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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. Sept. 21, 2021 Item #1 Page 3 of 48 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 Sept. 21, 2021 Item #1 Page 4 of 48 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 Sept. 21, 2021 Item #1 Page 5 of 48 .HISUIS'I.D.J 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 - 1 - Sept. 21, 2021 Item #1 Page 7 of 48 .HISUIS'l.:l:>.I 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 - 6 - Sept. 21, 2021 Item #1 Page 12 of 48 ,jJlSUlS'f,j:),I 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. -8 - Sept. 21, 2021 Item #1 Page 14 of 48 ,jJISUlS'I.D.J 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 - 9 - Sept. 21, 2021 Item #1 Page 15 of 48 JUSUlS'IJ).I 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. -10 - Sept. 21, 2021 Item #1 Page 16 of 48 .Hl:SUl:S'I.D.I 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 -14 - Sept. 21, 2021 Item #1 Page 20 of 48 -'HSUIS4-':>.J 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 -16 - Sept. 21, 2021 Item #1 Page 22 of 48 .H1SU1S'I.D.I 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 -18 - Sept. 21, 2021 Item #1 Page 24 of 48 jJ1SU1S'fj),I 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. -19 - Sept. 21, 2021 Item #1 Page 25 of 48 jJISUIS'fj:,,J 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 -20 - Sept. 21, 2021 Item #1 Page 26 of 48 .HlSUlS'f_j::>.J 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 -21 - Sept. 21, 2021 Item #1 Page 27 of 48 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. -22 - Sept. 21, 2021 Item #1 Page 28 of 48 _jJl!Ul!'I.D.I 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. -23 - Sept. 21, 2021 Item #1 Page 29 of 48 jJI\Ull'I.D.J 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. · -25 - Sept. 21, 2021 Item #1 Page 31 of 48 JHSU~'l.:D.I 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. -26 - Sept. 21, 2021 Item #1 Page 32 of 48 .'11SU1S'fj:l.l 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. -27 - Sept. 21, 2021 Item #1 Page 33 of 48 jJISUISlfj)_J 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. -28 - Sept. 21, 2021 Item #1 Page 34 of 48 _jJISUIS4.D.l 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. -30 - Sept. 21, 2021 Item #1 Page 36 of 48 _j[lSUlS'f_j:U , 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 -31 - Sept. 21, 2021 Item #1 Page 37 of 48 [remainder of page intentionally left blank] -33 - Sept. 21, 2021 Item #1 Page 39 of 48 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. - 1 -Sept. 21, 2021 Item #1 Page 44 of 48 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 -1 - Sept. 21, 2021 Item #1 Page 48 of 48