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HomeMy WebLinkAbout25L155 - Pacific Castle Rimrock 55650486.6 727918-00939 -1- In consideration of the rents and covenants hereinafter set forth, Landlord (as defined below) hereby leases to Tenant (as defined below), and Tenant hereby leases from Landlord, the following described Premises upon the following terms and conditions: ARTICLE 1 FUNDAMENTAL LEASE PROVISIONS 1.1 Landlord: Pacific Castle Rimrock, LLC, a Delaware limited liability company 1.2 Tenant: City of Palm Springs 1.3 Tenant's Trade Name: Palm Springs Public Library (§4.1) 1.4 Effective Date: ______________________ (date of full execution of Lease). (§3.1) 1.5 Premises: That certain space commonly known as Space A-E located at 4721 E. Palm Canyon Drive, Palm Springs, CA 92264, having approximately 6,001 sq. ft. of Floor Area, shown in the location identified on the site plan attached hereto as Exhibit A. (§2.1, §2.2; Ex A) 1.6 Permitted Use of Premises: Subject to all other terms and conditions of this Lease, the Premises shall be used and occupied only for primary operation of a public library and general office space, and for no other purpose. Any other uses, to the extent approved by Landlord, shall be lawful and not in violation of any other tenant’s exclusive use rights. (§4.1) 1.7 Radius: Two (2) Miles (§4.7) 1.8 Lease Term: Commencing on the Effective Date and expiring thirty-six (36) months after the Rent Commencement Date. (§3.1) 1.9 Rent Commencement Date: The earlier of: (i) the date that Landlord delivers possession of the Premises to Tenant with Landlord’s Work substantially completed, and (ii) July 19, 2025. (§5.1) 1.10 Minimum Annual Rental: (§5. 2) Months of Lease Term Dollars Per Month** Dollars Per Annum** Annual Rent*** Per Square Foot of Floor Area 1 – 12* $13,862.31 $166,347.72 $27.72*** 13-24 $14,277.38 $171,328.55 $28.55 25-36 $14,707.45 $176,489.41 $29.41 *(plus prorated Minimum Rent for any partial month prior to first full calendar month of Lease Term) ** Minimum rent will increase annually by three (3%) percent ***(based upon square footage of the Premises equal to the square footage set forth in Article 1.5)  !                   55650486.6 727918-00939 -2- 1.11 Addresses for Notices: (§ 20.16) To Landlord: Pacific Castle 2601 Main Street, Suite 900 Irvine, CA 92614 (949) 475-4588 Telephone (949) 475-4585 Facsimile To Tenant: At the address of the Premises and: 1.12 Security Deposit: N/A (Art. 17) 1.13 Promotional Fund Charge: N/A (Art. 20) 1.14 Landlord's Broker: Progressive Real Estate (Heather Sharp) (§20.10) Tenant's Broker: CBRE (Philip J. Woodford and Brian Hutcherson) 1.15 Guarantor. Check the applicable blanks: (_X___) None (____) See separate Guaranty of Lease Rider attached to this Lease 1.16 Option(s) to Extend: Check the applicable blank: (____) None (__X__) See Extension Option Rider attached to this Lease 1.17 Construction Allowance: Check the applicable blank: (_X__) None (____) See Construction Allowance Rider attached to this Lease 1.18 Percentage Rental: Check the applicable blank: (__X__) None (_____) See Percentage Rental Rider (for Gross Sales Reporting Purposes Only) attached to this Lease solely for the purpose of showing gross sales reporting requirements ( N/A % ) Insert Percentage, if applicable 1.19 Hazardous Material Rider: Check the applicable blank: (___) None (_X__) (See Hazardous Material Rider)  !                  55650486.6 727918-00939 -3- The foregoing provisions of this Article 1 summarize for convenience only certain key terms of the Lease delineated more fully in the Articles and Sections which follow. In the event of a conflict between the provisions of this Article 1 and the balance of the Lease, the latter shall control. ARTICLE 2 PREMISES 2.1 Lease of Premises. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, as of the Effective Date, at the rental and upon the covenants and conditions hereinafter set forth, the commercial space referred to herein as the Premises and described in Section 1.5. Said commercial space shall not include, and Landlord hereby reserves a non-exclusive easement for the installation, relocation, restoration and maintenance of, such conduits, facilities, and structures as may be located in the Premises (including the air space above the finished ceiling in the Premises) for the common use and benefit of Landlord and other tenants. The Premises shall be constructed in accordance with Exhibit B. The Floor Area of the Premises is set forth in Section 1.5. Prior to the Commencement Date, or as soon thereafter as is practicable and from time to time thereafter at Landlord’s sole option, Landlord’s architect may determine and certify in writing to Tenant and Landlord the actual rentable square footage of the Premises and the Shopping Center, respectively, and thereupon Tenant’s Minimum Annual Rent shall be adjusted accordingly. In the event that Tenant disputes Landlord's measurement, Tenant may have the Premises measured at Tenant's expense. If Tenant's measurement differs from Landlord's by less than three percent (3%), the parties agree to split the difference. If the two measurements differ by more than three percent (3%), either party has the right to request a remeasurement by a third-party independent engineer/surveyor whose measurement shall be binding upon the parties and whose cost would be equally shared by Landlord and Tenant. When so finally mutually acknowledged or determined, the revised rentable square footage of the Premises shall be used to determine Tenant’s Minimum Annual Rent. 2.2 Shopping Center. The Premises are contained within a shopping center which Landlord and/or others intend to construct and/or have constructed as shown on the site plan on Exhibit A, hereinafter referred to as the "Shopping Center." Tenant acknowledges that the site plan shown on Exhibit A ("Site Plan") is tentative and that Landlord has the right at any time to expand, reduce, remove, demolish, renovate or construct any existing or new improvements at the Shopping Center (other than the Premises), including without limitation the right to change the shape, size, location, number, design or extent of such improvements, and the right to change the occupants of the Shopping Center. 2.3 Definition of "Floor Area". The term "Floor Area", as used throughout this Lease, shall mean and include the square footage of the Premises (or, where applicable, of all premises located in a building or buildings of the Shopping Center), measured from the exterior surface of exterior building walls (and extensions thereof, in the case of openings, decks and/or patios), and from the center line of interior demising walls. The Floor Area shall be measured without deduction for the width of or space occupied by air-conditioning units that exclusively serve and are located within the Premises and/or by columns, sprinkler risers, roof drains, structural braces, expansion joints and/or shear walls in the Premises. Tenant acknowledges that it may be necessary for Landlord to utilize a portion of the Floor Area at any time to accommodate shafts, ducts and pipes to serve other tenants and Landlord reserves the right to utilize such portion for said purposes, as Landlord shall specify, provided such portion is located adjacent to an interior wall other than the storefront and does not exceed one percent (1%) of the Floor Area. ARTICLE 3 TERM 3.1 Duration of Lease Term. This Lease shall become legally binding as of the Effective Date, and shall remain in full force and effect thereafter until the expiration of the Lease Term, unless sooner terminated as provided in this Lease. Said Lease Term shall commence on either the Rent Commencement Date, if such date is the  !                  55650486.6 727918-00939 -4- first day of the month or, in all other cases, on the first day of the calendar month following the Rent Commencement Date. Notwithstanding the foregoing, however, Tenant shall have the one (1) time right to terminate this Lease upon delivering at least ninety (90) days’ advance written notice to Landlord at any time following the thirtieth (30th) month of the Lease Term, provided that Tenant shall pay to Landlord any and all amounts due under this Lease through to the termination date provided in Tenant’s termination notice. 3.2 Acceptance of the Premises. Landlord agrees to deliver to Tenant, and Tenant agrees to accept from Landlord, possession of the Premises upon substantial completion of the Landlord's Work, if applicable. The term "substantial completion of the Landlord's Work" is defined as completion of Landlord's Work as specified in Exhibit B to the point wherein Tenant's contractor may commence the construction of Tenant's Work as specified in Exhibit B. Landlord's notification of the substantial completion of the Landlord's Work in accordance with said Exhibit B shall be conclusive and binding upon the parties hereto. Tenant shall commence the construction of Tenant's Work as described in Exhibit B promptly upon substantial completion of the Landlord's Work and shall diligently prosecute such construction to completion and, subject to Section 20.4, shall open the Premises for business within the time specified in Section 1.9. 3.3 Holding Over. If, after the expiration or earlier termination of the Lease Term, Tenant remains in possession of the Premises without Landlord's express written consent, Tenant shall become a tenant at sufferance only, upon all of the provisions of this Lease (except as to Term and Minimum Annual Rental), but the monthly installments of Minimum Annual Rental payable by Tenant shall be increased to one hundred twenty-five percent (125%) of the monthly installments of Minimum Annual Rental payable by Tenant at the expiration of the Lease Term, prorated on a daily basis. Acceptance by Landlord of rental after such expiration or earlier termination shall not result in a renewal or extension of this Lease. The provisions of this Section 3.3 are in addition to and do not affect Landlord's right of re-entry or any other rights of Landlord hereunder or as otherwise provided by law. 3.4 Surrender of the Premises. At the expiration of the Lease Term or earlier termination of the Lease, Tenant shall remove all of its Personal Property, built-ins, shelving, book-drops, and book-returns from the Premises, repair any and all damage to the Premises (including the sidewalks) caused by such removal, and surrender possession of the Premises to Landlord in broom clean condition and good state of repair, except ordinary wear and tear, damage or destruction covered by Article 12, and any repair Landlord is obligated to perform pursuant to the Lease. ARTICLE 4 POSSESSION, USE AND OPERATION 4.1 Permitted Uses. Tenant shall use the Premises solely for the purpose or purposes specified in Section 1.6 (and for no other purpose whatsoever) ("Permitted Use") and shall operate its business on the Premises using only the exact trade name specified in Section 1.3 and no other trade name whatsoever ("Trade Name"). At Tenant's sole expense, Tenant shall procure, maintain and hold available for Landlord's inspection any governmental license or permit required for the proper and lawful conduct of Tenant's business. Notwithstanding the foregoing, Landlord shall not unreasonably withhold its consent to a change in Tenant's Permitted Use provided, however, the parties agree that it shall be reasonable under this Lease and under any applicable law for Landlord to withhold its consent to any such proposed change wherein one or more of the following apply: (i) in Landlord's reasonable judgment the proposed change in Permitted Use is not a use consistent with the character of the Shopping Center as a first-class shopping center; or (ii) the proposed use is not permitted by any reciprocal easement agreement, declaration or other covenants, conditions or restrictions or would cause a violation of another then-existing lease for space within the Shopping Center or would give an occupant of the Shopping Center a right to cancel its lease or bring an action against Landlord. 4.2 Duties and Prohibited Conduct. Tenant shall not use, or suffer or permit any person or persons to use, the Premises for the sale or display of pornography, nudity, graphic violence, drug paraphernalia, or any goods and/or services which, in the sole discretion of Landlord, are inconsistent with the image of a community or family- oriented Shopping Center. Tenant shall not conduct an auction, distress, fire, bankruptcy or going-out-of- business sale. Tenant shall not cause or permit waste to occur in the Premises. Tenant shall deposit its trash and rubbish only in those receptacles provided by Landlord. Unless otherwise permitted by this Lease, Tenant shall keep no live animals of any kind in the Premises. Except for general office and cleaning supplies typically used in an office or retail sales area in the ordinary course of business, such as copier toner, liquid paper, glue, ink, and general cleaning  !                  55650486.6 727918-00939 -5- supplies, for use in the manner for which they were designed, Tenant shall neither cause nor permit any Hazardous Material to be used, generated, stored, transported, handled or disposed of on or about the Premises or the Shopping Center. "Hazardous Materials" shall mean asbestos, any petroleum fuel and any hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the State of California or the United States Government, including, but not limited to, any material or substance defined as a "hazardous waste," "extremely hazardous waste," "restricted hazardous waste," "hazardous substance," "hazardous material" or "toxic pollutant" under the California law and/or under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601, et seq. Landlord hereby represents and warrants to its actual knowledge without any duty of investigation that it is not aware of the presence of any Hazardous Materials on or about the Premises in violation of applicable laws as of the Effective Date of this Lease. Notwithstanding the foregoing, however, Tenant acknowledges and confirms that Landlord has disclosed to Tenant about a fire that occurred in the space adjacent to the Premises prior to the Effective Date. Tenant shall not display or sell merchandise or place carts, portable signs, devices or any other objects, outside the defined exterior walls or roof and permanent doorways of the Premises. Except as otherwise provided herein, Tenant shall, at its cost, comply with all laws relating to the use, occupancy, maintenance, repair and alteration of the Premises. As to its leasehold estate, Tenant and all persons in possession thereof will conform to and will not violate the terms of any matters of record affecting the realty underlying the Premises, whether now existing or hereafter created. Tenant shall not sell merchandise from vending machines or allow any coin- or token- operated vending, video, pinball or gaming machines in the Premises. Notwithstanding anything contained in this Lease to the contrary, Tenant acknowledges that other tenants and third parties at the Shopping Center have been granted exclusive rights of use and Tenant agrees that it shall not use, or suffer or permit any person or persons to use, the Premises in violation of or in competition with the exclusive uses granted to such parties as specifically set forth on Exhibit “C” attached hereto. Tenant’s use and occupation of the Premises, and the condition of the Premises, shall, at Tenant’s sole cost and expense, comply in all material respects with (a) all Applicable Regulations in effect now or after the Effective Date including, without limitation, the laws and regulations referred to in Section 4.8 of this Lease and the Americans with Disabilities Act of 1990 (“ADA”); and (b) all restrictions, covenants and encumbrances of record with respect to the Premises and/or the Shopping Center. Tenant will not permit any act or condition to exist on or about the Premises that will increase any insurance rate applicable to the Premises and/or the Shopping Center, except when such acts are required in the normal course of its business, and Tenant shall pay such increase. As to its leasehold estate, Tenant and all persons in possession thereof will conform to and will not violate the terms of any matters of record affecting the realty underlying the Premises, whether now existing or hereafter created. 4.3 Deliveries. Tenant shall use its best efforts to complete, or cause to be completed, all deliveries, loading, unloading and services (including trash and refuse collection) to the Premises prior to 10:00 a.m. of each day. Any such deliveries, loading, unloading and collection shall be made at the rear of the Premises. 4.4 Operating Covenants. Tenant covenants and agrees that it will, continuously and uninterruptedly from and after the date it is required to open for business, (a) operate and conduct within the entire Floor Area of the Premises the business which it is permitted to operate and conduct as set forth in Section 1.6, under the Trade Name set forth in Section 1.3, except while the Premises are untenantable by reason of fire or other casualty, and (b) maintain within the Premises an adequate stock of merchandise together with sufficient personnel and Personal Property to service and supply the usual and ordinary requirements of its customers. Tenant shall conduct its business at all times in such manner as to produce the maximum return to Tenant and to assure Landlord a return of the greatest possible amount of percentage rental, if applicable. 4.5 Operating Days and Hours. Recognizing that it is in the interests of both Tenant and Landlord to have regulated hours of business for all of the Shopping Center, Tenant agrees that, commencing with the opening for business by Tenant in the Premises and for the remainder of the Lease Term, Tenant shall be open for business at least seven (7) days per week and eight (8) hours per day with its window displays, exterior signs and exterior advertising displays adequately illuminated during all operating days and hours as may be reasonably designated by City; provided, however, that so long as the Tenant under this Lease is the City of Palm Springs, Tenant’s operating hours from the Premises shall be 10:00am to 6:00pm on Mondays and Thursdays; 10:00am to 8:00pm on Tuesdays and Wednesdays; and 10:00am to 5:00pm on Fridays and Saturdays. 4.6 Signs and Advertising. All signage at the Premises shall comply with the sign criteria attached hereto as Exhibit "D." Tenant shall be permitted to install, at Tenant’s sole cost and expense, signs at the Premises,  !                  55650486.6 727918-00939 -6- provided that: (i) such signs do not violate any leases with other tenants at the Shopping Center, then in effect; (ii) Tenant complies with all applicable laws; and (iii) Tenant obtains all necessary permits. Tenant shall not place, affix or maintain any signs, advertising placards, names, insignia, trademarks, descriptive material or any other similar item or items outside, on or within twenty-four inches (24") of the store front, the glass panes and supports of the show windows, or any window or, door of the Premises or anywhere within, on or about the Premises that may be viewed from the other portions of the Shopping Center, except such signs as Landlord, in its sole discretion, shall approve in writing. Tenant shall utilize no advertising medium which can be heard or experienced outside the Premises, including, without limitation, flashing lights, neon lights, searchlights, loudspeakers, phonographs, radios or televisions. 4.7 Radius Clause. Tenant covenants and warrants that it will not, during the Lease Term, directly or indirectly, operate nor own any similar type of business (not so operated or owned on the date of this Lease) within the number of miles from the location of the Premises as set forth on Section 1.7, measured on a straight line basis on a map, not following contours of the land or streets. This covenant shall be specifically enforceable by mandatory or prohibitory injunction by Landlord and any breach of this covenant may be conclusively deemed by Landlord to be a material and incurable breach of this Lease and may lead to forfeiture and termination of all of Tenant’s leasehold interest. In addition, and without limiting Landlord’s remedies, in the event Tenant should violate this covenant, Landlord may, at its option and for so long as Tenant is operating said other business, include the Gross Sales of such other business in the Gross Sales transacted from the Premises for the purpose of computing Percentage Rental due hereunder. 4.8. Patriot Act. Tenant represents, warrants and certifies that neither Tenant nor any of its affiliates, nor any of their respective partners, members, shareholders or other equity owners, and none of their respective employees, officers, directors, representative or agents, is a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control (“OFAC”) if the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List, “SDN List”) or under any statute, executive order (including without limitation the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental statutes, regulations, orders or directives. Such persons are referred to herein as “Blocked Persons.” Tenant also represents, warrants and certifies that is no engaging in this transaction, directly or indirectly, on behalf of any Blocked Person. Tenant acknowledges and agrees to Landlord’s legal obligations (1) not to do business with Blocked Persons; and (2) to freeze any assets of Blocked Persons which may come into Landlord’s possession. Tenant releases Landlord from any liability to Tenant for any actions taken by Landlord in good faith efforts to comply with the foregoing obligations. Tenant agrees to defend, indemnify and hold harmless Landlord or any of its affiliates, agents, directors, officers, employees or otherwise from and against any and all claims, damages, losses, risks, liabilities and expenses (including attorneys’ fees and costs) arising from or related to any breach of this Section 4.8. 4.9 Definition of “Applicable Regulations”. “Applicable Regulations” shall mean all applicable statutes, regulations, rules, ordinances, codes, licenses, permits, orders and approvals of each Governmental Agencies having jurisdiction over the Premises, including, without limitation, all health, building, fire, safety and other codes, ordinances and requirements, all applicable standard of the National Board of Fire Underwriters and the ADA, and all policies or rules of common law, in each case, as amended, and any judicial or administrative interpretation, including any judicial order, consent, decree or judgment applicable to the Tenant. ARTICLE 5 RENTAL 5.1 Rent Commencement Date. Tenant's obligation to pay any amount of Minimum Annual Rental under this Lease shall commence upon the Rent Commencement Date. Notwithstanding the foregoing, Tenant shall pay the first monthly installment of Minimum Annual Rent upon the Effective Date of this Lease, which installment shall be applied to the first month of the Lease Term. 5.2 Minimum Annual Rental. Tenant agrees to pay as rental for the use and occupancy of the Premises the Minimum Annual Rental specified in Section 1.10. Tenant shall pay the Minimum Annual Rental in twelve (12) equal monthly installments during each year, in advance, on the first day of each calendar month, without setoff,  !                  55650486.6 727918-00939 -7- deduction, prior notice or demand. Should the Rent Commencement Date occur on a day other than the first day of the calendar month, then the rental for such first fractional month shall be paid on the Rent Commencement Date and shall be computed on a daily basis for the period from the Rent Commencement Date to the end of such calendar month and at an amount equal to one three-hundred-sixtieth (1/360th) of the Minimum Annual Rental for each such day, and thereafter shall be computed and paid as aforesaid. 5.3 Interest on Late Payments; Late Charge. If Tenant fails to pay, within five (5) days after the same is due and payable, the Minimum Annual Rental, such unpaid amounts shall bear interest at the Interest Rate from the date due to the date of payment. In addition to such interest, Tenant acknowledges that the late payment by Tenant of any rental will cause Landlord to incur certain costs and expenses not contemplated under this Lease, the exact amount of which are extremely difficult or impracticable to fix. Such costs and expenses will include, without limitation, administrative, collection, processing and accounting costs and expenses. Therefore, if any such installment of rental is not received by Landlord from Tenant by the fifth (5th) calendar day after such rent is due, Tenant shall immediately pay to Landlord a late charge of ten percent (10%) of each item of Minimum Annual Rental then due. Landlord and Tenant agree that this late charge represents a reasonable estimate of such costs and expenses and is fair compensation to Landlord for its loss caused by Tenant's nonpayment. 5.4 Address for Payments. Tenant shall pay all rental and other payments to Landlord at the address set forth in Section 1.11 of this Lease, or at such other place as may from time to time be designated by Landlord in writing at least ten (10) days prior to the next ensuing payment date. ARTICLE 6 UTILITIES AND AIR CONDITIONING 6.1 Utilities and Air Conditioning. Landlord agrees that initially it will make available to Tenant (a) facilities for removal of sewage and for delivery of water, electricity, telephone service and, to the extent permitted by Landlord, natural gas (hereinafter collectively referred to as "Utilities") to the Premises or, at Landlord's sole option, to a central distribution point outside the Premises, and (b) an air-conditioning system serving the Premises (the "Air-Conditioning System"). Tenant agrees, at its expense, to use such Utilities and Air-Conditioning System throughout the Lease Term. If a separate meter is provided or required by Tenant for any such Utilities, it shall be installed and maintained at Tenant's expense. Landlord shall not be liable, in damages or otherwise, for any discontinuance, failure or interruption of service to the Premises of Utilities. No such discontinuance, failure or interruption shall be deemed a constructive eviction of Tenant or entitle Tenant to terminate this Lease or withhold payment of any rental due under this Lease. ARTICLE 7 INDEMNITY; INSURANCE 7.1 Indemnity by Tenant. Landlord shall not be liable for, and Tenant shall defend (unless Landlord waives its right to such defense, and in any event with counsel satisfactory to Landlord), indemnify and protect Landlord from any claim, demand, liability, judgment, award, fine, mechanics' lien or other lien, loss, damage, expense, charge or cost of any kind or character (including actual attorney fees, actual expert fees and court costs) arising directly or indirectly from (a) any labor dispute involving Tenant or its contractors or agents, (b) the construction, repair, alteration, improvement, use, occupancy or enjoyment of the Premises by Tenant, its agents, employees, contractors or invitees, or (c) a breach of Tenant's obligations hereunder (hereinafter referred to as "Claims"); provided, however, Tenant shall have no obligation to defend, indemnify or protect Landlord from Claims to the extent caused by the grossly negligent, willful or criminal acts of Landlord and/or its agents. Tenant's obligations under this Section 7.1 shall survive the expiration or earlier termination of this Lease. 7.2 Tenant's Insurance Obligation. Tenant further covenants and agrees that from and after the earlier of substantial completion of the Premises or Tenant's entry into the Premises with Landlord's consent, Tenant will carry and maintain, at its sole cost and expense, the following types of insurance, in the amounts specified and in the form hereinafter provided for: 7.2.1 Public Liability. Commercial general liability insurance for personal injury and property damage with coverage limits of not less than Two Million Dollars ($2,000,000) combined single limit per occurrence  !                  55650486.6 727918-00939 -8- and, in the aggregate (or such greater amount as Landlord's lender may require or as Landlord may reasonably request from time to time), insuring against any and all liability of the insured with respect to said Premises or arising out of the maintenance, use or occupancy thereof. All such insurance shall specifically insure the performance by Tenant of the indemnity agreement contained in Section 7.1. During any construction performed by or on behalf of Tenant, Tenant shall obtain a "course of construction" endorsement to such insurance. 7.2.2 Workers' Compensation. The amount of workers' compensation insurance required by the state in which the Shopping Center is located for the benefit of Tenant's employees. 7.2.3 Plate Glass. Insurance covering full replacement cost of all plate glass on the Premises. Tenant shall have the option either to insure commercially or to self-insure the risk. 7.2.4 Equipment. Machinery insurance on all air-conditioning equipment and systems exclusively serving the Premises. If said equipment and the damage it may cause are not covered by Tenant's "All Risks" insurance (as specified in Subsection 7.2.5 below), then the insurance specified in this Subsection 7.2.4 shall be in an amount not less than One Hundred Thousand Dollars ($100,000). If Tenant requires boilers or other pressure vessels to serve the Premises, they shall also be insured in the amount required by this Subsection 7.2.4. 7.2.5 Tenant's Improvements. Insurance covering Tenant's (1) merchandise; (2) Fixtures, including the items specified as Tenant's Work; (3) Improvements permitted under Article 8; and (4) Personal Property from time to time in, on or upon the Premises, in an amount not less than on e hundred percent (100%) of their full replacement cost, providing protection against any peril included within the classification "All Risks," including, without limitation, theft; provided, however, that Landlord shall not be responsible for, and Tenant shall reimburse and indemnify Landlord for, any and all losses, costs, claims, and damages caused by sprinklers and all increases in insurance premiums as a result thereof. Any policy proceeds shall be used for the repair or replacement of the property damaged or destroyed unless this Lease shall cease and terminate under the provisions of Article 12. 7.2.6 Business Interruption. Business interruption insurance in such amount as will reimburse Tenant for direct or indirect earnings attributable to all perils commonly insured against by prudent retail tenants or attributable to prevention of access to the Premises or Shopping Cen ter as a result of such perils. 7.2.7 Additional Insurance. Tenant shall carry and maintain during the Lease Term such other reasonable types of insurance coverage and in such reasonable amounts covering the Premises and Tenant's operations therein, as may be required by Landlord's lender or as may be reasonably requested by Landlord from time to time, including liquor liability coverage if at any time alcoholic beverages are distributed from, sold at or served at the Premises. 7.3 Form of Policies. All policies of insurance required under Section 7.2 shall be issued by insurance companies qualified to do business in the state where the Shopping Center is located and holding a general policyholder's rating of not less than "A" and a financial rating of not less than "Class VIII" as rated in the most current available "Best's" Insurance Reports. All such policies shall contain cross-liability endorsements and shall name Landlord, Landlord's mortgagees or beneficiaries, Landlord’s property and asset management companies, and such additional individuals or entities as Landlord shall from time to time designate as "Additional Insureds." Executed copies of such insurance policies or certificates thereof shall be delivered to Landlord within ten (10) days after the earlier of substantial completion of the Premises or Tenant's entry onto the Premises with Landlord's consent and, thereafter, executed copies of renewal policies or certificates thereof shall be delivered to Landlord within thirty (30) days prior to the expiration of the term of each such policy. As often as any such policy shall expire or terminate, renewal or additional policies shall be procured and maintained by Tenant in like manner and to like extent. All policies of insurance delivered to Landlord must contain a provision that the company writing said policy will give to Landlord twenty (20) days' notice in advance of any cancellation, lapse, reduction in the amount of coverage or other adverse change respecting such insurance. All public liability, property damage and other casualty policies shall be written as primary policies, not contributing with or secondary to coverage which Landlord may carry. If Tenant fails to procure any such policy of insurance, or to deliver any such policy or certificate, Landlord may, at its option, procure such policy for the account of Tenant, and the cost thereof, along with a Two Hundred Fifty Dollar ($250) administrative processing fee, shall be paid in full to Landlord within ten (10) days after delivery to Tenant of invoice therefor.  !                  55650486.6 727918-00939 -9- 7.4 Landlord's Insurance Obligation. At all times during the Lease Term, Landlord shall maintain in effect a policy or policies of insurance providing protection for the following liabilities and/or risks: (a) public liability for bodily injury and property damage arising from Landlord's ownership and/or operation of the Shopping Center with coverage limits at least equal to those Tenant is required to maintain in accordance with Subsection 7.2.1, (b) any peril, in Landlord's sole discretion, insurable under an All Risks policy covering the building of which the Premises are a part (including without limitation, earthquake, flood and wind coverage), exclusive of any item insured by Tenant pursuant to Subsection 7.2.5, in an amount which is equal to such building's full replacement cost (exclusive of the cost of excavations, foundation and footings) and (c) rental interruption insurance covering the Premises and other premises in the Shopping Center in such amount as Landlord reasonably deems appropriate. Landlord's obligation to carry the All Risks insurance provided for in this Section 7.4 may be satisfied by inclusion of said building within the coverage of any blanket policy or policies of insurance carried and maintained by Landlord, provided that the coverage afforded will not be reduced or diminished by reason of the use of such blanket policies of insurance. 7.5 Mutual Waivers of Rights. Landlord (for itself and its insurer, and to the extent and on the condition that Tenant carries and maintains at all times the insurance required under Section 7.2) hereby waives any rights, including rights of subrogation, and Tenant (for itself and its insurer, and to the extent and on the condition that Landlord carries and maintains at all times the insurance required under Section 7.4) hereby waives any rights, including rights of subrogation, each may have against the other, and Tenant (for itself and its insurer) hereby waives any rights, including rights of subrogation, it may have against other tenants of the Shopping Center (provided such other tenants have waived such rights against Tenant) for compensation of any loss or damage occasioned to Landlord or Tenant, as the case may be, with regard to their respective property, the Premises, its contents or portions of the Shopping Center, arising from any risk generally covered by the insurance Landlord and Tenant are required to carry and maintain under Sections 7.2 and 7.4. ARTICLE 8 TENANT'S RIGHT TO MAKE IMPROVEMENTS AND MECHANIC'S' LIENS 8.1 Improvements. At Tenant's own expense, after giving Landlord written notice pursuant to the terms of this Lease of its intentions to do so, and without limiting Tenant's right to remove and/or replace Personal Property in accordance with Section 11.1, Tenant may, from time to time after completion of all work in accordance with Exhibit B, make such nonstructural alterations, replacements, additions, changes and/or improvements (collectively referred to in this Lease as "Improvements") to Tenant's Work previously completed in accordance with Exhibit B or to prior Improvements as Tenant may find necessary or convenient for its purposes, provided that the value of the Premises is not thereby diminished and provided further that no Improvements costing in excess of Five Thousand Dollars ($5,000) for any one work of Improvement, or in excess of Ten Thousand Dollars ($10,000) in the aggregate for multiple works of Improvement during any period of twelve (12) consecutive months during the Lease Term, may be made without obtaining the prior approval of Landlord; provided, however, that so long as the Tenant under this Lease is the City of Palm Springs, Tenant may make Improvements to the Premises without obtaining the prior approval of Landlord provided (i) the cost of which does not exceed Fifty Thousand Dollars ($50,000.00) in the aggregate for multiple works of Improvement during any period of twelve (12) consecutive months during the Lease Term, (ii) such Improvements do not affect the building structure, slab or roof, and (iii) such Improvements do not affect the exterior appearance of the Premises or the overall aesthetic of the Shopping Center. In addition, no Improvements shall be made to any storefront, mechanical system, electrical system, the exterior walls or roof of the Premises, nor shall Tenant erect any mezzanine or increase the size of same, if one be initially constructed, without obtaining the prior approval of Landlord, which Landlord may withhold in its sole and absolute discretion. In no event shall Tenant make or cause to be made any penetration into or through the roof or floor of the Premises without obtaining the prior approval of Landlord. Tenant shall be permitted to tying off of an electric plug in the middle of the Premises floor provided that such work is in compliance with any and all governmental codes or regulations and performed by a bonded licensed contractor or licensed City Employee. Tenant agrees to reimburse Landlord for all costs and expenses (including, without limitation, any architect and/or engineer fees) incurred by Landlord in approving or disapproving Tenant's plans for Improvements. 8.2 Construction Requirements. All Improvements to be made to the Premises which require the approval of Landlord shall, if required by Landlord, be made under the supervision of a competent architect, licensed general contractor or licensed structural engineer or licensed City Employee and made in accordance with plans and specifications approved by Landlord. Landlord's approval of such plans and specifications shall create no liability or  !                  55650486.6 727918-00939 -10- responsibility on the part of Landlord for their completeness, design sufficiency or compliance with laws. All work with respect to any Improvements must be done in a good and workmanlike manner and diligently prosecuted to completion to the end that the Premises shall at all times be a complete unit except as otherwise reasonably required during the period of such work. Upon the expiration or earlier termination of this Lease, such Improvements shall not be removed by Tenant but shall become a part of the Premises unless otherwise required by Landlord. All Improvements shall be constructed strictly in accordance with the laws and ordinances relating thereto. In performing the work of any such Improvements, Tenant shall have the work performed in such a manner as not to obstruct access to the premises of any other tenant in the Shopping Center. 8.3 Tenant's Covenants. Tenant agrees that it shall pay, or cause to be paid, all costs of labor, services and/or materials supplied in the prosecution of any work, except for Landlord's Work, done, or caused to be done, on the Premises, and Tenant will keep the Premises free and clear of all mechanics' liens and other such liens on account of work done for Tenant or persons claiming under Tenant. If Tenant desires to contest any such claim of lien, it shall either (a) post a mechanics' lien release bond issued by a responsible corporate surety in an amount sufficient to satisfy statutory requirements therefor in the state where the Shopping Center is located, or (b) furnish Landlord with adequate security for the amount of the claim plus estimated costs and interest, and (c) promptly pay or cause to be paid all sums awarded to the claimant on its suit. Tenant shall forthwith notify Landlord in writing pursuant to the terms of this Lease of any claim of lien filed against the Premises or the commencement of any action affecting the title thereto. Landlord or its representatives shall have the right to go upon and inspect the Premises at all reasonable times and shall have the right to post and keep posted thereon notices of nonresponsibility or such other notices which Landlord may deem to be proper for the protection of Landlord's interest in the Premises. 8.4 Landlord's Right to Cure. If Tenant shall be in default of any of its covenants in this Article, by failing to provide security for or satisfaction of any mechanic's or other such lien, then Landlord may (but shall not be obligated to), in addition to any other rights or remedies it may have, discharge said lien by (a) paying the claimant an amount sufficient to settle and discharge the claim, (b) posting a mechanics' lien release bond, or (c) taking such action as Landlord shall deem appropriate, and, in any such event, Tenant shall pay, on Landlord's demand, all costs (including reasonable attorney fees) incurred by Landlord in settling and discharging said lien together with interest thereon in accordance with Section 21.7, from the date of Landlord's payment of said costs. Landlord's payment of said costs shall not waive any default of Tenant under this Article. ARTICLE 9 PERSONAL PROPERTY; FIXTURES 9.1 Removal and Replacement. All of Tenant's trade fixtures, shelving, furniture, furnishings, signs and other personal property not permanently affixed to the Premises (collectively referred to herein as "Personal Property") must be in good working condition when installed in, or attached to, the Premises by Tenant. Subject to the provisions of Section 9.2, any such Personal Property shall remain the property of Tenant. Provided Tenant is not in default under the terms of this Lease, Tenant shall have the right to remove any or all of its Personal Property which it may have stored or installed in the Premises so long as Tenant shall immediately replace the same with similar Personal Property of comparable or better quality, except Tenant shall not be obligated to replace such Personal Property at the expiration or earlier termination of this Lease. Tenant shall, at its expense, immediately repair any damage occasioned to the Premises by reason of the removal of any such Personal Property. 9.2 Fixtures. Tenant's Improvements, Tenant's Work and any other personal property installed in the Premises that becomes realty under applicable law are collectively referred to in this Lease as "Fixtures" and shall become the property of Landlord upon the expiration or earlier termination of this Lease. Landlord and Tenant agree that the shelving installed shall not become Fixtures and shall be removed by Tenant upon the expiration or earlier termination of the Lease pursuant to Section 3.4 of this Lease. 9.3 Landlord's Security Interest. Tenant hereby grants Landlord a first priority security interest in Tenant's merchandise, Fixtures and Personal Property located on the Premises to secure Tenant's performance of any and all of Tenant's obligations under this Lease. To perfect said security interest, Tenant agrees to execute and deliver to Landlord such financing statements required by the applicable Uniform Commercial Code as Landlord may request. Tenant shall not further encumber Tenant's merchandise, Fixtures or Personal Property located in the Premises.  !                  55650486.6 727918-00939 -11- 9.4 Personal Property Taxes. Tenant shall pay before delinquency all taxes (including sales and use taxes), assessments, license fees and public charges levied, assessed or imposed upon its business operation as well as upon its merchandise, and Personal Property. In the event any such items of property are assessed with property of Landlord, then, and in such event, such assessment shall be equitably divided between Landlord and Tenant. Landlord shall determine the basis of dividing any such assessment and such determination shall be binding upon both Landlord and Tenant. ARTICLE 10 ASSIGNMENT AND SUBLETTING 10.1 Definitions. As used in this Article 10, the following definitions shall apply: 10.1.1 "Transfer" means any (i) assignment of some or all of Tenant's interest, rights and duties in the Lease and/or the Premises, including Tenant's right to use, occupy and possess the Premises, or hypothecation, mortgage or other encumbrance of Tenant’s leasehold interest, or (ii) sublease of Tenant's right to use, occupy and possess the Premises, in whole or in part; 10.1.2 "Change of Control" means the transfer by sale, assignment, death, incompetency, mortgage, deed of trust, trust, operation of law, or otherwise of any shares, voting rights or ownership interest which will result in a change in the identity of the person or persons exercising, or who may exercise, effective control of Tenant, unless such change results from the trading of shares listed on a recognized public stock exchange and such trading is not for the purpose of acquiring effective control of Tenant. If Tenant is a private corporation whose stock becomes publicly held, the transfers of such stock from private to public ownership shall not be deemed a Change of Control; 10.1.3 "Occupancy Transaction" means any Transfer, Change of Control, or other arrangement whereby the identity of the person or persons using, occupying or possessing the Premises changes or may change; and 10.1.4 "Transferee" means the proposed assignee, sublessee, mortgagee, beneficiary, pledgee or other recipient of Tenant's interests, rights or duties in this Lease or the Premises in the Occupancy Transaction. 10.2 Restrictions. Tenant shall not enter into, or consent to, an Occupancy Transaction without first procuring Landlord's written consent pursuant to the terms of this Lease, which Landlord shall not withhold unreasonably. The parties agree, however, that the manner of operation of the Premises and conduct of business thereon by Tenant will have an impact on the quality and reputation of the Shopping Center. Accordingly, the parties agree that in approving or disapproving of any proposed Occupancy Transaction, Landlord shall be entitled to take into consideration, by way of example and not limitation, any or all of the criteria set forth below and that it shall not be unreasonable for Landlord to withhold its consent if any of the following situations exist or may exist: (i) the Transferee's contemplated use of the Premises following the proposed Occupancy Transaction is different from the permitted use specified in Section 1.6; (ii) in Landlord's reasonable business judgment, the Transferee lacks sufficient business reputation or experience to operate a successful business of the type and quality permitted under the Lease; (iii) in Landlord's reasonable business judgment, the present tangible net worth of the Transferee is less than the greater of Tenant's tangible net worth (and the tangible net worth of Tenant's guarantor, if any) at the Effective Date or Tenant's tangible net worth (and the tangible net worth of Tenant's guarantor, if any) at the date of Tenant's request for consent to the Occupancy Transaction; (iv) in Landlord's reasonable business judgment, the Percentage Rental (if applicable) that Landlord reasonably anticipates receiving from the Transferee is less than that which Landlord has received from Tenant; (v) the proposed Occupancy Transaction would breach any covenant of Landlord respecting radius, location, use or exclusivity in any other lease, financing agreement or other agreement relating to the Shopping Center; or (vi) the Transferee requests an amendment to the Lease other than the identity of Tenant. No assignment shall release Tenant from its obligations and liabilities hereunder. Notwithstanding the foregoing, however, Tenant shall have the right to effect an Occupancy Transaction to a Permitted Transferee (as hereinafter defined) without the prior consent of Landlord, but by delivering prior written notice thereof to Landlord. A "Permitted Transferee" is (1) an entity controlling Tenant, controlled by Tenant, or under common control with those controlling Tenant, (2) an entity in which the Tenant is merged or  !                  55650486.6 727918-00939 -12- consolidated, or (3) an entity which acquires a majority of Tenant's assets or ownership interests. Any Transfer to a Permitted Transferee is referred to herein as a "Permitted Transfer". 10.3 No Default. Tenant shall not have the right or power to request Landlord's consent to, or to enter into, an Occupancy Transaction if Tenant shall be in default under the provisions of this Lease. 10.4 Procedures. 10.4.1 Request for Consent. Should Tenant desire to enter into an Occupancy Transaction that is not deemed to be a Permitted Transfer (as defined above), Tenant shall give notice thereof to Landlord by requesting in writing Landlord's consent to such Occupancy Transaction at least sixty (60) days before the proposed effective date of any such Occupancy Transaction and shall provide Landlord with the following: (i) the full particulars of the proposed Occupancy Transaction including its nature, effective date, terms and conditions, and copies of any documents pertaining to such proposed transaction; (ii) a description of the identity, net worth and previous business experience of the Transferee, including, without limitation, copies of Transferee's latest income, balance sheet and change-of-financial-position statements (with accompanying notes and disclosures of all material changes thereto) in audited form, if available, and certified as accurate by the Transferee; and (iii) any further information relevant to the transaction which Landlord shall have requested within fifteen (15) days after receipt of Tenant's request for consent. 10.4.2 Period for Review. Within sixty (60) days after receipt of Tenant's request for consent and the information set forth in Section 10.4.1, Landlord may respond as follows: (i) consent to the Occupancy Transaction, subject to Section 10.6 below; or (ii) refuse to consent to the Occupancy Transaction. 10.5 Documentation and Expenses. Each Occupancy Transaction to which Landlord has consented shall be evidenced by an instrument made in such written form as is satisfactory to Landlord and executed by Tenant and Transferee. By such instrument, Transferee shall assume all the terms, covenants and conditions of this Lease which are obligations of Tenant. Tenant shall remain fully liable to perform its duties under the Lease following the Occupancy Transaction. Tenant shall, on demand of Landlord, reimburse Landlord for Landlord's reasonable costs, including legal fees, incurred in obtaining advice and preparing documentation for each Occupancy Transaction to which Landlord has consented, which sum shall in no event be less than Two Thousand Five Hundred & 00/00 Dollars ($2,500.00) per request. 10.6 Transfer Premium. If Landlord consents to a Transfer, as a condition thereto which the parties hereby agree is reasonable, Tenant shall pay to Landlord one hundred percent (100%) of any "Transfer Premium", as that term is defined in this Section 10.6, received by Tenant from such Transferee; provided, however, that no such Transfer Premium shall be due in connection with any Permitted Transfer (as defined in Section 10.2 above). "Transfer Premium" shall mean all Minimum Annual Rental, additional rent or other consideration payable by such Transferee in excess of the Rental payable by Tenant under this Lease on a per rentable square foot basis if less than all of the Premises is transferred. "Transfer Premium" shall also include, but not be limited to, key money and bonus money paid by Transferee to Tenant in connection with such Transfer, and any payment in excess of fair market value for services rendered by Tenant to Transferee or for assets, fixtures, inventory, equipment, or furniture transferred by Tenant to Transferee in connection with such Transfer. The Transfer Premium shall be computed after adjustments are made for leasehold concessions granted to Transferee, including, but not limited to, any rent credit and tenant improvement allowance and brokerage commissions, lease takeover payments, and the costs of advertising the space for sublease or assignment. For purposes of calculating the effective rent and any other consideration to be paid by the Transferee all such concessions shall be amortized on a straight line basis over the relevant term. 10.7 Nullity. Any purported Occupancy Transaction consummated in violation of the provisions of this Article 10 shall, at Landlord's election, be null and void and of no force or effect. 10.8 Waiver. If Tenant requests Landlord's consent to an Occupancy Transaction, and Landlord's consent is impermissibly withheld, Tenant waives any right to seek damages or terminate this Lease under California law, it being the intention of the parties that Tenant's rights in such event shall be limited to seeking an injunction or specific performance.  !                  55650486.6 727918-00939 -13- 10.9 Minimum Annual Rental. If Landlord consents to a Lease assignment for the balance of the term of the original lease, there shall be no adjustment except the minimum annual rental schedule increases as stated in 1.10 of the Fundamental Lease Provisions. ARTICLE 11 REPAIRS AND MAINTENANCE 11.1 Tenant's Obligations. Tenant agrees at all times from and after substantial completion of the Premises, at its own cost and expense, to repair, maintain in good and tenantable condition and replace, as necessary, the Premises and every part thereof (except that portion of Premises to be maintained by Landlord under Section 11.2), including, without limitation, the following: all meters, pipes, conduits, equipment, components and facilities (whether or not within the Premises) that supply the Premises with Utilities on an exclusive basis (except as the appropriate utility company has assumed these duties) or that form any heating, ventilation and air-conditioning system ("HVAC System") exclusively serving the Premises; all Fixtures and other equipment installed in the Premises; all exterior and interior glass installed in the Premises; the storefront(s); all signs, locks and closing devices; all window sashes, casements and frames; doors and door frames; loading dock (if any); floor coverings, including carpeting, terrazzo or other special flooring; and all such items of repair, maintenance, alteration, improvement or reconstruction as may be required at any time or from time to time by a governmental agency having jurisdiction thereof. All replacements made by Tenant in accordance with this Section shall be of like size, kind and quality to the items replaced as they existed when originally installed and shall be subject to Landlord's approval. Tenant shall contract with a qualified air-conditioning service professional for the periodic maintenance per manufacturer’s specification and the repair of its HVAC System, and shall provide Landlord with a copy of said contract upon request. Notwithstanding the forgoing, during the initial Lease Term only, and only on a one-time basis, Landlord shall be responsible for the replacement of any HVAC System serving the Premises, including the HVAC System solely serving the Premises. Landlord’s obligation to replace the HVAC System as provided in the previous sentence shall only be applicable if Tenant has complied with the provisions hereof for the periodic maintenance and servicing of the HVAC System and if it is determined by a licensed technician retained at Tenant’s expense that the HVAC System is not repairable but must be replaced. 11.2 Landlord's Obligations. Subject to Section 11.1 and Article 13, Landlord shall repair, maintain in good and tenantable condition and replace, as necessary, the roof, exterior walls and structural parts of the Premises (including the structural floor) and all meters, pipes, conduits, equipment, components and facilities that supply the Premises with Utilities on a nonexclusive basis (except as the appropriate utility company has assumed these duties); provided however that Landlord shall not be required to make repairs necessitated by reason of the negligence or willful misconduct of Tenant or anyone claiming under Tenant, by reason of the failure of Tenant to perform or observe any conditions or agreements of this Lease, or by reason of Improvements made by Tenant or anyone claiming under Tenant. As used in this Article, "exterior walls" shall exclude storefronts, plate glass, window cases and window frames, doors and door frames, security grills and similar enclosures. It is understood and agreed that Landlord shall have no obligation to repair, replace or maintain the Premises or the mechanical equipment exclusively serving the Premises at any time, except as this Lease expressly provides. Tenant waives and releases its right to make repairs at Landlord’s expense under California law. ARTICLE 12 RECONSTRUCTION AND CONDEMNATION 12.1 Insured Casualty. In the event the Premises are damaged by fire or other perils covered by Landlord's insurance, Landlord shall: 12.1.1 Repair of Damage. Within a period of ninety (90) days after receipt of permits and insurance proceeds, commence repair, reconstruction and restoration (collectively referred to as "Reconstruction" in this Article) of that portion of the Premises described as Landlord's Work in Exhibit B and prosecute the same diligently to completion. Tenant, at its sole cost and expense, shall repair and restore all items described as Tenant's Work in Exhibit B. If the cost of Reconstruction exceeds the amount of insurance proceeds actually received by and available to Landlord for Reconstruction, Landlord may elect to terminate this Lease by giving notice thereof to Tenant within fifteen (15) days following Landlord's determination that the cost of Reconstruction will exceed the insurance proceeds; provided, however, Tenant may rescind Landlord's election to so terminate this Lease by paying to Landlord the difference between the cost of Reconstruction and the insurance proceeds within fifteen (15) days from the date Landlord gives such termination notice to Tenant, in which event this Lease shall not terminate and Landlord shall  !                  55650486.6 727918-00939 -14- diligently prosecute the Reconstruction to completion. 12.1.2 Damage Near End of Term. In the event of partial or total destruction of the Premises during the last two (2) years of the Lease Term, Landlord and Tenant shall each have the option to terminate this Lease on notice to the other of exercise thereof within thirty (30) days after such destruction. For purposes of this Article, "partial destruction" shall mean destruction to an extent of at least thirty-three and one-third percent (33 1/3%) of the full replacement cost as of the date of destruction. 12.2 Uninsured Casualty. In the event the Premises are damaged by any flood, earthquake, act of war, nuclear reaction, nuclear radiation or radioactive contamination, or any other casualty not covered by Landlord's insurance to any extent whatsoever, Landlord shall have the election, and shall within ninety (90) days following the date of such damage give Tenant written notice of Landlord's election, either (i) to commence Reconstruction of that portion of the Premises described as Landlord's Work in Exhibit B and prosecute the same diligently to completion, in which event this Lease shall continue in full force and effect and Tenant, at its sole cost and expense, shall repair and restore all items described as Tenant's Work in Exhibit B, or (ii) not to perform such Reconstruction of such portion of the Premises, in which event this Lease shall cease and terminate not later than sixty (60) days after Landlord's notice of its election to terminate. 12.3 Construction Provisions. In the event of any Reconstruction of the Premises under this Article, said Reconstruction shall substantially conform to the provisions of Exhibit B and shall cover all of the work set forth therein under Landlord's Work and Tenant's Work. Landlord shall reconstruct the Premises only to the extent of the work as described in Landlord's Work in Exhibit B. Tenant, at its sole cost and expense, shall reconstruct all items set forth in Tenant's Work in Exhibit B and shall replace its merchandise, Fixtures and Personal Property. 12.4 Release of Liability. Upon any termination of this Lease under any of the provisions of this Article, the parties shall be released thereby without further obligation to the other party coincident with the surrender of possession of the Premises to Landlord, except for its obligations which have theretofore accrued and are then unpaid. In the event of termination, all proceeds from Tenant's insurance (including self-insurance and deductibles) maintained pursuant to Subsection 7.2.5, covering Tenant's Fixtures, but excluding proceeds for Tenant's merchandise and Personal Property, shall be disbursed and paid to Landlord. 12.5 Abatement of Rent. In the event of Reconstruction as herein provided, then the Minimum Annual Rental shall be abated proportionately with the degree to which Tenant's use of the Premises is impaired, commencing upon the date of the casualty and continuing until the date which is the earlier of (i) the date Tenant recommences normal business in the portion of the Premises affected by the Reconstruction, (ii) the date which is the number of days specified in Section 1.8 (i) after the date Landlord completes Reconstruction of Landlord's Work as specified in Section 12.3 or (iii) the date that the coverage for the rental interruption insurance maintained by Landlord under Section 7.4 terminates. Tenant shall continue the operation of its business on the Premises during any such period to the extent reasonably practicable from the standpoint of prudent business management. Tenant shall not be entitled to any compensation or damages from Landlord for loss of use of the whole or any part of the Premises, the building of which the Premises are a part, Tenant's Personal Property, or any inconvenience or annoyance occasioned by such damage, Reconstruction or replacement. Tenant hereby waives any statutory rights of termination which may arise by reason of any partial or total destruction of the Premises which Landlord is obligated to restore or may restore under any of the provisions of this Lease. 12.6 Major Destruction. Notwithstanding any of the foregoing provisions of this Article, should there be a partial or total destruction of the Shopping Center at any time after the Effective Date, Landlord shall have the right to terminate this Lease on notice to Tenant within thirty (30) days after such destruction. 12.7 Condemnation. 12.7.1 Permanent Taking. If any portion of the Premises or the Common Area shall be permanently taken under any right of eminent domain, or any transfer in lieu thereof, and such taking renders the Premises unsuitable, in the reasonable judgment of Landlord, for Tenant's business operations, then Tenant may terminate this Lease by giving written notice to Landlord within twenty (20) days after such taking. In addition, if at least twenty percent (20%) of the Shopping Center shall be permanently taken under any right of eminent domain, or  !                  55650486.6 727918-00939 -15- any transfer in lieu thereof, then Landlord may terminate this Lease by giving written notice to Tenant within twenty (20) days after such taking. In the event of such termination, Tenant shall thereupon be released from any liability thereafter accruing hereunder. The rent for the last month of Tenant's occupancy shall be prorated, based on a thirty (30)-day month, and Landlord shall refund to Tenant any rent paid in advance. If this Lease is not so terminated, Landlord shall repair and restore the Premises and/or the Shopping Center, as the case may be, as practicable (but shall not be required to expend more than the amount of the award received by Landlord for such purpose), and this Lease shall continue, but commencing with the date on which Tenant is deprived of the use of any portion of the Premises or of any rights under this Lease, the Minimum Rent shall be proportionately abated or reduced, based on the extent to which Tenant's use of the Premises is impaired, as reasonably determined by Landlord. 12.7.2 Award. Any and all awards payable by the condemning authority or other governmental agency in connection with a taking under the right of eminent domain shall be the sole property of Landlord; provided, however, that nothing contained herein shall prevent Landlord and Tenant from prosecuting separate claims in any condemnation proceeding for the values of their respective interests, provided that the award which would otherwise be payable to Landlord is not diminished by Tenant's prosecution of a se parate claim. Landlord and Tenant each hereby waive the provisions of any law, allowing either party to petition a court to terminate this Lease, or otherwise to terminate this Lease, in the event of a condemnation of the Premises. ARTICLE 13 COMMON AREA 13.1 Definition of "Common Area". The term "Common Area" refers to all improved and unimproved areas within the boundaries of the Shopping Center or essential for servicing the Shopping Center (including additional land acquired by Landlord) that are now or hereafter made available for the general use, convenience and benefit of Landlord, other persons entitled to occupy Floor Area in the Shopping Center and/or their customers, patrons, employees and invitees, including, without limitation, all automobile parking areas, driveways, outdoor seating areas, sidewalks, curbs, service and/or delivery facilities and landscaped areas, and such public transportation facilities and landscaped areas as are contiguous with and benefit the Shopping Center. 13.2 Use of Common Area. Subject to the provisions of Section 13.4, Tenant and its employees and invitees are authorized, empowered and privileged to use the Common Area together with other persons after the Effective Date. Landlord agrees to maintain and operate, or cause to be maintained and operated (except as hereinafter provided with reference to cost of maintenance), the Common Area at all times following completion thereof for the benefit and use of the customers and patrons of Tenant, and of other tenants, owners and occupants of the Shopping Center. 13.3 Maintenance of Common Areas. 13.3.1 Landlord shall keep, or cause to be kept, said Common Area in a neat, clean and orderly condition, properly lighted and landscaped, and shall repair, maintain or replace as Landlord shall deem necessary all equipment and facilities thereof. 13.4 Control of Common Area. Landlord shall at all times have the right and privilege of determining the nature and extent of the Common Area, and of making such changes therein and thereto from time to time which in its opinion are deemed to be desirable and for the best interests of all persons using the Common Area. Landlord shall at all times have the sole and exclusive control of the Common Area. Should Landlord acquire or make available additional land not shown as part of the Shopping Center on Exhibit "A" and make the same available as common areas, the expenses incurred by Landlord in connection with the operation, maintenance, repair and replacement of common areas also shall include all of the aforementioned expenses incurred and paid in connection with said additional land. The rights of Tenant with respect to the Common Area shall at all times be subject to the rights of Landlord, the other tenants of Landlord and the other owners of the Shopping Center to use the same in common with Tenant. It shall be the duty of Tenant to keep all of the Common Area free and clear of any obstructions created or permitted by Tenant or resulting from Tenant's operation. Except to the extent covered by the general liability insurance on the Common Area, Tenant assumes all responsibility and liability, and releases Landlord from all responsibility and liability, for the protection of Tenant and its employees, agents, contractors, licensees, customers and guests, and the property thereof, from all acts of third parties, regardless of whether or not Landlord elects to  !                  55650486.6 727918-00939 -16- provide security service at the Shopping Center. Tenant acknowledges that Landlord may or may not provide security services within the Common Area. Landlord shall have no obligation to hire, maintain or provide such services, which may be withdrawn or changed at any time with or without notice to Tenant or any person and without liability to Landlord. Notwithstanding the foregoing, if a portion of the Common Area is not on Landlord's Property, Landlord's only obligation with respect to the maintenance, operation and repair of such portion of the Common Area shall be to use reasonable efforts to compel the responsible party or parties to discharge its or their obligations with respect thereto, and then only if Landlord has actual notice from Tenant of the failure of performance of such obligations by such party or parties. In no event will Landlord be in default hereunder if Landlord is taking reasonable steps with all due diligence after notice from Tenant to compel the responsible party or parties to discharge its or their obligations with respect to the maintenance, operation and repair of the Common Area in the balance of the Shopping Center. 13.5 Rules and Regulations. Tenant shall abide by the rules and regulations governing the Shopping Center as more particularly set forth on Exhibit “E” attached hereto. Landlord may amend such rules and regulations at any time and from time to time for the proper and efficient operation and/or maintenance of the Common Area or any portion thereof. 13.6 Employee Parking. Employees of Tenant shall not park their automobiles in those automobile parking areas of the Common Area which Landlord may from time to time designate for use by patrons of the Shopping Center. Landlord agrees to furnish, and/or cause to be furnished, space for employee parking either within said automobile parking areas or reasonably close thereto. At all times Landlord shall have the right to designate, or change the designation of, the particular parking area to be used by any or all of such employees. Tenant shall furnish Landlord with the automobile license number of Tenant and Tenant's employees within fifteen (15) days after taking possession of the Premises and shall thereafter notify Landlord of any change thereto within five (5) days after such change occurs. If Tenant or its employees fail to park their cars in the designated parking areas, Landlord may charge Tenant Ten Dollars ($10) per car per day for each day or partial day that any car is parked in any area other than those designated; provided, however, Landlord agrees to give Tenant notice of the first violation of this provision. Following more than three (3) violations by Tenant or its employees per calendar month, Landlord shall have the right to cause violating vehicles to be towed, at Tenant's sole cost and expense, from the Premises. After notice of such first violation no prior notice of any subsequent violation shall be required. All amounts due under provisions of this Section shall be payable by Tenant upon demand by Landlord. ARTICLE 14 DEFAULTS BY TENANT; REMEDIES 14.1 Events of Default. The occurrence of any of the following shall constitute a default by Tenant and a breach of this Lease: 14.1.1 Failure to Pay Rent. Failure to pay any amount of Minimum Annual Rental or any other charge under this Lease when due in accordance with the provisions of this Lease, and the continuance of such failure for a period of three (3) days after written notice from Landlord to Tenant specifying the nature of such failure; 14.1.2 Breach of Operating Covenants. Failure to occupy and operate the Premises in accordance with Article 4, and the continuance of such failure for a period of three (3) days after written notice from Landlord to Tenant specifying the nature of such failure; 14.1.3 Other Curable Defaults. Failure to perform fully and promptly any covenant or condition of this Lease, other than those specified in Subsections 14.1.1 and 14.1.2 above, and the continuance of such failure for a reasonable period not to exceed twenty (20) days; provided, however, that if such failure not involving a hazardous condition cannot reasonably be cured within such period, Tenant shall not be deemed to be in default hereunder if Tenant promptly commences such cure within such period and thereafter diligently pursues such cure to completion within a reasonable time, but no event more than forty-five (45) days following such notice; 14.1.4 Non-Curable Defaults. Maintaining, committing or permitting on the Premises waste, a nuisance, or use of the Premises for any unlawful purpose; entering into an Occupancy Transaction contrary to the provisions of Article 10; failing to occupy and operate as required by Article 4, on any occasion during a given year of the Lease Term in which Tenant has received three (3) or more notices pursuant to Subsection 14.1.2; Tenant or  !                  55650486.6 727918-00939 -17- any guarantor of this Lease becomes a debtor in any case filed under the Bankruptcy Code or similar law providing relief to bankrupt or insolvent debtors; and committing any other breach of the Lease which is not capable of cure. The notices provided in this Section 14.1 shall be in lieu of, and not in addition to, any notice required by California law as a condition precedent to the commencement of legal action against Tenant for possession of the Premises. 14.2 Landlord's Rights and Remedies. In the event of a default by Tenant, Landlord, in addition to any other remedies available to it at law or in equity, including injunction, at its option, and without further notice or demand of any kind to Tenant or any other person may: 14.2.1 Terminate this Lease and declare the Lease Term hereof ended and re-enter the Premises and take possession thereof and remove all persons and property therefrom, and Tenant shall have no further claim thereon or hereunder; or 14.2.2 Have the remedy described in California Civil Code Section 1951.4 or similar statute in other jurisdictions (Landlord may continue the 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); or 14.2.3 Even though Landlord may have re-entered the Premises, thereafter elect to terminate this Lease and all of the rights of Tenant in or to the Premises. In addition to any rights or remedies hereinbefore or hereafter conferred upon Landlord under the terms of this Lease, the following remedies and provisions shall specifically apply in the event Tenant or a guarantor of this Lease becomes a debtor in any case filed under the Bankruptcy Code or similar law providing relief to bankrupt or insolvent debtors: 14.2.4 Any receiver or trustee in bankruptcy shall either expressly assume or reject this Lease within sixty (60) days following the entry of an "Order for Relief" or within such earlier time as may be provided by applicable law; 14.2.5 In the event of an assumption of this Lease by a debtor or by a trustee, such debtor or trustee shall, within fifteen (15) days after such assumption (i) cure any default or provide adequate assurance that defaults will be promptly cured; and (ii) compensate Landlord for actual pecuniary loss or provide adequate assurance that compensation will be made for actual pecuniary loss including, but not limited to, all attorneys' fees and costs incurred by Landlord resulting from any such proceedings; and (iii) provide adequate assurance of future performance; 14.2.6 Where a default exists in this Lease, the trustee or debtor assuming this Lease may not require Landlord to provide services or supplies incidental to this Lease before its assumption by such trustee or debtor, unless the Landlord is compensated for such services and supplies provided and the default is cured before the assumption of such Lease; 14.2.7 The debtor or trustee may assign this Lease only if each of the following conditions is satisfied: (i) the Lease is assumed; (ii) adequate assurance of future performance by the assignee is provided, whether or not the Lease is then under default; (iii) any consideration paid by any assignee in excess of the rental reserved in this Lease shall be the sole property of, and paid to, Landlord; and (iv) the provisions of Article 10 are otherwise observed; 14.2.8 Landlord shall be entitled to the fair market value for occupancy of the Premises and the services provided by Landlord (but in no event less than the rental reserved in this Lease) subsequent to the commencement of a bankruptcy event; 14.2.9 Any security deposit given by Tenant to Landlord to secure the future performance by Tenant of all or any of the terms and conditions of this lease, shall be automatically transferred to Landlord upon the entry of an "Order of Relief"; and  !                  55650486.6 727918-00939 -18- 14.2.10 The parties agree that Landlord is entitled to adequate assurance of further performance of the terms and provisions of this Lease in the event of any assumption and assignment of the Lease under the provisions of the Bankruptcy Code. For purposes of any such assumption or assignment, the parties agree that the term "adequate assurance" shall include at least the following without limitation: (i) Any proposed assignee must have demonstrated to Landlord's satisfaction a net worth (as defined in accordance with generally-accepted accounting principles consistently applied) of an amount sufficient to assure that the proposed assignee will have the resources with which to conduct the business to be operated in the Premises, including the payment of all rent and other charges hereunder, for the balance of the Lease Term. The financial condition and resources of Tenant are material inducements to Landlord entering into this Lease. (ii) Any proposed assignee must have engaged in the permitted use described in Section 1.6 hereof for at least five (5) consecutive years prior to the proposed assignment. (iii) Any proposed assignee must have had minimum sales at each location at which it operated such a business equal to at least ninety percent (90%) of Tenant's average monthly sales at the Premises for the eighteen (18) month period preceding initiation of a proceeding under the Bankruptcy Code. (iv) In entering into this Lease, Landlord considered extensively Tenant's permitted use and determined that such permitted business would add substantially to the tenant mix in the Center, and were it not for the Tenant's agreement to operate only Tenant's permitted business on the Premises, Landlord would not have entered into this Lease. Landlord's operation of the Center will be materially impaired if a trustee in bankruptcy or any assignee of this Lease operates any business other than Tenant's permitted business. (v) The provisions of Section 4.7 of this Lease regarding competing locations and Landlord's acceptance thereof upon the terms and conditions specified therein were a material inducement to Landlord to enter into this Lease. Any individual or entity proposed by a trustee in bankruptcy to be an assignee of this Lease shall comply with the provisions of Section 4.7 of this Lease. Any proposed assignee of this Lease must assume and agree to be personally bound by each term, provision and covenant of this Lease. (vi) Any assumption of this Lease by a proposed assignee shall not adversely affect Landlord's relationship with any of the remaining tenants in the Center, taking into consideration any and all other "use" clauses and/or "exclusivity" clauses which may then exist under such tenants' leases with Landlord. Should Landlord have re-entered the Premises under the provisions of Section 14.2.2 above, Landlord shall not be deemed to have terminated this Lease or the liability of Tenant to pay any rental or other charges thereafter accruing, or to have terminated Tenant's liability for damages under any of the provisions hereof by any action in unlawful detainer or otherwise to obtain possession of the Premises, unless Landlord shall have notified Tenant in writing that it has so elected to terminate this Lease, and Tenant further covenants that the service by Landlord of any notice pursuant to the unlawful detainer statutes of the state in which the Center is located and the surrender of possession pursuant to such notice shall not (unless Landlord elects to the contrary at the time of or at any time subsequent to the serving of such notice and such election is evidenced by a written notice to Tenant) be deemed to be a termination of this Lease. In the event of any entry or taking possession of the Premises as aforesaid, Landlord shall have the right, but not the obligation, to remove therefrom all or any part of the personal property located therein and may place the same in storage at a public warehouse at the expense and risk of Tenant. Should Landlord elect to terminate this Lease pursuant to the provisions of paragraph 14.2.1 or 14.2.3 above, Landlord may recover from Tenant as damages the following: (i) The worth at the time of the award of any unpaid rent and other charges which had been earned at the time of termination; plus (ii) The worth at the time of the award by which the unpaid rent and other charges which would have been earned after termination until the time of the award exceeds the amount of the loss of such rental and other charges that Tenant proves could have been reasonably avoided; plus  !                  55650486.6 727918-00939 -19- (iii) The worth at the time of the award of the amount by which the unpaid rent and other charges for the balance of the Lease Term after the time of the award exceeds the amount of the loss of such rental and other charges that Tenant proves could have been reasonably avoided; plus (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 things would be likely to result therefrom including, but not limited to, any costs or expense incurred by Landlord in (a) retaking possession of the Premises, including reasonable attorneys' fees thereof; (b) maintaining or preserving the Premises after such default; (c) preparing the Premises for reletting to a new tenant, including repairs or alterations to the Premises for such reletting; (d) leasing commissions; or (e) any other costs necessary or appropriate to relet the Premises; plus (v) At Landlord's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable state law. 14.2.11 Should Landlord elect not to terminate this Lease, then Landlord may from time to time, without terminating this Lease, either recover all rental as it becomes due or relet the Premises or any part thereof for such term or terms and at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable, with the right to make alterations and repairs to the Premises. In the event that Landlord shall elect to relet the Premises following an Event of Default by Tenant, then rentals received by Landlord from such reletting shall be applied: 1. first, to the payment of any indebtedness, other than Minimum Annual Rent due hereunder, owed by Tenant to Landlord; 2. second, to the payment of any cost of such reletting; 3. third, to the payment of the cost of any alterations and repairs to the Premises; 4. fourth, to the payment of Minimum Annual Rent due and unpaid hereunder; and 5. the residual, if any, shall be held by Landlord and applied in payment of future rent as the same may become due and payable hereunder. Should that portion of such rentals received from such reletting during any month, which is applied to the payment of rent hereunder, be less than the rent payable during that month by Tenant hereunder, then Tenant shall pay such deficiency to Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in such reletting, including but not limited to brokerage commissions, or in making alterations and repairs not covered by the rentals received from such reletting. In the event of default, all of Tenant's fixtures, furniture, equipment, improvements, additions, alterations and other personal property shall remain on the Premises, and during the period of such default, Landlord shall have the right to require Tenant to remove the same forthwith. 14.3 Intentionally Deleted. 14.4 Definition of Worth at the Time of Award. As used in subparagraphs (i) and (ii) above, the "worth at the time of the award" shall be computed by allowing interest at the maximum rate permitted by law per annum. As used in subparagraph (iii) above, the "worth at the time of the award" shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award, plus one percent (1%), but not greater than ten percent (10%) per annum. 14.5 Cure of Tenant's Default. Should Tenant fail to pay and discharge, when due and payable any lien or claim for labor or materials, or any claim for damages arising out of the repair, alteration, maintenance and use of the Premises to be paid by Tenant under this Lease, or should Tenant fail to provide or evidence the provision of any  !                  55650486.6 727918-00939 -20- insurance policy as required by this Lease, or should Tenant fail to fully pay or perform any sum to be paid or any covenant or agreement to be performed by Tenant, as provided for in this Lease, after ten (10) days' written notice from Landlord (except as provided to the contrary in Section 14.1 above or unless Landlord is required to cure Tenant's failure in performance to correct an unsafe condition or to obtain insurance to have been provided or evidenced by Tenant, in which event said prior written notice shall not be required), then Landlord may, at its option and without waiving or releasing Tenant from any of Tenant's obligations hereunder, pay any such lien, claim, or charge, or settle or discharge any action therefor or satisfy any judgment thereon, or obtain any such insurance, or pay any such sum or perform any such covenant or agreement. All costs, expenses and other sums incurred or paid by Landlord in connection therewith, together with interest at the maximum rate permitted by law per annum on such costs, expenses, and sums from the date incurred or paid by Landlord, shall be paid by Tenant to Landlord upon demand, and any default therein shall constitute a breach of the covenants and conditions of this Lease. 14.6 Fixtures and Personal Property. Without limitation of Landlord's rights under Section 9.3, in the event of Tenant's default, all of Tenant's merchandise, Fixtures and Personal Property shall, at Landlord's option (i) remain on the Premises and, continuing during the length of said default, Landlord shall have the right to take the exclusive possession of same and to use the same free of rent or charge until all defaults have been cured, (ii) be removed by Landlord from the Premises and placed in storage at a public warehouse at the expense and risk of Tenant, or (iii) be removed by Tenant upon demand by Landlord. 14.7 No Waiver. The waiver by Landlord of any breach or partial performance of any term, covenant or condition contained in this Lease shall not be deemed to be a waiver of such term, covenant or condition or any subsequent breach thereof, or of any other term, covenant or condition contained in this Lease. 14.8 Right to Cure. If Tenant fails, refuses or neglects to perform any obligation under this Lease in the time and manner required herein, Landlord shall have the right, but not the obligation, to do the same, but at the expense and for the account of Tenant. The amount of money so expended or obligations so incurred by Landlord, together with interest thereon at the Interest Rate, shall be repaid to Landlord within five (5) days of Tenant's receipt of written notice thereof. Landlord's performance of such obligations shall not waive any default by Tenant hereunder. 14.9 No Termination. No re-entry, reletting or taking possession of the Premises by Landlord pursuant to this Article 14, shall be construed as an election to terminate this Lease unless a written notice of such intention be given by Landlord to Tenant or unless the termination thereof be decreed by a court of competent jurisdiction. Landlord may at any time after such reletting elect to terminate this Lease for any such default by Tenant. ARTICLE 15 DEFAULTS BY LANDLORD; REMEDIES Landlord shall not be in default hereunder unless Landlord fails to perform the obligations required of Landlord within a reasonable time, but in no event later than thirty (30) days after notice by Tenant to Landlord and to the holder of any Mortgage, if such holder so requires, specifying the nature of Landlord's failure to perform; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for performance, then Landlord shall not be in default if Landlord commences performance within such 30-day period and thereafter diligently prosecutes the same to completion. In no event shall Tenant have the right to terminate this Lease as a result of Landlord's default, and Tenant's remedies shall be limited to monetary damages; provided however, that in no event shall Landlord be liable under any circumstances for any consequential damages incurred by Tenant, including, without limitation, any injury to, or interference with, Tenant's business, (including any loss of profits) arising in connection with this Lease. Nothing herein contained shall be interpreted to mean that Tenant is excused from paying rental due hereunder as a result of any default by Landlord. 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 and any recourse by Tenant against Landlord shall be limited solely and exclusively to the interest of Landlord in and to the Shopping Center, and neither Landlord, nor any of its constituent partners or subpartners, shall have any personal liability therefor, and Tenant, on behalf of itself and all persons claiming by, through or under Tenant, hereby expressly waives and releases Landlord and such partners and subpartners from any and all personal liability.  !                  55650486.6 727918-00939 -21- If Landlord impermissibly fails to give any consent required hereunder, Tenant shall be entitled to specific performance in equity and shall have such other remedies as are reserved to it under this Lease, but in no event shall Landlord be responsible in monetary damages for such failure to give consent unless said consent is withheld maliciously or in bad faith. ARTICLE 16 SUBORDINATION; ATTORNMENT; NON-DISTURBANCE; ESTOPPEL 16.1 Subordination. This Lease, and all of Tenant's rights and interest in the leasehold estate hereunder, shall automatically be subject and subordinate to (i) any Mortgages and/or ground leases which encumber the Premises or the land in which the Premises are located that now encumber, or may hereafter be placed upon, the Premises, and to the rights of the mortgagees or beneficiaries or ground lessees thereunder, any and all advances made or to be made thereunder, the interest thereon, and all modifications, renewals, replacements and extensions thereof, and (ii) any of record reciprocal easement agreement, grant of easements, or declaration of conditions, covenants and restrictions, provided that the holder of such Mortgage and any ground lessor shall, by acceptance of such subordination or attornment as provided in Section 16.2 hereof, agree that Tenant shall not be disturbed in its possession or use of the Premises provided Tenant pays the Minimum Annual Rental and any other charge due under the Lease, and observes and performs all of its obligations under this Lease. If any such mortgagee or beneficiary so elects in writing, then this Lease shall be superior to the lien of the Mortgage held by such mortgagee or beneficiary, whether this Lease is dated or recorded before or after such Mortgage. Upon request, Tenant shall promptly execute and deliver to Landlord, or any such mortgagee or beneficiary or ground lessor, any documents or instruments required by any of them to evidence subordination of this Lease hereunder or to make this Lease prior to the lien of any Mortgage as herein specified, provided that a non-disturbance agreement signed by Landlord and mortgagee, beneficiary or ground lessor, and/or such non-disturbance language, is included in such documents or instruments. If Tenant fails or refuses to do so within ten (10) days after written request therefor by Landlord or such mortgagee or beneficiary or ground lessor, then Tenant shall be deemed to have irrevocably appointed Landlord as its attorney-in-fact to execute and deliver such documents or instruments on behalf of Tenant. 16.2 Attornment by Tenant. Upon enforcement of any rights or remedies under any Mortgage to which this Lease is subordinated (including proceedings for judicial foreclosure or a trustee's sale pursuant to a power of sale, or deed in lieu of foreclosure delivered by Landlord to the mortgagee or beneficiary thereunder), Tenant shall, at the election of the purchaser or transferee under such right or remedy, attorn to and recognize such purchaser or transferee as Tenant's landlord under this Lease. Tenant shall execute and deliver any document or instrument required by such purchaser or transferee confirming the attornment hereunder. 16.3 Estoppel Certificate. At any time and from time to time on not more than ten (10) days' notice from Landlord, Tenant shall execute and deliver to Landlord a written statement in form and substance as more particularly described on Exhibit “F” attached hereto (or any other form as may be required by the holder of any Mortgage or any prospective purchaser of the Shopping Center or the Premises) confirming certain matters concerning this Lease ("Estoppel Certificate"). Tenant's failure to execute and deliver the Estoppel Certificate or, if Tenant disputes the accuracy of any statement(s) contained in the Estoppel Certificate, Tenant's failure to notify Landlord in writing and with specificity why it disputes the accuracy of such statements, within said ten-day period shall be deemed to make conclusive and binding upon Tenant the statements contained in the Estoppel Certificate as true and correct, without exception. Unless Tenant shall have notified Landlord in writing within said ten (10) day period of any qualifications Tenant may have to the statements in the Estoppel Certificate, anyone transacting with Landlord in a Sale or Mortgage of the Premises shall have the right to rely on the accuracy of such statements, whether actually made by Tenant in the Estoppel Certificate or deemed made by Tenant pursuant to this Section. ARTICLE 17 SECURITY DEPOSIT Concurrently with execution and delivery of this Lease, Tenant shall deposit with Landlord the Security Deposit as defined in Section 1.12 above. The Security Deposit shall be held by Landlord without liability for interest as security for the faithful performance by Tenant of all of its obligations under this Lease. If any of the rental herein reserved or any other sum payable by Tenant to Landlord shall be overdue or paid by Landlord on behalf of Tenant, or if Tenant shall fail to perform any of its other obligations under this Lease, then Landlord may, at its option and  !                  55650486.6 727918-00939 -22- without prejudice to any other remedy which Landlord may have on account thereof, appropriate and apply said entire Security Deposit, or so much thereof as may be necessary, to compensate Landlord for Minimum Annual Rental, loss or damage sustained by Landlord as a result thereof, and Tenant shall forthwith upon demand restore said Security Deposit to the original sum deposited. Should Tenant comply with all of said obligations and promptly pay all the rentals when due and all other sums payable by Tenant to Landlord, said Security Deposit shall be refunded in full to Tenant after Tenant has surrendered possession of the Premises to Landlord at the expiration or earlier termination of the Lease Term. If Landlord claims deductions against the Security Deposit, Landlord shall return any remaining portion to Tenant. Deductions may include an estimate for the final Common Expense reconciliation until such time as the actual reconciliation is completed for the final year of the lease term. Tenant hereby waives the provisions of California law now or hereafter in effect which provide that Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by Tenant or to clean the Premises, it being agreed that Landlord may, in addition, claim those sums reasonably necessary to compensate Landlord for any loss or damage, foreseeable or unforeseeable, caused by the act or omission of Tenant or any officer, employee, agent or invitee of Tenant. Landlord may deliver the funds deposited hereunder by Tenant to the purchaser or assignee of Landlord's interest in the Premises in the event that such interest is transferred and thereupon Landlord shall be discharged from any further liability with respect to such Security Deposit. Landlord reserves the right to increase the Security Deposit at the same time and in the same manner that the Minimum Annual Rental is increased pursuant to the terms of this Lease. Any failure of Landlord to exercise its right to increase the Security Deposit as provided for herein shall not be deemed a waiver of such right, and any annual increase not collected when due shall accrue and be added to the next Security Deposit increase. ARTICLE 18 Reserved ARTICLE 19 Reserved. . ARTICLE 20 MISCELLANEOUS 20.1 Severability; Construction of Provisions. It is agreed that, if any provision of this Lease shall be determined to be void by any court of competent jurisdiction, then such determination shall not affect any other provision of this Lease and all such other provisions shall remain in full force and effect. 20.2 Entire Agreement; Interpretation. It is understood that there are no oral or written agreements or representations between the parties hereto affecting this Lease, and that this Lease supersedes and cancels any and all previous negotiations, arrangements, representations, brochures, displays, projections, estimates, agreements and understandings, if any, made by or between Landlord and Tenant with respect to the subject matter thereof, and none thereof shall be used to interpret, construe, supplement or contradict this Lease. Although the printed provisions of this Lease were drawn by Landlord, the parties hereto agree that this circumstance alone shall not create any presumption, canon of construction or implication favoring the position of either Landlord or Tenant. The parties agree that any deletion of language from this Lease prior to its mutual execution by Landlord and Tenant shall not be construed to have any particular meaning or to raise any presumption, canon of construction or implication, including, without limitation, any implication that the parties intended thereby to state the converse of the deleted language. 20.3 Governing Law/ Waiver of Jury Trial. The laws of the State of California shall govern the validity, performance and enforcement of this Lease. Venue shall be in Riverside County, California. LANDLORD AND TENANT DO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE RELATIONSHIP OF LANDLORD AND TENANT, OR TENANT'S USE OR OCCUPANCY OF THE PREMISES.  !                  55650486.6 727918-00939 -23- 20.4 Force Majeure. The occurrence of any of the following events shall excuse such obligations of Landlord or Tenant as are thereby rendered impossible or reasonably impracticable for so long as such event continues: lockouts; labor disputes; acts of God; inability to obtain labor, materials or reasonable substitutes therefor; governmental restrictions, regulations or controls; judicial orders; enemy or hostile governmental action; civil commotion; fire or other casualty; and other causes beyond the reasonable control of the party obligated to perform. Notwithstanding the foregoing, the occurrence of such events shall not excuse Tenant's obligations to pay Minimum Annual Rental (except as provided in Section 12.5); moreover, should the work performed by Tenant or Tenant's contractor result in a strike, lockout and/or labor dispute, such strike, lockout and/or labor dispute shall not excuse Tenant's performance. 20.5 Amendments and Waivers. To be effective and binding on Landlord and Tenant, any amendment, modification, addition, deletion to or waiver of the provisions of this Lease must be made in writing and executed by both parties (or the waiving party) in the same manner as the Lease itself. 20.6 Time of Essence. Time is of the essence in the performance of all covenants and conditions in this Lease for which time is a factor. 20.7 Rate of Interest. The rate of interest to be charged under the provisions of this Lease (the "Interest Rate"), unless expressly stated otherwise, shall be the lesser of (i) the prime rate or reference rate, or succeeding similar index, announced by Bank of America, N. A. (or its successor) from time to time plus three (3) percentage points or (ii) the maximum rate allowed by law. The Interest Rate shall be computed on the basis of monthly compounding with actual days elapsed compared to a 360-day year. 20.8 Joint and Several Liability. If two (2) or more persons or corporations execute this Lease as Tenant, then and in such event the word "Tenant" as used in this Lease shall refer to all such persons or corporations, and the liability of such persons or corporations for compliance with the performance of all the terms, covenants and conditions of this Lease shall be joint and several. 21.9 Successors and Assigns. All the provisions of this Lease, except as otherwise specified, shall bind and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns. 20.10 Brokers. Landlord has entered into an agreement with Landlord's Broker, and Landlord shall pay any commissions or fees that are payable to Landlord's Broker with respect to this Lease in accordance with provisions of a separate commission contract. Landlord shall have no further or separate obligation for payment of commissions or fees to any other real estate broker, finder or intermediary. Tenant represents that it has not had any dealings with any real estate broker, finder or intermediary with respect to this Lease, other than Landlord's Broker and Tenant's Broker, if applicable. Any commissions or fees payable to Tenant's Broker with respect to this Lease shall be paid exclusively by Landlord's Broker or Tenant. Subject to the foregoing, each party hereto shall indemnify and hold harmless the other party hereto from and against any and all losses, damages, liabilities, losses, costs and expenses (including, but not limited to, reasonable attorneys' fees and related costs) resulting from any claims that may be asserted against such other party by any real estate broker, finder or any intermediary arising from any acts of the indemnifying party in connection with this Lease. 20.11 Recordation. Tenant shall not record this Lease or a memorandum thereof. 20.12 Execution in Counterparts. This Lease may be executed in counterparts, and, when all counterpart documents are executed, the counterparts shall constitute a single binding instrument. 20.13 Landlord's Access. Landlord and Landlord's agents shall have the right to enter the Premises at reasonable times for the purpose of inspecting the same, to perform Landlord's duties under Section 11.2, showing the same to prospective purchasers, lenders, or tenants and making such alterations, repairs, improvements or additions to the Premises or to the building of which they are a part (a) as Landlord may deem necessary or desirable, (b) that may be necessary to comply with applicable law, and/or (c) that may be necessary to prevent waste if Tenant fails to perform such work. Landlord may at any time place on or about the Premises any ordinary "For Sale" signs and  !                  55650486.6 727918-00939 -24- Landlord may at any time during the last 180 days of the Lease Term place on or about the Premises any ordinary "For Lease" signs, all without rebate of rent or liability to Tenant. No exercise by Landlord of any such rights shall entitle Tenant to any compensation or abatement of rent for any injury or inconvenience occasioned thereby. 20.14 Sale or Mortgage by Landlord. Landlord may, at any time, without the consent of Tenant, contract to and/or perform any of the following transactions with respect to an interest in Landlord, the Lease, the Premises, the realty underlying the Premises, and/or any portion of or interest in the realty or improvements in the Shopping Center owned or hereafter acquired by Landlord: sale, purchase, exchange, transfer, assignment, lease, conveyance (collectively referred to herein as "Sale"); and/or encumbrance, pledge, mortgage, deed of trust, hypothecation or sale and leaseback transaction (collectively referred to herein as "Mortgage"). From and after a Sale, Landlord shall be released from all liability to Tenant and Tenant's successors and assigns arising from this Lease because of any act, occurrence or omission of Landlord occurring after such Sale. 20.15 Attorney Fees. If either Landlord or Tenant institutes any action or proceeding against the other relating to the provisions of this Lease or any default hereunder, the nonprevailing party in such action or proceeding shall reimburse the prevailing party for the reasonable expenses of attorney fees and all costs and disbursements incurred therein by the prevailing party, including, without limitation, any such fees, costs or disbursements incurred on any appeal from such action or proceedings. 20.16 Notices. All notices, approvals, requests, demands and other communications permitted or required to be given under this Lease shall be in writing and shall be and deemed duly served or given when actually delivered, if personally delivered (including delivery by Federal Express, Express Mail or other similar overnight courier service which confirms delivery in writing), or within five (5) business days after deposit in the U.S. Mail, if sent by certified mail, postage prepaid, return receipt requested. Communications for the purposes of notification or access may be delivered via facsimile or e-mail. Such notices shall be addressed to the addresses of the parties set forth in Section 1.11; provided however, notices to Tenant shall be deemed duly served or given if personally delivered or mailed to Tenant at the Premises. Landlord and Tenant may, from time to time by notice to the other, designate another place for receipt of future notices. 20.17 Exhibits and Riders. All Exhibits, Schedules and Riders referenced in this Lease and attached hereto are hereby incorporated into this Lease by this reference. 20.18 Independent Covenants. This Lease shall be construed as though the covenants herein between Landlord and Tenant are independent and not dependent and Tenant hereby expressly waives the benefit of any statute to the contrary and agrees that if Landlord fails to perform its obligations set forth herein, Tenant shall not be entitled to make any repairs or perform any acts hereunder at Landlord's expense or to any setoff of the Minimum Rent or other amounts owing hereunder against Landlord unless otherwise set forth herein; provided, however, that the foregoing shall in no way impair the right of Tenant to commence a separate action against Landlord for any violation by Landlord of the provisions hereof so long as notice is first given to Landlord and any holder of a mortgage or deed of trust covering the Shopping Center or any portion thereof, whose address has theretofore been given to Tenant, and an opportunity is granted to Landlord and such holder to correct such violations as provided above. 20.19 Landlord’s Lien. Landlord shall have at all times a valid lien for all rentals and other sums of money becoming due hereunder from Tenant, upon all goods, wares, equipment, fixtures, furniture and other personal property of Tenant situated on the Premises, and such property shall not be removed therefrom without the consent of Landlord until all arrearages in rent as well as any and all other sums of money then due to Landlord hereunder shall first have been paid and discharged. Notwithstanding the previous sentence, while Tenant is not in default in the payment of rent or other charges under this Lease, it may sell in the ordinary course of business, trade or replace any of said items free of this security interest, and the security interest shall, then, apply to the newly acquired items. This security interest shall be subordinate to the lien of any security interest hereinafter given to any lending institution as security for a bonafide business loan to Tenant that is used primarily in the operation of Tenant's business in the Premises, provided that such financing arrangement shall include the right of the Landlord (which right Tenant hereby grants to Landlord), at Landlord's option, to cure any default of Tenant thereunder and assume the position of Tenant therein. If Landlord at any time, by reason of such default, is compelled to pay or elects to pay a sum of money, or to do any act that will incur the obligation to pay a sum of money, or is compelled to incur any cost, including, without limitation, reasonable attorneys' fees in instituting, prosecuting, or defending any action of proceeding to enforce  !                  55650486.6 727918-00939 -25- Landlord's rights as a secured party, the money paid by Landlord, together with interest, shall be repaid to Landlord by Tenant immediately upon demand. Tenant will execute upon Landlord's request a financing statement and security agreement evidencing Landlord's security interest in Tenant's personal property in form properly completed for filing and recording. Tenant warrants to Landlord that there are no prior liens or security interests on said personal properties. Upon the default in the performance of any of the obligations of Tenant under this Lease, Landlord shall immediately have the remedies of a secured party under the California Uniform Commercial Code, in addition to any remedy which Landlord may have under the terms and provisions of this Lease independently of said security interest. 20.20 Assignee Notice. If any part of the Premises is at any time subject to a mortgage or a deed of trust, and this Lease or the rentals due from Tenant hereunder are assigned to a mortgagee(s), trustee(s) or beneficiary(ies) ("Assignee" for the purposes of this Section 21.20 only) and Tenant is given written notice of the assignment including the post office address of the Assignee, then Tenant shall also give written notice of any default by Landlord to Assignee, specifying the default in reasonable detail and affording Assignee a reasonable opportunity to make performance for and on behalf of Landlord. If and when Assignee has made performance on behalf of Landlord, the default shall be deemed cured. 20.21 No Implication of Exclusive Use. Nothing contained in this Lease shall be deemed to give Tenant an express or implied exclusive right to operate any particular type of business in the Center. 20.22 Center Remodeling. At any time during the Term, Landlord may remodel or expand, in any manner, the existing Center, which work may include the addition of shops and/or the addition of new buildings to the Center (collectively, "Remodeled Center"). If Landlord deems it necessary for construction personnel to enter the Premises in order to construct and/or renovate the Remodeled Center, Landlord shall give Tenant no less than five (5) days prior notice and Tenant shall allow such entry. Landlord shall use reasonable efforts to complete the work affecting the Premises in an efficient manner so as not to interfere unreasonably with Tenant's business. Tenant shall not be entitled to any damages or to reduction in Minimum Annual Rent, Percentage Rent or any other amounts due hereunder for any interference or interruption of Tenant's business upon the Premises or for any inconvenience caused by such construction work. Landlord shall have the right to use the portion of the Premises to accommodate any structures required for the Remodeled Center. If, as a result of Landlord utilizing a portion of the Premises for such purpose, there is a permanent increase or decrease in the square footage of the Premises of 1% or more, there shall be a proportionate adjustment of Minimum Annual Rent and other charges based on square footage. During the course of construction, Tenant shall continue to pay Minimum Annual Rent, Percentage Rent and all other amounts due hereunder. 20.23 Disclaimer of Authority. The Brokers identified in Section 1.14 above has(have) acted as the real estate broker(s) for Landlord in negotiating this Lease. By signing this Lease, Tenant acknowledges and agrees that no promise, representations or assurances made by such broker(s) or by any other employee and/or agent of Landlord that is not expressly set forth in this Lease will be binding upon or enforceable against Landlord. 20.24 CASp Disclosure. Landlord discloses that the Premises has not undergone an inspection by a Certified Access Specialist ("CASp"). Pursuant to California Civil Code Section 1938, Landlord hereby further advises Tenant as follows: A CASp can inspect the subject Premises and determine whether the subject Premises comply with all of the applicable construction-related accessibility standards under Applicable Regulations. Although state Applicable Regulations do not require a CASp inspection of the subject Premises, Landlord may not prohibit Tenant from obtaining a CASp inspection of the subject Premises for the occupancy or potential occupancy of Tenant, if requested by Tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction- related accessibility standards within the Premises. This disclosure is intended to comply with Section 1938 of the California Civil Code. To the maximum extent permitted by Applicable Regulations, if Tenant elects to engage a CASp to perform an inspection of the Premises, (a) Tenant shall be solely responsible for the costs thereof, (b) Tenant shall obtain Landlord's prior written consent with respect to the date and time of such CASp inspection, (c) Tenant shall promptly notify Landlord of the results of such inspection and provide a copy thereof to Landlord, but shall otherwise treat same  !                  55650486.6 727918-00939 -26- as confidential information, (d) if such CASp inspection report indicates that the Premises do not comply with all Applicable Regulations, Tenant shall (i) promptly perform all alterations and/or modifications necessary to cause the Premises to be in compliance with all Applicable Regulations, all at Tenant's sole cost and expense (provided all such work shall be completed in accordance with the terms of this Lease), and (ii) upon the completion of such work, Tenant shall cause, at its sole cost and expense, a CASp to return to the Premises and verify that all required alterations or modifications have been completed in accordance with all Applicable Regulations.  !                  55650486.6 727918-00939 -27- IN WITNESS WHEREOF, the parties hereto have executed this document as of the dates set forth below. LANDLORD: Pacific Castle Rimrock, LLC, a Delaware limited liability company By: Pacific Castle Fund I, LP, a Delaware limited partnership, its sole member By: Pacific Castle Asset Management, LLC, a Delaware limited liability company, its General Partner By: Pacific Castle Capital II, LLC, a Delaware limited liability company, its Manager Dated: __________________ By: Name: Rod Astarabadi Title: President  !                   55650486.6 727918-00939 -28- TENANT:The City of Palm Springs Approved as to Legal Form: Dated: __________________ By: Name: Jeffrey S. Ballinger, City Attorney Dated: __________________ By: Name: Scott Stiles, City Manager Initial: Name: Jeannie Kays, Director of Library Services  !          "  "           Agreement No. 25L155 55650486.6 727918-00939 -29- EXHIBIT A GENERAL SITE PLAN OF THE SHOPPING CENTER (with location of Premises cross-hatched thereon; not a representation or warranty)  !                  55650486.6 727918-00939 EXHIBIT B -1- EXHIBIT B DESIGN AND CONSTRUCTION OF TENANT'S WORK 1. Plans and Specifications. Tenant shall submit to Landlord, within fifteen (15) business days after execution of this Lease by both parties, construction plans and specifications for Tenant's Work as described in this Exhibit B. Tenant shall employ a licensed architect approved by Landlord, to prepare plans which are professional, complete and in compliance with all governing laws, codes and ordinances. Landlord will, within ten (10) business days following receipt of the Tenant's proposed construction plans and specifications, either approve or disapprove the plans and specifications. The plans and specifications as approved by Landlord shall be defined as the "Approved Construction Plans". Approved Construction Plans are not a representation by Landlord that they are in compliance with the requirements of governing authorities, and it shall be Tenant's responsibility to meet and comply with all Federal, State, and local law and code requirements. 2. Payment for Changes in Work and Delays in Landlord's Work. No changes to the Approved Construction Plans shall be made without the written consent of Landlord. Any additional charges, expenses or costs including, without limitation, increased fees which Landlord may be required to pay for architectural, engineering, construction and other similar services arising by reason of any subsequent change in the Approved Construction Plans made at the request of Tenant shall be the sole cost and expense of Tenant and shall be paid by Tenant to Landlord prior to the performance of the work. Landlord shall have the right, but not the obligation, to extend the date of delivery of the Premises to Tenant one day for each day Landlord's Work in the Premises is delayed because of such changes. 3. Requirements Relating to Tenant's Work. 3.1 All of Tenant's Work in the Premises shall be strictly in accordance with the Approved Construction Plans and all governing laws, codes and ordinances. Tenant shall obtain, at its sole cost and expense, permits and approval from all necessary authorities for Tenant's Work and shall furnish Landlord with a copy of said permits prior to commencement of construction. 3.2 Tenant shall obtain Landlord's prior written approval of all required state licensed contractors and licensed subcontractors engaged to perform any portion of Tenant's Work. Tenant shall not need to obtain Landlord’s written approval for work to be performed by City Employees provided that the cost for the labor and materials of such work does not exceed Fifty Thousand Dollars ($50,000). 3.3 Tenant agrees to cooperate and comply with all reasonable rules and regulations (which shall be nondiscriminatory and uniformly enforced) which Landlord, its architect, contractor or agents make in connection with the construction of the Shopping Center and the Premises. 3.4 Prior to commencement of construction of Tenant's Work, Tenant shall furnish Landlord with (i) evidence that Tenant has satisfied the insurance requirements of Section 7.2 of the Lease and (ii) if using contractors or subcontractors, a certificate of its contractors’ workers' compensation and liability insurance, both of which shall name Landlord, Landlord’s mortgagees or beneficiaries, Landlord’s property and asset management companies and such additional individuals or entities as Landlord shall from time to time designate as additional insureds. 3.5 Within the earlier of ten (10) days after completion of construction of Tenant's Work, or ten (10) days after Tenant's opening for business, Tenant shall deliver to Landlord the following items: (a) a copy of the Certificate of Occupancy for the Premises issued by the appropriate governmental agency; (b) copies of all mechanics' lien releases or other lien releases relating to Tenant's Work, notarized and unconditional, in such form as Landlord shall have pre-approved (if applicable); (c) a copy of Tenant's recorded valid Notice of Completion; (d) copies of all building permits indicating inspection and approval of the Premises by the issuer of said permits; (e) an architect's certification that the Premises have been constructed in accordance with Approved Construction Plans and  !                  55650486.6 727918-00939 EXHIBIT B -2- are one hundred percent (100%) complete; (f) copies of all guaranties, warranties and operations manuals issued by the contractors and suppliers of Tenant's Work, which guaranties and warranties shall inure to the benefit of both Landlord and Tenant; and (g) a copy of the final City approved as-built plan for Tenant's Work. 3.6 Tenant shall be permitted and Landlord hereby approves Tenant to install the service counter, install partial wall and work counter along the hallway to public restrooms, electrical work for service counter, work counter, and desk “bullpen” staff area, electrical drops at computer stations and self-check stations and such Improvements listed in this sentence shall not be included in the financial limitations set forth in Section 8.1 of the Lease. Furthermore, notwithstanding Landlord’s approval of the work described in the preceding sentence, Tenant’s plans for the foregoing work shall be subject to Landlord’s review and written approval prior to the commencement of such work. 4. Delivery of Premises and Commencement of Tenant's Work. 4.1 Upon substantial completion of Landlord's Work, Landlord shall tender delivery of the Premises to Tenant for its fixturization and performance of Tenant's Work. Notwithstanding the foregoing, Landlord may request Tenant to commence part or all of Tenant's Work prior to completion of Landlord's Work if Landlord and Tenant, in their reasonable discretion, deem that accelerating Tenant's Work would be advantageous to Landlord and Tenant and/or prevent delays in Landlord's Work. 4.2 Upon Landlord's delivery of possession of the Premises to Tenant, Tenant shall thereupon proceed with due diligence to install Tenant's Work, including Tenant's equipment and merchandise, without interfering with other work being done in the Premises or Shopping Center. Landlord shall have no responsibility for any loss of, or damage to, any of Tenant's property installed or left on the Premises. Tenant's entry prior to the commencement of the Lease Term shall be subject to all of the provisions of the Lease other than the payment of rent and other charges of Landlord. At all times after such entry, Tenant shall maintain, or cause to be maintained, insurance complying with the provisions of the Lease, notwithstanding the fact that the Lease Term shall not then have commenced. 5. Acknowledgment of Completion of Landlord Work. 5.1 Subject to Section 5.2 below, Tenant agrees that upon substantial completion of Landlord's Work, Tenant shall conclusively be deemed to have accepted the Premises and Tenant hereby waives any and all rights or claims against Landlord arising out of the condition of the Premises including, but not limited to, any and all latent or patent defects therein. Nothing contained in this paragraph shall be deemed to limit Landlord's obligations to repair the Premises, wherever such obligation is expressly set forth in the Lease. 5.2 Within thirty (30) days following delivery of substantially completed Premises to Tenant, and prior to commencement of Tenant’s Work, Tenant shall provide the Landlord with a list of those construction items, if any, which are patently or latently either incomplete or defective. Said list shall be referred to as the "punch- list". The failure of Tenant to submit the punch-list within such time shall be deemed final approval and acceptance of Landlord's Work. The items on the "punch-list" shall be addressed by Landlord in timely fashion. 6. Landlord's Work. Landlord's Work is described in Schedule 1 attached hereto. 7. Tenant's Work. The work to be performed by Tenant shall be all work (other than that specifically designated as Landlord's Work) necessary to complete the Premises in accordance with the Approved Construction Plans ("Tenant's Work").  !                  55650486.6 727918-00939 SCHEDULE to EXHIBIT B -1- SCHEDULE 1 TO EXHIBIT B (Landlord's Work) Landlord shall deliver the Premises in a clean, code-compliant vanilla shell condition suitable for Tenant’s use as a temporary public library and office space. Landlord's Work shall be designed and constructed in such manner as Landlord, in its sole and absolute discretion, deems advisable, with building standard materials, fixtures and equipment. The scope of Landlord’s Work shall include the following: • a. HVAC Systems • Existing rooftop HVAC systems shall be fully operational, properly serviced, and certified in good working order. • Minimum capacity of one (1) ton per 350 usable square feet. • System shall be tested and properly balanced prior to delivery. • b. Electrical and Lighting • bathroom light switches and exhaust fans shall be tested and replaced if non-functional. • Two electrical drops will be provided at center of front room. • c. Fire/Life Safety • Fire sprinkler system shall be operational and code compliant. • Any existing fire alarm system shall be functional and meet current code standards. • d. Plumbing and Restrooms • Kitchen and restroom facilities shall be fully ADA-compliant. • Any broken toilets, sinks, faucets, or accessories shall be repaired or replaced. • All plumbing systems shall be delivered in good working order. • e. Interior Finishes • All ceiling tiles shall be replaced with new acoustical ceiling tiles. • Flooring shall consist of commercial-grade carpet, installed throughout designated areas. • Any existing tile flooring shall be acid washed, and grout shall be cleaned and sealed. • Any broken or missing tiles shall be replaced to match adjacent finishes. • f. Doors and Hardware • All exterior exit doors and door frames shall be repaired. If they cannot be repaired, same shall be replaced.  !                  55650486.6 727918-00939 EXHIBIT B -2- • All related door hardware shall be replaced and fully operational to code. • g. Wiring and Communications • All legacy wiring related to former tenants’ telephone or internet systems, including server room wiring, shall be removed or properly capped and terminated in accordance with code. • h. Controls and Security • All existing HVAC controls, thermostats, and system switches currently located at the front entrance shall be relocated to a location mutually agreed upon by Landlord and Tenant that is secure and inaccessible to the public. • i. Structural and Building Systems • Roof shall be inspected, repaired as necessary, and certified as sound and leak-free by a licensed roofing contractor. • All structural elements including walls, foundation, and slab shall be in good condition, free of major defects or damage. • Premises to be delivered in broom-clean condition.  !                  55650486.6 727918-00939 EXHIBIT C -1- Exhibit C Exclusive Uses & Prohibited Uses Tenant Unit # Exclusive Use Eisenhower Medical 4771F Lessee shall have the exclusive right to provide pediatric, family practice, neonatal/prenatal practice, family planning, workmen’s compensation, personal injury, urgent care (8:00 am to 8:00 pm) medical services, x -ray, ultrasound diagnostic services, lab/blood draw services. Palm Springs Animal Hospital 4771E Landlord agrees that from and after the execution of this Lease by the parties, Landlord shall not enter into any new lease of all or any portion of the Shopping Center granting to any other tenant or occupant of the Shopping Center the right to utilize the premises leased or owned by such other tenant or occupant for the following: operation of a veterinary hospital. Vons 4733 Lessor agrees that it shall not permit the use or operation of any portion of the shopping center within 200 feet of any exterior building wall of the leased premises for a restaurant (fast food or sit-down) or entertainment or recreational activities such as, but not limited to, bowling alleys, theaters, carnivals or other places of public or private amusement. Notwithstanding the foregoing, Lessor may permit the operation of a delicatessen, ice cream parlor, donut shop, pizza and/or chicken takeout or similar use which shall not exceed 2,500 square feet each within the shopping center if such use is not within 75 feet of any exterior building wall of the leases premises. Lessor further covenants and agrees not to permit the use or operation of a theater within any portion of the shopping center. Roadrunner Print and Ship 4751C Landlord shall not lease to another tenant who has mailbox rentals or offers shopping/mailing services such as those offered by a typical mailbox store tenant, excluding existing tenants, assigns, successor and replacements.  !                  55650486.6 727918-00939 EXHIBIT D -1- EXHIBIT D SIGN CRITERIA Per City ordinances  !                  55650486.6 727918-00939 EXHIBIT E -1- EXHIBIT E RULES AND REGULATIONS Landlord hereby establishes the following rules and regulations as Landlord deems necessary for the safety, care and cleanliness of (i) the store areas (hereinafter referred to as the "Premises") of any tenant or tenants of the Center (hereinafter referred to as the "Tenant"), (ii) the common area; and (iii) the Center in general, or for the preservation of good order: A. FOR THE STORE AREAS: 1. All floor areas of the Premises (including vestibules, entrances, and air returns),doors, fixtures, windows, and plate glass shall be maintained in a clean, safe and good condition. 2. All trash, refuse, and waste materials shall be stored in adequate containers and regularly removed from the Premises. These containers shall not be visible to the general public and shall not constitute a health or fire hazard, or a nuisance to any other Tenant. In the event that any Tenant shall fail to remedy such a health or fire hazard, or nuisance, within five (5) days after written notice by Landlord, Landlord may remedy and/or correct such health or fire hazard or nuisance at the expense of the Tenant involved. 3. No portion of the Premises shall be used for lodging purposes. 4. Neither sidewalks nor walkways shall be used to display, store, or place any merchandise, equipment or devices, except in connection with sidewalk sales held with Landlord's prior written approval. The roof of the Premises shall not be used for the storage of merchandise or equipment. 5. No public telephone, newsstand, shoe shine stand, refreshment, vending or other coin- operated machine shall be installed or placed on the sidewalk or walkway area adjacent to the Premises or on the common areas without Landlord's prior written approval in each instance. 6. No person or persons shall use the Premises, or any part thereof, for conducting therein a second-hand store, auction, distress or for sale or bankruptcy sale, or "going-out-of-business" sale or "lost our lease" sale without Landlord's prior written consent. 7. No portion of the Premises shall be used for the storage of any merchandise, materials or other properties, other than those reasonably necessary for the operation of a Tenant's business. Landlord may, from time to time, inspect the Premises to insure compliance with the foregoing provisions. 8. Tenant shall not black out or otherwise obstruct the windows of the Premises by signage or otherwise, without Landlord's prior written consent. 9. If a Tenant provides its customers with the use of shopping carts and/or baskets, such Tenant shall be responsible for causing said carts and/or baskets to be stored only in areas designed by Landlord. If such Tenant fails to routinely collect and store said carts as necessary (at least twice on a daily basis), Landlord may assume the responsibility of same and may bill the Tenant involved on an estimated monthly basis for such service. B. FOR THE COMMON AREAS: 1. All Tenants and their authorized representatives and invitees shall use any roadway, walkway, or mall (including the enclosed mall, if any) only for ingress and egress from the stores in the Center. Use of the common areas shall be in an orderly manner in accordance with directional or other signs or guides. Roadways shall not be used at a speed in excess of ten (10) miles per hour and shall not be used for parking or stopping, except  !                  55650486.6 727918-00939 EXHIBIT E -2- for the immediate loading or unloading of passengers. Walkways and malls (including the enclosed mall, if any) shall be used only for pedestrian travel. 2. All Tenants and their authorized representatives and invitees shall not use the parking areas for anything but parking motor vehicles. All motor vehicles shall be parked in an orderly manner within the painted lines defining the individual parking places. During peak periods of business activity, Landlord can impose any and all controls Landlord deems necessary to operate the parking lot including but not limited to the length of time for parking use. 3. No person shall use any utility area or truck loading area reserved for use in conducting business, except for the specific purpose for which permission to use these areas has been given. 4. No employee shall use any area for motor vehicle parking except the area specifically designated for employee parking. No Tenant shall designate an area for employee parking except the area designated in writing by Landlord. 5. Without the prior written consent of Landlord, no person shall use any of the common areas for: (a) Vending, peddling or soliciting orders for sale or distributing of any merchandise, device, service, periodical, book, pamphlet, or other matter; (b) Exhibiting any non-professional sign, placard, banner, notice or other written material; (c) Distributing any circular, booklet, handbill, placard, or other material; (d) Soliciting membership in any organization, group, or association, or soliciting contributions for any purpose; (e) Parading, patrolling, picketing, demonstrating, or engaging in conduct that might interfere with the use of the common areas or be detrimental to any of the business establishments in the Center; (f) Using the common areas for any purpose when none of the business establishments in the Center is open for business; (g) Discarding any paper, glass, or extraneous matter of any kind, except in designated receptacles; (h) Except for normal and customary sound devices for Tenant's drive-thru facilities, using a sound-making device that is grossly annoying or unpleasant to the general public; or (i) Damaging any sign, light standard, or fixture, landscaping material or other improvement or property within the Center. The above listing of specific prohibitions is not intended to be exclusive, but is intended to indicate the manner in which the right to use the common areas solely as a means of access and convenience in shopping at the business establishments in the Center is limited and controlled by Landlord.  !                  55650486.6 727918-00939 -1- EXHIBIT F TENANT ESTOPPEL CERTIFICATE [THIS IS A SAMPLE DOCUMENT; DO NOT EXECUTE]] TO: ____________________________ Attention: ____________________ _________________________ _________________________ RE: Premises Address: _______________________, _______________________ (Shopping Center) Suite No. _____________ Lease Date: ___________________ By and Between: ________________________ , and ______________________ (Tenant) Square Footage Leased: Approximately _____________ Square Feet The undersigned is the Tenant under the above-referenced lease and a true, correct and complete copy of which Lease and any and all amendments thereto is attached hereto as Exhibit “A” and are hereinafter collectively referred to as the “Lease.” The undersigned hereby acknowledges and certifies on behalf of itself, its successors and assigns, to __________________________________(“Lender”) and ___________________________________ (“Landlord”) and each of their respective successors and assigns, the following: 1. The above-described Lease is unmodified and in full force and effect except for ____________________________________________________________________. 2. There is no prepaid rent, other than the current month’s rent paid in advance, except ___________________________________________ Dollars ($____________), and the amount of the security deposit is $_______________. The undersigned is not entitled to any “free” rent, rental concessions or other similar benefits, except for ____. 3. Possession of the Premises was taken by Tenant on ___________. Tenant began paying rent on ___________. Tenant’s current minimum monthly rental payments are _________________. Tenant’s current percentage rent is ___________ of ____________. Tenant’s current estimated monthly NNN payments are ______________. Minimum rent was last paid on _____________ and has been paid through ____________. Estimated monthly NNN payments were past paid on ____________ and have been paid through ________________. 4. No payments are required to be made by Landlord to Tenant and all work to be performed for Tenant by or on behalf of Landlord under the Lease has been performed as required and has been accepted by Tenant, except for .  !                  55650486.6 727918-00939 -2- 5. The Lease terminates on ________________ and Tenant has the following renewal option(s): _________________ option(s) to extend and renew the Lease for ____________ each. The exercise date(s) of said option(s) are: ______________. 6. Tenant has no right or option pursuant to the Lease or otherwise (i) to purchase all or any part of the Premises or the Center; (ii) for additional space in the Center, and/or (iii) to terminate the Lease prior to its stated expiration date except as follows: ______________________________________________. 7. As of the date hereof, neither Landlord nor Tenant is in default under the Lease, and Tenant has no knowledge of the occurrence of any event which with notice and/or the passage of time would constitute a default under the Lease, nor does Tenant have any claims against Landlord nor any defenses or offsets against rent. 8. The undersigned acknowledges that Lender, Landlord and their respective successors and/or assigns, may rely upon this Estoppel Certificate. 9. The undersigned is duly authorized to execute this certificate on behalf of the Tenant. 10. The undersigned has not assigned or sublet the Premises nor does Tenant hold the Premises under an assignment or sublease except: ________________________________________________. IN WITNESS WHEREOF, Tenant has executed this Tenant’s Estoppel Certificate this ____ day of _________________________, 200_. TENANT: __________________________________ By: Name: Title: By: Name: Title:  !                  55650486.6 727918-00939 -1- EXTENSION OPTION RIDER This Extension Option Rider ("Rider") is made and entered into by and between Pacific Castle Rimrock, LLC, a Delaware limited liability company ("Landlord"), and The City of Palm Springs ("Tenant"), and is dated as of the Effective Date of the Shopping Center Lease ("Lease") by and between Landlord and Tenant to which this Rider is attached. The agreements set forth in this Rider shall have the same force and effect as if set forth in the Lease. To the extent the terms of this Rider are inconsistent with the terms of the Lease, the terms of this Rider shall control. 1. Option to Extend Lease Term. Landlord hereby grants to Tenant two (2) options to extend the Lease Term each for a period of six (6) months (individually and collectively, "Option Term"). Each option must be exercised, if at all, by written notice ("Option Notice") delivered by Tenant to Landlord not less than three (3) months prior to the end of the initial Lease Term or extended Lease Term, whichever is applicable. Further, the option shall be deemed not to be properly exercised, if, as of the date of the Option Notice or at the end of the initial Lease Term or extended Lease Term (whichever is applicable), Tenant is in default under the Lease. Provided Tenant has properly and timely exercised the option, the Lease Term shall be extended for the number of months specified above, and all terms, covenants and conditions of the Lease shall remain unmodified and in full force and effect. 2. The Option shall be exercisable by Tenant on the express condition for Landlord's benefit that Tenant shall not be in default either at the time of the exercise of the Option or at the commencement of the Option Term. If Tenant timely exercises the Option under this Rider, "Lease Term" shall mean, for all purposes under the Lease, the sum of (a) the original Lease Term, plus (b) the term of the Option Term for which the Option has been exercised. 3. The Minimum Rent due at the commencement of the first (1st) Option Term shall be one hundred and three percent (103%) of the Minimum Rent due for the month immediately preceding the commencement of the first (1st) Option Term. In the event that Tenant exercises its second option to extend the Term of the Lease, Minimum Rent during the second (2 nd) Option Term shall be the same as the Minimum Rent during the first (1st) Option Term. 4. The Option is personal to Tenant. In the event of any sublease, assignment or transfer of Tenant's interest in the Lease before the permitted exercise of the Option, the Option shall not be transferred to any transferee but shall instead automatically lapse, and the Lease Term shall be as provided for in Section 1.8 of the Lease. 5. If Tenant is late with regard to the payment of Minimum Rent or any other amounts due under this Lease more than three (3) times during the term of the Lease, or any Option Term, then the Option, or any remaining Option, shall be deemed to have lapsed and to be null and void. “Late” for purposes of this paragraph is defined as Landlord’s failure to receive any such payment as and when due under the provisions of this Lease. Further, if Tenant is in default of any term or provision of this Lease as of the date when Tenant attempts to exercise any Option granted herein, Tenant’s exercise of such Option shall be deemed null and void. Default shall be defined for purposes of this paragraph as a failure of Tenant to perform any material obligation under this Lease as and when required.  !                  55650486.6 727918-00939 -2- IN WITNESS WHEREOF, Landlord and Tenant have executed this Rider as of the Effective Date. LANDLORD: Pacific Castle Rimrock, LLC, a Delaware limited liability company By: Pacific Castle Fund I, LP, a Delaware limited partnership, its sole member By: Pacific Castle Asset Management, LLC, a Delaware limited liability company, its General Partner By: Pacific Castle Capital II, LLC, a Delaware limited liability company, its Manager Dated: __________________ By: Name: Rod Astarabadi Title: President TENANT: The City of Palm Springs Approved as to Legal Form: Dated: __________________ By: Name: Jeffrey S. Ballinger, City Attorney Dated: __________________ By: Name: Scott Stiles, City Manager Initial: Name: Jeannie Kays, Director of Library Services  !          "  "            55650486.6 727918-00939 -3- HAZARDOUS MATERIAL RIDER This Hazardous Material Rider ("Rider") is made and entered into by and between Pacific Castle Rimrock, LLC, a Delaware limited liability company ("Landlord") and The City of Palm Springs ("Tenant") and is dated as of the Effective Date of the Shopping Center Lease between Landlord and Tenant to which this Rider is attached (the "Lease"). The agreements set forth herein shall have the same force and effect as if set forth in the Lease. To the extent that the terms of this Rider are inconsistent with the terms of the Lease, the terms of this Rider shall control. 1. Use, Storage, Handling and Disposal of Hazardous Materials. Except as provided herein, Tenant shall neither cause nor permit any Hazardous Materials (as such term is defined in Section 9 below) to be used, generated, stored, transported, handled or disposed of in or about the Premises or the Shopping Center at any time during the Lease Term (such activities are hereinafter referred to as "Environmental Activities"). This prohibition shall extend to Tenant's employees, agents, contractors, sublessees, assignees, licensees, concessionaires and invitees (collectively referred to herein as "Tenant's Agents") and Tenant shall be responsible for assuring compliance by such persons with the foregoing prohibition. Notwithstanding the foregoing, and subject to Tenant's covenant to strictly comply with all Hazardous Materials Laws (as such term is defined in Section 2 below) and all other terms and conditions of this Rider, Tenant and Tenant's Agents may bring upon, keep and use in (a) general office and cleaning supplies typically used in an office or retail area in the ordinary course of business, such as copier toner, liquid paper, glue, ink, and cleaning solvents, for use in the manner for which they were designed, and (b) only the following Hazardous Materials provided Tenant has delivered to Landlord a description of handling, storage, use and disposal procedures: [NOT APPLICABLE] . From time to time during the term of this Lease, Tenant may request Landlord's approval of Tenant's use of other Hazardous Materials, which approval may be withheld in Landlord's sole discretion. 2. Compliance with Laws. Tenant, at its sole cost and expense, shall comply and shall cause Tenant's Agents to comply, with all federal, state and local laws, ordinances and regulations and all rules, licenses, permits, orders, decrees and judgments relating to Environmental Activities (collectively referred to as "Hazardous Materials Laws") conducted on the Premises. Tenant's breach of any of its covenants or obligations under this Rider shall constitute a material default under the Lease. The obligations of Tenant under this Rider shall survive the expiration or earlier termination of the Lease without any limitation, and shall constitute obligations that are independent and severable from Tenant's covenants and obligations to pay rent under the Lease. 3. Exculpation of Landlord and Tenant. Other tenants of the Shopping Center may be using, handling or storing certain Hazardous Materials in connection with such tenants' use of their premises. The failure of another tenant to comply with applicable laws and procedures could result in a release of Hazardous Materials and contamination to improvements within the Shopping Center or the soil and ground water thereunder. In the event of such release, the tenant responsible for the release, and not Landlord, shall be solely responsible for any claim, damage or expense incurred by Tenant by reason of such contamination, and Tenant shall have no liability with respect to any contamination of the Premises caused by another tenant. Tenant waives any rights it may have under California law to later assert that the foregoing release does not cover unknown claims. 4. Notification. Tenant shall immediately advise Landlord in writing of, and provide Landlord with a copy of: (i) any notices of violation or potential or alleged violation of any Hazardous Materials Laws which are received by Tenant from any governmental agency concerned with Tenant's or Tenant's Agent's Environmental Activities; (ii) any and all inquiry, investigation, enforcement, clean-up, removal or other governmental or regulatory actions instituted or threatened relating to Tenant, the Premises or the Shopping Center; (iii) all claims made or threatened by any third party against Tenant, the Premises or the Shopping Center relating to any Hazardous Materials; and (iv) any release of Hazardous Materials on or about the Premises or the Shopping Center which Tenant knows of or reasonably believes may have occurred. 5. Inspection of Premises. From time to time Landlord may retain a registered environmental consultant (the "Consultant") acceptable to Landlord to conduct an investigation of the Premises ("Environmental  !                  55650486.6 727918-00939 -4- Assessment") (i) for Hazardous Materials contamination in, about or beneath the Premises and (ii) to assess all Environmental Activities at the Premises for compliance with all applicable laws, ordinances and regulations and for the use of procedures intended to reasonably reduce the risk of a release of Hazardous Materials. Notwithstanding the foregoing, however, so long as the Tenant under this Lease is the City of Palm Springs, Landlord shall not perform more than two (2) Environmental Assessments per calendar year and only with reasonable cause, unless requested by Landlord’s lender and/or insurance carrier or in connection with a sale of the Shopping Center or any portion thereof. If Landlord obtains an Environmental Assessment as a result of a reasonable suspicion that Tenant or Tenant’s Agents have undertaken Environmental Activities at the Premises or Shopping Center, Tenant shall pay Landlord on demand the cost of the Environmental Assessment. If Landlord so requires, Tenant shall comply, at its sole cost and expense, with all recommendations contained in the Environmental Assessment which should be taken with respect to Environmental Activities on the Premises or any recommendations for additional testing and studies to detect the presence of Hazardous Materials. Tenant covenants to reasonably cooperate with the Consultant and to allow entry and reasonable access to all portions of the Premises for the purpose of Consultant's investigation. 6. Indemnification. Tenant shall indemnify, defend (with counsel satisfactory to Landlord) and hold Landlord, its directors, officers, employees, agents, assigns and any successors to Landlord's interest in the Shopping Center, harmless from and against any and all loss, cost, damage, expense (including reasonable attorneys' fees), claim, cause of action, judgment, penalty, fine or liability directly or indirectly relating to or arising from (i) any Environmental Activity undertaken by Tenant or Tenant's Agents at the Premises, (ii) any remedial or clean-up work undertaken by or for Tenant in connection with Tenant's or Tenant's Agent's Environmental Activities or its compliance with Hazardous Materials Laws or (iii) the breach by Tenant of any of its obligations and covenants set forth in this Rider. Landlord shall have the right but not the obligation to join and participate in, and control, if it so elects, any legal proceedings or actions initiated in connection with Tenant's or Tenant's Agent's Environmental Activities. Landlord may also negotiate, defend, approve and appeal any action taken or issued by any applicable governmental authority with regard to contamination of the Premises or Shopping Center by a Hazardous Material. Any costs or expenses incurred by Landlord for which Tenant is responsible under this Rider or for which Tenant has indemnified Landlord shall be reimbursed by Tenant on demand. Landlord shall indemnify, defend (with counsel reasonably acceptable to Tenant) and hold Tenant harmless from and against any and all loss, cost, damage, expense (including reasonable attorneys' fees), claim, cause of action, judgment, penalty, fine or liability directly or indirectly relating to or arising from any Hazardous Materials existing in, on, at, under or near the Premises prior to the Effective Date, except to the extent, if any, that were introduced (or worsened) by Tenant (or by Tenant’s agents, employees or contractors). The indemnifications set forth in this Section shall survive the expiration or earlier termination of this Lease. 7. Remediation. If any Environmental Activities undertaken by Tenant or Tenant's Agents result in contamination of the Premises or any other portion of the Shopping Center or the soil or ground water thereunder, subject to Landlord's prior written approval and any conditions imposed by Landlord, Tenant shall promptly take all actions, at its sole expense and without abatement of rent, as are necessary to return the affected portion to the condition existing prior to the introduction of the contaminating Hazardous Material. Landlord shall also have the right to approve any and all contractors hired by Tenant to perform such remedial work. All such remedial work shall be performed in compliance with all applicable laws, ordinances and regulations and in such a manner as to minimize any interference with the use and enjoyment of the Shopping Center. Appearance of a Hazardous Material in or about the Premises or Shopping Center shall not be deemed an occurrence of damage or destruction subject to the terms of the Lease respecting damage or destruction. 8. Surrender of Premises. Prior to or after the expiration or termination of the Lease Term, Landlord may have an Environmental Assessment of the Premises performed in accordance with Section 5 of this Rider. Tenant shall perform, at its sole cost and expense, any clean-up or remedial work recommended by the Consultant which is necessary to remove, mitigate or remediate any Hazardous Materials contamination of the Premises or Shopping Center in connection with Tenant's or Tenant's Agent's Environmental Activities. Prior to surrendering possession of the Premises, Tenant shall also remove any personal property, equipment, fixture (except for any fixture installed by Landlord, unless otherwise directed by Landlord) and/or storage device or vessel on or about the Premises which is contaminated by or which contains Hazardous Materials. 9. Definition of Hazardous Materials. "Hazardous Materials" shall mean asbestos, any petroleum fuel and any hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental  !                  55650486.6 727918-00939 -5- authority, the State of California or the United States Government, including, but not limited to, any material or substance defined as a "hazardous waste," "extremely hazardous waste," "restricted hazardous waste," "hazardous substance," "hazardous material" or "toxic pollutant" under the California law and/or under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601, et seq. IN WITNESS WHEREOF, Landlord and Tenant have executed this Rider as of the Effective Date. LANDLORD: Pacific Castle Rimrock, LLC, a Delaware limited liability company By: Pacific Castle Fund I, LP, a Delaware limited partnership, its sole member By: Pacific Castle Asset Management, LLC, a Delaware limited liability company, its General Partner By: Pacific Castle Capital II, LLC, a Delaware limited liability company, its Manager Dated: __________________ By: Name: Rod Astarabadi Title: President TENANT: The City of Palm Springs Approved as to Legal Form: Dated: __________________ By: Name: Jeffrey S. Ballinger, City Attorney Dated: __________________ By: Name: Scott Stiles, City Manager Initial: Name: Jeannie Kays, Director of Library Services  !          "  "            55650486.6 727918-00939 -i- RIMROCK PLAZA SHOPPING CENTER LEASE by and between Pacific Castle Rimrock, LLC, a Delaware limited liability company “Landlord” and The City of Palm Springs “Tenant”  !                  55650486.6 727918-00939 -ii- TABLE OF CONTENTS Page ARTICLE 1 FUNDAMENTAL LEASE PROVISIONS ............................................................................... 1 ARTICLE 2 PREMISES ................................................................................................................................ 3 2.1 Lease of Premises....................................................................................................................... 3 2.2 Shopping Center. ........................................................................................................................ 3 2.3 Definition of ............................................................................................................................... 3 ARTICLE 3 TERM ........................................................................................................................................ 3 3.1 Duration of Lease Term ............................................................................................................. 3 3.2 Acceptance of the Premises ....................................................................................................... 4 3.3 Holding Over Without Consent ................................................................................................. 4 3.4 Surrender of the Premises .......................................................................................................... 4 ARTICLE 4 POSSESSION, USE AND OPERATION ................................................................................. 4 4.1 Permitted Uses ........................................................................................................................... 4 4.2 Duties and Prohibited Conduct .................................................................................................. 4 4.3 Deliveries ................................................................................................................................... 5 4.4 Operating Covenants .................................................................................................................. 5 4.5 Operating Days and Hours ......................................................................................................... 5 4.6 Signs and Advertising ................................................................................................................ 5 4.7 Radius Clause ............................................................................................................................. 6 ARTICLE 5 RENTAL .................................................................................................................................... 6 5.1 Rent Commencement Date ........................................................................................................ 6 5.2 Minimum Annual Rental ........................................................................................................... 6 5.3 Interest on Late Payments; Late Charge .................................................................................... 7 5.4 Address for Payments ................................................................................................................ 7 ARTICLE 6 UTILITIES AND AIR CONDITIONING ................................................................................. 7 6.1 Utilities and Air Conditioning .................................................................................................... 7 ARTICLE 7 INDEMNITY; INSURANCE .................................................................................................... 7 7.1 Indemnity by Tenant .................................................................................................................. 7 7.2 Tenant's Insurance Obligation .................................................................................................... 7 7.3 Form of Policies ......................................................................................................................... 8 7.4 Landlord's Insurance Obligation ................................................................................................ 9 7.5 Mutual Waivers of Rights .......................................................................................................... 9 ARTICLE 8 TENANT'S RIGHT TO MAKE IMPROVEMENTS AND MECHANICS' LIENS ................. 9 8.1 Improvements ............................................................................................................................ 9 8.2 Construction Requirements ........................................................................................................ 9 8.3 Tenant's Covenants .................................................................................................................. 10 8.4 Landlord's Right to Cure .......................................................................................................... 10 ARTICLE 9 PERSONAL PROPERTY; FIXTURES................................................................................... 10 9.1 Removal and Replacement ....................................................................................................... 10 9.2 Fixtures .................................................................................................................................... 10 9.3 Landlord's Security Interest ..................................................................................................... 10 9.4 Personal Property Taxes ........................................................................................................... 11 ARTICLE 10 ASSIGNMENT AND SUBLETTING ..................................................................................... 11 10.1 Definitions................................................................................................................................ 11 10.2 Restrictions .............................................................................................................................. 11 10.3 No Default ................................................................................................................................ 12 10.4 Procedures ................................................................................................................................ 12 10.5 Documentation and Expenses .................................................................................................. 12 10.6 Transfer Premium .................................................................................................................... 12 10.7 Nullity ...................................................................................................................................... 12 10.8 Waiver ...................................................................................................................................... 12 10.9 Minimum Annual Rental ......................................................................................................... 13 ARTICLE 11 REPAIRS AND MAINTENANCE ......................................................................................... 13 11.1 Tenant's Obligations ................................................................................................................. 13  !                  55650486.6 727918-00939 -iii- 11.2 Landlord's Obligations ............................................................................................................. 13 ARTICLE 12 RECONSTRUCTION AND CONDEMNATION ................................................................... 13 12.1 Insured Casualty ....................................................................................................................... 13 12.2 Uninsured Casualty .................................................................................................................. 14 12.3 Construction Provisions ........................................................................................................... 14 12.4 Release of Liability .................................................................................................................. 14 12.5 Abatement of Rent ................................................................................................................... 14 12.6 Major Destruction .................................................................................................................... 14 12.7 Condemnation .......................................................................................................................... 14 ARTICLE 13 COMMON AREA ................................................................................................................... 15 13.1 Definition of ............................................................................................................................. 15 13.2 Use of Common Area .............................................................................................................. 15 13.3 Maintenance of Common Areas ......................................................................................... 15 13.4 Control of Common Area ........................................................................................................ 15 13.5 Rules and Regulations .............................................................................................................. 16 13.6 Employee Parking .................................................................................................................... 16 ARTICLE 14 DEFAULTS BY TENANT; REMEDIES ................................................................................ 16 14.1 Events of Default ..................................................................................................................... 16 14.2 Landlord's Rights and Remedies .............................................................................................. 17 14.3 Intentionally Deleted ................................................................................................................ 19 14.4 Definition of Worth at the Time of Award .............................................................................. 19 14.5 Cure of Tenant’s Default .......................................................................................................... 19 14.6 Fixtures and Personal Property ................................................................................................ 20 14.7 No Waiver ................................................................................................................................ 20 14.8 Right to Cure ............................................................................................................................ 20 ARTICLE 15 DEFAULTS BY LANDLORD; REMEDIES .......................................................................... 20 ARTICLE 16 SUBORDINATION; ATTORNMENT; ESTOPPEL .............................................................. 21 16.1 Subordination ........................................................................................................................... 21 16.2 Attornment by Tenant .............................................................................................................. 21 16.3 Estoppel Certificate .................................................................................................................. 21 ARTICLE 17 SECURITY DEPOSIT ............................................................................................................. 21 ARTICLE 18 TENANT FINANCIAL DATA ............................................................................................... 22 18.1 Books and Records.................................................................... Error! Bookmark not defined. 18.2 Financial Statements ................................................................. Error! Bookmark not defined. ARTICLE 19 LANDLORD’S RIGHT TO RELOCATE PREMISES ........................................................... 22 19.1 Decor ......................................................................................... Error! Bookmark not defined. 19.2 Relocation ................................................................................. Error! Bookmark not defined. 19.3 Notice ........................................................................................ Error! Bookmark not defined. 19.4 Time .......................................................................................... Error! Bookmark not defined. 19.5 Costs .......................................................................................... Error! Bookmark not defined. 19.6 Frequency .................................................................................. Error! Bookmark not defined. 19.7 Size ............................................................................................ Error! Bookmark not defined. 19.8 Amendment ............................................................................... Error! Bookmark not defined. 19.9 Termination ............................................................................... Error! Bookmark not defined. ARTICLE 20 MISCELLANEOUS ................................................................................................................ 22 20.1 Severability; Construction of Provisions .................................................................................. 22 20.2 Entire Agreement; Interpretation ............................................................................................. 22 20.3 Governing Law ........................................................................................................................ 22 20.4 Force Majeure .......................................................................................................................... 23 20.5 Amendments and Waivers ....................................................................................................... 23 20.6 Time of Essence ....................................................................................................................... 23 20.7 Rate of Interest ......................................................................................................................... 23 20.8 Joint and Several Liability ....................................................................................................... 23 21.9 Successors and Assigns ............................................................................................................ 23 20.10 Brokers ..................................................................................................................................... 23 20.11 Recordation .............................................................................................................................. 23  !                  55650486.6 727918-00939 -iv- 20.12 Execution in Counterparts ........................................................................................................ 23 20.13 Landlord's Access .................................................................................................................... 23 20.14 Sale or Mortgage by Landlord ................................................................................................. 24 20.15 Attorney Fees ........................................................................................................................... 24 20.16 Notices ..................................................................................................................................... 24 20.17 Exhibits and Riders .................................................................................................................. 24 20.18 Independent Covenants ............................................................................................................ 24 20.19 Landlords Lien ......................................................................................................................... 24 20.20 Assignee Notice ....................................................................................................................... 25 20.21 No Implication of Exclusive Use ............................................................................................. 25 20.22 Center Remodeling .................................................................................................................. 25 20.23 Disclaimer of Authority ........................................................................................................... 25 Signature Page ......................................................................................................................... 27  !                  55650486.6 727918-00939 -v- E X H I B I T S Exhibit A - General Site Plan of the Shopping Center Exhibit B - Design and Construction of Tenant’s Store & Schedule to Exhibit B Exhibit C - Exclusive Uses Exhibit D Sign Criteria Exhibit E - Rules and Regulations Exhibit F - Tenant Estoppel Certificate Riders Extension Option Rider Hazardous Material Rider  !