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LEASE AGREEMENT
This LEASE AGREEMENT (hereinafter “Agreement”)) is entered into as of this 24th day of March 2026 (“Effective Date”) by and between the CITY OF LAGUNA BEACH, a California municipal corporation (“Lessor”) and ANNELIESE PRESCHOOL, INC., a California corporation (“Lessee”).
1 TERM OF LEASE.
1.1 Lease of Premises. For and in consideration of the payments of rentals and the performance by Lessee of each and every term, covenant, and condition herein, as of the “Lease Commencement Date” (as that term is defined in Section 1.2 below), Lessor hereby agrees to lease to Lessee, and Lessee hereby agrees to lease from Lessor, the following portions of the property identified as assessor parcel number 988-01-95: (a) the building located at 21542 Wesley Drive, in the City of Laguna Beach, State of California, 92651 (“Building”); (b) the small multipurpose room located at 21540 Wesley Drive, Laguna Beach, CA 92651 (“Small Multipurpose Room”); and (c) the following common areas with non-exclusive rights of use in Lang Park Community Center, located at 21540 Wesley Drive, Laguna Beach, CA 92651: (i) the common area restrooms (restroom janitor restroom); (ii) the playground; and (iii) parking spaces, as restricted further herein (the “Common Areas”). (Collectively, hereinafter the Building, Small Multipurpose Room, and Common Areas will be referred to hereinafter as the “Premises.”) The Premises are depicted in Exhibit A, which is attached hereto and incorporated herein by this reference.
1.2 Original Lease Term. Subject to the termination provisions of Section 9 below, the term of this Agreement (“Lease Term”) shall commence as of July 1, 2026 (“Lease Commencement Date”) and shall continue for two (2) years and terminate at 11:59 P.M. local time on June 30, 2028 (“Expiration Date”). Unless terminated earlier pursuant to the provisions of this Agreement, this Agreement shall terminate on the Expiration Date.
1.3 Option to Extend Lease Term. Subject to the following paragraph, Lessee shall have the right to extend the Lease Term for three (3) one-year (1) extensions (“Extension Term”), and in the event of any such extension, the Expiration Date shall be automatically extended to the end of the Extension Term. It is understood and agreed that Lessee shall provide Lessor written notice of its intention to exercise its option to extend the Lease Term not more than sixty (60) days and not less than thirty (30) days prior to the Expiration Date. If Lessee is in default hereunder, as set forth in Section 9.2 of this Agreement, on the date of providing notice of Lessee’s intent to exercise an option to extend the Lease Term, the option notice shall be ineffective and void. In addition, if Lessee is in default hereunder on the date of providing notice of Lessee’s intent to exercise an option to extend the Lease Term, the Extension Term shall not commence, and this Agreement shall terminate at the end of the original Expiration Date or at the end of any Extension Term authorized under this Agreement.
1.4 Conditions to Delivery. Notwithstanding anything in this Agreement to the contrary, Lessor shall not be obligated to deliver the Premises to the Lessee, and Lessee’s lease of the Premises shall not commence, until such time as all of the following conditions precedent have Attachment 3
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been satisfied, or waived by the Lessor:
1.4.1 Lessee has provided to Lessor, and obtained Lessor’s written approval of, the insurance required pursuant to Section 7 below.
2 LEASE RENTAL PAYMENTS
2.1 Monthly Rent. As consideration for the rental of the Premises by Lessor to Lessee, on each month during the Lease Term and Extension Term (if applicable) (each such date, (“Rent Payment Date”), commencing on the 1st of each month Lessee shall pay as monthly rent to Lessor the sum of Ten Thousand Six Hundred and Thirty-Five Dollars ($10,635) on the first of each month thereafter for the first twelve (12) months. Thereafter, the rent shall be increased by the amount of change in the Consumer Price Index-all Urban Consumers (CPI-U) for the Los Angeles–Anaheim–Riverside areas rounded off to the nearest dollar. This shall be determined based by the annual rate each June and be effective the following July 1st. The maximum increase will be (5%).
2.2 Payment of Rent.
2.2.1 Lessee shall make all rent payments, and pay all other sums due under this Agreement, in lawful money of the United States, by check payable to “City of Laguna Beach” and shall personally deliver or mail all rent payments without notice or demand to Lessor at the address set forth in Section 10.1 below. Lessee assumes all risks of loss and late payment if rental payments are made by mail.
2.2.2 Subject to Section 2.3 below, all payments of rent due under this Agreement shall be paid without offset or deduction and shall be deemed payments on account. Neither the payment by Lessee nor the acceptance by Lessor of any rent or other sums in an amount which is less than the amount due and payable pursuant to this Agreement, nor the issuance of a monthly statement showing as due and payable an amount less than is properly due and payable pursuant to the terms of this Agreement, shall constitute an agreement by Lessor modifying this Agreement or a waiver of Lessor’s right to receive all sums provided for in this Agreement. No endorsement or statement on any check or any letter accompanying any check or payment shall be deemed an accord or satisfaction, and Lessor shall accept all rent checks and payments from Lessee without prejudice to Lessor’s right to recover the balance of the amount due or to pursue any other remedy in this Agreement or otherwise provided by law.
2.3 Charge for Late Rent Payment.
2.3.1 Lessee hereby acknowledges that the late payment of rent or any other sums due hereunder constitutes a material breach of this Agreement which will cause Lessor to incur costs not contemplated by this Agreement, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, costs such as administrative processing of delinquent notices, lost interest and income, and increased accounting costs.
2.3.2 Lessee and Lessor hereby acknowledge and agree that such late charges do not represent and shall not be deemed to be an interest payment, but that such late charges represent 22 Initials:______
a fair and reasonable estimate of the costs and expenses that Lessor will incur by reason of Lessee’s late payment.
2.3.3 Acceptance by Lessor of any delinquent rent or late charges shall in no way constitute a waiver of Lessee’s default with respect to such overdue and delinquent payment, or in any way impair, prevent, or preclude Lessor from exercising any of its rights or remedies set forth in this Agreement or otherwise provided at law.
3 CONDITION AND INSPECTION OF PREMISES
3.1 Premises Leased “As-Is”. Lessee acknowledges that the Premises are being leased to the Lessee on an “as-is” basis, and Lessee takes and occupies the Premises without reliance upon any representation or warranty by Lessor, or any of its officials, employees, agents, or representatives, or any other person, concerning the Premises, their fitness for Lessee’s intended use or any other particular purpose or use, their income producing history, potential, or capabilities, their value, or any other promise, representation, or inducement not expressly set forth in this Agreement.
3.2 No Representation or Warranty Concerning Premises. Lessee acknowledges that neither Lessor, nor its directors, officials, employees, or agents or representatives, has made any written or oral representation, promise, or warranty, expressed or implied, concerning the Premises, their fitness for Lessee’s intended use or any other purpose or use, their income producing history, potential or capabilities, their value or any other matter not expressly set forth in this Agreement.
3.3 Inspection by Lessee. Lessee acknowledges that, as of the Lease Commencement Date, Lessee shall have had the opportunity to and shall have inspected the Premises, and that Lessee takes and leases the Premises in the condition in which the Premises exist as of the Lease Commencement Date. Lessee stipulates that the Premises are in good, clean, safe, and leasable condition, and fit for Lessee’s intended use, as of the Lease Commencement Date.
3.4 Accessibility. In accordance with California Civil Code Section 1938, Lessor hereby provides notice to Lessee that as of the Effective Date, the Premises have not undergone inspection by a Certified Access Specialist (“CASp”). Lessor acknowledges and agrees that all Lessor improvements to the Premises shall comply with all applicable laws, including the Americans with Disabilities Act (“ADA”) of 1990 (42 U.S.C. §12101 et seq.), any amendment thereto or regulations promulgated thereunder, and any federal, state, or local ordinances or codes enacted pursuant thereto.
Lessor shall be solely responsible for all of such costs. Except to the extent caused by Lessee or any Sublessee authorized by the City in writing, Lessor shall defend, indemnify, and hold harmless Lessee and the Sublessee with respect to any claims related to the failure of the Premises or any Lessor Improvements to comply with the ADA.
3.5 Hazardous Material Disclosure. California law requires landlords to disclose to tenants the existence of certain Hazardous Materials (as defined in Section 8.2.1, below). Certain adhesives, paints, and other construction materials and finishes used on portion of the Premises may contain Asbestos Containing Materials (“ACMs”) and/or lead based paint (“LBP”). 4 USE OF PREMISES. The Premises shall be used by Lessee for year-round school and summer recreational/educational programs for children. Subject to the advance written consent and approval of Lessor in its sole and absolute discretion, and subject to such terms and conditions 23 Initials:______
as may be prescribed by Lessor (including but not limited to insurance and indemnity). Lessee warrants and represents that it will maintain all necessary licenses, permits, and other entitlements as required for operation of recreational/educational programs on the Premises. Lessee agrees that all of Lessee’s operations or activitiesshall be conducted in compliance with all applicable statutes, ordinances, orders, laws, rules and regulations, and the requirements of all federal, state, county, and municipal governments and appropriate departments, commissions, boards, and offices thereof which may be applicable to the Premises or to the use or manner of use of the Premises.
Lessee agrees that the use of the Premises and the programs conducted thereon shall be nondiscriminatory as to race, religion, national origin, color, gender, age, marital status, sexual preference, AIDS or AIDS-related symptoms (including HIV positive findings). 5 CONDITIONS OF USE. For and during the Lease Term and Extension Term (if applicable), Lessee’s use of the Premises, as set forth in Section 4 above, is subject to the following conditions, covenants, and restrictions:
5.1 Prior Consent for Improvements. Any alterations, additions, or improvements (excluding interior painting) to the Premises proposed by Lessee, other than routine maintenance and repair, shall be approved in advance and in writing by Lessor in its sole and absolute discretion.
Any such approved alterations, additions, or improvements shall be diligently constructed, at no cost or expense to Lessor, in a good and workmanlike manner according to and in conformity with any applicable laws, rules, and regulations of all governmental bodies and agencies.
5.1.1 In the event that Lessor grants written approval to any requested alteration of or improvement to the Premises, such approval shall be deemed conditioned upon the Lessee acquiring all governmental licenses, approvals, and permits required therefor, and such alteration or improvement shall be constructed in strict conformance with the plans approved therefor by Lessor. Once approved by Lessor, no changes or alterations shall be made to the plans without the prior written approval by Lessor.
5.1.2 In the event that Lessor grants written approval to any requested alteration of or improvement to the Premises, Lessee shall construct such alteration or improvement at the Lessee’s sole cost and expense.
5.1.3 In the event that Lessor grants written approval to any requested alteration of or improvement to the Premises, Lessee shall give Lessor not less than ten (10) days’ notice prior to the commencement of any work to the Premises. Lessor shall have the right to post notices of non-responsibility in or on the Premises or the building in which the Premises are located, as provided by applicable law.
5.2 Ownership of Improvements. All improvements, fixtures, and facilities (exclusive of trade fixtures, portable buildings, vehicles, and antennas), constructed or placed within the Premises by the Lessee shall, upon the completion of construction, installation, or placement within the Premises, be free and clear of all liens, claims, and liability for payment for labor and material. Such buildings, improvements, fixtures, and facilities (exclusive of trade fixtures, portable buildings, vehicles, and antennas), shall become and remain the property of Lessor at the expiration of this Agreement or earlier termination hereof. 24 Initials:______
5.3 As-Built Plans and Construction Costs. As a condition of the approval of any alteration of or improvement to the Premises, Lessor shall have the right to require Lessee to prepare and furnish to Lessor, at the Lessee’s sole cost and expense, and within sixty (60) days following completion of such alteration or improvement, a complete set of reproducible “As-Built” plans for such alteration or improvement, and/or an itemized statement of the actual cost of the construction or installation of such alteration or improvement.
5.4 Modification of Alterations or Improvements. In the event that Lessee desires to modify or add to any alteration of or improvement to the Premises, no such modification or alteration shall be commenced without the prior written consent of Lessor.
5.5 Mechanic Liens or Stop-Notices. Lessee shall at all times indemnify and hold Lessor harmless from all claims, losses, demands, damages, costs, expenses, and liability costs for labor or materials in connection with construction, repair, alteration, or installation of structures, improvements, equipment, or facilities within the Premises, and from the cost of defending against such claims, including attorney fees and costs.
In the event a lien or stop-notice is imposed upon the Premises as a result of any of such construction, repair, alteration, or installation, Lessor shall either:
a) Require Lessee to record a valid Release of Lien, or b) Require Lessee to obtain and record a bond pursuant to Section 3143 of the California Civil Code, which frees the Premises from the claim of the lien or stop-notice and from any action brought to foreclose the lien.
Should Lessee fail to accomplish either of the two optional actions above within fifteen (15) days after the filing of such a lien or stop-notice, Lessee shall be in default hereunder and this Agreement shall be subject to immediate termination byLessor.
5.6 Common Area with Non-Exclusive Rights
5.6.1 Restrooms. Pursuant to this Agreement, Lessee has non-exclusive rights to use the restrooms depicted in Exhibit A during Lessee’s operation of recreational/educational programs on the Premises.
5.6.2 Playground. Pursuant to this Agreement, Lessee has non-exclusive rights to use the playground depicted in Exhibit A during Lessee’s operation of recreational/educational programs on the Premises.
5.6.3 Parking. Pursuant to this Agreement, Lessee has non-exclusive rights to use the parking lot depicted in Exhibit A during Lessee’s operation of recreational/educational programs on the Premises to accommodate student drop-off and pick-up times. Lessor and Lessee shall agree to a schedule of drop-off and pick-up time annually in writing. Lessor will provide a limited number of ten-minute parking passes for use by parents and guardians during drop-off and pick-up time. Lessee shall be responsible for distributing the passes to parents and guardians and shall enforce the ten25 Initials:______
minute parking limitation against parents and guardians. Lessor reserves the right to modify or revoke Lessee’s non-exclusive rights to the parking lot if misuse occurs or if operational needs require.
6 MAINTENANCE AND REPAIR OF PREMISES. Lessee shall, at all times during the Lease Term and Extension Term (if applicable), maintain all portions of the Premises and improvements located thereon, at its sole expense, in good condition and repair and keep the Premises in a clean, sanitary condition, free from debris. Lessor agrees, at its sole expense, to provide weekly landscaping services, and custodial services to the shared building Monday through Friday. Lessee hereby expressly waives any right or privilege under statute or otherwise to require that repairs to the Premises or any adjacent areas be performed by Lessor, or at the expense of Lessor.
6.1 Lessee’s Default of Maintenance Duties. In the event that Lessee fails, neglects, or refusesto maintain or make repairs or replacements as required by this Agreement, Lessor shall notify Lessee in writing of such failure or refusal. Should Lessee fail or refuse to correct or commence to correct such default within ten (10) business days of receipt of such written notice from Lessor to Lessee, Lessor may (but shall not be required to), itself or by contract, undertake the necessary maintenance, repair, or replacements; and the cost thereof, including but not limited to the cost of labor, materials, and equipment, plus an administrative fee in the amount of fifteen percent (15%) of the sum of such costs, shall be paid by Lessee to Lessor within ten (10) days of Lessee’s receipt of a statement of such costs from Lessor. Any such maintenance, repair, or replacement by or on behalf of Lessor shall not be deemed to be a waiver of Lessee’s default under this Agreement, and shall not in any way impair, prevent, or preclude Lessor from exercising any of its rights or remedies set forth in this Agreement or otherwise provided at law.
7 INSURANCE AND INDEMNIFICATION
7.1 Insurance Requirements:
7.1.1 Commercial General Liability Insurance.
7.1.1.1 Lessor shall require Lessee, at Lessee’s sole cost and expense, to maintain at all times during the Lease Term and Extension Term (if applicable), commercial public liability insurance, contractual liability insurance, and property damage liability insurance for the Premises and the conduct or operation of business therein, with each of Lessor’s respective officers, officials, employees, and agents as additional insureds, with a minimum limit of One Million Dollars ($1,000,000) per occurrence, and Two Million Dollars ($2,000,000) aggregate.
7.1.1.2 Lessee shall have the right to satisfy such minimum insurance coverage requirements through umbrella or excess coverage policies.
The limits of such insurance shall not limit the liability of Lessee. All such insurance shall insure the performance by Lessee of the indemnity provisions of Section 7.3 below as to liability for injury to, illness of, or death of persons and damage to property. All such 26 Initials:______
insurance shall be primary and shall provide that any insurance of Lessor shall be noncontributing, and Lessee shall deliver to Lessor additional insured ACORD Form 27 evidence of insurance, or any other form reasonably requested by Lessor, issued by the insurance company duly licensed to conduct the business of insurance in the State of California and County of Orange, at least ten (10) days before the Lessee either takes possession, occupies, or otherwise enters any portion of the Premises.
7.1.1.3 Lessor shall require Lessee to procure and pay for renewals of such insurance from time to time before the expiration thereof, and Lessee shall deliver to Lessor and any additional insured such renewal certificate at least thirty (30) days before the expiration of any existing policy.
7.1.2 Workers’ Compensation. Lessor shall require Lessee, at Lessee’s sole cost and expense, to maintain at all times during the Lease Term and Extension Term (if applicable), workers compensation insurance as required by law, including employer’s liability coverage.
7.1.3 Acceptable Insurance Companies; Termination. All insurance policies required to be carried by Lessee hereunder shall be issued by responsible insurance companies authorized to issue insurance in the State of California rated A-XV or higher by Best’s Insurance Rating Service. All such policies shall provide that they shall not be amended in any way that would affect the interests of Lessor or Lessee or any such additional insureds, or cancelled, without at least thirty (30) days prior written notice to Lessor and such additional insureds. Lessee shall deliver to Lessor certificates evidencing the insurance required hereunder and all specified endorsements at least ten (10) days before Les ee either takes possession or occupies any portion of the Premises.
7.1.4 Increase in Coverage. Lessor may from time to time, but not more frequently than once every three (3) years, require that the amount of commercial public liability insurance to be maintained by Lessee under this Section 7 be increased so that the amount thereof adequately protects Lessor’s interest based on amounts of coverage required of comparable tenants in comparable buildings.
7.1.5 Deductibles; Blanket Coverage. Any policy of insurance required pursuant to this Agreement containing a deductible exceeding One Thousand Dollars ($1,000) per occurrence must be approved in writing by Lessor prior to the issuance of such policy. Lessor shall require Lessee to be solely responsible for the payment of any deductible. Any insurance required of Lessee pursuant to this Agreement may be provided by means of a so-called “blanket policy,” so long as (i) the Premises are specifically covered (by rider, endorsement, or otherwise), (ii) the limits of the policy are applicable on a “per location” basis to the Premises and provide for restoration of the aggregate limits, and (iii) the policy otherwise complies with the provisions of this Agreement.
7.1.6 Waiver of Subrogation. The insurance coverage required by this Section 7 shall contain a clause pursuant to which the insurance carriers waive all rights of subrogation against Lessor, Lessee, as the case may be, with respect to losses payable under such policies. Lessee and 27 Initials:______
Lessor each waives, and Lessor shall require the Lessee to waive, any and all right of recovery against the others, or against the partners, members, officers, directors, shareholders, employees, and representatives of the other, for loss of or damage to such waiving party or its property or the property of others under its control, if and to the extent that such loss or damage is insured against under any insurance policy in force at the time of such loss or damage, or which is to be insured against under the terms of this Agreement. Any applicable deductible amount or coinsurance amount shall be treated as though it were recoverable under such policies. Notwithstanding the foregoing, it is agreed that in the event that any loss is due to the act, omission, or negligence or willful misconduct of Lessee or the Lessee’s employees, directors, agents, or representatives, Lessee’s liability insurance shall be primary and shall cover all losses and damages prior to any other insurance hereunder. The provisions of this Section shall not limit the indemnification provisions elsewhere contained in this Agreement.
7.2 Liability of Lessor. Lessor shall not be liable at any time for any loss, damage, or injury whatsoever to the person or property of any person or entity whatsoever, including but not limited to any employee, agent, or contractor of Lessee, resulting from or arising out of any act or omission of Lessee or of any person or entity holding under Lessee, or the occupancy or use of the Premises or any part thereof by or under Lessee, or directly or indirectly from any state or condition of the Premises, or any part thereof.
7.3 Lessee’s Indemnification Responsibilities.
7.3.1 Irrespective of any insurance carried by Lessee for the benefit of Lessor, and notwithstanding any other provision of this Agreement to the contrary, Lessor shall require Lessee to indemnify and hold Lessor, and its respective officers, officials, members, employees, agents, and representatives harmless from and against any and all actions, claims, demands, judgments, attorney’s fees, costs, damages to persons and property, penalties, obligations, expenses, or liabilities of any kind (“Claims”) that may be asserted or claimed by any person or entity (including, but not limited to, any employee, agent, or contractor of the Lessee) in any way arising out of or in connection with this Agreement, the construction, installation, and operations carried on by Lessee on the Premises or any lands to which the Lessee has access under the Lease, or the investigation, occupation, or use of the Premises by Lessee or any person or entity holding under Lessee whether or not there is concurrent passive or active negligence on the part of Lessor, its officers, officials, employees, agents, and representatives. Lessee’s indemnification obligation shall extend to any Claims arising from the use, generation, storage, treatment, handling, transportation, disposal, and release of any Hazardous Materials at, from, or near the Premises or the Building by Lessee or by anyone under Lessee’s control. The Lessee’s indemnification obligations set forth in this paragraph and the related subparagraphs shall survive termination of this Agreement. Notwithstanding the foregoing, Lessor shall not hold the Lessee liable for willful or negligent acts of Lessor, or Lessor’s officials, employees, and/or representatives. In connection therewith:
7.3.2 Lessor shall require Lessee to defend any action or actions filed in connection with any of such claims, damages, penalties, obligations, or liabilities, and shall pay all expenses and costs, including attorney’s fees, incurred in connection therewith. Lessor shall require Lessee to promptly pay any judgment rendered against Lessor, covering any such claims, damages, penalties, obligations, or activities hereunder, and hold and save Lessor harmless therefrom.
7.3.3 In the event Lessor is made a party to any action or proceeding filed or 28 Initials:______
prosecuted for damages or other claims arising out of or in connection with the possession or use of the Premises by Lessee or any person holding under Lessee, or the activities of Lessee under the Lease, Lessor shall require Lessee pay to Lessor any and all costs and expenses incurred by Lessor in any such action or proceeding, together with reasonable attorney’s fees.
7.4 Nature of Relationship. Lessor and Lessee understand and agree that the only relationship between them created by this Agreement is that of landlord and tenant, and that this Agreement does not create, and shall not be construed to create, any agency, partnership, joint venture, or other relationship between Lessor and Lessee
7.5 Compliance with Law. Lessor shall require the Lessee to keep itself fully informed of all existing and future state and federal laws and all county and City of Laguna Beach ordinances and regulations which in any manner affect the activities of the Lessee under this Agreement, or the possession or use of the Premises by Lessee, and of all such orders and decrees of bodies or tribunals having any jurisdiction or authority over the same. Lessors shall require the Lessee to at all times observe and comply with all such existing and future laws, ordinances, regulations, orders, and decrees, and shall protect and indemnify, as required herein, Lessor, its officers, officials, employees, and agents against any claim or liability arising from or based on the violation of any such law, ordinance, regulation, order, or decree, whether by Lessee or any person or entity holding under Lessee.
7.5.1 Lessor shall prohibit Lessee from engaging in any activity on or about the demised premises that violates any “Environmental Law” (as that term is defined below), and shall require Lessee to promptly, at Lessee’s sole cost and expense, take all investigatory and/or remedial action required or ordered by any governmental agency or Environmental Law for cleanup and removal of any contamination involving any hazardous material created or caused directly or indirectly by the Lessee. The term “Environmental Law” shall mean any federal, state, or local law, statute, ordinance, or regulation pertaining to health, industrial hygiene, or the environmental conditions on, under, or about the demised premises including, without limitations, (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), 42 U.S.C. Sections 9601 et seq.; (ii) the Resource Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C. Sections 6901 et seq.; (iii) California Health and Safety Code Sections 25100 et seq.; (iv) the Safe Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety Code Sections 25248.5 et seq.; (v) the Federal Water Pollution Control Act, 33 U.S.C.
Sections 1317 et seq.; (vi) California Water Code Section 13000 et seq.; and (vii) California Civil Code Section 3479 et seq., as such laws are amended, and the regulations and administrative codes applicable thereto. The term “Hazardous Material” includes, without limitation, any material or substance which is (i) defined or listed as a “hazardous waste”, “extremely hazardous waste,” “restrictive hazardous waste,” or “hazardous substance” or considered a waste, condition of pollution, or nuisance under the Environmental Laws; (ii) petroleum or a petroleum product or fraction thereof; (iii) asbestos; (iv) substances known by the State of California to cause cancer and/or reproductive toxicity; and (v) any material or substance defined as “hazardous” by any Federal, State, or local law, statute, ordinance, regulation, or order. It is the intent of the parties hereto to construe the terms “Hazardous Materials” and “Environmental Laws” in their broadest sense. Lessor shall require that Lessee provide all notices required pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1988, California Health and Safety Code Section 25249.5 et seq. Lessor shall require Lessee to provide prompt written notice to Lessor of the existence of 29 Initials:______
Hazardous Materials on the premises and all notices of violation of the Environmental Law received by Lessee.
7.6 Acknowledgement of Lessor’s Title. Lessee hereby acknowledges the title of Lessor in and to the Premises, including real property and improvements existing or erected thereon, and Lessee hereby covenants and promises never to assail, contest, or resist Lessor’s title to the Premises.
7.7 Condemnation. If pursuant to the exercise of the right of condemnation or eminent domain (i) the Premises is taken or conveyed under threat of the exercising of such right, or (ii) only a portion of the Premises is so taken or conveyed and Lessee reasonably determines that the remainder of the Premises is inadequate or unsatisfactory for the purposes and authorized uses described herein, or (iii) Lessee’s access to the Premises is reduced by such taking or conveyance, or other reconstruction or alteration of the roadways abutting the Premises, whether or not property is actually taken from the Premises for such reconstruction or alteration, and Lessee reasonably determines that its access to the Premises is inadequate or unsatisfactory for the purposes and authorized uses described herein, Lessee shall have the right to terminate this Agreement subject to Lessee’s rights as set forth below. Such termination shall be effective on the date Lessee reasonably determines that its occupancy, use, or access (whichever is earlier) is inadequate or unsatisfactory for the purposes and authorized uses described herein. The termination of this Agreement as provided above shall not operate to deprive Lessor of the right, and Lessor expressly grants to Lessee the right, to make a claim for an award in condemnation, or participate in an award, for loss of business goodwill, relocation expenses, Lessee’s leasehold interest and/or lease bonus value or leasehold advantage, loss or damage to fixtures and improvements made by Lessee to the Premises, the value of Lessee’s unexpired option to extend the Term, or any other claims that Lessee is permitted under applicable law to make or elects to make, or to receive notices and participate in the condemnation proceedings, including any settlement negotiations, whether conducted prior to or after the filing of a condemnation proceeding. Lessor further agrees to provide to Lessee information regarding any settlement offers made to or by Lessor, any appraisal reports made on behalf of Lessor in connection with the condemnation proceeding, and all other data relevant to calculating the compensation or damages to which Lessor may be entitled in such a condemnation proceeding. Further, Lessor agrees to meet and confer with Lessee prior to entering into an agreement or settlement with or sale or transfer to the condemning authority.
If this Agreement is not terminated, as provided herein, Lessor and Lessee shall cooperate in good faith to determine an equitable reduction in the rent. If the parties fail to agree upon such reduction within sixty (60) days from the date Lessee is required to give up such occupancy, use, or access, whichever is earlier, Lessor and Lessee shall each choose one arbitrator and the two arbitrators so chosen shall choose a third arbitrator. The decision of any two of the arbitrators concerning the rent reduction, if any, shall be binding on Lessor and Lessee and any expense of the arbitration shall be divided equally between Lessor and Lessee. Any such reduction in rent shall not constitute an election of remedies by Lessee nor deprive Lessee of the right to make a claim for an award in condemnation as set forth above or receive notices and participate in the condemnation proceedings, including any settlement negotiations, subject to the last sentence in the immediately preceding paragraph.
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7.8 Attornment. Subject to Section 8.10 below, Lessor hereby reserves the right to sell any portion of the Premises at any time, to any person or entity. In such event, Lessee shall attorn to and become the Tenant of the successor in interest to Lessor and recognize such successor in interest as the landlord under this Agreement. No attornment shall permit material interference with Lessee’s rights under this Agreement, and any successor in interest to Lessor shall recognize Lessee and its permitted successors and assigns as the tenant of the Premises and Lessee as Lessee of the Premises, and shall not disturb Lessee’s right to quiet possession of the Premises during the Lease Term and Extension Term (if applicable) so long as no default has occurred or is continuing under this Agreement pursuant to Section 9.2 below.
7.9 Waiver of Claims. As a material part of the consideration to be rendered to Lessor under this Agreement, Lessor shall require Lessee to waive any and all claims that it may have against Lessor during the Lease Term or Extension Term (if applicable), for damage to goods, wares, and merchandise upon or about the Premises, and for injury to the Lessee, its employees, agents, representatives, invitees, or to third parties in or about the Premises, from any cause arising at any time, except for willful or negligent acts of Lessor.
7.10 Surrender of Possession.
7.10.1 At the expiration of the Lease Term or Extension Term (if applicable), or termination of this Agreement, for any reason whatsoever, Lessee shall execute, acknowledge, and deliver to Lessor a quitclaim deed conveying all rights, title, and interest of Lessee to the Premises, both land and improvements. Should Lessee fail or refuse to deliver the required deed to Lessor, Lessor may prepare and record a notice reciting the failure of Lessee to execute, acknowledge, and deliver such deed and said notice shall be conclusive evidence of the termination of the Lease and of all rights of Lessee or those claiming under Lessee in and to the Premises.
7.10.2 Lessor shall require that Lessee, at the expiration of the Lease Term or Extension Term (if applicable), or termination of this Agreement, for any reason whatsoever, promptly quit and surrender the Premises in a good state of repair, reasonable wear and tear excepted.
7.10.3 Lessor shall require that Lessee, at the expiration of the Lease Term or Extension Term (if applicable), or termination of this Agreement, for any reason whatsoever, at its sole cost and expense, remove all portable buildings, equipment and personal property placed on the Premises by Lessee, and clear the Premises of all debris; and shall further require that the Premises shall be surrendered to Lessor in goof order and clean condition, reasonable wear and tear excepted.
7.11 Disposition of Abandoned Property. If Lessee abandons or quits the Premises or is dispossessed thereof by process of law or otherwise, title to any personal property left on the Premises for fifteen (15) or more days after such event shall, at Lessor’s option, be deemed to have been abandoned and transferred to Lessor. Lessor shall have the right to remove and dispose of any and all such property without liability therefor to Lessee or to any person or entity claiming under Lessee, and Lessor shall have no duty to account for such property. 31 Initials:______
7.12 Security Measures. Lessee acknowledges that the Premises are leased to and accepted by Lessee in an “as-is” condition, and that the rent payable from Lessee to Lessor hereunder does not include the cost of security guards or any other security services or measures.
Lessee further acknowledges that Lessor makes no representation or warranty, express or implied, regarding the security of the Premises or the need for or propriety of any security measures at the Premises; and Lessee further acknowledges that Lessor shall have no obligation whatsoever to provide guard service or any other security measures. Lessor shall require the Lessee to expressly assume all responsibility for the protection and security of the Premises, Lessee, its agents, employees, invitees, and property within the Premises from any and all acts of any third party.
7.13 Disputes and Attorneys’ Fees. In the event that any action is commenced by a party to this Agreement against the other to enforce its rights or obligations arising from this Agreement or seeking to interpret this Agreement, the prevailing party in such action, in addition to any other relief and recovery ordered by the court, shall be entitled to recover all costs, plus reasonable attorneys’ fees. Should Lessor be named in any suit brought by any third party against Lessee in connection with or arising out of Lessee’s occupancy or use of the Premises under this Agreement, Lessee shall pay to Lessor its costs and expenses incurred in such suit, including reasonable attorneys’ fees.
7.14 Prior Leases. It is mutually agreed that this Agreement shall terminate and supersede any prior leases or agreements between the parties hereto covering all or any portion of the Premises on and from the Lease Commencement Date of this Agreement.
7.15 Possessory Interest Tax. In accordance with California Revenue and Taxation Code Section 107.6(a), Lessee acknowledges that by entering into this Lease, a possessory interest subject to property taxation may be created, and that Lessee shall be subject to and responsible for the payment of any property taxes levied on such interest. 8 Default and Termination.
8.1 Term and Prior Termination. This Agreement shall continue for the Lease Term and any Extension Term (if applicable) set forth in Section 1 hereof, unless this Agreement is terminated prior to its expiration by reason of the abandonment of the Premises or breach of this Agreement by Lessee as set forth in Sections 9.2 and 9.3 below, or unless the Lease is terminated.
8.2 Default by Lessee. Each and every covenant and agreement contained in this Agreement is declared to be a condition to this Agreement, and to the Premises hereby demised to Lessee. Lessee shall be considered to have materially breached this Agreement, giving Lessor the remedies specified in Section 9.3 below, in the event that any one or more of the following occur:
8.2.1 Lessee fails or refuses to pay to Lessor any rent due hereunder when due, and such rent remains unpaid for five (5) days after written notice to pay rent or surrender possession of the Premises is served on Lessee by Lessor; or
8.2.2 Lessee defaults in the performance of or breaches any covenant, condition, or provision contained in this Agreement other than as set forth in Section 9.2.1 hereinabove, and such 32 Initials:______
default or breach is not cured within twenty (20) days after written notice thereof is served by Lessor on Lessee; or
8.2.3 Lessee abandons or vacates the Premises; or
8.2.4 Lessee become insolvent; for purposes of this Agreement, Lessee (as applicable) shall be conclusively presumed to have become insolvent if:
a) A receiver is appointed to take possession of all or substantially all of Lessee’s property because of insolvency; or
b) Lessee makes a general assignment for the benefit of creditors; or c) Lessee allows any judgment against Lessor to remain unsatisfied or unbonded for a period of thirty (30) days or longer; or d) An attachment or execution is levied upon or against any or all of Lessee’s right, title, or interest in or under this Agreement, and the same shall not have been released within thirty (30) daysfrom the date thereof; or
e) Proceedings in receivership or bankruptcy have been or are about to be instituted against Lessee; or
f) Lessee is adjudicated bankrupt.
8.3 Remedies for Lessee’s Default. Should Lessee breach this Agreement Lessor may, in addition to any other remedy given Lessor by law or in equity:
8.3.1 Terminate this Agreement and Lessee’s right to possession of the Premises bring an action to reenter and regain possession of the Premises in the manner provided by the laws of unlawful detainer of the State of California then in effect; or
8.3.2 In the event Lessee becomes insolvent, Lessor may, by giving twenty (20) days’ notice to Lessee to the person appointed to manage Lessee’s affairs at the address for such person appearing in the official records of the court that appointed such person, terminate this Agreement and forfeit the Lessee’s interest in the Premises and in any improvements or facilities on or appurtenant to the Premises.
8.4 Waiver of Breach. A waiver by Lessor of any breach of any term, covenant, or condition of this Agreement shall not be deemed to be a continuing waiver of such term, covenant, or condition, or a waiver of any subsequent breach of the same or any other term, covenant, or condition contained in this Agreement, unless such waiver is in writing signed by Lessor. The acceptance of rent by Lessor under this Agreement shall not be deemed to be a waiver of any preceding breach by Lessee of any term, covenant, or condition of this Agreement, other than the failure of Lessee to pay the particular rent so accepted by Lessor, regardless of Lessor’s knowledge of such preceding breach at the time of acceptance of such rent. 33 Initials:______
8.5 Cumulative Remedies. The remedies in Section 9.3 shall not be exclusive, but shall be cumulative and in addition to any and all other remedies now or hereafter allowed by law or otherwise authorized elsewhere by this Agreement; and the exercise of one or more of said rights, powers, elections, or remedies shall not impair Lessor’s right to exercise any other right, power, election, or remedy.
8.6 Re-entry. No entry or re-entry into the Premises by Lessor shall be construed as an election to terminate this Agreement, unless prior thereto or concurrently therewith written notice of intent to terminate is given by Lessor to Lessee. Lessor’s entry into possession of the Premises without having elected to terminate shall not prevent Lessor from making such an election and giving Lessee notice thereof.
9 Miscellaneous
9.1 Notice. Any notice payment or instrument required or permitted to be given or delivered by this Agreement may be given or delivered by personal delivery, by deposit with a reputable overnight courier that provides a receipt with the date and time of delivery, or by depositing the same in any United States mail depository, first class postage prepaid, certified or registered, and addressed as follows:
If to Lessor: City of Laguna Beach
505 Forest Ave.
Laguna Beach, CA 92651
Attn: City Manager
If to Lessee: Anneliese Preschool, Inc.
758 Manzanita Drive
Laguna Beach, CA 92651
Attn: Paul Schimmelpfennig
or such other person or address as either party may direct in writing to the other; provided, however, that such new or different person or address shall not become effective until acknowledged in writing by the party to whom directed. Except where service is by personal delivery, by registered or certified mail, return receipt requested, or by courier service, in which case service of any instrument or writing shall be deemed complete on delivery, service of any instrument or writing shall be deemed completed forty-eight (48) hours after deposit in a United States mail depository.
9.2 Warranty of Authority. Each officer of Lessor and Lessee affixing his or her signature to this Agreement warrants and represents by such signature that he or she has the full legal authority to bind his or her respective party to all of the terms, conditions, and provisions therein, that his or her respective party has the full legal right, power, capacity, and authority to enter into this Agreement and perform all of its provisions and obligations, and that no other approvals or consents are necessary in connection therewith.
9.3 Headings. The titles and headings of Sections and Paragraphs of this Agreement, as 34 Initials:______
herein set forth, have been inserted for the sake of convenience only, and are not to be taken, deemed or construed to be any part of the terms, covenants, or conditions of this Agreement or to control, limit, or modify any of the terms, covenants, or conditions hereof.
9.4 Time of Essence. Time is of the essence of this Agreement. Failure to comply with any requirement, including but not limited to any time requirement, of this Agreement shall constitute a material breach of this Agreement.
9.5 Integration, Construction and Amendment. This Agreement represent the entire understanding of Lessor and Lessee as to those matters contained herein and therein, and no prior oral or written understanding shall be of any force or effect with respect to those matters covered thereby. This Agreement shall be governed by the laws of the State of California and construed as if drafted by both Lessor and Lessee. This Agreement may not be modified, altered, or amended except in writing signed by both Lessor and Lessee.
9.6 Successors. Subject to the provisions of Section 8.4 above, this Agreement, and all of the terms, conditions, and provisions herein, shall inure to the benefit of, and be binding upon, Lessor, Lessee, and their respective successors and assigns.
9.7 Partial Invalidity. If any term, covenant, condition, or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the provisions hereof shall remain in full force and effect and shall in no way be affected, impaired, or invalidated thereby.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Agreement as of the date first above written.
“LESSOR”
CITY OF LAGUNA BEACH, A California
municipal corporation
By: _____
Dave Kiff, City Manager
Approved as to form:
By:
Megan Garibaldi, City Attorney
“LESSEE”
ANNELIESE PRESCHOOL, INC.
By:
35 Initials:______
Attest:
________________________________
Ann Marie McKay, City Clerk
36 Initials:______
EXHIBIT “A”
Portions of Assessor Parcel Number 988-01-95
21542 Wesley Drive Laguna Beach, CA 92651: Building; Small Multipurpose Room 21540 Wesley Drive Laguna Beach, CA 92651: Restroom Janitor Restroom; Playground; Parking Lot
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