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HomeMy WebLinkAbout2022-11-22; New Village Arts' Request for Additional Funding for the New Village Arts Tenant Improvement Project (District 1); Gomez, PazTo the memhers of the: CITY COUNCIL Datel1/i -iiic:A ✓cc ✓ CM ~_i DCM{3) ./ November 22, 2022 Council Memorandum To: From: Honorable Mayor Hall and Members of the City Council Paz Gomez, Deputy City Manager, Public Works Via: {city of Carlsbad Memo ID #2022118 Re: Gary Barberio, Deputy City Manager, Community Services Geoff Patnoe, Assistant City Manager~ New Village Arts' Request for Additi~Funding for the New Village Arts Tenant Improvement Project (District 1) This memorandum provides an update on the status of the New Village Arts (NVA) Tenant Improvement Project, including information regarding a recent request from NVA for additional city funds for the project. Background The city purchased the building and property located at 2787 State Street, Assessor Parcel Number 760-166-45-00, in November 1997. The building is currently leased to NVA. On November 4, 2022, Ms. Kristianne Kurner, NVA's Founder and Executive Artistic Director, submitted a letter to the city dated November 2, 2022, requesting additional city funds for the project (Attachment A). On November 8, 2022, Ms. Kurner made a presentation to the City Council during the non-agenda public comment section of the meeting making the same request for additional city funds for the project. Discussion Facilities Maintenance of Property As part of the Fiscal Year (FY) 2017-18 budget process, the City Council approved CIP Project No. 4739 to replace the roof and repair and replace siding on the south and west walls of the building leased by NVA. In early 2019, Mr. Alex Goodman, Managing Director of NVA, requested revisions to the proposed scope of work, including deleting renovation of the south wall. On July 28, 2020, the City Council approved plans and specifications and authorized advertisement for bids to repair the building's roof and refurbish the western wall (Resolution No. 2020-160). The City Council approved a contract to commence the repairs and to increase the budget for the renovations an additional $60,000, from $253,626 to $313,626, on September 22, 2020 (Resolution No. 2020-192). Repairs and renovations to the building were completed in January 2021. The total cost of the roof and west wall renovation project was $292,637. Public Works and Community Services Branches Fleet & Facilities Department and Real Estate Division 405 Oak Avenue I Carlsbad, CA 92008 I 442-339-2856 t Council Memo -Additional Funding for the NVA Tenant Improvement Project (District 1) November 22, 2022 Page 2 Lease Agreement History Between 2006 and 2019, the city entered into several short-term, below-market rate Lease Agreements with NVA who utilized the property as a performing arts theater and arts incubator (The Foundry). Between 2006 and 2019, the below-market rate leases resulted in a potential loss of approximately $2,654,164 in market-rate rental income to the city. On July 27, 2021, the city and NVA entered into a new 10-year Lease Agreement with two five- year extension options (the Staff Report, Resolution and Lease Agreement are provided as Attachment B). The Lease Agreement includes public benefit findings to support leasing the property at a below-market rate of one dollar ($1.00) per year. The city estimates that the current 20-year Lease Agreement will result in a potential loss of approximately $11,607,261 in market-rate rental income to the city. As part of the 2021 Lease Agreement, NVA agreed to make no less than $2 million worth of improvements to the interior and exterior of the property (Section 4.1 of the Lease Agreement). The city agreed to reimburse NVA up to $470,000 for the exterior improvements and up to $103,000 toward installation of solar panels as part of this tenant improvement project (for a total of up to $573,000), and to pay $40,000 for a Construction Manager to work for the city and ensure the project was being built to city standards and following city protocol. Pursuant to the Lease Agreement, the city and NVA also entered into a Construction and Reimbursement Agreement in January of 2022 (Attachment C). The Construction and Reimbursement Agreement detailed the terms by which NVA would receive reimbursement in an amount not to exceed $573,000 for the cost of the tenant improvement project (Section 4). Construction on the tenant improvement project began in July 2022 and is ongoing. As of October 19, 2022, approximately 31% of the work subject to the Construction and Reimbursement Agreement has been completed, and staff have processed reimbursement payments to NVA in the amount of $143,163. NVA indicated they expect construction to be completed in early 2023. Cultural Arts Grants to NVA Since 2013, the city has supported NVA with the award of 27 arts grants totaling $206,638, which includes $50,000 for a new mural on the west wall of the building which is currently being completed. NVA's Request for Additional Funding On November 4, 2022, the city received a letter from NVA requesting an additional $228,411 in city funds to support NVA's tenant improvement project (Attachment A). The letter reads in part: Council Memo -Additional Funding for the NVA Tenant Improvement Project (District 1) November 22, 2022 Page 3 New Village Arts is requesting an increase of $228,411 in support from the City of Carlsbad for the increased costs to protect the structure of the building, the increased costs to exterior repairs, and fixing the west wall of the building so sound proofing is improved, which we believe to be within the City's scope of work. During NVA's presentation at the November 8, 2022, City Council meeting, Ms. Kurner of NVA presented that the basis for the requested increase in reimbursement amount included inflation, prevailing wages, age and condition of the building, and supply chain challenges. In addition, NVA stated there have been several necessary change orders which NVA believes to be within the city's scope of work pursuant to section 11.3 of the city and NVA Lease Agreement: 11.3 Landlord's Obligations. From and after the Term Commencement Date and continuously thereafter until the expiration or termination of this Lease, Landlord, at Landlord's sole expense, shall keep in good order, condition and repair the foundations, exterior walls, roof mounted HVAC System, and roof of the Premises, except for (a) any damage thereto caused by any negligent act or omission of Tenant or its agents, contractors, subcontractors, employees or invitees, (b) any such portions of the Premises to the extent affected by any Tenant Improvements, and (c) any damage or destruction covered by insurance required to be maintained by Tenant. All repairs to be performed by Landlord shall be commenced and completed as soon as reasonably necessary after written notice from Tenant to Landlord. In cases of emergency, Tenant shall endeavor to give as much notice to Landlord as is reasonable under the circumstances. Should the City Council ultimately decide to support NVA's request for additional city funding for their tenant improvement project, the City Council would need to formally approve an amendment to the Lease Agreement in a public meeting and direct staff to draft and complete a subsequent amendment to the Construction and Reimbursement Agreement. Next Steps City staff will place NVA's request for additional city funding on a future City Council public meeting agenda for the City Council's consideration. Should the City Council determine that they want to consider NVA's request for additional city funding, city staff will then schedule the item for closed session to discuss price and terms related to the funding request and the subsequent necessary amendment to the Lease Agreement. Once negotiations are concluded, the City Council would need to consider an amendment to the Lease Agreement on a future public meeting agenda and direct staff to draft and complete a subsequent amendment to the Construction and Reimbursement Agreement. Attachments: A. NVA letter dated November 2, 2022 B. Staff Report and Resolution of July 27, 2021, and Lease Agreement (Due to the size of Attachment B, a hardcopy is on file in the Office of the City Council) C. Construction Agreement between the City of Carlsbad and NVA Council Memo -Additional Funding for the NVA Tenant Improvement Project (District 1) November 22, 2022 Page 4 cc: Scott Chadwick, City Manager Cindie McMahon, City Attorney Laura Rocha, Deputy City Manager, Administrative Services Allegra Frost, Assistant City Attorney Zach Korach, Finance Director Kristina Ray, Communication & Engagement Director John Maashoff, Public Works Manager Curtis Jackson, Real Estate Manager l<ristianne Kurner Exerntive Artistic Director Rae Henderson-Gray Managing Director Joan Cumming President Saundra Redmond-Moton Vice President Mary Kerr Treasurer Lauren Segovia Secretary Board Members at Large John Harelson Kristianne Kurner Katie Keller AJ Knox Robert Lin Sue Loftin Christy Rosa Mohler, M.D Milena (Sellers] Phillips Lou Storrow Scott L. White DeMilo Young NVA Advisory Board Rosemary Eshelman, Chair Ariel Bedell Mark Caruana Kathy Deering Fred Deutsch Haley DiDonato Mea Hall Walt & Sharon Hambly Pat Hansen Julie Nygaard Pat Hurley Emma Jadhav Chelsea Kaufman Richard Kuranda Cassie Langan Linda Ledesma Gina McBride Christine lleto Pangan Justin Peek Shari Roberts Jay Sarno Don & Becky Sciglimpaglia NVA is a 501{c}(3) Non-Profit Organization Tax ID #52-2320930 New Village Arts, Inc. 2787 State St. Carlsbad, CA 92008 760.433.3245 info@newvillagearts.org www.newvillagearts.org Scott Chadwick City Manager 1200 Carlsbad Village Drive Carlsbad, CA 92008 November 2, 2022 Dear Mr. Chadwick, Attachment A We are thrilled to share that we are planning the re-opening of New Village Arts! We are proud to be achieving the goals set by the City to create evening entertainment and activities that encourage public interaction and positive pedestrian traffic in Carlsbad Village and help to revitalize the retail and dining environment with exciting entertainment opportunities. While the construction process concludes, NVA will present a community tour of our highly acclaimed original holiday musical, 1222 OCEANFRONT: A BLACK FAMILY CHRISTMAS. This joyful musical takes place right here in Carlsbad and is a beautiful celebration of family, romance, and the holidays and was named the "best show of 2021" by the San Diego Union Tribune. NVA will take the show to venues around San Diego County showcasing the best of Carlsbad's arts. The grand re-opening of the Dea Hurston New Village Arts Center is scheduled for February 2023 and will coincide with NVA's production of Jez Butterworth's THE FERRYMAN. The show won the 2019 Tony Award for Best Play and NVA will be the first theatre company outside of New York and London to present this astonishing play. This will bring national attention to Carlsbad and we are proud to share it with our community. When the Dea Hurston New Village Arts Center re-opens, it will be a true cultural gathering space for our community. The robust plan for the Sahm Foundation Arts Education Center includes weekday classes for all ages from 9am to 9pm and weekend activities focused on the children in our community. The White Family Next Stage will bring music, poetry, discussion groups and more to the heart of Carlsbad Village. And New Village Arts will continue its highly acclaimed and award-winning professional theatre in the Conrad Prebys Theatre. It will also be a place where you can come for a cup of coffee and interact with local visual art and even be able to make your own art projects! When New Village Arts presented this project to the City of Carlsbad in May of 2019, the project was an estimated $1.2 million, with an anticipated final cost to NVA of $730,000 and cost to the city of $573,000. Three and a half years later, with a new construction company and architectural team, the same project scope is coming in at a total cost of $2.86 million. The reasons for the increase in cost are many, including inflation, prevailing wage, the age of the nearly 100-year old building, supply chain challenges and more. New Village Arts is requesting an increase of $228,411 in support from the City of Carlsbad for the increased costs to protect the structure of the building, the increased costs to exterior repairs, and fixing the west wall of the building so sound proofing is improved, which we believe to be within the City's scope of work. In addition to the original $730,000, NVA is raising $1.3 million to cover the increased costs within its,scope of work. A budget document with the breakdown of this request is attached. All of us at New Village Arts are incredibly grateful for the ongoing support of the City of Carlsbad and we certainly would not be able to do any of this without that support. We hope that the City will see the importance of finishing this project successfully and creating a thrilling cultural gathering space for our community. Please feel free to reach out to us with any questions or for any additional information. With gratitude, Kristianne Kurner Founder and Executive Artistic Director cc: Assistant City Manager Gary Barberio Real Estate Manager Curtis Jackson Assistant City Attorney Allegra Frost Public Works Manager John Maashoff Rae Henderson-Gray Managing Director Robert Polley, Senior Construction Manager, SchneiderCM GT GARDINER ' I &THEOBALD • NEW VILLAGE ARTS NEW VILLAGE ARTS CENTER 2787 State St. Ca rlsbad, CA Exterior Improvements Cost Tracking 10.20.22 Original City funding, per agreement $ 470,000 Base bid from contractor (Exterior) Exterior Change Order Log Added shoring needed to perform exterior framing repairs and alterations due to unforeseen structural conditions Exterior framing increased costs (RFI 7, RFI 9, RFI 20, RFI 29) Exterior demo increased costs (RFI 4) Exterior framing dry rot and structural issues BWE exterior water meter design -upsize on west side of building Westwall acoustical to mitigate train noise and return wall to previous levels of sound abatement Emergency repair to main roof support post (RFI 17) Solar increase costs (estimate based on rate of inflation; waiting on quote) Southwest exterior door replacement Total change order cost increase Total current project cost within city scope (bid+ change orders) Less City funding per agreement Delta Total Project Summary Original cost estimate -New Village Arts Additional costs -New Village Arts Total Cost to New Village Arts (proposed) Original cost estimate -City of Carlsbad Additional costs -City of Carlsbad Total Cost to City of Carlsbad (proposed) Total project cost $ 529,500 $ 168,911 $ 698,411 $ (470,000) $ 228,411 $ 2,061,653 $ 801,411 $ 2,863,064 $ 12,852 $ 18,951 $ 2,099 $ 33,188 $ 10,950 $ 54,015 $ 4,355 $ 29,000 $ 3,500 $ 730,000 $ 1,331,653 $ 573,000 $ 228,411 Meeting Date July 27, 2021 To: Mayor and City Council From: Scott Chadwick, City Manager Staff Contact: Curtis M. Jackson, Real Estate Manager curtis.jackson@carlsbadca.gov, 760-434-2836 Subject Lease agreement with New Village Arts to operate a theater and arts facility at 2787 State Street District: 1 Recommended Action Adopt a resolution authorizing the City Manager to: 1)Execute a 10-year lease agreement, with two, five-year extension options, with New Village Arts to operate a theater and arts facility at 2787 State St., commonly known as the Bauer Lumber Building 2)Appropriate $613,000 from the General Capital Construction Fund to the project 3)Execute a construction and reimbursement agreement with NVA that will detail the terms of reimbursement for the city’s portion of the tenant improvement project costs Executive Summary New Village Arts, or NVA, is a non-profit theater group that has leased and operated a theater in the city-owned Bauer Lumber Building at 2787 State St. continuously since 2006. The current five-year lease was approved in April 2019 and expires on April 11, 2024. On June 10, 2020, the group submitted a letter of intent with a request to continue and expand its partnership with the city under the terms of a new long-term lease agreement. The city and NVA then commenced negotiations to enter into a new 10-year lease agreement with two, five-year extension options. As part of the new lease agreement, NVA has agreed to make approximately $2 million worth of improvements to the interior and exterior of the property. The city will reimburse NVA up to $573,000 for the exterior improvements and the installation of solar panels that are part of this tenant improvement project. The Carlsbad Municipal Code does not provide the City Manager with authority to approve and execute lease agreements. This action by the City Council will grant the City Manager the authority to execute the agreement, appropriate $613,000 in funds from the General Capital Construction Fund to the project and execute a construction and reimbursement agreement with NVA that will detail the terms of reimbursement for a portion of the tenant improvement project. CA Review __AF__ July 27, 2021 Item #6 Page 1 of 57 Attachment B Discussion Background The Carlsbad Redevelopment Agency acquired the former Bauer Lumber Building, located on the northeast corner of State Street and Christiansen in the Village, in 1997 with proceeds from tax exempt bonds issued in 1993. The bonds used to purchase the property will reach their maturity date and be paid off in 2023. Properties purchased with tax-exempt bond proceeds must generally be used for a governmental purpose throughout the life of such bonds. The building is 9,400 square feet and is divided into two suites, 6,300 square feet in the rear of the building for theater performances and 3,100 square feet in front on State Street for an arts incubator. NVA has leased the rear 6,400 square-feet from the city since 2006, and has been the sole occupant of the entire 9,400 square-feet of the property since 2009. In October 2017, the City Council approved the city’s Real Estate Strategic Plan, which included a recommendation that the city enter into a new five-year lease agreement with NVA. Subsequently, on April 9, 2019, the City Council approved a five-year lease. Then, on Feb. 11, 2020, the City Council directed city staff to negotiate a long-term lease agreement with NVA with a period of between 10 to 20 years. On July 28, 2020, the City Council approved plans and specifications and authorized advertisement for bids to repair the building’s roof and refurbish the western wall (Resolution No. 2020-160). The City Council approved a contract to commence the repairs and to increase the budget for the renovations an additional $60,000, from $253,626 to $313,626, on Sept. 22, 2020 (Resolution No. 2020-192). Repairs and renovations to the building were completed in January 2021. To date, the city has spent $291,187 on the project. Lease agreement The letter of intent NVA submitted to the city June 10, 2020, requested a new long-term lease agreement with rent of $1 per year and proposed $1.2 million in interior and exterior renovations to the property, with the city to reimburse NVA up to $573,000, $103,000 for renovations related to the installation of solar panels and $470,000 to cover a portion of the exterior tenant improvements. In response, staff presented potential new lease terms to the City Council in closed session on Oct. 20, 2020, and the council directed staff to negotiate a new agreement with NVA. The city and NVA then commenced negotiations to enter into a new 10-year lease agreement with two, five-year extension options, with a rental rate for the property of $1 per year over the term of the agreement. As part of the new lease agreement, NVA has agreed to undertake a tenant improvement project to the property, the cost of which is estimated will exceed $2 million. This tenant improvement project will include interior and exterior renovations and the installation of solar panels. In keeping with the request detailed above, the city will reimburse NVA $103,000 for the installation of solar panels and $470,000 for exterior improvements to the south and east walls of the building, up to a total of $573,000. Before construction, the City Manager will execute a construction and reimbursement agreement with NVA that will detail the terms by which NVA will receive reimbursement of up to $573,000 for the cost of the tenant improvement project. The city will also enter into a July 27, 2021 Item #6 Page 2 of 57 contract with a construction management firm in an amount not to exceed $40,000, to ensure that the improvements to the city’s building are constructed properly and that funds are reimbursed as specified in the construction and reimbursement agreement. All work undertaken by NVA to improve the building will be subject to the state’s prevailing wage requirements on public work projects because of the partial reimbursement from the city and the below-market rate of the lease.1 Benefit to the city The city has determined that the lease is for a governmental purpose and NVA provides a public benefit to the community by offering an alternative evening activity that encourages more positive pedestrian traffic and public interaction in the Carlsbad Village area. Additionally, NVA’s presence in the Carlsbad Village contributes to the efforts to revitalize the retail and dining environment by providing an evening entertainment opportunity that otherwise would not exist within the area. NVA’s use of the property as a theater and arts center is also consistent with the goals of the Carlsbad Village & Barrio Master Plan, which calls for uses that will activate the Village by promoting placemaking strategies that support arts and culture, including visual, musical, and theatrical arts and other public performances. Surplus Lands Act In 2019, the California legislature adopted AB 1486, which amended the Surplus Land Act by adding new obligations that must be followed before cities can dispose of surplus land. The new obligations are intended to increase the state’s supply of affordable housing. In April 2021, the California Department of Housing and Community Development issued guidelines to implement the Surplus Land Act. The guidelines define surplus land as “… land owned in fee simple2 for which a local agency’s governing body takes formal action at a regular public meeting declaring land to be surplus and not necessary for a local agency’s use. The guidelines also state that property disposed of for the sole purpose of investment or generation of revenue, or for commercial activities, shall not be considered necessary for the agency’s use. The guidelines define “disposing” of surplus lands to mean the sale or lease of local agency-controlled land. However, two types of leases are excluded from the definition of “lease” and are not considered disposing of land: • A lease of land on which no development or demolition will occur • A lease that has a term that is less than five years, including any extensions, amendments or options There is no definition of “development or demolition” in the Surplus Lands Act, but the tenant improvements planned for the property leased by NVA do not meet the definitions of “development” or “demolition” used in other provisions of state law. Therefore, the proposed 1 State law requires workers employed on public works projects to be paid a prevailing wage that is based on the type of work and the location of the project. 2 Owned in fee simple means the owner of the property has full and irrevocable ownership of the land and any structures upon it. July 27, 2021 Item #6 Page 3 of 57 lease agreement with NVA is not subject to the Surplus Lands Act because it is a lease of land on which no development or demolition will occur. Staff recommendation Staff recommend the City Council authorize the City Manager to execute a new lease agreement with NVA, which will provide for the continued operation of a theater and arts facility on the property. The term of the agreement will be for 10 years, and contains two five- year lease extension options. Options Staff provide the following three options for the City Council’s consideration: 1. Approve the lease agreement as recommended Pros • The city would receive a public benefit to the community by offering an alternative evening activity that encourages more positive pedestrian traffic and public interaction in the Carlsbad Village area • NVA’s presence in the Carlsbad Village will assist in the efforts to revitalize the retail and dining environment by providing an evening entertainment opportunity that otherwise would not exist within the area. • NVA’s use of the property as a theater and arts center in consistent with the goals of the Carlsbad Village & Barrio Master Plan, which calls for strategies that support arts and culture, including visual, musical, and theatrical arts, and other public performances. • The city will receive approximately $1.4 million in improvements paid for by NVA. Cons • City will not receive market rent for the property. • City will spend up to $573,000 to reimburse NVA for the solar and exterior tenant improvement project. 2. Provide specific direction and send back to staff to renegotiate the lease agreement terms or provisions Pros • A lease agreement with different terms or provisions might be of greater benefit the city Cons • Renegotiating a potential new agreement would require additional expenditure of staff resources 3. Don’t lease property at all Pros • None Cons • Increased maintenance costs • No public benefits to the Carlsbad Village • City would lose out on benefit of NVA’s improvements to the building July 27, 2021 Item #6 Page 4 of 57 Staff recommend Option 1, that the City Council authorize the City Manager to execute the new 10-year agreement and any future extension options. Fiscal Analysis Under this agreement, NVA will pay the city an annual lease payment of $1, as well as all utilities associated with the lease of the property. The city will maintain liability and maintenance obligations for the roof, structure, foundation and its heating, ventilation and air conditioning. The city will reimburse NVA up to $573,000, $103,000 for the installation of solar panels and $470,000 for a portion of the exterior improvements to the building. The city will hire a construction management firm to assist in providing oversight and inspection of the tenant improvement project to the city’s building. The city anticipates the cost of the construction management contract will not exceed $40,000. Funds have not been appropriated for this project. City staff request that the City Council appropriate $613,000 from the General Capital Construction Fund for the project. This would leave the fund with a balance of $13,494,245, as shown in the following table: General Capital Construction Fund Projected fund balance at June 30, 20211 $32,303,317 Transfer in from the General Fund $5,353,000 Total appropriations to date $23,549,072 Projected General Capital Construction Fund balance $14,107,245 New Village Arts reimbursement $573,000 New Village Arts construction management $40,000 New Village Arts CIP project balance $613,000 Remaining General Capital Construction Fund balance $13,494,245 1 As projected during the budget process in May 2021. Next Steps NVA must obtain approval of its construction plans for the interior and exterior improvements. The City Manager will execute a construction and reimbursement agreement with NVA that will detail the terms of reimbursement for the tenant improvement project. City staff and NVA will carry out the terms of the lease agreement and the construction and reimbursement agreement. Upon expiration of the initial lease term, the City Manager will have discretion to approve or deny the two five-year extension options. Environmental Evaluation (CEQA) In keeping with state Public Resources Code Section 21065, this action does not constitute a “project” within the meaning of the California Environmental Quality Act in that it has no potential to cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, and therefore does not require environmental review. Exhibits 1.City Council resolution July 27, 2021 Item #6 Page 5 of 57 July 27, 2021 Item #6 Page 6 of 57 RESOLUTION NO. 2021-182 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING THE CITY MANAGER TO EXECUTE A TEN-YEAR LEASE AGREEMENT, WITH TWO, FIVE-YEAR EXTENSION OPTIONS, WITH NEW VILLAGE ARTS (NVA) TO OPERATE A THEATER AND ARTS FACILITY AT 2787 STATE STREET, COMMONLY KNOWN AS THE BAUER LUMBER BUILDING; APPROPRIATE $613,000 FROM THE GENERAL CAPITAL CONSTRUCTION FUND TO THE PROJECT; AND EXECUTE A CONSTRUCTION AGREEMENT WITH NVA THAT WILL DETAIL THE TERMS OF REIMBURSEMENT FOR THE CITY'S PORTION OF THE TENANT IMPROVEMENT PROJECT WHEREAS, On November 20, 1997, the Carlsbad Redevelopment Agency acquired the property located on the northeast corner of State Street and Christiansen Way at 2787 State Street in the Carlsbad Village (Property) with proceeds from tax exempt bonds issued in 1993; and WHEREAS, on September 26, 2006, the City Council approved a lease agreement (Agreement) with New Village Arts (NVA) for the purpose of operating a performing arts theater in the rear 6,300 square feet of the Property by Resolution No. 2006-429; and WHEREAS, on June 23, 2009, the City Council approved a lease agreement with NVA, expanding the leased area to include the front 3,100 square feet of the Property, for a revised total of 9,400 square feet of leased space, to incorporate an arts incubator on the Property by Resolution No. 2009-471; and WHEREAS, on April 12, 2019, the City Council approved a five-year lease agreement with NVA by Resolution No. 2019-045; and WHEREAS, On July 28, 2020, the City Council approved plans and specifications and authorized advertisement for bids to repair the building's roof and refurbish the western wall (Resolution No. 2020-160). The, City Council approved a contract to commence the repairs and to increase the budget for the renovations an additional $60,000, from $253,626 to $313,626, on Sept. 22, 2020 (Resolution No. 2020-192). Repairs and renovations to the building were completed in January 2021. To date, $291,187 has been spent on the project; and WHEREAS, On Feb. 11, 2020, the City Council directed city staff to negotiate a long-term lease agreement with NVA w ith a period of 10-20 years; and WHEREAS, On June 10, 2020, NVA submitted a Letter of Intent with a request to continue and expand NVA's partnership with the city under the terms of a new long-term lease agreement. The July 27, 2021 Item #6 Page 7 of 57 letter included a request for a new long-term lease agreement, rent of $1.00 per year, and proposed $1.2.million in renovations to the Property, with a request for the city to reimburse NVA up to a total of $573,000 for renovations related to the installation of solar panels. ($103,000) and a portion of the exterior improvements ($470,000); and WHEREAS, prior to construction, the City Manager will execute a Construction Agreement with NVA that will detail the terms of reimbursement for the city's portion of the tenant improvement project's costs; and WHEREAS, the city will also enter into a contract with a construction management firm in an amount not to exceed $40,000, to ensure that the improvements to the city's building are constructed properly and that funds are reimbursed consistent with the terms of the future Construction Agreement; and WHEREAS, in order to fund the reimbursement and construction management firm cost, city staff is requesting that the City Council appropriate $613,000 from the General Capital Construction Fund to the project; and WHEREAS, the city has determined that NVA provides a public benefit to the community; and WHEREAS, the City Council of the City of Carlsbad has determined that it is in the best interest of the city to enter into a new Agreement with NVA for the Property; and WHEREAS, the City Council has further determined that it accepts the terms of the Agreement with NVA; and WHEREAS, the Agreement is not subject to the Surplus Lands Act because it is excluded from the definition of "lease" and is not considered to be a "disposition" due to the fact that no development or demolition will occur on the property. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the city has determined that NVA provides a public benefit to the community by offering an alternative evening activity that encourages more positive pedestrian traffic and public interaction in the Carlsbad Village area, as well as a presence in the Carlsbad Village that will assist in the city's efforts to revitalize the retail and dining July 27, 2021 Item #6 Page 8 of 57 II II II II II II II environment by providing an evening entertainment opportunity which otherwise would not exist within the area. Further, NVA's use of the Subject Property as a theater and arts center is consistent with the goals of the Carlsbad Village and Barrio Master Plan which call for uses that will activate the Village by promoting placemaking strategies that support arts and culture, including visual, musical, and theatrical arts, and other public performances. 3. That the City Manager is hereby authorized to execute the Lease Agreement with New Village Arts, attached hereto as Attachment A, and to act on behalf of the City of Carlsbad in all future decisions and actions necessary to implement the Agreement with New Village Arts for use of city owned property located at 2787 State Street, Carlsbad, CA 92008, including any extension options, and to do so in full compliance with the terms and conditions expressed in the aforementioned Agreement and to the satisfaction of the City Attorney. 4. That the Deputy City Manager, Administrative Services is authorized to appropriate $613,000 from the General Capital Construction Fund to the project, to include funds in an amount not to exceed $573,000 for reimbursement to NVA and funds in an amount not to exceed $40,000 for the cost of a construction management contract. 5. That the City Manager is hereby authorized to execute a Construction Agreement with NVA that will detail the terms of reimbursement for the city's portion of the tenant improvement project costs. July 27, 2021 Item #6 Page 9 of 57 PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of the City of Carlsbad on the 27th day of July, 2021, by the following vote, to wit: AYES: Hall, Blackburn, Acosta, Bhat-Patel. NAYS: None. ABSENT: None. MATT HALL, Mayor \ bl\,~ Gu ·fc-v- BARBARA ENGLESON, City Clerk (SEAL} July 27, 2021 Item #6 Page 10 of 57 LEASE AGREEMENT THIS LEASE AGREEMENT (this "Lease") is entered into as of Jy\J ,'.l=tth.. , 2021, by and between CITY OF CARLSBAD, a California municipal corporation { Landlord") and NEW VILLAGE ARTS, a California tax exempt non-profit public benefit corporation organized under Section 501(c)(3) of the U.S. Internal Revenue Code ("Tenant") (collectively "Parties"), for the property located at 2787 State Street, California, 92008, and shall be effective and binding upon the parties hereto as of the date of execution hereof by both parties. RECITALS WHEREAS, Landlord is the owner of certain real property and improvements thereon, consisting of approximately 9,400 square feet of commercial building space, designated as Assessor Parcel Numbers 203-295-01 and 02, and more particularly described and/or depicted on Exhibit A attached hereto (the "Premises"); WHEREAS, the Parties entered into an initial Lease Agreement, dated July 1, 2013 ("Initial Agreement"), for the Premises, which Initial Agreement was amended by the First Amendment to the Initial Agreement dated July 1, 2016 ("First Amendment"); and WHEREAS, t he Parties subsequently entered into a new five-year Lease Agreement, dated April 9, 2019, ("Subsequent Agreement") for the Premises, which expires April 11, 2024; and WHEREAS, the Parties desire to replace the Subsequent Agreement with a longer-term lease agreement; and WHEREAS, t he Parties mut ually agree t hat this Lease shall replace and supersede the Subsequent Agreement; and WHEREAS, this Lease will further the goals and objectives of t he Arts . Element of the City's General Plan, specifically objective B.1 which promotes permanent faci lities for exhibition, performance, rehearsal, discussion, or teaching of visual and performing arts and cultural endeavors; and objective B.3 which encourages residents and visitors to practice, participate, attend and observe artistic and cultural act ivities; and WHEREAS, Tenant operates the Premises as a performing arts facility, including without li mitation, theater and musical performances, rehearsal, discussions and teaching performing arts and as a visual arts incubator and exhibit/education center within 9,400 square feet; and WHEREAS, Tenant desires to continue operating a t heater, art center, and visual arts education at t he Premises; and -1 - July 27, 2021 Item #6 Page 11 of 57 WHEREAS, Tenant's continued operation of the Premises as a civic resource on behalf of the City of Carlsbad furthers the Tenant's mission and benefits Carlsbad and the community at large; and WHEREAS, Landlord is willing to lease the Premises to Tenant for the term and upon the covenants, conditions and provisions hereinafter set forth. AGREEMENT NOW THEREFORE, the Parties hereby incorporate the above Recitals as though fully set forth into this Agreement and in consideration of the covenants, conditions and provisions contained herein, the parties hereto do mutually agree as follows: ARTICLE 1 BASIC LEASE PROVISIONS 1.1 Trade Name. New Village Arts ("Trade Name"). 1.2 Premises. The Premises (defined above) are commonly known as 2787 State Street, Carlsbad, California, 92008, and consist of a freestanding 9,400 square foot commercial building. 1.3 Term and Rent Commencement. The term of this Lease shall be approximately ten (10) years, commencing upon the date when this Lease has been executed by both parties (the "Commencement Date"), and expiring, unless sooner terminated in accordance with this Lease, upon the date that is ten (10) years after t he Commencement Date {the "Expiration Date"), subject to the two five-year extension options set forth in Section 3.2 below. As used in this Lease, "Lease Year" means each twelve (12) month period (or portion thereof) during the Term commencing with the Commencement Date. The Term of the Subsequent Agreement dated April 9, 2019 shall expire upon the Commencement Date of this Lease. 1.4 Base Rent. (a) Tenant agrees to pay Landlord the sum of one dollar ($1.00) per year. Tenant shall commence paying rent under this Lease on the Commencement Date. Tenant shall pay to Landlord the sum of $1.00 for t he first full year concurrently with execution of this Lease. (b) Rent shall be delivered to the Finance Department of the City of Carlsbad at 1635 Faraday Avenue, Carlsbad, California 92008. The designated place of payment and filing may be changed at any time by Landlord upon ten (10) days written notice to Tenant. Tenant assumes all risk of loss if payments are made by mail. -2 - July 27, 2021 Item #6 Page 12 of 57 1.5 Use of Premises. It is expressly agreed that the Premises shall be used by Tenant solely and exclusively for the purpose of a community theater for live t heater and music productions, art gallery, art exhibitions, readings, workshops, seminars, classes, lect ures, galas or festivals, fundraisers, community meetings, film screenings, performing arts, concessions, and other similar special programs by other groups which are related and consistent with the aforementioned uses and open to the general public, and for such other related or incidental purposes as may be first approved in writing by City, and for no other purpose whatsoever. Tenant covenants and agrees to use the Premises for the above specified purposes and related activities, and to diligently pursue said purposes throughout the term hereof. In t he event that Tenant fails to continuously use the Premises for said purposes or uses the Premises for purposes not expressly authorized herein, the Tenant shall be deemed in default under this Lease. ("Permitted Use"). 1.6 Tenant Improvement Allowance. None, except as provided in Section 12.1. 1.7 Security Deposit. Landlord is currently holding a security deposit from Tenant in the amount of $2,000. 1.8 Guarantor. None. 1.9 Broker{s). None. 1.10 Tenant's Address for Notices: New Village Arts Attn: Kristianne Kurner 2787 State Street Carlsbad, CA 92008 1.11 Landlord's Address for Notices: City of Carlsbad Real Estate Manager 3096 Harding Street Carlsbad, CA 92008 With a copy to: Chy of Carlsbad City Attorney's Office 1200 Carlsbad Village Drive Carlsbad, CA 92008 -3 - July 27, 2021 Item #6 Page 13 of 57 1.12 Landlord's Address for Rent Payments: Finance Department City of Carlsbad 1635 Faraday Avenue Carlsbad, CA 92008 This Article 1 is intended to supplement and/or summarize the provisions set forth in the balance of this Lease. If there is any conflict between any provisions contained in this ARTICLE 1 and the balance of this Lease, the balance of this Lease shall control. ARTICLE 2 PREMISES 2.1 Lease of Premises. Landlord leases to Tenant and Tenant leases from Landlord the Premises describe_d in ARTICLE 1 for the Term (as defined in ARTICLE 3 below) and pursuant to all of the terms, covenants and conditions contained herein. Any statement of square footage set forth in this Lease, or that may have been used in ca lculating Base Rent, is an approximation which Landlord and Tenant agree is reasonable and the Base Rent based thereon is not subject to revision whether or not the actual square footage is more or less. 2.2 Condition of the Premises. Tenant acknowledges that except as otherwise expressly provided herein it shall accept the Premises in its "AS IS" condition, without representation, warranty or any improvements by Landlord. Lahdlord makes no representations or warranties with respect to this Lease, the Premises or any property therein or with respect to any matter related thereto, other than as expressly set forth in this Lease. Tenant hereby acknowledges that it has had an opportunity to investigate and inspect the condition of the Premises and the suitability of same for Tenant's purposes, and Tenant does hereby (a) waive and disclaim any objection to, cause of action based upon, or claim that its obligations hereunder should be reduced or limited because of the condition of the Premises or the suitability of same for Tenant's purposes and {b) acknowledge t hat the Premises are in good, clean and sanitary order and repair and by taking possession Tenant accepts the Premises as it exists. Tenant acknowledges that neither Landlord nor any agent nor any employee of Landlord has made any representations or warranty with respect to the Premises or with respect to the suitability of either for the conduct of Tenant's business and Tenant expressly warrants and represents that Tenant has relied solely on its own investigation and inspection of the Premises in its decision to enter into this Lease and let the Premises in an "AS IS" condition and is not relying on any statements, representations or warranties whatsoever made by or enforceable directly or indirectly against Landlord relating to t he condition, operations, dimensions, descriptions, soil condition, suitability, compliance or lack of compliance with any state, federal, county or local law, ordinance, order, permit or regulation, or any other attribute or matter of or relating to the Premises. No promise of Landlord to alter, remodel, repa ir or -4 - July 27, 2021 Item #6 Page 14 of 57 improve the Premises, and no representation, express or implied, respecting any matter relating to the Premises or this Lease (including, without limitation, the condition of the Premises) has been made to Tenant by Landlord or any agent of Landlord ot her than as may be contained herein, unless more particularly described in section 11.3. 2.3 · Delivery of Possession. Tenant currently has possession of the premises and is utilizing the premises consistent with section 1.5 supra. To continue in possession of the premises, Tenant shall not be entitled to continue possession of the Premises unless the Landlord has received from Tenant all of the following: (i) the Security Deposit, the first annual installment of Base Rent for the first year after the Commencement Date; and (ii} executed copies of policies of insurance or certificates or binders thereof as required under ARTICLE 9 below. Tenant shall pay to Landlord, upon its execution of this Lease, the sums SPE:Cified in clause (i) above and the items required in clause (ii) shall be provided within thirty (30) days of the execution of this Lease. 2.4 Easements. Landlord reserves to itself the right, from t ime to time, to grant such easements, rights and dedications affecting all or any part of the Premises as Landlord deems necessary or desirable, and to cause the recordation of parcel and subdivision maps and restrictions affecting all or any part of the Premises, so long as such easements, rights, dedications, maps and restrictions do not increase Tenant's obligations under this Lease, or interfere with Tenant's use of the Premises. Tenant shall sign any of the aforementioned documents upon Landlord's request and Tenant's failure to do so or breach of this Section shall constitute a material default under this Lease, unless the Tenant presents evidence that any of the described acts interfere with Tenant's reasonable use of the Premises. Tenant shall cooperate with and not oppose or object to Landlord's construction, development, subdivision and parcellation of any property adjacent to the Premises, providing the afore described acts do not interfere with Tenant's reasonable use of the Premises. 2.5 Existing Equipment. Landlord hereby grants Tenant the right to use any and all existing furniture and equipment ("Existing Equipment"), if any, used by the prior tenant, exempting in the definition of "prior tenant" the Tenant executing this Lease, of the Premises and located within the Premises on the Commencement Date that are owned by the Landlord. Tenant acknowledges that it shall accept the Existing Equipment in its "AS IS" condition, without representation or warranty by Landlord. Said right shall be coterminous with this Lease and upon such termination, the Existing Equipment shall be deemed to constitute part of the Premises and surrendered by Tenant to Landlord in good condition and repair, ordinary wear and tear and damage from casualty excepted. Landlord agrees and acknowledges that certain equipment and improvements, including without limitation, sound and lighting equipment, seats, costumes, props, office furniture, computers and printers, appliances, theatre rigging, scenic furniture and supplies, and tools and hardware ("Tenants Property") currently located in or on the premises is exclusively owned by Tenant and will be removed when the Tenant vacates the premises. -5 - July 27, 2021 Item #6 Page 15 of 57 2.6 Tenant's Intellectual Property. Tenant's intellectual property, including without limitation, the names, Logos and other customary intellectual property to "New Village Arts" and to "The Foundry"; educational materials development by Tenant, plays, music, choreography, all other intellectual property related to the preforming arts are the sole and exclusive property of the Tenant and the subtenants of the Foundry's right,_title and ownership of their respective visual and creative expression are the sole and exclusive property of each respective subtenant of the Foundry. ARTICLE 3 TERM 3.1 Term. The Term of this Lease ("Term") shall commence on the Commencement Date and shall expire, unless sooner terminated in accordance with this Lease, on the Expiration Date. After the Commencement Date, upon Landlord's request, Tenant shall promptly execute a Memorandum of Term Commencement in the form attached hereto as Exhibit B, which shall specify the Commencement Date and the Expiration Date. If Tenant fails to execute a Memorandum of Term Commencement, such failure shall not affect Tenant's obligation to commence paying rent upon the occurrence of the Commencement Date. The Term of the Subsequent Agreement dated April 9, 2019 shall expire upon the Commencement Date of this · Lease. 3.2 Extension Option(s). Tenant shall have two (2) options to request an extension of the Term for a period of five (5) years each (each an "Extension Term"), commencing upon the expiration of the Term or prior Extension Term, as applicable. Each option shall be exercisable only if Tenant is not in default or breach of any term, condition, covenant or provision of this Lease beyond any applicable notice and cure period. In order to exercise this option, Tenant must give written notice of its request to extend the term to the City Manager, or his/her designee, no later than one hundred and eighty (180) days prior to the commencement of the applicable Extension Term, but not more than two hundred seventy (270) days prior to the commencement of the applicable Extension Term (the "Extension Request)". If Tenant is not in default or breach of any term, condition or covenant of this Lease, the City Manager is authorized to confirm the Extension Term. The City Manager or his/her designee w ill notify the Tenant not later than sixty (60) days after receipt of such Extension Request whether such request will be granted. The City Manager, at its sole discretion, may approve or deny the extension of the Term of this Lease. In the event the City Manager is unable to consider the Extension Request in sufficient time as to provide Tenant with notice at least thirty (30) days prior to the Expiration Date, t hen the Term shall be automatically extended for a period not to exceed thirty (30) days, to allow additional time for notification of such approval or denial. 3.3 Surrender of Premises. On the Expi ration Date or on the sooner termination hereof, within a reasonable time, Tenant shall remove all of Tenant's Property from the Premises and peaceably surrender the Premises in accordance with the terms of this Section -6 - July 27, 2021 Item #6 Page 16 of 57 and in -good order, condition and repair, broom clean and free of debris, excepting only ordinary wear and tear, condemnation and any damage or destruction not caused by Tenant or any or any officer, employee, agent or invitee of Tenant. ."Ordinary wear and tear" shall not include any damage or deterioration that would have been prevented by good maintenance practice. Notwithstanding any other provision hereof, Tenant shall not remove (unless requested to by Landlord, in which case Tenant shall remove) all or any part of the Tenant Improvements, or any fixtures or equipment which cannot be removed without material damage to the Premises except as to Tenant's Property disclosed in section 2.1 supra. Unless otherwise elected by Landlord, such items shall remain upon and be surrendered with the Premises as a part thereof, without charge, at the expiration or termination of this Lease and shall then become the property of Landlord. Tenant shall repair, to the reasonable satisfaction of Landlord, any damage to the Premises caused by any removal, or by the use of the Premises or by any failure of Tenant to comply with the terms of this Lease (including, without limitation, provisions relating to Hazardous Substances). Notwithstanding the foregoing, Landlord acknowledges and agrees that Tenant shall only be obligated to return the property is the same or similar condition as when Tenant took possession of the Premises, exception normal wear and tear. Tenant shall promptly surrender all keys for the Premises to Landlord at the place then fixed for notices to Land lord and shall inform Landlord of the combinations on any locks and safes on t he Premises. The provisions of this Section shall survive termination of this Lease. 3.4 Holding Over. Tenant has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. The failure of Tenant to timely surrender the Premises in the condition required by Section 3.3 above shall constitute a holdover and shall not be considered a renewal of this Lease or an extension of the Term. In the event of any such holdover Base Rent shall immediately be increased to an amount equal to 150% of the Base Rent applicable during the month immediately preceding the expiration or termination. In addition to paying Landlord the increased Base Rent, Tenant shall defend, indemnify, protect and hold Landlord harmless from and against all claims, liability, damages, costs and expenses, including attorneys' fees and costs of defending t he same, incurred· by Landlord and arising directly or indirectly from Tenant's holding over in the Premises without Land lord's express written · consent, including (a} any rent payable by or any loss, cost or damages, including lost profits and loss of good will claimed by any prospective tenant of the Premises, and (b) Landlord's damages as a result of such prospective tenant's rescinding or refusing to enter into the prospective lease of the Premises as a direct or indirect result of Tenant's holding over. No action by Landlord other than Landlord's express written consent shall be construed as consent by Landlord to any holding over by Tenant. 3.5 Waiver of Relocation Benefits: Tenant waives any and all relocat ion benefits defined in the California Relocation Assistance Law (Government Code, Section 7260, et. seq.) in connection with this Lease (including, without limitation, any termination as a result of Land lord's delivery of a Disapproval Notice). -7 - July 27, 2021 Item #6 Page 17 of 57 ARTICLE 4 CONSTRUCTION OF TENANT IMPROVEMENT PROJECT 4.1 Construction: Construction of Tenant's Improvement Project (defined below} shall be as described in Exhibit C, which is attached and incorporated herein, and as more particularly described in the Final Plans for such work, which must be preapproved in writing by the Landlord. Tenant's Improvement Project is defined as consisting of Exterior Improvements, Interior Improvements, and installation of Solar Panels on the Premises, the combined total cost of which is estimated will exceed $2 million. Tenant shall be solely responsible for the construction of the Tenant Improvement Project and payment of the costs thereof, provided Tenant and Landlord agree to negotiate in good faith to reach agreement on a Construction and Reimbursement Agreement that will outline timelines for construction performance measures and construction milestones required for Tenant to receive partial reimbursement (the "Construction and Reimbursement Agreement"), in accordance with Article 11 below. Tenant's construction of the Tenant's Improvement Project shall commence promptly upon receipt of all necessary permits required for commencement (collectively, the "Building Permits"), and Tenant shall diligently prosecute completion of Tenant's Improvement Project in accordance with ARTICLE 12 below, and in accordance with the terms of the Construction and Reimbursement Agreement. ARTICLE 5 RENT 5.1 General Provisions. Unless provided herein to the contrary, Tenant shall pay all rent to Landlord at Landlord's Address for Rent Payments provided in Article 1 above. All rent shall be paid to Landlord in lawful money of the United States of America without demand therefor, and without deduction, offset or abatement of any kind, except as may be expressly provided for in this Lease. Rent for any partial year shall not be prorated. Tenant assumes all risk of loss if payments are made by mail. 5.2 Payment of Rent. For each year or partial year of the Term commencing on the Commencement Date (except as otherwise expressly provided herein), Tenant shall pay to Landlord the sum specified in Article 1 as Rent ("Rent") in advance as set forth herein. Tenant shall pay the first installment of Rent to Landlord concurrently with Tenant's execution of this Lease, and all subsequent installments of Rent shall be payable in advance on or before the first day of each calendar year. 5.3 Tenant Performance Standards (Program Reports). As additional consideration for the lease of the Premises, Tenant agrees to timely satisfy the Tenant Performance Standards as more particularly described in attached Exhibit D attached hereto and by this reference made a part of this Lease. Failure by Tenant to perform the Performance Standards as scheduled shall be deemed a default under this Lease. Tenant shall be required to provide Landlord with a written annual theater and operations report regarding all phases of Tenant's use and occupation of the Premises, which shall indicate whether Tenant is satisfying all -8 - July 27, 2021 Item #6 Page 18 of 57 conditions contained in the Tenant Performance Standards. Tenant shall submit said report to Landlord within forty~five {45) days after June 30th of each year ARTICLE 6 SECURITY DEPOSIT 6.1 Security Deposit . Landlord is currently holding a security deposit from Tenant ("Security Deposit") in the amount of $2,000, as provided in Section 1.7. Landlord shall continue to hold the Security Deposit as security for Tenant's faithful performance of all the terms, covenants, and conditions of this Lease. Landlord shall not be required to keep the Security Deposit separate from Landlord's general funds. Landlord shall have the right to commingle the Security Deposit with Landlord's general funds and to retain any and all interest and earnings on the Security Deposit. Tenant shall not be entitled to any interest on the Security Deposit. Subject to Landlord's right hereunder to apply the Security Deposit in accordance with this Section, the parties acknowledge that the Security Deposit does not cover any rent due hereunder, except as set forth in section 6.2 below. In the event of a sale of t he Premises or assignment of this Lease by Landlord to any person other than a mortgagee, Landlord shall have the right to transfer the Security Deposit to its vendee or assignee, subject to Tenant's aforesaid rights upon termination, and if Landlord transfers the Security Deposit to the vendee or assignee for t he benefit of Tenant, or if such vendee or assignee assumes all liability with respect to such Security Deposit, Landlord shall be considered released by Tenant from all liability for the return of such Security Deposit, and Tenant agrees to look solely to the new landlord for the return of the Security Deposit, and it is agreed that this Section 6.1 shall apply to every transfer or assignment to a new Landlord. The new Landlord shall in writing acknowledge receipt of the Secu rity Deposit and covenant and agree to be bound by this Lease including without limitation the return of the Security Deposits 6.2 Use of Security Deposit. If Tenant breaches or fails to perform any of Tenant's obligations under this Lease, Landlord shall have the right, but not the obligation, to use or retain all or any part of the Security Deposit to cure the breach or failure of performance, and to compensate Landlord for any damages sustained by Landlord, including but not limited to · payment of: (i) delinquent rent; (ii) interest on delinquent rent; (iii) late charges on delinquent rent; (iv) the cost of performing any of Tenant's obligations under this Lease; (v) the cost of repairing damages to the Premises; (vi) the cost of cleaning, maintaining, repairing, or restoring ; (vii) attorneys' and accountants' fees and disbursements and court costs, assuming Landlord is the prevailing party in any legal action to enforce this Lease; and (ix) interest on any and all of the above at the maximum lawful rate ("Remedy Rate") from the date due until paid; provided, however, that retention of all or any part of the Security Deposit shall not affect Tenant's obligations under this Lease or Landlord's other rights and remedies provided at law, in equity, or under this Lease; and provided, further, that in the event that Landlord elects to apply the Security Deposit or any portion thereof as herein provided, such application and the amounts applied to particular items of cure and/or compensation shall be determined by Landlord in Landlord's reasonable discretion. If any portion of the Security Deposit is used as provided for in this Section, then within thirty (30) days after written demand by Landlord, Tenant shall - 9 - July 27, 2021 Item #6 Page 19 of 57 deposit with Landlord sufficient cash to restore the Security Deposit to its original amount. Tenant's failure to make this deposit shall be a default under this Lease. Notwithstanding the foregoing, prior to Landlord electing to apply the Security Deposit or any portion thereof, Landlord must provide a written statement specifically identifying the breach of th is Lease, the remedy Landlord believes will correct the breach and the anticipated cost thirty (30) days prior to expending the Security Deposit, or any portion thereof ("Correction Demand"). If Tenant does not agre,e with the Correction Demand, Tenant must provide a written dispute statement {"Dispute Statement"). The Parties shall negotiate a resolution of the Dispute in good faith for thirty (30) days. If a mutually agreement is not reached within the thirty (30) day negotiation period, then either or both Parties have available to them all remedies available under this Lease and the law. 6.3 Refund; Waiver of Statutes. If Tenant shall have fully and faithfully performed all of Tenant's obligations under t his Lease (or upon the earlier termination without Tenant's fault), has cleaned and repaired any damage ca used by Tenant, and has received invoices for such repair or cleaning costs, if any, and after Landlord has inspected the Premises, then Landlord shall return the Security Deposit or any balance thereof to Tenant. Notwithstanding anything to the contrary contained herein, the Security Deposit may be retained and applied by Landlord (a) to offset rent which is unpaid either before or after the termination of this Lease, and (b) subject to the provisions of Section 6.2 of this Lease, against other damages suffered by Landlord before or after the termination of this Lease, whether foreseeable or unforeseeable, caused by t he act or omission of Tenant or any officer, employee, agent or invitee of Tenant. ARTICLE 7 TAXES 7.1 Real Estate Taxes. Tenant shall pay directly prior to delinquency any and all real estate taxes, assessments (whether general, special, ordinary or extraordinary), possessory interest taxes, improvement bonds, license fees, commercial rental taxes, sewer and water rents and other levies, fees and charges of every kind imposed by any authority having the direct or indirect power to so tax, levy or assess ,to the extent relating to the Premises, to Landlord's gross receipts or revenues from the Premises, or to the business or other activities of Tenant upon or in connection with the Premises {individually and collectively, "Real Estate Taxes"). In particular, Tenant acknowledges that this Lease may result in a taxable possessory interest. Tenant shall be solely responsible for the payment of Real Estate Taxes associated with its occupancy of the Premises, if any apply. Tenant shall also pay any fees imposed by law for licenses or permits for any business or activities of Tenant upon the Premises or under this Lease. 7.2 Personal Property Taxes. Tenant shall pay directly prior to delinquency any and all taxes and assessments levied or assessed during the Term upon or against (i) Tenant's Property (as hereinafter defined), furniture, equipment, and any other personal property installed or located in the Premises and (ii) all above-standard alterations, additions, -10 - July 27, 2021 Item #6 Page 20 of 57 betterments, or improvements of whatever kind or nature made by Tenant to t he Premises that are separately assessed. ARTICLE 8 UTILITIES 8.1 Payment of Utilities. Tenant shall pay, before delinquency, for all utilities and services serving the Premises, including {without limitation) trash collection, water, gas and electricity, and any and all utility hook-up fees, connection fees, including sewer connection fees, and service and other ch;:uges for t he availability of any such utilities and services, supplied to or consumed in or upon the Premises from and after the Term Commencement Date and continuously thereafter throughout the Term, directly to the supplier of such utilities and services. Upon Landlord's request, Tenant shall deliver to Landlord copies of all bills for utilities supplied to the Premises for the past twelve {12) month period within Sixty (60) days after Landlord's request. 8.2 Interruption of Utilities. Landlord shall have t he right (but not the obligation), with reasonable prior notice to Tenant, or without notice in the case of an emergency, to shut off water, gas, electricity and any all ot her utilities and services whenever such discontinuance is necessary to make repairs or alterations or to protect the Premises. In no event shall Landlord be liable for the quality, quantity, failure or interruption of any such utilities or services to the Premises, unless due to t he negligence of Land lord or caused by Landlord's construction in, on or around adjacent properties. In addition, any such failure, interruption or impairment shall not be construed as an eviction of Tenant or a disturbance of Tenant's possession, and Tenant shall not be entitled to any abatement of rent, unless due to the negligence of Landlord or caused by Landlord's construction in, on or around adjacent properties. ARTICLE 9 INSURANCE 9.1 General. Tenant shall, at its expense, maintain in effect from and after the Term Commencement Date and continuously thereafter until the termination or expiration of this Lease, the policies of insurance required under this Article. All policies that Tenant is required to obtain under this Article shall be issued by companies licensed to do business in California with a general policyholder's rating of not less than "A-" and a financing rating of not less than Class "VIII", as rated by the most current available "Best's" Insurance Reports and shall be in a form (without any additions or deletions unless approved in writing by Landlord) and underwritten by companies acceptable to Landlord. On or before the Term Commencement Date, Tenant shall furnish Landlord with certificates and endorsements in a form acceptable to Landlord evidencing that {i) the policies (or a binder thereof) required pursuant to this Article are in effect and (ii) Landlord shall be notified in writing thirty (30) days prior to cancellation, material change, or nonrenewal of such insurance (or if Tenant's insurance carrier will not agree to provide notice of cancellation, material change, or nonrenewal to any additional insured or other entity, then Tenant shall deliver such notice to Landlord thirty (30) days prior to any cancellation, material change, or nonrenewal initiated by Tenant, or twenty {20) days -11 - July 27, 2021 Item #6 Page 21 of 57 after receipt of notification such cancellation, material change or nonrenewal not initiated by Tenant). The policies that Tenant is required to obtain pursuant to this Article shall name Landlord, and any other parties requested by Landlord in accordance with commercially reasonable practices, as add itional insureds, or as loss payee (as applicable) for property in which Landlord has an insurable interest ~nd shall be primary policies, and shall not be contributing with and shall be in excess of coverage which Landlord may have and shall be unaffected by any insurance or self-insurance Landlord may have regardless of whether any other insurance names Landlord as an insured or whether such insurance stands primary or secondary. If Tenant carries any of the insurance required hereunder in the form of a blanket policy, any certificate required hereunder shall make specific reference to the Premises. The procuring of policies of insurance shall not be construed to limit Tenant's liability hereunder in. any way, nor to fulfill the indemnification provisions and requirements of this Lease. Tenant agrees not to use the Premises in any manner, other than the Permitted Use generally, that will result in the cancellation of any insurance Landlord may have on the Premises, or on adjacent premises, or that will cause cancellation of any other insurance coverage for the Premises, or adjoining premises. Tenant further agrees not to keep on the Premises or permit to be kept, used, or sold thereon, anything prohibited by any fire or other insurance policy covering the Premises. Tenant shall, at its sole cost and expense, comply with any and all requirements, in regard to Premises, of any insurance organization necessary for maintaining fire and other insurance coverage at reasonable cost. 9.2 Commercial General Liability Insurance. Tenant shall obtain and keep in force a policy or policies of commercial general liability insurance covering the Premises and the business operations thereon, including contractual liability, personal injury and property liability coverage in amounts not less than a combined single limit of $2,000,000 per occurrence for bodily injury, personal injury, and death and property damage liability. If the submitted policies contain aggregate limits, general aggregate limits will apply separately under this Lease or the general aggregate will be twice the required per occurrence limits. Liability coverage for the required limits may be obtained with a combination of commercial general liability insurance and an umbrella policy. Such policy or policies shall include liquor liability coverage in the same limits and under the same conditions as Tenant's general liability insurance, if the sale of alcoholic beverages is permitted in the Premises. 9.3 Property and Extended Coverage Insurance. Tenant shall obtain and keep in force a Causes of Loss -Special Form property insurance policy (formerly known as "all risks"), including vandalism, malicious mischief, earthquake and sprinkler leakage coverage, covering one hundred percent (100%) of the replacement cost of the Prem ises, all Tenant's Property and any and all Tenant Improvements made in or upon the Premises, with an inflation rider or endorsement attached thereto and twelve (12) months' business income (business interruption) insurance rider or endorsement attached thereto. Tenant shall keep in force a policy of plate glass insurance covering all plate glass in the Premises in an amount equal to the full replacement cost thereof. The deductibles on such policies shall not exceed $10,000.00 per occurrence. The proceeds from any such insurance shall be used by Tenant for the -12 - July 27, 2021 Item #6 Page 22 of 57 replacement of the Premises, personal property and trade fixtures as well as alterations and utility installations. 9.4 Business Interruption. Tenant shall obtain and keep in force loss of income and extra expense insurance in amounts as will reimburse Tenant for at least twelve {12) months' direct and indirect loss of earnings attributable to all perils commonly insured against by prudent tenants in the business of Tenant or attributable to prevention of access to the Premises as a result of such perils. 9.5 Workers' Compensation Insurance. Tenant shall obtain and keep in force workers' compensation and employer's liability insurance covering all employees of Tenant engaged on or with respect to the Premises, affording applicable statutory limits for workers' compensation coverage and at least $1,000,000.00 in limits for employer's liability coverage. 9.6 Waiver of Subrogation. Notwithstanding anything to the contrary contained herein, Landlord and Tenant hereby waive any rights each may have against the other on account of any loss or damage occasioned to Landlord or Tenant, their respective property, the Premises or its contents, arising from any risk to the extent covered by the insurance required here under. The foregoing waiver shall also apply to any deductible, as if the same were a part of the insurance recovery. The parties each, on behalf of their respective insurance companies insuring the property of either Landlord or Tenant against any such loss, waive any right of subrogation that it may have against Landlord or Tenant, as the case may be. Each party shall obtain any special endorsements, if required by its insurer, whereby the insurer waives its rights of subrogation against the other party. The foregoing waivers of subrogation shall be operative only so long as available without invalidating either Landlord's or Tenant's policy of insurance. 9.7 Coverage Changes. Notwithstanding any of the foregoing, Landlord shall retain the right at any t ime to review the coverage, form, and amount of the insurance requ ired under this Lease. If, in the reasonable, and within the commercially standard, opinion of Landlord, the insurance provisions in t his Lease do not provide adequate protection for Landlord and/or for members of the public using the Premises, Landlord may require Tenant to obtain insurance sufficient in coverage, form and amount to provide adequate protection. Landlord's requirements shall be reasonable but shall be designed to assure protection from and against the kind and extent of risk which exists at the time a change in insurance is requested. Thirty {30) days prior to the effective date of any requested changes to insurance coverage, Landlord shall notify Tenant in writing of the requested changes in the insurance requirements, with the factual and legal findings upon which such changes are requested. After receipt of Landlord's request for insurance coverage changes, the Tenant shall have thirty (30) days to object to such additional coverage or agree to obtain said coverage. If Tenant objects to said coverage, then the Landlord and the Tenant agree to meet and negotiate in good faith to resolve the differences. Within thirty (30) days after a written agreement between the Parties regarding the insurance coverages to be obtained, Tenant shall deposit certificates/endorsements evidencing acceptable insurance policies with Landlord. -13 - July 27, 2021 Item #6 Page 23 of 57 ARTICLE 10 USE OF PREMISES 10.1 Permitted Use and Continuous Operation. Tenant shall actively and continuously use, operate and occupy the Premises solely for the Permitted Use, and shall be open to the public during Tenant's Business Hours. No other use shall be permitted without the prior express written consent of Landlord. Tenant shall identify itself to the public in connection with such business under the Trade Name specified in Article 1 above and under no other name without Landlord's prior express written consent, which shall not be unreasonably withheld. Notwithstanding anything to the contrary contained in this Lease, with prior written notice to Landlord {except in emergency situations, when notice shall be given as soon as reasonably possible), the Premises may be closed to the extent reasonably necessary due to Force Majeure or required maintenance. 10.2 · Conduct of Business. Tenant shall conduct its business at all t imes in a professional and businesslike manner consistent with reputable business standards and practices applicable to a California public nonprofit corporation operating as a 501C3 exempt organization. If there is a conflict between any provision of this Lease or Landlord's ordinances, as amended from time to time, and Local, State or Federal Statutes and Regulations {"Statutes") as they pertain to the operation of a Public Non-Profit 501(c}(3} organization, as amended from time to time, related to the operation of such entity, then the Statutes shall control. 10.3 Compliance with Laws; Nuisance. Tenant shall, at its sole expense and at all times, comply fully with (i) all federal, state and local laws except as otherwise provided in section 9.2 supra, including without limitation all applicable health orders, zoning and land use laws and ordinances, conditional use permit rules and orders and the Liquor Licenses, now in force or which may hereafter apply to the Premises or which impose any duty on Landlord or Tenant relating to the use or occupancy of the Premises {including but not limited to the obligation (a) to alter, maintain, repair or restore any portion of the Premises to the extent required as a result of Tenant's use of the Premises, or (b) to alter, maintain, repair or restore the portion of the Premises which Tenant is responsible to maintain, repair or restore pursuant to this Lease}; (ii) any declaration of covenants, conditions and restrictions and easements encumbering the Premises; (iii} any commercially reasonably rules and regulations prescribed by Landlord for the Premises {"Tenant Performance Standards"); and (iv) any and all requirements and recommendations of any insurance organization or company necessary for the maintenance of reasonable fire and public liability insurance covering the Premises. Tenant shall not store, use or sell any article in or about the Premises, nor permit any act, which would cause the premiums for insurance to significantly increase or cause a cancellation of any policy upon the Premises or any loss of coverage under any such policy. Tenant shall not occupy, suffer or permit the Premises or any part thereof to be used for any illegal, immoral or dangerous purpose, or in any other way contrary to the law or the rules or regulations of any public authority. Tenant shall not commit, or suffer to be committed, any waste upon the -14 - July 27, 2021 Item #6 Page 24 of 57 Premises, or any public or private nuisance, or any other act or thing which may disturb the quiet enjoyment of neighbors of the Premises. Tenant shall not conduct or permit to be conducted any sale by auction in, upon or on the Premises, unless related to Tenant's Permitted Use. 10.4 Environmental Compliance. Tenant represents, warrants and covenants to Landlord that: (a) Tenant and its agents, employees, contractors, affiliates, sublessees and invitees (collectively, "Tenant Parties") shall at no time use, or permit the Premises to be used, in violation of any federal, state or local law, ordinance or regulation relating to the environmental conditions on, under or about the Premises, including, but not limited to, air quality, soil and surface and subsurface water conditions; and (b) the Tenant Parties shall not cause or permit any Hazardous Substance to be used, stored, spilled or released in, on, under or about the Premises (except for supplies typically used in the ordinary course of t he Permitted Use in commercially reasonable amounts and in strict compliance with law) and shal l promptly, at Tenant's sole expense, take all investigatory and/or remedial action reasonably recommended by Tenant's investigation, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises and neighboring properties, that was caused or materially contributed to by any Tenant Party, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or for any Tenant Party. Tenant has no obligation to investigate unless Tenant has knowledge that an environmental compliance requirement has been violated by Tenant Parties. Tenant shall assume sole and .full responsibility and cost to remedy any such violations by any Tenant Parties and shall protect, indemnify, defend and hold harmless Landlord from all actions (including, without limitation, remedial or enforcement actions of any kind, and administrative or judicial proceedings and orders or judgments), costs, claims, damages {including, without limitation, punitive damages), expenses (incl uding, without limitation, attorneys', consultants' and experts' fees, court costs) amounts paid in settlement, fines, forfeitures or other civil, administrative or criminal penalties, injunctive or other relief, liabilities or losses in any way arising or resulting from a breach of this paragraph. Upon expiration or earlier termination of this Lease, Tenant shall cause any Hazardous Substance arising out of or related to the use or occupancy of the Premises by any Tenant Party to be removed from the Premises and the Parcel and properly transported for use, storage or disposal in accordance with all applicable laws, regulations and ordinances. Tenant has no obligation hereunder for any breach of the environmental compliance created or caused by the Landlord, prior owners or prior tenants, and/or by the agents, employees, contractors, affiliates, sublessees and invitees of said owners, occupants, or users of the Premises. Landlord shall be solely responsible for the breach of the environmental compliance requirements which occurred prior to the term of the Lease. The term "Hazardous Substance" as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials expected to be on the Premises, is either : {i) potentially injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any government authority, or {iii) a basis for potential liability of Landlord to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be -15 - July 27, 2021 Item #6 Page 25 of 57 limited to, asbestos, asbestos containing material, the group of organic compounds known as polychlorinated biphenyls, as well as substances defined as "hazardous substances" or "toxic substances" under State, local or federal laws or regulations, as they be enacted or promulgated from time to time. 10.5 Landlord's Right of Entry. Landlord, at reasonable times, may go into the Premises without any liability for the purposes of: {i) inspecting the Premises; (ii) inspecting the performance by Tenant of the terms and conditions hereof; {iii) showing the 'Premises to prospective tenants, purchasers, partners, or mortgagees; and {iv) posting notices for the protection of Landlord on the Premises. Except in the case of an emergency, Landlord shall give Tenant reasonable written notice of at least 72 hours of any and all intended entries or inspections pursuant to this Section. 10.6 Prohibition Against Discrimination. Tenant shall not discriminate against or segregate any person or class of persons by reason of sex, color, race, religion or national origin. If the use provided for in this Lease allows Tenant to offer accommodations or services to the public, such accommodations or services shall be offered by Tenant to the public on fair and reasonable terms. ARTICLE 11 MAINTENANCE AND REPAIR OF PREMISES 11.1 Tenant's Inspection. Tenant accepts the Premises in its "AS IS" condition as further provided in Section 2.2 above, except as to the conditions previously disclosed by Tenant to Landlord and Tenant expressly waives all implied warranties includ ing implied warranties of merchantability and fitness, if any. Tenant hereby waives all rights under Sections 1941 and 1942 of the California Civil Code, as amended or recodified from time to time, or any similar provision, permitting Tenant to make repairs at the expense of Landlord. Tenant represents and warrants that it is familiar with the condition of the Premises, except for any hidden and not visible conditions, including conditions set forth in Article 9. Tenant understands and acknowledges that the Premises may be subject to earthquake, fire, floods, erosion, high water table, dangerous underground soil and water conditions and similar · occurrences that may alter its condition or affect its suitability for any proposed use. Landlord shall have no responsibility or liability with respect to any such occurrence. 11.2 Tenant's Obligations. Except for Landlord's obligations as set forth in Section 11.3 below, from and after t he Term Commencement Date and continuously thereafter until the expiration or termination of this Lease, Tenant, at Tenant's sole expense, shall maintain the Premises for t he Permitted Use in a neat, clean and sanitary condition and repair, and make any necessary repairs and replacements to any portion of the Premises, including full responsibility for: {a) maintenance, repair and replacement of the interior and exterior of the building (except as provided in Section 10.3; however including, without limitation, (i) any structural portions of t he Premises to the extent affected by Tenant's Tenant Improvements, and {ii) any painting, plumbing, fixtures, windows and glass, custodial, flooring and appliances throughout the Term -16 - July 27, 2021 Item #6 Page 26 of 57 to maintain and preserve the Premises for the intended Use in a good, safe, healthy and sanitary condition satisfactory to landlord and in compliance with all applicable laws; and (b) keeping the Premises free and clear of trash, garbage and other fire hazards. The maintenance, repair and replacement obligations set forth in this paragraph are a material part of the consideration for this lease. 11.3 landlord's Obligations. From and after the Term Commencement Date and continuously thereafter until t he expiration or terminat ion of this lease, Landlord, at landlord's sole expense, shall keep in good order, condition and repair the foundations, exterior walls, roof mounted HVAC System, and roof of the Premises, except for {a) any damage thereto caused by any negligent act or omission of Tenant or its agents, contractors, subcontractors, employees or invitees, {b) any such portions of the Premises to the extent affected by any Tenant Improvements, and (c) any damage or destruction covered by insurance required to be maintained by Tenant. All repairs to be performed by Landlord shall be commenced and completed as soon as reasonably necessary after written notice from Tenant to Landlord. In cases of emergency, Tenant shall endeavor to give as much notice to landlord as is reasonable under the circumstances. 11.4 Landlord's Cure. Landlord shall have the right but not the duty, to enter, view, inspect, determine the condition of and protect its interests in, the Premises. If at any t ime Landlord determines t hat the Premises are not in the condition required by this Lease and the condition is the responsibility of the Tenant hereunder, then Tenant shall perform the necessary maintenance, repair and/or replacement work within ten (10) days or a commercially reasonable time related to the specific condition after written notice from Landlord. If Tenant fails to timely perform the necessary maintenance, repair and/or replacement work after written notice from landlord, then Landlord may, but is not obligated to, perform such obligations without liability to Tenant for any loss to Tenant's business that might arise by reason thereof. Tenant shall reimburse Landlord on demand in an amount equal to the cost incurred by Landlord in the performance of such obligations plus an administrative fee equal to ten percent {10%) of the cost incurred by landlord. landlord's rights reserved in this section shall not create any obligations or increase any obligations for Landlord elsewhere in this Lease. 11.5 Tenant's Cure. If at any time Tenant determines that the Premises are not in the condition required by t his Lease and the condition is the responsibility of the landlord hereunder, t hen the Landlord shall perform the necessary maintenance, repair and/or replacement work with ten (10) days or a commercially reasonable time related to the specific condition after written notice from the Tenant. If the Landlord fails to timely perform the necessary maintenance, repair and/or replacement work after written notice from Tenant, t hen Tenant may, but is not obligated to perform such obligations and compensate Tenant for any loss of business that might arise by reason thereof. landlord shall reimburse Tenant on demand in an amount equal to the cost incurred by Tenant in t he performance of such obligations. -17 - July 27, 2021 Item #6 Page 27 of 57 ARTICLE 12 ALTERATIONS AND ADDITIONS 12.1 Tenant shall complete the Tenant Improvement Project, described in ARTICLE 4, and Landlord will reimburse Tenant up to $103,000 for installation of Solar Panels on t he Premises and up to $470,000 for Exterior Improvements of the Premises, in accordance with the terms and conditions the Construction and Reimbursement Agreement, which shall be negotiated and executed by the Parties subsequent to execution of this Lease. The Parties will negotiate in good faith to agree upon the terms for the Construction and Reimbursement Agreement, which may be executed by the City Manager on behalf of the Landlord. The City shall have no obligation to provide reimbursement of the Tenant Improvement Project, except as provided by the Construction and Reimbursement Agreement. 12.2 Tenant Improvements. Tenant shall not commence or make (i) any alterations, emergency repairs or replacements, improvements, additions or utility installations, including without limit, carpeting, floor or window coverings, locks, air lines, power panels, electrical distribution systems, lighting fixtures, space heaters, air conditioning and plumbing in, on, or about the Premises or (ii) any change or alteration to the exterior of t he Premises (collectively "Tenant Improvements") . without Landlord's prior written consent, which shall not be unreasonably withheld, conditioned or delayed, except improvements related to the Use of the Premises, including without limitation, theater productions, visual arts space or shows, and related requirements for a performing, visual arts and education use. If Te_nant makes any Tenant Improvements without the prior written approval of Landlord except as set forth in this subsection, Landlord shall have the right to require that Tenant remove any or all of such Tenant Improvements, and repair and restore any damage to the Premises caused by such removal at Tenant's sole expense, and shall also have the right to declare Tenant in default and to terminate this Lease. Any and all Tenant Improvements shall at all t imes comply fu lly with all applicable federal, state and municipal laws, ordinances, regulations, codes and other governmental requirements now or hereafter in force and Tenant shall, at Tenant's sole cost and expense, take all actions now or hereafter necessary to ensure such compliance. Tenant shall provide Landlord with a written request for approval of any Tenant Improvements, including the Tenant Improvement Project, that Tenant would like to make with proposed detailed plans, if applicable in light of proposed work. Landlord shall have the right to condition Landlord's prior written consent upon Tenant's: (i) obtaining a building permit (if necessary) and complying with all building and planning laws and regulations for the Tenant Improvements from appropriate governmental agencies; (ii) furnishing a copy of such building permit and evidence of such compliance to Land lord prior to t he commencement of such work; (iii) complying with all the conditions of such building permit and such building and planning laws and regulations; (iv) providing Landlord with plans and specifications for any Tenant Improvements (if reasonable in light of the nature of the proposed work) for Landlord's prior written approval; (v) providing Landlord with a copy of the construction contract, construction schedule, trade payment breakdown and list of subcontractors and suppliers for Landlord's -18 - July 27, 2021 Item #6 Page 28 of 57 prior written approval, except Landlord acknowledges, understands and agrees that such work may be performed by volunteers of the nonprofit so long as Tenant complies with the Prevailing Wage Laws in Section 11.5; (vi) obtaining a builder's "all risk" insurance policy, if applicable, in an amount and issued by insurance company acceptable to Landlord, naming Landlord as an additional insured and otherwise satisfying the requirements of ARTICLE 9 above; and/or (vii) providing Landlord with at least ten (10) days written notice prior to commencing any such work, unless it is an emergency. In its capacity as a landlord (and not as the approving agency), Landlord's approval of the plans, specifications and working drawings for any Tenant Improvements shall create no responsibility or liability on the part of Landlord for their completeness, design sufficiency, or compliance with all laws, rules and regulations of governmental agencies or authorities. Landlord shall not be liable for any damage, loss, or prejudice suffered or claimed by Tenant, its agents or any other person or entity on account of: (a) the approval or disapproval of any plans, contracts, bonds, contractors, sureties or matters by Landlord in its capacity as a landlord (and not as t he approving agency); {b) the construction or performance of any work whether or not pursuant to approved plans; (c) the improvement of any portion of the Premises or alteration or modification to any portion of the Premises, except as stated in this subsection; or (d) the enforcement or failure to enforce any of the covenants, conditions and restrictions contained in this Lease. Under no circumstances shall Tenant make any roof penetrations without the prior written consent of Landlord. Any consent of Landlord shall be conditioned upon Landlord's review and approval of plans satisfactory to Landlord for the repair of the roof. Any roof penetrations may be inspected by Landlord's roofing contractor, and Tenant shall reimburse Landlord for the cost of such inspection and any necessary repair work within ten (10) days after Tenant's receipt of an invoice therefor. 12.3 Construction of Tenant Improvements; Liens. Tenant shall pay when due all claims for labor or materials furnished or alleged t o have been furnished to or for Tenant at, on, or for use in the Premises, and shall defend, indemnify, protect and hold harmless the Premises and Landlord against the same (including, without limitation, the costs of defending against such claims, and reasonable attorney's fees incurred therein). Tenant shall keep the Premises and any interest therein, free and clear of all mechanics' liens and all other liens. Tenant shall give Landlord immediate written notice of any lien filed against the Premises or any interest therein related to or arising from work performed by or for Tenant. Tenant shall give Landlord not less than ten (10) days' prior written notice of the commencement of any Tenant Improvements in the Premises, except as set forth in this Article, and Landlord shall have the right to post notices of nonresponsibility in or upon the Premises as provided by law. If any lien or levy of any nature whatsoever is filed against the Premises or Tenant's leasehold interest, then upon Landlord's request, Tenant shal l furnish to landlord a corporate surety bond, satisfactory to Landlord, in an amount equal to one and one-half (1 ½) times the amount of the claims upon which such lien or levy has been filed. Such bond shall be acknowledged by Tenant as principal and by a corporation, licensed by the Insurance Commissioner of t he Stat e of California to transact the business of a fidelity and surety insurance company, as surety. Landlord shall have the right to declare this Lease in default in t he event the bond required by this paragraph has not been deposited with Landlord within thirty (30) days after written request has been delivered to Tenant. -19 - July 27, 2021 Item #6 Page 29 of 57 12.4 Title to Tenant Improvements. Subject to Section 13.1 below and to the exceptions contained in this lease, upon the expiration or earlier termination of this lease, any and all Tenant Improvements, including the Tenant Improvement Project, which may be made in or upon the Premises shall become the property of landlord and remain upon and be surrendered with the Premises at the expiration of the Term without compensation to Tenant unless Landlord requires that Tenant remove any Tenant Improvements pursuant to ARTICLE 14 below. 12.5 Signs. Tenant shall be responsible for purchasing, installing and maintaining, at Tenant's sole cost, any new exterior signage in accordance with the signage regulations set forth by the City of Carlsbad and any other sign criteria provided by Landlord (collectively, "Sign Criteria") and which has received l andlord's prior written consent. In accordance with the Sign Criteria, Tenant shall maintain such signage in good condition and repair during the entire Term of this lease. Tenant shall repair, at its sole cost and expense, any damage to t he Premises caused by the erection, maintenance or removal of any sign, marquee, banner, awning, decoration or other attachment. 12.6 Compliance with Prevailing Wage Laws. Tenant acknowledges and agrees that: (a) any construction, alteration, demolition, installation or repair work performed under this Lease constitutes "public work" under California Prevailing Wage Law, including Labor Code sections 1720 through 1815, et seq. (the "PWL"), and will obligate Tenant to cause such work to be performed as a "public work," including, but not limited to, the payment of applicable prevailing wages to t he all persons or entities subject to the PWL; (b) Tenant shall cause all persons and/ or entities performing "public work" under this lease to comply with all applicable provisions of the PW; {c) in no event shall Landlord be responsible for Tenant's failure to comply with any applicable provisions of the PWL. ; (d) Tenant's violations of the PWL shall constitute an event of default under this Lease, and {e) Tenant shall defend and indemnify landlord and its officers, employees, council members and agents from and against any and all claims, assessments, back-wages, penalties, change orders, suits, liability, judgments, damages, proceedings, orders, directives, and costs, including reasonable attorneys' fees, arising from or relating to any actual or alleged violations of the PWL, or other application of laws, ordinances or .regulations, by any person or entity, including but not limited to Tenant, performing construction, alteration, demolition, installation, repair and/ or any other type of work contemplated under this Lease. Notwithstanding t he foregoing, the Landlord acknowledges, understands and agrees that some work is performed by volunteers or employees of Tenant, therefore, this section does not apply to those entities or persons. ARTICLE 13 TENANT'S PROPERTY 13.1 Tenant's Property. All trade fixt ures, goods, inventory, merchandise, stock, supplies, decorat ive light fixtures, and movable equipment owned by Tenant and installed in the Premises at Tenant's sole cost and which may be removed without material damage to the -20 - July 27, 2021 Item #6 Page 30 of 57 Premises ("Tenant's Property") shall remain the property of Tenant during t he Term. Except as provided to the contrary in Section 12.4 above, Tenant's Property shal l be removable from time to time and at t he expiration of the Term or earlier termination thereof, provided that: (i) Tenant shall not at such time be in default, or with notice or the passage of time or bot h would be in default, under any term, covenant, condition or provision of t his Lease; (ii} Tenant shall repair to the satisfaction of Landlord, any damage to the Premises caused by the removal of Tenant's Property; 13.2 Land lord's Lien. Subject to the rights of Tenant, if any, under Section 9102(4) of the California Uniform Commercial Code, as amended or recodified from time to time, Tenant hereby grants to Landlord a security interest in and lien upon Tenant's Property and the proceeds thereof as security for Tenant's performance of all the terms, covenants, conditions, provisions and obligations under this Lease. Upon Landlord's request, Tenant shall execute a security agreement, UCC-1 financing statement, continuation statement and such other documents as Landlord may reasonably require to evidence, create, protect, perfect and preserve the validity and priority of La ndlord's lien upon and security interest in Tenant's Property. ARTICLE 14 DAMAGE AND DESTRUCTION 14.1 Repairs by Tenant. If the Premises are totally or partially damaged or destroyed, Tenant shall, within ninety (90) days, commence and diligently pursue to completion the repair, replacement or reconstruction of the Premises, and of all Tenant's Property and Tenant Improvements to the extent necessary to permit full use and occupancy of the Premises for the purposes provided in this Lease. Repair, replacement or reconstruction of the Premises shall be accomplished in a manner and according to plans approved by Landlord; provided, however, Tenant shall not be obligated to repair, reconstruct or replace the improvements following their destruction in whole or substantial part except to the extent the loss is covered by insurance required to be carried by Tenant pursuant to this Lease (or would be covered whether or not such required insurance is actually in effect), and except if Tenant is required to indemnify Landlord for such destruction pursuant to ARTICLE 16. If Tenant is not obligated and elects not to restore, repair or reconstr.uct as herein provided, then this Lease shall terminate and neither party shall have any further obligation to the other, except for Tenant's obligation to pay rent and other charges which are accrued and unpaid as of the termination date and other provisions that survive the termination of this Lease. Tenant hereby waives California Civil Code Sect ions 1932 and 1933, as amended or recodified from time t o time. 14.2 Termination Right. If the destruction to the Premises occurs during the last twelve (12) months of the Term and such destruction will require more than ninety (90} days to repair, then Tenant may elect to terminate this Lease provided that: (i) Tenant provides written notice to Land lord of such election to terminate wit hin sixty (60) days after occurrence of the destruct ion; (ii) at the time of delivery of the termination notice Tenant is not in default under this Lease beyond any applicable not ice and cure period; (iii) Tenant did not intentionally cause -21 - July 27, 2021 Item #6 Page 31 of 57 such destruction; (iv) all insurance requ ired of Tenant under this Lease was in effect as of the date the destruction occurred and Tenant assigns to Landlord all claims rights and proceeds relating to the applicable destruction. ARTICLE 15 · EMINENT DOMAIN 15.1 Total or Substantial Taking. If all of the Premises are taken under the power of eminent domain or such a substantial portion thereof is so taken that reasonable restoration will not result 'in the Premises being reasonably suitable for the conduct of Tenant's business, this Lease shall terminate on the date that Tenant is required to yield possession to the condemning authority, or on the date that the possession of the Premises or part thereof is taken, whichever is later. The term "eminent domain" shall include the exercise of any governmental power of condemnation and any private sale or other transfer in lieu of or under t hreat of condemnation. 15.2 Partial Taking. If there is a partial taking of the Premises, and after restoration of any building or other improvements, the Premises would be reasonably suitable for Tenant's continued occupancy and conduct of its business, then: (i) this Lease shall terminate as to the part taken as of the date of transfer of possession; (ii) rent shall be equitably reduced; and (iii) Landlord shall, at its own cost and expense, make all necessary repairs or alterations to the Premises required to restore the Premises to useful condition. During such repair or restoration, rent shall be equitably abated as set forth above and Landlord shall provide either (i) alternative space reasonably suitable for the use or pay to Tenant the loss income related to t he loss of use. Notwithstanding the foregoing, Landlord, at its sole option, may elect to terminate t his Lease by delivering written notice to Tenant within thirty (30) days after any such partial taking but before any modifications by reason of the partial taking to t he Premises with t he effective date for the termination of t his Lease and relinquishment of occupancy to occur not less t han ninety (90) days after delivery of the thirty (30) day notice, in lieu of restoring the Premises to useful condition as provided above, unless Tenant agrees to perform all such restoration work at Tenant's sole cost 15.3 Award. Tenant hereby renounces any interest in, and assigns to Landlord, any award made in any condemnation proceeding for any such taking, provided that Landlord shall have no interest in or be assigned any award made to Tenant for the taking of Tenant's Property, for Tenant's relocation expenses, loss of revenue costs or of existing contracts which obligate Tenants. ARTICLE 16 INDEMNIFICATION Tenant covenants and agrees to indemnify, protect, defend and hold. harmless Landlord and its agents, employees, officers, affiliates and representatives (collectively, "Landlord Parties") from and against any and all losses, claims, demands, damages (but not consequential damages unless awarded in favor of a third party), liabilities, actions, judgments, costs and -22 - July 27, 2021 Item #6 Page 32 of 57 expenses (including, without limitation, reasonable attorneys' fees) arising out of or resulting from (a) the negligent or willful acts or omissions of Tenant, its agents, contractors, subcontractors or employees, (b) any breach of any obligation, covenant, representation or warranty of Tenant under this Lease; or (c) the use and operation of the Premises during the Term. The foregoing shall not apply to any loss, claim, damage, liability, action, judgment, cost or expense to the extent arising out of or resulting from any negligence or willful misconduct of any Landlord Party. Tenant's obligations under this section shall survive t he expiration or termination of this Lease. ARTICLE 17 DEFAULTS AND REMEDIES 17.1 Events of Default. The occurrence of any of the following events shall constitute an event of default and a material breach of this Lease on the part of Tenant: 17.1.1 Abandonment or Failure to Continuously Operate. Tenant's vacation or abandonment of the Premises or Tenant's failure to actively and continuously use, operate and occupy the Premises, except as otherwise provided in this Lease. 17.1.2 Failure to Make Payment. Tenant's failure to pay any rent or other sum due hereunder on the date when such payment is due, where such failure continues for five (5) days after written notice of such failure from Landlord, or Tenant's failure on three (3) occasions during any twelve (12) month period to timely pay rent on or before the due date as provided for herein (even though subsequently cured). 17.1.3 Non~Permitted Use. Tenant's failure to comply with any provision of this Lease relating to the Permitted Use, where such failure continues for t hirty (30) days after written notice of such failure from Landlord. 17.1.4 Failure to Perform Other Covenants. Tenant's failure to perform any of Tenant's other covenants, agreements or obligations hereunder, where such failure continues for thirty (30) days after written notice of such failure from Landlord (provided, however, if the nature of such default is such that the same cannot be reasonably cured within a thirty (30) day period, Tenant shall not be deemed to be in default if Tenant diligently commences such cure within such period and thereafter diligently proceeds to rectify and cure said default), except if a different notice or cure period is specified in another provision of this Lease. If this subsection conflicts with any provision of this Lease, t he other provision controls. 17.1.S Bankruptcy. The making of a general assignment for the benefit of creditors by Tenant, or t he filing of a voluntary or involuntary bankruptcy petition by or against . Tenant, or the appointment of a receiver to take possession of all or substantially all of Tenant's assets or the Premises, or the attachment, execution or other judicial seizure of substant ially all of Tenant's assets or the Premises, or in the event Tenant becomes insolvent or fails to generally pay Tenant's debts as such debts become due. -23 - July 27, 2021 Item #6 Page 33 of 57 17.1.6 Transfer without Consent. The occurrence of any Transfer without Landlord's express prior written consent. 17.2 Remedies. Upon the occurrence of an event of default by Tenant as set forth in Section 17.1 above, Landlord shall have the following rights and remedies, in addition to any and all other rights and remedies available to Landlord at law or in equity, includ ing without limit those provided under California Civil Code Sections 1951.2 and 1951.4, as amended or recodified from time to time: A. Terminate Lease. Landlord shall have the right to terminate this Lease and all rights of Tenant hereunder by giving sixty days (60) day written notice to Tenant. If this Lease is so terminated, then Landlord may recover from Tenant: (i) the worth at the time of award of any unpaid rent that had been earned at the time of such termination;~ (ii) the worth at the t ime of award of t he amount by which the unpaid rent which would have been earned from the time of such terminat ion until the t ime of award exceeds the amount of such rental loss Tenant proves could have been reasonably avoided; 12.!fil {iii) the worth at t he time of award of the amount by which the unpaid rent for the balance of the Term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; 12.!fil (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease or which in the ordinary course of events would be likely to result therefrom, plus interest thereon at the Remedy Rate from the date incurred by Landlord until reimbursed in full. As used in Subsections (A)(i) and (ii) above, the "worth at the time of award" is computed by allowing interest at the Remedy Rate. As used in Subsection (A)(iii) above, the "worth at the time of award" is computed by discounting such amount at the discount rate of t he Federal Reserve Bank of San Francisco at the time of award plus one percent (1%). All amount s owing under this Subsection which are not paid when due shall bear interest at the Remedy Rate from the date owing until paid and such interest shall be compounded monthly. B. Reenter Premises. Landlord shall also termination of this Lease to reenter the Premises and to remove all Property from the Premises and store the Tenant's Property in a elsewhere at the cost of and for the account of Tenant. have the right upon persons and Tenant's public warehouse or C. Maintain Lease; Relet Premises; Tenant's Abandonment of Premises. This subsection shall apply if, and only if, Tenant abandons the Premises. landlord shall have the remedy described in California Civil Code Section 1951.4 as amended from time to time (lessor may continue lease in effect after Tenant's breach and abandonment and recover rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations). Unless Landlord elects to terminate this Lease as provided in Section 17.2{A) above, Landlord may from time to time, without terminating this Lease, either recover all rent as it becomes due or relet the Premises or any pa rt thereof for such term or terms and at such rental or rentals and upon such other terms and conditions as landlord in its -24 - July 27, 2021 Item #6 Page 34 of 57 sole discretion may deem advisable, with the right to clean and to make alterations and repairs to the Premises at Tenant's sole expense. If Landlord elects to relet as provided herein, then rent received by Landlord from such reletting shall be applied at Landlord's option: first, to the payment of any indebtedness otherthan rent due hereunder from Tenant to Landlord; second, to the payment of any cost of such reletting (including reasonable attorneys' fees, tenant improvements reasonable and customary to make the Premises ready to lease [including the removal of any specialized improvements installed by Tenant], court costs and brokerage commissions); t hird, to the payment of the cost of any cleaning, alterations and repairs to the Premises; fourth, to the payment of rent due and unpaid hereunder; and the balance, if any, shall be applied in payment of future rent as the same may become due and payable hereunder. If the portion of such rentals received from such reletting during any month which is applied to the payment of rent under the reletting lease is less than the rent payable during that month by Tenant hereunder, then Tenant shall pay any such deficiency to Landlord immediately upon demand by Landlord. Such deficiency shall be calculated monthly and Tenant shall pay such deficiency monthly. Tenant shall also pay to Landlord, upon Landlord's demand, the costs and expenses incurred by Landlord in such reletting, including reasonable attorneys' fees, court costs, tenant improvements customary to make the Premises ready to lease (including the removal of any specialized improvements installed by Tenant) and brokerage commissions and in making any alterations and repairs to the Premises to be. No reentry, acts of maintenance or preservation, efforts to relet, or taking possession of the Premises by Landlord or the appointment of a receiver upon initiative of Landlord to protect Landlord's interest under this Lease shall be construed as an election to terminate this Lease unless an express written notice of such intention is delivered to Tenant or unless the termination thereof is decreed by a court of · competent jurisdiction. Notwithstanding any reletting of the Premises without termination of this Lease by Landlord, Landlord may at any time after such reletting elect to terminate this Lease, in which case, Landlord shall have all the rights and remedies provided by law or equity or this Lease upon termination. D. Performance by Landlord. If Tenant breaches or fails to perform any of Tenant's obligations under this Lease and the breach or failure continues for thirty (30) days (or such shorter or longer time period as may be specified otherwise in this Lease) after Landlord gives Tenant written notice of the breach or failure, Landlord, without thereby waiving or curing such may, but shall not be obligated to, perform any such obligation for the account and at the expense of Tenant as provided in the Lease. Landlord also may, but shall not be obligated to, perform any such obligation for the account and at the expense of Tenant without notice in case of an emergency as provided in this Lease. E. Receiver on Behalf of Landlord. If, at the instance of Landlord in any legal action arising under this Lease, a receiver shall be appointed to take possession of the Premises or to collect the rents derived therefrom, then the receiver may, if it shall be -25 - July 27, 2021 Item #6 Page 35 of 57 necessary or convenient in order to collect such rents, conduct the business of Te nant then being carried on in the Premises, and may t ake possession of any Tenant's Property and other personal property and records used in Tenant's business and use the same in conducting such business, without compensation to Tenant for such use; however, nothing herein shall change the ownership of Tenants personal or intellectual property to the Receiver, the Landlord or any other entity or person. Tenant's personal or intellectual property shall remain in the ownership of Tenant. Neither application for, nor the appointment of a receiver shall be construed as an election by Landlord to terminate this Lease, unless express written notice of such election is given to Tenant. The fees and expenses of such receiver shall be charged to Tenant as Additional Rent, if ordered by the court in t he appointment of t he receiver. 17.3 Late Charges. Landlord and Tenant agree that the fixing of actual damages for Tenant's breach of any of the provisions of this Lease, including but not limited to the late payment by Tenant to Landlord of rent and other amounts due · hereunder, would cause Landlord to incur costs not contemplated by this Lease, the exact amount of which would be extremely difficult or impracticable to ascertain. The "other amounts due hereunder" shall not include contested charges as provided in this Lease. Such costs include but are not limited to accounting, processing, administrative, legal and clerica l charges and late charges which may be imposed upon Landlord by the terms of any Mortgage covering the Premises. Accordingly, if any installment of rent or any ot her sum due from Tenant hereunder has not been received by Landlord or Landlord's agent within fifteen {15) days after such amount was due, Tenant shall pay to Landlord a late charge equal to five percent (5%) of any such delinquent installment of rent or any ot her delinquent sum due from Tenant. Tenant hereby agrees that said late charge represents a fair and reasonable est imate of the cost Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall not constitute a waiver of Tenant's default with respect to such overdue amount nor prevent Landlord from exercising any other rights and remedies provided for in this Lease, at law or in equity. If a late charge is payable by Tenant whether or not collected, for three (3) installments of rent during any twelve (12) month period, then the Base Rent shall automatically become due and payable to Landlord quarterly in advance, notwithstanding any other provision of this Lease to t he contrary. 17.4 Interest on Past Due Obligations. Any and all amounts not paid to Landlord when due, shall bear interest, compounded monthly from the dat e due until paid at the rate of four percent (4%) per annum. Payment of such interest shal l not excuse or cure any default by Tenant under this Lease and shal l not affect any rights and remedies provided to Landlord in this Lease or at law or in equity, all of which shall be cumulative. Notwithstanding the foregoing, t he City Manager of the City of Carlsbad shall have the right, in its sole discretion, to waive for good cause any interest payment upon written application of Tenant for any such delinquency period. 17.5 Waiver of Redemption. Tenant hereby expressly waives any and all rights of redempt ion. granted by or under any present or future laws in the event of Tenant being evided or dispossessed for any cause, or in the event of Landlord obtaining possession of the Premises by reason of the violation by Tenant of any of the covenants and conditions of this -26 -. July 27, 2021 Item #6 Page 36 of 57 Lease or otherwise. The rights given to Landlord herein are in addition to any rights that may be given to Landlord by any statute or otherwise. 17.6 Landlord's Default. Landlord shall in no event be charged with default in the performance of any of its obligations hereunder unless and until Landlord shall have failed to perform such obligations and such failure continues for more than thirty {30) days (or such less or additional time as is reasonably necessary to correct any such failure as provided in this Lease) after landlord's receipt of written notice of such failure from Tenant. If Landlord fails to perform within the specified time period as to any repair, rehabilitation or maintenance of the Premises, then the Tenant may perform such repair, rehabilitation or maintenance then the Landlord will be obligated to reimburse Tenant within thirty {30) days of receipt of the written demand for payment from Landlord. 17.7 Tenant's Right to Terminate Lease without Cause. The Tenant shall have the right to terminate this Lease after the third full year of this Lease upon One Hundred Eighty (180) Days written notice to the Landlord. ARTICLE 18 SUBORDINATION AND ATTORNMENT 18.1 Subordination. This Lease is and shall be subordinate to any ground lease, mortgage, deed of trust and/or any other hypothecation or security document and advances and obligations t hereunder now or hereafter placed upon the Premises, and any renewals, modifications, consolidations, replacements and extensions thereof {collectively "Mortgage") providing the terms of the Mortgage do not conflict with t he terms of this Lease.. Upon the request of Landlord, Tenant shall, from time to time, execute and deliver any documents that may be required by Landlord or the mortgagee, beneficiary, ground lessor or len~er (each a "Landlord's Lender") under any such Mortgage, to effectuate any subordination, provided that any such Landlord's Lender agrees not to disturb Tenant's right to quiet possession under this Lease so long as Tenant is not in default (or with notice or passage of time or both would not be in default) under this Lease. If Tenant fails to execute and deliver any such. document within fifteen (15) days after request, Tenant irrevocably constitutes and appoints Landlord as Tenant's specia l attorney-in-fact, coupled with an interest, to execute and deliver such document. Notwithstanding the foregoing, if Landlord's Lender elects to have this Lease prior to the lien of its Mortgage, and gives written notice to Tenant of such election, this Lease shall be deemed prior to such Mortgage regardless of the respective dates of execution, delivery and recordation of this Lease and any such Mortgage. 18.2 Attornment. In the event that Landlord transfers title to the Premises to a Landlord's Lender, or the Premises are acquired by a Landlord's Lender upon t he foreclosure or termination of a Mortgage to which this Lease is subordinated, Tenant shall attorn to and recognize the Landlord's Lender as Te nant's landlord under this Lease and shall promptly execute and deliver any documents that Landlord may require to evidence such attornment, provided that Landlord's Lender agrees not to disturb Tenant's right to quiet possession under -27 - July 27, 2021 Item #6 Page 37 of 57 this Lease so long as Tenant is not in default (or with notice or passage of time or both would not be in default) under this Lease. If Tenant fails to execute and deliver any such document within fifteen (15) days after request, Tenant irrevocably constitutes and appoints Landlord as Tenant's special attorney-in-fact, coupled with an interest, to execute and deliver such document. 18.3 Estoppel Certificate. Upon the request of Landlord, Tenant at any time and from time to time shall execute, acknowledge, and deliver to Landlord, no later than fifteen (15) business days after Landlord's request therefor, an estoppel certificate in any reasonable form requested by Landlord ("Estoppel Certificate"). The Estoppel Certificate may be conclusively relied upon by a prospective lender, purchaser, or encumbrancer of Landlord's interest in the Premises. Fail ure to deliver the Estoppel Certificate within fifteen (15) days of such request shall be conclusive upon Tenant that: (i) this Lease is in full force and effect; (ii) there are no uncured defaults in Landlord's or Tenant's performance; (iii) not more than one month's Base Rent has been paid in advance; and (iv) the Security Deposit is in an amount equal to that specified in ARTICLE 1 hereof. Tenant hereby irrevocably appoints Landlord as its attorney-in- fact, which agency is coupled with an interest, to execute any such Estoppel Certificate upon Tenant's failure to do so within such fifteen (15) day period. 18.4 Rights of Landlord's Lender and Landlord's Purchaser. If any Landlord's Lender or any purchaser of Landlord's interest in the Premises ("Landlord's Purchaser") requires a modification of this Lease at any t ime, Tenant shall, at Landlord's req uest, promptly execute and deliver to Landlord instruments effecting the modifications that the Landlord's Lender or Landlord's Purchaser reasonably requires, provided that such modifications do not increase the rent, reduce the size of the Premises, change in whole or part the use of the Premises or otherwise adve·rsely affect in any material respect any of Tenant's rights under this Lease. If Landlord's Lender or Landlord's Purchaser has given prior written notice to Tenant that it is the Landlord's Lender or Landlord's Purchaser and such notice includes the address at which notices to such La ndlord's Lender or Landlord's Purchaser are to be sent, then Tenant shall give Landlord's Lender or Landlord's Purchaser, as the case may be, written notice simultaneously with any notice given to Landlord to correct any failure of Landlord to perform any of Landlord's obligations. Landlord's Lender and Landlord's Purchaser shall have the right after receipt of said written notice to correct or remedy such failure within a reasonable period of t ime. Any written notice of default given Landlord shall be null and void unless simultaneous written notice has been given to Landlord's Lender and Landlord's Purchaser. 18.5 limitation of Liability. The covenants and agreements of Landlord under this Lease shall not be binding upon any person at any time after the transfer of that person's interest, as landlord, in the Premises, providing Landlord provides to the new Landlord with a copy to Tenant of any outstanding obligations, including without limitation, repair and maintenance obligations, of Landlord, other wise Landlord will remain liable for the outstanding obligations. In the event of such a transfer, the covenants and agreements of Landlord shall thereafter be binding upon the transferee of Landlord's interest. -28 - July 27, 2021 Item #6 Page 38 of 57 ARTICLE 19 FORCE MAJEURE If either party hereto shall be delayed in or prevented from the performance of any act required hereunder by reason of acts of God, labor troubles, inability to procure materials, restrictive governmental laws or regulations or other causes without fault and beyond the control of the party obligated (financial inability not excepted, unless caused by Force Majeure} (collectively, "Force Majeure"), performance of such act shall be excused for the period of the delay and the period for the performance of any such act shall be · extended for a period equivalent to the period of such delay; provided, however, nothing in this Section shall delay the Rent Commencement Date or excuse Tenant from the prompt payment of any rent or other charge required of Tenant hereunder, except as may be financially impossible due to Force Majeure or as may be expressly provided elsewhere in this Lease. ARTICLE 20 ASSIGNMENT AND SUBLETTING 20.1 Landlord's Consent. Tenant shall not voluntarily, involuntarily or by operation of law assign, mortgage, sublet, hypothecate or otherwise transfer or encumber all or any part of Tenant's real property interest in this Lease or in the Premises, or contract for the management or operation of the whole or any part of the Premises, or permit the occupancy of any part of the Premises by any other person or business entity, or permit transfer of this Lease by merger, consolidation or dissolution (collectively "Transfer"}, without first obtaining Landlord's express written consent. No consent to any Transfer shall constitute a waiver of the provisions of this Section. Tenant is a California public benefit corporation. Any dissolution or merger, consolidation, or other reorganization of Tenant of more than twenty-five (25%} the value of the assets of Tenant, shall be deemed a Transfer requiring Landlord's consent. Landlord and Tenant agree (by way of example and without limitation) that it shall be reasonable for Landlord to withhold its consent to a Transfer if any of the following situations exist or may exist: (i) the proposed Transferee's (as defined below) use of the Premises conflicts with or is different from the Permitted Use; (ii) the proposed Transferee or its business is subject to compliance with additional requirements of law beyond those requirements which are applicable to Tenant; (iii} in landlord's reasonable business judgment, the proposed Transferee lacks sufficient business reputation or experience to operate a successful business of the type and quality permitted under this Lease, or lacks the financial capacity to perform the Permitted Use; or (iv) Tenant is in default under this Lease. Any attempted or purported Transfer without Landlord's prior written consent shall be void and of no force or effect, and shall not confer any estate or benefit on anyone. A consent to one Transfer by Landlord shall not be deemed to be a consent to any subsequent Transfer to any other party. 20.2 Request for Transfer. Tenant shall give landlord at least sixty (60} days' prior written notice of any requested Transfer and of the proposed terms of such Transfer ("Transfer -29 - July 27, 2021 Item #6 Page 39 of 57 Notice"), including but not limited to: {i) the name and legal composition of the proposed assignee, sublessee, encumbrancer or transferee ("Transferee"); {ii) a current financial statement of the proposed Transferee prepared in accordance with generally accepted accounting principles consistently applied; (iii) the portion of the Premises Tenant proposes to Transfer (including square footage and location); and (iv) the nat ure of the proposed Transferee's business to be carried on in the Premises. The foregoing terms shall be in sufficient detail to enable Landlord to evaluate the proposed Transfer and the prospective Transferee. Within t hirty (30) days after receipt of the Transfer Notice, Landlord shall either approve or disapprove of such Transfer. Tenant shall immediately notify Landlord of any modification to the proposed terms of such Transfer. Tenant shall also provide to Landlord copies of the fully executed documents pertaining to the Transfer after the Transfer has become effective. Whether or not Landlord consents to any proposed Transfer, Tenant shall pay Landlord's review and processing fee, including without limitation, all landlord's agents, employees, outside consultants, in the amount of $500.00, as well as any additional and reasonable legal fees incurred by Landlord over the $500.00, within thirty (30) days after written request by Landlord. 20.3 Landlord's Rights. Upon receipt of a Transfer Notice pursuant to Section 20.2 above, Landlord shall have the right to (i) unreasonably withhold its consent to such Transfer, as permitted pursuant to Section 20.1 above; or (ii) impose any of the following as conditions to Landlord's consent: (a) that all rents pa id by the Transferee to Tenant in excess of the Base Rent be paid to Landlord; or (b) that either Tenant or the proposed Transferee cure, providing notice as required under this Lease has been provided by Landlords, on or before the proposed effective date of such Transfer, any and all uncured defaults hereunder; provided, however, in no event shall Landlord's failure to condition its consent upon such cure be deemed to be a waiver of any such default or of Landlord's rights and remedies under this Lease or under law or in equity in regard thereto. If Landlord has elected to impose such a cure as a condition to its consent and such condition is not satisfied by the effective date of the Transfer, then the Transfer shall be voidable at Landlord's option. La ndlord shall also have the right to condition Landlord's consent to any Transfer upon Tenant's and the Transferee's executing a written assumption agreement, in a commercially reasonable form approved by landlord, which approval shall not be unreasonably withheld. The assumption agreement shall require t he Transferee to expressly assume all obligations of Tenant under this Lease and shall require Tenant and Transferee to be and remain jointly and severally liable for the performance of all conditions, covenants, and obligations under this Lease from the effective date of the Transfer of Tenant's interest in this Lease. Regardless of Landlord's consent to any Transfer, no Transfer shall release Tenant of Tenant's obligation or alter the primary liability of Tenant to pay rent and to perform all other obligations to be performed by Tenant hereunder, unless all parties agree to a novation ("Novation"). The acceptance of rent by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision hereof. These rights are in addition to Landlord's right to withhold its consent based upon the criteria and standards set forth above to any Transfer These rights may be reasonably exercised by Landlord without limiting Landlord in the exercise of any other right or remedy at law or in equity which Landlord may have by reason of such Transfer. In the event a Novation has not occurred, and where -30 - July 27, 2021 Item #6 Page 40 of 57 there is a default by any Tra nsferee, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against said Transferee. Tenant expressly agrees that the provisions of this Article are not unreasonable standards or conditions for purposes of Section 1951.4(b)(2) of the California Civil Code, as amended or recodified from time to time. ARTICLE 21 NOTICES All notices given under this Lease shall be in writing and shall be given or served either personally or by depositing the same by United States registered or certified mail postage prepaid, return receipt requested, or by a nationally-recognized overnight delivery courier, addressed to the applicable Address for Notices specified in ARTICLE 1 or by electronic transmission to the person provided in Article 1. Notice shall be deemed to have been given (a) on the delivery date indicated by the United States Postal Service on the return receipt or by the courier or on the date such delivery is refused or deemed "undeliverable," or (b) on the date of personal delivery, (c) or the first business day after an electronic transmission has been sent. Either party may change its address or email for notices by providing written notice as specified herein; provided, however, that all addresses · provided must be an actual street address located in the United States of America. ARTICLE 22 AUTHORITY The Tenant is a California public nonprofit corporation each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on behalf of said entity. Tenant shall, simultaneously with execution of this lease, deliver to Landlord written evidence of such authority satisfactory to landlord. ARTICLE 23 QUIET ENJOYMENT Tenant, upon keeping, observing and perform_ing all of the covenants and agreements of this lease on its part to be kept, observed, and performed, shall lawfully and quietly hold, occupy and enjoy the Premises during the Term of this lease, subject to the reasonable customary and usual noise, traffic, loading and unloading of materials and all other acts necessary to the permitted use of the Premises. ARTICLE 24 ATTORNEYS' FEES Should either party commence an action or arbitration against the other to enforce any obligation hereunder, the prevailing party shall be entitled to recover the costs thereof and reasonable attorneys' fees actually incurred by such prevailing party (including the fees and -31 - July 27, 2021 Item #6 Page 41 of 57 charges of legal assistants or other non-attorney personnel performing services under the supervision of an attorney), whether or not such litigation is prosecuted to judgment. ARTICLE 25 WAIVER Any waiver by either party of any breach by the other party of any one or more of the covenants, conditions, or agreements of this Lease shall not be nor be construed to be a waiver of any subsequent or other breach of the same or any other covenant, condition or agreement of this Lease, nor shall any failure on the part of either party to require or exact full and complete compliance by the other party with any of the covenants, conditions, or agreements of this Lease be construed as in any manner changing the terms hereof or to prevent Landlord from subsequently enforcing the full provisions hereof. Land lord's acceptance of any payment which is less than that required to be paid by Tenant shall be deemed to have been received only on account of the obligation for which it is paid and shall not be deemed an accord and satisfaction, notwithstanding any provisions to the contrary asserted by Tenant, written on any check or contained in any transmittal letter. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term or covenant hereof, other than t he failure of Tenant to pay t he particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of accepta nee of such rent. An express waiver must be in writing and signed by a person with the power to contractually bind Tenant or Landlord. An express waiver shall affect only the default specified in the waiver, and only for the t ime and to the extent expressly stated. ARTICLE 26 LIMITATION ON CLAIMS Any claim, demand, right or defense of any kind by Tenant, which is based upon, arising in connection with or in any way related to this Lease or the negotiations prior to its execution, shall be barred unless Tenant commences an action thereon, or interposes in a legal proceeding a defense by reason thereof, within twelve (12) months after the date of t he inaction or omission or the date of the occurrence of the event or of the action to which t he claim, demand, right or defense relates, whicheverapplies. ARTICLE 27 INTERPRETATION AND APPLICATION 27.1 Submission of Lease . Submission of this instrument for examination or signature by Tenant does not constitute an offer, a reservation of, option for or option to lease, and it is not effective as a lease or otherwise until execution and delivery by both Landlord and Tenant. 27.2 Governing Law. This Lease shall be construed in accordance with and governed by the statutes, decisions, and other laws of the State of California and the Federal Statutes, regulations, decisions relating to Tenant's standing as an exempt organization and other laws of -32 - July 27, 2021 Item #6 Page 42 of 57 the United States. Tenant expressly agrees that any and all disputes arising out of or in connection with this Lease shall be litigated only in the Superior Court of the State of California for San Diego County, and Tenant hereby consents to the jurisdiction of said court, unless the Federal laws are applicable. 27.3 Complete Agreement. This Lease contains all terms, covenants, conditions, warranties and agreements of the parties relating in any manner to the rental, use a17d occupancy of the Premises. No prior agreements or understanding pertaining to the same shall be valid or of any force or effect. 27.4 Amendment. This Lease may not be amended, altered or modified in any way except in writing signed by the parties hereto. 27.5 No Partnership. It is agreed that nothing contained in this Lease shall be deemed or construed as creating a partnership or joint venture between Landlord and Tenant or between Landlord and any other party, or cause Landlord to be responsible in any way for the debts or obligations of Tenant or any other party!. 27.6 No Merger. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work as a merger, but shall, at the option of La ndlord, either termin9te all or any existing subleases or subtenancies, or operate as an assignment to Landlord of any or all such subleases or subtenancies. 27.7 Severability. If any provision of this Lease or application thereof to any person or circumstances shall to any extent be invalid, the remainder of this Lease (including the application of such provision to persons or circumstances other than those to which it is held invalid) shall not be affected thereby, and each provision of this Lease shall be valid· and enforced to the fullest extent permitted by law. 27.8 Captions. The captions of the Articles and Sections hereof are for convenience only and are not a part of this Lease and do not in any way limit or amplify t he terms .and provisions of this Lease. 27.9 Words. The words "Landlord" and "Tenant", as used herein, shall include the plural as well as the singular. Words used in the neuter gender include the masculine and feminine. 27.10 Joint and Several Liability. If either party is comprised of more than orie individual or entity, the obligations imposed upon such party hereunder shall be joint and several to all parties signing this Lease as such party. 27.11 Exhibits. All exhibits attached to this Lease are incorporated herein by this reference and made a part hereof, and any reference in the body of this Lease or in the exhibits to the "Lease" shall mean this Lease together with all exhibits. -33 - July 27, 2021 Item #6 Page 43 of 57 ARTICLE 28 MISCELLANEOUS 28.1 Time is of the Essence. Time is of the essence of each and all of the terms and provisions of this Lease. 28.2 Successors. Subject to the restrictions on Transfers contained in this Lease, all the terms, covenants and conditions hereof shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and assigns of the parties hereto. 28.3 Recordation; Quitclaim. Tenant shall not record this Lease or any memorandum hereof. Landlord has the right in its absolute discretion to record this Lease or a memorandum hereof, and, upon Landlord's request, Tenant shall execute and have acknowledged the same for recordation. Upon termination of this lease for any reason, Tenant shall execute, acknowledge and deliver to Landlord within thirty (30) days after receipt of written demand therefor a good an·d sufficient deed whereby all right, title and interest of Tenant in the Premises is quitclaimed to Landlord. If Tenant fails to deliver the required deed to Land lord, Landlord may prepare and record a notice reciting the failure of Tenant to execute, acknowledge and deliver such deed and said notice shall be conclusive evidence of the termination of this Lease and of all right of Tenant or those claiming under Tenant in and to the Premises. 28.4 Limitation of Liability. It is expressly understood and agreed that notwithstanding anything in this Lease to the contrary, and notwithstanding any applicable law to the contrary, the liability of Landlord hereunder (including any successor landlord) and any recourse by Tenant against Landlord shall be limited solely and exclusively to landlord's interest in the Premises, including the value of the Premises, and the income and profits from the Premises, and neither Landlord, nor any of its officers, employees, affiliates, managers or agents shall have any personal liability therefor, and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant. The limitations of liability provided in this Section are in addition to, and not in limitation of, any limitation on liability applicable to Landlord provided by law or in any other contract, agreement or instrument. Under no circumstances shall Landlord be liable for punitive or special damages, indirect damages or other consequential damages, including without limitation, injury to Tenant's business or for any loss of income or profit therefrom, except as provided otherwise in this Lease In the event of any transfer of Landlord's interest in this Lease, the Landlord herein named (and in case of any subsequent transfer, the then transferor} shall be automatically freed and relieved from and after the date of such transfer of all liability for the performance of any covenants or obligations on the part of Landlord contained in this Lease thereafter to be performed; provided, however, that any funds in the hands of Landlord or the then transferor at the time of such transfer, in which Tenant has an interest shal l be turned over to the transferee and any amount then due and payable to Tenant by Landlord or the then t ransferor under any provision of this Lease shall be paid to Tenant; -34 - July 27, 2021 Item #6 Page 44 of 57 and provided, f urther, that upon any such transfer, the transferee shall expressly assume, subject to the limitations of this Section, all of the agreements, covenants and conditions in this Lease to be performed on t he part of Landlord, it being intended hereby that the covenants and obligations contained in this Lease on the part of Landlord shall be binding on each Landlord, its successors and assigns, only during its period of ownership. 28.5 Broker. Landlord and Tenant each represents and warrants to t he other that it has· not retained the services of or had any dealings with any broker, finder or real estate licensee and owes no person or entity any finder's or broker's fee, commission or payment of any kind whatsoever. Landlord and Tenant each shall indemnify, protect, defend and hold harmless the other from and against all liability for compensation or charges which may be claimed by any such broker, finder or other similar party by reason of any dealings or actions of t he indemnifying party, including (without limitation} any costs, expenses or attorney's fees reasonably incurred with respect thereto. 28.6 Counterparts. This Lease may be executed in any number of counterparts each of which shall be deemed an original and all of which shall constitute one and the same Lease with the same effect as if all parties had signed the same signature page. [Signatures on Next Page] -35 - L July 27, 2021 Item #6 Page 45 of 57 ARTICLE 29 SIGNATURES The individ uals executing this Lease represent and warrant that they have the right, power, legal capacity and authority to enter into and to execute this Lease on behalf of the respective legal entities of Tenant and Landlord. IN WITNESS WHEREOF, the parties hereto have executed t his Lease as of the date first above written. LANDLORD: unicipal corporation By: Name: "'"S"'"co"-=-=--=~~----- Title: City Manager APPROVED AS TO FORM By: For Celia A. Brewer, City Attorney Date: _::;J-.....:....+>,tfl,""""""""g _ _,,2021 TENANT: NEW VILLAGE ARTS a California non-profit public benefit corporation By: Name: ---,,',---"'-----""'C-=--'-------"-____:_:_-- Title: ---+-<=i.......;:;...µ..~...!....:..L..--- Note: Signature of Tenant must be notarized -36 - July 27, 2021 Item #6 Page 46 of 57 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CML CODE§ 1189 ~ weess rrc re ewem C SVC SR fi 12 MM! B7 •t •s it!ffm'SW A notary public or other officer completing this certificate verifies only the Identity of the individual who signed the document to which this certificate is attached, and not tha truthfulness, accuracy, or validity of that document. State of California ) County of SA,.J bJ&.4 0 ) On CJ&?>/ 'Z.I before me, --~------'-l:--=1'--=lS'--...... JL:..~:::..;.z_..:;.c;____._, _,~=0....,7_..,A...,t.::..1Y.__....;..P--=u--"&=~_._\ C..=-__. Date Here Insert Name and Title of the Officer personally appeared ___ 2.o=N.::;..::_~:=.,..a......-L.-'-1,-..l _________________ _ Name(s) of Signer(s) who proved to me on the basis of satlsfactory evidence to be the person~ whose name(~ is/ap subscribed to the within instrument and acknowledged to me that he/sWt~y executed the same in his/h¢/their authorized capacity(~. and that by his/her/their signature~ on the instrument the person(s(, or the entity upon behalf of whicti the person~) acted, executed the instrument CURTIS MYLES JACKSOM Notary Public • California ~- Sao Di@iO County ~ Commission ~ 2356904 • ,.• 11,y Comm. Explrts /l.4y 10, 202S Place Notary Seal Above I certify under PENAL lY OF PERJURY under the faws of the State of California that the foregoing paragraph is true and correct. -...... ---------------OPTIONAL----------------- Though this section is optional, completing this information can deter alteration of the document fraudulent reattachment of this form to an unintended document. Description of Attached Document litle or Type of Document: ___________ _ Number of Pages: ___ Signer(s) Other Than Named Abo . ___________ _ CapacityOes) Claimed by Signer(s) Signer's Name:-----,----,----------~ D Corporate Officer -TitJe{s): ----::::,,-=-- □ Partner -D Limited D General D lndMdual O Attomey i ct D Trustee D Gu or Conservator D Other: ~~--mc-i-:::,,,-s ..:;;;--....,._---,-....,....,...,,-------Signer Is n, igner's Name: ___________ _ 0 Corporate Officer -Title(s): _____ _ D Partner -D Limited D General D Individual D Attorney in Fact , 0 Trustee D Guardian or ConseNator 0 Other. _____________ _ Signer Is Representing: ________ _ L f.M -' ca M ~Sk®Sihl :~:a: J_ ca::~ WWW£ -.d . {Sii,W: LC~ . sta:t ©2014 National Notary Association• www.NationalNotary.org • 1-800-US NOTARY (1-800-876-6827) Item #5907 July 27, 2021 Item #6 Page 47 of 57 EXHIBIT A LEGAL DESCRIPTION OF PREMISES APN NO: 203-295-01-01 and 203-295-01-02 Lots 1 through 4 inclusive, in Block "K" of Carlsbad, in the City of Carlsbad, County of San Diego, State of California, according to Map thereof No. 535, filed in the office of the County recorder of San Diego County May 2, 1888, and Map No. 775 filed I the Office of the County Recorder of said San Diego County. -1 - DOCS 12 116.,-000007/262557'! 8 July 27, 2021 Item #6 Page 48 of 57 EXHIBIT B MEMORANDUM OF TERM COMMENCEMENT This Memorandum of Term Commencement is made as of JtA.~ J.-~2021 by the CllY OF CARLSBAD, a California municipal corporation ("Landlord"), and~ W VILLAGE ARTS, a California non-profit public benefit corporation ("Tenant"). Landlord and Tenant agree to and acknowledge the following matters: 1. Landlord and Tenant have entered into t hat certain Lease Agreement dated as of d v-lv\ ::2::-=r +"--, 2021 (the "Lease"), covering t he Premises located at 2787 State Street, Carlsbad, California, 92008, as more particularly described in the Lease. All terms defined in the Lease shall have the same meaning when used in this Memorandum of Term Commencement. 2. The Commencement Date occurred on c\u½_j '.2-:::3:::t:b: , 2021 and the Expiration Date of the Lease is d\,l \.j ~ , 2031. INTENTIONALLY BLANK -1 - DOCS 1211 63-000007i2625579.8 July 27, 2021 Item #6 Page 49 of 57 IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum of Term Commencement as of the date first written above. LANDLORD: CITY O~RrLSBAD, a Calif r)unicipal corporation By: I ttt Name: :$tin-C,.~\J\Jt C L Title: CrT\J :r'.\t.~ TENANT: NEW VILLAGE ARTS a California non-profit public benefit corporation By: Name: Title: -2 - July 27, 2021 Item #6 Page 50 of 57 EXHIBIT C TENANT IMPROVEMENT PROJECT -1 - DOCS 121163-000007/2625579.8 July 27, 2021 Item #6 Page 51 of 57 NEW VILLAGE ARTS Kristianne Kurner Executive Artistic Director Alex Goodman Managing Director Robert I Lin President Sue Loftin Vice-President Mark Coulombe Secretary Mary Kerr Treasurer Board Members at Large Joan Cumming Bob Dawson Kristianne Kurner Christy Mohler Saundra Moton Scott L. White. Former President NVA Advisory Board Rosemary Eshelman, Chair Ariel Bedel I Mark Caruana Kathy Deering Fred Deutsch Haley DiOonato Mea Hall Wa It & Sharon Hambly Pat Hansen Bobbie Hoder Pat Hurley Emma Jadhav Chelsea Kaufman. Richard Kuranda Cassie Langan Linda Ledesma Dr. Richard l.cdcrer Gina McBride Julie Nygaard flr. RnbOgle Christine lleto Pangan Justin Peek Eli,abeth Rhodes Sharl Roberts Debbie Rossi Jay Samo Tcm Sears Alice S1evertson Lorraine Wood NW\ is a 501(c//3/ Non-Prcfir Organization Tax ID 1152-2320930 New Village Arts. Inc. 2787 State St. carlsbad, CA 92008 760.433.3245 info@new.,irtaiearts.or& www.newvlllagearts.org Wednesday, June 10, 2020 RE: LOI -REQUESTS TO CONTINUE AND EXPAND THE NVA PARTNERSHIP WITH THE CITY To Mayor Matt Hall, City Councilmembers Dr. Priya Bhat-Patel, Keith Blackburn, Cori Schumacher, and City Staff. First, we would like to commend the City of Carlsbad council and staff for the exemplary job they have continued to do facing the COVID-19 pandemic. Our City has been a shining example . of caring staff and volunteers making meticulously thought out decisions and communicating those decisions in an open and available manner. We have been very proud to be part of this City. Second, we also want to thank the City staff for working with New Village Arts on discussions around the establishment of a long-term lease agreement and necessary repairs to the building. The meetings we had before the pandemic were collaborative and inspiring, and we look forward to continuing the process. To that end, this letter will serve as our formal request (LOI). to renew and extend our current lease for the building located at 2787 State Street in the heart of Carlsbad Village. Having called the former Bauer Lumber Yard home for over a decade, NVA staff, board of directors and stakeholders look forward to investing in the property, in the near-and long-term, to continue to bring quality Arts and Culture experiences to Carlsbad residents and visitors alike for a long time to come. NEW VILLAGE ARTS CONTRIBUTIONS TO THE CITY NVA has rapidly adapted its services and programs to comply with all necessary restrictions imposed under state and local governmental orders due to the current Covid-19 pandemic but has found new and creative ways to continue to serve the community: a. Programs for the general public: New Online Programming entitled New Virtual Arts, was created to provide everyone in our community with access to creative and artistic experiences such as theater performances, musicals, and comedy. These on line programs not only continue our mission of providing a forum and opportunities for laughter, discussion, and deeper thinking and overall entertainment, but also provides employment for our staff, actors and digital technicians. We are actively collaborating with the Museum of Making Music to bring Shakespeare and Music outdoors to Carlsbad in the Fall. We are also in the process of developing two theatrical World Premieres to be produced in the coming year which will bring recognition and acclaim to both NVA and Carlsbad. b. Education Programs: We currently are offering several education programs online that are available to all members of our community. Additional programs will be added in the coming months. • Monday Night live, our program for Neuro-diverse young adults continues on Zoom 1 July 27, 2021 Item #6 Page 52 of 57 • In partnership with Kids Act, NVA is making nine different classes available online to students ages 6 -18, ongoing throughout the Summer. • NVA's Online Academy: a series of classes throughout the Summer for teens and adults. The first-round features: o A Choreography Class for Teens on Wednesdays through July 8. o Intro to Acting for Adults (ages 18+} through mid-July o Spanish Language Spoken Word classes led by poet Diana Cervera, the only offering of its kind in San Diego theatre. c. Continuing plans, as allowed by Health Guidelines: New Village Arts will continue to activate State Street as we have since 2009. We will do this by: • Hosting street events on Christiansen Way • Producing six mainstage theatre productions each season • Holding over 150 theatre and/or art classes open to anyone in the community each year • Hosting community events • Producing music or spoken w~rd events • Providing professional theatre training programs to 3 Carlsbad high schools • Bringing Theatre for Young Audiences performances to local middle schools • Running a program for special needs and neurodiverseteens that culminates in a summer production • Running an improvisation class for seniors with Alzheimer's and dementia d. FINANCIAL IMPACT -Substantial Economic Benefits to Other Businesses in the Village: New Village Arts has been an anchor for the North Carlsbad Village community for 14 years. In that time, many businesses have come and gone around us, but in the past 5 years, dozens of new businesses have opened (Handel's Ice Cream, Baba Coffee, Carruth Wine Cellars, Campfire, and Juene et Jolie to name a few). Our patrons have named all of these businesses as places they frequent before or after a performance at NVA, among other longer established bars and restaurants. With over 190 unique events in the Village every year, NVA attracts over 20,000 consumers to our downtown businesses. A recent study conducted by Americans for Arts states that the economic impact of arts attendees equals $31.47 per person or nearly $630,000 per year for our local restaurants and shops. The study Arts and Economic Prosperity® 5 was conducted by Americans for the Arts, the nation's nonprofit organization for advancing the arts in America. It found that when patrons attend an arts event in San Diego County, they may pay for parking, eat dinner at a restaurant, enjoy dessert after the show, and return home to pay the babysitter. The study found that the typical attendee spends $31.47 per person, per event beyond the cost of admission. AEPS also shows that one-third of attendees (34 percent) traveled from outside the county in which the arts event took place. Their event-related spending was more than twice that of their local counterparts ($47.57 vs. $23.44). What brought those visitors to town? Two-thirds (69 percent) indicated that the primary purpose for their visit was to attend an arts event. The message is clear: a vibrant arts community not only keeps residents and their discretionary spending close to home, it also attracts visitors who spend money and help local businesses thrive. In addition, NVA is an impactful local employer, paying over 100 artists, artisans, educators, and technicians nearly $250,000, a quarter of our budget, last year. When we add in full and part-time staff, over 60% of our $1 million annual budget is paid to individuals making art or making art possible. The arts drive jobs. Mark Cafferty, President and CEO, San Diego Regional Economic Development Corporation, said recently, "Business leaders no longer need to choose between arts and economic development. An investment in the arts is an investment in an industry that supports jobs, generates revenue and helps encourage new business to our region." 2 July 27, 2021 Item #6 Page 53 of 57 PLANNING FOR THE FUTURE When the order was given to shut businesses down due to the Covid-19 pandemic in mid-March, NVA staff and board quickly undertook key strategic actions to ensure our financial viability. a. Development of new financial model: The staff and board of New Village Arts, realizing the crit ical financial impact of dosing the theater and postponing all in-person activities, immediately took steps to reduce expenses and increase and stabilize income which will take the organization through June, 2021 when we plan to reopen the theater to live, on-stage performances. • Cut expenses from approximately $85,000 per month down to $25,000 per month • Obtained a PPP loan with funds received on April 11 • Received Business Interruption Insurance approved on April 10 • Filed for work-sharing unemployment insurance approved April 14 • Furloughed all part-time employees • Suspended contracts with all appropriate vendors • Applied for an SBA loan • Continued fund-raising campaigns which has resulted in significant ongoing contributions • Successfully worked with all grant ers and corporate sponsors to repurpose or renew grants to support on- going operations b. Short term plan: New Village Arts will continue to offer high quality Arts and Culture programs and performances for our community in the digital space for the time being, and in our physical space once we are able, continuing our mission of creating adventurous artistic experiences to awaken the human spirit. Having reduced costs and secured our financial future, we wi II confident! y weather this storm and co me out stronger with new and increased donor support; new, creative approaches of ways to serve our community; and a better appreciation for the flexibility and nimbleness that provides opportunities for growth. c. Long term plan: New Village Arts intends to re-open the renovated space Summer of 2021. Our award-winning indoor theatrical performances and education programs will continue onsite and in our community. When the renovation is complet e, the State street facing windows will open up into an inviting community gathering place, where we envision intimate concerts, community events and educational activities which will activate State street. Our Sahm Family Foundation sponsored Education Center will also open up to State Street, sharing the lively activity of our youth and neurodiversity theatre and artprograms with residents, local businesses and passersby. As we move forward, beyond 2021 and into the next phase of the evolution of our non-profit arts organization, we will continue to grow our programs, invest in the quality of our artistic offerings and educational programs, and continue to serve as the Cultural Hub of Carlsbad and all of North County San Diego. W ith the support of individual donors, local businesses, foundations and local, state and national government support, we w ill continue fulfill our mission. We will do this by: • Providing a collaborative and inspiring home for visual and performing artists » Investing in local playwrights and storytellers, and elevating San Diego voices to the National stage with World Premiere plays and musicals. • Providing a forum for laughter, discussion and deeper thinking within our community » Expanding our program offerings to include cabaret performances, lectures, poetry readings, book signings, dance performances, open mic nights, and more. • And training future generations of art-makers and art-lovers. » Growing our Nationally recognized Neurodiversity programs, bi-lingual classes, and in-school programs. 3 July 27, 2021 Item #6 Page 54 of 57 REQUEST TO THE CITY OF CARLSBAD The Bauer Lumber Yard, home to New Village arts is in need of both essential repairs and updating. But perhaps most importantly, this historic building sits in the midst of a revitalized and increasingly attractive commercial area of the Village and deserves to reflect Carlsbad's history and reputation as one of North County's most desirable places to visit and live. a. Preservation of Building. We ask that the City move forward with the previously approved and already budgeted replacement of the West-facing wall and the leaky roof as soon as possible. We hope to use this time of social distancing to plan for the future and renovate our space. We understand that plans are underway to commence with this project over the Summer. As of May 14, 2020, NVA was informed "We received 60% drawings about a week ago and they're getting ready to submit to building for 1st plan check. Currently targeting late summer to go to CC with a request to authorize bidding the contract docs." Continued communication about the progress of these plans are critical for not only the term of the existing lease but also for the proposed major renovation. b. Renovation of the Building. The historic Bauer Lumber building is in need up updating and repair. As the home of New Village Arts, we have committed to raising the funds to completely remodel and update the interior and to complement the area which is undergoing a transformation into one of the region's most attractive and exciting places to visit. With Conceptual Designs submitted to the City Plan Check Office on May 16, 2019 and the most recent revisions submitted in early June, NVA's ·renovation project continues to progress t hrough planning and approval. The entire project is estimated to cost $1.2 million. NVA will be raising funds for the entire interior, at an estimated cost of $730,000 c. Exterior Improvement. The terms of our current lease agreement states that the tenant is responsible for the upkeep of the interior of the building, and the City is responsible for maintaining the exterior of the building (Article 10.3) (Appendix A). Based on that agreement, we are requesting that the City be responsible for completing the exterior portion of the overall renovation plan and design which is currently estimated to cost $470,000 (Appendix B). d. Solar Panels: An opportunity exists to install solar panels as part of the renovation for approximately $103,000. Knowing this will comply with both state and local desires to save energy and "go green," we request that the City consider additionally covering the cost of installing solar panels. (Appendix C). The latest plans are attached here (Appendices 01 & D2). REQUEST FOR A LONG-TERM LEASE a. Lease Extension. Understanding that in order for NVA to commit to a significant fund raising campaign for the renovation of the Bauer Lumber Building and to assure donors that their donations are a sound investment for the future of Carlsbad and NVA, NVA requests the City approve a long-term lease extension of 20 years. b. Rent. We ask that the City return to the previous lease agreement of $1 per year in rent. This aligns with the lease agreements that our colleagues in Poway (Poway Performing Arts Center), Oceanside (Star Theatre), and San Diego (San Diego Repertory Theatre) currently enjoy. c. Other Terms. Similar to existing lease but to be refined for applicability to a longer term. T k you r your consideration. ,! . t-f_u-- Kurner Executive Artistic Director Alex Goodman Managing Director Board President ~~ U a:~~~resident Elect 4 July 27, 2021 Item #6 Page 55 of 57 EXHIBIT D TENANT PERFORMANCE STANDARDS (PERFORMANCE PLAN) The below enumerated Performance Plan shall commence on the Term Commencement Date. Landlord acknowledges that some enumerated performance measures are subject to grant funding and/or fundraising. Tenant acknowledges t hat they shall use good faith efforts to secure grant funding and/or fundraising for performance measures requiring such f unding. Land lord and tenant acknowledge that performance plan may be adversely impacted by restrictions due to public health or other emergency that would prevent tenant from otherwise conducting business as usual. ANNUAL PROGRAMMING FOR NEW VILLAGE ARTS CENTER The mission of New Village Arts is to create adventurous artistic experiences to awaken the human spirit. We provide: a collaborative and inspiring home for performing and visual artists, a forum for laughter, discussion, and deeper thinking within our community and a training ground for future generations of art-makers and art-lovers. We acknowledge, respect, and celebrate the differences and commonalities within our community and commit to dismantling the barriers to the creation, learning, and celebration of making live theatre and adventurous artistic experiences. To that end, New Village Arts will create: Professional Theatre & Event Production • Year-round theatre productions • Year-round music performances, including cabarets and loca l musicians • Produce award-winning Final Draft New Play Festival * Education and Outreach • Work with area schools to produce professional theatre training programs and performances* • Facilitate programming for special needs and neurodiverse teens and young adults that includes productions that are open to the public* • Facilitate art s education for senior community members including those with Alzheimer's and dementia* • Host acting and theatre classes for all ages open to the community • Host year-round acting and theatre-focused classes for child ren ages 4-17 • Facilitate visua l art classes for all ages in the community Community and Cultural • Recognize and educate the community about t he indigenous tribes that settled the region • . Make meeting space available for local arts and other nonprofit organizations • Participate in Carlsbad Village community and art-focused events with space open to the public - 2 - July 27, 2021 Item #6 Page 56 of 57 • Facilitate programming for the Teatro Pueblo Nuevo initiative that celebrates our bilingual and multicultural community including an annual festival open to the community* • Produce at least one show or event that honors the Black and African American community Visual Arts • Provide space for visual artists to work and teach classes • Consistently feature local artists in public spaces • Year-round visual art exhibitions and events • Engage in public art projects Employment and Economic Impact • Bring at least 15,000 patrons to Carlsbad Village, bringing over $470,000 of economic impact to local businesses, restaurants and retail shops • Employ an average of 100 artists, artisans, educators and technicians to facilitate programming and administration •• Sponsor student intern program for local theatre and arts students ADDITIONAL PROJECTS AND PROGRAMMING In addition to the annual programming listed above, New Village Arts is committed to increasing the presence of art in Carlsbad Village and will follow this five-year plan. New strategic plans will be shared with the City in 5-year increments. Year 1 (Season 19: Jul 2020 -Jun 2021) • Create and offer on line programming to the public • Rollout re branding campaign • Conduct and finalize negotiations for long term lease • Reassess Artist Studios business plan • Research/planning for renovation • Begin construction phase of The New Village Arts Center • Collaborate with the City on renovation of the exterior of the building • Commence Private Phase Capital Campaign to finance portion of new facility • Negotiate outdoor venue to continue production while building is closed • Research/planning for producing season 20 Year 2 (Season 20: Jul 2021 -Jun 2022) • Mid and final construction phases ofThe New Village Arts Center • Celebrate NVA's 20th Anniversary with large public event at newly renovated New Village Arts Center • Implement new Visual Arts plan • Activate Christiansen Way as a Festival Street • Increase number of patrons and economic impact brought t o the Village • Research/planning for producing season 21 Year 3 (Season 21: Jul 2022 -Jun 2023) • Begin research/planning to create Carlsbad Village Arts District • Continue to activate Christiansen Way as a Festival Street - 3 - July 27, 2021 Item #6 Page 57 of 57 • Increase number of pat rons and economic impact brought to the Village • Research/planning for producing season 22 Vear 4 (Season 22: Jul 2023 -Jun 2024) • Continue planning with City to create Carlsbad Village Arts District • Coordinat e fundraising efforts for Carlsbad Village Arts District • Continue to activate Christiansen Way as a Festival Street • Increase number of patrons and economic impact brought to the Village • Research/planning for producing season 23 Year S (Season 23: Jul 2024 -Jun 2025} • Grand opening of Carlsbad Village Arts District • Increase number of patrons and economic impact brought to the Village • Celebrate the 25th Anniversary of New Village Arts * Programming is contingent upon available funding - 4 - DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC AGREEMENT FOR CONSTRUCTION AND REIMBURSEMENT OF NEW VILLAGE ARTS' TENANT IMPROVEMENT PROJECT Attachment C This Agreement for Construction and Reimbursement of New Village Arts' Tenant Improvement Project is . 1/19/2022 entered into as of ______ _, 2022 ("Agreement") by and between the CITY OF CARLSBAD, a California municipal corporation ("Landlord") and NEW VILLAGE ARTS, a California tax exempt non-profit public benefit corporation organized under Section 501(c)(3) of the U.S. Internal Revenue Code ("Tenant")("collectively "Parties") for the property located at 2787 State Street, California 92008, with reference to the following recitals: RECITALS WHEREAS, Landlord is the owner of certain real property and improvements thereon, consisting of approximately 9,400 square feet of commercial building space, designated as Assessor Parcel Numbers 203-295-01 and 02 and located at 2787 State Street, California, 92008 (the "Premises"); WHEREAS, Tenant operates the Premises as a performing arts facility, including without limitation, theater and musical performances, rehearsals, discussions and teaching performing arts and cultural endeavors; WHEREAS, the Parties entered into a Lease Agreement for the Premises effective September 22, 2021 ("Lease Agreement"); WHEREAS, the Parties acknowledge and agree this Agreement does not modify, alter or change the terms and conditions of the Lease Agreement which authorizes Tenant to commence construction of certain interior and exterior improvements and installation of Solar Panels on the Premises ("Tenant Improvement Project") upon receipt of all necessary permits and approval by Landlord of the Final Plans for such work; WHEREAS, Tenant is solely responsible for the construction of the Tenant Improvement Project and payment of the costs thereof, with a portion of the costs to the reimbursed by Landlord in accordance with the terms of the Lease and this Agreement; and WHEREAS, this Agreement provides the timelines for construction performance measures and construction milestones for the Tenant Improvement Project required for Tenant to receive the partial reimbursement. NOW, THEREFORE, the Landlord and Tenant agree as follows: DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA6448723AAC 1 Recitals. The recitals, above, are true and correct and incorporated herein by this reference. 2 General Tenant Obligations. 2.1 In consideration of Landlord's reimbursement of a portion of the costs of the Tenant Improvement Project as set forth herein and Landlord's agreement to lease the Premises to Tenant, Tenant agrees to cause the construction of the Tenant Improvement Project, which work shall include the installation of roof-top photovoltaic panels ("solar panels"), exterior improvements to the south and east walls of the Premises, and interior renovations, as described in the public bidding documents and city-approved drawings, which are attached and incorporated herein by this reference. 2.2 Schedule. Tenant's Improvement Project shall be completed pursuant to the following schedule: 2.2.1 For all Plans and Specifications that were submitted to the Carlsbad Building Department on or before November 30, 2021: 2.2.1.1 Tenant shall submit its Construction Documents, Plans and Specifications to Landlord for written approval a minimum of fifteen (15) calendar days prior to advertisement of a notice inviting bids for the project. 2.2.1.2 Landlord shall review and provide written approval or comments to the Construction Documents, Plans and Specifications within fifteen (15) calendar days after receipt. 2.2.1.3 Tenant shall not advertise notice inviting bids until Landlord approval is obtained. 2.2.1.4 Tenant shall not commence construction until they are in receipt of Building Permits. 2.2.1.5 Tenant shall obtain the Certificate of Occupancy and open for business to the public within twelve (12) months after Tenant receives the Building Permit This deadline may be extended by mutual written consent of the parties, provided the delay is not the result of Tenant's actions or inaction. [THIS IS TO CONFORM TO 2.2.2.8. 2.2.2 For all Plans and Specifications that were not submitted to the Carlsbad Building Department on or before November 30, 2021: 2.2.2.1 Tenant shall submit its Plans and Specifications to Landlord for preliminary review a minimum of fifteen (15) calendar days prior to submittal to the City of Carlsbad Building Department. 2.2.2.2 Landlord shall review and provide written comments to the Plans and Specifications within fifteen (15) calendar days after receipt. 2.2.2.3 Tenant shall submit its Plans and Specifications to the City of Carlsbad Building Department on or before the date that is thirty (30) calendar days after receipt of Landlord's comments on Tenant's Plans and Specifications. DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA6448723AAC 2.2.2.4 Tenant shall submit its Construction Documents, Plans_ and Specifications to Landlord for written approval a minimum of fifteen (15) calendar days prior to advertisement of a notice inviting bids for the project. 2.2.2.5 Landlord shall review and provide written approval or comments to the Construction Documents, Plans and Specifications within fifteen {15) calendar days after receipt. 2.2.2.6 Tenant shall not advertise notice inviting bids until Landlord approval is obtained. 2.2.2.7 Tenant shall not commence construction until they are in receipt of Building Permits. 2.2.2.8 Tenant shall obtain the Certificate of Occupancy and open for business to the public within twelve {12) months after Tenant receives the Building Permits. This deadline may be extended by mutual written consent of the parties, provided the delay is not the result of Tenant's actions or inaction. 2.2.3 Plans and Specifications include, but are not limited to: building, mechanical, and electrical drawings, including instructions for materials, workmanship, style, color, and finishes. 2.2.4 Construction Documents include, but are not limited to: requests for qualifications or proposals including pre-qualification criteria, unsigned construction contract, contract addenda, notice inviting bids, instructions to bidders, bid (including documentation accompanying bid and any post-bid documentation submitted prior to notice of award), the bond(s), the general conditions, permits from other agencies, the special provisions, the plans, standard plans, standard specifications, reference specifications, and all modifications issued after the execution of the construction contract. 2.2.5 Landlord's approval of Tenant's Plans and Specifications and Construction Documents shall create no responsibility or liability on the part of Landlord with respect to the completeness, design sufficiency, or compliance of such plans and specifications with any applicable laws, rules, ordinances, directions or regulations. 2.3 Commencement of Construction. Tenant shall not commence construction until Tenant has: (1) Received Landlord's written approval ofTenant's Final Plans and Specifications and Construction Documents for the construction project; (2) Acquired all necessary governmental approvals; (3) Notified Landlord in writing of Tenant's intent to commence construction activities; (4) Delivered to Landlord such insurance coverages as specified within the Lease and this Agreement; and (5) Delivered to Landlord CADD drawing files of the Tenant Improvement Project, if applicable. DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC 2.4 Roof Equipment: Tenant shall not make any roof penetration and/or modifications to accommodate Tenant provided roof mounted equipment without Landlord's prior written consent. Any roof-mounted equipment shall be reasonably screened from the view of the general public; however Tenant shall not be required to raise the level of any exterior wall or parapet in order to accomplish such screening. Final flashing and patching of any roof penetrations shall be made at Tenant's sole cost and expense. 2.5 Hazardous Substances: Tenant shall not introduce or cause to be introduced any asbestos or other toxic or hazardous substances in any construction materials, fixtures or equipment used in the Premises, except ordinary and customary materials reasonably required in Tenant's Improvement Project so long as such use is in accordance with all applicable laws. The use of floor finishes containing asbestos is expressly prohibited. 2.6 Final Documents Delivered to Landlord: Tenant shall deliver to Landlord: (1) A copy of its final Certificate of Occupancy by the Opening Date; and (2) One set of reproducible "as built" or "marked up" drawings within 45 days after completion of Tenant's Improvement Project. 2.7 Construction Quality: Tenant's Improvement Project shall be performed in a good and workmanlike manner in accordance with all applicable law, ordinances and codes. Tenant shall only use new materials in performance of Tenant's Improvement Project, unless prior written approval of Landlord is obtained. 2.8 Compliance with all Laws, Design Standards, and Construction Standards. In all aspects of the design and construction of the Project, Tenant certifies that it has or will comply with all laws and the most current editions of the Standard Specifications for Public Works Construction (Green Book), the City's Standard Drawings and Design and Construction Standards, in effect at the time the Plans and Specifications for the Project was approved by the City of Carlsbad Building Department. Tenant certifies that it has and will comply with the Americans with Disabilities Act and Title 24 of the-California Building Standards Code, California Code of Regulations. Tenant shall certify compliance with Title 24/ADA to Landlord in the form and content as set forth on Exhibit G "Certificate for Title 24/ADA Compliance." 3 Tenant Contracting Obligations 3.1 Tenant shall cause the construction of the Tenant Improvement Project substantially in compliance with the Carlsbad Municipal Code and Zoning Code; California Public Contract Code, Division 2, Parts 1 and 3; the current edition of the Green Book; and all City-approved Plans and specifications applicable to the Tenant Improvement Project. 3.2 It shall be the sole responsibility ofTenant to observe and follow the requirements of City for retention of records and the submittal of information in connection with the Tenant Improvement Project, as specified in this Agreement. 3.3 Tenant certifies that all consultants hired to perform the necessary services related to the Tenant Improvement Project are and will be qualified and licensed and that all consultants shall be selected in accordance with all State and City laws, including regulations and policies applicable to consultants retained directly by Landlord unless a waiver of those procedures has been obtained. The selection of any consultant is subject to all applicable public contract laws, rules, and regulations, including, but not limited to, the City Charter, the Carlsbad DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA6448723AAC Municipal Code, Council Policies, and the City's Administrative Regulations. Failure to adhere to all applicable consultant selection procedures is a material breach of this Agreement, and any contract awarded not in accordance with the Landlord's consultant selection procedures shall be ineligible for reimbursement. 3.4 Tenant certifies that the professional services provided under this Agreement were and will be performed in accordance with the standards customarily adhered to by experienced and competent professional design, architectural, engineering, landscape architecture, and construction firms using the degree of care and skill ordinarily exercised by reputable professionals practicing in the same field of service in the State of California. 3.5 The Tenant, any consultants, contractors, subcontractors, and any other individuals employed by Tenant shall not be agents, vendors or employees of Landlord. Any provisions of this Agreement that may appear to give Landlord any right to direct Tenant concerning the details of performing the work or services under this Agreement, or to exercise any control over such performance, shall mean only that Tenant shall follow the direction of Landlord concerning the end results of the work. 3.6 Tenant certifies that it did not, and will not, discriminate on the basis of race, gender, gender expression, gender identity, religion, national origin, ethnicity, sexual orientation, age, or disability in the solicitation, selection, hiring or treatment of consultants, contractors, subcontractors, vendors or suppliers. Tenant certifies that it provided and will provide equal opportunity for contractors and subcontractors to participate in contracting and subcontracting opportunities. Tenant understands and agrees that violation of this clause shall be considered a material breach of the Agreement and may result in Agreement termination, debarment, and other sanctions. Tenant certifies that this language was included in contracts between the Tenant and any consultants, contractors, subcontractors, vendors and suppliers 3.7 Tenant shall comply with the City's bidding, contracting, and change order procedures: 3.7.1 Tenant shall competitively bid all work and may select either: 3.7.1.1 Open to Any Qualified Bidder: If bidding on the Tenant Improvement Project will be open to any qualified bidder, Tenant shall advertise each notice inviting bids in at least one newspaper of general circulation in the City of Carlsbad. The first posting/publication of notice shall be at least fourteen (14) calendar) days before bid opening. Such notice shall be published for at least ten (10) consecutive days or for at least two (2) consecutive times in a weekly newspaper in the City of Carlsbad. Notice inviting bids shall be sent to the construction trade journals at least 15 calendar days before the bid opening. Proof of publication shall be sent to the Deputy City Engineer-Facilities. 3.7.1.2 Open to Prequalified Bidders: Where the notice inviting bids will only be sent to a list of pre-qualified bidders, a minimum of three (3) bidders shall be pre-qualified based on criteria reviewed and approved by the Deputy City Engineer-Facilities. 3.7.2 The notice inviting bids must clearly state the time, date, and place for the submission of bids. These dates and times must be strictly adhered to unless changed DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC by addendum. The notice inviting bids and any addenda shall be sent to the Deputy City Engineer-Facilities. 3.7.3 The request for bids shall state that the successful bidder shall be required to furnish a performance and warranty bond equal to one hundred percent (100%) of the amount bid and a labor and materials bond equal to one hundred percent (100%) of the amount bid. In lieu of these bond requirements, Tenant may permit securities or cash to be substituted therefore. Providers of architectural, engineering, and land surveying services shall not be required to post bonds. 3.7.4 The request for bids shall require bidders to furnish a certificate of insurance and name the city as additional insured for commercial general liability, automobile liability, workers compensation and any other requirements set forth by the City's Risk Manager. 3.7.5 If significant changes to plans, specifications, or request for bids require the issuance of an addendum in the last five (5) working days of the bidding period, the bid opening date shall be extended to allow bidders a minimum offive (5) working days from receipt of the addendum to accommodate the change. 3.7.6 Bidders shall be given a reasonable period oftime between the issuance of the notice inviting bids and bid opening to permit bidders to prepare and submit their bids in a timely manner. The recommended minimum period between issuance ofthe notice inviting bids and bid opening is four (4) weeks, but in no event shall that time period be less than 15 days. 3.7.7 Tenant shall conduct the bid opening at a location open to the public. Sealed bids will be required to be submitted on or before the specified date and time and will be publicly opened and the bidder's name and total bid announced at the bid opening in the presence of any interested party. 3.7.8 Tenant shall open all bids in the presence of any interested parties and shall rank all bids from the lowest to the highest bid amount, based upon costs for the Improvements. Tenant shall prepare a summary analysis of all bids and provide its findings regarding the bid award to the Deputy City Engineer-Facilities within five (5) working days of the date such award is made. The summary analysis shall include: (a) an itemized summary of all bids received; (b) a certificate executed by an authorized representative of Tenant stating that all bidders received the same set of bid documents and any addenda issued, there are no pending disputes over the bidding procedures, all applicable binding, insurance, and licensing requirements have been met, and the bid was made without connection with any collusion or fraud; and (c) a copy of the selected bid proposal for award. 3.7.9 Tenant shall retain the original of all bids received for a minimum of three (3) years after bid award. 3.7.10 Tenant shall award contracts to the lowest responsive, responsible bidder within sixty (60) days after bid opening with concurrence of the Deputy City Engineer- Facilities and shall authorize the contractor to proceed with the work within sixty (60) days after award. DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA6448723AAC 3.7.11 Tenant shall not authorize the contractor to begin construction until the following documentation has been submitted to, and approved by, the Deputy City Engineer- Facilities: (a) copies of the signed bid documents for the construction of the Improvements; (b) copies of all insurance certificates for the Tenant and contractor; and (c) a written statement to certify and declare, under penalty of perjury, that the bid documents and bidding procedures were prepared and followed in accordance with the requirements of this Agreement. Upon written approval from the Deputy City Engineer-Facilities, the Tenant may issue the notice to proceed to the contractor. 3.7.12 Tenant shall schedule and conduct a pre-construction meeting prior to the beginning of construction of the Improvements. Tenant shall invite the Landlord, Deputy City Engineer-Facilities, design engineer, contractor, inspector, and any other interested parties. 3.7.13 If Tenant desires that any change order be included in the Reimbursement Amount, Tenant shall, prior to undertaking such work, obtain the w ritten acknowledgment of the Deputy City Engineer -Facilities as to the need to perform the work in order to satisfactorily complete the construction of the Tenant Improvement Project. The Deputy City Engineer -Facilities' acknowledgment shall be documented in writing. If Tenant undertakes such work prior to obtaining the Deputy City Engineer-Facilities' written acknowledgment, Tenant assumes the risk that such change order may not be included in the Reimbursement Amount. 3.7.14 Contracts for the construction of the Improvements shall provide for payments of prevailing wages by all Contractors and Subcontractors for all work performed. Tenant shall include the following provisions in the contract for construction of the Improvements: The general prevailing rate of wages for each craft or type of worker needed to execute the Contract shall be those as determined by the Director of Industrial Relations pursuant to the sections 1770, 1773, and 1773.1 of the Labor Code. Pursuant to section 1773.2 of the Labor Code, a current copy of applicable wage rates is on file in the principal office of New Village Arts and shall be made available to any interested party on request. The Contractor to whom the Contract is awarded shall not pay less than the said specified prevailing rates of wages to all workers employed by him or her in the execution of the Contract. The Prime Contractor(s) shall be responsible for insuring compliance with provisions of section 1777. 5 of the Labor Code and section 4100 et seq. of the Public Contracts Code, "Subletting and Subcontracting Fair Practices Act." The Deputy City Engineer- Facilities is the "duly authorized officer" for the purposes of section 4107 and 4107.5. The provisions of Part 7, Chapter 1, of the Labor Code commencing with section 1720 shall apply to the Contract for work. A contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract for public work, unless currently DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC registered and qualified to perform public work pursuant to Section 1725.5. This project is subject to compliance monitoring and enforcement by the Department of Industrial Relations. The Prime Contractor and all subcontractors shall comply with Section 1776 of the Labor Code, which generally requires keeping accurate payroll records, verifying and certifying payroll records, and making them available for inspection. Contractor shall require all subcontractors to comply with Section 1776. 3.7.15 Work that is proposed to deviate from the approved Plans or revisions to the Plans shall be reviewed and approved by the Deputy City Engineer-Facilities or designee, and if required, the City's Building Department and fire prevention divisions. 3.7.16 Tenant shall ensure that all contractors and subcontractors provide lien and material releases as to the Project and provide copies of such lien and material releases to the City Engineer. Alternatively, with City's approval, which shall not be unreasonably withheld, Tenant may ensure that bonds are provided in a form acceptable to City in lieu of the lien and material releases. Landlord shall have the right to post and maintain and record on the Premises any notice of non-responsibility provided for by the mechanic's lien laws. 3.8 Tenant shall secure warranty from Contractor for all work for one (1) year after recordation of the City issued notice of completion and any faulty work or materials discovered during the warranty period shall be repaired or replaced by Tenant, at its expense. Twenty-five percent (25%) of the faithful performance bond shall be retained as a warranty bond for the one-year warranty period. Tenant shall replace or repair any such defective work in a manner satisfactory to the Deputy City Engineer-Facilities, after notice to do so from the Deputy City Engineer-Facilities, and within the time specified in the notice. If Tenant fails to make such replacement or repairs within the time specified in the notice, City may perform this work and Tenant's contractor's sureties shall be liable for the cost thereof. 3.9 The Tenant Improvement Project will be inspected by the Deputy City Engineer-Facilities, for acceptance by Landlord, upon receipt of the Tenant's written assertion that the Tenant Improvement Project has been completed. The Landlord will not accept the project or any portion of the project as complete before all of the project is completed and all outstanding deficiencies that may exist are corrected by the Landlord and Landlord is satisfied that all the materials and workmanship, and all other features of the project, meet the requirements of all of the specifications for the project. Use, temporary, interim or permanent, of all, or portions of, the Premises does not constitute acceptance of the project. If, in the Landlord's judgment, the Tenant Improvement Project has been completed and is ready for acceptance the Landlord may accept the completed project. Upon Landlord's acceptance of the project the Deputy City Engineer -Facilities will cause a "Notice of Completion" to be filed in the office of the San Diego County Recorder. Upon Final Completion of the Project, Tenant shall assign its rights under its contracts with all contractors, subcontractors, design professionals, engineers, and material suppliers associated with the Project to Landlord. Tenant shall be required to obtain written approval and acknowledgement, whether in the form of a contract provision or separate document, of such assignment from its contractors, subcontractors, design professionals, engineers, and material suppliers. This assignment of rights shall not relieve Tenant of its obligations nor prohibit any remedies under this Agreement. DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC 4 General Landlord Obligations. Landlord shall reimburse Tenant in an amount not to exceed five hundred seventy-three thousand dollars ($573,000), which will be comprised of the following Reimbursable Amounts: 4.1 Solar Panels: Not to exceed one hundred and three thousand dollars ($103,000) for the direct costs incurred to install photovoltaic panels on the roof of the Premises as described in the approved Construction Documents. 4.2 Exterior Improvements: Not to exceed four hundred and seventy thousand dollars ($470,000) for the direct costs incurred for exterior improvements to the south and east walls of the Premises as described in the approved Construction Documents. 5 Incremental Reimbursement of Costs. 5.1 The reimbursement of costs for the Solar Panels and for the Exterior Improvements shall each be payable to Tenant on a monthly basis, with 10 percent withheld until satisfactory completion of the project, as follows: 5.1.1 Solar Panels: 5.1.1.1 Invoice Payments: Tenant may submit invoices to Landlord at intervals of no more than once per month showing the direct construction costs incurred by Tenant. Landlord shall reimburse Tenant up to a total of $92,700 for the direct construction costs incurred as shown on invoices and in accordance with Section 6, Eligibility for Reimbursement, below. In no event shall the total of all invoices reimbursed by Landlord exceed $92,700. DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC 5.1.1.2 Final Payment: Tenant shall be paid $10,300 (10 percent) 35 days after notice of completion recorded, assuming no stop notices/lien and upon satisfactory completion, in accordance with Section 6, Eligibility for Reimbursement, of one hundred {100) percent of the Solar Panel ins ta I lation. 5.1.2 Exterior Improvements: 5.1.2.1 Invoice Payments: Tenant may submit monthly invoices to Landlord at intervals of no more than once per month showing the direct construction costs incurred by Tenant. Landlord shall reimburse Tenant up to a total of $423,000 for the direct construction costs incurred as shown on invoices and in accordance with Section 6, Eligibility for Reimbursement, below. In no event shall the total of all invoices reimbursed by Landlord exceed $423,000. 5.1.2.2 Final Payment: Tenant shall be paid $47,000 (10 percent) upon satisfactory completion 35 days after notice of completion recorded, assuming no stop notices/lien and in accordance with Section 6, Eligibility for Reimbursement, of one hundred (100) percent of the Exterior Improvements. 6 Eligibility for Reimbursement. 6.1 Invoice Payments: Once per month, Tenant shall be eligible for reimbursement of direct construction costs incurred, in the amount shown on invoices provided by Tenant's contractor(s), provided: DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC 6.1.1 The work performed by Tenant was contracted for and performed in accordance with the terms of the contract with the Contractor and this Agreement; and 6.1.2 Tenant provides all required documentation specified in Section 7.2, below. 6.1.3 Once Landlord has paid Tenant ninety percent of the Reimbursable Amounts for the Solar Panels and Exterior Improvements, respectively, Landlord has no further obligation to make payments to Tenant, except as provided in Section 6.3, Final Payment. 6.2 Non-Reimbursable Costs. Non-Reimbursable Costs include: (i) Any cost or expenditure in excess of the Reimbursable Amounts; (ii) any cost or expenditure to remedy Defective Work (as defined in Section 12); (iii) any cost or expenditure caused by Tenant's or Tenant's consultants', contractors', subcontractors', employees', or other agents' (collectively, 11Tenant's agents") negligence, omissions, delay, except as delay may be outside the control of the person or entity, or Default; (iv) any cost of substituted products, work or services not necessary for completion of the Project, unless requested and approved by Landlord in writing; (v) any cost or expenditure not approved by Landlord in the manner required by this Agreement and/or the Charter of the City of Carlsbad (Charter) and rules, regulations, or laws promulgated thereunder; (vi) any cost not supported by proper invoicing or other documentation as reasonable and necessary; and (vii) any cost in excess of available for reimbursement to Tenant for the design and construction of the Project. Additionally, the fair value as reasonably determined by Landlord of any property that is destroyed, lost, stolen, or damaged rendering it undeliverable, unusable, or inoperable for Landlord constitutes a Non-Reimbursable Cost. 6.3 Final Payment: Landlord shall pay Tenant the Final Payment for the Solar Panels and for the Exterior Improvements 35 days after notice of completion recorded for the Solar Panels and Exterior Improvements, assuming no stop notices/lien, and upon satisfactory completion of one hundred percent of each project, provided Tenant provides all required documentation specified in Section 7.2. 7 Submittal and Audits of Reimbursable Amounts. 7.1 Tenant shall retain detailed payment records for all Reimbursable Amounts. 7.2 Each reimbursement request shall include the following documentation, as applicable: 7.2.1 A spreadsheet using Microsoft Excel, showing all eligible and non-eligible costs for each contractor, subcontractor, or vendor by bid item with the unit price bid, estimated quantity, actual quantity, total bid amount, change order amount, amount invoiced, cumulative amount invoiced, and retained amount. A summary sheet of all costs shall be included with each reimbursement request compared to the budget for each item of work and cross-reference to the voicer and canceled check number. 7.2.2 Copies of invoices, vouchers, canceled checks (front and back), or other evidence of payment to support the reimbursement request. 7.2.3 For the final payment request, Tenant shall provide in addition to the items above: a copy of the City issued and recorded notice of completion for the projects specified in Section 4, above; copies of all final mechanics lien releases from each contractor, subcontractor or vendor; and a copy of the approved as-built plans that incorporate all approved changes. DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC 7.3 Each reimbursement request will be processed and audited for City by the Deputy City Engineer -Facilities. 8 Payment of Reimbursable Amounts. 8.1 Upon receipt and review of the Tenant's Reimbursement Request, the Deputy City Engineer- Facilities may reject any additional cost claim that is not eligible under this Agreement or for which supporting documentation was not provided. If the Deputy City Engineer-Facilities rejects payment on any cost claim comprising the Reimbursement Request, the Deputy City Engineer-Facilities shall notify Tenant within thirty (30) days after the City's receipt of the Reimbursement Request, including all required documentation. 8.2 The Deputy City Engineer-Facilities shall process the invoice for payment in accordance with City invoice payment procedures. 8.3 In the event that Tenant and the Deputy City Engineer-Facilities cannot agree on the amount or eligibility of a claimed expense, the dispute procedures in Section 9 shall be followed. Resolution of any disputed costs or items of work shall not delay processing of an invoice that has been properly submitted by Tenant for reimbursement of costs that were deemed eligible for reimbursement by the Deputy City Engineer-Facilities. 9 Disputes/Claims. If a dispute should arise regarding performance or interpretation of this Agreement, the following procedures shall be used to resolve any question of fact or interpretation of this Agreement not informally resolved by the parties. Such questions, if they become identified as a part of a dispute among persons operating under the provisions of this Agreement shall be reduced to writing by the principal of Tenant or the Deputy City Engineer-Facilities. A copy of such documented dispute shall be forwarded to Landlord and Tenant, at the addresses provided in Section 14 for Notices, along with recommended methods of resolution which would be of benefit to both parties. The Deputy City Engineer-Facilities or principal of Tenant, upon receipt, shall reply to the letter, including a recommended resolution within ten (10) days. If the recommended resolution is unsatisfactory to the aggrieved party, the aggrieved party may request in writing an informal conference to informally resolve the disagreement. The informal conference shall be held within fourteen (14) days of the request, at a date, time and location that is mutually acceptable. If an informal conference is not requested or if an informal conference fails to resolve the dispute, a letter outlining the dispute shall be forwarded to the City Council for resolution through the office of the City Manager, with a copy to Landlord. The City Council may, but is not obligated to, resolve the dispute. If the City Council considers the dispute, and directs a solution, the action of the City Council shall be binding upon the parties involved, although nothing in this procedure shall prohibit the parties from seeking remedies available to them at law. 10 Indemnification. Other than the performance of design professionals services, Tenant shall defend, indemnify, and hold harmless the City and its officers, agents, departments, officials, and employees (Indemnified Parties) from and against all claims, losses, costs, damages, injuries, expense, and liability of every kind that arise out of or relate to, directly or indirectly, in whole or in part, (a) any work performed under this Agreement by Tenant or Tenant's agents, any subcontractor, anyone directly or indirectly employed by them, or anyone they control, (b) the negligent or willful acts or omissions of Tenant, its agents, contractors, subcontractors or DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC employees, (c) any breach of any obligation, covenant, representation or warranty of Tenant under this Lease, or (d) the use and operation of the Premises during the Term. Tenant's duty to defend, indemnify, and hold harmless shall not include any claims or liabilities arising from the active or sole negligence or willful misconduct of the Indemnified Parties. Nothing herein shall prohibit the Tenant from seeking all remedies available against any of its agents, subcontractors, anyone directly or indirectly employed by them, or anyone they control. With respect to the performance of design professional services, to the fullest extent permitted by law (including, without limitation, California Civil Code section 2782.8), Tenant shall require its design professional to indemnify and hold harmless City, its officers and employees, from all claims, demands, or liability that arise out of or relate to the negligence, recklessness, or willful misconduct of Tenant's design professional or the design professional's officers or employees. 11 Insurance. Tenant shall, at its expense, obtain and maintain for the duration of the Agreement and any and all amendments, insurance against claims for injuries to persons or damage to property which may arise out of or in connection with performance of the terms of this Agreement by Tenant or Tenant's agents, representatives, employees, contractors or subcontractors. All policies that Tenant is required to obtain under this section shall be issued by companies licensed to do business in California with a general policyholder's rating of not less than "A-" and a financing rating of not less than Class "VIII", as rated by the most current available "Best's" Insurance Reports and shall be in a form (without any additions or deletions unless approved in writing by Landlord) and underwritten by companies acceptable to Landlord. 11.1 Coverage and Limits. Tenant will maintain the types of coverage and minimum limits indicated below, unless the City of Carlsbad Risk Manager approves a lower amount. These minimum amounts of coverage will not constitute any limitations or cap on Tenant's indemnification obligations under this Agreement. Landlord (City), its officers, agents and employees make no representation that the limits of the insurance specified to be carried by Tenant pursuant to this Agreement are adequate to protect Tenant. If Tenant believes that any required insurance coverage is inadequate, Tenant will obtain such additional insurance coverage, as Tenant deems adequate, at Tenant's sole expense. The full limits available to the named insured shall also be available and applicable to Landlord (City) as an additional insured. 11.1.1 Commercial General Liability Insurance. $2,000,000 combined single-limit per occurrence for bodily injury, personal injury and property damage. If the submitted policies contain aggregate limits, general aggregate limits will apply separately to the work under this Agreement or the general aggregate will be twice the required per occurrence limit. 11.1.2 Automobile Liability. (if the use of an automobile is involved for performance of the work under this Agreement). $1,000,000 combined single-limit per accident for bodily injury and property damage. 11.1.3 Workers' Compensation and Employer's Liability. Tenant shall obtain and keep in force workers' compensation and employer's liability insurance covering all employees of Tenant engaged on or with respect to the Premises, affording applicable statutory limits DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC for workers' compensation coverage and at least $1,000,000.00 in limits for employer's liability coverage. 11.1.4 Professional Liability. Errors and omissions liability appropriate to Tenant's profession with limits of not less than $1,000,000 per claim. Coverage must be maintained for a period of five years following the date of completion of the Improvements. 11.2 Additional Provisions. Tenant will ensure that the policies of insurance required under this Agreement contain, or are endorsed to contain, the following provisions: Landlord will be named as an additional insured on Commercial General Liability which shall provide primary coverage to Landlord. Tenant will obtain occurrence coverage, excluding Professional Liability, which will be written as claims-made coverage. This insurance will be in force during the life of the Agreement and any extensions of it and will not be canceled without thirty (30) days prior written notice to Landlord sent by certified mail pursuant to the Notice provisions of this Agreement. 11.3 Providing Certificates of Insurance and Endorsements. Prior to Landlord's execution of this Agreement, Tenant will furnish certificates of insurance and endorsements to Landlord. 11.4 Failure to maintain Coverage. If Tenant fails to maintain any of these insurance coverages, then Landlord will have the option to declare Tenant in breach, or may purchase replacement insurance or pay the premiums that are due on existing policies in order to maintain the required coverages. Tenant is responsible for any payments made by Landlord to obtain or maintain insurance and Landlord may collect these payments from Tenant or deduct the amount paid from any sums due Tenant under this Agreement. 11.5 Submission of Insurance Policies. Landlord reserves the right to require, at any time, complete and certified copies of any or all required insurance policies and endorsements. DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA6448723AAC 12 Defective Work. All work, material, or equipment that is unsatisfactory, faulty, incomplete, or does not conform to the Construction Documents is defective (Defective Work). If within the designated warranty period, or such additional period as may be required by law or regulation, the Project is discovered to contain Defective Work, Tenant shall promptly and in accordance with Landlord's written instructions and within the reasonable time limits stated therein, either correct the Defective Work, or if it has been rejected by Landlord, remove it from the site and replace it with non-defective and conforming work. 12.1 If circumstances warrant, including an emergency or Tenant's failure to adhere to Section 12, Landlord may correct, remove, or replace the Defective Work. In such circumstances, Tenant shall not recover costs associated with the Defective Work and shall reimburse Landlord for all Landlord's costs, whether direct or indirect, associated with the correction or removal and replacement. 12.2 All costs incurred by Tenant or Tenant's agents to remedy Defective Work are Non- Reimbursable Costs, except nothing herein shall prevent Tenant from reimbursement from the Tenant's Contractor's sureties as stated in section 3.8. If Landlord has already reimbursed Tenant for Defective Work, Landlord is entitled to an appropriate decrease in Reimbursable Costs, to withhold a setoff against the amount, or to make a claim against Tenant's or the construction contractor's bond or against Tenant if Tenant has been paid in full. 12.3 When Defective Work, or damage there from, has been corrected, removed, or replaced during the warranty period, the one (1) year, or relevant warranty period, shall be extended for an additional one (1) year from the date of the satisfactory completion of the correction, removal, or replacement. 12.4 Exercise of the remedies for Defective Work pursuant to this Article shall not limit the remedies Landlord may pursue under this Agreement, at law, or in equity, nor shall it limit Tenants remedies to seek reimbursement as applicable from the Contractor's sureties or from the Contractor. 12.5 If Tenant and Landlord are unable to reach agreement on disputed work, Landlord may direct Tenant to proceed with the work and compensate Tenant for undisputed amounts. Payment of disputed amounts shall be as later determined by mediation or as subsequently adjudicated or established in a court of law. Tenant shall maintain and keep all records relating to disputed work. 12.6 Where Defective Work has been identified prior to the Final Completion of Project, Tenant shall promptly, and in accordance with Landlord's written instructions and within the reasonable time limits stated therein, either correct the Defective Work, or if it has been rejected by Landlord, remove it from the site and replace it with non-defective and conforming work. Costs incurred to remedy Defective Work are Non-Reimbursable Costs, except Tenant may seek reimbursement from Contractor or Contractor's bond. Where Defective Work is not remedied, Landlord is entitled to an appropriate decrease in Reimbursable Costs, to withhold a setoff against the amount paid, or make a claim against the Tenant's or construction contractor's bond. DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC 13 Assignment of Contract. Tenant shall not assign this contract or any part thereof or any monies due thereunder without the prior written consent of Landlord. 14 Notices. Unless otherwise specifically provided herein, all notices, demands or other communications given hereunder shall be in writing and shall be deemed to have been duly delivered upon personal delivery, or by Federal Express (or similar reputable express delivery service), or by electronic transmission with back-up copy mailed the same day, or as of the second business day after mailing by United States Certified Mail, return receipt requested, postage prepaid, addressed as shown below. Notices required to be given to Tenant shall be addressed as follows: New Village Arts Rae Henderson, Managing Director -rae@newvillagearts.org Sue Loftin, Board Member -sue@loftinbedell.com 2787 State Street Carlsbad, CA 92008 Project Manager Robert Webster, Project Manager -r.webster@gardinerusa.com Notices required to be given to Landlord shall be addressed as follows: Cutis Jackson Real Estate Manager-City of Carlsbad 3096 Harding Street Carlsbad, CA 92008 Curtis.Jackson@carlsbadca.gov Notices required to be given to the Deputy City Engineer -Facilities shall be addressed as follows: John Maashoff Deputy City Engineer-Facilities 405 Oak Avenue Carlsbad, CA 92008 john.maashoff@carlsbadca.gov DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC 15 Counterparts. This Agreement may be executed in any number of counterparts each of which shall be deemed an original and all of which shall constitute one and the same Agreement with the same effect as if all parties had signed the same signature page. 16 Governing Law and Venue. This Agreement shall be construed in accordance with and governed by the statutes, decisions, and other laws of the State of California and the Federal Statutes, regulations, decisions relating to Tenant's standing as an exempt organization and other laws of the United States. Tenant expressly agrees that any and all disputes arising out of or in connection with this Agreement shall be litigated only in the North County Superior Court of the State of California for San Diego County, and Tenant and Landlord hereby consents to the jurisdiction of said court, unless the Federal laws are applicable. 17 Complete Agreement. This Agreement contains all terms, covenants, conditions, warranties and agreements of the Parties with respect to the subject matter contained herein, and supersedes all negotiations, discussions, and prior drafts with respect to this subject matter. 18 Amendment. This Agreement may not be amended, altered or modified in any way except in writing signed by the parties hereto. 19 No Partnership. It is agreed that nothing contained in this Agreement shall be deemed or construed as creating a partnership or joint venture between Landlord and Tenant or between Landlord and any other party, or cause Landlord to be responsible in any way for the debts or obligations of Tenant or any other party. 20 No Third Party Beneficiaries. This Agreement shall not be deemed to confer any rights upon any individual or entity which is not a party hereto, and the parties hereto expressly disclaim any such third-party benefit. 21 Severability. If any provision of this Lease or application thereof to any person or circumstances shall to any extent be invalid, the remainder of this Lease (including the application of such provision to persons or circumstances other than those to which it is held invalid) shall not be affected thereby, and each provision of this Lease shall be valid and enforced to the fullest extent permitted by law. 22 Signatures. The individuals executing this Lease represent and warrant that they have the right, power, legal capacity and authority to enter into and to execute this Lease on behalf of the respective legal entities of Tenant and Landlord. DocuSign Envelope ID: 8EA75478-33EC--4C34-9834-DA644B723AAC IN WITNESS WHEREOF, the parties hereto have executed this Construction and Reimbursement Agreement as of the date first above written. Tenant: NEW VILLAGE ARTS Robert I. Lin, President Mary E. Kerr, Treasurer Landlord: CITY OF CARLSBAD, a municipal corporation of the State of California By: Scott Chadwick City Manager ATTEST: j~ le. --WV,~ FAVIOLA MEDINA City Clerk Services Manager If required by City, proper notarial acknowledgment of execution by contractor must be attached. !f....§. corporation, Agreement must be signed by one corporate officer from each of the following two groups. Group A Chairman, President, or Vice-President Group B Secretary, Assistant Secretary, CFO or Assistant Treasurer Otherwise, the corporation must attach a resolution certified by the secretary or assistant secretary under corporate seal empowering the officer(s) signing to bind the corporation. APPROVED AS TO FORM: CELIA A. BREWER, City Attorney a11ur~ fV'bSf BY: ____________ _ Deputy City Attorney DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA6448723AAC RESOLUTION NO. 2021-182 A RESOLUTION OF THI: CIJY COUl\lC:IL OF THE CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING THE CITY MANAGER TO EXECUTE A TEN-YEAR LEASE AGREEMENT, WITH TWO, FIVE-YEAR EXTENSION OPTIONS,. WITH NEW VILLAGE ARTS (NVA! TO OPERATE A THEATER AND ARTS FACILITY AT 2787 STATE SfREET, COMMONLY KNOWN AS THE BAUER LUMBER BUILDING; APPROPRIATE $613,000 FROM THE G.ENERAL CAPITAL CONSTRUCTION FUND TO THE PROJECT; AND E~ECUTE A CONSTRUCTION AGREEMENT WITH NVA THAT WILL DETAIL THE TERMS OF REIMBURSEMENT FOR THE CITY'S PORTION OF THE TENANT IMPROVEMENT PROJECT WHERE.A.S; On Nov~mber 20, 1997, the Carlsbad Redevelopment Agency acquired the property located on the northeastcorner of State Street and Christiansen Way at 2787 State Street in the Carlsbad Vfllage (Property) with proceeds from tax exempt bonds issued in 1993; and WHEREAS, on September 26, 2()06, the City Council approved a lease agreement (Agreement) with New Village Arts. (NVA) for the purpose of operating a p_erformlng arts theater in th¢ rear 6,300 square feet of the Property by Resolution No. 2006-429; and WHEREAS, on June 23, 2009, the City Council approved a lease agreement with NVA, expar,dingthe leased area to include the front 3,100 square fe~t of the Property, for a revised total of 9,400square feet of leased space, to incorporate an arts incubator on the· Property by Resolution No. 2009-471; and WHEREAS, on April 12,2019, the c:ity Council approved a-five~year lease agreementwith NVA by Resolution No .. 2019-045; and WHEREAS, On July 28, 2020, the City Council approved pJans and ~pecifications and authorized advertisement for bids to repair the building's roof and refurbish the western wall (Resolution No. 2020-160). The, City Council approved a contract to commence the repairs and to increase the budget for the renovations ~n .additional $60,000, fr:.om $25$,626 to $313,626, on Sept. 22, 2020 (Resolution No. 2020~192). Repairs and renovations to the building were completed in January 2021. To date, $291,187 has been spent on the project; and WHEREAS, On Feb. 11, 2020, the City Council directed city staff to negotiate a long-term lease agreement with NVA with a period of 10-20 years; and WHEREAS, On June 10, 2020, NVA submitted a Letter of Intent with a request to continue and expand NVA's partnership with the dty under the terms of a new long-term lease agreement. The July 27, 2021 Item #6 Page 6 of 57 ! • I DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC letter included a request for a new long-ter.m lease agreement, rent of $1.00 per year, and proposed $1.2.million in renovations to the Property, with~ request for the city to reimburse NVA up to a total of $573,000 for renovations related to the installation of solar panels. ($103,000) and a portion of the exterior improvements ($470,000); and WHEREAS, prior to construction, the City Manager will execute a Construction Agreement with NVA that will detail the terms of reimbursement for the city's portion of the tenant improvement project's costs; and WHEREAS., the city will also enter into a contract with a construction management firm in an amount not to exceed $40,000, to ensure that the improvements to the city's building are constructed properly and that funds are reimbursed consistent with the terms of the future Construction Agreement; and WHEREAS, in order to fund the reimbursement and construction management firm cost, city staff is requesting that the City Council appropriate $613,000 from the General Capital Construction Fund to the project; and WHEREAS, the city has determined that NVA provides a public benefit to the community; and WHEREAS, the City Council of the City of Carlsbad ha_s determined thar it is in the best interest of the city tb enter into a new Agreement with NVA for the Property; and WHEREAS, the City Council has further determined that it accepts the terms of the Agreement with NVA; and WHEREAS, the Agreement is not subject to the Surplus lands Act because it is excluded from the definition of "lease" and is not considered to be a "disposition" due to the fact that no development or demolition will occur on the property. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the city has determined that NVA provides a public benefit to the community by offering ~n alternative evening activity that encourages more positive pedt;sJrian traffic and public interaction in the Carlsbad Village area, as well as a presence in the Carlsbad Village that will assist in the city's efforts to revitalize the retail and dining July 27, 2021 Item #6 Page 7 of 57 DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC II II II II II II II environment by providing an evening entertainment opportunity which otherwise would not exist within the area. Further, NVA's use of the Subject Property as a theater and arts center is consistentwith the goals of the Carlsbad Village and Barrio Master Plan which call for uses that will activate the Village by promoting placemaking strategies that support arts and culture, including visual, musical, and theatrical arts, and other public performances. 3. That the City Manager is hereby authorized to execute the LeaseAgreement with New Village Arts, attached hereto as Attachment A, and to act on behalf of the City of Carlsbad "in all futwe decisions and actions necessary to implement the Agreement with New Village Arts for use of city owned property locat ed at2787 State Street, Carlsbad, CA 92008, including any extension options, and to do so in full compliance with the terms and conditions expressed in the aforementioned Agreement and to the satisfaction of the City Attorney. 4. That the Qeputy City Manager, Administrative Services is authorized to appropriate $613,000 from the General Capital Construction Fund to the project, to include funds in an amount not to exceed $573,000 for reimbursement to NVA and funds in an amount not to exceed $40,000 for the cost ofa construction management contract. 5. That the City Manager is hereby authorized to execute a Construction Agreement with NVA that will detail the.terms of reimbursement for the city's portion of the tenant impr:ovement project costs. July 27, 2021 Item #6 Page 8 of 57 DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC PASSED, APPROVED AND A_QOPTED at a Regular Meeting of the C.ity Council of the City pf the City of Carlsbad ori the 27th day of July, 2021, by the following vote, to wit: AYES: Hail, Blackburn, Acosta, Bhat-Patel. NAYS: None. ABSENT: None. MATT HALL, Mayor \ lbl\~•C?a? f·c·r BARBARA ENGLESON, City Clerk (SEAL) July 27, 2021 Item #6 Page 9 of 57 DocuSign Envelope ID: 8EA75478-33EC--4C34-9834-DA644B723AAC NEW VILLAGE ARTS Kristianne Kurner Executive Artistic Director Rae Henderson Managing Director Robert I. Lin President Saundra Redmond-Moton Vice President/Secretory Mary Kerr Treasurer Board Members at Large Kristianne Kurner John Harelson Sue Loftin Christy Rosa Mohler, M.D Andrea Moriarty Lou Storrow Scott L. White, Former President De Milo Young NVA Advisory Board Rosemary Eshelman, Chair Ariel Ariel Bedell Mark Caruana Kathy Deering Fred Deutsch Haley DiDonato Mea Hall Walt & Sharon Hambly Pat Hansen Bobbie Hoder Pat Hurley Emma Jadhav Chelsea Kaufman Richard Kuranda Cassie Langan Linda Ledesma Gina McBride Dr. Bob Ogle Christine lleto Pangan Justin Peek Elizabeth Rhodes Shari Roberts Jay Sarno Don & Becky Sciglimpaglia NVA is a 501/c)/3/ Non-Profit Organization Tax ID t/52-2320930 New Village Arts, Inc. 2787 State St. Carlsbad, CA 92008 760.433,3245 'info@newvillagearts.org www.newvillagearts.org January 2, 2022 Celia A. Brewer City Attorney Office of the City Attorney 1200 Carlsbad Village Drive Carlsbad, CA 92008 Re: Construction Agreement Dear Ms. Brewer: A special meeting of the New Village Arts Board of Directors was called on due notice and held on Monday, December 27, 2021 at 9:00 a.m. via electronic conference, in accordance with the bylaws. A quorum was declared and it was moved and seconded that the board approve the Construction Agreement, as negotiated between New Village Arts and the City of Carlsbad. After due discussion, a vote was taken in which it was resolved by unanimous approval that New Village Arts enter into the Construction Agreement and that signature authority be delegated to Robert I. Lin, President of the Board, Saundra Redmond-Moton, Secretary of the Board, and Mary Kerr, Treasurer of the Board, any two being authorized to act. I, Mary E. Kerr, declare that the above resolution came before the Board of Directors as stated, was moved and seconded and that the vote was to approve and to delegate signature authority as stated. Sincerely, Mary E. Kerr Treasurer of the Boa rd DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC ~ ACORD® CERTIFICATE OF LIABILITY INSURANCE I DATE (MM/DDNYYY) ~ 1/6/2022 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER ~~:i~cT The Certfiicate Team AssuredPartners Design Professionals Insurance Services, LLC f.~~NJ_ "-"· I FAX 3697 Mt. Diablo Blvd Suite 230 IA/C Nol: Lafayette CA 94549 Xt1D'rl~ss: CertsDesiqnPro@AssuredPartners.com INSURER($) AFFORDING COVERAGE NAIC# License#:6003745 INSURER A: Berkley Insurance Company 32603 INSURED MIGINC0-01 INSURER B : Travelers Property Casualty Company of America 25674 MIG, Inc. INSURER c : The Travelers Indemnity Company of Connecticut 25682 Moore lacofano Goltsman, Inc. 800 Hearst Ave INSURERD : Berkeley CA 94710 INSURER E: INSURER F: COVERAGES CERTIFICATE NUMBER: 926492498 REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR ADDL SUBR POLICYEFF POLICY EXP LTR TYPE OF INSURANCE ,.,~n ,m,n POLICY NUMBER fMM/DDNYYYl IMM/DDNYYYl LIMITS B X COMMERCIAL GENERAL LIABILITY y y 6801 H899998 8/31/2021 8/31/2022 EACH OCCURRENCE $1,000,000 -0 CLAIMS-MADE 0 OCCUR DAMAGE TO RENTED -PREMISES /Ea occurrencel $1,000,000 X -Contractual Liab MED EXP (Any one person) $1 0,000 -Included PERSONAL & ADV INJURY $1,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $2,000,000 R [I]PRO· [I]Loc PRODUCTS · COMP/OP AGG $2,000,000 POLICY JECT OTHER: $ C AUTOMOBILE LIABILITY y y BA0SS79947 8/31/2021 8/31/2022 COMBINED SINGLE LIMIT $1,000,000 /Ea accident\ -X ANY AUTO BODILY INJURY (Per person) $ -OWNED -SCHEDULED BODILY INJURY (Per accident) $ x AUTOS ONLY -AUTOS HIRED X NON-OWNED PROPERTY DAMAGE $ AUTOS ONLY AUTOS ONLY fPer accident\ -- $ B X UMBRELLA LIAB MOCCUR y y CUP0H758762 8/31/2021 8/31/2022 EACH OCCURRENCE $10,000,000 - EXCESS LIAB CLAIMS-MADE AGGREGATE $10,000,000 OED I X I RETENTION $ n $ B WORKERS COMPENSATION y UB2LSS3909 8/31/2021 8/31/2022 X I ~ffruTE I I OTH• ER AND EMPLOYERS' LIABILITY Y/N ANYPROPRIETOR/PARTNER/EXECUTIVE □ N/A E.L. EACH ACCIDENT $1,000,000 OFFICER/MEMBER EXCLUDED? (Mandatory In NH) E.L. DISEASE · EA EMPLOYEE $1,000,000 If yes, describe under E.L. DISEASE· POLICY LIMIT $1,000,000 DESCRIPTION OF OPERATIONS below A Professional Liability N y AEC904725003 8/31/2021 8/31/2022 Each Claim $3,000,000 Annual Aggregate $5,000,000 DESCRIPTION OF OPERATIONS/ LOCATIONS/ VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached if more space is required) Umbrella Liability policy is a follow-form underlying General Liability/Auto Liability/Employers Liability. Re: Project 60710.00 -Carlsbad City Hall Scoping & Space City of Carlsbad is named as an additional insured as respects general and auto liability as required per written contract or agreement. CERTIFICATE HOLDER CANCELLATION 30 Days Notice of Cancellation SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. City of Carlsbad 3096 Harding Street AU~ESENT:: Carlsbad CA 92008 I © 1988-2015 ACORD CORPORATION. All rights reserved. ACORD 25 (2016/03) The ACORD name and logo are registered marks of ACORD DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC COMMERCIAL GENERAL LIABILITY POLICY NUMBER: 6801H899998 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. ADDITIONAL INSURED -OWNERS, LESSEES OR CONTRACTORS-COMPLETED OPERATIONS This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE Name Of Additional Insured Person(s) Or Organization(s): Any person or organization that you agree in a written contract to include as an additional insured on this Coverage Part for "bodily injury" or "property damage" included in the "products- completed operations hazard", provided that such contract was signed and executed by you before, and is in effect when, the bodily injury or property damage occurs. Location And Description Of Completed Operations Any project to which an applicable contract described in the Name of Additional Insured Person(s) or Organization(s) section of this Schedule applies. Information required to complete this Schedule, if not shown above, will be shown in the Declarations. Section II -Who Is An Insured is amended to in- clude as an additional insured the person(s) or or- ganization(s) shown in the Schedule, but only with respect to liability for "bodily injury" or "property dam- age" caused, in whole or in part, by "your work" at the location designated and described in the schedule of this endorsement performed for that additional in- sured and included in the "products-completed opera- tions hazard". CG 20 37 07 04 CG TB 02 XXXX © ISO Properties, Inc., 2004 Page 1 of 1 DATE OF ISSUE: 08/31/2021 DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC COMMERCIAL GENERAL LIABILITY POLICY NUMBER 6801 H899998 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. ADDITIONAL INSURED -OWNERS, LESSEES OR CONTRACTORS -SCHEDULED PERSON OR ORGANIZATION This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE Names of Additional Insured Person(s) or Organization(s): Any person or organization that you agree in a written contract to include as an additional insured on this Coverage Part, provided that such written contract was signed by you before, and is in effect when, the "bodily injury" or "property damage" occurs or the "personal injury" or "advertising injury" offense is committed. Location of Covered Operations: Any project to which a written contract with the Additional Insured Person(s) or Organization(s) in the Schedule applies. (Information required to complete this Schedule, if not shown above, will be shown in the Declarations.) A. Section II -Who Is An Insured is amended to in- clude as an additional insured the person(s) or organization(s) shown in the Schedule, but only with respect to liability for "bodily injury", "property damage", "personal injury" or "advertising injury" caused, in whole or in part, by: 1. Your acts or omissions; or 2. The acts or omissions of those acting on your behalf; in the performance of your ongoing operations for the additional insured(s) at the location(s) desig- nated above. B. With respect to the insurance afforded to these additional insureds, the following additional exclu- sions apply: This insurance does not apply to "bodily injury" or "property damage" occurring, or "personal injury" or "advertising injury" arising out of an offense committed, after: 1. All work, including materials, parts or equip- ment furnished in connection with such work, on the project (other than service, mainte- nance or repairs) to be performed by or on behalf of the additional insured(s) at the loca- tion of the covered operations has been com- pleted; or 2. That portion of "your work" out of which the injury or damage arises has been put to its in- tended use by any person or organization other than another contractor or subcontrac- tor engaged in performing operations for a principal as a part of the same project. CG D3 61 03 05 Copyright 2005 The St. Paul Travelers Companies, Inc. All rights reserved. Page 1 of 1 CG TS 01 XX xx Includes copyrighted material of Insurance Services Office, Inc. with its permission. DATE OF ISSUE: 08/31/2021 DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA6448723AAC I .._,,IIV:J TT ....,....,.._. • • ,...,,.....,...,..,_. COMMERCIAL GENERAL LIABILITY <,. Method Of Sharing If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach each insurer contributes equal amounts until it has paid its applicable limit bf insurance or none of the loss remains, whichever comes first. If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this method, each insurer's share is based on the ratio of its applicable limit of insurance to the total applicable limits of insurance of all insurers. d. Primary And Non-Contributory Insurance If Required By Written Contract If you specifically agree in a written contract or agreement that the insurance afforded to an insured under this Coverage Part must apply on a primary basis, or a primary and non- contributory basis, this insurance is primary to other insurance that is available to such insured which covers such insured as a named insured, and we will notshare with that other insurance, provided that: (1) The "bodily injury'' or "property damage" for which coverage is sought occurs; and (2) The "personal and advertising injury" for which coverage is sought is caused by an offense that is committed; subsequent to the signing of that contract or agreement by you . 5. Premium Audit a. We will compute all premiums for this Coverage Part in accordance with our rules and rates. b. Premium shown in this Coverage Part as advance premium is a deposit premium only. At the close of each audit period we will compute the earned premium for that period and send notice to the first Named Insured. The due date for audit and retrospective premiums is the date shown as the due date on the bill. If the sum of the advance and audit premiums paid for the policy period is greater than the earned premium, we will return the excess to the first Named Insured. c. The first Named Insured must keep records of the information we need for premium computation, and send us copies at such times as we may request. 6. Representations By accepting this policy, you agree: a. The statements in the Declarations are accurate and complete; b. Those statements are based upon representations you made to us; and c. We have. issued this policy in reliance upon your representations. The unintentional omission of, or unintentional error in, any information provided by you which we relied upon in issuing this policy will not prejudice your rights under this insurance. However; this provision does not affect our tight to collect additional premium or to exercise our rights of cancellation or nonrenewal in accordance with applicable insurance laws or reaulations. 7. Separation Of Insureds Except with respect to the Limits of Insurance, and any rights or duties specifically assigned in this Coverage Part to the first Named Insured, this insurance applies: a. As if each Named Insure<:! were the only Named Insured; and b. Separately to each insured against whom claim is made or "suit" is brought. · 8. Transfer Of Rights Of Recovery Against Others To Us · If the insured has rights to recover all or part of any payment we have made under this Coverage Part, those rights are transferred to us. The insured must do nothing after loss to impair them. At our request, the insured will bring "suit" or transfer those rights to us and help us enforce them. 9. When We Do Not Renew If we decide not to renew this Coverage Part, we will mail or deliver to the first Named Insured shown in the Declarations written notice of the nonrenewal not less than 30 days before the expiration date. If notice is mailed, proof of mailing will be sufficient proof of notice. SECTION V -DEFINITIONS 1. "Advertisement" means a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the pyrpose of attracting cust9mers or supporters. For the purposes of this definition: a. Notices that are published include material placed on the Internet or on similar electronic means of communication; and b. Regarding websites, only that part of a website that is about your goods, products or services for the purposes of attracting customers or supporters is considered an advertisement. Page16of21 © 2017 The Travelers Indemnity Company. All rights reserved. CG T1000219 Includes copyrighted material of Insurance Services Office, Inc. with its permission. DocuSign Envelope ID: 8EA75478-33EC--4C34-9834-DA644B723AAC Policy # 6801 H899998 occupational therapist or occupational therapy assistant, physical therapist or speech-language pathologist; or (b) First aid or "Good Samaritan services" by any of your "employees" or "volunteer workers", other than an employed or volunteer doctor. Any such "employees" or "volunteer workers" providing or failing to provide first aid or "Good Samaritan services" during their work hours for you will be deemed to be acting within the scope of their employment by you or performing duties related to the conduct of your business. 3. The following replaces the last sentence of Paragraph 5. of SECTION Ill -LIMITS OF INSURANCE: For the purposes of determining the applicable Each Occurrence Limit, all related acts or omissions committed in providing or failing to provide "incidental medical services", first aid or "Good Samaritan services" to any one person will be deemed to be one "occurrence". 4. The following exclusion is added to Paragraph 2., Exclusions, of SECTION I - COVERAGES -COVERAGE A -BODILY INJURY AND PROPERTY DAMAGE LIABILITY: Sale Of Pharmaceuticals "Bodily injury" or "property damage" arising out of the violation of a penal statute or ordinance relating to the sale of pharmaceuticals committed by, or with the knowledge or consent of the insured. 5. The following is added to the DEFINITIONS Section: "Incidental medical services" means: a. Medical, surgical, dental, laboratory, x- ray or nursing service or treatment, advice or instruction, or the related furnishing of food or beverages; or b. The furnishing or dispensing of drugs or medical, dental, or surgical supplies or appliances. 6. The following is added to Paragraph 4.b., Excess Insurance, of SECTION IV - COMMERCIAL GENERAL LIABILITY CONDITIONS: This insurance is excess over any valid and collectible other insurance, whether primary, excess, contingent or on any other basis, COMMERCIAL GENERAL LIABILITY that is available to any of your "employees" for "bodily injury" that arises out of providing or failing to provide "incidental medical services" to any person to the extent not subject to Paragraph 2.a.(1) of Section II - Who Is An Insured. K. MEDICAL PAYMENTS -INCREASED LIMIT The following replaces Paragraph 7. of SECTION Ill -LIMITS OF INSURANCE: 7. Subject to Paragraph 5. above, the Medical Expense Limit is the most we will pay under Coverage C for all medical expenses because of "bodily injury" sustained by any one person, and will be the higher of: a. $10,000; or b. The amount shown in the Declarations of this Coverage Part for Medical Expense Limit. L. AMENDMENT OF EXCESS INSURANCE CONDITION -PROFESSIONAL LIABILITY The following is added to Paragraph 4.b., Excess Insurance, of SECTION IV - COMMERCIAL GENERAL LIABILITY CONDITIONS: This insurance is excess over any of the other insurance, whether primary, excess, contingent or on any other basis, that is Professional Liability or similar coverage, to the extent the loss is not subject to the professional services exclusion of Coverage A or Coverage B. M. BLANKET WAIVER OF SUBROGATION - WHEN REQUIRED BY WRITTEN CONTRACT OR AGREEMENT The following is added to Paragraph 8., Transfer Of Rights Of Recovery Against Others To Us, of SECTION IV -COMMERCIAL GENERAL LIABILITY CONDITIONS: If the insured has agreed in a written contract or agreement to waive that insured's right of recovery against any person or organization, we waive our right of recovery against such person or organization, but only for payments we make because of: a. "Bodily injury" or "property damage" that occurs; or b. "Personal and advertising injury" caused by an offense that is committed; subsequent to the signing of that contract or agreement. CG D3 79 0219 © 2017 The Travelers Indemnity Company. All rights reserved. Page 5 of6 Includes copyrighted material of Insurance Services Office, Inc. with its permission. DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA6448723AAC Policy: BA0S579947 COMMERCIAL AUTO THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. BLANKET ADDITIONAL INSURED This endorsement modifies insurance provided under the following: BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM The following is added to Paragraph c. in A.1., Who Is An Insured, of SECTION II -COVERED AUTOS LIABILITY COVERAGE in the BUSINESS AUTO COVERAGE FORM and Paragraph e. in A.1., Who Is An Insured, of SECTION II -COVERED AUTOS LIABILITY COVERAGE in the MOTOR CARRIER COVERAGE FORM, whichever Coverage Form is part of your policy: This includes any person or organization who you are required under a written contract or agreement between you and that person or organization, that is signed by you before the "bodily injury" or "property damage" occurs and that is in effect during the policy period, to name as an additional insured for Covered Autos Liability Coverage, but only for damages to which this insurance applies and only to the extent of that person's or organization's liability for the conduct of another "insured". CA T4 37 0216 © 2016 The Travelers Indemnity Company. All rights reserved. Page 1 of 1 Includes copyrighted material of Insurance Services Office, Inc. with its permission. DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC Policy#: BA0S579947 COMMERCIAL AUTO THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. BLANKET ADDITIONAL INSURED -PRIMARY AND NON-CONTRIBUTORY WITH OTHER INSURANCE This endorsement modifies insurance provided under the following: BUSINESS AUTO COVERAGE FORM PROVISIONS 1. The following is added to Paragraph A.1.c., Who Is An Insured, of SECTION II -COVERED AUTOS LIABILITY COVERAGE: This includes any person or organization who you are required under a written contract or agreement between you and that person or organization, that is signed by you before the "bodily injury" or "property damage" occurs and that is in effect during the policy period, to name as an additional insured for Covered Autos Liability Coverage, but only for damages to which this insurance applies and only to the extent of that person's or organization's liability for the conduct of another "insured". 2. The following is added to Paragraph B.S., Other Insurance of SECTION IV -BUSINESS AUTO CONDITIONS: Regardless of the provisions of paragraph a. and paragraph d. of this part 5. Other Insurance, this insurance is primary to and non-contributory with applicable other insurance under which an additional insured person or organization is the first named insured when the written contract or agreement between you and that person or organization, that is signed by you before the "bodily injury" or "property damage" occurs and that is in effect during the policy period, requires this insurance to be primary and non-contributory. CA T4 74 02 16 © 2016 The Travelers Indemnity Company. All rights reserved. Page 1 of 1 Includes copyrighted material of Insurance Services Office, Inc. with its permission. DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC Policy # BA0S579947 COMMERCIAL AUTO THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. BLANKET WAIVER OF SUBROGATION This endorsement modifies insurance provided under the following: AUTO DEALERS COVERAGE FORM BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM The following replaces Paragraph A.5., Transfer of Rights Of Recovery Against Others To Us, of the CONDITIONS Section: 5. Transfer Of Rights Of Recovery Against Oth- ers To Us We waive any right of recovery we may have against any person or organization to the extent required of you by a written contract executed prior to any "accident" or "loss", provided that the "accident" or "loss" arises out of the operations contemplated by such contract. The waiver ap- plies only to the person or organization desig- nated in such contract. CA T3 40 0215 © 2015 The Travelers Indemnity Company. All rights reserved. Page 1 of 1 Includes copyrighted material of Insurance Services Office, Inc. with its permission. DocuSign Envelope ID: 8EA75478-33EC-4C34-9834-DA644B723AAC ...... TRAVELERSJ WORKERS COMPENSATION AND EMPLOYERS LIABILITY POLICY ENDORSEMENT WC 99 03 76 ( A) - POLICY NUMBER: UB2L553909 WAIVER OF OUR RIGHT TO RECOVER FROM OTHERS ENDORSEMENT -CALIFORNIA (BLANKET WAIVER) We have the right to recover our payments from anyone liable for an injury covered by this policy. We will not enforce our right against the person or organization named in the Schedule. The additional premium for this endorsement shall be mium. % of the California workers' compensation pre- Schedule Person or Organization Job Description Any Person or organization for which the insured has agreed by written contract executed prior to loss to furnish this waiver. This endorsement changes the policy to which it is attached and is effective on the date issued unless otherwise stated. (The information below is required only when this endorsement is issued subsequent to preparation of the policy.) Insurance Company Countersigned by ____________ _ Travelers Property Casualty Company of America DATE OF ISSUE: 1/6/2022 Page 1 of 1