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12/1/2004 - STAFF REPORTS (10)
DATE: December 1, 2004 TO: City Council FROM: Director of Aviation CONSENT TO ASSIGNMENT OF LEASE AND OPTION TO LEASE NO. 1764 AND CONSENT TO ENCUMBRANCE OF GROUND LEASE INTEREST AND ESTOPPEL RECOMMENDATION: That the City Council approve a Consent to Assignment of Lease and Option to Lease No. 1764 and Consent to Encumbrance of Ground Lease Interest and Estoppel between the City of Palm Springs ("City"), and North America Capital Holdings Company dba Atlantic Aviation ("Assignee") subject to a form approved by the City Attorney. SUMMARY: This action will Consent to the Assignment of Lease and Option to Lease No. 1764 and Consent to Encumbrance of Ground Lease Interest and Estoppel between the City of Palm Springs ("City") and North America Capital Holdings Company dba Atlantic Aviation. ("Assignee") BACKGROUND: The City of Palm Springs has been asked to approve the proposed assignment of a leasehold interest of a Fixed Base Operator (FBO) at the Palm Springs International Airport(PSP). The FBO is presently leased to Million Air Palm Springs(Palm Springs FBO TWO), a wholly owned subsidiary of General Aviation Holdings LLC (General Aviation). Under a purchase agreement, General Aviation will be acquired by North America Capital Holdings Company (NACHC), a wholly owned subsidiary of Macquarie Bank Limited. It is anticipated that the sale of this facility will allow the operation to grow and prosper as it should. In an effort to ensure the financial strength of the new investment partners and to justify the assignment, Keyser Marston Associates, Inc.was retained to provide a general review of the conditions for assignment as set forth by the current lease. They provided a review of the financial statements of NACHC ("Assignee") and that of Palm Springs FBO TWO/General Aviation, and a summary review of the operational history of NACHC with respect to fixed base operations. The review indicates that Macquarie acquired 100% of the stock of NACHC through acquisition of Executive Air Support Inc.,which was a parent company of Atlantic Aviation. With this acquisition, Macquarie has two FBO chains under its management: Atlantic Aviation (10 FBO's) and AvPorts (5 FBO's, 1 heliport &5 airport management contracts). City Council Meeting December 1,2004 Page 2 of 2 The "Assignee" will be directed by Louis T. Pepper, CEO of Atlantic Aviation Services. Atlantic Aviation is the second largest Fixed Base Operator(FBO) service company in the United States and is considered an industry leader within the general aviation community. Atlantic Aviation is headquartered in Dallas, Texas, and provides fuel, hangar services, flight line support services, aircraft maintenance and aircraft brokerage services to business aircraft operators at ten FBO across the country. The oldest of Atlantic Aviation's airport leases has been held since 1946. The Keyser Marston review indicated that Macquarie is significantly larger and fiscally stronger than General Aviation. The reported assets and liabilities of Atlantic Aviation were also separately identified in the pro forma balance sheets, and in the opinion of Keyser Marston, provides a more reasonable comparison to General Aviation. In a press release issued by Atlantic Aviation, the purchase by Macquarie Bank would not result in a change in name, management or business practices of Atlantic Aviation. Macquarie intends that the Palm Springs FBO will continue to be managed by its current staff and report to the management at Atlantic Aviation. The Consent to Assignment of Lease and Option to Lease No. 1764 and Consent to Encumbrance of Ground Lease and Estoppel, prepared by the City Attorney's office, in coordination with staff and the referenced parties, is attached for your review. The Assignment will incorporate: that the new entity will assume all obligations of the Lease; that the City's consent of the Assignment is subject to the purchase of assets and other related requirements of the Lease in connection with the transactions contemplated by the Asset Purchase Agreement and is being transferred and assigned pursuant to the terms of the Asset Purchase Agreement. The proposed "Assignee" will also cover all legal expenses related to this transaction. The City Attorney's office and the Director of Finance have reviewed the financial statements and draft Asset Purchase Agreement. At its December 1, 2004 meeting the yt Ai pa -Co 1 fission r. comrrfen ed City Council approval of this transaction. RICHARD S. WALSH, A. A. E. Director of Aviation APPROVED: APPROVED,, City Attorney City Manage Attachment: 1. Consent to Assignment of Lease and Option to Lease No. 1764 2. Consent to Encumbrance of Ground Lease Interest and Estoppel 3. Minute Order REVIEWED BY DEPT. OF FINANCE N ESTOPPEL AND CONSENT TO TRANSFER OF OWNERSHIP INTERESTS OF LESSEE REGARDING LEASE AND OPTION TO LEASE NO. 1764 This Estoppel and Consent Regarding Lease and Option to Lease No. 1764 (this "Estoppel and Consent") is made and entered into as of the l't day of December, 2004, among the City of Palm Springs ("City"), Palm Springs FBO Two LLC, a Delaware limited liability company, d.b.a. Million Air Palm Springs ("Lessee"), and North America Capital Holding Company("Purchaser"), with reference to the following facts and purposes. RECITALS A. City and Lessee are parties to that certain Indenture of Lease and Aeronautical Concession Agreement, effective as of December 15, 1981, a memorandum of which was recorded on July 11, 1989, as Instrument No. 229437, Official Records of Riverside County, California, as duly amended, supplemented, assigned and extended (collectively,the"Lease") covering those certain parcels of real property within the Palm Springs International Airport ("Airport"),which parcels are more particularly described in Exhibit A attached hereto and incorporated herein by this reference("Premises"). B. City and Lessee are also parties to that certain Option to Lease dated as of September 19, 2001 (the "Option") covering that certain parcel of real property within the Airport, which parcel is more particularly described in Exhibits A and B attached to the Option. C. General Aviation Holdings, LLC ("General Aviation"), the parent company of Lessee, has advised the City of a certain Membership Interest Purchase Agreement by and between Purchaser and the members of General Aviation("Seller"), dated as of August 18, 2004 (the"Purchase Agreement"),pursuant to which Purchaser has agreed, subject to certain conditions, to acquire all of the issued and outstanding membership interests of General Aviation and, as result of such transaction, General Aviation would become a wholly-owned subsidiary of Purchaser. Promptly following this transaction,Purchaser would be acquired by Macquarie Infrastructure Company("MIC"). A description of MIC is attached as Exhibit B hereto. As a result of the Purchase Agreement, Lessee will remain the lessee under the Lease,but the ownership of Lessee's parent company(and, consequently, control of Lessee) will be transferred from Seller to Purchaser. After the closing under the Purchase Agreement, the ownership of Purchaser will subsequently be transferred to MIC (all of such transactions described in this paragraph are referred to collectively as the"Acquisition"). D. Lessee and Purchaser desire to obtain the City's consent to the transfer of ownership of Lessee's parent company(and, consequently, control of Lessee) to Purchaser and the ownership of Purchaser to MIC, as contemplated by the Acquisition. E. Lessee, Seller and Purchaser have represented to the City that, after Purchaser takes ownership of General Aviation(and, consequently, of Lessee), Lessee will continue to be adequately capitalized and will,to the extent commercially practical,be managed by the same MC#1293301 vl LA1:1059095.5 management team that has been operating Lessee's business operation under the Lease and the Option(other than Eric Affeldt, the current President of Lessee,who will resign from such position effective as of the closing date under the Purchase Agreement), and thus the expertise and financial capabilities of Lessee, as owned by Purchaser, to provide the services under the Lease and the Option are the same as, or better than, those of Lessee as owned by Seller. F. Based upon such representations, City wishes to consent to such assignment of ownership of General Aviation, and consequently, of Lessee, subject to the terms of this Estoppel and Consent. 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, Lessee and Purchaser agree as follows: 1. Representations. Lessee represents and certifies as of the date hereof the following: A. To the best of Lessee's knowledge,no default presently exists under the Lease or the Option and no state of facts exist which would constitute a default under the Lease or the Option; provided, that Lessee will take those actions set forth in Section 1(C). B. All the above recitals are true and correct. C. Lessee will take the following actions: (i) No later than December 20, 2004,Lessee will replace a garage door that had previously been installed some time prior to 1995 in a storage shed adjacent to a T-hangar on the Premises. Lessee will replace such garage door with sheet metal, such that the storage shed will be consistent in appearance with the other storage sheds and adjacent T-hangars on the Premises. (ii) Lessee will continue diligently to pursue currently pending litigation to evict Domenic Tallarita, Sr. from T-Hangars Nos. 14, 15 and 16 (the"T- Hangars") (Riverside Superior Court, Case No. INC 046946). The parties are simultaneously negotiating a possible settlement of the litigation which, if agreed upon,may result in execution of a Stipulation for Entry of Judgment between Lessee and Mr. Tallarita governing Mr. Tallarita's scheduled vacation of the T-Hangars. As proposed, the Stipulation would require Mr. Tallarita to vacate two of the three enumerated T-Hangars promptly, and no later than approximately 30 days after execution of the Stipulation. Mr. Tallarita would then vacate the third and final T-Hangar (which T-Hangar is being used by Mr. Tallarita to store an airplane, in compliance with the use provisions of the Lease)by an agreed upon date certain; provided,however,that Lessee would retain the right to terminate Mr. Tallarita's occupancy of that third T-Hangar if Mr. Tallarita violates the use provisions of his sublease by using the T-Hangar in violation of any Lease terms or City laws, rules or regulations. P, LA1:1059095.5 (iii) On or before December 31, 2005, Lessee will cause the aircraft ramp area at the Premises to be cleaned and recoated, consistent with the bid, dated April 30, 2004, provided by Wheeler Paving, hie. to Lessee, a copy of which bid has previously been provided to Airport officials. 2. Consent and Related Agreements. A. Lessee and Purchaser acknowledge that they have received a copy of the Lease and the Option and are fully familiar with their terms. B. Effective as of the Closing Date referenced in the Purchase Agreement (the "Closing Date"), City, as lessor under the Lease and optionor under the Option, hereby certifies and represents to Purchaser and its affiliates as follows: (i) Attached hereto as Exhibit C is a true, correct and complete copy of the Lease and the Option, and, together,represent the entire agreement between the City and the Lessee; (ii) To the knowledge of the City,neither the City nor the Lessee is in breach of or default under the Lease or the Option and, to the knowledge of the City,no event has occurred which, with notice or the passage of time, or both, would constitute a breach of or default under, or permit termination or modification of,the Lease or the Option; provided, that Lessee will take those actions described in Section 1(C); (iii) The City has not repudiated any provision of the Lease or the Option; (iv) To the knowledge of the City, the Lease and the Option are in full force and effect and there are no disputes regarding any provision of the Lease or the Option; (v) The City hereby consents to the change of control of General Aviation and Lessee as a result of the Acquisition, including the transfer of Purchaser to MIC, and confirms that such Acquisition shall not constitute or result in a breach of or default under the Lease or the Option; (vi) The City further acknowledges that the Acquisition may be funded, in part,with debt from one or more lenders that may, as a condition to making such funds available,require security interests in, or otherwise encumber, the membership interests of General Aviation and Lessee, and/or require a pledge of the Lease as additional security for such loans; provided, that, all encumbrances of the leasehold interest shall comply with the requirements of Article XI of the Lease. (vii) The City's current notice address is: Palm Springs International Airport Attn: Director of Aviation LA1:1059095.5 l� v 3400 E Tahquitz Canyon Way, Suite OFC Palm Springs, California 92262 With a copy to: Aleshire &Wynder, LLP Attention: David Aleshire, Esq. 18881 Von Kaman Avenue Tower 17, Suite 400 Irvine, California 92612 C. Upon the Closing Date, Lessee shall remain fully liable under the Lease and the Option, and shall continue to perform all duties and obligations required to be performed under the Lease and the Option,respectively. D. Purchaser acknowledges and agrees that the Lease and the Option shall continue to control the obligations of Lessee and City. 3. Payment of City Costs. In consideration for City's review and consideration of the Purchase Agreement and Acquisition, as proposed by Lessee, Seller and Purchaser, Seller has previously paid to City the sum of Five Thousand Dollars ($5,000) ("Review Fee"), which Review Fee reflects, and Lessee and Seller acknowledge and agree reflects, the City's actual cost and attorneys' fees of reviewing all documents in connection with the Acquisition contemplated hereunder. 4. Miscellaneous. The person(s) executing this Estoppel and Consent on behalf of the parties hereto warrant that they are duly authorized to execute and deliver this Estoppel and Consent on behalf of said party. In this Estoppel and Consent,where there is a representation based on the City's knowledge, that representation is made solely upon the actual knowledge or awareness of the City following such consultation with current airport staff as the undersigned has deemed appropriate. The parties hereto agree that, except for the additional obligations set forth in Section 1(C) above,the terms of the Lease and the Option shall remain unchanged and in full force and effect, and such terms and conditions of the Lease and the Option shall control over any inconsistent provision herein or in any other agreement between Lessee and Purchaser or Lessee and the City. [Signatures on Next Page] LA1:1059095.5 �) 11/23/2004 10:43 FAX 949 223 1180 ALESHIRE & WVN9ER, LLP 12 008/010 IN WI 1 NI?SS WPIHIRFEOP, the pnr('ies hurcfo have executed and delivered this Estoppel and C;onserit as 0I'the date written 'above;. "City, ATTEST: CITY 1 Y O PAI.M SPRINGS, u C aliliar,tia muaucipal corlroratiotx C lurk City Nfonager APPROVED A.� TO�PORM: ,Jr <Yly Mtorney "Purchaser" "Lessee" North America C'apilal I I0lding Company, n PALM Sl'RIN q PI3O TWO l LC'', £a Delawa i Delawarc corporation limited liabiliiy company Its: y _ ._........----- Ilse ..............„-...BY: 11s: ........ BY: .... Its: Corpurotlons rcrluiro two notarized si;;lncitun:rr One horn each of Ihu lollowu'q,1 A. Ch(-tinrran cd ROCKI,Prosirhent,or any vic.o: I•riasldonl:ANI')14.4cx^u'a1 City,AIt:,1"orrt SwC e:lcny,Ireaoaner, Al,IShanl I'r<':cuurr,r,cir Chu.�l rinnnc•inI(afticof). county(il )SS County ot,,,,,,,,, Jzs C)n_._. .. kuaorrIrur. _. On _..-....bcfncrno. -------- ---- -_._.. pormn'rally nt',l xrurad he rsonolly cippeued ...,...._ _ _........... ., .............. ..__ polsonnlly known na rv!l ivfr4ly kt'iown o me (or),,covert to me on trier b(niv,of m(; (of r)royod lu rru) on tho, (J(7pi!, of SUIiSIUCiUry 5(�1i51(ac,;loly evidonu.") Io I,m Ihu porsun(�) whov: evide'n(u) to be he persal(s) whose nar'ne(s) is/rues nurrw(.) Wale ,ubscnbud to th'I within instrument and suh,cribn,.d to the within instrument and ocknowlexdded orknowledcle d tc. m(- that hu/sheJthaey exefeutod the to rne• Thal he/Shu/Ifley execuled Ihu Surne in sur'nc• In hls/hut/li 61 authorized �upcldly(ies), and Ihal his/her/thoir outhorbcd r.apoclty(ins], and chat by by hL/hni/their sinnaturofs) on tho, instrument Iho N.01E Ulhulr .Mgn(JILIW(5) on ill<? insimr and ]fit, p[-rion(q, rwrvpnjV), of 11w (:nllly upon nriit,ll el wniCN 1170 or Ihu unlily upon bchull of which the; person(;) u<�lud, Pulson(s) acfad,uxuuuled the llr lruineril, exeuuhed Ifw Irwiumerll• WITNE55 my nand or)(]Offi(:iol Sr-tnl WII NI'SS my hand and ollir.Iul socil. Notary Siunatur( ..........-„ „..................... Notary SI(,7.nalurc . .......--,-.............. Notary Soot; Notary Seal; State of 1 State of } County of }ss County of )ss On before me, On before me, , personally appeared personally appeared personally known to me (or proved to me on the basis of personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and names) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),and that some in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the by his/her/their signature(s) on the instrument the person(s),or the entity upon behalf of which the person(s), or the entity upon behalf of which the persons) acted,executed the instrument. person(s) acted,executed the instrument. WITNESS my hand and official seal. WITNESS my hand and official seal. Notary Signature: Notary Signature: Notary Seal: Notary Seal: LAL1059095.5 19 U EXHIBIT A Description of Premises (See attached.) ' 1 \ LAI:1059095.5 Lh EXHIBIT A THE LAND REFERRED TO IN ITHIS REPORT IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF RIVERSIDE, CITY OF PALM SPRINGS AND IS DESCRIBED AS FOLLOWS : PARCEL 1: THAT PORTION OF THE EAST 1/2 OF SECTION 18, TOWNSHIP 4 SOUTH, RANGE 5 EAST, BAN BERNARDINO BASE AND MERIDIAN, IN THE CITY OF PALM SPRINGS, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS; BEGINNING AT THE SOUTHEAST CORNER OF SAID SECTION 18, SAID POINT BEING THE POINT OF INTERSECTYON OF THE CENTERLINE OF RAMON ROAD AND BOGIE ROAD) THENCE NORTH 0 DEGREES 17' 49" WEST, ALONG THE CENTERLINE OF BOGIE ROAD, BEING THE EAST LINE OF SAID SECTION 18, A DISTANCE OF 63 .03 FEET TO THE BEGINNING OF TANGENT CURVE CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 4830.00 FEET; THENCE NORTHWESTERLY ALONG THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 26 DEGREES 31' 24", A DISTANCE OF 2245 .16 FEET, TO A POINT ON THE ARC OF SAID CURVE, A RADIAL LINE PASSING THROUGH SAID POINT HEARS NORTH 63 DEGREES 10' 47" EAST; THENCE SOUTH 63 DEGREES 10' 47" WEST, ALONG SAID RADIAL LINE A DISTANCE OF 50 .00 FEET TO THE TRUE POINT OF BEGINNING; SAID POINT BEING HEREINAFTER KNOWN AND DESIGNATED AS POINT "A" ; THENCE CONTINUING SOUTH 63 DEGREES 10' 47" WEST, ALONG SAID RADIAL LINE, A DISTANCE OF 489.05 FEET; THENCE NORTH 36 DEGREES 32' 13" WEST, A DISTANCE OF 1581.47 FEET; THENCE NORTH 53 DEGREES 27' 47" EAST, A DISTANCE OF 550 . 88 FEET TO A POINT ON THE SOUTHWESTERLY RIGHT-OF-WAY LINE OF BOGIE ROAD; THENCE SOUTH 36 DEGREES 32. 08" EAST, ALONG THE SOUTHERLY RIGHT-OF- WAY LINE OF SAID BOGIE ROAD, A DISTANCE OF 853.99 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 4800 FEET; THENCE, SOUTHEASTERLY ALONG THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 09 DEGREES 42' 5511, A DISTANCE OF 813 .90 FEET TO THE TRUE POINT OF BEGINNING. PARCEL 2• THAT PORTION OF THE SOUTHEAST 1/4 OF SECTION 18, 4 SOUTH, RANGE 5 EAST, SAN BERNARDINO SASE AND MERIDIAN, IN THE CITY OF PALM SPRINGS, COUNTY OF RIVERSIDE, STATE OF CALTFORNTA, DESCRIBED AS FOLLOWS : BEGINNING AT THE POINT DESCRIBED ABOVE IN PARCEL 1 AS POINT "A"; THENCE SOUTHEAST 63 DEGREES 10' 47" WEST, A DISTANCE OF 489.05 FEET; THENCE SOUTH 36 DEGREES 32' 13" EAST A DISTANCE OF 957 .42 FEET; q EXHIBIT THENCE NORTH 75 DEGREES 12' 39" EAST, A DISTANCE OF 225 .36 FEET TO A POINT ON THE ARC OF A CURVE CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 4800 FEET, A RADIAL LINE PASSING THROUGH SAID POINT BEARS NORTH 75 DEGREES 12, 39" RAST; THENCE NORTHWESTERLY ALONG THE.ARC OF SAID CURVE, THROUGH A CENTM ANGLE OF 12 DEGREES Olt 52", A DISTANCE OF 1007 .90 FEET TO THE POINT OF BEGINNING. PARCEL 31 THAT PORTION OF THE NORTHEAST 1/4 OF SECTION 18, TOWNSHIP 4 SOUTH, RANGE 5 EAST, SAN BERNARDINO BASE AND MERIDIAN, IN THE CITY OF PALM SPRINGS, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS. COMMENCING AT THE SOUTHEAST CORNER OF SAID SECTION 18, SAID POINT BEING THE POINT OF INTERSECTION OF THE CENTERLINE OF RAMON ROAD AND GENE AUTRY TRAIL) THENCE NORTH O DEGREES 17' 49" WEST, ALONG THE CENTERLINE OF GENE AUTRY TRAIL, BEING THE EAST VINE OF SAID SECTION 18, A DISTANCE OF 63 .03 FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 4850.00 FEET) THENCE NORTHWESTERLY, ALONG THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 11 DEGREES 14' 02", A DISTANCE OF 3067 .14 FEET; THENCE NORTH 36 DEGREES 31' 51" WEST, TANGENT TO LAST MENTIONED CURVE, ALONG THE CENTERLINE OF SAID GENE AUTRY TRAIL, A DISTANCE OF 853 .99 FEET) THENCE SOUTH 53 DEGREES 27' 47" WEST, A DISTANCE OF 50 .00 FEET TO THE SOUTHWESTERLY RIGHT OF WAY OF GENE AUTRY TRAIL. SAID POINT IS THE TRUE POINT OF BEGINNING) THENCE CONTINUING SOUTH 53 DEGREES 27' 47" WEST, A DISTANCE OF 550 .68 BEET; THENCE NORTH 36 DEGREES 31' 51" WEST, PARALLEL TO THU CENTER LINE OF GENE AUTRY TRAIL, A DISTANCE OF 395 .37 FEET) THENCE NORTH 53 DEGREES 27' 47" EAST, A DISTANCE OF 550. 89 FEET TO A POINT ON THE SOUTHWESTERLY RIGHT OF WAY OF GENE AUTRY TRAIL, BEING 50 .00 FEET FROM CENTERLINE, AS MEASURED AT RIGHT ANGLES; THENCE SOUTH 36 DEGREES 31' 51" EAST, ALONG SAID SOUTHWESTERLY RIGHT OF WAY LINE, A DISTANCE OF 395 .37 FEET TO THE TRUE POINT OF BEGINNING. PARCEL 4s THAT CERTAIN 5 ACRES LOCATED NORTH OF PARCEL 14 2, AND 3 KNOWN AS PARCEL 4 OPTIONED BY AIR SOURCES, INC. , PURSUANT TO THAT CERTAIN OPTION AGREEMENT NO. 1764—B ADOPTED BY THE CITY COUNCIL OF PALM SPRINGS, ON THE 17TH DAY OF SEPTEMBER 1986 AS EVIDENCED BY THE MINUTE ORDER NO. 3801. fill (IF/`C1\ ,�i 5,283.78' e N 00'1Y49" W ---- ie n y \ i i / PARCEL 6 \ Q PP"�OF? pp' 395.37' PARCEL 5 5 36'32'08" E g0 F, 50.00' yes;'•d� S 5327'47" W 2 /PARC 4 T.P.O.B. arc'u, yyN PARCEL 3 c n '9G \ / T 1,249.36' N 36'32'08" W 3 N N N M � M N m \ PARCEL 1 z i \ PARCEL 2 3,067.14 RECORD CURVE DATA = 36'14'02" R = 4,850' L = 3jO67.14' 11 T = 1,586.81' 1 400 0 400 800 i SCALE IN FEET 62,90' N 00'17'49" W B 7 o_ __ EXHIBIT B Description of Macquarie Infrastructure Company ("MIC") MIC is participating in an initial public offering (IPO). MIC has been formed to own, operate and invest in a diversified group of infrastructure businesses. The proceeds from the IPO will be used to acquire MIC's initial businesses and investments. MIC's initial businesses will consist of an airport services business, an airport parking business, a district energy business and a 50% interest in a toll road. North America Capital Holding Company will be a subsidiary of MIC. Peter Stokes is the Chief Executive Officer of MIC. n � Pi'�i V 1 LA1:1059095.5 EXHIBIT C Copy of Lease and Option (See attached.) fi LAI:1059095.5 EXHIBIT INDENTURE OF LEASE AND AERONAUT C 3�N AGREEMENT TABLE OF ARTICLES NUMBER SUBJECT PAGE I Term 1 II Rental and Other Payments 2 III Rights of Lessee 5 IV Construction of Improvements by Lessee 8 V Parking, T-Hangar Facilities and Landing Fees g VI Obligations of Lessee 10 VII Public Facilities 12 VIII Lessor's Reserved Rights 12 IX Insurance 13 X Bonds 17 XI Encumbrance 18 XII Termination by Lessee 20 XIII Termination by Lessor 21 XIV' Assignments - Options to Terminate 23 XV Indemnity 23 XVI Other Fixed Base Operators 23 XVII Books and Records 24 XVIII Assignment of Agreement 24 XIX Notices and Consents and Approvals 24 XX Right of Inspection 25 XXI Holding Over 25 XXII Maintenance, Alterations and Repairs 25 XXIII General Provisions 26 %XIV Non-Discrimination and FAA Required Clauses 27 XXV Right of First Refusal 29 XXVI Invalid Provisions 29 INDENTURE AND AERONAUTICAL CONCESSION AGREEMENT This INDENTURE OF LEASE, made and entered into by and between the CITY OF PALM SPRINGS, -CALIFORMIA (hereinafter called "Lessor"), and JIMSAIR AVIATION SERVICES, INC., A California Corporation, having its usual place of business at the Palm Springs Municipal Airport, Palm- Springs, California, and whose permanent mailing address is Lindbergh Field International Airport, San Diego, California, (hereinafter called "Lessee,'): WIWITN�TH: WHEREAS, Lessor owns and operates an airport known as the Palm Springs Municipal Airport, situated in the City of Palm Springs, County of Riverside, State of California (hereinafter called the "Airport"); and WHEREAS, Lessor is desirous of leasing certain premises hereinafter more fully described in Exhibit "A," attached hereto and made a part hereof for all purposes, forming a part of the Airport; and WHEREAS, Lessee desires to engage in the business of aeronautics, aircraft and engine parts and accessories, sales of aviation fuels and lubricants, sales of automotive fuels for on-airport uses, and air taxi operations, and the operation of,general aviation and airport facilities, and desires to lease certain property and obtain certain rights at the Airport: NOW, THEREFORE, for and in consideration of the rents, fees, covenants and agreements contained herein and other valuable considerations, Lessor does hereby demise, rent and let Co Lessee, and Lessee does hire, take and lease from Lessor, the Parcel of land containing approximately 20.16 acres, as more Particularly described and shown as Parcel 1 on Exhibit "A" attached hereto and made a part hereof for all purposes, together with those rights and privileges stated elsewhere in this agreement upon the following terms and conditions: ARTICLE 1. The term of this agreement shall be for a period of 40 years, beginning December 15, lb81, and ending December 74, 2021, unless sooner terminated as provided for in Article XIII, herein. P ;� ARTICLE II - RENTAL AND OTHER PAYMENTS I. Leased premieres: Lessee agrees to pay to Lessor as rental for the land, as shown and described as Parcel 1 on attached Exhibit "A" and containing approximately 20.16 acres, for the first five (5) years of this lease, Three Hundred Sixty-two Thousand Eight Hundred Eighty ($362,88p) Dollars, payable monthly in advance the amount of Six Thousand Forty-eight ($6,048) Dollars per month, or such other amounts as are set forth in the construction schedule, Exhibit "B" attached hereto and made a part hereof for all purposes. For the remainder of this lease, in equal monthly installments, in advance, an amount of money to be determined by revising. the first five years' rent as set forth in this paragraph as the base rent and not as may be modified by the construction schedule referred to herein, as follows: The rental shall be revised, effective the beginning of the Sixth (6th), Eleventh (llth), Sixteenth (16th), and every five (5) years thereafter based on the change in cost of living index. For the purpose of this computation, it is agreed that the Consumer Price Index for the month of September 1981 is the base or 100%. The Cost of Living Index to be used is that reflected by the Consumer Price Index, all items, Los Angeles-Long Beach-Anaheim, (1967 equal 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 be no longer published, then another index generally recognized as authoritative shall be substituted by agreement. In any event, the base used by the new index shall be reconciled to the 1967 index. The rentals set out herr,inabove shall be payable on the first day of each and every month throughout the term of this agreement. 2. Aviation Retail Fuel and Oil Sales: Lessee agrees to pay Lessor, on or before the twentieth (20th) day of each month, an amount equal to Six and one quarter cents ($0.0625) per gallon for all aviation fuel purchased by or delivered to the Lessee at the Airport, annually. Lessee further agrees to pay 2 Lessor Ten cents ($0.IW per gallon on all aviation oil purchased by or delivered to Lessee at the Airport. In this regard, it is agreed that all aviation fuel received by Lessee and actually delivered by Lessee to regularly-scheduled airlines operating under contract with-Lessor shall not be subject to such pavrnent. It" is agreed that the total gallonage delivered to or purchased by Lessoe each month, other than fuel delivered to regularly-scheduled airlines operating under contract with Lessor, as described in Article III, Paragraph 2 heroiaf, shall be reduced by two percent (2%) before computing charges as a maximum loss allowance from any and all causes. Lessee agrees that it will instruct all of his fuel suppliers to promptly furnish a duplicate copy of all invoices and/or delivery receipts to the City. Lessee agrees to fully comply with all standards related to fuel sales as adopted by the City as regards safety and standards of service. Lessee further agrees that it will adopt and maintain retail sales prices for aviation fuels which are competitive with other trunk line air carrier airports within a sixty-five mile radius of the Palm Springs Airport. 3. Into-plane Fuel and Oil Sales: The Lessee will pay the Lessor, each calendar quarter, One and seven eighths mils ($0.001875) for each gallon of aviation fuel,delivered into airlines or other contract purchasers as described in Article III, Paragraph 2. 4. Automotive Retail Fuel and Oil Sales: Lessee agrees lto pay Lessor, on or before the twentieth (20th) day of each month, an amount equal to six and one quarter cents ($0.0625) per gallon on all automotive fuel purchased by or delivered to Lessee at the Airport, and ten cents ($0.10) per gallon on all automotive oil purchased by or delivered to Lessee at the Airport during the immediately preceding month, provided, however, that said fuel flowage fee for the period from the effective date of this lease and until October 31, 1983, shall be three (3t) per gallon and thereafter shall be adjusted pursuant to Article II, Paragraph 5. ('B 3 5. Renegotiation: It is specifically agreed that the fuel gallonage fees set out in Paragraphs 2, 3 and 4 above shall be renegotiated effective the first day of November, 1982, and thereafter every five years on said renegotiation anniversary date. Such renegotiated fees shall be limited in each renegotiation period, to a maximum increase of not more than twenty-five percent (25%). 6. Restriction on Fuel Sales: It is specifically agreed that no fuel sales of aviation or other fuels will be made in containers. 7. Sales of New and Used Aircraft: Lessee agrees to pay Lessor within sixty (60) days following the end of each year of this agreement a fee based Upon the gross sales price, excluding sales tax, of each new or used aircraft sold, as follows: 1/2 of 7% of the gross sales price, as reported by Lessee in Sales Tax Reports made to the State of California Board of Equalization. 8. Charter/Air Taxi Operation. 1% of gross revenue derived from charter/air taxi operations shall be paid to Lessor by the 20th of each succeeding month. 9. Sales of food and beverages, alcoholic beverages and general merchandise: Lessee agrees to pay Lessor, on or before the twentieth (20th) day of each month the following sums: a. Food & Beverane (1) Three (3% percent of total gross, exclusive of taxes, to a total yearly gross of $250,000. (2) Four (0) percent of total gross, exclusive of taxes, for total yearly gross from $250,001 to $500,000. (3) Six (6%) percent of total gross, exclusive of taxes, for total yearly gross in excess of $500,001. (4) Provided, however, for the period from the effective date of this agreement and expiring October 31, 1983, the percentage shall be three (3%) of all gross derived from this activity during said period. b. Alcoholic Beverages �\J 1 n 4 ,.r lair _ i (1) Seven (7%) percent of total yearly gross, exclusive of taxes, to a total yearly gross of $125,000. (2) Eight (8%) percent of total yearly gross, exclusive of taxes, .for total yearly gross from $125,o01 to $250,000. (3) Nine (9%) percent of total yearly gross, exclusive of taxes, in excess of $250,001, (4) Provided, however, for the period from the effective date of this agreement and expiring October 31, 1983, the percentage shall be five (5%) of all gross derived from this activity during said period. c. Generalise (1) Five (5%) percent of total yearly gross sales, exclusive of taxes. ARTICLE III- RIGHTS OF LESSEE 1. Fueling of Itinerant Aircraft: It is agreed that Lessee shall have the non-exclusive right to sell and deliver, and to provide into-plane services of aviation fuel and lubricants to all owners and operators of itinerant aircraft based at or using the Airport. "Itinerant aircraft" are defined as all aircraft based at or using the Airport, except those aircraft owned and operated by interstate carriers now or hereafter certificated by the Civil Aeronautics Board or intrastate carriers licensed by the Civil Aeronautics Board to service the Airport on a published schedule basis. 2. Into-plane Services: It is agreed that Lessee, to the extent consistent with leases in effect between Lessor and the scheduled airlines operating at the Airport, shall have the non-exclusive right to act as agent for fuel suppliers to handle into-plane deliveries of aviation fuel and lubricants sold by the suppliers directly to the consumer under a contract fuel and lubricants sales agreement. A "contract fuel and lubricants sales agreement" is defined as an agreement for the sale of aviation fuel and lubricants between a ,fuel supplier and a scheduled air carrier regularly serving Palm Springs and certificated by the Federal Aviation Administration, or the Civil Aeronautics Board. It is agreed that Lessor may grant to such carriers the right to fuel and service their own aircraft, by their own rt� (6 employees, and the right to maintain fuel and oil facilities and equipment for this purpose. It is further agreed that Lessor shall prohibit any of such certificated carriers from utilizing any aviation or automotive fuel and oil facilities or equipment for the purpose of supplying, selling, delivering or Performing into'-plane service of aviation fuel and lubricants to other carriers, whether such other carriers are certificated, itinerant, foreign or domestic. 3. Sale of Automotive Fuels and Lubricants: Lessee shall have the non-exclusive privilege of selling automotive fuels and lubricants on the Airport for motor vehicles, aircraft-servicing vehicles and ground-handling equipment; provided, however, that Lessor and scheduled air carriers may service their own ground equipment from their own Airport automotive gasoline installations maintained for such purpose. 4. Rights in Common With Others: Lessee shall have the right, in common with others (all such others, except carriers certificated by the Civil Aeronautics Board or Federal Aviation Administration to service the Airport on a published-scheduled basis, being subject to the provisions of Article vIII) to engage in, either directly or through agents or sub-tenants, provided, however, such agents or sub-tenants shall be subject to prior approval of the Airport commission, which approval shall not be unreasonably withheld, the following activities at the Airport: a. Repair, maintain, condition, inspect, service and make modifications and alterations to aircraft, aircraft engines, propellers, and appliances, including the removal of engines for major overhaul and including the actual overhaul of engines and aircraft; b. Sale of new and used aircraft at both retail and wholesale; c. Lease of aircraft; d. Sale of parts and accessories for aircraft, aircraft engines, propellers and appliances; e. Sale of airmen supplies., gifts, tobacco, and general merchandise; f. Hangaring and storing of aircraft; s 6 .� V1 `� �L i g. Repair, maintenance, sale and installation of aircraft electronic equipment; h. Operation of a charter or air taxi flight service; i. Operation of a car rental service upon payment to Lessor of additional rentals or fees based upon rates comparable to those paid by other car rental agencies operating at the Airport (provided, however, the existing car rental agencies currently servicing the airport shall have a right of first refusal to establish an on-site aocncy r,'I: ;r 'acility,); j. Operation of a flight and ground school k. Operation of a Restaurant open to the general public as well as an aircraft food catering servic_ a'nd r',li':rd !4,Mices subject to such rights as may be possessed by Air Terminal Services; 1. The rental of office or commercial space to aviation-related businesses and tenants, such rentals shall be subject to the provisions of the Airport Rules and Regulations, the City's Business License Code and require the prior approval of the Airport Commission prior to any such tenant engaging in a commercial aviation activity at the Airport. m. Sell and deliver and provide into-plane services of aviation fuel and lubricants, ground-handling, food catering, parking and related services to all scheduled, non-scheduled and commuter aircraft based at or using the Airport, subject to such rights as may be Possessed by Air Terminal Services; n. Such other activities as are incident to the operation of a general commercial aviation business o. It is agreed that Lessee may provide the required charter air taxi or flight school services herein required as Lessee's operation or through a sublessee of his choice provided said sublessee fully meets all Federal Aviation Administration requirements for such operations, and provided further that Lessee shall be fully responsible to assure that Federal Aviation Administration requirements are fully met, and that the fees required under Article II, Paragraph 8, shall be paid to Lessor as therein set out. <1„ 7 GIl1\` a. ARTICLE IV CONSTRUCTI N F IMPROVEMENTS by LhbbFE 1. General Specifications - Lessee intends to construct certain facilities and buildings on the demised premises. Lessee shall, without cost to Lessor and within the time periods set forth in Exhibit "B", attached hereto and made a part hereof, commence and complete construction of an Airport fixed base general aviation facility, such construction to include, but not be limited to, parking ramps, tiedown facilities, T-Hangars, maintenance facilities, office facilities, and one full-width lighted taxiway from said facilities to existing Runway 12/30, said taxiway to be constructed in full compliance with Federal Aviation Administration specifications. It is understood and agreed that Lessee shall install all utilities and shall provide adequate automobile parking spaces as required by the standards of the City of Palm Springs. Further, it is understood and agreed that all construction plans and specifications must be approved by the appropriate agencies of the City prior to the commencement of any construction. It is further agreed that Lessee shall submit to the Palm Springs Airport Commission a complete site, use and construction plan including architectural renderings sufficient to allow the Airport Commission to determine the character and nature of the improvements to be constructed on the demised premises. 2. Within thirty (30) days following completion of any construction on demised premises, Lessee shall give to Lessor, for filing, a complete set of As-built drawings, including but not 1-imited necessarily to all underground facilities. 3. It is specifically agreed that, at the sole option of the City, the improvements constructed on the leasehold shall become the property of the City, free and clear from any and all encumbrances at the expiration or termination of this agreement or any extension thereof. 4. Lessee agrees, without limiting the generality thereof, in constructing all improvements on.the leasehold, Lessee will hold Lessor harmless from and against claims, liens or attachments of any kind or type whatsoever. Lessee 8 )_ further agrees that Lessor shall have the right to post notices of non-responsibility as provided by Section 1183 of the Code of Civil Procedure of the State of California. Lessee further agrees to hold Lessor harmless from and against any claims of causes of action which might result from Lessee's use of the property, whether caused by the negligence of the Lessee, falling aircraft or any other cause, save and except damages caused by the negligence of the Lessor. 5. Lessee shall not erect, maintain or display any signs or other advertisements at or on the exterior of the leased premises without first obtaining the written approval of the Lessor, which approval shall not be unreasonably withheld.- ARTICLE V AIRCRAF�j(ING AREA T- GRFAIL S I Dom_ 1. Aircraft Parking Area: Lessee agrees to provide at all times during the term of this agreement a public aircraft parking ramp located upon the demised premises. Lessee agrees to install and maintain aircraft tiedown facilities for the securing of aircraft in this designated public aircraft parking ramp, and Lessee shall maintain the ramp in a clean and orderly, safe and sanitary condition at all times. 2. T-Hangar Facilities: Lessee agrees to provide upon the demised premises T-Hangar facilities of a type and kind approved by the Airport Commission and to maintain such facilities in a clean, orderly, safe and sanitary condition at all times.- 3. Collection of Landinsf Fees Aircraft Parking Fees, and T-Han ar Rental Fees: a. In General: Lessor may apply landing fees to certain aircraft except exempt government and military aircraft. Lessee shall have and assume the responsibility for the collection of all such landing fees with respect to its guests, business visitors, customers and invitees at the Airport. b. Landing It is agreed that the Lessee shall retain fifty percent (50%) of all landing fees referred to in the subparagraph above, and that Lessee will pay to Lessor the remaining fifty percent (50%) of said landing fees collected by it on or before the 20th day of the month following the month of collection. It is agreed that Lessor retains the right to adjust the landing fees upon sixty (60) days' written notice to Lessee. c. Parkinp Fees; It is agreed that Lessee shall collect'and retain all aircraft and automobile parking fees on the leased premises. Lessee shall provide Lessor with thirty (30) days' written notice of any fee changes. d. T-Hangar rental fees: It is agreed that Lessee shall collect and retain all T-Hangar rental fees on the leased premises. Lessee shall provide Lessor with thirty (30) days' written notice of any fee changes. .ARTICLE VI- OBLIGATION OF LESSEE 1. General Obligations: Lessee, his employees, agents or servants, shall at all times comply with the laws and regulations of the United States of America, the State of California and all applicable ordinances, codes and rules and regulations of the City of Palm Springs and regulations covering the operation of the Palm Springs Municipal Airport, as they now exist or as they may hereafter be lawfully enacted or amended. Violations thereof by Lessee, his agents, servants or employees, or revocation of permits or licenses required in the performance of this agreement, shall be cause for termination of this leasa agreement at the option of the Lessor if not corrected after ninety (90) days' written notice is provided Lessee. Lessee shall procure and maintain, at his own expense, all licenses or permits necessary to legally conduct the business of a fixed base operation and associated businesses in the City of Palm Springs. 2. Service Obligations: In addition to the obligations referred to else- where in this agreement, Lessee agrees, without limiting the generality thereof, to furnish at its own expense the following services and equipment: a. The parking, storage and tie-down of aircraft utilizing the facilities provided and installed by Lessee. b. Vehicular lead-in and lead-out services for all aircraft, excepting those operated by air carriers and other Airport Lessees, and transportation within the Airport premises for passengers and crews of all such aircraft "'P �� J desiring such service, including baggage. For these purposes, the Lessee will provide at least one late model station wagon, equipped with a fire extinguisher, and carrying such marking and lighting as may be required by Lessor. - c. Aircraft parking guidance, positioning of wheel chocks, tie-downs, etc., baggage-handling, fire guard for engine starts and any other services reasonably required. d. Ground service equipment suitable for- all types of aircraft, including aircraft jacks, auxiliary power units, aircraft tugs with all proper types of tow bars, sanitary servicing equipment and all other necessary and desirable equipment required for.complete ground service. e. An executive terminal facility consisting of an attractively appointed and furnished lounge and waiting room, an operations room containing adequate facilities for the preparation of flight plans, a bulletin board for current NOTAMS and modern and sanitary restroom facilities. f. Radio monitoring of ground control and approach control frequencies to coordinate and anticipate services to be rendered when appropriate. g. As agent for Lessor, as provided in Article VI, the collection of all applicable landing and parking fees. In this respect, Lessee will maintain, in its business office on its leased premises, clerical facilities and services necessary for the collection of fees and the recording of all operations in a manner and form prescribed by the Lessor. h. Lessee shall be open for business from 6:00 a,m. to 11:00 p.m., seven days a week. Lessee shall operate the demised premises and facilities in a progressive and efficient manner so as to produce the maximum revenues which may be derived therefrom. 1. Lessee shall observe and obey and shall compel its officers, employees, invitees and those doing business with it to observe and obey all rules and regulations of the Lessor now in effect, and such further rules and regulations as may from time to time be promulgated by Lessor; provided, however, that such further rules and regulations shall not unreasonably conflict with the provisions of this lease. l� 7 3. fair and Maintenance of Premises: Lessee has examined the leased premises and facilities and agrees to accept said premises and facilities for the purposes of this agreement in their present condition. Lessee agrees to make ordinary repairs as may be necessary from time to time as required to maintain the leased premises in good repair, order and condition. 4. Janitorial-and Cleaning, Services: Lessee will provide its own janitorial and cleaning serives and will maintain its leased premises in a clean and sanitary condition at all times. 5. Operations for Benefit of Public: Lessee agrees to operate the leased premises for the use and benefit of the public, to make available all Lessee's Airport facilities to the public, without discrimination on the grounds of sex, race, color or national origin, and to refrain from imposing or levying excessive, discriminatory or otherwise unreasonable charges or fees for any use Of its facilities or services. Nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of Section 308 of the Federal Aviation Act. of 1958, as amended. 6. Utilities: Lessee agrees to make its own arrangements for all utility services and to pay for such services on its leased premises. ARTICLE VII PUBLIC FACILITIES-INGRESS, EMM" __ N Lessor agrees that Lessee, upon payment of the rental hereunder and performing the covenants of the agreement, may quietly have, hold and enjoy the leased premises during the Lerm of this agreement, and that Lessee shall have the right to use, in common with others, the public facilities at the Airport and it shall also have the right of ingress to and egress from its leased premises and the public facilities for its employees, visitors and customers. ARTICLE VIII - LESSOR'S RESERVED RIGHTS 1. Airport Development and Safety: Lessor reserves the right to further develop or improve the aircraft operating area of the Airport as it sees fit, except those premises leased to Lessee, and Lessor reserves the right to take any action it considers necessary to protect the aerial approaches of the li 12 Airport against obstruction, together with the right to prevent Lessee from . erecting, or permitting to be erected, any building or other structure on the Airport which, in the opinion of Lessor, would limit the usefulness of the Air- port or constitute a hazard to aircraft. 2. The parties hereto agree that, at the sole option and election of the City, the leasehold granted herein may be amended to include Parcel 2, as shown on Exhibit "A" attached hereto, thereby increasing the leasehold by 8.35 acres. In the event the City so elects, the rental for this rarcel shall be at the same rate, per acre, as Parcel 1, and subject to the s<une five-year adjustments as provided in Article II, Page 2. In the event the City elects to exercise this option, it shall do so no sooner than August 15, 1986, and no later than October 15, 1986, with the effective date for the addition of Parcel 2 to be December 15, 1986, with rentals to accrue to the City from and after said date. 3. Lease to United States: During the time of war or national emergency, Lessor shall have the right to lease the landing area or any part thereof to the United States Government for military or naval use, and -- if such lease is executed -- the provisions of this instrument insofar as they are inconsistent with the provisions of the lease to the Government shall be suspended and, in that event, a just and proportionate part of the rent hereunder shall be abated, and the period of such closure shall be added to the term of this lease so as to extend and postpone the expiration thereof unless the Lessee otherwise elects to terminate the lease, as provided in subparagraph 3 of Article XII. ARTICLE Ix - INSURANCE 1. Liability Insurance: During the entire term of this agreement, Lessee agrees to procure and maintain public liability insurance at its sole expense to protect against loss from liability imposed by law for damages on account of bodily injury, including death therefrom, suffered or alleged to be suffered by any person or persons whomsoever, resulting directly or indirectly from any act or activities of the Lessor or Lessee, or any person acting for the City, or Lessee, or under its control or direction, and also to protect against loss from liability imposed by law for damages to anv property of any person caused directly or indirectly by or from acts or activities of the City, of Lessee, or 13 6, b any person acting for the City or Lessee, or under its control or direction. Such public liability and property damage insurance shall also provide for and protect the City against incurring any legal cost in defending claims for. alleged loss. Such public liability and property damage insurance shall be maintained in full force and effect throughout the term of the agreement and any extension- thereof, with coverage limits of not less than $2,000,000 combined single limit. In addition, Lessee shall procure and maintain throughout the term of this agreement a minimum passenger liability insurance of not less than $50,000 per seat for passengers and crew for each aircraft owned or used in his business or any authorized business conducted by a sublessee in addition to the single limit insurance specified above. All of such insurance shall be primary insurance and shall name the City of Palm Springs as an additional insured. If the operation Under this agreement results in an increased or decreased risk in the opinion of the City Manager, then Lessee agrees that the minimum limits hereinabove designated shall be changed accordingly upon request by the City Manager; provided, however, that the Lessee may appeal to the City Council within ten (10) days after any increase is requested, and such requirement for increased coverage shall be subject to determination by the City council. Lessee agrees that provisions of this paragraph as to maintenance of insurance shall not be construed as limiting in any way the extent to which the Lessee may be held responsible for the payment of damages to persons or property resulting from Lessee's activities, or the activities of any person or persons for which Lessee is otherwise responsible. 2. Worker's Compensation Insurance: The Lessee shall procure and maintain, at its sole expense, Worker's Compensation Insurance in such amounts 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 City against any loss, claim, or damage arising from any injuries or occupational diseases happening to any worker employed by the Lessee in the course of carrying out the within agreement. 14 'I 4r 3. Fire & Extended Coverage Insurance: Lessee also agrees to procure and maintain, at its sole expense, during the term of this agreement and any extension thereof, a policy of fire, extended coverage and vandalism insurance on all permanent property of Lessee's of an insurable nature located upon the leased premises. Said policy shall be in an amount sufficient to cover at least eighty percent (80%) of the replacement costs of said property. Lessee agrees to ;pay the premium for such insurance, and shall require that any insurance ,proceeds resulting from a loss under said policy are payable jointly to City and Lessee and said proceeds shall constitute a trust fund to be reinvested in rebuilding or repairing the damaged property or said proceeds may be disposed of as specified in the paragraph following entitled "Waste, Damage or Destruction" hereof; provided, however, that within the period during which there is in existence a mortgage upon the leasehold, then and for that period all policies of fire insurance, extended coverage and vandalism shall be made payable jointly to the mortgagee or beneficiary, the named insured, and City, and shall be disposed of, jointly, by the parties for the following purposes: a. As a trust fund to be retained by said mortgagee or beneficiary and applied in reduction of the debt secured by such mortgage with the excess remaining after full payment of said debt to be paid over to Lessee and City to pay for reconstruction, repair or replacement of the damaged or destroyed improvements in progress payments as the work is performed. The balance of said proceeds shall be paid to Lessee. Provided further, however, nothing herein shall prevent Lessee, at its option and with the approval of said mortgagee or beneficiary, from filing a faithful performance bond in favor of said mortgagee or beneficiary and City in an amount equivalent to said insurance proceeds in lieu of surrendering said insurance proceeds to said mortgagee or beneficiary and City. b. In the event that this lease is terminated by mutual agreement and said improvements are not reconstructed, repaired, or replaced, the insurance proceeds shall be jointly retained by City and said mortgagee or beneficiary to the extent necessary to first discharge the debt secured by said mortgage or deed of trust, and then to restore the premises to a neat and clean condition. Said mortgagee or beneficiary shall hold the balance of said proceeds for City and Lessee as their interest may appear. Lessee agrees to increase the limits of liability when, in the opinion of the City Manager, the value of the improvements covered is increased, subject to the availability of such insurance at the increased limits; provided, however, that the Lessee may appeal to the City Council within ten days after any increase is requested, and such requirement for increased coverage shall be subject to determination by the City Council. 4. Waste, Damage or Destruction: Lessee agrees to give notice to the City of any fire or other damage that may occur on the leased premises within ten days of such fire or damage. Lessee agrees not to commit or suffer to be committed any waste or injury or any public or private nuisance, to keep the premises clean and clear of refuse and obstructions, and to dispose of all garbage, trash and rubbish in a manner satisfactory to the City. If the leased premises shall be damaged by any cause which puts the premises into a condition which is not decent, safe, healthy, and, sanitary, Lessee agrees to make or cause to be made full repair of said damage and to restore the premises to the condition which existed prior to said damage, or Lessee agrees to clear and remove from the leased premises all debris resulting from said damage and rebuild the premises in accordance with plans and specifications previously submitted to the City and approved in writing in order to replace in kind and scope the operation which existed prior to such damage. Lessee agrees that preliminary steps toward performing repairs, restoration, or replacement of the premises shall be commenced by Lessee within thirty (30) days, and the required repairs, restoration, or replacement shall be completed within a reasonable time thereafter. City may determine an equitable deduction in the minimum annual rent requirement for such period that said premises are untenable by reason of such damage. 5. Automotive Insurance: The Lessee shall procure and maintain, at its sole expense, throughout the term of this agreement and any extension thereof public liability and property damage insurance coverage for, automotive equipment, if any, with coverage limits of not less than One Million Dollars 16 F ($1,000,000) combined single limit. All such insurance shall be primary insurance, and shall name the City of Palm Springs as an additional insured. Lessee's certification that it has no automobile equipment shall satisfy this clause. 6. Evidence of Insurance: A certificate of insurance or an appropriate insurance binder evidencing the above insurance coverage with a company acceptable to the Ci"ty's Risk Management Officer shall be submitted to the City prior to execution of this agreement on behalf of the City. 7. Notice to City, Insurance Coverage Change: The terms of the insurance Policy or policies issued to provide the above insurance coverage shall provide that said insurance may not be amended or canceled by the carrier for non-payment of premiums, or otherwise, without thirty (30) days' prior written notice of amendment or cancellation to the City. In the event the said insurance is canceled, the Lessee shall, prior to the cancellation date, submit to the City Clerk new evidence of insurance in the amount heretofore established. ARTICLE_ A - BONDS 1. Prior to the execution of this contract, the Lessee shall provide the City and maintain through the life of this agreement a performance bond in the amount of Twenty-five Thousand Dollars ($25,000). Payment of such performance bond shall be due and payable to reimburse the City for any loss sustained in the event of default or failure of the Lessee to perform as herein set forth. Alternatively, the Lessee may, at his option, Post a certificate of deposit, Payable to the City of Palm Springs, in the amount of $25,000 in a bank or savings and loan association approved by the City of Palm Springs. In the event the Lessee elects to exercise this option, any interest accruing to the certificate of deposit shall remain the property of the Lessee. 2. The Lessee shall, prior to the commencement of construction for each phase set forth in Exhibit "B", provide the City with a construction payments bond in an amount equal to the estimated cost of construction as approved by Lessor, which shall be posted prior to the commencement of the, construction of each phase. Payment of such construction payments bond shall be due and 17 payable to reimburse the City for any loss sustained in the event of default or failure of the Lessee to perform as hereinabove set forth. Alternatively, the Lessee may at his option post a certificate of deposit payable to the City,of Palm Springs in the amount equal to the estimated cost of construction in a bank or a savings and loan association approved by the City of Palm Springs. In the event the Lessee elects to exercise this option, any interest accruing to the certificate of deposit shall remain-the property of the Lessee. 3. As an alternative to furnishing the bonds in accordance with paragraphs 1 and 2, above, Lessee may enter into a building loan agreement with an institutional lender, which building loan agreement shall be subject to the approval of the City., Prior to such approval, Lessee shall deposit with the lending institution the difference between the amount of the loan and the projected cost of the improvement. ARTICLE XI - ENCUMBRANCE 1. This lease, or any right to or interest in, or any of the improvements on the leased premises, may be encumbered with the written approval of the City. No such encumbrance or any addition thereto or extension thereof shall be valid without said approval; provided, however, the City shall consent in writing to any encumbrance that does not exceed eighty-five percent (85%) of the value of,the leasehold interest and improvements placed thereon. 2. Any encumbrance must be confined to the leasehold interest of Lessee or the subleasehold interest of a sublessee and shall not jeopardize in any way the Lessor's interest in the land. Lessee agrees to furnish, as requested, any financial statements or analyses pertinent to the encumbrance that the City may deem necessary to justify the amount, purpose and terms of said encumbrance. 3. In the event of default by the Lessee of the terms of an approved encumbrance, the encumbrancer may exercise any rights provided in such approved encumbrance, provided that before any sales of the leasehold, whether by power of sale or foreclosure, the encumbrancer shall give to the City notice of the same character and duration as is required to be given to Lessee by such encumbrancer and/or the laws of the State of California. Any notice of default G1 L1 shall comply with the provisions of Section 2924(c) of the Civil Code of the State of California. 4. If any sale under the approved encumbrance occurs, whether by power of sale or foreclosure, and the purchaser at such sale is the encumbrancer, the encumbrancer may sell and assign the leasehold interest without any further consent provided that the assignee shall agree in writing to be bound by all the terms and conditions of this lease. If the encumbrancer is the purchaser, it shall be required to perform this lease only so long as it retains title thereto. If a sale under the approved encumbrance occurs, and the purchaser is a party other than the encumbrancer, said purchaser, as successor in interest to the Lessee, shall be bound by all the terms and conditions of this lease. 5. If notice of such sale shall be given and the defaults or any of them upon which such notice of sale is based shall then continue, Lessor shall have the right to correct such defaults at any time prior to the date of sale or foreclosure, and to terminate such leasehold upon paying to the encumbrancer the balance of the encumbrance, as hereinafter defined. 6. "Balance of encumbrance" shall mean the amount of principal remaining unpaid on a note secured by a trust deed or mortgage of an interest in this lease; provided that to such principal shall be added accrued interest, thereon past due and,expenses incurred by the lender in connection with foreclosure, including, but not limited to, fire insurance premiums, title insurance expenses, recording fees, appraisal fees, attorneys' fees, credit reports and any tax reporting services and additional expenditures paid by the lender on additions, betterments and rehabilitations of improvements on the property encumbered pursuant to plans approved by the City, which consent may not be unreasonably withhold, and other expenses necessary to place the improvements in marketable condition, such adjusted principal to be paid in cash or at the option of the City amortized over the term and in accordance with the schedule set forth in said note, the interest rate on the unpaid balance thereto to be as set forth in said note. 7. Lessor agrees that it will not terminate this lease because of any default or breach hereunder on the part of Lessee if the encumbrancer under the 19 ['f) I trust deed, within ninety (90) days after service of written notice on the encumbrancer by Lessor of its intention to terminate this lease for such default or breach, shall: a. Cure such default or breach if the same can be cured by the payment or expenditure of money provided to be paid under the terms of- this lease; provided, however, that for the purpose of the foregoing, the encumbrancer shall not be required to pay money to cure the bankruptcy or insolvency of Lessee; or _ - b. If such default or breach is not so curable, cause the trustee under the trust deed to commence and thereafter diligently to pursue to completion steps and proceedings for judicial foreclosure, the exercise of the power of sale under the pursuant to the trust deed in the manner provided by law, or accept from Lessee an assignment in lieu of foreclosure, and keep and perform all of the covenants and conditions of this lease requiring the payment or expenditure of money by Lessee until such time as said leasehold shall be sold upon foreclosure pursuant to the trust deed, be released or reconveyed thereunder, be sold upon judicial foreclosure or be transferred by deed in lieu of foreclosure. ARTICLE XII - TERMINATION BY LESSEE In addition to all other remedies available to the Lessee, this agreement shall be subject to cancellation by the Lessee should any one or more of the following events occur: 1. The issuance by any court of competent jurisdiction of a permanent injunction in any way preventing the use of the leased premises for the purpose hereinbefore enumerated. 2. The breach by the Lessor of any of the terms, covenants or conditions Of this agreement to be kept, performed and observed by the Lessor, and the failure of the Lessor to remedy, or to commence action to remedy such breach for a period of thirty (30) days after written notice from the Lessee of the existence of such breach. 3. The assumption by the United States Government, or any authorized agency of same, of the operation, control or use of the Airport and its 1. 20 i li1i )1 { facilities in such a manner as to substantially restrict the Lessee from conducting its operation if such restrictions be continued for a period of six (6) months or more. ARTICLE XIII - TERMINATION BY LESSOR 1. In addition to all other remedies available to the Lessor, this agreement shall be subject to cancellation by the Lessor should any one or more of the following exist:- a. Lessee expressly stipulates and agrees that Lessee fully understands the provisions of HR 8200 (the new Title 11 of the U. S. Code "Bankruptcy,,- effective October 1, 1979, particularly Section 265(e)(2), and notwithstanding the relief available to Lessee under the provisions referred to, Lessee agrees, elects, as a matter of contract, in consideration for the rights and privileges granted under this Lease Agreement, that if said Lessee shall file a voluntary petition of bankruptcy, or if proceedings in bankruptcy shall be instituted against it, and it is thereafter adjudicated a bankrupt pursuant to such proceedings, or, if a court shall take jurisdiction of Lessee and its assets pursuant to proceedings brought under provisions of any Federal Reorganization Act, or, if a receiver for Lessee's assets is appointed by a court of competent jurisdiction, or, if Lessee be divested of its rights, powers and privileges under this contract by other operations of law, then this agreement shall be subject to cancellation by the Lessor, as provided hereinabove. b. If the Lessee shall abandon and discontinue the contract and operation of said fixed-base operation for a period of six (6) months or more. c. If Lessee shall default in or fall to make any payments at the times and in the amounts as required of it under this contract. d. If the Lessee shall fail to perform, keep and observe all of the covenants and conditions contained in this contract to be performed, kept and observed by it. e. If the Lessee shall fail to abide by all applicable laws, ordinances and rules and regulations of the United States, State of California or the City of Palm Springs, as they now exist or as they may hereafter be lawfully enacted or amended. 2. Upon the happening of any of the contingencies recited in subparagraph 1, in Article XIII above, Lessor shall give written notice to Lessee to correct or cure such default, failure to perform, or breach, and if within ninety (90) days from date of such notice, the default, failure to perform or breach complained of shall not have been corrected in a manner satisfactory to the Lessor, then and in such event Lessor shall have the right, at once and without further notice to Lessee, to declare this contract terminated and to enter upon and take full possession of the leased premises, and provided further, that, upon the happening of any one of the contingencies enumerated in subsection la thereof, this contract shall be deemed to be breached by Lessee and thereupon, without entry or other, action by Lessor, the contract shall terminate subject to being reinstated only if such involuntary bankruptcy or insolvency proceedings, petitions for reorganization, trusteeship, receivership, or other legal act divesting Lessee of its rights under this contract shall be denied, set aside, vacated or terminated in the Lessee's favor within forty-five (45) days from the happening of the contingency. Upon the happening of said latter events, this contract shall be reinstated as if there had been no breach occasioned by the happening of said contingencies, provided that Lessee shall within ten (10) days after the final denial, vacating or setting aside of such Petition on the vacating, terminating or setting aside of such appointment, pay or discharge any and all sums of money which may have become due under this contract in the interim and shall then remain unpaid, and shall likewise fully perform and discharge all other obligations which may have accrued and become payable in the interim. 3. Lessor shall give written notice of such termination to said Lessee if defaults have not been cured within said ninety (90) days, and the lease shall terminate within ten (10) days from the date of said notice. The acceptance of rentals and fees by Lessor for any period after a default of any of the terms, covenants, and conditions herein contained to be performed, kept and observed by Lessee shall not be deemed a waiver of any rights on the part of the Lessor to cancel this lease for failure by Lessee to so perform, keep or observe any Of the terms, covenants or conditions hereof to be performed, kept and 22 o � observed. No waiver by the Lessor of any of the terms of this agreement to be kept, performed and observed by the Lessee shall be construed to be or act as a waiver by the Lessor of any subsequent default on the part of the Lessee. ARTICLE XIV - ASSIGNMENT/OPTIONS TO TERMINATE The privileges contained herein are personal. The Lessee agrees that it Will not assign the same or any portion thereof or any improvements thereon including, but not limited to, building or facilities constructed on the Premises without the express consent of the Lessor, in writing. Any purported assignment or violation hereof shall be void. Lessor will not be unnecessarily arbitrary in granting said permission, but the Lessor shall be the sole judge as to the reliability, capability, character and desirability of the parties involved until construction of all improvements is completed. Thereafter, Lessor agrees that it will not unreasonably withhold its consent. ARTICLE XV - INDEMNITY Lessee shall indemnify and hold harmless Lessor from any and all demands, losses, liabilities or judgments, together with costs and expenses incident thereto which may accrue against, be charged to, or be recoverable from Lessor as a result of the acts or omissions of Lessee, its employees or agents, in connection with Lessee's use and occupancy of the demised premises, excluding, however, such,as may be occasioned in whole or in part by the acts or omissions of Lessor, its employees or agents. Lessor shall give to Lessee prompt and timely notice of any claim made or suit instituted which in any way, directly or indirectly, contingently, or otherwise, affects or might affect Lessee, and Lessee shall have the right to compromise or participate in the defense of the same to the extent of its own interests. ARTICLE XVI - OTHER FIXED BASE OPERATORS It is understood between the parties that Lessor retains the privilege of entering into other agreements which authorize the commercial use of the Airport facilities, but only upon terms similar to those extended to Lessee. It is specifically understood and agreed between the parties hereto that Lessor shall not grant the right to engage in an aircraft fuel, sales or servicing concession to another operator except under terms and conditions 23 ' which obligate any new concessionaire to engage in all activities set forth in Article III, Paragraph 4, (excluding food, beverage and general merchandise) and further obligate such future concessionaire to construct like facilities to those constructed by Lessee herein. However, Lessor covenants not to enter into any similar agreement with respect to the Airport which contains more favorable terms than its agreement with Lessee, ,or to grant to potential competitors of Lessee privileges not herein authorized unless the same are concurrently extended to Lessee, excluding the negotiated value of land. ARTICLE XVII - BOOKS AND RECORDS Lessee agrees to submit to Lessor by the 20th day of each month a detailed statement of all business done at the Airport during the previous month for which fees or payments to the City are due. Lessor shall have- the further right to inspect the accounting records of Lessee at reasonable times. Lessee shall submit to Lessor each year a copy of its annual certified audited report reflecting all operations at the Airport as soon as reasonable following the close of each fiscal year. ARTICLE XVIII - ASSIGNMENT OF AGREEMENT Except as provided in Article XIV, Lessee shall not assign this agreement without first,obtaining the prior written consent of Lessor thereto; provided, however, that Lessee may assign this agreement to any entity controlling, controlled by, or under common control with Lessee without obtaining the written consent of Lessor. In such latter event, Lessee shall give prompt notice of assignment to Lessor. ARTICLE XIX - NOTICES AND CONSENTS AND APPROVALS 1, Notices; A bill or statement, or any notice or communication which Lessor may desire to give Lessee shall be deemed sufficiently rendered or given if the same be in writing and sent by registered or certified mail, addressed to Lessee at the address specified on the first page hereof or at the address Lessee may substitute therefor by notice to Lessor, or left at such address or delivered to Lessee's representative, and the time of such rendition of such bill or statement shall be deemed to be the time when the same is mailed, left (f''\ 24 or delivered as herein provided. Any notice from Lessee to Lessor shall be validly given if sent by registered or certified mail addressed to the City of Palm Springs, California, City Hall, Palm Springs, California, or at such other address as Lessor shall hereafter designate by notice to Lessee. All payments should be made payable to the City of Palm Springs, California. 2. Consents and Approvals: Consents and approvals as required under this agreement shall be in writing and shall not be unreasonably withheld and shall be deemed to have been given unless, within thirty (30) days after the receipt of written request from Lessee for such consent or approval , Lessor shall have given Lessee a written reply refusing or withholding action on such consent or approval and stating its reasons for such refusal or such withholding of action, ARTICLE XX - RIGHT OF INSPECTION The Transportation Director and/or his duly authorized representatives shall have at any and all times the full and unrestricted right to enter the premises for the purpose of inspecting such premises and of doing any and all things with reference thereto which the Lessor is obligated or authorized to do as set forth herein or which may be deemed necessary for the proper general conduct and operation of the Palm Springs Municipal Airport or in the exercise of the Lessors police power. ARTICLE XXI - HOLDING OVER In the event Lessee shall hold over and remain in possession of the premises herein leased after expiration of this agreement without any written renewal thereof, such holding over shall not be deemed to operate as a renewal or extension of this agreement, but shall only create a tenancy from month to month which may be terminated at any time by the Lessor. ARTICLE XXII - MAINTENANCE - ALTERATIONS 1. Lessee shall at all times keep the premises and all fixtures, equipment and personal property in a clean and orderly condition and appearance. 2. Lessee shall repair, replace, rebuild and paint all or any part of the premises which may be damaged or destroyed by the acts or omissions of Lessee, 1'Ril fJ. sublessees or by those of its officers, employees, guests, invitees or of other persons on or at the premises with consent of Lessee. 3. Lessee. shall take such care of the premises and all parts thereof so that at all times during the term of this agreement, and at the expiration or termination hereof, the premises shall be in as good condition as at the time of completed construction or installation, except for reasonable wear which does not adversely affect the structural -integrity or condition of the structures or adversely affect the appearance and efficient and proper utilization of any part of the premises. The premises and all parts thereof shall include, but not be limited to, such of the following as are or may be located or installed in or on the premises during the term of this agreement: Fencing the exterior and interior of the building walls; the exterior and interior and operating mechanism of and attachments to windows and skylights, screens, roofs, foundations, steel work, columns; the exterior and interior and operating mechanism of and attachments to doors, partitions, floors, ceilings; inside and outside paving and unpaved areas, landscaping, glass of every kind, and the utility, mechanical , electrical and other systems. 4. Lessee shall make frequent periodic inspections and, as the necessity arises regardless of the causes therefore, shall perform all necessary preventative vaintenance, including, but not limited to, painting; make all necessary repairs and replacements; and do all necessary rebuilding with respect to the premises and all parts thereof (including any total destruction). All such maintenance, repairs, and replacement shall be of quality equal to the original in materials and workmanship. All exterior paint colors shall be subject to the prior approval of Lessor. ARTICLE XXIII - GENERAL PROVISIONS 1. Lessee represents that it has carefully reviewed the terms and conditions of this agreement, and is familiar with such terms and conditions and agrees faithfully to comply with the same to the extent to which said terms and conditions apply to its activities as authorized and required by this instrument. 26 2. The term."Lessor" as used in this agreement means the "City of Palm Springs" and where agreement speaks of approval and consent by the Lessor, such approval is understood to be manifested by an official act of the City of Palm Springs, unless otherwise expressly stated in this agreement. 3. Whenever under this instrument a time is stated within which or by which original construction, repairs or reconstruction of said improvements shall be completed, .and if during such period a general or sympathetic strike or lockout, war or rebellion or some other event occurs beyond Lessee's power to control, the period of delay so caused shall be added to the period allowed herein for the completion of such work. ARTICLE XRIV - NON-DISCRIMINATION & FAA RE UIRED CLAUSES 1. Lessee, in the operations to be conducted pursuant to the provisions of this agreement and otherwise in the use of the Airport, shall not discriminate against any person or class of persons by reason of race, color, sex, creed or national origin as in any manner prohibited by Part 15 of the Federal Aviation regulations or any amendments thereto. 2. Lessee shall furnish its accommodations and/or services on, a fair, equal and not unjustly discriminatory basis to all users thereof. It shall charge fair, equal and not unjustly discriminatory prices for each unit or service; provided, however, that the Lessee may be allowed to make reasonable and non-discriminatory discounts, rebates or other similar type of price reductions to volume purchaser, and in accordance with the other provisions of this license with regard to discounts and rebates. 3. Non-compliance with these provisions shall constitute a material breach of this agreement. In the event of such non-compliance, the City shall have the right to terminate without liability; or at the election of the City or the United States, both shall have the right to judicially enforce the above provisions. 4. The Lessee agrees to insert the anti-discrimination provisions hereinabove enumerated in any agreement by which said Lessee grants a right or privilege to any person, firm or corporation to render accommodations and/or services to the public on the subject premises. 27 ARTICLE XXV - RIGHT OF FIRST REFUSAL In the event Lessor elects to allow the continuation of a fixed base operation beyond the expiration date of this agreement, Lessee shall have .the right of first refusal upon sixty days- written notice from Lessor to meet any offer received by the Lessor for such continuation of fixed base operations on the demised premises. ARTICLE XXVI - INVALID PROVISIONS In the event any covenant, condition, or provision herein contained is held to be invalid by any court of competent jurisdiction,, the invalidity of any such covenant, condition or provision herein contained is hereby declared to be severable and the remainder of this agreement shall remain in full force and effect provided that the validity of any such covenant, condition or provision does not materially prejudice either the Lessor or Lessee in its respective rights and abrogations contained in the valid covenants, conditions or provisions of this lease. IN WITNESS WHEREOF, the parties have caused this agreement, containing 33 pages including Exhibits "A" and "B", each of which is a part hereof as though fully set out herein, to be executed and their respective seals to be hereunto affixed the day and year first above written. ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By Crty er Ze City Manager REVIEWED & APPROVED STATE OF CALIFORNIA }a IOES, INC. �I COUNTY OF SBA Dj.eEO af IU ai Ft h 99 19A1 before,b.fo me, the enderdm gd, . Noruy public In and for aid `j o ad St+te, personally app.ared J.F. Braeamonte known to me to be the ------- President,and Rirn,•A R ViceYIce Itresident '6 known to me to be the SSere,tl}^Of the corporation that executed the within Instrument, and known la me Io be the po.q.n who executed 'be within 4 Imtroment on behalf of the corporation therein named, and so kpowtedged to me that mate In, .xuvted the within e 1 M1 pFFICIALSEAL nin.trvmem pu.....1 to Its by-law.or a r.aolallon of Oa board of ,� [ -. Sandra K. Baumeister ^- dir¢tan. NOTARY PN"LIO-a.A F.RNIA OFFICIAL SEAL 1 �.,,; *'vS/,''l�b PRINCIPAL OFFICE COUNTY IN ;ands IC. Baumeister WITNESS my hand and omd.1...1. SAN OIECU UOUMY N4IANYPUUIIC CALIFUNNIA 8 € My Commission Erpires Apr.15,1963 �tr.n+cIFAL OFFICE IN AN OIEGO COUNTY Sigmwre f/�y( � Q�// �. .,, .•..,., n E4,6S Apr.1s,1983 San d jt K 4 Ra� 9. .C3Prin Name RYp.d r ted) liters am for omaa notarial udl fa;,> -- EXHIBIT A JIMSA�SE PARCEL 1 That portion of the Southeast 1/4 of Section 18, Township 4 South, Range 5 East, San Bernardino Base and Meridian, in the City of Palm Springs, County of Riverside, State of California, described as follows: the Pointnofnintersectiontofatheccenterlineaof Ramono Road, andiBoglen Road;nthence North 0°17'49" West, along the centerline of Bogie Road, being the East line of said Section 1$„a distance of 63.03 feet to the beginning of a tangent curve concave Southwesterly having having a radius of 4850.00 feet; thence Northwesterly along the arc of said'Curve, through a central angle of 26°31'24", a distance of 2245.16 feet to a point on the arc of said curve, a radial line passing through said point bears North 63010'47" East; thence South 63°10'47" West, along said radial line a distance of 5o.00 feet to the True Point of Beginning; said point being hereinafter known and designated as Point "A"; thence continuing South 63*10147" West, along said radial line, a distance of 489.05 feet; thence North 36°32'13" West, a distance of 1581.47 feet; thence North right-of-way line of Bogi 53°27'47" East, a distance of 550.88 feet to a point on the Southwesterly e Road; thence South 36°32'08" East, along the Southerly right-of-way line of said Bogie Road, a distance of 853.99 feet to the beginning of a tangent curve concave Southwesterly, having 6 radius of 4800 feet; thence Southeasterly along the arc of said curve, through a central angle of 9°42'55" a distance of 813.90 feet to the True Point of Beginning, containing 20.16 acres, more or less. PARCEL 2 That portion of the Southeast 1/4 of Section 18, Township 4 South, Range 5 East, San Bernardino Base and Meridian, in the City of Palm Springs, County of Riverside, State of California, described as follows: Beginning at the point described above in Parcel 1 as Point "A"- thence South 63°10'47" West, a distance of 489.05 feet; thence South 36032'13' East a distance of 967.42 feet; thence North 75012'39" East, a distance of 225.36 feet to a point on the arc of a curve concave Southwesterly, having a radius of 4800 feet, a radial line passing through said point bears North 75°12'39" East; thence Northwesterly along the arc of said curve, through a central angle of 12°01'52", a distance of 1007.90 feet to the Point of Beginning, containing 8.35 acres, more or less. 30 � I 6 2�Al Os3 c/(^ 53 0 � w; F -po OS y � O 09. VO - -�S �S k s 151 5' A?-gS 9 Ago y0 'A i96, 'V 0 /D:12� Op RlA JEO7 90 225.36 ... N75'1239'E +•I S. E. 1/4 SECTION 18 ' T. 4,S., R. 5 E. r S. B. B. & M. 63.03' RAMON RD. N O° 17'49'W CITY OF PALM SPRINGS DEPARTMENT OF COMMUNITY DEVELOPMENT ENGINEERING DIVISION LEASE PLAT FILE NQ: R/ W IV SHEET N-Q A LEASE OFA PORTION OF AIRPORT PROPERTY DESIGN BY: BCALE I=4: 00� ��� ADJACENT TO 50GIE ROAD , SECTION 18 F.O.M. I !� T. 4 S., R. 5 E„ $•,B. 8. R M. CHECKED BY: DWG. NQ: 31 '` OF a,=;I RESOLUTION NO. 14055 OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING A FORTY-YEAR LEASE AGREEMENT BETWEEN THE CITY OF PALM SPRINGS AND JIMSAIR AVIATION SERVICES, INC., FOR 20,16 ACRES OF LAND, EFFECTIVE DECEMBER 15, 1981. WHEREAS the Airport Commission and Staff have recommended that a lease be granted for 20.16 acres of land at the Palm Springs Municipal Airport for the purpose of constructing and thereafter operating a full-service fixed base operation; and WHEREAS the Airport Commission and Staff have recommended that such activity is in the public interest in that such activity will provide a needed and essential service to the flying public, NOW THEREFORE BE IT RESOLVED by the City Council of the City of Palm Springs that the lease for 20,16 acres of Airport land to Jimsair Aviation Services, Inc. , be and it is he approved, ADOPTED this ise�_day of November 1981 AYES; Councilmemers aeirtch, F b NOES; ield, 0rtner, ABSENT: [done Rose and Mayor Doyle None ATTEST: By _ = /_ CITY OF .ALM SPRINGS, CALIFORNIA ity er ��.x.... REVIEWED & APPROVED sty Pan ger 20 b �L 011 EXHIBIT "B" 1. Descri tion of Phase Development with Estimated Cost and Completion Dates: PHASE EST. COMPLETION a. Main Terminal./Offices, Restaurant, Catering Kitchen, Self-serve Gas Station, Parking Lots, Underground Fuel Storage, Aircraft Parking Ramp, Taxiway October, 1982 b. Maintenance Hangar, Cor- porate Aircraft Storage Hangar, Vehicle Maintenance Building February, 1984 c. General Aviation T-Hangars December, 1984 d. Parking Ramp September, 1985 2. Expenditure Commitment: Jimsair must have spent $1,000,000 in development prior to October 1 , 1983. 3. Termination by Lessor: In the event that the investment commitment by Jimsair, set out in Paragraph 2 hereof, has not been accomplished, unless prevented by strike, war, riot, insurrection, act of God, or other cause totally beyond the control of Lessee, Lessor reserves the right to terminate this agreement upon thirty days' written notice to Lessee. 4. Rental Abatement During Development: During the development phases, as described in Paragraph "1" above, the rental payments provided in Article II, Section 1, of the lease shall be fifty percent (50%) of the amount provided for by said lease. Upon completion of each phase of development, as provided by this exhibit and as evidenced by the filing of a Notice of Completion with respect to the particular phase, the rental for that portion of the leased premises occupied by the particular phase shall resume at the rate provided for in the lease. For purposes of this provision, rental, as provided by the lease, shall be computed at the rate of Three Hundred Dollars ($300.00) per acre, per month. (By way of example: The rent payment due, on the initiation of this lease, will be $6,048 divided by two, or $3,024 per month. Upon completion of Phase 1 and assuming that Phase I occupies five (5) acres of h 32 �� land, the rental payment would be $3,024 plus an additional $750 per month, for a total of $3,774 per month). 5. Reimbursement of Taxiway cost: Upon completion of the taxiway, as provided by Article IV, Section 1, of the lease, the Lessor shall reimburse the Lessee the entire out-of-pocket cost of the taxiway to the Lessee, not to exceed Four Hundred Forty-eight Thousand Five Hundred Dollars ($448,500), whichever is the lesser amount; provided, however, that said reimbursement shall be paid over 240 equal monthly installments, which installments shall not exceed $1,868.75 per month as a rental credit regardless of. the Lessee's actual cost. ADAP funds used in construction shall not be utilized to compute reimbursement. 6. Reimbursemnt by Another FBO: In the event another FBO is authorized at the Airport prior to Lessee's receipt of total reimbursement for the taxiway, said FBO shall forthwith pay to Lessee one-half of the unreimbursed cost of said taxiway. 33 Recorded Instrument #229437 When recorded return to: MO #4385 William L. Hoese 7-5-89 Luce, Forward, Hamilton & Scripps 4250 Executive Square, Suite 700 La Jolla, CA 92037 (619 ) 535-2611 MEMORANDUM OF LEASE This Memorandum of Lease is made and entered into by and between The City of Palm Springs, herein called "Lessor" and Jimsair Aviation Services , Inc. , a California corporation, herein called "Lessee" , to witness that: Lessor has leased to Lessee for a term of fifty years commencing on December 15, 1981 and ending on December 14, 2031, on the terms and conditions set forth in that certain (1) Lease by and between the parties hereto and signed by the Lessee on October 23, 1981 and approved by the Lessor on November 18, 1981, and (2) Settlement Agreement between Lessor and Lessee dated September 18, 1986 , all the terms and conditions of which Lease and Settlement Agreement are made a part hereof as though fully - set forth herein. The Lease and Settlement Agreement pertain to those certain premises in the County of Riverside, State of California, described on Exhibit A (4 pages) attached hereto. Executed on V (o 1989 at Palm Springs, California. Lessor: THE CITY OF PALM SPRINGS by: 7"Z City Manager Lessee: JIMSAIR AVIATION SERVICES, INC. ByePresident J n F. BBracamonte, President STATE OF CALIFORNIA) , ss . COUNTY OF RIVERSIDE) 'Ord }A. lt-6 , 1989 , before me, the undersigned, a .Not ry Public in and 'fo�d state, personally appeared(!,(lzc/ey known to me to be ��tg„, (lTv r2 o THE C T OF PALM E li SPRINGS and known to me to be the person who executed the within instrument on behalf of the CITY OF PALM SPRINGS, and �' Q 7 i acknowledged to me that the CITY OF PALM SPRINGS executed the same. WITNESS my hand and official seal. C[!Ct EIgINE�'L`�� Notary Publi�,/ �7 NOTARY �SCHYlAR JC CA:`CF;t:A MY Cem FSIOE COL ' O.c 25 "'o STATE OF CALIFORNIA) ) ss. COUNTY OF SAN DIEGO) On this (p�ay of 1989, before me, the undersigned Notary Public, in and for aid county and state, personally appeared Juan F. Bracamonte, proved to me on the basis of satisfactory evidence to be the President of the Corporation that , executed the within instrument on behalf of the Corporation therein named, and acknowledged to me that such Corporation executed the within instrument pursuant to its Bylaws or a resolution of its Board of Directors. OFFICIAL SEAL 6AUNDA M HERNA140" , ary Pu is a NOTARY PUBLIC-CALIFORNIA SAN DIEGO CONY My comm.expires MAY 25, 1993 i MI121WLH 2 • f - EXHIBIT A JiMSAIR LEASE PARCEL 1 That portion of the Southeast 1/4 of Section 18, Township 4 South, Range 5 East, San Bernardino Base and Meridian, in the City of Palm Springs, County of Riverside, State of California, described as follows: Commencing at the Southeast corner of said Section 18, said point being the point of intersection of the centerline of Ramon Road and Bogie Road; thence North 0'17'49" West, along the centerline of Bogie Road, being the East line of said Section 1B, a distance of 63.03 feet to the beginning of a tangent curve concave Southwesterly, having a radius of 4850.00 feet; thence Northwesterly along the arc of said curve, through a central angle of 26'31'24", a distance of 2245.16 feet to a paint on the arc of said curve, a radial line passing through said point bears North 63'10'47" East; thence South 63.10147" West, along said radial line a distance of 50.00 feet to the True Point of Beginning; said point being hereinafter known and designated as Point "A"; thence continuing South 63.10'47" West, along said radial line, a distance of 489.05 feet; thence North 36.32'13" West, a distance of 1581.47 feet; thence North 53'27'47" East, a distance of 550.88 'feet to a point on the Southwesterly right-of-way line of Bogie Road; thence South 36.32'08" East, along the Southerly right-of-way line of said Bogie Road, a distance of 853.99 feet to the beginning of a tangent curve concave Southwesterly, having a radius of 4800 feet; thence Southeasterly along the arc of said curve, through a central angle of 9'42'55", a distance of 613.90 feet to the True Point of Beginning, containing 20.16 acres, more or less. PARCEL 2 That portion of the Southeast 1/4 of Section 18, Township 4 South, Range 5 East, San Bernardino Base and Meridian, in the City of Palm Springs, County of Riverside, State of California, described as follows: Beginning at the point described above in Parcel 1 as Point "A"; thence South 63.10'47" West, a distance of 489.05 feet; thence South 36.32'13" East a distance of 967.42 feet; thence North 75'12'39" East, a distance of 225.36 feet to a Point on the arc of a curve concave Southwesterly, having a radius of 4800 feet, a radial line passing through said point bears North 75.12'39" East; thence Northwesterly along the arc of said curve, through a central angle of 12'01'52", a distance of 1007.90 feet to the Point of Beginning, containing 8.35 acres, more or less. <_ EXHIBIT A es s\eo ybOp,�'� JG,• � cat^ 7,q,1 `act. tl5 �•. �" 90 �JJ yo �O JBi 9E`,P - S J 0`' • Al e s 9 00 JJ`, . D ABO s a- if . tEsA8Ol9p _._ 225.36 s\p S. E. I/4 I SECTION 18 I T. 4S.. R.5E. - • . S. B.B. EkM. 63.03' RAMON RD. s�N 0' IT'49 W CITY OF PALM SPRINGS DEPARTMENT OF COMMUNITY DEVELOPMENT ENGINEERING DIVISION LEASE PLAT nu A LEASE Of A PORTION OF AIRPORT PROPERTY DESIGN Ar. SCAEE: nE�C�l- r.ADJACENT TO BOGIE ROAO,SECTIOM 18 , F.0.M• I=4Do W T. 4 S., R. S E. S. B•B. S M. CHECKED AY: DING. N•: SHEE N• F `vl., Of 1 6 EXHIBIT A r PARCEL 3 THAT S.B.M- . INPORTION ITYF TH NORTHEAST s, OF SECT'JN 18, T45, OF CALIFORNIA O' PAL.• SPRINGS, COUNTY OF RIVERSIDE Rs DE:CRISED AS FOLLOWS; , STATE COY.*O:NCING AT THE SOUTHEAST CORNER OF SAID SECTION 18, r POINT BEING Tti POINT OF INTERSECTION OF THE CENTERLINE OF vim•. ROAD AND GENE ALF«Y TRAIL. SAID THENCE NORTH 00 ' R`" '' AUTRY TRAIL, 17 49" WEST, ALONG THE CENTERLINE OF GENE O: 63.03 FEET BTO`THEE BEGIHE STINC OFO. S ID SECTION IS NT CURVE 8CpyCDISTANC= WESTERLY, HAVING A RAD:_� OF 4850.00 FEET. THENCE NORTF.r=S-•- 0�'IH CENiR?L Al7C_ OF :�•14 02^ALONG TH° ARC OF SAID CURVE, THZJ h "'-:'CE NORTH 36.31' A DIS_:::CE OF 3067. 14 FEET. AIO;:C T.4� CE:;TETH 36 OF S1" WEST. TANGENT TO LAST MENTICN7ED 853.99 FEET. AID GENE AUTRY TRAIL, A LISTA :Cc_ CL%: TIZ:;CE SCLra? 53'27147" L1- 0 5 LirssESTEERLY RIGHT OF W rtST, A DISTANCE OF 50.00 FEET TRUE POINT OF BEGINNING F GENE AUTRY 'RAIL. SAID P0I!:T�IS� "EST, A DISTANCE OF THENCE CONTINUING SOUTH 53027'47" THENCE NORTH 36531'51"'1%T, PARAL_LEL TO r,• -. -,._ C-::- ACIRY TRAIL. A DISTANCE OF 39 :HE C aEET. .' or THENCE NORTH. 53':7'47" E.?ST, 5 DISTh :CE OF A F]:::. 0:7 �50.8S FEE: BE T_ SO,,:;r-STERLY RIGHT OF l O 50.00 FEET FROX CENTERLINE, AS !r_ASUREDG GENE RIGHT ICLE , T'_NCE SOUTP 36.31.511, AT RIGHT RLy C ;:A LINE, A DISTANCE OF E .,T, ALONG SAID SOUTHTESTE? _ It:G 395.37 FEET TO THE TRUE POI::T OFR V SA:D LESC::PT:O:; CC;CTAINS 5.00 ACRES. CITY OF PA SpRSPRINGS --"' t•_L': hT OF CJVNURITY OEVELOPUEAT ENGINEENING G�V1, nr `�1✓� . r ' E4IIBIT AIL �I \ z . C w ,1 r'S Sa -,'RCEL- ,3 _ 501�ACC ' p5� JIIvISA/R AVIr TIO;N/C SERVIC N .e 0 e L ' Il � 1 l I: CITY Of PA SPSPRINGS _'/•°� "EtiT OF COvuuNIT'r CE� EIOPWE-'T E ,, :I, , CONSENT TO ENCUMBRANCE OF GROUND LEASE INTEREST AND ESTOPPEL This CONSENT TO ENCUMBRANCE OF GROUND LEASE INTEREST(this"Consent") is made and entered into as of the_date of September, 1999,by and among the CITY OF PALM SPRINGS, whose principal place of business is 3200 East Tahquitz-Canyon Way, Palm Springs, California 92262("Lessor")and PALM SPRINGS FBO, LLC,as assignee("Assignee")having an address of 1670 Broadway, Suite 3350, Denver, Colorado 80202 with reference to the following facts and purposes: RECITALS: A. Lessor and Signature Flight Support-California, Inc. ("Lessee") are parties to that certain Indenture of Lease and Aeronautical Concession Agreement effective December 15, 1981, a memorandum of which was recorded on July 11, 1989, as Instrument No. 229437. Official Records of Riverside County,California,as amended by that certain Amendment No. 1 to Indenture of Lease and Aeronautical Concession Agreement No. 1764, dated September 18, 1986, and that certain Option Agreement dated September 18,1986, and that certain Settlement Agreement dated September 18, 1986, including any extensions, renewals or permitted modifications thereof (collectively, the "Lease") covering a portion of those certain premises known as Palm Springs International Airport as is more particularly described in Exhibit A attached hereto and incorporated herein by reference (the "Premises"). B. Pursuant to the Lease,Lessee owns the airport facility improvements that are a part of the Premises during the term of the Lease (the "Improvements"). C. The Improvements and the tenant's interest in the Lease are to be conveyed to Assignee. D. U.S.BANK NATIONAL ASSOCIATION("Lender")has agreed to lend the surn of up to $2,200,000.00 to Assignee in connection with the purchase by Assignee of (i) the Improvements, and (ii) Lessee's leasehold interest under the Lease, (collectively, the"Property"), which loan will be evidenced by a promissory note and will be secured by, among other things, a deed of trust(the "Leasehold Deed of Trust")upon Assignee's leasehold estate under the Lease. E. Lender desires to obtain Lessor's specific consent to (i) the purchase of the Improvements by Assignee and assignment of Lessee's leasehold interest under the Lease to Assignee, and (ii) the encumbering of Assignee's interest in the Lease by the Leasehold Deed of Trust,and(iii)for other matters relating thereto,all as is required pursuant to Article XI of the Lease. F. Lender intends to rely on this instrument in connection with the extension of credit to Assignee. %l Consent to Encumbrance of around Lease Interest.D03.wpd pp IIj i, A NOW, THEREFORE, in consideration of the premises, the mutual promises of the parties hereto and for other good and valuable consideration,the receipt and sufficiency of which are hereby acknowledged and as an inducement to Lender to make the above loan to Assignee, Lessor and Assignee represent and agree as follows: 1. Representations and Warrants. Lessor and Assignee hereby represent, warrant and certify to Lender as follows: (a) (i)That the documents referred to in Recital A above are the only documents which constitute the Lease, and (ii) that the Lease is in full force and effect and has not been modified, changed, altered or amended in any respect. (b) The Lease is the only agreement between the Lessor and Lessee, and/or between Lessor and Assignee, relating to the Premises. (c) That to Lessor's knowledge,Lessee and Assignee are current in the payment of any and all rent and any other charges required to be paid by Lessee and/or Assignee under the Lease,including the fixed ground rent,which fixed ground rent has been paid,through and including payment for the month of September, 1999, and to Lessor's knowledge,no default presently exists under the Lease and no state of facts exists which would constitute a default wider the Lease. (d) That the current term of the Lease expires on December 14, 2031. 2. Lender's Rights to Notice and to Cure Defaults. Lessor and Assignee agree that so long as the Leasehold Deed of Trust shall remain of record: (a) The Lease shall not be amended,terminated(except for a default of the tenant wider the Lease) or modified in any way without the prior written consent of Lender. (b) Any and all notices or other communication required or desired to be given to either Lessor or Assignee wider the Lease shall,in addition,be given to Lender by certified mail return receipt requested at U.S.Bank National Association,918171h Street,Denver,Colorado 80202, Attention: Hassan Salem or such other address as Lender may designate in writing. (c) Any notice of other communication which Lender shall desire or is required to give to or serve upon Lessor or Assignee shall be deemed to have been duly given or served if delivered in accordance with Article XIX of the Lease. (d) Lender shall have the right, but not the obligation to cure any default by the Assignee under the Lease and Lessor agrees to accept any performance tendered by Lender as if Assignee had tendered such performance,provided, however, that unless Lender otherwise agrees in writing, any performance or partial performance by Lender wider the Lease shall not constitute an assumption of the Assignee's obligation under the Lease. Consent to Enuumbianae of Ground Lease Interest D03.wpd 2 y \ (e) In the event that Assignee shall commit a default under the Lease,Lessor shall give written notice to Lender of such default concurrently with the delivery of a notice of default to Assignee or subsequently thereafter. Lessor shall not terminate the Lease by reason of such default of Assignee if Lender cures such default within the times set forth in Article XI of the Lease. (f) Unless otherwise provided herein,the exercise and non-exercise of remedies under the Leasehold Deed of Trust are solely at the election of Lender. If Lender agrees to exercise any of such remedies by reason of Assignee's default under the Lease or Leasehold Deed of Trust, Lender is not obligated to pursue such remedies if Assignee's defaults have not been corrected or cured. (g) Assignee hereby agrees that Assignee's right to cancel the Lease,pursuant to Article XII thereof, shall be subject to Lender's consent,and any exercise or attempt to exercise the cancellation right provided in Article XII of the Lease without the prior written consent of Lender shall be void. 3. Limitation of Lender's Liability Under Lease. Except as may otherwise be agreed in writing by Lender with Lessor and except for such period of time as Lender is actually the owner of the Lessee's interest in the Lease, in no event shall Lender be liable for any of the Lessee's obligations under the Lease. In the event that Lender shall at any time hold Lessee's interest under the Lease or any new lease entered into in replacement thereof, then, upon any sale, transfer of assignment thereof by Lender(which shall be in accordance with the terms hereof), Lessor agrees that such transfer shall automatically release Lender from any liability wider the Lease or any successor lease occurring after the date of such sale, transfer or assignment. 4. Successors. This Amendment is binding upon and inures to the benefit of the parties hereto,their successors and assigns,and including specifically Lender and its successors and assigns. 5. Lease and Airport Rules. Notwithstanding anything to the contrary contained herein, any person acquiring the leasehold interest of Assignee from Lender shall, as a condition precedent to the enjoyment of the leasehold estate, acknowledge and agree to be bound by the terms of the Lease and all rules and regulations of the Palm Springs International Airport. 4. Extensions of Time Periods. Notwithstanding anything to the contrary contained herein, any time periods within which Lender is required to act shall be extended by a period equal to the time Lender is restrained from exercising its remedies under the Leasehold Deed of Trust pursuant to the automatic or any other stay provision or order or injunction issued or in force pursuant to the Federal Bankruptcy Code as now or hereafter in effect. 5. No Merger. So long as the Deed of Trust is in existence, and unless otherwise expressly consented to in writing, the fee title to the Premises and the leasehold estate of Assignee created by the Lease shall not merge, but shall remain separate and distinct, notwithstanding the 0� Consent to Bnoumbrance of Ground Lease toteresLD03.wpd 3 acquisition of the fee title and the leasehold estate by Lessor or Assignee or by a third party, by purchase or otherwise. 6. Inconsistent Terms. This Consent shall constitute a part of the Lease. Lessor and Assignee acknowledge and agree that the Lease remains in full force and effect unmodified, except as herein provided, and that the terms and provisions of the Lease shall prevail over any term, covenants, agreement or provision in this Consent contrary or inconsistent with the terms of the Lease. 7. Captions; Counterparts. Captions are for reference only. This Consent may be executed in any number of identical counterparts, and each such counterpart shall be deemed a duplicate original hereof. 8. No Fee Mortgage. The foregoing provisions do not give any person the right to mortgage,hypothecate or otherwise encumber or cause any lien to be placed upon the fee estate of Lessor,nor shall the foregoing provisions in any event be construed as resulting in a subordination in whole or in part of the fee estate of Lessor to any indebtedness of Assignee. LESSOR: CIT , OF PALM SPRINGS, C ORNIA By: Name: Title: alya � ATTEST: APPROVED BY THE CITY COUNCIL BY�NO. City Clerk REVIEWED & APPROVED Rutan & Tucker e4 . DAVID J. ALESHIRE, ESQ. City Attorney Consent to Encumbrance of Ground Lease 1nterest.D03.wpd 4 p� 1r 11 (r\\ lJl 1\Lj �ILJ ASSIGNEE: PALM SPRINGS FBO, LLC, a Delaware limited liability company By: Name: Jeffrey W. Ross Title: Manager LENDER: U.S. BANK NATIONAL ASSOCIATION By: Name: Title: r c%Consent to Encumbrance of Ground Lease 1nterest.D03.wpd 5 J � e E o-g r � y ASSIGNEE: PALM SPRINGS PBO, LLC, a Delaware limited liability company By: Name: Title: LENDER: U.S. BANK NATIONAL ASSOCIATION Name: 1455,vW A :5ALc_. Title: isl: l l,ce a✓- del Consent to Encumbrance of Ground Lease Imerest.D03.wpd 5 r CONSENT-TO ENCUMBRANCE OF GROUND LEASE INTEREST AND ESTOPPEL This CONSENT TO ENCUMBRANCE OF GROUND LEASE INTEREST ,(this "Consent") is made and entered into as of thec�p('1�day of June, 2002, by and among the CITY OF PALM SPRINGS, whose principal place of business is 3200 East Tahquitz-Canyon Way, Palm Springs, California 92262 ("Lessor") and PALM SPRINGS FBO TWO, LLC, as assignee ("Assignee") with reference to the following facts and purposes: RECITALS A. Lessor and Palm .Springs FBO, LLC ("Lessee") are parties to that certain Indenture of Lease and Aeronautical Concession Agreement effective December 15, 1981, a memorandum of which was recorded on July 11, 1989, as Instrument No. 229437. Official Records of Riverside County, California, as amended by that certain Amendment No. 1 to Indenture of Lease and Aeronautica, Concession Agreement No. 1764, dated September 18, 1986, and that certain Option Agreement dated September 18, 1986, and that certain Settlement Agreement dated September 18, 1986, including any extensions, renewals or permitted modifications thereof (collectively, the "Lease") covering a portion of those certain premises known as Palm Springs International Airport as is more particularly described in Exhibit A attached hereto and incorporated herein by reference (the "Premises"). B. Pursuant to the Lease, Lessee owns the airport facility improvements that are a part of the Premises during the term of the Lease(the"Improvements"). C. The Improvements and Lessee's interest in the Lease are to be conveyed to Assignee. D. U.S. BANK NATIONAL ASSOCIATION ("Lender") has agreed to lend the sum of up to $5,050,000.00 to Assignee in connection with the purchase by Assignee of (i) the improvements, and (ii) Lessee's leasehold interest under the Lease, (collectively, the "Property"), which loan will be evidenced by a promissory note and will be secured by, among other things, a deed of trust (the "Leasehold Deed of Trust") upon Assignee's leasehold estate under the Lease. E. Lender desires to obtain Lessor's specific consent to (i) the purchase of the Improvements by Assignee and assignment of Lessee's leasehold interest under the Lease to Assignee, and(ii) the encumbering of Assignee's interest in the Lease by the Leasehold Deed of Trust, and (iii) for other matters relating thereto, all as is required pursuant to Article XI.of.the Lease. F. Lender intends to rely on this instrument in connection with the extension of credit to Assignee. IRV#22647 v I "1" i NOW, THEREFORE, in consideration of the premises, the mutual promises of the parties thereto and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and as an inducement to Lender to make the above loan to Assignee,Lessor and Assignee represent and agree as follows: I. Representations and Warrants. Lessor and Assignee hereby represent, warrant and certify to Lender as follows: (a) (i) That the documents referred to in Recital A above are the only documents which constitute the Lease, and (ii) that the Lease is in full force and effect and has not been modified, changed, altered or amended in any respect. (b) The Lease is the only agreement between Lessor and Lessee, and/or between Lessor and Assignee,relating to the Premises. (e) That to Lessor's knowledge, Lessee and Assignee are current in the payment of any and all rent and any other charges required to be paid by Lessee and/or Assignee under the Lease, including the fixed ground rent, and to Lessor's knowledge, no default presently exists under the Lease and no state of facts exists which would constitute a default under the Lease. (d) That the current term of the Lease expires on December 14, 2031. (e) Lessor hereby-consents to (i) the financing of the Improvements by Lessee,and (ii) the encumbering of Lessee's interest in the Lease by the Leasehold Deed of Trust and Lender's obtaining its security interest in Lessee's rights under the Lease and the leasehold interest in the Premises. 2. Lender's Rights to Notice and to Cure Defaults. Lessor and Assignee agree that so long as the Leasehold Deed of Trust shall remain of record: (a) The Lease shall not be amended,,terminated (except for a default of the tenant under the Lease) or modified in any way without the prior written consent of Lender. (b) Any and all notices or other communication required or desired to be given to either Lessor or Assignee under the Lease shall, in addition,be given to Lender by certified mail return receipt requested at U.S. Bank National Association, 918 17th Street, Denver, Colorado 80202, Attention: Hassan Salem or such other address as Lender may designate in writing. (c) Any notice or other communication which Lender shall desire or is required to give to or serve upon Lessor or Assignee shall be deemed to have been duly given or served if delivered in accordance with Article XIX of the Lease. (d) Lender shall have the right, but not the obligation to cure any default by the Assignee under the Lease and Lessor agrees to accept any performance tendered 1RV#22647 v1 r, } -2- y by Lender as if Assignee had tendered such performance,provided, however, that unless Lender otherwise agrees in writing, any performance or partial performance by Lender under the Lease shall not constitute an assumption of the Assignee's obligation under the Lease. (e) In the event that Assignee shall comrnit a default under the Lease, Lessor shall give written notice to Lender of such default concurrently with the delivery, of a notice of default .to Assignee or subsequently thereafter. Lessor shall not temunate the Lease by reason of such default by Assignee if Lender cures such default within the times set forth in Article XI of the Lease. (f) Unless otherwise provided herein, the exercise and non-exercise of remedies under the Leasehold Deed of Trust are solely at the election of Lender. If Lender agrees to exercise any of such remedies by reason of Assignee's default under the Lease or Leasehold Deed.of Trust, Lender is not obligated to pursue such remedies if Assignee's defaults have not been corrected or cured. (g) Assignee hereby agrees that Assignee's right to cancel the Lease, pursuant to Article XII 'thereof, shall be subject to Lender's consent, and any exercise or attempt to exercise the cancellation right provided in Article XII of the Lease without the prior written consent of Lender shall be void. 3. Limitation of.Lender's Liability Under Lease. Except as may otherwise be agreed in writing by Lender with Lessor and except for such. period of time as Lender is actually the owner of the Lessee's interest in the Lease, in no event shall Lender be liable for any of the Lessee's-obligations under the Lease. In the event that Lender shall at any time hold Lessee's interest under the Lease or any new lease entered into in replacement thereof, then, upon any sale, transfer of assignment thereof by Lender (which shall be in accordance with the terms hereof), Lessor agrees that such transfer shall automatically release Lender from any liability under the Lease or any successor lease occurring after the date of such sale, transfer or assignment. 4. Successors. This Amendment is binding upon and inures to the benefit of the parties hereto, their successors and assigns, and including specifically Lender and its successors and assigns. 5. Lease and Airoort Rules. Notwithstanding anything to the contrary contained herein, any person acquiring the leasehold interest of Assignee from Lender shall, as a condition precedent to the enjoyment of the leasehold estate, acknowledge and agree to be bound by the terms of the Lease and all rules and regulations of the Palm Springs International Airport. 6. Extensions of Time Periods. Notwithstanding anything to the contrary contained herein, any time periods within which Lender is required to act shall be extended by a period equal to the time Lender is prevented from exercising its remedies under the Leasehold Deed of Trust pursuant to the automatic or any other stay provision or IRV#22647 vl (V -3- d it �� order or injunction issued or in force pursuant to the Federal Bankruptcy Code as now or hereafter.in effect. . 7. No Mercer. So long as the Deed of trust is in existence, and unless otherwise expressly consented to in writing,the fee.title to the Premises and the leasehold estate of Assignee created by the Lease shall not merge, but shall remain separate and distinct, notwithstanding the acquisition of the fee title to the leasehold estate by Lessor or Assignee or by a third party,by purchase or otherwise. 8. Captions; Countemarts. Captions are for reference only. This Consent may be executed in any number of identical counterparts, and each such counterpart shall be deemed a duplicate original hereof: 9. No Fee Mortgage. The foregoing provisions do not give any person the right to mortgage, hypothecate or otherwise encumber or cause any lien to be placed upon the fee estate of Lessor, nor shall the foregoing provisions in any event be construed as resulting in a subordination in whole or in .part of the fee estate of Lessor to any indebtedness of Assignee. LESSOR CITY OF PALM SPRINGS, CALIFORNIA By - City Manager ATTEST Q "A City Clerk REVIEWED AND APPROVED City Alt4ney "Assignee" APPROVED BY THE CITY COUNCAL PALM SPRINGS FBO TWO, LLC, a BY S. NO.� � = -��O� Delaware limited liability company, d.b.a. mU �1��, �� Million Air, Palm Springs By J 4`lI-4� Its lly,sanv/t}C � q1 IRV#22647v1 -Q. - n E 1 • • T n c STATE OF COLORADO ) SS. CITY AND COUNTY OF DENVER) Subscribed to before me this 29a'day of August, 2002,by Jeffrey W. Ross, as President of Palm Springs FBO TWO, LLC, a Delaware limited liability company, d.b.a Mill' Springs .. P : pTA9 ' � N�A,= .0 �, .'p o ry Public M P xpires: April 6,2006 "�l n, Pa a w � OPTION TO LEASE This Option to Lease("Agreement")is made and entered into this {q day of September, 2001,by and between THE CITY OF PALM SPRINGS, a California municipal corporation("Optionor") and PALM SPRINGS,FBO,LLC dba MILLION AIR-PALM SPRINGS, a California Limited Liability Company("Optionee"). Recitals WHEREAS,Optionor is the owner of certain real property situated in the City of Palm Springs,Riverside County, known as the Palm Springs International Airport("Airport"); WHEREAS,Optionor and Optionee are parties to that certain Indenture of Lease and Aeronautical Concession Agreement No. 1764("Lease")dated December 15, 1981, as duly amended by Amendment No. 1 ("Amendment No.I")dated September 18, 1986,and that certain Settlement Agreement dated September 18, 1986, including any extensions,.assignments, subleases, or permitted modifications thereof, under which Optionee leases a certain portion of real property within the Airport C Leased Parcel"); and WHEREAS, Optionee desires to acquire the exclusive right to lease, without becoming obligated to lease, five(5) additional acres of real property, located immediately to the north- west of the Leased Parcel, as more particularly described in Exhibit"A" attached hereto and incorporated herein and depicted on Exhibit`B" as Parcel 4 (herein referred to as "Parcel 4"), at an agreed rental rate and under certain specified terms and conditions as provided in this Agreement. Agreement NOW THEREFORE, in consideration of the covenants and agreements contained herein, the above recitals,and other good and valuable consideration,the receipt and sufficiency of which are hereby acknowledged,the parties hereto agree as follows: 1. OPTION: (a) Grant of Option. Optionor hereby grants to Optionee the exclusive right to lease Parcel 4 at the rental rate and under the terms and conditions set forth herein(the "Option")for the construction and operation of a City-approved facility for "aeronautical activities", as that term is defined under FAA AC 150/5190-5 Appendix 1. (b) Option Period. This Option shall commence on the date this Agreement is fully executed and shall remain in effect until 5:00 p.m., September g 2006 (the "Option Period"). IRV#14083 v2 eK �` 1 (c) Option Price. This Option is granted in consideration of Optionee's payment to Optionor of the sum of FIVE THOUSAND AND 00/100 DOLLARS ($5,000.00) per year payable in advance to the order of Optionor each year,beginning concurrently with the execution of this Agreement, receipt of which is hereby acknowledged, and each year thereafter on or before September �q T11for each year of the Option Period. In the event this Option is not exercised,all sums paid and services rendered to Optionor by Optionee shall be retained by Optionor in consideration of the granting of this Option. (d) Lease Rate and Terms. Should Optionee exercise the Option within the Option' Period, Optionee shall be entitled to lease Parcel 4 from City for the rental rate payable by Optionee.to Optionor under Article 11 of the Lease, as such Lease shall be amended under the terms described immediately below. Before the commencement of Optionee's lease of Parcel 4,the parties shall enter into and execute an amendment to the Lease to incorporate Optionee's lease of Parcel 4 under the terns of the Lease. Unless mutually agreed by the parties to the contrary in writing,the lease of Parcel 4 shall be subject to the terns of the Lease, as amended as of the date of Optionee's exercise of the Option, at Article II,Paragraph 1 to read as follows: `Parcel 4: Lessee shall pay Lessor as rental for Parcel 4 described at Exhibit"A"herein and containing approximately 5.0 acres,the sum of Seventy-Seven Thousand Three Hundred Nineteen and 00/100 Dollars($77,319.00)per year commencing upon the date when Optionee exercises the Option to such Parcel 4 ("Option Exercise Date"),payable monthly in advance in the amount of Six Thousand Four Hundred Forty-Three and 25/100 Dollars($6,443.25). Consumer Price Index. The rent payable beginning the fourth (4th)year following the Option Exercise Date through the remainder of this Lease shall be revised,effective the beginning of the fourth(4th), ninth(9th), fourteenth(14th), and every five(5) years thereafter after the Option Exercise Date based on the change in Cost of Living Index. For the purposes of this computation, it is agreed that the Consumer Price Index for the month of March_ [insert year of Option Exercise Date] is the base or one hundred percent(100%). The Cost of Living Index to be used is that reflected by the Consumer Price Index, all items,Los Angeles- Riverside-Orange County, (1967 equal 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 be no longer published,then another index generally recognized as IRV 414083 v2 -2- '<, authoritative shall be substituted by agreement. In any event, the base used by the new index shall be reconciled to the 1967 index The rentals set out hereinabove shall be payable on the first day of each and every month throughout the term of this Agreement." (e) Method of Exercise of Op t ion. If Optionee is not in breach of this Agreement, it may exercise this Option during the Option Period by delivery of notice thereof in accordance with Section 3(b). 2. TERMINATION OF OPTION. (a) Automatic Termination. If Optionee fails to exercise this Option in accordance with its terms and within the Option Period or any extension thereof, then this Option and the rights of Optionee shall automatically and immediately terminate without notice. Thereafter, if requested by Optionor, Optionee shall properly execute, acknowledge, and deliver to Optionor within fifteen(15) days of the request therefor,any document required by Optionor or a title insurance company to verify the termination of this Agreement. (b) Termination due to Breach. If either party fails to perform in a timely manner any payment obligation, duty,or other obligation under this Agreement,the aggrieved party shall be entitled to the remedies for breach of contract that are available under applicable law,including the remedy of specific performance,and this Agreement and the rights of the breaching party shall automatically and immediately terminate on twenty(20) days' notice to the breaching party. However,the breaching party shall have the right to cure the default and reinstate such party's position under this Agreement if it, within the twenty(20) day period cures the default. 3. MISCELLANEOUS PROVISIONS. (a) Assignment of Agreement. Optionee shall not assign this Agreement. In the event an attempted assignment is made, in violation of this provision, then Optionee's rights under this Agreement shall automatically terminate without notice. (b) Notice. Unless otherwise provided herein, any notice,tender, or delivery to be given hereunder by either party to'the other may be effected by personal delivery in writing or by registered or certified mail, postage prepaid, return receipt requested, and shall be deemed communicated three days from mailing. Mailed notices shall be addressed as set forth below,but each party may change his address by written notice in accordance with this paragraph. IRV#14083Q n �� -3- ;l " � To Optionor: Palm Springs International Airport 3400 E. Tahquitz Canyon Way Palm Springs,CA 92262 Attn: Aviation Director With a copy to: Burke, Williams & Sorensen,LLP 18301 Von Karman Avenue, Suite 1050 Irvine, CA 92612 Attn: David J. Aleshire, Esq. To Optionee: Million Air—Palm Springs (c) Integration This instrument and the attached Exhibits constitute the entire agreement between the parties relating to the Option. Any prior agreements, promises,negotiations, or representations not expressly set forth in this Agreement are of no force and effect unless in writing and signed by the Optionor and Optionee. (d) Attorneys' Fees. If any legal action or proceeding arising out of or relating to this Agreement is brought by either party to this Agreement,the prevailing party shall be entitled to receive from the other party, in addition to any other relief that may be granted,the reasonable attorney's fees,costs, and expenses incurred in the action or proceeding by the prevailing party. (e) Successors and Assigns. This Agreement shall be binding on and inure to the benefit of the parties to this Agreement and their heirs, personal representatives, successors, and assigns, except as otherwise provided in this Agreement. [Signatures on Next Page] -4- IRV#14083 v2 iJ V a' IN WITNESS WHEREOF,the parties have executed and entered into this Agreement as of the date first written above. "Optionor" CITY OF PALM SPRINGS, a California municipal corporation City Clerk ity Manager APPROVED AS TO FORM: ty Attorney ,�J ,^/fir©� Optionee" A"�—� �/_ PALM SPRINGS, FBO, LLC dba MILLION AIR - °� PALM SPRINGS, a California Limited Liability � �-�cv. Company " �`1e'(NOTARIZED) `s'q fv,1l� 9,oe a. By. OFFICIAL SEAL /J Signature y ERNEST L SUSSMAN NOT COMMISSION 11303075 RNEflSIDE COUNTY Print Name and Title 9MV Camtlselon Eqr.May Si,4006 ED) By: Signature u^T.,�i� �y �? f Print Name an Title 9r�ev �� 01 C rporatious require two signatures; one from each of the following:A. Chairman of Board,President,any Vice President; AND B. Secretary, assistant Secretary, treasurer, assistant Treasurer, or Chief Financial Officer). End of Signatures nzva14083 vx -5- APPROVED BY THE CITY COUNCIL JURAT WITH AFFIANT ATEMENT State of C A h l FC3 R N l R ss. County of ❑ See Attached Document(Notary to cross out lines 1 -11 below) ❑ See Statement Below(Lines 1 - 11 to be completed only by document signer[s], notthe Notary) -------- 2 3 ------------ ---- --- . 4 ------ ------------------------------- 5 .----- -------._....---- ------ --------- --- -- --'---- - --- ------- --_-.. .. . .. .... _ -- 6-' --------------------------------- ----____------ -----'-----------'-------- -- -- --- - --- T----------- ------- ---- ------'- --- - ---.. ------------ --- ---- --- --. _` ---- _ ..-___. ...... &--------------__ - .__..__--- -----------_.___--- ----- ---------- Signature d t Sign r No.1 Signature of Docun ent Signer No.2 it any) Subscribed and sworn to (or affirmed) before me this day of �R� . M-40o-by �Ftfit�lt.81'11L Date Mengr Yew ERNEST L t>,YISSMAN (NOTAitYINItluC-CAUFotlral (� COL(SIAAN R . K1713C9tA31 �S ' Name a Signer IIArOarnnlrNonExp Wyaf.I�OOS (2) Name a Signer Signature ot Notary Pu OPTIONAL Though the information below is not required by law,it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this farm to another document. e WIMMEW Ulm Further Description of Any Attached Document Top of thumb here Top of thumb here ol?Tl(2)ty 'Td LcrySC F'Rmi-t Title or Type of Document: -T K iS C 1 r V o f F0 L.N) SPf t I N 4 Sdz rs o F °I PMCGes Document Date: ©c t, aA, 'd cam I Number of Pages: eZ Rc Signer(s) Other Than Named Above: i UHIBIT "A" PALM SPRINGS INTERNATIONAL AIRPORT PALM SPRINGS, CALIFORNIA MILLIONAIRE AIR PARCEL 4 That portion of the Northeast 1/4 of Section 18, Township 4 South,Range 5 East, San Bernardino Base and Meridian,in the City of Patin Springs, County of Riverside, State of California, being more particularly described as follows: Commencing at Southeast Corner of said Section 18, said point being the point of intersection of the centerline of Ramon Road and Gene Autry Trail; Thence North 00 Degrees 1T49"West a distance of 62.90 feet, along the centerline of Gene Autry Trail and being the East line of said Section 18,to the beginnirig of a curve, concave Southwesterly, having a radius of 4,850.00 feet; Thence Northwesterly along the are of said curve, through a central angle of 36 Degrees 14'02"a distance of 3,067.14 feet; Thence North 36 Degrees 32'08"West a distance of 1,249.36 feet; Thence leaving said centerline South 53 Degrees 27'47" West a distance of 50.00 feet to a point on the Southwesterly right-of-way line of said Gene Autry TTaif also being the TRUE POINT OF BEGINNING; Thence continuing South 53 Degrees 27'4T' West a distance of550.89 feet; Thence North 36 Degrees 32'13"West a distance of 39537 feet; Thence North 53 Degrees 27'4T'East a distance of 550.90 feet to a point on the Southwesterly right-of-way fine of Gene Autry Trail; Thence South 36 Degrees 32'08"East a distance of 395.37 feet along said Southwesterly right-of-way line to the TRUE POINT OF BEGINNING. Said Parcel 4 containing 217,807.36 square feet(5.00 acres),more or less. N 00'17'49" W •�—. n v i i PARCEL 6 •\\ �h n Q Q�Ry •• 395.37' S 36'32'6H" E PARCEL 5 i y0 4, 50.00' . S 5327'4T W '1 T.P.O.H. PARCEL 3 � i \v\/ 1,249.36' N 36370H" W } \� n n N M �\ PARCEL 1 z PARCH 2 i n^ , 3,067.14 , RECORD CORVE DATA 'i ' R= 4 L a 3;067.7.14' T a 1,506.HT i , 400 0 400 800 SCALE IN FEET 62.90' N 00'17'49" W r.� PARCEL 4 .. I =A DO OI A 7 WED 13:30 FAX 303 869 4602 BLACK CREF% CAP. 001 JEFFREY W. ROSS 518 17TH STREET, SEVENTEENTH FLOOR DENVER, COLORADO 80202 TELEPHONE: (303) 869-4700 FACSIMILE: (303) 869-4602 FAX TRANSMITTAL TO: Barry Griffith FROM: Jeff Ross DATE: 06-26- 02 FAX NUMBER: 760-318-3815 NUMBER OF PAGES: 33 (including this cover sheet) COMMENTS CONFIDENTIALITY NOTICE The information in this facsimile message is intended only for the personal and confidential use of the designated recipient(s) named above. If you are not the intended recipient to this facsimile or an agent responsible for delivering to the recipient note that any disclosure, copying, distribution or action taken on this information is not permitted. If you received this transmission in error, please notify the sender immediately. Thank you! F ($6/14 WED 13:30 FAX 303 869 4602 BLACK CREFK CAP. 0002 ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (together with the exhibits and schedules hereto, this "Agreement") is entered into as of June 24, 2002 (the "Effective Date") by and between PALM SPRINGS FBO, LLC, a Delaware limited liability company doing business as Million Air Palm Springs ("Seller"), and FBOCO Holdings LLC, a Delaware limited liability company("Buyer"). A. Jeffrey W. Ross ("Manager") operates for Seller a fixed base operation for corporate and private aircraft at Palm Springs International Airport located in Palm Springs, California (the "Facility"). The business operation relating to the Facility is hereinafter referred to as the"Business"; and B. Buyer desires to acquire from Seller, and Seller desires to sell to Buyer, all or substantially all of the assets and properties of the Business, wherever located, as more particularly described in this Agreement, and all or substantially all of the assets and properties of La Quinta, FBO, Inc. ("La Quinta") (which operates a fixed based operation for corporate and private aircraft at Desert Resorts Airport in Thermal, California) for a total combined gross purchase,price of Twelve Million dollars ($12,000,000) (Nine Million One Hundred Seventy- Eight Thousand Five Hundred Seventeen Dollars ($9,178,517.00) for the assets of Seller, and Two Million Eight Hundred Twenty-One Thousand Four Hundred Eighty-Three Dollars ($2,821,483) for the assets of La Quinta), subject to satisfaction of certain liabilities described below, on the terms and conditions set forth herein and in that certain Asset Purchase Agreement between La Quinta and Buyer dated June _, 2002 ("La Quinta Asset Purchase Agreement"); and C. Manager is a member and manager of Seller, and Manager and Buyer desire that Manager become the manager of the Business after the Closing, the terms of which are to be set forth in a Management Agreement between Manager and Buyer (the "Management Agreement"). ARTICLE 1 PURCHASE AND SALE OF ASSETS 1.1 Purchased Assets. Subject to the terms and conditions of this Agreement, Buyer shall purchase, and Seller shall sell, convey, assign transfer and deliver to Buyer, the Purchased Assets on the Closing Date. The term "Purchased Assets" means all properties, assets, rights and interests of every kind and nature, whether real or personal, tangible or intangible, of Seller as of the Closing Date that are used, owned or leased by Seller in connection with the Business, including, without limitation,the following assets: (a) inventories,parts and related supplies (including fuel supplies); (b) the existing leasehold estate of Seller for the Facility (the "Ground Lease"), all rights appurtenant thereto, and all interests of Seller in buildings, fixtures and improvements described on Schedule 1.1(b), as well as Seller's right to lease five (5) additional acres of real property from the City of Palm Springs as further set forth in that vll-ASSET PURCH IDASE AGREEMENT ' p r F 0AWP2Pr/014 WED 13:31 FAX 303 869 4602 BLACK CREFK CAP. [a 003 certain Option to Lease between the City of Palm Springs and Seller, dated September 19, 2001; (c) all interests in furniture, fixtures, equipment, vehicles and other tangible personal property, whether owned or leased, including but not limited to those listed in the attached Tangible Property Schedule, Schedule 1.1(e); (d) all rights existing under contracts, equipment leases, subleases (in which Seller is the Sublessor), licenses and permits to which Seller is a party, and other agreements by or to which the Business or any of the Purchased Assets are bound or subject(collectively,the "Contracts"); (e) all prepaid items and deposits paid by Seller in connection with the operation of the Business, including but not limited to those listed in Schedule M(e); (f) all lists (including, but not limited to, customer and vendor lists), files, documents, papers, agreements, books and records, plans and specifications pertaining to the Purchased Assets, the Facility, the Assumed Liabilities and the Business in the Possession of Seller, but excluding any documents pertaining solely to Excluded Liabilities(as defined in Section 1.3); (g) all goodwill as a going concern; (h) all trademarks and trade names, trademark and trade name registrations, service marks and service mark registrations, copyrights and copyright registrations, the applications therefore and the licenses with respect thereto listed in Schedule 1.1(h), trade secrets, proprietary know-how, together with the goodwill and the business appurtenant thereto and any rights, claims or choses in action relating to or deriving from any of the foregoing and attributable to the Business, including, but not limited to, any unregistered intellectual property used by the Business (collectively, the "Intellectual Property"); (i) all interest in and to telephone numbers and all listings pertaining to Seller in all telephone books and other directories, including but not limited to those listed in Schedule 1,1(i); 0) all catalogues, brochures, sales literature, promotional material and other selling material relating to the products and/or services of the Business; (k) all government business licenses, permits, registrations and equivalent documents relating to the conduct of the Business including but not limited to those set forth on the Permits Schedule, Schedule 1.1(k), but only to the extent such permits and other documents are transferable (which non-transferable permits, if any, shall be so disclosed in Schedule 1.1(k)); (1) other than in connection with the loans disclosed in Schedule 3.19, Seller's rights in connection with any advances made by Seller to employees of the Business, to VI ASSET PURCHASE AOREEMMENr 2 n F F r AF.:r46/92 WED 13:31 FAX 303 869 4602 BLACK CREFK CAP. fm004 r) the extent reflected on the Balance Sheet (as defined in Section 3.6), as increased or decreased in the ordinary course of business through the Closing Date; (m)all cash on hand and cash equivalents remaining after any cash distribution made pursuant to Section 2.2.below; (n) all trade and accounts receivable and notes receivable of Seller arising out of sales by the Business up to and including the Closing Date; (o) all insurance policies and rights thereunder, to the extent transferable (which non-transferable policies or rights, if any, shall be so disclosed in Schedule 1.1(o)), including but not limited to rights to any cancellation value as of the Closing Date; and (p) all other assets not referred to above which are either reflected in the Balance Sheet(as defined in Section 3.6) or acquired by Seller in the ordinary course of business. 1.2 Assumption of Liabilities. On the Closing Date, Buyer shall assume and agree to pay, defend, discharge and perform as and when due (a) all liabilities reflected or reserved for on the Closing Balance Sheet (as defined in Section 2.2(a)) (not including any Excluded Liabilities (as defined in Section 1.3)), increased or decreased in the ordinary course of business through the Closing Date, (b) all liabilities, obligations and commitments under the Contracts arising out of or relating to events or occurrences after the Closing Date, and (c)all other liabilities and obligations of the Business that arise or relate to events that occur solely after the Closing Date (the"Assumed Liabilities"). 1.3 Excluded Liabilities. Buyer shall not be liable for any liabilities or obligations of Seller that are not Assumed Liabilities, including without limitation, (a) all liabilities relating to Taxes (as defined in Section 3.9) accrued with respect to the Purchased Assets (except pursuant to Section 2.5 below) for all taxable periods prior to the Closing Date, (b) all liabilities (including without limitation liabilities for excise taxes, interest and penalties) resulting from or under any employee benefit plan, (c) all liabilities with respect to litigation, actions, proceedings, investigations or arbitrations pending on the Closing Date or which arise after the Closing Date as a result of events occurring prior to the Closing Date, (d)all liabilities for workers' compensation claims brought by Seller's employees of the Business and which relate to or arise from events which occurred prior to Closing, (e) all liabilities (including liabilities for excise taxes and other penalties) arising out of claims by current or former employees pending on the Closing Date (or which arise after the Closing Date but are based on facts occurring prior to the Closing Date), (f) any liabilities or obligations relating to Seller's Operating Agreement and (g) any other liabilities, obligations or commitments of Seller, whether contingent or non- contingent, liquidated or unliquidated, asserted or unasserted, that arise or relate to events that, occur prior to the Closing Date ((a)-(g), collectively, the "Excluded Liabilities"), all of which Excluded Liabilities shall remain the liabilities, obligations and commitments of Seller. 1.4 Bill of Sale. The sale and delivery will be effected by delivery by Seller to Buyer of a Bill of Sale, Assignment and Assumption Agreement, a copy of which is attached hereto as Exhibit"A". CV. ty N vll-ASSET PURCHASE AGREET 3 t�,., a.� r 04/46/02 WED 13:32 FAX 303 869 4602 DLACE CREFR CAP. 0 005 ARTICLE 2 PURCHASE PRICE; OTHER CONSIDERATION 2.1 Purchase Price: How Payable. (a) The purchase price shall be membership interests in Buyer valued at Nine Million One Hundred Seventy-Eight Thousand Five Hundred Seventeen Dollars ($9,178,517.00) (the"Purchase Price"). (b) The Purchase Price shall be payable as follows: (i) Buyer shall wire a deposit in the amount of Two Hundred Thousand Dollars ($200,000)to Seller immediately upon execution of this Agreement(if the transactions contemplated by this Agreement and the La Quinta Asset Purchase Agreement are consummated,at the Closing One Hundred Thousand Dollars ($100,000) of such deposit will be refunded to Buyer, and the remaining One Hundred Thousand Dollars($100,000)will be deducted from the purchase price set forth in the La Quinta Asset Purchase Agreement; if the transactions contemplated by this Agreement and the La Quinta Asset Purchase Agreement are not consummated,the deposit shall be non-refundable to Buyer and shall be retained in equal parts by the Seller and La Quinta(unless such non-consummation results from the failure or refusal of the City of Palm Springs to approve the transfer pursuant to Section 3.13 below, in which case the deposit will be refunded to Buyer)); and (ii) At Closing,Buyer shall tender the full Purchase Price. 2.2 Closing Settlement Adjustment. (a) Seller agrees the Business will be free and clear of all previously incurred indebtedness as of the Closing Date. At the Closing, Seller shall deliver to Buyer evidence reasonably satisfactory to Buyer that the Business has no liabilities or obligations of any kind except for the current liabilities reflected on a Closing Balance Sheet to be prepared by Seller and presented to Buyer. At least three business days prior to the Closing Date, Seller shall deliver to Buyer an estimated unaudited balance sheet of the Business as of the Closing Date prepared in good faith on a basis consistent with prior periods (the "Closing Balance Sheet"), including a certificate setting forth Seller's best estimate of Working Capital (the"Estimated Working Capital") as of 12:01 a.m, on the Closing Date calculated in accordance with generally accepted accounting principles, including a copy of the calculation of the Estimated Working Capital (the "Estimated Working Capital Statement"). "Working Capital" shall equal the sum of the following (excluding Taxes): (i) the book value of accounts receivable due from unrelated parties that are less than ninety (90) days old after the allowance for doubtful accounts, plus (ii) the book value of all inventory (including fuel and oil), plus (iii) the book value of all pre-paid expenses, including all utility deposits, rental deposits and equipment deposits, vl l-ASSET PURCHASE AGREMIENT 4 � �1 P6/2,6/02 WED 13:32 FAX 303 809 4602 BLACK CREFR CAP. IM006 Plus (iv) cash, cash equivalents and marketable securities; less the sum of the following: (a) the book value of all accounts payable, plus (b) the book value of accrued payroll (including salaries, commissions, bonuses and vacation pay) deductions,plus (c)the book value of advance billings, plus (d) the book value of accrued expenses (other than current portions of indebtedness included in accounts payable). If the Estimated Working Capital is more than zero dollars ($0) (the"Working Capital Objective"), Seller shall be entitled to a cash distribution from the Business immediately prior to the Closing in such value as the Estimated Working Capital exceeds the Working Capital Objective; provided however, that any such cash, up to a total of$125,000.00, shall be paid into the Holdback Escrow (as defined in Section 2.6). If Estimated Working Capital is less than the Working Capital Objective, Seller shall contribute to the Business, at Closing, an amount of cash required to make Estimated Working Capital equal the Working Capital Objective. (b) Buyer shall have seventy-five (75) calendar days after the Closing Date (the "Settlement Date") to review the collection of accounts receivable and the Estimated Working Capital reflected on the Closing Balance Sheet, and to prepare in good faith an. updated balance sheet of the Business as of 12:01 a.m. on the Closing Date (the, "Final Balance Sheet"). The Final Balance Sheet shall update the values of the items listed on the Closing Balance Sheet. (c) In the event that any of the accounts receivable reflected on the Closing Balance Sheet have not been fully collected on or before the Settlement Date, Buyer will provide written notice to Seller, and shall identify the uncollected accounts receivable ("Uncollected Accounts Receivable"), specifying the amounts thereof. By means of an adjustment to the Final Balance Sheet (i.e., eliminating such Uncollected Accounts Receivable as an asset of the Business) pursuant to Section 2.2(b) above, Seller shall be deemed to have purchased such Uncollected Accounts Receivable from Buyer and Buyer shall be deemed to have assigned such Uncollected Accounts Receivable to Seller. In the event Buyer fails to notify Seller of any Uncollected Accounts Receivable within ten(10) business days after the Settlement Date,no such adjustments shall be deemed necessary. (d) Within fifteen (15) calendar days after the Settlement Date, (i) the amount of any increase in the Estimated Working Capital reflected on the Final Balance Sheet compared to the Closing Balance Sheet shall be paid to Seller by bank draft; and (ii) the amount of any decrease in the Estimated Working Capital reflected on the Final Balance Sheet compared to the Closing Balance Sheet shall be paid to Buyer out of the Holdback Escrow(as defined in Section 2.6) (and by bank draft,to the extent that the amount in the Holdback Escrow is not sufficienty. (e) The obligations of Seller and Buyer under this Section 2.2 shall not be subject to the threshold described in Section 9.4. 2.3 Prorations. The operation of the Business and related income and expenses up to the Closing will be for the account of Seller and thereafter for the account of Buyer. Responsibility for expenses, including without limitation the following items, shall be prorated as of 11:59 p.m. of the day preceding the Closing: (a)real estate and personal property taxes and vl 1-ASSET PURCHASE AGREEMENT V 5 ` O+S./46/09 WED 13:33 FAX 303 869 4602 BLACK CREFK CAP. 007 assessments, and other state, county and municipal Taxes; (b)rents and other payments under any of the Assumed Liabilities; and (c)charges for water, electricity, gas, all other utilities and other operating expenses. If said information is not available at the Closing the parties will calculate said amounts within thirty (30) calendar days after the Closing. All prepaid items, including rent under the Ground Lease, will be paid by Buyer to Seller at the Closing. 2.4 Fuel Inventorv. Seller shall measure the quantity of fuel and oil included in the Purchased Assets which are on hand as of 12:01 am. on the Closing Date. Such inventory shall be valued based upon the current book value of the applicable fuel type as established by the latest invoice actually received by Seller. 2.5 Transaction Taxes. Buyer and Seller shall equally bear the cost for all sales taxes payable in connection with the transfer of the Purchased Assets. Buyer shall pay the cost of all use,transfer,registration, stamp, documentary,recording and similar taxes. 2.6 Holdback Escrow. Any cash, up to a total of $125,000, designated to be distributed from the Business pursuant to Section 2.2(a) shall be paid by Seller into an interest bearing escrow account with a mutually acceptable escrow agent (the "Holdback Escrow"), which funds shall be governed by the terms of an Escrow Agreement to be entered into between Buyer and Seller in the form attached hereto as Exhibit I'D" (the "Escrow Agreement") to reserve against any working capital adjustment pursuant to Section 2.2. To the extent that there is no such cash to be distributed from the Business pursuant to Section 2.2(a) or such cash is less than $125,000, then an amount of money to bring the total in the Holdback Escrow to $125,000 shall be paid by Buyer into the Holdback Escrow as a holdback from the purchase price to be paid by Buyer, pursuant to a Redemption Agreement, to redeem certain membership interests in Buyer that Seller will have distributed to Seller's members. All remaining escrow funds not utilized pursuant to the terms on this Agreement shall be disbursed ninety (90) days after the Closing Date,as follows: (a) any and all amounts remaining in the Holdback Escrow that were paid into the Holdback Escrow by Seller shall be disbursed pro rata to the members of Seller in accordance with the Escrow Agreement; and (b) any and all amounts remaining in the Holdback Escrow that were paid into the Holdback Escrow by Buyer shall be disbursed pro rata among the "cash-out" investors (as such term is used in Section 3.5)in,accordance with the Escrow Agreement. ARTICLE 3 SELLER'S REPRESENTATIONS AND WARRANTIES For the purposes of this Agreement,the phrase "to the best of Seller's knowledge" shall mean the actual knowledge of Jeffrey W. Ross, Russ Knowles, Mary Bieger and Penny Nelson, and shall be deemed to exist with respect to a particular matter if a prudent individual would be expected to discover or otherwise become aware of it after reasonable inquiry. Subject to the foregoing and as an inducement to Buyer to enter into this Agreement, Seller represents and warrants to Buyer that: vl I-ASSET PURCHASE AGREE tviLNT 6 rL y r"� gS/2,6/02 WED 13:34 FAb 303 869 4602 BLACK CREFK CAP. U 008 Y 3.1 Oreanization. Seller is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware. 3.2 Power and Authoritv. Seller has full power and authority to own and operate its properties (including the Purchased Assets),to carry on its businesses (including the Business) as now conducted, to execute and deliver this Agreement and the Transaction Documents (as defined in Section U and to perform its obligations thereunder. 3.3 Authorization: No Breach. The execution, delivery and performance of this Agreement has been, and the execution, delivery and performance of the other Transaction Documents as of the Closing will have been, duly and validly authorized by Seller, and this Agreement constitutes, and each of the other Transaction Documents as of the Closing will constitute, a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms (except as may be limited by bankruptcy, insolvency, reorganization and other similar laws and equitable principles relating to or limiting creditors' rights generally). The execution, delivery and performance of this Agreement and the Transaction Documents, and the consummation of the transactions thereunder, will not (a)violate Seller's Articles of Organization or Operating Agreement, violate any law, statute, rule, regulation,judgment, order or decree to which Seller is subject or any judgment, award, decree, or any material agreement (including the Contracts) or violate any other material instrument to which Seller is a party or by which Seller or the Purchased Assets are bound, (b) conflict with or result in a breach or . constitute a default under any agreement (including the Contracts) to which Seller is a party or by which Seller or the Purchased Assets are bound, (c)result in the creation of any lien, security interest, charge or encumbrance of any nature upon any of the Purchased Assets under any agreement, (d)result in the triggering of any rights of first refusal or other rights under any agreement to which Seller is a party, or (c)require any authorization, consent or approval of, or action or filing with, any court or other governmental body(except the Ground Lease). 3.4 Absence of Undisclosed Liabilities. As of the Closing Date, Seller will not have any liabilities or obligations, whether accrued, absolute, contingent or otherwise, and whether due or to become due, except (a) liabilities and obligations under Contracts described on the Leases Schedule (as defined in Section 3.8) and the Contracts Schedule, (b)liabilities and obligations reflected on the Balance Sheet, (c)liabilities and obligations of the Business which have arisen after the date of such Balance Sheet in the ordinary course of business, consistent with past practices, and in the aggregate do not exceed $25,000, and (d) liabilities and obligations otherwise expressly disclosed in this Agreement on the Liabilities Schedule attached hereto as Schedule 3.4. 3.5 Equity Holders. Schedule 3.5 sets forth the names and addresses of all of the "rolling" equity holders (i.e., such equity holder will initially retain the distribution of equity in Buyer) in Seller and the amount of equity that each such"rolling"equity holder holds. Schedule 3.5 also sets forth the total amount of total amount of equity in Seller held by all investors (including both "rolling" and "non-rolling" equity holders). All equity holders in Seller (including both "rolling" and "non-rolling" equity holders) will receive their complete, pro rata share of the Purchase Price and any other distributions made in connection with this Agreement. No person(individual or entity) is entitled to any distribution or other consideration from the sale VI•ASSET PURCHASE AGREEMENT 7 r+� J OS/26/02 WED 13:34 FAI 303 869 4602 BLACK CREFK CAP. lao09 of the Purchased Assets other than the equity holders that will receive distributions in accordance with the previous sentence. 3.6 Financial Statements. Seller has delivered to Buyer, or will deliver to Buyer prior to Closing, audited financial statements with respect to the Business prepared by Deloitte & Touche for the fiscal year ended September 30, 2001, a unaudited balance sheets for the Business dated April 30 and May 31, 2002 (the "Balance Sheets"), and unaudited statements of income and cash flow for the periods ending April 30 and May 31, 2002 (collectively, the "Financial Statements"). Seller is not aware of any material inaccuracies in the Financial Statements. The Financial Statements have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved and fairly present the financial condition and results of operation of the Business as of such balance sheet date or the period then ending, as the case may be. Copies,of the Financial Statements are attached as Schedule 3.6. Reserves are reflected on the Balance Sheets against assets in amounts that have been established on a basis consistent with the past practice and in accordance with generally accepted accounting principles as applied by Seller on a consistent basis. All receivables of Seller reflected on the Balance Sheets or created after the respective dates of the Balance Sheets arose from valid transactions in the ordinary course of business and consistent with past practices. At the date of each of the Financial Statements, the Business did not have any material liabilities (actual, contingent or otherwise) that, in accordance with generally accepted accounting principles applied on a consistent basis, should have been shown or reflected therein but were not. 3.7 No Material Adverse Changes' Since May 31, 2002, except as set forth in Schedule 3.7 or as contemplated hereunder, there has not been, occurred or arisen: (a) any change in or event affecting Seller, the Business, the Purchased Assets or the Assumed Liabilities that has had or may reasonably be expected to have a material adverse effect on Seller, the Business or the Purchased Assets or the Assumed Liabilities, or (b) any agreement, condition, action or omission which would be pro-scribed by (or require consent under) Section 5.2 had it existed, occurred or arisen after the date of this Agreement, or (c) any strike or other employment or labor dispute, any significant increase in workforce turnover or other indication of workforce unrest or dissatisfaction, or (d) any casualty, loss, damage or destruction (whether or not covered by insurance) of any of the Purchased Assets that is material or that has involved or may involve aggregate losses to the Business or Seller of more than $25,000. 3.8 Purchased Assets. (a) The Leases Schedule, Schedule 3.8(a), lists the subleasehold and leasehold interests allowing Seller to occupy the Facility, and all subleases allowing any other parties to occupy the Facility (each a "Lease" and collectively, the "Leases"), along with the term of each Lease. The Leases are in full force and effect and are enforceable J r (- `1� vll-ASSET PURCHASE AGREENIENT g - I�ii\\' �,�� j/ J 06/29/02 WED 13:35 FAX 303 869 4602 BLACK CREFK CAP. 0 010 against Seller and, to the best of Seller's knowledge, all other parties thereto. Seller has, delivered to Buyer complete and accurate copies of each of the Leases (including all amendments and supplements thereto). Except as set forth on Schedule 3.8(a), (i) Seller has received no notice that it is in default under any Lease, that it may be subject to any special assessments or that there may be any material changes in property tax or land use law affecting any such Leases; (ii) Seller has not delivered any notice to another party alleging any default under any Lease, (iii) Seller and, to the best of Seller's knowledge, all other parties to the Leases, have duly performed all of their respective obligations under the Leases, (iv)no breach or default, or event which would (with the passage of time or notice) constitute a breach or default under any Lease by Seller (or, to the best of Seller's knowledge, any other party or obligor with respect thereto), has occurred or as a result of this Agreement or Seller's performance will occur, and (v) all Leases are transferable (and will be transferred)to Buyer at Closing without any requirement to give or receive prior notice or consent, except as set forth in Section 3.13 or Schedule 3.8(a). Consummation of the transactions contemplated by this Agreement will not (and will not give any person a right to) terminate or modify any rights of, or accelerate or augment any obligation of, Seller under any of the Leases. (b) Attached hereto as Schedule 1.1(c) is a complete and accurate list of all furniture, equipment, leasehold improvements, motor vehicles and all other tangible personal property in which Seller has an interest and the nature of such interest. (c) Seller has good and marketable title to each of the Purchased Assets, which, as of the Closing Date, will be free and clear of any mortgages, liens, charges, security interests or other encumbrances. Seller has all rights, power and authority to sell, convey, assign, transfer and deliver the Purchased Assets to Buyer in accordance with the terms of this Agreement. At the Closing, Seller shall deliver the Purchased Assets to Buyer, free and clear of any mortgages, liens, charges, security interests or other encumbrances. The Purchased Assets are in a good state of maintenance and repair, have been regularly and appropriately maintained, repaired and replaced, are not materially defective except for ordinary wear and tear and are adequate for use in the Business. Seller makes no other representation or warranty as to the physical condition of the tangible personal property included in the Purchased Assets, and they are otherwise sold "as is and where is" and "with all physical faults". The Purchased Assets constitute all the property and assets, tangible and intangible, fixed or contingent, used or intended for use primarily in the operation of the Business or otherwise material to the Business. The Purchased Assets include all permits, licenses, consents and any other third party authorizations necessary to operate the Business consistent with the Seller's current practices, to the extent they are transferable, and subject to any requirements or procedures for transferring such permits, licenses, consents and third party authorizations (which requirements and procedures Buyer acknowledges may need to be completed after Closing). Schedule 3.8(c) sets forth a list of any and all Purchased Assets that are not transferable or for which, as of the Closing, requirements or procedures for transferring such Purchased Assets have not been completed. vl l-ASSET PURCHASE AGREENIENT 9 L�(✓)" 016/2,6/02 WED 13:36 FAX 303 SO 4602 BLACK CREFK CAP. 121011 3.9 Tax Matters. (a) Seller has filed, or will file, all federal, state, local and foreign Tax Returns relating to the Business for all periods before the Closing Date. Seller has duly paid or will pay when due all of Seller's federal, state, local and foreign Taxes relating to the Business for all periods before the Closing Date or which could affect Seller's ability to consummate the transaction contemplated hereby other than Taxes identified on Schedule 3.9 which are being contested in good faith. (b) Seller has withheld and paid, when due (or made adequate reserves for) all Taxes for employees as required by law. (c) To the best of Seller's knowledge, there is no proceeding or audit pending by any taxing authority. (d) For purposes of this Agreement: (i) "Tax" means any foreign, federal, state, county or local income, sales and use, excise, franchise, real and personal property, transfer, gross receipt, capital stock, production, business and occupation, disability, employment, payroll, severance or withholding tax or charge imposed by any Governmental Entity, any interest and penalties(civil or criminal) related thereto or to the nonpayment thereof, and any Loss in connection with the determination, settlement or litigation of any Tax liability; and (ii) "Tax Return" means a report, return or other information required to be supplied to a Governmental Entity with respect to Taxes including, where pennitted or required,combined or consolidated returns for any group of entities that includes any Subsidiary. 3.10 Contracts and Commitments. (a) Except as set forth in the Contracts Schedule, Schedule 3.10, Seller is not a party to any Contract,written or oral: (i) for a bonus, pension, profit sharing, retirement, deferred compensation, medical or life insurance plan, membership purchase or option or any other plans or arrangements providing for benefits of any type to employees (either current or former) of Seller; (ii) for collective bargaining or with any labor union; (iii) for the borrowing of money or mortgaging, pledging or encumbering any of the Purchased Assets; (iv) for the lending or investing of funds to or in other persons or entities; (v) granting any power of attorney (irrevocable or otherwise) to any person for any purpose relating to the Business, Purchased Assets or Assumed Liabilities, other than powers of attorney given to regulatory authorities in connection with routine qualifications to do business; or V vl I-ASSET PURCHASE AGREEMENT 10 0�/2,6/02 WED 13:36 FAX 303 869 4602 BLACK CREFK CAP. IM012 (vi) with an Affiliate of Seller. (b) The Contracts Schedule lists each of the Material Contracts. For purposes of USA.greemont, "Material Contracts"includes the following: (i) any and all contracts for the sale of goods or services by Seller with a value in excess of$10,000 or which is not terminable without penalty by Seller on less than 90 days' notice; (ii) any and all contracts, agreements, licenses, leases (other than the Ground Lease), sales and purchase orders and other legally binding commitments, whether written or oral, that obligate Seller to pay an amount of$10,000 or more or that cannot be terminated without penalty by Seller on less than 90 days' notice; - (iii) any and all broker, distributor, dealer, representative or agency agreements; (iv) any and all insurance policies insuring the Business, the Facility or any of the Purchased Assets; (v) ,, that certain Million Air Palm Springs Franchise Agreement between Seller and Million Air Interlink, Inc., dated November 1, 1999, as amended pursuant to a letter dated January 15,2002; (vi) any and all employment, severance, non-competition or consulting agreement with any current or former member or employee of Seller; and (vii) any and all agreements requiring a loan or advance by Seller. (c) Seller has made available to Buyer true and complete copies of all written Material Contracts, together with all amendments thereto, and accurate descriptions of all oral Material Contracts. Except as set forth on the Contracts Schedule, (i) Seller has not been notified of any claim that any Material Contract is not valid and enforceable in accordance with its terms for the periods stated therein, or that there is under any such Material Contract any existing material default (including, but not limited to, any payment default) or event of material default or event that, with notice or lapse of time or both, would constitute such a material default, (ii) all Contracts are in full force and effect to the best of Seller's knowledge, (iii) all Material Contracts are enforceable against Seller and, to the best of Seller's knowledge, all other parties thereto, and (iv)neither Seller nor, to the best of Seller's knowledge, any other party thereto is in default under any Material Contract. Except as set forth on 'the Contracts Schedule to the best of Seller's knowledge, there are no disputes with customers or vendors of the Business with respect to performance by Seller or the Business under any Material Contract requiring, or which could require, payment by Seller or the Business or performance of services or delivery of assets or properties of the Business in excess of$5,000. Except as set forth on the Contracts Schedule, each Contract is transferable (and will be transferred) to Buyer at Closing without any requirement to give or receive prior notice or consent, and � y1 F , • vI1-ASSET PURCHASE AGREEMENT %'N A P V �� O'6/26/02 WED 13:37 FAX 303 S,Ci9 4602 BLACK CREFK CAP. [a013 consummation of the transactions contemplated by this Agreement will not (and will not give any person a right to) terminate or modify any rights of, or accelerate or augment any obligation of, Seller under any of the Contracts, 3.11 Litigation; Proceedings. Except as set forth in the Litigation Schedule, Schedule 3.11, there is no action, suit, proceeding,judgment or order pending or, to the best of Seller's knowledge, threatened relating to the Business. There is no action, suit, proceeding,judgment or order pending or, to the best of Seller's knowledge, threatened against or affecting Seller before any federal, state, municipal or other governmental court or agency which would have a material adverse effect on Seller's performance under this Agreement or the consummation of the transactions contemplated hereby. 3.12 Brokerage, Except as set forth on Schedule 3.12, no agent, broker, finder, or investment or commercial banker engaged by or on behalf of Seller is or will be entitled to any brokerage commission, finders' fees or similar compensation as a result of this Agreement or any of the transactions contemplation herein. Seller shall be responsible for paying any and all such fees identified on Schedule 3.12. 3.13 Governmental Consent. Transfer of the Ground Lease is subject to the approval of the City of Palm Springs. Except as provided in this paragraph and as provided in the Consents Schedule, Schedule 3.13, no consent or authorization of any governmental or regulatory authority is required to transfer all of Seller's right, title and interest in and to the Facility, the Business and the Purchased Assets and thereby consummate the transaction contemplated in this Agreement. 3.14 Emplovees. Seller has complied in all material respects, with all applicable laws relating to the employment of labor. Schedule 3.14 lists each employee of Seller working for the Business as of the date set forth therein, together with such employee's original hire date and current salary or hourly wage, as the case may be. Seller is not a party to any written or oral agreements(other than oral agreements for at-will employment) with any of its employees. 3.15 Employee Benefit Plans. Seller does not maintain, nor has it maintained, any "Employee Welfare Benefit Plan," as defined in Section 3(1) of ERISA, any`Employee Pension Benefit Plan", as defined in Section 3(2) of ERISA, any other "employee benefit plan", as defined in Section 3(3) of ERISA, or is or has been a contributing employer to any multi- einployer plans, as defined in Section 3(37) or Section 4001(a)(3) of ERISA, other than those plans identified on Schedule 3.15 and medical and dental benefit plans identified on Schedule 3.15. Seller is and has been in compliance with all applicable federal and state laws governing any plans identified on Schedule 3.15. 3.16 Compliance with Laws. Seller has complied, and the use and operation of the Purchased Assets are in compliance, in all material respects, with all applicable laws, rules, regulations, orders, ordinances, judgments and decrees of all governmental authorities which affect the Business, except where such noncompliance would not have a material adverse effect. Seller holds all permits, licenses, certificates and other authorizations of federal, state and local agencies required for the conduct of the Business as operated to the date hereof (collectively, V , v vu-ASSET PURCHASE eattnEExr 12 Q612,6/0.2 W.ED 13:37 FAX 303 86fl 4602 BLACK CREFK CAP. [a014 "Permits"). All Permits are set forth on Schedule 1.1(k), and will remain in full force and effect following the Closing, except as set forth on Schedule 1.1(k). 3.17 Environmental Matters. (a) As used in this Section 3.17, the following terms shall have the following meanings: (i) "Environmental Law(s)" means all applicable federal, state or local laws, regulations, ordinances, codes, judgments or orders pertaining to the environment, Hazardous Materials, pollution or occupational safety and health, and includes without limitation the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et. seq., Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1986 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6961 et seq., the Oil Pollution Act of 1990, 33 U.S.C. §§ 2701 et seq. and similar or implementing state laws, rules, orders, directives and regulations promulgated thereunder, as well as those laws, regulations, ordinances, codes, judgments and orders relating to (i) emissions, discharges, releases or threatened releases of Hazardous Materials into the environment (including, but not limited to, ambient air, surface water, groundwater, land surface or subsurface strata), (ii)the manufacture, processing, distribution, use, generation, treatment, storage, disposal, transport or handling of Hazardous Materials as such, and (iii) underground storage tanks containing Hazardous Materials, and related piping, and emissions, discharges,releases or threatened releases therefrom. (ii) "Hazardous Material(s)" means any substance, pollutant, contaminant, radiation or chemical which is hazardous to human health or safety or the environment including, without limitation, all of those substances which are listed or defined as "pollutants," "contaminants," "hazardous materials," "hazardous wastes," "hazardous substances," "toxic substances," "radioactive materials," "solid wastes," or other similar designations pursuant to Environmental Laws, including (without limitation) petroleum (including crude oil or any fraction thereof), any petroleum product, asbestos and asbestos containing materials, and polychlorinated biphenyls. (iii) "Release" shall mean any non-de-minitnus (in the aggregate) discharge, disposal, deposit, spill, leak, emission, release or abandonment of Hazardous Material into the indoor or outdoor environment. (iv) "Environmental Permits" shall mean all material permits, approvals, certificates and licenses required under any Environmental Law. (b) Except as set forth in the Environmental Matters Schedule, Schedule 3.17, Seller represents and warrants that, with respect to the Facility and the Purchased Assets: vl1-ASS ET PURCHASE AGREEMENT 13 L 0t/2X/02 WED 13:38 FAX 303 869 4602 BLACK CREFR CAP. ICJ 015 (i) The Purchased Assets materially comply, and at all times during Seller's ownership of the Purchased Assets have been in compliance, with applicable Environmental Laws; (ii) Seller has obtained all required material Environmental Permits relating to the Business, enabling the Business to operate and continue to operate after the Closing Date in the ordinary course of business and consistent with past practices, and all such Environmental Permits are transferable (and will be transferred, except as set forth in Schedule 3.17) to Buyer at Closing; (iii) Seller has not caused any non-de-minimus (in the aggregate) Release or disposal of any Hazardous Material at the Facility, and there has not otherwise been,any Release, migration or contamination of or by a Hazardous Material at, on, about or under the Facility; (iv) Seller has not received notice and, to the best of Seller's knowledge, there is no violation, claim, demand, litigation, proceeding or governmental investigation (whether pending or threatened) arising from applicable Environmental Laws relating to the Business or Hazardous Materials which are present at the Facility; (v) Except for claims that would not have a material adverse effect on Seller or the Business, there are no past or present circumstances which could reasonably be expected to form the basis of any environmental claim of violation of any Environmental Laws against Seller or the Business; (vi) Seller has not placed, stored or caused the Release of any Hazardous Materials on or beneath the Facility, except for such Hazardous Materials managed in the ordinary course of business and consistent with past Practices of Seller in accordance with applicable Environmental Laws; (vii) Seller has delivered true, complete and correct copies of any reports, or other documents possessed by or in the control of Seller pertaining to the environmental condition of the Facility, Hazardous Materials on the Facility and regarding Seller's compliance with applicable Environmental Laws; (viii) Except as set forth in Schedule 3.17, the Facility does not contain any underground storage tanks, (c) To the best of Seller's knowledge, the Report of Phase I Environmental Site Assessment Update prepared by Earth Systems Southwest with respect to the Business, dated April 15, 2002 and updated on June_, 2002 (the "Phase I Report"), is accurate and, except as set forth on Schedule 3.17, includes an investigation and assessment of all parts of the Facility. 3,18 Airtiort and Other Regulatory Matters. All certificates of public convenience and necessity, permits, licenses and operating rights issued to Seller with respect to the Business by any local, state or foreign regulatory body (collectively, "Operating Rights") are set forth on �\ , vl1-ASSET PURCHASE AGREEMENT 14 �^- W���� v O6/2,6/02' WED 13:39 FAX 303 869 4602 BLACK CREFK CAP. U 016 Schedule 1.1(k). Except as otherwise set forth on Schedule Ll(k), there are no governmental permits of any type required to conduct the Business as conducted to the date hereof, and all of the Operating Rights will remain in full force and effect following the Closing. 3.19 Affiliate Transactions. Schedule 3.19 lists all agreements between Seller and any current or former member or other Affiliate (as defined in Section 11.9) of Seller or any entity in which any such person has a direct or indirect material interest. Schedule 3.19 lists all payments since January 1, 2000 from Seller to or for the benefit of any current or former member or other Affiliate of Seller or any of such person's Affiliates, or any entity in which any such person has a direct or indirect material interest, except to the members of Seller pursuant to Seller's Operating Agreement. Except as fully described in Schedule 3.19, no Affiliate of Seller nor any member, manager, officer, director or equity holder of any thereof, has any material interest in any of the Purchased Assets, the Assumed Liabilities or any property used in or pertaining to the Business; no such entity or person is indebted or otherwise obligated to Seller; and Seller is not indebted or otherwise obligated to any such entity or person, except to Seller's members pursuant to Seller's Operating Agreement or for amounts due under normal arrangements applicable to all employees generally as to salary or reimbursement of ordinary business expenses not unusual in amount or significance. Except as fully described in Schedule 3.19 or pursuant to Seller's Operating Agreement, the consummation of the transactions contemplated by this Agreement will not (either alone, or upon the occurrence of any act or event, or with the lapse of time, or both)result in any benefit or payment, (severance or other) arising or becoming due from Seller or the successor or assign of any thereof to any entity or person. 3.20 Customers and Suppliers. Schedule 3.20 sets forth the top ten customers and the top ten suppliers of the Business (based on dollar volume of sales or purchases, as applicable). Except as set forth in Schedule 3.20 or Schedule 3.10, Seller is not a party to any written agreements or, to the best of Seller's knowledge, any oral Material Contracts, with any of its customers or suppliers. 3.21 Seller's Investment Representation. Seller is acquiring membership interests in Buyer for Seller's own account for investment purposes only and not with a view to or for sale in connection with a distribution thereof except for a permitted transfer to an Affiliate of Seller. At the Closing, Seller and any intended Affiliate transferee shall deliver to Buyer an investment letter in form and substance substantially as set forth in Exhibit"C" (the "Investment Letter"). Seller acknowledges that the membership interests in Buyer will not be registered under and therefore will be"restricted securities"under the Securities Act of 1933 as amended. 3.22 No Capital Investments. Seller is not required under the Ground Lease or any Contract, and the transactions contemplated under this Agreement will not trigger any requirement for Seller or Buyer, to complete any material upgrades, repairs or make any other capital investments in the Facility, the Business or any of the Purchased Assets. 3.23 Airport Plan. To the best of Seller's knowledge, the Palm Springs Regional Airport Master Plan dated August 1994 has not been, and is not in the process of being, amended or supplemented. `F A v11•ASSET PURCHASE AQREEIvfBHT 06/2,6/0 WED 13:39 FAX 303 869 4602 BLACK CREFK CAP. j [a017 J 3.24 Due Diligence Materials. Seller, to the best of Seller's knowledge, has provided to Buyer true, complete and accurate responses to all due diligence inquiries made by Buyer, or by Buyer's counsel or consultants, in connection with the transactions contemplated by this Agreement. All documents delivered to Buyer or Buyer's counsel by (or on behalf of) Seller in connection with due diligence inquiries made by (or on behalf of) Buyer are, to the best of Seller's knowledge, true, accurate and complete and fairly present the current condition of the Business, the Facilities and the Purchased Assets, as relevant. ARTICLE 4 BUYER'S REPRESENTATIONS AND WARRANTIES As an inducement to Seller to enter into this Agreement, Buyer represents and warrants to Seller that: 4.1 Organization. Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware. 4.2 Power and Authority. Buyer has full power and authority to execute and deliver this Agreement and the Transaction Documents and to perform its obligations thereunder. 4.3 Authorization: No Breach. The execution, delivery and performance of this Agreement has been, and the execution, delivery and performance of the other Transaction Documents as of the Closing will have been, duly and validly authorized by Buyer, and this Agreement constitutes, and each of the other Transaction Documents as of the Closing will constitute, a valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms (except as may be limited by bankruptcy, insolvency, reorganization and other similar laws and equitable principles relating to or limiting creditors' rights generally). 4.4 Brokerage. Other than a transaction fee of$50,417.00 that will be paid by Buyer to Manager at Closing ($16,805.00 of which fee Manager will pay to Tony.Miller), no agent, broker, finder, or investment or commercial banker engaged by or on behalf of Buyer is or will be entitled to any brokerage commission, finders' fees or similar compensation as a result of this Agreement or any of the transactions contemplated herein. 4.5 Litigation. There is no action, suit, proceeding,judgment or order pending or, to the best of Buyer's knowledge, threatened against or affecting Buyer before any federal, state, municipal or other governmental court or agency which would have a material adverse effect on Buyer's performance under this Agreement or the consummation of the transactions contemplated hereby. ARTICLE 5 COVENANTS 5.1 Affirmative Covenants. Prior to the Closing, Seller shall use good faith efforts to: v1 i-ASSET PURCHASE AGREEMENT 16 06✓2,6/02 WED 13:40 FAX 303 869 4602 BLACK CREFK CAP. 121018 (7) (a) obtain all consents and approvals that may be necessary or reasonably requested by Buyer to consummate the transactions contemplated by this Agreement; (b) conduct the Business only in the usual and ordinary course of business and consistent with past practices; (c) keep.in full force and effect its corporate existence and all rights, franchises, Permits and Intellectual Property rights relating to or pertaining to the Business; (d) retain its employees and preserve its present business relationships; (e) maintain the Purchased Assets in customary repair, order and condition and in the event of any casualty, loss or damage to any of the Purchased Assets prior to Closing, either repair or replace such assets with assets of comparable quality or, if Buyer agrees, transfer to Buyer at Closing the proceeds of any insurance recovery with respect thereto; (f) maintain its books, accounts and records in accordance with past custom and practice as applied by Seller on a consistent basis; (g) maintain all Permits and insurance coverage existing as of the date hereof against loss or damage to the Purchased Assets; and (h) not be in default under any Material Contract (other than to the extent that the execution of this Agreement and the consummation of the Transactions may or may be alleged to constitute a default under any Material Contract) or to cure any such default. 5.2 Notification of Certain Changes. Seller shall promptly inform Buyer of any material adverse changes to the Business or the Purchased Assets occurring after the Effective Date which would make false or misleading, or necessitate a change to any of the Schedules to this Agreement. To the extent Seller proposes to enter into a new contract for an expenditure in excess of$10,000 Buyer shall have five business days after receipt of notice of such proposed Contract to elect whether or not it desires to purchase and assume such Contract. In the event Buyer elects to purchase such Contract, then such Contract shall be deemed added to the Contracts Schedule, 5.3 Access. Prior to Closing, Seller will (a)during ordinary business hours permit Buyer and its authorized representatives to have access to the Facility, books records and key personnel, (b) furnish, as soon as reasonably practicable, to Buyer or its authorized representatives such other information in Seller's possession with respect to the Business as Buyer may from time to time reasonably request, and (c) otherwise reasonably cooperate in the examination of the Business by Buyer. 5.4 Negative Covenants. From the Effective Date to the Closing Date, Seller shall not, without the prior written consent of Buyer, which consent shall not be unreasonably withheld or delayed: (a) waive, release, grant or transfer any rights of material value; VII-ASSET PURCHASE AGREEMENT 17 � � 0/26/02 WED 13:40 FAX 303 869 4602 BLACK CREFK CAP. [a o19 r 0 (b) assume, guarantee, endorse or otherwise become liable or responsible for any indebtedness of any other person, except in the ordinary course of business consistent with past practice; (c) incur or agree to incur any obligation or liability (absolute or contingent), or make any capital expenditures or commitments with respect thereto, except in the ordinary course of business consistent with past practices; (d) make any loans, or investments in, any other person or entity, except in the ordinary course of business consistent with past practices; (e) transfer any of the Purchased Assets except for any transfer or encumbrance in the ordinary course of business consistent with past practices; (f) pledge or otherwise mortgage any of the Purchased Assets or allow any Lien thereupon; (g) terminate, amend or fail to renew any Permits; (h) terminate, amend or fail to renew any insurance coverage existing as of the date hereof against loss or damage to the Business, the Facility or the Purchased Assets; (i) materially amend or terminate outside the ordinary course of business consistent with past practices any Material Contract; G) materially increase the compensation, benefits or other remuneration of any of the Business' current officers or key employees, except for entering into "stay" bonuses or special severance agreements(all of which shall be for Seller's account); (k) declare, issue, make or pay any dividend or other distribution to its equity holders; (1) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation,restructuring,recapitalization or other reorganization of Seller; or (m)alter through merger, liquidation, reorganization, restructuring or any other fashion the ownership of the Purchased Assets by Seller. ARTICLE 6 CLOSING CONDITIONS-BUYER 6.1 Conditions to Closine. The obligation of Buyer to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions on or before the Closing Date: viI-ASSET PURCHASEAGREEMENT 18 06/2,6/02 WED 13:41 FAA 303 869 4602 BLACK CREFK CAP. ID020 (a) the representations and warranties set forth in Article 3 shall be materially true and correct as of the Closing Date as though made on the Closing Date, and Seller shall have delivered to Buyer a certificate to that effect; (b) Seller shall have performed or complied with all of the covenants and agreements required under this Agreement, and Seller shall have delivered to Buyer a certificate to that effect; (c) Seller shall have provided Buyer with such documentation as may be reasonably necessary to show that the transactions contemplated by this Agreement are properly authorized; (d) Seller has received no notice of legal action or proceeding which shall have been instituted or overtly threatened by any governmental agency seeking to restrain, prohibit, invalidate or otherwise affect the consummation of the transactions contemplated by this Agreement; (e) all governmental permits and approvals and all material consents by third parties that are required for the transfer of the Purchased Assets shall have been obtained including consent of the City of Palm Springs to the transfer of the Ground Lease; (f) Seller shall have executed and delivered to Buyer .original or facsimile counterparts of each Transaction Document to which it is a party (in accordance with the provision in Section 8.1 permitting the use of facsimile copies) in connection with the transactions contemplated hereby and by the La Quinta Asset Purchase Agreement, in form and substance satisfactory to both Buyer and Seller; (g) Seller shall have obtained representations from the City of Palm Springs substantially consistent with the concepts set forth in Exhibit"D" attached hereto; (h) Buyer shall have received adequate evidence of termination and release of any and all deeds of trust, assignments of rents, security agreements and fixture filings affecting the Facility,the Business or any of the Purchased Assets; (i) Seller shall have delivered to Buyer an irrevocable commitment by a title insurance company reasonably acceptable to Buyer to provide title insurance; 0) Seller shall have satisfied, or shall satisfy at Closing,to the extent necessary to have deeds of trust, security agreements, or other liens removed in accordance with Section 6.1(h), all obligations under that certain Reducing Revolving Credit Agreement between Seller and U.S. Bank National Association, dated September 30, 1999, that certain First Amendment to Loan Documents between Seller and U.S. Bank National Association, dated August 15, 2001, and any other agreement with respect to the Excluded Liabilities, as each such agreement may have been amended or supplemented, and Seller shall have taken (or shall take at Closing) any and all other actions necessary to deliver the Purchased Assets, the Facility and the Business to Buyer free and clear of mortgages, liens, charges, security interests or other encumbrances or indebtedness (other than liabilities included in the Assumed Liabilities); and vll-ASSET PURCHASEA6RBHMBN'f 19 OS✓20102 ,WED 13:41 FAX 303 869 4602 BLACK CREFK CAP. _ [a021 (k) Manager shall not have died or otherwise become severely incapacitated. Any conditions specified in this Section 6.1 may be waived by Buyer in writing. ARTICLE 7 CLOSING CONDITIONS-SELLER 7.1 Conditions to Closing. The obligation of Seller to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions on or before the Closing Date: (a) Buyer shall have delivered the Purchase Price to Seller; (b) the representations and warranties set forth in Article 4 shall be materially true and correct as of the Closing Date as though made on the Closing Date, and Buyer shall have delivered to Seller a certificate to that effect; (c) Buyer shall have performed or complied with all of the covenants and agreements required under this Agreement, and Buyer shall have delivered to Seller a certificate to that effect; (d) Buyer and La Quints, shall have consummated the transactions contemplated under the La Quinta Asset Purchase Agreement prior to, or concurrently with, the Closing of the transactions contemplated under this Agreement. Any condition specified in this Article 7 may be waived by Seller in writing. ARTICLE 8 CLOSING MATTERS 8.1 The Closing. The closing of the transactions contemplated in this Agreement(the "Closing") will take place at 10:00 a.m. at the offices of Seller, or at such other place as Buyer and Seller may mutually agree, on June 30, 2002 (the "Closing Date"), unless the parties mutually agree to close on a date earlier than June 30, 2002. The parties agree that signature pages of documents required to be delivered at the Closing may be delivered by facsimile. 8.2 Action to Be Taken at the Closing. The sale and delivery of the Purchased Assets, and the payment of the Purchase Price shall take place at the Closing. 8.3 Closing Documents. (a) Seller shall deliver to Buyer at the Closing the following documents (collectively, the "Transaction Documents"), duly executed by Seller where necessary to make them effective: I v11-ASSET PURCHASE AGREEMENT 20 fJ J . O612PI02 WED 13:42 FAX 303 869 4602 BLACK CREFK CAP. 121022 4_.l 41 (i) Bill of Sale, Assignment and Assumption Agreement in the form of Exhibit"A"attached hereto; (ii) Escrow Agreement relating to the Holdback Escrow; (iii) Investment Letter relating to Seller's acquisition of membership interests in Buyer; (iv) a certificate dated the Closing Date, signed on its behalf by an authorized officer, to the effect that the conditions set forth in Article 6, subsections (a), (b)and (c)have been satisfied; (v) such instruments of assumption and other documents or instruments as Buyer reasonably may request to effect the transaction contemplated hereby; and (vi) good funds in the amount of One Hundred Thousand Dollars, representing one-half of Buyer's deposit made under Section 2.1(a). (b) Buyer shall deliver to Seller at the Closing the following documents, duly executed by Buyer where necessary to make them effective: (i) the Purchase Price; (ii) Bill of Sale, Assignment and Assumption Agreement in the form of Exhibit"A"attached hereto; (iii) Escrow Agreement relating to the Holdback Escrow; (iv) a certificate dated the Closing Date, signed on its behalf by an authorized officer, to the effect that the conditions set forth in Article 7, subsections (b)and(c)have been satisfied; and (v) such instruments of assumption and other documents or instruments as Seller reasonably may request to effect the transaction contemplated hereby. (c) Buyer shall deliver to Manager at the Closing good funds in an amount sufficient to cover all amounts paid or incurred by Manager for all of Buyer's and Manager's out-of-pocket transaction expenses, including without limitation reasonably fees and expenses of Manager's and Buyer's attorneys, inspectors, accountants and auditors, and the reasonable expenses of due diligence and due diligence trips. 8.4 Nonassienable Contracts. To the extent that the assignment hereunder by Seller to Buyer of any Contract or Permit is not permitted without the consent of another party and Buyer is willing to proceed with the Closing, this Agreement shall not be deemed an assignment of such Contract or Permit if such consent is not given, and Buyer shall assume no obligations or liabilities thereunder. Seller shall advise Buyer promptly in writing with respect to any Contract vll-ASSET PURCHASE AGREEMENT 21 r U 06/2,6/02 WED 13:42 FAX 303 869 4602 BLACK CREFK CAP. 11023 listed on the Contracts Schedule, or Permit listed on the Permit Schedule, that Seller learns shall not receive any required consent. Seller shall cooperate with Buyer (at no material cost or expense to Seller) so that Buyer may assume, obtain or otherwise receive the benefit under any such Contract or Permit, as applicable. 8.5 Possession. Simultaneously with the Closing, Seller shall cooperate with Buyer and take such steps as are reasonably necessary to put Buyer in actual possession and operating control of the Purchased Assets and Business. ARTICLE 9 INDEMNIFICATION 9.1 Indemnification by Manager; Environmental Insurance. (a) Manager agrees to indemnify Buyer and its members, manager, officers, directors, employees, Affiliates, agents and equity holders (collectively, the "Buyer Indemnified Parties") and hold them harmless against any Losses which any of the Buyer Indemnified Parties may suffer, sustain or become subject to as a result of, or based upon or arising from: (i) any material inaccuracy in any of the representations or breach of any of the warranties of Seller contained in this Agreement or in any exhibits, schedules, certificates or other documents delivered or to be delivered pursuant to the terms of this Agreement or otherwise incorporated in this Agreement; (ii) any breach of, or failure to perform, any agreement or covenant of Seller contained in this Agreement; (iii) any "Claims" (as defined in Section 9.3(a) hereof) against any of Buyer Indemnified Parties arising out of the actions or inactions of Seller prior to the Closing with respect to the Purchased Assets or the operation of the Business prior to the Closing or any other business prior to or after the Closing; and (iv) any Excluded Liability. (b) Notwithstanding the provisions of Section 9.1(a), Manager shall indemnify obligations arising from or in connection with Section 3.17(b) only after (a) Buyer shall have unsuccessfully sought insurance coverage, reimbursement from governmental entities, or reimbursement from third parties not affiliated with Manager for losses in connection with Section 3.17(b) (or such insurance coverage or reimbursement is not adequate to cover all such losses), and (b) Buyer's Losses (as defined in Section 9.3) in connection with Section 3.17(b) ("Environmental Losses") total $100,000, and only until Buyer's Environmental Losses reach $500,000, after which Manager shall have no further liability with respect to such Environmental Losses; and provided, further, that Manager's indemnification obligation in connection with Section 3.17(b) shall survive only for one (1) year after the Closing Date (except to the extent that any claim for any vl1-ASSET PURCHASE AGREEMENT 22 i 06✓26/02 WED 13:43 FAX 303 869 4602 BLACK CREFK CAP. ID 024 Environmental Losses arose within the first year after the Closing Date but is pending or unresolved at the end of such period). (c) The parties intend to obtain environmental insurance for the Business. Seller agrees to pay that portion of the premium for such environmental insurance policy that represents the first year of coverage for conditions that are existing (whether known or unknown) before the Closing, and Buyer agrees to pay the remainder of the premium for such environmental insurance policy. 9.2 Indemnification by Buyer. Buyer agrees to indemnify Seller and its members, manager, officers, directors, employees, agents, and equity holders (collectively, the "Seller Indemnified Parties"), and hold them harmless against any Losses which any of Seller Indemnified Parties may suffer, sustain or become subject to as a result of, or based upon or arising from (a) any material inaccuracy in any of the representations or breaches of any of the warranties of Buyer contained in this Agreement, (b) any breach of, or failure to perform, any agreement or covenant of Buyer contained in this Agreement, including assuming the Assumed Liabilities, (c) any Claims against any of Seller Indemnified Parties arising out of actions or inactions of Buyer subsequent to Closing with respect to the Purchased Assets or the operation of the Business subsequent to Closing, and(d) any Assumed Liability. 93 Method of Asserting Claims. As used herein, an "Indemnified Party" shall refer to a "Buyer Indemnified Parry" or "Seller Indemnified Party," as applicable, and the "Indemnifying Party" shall refer to the party(ies)hereto obligated to indemnify such Indemnified Parties. For purposes of this Agreement: "Loss(es)" shall mean any and all costs and expenses (including, but not limited to, reasonable,professionals' fees), damages and losses actually incurred by the Indemnified Party, net of(i)any tax adjustments, benefits, savings or reductions, and (ii) any insurance proceeds, in either case to which the Indemnified Party is entitled by virtue of such costs, expenses, damages and losses; and "Indemnifiable Losses" shall mean any Loss for or against which any party is entitled to indemnification under this Agreement. (a) In the event that any of the Indemnified Parties is made a defendant in or party to any action or proceeding instituted by any third party, the liabilities for which are Indemnifrable Losses (any such third party action or proceeding being referred to as a "Claim"), the Indemnified Party shall give the Indemnifying Party written notice thereof within 30 days of its knowledge of the same. The failure to give such notice shall not affect any Indemnified Party's ability to seek reimbursement unless (and then only to the extent that) such failure has materially and adversely affected the Indemnifying Party's ability to defend successfully a Claim. The Indemnifying Party shall be entitled to contest and defend such Claim provided it diligently contests and defends such Claim. Notice of the intention so to contest and defend shall be given by the Indemnifying Party to the Indemnified Party within 30 business days after the Indemnified Party's notice of such Claim (but, in all events, at least five business days prior to the date that an answer to such Claim is due to be filed taking into account any extensions to file a responsive pleading obtained by either party). Such contest and defense shall be conducted by reputable attorneys employed by the Indemnifying Party at its sole cost and expense. The Indemnified Party shall be entitled at any time, at its own cost and expense (which expense shall not constitute a Loss), to participate in such contest and defense and to be v11-ASSET PURCHASE AGREEMENT 23 a 06✓2p/02 WED 13:43 FAX 303 869 4602 BLACK CREFK CAP. @j025 represented by attorneys of its or their own choosing; provided, however, that if it does not or ceases to conduct the defense of such Claim actively and diligently, (i) the Indemnified Party may defend against, and, with the prior written consent of the Indemnifying Party (which consent will not be unreasonably withheld), consent to the entry of any judgment or enter into any settlement with respect to, such claim, (ii) the Indemnifying Party will reimburse the Indemnified Party promptly and periodically for the costs of defending against such claim, including attorneys' fees and expenses and (iii) the Indemnifying Party will remain responsible for any Losses the Indemnified Party may suffer as a result of such claim to the full extent provided in this Section. If the Indemnified Party elects to participate in such defense, the Indemnified Party shall reasonably cooperate with the Indemnifying Party in the conduct of such defense. Neither the Indemnified Party nor the Indemnifying Party may concede, settle or compromise any Claim without the consent of the other party, which consent shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, in the event the Indemnifying Party fails or is not entitled to contest and defend a claim, the Indemnified Party shall be entitled to contest, defend and settle such Claim in such manner and on such terms as the Indemnified Party may deem appropriate. (b) In the event any Indemnified Party should have a claim against any Indemnifying Party that does not involve a Claim, the Indemnified Party shall deliver a notice of such claim within 90 days of its knowledge of such claim to the Indemnifying Party. Included in such written notice will be a statement of the amount of the Loss, a brief explanation of the Loss, and instructions for payment by certified or bank cashier's check or by wire transfer of immediately available funds. If the Indemnifying Party notifies the Indemnified Party that it does not dispute the claim described in such notice, the Loss in the amount specified in the Indemnified Party's notice shall be deemed a liability of the Indemnifying Party and the Indemnifying Party shall pay the amount of such Loss to the Indemnified party on demand. 9.4 Limits on Indemnification. With respect to any claims arising under Section 9.1 or Section 9.2, the Indemnified Party shall not be entitled to indemnification until the aggregate Losses, suffered by such party exceeds $100,000 (the"Threshold"), and the Indemnifying Party shall be liable for indemnification only until Indemnified Party's Losses reach $500,000, after which the Indemnifying Party shall have no further liability with respect to such Losses. Neither party shall be entitled to assert a claim for recovery to the extent such claim is paid in whole by insurance. The foregoing indemnity shall be the sole and only remedy of Seller or Buyer under this Agreement, except as otherwise specifically provided herein. 9.5 Survival. This Article 9 shall survive the Closing and any termination of this Agreement, except as it may impose duties or obligations on Seller. The representations, warranties, covenants, conditions and other provisions in this Agreement or in any writing delivered to Buyer or Seller in connection with this Agreement shall survive the Closing Date for a period of one (1)year. Any matter that is time-limited, but for which an Indemnified Party has asserted a claim that is pending or unresolved at the end of any applicable limitation period will continue to be covered by this Article 9 notwithstanding any applicable statute of limitations (which the parties hereto hereby waive) until the parties or a court of competent jurisdiction finally resolve such matter and any amounts payable hereunder are finally determined and paid. vll ASSET PURCHASE AGREEMENT 24 . �r ; o6✓2p/02 WED 13:44 FAX 303 869 4602 BLACK CREFR CAP. IM 026 Notwithstanding anything to the contrary in this Agreement, no provision of this Agreement that imposes any duty or obligation upon Seller shall survive the Closing or any termination of this Agreement. 9.6 Exclusive Remedy, This exclusive remedy for Buyer under this Agreement shall be the indemnification obligation of Manager as set forth in this Article 9, and this Article 9 shall be deemed to preclude or otherwise limit the exercise of any other rights or pursuit of other remedies (in law or equity) by Buyer against Seller for the breach of this Agreement or with respect to any misrepresentation by Seller. 9.7 Offset. If any matter as to which Buyer or Manager may be able to assert a claim hereunder is pending or unresolved at the time any payment is due from one party to the other (including under the Escrow Agreement relating to the Holdback Escrow), Buyer and Manager, respectively, shall have the right, in addition to other rights and remedies (whether under this Agreement or applicable law),to withhold or cause to be withheld from such payment an amount or value equal to the amount of the claim (provided it has been or is then asserted in writing against Manager or Buyer, respectively, in accordance with the provisions of this Article 9) until such matters are resolved. If it is finally determined that such claims are covered by this Article, the amount of such claims may be offset against the retained payments and the remainder, if any, shall be delivered to Buyer or Manager, as applicable. ARTICLE 10 TERMINATION 10.1 Termination. This Agreement may be terminated at any time prior to the Closing: (a) by mutual written consent of Buyer and Seller; or (b) by Buyer if the conditions precedent to Closing set forth in Section 6.1 have not been satisfied on or before the prescribed Closing Date, or by Seller if the conditions precedent to Closing set forth in Section 7.1 have not been satisfied on or before the prescribed Closing Date. 10.2 Effect of Termination. In the event of termination of this Agreement as provided above, this Agreement shall forthwith become void, and there shall be no liability on the part of Seller or Buyer except as otherwise expressly stated herein; provided, however, that this Section 10.2 shall not release (a) any party from any such liability for a breach by such party of this Agreement or (b) any party from its obligations under Article 9 and Sections 11.1, 11.2, 11.8, 12.2, 12.3, 12.6 and 12.10, except as otherwise provided therein. ARTICLE 11 ADDITIONAL AGREEMENTS 11.1 Press Release and Announcements. No press release related to this Agreement or the transaction contemplated hereby, or other announcements to the employees, customers or suppliers of Seller, shall be issued without the joint approval of Buyer and Seller. vll-ASSET PURCHASE AGREEMENT 25 �� li ''•' �� 06%26/02' WED 13:45 FAX 303 869 44602 BLACK CREFK CAP. IaO27 7 11,2 Confidentiality. If the transaction contemplated by this Agreement is not consummated, Buyer shall maintain the confidentiality of all information and materials received by it reasonably designated by Seller as confidential, and Buyer shall destroy or return to Seller any materials (and copies thereof) obtained from Seller in connection with the transaction contemplated hereby. Whether or not the transaction contemplated hereby is consummated, Seller shall maintain the confidentiality of all information and materials regarding Buyer and its Affiliates. If the transaction contemplated by this Agreement is consummated, Seller shall maintain the confidentiality 'of all proprietary and other non-public information regarding the Business and the Purchased Assets and shall turn over to Buyer all such materials in Seller's possession. In addition, neither Seller nor any of its representatives shall make use of, divulge or otherwise disclose, directly or indirectly, any confidential information concerning the Business that may have been learned in their capacity as Seller or Seller's representatives, or members of or investors in Seller, to persons other than Buyer, without Buyer's prior written consent. Notwithstanding anything to the contrary in this Section, no party hereto is required to be keep information confidential to the extent such information (a) was known by the recipient when received, (b) is or hereafter becomes lawfully obtainable from other sources, or (c) is necessary or appropriate to disclose to a governmental entity having jurisdiction over the parties. 11.3 Remittances. All remittances, mail and other communications relating to the Purchased Assets received by Seller at any time after the Closing Date shall be immediately turned over to Buyer. Seller shall cooperate with Buyer and take such actions as Buyer reasonably requests to assure that customers of the Business send their remittances directly to Buyer, and to assure that remittances from customers of the Business which are improperly sent to Seller are not commingled with Seller's assets and are turned over to Buyer. 11.4 Waiver of Compliance with Bulk Sales Laws. Buyer hereby waives compliance by Seller with the requirements of the bulk sales laws in connection with the sale of the Purchased Assets to Buyer, 11.5 Tax Cooperation. After the Closing, Seller shall, and shall cause its Affiliates to, cooperate fully with Buyer in the preparation of all Tax Returns and shall provide, or cause to be provided at Seller's sole cost and expense, to Buyer any records and other information requested by such parties in connection therewith as well as access to, and the cooperation of, Seller's accountant. After the Closing, Seller shall, and shall cause its Affiliates to, cooperate fully with Buyer in connection with any Tax investigation, audit or other proceeding relating to the Business. Any information obtained pursuant to this Section 11.5 or pursuant to any other Section hereof providing for the sharing of information or the review of any Tax Return or other schedule relating to Taxes shall be subject to Section 11.2. 11.6 Employment Matters. (a) Employee Hiring. Buyer is under no legal obligation to employ any personnel presently employed by Seller. Prior to the Closing Date, Seller will make available to Buyer the employees of Seller at reasonable times and upon reasonable notice so that Buyer may interview such employees. Buyer may offer employment to such persons currently employed by Seller with respect to the Business as Buyer in its sole discretion shall determine on such terms and conditions as may be mutually agreed upon by Buyer off•nsssr PURCHASE AaRaenaerrr 26 06'126'%02- WED 13:45 FAX 303 869 4602 BLACK CREFK CAP. U 028 and such employees. Seller shall use its best efforts to assist Buyer in hiring any such employees with respect to whom Buyer elects to offer employment: (b) Employee Benefits. All obligations for compensation, wages, bonuses, severance pay, vacation time, pay in lieu of vacation, sickness and accident benefits, leaves of absence, and similar employee benefits provided by Seller shall be settled and paid by Seller through the Closing Date. (c) Worker Adjustment and Retraining Notification (WARN). Seller represents and warrants that it has complied with any and all requirements under WARN. In making this representation, Seller may assume that Buyer will initially hire or offer employment to the persons associated with the Business listed on Schedule 3.14. (d) No Third Party Beneficiaries. Notwithstanding any possible inferences to the contrary, neither Seller nor Buyer intend for this Section to create any rights or obligations except as between Seller and Buyer, and no past, present or future employees of Seller or Buyer shall be treated as third-party beneficiaries of this Section. 11.7 Further Assurances of Seller. At any time and from time to time after the Closing, at Buyer's request and without further consideration, Seller shall cooperate and execute and deliver such other instruments or sale, conveyance, transfer, assignment and confirmation and take such further action as Buyer may reasonably deem necessary or required in order to effectively convey, transfer and assign to Buyer, and to confirm Buyer's title to, all of the Purchased Assets of Seller,to put Buyer in actual possession and operating control thereof and to assist Buyer in exercising all rights with respect thereto,provided the same is at no cost to Seller. 11.8 Arbitration. Any controversy, dispute or claim between the parties arising out of, related to or in connection with this Agreement or the performance or breach hereof shall be submitted to non-binding arbitration conducted by the American Arbitration Association in Los Angeles, California, in accordance with its commercial arbitration rules as then in effect; provided that the arbitration shall be conducted by a panel of three arbitrators. One arbitrator shall be selected by Buyer, one by Seller, and a third selected by the agreement of the first two arbitrators. The non-binding determination of the arbitrators shall be accompanied by a written opinion of the arbitrators. Fees and expenses of the American Arbitration Association and of the arbitrators shall be borne as shall be determined by the arbitrators. 11.9 Distribution of Assets. Seller must distribute the Purchase Price to its member promptly, but no later than 48 hours, after the Closing Date. 11.10 Affiliate. For purposes of this Agreement, "Affiliate" shall mean an individual or entity that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with;a specified individual or entity. For purposes of this definition, "control" shall include, without limitation, the exertion of significant influence over an individual or entity and shall be conclusively presumed as to any 30% or greater equity interest. 11.11 Survival. This Article I shall survive the Closing or any termination of this Agreement, cf, vti•ASSET PURCHASE AGREEMENT 27 G ` 01?12klOf WED 13:46 FAX 303 8,699 4602 BLACK CREFR CAP. 121029 ARTICLE 12 MISCELLANEOUS 12.1 Amendment and Waiver. This Agreement may be amended, and any provision of this Agreement may be waived;provided that any such amendment or waiver shall be binding on the party against whom the amendment is being asserted only if such amendment or waiver is set forth in a writing executed by such party against whom the amendment is being asserted and then only to the specific purpose, extent and instance so provided. The parties hereto contemplate that one or more amendments to this Agreement will be required after the Effective Date to effect certain tax matter's related to the Purchase Price. 12.2 Notices. All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given when personally delivered, when mailed by certified mail, return receipt requested, when sent by telecopy with confirmation of receipt received, or when delivered by overnight courier with executed receipt. Notices, demands and communications to Seller or Buyer shall, unless another address is specified in writing in accordance herewith, be sent to the address indicated below: Notices to Seller: Before and after the Closing: Palm Springs FBO,LLC Palm Springs FBO, LLC c/o Michael Shannon c/o William Xanetschek KSL Recreation Corp. KKR Real Estate Investors LLC 50905 Avenita Bermudas 9 West 57' Street, Suite 4200 La Quinta, California 92253 New York,New York 10019 with a copy to: Nola Dyal,Esq. KSL Recreation Corp. 50905 Avenita Bermudas La Quinta, California 92253 Ilk Y1I-ASS13T PURCHASE AGREEMENT 28 06f:✓dlOt WED 13:46 FAX 303 869 4602 BLACK CREFK CAP. 191030 r Notices to Buyer: FBOCO Holdings LLC FBOCO Holdings LLC c/o Merced Partners Limited Partnership c/o Dave Ericson 601 Carlson Parkway, Suite 200 EBF&Assoc. Minetonka, Minnesota 55305 19 Benedict Place Attn: Coleen McMahon Greenwich, CT 06830 Tel: (952) 476-7221 Fax: (952)476-7202 with a cop�to: O'Melveny&Myers LLP 400 South Hope Street Los Angeles, California 90071 Attn: Eric Richards Tel: (213)430-6552 Fax: (213) 430-6407 Notices to Manager: Jeffrey W. Ross with a copy to: 518 17th Street, 17th Floor Denver, Colorado 80202 Moye, Giles, O'Keefe, Vermeire & Gorrell Tel: (303) 869-4700 LLP Fax: (303) 869-4602 1225 17th Street, Suite 2900 Denver, Colorado 80202 Attn: Edward D. White III,Esq. Tel: (303)292-2900 Fax: (303) 292-4510 12.3 Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assignable by either party without the prior written consent of the other party (except that Buyer may assign its rights and obligations hereunder to a wholly-owned subsidiary). 12.4 Captions. . The captions used in this Agreement are for convenience of reference only and do not constitute a part of this Agreement and shall not be deemed to limit, characterize or in any way affect any provision of this Agreement, and all provisions of this Agreement shall be enforced and construed as if no caption had been used in this Agreement, 12.5 Complete Agreement-, Schedules and Exhibits. Each schedule and exhibit delivered pursuant to the terms of this Agreement shall be in writing and shall constitute a part of this Agreement, although schedules need not be attached to each copy of this Agreement, This Agreement, together with such schedules and exhibits, and the documents referred to herein contain the complete agreement between the parties and supersede any prior understandings, rn L l%'�� �,�\., vll-ASSET PURCHASE AGREEMENT 29 ,;� � Ili 06/26/Ot WED 13:47 FAX 303 869 4602 BLACK CREFK CAP. [a 031 V � F� agreements or representations by or between the parties, written or oral, which may have related to the subject matter hereof in any way. 12.6 Governing Law. The laws of the State of California, without regard to conflict of law doctrines, govern all questions concerning the construction, validity and interpretation of this Agreement and the performance of the obligations imposed by this Agreement. 12.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an,original, but all of which together shall constitute one and the same instrument. 12.8 Third Party Beneficiaries. Nothing in this Agreement is intended or will be construed to entitle any person or entity, other than Buyer and Seller or their respective transferees and assigns, to any claim, cause of action, remedy or right of any kind, except for Manager in the case of Section 8.3(c). 12.9 Severabilily. The validity, :legality or enforceability of the remainder of this Agreement will not be affected even if one or more of the provisions of this Agreement will be held to be invalid, illegal or unenforceable in any respect. 12.10 Costs and Attorneys' Fees. A prevailing party shall be awarded attorneys' fees and costs in any proceeding brought after the Effective Date of this Agreement to enforce or to interpret this Agreement. [Signatures on Next Page] VI •ASSET PURCHASE AGREEMENT 30 �, R672d/oe WED 13:47 FAX 303 8699 4602 BLACK CREFK CAP. Ct3J032 IN WITNESS WkWREOF, each of the patties hereto bave caused this Agoement to be duly cxe=tcd by duly authorized 9n&viduab as of the Effective Date. "SELLER" PALM SPRINGS FBO,LLC, a Delaware limited liability cOmPRAY By: KKR'Real Estatte Investors LLC a c'Willi=j. l=Mchek T" e: Tuiemher r.QE/VOf WED 13:47 FAX 303 869 4602 BLACK CREFK CAP. U 033 .. .. rnn oi,cxurum 10002/002 IN WITNESS WHEREOF, the undersigned has signed this Agreement as of the day and year first above written. ,MERCED PARTNERS LIMITED. PARTNERSHIP By: Global Capital Management, Inc., its General Partner By: Name: Its: 5ta�1 ttr Autltalnd itgw LA1:974953.4 DRAFTSi.- I \` FI 4 1131 Minute Order 3799 September 17, 1986 SETTLEMENT AGREEMEI n1764A SETTLEMENT AGREEMENT This Settlement Agreement is entered into this /� day of ;f/rl by and between THE CITY OF PALM SPRINGS, CALIFORNIA (the "City") and JIMSAIR AVIATION SERVICES, INC. a California corporation RECITALS A. On or about November 18, 1981, the City Council for the City approved and .entered into that certain Indenture of Lease and Aeronautical Concession Agreement (the "Lease Agreement") for approximately twenty acres of land having an effective date of December 15, 1981. A true and correct copy of the Lease Agreement is attached hereto as Exhibit "A" and incorporated herein by this reference. H. Subsequent to entering into the Lease Agreement, certain disputes have arisen with respect to the rights and liabilities of the parties. In particular, Jimsair has paid to the City the sum of approximately Ninety-Four Thousand Dollars ($94,000.00) as flood- control fees, and made an additional expenditure of approximately One Hundred Eighty Thousand Dollars ($180,000,00) in off-site flood improvements for which Jimsair believes it is entitled to reimbursement pursuant to City ordinance. The City asserts that no such reimbursement is due. In addition, costs in the amount of approximately Sixty-Seven Thousand Dollars ($67;000.00) have been incurred by the City in connection with construction of two taxiways at the Airport which the City asserts are wholly recoverable from Jimsair under the terms of certain letter agreements. It is Jimsair's position that it is liable for the cost of only one taxiway (i.e. , one- half of the total cost) according to the terms of the Lease Agreement and understanding of the parties. -°/\�• f' wB,T }; 0 Finally, Jimsair asserts that unreasonable delays and changes in plan approvals by the City should be cause, for rent abatement and a recovery of additional costs for regrading and engineering. The City believes that no such relief is warranted. In summary, the parties contend as follows: CITY'S POSITION AMOUNT 1. Lease starts 12/1/81. Rental payments are $3,024 per month. Rent for 12/1/81 through 8/31/83 $ 63,504.00 2. Rent increases on 9/1/83 to $5,443 per month. Rent for 9/l/83 through 1/31/84 27,215.00 3. No relief for architectural fees or regrading 00 4. Jimsair owes for two taxiways 66 842.87 Total $157,561.87 Less rental payments credited through January, 1984 ('such amount is deposited by Jimsair and sub- ject to verification) -(30,240.00) City claims Jimsair owes it $127,321.37 JIMSAIR'S POSITION AMOUNT 1. Lease starts 8/l/82 due to unreasonable delays by City $ 27,216.00 2. Flood control reimbursement 180,000.00 Engineering Fees 27,000.00 Regrading 2,000.00 Street Improvement Bond held by City 5,000.00 3. Jimsair Owes for 1 taxiway reimbursed to Jimsair over 20 years (33,421.00) Jimsair claims City owes it $207,795.00 C. The parties hereto desire to settle their differences and resolve all matters and disputes between them. NOW, THEREFORE, the parties hereto agree as follows: 1. Upon approval of this Agreement by the Airport Commission and the City Council, Jimsair shall pay to the City in settlement and satisfaction of the disputes between the parties the sum of $30,000.00 which shall be: MEE/071702-3 (i) reduced by the amount of actual land rental payments made by Jimsair to the City under the Lease Agreement in excess of the $30,240.00 credited for rent accruing through January 1984; or (ii) increased by any shortfall between the $30,240.00 credited any shortfall and actual land rental payments made. In no event shall the City be liable for payment to Jimsair under this paragraph. 2. Upon approval of this Agreement by the Airport Commission and the City, the City shall return to Jimsair the sum of $5,000.00 without interest held by the City as a Street Improvement Bond. 3. Article II, paragraphs 2-4 of the Lease Agreement shall be amended to delete any reference to specific amounts payable by Lessee to Lessor with respect to aviation, fuel and oil sales. Such amounts shall be determined by a fee schedule prepared by the City and as mutually negotiated between the parties pursuant to the terms of Article II, paragraph S. Rates and amounts set out in such fee schedules shall become part of the Lease Agreement and subsequent changes in the rate schedule as provided in such Article II, paragraph 5 shall become part of the Lease Agreement without formal amendment to the Lease Agreement. 4. Jimsair agrees to give up a favorable fuel gallonage rate fee which would remain in effect for approximately one more year and in conformity therewith, Article II,,par.agraph 5 of the Lease Agreement shall be deleted in its entirety and the following shall be substituted in its stead: "Renegotiation. It is specifically agreed that the fuel gallonage fees set out in para- graphs 2, 3, and 4 above shall be renegotiated effective the fi;st day of September, 1986, and thereafter every five years on said rene- gotiation-anniversary date. Such renegotiated fees shall be limited in each renegotiation period, -to a maximum increase of not more than twenty-five percent (25%) ." MEE/071702-H i%' I 5. In consideration of the extensive leasehold improvements made by Jimsair as more specifically set out in Exhibit "B" of this Agreement, the Lease Agreement shall be extended for an additional ten-year term. In conformity therewith, Article I, paragraph 1 of the Lease Agreement shall be deleted in its entirety and the following shall be substituted in its stead: "1. The term of this Agreement shall be for a period of fifty (50) years, beginning December 15, 1981, and ending December 14, 2031, unless sooner terminated as provided for in Article XIII herein." Such amendment shall be subject to any government code limita- tions respecting the length of lease terms. 6. The parties agree that Jimsair shall obtain automobile fuel price parity with other fixed base operators subject to pending renegotiations regarding the fees to be paid by such operators. 7. It is, and has been, Jimsair's position that the City granted to Jimsair an option on five acres of land adjacent to and north of the leased premises under the Lease Agreement. Jimsair asserts that it properly exercised its option and has made ,all required payments to obtain a lease of the additional property. By this Agreement, the City acknowledges the existence Of Jimsair's leasehold interest effective from December 15, 1981 under the same terms and conditions of the Lease Agreement. The "Leased Premises" as set out in various Articles of the Lease Agreement shall include an additional 5.00 acres of land as shown and des cribed_as Parcel 3 on Exhibit "C" of this Agreement (the "New Leased Premises") . As additional rental for the New Leased Premises, Jimsair shall pay the , sum of One Thousand Five Hundred ($1,500.00) per month, or such other amounts as set forth in Exhibit "S", paragraph 4 of the Lease Agreement. In Particular, Jimsair has paid, and will continue to Pay Seven Hundred Fifty Dollars ($750.00) per month until improvements on the New Leased Premises are completed or expiration of the first five years of the lease. By execution of j -4- MEE/071702-B G' C°' this Agreement, the City acknowledges receipt of all amounts due as rental for the New Leased Premises up to and including the date of execution. S. The foregoing changes to the Lease Agreement shall be reflected in Amendment No. 1 to the Lease Agreement attached hereto as Exhibit "0" and incorporated herein by this reference. Except as provided to the contrary herein, all terms and condi- tions of the Lease Agreement shall remain in full force & effect. 9. The City shall offer to Jimsair an option (the "Option") to lease an additional five (5) acres adjacent to the New Leased Premises pursuant 'to the terms of an option agreement in the form attached hereto as Exhibit "E" and incorporated herein by this reference. The Option shall consist of four (4) option periods of one (1) year each beginning January 1, 1987. Upon proper exercise of the Option by Jimsair, the City shall be the Lessor and Jimsair shall be the Lessee under the terms of a lease in the form attached hereto as Exhibit "F" and incorporated herein by this reference, with rental terms based on current appraisal of the property and current capitalization rates being offered by the City to other tenants. 10. In consideration of the agreement between the parties, as provided in paragraphs 1 through 4, inclusive above, each of the above-named parties on behalf of themselves, their descen- dants, ancestors, dependents, heirs, executors, attorneys, admin- istrators, assigns, agents, servants, stockholders, employees, _ firms, insurance companies, officers, directors, representatives, predecessors, successors-in-interest, co-partners and any other person, firm, partnership, entity or corporation with whom any of them have been affiliated, hereby fully acquit, release and dis- charge the other party and his or her descendants, ancestors, dependents, heirs, attorneys, executors, administrators, assigns, agents, servants, stockholders, employees, insurance companies, Officers, directors, representatives, predecessors, successors- in-interest, co-partners and any other person, firm partnership, entity or corporation with whom any of them have been affiliated t� MEE/071702-B r/ of ,.and , from ,all rights, claims, .fees, demands, costs, damages, obligations, expenditures, remedies, liens, rights of arbitra- tion, rights of action and/or causes of action, whether compensa- tory or punitive, of any nature whatsoever, whether known or unknown, foreseeable or unforeseeable, and any consequences thereof. 11. It is understood and agreed that this is a full and final release and is intended to cover, and does cover, any and all future damages not now known to any party claiming hereto or which may later develop or be discovered, except that this Agree- ment does not cover any damages or claims which may arise solely as a result of a breach by either party of the specific provi- sions of this Agreement. 12. It is further understood and agreed that the parties expressly waive and assume the risk of any and all past, present and future claims of which the parties do not know or suspect to exist in their favor, whether through negligence, ignorance, oversight, error, or for any other reason whatsoever and which, if known, would materially affect their decision to enter into this Agreement. Each party expressly waives all rights under Section 1542 of the Civil Code of California and any similar laws of the United States and of any state or territory of the United States are expressly waived. Said Section provides as follows: "A general release does not extend to claims which 'the creditor does not know, or suspect to exist in his favor at the time of executing a release, which if known by him must have materially affected his settlement with the debtor. " 13. In further consideration of this Agreement, each party represents and warrants that no portion of any claim, right, demand, cause and/or right of action, that each party has or might have as herein referenced, as been assigned or transferred to any other person, firm, partnership, entity or corporation, whether by operation of law or otherwise. MEE/071702-B -6- o 14. It ,is further understood and agreed that if any portion of this Agreement be held null, void or unenforceable, for any reason whatsoever, that both parties hereto may, at the sole and express option of each of them, enforce the remaining portions of this Agreement. 15. This Agreement contains the entire agreement of the parties with regard to the matters herein set forth, and shall not be modified, except in writing, and shall be binding upon and inure to the benefit of the executors, administrators, heirs, successors and assigns of the parties hereto. 16. The terms. of this Agreement are contractual and are not a mere recital. This Agreement is executed without reliance upon any representations of any nature whatsoever of the parties, and their attorneys, agents, servants and/or employees. 17. This Agreement has been entered into in the State of California, County of Riverside, and shall be construed and interpreted in accordance with the laws of California and shall be deemed to have been made and/or performed in said State and County. 18. Neither the execution or acceptance of this Agreement is in any way whatsoever an admission of liability by either party but is a compromise and/or settlement of known, unknown, prospec- tive and/or pending claims, demands, causes of action, rights of action and/or remedies that have been, may have been, could have been, or should have been or yet could be asserted to in this or any other forum or jurisdiction. 19. Each party represents and warrants to the other that they have carefully read this Agreement and had the contents and legal effect hereof fully explained by legal counsel of their choosing; that each party has the sole and exclusive power and authority to execute this Agreement and does so of his own free act. 20. This Agreement may be signed in counterpart or duplicate copies, and any signed counterpart or duplicate copy shall be '� i equivalent to a signed original for all purposes. A- MEE/071702-H -7 ��� n � 21. The parties hereto agree that each shall, concurrently herewith, or at any time hereafter, on the demand of the other, execute any other documents or instruments and do or cause to be done any other acts and things as may be necessary or convenient to carry out the intents and purposes of this Agreement. 22. In the event litigation is commenced arising from or pertaining to this Agreement or any term or provision hereto, the prevailing party in such litigation shall be entitled to recover its costs of suit, including reasonable attorneys' fees. IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed on the L day of 1986. ATTEST: CITY OF PALM SPRINGS, CALIFORNIA BY����� �� BY: �..n.� amity Clark City Manager/ f^�'/ REVIEWED & APPROVED 'I-� SIMSAIR AVIATION SERVICES, INC. Y Nun BY THE CITY COUNCIL NO. If By. STATE OF _Cazg0AALa- COUNTY OF �ti'/Ld-tQ�2 ) ss. 11 � On this 1&- day of S1 19 90, before me, the undersigned authority, personally appeared 'f-I�Q 1TQPR"m004e- personally known to me, or proved to me on the basis of satisfactory evidence, to be the person who executed the within instrument as and a� or on ehalf of thecknowledged to me that the CorporationCor exe ut d itporatio.therein named, OEM' L SEAL 8MlDp CIAL ONS �Notary Publlc NatrtY"t_celtlanle RIVERSIDE COUNTY My Comm.Exp,ppr 23.1990 p, a MEE/071702-B �r AMENDMENT 1 to INDENTURE OF LEASE: AND AERONAUTICAL CONCESSION AGREEMENT No. 1764 WHEREAS, The City of Palm Springs, C.-Ilifornia, hereinafter called "CITY" or' "LESSOR", and JIMSAIR AVIATION SERVICES, INC. , hereinafter called "LESSEE" or "JIMSAIR", entered into Lease Agreement No. 1764, effective December 15, 1981; and WHEREAS, Lessor and Lessee mutually desire to lease an addi- tional five (5) acres; NOW, THEREFORE, the parties hereto mutually agree as follows: Paragraph "1" Of ARTICLE I - TERM, is hereby amended to read as follows: "1. The term of this Agreement shall be for a period of fifty years, beginning December 15, 1981, and ending December 14, 2031, unless sooner terminated, as provided for in Article XIII herein." Paragraphs "l" through "5" of ARTICLE II - RENTAL AND OTHER PAYMENTS', are hereby amended to read as follows: "1. Leased�iSeS: "Parcel 1: Lessee agrees to pay to Lessor as rental for the land, as shown and described as 'Parcel 1' On attached Exhibit "A", and containing approximately 20-.16 acres, for the first five (5) years of this Lease, Three Hundred Sixty-two Thousand Eight Hundred Eighty Dollars ($362,880) , payable monthly in advance in the amount of Six Thousand Forty-eight Dollars ($6,048) per month, or such other amounts as are set forth in the - � construction schedule, Exhibit "B" attached hereto and made a part hereof for all purposes. EXHIBIT A-f- `T 0 "Parcel 3: Lessee agrees to pay to Lessor, as rental for the land, shown and described as 'Parcel 3' on attached Exhibit "C", and containing approximately 5.00 acres, for the first five (5) years of this Lease, monthly in advance, the amount of One Thousand Five Hundred Dollars ($1,500) per month except that rental will be reduced by fifty percent (50%) until improve- ments are completed on this parcel or expiration of the first five (5) years of the lease. "For the remainder of this Lease, in equal monthly installments, in advance, an amount of money to be determined by revising the first five (5) years' rent, as set forth in the above paragraphs, as follows: "The rentals shall be revised, effective the begin- ning of the Sixth (6th), Eleventh (llth) , Sixteenth {16th), and every five (5) years thereafter based on the change in Cost of Living Index. For the purposes of this computation, it is agreed that the Consumer Price Index for the month of September 1981 is the base or one hundred percent (100%) . The Cost of Living Index to be used is that reflected by the Consumer Price Index, all items, Los Angeles-Long Beach-Anaheim, (1967 equal 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 be no longer published, then another index generally recognized as authoritative shall be substituted by agreement. In any event, the base used by the new index shall be reconciled to the 1967 index. "The rentals set out hereinabove shall be payable on the first day of each and every month throughout the term of this Agreement. , MEE/071702XXD -2 "Lessee acknowledges that the westerly sixty (60) feet of Parcel 3, as shown on Exhibit "C", are desig- nated in the Master Plan as a taxiway; and, as such, shall revert to the City for taxiway use, without cost, upon one hundred eighty (180) days' notice, provided that Jimsair shall retain a non-exclusive easement over such property. "2. Aviation, Retail Fuel and Oil Sales: Lessee -agrees to payLessor, on or before the twentieth (20th) day of each month, an amount as calculated by a mutually-agreed-upon rate schedule (the "Rate Schedule") , a per-gallon fee for all aviation fuel pur- chased by, or delivered to, the Lessee at the Airport, annually. The Rate Schedule, and any amendments thereto, pursuant to Article II, Paragraph 5, shall be deemed a part of this Agreement. Lessee further agrees to pay Lessor, according to the Rate Schedule, a per- gallon fee on all aviation oil purchased by, or deliv- ered to, Lessee at the Airport. "in this regard, it is agreed that all aviation fuel received by Lessee, and actually delivered by Lessee to regularly-scheduled airlines operating under contract with Lessor, shall not be subject to such pay- ment. It is agreed that the total gallonage delivered to, or purchased by, Lessee each month,. other than fuel delivered to regularly-scheduled airlines operating under contract with Lessor, as described in Article III, Paragraph 2 hereof, shall be reduced by two percent (2%) before computing charges, as a maximum loss allowance from any and all causes. "Lessee agrees that it will instruct all of his fuel suppliers to promptly furnish a duplicate copy of all invoices and/or delivery receipts to the City. Lessee agrees to fully comply with all standards related I `2- to fuel sales, as adopted by the City, as regards safety MEE/071702XXD -3 and standards of service: Lessee further agrees that it will adopt and maintain retail sales prices for aviation fuels which are competitive with other trunk line air carrier airports within a sixty-five (65) mile radius of the Palm Springs Airport. 113. Into-plane Fuel and Oil Sales: The Lessee will pay the Lessor, each calendar quarter, according to the Rate Schedule, a fee for each gallon of aviation fuel delivered into airlines or rather contract pur- chasers, as described in Article III, Paragraph 2. 4. Automotive Retail Fuel and Oil Sales: Lessee agrees to pay Lessor, on or before the twentieth (20th) day of each month, according to the Rate Schedule, a per-gallon fee on all automotive fua•t purchased by, or delivered to, Lessee at the Airport, and on all auto- motive oil purchased by, or delivered to, Lessee at the Airport during the immediately-preceding month, pro- vided, however, that said fuel flowage fee for the period from the effective date of this Lease and until October 31, 1983, shall be three cents ($.03) per gallon, and thereafter shall be adjusted pursuant to Article II, Paragraph 5. "5. Renegotiation. It is specifically agreed that the fuel gallonage fees, as set out in Paragraphs 2, 3 and 4 above, shall be renegotiated effective the first day of September, 1986, and thereafter every five (5) years on said renegotiation anniversary date. Such renegotiated fees shall be limited in each renegotiation period, to a maximum increase of not more than twenty- five percent (25%) ." Except as expressly herein modified, the terms, covenants and conditions of Agreement No. 1764 are hereby ratified, and shall �r continue in full force and effect. °.y -4- J MEE/071702XXD IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed on the _ day of 1986. ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By: City Clerk Clty Manager REVIEWED AND APPROVED JIMSSAIIRR AAVVIA�TION SERVICES, INC. �nJ By--< STATE OF l,Q�tI,YL�Lt✓ ) COUNTY OF t5(,LIO A.Q([I(Q ) ss. On this signed auth&F� day of 1986, before me, the under- signed persona ly appeare Thd ZfQ!'a lnD(1-11_ , personally known to me, or proved to me on the basis of satisfactory evidence, to be the person who executed the within instrument as or of the Corn an acknowle ge to me thatotheehalf Corporation executediit therein named, OFFICIAL SEAL ,d /" / SANDgA L.SIMMONS A-ti �/ ( �L.(i!'r✓>�-dam � Nol�ry p,yllp-G�plpel� Notary PUI]11C RIVERSIDE COUNTY c. MEE/071702XXD -5 z w P 5 5a �RCEL 3 _ 50.0 AC. cW�j y3 JIMSAIR AVIATION SERVIC r✓ INC. /N A G b O H w q ` r ' Ir I I ; NO•/7 ei9'r.� SE CD.P c �7A;Ory n�1q0 G'09 =C /e CITY OF PALM SPRINGS ^, '�•�� F'E/:T OF COV NUNITY DE\'c LOAiA E':T ... _ .-. . L • � _ - < I0N - I Tce investment to date of the facilities constructed ar, Terminal Building . . • , . hangars . :1,2;^r,6' 3 . Fuel storage facility . . ' ' ' • 1,357,515 Ram, and . . . . . . 2; 3, 427 P par%ing lot . , , , oar 7; . Underground utilities . • . . . � 12_ S ;;• Landscaping, security fe:;cing, lighting . • • Gas Static'!/Deli/Car " " ' P;asit (unde. ccnstructicn . TOTAL PARCEL 3 THAT PDRT20!i OF THE NORTHEAST i OF SECTION 18, S.H.M. . IN LAME C'T ABE PALY D AS SPRINGS, COUNTY ZO R1 T4S' SSE, OF CALIF IN FOLLOWS: VERSIDc, STATE C0I0IENCING AT THE SOUTHEAST CORNER POINT BEING THc^ p02NZ OF INIERSECTZON OF T ROAD AND GENE AUTRy TRAIL. OTHEACEIITECTION 18' SAID THENCE O.T 49 RLINE OF R 0;4 AUTRY NORTH � „ OF RY TRAIL BEING THE "" T.IliAWEST ALONG THE CENTERLINE OF GENE WESTERLY, TO THE HEEAS-T NG OF _SAID SECTION 18, CENTRTHENCE PING k RADZY OF 4850.001FEETNT CURVE, CpyCDT 0 TH ANG HOOF cS E ALONG THE ARC OF SAID CURVE, THRl 9 T:-!dCE NORTH 614 '02", A DISsA,'CE OF A2,0;;99T�ETEN,T£RLINE OF SAID ENE TANGAUTRENT TRTo LAST MENTIC\ED CL V 3067.14 FEET 853. THc::CE IL, A LIST?IO OF WESTTR c POINTR FHT OF BECINNAY'OFEGEA'E AUTRY T°RAA 0r 50.00 FEET TO Tt£ A DISTANCE OF BEGINNING. THENCE II SAID POINT IS Cc'1:c THENCE OF 550.aS FEET. CONTINUING SOUTH 53-27,47„ AUTRr TRAIL, A6DISTANC^WEST, PARALLEL TO THENCE NORTH c OF 395.37 FEET. THE CENTS?,LI+;E 0'A PDIid50.00T Es SO-1HIIIS NRLYR RIGHT A DISTANCE GF F$50.83 FEET TO BE_r;C rktn RIGHT 0 THE.NC TERLI AS MEASUOF N" AWRY TRAIL BEC`•!a'ILIN+E, SA DISTANCE OF'3F--ST ALONG TSAID SOUTHWEST£•RLI7LES. SOUTH 31' PEET TRUE PO R,C INT OF SAID DESCRIPTiO\ CONTAINS 5.00 ACRES. I i CITY OF PALM OF CoSPRINGS ?NE NT 1u UNITY DEVELOPMENT -�� ._ ENGINEERING DIV IS In ��i OPTIONy AGREEMENT V1764B OPTION AGREEMENT THIS OPTION AGREEMENT is made this ���-J day of 1986, by and between THE CITY OF PALM SPRINGS, CALIFORNIA ("Optionor") , and JIMSAIR AVIATION SERVICES, INC. , a California corporation, having its usual place of business at the Palm Springs Municipal Airport, Palm Springs, California, and whose permanent mailing address is Lindbergh Field International Airport, San Diego, California ("Optionee") , R E C I T A L S A. Optionor is the owner and operator of an airport known as Palm Springs Municipal Airport, situated in the City of Palm Springs, County of Riverside, State of California, and in particular, certain property (the "Property") consisting of approximately five (5) acres more specifically described as Parcel 4 on Exhibit E-1 attached hereto and incorporated herein by this reference. B• Optionee desires to acquire through successive option periods, the exclusive right to lease, without being obligated to lease, the Property, under the specified terms and conditions as set forth herein, NOW, THEREFORE, the Parties hereto agree as follows: 1• APPRAISAL AND CALCULATION OF RENT. Prior to January 1, 1987, Optionor shall have obtained and provided to Optionee an appraisal of the Property and shall have calculated the rental to be charged on the Property to be based on such appraisal and current capitalization rates being used by Optionor and offered to other similarly situated tenants. 2. GRANT 0- n OPtionor hereby grants to the 0 tionee P exclusive ri lease the Property at a ght to price and under the terms and conditions EXHIBIT lU Of the Indent of Lease and Use Agreeme.,_ the "Use Agreement" in Exhibit "F" attached hereto, with rental, payments to be deter- mined as set out in Section 1• above. 3• OPTION PERIODS AND CONSIDERATION. Option n_ Period January 1, 1987 Option PaymentDecember 31, ,}gg7 January 1, 1988 - December 31, 1986 $ 6,000.00 Januar 1 6,000.00 Y , 1989 - December 31, 1989 One-half (1/2) of the annual rental pay- determined as determined Pursuant to paragraph I above. January 1, 1990 December 31, 1990 One-half (1/2) of the annual rental pay- ments as determined Pursuant to paragraph e. With respect to the first two Option p p eriods, t ment for each the option pay_ year shall be due in a lump sum on the first day of such option period. With respect to the second two option Periods, payment shall be made in advance on a quarterly basis throughout the option periods. 4• EXERCISE OF SUCCESSIVE OPTION PERIODS. Each of the option periods granted herein must be exercised by notice to the Optionor on or before the first day of such Period, provided, however, that the exercise of each conditioned on: option is A. the timely ,payment of the applicable option considera- tion (but Optionee shall not be considered delinquent in such payment or notice until fifteen (16) days after the applicable due date) ; B. the exercise of the preceding Option; C• Optionee's performance without breach of all terms and conditions of this Agreement. ) �1a MEE/071702-EIN -2- ' � 5. RETENTION AN kPPLICATION OF CONSIDERATI In the event that any or all of the successive option periods granted herein are not exercised, all sums paid and services rendered Optionor by Optionee shall be retained by Optionor in consideration of the granting of these successive options. In the event, however, that Optionee shall exercise its Option -to enter into the Use Agreement during the term of an option period, Optionor shall be given credit, pro rats, for a portion of the option payment towards rental payments due under the lease agree- ment. (By way of illustration: should Optionee, after having paid in advance $6,000.00 for the first Option Period, exercise its right to enter into the lease agreement on July 1, 1987, Optionee would be given credit in the amount of $3,000.00 towards rental payments due under the Lease Agreement. ) 6. DEFAULT AND TERMINATION. Each of the following events shall constitute an event of default hereunder: A. Optionee shall fail to meet any deadline relating to the Option consideration or exercise of an option period (except that Optionee shall in all cases be given a fifteen-day (15-day) grace period) or meet the terms for ' lease of the Property. B. Optionee shall fail to perform any other acts to be per- formed pursuant to the provisions of this Agreement. C. Optionee shall be dissolved in accordance with the pro- visions of the California Corporations Code. In an event of default, this Agreement and the rights of Optionee shall automatically and immediately terminate without notice. MEE/071702-EIN -3- c<' 7. RECORDING. - Upon written request by Optionee to Opti.onor, this Agreement or a memorandum of this Agreement, shall be executed and acknow- ledged by the Parties for the purpose of recording. B• EXERCISE OF OPTION. If Optionee is not in breach of this Agreement, it may exer- cise this Option by execution and tender to Optionor of the Use Agreement in the form of Exhibit "F", Optionor shall then imme- diately- execute and deliver to Optionee an executed copy of the Use Agreement. The term of the Use Agreement shall run from the date of the exercise of the Option to December 14, 2031. 9. RENTAL ABATEMENT DURING DEVELOPMENT. After the proper exercise of this option to lease p and during the actual construction of improvements on the Property, the rental payments provided in the Use Agreement shall be reduced by fifty percent (50t . 1 Upon completion of each portion of the improvements on the Property as evidenced by the filing of a notice of completion with respect to the particular improvements, the rental for that portion of the Property occupied by such improvements shall resume at the rate provided for in the Use Agreement. NO the foregoing, in no event shall this rent abatement provision be operative after December 31, 1990. 10. ASSIGNMENT This Agreement and the rights hereunder may not be assigned or delegated by either Party without the prior written consent of the other, which consent shall not be unreasonably withheld. 11. OTHER DOCUMENTS. The Parties hereto agree that each shall, concurrently here- with, or at any time hereafter, on the demand of the Other, exe- cute any other documents Or instruments and do i or cause to be MEE/071702-EIN -4- `-`� done any other acts and things as may be necessary or. convenient to carry out the intents and purposes of this Agreement. 12. COUNTERPARTS. This Agreement may be signed in counterpart or duplicate copies, and any signed counterpart or duplicate copy shall be equivalent to a signed original for all purposes. 13. NOTICES. Any written notice to any of the parties required or permit- ted under this Agreement shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given, or on the fifth (5th) day after mailing if mailed to the party to whom notice is to be given, by first class certified, postage prepaid, and addressed to the addressee at the address stated opposite his name below, or at the most recent address, specified by written notice pursuant to this paragraph/section. 14. ADDITIONAL DOCUMENTS. Each party hereto agrees to execute, with acknowledgment or affidavit, if required, any and all documents in writing which may be necessary or expedient for the purposes of this Agreement. 15. ENTIREENTIRE-EMENT This instrument contains the entire agreement of the parties relating to the rights granted and obligations assumed in this instrument -and supersedes any and all Other agreements, contracts or understandings between the parties. Any oral representations or modifications concerning this instrument shall be of no force` Or effect unless contained in a subsequent written modification signed by the party to be charged. MEE/071702-RTX7 -5- Q, IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed on the L� day of ,( 1986. ' ATTEST: OPTIONOR: CITY OF PALM SPRINGS, CALIFORNIA Cti ryy �Ierk By: —A , City a ager REVIEWED & APPROVED; 'Ay OPTIONEE: A PR VED BY THE CITY COUNCIL `IIMSAIR AVIATION SERVICES, INC. A California Corporation BY NO. �8%Ty�86 By: STATE OF �[ /�,2r ) COUNTY OF R(�, �� ) as. On this I(p'H' day of �Z(�r/� undersigned authority, Persona 1 a ' 19 8� before me, the Personally known to meproved y PPeare �YI1D t'riRlcctr�"1 for evidence, to be the perrso who to me exe executed the basis the withinof satis instrument toas acknowle or on behalf of the Corporation therein named, and ge to me that the Corporation executed it. ^��4�y ru�11C OFF IAL SEAL S DRA L&ADAO a ArVEMDECOUNlY W Came.EM.M.=I M0� i(� MEE/071702-EIN -6- Exhibit �L III r:oi I 1I 1 i', I I i'AL 1 SPItlI�IGS-------�_.-- ' •'i' to I '✓.:L.[I I _ �... .... ..f V �� �, ���_�i��� �1 � f� �l i ,,- / �.�11 `1� lia;'�1��,,� �., � � ,,. s-��) G� n fir' }I '� ,,/r r r "Iri. aq'q fi WJnYnp Hegw amy, nLL.L1v�1 JiinsAir Aviation Sery Inc RETURN i0: JUL ) 1989 Consent to Encumber & Amenc r(� 77yy �('�� F�RRKK Lease 64 City Clerk CONSENT TO�'Ea&Vp%CE, NOAGREEMENT {4385,T7-5789 Box 1Spr LESSOR'S CERTIFICATE AND Palm Springs, CA 92263 AMENDMENT TO LEASE "' This Consent to Encumbrance, Lessor's Certificate and Amendment to Lease ("Amendment's) is made and entered into as of the y SPRINGS, whose of 1989, by and between CITY OF PALM 1 Tahquitz-McCallumWay, Pala mSpringsce Of Californiainess isn 92262st and JIMSAIR AVIATION SERVICES, INC. , a California corporations ) whose principal place of business Lindbergh Field, San is 2904 Pacific Highway Diego, California 92101 ("Lessees') w, ith reference to the following facts and purposes: R E C I T A L S• A. Lessor and Lessee are parties to that certain Indenture of Lease and Aeronautical Concession Agreement effective December 15, 1981, a Memorandum of which was recorded on November 8,as Instrument No. 193763, Official Records of Riverside Coun 1982, ty, California, as amended by that certain Amendment No. 1 to Indenture of Lease and Aeronautical Concession Agreement No. 1764, dated September 18, 1986, and that certain Option Agreement dated September is, 1986, and that certain Settlement Agreement dated September is, 1986 (including any extensions, renewals or Permitted modifications thereof, collectively, the "Leaser') covering a portion of those certain premises known as Palm Springs, Regional Airport as more particularly described in Exhibit "A" attached hereto and incorporated herein by reference (the "Premises") , B. TEXTRON FINANCIAL CORPORATION, a Delaware corporation ("Lender") has agreed to lend the sum of up to $21500,000.00 to Lessee which loan will be evidenced by a promissory note and secured, among other things, by a deed of trust (the "Leasehold Deed of Trust's) upon Lessee's leasehold estate under the Lease. %, C. Lessee desires to obtain Lessor's specific consent to the encumbering of the Lessee's interest in the Lease by the Leasehold Deed of Trust pursuant to Article XI of the Lease and for other matters relating thereto. D. Lender intends to rely on this instrument in connection with the extension Of credit to Lessee. NOW, THEREFORE, in consideration of the premises, the mutual Promises of the parties hereto and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and as an inducement to Lender to make the above loan to Lessee, Lessor and Lessee agree as follows: (y 1. Representations and Warranties. Lessor and Lessee do hereby represent, warrant and certify to Lender as follows: (a) That the documents referred to in Recital A above are the only documents which constitute the Lease, and that the Lease is in full force and effect and has not been modified, changed, altered or amended in any respect. (b) That the Lease is the only agreement between the Lessor and Lessee affecting the Premises. ) That all rent and anyother s current chargesrequired ntohbep paid nbyo Lessee f any and under the Lease, including the fixed ground rent through and including payment for the month of June, 1989, and all other monthly rental payments and other charges through and including payment for the month of May, 1989, and no default presently exists under the Lease and no state of facts exists which would constitute a default under the Lease. (d) That the current term of the Lease expires on December 14, 2031. 2. Lender's Rights to Notice and to Cure Defaults. Lessor and Lessee agree that so long as the Leasehold Deed of Trust shall remain of record: (a) The Lease shall not be amended, terminated or modified in any way without the prior written consent of Lender. (b) Any and all notices or other communication required or desired to be given to either Lessor or Lessee under the Lease shall in addition be given to Lender by certified mail return receipt requested at Textron Financial Corporation, 10 Dorrance Street, P. O. Box 6687, Providence, Rhode Island 02940-6687, Attention: General Counsel, with a copy to Textron Financial Corporation, 490 Nowlin Center, Airport Freeway, Fort Worth, Texas 67180, Attention: Vice President-Division Manager; (c) Any notice or other communication which Lender shall desire or is required to give to or serve upon Lessor or Lessee shall be deemed to have been duly given or served if sent by certified mail, return receipt requested, addressed to Lessor and/or Lessee as follows: Lessor: Director of Transportation City of Palm springs Post Office Box 1736 Palm Springs, CA 92262 Lessee: Jimsair Aviation Services, Inc. 2904 Pacific Highway - Lindbergh Field San Diego, CA 92101 Attn: President +' -2- er ha he ight ut obligation(tto curedanysdefaultvbytthe rLessee bundertthee Lease and Lessor agrees to accept any performance tendered by Lender as if Lessee had tendered such performance, provided, however, that unless Lender otherwise agrees in writing, any performance or partial performance by Lender under the Lease shall not constitute an assumption of the Lessee's obligations under the Lease. (e) In the event that Lessee shall fail to cure a default within the time period prescribed by the Lease, Lessor shall give written notice to Lender of such failure to cure. Lessor shall not terminate the Lease by reason of such default of Lessee if Lender shall: (1) Cure such default within ninety (90) days after service on Lender of written notice from Lessor of (i) Lessee's failure to cure the default within the time period prescribed by the Lease and (ii) Lessor's intention to terminate the Lease; or (2) Undertake, in writing, on or before the expiration of said ninety (90) days to perform all of the covenants of the Lease capable of performance by Lender. In the event of such undertaking, such default shall be deemed cured. In the event such default is not susceptible of being cured by Lender, such default shall be deemed cured if Lender shall proceed in good faith in a diligent manner to accomplish the foreclosure of Lessee's leasehold estate under the Leasehold Deed of Trust. (f) Unless otherwise provided herein the exercise and non-exercise of remedies under the Leasehold Deed of Trust are solely at the election of Lender. If Lender agrees to exercise any of such remedies by reason of Lessee's default under the Lease or Leasehold Deed of Trust, Lender is not obligated to pursue such remedies if Lessee's defaults have been corrected or cured; (g) Lessor and Lessee hereby waive as against Lender and agree that Lender shall have no obligation to cure any defaults under the Lease which by their nature are incapable of a cure (including by way of example and not limitation, defaults by Lessee under the Lease consisting of the bankruptcy of Lessee, an unpermitted assignment, transfer or sublease of the Lease, an unpermitted pledge, hypothecation, surrender or encumbrance of the Lease or Lessee's interest therein, a misrepresentation by Lessee, and performance under the Lease which is discriminatory) ; and -3- (h) Lessee and Lessor hereby agree that Lessee's right to cancel the Lease, pursuant to Article XII thereof, shall be subject to Lender's consent, and any exercise or attempt to exercise the cancellation right provided in Article XII of the Lease without the prior written consent of Lender shall be void. 3. Lender's Rioht to New Lease Upon Master Lease Termination. Subject to th e provisions of Sections 4 and 5 hereof, upon any termination of the Lease for reasons other than expiration of the lease term, Lessor shall serve upon Lender written notice that the Lease has been terminated together with a statement of any and all sums which would at that time be due under the Lease but for such termination, and of all other defaults, if any, under the Lease then known to Lessor. Lender shall thereupon have the option, in its sole discretion, to obtain a new lease in accordance with and upon the following terms and conditions: Upon the written request of Lender, within thirty (30) days after service of such notice that the Lease has been terminated, Lessor shall enter into a new lease of the leased premises with Lender, or its designee, as follows: Such new lease shall be entered into at the reasonable cost of the lessee thereunder, shall be effective as at the date of termination of the Lease, and shall be for the remainder of the term of the Lease and upon all the agreements, terms, covenants and conditions of the Lease as amended herein, including any applicable rights of renewal, except that the rent payable thereunder shall be determined based upon the then current going rate for such rent as determined from time to time by Lessor for fixed based operators of other comparable airport properties. Such new lease shall require the lessee to perform any unfulfilled obligation of Lessee under the Lease which is reasonably susceptible of being performed by such lessee. Upon the execution of such new lease, the lessee named therein shall pay any and all sums which would at the time of the execution be due, and shall pay all expenses, including reasonable counsel fees, court costs and disbursements incurred by Lessor in connection with such defaults and termination, the ,recovery of possession of said premises, and the preparation, execution and delivery of such new lease. Upon the execution of such new lease, Lessor shall allow to the lessee named therein, and such lessee shall be entitled to, an adjustment in an amount equal to the net income derived by Lessor from the leased premises during the period from the date of termination of the Lease to the date of execution of such new lease. 4 . Enforcement of Leasehold Trust Deed Assignability off Master Lease. Upon the exercise of any of the remedies contained n\' � in the Leasehold Deed of Trust, such that the interest of Lessee is foreclosed upon, sold, transferred, acquired by or otherwise > r" terminated by Lender (collectively, the "Default Remedies") , ��:,6'. Lessor agrees: -4- r �1 (a) , That any such foreclosure, termination, sale, assignment or transfer of Lessee's interest in the Lease shall not terminate the Lease, but the Lease shall be fully assignable without the further consent or approval of Lessor to any one or more of the following: (1) the purchaser or transferee of Lessee's leasehold estate under or pursuant to the Default Remedies provided by the Leasehold Deed of Trust; (2) any purchaser or transferee from Lender; or (3) Lender; (b) To execute such reasonable amendments to the Lease or instruments as may be necessary to evidence or effectuate the transfer described in Paragraph 4(a) above; and (c) Upon the request of the purchaser or transferee described in Paragraph 4(a) above or Lender, to execute a new lease with such transferee or Lender upon the same terms and conditions as the Lease, as amended hereby. 5. Rejection: No Termination Upon Lender Assumption and Cure of De faults if the Lessee shall reject the Lease pursuant to Section 365(a) of the Bankruptcy Code, 11 U.S.C. § 365(a) , the Lessor shall serve on the Lender written notice of such rejection, together with a statement of all sums at the time due under the Lease (without giving effect to any acceleration) , and of all other defaults under the Lease then known to the Lessor. Lender shall have the right, but not the obligation, to serve on the Lessor within ten (10) days after service of the notice Provided for in the preceding sentence, a notice that the Lender elects to (a) assume the Lease, and (b) cure all defaults outstanding thereunder either (x) concurrently with such assumption as to defaults in the payment of money, or (y) within ninety days after the date of such assumption as to other defaults except defaults of the type specified in Section 365(b) (2) of the Bankruptcy Code, it U.S.C. § 365(b) (2) . If Lender serves the notice provided for in the preceding sentence, then, as between the Lessor and Lender (1) the rejection of the Lease by the Lessee shall not constitute a termination of the Lease, (2) Lender may assume the obligations of the Lessee under the Lease without any instrument of assignment or transfer from the Lessee, (3) Lender's rights under the Lease shall be free and clear of all rights, claims and encumbrances of or in respect of the Lessee, and (4) Lender shall consummate the assumption of the Lease and the payment of the amounts payable by it to the Lessor pursuant to this section at a closing to be held at the business offices at the leased premises on the tenth (10th) business day after Lender shall have served the notice hereinabove provided for. 6• Limitation of Lender's Liabilit Under Lease. Except !/ 'as may otherwise be agreed in writing by Lender with Lessor and except for such period of time as Lender is actually the owner of the lessee's interest in the Lease, in no event shall Lender be (• ; -5- �� i� liable for any of the lessee obligations under the Lease. In the event that Lender shall at any time hold the lessee's interest under the Lease or any new lease entered into in replacement thereof, then, upon any sale, transfer or assignment thereof by Lender (which shall be in accordance with the terms hereof) , Lessor agrees that such transfer shall automatically release Lender from any liability under the Lease or any successor lease occurring after the date of such sale, transfer or assignment. 7. Successors. This Amendment is binding upon and inures to the benefit of the parties hereto, their successors and assigns, and including specifically Lender and its successors and assigns. 8. Airport Rules. Notwithstanding anything to the contrary contained herein, any person acquiring the leasehold interest of Lessee from Lender shall, as a condition precedent to the enjoyment of the leasehold estate, acknowledge and agree to be bound by all rules and regulations of the Palm Springs Regional Airport. 9. Extensions of Time Periods. Notwithstanding anything to the contrary contained herein, any time periods within which Lender is required to act shall be extended by a period equal to the time Lender is restrained from exercising its remedies under the Leasehold Deed of Trust ,pursuant to the automatic or any other stay provision or order or injunction issued or in force pursuant to the Federal Bankruptcy Code as now or hereafter in effect. 10. Assignment of Subleases. Effective upon the commencement of the term of any new lease entered into pursuant to Sections 3 or 5 above, all subleases shall be assigned and transferred without recourse by Lessor to the lessee under such new lease, and all moneys on deposit with Lessor or any trustee holding insurance proceeds for use in repair or replacement of leasehold improvements, which Lessee would have been entitled to use but for the termination or expiration of the Lease may be used by the lessee under such new lease for the purposes of and in accordance with the provisions of such new lease. 11. No Merger. So long as the Deed of Trust is in existence, and unless otherwise expressly consented to in writing, the fee title to the Premises and the leasehold estate of Lessee created by the Lease shall not merge, but shall remain separate and distinct, notwithstanding the acquisition of the fee title and the leasehold estate by Lessor or Lessee or by a third party, by purchase or otherwise. 12. Inconsistent Terms. This Amendment shall constitute a part of the Lease. Lessor and Lessee acknowledge and agree that the Lease remains in full force and effect unmodified, except as -6- y r 2;�9•'!3E herein provided, and that the terms and provisions of this Amendment shall prevail over any term, covenant, agreement or Provision in the Lease contrary or inconsistent with the terms of this Amendment. 13. Captions. Captions are for reference only. 14 . No Fee Mortoage The foregoing Provisions do not give any person the right to mortgage, hypothecate or otherwise encumber or cause any lien to be placed upon the fee estate of Lessor, nor shall the foregoing Provisions in any event be construed as resulting in a subordination in whole or in part of the fee estate of Lessor to any indebtedness of Lessee. 15. Public Works Assessment. Lessee agrees to pay public works assessments for improvements to the Gene Autry Trail - frontage of Parcels 2 and 3 of Jimsair 's Leasehold, and further agrees to pay similar assessments for Parcel 9 If Lessee exercises the option to lease said parcel. IN WITNESS WHEREOF, the parties hereto have hereby set their hands the day and year first above written. "Lessor" CITY OF PALM SPRINGS, ATTEST: // CALIFORNI'A l City Clerk - By. ((` � City Manager q REVIEWFD; 6 APPROVED:• � l4 f. t- "Lessee" JIMSAIR AVIATION SERVICES, INC. F•rI"'k`✓'+rj9Y Tr,€�"1M „�jL a California corporation BY ES Ily •4 �� Title: President ' STATE OF \Q I OFrICIAL SEAL' SILVIA PROVENZANO COUNTY OF Gin ) ss: e a NdN EGPubOcCOUNTY S,N DIEGO COUNTY On MY Oa -EM NM 12.1W1 e notary pub c, 1989 pers he executed the above instrument, who acknowledged that cA, 01 \F✓ �� . A P QM (Signature) STATE OF CALIFORNIA) )ss. COUNTY OF RIVERSIDE) That portion of the Southeast 1/4 of Section 18, Township 4 South, Range 5 East, San Bernardino Base and Meridian, in the City of Palm Springs, County of Riverside, State of California, described as follows: Commencing at the Southeast corner of said Section 18, said point being the point of intersection of the centerline of Ramon Road and Bogie Road; thence North 0017'49" West, along the centerline of Bogie Road, being the East line of said Section 18, a distance of 63.03 feet to the beginning of a tangent curve concave Southwesterly, having a radius of 4850.00 feet; thence Northwesterly along the arc of said curve, through a central angle of 26°31'24", a distance of 2245.16 feet to a point on the arc of said curve, a radial line passing through said point bears North 63°10'47" East; thence South 63°10'47" West, along said radial line a distance of 50.00 feet to the True Paint of Beginning; said point being hereinafter known and designated as Point "A"; thence continuing South 63°10'47" West, along said radial line, a distance of 489.05 feet; thence North 36°32'13" West, a distance of 1581.47 feet; thence North 53°27'47" East, a distance of 550.88 feet to a point on the Southwesterly right-of-way line of Bogie Road; thence South 36°32'08" East, along the Southerly right-of-way line of said Bogie Road, a distance of 853.99 feet to the beginning of a tangent curve concave Southwesterly, having a radius of 4800 feet; thence Southeasterly along the arc of said curve, through a central angle of 9°42'55", a distance of 813.90 feet to the True Point of Beginning, containing 20.16 acres, more or less. PARCEL 2 That portion of the Southeast 1/4 of Section 18, Township 4 South, Range 5 East, San Bernardino Base and Meridian, in the City of Palm Springs, County of Riverside, State of California, described as follows: Beginning at the point described above in Parcel 1 as Point "A"; thence South 63°10'47" West, a distance of 489.05 feet; thence South 36°32'13" East a distance of 967.42 feet; thence North 75°12'39" East, a distance of 225.36 feet to a point on the arc of a curve concave Southwesterly, having a radius of 4800 feet, a radial line passing through said point bears North 75°12'39" East; thence Northwesterly along the arc of said curve, through a central angle of 12°01'52", a distance of 1007.90 feet to the Point of Beginning, containing 8.35 acres, more or less. r 30 „ 6 N6 . 5 - V 0P 01 92, 1t=A1p07.90 225.3G 1 ' N75'123g E n1 S. E. 1/4 SECTION 18 n T. 4.S. R. 5 E. S. B. B. B; M. _ G3.03' RAMON RD. N O' 17'49'W CITY OF PALM SPRINGS - EPARTMENT OF COMMUNITY DEVELOPMENT ENGINEERING 51WISION LEASE PLAT c, rt �ll A LEASE OFA PORTION OF AIRPORT PROPERTY DESIGN BY: ISCALE: FENADJACENT TO BOGIE ROAD ,SECTION18 EO.M- I�= 400�T. 4 S. R• 5 E, S. B• S. 8, M. owD. Nc: CHECKED BY:31 PARCEL 3 THAT PORTIO`d OF THE NORTHEAST '{ OF SECTION 18, T4S, R5E, S.H.M. , IN THE CITY OF PALM SPRINGS, COUNTY OF RIVERSIDE, STATE, OF CALIFORNIA, DESCRIBED AS FOLLOWS: COMMENCING AT TYE SOUTHEAST CORNER OF SAID SECTION 18, SAID POINT BEING THE POINT OF INTERSECTION OF THE CENTERLINE OF RA.MON ROAD AND GENE AUTRY TRAIL. THENCE NORTH 0°17'49" WEST, ALONG THE CENTERLINE OF GENE AUTRY TRAIL, BEING THE EAST LINE OF SAID SECTION 18, A DISTANCE OF 63.03 FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE SOLZ'H— WESTERLY, HAVING A RADIUS OF 4850.00 FEET. THENCE NORTHWESTERLY, ALONG THE ARC OF SAID CURVE, T&RU A CENTRAL ANGLE OF 36°14'02", A DISTANC€ OF 3067. 14 FEET. THENCE NORTH 36"31'51" WEST, TANGENT TO LAST MENTICN7D CURVE, ALONG THE CENTERLINE OF SAID GENE AUTRY TRAIL, A DISTANCE OF 853. 99 FEET. TIENCE SOUTH 53°27'_47" WEST, A DISTANCE OF 50.00 FEET TO THE SOUTHWESTERLY RIGHT OF WAY-OF GENE AUTRY TRAIL. SAID POINT IS THE TRUE POINT OF BEGINNING. THENCE CONTINUING SOUTH 53"27'47" WEST, A ➢ISTANCE OF 550.88 FEET. THENCE NORTH 36°31'51" WEST, PARALLEL TO THE CENTERLINE OF GLNE AUTRY TRAIL, A DISTANCE OF 395.37 FEET. THENCE NORTH 53°27'47" EAST, A DISTANCE OF 550.85 FEET TO A POINT ON THE SOUTHWESTERLY RIGHT OF WAY OF GENE AUTRY TRAIL, BEING 50.00 FEET FROM CENTERLINE, AS MEASURED AT RIGHT ANGLES. THENCE SOUTH 36"31'51" EAST, ALONG SAID SOUTHWESTERLY RIGHT OF WAY LINE, A DISTANCE OF 395.37 FEET TO THE TRUE POINT OF BEGINNING. SAID DESCRIPTION CONTAINS 5.00 ACRES. CITY OF PALPl SPRINGS j, W ,Cw PARCEL 3 5.00 AC. E a/ SAIR AVIATION SERVIC \ INC. A/ a Q \ O Q ,2 om 0 ti v � ILA I i it q S6 O fop �+fif!ON RHO !.-.S0-7- � CITY OF PADA SPRINGS COWNUNITY DEPELOPME:%T 1J, I i ' OPTION AGREEMENTy1764B OPTION AGREEMENT THIS OPTION AGREEMENT is made this IZ�j day of «•-E!�t�, 1986, by and between THE CITY OF PALM SPRINGS, CALIFORNIA ("Optionor") , and JIMSAIR AVIATION SERVICES, INC. , a California corporation, having its usual Place of business at the Palm springs Municipal Airport, Palm Springs, California, and whose permanent mailing address is Lindbergh Field International Airport, San Diego, California ("Optionee"i . R E C I T A L S A. Option" is the owner and operatnr of an airport known as Palm Springs Municipal Airport, situated in the City of Palm Springs, County of Riverside, State of California, and in particular, certain Property (the "Property") consisting of approximately five (5) acres more specifically described as Parcel 4 on Exhibit E-1 attached hereto and incorporated herein by this reference. B. OPtionee desires to acquire through successive option periods, the exclusive right to lease, without being obligated to lease, the Property, under the specified terms and conditions as set forth herein. • NOW, THEREFORE, the Parties hereto agree as follows: 1. APPRAISAL AND CALCULATION OF RENT. Prior to January 1, 1987, Option or shall have obtained and provided to OPtionee an appraisal of the Property and shall have calculated the rental to be charged on the Property to be based on such appraisal and current capitalization rates being used by OPtionor and offered to other similarly situated tenants. 2. GRANT 0-,r?ON OPtionor hereby grants to OPtionee the exclusive right to lease the Property at a price and under the terms and conditions Ir �y��,� Of the Indent a of Lease and Use Agreeme— (the "Use Agreement" in Exhibit "F" attached hereto, with rental payments to be deter- mined as set out in Section 1. above. 3. OPTION PERIODS AND CONSIDERATION• Optio�iod Option Payment , 1988 - December 31, 1988 January 1, 1987 - December 31, }987 January1 $ 6,000.00 Januar 6,000.00 y 1, 1989 - December 31, 1989 One-half (1/2) of the annual rental pay- ments as determined Pursuant to paragraph i above. January 1, 1990 - December 31, 1990 One-half (1/2) of the annual rental pay- ments as determined pursuant to paragraph 1 above. With respect to the first two option periods, the option pay- ment for each year shall be due in a lump sum on the first day of such option period. W periods, payment ith respect to the second two option shall be made in advance on a quarterly basis throughout the option periods. 4• EXERCISE OF SUCCESSIVE OPTION PERIODS. Each of the option periods granted herein must be exercised by notice to the Optionor on or before the first day of such Period, provided, however, that the exercise of each option is conditioned on: A. the timely payment of the applicable option considera- tion (but Optionee shall not be considered delinquent in such payment or notice until fifteen (is) days after the applicable due date) ; B• the exercise of the preceding option; C. Optionee's performance without breach of all terms and conditions of this Agreement. " u MEE/071702-EIN 72- '� 5. RETENTION AN. {ppLICATION OF CONSIDERATI .. In the event that any or all of the successive option periods granted herein are not exercised, all sums paid and services rendered Optionor by Optionee shall be retained by Optionor in consideration of the granting of these successive options. In the event, however, that Optionee shall exercise its option -to enter into the Use Agreement during the term of an option period, Optionor shall be given credit, pro rats, for a portion of the option payment towards rental payments due under the lease agree- ment. (By way of illustration: should Optionee, after having paid in advance $6,000.00 for the first Option Period, exercise its right to enter into the lease agreement on July 1, 1987, Optionee would be given credit in the amount of $3,000.00 towards rental payments due under the Lease Agreement. ) 6. DEFAULT AND TERMINATION. Each of the following events shall constitute an event of default hereunder: A. Optionee shall fail to meet any deadline relating to the Option consideration or exercise of an option period (except that Optionee shall in all cases be given a fifteen-day '(15-day) grace period) or meet the terms for ' lease of the Property. B• Optionee shall fail to perform any other acts to be per- formed pursuant to the provisions of this Agreement. C•. Optionee shall be dissolved in accordance with the pro- visions of the California Corporations Code. In an .event of default, this Agreement and the rights of Optionee shall automatically and immediately terminate without notice. �d-a u . MEE/071702-EIN -3- '� l 7. RECORDING. - Upon written request by Optionee to Opti.onor, this Agreement Or a memorandum of this Agreement, shall be executed and acknow- ledged by the Parties for the purpose of recording, 8. EXERCISE OF OPTION. If Optionee is not in breach of this Agreement, it may exer- cise this Option by execution and tender to Optionor of the Use Agreement in the form of Exhibit "F". Optionor shall then imme- diately- execute and deliver to Optionee an executed copy of the Use Agreement. The term of the Use Agreement shall run from the date of the exercise of the option to December 14, 2031. 9. RENTAL ABATEMENT DURING DEVELOPMENT. After the proper exercise of this ,Option to lease, and during the actual construction of improvements on the Property, the rental payments provided in the Use Agreement shall be reduced by fifty percent (503) . Upon completion of each portion of the improvements on the Property as evidenced by the filing of a notice of completion with respect to the particular improvements, the rental for that portion of the Property occupied by such improvements shall resume at the rate provided for in the Use Agreement. NO the foregoing, in no event shall this rent abatement provision be operative after December 31, 1990. 10. ASSINT - This Agreement and the rights hereunder may not be assigned or delegated by either Party without the prior written consent of the other, which consent shall not be unreasonably withheld. 11. OTHER DOCUMENTS The parties hereto agree that each shall, concurrently here- with, or at any time hereafter, on the demand of the other, exe- cute any other documents or instruments and do or cause to be P P ,r MEE/071702-EIN -4- I � done any other acts and things as may be necessary or convenient to carry out the intents and purposes of this Agreement. 12. COUNTERPARTS. This Agreement may be signed in counterpart or duplicate copies, and any signed counterpart or duplicate copy shall be equivalent to a signed original for all purposes. 13. NOTICES. Any written notice to any of the parties required or permit- ted under this Agreement shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given, or on the fifth (Sth) day after mailing if mailed to the party to whom notice is to be given, by first class certified, postage prepaid, and addressed to the addressee at the address stated opposite his name below, or at the most recent address, specified by written notice pursuant to this paragraph/section. 14. ADDITIONAL DOCUMENTS. Each party hereto agrees to execute, with acknowledgment or affidavit, if required, any and all documents in writing which may be necessary or expedient for the purposes of this Agreement. IS. ENTIRE AGREEMENT This instrument contains the entire agreement of- the parties relating to the 'rights granted and obligations assumed in this instrument and supersedes any and all other agreements, contracts or understandings -between the parties. Any oral representations or modifications concerning this instrument shall be of no force'- or effect unless contained in a subsequent written modification signed by the party to be charged. MEE/071702-EIN -5- IN WITNESS WHEREOF, the Parties hereto have caused these presents to be executed on the _L day of 1986. ATTEST: OPTIONOR: _... / CITY OF PALM SPRINGS, CALIFORNIA 11`iW Clerk By' y 4� A Citmanager ��— REVIEWED & APPROVED: OPTIONEE: JIMSAIR AVIATION SERVICES, INC. A PR VED BY THE CITY COUNCIL A California Corporation BY NO. 0380� 9y: STATE OF �[�/L,2�� ) v COUNTY OF R(y+��� ) as. On this day of y�jL�p/� undersigned authcrit 19 g�0 r before me, the personally known to me Peoc oPa ly appeare hI'liD fQ CClfnUi'lf� evidence, to be P roved to me on the basis of satis actory the person who executed the within instrument as acknowle or on behalf of the Corporation therein named, and ge to me that the Corporation executed it. No�ary Public-c OPFICNUMO dANDHA 1.61M1AONS WPM W 0..m°P•An.2J.two MEE/071707—cru —6— Exhibit Q-1 : MINUTE ORDER NO. APPROVING A CONSENT TO ASSIGNMENT OF LEASE AND OPTION TO LEASE NO. 1764 AND CONSENT TO ENCUMBRANCE OF GROUND LEASE INTEREST AND ESTOPPEL BETWEEN THE CITY OF PALM SPRINGS ("CITY"), AND NORTH AMERICA CAPITAL HOLDINGS COMPANY DBA ATLANTIC AVIATION("ASSIGNEE")SUBJECT TO A FORM APPROVED BY THE CITY ATTORNEY. I HEREBY CERTIFY that this Minute Order, approving a Consent to Assignment of Lease and Option to Lease No. 1764 and Consent to Encumbrance of Ground Lease Interest and Estoppel between the City of Palm Springs ("City"), and North America Capital Holdings Company dba Atlantic Aviation ("Assignee")subject to a form approved by the City Attorney,was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 1"day of December, 2004. KATHIE HART City Clerk