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HomeMy WebLinkAbout2012-12-11; City Council; Resolution 2012-2751 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 2012-275 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, CONSENTING TO AN AMENDMENT OF THE SUBLEASE AGREEMENT BETWEEN PALOMAR TRANSFER STATION, INC. AND COAST WASTE MANAGEMENT, INC. FOR A PORTION OF THE PALOMAR TRANSFER STATION. WHEREAS, the City of Carlsbad ("City") leases the Palomar Facility to Palomar Transfer Station, Inc. ("PTS"); and WHEREAS, PTS has a sublease with Coast Waste Management, Inc. (CWM) for a portion of the Palomar Facility for use as a trucking terminal ("WMI Sublease"); and WHEREAS, the City and PTS have an agreement to dispose of solid waste through the Palomar Facility; and WHEREAS, under Section 2.02.E of the agreement, the WMI Sublease shall not be amended without the prior written consent of the City; and WHEREAS, on February 14, 2012 the City Council of the City of Carlsbad consented to an amendment of the sublease between PTS and CWM for a portion of the Property; and WHEREAS, subsequent changes were made to the sublease approved on February 14, 2012 and changes were administrative in nature; and WHEREAS, the proposed WMI Sublease was approved by CWM, PTS and the County. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the City Council hereby provides this written approval for PTS to amend the WMI Sublease, retroactively effective June 1, 2012 as set forth in "Exhibit 2." /// /// /// 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 11th day of December 2012, by the following vote to wit: AYES: NOES: Council Members Hall, Kulchin, Blackburn, Douglas, Packard. None. ABSENT: None. MATT HALL, Mayor ATTEST: St^^^ierk (SEAL) X^tse:^o% SUB-SUBLEASE AND DISPOSAL AGREEMENT This Sub-Sublease and Disposal Agreement ("Agreement") is made and entered into as of April 20, 2012, among PALOMAR TRANSFER STATION, INC. ("Palomar") and ALLIED WASTE INDUSTRIES, INC. and its affiliates ("Allied"), and COAST WASTE MANAGEMENT, INC., a Califomia corporation, a Waste Management Company, and its affiliates (collectively "CWM"). RECITALS A. The County of San Diego, a political subdivision of the State of Califomia (the "County"), as lessor, and Palomar, as lessee, entered into that certain Palomar Transfer Station Lease Agreement dated October 31, 1997 (the "Transfer Station Master Lease") for that certain real property located in the City of Carlsbad, County of San Diego, Califomia identified as San Diego County Assessor's Parcel Number 97-0085-Al and known as the Palomar Facility (the "Property"), which consists, among other things, of a solid waste transfer station, office space, parking and maintenance facilities, all as more particularly described in the Transfer Station Master Lease, a copy of which Transfer Station Master Lease is attached hereto and incorporated herein as Exhibit A. B. Allied and CWM are parties to that certain Purchase Agreement dated November 5, 1999, as amended from time to time (the "Purchase Agreement"), which provides for the purchase by Allied of CWM's landfill and a landfill operating agreement in the Yuma, Arizona area. The execution of this Agreement is a condition to the consummation of the transactions contemplated by the Purchase Agreement. C. Palomar assigned all of its rights, title and interests as lessee in, under and to the Transfer Station Master Lease to the City of Carlsbad, a municipal corporation of the State of Califomia (tiie "City") pursuant to that certain Assignment of Lease dated June 1,2002. D. Palomar, pursuant to the terms of that certain Sublease Agreement for Palomar Transfer Station dated June 1, 2002 (the "Transfer Station Sublease") between Palomar, as sublessee, and the City, as sublessor, subleases tiie Property, a copy of which Transfer Station Sublease is attached hereto as Exhibit B. E. Commencing on the Effective Date hereof (as hereinafter defined), Palomar desires to sublease to CWM, and CWM desires to sublease from Palomar, the portion of tiie Property consisting generally of office space, parking and maintenance facilities for use as a tmcking terminal for the collection of solid waste and recyclable materials (the "Sublease Premises"). F. During the Term (as defined in Section 1), CWM desires to deliver Acceptable Waste (as defined in Section 3.2) collected by it from and in tiie City of Carlsbad, Califomia to the transfer station located on tiie Property (the "Transfer Station"), and Palomar desires to transport and dispose of such waste for CWM. G. Palomar, Allied and CWM entered into that certain Transport and Disposal Agreement, dated November, 2011. H. Palomar and Allied have entered into a renewal of that certain agreement entitied "Agreement for Transfer Station and Disposal Services between the City of Carlsbad and Palomar Transfer Station, Inc." ("Carlsbad Disposal Agreement") witii tiie City, and CWM has entered into a renewal of that certain agreement entitled "Contract for the Provision of Solid Waste Services" ("Carlsbad Collection Agreement") with the City. AGREEMENTS NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the covenants and agreements contained in tiiis Agreement, the parties agree as follows: L TERM Unless sooner terminated in accordance with the terms hereof, this Agreement shall become effective on the date first written above (tiie "Effective Date") and shall remain in effect until May 31, 2022 unless otherwise extended by written agreement of the parties hereto, or tiieir successors or assigns; provided the Transfer Station Sublease and the Transfer Station Master Lease are still validly existing (the "Term"), at which time CWM shall vacate the Sublease Premises in accordance with tiie terms and conditions of this Agreement. If the Transfer Station Sublease and the Transfer Station Master Lease are not still validly existing, tiien CWM shall vacate the Sublease Premises in accordance with the terms and conditions of this Agreement on or before May 31,2022. Upon expiration of the Term or as otherwise explicitly provided in tiiis Agreement, the obligations of Palomar to sublease tiie Sublease Premises to CWM, the obligations of CWM to sublease the Sublease Premises from Palomar and the obligations of CWM and Allied to deliver and accept Acceptable Waste shall terminate; provided, however, that all otiier obligations of the parties hereunder shall survive tiie termination of tiiis Agreement and continue until the same are fully satisfied or waived. 2. SUBLEASE PROVISION 2.1 Sublease Premises. Palomar hereby subleases to CWM and CWM hereby subleases from Palomar the Sublease Premises upon the following terms and conditions. This Agreement is made subject to and is suborduiate to all the terms and conditions of the Transfer Station Master Lease, including the provisions of Exhibit F to the Transfer Station Master Lease (McClellan-Palomar Airport: The County of San Diego Required Sublease Provisions) (the "Required Sublease Provisions"). The required provisions of the Required Sublease Provisions are attached hereto as Exhibit C and made a part of this Agreement by this reference. The effectiveness of the Transfer Station Master Lease shall be an express and continuing condition precedent to the effectiveness of this Agreement. The parties fiirther acknowledge that this Agreement is subject to the County's prior written consent, which consent is attached hereto and made a part hereof as Exhibit D. Palomar will use its best efforts to obtain the County's consent on or prior to June 1, 2012. Palomar covenants not to cause any default under the Transfer Station Sublease tiiat results in tiie termination of tiie Transfer Station Sublease or the Transfer Station Master Lease and not to take any otiier intentional action to cause tiie termination of tiie Transfer Station Sublease. 2.2 Rent. CWM shall pay to Palomar as rent for tiie Sublease Premises tiie sum of Fifteen Thousand and 00/100 Dollars ($15,000.00) per montii, in advance, on the first day of each month during the Term from tiie Effective Date to May 31, 2012. The base monthly rent, effective June 1,2012, and continuing for each and every montii during the Term tiiereafter, shall be the sum of Sbcty Thousand and 00/100 Dollars ($60,000.00) (for an annual rent equal to Seven Hundred Twenty Thousand and 00/100 Dollars ($720,000.00)) due and payable in accordance with the terms hereof From and after June 1, 2013, the rent hereunder shall be subject to a percentage increase only based on the annual increases in collection rates applied by the City pursuant to the Carlsbad Collection Agreement. However, under no circumstances shall the rent hereunder be decreased if the rate applied by tiie City pursuant to the Carlsbad Collection Agreement decreases, rather in that case there shall be no adjustment for tiie year in which there was no increase. In the event CWM fails to make payment when due, any amount remaining unpaid shall bear interest at the lesser of the rate of 1% per montii or tiie highest rate of interest allowed under Applicable Laws (as defined in Section 3.3(b)), from such time to the actual date of payment. 2.3 Taxes and Utilities. Palomar shall maintain all necessary electric, gas and water and sewer service for the operation of the Property, and shall provide tiie same to CWM with respect to the Sublease Premises. CWM shall reimburse Palomar one-half (1/2) of Palomar's utility costs, payable upon receipt by CWM of a copy of the utility invoice and evidence o payment by Palomar. Palomar shall pay all property taxes relating to the Property. CWM shall reimburse Palomar one-half (1/2) of all property taxes paid, except for any new or increased property taxes assessed solely with respect to property or improvements other than the Sublease Premises, payable upon receipt of tiie tax bill and evidence of payment by Palomar. CWM shall be solely responsible for any personal property taxes imposed with respect to its trade fixtures, fumishings and equipment located on the Sublease Premises. 2.4 Assignment and Subletting. CWM shall not voluntarily or by operation of law assign, transfer, sublet, mortgage or otherwise transfer or encumber the Sublease Premises without Palomar's prior written consent, which shall not be withheld unreasonably; provided however, that CWM may assign this Agreement to an affiliate of CWM without the consent of Palomar or Allied. 2.5 Transfer Station Master Lease is Incoroorated. This Agreement is made subject to and is subordinate to the terms of the Transfer Station Master Lease, including Exhibit F thereto, which shall govern this Agreement. 2.6 Permitted Uses. CWM may utilize the Sublease Premises for parking of vehicles, maintenance, office facilities, and ancillary uses related to the operation of a solid waste and recyclable materials collection tmck terminal (collectively the "Permitted Uses"). 7 2.7 Covenant of Ouiet Enjoyment. Provided that CWM is in compliance with the terms and conditions of this Agreement, Palomar covenants that it will take no action that will interfere witii CWM's quiet and peaceable enjoyment of tiie Sublease Premises for the Permitted Uses. 2.8 Encumbrances. Palomar shall not pledge or encumber this Agreement, or any right or interest in the Sublease Premises or any of tiie improvements tiiereon, in any manner that would interfere with CWM's quiet and peaceable enjoyment thereof during the Term of this Agreement, and any pledge or encumbrance of any kind or nature shall be made expressly subject to this Agreement and CWM's right of possession of the Sublease Premises during the Term of this Agreement. 2.9 Improvements. If and to the extent permitted by the terms and conditions and approval requirements of the Transfer Station Master Lease, which are in addition to the approval rights of Palomar, CWM shall have the right to make legally permitted improvements to the Sublease Premises upon the written consent of Palomar, which shall not be withheld unreasonably nor required in the event of improvements of less than $25,000 in cost. 2.10 Eminent Domain. If all or any portion of the Sublease Premises is taken in fee by a governmental entity and such taking interferes with the conduct of CWM's Permitted Uses, CWM shall have the right to terminate this Agreement without penalty upon sixty (60) days' written notice to Palomar. 3. CWM's OBLIGATIONS 3.1 Exclusivity. (a) During the Term hereof, CWM shall deliver to Palomar and Palomar shall accept at the Transfer Station all Acceptable Waste collected by CWM for disposal pursuant to the Carisbad Collection Agreement (the "Carlsbad Acceptable Waste"). CWM estimates tiie amount of Carisbad Acceptable Waste to be delivered, based on a 5.5-day work week, to be approximately 350 tons per day. Notwitiistanding the above, CWM's obligation to deliver tiie Carlsbad Acceptable Waste exclusively to the Transfer Station shall terminate (i) concurrently with the termination or expiration of the Carlsbad Collection Agreement, however brought about, or (ii) should the City refuse to approve of the disposal facility selected by Palomar, or exercise its "flow control" rights to direct the Carlsbad Acceptable Waste to a facility other than the Transfer Station or to a disposal facility other than a disposal facility selected by Palomar. For handling, transporting and disposing of such Acceptable Waste, CWM shall pay Palomar the fee set forth in Section 5.1, subject to adjustment as provided in Section 5. No action by the City or other governmental entity that prevents or limits the delivery of Carisbad Acceptable Waste to the Transfer Station or a disposal facility selected by Palomar shall constitute a breach of this Agreement by eitiier party, limit tiie Term, or affect any of the terms and conditions of the Sublease provided in Section 2. (b) CWM shall arrange, be responsible for, and bear the costs of delivering Acceptable Waste to Allied at tiie Transfer Station, CWM shall ensure tiiat all waste it delivers <7 to Allied is Acceptable Waste. CWM shall deliver tiie Acceptable Waste during the Transfer Station's normal hours of operation. (c) Allied shall at all times maintain permitted capacity and operate the Transfer Station in a manner so as to allow tiie prompt receipt of tiie Carlsbad Acceptable Waste when and as delivered by CWM. With respect to all Acceptable Waste delivered by CWM, Palomar shall operate the Transfer Station in a manner such that the tmck turnaround times shall be minimized, and in no event exceed fifteen (15) minutes. (d) CWM shall defend, indemnify and hold harmless Allied with respect to any notices of violation or other citations related to CWM's occupancy and operation of the Sublease Premises during the Term, and will take reasonable corrective action in response thereto prior to the transfer of occupancy to Allied. 3.2 Composition of Waste. As used in tiiis Agreement, "Acceptable Waste" means all garbage, refiise, mbbish and other materials and substances discarded or rejected as being spent, useless, worthless, or in excess to tiie owners at tiie time of such discard or rejection and which are normally disposed of, or collected from residential (single family or multi-family), commercial, industrial, governmental and institutional establishments, and which are acceptable for disposal at Class 111 landfills in Califomia, 3.3 Definition of Unacceptable Waste. Waste shall be considered "Unacceptable Waste" if: (a) it fails to comply with the requirements of Section 3.2; (b) it can now or hereafter be defined by any applicable federal, state or local statute, law, ordinance, code, mle, regulation, order, judgment, permit or license relating to the operation, maintenance and constmction of the Transfer Station or the transportation, receipt, acceptance or disposal of waste materials ("Applicable Law") as a hazardous waste, a hazardous substance or hazardous material, or if it is detennined by any governmental agency or unit having or claimmg appropriate jurisdiction to be harmful, toxic or dangerous, or otherwise ineligible for disposal at Allied's disposal facility; provided, however, that Acceptable Waste may include de minimis amounts of hazardous substances commonly found in waste generated from residences and commercial premises that may be disposed of in Class III landfills in Califomia; (c) it is agricultural waste, explosive materials, corrosive materials, pathological waste, biological waste, offel (entrails, etc., of butchered animals), radioactive materials, ashes, foundry sand, mining waste, sewage sludge, cesspool and other human waste, human and animal remains, motor vehicles, major motor vehicle parts (including transmissions, rear ends, springs, fenders, batteries, battery cables, exhaust systems and gasoline tanks), agricultural and farm machinery and equipment and major parts thereof, marine vessels and major parts thereof, any other large type of machinery or equipment, including tiiick walled or solid metallic objects such as castings, forgings, gas cyluiders, 55 gallon dmms, asbestos insulation, closed metal containers, barrels, buckets, or large motors, solid blocks of mbber or plastic, large rolls of carpet or fencing over 12 inches in diameter, steel or nylon rope, chains, cables or slings, logs larger than usually accepted according to Allied's normal operating procedure at its disposal fiicilities, tree stumps, more than an incidental amount of tires, white goods such as refrigerators, stoves and washing machines that have not been properly evacuated, liquid waste, including liquid chemical wastes, sewage and otiier highly diluted water-carried materials or substances and those in gaseous form, or special nuclear or by-product materials witiiin the meaning of the Atomic Energy Act of 1954, as amended; (d) it is constmction materials and/or demolition debris which is not permitted under then Applicable Law to be disposed of at Class III landfills in Califomia; or (e) it is any other material which may present a substantial endangerment to public healtii or safety, would cause applicable air quality or water effluent standards to be violated by the normal operation of Allied's disposal facilities or because of its size, durability or composition cannot be disposed of at Allied's disposal facilities or has a reasonable possibility of otherwise adversely affecting the operation or usefiil life of Allied's disposal facilities outside the normal usage expected for such facilities. 3.4 Rejection of Waste. This Agreement creates no obligation on Palomar or Allied to accept or dispose of any Unacceptable Waste. Palomar or Allied shall have the right in its reasonable discretion to reject delivery of any waste offered for acceptance by CWM that does not constitute Acceptable Waste. Palomar or Allied may reject, in whole or in part, any load containing Unacceptable Waste. CWM's delivery vehicle in question shall immediately remove any Unacceptable Waste rejected by Palomar or Allied and transport it to anotiier lawful place of disposition. 3.5 Delivery Vehicles. Acceptable Waste shall be delivered by CWM, at its expense, to Allied at the Transfer Station in enclosed container vehicles or enclosed compactor vehicles which shall include, but not be limited to, properly covered roll-offs, complying witii all Applicable Laws. Such vehicles shall be enclosed and self-unloading and shall comply with tiie identification procedures at tiie Transfer Station. 3.6 Weighing of Acceptable Waste. Allied shall operate and maintain, or cause to be operated and maintained, a scale facility at tiie Transfer Station. Upon arrival of a CWM delivery vehicle at a Transfer Station, Allied shall weigh each load of Acceptable Waste delivered to Allied for transportation and disposal. Allied shall keep daily records of the weight of each load of Acceptable Waste, and shall deliver a report of weights to CWM by electronic or other approved means prior to the close of business on the day the loads are delivered. CWM reserves tiie right to use its own or otiier scales to verify the weight of each load, and to dispute the weight of, and payment of fees on, any load whose weight is materially different fiiom tiiat indicated on Allied's report. 3.7 Access to Sublease Premises. Allied shall grant or cause to be granted to CWM, its agents and employees, during the Term of this Agreement, access to tiie Transfer Station for purposes of fulfilling its obligations under this Agreement. 3.8 Permits and Licenses. CWM shall at all times maintain in full force and effect all existing permits, licenses and approvals necessary to deliver waste to Allied. CWM shall collect and deliver waste in compliance with all Applicable Law. 4. PALOMAR'S AND ALLIED'S OBLIGATIONS 4.1 Transfer Station Premises. Allied or its designee shall be responsible for the operation and maintenance of all improvements at the Transfer Station. Allied accepts the transfer of the right to occupy the Transfer Station. 4.2 Transportation. Allied shall provide suitable transportation equipment to transport Acceptable Waste tendered by CWM to Allied's disposal sites. Subject to Sections 3.1 and 3.4, Palomar agrees to accept all Acceptable Waste tendered to it by CWM under this Agreement and to transport such Acceptable Waste to a permitted landfill capable of accepting the Acceptable Waste. 4.3 Disposal. Subject to Sections 3.1 and 3.4, Alhed agrees to dispose of all Acceptable Waste tendered by CWM at a permitted landfill capable of accepting the Acceptable Waste. Allied shall be solely responsible for determining the appropriate disposal sites, times, techniques and methods for disposal of the Acceptable Waste; except that Allied shall comply with any orders or directives from a local governmental entity regarding tiie disposal site utilized made pursuant to contract or through the exercise of that entity's "flow control" powers. 4.4 Permits and Licenses. Palomar and Allied shall at all times maintain in fiill force and effect all existing permits, licenses and approvals necessary to operate the Transfer Station and transport and dispose of Acceptable Waste delivered to Palomar at the Transfer Station. Palomar and Allied shall operate the Transfer Station and transport and dispose of Acceptable Waste in material compliance with all Applicable Law. 5. COMPENSATION FOR DISPOSAL SERVICES 5.1 Fees. For the acceptance, transportation and disposal by Palomar and Allied o Acceptable Waste generated in or collected in the City of Carlsbad and delivered to the Transfer Station pursuant to Section 3.1, CWM will pay Palomar the per ton fee established in the Carlsbad Disposal Agreement (the "Disposal Fee"), as such Disposal Fee is adjusted from time to time pursuant to the terms of the Carlsbad Disposal Agreement, as it may be amended from time to time. 5.2 Taxes. Subject to Section 5.3, CWM shall reimburse Allied for any new or increased taxes, tariffs, fees, surcharges or other charges imposed by legislation or regulations enacted or promulgated after the date of this Agreement (collectively, "Taxes") and levied upon the transportation and disposal of the Acceptable Waste upon 90 days written notice of such change in legislation and upon submission by Palomar or Allied of evidence that such Taxes have been levied or paid; provided, however, that CWM shall have no obligation to reimburse Allied with respect to any increase in host fees on Carisbad Acceptable Waste. Any sales, use, or other taxes imposed by any federal, state or local law on any goods and/or services required to II be procured or fumished by a party under this Agreement shall be duly paid by such party. Each party shall pay, at its own expense, all payroll taxes or contributions, unemployment insurance or other similar taxes, assessments or charges, as now or hereinafter may be in effect which are to be paid relating to any employee or agent of tiie party. Notwithstanding tiie foregoing, tiie price adjustments provided for in this Section 5.2 shall not apply to the extent such Taxes are included in and paid through the Disposal Fee. 5.3 Exceptions to Adjustments, Notwitiistanding the provisions of Section 5.2, in the event CWM is unable to pass through any rate adjustment on Carlsbad Acceptable Waste related to a change in Applicable Laws or new or increased taxes or fees to the City pursuant to the Carisbad Collection Agreement, and provided that CWM has made a good faitii effort to obtain such pass through, tiie rate adjustment requested or imposed by Palomar or Allied shall be of no further force and effect and tiie rate for services shall be the same as if such adjustment had not been requested or imposed. 5.4 Payment. Palomar shall transmit an itemized invoice to CWM of all disposal charges hereunder on a monthly basis. CWM shall pay all invoices witiiin tiiirty (30) days after receipt. In tiie event CWM fails to make payment when due, any amount remaining unpaid shall bear interest at a rate of the lesser of 1% per month or the highest rate of interest allowed under Applicable Laws from such time to the actual date of payment. 5.5 No Rights of Set-off. The obligations of CWM to make payments under this Agreement shall not be subject to any set-off abatement, counterclaim, existence of a dispute or any reason, known or unknown, foreseeable or unforeseeable, which might otherwise constitute a legal or equitable defense or discharge of the liabilities of CWM hereunder or limit recourse to CWM. 6. TITLE AND RISK OF LOSS 6.1 Acceptable Waste. In the case of Acceptable Waste delivered to Palomar at tiie Transfer Station, all title, risk of loss and all other incidents of ownership of Acceptable Waste shall transfer from CWM and vest in Palomar and Allied upon the Acceptable Waste being accepted by Palomar at the Transfer Station. 6.2 Unacceptable Waste. Title, risk of loss and all other incidents of ownership of Unacceptable Waste and any rejected Acceptable Waste tendered by CWM for disposal at the Transfer Station shall at no time be transferred to Palomar or Allied, and shall at all times remain in CWM. 7. REPRESENTATIONS, WARRANTIES AND COVENANTS 7.1 Palomar's and Allied's Representations and Warranties. Palomar and Allied represent and warrant to CWM that: (a) it has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder; (b) the execution, delivery and performance of tiiis Agreement have been duly authorized by all necessary action on the part of Palomar and Allied; (c) it is, or will be prior to providing service under this Agreement, in material compliance with all Applicable Laws affecting the services to be provided by it, and it will perform such services using industry accepted practices; and (d) it will observe and comply, in all material respects, with all Applicable Laws. 7.2 CWM's Representations and Warranties. CWM represents and warrants to Palomar and Allied that: (a) it has fiill power and authority to execute and deliver this Agreement and to perform its obligations hereunder; (b) the execution, delivery and performance of this Agreement have been duly authorized by all necessary action on the part of CWM; (c) it is, or will be prior to performing its obligations under this Agreement, in material compliance with all Applicable Laws affecting the services to be provided by it, and it will perform such services using industry accepted practices; (d) it will observe and comply, in all material respects, witii all Applicable Laws; (e) is under no restraint which prohibits tiie transfer of possession or titie to such Acceptable Waste to Palomar or Allied, 7.3 Additional Covenants of CWM. CWM shall promptly report to Palomar any information tiiat the Acceptable Waste tendered to Palomar, or some constituents or components thereof, present or may present a threat to human health or tiie environment which was not disclosed prior to loading of the Acceptable Waste on Palomar trailers or containers for transportation and disposal. 8. INDEMNIFICATION 8.1 Indemnification by CWM. CWM agrees to indemnify and hold harmless Palomar and Allied and its subsidiaries and affiliates, and tiieir respective directors, officers, agents and employees (the "AlUed Indemnified Parties") from and against any and all liabilities, losses, damages, costs, expenses and disbursements, including reasonable legal fees and expenses, arising out of any claim or loss of or damage to property and injuries to or death of any persons, including any Allied Indemnified Parties, caused (i) by tiie breach of any term, covenant, agreement or undertaking herein of CWM (other tiian a breach caused by Palomar's or Allied's breach of its obligations hereunder) or (ii) by the negligence or willfiil misconduct of CWM. (5 8.2 Indenmification by Palomar and Allied. Palomar and Allied agree to indenmify and hold harmless CWM and its subsidiaries and affiliates, and their respective directors, officers, agents and employees (the "CWM Indemnified Parties") from and against any and all liabilities, losses, damages, costs, expenses and disbursements, including reasonable legal fees and expenses, arising out of any claim or loss of or damage to property and injuries to or deatii of any persons, including any CWM Indemnified Parties, caused (i) by the breach of any term, covenant, agreement or undertaking herein of Palomar or Allied (other tiian a breach caused by CWM's breach of its obligations hereunder) or (ii) by the negligence or willful misconduct of Palomar or Allied. 9. TERMINATION AND REMEDIES 9.1 Default. (a) Events of Default of Palomar or Allied. Each of tiie following shall be an event of default by Palomar or Allied under this Agreement: (i) Palomar or Allied fail to observe and perfomi any material term, covenant or agreement contained in this Agreement on its part to be performed and continues such failure for a period of thirty (30) days after written notice to Palomar or Allied specifying the nature of such failure and requesting that it be remedied; or (ii) Palomar or Allied make a general assignment for the benefit of creditors, files a petition in bankmptcy, is adjudicated insolvent or bankmpt, petitions or applies to any tribunal for any custodian, receiver or tmstee for it or any substantial part of its property, commences any proceeding relating to it under bankmptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction whetiier now or hereinafter in effect, or if tiiere shall have been filed any such proceeding, in which an order for relief is entered or which remains undismissed for a period of sixty (60) days or more or if by any act indicates its consent to, approval of or acquiescence in any such petition, application or proceeding or order for relief or tiie appointment of any custodian, receiver of or any tmstee for it or any substantial part of its property or suffers such custodianship, receivership or tmsteeship to continue undismissed for a period of sixty (60) days or more. (b) Events of Default CWM. Each of the following shall be an event of default by CWM under this Agreement: (i) CWM fails to pay any amounts, including without lunitation any rent or Disposal Fee, which become due hereunder, witiiin thuly (30) days notice of delinquency from Palomar or Allied; (ii) CWM fails to observe and perform any other material term, covenant or agreement contained in this Agreement on its part to be performed and continues such failure for a period of thirty (30) days after written notice to CWM specifying tiie nature of such failure and requesting that it be remedied; or 10 (iii) CWM makes a general assignment for tiie benefit of creditors, files a petition in bankmptcy, is adjudicated insolvent or bankmpt, petitions or applies to any tribunal for any custodian, receiver or tmstee for it or any substantial part of its property, commences any proceedings relating to it under bankmptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction whether now or hereinafter in effect, or if there shall have been filed any such proceeding, in which an order for relief is entered or which remains undismissed for a period of sixty (60) days or more or if by any act indicates its consent to, approval of or acquiescence in any such petition, application or proceeding or order for reliefer the appointment of any custodian, receiver of or any tmstee for it or any substantial part of its property or suffers such custodianship, receivership or tmsteeship to continue undismissed for a period of sixty (60) days or more. (c) Remedies on Default. Whenever any event of default shall have occurred and be continuing, the nondefaulting party shall have the following rights and remedies: (i) Upon thirty (30) days' written notice to Palomar or Allied if Palomar or Allied is tiien in default, CWM shall have the option to terminate tiiis Agreement unless the event of default is cured prior to tiie expiration of such 30-day period or unless during such period Palomar or Allied has taken remedial steps tiie effect of which would be to enable Palomar or Allied to cure such event of default within a reasonable period of time; (ii) Upon thirty (30) days' written notice to CWM, if CWM is tiien in default, Palomar or Allied shall have tiie option to terminate this Agreement unless the event of default is cured prior to tiie expiration of such 30-day period or unless during such period CWM has taken remedial steps tiie effect of which would be to enable CWM to cure such event of default witiiin a reasonable period to time; and (iii) In the event Palomar or Allied is in default of its obligation to handle, transport or dispose of Acceptable Waste delivered by CWM to the Transfer Station pursuant to Sections 3.1(c) and 4.3, except where arising as a result of an event of Force Majeure, and following notice and opportunity to cure of not more tiian one (1) business day, CWM, in addition to any otiier rights and remedies provided herein, shall have the right to deliver Acceptable Waste directly to a disposal facility selected by CWM and to have rehnbursed from Palomar or Allied any and all additional handling, transportation, or disposal costs. 10. MISCELLANEOUS 10.1 Force Majeure. Except for CWM's obligation to pay for rent and services rendered, any party's obligations under tiiis Agreement may be suspended by a party in the event of: (i) an occurrence beyond tiie reasonable control of tiiat party which adversely affects tiie ability of the party to perform its obligations hereunder or to comply witii the requirements of any governmental order, permit or otiier approval; (ii) acts of God, landslides, lightning, earthquakes, hurricanes, tomadoes, severe weatiier, fires, explosions, floods, acts of public enemy, war, blockades, insurrections, riots or civil disturbances; or (iii) orders and/or judgments of any federal, state or local court, adnunistrative agency or governmental body, or otiier entity. 11 if not tiie result of willfiil or negligent action of the party relying tiiereon or failure to act in accordance witii tiiis Agreement (provided, however, that tiie contesting in good faith by such party of any such order and/or judgment shall not constitute or be constmed to constitute a willful or negligent action or inaction of such party), 10.2 No Opposition by CWM. CWM shall not take any action, or omit to take any action, that would oppose Allied's efforts to re-negotiate tiie City of Carlsbad host fees, to repermit the Transfer Station or expand the conditional use permit relating thereto; provided, however, tiiat CWM shall have all rights under Applicable Laws to comment on any application, Environmental Impact Report, or other related filing. 10.3 Assignment: Binding Effect. Neitiier party shall assign tiiis Agreement without the consent of tiie otiier, which shall not be withheld unreasonably nor required in the event of an assignment to an affiliate; provided, however, tiiat no assignment by Palomar or Allied shall interfere with CWM's use of the subleased Sublease Premises during tiie Term of tiiis Agreement. This Agreement shall be binding upon and shall inure to tiie benefit of the parties and their respective successors and assigns. 10.4 Entire Agreement. This Agreement (including the Transfer Station Master Lease) supersedes all prior agreements, written or oral, with respect to tiie subject matter of this Agreement, This Agreement may be changed only by a written instmment signed by both parties hereto. 10.5 Severability. In the event that any one or more of the provisions contained in this Agreement is, for any reason, held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any otiier provisions of this Agreement, and all other provisions shall remain in full force and effect. 10.6 Waiver. No delay or omission by a party in exercising any right under tiiis Agreement will operate as a waiver of tiiat or any otiier right, A waiver or consent given by a party on any occasion is effective only in tiiat instance and will not be constmed as a bar to or waiver of any right on any other occasion. 10.7 Notice. Any notice, request, information or otiier document to be given hereunder to one of tiie parties by tiie other party shall be in writing and shall be given by hand delivery, facsimile, certified or registered U.S. mail or a private courier service which provides evidence of receipt as part of the service, as follows: If to Palomar/Allied: Palomar Transfer Station, Inc. Allied Waste Services San Diego 8364 Claremont Mesa Boulevard San Diego, CA92111 Attn: James T. Ambroso, Vice President 12 Witii a copy to: Republic Services, Inc. 18500 North Allied Way Phoenix, AZ 85054 Attn: General Counsel If to CWM: Coast Waste Management, Inc. 5960 El Camino Real Carlsbad, CA 92108-0947 Attn: District Manager With a copy to: Waste Management - Westem Group 7025 N. Scottsdale Road Suite 200 Scottsdale, AZ 85253 Attention: Group Legal Counsel 10.8 Goveming Law. This Agreement shall be govemed by and constmed in accordance witii tiie laws of the State of California. 10.9 Insurance. (a) Both parties agree to fumish to the other, upon execution, certificates attesting to the existence of the following insurance and to maintain tiie following insurance during the term of this Agreement: Coverages Limits of Liability Workmen's Compensation Statutory Employer's Liability $1,000,000 Each Occurrence General Liability, Including $5,000,000 Combined Single Limit, Bodily Injury, Property Damage Each Occurrence And Contractual Liability Automobile Liability, Including $5,000,000 Combined Single Limit, Bodily Injury and Property Damage Each Occurrence (b) Each such certificate shall contain a statement of the insurer's obligation to notify the party to whom the certificate is addressed at least tiiirty (30) days prior to cancellation of any policy covered thereunder. The policy shall also contain a waiver of subrogation. 13 IN WITNESS WHEREOF, the parties have executed tiiis Agreement as of tiie day and year first above written. ALLIED: Allied Waste Industriearlnc. CWM: Its Vice President PALOMAR: Palomar Transfer Station, es T. Ambroso Its Vice President Coast Waste Management, Inc. !7133I94_IJX)C 14 EXHIBIT A TRANSFER STATION MASTER LEASE [See attached] 1^ PALOMAR TRAHSPBR STATION I»EASS AGREEMBMT MCCLSLLAN-PALOMAR AIRPORT CARLSBAD, CALIFORNIA EXHIBIT 0 LESSOR: TSE COOWTY OF SAK DIBOO LESSEE I PALOMAR TRAKSFER STATIOH, INC. PARCELS: APM#. 97-0085-Al COUNTY CONTRACT NO, UA3.7W7l.Vl ^0 INDEX ARTICLE 1 - SUMMARY OF BASIC LEASE • PROVISIONS ........ i 1.1 Lessor . * 2. 1.2 Lessee [ [ ^ 1.3 Premises and Property [ , , . 2 1.4 The County's and Lessee's Lease Administrators , , 2 1.5 Term 2 1.6 Effective Date 2 1.7 Intentionally Omitted 2 1.8 Rent [ 2 1.9 General Description of Lessee's Use of Premises . ! 2 1.10 Definitions 2 i.Xl Exhibits To Lease 3 1.12 Construction of Lease Provisions I . i 3 ARTICLE 2 - LEASE OF PREMISES 4 2.1 Description . .• 4 2.2 Mineral Rights 4 2.3 Reservations to the County/Easement Reservations' . 4 2.4 Lease Subordinate to Conditions and Restrictions Imposed by Public Agencies on Airport Operations . 4 ARTICLE 3 - TERM OF LEASE AND FIRST RlOaSC. TO .ACQUIRE THB^> PREMISES 5 3.1 Term? Definitions ^ 5 3.2 Surrender of the Premises; Quitclaim of Lessee*s^> Interest Upon Termination 6 3.3 Early Termination by the County 6 3.4 First Right to Acquire the Premises 6 ARTICLE 4 - RENT 7 4.1 Prepaid Rent 7 4.2 Base Rent for Option Periods 7 4.3 Payments of Monthly Base Rent . 7 4.4 Rent Adjustment at Commencement of Each Option Period 7 4.5 cost of Living Adjustment ("COLA") to the Base Rent Payable Monthly During Option Periods .... a 4.6 Consumer Price Index . 9 ARTICLE 5 - CONDITIONS PRECEDENT TO EFFECTIVENESS OF LEASE 5.1 Conditions Precedent to Effectiveness of Lease . . 9 ARTICLE 6 • POSSESSION AND USB 10 6.1 Permitted Uses 10 6.2 Duties and Prohibited Conduct 10 6.3 Compliance with Laws 11 6.4 Substance Abuse 12 6.5 Control of Premises 12 o«/ism ARTICLE 7 - UTILITIES 12 ARTICLE 8 - MECHANICS* LIENS 13 8.1 Mechanics' Liens 13 8.2 contest of Lien 13 8.3 Right to Cure 13 8.4 Notice of Lien 13 8.5 Notice of Nonresponsibility 13 ARTICLE 9 . - SECURITY 14 ARTICLE 10 - IMPROVEMENTS; PERSONAL PROPERTY; FIXTURES; MINOR ALTERATIONS 14 10.1 Improvements 14 10.2 Construction Requirements . 14 10.3 The County's Costs; Indemnity 15 10.4 Personal Property 15 10.5 Fixtures 15 10.6 Signs and Lighting 16 10.7 Minor Alterations . 16 ARTICLE 11 - TAXES, ASSESSMENTS AND FEES 16 11.1 Responsibility for Payment of Taxes and Assessments 16 11.2 Definition of "Taxes" 16 11.3 Creation of Possessory Interest 17 ARTICLE 12 - REPAIRS; MAINTENANCE 17 12.1 Acceptance of Premises 17 12.2 Lessee's Repair and Maintenance Obligations . . . . 17 12.3 Lessee's Failure to Maintain 18 12.4 Right to Enter . 18 12.5 County Not Obligated to Repair or Maintain; Lessee's Waiver of Califomia Civil Code Section 1942 18 ARTICLE 13 - INDEMNITY AND INSURANCE 19 13.1 Indemnity 19 13.2 Insurance 19 13.3 indemnity 19 ARTICLE 14 - CONTAMINANTS 20 14.1 Environmental Laws - Definition 20 14.2 Contaminants, Leachate and Landfill Gas - Definitions 20 14.3 Lessee's Representations and Warranties 20 14.4 Indemnifications Regarding Contaminants, X/eachate and Landfill Gas 22 14.5 Remedies Cumulative; Survival 22 14-6 Inspection 22 ARTICLE IS - ASSIGNMENT, SUBLEASING AND ENCUMBRANCING .... 22 ii W>M7 ARTICLE 16 DEFAULTS BY LESSEE; THE COUNTY'S REMEDIES .... 28 16.1 Events of Default 28 16.2 Notices . . 29 16.3 The County's Rights and Remedies 29 16.4 The County's Damages 30 16.5 Fixtures and Personal Property 31 16.6 The County's Security Interest 32 16.7 Lessee's Waiver . .32 16.8 Interest 32 ARTICLE 17 - DEFAULTS BY THB COUNTY; REMEDIES 32 ARTICLE 18 - ABANDONMENT i3 « I ARTICLE 19 • BANKRUPTCY : . . 33 19.1 Right of Termination f,. ., 33 19.2 Request for Information '. < 34 ARTICLE 20 - DAMAGE OR DESTRUCTION 34 ARTICLE 21 - EMINENT DOMAIN 35 ARTICLE 22 - SALE OR MORTGAGE BY THB COUNTY 36 ' 22.1 Sale or Mortgage 36 ARTICLE 23 - SUBORDINATIONr ATTORKMHWr: 36 23.1 Subordination 36 23.2 Attornment 36 ARTICLE 24 - COUNTY'S RIGHT OF ACCESS. 36 24.1 Access 36 24.2 Lessee Waivers Regarding Coimty Access 37 ARTICLE 25 - QUIET ENJOYMENT 37 ARTICLE 26 - HOLDING OVER 37 ARTICLE 27 - NOTICES 38 27.1 Notices 38 27.2 Default Notices 38 ARTICLE 28 - NONDISCRIMINATION 38 ARTICLE 29 - AFFIRMATIVE ACTION PROGRAM 38 ARTICLE 30 - WAIVER OF RELOCATION ASSISTANCE BENEFITS .... 39 30.1 Relocation Assistance Benefits 39 30.2 Lessee's Waiver and Release of Relocation Benefits 39 ARTICLE 31 - RECORDS, ACCOUNTS AND AUDITS 40 L>3.7«377t.Vl iii ouxtm A3 ARTICLE 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 - GENERAL PROVISIONS . • *0 .1 Authority *0 .2 Brokers *0 .3 Captions ^0 .4 The County Approval 40 , 5 Cumulative* Remedies 41 .6 Entire Agreement 41 .7 Estoppel Certificate 41 .8 Exhibits *l .9 Force Majeure 41 .10 Goveming Law • 42 .11 Interpretation 42 ,12 Joint and Several Liability r • • .13 Lessee's Lease Administration i . . 42 !l4 Liquidated Damages 42 .15 Modification • !• .16 Partial Invalidity . . .1 . ., 42 .17 Payments .18 Successors & Assigns • • 43 .19 Time of Essence *3 .20 Waiver *3 EXHIBIT A: EXHIBIT B: EXHIBIT C: EXHIBIT D: DESCRIPTION AND PLAT OF THE PREMISES FAA REQUIREMENTS MCCLELLAN-PALOMAR AIRPORT INDUSTRIAL AREAS DEVELOPMENT STANDARDS MCCLELLAN-PALOMAR AIRPORT INDUSTRIAL AND AVIATION AREAS PERFORMANCE STANDARDS EXHIBIT E: INSURANCE REQUIREMENTS A: Liability Insurance A(i) : Conmrehensive General Liability Insurance A(2): Conroercial General Liability Insurance A(3): Required Liability Policy Coverage A(4) : Additional Insured Endorsement A(5) : Primary Insujrance Endorsement A<6): Form of Liability Insurance Policies B: All Risk Fire Insurance B(l) : Deductible B(2): Rental Income Insurance B(3): Loss Payee B(4} : Proceeds of Insurance C: Comprehensive Automobile/Aircraft /Watercraft Liability Insurance D: Statutory Workers' Compensation and En^jloyer s Liability Insurance E: General Provisions E(l): Certificates of Insurance E(2): Claims Made Coverage l>J.7Vni.V2 iv QVIVfT E(3): Failure to Obtain or Maintain Insurance; the County's Remedies E(4}: No Limitations of Obligations E<5): Notice of Cancellation or Change of Coverage B(6}: Qualifying Insurers E(7): Review of Coverage B(8): Self*Insurance £(9): Sublessee's Insurance E(10}: Waiver of Subrogation EXHIBIT F: THE COUNTY OF SAN DIEGO REQUIRED SUBLEASE PROVISIONS UA3.7«S77|.Va V 0t/llM7 PALOMAR TRANSFER STATION LEASE AGRCEKENT THIS PALOMAR TRANSFER STATION LEASE AGREEMENT ("Lease") is made and entered into. «t<Lf active as of October 31, 199T; *y and between the0^ijfilt.Of' BMM DIEOO,* a political 6Ub<Uyisi;Sfflag|^t^^ State of California (the "County"), and the PlSOlM- TpOWfli STATiOHV" nw^^^fi Califomia corporation ("Lessee"). IN CONSIDERATION OF TBS RENTS AND COVENANTS set forth in. this Lease, the County hereby leases to Lessee, and Lessee hereby leases from the County, the Premises described in Article 1 (SUMMARY or BASIC LEASE PROVISIONS) below, upon the following terms and conditions: ARTICLE 1 ' SUMMARY OF BASIC LEASE PROVISIONS 1.1 hSAMSHi 1.2 XtfiAAfiA: THB COUNTY OF SAN DIEGO, a political' subdivision of the State of Califomia Address for notice: Director Department of General Services Building 2 5555 Overland Avenue San Diego, Califomia 92123 with a copy to: Assistant Deputy Director - Aviation 1960 Joe Crosson Drive El Cajon, Califomia 92020 Palomar Transfer Station, Inc. Address for notice: 8364 Clairmont Mesa Boulevard San Diego, Califomia 92111 Attention: Mr. Jim Ambroso with a copy to: Allied Waste Industries, Inc. 15880 N. Greenway-Hayden Loop Suite 100 Scottsdale, Arizona 85260 Attention: Jo Lynn White, Esq, IAJ.7«177I.V« 1.3 |>?reniges and PropertY- The Premises means that approximately 10.697 acres described on Exhibit A (DESCRIPTION AND PLAT 07 PREMISES) attached hereto and by this reference incorporated in this Lease. The term "Property", as used herein, includes the Premises, all buildings and improvements to the Premises, the parking lots and any parking structures appurtenant to the buildings, and such other facilities, structures and inprovements located thereon. 1.4 THe County's and League's Lease Administrators; This Lease shall be administered on behalf of the County by the Director, Department of General Services, The County of San Diego, or by such person's duly-authorized designee referred to collectively in this Lease as "Tlie County's Lease Administrator"), and on behalf of Lessee by Mr. Jim Ambroso, or by such other person as may be designated in writing by liiessee referred to in this Lease as "Lessee's Lease Administrator"). 1.9^. JMSB* The term of this Lease shall be tj|^{S|^f 1^888(8^^ yeaxgjjilthe 'Xaitial Tezai"), commencing on the Effective Date and ending on the twenty-fifth (25th) year anniversary of the Effective Date, as the same may be extended pursuant to Section 3.1, "Term; Definitions". 1.6 Effective Dateet See Section 3.1, "Termi Definitions". 1.7 Ipfegntienallv ttaitted. 1.8 The tABBniS^I^ Three Million Eighty-Six Thousand Dollar»J^p^fiifi::P0TO (the •Prepaid Rent"), which amount will be prepaid by Lessee to the* County at Closing (as defined in the Purchase Agreement (as defined below)), pursuant to the terms thereof. If Lessee elects to extend the term pursuant to Section 3.1, "Termi Definitions", the Base Rent for each month during the applicable Option Period (as defined below) shall be determined pursuant to Section 4.4, "Rent Adjustment at Cooaeneement of Each Option Period" and Section 4.5, "Cost of Living Adjustments ("COLA") to the Base Monthly Rent During Option Periods" shall be payable on the first calendar day of each month. 1.9 e^^eral Description of Lessee's Ust Of Prtaiggg: Lessee shall use the Premises solely for the uses specified in this Lease, generally described as the office operations of^ ^ - solid M^S^S^aSS^^ • "^XSiigSalS^^^i^^^^ 5SI?^itJ#I^^^MS^J^^^^^^ trash. 1.10 tmfinitions; As used in this Lease, the following terms shall have the meanings attached to them in this Section unless otherwise apparent from their context: LA3-79S771.V8 2 0%/ltm a. "Airport" means McClellan-Palomar Airport, Carlsbad, Califomia. to. "Assistant Deputy Director - Aviation" means the Assistant Deputy Director - Aviation, of the Department of Public Works, the County of San Diego, or upon written notice to Lessee, such other person as shall be designated from time-to- time by the Board. c. "Board" means the Board of Supervisors of the County of San Diego. d. "FAA" means the Federal Aviation AdministrJ^tion. e "Standards" means the McClellan-Palomar Airport Industrial Areas Development Standards and i the*. McClellan-Palomar Airport Industrial and Aviation Areas Performance Standards attached as ExniPlt C and Exhibit-D hereto. f. "ALP" means the FAA-approved Airport Layout plan for McClellan-Palomar Airport. 1.11 E.Trn*biti T9 mg^: The following ^j^;;;iS2"/SL?^o5^*^ provisions are attached hereto as exhibits and made a part of this Lease: PIT^HTBTT A - Description and Plat of the Premises. EXHTP^*^ B - FAA Requirements. EXHIBITC - McClellan-Palomar Airport Industrial Areas nnr— Development Standards. EXHIBTUB - McClellan-Palomar Airport Industrial and r^MWPii M Aviation Areas Performance Standards. |gXH7BiT E - Insurance Requirements. EXHIBITS - The County of San Diego Required Sublease Provisions ^^r^^^a^r^na of this Article suimnarize for convenience oniy certain ^ey te^ o? the Lease delineated more fully in the Articles and slctio^referenced in this Article. In the event of a conflict between the provisions of this Article and the balance of the Lease, the latter shall control. 5 oi/iim LA3.7^S77I.V1 ARTICLE 2 LEASE or PREMISES 2.1 Description. Subject to Article 5 (CONDITIONS PRECEDENT TO EFFECTIVENESS OF LEASE), the County hereby leases to Lessee and Lessee hereby leases from the County, for the rent and upon the covenants and conditions set forth in this Lease, the Premises described in Section 1.3, "Premises and Property" atbove. 2.2 nj,Pfrfl RAqbfeg- Notwithstanding any provision of this Lease to the contrary, the County hereby expressly reserves all rights, title and interest in.and to any and all gas, oil, mineral and water deposits located upon or bieneath the surface of the Premises. The County shall have the right to enter the Premises at any time during the Term for the purpose of operating or maintaining such drilling or other installations as may be necessary or desirable for the development of any such gas, 'oil, mineral or water deposits. 2.3 Restrvations to the Countv/Easement Reservations. Lessee accepts the Premises subject to any and all existing easements and encxunbrances. The County reserves the right to establish, to grant or to use easements or rights-of-way over, under, along and across the Premises for access, undergro\md sewers, utilities, thoroughfares or such other facilities as it deems necessary for public health, convenience and welfare, whether or not such facilities directly or indirectly benefit the Premises, and to enter the Premises for any such purpose; provided. hQ^ever* any such grant of rights by the County shall require that the Premises be restored to their preexisting condition; and, provldsd, further, however, that such grant does not materially interfere with Lessee's continued operation of the Premises. 2.4 Lease Subordinate to Conditions and Reeterietiftn« Imposed bv Public Agencies on Airper^ Qperatiene. This Lease shall be subordinate and subject to the terms, conditions, restrictions and other provisions of any existing or future permit, lease and agreement between the County and any federal, state or local agency goveming the County's control, operation or maintenance of the Airport, or affecting the expenditure of federal funds for the Airport. Lessee shall be bound by all such terms and conditions, and shall, whenever the County may so demand, execute, ac)cnowledge or consent to any instrument evidencing such terms, conditions, restrictions or provisions. Without limiting the generality of the foregoing, this Lease and Lessee's occupancy of the Premises are expressly made subordinate and subject to the terms, conditions, restrictions and other provisions of those requirements of the Federal Aviation Administration specifically set forth in Exhibit S and Lessee shall be bound by all such requirements. U3-7<)977i,v3 4 tmitm ARTICLE 3 TE;«^ OF LEASE AND FIRST RIGHT TO ACQUIRE THE PREMISES 3.1 Term Definitions. a. Subject to Article 5 (CONDITIONS PRECEDB9T TO EFFECTIVENESS OF LEASE), this Lease shall be effective as of the "Effective Date" as defined below and the term ("Term") of this Lease shall commence on the "Effective Date" and shall continue thereafter for the period specified in Article X (SUMMARY or BASIC LEASE PROVISIONS), unless sooner terminated as provided in this Lease. As used in this Lease, the "Effe^tirf Dat«f means thirty (30) business days (or upon such %tfi^F''6k€t'-W'%ty mutually agreed upon) following the date on which the later ot th«j fbllowing occurr' tcollectively, thi^^CarXsbaC LejRsei Conditioas<^l:':J. (tT^ the expj.ration or earlier''terMMlEicm of that certain Industrial Lease Agreement (Airigorts) dated as or October 21, 1997, by and "between the County and the ditj^ bf 'Carlsbad^^^ (2) the surrende;^ and vacati6|^, of! the ^Premises'ty'tihe'City bf Carlsbad luid''Cbi1it'^ W«st^e >^^ Inc/ within fifteen (15) business days following the Effective Date, the County and Lessee shall confirm the actual date of the Effective Date in writing. Except as otherwise specifically stated in this Lease or in any subsequent amendments hereof, the terms and conditions of this Lease shall remain in effect following any extension, renewal or holdover of the original Term. b. Subject to the terms of this Section, have fourteen (14) successive options (each, an "Opt iliall' extend*tWT^ffW by ifive (5) y«aS'per "0^^ (each, an "Option Period") ; provided, however, that in no event shall the Term exceed ninety-five (95) years in the aggregate. An Option shall be exercisable iyy Lessee only if Lessee (i) ^MRMrrtlnrdacvsr'oai'* which Lessee exercises the Option and as of the commencement date of the Option Period related to such Option, t(m9m^!t^l»M0St^ »aterli^M«>llm!9<':w^^ A^ieSffil^and liesisee agrees that, if Lessee has failed to make any payment required under this Lease, after any applicable notice and cure period provided in this Lease, it shall not be in "material compliance"); (ii) JSfilffQitM^ th«r?I^rMis«»l^ solid^Afttiiffimiil0aSltl^^ and (iii) is, as of'"fine''date on which*^Lessee exercises axi Option and as of the commencement date of the Option Period related to such Option, j^iiMiraBESl^Pr tlir PtetidiseS'-'prlfSiiril^'-a^^^ transfi'i?>slfifl8iSiP In order to exercise an Option, Lessee must notify the County of its irrevocable election to exercise the Option no morsrthan on*'year and nd less tlia0 sJk (6^)-inonth*^ before the expiration of, with respect to the first Option, the Initial Term or, with respect to all other Options, the then applicable (iiption Period. Upon the proper and timely exercise of an Option by Lessee in accordance with this Section, the Term shall be extended for the applicable Option Period and the terms LA»,tlS77I.Vl oi/ii/tr 30 and provisions of this Lease shall remain in full force and effect during such Option Period. 3.2 surrender cf the Premiaesr Quitclsia Of Lessee's Tntereefc TTpon Teminatien. a. Lessee shall surrender possession of the Premises to the County upon expiration of the Term or earlier termination of this Lease. Upon termination of this Lease for any reason, including but not limited to termination because of default by Lessee, Lessee shall execute, acknowledge and deliver to the County, within thirty (30) days following receipt of written demand therefor, a good and sufficient deed whereby Lessee quitclaims all right, title and interest in the Premises to the County. Should Lessee fail or refuse to deliver such quiticlaim deed to the County, the County may prepare and record a liotice reciting the failure of Lessee to do so, and such notice shall be conclusive evidence of the termination of this Lease and of all right of Lessee or those claiming under Lessee to the Premises. b. Should the manner or method employed by the County to re-enter or take possession of the Premises following the termination of this Lease give Lessee a cause of action for' damages or in forcible entry and detainer, the total amount of damages to which Lessee shall be entitled in any such action shall be One Dollar ($1.00). This provision may be filed in any action brought by Lessee against the County, and when so filed shall constitute a stipulation by Lessee fixing the total damages to which Lessee is entitled in such an action. 3.3 If^arlv Termination bv the CouBtY. i^lSP^iiPsli^i^ * ' iQ^cpnnectlon witn this Cea8<e? " ^^^i^^^^^^^^^^^^^^^Sl^i "hall limit the . 3.4 firet Right to Acquire the PrealBti. Subject and subordinate to the first right of refusal granted to the City of Carlsbad, its successors and assigns, pursuant to the Palomar Transfer Station Settlement Agreement (as defined in the Purchase Agreement), if, during the term of this Lease, the County proposes to sell the Premises, or any portion thereof, and provided Lessee is not in default under the terms of this Lease at the time such proposal to sell is made by County and Lessee is not in default at any time during the following negotiation S^riod. IflBHaBybaa^g^ Lessee first right ("First Right") to negott4l!i^w5WB^^ or that portion of the Premises^^ountjft*foposes to sell. In no event shall the First Right survive the expiration or earlier termination of this Lease. a. Lessee must exercise its First Right within thirty (30) days after Lessee has received written notice frcan County of County's intent to sell the Premises. LA3.7*S77|.V1 V b. If the County receives written notice from Lessee within thirty (30) days after Lessee lias received written notice from County of County's intent to sell, County and Lessee shall enter negotiations for sale of the Premises, or that portion of the Premises County intends to sell. c. If the County and Lessee do not successfully negotiate an agreement on the sale of the Premises to Lessee within forty-five (45) days following the County's receipt from Lessee of Lessee's exercise of its First Right, Lessee's First Right shall terminate and the County may take any action it deems necessary in the sale of the Premises. During said period of negotiations, Lessee and County shall negotiate in good faith. d. The Negotiation of a sale of the Premises fcrom the County to Lessee is siibject to approval by the Federal Aviation Administration and without such approval, the terms of this ', Section 3.4 (FIRST RI6ET TO ACQUIRE THB PREMISES) are nuXl and void. ARTICLE 4 RENT 4.1 Ergpttird Kent. The total prepaid Base Rent for the J-xt/l'll Initial Term is the Prepaid Rent, which amount will be prepaid by xO"hfl Lessee to the Coimty at Closing (as defined in the Purchase Agreement (as defined below)), pursuant to the te 4.2 pase Rent for Option Periods extend the term of this Lease pursuant Definitions", during the applicable Op(;ionPe5dJ»r*Kssee shal pay to the County each month in advance, wxthout setoff, deduction, prior notice or demand, the Base Rent, which monthly payment must be made on or before the first calendar day of each calendar month during the applicable Option Period. JOmmom' * Rent for each Option Period shall be determined pursulEBr^Jor Section ••.4rir"^^t AdjustaMial;; at .CoHimenc.e^ Period^ ISUrViSfnKS^^ Adjtistmea€|ul»%^t) to the Base MontMy ''R^eisr'bariag Opti^^ 4.3 Pavmenta of Monthly Beae Rent. The Base Rent payable monthly dxiring any Option Period shall be made payable to the County of san Diego and shall be considered paid when delivered to Controller Branch Office • Cashier, 5201 Ruffin Road, Suite H (MS 0654), San Diego, Califomia 92123. The County may, at any time, by %/ritten notice to Lessee, designate a different address to which Lessee shall deliver the rent payments. 4.4 yent Adiugtment afc Commencement of Each Option Period. 4.4.1 Pifiit option Period. Base Rent payable monthly for the first Option Period shall be adjusted to an amount equal to the fair market rent for the Premises, which amount shall, subject to the provisions of this Section 4.4.1, "First Option Period", be determined by an appraisal performed by a mutually acceptable appraiser pursuant to mutually acceptable instmctlons. Such appraisal shall be performed no later than six (6) months prior to the expiration of the then-current Option Period. If the parties are not able to agree on the designation of the appraiser, the instructions to the appraiser or on the appraiser's conclusions, the matter shall be submitted to binding arbitration pursuant to the provisions bf the Califomia Code of Civil Procedure, or such successor codes or statutes. Notwithstanding the foregoing provisions of this Section 4.4.1, "First Option Period", in no event shall the Base Rent payable monthly for the first Option Period be less than an amount determined by using the formula described in Section A.S, "Cost of Living Adjustments ("COLA") to the Base Rent During Option Periods", where (1) "A" equals $23,000; (ii) "B" equals the monthly Consumer Price tndex, as hereinafter defined, fbr the month of March immediately preceding the commencement of .the first Option Period; and (iii) "C" equals the monthly Consumer Price Index, as hereinafter defined, for the month of March immediately preceding the commencement of the Initial Term. 4.4.2 Other Option Periods. Except for the first (Option Period, which shall be govemed by Section 4.4.1, "First Option Period", at the commencement of each Option Period, the Base Rent shall be adjusted to an amount equal to the fair market rent for the Premises; prOYidcd* toafiCZfiXi that in no event shall the Base Rent for any Option Period be less than three percent . (3%) greater or more than seven percent (7%) percent greater thanr the Base Rent for the month immediately preceding the commencement of such Option Period (excluding any offset, free rent or credit rights of Lessee). Subject to the preceding sentence, fair market rent shall be determined by an appraisal performed by a mutually acceptable appraiser pursuant to mutually acceptable instmctlons. Such appraisal shall be performed no later than six (6) months prior to the es^iration of the then- current Option Period. If the parties are not able to agree on the designation of the appraiser, the instmctlons to the appraiser or on the appraiser's conclusions, the matter shall be submitted to binding arbitration pursuant to the provisions of the Califomia Code of Civil Procedure, or such successor codes or statutes. 4.5 poet of Living Adiuatment ("COLA") to the Base Rent Payable Monthly During Option Periods. The Base Rent payable monthly during each Option Period shall be adjusted as of the first (1st) anniversary of the conroencement of each Option Period, and thereafter every year on such date for the remainder of the applicable Option Period (each such one-year period is referred to herein as a "COLA Period"), to reflect any increase in purchasing power by use of the following formula: R - A(B/C) LA3.7WI.VJ 8 OWlVfJ ^PR_ae.99 aatoa PM HCRAP T«aa»i-»T«a ^erei n: "R* equale the monthly rent for the COLA Period being calculatedi pggyideil, howvajp. in no avent ehall the aKonthiy rent Cor Any one-year COLA P«r%od~be than thr«e percent (3%) greater or VA>X% than tevftn pareant t7%) greatar than che tnontniy r«!nt for tht previous one-year co:jk Period; •"A" equals the Base Rent as of the comneneement ef ths then-currtnc opclon Period: equals ch« monthly Coasuner P«lee Xneox, as herein«£v«r defined, fcr che fftonth ef Nareki iantdiatsly preceding the ' con«n«ncetnent ef the COLA Period for which the rent is being adjuitedt aM ' ) "C" equals the monthly Consumer Price index, as hereinafter deciacd, :or che month cr aerck imMdiacely evading the conifflencement of the Chen-current option Periad. 4«< eanaumar ggiaa xaAae. The consumer price index which shall be used as the •miree for the Consumer Price Index numbers •hall be that pfubliBhed by the Uniteo states Department of Leber, entitled Uaittd States 3epa«r.meat of Labor. Bureau Of LabOt StatiitiCB, Coaeam*« Price indtx tor the Loe aogelea-AAaheim-- Riveraide Area (x982-a4 » loo). If such index Is net publiahed for the LOS Angeiee-Ahaheim^RlveKvide Area, then another coinparable index or source ot sueh infenoation generally recognised as authoritative ehe^l be eubetituced by agreement or the parties. Tf the pareics should not agree, suen source of informtioA ehall be detennined by arbitration pursuant to the provisions of the California Cod^n oS Civil Procedure* ARTICLB. 9 connxTxoiia PISCSPKMT TO syrBCtxvaiiif or ^M^kM% S.l Cnaaitle«L« ^r^^m^mfi^ to Sf f»«tIvanaaB-of LaSSe. The osrectiveness of this Laese and ths oecurrenoe of the tefeetive Date is expreselv ccnditiened upon the eatisfaction of the following eondltiensi a. Been OC the csrisbad uease Conditions shall have occurred; b. The County shall have determined, in its sole ano ahaoiuta diecretlon, that the Ps-amieaa ere not weaaeary or desirable for the operstlott ot. or uses related to, the . McClellan-Palomar Airport (Includiftg, waithout limitation, tha dovelopment of in^uetra-al. buaineea or coomrciaL Cadlitieo thcroon». which detetfminatica ehall ba made by ths County en or before thirty busineas (301 days tolXowiag tne oceurrenee of each of Che CacSabad Lease Condi ti one; TUUSOtSJlaA* hPxeYRg. that in no Raeaivad Aor-II-OO 02:01M Pro«-760SIU7n To-PILLSBURY $0 Pu« 02 »eiPR~2e-oe aaioa PM HCRRP T*ea*i^T«a p. as •vent shall the County bs entitled to laaae the Pretniaee to 4nother entity for use as a tran«far atatieai and c. AS of Che date on which the lasn of the Carlabad lease Conditions occurs. Laaaee ahsll be in material complisnca with the terms and previeions ot the Purchsae Agreement as defined below) and the docujnenta executed in connection therewith. conditions precedent set forth In Seetioa i.l, 'fondlfcioaa vxeeedent to Effectiveness ef tease" are not eatlefied ««'^lv*J_ by tha County in writing, (1) this wsase shall be of no force Wid HfHer.ki (11) neither ths County nor Lessee shall be bound hereby; (ill) Leeeee ehall hava no right or interest In and te thb rremlaee, including, without limitation, the uee or oecvpSDey thereof I and (iv) the county ehall be tree te take any action vrith araapaee to th* Preniaes It daeme neoeaaary or desirable} priavlgea, .Sosaaair chat in Lessee •"Ji'^i;* *J • the prepaid rent es datarmlned pursuant to the Purcnase Agreement. aXTZCLE fl possisszoir m usi s.i fsr»<fcted ffses. Lessee shall use. the ^^^£•^•^•1^ tot the uaee permitted and jtfeacribeA.J.n ajghibji* paLOKAX AIRPORT INDOiTRXAlf^ARlAi PfVllOrMlW«iTail»AlttSIS»ettach«d hereto and for the purposes apetsifled in Seeeioa ^.lS* '{leaeraX Oeseriptioa ef Itefsee^s Ose of tbe 9ra»ises"> No one other than Lessee, its acents aad employees, or any autaleaeee cf Lessee approved by the County es provided in Artlole IS (AlSIomvrr, seSLSJUBSMO AMP astCOMSIjJicxsa) la pannlttea to use the Premlaes fer Che purposes described herein, and Lessee shall be fully responsible for the aetivitiea of Ite ageatSi esqiloyees and sublessees, if any. on the Premieee. Lessee aeknowledaea that the county reaervea the rlsht te permit others at the Airport to provide one cr more of the aesvices to be provided by Leeaee on the Premisea. i.a nyt^iaa yy^t^in^t^ad eaaSuate. Where Leeeee ie r«»aoB*bly in doubt ae te the propriety of •«y^P*"i««i*H-.^i* * L«aaaa may rogueat the written determination ct the County's Laaae Administrator that such use la or is hot persiltted, and fjmmwm will not be in breaeh or defsulc under this Ltase if Lessee abides by such determination. Notwithstanding tne foregoing, however. Lessee shall not use nor permlc the use of the Premiees in any manner chat will tend to create waste •«'^s _ nuisance. Lessee shall not uee, or permit any parson or persons to use. the Premises for the sale or diepiav of any goede or •ervicas which, in the sole discretion of the county, are ineonjiatant with the psrtnltted uees of the Premiees pursuant CO this Lease. Lessee shall keep the Pramises. and every part 10 ^'**"^ Vit •6tif iMdsftei oQ-nz'^di ionn HIS sift iv^sMi/.^dOiOs 'oo :Ae RMtjvtd A^f-2I-0P 02<0lM PrM-760S8U7t9 Te-PILl$BUl»V SD P««« 03 thereof, in a good, safe and sanitary condition, free from any objectionable noises or odors, except may be typically present for the permitted uses specified above. Lessee shall deposit all trash and rubbish of Lessee only within receptacles provided by Lessee and located in the areas designated by the County. Lessee shall not allow or permit installation of any billboards or advertising signs, or aerials or antennas, upon the Premises without first obtaining, in each instance, the written consent of the County, which consent the County may give or withhold in the County's sole discretion. Any such signs or antenna installed without such written consent shall be subject to removal without notice at any time, at Lessee's expense. Nothing in this Section shall be deemed to preclude Lessee from erecting and maintaining safety, waming or directional signs, of ireasonable dimensions, which are not used for advertisement of goods or services; provided. bCHfiZfiE, all such signs must conform to applicable statutes and ordinances. 6.3 goroliapgg >yith Laifg* a. Lessee, at Lessee's sole expense, shall procure, maintain and hold available for the County's inspection any governmental license or permit required for the proper and lawful conduct of Lessee's business. Lessee shall not use the Premises for any use or purpose in violation of the laws of the Ubited States of America, or the laws, ordinances, regulations and requirements of the State of Califomia, the County of San Diego or the city where the Premises are situated, or of other lawful authorities. Lessee shall, at Lessee's expense, comply prooptly with all applicable statutes, laws, ordinances, mles, regulations, orders, covenants and restrictions of record, and requirements in effect during the Term, regulating the use by Lessee of the Premises. The final judgment of any court of con?>etent jurisdiction, or the admission of Lessee or any sublessee or permittee in any action or proceeding against them or any of them, whether or not the County is a party to such action or proceeding, that Lessee, or any such sublessee or permittee, has violated any such ordinance, law, statute, regulation, covenant, restriction or requirement pertaining to the use of the Premises, shall be conclusive as to that fact as between the County and Lessee. b. Notwithstanding any other provision of this Lease to the contrary. Lessee shall be responsible for payment of all costs of conrolying with the requirements of the Americans with Disabilities Act of 1990 ("ADA") (42 USCS SS 12101-12213), Title 24 of the Califomia Code of Regulations ("Title 24") and Califomia Civil Code S 54.1 as they may apply to the Premieee. Lessee's obligations under this Section shall include, without limitation, all costs of bringing the Premises into con^jliance, and thereafter maintaining such compliance, with the requirements of Title III of the ADA ("Title III") (42 USCS SS 12181 - 12189) applicable during the Term to public accommodations and . .fmiiM 11 ou%tm tA3.7t577I.V2 commercial facilities, irrespective of whether or not the particular requirements of such compliance (i) are specifically required by Lessee's intended use of the Premises, or (ii) may also be required of the County under Title II of the ADA ("Title II") (42 USCS SS 12131 - 12165). c. Lessee shall, with regard to the Property, assume all obligations placed on the Coimty pursuant to any existing or future industrial stormwater permit or existing or future constmction permit including, but not limited to, preparation of any required Notices of Intent or Storsiwater Pollution Prevention Plans for so long as this Lease is in effect. 6.4 ^abstance Abuse. Lessee and its es^loyees and e^gents shall not use or )cnowingly allow the use of the Premises. for the purpose Of unlawfully driving a motor vehicle or aircraft under the influence of an alcoholic beverage or any dmg, or fot th^ purpose of unlawfully selling, serving, using, storing, transporting, keeping, manufacturing or giving away alcoholic beverages or any. "controlled s\ibstance," precursor or analog specified in Division 10 of the Califomia Health and Safety Code, and violation of this prohibition shall be grounds for immediate termination of this Lease. 6.5 Control of Premises. Failure of Lessee to exercise control of the use of Premises to conform to the provisions of this Article shall constitute a material- breach of tha^^Lease /:and such shall be grounds for termination. ARTICLE 7 UTILITIES for its use and occupancy of the Premises durl^grtlia Term, including but not llmlted'^to gas, water, electricity, trash, sewer/septic tank charges and telephone; the County shall have no responsibility to either provide or pay for such services. The County will not be liable for any reason for any loss or damage resulting from an intermption of any of these services. The County shall have the right, at no charge from Lessee, to connect to any water, sewer, electrical, gas and communications lines as are now or may hereafter be installed on the Premises, and shall have all necessary rights of access to constmct and service such connections; provided^ however. Lessee shall have no obligation to pay any additional service fees or charges assessed by any governmental agency, or public or private utility cocipany, for the County's use of such connections; and, pgQYldgd* further, however, that such connection does not materially interfere with Lessee's continued operation of the Premises. U3*7«3771.V} 12 OUlVn i7 ARTICLE 8 MECHANICS' LIENS 8.1 Mechaniea' Liens. Lessee shall pay, or cause to be paid, all costs for work done by it, or caused to be done by it, on the Premises, and for all materials fumished for or in connection with any such work. If any lien is filed against the Premises, Lessee shall cause the lien to be discharged of record within ten (10) days after it is filed. Lessee shall indemnify, defend and hold the Coimty harmless from any and all liability, loss, damage, costs, attomeys' fees and all other expenses on account of claims of lien of laborers or materialmen or others for work performed or materials or supplies fumished for Lessee or persons claiming under Lessee. I 8.2 Copt^at of Lien. If I^essee shall desire to contest any lien filed against the Premises, it shall fumish the County, within the ten-day period following filing of the lien, sticuri^ty reasonably satisfactory to the County of at least one hundred fifty percent (150%) of the amount of the lien, plus estimated costs and interest, or a bond of a responsible corporate surety in such amount, conditioned on the discharge of the lien. If a final judgment establishing the validity or existence pf a lien for any amoimt is entered. Lessee shall immediately pay and satisfy the same. 8.3 Right to Cure. If Lessee shall be in default in paying any charge for which a mechanics' lien claim and suit to foreclose the lien have been filed, and shall not have given the County security to protect the property and the County from liability for such claim of lien, the County may (but shall not be required to) pay said claim and any costs, and the amount so paid, together with reasonable attomeys' fees incurred in connection therewith, shall be immediately due and owing frooi Lessee to the County, and Lessee shall pay the same to the County with interest at the rate spedified in Section 16.8, "interest" from the date(s) of the County's payments. 8.4 pfotiea of Lien. Should any claim of lien be filed against the Premises or any action against the Premises or any action affecting the title to such property be commenced, the party receiving notice of such lien or action shall immediately give the other party written notice thereof. 8.5 N9tlgf 9t Nqpr^PP9ffffibUjlty. The county orbits representatives shall have the right to go upon and inspect the Premises at all reasonable times and shall have the right to post and keep posted thereon notices of nonresponsibility or such other notices which the County may deem to be proper for the protection of The County's interest in the Premises. Lessee shall, before the commencement of any work which might result in any such lien, give to the County voritten notice of its intention to do so in sufficient time to enable posting of such notices. It ARTICLE 9 SECURITY Lessee shall be responsible for and shall provide for the security of the Premises, and the County shall have no responsibility therefor. Lessee shall constmct and maintain fences, gates, walls and/or barriers on the Premises in a maimer designed, in the County's judgement, to prevent unauthorized access to the Premises. All plans for such fences, gates, %falls and/or barriers must be submitted to and approved by the County prior to constmction. In the event the northerly Ixmndary of the Premises is adjusted for the constmction of the easterly prolongation of Faraday Road, Lessee shall move, at Lessee's sole expense, said security fencing, gates, walls and/or barriers within thirty (30) days following the completion of Fara<^y Road along the northerly boundary of the Premises. ARTICLE 10 ' - IMPROVEMENTS I PERSONAL PROPBRTTf FIXTURES I MINOR ALTERATIONS 10.1 Improvement^- Lessee may, at Lessee's o%m expense, from time to time make such nonstmctural (whether permanent or temporary) alterations, replacements, additions, changes, or in^rovements (collectively referred to in this Lease as "Improvements") to the Premises as Lessee may find necessary or convenient for its purposes; provided, howeveiipr. the value of tha Premlses^«!^bftSf^erefa9^^a^|i0Md, and further provided that, with respect; .to_a|iy;^rat:i^^ noki-stmcturali^ Improvements, no such Improvements may be made without obtaining- the prior writ tag. approvaX^^f the ^Countyf* which consent shall not be unreasonably withheld. In no event shall Lessee make or cause to be made any penetration into or through the roof or floor of any stmcture on the Premises or make any other stmctural changes in or on the Premises without obtaining the prior written approval therefor of the County, which approval shall not be unreasonably withheld. Lessee shall at all times conduct its constmction operations so tliat such operations do not interfere with the normal operation and use of the Airport hy the County, the public and other persons and organisations entitled to use of the same. 10.2 gonstruction Requirements. All Improvements to be made to the Premises shall be made tmder the supervision of a competent architect or licensed stmctural engineer and made in conformity with any present or future ALP and Aviation Area Development Standards which are or may be adopted by the Board and the FAA, and with plans and specifications approved in writing by the County before commencement of any work. In connection therewith, Lessee shall provide a minimum of three (3) sets Of working drawings or plans showing the planned Improvements, for the County's approval, prior to commencing work. All work with respect to any Improvements must be done in LA3-7f577l.V3 14 OVItm a good and workmanlike maimer, comnenced within ninety (90) days following receipt of approval therefor from the County, and diligently prosecuted to conpletion to the end that the Premises shall at all times be a complete unit except during the period of work. Upon conpletion of such work. Lessee shall have recorded in the office of the' San Diego the County Recorder a Notice of Completion, as required or permitted by law, and Lessee shall deliver to the County, within ten (10) days after conqpletion of said work, a copy of the Notice of Occupancy and the building permit with respect thereto. Within sixty (60) days following conflation of an lo^rovement, Lessee shall provide the County with two (2) cooplete. sets of "as-built" plans of such In^rovement. Upon the expiration or earlier termination of this Lease, such Improvements shall not be removed by Lessee but shall become a part of the Premises. Any such Improvements shall be performed and done strictly in accordance with' the laws and ordinances relating thereto. 10.3 The Countv*s Coatsi Indemnity. Lessee shall reinburse the County for all actual and documented reasonable out-of-pocket costs and expenses (including, without limitation, any architect or engineer fees) incurred hy the County in approving or disapproving Lessee's plans for In^rovements. Lessee shall be liable for and shall indemnify and defend the County from any claim, demand, lien, loss, damage or eaqiense, including reasonabls attomeys' fees and costs, arising from Lessee's constmction or installation of smy Improvements permitted tmder this Article. 10.4 Personal Property. Subject to the provisioM of the following Section 10.5, "Fixtures", all of Lessee's trade fixtures, fumiture, fumishings' signs and other personal property not permanently affixed to the Premises (collectively referred to as "Personal Property" in this Lease) shall remain the property of Lessee. Lessee shall, at its expense, immediately repair any damage occasioned to the Premises by reascm of the removal of any such Personal Property. 10.5 yixturea. All In^jrovements constmcted by Lessee, or existing on the Premises on the Effective Date, together %rlth all other fixtures, excepting Lessee's trade fixtures, permanently attached to the Premises (collectively referred to in this Lease as "Fixtures") shall become the property of the County upon expiration or earlier termination of this Lease. Notwithstanding the foregoing, the County nay require Lessee to remove any Fixtures at Lessee's own expense upon termination of this Lease. Any damage to the Premises occasioned thereby shall be repaired by Lessee in a good and worJcroanlike manner and the Premises shall be left in as good order and condition as when Lessee took possession thereof, reasonable wear and tear emd damage by the elements excepted. In the event Lessee does not remove any Fixtures following direction by the County, the County may remove, sell or destroy the same, and Lessee shall pay to the U3-7W7I.VJ 15 wtm 4 0 County the reasonable cost of such removal, sale or destmction, together with the reasonable cost of repair of damages to the County's property or improvements or to the Premises resulting therefrom. • 10.6 Signs and Lighting. Lessee shall not constmct nor permit the erection of any signs on the Premises without the prior written approval of the Coimty. Lessee shall submit sketches of proposed signs to the County for approval showing, size, materials, colors and location. Such signs must conform to the standards contained in Exhibit C (MCCLELLAN-PALOMAR AIRPORT INDUSTRIAL AREAS DEVELOPMENT STANDARDS) and to any laws or ordinances of governmental agencies having jurisdiction over the Premises. All- exterior lighting on the Premises must conform to the standards contained in Exhibit D (MCCLELLAN-PALOMAR 'ASRPORT IHDUSTRIAL AND AVIATION AREAS PERFORMANCE STANDARDS) and tO any laws or ordinances of governmental agencies having juri^dllctflon over the premises- ' 10.7 ifinor Aitaratione. Notwithstanding the foregoing provisions of this Article, Lessee may make, without obtaining the prior approval of the County, minor alterations and improvements ("Minor Alteration") to the Premises that do not require a building permit, or which involve only the repair, replacement, or reconfiguration of non-load bearing partition walls or Fixtures, and which do not penetrate into or through the roof or floor of any stmcture on the Premises, and which do not involve the constmction of any new stmctures on the Premieee The County shall be the sole judge of whether or not any alteration or improvement is a Minor Alteration. ARTICLE 11 TAXES, ASSESSMENTS AND FEES 11.1 y«^sponsibility for Payment of Taxes and AgflCiMMtl. The County shall not be obligated to pay any taxes or assessments accming against Lessee on the Premises or any interest of Lessee therein before, during or after the Term, or any extension thereof; all such payments shall be the sole responsibility of Lessee. In addition. Lessee shall be solely responsible for payment of any taxes or assessments levied upon any Improvements, Fixtures or Personal Property located on the Premises, to the extent that such taxes or assessments result from the business or other activities of Lessee upon, or in connection with, the Premises. 11.2 definition pt "Taxes". As used herein, the tem "taxes" means all taxes, governmental bonds, special assessments, Mello-Roos assessments, charges, rent income or transfer taxes, license and transaction fees, including, but not limited to, (i) any state, local, federal, personal or corporate income tax, or any real or personal property tax, (ii) any estate inheritance taxes, (iii) any franchise, succession or transfer taxes, LA3-7«S77l.va 16 ouinm (iv) interest on taxes or penalties resulting from Lessee's failure to pay taxes, or (v) any increases in taxes attributable to the sale of Lessee's leasehold interest in the Premises. 11.3 creation of Ppfaaaaory Interest. Pursuant to the provisions of Revenue and Taxation Code Section 107.6, Lessee is hereby advised that the terms of this Lease may result in the creation of a possessory interest. If such a possessory interest is vested in Lessee, Lessee may be subjected to the payment of real property taxes levied on such interest. Lessee shall be solely responsible for the payment of any such real property taxes. Lessee shall pay all such taxes when due, and shall not allow any such taxes, assessments or fees to become a lien ARTICLE 12 REPAIRSI MAINTENANCE 12.1 #eeeptanee of Premises. Lessee ac)cnowledges that Lessee has made a thorough inspection of the Premises prior to the Effective Date of this Lease, and that it accepts the Premises as of the Effective Date in their condition at that time; pjmidfid, however, that the foregoing shall not be constmed as the acceptance by Lessee of any liabilities for Pre- Closing Leased Facilities Environmental Conditions (as defined in tbe Purchase Agreement). Lessee further ac)aiowledges tliat the County has made no oml or written representations or warranties to Lessee regarding the condition of the Premises, and that Lessee is relying solely on its inspection of the Premises with respect thereto. 12.2 ;^cBBee*a Repair and Maintenance QbllftStioBS. Lessee shall at all times from and after the Effective Date, at its own cost and expense, repair, maintain in good and tenantable condition and replace, as necessary, the Premises and every part thereof, including, without limitation, the following as applicable: the roof; the heating, ventilation and air conditioning system; mechanical and electrical systems; all meters, pipes, conduits, equipment, components and facilities (whether or not within the Premises) that supply the Premises exclusively with utilities (except to the extent the appropriate utility company has assumed these duties); all Fixtures and other equipment installed in the Premises; all exterior and interior glass installed in the Premises; all signs, locking and closing devices; all interior window sashes, casements and frames; doors and door frames (except for the painting of the exterior surfaces thereof); floor coverings; and all such items of repair, maintenance, alteration, inprovcment or reconstmction as may be required at any time or from time to time by a governmental agency having jurisdiction thereof. Lessee's obligations u LAS.7«yni.vi under 17 oi/ism this Article shall apply regardless of whether the repairs, restorations and replacements are ordinary or extraordinary, foresee«Lble or unforeseeable, capital or noncapital, or the fault or not the fault of Lessee, its agents, employees, invitees, visitors, sublessees or contractors. All replacements made by Lessee in accordance with this Section shall be of like size, kind and quality to the items replaced and shall be subject to prior written approval by the County. Upon surrender of the Premises, Lessee shall deliver the Premises to the County in good order, condition and state of repair, but shall not be responsible for damages resulting from ordinary wear and tear. Lessee shall provide fcr trash removal, at its eaqpense, and shall maintain all trash receptacles and trash areas in a clean, orderly and first-class condition. The County shall have no responsibility or liability for any of the obligations set forth in this Section. 12.3 y^aaaaa^a Pailura feo Maintain. If Lessee refuses Or neglects to repair, replace, or maintain the Premises, or any part thereof, in a manner reasonably satisfactory to the County, the County shall have the right, upon giving Lessee reasonable written notice of its election to do so, to make such repairs or perform such maintenance on behalf of and for the account of Lessee. If the County makes or causes any such repairs to be made or performed. Lessee shall pay the cost thereof to the County proof tly upon receipt of an invoice therefor wit interest at the rate specified in Seetioa 16.8« "Interest" froia the date(s) of the County's payments. 12.4 yjght to Enter. Lessee shall permit the County, or its authorized representatives, to enter the Premises at all times during usual business hours to inspect the same, and to perform any work thereon (a) that may be necessary to coof ly with any la%^, ordinances, mles or regulations of any public authority, (b) that tbe County may deem necessary to prevent waste or deterioration in connection with the Premises if Lessee does not make, or cause to be made, such repairs or psrfonn, or cause to be performed, such work promptly after receipt of vnritten demand from the County, and (c) that the County may deem necessary in coxmection with the expansion, reduction, remodeling, protection or renovation of any the County-constmcted or owned facilities on or off of the Premises, or at the Airport. Nothing contained in this Section shall inqply any duty on the part of the County to do any such work which, under any provision of this Lease, Lessee may be required to do, nor shall the County's performance of any repairs on behalf of Lessee constitute a inraiver of Lessee's default in failing to do the same. No exercise k>y the County of any rights reserved to it by this Section shall entitle Lessee to any condensation, damages or abatement of rent from the County for any injury or inconvenience occasioned thereby. 12.5 g?Qmitv Not Obligated to Repair or Maintaim Lessee's Waiver of California Civil Code Section 1942. To the extent that LAj.7tJ77J.VJ 18 (mtVfl ^3 any remedies specified in this Lease conflict or are inconsistent with any provisions of Califomia Civil code Section 1942, or any successor statute thereto ("CC $1942"), the provisions of this Lease shall control. Lessee specifically waives any right it may have pursuant to CC $1942 to effect maintenance or repairs to the Premises and to abate the costs thereof from rent due to the County under this Lease. ARTICLE 13 INDEMNITY AND INSURANCB 13.1 yadtiffiity by Pecif. Except for indemnification related to Contaminants (as defined in the Purchase Agreement), Leachate (as defined in the Purchase Agreement}* and Landfill Gaa (as defined in the Purchase Agreement), with respect to which the provisions of the Purchase Agreement shall govem, the County shall not he liable for, and Lessee (and if applicable, each of its general partners) and its successors, assigns and guarantors shall defend, indemnify, protect and hold harmless the County, its employees, representatives, agents, consultants, officers, supervisors, successors and assigns from and against any and all claims, demands, liability, judgments, awards, fines, mechanics' liens or other liens, losses, damages, expenses, charges or costs of emy kind or character, including actual attorneys' fees and court costs (collectively referred to as "Claims"), arising from or in connection with, or caused by, directly or indirectly, (1) any breach or default by Lessee of its obligations under this Lease (excluding therefrom any Retained Liability (as defined in the Purchase Agreement), (ii) any act, omission or negligence of Lessee or any subtenant of Lessee, or their respective contractors, licensees, invitees, agents, servants or employees, (ill) any use of the Premises, or any accident, injury, death or damage to any person or property occurring in, on or about the Premises, or any part thereof, or any service delivery facilities or any other portions of the Property used by Lessee, and (iv) any labor dispute involving Lessee, its esfloyees, contractors or agents, including, without limitation, Claims caused by the concurrent negligent act or omission, whether active or passive, of the County or its agents; prflscldfidf t>owfver. Lessee shall have no obligation to defend or indemnify the County from Claims caused solely by the gross negligence or willful or criminal act of the Coimty or its agents; 13.2 l&222£assfi. Without limiting Lessee's indemnification obligations to the County, Lessee shall provide and maintain, during the Term and for such other period as may be required in this Lease, at its sole expense, insurance in the amounts amd form specified in Exhibit E (INSURANCE REQUIREMENTS) attached hereto. 13.3 rT?^r"n1tY bv the Countv. Except for indemnification related to Contaminants (as defined in the Purchase Agreement), Leachate (as defined in the Purchase Agreement) and Landfill Gas LA3.7tS77|,Vl 19 Ol/lim LfLf (as defined in the Purchase Agreement), v-ith respect to which the provisions of the Purchase Agreement shall govem, Lessee shall not be liable for, and only to the extent permitted by applicable law, the County shall defend, indemnify, protect and hold harmless Lessee, its employees, representatives, agents, consultants, officers, supervisors, successors and permitted assigns from ajid against any and all Claims arising from or in connection with, or caused by, directly or indirectly, (1) any breach or default hy the County of its obligations under this Lease, excluding therefrom any Assumed Liabilities (as defined in the Purchase Agreement) and any items with respect to which Lessee or Allied (as defined below) is required under the Purchase Agreement to assume or indemnify the County; and (11) smy gross negligence or willful or criminal act of the County or its agents; provided> hoycvegi the County shall have no i i obligation to defend or indemnify Lessee from Claims caused solely by the gross negligence or willful or criminal act of the Lessee or its agents. ' ' : 'i ARTICLE 14 CONTAMINANTS, LEACBATB AND LANDFILL OAS 14.1 gftvijrQ^mtaUl hm - Pefiaitiga- AS used in this Section, the term "Environmental Laws" has the meaning set fort.h in the Purchase Agreement. 14.2 C°nt"ninante. Leachate and Landfill Gas. > Definitions. AS used in this Section, the terms *ContawinantfrA» "Leachate" and "Landfill Gas" have the meanings set forth in «heiwPurchae**. Agreement. 14.3 Iieesee'B Representations and Warranties. Lessee represents and warrants that, during the Term or any extension thereof, or for such longer period as may be specified in this Lease, Lessee shall comply wlth__tJt»JCaU<aring, prnVilUlflaM.. ot this* Section linlesOt^^ approved in writlii*r by tha County's LeassFAdmlhistrator: a. Lessee vSiSgti?l6l^^usf^^ pt^xM^'isSy' CoDtamlnantli, Leachate or Landf 111^ Gai^ to-Ide brought f kept or used in or about the Premised by Lessee, its agents, enfloyeee, sublessees, assigns, contractors or invitees, except as permitted by Environmental Laws and except as required by Lessee's permitted use of the Premises, as described in Section 6.1 (PERMITTED USES). b. Any handling, transportation, stomge, treatment or usage by Lessee of Contaminants, Leachate or Landfill Gas that is to occur on the Premises following the Effective Date shall be in confliance with all applicable Environmental Law*/* c. Any leaks, spills, release, discharge, emission or disposal of Contaminants, Leachate or Landfill Gas which may LA3-7t5Tji.vj 20 miitm occur on the Premises following the Effective Date shall be promptly and thoroughly cleaned and removed from the Premises by Lessee at its sole expense, and any such discharge shall be promptly reported in vrriting to the County, and to any other appropriate governmental regulatory authorities; d. No friable asbestos shall be constmcted, placed on, deposited, stored, disposed of. or located by Lessee in the Premises or on the Property; e. No underground inqprovements, including but not limited to treatment or storage tanks, or water, gas or oil wells shall be located by Lessef^ on the Premises or on the Property without the Coimty's prior written consent, which consent shall not be unreasonably withheld; < I f. Lessee shall conduct and conqplete all j investigations, studies, sasfling, and testing proceduresj arid all remedial, removal, and other actions necessary to clean up add remove all Contaminants, Leachate and Landfill Gas on, from, or affecting the Premises in accordance with all applicable Environmental Laws and to the satisfaction of the County, except with respect to Pre-Closing Leased Facilities Environmental Conditions; g. Lessee shall promptly supply the County with copies of all notices, reports, correspondence, and submissions made by Lessee to the United States Environmental Protection Agency, the United Occupational Safety and Health Administmtion, and any other local, state or federal authority which requires submission of any information conceming environmental matters or hazardous wastes or substances pursuant to applicable Environmental Laws; h. Lessee shall promptly notify the County of any liens threatened or attached against the Premises pursuant to any Environmental Law, If such a lien is fil^d against the Premises, then, within the earlier of (1) twenty (20) days following such filing, or (ii) before any governmental authority commences proceedings to sell the Premises pursuant to the lien. Lessee shall either: (a) pay the claim and remove the lien from the Premises, or (b) fumish either (1) a bond or cash deposit reasonably satisfactory to the County in an amount not less than the claim from which the lien arises, or (ii) other security satisfactory to the County in an amount not less th«m that which is sufficient to discharge the claim from which the lien arises; and 1. At the end of this Lease, tjessee shall surrender the Premises to the County free of any and all Contaminants, Leachate and Landfill Gas and in conqpliance with all Environmental Laws affecting the Premises, except with respect to Pre-Closing Leased Facilities Environmental Conditions. LA3.79577I.V] 21 14.4 TndffmnHfications Regarding Contaminants. Leaehata «tid Landfill Sas. The indemnification responsibilities of Lessee and the County relating to Contaminants, Leachate and Landfill Gas shall be as set forth in the Purchase Agreement. 14.5 Remediee Cumulativei Survival. The provisions of this Article shall be in addition to any and all obligations and liabilities Lessee may have to the Coimty at cononon law, and any remedies and the environmental indemnities provided for in this Article shall survive the expiration or termination of this Lease, the transfer of all or any portion of the Premises or of any interest in this Lease, and shall be govemed by the laws of the State of C!alifomia. 14.6 TPBPectioyi. The County and the County's agents, servants, and employees including, without limitation, legal counsel and environmental consultants and engineers retained lay the County, may (but without the obligation or duty so to do), at any time and from time to time, on not less than ten (10) business days' notice to Lessee (except in the event of an emergency in which case no notice shall IDS required), inspect the Premises to determine whether Lessee is complying with Lessee's obligations set forth in this Article, and to perform environmental inspections and sanflings, during regular business hours (except in the event of an emergency) or during such other hours as the County and Lessee may agree. If Lessee is not in compliance, the County shall have the right, in addition to the County's other remedies available at law and in equity, to enter upon the Premises immediately and take such action as the County in its sole judgment deems appropriate to remediate any actual or threatened contamination caused by Lessee's failure to ccmply. The County will use reasonabls efforts to minimize interference with Lessee's use of Premises h\it will not be liable for any interference caused by the County's entry and remediation efforts. Upon completion of any sanfling or testing the Cbunty will (at Lessee's expense if the Coimty's actions are a result of Lessee's default under this Section) restore the affected area of the Premises from any damage caused l>y the County's sampling and testing. ARTICL8 15 ASSIGNMENT, SUBLEASING AND ENCUMBRANCING 15.1 The County*e Consent to Transfer Required. Lessee shall not voluntarily or involuntarily assign, sublease, mortgage, encumber, or otherwise transfer (collectively, a "Transfer") aill or any portion of the Premises or its interest in this Lease wl^|(giPptb# Cbimt]^s jprlor written consent, %ffalch consent shall not Ise'unreasonaa5ry*wl€fiHeXd/ however, that Lessee ac)cnowledges and agrees that the County's denial of consent for a reason listed in Section 15.2.2, "Denial of Consent to Transfer" shall conclusively be deemed reasonable). The County may witlihold its consent until Lessee has complied with LA3.7fS77t.V2 22 0I/IV97 HI the provisions of the following Sections of this Article. Any attenfted Transfer without the County's consent shall be void and shall constitute a material breach of this Lease. As used herein, the term "Transfer" shall include (i) an arrangement (including without limitation management agreements, concessions, and licenses) that allows the use and occupancy of all or part of the Premises by anyone other than Lessee, and (ii) the transfer of any stock or interest in Lessee as a corporation, partnership or joint powers authority which, in the aggregate, exceeds forty- nine percent (49%) of the total ownership interest in Lessee. 15.2 The County*a Elaefelon. Lessee's request for consent to any Transfer shall be accompanied by a written statement setting forth the details of the proposed Transfer, includ'ing (1) .the name, address, business, business history and financial Condition of the proposed assignee or sublessee (collectively, "Transferee") sufficient to enable the Coimty to detexnlM the financial responsibility and character of the Transferee, (11) a copy of the proposed assignment or sublease and the financial details of the proposed Transfer (including the duration, the rent and any security deposit payable under an assignment or sublease), (iii) the Transferee's proposed use of the Premises, and (iv) any other related information which tbe County may reasonably require. The County shall have the right: (a) to withhold consent to the Transfer, if reasonable; (b) to grant consent; or (c) to terminate this Lease for the portion of tha. Premises affected hy any proposed subleasa or assignment, in which event the Coimty may enter into a leaae direaaly with the^ proposed sublessee or assignee. 15.2.1 CoagWt tff Traagftr. The county's consent to an assignment or sublease will not he effective until (1) a fully exfscuted copy of the instrument: accomplishing a Transfer ("Transfer Instrument") has been delivered to the County, including, without limitation, a copy of any trust deed encumbering Lessee's leasehold and the note secured thereby, (ii) in the case of & sublease, the County has received from Lessee an original of the executed sublease (which sublease must contain the provisions described in Exhibit F (MCCLELLAN-PALOMAR AIRPORT - THE COUNTT OF SAN DIEGO REQUIRED SUBLEASE PROVISIONS)) and. (ill) in the case of an assignment, the County has received a written instrument in which the assignee has assumed amd agreed to perform all of Lessee's obligations under this Lease. Any rights acquired by a Transferee pursuant to any Transfer Instrument shall be subject to each and every covenant, condition and restriction set forth in this Lease and to all of the rights and interest of the County in this Lease, except as may be otherwise herein specifically provided in this Article. In the event of any conflict between the provisions of this Lease and the provisions of any Transfer Instnmient, the provisions of this Lease shall control. LA3.7tS77l.V3 23 OI/ltm 15.2.2 Denial of Consent te Tranafar. If the County denies its consent to a proposed Transfer, and if Lessee shall so request in writing, the County shall provide to Lessee a statement of the basis on which the County denied its consent within a reasonable time after the receipt of Lessee's notice. Lessee shall have the burden of proving that the Coun^/s consent to the proposed Transfer was withheld unreasonably; croB^rdan may be satisfied if the County fails to provide a statement of a reasonable Isasis for withholdinn^''itr consent within a reaaonable time after Lessee's request therefor. Notwithstanding any of the foregoing provisions of this Section to the contrary, the following shall be deemed to be reasonable grounds for the County to withhold consent to a Transfer for purposes of compliance with Califomia Civil Code Section 1951.4: > I (a) Lessee or any of its successors, assigns or sublessees are in default as to any term, covenant or condition of this Lease, whether or not notice of default has been givan by the County. (b) The prospective assignee or sublessee has not agreed in writing to keep, perform and be bound hy all of the terms, covenants and conditions of this Xiease. (c) The County reasonably objects to the financial condition of the prospective assignee or sublessee. (d) All of the terms, covenants and conditions of the assignment or sublease, including any considemtion therefor, have not been disclosed in writing to the Coimty. (e) Any constmction of infrovements commenced by Lessee has not been completed to the satisfaction of the County unless the assignee or sublessee assumes, to the reasonable satisfaction of the County, the obligation to complete such constmction. (f) Nonpayment of the Transfer Fee described below. If Lessee believes that the County has unreasonably withheld its consent to a Transfer, Lessee's sole remedy will be to seek a declaratory judgment that the County has unreasonably withheld its consent or an order of specific performance or mandatory injunction requiring the County's consent. Lessee will not have any right to recover damages or to terminate this Lease. 15.3 ErnnrhtrApQ <^ha Leasehold Estate with a Mortoaoe. Any Transfer which consists of the grant of a deed of tmst or similar encumbrance (such encumbrances are collectively referred to herein as a "Mortgage") by Lessee to secure the beneficial interest of a lender ("Beneficiary") in the Premises or Lessee's interests under this Lease, shall be subject to all of the LA).7«5T71.V: 24 ovtim provisions of this Article pertaining to the conclusion and approval of other Transfers, and shall also be subject to the additional terms and conditions set forth below: (a) No Mortgage granted hy Lessee shall encumber the fee title to the Pr&nises at any time; (b) Immediately following the recordation of any Mortgage affecting the Premises or Lessee's interest in this Lease, Lessee, at Lessee's expense, shall cause to be recorded in the Office of the Recorder, San Diego the County, Califomia, a written request for delivery to the Coimty of a copy of any notice of default and of any notice of sale under such Mortgage, as provided by the statutes of the State of Califomia pertaining thereto. 15.3.1 Curable and Noncurable Defaulta Tfadar t.^^ LeaseI the County's Covenant of Forbearance. Where the County has consented to a Mortgage encimibering Lessee's leasehold as required pursuant to this Article, then the County, notwithstanding anything to the contrary in this Lease, shall not exercise its remedies under this Lease for Lessee's default during the periods specified in this Section so long as the Beneficiary of such Mortgage takes the following actions: a. If a curable breach of the Lease occurs, a... Beneficiary shall have the right to begin foredosare .^proceedings and to obtain possession of Lessee's interest in't}sm»*iPtmm±Bem^ao long as Beneficiary complies with the conditions set forth below: (1) Cures Lessee's default within the same time period allotted to Lessee for cure of such default, plus an additional thirty (30) days (except that only ten (10) additional days shall be permitted in the case of a default in the payment of money from Lessee to the County). (2) Notifies the County, within ten (10) days following receipt of the Coimty's notice of Lessee's default, of its intention to effect this remedy; (3) Institutes immediate steps or legal proceedings to foreclose on or recover possession of the leasehold, amd thereaf-ter prosecutes the remedy or legal proceedings to conpletion with due diligence and continuity; and (4) Keeps and performs, during the period until the leasehold shall be either (i) sold upon foreclosure pursuant to the Mortgage, or (ii) released or reconveyed pursuant to the Mortgage (such period being referred to hereinafter as the "Foreclosure Period"), all of the covenants and conditions of this Lease, including, without limitation, payment of all rent, taxes, assessments, utility charges and Insurance premiums LA3.7tJ77l.V2 25 ot/11/97 required by this Lease to be paid by Lessee and which become due during the Foreclosure Period. b. If a noncurable breach of the Lease occurs, a Beneficiary shall have the right to begin foreclosure proceedings and to obtain possession of Lessee's interest in the Premises, so long as Beneficiary con^lies with the conditions set forth below: (1) Notifies the County, within ten (10) days after receipt of the County's notice of Lessee's default, of its intention to effect this remedy; (2) Institutes immediate steps or legal proceedings to foreclose on or recover possession of the leasehold, and thereafter prosecutes the remedy or legal proceedings to con^)letion with due diligence and continuity; and (3) Keeps and performs, during the Foreclosure Period, all of the covenants and conditions of this Lease requiring the payment of money, including, without limitation, payment of all rent, taxes, assessments, utility charges and insurance premiums required hy this Lease to be paid by Lessee and which become due during the Foreclosure Period. c. If Lessee fails to cure any curable default within the time period allowed for such cum in this Lease, no cure by a Beneficiary of any such default in the manner allowed under this Section shall reinstate Lessee in good standing under this Iiease. If, following expiration of the cure period, if any, applicable to Lessee, the Beneficiary shall fail or refuse to conq^ly with any or all of the conditions of this Section applicable to Lessee's default, including failing to expeditiously obtain title to Lessefe'« leasehold, then the County shall be released from its covenant cf forbearance hereunder, and may immediately terminate this Lease. 15.3.2 Tranafer of Leaaahold Estatef the County's rypt^ton to Purchase. Any Beneficiary who acquires title to the leasehold estate shall insnediately provide the County with written notice of such transfer. Notwithstanding any provision of this Section to the contrary, following transfer of the leasehold estate to a Beneficiary in any manner, the County shall have the option to purchase all right, title and interest in and to the leasehold directly from the Beneficiary. The purchase price shall be equal to the unpaid principal balance due on the note or notes formerly secured by such Mortgage, plus tmstee's fees and costs of sale, if any, but excluding (1) any fees, penalties or late charges assessed by Beneficiary against Lessee, and (ii) any rent or other payments made hy Beneficiary under the terms of the Lease. The County may exercise such option to purchase by delivering written notification thereof to a Beneficiary at any time within thirty (30) days following the LA3.7tJ77l.V2 26 Ol/lim County's receipt of written notification of the Beneficiary's acquisition of title to the leasehold. a. Should the County elect to not exercise its option to purchase the leasehold within the period described above, then, subject' to the provisions of Sections 15.4, "Transfer fee," 15.5, "No Release of Lessee," and 15.6, "No Merger," below, and so long as the Beneficiary shall have observed all of the conditions of Section 15.3.1, above, the following breaches, if any, relating to the prior lessee shall be deemed cured: (i) attachment, execution of or other judicial levy upon the leasehold estate, (11) assignment of credltom of Lessee, (iii) judicial appointment of a receiver or similar officer to take possession of the leasehold estate or the Premises or (iv) filing any petition by, for or against Lessee under any chapter of the Federal Banlcmptcy Code. Any further transfer of the leasehold estate, however (whether lay a i i , >, Beneficiary or by a third-party bidder acquiring the estate at a foreclosure sale), shall be subject to the following conditions: (1) The provisions of Sections 15.1, "The County's Consent to Assignment Required," and 15,2, "Tha County's Election," above, shall apply to such further Transfer, and- the Coimty's consent shall be required to such further Transfer; and (2) By its acceptance of the leasehold estate, the Transferee of such further Transfer assumes this Leaaa-as to the entire leasehold estate and covenants with'the Coymtfy^.o be bound hereby. 15.3.3 Article Controlling. In the event of any conflict between the provisions of this Article and any other provision of this Lease, this Article shall control. 15.3.4 Failure to Give Notiee. Except as expressly set forth in this Article, the County shall have no obligation to any Beneficiary or to give any notice to any Beneficiary, and the County's failure to provide any Beneficiary with any notice of any default hereunder shall not create any right or claim against the County on behalf of Lessee or any Beneficiary. 15.4 Transfer Fee. If the County is requested to consent to a Transfer hereunder. Lessee shall pay all the County's attorneys' fees, plus a nonrefundable fee of $750 ("Transfer Fee") to reimburse the County or the County's agent for costs and expenses incurred in connection with such request. The Transfer Pee shall be delivered to the Coimty concurrently with Lessee's request for consent, 15.5 No Release of Lessee. No permitted Transfer shall release or change Lessee's primary liability to perform all obligations of Lessee under this Lease, except to the extent the Lease is terminated as described above. The County's consent to LA3-7tJ77I.V2 27 Ol/ICm one Transfer shall not be deemed to imply the County's consent to any subsequent Transfer. If Lessee's Transferee defaults uader this Lease, the County may proceed directly against Lessee without pursuing remedies against the Transferee. The County may consent to subsequent assigxmients or modifications of this Lease hy Lessee's Transferee, without notifying Lessee or obtaining its consent, and such action shall not relieve Lessee's liability under this Lease. 15.6 yo Merger. No merger shall result from a Transfer pursuant to this Article, Lessee's surrender of this Lease, , or a mutual cancellation of this Lease in any other manner. In any such event, the Coimty may either terminate any or all subleases or succeed to the int«:rest of Lessee thereunder. I 15.7 Approval of Tyrnnorarv er Limited Activities bv. tha County. Notwithstanding any provision of this Article to the contmry, the County, may, at his or her sole discretion, < anidi without charging a Transfer Fee, give written authorization for the following activities on the Premises: (1) activities of a tenqporary nature, not to exceed one hundred twenty (120) calendar days, and (11) activities of a limited nature which do not exceed ten (10) hours per week. Lessee shall maintain, on an approved the Coimty form, a listing of all such activities approved by the County, stating the nature, duration and other relevant matters regarding such activities, and shall make such form avallabla to the County for inspection upon request. Nothing herein shall relieve Lessee from its responsibilities under this Lease, and Lessee shall be responsible for insuring that any such activity approved by the County complies with all of the provisions of this Lease. Any such tempomry or limited activity shall be subject to immediate termination upon delivery of written notification thereof from the County. ARTICLB 16 DEFAULTS BY LESSEE} TKB COUNTY'S REMEDIBS 16.1 gyeatt 9f PtlMlt* nie occurrence of any of the following shall constitute a default by Lessee and a breach of this Leases (a) Failing or refusing to pay any amount due to the.. . County when due in accordance with the provisions of this Lease; (b) Failing or refusing to occupy and operate the Premises in accordance with the provisions of this Lease; (c) Failing or refusing to perform fully and pronqptly any covenant or condition of this Lease, other than those specified in subparagraphs (a) and (b) above, the breach of which Lessee is capable of curing after reasonable notice from the County; LA3.7t5ni.v2 2 8 mnvn ^5 (d) Maintaining, committing or permitting on the Premises waste, a nuisance, or use of the Premises for an unlawful purpose, or assigning or subletting this Lease in a manner contrary to the provisions of this Lease; (e) The ofccurrence of any of the events set forth in Section 19.1, "Right of Termination," below. 16.2 Notictl. Following the occurrence of any of the defaults specified in the preceding section, the County shall give Lessee a written notice specifying the nature of the default and the provisions of this Lease breached and demanding that Lessee either fully cure each such default within the time period specified in the subpamgmphs below or quit the Premises and surrender the same to tha County: (a) For nonpayment of any amount due to the County in accordance with the provisions of this Lease, five (5) wor)cing days; (b) For a curable default, a reasonable period not to exceed ten (10) wor)clng days, provided# however, if such default cazmot be cured within said time period. Lessee sliall be deemed to have cured such default if Lessee so notifies the County in vrriting, commences cure of the default within said time period, and thereafter diligently and in good faith continues with and actually cos^letes said cure; and (c) For a noncurable default, the County, shall givet^ Lessee a written notice specifying the nature of the default and the provisions of this Lease breached and the County shall hava^^^ the right to demand in said notice that Lessee, and any - subtenant, quit the Premises within five (5) working days. To the extent permitted by applicable State law, the time periods provided in this Section for cure of Lessee's defaults under this Lease or for surrender of the Premises shall be in lieu of, and not in addition to, any similar time periods described by Califomia law as a condition precedent to the commencement of legal action against Lessee for possession of the Premises, 16.3 The County*a Riohta and Ramediaa. Should Lessee fail to cure any such defaults within the time periods specified in the immediately preceding Section, or fail to quit the Premises as required thereby, the County may exercise any of the following rights without further notice or demand of any )cind to Lessee or any other person, except as may otherwise be required by applicable Califomia law: (a) The right of the Cbunty to terminate this Lease and Lessee's right to possession of the Premises and to reenter the Premises, take possession thereof and remove all persons U3*7tJ77i.V2 29 Oitttm Si therefrom, following which Lessee shall have no further claim on the Premises under this Lease; (b) The right of the County without terminating this Lease and Lessee's right to possession of the Premises, to reenter the Premises and occupy the whole or any part thereof for and on account of Lessee and to collect any unpaid ren^s and other charges, which have become payable,, or which may thereafter become payable pursuant to Civil Code Section 1951.4; or (c) The right of the County, even though it may have reentered the Premises in accordance with the immediately preceding subparagraph (b) of this Section, to elect thereafter to terminate this Lease and Lessee's right to possession* of the Premises. ^ Should the Coimty have reentered the Premises under the ' provisions of subparagraph (b) of this Section, the County shiall not he deemed to have terminated this Lease, the liability of Lessee to pay rent or other charges thereafter accming, or Lessee's liability for damages under any of the provisions hereof, by any such reentry or by any action, in unlawful detainer or otherwise, to obtain possession of the Premises, unless the County shall have notified Lessee in writing that it has so elected to terminate this Lease and Lessee's right to possession. Lessee further covenants that the service hy tha County of any notice pursuant to the unlawful detainer statutes of the State of Califomia and the surrender of possession pursuant to such notice shall not (unless the County elects to the contmry at the time of, or at any time subsequent to, the serving of such notics and such election is evidenced by a written notice to Lessee) be deemed to be a termination of this Lease. In the event of any reentry or ta)tlng possession of the Premises as aforesaid, the County shall have the right, but not the obligation, at Lessee's expense, to remove therefrom (1) all or any part- of the buildings or stmctures placed on the Premises by Lessee or its agents, and (11) any or all merchandise. Fixtures or Personal Property located therein and to place the same in storage at a public warehouse at the expense and risk of Lessee. The rights and remedies given to the County in this Section shall be additional and supplemental to all other rights or remedies which the Coimty may have under laws in force when the default occurs. 16.4 The County'B PftnuiTfilt Should the County terminate this Lease and Lessee's right to possession of the Premises pursuant to the provisions of subparagraph (a) or (c) of the immediately preceding Section, the County may recover from Lessee as damages any or all of the following: (a) The worth at the time of award of any unpaid rent that had been earned at the time of such termination; LA3.7t377l.V2 30 wivn (b) The worth at the time of award of the amount by which the unpaid rent that would liave been eamed after termination until the time of award exceeds the amount of such rent loss Lessee proves could have been reasonably avoided; (c) The worth at the time of award of the amount hy which the unpaid rent for the balance of the Term after the time of award exceeds the amount pf such rent loss that Lessee proves could be reasonably avoided; (d) Any other amoimt necessary to condensate the. County for all actual damages suffered by the County as a result of Lessee's failure to perform its obligations under this Ijsase or which in the ordinary course of things would be likely to result therefrom, ificluding, without limitation, any costs or e3q}ense incurred by the County in (1) reta)ting possession of the Premises, including reasonable attomeys' fees therefor, (11) maintaining or preserving the Premises after such default, (ill) preparing the Premises for reletting to a new tenant, including repairs or-altemtions to the Premises for such reletting, (iv) leasing cononisslons, and (v) any other costs necessary or appropriate to relet the Premises; and (e) At the County's election, such other amounts in addition to or in lieu of the foregoing as may he permitted from time to time by the laws of the State of Califomia. As used in subparagmphs (a) and (b) of tl^ls Seetlbn, the "worth at the time of award" is computed by allowing interest at the maximum rate allowed by Califomia Law. As used in subp'aragmph c of this Section, the "worth at the time of award is con^nited by discounting such amount at the discount mte of the Federal Reserve Bank of San Francisco at tha time of award plus one percent (1%). All rent, other than monthly Base Rent shall, for the purposes of calculating any amount due under the provisions of subparagraph c of this Section, be con5>uted on the basis of the average monthly amount thereof accming during the ioanediately preceding sixty (60) month period, except that, if it becomes necessary to compute such rent before such a sixty (60) month period has occurred, then such rent shall be conqputed on the basis of the average monthly amount hereof accming during such shorter period. 16.5 yiaeturaa and Personal PropertY. In the event of Lessee's default, all of Lessee's merchandise. Fixtures and Personal Property sliall remain on the Premises and, continuing during the length of said default, the County shall have the right to take the exclusive possession of same and to use the same free of rent or charge until all defaults have been cured or, at its option, to require Lessee to remove same forthwith. UA3-7tS77l.va ^* ie.6 The County*a s^^^i-jfcy interest. To secure Lessee's perfoimance of any and all of Lessee's obligations under this Lease, Leasee hereby grants the County an express first and prior contractual lien and security interest in Lessee's Fixtures and Personal Property located on the Premises, and also upon all proceeds of any insurance that may accme to Lessee by reason of the destmction or damage such property. Lessee waives the benefit of all exemption lanrs in favor of this lien and security interest. This lien and security interest is given in addition to the County's statutory lien and is cumulative with it. Upon the occurrence of an event of default, these liens may he foreclosed with or without court proceedings by public or private sale, so long as the County gives Lessee at least fifteen (15) days' notice of the time'and place of the sale. The County shall have the right to become the purchaser if it is the highest bidder at the sale. To perfect said security interest. Lessee shall execute and deliver to the County such financing statements required by the applicable Uniform Commercial Code as the County may request. 16.7 Lessee's Waiver. Notwithstanding anything to the contrary contained in this Article, Lessee waives (to the fullest extent permitted under law) any %n:itten notice (other than such notice as this Article specifically requires) which any statute or law now or hereafter in force prescribes he given Lessee. Lessee further waives any and all rights of redemption under any existing or future law in the event its eviction from, or dispossession of, the Premises for any reason, or in the event the County reenters and takes possession of the Premises in a lawful manner. 16.8 Interest. Any amounts due from Lessee under the provisions of this Lease which are not paid when due shall bear interest at the rate of four percent (4%) per annum over the discount rate chazrged from time to time by the Federal Reserve Bank (San Francisco office), hut not to exceed the maximum rate which the County is permitted by law to charge. ARTICLB 17 DEFAULTS BY THB COUNTX | REMEDIES If the County shall neglect or fail to perfoam or obseirve any of the terms, covenants, or conditions contained in this Lease on its part to be performed or observed within thirty (30) days after written notice of default or. when more than thirty (30) days shall be required because of the nature of the default, if the County shall fail to proceed diligently to cure such default after written notice thereof, then the County shall be liable to Lessee for any and all damages sustained hy Lessee as a result of the County's breach; proylOgdi howevea^. (a) except with respect to the County's indemnification obligations and except if the County defaults under this Lease by granting any interest in the Premises to another party during the term hereof or by UA3.79S77I,V2 32 Ot/ttm ^1 entering the Premises, in either case in a manner not permitted by this Lease (and in all of the foregoing situations described in this slaUfifi-laJLt the "Net Income" limit described herein shall not apply), any money judgment resulting from any default or other claim arising under this Lease shall be satisfied only out of Prepaid Rent, if during the Initial Term, and, thereafter, out of the Base Rent ("Net Income" f.or purposes of this Article only), (b) no other real, personal or mixed property of the County, wherever located, shall be subject to levy on any such judgment obtained against the County, (c) if such Net Income Is insufficient to satisfy such judgment. Lessee will-not institute any further action, suit, claim or demand, in law or in equity, against the County for or on the account of such deficiency, and (d) such neglect or failure shall not constitute consent by the County for Lessee to perform or observe such terms, covenants or conditions at the County's expense. Lessee hereby waives, to. the extent permitted under law, any right to satisfy said mosay ' 1 judgment against the County except from Net Income and agrees that on any action for damages. Lessee is limited to recovering its actual damages and may not recover any consequential or punitive damages. ARTICLB 18 ABANDONMENT Lessee shall not vacate or al^andon the Premises at any time during the term of this Lease. If Lessee shall.,yibsndaaii..vasa^ >i> or surrender the Premises, or be dispossessed by procesa^f lasfi or otherwise, any Personal Property or Fixtures belonging .to Lessee and left on the Premises shall, at the option of the County, be deemed abandoned. In such case, the County may dispose of said Personal Property and Fixtures in any manner provided by Califomia law and is hereby-relieved of all liability for doing so. These provisions shall not apply if the Premises should be closed and business temporarily discontinued therein on account of strikes, lockouts, or similar causes beyond the reasonable control of Lessee. ARTICLB 19 BANKRUPTCY 19.1 pjght of Termination. Should any of the following events occur, the County may terminate this Lease and any interest of Lessee therein, effective with the commencement of the event: a. Proceedings are instituted whereby all, or substantially all, of Lessee's assets are placed in the hands of a receiver, tmstee or assignee for the benefit of Lessee's creditors, and such proceedings continue for at least thirty (30) days; LA3-7tJT71.V2 33 Qi/iim b. Any creditor of Lessee institutes judicial or administrative process to execute on, attach or otherwise seize any of Lessee's merchandise. Fixtures or Personal Property, located on the Premiees and Lessee fails to discharge, set aside exonerate by posting a bond, or otherwise obtain a release of such property within thirty (30) days; or c. A petition is filed for an order of relief under the Federal Bankmptcy Code or for an order or decree of insolvency or reorganization or rearrangement under any state or federal law, and is not dismissed within thirty (30) days. Any assignee pursuant to the provisions of any bankmptcy law shall be deemed without further act to have assumed all of the obligations of the Lessee under this Lease arising on or lifter the date of such assignment. Any such assignee shall upon demand execute and deliver to the Coimty an instrument confirming s<ich assunptioh. i I 19.2 BeqttMt fQr lafgnwitign- within ten (lO) days after the County's request therefor. Lessee shall provide the County and any mortgagee or proposed mortgagee of the County, as the County shall specify, such financial, legal and busineas information conceming any of the events described in this Article as the County shall request. ARTICLB 20 DAUAGB OR DESTRUCTION 20.1 £ACUA1£SC. Should the Fixtures, Personal Property or improvements be damaged by fire, flood or any other peril. Lessee shall restore such Fixtures, Personal Property or in^rovements to substantially the same condition as they were in immediately preceding such damage or destmction. In the event of a total destmction of the Premises so that the Premises are rendered unusable, either party shall have the right to terminate this Lease. 20.2 Constmction Proviaiona. In the event of any reconstmction of the Premises required of Lessee pursuant to this Article, Lessee shall, to the extent of available insurance proceeds, repair or rebuild such improvements to substantially the same condition they were in immediately preceding such damage or destmction. 20.3 NO Abatement ef Rant. Lessee shall not be entitled to any compensation or damages from the County for loss of use of the whole or any part of the Premises, Fixtures and Personal Property, or any inconvenience or annoyance occasioned by such damage, reconstmction or replacement. Lessee hereby waives any statutory rights of termiziation which may arise by reason of any partial or total destmction of the Premises. LA3.7t3T7l.V2 34 ft ARTICLB 21 EMINENT DOMAIN 21.1 Ossjim^jn^iaSL' If all of the Premises is taken under eminent domain proceedings by a party other tlian the County, or, if less than all of the- Premises is taken under such proceeding and the part taken substantially in^irs the ability of Lessee to use the remainder of the Premises for the purposes permitted by this Lease, then either the Coimty or Lessee may terminate this Lease as of the date that the condemning authority takes possession by delivery of written notice of such election within twenty (20) days after such party has been notified of the taking or, in the absence thereof, within twenty (20) days after the condemning authority shall have taken possession. 21.2 Continuation of Laaae After rondarnnafcioyi. Jf this Lease is not terminated by the County or Lessee, it shall remain in full force and effect as to any portion of the Premises remaining, and: (a) This Lease will end as of the date possession of the part is taken by the public entity as to the part of the Premieee that is taken; (b) Lessee is not entitled to the retum of any prepaid rent; and (c) At its cost. Lessee shall restoreieeo much?iOf'^he remaining portion of the Premises as is required to create a site substantially suitable for the purposes for which it was used immediately before the taking. 21.3 Lessee's Award. In connection with any taking. Lessee may prosecute its own claim by separate proceedings against the condemning authority for damages legally due to it (such as the loss of Fixtures that Lessee was entitled to remove and moving expenses) only so long as Lessee's award does not diminish or otherwise adversely affect the Coimty's award. 21.4 Allocation of CondrTmiation Award for a Total Taking of ^Ijif yremiaes. All awards for the total taking of the Premises or proceeds from the sale made under the threat of the exercise of the power of eminent domain shall be the property of the County, whether made as compensation for diminution of value of the leasehold estate, for the taking of the fee, or as severance damage; provided, however. Lessee shall be entitled to any award for (i) the value of Lessee-constmcted in^rovements minus depreciation by that percentage per year which is derived by dividing 100 years by the length of the initial Term, and (11) loss of or damage to Lessee's trade fixtures, and removable personal property. Notwithstanding the foregoing, any amount of condemnation compensation due to Lessee pursuant hereto shall go first, to the County to satisfy (i) the County's attomeys' fees. LA3.7tJ771.V2 35 M/ltm 4 ^ appraisal fees, and other costs incurred in prosecuting the claim for the award, (ii) the value of the reversion as of the ending date, and (iii) any financial obligations of Lessee to the County pursuant to the provisions of this Lease, and second, to any creditors of Lessee to satisfy the remaining balance of any due to such creditor from any the Coimty-approved loan encumbering the Premises. ^ ARTICLB 22 SALE OR MORTGAGE BY TBB COUNTY 22*1 gftlc 9r MQrt;qffgg. From and after the Effective Date, the County may at any time, without the consent of Lessee, sell, purchase, exchange, transfe'r, assign, lease, encumber on convey' the County's* interest in whole or in part, in the Lease, the Premises, the realty underlying the Premises or any portion of or interest in the realty or in^rovements on the Property ' (collectively referred to in this Article as a "Sale"). ARTICLE 23 SUBORDINATIONi ATTORNMENT 23.1 ffiafegrdibftiga- without the necessity of any other document being executed and delivered by Lessee, this Lease is and shall be junior, subject and subordinate to any existing or future permits or approvals issued hy the United States of America or any local. State or federal agency affecting the control or operation of the Premises; Lessee shall be bound by the terms and provisions of such permits or approvals. In addition, this Lease is and shall also be subject, subordinate and junior to all ground leases, mortgages, deeds of tmst and other security instruments of any kind now covering the Premises, or any portion thereof. 23*2 Attommtat* In the event any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of tmst made by the County covering the Premises, Lessee shall attom to the purchaser upon any such foreclosure or sale and recognize such purchaser as landlord under this Lease. ARTICLB 24 COUNTT*S RIGHT OF ACCESS 24.1 hStssMM' The County, its agents, en^loyees, and contractors may enter the Premises at any time in response to an emergency, and at reasonable hours to (a) inspect the Premises, (b) exhibit the Premises to prospective purchasers or Lessees, (c) determine whether Lessee is complying with its obligations in this Lease (including its obligations with respect to conmliance with Environmental Laws), (d) supply cleaning service and any other service that this Lease requires the County to provide, (e) post notices of nonresponsibility or similar notices. LAj.7tJ77I.VJ 36 (f) make repairs that this Lease requires the County to make, or make repairs to any adjoining space or utility servicee, or make repairs, alterations, or inprovements to amy other portion of the Property, (g) access any property owned or opemted by the County that is adjacent to or near the Premises, (h) test, inspect, investigate, remediate or monitor the Premises, and any real property adjacent to or near the Premises, for Contaminants, Leacliate or Landfill Gas, and (1) repair, maintain, install, replace, investigate, inspect and test any equipment or machinery relating to Contaminants, Leachate or Landfill Gas remediation, testing or monitoring of the Premises or any real property adjacent to or near the Premises; provided* however, all work will be dona as pron^^tly as reasonably possible and so as to cause as little interference to Lessee as reasonably possl|Dle. 24.2 Lessee Waivers Regarding Countv Aeee^^. Lessee waives any claim of injury or inconvenience to Lessee's business,| interference with Lessee's business, loss of occupancy or quielt enjoyment of the Premises, or any other loss occasioned by such entry. If necessary, .Lessee shall provide the County with keys-to unlock all of the doors in ths Premises (excluding Lessee's vaults, safes, and similar areas designated in writing by Lessee in advance). The County will have the right to use any means that the Coimty may deem proper to open doors in the Premises and to the Premises in an emergency. ARTICLES, QUIBT BNJOfMBNT *^ If Lessee is not in breach under the covenants made in this Lease, the County covenants that Lessee shall have peaceful and quiet enjoyment of the Premises without hlndmnce on the part of the County. The County will defend Lessee in the peaceful and quiet enjoyment of the Premises against claims of all persons claiming through or under the County. ARTICLB 26 HOLDING OVBR If Lessee remains in possession of the Premises, for any reason, after the expiration of the term of this Lease without executing a new Lease, or after the County has declared a forfeiture by reason of a default by Lessee, then such holding over shall be constmed as a tenancy from month to month, subject to all the conditions, provisions and obligations of this Lease insofar as they are applicaOsle to a month-to-month tenancy. The Base Rent payable during any period of holding over shall be equal to Two Thousand Five Hundred Dollars ($2,500) (based upon 1997 dollars) per day, or any portion thereof, as such number is adjusted for inflation. LA3.7t377l.V3 37 Ol/lim ARTICLB 27 NOTICES 27.1 yptlgeg. Whenever in this Lease it shall be requircKl or permitted that notice or demand be given or served by either party to this Lease to or on the other, such notice or demand shall be in writing, mailed or delivered to the other party at the addresses specified in Article 1 (SUMMARY OF BASIC LEASE PROVISIONS). Mailed notices shall be sent by United States Postal Service, certified or registered mail, postage prepaid and shall be deemed to liave been given, delivered and received three (3) business days after the date such notice or other communication is posted by the United States Postal Service. All other such notices or other consmmi cat ions shall he deemed given, delivered and received upon actual receipt. Either party pay, by written notice delivered pursuant to this provision, at any time designate a different address to which notices shall be sent. ' 'l 27;2 Default Notices. Notwithstanding anything to the contrary contained within this Article, any notices the County, is required or authorized to deliver to Lessee in order to advise Lessee of alleged violations of Lessee's covenants under this Lease must be in writing hut shall be deemed to have b^en duly given or served upon Lessee hy the County attempting to deliver at the Premises during normal business hours a copy of such notice to Lessee or its managing en^loyee or by the County mailing a copy of such notice to Lessee in the manner specified in the preceding Section. ARTICLB 28 NONDISCRIMINATION Lessee hereby covenants by and.for itself, its successors, assigns amd all persons claiming under or through it, that-this Lease is made amd accepted upon and subject to the condition that there shall be no discrimination against, or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or amcestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the Premises, nor shall. Lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the Premises. ARTICLB 29 AFFIRMATIVE ACTION PROGRAM Lessee, by maintaining a business location within San Diego the County and by being.able to use such business location by virtue, in whole or in part, of this Lease, shall comply with the Affirmative Action Program for Vendors as set forth in i>3.7t577i.V2 3 8 (Mltm Article III (commencing at Section 84) of the San Diego the County Administrative Code, which program is incorporated in this Lease by this reference. A copy of such Affirmative Action Program for Vendors will be fumished to Lessee by the County's Lease Administrator upon request. '-ouncy s ARTICLE 30 WAIVER OF RELOCaiTION ASSISTANCE BENEFITS . , ^ ^2*^ Bylocation Assistance Banafifea. Lessee is hereby informed and acknowledges the following: a. By entering into this Lease and becoming a tenant Of the County, Lessee may become entitled to receipt of ' relocation assistance benefits ("Relocation Benefits") pursuant to the Federal Uniform Relocation Assistance Act (42 U.S.C. SS 4601 et seq.) and the Califomia Relocation Assistance Law (Cal Gov. Code. SS 7260 et seq.), or either of them (collectively, the "Relocation Statutes"), should: the County at some time make use of the Premises in such a way as to "displace" Lessee from the Premises. Pursuant to the Relocation Statutes, the County may then become obligated to make such payments to Lessee even where such displacement of Lessee does not otherwise constitute a breach or default by the County of its obligations pursuant to this Lease. b. Under the Relocation Statutes in^effeet as^af rtha »r date hereof. Relocation Benefits may include payment to suah a "displaced person* of (1) the actual and reasonable expense of moving himself or herself and a family, business, or farm operation, including personal property, (ii) the actual direct loss of reestablishing a business or farm operation, but not to exceed Ten Thousand Dollars ($10,000), or (iii) payment in lieu of moving eacpenses of not less than One Thousand Dollars ($1,000) or more than Twenty Thousand Dollars ($20,000). 30.2 tieesee's Waiver and Release of Ralogafeif»^ Bepcfitg. m consideration of the County's agreement to enter into this Lease, Lessee hereby waives any amd all rights it may now have, or may hereafter obtain, to Relocation Benefits arising out of the County's assertion or exercise of its contractual rights to terminate this Lease pursuant to its terms, whether or not such rights are contested by Lessee or amy other entity, and releases the County from any liability for payment of such Relocation Benefits; prgyidcd/ however. Lessee does not waive its rights to Relocation Benefits to the extent that Lessee's entitlement thereto may arise out of amy condemnation or pre- condemnation actions taken by the County or amy other public agency with respect to the Premises. Lessee shall in the future execute any further documentation of the release and waiver provided hereby as the County may reasonably require. LA3-7tJ77I.V2 39 ARTICLB 31 RECORDS, ACCOUNTS AND AUDITS a. Lessee sliall, at all times during the term of this Lease, keep or cause to be-kept, tme amd conplete boolcs, records and accounts of all financial transactions in the operation of all business activities, of whatever nature, conducted pursuant to the rights granted in this Lease. Such records shall also include the source and disposition of all trash collected amd disposed of by Lessee in the operation of its lousiness. Said records must be supported by reasonable source documents. b. All Lessee's hooka or accounts and records shall be kept and made available at one location within the limits of the Coimty of San Diego. The County shall liave the right at any reasonable time to examine and perfom audits of Lessee'i| records pertaining to its opemtions on the Premises. The cost of ssLld audits shall be home by the County; however. Lessee shall provide to the County at Lessee's expense, necessary data to enable the county to fully coBBply with each and every requirement of the State of Califomia or by the United States of America for information or reports relating to this. Lease and to Lessee's use of the Premises. • ARTICLB 32 ... . GENERAL PROVISIONS 32.1 Authority. Lessee represents and warrants that it has full power and authority to execute and fully perform its obligations under this Lease pursuant to its goveming instruments, without the need for any further action, and that the person(s) executing this Lease on behalf of Lessee are the duly designated agents of Lessee and are authorized to do so. 32.2 SsaktX*. Lessee warrants that it has had no dealings with any real estate broker or agent in connection with the- negotiation or execution of this Lease. In the event amy broker other tham the brokers acknowledged in-writing iDy the County make claim for monies owed. Lessee shall indemnify, defend and hold the County harmless therefrom. 32.3 Captions. The captions, headings and index appearing in this Lease are inserted for convenience only amd in no way define, limit, constme, or describe the scope or intent of the provisions of this Lease. 32.4 The County Approval. Except where stated in this Lease to the contrary, the phrases "the County's approval," and "the County's written approval" or such similar phrases shall mean approval of the County's Lease Administrator or said Administrator's representative aa authorized by said administrator in writing. U0.7t377l.V2 40 oi/iim 32-5 Cumulative Remedies. In the event of a default under this Lease, each party's remedies shall be limited to-those remedies set forth in this Lease; any such remedies are cumulative and not exclusi-ve of any other remediei under this Lease to which the non-defaulting party may he entitled. 32.6 Entire Aqreimttat* This Lease, together with all addenda, exhibits and riders attached hereto, constitutes the entire agreement between the parties with respect to the subject matter hereof, and all prior or contemporaneous agreements, understandings and representations, oral or nrritten, are superseded. 32.7 ggtoppel Cert^gjgftte.' Lessee shall at anyitime during the term of this Lease, %rithin five (5) business days of written notice from the County, execute and deliver to the County a statement in writing certifying that this Lease is unmodified and in full force and effect or, if modified, stating the nature of such modification. Lessee's statement shall include other details requested by the County, such as the date to which rent and other charges are paid, the current ownemhlp and name of Lessee, Lessee's )cnowledge conceming any outstanding defaults with reapedt to the Coimty's-obligations under this Lease and the nature of such defaults if they are claims. Any such statement may be relied upon conclusively by any prospective purchaser or encurobramcer of the Premises. Lessee's failure to deliver such statements within such time shall he conduslva upon Lessee that- this Lease is in full force and effect, except to tha eau^mnit^ any modification lias been represented by the County, and that there ^ are no uncured defaults in the County's performance, amd that not' more than one month's rent has been paid in advance. 32.8 Exhibjtpff. All exhibits referred to in this Lease are attached hereto and incorporated by reference. 32.9 yprce MftjfVrB> in the event either party is prevented or delayed from performing any act or discharging any obligation under this Lease, except for the payment of rent by Lessee, because of any and all causes beyond either party's reasonaible control, including unusual delays in deliveries, abnormal adverse weather conditions, unavoidable casualties, strikes, labor disputes, inability to obtain labor, materials or equipment, acts of God, governmental restrictions, regulations or controls, any hostile govemment actions, civil commotion and fire or other casualty, legal actions attacking the validity of this Lease or the County's occupancy of the Premises, or any other casualties beyond the reasonable control of either party except casualties resulting from Lessee's negligent operation or maintenance of the Premises ("Force Majeure"), performance of such act shall be excused for the period of such delay, and the period for performance of such act shall be extended for a period equivalent to the period of such delay. Force Majeure shall not LA3.7tJ77t.V2 41 Ot/lim include any bankmptcy, insolvency, or other financial inability on the pare of either party hereto. 32.10 Governing Law. This Lease shall be govemed, constmed and enforced in accordance with the laws of the State of Califomia. 32.11 Intemretatien. The parties have each agreed to the use of the particular language of the provisions of this Lease, and any question of doubtful interpretation shall not be resolved by any mle of interpretation providing for interpretation against the parties who cause an uncertainty to exist or against ths draf tsperson. 32.12 Joint and Several Liability. If more t^ham one person or entity executes this Lease as Lessee, each of them is jointly and severally liable for all of the obligations of Lessee under this Lease. I ' '| 32.13 Meg^e'g fceegc AdPlaifltmioa* Lessee confirms that Lessee's Lease Administmtor has been given full operational responsibility for con^liance with the terms of this Lease. Lessee shall provide the County with a written schedule of its normal hours of businees operation on the Premises, and Lessee's Lease Administrator or a representative designated thereby shall be (i) available to the County on a twenty-four (24) hour a day, seven (7) days a week, basis, and (ii) present on the Premises during Lessee's normal business hours, to resolve problems or answer question pertaining to this Lease and Lessee's operations on the Premises. 32.14 Liquidate^ Pf^^f^ftg Any payments by Lessee to the County under this Lease described as liquidated damages represent the parties' reasonable estimate of the County's actual damages under the described circumstances, such actual damages being uncertain and difficult to ascertain in light of the impossibility of foreseeing the state of the leasing market at the time of the various deadlines set forth herein, l^e County may, at its election, taOce any of the liquidated damages assessed in any portion of this Lease as direct monetary payments from Lessee and/or as an increase of rent due from Lessee under this Lease. 32.15 Modification. The provisions of this Lease may not be modified, except by a written instrument signed by both parties. 32.16 Partial Invalidity. If any provision of this Lease is determined hy a court of con^etent jurisdiction to be invalid or unenforceable, the remainder of this Lease shall not be affected thereby. Each provision shall be valid and enforceable to the fullest extent permitted by law. LA3.7t377l.V2 42 mUVfl £-.1 32.17 EUffisatJi. Except as may otherwise be expressly stated, each payment required to be made by Lessee shall be in addition to and not in substitution for other payments to be made by Lessee. 32.18 gyggggpgrg § Aggjgag. This Lease shall be binding on an inure to the benefit of the parties and their successors and assigns, except as may otherwise be provided in this Lease. 32.19 Tiae gf Pggeace. Time is of the essence of each amd every provision of this Lease. 32.20 Itelaas. NO provision of this Lease or the breach thereof shall be deemed waived, except by written consent of the party against whom the waiver is claimed. Tlie waiver by the County of any breach of any term, covenant or condition contained in this Lease shall not be deemed to be a waiver of such term, covenamt or condition of any subsequent breach thereof, or of any other term, covenant or condition contained in this Lease. The Coimty's subsequent acceptance of partial rant or performance by Lessee shall not be deemed to be an accord and satisfaction or a waiver of any preceding breach by Lessee of any term, covenant or condition of this Lease or of any right of the County to a forfeiture of the Lease by reason of such breach, regardless of the County's knowledge of such preceding breach at the time of the County's acceptance. Tbe failure on«;;tha*<part of the County to require exact or full and complete compliance wi<eh amy of the covenamts, conditions of agreements of this Lease shall not bs constmed as in any mamner changing or waiting the terms of tliie Lease or as estopping the County from enforcing in full the provisions hereof. No custom or practice whiclL may arise or grow up between the parties hereto in the courtle of administering this Lease shall be constmed to waive, eiitop or any way lessen the right of the County to insist upon tiie full performance of, or compliance with, any term, covenant or condition hereof by Lessee, or constmed to inhibit or prevent the rights of the County to exercise its rights with reitpect to any default, dereliction or breach of this Lease by Lesctee. in contained 32.21 Purchase Agraamant. Nothing this Lease shall limit, modify or reduce the covenamts, agreements or obligations of Lessee or Allied, or the rights and remedies, under that certain Purchase amd Sal Agreement dated as of August 12, 1997 (as amended from time, the "purchase Agreement"), by amd between the seller, and Allied Waste Industries, Inc., a Delaware ("Allied"), as purchaser (which Purchase Agreement has assigned to, and assumed by. Lessee as it relates to, things, the Premises), including, without limitation, or Lessee indemnification obligations and amy County of representations and warranties set forth therein. Ix Cout.ty aSLOng LA3-7tJ7Jl,V2 43 in 's county " e tiime to , as cdrporation paen other Allied ary disclaimers the oc/iim event of a conflict between the terms of this Lease and the Purchase Agreement, the Purchase Agreement shall control. 32.22 (^ffm^^ftmarts. This Lease may be executed in any number of counterparts, each of which is deemed an original and all of which, when taken together, constitute one and the same instrument. 32.23 Approvals. All Coupty approvals under this Lease must include the approval of the Assistant Deputy Director - Aviation. LA3.7t5m.V2 44 IN WITNESS WHEREOF, the County an Lease as of the day and year fir ' THE COUNTY: executed this THB COUNTY OF SAN a political sulsdivision of. the State of Califomia Lwrence B. Prior Crhief Administrative Officer APPROVED AS TO FORK. AND LEGALITT LESSEEI STATION, INC., corpom;^on telji#r Authorized Repvaaanaatt^e n By Don Swierenga, President « I LA3.7t5T7LV2 45 oi/iim 90 EXHIBIT A DESCRIPTION AND PLAT OF THB PREMISES Parcel No. 97-0085-Ai That portion of McClellan-Palomar Airport, in the City of Carlsbad, County of Sam Diego, State of Califomia, described in deed to the County of San Diego, recorded January 18, 1974 as File/Pagti No. 74-014190 in the Office of the County Recorder of said County, described as follows: BEGINNING at the most Southerly comer of land described' in deed to the City of Carlsbad recorded June 30, 1982 at File/Page No. 82-201566 in said County Recorder's Office; thence alongj the Southerly boundary of said Crarlsbad land. North 78*42'04"| Wast, 635.35 feet to a point on the Easterly line of a 40.00 foot road and utility easement granted to said City of Carlsbad on said 1982 deed; thence along said Easterly line. South 11*17*56" West, 519.92 feet to the beginning of a tangent 326.00 foot radius curve, concave Easterly; thence Southerly, along the arc of said curve, through a centml angle of 54"45'22", a distance of'311.55 feet; thence tangent to said curve South 43'27'26" East, 112.20 feet; thence leaving said Easterly line. North 51*31'08" Bast, 235.72 feet; thence North 61*24'19" East, 355.40 feet; thence North 57*22'14" East, 246.04 feet to the beginning of a tangent 50.00 foot radius curve concave Westerly; thence Northeasterly along the arc of said curve, t^hrough a centml angle of 88*35'04', a distance of 77.30 feet; thence tangent to said curve North 31*12'50" West, 51.72 feet; thence North 53*37'13" West, 169.04 feet; thence North 4"55'29" East, 93.29 feet to the POINT OF BEGINNING. UO-7tJ77I.V2 A-1 0«ll/t7 PLAT OF TBB PREMISES [SEE ATTACHED] LA3.7f5771.V2 A- 2 OUlUtl ^ —-• •03 EXBIBIT B FEDERAL AVIATION ADMINISTRATION REQUIREMENTS In the event there is any conflict between the provisions in tills Exhibit amd the' other provisions in this Lease, the provisions in this Exhibit shall take precedence. a. Lessee for itself, its heirs, personal representatives, successors in interest, amd assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant mnning with the land that in the event facilities are constmcted, maintained, or otherwise operated on the said property described in this Lease for a purpose for which tm DOT program or activity is extended or for another purpose involving the provision of similar services or benefits. Lessee "hall ,, maintain and opemte such facilities and services in ccaqpl'lahce with all other requirements inoosed pursuant to Title 49, Coda of Federal Regulations, DOT, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of tha Department of Transportation-Effectuation of Title VI of tha Civil Rights Act of 1964, and as said Regulations may he amended. b. Lessee for itself, its personal representatives, successors in interest, amd assigns, as a part of the consideration hereof, does hereby covenant amd agree as a covenant running with the land that: (1) na person onrsHthawgrounds «. of race, color, or national origin- shall be exclude* ffossf^ participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities, (2) that in the constmction of any improvements on, over, or undar such land and the fumishing of services thereon, no person on the grounds of race, color, or national origin shall k>e excluded from participation in, denied the benefits of. or otherwise ba subject to discrimination, (3) that Lessee shall use the Premises in con^llance with all other requirements imposed hy or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Fedemlly-Assisted Programs of the Department of Transportation-Eff actuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended. c. That in the event of breach of any of the above nondiscrimination covenants, the County shall have the right to terminate this Lease and to re-enter and repossess said lamd and the facilities thereon, and hold the same as if said Lease had never been made or issued. This provision does not become effective until the procedures of 49 CFR Part 21 are followed and completed including expiration of appeal rights. d. Lessee shall fumish its accommodations and/or services on a fair, equal and not unjustly discriminatory basis to all users thereof and it shall charge fair, reasonable amd not U3-7tJ77I.V2 B-1 mt\tm ny unjustly discriminatory prices for each unit or service; PROVIDED, THAT L.?:8see may be allowed to make reasonable and nondiscriminatory discounts, rebates or other similar type of price reductions to volume purchasers. e. Non-C(Dmpliamce with Provision d above shall constitute a material breach thereof and in the event of such noncon^llance the County shall have the right to terminate this Lease and the estate hereby created %rithout liability therefore or at the election of the County or the United States either or both said Governments shall have the right to judicially enforce said Provisions. f. Lessee agrees that it shall insert the abdve five (5) Provisions in aiiy sublease, contract or agreement by which said Lessee grants a right or privilege to any person, firm or corporation to render accommodations amd/or services to the ' public on the Premises herein leased. 9. Lessee assures that it will undertake an affirmative action program as required hy 14 CFR Part 152, Subpart B, to insure that no person shaai on the grounds of mce, creed, color, national origin, or sex be excluded from participating in any employment activities covered in 14 CFR Part 152, Subpart B. Lessee assures that no person shall be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by this subpart. Lessee assures that it will require that its covemd suborganizations provide assurances to Lessee that they similarly will undertake affirmative action program* and that they will require assurances from their suborganizations, as required by 14 CFR Part 152, Subpart E, to the same effect. h. The County reserves tha right to further develop or improve the landing area of the Airport as it sees fit, regardless of the desires or view of lisssee and without intierference or hindrance. 1. The County reserves tha right, but shall not he obligated to Lessee, to maintain amd keep in repair the lamding area of the Airport and all publicly-owned facilities of the Airport, together with the right to direct and control all activities of Lessee in this regard. j. This Lease shall be subordinate to the provisions and requirements of any existing or future agreement between the County and the United States, relative to the development, operation or maintenance of the Airport. k. There is hezehy reserved to the County, its successors and assigns, for the use amd benefit of the public, a right of flight for the passage of aircraft in the airspace above the surface of the Premises herein leased. This public right of LA3.7tS77l.V2 B-2 Ot/1Vt7 flight shall include the right to cause in said airspace amy noise inherent in the operation of any aircraft used for navigation or flight through the said airspace or landing at, taking off froai or operation on the Airport. 1. Lessee agrees to comply with the notification and review requirements covered in Part 77 of the Federal Aviation Regulations in the event future constmction of a building is planned for the leased Premises, or in the event of any plazmed modification or alteration of any present or future building or stmcture situated on the leased Premises. m. Lessee, by accepting this, expressly agrees for itself, its successors and assigns that it will not erect |nor permit the erection of any stmcture or object, nor permit the growth of any tree on the land leased hereunder that conflicts with Part 77 of the Fedeml Aviation Regulations. In thelevek^t the aforesaid covenamts are breached, the County reserves the right to enter upon the land leased hereunder and to remove the offending stmcture or object and cut the offending tree, all of which shall be at the esqpense of Lessee. n. Lessee, by accepting this Lease, agrees for itself, its successors and assigns that it will not make use of the leased Premises in any manner which might interfere with the lamding and taking off of aircraft from said Airport or otherwise constitute a hazard. In the event the aforesaid covenant ia^ breached, the County reserves the right to enter upon thm*^ Premises hereby leased and cause the abatement of such interference at the expense of Lessee. o. It is understood amd agreed that nothing hereiaa^ contained shall be constmed to grant or authorize the granting-- of am exclusive right within the meaming of Section 308a of the - Federal Aviation Act of 1958 (49 U.S.C. 1349a). p. This Lease amd all the provisions hereof shall be subject to whatever right the United States Govemment now has or in the future may have or acquire, affecting the control, opemtion, regulation and taking over of said Airport or the exclusive or non-exclusive use of the Airport by the United States during the time of war or national emergency. U3.7tJ77l.V2 B-3 Ot/liW EXBIBIT C MCCLELLAN-PALOMAR AIRPORT INDUSTRIAL AREAS DEVELOPMENT STANDARDS TABLE OF CONTENTS 1. LAND USES ' - a. Accepted Uses J b. Prohibited Uses l 2. CONDUCT OF USE ..." J . . . 1 3. BUILDING SETBACKS 1 4. BUILDING CONSTRUCTION I , a. Coverage '* - b. Exterior Walls ^ ^ !!!!!! 1 5. HEIGHT LIMIT 2 6. MINIMUM DISTANCE BETWEEN BUILDINQS 2 7. MULTIPLE-OCCUPANCY BUILDINGS 2 8. RBQUltoD SCaiBENING 2 a. Parking Areas ! ! ! ! ' ' 2 b. screening Types 2 c. Roof Tops i !!!!!! 2 9. HEIGHT OF FENCES. WALLS, AND PLANT MATERIALS 3 a. Fences and Walls '3 b. Plamt Materials !!!!!! 3 10. OFF-STREET PARKING AND LOADING 3 a. Parking ! ! ! ! 3 b. Loading Space ! ! ! ! 3 c. Dimensions i i ! ! ! 3 d. Location !!!!!!! 3 e. Improvement of Parking Spaces and Parking Areas .' ! ! 3 f. Marking of Parking Spaces 3 g. Parking Restrictions 3 11. ON-SITE CIRCULATION 4 a. Ingress amd Egress . ! ! ! 4 b. Drive%*ay Tyrone ! . ! 4 c. Pedes triam WaLkways 4 12. SIGNS 4 a. Identification Signs 5 b. Directional Signs 5 UA3.7t377l,y2 c-1 00 c. Safety Signs 5 d. Real Estate Signs . 5 e. Sign Design 5 13. TRASH COLLECTION AREAS 5 14. LANDSCAPING 5 a. Required Lamdscaped Areas . . . ^ 5 b. Landscaping Design 6 c. Irrigation 6 15. OTHER RE(5ULATI0NS 6 LA3.7tS77LV2 C-2 OUIWI MCCLELLAN-PALOMAR AIRPORT . INDUSTRIAL ARBAS DEVELOPMENT STANDARDS 1. ^ANP WBg a. Aggepted Uggg. The following primary uses will be acceptable subject to approval of the County amd conqpliamce with these development standards and the performance stamdards specified for McClellan-Palomar Airpom: (1) Research and development uses. (2) Industrial and manufactuz^ing uses* (3) Warehousing, storage, and wholesaling. (4) Offices, services, sales activity, and other necessary buildings amd uses appurtenant to permitted uses specified in 1, 2, amd 3 above. (5) Signs pertaining only to the use conducted within buildings or signs pertaining to the sale or lease of the premises on which they are located in accordamce with standards contained herein. (6) Off-street parking and loading, vehicular amd pedestrian circulation, amd landscaping in accoirdamce with standards specified herein. (7) On the same leasehold or building site with a permitted industrial park use, one dwelling unit occupied exclusively by a caretaker or superintendent of such use and his/her family may be permitted upon approval of the County. (8) Finance, insurance, real estate and kmsiness services, provided such services involve primary emphasis on processing or production, to the exclusion of services rendered to customers on the premises, to which end such offices shall be called process offices. b. Prohibited Uaea. Uses not falling into the aLbove categories are not permitted unless specifically set forth in the Lease. 2. CONDUCT PF USB- All manufacturing operations shall be conducted within an enclosed building. All storage shall be conducted within a totally enclosed building or enclosed by a six (6) foot high or higher, view obscuring fence or wall. This fence shall not encroach into any required exterior yard. No storage shall exceed the height of the wall or fence. LA3.7t377I.V2 C-3 oi/tam 10 3. fyj7tP™Q SETBAf?rg. No building, stmcture (except a wall or lamdscape feature--or fence) shall at any time be erected or maintained on any site within twenty-five (25) feet from any' site boundary abutting any street. 4. mi^pawq coygTRVcTiow. a. ^9verage. All buildings, including accessory buildings ' amd stmctures, amd all paved areas shall not cover more than ninety percent (90%) of the net lot area. b. Exterior Walla. Any building erected within the industrial park shall conform to the following: (1) Exterior Walls shall be concrete or masonry except where specific approval is given by the County for , architecturally acceptable alternate materials and design.' ' i (2) Exterior walls shall be painted or treated in a manner acceptable to the County. 5. ffigycHT LIMIT. No building or stmcture shall exceed two stories or 35 feet in height, whichever is the lesser; prPYidCd* ^owevar. buildings or stmctures located one hundred (100) feet or more from amy property line and exceeding 35 feet in height may be permitted upon approval by the County. 6. MTWIMOM DISTANCE BETWEEN BUILDINGS. Thesa-Shalil^ib^^a minimum ten (10) feet between all buildings located on the sana site. .}••••"• 7. MTTT.TTPLE OCCUPANCY BUILDINGS. Multiple occupancy of buildings is permitted. In case of multiple occupancy, off-street parking, off-street loading, outdoor trash facilities, and on-site vehicular amd pedestrian circulation systems must be shared in common; provided that separate such facilities may be perxiiitted hy the County where justified and when such provision does not otherwise deviate frcm the specifics amd intent of these development stamdards. 8. pgOPTRgP SCREBNINQ- a. parking Areas. Where parking space areas are located so as to be visible from a street, there shall be a landscaped screen at least five (5) feet in width, planted with trees, shrubs, ground cover, or combination of landscaping and aggregate materials that will significantly soften the view of such areas. Such landscaping may be credited to the ten percent (10%) requirement of Paragraph 14. . b. gpreening Types. Where screening is required herein it shall consist of one, or any combination of the following types, in an aesthetically designed configuration. LA3'7t377I.V2 C-4 Qviim go A wall shall consist of concrete, stone, brick, tile, or similar type of solid masonry material a minimum of four inches thick. (2) Berms: A berm shall consist of landscaped mounded earth designed in such a way as to provide desired screening effect. (3) Fences, solid: A solid fence shall be constmcted of masonry. (4) Fences, open: An open weave or mesh type fence shall be combined with plant materials or view obscuring slats to form an opaque screen. ^ ^ (5) Planting: Plant materials, when used as a screen', shall consist of con5)act evergreen plants. They shall be of js ikind, or used in such a manner, so as to provide screening having a ' minimum thickness of tvro (2) feet within eighteen (18) months ' after initial installation. -wa^na c. Rpof T9Pg. Roof top equipment such as HVAC units shall be screened from view from both street level and above. To that end, all duct work and electrical conduits are to be nin undemeath the roof surface. In addition, the equipment should be clustered and roof top color shall be considered during the design of the buildings. 9. HETGgT OF FENCES. WALLS. AND PLANTED MATERTAI.^. a. Feageg ^d Nal^g. No decorative or screening fences or walls sliall exceed the following height limits above ground elevation: (1) Within required front or side yard setback abutting a street: Forty-two (42) inches except within five (5) feet of the intersection of a drive%ray and a street, a driveway and a walkway, a driveway and parking area circulation aisle, or two (2) driveways in which cases the height limit shall be thirty (30) inches. (2) All other areas: Eight (8) feet, unless otherwise approved by the County. b. Plant Mafcariaia. Except where used as an opaque screen, plant materials may be permitted at any height not constituting a hazard to operation of aircraft based on the judgment of the County. 10. OFF-STREET PARKING AND LOADING SPACB. a. ££ZMBS* All parking shall be designed to be provided at the ratio of one (1) off street parking space per three hundred (300) square feet of gross floor area If the proposed LA3.7tJ771.V2 C-S OWlim development of the Premises is recognized as a standard warehouse or manufacturing use, paved parking may be provided at the ratio of one space per six hundred (600) square feet. However, the remainder of the land area necessary to provide an ultimate parking ratio of one (i) space per three hundred (300) square feet of gross floor must be available for future parking expamsion. This area may be made a part of the lamdscaped area of the Premises until such time as the additional parking is needed, however it will not be considered as pam of the required 10% landscaping coverage outlined in Clause 14. (LANDSCAPING) below. b. ^foading Space. All buildings With a gross floor area greater thsin one 'thousand (1,000) square feet shall l>e served with a loading area* vrlth minimum dimension of twenty (20) feet by twenty (20) feet. One (1) additional loading area shall be provided for buildings with a gross floor area exceeding twelve thousand (12.000) square feet. Loading areas shall not be placed in any required yard areas or parldng spaces. c. pjjaensions. Each parking space shall be a minimum of nine (9) feet wide and twenty (20) feet deep. d. poeation. All parking amd loading spaces shall be on the same leasehold Premises with the building or stmctures they are to serve. e. j^^rovement of Parking Spaces find (1) All parking spaces or areas, loading berths, approaches, and drivevrays shall be adequate for anticipated %flweli^ loads, with a stmcturaa section designed by a.soils englnear^^ and constmcted of Pomlamd Cement (concrete over a base couraa of adequate stability. (2) All parking spaces abutting the perimeter of the property shall be provided with securely installed concrete wheel barriers or concrete curbs not less than four (4) inches in height. £. ^rking of Parking Spaces. The location of each parking space shall be identified and maintained by permanent surface markings. g. parking Reetrietions. On street parking within the Industrial Park shall conform with the current City of Carlsbad Code. 11. 9H'gI''^ CIRCULATION. a. inaresa and Egress. LA3-7t377|.V2 C-6 ov\%m (1) on-site driveways shall be located so as to serve multiple purposes such as parking and loading areas wherever possible. (2) On-site driveways shall have an unobstmcted paved surface minimum width of not less than fifteen (15) feet per one-%.ray drive, or twenty-four (24) feet for two-way driveT (3) Parking, loading areas, and driveways shall he arranged to permit vehicular traffic to move into and out of parking and loading areas, driveways, and ranps without the backing of anv vehicle onto a street. ^ (4) Unobstmcted and adequate maneuvering aisles or tum-around areas shall be provided as necessary to insure that all vehicles shall enter the street or highway in a forward mamner. (5) Parking areas, driveways, maneuvering aisles, ramps, and tum-around areas shall be kept free and clear of obstmctions at all times. h* PriYgwfly Apggna. All driveway aprons will be installed concurrently with individual site development and shall be commercial driveways of Portland cement concrete, six (6) inches thick from curb to right-of-way line with minimum width of fifteen (IS) feet at the curb line for one-way traffic and thirty (30) feet for two-way tmffic according to Standard Drawing 0-16 Where driveway aprons will serve semi-tmilem, they shall be no less tham twenty-four (24) feet and thimy-slx (36) feet respectively, and may be constmcted as alley aprons with appropriate curb retums. o« Pedestrian Wal^fw^yg, Easily accessdlble and adequate pedestrian walkways consisting of concrete, decorative gravel, paving blocks, or other aesthetically pleasing materials shall be provided. 12. a. Xdea.tlgiggtloa» Not more than two (2) signs identifying the name and address of the occupant and the products, activities or facilities located on the Premises are permitted for each Premises except as hereinafter specified. (1) One (1) such sign may be a single-face sign mounted on and parallel to a wall of the main building. Such sign shaai be proportional to the size of the building wall upon which it is mounted ljut shall not exceed an area of forty-eight (48) square feet. Such a sign may not extend aO^ove the top of the parapet wall, the roof line at the wall, the eaves of the building, or portion of the building to which attached, whichever is applicable; nor shall the sign face protmde more tham eighteen ( LAj.7tJ77I.V2 C-7 OI/ltm e. sign Dag|ga. Identification signs must be designed so as to provide uniformity of layout, lettering, graphics; size, shape, color, method of installation and constmction. The location and design of all identification signs shall be subject to the written approval of the Coimty. No sign of any type shall be installed without' the prior written approval of the Coimty. 13. TRASH COLLECTION AHEAS. All trash coUectlon areas shall .be located outside of areas required to be devoted to landscaping and shall be enclosed by a wall and heavy duty solid gates not less than six (6) feet in height. Portland cement concrete . floors and aprons are required in.trash collection areas. a. Recniired Landscaping Areas. Landscaping plans Sjhall be required and submitted for approval of the County. All exteriior yards, except for driveways shall be landscaped and maintained, however, in no event shall the total landscaped area be less than ten percent (10%) of the gross lot area. All areas not in a. driveway or sidewalk between street curb and the property line shall be lamdscaped and maintained by Lessee and may be included in the above mentioned ten percent on-site requirement. b. Landscaping Daai<ni. (1) Coverage: At least seventy-five percent (73%>^..^.of4;the surface landscaped shall be planted with*m con^tibM»«coablnatlon of trees, shrubs, vines, flowers or oznnamental ground cover. Thm>*> remainder may include features such as pedestrian %iral)cways, rock groupings, sculptures, pools, fountains, outdoor seating areas, decorative paving, and gravel areas, interspersed with planting areas. (2) Spacing: Plamt material spacing shall conform to the following standards: A minimum of twenty-five (25) feet from the back of sidewalk at street intersections to the center of the first tree or the center of the first large shrub ten feet in height or more at maturity. c. Irrigation. Prior to commencing any use of the property, required lamdscaped areas shall be planted amd a permanent type sprinJcler system or similar watering system or device, adequate to provide water necessary to properly maintain the particular plant materials used, shall be constmcted amd thereafter maintained in good working order. 15. oyp^ REGULATIONS. In addition to the provisions of these Development Standards, all development on the Premises shall conform to the standards specified by the applicable Federal Aviation Administration Regulations, laws of the State of Califomia, the Carlsbad Municipal Code and those ordinances and policies promulgated by the Board of Supervisors which regulate L>3.7tj77i.v2 C-9 auitm the administration, land use. constmction, and development of the County Airports. *^ In the event there is any conflict between these Development Standards and the regulations, laws, and/or ordinances of the above mentioned agencies, the most restrictive shall apply LA3.7tJ77I.V2 C-lO ov\vn EXBIBIT D INDUSTRIAL AMP AVIATION AREAS PERFORMAWCE STANDARDS TAPLB or CPHTEWTg PAGE 1. NOISE 1 a. stamdards 1 b. Method of Measurement 1 c. Sound Level 1 d. Aircmft Engine Runups , . . . i e. Exesqptlons ,. 1 2. GLARE , J . ^ . 1 a. Standards l b. Prohibitions ........ 1 3. ELECTROMAGNETIC INTERFERENCE 2 a. Standards 2 b. Method of Measurement 2 4. VIBRATION 3 a. stamdards 3 b. . Method of Measurement - . . 3 5. TOXIC MATTER 3 a. Standards ..... ....... 3 b. Method of Measurement • - 3 6. ODOR 4 7. SMOKE, PARTICULATE MATTER, AND OTHER AIJlViCONTAMWIANTS . . 4 8. LIQUID WASTES . 4 a. standards 4 b. Prohibitions 4 9. FIRE AND EXPLOSIVE HAZARDS \ 4 10. OTHER REGULATIONS 4 LAJ.7tJ77l.V2 D-1 ot/iim HCC^gMfAN-mOlM AIKPORT yNpygTRIAt AWP AYIAT^OW A^fflftg 1. a. gtgaderdg* At no point on or beyond the boundary of the leasehold Premises shall the maximum sound level resulting from any operation, activity or use exceed Leq(h) - 70 dB for continuous noise. If the measured aunbient level exceeds the applicable limit noted above, the allowable one hour average sound level shall be the ambient noise level. The ambient noise level shall be measured when the alleged noise violation source is not operating. i h» Method of Meaau^fmgiit;- Noise ishall be measured with a sound level meter liavlng am A-weighted filter constmcted in ' accordamce with specifications of the American Nationaa Standards Institute for type S-2A general purpose sound level meters. (1) In^ct noise shall be measured using the fast response of the sound level meter. Impact noises are - intermittent sounds such as from a punch press or drop-forge haunmer. (2) Continuous noise shall be measured-using the slow response of the sound level meter. c. ggWd fceveX (Ngjge Level) * Sound level shall mean the weighted sound pressure level obtained by the use of a sound level meter amd frequency weighting network as -specified in American National Standards Institute specifications for sound level meters (ANSI.4-1971, or the latest revision thereof). If the frequency weighting eaployed is not indicated, the A-weighting is inplied. d. Aircraft Engine ^^^pf. Lessee shall restrict aircraft engine tests and maintenance runups performed on the leasehold Premises to idle power settings. Lessee shall restrict aircmft tests and maintenance runups at greater than power settings to locations on the Airport and during the time of day authorized in writing by the Coimty. e. l^tmtioUB' The following sources of noise are exen^t from the specified maocimum sound level: Lessee; (1) Tramsportation vehicles not under the control of (2) Occasionally used safety signals, waming devices, and emergency pressure relief valves; and LA3.7tJ77l.V2 D-2 ot/tsm 920 - 30,000 Megacycles 2000 Microvolt/Meter Irrespective of the above standards, any electromagnetic disturbance that causes interference with radio transmissions, aircraft instruments, navigational aids, or other electromagnetic receptors essential to aircraft operations shall be modified or abated upon request of the County. b. Method of Measurement. The level Of radiated electromagnetic interference shall be measured by using standard field strength measuring techniques. The maximum value of the tabulation shall be considered as having been exceeded if *t any frequency in the section of the spectrum being measured, the measured field strength exceeds the maximum value tabulate|d for this spectrum section. 4. YIPRATIOW' I 1 a. standards. At no point on or beyond the boundary of the leasehold Premises shall the maximum particle velocity resulting from amy opemtion, or activity or use exceed O.IO inches per second for steady-mte vibrations and 0.20 inches per second for impact vibmtions. b. N«^^Q<^ °^ Measurement. Vibration shall be measured with a seismograph or complement of instruments capable of recording vibration displacement amd frequency or pamicle velocity simultaneously in three mutually perpendicular,'' directions. When particle velocity is computed on the basis of 7 displacement and frequency, the following formula shall be usediVf P.V. - 6.28 F X D P.V. - Particle velocity, inches per second F - vibmtion frequency, cycles per second D - Single anplitude displacement of the vibration, inches The maximum particle velocity shall be the maximum vector sum of the three mutually perpendicular components recorded simultaneously. (1) steady-rate vibrations are vibrations which are continuous or vibmtions in discrete in^ulses occurring 100 or more times per minute. (2) impact vibrations are vibrations in discrete impulses occurring less than 100 times per minute. 5. TQ^TC MATTES^ a. g^andards. At no point on or beyond the boundary of the leasehold Premises shall the release of any airborne toxic matter resulting from any operation, activity or use exceed 3.0 percent of the Threshold Limit Value; provided, however, if a LA3-7t3771.V2 *' ' v^fif ««S !y,f??' ^^""^ *° established Threshold Limit Value, Lessee shall satisfy the County Department of Pijblic Health that the proposed levels will be siife to the general populat ion. ^ . ^- Method of Maa^t^y^ffi^ni; jhe maximum concentmtion is ^Jy®? a fractional amount of the ACGIH Threshold Limit Value which is the maximum concentration permitted an industrial worker for eight hours exposure per day, five days a week, as adopted by conference of Governmental Industrial Hyglenists matter shall be measured at ground level or habitable elevation using ACGIH or ASIM methods and shall be the average of any 24-hour san?)ling period. 6. fiCSE- At no point on or beyond the boundary of the I leasehold Premises shall any odorous gases or other odomus matter resulting from any operation, activity or use be detectable. ' i LaraM^S' a^E^^H^P WATm, ANg OTTO AIR COWT?fcWTN>iWTg. All opemtions, activities, and uses shall ba conducted so as to S??'pXi?t^^?on^?o^l?i^? and regulations of the San Diego the County Air Pollution Control District governing emoke, particulate matter, and other air contaminants. 8* LIQUIP W^SISg* a. Standards» All operations, activities, siad uses shall be conducted so as to conply with the mles and regulations of the State of Califomia Water Quality Control Board - San Dleao Region and the County San Diego. Prgl>ibitigM» The discharge of any toxic or waste material onto the ground, into any dminage chamnel, or the discharge of any toxic material into any on-site leaching system shall be prohibited. ^ jr»«-«u 9. riRg AWP aPLQglYg BAZASBfl* All opemtions, activities, and uses shall be conducted so as to conply with the mles and regulations of the applicable fire protection agency and the Uniform Fire Code goveming fire and explosive hazards. ^0. OTBER RggULATIOWfi- In addition to the provisions of these Perf ormamce Stamdards, all operations on the Premises shall conform to the standards specified by the applicable Fedeml Aviation Administration Regulations, laws of the State of Califomia and the applicable local ordinances which regulate land use and operations. In the event of a conflict between these Performance Standards and various applicable laws, ordinances and regulations, the most restrictive shall apply l.A3.7ti77I.V2 D-5 EXHIBIT E INSURANCB REQUIREMENTS Without limiting Lessee's indemnification obligations to the County, Lessee shall provide and maintain, during the Term-and for such other period as may be required by the provisions of this exhibit ("Insurance Exhibit") or the Lease, at its sole expense, insurance in the amounts and form specified in this Insurance Exhibit. A. ^latellitv Insurance. Lessee shall procure either Comprehensive Geneml Liability insuramce or Connerclal Geneml Liability insurance applying to its use and occupancy of the Premises, or any part thereof, or any areas adjacent thereto, amd the business operated by Lessee or amy other occupant on the Premises, in the amounts and form set forth below: ^ (1) Contprehensiye General Liability Insurance. A policy of Con^rehenslve (General Liability Insurance which provides limits of: (a) Combined Single Limit per occurrence: $5,000,000 (b) Fire Damage Limit (Any One Fire): $ 500,000 (c) Medical Expense (Any One Person): $ 5,000 OR (2) coffiBtergiftl geaerel Liebility laearftaQg>» A Mii^y^f Commercial General Liability Insurance which provides^ lad ts of (a) Per Occurrence: $5,000,000 (b) Location ?.paeigie Aggregate; $5,000,000 (c) Products/Completed Operations: $5,000,000 (d) « Personal & Advertising Injury limit: $5,000,000 (e) Fire Damage Limit (Any One Fire) : $ 500,000 (f) Medical Expense Limit (Anyone Person): $ 5,000 (3) i^ggaired LiftbilitY Pgligv ggyeraqe» Any liability policy provided by Lessee under this Insurance Exhibit shall contain the following covemge: (a) Premises and Opemtions (b) Products/Completed Operations (c) Contmctual Liability eaqpressly including liability assumed under this Lease. (d) Personal Injury Liability (e) Independent Contmctors' LiaOsility (f) Pollution liability with no exclusion for operations at the Premises (g) Severability of Interest clause providing that the coverage applies separately to each insured, and that an act or omission by one of the named LAJ-79J77I.V3 B-1 oaiim ')0 insureds shall not reduce or avoid coverage to the other named insureds, y w une r.oi w^Lr^fnlH^SS*? Tagyred^Eadgrg^intTIt,. Any general liability policy provided by Lessee under this Insurance Exhibit shall contain an endorsement which applies its coverage to the Countv the members of the Board of Su^ervisom of tSJ cSuS^y^^'iiS^e^' °^iJ^f5*',?^®°^f' enrployees and volunteers of the Couity. individually and collectively, as additional insureds? Kn, t.v.i^!^^r5?!!!!!!T eBdgrff^*t,nt» The covemge afforded by the additional insured endorsement described abovS shall aoDlv as primary insurance, and any other insurance maintained by ?hS County the membem of the Board of Supervisors of the C^oSty or its officers, agents, employees and volunteers, or any tSTcXin?? :iJh-s'SSS"co?eS^r' con^rSSt^ST'^ policgi sSg ge^ S^i^^i:VSSlir^g llV^liy fnj^^r^^^^^^ including death, property damage, personal injury and other covered loss, however occasioned, occurring during the policy term, and shall specifically insure the performanle by Lessei of' ^^^1.?^ iJ-S^J??*^^''^-*?''**^^ contained in thii Lease relating to liability for injury to or death of persons and damage to property. If the coverage contains one or more SiSir?^ii^?{,Si""^°J™f,*'5.^^* ""f.^y ""^^^ aggregate limit must remain available at all times; if over 50% of any aggregate limit has been paid or reserved, the County may require additional coverage to be purchased by Lessee to restore the required limits. Lessee may combine primary, umbrella and as broad as possible excess liability coverage to achieve the total limits indicated above. Any umbrella or excess liability oollcv shall include the Additional Insured Endorsement described belS#. f 11 Jii ^i^^rliU^ ^S'"'^*"^*:, ^ standard fire policy including oii ?f^**^,'°"" perils, in-an amount of ninety percent 90% of the full replacement cost of the Building and rin^S^'f deduction for depreciation, including costs of demolition and debris removal. Such policy or policies of insurance shall include coverage for (i) Lessee's merchandise. L^iia af ?^S?oS^!n^^^^^?;'*^ ^4^^ ^""^ identified in this Lease as inprovements to the Premises constmcted or owned either by the County or Lessee, and (iv) the personal property of Lessee, its agents amd en^loyees. (1) Pedygtibli. The deductible for the required fire insurance policy shall not exceed $10,000 per occurrence and shall be home by Lessee. <2) Prggeedg pg ya^ar»age« in the event of damage or destmction to the Premises covered by the fire or physical LA3.7t577l.V2 E-2 hazard insurance required of Lessee under this Insurance Exhibit, the proceeds of auch insurance shall be allocated as follows: (a) Proceeds from amy or all of said insurance policies shall be payable, first, to the holder of any mortgage or deed of tmst permitted under this Lease to the extent required by said mortgage or deed of trust; (b) Any balance, remaining after application of insurance proceeds in the manner indicated in subparagmph (a) , above, shall be credited to Lessee. If Lessee, or tha County, is required to rebuild or restore the Premises pursuant to the' provisions of this Lease, the amount of insurance proceeds credited to Lessee shall -be in^ounded with an independent depository acceptable to the County in accordance with a rider to the insurance policy setting forth this procedure, to be* disbursed to pay, to the extent such portion of proceeds fnay be sufficient. Lessee's obligations to repair and restore the Premises pursuant to the provisions of this Lease; (c) In the event that, after paying all of the costs and expenses of repair and restoration referenced in subparagmph (b), above, any Isalance of insurance proceeds remains, it shall be retained by Lessee. Should it be anticipated that the proceeds of insuramce to be received by Lessee will be insufficient to repair or restore the Premises as required by this Lease, Lessee shall have the option to either (1) terminate., this Lease and tum over all insurance proceeds from thaw.lmpound^ account to the County, or (11) repair or restom the Premlsaaia*.. required under this Lease using the available insurance proceedar with amy shortfall in the amount necessary to repair or restore the Premises being contributed, in cash, by Lessee. (See, Section 20.5 (UNINSURED CASUALTY) under Article 20 (DAMAOB OR DESTRUCTION) . (d) Notwithstanding any provision of the foregoing to the contrary, upon any termination of this Lease all proceeds from Lessee's insurance, but excluding such proceeds attributable to damages sustained by Lessee's merchandise or personal property, shall be disbursed and paid to the County. C. ^'^^r^^^'^^^ Automobila/Alreraft/Watercraft Liability Insuraneji- Lessee shall procure Comprehensive Automobile/Aircraft/Watercraft Liability Insurance, applying to its use and occupancy of the Premises and the business operated by Lessee or any other occupant on the Premises. Such policy shall be written for bodily injury, including death, and property damage, however occasioned, occurring during the policy term, in the amount of not less than One Million Dollars ($1,000,000), combined single limit per occurrence, applicable to all owned, non-owned and hired vehicles/aircraft/watercraft. Notwithstanding any provision of the foregoing to the contrary, w3-7tjT7i.v2 *"3 tmtum ?rHo?f;«t«f« ^« writing by the County if it determines there is no sioriifleant exposure to these risks. LaixI^T^'^LlsserSSI/ ftgg^yPYtr'g hUhiUty ***gwiffpya« iJcsBaa snail provide the statutory amount Of workara' compensation insurance, with a broad form alltstateS endowSSS? S??iy^^^r>^^''^*Tl; li^i'ility coverage of no less thaS SJS?^ ' Million Dollars ($3,000,000) per occurrence for all^ioyles a?^o^prni?dfTg^^f 2P^«^i^^ ^nder this Lease. ^Jsee Shall also provide U.S. Longshoremens' and Harbor Workers' Act ' covemge, when applicable. General Pmviaio^^- ^^^..^./^^wi^^f^f?*^?^*' Inffurftagf. Lessee shall, as soon as practicable following the placement of insurance riquired by this Insurance Exhibit, but in no event later than ten (10) Svs^brio? to the Effective Date, deliver to the County certified cSleSw ^iSit''*ir^^S????^.r"'^^?5 specified by this Insuranc? '^^ fjSiSi^5«?I ff^ifi'"*'*!! «^i<leacing the same, together with appropriate separate endorsements thereto, evidencing that Lessee has obtained such coverage for the period of the LeaSe! Thereafter, copies of renewal policies, or certificates and* appropriate separate endorsements thereof, shall be delivered to the County within thirty (30) days prior to the expiratloS bf the term of any policy required by this Insurance Exhibit. ^asee shall permit the County at all reasonable times to inipec? SS? thi C^t? ^^^^^^ ^ssee which Lessee has not dSliverS to . , ^ <2) qiljlPg Made CgYeriqe* if covemge is written on a "claims made" basis, the Certificate of Insurance shall clearly state so. In addition to the coverage requirements specified above, such policy shall provide that: p«citiea (a) The policy retroactive date coincides with or precedes Lessee's possession of the Premises (including subsequent policies purchased as renewals or replacements). (b) Lessee will-make every effort to maintain similar insurance during the required extended period of coverage following eaipiration of the Lease, including the requirement of adding all additional insureds. ^^ntsat oc t- insurance is terminatfed for amy reason. Lessee shall purchase an extended reporting provision of at least two years to report claims arising in connection with the Lease! . i^^.u^!?® policy allows for reporting of circumstances or incidents that might give rise to future claims. "^^^s Remediai ^LesSel's^failSm tl ^t^^^j^.l'^'^t^^'^'^' r^mtY' ^eaeqaLfg* ijessee s taiiure to procure the insurance specified by U3.7tJ77I.V2 £-4 OI/ltm 9J this Insurance Exhibit, or failure to deliver certified copies or appropriate certificates of such insurance, or failure to make the premium payments required by such insurance, shall constitute a material breach of the Lease, and the County may, at its option, terminate the Lease for any-such default by-Lessee. (4) yg Liaitfttiga Qt Pbliqitigag> The foregoing requirements as to the types-and limits of insurance coverage to be maintained by Lessee, and any approval of said insurance by the County or its insuramce consultant (s), are not intended to and shall not in amy manner limit or qualify the liabilities amd obligations otherwise assumed by Lessee pursuant to the Agreement, including, but not limited to, the provisions conceming indemnification. (5) yotioe of' Cancellation or Change of Coverage. All certificates of insurance provided by Lessee must evidence that the insurer providing the policy will give-the County thirty (30) days' written notice, at the address shown in the Section of this Lease entitled "Notices" below, in advance of any cancellation, lapse, reduction or other adverse change respecting such insurance. (6) jTtialifving Inenrars. All policies Of insurance reouired hereby shall be issued by companies wliich have been approved to do business in the State of Califomia by the State Department of Insurance, and which hold a current policy holder's alphabetic and fixiancial size category rating pf not lesa than A, VII according to the current Best's Key RKtingsiGtflde, o»« * company of equal financial stability that is approved in writing-* by the County's Risk Manager. (7) gaview of Coverage. The Coimty shall retain the rightf*' at any time to review the coverage, form and amount of insurance required by this Insurance Exhibit and may require Lessee to obtain insurance reasonably sufficient in coverage, form and amount to provide adequate protection against the kind and extent of risk which exists ait the time a change in insurance is required. (8) fi^if-Tnaiiranea. Lessee may, with the prior written consent of the County's Risk Manager, fulfill some or all or the insurance requirements contained in this Lease under a plan of self-insurance. Lessee shall only be permitted to utilize such self-insurance, however, if, in the opinion of the County's Risk Manager. Lessee's (1) net worth, and (11) reserves for payment of claims of liability against Lessee, are sufficient to adequately compensate for the lack of other insurance coverage required by this Lease. Lessee's utilization of self-insurance shall not in any way limit liabilities assumed by Lessee under this Lease. (9) fi,p^iaaBees' Insurance. Lessee shall require any sublessee, and any sub-sublessee, of all or any portion of the LA3-7tJ77l.V2 a 3 If Premises to provide the insurance coverage described in this Insurance Exhibit prior to occupancy of the Premises. . ^ ^^^^ Waiver of ^yhyy^^^^g^ Lessee and the Countv waive an recover againrt eiSh other or against any StheJ teSaSt or occupant of the building, or against the officSm? direc^SS shareholders, partners, en^loyees, agents or invitee; of each other or of any other occupant or tenant of the building from any Claims (as defined in the Article 12 ^LIDESNIW ANS INSURANCE)) , against either of them and from ™ dLages to the fixtures, personal property. Lessee's in5>rovemeits?kSd alterations of either the County or Lessee in or on the Premiaaa to the extent that the proceeds received from any insirancr^ ^' carried by either the County or Lessee, other thin proceSdtf from any program of self-insurance, covers any such Claii or damagS Included in any policy or policies of insurance provided^^ Lessee under this insurance Exhibit shall be a standard waiver of rights of subrogation against the County by the insurScric^^v issuing said policy or policies. company lA3.7tS77I.V2 B-6 ot/iim EXBIBIT F MCCLELLAN-PALOMAR AIRPORT THB COUHTy OF SAN DIEGO REQUIRED SUBLEASB PROVISIONS The following paragraphs must appear in each sublease of the Premises. Paragraphs marked with an asterisk (*) must be used exactly as written. 1. • Fartieg - This sublease is entered into by and between _i hereinafter called "Sublessor", and hereinafter*called "Sublessee", as a Sublease under the Palomar Transfer Station Lease Agreement datedi .# 19 (the "Master Lease"), also known as the County of San Diego Contract No. , Sublessor, under this Sublease, is Lessee and the County of San Diego is Lesso'r under said Master Lease. 2. Premises- Sublessor leases to Sublessee and Sublessee hires the following described Premises together with the appurtenances, situated in the Coimty of San Diego, State of California:^ Said Premises are shown on Exhibit A attaahed hewseoj^a. 3. £fiza* The tem of this Sublease Agreement shall be for , commencing . 19 , aad terminating , , unless sooner terminated as provided herein. (Note: Termination date of Sublease cannot exceed expiration date of Master Lease.) 4. £saL&&l. Sublessee shall pay to Sublessor as rent for the Premises in advamce on the first day of each calendar month of the term of this Sublease without deduction, offset, prior notice or demand, in lawful money of the United States, the sum of . Dollars and Cents ($ ) . If the commencement date is not the first day of the month, or if the Sublease termination date is not the last day of the month, a prorated month installment shall be paid at the then current rate for the fractional month during which the Sublease commences and/or terminates. Receipt of $ is hereby acknowledged for rental for the first month, and the additional amount of $ as non-interest bearing security for performance under this Sublease. In the event Sublessee has performed all the terms and conditions of this Sublease throughout the term, upon Sublessee vacating the Premises, the amount paid as a security deposit shall be retumed to Sublessee after first deducting any sums owning to Sublessor. UJ.7tJ77I.Vl F-1 Qt/tlM7 5* HBJI- Sublessee shall use the Premises for uses specified in the Master Lease, generally described as the office operations of a solid waste collection business, a recycling facility, and a trash transfer station, including office, repair and storage facilities for equipment used in collecting and transferring trash, and for no other purposes without prior written consent of Sublessor. Sublessee's business shall be established and conducted throughout the tem hereof in a first class manner. Sublessee shall not use the Premises for, or carry on, or permit to be carried on, amy offensive, noisy or dangerous trade, business, mamufacture or occupation. ?a<3eWBif jqitiga» sublessee shall indemnify and save harmless the County of San Diego, it officers, agents, and enqployees from and against any and all" claims, demands, liabilities, or loss of any kind or nature which the County, its officers, agents, or enqployees may sustain or incur, or Which may be imposed upon them or any of them for injury to, or death or persons or damage to property, as a result of, arising out of 'or in any manner connected with this Sublease or with occupancy and use of the Subleased Premises by Sublessee, its offIceraTagents, employees, licensees, patrons or visitors except as attributable to an act or omission of the County. Sublessee further agrees to pay amy and all costs and expenses, including, but not limited to, court costs and reasonaOjle attorneys' fees, incurred by the County on account of any such claims, demands, or liabilities. *7. FroYiglons constituting sublaaaa. This Sublease is subject to all of the terms amd conditions of the Master Lease Sublessee shall assume and perform the obligations of Sublessor and Lessee in said Master Lease, to the extent said terms and conditions are applicable to the Premises subleased pursuamt to this Sublease. Sublessee shall not conmlt or permit to be committed on the Premises any act or omission which shall violate any term or condition of the Master Lease. In the event of the termination of Sublessor's interest as Lessee under the Master Lease for any reason, then this Sublease shall terminate coincidental'ly therewith without any liability of Sublessor and the County to Sublessee. Sublessee hereby acknowledges and agrees that Sublessee %raives all rights to any form of Relocation Assistance provided for by locaa. State, or Federal law that Sublessee--may be entitled to by reason of this Sublease. Federal Aviation Administration Reonlremanfca. in the event there is any conflict between the provisions in this Clause and the other provisions in this Sublease, the provisions in this Clause shall take precedence. a. Sublessee, for itself, its heirs, personal representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereiyy covenant and agree as a covenant mnning with the land that in the event facilities are constmcted, maintained, or otherwise operated on the said LA3-7tJ77|.V, F.2 ^9 property described in this Sublease for a purpose for which a DOT program or activity is extended or for another purpose involving the provision of similar services or benefits. Sublessee shall maintain and operate such facilities and services in compliance with all other requirements inposed pursuant to Title 49, Code of Federal Regulations,- DOT, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of Transporta^t ion-Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended. b. Sublessee, for itself, its personal representatives, successors in interest, and assigns, as a part of the considemtion hereof, does hereby covenant and agree as a covenamt running with the land that: (l) no person on the grounds of race, color, or national origin shall be excluded from' participation in, denied the benefits of, or be otherwisa subjected to discrimination in the use of said facilities. (2) that in the constmction of amy inprovements on, over, or under such land and the fumishing of services thereon, no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subject to discrimination, (3) that Sublessee shall use the Premises in conqpliamce with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, paurt 21, Nondiscrimination in Federally-Assistsd Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, amd as said Regulations may beaamandad. c. That in the event of breach of any of the ahcrre nondiscrimination covenamts. Sublessor shall have the right to terminate this Sublease and to re-enter and repossess said lamd and the facilities thereon, and hold the same as if said Sublease had never been made or issued. This provision does not became effective until the procedures of 49 CFR Part 21 are followed and con^leted including expimtion of appeal rights. d. Sublessee .shall fumish its accommodations amd/or services on a fair, equal and not unjustly discriminatory basis to all users thereof and it shall charge fair, reasonable and not unjustly .discriminatory prices for each unit or service; PROVIDED, THAT Sublessee may be allowed to make reasonable and nondiscriminatory discounts, rebates or other similar type of price reductions to volume purchasers. e. Non-compliance with Provision d above shall constitute a material breach thereof and in the event of such non-con^llance Sublessor shall have the right to terminate this Sublease and the estate hereby created without liability therefore, or at the election of Sublessor, the County or the United States, any or all said entities shall have the right to judicially enforce said Provisions. LAj.7ts77i.v: F-3 OI/ltm 11=. « Sublessee agrees that it shall insert the above '^^%Y,t^^T' ^° sub-sublease, contract or agreement by which said Sublessee grants a right or privilege to any person, firm or corpomtion to render accommodations amd/or services to the public on the Premises herein subleased. g. Sublessee assures that it will undertake an affirmative action program as required by 14 CFR Part 152 Subpart E, to insure that no person shall, on the grounds'of race, creed, color, national origin, or sex be excluded from participating in any employment activities covered in 14 CFR Part 152, Subpart E. Sublessee assures that no person shall be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by this subpart. Sublessee assures that it will require that its qovered suborganizations provide assurances to Sublessee that they similarly will undertake affirmative action programs and that they will require assurance from their suborganizations, a4 i required by 14 CFR Part 152, Subpart B, to the same effort. h. the County reserves the right to further develop or improve the landing area of the Airport as it sees fit, regardless of the desires or view of Sublessee, and without interference or hindrance. . ^* ^ 5?® County reserves the right, but shall not be obligated to Sublessee, to maintain and keep in repai^ the landing area of the Airport and all publicly-owned facilities of the Airport, together with the right to direct and control all activities of Sublessee in this regard. j. This Subleass shall be subordinate to the provisions and requirements of amy existing or future agreement between the County and the United States, relative to the development, operation or maintenance of the Airport. k. There is hereby reserved to the County, its successors and assigns, for the use and benefit of the public, a right of flight for the passage of aircraft in the airspace above the surface of the Premises herein subleased. This public right of flight shall include the right to cause in said airspace any noise inherent in the operation of any aircraft used for navigation or flight through the said airspace or lamding at, taking off from or operation on the Airport. 1. Sublessee agrees to comply with the notification and review requirements covered in Part 77 of the Federal Aviation Regulations in the event future constmction of a building is planned for the subleased Premises, or in the event of any planned modification or alteration of amy present or future building or stmcture situated on the subleased Premises LAi.7t3T7,.v2 F.4 Ot/ltm m. Sublessee by accepting this expressly agrees for itself, its successors and assigns that it will not erect nor permit the erection of any stmcture or object nor permit the growth of any tree on the land subleased hereunder that conflicts with Part 77 of the Federal Aviation Regulations. In the event the aforesaid covenants are breached, the County and/or Sublessor reserve the right to enter upon the land subleased hereunder amd to remove the offending stmcture or object and cut the offending tree, all of which shall be at the expense ot Sublessee. n. Sublessee by accepting this Sublease agrees for itself, its successors and assigns that it will not make use of the subleased Premises in any manner which might interfere with the landing and taking off of aircraft from the Airport or otherwise constitutje a hazard. In the event the aforesai'd covenant is breached, the Coimty amd/or iSublessor reserve the right to enter upon the Premises hereby subleased and caifse t^he abatement of such interference at the expense of Sublessee. o. It is understood and agreed that nothing herein contained shall be constmed to grant or authorize the granting of an exclusive right within the meaning of Section 308a of the Federal Aviation Act of 1958 (49 U.S.C. 1349a) . p. This Sublease and all the provisions hereof shall be subject to whatever right the United States Govemment now has or in the future may have or acquire, affecting the control, operation, regulation and taking over of said Airppat \or.. the exclusive or non-exclusive use of the Airport by tha^nited^ States during the time of war or national emergency, *9. &iaBR* Sublessee shall not erect nor cause to be erected any sign on the Subleased Premises without the prior written approval of the County. A written request for sign approval must include the size, type, color and location of the proposed sign and said application must be concurred in hy Sublessor before submittal to the County. «10. gubstanee Abus^. Sublessee and its en^loyees and agents shall not use or ]cnowingly allow the use of the subleased Premises for the purpose of unlawfully driving a motor vehicle or aircraft under the influence of an alcoholic bevemge or amy dmg or for the purpose of unlawfully selling, serving, using, storing, transporting, keeping, manufacturing or giving away alcoholic beverages or any controlled substance, precursor, or- analog specified in Division 10 of the Califomia Health and Safety Code, and violation of this prohibition shall be grounds for immediate termination of this Sublease. LAJ.7t377I.V2 F-5 ot/iim oo This Sublease entered into this SUBLESSEE ^ SUBLESSOR: day of October 19 . By (Title) By. (Title) By. (Title) By. (Title] Address Address LA3.7tJ77l.v: S-l 01/1 im 1 EXHIBIT B 2 SUBLEASE AND DISPOSAL AGREEMENT BETWEEN ALLIED WASTE 3 INDUSTRIES, INC. AND WASTE MANAGEMENT, INC. 70017373VI EXHIBITS TRAJVSFER STATION SUBLEASE [See attached] f o3 EXHIBIT B SUBLEASE AGREEMENT FOR PALOMAR TRANSFER STATION 1. Parties. This Sublease Agreement ("Sublease" or "Agreemenf *) is entered into as of June 1,2002 by and between The City of Carlsbad, a municipal corporation of the State of Califomia C'Sublessor'O* Palomar Transfer Station, Inc., a California corporation ("Sublessee,*") as a sublease imder a certain Palomar Transfer Station Lease Agreement, APN # 97-0085-Al, with County of San Diego, dated October 31, 1997 (the "Master Lease"). Sublessor (as successor-in-interest by assignment of the Master Lease from Sublessee) is Lessee and the County of San Diego is Lessor under said Master Lease (hereinafter "Master Lessor" or the "County")- Capitalized terms not otherwise defined herein shall have the meanings given in the Transfer Station Agreement (defined below). 2. Premises. a. Lease of Premises. Sublessor leases to Sublessee and Sublessee hires the following described premises (the "Premises**) together with all qjpurtenances thereto, situated in the County of San Diego, State of Califomia and more particularly described as follows: The real property conomonly known as San Diego County Assessor*s Parcel Number 97-0085A1 as more particularly described and depicted on the attached Exhibit A. comprising die entirety of the premises subject to the Master Lease. b. Condition of Premises. Sublessor shall assign to Sublessee all of Sublessor's rights and remedies against and with respect to any prior tenant, subtenant or occupant (collectively, a "Prior Tenant**) of the Premises, to the extent such Prior Tenant is, or may be, liable or otherwise responsible for, by act or omission, (i) any failure of the Premises to comply with s^plicable law or regulation, including, without limitation, any conditional use permit applicd^le to the use of the Premises as a refuse and waste transfer station, cr (ii) any material defect, latent or patent, in the Premises, in each case as of the commencement of the term of this Sublease. Sublessor shall execute and deliver to Sublessee such additional instruments and documentation, including assignments of claims and rights, as may be reasonably required by Sublessee in order to effect the assignment of rights and remedies contemplated hereunder. 3. Term. The term of this Sublease shall commence on June 1,2002 for a period of time equal to the PTS Operating Period, provided the CTS Operating Period has not commenced, as each such term is defined in, andsubjeCl U> all Qie lerfflS and }^ti6Vi^ons of, that certain Agreement for Transfer and Disposal Services, of even date herewith, by and between Sublessor and Sublessee (the 'Transfer Station Agreement"); provided, however, for avoidance of doubt, the term of this Sublease shall continue for such period of time as Sublessee is permitted to occupy the Premises as contemplated under the Transfer Station Agreement and shall be for a term of not less than ten (10) years; provided further, that the term of this Sublease shall in no event exceed the expiration of the Master Lease. 700l7H3v2 4. Rental. Sublessee shdl pay to Sublessor as monthly rent for the Premises, in advance on the first day of each calendar month of the term of this Sublease without deduction, offset, prior notice or demand, in lawful money of the United States, the sum of One Dollar ($1.00). If the commencement date is not the first day of the month, or if the Sublease termination date is not the last day of the month, a prorated month instalhnent shall be paid at the then cunrent rate for the fiactional month during which the Sublease commences and/or terminates. Receipt of $ 1.00 is hereby acknowledged for rental for the first month. 5. Usg. Sublessee shall use the Premises for operation of a refiise and waste transfer station and any other uses permitted under the Master Lease, and, if applicable, in compliance with the tenns and conditions ofihe conditional use pennit issued by Sublessor for the Premises, and for no other purposes without the prior written consent of Sublessor. Sublessee's business shall be established and conducted throughout the tenn hereof in a first class manner. 6. Iq^^ipnification. Sublessee shall indemnify and save hamiless the County and Sublessor, as applicable, and their respective officers, agents, and employees fiom and against any and all claims, demands, liabilities, or loss of any kind or nature vMch the County and Sublessor, as applicable, and their respective officers, agents, or employees may sustain or incur or which may be unposed upon them or any of them for injury to, or death or, persons or damage to property, as a result of, arising out of, or in any manner connected with this Sublease or with occupancy and use of the Premises by Sublessee, its officers, agents, employees, licensees patrons or visitors except as attributable to an act or omission of the County or Sublessor as applicable. Sublessee fiirther agrees to pay any and all costs and expenses, including, but not lumted to, court costs and reasonable attomeys* fees, incurred by the County or Sublessor, as applicable, on account of any such claims, demands, or liabilities. Provisions Constit^nff This Sublease is subject to all of the tenns and conditions of the Master Lease. Sublessee shall assume and perfonn the obligations of Sublessor and Lessee m said Master Lease, to the extent said tenns and conditions are applicable to the Premises subleased pursuant to this Sublease. Sublessee shall not commit or pemiit to be committed on the Premises any act or omission which shall violate any terai or condition of the Master Lease. In the event of the tennination of Sublessor's interest as Lessee under the Master Lease for any reason, then, except as otherwise consented to by the County, this Sublease shall temunate concunently therewith without any liability of Sublessor (except to die extent such tennmation is due to Sublessor's default under the Master Lease not arising fit)m Sublessee's failure to perform under this Sublease) and the County to Sublessee. Sublessee hereby acknowledges and agrees that Sublessee waives all rights to any forni of relocation assistance provided for by local. State, or Federal law that Sublessee may be entitled to by reason of this Sublease. Fe4eral Aviation Administration Requiremftnt« in the event there is any conflict between the provisions in this clause and the other provisions in this Sublease, the provisions in this clause shall take precedence. a. Sublessee, for itself, its heirs, personal representatives, successors in mterest, and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant runnmg with the land that in the event facilities are constmcted, maintained or 700l7n3v2 otherwise operated on the said property described in this Sublease for a piupose for which a DOT (Department of Transportation) program or activity is extended or for another purpose involving the provision of similar services or benefits. Sublessee shall maintain and operate such facilities and services m compliance with all other requirements imposed pursuant to Htle 49, Code of Federal Regulations, DOT, Subtitle A, Office of the Secretary, Part 21, Nondiscrunination in Federally- Assisted Programs of the Department of Transportation- Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended. b. Sublessee, for itself its personal representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant nmning with the land that: (1) no person on the grounds of race, color, or national origin shall be excluded fix)m participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities, (2) that in the construction of any improvements on, over, or under such land and the fumishing of services thereon, no person on the grounds of race, color, or national origin shall be excluded fiom participation in, denied the benefits of, or otherwise be subject to discrimination, (3) that Sublessee shall use the Premises in compliance with all other reqmrements unposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended. c. That in the event of breach of any of the above nondiscrimination covenants. Sublessor shall have the right to terminate this Sublease and to re-enter and repossess said land and the facilities thereon, and hold the same as if said Sublease had never been made or issued. This provision does not become effective until the procedures of 49 CFR Part 21 are followed and completed including expiration of appeal rights. d. Sublessee shall fumish its accommodations and/or services on a fair, equal and not unjustly discriminatory basis to all users thereof and it shall charge fair, reasonable and not unjustly discriminatory prices for each unit or service; PROVIDED, THAT Sublessee may be allowed to make reasonable and nondiscriminatory discounts, rebates or other similar type of price reductions to volume purchasers. e. Non-compliance with provision (d) above shall constitute a material breach thereof and in the event of such non-compliance Sublessor shall have the right to terminate this Sublease and the estate hereby created without liability therefore, or at the election of Sublessor, the County or the United States, any or all said entities shall have the right to judicially enforce said provisions. f. Sublessee agrees that it shall insert the above five (5) provisions in any sub-sublease, contract or agreement by which said Sublessee grants a right or privilege to any person, firm or corporation to render accommodations and/or services to the public on the Premises herein subleased. g. Sublessee assures that it will undertake an affirmative action program as reqmred by 14 CFR Part 152, Subpart E, to insure that no person shall, on the grounds of race. 70017113v2 \ 0^ creed, color, natiojial origin, or sex be excluded from participating in any employment activities covered in 14 CFR Part 152, Subpart E. Sublessee assures that no person shall be excluded on these grounds &om participating in or receiving the services or benefits of any program or activity covered by this subpart. Sublessee assures that it will require that ite covered suborganizations provide assurances to Sublessee that they similarly will undertake affirmative action programs and that they will require assurance from their suborganizations, as required by 14 CFR Part 152, Subpart E, to the same effort. h. The County reserves the right to fiirther develop or improve the landing area of the Airport (as defined in the Master Lease) as it sees fit, regardless of the desires or view of Sublessee, and without interference or hindrance. i. The County reserves the right, but shall not be obligated to Sublessee, to maintain and keep in repafr the landing area of the Airport and all publicly owned fecilities of the Airport, together with the right to direct and control all activities of Sublessee in this regard, j. This Sublease shall be subordinate to the provisions and requu«mente of any existing or future agreement between the County and the United States, relative to the development, operation or maintenance of the Airport. k. There is hereby reserved to the County, ite successors and assigns, for the use and benefit of the public, a right of flight for the passage of aircraft in the airspace above the surface of ihe Premises herein subleased. This public right of flight shall include the right to cause in said airspace any noise inherent in the operation of any aircraft used for navigation or flight through the said airspace or landing at, taking off fh>m or operation on the Airport. 1. Sublessee agrees to comply with the notification and review requiremente covered in Part 77 of the Federal Aviation Regulations m the event future construction of a building is planned for the subleased Premises, or m the event of any planned modification or alteration of any present or future building or stmcture situated on die subleased Premises. m. Sublessee by accepting this expressly agrees for itself, ite successors and assigns that it will not erect nor permit the erection of any structure or object nor permit the growdi of any tree on the land subleased hereunder that conflicte with Part 77 of the Federal Aviation Regulations. In the event the aforesaid covenante are breached, the County and/or Sublessor reserve the right to enter upon the land subleased hereunder and to remove the offending stmcture or object and cut the offending tree, all of which shall be at the expense of Sublessee. a Sublessee by accepting this Sublease agrees for itself, ite successors and assigns that it will not make use of the subleased Premises in any manner which might interfere with the landing and taking off of aircraft from the Airport or otherwise constitute a hazard. In the event the aforesaid covenant is breached, the County and/or Sublessor reserve the right to enter upon the Premises hereby subleased and cause the abatement of such interference at the expense of Sublessee. 70017n3v2 ion o. It is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of Section 308a of the Federal Aviation Act of 1958 (49 U.S.C. 1349a). p. This Sublease and all the provisions hereof shall be subject to whatever right the United States Government now has or in the future may have or acquire, affectmg the control, operation, regulation and taking over of said Airport or the exclusive or non-exclusive use of the Airport by the United States during the tune of war or national emergency. 9. Signs. Sublessee shall not erect nor cause to be erected any sign on the Premises without the prior written approval of the County. A written request for sign approval must include the size, type, color and location of the proposed sign and said application must be concurred in by Sublessor before submittal to the County. 10. Substance Abuse. Sublessee and ite employees and agente shall not use or knowingly allow the use of the subleased Premises for the purpose of unlawfuUy driving a motor vehicle or aircraft under the influence of an alcoholic beverage or any drug or for the purpose of unlawfully selling, serving, using, storing, transporting, keeping, manufacturing or giving away alcoholic beverages or any controlled substance, precursor, or analog specified in Division 10 of the Califomia Healtii and Safety Code, and violation of this prohibition shall be grounds for inunediate tennination of this Sublease. 11. Prime Lease. Sublessor, as Lessee under tiie Master Lease represente and warranto to Sublessee that, to Sublessor's knowledge as of the date of the commencement of the term of tiiis Sublease: (a) Sublessor has delivered to Sublessee full and complete copies of the Master Lease and all otiier related agreemente between Sublessor and Master Lessor; (b) tiie Master Lease is in full force and effect; and (c) no event of default has occurred under the Master Lease on tiie part of Sublessor or Master Lessor and, to Sublessor's knowledge, no event has occurred and is continuing which would constitute an event of default but for the requirement of the giving of notice and/or the expiration of the period of time to cure under, or with respect to, any of such agreemente. 12. Ouiet Eniovment. Sublessor has fiiU power and autiiority to enter into tiiis Sublease, subject to the consent of Master Lessor. So long as Sublessee is not in default in the performance of ite covenante and agreemente in tiiis Sublease, Sublessee's quiet and peaceable enjoyment of tiie Premises shall not be disturbed or interfered with by Sublessor, or by any person claiming by, through, or under Sublessor. 13. Further Provisions Regarding Sublease. Sublessee agrees that it will provide and maintain the insurance coverage reqmred of Sublessor pursuant to the Master Lease with respect to the Premises. Each party agrees that it will not, by ite act or omission to act, cause a default under tiie Master Lease. In fiirtiierance of tiie foregoing, tiie parties hereby confirm and agree, each to tiie other, tiiat it is not practical in tiiis Sublease to enumerate all of tiie righte and obligations of the various parties under the Master Lease and specifically to allocate those righte and obligations in tiiis Sublease. Accordmgly, in order to afford to Sublessee tiie benefite of tiiis Sublease and of those provisions of tiie Master Lease which by tiieir nature are intended to benefit the party in possession of the Premises, and in order to protect Sublessor against a default 70017113V2 by Sublessee which might cause a default or event of default by Sublessor under tiie Master Lease: * A \v Otiierwise expressly provided herein. Sublessor shall perform ite covenante and obligations under tiie Master Lease which do not require for tiieir perfoimance possession of the Premises and which are (i) not reasonably anticipated to be performed by Sublessee or (ii) not otiierwise to be performed hereunder by Sublessee on beElf of Sublessor. b. Exc^t as otiierwise expressly provided herein. Sublessee shaU perform all affirmative covenants and shall refrain from perfomiing any act which is prohibited byTe negative covenante of tiie Master Lease; where tiie obligation to perform or refrain from perfoimmg is by ite nature imposed upon tiie party in possession of tiie Premises. • u* u SiAlessor shall not agree to an amendment to tiie Master Lease which might have an adverse effect on Sublessee's use or occupancy of tiie Premises, increase Sublessee s coste mider tiiis Sublease or have an adverse effect on tiie use of tiie Premises for Aeir mtended puipose, unless Sublessor shall first obtain Sublessee's prior written approval tiiereof, w^ch approval by Sublessee shaU not be unreasonably witiiheld or delayed. , Reversipn to Sublessee of Sublessor's Interest in M«^^ j yf SiiMmTr b ever terminated or expires otiier tium as a result of default by Sublet, all nW titie and mter^t m the Master Lease shall revert to Sublessee; provided, however, tiiat Sublessor shall cure any defaulte and mdemn^ Sublessee for any liabUities arising during tiie period prior to Mt^to ^rfoi?'''' "^^"^^ n^m^ caused by Sublessee's own breach or 15. Additional Provisions. a. Governing Law. This Sublease shall be govemed by and constmed in accordance witii tiie laws oftiie State of California. «uucum b. Waivaa. No waiver or breach ofany covenant or provision shall be deemed a waiver of any otiier consent or provision, and no waiver shall be valid unless in writine and executed by tfie waiving party. wnwng nnt« n«rf ^i^jcC ^^"'^^^j^?; Hcadings are used solely for tiie parties' convenience, are not a part oftius Sublease, and shall not be used to interpret tiiis Sublease. This Sublease shall 70017n3v2 This Sublease Agreement is entered as of the date first set forth above. SUBLESSEE: PALOMAR TRANSFER STATION, INC. By:. Title: Address: 8364 Claremont Mesa Blvd. San Diego, CA 92111 Atto: General Manager SUBLESSOR: CITY OF CARLSBAD, a municipal corporation By:_ Titie: By:_ Titie: Address: 1200 Carlsbad Village Drive Carlsbad, CA 92008 Atto: City Manager 70017n3vl HO EXHIBIT C COUNTY OF SAN DIEGO REQUIRED SUBLEASE PROVISIONS 1. Indemnity. County shall not be liable for, and CWM, as sublessee, shall defend and indemnify County and the employees and agents of County (collectively "County Parties"), against any and all claims, demands, liability, judgments, awards, fines, mechanics' liens or other liens, labor disputes, losses, damages, expenses, charges or costs of any kind or character, including attomeys' fees and court costs (hereinafter collectively referred to as "Claims"), related to this Agreement or CWM's use or occupancy of the Sublease Premises and arising either directly or indirectly from any act, error, omission or negligence of CWM or its sublessees, licensees, agents, servants or employees, including, without limitation, Claims caused by the concurrent negligent act, error or omission, whether active or passive, of County Parties. CWM shall have no obligation, however, to defend or indemnify County Parties from a Claim if it is determined by a court of competent jurisdiction that such Claun was caused by the sole negligence or willfiil misconduct of County Parties. 2. Provisions Constituting Sublease. This Agreement is subject to all of the terms and conditions of the Transfer Station Master Lease. CWM shall assume and perform the obligations of Palomar and Lessee in the Transfer Station Master Lease, to the extent such terms and conditions are applicable to the Sublease Premises subleased pursuant to this Agreement. CWM shall not commit or pennit to be committed on the Sublease Premises any act or omission which shall violate any term or condition of the Transfer Station Master Lease. In the event of the termination of the City's interest as Lessee under the Transfer Station Master Lease or Palomar's interest as Sublessee under the Transfer Station Sublease for any reason, then this Agreement shall terminate coincidentally therewith without any liability of Palomar, County or City to CWM. 3. CWM's Waiver and Release of Relocation Benefits. In consideration of (bounty's consent to this Agreement, CWM hereby waives any and all rights it may now have, or may hereafter obtain, to relocation benefits ("Relocation Benefits") under the Federal Uniform Relocation Assistance Act (42 U.S.C. §§ 4601 et seq.) and/or the Califomia Relocation Assistance Law (Cal. Gov. Code, §§ 7260 et seq.), arising out of the County's assertion or exercise of its contractual rights to terminate the Lease or this Agreement pursuant to its terms, whether or not such rights are contested by CWM or any other entity, and releases County from any liability for payment of such Relocation Benefits. CWM shall in the future execute any further documentation of the release and waiver provided hereby as County may reasonably require. 4. Federal Aviation Administration Requirements. In the event there is any conflict between the provisions in this Clause and the other provisions in this Agreement, the provisions in this Clause shall take precedence. in a. CWM, for itself, its heirs, personal representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant mnning with the land that in the event fecilities are constmcted, maintained, or otherwise operated on the said property described in this Agreement for a purpose for which a DOT program or activity is extended or for another purpose involving the provision of similar services or benefits, CWM shall maintain and operate such facilities and services in compliance with all other requirements unposed pursuant to Title 49, Code of Federal Regulations, DOT, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation-Effecmation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended. b. CWM, for itself, its personal representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant ranning with the land that: (1) no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities, (2) that in the constmction of any improvements on, over, or under such land and the fiimishing of services thereon, no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subject to discrimination, (3) that CWM shall use the Sublease Premises in compliance with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended. c. That in the event of breach of any of the above nondiscrimination covenants, Palomar shall have the right to terminate this Agreement and to re-enter and repossess said land and the facilities thereon, and hold the same as if said Agreement had never been made or issued. This provision does not become effective until the procedures of 49 CFR Part 21 are followed and completed including expiration of appeal rights. d. CWM shall fumish its accommodations and/or services on a fair, equal and not unjustly discriminatory basis to all users thereof and it shall charge fair, reasonable and not unjustiy discriminatory prices for each unit or service; provided, that CWM may be allowed to make reasonable and nondiscriminatory discounts, rebates or other similar type of price reductions to volume purchasers. e. Non-compliance with Provision d above shall constitute a material breach thereof and in the event of such non-compliance Palomar shall have tiie right to terminate this Agreement and the estate hereby created without liability therefore, or at the election of Palomar, County or the United States, any or all said entities shall have the right to judicially enforce said Provisions. f. CWM agrees that it shall insert the above five Provisions in any sub-sublease by which said CWM grants a right or privilege to any person, firm or corporation to render accommodations and/or services to the public on the Sublease Premises herein subleased. C-2 1 \^ g. CWM assures that it will undertake an affirmative action program as required by 14 CFR Part 152, Subpart E, to insure that no person shall, on the grounds of race, creed, color, national origin, or sex be excluded from participating in any employment activities covered in 14 CFR Part 152, Subpart E. CWM assures that no person shall be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by this subpart. CWM assures that it will require that its covered sub-organizations provide assurances to CWM that they similarly will undertake affirmative action programs and that they will require assurance from their sub-organizations, as required by 14 CFR Part 152, Subpart E, to the same effort. h. County reserves the right to further develop or improve the landing area of the Airport as it sees fit, regardless of the desires or view of CWM, and without interference or hindrance. i. County reserves the right, but shall not be obligated to CWM, to maintain and keep in repair the landing area of the Airport and all publicly-owned facilities of the Airport, together with the right to direct and control all activities of CWM in this regard. j. This Agreement shall be subordinate to the provisions and requirements of any existing or fiiture agreement between County and the United States, relative to the development, operation or maintenance of the Airport. k. There is hereby reserved to County, its successors and assigns, for the use and benefit of the public, a right of flight for the passage of aircraft in the airspace above the surface of the Sublease Premises herein subleased. This public right of flight shall include the right to cause in said airspace any noise inherent in the operation of any aircraft used for navigation or flight through the said airspace or landing at, taking off from or operation on the Airport. I. CWM agrees to comply with the notification and review requirements covered in Part 77 of the Federal Aviation Regulations in the event fumre constmction of a building is planned for the Sublease Premises, or in the event of any planned modification or alteration of any present or fiimre building or stmcture situated on the Sublease Premises. m. CWM by accepting this expressly agrees for itself, its successors and assigns that it will not erect nor pennit the erection of any stmctare or object nor permit the growth of any tree on the land subleased hereunder that conflicts with Part 77 of the Federal Aviation Regulations. In the event the aforesaid covenants are breached. County and/or Palomar reserve the right to entCT upon the land subleased hereunder and to remove the offending stmcture or object and cut the offending tree, all of which shall be at the expense of CWM. n. CWM by accepting this Agreement agrees for itself, its successors and assigns that it will not make use of the subleased Sublease Premises in any manner which might interfere with the landing and taking off of aircraft from the Airport or otherwise constitate a hazard. In the event the aforesaid covenant is breached. County and/or Palomar reserve the right to enter upon the Sublease Premises hereby subleased and cause the abatement of such interference at the expense of CWM. C-3 o. It is understood and agreed that nothing herein contained shall be constmed to grant or authorize the granting of an exclusive right within the meaning of Section 308a of the Federal Aviation Act of 1958 (49 U.S.C. 1349a). p. This Agreement and all the provisions hereof shall be subject to whatever right the United States Govemment now has or in the future may have or acquire, affecting the control, operation, regulation and taking over of said Airport or the exclusive or non-exclusive use of the Airport by the United States during the time of war or national emergency. 5. Signs. CWM shall not erect nor cause to be erected any sign on the Sublease Premises without the prior written approval of the County Airports Director. A written request for sign approval must include the size, type, color and location of the proposed sign and said application must be concurred in by Palomar before submittal to County Airports Director. 6. Substance Abuse. CWM and its employees and agents shall not use or knowingly allow the use of the Sublease Premises for the purpose of unlawfully driving a motor vehicle or aircraft under the influence of an alcoholic beverage or any dmg or for the purpose of unlawfully selling, serving, using, storing, transporting, keeping, manufactaring or giving away alcoholic beverages or any controlled substance, precursor, or analog specified in Division 10 of the Califomia Health and Safety Code, and violation of this prohibition shall be grounds for immediate termination of this Agreement. 7. County's Right of Access. a. County's Right to Enter the Premises. County, its agents, employees, and contractors may enter the Premises at any time in response to an emergency, and at reasonable hours to (a) inspect the Sublease Premises, (b) exhibit the Sublease Premises to prospective purchasers or lessees, (c) determine whether City is complying with its obligations under the Transfer Station Master Lease (including its obligations with respect to compliance with Hazardous Materials Laws), (d) supply cleaning service and any other service that the Transfer Station Master Lease requires (bounty to provide, (e) post notices of nonresponsibility or similar notices, or (f) make repairs that the Transfer Station Master Lease requires County to make, or make repairs to any adjoining space or utility services, or make repairs, alterations, or improvements to any other portion of the Sublease Premises; provided, however, that all work will be done as promptly as reasonably possible and so as to cause as little interference to CWM as reasonably possible. b CWM's Waiver of Damages Claims. Sublessee waives any claim of injury or inconvenience to CWM's business, interference with CWM's business, loss of occupancy or quiet enjoyment of the Sublease Premises, or any other loss occasioned by such entry. If necessary, CWM shall provide County with keys to unlock all of the doors in the Sublease Premises (excluding CWM's vaults, safes, and similar areas designated in writing by CWM in advance). County will have the right to use any means that County may deem proper to open doors in the Sublease Premises and to the Sublease Premises in an emergency. No entry to the Sublease Premises by County by any means will be a forcible or unlawful entry into the Sublease C-4 \1M Premises or a detainer of the Sublease Premises or an eviction, actaal or constmctive, of CWM from the Sublease Premises, or any part of the Sublease Premises, nor will the entry entitle CWM to damages or an abatement of rent or other charges that this Agreement requires CWM to pay. C-5 EXHIBIT D COUNTY OF SAN DIEGO CONSENT TO SUB-SUBLEASE WHEREAS, tiie COUNTY OF SAN DIEGO, hereinafter referred to as "County," has leased a portion of McClellan-Palomar Airport (the "Property") to PALOMAR TRANSFER STATION, INC., a Califomia corporation, by lease known as PALOMAR TRANSFER STATION LEASE AGREEMENT, APN # 97-0085-A1, entered into between County and Palomar Transfer Station, hic. on October 31,1997 and hereinafter referred to as "Master Lease"; and WHEREAS, said Master Lease was assigned on June 1,2002 to CITY OF CARLSBAD, a municipal corporation, hereinafter referred to as "Lessee"; and WHEREAS, Lessee has subleased the Property to PALOMAR TRANSFER STATION, INC., a Califomia corporation, hereinafter referred to as "Sublessee", by sublease known as SUBLEASE AGREEMENT FOR PALOMAR TRANSFER STATION, entered into between Lessee and Sublessee on June 1,2002 and consented to by County on May 31, 2002; and WHEREAS, Sublessee desires to enter into that certain Sub-sublease and Disposal Agreement, to which this County of San Diego Consent to Sub-Sublease is attached as Exhibit "D", hereinafter referred to as "Sub-Sublease", with COAST WASTE MANAGEMENT, INC. a Califomia corporation, hereinafter referred to as "Sub-Sublessee", for a portion of the Property as more particularly described in the Sub-Sublease; and WHEREAS, said Master Lease provides that subleases shall not be effective until consented to in writing by County; and WHEREAS, the San Diego County Code of Administrative Ordinances, per Section 455.1 (AIRPORT OPERATIONS), autiiorizes the Director oftiie Department of Public Works, on behalf oftiie County as Lessor, to consent to such subleases; and WHEREAS, the Director of the Department of Public Works has delegated this authority to the Director of Airports, Department of Public Works of the County of San Diego. NOW, THEREFORE, County, acting through the Director of Airports, does hereby consent to said sub-sublease on this 9^ day of July 2012, witii the stipulation that in the event tiiere is any conflict between said Sub-sublease and said Master Lease, the terms and conditions of said Master Lease shall prevail. COUNTY OF SAN DIEGO PETER DRINKhV^ER, Director of Airports Department of Public Works FIRST AMENDMENT TO SUBLEASE AND DISPOSAL AGREEMENT This First Amendment to Sublease and Disposal Agreement is entered into and effective as of November 1, 2011 (the "First Amendment"), by and between PALOMAR TRANSFER STATION, INC., a Califomia corporation ("Palomar") and ALLIED WASTE INDUSTRIES, INC. ("AWI") and COAST WASTE MANAGEMENT, INC., a Califomia corporation, a Waste Management company, and its affiliates (collectively, "WMI") for the purpose of amending that certain Sublease and Disposal Agreement, dated May 31, 2000, entered into between Palomar, AWI, Coast and Waste Management, Inc. (the "WMI Sublease"), a copy of which WMI Sublease is attached hereto as Exhibit A. RECITALS A. Palomar, pursuant to the terms of that certain Sublease Agreement dated June 1,2002 (the "Transfer Station Sublease") between Palomar and the City of Carlsbad (the "City"), subleases that certain real property located in the City of Carlsbad, County of San Diego, Califomia identified as San Diego County Assessor's Parcel Number 97-0085-Al and known as the Palomar Facility (the "Property"), which consists, among other things, of a solid waste transfer station, office space, parking and maintenance facilities, all as more particularly described in the Transfer Station Sublease, a copy of which Transfer Station Lease is attached hereto as Exhibit B. B. The Transfer Station Sublease is subject to the terms and conditions of that certain Palomar Transfer Station Lease Agreement, dated October 31, 1997 (the "Master Lease"), between the County of San Diego and the City (by Assignment of Lease dated June 1, 2002 between Palomar and the City), a copy of which Master Lease is attached hereto as Exhibit C. C. Palomar and WMI have entered into that certain Transport and Disposal Agreement, dated of even date herewith. D. Palomar and AWI are in the process of negotiating a renewal of that certain agreement entitled "Agreement for Transfer Station and Disposal Services between the City of Carlsbad and Palomar Transfer Station, Inc." ("Carlsbad Disposal Agreement") with the City of Carlsbad, and Coast is in the process of negotiating a renewal of that certain agreement entitled "Contract for the Provision of Solid Waste Services" ("Carlsbad Collection Agreement") with the City of Carlsbad. Both Parties believe in good faith that both agreements will be approved and executed prior to June 1, 2012. E. Landlord and Tenant are desirous of entering into this First Amendment for the purpose of extending the Term, providing for an adjustment in the rental rate to be paid during the Extended Term (as defined herein), and to modify the addresses for purposes of notice. NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged. Landlord and Tenant agree as follows: wn AGREEMENT 1. CONDITION PRECEDENT: This First Amendment is expressly conditioned upon, and shall be of no force and effect, unless WMI and the City of Carlsbad enter into a renewal of the Carlsbad Collection Agreement that becomes effective on or before June 1, 2012 WMI may waive this condition precedent, upon written notice to Palomar and AWI. This First Amendment is further expressly conditioned upon, and shall be of no force and effect, unless both of the following occur: (a) Palomar, AWI and the City of Carlsbad enter into a renewal of the Carlsbad Disposal Agreement; and (b) Palomar, AWI and WMI enter into a "Transportation and Disposal Agreemenf regarding the delivery by WMI of certain San Diego County waste streams to Palomar and AWI, as more particularly described in that agreement. Palomar and AWI may waive this condition precedent, upon written notice to WMI. 2. TERM: The Tenn of the WMI Sublease shall be extended for a ten (10) year period beginning on June 1, 2012 and mnning through and including May 31, 2022 provided the Transfer Station Sublease and the Master Lease are still validly existing (the "Extended Tenn"), at which time Tenant shall vacate the Premises in accordance with the terms and conditions of the WMI Sublease, as amended by this First Amendment. The WM I Sublease shall expire on June 1,2022 unless otherwise extended by written agreement of the parties hereto, or their successors or assigns, and there shall be no requirement of any written notice of termination to be provided by Palomar, A WI, Coast or WMI to effect such tennination upon the expiration of the Extended Term. 3. RENT: The base monthly rent, effective June 1, 2012, and continuing for each and every month during the Extended Tenn, shall be the sum of Sixty Thousand and 00/100 Dollars ($60,000.00) (for an annual rent equal to Seven Hundred Twenty Thousand and 00/100 (1720,000.00)) due and payable in accordance with the tenns of the WMI Sublease. The Rent hereunder shall be subject to a percentage increase only based on the annual increases in collection rates applied by the City of Carlsbad pursuant to the Carlsbad Collection Agreement. However, under no circumstances shall the Rent hereunder be decreased if the rate applied by the City of Carlsbad pursuant to the Carlsbad Collection Agreement decreases, rather in that case there shall be no adjustment for the year in which there was no increase. 4. WMFS OBLIGATIONS: Section 3.! (a), lines 12 and 13 of the WMI Sublease are amended to delete "WMI may also deliver additional amounts of Acceptable Waste, other than the Carlsbad Acceptable Waste, from time to time, in amounts to be detenni«ed by WML" 5» Section 5.1 of the WM! Sublease is deleted in its entirety and replaced with the following: For the acceptance, transportation and disposal by Palomar and AWI of Acceptable Waste generated in or collected tn the City of Carlsbad and delivered to the Palomar Transfer Station pursuant to section 3J, WMI, Coast and their affiliates will pay PTS the per ton fee established in the Carlsbad Agreement, as such fee is adjusted from time to time pursuant to the terms of the Carlsbad Disposal Agreement, as it may be amended from time to time. Sections 5.2 and 5.3 of the WMI Sublease are deleted in their entirety. Section 5.5, lines I and 2 of the WMI Sublease are amended to delete "Section 5.3 and 5.4" and substitute "Section 5.1 6. NOTICES: Notwithstanding anything to the contrary in the WMI Sublease, speciilcaUy including but not limited to the provision of Section 10.7, the address for notices to Palomar and AWI shall be as tbllows: If to Palomar/A WI: Palomar Transfer Station, Inc. Alficil \\ asic Services San l)!cpt> K3b4 ( laivmuiH Mesa Htmfexaril San Dicuo. fA*)2ni Attn: James T. Ambroso, Vice President With a copy to: Republic Services, Inc. l8500North Allied Way Phoenix, Arizona 85054 Attn: General Counsel If to WM I: Coast Waste Management, Inc. 5960 El Camino Real Carisbad, CA 92108-0947 Attn: District Manager With a copy to: Waste Management - Westem Group 7025 N. Scottsdale Road Suite 200 Scottsdale, AZ 85253 Attention: Group Legal Counsel 7. PRESERVATION OF TERMS: Except as modified herein, all tenns and conditions of the WMI Sublease shall remain in full force and eflect. Capitalized tenns not defined herein shall have the meaning ascribed to them in the WMI Sublease. Signed, sealed and delivered as of the date below each signature: PALOMAR: By: NafeJapifes T. Ambroso, Vice President Date: //-3^? -// AWI: By: Allied Waste Industries, Inc., a Delaware corporation General Partner By:. Nail aiiie: /^-v/tf itiar^ Date: i.S^^Ji, -( ( Titiar' - h^f^^ WMI: Area Vice President