HomeMy WebLinkAbout12/20/2006 - STAFF REPORTS - 5.F. Glen Energy"
Aq,Y.Y i[an^aty.h�.:.n
Airport CIVG Stations
Location Monthly Rent Monthly Volume
Oakland $0 60,000
Love Field $0 12,000
Albuquerque $0 6,000
LaGuardia $0 4,000
Tucson $218 13,000
DFW $975 170,000
Seattle Tacoma $1,500 100,000
Sky Harbor Rental Car Center $1,600 125,000
d F PALM S.
°' f " p� City of Palm Springs
V �Nw:by�ti INN
I • I � I / Deparrmenr of Aviation
"To 1 . Palm Springs International Airport
C' °ae.cea A/ 3400 E-Tahquirz Canyon Way,Suite-OPC • Palm Springs,Caldornia 92262-6966
q<!Fp RNA' T$L:(760) 318-3800 • FAX(760)31 S-3fi 15 • TDD(760)S64.9527
July 23, 2003
Clean Energy Fuels Corp.
Attn: Mr. Andrew Littlefair
Mr- James Harger
3020 Old Ranch Parkway, Suite 200
Seal Beach, CA 90470
RE: AGREEMENT 4647
Dear Sirs:
Enclosed please find an executed copy of Agreement#4647 approved by City Council
on February 19, 2003 via Minute Order#7259.
Sincerely,
J ckp ccoun
count ecialistS
Enclosure
Cc: file
Post Office Box 2743 • Palm Springs, California 92263-27 43
LEASE
CITY OF PALM SPRINGS,
a municipal corporation
"Landlord"
and
Clean Energy Fuels Corp.
"Tenant"
LEAS E
THIS NON-EXCLUSIVE LEASE ("Lease") is made and entered into this leday of
2003 _, by and between the CITY OF PALM SPRINGS, a municipal
corporation("Landlord"),and Clean Energy Fuels Corp. ("Tenant").
RECITALS
A. WHEREAS ,Clean Energy Fuels Corp. (Tenant)a nationwide industry leader in clean air
programs,has offered to construct up to$850,000.00 worth of improvements to develop a state
of the art Compressed Namral Gas(CNG)Vehicle Fueling Station at the Palm Springs
International Airport(PSP); and
B. WHEREAS the Airport's new Master Plan has designated approximately 5,200 square feet on the
Airport Entrance Road frontage for development of a Renewable Energy Fueling Site; and
C. WHEREAS the City of Palm Springs(Landlord),with the concurrence of the Federal Aviation
Administration, has determined that CLEAN ENERGY's involvement of actively providing
Compressed Natural Gas(CNG)Vehicle Fueling Station services for Airport Emergency vehicles
on twenty-four(24)hour basis for response to Airport incidents and/or accidents on the
Renewable Energy Site; and
D. WHEREAS the City Council has set forth the Non-Exclusive Use of the site to be provided by
l CLEAN ENERGY to the Airport as a result of the development of the Compressed Natural Gas
vehicle fueling station, copy attached as Exhibit A to this Lease Agreement; and
E. WHEREAS the CLEAN ENERGY will promote and encourage the general public interest in the
use of clean burning alternative fuels and is consistent with national efforts to enhance public
awareness and support for air quality programs; and
P. WHEREAS the nature of the Compressed Natural Gas vehicle fueling station use is such that it
will serve to provide clean burning alternative fuels for agencies involved in the aviation industry
and the City of Palm Springs,but also those with broader revenue production purposes(i.e_
Sunline Transit Agency). In enhancing the leaseability of surrounding properly,it will assist in
making the Airport as self-sustaining as possible,
NOW THEREFORE,the parties hereto agree as follows:
I. LEASE SUMMARY. Certain fundamental lease provisions are presented in this Section
and represent the agreement of the parties hereto, subject to further definition and elaboration in the
respective referenced Sections and elsewhere in this Lease. In the event of any conflict between any
fundamental lease provision and the balance of this Lease,the latter shall control. References to specific
Sections are for convenience only and designate some of the Sections where references to the particular
fundamental lease provisions may appear.
i.l Demised Premises. The"Demised Premises" shall refer to that certain real property located in the
County of Riverside, State of California,as depicted on the Plot Plan attached as Exhibit "B"hereof
1.2 Lease Commencement Date. The term of this Lease shall commence on the date
that Agreement No. is exercised and executed. This Lease Agreement shall be for ten(10)
IN WITNESS WHEREOF, the parties have executed and entered into this Agr•eetnent as of the date first
rvntten above.
CITY OF PALM SPRINGS
a municipal corporation
City Clerk 7/,-2 /�(]3 City Manaycr
APPROVED AS TO FORM:
City
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City Attorney
CONTRACT hec4. 1ndividual_Partnership_Corporation
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By: By:
tgna ure( otarized) Signature(notarized)
Name: AndreiLitticfai Name: Richard Wheeler
i
Title: President and CEO Title Chief Financial Officer
State of Cw I"C' __ (� State of County of 0 r
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within inswmoat and acFmow]edged tome that hdshe[thsy.execu[ed wifhm insirumrnt and acimnwledged to me that hdshdthey executed
the same in hisfkok4«r-authorized capacity(ns), and that by the same in his/F authorized capacity6m), and that by
hisiherAheir signature on the instrument the personX,, or the hislherJ hm ignature on the instrument the person or the
entity upon behalf o which the person acted, czccutcd the entity upon behalf of which the person acted,acted, executed the
insimment. instrument
WITNESS my hand and official seal. WrrNF.SS my band and official seal.
Notary Signature:. Notary Signature:
Notary Seal: Notary Seal:
DONNA J. NUNES DONNA J. NUNES `
Cammission k 1296717 T _ Commission 9 7296777
Notary Public-Callfoaila -+ _ Notary Public-CaliFomia
Orange County orange County
9MYComm.Expi"Apr7,2115 r My Comm.Expires7,2005`�
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PALM
City of Palm Springs
I ✓4 Dcparrmcnc of Aviation
1 I •J 4 ]Palm Springs International Airport
cO'°aa;eo••y
y`•a �+ �' 3400 E.Tahquin.Canyon Way,Suicc,0K • Palm Springs, California 92262-6966
I Fp Ra TEL: (760)318-3goo • PAS(760)318-3815 • TDD(760)864-9527
July 23, 2003
Clean Energy Fuels Corp.
Attn: Mr- Andrew Littlefair
Mr. James Harger
3020 Old Ranch Parkway, Suite 200
Seal Beach, CA 90470
RE: AGREEMENT 4647
Dear Sirs:
Enclosed please find an executed copy of Agreement#4647 approved by City Council
on February 19, 2003 via Minute Order 47259.
Sincerely,
J net Buck
ccount Specialist
Enclosure
Cc: file
7
A� -
. a
Post Office Box 2743 • Palm Springs, California 92263-2743
LEASE
CITY OF PALM SPRINGS,
a municipal corporation
"Landlord"
and
Clean Energy Fuels Corp.
"Tenant"
LEASE
THIS NON-EXCLUSIVE LEASE ("Lease") is made and entered into this 4day of
/ a„ , 2003 , by and between the CITY OF PALM SPRINGS, a municipal
corporation("Landlord"),and Clean Energy Fuels Corp. ("Tenan
RECITALS
i
A. WHEREAS ,Clean Energy Fuels Corp. (Tenant)a nationwide industry leader in clean air
programs,has offered to construct up to$850,000,00 worth of improvements to develop a state
of the art Compressed Natural Gas(CNG)Vehicle Fueling Station at the Palm Springs
International Airport(PSP); and
13 WFIEREAS the Airport's new Master Plan has designated approximately 5,200 square feet on the
Airport Entrance Road frontage for development of a Renewable Energy Fueling Site; and
C- WHEREAS the City of Palm Springs(Landlord), wizb the concurrence of the Federal Aviation
Administration,has determined that CLEAN ENERGY's involvement of actively providing
Compressed Natural Gas(CNG)Vehicle Fueling Station services for Airport Emergency vehicles
on twenty-four(24)hour basis for response to Airport incidents and/or accidents on the
Renewable Energy Site; and
D. WHEREAS the City Council has set forth the Non-Exclusive Use of the site to be provided by
CLEAN ENERGY to the Airport as a result of the development of the Compressed Natural Gas
vehicle fueling station,copy attached as Exhibit A to this Lease Agreement; and
E. WHEREAS the CLEAN ENERGY will promote and encourage the general public interest in the
use of clean burning alternative fuels and is consistent with national efforts to enhance public
awareness and support for au quality programs; and
F. WHEREAS the nature of the Compressed Natural Gas vehicle fueling station use is such that it
will serve to provide clean burning alternative fuels for agencies involved in the aviation industry
and the City of Palm Springs,but also those with broader revenue production purposes(i.e.
Sunline Transit Agency). In enhancing the leaseability of surrounding property, it will assist in
making the Airport as self-sustaining as possible,
NOW THEREFORE,the parties hereto agree as follows:
1. LEASE SUMMARY. Certain fundamental lease provisions arc presented in this Section
and represent the agreement of the parties hereto,subject to further definition and elaboration in the
respective referenced Sections and elsewhere in this Lease. In the event of any conflict between any
fumdamental lease provision and the balance of this Lease,the latter shall control- References to specific
Sections arc for convenience only and designate some of the Sections where references to the particular
fundamental lease provisions may appear.
i.1 Demised Premises. The"Demised Premises" shall refer w that certain real property located in the
County of Riverside, State of California,as depicted on the Plot Plan attached as xhihft"B"hereof.
1.2 Lease Commencement Date. The term of this Lease shall commence on the date
that Agreement No. is exercised and executed. This Lease Agreement shall be for ten(10)
IN WITNESS WHEREOF, the patties have executed and entered into this Agreement as of the date first
written above.
1
CITY OF PALM SPRINGS
c a municipal corporation }
R r J
City Clerk 7�� 1/(�3 Ciry Manager
APPROVED AS TO FORM:
.",:�`?'��c:t�� �c -fir: t:�'►�=''i`�:'#L
ray:
City Attorney
CONTRACT heck Individual Partnership_Corporation
Corporations q Its a n d Si res: One from each of the following. A. Choi of B :ud,P esi 1,or any Vice President:AND
8,Secretary,As isG I Sec ,Tr er,Assistant Treasurer,or Chief Financial Offic
By-
By:
igna urc( otarized) Signature(notarized)
Name: An rc 1. ."ttic a" Name: Richard Wheeler
Title: President and CEO Tide: Chief Financial Officer
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State of r.; (y�. s f� State oC to n•cam
County of =ss s yy I'a blkCountyof t,. Zss �� 11
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within msrrument and acknowledged to me that helshekhe}.executed within instrument and aelmowledged to me that hdandthey executed
the same in hisflwrg fs authorized capacity(4@s), and that by the same in hr. authorized capacity*), and that by
hisA[cr/their signaturco on the instrument the person, . or the his/het h it signaturqA on the instrument the person or the
entity upon behalf Or which the person acted, executed the entity upon behalf of which the person acted, executed the
instillment. instrument.
WITNESS my hand and official seal. WITNESS my hand and official seal.
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Notary Signature: '/L�-zq '4 -J Notary Signature / • u-,.,�
Notary Seal: Notary Seal:
DONNA J. NUNES DONNA J- NJNES F
COMML slorl 0 7276717 y Commission# 7296717
Notary Publlc-CeIrfomla y i m Notary Pu6Gc-Caliromio
Orange County Orange County
9MYCOrrm-Elp�MAPr7,2115 ' My Comm.E?pinm Apr7,205
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CITY COUNCIL STAFF REPORT
DATE: December 20, 2006 NEW BUSINESS
SUBJECT: NON-EXCLUSIVE LEASE AGREEMENT WITH CLEAN ENERGY FOR THE
EXPANSION AND OPERATION OF THE CNG VEHICLE FUELING
STATION AT PALM SPRINGS INTERNATIONAL AIRPORT
FROM: David H. Ready, City Manager
BY: Department of Aviation
SUMMARY
Clean Energy operates a Compressed Natural Gas (CNG) fueling station at the Palm
Springs International Airport through a cooperative arrangement with Sunline Transit
Agency. Clean Energy and Sunline Transit Agency recently reached a settlement
agreement that grants sole ownership of the existing fueling station to Clean Energy. In
light of the settlement agreement, the City has negotiated a new lease agreement with
Clean Energy for this site. This action would approve a non-exclusive lease agreement with
Clean Energy for the expansion and continued operation of the CNG vehicle fueling station,
contingent upon FAA review and approval.
RECOMMENDATION:
1. Approve Minute Order No. approving a Non-Exclusive Lease Agreement
with Clean Energy, Inc. for the expansion and operation of a CNG vehicle fueling
station at palm Springs International Airport.
2. Authorize the City Manager to execute all necessary documents to effectuate the
lease agreement.
STAFF ANALYSIS:
Clean Energy operates a CNG vehicle fueling station at Palm Springs International Airport.
The fueling station was built in conjunction with Sunline Transit Agency in the late 1980's as
part of a regional CNG fueling network. The City, its franchised waste company, several
taxi companies and a number of private fleets use this fueling station on a regular basis to
fuel their CNG powered vehicles. Recently, Sunline Transit Agency reached a settlement
on a lawsuit they had filed against Clean Energy which resulted in the transfer of ownership
of the CNG fueling station at the Airport to Clean Energy.
The City does not currently have a lease agreement with Clean Energy for the fueling
station site. In order to rectify this situation, City staff held a series Itee g�th �a: F .
City Council Staff Report
December 20, 2006 -- Page 2
Non-Exclusive Lease Agreement with Clean Energy
Energy to negotiate terms and conditions of a lease agreement for the fueling station. A
copy of the proposed lease agreement is attached.
Under the proposed lease agreement, Clean Energy will expand the existing fueling station
to include two (2) new compressors, two (2) dual hose compensated dispensers capable of
fueling two (2) vehicles simultaneously at a minimum rate of three (3) gallons per minute per
vehicle, and a universal card system capable of reading all major credit cards. The
estimated cost of these improvements is approximately $800,000 and will be paid for
entirely by Clean Energy.
The proposed term of the lease is for ten (10) years, with an option to extend the term for
two (2) subsequent five (5) year terms. The financial terms of the lease are discussed
below.
There are two key issues that staff and Clean Energy have been unable to resolve through
negotiations. Specifically, Clean Energy has requested a credit of $58,000 for engineering
and design costs that the company previously incurred for a site they were planning to
relocate to just south of their current location. Although Clean Energy had received their
land use entitlements to relocate to this site, they withdrew their application, with staffs
concurrence, after concern was voiced from the adjacent condominium association that the
proposed fueling station was too close and would adversely impact the residents of the
association. Clean Energy has suggested that this amount could be credited against any
permit costs that might be owed to the City for processing their current Conditional Use
Permit, or the City could contribute this amount towards landscaping around the fueling
station to provide better screening. Staff believes that the City should not be responsible for
the engineering and design costs Incurred by Clean Energy for the previous site and that to
reimburse them for these costs would set a precedent for other projects since these costs
were a necessary part of their development application and an assumed risk.
The other issue that is in dispute is the amount of square footage that will be used to
calculate the monthly rental for the site. According to the City's electronic mapping
application, CityGIS, the total area, which includes the landscape buffer around the fueling
station and the driveway leading into the site, is 21,714 square feet. Clean Energy
maintains that the total area used for their equipment is only 5,000 square feet. In order to
find a resolution to this issue, staff took the site plan that was provided by Clean Energy for
their Conditional Use Permit application and recalculated the area. Based on this site plan,
staff was able to reduce the overall area from 21,714 to 17,118 square feet. At a rate of
$0.10 per square foot per month, which is the fair market rental for this property, the total
rental payment is $1,718 per month. Clean Energy has indicated that they are only willing
to pay around $500 a month to lease the site. The Federal Aviation Administration ("FAA")
has indicated that they expect the City to charge Clean Energy fair market value to lease
this site. Since rent is determined by the total area used by the tenant for their operations
multiplied by the fair market value of the land, the FAA may require the City to pay the
Airport the difference between what Clean Energy is willing to pay and the actual fair market
value of the site. Using the total rental payment noted above, the City may be responsible
for the difference in rent, which is estimated at $1,200 per month. In the alternative, the
FAA's requirement for fair market rent could be eliminated altogether if the Airport was able
to demonstrate a higher public purpose by having more of its own vehicles and equipment
City Council Staff Report
December 20, 2006-- Page 3
Non-Exclusive Lease Agreement with Clean Energy
used by the airlines and other vendors use of the CNG fueling station. In addition, during a
meeting between the FAA, Council Members Mills and Foat and staff, the FAA suggested
that they might consider eliminating the flow-through charge of $0.025 per gallon of CNG
sold. This amounts to a total of $3,750 per year in flow-through charges. Hence, based on
discussions with the FAA, staff could support the elimination of the flow-through charge and
even the $0.25 per gallon reduction on CNG fuel to the City if the Council is interested in
helping to offset the amount of rent Clean Energy has to pay for use of the site.
The City has a stated policy interest in providing CNG fueling services not only for its own
fleet, but for the greater community as well- Although staff has attempted in good faith to
resolve the outstanding issues in order to reach an agreement with Clean Energy on the
fueling station, the two key issues noted above have prevented us from reaching final
agreement.
The proposed lease agreement was reviewed and discussed by the Airport Commission on
December 6, 2006. The Airport Commission recommends that the City Council approve the
lease as presented by staff.
FISCAL IMPACT: IFinance Director Review:
Airport revenue will increase by approximately $24,291.60 per annum. The annual revenue
is based on hand Rental in the amount of$20,541.60 ((17,118 SF x $0.10 x 12 mo.) and an
estimated fuel flowage fee of $3,750 (150,000 GEG x $0.025). A CPI adjustment to the
land rental will occur every fifth (5th) year of the lease term.
If the option periods are exercised, a new appraisal of the demised premises will be done
before each option period and the rent will be adjusted to Fair Market Value.
The City will receive a $0.25 / GEG deduction on City CNG fuel purchases.
David H. Ready, Ity ger Richard S.Walsh,A-A-E-,Director of Aviation
Attachments:
1. Minute Order
2. Lease Agreement
MINUTE ORDER NO,
APPROVING A NON-EXCLUSIVE LEASE AGREEMENT
WITH CLEAN ENERGY, INC. FOR THE EXPANSION AND
OPERATION OF A CNG VEHICLE FUELING STATION AT
PALM SPRINGS INTERNATIONAL AIRPORT,
---------------
I HEREBY CERTIFY that this Minute Order, approving a Non-Exclusive Lease Agreement
with Clean Energy, Inc. for the expansion and operation of a CNG vehicle Fueling station at
Palm Springs International Airport was adopted by the City Council of the City of Palm
Springs, California, in a meeting thereof held on the 20�h day of December, 2006.
JAMES THOMPSON
City Clerk
LEASE
CITY OF PALM SPRINGS,
a California charter city,
Doing Business As
PALM SPRINGS INTERNATIONAL AIRPORT
"Landlord"
and
CLEAN ENERGY Inc.
a California corporation
"Tenant"
1
szzasa i
LEASE
THIS NON-EXCLUSIVE LEASE ("Lease") is made and entered into this
day of , 2006_, by and between the City of Palm Springs
("City"), a California charter city, dba Palm Springs International Airport (PSP"),
("Landlord"), and Clean Energy, Inc., a California corporation ("Tenant').
RECITALS
A. The operation of a CNG vehicle fueling station in the City and at PSP will
promote and encourage the general public interest in the use of clean burning
alternative fuels and is consistent with national efforts to enhance public awareness and
support for air quality programs-
B. The nature of the CNG vehicle fueling station use is such that it will serve to
provide clean burning alternative fuels for agencies involved in the aviation industry, the
City of Palm Springs, and local and regional businesses and government agencies with
broader resources and a desire to utilize environmentally safe fuel alternatives. The
availability of CNG fuels will attract such business operations to PSP and PSP lands,
and thereby assist in the making of the Airport as self-sustaining as possible.
AGREEMENT
NOW THEREFORE, the parties hereto agree as follows:
1. LEASE SUMMARY. Certain lease provisions are presented and
summarized in this Section 1 of the Lease and generally represent the terms of the
agreement of the parties, subject to further definition and elaboration in subsequent
provisions of this Lease. In the event of any conflict between the provisions of this
Section and any subsequent provisions of this Lease, the subsequent provisions shall
control.
1.1 Demised Premises. The "Demised Premises" shall refer to that
certain real property located in the County of Riverside, State of California, as depicted
on the approved Plot Plan, dated , 2006 attached as Exhibit "A" hereof.
1.2 Lease Commencement Date. The term of this Lease shall
cornmence on the date that this Lease is executed by the parties. This Lease
Agreement shall remain in effect until December 1, 2016 and then shall be eligible for
renewal on the terms contained in this Lease for two subsequent five (5) year terms
("Options"), unless the Lease is terminated as otherwise provided in this Lease.
1.3 Use of Demised Premises. The Tenant is granted a non-exclusive
use of the Demised Premises, including any improvements installed by Tenant, solely
for a CNG Vehicle Fueling Station as described on Exhibit "B" to this Lease.
1.4 Rental/Compensation. The Tenant shall pay to Landlord the
monthly and percentage rentals as provided in Sections Exhibit "C" to this Lease.
2
s�zasx i
1.5 Landlord reserves the right, under this nonexclusive lease of
airport property, to encourage the development of a multi-fuel, renewable, energy
service station by entering into additional non-exclusive leases of the Site to one or
more providers of fuel supplies. Landlord may exercise this right so long as (1) the
Landlord does not lease the Site to another provider of CNG fuels; (2) Tenant continues
to operate its fuel station on the Site in full compliance with the provisions of this lease;
and (3) the Landlord conditions any subsequent tenant to reimburse the Tenant for its
pro-rats share of site improvements paid solely by Tenant, not including any
improvement dedicated solely to Tenant's fuel supply and distribution system.
1.6 Tenant's Address for Notices.
Clean Energy, Inc.
3020 Old Ranch Parkway, Suite 200
Seal Beach, California 90470
2. TERM.
2.1 Initial Term. The initial term of this Lease shall commence on the
date specified in Section 12 ("Commencement Date") and shall continue for the period
specified therein unless earlier terminated as provided in this Lease.
2.2 Option Term. Tenant and Landlord may mutually agree to
extend the term of this Lease on all of the provisions contained in this Lease for the
period(s) specified in Section 1.3 ("extended term") following the expiration of the initial
term or any other extended term properly exercised hereunder. Tenant shall give
Landlord notice of Tenant's desire to extend the Lease ("option notice") at least one
hundred twenty (120) days but not more than six (6) months before the expiration of the
initial term or any other extended term properly exercised hereunder. Landlord shall at
least sixty (60) days before the expiration of the initial or extended term, provide notice
of Landlord's concurrence with the Tenant's request to extend the Lease ("Concurrence
Notice"). In the event the Landlord does not provide the Concurrence Notice or the
Landlord provides the Tenant with written notice that the Landlord does not concur with
the request for an extension, the extended term shall not commence and this Lease
shall expire at the end of the initial term or properly exercised extended term. Tenant
agrees that it has no right to claim just compensation or relocation benefits under the
United States Constitution, California Constitution or federal or state law. Tenant fully
and irrevocably releases Landlord and the City of Palm Springs from all such claims,
liabilities, and causes of action, including attorneys' fees and cost. In the event of
renewal or extension of this Lease, the Landlord may impose new conditions to protect
the public health, safety, and general welfare.
2.3 Time. Time is of the essence of this Lease.
2.4 Force Majeure. If either party hereto shall be delayed or prevented
from the performance of any act required hereunder by reason of acts of God, strikes,
lockouts, labor troubles, inability to procure materials, or other cause without fault and
beyond the control of the party obligated (financial inability excepted), performance of
such act shall be excused for the period of the delay and the period for the performance
3
5228581
of any such act shall be extended for a period equivalent to the period of such delay,
provided such party provides the other party written notice of such event within ten (10)
days of the commencement of the delay; provided, however, nothing in this Section
shall excuse Tenant from the prompt payment of any rental or other charge required of
Tenant hereunder except as may be expressly provided elsewhere in this Lease.
2.5 Holding Over. Any holding over after the expiration of the term of
this Lease, with the consent of Landlord, express or implied, shall be construed to be a
tenancy from month to month, cancelable upon thirty (30) days written notice, and at a
rental equal to one hundred fifty percent (150%) of the last applicable Monthly Rental
and upon terms and conditions as existed during the last year of the term hereof.
3. RENTAL.
3.1 Monthly Rental. Tenant shall pay to Landlord, during the term of
this Lease from and after the Commencement Date as monthly rental ("Monthly Rental")
for the demised premises the sum specified in Exhibit "C" to this Lease, which sum shall
be paid in advance on the first day of each calendar month. In the event the
Commencement Date does not occur on the first day of a calendar month, the Tenant
shall pay the rental for the fractional month on the Commencement Date on a per diem
basis (calculated on the basis of a thirty day month). All rental to be paid by Tenant to
Landlord shall be in lawful money of the United states of America and shall be paid
without deduction or offset, prior notice or demand at the address designated in Section
13.10 hereof.
3.2 Percentage Rental.
(a) Tenant shall and will pay to Landlord at the time and in the
manner herein specified as additional rental or fuel royalty (sometimes referred to
herein as "Percentage Rental") the sums provided in Exhibit "C" to this Lease.
(b) Within fifteen (15) days after the end of each quarter (three
months period) of the term hereof, commencing on or before the fifteenth (15t'') day
after the first three months after the Commencement Date, and ending with the fifteenth
(15th) day of the month next succeeding the last quarter of the Lease term, Tenant shall
furnish to Landlord a statement in writing, certified by Tenant to be correct, showing the
total gross sales made in, upon, or from the Demised Premises during the preceding
three calendar months relating to such CNG fuel sales (or fractional month at the
beginning of the term if the Commencement Date is other than the first day of a month),
and shall accompany each such statement with a payment to Landlord equal to said
percentage of such total monthly gross sales made in, upon, or from the Demised
Premises during each calendar month.
(c) The term "gross sales" as used herein means the total gross
receipts, including the actual charges for all services performed by Tenant and fees
charged by Tenant and by anyone including any subtenant, licensee or concessionaire
in, at, from, or arising out of the use of the Demised Premises, whether wholesale or
retail, whether for cash or credit, or otherwise, and including the value of all
consideration other than money received for any of the foregoing, without reserve or
4
522858.1
deduction for inability or failure to collect, including but not limited to sales, related to
said gift shop and any food and beverage sales related hereto. For the CNG fueling
station "gross sales" is further defined as the volume of CNG fuel sold at each dispenser
in gasoline equivalent gallons (GEG) multiplied by the CNG retail sales price for the
period. Each installment or credit sale shall be treated as a sale for the full price in the
month during which such sale is made, irrespective of whether or when Tenant receives
payment therefore. Gross Sales shall not include sales taxes, so-called luxury taxes,
consumers excise taxes, gross receipts taxes and other similar taxes now or hereafter
imposed upon the sale of merchandise or services, but only if collected separately from
the selling price of merchandise or services and collected from customers.
(d) The Tenant shall keep at the Demised Premises (and shall
require any permitted subtenant to keep at the Demised Premises) full, complete, and
proper books, records, and accounts of its daily gross sales, both for cash and on credit,
at any time operated in the Demised Premises. The Landlord and its agents and
employees shall have the right at any and all times, during regular business hours, to
examine and inspect all of the books and records of the Tenant, including any sales tax
reports pertaining to the business of the Tenant conducted in, upon, or from the
Demised Premises, for the purpose of investigating and verifying the accuracy of any
statement of gross sales and to cause an audit of the business of Tenant to be made by
a certified public accountant of Landlord's selection. If the statement of gross sales
previously made to Landlord shall be found to be inaccurate, then and in that event,
there shall be an adjustment and one party shall pay to the other on demand such sums
as may be necessary to settle in full the accurate amount of said percentage rental that
should have been paid to Landlord for the period or periods covered by such inaccurate
statement or statements. If said audit shall disclose an inaccuracy of greater than three
percent (3%) error with respect to the amount of gross sales reported by Tenant for the
period of said report, then the Tenant shall immediately pay to Landlord the cost of such
audit; otherwise, the cost of such audit shall be paid by Landlord.
3.3 Cost of Living Adjustment. Upon each fifth year anniversary date of
the Commencement Date or if the Commencement Date is not on the first day of a
month, then on the first day of the next calendar month, the Monthly Rental and
Percentage Rental as described in Sections 1 and 2 of Exhibit "C" shall be adjusted in
proportion to changes in the Consumer Price Index over the five year period of the
applicable term. Such adjustment shall be made by multiplying the original or current
Monthly Rental and Percentage Rental by a fraction, the numerator of which is the value
of the Consumer Price Index for the calendar month three (3) months preceding the
calendar month for which such adjustment is to be made and the denominator of which
is the value of the Consumer Price Index for the same calendar month immediately prior
to Commencement Date or the month five years previous to the calendar month three
months preceding the calendar month for which the adjustment is to be made. For
example, if the adjustment is to occur effective June 1, 2011, the index to be used for
the numerator is the index for the month of March 2011 and the index to be used for the
denominator is the index for the month of March preceding the Commencement Date.
However, in no event shall the rent be reduced below the Monthly Rental or Percentage
Rental in effect immediately preceding such adjustment. The "Consumer Price Index"
to be used in such calculation is the Consumer Price Index, All Urban Consumers (All
Items), for the Los Angeles-Anaheim-Riverside Metropolitan Area, published by the
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United States Department of Labor, Bureau of Labor Statistics (1982-84 = 100), If both
an official index and one or more unofficial indices are published, the official index shall
be used. If said Consumer Price Index is no longer published at the adjustment date, it
shall be constructed by conversion tables included in such new index.
3.4 Additional Rental. For purposes of this Lease, all monetary
obligations of Tenant under this Lease, including, but not limited to, insurance
premiums, property taxes, maintenance expenses, late charges, and utility costs shall
be deemed to be additional rental.
3.5 Real Property Taxes. In addition to all rentals herein reserved,
Tenant shall pay, at the election of Landlord, either directly to the taxing authority or to
Landlord, annual real estate taxes and assessments levied upon the Demised Premises
(including any possessory interest taxes), as well as taxes of every kind and nature
levied and assessed in lieu of, in substitution for, or in addition to, existing real property
taxes. Such amount shall be paid on the date that is twenty (20) days prior to the
delinquent date or, if Landlord receives the tax bill, ten (10) days after receipt of a copy
of the tax bill From Landlord, whichever is later. Even though the term of this Lease has
expired and Tenant has vacated the Demised Premises, when the final determination is
made of Tenant's share of such taxes and assessments, Tenant shall immediately pay
to Landlord the amount of any additional sum owed.
3.6 Personal Property Taxes. During the term hereof Tenant shall pay
prior to delinquency all taxes assessed against and levied upon fixtures, furnishings,
equipment and all other personal property of Tenant contained in the Demised
Premises, and when possible Tenant shall cause said fixtures, furnishings, equipment
and other personal property to be assessed and billed separately from the real property
of Landlord.
3.7 Utilities_ Tenant shall pay before delinquency all charges for water,
gas, heat, electricity, power, sewer, telephone service, trash removal, and all other
services and utilities used in, upon, or about the Demised Premises by Tenant or any of
its subtenants, licensees, or concessionaires during the term of this Lease.
3.8 Late Payment. Tenant hereby acknowledges that late payment by
Tenant to Landlord of rental or other sums due hereunder will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which is extremely difficult to
ascertain. Such costs include, but are not limited to, processing and accounting
charges. Accordingly, any payment of any sum to be paid by Tenant not paid when
within five (5) days of its due date shall be subject to a five percent (5%) late charge.
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 suffered by
such late payment by Tenant.
3.9 Interest. Any sum to be paid pursuant to the terms of this Lease
not paid when due shall bear interest from and after the due date until paid at a rate
equal to three percent (3%) over the reference rate being charged by Bank of America,
N.A. from time to time during such period so long as the rate does not exceed the
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maximum non-usurious rate permitted by law in which case interest shall be at the
maximum non-usurious rate allowed by law at the time the sum became due.
4. USE OF THE PREMISES.
4.1 Permitted Use. The Landlord hereby leases to Tenant and Tenant
hires from Landlord, on a non-exclusive basis, the Demised Premises with
appurtenances as defined herein, for the purpose of conducting thereon only the use
specified in Section 1.3 of this Lease and for no other use.
4.2 Prohibited Uses. Tenant shall not sell or permit to be kept, used,
displayed or sold in or about the Demised Premises (a) pornographic or sexually explicit
books, magazines, literature, films or other printed material, sexual paraphernalia, or
other material which would be considered lewd, obscene or licentious, (b) any article
which may be prohibited by standard forms of fire insurance policies, or any alcoholic
beverages unless expressly permitted by Section 1.3 hereof. Tenant shall not use, or
permit to be used, the Demised Premises or any part thereof for the installation or on-
premises use of any vending machine, gaming machine or video or arcade game unless
expressly permitted by this Lease. Tenant shall not store or sell any fuel or petroleum
products. Tenant shall not allow any overnight itinerant aircraft parking or storage of
dismantled aircraft.
4.3 Compliance with Laws. Tenant shall, at its sole cost and expense,
comply with all of the requirements of all municipal, state, and federal authorities now in
force or which may hereafter be in force pertaining to the use of the Demised Premises,
and shall faithfully observe in said use all municipal ordinances, including, but not
limited to, the General Plan and zoning ordinances, state and Federal statutes, or other
governmental regulations now in force or which shall hereinafter be in force. Tenant's
viedation of law shall constitute an incurable default under this Lease. The judgment of
any court of competent jurisdiction, or the admission of Tenant in any action or
proceeding against Tenant, whether Landlord be a party thereto or not, that Tenant has
violated any such order or statute in said use, shall be conclusive of that fact as
between the Landlord and Tenant. Tenant shall obtain a City Building Permit and such
other entitlements as may be required under the City's Zoning Code or Municipal Code
for upgrade and expansion of the existing CNG station and shall post a "Permit to
Operate" notice at the site after approval and signoff by the City. The Landlord will be
responsible for any permit fees for the project.
Tenant shall not engage in any activity on or about the Demised Premises
that violates any Environmental Law, and shall promptly, at Tenant's sole cost and
expense, take all investigatory and/or remedial action required or ordered by any
governmental agency or Environmental Law For clean-up and removal of any
contamination involving any Hazardous Material created or caused directly or indirectly
by Tenant. The term "Environmental Law" shall mean any federal, state or local law,
statute, ordinance or regulation pertaining to health, industrial hygiene or the
environmental conditions on, under or about the Demised Premises, including, without
limitation, (1) the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), 42 U.S.C. Sections 9601 et seq.; (ii) the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Sections 6901 et seq.; (iii)
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California Health and Safety Code Sections 25100 et seq.; (iv) the Safe Drinking Water
and Toxic Enforcement Act of 1986, California Health and Safety Code Section 26249.5
et seq.; (v) California Health and Safety Code Section 25359.7; (vi) California Health
and Safety Code Section 25915; (vii) the Federal Water Pollution Control Act, 33 U.S.C.
Sections 1317 et seq.; (viii) California Water Code Section 1300 et seq.; and (ix)
California Civil Code Section 3470 et seq., as such laws are amended and the
regulations and administrative codes applicable thereto. The term "Hazardous Material"
includes, without limitation, any material or substance which is (1) defined or listed as a
"hazardous waste", "extremely hazardous waste", "restrictive hazardous waste" or
"hazardous substance" or considered a waste, condition of pollution or nuisance under
the Environmental Laws; (ii) petroleum or a petroleum product or fraction thereof; (iii)
asbestos; and/or (iv) substances known by the State of California to cause cancer
and/or reproductive toxicity. It is the intent of the parties hereto to construe the terms
"Hazardous Materials" and "Environmental Laws" in their broadest sense. Tenant shall
provide all notices required pursuant to the Safe Drinking Water and Toxic Enforcement
Act of 1986, California Health and Safety Code Section 25249.5 et seq. Tenant shall
provide prompt written notice to Landlord of the existence of Hazardous Substances on
the premises and all notices of violation of the Environmental Laws received by Tenant.
Tenant shall be strictly liable for and shall indemnify and hold the Landlord harmless for
any violation of the provisions of this Section 4.3 of the Lease.
4.4 Non-Discrimination & FAA Required Clauses.
(a) Tenant for itself, its heirs, personal representatives,
successors in interest, and assigns, as a part of the consideration hereof, does hereby
covenant and agree "as a covenant running with the land" that in the event facilities are
constructed, maintained, or otherwise operated on the said property described in the
lease for a purpose for which a DOT program or activity is extended or for another
purpose involving the provision of similar services or benefits, the Tenant shall maintain
and operate such facilities and services in compliance with all other requirements
impose pursuant to Title 49, Code of Federal Regulations DOT, Subtitle A, Office of the
Secretary, Part 26, Nondiscrimination in Federally-Assisted Programs of the
Department of Transportation-effectuation of Title VI of the Civil Rights Act of 1964, and
as said Regulations may be amended.
(b) The Tenant for itself, its heirs, personal representatives,
successors in interest, and assigns, as a part of the consideration hereof, does hereby
covenant and agree "as a covenant running with the land" that: (1) no person on the
grounds of race, color, or national origin shall be excluded from participation in, denied
the benefits, of or be otherwise subjected to discrimination in the use of said facilities,
(2) that in the construction of any improvements on, over, or under such land and the
furnishing of services thereon, no person on the grounds of race, color, or national
origin shall be excluded from participation in, denied the benefits of, or otherwise be
subject to discrimination, (3) that the Tenant shall use the premises in compliance with
all other requirements imposed by or pursuant to Title 49, code of Federal Regulations,
Department of Transportation, Subtitle A, Office of the Secretary, Part 26,
nondiscrimination in Federally-Assisted Programs of the Department of Transportation-
Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be
amended.
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T
c) In the event of breach of any of the above nondiscrimination
covenants, landlord shall have the right to terminate the lease, and to reenter and
repossess said land and the facilities thereon, and hold the same as if said lease had
never been made or issued. This provision does not become effective until the
procedures of 49 CFR Part 26 are followed and completed including expiration of
appeal rights-
(d) Tenant shall furnish its accommodations and/or services on
a stair, equal and not unjustly discriminatory basis to all users thereof and it shall charge
fair, reasonable and not unjustly discriminatory prices for each unit or services; provided
that the Tenant may be allowed to make reasonable and nondiscriminatory discounts,
rebates or other similar type of price reductions to volume purchasers.
(e) Non-compliance with Provision 4 above shall constitute a
material breach thereof and in the event of such non-compliance the Landlord shall
have the right to terminate this lease and the estate hereby created without liability
therefore or at the election of the Landlord or the United States either or both said
Governments shall have the right to judicially enforce provisions.
(f) Tenant agrees that is shall insert the above five provisions in
any sublease or contract by which said Tenant grants a right or privilege to any person,
form or corporation to render accommodations and/or services to the public on the
premises herein leased.
(g) The Tenant assures that it will undertake an affirmative
action program as required by 14 CFR Part 152, Subpart E, to insure that no person
shall on the grounds of race, creed color, national origin, or sex be excluded from
participating in any employment activities covered in 14 CFR Part 152, subpart E. The
Tenant assures that no person shall be excluded on these grounds from participating in
or receiving the services or benefits of any program or activity covered by this subpart.
The Tenant assures that it will require that its covered sub-organizations provide
assurances to the Tenant that they similarly will undertake affirmative action programs
and that they will require assurances from their sub-organizations, as required by 14
CRF Part 152, Subpart E, to the same effort.
(h) The Landlord reserves the right to further develop or improve
the landing area of the Airport as it sees fit, regardless of the desires or view of the
Tenant and without interference or hindrance.
(1) The Landlord reserves the right, but shall not be obligated to
the Tenant to maintain and keep in repair the landing area of the airport and all publicly-
owned facilities of the airport, together with the right to direct and control all activities of
the Tenant in this regard.
Q) The Lease shall be subordinate to the provisions and
requirements of any existing or future agreement between the Landlord and the United
States, relative to the development, operation, or maintenance of the airport. Failure of
the Tenant or any lawful occupant to comply with the requirements of any existing or
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future agreement between the Landlord and the United States and which continues
after reasonable notice to make appropriate corrections shall be cause for immediate
termination of Tenant's rights under this Lease.
(k) There is hereby reserved to the Landlord, its successors and
assigns, for the use and benefit of the public, a right of flight for the passage of aircraft
in the airspace above the surface of the premises herein (leased, licensed, permitted).
This public right of flight shall include the right to cause in said airspace any noise
inherent in the operation of any aircraft used for navigation or flight through the said
airspace or landing at, taking off from or operation on the Palm Springs Regional
Airport.
(1) Tenant agrees to comply with the notification and review
requirements covered in Part 77 of the Federal Aviation Regulation in the event future
construction of a building is planned for the leased premises, or in the event of any
planned modification or alteration of any present or future building or structure situated
on the leased premises.
(m) The Tenant, by accepting this, expressly agrees for itself, its
successors and assigns that it will not erect nor permit the erection of any structure or
object, nor permit the growth of any tree on the land leased hereunder above the mean
sea level elevation of 530 feet. Landlord reserves the right to enter upon the land
leased, hereunder and to remove the offending structure or object and cut the offending
tree, all of which shall be at the expense of the Tenant.
(n) The Tenant, by accepting this Lease, agrees for itself, its
successors and assigns that it will not make use of the lease premises in any manner
which might interfere with the landing and taking off of aircraft from Palm Springs
International Airport or otherwise constitute a hazard. In the event the aforesaid
covenant is breached, the owner reserves the right to enter upon the premises here
leased, and cause the abatement of such interference at the expense of the Tenant.
(o) It is understood and agreed that nothing herein contained
shall be construed to grant or authorize the granting of an exclusive right within the
meaning of Section 308a of the Federal Aviation Act of 1958 (49 U.S.0 1349a).
(p) The lease, and all the provisions hereof shall be subject to
whatever right the United States Government now has or in the future may have or
acquire, affecting the control, operation, regulation and taking over of said airport or the
exclusive or non-exclusive use of the airport by the United States during the time of war
or national emergency.
4.5 Remediation Obligations. If any inspection of the Demised
Premises determines that a release of hazardous materials or substances has occurred
or if the presence or threatened presence of any Hazardous Material is hereafter
detected on or about the Demised Premises, and the Hazardous Material is one which
may have been introduced to the Demised premises by Tenant or its agents,
contractors, employees, or licensees during the term of this Agreement or any previous
agreement between City and Tenant, then until such time as it is finally determined by a
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court of competent jurisdiction that such Hazardous Material (hereinafter "Covered
Hazardous Material") was released or discharged on or about the Designated Premises
by a person other than Tenant or its agents, contractors, employees, or licensees,
Tenant shall, at its sole expense, immediately commence the remedial clean-up
measures to assess, remove or remediate the Covered Hazardous Material from the
Demised Premises, monitor, mitigate and/or dispose of the effects of such hazardous
Material, as such may be required, and shall diligently pursue such assessment,
removal, remedial, clean-up, monitoring, disposal and mitigation measures to
completion and closure from the appropriate regulatory agencies, all in compliance with
applicable Environmental Laws. Such activities shall be conducted in a diligent,
expeditious and safe manner so as to not allow any dangerous or hazardous conditions
to occur on the Demised Premises during or after such activities. In addition, Tenant
shall promptly repair all damage to the Demised Premises and the improvements
thereof caused by any such remedial removal, remedial clean-up, monitoring, disposal
or mitigation measures undertaken by or at the direction of Tenant and return the
Demised Premises to the condition it existed immediately prior to such remediation
activities.
4.6 Signs.
(a) Tenant for himself, his heirs, personal representatives,
successors in interest, and assigns, as a part of the consideration hereof, does hereby
covenant and agree "as a covenant running with the land" that in the event facilities are
constructed, maintained or otherwise operated on the said property described in the
lease for a purpose for which a DOT program or activity is extended or for another
purpose involving the provision of similar services or benefits, the Tenant shall maintain
and open;. Tenant shall not place or permit to be placed any sign that is not in
compliance with the sign ordinance of the Landlord upon the exterior or in the windows
of the Demised Premises. Any sign not constructed in accordance therewith shall be
immediately removed by Tenant and, if said sign is not removed by Tenant within ten
(10) days of written notice from Landlord to Tenant, then Landlord may remove and
destroy said sign without Tenant's approval and without any liability to Landlord.
4.7 Public Facilities, Ingress, Egress, and Quiet Enjoyment. Landlord
agrees that Tenant, upon payment of the rental hereunder and performing the
covenants of the Lease, may quietly have, hold, and enjoy the Demised Premises
during the term of the Lease, and that Tenant shall have the non-exclusive right to use,
in common with others, the public facilities at the Airport and Tenant shall have a
reasonable right of ingress to and egress from the Demised Premises and the public
facilities for its employees, visitors, and customers.
4.8 Rules and Regulations. Tenant shall faithfully observe and comply
with the rules and regulations that Landlord shall from time to time promulgate and/or
modify. Any amendment or modification of the Rules and Regulations shall be binding
upon the Tenant upon delivery of a copy of such amendment or modification to Tenant.
Landlord shall not be responsible to Tenant for the nonperformance of any said rules
and regulations by any other tenants or occupants. The Rules and Regulations shall
apply and be enforced as to all tenants in the Demised Premises on a uniform basis.
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5. IMPROVEMENTS, MAINTENANCE, AND REPAIRS
5.1 Improvements, Alterations, and Fixtures. Tenant shall not make
any improvements to the Demised Premises without the prior written consent of
Landlord, and any improvements to the Demised Premises, except movable tanks and
trade fixtures, shall become at once a part of the realty and shall at the expiration or
earlier termination of this Lease belong to Landlord free and clear of any liens or
encumbrances. Any such improvements shall be in conformance with the requirement
of all municipal, state, federal, and other governmental authorities, including
requirements pertaining to the health, welfare or safety of employees of the public and
in conformance with reasonable rules and regulations of Landlord. Landlord may
require that any such improvements be removed prior to the expiration of the term
hereof. Any removal of improvements or furniture and trade fixture shall be at Tenant's
expense and accomplished in a good and workmanlike manner. Any damage
occasioned by such removal shall be repaired at Tenant's expense so that the Demised
Premises can surrendered in a good, clean and sanitary condition as required by
Section 5.2 hereof. Any and all fixtures, improvements and appurtenances installed by
Tenant shall conform with the requirements of all municipal, state, federal, and
governmental authorities including requirements pertaining to the health, welfare, or
safety of employees or the public.
5.2 Operation, Maintenance, and Repair. Tenant shall, subject to
Landlord's obligations hereinafter provided, at all times during the term hereof, and at
Tenant's sale cost and expense, keep, maintain, and repair the Demised Premises and
other improvements upon the Demised Premises in good and sanitary order, condition,
and repair (except as hereinafter provided) including without limitation, the maintenance
and repair of any store front, doors, window casements, glazing, heating and air
conditioning system, plumbing, pipes, electrical wiring, and conduits. Tenant shall also
at its sole cost and expense be responsible for any alterations or improvements to the
Demised Premises necessitated as a result of the requirement of any municipal, state or
federal authority. Tenant hereby waives all right to make repairs at the expense of the
State of California to make said repairs. Tenant agrees on the last day of said term or
sooner termination of this Lease to surrender the Demised Premises with
appurtenances in the same condition as when received and in a good, clean and
sanitary condition, reasonable use and wear thereof and damage by fire, act of God or
by the elements excepted. Tenant shall periodically sweep and clean the sidewalks
adjacent to the Demised Premises, as needed. Tenant shall maintain the Demised
Premises including the cost of water and electricity.
5.3 Free From Liens. Tenant shall keep the Demised Premises free
from any liens arising out of any work performed, material furnished, or obligation
incurred by Tenant or alleged to have been incurred by Tenant.
5.4 Construction Obligations. Tenant agrees to construct the
improvements to the extent shown on the attached Exhibit "D" at its sole cost and
expense. It is specifically agreed that, at the sole option of the Landlord, the
improvements constructed on the Demised Premises shall become to property of the
Landlord, free and clear from any and all encumbrances at the expiration or termination
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522856.1
of the agreement or any extension thereof, or if said Compressed Natural Gas vehicle
fueling station fails to operate for 12 consecutive months, at its sole cost and expense,
Tenant will remove any movable tanks and trade fixtures upon receipt of a thirty (30)
day written notice from the Landlord.
5.5 Landlord's Reserved Rights.
(a) Airport Development and Safety. Landlord reserves the right
to further develop or improve the aircraft operating area of the Airport as it sees fit, and
Landlord reserves the right to take any action it considers necessary to protect the
aerial approaches of the Airport against obstruction, together with the right to prevent
Tenant from erecting or permitting to be erected any building or other structure of the
Demised premises which, in the opinion of Landlord, would limit the usefulness of the
Airport or constitute a hazard to aircraft-
(b) Lease to United States. During the time of war or national
emergency, Landlord shall have the right to lease the landing area or any part thereof to
the United States Government for military or naval use, and, if such lease is executed,
the provisions of the Lease insofar as they are inconsistent with the provisions of the
Lease to the Government shall be suspended and, in that event, a just and
proportionate part of the rent hereunder shall be abated, and the period of such closure
shall be added to the term of this Lease so as to extend and postpone the expiration
thereof unless the Tenant otherwise elects to terminate the Lease.
6. INSURANCE AND INDEMNIFICATION.
6.1 Insurance Provided by Tenant.
(a) Tenant to Provide Personal Property Insurance. Tenant, at
its sole cost and expense, shall maintain fire and extended coverage insurance written
on a per occurrence basis on its trade fixtures, equipment, personal property and
inventory within the Demised Premises from loss or damage to the extent of their full
replacement value and shall provide plate glass coverage.
(b) Tenant to Provide Liability Insurance. During the entire term
of this Lease, the Tenant shall, at the Tenant's sole cost and expense, but for the
mutual benefit of Landlord and Tenant, maintain comprehensive general liability
insurance insuring against claims for bodily injury, death or property damage occurring
in, upon or about the Demised Premises and on any sidewalks directly adjacent to the
Demised Premises written on a per occurrence basis in an amount not less than ONE
MILLION DOLLARS ($1,000,000.00).
(c) Tenant to Provide Worker's Compensation Insurance.
Tenant shall, at the Tenant's sole cost and expense, maintain a policy of worker's
compensation insurance in an amount as will fully comply with the laws of the State of
California and which shall indemnify, insure and provide legal defense for both the
Tenant and the Landlord against any loss, claim or damage arising from any injuries or
occupational diseases occurring to any worker employed by or any persons retained by
the Tenant in the course of conducting Tenant's business in the Demised Premises.
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(d) General Provisions Applicable to Tenant's Insurance. All of
the policies of insurance required to be procured by Tenant pursuant to this Section 6.1
shall be primary insurance and shall name the Landlord, its officers, employees, and
agents as additional insureds. The insurers shall waive all rights of contribution they
may have against the Landlord, its officers, employees and agents and their respective
insurers. All of said policies of insurance shall provide that said insurance may not be
amended or canceled without providing 30 days prior written notice by registered mail to
the Landlord. Prior to the Commencement Date or such earlier date as Tenant takes
possession of the Demised Premises for any purpose; and at least 30 days prior to the
expiration of any insurance policy, Tenant shall provide Landlord with certificates of
insurance or appropriate insurance binders evidencing the above insurance coverages
written by insurance companies acceptable to Landlord, licensed to do business in the
state where the Demised Premises are located and ratedB++;VII or better by Best's
Insurance Guide. In the event the City Manager of Landlord ("City Manager")
determines that (1) the Tenant's activities in the Demised Premises creates an increased
or decreased risk of loss to the Landlord, (ii) greater insurance coverage is required due
to the passage of time, or (iii) changes in the industry require different coverages be
obtained, Tenant agrees that the minimum limits of any insurance policy required to be
obtained by Tenant may be changed accordingly upon receipt of written notice from the
City Manager; provided that Tenant shall have the right to appeal a determination of
increased coverage by the City Manager to the City Council of Landlord within ten (10)
days of receipt of notice from the City Manager. Landlord and Tenant hereby waive any
rights each may have against the other on account of any loss or damage occasioned
by property damage to the Demised Premises, its contents, or Tenant's trade fixtures,
equipment, personal property or inventory arising from any risk generally covered by
insurance against the perils of fire, extended coverage, vandalism, malicious mischief,
theft, sprinkler damage, and earthquake sprinkler leakage. Each of the parties, on
behalf of their respective insurance companies insuring such property of either Landlord
or Tenant against such loss, waives any right of subrogation that it may have against
the other. The foregoing waivers of subrogation shall be operative only so long as
available in California and provided further that no policy is invalidated thereby.
6.2 Tenant to Provide Fire and Extended Coverage Insurance. Tenant, at
its sole expense, shall maintain fire and extended coverage insurance throughout the
term of this Lease written on a per occurrence basis on the Demised Premises, its trade
fixtures, equipment, personal property and inventory within the Demised Premises from
loss or damage to the extent of the full replacement value.
6.3 Indemnification. Tenant, as a material part of the consideration to
be rendered to Landlord under this Lease, hereby waives all claims against Landlord for
damage to equipment or other personal property, trade fixtures, leasehold
improvements, goods, wares, inventory and merchandise, in, upon or about the
Demised Premises and for injuries to persons in or about the Demised Premises, from
any cause arising at any time. Tenant agrees to indemnify the Landlord, its officers,
agents, and employees against, and will hold and save them and each of them
harmless from, any and all actions, suits, claims, damages to persons or property,
losses, costs, penalties, obligations, errors, omissions or liabilities, (herein "claims or
liabilities") that may be asserted or claimed by any person, firm or entity arising out of or
14
szzasa i
in connection with (i) the negligent performance of the work, operations, or activities of
Tenant, its agents, employees, subcontractors, or invitees, provided for herein, or (ii)
arising from the use of the Demised Premises or the parking and common areas by
Tenant or its employees and customers, or arising from the failure of Tenant to keep the
Demised Premises in good condition and repair, as herein provided, or (iii) arising from
the negligent acts or omissions of Tenant hereunder, or (iv) arising from Tenant's
negligent performance of or failure to perform any term, provision covenant or condition
of this Lease, whether or not there is concurrent passive or active negligence on the
part of the Landlord, its officers, agents or employees but excluding such claims or
liabilities arising from the sole negligence or willful misconduct of the Landlord, its
officers, agents or employees, who are directly responsible to the Landlord, and in
connection therewith:
(a) Tenant will defend any action or actions filed in connection
with any of said claims or liabilities and will pay all costs and expenses, including legal
costs and attorneys' fees incurred in connection therewith;
(b) Tenant will promptly pay any judgment rendered against the
Landlord, its officers, agents or employees for any such claims or liabilities arising out of
or in connection with the negligent performance of or failure to perform such work,
operations or activities of Tenant hereunder; and Tenant agrees to save and hold the
Landlord, its officers, agents, and employees harmless from such claims or liabilities;
c) In the event the Landlord, its officers, agents or employees
is made a party to any action or proceeding filed or prosecuted against Tenant for such
damages or other claims arising out of or in connection with the negligent performance
of or failure to perform the work, operation or activities of Tenant hereunder, Tenant
agrees to pay to the Landlord, its officers, agents or employees, any and all costs and
expenses incurred by the Landlord, its officers, agents or employees in such action or
proceeding, including but not limited to, legal costs and attorneys' fees.
7. ABANDONMENT AND SURRENDER.
7.1 Abandonment. Tenant shall not vacate or abandon the Demised
Premises at any time during the term of this Lease; and if Tenant shall abandon, vacate
or surrender the Demised Premises or be dispossessed by process of law, or otherwise,
any personal property belonging to Tenant and left on the Demised Premises shall be
deemed to be abandoned, at the option of Landlord, except such property as may be
mortgaged to Landlord.
7.2 Surrender of Lease. The voluntary or other surrender of this Lease
by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at the
option of Landlord, terminate all or any existing subleases or subtenancies, or may, at
the option of Landlord, operate as an assignment to it of any or all of such subleases or
subtenancies.
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522858.1
8. DAMAGE AND DESTRUCTION OF PREMISES.
In the event of(a) partial or total destruction of the Demised Premises during the term of
this Lease which requires repairs to the Demised Premises, or (b) the Demised
Premises being declared unsafe or unfit for occupancy by any authorized public
authority for any reason, which declaration requires repairs to the Demised Premises,
Tenant shall forthwith make said repairs. No such damage or destruction (including any
destruction necessary in order to make repairs required by any declaration made by any
public authority) shall in any way annul or void this Lease. Tenant shall promptly clean
and remove all debris resulting from said damage or destruction. Tenant shall take
preliminary steps toward restoring the improvements with thirty (30) days of the casualty
and such improvements shall be restored within a reasonable time thereafter. The
Demised Premises shall be restored to the condition they existed immediately before
said casualty.
9. ASSIGNMENT AND SUBLETTING.
Tenant shall not assign this Lease or sublet the Demised Premises, or any interest
therein, without the prior written consent of Landlord, which consent shall not be
unreasonably withheld. For purposes of this Lease, an assignment shall be deemed to
include the transfer to any person or group of persons acting in concert of more than
twenty five percent (25%) of the present ownership and/or control of Tenant, taking all
transfers into account on a cumulative basis. Any such assignment or subletting shall
be subject to all of the terms and conditions of this Lease and proposed assignee shall
assume the obligations of Tenant under this Lease in writing in form satisfactory to
Landlord. The proposed assignee shall simultaneously provide to Landlord an estoppel
certificate in the form described in Section 13.2 hereafter. Consent by Landlord to one
assignment, subletting, occupation or use by another person shall not be deemed to be
a consent to any subsequent assignment, subletting, occupation or use by another
person. Any assignment or subletting without the prior written consent of Landlord shall
be void, shall constitute a material breach of this Lease, and shall, at the option of
Landlord, terminate this Lease. Neither this Lease nor any interest therein shall be
assignable as to the interest of Tenant by operation of law.
Landlord shall be under no obligation to consider a request for Landlord's
consent to an assignment until Tenant shall have submitted in writing to Landlord a
request for Landlord's consent to such assignment together with audited financial
statements of the proposed assignee, a history of the proposed assignee's business
experience and such other information as required by Landlord the criteria for
assignment as set forth herein are met. In addition, if Landlord determines that the
Monthly Rent payable to Landlord under this Lease is less than the fair market rental
value, as determined by Landlord, Landlord shall have the right to condition its approval
to an assignment or subletting on the increase of Monthly Rent to the fair market rental
value.
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10. ENCUMBRANCE
(a) This Lease, or any right to or interest in, or any of the
improvements on the Demised premises, may be encumbered with the written approval
of Landlord. No such encumbrance or addition thereto or extension thereof shall be
valid without said approval. Any such approved encumbrance shall be subject to the
covenants, conditions and restrictions set Forth herein and to all rights of Landlord.
(b) Any encumbrance must be confined to the leasehold interest of
Tenant or the subleasehold interest of a subtenant, and shall not affect in any way the
landlord's interest in the land. The encumbrance shall provide that the proceeds from
fire or extended coverage insurance shall be used for the repair or rebuilding of the
leasehold improvements and not to repay and part of the outstanding mortgage. Tenant
agrees to furnish, as requested, any financial statements or analyses pertinent to the
encumbrance that Landlord may deem necessary to justify the amount, purpose and
terms of said encumbrance.
c) In the event of default by the Tenant of the terms of an approved
encumbrance, the encumbrancer may exercise any rights provided in such approved
encumbrance provided that, before any sale of the leasehold estate, whether by power
of sale or foreclosure, the encumbrancer shall give to Landlord notice of the same
character as is required to be given to Tenant by such encumbrancer pursuant to the
loan documents and/or Lhe laws of the State of California and Landlord shall be given
an additional Lhirty (30) days in which to cure the default after the time for tenant to cure
has expired-
(d) If any sale under the approved encumbrance occurs, whether by
power of sale or foreclosure, and the purchaser at such sale is the encumbrancer, the
encumbrancer may sell and assign the Lease without any further consent of Landlord
provided that the assignee shall agree in such assumption by the assignee, the
encumbrancer shall be released from all future obligations of the Tenant under the
Lease. If a sale under the approved encumbrance occurs, and the purchaser is a party
other than the encumbrancer, said purchaser, as successor in interest to the Tenant,
shall be bound by all the terms and conditions of the Lease and the purchaser shall
assume in writing the obligations of Tenant hereunder.
(e) If notice of such sale shall be given and the defaults or any of them
upon which such notice of sale is based shall then continue, Landlord shall have the
Fight to correct such defaults at any time prior to the date of sale or foreclosure, and to
terminate such leasehold upon paying to the encumbrancer the balance of the
encumbrance as hereinafter defined.
(f) "Balance of encumbrance" shall mean the amount of principal
remaining unpaid on a note secured by a trust deed or mortgage of an interest plus
accrued and past due interest thereon and expenses incurred by the lender in
connection with Foreclosure including by not limited to, fire insurance premiums, title
insurance expenses, recording fees, appraisal Fees, credit reports and any tax reporting
services and additional expenditures paid by the lender on additions, betterments and
17
522858.1
rehabilitations of improvements on the property encumbered pursuant to plans
approved by landlord, which consent may not be unreasonably withheld, and other
expenses necessary to place the improvements in marketable condition, such adjusted
principal to be paid in case or, at the option of Landlord, amortized over the term and in
accordance with the schedule set forth in said note, the interest rate on the unpaid
balance thereto to be as set forth in said note.
(g) Landlord agrees to provide encumbrancer written notice of any
default by Tenant under this lease and an opportunity to cure at the time notice of such
default is provided to Tenant and give encumbrancer thirty (30) days to cure a monetary
default or forty-five (45) days to cure a non-monetary default cannot be cured within
such period of forty-five days, encumbrancer shall have a reasonable time to cure such
default provided that encumbrancer commences to cure within said forty-five days and
diligently prosecutes the cure to completion. Such period of time shall include the time
to complete a foreclosure action if encumbrancer needs to gain possession of the
Demise Premises to cure said default by Tenant.
11. DEFAULT AND REMEDIES.
11.1 Default by Tenant. In addition to the defaults described in Section
9.0 hereinabove, the occurrence of any one or more of the following events shall
constitute a default and breach of this Lease by Tenant: (a) the failure to pay any rental
or other payment required hereunder to or on behalf of Landlord more than three (3)
days after written notice from Landlord to Tenant that Tenant has failed to pay rent
when due; (b) the failure to perform any of Tenant's agreements or obligations
hereunder (exclusive of a default in the payment of money) where such default shall
continue for a period of thirty (30) days after written notice thereof from Landlord to
Tenant which notice shall be deemed to be the statutory notice so long as such notice
complies with statutory requirements; (c) the vacation or abandonment of the Demised
Premises by Tenant; (d) the making by Tenant of a general assignment for the benefit
of creditors; (e) the filing by Tenant of a voluntary petition in bankruptcy or the
adjudication of Tenant as a bankrupt; (f) the appointment of a receiver to take
possession of all or substantially all the assets of Tenant located at the Demised
Premises or of Tenant's leasehold interest in the Demised Premises; (g) the filing by
any creditor of Tenant of an involuntary petition in bankruptcy which is not dismissed
within sixty (60) days after filing; or (h) the attachment, execution or other judicial
seizure of all or substantially all of the assets of Tenant or Tenant's leasehold where
such an attachment, execution or seizure is not discharged within sixty (60) days. Any
repetitive failure by Tenant to perform its agreements and obligations hereunder, though
intermittently cured, shall be deemed an incurable default. Two (2) breaches of the
same covenant within a sixty (60) day period, a notice having been given pursuant to (a)
or (b) above for the first breach, or three (3) of the same or different breaches at any
time during the term of this Lease for which notices pursuant to (a) or (b) above were
given for the first two (2) breaches shall conclusively be deemed to be an incurable
repetitive failure by Tenant to perform its obligations hereunder.
In the event of any such default or breach by Tenant, Landlord may at any
time thereafter, without further notice or demand, rectify or cure such default, and any
sums expended by Landlord for such purposes shall be paid by Tenant to Landlord
is
522958 1
upon demand and as additional rental hereunder. In the event of any such default or
breach by Tenant, Landlord shall have the right (1) to continue the lease in full force and
effect and enforce all of its rights and remedies under this Lease, including the right to
recover the rental as it becomes due under this Lease, or (ii) Landlord shall have the
right at any time thereafter to elect to terminate the Lease and Tenant's right to
possession thereunder. Upon such termination, Landlord shall have the right to recover
from Tenant:
(a) The worth at the time of award of the unpaid rental which
had been earned at the time of termination;
(b) The worth at the time of award of the amount by which the
unpaid rental which would have been earned after termination until the time of award
exceeds the amount of such rental loss that the Tenant proves could have been
reasonably avoided;
c) The worth at the time of award of the amount by which the
unpaid rental for the balance of the term after the time of award exceeds the amount of
such rental loss that the Tenant proves could be reasonably avoided; and
(d) Any other amount necessary to compensate the Landlord for
all the detriment proximately caused by Tenant's failure to perform its obligations under
the lease or which in the ordinary course of things would be likely to result therefrom.
The "worth at the time of award" of the amounts referred to in
subparagraphs (1) and (ii) above shall be computed by allowing interest at three percent
(3%) over the prime rate then being charged by Bank of America, N.A. but in no event
greater than the maximum rate permitted by law. The worth at the time of award of the
amount referred to in subparagraph (iii) above 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 in no event greater than ten percent (10%).
As used herein "rental" shall include the Monthly Rental, percentage rental
equal to the average percentage rental paid or payable by Tenant for the last twelve
(12) months or such lesser period as Tenant has been open for business, other sums
payable hereunder which are designated "rental" or "additional rental" and any other
sums payable hereunder on a regular basis such as reimbursement for real estate
taxes.
Such efforts as Landlord may make to mitigate the damages caused by
Tenant's breach of this Lease shall not constitute a waiver of Landlord's right to recover
damages against Tenant hereunder, nor shall anything herein contained affect
Landlord's right to indemnification against Tenant for any liability arising prior to the
termination of this Lease for personal injuries or property damage, and Tenant hereby
agrees to indemnify and hold Landlord harmless from any such injuries and damages,
including all attorney's fees and costs incurred by Landlord in defending any action
brought against Landlord for any recovery thereof, and in enforcing the terms and
previsions of this indemnification against Tenant.
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522658.1
Notwithstanding any of the foregoing, the breach of this Lease by Tenant,
or an abandonment of the Demised Premises by Tenant, shall not constitute a
termination of this Lease, or of Tenant's right of possession hereunder, unless and until
Landlord elects to do so, and until such time Landlord shall have the right to enforce all
of its rights and remedies under this Lease, including the right to recover rent, and all
other payments to be made by Tenant hereunder, as they become due. Failure of
Landlord to terminate this Lease shall not prevent Landlord from later terminating this
Lease or constitute a waiver of Landlord's right to do so.
11.2 No Waiver. Acceptance of rental hereunder shall not be deemed a
waiver of any default or a waiver of any of Landlord's remedies.
11.3 Landlord's Default. Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord within a reasonable time, but in no
event later than thirty (30) days after written notice by Tenant to Landlord and to the
holder of any first mortgage or deed of trust covering the Premises whose name and
address shall have theretofore been furnished to Tenant in writing, specifying wherein
Landlord has failed to perform such obligation; 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 deemed in default if Landlord commences
performance within a (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 damages and/or an
injunction.
11.4 Termination. This Lease may be terminated in whole or in part in
writing by Landlord in the event of substantial failure by the Tenant to fulfill its
obligations under this Lease, or it may be terminated by Landlord for necessity or
convenience provided that Landlord provide Tenant with thirty (30) days written notice.
If this Lease is terminated under the provisions of this Section 11.4 for necessity or
convenience, City shall reimburse Tenant for Tenant's actual construction cost of any
new improvements installed subsequent to the execution of this Lease and approved by
Landlord pursuant to the provisions of Section 5.1 of this Lease, less depreciation at the
rate of 33.33% per year from date of this Lease, regardless of when such improvements
are installed. The reimbursement provided herein shall be Tenant's sole and exclusive
remedy and form of compensation, costs or damages, including Relocation Assistance
benefits (Sec. 7260 et sea. of the California Government Code), due to termination, re-
entry, or acquisition by City.
12. CONDEMNATION.
In the event a condemnation or a transfer in lieu thereof results in a taking of any portion
of the Demised Premises, Landlord may, or In the event a condemnation or a transfer in
lieu thereof results in a taking of twenty-five percent (25%) or more of the Demised
Premises, Tenant may, upon written notice given within thirty (30) days after such taking
or transfer in lieu thereof, terminate this Lease. Tenant shall not be entitled to share in
any portion of the award and Tenant hereby expressly waives any right or claim to any
part thereof. Tenant shall, however, have the right to claim and recover, only from the
condemning authority (but not from Landlord), any amounts necessary to reimburse
20
522g5,1
Tenant for the cost of removing stock and fixtures. If this Lease is not terminated as
above provided, Landlord shall use a portion of the condemnation award to restore the
Demised Premises.
13. MISCELLANEOUS.
13.1 Entry and Inspection.
Tenant shall permit Landlord and his agents to enter into and upon the Demised
Premises at all reasonable times for the purpose of inspecting the same or for the
purpose of maintaining the Demised Premises as required by the terms of this Lease or
for the purpose of posting notices of non-liability for alterations, additions or repairs, or
for the purpose of placing upon the property in which the Demised Premises are located
any usual or ordinary "For Sale" signs or any signs for public safety as determined by
Landlord. Landlord shall be permitted to do any of the above without any rebate of rent
and without any liability to Tenant for any loss of occupation or quiet enjoyment of the
Demised Premises thereby occasioned. Tenant shall permit Landlord, at any time
within six (6) months prior to the expiration of this Lease, to place upon the Demised
Premises any usual or ordinary "For Lease" signs, and during such six (6) month period
Landlord or his agents may, during normal business hours, enter upon said Demised
Premises and exhibit same to prospective tenants.
13.2 Estoppel Certificate.
If, as a result of a proposed sale, assignment, or hypothecation of the Demised
Premises or the land thereunder by Landlord, or at any other time, an estoppel
certificate shall be requested of Tenant, Tenant agrees, within ten (10) days thereafter,
to deliver such estoppel certificate in the form attached hereto as Exhibit "E" addressed
to any existing or proposed mortgagee or proposed purchaser, and to the Landlord_
Tenant shall be liable for any loss or liability resulting from any incorrect information
certified, and such mortgagee and purchaser shall have the right to rely on such
estoppel certificate and financial statement.
13.3 Jurisdiction and Venue. The parties hereto agree that the State of
California is the proper jurisdiction for litigation of any matters relating to this Lease, and
service mailed to the address of tenants set forth herein shall be adequate service for
such litigation. The parties further agree that Riverside County, California is the proper
place for venue as to any such litigation and Tenant agrees to submit to the personal
jurisdiction of such court in the event of such litigation.
13.4 Partial Invalidity. If any term, covenant, condition or provision of
this Lease is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the provisions hereof shall remain in full force and
effect and shall in no way be affected, impaired or invalidated thereof.
13.5 Successors in Interest. The covenants herein contained shall,
subject to the provisions as to assignment, apply to and bind the heirs, successors,
executors, administrators and assigns of all the parties hereto; and all of the parties
hereto shall be jointly and severally liable hereunder.
21
522$SH I
13.6 No Oral Agreements. This (1) Lease covers in full each and every
agreement of every kind or nature whatsoever between the parties hereto concerning
this Lease, (ii) supersedes any and all previous obligations, agreements and
understandings, if any, between the parties, oral or written, and (iii) merges all
preliminary negotiations and agreements of whatsoever kind or nature herein. Tenant
acknowledges that no representations or warranties of any kind or nature not
specifically set forth herein have been made by Landlord or its agents or
representatives.
13.7 Authority. In the event that Tenant is a corporation or a partnership,
each individual executing this Lease on behalf of said corporation or said partnership,
as the case may be, represents and warrants that he or she is duly authorized to
execute and deliver this Lease on behalf of said corporation or partnership, in
accordance with a duly adopted resolution of the Board of Directors, if a corporation, or
in accordance with the Partnership Agreement, if a partnership, and that this Lease is
binding upon said corporation or partnership in accordance with its terms. Tenant
represents and warrants to Landlord that the entering into this Lease does not violate
any provisions of any other agreement to which Tenant is bound.
13.8 Relationship of Parties. The relationship of the parties hereto is that
of Landlord and Tenant, and it is expressly understood and agreed that Landlord does
not in any way or for any purpose become a partner of Tenant in the conduct of
Tenant's business or otherwise, or a joint venturer with Tenant, and that the provisions
of this Lease and the agreements relating to rent payable hereunder are included solely
for the purpose of providing a method whereby rental payments are to be measured and
ascertained.
13.9 Nondiscrimination. Tenant herein covenants by and for itself, its
heirs, executors, administrators and assigns and all persons claiming under or through
it, and this Lease is made and accepted upon and subject to the following conditions:
That there shall be no discrimination against or segregation of any person or group of
persons on account of race, sex, marital status, color, creed, national origin or ancestry,
in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the
Demised Premises herein leased, nor shall the Tenant itself, or any person claiming
under or through it, establish or permit any such practice or practices of discrimination
or segregation with reference to the selection, location, number, use or occupancy of
tenants, lessees, sublessees, subtenants or vendees in the Demised Premises.
13.10 Notices. Wherever in this Lease it shall be required or permitted
that notice and demand be given or served by either party to this Lease to or on the
other, such notice or demand shall be given or served in writing and shall not be
deemed to have been duly given or served unless in writing, and personally served or
forwarded by certified mail, postage prepaid, addressed, if to Landlord, to City of Palm
Springs, P.O. Box 2743, Palm Springs, California, 02263, Attn: City Manager, and if to
Tenant, as specified in Section 1.7. Either party may change the address set forth
herein by written notice by certified mail to the other. Any notice or demand given by
certified mail shall be effective one (1) day subsequent to mailing.
22
5228581
13.11 Waiver. No delay or omission in the exercise of any right or
remedy by a non-defaulting party shall impair such right or remedy or be construed as a
waiver. A party's consent to or approval of any act by the other party requiring the
party's consent or approval shall not be deemed to waive or render unnecessary the
other party's consent to or approval of any subsequent act. Any waiver by either party
of any default must be in writing and shall not be a waiver of any other default
concerning the same or any other provision of this Lease.
13.12 FAA Review. Tenant shall be solely responsible for any charges,
assessments, fines, penalties, or costs of any kind or nature as a result of the FAA's
review of this Lease and any modifications, revisions, or changes directed or otherwise
required by the FAA to the Lease or the Tenant's use or occupancy of the Demised
Premises and Tenant shall defend and hold the City and its officers, employees, and
agents harmless from any damage or cost Tenant may incur as a result thereof. Tenant
understands and acknowledges that Tenant is assuming full responsibility for any
deficiency in the Lease or Tenant's use of the Demised Premises on or before the
effective date of this Lease identified by the FAA and any cure that the FAA may require
regarding the Lease or the Tenant's use of the Demised Premises on or before the
effective date of this Lease.
13.12 Exhibits and Addenda. The Exhibits and Addenda attached to this
Lease are made a part hereof as if fully set forth herein. In the event of a conflict
between the terms and provisions of an Addenda and the terms and provisions of this
Lease, the terms and provisions of the Addenda shall prevail.
23
szzesa i
IN WITNESS WHEREOF, the parties have executed and entered into this
Agreement as of the dale first written above.
"Landlord"
CITY OF PALM SPRINGS
A California Charter City
Dated: By:
City Manager
APPROVED AS TO FORM ATTEST:
By: By:
Tilde: Title:
"Tenant"
CLEAN ENERGY, Inc.
A California corporation
Dated: By:
Titile:
By:
Title:
(Attach corporate acknowledgments)
24
szzess i
EXHIBIT "B"
Use of Premises
This Agreement expresses the terms and conditions pursuant to which Landlord
authorizes Tenant to design, construct, operate, and maintain, at Tenant's sole cost
and expense, an upgraded and expanded Compressed Natural Gas ("CNG") motor
vehicle fueling station (the "Station") on Palm Springs International Airport ("PSP")
property in the City of Palm Springs. The site is generally located at 3400 E. Tahquitz-
Canyon Way, Palm Springs, CA 92262 and is owned or controlled by the Landlord for
the use of PSP and other authorized users.
The CNG Station shall include2 (two) compressors and controls and equipment, thirty
thousand (30,000) standard cubic feet of storage capacity for fast filling 3600 psig
vehicles, at least two (2) two-hose 3600 psi temperature compensated dispensers
capable of fueling two (2) vehicles simultaneously at a minimum rate of three (3) gallons
per minute per vehicle, and magnetic card readers located conveniently for fueling
access which are capable of communicating with Tenant's billing system, and a
universal card system capable of reading all major credit cards. The CNG dispensers
shall be designed for 24 hour per day unlimited public access for all CNG vehicles
including heavy-duty vehicles at the "Public Dispensers".
CNG Station Operation and Maintenance: Tenant shall provide scheduled, routine and
emergency maintenance service for the term of Station ownership and shall repair or, at
its option or upon request of the "City", replace, any defective equipment at its expense.
Tenant shall perform other necessary maintenance or repair or replace parts or
equipment damaged by negligence, abuse, or neglect of others. In the event such
damage was caused solely by the negligence or willful conduct of PSP personnel, PSP
shall reimburse Tenant for its actual out of pocket expenses.
The additional operations and maintenance conditions shall apply to Tenant:
1. Provide all maintenance records for the facility to the Landlord on a semi-annual
basis. This shall include, but not limited to, routine and scheduled maintenance,
emergency maintenance and action taken to resolve major operational problems. Any
safety near misses or accidents shall be reported to the Landlord within 12 hours.
2. The natural gas for the CNG station during the agreement period must meet the
California Air Resources Board (CARB) specification and the water content shall not
exceed 7#/million standard cubic foot (MMSCF).
3. Tenant to have each of the CNG dispensers calibrated once every 2 years to
California Weights and Measures standards, and submit copies to the Landlord.
4. Jointly conduct with the Landlord a mutual annual operation, safety and code
inspection of the CNG station.
25
522855.1
5. If a safety incident or accident were to occur, Tenant is to immediately shutdown
the CNG station and report the incident to the Landlord. Tenant shall not restart the
CNG station without approval of the Landlord.
6. Tenant to advise the Landlord within 48 hours of any retail price change at the CNG
fueling station
CNG Service Calls: In the event of an emergency involving substantial risk of injury or
material property damage at the Station, Tenant shall respond within forty-eight (48)
hours following notification by PSP or other entities. In the event of other serious
operational difficulties, Tenant shall respond within four (4) hours following notification
and repairs shall be undertaken and completed with reasonable diligence.
CNG Training: Tenant shall offer reasonable training programs to educate PSP"s or
other Landlord personnel as to procedures for the safe and efficient use of the Station,
including, without limitation, procedures relating to safe vehicle fueling, troubleshooting
and appropriate emergency procedures.
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522858 I
EXHIBIT "A"
PLOT PLAN OF DEMISED PREMISES
(Include dimensions and area calculation)
27
522858.1
EXHIBIT "C"
RENTAL/COMPENSATION
Rental obligations of the Tenant shall include, but not be limited to the following:
1) TENANT shall pay the Landlord $0.10 per square foot of the demised premises
monthly land rental.
2) TENANT shall pay the Landlord on a quarterly basis beginning at the end of the
first calendar quarter after the Station begins operation a percentage rental in the
amount of $0.025 per gasoline gallon equivalent (125,000 BTU/gallon) (a "Gasoline
Gallon") sold at the Station to anyone other than to the City based on the posted Tenant
retail price. The percentage rental shall not apply to sales of CNG to the City for use in
CNG Vehicles owned or leased by City.
3) TENANT shall provide the City of Palm Springs with CNG at a price per gasoline
gallon equivalent (126,000 BTU/gallon) (a "Gasoline Gallon") equal to the posted retail
price by TENANT less $0.025 per gallon during the immediately proceeding calendar
month.
4) Landlord shall, at mutually agreeable times, permit and cooperate with TENANT
in hosting demonstrations and seminars for interested members of the public, press and
other fleet operators for the promotion of clean air programs within the City of Palm
Springs and the Desert Resort Communities.
5) City and PSP operate a vast array of alternative fuel vehicles, utilizing CNG as
the primary fuel source for internal combustive engines. City CNG vehicles are utilized
on a twenty-four (24) hour basis. By having the CNG fueling station located on Airport
property, City employees are able to respond to emergency situations in a timely
manner and/or re-fill vehicles efficiently without causing unnecessary delays in
emergency response times.
6) Landlord acknowledges and will authorize inclusion of a PSP logo in advertising
materials produced by TENANT for the purposes of promoting clean air programs on a
statewide, nationwide, and international level. Should commercial filming occur on the
station site, TENANT shall guarantee all filming fees due the Landlord, as provided in
the City of Palm Springs' Comprehensive Fee Schedule, shall be paid.
7) TENANT shall utilize its professional expertise in applying for federal grant
programs, including but not limited to those sponsored by the Federal Aviation
Administration (FAA) and the South Coast Air Quality Management District (SCAQMD)
for vehicle and equipment acquisition, CNG fueling station upgrades, or other
associated incentive programs that promote air quality standards.
8) TENANT will maintain the station site and the roadway entrances along the entire
width of the demised premises including water and electricity. Said maintenance shall
meet the same quality standard as the Airport Entrance Road areas.
28
szzesa i
9) The monthly Tenant payment for rental/compensation listed above shall include
sufficient information as may be requested by Landlord to accurately document
Tenant's compliance with the provisions of this Exhibit.
10) The payment obligations of this Exhibit are based on the assumption that Tenant
will sell approximately 150,000 GEG per year at the upgraded and expanded CNG
station.
?9
522858 I
EXHIBIT "D"
CONSTRUCTION OBLIGATIONS
All such improvements shall be constructed pursuant to construction plan and
specifications, prepared by a professional engineer or architect and retained by Tenant
and licensed to practice in the State of California, that are in sufficient detail to enable
potential contractors and subcontractors to make reasonably accurate bid estimates
and to enable Landlord to make an informed judgment about the design and quality of
construction. Following approval by the Landlord, said plans and specifications shall be
subject to the prior written approval of Landlord.
Tenant shall provide Landlord with ten (10) days advance written notice of Tenant's
intent to commence construction of the improvements so that Landlord may post
appropriate notices of non-responsibility. Tenant shall not commence construction until
Tenant has procured all necessary permits and approvals required by all federal, state
and local governmental authorities with jurisdiction. All improvements shall be
constructed within the boundaries of the Demised Premises, shall be constructed in a
good and workmanlike manner, shall substantially comply with the approved plans and
specifications for the improvements and shall comply with all applicable governmental
permits, laws, ordinances and regulations. Tenant is responsible for all construction
material and equipment stored at the site during construction. Tenant shall diligently
prosecute the construction of the improvements to completion, The improvements shall
be completed not later than six (6) months from the Commencement Date. Upon
substantial completion of the improvements, Tenant shall file or cause to be filed
appropriate notices of completion in the Riverside County Recorder's Office.
Tenant shall pay or cause to be paid the total cost and expense of all works of
improvement constructed upon the Demised Premises by Tenant. Tenant shall not
suffer or permit to be enforced against the Demised Premises or any part of it any
mechanic's, material man's, contractor's, subcontractor's or design it may arise.
However, Tenant may in good faith and at Tenant's expense contest the validity of any
such asserted lien, claim or demand provided Tenant has furnished a bond required
pursuant to the California Civil Code to free the Demised premises from the effect of
such lien. If Tenant fails to discharge such lien, Landlord shall have the right, but not
the obligation, to pay or otherwise discharge such lien. Tenant shall reimburse Landlord
for all sums expended by Landlord therefor, plus interest at the rate of ten percent
(10%) per annum from the date expended by Landlord until fully repaid. Any such
amounts expended by landlord plus interest shall be deemed to be additional rental.
Tenant hereby agrees to indemnify, protect, defend and hold Landlord harmless from
any loss, expense (including reasonable attorneys' fees) or liability arising out of the
work of improvement.
Improvements shall include:
CNIG Station! Such station shall include 2 (two) compressors and controls and
equipment, thirty thousand (30,000) standard cubic feet of storage capacity for fast
filling 3600 psig vehicles, at least two (2) two-hose 3600 psi temperature compensated
dispensers capable of fueling Iwo (2) vehicles simultaneously at a minimum rate of
three (3) gallons per minute per vehicle, and magnetic card readers located
30
5228n.i
conveniently for fueling access which are capable of communicating with Tenant's
billing system, and a universal card system capable of reading all major credit cards.
The CNG dispensers shall be designed for 24 hour per day unlimited public access for
all CNG vehicles including heavy-duty vehicles at the "Public Dispensers".
�1
522858.1
EXHIBIT "E"
ESTOPPEL CERTIFICATE
Tenant:
Landlord: CITY OF PALM SPRINGS, a California Charter City, dba PALM SPRINGS
INTERNATIONAL AIRPORT
Date of Lease:
Demised Premises:
To:
The undersigned hereby certifies as follows:
1. The undersigned is the tenant ("Tenant") under the above-referenced
lease ("Lease") covering the above-referenced premises ("Demised Premises").
2. The Lease constitutes the entire agreement between landlord under the
Lease ("Landlord") and Tenant with respect to the Demised Premises and the Lease
has not been modified, changed, altered or amended in any respect except as set forth
above.
3. The term of the Lease commenced on 20_,
and, including any presently exercised option or renewal term, will expire on
_ , 20_. Tenant has accepted possession of the Demised
Premises and is the actual occupant in possession thereof and has not sublet, assigned
or hypothecated its leasehold interest. All improvements to be constructed on the
Demised Premises by Landlord have been completed and accepted by Tenant and any
tenant construction allowances have been paid in full.
4. As of this date, to the best of Tenant's knowledge, there exists no breach
or default, nor state of facts which, with notice, the passage of time, or both, would
result in a breach or default on the part of either Tenant or Landlord. To the best of
Tenant's knowledge, no claim, controversy, dispute, quarrel or disagreement exists
between Tenant and Landlord.
5. Tenant is currently obligated to pay Monthly Rent in installments of
$ per month, and such monthly installments have been paid not more
than one month in advance. In addition, the Lease requires Tenant to pay percentage
rent each month in the amount of percent (_%) and percentage rent has been
paid through 20_. To the best of Tenant's knowledge, no other rent
has been paid in advance and Tenant has no claim or defense against Landlord under
the Lease and is asserting no offsets or credits against either the rent or Landlord.
Tenant has no claim against Landlord for any security or other deposits except
$ which was paid pursuant to the Lease.
32
522858.1
6. Tenant has no option or preferential right to lease or occupy additional
space within the Property of which the Demised Premises are a part. Tenant has no
option or preferential right to purchase all of any part of the Demised Premises nor any
right or interest with respect to the Demised Premises other than as Tenant under the
Lease. Tenant has no right to renew or extend the term of the Lease except as set
forth in the Lease.
7. Tenant has made no agreements with Landlord or its agent or employees
concerning free rent, partial rent, rebate of rental payments or any other type of rent or
other concession except as expressly set forth in the Lease.
8. There has not been filed by or against Tenant a petition in bankruptcy,
voluntary or otherwise, any assignment for the benefit of creditors, any petition seeking
reorganization or arrangement under the bankruptcy laws of the United States, or any
state thereof, or any other action brought under said bankruptcy laws with respect to
Tenant.
9. All insurance which Tenant is required to maintain under the Lease has
been obtained by Tenant and is in full force and effect and all premiums with respect
thereto have been paid.
Dated this day of 20
By:
Its:
33
522658.1
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