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Home My WebLink About2021-07-27; City Council; Resolution 2021-182RESOLUTION NO. 2021-182 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING THE CITY MANAGER TO EXECUTE A TEN-YEAR LEASE AGREEMENT, WITH TWO, FIVE-YEAR EXTENSION OPTIONS, WITH NEW VILLAGE ARTS (NVA) TO OPERATE A THEATER AND ARTS FACILITY AT 2787 STATE STREET, COMMONLY KNOWN AS THE BAUER LUMBER BUILDING; APPROPRIATE $613,000 FROM THE GENERAL CAPITAL CONSTRUCTION FUND TO THE PROJECT; AND EXECUTE A CONSTRUCTION AGREEMENT WITH NVA THAT WILL DETAIL THE TERMS OF REIMBURSEMENT FOR THE CITY'S PORTION OF THE TENANT IMPROVEMENT PROJECT WHEREAS, On November 20, 1997, the Carlsbad Redevelopment Agency acquired the property located on the northeast corner of State Street and Christiansen Way at 2787 State Street in the Carlsbad Village (Property) with proceeds from tax exempt bonds issued in 1993; and WHEREAS, on September 26, 2006, the City Council approved a lease agreement (Agreement) with New Village Arts (NVA) for the purpose of operating a performing arts theater in the rear 6,300 square feet of the Property by Resolution No. 2006-429; and WHEREAS, on June 23, 2009, the City Council approved a lease agreement with NVA, expanding the leased area to include the front 3,100 square feet of the Property, for a revised total of 9,400 square feet of leased space, to incorporate an arts incubator on the Property by Resolution No. 2009-471; and WHEREAS, on April 12, 2019, the City Council approved a five-year lease agreement with NVA by Resolution No. 2019-045; and WHEREAS, On July 28, 2020, the City Council approved plans and specifications and authorized advertisement for bids to repair the building's roof and refurbish the western wall (Resolution No. 2020-160). The, City Council approved a contract to commence the repairs and to increase the budget for the renovations an additional $60,000, from $253,626 to $313,626, on Sept. 22, 2020 (Resolution No. 2020-192). Repairs and renovations to the building were completed in January 2021. To date, $291,187 has been spent on the project; and WHEREAS, On Feb. 11, 2020, the City Council directed city staff to negotiate a long-term lease agreement with NVA with a period of 10-20 years; and WHEREAS, On June 10, 2020, NVA submitted a Letter of Intent with a request to continue and expand NVA's partnership with the city under the terms of a new long-term lease agreement. The July 27, 2021 Item #6 Page 6 of 57 letter included a request for a new long-term lease agreement, rent of $1.00 per year, and proposed $1.2 million in renovations to the Property, with a request for the city to reimburse NVA up to a total of $573,000 for renovations related to the installation of solar panels ($103,000) and a portion of the exterior improvements ($470,000); and WHEREAS, prior to construction, the City Manager will execute a Construction Agreement with NVA that will detail the terms of reimbursement for the city's portion of the tenant improvement project's costs; and WHEREAS, the city will also enter into a contract with a construction management firm in an amount not to exceed $40,000, to ensure that the improvements to the city's building are constructed properly and that funds are reimbursed consistent with the terms of the future Construction Agreement; and WHEREAS, in order to fund the reimbursement and construction management firm cost, city staff is requesting that the City Council appropriate $613,000 from the General Capital Construction Fund to the project; and WHEREAS, the city has determined that NVA provides a public benefit to the community; 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 Agreement with NVA for the Property; and WHEREAS, the City Council has further determined that it accepts the terms of the Agreement with NVA; and WHEREAS, the 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 has determined that NVA provides a public benefit to the community by offering an alternative evening activity that encourages more positive pedestrian traffic and public interaction in the Carlsbad Village area, as well as a presence in the Carlsbad Village that will assist in the city's efforts to revitalize the retail and dining July 27, 2021 Item #6 Page 7 of 57 environment by providing an evening entertainment opportunity which otherwise would not exist within the area. Further, NVA's use of the Subject Property as a theater and arts center is consistent with the goals of the Carlsbad Village and Barrio Master Plan which call for uses that will activate the Village by promoting placemaking strategies that support arts and culture, including visual, musical, and theatrical arts, and other public performances. 3.That the City Manager is hereby authorized to execute the Lease Agreement with New Village Arts, 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 Agreement with New Village Arts for use of city owned property located at 2787 State Street, Carlsbad, CA 92008, 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. 4.That the Deputy City Manager, Administrative Services is authorized to appropriate $613,000 from the General Capital Construction Fund to the project, to include funds in an amount not to exceed $573,000 for reimbursement to NVA and funds in an amount not to exceed $40,000 for the cost of a construction management contract. 5.That the City Manager is hereby authorized to execute a Construction Agreement with NVA that will detail the terms of reimbursement for the city's portion of the tenant improvement project costs. July 27, 2021 Item #6 Page 8 of 57 PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of the City of Carlsbad on the 27th day of July, 2021, by the following vote, to wit: AYES: Hall, Blackburn, Acosta, Bhat-Patel. NAYS: None. ABSENT: None. cfr6/7/z( MATT HALL, Mayor 1?-1A ir)a-b .-frr BARBARA ENGLESON, City Clerk (SEAL) July 27, 2021 Item #6 Page 9 of 57 LEASE AGREEMENT THIS LEASE AGREEMENT (this "Lease") is entered into as of Jt,eitA , 2021, by and between CITY OF CARLSBAD, a California municipal corporation (fliandlord") and NEW VILLAGE ARTS, a California tax exempt non-profit public benefit corporation organized under Section 501(c)(3) of the U.S. Internal Revenue Code ("Tenant") (collectively "Parties"), for the property located at 2787 State Street, California, 92008, and shall be effective and binding upon the parties hereto as of the date of execution hereof by both parties. RECITALS WHEREAS, Landlord is the owner of certain real property and improvements thereon, consisting of approximately 9,400 square feet of commercial building space, designated as Assessor Parcel Numbers 203-295-01 and 02, and more particularly described and/or depicted on Exhibit A attached hereto (the "Premises"); WHEREAS, the Parties entered into an initial Lease Agreement, dated July 1, 2013 ("Initial Agreement"), for the Premises, which Initial Agreement was amended by the First Amendment to the Initial Agreement dated July 1, 2016 ("First Amendment"); and WHEREAS, the Parties subsequently entered into a new five-year Lease Agreement, dated April 9, 2019, ("Subsequent Agreement") for the Premises, which expires April 11, 2024; and WHEREAS, the Parties desire to replace the Subsequent Agreement with a longer-term lease agreement; and WHEREAS, the Parties mutually agree that this Lease shall replace and supersede the Subsequent Agreement; and WHEREAS, this Lease will further the goals and objectives of the Arts Element of the City's General Plan, specifically objective B.1 which promotes permanent facilities for exhibition, performance, rehearsal, discussion, or teaching of visual and performing arts and cultural endeavors; and objective B.3 which encourages residents and visitors to practice, participate, attend and observe artistic and cultural activities; and WHEREAS, Tenant operates the Premises as a performing arts facility, including without limitation, theater and musical performances, rehearsal, discussions and teaching performing arts and as a visual arts incubator and exhibit/education center within 9,400 square feet; and WHEREAS, Tenant desires to continue operating a theater, art center, and visual arts education at the Premises; and - 1 - July 27, 2021 Item #6 Page 10 of 57 WHEREAS, Tenant's continued operation of the Premises as a civic resource on behalf of the City of Carlsbad furthers the Tenant's mission and benefits Carlsbad and the community at large; and WHEREAS, Landlord is willing to lease the Premises to Tenant for the term and upon the covenants, conditions and provisions hereinafter set forth. AGREEMENT NOW THEREFORE, the Parties hereby incorporate the above Recitals as though fully set forth into this Agreement and 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. New Village Arts ("Trade Name"). 1.2 Premises. The Premises (defined above) are commonly known as 2787 State Street, Carlsbad, California, 92008, and consist of a freestanding 9,400 square foot commercial building. 1.3 Term and Rent Commencement. The term of this Lease shall be approximately ten (10) years, commencing upon the date when this Lease has been executed by both parties (the "Commencement Date"), and expiring, unless sooner terminated in accordance with this Lease, upon the date that is ten (10) years after the Commencement Date (the "Expiration Date"), subject to the two five-year extension options set forth in Section 3.2 below. As used in this Lease, "Lease Year" means each twelve (12) month period (or portion thereof) during the Term commencing with the Commencement Date. The Term of the Subsequent Agreement dated April 9, 2019 shall expire upon the Commencement Date of this Lease. 1.4 Base Rent. (a)Tenant agrees to pay Landlord the sum of one dollar ($1.00) per year. Tenant shall commence paying rent under this Lease on the Commencement Date. Tenant shall pay to Landlord the sum of $1.00 for the first full year concurrently with execution of this Lease. (b)Rent shall be delivered to the Finance Department of the City of Carlsbad at 1635 Faraday Avenue, Carlsbad, California 92008. The designated place of payment and filing may be changed at any time by Landlord upon ten (10) days written notice to Tenant. Tenant assumes all risk of loss if payments are made by mail. - 2 - July 27, 2021 Item #6 Page 11 of 57 1.5 Use of Premises. It is expressly agreed that the Premises shall be used by Tenant solely and exclusively for the purpose of a community theater for live theater and music productions, art gallery, art exhibitions, readings, workshops, seminars, classes, lectures, galas or festivals, fundraisers, community meetings, film screenings, performing arts, concessions, and other similar special programs by other groups which are related and consistent with the aforementioned uses and open to the general public, and for such other related or incidental purposes as may be first approved in writing by City, and for no other purpose whatsoever. Tenant covenants and agrees to use the Premises for the above specified purposes and related activities, and to diligently pursue said purposes throughout the term hereof. In the event that Tenant fails to continuously use the Premises for said purposes or uses the Premises for purposes not expressly authorized herein, the Tenant shall be deemed in default under this Lease. ("Permitted Use"). 1.6 Tenant Improvement Allowance. None, except as provided in Section 12.1. 1.7 Security Deposit. Landlord is currently holding a security deposit from Tenant in the amount of $2,000. 1.8 Guarantor. None. 1.9 Broker(s). None. 1.10 Tenant's Address for Notices: New Village Arts Attn: Kristianne Kurner 2787 State Street Carlsbad, CA 92008 1.11 Landlord's Address for Notices: City of Carlsbad Real Estate Manager 3096 Harding Street Carlsbad, CA 92008 With a copy to: City of Carlsbad City Attorney's Office 1200 Carlsbad Village Drive Carlsbad, CA 92008 - 3 - July 27, 2021 Item #6 Page 12 of 57 1.12 Landlord'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. Landlord leases to Tenant and Tenant leases from Landlord 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 Landlord and Tenant 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. Tenant 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 Landlord. Landlord 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. Tenant hereby acknowledges that it has had an opportunity to investigate and inspect the condition of the Premises and the suitability of same for Tenant's purposes, and Tenant 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 Tenant's purposes and (b) acknowledge that the Premises are in good, clean and sanitary order and repair and by taking possession Tenant accepts the Premises as it exists. Tenant acknowledges that neither Landlord nor any agent nor any employee of Landlord has made any representations or warranty with respect to the Premises or with respect to the suitability of either for the conduct of Tenant's business and Tenant expressly warrants and represents that Tenant has relied solely on its own investigation and inspection of the Premises in its decision to 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 Landlord 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 Landlord to alter, remodel, repair or - 4 - July 27, 2021 Item #6 Page 13 of 57 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 Tenant by Landlord or any agent of Landlord other than as may be contained herein, unless more particularly described in section 11.3. 2.3 Delivery of Possession. Tenant currently has possession of the premises and is utilizing the premises consistent with section 1.5 supra. To continue in possession of the premises, Tenant shall not be entitled to continue possession of the Premises unless the Landlord has received from Tenant all of the following: (i) the Security Deposit, the first annual installment of Base Rent for the first year after the Commencement Date; and (ii) executed copies of policies of insurance or certificates or binders thereof as required under ARTICLE 9 below. Tenant shall pay to Landlord, upon its execution of this Lease, the sums specified in clause (i) above and the items required in clause (ii) shall be provided within thirty (30) days of the execution of this Lease. 2.4 Easements. Landlord 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 Landlord 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 Tenant's obligations under this Lease, or interfere with Tenant's use of the Premises. Tenant shall sign any of the aforementioned documents upon Landlord's request and Tenant's failure to do so or breach of this Section shall constitute a material default under this Lease, unless the Tenant presents evidence that any of the described acts interfere with Tenant's reasonable use of the Premises. Tenant shall cooperate with and not oppose or object to Landlord's construction, development, subdivision and parcellation of any property adjacent to the Premises, providing the afore described acts do not interfere with Tenant's reasonable use of the Premises. 2.5 Existing Equipment. Landlord hereby grants Tenant the right to use any and all existing furniture and equipment ("Existing Equipment"), if any, used by the prior tenant, exempting in the definition of "prior tenant" the Tenant executing this Lease, of the Premises and located within the Premises on the Commencement Date that are owned by the Landlord. Tenant acknowledges that it shall accept the Existing Equipment in its "AS IS" condition, without representation or warranty by Landlord. Said right shall be coterminous with this Lease and upon such termination, the Existing Equipment shall be deemed to constitute part of the Premises and surrendered by Tenant to Landlord in good condition and repair, ordinary wear and tear and damage from casualty excepted. Landlord agrees and acknowledges that certain equipment and improvements, including without limitation, sound and lighting equipment, seats, costumes, props, office furniture, computers and printers, appliances, theatre rigging, scenic furniture and supplies, and tools and hardware ("Tenants Property") currently located in or on the premises is exclusively owned by Tenant and will be removed when the Tenant vacates the premises. - 5 - July 27, 2021 Item #6 Page 14 of 57 2.6 Tenant's Intellectual Property. Tenant's intellectual property, including without limitation, the names, Logos and other customary intellectual property to "New Village Arts" and to "The Foundry"; educational materials development by Tenant, plays, music, choreography, all other intellectual property related to the preforming arts are the sole and exclusive property of the Tenant and the subtenants of the Foundry's right, title and ownership of their respective visual and creative expression are the sole and exclusive property of each respective subtenant of the Foundry. ARTICLE 3 TERM 3.1 Term. The Term of this Lease ("Term") shall commence on the Commencement Date and shall expire, unless sooner terminated in accordance with this Lease, on the Expiration Date. After the Commencement Date, upon Landlord's request, Tenant shall promptly execute a Memorandum of Term Commencement in the form attached hereto as Exhibit B, which shall specify the Commencement Date and the Expiration Date. If Tenant fails to execute a Memorandum of Term Commencement, such failure shall not affect Tenant's obligation to commence paying rent upon the occurrence of the Commencement Date. The Term of the Subsequent Agreement dated April 9, 2019 shall expire upon the Commencement Date of this Lease. 3.2 Extension Option(s). Tenant shall have two (2) options to request an extension of the Term for a period of five (5) years each (each an "Extension Term"), commencing upon the expiration of the Term or prior Extension Term, as applicable. Each option shall be exercisable only if Tenant is not in default or breach of any term, condition, covenant or provision of this Lease beyond any applicable notice and cure period. In order to exercise this option, Tenant must give written notice of its request to extend the term to the City Manager, or his/her designee, no later than one hundred and eighty (180) days prior to the commencement of the applicable Extension Term, but not more than two hundred seventy (270) days prior to the commencement of the applicable Extension Term (the "Extension Request)". If Tenant is not in default or breach of any term, condition or covenant of this Lease, the City Manager is authorized to confirm the Extension Term. The City Manager or his/her designee will notify the Tenant not later than sixty (60) days after receipt of such Extension Request whether such request will be granted. The City Manager, at its sole discretion, may approve or deny the extension of the Term of this Lease. In the event the City Manager is unable to consider the Extension Request in sufficient time as to provide Tenant with notice at least thirty (30) days prior to the Expiration Date, then the Term shall be automatically extended for a period not to exceed thirty (30) days, to allow additional time for notification of such approval or denial. 3.3 Surrender of Premises. On the Expiration Date or on the sooner termination hereof, within a reasonable time, Tenant shall remove all of Tenant's Property from the Premises and peaceably surrender the Premises in accordance with the terms of this Section - 6 - July 27, 2021 Item #6 Page 15 of 57 and in good order, condition and repair, broom clean and free of debris, excepting only ordinary wear and tear, condemnation and any damage or destruction not caused by Tenant or any or any officer, employee, agent or invitee of Tenant. "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, Tenant shall not remove (unless requested to by Landlord, in which case Tenant shall remove) all or any part of the Tenant Improvements, or any fixtures or equipment which cannot be removed without material damage to the Premises except as to Tenant's Property disclosed in section 2.1 supra. Unless otherwise elected by Landlord, 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 Landlord. Tenant shall repair, to the reasonable satisfaction of Landlord, any damage to the Premises caused by any removal, or by the use of the Premises or by any failure of Tenant to comply with the terms of this Lease (including, without limitation, provisions relating to Hazardous Substances). Notwithstanding the foregoing, Landlord acknowledges and agrees that Tenant shall only be obligated to return the property is the same or similar condition as when Tenant took possession of the Premises, exception normal wear and tear. Tenant shall promptly surrender all keys for the Premises to Landlord at the place then fixed for notices to Landlord and shall inform Landlord 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. Tenant has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. The failure of Tenant 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 Landlord the increased Base Rent, Tenant shall defend, indemnify, protect and hold Landlord harmless from and against all claims, liability, damages, costs and expenses, including attorneys' fees and costs of defending the same, incurred by Landlord and arising directly or indirectly from Tenant's holding over in the Premises without Landlord's express written consent, including (a) any rent payable by or any loss, cost or damages, including lost profits and loss of good will claimed by any prospective tenant of the Premises, and (b) Landlord's damages as a result of such prospective tenant's rescinding or refusing to enter into the prospective lease of the Premises as a direct or indirect result of Tenant's holding over. No action by Landlord other than Landlord's express written consent shall be construed as consent by Landlord to any holding over by Tenant. 3.5 Waiver of Relocation Benefits: Tenant 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 Landlord's delivery of a Disapproval Notice). -.7- July 27, 2021 Item #6 Page 16 of 57 ARTICLE 4 CONSTRUCTION OF TENANT IMPROVEMENT PROJECT 4.1 Construction: Construction of Tenant's Improvement Project (defined below) shall be as described in Exhibit C, which is attached and incorporated herein, and as more particularly described in the Final Plans for such work, which must be preapproved in writing by the Landlord. Tenant's Improvement Project is defined as consisting of Exterior Improvements, Interior Improvements, and installation of Solar Panels on the Premises, the combined total cost of which is estimated will exceed $2 million. Tenant shall be solely responsible for the construction of the Tenant Improvement Project and payment of the costs thereof, provided Tenant and Landlord agree to negotiate in good faith to reach agreement on a Construction and Reimbursement Agreement that will outline timelines for construction performance measures and construction milestones required for Tenant to receive partial reimbursement (the "Construction and Reimbursement Agreement"), in accordance with Article 11 below. Tenant's construction of the Tenant's Improvement Project shall commence promptly upon receipt of all necessary permits required for commencement (collectively, the "Building Permits"), and Tenant shall diligently prosecute completion of Tenant's Improvement Project in accordance with ARTICLE 12 below, and in accordance with the terms of the Construction and Reimbursement Agreement. ARTICLE 5 RENT 5.1 General Provisions. Unless provided herein to the contrary, Tenant shall pay all rent to Landlord at Landlord's Address for Rent Payments provided in Article 1 above. All rent shall be paid to Landlord 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 year shall not be prorated. Tenant assumes all risk of loss if payments are made by mail. 5.2 Payment of Rent. For each year or partial year of the Term commencing on the Commencement Date (except as otherwise expressly provided herein), Tenant shall pay to Landlord the sum specified in Article 1 as Rent ("Rent") in advance as set forth herein. Tenant shall pay the first installment of Rent to Landlord concurrently with Tenant'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 year. 5.3 Tenant Performance Standards (Program Reports). As additional consideration for the lease of the Premises, Tenant agrees to timely satisfy the Tenant Performance Standards as more particularly described in attached Exhibit D attached hereto and by this reference made a part of this Lease. Failure by Tenant to perform the Performance Standards as scheduled shall be deemed a default under this Lease. Tenant shall be required to provide Landlord with a written annual theater and operations report regarding all phases of Tenant's use and occupation of the Premises, which shall indicate whether Tenant is satisfying all - 8 - July 27, 2021 Item #6 Page 17 of 57 conditions contained in the Tenant Performance Standards. Tenant shall submit said report to Landlord within forty-five (45) days after June 30th of each year ARTICLE 6 SECURITY DEPOSIT 6.1 Security Deposit. Landlord is currently holding a security deposit from Tenant ("Security Deposit") in the amount of $2,000, as provided in Section 1.7. Landlord shall continue to hold the Security Deposit as security for Tenant's faithful performance of all the terms, covenants, and conditions of this Lease. Landlord shall not be required to keep the Security Deposit separate from Landlord's general funds. Landlord shall have the right to commingle the Security Deposit with Landlord's general funds and to retain any and all interest and earnings on the Security Deposit. Tenant shall not be entitled to any interest on the Security Deposit. Subject to Landlord's right hereunder to apply the Security Deposit in accordance with this Section, the parties acknowledge that the Security Deposit does not cover any rent due hereunder, except as set forth in section 6.2 below. In the event of a sale of the Premises or assignment of this Lease by Landlord to any person other than a mortgagee, Landlord shall have the right to transfer the Security Deposit to its vendee or assignee, subject to Tenant's aforesaid rights upon termination, and if Landlord transfers the Security Deposit to the vendee or assignee for the benefit of Tenant, or if such vendee or assignee assumes all liability with respect to such Security Deposit, Landlord shall be considered released by Tenant from all liability for the return of such Security Deposit, and Tenant agrees to look solely to the new landlord for the return of the Security Deposit, and it is agreed that this Section 6.1 shall apply to every transfer or assignment to a new Landlord. The new Landlord shall in writing acknowledge receipt of the Security Deposit and covenant and agree to be bound by this Lease including without limitation the return of the Security Deposits 6.2 Use of Security Deposit. If Tenant breaches or fails to perform any of Tenant's obligations under this Lease, Landlord shall have the right, but not the obligation, to use or retain all or any part of the Security Deposit to cure the breach or failure of performance, and to compensate Landlord for any damages sustained by Landlord, including but not limited to payment of: (i) delinquent rent; (ii) interest on delinquent rent; (iii) late charges on delinquent rent; (iv) the cost of performing any of Tenant's obligations under this Lease; (v) the cost of repairing damages to the Premises; (vi) the cost of cleaning, maintaining, repairing, or restoring ; (vii) attorneys' and accountants' fees and disbursements and court costs, assuming Landlord is the prevailing party in any legal action to enforce this Lease; and (ix) interest on any and all of the above at the maximum lawful rate ("Remedy Rate") from the date due until paid; provided, however, that retention of all or any part of the Security Deposit shall not affect Tenant's obligations under this Lease or Landlord's other rights and remedies provided at law, in equity, or under this Lease; and provided, further, that in the event that Landlord elects to apply the Security Deposit or any portion thereof as herein provided, such application and the amounts applied to particular items of cure and/or compensation shall be determined by Landlord in Landlord's reasonable discretion. If any portion of the Security Deposit is used as provided for in this Section, then within thirty (30) days after written demand by Landlord, Tenant shall - 9 - July 27, 2021 Item #6 Page 18 of 57 deposit with Landlord sufficient cash to restore the Security Deposit to its original amount. Tenant's failure to make this deposit shall be a default under this Lease. Notwithstanding the foregoing, prior to Landlord electing to apply the Security Deposit or any portion thereof, Landlord must provide a written statement specifically identifying the breach of this Lease, the remedy Landlord believes will correct the breach and the anticipated cost thirty (30) days prior to expending the Security Deposit, or any portion thereof ("Correction Demand"). If Tenant does not agree with the Correction Demand, Tenant must provide a written dispute statement ("Dispute Statement"). The Parties shall negotiate a resolution of the Dispute in good faith for thirty (30) days. If a mutually agreement is not reached within the thirty (30) day negotiation period, then either or both Parties have available to them all remedies available under this Lease and the law. 6.3 Refund; Waiver of Statutes. If Tenant shall have fully and faithfully performed all of Tenant's obligations under this Lease (or upon the earlier termination without Tenant's fault), has cleaned and repaired any damage caused by Tenant, and has received invoices for such repair or cleaning costs, if any, and after Landlord has inspected the Premises, then Landlord shall return the Security Deposit or any balance thereof to Tenant. Notwithstanding anything to the contrary contained herein, the Security Deposit may be retained and applied by Landlord (a) to offset rent which is unpaid either before or after the termination of this Lease, and (b) subject to the provisions of Section 6.2 of this Lease, against other damages suffered by Landlord before or after the termination of this Lease, whether foreseeable or unforeseeable, caused by the act or omission of Tenant or any officer, employee, agent or invitee of Tenant. ARTICLE 7 TAXES 7.1 Real Estate Taxes. Tenant 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 Landlord's gross receipts or revenues from the Premises, or to the business or other activities of Tenant upon or in connection with the Premises (individually and collectively, "Real Estate Taxes"). In particular, Tenant acknowledges that this Lease may result in a taxable possessory interest. Tenant shall be solely responsible for the payment of Real Estate Taxes associated with its occupancy of the Premises, if any apply. Tenant shall also pay any fees imposed by law for licenses or permits for any business or activities of Tenant upon the Premises or under this Lease. 7.2 Personal Property Taxes. Tenant shall pay directly prior to delinquency any and all taxes and assessments levied or assessed during the Term upon or against (i) Tenant'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, - 10 - July 27, 2021 Item #6 Page 19 of 57 betterments, or improvements of whatever kind or nature made by Tenant to the Premises that are separately assessed. ARTICLE 8 UTILITIES 8.1 Payment of Utilities. Tenant shall pay, before delinquency, for all utilities and services serving the Premises, including (without limitation) trash collection, water, gas and electricity, and any and all utility hook-up fees, connection fees, including sewer connection fees, and service and other charges for the availability of any such utilities and services, supplied to or consumed in or upon the Premises from and after the Term Commencement Date and continuously thereafter throughout the Term, directly to the supplier of such utilities and services. Upon Landlord's request, Tenant shall deliver to Landlord copies of all bills for utilities supplied to the Premises for the past twelve (12) month period within Sixty (60) days after Landlord's request. 8.2 Interruption of Utilities. Landlord shall have the right (but not the obligation), with reasonable prior notice to Tenant, or without notice in the case of an emergency, to shut off water, gas, electricity and any all other utilities and services whenever such discontinuance is necessary to make repairs or alterations or to protect the Premises. In no event shall Landlord be liable for the quality, quantity, failure or interruption of any such utilities or services to the Premises, unless due to the negligence of Landlord or caused by Landlord's construction in, on or around adjacent properties. In addition, any such failure, interruption or impairment shall not be construed as an eviction of Tenant or a disturbance of Tenant's possession, and Tenant shall not be entitled to any abatement of rent, unless due to the negligence of Landlord or caused by Landlord's construction in, on or around adjacent properties. ARTICLE 9 INSURANCE 9.1 General. Tenant shall, at its 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 Tenant 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 Landlord) and underwritten by companies acceptable to Landlord. On or before the Term Commencement Date, Tenant shall furnish Landlord with certificates and endorsements in a form acceptable to Landlord evidencing that (i) the policies (or a binder thereof) required pursuant to this Article are in effect and (ii) Landlord shall be notified in writing thirty (30) days prior to cancellation, material change, or nonrenewal of such insurance (or if Tenant's insurance carrier will not agree to provide notice of cancellation, material change, or nonrenewal to any additional insured or other entity, then Tenant shall deliver such notice to Landlord thirty (30) days prior to any cancellation, material change, or nonrenewal initiated by Tenant, or twenty (20) days July 27, 2021 Item #6 Page 20 of 57 after receipt of notification such cancellation, material change or nonrenewal not initiated by Tenant). The policies that Tenant is required to obtain pursuant to this Article shall name Landlord, and any other parties requested by Landlord in accordance with commercially reasonable practices, as additional insureds, or as loss payee (as applicable) for property in which Landlord has an insurable interest and shall be primary policies, and shall not be contributing with and shall be in excess of coverage which Landlord may have and shall be unaffected by any insurance or self-insurance Landlord may have regardless of whether any other insurance names Landlord as an insured or whether such insurance stands primary or secondary. If Tenant 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 Tenant's liability hereunder in any way, nor to fulfill the indemnification provisions and requirements of this Lease. Tenant agrees not to use the Premises in any manner, other than the Permitted Use generally, that will result in the cancellation of any insurance Landlord 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. Tenant 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. Tenant 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. 9.2 Commercial General Liability Insurance. Tenant 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, and 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 and under the same conditions as Tenant's general liability insurance, if the sale of alcoholic beverages is permitted in the Premises. 9.3 Property and Extended Coverage Insurance. Tenant shall obtain and keep in force a Causes of Loss - Special Form property insurance policy (formerly known as "all risks"), including vandalism, malicious mischief, earthquake and sprinkler leakage coverage, covering one hundred percent (100%) of the replacement cost of the Premises, all Tenant's Property and any and all Tenant Improvements made in or upon the Premises, with an inflation rider or endorsement attached thereto and twelve (12) months' business income (business interruption) insurance rider or endorsement attached thereto. Tenant shall keep in force a policy of plate glass insurance covering all plate glass in the Premises in an amount equal to the full replacement cost thereof. The deductibles on such policies shall not exceed $10,000.00 per occurrence. The proceeds from any such insurance shall be used by Tenant for the - 12 - July 27, 2021 Item #6 Page 21 of 57 replacement of the Premises, personal property and trade fixtures as well as alterations and utility installations. 9.4 Business Interruption. Tenant shall obtain and keep in force loss of income and extra expense insurance in amounts as will reimburse Tenant for at least twelve (12) months' direct and indirect loss of earnings attributable to all perils commonly insured against by prudent tenants in the business of Tenant or attributable to prevention of access to the Premises as a result of such perils. 9.5 Workers' Compensation Insurance. Tenant shall obtain and keep in force workers' compensation and employer's liability insurance covering all employees of Tenant 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. 9.6 Waiver of Subrogation. Notwithstanding anything to the contrary contained herein, Landlord and Tenant hereby waive any rights each may have against the other on account of any loss or damage occasioned to Landlord or Tenant, 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 Landlord or Tenant against any such loss, waive any right of subrogation that it may have against Landlord or Tenant, 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 Landlord's or Tenant's policy of insurance. 9.7 Coverage Changes. Notwithstanding any of the foregoing, Landlord 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, and within the commercially standard, opinion of Landlord, the insurance provisions in this Lease do not provide adequate protection for Landlord and/or for members of the public using the Premises, Landlord may require Tenant to obtain insurance sufficient in coverage, form and amount to provide adequate protection. Landlord'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 requested. Thirty (30) days prior to the effective date of any requested changes to insurance coverage, Landlord shall notify Tenant in writing of the requested changes in the insurance requirements, with the factual and legal findings upon which such changes are requested. After receipt of Landlord's request for insurance coverage changes, the Tenant shall have thirty (30) days to object to such additional coverage or agree to obtain said coverage. If Tenant objects to said coverage, then the Landlord and the Tenant agree to meet and negotiate in good faith to resolve the differences. Within thirty (30) days after a written agreement between the Parties regarding the insurance coverages to be obtained, Tenant shall deposit certificates/endorsements evidencing acceptable insurance policies with Landlord. -13 - July 27, 2021 Item #6 Page 22 of 57 ARTICLE 10 USE OF PREMISES 10.1 Permitted Use and Continuous Operation. Tenant shall actively and continuously use, operate and occupy the Premises solely for the Permitted Use, and shall be open to the public during Tenant's Business Hours. No other use shall be permitted without the prior express written consent of Landlord. Tenant shall identify itself to the public in connection with such business under the Trade Name specified in Article 1 above and under no other name without Landlord's prior express written consent, which shall not be unreasonably withheld. Notwithstanding anything to the contrary contained in this Lease, with prior written notice to Landlord (except in emergency situations, when notice shall be given as soon as reasonably possible), the Premises may be closed to the extent reasonably necessary due to Force Majeure or required maintenance. 10.2 Conduct of Business. Tenant shall conduct its business at all times in a professional and businesslike manner consistent •with reputable business standards and practices applicable to a California public nonprofit corporation operating as a 501C3 exempt organization. If there is a conflict between any provision of this Lease or Landlord's ordinances, as amended from time to time, and Local, State or Federal Statutes and Regulations ("Statutes") as they pertain to the operation of a Public Non-Profit 501(c)(3) organization, as amended from time to time, related to the operation of such entity, then the Statutes shall control. 10.3 Compliance with Laws; Nuisance. Tenant shall, at its sole expense and at all times, comply fully with (i) all federal, state and local laws except as otherwise provided in section 9.2 supra, including without limitation all applicable health orders, zoning and land use laws and ordinances, conditional use permit rules and orders and the Liquor Licenses, now in force or which may hereafter apply to the Premises or which impose any duty on Landlord or Tenant relating to the use or occupancy of the Premises (including but not limited to the obligation (a) to alter, maintain, repair or restore any portion of the Premises to the extent required as a result of Tenant's use of the Premises, or (b) to alter, maintain, repair or restore the portion of the Premises which Tenant 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) any commercially reasonably rules and regulations prescribed by Landlord for the Premises ("Tenant Performance Standards"); 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. Tenant 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. Tenant 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. Tenant shall not commit, or suffer to be committed, any waste upon the - 14 - July 27, 2021 Item #6 Page 23 of 57 Premises, or any public or private nuisance, or any other act or thing which may disturb the quiet enjoyment of neighbors of the Premises. Tenant shall not conduct or permit to be conducted any sale by auction in, upon or on the Premises, unless related to Tenant's Permitted Use. 10.4 Environmental Compliance. Tenant represents, warrants and covenants to Landlord that: (a) Tenant and its agents, employees, contractors, affiliates, sublessees and invitees (collectively, "Tenant 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 Tenant 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 Tenant's sole expense, take all investigatory and/or remedial action reasonably recommended by Tenant's investigation, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises and neighboring properties, that was caused or materially contributed to by any Tenant Party, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or for any Tenant Party. Tenant has no obligation to investigate unless Tenant has knowledge that an environmental compliance requirement has been violated by Tenant Parties. Tenant shall assume sole and full responsibility and cost to remedy any such violations by any Tenant Parties and shall protect, indemnify, defend and hold harmless Landlord 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, 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. Upon expiration or earlier termination of this Lease, Tenant shall cause any Hazardous Substance arising out of or related to the use or occupancy of the Premises by any Tenant 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. Tenant has no obligation hereunder for any breach of the environmental compliance created or caused by the Landlord, prior owners or prior tenants, and/or by the agents, employees, contractors, affiliates, sublessees and invitees of said owners, occupants, or users of the Premises. Landlord shall be solely responsible for the breach of the environmental compliance requirements which occurred prior to the term of the Lease. 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 Landlord to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be -15 - July 27, 2021 Item #6 Page 24 of 57 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. 10.5 Landlord's Right of Entry. Landlord, at reasonable times, may go into the Premises without any liability for the purposes of: (i) inspecting the Premises; (ii) inspecting the performance by Tenant of the terms and conditions hereof; (iii) showing the Premises to prospective tenants, purchasers, partners, or mortgagees; and (iv) posting notices for the protection of Landlord on the Premises. Except in the case of an emergency, Landlord shall give Tenant reasonable written notice of at least 72 hours of any and all intended entries or inspections pursuant to this Section. 10.6 Prohibition Against Discrimination. Tenant 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 Tenant to offer accommodations or services to the public, such accommodations or services shall be offered by Tenant to the public on fair and reasonable terms. ARTICLE 11 MAINTENANCE AND REPAIR OF PREMISES 11.1 Tenant's Inspection. Tenant accepts the Premises in its "AS IS" condition as further provided in Section 2.2 above, except as to the conditions previously disclosed by Tenant to Landlord and Tenant expressly waives all implied warranties including implied warranties of merchantability and fitness, if any. Tenant 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 Tenant to make repairs at the expense of Landlord. Tenant represents and warrants that it is familiar with the condition of the Premises, except for any hidden and not visible conditions, including conditions set forth in Article 9. Tenant 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. Landlord shall have no responsibility or liability with respect to any such occurrence. 11.2 Tenant's Obligations. Except for Landlord's obligations as set forth in Section 11.3 below, from and after the Term Commencement Date and continuously thereafter until the expiration or termination of this Lease, Tenant, at Tenant's sole expense, shall maintain the Premises for the Permitted Use in a neat, clean and sanitary condition and repair, and make any necessary repairs and replacements to any portion of the Premises, including full responsibility for: (a) maintenance, repair and replacement of the interior and exterior of the building (except as provided in Section 10.3; however including, without limitation, (i) any structural portions of the Premises to the extent affected by Tenant's Tenant Improvements, and (ii) any painting, plumbing, fixtures, windows and glass, custodial, flooring and appliances throughout the Term - 16 - July 27, 2021 Item #6 Page 25 of 57 to maintain and preserve the Premises for the intended Use in a good, safe, healthy and sanitary condition satisfactory to Landlord and in compliance with all applicable laws; and (b) keeping the Premises free and clear of trash, garbage and other fire hazards. The maintenance, repair and replacement obligations set forth in this paragraph are a material part of the consideration for this Lease. 11.3 Landlord's Obligations. From and after the Term Commencement Date and continuously thereafter until the expiration or termination of this Lease, Landlord, at Landlord's sole expense, shall keep in good order, condition and repair the foundations, exterior walls, roof mounted HVAC System, and roof of the Premises, except for (a) any damage thereto caused by any negligent act or omission of Tenant or its agents, contractors, subcontractors, employees or invitees, (b) any such portions of the Premises to the extent affected by any Tenant Improvements, and (c) any damage or destruction covered by insurance required to be maintained by Tenant. All repairs to be performed by Landlord shall be commenced and completed as soon as reasonably necessary after written notice from Tenant to Landlord. In cases of emergency, Tenant shall endeavor to give as much notice to Landlord as is reasonable under the circumstances. 11.4 Landlord's Cure. Landlord 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 Landlord determines that the Premises are not in the condition required by this Lease and the condition is the responsibility of the Tenant hereunder, then Tenant shall perform the necessary maintenance, repair and/or replacement work within ten (10) days or a commercially reasonable time related to the specific condition after written notice from Landlord. If Tenant fails to timely perform the necessary maintenance, repair and/or replacement work after written notice from Landlord, then Landlord may, but is not obligated to, perform such obligations without liability to Tenant for any loss to Tenant's business that might arise by reason thereof. Tenant shall reimburse Landlord on demand in an amount equal to the cost incurred by Landlord in the performance of such obligations plus an administrative fee equal to ten percent (10%) of the cost incurred by Landlord. Landlord's rights reserved in this section shall not create any obligations or increase any obligations for Landlord elsewhere in this Lease. 11.5 Tenant's Cure. If at any time Tenant determines that the Premises are not in the condition required by this Lease and the condition is the responsibility of the Landlord hereunder, then the Landlord shall perform the necessary maintenance, repair and/or replacement work with ten (10) days or a commercially reasonable time related to the specific condition after written notice from the Tenant. If the Landlord fails to timely perform the necessary maintenance, repair and/or replacement work after written notice from Tenant, then Tenant may, but is not obligated to perform such obligations and compensate Tenant for any loss of business that might arise by reason thereof. Landlord shall reimburse Tenant on demand in an amount equal to the cost incurred by Tenant in the performance of such obligations. - 17 - July 27, 2021 Item #6 Page 26 of 57 ARTICLE 12 ALTERATIONS AND ADDITIONS 12.1 Tenant shall complete the Tenant Improvement Project, described in ARTICLE 4, and Landlord will reimburse Tenant up to $103,000 for installation of Solar Panels on the Premises and up to $470,000 for Exterior Improvements of the Premises, in accordance with the terms and conditions the Construction and Reimbursement Agreement, which shall be negotiated and executed by the Parties subsequent to execution of this Lease. The Parties will negotiate in good faith to agree upon the terms for the Construction and Reimbursement Agreement, which may be executed by the City Manager on behalf of the Landlord. The City shall have no obligation to provide reimbursement of the Tenant Improvement Project, except as provided by the Construction and Reimbursement Agreement. 12.2 Tenant Improvements. Tenant shall not commence or make (i) any alterations, emergency repairs or replacements, 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 or (ii) any change or alteration to the exterior of the Premises (collectively "Tenant Improvements") without Landlord's prior written consent, which shall not be unreasonably withheld, conditioned or delayed, except improvements related to the Use of the Premises, including without limitation, theater productions, visual arts space or shows, and related requirements for a performing, visual arts and education use. If Tenant makes any Tenant Improvements without the prior written approval of Landlord except as set forth in this subsection, Landlord shall have the right to require that Tenant remove any or all of such Tenant Improvements, and repair and restore any damage to the Premises caused by such removal at Tenant's sole expense, and shall also have the right to declare Tenant in default and to terminate this Lease. Any and all Tenant 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 Tenant shall, at Tenant's sole cost and expense, take all actions now or hereafter necessary to ensure such compliance. Tenant shall provide Landlord with a written request for approval of any Tenant Improvements, including the Tenant Improvement Project, that Tenant would like to make with proposed detailed plans, if applicable in light of proposed work. Landlord shall have the right to condition Landlord's prior written consent upon Tenant's: (i) obtaining a building permit (if necessary) and complying with all building and planning laws and regulations for the Tenant Improvements from appropriate governmental agencies; (ii) furnishing a copy of such building permit and evidence of such compliance to Landlord prior to the commencement of such work; (iii) complying with all the conditions of such building permit and such building and planning laws and regulations; (iv) providing Landlord with plans and specifications for any Tenant Improvements (if reasonable in light of the nature of the proposed work) for Landlord's prior written approval; (v) providing Landlord with a copy of the construction contract, construction schedule, trade payment breakdown and list of subcontractors and suppliers for Landlord's -18 - July 27, 2021 Item #6 Page 27 of 57 prior written approval, except Landlord acknowledges, understands and agrees that such work may be performed by volunteers of the nonprofit so long as Tenant complies with the Prevailing Wage Laws in Section 11.5; (vi) obtaining a builder's "all risk" insurance policy, if applicable, in an amount and issued by insurance company acceptable to Landlord, naming Landlord as an additional insured and otherwise satisfying the requirements of ARTICLE 9 above; and/or (vii) providing Landlord with at least ten (10) days written notice prior to commencing any such work, unless it is an emergency. In its capacity as a landlord (and not as the approving agency), Landlord's approval of the plans, specifications and working drawings for any Tenant Improvements shall create no responsibility or liability on the part of Landlord for their completeness, design sufficiency, or compliance with all laws, rules and regulations of governmental agencies or authorities. Landlord shall not be liable for any damage, loss, or prejudice suffered or claimed by Tenant, its agents or any other person or entity on account of: (a) the approval or disapproval of any plans, contracts, bonds, contractors, sureties or matters by Landlord in its capacity as a landlord (and not as the approving agency); (b) the construction or performance of any work whether or not pursuant to approved plans; (c) the improvement of any portion of the Premises or alteration or modification to any portion of the Premises, except as stated in this subsection; or (d) the enforcement or failure to enforce any of the covenants, conditions and restrictions contained in this Lease. Under no circumstances shall Tenant make any roof penetrations without the prior written consent of Landlord. Any consent of Landlord shall be conditioned upon Landlord's review and approval of plans satisfactory to Landlord for the repair of the roof. Any roof penetrations may be inspected by Landlord's roofing contractor, and Tenant shall reimburse Landlord for the cost of such inspection and any necessary repair work within ten (10) days after Tenant's receipt of an invoice therefor. 12.3 Construction of Tenant Improvements; Liens. Tenant shall pay when due all claims for labor or materials furnished or alleged to have been furnished to or for Tenant at, on, or for use in the Premises, and shall defend, indemnify, protect and hold harmless the Premises and Landlord against the same (including, without limitation, the costs of defending against such claims, and reasonable attorney's fees incurred therein). Tenant shall keep the Premises and any interest therein, free and clear of all mechanics' liens and all other liens. Tenant shall give Landlord immediate written notice of any lien filed against the Premises or any interest therein related to or arising from work performed by or for Tenant. Tenant shall give Landlord not less than ten (10) days' prior written notice of the commencement of any Tenant Improvements in the Premises, except as set forth in this Article, and Landlord 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 Tenant's leasehold interest, then upon Landlord's request, Tenant shall furnish to Landlord a corporate surety bond, satisfactory to Landlord, in an amount equal to one and one-half (11/2) times the amount of the claims upon which such lien or levy has been filed. Such bond shall be acknowledged by Tenant 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. Landlord shall have the right to declare this Lease in default in the event the bond required by this paragraph has not been deposited with Landlord within thirty (30) days after written request has been delivered to Tenant. - 19 - July 27, 2021 Item #6 Page 28 of 57 12.4 Title to Tenant Improvements. Subject to Section 13.1 below and to the exceptions contained in this Lease, upon the expiration or earlier termination of this Lease, any and all Tenant Improvements, including the Tenant Improvement Project, which may be made in or upon the Premises shall become the property of Landlord and remain upon and be surrendered with the Premises at the expiration of the Term without compensation to Tenant unless Landlord requires that Tenant remove any Tenant Improvements pursuant to ARTICLE 14 below. 12.5 Signs. Tenant shall be responsible for purchasing, installing and maintaining, at Tenant's sole cost, any new exterior signage in accordance with the signage regulations set forth by the City of Carlsbad and any other sign criteria provided by Landlord (collectively, "Sign Criteria") and which has received Landlord's prior written consent. In accordance with the Sign Criteria, Tenant shall maintain such signage in good condition and repair during the entire Term of this Lease. Tenant shall repair, at its sole cost and expense, any damage to the Premises caused by the erection, maintenance or removal of any sign, marquee, banner, awning, decoration or other attachment. 12.6 Compliance with Prevailing Wage Laws. Tenant acknowledges and agrees that: (a) any construction, alteration, demolition, installation or repair work performed under this Lease constitutes "public work" under California Prevailing Wage Law, including Labor Code sections 1720 through 1815, et seq. (the "PWL"), and will obligate Tenant to 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; (b) Tenant shall cause all persons and/ or entities performing "public work" under this Lease to comply with all applicable provisions of the PW; (c) in no event shall Landlord be responsible for Tenant's failure to comply with any applicable provisions of the PWL. ; (d) Tenant's violations of the PWL shall constitute an event of default under this Lease, and (e) Tenant shall defend and indemnify Landlord 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, and 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, including but not limited to Tenant, performing construction, alteration, demolition, installation, repair and/ or any other type of work contemplated under this Lease. Notwithstanding the foregoing, the Landlord acknowledges, understands and agrees that some work is performed by volunteers or employees of Tenant, therefore, this section does not apply to those entities or persons. ARTICLE 13 TENANT'S PROPERTY 13.1 Tenant's Property. All trade fixtures, goods, inventory, merchandise, stock, supplies, decorative light fixtures, and movable equipment owned by Tenant and installed in the Premises at Tenant's sole cost and which may be removed without material damage to the - 20 - July 27, 2021 Item #6 Page 29 of 57 Premises ("Tenant's Property") shall remain the property of Tenant during the Term. Except as provided to the contrary in Section 12.4 above, Tenant's Property shall be removable from time to time and at the expiration of the Term or earlier termination thereof, provided that: (i) Tenant shall not at such time be in default, or with notice or the passage of time or both would be in default, under any term, covenant, condition or provision of this Lease; (ii) Tenant shall repair to the satisfaction of Landlord, any damage to the Premises caused by the removal of Tenant's Property; 13.2 Landlord's Lien. Subject to the rights of Tenant, if any, under Section 9102(4) of the California Uniform Commercial Code, as amended or recodified from time to time, Tenant hereby grants to Landlord a security interest in and lien upon Tenant's Property and the proceeds thereof as security for Tenant's performance of all the terms, covenants, conditions, provisions and obligations under this Lease. Upon Landlord's request, Tenant shall execute a security agreement, UCC-1 financing statement, continuation statement and such other documents as Landlord may reasonably require to evidence, create, protect, perfect and preserve the validity and priority of Landlord's lien upon and security interest in Tenant's Property. ARTICLE 14 DAMAGE AND DESTRUCTION 14.1 Repairs by Tenant. If the Premises are totally or partially damaged or destroyed, Tenant shall, within ninety (90) days, commence and diligently pursue to completion the repair, replacement or reconstruction of the Premises, and of all Tenant's Property and Tenant 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 Landlord; provided, however, Tenant 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 Tenant pursuant to this Lease (or would be covered whether or not such required insurance is actually in effect), and except if Tenant is required to indemnify Landlord for such destruction pursuant to ARTICLE 16. If Tenant 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 Tenant'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. Tenant hereby waives California Civil Code Sections 1932 and 1933, as amended or recodified from time to time. 14.2 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 Tenant may elect to terminate this Lease provided that: (i) Tenant provides written notice to Landlord of such election to terminate within sixty (60) days after occurrence of the destruction; (ii) at the time of delivery of the termination notice Tenant is not in default under this Lease beyond any applicable notice and cure period; (iii) Tenant did not intentionally cause - 21 - July 27, 2021 Item #6 Page 30 of 57 such destruction; (iv) all insurance required of Tenant under this Lease was in effect as of the date the destruction occurred and Tenant assigns to Landlord all claims rights and proceeds relating to the applicable destruction. ARTICLE 15 EMINENT DOMAIN 15.1 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 Tenant's business, this Lease shall terminate on the date that Tenant 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. 15.2 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 Tenant'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) Landlord 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 and Landlord shall provide either (i) alternative space reasonably suitable for the use or pay to Tenant the loss income related to the loss of use. Notwithstanding the foregoing, Landlord, at its sole option, may elect to terminate this Lease by delivering written notice to Tenant within thirty (30) days after any such partial taking but before any modifications by reason of the partial taking to the Premises with the effective date for the termination of this Lease and relinquishment of occupancy to occur not less than ninety (90) days after delivery of the thirty (30) day notice, in lieu of restoring the Premises to useful condition as provided above, unless Tenant agrees to perform all such restoration work at Tenant's sole cost 15.3 Award. Tenant hereby renounces any interest in, and assigns to Landlord, any award made in any condemnation proceeding for any such taking, provided that Landlord shall have no interest in or be assigned any award made to Tenant for the taking of Tenant's Property, for Tenant's relocation expenses, loss of revenue costs or of existing contracts which obligate Tenants. ARTICLE 16 INDEMNIFICATION Tenant covenants and agrees to indemnify, protect, defend and hold harmless Landlord and its agents, employees, officers, affiliates and representatives (collectively, "Landlord 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 - 22 - July 27, 2021 Item #6 Page 31 of 57 expenses (including, without limitation, reasonable attorneys' fees) arising out of or resulting from (a) the negligent or willful acts or omissions of Tenant, its agents, contractors, subcontractors or employees, (b) any breach of any obligation, covenant, representation or warranty of Tenant under this Lease; or (c) the 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 willful misconduct of any Landlord Party. Tenant's obligations under this section shall survive the expiration or termination of this Lease. ARTICLE 17 DEFAULTS AND REMEDIES 17.1 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 Tenant: 17.1.1 Abandonment or Failure to Continuously Operate. Tenant's vacation or abandonment of the Premises or Tenant's failure to actively and continuously use, operate and occupy the Premises, except as otherwise provided in this Lease. 17.1.2 Failure to Make Payment. Tenant'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 Landlord, or Tenant'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). 17.1.3 Non-Permitted Use. Tenant's failure to comply with any provision of this Lease relating to the Permitted Use, where such failure continues for thirty (30) days after written notice of such failure from Landlord. 17.1.4 Failure to Perform Other Covenants. Tenant's failure to perform any of Tenant's other covenants, agreements or obligations hereunder, where such failure continues for thirty (30) days after written notice of such failure from Landlord (provided, however, if the nature of such default is such that the same cannot be reasonably cured within a thirty (30) day period, Tenant shall not be deemed to be in default if Tenant 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. If this subsection conflicts with any provision of this Lease, the other provision controls. 17.1.5 Bankruptcy. The making of a general assignment for the benefit of creditors by Tenant, or the filing of a voluntary or involuntary bankruptcy petition by or against Tenant, or the appointment of a receiver to take possession of all or substantially all of Tenant's assets or the Premises, or the attachment, execution or other judicial seizure of substantially all of Tenant's assets or the Premises, or in the event Tenant becomes insolvent or fails to generally pay Tenant's debts as such debts become due. - 23 - July 27, 2021 Item #6 Page 32 of 57 17.1.6 Transfer without Consent. The occurrence of any Transfer without Landlord's express prior written consent. 17.2 Remedies. Upon the occurrence of an event of default by Tenant as set forth in Section 17.1 above, Landlord shall have the following rights and remedies, in addition to any and all other rights and remedies available to Landlord at law or in equity, including without limit those provided under California Civil Code Sections 1951.2 and 1951.4, as amended or recodified from time to time: A.Terminate Lease. Landlord shall have the right to terminate this Lease and all rights of Tenant hereunder by giving sixty days (60) day written notice to Tenant. If this Lease is so terminated, then Landlord may recover from Tenant: (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 Tenant 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 Tenant proves could be reasonably avoided; plus (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant'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 Landlord 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. Landlord shall also have the right upon termination of this Lease to reenter the Premises and to remove all persons and Tenant's Property from the Premises and store the Tenant's Property in a public warehouse or elsewhere at the cost of and for the account of Tenant. C.Maintain Lease; Relet Premises; Tenant's Abandonment of Premises. This subsection shall apply if, and only if, Tenant abandons the Premises. Landlord shall have the remedy described in California Civil Code Section 1951.4 as amended from time to time (lessor may continue lease in effect after Tenant's breach and abandonment and recover rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations). Unless Landlord elects to terminate this Lease as provided in Section 17.2(A) above, Landlord 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 Landlord in its - 24 - July 27, 2021 Item #6 Page 33 of 57 sole discretion may deem advisable, with the right to clean and to make alterations and repairs to the Premises at Tenant's sole expense. If Landlord elects to relet as provided herein, then rent received by Landlord from such reletting shall be applied at Landlord's option: first, to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; second, to the payment of any cost of such reletting (including reasonable attorneys' fees, tenant improvements reasonable and customary to make the Premises ready to lease [including the removal of any specialized improvements installed by Tenant], 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 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 Tenant hereunder, then Tenant shall pay any such deficiency to Landlord immediately upon demand by Landlord. Such deficiency shall be calculated monthly and Tenant shall pay such deficiency monthly. Tenant shall also pay to Landlord, upon Landlord's demand, the costs and expenses incurred by Landlord in such reletting, including reasonable attorneys' fees, court costs, tenant improvements customary to make the Premises ready to lease (including the removal of any specialized improvements installed by Tenant) 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 Landlord or the appointment of a receiver upon initiative of Landlord to protect Landlord'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 Tenant 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 Landlord, Landlord may at any time after such reletting elect to terminate this Lease, in which case, Landlord shall have all the rights and remedies provided by law or equity or this Lease upon termination. D.Performance by Landlord. If Tenant breaches or fails to perform any of Tenant's obligations under this Lease and the breach or failure continues for thirty (30) days (or such shorter or longer time period as may be specified otherwise in this Lease) after Landlord gives Tenant written notice of the breach or failure, Landlord, 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 Tenant as provided in the Lease. Landlord also may, but shall not be obligated to, perform any such obligation for the account and at the expense of Tenant without notice in case of an emergency as provided in this Lease. E.Receiver on Behalf of Landlord. If, at the instance of Landlord in any legal 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 - 25 - July 27, 2021 Item #6 Page 34 of 57 necessary or convenient in order to collect such rents, conduct the business of Tenant then being carried on in the Premises, and may take possession of any Tenant's Property and other personal property and records used in Tenant's business and use the same in conducting such business, without compensation to Tenant for such use; however, nothing herein shall change the ownership of Tenants personal or intellectual property to the Receiver, the Landlord or any other entity or person. Tenant's personal or intellectual property shall remain in the ownership of Tenant. Neither application for, nor the appointment of a receiver shall be construed as an election by Landlord to terminate this Lease, unless express written notice of such election is given to Tenant. The fees and expenses of such receiver shall be charged to Tenant as Additional Rent, if ordered by the court in the appointment of the receiver. 17.3 Late Charges. Landlord and Tenant agree that the fixing of actual damages for Tenant's breach of any of the provisions of this Lease, including but not limited to the late payment by Tenant to Landlord of rent and other amounts due hereunder, would cause Landlord to incur costs not contemplated by this Lease, the exact amount of which would be extremely difficult or impracticable to ascertain. The "other amounts due hereunder" shall not include contested charges as provided in this Lease. Such costs include but are not limited to accounting, processing, administrative, legal and clerical charges and late charges which may be imposed upon Landlord by the terms of any Mortgage covering the Premises. Accordingly, if any installment of rent or any other sum due from Tenant hereunder has not been received by Landlord or Landlord's agent within fifteen (15) days after such amount was due, Tenant shall pay to Landlord a late charge equal to five percent (5%) of any such delinquent installment of rent or any other delinquent sum due from Tenant. Tenant hereby agrees that said late charge represents a fair and reasonable estimate of the cost Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall not constitute a waiver of Tenant's default with respect to such overdue amount nor prevent Landlord from exercising any other rights and remedies provided for in this Lease, at law or in equity. If a late charge is payable by Tenant 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 Landlord quarterly in advance, notwithstanding any other provision of this Lease to the contrary. 17.4 Interest on Past Due Obligations. Any and all amounts not paid to Landlord 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 Tenant under this Lease and shall not affect any rights and remedies provided to Landlord 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 Tenant for any such delinquency period. 17.5 Waiver of Redemption. Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Tenant being evicted or dispossessed for any cause, or in the event of Landlord obtaining possession of the Premises by reason of the violation by Tenant of any of the covenants and conditions of this - 26 - July 27, 2021 Item #6 Page 35 of 57 Lease or otherwise. The rights given to Landlord herein are in addition to any rights that may be given to Landlord by any statute or otherwise. 17.6 Landlord's Default. Landlord shall in no event be charged with default in the performance of any of its obligations hereunder unless and until Landlord shall have failed to perform such obligations and such failure continues for more than thirty (30) days (or such less or additional time as is reasonably necessary to correct any such failure as provided in this Lease) after Landlord's receipt of written notice of such failure from Tenant. If Landlord fails to perform within the specified time period as to any repair, rehabilitation or maintenance of the Premises, then the Tenant may perform such repair, rehabilitation or maintenance then the Landlord will be obligated to reimburse Tenant within thirty (30) days of receipt of the written demand for payment from Landlord. 17.7 Tenant's Right to Terminate Lease without Cause. The Tenant shall have the right to terminate this Lease after the third full year of this Lease upon One Hundred Eighty (180) Days written notice to the Landlord. ARTICLE 18 SUBORDINATION AND ATTORNMENT 18.1 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") providing the terms of the Mortgage do not conflict with the terms of this Lease.. Upon the request of Landlord, Tenant shall, from time to time, execute and deliver any documents that may be required by Landlord or the mortgagee, beneficiary, ground lessor or lender (each a "Landlord's Lender") under any such Mortgage, to effectuate any subordination, provided that any such Landlord's Lender agrees not to disturb Tenant's right to quiet possession under this Lease so long as Tenant is not in default (or with notice or passage of time or both would not be in default) under this Lease. If Tenant fails to execute and deliver any such document within fifteen (15) days after request, Tenant irrevocably constitutes and appoints Landlord as Tenant's special attorney-in-fact, coupled with an interest, to execute and deliver such document. Notwithstanding the foregoing, if Landlord's Lender elects to have this Lease prior to the lien of its Mortgage, and gives written notice to Tenant 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. 18.2 Attornment. In the event that Landlord transfers title to the Premises to a Landlord's Lender, or the Premises are acquired by a Landlord's Lender upon the foreclosure or termination of a Mortgage to which this Lease is subordinated, Tenant shall attorn to and recognize the Landlord's Lender as Tenant's landlord under this Lease and shall promptly execute and deliver any documents that Landlord may require to evidence such attornment, provided that Landlord's Lender agrees not to disturb Tenant's right to quiet possession under - 27 - July 27, 2021 Item #6 Page 36 of 57 this Lease so long as Tenant is not in default (or with notice or passage of time or both would not be in default) under this Lease. If Tenant fails to execute and deliver any such document within fifteen (15) days after request, Tenant irrevocably constitutes and appoints Landlord as Tenant's special attorney-in-fact, coupled with an interest, to execute and deliver such document. 18.3 Estoppel Certificate. Upon the request of Landlord, Tenant at any time and from time to time shall execute, acknowledge, and deliver to Landlord, no later than fifteen (15) business days after Landlord's request therefor, an estoppel certificate in any reasonable form requested by Landlord ("Estoppel Certificate"). The Estoppel Certificate may be conclusively relied upon by a prospective lender, purchaser, or encumbrancer of Landlord's interest in the Premises. Failure to deliver the Estoppel Certificate within fifteen (15) days of such request shall be conclusive upon Tenant that: (i) this Lease is in full force and effect; (ii) there are no uncured defaults in Landlord's or Tenant'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. Tenant hereby irrevocably appoints Landlord as its attorney-in- fact, which agency is coupled with an interest, to execute any such Estoppel Certificate upon Tenant's failure to do so within such fifteen (15) day period. 18.4 Rights of Landlord's Lender and Landlord's Purchaser. If any Landlord's Lender or any purchaser of Landlord's interest in the Premises ("Landlord's Purchaser") requires a modification of this Lease at any time, Tenant shall, at Landlord's request, promptly execute and deliver to Landlord instruments effecting the modifications that the Landlord's Lender or Landlord's Purchaser reasonably requires, provided that such modifications do not increase the rent, reduce the size of the Premises, change in whole or part the use of the Premises or otherwise adversely affect in any material respect any of Tenant's rights under this Lease. If Landlord's Lender or Landlord's Purchaser has given prior written notice to Tenant that it is the Landlord's Lender or Landlord's Purchaser and such notice includes the address at which notices to such Landlord's Lender or Landlord's Purchaser are to be sent, then Tenant shall give Landlord's Lender or Landlord's Purchaser, as the case may be, written notice simultaneously with any notice given to Landlord to correct any failure of Landlord to perform any of Landlord's obligations. Landlord's Lender and Landlord's Purchaser 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 Landlord shall be null and void unless simultaneous written notice has been given to Landlord's Lender and Landlord's Purchaser. 18.5 Limitation of Liability. The covenants and agreements of Landlord under this Lease shall not be binding upon any person at any time after the transfer of that person's interest, as landlord, in the Premises, providing Landlord provides to the new Landlord with a copy to Tenant of any outstanding obligations, including without limitation, repair and maintenance obligations, of Landlord, otherwise Landlord will remain liable for the outstanding obligations. In the event of such a transfer, the covenants and agreements of Landlord shall thereafter be binding upon the transferee of Landlord's interest. - 28 - July 27, 2021 Item #6 Page 37 of 57 ARTICLE 19 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 not excepted, unless caused by Force Majeure) (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 Tenant from the prompt payment of any rent or other charge required of Tenant hereunder, except as may be financially impossible due to Force Majeure or as may be expressly provided elsewhere in this Lease. ARTICLE 20 ASSIGNMENT AND SUBLETTING 20.1 Landlord's Consent. Tenant shall not voluntarily, involuntarily or by operation of law assign, mortgage, sublet, hypothecate or otherwise transfer or encumber all or any part of Tenant's real property interest in this Lease or in the Premises, or contract for the management or operation of the whole or any part of the Premises, or permit the occupancy of any part of the Premises by any other person or business entity, or permit transfer of this Lease by merger, consolidation or dissolution (collectively "Transfer"), without first obtaining Landlord's express written consent. No consent to any Transfer shall constitute a waiver of the provisions of this Section. Tenant is a California public benefit corporation. Any dissolution or merger, consolidation, or other reorganization of Tenant of more than twenty-five (25%) the value of the assets of Tenant, shall be deemed a Transfer requiring Landlord's consent. Landlord and Tenant agree (by way of example and without limitation) that it shall be reasonable for Landlord 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) the proposed Transferee or its business is subject to compliance with additional requirements of law beyond those requirements which are applicable to Tenant; (iii) in Landlord'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 lacks the financial capacity to perform the Permitted Use; or (iv) Tenant is in default under this Lease. Any attempted or purported Transfer without Landlord's prior written consent shall be void and of no force or effect, and shall not confer any estate or benefit on anyone. A consent to one Transfer by Landlord shall not be deemed to be a consent to any subsequent Transfer to any other party. 20.2 Request for Transfer. Tenant shall give Landlord at least sixty (60) days' prior written notice of any requested Transfer and of the proposed terms of such Transfer ("Transfer -29 - July 27, 2021 Item #6 Page 38 of 57 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 Tenant 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 Landlord to evaluate the proposed Transfer and the prospective Transferee. Within thirty (30) days after receipt of the Transfer Notice, Landlord shall either approve or disapprove of such Transfer. Tenant shall immediately notify Landlord of any modification to the proposed terms of such Transfer. Tenant shall also provide to Landlord copies of the fully executed documents pertaining to the Transfer after the Transfer has become effective. Whether or not Landlord consents to any proposed Transfer, Tenant shall pay Landlord's review and processing fee, including without limitation, all Landlord's agents, employees, outside consultants, in the amount of $500.00, as well as any additional and reasonable legal fees incurred by Landlord over the $500.00, within thirty (30) days after written request by Landlord. 20.3 Landlord's Rights. Upon receipt of a Transfer Notice pursuant to Section 20.2 above, Landlord shall have the right to (i) unreasonably withhold its consent to such Transfer, as permitted pursuant to Section 20.1 above; or (ii) impose any of the following as conditions to Landlord's consent: (a) that all rents paid by the Transferee to Tenant in excess of the Base Rent be paid to Landlord; or (b) that either Tenant or the proposed Transferee cure, providing notice as required under this Lease has been provided by Landlords, on or before the proposed effective date of such Transfer, any and all uncured defaults hereunder; provided, however, in no event shall Landlord's failure to condition its consent upon such cure be deemed to be a waiver of any such default or of Landlord's rights and remedies under this Lease or under law or in equity in regard thereto. If Landlord 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 Transfer, then the Transfer shall be voidable at Landlord's option. Landlord shall also have the right to condition Landlord's consent to any Transfer upon Tenant's and the Transferee's executing a written assumption agreement, in a commercially reasonable form approved by Landlord, which approval shall not be unreasonably withheld. The assumption agreement shall require the Transferee to expressly assume all obligations of Tenant under this Lease and shall require Tenant and Transferee 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 Tenant's interest in this Lease. Regardless of Landlord's consent to any Transfer, no Transfer shall release Tenant of Tenant's obligation or alter the primary liability of Tenant to pay rent and to perform all other obligations to be performed by Tenant hereunder, unless all parties agree to a novation ("Novation"). The acceptance of rent by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision hereof. These rights are in addition to Landlord's right to withhold its consent based upon the criteria and standards set forth above to any Transfer These rights may be reasonably exercised by Landlord without limiting Landlord in the exercise of any other right or remedy at law or in equity which Landlord may have by reason of such Transfer. In the event a Novation has not occurred, and where - 30 - July 27, 2021 Item #6 Page 39 of 57 there is a default by any Transferee, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against said Transferee. Tenant 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 21 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 transmission to the person provided in Article 1. 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," or (b) on the date of personal delivery, (c) or the first business day after an electronic transmission has been sent. Either party may change its address or email for notices by providing written notice as specified herein; provided, however, that all addresses provided must be an actual street address located in the United States of America. ARTICLE 22 AUTHORITY The Tenant is a California public nonprofit corporation 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. Tenant shall, simultaneously with execution of this Lease, deliver to Landlord written evidence of such authority satisfactory to Landlord. ARTICLE 23 QUIET ENJOYMENT Tenant, 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, subject to the reasonable customary and usual noise, traffic, loading and unloading of materials and all other acts necessary to the permitted use of the Premises. ARTICLE 24 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 - 31 - July 27, 2021 Item #6 Page 40 of 57 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 25 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 Landlord from subsequently enforcing the full provisions hereof. Landlord's acceptance of any payment which is less than that required to be paid by Tenant 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 Tenant, written on any check or contained in any transmittal letter. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term or covenant hereof, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord'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 Tenant or Landlord. An express waiver shall affect only the default specified in the waiver, and only for the time and to the extent expressly stated. ARTICLE 26 LIMITATION ON CLAIMS Any claim, demand, right or defense of any kind by Tenant, 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 Tenant commences an action thereon, or 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 27 INTERPRETATION AND APPLICATION 27.1 Submission of Lease. Submission of this instrument for examination or signature by Tenant 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 Landlord and Tenant. 27.2 Governing Law. This Lease shall be construed in accordance with and governed by the statutes, decisions, and other laws of the State of California and the Federal Statutes, regulations, decisions relating to Tenant's standing as an exempt organization and other laws of - 32 - July 27, 2021 Item #6 Page 41 of 57 the United States. Tenant 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 Tenant hereby consents to the jurisdiction of said court, unless the Federal laws are applicable. 27.3 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. 27.4 Amendment. This Lease may not be amended, altered or modified in any way except in writing signed by the parties hereto. 27.5 No Partnership. It is agreed that nothing contained in this Lease shall be deemed or construed as creating a partnership or joint venture between Landlord and Tenant or between Landlord and any other party, or cause Landlord to be responsible in any way for the debts or obligations of Tenant or any other party, 27.6 No Merger. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work as a merger, but shall, at the option of Landlord, either terminate all or any existing subleases or subtenancies, or operate as an assignment to Landlord of any or all such subleases or subtenancies. 27.7 Severability. 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. 27.8 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. 27.9 Words. The words "Landlord" and "Tenant", as used herein, shall include the plural as well as the singular. Words used in the neuter gender include the masculine and feminine. 27.10 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. 27.11 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. - 33 - July 27, 2021 Item #6 Page 42 of 57 ARTICLE 28 MISCELLANEOUS 28.1 Time is of the Essence. Time is of the essence of each and all of the terms and provisions of this Lease. 28.2 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. 28.3 Recordation; Quitclaim. Tenant shall not record this Lease or any memorandum hereof. Landlord has the right in its absolute discretion to record this Lease or a memorandum hereof, and, upon Landlord's request, Tenant shall execute and have acknowledged the same for recordation. Upon termination of this Lease for any reason, Tenant shall execute, acknowledge and deliver to Landlord within thirty (30) days after receipt of written demand therefor a good and sufficient deed whereby all right, title and interest of Tenant in the Premises is quitclaimed to Landlord. If Tenant fails to deliver the required deed to Landlord, Landlord may prepare and record a notice reciting the failure of Tenant to execute, acknowledge and deliver such deed and said notice shall be conclusive evidence of the termination of this Lease and of all right of Tenant or those claiming under Tenant in and to the Premises. 28.4 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 Landlord hereunder (including any successor landlord) and any recourse by Tenant against Landlord shall be limited solely and exclusively to Landlord's interest in the Premises, including the value of the Premises, and the income and profits from the Premises, and neither Landlord, nor any of its officers, employees, affiliates, managers or agents shall have any personal liability therefor, and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant. The limitations of liability provided in this Section are in addition to, and not in limitation of, any limitation on liability applicable to Landlord provided by law or in any other contract, agreement or instrument. Under no circumstances shall Landlord be liable for punitive or special damages, indirect damages or other consequential damages, including without limitation, injury to Tenant's business or for any loss of income or profit therefrom, except as provided otherwise in this Lease In the event of any transfer of Landlord's interest in this Lease, the Landlord 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 Landlord contained in this Lease thereafter to be performed; provided, however, that any funds in the hands of Landlord or the then transferor at the time of such transfer, in which Tenant has an interest shall be turned over to the transferee and any amount then due and payable to Tenant by Landlord or the then transferor under any provision of this Lease shall be paid to Tenant; - 34 - July 27, 2021 Item #6 Page 43 of 57 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 Landlord, it being intended hereby that the covenants and obligations contained in this Lease on the part of Landlord shall be binding on each Landlord, its successors and assigns, only during its period of ownership. 28.5 Broker. Landlord and Tenant 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. Landlord and Tenant 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. 28.6 Counterparts. This Lease may be executed in any number of counterparts 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 Page] - 35 - July 27, 2021 Item #6 Page 44 of 57 By: ARTICLE 29 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 Tenant and Landlord. IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first above written. LANDLORD: TENANT: CITY OF ARL BAD, a Califor la municipal corporation Name: Scott Chadwick Title: City Manager APPROVED AS TO FORM NEW VILLAGE ARTS a California non-profit public benefit corporation By: Name: Title: eT-2.7. Lit/ Note: Signature of Tenant must be notarized By: Allegra Frt, Deputy City Attorney For Celia A. Brewer, City Attorney Date: , 2021 - 36 - July 27, 2021 Item #6 Page 45 of 57 WITNESS my hand and official seal. Signatur Signature i otary Public CURTIS MYLES JACXSON Notary Public - California San Diego County Commission 4 2356904 -- My Comm. Expires Alay 10, 2025 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE § 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of 5A t.-1 b164 0 On 1113/21 before me, (-4.4:115 7Pre-k-Seit--f, Pusuc_. Date Here Insert Name and Title of the Officer personally appeared et) liSeta 1-4 Name(s) of Signer(s) who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/ate subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capadty(ies), and that by his/her/their signature(e) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. Place Notary Seal Above OPTIONAL Though this section is optional, completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document Title or Type of Document: Document Date: Number of Pages: Signer(s) Other Than Named Above:-- Capacity(les) Claimed by Signer(s) Signer's Name: igner's Name: 0 Corporate Officer — Title(s): 0 Corporate Officer — Title(s): 0 Partner — LI limited 0 General 0 Partner — E Limited 0 General 0 Individual 0 Attorney in Fact 0 Individual 0 Attorney in Fact 0 Trustee LI Guardian or Conservator 0 Trustee 0 Guardian or Conservator 0 Other: 0 Other. Signer Is RepreSenting: Signer Is Representing: „wcawswww,sziaRivg ©2014 National Notary Association www.NationaiNotary.org • 1-800-US NOTARY (1-800-878-6827) Item #5907 July 27, 2021 Item #6 Page 46 of 57 EXHIBIT A LEGAL DESCRIPTION OF PREMISES APN NO: 203-295-01-01 and 203-295-01-02 Lots 1 through 4 inclusive, in Block "K" of Carlsbad, in the City of Carlsbad, County of San Diego, State of California, according to Map thereof No. 535, filed in the office of the County recorder of San Diego County May 2, 1888, and Map No. 775 filed I the Office of the County Recorder of said San Diego County. - 1 - DOCS 121 1 63-000007S2625579.8 July 27, 2021 Item #6 Page 47 of 57 EXHIBIT B MEMORANDUM OF TERM COMMENCEMENT This Memorandum of Term Commencement is made as of J 0,14 2111(,‘2021 by the CITY OF CARLSBAD, a California municipal corporation ("Landlord"), and W VILLAGE ARTS, a California non-profit public benefit corporation ("Tenant"). Landlord and Tenant agree to and acknowledge the following matters: 1.Landlord and Tenant have entered into that certain Lease Agreement dated as of Jo, \A, '2-1 , 2021 (the "Lease"), covering the Premises located at 2787 State Street, Carlsbad, California, 92008, as more particularly described in the Lease. All terms defined in the Lease shall have the same meaning when used in this Memorandum of Term Commencement. 2.The Commencement Date occurred on (11/1A1 , 2021 and the Expiration Date of the Lease is cA.j , 2031. INTENTIONALLY BLANK 1 DOC'S 121163-00000712625579.8 July 27, 2021 Item #6 Page 48 of 57 IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum of Term Commencement as of the date first written above. LANDLORD: TENANT: CITY OF RLSBAD, NEW VILLAGE ARTS a Calif rnia municipal corporation a California non-profit public benefit corporation By: Name: 6.4AINAQe_ Title: t‘i-TN/ By: Name: Title: 2 July 27, 2021 Item #6 Page 49 of 57 EXHIBIT C TENANT IMPROVEMENT PROJECT - 1 - DOCS 121163-000007/2625579.8 July 27, 2021 Item #6 Page 50 of 57 NEW VILLAGE ARTS Kristianne Kurner Executive Artistic Director Alex Goodman Managing Director Robert I Lin President Sue Loftin Vice-President Mark Coulombe Secretary Mary Kerr Treasurer Board Members at Large Joan Cumming Bob Dawson Kristianne Kurner Christy Mohler Saundra Moton Scott L. White. Former President • NVA Advisory Board Rosemary Eshelman, Chair Arid Bedell Mark Caruana Kathy Deering Fred Deutsch Haley DiDonato Mea Hall Walt &Sharon Hambly Pat Hansen Bobbie Hoder Pat Huley Emma Jadhav Chelsea Kaufman Richard Kuranda Cassie Langan Linda Ledes-na Dr. Richard Lederer Gina McBride Julie Nygaard Dr. Bob Ogle Christine Veto Fangan Justin Peek Elizabeth Rhodes Shari Roberts Debbie Rossi Jay Sarno Tom Seers Alice Sievertson Lorraine Wood ANA is a 501(0(3) Non-Profit Organization Tax ID #52-2320930 New Village Arts, Inc. 2787 State St. Carlsbad, CA 92008 760.433.3245 info@newvittagearts.org www.newviltagearts.org Wednesday, June 10, 2020 RE: LOI - REQUESTS TO CONTINUE AND EXPAND THE NVA PARTNERSHIP WITH THE CITY To Mayor Matt Hall, City Councilmembers Dr. Priya Bhat-Patel, Keith Blackburn, Cori Schumacher, and City Staff. First, we would like to commend the City of Carlsbad council and staff for the exemplary job they have continued to do facing the COVID-19 pandemic. Our City has been a shining example of caring staff and volunteers making meticulously thought out decisions and communicating those decisions in an open and available manner. We have been very proud to be part of this City. Second, we also want to thank the City staff for working with New Village Arts on discussions around the establishment of a long-term lease agreement and necessary repairs to the building. The meetings we had before the pandemic were collaborative and inspiring, and we look forward to continuing the process. To that end, this letter will serve as our formal request (L01) to renew and extend our current lease for the building located at 2787 State Street in the heart of Carlsbad Village. Having called the former Bauer Lumber Yard home for over a decade, NVA staff, board of directors and stakeholders look forward to investing in the property, in the near- and long-term, to continue to bring quality Arts and Culture experiences to Carlsbad residents and visitors alike for a long time to come. NEW VILLAGE ARTS CONTRIBUTIONS TO THE CITY NVA has rapidly adapted its services and programs to comply with all necessary restrictions imposed under state and local governmental orders due to the current Covid-19 pandemic but has found new and creative ways to continue to serve the community: a.Programs for the general public: New Online Programming entitled New Virtual Arts, was created to provide everyone in our community with access to creative and artistic experiences such as theater performances, musicals, and comedy. These online programs not only continue our mission of providing a forum and opportunities for laughter, discussion, and deeper thinking and overall entertainment, but also provides employment for our staff, actors and digital technicians. We are actively collaborating with the Museum of Making Music to bring Shakespeare and Music outdoors to Carlsbad in the Fall. We are also in the process of developing two theatrical World Premieres to be produced in the coming year which will bring recognition and acclaim to both NVA and Carlsbad. b.Education Programs: We currently are offering several education programs online that are available to all members of our community. Additional programs will be added in the coming months. •Monday Night live, our program for Neuro-diverse young adults continues on Zoom 1 July 27, 2021 Item #6 Page 51 of 57 •In partnership with Kids Act, NVA is making nine different classes available online to students ages 6 - 18, ongoing throughout the Summer. •NVA's Online Academy: a series of classes throughout the Summer for teens and adults. The first-round features: o A Choreography Class for Teens on Wednesdays through July 8. o Intro to Acting for Adults (ages 18+) through mid-July o Spanish Language Spoken Word classes led by poet Diana Cervera, the only offering of its kind in San Diego theatre. c. Continuing plans, as allowed by Health Guidelines: New Village Arts will continue to activate State Street as we have since 2009. We will do this by: •Hosting street events on Christiansen Way •Producing six mainstage theatre productions each season •Holding over 150 theatre and/or art classes open to anyone in the community each year •Hosting community events •Producing music or spoken word events •Providing professional theatre training programs to 3 Carlsbad high schools •Bringing Theatre for Young Audiences performances to local middle schools •Running a program for special needs and neurodiverse teens that culminates in a summer production •Running an improvisation class for seniors with Alzheimer's and dementia d. FINANCIAL IMPACT — Substantial Economic Benefits to Other Businesses in the Village: New Village Arts has been an anchor for the North Carlsbad Village community for 14 years. In that time, many businesses have come and gone around us, but in the past 5 years, dozens of new businesses have opened (Handel's Ice Cream, Baba Coffee, Carruth Wine Cellars, Campfire, and Juene et Jolie to name a few). Our patrons have named all of these businesses as places they frequent before or after a performance at NVA, among other longer established bars and restaurants. With over 190 unique events in the Village every year, NVA attracts over 20,000 consumers to our downtown businesses. A recent study conducted by Americans for Arts states that the economic impact of arts attendees equals $31.47 per person or nearly $630,000 per year for our local restaurants and shops. The study Arts and Economic Prosperity'' 5 was conducted by Americans for the Arts, the nation's nonprofit organization for advancing the arts in America. It found that when patrons attend an arts event in San Diego County, they may pay for parking, eat dinner at a restaurant, enjoy dessert after the show, and return home to pay the babysitter. The study found that the typical attendee spends $31.47 per person, per event beyond the cost of admission. AEP5 also shows that one-third of attendees (34 percent) traveled from outside the county in which the arts event took place. Their event-related spending was more than twice that of their local counterparts ($47.57 vs. $23.44). What brought those visitors to town? Two-thirds (69 percent) indicated that the primary purpose for their visit was to attend an arts event. The message is dear: a vibrant arts community not only keeps residents and their discretionary spending close to home, it also attracts visitors who spend money and help local businesses thrive. In addition, NVA is an impactful local employer, paying over 100 artists, artisans, educators, and technicians nearly $250,000, a quarter of our budget, last year. When we add in full and part-time staff, over 60% of our $1 million annual budget is paid to individuals making art or making art possible. The arts drive jobs. Mark Cafferty, President and CEO, San Diego Regional Economic Development Corporation, said recently, "Business leaders no longer need to choose between arts and economic development. An investment in the arts is an investment in an industry that supports jobs, generates revenue and helps encourage new business to our region." 2 July 27, 2021 Item #6 Page 52 of 57 PLANNING FOR THE FUTURE When the order was given to shut businesses down due to the Covid-19 pandemic in mid-March, NVA staff and board quickly undertook key strategic actions to ensure our financial viability. a. Development of new financial model: The staff and board of New Village Arts, realizing the critical financial impact of closing the theater and postponing all in-person activities, immediately took steps to reduce expenses and increase and stabilize income which will take the organization through June, 2021 when we plan to reopen the theater to live, on-stage performances. •Cut expenses from approximately $85,000 per month down to $25,000 per month •Obtained a PPP loan with funds received on April 11 •Received Business Interruption Insurance approved on April 10 •Filed for work-sharing unemployment insurance approved April 14 •Furloughed all part-time employees •Suspended contracts with all appropriate vendors •Applied for an SBA loan •Continued fund-raising campaigns which has resulted in significant ongoing contributions •Successfully worked with all grantors and corporate sponsors to repurpose or renew grants to support on- going operations b. Short term plan: New Village Arts will continue to offer high quality Arts and Culture programs and performances for our community in the digital space for the time being, and in our physical space once we are able, continuing our mission of creating adventurous artistic experiences to awaken the human spirit. Having reduced costs and secured our financial future, we will confidently weather this storm and come out stronger with new and increased donor support; new, creative approaches of ways to serve our community; and a better appreciation for the flexibility and nimbleness that provides opportunities for growth. C. Long term plan: New Village Arts intends to re-open the renovated space Summer of 2021. Our award-winning indoor theatrical performances and education programs will continue onsite and in our community. When the renovation is complete, the State street facing windows will open up into an inviting community gathering place, where we envision intimate concerts, community events and educational activities which will activate State street. Our Sahm Family Foundation sponsored Education Center will also open up to State Street, sharing the lively activity of our youth and neurodiversity theatre and art programs with residents, local businesses and passersby. As we move forward, beyond 2021 and into the next phase of the evolution of our non-profit arts organization, we will continue to grow our programs, invest in the quality of our artistic offerings and educational programs, and continue to serve as the Cultural Hub of Carlsbad and all of North County San Diego. With the support of individual donors, local businesses, foundations and local, state and national government support, we will continue fulfill our mission. We will do this by: •Providing a collaborative and inspiring home for visual and performing artists »Investing in local playwrights and storytellers, and elevating San Diego voices to the National stage with World Premiere plays and musicals. •Providing a forum for laughter, discussion and deeper thinking within our community »Expanding our program offerings to include cabaret performances, lectures, poetry readings, book signings, dance performances, open mic nights, and more. •And training future generations of art-makers and art-lovers. •Growing our Nationally recognized Neurodiversity programs, bi-lingual classes, and in-school programs. 3 July 27, 2021 Item #6 Page 53 of 57 Kristianrie Kurner Alex Goodman Executive Artistic Director Managing Director Other Terms. Similar to existing lease but to be refined for applicability to a longer term. i< you or your consideration. 4 efloan Cumming Board President Elect Robert I. in Board President REQUEST TO THE CITY OF CARLSBAD The Bauer Lumber Yard, home to New Village arts is in need of both essential repairs and updating. But perhaps most importantly, this historic building sits in the midst of a revitalized and increasingly attractive commercial area of the Village and deserves to reflect Carlsbad's history and reputation as one of North County's most desirable places to visit and live. a.Preservation of Building. We ask that the City move forward with the previously approved and already budgeted replacement of the West-facing wall and the leaky roof as soon as possible. We hope to use this time of social distancing to plan for the future and renovate our space. We understand that plans are underway to commence with this project over the Summer. As of May 14, 2020, NVA was informed "We received 60% drawings about a week ago and they're getting ready to submit to building for 1st plan check. Currently targeting late summer to go to CC with a request to authorize bidding the contract docs." Continued communication about the progress of these plans are critical for not only the term of the existing lease but also for the proposed major renovation. b.Renovation of the Building. The historic Bauer Lumber building is in need up updating and repair. As the home of New Village Arts, we have committed to raising the funds to completely remodel and update the interior and to complement the area which is undergoing a transformation into one of the region's most attractive and exciting places to visit. With Conceptual Designs submitted to the City Plan Check Office on May 16, 2019 and the most recent revisions submitted in early June, NVA's renovation project continues to progress through planning and approval. The entire project is estimated to cost $1.2 million. NVA will be raising funds for the entire interior, at an estimated cost of $730,000 c.Exterior Improvement. The terms of our current lease agreement states that the tenant is responsible for the upkeep of the interior of the building, and the City is responsible for maintaining the exterior of the building (Article 10.3) (Appendix A). Based on that agreement, we are requesting that the City be responsible for completing the exterior portion of the overall renovation plan and design which is currently estimated to cost $470,000 (Appendix B). d.Solar Panels: An opportunity exists to install solar panels as part of the renovation for approximately $103,000. Knowing this will comply with both state and local desires to save energy and "go green," we request that the City consider additionally covering the cost of installing solar panels. (Appendix C). The latest plans are attached here (Appendices D1 & D2). REQUEST FOR A LONG-TERM LEASE a.Lease Extension. Understanding that in order for NVA to commit to a significant fund raising campaign for the renovation of the Bauer Lumber Building and to assure donors that their donations are a sound investment for the future of Carlsbad and NVA, NVA requests the City approve a long-term lease extension of 20 years. b.Rent. We ask that the City return to the previous lease agreement of $1 per year in rent. This aligns with the lease agreements that our colleagues in Poway (Poway Performing Arts Center), Oceanside (Star Theatre), and San Diego (San Diego Repertory Theatre) currently enjoy. July 27, 2021 Item #6 Page 54 of 57 EXHIBIT D TENANT PERFORMANCE STANDARDS (PERFORMANCE PLAN) The below enumerated Performance Plan shall commence on the Term Commencement Date. Landlord acknowledges that some enumerated performance measures are subject to grant funding and/or fundraising. Tenant acknowledges that they shall use good faith efforts to secure grant funding and/or fundraising for performance measures requiring such funding. Landlord and tenant acknowledge that performance plan may be adversely impacted by restrictions due to public health or other emergency that would prevent tenant from otherwise conducting business as usual. ANNUAL PROGRAMMING FOR NEW VILLAGE ARTS CENTER The mission of New Village Arts is to create adventurous artistic experiences to awaken the human spirit. We provide: a collaborative and inspiring home for performing and visual artists, a forum for laughter, discussion, and deeper thinking within our community and a training ground for future generations of art-makers and art-lovers. We acknowledge, respect, and celebrate the differences and commonalities within our community and commit to dismantling the barriers to the creation, learning, and celebration of making live theatre and adventurous artistic experiences. To that end, New Village Arts will create: Professional Theatre & Event Production •Year-round theatre productions •Year-round music performances, including cabarets and local musicians •Produce award-winning Final Draft New Play Festival * Education and Outreach •Work with area schools to produce professional theatre training programs and performances * •Facilitate programming for special needs and neurodiverse teens and young adults that includes productions that are open to the public * •Facilitate arts education for senior community members including those with Alzheimer's and dementia * •Host acting and theatre classes for all ages open to the community •Host year-round acting and theatre-focused classes for children ages 4 —17 •Facilitate visual art classes for all ages in the community Community and Cultural •Recognize and educate the community about the indigenous tribes that settled the region •Make meeting space available for local arts and other nonprofit organizations •Participate in Carlsbad Village community and art-focused events with space open to the public - 2 - July 27, 2021 Item #6 Page 55 of 57 •Facilitate programming for the Teatro Pueblo Nuevo initiative that celebrates our bilingual and multicultural community including an annual festival open to the community * •Produce at least one show or event that honors the Black and African American community Visual Arts •Provide space for visual artists to work and teach classes •Consistently feature local artists in public spaces •Year-round visual art exhibitions and events •Engage in public art projects Employment and Economic Impact •Bring at least 15,000 patrons to Carlsbad Village, bringing over $470,000 of economic impact to local businesses, restaurants and retail shops •Employ an average of 100 artists, artisans, educators and technicians to facilitate programming and administration •Sponsor student intern program for local theatre and arts students ADDITIONAL PROJECTS AND PROGRAMMING In addition to the annual programming listed above, New Village Arts is committed to increasing the presence of art in Carlsbad Village and will follow this five-year plan. New strategic plans will be shared with the City in 5-year increments. Year 1 (Season 19: Jul 2020 — Jun 2021) •Create and offer online programming to the public •Rollout rebranding campaign •Conduct and finalize negotiations for long term lease •Reassess Artist Studios business plan •Research/planning for renovation •Begin construction phase of The New Village Arts Center •Collaborate with the City on renovation of the exterior of the building •Commence Private Phase Capital Campaign to finance portion of new facility •Negotiate outdoor venue to continue production while building is closed •Research/planning for producing season 20 Year 2 (Season 20: Jul 2021 —Jun 2022) •Mid and final construction phases of The New Village Arts Center •Celebrate NVA's 20th Anniversary with large public event at newly renovated New Village Arts Center •Implement new Visual Arts plan •Activate Christiansen Way as a Festival Street •Increase number of patrons and economic impact brought to the Village •Research/planning for producing season 21 Year 3 (Season 21: Jul 2022 — Jun 2023) •Begin research/planning to create Carlsbad Village Arts District •Continue to activate Christiansen Way as a Festival Street - 3 - July 27, 2021 Item #6 Page 56 of 57 •Increase number of patrons and economic impact brought to the Village •Research/planning for producing season 22 Year 4 (Season 22: Jul 2023 —Jun 2024) •Continue planning with City to create Carlsbad Village Arts District •Coordinate fundraising efforts for Carlsbad Village Arts District •Continue to activate Christiansen Way as a Festival Street •Increase number of patrons and economic impact brought to the Village •Research/planning for producing season 23 Year 5 (Season 23: Jul 2024 —Jun 2025) •Grand opening of Carlsbad Village Arts District •Increase number of patrons and economic impact brought to the Village •Celebrate the 25th Anniversary of New Village Arts * Programming is contingent upon available funding July 27, 2021 Item #6 Page 57 of 57