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HomeMy WebLinkAbout2/19/2003 - STAFF REPORTS (17) DATE: February 19, 2003 TO: City Council FROM: Executive Director-Airports SUPPLEMENTAL REPORT - ENRG FUEL USA, INC. AGREEMENT RECOMMENDATION: Revisions have been incorporated into the attached lease agreement, and it is recommended that the City Council approve the lease agreement between the City of Palm Springs and ENRG Fuel USA, Inc. for the installation, operation and maintenance of a CNG vehicle fueling station located at the Palm Springs International Airport (PSP) . SUMMARY: To establish a lease agreement between the City of Palm Springs and ENRG Fuel USA, Inc. for a CNG vehicle fueling station at the Palm Springs International Airport. BACKGROUND: City Council, at its January 15, 2003 meeting, requested staff make revisions to a proposed lease between the City of Palm Springs and ENRG Fuel USA, Inc.for a CNG vehicle fueling station at the Palm Springs International Airport. These revisions have been incorporated into the attached lease agreement with the exception of the percentage rental provision. A summary of the revisions are as follows: 1) Non-exclusive use of the property and allowance for other renewable energy fuel companies to enter into future leases which would require the new tenant to pay pro-rata shares of existing site and fuel distribution improvements not covered by grant sources. 2) Provision to recover fair market rent, in addition to said improvement cost and percentage rental amounts, if the Federal Aviation Administration should ever require this to change in the future. 3) Percentage rental amount to remain at $0.025 per equivalent gasoline gallon sold; allowance for the City and the Airport to purchase CNG from ENRG at their posted retail rate less fifteen (15) cents. Airport still receives percentage rental amount from all others, including the City. 4) Said improvements to include multiple magnetic card readers located conveniently for customer access, water and air dispensers and, if possible, a coin operated windshield wiper dispenser. 5) Following approval by the Planning Commission, said plans and specifications shall be subject to the prior approval of Landlord. ENRG provided additional information from the Oakland International Airportwhich has a FAA approved agreement showing the same rental amount of$0.025 per equivalent gasoline gallon said. q# ENRG Agreement Supplemental Report City Council 2-19-03 Page 2 of 2 The Oakland rental rate ties to the price per gallon paid for by the Port which is established by "PG&E tariff rates which is usually higher than ENRG's retail rate. ENRG indicated that any increases in the posted fuel rate are done because of market based condition which does not reflect higher profitability for ENRG. A percentage rental provision in the agreement would result in the customer paying that additional cost. While ENRG can establish fixed pricing for companies such as Sunline Transit which has a percentage rental adjustment, public access stations are not guaranteed the same benefit. ENRG has offered to provide CNG to the City of Palm Springs/Airport at their posted retail rate less fifteen (15)cents, and will pay the Airport $0.025/gallon for sales to all others, including the City. ,�BARR�; R�Ft�; ALLEN F. SM T, A.A.E. Assisa'r�Di for of Aviation Executive Director-Airports APPROVED; City Manager �� Attachments: (1) Minute Order (1) Lease Agreement REVIEWED BY DEPT. OF FINANCE LEASE THIS NON-EXCLUSIVE LEASE ("Lease") is made and entered into this day of , 2003_, by and between the CITY OF PALM SPRINGS, a municipal corporation ("Landlord"), and ENRG Fuel USA, Inc. ("Tenant"). RECITALS A. WHEREAS , ENRG Fuel USA, Inc. (Tenant) a nationwide industry leader in clean air programs, has offered to construct up to $850,000.00 worth of improvements to develop a state of the art Compressed Natural Gas (CNG) Vehicle Fueling Station at the Palm Springs International Airport (PSP); and B. WHEREAS the Airport's new Master Plan has designated approximately 5,200 square feet on the Airport Entrance Road frontage for development of a Renewable Energy Fueling Site; and C. WHEREAS the City of Palm Springs (Landlord), with the concurrence of the Federal Aviation Administration, has determined that ENRG's involvement of actively providing Compressed Natural Gas (CNG) Vehicle Fueling Station services for Airport Emergency vehicles on twenty-four (24) hour basis for response to Airport incidents and/or accidents on the Renewable Energy Site; and D. WHEREAS the City Council has set forth the Non-Exclusive Use of the site to be provided by ENRG to the Airport as a result of the development of the Compressed Natural Gas vehicle fueling station, copy attached as Exhibit A to this Lease Agreement; and E. WHEREAS the ENRG will promote and encourage the general public interest in the use of clean burning alternative fuels and is consistent with national efforts to enhance public awareness and support for air quality programs; and F. WHEREAS the nature of the Compressed Natural Gas vehicle fueling station use is such that it will serve to provide clean burning alternative fuels for agencies involved in the aviation industry and the City of Palm Springs, but also those with broader revenue production purposes (i.e. Sunline Transit Agency), In enhancing the leaseability of surrounding property, it will assist in making the Airport as self- sustaining as possible, NOW THEREFORE, the parties hereto agree as follows: 1 . LEASE SUMMARY. Certain fundamental lease provisions are presented in this Section and represent the agreement of the parties hereto, subject to further definition and elaboration in the respective referenced Sections and elsewhere in this Lease. In the event �9/ � of any conflict between any fundamental lease provision and the balance of this Lease, the latter shall control. References to specific Sections are for convenience only and designate some of the Sections where references to the particular fundamental lease provisions may appear. 1 .1 Demised Premises. The "Demised Premises" shall refer to that certain real property located in the County of Riverside, State of California, as depicted on the Plot Plan attached as Exhibit "B" hereof. 1 .2 Lease Commencement Date. The term of this Lease shall commence on the date that Agreement No. is exercised and executed. This Lease Agreement shall be for ten (10) years and shall automatically renew under the same terms and conditions for consecutive five (5) year terms for a total of thirty (30) years unless ENRG or the "City" gives notice of cancellation to the other party at least thirty (30) days prior to such renewal. 1 .3 Extension Options. Option 1 - January , 2013 thru January 2018 Option 2 - January , 2018 thru January 2023 Option 3 - January , 2023 thru January 2028 Option 4 - January , 2028 thru January 2033 1 .4 Rental/Compensation.. (See Exhibit "C"). Percentage Rental: See Section 3.2. 1 .5 Security Deposit. None. (See Section 3.10). 1 .6 Use of Demised Premises. The Non-Exclusive Use of the Demised Premises and the improvements to be installed by tenant, may be utilized for the following use: Compressed Natural Gas Vehicle Fueling Station (See Exhibit "A") It is the intent of the City, under this non-exclusive lease of airport property, to encourage the development of a multi-fuel renewable energy service station. As such, tenant acknowledges that the City may perfect further deals for non- competing additional fuel supplies. If City does provide additional non-exclusive leases for this site, all additional leases shall pay pro-rata shares of items covered in Sections 3.5, 3.6, 3.7, 4.5, 5.2 and Article 6 based on equivalent gallon sales. Also, additional lessees shall pay pro-rata shares of site and fuel distribution improvements paid for by tenant from non-grant sources. 1 .7 Not Applicable Sections. Sections 2.2, 3.3, shall not be applicable to this Lease. �g�S_ 1 .8 Tenant's Address for Notices. ENRG Fuel USA, Inc. 3020 Old Ranch Parkway, Suite 200 Seal Beach, California 90470 Attn: Mr. Andrew J. Littlefair or Mr. James N. Harger Fax: (562) 493-4532 2. TERM, 2.1 Initial Term. The initial term of this Lease shall commence on the date specified in Section 1 .2 ("Commencement Date") and shall continue for the period specified therein unless earlier terminated as provided herein. 2.2 Option Term. Tenant is given the option(s) to extend the term on all of the provisions contained in this Lease for the period specified in Section 1 .3 ("extended term") following the expiration of the initial term or any other extended term properly exercised hereunder, by giving notice of exercise of the option ("option notice") to Landlord at least one hundred twenty (120) days but not more than six (6) months before the expiration of the initial term or any other extended term properly exercised hereunder; provided that, if Tenant is in default on the date of giving the option notice, the option notice shall be totally ineffective or, if Tenant is in default on the date the extended term is to commence, the extended term shall not commence and this Lease shall expire at the end of the initial term or properly exercised extended term. 2.3 Time. Time is of the essence of this Lease. 2.4 Force Maieure. If either party hereto shall be delayed or prevented from the performance of any act required hereunder by reason of acts of God, strikes, lockouts, labor troubles, inability to procure materials, restrictive governmental laws or regulations or other cause without fault and beyond the control of the party obligated (financial inability excepted), performance of such act shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay, provided such party provides the other party written notice of such event within ten (10) days of the commencement of the delay; provided, however, nothing in this Section shall excuse Tenant from the prompt payment of any rental or other charge required of Tenant hereunder except as may be expressly provided elsewhere in this Lease. 2.5 Holding Over. Any holding over after the expiration of the term of this Lease, with the consent of Landlord, express or implied, shall be construed to be a tenancy from month to month, cancelable upon thirty (30) days written notice, and at a rental equal to one hundred fifty percent (150%) of the last applicable Monthly Rental and upon terms and conditions as existed during the last year of the term hereof. &IKO:9 3. RENTAL. 3.1 Monthly Rental. Tenant shall pay to Landlord, during the term of this Lease from and after the Commencement Date as monthly rental ("Monthly Rental") for the Demised Premises the sum specified in Section 1 .4 hereof, which sum shall be paid in advance on the first day of each calendar month. In the event the Commencement Date does not occur on the first day of a calendar month, the Tenant shall pay the rental for the fractional month on the Commencement Date on a per diem basis (calculated on a thirty-day month). All rental to be paid by Tenant to Landlord shall be in lawful money of the United States of America and shall be paid without deduction or offset, prior notice or demand at the address designated in Section 13.10 hereof. 3.2 Percentage Rental. (a) Tenant shall and will pay to Landlord at the time and in the manner herein specified as additional rental (sometimes referred to herein as "percentage rental") a sum equal to the following: (See Exhibit "C"). Percentage Rental (b) Within fifteen (15) days after the end of each calendar month of the term hereof, commencing with the fifteenth (15th) day of the month following the Commencement Date, and ending with the fifteenth (15th) day of the month next succeeding the last month of the Lease term, Tenant shall furnish to Landlord a statement in writing, certified by Tenant to be correct, showing the total gross sales made in, upon, or from the Demised Premises during the preceding calendar month relating to such CNG fuel sales (or fractional month at the beginning of the term if the Commencement Date is other than the first day of a month), and shall accompany each such statement with a payment to Landlord equal to said percentage of such total monthly gross sales made in, upon, or from the Demised Premises during each calendar month. (c) The term "gross sales" as used herein means the total gross receipts, including the actual charges for all services performed by Tenant and fees charged by Tenant and by anyone including any subtenant, licensee or concessionaire in, at, from, or arising out of the use of the Demised Premises, whether wholesale or retail, whether for cash or credit, or otherwise, and including the value of all consideration other than money received for any of the foregoing, without reserve or deduction for inability or failure to collect, including but not limited to sales, related to said gift shop and any food and beverage sales related hereto. Each installment or credit sale shall be treated as a sale for the full price in the month during which such sale is made, irrespective of whether or when Tenant receives payment therefor. Gross Sales shall not include sales taxes, so-called luxury taxes, consumers excise taxes, gross receipts taxes and other similar taxes now or hereafter imposed upon the sale of merchandise or services, but only if collected separately from the selling price of merchandise or services and collected from customers. (d) The Tenant shall keep at the Demised Premises (and shall require any permitted subtenant to keep at the Demised Premises) full, complete and proper books, / 9A7 records and accounts of its daily gross sales, both for cash and on credit, at any time operated in the Demised Premises. The Landlord and its agents and employees shall have the right at any and all times, during regular business hours, to examine and inspect all of the books and records of the Tenant, including any sales tax reports pertaining to the business of the Tenant conducted in, upon, or from the Demised Premises, for the purpose of investigating and verifying the accuracy of any statement of gross sales and to cause an audit of the business of Tenant to be made by a certified public accountant of Landlord's selection. If the statement of gross sales previously made to Landlord shall be found to be inaccurate, then and in that event, there shall be an adjustment and one party shall pay to the other on demand such sums as may be necessary to settle in full the accurate amount of said percentage rental that should have been paid to Landlord for the period or periods covered by such inaccurate statement or statements. If said audit shall disclose an inaccuracy of greater than three percent (3%) error with respect to the amount of gross sales reported by Tenant for the period of said report, then the Tenant shall immediately pay to Landlord the cost of such audit; otherwise, the cost of such audit shall be paid by Landlord. 3.3 Cost of Living Adiustment. Upon each fifth year anniversary date of the Commencement Date or if the Commencement Date is not on the first day of a month, then on the first day of the next calendar month, the Monthly Rental shall be adjusted in proportion to changes in the Consumer Price Index except that no five (5) year adjustment shall exceed 25%. Such adjustment shall be made by multiplying the original Monthly Rental by a fraction, the numerator of which is the value of the Consumer Price Index for the calendar month three (3) months preceding the calendar month for which such adjustment is to be made and the denominator of which is the value of the Consumer Price Index for the same calendar month immediately prior to Commencement Date. For example, if the adjustment is to occur effective June 1, 2003, the index to be used for the numerator is the index for the month of March 2003 and the index to be used for the denominator is the index for the month of March preceding the Commencement Date. However, in no event shall the rent be reduced below the Monthly Rental in effect immediately preceding such adjustment. The "Consumer Price Index" to be used in such calculation is the Consumer Price Index, All Urban Consumers (All Items) for the Los Angeles-Anaheim-Riverside Metropolitan Area, published by the United States Department of Labor, Bureau of Labor Statistics 0 982-84 = 100). If both an official index and one or more unofficial indices are published, the official index shall be used. If said Consumer Price Index is no longer published at the adjustment date, it shall be constructed by conversion tables included in such new index. 3.4 Additional Rental. For purposes of this Lease, all monetary obligations of Tenant under this Lease, including, but not limited to, insurance premiums, property taxes, maintenance expenses, late charges and utility costs shall be deemed to be additional rental. 3.5 Real Property Taxes. In addition to all rentals herein reserved, Tenant shall pay, at the election of Landlord, either directly to the taxing authority or to Landlord, annual real estate taxes and assessments levied upon the Demised Premises (including any possessory interest taxes), as well as taxes of every kind and nature levied and assessed in lieu of, in substitution for, or in addition to, existing real property taxes. Such amount shall III J405 be paid on the date that is twenty (20) days prior to the delinquent date or, if Landlord receives the tax bill, ten (10) days after receipt of a copy of the tax bill from Landlord, whichever is later. Even though the term of this Lease has expired and Tenant has vacated the Demised Premises, when the final determination is made of Tenant's share of such taxes and assessments, Tenant shall immediately pay to Landlord the amount of any additional sum owed. 3.6 Personal Property Taxes. During the term hereof Tenant shall pay prior to delinquency all taxes assessed against and levied upon fixtures, furnishings, equipment and all other personal property of Tenant contained in the Demised Premises, and when possible Tenant shall cause said fixtures, furnishings, equipment and other personal property to be assessed and billed separately from the real property of Landlord. 3.7 Utilities. Tenant shall pay before delinquency all charges for water, gas, heat, electricity, power, sewer, telephone service, trash removal and all other services and utilities used in, upon, or about the Demised Premises by Tenant or any of its subtenants, licensees, or concessionaires during the term of this Lease. 3.8 Late Payment. Tenant hereby acknowledges that late payment by Tenant to Landlord of rental or other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which is extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges. Accordingly, any payment of any sum to be paid by Tenant not paid when within five (5) days of its due date shall be subject to a five percent (5%) late charge. Landlord and Tenant agree that this late charge represents a reasonable estimate of such costs and expenses and is fair compensation to Landlord for its loss suffered by such late payment by Tenant. 3.9 Interest. Any sum to be paid pursuant to the terms of this Lease not paid when due shall bear interest from and after the due date until paid at a rate equal to three percent (3%) over the reference rate being charged by Bank of America, N.A. from time to time during such period so long as the rate does not exceed the maximum non-usurious rate permitted by law in which case interest shall be at the maximum non-usurious rate allowed by law at the time the sum became due. 4. USE OF THE PREMISES. 4.1 Permitted Use. The Landlord hereby leases to Tenant and Tenant hires from Landlord, on a non-exclusive basis, the Demised Premises with appurtenances as defined herein, for the purpose of conducting thereon only the use specified in Section 1 .6 of this Lease and for no other use. 4.2 Prohibited Uses. Tenant shall not sell or permit to be kept, used, displayed or sold in or about the Demised Premises (a) pornographic or sexually explicit books, magazines, literature, films or other printed material, sexual paraphernalia, or other material which would be considered lewd, obscene or licentious, (b) any article which may be prohibited by standard forms of fire insurance policies, or©) any alcoholic beverages unless ,qA5 expressly permitted by Section 1 .6 hereof. Tenant shall not use, or permit to be used, the Demised Premises or any part thereof for the installation or on-premises use of any vending machine, gaming machine or video or arcade game unless expressly permitted by this Lease. Tenant shall not store or sell any fuel or petroleum products. Tenant shall not allow any overnight itinerant aircraft parking or storage of dismantled aircraft. 4.3 Compliance with Laws. Tenant shall, at his sole cost and expense, comply with all of the requirements of all municipal, state and federal authorities now in force or which may hereafter be in force pertaining to the use of the Demised Premises, and shall faithfully observe in said use all municipal ordinances, including, but not limited to, the General Plan and zoning ordinances, state and federal statutes, or other governmental regulations now in force or which shall hereinafter be in force. Tenant's violation of law shall constitute an incurable default under this Lease. The judgment of any court of competent jurisdiction, or the admission of Tenant in any action or proceeding against Tenant, whether Landlord be a party thereto or not, that Tenant has violated any such order or statute in said use, shall be conclusive of that fact as between the Landlord and Tenant. Tenant shall not engage in any activity on or about the Demised Premises that violates any Environmental Law, and shall promptly, at Tenant's sole cost and expense, take all investigatory and/or remedial action required or ordered by any governmental agency or Environmental Law for clean-up and removal of any contamination involving any Hazardous Material created or caused directly or indirectly by Tenant. The term "Environmental Law" shall mean any federal, state or local law, statute, ordinance or regulation pertaining to health, industrial hygiene or the environmental conditions on, under or about the Demised Premises, including, without limitation, (1) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Sections 9601 et sec .; Oil the Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Sections 6901 et sec .; (iii) California Health and Safety Code Sections 25100 et seq.; (iv) the Safe Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety Code Section 25249.5 et seq.; (v) California Health and Safety Code Section 25359.7; (vi) California Health and Safety Code Section 25915; (vii) the Federal Water Pollution Control Act, 33 U.S.C. Sections 1317 at seq.; (viii) California Water Code Section 1300 et seq.; and (ix) California Civil Code Section 3479 at seq., as such laws are amended and the regulations and administrative codes applicable thereto. The term "Hazardous Material" includes, without limitation, any material or substance which is (1) defined or listed as a "hazardous waste", "extremely hazardous waste", "restrictive hazardous waste" or "hazardous substance" or considered a waste, condition of pollution or nuisance under the Environmental Laws; Oil petroleum or a petroleum product or fraction thereof; (iii) asbestos; and/or (iv) substances known by the State of California to cause cancer and/or reproductive toxicity. It is the intent of the parties hereto to construe the terms "Hazardous Materials" and "Environmental Laws" in their broadest sense. Tenant shall provide all notices required pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety Code Section 25249.5 et sue. Tenant shall provide prompt written notice to Landlord of the existence of Hazardous Substances on the premises and all notices of violation of the Environmental Laws received by Tenant. 4.4 Non-Discrimination & FAA Required Clauses (a) Tenant for himself, his heirs, personal representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby covenant and agree "as a covenant running with the land" that in the event facilities are constructed, maintained or otherwise operated on the said property described in the lease for a purpose for which a DOT program or activity is extended or for another purpose involving the provision of similar services or benefits, the Tenant shall maintain and operate such facilities and services in compliance with all other requirements impose pursuant to Title 49, Code of Federal Regulations DOT, Subtitle A, Office of the Secretary, Part 26, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation-effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended. (b) The Tenant for himself, his personal representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby covenant and agree "as a covenant running with the land" that: (1) no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits, of or be otherwise subjected to discrimination in the use of said facilities, (2) that in the construction of any improvements on, over, or under such land and the furnishing of services thereon, no person on the grounds of race, color, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subject to discrimination, (3) that the Tenant shall use the premises in compliance with all other requirements imposed by or pursuant to Title 49, code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 26, nondiscrimination in Federally-Assisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended. c) That in the event of breach of any of the above nondiscrimination covenants, landlord shall have the right to terminate the lease, and to reenter and repossess said land and the facilities thereon, and hold the same as if said lease had never been made or issued. This provision does not become effective until the procedures of 49 CFR Part 26 are followed and completed including expiration of appeal rights. (d) Tenant shall furnish its accommodations and/or services on a fair, equal and not unjustly discriminatory basis to all users thereof and it shall charge fair, reasonable and not unjustly discriminatory prices for each unit or services; provided that the Tenant may be allowed to make reasonable and nondiscriminatory discounts, rebates or other similar type of price reductions to volume purchasers. (e) Non-compliance with Provision 4 above shall constitute a material breach thereof and in the event of such non-compliance the Landlord shall have the right to terminate this lease and the estate hereby created without liability therefore or at the election of the Landlord or the United States either or both said Governments shall have the right to judicially enforce provisions, Ig�t�. l (f) Tenant agrees that is shall insert the above five provisions in any sublease or contract by which said Tenant grants a right or privilege to any person, form or corporation to render accommodations and/or services to the public on the premises herein leased. (g) The Tenant assures that it will undertake an affirmative action program as required by 14 CFR Part 152, Subpart E, to insure that no person shall on the grounds of race, creed color, national origin, or sex be excluded from participating in any employment activities covered in 14 CFR Part 152, subpart E. The Tenant assures that no person shall be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by this subpart. The Tenant assures that it will require that its covered sub-organizations provide assurances to the Tenant that they similarly will undertake affirmative action programs and that they will require assurances from their sub-organizations, as required by 14 CRF Part 152, Subpart E, to the same effort. (h) The Landlord reserves the right to further develop or improve the landing area of the Airport as it sees fit, regardless of the desires or view of the Tenant and without interference or hindrance. (1) The Landlord reserves the right, but shall not be obligated to the Tenant to maintain and keep in repair the landing area of the airport and all publicly-owned facilities of the airport, together with the right to direct and control all activities of the Tenant in this regard. (j) The Lease shall be subordinate to the provisions and requirements of any existing or future agreement between the Landlord and the United States, relative to the development, operation or maintenance of the airport. (k) There is hereby reserved to the Landlord, its successors and assigns, for the use and benefit of the public, a right of flight for the passage of aircraft in the airspace above the surface of the premises herein (leased, licensed, permitted). This public right of flight shall include the right to cause in said airspace any noise inherent in the operation of any aircraft used for navigation or flight through the said airspace or landing at, taking off from or operation on the Palm Springs Regional Airport. (1) Tenant agrees to comply with the notification and review requirements covered in Part 77 of the Federal Aviation Regulation in the event future construction of a building is planned for the leased premises, or in the event of any planned modification or alteration of any present or future building or structure situated on the leased premises. (m) The Tenant, by accepting this, expressly agrees for itself, its successors and assigns that it will not erect nor permit the erection of any structure or object, nor permit the growth of any tree on the land leased hereunder above the mean sea level elevation of 530 feet. Landlord reserves the right to enter upon the land leased, hereunder and to remove the offending structure or object and cut the offending tree, all of which shall be at the expense of the Tenant. Iqj+ (n) The Tenant, by accepting this Lease, agrees for itself, its successors and assigns that it will not make use of the lease premises in any manner which might interfere with the landing and taking off of aircraft from Palm Springs International Airport or otherwise constitute a hazard. In the event the aforesaid covenant is breached, the owner reserves the right to enter upon the premises here leased, and cause the abatement of such interference at the expense of the Tenant. (o) It is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of Section 308a of the Federal Aviation Act of 1958 (49 U.S.0 1349a). V The lease, and all the provisions hereof shall be subject to whatever right the United States Government now has or in the future may have or acquire, affecting the control, operation, regulation and taking over of said airport or the exclusive or non-exclusive use of the airport by the United States during the time of war or national emergency. 4.5 Remediation Obligations. If any inspection of the Demised Premises determines that a release of hazardous materials or substances has occurred or if the presence or threatened presence of any Hazardous Material is hereafter detected on or about the Demised Premises, and the Hazardous Material is one which may have been introduced to the Demised premises by Tenant or its agents, contractors, employees, or licensees during the term of this Agreement or any previous agreement between City and Tenant, then until such time as it is finally determined by a court of competent jurisdiction that such Hazardous Material (hereinafter "Covered Hazardous Material") was released or discharged on or about the Designated Premises by a person other than Tenant or its agents, contractors, employees, or licensees, Tenant shall, at its sole expense, immediately commence the remedial clean-up measures to assess, remove or remediate the Covered Hazardous Material from the Demised Premises, monitor, mitigate and/or dispose of the effects of such hazardous Material, as such may be required, and shall diligently pursue such assessment, removal, remedial, clean-up, monitoring, disposal and mitigation measures to completion and closure from the appropriate regulatory agencies, all in compliance with applicable Environmental Laws. Such activities shall be conducted in a diligent, expeditious and safe manner so as to not allow any dangerous or hazardous conditions to occur on the Demised Premises during or after such activities. In addition, Tenant shall promptly repair all damage to the Demised Premises and the improvements thereof caused by any such remedial removal, remedial clean-up, monitoring, disposal or mitigation measures undertaken by or at the direction of Tenant and return the Demised Premises to the condition it existed immediately prior to such remediation activities. 4.6 Signs. Tenant shall not place or permit to be placed any sign that is not in compliance with the sign ordinance of the Landlord upon the exterior or in the windows of the Demised Premises. Any sign not constructed in accordance therewith shall be immediately removed by Tenant and, if said sign is not removed by Tenant within ten (10) 19A6\3 days of written notice from Landlord to Tenant, then Landlord may remove and destroy said sign without Tenant's approval and without any liability to Tenant. 4.7 Public Facilities, Ingress, Egress and Quiet Enioyment Landlord agrees that Tenant, upon payment of the rental hereunder and performing the covenants of the Lease, may quietly have, hold and enjoy the Demised Premises during the term of the Lease, and that Tenant shall have the non-exclusive right to use, in common with others, the public facilities at the Airport and Tenant shall have a reasonable right of ingress to and egress from the Demised Premises and the public facilities for its employees, visitors and customers. 4.8 Rules and Regulations. Tenant shall faithfully observe and comply with the rules and regulations that Landlord shall from time to time promulgate and/or modify. Any amendment or modification of the Rules and Regulations shall be binding upon the Tenant upon delivery of a copy of such amendment or modification to Tenant. Landlord shall not be responsible to Tenant for the nonperformance of any said rules and regulations by any other tenants or occupants. The Rules and Regulations shall apply and be enforced as to all tenants in the Demised Premises on a uniform basis. 5. IMPROVEMENTS, MAINTENANCE AND REPAIRS 5.1 Improvements, Alterations and Fixtures. Tenant shall not make any improvements to the Demised Premises, without the prior written consent of Landlord, and any improvements to the Demised Premises, except movable furniture, trade fixtures shall become at once a part of the realty and shall at the expiration or earlier termination of this Lease belong to Landlord free and clear of any liens or encumbrances. Any such improvements shall be in conformance with the requirement of all municipal, state, federal, and other governmental authorities, including requirements pertaining to the health, welfare or safety of employees of the public and in conformance with reasonable rules and regulations of Landlord. Landlord may require that any such improvements be removed prior to the expiration of the term hereof. Any removal of improvements or furniture and trade fixture shall be at Tenant's expense and accomplished in a good and workmanlike manner. Any damage occasioned by such removal shall be repaired at Tenant's expense so that the Demised Premises can surrendered in a good, clean and sanitary condition as required by Section 5.2 hereof. Any and all fixtures, improvements and appurtenances installed by Tenant shall conform with the requirements of all municipal, state, federal, and governmental authorities including requirements pertaining to the health, welfare, or safety of employees or the public. 5.2 Maintenance and Repair Tenant shall, subject to Landlord's obligations hereinafter provided, at all times during the term hereof, and at Tenant's sole cost and expense, keep, maintain and repair the Demised premises and other improvements upon the Demised Premises in good and sanitary order, condition, and repair (except as hereinafter provided) including without limitation, the maintenance and repair of any store front, doors, window casements, glazing, heating and air conditioning system, plumbing, pipes, electrical wiring and conduits. Tenant shall also at its sole cost and expense be responsible for any 194c)-y alterations or improvements to the Demised Premises necessitated as a result of the requirement of any municipal, state or federal authority. Tenant hereby waives all right to make repairs at the expense of the State of California to make said repairs. Tenant agrees on the last day of said term or sooner termination of this Lease to surrender the Demised Premises with appurtenances in the same condition as when received and in a good, clean and sanitary condition, reasonable use and wear thereof and damage by fire, act of God or by the elements excepted. Tenant shall periodically sweep and clean the sidewalks adjacent to the Demised Premises, as needed. Tenant shall maintain the Demised Premises including the cost of water and electricity. 5.3 Free From Liens. Tenant shall keep the Demised Premises free from any liens arising out of any work performed, material furnished, or obligation incurred by Tenant or alleged to have been incurred by Tenant. 5.4 Construction Obligations. Tenant agrees to construct the improvements to the extent shown on the attached Exhibit "D" at its sole cost and expense. It is specifically agreed that, at the sole option of the Landlord, the improvements constructed on the Demised Premises shall become to property of the Landlord, free and clear from any and all encumbrances at the expiration or termination of the agreement or any extension thereof, or if said Compressed Natural Gas vehicle fueling station fails to operate for 12 consecutive months, at its sole cost and expense, Tenant will remove the Compressed Natural Gas Vehicle Fueling Station upon receipt of a thirty (30) day written notice from the Landlord. 5.5 Landlord's Reserved Rights. (a) Airport Development and Safety. Landlord reserves the right to further develop or improve the aircraft operating area of the Airport as it sees fit, except that portion of the Airport comprising of the Demised Premises, and Landlord reserves the right to take any action it considers necessary to protect the aerial approaches of the Airport against obstruction, together with the right to prevent Tenant from erecting or permitting to be erected any building or other structure of the Demised premises which, in the opinion of Landlord, would limit the usefulness of the Airport or constitute a hazard to aircraft. (b) Lease to United States. During the time of war or national emergency, Landlord shall have the right to lease the landing area or any part thereof to the United States Government for military or naval use, and, if such lease is executed, the provisions of the Lease insofar as they are inconsistent with the provisions of the Lease to the Government shall be suspended and, in that event, a just and proportionate part of the rent hereunder shall be abated, and the period of such closure shall be added to the term of this Lease so as to extend and postpone the expiration thereof unless the Tenant otherwise elects to terminate the Lease. 6. INSURANCE AND INDEMNIFICATION. 6.1 Insurance Provided by Tenant. (a) Tenant to Provide Personal Property Insurance. Tenant, at its expense, shall maintain fire and extended coverage insurance written on a per occurrence basis on its trade fixtures, equipment, personal property and inventory within the Demised Premises from loss or damage to the extent of their full replacement value and shall provide plate glass coverage. (b) Tenant to Provide Liability Insurance. During the entire term of this Lease, the Tenant shall, at the Tenant's sole cost and expense, but for the mutual benefit of Landlord and Tenant, maintain comprehensive general liability insurance insuring against claims for bodily injury, death or property damage occurring in, upon or about the Demised Premises and on any sidewalks directly adjacent to the Demised Premises written on a per occurrence basis in an amount not less than either (p a combined single limit of TWO MILLION DOLLARS ($2,000,000.00) for bodily injury, death, and property damage or (ii) bodily injury limits of $250,000.00 per person, $500,000.00 per occurrence and $500,000.00 products and completed operations and property damage limits of $100,000.00 per occurrence and $250,000.00 in the aggregate; provided, however, if Landlord so elects Landlord may provide such insurance and, in such event, Tenant agrees to pay its pro rata share of the cost of said insurance on the same basis as provided in Section 6.1 above. C) Tenant to Provide Worker's Compensation Insurance. Tenant shall, at the Tenant's sole cost and expense, maintain a policy of worker's compensation insurance in an amount as will fully comply with the laws of the State of California and which shall indemnify, insure and provide legal defense for both the Tenant and the Landlord against any loss, claim or damage arising from any injuries or occupational diseases occurring to any worker employed by or any persons retained by the Tenant in the course of conducting Tenant's business in the Demised Premises. (d) General Provisions Applicable to Tenant's Insurance. All of the policies of insurance required to be procured by Tenant pursuant to this Section 6.1 shall be primary insurance and shall name the Landlord, its officers, employees and agents as additional insureds. The insurers shall waive all rights of contribution they may have against the Landlord, its officers, employees and agents and their respective insurers. All of said policies of insurance shall provide that said insurance may not be amended or canceled without providing 30 days prior written notice by registered mail to the Landlord. Prior to the Commencement Date or such earlier date as Tenant takes possession of the Demised Premises for any purpose; and at least 30 days prior to the expiration of any insurance policy, Tenant shall provide Landlord with certificates of insurance or appropriate insurance binders evidencing the above insurance coverages written by insurance companies acceptable to Landlord, licensed to do business in the state where the Demised Premises are located and rated A:VII or better by Best's Insurance Guide. In the event the Risk Manager of Landlord ("Risk Manager") determines that (1) the Tenant's activities in the Demised Premises creates an increased or decreased risk of loss to the Landlord, (ii) greater insurance coverage is required due to the passage of time, or (iii) changes in the industry require different coverages be obtained, Tenant agrees that the minimum limits of any insurance policy required to be obtained by Tenant may be changed accordingly upon receipt of written notice from the Risk / 1444G Manager; provided that Tenant shall have the right to appeal a determination of increased coverage by the Risk Manager to the City Council of Landlord within ten 00) days of receipt of notice from the Risk Manager. Landlord and Tenant hereby waive any rights each may have against the other on account of any loss or damage occasioned by property damage to the Demised Premises, its contents, or Tenant's trade fixtures, equipment, personal property or inventory arising from any risk generally covered by insurance against the perils of fire, extended coverage, vandalism, malicious mischief, theft, sprinkler damage, and earthquake sprinkler leakage. Each of the parties, on behalf of their respective insurance companies insuring such property of either Landlord or Tenant against such loss, waive any right of subrogation that it may have against the other. The foregoing waivers of subrogation shall be operative only so long as available in California and provided further that no policy is invalidated thereby. 6.2 Tenant to Provide Fire and Extended Coverage Insurance. Tenant, at its expense, shall maintain fire and extended coverage insurance throughout the term of this Lease written on a per occurrence basis on the Demised Premises, its trade fixtures, equipment, personal property and inventory within the Demised Premises from loss or damage to the extent of the full replacement value. 6.3 Indemnification of Landlord. Tenant, as a material part of the consideration to be rendered to Landlord under this Lease, hereby waives all claims against Landlord for damage to equipment or other personal property, trade fixtures, leasehold improvements, goods, wares, inventory and merchandise, in, upon or about the Demised Premises and for injuries to persons in or about the Demised Premises, from any cause arising at any time. Tenant agrees to indemnify the Landlord, its officers, agents and employees against, and will hold and save them and each of them harmless from, any and all actions, suits, claims, damages to persons or property, losses, costs, penalties, obligations, errors, omissions or liabilities, (herein "claims or liabilities") that may be asserted or claimed by any person, firm or entity arising out of or in connection with (1) the negligent performance of the work, operations or activities of Tenant, its agents, employees, subcontractors, or invitees, provided for herein, or (ii)(iii) arising from the use of the Demised Premises or the parking and common areas by Tenant or its employees and customers, or arising from the failure of Tenant to keep the Demised Premises in good condition and repair, as herein provided, or (iv) arising from the negligent acts or omissions of Tenant hereunder, or (v) arising from Tenant's negligent performance of or failure to perform any term, provision covenant or condition of this Lease, whether or not there is concurrent passive or active negligence on the part of the Landlord, its officers, agents or employees but excluding such claims or liabilities arising from the sole negligence or willful misconduct of the Landlord, its officers, agents or employees, who are directly responsible to the Landlord, and in connection therewith: (a) Tenant will defend any action or actions filed in connection with any of said claims or liabilities and will pay all costs and expenses, including legal costs and attorneys' fees incurred in connection therewith; 1944P (b) Tenant will a promptly pay any judgment rendered against the Landlord, its officers, agents or employees for any such claims or liabilities arising out of or in connection with the negligent performance of or failure to perform such work, operations or activities of Tenant hereunder; and Tenant agrees to save and hold the Landlord, its officers, agents, and employees harmless therefrom; c) In the event the Landlord, its officers, agents or employees is made a party to any action or proceeding filed or prosecuted against Tenant for such damages or other claims arising out of or in connection with the negligent performance of or failure to perform the work, operation or activities of Tenant hereunder, Tenant agrees to pay to the Landlord, its officers, agents or employees, any and all costs and expenses incurred by the Landlord, its officers, agents or employees in such action or proceeding, including but not limited to, legal costs and attorneys' fees. 7. ABANDONMENT AND SURRENDER. 7.1 Abandonment. Tenant shall not vacate or abandon the Demised Premises at any time during the term of this Lease; and if Tenant shall abandon, vacate or surrender the Demised Premises or be dispossessed by process of law, or otherwise, any personal property belonging to Tenant and left on the Demised Premises shall be deemed to be abandoned, at the option of Landlord, except such property as may be mortgaged to Landlord. 7.2 Surrender of Lease. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Landlord, terminate all or any existing subleases or subtenancies, or may, at the option of Landlord, operate as an assignment to it of any or all of such subleases or subtenancies. 8. DAMAGE AND DESTRUCTION OF PREMISES. In the event of (a) partial or total destruction of the Demised Premises during the term of this Lease which requires repairs to the Demised Premises, or (b) the Demised Premises being declared unsafe or unfit for occupancy by any authorized public authority for any reason, which declaration requires repairs to the Demised Premises, Tenant shall forthwith make said repairs. No such damage or destruction (including any destruction necessary in order to make repairs required by any declaration made by any public authority) shall in any way annul or void this Lease. Tenant shall promptly clean and remove all debris resulting from said damage or destruction. Tenant shall take preliminary steps toward restoring the improvements with thirty (30) days of the casualty and such improvements shall be restored within a reasonable time thereafter. The Demised Premises shall be restored to the condition they existed immediately before said casualty. 9. ASSIGNMENT AND SUBLETTING. Tenant shall not assign this Lease or sublet the Demised Premises, or any interest therein, without the prior written consent of Landlord, which consent shall not be unreasonably withheld. For purposes of this Lease, an assignment shall be deemed to include the transfer to any person or group of persons acting in concert of more than twenty five percent (25%) of the present ownership and/or control of Tenant, taking all transfers into account on a cumulative basis. Any such assignment or subletting shall be subject to all of the terms and conditions of this Lease and proposed assignee shall assume the obligations of Tenant under this Lease in writing in form satisfactory to Landlord. The proposed assignee shall simultaneously provide to Landlord an estoppel certificate in the form described in Section 13.2 hereafter. Consent by Landlord to one assignment, subletting, occupation or use by another person shall not be deemed to be a consent to any subsequent assignment, subletting, occupation or use by another person. Any assignment or subletting without the prior written consent of Landlord shall be void, shall constitute a material breach of this Lease, and shall, at the option of Landlord, terminate this Lease. Neither this Lease nor any interest therein shall be assignable as to the interest of Tenant by operation of law. Landlord shall be under no obligation to consider a request for Landlord's consent to an assignment until Tenant shall have submitted in writing to Landlord a request for Landlord's consent to such assignment together with audited financial statements of the proposed assignee, a history of the proposed assignee's business experience and such other information as required by Landlord the criteria for assignment as set forth herein are met. In addition, if Landlord determines that the Monthly Rent payable to Landlord under this Lease is less than the fair market rental value, as determined by Landlord, Landlord shall have the right to condition its approval to an assignment or subletting on the increase of Monthly Rent to the fair market rental value. 10. ENCUMBRANCE (a) This Lease, or any right to or interest in, or any of the improvements on the Demised premises, may be encumbered with the written approval of Landlord. No such encumbrance or addition thereto or extension thereof shall be valid without said approval. Any such approved encumbrance shall be subject to the covenants, conditions and restrictions set forth herein and to all rights of Landlord. (b) Any encumbrance must be confined to the leasehold interest of Tenant or the subleasehold interest of a subtenant, and shall not affect in any way the landlord's interest in the land. The encumbrance shall provide that the proceeds from fire or extended coverage insurance shall be used for the repair or rebuilding of the leasehold improvements and not to repay and part of the outstanding mortgage. Tenant agrees to furnish, as requested, any financial statements or analyses pertinent to the encumbrance that Landlord may deem necessary to justify the amount, purpose and terms of said encumbrance. c) In the event of default by the Tenant of the terms of an approved encumbrance, the encumbrancer may exercise any rights provided in such approved encumbrance provided that, before any sale of the leasehold estate, whether by power of sale or foreclosure, the encumbrancer shall give to Landlord notice of the same character as is required to be given to Tenant by such encumbrancer pursuant to the loan documents and/or the laws of the State of California and Landlord shall be given an additional thirty (30) days in which to cure the default after the time for tenant to cure has expired. (d) If any sale under the approved encumbrance occurs, whether by power of sale or foreclosure, and the purchaser at such sale is the encumbrancer, the encumbrancer may sell and assign the Lease without any further consent of Landlord provided that the assignee shall agree in such assumption by the assignee, the encumbrancer shall be released from all future obligations of the Tenant under the Lease. If a sale under the approved encumbrance occurs, and the purchaser is a party other than the encumbrancer, said purchaser, as successor in interest to the Tenant, shall be bound by all the terms and conditions of the Lease and the purchaser shall assume in writing the obligations of Tenant hereunder. (e) If notice of such sale shall be given and the defaults or any of them upon which such notice of sale is based shall then continue, Landlord shall have the 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. (f) "Balance of encumbrance" shall mean the amount of principal remaining unpaid on a note secured by a trust deed or mortgage of an interest plus accrued and past due interest thereon and expenses incurred by the lender in connection with foreclosure including by not limited to, fire insurance premiums, title insurance expenses, recording fees, appraisal fees, credit reports and any tax reporting services and additional expenditures paid by the lender on additions, betterments and rehabilitations of improvements on the property encumbered pursuant to plans approved by landlord, which consent may not be unreasonably withheld, and other expenses necessary to place the improvements in marketable condition, such adjusted principal to be paid in case or, at the option of Landlord, amortized over the term and in accordance with the schedule set forth in said note, the interest rate on the unpaid balance thereto to be as set forth in said note. (g) Landlord agrees to provide encumbrancer written notice of any default by Tenant under this lease and an opportunity to cure at the time notice of such default is provided to Tenant and give encumbrancer thirty (30) days to cure a monetary default or forty-five (45) days to cure a non-monetary default cannot be cured within such period of forty-five days, encumbrancer shall have a reasonable time to cure such default provided that encumbrancer commences to cure within said forty-five days and diligently prosecutes the cure to completion. Such period of time shall include the time to complete a foreclosure action if encumbrancer needs to gain possession of the Demise Premises to cure said default by Tenant. 11. DEFAULT AND REMEDIES. 11 .1 Default by Tenant. In addition to the defaults described in Section 9.0 hereinabove, the occurrence of any one or more of the following events shall constitute a default and breach of this Lease by Tenant: (a) the failure to pay any rental or other payment required hereunder to or on behalf of Landlord more than three (3) days after written notice from Landlord to Tenant that Tenant has failed to pay rent when due; (b) the failure to 1 9 i4 30 perform any of Tenant's agreements or obligations hereunder (exclusive of a default in the payment of money) where such default shall continue for a period of thirty (30) days after written notice thereof from Landlord to Tenant which notice shall be deemed to be the statutory notice so long as such notice complies with statutory requirements; °) the vacation or abandonment of the Demised Premises by Tenant; (d) the making by Tenant of a general assignment for the benefit of creditors; (e) the filing by Tenant of a voluntary petition in bankruptcy or the adjudication of Tenant as a bankrupt; (f) the appointment of a receiver to take possession of all or substantially all the assets of Tenant located at the Demised Premises or of Tenant's leasehold interest in the Demised Premises; (g) the filing by any creditor of Tenant of an involuntary petition in bankruptcy which is not dismissed within sixty (60) days after filing; or (h) the attachment, execution or other judicial seizure of all or substantially all of the assets of Tenant or Tenant's leasehold where such an attachment, execution or seizure is not discharged within sixty (60) days. Any repetitive failure by Tenant to perform its agreements and obligations hereunder, though intermittently cured, shall be deemed an incurable default. Two (2) breaches of the same covenant within a sixty (60) day period, a notice having been given pursuant to (a) or (b) above for the first breach, or three (3) of the same or different breaches at any time during the term of this Lease for which notices pursuant to (a) or (b) above were given for the first two (2) breaches shall conclusively be deemed to be an incurable repetitive failure by Tenant to perform its obligations hereunder. In the event of any such default or breach by Tenant, Landlord may at any time thereafter, without further notice or demand, rectify or cure such default, and any sums expended by Landlord for such purposes shall be paid by Tenant to Landlord upon demand and as additional rental hereunder. In the event of any such default or breach by Tenant, Landlord shall have the right (1) to continue the lease in full force and effect and enforce all of its rights and remedies under this Lease, including the right to recover the rental as it becomes due under this Lease, or (ii) Landlord shall have the right at any time thereafter to elect to terminate the Lease and Tenant's right to possession thereunder. Upon such termination, Landlord shall have the right to recover from Tenant: (a) The worth at the time of award of the unpaid rental which had been earned at the time of termination; (b) The worth at the time of award of the amount by which the unpaid rental which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Tenant proves could have been reasonably avoided; c) The worth at the time of award of the amount by which the unpaid rental for the balance of the term after the time of award exceeds the amount of such rental loss that the Tenant proves could be reasonably avoided; and (d) Any other amount necessary to compensate the Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under the lease or which in the ordinary course of things would be likely to result therefrom. ) 5431 The "worth at the time of award" of the amounts referred to in subparagraphs (1) and (ii) above shall be computed by allowing interest at three percent (3%) over the prime rate then being charged by Bank of America, N.A. but in no event greater than the maximum rate permitted by law. The worth at the time of award of the amount referred to in subparagraph (iii) above shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1 %), but in no event greater than ten percent (10%). As used herein "rental" shall include the Monthly Rental, percentage rental equal to the average percentage rental paid or payable by Tenant for the last twelve (12) months or such lesser period as Tenant has been open for business, other sums payable hereunder which are designated "rental" or "additional rental" and any other sums payable hereunder on a regular basis such as reimbursement for real estate taxes. Such efforts as Landlord may make to mitigate the damages caused by Tenant's breach of this Lease shall not constitute a waiver of Landlord's right to recover damages against Tenant hereunder, nor shall anything herein contained affect Landlord's right to indemnification against Tenant for any liability arising prior to the termination of this Lease for personal injuries or property damage, and Tenant hereby agrees to indemnify and hold Landlord harmless from any such injuries and damages, including all attorney's fees and costs incurred by Landlord in defending any action brought against Landlord for any recovery thereof, and in enforcing the terms and provisions of this indemnification against Tenant. Notwithstanding any of the foregoing, the breach of this Lease by Tenant, or an abandonment of the Demised Premises by Tenant, shall not constitute a termination of this Lease, or of Tenant's right of possession hereunder, unless and until Landlord elects to do so, and until such time Landlord shall have the right to enforce all of its rights and remedies under this Lease, including the right to recover rent, and all other payments to be made by Tenant hereunder, as they become due. Failure of Landlord to terminate this Lease shall not prevent Landlord from later terminating this Lease or constitute a waiver of Landlord's right to do so. 11 .2 No Waiver. Acceptance of rental hereunder shall not be deemed a waiver of any default or a waiver of any of Landlord's remedies. 11 .3 Landlord's Default. Landlord shall not be in default unless Landlord fails to perform obligations required of Landlord within a reasonable time, but in no event later than thirty (30) days after written notice by Tenant to Landlord and to the holder of any first mortgage or deed of trust covering the Premises whose name and address shall have there- tofore been furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for performance then Landlord shall not be deemed in default if Landlord commences performance within a (30) day period and thereafter diligently prosecutes the same to completion. In no event shall Tenant have the right to terminate this Lease as a result of Landlord's default and Tenant's remedies shall be limited to damages and/or an injunction. 9 0** 12. CONDEMNATION. In the event a condemnation or a transfer in lieu thereof results in a taking of any portion of the Demised Premises, Landlord may, or in the event a condemnation or a transfer in lieu thereof results in a taking of twenty-five percent (25%) or more of the Demised Premises, Tenant may, upon written notice given within thirty (30) days after such taking or transfer in lieu thereof, terminate this Lease. Tenant shall not be entitled to share in any portion of the award and Tenant hereby expressly waives any right or claim to any part thereof. Tenant shall, however, have the right to claim and recover, only from the condemning authority (but not from Landlord), any amounts necessary to reimburse Tenant for the cost of removing stock and fixtures. If this Lease is not terminated as above provided, Landlord shall use a portion of the condemnation award to restore the Demised Premises. 13. MISCELLANEOUS. 13.1 Entry and Inspection. Tenant shall permit Landlord and his agents to enter into and upon the Demised Premises at all reasonable times for the purpose of inspecting the same or for the purpose of maintaining the Demised Premises as required by the terms of this Lease or for the purpose of posting notices of non-liability for alterations, additions or repairs, or for the purpose of placing upon the property in which the Demised Premises are located any usual or ordinary "For Sale" signs or any signs for public safety as determined by Landlord. Landlord shall be permitted to do any of the above without any rebate of rent and without any liability to Tenant for any loss of occupation or quiet enjoyment of the Demised Premises thereby occasioned. Tenant shall permit Landlord, at any time within six (6) months prior to the expiration of this Lease, to place upon the Demised Premises any usual or ordinary "For Lease" signs, and during such six (6) month period Landlord or his agents may, during normal business hours, enter upon said Demised Premises and exhibit same to prospective tenants. 13.2 Estoppel Certificate. If, as a result of a proposed sale, assignment, or hypothecation of the Demised Premises or the land thereunder by Landlord, or at any other time, an estoppel certificate shall be requested of Tenant, Tenant agrees, within ten (10) days thereafter, to deliver such estoppel certificate in the form attached hereto as Exhibit "E" addressed to any existing or proposed mortgagee or proposed purchaser, and to the Landlord. Tenant shall be liable for any loss or liability resulting from any incorrect information certified, and such mortgagee and purchaser shall have the right to rely on such estoppel certificate and financial statement. 13.3 Jurisdiction and Venue. The parties hereto agree that the State of California is the proper jurisdiction for litigation of any matters relating to this Lease, and service mailed to the address of tenants set forth herein shall be adequate service for such litigation. The parties further agree that Riverside County, California is the proper place for venue as to any such litigation and Tenant agrees to submit to the personal jurisdiction of such court in the event of such litigation. 1qn- 3 S 13.4 Partial Invalidity. If any term, covenant, condition or provision of this Lease is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the provisions hereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereof. 13.5 Successors in Interest. The covenants herein contained shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of all the parties hereto; and all of the parties hereto shall be jointly and severally liable hereunder. 13.6 No Oral Agreements. This (1) Lease covers in full each and every agreement of every kind or nature whatsoever between the parties hereto concerning this Lease, (ii) supersedes any and all previous obligations, agreements and understandings, if any, between the parties, oral or written, and (iii) merges all preliminary negotiations and agreements of whatsoever kind or nature herein. Tenant acknowledges that no representations or warranties of any kind or nature not specifically set forth herein have been made by Landlord or its agents or representatives. 13.7 Authority. In the event that Tenant is a corporation or a partnership, each individual executing this Lease on behalf of said corporation or said partnership, as the case may be, represents and warrants that he or she is duly authorized to execute and deliver this Lease on behalf of said corporation or partnership, in accordance with a duly adopted resolution of the Board of Directors, if a corporation, or in accordance with the Partnership Agreement, if a partnership, and that this Lease is binding upon said corporation or partnership in accordance with its terms. Tenant represents and warrants to Landlord that the entering into this Lease does not violate any provisions of any other agreement to which Tenant is bound. 13.8 Relationship of Parties. The relationship of the parties hereto is that of Landlord and Tenant, and it is expressly understood and agreed that Landlord does not in any way or for any purpose become a partner of Tenant in the conduct of Tenant's business or otherwise, or a joint venturer with Tenant, and that the provisions of this Lease and the agreements relating to rent payable hereunder are included solely for the purpose of providing a method whereby rental payments are to be measured and ascertained. 13.9 Nondiscrimination. Tenant herein covenants by and for itself, its heirs, executors, administrators and assigns and all persons claiming under or through it, and this Lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons on account of race, sex, marital status, color, creed, national origin or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the Demised Premises herein leased, nor shall the Tenant itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the Demised Premises. 1543q 13.10 Notices. Wherever in this Lease it shall be required or permitted that notice and demand be given or served by either party to this Lease to or on the other, such notice or demand shall be given or served in writing and shall not be deemed to have been duly given or served unless in writing, and personally served or forwarded by certified mail, postage prepaid, addressed, if to Landlord, to City of Palm Springs, P.O. Box 2743, Palm Springs, California, 92263, Attn: City Manager, and if to Tenant, as specified in Section 1 .7. Either party may change the address set forth herein by written notice by certified mail to the other. Any notice or demand given by certified mail shall be effective one (1 ) day subsequent to mailing. 13.11 Waiver. No delay or omission in the exercise of any right or remedy by a non-defaulting party shall impair such right or remedy or be construed as a waiver. A party's consent to or approval of any act by the other party requiring the party's consent or approval shall not be deemed to waive or render unnecessary the other party's consent to or approval of any subsequent act. Any waiver by either party of any default must be in writing and shall not be a waiver of any other default concerning the same or any other provision of this Lease. 13.12 Exhibits and Addenda. The Exhibits and Addenda attached to this Lease are made a part hereof as if fully set forth herein. In the event of a conflict between the terms and provisions of an Addenda and the terms and provisions of this Lease, the terms and provisions of the Addenda shall prevail. EXHIBIT "A" Use of Premises This Agreement expresses the terms and conditions pursuant to which PSP authorizes ENRG to design, construct, operate and maintain, at ENRG's expense, a Compressed Natural Gas ("CNG") motor vehicle fueling station (the "Station") on Palm Springs International Airport ("PSP") property in the City of Palm Springs (the"Premises"). The site located at 3400 E. Tahquitz-Canyon Way, Palm Springs, CA 92262,is owned or controlled by the City of Palm Springs for the use of PSP and other authorized users. Such benefits accrued from this Non-Exclusive Lease Agreement in lieu of a monthly rental payment are listed as follows: CNG Station: Such station shall include a compressor and controls and equipment with a capacity of at least one thousand (1,000) standard cubic feet per minute, regenerative dryer, thirty thousand (30,000) standard cubic feet of storage capacity, at least two (2) two-hose dispensers capable of fueling two (2) vehicles simultaneously at a minimum rate of three (3) gallons per minute per vehicle, and magnetic card readers located conveniently for fueling access which are capable of communicating with ENRG's billing system. The CNG dispensers shall be designed for public access(the "Public Dispensers"). ENRG will also provide air and water dispensers, and if possible a coin operated windshield wiper dispenser. CNG Station Maintenance: ENRG shall provide scheduled, routine maintenance service for the term of Station ownership and shall repair or, at its option or upon request of the "City", replace, any defective equipment at its expense. ENRG shall perform other necessary maintenance or repair or replace parts or equipment damaged by negligence, abuse or neglect resulting from PSP personnel and maintain all site improvements. CNG Service Calls: In the event of an emergency involving substantial risk of injury or material property damage at the Station, ENRG shall respond within forty-eight (48) hours following notification by PSP or other entities. In the event of other serious operational difficulties, ENRG shall respond within four (4) hours following notification and repairs shall be undertaken and completed with reasonable diligence. CNG Training: ENRG shall offer reasonable training programs to educate PSP's or other "City" personnel as to procedures for the safe and efficient use of the Station, including, without limitation, procedures relating to safe vehicle fueling, troubleshooting and appropriate emergency procedures. EXHIBIT "C" RENTAL/COMPENSATION Rental obligations of the Tenant shall include, but not be limited to the following: 1) ENRG shall pay $0.00 monthly land rental. Should at anytime the Federal Aviation Administration (FAA) decide that fair market rent is required, then tenant will immediately commence making said payments in addition to the percentage rental." 2) ENRG shall pay "PSP" on a quarterly basis beginning at the end of the first calendar quarter after the Station begins operation a percentage rental in the amount of $0.025 per gasoline gallon equivalent (125,000 BTU/gallon) of CNG (a "Gasoline Gallon") sold at the Station to anyone other than to "PSP". Sales of CNG to "PSP"for use in CNG Vehicles owned or leased by "PSP"shall be deemed to be sales to the "PSP" and a percentage rental shall not apply. 3) ENRG shall provide the City of Palm Springs with CNG at a price per gasoline gallon equivalent (125,000 BTU/gallon) (a "Gasoline Gallon") equal to the posted retail sum paid by ENRG less fifteen (15) cents during the immediately proceeding calendar month. 4) PSP shall, at mutually agreeable times, permit and cooperate with ENRG in hosting demonstrations and seminars for interested members of the public,press and other fleet operators for the promotion of clean air programs within the City of Palm Springs and the Desert Resort Communities. 5) PSP and the City of Palm Springs employees operate a vast array of alternative fuel vehicles, utilizing CNG as the primary fuel source for internal combustive engines. PSP CNG vehicles are utilized on a twenty-four (24) hour basis. By having the CNG fueling station located on Airport property, PSP employees are able to respond to emergency situations in a timely manner and/or re- fill vehicles efficiently without causing unnecessary delays in emergency response times. 6) PSP acknowledgment, and logo will be included in advertising materials produced by ENRG for the purposes of promoting clean air programs on a statewide,nationwide and international level. Should commercial filming occur on the station site, ENRG shall guarantee all filming fees due the Airport, as listed in the City's Comprehensive Fee Schedule, shall be paid. 7) PSP will include ENRG and utilize its professional expertise in applying for federal grant programs sponsored by the Federal Aviation Administration (FAA) and the South Coast Air Quality Management District (SCAQMD) for vehicle and equipment acquisition, CNG fueling station upgrades or other associated incentive programs that promote air quality standards. 8) PSP will require that ENRG maintain the station site and the roadway entrances along the entire width of the demised premises including water and electricity. Said maintenance shall meet the same quality standard as the Airport Entrance Road areas. jqA37 � IIIII � GII w � y t fq Q � 0/0 Sv at GNG FUELING STATION £NRC FUEL E�, ]YdD2 HFM Y G SITE LAYOUT SM AWH.a 9 740 TR r2 In-t301 FAY:l`56] 19]-45 @ V PALM SPRINGS AIRPORT It EXHIBIT "D" CONSTRUCTION OBLIGATIONS All such improvements shall be constructed pursuant to construction plan and specifications prepared by ENRG Fuel USA, Inc. licensed to practice in the State of California that are in sufficient detail to enable potential contractors and subcontractors to make reasonably accurate bid estimates and to enable Landlord to make an informed judgment about the design and quality of construction. Following approval by the Planning Commission, said plans and specifications shall be subject to the prior written approval of Landlord. Tenant also shall furnish Landlord with a true and correct copy of Tenant's contract with the general contractor. Said construction contract shall provide that Landlord shall have the right, but not the obligation, to assume Tenant's right and obligations under the contract if Tenant should default on Tenant's obligations under this Lease and shall require the general contractor to procure this Lease and shall require the general contractor to procure payment and performance bonds acceptable to Landlord naming Landlord as a dual obligee in an amount equal to one hundred percent (100%) of the sum to be paid general contractor thereunder. Tenant shall provide Landlord with ten (10) days advance written notice of Tenant's intent to commence construction of the improvements so that Landlord may post appropriate notices of non-responsibility. Tenant shall not commence construction until Tenant has procured all necessary permits and approvals required by all federal, state and local governmental authorities with jurisdiction. All improvements shall be constructed within the boundaries of the Demised Premises, shall be constructed in a good and workmanlike manner, shall substantially comply with the approved plans and specifications for the improvements and shall comply with all applicable governmental permits, laws, ordinances and regulations. Tenant shall diligently prosecute the construction of the improvements to completion. The improvements shall be completed not later than six (6 ) months from the date this Lease is executed. Upon substantial completion of the improvements, Tenant shall file or cause to be filed appropriate notices of completion in the Riverside County Recorder's Office. Tenant shall pay or cause to be paid the total cost and expense of all works of improvement constructed upon the Demised Premises by Tenant. Tenant shall not suffer or permit to be enforced against the Demised Premises or any part of it any mechanic's, material man's, contractor's, subcontractor's or design it may arise. However, Tenant may in good faith and at Tenant's expense contest the validity of any such asserted lien, claim or demand provided Tenant has furnished a bond required pursuant to the California Civil Code to free the Demised Premises from the effect of such lien. Tenant hereby agrees to indemnify, protect, defend and hold Landlord harmless from any loss, expense (including reasonable attorneys' fees) or liability arising out of the work of improvement. If Tenant fails to discharge such lien, Landlord shall have the right, but not the obligation, to pay or otherwise discharge such lien. Tenant shall reimburse Landlord for all sums expended by Landlord therefor, plus interest at the rate of ten percent(10%) per annum from the date expended by Landlord until fully repaid. Any such amounts expended by landlord plus interest shall be deemed to be additional rental. Improvements shall include: Such Compressed Natural Gas (CNG) Vehicle Fueling Station shall include a compressor and controls equipment with a capacity of at least 1000 standard cubic feet per minute, regenerative dryer, 30,000 standard cubic feet of storage capacity, at least two (2) two-hose dispensers capable of fueling two vehicles simultaneously at a minimum rate of three gallons per minute per vehicle, and magnetic card readers located conveniently for fueling access which are capable of communicating with ENRG's billing system. The CNG dispenser shall be designed for public access (the "Public Dispenser"). ENRG will also provide air and water dispensers, and if possible a coin operated windshield wiper dispenser. /9+39 EXHIBIT "E" ESTOPPEL CERTIFICATE Tenant: Landlord: CITY OF PALM SPRINGS, a municipal corporation Date of Lease: Demised Premises: To: The undersigned hereby certifies as follows: 1. The undersigned is the tenant("Tenant")under the above-referenced lease("Lease")covering the above-referenced premises ("Demised Premises"). 2. The Lease constitutes the entire agreement between landlord under the Lease ("Landlord") and Tenant with respect to the Demised Premises and the Lease has not been modified, changed, altered or amended in any respect except as set forth above. 3. The term of the Lease commenced on , 20_, and, including any presently exercised option or renewal term, will expire on , 20 . Tenant has accepted possession he of the Demised Premises and is the actual occupant in possession thereof and has not sublet, assigned or hypothecated its leasehold interest. All improvements to be constructed on the Demised Premises by Landlord have been completed and accepted by Tenant and any tenant construction allowances have been paid in full. 4. As of this date, to the best of Tenant's knowledge, there exists no breach or default, nor state of facts which, with notice, the passage of time, or both, would result in a breach or default on the part of either Tenant or Landlord. To the best of Tenant's knowledge, no claim, controversy, dispute, quarrel or disagreement exists between Tenant and Landlord. 5. Tenant is currently obligated to pay Monthly Rent in installments of $ per month, and such monthly installments have been paid not more than one month in advance. In addition,the Lease requires Tenant to pay percentage rent each month in the amount of_percent(_%) and percentage rent has been paid through , 20_. To the best of Tenant's knowledge, no other rent has been paid in advance and Tenant has no claim or defense against Landlord under the Lease and is asserting no offsets or credits against either the rent or Landlord. Tenant has no claim against Landlord for any security or other deposits except $ which was paid pursuant to the Lease. 6. Tenant has no option or preferential right to lease or occupy additional space within the Property of which the Demised Premises are a part. Tenant has no option or preferential right to purchase all of any part of the Demised Premises nor any right or interest with respect to the Demised Premises other than as Tenant under the Lease. Tenant has no right to renew or extend the term of the Lease except as set forth in the Lease. 7. Tenant has made no agreements with Landlord or its agent or employees concerning free rent, partial rent, rebate of rental payments or any other type of rent or other concession except as expressly set forth in the Lease. 8. There has not been filed by or against Tenant a petition in bankruptcy, voluntary or otherwise, any assignment for the benefit of creditors, any petition seeking reorganization or arrangement under the 19AW bankruptcy laws of the United States, or any state thereof, or any other action brought under said bankruptcy laws with respect to Tenant. 9. All insurance which Tenant is required to maintain under the Lease has been obtained by Tenant and is in full force and effect and all premiums with respect thereto have been paid. Dated this_ day of , Zp By: Its: MINUTE ORDER NO. APPROVING A NON-EXCLUSIVE LEASE AGREEMENT BETWEEN THE CITY OF PALM SPRINGS AND ENRG FUEL USA, INC. FOR THE INSTALLATION, OPERATION AND MAINTENANCE OFA COMPRESSED NATURAL GAS (CNG) VEHICLE FUELING STATION AT THE PALM SPRINGS INTERNATIONAL AIRPORT FOR A TEN (10) YEAR TERM WITH FOUR (4) CONSECUTIVE LEASE TERM OPTIONS TOTALING THIRTY(30)YEARS IN FULL. I HEREBY CERTIFY that this Minute Order, approving a non-exclusive lease agreement between the City of Palm Springs and ENRG Fuel USA, Inc.for the installation,operation and maintenance of a compressed natural gas (CNG) vehicle fueling station at the Palm Springs International Airport for a ten (10)year term with four(4)consecutive lease term options totaling thirty (30) years in full, was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 191h day of February, 2003. PATRICA A SANDERS City Clerk r y R