San Clemente City Council
August 20, 2024

Exhibit A
138
City of San Clemente (C) Confidential
Salary Schedule - Benefited Positions (E) Executive

2.5% Between Ranges, 5.0% Between Steps (M) Mid-Management Adopted 8/20/24; Effective 9/2/24 (NC) Non-Confidential Revision Date: 8/20/24
Range Pay Entry Maximum
Number Title Period Step A Step B Step C Step D Step E
35 Customer Service Specialist II Hourly $25.92 $27.22 $28.58 $30.01 $31.51 Office Specialist II Monthly $4,492.82 $4,717.46 $4,953.33 $5,201.00 $5,461.05 36 Hourly $26.57 $27.90 $29.29 $30.76 $32.29
Monthly $4,605.14 $4,835.40 $5,077.17 $5,331.02 $5,597.58 37 Accounting Specialist I Hourly $27.22 $28.58 $30.01 $31.51 $33.08 Golf Course Maintenance Worker Monthly $4,717.46 $4,953.33 $5,201.00 $5,461.05 $5,734.10 Maintenance Worker I
Senior Customer Service Specialist
Senior Office Specialist
Utility Billing Specialist I
38 Hourly $27.90 $29.29 $30.76 $32.29 $33.91
Monthly $4,835.40 $5,077.17 $5,331.02 $5,597.58 $5,877.45 39 Hourly $28.58 $30.01 $31.51 $33.08 $34.74
Monthly $4,953.33 $5,201.00 $5,461.05 $5,734.10 $6,020.81 40 Facilities Maintenance Technician Hourly $29.29 $30.76 $32.29 $33.91 $35.60 Maintenance Worker II Monthly $5,077.17 $5,331.02 $5,597.58 $5,877.45 $6,171.33 41 Accounting Specialist II Hourly $30.01 $31.51 $33.08 $34.74 $36.47 Business License Specialist Monthly $5,201.00 $5,461.05 $5,734.10 $6,020.81 $6,321.85 Utility Billing Specialist II
42 Administrative Assistant Hourly $30.76 $32.29 $33.91 $35.60 $37.38 Park Ranger Supervisor Monthly $5,331.02 $5,597.58 $5,877.45 $6,171.33 $6,479.89 43 Electrician I Hourly $31.51 $33.08 $34.74 $36.47 $38.30 Golf Course Maintenance Leadworker Monthly $5,461.05 $5,734.10 $6,020.81 $6,321.85 $6,637.94 Permit Technician
44 Code Compliance Technician Hourly $32.29 $33.91 $35.60 $37.38 $39.25 Monthly $5,597.58 $5,877.45 $6,171.33 $6,479.89 $6,803.89 45 Facilities Maintenance Specialist I Hourly $33.08 $34.74 $36.47 $38.30 $40.21 Golf Course Mechanic Monthly $5,734.10 $6,020.81 $6,321.85 $6,637.94 $6,969.84 Maintenance Leadworker
Planning Technician
Recreation Coordinator
Senior Accounting Specialist
Senior Utility Billing Specialist

139
City of San Clemente (C) Confidential
Salary Schedule - Benefited Positions (E) Executive

2.5% Between Ranges, 5.0% Between Steps (M) Mid-Management Adopted 8/20/24; Effective 9/2/24 (NC) Non-Confidential Revision Date: 8/20/24
Range Pay Entry Maximum
Number Title Period Step A Step B Step C Step D Step E
46 Human Resources Specialist (C) Hourly $33.91 $35.60 $37.38 $39.25 $41.22 Maintenance Contract Inspector Monthly $5,877.45 $6,171.33 $6,479.89 $6,803.89 $7,144.08 47 Community Outreach Worker Hourly $34.74 $36.47 $38.30 $40.21 $42.22 Collection Systems Operator I Monthly $6,020.81 $6,321.85 $6,637.94 $6,969.84 $7,318.33 Distribution Operator I
Environmental Services Coordinator
Facilities Maintenance Specialist II
Utilities Mechanic I
48 Engineering Technician Hourly $35.60 $37.38 $39.25 $41.22 $43.28 Records Management Coordinator Monthly $6,171.33 $6,479.89 $6,803.89 $7,144.08 $7,501.29 Senior Permit Technician
49 Code Compliance Officer Hourly $36.47 $38.30 $40.21 $42.22 $44.33 Community Development Coordinator Monthly $6,321.85 $6,637.94 $6,969.84 $7,318.33 $7,684.24 Electrician II
Senior Administrative Assistant (C)
50 Assistant Planner Hourly $37.38 $39.25 $41.22 $43.28 $45.44 Collection Systems Operator II Monthly $6,479.89 $6,803.89 $7,144.08 $7,501.29 $7,876.35 Distribution Operator II
Electrical Instrumentation Technician I
Utilities Mechanic II
Senior Facilities Maintenance Specialist
51 Building Inspector I Hourly $38.30 $40.21 $42.22 $44.33 $46.55 Monthly $6,637.94 $6,969.84 $7,318.33 $7,684.24 $8,068.46 52 Information Technology Analyst I Hourly $39.25 $41.22 $43.28 $45.44 $47.71 Marine Safety Officer Monthly $6,803.89 $7,144.08 $7,501.29 $7,876.35 $8,270.17 Recreation Supervisor
Senior Engineering Technician
53 Construction Inspector Hourly $40.21 $42.22 $44.33 $46.55 $48.88 Deputy City Clerk Monthly $6,969.84 $7,318.33 $7,684.24 $8,068.46 $8,471.88 54 Contract Maintenance Coordinator Hourly $41.22 $43.28 $45.44 $47.71 $50.10 Electrical Coordinator Monthly $7,144.08 $7,501.29 $7,876.35 $8,270.17 $8,683.68 Facilities Maintenance Coordinator
Human Resources Analyst I (C)
Lead Operator

140
City of San Clemente (C) Confidential
Salary Schedule - Benefited Positions (E) Executive

2.5% Between Ranges, 5.0% Between Steps (M) Mid-Management Adopted 8/20/24; Effective 9/2/24 (NC) Non-Confidential Revision Date: 8/20/24
Range Pay Entry Maximum
Number Title Period Step A Step B Step C Step D Step E
55 Accountant Hourly $42.22 $44.33 $46.55 $48.88 $51.32 Aquatics Supervisor Monthly $7,318.33 $7,684.24 $8,068.46 $8,471.88 $8,895.47 Associate Planner I
Building Inspector II
Electrical Instrumentation Technician II
Executive Analyst (C)
Management Analyst I
Public Information Coordinator (C)
Regulatory Compliance Analyst
System Operator
Water Conservation Analyst
56 Revenue Supervisor Hourly $43.28 $45.44 $47.71 $50.10 $52.60 Senior Code Compliance Officer Monthly $7,501.29 $7,876.35 $8,270.17 $8,683.68 $9,117.86 57 Associate Planner II Hourly $44.33 $46.55 $48.88 $51.32 $53.89 GIS Coordinator Monthly $7,684.24 $8,068.46 $8,471.88 $8,895.47 $9,340.25 Information Technology Analyst II
Plant Operator III
Systems Applications Analyst
58 Lead Electrical Instrumentation Technician Hourly $45.44 $47.71 $50.10 $52.60 $55.23 Marine Safety Lieutenant Monthly $7,876.35 $8,270.17 $8,683.68 $9,117.86 $9,573.75 Plans Examiner I
59 Environmental Programs Analyst (M) Hourly $46.55 $48.88 $51.32 $53.89 $56.58 Human Resources Analyst II (C) Monthly $8,068.46 $8,471.88 $8,895.47 $9,340.25 $9,807.26 Lead Project Planner
Management Analyst II
Senior Construction Inspector
60 CMMS Coordinator Hourly $47.71 $50.10 $52.60 $55.23 $57.99 Monthly $8,270.17 $8,683.68 $9,117.86 $9,573.75 $10,052.44 61 Chief Operator Hourly $48.88 $51.32 $53.89 $56.58 $59.41 Chief Operator Water Reclamation Monthly $8,471.88 $8,895.47 $9,340.25 $9,807.26 $10,297.62 Chief Operator Water Systems
Laboratory Coordinator
Senior Building Inspector
Senior IT Analyst
Utilities Chief Mechanic

141
City of San Clemente (C) Confidential
Salary Schedule - Benefited Positions (E) Executive

2.5% Between Ranges, 5.0% Between Steps (M) Mid-Management Adopted 8/20/24; Effective 9/2/24 (NC) Non-Confidential Revision Date: 8/20/24
Range Pay Entry Maximum
Number Title Period Step A Step B Step C Step D Step E
62 Assistant Engineer Hourly $50.10 $52.60 $55.23 $57.99 $60.89 Emergency Services Officer (M) Monthly $8,683.68 $9,117.86 $9,573.75 $10,052.44 $10,555.06 Golf Course Manager (M)
Maintenance Operations Supervisor (M)
Plans Examiner II
SCADA Specialist
Senior Planner (M)
63 Senior Management Analyst Hourly $51.32 $53.89 $56.58 $59.41 $62.38 Monthly $8,895.47 $9,340.25 $9,807.26 $10,297.62 $10,812.50 64 Accounting Supervisor (M) Hourly $52.60 $55.23 $57.99 $60.89 $63.94 Associate Civil Engineer (M) Monthly $9,117.86 $9,573.75 $10,052.44 $10,555.06 $11,082.82 65 Hourly $53.89 $56.58 $59.41 $62.38 $65.50
Monthly $9,340.25 $9,807.26 $10,297.62 $10,812.50 $11,353.13 66 Code Compliance Manager (M) Hourly $55.23 $57.99 $60.89 $63.94 $67.14 Marine Safety Captain (M) Monthly $9,573.75 $10,052.44 $10,555.06 $11,082.82 $11,636.96 Senior Plans Examiner (M)
67 Principal Management Analyst (M) Hourly $56.58 $59.41 $62.38 $65.50 $68.77 Risk Management/Human Resources Officer (M) Monthly $9,807.26 $10,297.62 $10,812.50 $11,353.13 $11,920.79 68 Coastal Administrator (M) Hourly $57.99 $60.89 $63.94 $67.14 $70.49 Principal Planner (M) Monthly $10,052.44 $10,555.06 $11,082.82 $11,636.96 $12,218.80 Recreation Manager (M)
Senior Civil Engineer (M)
69 Hourly $59.41 $62.38 $65.50 $68.77 $72.21
Monthly $10,297.62 $10,812.50 $11,353.13 $11,920.79 $12,516.82 70 Hourly $60.89 $63.94 $67.14 $70.49 $74.02
Monthly $10,555.06 $11,082.82 $11,636.96 $12,218.80 $12,829.75 71 Marine Safety Chief (M) Hourly $62.38 $65.50 $68.77 $72.21 $75.82 Monthly $10,812.50 $11,353.13 $11,920.79 $12,516.82 $13,142.67 72 Legislative Administrator (M) Hourly $63.94 $67.14 $70.49 $74.02 $77.72 Maintenance Manager (M) Monthly $11,082.82 $11,636.96 $12,218.80 $12,829.75 $13,471.23 Utilities Superintendent Water Operations (M)
Utilities Superintendent Collections & Maint (M)
Utilities Superintendent Environmental Ops (M)

142
City of San Clemente (C) Confidential
Salary Schedule - Benefited Positions (E) Executive

2.5% Between Ranges, 5.0% Between Steps (M) Mid-Management Adopted 8/20/24; Effective 9/2/24 (NC) Non-Confidential Revision Date: 8/20/24
Range Pay Entry Maximum
Number Title Period Step A Step B Step C Step D Step E
73 Principal Civil Engineer (M) Hourly $65.50 $68.77 $72.21 $75.82 $79.61 Monthly $11,353.13 $11,920.79 $12,516.82 $13,142.67 $13,799.80 74 Hourly $67.14 $70.49 $74.02 $77.72 $81.60
Monthly $11,636.96 $12,218.80 $12,829.75 $13,471.23 $14,144.79 75 Assistant City Engineer (M) Hourly $68.77 $72.21 $75.82 $79.61 $83.59 Building Official (M) Monthly $11,920.79 $12,516.82 $13,142.67 $13,799.80 $14,489.79 City Planner (M)
Information Technology Manager (M)
76 Hourly $70.49 $74.02 $77.72 $81.60 $85.68
Monthly $12,218.80 $12,829.75 $13,471.23 $14,144.79 $14,852.03 77 Deputy Community Development Director (M) Hourly $72.21 $75.82 $79.61 $83.59 $87.77 Finance Manager (M) Monthly $12,516.82 $13,142.67 $13,799.80 $14,489.79 $15,214.28 Human Resources Manager (M)
78 Hourly $74.02 $77.72 $81.60 $85.68 $89.97
Monthly $12,829.75 $13,471.23 $14,144.79 $14,852.03 $15,594.64 79 Deputy Public Works Director (M) Hourly $75.82 $79.61 $83.59 $87.77 $92.16 Utilities Manager (M) Monthly $13,142.67 $13,799.80 $14,489.79 $15,214.28 $15,974.99 80 Hourly $77.72 $81.60 $85.68 $89.97 $94.47
Monthly $13,471.23 $14,144.79 $14,852.03 $15,594.64 $16,374.37 81 Hourly $79.61 $83.59 $87.77 $92.16 $96.77
Monthly $13,799.80 $14,489.79 $15,214.28 $15,974.99 $16,773.74 82 Hourly $81.60 $85.68 $89.97 $94.47 $99.19
Monthly $14,144.79 $14,852.03 $15,594.64 $16,374.37 $17,193.09 83 Beaches Parks and Recreation Director (E) Hourly $83.59 $87.77 $92.16 $96.77 $101.61 Monthly $14,489.79 $15,214.28 $15,974.99 $16,773.74 $17,612.43 84 Hourly $85.68 $89.97 $94.47 $99.19 $104.15
Monthly $14,852.03 $15,594.64 $16,374.37 $17,193.09 $18,052.74 85 Hourly $87.77 $92.16 $96.77 $101.61 $106.69
Monthly $15,214.28 $15,974.99 $16,773.74 $17,612.43 $18,493.05 86 Administrative Services Director (E) Hourly $89.97 $94.47 $99.19 $104.15 $109.36 Community Development Director (E) Monthly $15,594.64 $16,374.37 $17,193.09 $18,052.74 $18,955.38

143
City of San Clemente (C) Confidential
Salary Schedule - Benefited Positions (E) Executive

2.5% Between Ranges, 5.0% Between Steps (M) Mid-Management Adopted 8/20/24; Effective 9/2/24 (NC) Non-Confidential Revision Date: 8/20/24
Range Pay Entry Maximum
Number Title Period Step A Step B Step C Step D Step E
87 Hourly $92.16 $96.77 $101.61 $106.69 $112.03
Monthly $15,974.99 $16,773.74 $17,612.43 $18,493.05 $19,417.70 88 Public Works Director / City Engineer (E) Hourly $94.47 $99.19 $104.15 $109.36 $114.83 Monthly $16,374.37 $17,193.09 $18,052.74 $18,955.38 $19,903.15 89 Hourly $96.77 $101.61 $106.69 $112.03 $117.63
Monthly $16,773.74 $17,612.43 $18,493.05 $19,417.70 $20,388.59 90 Hourly $99.19 $104.15 $109.36 $114.83 $120.57
Monthly $17,193.09 $18,052.74 $18,955.38 $19,903.15 $20,898.30 91 Hourly $101.61 $106.69 $112.03 $117.63 $123.51
Monthly $17,612.43 $18,493.05 $19,417.70 $20,388.59 $21,408.02 92 Chief Adminstrative Officer/ACM(E) Hourly $104.15 $109.36 $114.83 $120.57 $126.60 Monthly $18,052.74 $18,955.38 $19,903.15 $20,898.30 $21,943.22 93 Hourly $106.69 $112.03 $117.63 $123.51 $129.68
Monthly $18,493.05 $19,417.70 $20,388.59 $21,408.02 $22,478.42 94 Hourly $109.36 $114.83 $120.57 $126.60 $132.93
Monthly $18,955.38 $19,903.15 $20,898.30 $21,943.22 $23,040.38 95 Hourly $112.03 $117.63 $123.51 $129.68 $136.17
Monthly $19,417.70 $20,388.59 $21,408.02 $22,478.42 $23,602.34 96 Hourly $114.83 $120.57 $126.60 $132.93 $139.57
Monthly $19,903.15 $20,898.30 $21,943.22 $23,040.38 $24,192.40 97 Hourly $117.63 $123.51 $129.68 $136.17 $142.98
Monthly $20,388.59 $21,408.02 $22,478.42 $23,602.34 $24,782.46 98 Hourly $120.57 $126.60 $132.93 $139.57 $146.55
Monthly $20,898.30 $21,943.22 $23,040.38 $24,192.40 $25,402.02 99 City Manager (E) Hourly $123.51 $129.68 $136.17 $142.98 $150.12 Monthly $21,408.02 $22,478.42 $23,602.34 $24,782.46 $26,021.58 100 Hourly $126.60 $132.93 $139.57 $146.55 $153.88
Monthly $21,943.22 $23,040.38 $24,192.40 $25,402.02 $26,672.12

144
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: August 20, 2024 Agenda Item: (1)
145
910 Calle Negocio
2nd Floor
San Clemente, California
www.san-clemente.org
Council Chambers

CITY OF SAN CLEMENTE
Tuesday, August 6, 2024
City Council
Special and Regular Meeting Minutes
5:30 p.m. - Closed Session (Special Meeting)
6:00 p.m. - Business Meeting (Regular Meeting)
Councilmember Duncan participated remotely from
the following location:
123 Nassau St., New York, NY 10038
Mayor Cabral
Mayor Pro Tem Enmeier
Councilmember Duncan
Councilmember Knoblock
Councilmember Loeffler
These minutes reflect the order in which items appeared on the meeting agenda and do not necessarily reflect the order in which items were actually considered.

A Special and Regular Meeting of the San Clemente City Council was called to order by Mayor Cabral on August 6, 2024 at 5:30 p.m. in the San Clemente City Council Chambers, located at 910 Calle Negocio, 2nd Floor, San Clemente.

PRESENT: Duncan, Enmeier, Knoblock, Loeffler and Mayor Cabral * Councilmember Duncan arrived at 6:16 p.m, participated via teleconference.

STAFF PRESENT: Andy Hall, City Manager; Elizabeth Mitchell, City Attorney; Laura Campagnolo, City Clerk; Megan Jimenez, Deputy City Clerk

CLOSED SESSION
Motion by Mayor Pro Tem Enmeier, second by Councilmember Knoblock, CARRIED 4-0 (Councilmember Duncan Absent) to recess to Closed Session at 5:31 p.m. to discuss the following:

CONFERENCE WITH LABOR NEGOTIATORS
Pursuant to Government Code Section 54957.6
Agency designated representative: Administrative Services Director Unrepresented employees: All Employees
Employee Organization: San Clemente City Employees Association AYE: Enmeier, Knoblock, Loeffler and Mayor Cabral
NOE: None
ABSENT: Duncan
Closed Session concluded at 5:58 p.m.

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City Council Special and Regular Meeting Minutes August 6, 2024

BUSINESS MEETING
The Regular Business meeting reconvened at 6:02 p.m. with all Councilmembers present, with the exception of Councilmember Duncan who was absent.

INVOCATION
Senior Pastor, Holland Davis, Calvary Chapel San Clemente, gave the invocation.

PLEDGE OF ALLEGIANCE
Brad Baker, San Clemente High School Principal, led the Pledge of Allegiance.

1. Special Presentations
A. Recognition of San Clemente High School State Champion 4x800 Track Relay Team
Mayor Cabral and the City Council recognized the San Clemente High School State Champion 4x800 Boys Track Relay Team.

2. Council Member Reports
Mayor Cabral reported:
· Displayed a photograph of the send-off party for Griffin Colapinto and Caroline Marks in celebration of their departure for the Olympics; acknowledged their success at the Olympics in surfing; noting that Caroline Marks won the gold medal. A hard copy of the photograph is on file with the City Clerk.
· Met with the Mayor of Makinohara on July 18, 2024, concerning the Tokyo Olympic Anniversary. The Mayor offered support for San Clemente to hold Surf Competitions in the 2028 Los Angeles Summer Olympics. · Recognized the success of the Ocean Festival on July 20-21, 2024; acknowledged Fisherman’s efforts of keeping food and beverage costs low for attendees.
· Attended the Noble Path Foundation AIM High Certification Ceremony on July 22, 2024.
· Attended the Sand and Sea exhibition at the Orange County Fair. · Attended the Junior Lifeguard Graduation Ceremony on July 19, 2024. · Announced that the North Beach Opportunistic Sand project has begun. · Announced the upcoming San Clemente Chamber of Commerce 69th Annual Fiesta Music Festival on August 11, 2024.

Councilmember Loeffler reported:
· Recognized Nyjah Huston, Olympic Men’s Street Skateboarding Bronze Medal winner, noted that he trained for the Olympics in San Clemente. · Recognized the San Clemente Boys’ Water Polo Club U10 won the gold medal at the National Junior Olympics.

147
City Council Special and Regular Meeting Minutes August 6, 2024 · Reported that the Miramar Theater construction project is progressing.

Councilmember Knoblock:
· Reported that the North Beach Opportunistic Sand project is underway.

Mayor Pro Tem Enmeier reported:
· Reported that the Coastal Cities Group Leadership Committee discussed upcoming state legislation at its meeting on July 18, 2024. · Attended the Junior Lifeguard Graduation Ceremony on July 19, 2024. · Attended the Noble Path Foundation AIM High Certification Ceremony on July 22, 2024.
· Attended the Nuclear Waste Symposium at the University of California San Diego concerning the nuclear waste at the San Onofre Nuclear Generating Station (SONGS) on July 24, 2024.
· Attended the San Clemente Beach Concert on July 25, 2024. · Attended the Association of California Cities meeting at Wild Rivers on August 1, 2024.
· Attended the Ribbon Cutting for Daas Opticians on August 2, 2024. · Congratulated the Swenson Family on their first-place win with their Whale Sculpture at the Ocean Festival.
· Announced the North Beach Opportunistic Sand project is underway.

Councilmember Duncan reported:
· Congratulated Caroline Marks on her gold medal win in Women’s Surfing at the Olympics.

3. Oral Communications (Part 1)
Ira Horwitz, San Clemente, expressed his gratitude for the removal of weeds and overgrown vegetation behind his home; voiced concerns regarding parking congestion on Avenida Acapulco.

Amanda Quintanilla narrated a PowerPoint presentation entitled "Nature-Based Coastal Project Feasibility Study". A hard copy of the presentation is on file with the City Clerk.

Lois McNicoll commented that the City of Long Beach was removing its breakwater due to the elimination of surf.

4. Motion waiving reading in full of all Resolutions and Ordinances Motion by Councilmember Knoblock, second by Councilmember Loeffler, CARRIED 5-0, to waive reading in full of all Resolutions and Ordinances.

AYE: Duncan, Enmeier, Knoblock, Loeffler and Mayor Cabral NOE: None

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City Council Special and Regular Meeting Minutes August 6, 2024

5. Consideration of agendizing items requiring immediate action None.

6. Closed Session Report - City Attorney
City Attorney Mitchell announced that the following action was taken in Closed Session:

Direction given; no reportable action concerning:

CONFERENCE WITH LABOR NEGOTIATORS
Pursuant to Government Code Section 54957.6
Agency designated representative: Administrative Services Director Unrepresented employees: All Employees
Employee Organization: San Clemente City Employees Association

7. Staff Communications
City Clerk Campagnolo announced that the item agendized at the July 17, 2024 City Council meeting concerning an appropriation of funds to assist Marblehead Elementary with fingerprinting of volunteers was removed from the agenda by the Councilmember that made the original motion.

Community Development Director Atamian provided an update on future actions concerning the Grants Pass Supreme Court decision. Additional information will be provided at the next City Council meeting on August 20, 2024.

8. Public Hearings
8A. CONSIDERATION OF A RESOLUTION CALLING AN ELECTION IN THE CITY OF SAN CLEMENTE TO BE CONSOLIDATED WITH THE CITY’S NEXT GENERAL MUNICIPAL ELECTION ON NOVEMBER 5, 2024, SUBMITTING TO

THE ELECTORS A BALLOT MEASURE TO ESTABLISH A
THREE-QUARTERS OF ONE CENT (0.75¢) SPECIAL PURPOSE

TRANSACTIONS AND USE (SALES) TAX, ESTABLISHING THE POLICIES

AND PROCEDURES FOR SUCH AN ELECTION, REQUESTING THAT

ORANGE COUNTY PROVIDE ELECTION SERVICES, DIRECTING THE CITY

ATTORNEY TO PREPARE AN IMPARTIAL ANALYSIS AND AUTHORIZING

THE FILING OF REBUTTAL ARGUMENT
(See page 8 of these minutes for the final vote and action of the City Council.) Mayor Cabral opened the Public Hearing.

City Manager Hall narrated a PowerPoint presentation entitled "The Genesis of the Discussion was Exploring Strategies for Placing Sand on the Beach" and responded to City Council inquiries. A hard copy of the presentation is on file with the City Clerk.

Amanda Quintanilla narrated a PowerPoint presentation entitled "Poll - General

149
City Council Special and Regular Meeting Minutes August 6, 2024 Election". A hard copy of the presentation is on file with the City Clerk.

Suzie Whitelaw, Save our Beaches San Clemente, narrated a PowerPoint presentation concerning the costs of sand replenishment. A hard copy of the presentation is on file with the City Clerk.

Lisa Gant, San Clemente, spoke in support of a special purpose tax measure being placed on the ballot for the General Municipal Election on November 5, 2024.

Joe Wilson, Save our Beaches San Clemente, commented on the community support for placing a special purpose tax measure on the ballot for the November 5, 2024 General Municipal Election.

Greg Ray, San Clemente, spoke in support of a 3/4 cent special purpose tax on measure on the ballot for the November 5, 2024 General Municipal Election.

Julian Husbands, San Clemente, spoke on the importance of investing in the community; urged the City Council to place a special purpose tax measure on the ballot for the November 5, 2024 General Municipal Election.

John Dow, San Clemente, spoke in support of the special purpose tax measure being placed on the ballot for the General Municipal Election on November 5, 2024.

Wayne Eggleston commented on the previously placed ballot measure for the Clean Ocean Fee; spoke in support of the special purpose tax measure being placed on the ballot for the General Municipal Election on November 5, 2024.

Linda More, San Clemente, spoke in support of placing a special purpose tax measure on the ballot for the November 5, 2024 General Municipal Election.

Cameron Cosgrove spoke in support of placing a special purpose tax measure on the ballot for the November 5, 2024 General Municipal Election.

Lois McNicoll opined that the City Council should explore all options prior to determining funding sources; spoke in opposition to a special purpose tax measure being placed on the ballot for the General Municipal Election on November 5, 2024.

Michelle Brooks, San Clemente, spoke in support of the 3/4 cent special purpose tax measure being placed on the ballot for the General Municipal Election on November 5, 2024.

Steve Lang, San Clemente, spoke in support of placing a special purpose tax measure on the ballot for the November 5, 2024 General Municipal Election.

Jeff Berg, Bring Back our Beaches, spoke in support of placing a special

150
City Council Special and Regular Meeting Minutes August 6, 2024 purpose tax measure on the ballot for the November 5, 2024 General Municipal Election.

Greg Bunker, San Clemente, spoke in support of placing a special purpose tax measure on the ballot for the November 5, 2024 General Municipal Election.

Susan Ambrose, San Clemente, opined on the benefits of the beaches on the local economy; spoke in support of placing a special purpose tax measure on the ballot for the November 5, 2024 General Municipal Election.

Helen Gilchrest, San Clemente, commented on the potential impacts of having the Olympic surfing competition in San Clemente in 2028; spoke in support of placing a special purpose tax measure on the ballot for the November 5, 2024 General Municipal Election.

Meeting Recess
The City Council recessed the meeting at 7:40 p.m. and reconvened at 7:47 p.m. with all Councilmembers present, with Councilmember Duncan participating via teleconference.

There being no others desiring to speak, Mayor Cabral closed the Public Hearing.

Councilmember Knoblock narrated a PowerPoint presentation concerning sand replenishment methods. A hard copy of the presentation is on file with the City Clerk.

Mayor Pro Tem Enmeier narrated a PowerPoint presentation entitled "Proposed Ballot Measure". A hard copy of the presentation is on file with the City Clerk.

Mayor Cabral narrated a PowerPoint presentation concerning the proposed special purpose ballot tax. A hard copy of the presentation is on file with the City Clerk.

Following discussion, motion by Councilmember Loeffler, second by Mayor Pro Tem Enmeier, to adopt Resolution No. 24-125 entitled a resolution of the City Council of the City of San Clemente, calling an election in the City of San Clemente to be consolidated with the City's next General Municipal election on November 5, 2024, submitting to the electors a ballot measure to establish a three-quarters of one cent (0.75¢) special purpose transactions and use (sales) tax, establishing the policies and procedures for such an election, requesting that Orange County provide election services, directing the City Attorney to prepare an impartial analysis and authorizing the filing of a rebuttal argument.

Substitute motion by Mayor Pro Tem Enmeier, second by Councilmember Loeffler, to determine whether to introduce Resolution No. 24-112, submitting the San Clemente Public Safety, Beach Maintenance, City Services Measure to

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City Council Special and Regular Meeting Minutes August 6, 2024 the November 5, 2024 ballot for the voters to decide whether the existing Sales Tax should be increased by 3/4 cent, establishing policies and procedures for the election, directing the City Attorney to prepare the impartial analysis of the Measure and authorizing the filing of rebuttal arguments, and introducing Resolution No. 24-111, approving the Advisory Spending Guidelines declaring that the funds from the Measure are to be used for resident identified priorities, such as: keeping public areas safe and clean, maintaining local beaches and beach access for residents, protecting local drinking water supply and ocean water quality, and maintaining 911 emergency response.

Substitute motion by Mayor Cabral, second by Councilmember Duncan, FAILED 2-3 (Councilmember Loeffler, Councilmember Knoblock and Mayor Pro Tem Enmeier voting NOE) to adopt Resolution No. 24-126 entitled a Resolution of the City Council of the City of San Clemente, calling an election in the City of San Clemente to be consolidated with the City's next General Municipal election on November 5, 2024, submitting to the electors a ballot measure to establish a one half cent (1/2¢) special purpose transactions and use (sales) tax, establishing the policies and procedures for such an election, requesting that Orange County provide election services, directing the City Attorney to prepare an impartial analysis and authorizing the filing of a rebuttal argument.

AYE: Duncan and Mayor Cabral
NOE: Enmeier, Knoblock and Loeffler
Substitute motion by Mayor Pro Tem Enmeier, second by Councilmember Loeffler, FAILED 1-4 (Councilmember Duncan, Councilmember Knoblock, Mayor Pro Tem Enmeier, and Mayor Cabral voting NOE) to introduce Resolution No. 24-112, submitting the San Clemente Public Safety, Beach Maintenance, City Services Measure to the November 5, 2024 ballot for the voters to decide whether the existing Sales Tax should be increased by 3/4 cent, establishing policies and procedures for the election, directing the City Attorney to prepare the impartial analysis of the Measure and authorizing the filing of rebuttal arguments, and introducing Resolution No. 24-111, approving the Advisory Spending Guidelines declaring that the funds from the Measure are to be used for resident identified priorities, such as: keeping public areas safe and clean, maintaining local beaches and beach access for residents, protecting local drinking water supply and ocean water quality, and maintaining 911 emergency response.

AYE: Enmeier
NOE: Duncan, Knoblock, Loeffler and Mayor Cabral
Motion by Councilmember Loeffler, second by Mayor Pro Tem Enmeier, FAILED 2-3 (Councilmember Duncan, Councilmember Knoblock and Mayor Cabral voting NOE) to adopt Resolution No. 24-125 entitled a Resolution of the City

152
City Council Special and Regular Meeting Minutes August 6, 2024 Council of the City of San Clemente, calling an election in the City of San Clemente to be consolidated with the City's next General Municipal election on November 5, 2024, submitting to the electors a ballot measure to establish a three-quarters of one cent (0.75¢) special purpose transactions and use (sales) tax, establishing the policies and procedures for such an election, requesting that Orange County provide election services, directing the City Attorney to prepare an impartial analysis and authorizing the filing of a rebuttal argument.

AYE: Enmeier and Loeffler
NOE: Duncan, Knoblock and Mayor Cabral
The final vote and action by the City Council on Agenda Item 8A is as follows:

Motion by Councilmember Loeffler, second by Mayor Cabral, CARRIED 4-1 (Councilmember Knoblock voting NOE) to adopt Resolution No. 24-126 entitled

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN CLEMENTE,

CALLING AN ELECTION IN THE CITY OF SAN CLEMENTE TO BE
CONSOLIDATED WITH THE CITY’S NEXT GENERAL MUNICIPAL ELECTION ON NOVEMBER 5, 2024, SUBMITTING TO THE ELECTORS A BALLOT MEASURE TO ESTABLISH A ONE HALF CENT (1/2¢) SPECIAL PURPOSE

TRANSACTIONS AND USE (SALES) TAX, ESTABLISHING THE POLICIES

AND PROCEDURES FOR SUCH AN ELECTION, REQUESTING THAT

ORANGE COUNTY PROVIDE ELECTION SERVICES, DIRECTING THE CITY

ATTORNEY TO PREPARE AN IMPARTIAL ANALYSIS AND AUTHORIZING THE FILING OF REBUTTAL ARGUMENT.

AYE: Duncan, Enmeier, Loeffler and Mayor Cabral
NOE: Knoblock

9. Unfinished Business
None.

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10. New Business
10A. DESIGNATION OF VOTING DELEGATE AND ALTERNATE(S) TO

REPRESENT SAN CLEMENTE AT THE LEAGUE OF CALIFORNIA CITIES

ANNUAL BUSINESS MEETING
City Clerk Campagnolo reviewed the contents of the Administrative Report and responded to City Council inquiries.

Lois McNicoll opined that the City should not attend the League of California Annual Conference; suggested that the City create a Coastal League of Cities to better address the specific needs of the community.

Motion by Councilmember Loeffler, second by Councilmember Knoblock, CARRIED 5-0, to appoint Mayor Cabral as the voting delegate and Mayor Pro Tem Enmeier as the voting alternate to represent the City at the League of California Cities Annual Conference October 18, 2024.

AYE: Duncan, Enmeier, Knoblock, Loeffler and Mayor Cabral NOE: None

11. Consent Calendar
Public Comment
Agenda Item 11D - CONSIDERATION OF APPROVAL OF A LETTER OF OPPOSITION TO ASSEMBLY BILL 2560 REQUIRING LOCAL COASTAL

PROGRAMS TO INCLUDE HOUSING PROVISIONS, INCLUDING DENSITY

BONUSES, AND REDUCING LOCAL CONTROL OF HOUSING BY GIVING

OVERSIGHT TO THE CALIFORNIA DEPARTMENT OF HOUSING AND

COMMUNITY DEVELOPMENT AND THE CALIFORNIA COASTAL
COMMISSION.

Lois McNicoll spoke in support of the letter of opposition to Assembly Bill (AB) 2560.

A. City Council Minutes
Motion by Councilmember Loeffler, second by Councilmember Knoblock, CARRIED 5-0, to:
(1) APPROVE THE SPECIAL AND ADJOURNED REGULAR MEETING MINUTES OF JULY 17, 2024.

AYE: Duncan, Enmeier, Knoblock, Loeffler and Mayor Cabral NOE: None

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City Council Special and Regular Meeting Minutes August 6, 2024 B. Commission/Committee Minutes
Motion by Councilmember Loeffler, second by Councilmember Knoblock, CARRIED 5-0, to receive and file the following:
(1) ARTS AND CULTURE REGULAR MEETING MINUTES OF MAY 20, 2024. (2) PLANNING COMMISSION REGULAR STUDY SESSION MINUTES OF MAY 22, 2024.
(3) PLANNING COMMISSION REGULAR MEETING MINUTES OF MAY 22, 2024. (4) PLANNING COMMISSION REGULAR MEETING MINUTES OF JUNE 5, 2024. (5) PLANNING COMMISSION SPECIAL MEETING MINUTES OF JUNE 26, 2024. (6) HUMAN AFFAIRS COMMITTEE REGULAR MEETING MINUTES OF JULY 9, 2024.
(7) ZONING ADMINISTRATOR REGULAR MEETING MINUTES OF JULY 18, 2024.

AYE: Duncan, Enmeier, Knoblock, Loeffler and Mayor Cabral NOE: None
C. Warrant Register
Motion by Councilmember Loeffler, second by Councilmember Knoblock, CARRIED 5-0, to:
(1) APPROVE WIRE TRANSFER NOS.
3068 THROUGH 3073 AND WARRANT NOS.
597545 THROUGH 597748, PAID ON
6-28-24, IN THE AMOUNT OF $1,127,393.42
(2) APPROVE WIRE TRANSFER NOS.
3074 THROUGH 3075 AND WARRANT NOS.
597749 THROUGH 597904, PAID ON
7-5-24, IN THE AMOUNT OF $4,332,970.62
(3) APPROVE HANDWRITE NO. 598028,
WIRE TRANSFER NOS. 3076 THROUGH
3083 AND WARRANT NOS. 597905
THROUGH 598027, PAID ON 7-12-24,
IN THE AMOUNT OF $3,302,333.57
(4) APPROVE WIRE TRANSFER NOS.
3084 THROUGH 3086 AND WARRANT NOS.
598029 THROUGH 598233, PAID ON
7-19-24, IN THE AMOUNT OF $3,708,385.02
TOTAL WARRANT REGISTER $12,471,082.63
AYE:

NOE:

Duncan, Enmeier, Knoblock, Loeffler and Mayor Cabral
None

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City Council Special and Regular Meeting Minutes August 6, 2024 Payroll Register
Motion by Councilmember Loeffler, second by Mayor Pro Tem Enmeier, CARRIED 5-0 to approve:

WARRANT NO. 938 AND AUTOMATIC
DEPOSIT ADVISES 95117 THROUGH
95499, FOR THE PERIOD 6-10-24
THROUGH 6-23-24, PAID ON 6-28-24,
IN THE AMOUNT OF $572,917.17
WARRANT NO. 939 AND AUTOMATIC
DEPOSIT ADVISES 95500 THROUGH
95885, FOR THE PERIOD 6-24-24
THROUGH 7-7-24, PAID ON 7-12-24,
IN THE AMOUNT OF $589,545.83
TOTAL PAYROLL REGISTER $1,162,463.00
AYE: Duncan, Enmeier, Knoblock, Loeffler and Mayor Cabral NOE: None
11D. CONSIDERATION OF APPROVAL OF A LETTER OF OPPOSITION TO ASSEMBLY BILL 2560 REQUIRING LOCAL COASTAL PROGRAMS TO

INCLUDE HOUSING PROVISIONS, INCLUDING DENSITY BONUSES, AND

REDUCING LOCAL CONTROL OF HOUSING BY GIVING OVERSIGHT TO

THE CALIFORNIA DEPARTMENT OF HOUSING AND COMMUNITY

DEVELOPMENT AND THE CALIFORNIA COASTAL COMMISSION
Motion by Councilmember Loeffler, second by Councilmember Knoblock, CARRIED 5-0, to adopt Resolution No. 24-121 entitled A RESOLUTION OF THE

CITY COUNCIL OF THE CITY OF SAN CLEMENTE, CALIFORNIA,

AUTHORIZING THE MAYOR TO EXECUTE A LETTER IN OPPOSITION TO ASSEMBLY BILL 2560 (ALVAREZ) AND CAUSE THE DELIVERY OF SAID LETTER TO THE CHAIR OF THE CALIFORNIA STATE ASSEMBLY’S LOCAL GOVERNMENT COMMITTEE.

AYE: Duncan, Enmeier, Knoblock, Loeffler and Mayor Cabral NOE: None

156
City Council Special and Regular Meeting Minutes August 6, 2024 11E. CONSIDERATION TO SUBMIT A LETTER OF OPPOSITION FOR ASSEMBLY BILL 2557 IMPACTING THE COSTS FOR PROVIDING CONTRACT

SERVICES TO MUNICIPALITIES
Motion by Councilmember Loeffler, second by Councilmember Knoblock, CARRIED 5-0, to adopt Resolution No. 24-122 entitled A RESOLUTION OF THE

CITY COUNCIL OF THE CITY OF SAN CLEMENTE, CALIFORNIA,

AUTHORIZING THE MAYOR TO EXECUTE A LETTER IN OPPOSITION TO ASSEMBLY BILL 2557 (ORTEGA) AND CAUSE THE DELIVERY OF SAID LETTER TO THE CHAIR OF THE CALIFORNIA STATE ASSEMBLY’S LOCAL GOVERNMENT COMMITTEE.

AYE: Duncan, Enmeier, Knoblock, Loeffler and Mayor Cabral NOE: None
11F. CONSIDERATION OF MAYOR CABRAL’S TRAVEL EXPENSES
Motion by Councilmember Loeffler, second by Councilmember Knoblock, CARRIED 5-0 to authorize an expenditure of up to $550 related to Mayor Cabral's attendance at Senator Nguyen's California Surf Day event.

AYE: Duncan, Enmeier, Knoblock, Loeffler and Mayor Cabral NOE: None
11G. CONSIDERATION OF A RESOLUTION AWARDING A CONSTRUCTION CONTRACT TO ONYX PAVING COMPANY, INC. FOR FY 2025 ARTERIAL AND LOCAL STREET IMPROVEMENT PROGRAM, CIP PROJECT NOS.
15317 AND 15322, IN AN AMOUNT NOT TO EXCEED $1,639,000,

AUTHORIZING THE CITY MANAGER TO EXECUTE THE CONSTRUCTION

CONTRACT, AND FINDING THE PROJECT CATEGORICALLY EXEMPT

FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT
Motion by Councilmember Loeffler, second by Councilmember Knoblock, CARRIED 5-0, to:

Adopt Resolution No. 24-123, which will:

1. Find the FY 2025 Arterial and Local Street Improvement Program, CIP Project Nos. 15317 and 15322, categorically exempt from the California Environmental Quality Act (CEQA) under Class 1 (Existing Facilities, 14 CCR section 15301) of the State CEQA Guidelines.

2. Award the FY 2025 Arterial and Local Street Improvement Program, CIP Project Nos. 15317 and 15322, contract to ONYX Paving Company, Inc.

3. Approve, and authorize the City Manager to execute, Contract No. C24-44, by and between the City of San Clemente and ONYX Paving Company, Inc., providing for the FY 2025 Arterial and Local Street Improvement Program, in an amount not to exceed $1,639,000, in a form substantially similar to Contract No. 24-44 (Attachment 3).

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City Council Special and Regular Meeting Minutes August 6, 2024

4. Approve a 10% construction contingency of $163,900 for this project.

AYE: Duncan, Enmeier, Knoblock, Loeffler and Mayor Cabral NOE: None
11H. RESPONSE TO 2023-2024 ORANGE COUNTY GRAND JURY REPORT “E-BIKES FRIEND OR FOE”
Motion by Councilmember Loeffler, second by Councilmember Knoblock, CARRIED 5-0, to:

1. Adopt Resolution No. 24-124, entitled A RESOLUTION OF THE CITY

COUNCIL OF THE CITY OF SAN CLEMENTE, CALIFORNIA, APPROVING

RESPONSE TO FINDINGS AND RECOMMENDATIONS IN THE REPORT OF THE ORANGE COUNTY GRAND JURY - ‘E-BIKES FRIEND OR FOE’.

2. Authorize the Mayor to execute, and direct staff to submit a letter in response to the findings and recommendations noted in the Administrative Report dated August 6, 2024, and on file with the City Clerk, to the Presiding Judge of the Superior Court by September 19, 2024 in substantially the same form as attached to the Resolution as Exhibit A.

AYE: Duncan, Enmeier, Knoblock, Loeffler and Mayor Cabral NOE: None

12. Oral Communications (Part 2)
Tony Rubolino commented on Councilmember Duncan being pulled over by the Orange County Sheriff's Department for a traffic violation and his related public records request.

13. Future Agenda Items
Councilmember Knoblock requested that the Business Overlay Zone at Vista Hermosa be brought to Council for consideration as soon as it is ready.

14. Reports
A. Commissions and Committees
None.

B. Council Subcommittee Updates
None.

C. City Attorney
None.

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City Council Special and Regular Meeting Minutes August 6, 2024 D. City Manager
City Manager Hall announced that he executed the following contracts under his signature authority:

1. WSP USA Environment & Infrastructure, Inc. providing for the Existing Development Stormwater Compliance in the amount of $38,757.

2. JILK Heavy Construction providing for the Pier Steel Piles Cathodic Protection Improvements in the amount of $36,420.

3. AmeriNational Community Services providing the First Amendment Community Development Block Grant Rehabilitation Loan Program in the amount of $25,000.

4. Jacob Green and Associates, Inc providing for the Radio Amateur Civil Emergency Service (RACES) Program Support and Community Emergency Response Team (CERT) Program Administration in an amount not to exceed $40,000.

5. The Lew Edwards Group providing for Professional Consulting Services in relation to a resident survey in an amount not to exceed $49,000.

6. Kimley-Horn and Associates providing the First Amendment for Professional Traffic and Parking Assessment Review Services in an amount not to exceed $14,650.

7. Coating Specialists and Inspection Services providing for the Reservoir No. 4 Exterior Coating Project in the amount of $18,400.

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City Council Special and Regular Meeting Minutes August 6, 2024

15. Adjournment
Motion by Mayor Pro Tem Enmeier, second by Councilmember Loeffler, CARRIED 5-0, to adjourn at 9:21 pm.. The next Regular Meeting will be held on August 20, 2024. Closed Session will begin at 5:00 p.m.The Business Meeting will commence at 6:00 p.m. The meeting will take place at City Hall Council Chambers, located at 910 Calle Negocio, 2nd Floor, San Clemente.

AYE: Duncan, Enmeier, Knoblock, Loeffler and Mayor Cabral NOE: None
_______________________________
MAYOR of the City of
San Clemente, California
_______________________________
CITY CLERK of the City of
San Clemente, California

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CITY COUNCIL MEETING
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Meeting Date: August 20, 2024 Agenda Item: (1)
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Approved at the Regular Meeting of the Coastal Advisory Committee on March 21, 2024

CITY OF SAN CLEMENTE

MINUTES OF THE SPECIAL MEETING OF THE

COASTAL ADVISORY COMMITTEE
JANUARY 18, 2024

1. CALL TO ORDER/ROLL CALL
Coastal Administrator Meyerhoff called the Special Meeting of the City of San Clemente Coastal Advisory Committee to order on January 18, 2024, at 4:00 p.m. The meeting was held at San Clemente City Hall, Second Floor Council Chambers, located at 910 Calle Negocio, San Clemente, California.

Committee
Members Present: Members Susan Ambrose, John Dolegowski (arrived at 4:04 p.m.), John Dow, Brian Jacobs (left at 4:45 p.m.), Matthew Schmitt, Aaron Washington, and Suzie Whitelaw
Staff Present: Leslea Meyerhoff, Coastal Administrator
Elizabeth Mitchell, City Attorney
Janet Batchelor, Management Analyst II
Chris Johnson, Senior Planner
Niki Beach, Environmental Programs Analyst
Jacob Ohana, Senior Engineer

2. PLEDGE OF ALLEGIENCE
The Pledge was led by Member Washington.

3. APPROVAL OF MINUTES
None.

4. SPECIAL OR PUBLIC PRESENTATION
Welcome and presentation on the role of the advisory committees to the City Council by City Manager Andy Hall. Presentation by City Attorney Elizabeth Mitchell on new committee member training.

Mayor Cabral welcomed the Committee Members and thanked them for their participation.

City Attorney Mitchell provided an overview of the role of Committee Members; local laws applicable to the Committee Members; functions and duties; requirements for filing Statement of Economic Interests (Form 700); and Conflict of Interest, Brown Act, Public Records Act, and Ethics Training regulations.
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Minutes of the Special Meeting of the Coastal Advisory Committee of January 18, 2024 Page 2 In response to Committee questions, City Attorney Mitchell explained means of Committee Members attending other agency meetings; and attending meetings that might cover the Committee’s subject matter jurisdiction.

5. ORAL AND WRITTEN COMMUNICATION
George Gregory discussed beach erosion and presented ideas for sand replenishment. He expressed frustration with his prior efforts to address the matter.

He offered his boat and services to assist in building a harbor.

Amanda Quintanilla reminded the community about the Grunions and urged mindfulness of the impact of sand replenishment. She congratulated the Committee.

Don Brown discussed his prior involvement on the Coastal Advisory Committee and Planning Commission and wished the Committee well. He discussed topics before the Committee and encouraged the members to prepare for the meetings.

Ruth Martin questioned why sand replenishment north of North Beach was not being addressed and the delineation between the Coastal Advisory Commission and Beaches, Parks and Recreation Commission. She asked if there was a conflict of Committee Members serving on Save Our Beaches. She congratulated the members.

6. UNFINISHED BUSINESS AND UPDATES
None.

7. NEW BUSINESS
A. Welcome and Introductions of the Committee and Staff The Committee Members and Staff introduced themselves and provided an overview of their backgrounds and experience.

B. Nomination and Selection of Coastal Advisory Committee Chair and ViceChair Ruth Martin recommended considerations for selecting a Chair and Vice Chair and suggested Susan Ambrose be selected as Chair.

Amanda Quintanilla suggested Aaron Washington be selected as Chair and Susan Ambrose as Vice Chair. She asked if there was a conflict between the Committee and Save Our Beaches.

The Committee accepted nominations for Chair.

Member Washington nominated himself to serve as Chair.
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Minutes of the Special Meeting of the Coastal Advisory Committee of January 18, 2024 Page 3 Member Dow nominated Brian Jacobs to serve as Chair.

Member Ambrose nominated herself to serve as Chair.

A roll call vote for Member Washington to serve as Chair was conducted and failed 3-4, Members Ambrose, Dolegowski, Dow and Whitelaw dissenting.

A roll call vote for Member Jacobs to serve as Chair was conducted and carried 4- 3, Members Ambrose, Dolegowski, and Schmitt dissenting.

The Committee accepted nominations for Vice Chair.

Member Jacobs nominated Member Washington to serve as Vice Chair.

Member Washington nominated himself to serve as Vice Chair.

Member Ambrose nominated herself to serve as Vice Chair.

A roll-call vote for Aaron Washington to serve as Vice Chair was conducted and carried 5-2, Members Ambrose and Dolegowski dissenting.

C. Consideration of Establishing 2024 Meeting Schedule
The suggested dates for the 2024 meeting schedule of the Coastal Advisory Committee are the third Thursday every other month beginning in January 2024.

Vice Chair Washington suggested the Committee meet monthly. City Attorney Mitchell referenced the Municipal Code section indicating the Committee would meet every other month.

CONSENSUS
By consensus, the Committee directed staff to inform the Council of the Committee’s desire to meet monthly and encouraged each Member to reach out to the Council as well.

MOTION
Vice Chair Washington moved and Member Ambrose seconded a motion to direct staff to bring back a resolution adopting the Committee calendar. The question was called and the motion carried unanimously.

D. Collaborative Brainstorming and Discussion of General Topics for City Council Consideration in Connection with the City Council Setting the Coastal Advisory Committee Work Plan for 2024
Member Whitelaw presented her proposed workplan.
164
Minutes of the Special Meeting of the Coastal Advisory Committee of January 18, 2024 Page 4 Chair Jacobs left the meeting at 4:45 p.m.

The Committee discussed whether landslide issues were within its purview; acquisition of sand; importance of having a presence with other agencies; Committee assistance to staff on projects and involvement with other agencies; need to formulate strategies to coordinate with the Coastal Commission and OCTA; request for information on how to retain sand; and data collection.

In response to Committee questions, Coastal Administrator Meyerhoff discussed Staffs’ involvement in working with other agencies, including the OCTA and the Coastal Commission; stakeholder involvement; guest speakers to address the Committee; and shoreline protection monitoring program.

Environmental Programs Analyst Beech explained the collaboration between water quality and solid waste staff efforts.

Member Whitelaw proposed agendizing establishment of subcommittees at the next Coastal Advisory Committee meeting. Member Ambrose seconded the proposal.

MOTION
Vice Chair Washington moved and Committee Member Schmitt seconded a motion to recommend the City Council consider the draft proposed work plan as follows:

1. Get Sand
a. SANDAG (Regional Beach Sand Project III
b. "Sand via Rail" pilot project (North Beach, State Beach) c. SCOUP permit
d. OCTA Phase I Track Stabilization Study (Metrolink, LOSSAN and Caltrans)
e. Study for new sand sources
f. Federal project oversight and advice
g. Pay for Sand and Retention Structures
1). Research grant opportunities
2). Research other funding opportunities (tax or fee)
3). Research public / private partnership PPP

2. Keep Sand
a. Nature Based Solutions Study
b. Other studies (literature search and field observations of natural features)and Request for Information from engineering firms c. San Clemente Regional Shoreline Monitoring Program and potential extension and potential to switch to satellite imagery
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Minutes of the Special Meeting of the Coastal Advisory Committee of January 18, 2024 Page 5

3. Water Quality
a. Poche Beach
b. Other storm drains: field observations, sampling, prioritize c. Request presentation by Water Quality staff
d. Solid waste reduction/recycling

4. Collaborate with others
a. Beaches, Parks & Recreation Commission (We will monitor their agendas and Committee Member will attend as needed)
b. SANDAG Shoreline Preservation Working Group
c. OCTA Phase I Track Stabilization Study Stakeholders Group d. State Parks
e. Orange County Coastal Resilience Task Force (Katrina Foley group) f California Coastal Commission
g. Interface with experts on coastal issues
h. Other municipalities to understand how they deal with sand i. Surfing groups to understand how to protect our surfing resources The motion carried 6-0, Chair Jacobs absent.

8. COMMUNICATIONS FROM COMMITTEE MEMBERS AND STAFF
Member Ambrose congratulated the new officers.

ADJOURNMENT

VICE CHAIR WASHINGTON MOVED AND MEMBER SCHMITT SECONDED A MOTION TO ADJOURN THE MEETING AT 6:55 P.M. TO THE SPECIAL COASTAL ADVISORY COMMITTEE MEETING TO BE HELD ON JANUARY 22, 2024, AT 3:00 P.M. AT SAN CLEMENTE CITY HALL, SECOND FLOOR COUNCIL CHAMBERS, LOCATED AT 910 CALLE NEGOCIO, SAN CLEMENTE, CALIFORNIA. THE MOTION CARRIED 6-0, CHAIR JACOBS ABSENT.

Respectfully submitted,
______________________________
Brian Jacobs, Chair
Attest: ______________________________
Zach Rehm, Senior Planner
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..ag endizedby
..end
Subject:
..titl e
INVESTMENT ADVISORY COMMITTEE REGULAR MEETING MINUTES OF APRIL 29, 2024. ..body
..recommendation
..end
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CITY OF SAN CLEMENTE
Investment Advisory Committee Minutes
Regular Meeting – April 29, 2024
A Regular Meeting of the City of San Clemente Investment Advisory Committee was called to order by City Treasurer, Charlie Smith, on April 29, 2024, at 5:34 p.m. This meeting was conducted in the Community Conference Room at City Hall, 910 Calle Negocio, San Clemente. (1) PLEDGE OF ALLEGIANCE
The Pledge of Allegiance was led by Charlie Smith.
(2) ROLL CALL
PRESENT: Investment Advisory Committee Members:

Charlie Smith, Art Carter, Jeff Willardson
Staff:

Sandee Chiswick, Melissa Anderson, Brian Brower
ABSENT: Victor Cabral, Amanda Conley
PUBLIC: None
(3) APPROVAL OF MINUTES
Motion by Art Carter, seconded by Jeff Willardson to approve the minutes of January 22, 2024, January 29, 2024, February 5, 2024, and February 12, 2024.

Approved 3-0.
(4) INVESTMENT REPORT 3
rd QUARTER 2023-24
The third quarter Investment Report was introduced by City Treasurer, Charlie Smith. Jayson Schmitt, Chandler Asset Management representative, reviewed the report with the committee and answered questions. Jeff Willardson moved to approve the 3
rd Quarter Investment Report, seconded by Art Carter. Approved 3-0. (5) DISCUSS SECTION 115 TRUST ACCOUNT
The committee discussed opening a Section 115 Trust Account. Jayson reviewed what it is and what the IRS Section of code allows for public agencies. The amount to be allocated along with the ways to open an account were discussed. The committee would like to meet with both PARS and also a legal firm who drafts customized accounts to gather more information.

A motion was made by Jeff Willardson, seconded by Art Carter, approved 3-0 to recommend to council that the Investment Advisory Committee is in agreement that a 115 Trust Account for prefunding of CalPERS payments is their recommendation.
174
Investment Advisory Committee Minutes April 29, 2024 Page 2 (6) PUBLIC INPUT
Art Carter asked question about LAIF
(7) ADJOURNMENT
The committee agreed to change the date of the next meeting from July 29th to August 5, 2024.

Motion was made by Art Carter, seconded by Jeff Willardson, carried 3-0, to adjourn to a Special Meeting to be held on August 5, 2024, at 5:30 p.m. at City Hall located at 910 Calle Negocio, San Clemente, California. _________________________________
Charlie Smith
Chair-Investment Advisory Committee
Future Meeting Dates:

August 5, 2024
October 28, 2024
January 27, 2025
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Meeting Date: August 20, 2024 Agenda Item: (6)
Submitted By: Choose an item.

Prepared By:

Subject:
..titl e
PLANNING COMMISSION SPECIAL MEETING MINUTES OF JULY 24, 2024 ..body Fiscal Impact:

Summary:

Background:

Council Options:

Environmental Review/Analysis:

Recommended Actions:

Staff Recommendation ..recommendation
..end
Attachment:

Notification:
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These minutes will be considered for approval at the Planning Commission meeting of 08-21-2024.

MINUTES OF THE SPECIAL MEETING

OF THE CITY OF SAN CLEMENTE

PLANNING COMMISSION
July 24, 2024 @ 5:00 p.m.

San Clemente City Hall Council Chamber
910 Calle Negocio, San Clemente, CA 92673
Teleconference via www.san-clemente.org

CALL TO ORDER
Chair Cosgrove called the Special Meeting of the Planning Commission of the City of San Clemente to order at 5:05 p.m. The meeting was offered in person at San Clemente City Hall Council Chambers, 910 Calle Negocio, San Clemente, California, 92673, and also via live stream from the City’s YouTube Channel.

2. PLEDGE OF ALLEGIANCE
Commissioner McKhann led the Pledge of Allegiance.

3. ROLL CALL
Commissioners Present: Barton Crandell; Scott McKhann; Vice Chair M. Steven Camp; Karen Prescott-Loeffler; Chair Cameron Cosgrove
Commissioners Absent: Brent Davis and Chair Pro Tem Gary P. McCaughan, M.D.

Staff Present: Jonathan Lightfoot, City Planner
Gena Burns, Deputy City Attorney
Zachary Ponsen, Assistant City Engineer
David Carrillo, Associate Planner
John Ciampa, Contract Planner
Tamara Tatich, Office Specialist
These minutes reflect the order in which items appeared on the meeting agenda and do not necessarily reflect the order in which items were actually considered.

4. SPECIAL ORDER OF BUSINESS/SPECIAL PRESENTATION
None

5. MINUTES
A. Receive and file Minutes from the Planning Commission Regular Meeting of June 5, 2024.

IT WAS MOVED BY COMMISSIONER MCKHANN, SECONDED BY COMMISSIONER CAMP, AND CARRIED 5-0, COMMISSIONER DAVIS AND CHAIR PRO TEM 187
Minutes of Special Planning Commission Meeting of July 24, 2024 Page 2 MCCAUGHAN ABSENT, to receive and file the minutes from the Planning Commission Regular Meeting of June 5, 2024.

B. Receive and file Minutes from the Planning Commission Special Meeting of June 26, 2024.

IT WAS MOVED BY COMMISSIONER MCKHANN, SECONDED BY COMMISSIONER CAMP, AND CARRIED 3-2, COMMISSIONER DAVIS AND CHAIR PRO TEM MCCAUGHAN ABSENT, to receive and file the minutes from the Planning Commission Special Meeting of June 26, 2024.

6. ORAL AND WRITTEN COMMUNICATION
None.

7. CONSENT CALENDAR
None.

8. PUBLIC HEARING
A. Continued Public Hearing Project (PHP) 23-083, Sea Cliff Hotel & Restaurant, 402 Pasadena Court
A continued public hearing item for the Planning Commission to consider the development of an eleven-unit boutique motel and a restaurant with 25 outdoor seats at a historic property located at 402 Pasadena Court within the Pier Bowl.

The project preserves the existing historic four-level residence and portions of the garden, including the fountains, and rehabilitates the runnel and lower terrace patio. Two new buildings are proposed on the southern portion of the property and a new garage is provided with access from Avenida Victoria. Additionally, an Encroachment Permit is required to legalize the existing encroachment of the historic residence into the public right-of-way. A sidewalk easement is also required for portions of the sidewalk that encroach into the subject private property.

The project scope requires a Cultural Heritage Permit (CHP 23-084), Conditional Use Permit (CUP 23-085), and Discretionary Encroachment Permit (DEP 24-108).

The Planning Commission will also consider whether to find the project categorically exempt from the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines Section 15301 (Class 1: Existing Facilities), Section 15331 (Class 31: Historical Resource Restoration/Rehabilitation) and Section 15332 (Class 32: In-Fill Development Projects).

Chair Cosgrove opened the public hearing.

David Carrillo, Associate Planner, narrated a PowerPoint Presentation entitled, “Sea Cliff Boutique Motel & Restaurant CHP 23-084 / CUP23-085,” dated July 24, 2024. A copy of the Presentation is on file in Planning Division. 188
Minutes of Special Planning Commission Meeting of July 24, 2024 Page 3 Jim Holloway indicated that the applicant team was available to respond to questions.

John Boland expressed disappointment about the prior hearing and suggested the historic property be retained and an Environmental Impact Report (EIR) be conducted. He expressed concern about the ongoing code violations.

Scott Potter, representing homeowners on Cazador Lane, expressed concern about emergency vehicle access, special use permits, parking, and delivery trucks.

Jill Ammirato suggested the need for an EIR and consideration of water pressure from above the property, and previous code violations. She requested story poles and the door on Pasadena Court be only for private use.

Jerry Laidlaw expressed concern about earth stability and assurances for his property.

Wayne Eggleston suggested the new parking garage have a gate and that it be open during the day and closed at night.

Gerald Kroger provided a historical overview of groundwater studies.

Amanda Quintanilla indicated opposition to the proposed project; urged consideration of the comments from the prior hearing; expressed concern about the lack of an EIR, maintaining the garden area, noise and traffic.

Mike Palkovic expressed concern about the height of the wall affecting the view corridor.

Tony Massaro, architect and Jim Holloway, representing the applicant, discussed the elevation difference between the Pasadena Court and the spa; contrasted the project with reactionary responses to the land movement next to Casa Romantica and La Ventana and indicated the project would proactively stabilize the slope; economic viability of the project in order to maintain the cultural resources; curb improvements that would help Pasadena Court traffic circulation; openness to a gate and for it to be open in day and closed at night; clarified proposed parking; and explained configuration of the fence/arbor creating privacy for the spa and maintaining the site line to the Ocean.

In response to Commission questions, Mr. Holloway discussed the lack of a policy basis for a landscape height limit; intent to retain historic wall along Pasadena Court; spa hours of operation; traffic construction; deliveries; economic feasibility analysis; and agreement to meet with the residents’ geotechnical consultant during building permit plan check process.

City Planner Lightfoot discussed the 42-inch limit on hedges, which was referenced within public comment as an example of a code violation, and review of revised 189
Minutes of Special Planning Commission Meeting of July 24, 2024 Page 4 landscape. He explained the special event permit process and how proposed conditions would limit the project to a lower number of annual special events; discussed delivery trucks.

Assistant City Engineer Ponsen explained ground water monitoring, construction traffic and parking, drainage and performance bonds, parking restrictions on Pasadena Court, Fire Department review and inclinometers.

Deputy City Attorney Burns concurred with staff’s recommendation on categorical exemption under CEQA
Chair Cosgrove suggested Conditions restricting deliveries to Avenida Victoria only; that the garage door remain open during the day and closed at night; and no amplified sound; and requested the City offer a meeting with the applicant’s engineers with HOA engineers.

During discussion, the Commission indicated it could make the Findings and to allow staff to work out the garage door operations and that the spa closes at 10 p.m.

IT WAS MOVED BY CHAIR COSGROVE, SECONDED BY COMMISSIONER CAMP, AND CARRIED 5-0, COMMISSIONER DAVIS AND CHAIR PRO TEM MCCAUGHAN ABSENT, TO 1) Determine the project is categorically exempt from the requirements of the CEQA pursuant to CEQA Guidelines §15301 (Class 1: Existing Facilities); §15331 (Class 31:

Historical Resource Restoration/Rehabilitation); and §15332 (Class 32: In-Fill Development Projects); and 2) Adopt Resolution PC 24-013, approving Public Hearing Project 24-249, Sea Cliff Boutique Motel and Restaurant, subject to Conditions of Approval, with modifications to the following Conditions:.
a. Add 3.20: The applicant/owner shall install a trench drain adjacent to the retaining wall along Avenida Victoria north of the historic residence garages for the purpose of conveying water from existing subdrains to the street and shall also replace any displaced parking meters along Avenida Victoria at their own expense and to the standards and satisfaction of the City Engineer. b. Remove 4.24 (landscape plane)
c. Add 5.14: The applicant/owner shall install signage in location(s) approved by the City that includes the following: (1) that there shall be public access to the viewing deck daily from 6:00 a.m. to 10:00 p.m. and to the restaurant patio during operating hours; (2) contact information for the owner’s representative responsible for maintaining the access area and to whom complaints can be directed; and (3) that misuse of the area is enforceable by the Orange County Sheriff’s Department and the City and subject to citation. The owner shall obtain written approval of the design, verbiage and location(s) of the signage from the City prior to installation. The owner shall execute such other and further documentation as may be required by the Orange County Sheriff’s Department or the City to allow enforcement with respect to misuse use of the 190
Minutes of Special Planning Commission Meeting of July 24, 2024 Page 5 area, including but not limited to under San Clemente Municipal Code Titles 8, 9, and 17.
d. Replace 7.7 with: A garage door or gate shall be required at the entry to the subterranean garage and shall be open from 7 am – 10 pm. Hours may be modified by the City Planner, in concurrence with the City Engineer. e. Modify 7.8: Replace “All” with “Amplified sound and…” f. Add 7.10: Commercial deliveries shall be taken from the driveway or garage along the Avenida Victoria frontage.
g. Add 7.11: The pool and spa shall close at 10 p.m. daily.

B. Public Hearing Project 24-029, Rimland Residence, 137 W. Avenida Santiago The Planning Commission will consider to allow the demolition of 1,155 square feet of the existing two-story single-family residence, the construction of a first and second story addition totaling 2,229 square feet, and a 344 square foot roof deck in the Residential Low (RL) Density Zoning District and abutting a historic resource at 201 Esplanade. The project includes a Development Permit (DP 24-041).

The Planning Commission will also consider whether the project is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines §15301 (Class 1: Existing Facilities), §15302 (Class 2:

Replacement or Reconstruction), and §15303 (Class 3(a): New Construction of a single-family residence in a residential zone).

Commissioner Prescott–Loffler disclosed site visits.

Chair Cosgrove opened the public hearing.

John Ciampa, Contract Planner narrated a PowerPoint Presentation entitled, “Rimland Residence, 137 W. Avenida Santiago, PHP24-029 for a Development Permit DP24-041),” dated July 24, 2024. A copy of the Presentation is on file in Planning Division.

Austin Peters, Applicant’s architect, explained the goal to make the property the primary residence; overall design strategy to remove massing; and the existing property across the street.

In response to Commission questions, Mr. Peters indicated the mature landscaping would remain and the parking would be unchanged.

During discussion, the Commission indicated the project would be an improvement to the home and neighborhood; the Findings could be made; and there was no negative impact on historic resources.
191
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IT WAS MOVED BY COMMISSIONER MCKHANN, SECONDED BY COMMISSIONER PRESCOTT-LOEFFLER, AND CARRIED 5-0, COMMISSIONER DAVIS AND CHAIR PRO TEM MCCAUGHAN ABSENT, 1) Determine the project is Categorically Exempt from the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines 14 CCR §15301, Class 1: Existing Facilities, §15302, Class 2: Replacement or Reconstruction and §15303, Class 3(a): New Construction of a single-family residence in a residential zone; and 2) Adopt Resolution PC 24-017, approving Development Permit 24-041, Rimland Residence, subject to the Conditions of Approval provided in the staff report.

C. Public Hearing Project (PHP) 24-246, Rasta Taco Mixed-Use, 424 N. El Camino Real
The Planning Commission will consider a request to develop a new mixed-use building with two ground floor commercial spaces, including a restaurant with beer, wine, and alcohol sales for indoor and outdoor consumption, and a residential unit and an ADU on the second floor above. The project includes a Development Permit (DP 24-247) and a Conditional Use Permit (CUP 22-246).

The Planning Commission will also consider whether the project is Categorically Exempt from the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines §15302 (Class 2: Replacement or Reconstruction), §15303 (Class 3(b) and 3(c): New construction of a building under 10,000 square feet in an urbanized area which includes up to six small residential units), and §15332 (Class 32: In-Fill Development Projects).

Commissioner Prescott-Loeffler disclosed that she had driven by the property.

Commissioner McKhann disclosed he had property within 1000 feet of the project but did not anticipate a financial impact.

Chair Cosgrove opened the public hearing.

Jonathan Lightfoot, City Planner, narrated a PowerPoint Presentation entitled, “Rasta Taco Mixed-Use,” dated July 24, 2024. A copy of the Presentation is on file in Planning Division.

In response to Commission questions, the applicant discussed proposed signage; stucco projections; and building size.

City Planner Lightfoot responded to questions about roof heights and maximum height, and alcohol license and onsite consumption.

Chair Cosgrove closed the public hearing.

The Commission discussed the need to consider signage; improvements to the existing location; and concurred that the signage be reviewed by DRC. 192
Minutes of Special Planning Commission Meeting of July 24, 2024 Page 7

IT WAS MOVED BY COMMISSIONER CAMP, SECONDED BY CHAIR COSGROVE, AND CARRIED 5-0, COMMISSIONER DAVIS AND CHAIR PRO TEM MCCAUGHAN ABSENT, to 1) Determine the project is Categorically Exempt from the requirements of the CEQA pursuant to CEQA Guidelines Section 15302 (Class 2 (b): Replacement or Reconstruction),15303 (Class 3(b) and 3(c): New Construction), and §15332 (Class 32: Infill Development Projects); and 2) Adopt Resolution PC 24-018, approving Development Permit 24-247 and Conditional Use Permit 22-246, subject to Conditions of Approval with an added condition (4.20) to require removal of the keystone detail above the arch to create space for signage; and final sign location and details to be reviewed by Design Review Subcommittee.

9. NEW BUSINESS
A. Selection of Planning Commission Chair, Vice-Chair, and Chair Pro Tem Chair
Outgoing Chair Cosgrove was nominated by Commissioner McKhann to serve as Chair of the Planning Commission. On a majority vote, Cameron Cosgrove was selected as Chair of the Planning Commission.

Vice Chair
Outgoing Chair Pro Tem Gary P. McCaughan was nominated by Commissioner Prescott-Loeffler to serve as Vice Chair of the Planning Commission. On a majority vote, Gary P. McCaughan was selected as Vice Chair.

Chair pro tem
Outgoing Vice Chair Camp was nominated by McKhann to serve as Chair pro tem of the Planning Commission. On a majority vote, M. Steven Camp was selected to serve as Chair pro tem.

B. Selection of Design Review Subcommittee Members
Appoint four (4) Commissioners to serve on the Design Review Subcommittee; three (3) serve as active members and one (1) is an alternate member. The Design Review Subcommittee (DRSC) meets the second and fourth Wednesday of each month at 3:00 p.m.

IT WAS MOVED BY COMMISSIONER PRESCOTT-LOEFFLER, SECONDED BY CHAIR COSGROVE, AND CARRIED 5-0, COMMISSIONER DAVIS AND CHAIR PRO TEM MCCAUGHAN ABSENT, to appoint M. Steven Camp, Cameron Cosgrove and Barton Crandall to the Design Review Subcommittee, with Scott McKhann as Alternate.

Commissioner Camp was nominated by Commissioner Crandell to serve as Chair of the DRSC. On a majority vote, M. Steven Camp was selected as Chair.

Commissioner Crandell was nominated by Commissioner Camp to serve as Vice Chair of the DRSC. On a majority vote, Barton Crandell was selected as Vice Chair. 193
Minutes of Special Planning Commission Meeting of July 24, 2024 Page 8

10. OLD BUSINESS
None.

11. REPORTS OF COMMISSIONERS AND STAFF
A. Tentative Future Agenda
B. Administrative Development Permit Report
City Planner Lightfoot discussed the Ole Hanson Beach Club community meeting which would be brought back to the Commission in August; announced the Senior Planner recruitment; and Miramar site visits and timeline of expectations.

12. ADJOURNMENT

THERE BEING NO OTHER BUSINESS BEFORE THE COMMISSION, IT WAS

MOVED BY COMMISSIONER MCKHANN, SECONDED BY VICE CHAIR CAMP, AND CARRIED 5-0, COMMISSIONER DAVIS AND CHAIR PRO TEM MCCAUGHAN ABSENT, TO ADJOURN THE MEETING AT 8:30 P.M. TO A REGULAR PLANNING COMMISSION MEETING TO BE HELD IN-PERSON ON AUGUST 21, 2024, AT THE SAN CLEMENTE CITY HALL COUNCIL CHAMBERS LOCATED AT 910 CALLE NEGOCIO, 2
nd FLOOR, SAN CLEMENTE, CALIFORNIA.

Respectfully submitted,
Cameron Cosgrove, Chair
Attest:

Jonathan Lightfoot, City Planner
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AGENDA REPORT

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CITY COUNCIL MEETING
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Meeting Date: August 20, 2024 Agenda Item: (7)
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AGENDA REPORT

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Meeting Date: August 20, 2024 Agenda Item: (1)
..ag endizedby
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Subject:
..titl e
Approve Wire Transfer Nos.
3087 through 3090 and Warrant Nos.
589234 through 589398, paid on
7-26-24, in the amount of $5,216,984.13
TOTAL WARRANT REGISTER $5,216,984.13 ..end
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AGENDA REPORT

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CITY COUNCIL MEETING
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Meeting Date: August 20, 2024 Agenda Item:
..ag endizedby
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Subject:
..titl e
Warrant Nos. 940 through 943 and
Automatic Deposit Advises 95886
through 96279, for the period
7-8-24 through 7-21-24, paid
on 7-26-24, in the amount of $590,767.37
TOTAL PAYROLL REGISTER $590,767.37 ..end
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AGENDA REPORT

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CITY COUNCIL MEETING
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Meeting Date: August 20, 2024 Agenda Item: 11D.

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

CONSIDERATION OF A RESOLUTION APPROVING A SECOND AMENDMENT TO A LEASE

WITH TWO OPTIONS WITH GLAUKOS CORPORATION FOR THE CITY OWNED LAND LOCATED ON AVENIDA FABRICANTE (APN 690-661-09)
..body
Fiscal Impact:

The five-year extension of the lease’s original term will generate, at minimum, $180,000, up to a possible $277,693.34, depending upon when the Lessee develops a parking lot on the parcel. If all Lease Options are further exercised, the proposed lease is estimated to generate a total of between $835,620.96 and $995,341.35 in revenue over the next fifteen years, and provide the City with parking lot improvements on the currently undeveloped parcel that have an estimated value of between $100,000 and $150,000.

Summary:

Glaukos Corporation (“Lessee”) has leased the vacant, unimproved lot adjacent to their building located at 229 Avenida Fabricante since January 1, 2016. Pursuant to the first amendment to the original lease, the original lease term is set to expire on December 31, 2024. Lessee has expressed interest in amending the existing lease a second time to extend the original term an additional five years, with a new term end date of December 31, 2029 (“Original Term”). The proposed Second Amendment to the Standard Industrial/Commercial Land Lease Agreement – Gross (“Second Lease Amendment”) includes the addition of a second, five-year option term (“Option Term”) contained within the Lease, and provides some revisions to existing lease terms that include an increase in the lease amounts, specific stipulations to develop a parking lot as intended by Lessee, provisions for the use of the parking lot by the City, and some other minor clarifications to the existing terms of the lease.

Background:

At the July 15, 2014 City Council meeting, the property located at Avenida Fabricante, legally described as Assessor’s Parcel Number 690-661-09 was placed on the City’s marketable property list as directed by the City Council. In April of 2015, Lessee expressed interest in leasing the subject lot to expand the capacity of their employee parking areas. At the September 15, 2015 City Council meeting, the City Council unanimously approved a Standard Industrial/Commercial Land Lease Agreement – Gross (“Lease”, provided as Attachment 2) for the City-owned land to Lessee for an initial term of six years, with the term ending on December 31, 2021. On November 5, 2019, the City Council approved a first amendment to the Lease (provided as Attachment 3) to extend the term of the Lease for an additional five years, ending on December 31, 2024. In written correspondence dated March 17, 2024, the Lessee expressed interest to the City in further extending the Lease. Through discussions with the Lessee, City 210
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CITY OF SAN CLEMENTE 2
staff and Lessee propose amending the Lease to extend the original term for an additional five years and include a second additional Option Term, for a total potential term of an 15 additional years (five-year extension plus two five-year Option Terms).

Discussion:

The proposed Second Lease Amendment, provided as Exhibit A of Attachment 1, includes amendments to effectuate the following changes to the Lease, inclusive of changes made through execution of the first amendment to the Lease:
 The Second Lease Amendment extends the Original Term of the Lease by five years, to expire on December 31, 2029.
 The Lease grants the Lessee one Option Term to extend the Original Term by five years.

The Second Lease Amendment provides a second additional five-year Option Term, with both Option Terms being exercisable through a written request only after completing the "Parking Lot Improvements," defined in Section 54, by the expiration of the Lease’s Original Term. If the Parking Lot Improvements are not completed by the expiration of the original lease term, each of the two Option Terms may only be exercised with approval of the City Manager.
 The Lease includes a monthly base rent of $2,500 prior to the development of the Parking Lot Improvements on the site, and $4,000 a month after such development occurs. The proposed Second Lease Amendment increases these base rent amounts to $3,000 and $4,500, respectively. Please refer to the section below entitled, “Fair Market Value” for more detail on how this base rent increase was calculated.  The Second Lease Amendment increases the monthly rent for the Option Terms to equal the greater of $4,500 or the final month's Base Rent increased by 3%, whichever is greater.
 Before using the property as a parking lot, Lessee must enhance it to meet City of San Clemente specifications and permits, including asphalt, striping, lighting, etc., referred to as the "Parking Lot Improvements." The Second Lease Amendment clarifies that these improvements are required to meet the requirements and standards of the City’s Building, Engineering, and Planning Divisions.
 The Lease provides that the parking lot, once constructed, is for the exclusive use of Lessee. The Second Lease Amendment revises terms to specify that the parking lot will be exclusively available to the Lessee on weekdays from 6:00 a.m. to 6:00 p.m., with the City having access to use the parking lot during all other times.

The proposed Second Lease Amendment will generate revenue of $3,000.00 per month (base rent) during the extension of the Original Term. Once the “Parking Lot Improvements” are completed, the base rent will increase to $4,500. Subsequent years, including during the two five-year Option Terms, will each contain a 3% increase until the final year of the Lease. The fiveyear extension of the Lease’s Original Term will generate, at minimum, $180,000, if the parking lot is not developed. This figure is increased, up to a possible $277,693.34 with an assumption that the Lessee develops a parking lot on the parcel within the first 6 months of 2025. If the parking lot is developed as assumed in this calculation, and all Lease Options are further exercised, the proposed lease is estimated to generate a total of $995,341.35 in revenue over the next fifteen years. Should the development of the parking lot not occur until the last year of the 211
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Original Term, 2029, the total amount of revenue generated by the Second Lease Amendment would be $835,620.96.

Fair Market Value
Pursuant to City Policy 901-1, Property Management Policies and Procedures for Lease and Sale of City-owned Property, whenever there is a substantial amendment to a lease, information must be provided to the City Council indicting the fair market return for the leasehold. The subject lease is a unique situation that does not provide any direct market comparisons for a number of reasons. First, there are no vacant-lot lease comparisons available because vacant lots are not typically leased, and there are no such situations recently on the market in the San Clemente business parks. Second, there are no direct parking-lot lease comparisons available because there are no such situations recently entered into for comparison in the San Clemente business parks. While the City does maintain a parking lot lease program in the City’s downtown area, these leases are not comparable to the proposed use of the subject property because they are non-exclusive. In those leases, the City pays $350 a month to private property owners in exchange for the parking to be made available to the public, while the lot is still available for parking to the private property owners and their customers.

Furthermore, a comparison based on the fair market value of the vacant lot cannot be made because the City is significantly limiting the highest and best use of the property by only allowing it to be used for a parking lot. In addition to the very limited allowable use of this property, there are other considerations that must be factored to determine the rent amounts. Included are the public benefit of the lot for City purposes outside of the Lessee’s times of exclusive use, and the future public benefit of the City’s exclusive use of the parking lot, after termination of the lease, as ancillary parking for Steed Park and the adjacent Animal Shelter. For the Animal Shelter, additional benefits could be more space to hold outdoor events, such as pet adoption events.

These benefits provide an incentive for a reduction in the rent amount commensurate with these public benefits and purposes.

Within the real estate industry, there are methods to calculate a lease value from the sale value of a property based on anticipated rate of return. For example, a survey of comparable vacant parcels in southern Orange County revealed that the average price per square foot of seven recently sold vacant parcels was $105.34. Closer to this area, an industrial property with building improvements on Puerta Del Sol sold last year, and the land alone was reappraised by the County Assessor at $86.93 per square foot. Applied to the subject parcel, which is 43,384 square feet, the value of the land is estimated to be between $3.7 million and $4.5 million. Based on these figures, a lease that allows for the highest and best use of the property would be calculated based on an annual rate of return of between 8% and 10% for typical commercial properties.

This equates to a monthly rent of between $31,428 and $38,083, averaging out to a fair market monthly rent of $34,755.50.

In order to develop a fair market lease value of the property, staff utilized the value of the property as indicated above, factoring in those limitations that reduce the value of the Lease, and considering the public benefits that would occur through execution of the Lease resulting in the anticipated and timely development of the parking lot. From this analysis, staff proposes a fair market value lease amount to be approximately 8% of the average fair market monthly rent while 212
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the lot remains unimproved, and 13% per month once developed as a parking lot. This equates to $3,000 and $4,500 per month, respectively. These amounts are also reasonably comparable increases to the rent amounts contained in the original Lease and First Lease Amendment.

Surplus Land Act
Pursuant to Section 102(i)(2)(A) of the Final Updated Surplus Land Act (SLA) Guidelines, dated August 1, 2024, the leasing of the property as proposed, does not constitute a disposition of public land, and therefore the requirements of the SLA are not applicable to this Second Lease Amendment.

Council Options:
 Adopt Resolution No. 24-129, which would approve, and authorize the City Manager to execute, the Second Lease Amendment, included as Exhibit A to the Resolution.  Modify and then adopt Resolution No. 24-129.
 Continue the item and provide staff with an alternative direction.  Do not approve Resolution No. 24-129, which would result in the City not entering into a lease extension of the property at this time. The existing Lease will remain in effect until December 31, 2024, and allows the Lessee one Option Term, which, if exercised, would expire on December 31, 2029.

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 as a result of the leasing of the property. The Parking Lot Improvements contemplated in the Lease will undergo a CEQA review as part of any future permit applications for such.

Recommended Actions:

CITY STAFF RECOMMENDS that the City Council Adopt Resolution No. 24-129, which will:

1. Approve the Second Amendment to the Standard Industrial/Commercial Land Lease Agreement – Gross Between City and Glaukos Corporation, provided as Attachment 1, Exhibit A, for the lease of the unimproved land located at Avenida Fabricante (APN 690-661-09); and

2. Authorize the City Manager to execute the Second Amendment to the Standard Industrial/Commercial Land Lease Agreement – Gross Between City and Glaukos Corporation.
..recommendation
..end
Attachment:

1. Resolution No. 24-129
A. Exhibit – Second Amendment to the Standard Industrial/Commercial Land Lease Agreement – Gross Between City and Glaukos Corporation
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CITY OF SAN CLEMENTE 5

2. Original Standard Industrial/Commercial Land Lease Agreement – Gross Between City and Glaukos Corporation

3. First Amendment to the Standard Industrial/Commercial Land Lease Agreement – Gross Between City and Glaukos Corporation
Notification:

Glaukos Corporation
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ATTACHMENT 1
RESOLUTION NO. 24-129

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

SAN CLEMENTE, CALIFORNIA, APPROVING THE

SECOND AMENDMENT TO THE STANDARD

INDUSTRIAL/ COMMERCIAL LAND LEASE
AGREEMENT – GROSS, BY AND BETWEEN CITY AND

GLAUKOS CORPORATION FOR THE CITY OWNED LAND
LOCATED ON AVENIDA FABRICANTE (APN 690-661-09)
WHEREAS, pursuant to City policy 901-1, the City delegates the authority to engage in negotiations with current and prospective tenants for City-owned property to the City Manager; and
WHEREAS, the City owns the subject property at Avenida Fabricante, APN 690- 61-009, an unimproved lot; and
WHEREAS, on July 15, 2014, the property was placed on the City’s marketable property list at the City Council’s direction; and
WHEREAS, on September 15, 2015, the City Council approved a Standard Industrial/Commercial Land Lease Agreement - Gross for the City-owned land to Glaukos Corporation (“Lessee”) for an initial term of six years, with the term ending on December 31, 2021; and
WHEREAS, on November 5, 2019, the City Council approved a first amendment to the Lease to extend the term of the Lease for an additional five years, ending on December 31, 2024; and
WHEREAS, on March 17, 2024, Lessee expressed interest in extending the lease by way of a Second Amendment to the Standard Industrial/Commercial Land Lease Agreement - Gross; and
WHEREAS, pursuant to Section 102(i)(2)(A) of the Final Updated Surplus Land Act (SLA) Guidelines, dated August 1, 2024, the leasing of the property pursuant to the proposed Second Amendment, does not constitute a disposition of public land, and therefore the requirements of the SLA are not applicable; and WHEREAS, City staff has reviewed the proposed Second Amendment to the Standard Industrial/Commercial Land Lease Agreement - Gross proposal and finds it to be beneficial to the City, in that the Second Amendment provides for public benefits and purposes once the property is developed as a parking lot, allows for City use outside Lessee’s exclusive use hours and the monthly rent amounts are consistent with a fair 215
Resolution No. 24-129 Page 2
market value of the property based on the uses allowed pursuant to said Second Amendment.

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 Second Amendment to the Standard Industrial/Commercial Land Lease Agreement – Gross, attached as Exhibit A, by and between City and Glaukos Corporation is approved.

SECTION 3. The City Manager, or the City Manager's designee, is hereby authorized and directed to execute the Second Amendment to the Standard Industrial/Commercial Land Lease Agreement - Gross by and between City and Glaukos Corporation.

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 _____________________, ____.

ATTEST:

City Clerk of the City of Mayor of the City of
San Clemente, California Clemente, California
216
Resolution No. 24-129 Page 2

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. 24-129 was adopted at a regular meeting of the City Council of the City of San Clemente held on the _______ 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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Exhibit A
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Attachment 2
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Attachment 3
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241
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: August 20, 2024 Agenda Item: 11E.

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

CONSIDERATION OF A RESOLUTION APPROVING A FIVE-YEAR LEASE WITH TWO

THREE-YEAR OPTIONS FOR THE CITY OWNED COMMERCIAL BUILDING LOCATED AT 1030 CALLE NEGOCIO (APN 688-142-35) AND APPROVING A SUPPLEMENTAL APPROPRIATION ..body FOR BROKER COMMISSIONS
Fiscal Impact:

The proposed five-year lease will generate revenue of $16,081 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 $1,024,500. The lease includes a commission of 6% of the gross lease, or $61,470.

Additionally, the lease provides for the repair of the roof and replacement of the air conditioning units at the lessee’s expense, which are improvements valued between $100,000 and $125,000 regarding which the City would no longer bear the cost. The lease includes two (3) three-year options, with annual increases, to renew at the fair market rate, the revenue from which is difficult to estimate at this time.

Summary:

Under an exclusive marketing agreement with James Wynne/WynneCRE, Inc. (“City’s Broker”), approved by the City Council on June 18, 2024, the City received multiple inquiries and one offer to lease the City-owned building at 1030 Calle Negocio. The offer submitted came from XLR8 EMS, LLC, a local business. The submitted offer is for a Standard Industrial/Commercial SingleTenant Lease - Gross (“Lease”) with an initial term (“Original Term”) of five-years. The City’s Broker drafted a prospective Lease (provided as Exhibit A of Attachment 1) for the City Council’s consideration with the Original Term commencing on December 1, 2024 and expiring on September 30, 2029, and includes two three-year options to extend the lease, with early possession prior to December 1, 2024. The monthly base rent of the lease is $16,081 for the first year, with 3% increases each year thereafter.

Background:

The tenant that most recently occupied the subject building was Family Assistance Ministries.

Their lease with the City has ended and the building has since been vacated. XLR8 EMS, LLC is an electronic manufacturing/assembly business that specializes in various facets of electronic prototype and production assembly, which is headquartered next door to the subject property at 1020 Calle Negocio. The business is looking to expand their operations. Since its establishment in 2013, XLR8 EMS, LLC has grown at a healthy rate and seeks additional commercial space.

The proposed expansion includes adding assembly and testing equipment at the 1030 Calle Negocio building and hiring ten new employees from the community. The new prospective tenant is looking to take possession as soon as possible.
242
Meeting Date: August 20, 2024 Agenda Item: 11E.

CITY OF SAN CLEMENTE 2
Discussion:

A five-year lease by and between the City of San Clemente and XLR8 EMS is proposed with the following terms and conditions:
 $16,081 per month, for the first year, with 3% increases annually. The table below provides the monthly, annual, and total rent amounts specified in the lease.

Table 1 – Payment Schedule
 Two (3) three-year options, with annual increases, to renew at the fair market rate.  Rules and regulations for the use and occupancy of the building are included in the lease agreement.

Surplus Land Act
Pursuant to Section 102(i)(2)(A) of the Final Updated Surplus Land Act (SLA) Guidelines, dated August 1, 2024, the leasing of the property, as proposed for a term, including all options, of less than 15 years, does not constitute a disposition of public land, and therefore the requirements of the SLA are not applicable to this proposed lease.

Council Options:
 Adopt Resolution No. 24-130, which would approve, and authorize the City Manager to execute, the five-year lease agreement, with the two three-year options, by and between the City of San Clemente and XLR8 EMS, LLC.
 Modify and then adopt Resolution No. 24-130.
 Continue the Item and provide staff with alternative direction. Alternative direction could include directing staff to work with the City’s Broker to return to the City Council with additional offers, if received.
 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 submit timely offers to the City’s Broker, the commission fee stipulated in the exclusive listing agreement would remain a cost payable to the City’s Broker for services rendered.

Gross per SF/Mo Monthly Rent Annual Rent Multiplier
Year One $ 1.80 $ 16,081.00 $ 192,972.00 Base
Year Two $ 1.85 $ 16,563.00 $ 198,756.00 3%
Year Three $ 1.90 $ 17,060.00 $ 204,720.00 3%
Year Four $ 1.96 $ 17,572.00 $ 210,864.00 3%
Year Five $ 2.02 $ 18,099.00 $ 217,188.00 3%
Total $ 1,024,500.00
243
Meeting Date: August 20, 2024 Agenda Item: 11E.

CITY OF SAN CLEMENTE 3
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 to 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 recommends that the City Council Adopt Resolution No. 24-130, provided as Attachment 1, which would accomplish the following:..recommendati on ..r ecommendati on

1. Approve the five-year lease agreement, provided as Exhibit A of Attachment 1, for the lease to XLR8 EMS, LLC of 1030 Calle Negocio, and

2. Authorize the City Manager to execute the lease agreement, for a base rent of $16,081 per month for the first year, with 3% increases annually, and two three-year options to renew at market rental rate, and including the commission for consultant real estate services not to exceed 6% of the gross lease revenues.

3. Accept revenues in the amount of $112,567 for FY 2025 in account # 001-000-36253 - Negocio Lease Revenues.

4. Approve a supplemental appropriation in the amount of $61,470 to account #001-151-43605 - Broker Commissions.
..end
Attachment:

1. Resolution No. 24-130
A. Exhibit - Standard Industrial/Commercial Single-Tenant Lease - Gross by and between City and XLR8 EMS, LLC
Notification:

XLR8 EMS, LLC
James Wynne/WynneCRE, Inc.
244
ATTACHMENT 1
RESOLUTION NO. 24-130

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

SAN CLEMENTE, CALIFORNIA, APPROVING A STANDARD

INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE -

GROSS FOR A FIVE-YEAR LEASE AGREEMENT, WITH

TWO THREE-YEAR OPTIONS, FOR THE CITY OWNED
BUILDING AT 1030 CALLE NEGOCIO (APN 688-142-35) BY
AND BETWEEN CITY AND XLR8 EMS, LLC AND

APPROVING A SUPPLEMENTAL APPROPRIATION FOR

BROKER COMMISSIONS
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 1030 Calle Negocio, APN 688-142-35, is owned by the City, is currently vacant and is available for a prospective tenant and multi-year lease; and
WHEREAS, in June, 2024, the City awarded a Professional Services Agreement to James Wynne, WynneCRE, Inc., (“Broker”) a commercial real estate firm, for consultant real estate listing services to lease the City-owned building at 1030 Calle Negocio; and WHEREAS, the City’s Broker facilitated the listing of the subject property and obtained several inquiries and one offer for lease; and WHEREAS, City staff reviewed the offer presented and determined the offer submitted by XLR8 EMS, LLC, a California Limited Liability Company, a local business headquartered at 1020 Calle Negocio, for a five-year term, with two three-year options to renew, was beneficial to the City, and allows 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 for the lease of 1030 Calle Negocio to XLR8 EMS, LLC is approved in a form substantially similar to that presented to the City Council on August 20, 2024.

Section 3. The City Manager, or the City Manager's designee, is authorized and 245
Resolution No. 24-130 Page 2
directed to execute the Standard Industrial/Commercial Single-Tenant Lease - Gross in a form substantially similar to that presented to the City Council on August 20, 2024.

Section 4. The City Manager, or the City Manager's designee, is authorized and directed to accept revenues in the amount of $112,567 for FY 2025 in account # 001-000- 36253 - Negocio Lease Revenues.

Section 5. A supplemental appropriation in the amount of $61,470 to account #001- 151-43605 - Broker Commissions, is approved.

Section 6. City staff is authorized and directed to take such additional actions and execute such additional documents as may be necessary and proper to accomplish the purposes of this resolution.

Section 7. 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.

ATTEST:
___________________________ __________________________
City Clerk of the City of Mayor of the City of San
San Clemente, California Clemente, California
246
Resolution No. 24-130 Page 3

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. 24-130 was adopted at a regular meeting of the City Council of the City of San Clemente held on the _______ 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
247
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INITIALS INITIALS
© 2019 AIR CRE. All Rights Reserved. Last Edited: 8/14/2024 1:53 PM STG-27.40, Revised 10-22-2020 Page 1 of 17

1. Basic Provisions ("Basic Provisions").

1.1 ParƟes. This Lease ("Lease"), dated for reference purposes only August 20, 2024 , is made by and between City of San Clemente ("Lessor") and XLR8 EMS, LLC, a California Limited Liability Company ("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): 1030 Calle Negocio, San Clemente, CA 92673 ("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 is located within a Project): an approximate 8,934 sq. ft. industrial building . (See also Paragraph 2)

1.3 Term: 5 years and 0 months("Original Term") commencing December 1, 2024 ("Commencement Date") and ending November 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 upon Lease execution and Lessor's receipt of Lessee's required proof of insurance ("Early Possession Date"). (See also Paragraphs 3.2 and 3.3)

1.5 Base Rent: $16,081.00 per month ("Base Rent"), payable on the first day of each month commencing December 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 51 .

1.6 Base Rent and Other Monies Paid Upon ExecuƟon:

1.7 Agreed Use: office, storage, and assembly of electronics . (See also Paragraph 6)

1.8 Insuring Party. Lessoris the "Insuring Party". The annual "Base Premium" is N/A . (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 Wynne CRE, Inc. License No. 02244094 Isthe broker of (check one): the Lessor; or both the Lessee and Lessor (dual agent).

Lessor's Agent James Wynne License No. 01242705 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 Johnston Pacific Commercial Real Estate, Inc. License No. 01121630 Isthe broker of (check one): the Lessee; or both the Lessee and Lessor (dual agent).

Lessee's Agent Louis Johnston License No. 02054162 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 services rendered by the Brokers, to be shared equally.

1.10 Guarantor. The obligaƟons of the Lessee under this Lease are to be guaranteed by N/A ("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 51 through 53 ;
a plot plan depicƟng the Premises;
a current set of the Rules and RegulaƟons;
a Work LeƩer;
other (specify): Roof Inspection Report Exhibit, Options to Extend Term, Agency Disclosures .

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: $16,081.00 for the period 12/1/2024 through 12/31/2024 . (b) Security Deposit: $18,099.00 ("Security Deposit"). (See also Paragraph 5) (c) AssociaƟon Fees: $556.55 for the period 12/1/2024 through 12/31/2024 . (d) Other: N/A for .
(e) Total Due Upon ExecuƟon of this Lease: $34,736.55 . (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 Exhibit A
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INITIALS INITIALS
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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, and 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 discussed above in this subsection. 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'ssole 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 249
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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, 250
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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. 251
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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 Premises in good order, condiƟon and repair, shall exercise and perform good maintenance pracƟces, specifically including the procurement and maintenance of the service contracts required by Paragraph 7.1(b) below. Lessee's obligaƟons shall include restoraƟons, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condiƟon and state of repair. 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 other similar 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) excluding the HVAC equipment, cannot be repaired other than at a cost which isin 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 ofsuch 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.

Lessee is obligated to replace/repair the surface and structural elements of the roof, as necessary, to ensure adequate protection of the building as further described in Section 52 provided in Addendum to Lease.

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. 252
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(b) Removal. By delivery to Lessee of wriƩen noƟce from Lessor not earlier than 90 and not later than 30 days prior to the end of the term of this Lease, Lessor may require that any or all Lessee Owned AlteraƟons or UƟlity InstallaƟons be removed by the expiraƟon or terminaƟon of this Lease. Lessor may require the removal at any Ɵme of all or any part of any Lessee Owned AlteraƟons or UƟlity InstallaƟons made without the required consent. (c) Surrender; RestoraƟon. Lessee shall surrender the Premises by the ExpiraƟon Date or any earlier terminaƟon date, with all of the improvements, parts and 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.
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(c) Worker's CompensaƟon Insurance. Lessee shall obtain and maintain Worker's CompensaƟon Insurance in such amount as may be required by Applicable Requirements. Such policy shall include a 'Waiver of SubrogaƟon' endorsement. Lessee shall provide Lessor with a copy of such endorsement along with the cerƟficate of insurance or copy of the policy required by paragraph 8.5. (d) No RepresentaƟon of Adequate Coverage. Lessor makes no representaƟon that the limits or forms of coverage of insurance specified herein are adequate to cover Lessee's property, business operaƟons or obligaƟons under this Lease.

8.5 Insurance Policies. Insurance required herein shall be by companies maintaining during the policy term a "General Policyholders RaƟng" of at least A-, VII, as set forth in the most current issue of "Best'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 254
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adequate assurance thereof within said 10 day period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds or assurance are not received, Lessor may nevertheless elect by wriƩen noƟce to Lessee within 10 days thereaŌer to: (i) make such restoraƟon and repair as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or (ii) have this Lease terminate 30 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. 255
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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, 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, which shall not be unreasonably withheld or delayed. (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. 256
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(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 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 257
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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 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 258
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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.

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. 259
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25. Disclosures Regarding the Nature of a Real Estate Agency RelaƟonship. (a) When entering into a discussion with a real estate agent regarding a real estate transacƟon, a Lessor or Lessee should from the outset understand what type of agency relaƟonship or representaƟon it has with the agent or agents in the transacƟon. Lessor and Lessee acknowledge being advised by the Brokers in 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 260
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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.

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.
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(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 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 262
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execuƟng this Lease and agreesto keep such report confidenƟal except as necessary to complete repairs and correcƟons of violaƟons of construcƟon related accessibility standards.

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:

City of San Clemente
By:

Name Printed: Andy Hall
Title: City Manager
Phone:

Fax:

Email: [email protected]
By:

Name Printed:

Title:

Phone:

Fax:

Email:

Address:

Federal ID No.:

Executed at:

On:

By LESSEE:

XLR8 EMS, LLC, a California Limited
Liability Company
By:

Name Printed: Jason Powell
Title: President
Phone:

Fax:

Email:

By:

Name Printed:

Title:

Phone:

Fax:

Email:

Address:

Federal ID No.:

BROKER
Wynne CRE, Inc.

AƩn: James Wynne
Title: President
Address: 501 N. El Camino Real, Suite 200
San Clemente, CA 92672
Phone: 949-374-2052
Fax:

Email: [email protected]
Federal ID No.:

Broker DRE License #: 02244094
BROKER
Johnston Pacific Commercial Real Estate,
Inc.

AƩn: Louis Johnston
Title: Vice President
Address: 1305 Calle Avanzado
San Clemente, CA 92673
Phone: 949-366-2020
Fax:

Email: [email protected]
Federal ID No.:
263
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© 2019 AIR CRE. All Rights Reserved. Last Edited: 8/14/2024 1:53 PM STG-27.40, Revised 10-22-2020 Page 17 of 17
Agent DRE License #: 01242705 Broker DRE License #: 01121630 Agent DRE License #: 02054162
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. 264
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INITIALS INITIALS
© 2017 AIR CRE. All Rights Reserved. Last Edited: 8/14/2024 1:53 PM ADD-1.03, Revised 10-22-2020 Page 1 of 1

ADDENDUM TO LEASE
Date: August 20, 2024
By and Between
Lessor: City of San Clemente
Lessee: XLR8 EMS, LLC, a California Limited Liability Company Property Address: 1030 Calle Negocio, San Clemente, CA 92673 (street address, city, state, zip)
Paragraph: 51. Monthly Base Rent:
12/1/2024 through 11/30/2025: $16,081.00
12/1/2025 through 11/30/2026: $16,563.00
12/1/2026 through 11/30/2027: $17,060.00
12/1/2027 through 11/30/2028: $17,572.00
12/1/2028 through 11/30/2029: $18,099.00

52. Building Condition: Lessee accepts the premises in "as is" condition. In the context of this Agreement, the term "as is" means that the Lessee accepts the property in its current condition, including any defects or issues that may exist at the time the lease is executed. The Lessor is not responsible for making repairs or improvements unless otherwise specified in this Agreement. Lessee agrees to replace the roof exterior and repair any structural damage on the rooftop, per the attached Roof Inspection Report Exhibit, within the initial 18 months of the lease term. Lessee agrees to replace the existing HVAC units and all interior sheet vinyl within the initial 18 months of the lease term.

53. Lease Preparation: This Lease has been prepared by Wynne CRE, Inc. at the request of Lessor and Lessee. The Lessor and Lessee agree to release and covenant not to sue Wynne CRE, Inc., 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 preparing the Lease form and attachments. Lessor and Lessee acknowledge being advised by Wynne CRE, Inc. to have this Lease reviewed by their respective attorneys.

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. 265
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© 2017 AIR CRE. All Rights Reserved. Last Edited: 8/14/2024 1:53 PM OE-7.02, Revised 01-13-2023 Page 1 of 2

OPTION(S) TO EXTEND TERM

STANDARD LEASE ADDENDUM
Dated: August 20, 2024
By and Between
Lessor: City of San Clemente
Lessee: XLR8 EMS, LLC, a California Limited Liability Company Property Address: 1030 Calle Negocio, San Clemente, CA 92673 (street address, city, state, zip)
Paragraph: 54 OPTION(S) TO EXTEND TERM. Subject to the terms, condiƟons and provisions of Paragraph 39, Lessor grants Lessee 2 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 4 but not more than 6 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 Premises is 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 December 1, 2029 , the amount of Rent and annual increases 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 of such 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 ParƟesshall 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 266
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INITIALS INITIALS
© 2017 AIR CRE. All Rights Reserved. Last Edited: 8/14/2024 1:53 PM OE-7.02, Revised 01-13-2023 Page 2 of 2
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. 267
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INITIALS
1030 CALLE NEGOCIO, SAN CLEMENTE

APPROXIMATE FLOOR PLAN
Kitchen
Restroom
Restroom
Approximate floor plan; partial walls not shown.
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INITIALS
268

INITIALS INITIALS
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INITIALS INITIALS
© 2019 AIR CRE. All Rights Reserved. Last Edited: 8/14/2024 1:53 PM AD-3.01, Revised 10-22-2020 Page 1 of 4

DISCLOSURE REGARDING REAL ESTATE AGENCY RELATIONSHIP
(Asrequired by the Civil Code)
When you enter into a discussion with a real estate agent regarding a real estate transacƟon, you should from the outset understand what type of agency relaƟonship or representaƟon you wish to have with the agent in the transacƟon.

SELLER'S AGENT
A Seller's agent under a lisƟng agreement with the Seller acts as the agent for the Seller only. A Seller's agent or a subagent of that agent has the following affirmaƟve obligaƟons:

To the Seller: A fiduciary duty of utmost care, integrity, honesty and loyalty in dealings with the Seller.

To the Buyer and the Seller:
(a) Diligent exercise of reasonable skill 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 that does not involve the affirmaƟve duƟesset forth above.

BUYER'S AGENT
A Buyer's agent can, with a Buyer's consent, agree to act as agent for the Buyer only. In these situaƟons, the agent is not the Seller's agent, even if by agreement the agent may receive compensaƟon forservices rendered, either in full or in part from the Seller. An agent acƟng only for a Buyer has the following affirmaƟve obligaƟons:

To the Buyer: A fiduciary duty of utmost care, integrity, honesty and loyalty in dealings with the Buyer.

To the Buyer and the Seller:
(a) Diligent exercise of reasonable skill 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 that does not involve the affirmaƟve duƟesset forth above.

AGENT REPRESENTING BOTH SELLER AND BUYER
A real estate agent, either acƟng directly or through one or more salesperson and broker associates, can legally be the agent of both the Seller and the Buyer in a transacƟon, but only with the knowledge and consent of both the Seller and the Buyer.

In a dual agency situaƟon, the agent hasthe following affirmaƟve obligaƟonsto both the Seller and the Buyer:
(a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either the Seller or the Buyer. (b) Other duƟes to the Seller and the Buyer as stated above in their respecƟve secƟons.

In represenƟng both Seller and Buyer, a dual 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 the Buyer's or Seller's financial posiƟon, moƟvaƟons, bargaining posiƟon, or other personal informaƟon that may impact price, including the Seller's willingness to accept a price less than the lisƟng price or the Buyer's willingness to pay a price greater than the price offered.

SELLER AND BUYER RESPONSIBILITIES
Either the purchase agreement or a separate document will contain a confirmaƟon of which agent is represenƟng you and whether that agent isrepresenƟng you exclusively in the transacƟon or acƟng as a dual agent. Please pay aƩenƟon to that confirmaƟon to make sure it accurately reflects your understanding of your agent's role. The above duƟes of the agent in a real estate transacƟon do not relieve a Seller or Buyer from the responsibility to protect his or her own interests. You should carefully read all agreements to assure that they adequately express your 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. If you are a Buyer, you have the duty to exercise reasonable care to protect yourself, including as to those facts about the property which are known to you or within your diligent aƩenƟon and observaƟon. Both Sellers and Buyers 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.

Throughout your real property transacƟon you may receive more than one disclosure form, depending upon the number of agents assisƟng in the transacƟon. The law requires each agent with whom you have more than a casual relaƟonship to present you with this disclosure form. You should read its contents each Ɵme it is presented to you, considering the relaƟonship between you and the real estate agent in your specific transacƟon. This disclosure form includesthe provisions of SecƟons 2079.13 to 2079.24, inclusive, of the Civil Code set forth on page 2. Read it carefully. I/WE ACKNOWLEDGE RECEIPT OF A COPY OF THIS DISCLOSURE AND THE PORTIONS OF THE CIVIL CODE PRINTED ON THE BACK (OR A SEPARATE PAGE).

Buyer Seller Lessor Lessee Date:

City of San Clemente by Andy Hall,City Manager
Buyer Seller Lessor Lessee Date:

Agent: Wynne CRE, Inc. DRE Lic. #: 02244094
Real Estate Broker (Firm)
By: DRE Lic. #: 01242705 Date:
(Salesperson or Broker-Associate) James Wynne
270
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INITIALS INITIALS
© 2019 AIR CRE. All Rights Reserved. Last Edited: 8/14/2024 1:53 PM AD-3.01, Revised 10-22-2020 Page 1 of 4

DISCLOSURE REGARDING REAL ESTATE AGENCY RELATIONSHIP
(Asrequired by the Civil Code)
When you enter into a discussion with a real estate agent regarding a real estate transacƟon, you should from the outset understand what type of agency relaƟonship or representaƟon you wish to have with the agent in the transacƟon.

SELLER'S AGENT
A Seller's agent under a lisƟng agreement with the Seller acts as the agent for the Seller only. A Seller's agent or a subagent of that agent has the following affirmaƟve obligaƟons:

To the Seller: A fiduciary duty of utmost care, integrity, honesty and loyalty in dealings with the Seller.

To the Buyer and the Seller:
(a) Diligent exercise of reasonable skill 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 that does not involve the affirmaƟve duƟesset forth above.

BUYER'S AGENT
A Buyer's agent can, with a Buyer's consent, agree to act as agent for the Buyer only. In these situaƟons, the agent is not the Seller's agent, even if by agreement the agent may receive compensaƟon forservices rendered, either in full or in part from the Seller. An agent acƟng only for a Buyer has the following affirmaƟve obligaƟons:

To the Buyer: A fiduciary duty of utmost care, integrity, honesty and loyalty in dealings with the Buyer.

To the Buyer and the Seller:
(a) Diligent exercise of reasonable skill 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 that does not involve the affirmaƟve duƟesset forth above.

AGENT REPRESENTING BOTH SELLER AND BUYER
A real estate agent, either acƟng directly or through one or more salesperson and broker associates, can legally be the agent of both the Seller and the Buyer in a transacƟon, but only with the knowledge and consent of both the Seller and the Buyer.

In a dual agency situaƟon, the agent hasthe following affirmaƟve obligaƟonsto both the Seller and the Buyer:
(a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either the Seller or the Buyer. (b) Other duƟes to the Seller and the Buyer as stated above in their respecƟve secƟons.

In represenƟng both Seller and Buyer, a dual 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 the Buyer's or Seller's financial posiƟon, moƟvaƟons, bargaining posiƟon, or other personal informaƟon that may impact price, including the Seller's willingness to accept a price less than the lisƟng price or the Buyer's willingness to pay a price greater than the price offered.

SELLER AND BUYER RESPONSIBILITIES
Either the purchase agreement or a separate document will contain a confirmaƟon of which agent is represenƟng you and whether that agent isrepresenƟng you exclusively in the transacƟon or acƟng as a dual agent. Please pay aƩenƟon to that confirmaƟon to make sure it accurately reflects your understanding of your agent's role. The above duƟes of the agent in a real estate transacƟon do not relieve a Seller or Buyer from the responsibility to protect his or her own interests. You should carefully read all agreements to assure that they adequately express your 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. If you are a Buyer, you have the duty to exercise reasonable care to protect yourself, including as to those facts about the property which are known to you or within your diligent aƩenƟon and observaƟon. Both Sellers and Buyers 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.

Throughout your real property transacƟon you may receive more than one disclosure form, depending upon the number of agents assisƟng in the transacƟon. The law requires each agent with whom you have more than a casual relaƟonship to present you with this disclosure form. You should read its contents each Ɵme it is presented to you, considering the relaƟonship between you and the real estate agent in your specific transacƟon. This disclosure form includesthe provisions of SecƟons 2079.13 to 2079.24, inclusive, of the Civil Code set forth on page 2. Read it carefully. I/WE ACKNOWLEDGE RECEIPT OF A COPY OF THIS DISCLOSURE AND THE PORTIONS OF THE CIVIL CODE PRINTED ON THE BACK (OR A SEPARATE PAGE).

Buyer Seller Lessor Lessee Date:

XLR8 EMS LLC
Buyer Seller Lessor Lessee Date:

Agent: Johnston Pacific Commercial Real Estate, Inc. DRE Lic. #: 01121630 Real Estate Broker (Firm)
By: DRE Lic. #: 02054162 Date:
(Salesperson or Broker-Associate) Louis Johnston
271
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INITIALS INITIALS
© 2019 AIR CRE. All Rights Reserved. Last Edited: 8/14/2024 1:53 PM AD-3.01, Revised 10-22-2020 Page 3 of 4

DISCLOSURE REGARDINGREAL ESTATE AGENCY RELATIONSHIP
CIVIL CODE SECTIONS 2079.13 THROUGH 2079.24 (2079.16 APPEARS ONTHE FRONT) 2079.13. As used in SecƟons 2079.7 and 2079.14 to 2079.24, inclusive, the following terms have the following meanings:
(a) “Agent” means a person acƟng under provisions of Title 9 (commencing with SecƟon 2295) in a real property transacƟon, and includes a person who is licensed as a real estate broker under Chapter 3 (commencing with SecƟon 10130) of Part 1 of Division 4 of the Business and Professions Code, and under whose license a lisƟng is executed or an offer to purchase is obtained. The agent in the real property transacƟon bears responsibility for that agent's salespersons or broker associates who perform as agents of the agent. When a salesperson or broker associate owes a duty to any principal, or to any buyer or seller who is not a principal, in a real property transacƟon, that duty is equivalent to the duty owed to that party by the broker for whom the salesperson or broker associate funcƟons. (b) “Buyer” means a transferee in a real property transacƟon, and includes a person who executes an offer to purchase real property from a seller through an agent, or who seeks the services of an agent in more than a casual, transitory, or preliminary manner, with the object of entering into a real property transacƟon. “Buyer” includes vendee or lessee of real property. (c) “Commercial real property” means all real property in the state, except (1) single-family residenƟal real property, (2) dwelling units made subject to Chapter 2 (commencing with SecƟon 1940) of Title 5, (3) a mobile home, as defined in SecƟon 798.3, (4) vacant land, or (5) a recreaƟonal vehicle, as defined in SecƟon 799.29. (d) “Dual agent” means an agent acƟng, either directly or through a salesperson or broker associate, as agent for both the seller and the buyer in a real property transacƟon. (e) “LisƟng agreement” means a wriƩen contract between a seller of real property and an agent, by which the agent has been authorized to sell the real property or to find or obtain a buyer, including rendering other servicesfor which a real estate license isrequired to the seller pursuant to the terms of the agreement. (f) “Seller's agent” means a person who has obtained a lisƟng of real property to act as an agent for compensaƟon. (g) “LisƟng price” is the amount expressed in dollars specified in the lisƟng for which the seller is willing to sell the real property through the seller's agent. (h) “Offering price” is the amount expressed in dollars specified in an offer to purchase for which the buyer is willing to buy the real property. (i) “Offer to purchase” means a wriƩen contract executed by a buyer acƟng through a buyer's agent that becomes the contract for the sale of the real property upon acceptance by the seller. (j) “Real property” means any estate specified by subdivision (1) or (2) of SecƟon 761 in property, and includes (1) single-family residenƟal property, (2) mulƟ-unit residenƟal property with more than four dwelling units, (3) commercial real property, (4) vacant land, (5) a ground lease coupled with improvements, or (6) a manufactured home as defined in SecƟon 18007 of the Health and Safety Code, or a mobile home as defined in SecƟon 18008 of the Health and Safety Code, when offered for sale or sold through an agent pursuant to the authority contained in SecƟon 10131.6 of the Business and Professions Code. (k) “Real property transacƟon” means a transacƟon for the sale of real property in which an agent is retained by a buyer, seller, or both a buyer and seller to act in that transacƟon, and includes a lisƟng or an offer to purchase. (l) “Sell,” “sale,” or “sold” refers to a transacƟon for the transfer of real property from the seller to the buyer and includes exchanges of real property between the seller and buyer, transacƟons for the creaƟon of a real property sales contract within the meaning of SecƟon 2985, and transacƟons for the creaƟon of a leasehold exceeding one year's duraƟon. (m) “Seller” means the transferor in a real property transacƟon and includes an owner who lists real property with an agent, whether or not a transfer results, or who receives an offer to purchase real property of which he or she is the owner from an agent on behalf of another. “Seller” includes both a vendor and a lessor of real property. (n) “Buyer's agent” means an agent who represents a buyer in a real property transacƟon. 2079.14. A seller's agent and buyer's agent shall provide the seller and buyer in a real property transacƟon with a copy of the disclosure form specified in SecƟon 2079.16, and shall obtain a signed acknowledgment of receipt from that seller and buyer, except as provided in SecƟon 2079.15, as follows: (a) The seller's agent, if any, shall provide the disclosure form to the seller prior to entering into the lisƟng agreement. (b) The buyer's agent shall provide the disclosure form to the buyer as soon as pracƟcable prior to execuƟon of the buyer's offer to purchase. If the offer to purchase is not prepared by the buyer's agent, the buyer's agent shall present the disclosure form to the buyer not later than the next business day aŌer receiving the offer to purchase from the buyer. 2079.15. In any circumstance in which the seller or buyer refuses to sign an acknowledgment of receipt pursuant to SecƟon 2079.14, the agent shall set forth, sign, and date a wriƩen declaraƟon of the facts of the refusal. 2079.16 Reproduced on Page 1 of this AD form.
2079.17(a) As soon as pracƟcable, the buyer's agent shall disclose to the buyer and seller whether the agent is acƟng in the real property transacƟon as the buyer's agent, or as a dual agent represenƟng both the buyer and the seller. This relaƟonship shall be confirmed in the contract to purchase and sell real property or in a separate wriƟng executed or acknowledged by the seller, the buyer, and the buyer's agent prior to or coincident with execuƟon of that contract by the buyer and the seller, respecƟvely. (b) As soon as pracƟcable, the seller's agent shall disclose to the seller whether the seller's agent is acƟng in the real property transacƟon as the seller's agent, or as a dual agent represenƟng both the buyer and seller. This relaƟonship shall be confirmed in the contract to purchase and sell real property or in a separate wriƟng executed or acknowledged by the seller and the seller's agent prior to or coincident with the execuƟon of that contract by the seller. (C) CONFIRMATION: The following agency relaƟonships are confirmed for thistransacƟon.

Seller's Brokerage Firm DO NOT COMPLETE, SAMPLE ONLY License Number Is the broker of (check one):  the seller; or  both the buyer and seller. (dual agent) Seller's Agent DO NOT COMPLETE, SAMPLE ONLY License Number Is (check one):  the Seller's Agent. (salesperson or broker associate); or  both the Buyer's Agent and the Seller's Agent. (dual agent) Buyer's Brokerage Firm DO NOT COMPLETE, SAMPLE ONLY License Number Is the broker of (check one):  the buyer; or  both the buyer and seller. (dual agent) Buyer's Agent DO NOT COMPLETE, SAMPLE ONLY License Number Is (check one):  the Buyer's Agent. (salesperson or broker associate); or  both the Buyer's Agent and the Seller's Agent. (dual agent) (d) The disclosures and confirmaƟon required by thissecƟon shall be in addiƟon to the disclosure required by SecƟon 2079.14. An agent's duty to provide disclosure and confirmaƟon of representaƟon in thissecƟon may be performed by a real estate salesperson or broker associate affiliated with that broker. 2079.18 (Repealed pursuant to AB-1289, 2017-18 California LegislaƟve session) 2079.19 The payment of compensaƟon or the obligaƟon to pay compensaƟon to an agent by the seller or buyer is not necessarily determinaƟve of a parƟcular agency relaƟonship between an agent and the seller or buyer. A lisƟng agent and a selling agent may agree to share any compensaƟon or commission paid, or any right to any compensaƟon or commission for which an obligaƟon arises as the result of a real estate transacƟon, and the terms of any such agreement shall not necessarily be determinaƟve of a parƟcular relaƟonship.
2079.20 Nothing in this arƟcle prevents an agent from selecƟng, as a condiƟon of the agent's employment, a specific form of agency relaƟonship not specifically 272
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INITIALS INITIALS
© 2019 AIR CRE. All Rights Reserved. Last Edited: 8/14/2024 1:53 PM AD-3.01, Revised 10-22-2020 Page 4 of 4
prohibited by this arƟcle if the requirements of SecƟon 2079.14 and SecƟon 2079.17 are complied with. 2079.21 (a) A dual agent may not, without the express permission of the seller, disclose to the buyer any confidenƟal informaƟon obtained from the seller. (b) A dual agent may not, without the express permission of the buyer, disclose to the seller any confidenƟal informaƟon obtained from the buyer. (c) “ConfidenƟal informaƟon” meansfacts relaƟng to the client's financial posiƟon, moƟvaƟons, bargaining posiƟon, or other personal informaƟon that may impact price, such as the selleris willing to accept a price lessthan the lisƟng price or the buyer is willing to pay a price greater than the price offered. (d) ThissecƟon does not alter in any way the duty or responsibility of a dual agent to any principal with respect to confidenƟal informaƟon other than price. 2079.22 Nothing in this arƟcle precludes a seller's agent from also being a buyer's agent. If a seller or buyer in a transacƟon chooses to not be represented by an agent, that does not, of itself, make that agent a dual agent. 2079.23 (a) A contract between the principal and agent may be modified or altered to change the agency relaƟonship at any Ɵme before the performance of the act which is the object of the agency with the wriƩen consent of the parƟes to the agency relaƟonship. (b) A lender or an aucƟon company retained by a lender to control aspects of a transacƟon of real property subject to this part, including validaƟng the sales price, shall not require, as a condiƟon of receiving the lender's approval of the transacƟon, the homeowner or lisƟng agent to defend or indemnify the lender or aucƟon company from any liability alleged to result from the acƟons of the lender or aucƟon company. Any clause, provision, covenant, or agreement purporƟng to impose an obligaƟon to defend or indemnify a lender or an aucƟon company in violaƟon of thissubdivision is against public policy, void, and unenforceable. 2079.24 Nothing in this arƟcle shall be construed to either diminish the duty of disclosure owed buyers and sellers by agents and their associate licensees,subagents, and employees or to relieve agents and their associate licensees, subagents, and employeesfrom liability for their conduct in connecƟon with acts governed by this arƟcle or for any breach of a fiduciary duty or a duty of disclosure.

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. 273
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: August 20, 2024 Agenda Item: 11F.

Submitted By: Public Works
Prepared By: Julie Schmidt, Management Analyst II
Subject:
..titl e

CONSIDERATION OF A RESOLUTION APPROVING THE PURCHASE OF WATER METERS FOR FISCAL YEAR 2025 FROM FERGUSON WATERWORKS AND METRON-FARNIER AS SOLE SOURCE VENDORS IN A CUMULATIVE AMOUNT NOT TO EXCEED $122,070, AND

FINDING THE PROJECT CATEGORICALLY EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL ..body QUALITY ACT
Fiscal Impact:

The funding for water meter purchases and replacements was approved in the Fiscal Year 2024- 25 Budget. New water meters related to development are budgeted in the amount of $2,070 from the Water Operating Fund, Account Number 052-463-42495. Replacement of existing meters are budgeted in the amount of $120,000 from the Water Fund Depreciation Reserve, Account Number 052-466-43420-000-23401.

Summary:

Before the City Council is consideration of a resolution authorizing expenditures for Fiscal Year 2024-25 for water meter purchases and replacements from Ferguson Waterworks and MetronFarnier as sole source vendors based on the attached fixed price quotes.

Background:

The City's water service area contains approximately 17,600 water meters ranging in size from one to six inches. There is a need for Utilities staff to periodically replace old or damaged meters, and meters are also installed for new water services. For smaller water meters (one to two inches), which are the most commonly purchased meters, the City purchases Neptune meters through Ferguson Waterworks. Prior to the use of Neptune Meters, the City used Actaris Meters, which proved very reliable, accurate, and a good fit for the City’s needs. When Actaris Meters were discontinued, Utilities staff researched and tested several meter brands available in Southern California, and determined that Neptune meters were the most reliable, the highest quality, and were the best fit for the City's needs for small meters. The recommendation to continue using Neptune for small meters ensures the use of quality products, reliability, and meter consistency throughout the distribution system, making it necessary to stock parts for only one brand of small meters. Irvine Ranch Water District and several other local agencies also use Neptune meters. Ferguson Waterworks, though not a local vendor, is the only distributor in Southern California for Neptune water meters.

For large meters (three to 12 inches), Utilities staff previously evaluated multiple vendors and discussed meter performance with other local agencies. Staff chose Metron-Farnier based on performance and due to the exceptional accuracy with the large range from low to high flows that 274
Meeting Date: August 20, 2024 Agenda Item: 11F.

CITY OF SAN CLEMENTE 2
the meters are capable of reading. Metron-Farnier, though not a local vendor, is the only distributor for these types of meters.

City Policy Number 201-2-1, Procurement Policy and Procedure, allows for these types of purchases as follows:
• V- Purchasing Cycle, Section 7.6.4
This section of the Policy allows these types of purchases under a "Contract Purchase Order" which is an agreement whereby the terms and conditions, pricing, and special provisions are agreed to and apply to individual commitments within a pre-established time period. The price quotes attached for Fiscal Year 2024-25 from Ferguson Waterworks and Metron-Farnier would result in Contract Purchase Orders. • V - Purchasing Cycle, Section 7.6.4 (a)
This section of the Policy regarding "Exclusive Requirements" would apply to these Contract Purchase Orders since no guarantee is made as to the quantity to be purchased, but it is agreed any and all requirements will be purchased only under each Contract Purchase Order and from no other sources.
• XI - Exemptions To The Formal & Informal Solicitation Process, Section 1.7 This section of the Policy allows for exemption from the Informal and Formal Bidding Process for "Sole Source" suppliers which allows approval of the attached price quotes with these vendors since Ferguson Waterworks is the only distributor in Southern California for Neptune Meters, and Metron-Farnier is the only distributor for the large meters that the City purchases.

Attached are the fixed price quotes from Ferguson Waterworks and Metron-Farnier for Fiscal Year 2024-25. The prices for the smaller meters from Ferguson Waterworks reflect an average

5.9% increase from Fiscal Year 2023-24, and the prices for the larger meters from Metron-Farnier reflect an average 1.0% increase from Fiscal Year 2023-24.

Council Options:
 Adopt Resolution No. 24-131, authorizing the Purchase of Water Meters for Fiscal Year 2024- 25 and finding the project categorically exempt from the California Environmental Quality Act (CEQA) under Class 1 (Existing Facilities, 14 CCR section 15301) of the State CEQA Guidelines.
 Modify and adopt Resolution No. 24-131.
 Continue the Item and direct staff to provide additional information.  Deny Resolution No. 24-131 and deny the approval of the purchase of water meters for Fiscal Year 2024-25.
275
Meeting Date: August 20, 2024 Agenda Item: 11F.

CITY OF SAN CLEMENTE 3
Environmental Review/Analysis:

Staff recommends that the City Council determine this action to be categorically exempt from CEQA under Class 1 (Existing Facilities, 14 CCR section 15301) of the State CEQA Guidelines.

A notice of exemption will be filed with the County of Orange Recorder's Office. (See Attachment 4).

Recommended Actions:

Staff Recommendation ..recommendation
STAFF RECOMMENDS THAT the City Council adopt Resolution No. 24-131, which would:

1. Find the project categorically exempt from CEQA under Class 1 (Existing Facilities, 14 CCR section 15301) of the State CEQA Guidelines;

2. Approve the purchase of water meters from Ferguson Waterworks as a sole source vendor based on the attached fixed price quote;

3. Approve the purchase of water meters from Metron-Farnier as a sole source based on the attached fixed price quote; and

4. Approve the expenditure for water meter purchases for Fiscal Year 2024-25 for a total amount not to exceed $122,070.
..end
Attachment:

1. Resolution No. 24-131

2. Price quote for small water meters from Ferguson Waterworks for Fiscal Year 2024-25

3. Price quote for large water meters from Metron-Farnier for Fiscal Year 2024-25

4. CEQA Notice of Exemption Form
Notification:

None
276
RESOLUTION NO. 24-131

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

SAN CLEMENTE, CALIFORNIA, AUTHORIZING THE
PURCHASE OF WATER METERS FOR FISCAL YEAR 2024-
25 FROM FERGUSON WATERWORKS AND METRONFARNIER FOR A CUMULATIVE AMOUNT NOT TO EXCEED $122,070 BASED ON FIXED PRICING, AND FINDING THE

PROJECT CATEGORICALLY EXEMPT FROM THE

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)
UNDER CLASS 1 (EXISTING FACILITIES, 14 CCR SECTION
15301) OF THE STATE CEQA GUIDELINES
WHEREAS, the City of San Clemente provides adequate supplies of potable and recycled water while meeting health and quality standards of the State Water Resources Control Board - Drinking Water Division and Federal Safe Water Drinking Act; and WHEREAS, the City’s water service area contains approximately 17,600 water meters ranging in size from one to six inches; and
WHERAS, City staff periodically replaces old or damaged water meters as needed, and meters are also installed for new water services; and WHERAS, City staff previously researched and tested various water meter brands and received feedback from other agencies related to water meters; and WHERAS, Neptune meters are the most reliable, the highest quality, and the best fit for the City’s needs for small meters, and Ferguson Waterworks is the only distributor in Southern California for Neptune water meters; and
WHEREAS, the large meters distributed by Metron-Farnier are the best fit for the City’s large meters based on performance and due to their exceptional accuracy with the large range from low to high flows that the meters are capable of reading, and MetronFarnier is the only distributor in Southern California for these types of meters; and WHEREAS, Section XI - Exemptions To The Formal & Informal Solicitation Process, Section 1.7 of City Policy Number 201-2-1 (Procurement Policy and Procedure) allows for exemption from the Informal and Formal Bidding Process for sole source suppliers within the geographic region; and
WHEREAS, City staff has obtained quotes from Ferguson Waterworks and MetronFarnier for fixed pricing for the various sizes of meters that the City uses for Fiscal Year 2024-25 and the pricing is fair and reasonable; and
WHEREAS, purchasing the meters from Ferguson Waterworks and Metron-Farnier 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, Attachment 1
277
Resolution No. 24-131 Page 2
determine and resolve as follows:

Section 1. That the above recitals are true and correct and incorporated herein fully as findings.

Section 2. That this project is categorically exempt from the California Environmental Quality Act (CEQA) under Class 1 (Existing Facilities, 14 CCR section 15301) of the State CEQA Guidelines because it consists of the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use, and there is no reasonable possibility that the activity will have a significant direct or foreseeable indirect effect on the environment.

Section 3. That under Section 1.7 of City Policy Number 201-2-1, Ferguson Waterworks qualifies as a sole source supplier of Neptune water meters and Metron-Farnier qualifies as a sole source supplier of certain large water meters and the purchase of water meters for Fiscal Year 2024-25 from Ferguson Waterworks and Metron-Farnier are exempt from the City’s formal bidding process.

Section 4. That the purchase of water meters for Fiscal Year 2024-25 from Ferguson Waterworks and Metron-Farnier for a cumulative amount not to exceed $122,070 based on the fixed pricing presented to the City Council on August 20, 2024 is hereby approved.

Section 5. 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 ____________________, 2024.

ATTEST:
___________________________ __________________________
City Clerk of the City of Mayor of the City of San
San Clemente, California Clemente, California
278
Resolution No. 24-131 Page 3

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. 24-131 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
279
Date:
1 2
3 4
5 6
$0.00
San Clemente, City of 06122024
Extended
0 0
1" Neptune T-10 ProCoder, Pit Pad, CF $274.00
$144.00
$0.00
$0.00
Quotation #
Project:

AMI Specialists: Adam Milauskas
6/12/2024
Ship to:

Julie Schmidt Annual ProCoder Meter Quote
Reclaim 2" Neptune T-10 ProCoder, Pit Pad, CF
$0.00
Estimated Sales Tax 7.75%
$0.00
Sub Total
Total Investment
$0.00
$662.00
Ship Date Taxable Freight
Freight
2" Neptune T-10 ProCoder, Pit Pad, CF
7/1/24-6/30/25
San Clemente, City of
380 Avenida Pico Valid Until:

San Clemente, CA 92672
$801.00
0 $801.00
Net Thirty Days
5/8" x 3/4" Neptune T-10 ProCoder, Pit Pad, CF
Product or Service Description
$0.00
Terms:

Item Quantity Per Item

1.5" Neptune T-10 ProCoder, Pit Pad, CF
$0.00
0 0
11909 Tech Center Ct.

Poway, CA 92064
Phone: 949.467.4758
Fax: 858.391.5958