Agenda packet — San Clemente City Council, June 18, 2024 (part 4 of 5)

Section 1 Project Description
General Project Attributes and Control Measures
Site Location
The Poche Beach Water Reclamation Project is located near the outfall of the Prima Deshecha storm drain at Poche Beach near the intersection of Pacific Coast Highway and Camino Capistrano in the City of San Clemente.

Narrative Project
Description:

The Poche Beach Water Reclamation Project proposes to divert dry weather runoff from the Prima Deshecha and Cascadita storm drains, treat the water using membrane filtration and reverse osmosis to meet recycled water quality targets, and then discharge it to the city sewer system for recycling and distribution. Treatment will operate year-round, including during wet weather, and the operations of the diversion and treatment system will be automated with telemetry

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System
ID
Type Narrative Description Location Other
Considerations
System
1 Diversion
Structure
Diversion structure located
in the Prima Deshecha
storm drain.

Prima Deshecha
storm drain just
upstream of the
confluence of the
Prima Deshecha
and Cascadita
storm drains.

System
2 Diversion
Structure
Diversion structure located
in the Cascadita storm
drain.

Cascadita storm
drain just
upstream of the
confluence of the
Prima Deshecha
and Cascadita
storm drains.

System
3 Trash Collection
Manhole
Manhole with trash
separation screens from
diversion from Prima
Deshecha storm drain.

Adjacent to
diversion structure
on Prima Deshecha
storm drain.

System
4 Trash Collection
Manhole
Manhole with trash
separation screens from
diversion from Cascadita
storm drain.

Adjacent to
diversion structure
on Cascadita storm
drain.

System
5 Pump
Station/Manhole
Pump manhole containing
pumps to pump water to
MFRO system.

Adjacent to and in
between Prima
Deshecha &
Cascadita trash
collection
manholes.

System
6 Membrane
Filtration/
Reverse
Osmosis
Treatment of dry weather
runoff diverted from Prima
Deshecha and Cascadita
storm drains and conveyed
via a dedicated pipe to a
treatment system utilizing
membrane filtration and
reverse osmosis system
Existing concrete
pad located in
railroad right—ofway south of the
intersection of
PCH and Camino
Capistrano.
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Section 2 Personnel, Documentation, and
Reporting

2.1 Maintenance Roles and Responsibilities
The roles related to O&M of the primary project systems are defined as follows:
x Facility Owner – The Facility Owner is the party who is ultimately responsible for the functionality of all systems.
x Responsible Party – The Responsible Party is the party that shall have direct responsibility for the O&M of the project systems. This party shall be the designated contact with inspectors and lead maintenance personnel. The Responsible Party shall sign self-inspection reports and any correspondence regarding the verification of inspections and required maintenance. The Responsible Party will establish a system to delegate general inquiries to the appropriate maintenance personnel concerning the operation and maintenance of the systems. x Designated Emergency Respondent – The Designated Emergency Respondent is the party responsible for directing activities and communications during emergencies such as broken irrigation pipes, landslides, hazardous spill responses etc., that would require immediate response should they occur during off-hours. It is the responsibility of the Designated Emergency Respondent to communicate the emergent situation with the Responsible Party as soon as possible. x Key Maintenance Personnel – Key Maintenance Personnel are the designated lead field manager(s) or supervisor(s) who directly oversee and delegate the maintenance activities, maintain the scheduling, and coordinate activities between all personnel. These tend to change more often than other personnel over time, so their names do not necessarily need to be included in the O&M Plan.

However, they must be properly trained as recorded in the training logs (Section 2.2).

The table below lists the roles for this project. This table must be updated whenever changes occur.

Role Name (Title
and
Affiliation)
Phone
Number
Address Email Address
Facility
Owner/Responsible
Party/Designated
Emergency
Respondent
City of San
Clemente;
Contact: David
Rebensdorf,
Public Works
Director
(949) 361-
6130
380 E. Avenida Pico,
Building N,
San Clemente, CA
92672
RebensdorfD@sanclemente.org
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2.2 Qualification and Training Requirements for Personnel Activities associated with maintenance of the Poche Beach Water Reclamation Project require an experienced skillset to identify and remediate potential issues that could compromise the functionality of the MF/RO system.

Activities that typically require maintenance personnel with specialized qualifications, training, and/or engineering oversight include:
x Inspection and/or repair of inflow and outflow structures; x Inspection and/or repair of underground elements;
x Spill response and remediation.

Maintenance personnel who have identified a potential major issue with any facility should contact the designated key maintenance personnel for the facility immediately.

Training must be provided for all personnel performing maintenance tasks on or providing maintenance oversight of structural systems. The table below provides the personnel and relevant training topics.

Training Logs contained in Attachment 1 should be used to document training of maintenance personnel.

Training Topic Responsible Party Designated
Emergency
Respondent
Key
Maintenance
Personnel
Proper Maintenance of all system
components X X
Identification and clean-up
procedures for spills and overflows X X X
Safety concerns when maintaining
devices and responding to
emergency situations
X X X

2.3 Funding Mechanisms
The City of San Clemente is responsible for operation and maintenance and funding of the operation and maintenance of the Poche Beach Water Reclamation Project. 37 of 47
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2.4 Record Keeping Requirements
Documentation of site conditions, maintenance activities performed, and any other remaining maintenance required is necessary during each inspection/maintenance visit. Inspection and maintenance records shall be retained in an accessible, secure location for the life of the facility, and not less than 10 years.

The following documentation mechanisms and procedures have been established for this O&M Plan:
x Training Logs: Personnel will document training activities as part of implementing this O&M Plan. Attachment 1 contains a sample training log.
x Inspection and Routine Maintenance Logs: Maintenance personnel are required to maintain logs of inspection and maintenance activities. Attachment 2 contain inspection and maintenance logs.
x Rehabilitative and Corrective Maintenance Log and Reporting: Rehabilitation and corrective maintenance activities will be documented at a degree of detail that is commensurate to the complexity/significance of the activity. Corrective maintenance that does not result in design changes will be documented as a special entry in the maintenance logs to provide pertinent details of that rehabilitative or corrective maintenance activity. x Monitoring and Assessment: Monitoring and assessment of the performance of the project will be documented for the project.

2.5 Required Permits Associated with Maintenance Activities Encroachment permits may be needed with the OC Flood Control District for the diversion structures in the Prima Deshecha and Cascadita storm drains. 38 of 47
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Section 3 Inspection, Monitoring, and
Operation & Maintenance Activities
This section identifies the inspection and O&M activities for each of the primary systems incorporated into the Poche Beach Water Reclamation Project.

3.1 Inspection, Monitoring, and Maintenance of Primary Systems The section is organized by type of structural system the inspection/monitoring frequency and the maintenance activities of each of the primary systems for the Poche Beach Water Reclamation Project.

System
ID
Type Inspection & Monitoring
Frequency
Maintenance
Systems
1 & 2
Diversion
Structure
- Once during dry season
- Monthly during wet season
- Debris removal and vacuum cleaning as
needed
- Hydrojetting annually
Systems
3 & 4
Trash Collection
Manhole
- Once during dry season
- Monthly during wet season
- Vacuum all debris and sediment in
manhole with each cleaning as needed per
inspection
- Full cleanout at the end of the wet
season
System
5 Pump
Station/Manhole
- Minimum monthly during
dry season
- Minimum monthly during
wet season or per
manufacturers guidelines
- Vacuum all debris and sediment in
manhole with each cleaning as needed per
inspection
- If standing water, remove all standing
water, debris, and sediment and test if
pump station now functions
- If still no pumping replace with backup
pump (per design specifications) and
perform maintenance on the primary
pump.

System
6 Membrane
Filtration/
Reverse
Osmosis
- During the first two weeks
after installation of MF
modules and RO membrane
elements,
- Operation and maintenance per
manufacturers guidelines
Primary elements:
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documenting baseline
performance conditions of the
MF and RO system (e.g., MF
transmembrane pressure, MF
and RO temperature-corrected
specific flux, RO pressures,
temperature, flow rates, and
water recovery) via operating
parameter data collection and
data processing, and water
quality analyses for potential
scalants and foulants;
- Bi-weekly (once every two
weeks) operating performance
data collection and analysis for
at least one year; and
- Quarterly (or semi-annual)
water quality analyses of the
MF feed water and RO
permeate for at least one year
to observe trends in feed water
quality and quantify RO
rejection of key constituents.

Pre-Filter Replacement: Typically, every
6-9 months to protect RO membranes.

RO Membrane Replacement: Typically,
every 2-3 years.

RO Clean-In-Place (CIP) System
CIPs are used to control scaling and
fouling caused by particulate matter,
precipitation of inorganic salts, and
biological matter adhering to the
membrane surface. A CIP is an involved
process that consists of soaking and
recirculating a heated high pH solution
and low pH solution through the RO
membranes for an extended period of time.

Flushing: The RO flush system is
designed to hold sufficient permeate to
flush all RO trains during shutdowns. A
flush tank stores enough permeate to flush
all RO trains including an additional
20% to account for piping.

Chemical System: The two chemicals
dosed within the MF/RO process are
sodium hypochlorite and antiscalant.

Sodium hypochlorite is dosed into the
ammonia rich feed water to provide a
continuous monochloramine
concentration at the MF feed.

Monochloramine is used within the
process to control fouling of the MF and
RO systems. Antiscalant is used to
mitigate scaling on the RO membranes.

3.2 Emergency Response Plan
In some cases, adverse conditions may occur which could be an imminent threat to human or environmental health or severe damage to infrastructure or property. For example, a spill of hazardous substances in the drainage area of the Poche Beach Water Reclamation Project could cause harmful substances to enter the water capture system and affect environmental and public 40 of 47
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health. In the event of an actual or suspected hazardous material release, the following plan shall take effect.

The primary importance of initial response to an actual or suspected spill will be public safety, control of the source of pollution, and containment of spills that have occurred, as applicable. The table below provides the emergency contact information for hazardous materials spills affecting BMPs.

Name Phone When to Report
Local Emergency Response (Fire Department) 911 Immediately Orange County 24-Hour Water Pollution
Problem Reporting Hotline
1-877-897-7455 Immediately
CalOES State Warning Center 1-800-852-7550 Immediately
The first number to call is emergency response (9-1-1), followed by the California Governor’s Office of Emergency Services (CalOES), formerly the California Emergency Management Agency (CalEMA). (CalOES) maintains guidance and instructions of what to do in the event of a spill of hazardous substances (http://www.caloes.ca.gov/cal-oes-divisions/fire-rescue/hazardousmaterials/spill-release-reporting). This plan is based on the guidance provided by CalOES (CalOES, 2014).

1. If an actual or suspected hazardous material incident exists, maintenance personnel will immediately call 911 and the CalOES State Warning Center.

2. The Designated Emergency Respondent and Responsible Party assigned to the facility (from Section 2.1) must also be notified of any actual or potential spill.

3. Remediation of contamination in the water quality facility should be handled as a corrective maintenance issue per Section 3.2 of this O&M plan.

In the event that a potential spill is identified prior to it reaching the diversion system, the Designated Emergency Respondent will implement an isolation protocol to prevent the spill from entering the diversion system. An inflatable plug, Hazmat Plug, or equivalent device as approved by the Designated Emergency Respondent will be installed within the storm drains or catch basins to block upstream flow from reaching and contaminating the diversion system. The temporary plug will be an interim measure until the spill is properly maintained and remediated and the Designated Emergency Respondent has determined the risk to the diversion system of contamination no longer exists.
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Similar measures should be taken in the event of a landslide, mudslide, or major erosion within the drainage area of the Poche Beach Water Reclamation Project to prevent sediment from damaging the BMP to the extent possible.

3.3 Vector Control
In addition to the inspection and maintenance activities listed in Section 3, all the diversion systems shall be inspected for standing water on a regular basis. Standing water which exists for longer than 72 hours may contribute to mosquito breeding areas. Standing water may indicate that the diversion system is not functioning properly and proper action to remedy the situation shall be taken in a timely manner. The Orange County Vector Control District may be contacted for more information and support at 714-971-2421 or 949-654-2421 or www.ocvcd.org. 42 of 47
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Attachment 1: Training Log Form
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TRAINING / EDUCATIONAL LOG
Date of Training/Educational Activity:

Name of Person Performing Activity
(Printed):

Signature:

Topic of Training/Educational Activity:

Name of Participant Signature of Participant

For newsletter or mailer educational activities, please include the following information:
Date of mailing:
Number distributed:
Method of distribution:
Topics addressed:

If a newsletter article was distributed, please include a copy of it. 44 of 47
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ŝƚǇŽĨ^ĂŶůĞŵĞŶƚĞ Attachment 2

Attachment 2: Inspection and Maintenance Log
Form
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ŝƚǇŽĨ^ĂŶůĞŵĞŶƚĞ Attachment 2

BMP OPERATION & MAINTENANCE LOG

POCHE BEACH WATER RECLAMATION PROJECT
Today’s Date:

Name of Person Performing Activity
(Printed):

Signature:

System Name or Type
(As Shown in O&M Plan)
Brief Description of Operation,
Maintenance, or Inspection Activity
Performed
Summary of Notable Observations
or Outcomes from Activity

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ŝƚǇŽĨ^ĂŶůĞŵĞŶƚĞ Attachment 3

Attachment 3:Vendor O&M Information
Membrane filtration/reverse osmosis information from the manufacturer to be included in this attachment once a specific system is selected.
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910 Calle Negocio
2nd Floor
San Clemente, California
www.san-clemente.org

AGENDA REPORT

CITY OF SAN CLEMENTE

CITY COUNCIL MEETING
CITY OF SAN CLEMENTE 1
Meeting Date: June 18, 2024 Agenda Item: 11I.

Submitted By: Finance and Administrative Services
Prepared By: Jake Rahn, Finance Manager
Subject:
..titl e

CONSIDERATION OF A RESOLUTION APPROVING AN AMENDMENT TO THE PROFESSIONAL SERVICES AGREEMENT WITH MILLIMAN, INC. FOR DEFINED BENEFIT SERVICES ..body
Fiscal Impact:

The annual contract cost will not exceed $35,200 and remains unchanged from previous years.

Summary:

Before the City Council is the approval of an amendment to the professional services agreement with Milliman Inc. for Defined Benefit Administration extending the term of the agreement for one (1) year.

Background:

The City maintains a legacy retirement plan for employees who were not transitioned over to the California Public Employees’ Retirement System (CalPERS) in 2014. This includes employees who retired or separated prior to the CalPERS transition as well as active and inactive Coastal Animal Services Authority (CASA) employees. The City awarded a contract to Milliman, Inc. for Defined Benefit Administration in 2017 with a term through September 30, 2024 to oversee these retirement plans.

As part of the 2019 Long Term Financial Plan, new fiscal policies were implemented to improve funding levels of pensions plans and certain actions were taken including the submission of a formal application to transfer active CASA employees in the City of San Clemente Employee Retirement Plan (CSCERP) to CalPERS. With the anticipated timing of this transition in July 2024, staff’s recommendation is to extend Milliman, Inc. services to ensure adequate and smooth operations after the transition. In compliance with Purchasing Policy 201-2-3 the extension is exempt from the selection process due to the consultant’s unique familiarity with the project.

However, after the transition is complete and a new operational structure is in place, a request for proposal will be issued in 2025 based on the revised operations and lower participant requirements. As in previous years, the cost for the Defined Benefit Administration will not exceed $35,200 per the terms of the agreement and is paid for from the retirement plan. Staff is recommending a one (1) year extension of the agreement to expire on September 30, 2025.

Council Options:
 Adopt Resolution 24-99, which will approve and authorize the City Manager to execute the third amendment to the Professional Services Agreement with Milliman, Inc. 1729
Meeting Date: June 18, 2024 Agenda Item: 11I.

CITY OF SAN CLEMENTE 2
 Modify and adopt Resolution 24-99.
 Continue the item with direction to staff to provide additional information.  Deny the request to execute the third amendment to the Professional Services Agreement with Milliman, Inc. and direct staff to solicit proposals.

Environmental Review/Analysis:

This is not a “project” under the California Environmental Quality Act.

Recommended Actions:

Staff Recommendation ..recommendation
Adopt Resolution 24-99, which will approve and authorize the City Manager to execute the third amendment to the Professional Services Agreement with Milliman, Inc. extending the services for one (1) year in an amount not exceed $35,200.
..end
Attachment:

1. 3rd Amendment to the Professional Services Agreement for Defined Benefit Services

2. Resolution No. 24-99
Notification:

The San Clemente City Employees Association
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THIRD AMENDMENT TO

PROFESSIONAL CONSULTANT SERVICES AGREEMENT FOR

DEFINED BENEFIT SERVICES

This Third Amendment to Professional Consultant Services Agreement for Defined Benefit Administration (this “Third Amendment”) is made and entered into on this ____ day of ________, 2024, by and between the CITY OF SAN CLEMENTE, a California municipal corporation (“City”), and Milliman Inc., a Washington corporation (“Consultant”).

R E C I T A L S:

A. City and Consultant entered into that certain Professional Consultant Services Agreement for Defined Benefit Administration for the City of San Clemente Restated Employees Retirement Plan (the “Original Agreement”) on October 1, 2017, which had an original five (5) year term through September 30, 2022 and had two (2) optional one (1) year extensions .

B. City and Consultant entered into that certain First Amendment to the Professional Consultant Services Agreement for Defined Benefit Administration for the City of San Clemente Restated Employees Retirement Plan (“First Amendment”) on August 10, 2022, which exercised the first extension option.

C. City and Consultant entered into that certain Second Amendment to Professional Consultant Services Agreement for Defined Benefit Administration for the City of San Clemente Restated Employees Retirement Plan (“Second Amendment”) on August 31, 2023, which exercised the second extension option. The Original Agreement, as modified by the First Amendment and the Second Amendment, is hereinafter referred to as the “Agreement”.

D. City and Consultant desire to amend the Agreement in the manner provided herein.

C O V E N A N T S:

Section 1.1 of the Agreement is hereby amended to allow one (1) additional one (1) year extension option through September 30, 2025, which extension option the City hereby exercises. The Agreement shall expire on September 30, 2025, unless earlier terminated pursuant to its terms.
1731
Section 3.1 of the Agreement is hereby amended to allow total compensation for the extended term of the agreement through September 30, 2025 to not exceed $35,200.

Except as expressly amended by this Third Amendment, the remaining portions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be duly executed on the respective dates set forth opposite of their signatures.

CITY OF SAN CLEMENTE
By:________________________________
Andy Hall, City Manager
ATTEST: Dated: __________________, 20____
____________________________
CITY CLERK of the City of
San Clemente, California
APPROVED AS TO FORM:
____________________________
Elizabeth A. Mitchell, City Attorney

APPROVED AS TO AVAILABILITY
OF FUNDING:
________________________________
Finance Authorization

Milliman, Inc.
(“CONTRACTOR”)
By:_____________________________
Jean Smith, Principal
Dated: __________________, 2024
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Attachment 2
4865-2498-4682 v1
RESOLUTION NO. 24-99

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

SAN CLEMENTE, CALIFORNIA, AUTHORIZING THE CITY

MANAGER TO EXECUTE THE THIRD AMENDMENT TO

THE PROFESSIONAL SERVICES AGREEMENT WITH
MILLIMAN, INC. TO PROVIDE DEFINED BENEFIT

ADMINISTRATION
WHEREAS, on October 1, 2017, the City of San Clemente (“City”) and Milliman, Inc. entered into a Professional Services Agreement (“Agreement”) for Defined Benefit Administration; and
WHEREAS, the Professional Services Agreement for Defined Benefits Administration will expire on September 30, 2024; and
WHEREAS, the City wishes to continue Professional Services for Defined Benefit Administration with Milliman, Inc.; and
WHEREAS, the services being provided by Milliman under the Agreement are professional services, the price is fair and reasonable and Milliman is uniquely qualified to perform the services during the upcoming transition period.

NOW, THEREFORE, the City Council of the City of San Clemente does hereby find, determine and resolve as follows:

SECTION 1. That the above recitations are true and correct and incorporated herein.

SECTION 2. That the City Manager is authorized and directed to execute the Third Amendment to the Professional Services Agreement for Defined Benefits Administration with Milliman Inc. extending the term of the Agreement through September 30, 2025 for an amount not to exceed $35,200 in a form substantially similar as that presented to the City Council on June 18, 2024.

SECTION 3. That the City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions. 1733
Resolution No. 24-99 Page 2
PASSED AND ADOPTED this _____ day of _______, 2024.

ATTEST:
__________________________ _______________________
CITY CLERK of the City of Mayor of the City of
San Clemente, California San Clemente, California

STATE OF CALIFORNIA )
COUNTY OF ORANGE ) §

CITY OF SAN CLEMENTE )
I, LAURA CAMPAGNOLO, City Clerk of the City of San Clemente, California, do hereby certify that Resolution No. 24-99 was adopted at a regular meeting of the City Council of the City of San Clemente held on _______ day of ______ 2024, by the following vote:

AYES:

NOES:

ABSENT:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Clemente, California, this _____ day of _________________, ________. ______________________
CITY CLERK of the City of
San Clemente, California
Approved as to form:
___________________________
Elizabeth A. Mitchell, City Attorney
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910 Calle Negocio
2nd Floor
San Clemente, California
www.san-clemente.org

AGENDA REPORT

CITY OF SAN CLEMENTE

CITY COUNCIL MEETING
CITY OF SAN CLEMENTE 1
Meeting Date: June 18, 2024 Agenda Item: 11J.

Submitted By: Public Works
Prepared By: Fatana Temory, Management Analyst
Subject:
..titl e

CONSIDERATION OF A RESOLUTION AUTHORIZING A ONE-YEAR EXTENSION TO THE SCRIDES

AGREEMENTS WITH LYFT AND BUTTERFLI AND FINDING THE PROJECT STATUTORILY EXEMPT FROM ..body THE CALIFORNIA ENVIRONMENTAL QUALITY ACT
Fiscal Impact:

These Agreement Amendments will require program costs in the amount of $415,000, which is included in the approved Fiscal Year 2024/25 adopted budget. Please note, Orange County Transportation Authority (OCTA) awarded funds to the City to provide up to 90% of the cost of this program with a local City match of 10%.

Summary:

Before the City Council are two a one-year contract extensions to the agreements with Lyft and Butterfli for the continuation of the SCRides Program through June 30, 2025. These contracts are set to expire on June 30, 2024 unless extended.

Background:

In 2016, the City Council approved an agreement with Lyft to implement a pilot on-demand transportation service titled “SCRides,” designed to help mitigate the loss of former local bus routes 191 and 193 which were cancelled by the Orange County Transportation Authority (OCTA). Under OCTA’s Project V grant program, OCTA awarded funds to the City to provide up to 90% of the cost of this program. With City Council approval, staff applied for a second grant to continue the program. OCTA approved a funding extension of the grant term through June 30, 2025.

The City also executed an agreement with Butterfli to provide a companion service capable of providing on-demand rides for SCRides users requiring special assistance (e.g., wheelchairs, canes, walkers) that could not be accommodated by typical Lyft contracted drivers. The Butterfli agreement is 100% funded by OCTA.

The SCRides program allows riders discounted rides within a 0.25-mile radius of the original 191 and 193 bus routes. Riders save up to $9 on rides, and pay as low as $2 a ride. The SCRides program has an average of 3,500 riders a month.

In order to continue the SCRides program without any interruptions until the next Project V funding cycle begins in FY 2025, staff recommends that the City Council approve amendments to the agreement (Third Amendments, Attachments 1 and 5) with both Lyft and Butterfli for a oneyear contract extension through June 30, 2025. 1735
Meeting Date: June 18, 2024 Agenda Item: 11J.

CITY OF SAN CLEMENTE 2
According to OCTA, a new procurement will be required when the new Project V grant goes into effect in FY2025. Therefore, after the proposed one-year extensions, staff will issue a Request for Proposals under the new Project V grant that will take into effect in FY 2025-2026 and return to the City Council in the future for a contract award for that period and beyond.

Council Options:
 Adopt Resolution No. 24-100, authorizing the City Manager to execute contract amendments with Lyft and Butterfli for one-year extensions for the continuation of the SCRides Program through June 30, 2025 and determining that the project is statutorily exempt from the California Environmental Quality Act (CEQA).
 Modify and Adopt Resolution No. 24-100.
 Continue the Item and direct staff to provide additional information. Note: Both the Butterfli and Lyft contracts conclude June 30, 2024 and the City’s SCRides Program would not be able to operate without contracts.
 Do not adopt Resolution No. 24-100 and discontinue the SCRides Program.

Environmental Review/Analysis:

The project statutorily exempt from CEQA under Public Resources Code section 21080(b)(10) because it is a project for the institution or increase of passenger or commuter services on rightsof-way already in use.

Recommended Actions:

Staff Recommendation ..recommendation
Staff Recommends that the City Council adopt Resolution No. 24-100, which will:

1. Find the project statutorily exempt from the California Environmental Quality Act (CEQA) under Public Resources Code section 21080(b)(10);

2. Approve and authorize the City Manager to execute a Third Amendment to the Agreement with Lyft to extend the SCRides Program for an additional year through June 30, 2025; and

3. Approve and authorize the City Manager to execute a Third Amendment to the Agreement with Butterfli to extend the SCRides Program for an additional year through June 30, 2025. ..end
Attachment:

1. Proposed Third Amendment to Agreement with Lyft

2. Copy of Second Amendment to Agreement with Lyft

3. Copy of First Amendment to Agreement with Lyft

4. Copy of Original Agreement with Lyft

5. Proposed Third Amendment to Agreement with Butterfli

6. Copy of Second Amendment to Agreement with Butterfli

7. Copy of First Amendment to Agreement with Butterfli

8. Copy of Original Agreement with Butterfli

9. Resolution No. 24-100
1736
Meeting Date: June 18, 2024 Agenda Item: 11J.

CITY OF SAN CLEMENTE 3
Notification:

None.
1737
ATTACHMENT 1

THIRD AMENDMENT TO
Rideshare Beta Test Program Agreement

This Third Amendment to Rideshare Beta Test Program Agreement (this “Third Amendment”) is made and entered into on this ___ day of June, 2024, by and between the CITY OF SAN CLEMENTE, a California municipal corporation (“City”), and LYFT, INC., a Delaware corporation (“Consultant”).

R E C I T A L S:

A. City and Consultant entered into that certain Professional Consultant Services Agreement for Rideshare Beta Test Program Agreement (the “Original Agreement”) on October 9, 2016.

B. City and Consultant entered into that certain First Amendment to the Professional Consultant Services Agreement for Rideshare Beta Test Program Agreement (“First Amendment”) on July 10, 2019.

C. City and Consultant entered into that certain Second Amendment to Professional Consultant Services Agreement for Rideshare Beta Test Program Agreement (“Second Amendment”) on June 30, 2023. The Original Agreement, as modified by the First Amendment and the Second Amendment, is hereinafter referred to as the “Agreement”.

D. City and Consultant desire to amend the Agreement in the manner provided herein.

C O V E N A N T S:

1. Section 6.1(a) of the Agreement is hereby deleted in its entirety and replaced with the following:

6.1 Term. This Agreement shall commence on October 9, 2016 and continue until June 30, 2025, unless earlier terminated as authorized in Section 7.2 (“Termination”).

2. This Third Amendment may be executed electronically with the same force and effect as an original ink signature.

3. Except as expressly amended by this Third Amendment, the remaining portions of the Agreement shall remain in full force and effect.
1738
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be duly executed on the respective dates set forth opposite of their signatures.

CITY OF SAN CLEMENTE
By:________________________________
Andy Hall, City Manager
ATTEST: Dated: __________________, 20____
_____________________________
CITY CLERK of the City of
San Clemente, California
APPROVED AS TO FORM:
_____________________________
Elizabeth A. Mitchell, City Attorney

APPROVED AS TO AVAILABILITY
OF FUNDING:
________________________________
Finance Authorization

LYFT, INC., a Delaware corporation
(“CONSULTANT”)
By:________________________________
(Name, Title)
Dated: ____________________, 20____
By:________________________________
(Name, Title)
Dated: ___________________, 20____
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ATTACHMENT 2
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ATTACHMENT 3
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ATTACHMENT 4
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ATTACHMENT 5

THIRD AMENDMENT TO
Rideshare Beta Test Program Agreement

This Third Amendment to Rideshare Beta Test Program Agreement (this “Third Amendment”) is made and entered into on this ___ day of June, 2024, by and between the CITY OF SAN CLEMENTE, a California municipal corporation (“City”), and BUTTERFLI TECHNOLOGIES, INC., a California corporation (“Consultant”).

R E C I T A L S:

A. City and Consultant entered into that certain Professional Consultant Services Agreement for Rideshare Beta Test Program Agreement (the “Original Agreement”) on March 19, 2018.

B. City and Consultant entered into that certain First Amendment to the Professional Consultant Services Agreement for Rideshare Beta Test Program Agreement (“First Amendment”) on July 1, 2019.

D. City and Consultant desire to amend the Agreement in the manner provided herein.

C O V E N A N T S:

1. Section 5.1(Term) of the Agreement is hereby deleted in its entirety and replaced with the following:

5.1 Term. This Agreement shall commence on March 28, 2018 and continue until June 30, 2025, unless earlier terminated as authorized in Section 7.2 (“Termination”).

2. This Third Amendment may be executed electronically with the same force and effect as an original ink signature.

3. Except as expressly amended by this Third Amendment, the remaining portions of the Agreement shall remain in full force and effect.
1762
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be duly executed on the respective dates set forth opposite of their signatures.

APPROVED AS TO AVAILABILITY
OF FUNDING:
________________________________
Finance Authorization

BUTTERFLI TECHNOLOGIES, INC.,
a California corporation
(“CONSULTANT”)
By:________________________________
(Name, Title)
Dated: ____________________, 20____
By:________________________________
(Name, Title)
Dated: ___________________, 20____
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EXHIBIT “A”
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ATTACHMENT 6
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ATTACHMENT 7
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ATTACHMENT 8
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ATTACHMENT 9
4860-5047-5367 v1
RESOLUTION NO. 24-100

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

SAN CLEMENTE, CALIFORNIA, AUTHORIZING THE CITY

MANAGER TO EXECUTE THIRD AMENDMENTS TO THE

PROFESSIONAL SERVICES AGREEMENT WITH LYFT

AND BUTTERFLI TO PROVIDE SCRIDES SERVICES FOR
FY 2024/2025
WHEREAS, the City wishes to continue providing SCRides on-demand transportation services to help mitigate the loss of former local bus routes 191 and 193; and
WHEREAS, the City has contracted for professional on-demand transportation services under a professional services agreements and related Amendments Nos. 1 and 2 to those agreements with Lyft and Butterfli; and
WHEREAS, the professional on-demand transportation services under Amendment No. 2 with Lyft and Butterfli expire on June 30, 2024; and WHEREAS, extending the agreements with Lyft and Butterfli for one additional year is in the best interests of the City and the public.

NOW, THEREFORE, the City Council of the City of San Clemente does hereby find, determine and resolve as follows:

SECTION 1. That the above recitations are true and correct and incorporated herein.

SECTION 2. That based on review of the record as a whole, the project is statutorily exempt from the requirements of the California Environmental Quality Act, Public Resources Code sections 25000 et seq., (CEQA) per section 21080, subdivision (b)(10), which exempts from CEQA review projects for the institution or increase of passenger or commuter services on highway rights-of-way already in use, including on public streets. (Pub. Resources Code, § 21080, subd. (b)(10); Veh. Code, § 360.) The Project is intended to maintain and increase passenger and commuter trolley service on City streets and rights-of-way already being used for this exact purpose, and therefore it is exempt from CEQA review per this exemption.

SECTION 3. That the City Manager is authorized and directed to execute an Amendment No. 3 to the Rideshare Beta Test Program Agreement with Lyft to extend the SC Rides Program for an additional year through June 30, 2025 in a form substantially similar as that presented to the City Council on June 18, 2024. 1797
Resolution No. 24-100 Page 2
4860-5047-5367 v1
SECTION 4. That the City Manager is authorized and directed to execute an Amendment No. 3 to the Rideshare Beta Test Program Agreement with Butterfli to extend the SC Rides Program for an additional year through June 30, 2025 in a form substantially similar as that presented to the City Council on June 18, 2024.

SECTION 5. That the City Manager is hereby authorized and directed to execute such other documents and take such other and further action as may be necessary and proper to accomplish the purpose of this resolution, including accepting any funding from the Orange County Transportation Authority for this project.

SECTION 6. That the City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.

PASSED AND ADOPTED this _____ day of June, 2024.
_______________________
Mayor of the City of
San Clemente, California
ATTEST:
__________________________
CITY CLERK of the City of
San Clemente, California
1798
Resolution No. 24-100 Page 3
4860-5047-5367 v1

STATE OF CALIFORNIA )
COUNTY OF ORANGE ) §

CITY OF SAN CLEMENTE )
I, LAURA CAMPAGNOLO, City Clerk of the City of San Clemente, California, do hereby certify that Resolution No. 24-100 was adopted at a regular meeting of the City Council of the City of San Clemente held on _______ day of June 2024, by the following vote:

AYES:

NOES:

ABSENT:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Clemente, California, this _____ day of _________________, ________ _______________________
CITY CLERK of the City of
San Clemente, California
Approved as to form:
___________________________
Elizabeth A. Mitchell, City Attorney
1799
910 Calle Negocio
2nd Floor
San Clemente, California
www.san-clemente.org

AGENDA REPORT

CITY OF SAN CLEMENTE

CITY COUNCIL MEETING
CITY OF SAN CLEMENTE 1
Meeting Date: June 18, 2024 Agenda Item: 11K.

Submitted By: Community Development
Prepared By: Adam Atamian, Community Development Director Subject:
..titl e

CONSIDERATION OF A RESOLUTION APPROVING A FIVE YEAR LEASE FOR THE CITY OWNED COMMERCIAL BUILDING LOCATED AT 1100 N. EL CAMINO REAL (APN 692-393- 01)
..body
Fiscal Impact:

The proposed five-year lease will generate revenue of $3,724 per month, for the first year.

Subsequent years will each contain a 3% increase until the fifth year of the agreement, for total revenues of $237,254. The lease includes a commission of 6% of the gross lease, or $14,235.

Summary:

Under an exclusive listing agreement with Josh Cunningham/Kidder Mathews commercial real estate brokerage, the City received multiple inquiries and two offers to lease the City-owned building at 1100 N. El Camino Real. The best offer submitted came from Trestles Property Management, LLC for a five-year lease of the property to be used as a real estate office. The City’s contracted commercial real estate consultant drafted a prospective lease agreement for the Council’s consideration with a term of five years (October 1, 2024 – September 30, 2029) at $3,724 monthly rent for the first year, with 3% increases each year thereafter.

Background:

The current tenant, Novella Royale, Inc., has vacated the premises and the lease has been terminated. The new prospective tenant is looking to take early possession of the building on July 1, 2024 to start making interior improvements and upgrades. The proposed lease includes an abatement of rent for the first 3 months in exchange for these tenant improvements, with paid occupancy beginning October 1, 2024.

Discussion:

A five-year lease by and between the City of San Clemente and Trestles Property Management, LLC is proposed with the following terms and conditions.  $3,724 per month after the first 3 months, with 3% increases annually  One (3) three-year option to renew at market rental rate  Lease is personally guaranteed by Gary Ward
 Rules and regulations for the building included in the lease agreement 1800
Meeting Date: June 18, 2024 Agenda Item: 11K.

CITY OF SAN CLEMENTE 2
Council Options:
 Adopt Resolution No. 24-101, which would approve the five-year lease agreement by and between the City of San Clemente and Trestles Property Management, LLC.  Modify and adopt Resolution No. 24-101.
 Continue the Item and provide staff with alternative direction.  Do not approve the proposed lease agreement, which would result in the City not entering into a lease of the property at this time. Additionally, should the City not engage in a lease with any other parties who submitted recent offers to the City’s contracted real estate consultant, the commission fee stipulated in the exclusive listing agreement would remain a cost payable to the consultant for services rendered.

Environmental Review/Analysis:

Not a “project” under the California Environmental Quality Act Guidelines Section 15378 (14 CCR 15378). Entering into the proposed lease has no potential result in either a direct or physical change in the environment or a reasonably foreseeable indirect physical change in the environment. The proposed use is consistent with the underlying zoning.

Recommended Actions:

Staff Recommendation ..recommendation
City staff recommends that the City Council Adopt Resolution No. 24-101 to do the following:

1. Approve the five-year lease agreement, provided as Attachment 2, for the lease to Trestles Property Management, LLC of 1100 N. El Camino Real, and

2. Authorize the City Manager to execute the lease agreement, for a base rent of $3,724 per month after 3 months, with 3% increases annually, and including the commission for consultant real estate services not to exceed 6% of gross lease and one (3) three-year option to renew at market rental rate.
..end
Attachment:

1. Resolution No. 24-101

2. Lease agreement with Trestles Property Management, LLC Notification:

Trestles Property Management, LLC
1801
ATTACHMENT 1
RESOLUTION NO. 24-101

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

SAN CLEMENTE, CALIFORNIA, APPROVING A FIVE-YEAR

LEASE AGREEMENT FOR THE CITY OWNED BUILDING AT
1100 N. EL CAMINO REAL (APN 692-393-01) WITH

TRESTLES PROPERTY MANAGEMENT LLC
WHEREAS, pursuant to City Policy 901-1, the City delegates the authority to engage in negotiations with prospective tenants for City-owned property to the City Manager; and WHEREAS, the subject property at 1100 N. El Camino Real, APN 692-393-01; owned by the City, is currently vacant and is available for a prospective tenant and multi-year lease; and WHEREAS, in March, 2024, the City extended an exclusive listing agreement to Josh Cunningham, Kidder Mathews, a commercial real estate firm, for consultant real estate listing services of City-owned building at 1100 N. El Camino Real; and WHEREAS, the City’s consultant facilitated the listing of the subject property and obtained two offers for lease. City staff reviewed the offers presented and determined the offer submitted by Trestles Property Management for a five-year term was the most beneficial to the City, and allowed for occupancy of the building at the soonest opportunity possible.

NOW, THEREFORE, the City Council of the City of San Clemente does hereby find, determine and resolve as follows:

Section 1. The above recitals are true and correct and incorporated herein by reference.

Section 2. The Standard Industrial/Commercial Single-Tenant Lease - Gross, included as Attachment 2 to the agenda report, dated June 18, 2024, entitled “Consideration of a Resolution to Approve a Five-Year Lease for the City Owned Commercial Building Located at 1100 N. EL Camino Real (APN 692-393-01),” is hereby approved, and; Section 3. The City Manager, or the City Manager's designee, is authorized and directed to execute the Standard Industrial/Commercial Single-Tenant Lease - Gross with Trestles Property Management, LLC, for a base rent of $3,724 per month after the first 3 months, with 3% increases annually, and including the commission for consultant real estate services not to exceed 6% of the gross lease and one three-year option to renew at market rental rate, in a form substantially similar to that presented to the City Council on June 18, 2024, and; Section 4. The City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.

PASSED AND ADOPTED this _____ day of ____________________, 2024. 1802
Resolution No. 24-101 Page 2
ATTEST:
___________________________ __________________________
City Clerk of the City of Mayor of the City of San
San Clemente, California Clemente, California

STATE OF CALIFORNIA )
COUNTY OF ORANGE ) §

CITY OF SAN CLEMENTE )
I, LAURA CAMPAGNOLO, City Clerk of the City of San Clemente, California, do hereby certify that Resolution No. 24-101 was adopted at a regular meeting of the City Council of the City of San Clemente held on the _______ day of _______________________, _________, by the following vote:

AYES:

NOES:

ABSENT:

1. Basic Provisions ("Basic Provisions").

1.1 ParƟes. This Lease ("Lease"), dated for reference purposes only 6/11/2024 , is made by and between The city of San Clemente ("Lessor") and Trestles Property Management, LLC ("Lessee"), (collecƟvely the "ParƟes," or individually a "Party").

1.2 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, city, state, zip): 1100 N. El Camino Real, San Clemente Ca 92672 ("Premises"). The Premises are located in the County of Orange , and are generally described as(describe briefly the nature of the property and , if applicable, the "Project," if the property islocated within a Project): +- 1,400 SF freestanding building located on the corner of El Camino Real and El Portal . (See also Paragraph 2)

1.3 Term: 5 years and 0 months("Original Term") commencing 10/1/2024 ("Commencement Date") and ending 9/30/2029 ("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 after receipt of security deposit, first month's rent, and proof of insurance ("Early Possession Date"). (See also Paragraphs 3.2 and 3.3)

1.5 Base Rent: $3,724 per month ("Base Rent"), payable on the 1st day of each month commencing 10/1/2024 . (See also Paragraph 4)
If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted. See Paragraph 3% annual increases .

1.6 Base Rent and Other Monies Paid Upon ExecuƟon:

1.7 Agreed Use: general office for real estate services including property management . (See also Paragraph 6)

1.8 Insuring Party. Lessoris the "Insuring Party". The annual "Base Premium" is to be paid by tenant . (See also Paragraph 8)

1.9 Real Estate Brokers. (See also Paragraph 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 Kidder Mathews License No. 01946490 Isthe broker of (check one): the Lessor; or both the Lessee and Lessor (dual agent).

Lessor's Agent Josh Cunningham License No. 01802660 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 Lincoln Property Company License No. Isthe broker of (check one): the Lessee; or both the Lessee and Lessor (dual agent).

Lessee's Agent Garrick Shupe 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 or 6 % of the total Base Rent) for the brokerage servicesrendered by the Brokers.

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

1.11 AƩachments. AƩached hereto are the following, all of which consƟtute a part of this Lease:
an Addendum consisƟng of Paragraphs 50 through 50.3 ;
a plot plan depicƟng the Premises;
a current set of the Rules and RegulaƟons;
a Work LeƩer;
other (specify): .

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 Premisesfor

STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - GROSS (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)
(a) Base Rent: $3,724 for the period 10/1/2024-10/31/2024 . (b) Security Deposit: $4,234 ("Security Deposit"). (See also Paragraph 5) (c) AssociaƟon Fees: for the period .
(d) Other: for .
(e) Total Due Upon ExecuƟon of this Lease: $7,958 .
(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 Brokersthe brokerage fee agreed to in a ATTACHMENT 2
1804
purposes of comparison, the Base Rentstated herein is NOT Ɵed to square footage and is notsubject 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 the Premises 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 asthe required service contracts described in Paragraph 7.1(b) below are obtained by Lessee and in effect within thirty days following the Start Date, warrantsthat the exisƟng electrical, plumbing, fire sprinkler, lighƟng, heaƟng, venƟlaƟng and air condiƟoning systems ("HVAC"), loading doors, sump pumps, if any, and all othersuch elements in the Premises, other than those constructed by Lessee, shall be in good operaƟng condiƟon on said date, that the surface and structural elements of the roof, bearing walls and foundaƟon of any buildings on the Premises (the "Building") 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 said 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'ssole 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 ofsuch non-compliance, malfuncƟon or failure, recƟfy same at Lessor's expense. The warranty periods shall be as follows: (i) 6 months asto the HVAC systems, and (ii) 30 days asto the remaining systems and other elements of the Building. 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 roof, foundaƟons, and bearing walls which are handled as provided in 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 warrantsthat 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 50), 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 acknowledgesthat 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 monthsfollowing the Start Date, correcƟon of that non-compliance shall be the obligaƟon of Lessee at Lessee'ssole 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 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 an 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 earlierthan 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 Lessorreasonably 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'sterminaƟon noƟce that Lessee will pay for such Capital Expenditure. If Lessor does not elect to terminate, and failsto tender itsshare 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'sshare, orif 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, however, have any right to terminate this Lease.

2.4 Acknowledgements. Lessee acknowledgesthat: (a) it has been given an opportunity to inspect and measure the Premises, (b) it has been advised by Lessor and/or Brokersto 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 asthe 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 asset forth in this Lease. In addiƟon, Lessor acknowledgesthat: (i) Brokers have made no representaƟons, promises or warranƟes concerning Lessee's ability to honor the Lease orsuitability to occupy the Premises, and (ii) it is Lessor'ssole 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 wasthe owner or occupant of the Premises. In such event, Lessee shall be responsible for any necessary correcƟve work.

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 issubject 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 Rentshall be abated for the period of such Early Possession. All other terms of this Lease (including but not limited to the obligaƟons to pay Real Property Taxes and insurance premiums and to maintain the Premises) shall be in effect 1805
during such period. Any such Early Possession shall not affect the ExpiraƟon Date.

3.3 Delay In Possession. Lessor agrees to use commercially reasonable effortsto 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, asthe 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 ofsuch 60 day period, cancel this Lease, in which event the ParƟesshall 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 Premisesto 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 isrequired 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 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 invoice prepared by Lessor isinaccurate such inaccuracy shall not consƟtute a waiver and Lessee shall be obligated to pay the amountset forth in this Lease. Rent for any period during the term hereof which is for lessthan one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rentshall 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 isless than the amount then due shall not be a waiver of Lessor's rightsto 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 and Lessor, at its opƟon, may require all future paymentsto be made by Lessee to be 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, Insurance and Real Property Taxes, and any remaining amount to any other outstanding charges or costs.

4.3 AssociaƟon Fees. In addiƟon to the Base Rent, Lessee shall pay to Lessor each month an amount equal to any owner's associaƟon or condominium fees levied or assessed against the Premises. Said monies shall be paid at the same Ɵme and in the same manner asthe Base Rent.

5. Security Deposit. Lessee shall deposit with Lessor upon execuƟon hereof the Security Deposit assecurity for Lessee'sfaithful 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 ofsaid 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 orincur 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'sreasonable 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 asshall 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 be considered to be held in trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease. 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 isreasonably 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. Lessorshall 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 improvements on the Premises or the mechanical or electrical systemstherein, and/or is not significantly more burdensome to the Premises. 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, 1806
liquid paper, glue, etc.) and common household cleaning materials, so long as such use isin 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 hasreasonable 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 ofsuch 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 adjacent properƟes 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 ofsuch 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 result from Hazardous Substances which existed on the Premises prior to Lessee's occupancy or which are caused by the gross negligence or willful misconduct of Lessor, its agents or employees. Lessor's 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 measuresrequired by governmental enƟƟes having jurisdicƟon with respect to the existence of Hazardous Substances on the Premises prior to Lessee's occupancy, unlesssuch 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 Ɵmesin 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, assoon asreasonably 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 daysfollowing the date of such noƟce. In the event Lessor electsto 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 Ɵmesthe 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 assoon asreasonably 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'ssole 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 whethersaid 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. In addiƟon, Lessee shall provide Lessor with copies of its business license, cerƟficate of occupancy and/or any similar document within 10 days of the receipt of a wriƩen request therefor.

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 a 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'sfailure 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. 1807

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 Premisesrequiring 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 ofsuch porƟon of the Premises), including, but not limited to, all equipment or faciliƟes, such as plumbing, HVAC equipment, electrical, lighƟng faciliƟes, boilers, pressure vessels, fire protecƟon system, fixtures, walls (interior and exterior), ceilings, floors, stairs, windows, doors, plate glass, skylights, landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks and parkways located in, on, or adjacent to the Premises. Lessee is also responsible for keeping the roof and roof drainage clean and free of debris. Lessor shall keep the surface and structural elements of the roof, foundaƟons, and bearing walls in good repair (see paragraph 7.2). Lessee, in keeping the Premisesin good order, condiƟon and repair, shall exercise and perform good maintenance pracƟces, specifically including the procurement and maintenance of the service contractsrequired by Paragraph 7.1(b) below. Lessee's obligaƟons shall include restoraƟons, replacements or renewals when necessary to keep the Premises and all improvementsthereon or a part thereof in good order, condiƟon and state of repair. Lessee shall, during the term of this Lease, keep the exterior appearance of the Building in a first-class condiƟon (including, e.g. graffiƟ removal) consistent with the exterior appearance of othersimilar faciliƟes of comparable age and size in the vicinity, including, when necessary, the exterior repainƟng of the Building. (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, (iii) fire exƟnguishing systems, including fire alarm and/or smoke detecƟon, (iv) landscaping and irrigaƟon systems, and (v) 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'sindemnificaƟon of Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of liability resulƟng from Lessee'sfailure 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), 9 (Damage or DestrucƟon) and 14 (CondemnaƟon), it is intended by the ParƟes hereto that Lessor have no obligaƟon, in any manner whatsoever, to repair and maintain the Premises, or the equipment therein, all of which obligaƟons are intended to be that of the Lessee, except for the surface and structural elements of the roof, foundaƟons and bearing walls, the repair of which shall be the responsibility of Lessor upon receipt of wriƩen noƟce that such a repair is necessary. It isthe intenƟon of the ParƟes that the terms of this Lease govern the respecƟve obligaƟons of the ParƟes asto maintenance and repair of the Premises.

7.3 UƟlity InstallaƟons; Trade Fixtures; AlteraƟons.
(a) DefiniƟons. The term "UƟlity InstallaƟons" refersto 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 InstallaƟonsto 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 PremisesresulƟng from Applicable Requirements, such as compliance with Title 24, 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 claimsfor 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 lessthan 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 itssole 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 Lessorshall 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 1808
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 surfacesthereof 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 orfor Lessee.

Lessee shall also completely remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except Hazardous Substances which were deposited via underground migraƟon from areas outside of the Premises) to the levelspecified 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 earlierterminaƟon 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 Premium Increases.
(a) Lessee shall pay to Lessor any insurance cost increase ("Insurance Cost Increase") occurring during the term of this Lease. Insurance Cost Increase is defined as any increase in the actual cost of the insurance required under Paragraph 8.2(b), 8.3(a) and 8.3(b), over and above the Base Premium as hereinaŌer defined calculated on an annual basis. Insurance Cost Increase shall include but not be limited to increases resulƟng from the nature of Lessee's occupancy, any act or omission of Lessee, requirements of the holder of mortgage or deed of trust covering the Premises, increased valuaƟon of the Premises and/or a premium rate increase. The parƟes are encouraged to fill in the Base Premium in Paragraph 1.8 with a reasonable premium for the Required Insurance based on the Agreed Use of the Premises. If the parƟesfail to insert a dollar amount in Paragraph 1.8, then the Base Premium shall be the lowest annual premium reasonably obtainable for the Required Insurance as of the commencement of the Original Term for the Agreed Use of the Premises. In no event, however, shall Lessee be responsible for any porƟon of the increase in the premium cost aƩributable to liability insurance carried by Lessor under Paragraph 8.2(b) in excess of $2,000,000 per occurrence. (b) Lessee shall pay any such Insurance Cost Increase to Lessor within 30 days aŌer receipt by Lessee of a copy of the premium statement or other reasonable evidence of the amount due. If the insurance policies maintained hereunder cover other property besides the Premises, Lessor shall also deliver to Lessee a statement of the amount ofsuch Insurance Cost Increase aƩributable only to the Premisesshowing in reasonable detail the manner in which such amount was computed. Premiumsfor policy periods commencing prior to, or extending beyond the term of this Lease, shall be prorated to correspond to the term of this Lease.

8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability policy of insurance 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. The Insuring Party shall obtain and keep in force a policy or policiesin 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, asthe 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 or included in the Base Premium), 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 asthe result of a covered loss. Said policy or policies shall also contain an agreed valuaƟon provision in lieu of any coinsurance clause, waiver ofsubrogaƟon, 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 amountshall not exceed $5,000 per occurrence, and Lessee shall be liable for such deducƟble amount in the event of an Insured Loss. (b) Rental Value. The Insuring Party shall 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. Lessee shall be liable for any deducƟble amount in the event of such loss. (c) Adjacent Premises. If the Premises are part of a larger building, or of a group of buildings owned by Lessor which are adjacent to the Premises, the Lessee shall pay for any increase in the premiums for the property insurance of such building or buildingsif said increase is caused by Lessee's acts, omissions, use or occupancy of the Premises.

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) BusinessInterrupƟon. 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 accessto 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 1809
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'sInsurance 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 perilsrequired 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 Agentsfrom Liability. Notwithstanding the negligence or breach of this Lease by Lessor or its agents, neither Lessor nor its agentsshall 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, whethersuch 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 of which the Premises are a part, or from other sources or places, (ii) any damages arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor or its agentsto 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 ofsuch 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 acknowledgesthat 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 representsfair and reasonable compensaƟon for the addiƟonal risk/costs that Lessor will incur by reason of Lessee'sfailure to maintain the required insurance. Such increase in Base Rentshall 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 6 months orless from the date of the damage or destrucƟon. 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 Premises, other than Lessee Owned AlteraƟons and UƟlity InstallaƟons and Trade Fixtures, which cannot reasonably be repaired in 6 months or less from the date of the damage or destrucƟon. Lessorshall noƟfy Lessee in wriƟng within 30 daysfrom 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 basisfor 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 (except as to the deducƟble which is Lessee's responsibility) 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 daysfollowing 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 1810
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 daysthereaŌer. 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, 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 ofsuch 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 asreasonably 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 daysfollowing the date of occurrence of such damage by giving a wriƩen terminaƟon noƟce to Lessee within 30 days aŌer the date of occurrence ofsuch 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 asreasonably 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 aŌersuch 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 lessthan 60 days following the giving of such noƟce. If Lessee givessuch 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 Premises or 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 Building address. Real Property Taxes shall also include any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Premises, and (ii) levied or assessed on machinery or equipment provided by Lessor to Lessee pursuant to this Lease.

10.2 Payment of Taxes. Lessor shall pay the Real Property Taxes applicable to the Premises provided, however, that Lessee shall pay to Lessor the amount, if any, by which Real Property Taxes applicable to the Premises increase over the fiscal tax year during which the Commencement Date Occurs("Tax Increase"). Payment of any such Tax Increase shall be made by Lessee to Lessor within 30 days aŌer receipt of Lessor's wriƩen statement seƫng forth the amount due and computaƟon thereof. If any such taxes shall cover any period of Ɵme prior to or aŌer the expiraƟon or terminaƟon of this Lease, Lessee's share of such taxes shall be prorated to cover only that porƟon of the tax bill applicable to the period that this Lease is in effect. In the event Lessee incurs a late charge on any Rent payment, Lessor may esƟmate the current Real Property Taxes, and require that the Tax Increase be paid in advance to Lessor by Lessee monthly in advance with the payment of the Base Rent. Such monthly payment shall be an amount equal to the amount of the esƟmated installment of the Tax Increase divided by the number of months remaining before the month in which said installment becomes delinquent. When the actual amount of the applicable Tax Increase is known, the amount of such equal monthly advance payments shall be adjusted asrequired to provide the funds needed to pay the applicable Tax Increase. If the amount collected by Lessor is insufficient to pay the Tax Increase when due, Lessee shall pay Lessor, upon demand, such addiƟonal sums as are necessary to pay such obligaƟons. Advance payments may be intermingled with other moneys of Lessor and shall not bear interest. In the event of a Breach by Lessee in the performance of its obligaƟons under this Lease, then any such advance payments may be treated by Lessor as an addiƟonal Security Deposit.

10.3 AddiƟonal Improvements. Notwithstanding anything to the contrary in this Paragraph 10.2, Lessee shall pay to Lessor upon demand therefor the enƟrety of any increase in Real Property Taxes assessed by reason of AlteraƟons or UƟlity InstallaƟons placed upon the Premises by Lessee or at Lessee's request or by reason of any alteraƟons or improvementsto the Premises made by Lessor subsequent to the execuƟon of this Lease by the ParƟes.

10.4 Joint Assessment. If the Premises are notseparately assessed, Lessee's liability shall be an equitable proporƟon of the Tax Increase for all of the land and improvements included within the tax parcel assessed, such proporƟon to be conclusively determined by Lessor from the respecƟve valuaƟons assigned in the assessor's work sheets or such other informaƟon as may be reasonably available.

10.5 Personal Property Taxes. Lessee shall pay, prior to delinquency, all taxes assessed against and levied upon Lessee Owned AlteraƟons, UƟlity InstallaƟons, Trade Fixtures, furnishings, equipment and all personal property of Lessee. When possible, Lessee shall cause its Lessee Owned AlteraƟons and UƟlity InstallaƟons, 1811
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 servicessupplied to the Premises, together with any taxesthereon. If any such services are not separately metered or billed to Lessee, Lessee shall pay a reasonable proporƟon, to be determined by Lessor, of all charges jointly metered or billed. 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 Lessorto 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") orsublet 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 willresult in a reducƟon of the Net Worth of Lessee by an amount greater than 25% of such Net Worth asit 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 consentshall, 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 treatsuch 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 orless, 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 orsubleƫng 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 orsubleƫng shall not consƟtute a consent to any subsequent assignment orsubleƫng. (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 orsublease, other than such obligaƟons as are contrary to or inconsistent with provisions of an assignment orsublease to which Lessor hasspecifically 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 transfersto Lessor all of Lessee's interest in all Rent payable on any sublease, and Lessor may collectsuch 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 ofsuch 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 undersuch sublease from the Ɵme of the exercise of said opƟon to the expiraƟon of such sublease; provided, however, Lessor shall not be 1812
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 isjeopardized 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 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, to provide reasonable evidence of insurance or surety bond, or to fulfill any obligaƟon under this Lease which endangers or threatens life or property, where such failure conƟnues for a period of 3 business daysfollowing 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 42, (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 daysfollowing wriƩen noƟce to Lessee.
(e) A Default by Lessee asto the terms, covenants, condiƟons or provisions of this Lease, or of the rules adopted under Paragraph 40 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 issuch that more than 30 days are reasonably required for its cure, then itshall 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'sinterest 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 exceedsthe 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'sright 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 lossthat 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. 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 damagesto 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 periodsshall 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 asit becomes due, in which event Lessee may sublet or assign, subject only 1813
to reasonable limitaƟons. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor'sinterests, 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'sright 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 improvementsfor 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 ofsaid 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 costsinclude, 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 amountshall 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 ofsuch 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 issuch 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'sright to seek reimbursement from Lessor for any such expense in excess of such offset. Lessee shall document the cost ofsaid 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 Building, or more than 25% of that porƟon of the Premises not occupied by any building, istaken 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 ofsuch 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 asto the porƟon of the Premises remaining, except that the Base Rentshall 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'srelocaƟon 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 1.9 above, Lessor agrees that: (a) if Lessee exercises any OpƟon, (b) if Lessee or anyone affiliated with Lessee acquires any rights to the Premises or other premises owned by Lessor and located within the same Project, if any, within which the Premisesis located, (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'sinterest in this Lease shall be deemed to have assumed Lessor's obligaƟon hereunder.

Brokersshall be third party beneficiaries of the provisions of Paragraphs 1.9, 15, 22 and 31. If Lessor failsto 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 failsto pay any amountsto 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 Agentsis 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' feesreasonably incurred with respect thereto. 1814

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 failto execute or deliver the Estoppel CerƟficate within such 10 day period, the RequesƟng Party may execute an Estoppel CerƟficate staƟng that: (i) the Lease isin 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 isthe 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 Rentshall 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 Rentshall 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 desiresto finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantorsshall 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 statementsfor the past 3 years. Allsuch financial statementsshall 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 thisis 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 orthis 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 assetsfor 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 warrantsto the Brokers that it has made, and isrelying solely upon, its own invesƟgaƟon asto the nature, quality, character and financial responsibility of the other Party to this Lease and asto 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 ifserved 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 otherspecify 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 isshown, 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, itshall 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 actshall 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 1815
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 thistransacƟon, asfollows:
(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 hasthe 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 servicesrendered, either in full or in part from the Lessor. An agent acƟng only for a Lessee hasthe 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 duƟesset 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 duƟesto the Lessor and the Lessee asstated 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 Premisesto 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 asspecified 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 asif prepared by one of the ParƟes, but rather according to itsfair meaning as a whole, asif 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, 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'srent, 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.
1816

30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor aŌer the execuƟon of this Lease, Lessee'ssubordinaƟon 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 opƟonsto 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 effortsto 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, asthe 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' feesreasonably 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 forsuch services and consultaƟon).

32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agentsshall 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 ofshowing 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. Allsuch acƟviƟesshall 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 "forsublease" signs, Lessee shall not place any sign upon the Premises without Lessor's prior wriƩen consent. All signs must comply with all Applicable Requirements.

35. TerminaƟon; Merger. Unlessspecifically 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'sfailure 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 ofsuch interest.

36. Consents. All requestsfor 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 consentsto 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 daysfollowing 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 Lessee has no intenƟon of thereaŌer assigning or subleƫng.

39.3 MulƟple OpƟons. In the event that Lessee has any mulƟple OpƟonsto extend or renew this Lease, a later OpƟon cannot be exercised unless the prior OpƟons have been validly exercised.

39.4 Effect of Default on OpƟons.
(a) Lessee shall have no right to exercise an OpƟon: (i) during the period commencing with the giving of any noƟce of Default and conƟnuing unƟlsaid Default is cured, (ii) during the period of Ɵme any Rent is unpaid (without regard to whether noƟce thereof is given Lessee), (iii) during the Ɵme Lessee is in Breach of 1817
this Lease, or(iv) in the event that Lessee has been given 3 or more noƟces of separate Default, whether or not the Defaults are cured, during the 12 month period immediately preceding the exercise of the OpƟon.
(b) The period of Ɵme within which an OpƟon may be exercised shall not be extended or enlarged by reason of Lessee's inability to exercise an OpƟon because of the provisions of Paragraph 39.4(a).
(c) An OpƟon shall terminate and be of no further force or effect, notwithstanding Lessee's due and Ɵmely exercise of the OpƟon, if, aŌer such exercise and prior to the commencement of the extended term or compleƟon of the purchase, (i) Lessee failsto pay Rent for a period of 30 days aŌersuch Rent becomes due (without any necessity of Lessor to give noƟce thereof), or (ii) if Lessee commits a Breach of this Lease.

40. MulƟple Buildings. If the Premises are a part of a group of buildings controlled by Lessor, Lessee agreesthat it will abide by and conform to all reasonable rules and regulaƟons which Lessor may make from Ɵme to Ɵme for the management,safety, and care of said properƟes, including the care and cleanliness of the grounds and including the parking, loading and unloading of vehicles, and to cause its employees, suppliers, shippers, customers, contractors and inviteesto so abide and conform. Lessee also agrees to pay its fair share of common expenses incurred in connecƟon with such rules and regulaƟons.

41. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligaƟon whatsoever to provide same. Lessee assumes all responsibility for the protecƟon of the Premises, Lessee, its agents and invitees and their property from the acts of third parƟes.

42. ReservaƟons. Lessor reservesto itself the right, from Ɵme to Ɵme, to grant, without the consent or joinder of Lessee,such easements, rights and dedicaƟons that Lessor deems necessary, and to cause the recordaƟon of parcel maps and restricƟons, so long assuch easements, rights, dedicaƟons, maps and restricƟons do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any documentsreasonably requested by Lessor to effectuate any such easement rights, dedicaƟon, map orrestricƟons.

43. Performance Under Protest. If at any Ɵme a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligaƟon to pay the money is asserted shall have the right to make payment "under protest" and such paymentshall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to insƟtute suit for recovery ofsuch sum. If it shall be adjudged that there was no legal obligaƟon on the part of said Party to pay such sum or any part thereof, said Party shall be enƟtled to recover such sum or so much thereof asit was not legally required to pay. A Party who does not iniƟate suit for the recovery of sums paid "under protest" within 6 months shall be deemed to have waived itsright to protest such payment.

44. Authority; MulƟple ParƟes; ExecuƟon.
(a) If either Party hereto is a corporaƟon, trust, limited liability company, partnership, or similar enƟty, each individual execuƟng this Lease on behalf of such enƟty represents and warrantsthat he or she is duly authorized to execute and deliver this Lease on its behalf. Each Party shall, within 30 days aŌer request, deliver to the other Party saƟsfactory evidence of such authority. (b) If this Lease is executed by more than one person or enƟty as "Lessee", each such person or enƟty shall be jointly and severally liable hereunder. It is agreed that any one of the named Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary thereto and bind all of the named Lessees, and Lessor may rely on the same asif all of the named Lessees had executed such document. (c) This Lease may be executed by the ParƟesin counterparts, each of which shall be deemed an original and all of which togethershall consƟtute one and the same instrument.

45. Conflict. Any conflict between the printed provisions of this Lease and the typewriƩen or handwriƩen provisionsshall be controlled by the typewriƩen or handwriƩen provisions.

46. Offer. PreparaƟon of this Lease by either Party or their agent and submission of same to the other Party shall not be deemed an offerto lease to the other Party. This Lease is not intended to be binding unƟl executed and delivered by all ParƟes hereto.

47. Amendments. This Lease may be modified only in wriƟng, signed by the ParƟesin interest at the Ɵme of the modificaƟon. Aslong asthey do not materially change Lessee's obligaƟons hereunder, Lessee agreesto make such reasonable non-monetary modificaƟonsto this Lease as may be reasonably required by a Lender in connecƟon with the obtaining of normal financing or refinancing of the Premises.

48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS LEASE.

49. ArbitraƟon of Disputes. An Addendum requiring the ArbitraƟon of all disputes between the ParƟes and/or Brokers arising out of this Lease is is not aƩached to this Lease.

50. Accessibility; Americans with DisabiliƟes Act.
(a) The Premises:
have not undergone an inspecƟon by a CerƟfied Access Specialist (CASp). Note: A CerƟfied Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construcƟon-related accessibility standards under state law. Although state law does not require a CASp inspecƟon of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspecƟon of the subject premises for the occupancy or potenƟal occupancy of the lessee or tenant, if requested by the lessee or tenant. The parƟesshall mutually agree on the arrangementsfor the Ɵme and manner of the CASp inspecƟon, the payment of the fee for the CASp inspecƟon, and the cost of making any repairs necessary to correct violaƟons of construcƟon-related accessibility standards within the premises. have undergone an inspecƟon by a CerƟfied Access Specialist (CASp) and it was determined that the Premises met all applicable construcƟon-related accessibility standards pursuant to California Civil Code §55.51 et seq. Lessee acknowledgesthat it received a copy of the inspecƟon report at least 48 hours prior to execuƟng this Lease and agreesto keep such report confidenƟal. have undergone an inspecƟon by a CerƟfied Access Specialist (CASp) and it was determined that the Premises did not meet all applicable construcƟon-related accessibility standards pursuant to California Civil Code §55.51 et seq. Lessee acknowledgesthat it received a copy of the inspecƟon report at least 48 hours prior to execuƟng this Lease and agreesto keep such report confidenƟal except as necessary to complete repairs and correcƟons of violaƟons of construcƟon related accessibility standards.
1818
In the event that the Premises have been issued an inspecƟon report by a CASp the Lessor shall provide a copy of the disability accessinspecƟon cerƟficate to Lessee within 7 days of the execuƟon of this Lease.
(b) Since compliance with the Americans with DisabiliƟes Act (ADA) and otherstate and local accessibility statutes are dependent upon Lessee'sspecific use of the Premises, Lessor makes no warranty or representaƟon as to whether or not the Premises comply with ADA or any similar legislaƟon. In the event that Lessee's use of the Premisesrequires modificaƟons or addiƟons to the Premisesin order to be in compliance with ADA or other accessibility statutes, Lessee agrees to make any such necessary modificaƟons and/or addiƟons at Lessee's expense.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY AIR CRE OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES ARE LOCATED.

The parƟes hereto have executed this Lease at the place and on the dates specified above their respecƟve signatures.

Executed at:

On:

By LESSOR:

The city of San Clemente
By:

Name Printed:

Title:

Phone:

Fax:

Email:

By:

Name Printed:

Title:

Phone:

Fax:

Email:

Address:

Federal ID No.:

Executed at:

On:

By LESSEE:

Trestles Property Management, LLC
By:

Name Printed:

Title:

Phone:

Fax:

Email:

By:

Name Printed:

Title:

Phone:

Fax:

Email:

Address:

Federal ID No.:

BROKER
Kidder Mathews
AƩn: Josh Cunningham
Title:

Address:

Phone:

Fax:

Email:

Federal ID No.:

Broker DRE License #:

Agent DRE License #:

BROKER
Lincoln Property Company
AƩn:

Title:

Address:

Phone:

Fax:

Email:

Federal ID No.:

Broker DRE License #:

Agent DRE License #:

AIR CRE * hƩps://www.aircre.com * 213-687-8777 * [email protected] 1819
NOTICE: No part of these works may be reproduced in any form without permission in wriƟng. 1820

ADDENDUM TO LEASE
Date: 6/11/2024
By and Between
Lessor: The city of San Clemente
Lessee: Trestles Property Management, LLC
Property Address: 1100 N. El Camino Real, San Clemente Ca 92672 (street address, city, state, zip)
Paragraph: 50

ADDENDUM TO THAT CERTAIN COMMERCIAL LEASE AGREEMENT, DATED FOR REFERENCE PURPOSES ONLY, JUNE 6/11/2024, MADE BY AND BETWEEN THE CITY OF SAN CLEMENTE, AS LESSOR, AND TRESTLES PROPERTY MANAGEMENT, LLC., AS LESSEE, FOR THE PROPERTY LOCATED AT 1100 N. EL CAMINO REAL, SAN CLEMENTE, CALIFORNIA.

1.LEASE PREPARATION: This Lease, Addendum, Exhibit and Guaranty of Lease have been prepared by Kidder Mathews, at the request of Lessor and Lessee. The Lessor and Lessee agree to indemnify, defend, and hold harmless Kidder Mathews, its respective agents, and employees from and against any claims, expenses, losses, and liabilities including without limitation, attorney fees and costs that may be occasioned as a result of completing this Standard Industrial/Commercial Lease Form, Addendum, Exhibit and Guaranty of Lease. Lessor and Lessee acknowledge being advised by Kidder Mathews, to have this Lease, Addendum, Exhibit and Guaranty of Lease reviewed by their respective attorneys.

2.RENTAL INCREASE: The base rent shall be calculated on a modified gross basis at an initial rate of $2.66 per rentable square foot with fixed annual increases of three percent (3%). The rent schedule as follows:
(2) $3,836
(3) $3,991
(4) $4,111
(5) $4,234

3.TENANT IMPROVEMENTS: Lessor shall deliver space in a clean, in good repair, fully operational, move-in condition. Costs associated with any additional Lessee improvements shall be paid at Lessee's and subject to Lessor's prior written approval.

In the event of any conflict between the provisions of this Addendum and the printed provisions of the Lease, this Addendum shall control.

AIR CRE * hƩps://www.aircre.com * 213-687-8777 * [email protected] NOTICE: No part of these works may be reproduced in any form without permission in wriƟng. 1821

OPTION(S) TO EXTEND TERM

STANDARD LEASE ADDENDUM
Dated: 6/11/2024
By and Between
Lessor: The city of San Clemente
Lessee: Trestles Property Management, LLC
Property Address: 1100 N. El Camino Real, San Clemente Ca 92672 (street address, city, state, zip)
Paragraph: 51 OPTION(S) TO EXTEND TERM. Subject to the terms, condiƟons and provisions of Paragraph 39, Lessor grants Lessee 1 opƟon(s) to extend the term of the Lease ("Extension OpƟon(s)"), with each Extension OpƟon being for a term of 36 months, commencing when the prior term expires("OpƟon Term(s)"). In order to exercise an Extension OpƟon, Lessee must give wriƩen noƟce ofsuch elecƟon to Lessor and Lessor must receive such noƟce at least 6 but not more than 9 months prior to the date that the applicable OpƟon Term would commence, Ɵme being of the essence. If Ɵmely and proper noƟficaƟon of the exercise of an Extension OpƟon is not given by Lessee and/or received by Lessor, such Extension OpƟon shall automaƟcally expire.

Except as specifically modified, the terms, condiƟons and provisions of the Lease shall apply during OpƟon Terms but the amount of Rent during OpƟon Termsshall be established by using the method(s) selected below (check method(s) to be used and fill in appropriately):

I. Consumer Price Index.
(a) During the OpƟon Term(s) which start(s) on , the monthly Base Rent shall be increased on and every months thereaŌer during such OpƟon Term(s) ("OpƟon Term CPI Increase Date(s)") commensurate with the increase in the OpƟon Term CPI (as herein defined) determined as follows: the monthly Base Rent scheduled for the month immediately preceding the first occurring OpƟon Term CPI Increase Date shall be mulƟplied by a fracƟon the denominator of which is the OpƟon Term Base CPI (as herein defined), and the numerator of which isthe OpƟon Term Comparison CPI (as herein defined). The amount so calculated shall consƟtute the new Base Rent unƟl the next OpƟon Term CPI Increase Date during the applicable OpƟon Term, but in no event shall any such new Base Rent be less than the Base Rent for the month immediately preceding the applicable OpƟon Term CPI Increase Date. (b) The term "OpƟon Term CPI" shall mean the Consumer Price Index of the Bureau of Labor StaƟsƟcs of the U.S. Department of Labor for (select one):

CPI W (Urban Wage Earners and Clerical Workers) or CPI U (All Urban Consumers), for (fill in Urban Area): or the area in which the Premisesis located, All Items(1982-1984 = 100). The term "OpƟon Term Comparison CPI" shall mean the CPI of the calendar month which is 2 full months prior to the applicable OpƟon Term CPI Increase Date. The term "OpƟon Term Base CPI" shall mean the CPI of the calendar month which is 2 full months prior to (select one):

Commencement Date of the Original Term, start of the applicable OpƟon Term, or (fill in month) . (c) If compilaƟon and/or publicaƟon of the CPI is transferred to another governmental department, bureau or agency or is disconƟnued, then instead the index most nearly the same asthe CPI shall be used to calculate the Base Rent increases hereunder. If the ParƟes cannot agree on such alternaƟve index, then the maƩer shall be submiƩed for decision to the American ArbitraƟon AssociaƟon in accordance with the then rules of said associaƟon and the decision of the arbitrators shall be binding upon the parƟes, with the cost of such arbitraƟon being paid equally by the ParƟes.

II. Fixed Percentage. During the OpƟon Term(s) which start(s) on , the monthly Base Rentshall be increased on and every monthsthereaŌer during such OpƟon Term(s) ("OpƟon Term Percentage Increase Date(s)") by percent ( %) of the monthly Base Rent scheduled to be paid for the month immediately preceding the applicable OpƟon Term Percentage Increase Date.

III. Fair Market Value.
(a) During the OpƟon Term(s) which start(s) on 10/1/2029 , the amount of Rent shall be the amount forecasted to be the fair market rental value of the Premises during such OpƟon Term established pursuant to the procedures, terms, assumpƟons and condiƟons set forth herein ("Fair Market Value"); provided, however, regardless ofsuch Fair Market Value, Base Rent during an OpƟon Term shall not be lessthan the Base Rent scheduled as of when the prior term expires.

StarƟng as of Lessee's exercise of the applicable Extension OpƟon (but not earlier than six (6) months before start of the applicable OpƟon Term), the ParƟes shall for thirty (30) days("NegoƟaƟon Period") aƩempt to agree upon the Fair Market Value. If during the NegoƟaƟon Period the ParƟes do not agree on the Fair Market Value, then the Fair Market Value shall be established pursuant to the procedures set forth herein, which shall be binding. (b) Each Party shall, within fiŌeen (15) days aŌer the end of the NegoƟaƟon Period, in wriƟng submit to the other Party such Party's determinaƟon of the Fair Market Value ("SubmiƩed Value(s)"). If a Party fails to Ɵmely provide a SubmiƩed Value, then the other Party's SubmiƩed Value shall be the Fair Market Value. If both ParƟes Ɵmely provide SubmiƩed Values, then each Party shall, within fiŌeen (15) days aŌer both ParƟes have exchanged SubmiƩed Values, in wriƟng noƟfy the other Party ofsuch Party'sselected valuator who shall meet the qualificaƟons set forth herein ("Advocate Valuator(s)"). Lessor and Lessee may select an Advocate Valuator who isfavorable to such Party's posiƟon and may, prior to or aŌer appointment of an Advocate Valuator, consult with such Party's Advocate Valuator. If a Party fails to Ɵmely and properly provide noƟce of such Party's chosen Advocate Valuator, then the other Party's SubmiƩed Value shall be the Fair Market Value. (c) If both ParƟes Ɵmely and properly designate Advocate Valuators, then such Advocate Valuators shall, within fiŌeen (15) days aŌer their selecƟon, choose a third (3rd) neutral valuator who shall meet the qualificaƟons set forth herein ("Neutral Valuator"). The Neutral Valuator shall be engaged jointly by Lessor and Lessee.

If Advocate Valuatorsfail to agree upon and Ɵmely appoint a Neutral Valuator, then the President of AIR CRE shall appoint such Neutral Valuator within fiŌeen (15) days aŌer request by either Party. If the President of AIR CRE does not Ɵmely appoint the Neutral Valuator, then either Party may file an appropriate legal acƟon for a 1822
judge with competent jurisdicƟon over the ParƟes to appoint the Neutral Valuator. (d) The Advocate Valuators and the Neutral Valuator ("Valuator(s)") shall be duly licensed real estate brokers or salespersons in good standing in the state in which the Premisesis located, shall have been acƟve over the five (5) year period before their appointment in the leasing of properƟes similar to the Premises within the general real estate market of the Premises. The Neutral Valuator shall addiƟonally not be related to or affiliated with either Party or Advocate Valuator, and shall not have previously represented in a real estate transacƟon a Party or anyone related to or affiliated with a Party. All maƩersto be determined by the Valuatorsshall be decided by a majority vote of the Valuators, with each Valuator having one (1) vote. The Valuators may, as the Valuators determine, hold hearings and require briefs, including market data and addiƟonal informaƟon. (e) Within thirty (30) days aŌerselecƟon of the Neutral Valuator, the Valuatorsshall first determine the Fair Market Value established by taking into account the terms, assumpƟons and condiƟons set forth herein ("Valuators' Market Value"), then decide which Party's SubmiƩed Value is closer in monetary amount to the Valuators' Market Value ("Selected Market Value"), then provide the ParƟes a copy of the Valuators' Market Value and finally noƟfy the ParƟes of the Selected Market Value. The Selected Market Value shall be the Fair Market Value. The Valuators shall have no right to decide a Selected Market Value which is a compromise to (or modificaƟon of) the SubmiƩed Values. The decision of the Valuators shall be binding upon the ParƟes. The Party whose SubmiƩed Value is not the Selected Market Value shall, within ten (10) days aŌer the Valuators decide the Selected Market Value, pay the fees and costs of all three (3) Valuators. (f) If the Fair Market Value has not been established before the start of the applicable OpƟon Term, then Lessee shall conƟnue to pay to Lessor rent in the amount payable for the month immediately preceding the start of such OpƟon Term and Lessor's acceptance ofsuch rent shall not waive, adversely affect or prejudice the ParƟes' right to complete establishment of the Fair Market Value or Lessor's right to collect the full amount of the Fair Market Value once the Fair Market Value is established. Lessee shall, within ten (10) days aŌer establishment of the Fair Market Value, pay to Lessor any deficiency in rent then due for the OpƟon Term.

Following establishment of Fair Market Value, the ParƟesshall, within ten (10) days aŌer request by either Party, sign an amendment to this Lease to confirm the Fair Market Value and the expiraƟon date of this Lease, but the ParƟes' failure to request or to sign such an amendment shall not affect establishment of the Fair Market Value or extension of the Lease term.
(g) The Valuators, in deciding the Valuators' Market Value, shall take into account rent rates, rent abatements, periodic rent increases, real property taxes, insurance premiums and other operaƟng expenses, tenant improvement and other applicable allowances, building services, length of lease term and other factors professional real estate brokers and/or appraisers customarily consider in determining fair market rent of property in an arm'slength transacƟon by ready, willing and able parƟes for space of comparable locaƟon, size, age, condiƟon, quality, parking, visibility, view, signage and accessibility if the Premises were marketed in a normal and customary manner for a reasonable length of Ɵme on the open market to be leased to a tenant with financial strength and credit worthiness comparable to Lessee and guarantors (if any) of this Lease (as of Lessee's exercise of the Extension OpƟon) for a term comparable to the length of the applicable OpƟon Term and used for the Agreed Use (or other reasonably comparable uses). The Valuators, in deciding the Valuators' Market Value, shall not consider as a comparable transacƟon any of the following: a sublease, lease assignment, lease renewal or extension; lease with a tenant that has equity, isrelated to or affiliated with the landlord; or a lease ofspace that wassubject to a right of first refusal, right of first offer, expansion opƟon or other encumbrances. The Valuators, in deciding the Valuators' Market Value, shall reduce the Fair Market Value on account of AlteraƟons and improvements made by Lessee to the extent the cost thereof was paid solely by Lessee (in excess of any applicable improvement allowance, abated rent in lieu of improvement allowance or other consideraƟon provided by Lessor for Lessee's improvement of the Premises), shall not reduce the Fair Market Value on account of any real estate brokerage commission savings by Lessor, and shall not reduce the Fair Market Value on account of deferred maintenance or repair of the Premises for which Lessee wasresponsible under the Lease but did not perform.

IV. Fixed Rental Adjustment(s) ("FRA").

The monthly Base Rent shall be increased to the following amounts on the dates set forth below:

On (fill in FRA Adjustment Date(s)): The new Base Rent shall be:

V. ConƟnuaƟon of Original Term Adjustments.

The monthly Base Rent during the OpƟon Term(s) which start(s) on shall be increased in accordance with the same formula provided in the Lease to be used to calculate increases in the Base Rent during the Original Term of the Lease.

BROKER'S FEE: For each adjustment in Base Rent specified above, the Brokers shall be paid a Brokerage Fee in accordance with paragraph 15 of the Lease or if applicable, paragraph 9 of the Sublease.

AIR CRE * hƩps://www.aircre.com * 213-687-8777 * [email protected] NOTICE: No part of these works may be reproduced in any form without permission in wriƟng. 1823

GUARANTY OF LEASE
WHEREAS Trestles Property Management, LLC ("Lessee") desires to lease from The city of San Clemente ("Lessor") the premises commonly known as(street address, city, state, zip) 1100 N. El Camino Real, San Clemente Ca 92672 ("Premises") pursuant to a lease dated for reference purposes only as of 6/11/2024 ("Lease").

WHEREAS, as a material inducement to and in consideraƟon of Lessor execuƟng the Lease, Lessor requires Gary Ward ("Guarantor") to execute this Guaranty of Lease ("Guaranty"); Guarantor desires Lessee to consummate the Lease. Accordingly, contemporaneous with execuƟon of the Lease, Guarantor is execuƟng this Guaranty to induce Lessor to execute the Lease with Lessee.

NOW THEREFORE, Guarantor hereby uncondiƟonally and irrevocably guarantees and promises to perform and be liable for any and all obligaƟons and liabiliƟes of Lessee under the Lease, including, but not limited to, payment of all rents and all other sums payable by Lessee under the Lease and performance by Lessee of each and every one of the terms, condiƟons and covenants to be kept and performed by Lessee under the Lease.

Guarantor hereby agreesthat, without the consent of, or noƟce to, Guarantor and without affecƟng or in any way releasing Guarantor's obligaƟons under this Guaranty: (i) Lessor and Lessee may, by agreement or course of conduct, amend, extend, renew or otherwise alter any term, covenant or condiƟon of the Lease, or the Lease may be assigned by Lessor or Lessee (and their successors and assigns) and this Guaranty shall guarantee all obligaƟons of Lessee under the Lease as so amended, extended, renewed, altered or assigned; (ii) Lessor may release, change or add a party to the Lease and/or a guarantor of the Lease; (iii) Lessor may exercise, not exercise, delay exercising, impair, modify, limit, terminate or suspend any of Lessor's rights or remedies under the Lease or this Guaranty; and (iv) Lessor may permit all or any part of the Premises to be subleased, or the Lease to be assigned, assumed, transferred, mortgaged or encumbered.

Guarantor hereby agreesthat no noƟce of nonperformance or default by Lessee or by another guarantor need be given to Guarantor. This Guaranty is a conƟnuing and irrevocable guarantee. Guarantor waives the benefit of any law allowing Guarantor to revoke this Guaranty. No provision of this Guaranty or rights of Lessor hereunder may be waived, nor may any Guarantor be released from any obligaƟon under this Guaranty except by a wriƟng duly executed by Lessor.

Guarantor hereby waives and agrees not to assert or take advantage of any right or defense based on: (i) noƟce of acceptance of this Guaranty; (ii) demands (including demands for payment or performance), presentaƟon and protest; (iii) any statute of limitaƟons; (iv) requiring Lessor to proceed against Lessee, any Guarantor or other guarantor or any other person (as herein defined) liable to Lessor, or to proceed against these persons in any order; (v) requiring Lessor to apply any security deposit or othersecurity; (vi) requiring Lessor to proceed under any other remedy Lessor may have before proceeding against Guarantor; (vii) any right of subrogaƟon that Guarantor may have against Lessee or other guarantors; (viii) any right or defense that may arise by reason of the incapacity, lack of authority, death or disability of Lessee, any guarantor or any other person; (ix) any right or defense arising by reason of the absence, impairment, modificaƟon, limitaƟon, destrucƟon or cessaƟon (in bankruptcy, by an elecƟon of remedies, or otherwise) of the liability of Lessee, of the subrogaƟon rights of Guarantor, or of the rights of Guarantor to proceed against Lessee for reimbursement; (x) limiƟng Guarantor's obligaƟons to not exceed Lessee's obligaƟons; and (xi) noƟces(including noƟces of adverse change in the financial status of Lessee or other facts that increase the risk to Guarantor).

The obligaƟons of Guarantor under this Guaranty shall not be altered, limited or affected by any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganizaƟon or liquidaƟon of Lessee, Guarantor, any other guarantor, or by any defense that Lessee, Guarantor or any other guarantor may have by reason of any order, decree, or decision of any court or administraƟve body resulƟng from any such proceeding.

Guarantorsubordinates any and all exisƟng or future indebtedness of Lessee to Guarantor to Lessee's obligaƟons owed to Lessor under the Lease. Any recovery by Lessor from any other guarantor or insurer shall first be credited to the porƟon of Lessee'sindebtedness to Lessor which exceeds the maximum liability of Guarantor under this Guaranty. If a person comprising Guarantor is married, such Guarantor expressly agrees that recourse may be had againstsuch Guarantor's separate or community property.

Guarantorshall, upon ten (10) days' prior wriƩen noƟce from Lessor, provide Lessor with Guarantor's financial statements for the current year and tax returns for the three (3) preceding years and, if such isthe normal pracƟce of Guarantor, such statementsshall be prepared in accordance with generally accepted accounƟng principles and audited by an independent cerƟfied public accountant. Lessor shall maintain Guarantor's financial statements and tax returns in confidence butshall be permiƩed to disclose Guarantor's financial statements and tax returns to prospecƟve lenders, purchasers or othersfor a bona fide business purpose.

Guarantorshall, upon ten (10) days' prior wriƩen noƟce from Lessor, in wriƟng reaffirm that this Guaranty remains and conƟnuesin full force and effect, that no event has occurred that would invalidate the Guaranty or excuse Guarantor's obligaƟons or performance under the Guaranty, and that the Guaranty appliesto the Lease, as amended, extended, renewed, altered or assigned. Guarantor shall, upon ten (10) days' prior wriƩen noƟce from Lessor, execute such other and further documents and do such further acts as may be reasonably necessary or required by Lessor to effectuate the intent of the parƟes and carry out the terms of this Guaranty.

Guarantor agrees that any suit, acƟon or proceeding arising directly or indirectly from the Guaranty or the Lease shall be liƟgated only in courts located within the county and state in which the Premises is located. Guarantor irrevocably consents to the jurisdicƟon of any local,state or federal court located within the county and state in which the Premises is located, and waives and agrees not to assert by way of moƟon, defense or otherwise in any suit, acƟon, or proceeding any claim that Guarantor is not personally subject to the jurisdicƟon of the above-named courts, that such suit, acƟon, or proceeding is brought in an inconvenient forum, or that the venue of such acƟon, suit, or proceeding is improper.

Each person which comprises Guarantor consents to service of process by a naƟonally recognized overnight courier service (such as Federal Express) at either the Premises or at the Guarantor's address for noƟces set forth below, and shall be deemed served and received three (3) business days aŌer deposit with the overnight mail service. Guarantor irrevocably waives and agrees not to plead or claim in any acƟon or proceeding thatsuch service of process was in any way invalid or ineffecƟve. Lessor reserves the right to serve processin any other manner permiƩed by law. 1824
This Guaranty shall be governed by the laws of the state in which the Premises is located and, for purposes of conflicts of law, Guarantor shall be treated asif resident of or domiciled in such state. Guarantor waives the right to a jury trial of any cause of acƟon, claim, counterclaim or cross-complaint in any acƟon, proceeding or other hearing brought against Guarantor. If and to the extent the Lease requires Lessor and Lessee to arbitrate any disputes, then Guarantor also agrees to arbitrate such disputes in the same arbitraƟon to the extent related to the Guaranty and upon the same terms and condiƟons provided in the Lease.

If Lessor brings an acƟon or proceeding against Guarantor to enforce this Guaranty, 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, the party who substanƟally obtains or defeats the reliefsought, asthe case may be, whether by compromise, seƩlement, judgment, or the abandonment by the other party of its claim or defense. The aƩorneys' fees award shall not be computed in accordance with any court fee schedule, but shall be such asto fully reimburse all aƩorneys' feesreasonably incurred.

This Guaranty consƟtutes the enƟre agreement between Guarantor and Lessor with respect to the subject maƩer of this Guaranty and supersedes all prior agreements, understandings, negoƟaƟons, representaƟons and discussions, whether verbal or wriƩen, of the parƟes, pertaining to such subject maƩer. Guarantor is not relying on any representaƟons, warranƟes or inducements from Lessor that are not expressly stated in this Guaranty.

If any provision of this Guaranty is determined to be illegal or unenforceable, all other provisions hereof shall nevertheless be effecƟve. The waiver or failure to enforce any provision of this Guaranty shall not operate as a waiver of any other breach ofsuch provision or any other provisions of this Guaranty, nor shall any single or parƟal exercise of any right, power or privilege preclude any other or further such exercise or the exercise of any other right, power or privilege. Time is strictly of the essence under this Guaranty and any amendment, modificaƟon or revision of this Guaranty.

Each person execuƟng this Guaranty represents and warrants to Lessor that (i) each individual execuƟng this Guaranty has the legal power, right, and actual authority to bind Guarantor; (ii) Guarantor has the legal right, power and authority to enter into and perform this Guaranty; (iii) all requisite acƟon by or on behalf of a corporaƟon, limited liability company, partnership (general or limited), trust or other legal enƟty ("enƟty") has been taken for this Guaranty to be duly authorized by such enƟty or Guarantor; (vi) no consent of any partner, shareholder, member, creditor, investor, government, judicial or administraƟve body or other party isrequired in connecƟon with Guarantor execuƟng this Guaranty; (v) this Guaranty is a valid and legally binding obligaƟon of Guarantor; (vi) the execuƟon and delivery of this Guaranty does not conflict with or result in the material breach of any terms, condiƟons or provisions of, or consƟtute a default under, any bond, note, or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnership agreement or other agreements or instruments to which Guarantor is a party or by which Guarantor is bound; and (vi) Guarantor will derive a substanƟal and material economic benefit from Lessor's execuƟon of the Lease. If Guarantor is an enƟty, Guarantor shall, concurrently with the execuƟon of this Guaranty (or upon ten (10) days' prior wriƩen noƟce from Lessor), deliver to Lessor a cerƟfied copy of a resoluƟon or other documentaƟon evidencing that such enƟty is authorized or raƟfiesthe enƟty's execuƟon of this Guaranty.

The term "person" as used in this Guaranty shall include an individual and/or an enƟty. If more than one (1) person comprises Guarantor, the obligaƟons ofsuch persons shall be joint and several. The unenforceability of this Guaranty or Lessor's elecƟon not to enforce this Guaranty against one (1) or more persons shall not affect the obligaƟons of the remaining persons which comprise Guarantor or the enforceability of this Guaranty againstsuch remaining persons.

Any noƟce, request, demand, instrucƟon or other communicaƟon to be given to Guarantor under this Guaranty shall be in wriƟng and shall be delivered at either the Premises or the address set forth beneath the Guarantor's signature below, or to such other place as Guarantor may from Ɵme to Ɵme in wriƟng designate by at least fiŌeen (15) days' noƟce to Lessor.

When the context and construcƟon so requires, all words used in the singular in this Guaranty shall be deemed to have been used in the plural. The term "Lessee" as used in this Guaranty shall mean the Lessee named in the Lease, any assignee of Lessee'sinterest under the Lease and their respecƟve successors and assigns. The term "Lessor" as used in this Guaranty shall mean the Lessor named in the Lease, any assignee of Lessor, whether by outright assignment, assignment for security or otherwise. Lessor may without Guarantor's consent assign this Guaranty, voluntarily or by operaƟon of law. This Guaranty appliesto, inures to the benefit of, and binds all persons that comprise Guarantor, their heirs, devisees, legatees, executors, administrators, representaƟves, successors and assigns.

Signatures to this Guaranty accomplished by means of electronic signature or similar technology shall be legal and binding. This Guaranty may be executed in counterparts.

Guarantor is advised to seek advice of legal counsel before signing this Guaranty. Guarantor acknowledges that AIR CRE, the real estate brokers or their agents or employees have not made any representaƟon or statement as to the legal sufficiency or effect or tax consequences of this Guaranty or the Lease.

GUARANTOR
Gary Ward
Executed At:

On:

By:

Name Printed:

Title:

Address:

Email Address:

By:

Name Printed:

Title:

Address:

Email Address:

AIR CRE * hƩps://www.aircre.com * 213-687-8777 * [email protected] NOTICE: No part of these works may be reproduced in any form without permission in wriƟng. 1825

RULES AND REGULATIONS FOR

STANDARD OFFICE LEASE
Date: 6/11/2024
By and Between
Lessor: The city of San Clemente
Lessee: Trestles Property Management, LLC
Property Address: 1100 N. El Camino Real, San Clemente Ca 92672 (street address, city, state, zip)

GENERAL RULES

1. Lessee shall not suffer or permit the obstrucƟon of any Common Areas, including driveways, walkways and stairways.

2. Lessor reserves the right to refuse access to any persons Lessor in good faith judges to be a threat to the safety and reputaƟon of the Project and its occupants.

3. Lessee shall not make or permit any noise or odors that annoy or interfere with other lessees or persons having business within the Project.

4. Lessee shall not keep animals or birds within the Project, and shall not bring bicycles, motorcycles or other vehicles into areas not designated as authorized for same.

5. Lessee shall not make, suffer or permit liƩer except in appropriate receptacles for that purpose.

6. Lessee shall not alter any lock or install new or addiƟonal locks or bolts.

7. Lessee shall be responsible for the inappropriate use of any toilet rooms, plumbing or other uƟliƟes. No foreign substances of any kind are to be inserted therein.

8. Lessee shall not deface the walls, parƟƟons or other surfaces of the Premises or Project.

9. Lessee shall not suffer or permit anything in or around the Premises or Building that causes excessive vibraƟon or floor loading in any part of the Project.

10. Furniture, significant freight and equipment shall be moved into or out of the building only with the Lessor's knowledge and consent, and subject to such reasonable limitaƟons, techniques and Ɵming, as may be designated by Lessor. Lessee shall be responsible for any damage to the Office Building Project arising from any such acƟvity.

11. Lessee shall not employ any service or contractor for services or work to be performed in the Building, except as approved by Lessor.

12. Lessor reservesthe right to close and lock the Building on Saturdays, Sundays and Building Holidays, and on other days between the hours of 9 P.M. and 5 A.M. of the following day. If Lessee usesthe Premises during such periods, Lessee shall be responsible for securely locking any doors it may have opened for entry.

13. Lessee shall return all keys at the terminaƟon of its tenancy and shall be responsible for the cost of replacing any keys that are lost.

14. No window coverings, shades or awnings shall be installed or used by Lessee.

15. No Lessee, employee or invitee shall go upon the roof of the Building.

16. Lessee shall not suffer or permit smoking or carrying of lighted cigars or cigareƩes in areas reasonably designated by Lessor or by applicable governmental agencies as non-smoking areas.

17. Lessee shall not use any method of heaƟng or air condiƟoning other than as provided by Lessor.

18. Lessee shall not install, maintain or operate any vending machines upon the Premises without Lessor's wriƩen consent.

19. The Premises shall not be used for lodging or manufacturing, cooking or food preparaƟon.

20. Lessee shall comply with all safety, fire protecƟon and evacuaƟon regulaƟons established by Lessor or any applicable governmental agency.

21. Lessor reservesthe right to waive any one of these rules orregulaƟons, and/or as to any parƟcular Lessee, and any such waiver shall not consƟtute a waiver of any other rule or regulaƟon or any subsequent applicaƟon thereof to such Lessee.

22. Lessee assumes all risksfrom theŌ or vandalism and agrees to keep its Premises locked as may be required.

23. Lessor reservesthe right to make such other reasonable rules and regulaƟons as it may from Ɵme to Ɵme deem necessary for the appropriate operaƟon and safety of the Project and its occupants. Lessee agreesto abide by these and such rules and regulaƟons.

PARKING RULES

1. Parking areas shall be used only for parking by vehicles no longer than full size, passenger automobiles herein called "PermiƩed Size Vehicles." Vehicles other than PermiƩed Size Vehicles are herein referred to as "Oversized Vehicles."

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

3. Parking sƟckers or idenƟficaƟon devicesshall be the property of Lessor and be returned to Lessor by the holder thereof upon terminaƟon of the holder's parking privileges. Lessee will pay such replacement charge as isreasonably established by Lessor for the loss ofsuch devices.

4. Lessor reserves the right to refuse the sale of monthly idenƟficaƟon devices to any person or enƟty that willfully refuses to comply with the applicable rules, regulaƟons, laws and/or agreements.

5. Lessor reserves the right to relocate all or a part of parking spaces from floorto floor, within one floor, and/or to reasonably adjacent offsite locaƟon(s), and to reasonably allocate them between compact and standard size spaces, as long as the same complies with applicable laws, ordinances and regulaƟons.

6. Users of the parking area will obey all posted signs and park only in the areas designated for vehicle parking.

7. Unless otherwise instructed, every person using the parking area isrequired to park and lock his own vehicle. Lessor will not be responsible for any damage to vehicles, injury to persons or loss of property, all of which risks are assumed by the party using the parking area.

8. ValidaƟon, if established, will be permissible only by such method or methods as Lessor and/or itslicensee may establish at rates generally applicable to visitor 1826
parking.

9. The maintenance, washing, waxing or cleaning of vehicles in the parking structure or Common Areasis prohibited.

10. Lessee shall be responsible for seeing that all of its employees, agents and invitees comply with the applicable parking rules, regulaƟons, laws and agreements.

11. Lessorreserves the right to modify these rules and/or adopt such other reasonable and non-discriminatory rules and regulaƟons as it may deem necessary for the proper operaƟon of the parking area.

12. Such parking use as is herein provided isintended merely as a license only and no bailment isintended orshall be created hereby.

AIR CRE * hƩps://www.aircre.com * 213-687-8777 * [email protected] NOTICE: No part of these works may be reproduced in any form without permission in wriƟng. 1827
910 Calle Negocio
2nd Floor
San Clemente, California
www.san-clemente.org

AGENDA REPORT

CITY OF SAN CLEMENTE

CITY COUNCIL MEETING
CITY OF SAN CLEMENTE 1
Meeting Date: June 18, 2024 Agenda Item: 11L.

Submitted By: Community Development
Prepared By: Adam Atamian, Community Development Director Subject:
..titl e

CONSIDERATION OF A RESOLUTION AWARDING A PROFESSIONAL SERVICES AGREEMENT TO WYNNE CRE, INC. FOR THE LEASE OF 1030 CALLE NEGOCIO (APN – 688 ..body-142-35) AND AUTHORIZING THE CITY MANAGER TO EXECUTE THE AGREEMENT Fiscal Impact:

Fee in the form of commission not to exceed 6% of total rent for the length of the lease term.

Summary:

The commercial building located at 1030 Calle Negocio in the Rancho San Clemente business park was previously rented to Family Assistance Ministries (FAM). As of April 30 2024, the building has been vacant and the City has expressed interest in contracting with a commercial real estate firm to market the property to prospective tenants and assist in negotiations for a multi-year lease. Before the City Council is the approval of a professional services agreement with Wynne CRE, INC. (“WynneCRE”), a local firm, for these services.

Background:

At the July 19, 2022 City Council meeting, a final building lease extension was granted by the City Council, amending the agreement with FAM through April 30 2024. During that period, the rental rate agreed upon was $6,890 and not to exceed $10,000 per month, below the market rate of comparable properties leasing in the area. The building is no longer occupied by FAM and the City is looking to enter into a new lease with a qualified lessee.

Discussion:

To better leverage the City’s property, use and financial investment, staff recommends the assistance of a local commercial real estate consulting firm. A qualified real estate firm will provide services to properly analyze the property, provide a comparable market analysis to develop a current market lease value, and market the property to solicit fair-market lease proposals for future City Council approval, on behalf of the City.

Pursuant to City Policy 201-2-3, City staff conducted a Request For Proposals to facilitate the selection of a professional services contractor to carry out these services and sought out local commercial real estate consultants. After careful consideration of all proposals submitted, including interviews with two of the firms, staff determined that the proposal submitted by WynneCRE was the most advantageous to the City for this particular project. This decision was based on the combination of various factors, including experience of the firm, demonstration of the quality of the services provided, understanding of the project, proposed timeline of the project, and cost (which is fair and reasonable).
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Meeting Date: June 18, 2024 Agenda Item: 11L.

CITY OF SAN CLEMENTE 2
Environmental Review/Analysis:

Not a “project” under the California Environmental Quality Act Guidelines Section 15378 (14 CCR 15378). Entering into a contract with a professional services contractor to lease a City owned building has no potential result in either a direct or physical change in the environment or a reasonably foreseeable indirect physical change in the environment.

Council Options:
 Adopt Resolution No. 24-102, which approves the Professional Services Agreement with WynneCRE (Attachment 2).
 Modify and adopt Resolution No. 24-102.
 Continue the item and direct staff to provide additional information.  Deny Resolution No. 24-102, which will result in the City not obtaining the services of a qualified real estate firm to market the property for lease.

Recommended Actions:

Staff Recommendation ..recommendation
City staff recommends that the City Council Adopt Resolution No. 24-102 (Attachment 1) to do the following:

1. Approve the Professional Services Agreement, provided as Attachment 2, for Commercial Real Estate Consulting services with WynneCRE; and

2. Authorize the City Manager to execute the Professional Services Agreement with WynneCRE for a fee in the form of commission not to exceed 6% of total rent for the length of the lease term.
..end
Attachment:

1. Resolution No. 24-102

2. Professional Services Agreement with Wynne CRE, Inc.

Notification:

All proposers.
1829
Attachment 1
RESOLUTION NO. 24-102

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

SAN CLEMENTE, CALIFORNIA, AWARDING A

PROFESSIONAL SERVICES AGREEMENT TO WYNNE
CRE, INC. FOR COMMERCIAL REAL ESTATE
CONSULTING SERVICES FOR THE LEASE OF 1030 CALLE
NEGOCIO (APN – 688-142-35) AND AUTHORIZING THE

CITY MANAGER TO EXECUTE THE AGREEMENT
WHEREAS, pursuant to City Policy 201-2-3, the City delegates the authority to engage with prospective commercial real estate consultant firms following a competitive bid process to the City Manager, or their designee; and
WHEREAS, the subject property at 1030 Calle Negocio, APN 688-142-35, legally described as N TR 12766 BLK LOT 10, owned by the City, is currently vacant and is available for a prospective tenant and multi-year lease; and
WHEREAS, in April, 2024, the City initiated a Request for Proposals from local commercial real estate firms for the leasing of City-owned property at 1030 Calle Negocio, and obtained three proposals for such; and
WHEREAS, the City reviewed the proposals and interviewed firms based on their proposed services and the City’s specific needs for the successful completion of this work and services; and
WHEREAS, City staff determined that the proposal submitted by Wynne CRE, INC. was the most advantageous to the City for this particular lease of property at 1030 Calle Negocio, as this decision was based on the combination of various factors including experience of the firm, demonstration of the quality of the services provided, understanding of the project, proposed timeline of the project, and the cost, which is fair and reasonable.

NOW, THEREFORE, the City Council of the City of San Clemente does hereby find, determine and resolve as follows:

Section 1. The above recitals are true and correct and incorporated herein by reference.

Section 2. A Professional Services Agreement for professional commercial real estate consulting services is hereby awarded to Wynne CRE, Inc. for the lease of 1030 Calle Negocio (APN – 688-142-35); and
Section 3. The City Manager, or the City Manager's designee, is authorized and directed to execute the Professional Services Agreement with Wynne CRE, INC. for a fee in the form of commission not to exceed 6% of total rent for the length of the term, in a form substantially similar to that presented to the City Council on June 18, 2024, and; Section 4. The City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.
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Resolution No. 24-102 Page 2
PASSED AND ADOPTED this _____ day of ____________________, 2024.

ATTEST:
___________________________ __________________________
City Clerk of the City of Mayor of the City of San
San Clemente, California Clemente, California

STATE OF CALIFORNIA )
COUNTY OF ORANGE ) §

CITY OF SAN CLEMENTE )
I, LAURA CAMPAGNOLO, City Clerk of the City of San Clemente, California, do hereby certify that Resolution No. 24-102 was adopted at a regular meeting of the City Council of the City of San Clemente held on the _______ day of _______________________, _________, by the following vote:

AYES:

NOES:

ABSENT:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Clemente, California, this _____ day of _________________, ________. __________________________
CITY CLERK of the City of
San Clemente, California
Approved as to form:
_____________________________
Elizabeth A. Mitchell, City Attorney
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910 Calle Negocio
2nd Floor
San Clemente, California
www.san-clemente.org

AGENDA REPORT

CITY OF SAN CLEMENTE

CITY COUNCIL MEETING
CITY OF SAN CLEMENTE 1
Meeting Date: June 18, 2024 Agenda Item: 11M.

Submitted By: Public Works
Prepared By: Fatana Temory, Management Analyst
Zak Ponsen, Assistant City Engineer
Subject:
..titl e

CONSIDERATION OF A RESOLUTION AWARDING TWO PROFESSIONAL SERVICES AGREEMENTS TO

LAZ PARKING CALIFORNIA LLC FOR TROLLEY OPERATION SERVICES, AUTHORIZING THE CITY

MANAGER TO EXECUTE THE AGREEMENTS IN A COMBINED AMOUNT NOT TO EXCEED $2,416,757.88 FOR THREE YEARS AND FINDING THE PROJECT STATUTORILY EXEMPT FROM THE CALIFORNIA ENVIRONMEN ..body TAL QUALITY ACT
Fiscal Impact:

The proposed three year contracts are for a total of $2,416,757.88, of which, the Red and Blue Line costs are $1,871,665.80, and the Green Line cost is $545,092.08. The services for the Trolley Program is funded from the Transit Fund that includes a 90% grant from OCTA. There is currently $592,850 in revenue in FY 2024/25 with an anticipated cost of $781,915.50. The proposed contracts also include two (2) one-year renewal options.

The City is currently anticipating additional funding in FY 2024/25 and in future years from Project V Grant for additional lines of service and operating dates. OCTA anticipates finalization of the new Project V Grant approval in August 2024. It is anticipated that the City will receive new grant funds for expansion of the Trolley Program for other services such as a daily Green Line for the southerly area of the City for the Summer season from July 1 through September 30. The City has requested the new grant reimburse the City for the Green Line Summer 2024 season. Since the 2024 Project V Grant has not been finalized, there is a chance that reimbursement for the Trolley Program will not be funded as expected. If additional funding is not adequate, staff will return to the City Council to consider other funding options or revisions to service levels. The proposed contracts allow the City to withdraw or reduce service if needed.

Summary:

Before the City Council is the approval of two Professional Services Agreements between LAZ Parking California LLC for Trolley Operation Services. Due to the delayed timing by OCTA for the 2024 Project V Grant funding award it may necessitate unanticipated changes to the funding for Trolley Operation Services. It is expected that once OCTA grant funding is determined (approximately August 2024) staff will return to Council with the final grant acceptance for the new 2024 Project V Grant funding, and address any necessary changes to the Trolley Program if grant funding is not fully received as expected.

Background:

The City Trolley Program is funded through a Project V Grant from the Orange County Transportation Authority (OCTA). OCTA reimburses the City for 90% of operational costs within the allotted annual grant amounts. The standard schedule of services in the Grant Agreement 1856
Meeting Date: June 18, 2024 Agenda Item: 11M.

CITY OF SAN CLEMENTE 2
provides for daily trolley operations between Memorial Day weekend and the final weekend in September on both the Red Line (downtown) and Blue Line (Dana Point). The City has recently submitted a letter to OCTA through the “Semi-Annual Review” process requesting weekend service on the Red Line year-round for FY 2024. If approved, the grant will also fund Green Line operations.

The current contract with LAZ Parking is set to expire on June 30, 2024. Pursuant to City Policy 201-2-3, Staff conducted a Request for Proposals (RFP) for Trolley Operation Services on May 14, 2024 through PlanetBids. Staff advertised a Request for Proposals (RFP) to qualified transportation service contractors to provide trolley operations services for the period of three years commencing July 1, 2024, with the option, at the City's sole discretion, to award two additional years upon successful demonstration of exemplary contract performance.

On May 28, 2024, the City received proposals from two (2) vendors: LAZ Parking California, LLC (LAZ Parking) and Parking Concepts Inc., dba Transportation Concepts (TC). Neither company are considered a local, San Clemente based company and staff is unaware of a local business qualified to perform these services.

After careful consideration and evaluation, Staff found LAZ Parking the highest-ranked firm.

Among the two proposals received, LAZ Parking demonstrated superior expertise in San Clemente and the City’s trolley system, extensive knowledge in Orange Country and exceptional ability working alongside OCTA to provide accurate data analysis required for Project V reporting.

In addition, LAZ Parking is currently the provider for all the surrounding Orange County trolley programs including Dana Point, Laguna Niguel, Laguna Beach, San Juan Capistrano and Newport Beach.

Staff’s recommendation is based on the combination of various factors including technical expertise, methodology and work plan, project experience, staff qualifications, delivery schedule, quality control, local knowledge and cost. Staff recommends the contract be awarded to LAZ Parking.

The cost summary for each potential vendor was as follows:

LAZ Parking: Red & Blue Lines

YEAR HOURLY RATE ESTIMATED
ANNUAL

SERVICE HOURS
TOTAL
1 $76.75 7,890 $605,557.50
2 $79.05 7,890 $623,704.50
3 $81.42 7,890 $642,403.80
Grand Total Years 1-3 $1,871,665.80
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Meeting Date: June 18, 2024 Agenda Item: 11M.

CITY OF SAN CLEMENTE 3
LAZ Parking: Green Line

YEAR HOURLY RATE ESTIMATED
ANNUAL

SERVICE HOURS
TOTAL
1 $99.75 1,768 $176,358.00
2 $102.74 1,768 $181,644.32
3 $105.82 1,768 $187,089.76
Grand Total Years 1-3 $545,092.08
Transportation Concepts: Red & Blue Lines

YEAR HOURLY RATE ESTIMATED
ANNUAL

SERVICE HOURS
TOTAL
1 $65.52 7,890 $516,952.80
2 $67.81 7,890 $535,046.15
3 $70.19 7,890 $553,772.76
Grand Total Years 1-3 $1,605,771.71
Transportation Concepts: Green Line

YEAR HOURLY RATE ESTIMATED
ANNUAL

SERVICE HOURS
TOTAL
1 $93.92 7,890 $166,050.56
2 $97.21 7,890 $171,862.33
3 $100.61 7,890 $177,877.51
Grand Total Years 1-3 $515,790.40
Staff is proposing two separate Professional Service Agreements with LAZ Parking so that the Green Line operations can be tracked and invoiced for OCTA’s consideration. This will also help in the event that the new OCTA Project V Grant does not fund the Green Line operations at a 90% reimbursement rate as expected.

Council Options:
 Consider adopting Resolution No. 24-103, which would approve the Professional Services Agreements with LAZ Parking for Trolley Operation Services and find the project statutorily exempt from the California Environmental Quality Act (CEQA).  Modify and adopt Resolution No. 24-103.
 Continue the Item and provide Staff with alternative direction. Please note, continuation of this Item would result in no active Trolley Program operations contract on July 1, and may result in interruption of trolley services until a new contract could be considered. 1858
Meeting Date: June 18, 2024 Agenda Item: 11M.

CITY OF SAN CLEMENTE 4
Environmental Review/Analysis:

Staff Recommendation ..recommendation
..recommendation
Staff recommends that the City Council adopt Resolution 24-103, which would:
..recommendation

1. Find the project statutorily exempt from CEQA under Public Resources Code section 21080(b)(10).

2. Award a Professional Services Agreement to LAZ Parking California LLC for Red & Blue Line Operations in an amount not to exceed a total of $1,871,665.80 for three years;

3. Award a Professional Services Agreement to LAZ Parking California LLC for Green Line Operations in an amount not to exceed a total of $545,092.08 for three years; and

4. Authorize the City Manager to execute both Agreements, which will include two (2) one-year optional extensions.
..end
Attachment:

1. Resolution No. 24-103

2. LAZ Professional Services Agreement- Red & Blue Line Operations

3. LAZ Professional Services Agreement- Green Line Operations

4. LAZ Proposal

5. Parking Concepts Proposal
Notification:

All proposers.
1859
ATTACHMENT 1
4860-5047-5367 v1
RESOLUTION NO. 24-103

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

SAN CLEMENTE, CALIFORNIA, AWARDING TWO

PROFESSIONAL SERVICES AGREEMENTS TO LAZ

PARKING CALIFORNIA LLC FOR TROLLEY OPERATION
SERVICES; AUTHORIZING THE CITY MANAGER TO

EXECUTE THE AGREEMENTS IN A COMBINED AN
AMOUNT NOT TO EXCEED $2,416,757.88 FOR THREE
YEARS; AND FINDING THE PROJECT STATUTORILY

EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL

QUALITY ACT UNDER PUBLIC RESOURCES CODE
SECTION 21080(b)(10)
WHEREAS, on May 14, 2024, the City of San Clemente released a Request For Proposals for Trolley Operation Services; and
WHEREAS, City staff reviewed the proposals and determined that LAZ Parking California LLC is the highest-ranked firm among the proposals received and its prices are fair and reasonable.

NOW, THEREFORE, the City Council of the City of San Clemente does hereby find, determine and resolve as follows:

SECTION 1. That the above recitations are true and correct and incorporated herein.

SECTION 3. That a Professional Services Agreement is hereby awarded to LAZ Parking California LLC for Red & Blue Line Operations in an amount not to exceed a total of $1,871,665.80 for three years.

SECTION 4. That a Professional Services Agreement is hereby awarded to LAZ Parking California LLC for Green Line Operations in an amount not to exceed a total of $545,092.08 for three years.

SECTION 5. That the City Manager is hereby authorized and directed to execute 1860
Resolution No. 24-103 Page 2
both agreements with LAZ Parking, which include two (2) one-year optional extensions, in forms substantially similar to those presented to the City Council on June 18, 2024.

SECTION 6. That the City Manager is hereby authorized and directed to execute such other documents and take such other and further action as may be necessary and proper to accomplish the purpose of this resolution, including accepting any funding from the Orange County Transportation Authority for this project.

SECTION 7. That the City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.

STATE OF CALIFORNIA )
COUNTY OF ORANGE ) §

CITY OF SAN CLEMENTE )
I, LAURA CAMPAGNOLO, City Clerk of the City of San Clemente, California, do hereby certify that Resolution No. 24-103 was adopted at a regular meeting of the City Council of the City of San Clemente held on _______ day of June, 2024, by the following vote:

AYES:

NOES:

ABSENT:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Clemente, California, this _____ day of _________________, ________ _______________________
CITY CLERK of the City of
San Clemente, California
Approved as to form:
____________________________
Elizabeth A. Mitchell, City Attorney
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ATTACHMENT 2

CITY OF SAN CLEMENTE

PROFESSIONAL CONSULTANT SERVICES AGREEMENT

1. PARTIES AND DATE.

This Agreement is made and entered into this _____ day of ________, 20___, by and between the City of San Clemente, a municipal corporation, organized under the laws of the State of California, with its principal place of business at 910 Calle Negocio , San Clemente, California, 92673 ("City") and LAZ Parking California, LLC, a Connecticut limited liability company, with its principal place of business at 10635 Santa Monica, Suite 145, Los Angeles, CA 90025 ("Consultant"). City and Consultant are sometimes individually referred to herein as "Party" and collectively as "Parties."

2. RECITALS.

2.1 Consultant.

Consultant desires to perform and assume responsibility for the provision of certain professional trolley operation services required by the City on the terms and conditions set forth in this Agreement. Consultant represents that it is experienced in providing professional trolley operation services to public clients, is licensed in the State of California, if applicable, and is familiar with the plans of City.

2.2 Project.

City desires to engage Consultant to render such professional trolley operation services for the San Clemente Trolley Transit Operation Services – Red & Blue Line project ("Project") as set forth in this Agreement.

3. TERMS.

3.1 Scope of Services and Term.

3.1.1 General Scope of Services. Consultant promises and agrees to furnish to the City all labor, materials, tools, equipment, services, and incidental and customary work necessary to fully and adequately supply the professional trolley operation services necessary for the Project ("Services"). The Services are more particularly described in Exhibit "A" attached hereto and incorporated herein by reference. All Services shall be subject to, and performed in accordance with, this Agreement, the exhibits attached hereto and incorporated herein by reference, and all applicable local, state and federal laws, rules and regulations.

3.1.2 Term. The term of this Agreement shall be from July 1, 2024 to July 1, 2027, unless earlier terminated as provided herein. The City shall have the unilateral option, at its sole discretion, to renew this Agreement automatically for no more than two additional one-year terms. Consultant shall complete the Services within the term of this Agreement, and shall meet any other established schedules and deadlines.

3.2 Responsibilities of Consultant.

3.2.1 Independent Contractor; Control and Payment of Subordinates. The Services shall be performed by Consultant or under its supervision. Consultant will determine the means, methods and details of performing the Services subject to the requirements of this Agreement. City retains Consultant on an independent contractor basis and not as an employee.

Consultant retains the right to perform similar or different services for others during the term of 1863
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this Agreement. Any additional personnel performing the Services under this Agreement on behalf of Consultant shall also not be employees of City and shall at all times be under Consultant's exclusive direction and control, the City being only concerned with the finished results of the work being performed. Neither City, nor any of its officials, officers, directors, employees or agents shall have control over the conduct of Consultant or any of Consultant's officers, employees, or agents, except as set forth in this Agreement. Consultant shall pay all wages, salaries, and other amounts due such personnel in connection with their performance of Services under this Agreement and as required by law. Consultant shall be solely responsible for all reports and obligations respecting such additional personnel, including, but not limited to: social security taxes, income tax withholding, unemployment insurance, disability insurance, and workers' compensation insurance. Neither Consultant nor Consultant's employees shall in any event be entitled to any benefits to which City employees are entitled, including, but not limited to, overtime, retirement benefits, workers’ compensation benefits, injury leave or other leave benefits. Consultant is solely responsible for all such matters, as well as compliance with social security and income tax withholding and all other regulations and laws governing such matters.

3.2.2 PERS Eligibility and Employee Payments Indemnification. In the event that Consultant's employee providing services under this Agreement claims or is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS of the City, Consultant shall indemnify, defend, and hold harmless City for the payment of any employer and employee contributions for PERS benefits on behalf of the employee as well as for payment of any penalties and interest on such contributions that would otherwise be the responsibility of the City. Notwithstanding any other agency, state or federal policy, rule, regulation, law or ordinance to the contrary, Consultant's employees providing service under this Agreement shall not qualify for or become entitled to, and hereby agree to waive any claims to, any compensation and benefit including but not limited to eligibility to enroll in PERS as an employee of City and entitlement to any contributions to be paid by City for employer contributions and/or employee contributions for PERS benefits. Consultant agrees to defend and indemnify the City for any obligation, claim, suit or demand for tax, retirement contribution including any contribution to the PERS, social security, salary or wages, overtime payment, or workers’ compensation payment that the City may be required to make for work done under this Agreement. The provisions of this section 3.2.2 are continuing obligations that shall survive expiration or termination of this Agreement.

3.2.3 Schedule of Services. Consultant shall perform the Services expeditiously, within the term of this Agreement, and in accordance with the Schedule of Services set forth in Exhibit "B" attached hereto and incorporated herein by reference. Consultant represents that it has the professional and technical personnel required to perform the Services in conformance with such conditions. In order to facilitate Consultant's conformance with the Schedule, City shall respond to Consultant's submittals in a timely manner. Upon request of City, Consultant shall provide a more detailed schedule of anticipated performance to meet the Schedule of Services.

3.2.4 Endorsement on PS&E/ Other Data. Consultant shall sign all plans, specifications, estimates (PS&E) and engineering data furnished by Consultant, and where appropriate will indicate Consultant’s authorized signature and professional registration number.

3.2.5 Conformance to Applicable Requirements. All work prepared by Consultant shall be subject to the approval of City.

3.2.6 Substitution of Key Personnel. Consultant has represented to City that certain key personnel will perform and coordinate the Services under this Agreement. Should one or more of such personnel become unavailable, Consultant may substitute other personnel 1864
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of at least equal competence upon written approval of City. In the event that City and Consultant cannot agree as to the substitution of key personnel, City shall be entitled to terminate this Agreement for cause. As discussed below, any personnel who fail or refuse to perform the Services in a manner acceptable to the City, or who are determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project or a threat to the safety of persons or property, shall be promptly removed from the Project by the Consultant at the request of the City. The key personnel for performance of this Agreement are as follows: Mario Montenegro, General Manager.

3.2.7 City's Representative. The City hereby designates Dave Rebensdorf, or his/her designee, to act as its representative in all matters pertaining to the administration and performance of this Agreement ("City's Representative"). City's Representative shall have the power to act on behalf of the City for review and approval of all products submitted by Consultant but not the authority to enlarge the Scope of Work or change the total compensation due to Consultant under this Agreement. The City Manager shall be authorized to act on City's behalf and to execute all necessary documents which enlarge the Scope of Work or change the Consultant's total compensation subject to the provisions contained in Section 3.3 of this Agreement. Consultant shall not accept direction or orders from any person other than the City Manager, City's Representative or his/her designee.

3.2.8 Consultant's Representative. Consultant hereby designates Mario Montenegro, General Manager, or his/her designee, to act as its representative for the performance of this Agreement ("Consultant's Representative"). Consultant's Representative shall have full authority to represent and act on behalf of the Consultant for all purposes under this Agreement. The Consultant's Representative shall supervise and direct the Services, using his/her best skill and attention, and shall be responsible for all means, methods, techniques, sequences, and procedures and for the satisfactory coordination of all portions of the Services under this Agreement.

3.2.9 Coordination of Services. Consultant agrees to work closely with City staff in the performance of Services and shall be available to City's staff, consultants and other staff at all reasonable times.

3.2.10 Standard of Care; Performance of Employees. Consultant shall perform all Services under this Agreement in a skillful and competent manner, consistent with the standards generally recognized as being employed by professionals in the same discipline in the State of California. Consultant represents and maintains that it is skilled in the professional calling necessary to perform the Services. Consultant warrants that all employees and subconsultants shall have sufficient skill and experience to perform the Services assigned to them. Finally, Consultant represents that it, its employees and subconsultants have all licenses, permits, qualifications and approvals of whatever nature that are legally required to perform the Services, and that such licenses and approvals shall be maintained throughout the term of this Agreement.

As provided for in the indemnification provisions of this Agreement, Consultant shall perform, at its own cost and expense and without reimbursement from the City, any services necessary to correct errors or omissions which are caused by the Consultant's failure to comply with the standard of care provided for herein. Any employee of the Consultant or its sub-consultants who is determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project, a threat to the safety of persons or property, or any employee who fails or refuses to perform the Services in a manner acceptable to the City, shall be promptly removed from the Project by the Consultant and shall not be re-employed to perform any of the Services or to work on the Project.
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3.2.11 Laws and Regulations. Consultant shall keep itself fully informed of and in compliance with all local, state and federal laws, rules and regulations in any manner affecting the performance of the Project or the Services, including all Cal/OSHA requirements, and shall give all notices required by law. Consultant shall be liable for all violations of such laws and regulations in connection with Services. If Consultant performs any work knowing it to be contrary to such laws, rules and regulations, Consultant shall be solely responsible for all costs arising therefrom. Consultant shall defend, indemnify and hold City, its officials, directors, officers, employees, agents, and volunteers free and harmless, pursuant to the indemnification provisions of this Agreement, from any claim or liability arising out of any failure or alleged failure to comply with such laws, rules or regulations.

3.2.12 Safety. Consultant shall execute and maintain its work so as to avoid injury or damage to any person or property. In carrying out its Services, the Consultant shall at all times be in compliance with all applicable local, state and federal laws, rules and regulations, and shall exercise all necessary precautions for the safety of employees appropriate to the nature of the work and the conditions under which the work is to be performed. Safety precautions, where applicable, shall include, but shall not be limited to: (A) adequate life protection and lifesaving equipment and procedures; (B) instructions in accident prevention for all employees and subconsultants, such as safe walkways, scaffolds, fall protection ladders, bridges, gang planks, confined space procedures, trenching and shoring, equipment and other safety devices, equipment and wearing apparel as are necessary or lawfully required to prevent accidents or injuries; and (C) adequate facilities for the proper inspection and maintenance of all safety measures.

3.2.13 Insurance. Consultant agrees to procure and maintain, at Consultant’s expense all insurance specified in Exhibit “C” attached hereto and by this reference incorporated herein. Consultant shall require all subconsultants to carry the same policies and limits of insurance that the Consultant is required to maintain, unless otherwise approved in writing by the City.

3.3 Fees and Payments.

3.3.1 Compensation. Consultant shall receive compensation, including authorized reimbursements, for all Services rendered under this Agreement at the rates set forth in Exhibit "D" attached hereto and incorporated herein by reference. The total compensation shall not exceed ONE MILLION EIGHT HUNDRED SEVETY ONE THOUSAND SIX HUNDRED SIXTY-FIVE AND EIGHTY CENTS ($1,871,665.80) for the initial three-year term without written approval of the City Council. Extra Work may be authorized, as described below, and if authorized, will be compensated at the rates and manner set forth in this Agreement.

3.3.2 Payment of Compensation. Consultant shall submit to City a monthly invoice which indicates work completed and hours of Services rendered by Consultant. The invoice shall describe the amount of Services provided since the initial commencement date, or since the start of the subsequent billing periods, as appropriate, through the date of the invoice.

City shall, within 30 days of receiving such invoice, review the invoice and pay all non-disputed and approved charges thereon. If the City disputes any of Consultant's fees, the City shall give written notice to Consultant within thirty (30) days of receipt of an invoice of any disputed fees set forth therein.

3.3.3 Reimbursement for Expenses. Consultant shall not be reimbursed for any expenses unless authorized in writing by City, or included in Exhibit "D" of this Agreement. 1866
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3.3.4 Extra Work. At any time during the term of this Agreement, City may request that Consultant perform Extra Work. As used herein, "Extra Work" means any work which is determined by City to be necessary for the proper completion of the Project, but which the Parties did not reasonably anticipate would be necessary at the execution of this Agreement.

Consultant shall not perform, nor be compensated for, Extra Work without written authorization from the City.

3.3.5 Rate Increases. In the event that this Agreement is renewed pursuant to Section 3.1.2, the rate set forth in Exhibit “D” may be adjusted each year at the time of renewal as set forth in Exhibit “D.”

3.3.6 Labor Code Requirements.

3.3.6.1 Prevailing Wages. Consultant is aware of the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 16000, et seq., ("Prevailing Wage Laws"), which require the payment of prevailing wage rates and the performance of other requirements on "public works" and "maintenance" projects. If the Services are being performed as part of an applicable "public works" or "maintenance" project, as defined by the Prevailing Wage Laws, and if the total compensation is $1,000 or more, Consultant agrees to fully comply with such Prevailing Wage Laws. Consultant shall make copies of the prevailing rates of per diem wages for each craft, classification or type of worker needed to execute the Services available to interested parties upon request, and shall post copies at the Consultant's principal place of business and at the project site. Consultant shall defend, indemnify and hold the City, its officials, officers, employees, agents, and volunteers free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws.

3.3.6.2 Registration. If the Services are being performed as part of an applicable “public works” or “maintenance” project, in addition to the foregoing, then pursuant to Labor Code sections 1725.5 and 1771.1, the Consultant and all subconsultants must be registered with the Department of Industrial Relations (“DIR”). Consultant shall maintain registration for the duration of the project and require the same of any subconsultants. This project may also be subject to compliance monitoring and enforcement by the DIR. It shall be Consultant’s sole responsibility to comply with all applicable registration and labor compliance requirements, including the submission of payroll records directly to the DIR. Notwithstanding the foregoing, the contractor registration requirements mandated by Labor Code sections 1725.5 and 1771.1 shall not apply to Services performed on a public works project that is exempt pursuant to the small project exemption specified in Labor Code sections 1725.5 and 1771.1.

3.4 Accounting Records.

3.4.1 Maintenance and Inspection. Consultant shall maintain complete and accurate records with respect to all costs and expenses incurred under this Agreement. All such records shall be clearly identifiable. Consultant shall allow a representative of City during normal business hours to examine, audit, and make transcripts or copies of such records and any other documents created pursuant to this Agreement. Consultant shall allow inspection of all work, data, documents, proceedings, and activities related to the Agreement for a period of four (4) years from the date of final payment under this Agreement.

3.5 General Provisions.

3.5.1 Termination of Agreement.
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3.5.1.1 Grounds for Termination. City may, by written notice to Consultant, terminate the whole or any part of this Agreement at any time, with or without cause, by giving written notice to Consultant of such termination, and specifying the effective date thereof, at least seven (7) days before the effective date of such termination. Upon termination, Consultant shall be compensated only for those services which have been adequately rendered to City, and Consultant shall be entitled to no further compensation. Consultant may not terminate this Agreement except for cause.

3.5.1.2 Effect of Termination. If this Agreement is terminated as provided herein, City may require Consultant to provide all finished or unfinished Documents and Data and other information of any kind prepared by Consultant in connection with the performance of Services under this Agreement. Consultant shall be required to provide such document and other information within fifteen (15) days of the request.

3.5.1.3 Additional Services. In the event this Agreement is terminated in whole or in part as provided herein, City may procure, upon such terms and in such manner as it may determine appropriate, services similar to those terminated.

3.5.2 Delivery of Notices. All notices permitted or required under this Agreement shall be given to the respective parties at the following address, or at such other address as the respective parties may provide in writing for this purpose:

Consultant: LAZ Parking California, LLC
10635 Santa Monica Blvd, Suite 145
Los Angeles, Ca 90025
ATTN: Mario Montenegro
City: City of San Clemente
910 Calle Negocio
San Clemente, CA 92673
ATTN: Laura Campagnolo, City Clerk
Such notice shall be deemed made when personally delivered or when mailed, forty-eight (48) hours after deposit in the U.S. Mail, first class postage prepaid and addressed to the party at its applicable address. Actual notice shall be deemed adequate notice on the date actual notice occurred, regardless of the method of service.

3.5.3 Ownership of Materials and Confidentiality.

3.5.3.1 Documents & Data; Licensing of Intellectual Property. This Agreement creates a non-exclusive and perpetual license for City to copy, use, modify, reuse, or sublicense any and all copyrights, designs, and other intellectual property embodied in plans, specifications, studies, drawings, estimates, and other documents or works of authorship fixed in any tangible medium of expression, including but not limited to, physical drawings or data magnetically or otherwise recorded on computer diskettes, which are prepared or caused to be prepared by Consultant under this Agreement ("Documents & Data"). Consultant shall require all subconsultants to agree in writing that City is granted a non-exclusive and perpetual license for any Documents & Data the subconsultant prepares under this Agreement. Consultant represents and warrants that Consultant has the legal right to license any and all Documents & Data.

Consultant makes no such representation and warranty in regard to Documents & Data which were prepared by design professionals other than Consultant or provided to Consultant by the City. City shall not be limited in any way in its use of the Documents & Data at any time, provided 1868
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that any such use not within the purposes intended by this Agreement shall be at City's sole risk.

3.5.3.2 Confidentiality. All ideas, memoranda, specifications, plans, procedures, drawings, descriptions, computer program data, input record data, written information, and other Documents & Data either created by or provided to Consultant in connection with the performance of this Agreement shall be held confidential by Consultant. Such materials shall not, without the prior written consent of City, be used by Consultant for any purposes other than the performance of the Services. Nor shall such materials be disclosed to any person or entity not connected with the performance of the Services or the Project. Nothing furnished to Consultant which is otherwise known to Consultant or is generally known, or has become known, to the related industry shall be deemed confidential. Consultant shall not use City's name or insignia, photographs of the Project, or any publicity pertaining to the Services or the Project in any magazine, trade paper, newspaper, television or radio production or other similar medium without the prior written consent of City.

3.5.3.3 Confidential Information. The City shall refrain from releasing Consultant’s proprietary information ("Proprietary Information") unless the City's legal counsel determines that the release of the Proprietary Information is required by the California Public Records Act or other applicable state or federal law, or order of a court of competent jurisdiction, in which case the City shall notify Consultant of its intention to release Proprietary Information.

Consultant shall have five (5) working days after receipt of the Release Notice to give City written notice of Consultant's objection to the City's release of Proprietary Information. Consultant shall indemnify, defend and hold harmless the City, and its officers, directors, employees, and agents from and against all liability, loss, cost or expense (including attorney’s fees) arising out of a legal action brought to compel the release of Proprietary Information. City shall not release the Proprietary Information after receipt of the Objection Notice unless either: (1) Consultant fails to fully indemnify, defend (with City's choice of legal counsel), and hold City harmless from any legal action brought to compel such release; and/or (2) a final and non-appealable order by a court of competent jurisdiction requires that City release such information.

3.5.4 Cooperation; Further Acts. The Parties shall fully cooperate with one another, and shall take any additional acts or sign any additional documents as may be necessary, appropriate or convenient to attain the purposes of this Agreement.

3.5.5 Attorney's Fees. If either party commences an action against the other party, either legal, administrative or otherwise, arising out of or in connection with this Agreement, the prevailing party in such litigation shall be entitled to have and recover from the losing party reasonable attorney's fees and all other costs of such action.

3.5.6 Indemnification.

3.5.6.1 To the fullest extent permitted by law, Consultant shall defend (with counsel of City’s choosing), indemnify and hold the City, its directors, officials, officers, employees, volunteers and agents free and harmless from any and all claims, demands, causes of action, costs, expenses, liability, loss, damage or injury of any kind, in law or equity, to property or persons, including wrongful death, in any manner arising out of, pertaining to, or incident to any alleged acts, errors or omissions, or willful misconduct of Consultant, its officials, officers, employees, subcontractors, consultants or agents in connection with the performance of the Consultant's Services, the Project or this Agreement, including without limitation the payment of all damages, expert witness fees and attorney’s fees and other related costs and expenses. Consultant’s obligation to indemnify shall not be restricted to insurance proceeds, if any, received by Consultant, the City, its officials, officers, employees, agents, or volunteers. 1869
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3.5.6.2 If Consultant’s obligation to defend, indemnify, and/or hold harmless arises out of Consultant’s performance as a “design professional” (as that term is defined under Civil Code section 2782.8), then, and only to the extent required by Civil Code section 2782.8, which is fully incorporated herein, Consultant’s indemnification obligation shall be limited to claims that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the Consultant, and, upon Consultant obtaining a final adjudication by a court of competent jurisdiction, Consultant’s liability for such claim, including the cost to defend, shall not exceed the Consultant’s proportionate percentage of fault.

3.5.7 Entire Agreement. This Agreement contains the entire Agreement of the parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings or agreements. This Agreement may only be modified by a writing signed by both parties.

3.5.8 Governing Law. This Agreement shall be governed by the laws of the State of California. Venue shall be in Orange County.

3.5.9 Time of Essence. Time is of the essence for each and every provision of this Agreement.

3.5.10 City's Right to Employ Other Consultants. City reserves right to employ other consultants in connection with this Project.

3.5.11 Successors and Assigns. This Agreement shall be binding on the successors and assigns of the parties.

3.5.12 Assignment or Transfer. Consultant shall not assign, hypothecate, or transfer, either directly or by operation of law, this Agreement or any interest herein without the prior written consent of the City. Any attempt to do so shall be null and void, and any assignees, hypothecates or transferees shall acquire no right or interest by reason of such attempted assignment, hypothecation or transfer.

3.5.13 Construction; References; Captions. Since the Parties or their agents have participated fully in the preparation of this Agreement, the language of this Agreement shall be construed simply, according to its fair meaning, and not strictly for or against any Party. Any term referencing time, days or period for performance shall be deemed calendar days and not work days. All references to Consultant include all personnel, employees, agents, and subconsultants of Consultant, except as otherwise specified in this Agreement. All references to City include its elected officials, officers, employees, agents, and volunteers except as otherwise specified in this Agreement. The captions of the various articles and paragraphs are for convenience and ease of reference only, and do not define, limit, augment, or describe the scope, content, or intent of this Agreement.

3.5.14 Amendment; Modification. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties.

3.5.15 Waiver. No waiver of any default shall constitute a waiver of any other default or breach, whether of the same or other covenant or condition. No waiver, benefit, privilege, or service voluntarily given or performed by a Party shall give the other Party any contractual rights by custom, estoppel, or otherwise.

3.5.16 No Third-Party Beneficiaries. There are no intended third party 1870
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beneficiaries of any right or obligation assumed by the Parties.

3.5.17 Invalidity; Severability. If any portion of this Agreement is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect.

3.5.18 Prohibited Interests. Consultant maintains and warrants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Consultant, to solicit or secure this Agreement. Further, Consultant warrants that it has not paid nor has it agreed to pay any company or person, other than a bona fide employee working solely for Consultant, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this warranty, City shall have the right to rescind this Agreement without liability. For the term of this Agreement, no member, officer or employee of City, during the term of his or her service with City, shall have any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom.

3.5.19 Equal Opportunity Employment. Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subconsultant, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. Such non-discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. Consultant shall also comply with all relevant provisions of City's Minority Business Enterprise program, Affirmative Action Plan or other related programs or guidelines currently in effect or hereinafter enacted.

3.5.20 Labor Certification. By its signature hereunder, Consultant certifies that it is aware of the provisions of Section 3700 of the California Labor Code which require every employer to be insured against liability for Worker's Compensation or to undertake self-insurance in accordance with the provisions of that Code, and agrees to comply with such provisions before commencing the performance of the Services.

3.5.21 Authority to Enter Agreement. Consultant has all requisite power and authority to conduct its business and to execute, deliver, and perform the Agreement. Each Party warrants that the individuals who have signed this Agreement have the legal power, right, and authority to make this Agreement and bind each respective Party.

3.5.22 Counterparts/Electronic Signatures. This Agreement may be signed in counterparts, each of which shall constitute an original. This Agreement may be signed with the same force and effect as original ink signatures.

3.6 Subcontracting.

3.6.1 Prior Approval Required. Consultant shall not subcontract any portion of the work required by this Agreement, except as expressly stated herein, without prior written approval of City. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the respective dates set forth opposite of their signatures. 1871
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APPROVED AS TO AVAILABILITY
OF FUNDING:
_____________________________
Finance Authorization

__________________________
(“CONSULTANT”)
By:_____________________________
Mike Kuziak, COO
Dated: __________________, 20____
By:_____________________________
John Svenblad, President
Dated: __________________, 20____
EXHIBIT "A"

SCOPE OF SERVICES
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Consultant shall perform the following services for the City and such additional services as the City requests in connection with the Project (collectively, the “Services”):

A. GENERAL INFORMATION
The Consultant will provide high quality, transportation operations service of the trolleys and timely expertise where needed. The scope of services for the trolley operation services includes supplying properly licensed and experienced drivers to operate the trollies, inspection of the trollies, providing insurance to cover the trollies and the trolley drivers. The City has on-site trolley maintenance, trolley washing, and fuel at the City Yard that can be used for trolley operation services by the Consultant.

The Consultant will fuel the trolley vehicles using City fuel tanks located in the City Yard near the trolley route. The City has the auditing process and reporting needed to track the trolley fueling. The fuel costs, trolley maintenance and washing will not be included in the Consultant’s operation cost per hour per vehicle.

Since OCTA is providing the grant funds, the following requirements apply:
 Separate and distinct operating hours and cost must be provided in the detail and as requested by the City, OCTA, and Federal Transit Administration, e.g., revenue vehicle hours, total boardings, boardings per revenue hour, operating costs, etc.

These records are to be provided monthly to the City.
 Allow inspection and audit of records.
 Operator shall indemnify City against liability for operation.  Termination for convenience within 60 days written notice.  Compliance with all applicable federal, state, and local laws and licenses.  Meet all ADA accessibility requirements.

Operators will record the number of users at each stop, vehicle hours, and other necessary reporting, separated by service, necessary to meet National Transit Database reporting.

The trolley service will be free for riders. Consultant shall provide a smartphone trolley tracker app for use on iPhone and Android platforms.

The Consultant shall be entitled to request an annual fee adjustment which is to be no greater than the United States Consumer Price Index (CPI) published by the Department of Industrial Relations for Southern California Region, commencing one year after execution of the Agreement.

The City and OCTA will require complete indemnification. By submitting a proposal, the Consultant agrees that the contents and requirements of the City’s Request for Proposals shall become part of the Agreement for this work, and that it accepts the terms thereof.

The City reserves the right to order a decrease or increase in the level of service such as removing or adding routes or stop locations at any given time.

Consultant understands and agrees that the City is currently in discussion with OCTA for additional lines of service and operating dates. Trolley operating lines, schedule, times, and days are subject to change at the City’s request. The City reserves the right to negotiate final cost and operating plans with the Consultant at any time.

Consultant shall also provide the ability to provide two (2) ADA accessible passenger shuttles 1873
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and drivers for the operation of expanded service areas such as the 2023 “Green Line” transit service. The Green Line is expected to connect the San Clemente Pier to San Clemente State Beach. The City may alter the route or stops at its sole discretion. If the City is awarded the additional OCTA funds, the Green Line would likely be needed daily from July 1 through September.

B. ADMINISTRATION
Consultant shall be responsible for:

1. Identifying an On-site Manager who will oversee the proper operation and administration of all trolley services. The designated Manager must be available to the City at all times.

An organizational chart of Consultant’s management personnel shall be included in the proposal.

2. Consultant shall adhere to the performance standards set by the City, and shall meet periodically with the City to evaluate its performance under the Agreement.

3. Attending preliminary meetings (if requested by the City) with City staff to finalize the logistics and paperwork to properly implement, coordinate, and administer the Trolley program to the satisfaction of the City and OCTA.

4. Hiring capable and courteous drivers.

5. Notifying the City of all trolley accidents and passenger injuries immediately and in writing by the close of the next business day.

6. Include the development and implementation of a smartphone trolley tracker app for use on iPhone and Android platforms.

C. CONSULTANT EMPLOYEES
Consultant agrees that all individuals employed for this program will be employees of Consultant and Consultant will provide recruitment, hiring, and firing of employees.

The Consultant shall investigate all public complaints concerning trolley operations services. Consultant shall furnish a written report of the incident to the City Public Works Department within three (3) business days after the occurrence.

Consultant agrees that in carrying out its responsibilities under this Agreement, and in particular with regard to the employment of persons and sub-Consultants working on the project, it will not discriminate on the basis of race, color, creed, national origin, religion, sex, age, or handicap.

D. PAYROLL
Consultant (including the actual processing/distribution of payroll checks, processing payroll reports, etc.) will handle all payroll services. 1874
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EXHIBIT "B"

SCHEDULE OF SERVICES
Consultant shall diligently perform the services to the City’s satisfaction according to the timeframe and schedule requested by the City.
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EXHIBIT “C”

INSURANCE REQUIREMENTS

3.2.12 Insurance.

3.2.12.1 Time for Compliance. Consultant shall not commence work under this Agreement until it has provided evidence satisfactory to the City that it has secured all insurance required under this section. In addition, Consultant shall not allow any subconsultant to commence work on any subcontract until it has provided evidence satisfactory to the City that the subconsultant has secured all insurance required under this section.

3.2.12.2 Types of Insurance Required. As a condition precedent to the effectiveness of this Agreement for work to be performed hereunder, and without limiting the indemnity provisions of the Agreement, the Consultant, in partial performance of its obligations under such Agreement, shall procure and maintain in full force and effect during the term of the Agreement the following policies of insurance. If the existing policies do not meet the insurance requirements set forth herein, Consultant agrees to amend, supplement or endorse the policies to do so.
(A) Commercial General Liability: Commercial General Liability Insurance which affords coverage at least as broad as Insurance Services Office "occurrence" form CG 0001, or the exact equivalent, with limits of not less than $1,000,000 per occurrence and no less than $2,000,000 in the general aggregate. Defense costs shall be paid in addition to the limits. The policy shall contain no endorsements or provisions (1) limiting coverage for contractual liability; (2) excluding coverage for claims or suits by one insured against another (cross-liability); or (3) containing any other exclusion(s) contrary to the terms or purposes of this Agreement. (B) Automobile Liability Insurance: Automobile Liability Insurance with coverage at least as broad as Insurance Services Office Form CA 0001 covering "Any Auto" (Symbol 1), or the exact equivalent, covering bodily injury and property damage for all activities with limits of not less than $1,000,000 combined limit for each occurrence. (C) Workers' Compensation: Workers' Compensation
Insurance, as required by the State of California and Employer's Liability Insurance with a limit of not less than $1,000,000 per accident for bodily injury and disease. (D) Professional Liability (Errors & Omissions): Professional Liability insurance or Errors & Omissions insurance appropriate to Consultant’s profession with limits of not less than $1,000,000 per claim. Covered professional services shall specifically include all work to be performed under the Agreement and delete any exclusions that may potentially affect the work to be performed (for example, any exclusions relating to lead, asbestos, pollution, testing, underground storage tanks, laboratory analysis, soil work, etc.). If coverage is written on a claims-made basis, the retroactive date shall precede the effective date of the initial Agreement and continuous coverage will be maintained or an extended reporting period will be exercised for a period of at least three (3) years from termination or expiration of this Agreement. (E) Cyber Liability Insurance with limits not less than $2,000,000 per occurrence or claim, $2,000,000 aggregate. Coverage shall be sufficiently broad to respond to the duties and obligations as is undertaken by Consultant in this agreement and shall include, but not be limited to, claims involving security breach, system failure, data recovery, 1876
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business interruption, cyber extortion, social engineering, infringement of intellectual property, including but not limited to infringement of copyright, trademark, trade dress, invasion of privacy violations, information theft, damage to or destruction of electronic information, release of private information, and alteration of electronic information. The policy shall provide coverage for breach response costs, regulatory fines and penalties as well as credit monitoring expenses.

3.2.12.3 Insurance Endorsements. Required insurance policies shall contain the following provisions, or Consultant shall provide endorsements on forms approved by the City to add the following provisions to the insurance policies:
(A) Commercial General Liability:
(1) Additional Insured: The City, its officials, officers, employees, agents, and volunteers shall be additional insureds with regard to liability and defense of suits or claims arising out of the performance of the Agreement.

Additional Insured Endorsements shall not (1) be
restricted to "ongoing operations"; (2) exclude "contractual liability"; (3) restrict coverage to "sole" liability of Consultant; or (4) contain any other exclusions contrary to the terms or purposes of this Agreement. For all policies of Commercial General Liability insurance, Consultant shall provide endorsements in the form of ISO CG 20 10 10 01 (or endorsements providing the exact same coverage) to effectuate this requirement.
(2) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium. (B) Automobile Liability:
(1) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium.

3.2.12.4 Professional Liability (Errors & Omissions):
(A) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium. (B) Contractual Liability Exclusion Deleted: This insurance shall include contractual liability applicable to this Agreement. The policy must “pay on behalf of” the insured and include a provision establishing the insurer’s duty to defend.

3.2.12.5 Workers' Compensation:
(A) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium.

3.2.12.6 Primary and Non-Contributing Insurance. All policies of Commercial General Liability and Automobile Liability insurance shall be primary and any other 1877
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insurance, deductible, or self-insurance maintained by the City, its officials, officers, employees, agents, or volunteers shall not contribute with this primary insurance. Policies shall contain or be endorsed to contain such provisions.

3.2.12.7 Waiver of Subrogation. All policies of Commercial General Liability and Automobile Liability insurance shall specifically allow Consultant or others providing insurance evidence in compliance with these specifications to waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery against the City, its officials, officers, employees, agents, and volunteers, and shall require similar written express waivers and insurance clauses from each of its subconsultants.

3.2.12.8 Deductibles and Self-Insured Retentions. Any deductible or selfinsured retention greater than $5,000 must be approved in writing by the City and shall protect the City, its officials, officers, employees, agents, and volunteers in the same manner and to the same extent as they would have been protected had the policy or policies not contained a deductible or self-insured retention.

3.2.12.9 Evidence of Insurance. The Consultant, concurrently with the execution of the Agreement, and as a condition precedent to the effectiveness thereof, shall deliver either certified copies of the required policies, or original certificates on forms approved by the City, together with all endorsements affecting each policy. Required insurance policies shall not be in compliance if they include any limiting provision or endorsement that has not been submitted to the City for approval. The certificates and endorsements for each insurance policy shall be signed by a person authorized by that insurer to bind coverage on its behalf. At least fifteen (15 days) prior to the expiration of any such policy, evidence of insurance showing that such insurance coverage has been renewed or extended shall be filed with the City. If such coverage is cancelled or reduced and not replaced immediately so as to avoid a lapse in the required coverage, Consultant shall, within ten (10) days after receipt of written notice of such cancellation or reduction of coverage, file with the City evidence of insurance showing that the required insurance has been reinstated or has been provided through another insurance company or companies.

3.2.12.10 Failure to Maintain Coverage. In the event any policy of insurance required under this Agreement does not comply with these specifications or is canceled and not replaced immediately so as to avoid a lapse in the required coverage, City has the right but not the duty to obtain the insurance it deems necessary and any premium paid by City will be promptly reimbursed by Consultant or City will withhold amounts sufficient to pay premium from Consultant payments. In the alternative, City may cancel this Agreement effective upon notice.

3.2.12.11 Acceptability of Insurers. Each such policy shall be from a company or companies with a current A.M. Best's rating of no less than A- VII and authorized to transact business of insurance in the State of California, or otherwise allowed to place insurance through surplus line brokers under applicable provisions of the California Insurance Code or any federal law.

3.2.12.12 Enforcement of Agreement Provisions (non estoppel).

Consultant acknowledges and agrees that actual or alleged failure on the part of the City to inform Consultant of non-compliance with any requirement imposes no additional obligation on the City nor does it waive any rights hereunder.
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3.2.12.13 Requirements Not Limiting. Requirement of specific coverage or minimum limits contained in this Appendix are not intended as a limitation on coverage, limits, or other requirement, or a waiver of any coverage normally provided by any insurance.

3.2.12.14 Insurance for Subconsultants. Consultant shall include all subconsultants engaged in any work for Consultant relating to this Agreement as additional insureds under the Consultant's policies, or the Consultant shall be responsible for causing subconsultants to purchase the appropriate insurance in compliance with the terms of these Insurance Requirements, including adding the City, its officials, officers, employees, agents, and volunteers as additional insureds to the subconsultant's policies. All policies of Commercial General Liability insurance provided by Consultant’s subconsultants performing work relating to this Agreement shall be endorsed to name the City, its officials, officers, employees, agents and volunteers as additional insureds using endorsement form ISO CG 20 38 04 13 or an endorsement providing equivalent coverage. Consultant shall not allow any subconsultant to commence work on any subcontract relating to this Agreement until it has received satisfactory evidence of subconsultant’s compliance with all insurance requirements under this Agreement, to the extent applicable. The Consultant shall provide satisfactory evidence of compliance with this section upon request of the City.
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EXHIBIT “D”

COMPENSATION
In total compensation for the Services provided under this Agreement, the City shall pay the Consultant for actual hours of trolley operations based on the following schedule:

Total compensation under this Agreement shall not exceed $1,871,665.80 for the initial threeyear term. Additional work shall require approval in writing in advance by the City Manager. 1880
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WORKER’S COMPENSATION INSURANCE CERTIFICATION

WORKERS' COMPENSATION DECLARATION
I hereby affirm under penalty of perjury one of the following declarations:
(ONE OF THE BOXES BELOW MUST BE CHECKED)
I have and will maintain a certificate of consent from the California Labor Commission to self-insure for workers' compensation, as provided for by Section 3700 of the Labor Code, for the performance of the work to be performed under this contract.

I have and will maintain workers' compensation insurance, as required by Section 3700 of the Labor Code, for the performance of the work to be performed under this contract. My workers' compensation insurance carrier and policy number are:

Carrier____________________________________________________ Policy Number______________________________________________ I certify that, in the performance of the work under this Agreement, I shall not employ any person in any manner so as to become subject to the workers' compensation laws of California, and I hereby agree to indemnify, defend, and hold harmless the City of San Clemente and all of its officials, employees, and agents from and against any and all claims, liabilities, and losses relating to personal injury or death, economic losses, and property damage arising out of my failure to provide such worker’s compensation insurance. I further agree that, if I should become subject to the workers' compensation provisions of Section 3700 of the Labor Code, I shall forthwith comply with those provisions.

WARNING: FAILURE TO SECURE WORKERS’ COMPENSATION

COVERAGE IS UNLAWFUL, AND SHALL SUBJECT AN EMPLOYER TO

CRIMINAL PENALTIES AND CIVIL FINES UP TO ONE HUNDRED THOUSAND DOLLARS ($100,000), IN ADDITION TO THE COST OF COMPENSATION, DAMAGES AS PROVIDED FOR IN SECTION 3706 OF THE LABOR CODE, INTEREST, AND ATTORNEY’S FEES.
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Dated: ________________________, 20____
________________________________
(“CONSULTANT”)
By: ________________________________
________________________________
Title
________________________________
Address
________________________________
1882
ATTACHMENT 3

CITY OF SAN CLEMENTE

PROFESSIONAL CONSULTANT SERVICES AGREEMENT

1. PARTIES AND DATE.

2. RECITALS.

2.1 Consultant.

2.2 Project.

City desires to engage Consultant to render such professional trolley operation services for the San Clemente Trolley Transit Operation Services – Green Line project ("Project") as set forth in this Agreement.

3. TERMS.

3.1 Scope of Services and Term.

3.2 Responsibilities of Consultant.

Consultant retains the right to perform similar or different services for others during the term of 1883
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this Agreement. Any additional personnel performing the Services under this Agreement on behalf of Consultant shall also not be employees of City and shall at all times be under Consultant's exclusive direction and control, the City being only concerned with the finished results of the work being performed. Neither City, nor any of its officials, officers, directors, employees or agents shall have control over the conduct of Consultant or any of Consultant's officers, employees, or agents, except as set forth in this Agreement. Consultant shall pay all wages, salaries, and other amounts due such personnel in connection with their performance of Services under this Agreement and as required by law. Consultant shall be solely responsible for all reports and obligations respecting such additional personnel, including, but not limited to: social security taxes, income tax withholding, unemployment insurance, disability insurance, and workers' compensation insurance. Neither Consultant nor Consultant's employees shall in any event be entitled to any benefits to which City employees are entitled, including, but not limited to, overtime, retirement benefits, workers’ compensation benefits, injury leave or other leave benefits. Consultant is solely responsible for all such matters, as well as compliance with social security and income tax withholding and all other regulations and laws governing such matters.

3.2.5 Conformance to Applicable Requirements. All work prepared by Consultant shall be subject to the approval of City.

3.2.6 Substitution of Key Personnel. Consultant has represented to City that certain key personnel will perform and coordinate the Services under this Agreement. Should one or more of such personnel become unavailable, Consultant may substitute other personnel 1884
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of at least equal competence upon written approval of City. In the event that City and Consultant cannot agree as to the substitution of key personnel, City shall be entitled to terminate this Agreement for cause. As discussed below, any personnel who fail or refuse to perform the Services in a manner acceptable to the City, or who are determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project or a threat to the safety of persons or property, shall be promptly removed from the Project by the Consultant at the request of the City. The key personnel for performance of this Agreement are as follows: Mario Montenegro, General Manager.

3.3 Fees and Payments.

3.3.1 Compensation. Consultant shall receive compensation, including authorized reimbursements, for all Services rendered under this Agreement at the rates set forth in Exhibit "D" attached hereto and incorporated herein by reference. The total compensation shall not exceed FIVE HUNDRED FORTY-FIVE THOUSAND AND NINETY-TWO DOLLARS AND EIGHT CENTS ($545,092.08) for the initial three-year term without written approval of the City Council. Extra Work may be authorized, as described below, and if authorized, will be compensated at the rates and manner set forth in this Agreement.

3.3.3 Reimbursement for Expenses. Consultant shall not be reimbursed for any expenses unless authorized in writing by City, or included in Exhibit "D" of this Agreement. 1886
5 55452.01100\31193624.5

Consultant shall not perform, nor be compensated for, Extra Work without written authorization from the City.

3.3.6 Labor Code Requirements.

3.4 Accounting Records.

3.5 General Provisions.

3.5.1 Termination of Agreement.
1887
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3.5.3 Ownership of Materials and Confidentiality.

Consultant makes no such representation and warranty in regard to Documents & Data which were prepared by design professionals other than Consultant or provided to Consultant by the City. City shall not be limited in any way in its use of the Documents & Data at any time, provided 1888
7 55452.01100\31193624.5
that any such use not within the purposes intended by this Agreement shall be at City's sole risk.

3.5.6 Indemnification.

3.5.8 Governing Law. This Agreement shall be governed by the laws of the State of California. Venue shall be in Orange County.

3.5.9 Time of Essence. Time is of the essence for each and every provision of this Agreement.

3.5.10 City's Right to Employ Other Consultants. City reserves right to employ other consultants in connection with this Project.

3.5.11 Successors and Assigns. This Agreement shall be binding on the successors and assigns of the parties.

3.5.14 Amendment; Modification. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties.

3.5.16 No Third-Party Beneficiaries. There are no intended third party 1890
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beneficiaries of any right or obligation assumed by the Parties.

3.6 Subcontracting.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the respective dates set forth opposite of their signatures. 1891
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APPROVED AS TO AVAILABILITY
OF FUNDING:
_____________________________
Finance Authorization

SCOPE OF SERVICES
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Consultant shall perform the following services for the City and such additional services as the City requests in connection with the Project (collectively, the “Services”):

Operators will record the number of users at each stop, vehicle hours, and other necessary reporting, separated by service, necessary to meet National Transit Database reporting.

The trolley service will be free for riders. Consultant shall provide a smartphone trolley tracker app for use on iPhone and Android platforms.

The City reserves the right to order a decrease or increase in the level of service such as removing or adding routes or stop locations at any given time.

Consultant shall also provide the ability to provide two (2) ADA accessible passenger shuttles 1893
12 55452.01100\31193624.5
and drivers for the operation of expanded service areas such as the 2023 “Green Line” transit service. The Green Line is expected to connect the San Clemente Pier to San Clemente State Beach. The City may alter the route or stops at its sole discretion. If the City is awarded the additional OCTA funds, the Green Line would likely be needed daily from July 1 through September.

B. ADMINISTRATION
Consultant shall be responsible for:

1. Identifying an On-site Manager who will oversee the proper operation and administration of all trolley services. The designated Manager must be available to the City at all times.

An organizational chart of Consultant’s management personnel shall be included in the proposal.

2. Consultant shall adhere to the performance standards set by the City, and shall meet periodically with the City to evaluate its performance under the Agreement.

4. Hiring capable and courteous drivers.

5. Notifying the City of all trolley accidents and passenger injuries immediately and in writing by the close of the next business day.

6. Include the development and implementation of a smartphone trolley tracker app for use on iPhone and Android platforms.

C. CONSULTANT EMPLOYEES
Consultant agrees that all individuals employed for this program will be employees of Consultant and Consultant will provide recruitment, hiring, and firing of employees.

D. PAYROLL
Consultant (including the actual processing/distribution of payroll checks, processing payroll reports, etc.) will handle all payroll services. 1894
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EXHIBIT "B"

SCHEDULE OF SERVICES
Consultant shall diligently perform the services to the City’s satisfaction according to the timeframe and schedule requested by the City.
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EXHIBIT “C”

INSURANCE REQUIREMENTS

3.2.12 Insurance.

3.2.12.2 Types of Insurance Required. As a condition precedent to the effectiveness of this Agreement for work to be performed hereunder, and without limiting the indemnity provisions of the Agreement, the Consultant, in partial performance of its obligations under such Agreement, shall procure and maintain in full force and effect during the term of the Agreement the following policies of insurance. If the existing policies do not meet the insurance requirements set forth herein, Consultant agrees to amend, supplement or endorse the policies to do so.
(A) Commercial General Liability: Commercial General Liability Insurance which affords coverage at least as broad as Insurance Services Office "occurrence" form CG 0001, or the exact equivalent, with limits of not less than $1,000,000 per occurrence and no less than $2,000,000 in the general aggregate. Defense costs shall be paid in addition to the limits. The policy shall contain no endorsements or provisions (1) limiting coverage for contractual liability; (2) excluding coverage for claims or suits by one insured against another (cross-liability); or (3) containing any other exclusion(s) contrary to the terms or purposes of this Agreement. (B) Automobile Liability Insurance: Automobile Liability Insurance with coverage at least as broad as Insurance Services Office Form CA 0001 covering "Any Auto" (Symbol 1), or the exact equivalent, covering bodily injury and property damage for all activities with limits of not less than $1,000,000 combined limit for each occurrence. (C) Workers' Compensation: Workers' Compensation
Insurance, as required by the State of California and Employer's Liability Insurance with a limit of not less than $1,000,000 per accident for bodily injury and disease. (D) Professional Liability (Errors & Omissions): Professional Liability insurance or Errors & Omissions insurance appropriate to Consultant’s profession with limits of not less than $1,000,000 per claim. Covered professional services shall specifically include all work to be performed under the Agreement and delete any exclusions that may potentially affect the work to be performed (for example, any exclusions relating to lead, asbestos, pollution, testing, underground storage tanks, laboratory analysis, soil work, etc.). If coverage is written on a claims-made basis, the retroactive date shall precede the effective date of the initial Agreement and continuous coverage will be maintained or an extended reporting period will be exercised for a period of at least three (3) years from termination or expiration of this Agreement. (E) Cyber Liability Insurance with limits not less than $2,000,000 per occurrence or claim, $2,000,000 aggregate. Coverage shall be sufficiently broad to respond to the duties and obligations as is undertaken by Contractor in this agreement and shall include, but not be limited to, claims involving security breach, system failure, data recovery, 1896
55452.01100\31193624.5
business interruption, cyber extortion, social engineering, infringement of intellectual property, including but not limited to infringement of copyright, trademark, trade dress, invasion of privacy violations, information theft, damage to or destruction of electronic information, release of private information, and alteration of electronic information. The policy shall provide coverage for breach response costs, regulatory fines and penalties as well as credit monitoring expenses.

3.2.12.6 Primary and Non-Contributing Insurance. All policies of Commercial General Liability and Automobile Liability insurance shall be primary and any other 1897
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insurance, deductible, or self-insurance maintained by the City, its officials, officers, employees, agents, or volunteers shall not contribute with this primary insurance. Policies shall contain or be endorsed to contain such provisions.

3.2.12.12 Enforcement of Agreement Provisions (non estoppel).

COMPENSATION
In total compensation for the Services provided under this Agreement, the City shall pay the Consultant for actual hours of trolley operations based on the following schedule:

Total compensation under this Agreement shall not exceed $545,092.08 for the initial three-year term. Additional work shall require approval in writing in advance by the City Manager. 1900
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WORKER’S COMPENSATION INSURANCE CERTIFICATION

WARNING: FAILURE TO SECURE WORKERS’ COMPENSATION

COVERAGE IS UNLAWFUL, AND SHALL SUBJECT AN EMPLOYER TO

CRIMINAL PENALTIES AND CIVIL FINES UP TO ONE HUNDRED THOUSAND DOLLARS ($100,000), IN ADDITION TO THE COST OF COMPENSATION, DAMAGES AS PROVIDED FOR IN SECTION 3706 OF THE LABOR CODE, INTEREST, AND ATTORNEY’S FEES.
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Dated: ________________________, 20____
________________________________
(“CONSULTANT”)
By: ________________________________
________________________________
Title
________________________________
Address
________________________________
1902
Trolley Operations Services
City of San Clemente | 2024 RFP | May 31st, 2024
ATTACHMENT 4
1903
One Financial Plaza
Fourteenth Floor
Hartford, CT 06103
P: 860.522.7641
F: 860.524.8249
lazparking.com

1. COVER LETTER
May 31st, 2024
City of San Clemente
ATTN: Fatana Temory, Management Analyst Public Works
Department
910 Calle Negocio, Suite 100, San Clemente, CA 92673
RE: 2024 RFP, Trolley Operations Services
Dear Fatana Temory, Management Analyst,
On behalf of the entire LAZ Transportation family, our local Southern California team, and our National Transportation Services group, we are honored to present the enclosed proposal to operate City of San Clemente Trolley Operations Services. We are very grateful for the opportunity to participate in this process and guarantee, that should LAZ be fortunate enough to continue as your transportation partner for this project, we will bring the same customer-centric and dedicated management oversight we have delivered to the City of San Clemente over the years.

LAZ and its management team understands the scope of work for this project and has ensured the following in this proposal:
• Project Specific Details
• General work Program / Core Competencies
• Quality Budget Control
• Hiring Process
• Staff Breakdown
• Cost Proposal
We have read and understood all the terms and conditions set forth in the Request for Proposal documents, as well as the information presented in the Questions and Answers document posted as well as the 3rd Amendment. We are compliant. We have been authorized to bind LAZ Transportation to this proposal and contract, if awarded.

Should LAZ Parking’s proposal be accepted, we agree to enter into a contract under the terms and conditions as set forth herein and this proposal will be valid for a period of ninety (90) days. 1904
One Financial Plaza
Fourteenth Floor
Hartford, CT 06103
P: 860.522.7641
F: 860.524.8249
lazparking.com
Our services, methods, and technology solutions support our municipal clients by helping them realize dramatically increased customer service, lower operational costs, a quality-maintained fleet, and greater public confidence in transportation management services. We are excited to continue our partnership with The City to operate its Trolley Operations Services and to share its success.

By partnering with LAZ Parking, the City of San Clemente will receive:
• A safety focused professional team with extensive
transportation experience
• A large resource base of support – locally and nationally • Unmatched technology and fleet maintenance experience • A transparent reporting and management style
• A customer first attitude and a clear understanding of performance management
• A strategic alliance with a vision to collaborate on initiatives, services, and technology
In closing, we want to say thank you once again for the opportunity to present this proposal. We are hopeful that we will be afforded the privilege of continuing our long-term and successful partnership operating the Trolley Operations Services for many years to come.

Local Office
LAZ Parking California, LLC
949 South coast drive
Costa Mesa, CA 92626
(949)616-4237
[email protected]
Sincerely,

JARED SVENDSEN PAULA HENRY
Senior Vice President,
Southwest Region
Vice President,
Transportation Services
757 Union Street 1200 Wilshire Blvd, Ste. 100B
San Diego, CA 92101 Los Angeles, CA 900171
C: (619) 261-7622 C: (747) 254-9400
[email protected] [email protected]
1905
Trolley Operations Services
Table of Contents | 2024 RFP 1

TABLE OF CONTENTS
2024 RFP
City of San Clemente
Trolley Operations Services

1. Cover Letter.......................................................................................................................1 Table of Contents ..................................................................................................................1 Executive Summary ...............................................................................................................2

2. Project Understanding & Work plan....................................................................................4 A. San Clemente Project Specific Details.....................................................................................4 B. General Work Program / Core Competencies, Quality & Budget Control, Hiring Processes and Staffing Breakdown................................................................................................................5 Core Competency 1: Culture .........................................................................................................6 Core Competency 2: Performance .............................................................................................13 Core Competency 3: Fleet Efficiencies.......................................................................................23

3. Project Organization, Key Personnel & Staffing................................................................27 Staffing Plan & Organization Chart.............................................................................................27 Local & Regional ..........................................................................................................................27 Proposed Organizational Chart For The City Of San Clemente.................................................28 Meet The Team............................................................................................................................28 National Support..........................................................................................................................30

4. Related Experience ..........................................................................................................32 City of Dana Point, CA .................................................................................................................32 City of Laguna Beach, CA............................................................................................................33 California State University Long Beach ......................................................................................34

5. Cost & Cost Proposal .......................................................................................................35

6. Statement of Compliance.................................................................................................37 1906
Trolley Operations Services
Executive Summary | 2024 RFP 2

EXECUTIVE SUMMARY
This executive summary provides a concise overview of LAZ Transportation and our tailoredmade strategy, designed to enhance The City of San Clemente mobility experience. This plan includes identifying opportunities to streamline operations through technology and our decades of expertise serving similar municipalities.

LAZ is excited to present forward-thinking solutions that not only meet the requirements outlined in the request for proposal but also provide San Clemente industry-leading enhancements to the customer experience, while maintaining a reliable and innovative transportation operation.

We believe in the power of curiosity and collaboration, and we are confident that our proposal will set the stage for a mutually beneficial partnership. The following is a strategic roadmap that aligns with the University’s objectives and enhances operations.

LOCAL FOCUS, REGIONAL LEADERSHIP, NATIONAL SUPPORT. One of our key strengths is the ability to make decisions and manage operations on a local level, while calling on the operational expertise, financial support, and dedicated teams of our corporate office when needed. This ensures that clients receive boutique attention and a customized approach to their operation. We’re committed to making leadership available for regular meetings with the City.

COMPREHENSIVE APPROACH TO MOBILITY PLANNING. As a full-service mobility provider – encompising transportation, LAZ’s forward-thinking operational approach creates an efficient and accessible mobility ecosystem. This holistic planning methodology ensures that the transportation systems complement each other, creating a safe environment, establishing a seamless customer journey, and promoting planning efforts.

EMPLOYEE RETENTION & HIRING. We understand the challenge of hiring and retaining experienced and engaged staff. We have a dedicated group of Talent Acquisition Specialists who continuously recruit the best and the brightest. Additionally, as a people-first organization, we also promote from within, giving team members the opportunity to grow their careers with LAZ.
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COMPREHENSIVE TECHNOLOGY PLATFORMS. We provide world-class technology platforms that manage passenger data, service performance, driver behavior, management engagement, safety compliance, fleet maintenance and asset longevity.

The platforms also offer cameras, passenger applications, and real time location of buses. The integration and tracking of service performance and key performance indicators allows for a transparent view of the service for all parties involved. A comprehensive suite of customized reports is a valuable tool for the successful management of the contract.

SYSTEMIC RISK MANAGEMENT APPROACH. As an organization with robust procedures, we have a comprehensive strategy to mitigate safety, financial, and reputational risks.

As a result of risk identification, scenario analysis, business continuity and disaster recovery planning. Collaboration, transparency, and continuous training, we ensure the stability of our operations through a reduced risk profile.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG). LAZ launched its ESG program in 2022. Created to ensure that our employees have access to diversity programs, wellness initiatives, and operational excellence procedures. The program is designed to build value for our clients through DBE partnerships, multi-faceted facility use, & technology optimization.

DIVERSITY, EQUITY + INCLUSION (DE+I). Launched in 2020, LAZ’s DE+I program (See Attachment 1) is grounded in the belief that inclusive and supportive work environments attract top talent, foster innovation, and enhance employee engagement. Embracing DE+I reflects LAZ Transportation’s commitment to social responsibility and ethical leadership.

This collaborative effort will ensure that San Clemente has the resources of a proven, experienced mobility organization that can provide an operational approach. LAZ Transportation would welcome the chance to discuss our proposal in detail, addressing any questions or concerns, and work closely with the San Clemente to cultivate a mutually beneficial relationship. 1908
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2. PROJECT UNDERSTANDING & WORK PLAN
A. San Clemente Project Specific Details
The City of San Clemente is the southernmost city in Orange County and known for its surf breaks, great summer weather and white sandy beaches. The booming city attracts tourism from many other cities in and outside of Orange County.

In 2017, the program started with three trolleys on the Red Line, and in subsequent years, two more trolleys were added to the service, becoming the Blue Line. LAZ proved to be an efficient partner complying with the OCTA ridership requirements as necessary for The City to receive reimbursements from OCTA via Project V. We provide ridership data to The City in various formats that were accepted by OCTA; which included: Ridership by Hour, Ridership by Vehicle, Ridership by Stop and average ridership per hour.

Our first year, the requirement was to maintain a minimum of 5 riders per hour and 10 riders the year after, which we met with no difficulty. The trolleys had an immediate benefit to The City, its visitors, businesses and the community from the start and the Trolley Program has grown into a vital program for the city, its residents, and visitors.

We added GPS tracking so that riders can have clear visibility of the location of each vehicle which results in an improved rider experience and easier trip planning.

In 2023, on a 10-day notice, LAZ was asked to provide two ADA shuttles and drivers to service a new route called the Green Line that ran seven days a week mirroring the red and blue routes.

LAZ has proven its flexibility to provide high quality service as requested by The City.

In our eight-year history we have never missed a trip and have no history of any major accidents or major complaints.

Every summer we are challenged with staffing the summer program and we have always met the operational needs and our contractual obligations. After COVID, staffing was especially 1909
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difficult with a nationwide shortage of drivers and LAZ was again successful in recruiting qualified, professional drivers that met the expectations of The City and LAZ.

Part of this program's success can be attributed to the cohesiveness of the other Trolley Programs in the neighboring cities that LAZ also run. The fact that LAZ Parking also has those accounts translates to better service for our riders. Trips can be easily planned with a one-stopshop type program that unites the cities and their various communities. This cohesiveness also allows for our riders to get real time information throughout the South County cities that LAZ also operates.

Due to this cohesiveness, we aligned and synced schedules with Dana Point to reduce wait times.

LAZ is committed to continue providing services to the Red, Blue and Green Lines on the schedules provided by the city.

B. General Work Program / Core Competencies, Quality & Budget Control, Hiring Processes and Staffing Breakdown
Service Goals
Service Solutions
Service Expectations & Results
The general approach and plan for The City of San Clemente operation will be focused on our core operational competencies, which are the most important attributes to the success of our trolley operations. These competencies have three components that provide the foundation for a safe, effective, and efficient operations plan.
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Core Competency 1: Culture
Our most important asset is our people. Therefore, one of the most important components of the LAZ Transportation Trolley Operations Plan starts with the selection of the management team and all other team members. In the Employee Recruiting and Training Program section, we describe the hiring process, training programs, retention and building morale programs and benefit programs, with safety and service at the forefront of training and operations. To ensure that we are hiring and retaining the best employees, we have developed an extremely comprehensive program for employee recruitment, selection, training, motivation, and development. We will provide San Clemente with employees who will successfully perform their jobs. LAZ believes that it is critical for frontline employees to have strong communications skills, demonstrate professionalism and courtesy.

At LAZ, Customer Service is not just a buzz word; it is a total commitment to excellence that is woven into every area of the company’s operational methodology. From the way we hire & train our employees to how we maintain our modern fleet to compassionate treatment of our customers & clients, LAZ has always been “Driven to Excellence.”

1. The LAZ PACT
This LAZ PACT (Practicing Accountability Coaching and Training) is designed to assist all staff in making sound decisions and judgments while driving, or in the shuttle. In order to perform up to the standards of LAZ and our clients, the following material must be understood completely.

Vision
San Clemente is a unique account offering challenges;
however, these challenges offer an opportunity to grow
as an employee and as a person. While challenging,
working for San Clemente is a privilege, and it should be looked at as such.

Values
Respect, Commitment to People, Honesty, Integrity, and
Trust.

Practices
Sharp and On Time, Get 100% performance, and Clean &
Safe
Standards of Behavior
Actively looking for ways to help people, effectively communicate customer requests to prevent multiple/repeated requests from the customer, be efficient and organized, personalize the interaction in any way and engage the customer as individuals. Maintain a gracious tone and pace throughout the interaction, avoid slang and excessive use of phrase-fragments, make eye contact and keep focus on the customer. Save energy and time by taking less steps, create less 1911
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stress by being in control of the situation and working proactively. Always smile, never, ever give up and before your shift, always be prepared (ABP) with the proper tools. We would work closely with you to ensure that the service LAZ is providing at the trolley operations is meeting or exceeding your goals to provide premier customer service through operational excellence.

2. General Hiring Process
Recruiting & Hiring Process
We understand that the service we provide begins and ends with our front-line employees and how well we train and support them. Therefore, the recruitment process is especially important to ensure we are hiring the team members that will make a difference.

Pre – Employment Process
LAZ has a comprehensive pre-employment screening program in place to make sure that only the most qualified candidates are chosen for employment. Pre-employment screening is an effective risk management tool that promotes a safe workplace by helping to limit the uncertainty inherent in the hiring process.

Current Hiring and local Process
Every summer, LAZ invests significant resources to retain the personnel already in this system.

Our initial and future recruiting efforts will focus on cultivating a workforce that represents the community it serves.

Background Checks
All candidates for employment, prior to receiving an employment offer, must successfully pass a criminal background check. Candidates must also pass a pre-employment drug test.

Third-Party Background Checks
LAZ uses the services of American Background Information Services, Inc., to perform background checks (including criminal record searches, credit history and motor vehicle record searches) on all prospective driver candidates. Screening of all management-level candidates, including supervisors, specifically covers criminal records, credit violations, motor vehicle driving infractions, educational credentials and prior employment.

Pre-Employment Drug Tests
Pre-employment drug testing is required of all candidates for employment.

Initial Feedback
An employee’s first 90 days are carefully monitored by the manager. The employee is shown an initial review, which addresses work habits, appearance, paperwork, customer contact and onthe-job performance. All new employees are given a comprehensive evaluation after 90 days. 1912
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Orientation
LAZ provides a robust orientation and training program upon hire for employees that is listed in detail starting later on this page.

Post-Employment Education
LAZ also has a “Post-Employment Education” program which instructs line level employees and managers on developing skills necessary for advancement within the company. Formal classroom setting courses are offered, and employees must accumulate course credits to be considered for promotion. Examples of some of the courses that LAZ offers:
• GET 100
• Loss Prevention
• How to Become a Better Manager
• Property Safety
• Motivating Your Employees
• Time Management
• Effective Communication
• Business Ethics
Proactive Hiring & Continuous Hiring
Our local HR team is continuously recruiting and on-boarding to ensure staff fills any turnover.

This allows us to have a large pool of candidates readily available to fill shifts. This proactive strategy mitigates the risk of being short-staffed due to turnover.

3. Shuttle Specific Training Programs
All shuttle locations have an assigned driver trainer who is responsible for the training program.

This program was designed to be adapted to include the training requirements of each clients.

This training explicitly trains our staff in every aspect of safe driving. These are participatory, engaging sessions that include extensive materials for trainers (discussion guides, facilitator’s guides, etc.), a detailed instructor’s manual and driver workbooks for practice and comprehension. Quizzes and assessment tests are used to document performance and learning, and there is a thorough final driving evaluation. Based on assessment performance, drivers are entered into our full New Driver Training program which includes:
• 4 hours = Orientation
• 4 hours = Company-Specific Training
• 8-hours classroom = 4 hours Defensive Driving and 4 hours Safety Training • 24-40 hours = Behind the wheel driver training (depending on experience) LAZ understands the success of the City of San Clemente Trolley Service is highly dependent on the drivers effectiveness on their assigned routes. Therefore, in addition to the training outlined above, the drivers dispatched to the City’s service are required to complete route specific training. Providing this supplementary training ensures our drivers are prepared to handle challenges they may encounter while on route (i.e. traffic, closures, road incidents, etc.). 1913
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New Driver Training
Get Started – LAZ Policies and Expectations: Drug and Alcohol Policy, Mobile Phone and Seat Belt Use. Random Drug Test Program, Distracted Driving and Artificial Intelligence (A.I.) Camera Integration, Accident Policy and Reporting, Bloodborne Pathogens, Facility Tours, Know Your Vehicle – Overview, Components, And Operation, Your Vehicle, Your Responsibility – Proper Inspections, Maneuvering Your Vehicle Basics, Maneuvering Your Vehicle Intermediate.

Maneuvering Your Vehicle – Defensive Driving, Elderly Customers and Customers with Disabilities. The Professional LAZ Driver, Standards of Behavior, Passenger Relations, Communication Skills and Overview of the Professional Driver.

Experienced Driver Training
The LAZ Way, Understanding Your Vehicle, I See You – You See Me! Mirrors, Blind Spots, And Mirror Alignment, The Professional LAZ Driver.

Budget Control
LAZ understands how critical it is to stay within the city’s budget that is directly tied to the Project V program through OCTA. We will continue to operate in a fiscally responsible manner and not deviate from the approved cost of the project without prior written approval from the City.

Bilingual Language Skills
LAZ understands the diverse nature of both the workforce and the ridership of San Clemente.

As such, LAZ strives to plan for/prioritize their accommodation as needed.

Defensive Driving for All Drivers – Decision Driving
The Five Principles of Decision Driving: Expand Your Look Ahead Capacity, Get the Birds Eye View, Signal Your Intentions Early, Plan an Escape Route and Take Decisive Action. The result of our detailed approach is a professional LAZ driver who can be trusted to make the best available decisions while operating their vehicle. These decisions include vehicle control skills that enable us to provide a safe transportation environment, as well as skills to properly address a passenger’s needs both, tangible and intangible during their journeys.

Americans with Disabilities Act and Passenger Sensitivity Training LAZ recognizes that some customers are people with disabilities. To ensure our Drivers have knowledge and understanding of the wide range of abilities of passengers and the best methods to interact with and assist them, LAZ includes a comprehensive ADA and passenger assistance training program for Drivers.

Approach to Passenger Safety & Compliance with ADA Laws Our Recruiting Managers look for compassion as the number one trait in potential new employees, as we take the responsibility of providing excellent transportation service for our passengers very seriously. To ensure the safety of our passengers during transport, we utilize the strictest ADA standards in the industry for pre-screening and training of all our personnel.

Below are selected excerpts from our training and operations manual with regard to ADA compliance and wheelchair safety:
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• Wheelchair Safety
• Lifting
• Alighting
• Maintenance of Accessible Features on Vehicles
• Safety Monitoring
In-Service Training
During the latter portion of training, trainees drive the trolley routes and are expected to follow the same procedures as graduated Drivers. This includes, at minimum, driving under the immediate supervision of a Behind the Wheel trainer. This provides the new driver the opportunity to experience customers, maintain a schedule, with an experienced Driver on-board to assist and evaluate. Trainees are tested frequently on their knowledge of operational policies and procedures.

Training Documentation
LAZ requires the Training Manager to be responsible for maintaining proper documentation of the training received by each employee and the satisfactory completion of each module. The training log will be the source document used to record trainee attendance, hours of instruction and coursework completion. A training certificate is presented to each successful trainee with a copy of the certificate going into the employee’s record.

First Year Training and Refresher Training
The training program does not end with the last day of the training schedule. As part of the company training program, LAZ has instituted Driver safety monitoring to measure the success of our training program and to determine the need for further training in specific areas. Safety monitoring of drivers is accomplished by supervisors who ride along with the driver and monitor their safety habits. All drivers are evaluated at least once during their first six months of employment. Each employee meets annually with a management employee to review performance and discuss potential improvements to the operations.

4. Service Level Monitoring & Customer Feedback
We empower all staff to handle consumer service problems. Responsibility for consumer feedback is in the duty statement of all employees, supervisors & management. The General Manager or their designee reviews all customer feedback, resolutions & any unresolved problems. Customer feedback can be provided to us in a variety of ways: Our Website, Customer Feedback card, Customer Service Hotline, Suggestion Boxes and In Person at our management office.

All employees are expected to listen courteously to customers’ feedback and concerns and do what they can to correct the deficiencies. When an employee receives customer feedback, regardless of its nature a “Customer Feedback Form” should be initiated. If the employee is able to resolve the matter, then the “Customer Feedback Form” should be completed & given to the Supervisor or manager on duty for review & follow-up.
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Where employees are unable to resolve the problem, they ask the customer if they would like to speak with a supervisor or manager on duty to further assist them with their concerns. If the customer says no, the employee continues to try & resolve the problem. If the customer says yes, the employee immediately contacts a supervisor or manager on duty to expedite the matter & informs the customer that <name>, who is <position> at LAZ will be assisting them further with their concerns.

The “Customer Feedback Form” is then passed to the attending supervisor or manager for review & completion. If a supervisor or manager is not immediately available the employee will notify the customer that <name>, who is <position at LAZ> & is responsible for customer service concerns, will contact them within 24 hours to discuss their concerns. The employee will place the “Customer Feedback Form” in the designated mailbox to be followed up immediately by the supervisor or manager once they become available. All “Customer Feedback Forms regardless of status will be passed to the operations manager no later than 48 hours after initiation. The operations manager will review & follow-up when necessary.

Secret Shopper Service
Trendsource, our third party “Secret Shopper Service,” audits the trolley experience and evaluates each of our operations. The shopper evaluates the ticketing procedure and tickets themselves, the cashier in terms of appearance and customer service, and the cleanliness of the facility. A report is generated and sent to Senior Management who then pulls the ticket to ensure proper ticketing procedures were followed and the transaction was accurate. Based on the other aspects of the shopper’s report any necessary actions should be taken. Some of the highlights of our mystery shopping service include ratings for: Greeting, Eye Contact, Name Recognition, Impressing the Rider, Pick Up / Drop Off Times, Driving Habits, Claims Prevention, Appearance and Professionalism, Safety and Security and Cleanliness of trolleys. We will share all results with San Clemente. This allows us consistent feedback which in turn leads to Outstanding Performance. The unbiased feedback we receive through this program also enables us to recognize our People & Reward them for providing exemplary Service.

Customer Surveys
While the City uses their own survey as approved by OCTA, we usually do customer surveys as well. We developed it using best practices in the transportation industry, as well as other service industries. We’re happy to provide additional surveys if requested.

Online Complaint Process
Customers can also report a concern online at our website at: www.lazparking.com. LAZ views customer complaints or issues as an opportunity to “exceed our clients’ & customers’ expectations.” While we constantly try to keep customer complaints to a minimum, it is not possible to interact with the public hundreds or thousands of times each day and not have an occasional unfortunate issue arise. All complaints are recorded in an operational logbook which is available for review by our management and client at any time. This logbook serves as an aid to management that allows for identification of any recurring complaints in order to implement a more lasting solution or develop additional training programs for the staff in order to mitigate similar issues that may occur in the future.
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Patron Claims and Complaints
We promptly investigate and resolve all claims and complaints about service, damage, accidents, etc. We will furnish the City with a copy of the complaint or claim, documentation of its investigation, and a written response resolving the complaint or claim. Maintain a computer database of compliments, complaints and claims that shall be made available to the City upon request. Our Quality Assurance Database collects detailed information while providing many advantages over manual systems. From the database, we can generate reports, transfer reports to management electronically, trigger automatic follow-ups, collect statistical information, track action taken, etc. allows us to monitor our progress of training customers & employees in equipment use so we can determine & schedule staffing levels accurately. We maintain all complaints or issues related to the transportation operation in the Database for a period of three years or as otherwise may be requested Client. This database allows LAZ to monitor our progress in training customers & employees in equipment use so we can determine & schedule staffing levels accurately. We would work with San Clemente to put together a customized customer complaint resolution process that will include electronically trackable communication with all complaints within a defined timeframe.

5. Employee Motivation & Recognition
Our people-first mindset and service-focused philosophy differentiates us from other transportation companies. LAZ 's continued growth, success and service to our clients are the result of living this mission. We call all of this "The LAZ Way" and it includes our mission, our values, and our daily practices. At LAZ, investing in our employees is one of our highest priorities, including motivation tools such as LAZ Connected, a seasonal company newsletter, company parties, bonus structures and other morale boosting programs. These programs are constantly evolving and are imperative in motivating employees to deliver the highest level of service to your customers.
• Annual Awards and Recognition
• Diversity and Inclusion Commitment
• Employee Assistance Program
• Employee Referral Programs
• Feel Good Friday
• Fitness Challenges
• Health & Resources
• LAZ U Management Program
• Mental Health
• Mentor Program
• Movement Monday
• Professional Development
• Internal Promotion
• Smoking Cessation Program
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LAZ “Rave” Program
On our weekly regional operations conference call, each region highlights any employee who stands out for their overall dedication or for a specific achievement. These individuals are sent a “RAVE Card” that is personally signed by the LAZ management staff. RAVE stands for Recognizing Acts of Value & Excellence.

Employee Wellness Programs
LAZ promotes a caring culture and places tremendous emphasis on being able to deliver the following employee programs: Health and Wellness, LAZ Charitable Foundation, Gym Membership Discounts, AT&T LAZ Employee Friends & Family discount and several others.

Incentive Programs
This is of critical importance to boost employee morale — excellent performance is rewarded.

Our recommended employee incentive program works like this: In order to qualify for the employee incentive program, you must work 20 hours per week, for at least 4 months.

Employees are evaluated on absences, punctuality, teamwork, uniforms, cleanliness, accuracy of paperwork, customer service and friendliness and overage/ shortages. Each employee would receive the appropriate bonus based on the total points earned during the period. Points will be given during the specific time period of the program (usually monitored every quarter or 6 months and awarded quarterly or every 6 months) for the following: • Zero Absences = 20 points, Accuracy of paperwork = 10 points, Customer letter or e-mail = 15 points, Zero overage/shortage = 15 points, 100% punctual = 15 points, No write ups = 10 points, Uniform = 10 points, Area/Shuttle Cleanliness = 5 points Point Scale & Reward: 95–100 points = $100 and 89–94 points = $50.

Core Competency 2: Performance
LAZ provides trolley services in a safe, passenger-focused and very efficient and friendly manner. We ensure that the following methods, programs and initiatives are deployed to ensure safe and on time delivery of passengers, as well as delivering stellar customer service for every ride. LAZ provides a comprehensive telematics approach to our service. Our technology platform addresses various key elements in one solution as summarized below.

Monitoring Efficiency, Reporting, Creating a Positive
Customer Experience
The vehicles currently operating on the City of San Clemente Trolley Service utilize Transloc Technologies as the GPS system. Starting in year two of the contract, LAZ proposes to replace Transloc with the systems outlined below. We believe converting to Passio Technologies will enhance the rider experience while still providing all the necessary reports the City needs to comply with the requirements of OCTA.

LAZ proposes to use state-of-the-art GPS tracking systems Samsara and Passio to monitor trolley location, passenger load, and minute-by-minute demand to determine the proper number of trolley required. In addition to this ongoing evaluation, data will be used to project the 1918
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scheduling needs for each week, day and hour, so that staffing – and ultimately costs – can be monitored for efficiency and controlled. This program for trolley GPS tracking not only allows for real time monitoring and dispatching, but it also adds to the passenger’s customer experience.

Samsara
Samsara is a best-in-class telematics company known worldwide for providing an advanced allin-one telematics solution that goes beyond basic GPS tracking. The chart below is a snapshot of the offerings that can be leveraged through the installation of Samsara Technology.

In addition to the above comprehensive snapshot, and even more important, is the unique driver behavior monitoring feature of the Samsara technology. This technology includes a vehicle gateway that provides a Dual-Facing AI Dash Cam, CM32. With live scene analysis, the CM32 is purpose-built to reduce high-risk behaviors, like distracted driving and unsafe acts, lower safetyrelated and claims costs, and provide deep visibility into fleet operations. The CM32 automatically uploads HD video footage to the Samsara Cloud allowing our Safety and Management Team to analyze driver behavior and road conditions in real-time, providing unprecedented visibility into leading causes of preventable accidents. This tool can be used in coaching driver behaviors, rewarding employees for a job well done, and assisting in accident fault determination.
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Passio GO Mobile
Real-time Vehicle Locating and Passenger Counting – Passio GO Mobile Passio GO offers a mobile app designed to be intuitive and user-friendly. For users wishing to take advantage of features like “where’s my bus” or destination planning, the app will provide hints and guidance tools to make the app easy to use. The GPS data is updated I real time, typically every second or so. Also included with the Passio Go solution will be Wi-fi availability to the riders.

The public facing real-time location of vehicles, stops and routes can be accessible from a smartphone, PC, or tablet.

The mobile app has the following features:
• Geo-location button on the home screen allows GPS enabled smart devices to orient the users’ location to the map view • Option to select all, some or one route (Green, Red, Black Lines)
• Option to select individual stops on the different routes • Smooth and steady real time vehicle location processed through the applications algorithm
• Customizable with easy access to saved routes and stops The Passio GO app will allow us to send alerts and announcements to the City’s ridership. Alerts will be displayed above the map and do not require any action by the user. Announcements are indicated on the app by a red message button at the bottom of the home screen. Users need to tap the indicator to view the announcement.
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In addition, the Passio GO app allows the users to set automatic scheduled stops alerts. The user can set an “arrival” alert for their favorite stop by tapping on the desired stop and set the alert for a certain number of minutes away.
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Passenger Counting
The Automatic Passenger Counting (APC) is fully
automated with startup beginning with vehicle
ignition. The system accurately counts passengers as
they board and alight and registers stops, routes, and
runs. It distinguishes between passengers and nonpassenger objects and can detect double backs and re-crossings. Its accuracy is 98% allowing the drivers
for the City to focus on Safety and customer service
while providing data to City Management.

APC record-level detail is stored for a minimum of 36
months and provides count information at the base
level which allows for time and individual bus and
driver reporting at the stop level. Beyond those 36
months, the data will be available in a format of route, day and passenger level. Dynamic reporting of the
data will be available for up to five (5) years. After that, all data will be made available electronically.

LAZ Business Intelligence
An example of data reporting
that can be customized through
the LAZ Business Intelligence
Department is Performance
Audit – Secret Shops.

Each of the above examples
was taken from current LAZ
shuttle operations. They are just
a selection of data that can be
captured in report or dashboard
form. Based on the needs of the
San Clemente, LAZ is confident
through either the Passio or
Samsara technology or our
Business Intelligence Department, that we can meet all the reporting requirements of the San Clemente.
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LAZ Customer Service Metrics: Surveys & Secret Shoppers LAZ is committed to providing the highest level
of customer service and quality programs. We
believe that setting relevant, important, and
meaningful Key Performance Indicators (KPI’s)
are critical to sustaining high levels of service
and articulating our success to our clients. LAZ
believes in a balanced scorecard approach to
ensure that we are delivering (and measuring)
all aspects of our business, Quality, Service,
People, and Financial.

These are just a few of the Key Performance
Indicators that we can report to our clients. A
detailed list can be developed in partnership
with our clients and can be customized to be
site-specific.

LAZ understands that customer service is one of the most important aspects of trolley operations. First and foremost, all our personnel will be trained in safety and customer service focused and efficient service. We will measure our service levels in a variety of ways to ensure satisfaction. The best two ways to measure customer service are Secret Shoppers and Customer Service.

Secret Shoppers
An integral part of our Quality Assurance program is
the user of “Secret Shoppers” to audit the quality of
customer service of our own staff. The secret
shopper verifies ticket and cash transactions and
evaluates the drivers’ overall appearance, attitude,
and helpfulness as well as the vehicles overall
condition and cleanliness. These reports will be a
part of the monthly reporting package. The results
are then shared with the RVP, GM, and the client. The
secret shopper company will conduct at least 2
visits each quarter, with the goal for scoring to be
95% (A) or above. All reports are fed into our BI
system.

The system has an app that allows passengers to
see the exact location of the next trolley and gives them a countdown of when the vehicle will arrive. With San Clemente permission, LAZ will encourage the use of the app for passengers, allowing the public an added convenience during the travel experience. In addition to the app, a vehicle arrival countdown can be added to the digital display board at the trolley stops, alerting passengers to how long the wait is for the next vehicle. We are of course open to utilizing other technology if San Clemente has a different preference.
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Passenger Count Analysis
The first step in creating a route structure that will deliver results for the trolley service is completing an initial and then continual passenger count analysis. This is the foundation of identifying passenger trends by hour throughout the service day, week, month and year. This information allows us to identify the time of day that the specific stops are experiencing heavy loads of passengers. We use this method in our daily analysis to make sure a sufficient number of buses are operating throughout the 24-hour day. The second step of the analysis is to continually monitor the ever-changing passenger trends that are inherent with City operations.

The application of technologies that track traffic and passenger patterns plays a crucial role in better understanding the passenger trends and patterns over the long-term. This enables better decisions for the allocation of resources for the trolley operations. With continual analysis, LAZ and San Clemente management will have a complete understanding of normal increases or decreases in passenger load, versus seasonal or exceptional operations.

Route Times – Demand Staffing Schedule
LAZ has and will continue to follow the schedule provided by the City. The schedule has proven to be efficient and effective in providing the necessary levels to service the community and tourists of the City.

Improper schedules can create significant drop in the number of buses on route, causing increased headways and passenger wait times and result in the perception that more buses need to be added to deliver the service and add long-term costs that are unneeded. LAZ is familiar with the operational challenges of the City.

Should drivers need to be replaced in the field, the
manager on duty will transport a substitute driver to the bus on route, and will swap drivers to return to base.

Driver call-outs will be handled by dispatch and a
sufficient board of part-time drivers will be readily
available.

We will optimally meet the route and scheduling needs
for the San Clemente Trolley Operation by providing not only a proven and effective run cutting system, but also an experienced expert in the run cutting field. We would perform the following functions: Operate a scheduled
transit bus service at a headway frequency or at fixed
times for the following routes: Red Line, Blue Line & Green Line.

We would never change the routes, service, or schedules without prior written approval from the City. Ensure that any and all approved changes are maintained in the SOP Manual. 1924
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KPIs & Reporting
The KPI and performance measurement process entails the following:
• Jointly establish KPIs (OTP, driver performance, safety enhancements and fleet management)
• Data benchmarks
• Implement best practices and review process.
• Monitor and evaluate.
• Continuous joint reviews
• Development of custom reports and review process
Sample Reports
Passio Reports Summary – We will continue to provide the City with: Ridership reports by hour, by day and by route with average ridership as required by OCTA. 1925
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2. Project Understanding & Work plan | 2024 RFP 21
Route time, Headway, In/Out of Service Report, Schedule Reports, and Passenger load reports.

Samsara Summary of Reports – Vehicle activity reports, driver compliance, driver safety, and fuel/energy reports.

Assignment of Trolley Buses
Supervisors are to assign trolleys to drivers on their respective shifts. Driver Vehicle Inspection Reports (DVIR) will be filled out daily by the drivers and maintenance slips will be prepared. At the start of their shift the dispatcher will note any trolleys that are under maintenance & note any trolleys that have had maintenance slips prepared. The supervisor will look over any 1926
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2. Project Understanding & Work plan | 2024 RFP 22
maintenance slips & submit these reports to the City’s maintenance staff. Trolleys will then be assigned by the supervisor to the drivers based on what is available at the time.

Route and Driver Supervision
The supervisor will be responsible for all routes and drivers throughout the duration of the service. The supervisor will be in the field overseeing all operations.

The management team at LAZ Transportation will be accountable for all performance, activities, and compliance with the requirements of the Contract. Our Operations Team will be empowered and able to react to the day-to-day passengers’ needs. Beyond their regular work schedules, all management staff will be on call in the event of an emergency.

As part of the overall Operations Plan, LAZ will be responsible for management of all elements of the transportation program, including but not limited to:
• Staff will be available during all hours of operation and have the necessary communication devices for communicating to City staff and LAZ management • Ensuring that operations staff and bus drivers are trained properly and are equipped with the tools required to complete their job duties
• Ensuring adherence and compliance by personnel to all established customer service and operations policies, rules, procedures, and regulations • Ensuring all staff have a complete understanding of their job description and understand customer service expectations
• Ensuring that passengers are picked up in a timely manner and transported safely, and that the clients’ expectations for service delivery are exceeded • Ensuring appropriate staffing schedules at all locations • Ensuring all employees are in their proper uniform
• Directing and coordinating the customer service activities of all personnel • Follow the schedule to ensure that adequate resources are allocated for daily operations • Evaluating Mystery Shopping Reports and Customer Survey results to ensure superior customer service standards are consistently delivered by all drivers and employees Assignment of Routes and Drivers
The supervisor will assign drivers to their respective routes at the beginning of their shift. The supervisor may rotate the drivers between routes as much as possible while keeping in mind that they want their shift to run as smoothly as possible. At the beginning of their shift, drivers will be checked in and a review of their hours of service, credentials and readiness will be conducted.

When assigning routes, the supervisor will keep in mind the following: For busy days, assign drivers who are remarkably familiar with the service to the heavier routes & drivers with less experience to the slower routes. During slow periods of the day or on slow days rotate the less experienced drivers to the heavier routes so that they have the opportunity to improve. This will accomplish 2 things, it will expose drivers to provide them with the opportunity to improve & it will keep them from getting too comfortable on a specific route, which could become a hazard. 1927
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2. Project Understanding & Work plan | 2024 RFP 23
Core Competency 3: Fleet Efficiencies
We will maintain the Shuttle Vehicles in a safe, clean, operable, and sanitary condition. All our vehicles and equipment will meet all Federal, State, and Local regulations.

Our Fleet Management Plan is very comprehensive and provides flexibility for driver only or allinclusive operations and fleet management contracts.

We will handle the daily inspection of all vehicles and very minor repairs, utilizing internal staff.

The following is a summary of our fleet maintenance guidelines. In addition, we have detailed processes and procedures in place, which are available upon request.

Fleet Management and Maintenance Summary of Guidelines
LAZ Understands that the Red and Blue Line maintenance service is performed and paid for by the City. We also understand that the Green Line maintenance service is required to be performed and paid for by the contractor. As such, we have included below details of the LAZ Fleet Maintenance program.

General Fleet Maintenance – (All fleet types)
MAINTENANCE – PM COMPLIANCE GUIDELINE FOR STAFF
DAILY
• Manager will discuss with staff the available buses for the following day • The supervisor will assign available buses to routes
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2. Project Understanding & Work plan | 2024 RFP 24
• Managers will review, prioritize, and schedule maintenance department repairs WEEKLY
• Shop Manager will provide a weekly schedule for the buses needed for PM compliance • Supervisor will run weekly PM compliance report and discuss with contract team

MONTHLY
• The manager will run monthly PM compliance reports from telematics system • Review KPI with senior management and client.

Bus Utilization & Life Expectancy Guideline
A location bus rotation plan will be developed based on route mileage and company guidelines for bus utilization. The plan will address rotating high milage vehicles out of service and replace them with vehicles with lower mileage to reduce wear and tear of fleet.

DAILY
• The Manager will review bus and DVIR mileage and routes and develop a plan to rotate vehicles in the service plan based on mileage.
• Manager will discuss with staff the available buses for the following day • Dispatcher and Shift supervisor will assign available buses to routes and review mileage after route
WEEKLY
• Shop Manager will provide a weekly schedule for the buses needed for PM compliance

MONTHLY
• The manager will run monthly mileage reports from telematics system. • review KPI with senior management and client.

Daily Vehicle Inspections
For Service Operations and Maintenance Reporting, we are using Samsara, a cloud-based system that allows us to track driver log inspections, vehicle condition, maintenance needs, mileage, and overall vehicle history. Checklists are customizable for each operation. These records will be used during DOT inspections.

Drivers will use the technology platform app or the existing location process to conduct daily vehicle inspections. The App works online or offline so there is no reason not to obtain the information. Drivers have their own login, so we know who conducted the inspection. We will have complete control over the inspection process and the vehicle inventory in real time and photographic back up. Before starting the daily inspection, drivers view the last report conducted on the vehicle, any defects flagged as well as photos and comments relating to the defect or the repair of it. Drivers then sign off on the inspection. A vehicle inspection is done any time a new 1929
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2. Project Understanding & Work plan | 2024 RFP 25
driver takes possession of the vehicle whether it’s to start the shift, a lunch break or mid shift change.

Inventory Tracking Software
Our highest priority is to ensure safe and on-time transportation for all passengers and visitors.

Inventory management and timely parts replacement are essential to ensuring that we meet or exceed these standards and City expectations. Inventory controls and safeguarding procedures begin with careful management and oversight. Our management and staff are trained to monitor the security of our operations facilities and vehicles at all times. Inventory tracking includes keeping a spreadsheet with all vehicle information, registration renewal and expiration, date of next annual inspection, vehicle maintenance logs, and any accidents.

Preventative Maintenance Procedures
LAZ’s goal of preventive facility maintenance is to perform all inspections and services before a repair is needed. All buses will be ready for service, clean both inside and out, and ready to use at the start of the requested service. We will outsource our quarterly and annual maintenance of the buses, which makes it easy to keep up with all the service our vehicles will need with minor to major repairs, service due reminders, and detailed e reports. We will coordinate preventative maintenance which will include, but not be limited to, oil and filter change, engine tune-up, transmission lube, differential lube, charging system test, ultraviolet inspections, auxiliary equipment, refrigeration units, service-due reminders, wheels alignment, and glass replacement.

Fueling
LAZ will utilize our drivers and/or supervisory staff to ensure all vehicles are properly fueled and ready for service.

Fleet Sustainable Processes & Practices
LAZ has developed processes and practices to mitigate the impacts of the transportation fleet on air pollution. The following is an example of some of these practices:
• Established guidelines for purchasing alternative fuel vehicles. • Comprehensive fleet replacement and refurbishment plan. • Awareness programs for drivers to become riders of transportation services. • Strategies for idling efficiency and reduction.
• Combined with these practices, LAZ has developed practical approaches to optimizing efficiencies in operations, maintenance, and driver behavior.

LAZ has implemented a world class transportation telematics platform that provides a comprehensive reporting suite for sustainable practices and technologies.

The custom reporting features include:
• Fuel Efficiencies
• Operating Practices
• Driver Behavior
• Emissions and Fleet Monitoring
• Route Optimization
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2. Project Understanding & Work plan | 2024 RFP 26
The platform coupled with the fleet enhancements provide for a robust view into the commitment to the strategies and goals set forth by LAZ.LAZ has wisely invested in alternative fuel vehicles for the fleet and will continue to replace existing diesel vehicles with alternative fuel types.

The fleet maintenance readiness program is centered around proving the required maintenance and OMC parts. This will increase efficiency of the vehicle and driver operations.

In addition to the fleet readiness practices, LAZ has developed an idling reduction program that is driven with goals and key performance indicators (KPI). The primary focus is the daily monitoring and measuring of driver behavior, vehicle performance and established KPI’s. It is expected that a substantial decrease in emissions will be achieved yearly by our strategy of increasing fleet utilization, driver awareness, and ongoing KPI monitoring. 1931
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3. Project Organization, Key Personnel & Staffing | 2024 RFP
27 3. PROJECT ORGANIZATION, KEY

PERSONNEL & STAFFING
Staffing Plan & Organization Chart
LAZ is a matrix-based organization, an innovative approach to managing and aligning resources across the company. This structure is designed to leverage the expertise of our specialized services lines, allowing LAZ to respond more effectively to dynamic and complex operations.

Though LAZ has more than 14,000 employees across the nation, each location is managed locally. The LAZ’s implementation of the matrix-based structure is designed to empower local and regional leaders to make the best decisions, while continuously supporting them at a national level through the strength of the LAZ organization at large.

Local & Regional
The California LAZ Family has a dedicated Regional Vice President, Human Resource Team, and multiple Managers who play a crucial role in driving growth, success, people focus, and cohesion. In California with an experienced local transportation expert who is an active member of the community, LAZ can ensure that clients receive boutique attention and a customized approach to their specific operational needs.
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3. Project Organization, Key Personnel & Staffing | 2024 RFP
28 Proposed Organizational Chart for The City Of San
Clemente
Meet The Team
Beejay Jones - On Site Project Manager
Beejay serves LAZ as the Manager for the San Clemente Trolley public transportation services and Assistant Manager of Cal State Long Beach campus shuttle for students, staff, and faculty. He has 30+ years’ experience in transportation management and coordination & 10 years supervision in Security logistics. He effectively executes account management and has a proven history in client relationships, consulting with city officials and other executives. Building effective partnerships, overseeing execution to exceed client expectations and performance improvement opportunities. He has an excellent driving record and has held elevated security clearance in transportation of government officials and qualified with lengthy experience managing drivers. As well as, training behind the wheel and supervising routes and shifts, defensive driving, coordination and execution of passenger transport in both public and private transportation sectors. He maintains employee records 1933
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3. Project Organization, Key Personnel & Staffing | 2024 RFP
29 administration, managing staff time entry, payroll and performance compliance and evaluations, maintaining safety & traffic regulations. He is consistent, reliable, innovative and ready to serve.

Jackie Apollo - Operations Manager
Jackie serves as the Operations Manager for transportation in Orange County. With the experience in Academic degree in Urban Planning, and the commitment towards transit services. Jackie successfully demonstrated efficient management and maximizing transportation routes. Jackie has always provided the leadership and support to all location managers, and front-line associates. As the technology progress, Jackie also strives to create opportunities for LAZ employees to develop skills for modern technology.

Marco Carrillo- Sr. Director of Transportation
Marco Carrillo serves as Sr. Director of Transportation. Offering over 22 years of Management success, with intense concentration and enormous success in project management and customer service. Outstanding record of achievement in delivering substantial revenue, productivity, and quality improvements through well-managed, on-time projects. Particularly strong in staff development, including training, coaching, and evaluation.

Responsible for the day to day operations of all transit contract, maintaining accurate records/documentation of training, testing, and driving records. Responsible for daily, monthly, and annual Terminal inspections of shuttles, buses, and records. Maintained detailed records as required by DOT, PUC, and CHP to ensure compliance. Responsible for creating weekly, monthly, and annual reporting to clients. Consistently build and maintain strong relationships with clients, employees and customers through close and effective communication.

Mario Montenegro – Transportation General Manager
Mario Montenegro has over 25 years of professional experience in the Parking and Transportation industry. He holds a bachelor’s degree in business management. Mario has managed shuttle operations for several universities, hospitals, municipalities to include all trolley operations in Orange County cities. Mainly focused on transit and fixed routes and he has a lot of experience to major events, such as ComiCon, Boots in the Park, professional sporting events and large festivals. On his personal time, Mario supports several non-profit organizations such as Saving Innocence, which helps save children from sex trafficking. He also financially supports several orphanages in third world countries and helps provide them with in-house education, food, clothing and more. As the Transportation General Manager, Mario has helped develop internal talent into bigger roles that have led to their success.
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3. Project Organization, Key Personnel & Staffing | 2024 RFP
30 Chris Canales – Regional DOT Safety Manager
Chris serves as the Orange County Regional DOT Safety Manager. Chris possesses an extensive background from safety management to sr. operations management. Offering over 10 years of relevant experience, Chris is seasoned in DOT/FMSCA regulations and maintains effective management skills. With an excellent compliance audit/inspection record, Chris has always provided effective leadership and support to all operations, location managers, and front-line associates. Chris oversees and ensures the safety and compliance for transportation operations in Orange County by implementing company policies and procedures as well as safety best practices.

National Support
LAZ’s national support teams facilitate efficient communication, knowledge sharing, and resource allocation across regions, enabling LAZ to leverage local expertise, adapt to market dynamics, and capitalize on regional opportunities. Additionally, specialized operations – such as universities and healthcare – have dedicated services lines that enable effective coordination of activities, standardization of processes, and implementation of company-wide strategies, leading to improved performance. National support ensures that regions have access to bestin-class training, practices, and technology to run efficient operations and drive value to our clients.

Jonathan Wilkins – DOT Compliance Director
Jonathan joined LAZ in 2021 as the National DOT Compliance Director. With this foundation, Jonathan seeks to improve organizational compliance through training and empowering our people to make the best available decisions. Jonathan brings with him 20 years’ experience in transportation ranging from smaller operations to multi-modal locations with hundreds of vehicles. He now supports LAZ’s transportation operations through regulatory compliance as well as promoting safety practices network wide.

Kristin Martinez – National Director, Transportation Services Kristin is a top-performing operations leader with over 20 years of experience in the transportation industry. Experienced in marrying strategy and execution by planning, organizing, and directing workflow while aligning day-to-day activities with the overall strategic direction. Kristin aligns people and processes to effectively attain measurables in workforce utilization, cost containment, safety, and compliance. Drives quality assurance and safety requirements by reviewing for accuracy, efficiency, and redundancy.

Responds to and appropriately handles safety and compliance issues that arise with the goal of remedy and best practice implementation. Manages through continuous change, championing critical thinking, and creating a transparent environment to ensure open communication and clear expectations.
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3. Project Organization, Key Personnel & Staffing | 2024 RFP
31 Paula Henry – Vice President, Transportation Services Paula joined LAZ Transportation in 2022 as the Vice President of Transportation Services. Paula brings over 25 years of transportation experience to LAZ, having managed large bus and rail operations and fleets in multiple regions that included fixed and on demand transit, airport shuttles, event charters and school operations. In her role, Paula oversees our rapidly growing shuttle operation, which includes hospitals, universities, airports, class A office buildings, large special events and municipalities. Her focus is on maximizing both the client’s and LAZ’s operating results for each location, growth through new business opportunities and implementing new technologies. Paula attended Western Washington University where she received her bachelor’s degree in urban planning.

Jared Svendsen – Senior Vice President, Southwest
Jared Svendsen began working for LAZ Parking's West Coast Division in 1997 as a front-line valet while attending San Diego State University. After graduation, he went on to work for a national real estate trust, where he gained experience in all facets of Property Management. During his 20 year career with LAZ he has worked at all levels of management and has been involved with the planning, implementation, and management of the region’s largest operations. He currently serves as the Senior Vice President for the Southwest Region, which includes the San Diego, Orange County, and Arizona markets. Jared holds a BS degree in Social Science from SDSU where he graduated summa cum laude. 1936
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4. Related Experience | 2024 RFP 32

4. RELATED EXPERIENCE
The LAZ team proposed for San Clemente has also been managing the other coastal cities operations since 2019 to present.

City of Dana Point, CA
LAZ operates fixed route service for the City of Dana Point. The 2 routes supports hotels and restaurant venues, residents, and community parks. In addition, we provide increased services during special events such as the BBQ festival, Tall Ships Festival, Music Festival, Food and Wine Festival, Festival of Whales, and the annual holiday Boat Parade.

Client And Operation Information
Contact Info Details Operation Info Details
Point of
Contact
Jennifer Anderson, Senior
Management Analyst
Vehicles 5 CNG trolleys and 1 CNG
shuttle bus ranging from 22-
26 passenger
Address 33282 Golden Lantern
Dana Point, CA
Passenger
Volume
380,000 annually
Phone/Email [email protected]
(949) 248-3571
Technology Ride System/Samsara
Contract Period 2016 – Present LAZ Team Mario Montenegro, Marco Carrillo, Jackie Apollo
1937
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4. Related Experience | 2024 RFP 33
City of Laguna Beach, CA
LAZ Parking and Transportation operates a transit fixed and on-demand route service for the City of Laguna Beach, CA. The shuttle service offers transportation for passengers 7 days a week, schedule is adjusted for summer and winter hours and an on-demand service for residents and visitors.

Client And Operation Information
Contact Info Details Operation Info Details
Point of
Contact
Michael Litschi, Deputy
Director of Public Works -
Transit
Vehicles 25 Shuttles, 6 On demand
transit vans
Address 1875 CA 133
Laguna Beach, CA
Passenger
Volume
548,000 annually
Phone/Email [email protected]
et (949) 497-0303
Technology Transloc/Samsara
Contract Period 2021 – Present LAZ Team Mario Montenegro, Marco Carrillo, Jackie Apollo
1938
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4. Related Experience | 2024 RFP 34
California State University Long Beach
LAZ Transportation operates 9 shuttles on four different routes for the California State University Long Beach. The shuttle service provides transportation for students 5 days a week, Monday to Friday and over 50 special events a year. The routes connect various student housing locations outside and within the campus. In addition, we run 3 shuttles to an overflow lot during the first 6 weeks of each semester.

Client And Operation Information
Contact Info Details Operation Details
Point of
Contact
Amy Gerety
Dir of Parking & Operations
Vehicles (7) 24-passenger CNG shuttles,
(2) 28-passenger CNG shuttles
Address 1250 Bellflower Blvd.

Long Beach, CA
Passenger
Volume

1.4 million annually
Phone/Email [email protected]
562.985.7888 direct
Technology Ride System/Samsara
Contract Period 2013 – Present LAZ Team Mario Montenegro, Marco Carrillo, Jackie Apollo
1939
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5. Cost & Cost Proposal | 2024 RFP 35

5. COST & COST PROPOSAL
1940
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5. Cost & Cost Proposal | 2024 RFP 36 1941
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6. Statement of Compliance | 2024 RFP 37

6. STATEMENT OF COMPLIANCE
This proposal is in compliance with the Request for Proposal and the City’s Standard Professional Services Agreement and no exceptions to either are proposed. 1942
Proposal to the
For the Operation
of the
San Clemente Trolley Service
Submitted by:
12 Mauchly Building I
Irvine, California 92618
ATTACHMENT 5
1943
City of San Clemente `
Proposal for the San Clemente Trolley Operations Service

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San Clemente City CouncilJune 18, 2024

San Clemente City Council
June 18, 2024