party vendor in connecƟon with the installaƟon of a vending machine or payphone shall not consƟtute a subleƫng.

12.2 Terms and CondiƟons Applicable to Assignment and Subleƫng. (a)Regardless of Lessor's consent,no assignment or subleƫng shall :(i)be effecƟve without the express wriƩen assumpƟon by such assignee or sublessee of the obligaƟons of Lessee under this Lease,(ii)release Lessee of any obligaƟons hereunder,or (iii)alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligaƟons to be performed by Lessee. (b)Lessor may accept Rent or performance of Lessee's obligaƟons from any person other than Lessee pending approval or disapproval of an assignment.

Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall consƟtute a waiver or estoppel of Lessor's right to exercise its remedies for Lessee's Default or Breach.
(c)Lessor's consent to any assignment or subleƫng shall not consƟtute a consent to any subsequent assignment or subleƫng. (d)In the event of any Default or Breach by Lessee,Lessor may proceed directly against Lessee,any Guarantors or anyone else responsible for the performance of Lessee's obligaƟons under this Lease,including any assignee or sublessee,without first exhausƟng Lessor's remedies against any other person or enƟty responsible therefor to Lessor,or any security held by Lessor. (e)Each request for consent to an assignment or subleƫng shall be in wriƟng,accompanied by informaƟon relevant to Lessor's determinaƟon as to the financial and operaƟonal responsibility and appropriateness of the proposed assignee or sublessee,including but not limited to the intended use and/or required modificaƟon of the Premises,if any,together with a fee of $500 as consideraƟon for Lessor's considering and processing said request.Lessee agrees to provide Lessor with such other or addiƟonal informaƟon and/or documentaƟon as may be reasonably requested.(See also Paragraph 36) (f)Any assignee of,or sublessee under,this Lease shall,by reason of accepƟng such assignment,entering into such sublease,or entering into possession of the Premises or any porƟon thereof,be deemed to have assumed and agreed to conform and comply with each and every term,covenant,condiƟon and obligaƟon herein to be observed or performed by Lessee during the term of said assignment or sublease,other than such obligaƟons as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented to in wriƟng. (g)Lessor's consent to any assignment or subleƫng shall not transfer to the assignee or sublessee any OpƟon granted to the original Lessee by this Lease unless such transfer is specifically consented to by Lessor in wriƟng.(See Paragraph 39.2)

12.3 AddiƟonal Terms and CondiƟons Applicable to Subleƫng.The following terms and condiƟons shall apply to any subleƫng by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein:
(a)Lessee hereby assigns and transfers to Lessor all of Lessee's interest in all Rent payable on any sublease,and Lessor may collect such Rent and apply same toward Lessee's obligaƟons under this Lease;provided,however,that unƟl a Breach shall occur in the performance of Lessee's obligaƟons,Lessee may collect said Rent.In the event that the amount collected by Lessor exceeds Lessee's then outstanding obligaƟons any such excess shall be refunded to Lessee.Lessor shall not,by reason of the foregoing or any assignment of such sublease,nor by reason of the collecƟon of Rent,be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee's obligaƟons to such sublessee.Lessee hereby irrevocably authorizes and directs any such sublessee,upon receipt of a wriƩen noƟce from Lessor staƟng that a Breach exists in the performance of Lessee's obligaƟons under this Lease,to pay to Lessor all Rent due and to become due

under the sublease.Sublessee shall rely upon any such noƟce from Lessor and shall pay all Rents to Lessor without any obligaƟon or right to inquire as to whether such Breach exists,notwithstanding any claim from Lessee to the contrary. (b)In the event of a Breach by Lessee,Lessor may,at its opƟon,require sublessee to aƩorn to Lessor,in which event Lessor shall undertake the obligaƟons of the sublessor under such sublease from the Ɵme of the exercise of said opƟon to the expiraƟon of such sublease;provided,however,Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor. (c)Any maƩer requiring the consent of the sublessor under a sublease shall also require the consent of Lessor. (d)No sublessee shall further assign or sublet all or any part of the Premises without Lessor's prior wriƩen consent. (e)Lessor shall deliver a copy of any noƟce of Default or Breach by Lessee to the sublessee,who shall have the right to cure the Default of Lessee within the grace period,if any,specified in such noƟce.The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee.

13.Default;Breach;Remedies.

13.1 Default;Breach.A "Default"is defined as a failure by the Lessee to comply with or perform any of the terms,covenants,condiƟons or Rules and RegulaƟons under this Lease.A "Breach"is defined as the occurrence of one or more of the following Defaults,and the failure of Lessee to cure such Default within any applicable grace period:
(a)The abandonment of the Premises;the vacaƟng of the Premises prior to the expiraƟon or terminaƟon of this Lease without providing a commercially reasonable level of security,or where the coverage of the property insurance described in Paragraph 8.3 is jeopardized as a result thereof,or without providing reasonable assurances to minimize potenƟal vandalism;or failure to deliver to Lessor exclusive possession of the enƟre Premises in accordance herewith prior to the expiraƟon or terminaƟon of this Lease.
(b)The failure of Lessee to (i)make any payment of Rent or any Security Deposit required to be made by Lessee hereunder,whether to Lessor or to a third party,when due,(ii)to provide reasonable evidence of insurance or surety bond,or (iii)to fulfill any obligaƟon under this Lease which endangers or threatens life or property,where such failure conƟnues for a period of 3 business days following wriƩen noƟce to Lessee.THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF

RENT OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR'S RIGHTS,INCLUDING LESSOR'S RIGHT TO RECOVER POSSESSION OF THE PREMISES.
(c)The failure of Lessee to allow Lessor and/or its agents access to the Premises or the commission of waste,act or acts consƟtuƟng public or private nuisance,and/or an illegal acƟvity on the Premises by Lessee,where such acƟons conƟnue for a period of 3 business days following wriƩen noƟce to Lessee.In the event that Lessee commits waste,a nuisance or an illegal acƟvity a second Ɵme then,the Lessor may elect to treat such conduct as a non-curable Breach rather than a Default.
(d)The failure by Lessee to provide (i)reasonable wriƩen evidence of compliance with Applicable Requirements,(ii)the service contracts,(iii)the rescission of an unauthorized assignment or subleƫng,(iv)an Estoppel CerƟficate or financial statements,(v)a requested subordinaƟon,(vi)evidence concerning any guaranty and/or Guarantor,(vii)any document requested under Paragraph 41,(viii)material safety data sheets (MSDS),or (ix)any other documentaƟon or informaƟon which Lessor may reasonably require of Lessee under the terms of this Lease,where any such failure conƟnues for a period of 10 days following wriƩen noƟce to Lessee.
(e)A Default by Lessee as to the terms,covenants,condiƟons or provisions of this Lease,or of the rules adopted under Paragraph 2.9 hereof,other than those described in subparagraphs 13.1(a),(b),(c)or (d),above,where such Default conƟnues for a period of 30 days aŌer wriƩen noƟce;provided,however,that if the nature of Lessee's Default is such that more than 30 days are reasonably required for its cure,then it shall not be deemed to be a Breach if Lessee commences such cure within said 30 day period and thereaŌer diligently prosecutes such cure to compleƟon. (f)The occurrence of any of the following events:(i)the making of any general arrangement or assignment for the benefit of creditors;(ii)becoming a "debtor"as defined in 11 U.S.C.§101 or any successor statute thereto (unless,in the case of a peƟƟon filed against Lessee,the same is dismissed within 60 days);(iii) the appointment of a trustee or receiver to take possession of substanƟally all of Lessee's assets located at the Premises or of Lessee's interest in this Lease,where possession is not restored to Lessee within 30 days;or (iv)the aƩachment,execuƟon or other judicial seizure of substanƟally all of Lessee's assets located at the Premises or of Lessee's interest in this Lease,where such seizure is not discharged within 30 days;provided,however,in the event that any provision of this subparagraph is contrary to any applicable law,such provision shall be of no force or effect,and not affect the validity of the remaining provisions. (g)The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false. (h)If the performance of Lessee's obligaƟons under this Lease is guaranteed:(i)the death of a Guarantor,(ii)the terminaƟon of a Guarantor's liability with respect to this Lease other than in accordance with the terms of such guaranty,(iii)a Guarantor's becoming insolvent or the subject of a bankruptcy filing,(iv)a Guarantor's refusal to honor the guaranty,or (v)a Guarantor's breach of its guaranty obligaƟon on an anƟcipatory basis,and Lessee's failure,within 60 days following wriƩen noƟce of any such event,to provide wriƩen alternaƟve assurance or security,which,when coupled with the then exisƟng resources of Lessee,equals or exceeds the combined financial resources of Lessee and the Guarantors that existed at the Ɵme of execuƟon of this Lease.

13.2 Remedies.If Lessee fails to perform any of its affirmaƟve duƟes or obligaƟons,within 10 days aŌer wriƩen noƟce (or in case of an emergency,without noƟce),Lessor may,at its opƟon,perform such duty or obligaƟon on Lessee's behalf,including but not limited to the obtaining of reasonably required bonds, insurance policies,or governmental licenses,permits or approvals.Lessee shall pay to Lessor an amount equal to 115%of the costs and expenses incurred by Lessor in such performance upon receipt of an invoice therefor.In the event of a Breach,Lessor may,with or without further noƟce or demand,and without limiƟng 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 and Lessee shall immediately surrender possession to Lessor.In such event Lessor shall be enƟtled to recover from Lessee:(i)the unpaid Rent which had been earned at the Ɵme of terminaƟon; (ii)the worth at the Ɵme of award of the amount by which the unpaid rent which would have been earned aŌer terminaƟon unƟl the Ɵme of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided;(iii)the worth at the Ɵme of award of the amount by which the unpaid rent for the balance of the term aŌer the Ɵme of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided;and (iv)any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee's failure to perform its obligaƟons under this Lease or which in the ordinary course of things would be likely to result therefrom,including but not limited to the cost of recovering possession of the Premises,expenses of releƫng,including necessary renovaƟon and alteraƟon of the Premises,reasonable aƩorneys'fees,and that porƟon of any leasing commission paid by Lessor in connecƟon with this Lease applicable to the unexpired term of this Lease.Lessor and Lessee agree that the damages to be incurred by the Lessor in the event of Lessee's default of the Lease would be difficult or impossible to calculate and the parƟes therefore intend to provide by the foregoing for liquidated damages and not a penalty and agree that the sum provided is a reasonable pre-esƟmate of the probable loss.The worth at the Ɵme of award of the amount referred to in provision (iii)of the immediately preceding sentence shall be computed by discounƟng such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the Ɵme of award plus one percent.Efforts by Lessor to miƟgate damages caused by Lessee's Breach of this Lease shall not waive Lessor's right to recover any damages to which Lessor is otherwise enƟtled.If terminaƟon 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 noƟce and grace period required under Paragraph 13.1 was not previously given,a noƟce to pay rent or quit,or to perform or quit given to Lessee under the unlawful detainer statute shall also consƟtute the noƟce required by Paragraph 13.1.In such case,the applicable grace period required by Paragraph 13.1 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 consƟtute both an unlawful detainer and a Breach of this Lease enƟtling Lessor to the remedies provided for in this Lease and/or by said statute. (b)ConƟnue the Lease and Lessee's right to possession and recover the Rent as it becomes due,in which event Lessee may sublet or assign,subject only to reasonable limitaƟons.Acts of maintenance,efforts to relet,and/or the appointment of a receiver to protect the Lessor's interests,shall not consƟtute a terminaƟon of the Lessee's right to possession.
(c)Pursue any other remedy now or hereaŌer available under the laws or judicial decisions of the state wherein the Premises are located.The expiraƟon or terminaƟon of this Lease and/or the terminaƟon of Lessee's right to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to maƩers occurring or accruing during the term hereof or by reason of Lessee's occupancy of the Premises.

13.3 Inducement Recapture.Any agreement for free or abated rent or other charges,the cost of tenant improvements for Lessee paid for or performed by Lessor,or for the giving or paying by Lessor to or for Lessee of any cash or other bonus,inducement or consideraƟon for Lessee's entering into this Lease,all of which concessions are hereinaŌer referred to as "Inducement Provisions,"shall be deemed condiƟoned upon Lessee's full and faithful performance of all of the terms, covenants and condiƟons of this Lease.Upon Breach of this Lease by Lessee,any such Inducement Provision shall automaƟcally be deemed deleted from this Lease and of no further force or effect,and any rent,other charge,bonus,inducement or consideraƟon theretofore abated,given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by Lessee to Lessor,notwithstanding any subsequent cure of said Breach by Lessee.The acceptance by Lessor of rent or the cure of the Breach which iniƟated the operaƟon of this paragraph shall not be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in wriƟng by Lessor at the Ɵme of such acceptance.

13.4 Late Charges.Lessee hereby acknowledges that late payment by Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,the exact amount of which will be extremely difficult to ascertain.Such costs include,but are not limited to,processing and accounƟng charges,and late charges which may be imposed upon Lessor by any Lender.Accordingly,if any Rent shall not be received by Lessor within 5 days aŌer such amount shall be due,then,without any requirement for noƟce to Lessee,Lessee shall immediately pay to Lessor a one-Ɵme late charge equal to 10%of each such overdue amount or $100,whichever is greater.The parƟes hereby agree that such late charge represents a fair and reasonable esƟmate of the costs Lessor will incur by reason of such late payment.

Acceptance of such late charge by Lessor shall in no event consƟtute a waiver of Lessee's Default or Breach with respect to such overdue amount,nor prevent the exercise of any of the other rights and remedies granted hereunder.In the event that a late charge is payable hereunder,whether or not collected,for 3 consecuƟve installments of Base Rent,then notwithstanding any provision of this Lease to the contrary,Base Rent shall,at Lessor's opƟon,become due and payable quarterly in advance.

13.5 Interest.Any monetary payment due Lessor hereunder,other than late charges,not received by Lessor,when due shall bear interest from the 31st day aŌer it was due.The interest ("Interest")charged shall be computed at the rate of 10%per annum but shall not exceed the maximum rate allowed by law.Interest is payable in addiƟon to the potenƟal late charge provided for in Paragraph 13.4.

13.6 Breach by Lessor.
(a)NoƟce of Breach.Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable Ɵme to perform an obligaƟon required to be performed by Lessor.For purposes of this Paragraph,a reasonable Ɵme shall in no event be less than 30 days aŌer receipt by Lessor,and any Lender whose name and address shall have been furnished to Lessee in wriƟng for such purpose,of wriƩen noƟce specifying wherein such obligaƟon of Lessor has not been performed; provided,however,that if the nature of Lessor's obligaƟon 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 thereaŌer diligently pursued to compleƟon. (b)Performance by Lessee on Behalf of Lessor.In the event that neither Lessor nor Lender cures said breach within 30 days aŌer receipt of said noƟce, or if having commenced said cure they do not diligently pursue it to compleƟon,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 or the Security Deposit,reserving Lessee's right to reimbursement from Lessor for any such expense in excess of such offset.Lessee shall document the cost of said cure and supply said documentaƟon to Lessor.

14.CondemnaƟon.If the Premises or any porƟon thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collecƟvely "CondemnaƟon"),this Lease shall terminate as to the part taken as of the date the condemning authority takes Ɵtle or possession,whichever first occurs.

If more than 10%of the floor area of the Unit,or more than 25%of the parking spaces is taken by CondemnaƟon,Lessee may,at Lessee's opƟon,to be exercised in wriƟng within 10 days aŌer Lessor shall have given Lessee wriƩen noƟce of such taking (or in the absence of such noƟce,within 10 days aŌer the condemning authority shall have taken possession)terminate this Lease as of the date the condemning authority takes such possession.If Lessee does not terminate this Lease in accordance with the foregoing,this Lease shall remain in full force and effect as to the porƟon of the Premises remaining,except that the Base Rent shall be reduced in proporƟon to the reducƟon in uƟlity of the Premises caused by such CondemnaƟon.CondemnaƟon awards and/or payments shall be the property of Lessor, whether such award shall be made as compensaƟon for diminuƟon in value of the leasehold,the value of the part taken,or for severance damages;provided, however,that Lessee shall be enƟtled to any compensaƟon paid by the condemnor for Lessee's relocaƟon expenses,loss of business goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph.All AlteraƟons and UƟlity InstallaƟons made to the Premises by Lessee,for purposes of CondemnaƟon only,shall be considered the property of the Lessee and Lessee shall be enƟtled to any and all compensaƟon which is payable therefor.In the event that this Lease is not terminated by reason of the CondemnaƟon,Lessor shall repair any damage to the Premises caused by such CondemnaƟon.

15.Brokerage Fees.

15.1 AddiƟonal Commission.In addiƟon to the payments owed pursuant to Paragraph 1.10 above,Lessor agrees that:(a)if Lessee exercises any OpƟon,(b)if Lessee or anyone affiliated with Lessee acquires from Lessor any rights to the Premises or other premises owned by Lessor and located within the Project,(c)if Lessee remains in possession of the Premises,with the consent of Lessor,aŌer the expiraƟon of this Lease,or (d)if Base Rent is increased,whether by agreement or operaƟon of an escalaƟon clause herein,then,Lessor shall pay Brokers a fee in accordance with the fee schedule of the Brokers in effect at the Ɵme the Lease was executed.The provisions of this paragraph are intended to supersede the provisions of any earlier agreement to the contrary.

15.2 AssumpƟon of ObligaƟons.Any buyer or transferee of Lessor's interest in this Lease shall be deemed to have assumed Lessor's obligaƟon hereunder.

Brokers shall be third party beneficiaries of the provisions of Paragraphs 1.10,15,22 and 31.If Lessor fails to pay to Brokers any amounts due as and for brokerage fees pertaining to this Lease when due,then such amounts shall accrue Interest.In addiƟon,if Lessor fails to pay any amounts to Lessee's Broker when due,Lessee's Broker may send wriƩen noƟce to Lessor and Lessee of such failure and if Lessor fails to pay such amounts within 10 days aŌer said noƟce,Lessee shall pay said monies to its Broker and offset such amounts against Rent.In addiƟon,Lessee's Broker shall be deemed to be a third party beneficiary of any commission agreement

entered into by and/or between Lessor and Lessor's Broker for the limited purpose of collecƟng any brokerage fee owed.

15.3 RepresentaƟons and IndemniƟes of Broker RelaƟonships.Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person,firm,broker,agent or finder (other than the Brokers and Agents,if any)in connecƟon with this Lease,and that no one other than said named Brokers and Agents is enƟtled to any commission or finder's fee in connecƟon herewith.Lessee and Lessor do each hereby agree to indemnify,protect,defend and hold the other harmless from and against liability for compensaƟon or charges which may be claimed by any such unnamed broker,finder or other similar party by reason of any dealings or acƟons of the indemnifying Party,including any costs,expenses,aƩorneys'fees reasonably incurred with respect thereto.

16.Estoppel CerƟficates.
(a)Each Party (as "Responding Party")shall within 10 days aŌer wriƩen noƟce from the other Party (the "RequesƟng Party")execute,acknowledge and deliver to the RequesƟng Party a statement in wriƟng in form similar to the then most current "Estoppel CerƟficate"form published by AIR CRE,plus such addiƟonal informaƟon,confirmaƟon and/or statements as may be reasonably requested by the RequesƟng Party. (b)If the Responding Party shall fail to execute or deliver the Estoppel CerƟficate within such 10 day period,the RequesƟng Party may execute an Estoppel CerƟficate staƟng that:(i)the Lease is in full force and effect without modificaƟon except as may be represented by the RequesƟng Party,(ii)there are no uncured defaults in the RequesƟng Party's performance,and (iii)if Lessor is the RequesƟng Party,not more than one month's rent has been paid in advance.

ProspecƟve purchasers and encumbrancers may rely upon the RequesƟng Party's Estoppel CerƟficate,and the Responding Party shall be estopped from denying the truth of the facts contained in said CerƟficate.In addiƟon,Lessee acknowledges that any failure on its part to provide such an Estoppel CerƟficate will expose Lessor to risks and potenƟally cause Lessor to incur costs not contemplated by this Lease,the extent of which will be extremely difficult to ascertain.Accordingly,should the Lessee fail to execute and/or deliver a requested Estoppel CerƟficate in a Ɵmely fashion the monthly Base Rent shall be automaƟcally increased,without any requirement for noƟce to Lessee,by an amount equal to 10%of the then exisƟng Base Rent or $100,whichever is greater for remainder of the Lease.The ParƟes agree that such increase in Base Rent represents fair and reasonable compensaƟon for the addiƟonal risk/costs that Lessor will incur by reason of Lessee's failure to provide the Estoppel CerƟficate.Such increase in Base Rent shall in no event consƟtute a waiver of Lessee's Default or Breach with respect to the failure to provide the Estoppel CerƟficate nor prevent the exercise of any of the other rights and remedies granted hereunder. (c)If Lessor desires to finance,refinance,or sell the Premises,or any part thereof,Lessee and all Guarantors shall within 10 days aŌer wriƩen noƟce from Lessor deliver to any potenƟal lender or purchaser designated by Lessor such financial statements as may be reasonably required by such lender or purchaser, including but not limited to Lessee's financial statements for the past 3 years.All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.

17.DefiniƟon of Lessor.The term "Lessor"as used herein shall mean the owner or owners at the Ɵme in quesƟon of the fee Ɵtle to the Premises,or,if this is a sublease,of the Lessee's interest in the prior lease.In the event of a transfer of Lessor's Ɵtle or interest in the Premises or this Lease,Lessor shall deliver to the transferee or assignee (in cash or by credit)any unused Security Deposit held by Lessor.Upon such transfer or assignment and delivery of the Security Deposit,as aforesaid,the prior Lessor shall be relieved of all liability with respect to the obligaƟons and/or covenants under this Lease thereaŌer to be performed by the Lessor.

Subject to the foregoing,the obligaƟons and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined.

18.Severability.The invalidity of any provision of this Lease,as determined by a court of competent jurisdicƟon,shall in no way affect the validity of any other provision hereof.

19.Days.Unless otherwise specifically indicated to the contrary,the word "days"as used in this Lease shall mean and refer to calendar days.

20.LimitaƟon on Liability.The obligaƟons of Lessor under this Lease shall not consƟtute personal obligaƟons of Lessor,or its partners,members,directors,officers or shareholders,and Lessee shall look to the Premises,and to no other assets of Lessor,for the saƟsfacƟon of any liability of Lessor with respect to this Lease,and shall not seek recourse against Lessor's partners,members,directors,officers or shareholders,or any of their personal assets for such saƟsfacƟon.

21.Time of Essence.Time is of the essence with respect to the performance of all obligaƟons to be performed or observed by the ParƟes under this Lease.

22.No Prior or Other Agreements;Broker Disclaimer.This Lease contains all agreements between the ParƟes with respect to any maƩer menƟoned herein,and no other prior or contemporaneous agreement or understanding shall be effecƟve.Lessor and Lessee each represents and warrants to the Brokers that it has made,and is relying solely upon,its own invesƟgaƟon as to the nature,quality,character and financial responsibility of the other Party to this Lease and as to the use,nature, quality and character of the Premises.Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party.

23.NoƟces.

23.1 NoƟce Requirements.All noƟces required or permiƩed by this Lease or applicable law shall be in wriƟng and may be delivered in person (by hand or by courier)or may be sent by regular,cerƟfied or registered mail or U.S.Postal Service Express Mail,with postage prepaid,or by facsimile transmission,or by email,and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23.The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for delivery or mailing of noƟces.Either Party may by wriƩen noƟce to the other specify a different address for noƟce,except that upon Lessee's taking possession of the Premises,the Premises shall consƟtute Lessee's address for noƟce.A copy of all noƟces to Lessor shall be concurrently transmiƩed to such party or parƟes at such addresses as Lessor may from Ɵme to Ɵme hereaŌer designate in wriƟng.

23.2 Date of NoƟce.Any noƟce sent by registered or cerƟfied mail,return receipt requested,shall be deemed given on the date of delivery shown on the receipt card,or if no delivery date is shown,the postmark thereon.If sent by regular mail the noƟce shall be deemed given 72 hours aŌer the same is addressed as required herein and mailed with postage prepaid.NoƟces delivered by United States Express Mail or overnight courier that guarantees next day delivery shall be deemed given 24 hours aŌer delivery of the same to the Postal Service or courier.NoƟces delivered by hand,or transmiƩed by facsimile transmission or by email shall be deemed delivered upon actual receipt.If noƟce is received on a Saturday,Sunday or legal holiday,it shall be deemed received on the next business day.

23.3 OpƟons.Notwithstanding the foregoing,in order to exercise any OpƟons (see paragraph 39),the NoƟce must be sent by CerƟfied Mail (return receipt requested),Express Mail (signature required),courier (signature required)or some other methodology that provides a receipt establishing the date the noƟce was received by the Lessor.

24.Waivers.
(a)No waiver by Lessor of the Default or Breach of any term,covenant or condiƟon hereof by Lessee,shall be deemed a waiver of any other term, covenant or condiƟon hereof,or of any subsequent Default or Breach by Lessee of the same or of any other term,covenant or condiƟon hereof.Lessor's consent to, or approval of,any act shall not be deemed to render unnecessary the obtaining of Lessor's 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 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 monies or damages due Lessor,notwithstanding any qualifying statements or condiƟons made by Lessee in connecƟon therewith,which such statements and/or condiƟons shall be of no force or effect whatsoever unless specifically agreed to in wriƟng by Lessor at or before the Ɵme of deposit of such payment. (c)THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE.

25.Disclosures Regarding The Nature of a Real Estate Agency RelaƟonship. (a)When entering into a discussion with a real estate agent regarding a real estate transacƟon,a Lessor or Lessee should from the outset understand what type of agency relaƟonship or representaƟon it has with the agent or agents in the transacƟon.Lessor and Lessee acknowledge being advised by the Brokers in this transacƟon,as follows:
(i)Lessor's Agent.A Lessor's agent under a lisƟng agreement with the Lessor acts as the agent for the Lessor only.A Lessor's agent or subagent has the following affirmaƟve obligaƟons:To the Lessor:A fiduciary duty of utmost care,integrity,honesty,and loyalty in dealings with the Lessor.To the Lessee and the Lessor:(a)Diligent exercise of reasonable skills and care in performance of the agent's duƟes.(b)A duty of honest and fair dealing and good faith.(c)A duty to disclose all facts known to the agent materially affecƟng the value or desirability of the property that are not known to,or within the diligent aƩenƟon and observaƟon of,the ParƟes.An agent is not obligated to reveal to either Party any confidenƟal informaƟon obtained from the other Party which does not involve the affirmaƟve duƟes set forth above.
(ii)Lessee's Agent.An agent can agree to act as agent for the Lessee only.In these situaƟons,the agent is not the Lessor's agent,even if by agreement the agent may receive compensaƟon for services rendered,either in full or in part from the Lessor.An agent acƟng only for a Lessee has the following affirmaƟve obligaƟons.To the Lessee:A fiduciary duty of utmost care,integrity,honesty,and loyalty in dealings with the Lessee.To the Lessee and the Lessor:(a) Diligent exercise of reasonable skills and care in performance of the agent's duƟes.(b)A duty of honest and fair dealing and good faith.(c)A duty to disclose all facts known to the agent materially affecƟng the value or desirability of the property that are not known to,or within the diligent aƩenƟon and observaƟon of,the ParƟes.

An agent is not obligated to reveal to either Party any confidenƟal informaƟon obtained from the other Party which does not involve the affirmaƟve duƟes set forth above.
(iii)Agent RepresenƟng Both Lessor and Lessee.A real estate agent,either acƟng directly or through one or more associate licensees,can legally be the agent of both the Lessor and the Lessee in a transacƟon,but only with the knowledge and consent of both the Lessor and the Lessee.In a dual agency situaƟon, the agent has the following affirmaƟve obligaƟons to both the Lessor and the Lessee:(a)A fiduciary duty of utmost care,integrity,honesty and loyalty in the dealings with either Lessor or the Lessee.(b)Other duƟes to the Lessor and the Lessee as stated above in subparagraphs (i)or (ii).In represenƟng both Lessor and Lessee,the agent may not,without the express permission of the respecƟve Party,disclose to the other Party confidenƟal informaƟon,including,but not limited to,facts relaƟng to either Lessee's or Lessor's financial posiƟon,moƟvaƟons,bargaining posiƟon,or other personal informaƟon that may impact rent,including Lessor's willingness to accept a rent less than the lisƟng rent or Lessee's willingness to pay rent greater than the rent offered.The above duƟes of the agent in a real estate transacƟon do not relieve a Lessor or Lessee from the responsibility to protect their own interests.Lessor and Lessee should carefully read all agreements to assure that they adequately express their understanding of the transacƟon.A real estate agent is a person qualified to advise about real estate.If legal or tax advice is desired,consult a competent professional.Both Lessor and Lessee should strongly consider obtaining tax advice from a competent professional because the federal and state tax consequences of a transacƟon can be complex and subject to change. (b)Brokers have no responsibility with respect to any default or breach hereof by either Party.The ParƟes agree that no lawsuit or other legal proceeding involving any breach of duty,error or omission relaƟng to this Lease may be brought against Broker more than one year aŌer the Start Date and that the liability (including court costs and aƩorneys'fees),of any Broker with respect to any such lawsuit and/or legal proceeding shall not exceed the fee received by such Broker pursuant to this Lease;provided,however,that the foregoing limitaƟon on each Broker's liability shall not be applicable to any gross negligence or willful misconduct of such Broker.
(c)Lessor and Lessee agree to idenƟfy to Brokers as "ConfidenƟal"any communicaƟon or informaƟon given Brokers that is considered by such Party to be confidenƟal.

26.No Right To Holdover.Lessee has no right to retain possession of the Premises or any part thereof beyond the expiraƟon or terminaƟon of this Lease.At or prior to the expiraƟon or terminaƟon of this Lease Lessee shall deliver exclusive possession of the Premises to Lessor.For purposes of this provision and Paragraph

13.1(a),exclusive possession shall mean that Lessee shall have vacated the Premises,removed all of its personal property therefrom and that the Premises have been returned in the condiƟon specified in this Lease.In the event that Lessee does not deliver exclusive possession to Lessor as specified above,then Lessor's damages during any holdover period shall be computed at the amount of the Rent (as defined in Paragraph 4.1)due during the last full month before the expiraƟon or terminaƟon of this Lease (disregarding any temporary abatement of Rent that may have been in effect),but with Base Rent being 150%of the Base Rent payable during such last full month.Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee.

27.CumulaƟve Remedies.No remedy or elecƟon hereunder shall be deemed exclusive but shall,wherever possible,be cumulaƟve with all other remedies at law or in equity.

28.Covenants and CondiƟons;ConstrucƟon of Agreement.All provisions of this Lease to be observed or performed by Lessee are both covenants and condiƟons.

In construing this Lease,all headings and Ɵtles are for the convenience of the ParƟes 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 ParƟes,but rather according to its fair meaning as a whole,as if both ParƟes had prepared it.

29.Binding Effect;Choice of Law.This Lease shall be binding upon the ParƟes,their personal representaƟves,successors and assigns and be governed by the laws of the State in which the Premises are located.Any liƟgaƟon between the ParƟes hereto concerning this Lease shall be iniƟated in the county in which the Premises are located.Signatures to this Lease accomplished by means of electronic signature or similar technology shall be legal and binding.

30.SubordinaƟon;AƩornment;Non-Disturbance.

30.1 SubordinaƟon.This Lease and any OpƟon granted hereby shall be subject and subordinate to any ground lease,mortgage,deed of trust,or other hypothecaƟon or security device (collecƟvely,"Security Device"),now or hereaŌer placed upon the Premises,to any and all advances made on the security thereof, and to all renewals,modificaƟons,and extensions thereof.Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as "Lender") shall have no liability or obligaƟon to perform any of the obligaƟons of Lessor under this Lease.Any Lender may elect to have this Lease and/or any OpƟon granted hereby superior to the lien of its Security Device by giving wriƩen noƟce thereof to Lessee,whereupon this Lease and such OpƟons shall be deemed prior to such Security Device,notwithstanding the relaƟve dates of the documentaƟon or recordaƟon thereof.

30.2 AƩornment.In the event that Lessor transfers Ɵtle to the Premises,or the Premises are acquired by another upon the foreclosure or terminaƟon of a Security Device to which this Lease is subordinated (i)Lessee shall,subject to the non-disturbance provisions of Paragraph 30.3,aƩorn to such new owner,and upon

request,enter into a new lease,containing all of the terms and provisions of this Lease,with such new owner for the remainder of the term hereof,or,at the elecƟon of the new owner,this Lease will automaƟcally become a new lease between Lessee and such new owner,for the remainder of the term hereof and (ii)Lessor shall thereaŌer be relieved of any further obligaƟons hereunder and such new owner shall assume all of Lessor's obligaƟons,except that such new owner shall not:(a)be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisiƟon of ownership;(b)be subject to any offsets or defenses which Lessee might have against any prior lessor,(c)be bound by prepayment of more than one month's rent,or (d)be liable for the return of any security deposit paid to any prior lessor which was not paid or credited to such new owner.

30.3 Non-Disturbance.With respect to Security Devices entered into by Lessor aŌer the execuƟon of this Lease,Lessee's subordinaƟon of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a "Non-Disturbance Agreement")from the Lender which Non-Disturbance Agreement provides that Lessee's possession of the Premises,and this Lease,including any opƟons to extend the term hereof,will not be disturbed so long as Lessee is not in Breach hereof and aƩorns to the record owner of the Premises.Further,within 60 days aŌer the execuƟon of this Lease,Lessor shall,if requested by Lessee,use its commercially reasonable efforts to obtain a Non-Disturbance Agreement from the holder of any pre-exisƟng Security Device which is secured by the Premises.In the event that Lessor is unable to provide the Non-Disturbance Agreement within said 60 days,then Lessee may,at Lessee's opƟon,directly contact Lender and aƩempt to negoƟate for the execuƟon and delivery of a Non-Disturbance Agreement.

30.4 Self-ExecuƟng.The agreements contained in this Paragraph 30 shall be effecƟve without the execuƟon of any further documents;provided,however,that, upon wriƩen request from Lessor or a Lender in connecƟon with a sale,financing or refinancing of the Premises,Lessee and Lessor shall execute such further wriƟngs as may be reasonably required to separately document any subordinaƟon,aƩornment and/or Non-Disturbance Agreement provided for herein.

31.AƩorneys'Fees.If any Party or Broker brings an acƟon or proceeding involving the Premises whether founded in tort,contract or equity,or to declare rights hereunder,the Prevailing Party (as hereaŌer defined)in any such proceeding,acƟon,or appeal thereon,shall be enƟtled to reasonable aƩorneys'fees.Such fees may be awarded in the same suit or recovered in a separate suit,whether or not such acƟon or proceeding is pursued to decision or judgment.The term,"Prevailing Party"shall include,without limitaƟon,a Party or Broker who substanƟally obtains or defeats the relief sought,as the case may be,whether by compromise, seƩlement,judgment,or the abandonment by the other Party or Broker of its claim or defense.The aƩorneys'fees award shall not be computed in accordance with any court fee schedule,but shall be such as to fully reimburse all aƩorneys'fees reasonably incurred.In addiƟon,Lessor shall be enƟtled to aƩorneys'fees,costs and expenses incurred in the preparaƟon and service of noƟces of Default and consultaƟons in connecƟon therewith,whether or not a legal acƟon is subsequently commenced in connecƟon with such Default or resulƟng Breach ($200 is a reasonable minimum per occurrence for such services and consultaƟon).

32.Lessor's Access;Showing Premises;Repairs.Lessor and Lessor's agents shall have the right to enter the Premises at any Ɵme,in the case of an emergency,and otherwise at reasonable Ɵmes aŌer reasonable prior noƟce for the purpose of showing the same to prospecƟve purchasers,lenders,or tenants,and making such alteraƟons,repairs,improvements or addiƟons to the Premises as Lessor may deem necessary or desirable and the erecƟng,using and maintaining of uƟliƟes, services,pipes and conduits through the Premises and/or other premises as long as there is no material adverse effect on Lessee's use of the Premises.All such acƟviƟes shall be without abatement of rent or liability to Lessee.

33.AucƟons.Lessee shall not conduct,nor permit to be conducted,any aucƟon upon the Premises without Lessor's prior wriƩen consent.Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an aucƟon.

34.Signs.Lessor may place on the Premises ordinary "For Sale"signs at any Ɵme and ordinary "For Lease"signs during the last 6 months of the term hereof.Except for ordinary "For Sublease"signs which may be placed only on the Premises,Lessee shall not place any sign upon the Project without Lessor's prior wriƩen consent.

All signs must comply with all Applicable Requirements.

35.TerminaƟon;Merger.Unless specifically stated otherwise in wriƟng by Lessor,the voluntary or other surrender of this Lease by Lessee,the mutual terminaƟon or cancellaƟon hereof,or a terminaƟon hereof by Lessor for Breach by Lessee,shall automaƟcally terminate any sublease or lesser estate in the Premises;provided, however,that Lessor may elect to conƟnue any one or all exisƟng subtenancies.Lessor's failure within 10 days following any such event to elect to the contrary by wriƩen noƟce to the holder of any such lesser interest,shall consƟtute Lessor's elecƟon to have such event consƟtute the terminaƟon of such interest.

36.Consents.All requests for consent shall be in wriƟng.Except as otherwise provided herein,wherever in this Lease the consent of a Party is required to an act by or for the other Party,such consent shall not be unreasonably withheld or delayed.Lessor's actual reasonable costs and expenses (including but not limited to architects',aƩorneys',engineers'and other consultants'fees)incurred in the consideraƟon of,or response to,a request by Lessee for any Lessor consent,including but not limited to consents to an assignment,a subleƫng or the presence or use of a Hazardous Substance,shall be paid by Lessee upon receipt of an invoice and supporƟng documentaƟon therefor.Lessor's consent to any act,assignment or subleƫng shall not consƟtute an acknowledgment that no Default or Breach by Lessee of this Lease exists,nor shall such consent be deemed a waiver of any then exisƟng Default or Breach,except as may be otherwise specifically stated in wriƟng by Lessor at the Ɵme of such consent.The failure to specify herein any parƟcular condiƟon to Lessor's consent shall not preclude the imposiƟon by Lessor at the Ɵme of consent of such further or other condiƟons as are then reasonable with reference to the parƟcular maƩer for which consent is being given.In the event that either Party disagrees with any determinaƟon made by the other hereunder and reasonably requests the reasons for such determinaƟon,the determining party shall furnish its reasons in wriƟng and in reasonable detail within 10 business days following such request.

37.Guarantor.

37.1 ExecuƟon.The Guarantors,if any,shall each execute a guaranty in the form most recently published by AIR CRE.

37.2 Default.It shall consƟtute a Default of the Lessee if any Guarantor fails or refuses,upon request to provide:(a)evidence of the execuƟon of the guaranty, including the authority of the party signing on Guarantor's behalf to obligate Guarantor,and in the case of a corporate Guarantor,a cerƟfied copy of a resoluƟon of its board of directors authorizing the making of such guaranty,(b)current financial statements,(c)an Estoppel CerƟficate,or (d)wriƩen confirmaƟon that the guaranty is sƟll in effect.

38.Quiet Possession.Subject to payment by Lessee of the Rent and performance of all of the covenants,condiƟons 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.

39.OpƟons.If Lessee is granted any OpƟon,as defined below,then the following provisions shall apply.

39.1 DefiniƟon."OpƟon"shall mean:(a)the right to extend or reduce the term of or renew this Lease or to extend or reduce the term of or renew any lease that Lessee has on other property of Lessor;(b)the right of first refusal or first offer to lease either the Premises or other property of Lessor;(c)the right to purchase, the right of first offer to purchase or the right of first refusal to purchase the Premises or other property of Lessor.

39.2 OpƟons Personal To Original Lessee.Any OpƟon granted to Lessee in this Lease is personal to the original Lessee,and cannot be assigned or exercised by anyone other than said original Lessee and only while the original Lessee is in full possession of the Premises and,if requested by Lessor,with Lessee cerƟfying that