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Cq<�FORN�P CITY COUNCIL STAFF REPORT
DATE: February 17, 2016 CONSENT CALENDAR
SUBJECT: APPROVE A LEASE EXTENSION OPTION BETWEEN THE CITY OF
PALM SPRINGS AND THE COACHELLA VALLEY ECONOMIC
PARTNERSHIP FOR OFFICE SPACE AT A CITY OWNED BUILDING AT
3111 E. TAHQUITZ CANYON WAY
FROM: David H. Ready, City Manager
BY: Community & Economic Development Department
SUMMARY
The Coachella Valley Economic Partnership (CVEP) and the City of Palm Springs
entered into a Lease Agreement on February 2, 2011, for the development of the
regional economic development and business incubator facility at 3111 E. Tahquitz
Canyon Way, Palm Springs. The lease agreement includes an option to extend for two
five year terms. CVEP is formally exercising their right to execute the first five (5) year
option with all other terms and conditions remaining the same.
RECOMMENDATION:
1. Approve Lease Amendment No 1 — Extension Option, between the City of Palm
Springs and the Coachella Valley Economic Partnership for the property at 3111
E. Tahquitz Canyon Way, Palm Springs, California.
2. Authorize the City Manager or his designee to execute all necessary documents.
STAFF ANALYSIS:
The Coachella Valley Economic Partnership (CVEP) leases the building at 3111 E.
Tahquitz Canyon Way to house the organization's offices and to establish the incubator
space for the City's Innovation Hub (iHub) Program. CVEP officially leases 5,000
square foot for their operation and manages the balance of the space to incubate iHub
clients, as well as regional business development. They also provide shared office
space for business resource agencies and support services to help emerging
businesses grow and create jobs.
ITEM NO.� n/
City Council Staff Report
(February 17, 2016) — Page 2
(CVEP- Lease Amendment No 1 —Extension Option Years)
The original five year term included CVEP undertaking all the tenant improvements in its
own space as well as the iHUB space, and all of the common areas. The City-owned
building consists of 14,000 square feet, and was originally built in 1958 for the Police
Department. The County of Riverside Health Services Department leased the building
for 22 years, until late 2007, prior to relocating to their new Family Care Center at
Sunrise Way and Vista Chino. Based on the prior two occupants and age of the
building, tenant improvements were quite extensive.
CVEP undertook the permitting and renovation of the building with City review and
approval. Tenant improvement costs for the entire building, including exterior painting,
landscaping, and furniture, fixtures, and equipment, totaled $510,906. The tenant
improvement costs are credited against the monthly rent until fully amortized. On
October 1, 2019 CVEP will make a partial payment of $4,756. The $669 difference is
the balance of the amortized tenant improvement credit. On November 1, 2019 the
monthly rent payment will be $5,425 for the remaining lease term. The rental rate
increase includes a cost of living adjustment as described in Section 3.2 in the Lease
Agreement. All other terms and conditions remain the same.
FISCAL IMPACT:
Rental income will start with a partial payment on October 1, 2019, due to the amortized
tenant improvement credit. On November 1, 2019, the monthly rental income will be
$5,425.00 forth remain' term.
Lauri Aylaian, Director Cathy Van/fiorn, Administrator
David H. Ready, City Mar�g
Attachments:
CVEP Letter
CPI calculation
Rent schedule
Lease Amendment No 1 — Extension of Option Years
Lease Agreement (2/2/2011)
02
COACHELLA VALLEY ECONOMIC PARTNERSHIP i�
January 5, 2016
Joe J. Wallace, interim CEO
Coachella Valley Economic Partnership
3111 East Tahquitz Canyon Way
Palm Springs, CA 92262
City of Palm Springs
Attn: David Ready, City Manager
3200 East Tahquitz Canyon Way
Palm Springs, CA 92262
David,
The purpose of this letter is to formally notify you that the Coachella Valley Economic
Partnership (CVEP) intends to exercise the option to continue the lease executed on
February 2, 2011 with respect to the facility at 3111 E. Tahquitz Canyon Way, Palm
Springs, CA 92262 for an additional 5 years according to the terms set forth in Section
2.2 of the original lease.
The payment schedule associated with this lease extension has been prepared by the
staff of the City of Palm Springs and is attached as part of this letter. CVEP accepts
the COLA adjustment calculation by the City of Palm Springs and the amortization of
payments as set forth in the attachment. The first payment due to the City of Palm
Springs will be for the month of October 2019 in the amount of$5,425 and will be
followed by monthly payments of the same amount until the option period ends on
August 1, 2021.
By my signature below, CVEP formally exercises the option to continue the lease of
February 2, 2011 for another 5 year period that will end on August 1, 2021.
Bes ds, .
Joe J. allace, interim CEO
CVEP
31.1 EAST TAHQU I TZ CANYON WAY PALM SPRINGS CAL.FORNIA 12262-PH.760.340.1575-FX: 760 S480170•WWWSVEPCOM 03
CVEP City-Owned Building Lease Payment CPI
City of Palm Springs
Index
2016 thru 2021 Payment Calculation: 1982-84=100
November 2010 218.694
November 2015 237.190
Five-year index change as a# 18.496 j
Five-year index change as a % 8.500%
Old Annual Payment Amount $60,000
Increase in Payment Amount $5,100
New Annual Payment Amount $65,100
New Monthly Payment Amount $5,425.00
Source: Bureau of Labor Statistics, December Index card
Los Angeles-Riverside-Orange County CPI-W
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12/31/2015 CVEP CPI and History(12-31.2015);CPI Calculations 11:20 AM 04
Coachella Valley Economic Partnership
3111 E.Tahquitz Canyon Way - _— -- - - -- �_—_- - - - -
5 year leaes term beginning Au u5t 1,2011
Lease Hold Tenant
Improvement Credit $510,906.00
e_a_r._ - _Year _ e_a_r_(_ ) _ _Year 4(20f
14-_1_5) Year s(20t15-16)
Au us[ 55,000.00 Au ust g g $5,000.00 August $5OD0.00
September $5,000.00 Se tember $5,000.00 September $5,000. 5e tember $5,000.00 Se tember $5000.00
October $5000.00 October $5,000.00 October $5,000.00 October $5,000.00 October $5,000.00
$ 00 November $5,000.00 November $5,00000 November $5,000.00November $5,000.00 November
_
December e _ '$500000 December $5,000.00 December �, $5,000.00 December $5 000.00 December _ $5,00000
January $5,00000 January _ _ $5,000.00 January $5,000.00 January _ $5,000.00 January $5,00000
February $5,00000 February $5,000.00 February $5,000.00 February $5000.00 February $5,00000
March '. $500000 March $5,000.00 March $5,000.00 March $5,000.00 March $5,000.00
April $5,000.00 April _ $5,000.00 April $5,000.00 April $5,000.00 April $5,000.00
May _ $5,000.00 May $5,000.00 May $5,000.00 May $5,000.00 May $S,OOD W
June _$5,000.00 June _ _ $5,000.00 June $5,000.00 June $5,000.00 June $5,000.00
July - $5,00000 July $5,000.00 July $5,000.00 July _ $5,000.00 July _ $5,00000 _
Sub total 6.00$450,906.00 Sub-total $390,906.00 Sub total) $330,906.00 Sub-total $270,90 Sub-total OK906.00
OPTION 1 YEARS 6-10, _ _.__.,
',with CPl Increase -- �-- _
Year 6(2016-17) 1 Year 7(2017-18) Year 8(2018-19) Year 9(2019-20) Year 10(2020-21)
August_ _ $5,425.00 August $5,425.00 August $5,425.00 August _ $5,425.00 _ NEP_ August $5,425.00
September _ _ _ $5,425.00 September $5,425.00 September i $5,425.00 September $5,425.00 Rent Payments September $5,425.00
October $5,425.00 October $5,425.00 October $5,425.00 October $4,756.00 Start 10/1/2019 October $5,425.00
November $5,425.00 November $5,425 00 November $5,425.00 November _$5,425 00 November $5,425.00
December _ $5,425.00 December $5,425.00 December $5,425.00 December $5,425.00 December $5,425.00
January(2016) $5 425 00 January $5,425.00 January $5 425.00 January _ $5,425.00 January $5,425._00
April - Y 4 $5,425.00 May $5,425.00 May _
February _ $5,425.00 February $5,425 00 February $5,425.00 February $5,425 00 February $5,425.00
_ _ _ _ $5,425.00 March $5,425.00
Mach _ $5 425.00 March $5,425.OD March $5 425.00 March _ _ _ $5,425.00
April $5,425.00 April $5,425.O0 April $5,425.00 April i $5,425.00 April j
_ - _ $5,425.00
June $5,425.00 June $5,425.00 June __� $5,425.00 June $5,425.00 June $5,425.00
July - I_. $5,425.00 July -- $5,425.00 July $5,425.00 JuIY _-- $5,425.00 July _ _ $5,425.00
Sub-total $145,806.00 Subtotal $80,706.00 Sub-total $15,606.00 Subtotal $0.00 $48,825.00 Sub-total $65,300.00
2/8/2016
11:19 AM
LEASE AGREEMENT NO. A6037
AMENDMENT NO. 1
COACHELLA VALLEY ECOOMIC PARTNERHSIP
LEASE EXTENSION OPTION
This FIRST AMENDMENT TO Agreement No. 6037 for certain premises and
improvements located at 3111 East Tahquitz Canyon Way, Palm Springs, California
("Agreement') made and entered into on the _ of , 2016 by and between
the CITY OF PALM SPRINGS ( "City"), and the Coachella Valley Economic Partnership,
a non-profit corporation ("Lessee").
RECITALS
WHEREAS, THE City and Lessee entered into a Lease Agreement No. 6037 on
February 2, 2011, for certain premises and improvements located at 3111 East Tahquitz
Canyon Way, Palm Springs, California (Agreement'), as may be duly amended from
time to time; and
WHEREAS, the parties wish to amend the Lease Agreement pursuant to the
terms of this Amendment No. 1:
NOW THEREFORE, in consideration of the mutual promises of the parties
hereto and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, City and Lessee agree to amend the Lease Agreement
as follows:
SECTION 1. LEASE SUMMARY
The Lease between the Lessor and Lessee, executed on February 2, 2011, shall
be amended as follows:
1.4 Extension Options.
a. Lessee hereby exercises its first (of two) five (5) year option term.
SECTION 2. TERM
2.2 Option Term.
a. Lessee hereby extends the term subject to all of the provisions
contained in the Agreement for the period specified in Section 1.4
("Extension Options") commencing upon the expiration of the initial
term.
(is
SECTION 3.0 RENTAL
3.1 Monthly Rental
During the option term of this Lease from and after the
Commencement Date, Lessee shall pay to City as monthly rental
("Monthly Rental) for the Premises the sum specified in Section 1.5 of
the Agreement.
3.2 Cost of Living Adjustment
Upon the execution of this extension option, the Monthly Rental shall
be adjusted upward to $5,425 per month. The rent increase is based
on the cost of living index reflected by the Revised Consumer Price
Index for Urban Wage Earners and Clerical Workers, all items, Los
Angeles -Anaheim - Riverside, California (1982-84 = 100) published by
the Bureau of Labor Statistics of the U.S. Department of Labor.
SECTION 12. MISCELLANEOUS
12.9.1 Conflict of Interest (Insert after 12.9)
Parties acknowledge that no officer or employee of the Lessor has or
shall have any direct or indirect financial interest in this Agreement nor
shall Lessee enter into any agreement of any kind with any such officer
or employee during the term of this Agreement and for one year
thereafter. Lessor warrants that Lessee has not paid or given, and will
not pay or give, any third party any money or other consideration in
exchange for obtaining this Agreement.
12.10 Nondiscrimination
(Remove 12.10 in its entirety and replace with the following)
Lessee 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, religion, disability, sexual orientation,
gender identity, physical or mental disability, medical condition,
national origin or ancestry, in the leasing, subleasing, transferring, use,
occupancy, tenure or enjoyment of the Premises herein leased, nor
shall the Lessee itself, or any person claiming under or through it,
establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or
occupancy of Lessees, Lessees, sub-Lessees, sublessees or vendees
in the Premises.
All other terms and conditions contained in the Lease Agreement dated February 2,
2011, remain unchanged and in full force and effect. 07
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the dates
stated below.
"CITY"
City of Palm Springs
Date: By:
David H. Ready
City Manager
APPROVED AS TO FORM: ATTEST
By: By:
Douglas C. Holland James Thompson
City Attorney City Clerk
APPROVED BY CITY COUNCIL:
Date: Agreement No.
COMPANY NAME: Check one_ Individual_ Partnership _x_Corporation
Coachella Valley Economic Partnership
3111 E. Tahquitz Canyon Way
Palm Springs, CA 92262
By: By:
Signature (Notarized) Signature (Notarized)
Corporations require two notarized signatures. One signature must be from Chairman of Board, President, or
any Vice President.
The second signature must be from the Secretary, Assistant Secretary, Treasurer, Assistant Treasurer,
or Chief Financial Officer.
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LEASE AGREEMENT
THIS LEASE ("Lease") is made and entered into this day of
k1 , 2aft, by and between the CITY OF PALM SPRINGS, a municipal
corporation ("Lessor"), and the Coachella Valley Economic Partnership, a California
non-profit corporation ("Lessee").
RECITALS:
A. Lessor is the owner of certain premises and improvements in the City of Palm
Springs, County of Riverside, State of California, located at the 3111 Tahquitz
Canyon Way('Property'); and
B. Lessee is a regional public-private economic development organization, of which
Lessor is a member, and is charged with implementing a regional blueprint to
make the Coachella Valley competitive in a number of key industries;
C. Lessee desires to lease a portion of said Property to operate its regional
economic development organization in said offices and facilities and partner with
Lessor in the development of a business incubator at the Property.
1.0 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.
1.1 Property. The `Property' shall refer to that certain real property
consisting of a 14,000 square foot building located in the County of Riverside, State of
California, as more particularly described in Exhibit "A" hereof together with the
improvements located thereon as depicted on the Plot Plan attached as Exhibit "B"
hereof.
1.2 The Premises. The Premises shall consist of that certain portion of
the building, as defined, herein, including all improvements therein or to be provided by
Lessor under the terms of this Lease, and commonly know as 3111 East Tahguitz
Canyon Wav, located in the City of Palm Springs, County of Riverside, State of
California, also identified as Assessor Parcel Number 502-210-023 and generally
described as office space consisting of approximately 5,000 square feet with 20 parking
spaces, all as shown on the plot plan attached as Exhibit "B".
1.3 Lease Term. The Lease term shall be five (5) years commencing
upon the completion of construction of the tenant improvements and first day of
occupancy ("Commencement Date") and terminating five years hence from that date.
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each. 1.4 Extension Options. Two (2) options for a term of five (5) years
1.5 Monthly Rental. Rental payment shall be $1.00 per square foot per
month for the space exclusively used by Lessee. Common area spaces .such as
conference rooms, bathrooms, meeting rooms, lobby and passageways shall not be
included as part of the square footage calculation for the period of the term, less a
credit for Eligible Lessee Improvements as described in Section 3.10. The Lessee
Improvement Credit shall be applied against the Monthly Rental under the terms
described in Section 3.10 of this Agreement. If the extension option is exercised, the
Monthly Rental shall be adjusted at the end of the initial five (5) years of the within term
under the terms described in Section 3.2 of this Agreement.
1.6 Security Deposit. N/A
1.7 Use of Premises. Lessee shall use and occupy the Premises for
the purpose of providing regional economic development services and coordination to
the cities of the Coachella Valley, as well as specifically assisting the cities of Palm
Springs, Cathedral City and Desert Hot Springs in the implementation of a State-
designated Innovation Hub (iHUB) at the Property.
1.8 Address for Notices.
Lessee: Coachella Valley Economic Partnership
Attn: Chief Operating Officer
3111 East Tahquitz Canyon Way
Palm Springs, California 92262
Lessor: City of Palm Springs
Attn: City Manager
3200 East Tahquitz Canyon Way
Palm Springs, CA 92262
2.0 TERM
2.1 Term, The term of this Lease shall commence on the date
specified in Section 1.3 ("Commencement Date") and shall continue for the period
specified therein unless earlier terminated as provided herein.
2.2 Option Term. Lessee is given the option(s) to extend the term
subject to all of the provisions contained in this Lease for the period specified in Section
1.4 ("Extension Options") commencing upon the expiration of the initial term or any
other extended term properly exercised hereunder, by giving written notice of extension
not less than (120) days. but not more than six (6) months before the expiration of the
initial term or any other extended term properly exercised hereunder. Provided that, if
Lessee is in default on the date of giving the extension notice, the option notice shall be
totally ineffective, or if Lessee is in default on the date the extended term is to
commence, the extended term shall not commence and this Lease shall expire at the
end of the initial term or properly exercised extended term.
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2.3 Time. Time is of the essence of this Lease.
2.4 Force Maieure. 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, restrictive governmental laws or
regulations 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 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
prompt payment of any rental or other charge required of Lessee hereunder except as
may be expressly provided elsewhere in this Lease.
2.5 Termination by Lessor. Lessor shall have the right to terminate this
Lease effective on any anniversary of the Commencement Date, with or without cause,
by providing Lessee with at least one hundred twenty (120) days advance written
notice. With the exception of any unamortized balance of Leasehold Improvement
Costs described in Section 3.10 of this Agreement, if Lessor terminates this Lease as
provided in this Section, Lessee hereby waives any right to receive any other
compensation from Lessor, including, but not limited to, the value of Lessee's leasehold
interest, loss of goodwill and relocation benefits, inverse condemnation or the taking of
property and Lessor shall have no obligation to pay Lessee therefor.
2.6 Holding Over. Any holding over after the expiration of the term of
this Lease, with the consent of Lessor, express or implied, shall be construed to be a
tenancy from month to month, cancelable upon thirty (30) days' written notice, and at a
monthly rental equal to one hundred and fifty percent (150%) of the monthly rental in
effect at the expiration of the term and upon terms and conditions as existed during the
last year of the term hereof.
2.7 Termination by Lessee. Lessee shall have the right to terminate
this Lease by providing Lessor with at least sixty (60) days advance written notice that
Lessee has experienced a reduction in funding in an amount that would require a
reduction in space greater than 60% of the current Premises, through staff reduction
and reduced programming. If Lessee terminates this Lease as provided in this Section,
Lessee hereby waives any right to receive any other compensation from Lessor,
including, but not limited to, the unamortized value of Lessee's leasehold improvements,
Lessee's leasehold interest, loss of goodwill and relocation benefits, inverse
condemnation or the taking of property and Lessor shall have no obligation to pay
Lessee therefor.
3.0 RENTAL
3.1 Monthly Rental. Lessee shall pay to Lessor, during the term of this
Lease from and after the Commencement Date as monthly rental ("Monthly Rental") for
the Premises the sum specified in Section 1.5 hereof, 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 Lessee shall pay the
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rental for the fractional month on the Commencement Date on a per diem basis
(calculated on a thirty-day month). All rental to be paid by Lessee to Lessor 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 1.8 hereof.
3.2 Cost of Living Adjustment. If the extension option is exercised,
the Monthly Rental shall be adjusted at the end of the first five (5) years of the within
term and adjusted upward at the end of each five (5) year period thereafter by the same
percentage as the cost of living index has changed during the said five (5) year period
with a maximum 15% increase for any adjustment period, provided that in no event shall
the adjusted minimum rental be less than the original Monthly Rental provided for
herein. The cost of living index to be used is that reflected by the Revised Consumer
Price Index for Urban Wage Earners and Clerical Workers, all items, Los Angeles -
Anaheim - Riverside, California (1982-84 = 100) published by the Bureau of Labor
Statistics of the U.S. Department of Labor. If, for any reason whatsoever, there is any
change in the method of calculation or formulation of said price index, or if that index
shall no longer be published, then another index generally recognized as authoritative
shall be substituted by agreement. In any event, the base used by any new index shall
be reconciled to the 1982-84 Index. It is agreed for the purposes of this Lease, that the
base index shall be the month of November, 2010.
3.3 Additional Rental. For the purposes of this Lease, all monetary
obligations of Lessee 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.
3.4 _Real Property Taxes. Unless Lessee qualifies for an exemption
from property taxes or possessory interest taxes due to its non-profit status, in addition
to all rentals herein reserved, Lessee shall pay, at the election of Lessor, either directly
to the taxing authority or to Lessor, annual real estate taxes and assessments levied
upon the 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 Lessor receives the tax bill, ten (10) days after
receipt of a copy of the tax bill from Lessor, whichever is later. Even though the term of
this Lease has expired and Lessee has vacated the Premises, when the final
determination is made of Lessee's share of such taxes and assessments, Lessee shall
immediately pay to Lessor the amount of any additional sum owed.
3.5 Personal Property Taxes. Unless Lessee qualifies for an
exemption from property taxes or possessory interest taxes due to its non-profit status,
during the term hereof Lessee shall pay prior to delinquency all taxes assessed against
and levied upon fixtures, furnishings, equipment and all other personal property of
Lessee contained in the Premises, and when possible Lessee shall cause said fixtures,
furnishings, equipment and other personal property to be assessed and billed
separately from the real property of Lessor.
3.6 Utilities. City shall furnish Lessee, and Lessee shall accept
exclusively from City, thermal and electrical energy. Lessor shall pay all charges for
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water, gas, heat, electricity, power and sewer, and all other services used in, upon, or
about the Premises by Lessee or any of its sublessees, licensees, or concessionaires
during the term of this Lease. Lessee shall pay all telephone, internet, cable television,
satellite, broadband and other telecommunications services, as well as trash removal.
3.7 Late Payment. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rental or other sums due hereunder will cause Lessor 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 Lessee not paid within ten
(10) days of its due date shall be subject to a five percent (5%) late charge. Lessor and
Lessee agree that this late charge represents a reasonable estimate of such costs and
expenses and is fair compensation to Lessor for its loss suffered by such late payment
by Lessee. Sixty (60) days before the anniversary date each year the City shall notify
the Lessee of any outstanding delinquency, which must be cured prior to the
anniversary date or the City may exercise its right of termination under section 2.5 and
terminate the lease.
3.8 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
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.
3.9 Security Deposit. N/A
3.10 Lessee Improvement Credit. Lessee shall provide for the physical
improvements of the Lessee's space, common area space including shared restrooms
and conference rooms, and the core HUB office space, subject to the provisions of the
Leasehold Improvement Agreement attached as Exhibit "E" to this Agreement. The
Lessee improvement costs for all areas would be credited to Lessee's Monthly Rental
obligation. Lessee shall, at its sole cost and expense, and subject to
reimbursement as hereinafter set forth, construct the improvements in the
Premises (the "Leasehold Improvements") pursuant to those certain blueprints, floor
and space plans, specification and finalize construction prices, collectively, the approved
'Working Drawings" prepared by Lessee's architect. Lessee shall make no changes or
modifications to the Approved Working Drawings without the prior written consent of
Lessor, which consent may be withheld if such change or modification would directly or
indirectly increase the cost of designing or constructing the Leasehold
Improvements. Any changes or modifications required by the Lessor shall be at
Lessee's sole cost and expense.
Lessor has designated its Director of Community & Economic Development
or his designee as its sole representative with respect to the Leasehold Improvement
matters set forth in this Agreement, who, until further notice to Lessee, shall have full
authority and responsibility to act on behalf of the Lessor with respect to approval of
Leasehold Improvements.
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Leasehold Improvements includes work on major building systems such
as electrical, plumbing, and HVAC, load-bearing or non-load-bearing walls, carpeting,
ceilings, skylights, windows, doors, painting but does not include any modular or
movable office system or walls, cubicles, telecommunications or information systems,
decor or office equipment.
Leasehold Improvement Credit shall be made by Lessor at a $1.00 per
square foot per month of the Lessee's Premises against Monthly Rental until the cost of
such Leasehold Improvements has been reimbursed by Lessor to Lessee. The
following examples are illustrative only:
(a) Lessee invests $25.00 per square foot to improve Lessee's
5,000 sq.ft. Premises, and the negotiated (gross) rent is $1.00 per square foot
per month. The total Leasehold Improvement cost would be $125,000. Credit
against the $5,000 Monthly Rental would yield a rent credit of $1.00lsf for 25
months; or
(b) Lessee invests $240,000.00 to improve Lessee's 5,000 sq.ft.
Premises plus the 2,000 sq.ft. common area and iHUB space. The gross rent on
the Premises only (Lessee's 5,000 s.f.) is $1.00 per square foot per month.
Credit against the $5,000 Monthly Rental would yield a rent credit of $1.00/sf for
48 months.
4.0 USE OF THE PREMISES
4.1 Permitted Use. The Lessor hereby leases to Lessee and Lessee
leases from Lessor the Premises with appurtenances as defined herein, for the purpose
of conducting thereon only the use specified in Section 1.7 of this Lease and for no
other use.
4.2 Prohibited Uses. Lessee shall not sell or permit to be kept, used,
displayed or sold in or about the 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 (c) any alcoholic
beverages unless expressly permitted by Section 1.7 hereof.
4.3 Compliance with Laws. Lessee shall, at his own 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 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. Lessee's violation of law
shall constitute an incurable default under this Lease. The judgment of any court of
competent jurisdiction, or the admission of Lessee in any action or proceeding against
Lessee, whether Lessor is a party thereto or not, that Lessee has violated any such
order or statute in said use, shall be conclusive of that fact as between the Lessor and
Lessee.
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Lessee shall not engage in any activity on or about the Premises that
violates any Environmental Law, and shall promptly, at Lessees 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 Lessee. The term
"Environmental Law" shall mean any federal, state or local law, statute, ordinance or
regulation pertaining to health, industrial hygiene or the environmental conditions on,
under or about the Demised Premises, including, without limitation, (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), 42 U.S.C. Sections 9601 et seq.; (ii) the Resource Conservation and
Recovery Act of 1976 ("RCRA"), 42 U.S.C. Sections 6901 et seq.; (iii) California Health
and Safety Code Sections 25100 et seq.; (iv) the Safe Drinking Water and Toxic
Enforcement Act of 1986, California Health and Safety Code Section 25249.5 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 3479 et seq., as such laws are amended and the regulations and
administrative codes applicable thereto. The term "Hazardous Material" includes,
without limitation, any material or substance which is (i) defined or listed as a
"hazardous waste", "extremely hazardous waste", "restrictive hazardous waste" or
"hazardous substance" or considered a waste, condition of pollution or nuisance under
the Environmental Laws; (ii) petroleum or a petroleum product or fraction thereof; (iii)
asbestos; 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. Lessee 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. Lessee shall
provide prompt written notice to Lessor of the existence of Hazardous Substances on
the premises and all notices of violation of the Environmental Laws received by Lessee.
4.4 Signs. Lessee shall not place or permit to be placed any sign that is
not in compliance with the sign ordinance of the Lessor upon the exterior or in the
windows of the Premises. Any sign not constructed in accordance therewith shall be
immediately removed by Lessee and, if said sign is not removed by Lessee within ten
(10) days of written notice from Lessor to Lessee, then Lessor may remove and destroy
said sign without Lessee's approval and without any liability to Lessee.
4.5 Parking and Common Areas. During the term of this Lease and any
extension thereof, Lessor gives to Lessee for the use and benefit of Lessee, its agents,
employees, customers, licensees and sublessees a nonexclusive license in common
with Lessor and other present and future owners and Lessees of the Property and their
agents, employees, customers, licensees and sublessees, and others authorized by
Lessor to use the automobile parking areas, roadways, walkways, landscaped areas,
service areas, of the Property for ingress, egress and automobile parking, provided that
the condemnation or other taking by any public authority, or sale in lieu of
condemnation, of any or all of such parking and common areas shall not constitute a
violation of this covenant. Nothing herein contained shall be deemed to prevent Lessor15
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from using or authorizing others to use said parking and common areas.
4.6 Maintenance and Landscaping. During the entire term hereof,
Lessor shall keep or cause to be kept the parking and landscaped areas in a good,
neat, clean and orderly condition, properly lighted and landscaped, and shall repair any
damage to the facilities thereof as well as the exterior walls and roof of the Premises as
provided in Article 11.
4.7 Hours of Business. Subject to the provisions of Section 7.0 hereof,
Lessee shall continuously during the entire term hereof conduct and carry on Lessee's
business in the Premises and shall keep the Premises open for business and cause
Lessee's business to be conducted therein during the Lessee's usual business hours of
each and every business day.
4.8 Rules and Regulations. Lessee shall faithfully observe and comply
with the rules and regulations that Lessor shall from time to time promulgate and/or
modify. The rules and regulations, if any, are attached hereto as Exhibit "D" ("Rules and
Regulations"). Any amendment or modification of the Rules and Regulations shall be
binding upon the Lessee upon delivery of a copy of such amendment or modification to
Lessee. Lessor shall not be responsible to Lessee for the nonperformance of any said
rules and regulations by any other Lessees or occupants. The Rules and Regulations
shall apply and be enforced as to all Lessees in the Premises on a uniform basis.
5.0 ALTERATIONS AND REPAIRS.
5.1 Alterations and Fixtures. Lessee shall not make, or suffer to be
made, any alterations to the Premises, or any part thereof, without the prior written
consent of Lessor, and any alterations to the Premises, except movable furniture 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 Lessor. Lessee shall not in any event make
any changes to the exterior of the Premises. Any such alterations shall be in
conformance with the requirements of all municipal, state, federal, and other
governmental authorities, including requirements pertaining to the health, welfare or
safety of employees or the public and in conformance with reasonable rules and
regulations of Lessor. Any damage occasioned by such removal shall be repaired at
Lessee's expense so that the Premises can be surrendered in a good, clean and
sanitary condition as required by Section 5.2 hereof. Any and all fixtures and
appurtenances installed by Lessee 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. Upon completion of construction of
the alterations, Lessee shall submit to Lessor evidence satisfactory to Lessor of the cost
of said alterations ("Improvement Costs").
5.2 Maintenance and Repair. Lessee shall, subject to Lessor's
obligations hereinafter provided, at all times during the term hereof, and at Lessee's
sole cost and expense, keep, maintain and repair the Premises, and other
improvements within the Premises in good and sanitary order, condition, and repair
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(except as hereinafter provided), including, without limitation, the maintenance and
repair of any store front, doors, window casements, walls, glazing, heating and air
conditioning system, plumbing, pipes, electrical wiring and conduits. Lessor shall also at
its sole cost and expense be responsible for any alterations or improvements to the
Premises necessitated as a result of the requirement of any municipal, state or federal
authority. Lessee hereby waives all right to make repairs at the expense of Lessor, and
Lessee hereby waives all rights provided for by the Civil Code of the State of California
to make said repairs. By entering into the Premises, Lessee shall be deemed to have
accepted the Premises as being in good and sanitary order, condition and repair, and
Lessee agrees on the last day of said term or sooner termination of this Lease to
surrender the 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. Lessee shall periodically
sweep and clean the sidewalks adjacent to the Premises, as needed. Upon Lessee's
possession of the Premises, Lessee shall be deemed to have accepted the Premises as
being in good condition and repair.
Lessee agrees that it will not, nor will it authorize any person to, go onto
the roof of the building of which the Premises are a part without the prior written consent
of Lessor. Said consent will be given only upon Lessor's satisfaction that any repairs
necessitated as a result of Lessee's action will be made by Lessee at Lessee's expense
and will be made in such a manner so as not to invalidate any guarantee relating to said
roof.
5.3 Free from Liens. Lessee shall keep the Premises free from any
liens arising out of any work performed, material furnished, or obligation incurred by
Lessee or alleged to have been incurred by Lessee.
6.0 INSURANCE AND INDEMNIFICATION.
6.1 Insurance Provided by Lessor. Lessor shall maintain fire and
extended coverage insurance throughout the term of this Lease in an amount equal to
at least ninety percent (90%) of the replacement value of the building containing the
Premises, together with such other insurance, coverages and endorsements as may be
required by Lessor's lender, or as Lessor may determine in its sole discretion. Lessee
hereby waives any right of recovery from Lessor, its officers and employees, and Lessor
hereby waives any right of loss or damage (including consequential loss) resulting from
any of the perils insured against as a result of said insurance. Lessee agrees to pay to
Lessor its pro rata share of the cost of said insurance to be determined by the
relationship that the gross floor area of the Premises bears to the total gross leasable
floor area of the building or buildings for which such policy relates.
6.2 Insurance Provided by Lessee.
(a) Lessee to Provide Personal Property Insurance. Lessee, at
its expense, shall maintain fire and extended coverage insurance written on a per
occurrence basis on its trade fixtures, equipment, personal property and inventory within
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the Premises from loss or damage to the extent of their full replacement value and shall
provide plate glass coverage.
(b) Lessee to Provide Liability Insurance. During the entire term
of this Lease, the Lessee shall, at the Lessee's sole cost and expense, but for the
mutual benefit of Lessor and Lessee, maintain comprehensive general liability
insurance insuring against claims for bodily injury, death or property damage occurring
in, upon or about the Premises and on any sidewalks directly adjacent to the Premises
written on a per occurrence basis in a combined single limit of ONE MILLION DOLLARS
($1,000,000.00) for bodily injury, death, and property damage or provided, however, if
Lessor so elects Lessor may provide such insurance and, in such event, Lessee agrees
to pay its pro rata share of the cost of said insurance on the same basis as provided in
Section 6.1 above.
(c) Lessee to Provide Workers' Compensation Insurance.
Lessee shall, at the Lessee's sole cost and expense, maintain a policy of workers'
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
Lessee and the Lessor 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 Lessee in the course of conducting Lessee's business in the Premises.
(d) General Provisions Applicable to Lessee's Insurance. All of
the policies of insurance required to be procured by Lessee pursuant to this Section 6.2
shall be primary insurance and shall name the Lessor, its officers, employees and
agents as additional insureds. The insurers shall waive all rights of subrogation and
contribution they may have against the Lessor, 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 cancelled without providing thirty (30) days' prior
written notice by registered mail to the Lessor. Prior to the Commencement Date or
such earlier date as Lessee takes possession of the Premises for any purpose; and at
least thirty (30) days prior to the expiration of any insurance policy, Lessee shall provide
Lessor with endorsements evidencing the above insurance coverages written by
insurance companies acceptable to Lessor, licensed to do business in the state where
the Premises are located and rated A:VII or better by Best's Insurance Guide. In the
event the Risk Manager of Lessor ("Risk Manager') determines that (i) the Lessee's
activities in the Premises creates an increased or decreased risk of loss to the Lessor,
(ii) greater insurance coverage is required due to the passage of time, or (iii) changes in
the industry require different coverages be obtained, Lessee agrees that the minimum
limits of any insurance policy required to be obtained by Lessee may be changed
accordingly upon receipt of written notice from the Risk Manager; provided that Lessee
shall have the right to appeal a determination of increased coverage by the Risk
Manager to the City Council of Lessor within ten (10) days of receipt of notice from the
Risk Manager. Lessor and Lessee hereby waive any rights each may have against the
other on account of any loss or damage occasioned by property damage to the
Premises, its contents, or Lessee's trade fixtures, equipment, personal property or
inventory arising from any risk generally covered by insurance against the perils of fire,
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extended coverage, vandalism, malicious mischief, theft, sprinkler damage or leakage,
and earthquake. Each of the parties, on behalf of their respective insurance companies
insuring such property of either Lessor or Lessee 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 lawful in California and provided further that no policy
is invalidated thereby.
6.3 Indemnification of Lessor. Lessee, as a material part of the
consideration to be rendered to Lessor under this Lease, hereby waives all claims
against Lessor for damage to equipment or other personal property, trade fixtures,
leasehold improvements, goods, wares, inventory and merchandise, in, upon or about
the Premises and for injuries to persons in or about the Premises, from any cause
arising at any time. Lessee agrees to indemnify the Lessor, 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 in connection with the
negligent performance of the work, operations or activities of Lessee, its agents,
employees, subcontractors, or invitees, provided for herein, or arising from the use of
the Premises or the parking and common areas by Lessee or its employees and
customers, or arising from the failure of Lessee to keep the Premises in good condition
and repair, as herein provided, or arising from the negligent acts or omissions of Lessee
hereunder, or arising from Lessee'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 Lessor, its officers, agents or employees
but excluding such claims or liabilities arising from the sole negligence or willful
misconduct of the Lessor, its officers, agents or employees, who are directly responsible
to the Lessor, and in connection therewith:
(a) Lessee 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) Lessee will promptly pay any judgment rendered against the
Lessor, 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 Lessee hereunder; and Lessee agrees to save and hold the
Lessor, its officers, agents, and employees harmless therefrom;
(c) In the event the Lessor, its officers, agents or employees is
made a party to any action or proceeding filed or prosecuted against Lessee 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 Lessee hereunder, Lessee
agrees to pay to the Lessor, its officers, agents or employees, any and all costs and
expenses incurred by the Lessor, its officers, agents or employees in such action or
proceeding, including, but not limited to, legal costs and attorneys' fees.
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7.0 ABANDONMENT AND SURRENDER.
7A Abandonment. Lessee shall not vacate or abandon the Premises at
any time during the term of this Lease; and if Lessee shall abandon, vacate or surrender
the Premises or be dispossessed by process of law, or otherwise, any personal property
belonging to Lessee and left on the Premises shall be deemed to be abandoned, at the
option of Lessor, except such property as may be mortgaged to Lessor.
P P P Y Y
7.2 Surrender of Lease. The voluntary or other surrender of this Lease
by Lessee, or a mutual cancellation thereof, shall not work a merger, and shall, at the .
option of Lessor, terminate all or any existing subleases or sub-tenancies, or may, at the
option of Lessor, operate as an assignment to it of any or all of such subleases or sub-
tenancies.
8.0 DAMAGE AND DESTRUCTION OF PREMISES. In the event of (a)
partial or total destruction of the Premises during the term of this Lease which requires
repairs to the Premises, or (b) the Premises being declared unsafe or unfit for
occupancy by any authorized public authority for any reason other than Lessee's act,
use or occupation, which declaration requires repairs to the Premises, Lessor shall
forthwith make said repairs provided Lessee gives to Lessor thirty (30) days' written
notice of the necessity therefor. No such partial 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 except that Lessee shall be entitled
to a proportionate reduction of Monthly Rental while such repairs are being made, such
proportionate reduction to be based upon the extent to which the making of such repairs
shall interfere with the business carried on by Lessee in the Premises. However, if
during the last two (2) years of the term of this Lease the Premises are damaged as a
result of fire or any other insured casualty to an extent in excess of twenty-five percent
(25%) of the then replacement cost (excluding foundations), Lessor may within thirty
(30) days following the date such damage occurs terminate this Lease by written notice
to Lessee. If Lessor, however, elects to make said repairs, and provided Lessor uses
due diligence in making said repairs, this Lease shall continue in full force and effect,
and the Monthly Rental shall be proportionately reduced while such repairs are being
made as hereinabove provided. Nothing in the foregoing to the contrary withstanding, if
the Premises or said building is damaged or destroyed at any time during the term
hereof to an extent of more than twenty-five percent (25%) of the then replacement cost
(excluding foundations) as a result of a casualty not insured against, Lessor may within
thirty (30) days following the date of such destruction terminate this Lease upon written
notice to Lessee. If Lessor does not elect to terminate because of said uninsured
casualty, Lessor shall promptly rebuild and repair the Premises and/or the building and
the Monthly Rental shall be proportionately reduced while such repairs are being made
as hereinabove provided. If Lessor elects to terminate this Lease, all rentals shall be
prorated between Lessor and Lessee as of the date of such destruction. In respect to
any partial or total destruction (including any destruction necessary in order to make
repairs required by any such declaration of any authorized public authority) which
Lessor is obligated to repair or may elect to repair under the terms of this Section,
Lessee waives any statutory right it may have to cancel this Lease as a result of such
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destruction.
9.0 ASSIGNMENT AND SUBLETTING. Lessee shall not assign.this Lease
or sublet all or a portion of the Premises without the prior written consent of Lessor,
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 Lessee, taking all transfers into account on a cumulative basis. Lessor
may withhold its consent to an assignment or sublease to a proposed assignee or sub-
Lessee, and Lessee agrees that Lessor shall not be unreasonable for doing so, unless
all the following criteria are met: (a) The proposed assignee's or sub-Lessee's general
financial condition, including liquidity and net worth, verified by audited financial
statements prepared by a Certified Public Accountant in conformity with Generally
Accepted Accounting Principles is equal to or greater than that of Lessee; (b) the
proposed assignee or sub-Lessee has a demonstrated merchandising capability equal
to or greater than that of Lessee as to the use for which the Premises are leased; (c) the
proposed assignee or sub-Lessee is morally and financially responsible; and (d) the
failure of Lessee's use of the Premises to fit the business plan of Lessor to promote
tourism to the City of Palm Springs; and (e) the proposed assignee or subLessee is
exempt from federal income taxation pursuant to Internal Revenue Code Sections
501(c) (1) and/or 501(c) (3) and the proposed assignee's or subLessee's proposed use
of the Premises is a tax exempt function. Any such assignment shall be subject to all of
the terms and conditions of this Lease and the proposed assignee shall assume the
obligations of Lessee under this Lease in writing in form satisfactory to Lessor. The
proposed assignee shall simultaneously provide to Lessor an estoppel certificate in the
form described in Section 12.3 hereafter. Consent by Lessor to one assignment,
subletting, occupation or use by another person shall not be deemed to be consent to
any subsequent assignment, subletting, occupation or use by another person. Any
assignment or subletting without the prior written consent of Lessor shall be void, shall
constitute a material breach of this Lease, and shall, at the option of Lessor, terminate
this Lease. Neither this Lease nor any interest therein shall be assignable as to the
interest of Lessee by operation of law.
Lessor shall be under no obligation to consider a request for Lessor's consent to
an assignment until Lessee shall have submitted in writing to Lessor a request for
Lessor's consent to such assignment together with audited financial statements of
Lessee and the proposed assignee, a history of the proposed assignee's business
experience and such other information as required by Lessor to verify that the criteria
for assignment as set forth herein are met. If Lessor approves such assignment, Lessee
shall pay to Lessor one-half (1/2) of any consideration received by Lessee for such
assignment. In addition, if Lessor determines that the Monthly Rent payable to Lessor
under this Lease is less than the fair market rental value, as determined by Lessor,
Lessor 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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10.0 DEFAULT AND REMEDIES.
10.1 Default by Lessee. 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 Lessee: (a) the failure to pay any rental
or other payment required hereunder to or on behalf of Lessor more than three (3) days
after written notice from Lessor to Lessee that Lessee has failed to pay rent when due;
(b) the failure to perform any of Lessee'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 Lessor to Lessee 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 Premises by Lessee; (d)
the making by Lessee of a general assignment for the benefit of creditors; (e) the filing
by Lessee of a voluntary petition in bankruptcy or the adjudication of Lessee as a
bankrupt; (f) the appointment of a receiver to take possession of all or substantially all
the assets of Lessee located at the Premises or of Lessee's leasehold interest in the
Premises; (g) the filing by any creditor of Lessee 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 Lessee or Lessee's
leasehold where such an attachment, execution or seizure is not discharged within sixty
(60) days. Any repetitive failure by Lessee 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 Lessee to perform its obligations
hereunder.
In the event of any such default or breach by Lessee, Lessor may at any
time thereafter, without further notice or demand, rectify or cure such default, and any
sums expended by Lessor for such purposes shall be paid by Lessee to Lessor upon
demand and as additional rental hereunder. In the event of any such default or breach
by Lessee, Lessor shall have the right (i) 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) Lessor shall have the right at any
time thereafter to elect to terminate the Lease and Lessee's right to possession
thereunder. Upon such termination, Lessor shall have the right to recover from Lessee:
(i) The worth at the time of award of the unpaid rental which
had been earned at the time of termination;
(ii) 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 Lessee proves could have been
reasonably avoided;
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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 Lessee proves could be reasonably avoided; and
(iv) Any other amount necessary to compensate the Lessor for
all the detriment proximately caused by Lessee'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 (i) 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, 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 Lessor may make to mitigate the damages caused by
Lessee's breach of this Lease shall not constitute a waiver of Lessor's right to recover
damages against Lessee hereunder, nor shall anything herein contained affect Lessor's
right to indemnification against Lessee for any liability arising prior to the termination of
this Lease for personal injuries or property damage, and Lessee hereby agrees to
indemnify and hold Lessor harmless from any such injuries and damages, including all
attomeys' fees and costs incurred by Lessor in defending any action brought against
Lessor for any recovery thereof, and in enforcing the terms and provisions of this
indemnification against Lessee.
Notwithstanding any of the foregoing, the breach of this Lease by Lessee,
or an abandonment of the Premises by Lessee, shall not constitute a termination of this
Lease, or of Lessee's right of possession hereunder, unless and until Lessor elects to
do so, and until such time Lessor 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 Lessee hereunder, as they become due. Failure of Lessor to terminate this
Lease shall not prevent Lessor from later terminating this Lease or constitute a waiver
of Lessor's right to do so.
10.2 No Waiver. Acceptance of rental hereunder shall not be deemed a
waiver of any default or a waiver of any of Lessor's remedies.
10.3 Lessor's Default. Lessor shall not be in default unless Lessor fails
to perform obligations required of Lessor within a reasonable time, but in no event later
than thirty (30) days after written notice by Lessee to Lessor and to the holder of any
first mortgage or deed of trust covering the Premises whose name and address shall
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have theretofore been furnished to Lessee in writing, specifying wherein Lessor has
failed to perform such obligation; provided, however, that if the nature of Lessor's
obligation is such that more than thirty (30) days are required for performance then
Lessor shall not be deemed in default if Lessor commences performance within a (30)
day period and thereafter diligently prosecutes the same to completion. In no event shall
Lessee have the right to terminate this Lease as a result of Lessor's default and
Lessee's remedies shall be limited to damages and/or an injunction.
11.0 CONDEMNATION. In the event a condemnation or a transfer in lieu
thereof results in a taking of any portion of the Premises, Lessor 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 Premises, Lessee may, upon written notice given within thirty (30)
days after such taking or transfer in lieu thereof, terminate this Lease. Lessee shall not
be entitled to share in any portion of the award and Lessee hereby expressly waives
any right or claim to any part thereof. Lessee shall, however, have the right to claim and
recover, only from the condemning authority (but not from Lessor), any amounts
necessary to reimburse Lessee for the cost of removing stock and fixtures. If this Lease
is not terminated as above provided, Lessor shall use a portion of the condemnation
award to restore the Premises.
12.0 MISCELLANEOUS.
12.1 Reservation of Right to Modify Property. Lessor hereby reserves
the right (but not the obligation) to renovate, modernize, rehabilitate, expand, reduce,
reconfigure, enclose and/or otherwise alter all or any portion of the Premises
(collectively "Modifications"), in such manner and at such time or times, throughout the
term of this Lease, as Lessor may, in its sole and absolute discretion, deem to be in the
best interests of the Property. Such Modifications may include, without limitation, the
right to construct new buildings on the Property for additional uses, to remove, renovate,
repair, add to, modernize or otherwise alter the building in which the Premises are
situated as well as other buildings, facilities, structures, malls, walkways, landscaping,
parking and common areas or other areas within the Property. In connection with any
and all such Modifications, Lessor may enter the Premises to the extent reasonably
required by Lessor to pursue and complete such Modifications. In addition, Lessor may
temporarily close portions of the parking and common areas and cause temporary
obstructions in connection with any Modifications. Lessee agrees that under no
circumstances shall the Modifications as to any portion of the Property or the
construction activity that takes place in the course of making the Modifications, or any
aspect thereof, including Lessor's entry into the Premises, constitute an eviction or
partial eviction of Lessee or a breach of Lessee's right to quiet enjoyment or of any
other provision of this Lease, nor entitle Lessee to damages, injunctive relief or other
equitable relief, nor entitle Lessee to any abatement or reduction in the Monthly Rental,
additional rental or other charges or sums due under this Lease; provided Lessor uses
reasonable efforts to mitigate any adverse effects on Lessee caused by the
Modifications.
12.2 Entry and Inspection. Lessee shall permit Lessor and his agentsxo4
16 C
1.
enter into and upon the Premises at all reasonable times for the purpose of inspecting
the same or for the purpose of maintaining the 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 Premises are
located any usual or ordinary "For Sale" signs or any signs for public safety as
determined by Lessor. Lessor shall be permitted to do any of the above without any
rebate of rent and without any liability to Lessee for any loss of occupation or quiet
enjoyment of the Premises thereby occasioned. Lessee shall permit Lessor, at any time
within six (6) months prior to the expiration of this Lease, to place upon the Premises
any usual or ordinary "For Lease" signs, and during such (6) month period Lessor or his
agents may, during normal business hours, enter upon said Premises and exhibit same
to prospective Lessees.
12.3 Estoppel Certificate. If, as a result of a proposed sale, assignment,
or hypothecation of the Premises or the land thereunder by Lessor, or at any other time,
an estoppel certificate shall be requested of Lessee, Lessee agrees, within ten (10)
days thereafter, to deliver such estoppel certificate in the form attached hereto as
Exhibit "C" addressed to any existing or proposed mortgagee or proposed purchaser,
and to the Lessor. Lessee 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.
12.4 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 Lessees 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 Lessee agrees to submit to the personal
jurisdiction of such court in the event of such litigation.
12.5 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.
12.6 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.
12.7 No Oral Agreements. This (i) 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. Lessee
acknowledges that no representations or warranties of any kind or nature not
specifically set forth herein have been made by Lessor or its agents or representatives.
25
17
12.8 Authority. In the event that Lessee 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. Lessee
represents and warrants to Lessor that the entering into this Lease does not violate any
provisions of any other agreement to which Lessee is bound.
12.9 Relationship of Parties. The relationship of the parties hereto is that
of Lessor and Lessee, and it is expressly understood and agreed that Lessor does not
in any way or for any purpose become a partner of Lessee in the conduct of Lessee's
business or otherwise, or a joint-venture with Lessee, 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.
12.10 Nondiscrimination. Lessee 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
Premises herein leased, nor shall the Lessee itself, or any person claiming under or
through it, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of
Lessees, Lessees, sub-Lessees, sublessees or vendees in the Premises.
12.11 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 Lessor, as specified in
Section 1.9. 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.
12.12 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.
12.13 Exhibits and Addenda. The Exhibits and Addenda attached to this
26
18
i
Lease are made a part hereof as if fully set forth herein. In the event of a conflict
between the terms and provisions of Addenda and the terms and provisions of this
Lease, the terms and provisions of the Addenda shall prevail.
27
19
IN WITNESS WHEREOF, the parties have duly executed this Lease together with
the herein referred to Exhibits which are attached hereto, on the day and year first
above written in Palm Springs, California.
"City"
ATTEST: CITY OF PALM SPRINGS, a municipal
Corporation
ames Thompson, Cit C erk
d� Ox�ZO1 �
Its:
APPROVED AS TO FORM:
AFFP,OVE0 BY CITY COUNCIL
i4-Douglas Holland, Cy Attorney
1 "Lessee"
Coachella Valley Economic Partnership
By:
Its:
By:
Its: :C b 'n
W csk 7f /-rJ-10^
28
20
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PREMISES
Being that portion of Parcel 2 of the map entitled "Parcel Map No. 15576, being a
subdivision of a portion of Lot 17, Section 13, Township 4, South, Range 4 East, San
Bernardino Base Meridian, per map of Palm Valley Colony Lands on file in map book
14, page 652, records of San Diego County, State of California, filed for record August
13, 1980 in Map Book 81, Pages 37 and 38, Records of Riverside County, described as
follows: RPN
Beginning at a point on the South right-of-way line of Tahquitz-McCallum Way, said
point being the Northeast corner of said Parcel 2;
Thence leaving the South right-of-way line of Tahquitz-McCallum Way, South 00012'58"
West 303.00 feet along the East line of said Parcel 2;
Thence leaving the East line of said Parcel 2, North 89059'28" West 200.34 feet;
Thence South 00012'58" West 7.00 feet;
Thence North 89°59'28" West 83.00 feet to the West line of said Parcel 2;
Thence along the West line of said Parcel 2, North 00009'50" East 290.00 feet, to the
beginning of a curve concave to the Southeast having a radius of 20.00 feet;
Thence Northeasterly 31.36 feet along said curve through a central angle of 89°50'42"
to a point on the South right-of-way line of Tahquitz-McCallum Way;
Thence along the South right-of-way line of Tahquitz-McCallum Way, South 89059'28"
East 263.38 feet to the POINT OF BEGINNING.
Reserving an Easement for the existing Tower and any necessary devices and
appurtenances being used for radio communication and the right of ingress and egress
over, under, along and across the South boundary of the above described parcel of
land, to maintain, repair, and replace said Tower and any necessary devices and
appurtenances.
Also, reserving easements for the existing utility facilities together with the right-of-
ingress and egress over, under, along and across the South boundary of the above
described parcel of land, to maintain, repair, and replace any of the utility facilities as
needed.
EXHIBIT"A" 29
LEGAL DESCRIPTION OF PREMISES
535212.1
EXHIBIT "B"
PLOT PLAN OF DEMISED PREMISES
EXHIBIT`B" 30
PLOT PLAN OF DEMISED PREMISES
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EXHIBIT "C"
ESTOPPEL CERTIFICATE
Lessee: COACHELLA VALLEY ECONOMIC PARTNERSHIP
Lessor: THE CITY OF PALM SPRINGS, a municipal corporation
Date of Lease:
Premises: 3111 E. TAHQUITZ CANYON WAY, PALM SPRINGS CA 92292
To:
The undersigned hereby certifies as follows:
1. The undersigned is the Lessee ("Lessee") under the above-referenced
lease ("Lease") covering the above-referenced premises ("Premises").
2. The Lease constitutes the entire agreement between Lessor and Lessee
with respect to the 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 201_ and, including any
presently exercised option or renewal term, will expire on 201
Lessee has accepted possession of the 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 Premises by Lessee have been completed
and accepted by Lessor and any Lessee construction allowances have been paid in full.
4. As of this date, to the best of Lessee'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 Lessee or Lessor. To the best of
Lessee's knowledge, no claim, controversy, dispute, quarrel or disagreement exists
between Lessee and Lessor.
5. Lessee is currently obligated to pay Annual Rent in installments of
$ per month, and such monthly installments have been paid not more
than one month in advance. To the best of Lessee's knowledge, no other rent has
been paid in advance and Lessee has no claim or defense against Lessor under the
Lease and is asserting no offsets or credits against either the rent or Lessor. Lessee
has no claim against Lessor for any security or other deposits except $ which
was paid pursuant to the Lease.
6. Lessee has no option or preferential right to lease or occupy additional
EXFIIBIT"C, 32
ESTOPPEL CERTIFICATE
space within the Property of which the Premises are a part. Lessee has no option or
preferential right to purchase all of any part of the Premises nor any right or interest
with respect to the Premises other than as Lessee under the Lease. Lessee has no
right to renew or extend the term of the Lease except as set forth in the Lease.
7. Lessee has made no agreements with Lessor 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 Lessee 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
Lessee.
9. All insurance which Lessee is required to maintain under the Lease has
been obtained by Lessee and is in full force and effect and all premiums with respect
thereto have been paid.
Dated this day of 201 .
By:
Its:
33
EXHIBIT"C'
ESTOPPEL CERTIFICATE
EXHIBIT "D"
RULES AND REGULATIONS
1. All loading and unloading of goods shall be done only at the times, in the
areas and through the entrances reasonably designated for such purposes by Lessor.
2. The delivery or shipping of merchandise, supplies and fixtures to and from
the Premises shall be subject to such rules and regulations as in the reasonable
judgment of Lessor are necessary for the proper operation of the Premises or of the
Property generally.
3. All of Lessee's refuse and rubbish shall be removed to central trash bins
located in the Property, at Lessee's sole cost and expense.
4. No radio or television or other similar device audible outside the Premises
shall be installed without obtaining in each instance the written consent of Lessor. No
aerial shall be erected on the roof or exterior walls of the Premises or on the grounds of
the Property without first obtaining in each instance the written consent of Lessor which
consent shall not be unreasonably withheld or delayed. Any aerial so installed without
such written consent shall be subject to removal without notice at any time.
5. No loudspeakers, televisions, phonographs, radios or other devices shall
be used in a manner so as to be heard or seen outside of the Premises without first
obtaining in each instance written consent of Lessor.
6. The outside sidewalks and loading areas immediately adjoining the
Premises shall be kept clean and free from dirt and rubbish by Lessee to the reasonable
satisfaction of Lessor, and Lessee shall not place or permit any obstructions or
merchandise in such areas, except to the extent specifically permitted by the provisions
of Lessees Sublease.
7. Lessee shall not burn any trash or garbage of any kind in or about the
Premises or the Property generally.
8. Lessee will not allow animals, except seeing-eye dogs, in, about or upon
the Premises.
9. Lessee shall not use, and shall not allow anyone else to use, the Premises
as a habitation. Such prohibition shall include, without limitation, sleeping, eating or
bathing.
1. Lessee shall not place any rubbish or other matter outside any building
within the Property, except in such containers as are authorized from time to time by
Lessor.
EXHIBIT"M 34
RULES AND REGULATIONS
EXHIBIT "E"
LEASEHOLD IMPROVEMENT AGREEMENT
3111 East Tahquitz Canyon Way
Palm Springs, California
This Leasehold Improvement Agreement shall set forth the terms and conditions relating
to the construction of the Leasehold Improvements in the Premises. This Leasehold
Improvement Agreement is essentially organized chronologically and addresses the
issues of the construction of the Premises, in sequence, as such issues will arise during
the actual construction of the Premises. All references in this Leasehold Improvement
Agreement to Paragraphs or Sections of the "Lease" shall mean the relevant portion
of that certain Lease to which this Leasehold Improvement Agreement is attached as
Exhibit "E" and of which this Leasehold Improvement Agreement forms a part, and all
references in the Lease to Sections of "Leasehold Improvement Agreement" shall mean
the relevant portion of this Leasehold Improvement Agreement and all references in this
Leasehold Improvement Agreement to Sections of this Leasehold Improvement
Agreement shall mean the relevant portion of this Leasehold Improvement
Agreement.
SECTION 1- LESSOR'S OWNERSHIP OF PREMISES
1.1 Lessor has constructed that certain free standing building described in
Section 1.1 of the Lease, hereinafter referred to as the "Property."
SECTION 2- CONSTRUCTION DRAWINGS FOR THE PREMISES
2.1 Lessee shall, at its sole cost and expense, and subject to
reimbursement as hereinafter set forth, construct the improvements in the
Premises (the "Leasehold Improvements") pursuant to those certain blueprints, floor
and space plans, specification and finalize construction prices, collectively, the approved
'Working Drawings" prepared by Lessee's architect. Lessee shall make no changes or
modifications to the Approved Working Drawings without the prior written consent of
Lessor, which consent may be withheld if such change or modification would directly or
indirectly delay the "Substantial Completion," as that term is defined in Section 8.1 of
this Leasehold Improvement Agreement, of the Premises or increase the cost of
designing or constructing the Leasehold Improvements. Any changes or
modifications approved by the Lessor shall be at Lessee's sole cost and expense.
SECTION 3 - CONSTRUCTION DRAWINGS
3.1 Selection of Architect/Construction Drawinas. Lessee shall retain
an architect or space planner (the "Architect") to prepare the Construction Drawings.
Lessee shall retain the engineering consultants (the "Engineers") to prepare all
plans and engineering working drawings relating to the structural, mechanical,
electrical, plumbing, HVAC, life safety, and sprinkler work of the Leasehold
Improvements. The plans and drawings to be prepared by Architect and the
Engineers hereunder shall be known collectively as the "Construction Drawings."
EXHIBIT"E" 35
LEASEHOLD IMPROVEMENT AGREEMENT
All Construction Drawings shall comply with the drawing format and specifications as
determined by Lessee, and shall be subject to Lessor's approval. Lessee and Architect
shall verify, in the field, the dimensions and conditions as shown on the relevant
portions of the Base Building Plans, and Lessee and Architect shall be solely
responsible for the same, and Lessor shall have no responsibility in connection
therewith. Lessor's review of the Construction Drawings as set forth in this Section 3,
shall be for its sole purpose and shall not imply Lessor's review of the same, or obligate
Lessee to review the same, for quality, design, Code compliance or other like matters.
Accordingly, notwithstanding that any Construction Drawings are reviewed by Lessor or
its agents and consultants, and notwithstanding any advice or assistance which may be
rendered to Lessee by Lessor or Lessor's agents or consultants, Lessor shall have no
liability whatsoever in connection therewith and shall not be responsible for any
omissions or errors contained in the Construction Drawings, and Lessee's waiver and
indemnity set forth in this Lease shall specifically apply to the Construction Drawings.
3.2 Final Space Plan. Prior to execution of the Lease by Lessor,
Lessee and the Architect shall prepare the final space plan for Leasehold
Improvements in the Premises (collectively, the "Final Space Plan"), which Final Space
Plan shall include a layout and designation of all offices, rooms and other partitioning,
their intended use, and equipment to be contained therein, and shall deliver the Final
Space Plan Lessor for Lessors approval.
3.3 Final Working Drawings. Within ten (10) working days after execution
of the Lease by Lessor and delivery of a copy of the Lease to Lessee, Lessee, the
Architect and the Engineers shall complete the architectural and engineering drawings
for the Leasehold Improvements, and the final architectural working drawings in a form
which is complete to allow subcontractors to perform the work and to obtain all applicable
permits (collectively, the "Final Working Drawings") and shall submit the same to Lessor
for Lessors approval.
3.4 Permits. The Final Working Drawings shall be approved by Lessor (the
"Approved Working Drawings") prior to the commencement of the construction of the
Leasehold Improvements. Lessee shall immediately submit the Approved Working
Drawings to the appropriate municipal authorities for all applicable building permits
necessary to commence and fully complete the construction of the Leasehold
Improvements (the "Permits"). Lessee hereby agrees that neither Lessor nor Lessor's
agents or consultants shall be responsible for obtaining any building permit or certificate
of occupancy for the Premises and that the obtaining of the same shall be Lessees
responsibility; provided however that Lessor shall, in any event, cooperate with
Lessee in executing permit applications and performing other ministerial acts
reasonably necessary to enable Lessee to obtain any such permit or certificate of
occupancy. No changes, modifications or alterations in the Approved Working Drawings
may be made without the prior written consent of Lessor, provided that Lessor may
withhold its consent, in its sole discretion, teeny change in the Approved Working
Drawings if such change would directly or indirectly delay the "Substantial
Completion" of the Premises as that term is defined in Section 6.1 of this Leasehold
Improvement Agreement. Lessor shall waive all city and municipal permit fees that it
EXHIBIT"E" 36
LEASEHOLD DAPROVEMENT AGREEMENT
has direct control over.
3.5 Cooperation. Lessor shall use its best, good faith, efforts and all due
diligence to cooperate with the Architect, the Engineers, and Lessee to complete all
phases of the Construction Drawings and the permitting process and to receive the
permits, and approval of the "Construction Costs," as set forth in Section 7.1 below, as
soon as possible after the execution of the Lease, and, in that regard, shall meet with
Lessee on a scheduled basis to be determined by Lessor, to discuss Lessees progress
in connection with the same. Upon Lessor's execution of this Lease, Lessee shall
provide Lessor with a construction schedule including time projections for planning,
entitlement process, related preparation and construction of the Leasehold
Improvements.
SECTION 4-LESSEE COVENANTS
4.1 Lessee recognizes, understands and covenants that any and all
improvements shall be undertaken according to the City of Palm Springs codes.
4.2 Lessee recognizes, understands and covenants that improvements
contemplated herein may be subject to the provisions contained in the California Labor
Code (commencing with Section 1720) relating to general prevailing wage rates and
other pertinent provisions therein.
4.3 Lessee shall comply and stay current with all applicable building
standards, which may change from time to time, including but not limited to, the Americans
with Disabilities Act of 1990 and any regulations issued pursuant thereto in providing
improvements contemplated herein.
SECTION 5 - CONSTRUCTION
5.1 Lessee shall diligently pursue the planning, entitlement process,
related preparation and construction of the Leasehold Improvements. Lessee shall
provide Lessor with periodic written progress reports, which reports shall contain,
without limitation, updated information relative to permit approvals and construction.
5.2 Lessee shall notify Lessor, in writing, forthwith when such planning,
entitlement process, related preparation and construction of the Leasehold
Improvements have been completed, a Certificate of Occupancy has been issued by
the City of Palm Springs, or if no new Certificate of Occupancy is required, then upon
acceptance of the improvements by the City of Palm Springs upon final inspection, all
required permits have been obtained and electrical power has been turned on.
5.3 In addition, immediately after the Substantial Completion of the
Premises, Lessee shall have prepared and delivered to the Lessor (1) a complete
set of "As-Built" drawings showing every detail, latent or otherwise, of such
improvements, including but not limited to electrical circuitry and plumbing, and (2) the
same complete set of"As-Built' drawings on a computer disk in a CADD format.
EXHIBIT"B" 37
LEASEHOLD IMPROVEMENT AGREEMENT
5.4 Lessee has received a preliminary Asbestos report from the Lessor.
Until demolition and construction efforts begin several elements of the report remain
inconclusive. Should the asbestos remediation and mitigation costs exceed 20% of the
total demolition cost for the total effort the Lessor shall pay all amounts in excess.
Lessor shall be provided access to all reports and findings that lead to increased
abatement costs.
SECTION 6 - COMPLETION OF THE LESSOR IMPROVEMENTS: LEASE
COMMENCEMENT DATE
6.1 For purposes of this Lease, "Substantial Completion" of the
Premises shall occur upon the completion of construction of the Leasehold
Improvements in the Premises pursuant to the Approved Working Drawings, with the
exception of any punch list items and any Lessee fixtures, work-stations, built-in
furniture, or equipment to be installed by Lessee, provided however, that such punch list
items do not preclude the useful occupancy of the Promises. Useful occupancy herein
defined as the Premises being safe, free of hazard, free of any risk to the safety of Lessee
employees and available for the use set forth in the Lease.
6.2 The Lease Commencement Date shall occur as set forth in Section
1.3 of the Lease.
SECTION 7 - CONSTRUCTION COSTS
7.1 Prior to Lessor's execution of this Lease, Lessee shall provide Lessor
an itemized cost breakdown of the construction costs of the leasehold improvements,
attached hereto and made a part hereof as Addendum 1. The total costs of all the
Leasehold Improvements subject to reimbursement including but not limited to
fixtures, equipment architectural fees and permits, and as reflected in the cost
breakdowns.
7.2 Upon completion of the Leasehold Improvements and within fourteen
(14) days of Substantial Completion and acceptance of the Premises by Lesseer,
Lessee shall provide Lessor with an itemized statement, similar to the cost breakdown
form attached as Addendum 1, of the actual costs of the Leasehold Improvements
incurred by Lessee, accompanied by vendor, contractor, subcontractor, material man
invoices if requested by the Lessor along with request for reimbursement of actual costs
incurred.
SECTION 8- REIMBURSEMENT FOR LEASEHOLD IMPROVEMENTS
8.1 As a credit against the base rent as stated in the Lease, Lessor shall
reimburse Lessee, as hereinafter set forth, the actual cost of the Leasehold
Improvements as substantiated by the itemized statement required in Section 7.2 above
and related supporting documentation as requested by the Lessor. In no event shall
Lessee be reimbursed an amount in excess of actual costs pursuant to Section 7.2 .
8.2 Lessor shall credit Lessee an amount not to exceed the
EXHIBIT"E" 38
LEASEHOLD IMPROVEMENT AGREEMENT
r
monthly lease amount for executed and exclusive square footage occupied by
Lessee as reimbursement for the actual costs of improvements made by Lessee. In no
event shall Lessee be reimbursed any amount in excess of actual costs nor in excess
of the total amount set forth in Sections 7.1 and 7.2 above.
8.3 In the event that Lessor terminates the Lease as provided in Section
2.5 of the Lease, Lessor agrees to pay Lessee upon such termination the balance of all
payments which would otherwise be due pursuant to Section 8.2 for Leasehold
Improvements.
SECTION 9- MISCELLANEOUS
9.1 Lessee's Entry Prior to Substantial Completion. Provided that Lessor
and its agents do not interfere with Lessee's work in the Premises, Lessor shall allow
Lessee access to the Premises prior to the Substantial Completion of the Premises
for the purpose of Lessee installing standard equipment or fixtures (including
Lessee's data and telephone equipment) in the Premises. Prior to Lessee's entry into
the Premises as permitted by the terms of this Section 9.1, Lessee shall submit a
schedule to Lessee, for approval, which schedule shall detail the timing and purpose of
Lessee's entry. Lessee shall hold Lessor harmless from and indemnify, protect and
defend Lessee against any loss or damage to the Premises and against injury to any
persons caused by Lessee's actions pursuant to this Section 9.1.
9.2 Lessor's Representative. Lessor has designated its Director of
Community & Economic Development as its sole representative with respect to the
matters set forth in this Leasehold Improvement Agreement, who, until further notice to
Lessee, shall have full authority and responsibility to act on behalf of the Lessor as
required in this Leasehold Improvement Agreement.
9.3 Lessees Representative. Lessee has designated its Chief Operating
Officer as its sole representative with respect to the matters set forth in this Leasehold
Improvement Agreement, who, until further notice to Lessor, shall have full authority and
responsibility to act on behalf of the Lessee as required in this Leasehold Improvement
Agreement.
9.4 Lessee's Agents. All subcontractors, laborers, material men, and
suppliers retained directly by Lessee shall conduct their activities in and around the
Premises, in a harmonious relationship with all other subcontractors, laborers, material
men and suppliers at the Premises.
9.5 Time of the Essence in this Leasehold Improvement Agreement.
Unless otherwise indicated, all references herein to a "number of days" shall mean and
refer to calendar days. In all instances where Lessor is required to approve, if no written
notice of approval is given within the stated time period, at the end of such period the
item shall automatically be deemed not approved.
9.6 Lessee's Lease Default, Notwithstanding any provision to the contrary
contained in this Lease, if an event of default by Lessee of this Leasehold Improvement
Agreement, and said default has occurred at any time on or before the Substantial
Completion of the Premises, then (i) in addition to all other rights and remedies granted
EXHIBIT"E" 39
LEASEHOLD IMPROVEMENT AGREEMENT
to Lessor pursuant to the Lease, Lessor shall have the right to cause Lessee to cease
the construction of the Leasehold Improvements and (ii) all other obligations of
Lessor under the terms of this Leasehold Improvement Agreement shall be forgiven
until such time as such default is cured pursuant to the terms of the Lease or this
Leasehold Improvement Agreement.
EXHIBIT"E" 40
LEASEHOLD IMPROVEMENT AGREEMENT