HomeMy WebLinkAbout2021-09-21; City Council; ; Lease Agreement with Mira Costa Community College District for the Las Palmas property, located at 2075 Las Palmas Drive Meeting Date: Sept. 21, 2021
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Curtis M. Jackson, Real Estate Manager
curtis.jackson@carlsbadca.gov, 760-434-2836
Subject: Lease Agreement with Mira Costa Community College District for the Las
Palmas property, Located at 2075 Las Palmas Drive
District: 2
Recommended Action
Adopt a resolution authorizing the City Manager to execute a four-year, 364-day lease
agreement with Mira Costa Community College District for the Las Palmas property (APN: 213-
061-19-00).
Executive Summary
The Mira Costa Community College District has had a lease agreement for the Las Palmas
property continuously since July 8, 2014. Staff recommend the City Council authorize the City
Manager to execute a new agreement with Mira Costa.
This agreement is before the City Council for review and approval because the City Council has
not delegated authority to enter into lease agreements to the City Manager.
Discussion
The Mira Costa Community College District1 entered into a six-year lease agreement for the
22,627-square foot, city-owned building at 2075 Las Palmas Drive on July 8, 2014. Before the
agreement expired on July 16, 2020, the city and Mira Costa began negotiating a new agreement,
but the negotiations did not conclude before the lease expired. The tenant is currently in a
holdover lease position, continuing to occupy the building and paying rent in accordance with the
2014 lease agreement.
The intent of the original agreement was for Mira Costa to operate its Technology Career
Institute and Small Business Development Center. Since that time, Mira Costa has expanded its
technician level trainings within a variety of different industries, such as advanced
manufacturing, biomedical, unmanned systems, engineering, veterinary medicine and homeland
security and the center is called the MiraCosta College Technology Career Institute. More than
3,275 individuals have enrolled in these programs.
1 The college district and the college uses the public brand name of MiraCosta but does business as Mira Costa.
Sept. 21, 2021 Item #1 Page 1 of 48
On Oct. 17, 2017, the City Council approved the Real Estate Strategic Plan which recommended
city staff negotiate a rent increase with an annual minimum rent adjustment to cover all of the
city’s costs to maintain, repair, or improve the exterior of the property, as well provide the city
with some additional financial return on the property that is at, or closer to, current market
rates. The real estate plan also recommended the city remove the entire upper parking area from
the lease if an extension was agreed to.
The proposed agreement includes an initial annual rental rate of $71,475, about a 5% increase
over the existing annual rental rate of $67,749, with an annual 5.5% rent increase over the term
of the agreement. The total rent received under the term of the new agreement would be
$398,910. The new agreement also includes a 60-day notice of termination for the upper parking
lot area, which has 19 parking spaces, so the city can include the lot in a future sale of an
adjacent city-owned property, known as the Hawthorne property.
The city has determined that Mira Costa provides a public benefit to the community by offering
workforce training of industry recognized certificate programs to the residents in Carlsbad and
surrounding communities. Additionally, Mira Costa’s trainings will strengthen the city’s
technology cluster, add to Carlsbad’s core technology and skilled workforce base, and serve as a
key strategic alliance with the city’s regional economic development and education partners.
Surplus Lands Act
In 2019, the California legislature adopted AB 1486, which amended the Surplus Land Act by
adding new obligations that must be followed before cities can dispose of surplus land. The
new obligations are intended to increase the state’s supply of affordable housing. Surplus
property is defined as land owned by a local agency and formally declared by that agency’s
governing body to be surplus and not necessary for the local agency’s use. The land act
guidelines define “disposing” of surplus lands to mean the sale or lease of local agency-
controlled land.
However, two types of leases are excluded from the definition of “lease” and are not considered
“disposing” of land:
•A lease of land on which no development or demolition will occur
•A lease of land that has a term that is less than five years, including any extensions,
amendments or options
The proposed agreement with Mira Costa is not subject to the Surplus Land Act because it is a
lease of land on which no development or demolition will occur, and the length of the lease is
for less than five years.
Staff is recommending that the City Council authorize the City Manager to execute a new four-
year, 364-day lease agreement with Mira Costa, which will provide for the continued use of the
property as a Technology Career Institute and Small Business Development Center.
Sept. 21, 2021 Item #1 Page 2 of 48
Options
Staff provide the following three options for the City Council’s consideration:
1. Approve the lease agreement as recommended
Pros
• City shall receive $71,475 per year subject to 5.5% annual increases over the term
of the agreement, for a total of $398,910 over the full term of the new agreement
• Occupancy by the tenant reduces potential trespassing and vandalism
Cons
• City is prevented from offering the property to the open market and potentially
realizing a higher rental rate
2. Provide specific direction and send back to staff to renegotiate the lease agreement terms or
provisions
Pros
• A lease agreement with different terms or provisions might be of greater benefit
to the city
Cons
• Renegotiating a potential new agreement would require additional expenditure
of staff resources
3. Decline to lease the property
Pros
• None identified
Cons
• Lost revenue
• Increased maintenance costs
• Shifts all maintenance responsibilities onto the city
Staff is recommending Option 1, that the City Council authorize the City Manager to execute the
new agreement.
Fiscal Analysis
The agreement provides for an annual rent payment of $71,475, subject to 5.5% annual
increases, which represents an initial increase of 5% over the original lease agreement. Total
rent received over the term of the new Agreement would be $398,910.
From 2014 to present, the city has spent approximately $75,105 on landscaping and building
maintenance expenses at the property. This includes $45,305 for landscape and grounds
maintenance, $17,500 in tree maintenance, and $12,300 in a recycled water conversion. The
city also has spent approximately $20,000 for heating, ventilation and air conditioning and
other various building maintenance expenses. Total city expenses at the property are estimated
to be approximately $95,100 over the last six years, or $15,851 per year. The city anticipates
similar annual expenses over the term of the new agreement.
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Next Steps
Mira Costa and city staff will carry out the terms of the new agreement. Staff will consult with
the City Council before the agreement expires to determine whether the council wishes to
continue its partnership with Mira Costa.
Environmental Evaluation
The proposed action is Categorically Exempt as defined in CEQA Section 15301 because the
Project consists of approval of a lease for Mira Costa Community College District to continue to
operate within an existing public structure. On its own accord, the Project will not cause
significant environmental impact.
Public Notification
This item was noticed in keeping with the state's Ralph M. Brown Act and it was available for
public viewing and review at least 72 hours before the scheduled meeting date.
Exhibits
1. City Council resolution
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RESOLUTION NO. 2021-211
A RESOLUTION OF. THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AUTHORIZING THE CITY MANAGER TO EXECUTE A FOUR-YEAR,
364-DAY LEASE AGREEMENT WITH MIRA COSTA COMMUNITY COLLEGE
DISTRICT FOR APN: 213-061-19-00, LOCATED AT 2075 LAS PALMAS DRIVE
EXHIBIT 1
WHEREAS, on July 8, 2014, the city entered into a six-year lease agreement with Mira Costa
Community·college District (Mira Costa), by Resolution No. 2014-171, for lease ofthe property located
at 2075 Las Palmas Drive (Property), that expired on July 7, 2020; 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 four-year, 364-day lease agre~ment with the Mira Costa for the Property
(APN 213-061-19-00); and
WHEREAS, the City Council has further determined that it accepts the terms of the Agreement
with Mira Costa; and
WHEREAS, the Agreement will generate $71,475.20 in ·annual revenue, subject to 5.5% annual
increases over the term of the Agreement; and
WHEREAS, the Agreement includes a 60-day notice termination provision for the upper parking
lot area (19 parking spaces) so that the city can include the upper parking lot area in a future sale of
the adjacent Hawthorne property; and
WHEREAS, the city has determined that Mira Costa provides a public benefit to the community
by offering workforce training of industry recognized certificate programs to the residents in Carlsbad
and surrounding communities. Additionally, Mira Costa's trainings will strengthen the city's technology
cluster, add to Carlsbad's core technology and skilled workforce base, and serve as a key strategic
alliance with the city's regional economic development and education partners; 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 and the Agreement is for less than five years.
' 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 Mira Costa provides a public benefit to the community by offering workforce
training of industry recognized certificate programs to the residents in Carlsbad and
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Attachment A
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") is entered into as of September 22, 2021, by and
between CITY OF CARLSBAD, a California municipal corporation ("Landlord") and MIRA COSTA
COMMUNITY COLLEGE DISTRICT ("Tenant"), and shall be effective and binding upon the parties
hereto as of the date of execution hereof by both parties ("Parties").
RECITALS
WHEREAS, Landlord is the owner of certain real property and improvements thereon,
consisting of approximately 22,627 square feet and parking, located at 2075 Las Palmas drive in
the City of Carlsbad, including APNs 213-061-19-00, 213-061-27, and a portion of APN (APN
213-061-28-00, and more particularly described and/or depicted on Exhibit A and A-1 attached
hereto (the "Premises");
WHEREAS, the Parties previously entered into that Lease Agreement, dated July 17,
2014, for the purpose of operating a Technology Career Institute and Small Business
Development Center on the Premises, which expired on July 16, 2019; and
WHEREAS, Tenant desires to continue leasing the Premises, for the purpose of operating
a Technology Career Institute and Small Business Development Center; 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, 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. Mira Costa Community College District ("Trade Name").
1.2 Premises. The Premises (defined above) are commonly known as 2075
Las Palmas Drive, Carlsbad, California, 92011, and consist of a commercial building with
approximately 22,627 square feet of indoor space and related improvements, and an adjacent
parking lot.
1.3 Term and Rent Commencement. Approximately four (4) years and
394-days commencing upon the date when this Lease has been executed by both parties (the
"Term Commencement Date"), and expiring, unless sooner terminated in accordance with this
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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 tena.nt 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 understands this Lease is entered
into for a specified period of time. Tenant therefore waives any and all relocation benefits
defined in the California Relocation Assistance Law (Government Code, Section 7260, et. seq.).
ARTICLE4
RENT
4.1 General Provisions. As used herein, "rent" shall mean Base Rent (defined
below). 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 month shall be prorated on the basis of a thirty (30} day month.
Tenant assumes all risk of loss if payments are made by mail.
4.2 Payment of Base Rent. For each month or partial month of the Term
commencing on the Rent Commencement Date (except as otherwise expressly provided
herein), Tenant shall pay to Landlord the sum specified in Article 1 as Base Rent ("Base Rent")
in advance as set forth herein. Tenant shall pay the first installment of Base Rent to Landlord
concurrently with Tenant's execution of this Lease, and all subsequent installments of Base
Rent shall be payable . in advance on or before the monthly anniversary of the Rent
Commencement Date.
4.3 Additional Rent. Except for Base Rent, any and all amounts which Tenant
is required to pay to Landlord under this Lease shall be treated as "Additional Rent," and shall
be paid when due as provided in this Lease.
ARTICLE 5
SECURITY DEPOSIT
5.1 Security Deposit. Concurrently with Tenant's execution of this Lease,
Tenant shall deposit with Landlord the security deposit, if any, specified in Article 1 ("Security
Deposit"). Landlord shall hold the Security Deposit as security for Tenant's faithful performance
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Sept. 21, 2021 Item #1 Page 12 of 48
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Deposit Laws"), and (ii) any and all rights, duties and obligations Landlord may now or, in the
future, will have relating to or arising from the Security Deposit Laws. 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) 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 6
TAXES
6.1 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. In particular, Tenant
acknowledges that this Lease may result in a taxable possessory interest. Tenant shall be solely
responsible for payment of property ~axes associated with its occupancy of the Premises, if any
apply. Tenant shall also pay any fees imposed by law for licenses or permits fqr any business or
ac_tivities of Tenant upon the Premises or under this Lease.
6.2 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,
betterments, or improvements of whatever kind or nature made by Tenant to the Premises
that are separately assessed. Whenever possible.
ARTICLE 7
UTILITIES
7.1 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 th.e Premises for the past twelve (12) month period within thirty (30) days
after Landlord's request.
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7.2 Interruption of Utilities. Landlord shall have the right (but not the
obligation), with 72-hours prior written 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 except to the extent caused by Landlord. 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.
Notwithstanding the foregoing or any language in this Lease to the contrary, except in the
event of an act of Force Majeure, if any utility service to the Premises is interrupted more than
three (3) consecutive days solely due to the negligent or intentional act of Landlord or
Landlord's employees, and as a result, Tenant discontinues all business operations in the
Premises, Tenant shall have the right to abate all Base Rent payable hereunder for the period
for which such interruption and discontinuation exist. In the event of any such interruption of
any utility service to the Premises, Landlord shall use due diligence to restore promptly such
service.
ARTICLE 8
INSURANCE
8.1 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-" an_d 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. The policies that
Tenant is required to obtain pursuant to this Article shall name Landlord, and any other parties
requested by Landlord, as additional insureds, or as loss payee (as applicable) for property
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 fulfi-11 the indemnification provisions and requirements of this Lease. Tenant
agrees not to use the Premises in any manner, even if use is for purposes stated herein, tha_t
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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.
8.2 Commercial General Liability Insurance. Tenant shall obtairi 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 $1,000,000 per occurrence
for bodily injury, personal injury, death and property damage liability. If the submitted policies
contain aggregate limits, general aggregate limits will apply separately under this Lease or the
general aggregate will be _twice the required per occurrence limits. Liability coverage for the
~equired 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 ahd under the same conditions as Tenant's general liability insurance, if the sale of
alcoholic beverages is permitted in the Premises.
8.3 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 ~he replacement cost of all Tenant's Property, 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
$1,000.00 per occurrence. The proceeds from any such insurance shall be used by Tenant for
the replacement of personal property and trade fixtures as well as alterations and utility
installations.
8.4 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.
8.5 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.
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affect its suitability for any proposed use. Landlord shall have no responsibility or liability with
respect to any such occurrence.
10.2 Tenant's Obligations. 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 in a first-class order and neat, clean and
sanitary condition, including, (a) maintenance and repair of all equipment or facilities
exclusively serving the Premises, such as plumbing, heating, air conditioning, ventilating,
electrical, lighting facilities, boilers, fired or unfired pressure vessels, fire hose connections if
within the Premises, fixtures, interior walls, interior surfaces of exterior walls, ceilings, floors,
windows, doors, plate glass, and skylights, but excluding any items which are the responsibility
of Landlord as set forth below. If Tenant fails to perform Tenant's obligations under this
Paragraph, Landlord may, enter upon the Premises after ten {10) days' prior written notice to
Tenant (except in the case of an emergency, in which case no notice shall be required), perform
such obligations on Tenant's behalf, and put the Premises in good order, condition and repair,
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. Landlord warrants and represents that the heating, and air-
conditioning ("HVAC") systems for the Premises are in good working order as ofthe date hereof
and will remain so for the initial twelve (12) months of the term of this Lease, ordinary wear
and tear and negligence of Tenant excepted; in the event that any such systems and/or
equipment fail during said twelve-month period, the cost to repair or replace shall be the sole
responsibility of Landlord and no portion of such cost will be passed through to Tenant.
10.3 Landlord's Obligations. Landlord shall keep in good order, condition and
repair the foundations, exterior walls, structural condition of interior bearing walls, exterior
roof, fire sprinkler and/or standpipe and hose (if located in the common areas) or other
automatic fire extinguishing system ·including fire alarm and/or smoke detection system and
equipment, fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences,
signs and utility_systems serving the common areas and all parts thereof.
10.4 Landlord's Cure. Landlord shall have the right with 72-hours written
prior notice, 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, then Tenant shall perform the necessary maintenance,
repair and/or replacement work within ten {10) days after written notice from Landlord. If
Tenant fails to perform the necessary maintenance, repair and/or replacement work within ten
{10) days 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. Landlord's rights reserved in
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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; 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.
11.2 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
I give Landlord not less than ten (10) days' prior written notice of the commencement of
Tenant's Work or any Tenant Improvements in the Premises, and Landlord shall have the right
to post notices of non-responsibility 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 (1 ½) 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 ten (10) days after written request has been delivered
to Tenant.
11.3 Title to Tenant Improvements. Subject to Section 13.1 below, any and all
Tenant's Work and Tenant Improvements 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 the Tenant's Work and/or the Tenant Improvements pursuant to Article 13
below.
11.4 Signs. Tenant shall be responsible for purchasing, installing and
maintaining, at Tenant's sole cost, 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 go,od condition and repair during the
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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 13
DAMAGE AND DESTRUCTION
In the event of damage or destruction to the Premises by fire, the elements or
any other cause, Tenant shall, within ninety (90) days, commence and diligently pursue to
completion the repair, replacement or reconstruction of improvements 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). 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 frorri
time to time.
ARTICLE 14
EMINENT DOMAIN
14.1 Total or Substantial Taking. If all of the .Premises are taken under the
power of eminent domain or such a substantial portion thereof is so taken that reasonable
restoration will not result in the Premises being reasonably suitable for the conduct of 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.
14.2 Partial Taking. If there is a partial taking of the Premises, and after
restoration of any building or other improvements, the Premises would be reasonably suitable
for Tenant's continued occupancy and conduct of its business, Landlord, at its sole option, may
elect to terminate this Lease or affirm this Lease by delivering written notice to Tenant within
fifteen (15) days after any such partial taking. If Landlord fails to send any such written notice,
this Lease shall terminate on the later of the dates that possession is so taken or that Tenant or
Landlord is required to yield possession to the condemning authority. _ If Landlord e·lects to
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affirm this Lease, then: (i) this Lease shall terminate as to the part taken as of the date of
transfer of possession; (ii) the rental shall be reduced in the same proportion as the square
footage of the portion of the Premises taken bears to the original square footage of the
Premises; 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, rental shall be abated proportionately as set forth above. Tenant hereby
waives any statutory rights of termination which may arise by reason of any taking of the
Premises under the power of eminent domain.
14.3 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 or for Tenant's relocation expenses. Tenant hereby specifically waives any
right it may have to any compensation award representing the excess of the market value,
immediately before the taking, of Tenant's leasehold interest in the portion of the Premises
taken over the rent attributable thereto under the terms of this Lease.
ARTICLE 15
INDEMNIFICATION
Tenant shall 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, damages, liabilities, actions, causes of action (whether
legal, equitable or administrative), claims, judgments, costs, and expenses (including, without
limitation, reasonable attorneys' fees) arising as a direct or indirect consequence of any of the' .
following (except to the extent caused by the gross negligence or willful misconduct of Landlord
or any of Landlord Parties): (i) Tenant's failure to perform any of Tenant's obligations as and
when required by this Lease, or the failure at any time of any representation or warranty of
Tenant to be true and correct; (ii) the use and operation of the Premises during the Term; or
(iii) any act or omission by Tenant or any of Tenant's contractors, subcontractors or material
suppliers, engineers, architects, agents, employees, customers or invitees with respect to the
Premises. Tenant shall employ counsel satisfactory to Landlord, or at Landlord's option,
Landlord may retain its own counsel, at the expense of Tenant, to prosecute, negotiate and ·
defend any such claim, action or cause of action. Landlord shall have the right to compromise
or settle any such claim, action, or cause of action without admitting actual liability and withou_t
Tenant's consent. Tenant shall pay any indebtedness arising under said indemnity to Landlord
immediately upon demand by Landlord together with interest thereon, at the Remedy Rate,
from the date such indebtedness arises until paid. Tenant's obligations under this section shall
survive the expiration or termination of this Lease.
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ARTICLE 16
DEFAULTS AND REMEDIES
16.1 Events of Default. The occurrence of any of the following events shall
constitute an event of default and a material breach of this Lease on the part of Tenant:
A. 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.
B. 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 fail_ure on three
(3) occasions during any twelve (12) month period to timely pay rent on or before the due date
as provided for herein (even though subsequently cured).
C. Non-Permitted Use. Tenant's failure to comply with any
provision of this Lease relating to the Permitted Use, where such failure continues for ten (10)
days after written notice of such failure from Landlord.
D. 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 peri<:>d is specified in another provision of this
Lease.
E. 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.
F, Transfer without Consent. The occurrence of any Transfer
· without Landlorq's express prior written consent.
16.2 Remedies. Upon the occurrence of an event of default by Tenant as set
forth in Section 16.1 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
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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 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; ~ (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; ~ (iv) any
other amount necessary to compensate Landlord for all the actual and consequential damages
proximately caused by Tenant's failure to perform Tenant's obligations under this Lease or
which in the ordinary course of things would be likely to result therefrom; and (v) at Landlord's
election, such other amounts. in addition to or in lieu of the foregoing as may be permitted from
time to time by applicable California law. 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, with or
without terminating 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. Landlord shall have the remedy
described in California Civil Code Section 1951.4 (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 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
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customary to make the Premises ready to le~se [including the removal of any specialized
improvements installed by Tenant], cowt 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 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.
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,
Lanqlord may at any time after such reletting elect to terminate this Lease, in which case,
L~ndlord 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 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. Landlord may also so perform any such obligation without notice in
case of an emergency.
E. Receiver on Behalf of Landlord. If, at the instance of Landlord in
·any action arising under this Lease, a receiver shall be appointed to take possession of the
Premises or to collect the rents derived therefrom, then the receiver may, if it shall be
necessary or convenient in order to collect such rents, conduct the business of 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. 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.
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16.3 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. 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 Deed of Trust 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 ten {10) 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.
16.4 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 five percent (5%). 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.
16.5 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
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.
16.6 Guaranty. NA
16.7 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
additional time as is reasonably necessary to correct any such failure) after Landlord's receipt of
written notice of such failure from Tenant.
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17.2 Attornment. Tenant hereby attorns to and shall recognize the Landlord's
Lender as Tenant's landlord under this Lease and shall promptly execute and deliver any
instrument that Landlord may require to evidence such attornment. Tenant hereby irrevocably
appoints Landlord as Tenant's attorney-in-fact, coupled with an interest, to execute,
acknowledge and deliver the instrument of attornment on behalf of Tenant.
17.3 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 ten
(10) 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 ten (10) 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 ten {10) day period.
17.4 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 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.
17.5 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. In the event of such a transfer, the covenants and
agreements of Landlord shall thereafter be binding upon the transferee of Landlord's interest. ·
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ARTICLE 18
FORCE MAJEURE
If either party hereto shall be delayed in or prevented, from the performance of
any act required hereunder by reason of acts of God, labor troubles, inability to procure
materials, restrictive governmental laws or regulations or other causes without fault and
beyond the control of the party obligated (financial inability excepted) (collectively, "Force
Majeure"), performance of such act shall be excused for the period of the delay and the period
for the 'performance of any such act shall be extended for a period equivalent to the period of
such delay; provided, however, nothing in this Section shall delay-the Rent Commencement
Date or excuse Tenant from the prompt payment of ·any rent or other charge required of
Tenant hereunder, except as may be expressly provided elsewhere in this Lease.
ARTICLE 19
ASSIGNMENT AND SUBLETTING
19.1 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 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. If Tenant is a partnership or limited liability company, a withdrawal or change,
voluntary, involuntary, or by operation of law, of any partner or member, or the dissolution of
the partnership or limited liability company, shall be deemed a Transfer requiring Landlord's
consent. If Tenant consists of more than one person or entity, a purported assignment,
voluntary, involuntary, or by operati_on of law, from one person to the other shall be deemed a
Transfer requiring Landlord's consent. If Tenant is a corporation, any dissolution, merger,
consolidation, or other reorganization of Tenant, or the sale or other transfer of twenty-five
percent (25%) or more of the capital stock of Tenant or 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 aqditional
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; (iv) Tenant is in default under this Lease; or (v) the present net worth of the
proposed Transferee is less than the greater o~ Tenant's net worth as of the date of this Lease
or Tenant's net worth at the date of Tenant's request for consent.
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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.
19.2 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 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; provided, however, that Landlord shall be deemed to
have disapproved the Transfer Notice if Landlord has not sent Tenant written notice of
Landlord's approval within such thirty (30) day period. 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 in the amount of $500.00, as well as any
reasonable legal fees incurred by Landlord, within thirty {30) days after written request by
Landlord.
19.3 Landlord's Rights. Upon receipt of a Transfer Notice pursuant to
Section 20.2 above, Landlord shall have the right to: (i) withhold its consent to such Transfer, as
permitted pursuant to Section 20.1 above; (ii) terminate this Lease as it relates to the portion of
the Premises described in the Transfer Notice and recaptt,1re such portion of the Premises"
effective automatically as of the date of dispatch of a notice of termination from Landlord to
Tenant, which notice may be sent at any time within thirty (30} days following Landlord's
refusal to consent to the Transfer; (iii) sublet or receive an assignment of all or a portion of the
Premises from Tenant at the lower of the rental specified in this Lease o·r in Tenant's Notice; or
(iv) 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 any
Guarantor. of this Lease reaffirms its guaranty; or (c) that either Tenant or the proposed
Transferee cure, on or before the proposed effective date of such Transfer, any and all uncured
defaults hereunder; provided, however, in no event shall 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.
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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 form approved by
Landlord. 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. 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 to any Transfer, and may
be exercised by Landlord in its sole discretion 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 of 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 20
NOTICES
All notices given under this Lease shall be in writing and shall be given or served
either personally or by depositing the same by United States registered or certified mail
postage prepaid, return receipt requested, or by a nationally-recognized overnight delivery
courier, addressed to the applicable Address for Notices specified in Article 1. 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. Either party may change its
address 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 21
AUTHORITY
If Tenant is a corporation, trust, general or limited partnership or limited liability
company, each individual executing this Lease on behalf of such entity represents and warrants
that he or she is duly authorized to execute and deliver this Lease on behalf of said entity. If
Tenant is a corporation, trust, partnership, or limited liability company, Tenant shall,
simultaneously with execution of this Lease, deliver to Landlord written evidence of such
authority satisfactory to Landlord.
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proceeding a defense by reason thereof, within twelve (12) months after the date of the
inaction or omission or the date of the occurrence of the event or of the action to which the
claim, demand, right or defense relates, whichever applies.
ARTICLE 26
INTERPRETATION AND APPLICATION
26.1 Submission of Lease. Submission of this instrument for examination or
signature by 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.
26.2 Governing Law. This Lease shall be construed in accordance with and
governed by the statutes, decisions, and other laws of the State of California. 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.
26.3 "complete Agreement. This Lease contains all terms, covenants,
conditions, warranties and agreements of the parties relating in any manner to the rental, use
and occupancy of the Premises. No prior agreements or understanding pertaining tci the same
shall be valid or of any force or effect.
26.4 Amendment . .This Lease may not be amended, altered or modified in any
way except in writing signed by the parties hereto.
26.5 No Partnership. It is agreed that nothing contained in this Lease shall be
deemed or construed as creating a partnership or joint venture between 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.
26.6 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.
26.7 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.
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, 26.8 Captions. The captions of the Articles and Sections hereof are for
convenience only and are not a part of this Lease and do not in any way limit or amplify the
terms and provisions ofthis Lease.
26.9 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.
26.10 Joint and Several Liability. If either party is comprised of more than one
individual or entity, the obligations imposed upon such party hereunder shall be joint and
several to all parties signing this Lease as such party.
26.11 Exhibits. All exhibits attached to this Lease are incorporated herein by
this reference and made a part hereof, and any reference in the body of this Lease or in the
exhibits to the "Lease" shall mean this Lease together with all exhibits.
ARTICLE 27
MISCELLANEOUS
27.1 Time is of the Essence. Time is of the essence of each and all of the
terms and provisions of this Lease.
27.2 Successors. Subject to the restrictions on Transfers contained in this
Lease, all the terms, covenants and conditions hereof shall be binding upon and inure to the
benefit of the heirs, executors, administrators, successors and assigns of the parties hereto.
27.3 Recordation; Quitclaim. 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.
27.4 Limitation of Liability. It is expressly understood and agreed that
notwithstanding anything in this Lease to the contrary, and notwithstanding any applicable law
to the contrary, the liability of 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 income and profits from the Premises, and neither
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EXHIBIT B
MEMORANDUM OF TERM COMMENCEMENT
This Memorandum of Term Commencement is made as of September 22, 2021 by the
CITY OF CARLSBAD, a California municipal corporation ("Landlord"), and MIRA COSTA
COMMUNITY COLLEGE DISTRICT ("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 September 22, 2021 (the "Lease"), covering the Premises located at 2075 Las Palmas
Drive, Carlsbad, California, 92011, as more particularly described in the Lease. All terms
defined in the Lease st,;ill h~ve the same meaning when used in this Memorandum of Term
Commencement.
2. The Term Commencement Date occurred on September 22, 2021, the Rent
Commencement Date occurred on September 22, 2021, and the Expiration Date of the Lease is
September 21, 2026, subject to Tenant's options to extend under Section 3.2 of the Lease.
4. Base Rent shall be paid by Tenant to Landlord in accordance with the
following schedule:
Lease Year
09/22/2021-09/21/2022
09/22/2022 -09/21/2023
09/22/2023 -09/21/2024
09/22/2024-09/21/2025
09/22/2025 -09/21/2026
Base Rent Per Month
$71,475.20
$75,406.33
$79,553.68
$83,929.13
$88,545.23
5. In addition to Base Rent, Percentage Rent shall be paid by Tenant to Landlord
each Lease Year as provided in the Lease.
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EXHIBITC
OPERATIONAL GUIDELINES
The below enumerated Operational Guidelines 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 fund raising for performance measures requiring such funding.
Tenant shall create a center that will serve as a Technology Career Institute (TCI) where attendees can
become skilled professionals in advanced manufacturing and be trained on machinery and/or new
technology that will create jobs and benefit Carlsbad businesses and the region. The center will provide
learning opportunities for businesses utilizing the Small Business Development Center and could
potentially create additional partnerships to strengthen the educational goals and improve the skills of
the workforce.
Lessee shall be allowed to hold events and functions that will promote the center's purpose and
function such as Job Fairs, Industry Open Houses STEM summer outreach programs from High School
and Middle School students, and program fund raisers.
Furthermore, the Center aims to increase the sphere of available advanced education to include other
trades or skills to help in an evolving workforce.
Regional Small Business Development
The Small Business Development Center (SBDC) shall help small businesses in Carlsbad and the
surrounding region by:
• Hosting training events
• Counseling small businesses
• Helping small business get started
• Increasing local job sales
• Creating/retaining local jobs
• Helping small businesses obtain contracts
•
DOCS 121163-000007/2625579.8
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