HomeMy WebLinkAbout2021-07-20; City Council; ; Ground Lease Agreement with Callaway Golf Company for APN: 212-270-08-00, commonly known as the Callaway Golf Testing Facility property Meeting Date: July 20, 2021
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Curtis M. Jackson, Real Estate Manager
curtis.jackson@carlsbadca.gov, 760-434-2836
Subject: Ground Lease Agreement with Callaway Golf Company for APN: 212-270-
08-00, commonly known as the Callaway Golf Testing Facility property
District: 2
Recommended Action
Adopt a resolution authorizing the City Manager to execute a 10-year ground lease agreement
with Callaway Golf Company for the Callaway Golf Testing Facility property (APN: 212-270-08-
00)
Executive Summary
Callaway Golf Company has operated under a ground lease agreement for the Callaway Golf
Testing Facility property continuously since August 2004, with one five-year extension in 2014.
Before that agreement expired in 2019, the city and Callaway began negotiating a new 10-year
lease agreement with two, five-year extension options, but a formal agreement was not
reached. Staff recommend the City Council authorize the City Manager to execute the new 10-
year agreement, with two five-year extension options. The City Council has not delegated
authority to enter into lease agreements to the City Manager, so this agreement is before the
City Council for review and approval.
Discussion
The City of Carlsbad is the owner of 140 acres that were previously identified as part of an
industrial development. The majority of the 140 acres was eventually developed into the
Crossings at Carlsbad Golf Course, with most of the remaining land set aside as open space.
During the Crossings golf course entitlement process, a 0.84-acre parcel was created (APN: 212-
270-08-00). In August 2004, Callaway entered into a 10-year ground lease agreement for the
lease of that parcel for the purpose of operating a golf test range facility for testing golf clubs and
golf balls.
The original agreement contained two five-year options to extend the agreement, of which
Callaway exercised the first. Callaway was required to provide the city with written notice 180
days prior to the expiration of any term. Callaway failed to provide timely notice in regard to the
second extension, not doing so until after the lease had expired on July 31, 2019. Since the
expiration, Callaway has been in a holdover lease position with the city and has continued to
make lease payments based on the lease rate established in the expired agreement.
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Surplus Lands Act
In 2019, the California legislature adopted AB 1486, which amended the Surplus Land Act by
adding new obligations that must be followed before cities can dispose of surplus land. The
new obligations are intended for the purpose of increasing affordable housing in the state of
California. Surplus property is defined as land owned by a local agency and formally declared by
that agency’s governing body to be surplus and not necessary for the local agency’s use. The
land act guidelines define “disposing” of surplus lands to mean the sale or lease of local agency-
controlled land.
However, two types of leases are excluded from the definition of “lease” and are not considered
“disposing” of land:
•A lease of land on which no development or demolition will occur
•A lease of land that has a term that is less than five years, including any extensions,
amendments or options
The proposed ground lease agreement with Callaway is not subject to the Surplus Land Act
because it is a lease of land on which no development or demolition will occur.
Staff recommend the City Council authorize the City Manager to execute a new 10-year ground
lease agreement with Callaway, which will provide for the continued use of the property as a golf
testing facility. The term of the agreement will be for 10 years, and contains two, five-year
extension options.
Options
Staff provide the following three options for the City Council’s consideration:
1.Approve the Ground Lease Agreement as recommended
Pros
•City would benefit from leasing the property because the maintenance obligations
will be shifted to the tenant
•Occupancy by the tenant reduces potential trespassing and vandalism
•City shall receive $31,860 per year subject to 4.5% annual increases over the term
of the agreement
Cons
•None
2.Provide specific direction and send back to staff to renegotiate the lease agreement terms or
provisions
Pros:
•A lease agreement with different terms or provisions might be of greater benefit
to the city
Cons:
•Renegotiating a potential new agreement would require additional expenditure
of staff resources
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3. Decline to lease the property at all
Pros:
• None
Cons:
• Lost revenue
• Increased maintenance costs
• Shifts all burdens onto the city
Staff recommend Option 1, that the City Council authorize the City Manager to execute the new
10-year agreement and any future extension options.
Fiscal Analysis
The agreement provides for an annual rent payment of $31,860, subject to 4.5% annual
increases, which represents an initial increase of 1% over the original ground lease agreement.
Callaway’s use of the property also relieves the city of annual costs associated with maintaining
the property of approximately $281.
Next Steps
Callaway and city staff will carry out the terms of the agreement. Upon expiration of the initial
10-year term, the City Manager will have discretion to approve or deny the two, five-year
extension options.
Environmental Evaluation (CEQA)
Pursuant to Public Resources Code Section 21065, this action does not constitute a “project”
within the meaning of CEQA in that it has no potential to cause either a direct physical change
in the environment, or a reasonably foreseeable indirect physical change in the environment,
and therefore does not require environmental review.
Public Notification
This item was noticed in keeping with the state's Ralph M. Brown Act and it was available for
public viewing and review at least 72 hours before the scheduled meeting date.
Exhibits
1. City Council resolution
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RESOLUTION NO. 2021-173
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AUTHORIZING THE CITY MANAGER TO EXECUTE A TEN-YEAR
GROUND LEASE AGREEMENT WITH CALLAWAY GOLF COMPANY FOR APN:
212-270-08-00, COMMONLY REFERRED TO AS THE CALLAWAY GOLF
TESTING FACILITY PROPERTY
WHEREAS, on Aug. 1, 2004, the city entered into a 10-year lease agreement that included two
five-year extension options, with Rey River Farms, by Resolution No. 2004-260, that expired on July 31,
2014; and
WHEREAS, on June 4, 2014, the city executed Amendment No. 1 to the original agreement,
extending the agreement five-years, that expired on July 31, 2019; and
WHEREAS, the City Council of the City of Carlsbad has determined that it is in the best interest
of the city to enter into a new Ground Lease Agreement with the Callaway Golf Company for APN 212-
270-08-00; and
WHEREAS, the City Council has further determined that it accepts the terms of the Ground
Lease Agreement with Callaway Golf Company; and
WHEREAS, the Ground Lease Agreement will generate $31,860 in annual revenue, subject to
4.5% annual increases over the term of the agreement, with two five-year extension options; and
WHEREAS, the Ground Lease Agreement is not subject to the Surplus Lands Act because it is
excluded from the definition of "lease" and is not considered to be a "disposition" due to the fact that
no development or demolition will occur on the property.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1.That the above recitations are true and correct.
2.That the City Manager is hereby authorized to execute the Lease Agreement with
Callaway Golf Company, attached hereto as Attachment A, and to act on behalf of the
City of Carlsbad in all future decisions and actions necessary to implement the Ground
Lease Agreement with Callaway Golf Company for use of city owned property located at
APN: 212-270-08-00, including any extension options, and to do so in full compliance
with the terms and conditions expressed in the aforementioned Agreement and to the
satisfaction of the City Attorney.
July 20, 2021 Item #3 Page 4 of 36
CITY OF CARLSBAD
GROUND LEASE TO
CALLAWAY GOLF COMPANY
OF PROPERTY LOCATED ON
ACCESSOR PARCEL NUMBER (APN) 212-270-08-00
CARLSBAD, CALIFORNIA, 92008
COMMENCING J toi io, 2021
AND ENDING juAil 11 , 2031
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LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") is entered into as of jtA 9,6"11,N4 2021, by and
between City of Carlsbad, a California municipal corporation ("Lessor") and Callaway Golf
Company, a Delaware corporation ("Lessee") (collectively "Parties"), for the property located on
Assessor Parcel Number 212-270-08-00, and shall be effective and binding upon the parties
hereto as of the date of execution hereof by both parties.
RECITALS
WHEREAS, Lessor is the owner of certain real property, consisting of approximately .84
acres of Planned Industrial zoned property, and more particularly described and/or depicted on
Exhibit A and Exhibit B attached hereto (the "Premises");
WHEREAS, the Parties entered into that certain Ground Lease Agreement, dated August
1, 2004 ("Agreement"), for the Premises, which Lease was amended by First Amendment to
Lease Agreement dated August 1, 2014 ("First Amendment"); and
WHEREAS, Lessee operates a golf testing facility on the Premises; and
WHEREAS, Lessee desires to continue to lease from Lessor the Premises to continue
operating their golf testing facility on the Premises; and
WHEREAS, Lessee is one of Carlsbad's largest employers and a critical component to the
City's action sports manufacturing industry business cluster and benefits Carlsbad and the
community at large; and
WHEREAS, Lessor is willing to lease the Premises to Lessee for the term and upon the
covenants, conditions and provisions hereinafter set forth.
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AGREEMENT
NOW THEREFORE, in consideration of the covenants, conditions and provisions contained
herein, the parties hereto do mutually agree as follows:
ARTICLE 1
BASIC LEASE PROVISIONS
1.1 Trade Name. Callaway Golf Company ("Trade Name").
1.2 Premises. The Premises (APN: 212-270-08-00) consisting of approximately
.843 acres of Planned Industrial zoned property, located in the City of Carlsbad, County of San
Diego, State of California, north of Palomar Airport Road and adjacent to The Crossings Golf
Course.
1.3 Term and Rent Commencement. The term of this Lease shall be ten
(10) years, commencing upon the date when this Lease has been executed by both parties (the
"Term Commencement Date"), and expiring, unless sooner terminated in accordance with this
Lease, upon the date that is ten (10) years after the Rent Commencement Date (defined below)
(the "Expiration Date"). Lessee shall commence paying rent under this Lease on the date the
Parties fully execute this Lease (the "Rent Commencement Date"); provided, however, that
concurrently with the execution of this Lease, Lessee shall pay to Lessor the Rent for the first (1st)
full month beginning on the Rent Commencement Date. As used in this Lease, "Lease Year"
means each twelve (12) month period (or portion thereof) during the Term commencing with the
Rent Commencement Date.
1.4 Rent. Base rent shall be Two Thousand Six Hundred and Fifty-Five dollars
($2,655) per month or Thirty-One Thousand Eight Hundred and Sixty dollars ($31,860) per year,
payable on the first day of each month commencing on the Rent Commencement Date.
1.5 Rental Adjustment Rent shall be adjusted annually on each anniversary
of the Rent Commencement Date, by four and one-half percent (45%) for the Term of the Lease.
Set forth below is a summary of the monthly rent for each year of the initial term.
Year 1: $2,655 per month, or $31,860 per year.
Year 2: $2,774 per month, or $33,294 per year.
Year 3: $2,899 per month, or $34,792 per year.
Year 4: $3,030 per month, or $36,358 per year.
Year 5: $3,166 per month, or $37,994 per year.
Year 6 $3,309 per month, or $39,703 per year.
Year 7: $3,458 per month, or $41,490 per year.
Year 8: $3,613 per month, or $43,357 per year.
Year 9: $3,776 per month, or $45,308 per year.
Year 10: $3,946 per month, or $47,347 per year.
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1.6 Use of Premises. It is expressly agreed that the Premises shall be used
by Lessee solely and exclusively for the purpose of a golf test range facility for testing golf clubs
and golf balls, for such other related or incidental purposes, and for other uses consistent with
the approved zoning and use permits of the Premises ("Permitted Use").
Lessee covenants and agrees to use the Premises for the above specified purposes throughout
the term hereof subject to Force Majeure and casualty and temporary, periodic suspension of
such use to perform maintenance, repairs or cleaning, to construct improvements, and during
holidays. In the event that Lessee fails to continuously use the Premises for said purposes subject
to these permitted closures, or uses the Premises for purposes not expressly authorized herein,
the Lessee shall be deemed in default under this Lease after any notice and lapse of cure period
provided under this Lease. ("Permitted Use").
1.7 Lessee Improvement Allowance. None.
1.8 Security Deposit. Lessor acknowledges and agrees that Lessor
currently holds Lessee's Security Deposit, as defined in the Agreement, in the amount of
$4,749.00.
1.9 Guarantor: None.
1.10 Broker(s): None.
1.11 Lessee's Address for Notices:
Callaway Golf Company
Attn: Deputy General Counsel
Email: MartyH@callawaygolf.com
Phone: 760-931-1771
2180 Rutherford Road
Carlsbad, CA 92008
1.12 Lessor's Address for Notices:
City of Carlsbad
Attn: Real Estate Manager
Email: Curtis.jackson@carlsbadca.gov
1200 Carlsbad Village Drive
Carlsbad, CA 92008
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With a copy to:
City of Carlsbad
Attn: City Attorney's Office
Email: Allegra.FrostcCarlsbadca.gov
1200 Carlsbad Village Drive
Carlsbad, CA 92008
1.13 Lessor's Address for Rent Payments:
Finance Department
City of Carlsbad
1635 Faraday Avenue
Carlsbad, CA 92008
This Article 1 is intended to supplement and/or summarize the provisions set forth in the balance
of this Lease. If there is any conflict between any provisions contained in this Article 1 and the
balance of this Lease, the balance of this Lease shall control.
ARTICLE 2
PREMISES
2.1 Lease of Premises. Lessor leases to Lessee and Lessee leases from Lessor
the Premises described in Article 1 for the Term (as defined in Article 3 below) and pursuant to
all of the terms, covenants and conditions contained herein. Any statement of square footage
set forth in this Lease, or that may have been used in calculating Base Rent, is an approximation
which Lessor and Lessee agree is reasonable and the Base Rent based thereon is not subject to
revision whether or not the actual square footage is more or less.
2.2 Condition of the Premises. Lessee acknowledges that except as otherwise
expressly provided herein it shall accept the Premises in its "AS IS" condition, without
representation, warranty or any improvements by Lessor. Lessor makes no representations or
warranties with respect to this Lease, the Premises or any property therein or with respect to any
matter related thereto, other than as expressly set forth in this Lease. Lessee hereby
acknowledges that it has had an opportunity to investigate and inspect the condition of the
Premises and the suitability of same for Lessee's purposes, and Lessee does hereby (a) waive and
disclaim any objection to, cause of action based upon, or claim that its obligations hereunder
should be reduced or limited because of the condition of the Premises or the suitability of same
for Lessee's purposes and (b) acknowledge that the Premises are in good, clean and sanitary
order and repair and by taking possession Lessee accepts the Premises as it exists. Lessee
acknowledges that neither Lessor nor any agent nor any employee of Lessor has made any
representations or warranty with respect to the Premises or with respect to the suitability of
either for the conduct of Lessee's business and Lessee expressly warrants and represents that
Lessee has relied solely on its own investigation and inspection of the Premises in its decision to
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enter into this Lease and let the Premises in an "AS IS" condition and is not relying on any
statements, representations or warranties whatsoever made by or enforceable directly or
indirectly against Lessor relating to the condition, operations, dimensions, descriptions, soil
condition, suitability, compliance or lack of compliance with any state, federal, county or local
law, ordinance, order, permit or regulation, or any other attribute or matter of or relating to the
Premises. No promise of Lessor to alter, remodel, repair or improve the Premises, and no
representation, express or implied, respecting any matter relating to the Premises or this Lease
(including, without limitation, the condition of the Premises) has been made to Lessee by Lessor
or any agent of Lessor other than as may be contained herein.
2.3 Delivery of Possession. Paragraph Not Applicable.
2.1 Easements. Lessor reserves to itself the right, from time to time, to grant
such easements, rights and dedications affecting all or any part of the Premises as Lessor deems
necessary or desirable, and to cause the recordation of parcel and subdivision maps and
restrictions affecting all or any part of the Premises, so long as such easements, rights,
dedications, maps and restrictions do not increase Lessee's obligations under this Lease, or
unreasonably interfere with Lessee's use of the Premises. Lessee shall sign any of the
aforementioned documents upon Lessor's reasonable request. Lessee shall cooperate with and
not oppose or object to Lessor's construction, development, subdivision and parcelization of all
or any part of the Premises and any property adjacent to the Premises so long as there is no
material adverse impact to Lessee's use of the Premises, in Lessee's reasonable judgment.
2.2 Existing Equipment. Paragraph Not Applicable.
ARTICLE 3
TERM
3.1 Term. The Term of this Lease ("Term") shall commence on the Term
Commencement Date and shall expire, unless sooner terminated in accordance with this Lease,
on the Expiration Date.
3.2 Extension Option(s). Upon expiration of this Lease, Lessee shall have two
(2) five-year extension options (each an "Extension Term").
3.3 Surrender of Premises. On the Expiration Date or on the sooner
termination or the later expiration of all applicable Extension Term(s) hereof, Lessee shall remove
all of Lessee's Property from the Premises and peaceably surrender the Premises in accordance
with the terms of this Section free of debris, excepting only ordinary wear and tear,
condemnation and any damage or destruction not caused by Lessee or any or any officer,
employee, agent or invitee of Lessee. "Ordinary wear and tear" shall not include any damage or
deterioration that would have been prevented by good maintenance practice. Notwithstanding
any other provision hereof, Lessee shall not remove (unless requested to by Lessor, in which case
Lessee shall remove) all or any part of Lessee's Work and the Lessee Improvements, or any
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fixtures or equipment which cannot be removed without material, permanent damage to the
Premises. Any permanent damage caused by Lessee shall be repaired at Lessee's sole cost. Unless
otherwise elected by Lessor, such items shall remain upon and be surrendered with the Premises
as a part thereof, without charge, at the expiration or termination of this Lease and shall then
become the property of Lessor. Lessee shall repair, to the reasonable satisfaction of Lessor, any
damage to the Premises caused by any removal, or by the use of the Premises or by any failure
of Lessee to comply with the terms of this Lease (including, without limitation, provisions relating
to Hazardous Substances). Lessee shall promptly surrender all keys for the Premises to Lessor at
the place then fixed for notices to Lessor and shall inform Lessor of the combinations on any locks
and safes on the Premises. The provisions of this Section shall survive termination of this Lease.
3.4 Holding Over. Lessee has no right to retain possession of the Premises or
any part thereof beyond the expiration or termination of this Lease. The failure of Lessee to
timely surrender the Premises in the condition required by Section 3.3 above shall constitute a
holdover and shall not be considered a renewal of this Lease or an extension of the Term. In the
event of any such holdover Base Rent shall immediately be increased to an amount equal to 150%
of the Base Rent applicable during the month immediately preceding the expiration or
termination. In addition to paying Lessor the increased Base Rent, Lessee shall defend, indemnify,
protect and hold Lessor harmless from and against all claims, liability, damages, costs and
expenses, including reasonable attorneys' fees and actual out-of-pocket costs of defending the
same, incurred by Lessor and arising directly or indirectly from Lessee's holding over in the
Premises beyond ten (10) days after receipt of Lessor's written notice, without Lessor's express
written consent, including (a) any rent payable by or any actual loss, cost or damages, including
lost profits and loss of good will suffered by any prospective lessee of the Premises and claimed
against Lessor, and (b) Lessor's actual damages as a result of a prospective lessee's rescinding or
refusing to enter into the prospective lease of the Premises as a direct or indirect result of
Lessee's holding over. No action by Lessor other than Lessor's express written consent shall be
construed as consent by Lessor to any holding over by Lessee. This paragraph is subject to Section
27.4 below.
3.5 Waiver of Relocation Benefits: Lessee waives any and all relocation
benefits defined in the California Relocation Assistance Law (Government Code, Section 7260, et.
seq.) in connection with this Lease (including, without limitation, any termination as a result of
Lessor's delivery of a Disapproval Notice, if any).
ARTICLE 4
RENT
4.1 General Provisions. Unless provided herein to the contrary, Lessee shall
pay all rent to Lessor at Lessor's Address for Rent Payments as provided in Article 1 above. All
rent shall be paid to Lessor in lawful money of the United States of America without demand
therefor, and without deduction, offset or abatement of any kind, except as may be expressly
provided for in this Lease. Rent for any partial month shall be prorated on the basis of a thirty
(30) day month. Lessee assumes all risk of loss if payments are made by mail.
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4.2 Payment of Rent. For each month or partial month of the Term
commencing on the Rent Commencement Date (except as otherwise expressly provided herein),
Lessee shall pay to Lessor the sum specified in Article 1 as Rent ("Rent") in advance as set forth
herein. Lessee shall pay the first installment of Rent to Lessor concurrently with Lessee's
execution of this Lease, and all subsequent installments of Rent shall be payable in advance on
or before the first day of each calendar month.
ARTICLE 5
SECURITY DEPOSIT
5.1 Security Deposit. Section 1.8 of the Agreement is incorporated herein by
this reference.
ARTICLE 6
TAXES
6.1 Real Estate Taxes. Lessee shall pay directly, prior to delinquency, any and
all real estate taxes, assessments (whether general, special, ordinary or extraordinary),
possessory interest taxes, improvement bonds, license fees, commercial rental taxes, sewer and
water rents and other levies, fees and charges of every kind imposed by any authority having the
direct or indirect power to so tax, levy or assess, to the extent relating to the Premises, to Lessor's
gross receipts or revenues from the Premises, or to the business or other activities of Lessee upon
or in connection with the Premises (individually and collectively, "Real Estate Taxes"), only to the
extent Lessor is obligated to pay such Real Estate Taxes itself. In particular, Lessee acknowledges
that this Lease may result in a taxable possessory interest. Lessee shall be solely responsible for
the payment of Real Estate Taxes associated with its occupancy of the Premises, if any apply.
Lessee shall also pay any fees imposed by law for licenses or permits for any business or activities
of Lessee upon the Premises or under this Lease.
6.2 Personal Property Taxes. Lessee shall pay directly prior to delinquency
any and all taxes and assessments levied or assessed during the Term upon or against (i) Lessee's
Property (as hereinafter defined), furniture, equipment, and any other personal property
installed or located in the Premises and (ii) all above-standard alterations, additions,
betterments, or improvements of whatever kind or nature made by Lessee to the Premises that
are separately assessed (item "ii", only to the extent Lessor is obligated to pay such taxes and
assessments itself).
ARTICLE 7
UTILITIES - Article Not Applicable.
ARTICLE 8
INSURANCE
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8.1 General. Lessee shall, at its sole expense, maintain in effect from and after
the Term Commencement Date and continuously thereafter until the termination or expiration
of this Lease, the policies of insurance required under this Article. All policies that Lessee is
required to obtain under this Article shall be issued by companies licensed to do business in
California with a general policyholder's rating of not less than "A-" and a financing rating of not
less than Class "VIII", as rated by the most current available "Best's" Insurance Reports and shall
be in a form (without any additions or deletions unless approved in writing by Lessor) and
underwritten by companies reasonably acceptable to Lessor. On or before the Term
Commencement Date, Lessee shall furnish Lessor with certificates and endorsements in a form
reasonably acceptable to Lessor evidencing that (i) the policies (or a binder thereof) required
pursuant to this Article are in effect and (ii) Lessor shall be notified in writing thirty (30) days prior
to cancellation, material change, or nonrenewal of such insurance (or if Lessee's insurance carrier
will not agree to provide notice of cancellation, material change, or nonrenewal to any additional
insured or other entity, then Lessee shall deliver such notice to Lessor thirty (30) days prior to
any cancellation, material change, or nonrenewal initiated by Lessee, or twenty (20) days prior
to such cancellation, material change or nonrenewal not initiated by Lessee). The policies that
Lessee is required to obtain pursuant to this Article shall name Lessor, and any other parties
requested by Lessor in accordance with commercially reasonable practices, as additional
insureds, or as loss payee (as applicable) for property in which Lessor has an insurable interest
and shall be primary policies, and shall not be contributing with and shall be in excess of coverage
which Lessor may have and shall be unaffected by any insurance or self-insurance Lessor may
have regardless of whether any other insurance names Lessor as an insured or whether such
insurance stands primary or secondary. If Lessee carries any of the insurance required hereunder
in the form of a blanket policy, any certificate required hereunder shall make specific reference
to the Premises. The procuring of policies of insurance shall not be construed to limit Lessee's
liability hereunder in any way, nor to fulfill the indemnification provisions and requirements of
this Lease. Lessee agrees not to use the Premises in any manner, other than the Permitted Use
generally, that will result in the cancellation of any insurance Lessor may have on the Premises,
or on adjacent premises, or that will cause cancellation of any other insurance coverage for the
Premises, or adjoining premises. Lessee further agrees not to keep on the Premises or permit to
be kept, used, or sold thereon, anything prohibited by any fire or other insurance policy covering
the Premises. Lessee shall, at its sole cost and expense, comply with any and all requirements, in
regard to Premises, of any insurance organization necessary for maintaining fire and other
insurance coverage at reasonable cost.
8.2 Commercial General Liability Insurance. Lessee shall obtain and keep in
force a policy or policies of commercial general liability insurance covering the Premises and the
business operations thereon, including contractual liability, personal injury and property liability
coverage in amounts not less than a combined single limit of $2,000,000 per occurrence for
bodily injury, personal injury, death and property damage liability. If the submitted policies
contain aggregate limits, general aggregate limits will apply separately under this Lease or the
general aggregate will be twice the required per occurrence limits. Liability coverage for the
required limits may be obtained with a combination of commercial general liability insurance and
an umbrella policy. Such policy or policies shall include liquor liability coverage in the same limits
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and under the same conditions as Lessee's general liability insurance, if the sale of alcoholic
beverages is permitted in the Premises.
8.3 Property and Extended Coverage Insurance. Paragraph Not Applicable.
8.4 Business Interruption. Lessee shall obtain and keep in force loss of income
and extra expense insurance in amounts as will reimburse Lessee for at least twelve (12) months'
direct and indirect loss of earnings attributable to all perils commonly insured against by prudent
Lessees in the business of Lessee or attributable to prevention of access to the Premises as a
result of such perils.
8.5 Workers' Compensation Insurance. Lessee shall obtain and keep in force
workers' compensation and employer's liability insurance covering all employees of Lessee
engaged on or with respect to the Premises, affording applicable statutory limits for workers'
compensation coverage and at least $1,000,000.00 in limits for employer's liability coverage.
8.6 Waiver of Subrogation. Notwithstanding anything to the contrary
contained herein, Lessor and Lessee hereby waive any rights each may have against the other on
account of any loss or damage occasioned to Lessor or Lessee, their respective property, the
Premises or its contents, arising from any risk to the extent covered by the insurance required
hereunder. The foregoing waiver shall also apply to any deductible, as if the same were a part of
the insurance recovery. The parties each, on behalf of their respective insurance companies
insuring the property of either Lessor or Lessee against any such loss, waive any right of
subrogation that it may have against Lessor or Lessee, as the case may be. Each party shall obtain
any special endorsements, if required by its insurer, whereby the insurer waives its rights of
subrogation against the other party. The foregoing waivers of subrogation shall be operative
only so long as available without invalidating either Lessor's or Lessee's policy of insurance.
8.7 Coverage Changes. Notwithstanding any of the foregoing, Lessor shall
retain the right at any time to review the coverage, form, and amount of the insurance required
under this Lease. If, in the reasonable opinion of Lessor, the insurance provisions in this Lease do
not provide adequate protection for Lessor and/or for members of the public using the Premises,
Lessor may require Lessee to obtain insurance sufficient in coverage, form and amount to provide
adequate protection. Lessor's requirements shall be reasonable but shall be designed to assure
protection from and against the kind and extent of risk which exists at the time a change in
insurance is required. Lessor shall notify Lessee in writing of changes in the insurance
requirements, and Lessee shall deposit certificates/endorsements evidencing acceptable
insurance policies with Lessor incorporating such changes within thirty (30) days after receipt of
such notice.
8.8 No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified herein are adequate to
cover Lessee's property, business operations or obligations under this Lease.
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ARTICLE 9
USE OF PREMISES
9.1 Permitted Use and Continuous Operation. Lessee shall operate and
occupy the Premises solely for the Permitted Use. No other use shall be permitted without the
prior express written consent of Lessor.
9.2 Conduct of Business. Lessee shall conduct its business at all times in a
professional and businesslike manner consistent with reputable business standards and
practices.
9.3 Compliance with Laws; Nuisance. Lessee shall, at its sole expense and at
all times, comply fully with (i) all federal, state, county and municipal laws and regulations,
including without limitation all applicable County health orders, zoning and land use laws and
ordinances, conditional use permit rules and orders and the Liquor Licenses, if any, now in force
or which may hereafter apply to the Premises or which impose any duty on Lessor or Lessee
relating to the use or occupancy of the Premises (including but not limited to the obligation (a)
to obtain a conditional use permit, (b) to alter, maintain, repair or restore any portion of the
Premises to the extent required as a result of Lessee's use of the Premises, or (c) to alter,
maintain, repair or restore the portion of the Premises which Lessee is responsible to maintain,
repair or restore pursuant to this Lease); (ii) any declaration of covenants, conditions and
restrictions and easements encumbering the Premises; (iii) intentionally deleted; and (iv) any and
all requirements and recommendations of any insurance organization or company necessary for
the maintenance of reasonable fire and public liability insurance covering the Premises. Lessee
shall not store, use or sell any article in or about the Premises, nor permit any act, which would
cause the premiums for insurance to significantly increase or cause a cancellation of any policy
upon the Premises or any loss of coverage under any such policy. Lessee shall not occupy, suffer
or permit the Premises or any part thereof to be used for any illegal, immoral or dangerous
purpose, or in any other way contrary to the law or the rules or regulations of any public
authority. Lessee shall not commit, or suffer to be committed, any waste upon the Premises, or
any public or private nuisance, or any other act or thing which may disturb the quiet enjoyment
of neighbors of the Premises except as expressly set forth herein. Lessee shall not conduct or
permit to be conducted any sale by auction in, upon or on the Premises.
9.4 Environmental Compliance. Lessee represents, warrants and covenants
to Lessor that: (a) Lessee, any party under its control or its agents, employees, contractors,
affiliates, sublessees and invitees (collectively, "Lessee Parties") shall at no time use, or permit
the Premises to be used, in violation of any federal, state or local law, ordinance or regulation
relating to the environmental conditions on, under or about the Premises, including, but not
limited to, air quality, soil and surface and subsurface water conditions; and (b) the Lessee Parties
shall not cause or permit any Hazardous Substance to be used, stored, spilled or released in, on,
under or about the Premises (except for supplies typically used in the ordinary course of the
Permitted Use in commercially reasonable amounts and in strict compliance with law) and shall
promptly, at Lessee's sole expense, take all investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of any
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contamination of, and for the maintenance, security and/or monitoring of the Premises and
neighboring properties, that was caused or materially contributed to by any Lessee Party, or
pertaining to or involving any Hazardous Substance brought onto the Premises during the term
of this Lease, by or for any Lessee Party. Lessee shall assume sole and full responsibility and cost
to remedy any such violations caused by any Lessee Parties and shall protect, indemnify, defend
and hold harmless Lessor from all actions (including, without limitation, remedial or enforcement
actions of any kind, and administrative or judicial proceedings and orders or judgments), costs,
claims, damages (including, without limitation, punitive damages), expenses (including, without
limitation, reasonable attorneys', consultants' and experts' fees, court costs) amounts paid in
settlement, fines, forfeitures or other civil, administrative or criminal penalties, injunctive or
other relief, liabilities or losses in any way arising or resulting from a breach of this paragraph.
Notwithstanding the foregoing, neither Lessee nor Lessee's Parties shall be responsible for the
mere discovery of Hazardous Substances not arising from or resulting from Lessee or Lessee
Parties' activities on the Premises. Upon expiration or earlier termination of this Lease, Lessee
shall cause any Hazardous Substance arising out of or related to the use or occupancy of the
Premises by any Lessee Party to be removed from the Premises and the Parcel and properly
transported for use, storage or disposal in accordance with all applicable laws, regulations and
ordinances. The term "Hazardous Substance" as used in this Lease shall mean any product,
substance, or waste whose presence, use, manufacture, disposal, transportation, or release,
either by itself or in combination with other materials expected to be on the Premises, is either:
(i)potentially injurious to the public health, safety or welfare, the environment or the Premises,
(ii)regulated or monitored by any government authority, or (iii) a basis for potential 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, asbestos, asbestos containing
material, the group of organic compounds known as polychlorinated biphenyls, as well as
substances defined as "hazardous substances" or "toxic substances" under State, local or federal
laws or regulations, as they be enacted or promulgated from time to time. Hazardous Substances
shall not include hazardous materials contained in products used by Lessee in the ordinary course
of its business, provided the products are used, stored and maintained in compliance with all
applicable federal, state, county and municipal laws and regulations and all other applicable
environmental laws.
9.5 Lessor's Right of Entry. Lessor, at reasonable times, may go into the
Premises for the purposes of: (i) inspecting the Premises; (ii) inspecting the performance by
Lessee of the terms and conditions hereof; (iii) showing the Premises to prospective Lessees,
purchasers, partners, or mortgagees; and (iv) posting notices for the protection of Lessor on the
Premises. Except in the case of an emergency, Lessor shall give Lessee reasonable notice of any
and all intended entries or inspections pursuant to this Section.
9.6 Prohibition Against Discrimination. Lessee shall not discriminate against
or segregate any person or class of persons by reason of sex, color, race, religion or national
origin. If the use provided for in this Lease allows Lessee to offer accommodations or services to
the public, such accommodations or services shall be offered by Lessee to the public on fair and
reasonable terms.
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ARTICLE 10
MAINTENANCE AND REPAIR OF PREMISES
10.1 Lessee's Inspection. Lessee accepts the Premises in its "AS IS" condition
as further provided in Section 2.2 above, and Lessee expressly waives all implied warranties
including implied warranties of merchantability and fitness, if any. Lessee hereby waives all rights
under Sections 1941 and 1942 of the California Civil Code, as amended or recodified from time
to time, or any similar provision, permitting Lessee to make repairs at the expense of Lessor.
Lessee represents and warrants that it is familiar with the condition of the Premises. Lessee
understands and acknowledges that the Premises may be subject to earthquake, fire, floods,
erosion, high water table, dangerous underground soil and water conditions and similar
occurrences that may alter its condition or affect its suitability for any proposed use. Lessor shall
have no responsibility or liability with respect to any such occurrence.
10.2 Lessee's Obligations. Except for Lessor's obligations as set forth in Section
10.3 below, from and after the Term Commencement Date and continuously thereafter until the
expiration or termination of this Lease, Lessee, at Lessee's sole expense, shall keep the Premises
free and clear of trash, garbage and other fire hazards. The obligations set forth in this paragraph
are a material part of the consideration for this Lease.
10.3 Lessor's Obligations. Paragraph Not Applicable.
10.4 Lessor's Cure. Lessor shall have the right but not the duty, to enter, view,
inspect, determine the condition of and protect its interests in, the Premises. If at any time Lessor
determines that the Premises are not in the condition required by this Lease, then Lessee shall
perform the necessary maintenance, repair and/or replacement work within ten (10) days after
written notice from Lessor. If Lessee fails to perform the necessary maintenance, repair and/or
replacement work within ten (10) days after written notice from Lessor, then Lessor may, but is
not obligated to, perform such obligations without liability to Lessee for any loss to Lessee's
business that might arise by reason thereof. Lessee shall reimburse Lessor on demand in an
amount equal to the cost incurred by Lessor in the performance of such obligations plus an
administrative fee equal to ten percent (10%) of the cost incurred by Lessor. Lessor's rights
reserved in this section shall not create any obligations or increase any obligations for Lessor
elsewhere in this Lease.
ARTICLE 11
ALTERATIONS AND ADDITIONS
11.1 Lessee Improvements. Lessee shall not commence or make (i) any
alterations, improvements, additions or utility installations, including without limit, carpeting,
floor or window coverings, locks, air lines, power panels, electrical distribution systems, lighting
fixtures, space heaters, air conditioning and plumbing in, on, or about the Premises (collectively
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"Lessee Improvements") without Lessor's prior written consent, which shall not be unreasonably
withheld, conditioned or delayed. If Lessee makes any Lessee Improvements without the prior
written approval of Lessor, Lessor shall have the right to require that Lessee remove any or all of
such Lessee Improvements, and repair and restore any damage to the Premises caused by such
removal at Lessee's sole expense, and if Lessee shall fail to accomplish same within 30 days after
notice from Lessor, shall also have the right to declare Lessee in default and to terminate this
Lease. Any and all Lessee Improvements shall at all times comply fully with all applicable federal,
state and municipal laws, ordinances, regulations, codes and other governmental requirements
now or hereafter in force and Lessee shall, at Lessee's sole cost and expense, take all actions now
or hereafter necessary to ensure such compliance.
11.2 Construction of Lessee Improvements; Liens. Lessee shall pay when due
all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at,
on, or for use in the Premises, and shall defend, indemnify, protect and hold harmless the
Premises and Lessor against the same (including, without limitation, the costs of defending
against such claims, and reasonable attorney's fees incurred therein). Lessee shall keep the
Premises and any interest therein, free and clear of all mechanics' liens and all other liens. Lessee
shall give Lessor immediate written notice of any lien filed against the Premises or any interest
therein related to or arising from work performed by or for Lessee. Lessee shall give Lessor not
less than ten (10) days' prior written notice of the commencement of any Lessee Improvements
in the Premises, and Lessor shall have the right to post notices of nonresponsibility in or upon
the Premises as provided by law. If any lien or levy of any nature whatsoever is filed against the
Premises or Lessee's leasehold interest, then upon Lessor's request, Lessee shall furnish to Lessor
a corporate surety bond, satisfactory to Lessor, in an amount equal to one and one-half (1 'A)
times the amount of the claims upon which such lien or levy has been filed. Such bond shall be
acknowledged by Lessee as principal and by a corporation, licensed by the Insurance
Commissioner of the State of California to transact the business of a fidelity and surety insurance
company, as surety. Lessor shall have the right to declare this Lease in default in the event the
bond required by this paragraph has not been deposited with Lessor within ten (10) days after
written request has been delivered to Lessee.
11.3 Title to Lessee Improvements. Section Not Applicable
11.4 Signs_. Section Not Applicable.
11.5 Compliance with Prevailing Wage Laws. Lessee acknowledges and agrees
that Lessee shall be responsible for determining whether any construction, alteration,
demolition, installation or repair work performed by Lessee under this Lease constitutes "public
work" under California Prevailing Wage Law, including Labor Code sections 1720 through 1815,
et seq. (the "PWL"), and that if it does then (a) Lessee shall cause such work to be performed as
a "public work," including, but not limited to, the payment of applicable prevailing wages to the
all persons or entities subject to the PWL; and (b) Lessee shall cause all persons and/ or entities
performing "public work" under this Lease to comply with all applicable provisions of the PWL.
In no event shall Lessor be responsible for Lessee's failure to comply with any applicable
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provisions of the PWL. Lessee's violations of the PWL shall constitute an event of default under
this Lease, and Lessee shall defend and indemnify Lessor and its officers, employees, council
members and agents from and against any and all claims, assessments, back-wages, penalties,
change orders, suits, liability, judgments, damages, proceedings, orders, directives, costs,
including reasonable attorneys' fees, arising from or relating to any actual or alleged violations
of the PWL, or other application of laws, ordinances or regulations, by any person or entity (other
than Lessor), including but not limited to Lessee, performing construction, alteration, demolition,
installation, repair and/ or any other type of work contemplated under this Lease to the Premises.
ARTICLE 12
LESSEE'S PROPERTY — Article Not Applicable.
ARTICLE 13
DAMAGE AND DESTRUCTION
13.1 Repairs by Lessee. If the Premises are totally or partially damaged or
destroyed, Lessee shall, within ninety (90) days, commence and diligently pursue to completion
the repair, replacement or reconstruction of the Premises, and of all Lessee's Property and Lessee
Improvements to the extent necessary to permit full use and occupancy of the Premises for the
purposes provided in this Lease. Repair, replacement or reconstruction of the Premises shall be
accomplished in a manner and according to plans approved by Lessor; provided, however, Lessee
shall not be obligated to repair, reconstruct or replace the improvements following their
destruction in whole or substantial part except to the extent the loss is covered by insurance
required to be carried by Lessee pursuant to this Lease (or would be covered whether or not such
required insurance is actually in effect), and except if Lessee is required to indemnify Lessor for
such destruction pursuant to Section 15. If Lessee is not obligated and elects not to restore, repair
or reconstruct as herein provided, then this Lease shall terminate and neither party shall have
any further obligation to the other, except for Lessee's obligation to pay rent and other charges
which are accrued and unpaid as of the termination date and other provisions that survive the
termination of this Lease. Lessee hereby waives California Civil Code Sections 1932 and 1933, as
amended or recodified from time to time.
13.2 Termination Right. If the destruction to the Premises occurs during the
last twelve (12) months of the Term and such destruction will require more than ninety (90) days
to repair, then Lessee may elect to terminate this Lease provided that: (i) Lessee provides written
notice to Lessor of such election to terminate within thirty (30) days after occurrence of the
destruction; (ii) at the time of delivery of the termination notice Lessee is not in default under
this Lease beyond any applicable notice and cure period; (iii) Lessee did not intentionally cause
such destruction; (iv) all insurance required of Lessee under this Lease was in effect as of the date
the destruction occurred and Lessee assigns to Lessor all claims rights and proceeds relating to
the applicable destruction.
ARTICLE 14
EMINENT DOMAIN
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14.1 Total or Substantial Taking. If all of the Premises are taken under the
power of eminent domain or such a substantial portion thereof is so taken that reasonable
restoration will not result in the Premises being reasonably suitable for the conduct of Lessee's
business, this Lease shall terminate on the date that Lessee is required to yield possession to the
condemning authority, or on the date that the possession of the Premises or part thereof is taken,
whichever is later. The term "eminent domain" shall include the exercise of any governmental
power of condemnation and any private sale or other transfer in lieu of or under threat of
condemnation.
14.2 Partial Taking. If there is a partial taking of the Premises, and after
restoration of any building or other improvements, the Premises would be reasonably suitable
for Lessee's continued occupancy and conduct of its business, then: (i) this Lease shall terminate
as to the part taken as of the date of transfer of possession; (ii) rent shall be equitably reduced;
and (iii) Lessor shall, at its own cost and expense, make all necessary repairs or alterations to the
Premises required to restore the Premises to useful condition. During such repair or restoration,
rent shall be equitably abated as set forth above. Notwithstanding the foregoing, Lessor, at its
sole option, may elect to terminate this Lease by delivering written notice to Lessee within thirty
(30) days after any partial taking by any condemning authority other than Lessor, in lieu of
restoring the Premises to useful condition as provided above, unless Lessee agrees to perform all
such restoration work at Lessee's sole cost. Lessee hereby waives any statutory rights of
termination that may arise by reason of any taking of the Premises under the power of eminent
domain. Lessor shall not seek condemnation of any portion of the Premises during the Lease.
14.3 Award. Lessee hereby renounces any interest in, and assigns to Lessor,
any award made in any condemnation proceeding for any such taking, provided that Lessor shall
have no interest in or be assigned any award made to Lessee for the taking of Lessee's Property
or for Lessee's relocation expenses. Lessee hereby specifically waives any right it may have to any
compensation award representing the excess of the market value, immediately before the taking,
of Lessee's leasehold interest in the portion of the Premises taken over the rent attributable
thereto under the terms of this Lease.
ARTICLE 15
INDEMNIFICATION
Lessee covenants and agrees to indemnify, protect, defend and hold harmless
Lessor and its agents, employees, officers, affiliates and representatives (collectively, "Lessor
Parties") from and against any and all losses, claims, demands, damages (but not consequential
damages unless awarded in favor of a third party), liabilities, actions, judgments, costs and
expenses (including, without limitation, reasonable attorneys' fees) arising out of or resulting
from (a) the negligent or willful acts or omissions of Lessee, its agents, contractors,
subcontractors or employees, (b) any material breach of any obligation, covenant,
representation or warranty of Lessee under this Lease; or (c) Lessee's use and operation of the
Premises during the Term. The foregoing shall not apply to any loss, claim, damage, liability,
action, judgment, cost or expense to the extent arising out of or resulting from any negligence or
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willful misconduct of any Lessor Party. Lessee's obligations under this section shall survive the
expiration or termination of this Lease.
ARTICLE 16
DEFAULTS AND REMEDIES
16.1 Events of Default. The occurrence of any of the following events shall
constitute an event of default and a material breach of this Lease on the part of Lessee:
A.Abandonment. Lessee's vacation or abandonment of the Premises
without providing a commercially reasonable level of security or without providing reasonable
assurances to minimize potential vandalism.
B.Failure to Make Payment. Lessee's failure to pay any rent or other
sum due hereunder on the date when such payment is due, where such failure continues for five
(5) days after written notice of such failure from Lessor, or Lessee's failure on three (3) occasions
during any twelve (12) month period to timely pay rent on or before the due date as provided
for herein (even though subsequently cured).
C.Non-Permitted Use. Lessee's failure to comply with any provision
of this Lease relating to the Permitted Use, where such failure continues for ten (10) days after
written notice of such failure from Lessor.
0. Failure to Perform Other Covenants. Lessee's failure to perform
any of Lessee's other covenants, agreements or obligations hereunder, where such failure
continues for thirty (30) days after written notice of such failure from Lessor (provided, however,
if the nature of such default is such that the same cannot be reasonably cured within a thirty (30)
day period, Lessee shall not be deemed to be in default if Lessee diligently commences such cure
within such period and thereafter diligently proceeds to rectify and cure said default), except if a
different notice or cure period is specified in another provision of this Lease.
E.Bankruptcy. The making of a general assignment for the benefit of
creditors by Lessee, or the filing of a voluntary or involuntary bankruptcy petition by or against
Lessee, or the appointment of a receiver to take possession of all or substantially all of Lessee's
assets or the Premises, or the attachment, execution or other judicial seizure of substantially all
of Lessee's assets or the Premises, or in the event Lessee becomes insolvent or fails to generally
pay Lessee's debts as such debts become due.
F.Transfer without Consent. The occurrence of any Transfer without
Lessor's express prior written consent, to the extent required herein.
16.2 Remedies. Upon the occurrence of an event of default by Lessee as set
forth in Section 16.1 above, Lessor shall have the following rights and remedies, in addition to
any and all other rights and remedies available to Lessor at law or in equity, including without
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limit those provided under California Civil Code Sections 1951.2 and 1951.4, as amended or
recodified from time to time:
A.Terminate Lease. Lessor shall have the right to terminate this
Lease and all rights of Lessee hereunder by giving forty-five days (45) day written notice to Lessee.
If this Lease is so terminated, then Lessor may recover from Lessee: (i) the worth at the time of
award of any unpaid rent that had been earned at the time of such termination; plus (ii) the worth
at the time of award of the amount by which the unpaid rent which would have been earned
from the time of such termination until the time of award exceeds the amount of such rental loss
Lessee proves could have been reasonably avoided; plus (iii) the worth at the time of award of
the amount by which the unpaid rent for the balance of the Term after the time of award exceeds
the amount of such rental loss that Lessee proves could be reasonably avoided; plus (iv) any
other amount necessary to compensate Lessor for all the detriment proximately caused by
Lessee's failure to perform its obligations under this Lease or which in the ordinary course of
events would be likely to result therefrom, plus interest thereon at the Remedy Rate from the
date incurred by Lessor until reimbursed in full. As used in Subsections (A)(i) and (ii) above, the
"worth at the time of award" is computed by allowing interest at the Remedy Rate. As used in
Subsection (A)(iii) above, the "worth at the time of award" is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%). All amounts owing under this Subsection which are not paid when due
shall bear interest at the Remedy Rate from the date owing until paid and such interest shall be
compounded monthly.
B.Reenter Premises. Upon termination of the Lease as provided in
Section 16.2(A) above, Lessor shall also have the right to reenter the Premises and to remove all
persons and Lessee's Property from the Premises and store the Lessee's Property in a public
warehouse or elsewhere at the cost of and for the account of Lessee.
C.Maintain Lease; Relet Premises. Lessor shall have the remedy
described in California Civil Code Section 1951.4 (lessor may continue lease in effect after
Lessee's breach and abandonment and recover rent as it becomes due, if Lessee has the right to
sublet or assign, subject only to reasonable limitations). Unless Lessor elects to terminate this
Lease as provided in Section 16.2(A) above, Lessor may from time to time, without terminating
this Lease, either recover all rent as it becomes due or relet the Premises or any part thereof for
such term or terms and at such rental or rentals and upon such other terms and conditions as
Lessor in its sole discretion may deem advisable, with the right to clean and to make alterations
and repairs to the Premises at Lessee's sole expense.
If Lessor elects to relet as provided herein, then rent received by Lessor from such
reletting shall be applied at Lessor's option: first, to the payment of any indebtedness other than
rent due hereunder from Lessee to Lessor; second, to the payment of any cost of such reletting
(including reasonable attorneys' fees, Lessee improvements customary to make the Premises
ready to lease [including the removal of any specialized improvements installed by Lessee], court
costs and brokerage commissions); third, to the payment of the cost of any cleaning, alterations
and repairs to the Premises; fourth, to the payment of rent due and unpaid hereunder; and the
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balance, if any, shall be applied in payment of future rent as the same may become due and
payable hereunder. If the portion of such rentals received from such reletting during any month
which is applied to the payment of rent under the reletting lease is less than the rent payable
during that month by Lessee hereunder, then Lessee shall pay any such deficiency to Lessor
immediately upon demand by Lessor. Such deficiency shall be calculated monthly and Lessee
shall pay such deficiency monthly. Lessee shall also pay to Lessor, upon Lessor's demand, the
costs and expenses incurred by Lessor in such reletting, including reasonable attorneys' fees,
court costs, Lessee improvements customary to make the Premises ready to lease (including the
removal of any specialized improvements installed by Lessee) and brokerage commissions and in
making any alterations and repairs to the Premises to be.
No reentry, acts of maintenance or preservation, efforts to relet, or taking
possession of the Premises by Lessor or the appointment of a receiver upon initiative of Lessor
to protect Lessor's interest under this Lease shall be construed as an election to terminate this
Lease unless an express written notice of such intention is delivered to Lessee or unless the
termination thereof is decreed by a court of competent jurisdiction. Notwithstanding any
reletting of the Premises without termination of this Lease by Lessor, Lessor may at any time
after such reletting elect to terminate this Lease, in which case, Lessor shall have all the rights
and remedies provided by law or equity or this Lease upon termination.
D.Performance by Lessor. If Lessee materially breaches or fails to
perform any of Lessee's obligations under this Lease and the material breach or failure continues
for thirty (30) days (or such shorter time period as may be specified otherwise in this Lease) after
Lessor gives Lessee written notice of the breach or failure, Lessor, without thereby waiving or
curing such may, but shall not be obligated to, perform any such obligation for the account and
at the expense of Lessee. Lessor also may, but shall not be obligated to, perform any such
obligation for the account and at the expense of Lessee without notice in case of an emergency.
E.Receiver on Behalf of Lessor. If, at the instance of Lessor in any
action arising under this Lease, a receiver shall be appointed to take possession of the Premises
or to collect the rents derived therefrom, then the receiver may, if it shall be necessary or
convenient in order to collect such rents, conduct the business of Lessee then being carried on in
the Premises, and may take possession of any Lessee's Property and other personal property and
records used in Lessee's business and use the same in conducting such business, without
compensation to Lessee for such use. Neither application for, nor the appointment of a receiver
shall be construed as an election by Lessor to terminate this Lease, unless express written notice
of such election is given to Lessee. The fees and expenses of such receiver shall be charged to
Lessee as Additional Rent.
16.3 Late Charges. Lessor and Lessee agree that the fixing of actual damages
for Lessee's breach of any of the provisions of this Lease, including but not limited to the late
payment by Lessee to Lessor of rent and other amounts due hereunder, would cause Lessor to
incur costs not contemplated by this Lease, the exact amount of which would be extremely
difficult or impracticable to ascertain. Such costs include but are not limited to accounting,
processing, administrative, legal and clerical charges and late charges which may be imposed
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upon Lessor by the terms of any Mortgage covering the Premises. Accordingly, if any installment
of rent or any other sum due from Lessee hereunder has not been received by Lessor or Lessor's
agent within ten (10) days after such amount was due, Lessee shall pay to Lessor a late charge
equal to five percent (5%) of any such delinquent installment of rent or any other delinquent sum
due from Lessee. Notwithstanding the foregoing, Lessee shall not be liable for a late charge for
the first late payment in any calendar year unless and until such payment is not made within five
(5) business days after receipt of notice from Lessor of such delinquency. Lessee hereby agrees
that said late charge represents a fair and reasonable estimate of the cost Lessor will incur by
reason of late payment by Lessee. Acceptance of such late charge by Lessor shall not constitute
a waiver of Lessee's default with respect to such overdue amount nor prevent Lessor from
exercising any other rights and remedies provided for in this Lease, at law or in equity. If a late
charge is payable by Lessee whether or not collected, for three (3) installments of rent during any
twelve (12) month period, then the Base Rent shall automatically become due and payable to
Lessor quarterly in advance, notwithstanding any other provision of this Lease to the contrary.
16.4 interest on Past Due Obligations. Any and all amounts not paid to Lessor
when due, shall bear interest, compounded monthly from the date due until paid at the rate of
four percent (4%) per annum. Payment of such interest shall not excuse or cure any default by
Lessee under this Lease and shall not affect any rights and remedies provided to Lessor in this
Lease or at law or in equity, all of which shall be cumulative. Notwithstanding the foregoing, the
City Manager of the City of Carlsbad shall have the right, in its sole discretion, to waive for good
cause any interest payment upon written application of Lessee for any such delinquency period.
16.5 Waiver of Redemption. Lessee hereby expressly waives any and all rights
of redemption granted by or under any present or future laws in the event of Lessee being evicted
or dispossessed for any cause, or in the event of Lessor obtaining possession of the Premises by
reason of the violation by Lessee of any of the covenants and conditions of this Lease or
otherwise. The rights given to Lessor herein are in addition to any rights that may be given to
Lessor by any statute or otherwise.
16.6 Lessor's Default. Lessor shall in no event be charged with default in the
performance of any of its obligations hereunder unless and until Lessor shall have failed to
perform such obligations and such failure continues for more than thirty (30) days (or such
additional time as is reasonably necessary to correct any such failure) after Lessor's receipt of
written notice of such failure from Lessee.
ARTICLE 17
SUBORDINATION AND ATTORNMENT
17.1 Subordination. This Lease is and shall be subordinate to any ground lease,
mortgage, deed of trust and/or any other hypothecation or security document and advances and
obligations thereunder now or hereafter placed upon the Premises, and any renewals,
modifications, consolidations, replacements and extensions thereof (collectively "Mortgage").
Upon the request of Lessor, Lessee shall, from time to time, execute and deliver any documents
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that may be required by Lessor or the mortgagee, beneficiary, ground lessor or lender (each a
"Lessor's Lender") under any such Mortgage, to effectuate any subordination, provided that any
such Lessor's Lender agrees not to disturb Lessee's right to quiet possession under this Lease so
long as Lessee is not in default (or with notice or passage of time or both would not be in default)
under this Lease ("SNDA"). If Lessee fails to execute and deliver such requested SNDA within
thirty (30) days after request, Lessee irrevocably constitutes and appoints Lessor as Lessee's
special attorney-in-fact, coupled with an interest, to execute and deliver such requested SNDA.
Notwithstanding the foregoing, if Lessor's Lender elects to have this Lease prior to the lien of its
Mortgage, and gives written notice to Lessee of such election, this Lease shall be deemed prior
to such Mortgage regardless of the respective dates of execution, delivery and recordation of this
Lease and any such Mortgage.
17.2 Attornment. In the event that Lessor transfers title to the Premises to a
Lessor's Lender, or the Premises are acquired by a Lessor's Lender upon the foreclosure or
termination of a Mortgage to which this Lease is subordinated, Lessee shall attorn to and
recognize the Lessor's Lender as Lessee's Lessor under this Lease and shall promptly execute and
deliver any documents that Lessor may reasonably require to evidence such attornment,
provided that Lessor's Lender agrees not to disturb Lessee's right to quiet possession under this
Lease so long as Lessee is not in default (or with notice or passage of time or both would not be
in default) under this Lease. If Lessee fails to execute and deliver the requested SNDA within
fifteen (15) days after request, Lessee irrevocably constitutes and appoints Lessor as Lessee's
special attorney-in-fact, coupled with an interest, to execute and deliver the requested SNDA.
17.3 Estoppel Certificate. Upon the reasonable request of Lessor, Lessee from
time to time shall execute, acknowledge, and deliver to Lessor, no later than ten (10) business
days after Lessor's request therefor, an estoppel certificate in any reasonable form requested by
Lessor ("Estoppel Certificate"). The Estoppel Certificate may be conclusively relied upon by a
prospective lender, purchaser, or encumbrancer of Lessor's interest in the Premises. Failure to
deliver the Estoppel Certificate within ten (10) business days of such request shall be conclusive
upon Lessee that: (i) this Lease is in full force and effect; (ii) there are no uncured defaults in
Lessor's or Lessee's performance; (iii) not more than one month's Base Rent has been paid in
advance; and (iv) the Security Deposit is in an amount equal to that specified in Article 1 hereof.
Lessee hereby irrevocably appoints Lessor as its attorney-in-fact, which agency is coupled with
an interest, to execute any such Estoppel Certificate upon Lessee's failure to do so within such
fifteen (15) day period.
17.4 Rights of Lessor's Lender. If any Lessor's Lender requires a modification of
this Lease at any time, Lessee shall, at Lessor's reasonable request, promptly execute and deliver
to Lessor instruments effecting the modifications that the Lessor's Lender reasonably requires,
provided that such modifications do not increase the rent, reduce the size of the Premises or
otherwise adversely affect in any material respect any of Lessee's rights under this Lease or
increase Lessee's obligations hereunder. If Lessor's Lender has given prior written notice to
Lessee that it is the Lessor's Lender and such notice includes the address at which notices to such
Lessor's Lender are to be sent, then Lessee shall give Lessor's Lender, as the case may be, written
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notice simultaneously with any notice given to Lessor to correct any failure of Lessor to perform
any of Lessor's obligations. Lessor's Lender shall have the right after receipt of said written notice
to correct or remedy such failure within a reasonable period of time. Any written notice of
default given Lessor shall be simultaneously given to Lessor's Lender.
17.5 Limitation of Liability. The covenants and agreements of Lessor under this
Lease shall not be binding upon any person at any time after the transfer of that person's interest,
as Lessor, in the Premises. In the event of such a transfer, the covenants and agreements of
Lessor shall thereafter be binding upon the transferee of Lessor's interest.
ARTICLE 18
FORCE MAJEURE
If either party hereto shall be delayed in or prevented from the performance of
any act required hereunder by reason of acts of God, labor troubles, inability to procure
materials, restrictive governmental laws or regulations or other causes without fault and beyond
the control of the party obligated (financial inability excepted) (collectively, "Force Majeure"),
performance of such act shall be excused for the period of the delay and the period for the
performance of any such act shall be extended for a period equivalent to the period of such delay;
provided, however, nothing in this Section shall delay the Rent Commencement Date or excuse
Lessee from the prompt payment of any rent or other charge required of Lessee hereunder,
except as may be expressly provided elsewhere in this Lease.
ARTICLE 19
ASSIGNMENT AND SUBLETTING
19.1 Lessor's Consent. Lessee shall not voluntarily, involuntarily or by
operation of law assign, mortgage, sublet, hypothecate or otherwise transfer or encumber all or
any part of Lessee's interest in this Lease or in the Premises (collectively "Transfer"), without first
obtaining Lessor's express written consent, which shall not be unreasonably withheld,
conditioned or delayed. No consent to any Transfer shall constitute a waiver of the provisions of
this Section. If Lessee consists of more than one person or entity, a purported assignment,
voluntary, involuntary, or by operation of law, from one person to the other shall be deemed a
Transfer requiring Lessor's consent. Lessor and Lessee agree (by way of example and without
limitation) that it shall be reasonable for Lessor to withhold its consent to a Transfer if any of the
following situations exist or may exist: (i) the proposed Transferee's (as defined below) use of the
Premises conflicts with or is different from the Permitted Use; (ii) intentionally deleted; (iii) in
Lessor's reasonable business judgment, the proposed Transferee lacks sufficient business
reputation or experience to operate a successful business of the type and quality permitted
under this Lease; or (iv) Lessee is in default under this Lease beyond applicable notice and cure
periods.
Any attempted or purported Transfer without Lessor's prior written consent (to
the extent required hereunder) shall be void and of no force or effect, and shall not confer any
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estate or benefit on anyone. A consent to one Transfer by Lessor shall not be deemed to be a
consent to any subsequent Transfer to any other party.
Notwithstanding anything herein to the contrary, Lessee shall have the right,
without the necessity of obtaining Lessor's consent, to Transfer this Lease (1) to an entity
controlling, controlled by, or under common control with Lessee or an affiliate of Lessee, or (2)
to the surviving entity of a merger or consolidation of Lessee, or (3) to the purchaser of all or
substantially all of the stock or assets of Lessee.
19.2 Request for Transfer. Lessee shall give Lessor at least forty-five (45) days'
prior written notice of any requested Transfer and of the proposed terms of such Transfer
("Transfer Notice"), including but not limited to: (i) the name and legal composition of the
proposed assignee, sublessee, encumbrancer or transferee ("Transferee"); (ii) a current financial
statement of the proposed Transferee prepared in accordance with generally accepted
accounting principles consistently applied; (iii) the portion of the Premises Lessee proposes to
Transfer (including square footage and location); and (iv) the nature of the proposed Transferee's
business to be carried on in the Premises. The foregoing terms shall be in sufficient detail to
enable Lessor to evaluate the proposed Transfer and the prospective Transferee. Within thirty
(30) days after receipt of the Transfer Notice, Lessor shall either approve or disapprove of such
Transfer. Lessee shall immediately notify Lessor of any modification to the proposed terms of
such Transfer. Lessee shall also provide to Lessor copies of the fully executed documents
pertaining to the Transfer after the Transfer has become effective. Whether or not Lessor
consents to any proposed Transfer, Lessee shall pay Lessor's review and processing fee in the
amount of $500.00 within thirty (30) days after written request by Lessor.
19.3 Lessor's Rights. Upon receipt of a Transfer Notice pursuant to Section 19.2
above, Lessor shall have the right to (i) withhold its consent to such Transfer, as permitted
pursuant to Section 19.1 above; (ii) terminate this Lease as it relates to the portion of the
Premises described in the Transfer Notice and recapture such portion of the Premises, effective
as of the date of dispatch of a notice of termination from Lessor to Lessee, which notice may be
sent at any time within thirty (30) days following Lessor's refusal to consent to the Transfer; (iii)
sublet or receive an assignment of all or a portion of the Premises from Lessee at the lower of
the rental specified in this Lease or in Lessee's Notice (provided, however, that with respect to
"ii" and "iii" above, Lessee shall have the right to rescind its Transfer Notice within ten (10) days
after receipt of Lessor's notice under "ii" or "iii", and in such event, Lessor's election to terminate
this Lease, sublet or receive an assignment of all or a portion of the Premises shall be null and
void); or (iv) impose any of the following as conditions to Lessor's consent: (a) that all rents paid
by the Transferee to Lessee in excess of the Base Rent be paid to Lessor; or (b) that an acceptable
guaranty of this Lease be provided to Lessor; or (c) that either Lessee or the proposed Transferee
cure, on or before the proposed effective date of such Transfer, any and all uncured defaults
hereunder; provided, however, in no event shall Lessor's failure to condition its consent upon
such cure be deemed to be a waiver of any such default or of Lessor's rights and remedies under
this Lease or under law or in equity in regard thereto. If Lessor has elected to impose such a cure
as a condition to its consent and such condition is not satisfied by the effective date of the
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Transfer, then the Transfer shall be voidable at Lessor's option. Lessor shall also have the right
to condition Lessor's consent to any Transfer upon Lessee's and the Transferee's executing a
written assumption agreement, in a form reasonably approved by Lessor. The assumption
agreement shall require the Transferee to expressly assume all obligations of Lessee under this
Lease and shall require Lessee and Transferee (but not the Guarantor if a replacement guaranty
reasonably acceptable to Lessor is obtained) to be and remain jointly and severally liable for the
performance of all conditions, covenants, and obligations under this Lease from the effective
date of the Transfer of Lessee's interest in this Lease. Regardless of Lessor's consent to any
Transfer, no Transfer shall release Lessee of Lessee's obligation or alter the primary liability of
Lessee to pay rent and to perform all other obligations to be performed by Lessee hereunder.
The acceptance of rent by Lessor from any other person shall not be deemed to be a waiver by
Lessor of any provision hereof. These rights are in addition to Lessor's right to withhold its
consent to any Transfer, and may be exercised by Lessor in its sole discretion without limiting
Lessor in the exercise of any other right or remedy at law or in equity which Lessor may have by
reason of such Transfer. In the event of default by any Transferee, Lessor may proceed directly
against Lessee without the necessity of exhausting remedies against said Transferee. Lessee
expressly agrees that the provisions of this Article are not unreasonable standards or conditions
for purposes of Section 1951.4(b)(2) of the California Civil Code, as amended or recodified from
time to time.
ARTICLE 20
NOTICES
All notices given under this Lease shall be in writing and shall be given or served
either personally or by depositing the same by United States registered or certified mail postage
prepaid, return receipt requested, or by a nationally-recognized overnight delivery courier,
addressed to the applicable Address for Notices specified in Article 1 or by electronic mail. Notice
shall be deemed to have been given (a) on the delivery date indicated by the United States Postal
Service on the return receipt or by the courier or on the date such delivery is refused or deemed
"undeliverable," (b) on the date of personal delivery or (c) on the date the electronic mail is sent
by the applicable party. Either party may change its address for notices by providing written
notice as specified herein.
ARTICLE 21
AUTHORITY
If Lessee is a corporation, trust, general or limited partnership or limited liability
company, each individual executing this Lease on behalf of such entity represents and warrants
that he or she is duly authorized to execute and deliver this Lease on behalf of said entity. If
Lessee is a corporation, trust, partnership, or limited liability company, Lessee shall,
simultaneously with execution of this Lease, deliver to Lessor written evidence of such authority
reasonably satisfactory to Lessor.
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ARTICLE 22
QUIET ENJOYMENT
Lessee, upon keeping, observing and performing all of the covenants and
agreements of this Lease on its part to be kept, observed, and performed, shall lawfully and
quietly hold, occupy and enjoy the Premises during the Term of this Lease.
ARTICLE 23
ATTORNEYS' FEES
Should either party commence an action or arbitration against the other to
enforce any obligation hereunder, the prevailing party shall be entitled to recover the costs
thereof and reasonable attorneys' fees actually incurred by such prevailing party (including the
fees and charges of legal assistants or other non-attorney personnel performing services under
the supervision of an attorney), whether or not such litigation is prosecuted to judgment.
ARTICLE 24
WAIVER
Any waiver by either party of any breach by the other party of any one or more of
the covenants, conditions, or agreements of this Lease shall not be nor be construed to be a
waiver of any subsequent or other breach of the same or any other covenant, condition or
agreement of this Lease, nor shall any failure on the part of either party to require or exact full
and complete compliance by the other party with any of the covenants, conditions, or
agreements of this Lease be construed as in any manner changing the terms hereof or to prevent
Lessor from enforcing the full provisions hereof. Lessor's acceptance of any payment which is
less than that required to be paid by Lessee shall be deemed to have been received only on
account of the obligation for which it is paid and shall not be deemed an accord and satisfaction,
notwithstanding any provisions to the contrary asserted by Lessee, written on any check or
contained in any transmittal letter. The subsequent acceptance of rent hereunder by Lessor shall
not be deemed to be a waiver of any preceding breach by Lessee of any term or covenant hereof,
other than the failure of Lessee to pay the particular rent so accepted, regardless of Lessor's
knowledge of such preceding breach at the time of acceptance of such rent. An express waiver
must be in writing and signed by a person with the power to contractually bind Lessee or Lessor.
An express waiver shall affect only the default specified in the waiver, and only for the time and
to the extent expressly stated.
ARTICLE 25
LIMITATION ON CLAIMS
Any claim, demand, right or defense of any kind by either of the parties, which is
based upon, arising in connection with or in any way related to this Lease or the negotiations
prior to its execution, shall be barred unless such party commences an action thereon, or
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interposes in a legal proceeding a defense by reason thereof, within twelve (12) months after the
date of the inaction or omission or the date of the occurrence of the event or of the action to
which the claim, demand, right or defense relates, whichever applies.
ARTICLE 26
INTERPRETATION AND APPLICATION
26.1 Submission of Lease. Submission of this instrument for examination or
signature by Lessee does not constitute an offer, a reservation of, option for or option to lease,
and it is not effective as a lease or otherwise until execution and delivery by both Lessor and
Lessee.
26.2 Governing_ Law. This Lease shall be construed in accordance with and
governed by the statutes, decisions, and other laws of the State of California. Lessee expressly
agrees that any and all disputes arising out of or in connection with this Lease shall be litigated
only in the Superior Court of the State of California for San Diego County, and Lessee hereby
consents to the jurisdiction of said court.
26.3 Complete Agreement. This Lease contains all terms, covenants,
conditions, warranties and agreements of the parties relating in any manner to the rental, use
and occupancy of the Premises. No prior agreements or understanding pertaining to the same
shall be valid or of any force or effect unless expressly referenced and incorporated herein.
26.4 Amendment. This Lease may not be amended, altered or modified in any
way except in writing signed by the parties hereto.
26.5 No Partnership. It is agreed that nothing contained in this Lease shall be
deemed or construed as creating a partnership or joint venture between Lessor and Lessee or
between Lessor and any other party, or cause Lessor to be responsible in any way for the debts
or obligations of Lessee or any other party.
26.6 No Merger. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, shall not work as a merger, but shall, at the option of Lessor, either
terminate all or any existing subleases or subtenancies, or operate as an assignment to Lessor of
any or all such subleases or sub-tenancies.
26.7 Severabilitv. If any provision of this Lease or application thereof to any
person or circumstances shall to any extent be invalid, the remainder of this Lease (including the
application of such provision to persons or circumstances other than those to which it is held
invalid) shall not be affected thereby, and each provision of this Lease shall be valid and enforced
to the fullest extent permitted by law.
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26.8 Captions. The captions of the Articles and Sections hereof are for
convenience only and are not a part of this Lease and do not in any way limit or amplify the terms
and provisions of this Lease.
26.9 Words. The words "Lessor" and "Lessee", as used herein, shall include the
plural as well as the singular. Words used in the neuter gender include the masculine and
feminine.
26.10 Joint and Several Liability. If either party is comprised of more than one
individual or entity, the obligations imposed upon such party hereunder shall be joint and several
to all parties signing this Lease as such party.
26.11 Exhibits. All exhibits attached to this Lease are incorporated herein by this
reference and made a part hereof, and any reference in the body of this Lease or in the exhibits
to the "Lease" shall mean this Lease together with all exhibits.
ARTICLE 27
MISCELLANEOUS
27.1 Time is of the Essence. Time is of the essence of each and all of the terms
and provisions of this Lease.
27.2 Successors. Subject to the restrictions on Transfers contained in this
Lease, all the terms, covenants and conditions hereof shall be binding upon and inure to the
benefit of the heirs, executors, administrators, successors and assigns of the parties hereto.
27.3 Recordation; Quitclaim. Lessee shall not record this Lease or any
memorandum hereof. Lessor has the right in its absolute discretion to record this Lease or a
memorandum hereof, and, upon Lessor's request, Lessee shall execute and have acknowledged
the same for recordation. Upon termination of this Lease for any reason, Lessee shall execute,
acknowledge and deliver to Lessor within thirty (30) days after receipt of written demand
therefor a good and sufficient memorandum of termination indicating that this Lease has been
terminated. If Lessee fails to deliver the required memorandum of termination to Lessor, Lessor
may prepare and record a notice reciting the failure of Lessee to execute, acknowledge and
deliver such memorandum of termination and said notice shall be conclusive evidence of the
termination of this Lease and of all right of Lessee or those claiming under Lessee in and to the
Premises.
27.4 Limitation of Liability. It is expressly understood and agreed that
notwithstanding anything in this Lease to the contrary, and notwithstanding any applicable law
to the contrary, the liability of Lessor hereunder (including any successor Lessor) and any
recourse by Lessee against Lessor shall be limited solely and exclusively to Lessor's interest in the
Premises, including the income and profits from the Premises, and none of its officers,
employees, affiliates, managers or agents shall have any personal liability therefor, and Lessee
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hereby expressly waives and releases such personal liability on behalf of itself and all persons
claiming by, through or under Lessee. The limitations of liability provided in this Section are in
addition to, and not in limitation of, any limitation on liability applicable to Lessor provided by
law or in any other contract, agreement or instrument. Under no circumstances shall Lessor or
Lessee be liable for punitive or special damages, indirect damages or other consequential
damages, including without limitation, injury to business or for any loss of income or profit
therefrom. In the event of any transfer of Lessor's interest in this Lease, the Lessor herein named
(and in case of any subsequent transfer, the then transferor) shall be automatically freed and
relieved from and after the date of such transfer of all liability for the performance of any
covenants or obligations on the part of Lessor contained in this Lease thereafter to be performed;
provided, however, that any funds in the hands of Lessor or the then transferor at the time of
such transfer, in which Lessee has an interest shall be turned over to the transferee and any
amount then due and payable to Lessee by Lessor or the then transferor under any provision of
this Lease shall be paid to Lessee; and provided, further, that upon any such transfer, the
transferee shall expressly assume, subject to the limitations of this Section, all of the agreements,
covenants and conditions in this Lease to be performed on the part of Lessor, it being intended
hereby that the covenants and obligations contained in this Lease on the part of Lessor shall be
binding on each Lessor, its successors and assigns, only during its period of ownership.
27.5 Broker. Lessor and Lessee each represents and warrants to the other that
it has not retained the services of or had any dealings with any broker, finder or real estate
licensee and owes no person or entity any finder's or broker's fee, commission or payment of
any kind whatsoever. Lessor and Lessee each shall indemnify, protect, defend and hold harmless
the other from and against all liability for compensation or charges which may be claimed by any
such broker, finder or other similar party by reason of any dealings or actions of the indemnifying
party, including (without limitation) any costs, expenses or attorney's fees reasonably incurred
with respect thereto.
27.6 Counterparts. This Lease may be executed in any number of counterparts
(by original, facsimile, PDF file or other electronic format) each of which shall be deemed an
original and all of which shall constitute one and the same Lease with the same effect as if all
parties had signed the same signature page.
[Signatures on Next Pages
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Title: City Manager
By:
Name: Scott-Chadwick
By:
Name: Mark F. Le
Title: Executive Vice Presid
Global Operations
ARTICLE 28
Signatures
The individuals executing this Lease represent and warrant that they have the right,
power, legal capacity and authority to enter into and to execute this Lease on behalf of the
respective legal entities of Lessee and Lessor.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first
above written.
LESSOR: LESSEE:
City of Carlsbad, Callaway Golf Company,
a California municipal corporation a Delaware corporation
APPROVED AS TO FORM
B:
Alle rost
Deputy City Attorney, for
Celia A. Brewer, City Attorney
Date: , 2021
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EXHIBIT A
LEGAL DESCRIPTION OF PREMISES
APN NO: 212-270-08-00
BEING A PORTION OF LOT 69 OF CARLSBAD TRACT NO. 81-46, UNIT NO. 3, IN THE CITY
OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP
THEREOF NO. 11289 FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY, JULY 16,1985, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE SOUTHEASTERLY BOUNDARY LINE OF SAID LOT 69,
DISTANT THEREON, 65.50 FEET FROM THE MOST NORTHEASTERLY CORNER THEREOF,
THENCE SOUTHWESTERLY ALONG SAID SOUTHEASTERLY BOUNDARY LINE, S.32°04'25" W.
374.77 FEET TO THE INTERSECTION WITH THE NORTHEASTERLY SIDELINE OF AN EXISTING
EASEMENT, 20.00 FEET IN WIDTH IN FAVOR OF SAN DIEGO GAS AND ELECTRIC
COMPANY FOR THE RIGHT AND PRIVILEGE TO TRIM TREES OUTSIDE OF THE 100.00 FOOT
WIDE EXISTING EASEMENT FOR ELECTRICAL POWER TRANSMISSION PER DOCUMENT NO.
49242, RECORDED APRIL 15,1954, IN BOOK 5205 AT PAGE 419 OF OFFICIAL RECORDS;
THENCE NORTHWESTERLY ALONG SAID NORTHEASTERLY EASEMENT SIDELINE,
N.47°28'18" W. 140.00 FEET; THENCE DEPARTING SAID NORTHEASTERLY EASEMENT
SIDELINE, N.38°35'43" E. 182.04 FEET TO AN ANGLE POINT; THENCE N.43'231011' E. 86.68 FEET
TO AN ANGLE POINT; THENCE S.65°34'011' E. 41.37 FEET TO AN ANGLE POINT; THENCE
N.69°10'40" E. 97.80 FEET TO THE POINT OF BEGINNING.
CONTAINING AN AREA OF 0.843 ACRE. (36,740 SQUARE FEET)
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PLUS T 1jFFr4NNNG---,
14,
NOR1NEASTERLY LINE
Or 20 %JOE S.D.G.K,
EASEMENT
EXPIries 6,30666.
No_ MN
PALMAP
JORingtr tt.
PALOMAR AIPPOrr (41:4110.
)1/1.CI'N.41 T Y MA
NO
EXHIBIT 18*
LEGAL DESCRIP110N PLAT
1 ,MOST NORD-IEASIERLY
CORNER LOT 69
PAD COMPt_i_i MINIX lifa, ;mg parw 42R/K Mgr 6W
SAW csEt;r4 C.414,00t664 iatemer% 'Arra t —1174 FrAtJo..414td I MC. 11A7A
July 20, 2021 Item #3 Page 36 of 36