HomeMy WebLinkAbout9/18/2002 - STAFF REPORTS (6) DATE: September 18, 2002
TO: City Council
FROM: Deputy Director of Aviation via Executive - Director Airports
KARBZ, INC. D/B/A SSC RACING LEASE
RECOMMENDATION:
That the City Council approve a lease with KARBZ, Inc. d/b/a SSC Racing of Illinois
Tool Works and dissolution of existing lease.
SUMMARY:
The Airport has an existing lease with Illinois Tool Works who subleases to KARBZ,
Inc. d/b/a SSC Racing. Illinois Tool Works desires to terminate their existing lease
and KARBZ, Inc. d/b/a SSC Racing desires to enter into a lease for the same
premises.
BACKGROUND:
KARBZ, Inc. d/b/a SSC Racing is a distributor and assembly business involved in high
performance race karts, they have several international and domestic vendors and
a customer list that stretches internationally.
The majority Stockholders of James Boltz and Joe Ramos have been involved in the
motorsport industry for over 35 years. They brought the company from Seattle to
Palm Springs in 1997 as activity in the southwest was far more active.
In October of 1997 KARBZ, Inc. d/b/a SSC Racing secured the sublease with Illinois
Tool works. It is this current lease that KARBZ, Inc. d/b/a SSC Racing has operated
under.
Airport management has been approached by both of the above parties to allow
Illinois Tool Works out of their current lease and KARBZ, Inc. d/b/a SSC Racing would
like to enter into a new lease directly with the Airport.
The parcel of land has no airside access and KARBZ, Inc. d/b/a SSC Racing
continues to be a good tenant at the airport.
Airport management has negotiated with KARBZ, Inc. d/b/a SSC Racing for a long-
term lease that would allow the Airport to receive revenues beyond the current lease
expiration of 2006. The annual revenue to the airport would be $56,496.
The Airport commission unanimously approved the action N move forward to the City
Council for consideration.
�i
APPROVED:
RICHARD STRICKLAND ALLEN F. SM OT, A.A.E.
Dept Director of Aviation -Administration Executive Director-Airports
APPROVED: 3
City Manager 6
Attachment: 1. Minute Order
2. Resolution REVIEWED BY DEPT.OF FINANCE
1<11
LEASE
THIS LEASE ("Lease") is made and entered into this day of September, 2002, by
and between the CITY OF PALM SPRINGS, a municipal corporation ("City"), and KARBZ,
INC. d/b/a SSC RACING ("Tenant').
RECITALS
WHEREAS, on or about November 1, 1997, Tenant entered into a sublease agreement
("Sublease") with Illinois Tool Works Inc ("Sublessor") for the sublease of the Demised
Premises (as that tern is defined at Section 1.1 below) for a term of five (5) years expiring
October 31, 2002, with an option to extend the tern until July 31, 2006 pursuant to the terns of
the Sublease;
WHEREAS, under the Sublease, Tenant has operated the corporate headquarters of its
go-cart manufacturing business at the Demised Premises and wishes to continue to operate such
business at the Demised Premises;
WHEREAS, concurrently with the execution of this Lease, City and Sublessor have
terminated the ground lease ("Ground Lease") under which Sublessor leased the Demised
Premises from City;
WHEREAS, in light of the termination of the Ground Lease, Tenant wishes to continue
enter into this Lease to permit it to continue to occupy the Demised Premises and operate its
corporate headquarters for its go-cart manufacturing business thereon; and
WHEREAS, Tenant wishes to lease from City and City wishes to lease to Tenant the
Demised Premises upon the terms and subject to the conditions of this Lease.
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 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 at 3101 East Alejo Road, Palm Springs, in the County of Riverside, State of
California, as more particularly described in Exhibit "A" hereof together with the irnprovements
located thereon and as depicted as the cross-hatched portions on the Plot Plan attached as Exhibit
"B"hereof.
1.2 Lease. Commencement Date. The term of this Lease shall commence on
September_, 2002 and shall terminate on September_, 2012.
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1.3 Extension Option. One (1) five (5) year option (See Section 2.2)..
1.4 Monthly Rental. Base Rental — Four Thousand Seven Hundred Eight and
00/100 Dollars ($4,708.00) (See Section 3.1).
1.5 Percentage Rental. Not applicable.
1.6 Security Deposit. (See Section 3.10).
1.7 Use of Demised Premises. Tenant desires to continue to engage in the
business of operating its corporate headquarters for its go-cart manufacturing business and
related operations and wishes to lease the Demised Premises, provided such uses are in
compliance with federal, State, local and City laws, regulations and municipal ordinances and the
Airport Rules and Regulations. Due to the noise sensitive environment of the Airport, Tenant
will endeavor to not schedule work which exceeds the City noise standards between the hours of
10:00 pm and 7:00 am. Further, Tenant agrees that it will provide reciprocal access easements
for all automobile parking facilities with other airport tenants. Tenant will use its best efforts to
restrict the use of its automobile parking facilities on the premises to the automobiles of tenant's
guests, visitors, employees and suppliers. (See Section 4.1).
1.8 Not applicable Sections. None.
1.9 Tenant's Address for Notices.
KARBZ, hic. d/b/a SSC Racing
3101 East Alejo Road
Palm Springs, CA 92262
Attn: Joe Ramos, President
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 City 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 tern shall not
commence and this Lease shall expire at the and of the initial term or properly exercised
extended term.
2.3 Time. Time is of the essence of this Lease. 3fi3
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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),
perfonnance of such act shall be excused for the period of the delay and the period for the
perfonnance 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 City, 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 tenns and conditions as existed
during the, last year of the term hereof.
3. RENTAL.
3.1 Monthly Rental. Tenant shall pay to City, 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 an the first
day of a calendar month, the Tenant shall pay the rental for the fractional month on the
Commencement Date on a pro rata basis (calculated on a thirty-day month). All rental to be paid
by Tenant to City 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. Not applicable
3.3 Costs of Living Adjustment. Upon each fifth year anniversary date of the
Commencement Date or if the Commencement Date is not an 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 hndex for the some calendar month
immediately prior to Commencement Date. For example, if the adjustment is to occur effective
June 1, 2006, the index to be used for the numerator is the index for the month of March 2006
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 (1982-84 = 100). If both an official index and one or more
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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 constricted 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 City, either directly to the taxing authority or to City, annual real estate
taxes and assessments levied upon the Demised Premises (including any annual real estate taxes
and assessments levied upon the Demised Premises (including any Possessory interest taxes), as
well as taxes of every kind and nature levied and assessed in lieu of, in substitution for, or in
addition to, existing real property taxes. Such amount shall be paid on the date that is twenty
(20) days prior to the delinquent date or, if City receives the tax bill, thirty (30) days after receipt
of a copy of the tax bill from City, whichever is later. Even though the term of this Lease has
expired and Tenant has vacated the Demised Promises, when the final determination is made of
Tenant's share of such taxes and assessments, Tenant shall immediately pay to City 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 City.
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
City of rental or other sums due hereunder will cause City 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. City and Tenant agree that this late charge represents a reasonable
estimate of such costs and expenses and is fair compensation to City for its loss suffered by such
late payment by Tenant.
3.9Interest. 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. 3A500
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3.10 Permit. Tenant shall continuously maintain in effect during the term
hereof a Commercial Aeronautical Business permit from the Airport.
4. USE OF THE PREMISES.
4.1 Permitted Use. The City hereby leases to Tenant and Tenant hires from City
the Demised Premises with appurtenances as defined herein, for the purpose of conducting
thereon only the use specified in Section 1.7 of this Lease and for no other use.
4.2 Compliance with Laws. Tenant shall, at its sole cost and expense, comply
with all of the requirements of all municipal, state and federal authorities now in force or which
may hereafter be in force pertaining to the use of the Demised Premises, and shall faithfully
observe in said use all municipal ordinances, including, but not limited to, the General Plan and
zoning ordinances, state and federal statutes, or other govermnental regulations now in force or
which shall hereinafter be in force. Tenant's violation of law shall constitute an admission of
Tenant in any action or proceeding against Tenant, whether City 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 City and Tenant.
Tenant shall not engage in any activity on or about the Demised Premises that
violates any Enviromnental 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
Enviromnental Law for clean-up and removal of any contamination involving any Hazardous
Material created or caused directly or indirectly by Tenant. The tern "Environmental Law" shall
mean any federal, state or local law, statute, ordinance or regulation pertaining to health,
industrial hygiene or the environmental conditions on, under or about the Demised Premises,
including, without limitation, (i) the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Sections 9601 et sec.; (ii) the Resource
Conservation and Recovery, Act of 1976 ("RCRA"), 42 U.S.C. Sections 6901 et sue.; (iii)
California Health and Safety Code Sections 25100 et sue.; (iv) the Safe Drinking Water and
Toxic Enforcement Act of 1986. California Health and Safety Code Section 25249.5 et sue.; (v)
California Health and Safety Code Section 25359.7, (vi) California Health and Safety Code
Section 25915; (vii) the Federal Water Pollution Control Act, 33 U.S.C. Sections 1317 et seq.;
(viii) California Water Code Section 1300 et seq.; and (ix) California Civil Code Section 3479 et
sue., as such laws are amended and the regulations and administrative codes applicable thereto.
The tern "Hazardous Material" includes, without limitation, any material or substance which is
(i) defined or listed as a "hazardous waste", "extremely hazardous waste", "restrictive hazardous
waste" or "hazardous substance" or considered a waste, condition of pollution or nuisance under
the Environmental Laws; (ii) petroleum or a petroleum product or fraction thereof; (iii) asbestos;
and/or (iv) substances known by the State of California to cause cancer and/or reproductive
toxicity. It is the intent of the parties hereto to construe the terns "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 sec . Tenant shall provide prompt written notice to City of the existence
of Hazardous Substances on the premises acid all notices of violation of the Environmental Laws
received by Tenant,
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4.3 Non-Discrimination & FAA Required Clauses.
(a) Tenant, in the operations to be conducted pursuant to the provisions of
this Lease and otherwise in the use or 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.
(b) Tenant 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 tenant may be
allowed to make reasonable and non-discriminatory discounts, rebates or other similar types of
price reductions to volume purchasers in accordance with the other provisions of this Lease with
regard to discounts and rebates.
(c) The Tenant agrees to insert the anti-discrimination provisions
hereinabove enumerated in any agreement by which said Tenant grants a right or privilege to any
person, firm or corporation to render accommodations and/or services to the public on the
Demised Premises.
(d) City also reserves the right, but shall not be obligated to Tenant, to
maintain and keep in repair the landing area of the Airport, as well as publicly-owned facilities
of the Airport, together with the right to direct and control the activities of the Tenant in this
regard.
(e) Tenant hereby agrees to comply with the notification and review
requirements covered in Part 77 of the Federal Aviation regulations in the event any future
structure or building is planned or in the event of any plarmed modification or alteration of any
present or future building or structure situated on the Demised Premises.
(f) City hereby reserves a right of flight for the passage of aircraft in the
airspace above the surface of the Demised Premises together with the right to create in said
airspace such noise as is or shall become inherent in the operation of aircraft. operating on the
Airport.
(g) Tenant, by accepting the Lease, expressly agrees for itself, its
successors and assigns that it shall 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
five hundred (600) feet. in such an event, City reserves the right to enter upon the Demised
Premises and cause the abatement of the interference or hazard at the expense of the Tenant.
(h) Tenant, by accepting this Lease, expressly agrees for itself, its
successors and assigns that it shall not use the Demised Premises in any manner which might
interfere with the landing and taking off of aircraft from on or off the Airport or otherwise create
a hazard. In such an event, City reserves the right to enter upon the Demised Premises and cause
the abatement of the interference or hazard at the expense of the Tenant.
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(i) This agreement and all the provisions hereof shall be subject to
whatever right the United States Govenunent now has or in the future may have or acquire
affecting the control, operation, regulation or commandeering of the Airport or the exclusive or
non-exclusive use of the Airport by the United States during the time of war or national
emergency.
0) Operations for Benefit of Public. Tenant agrees to operate the Demised
Premises for the use and benefit of the public, to make available all Tenant's airport facilities to
the public, other than office or restricted areas. without discrimination an 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 otherwise unreasonable
charges or fees for any use of its facilities for 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. Other Tenants or aircraft shall have the
right to cross over taxiway/ramp areas of the Leasehold.
4.4 Signs. Tenant shall not place or permit to be Placed any sign that is not in
compliance with the sign ordinance of the City upon the exterior or in the windows of the
Demised Premises. Any sign not constricted in accordance therewith shall be immediately
removed by Tenant and, if said sign is not removed by Tenant within ten (10) days of written
notice from City to Tenant, then City may remove said sign without Tenant's approval and
without any liability to Tenant.
4.5 Public Facilities Ingress Egress and Quiet Enjoyment. City 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, expressly including
access to runways and taxiways, from the Demised Premises and other public facilities.
4.6 Rules and Regulations. Tenant shall faithfully observe and comply with the
rules and regulations that City shall from time to time promulgate and/or modify. City shall have
previously provided a copy of any such rules and regulations to Tenant. Any amendment or
modification of the Rules and Regulations shall be binding upon the Tenant within a reasonable
period following delivery of a copy of such amendment or modification to Tenant. City 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. ALTERATIONS AND REPAIRS
5.1 briprovements Alterations and Fixtures. Tenant shall not make or suffer to be
made, any alterations or improvements to the Demised Premises, or any part thereof, without the
prior written consent of City, which consent shall not be unreasonably withheld or delayed, and
any alterations or improvements to the Demised Premises, except movable furniture, trade
fixtures, equipment, and items of personal property shall become at once a part of the realty and
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shall at the expiration or earlier termination of this Lease belong to City free and clear of any
liens or encumbrances. Tenant shall not in any event make any changes to the exterior of the
Demised Premises, if any. Any such alterations or 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 City. City may require that any such
alterations or improvements be removed prior to the expiration of the term hereof provided City
has notified Tenant of such requirement at the time alterations or improvements are approved.
Any removal of alterations or 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, reasonable wear and tear
excepted. 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 City's obligations
hereinafter provided, at all times during the tern hereof, and at Tenant's sole cost and expense,
keep, maintain and repair the Demised Premises and other improvements within the Demised
Premises in good and sanitary order, condition, and repair, reasonable wear and tear excepted
(except as hereinafter provided) including without limitation, the maintenance and repair of any
store front. doors, window easements, glazing, heating and air conditioning system, plumbing,
pipes, electrical wiring and conduits. Tenant shall also at its sole cost and expense be
responsible for any alterations or improvements to the Demised Premises necessitated as a result
of the requirement of any municipal, state or federal authority. Tenant hereby waives all right to
make repairs at the expense of the State of California. By entering into the Demised Premises,
Tenant shall be deemed to have accepted the Demised Premises as being in good and sanitary
order, condition and repair, and Tenant agrees on the last day of said teen 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 and subject to any alterations or
improvements approved by City as provided herein. Tenant shall periodically sweep and clean
the sidewalks adjacent to the Demised premises, as needed.
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 make the improvements to
the extent shown on the attached Exhibit "E" ("Tenant's Work,") at its sole cost and expense.
5.5 City's Reserved Rights.
(a) Airport Development and Safety. City reserves the right to further
develop or improve the aircraft operating area of the Airport as it sees fit, and City reserves the
right to take any action it considers necessary to protect the aerial approaches of the Airport
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against obstruction, together with the right to prevent Tenant from erecting or pennitting to be
erected any building or other structure of the Demised premises which, in the opinion of City,
would limit the usefulness of the Airport or constitute a hazard to aircraft provided, if such
developments or improvements materially impair Tenant's use of the Demised Premises, Tenant
can terminate this lease without any further liability therefor.
(b) Lease to United States. During the time of war or national emergency,
City 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 tern 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) Food Pre aration. Tenant, if involved in food preparation and sales as
a cafe, restaurant, or similar use, and/or food takeout service, shall install at Tenant s expense
any fire protective systems in grill, deep fry, and cooking areas which are required by city,
county, and state fire ordinances, and such system when installed shall qualify for full fire
protective credits allowed by the fire insurance rating and regulatory body in whose jurisdiction
the Demised Promises are located.
(b) 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.
(c) Tenant to Provide Liability hlsurance. During the entire term of this
Lease, the Tenant shall, at the Tenant's sole Cost and expense, but for the mutual benefit of City
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
an any sidewalks directly adjacent to -the Demised Premises written on a per occurrence basis in
an amount not less than either (i) a combined single limit of FIVE MILLION DOLLARS
($5,000,000.00) for bodily injury, death, and property damage or (ii) bodily injury limits of
$1,000,000.00 per person, $2,000,000.00 per occurrence and $2,000,000.00 products and
completed operations and property damage limits of $500,000.00 per occurrence and
$1,000,000.00 in the aggregate; provided, however, if City so elects City 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.
(d) 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 City against any loss, claim or
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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.
(e) 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 City, its officers, employees and agents as additional
insureds. The insureds shall waive all rights of contribution they may have against the City, 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 City. 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 City with certificates of
insurance or appropriate insurance binders evidencing the above insurance coverages written by
insurance companies acceptable to City, licensed to -do business in the state where the Demised
Premises are located and rated A:V1I or, better by Beat's Insurance Guide. In the event the Risk
Manager of City ("Risk Manager") determines that (i) the Tenant's activities in the Demised
Premises creates an increased or decreased risk of loss to the City, (H) greater insurance
coverage 13 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 Manager; provided that Tenant shall have the right to appeal a determination of increased
coverage by the Risk Manager to the City Council of City within ten (10) days of receipt of
notice from the Risk Manager. City 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 City 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 hrdemnification- -of City. Tenant, as a material part of the consideration to be
rendered to City under this Lease, hereby waives all claims against City 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 Promises, from any cause arising at any time, other than claims and injuries caused by
the gross negligence or willful misconduct of City or its agents, employees or invitees. Tenant
agrees to indemnify the City, 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
IRV#15925 vl -10-
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 (i) the negligent performance of the work, operations or activities of Tenant, its
agents, employees, subcontractors, or invitees. provided for herein, or (ii) arising from the use of
the Demised Premises or the parking and common areas by Tenant or its employees and
customers, (iii) 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 tern, provision covenant or condition of this Lease, but excluding such claims or liabilities
arising from the sole negligence or willful misconduct of the City, its officers, agents or
employees, who are directly responsible to the City, and in connection therewith:
(a) Tenant will defend any action or actions filed in connection with any
of said claims or liabilities and will pay all costs and expenses, including legal costs and
attorneys' fees incurred in connection therewith;
(b) Tenant will promptly pay any judgment rendered against the City, 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, other than claims and injuries, caused by the gross negligence or willful
misconduct of City or its agents, employees or invitees; and Tenant agrees to save and hold the
City, its officers, agents, and employees harmless therefrom,
(c) In the event The City, 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 perforni the work,
operation or activities of Tenant hereunder, other than claims and injuries caused by the gross
negligence or willful misconduct of City or its agents, employees or invitees, Tenant agrees to
pay to the City, Its officers, agents or employees, any and all costs and expenses incurred by the
City, its officers, agents or employees in such action or proceeding, including but not limited to,
reasonable 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 tern 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 City, except such property as may be mortgaged to City.
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 City,
tenninate all or any existing subleases or subtenancies, or may, at the option of City, operate as
an assignment to it of any or all of such subleases or subtenancies.
8. DAMAGE AND DESTRUCTION OF PREMISES. IIII���� AAA
AIRV#15925 v I -it- /
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 Promises, 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 armul 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. Notwithstanding the foregoing in the event of total destruction of the
Demised Promised (in Tenant's sole opinion), Tenant shall have the right to terminate this lease
without any further liability therefor.
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 City, which consent shall not be unreasonably
withheld. Tenant may assign this Lease or sublet the Demised Premises to any affiliate, parent
or subsidiary of Tenant with prior written notification to City and provision of a copy the
assumption and assignment agreement. For purposes of this Lease, an assignnent 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 assigmnent or subletting shall be subject to all of
the terns and conditions of this Lease and proposed, assignee shall assume the obligations of
Tenant under this Lease in writing in form satisfactory to City. The proposed assignee shall
simultaneously provide to City an estoppel certificate in the form described in Section 13.2
hereafter. Consent by City 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 City shall
be void, shall constitute a material breach of this Lease, and shall, at the option of City, terminate
this Lease. Neither this Lease nor any interest therein shall be assignable as to the interest of
Tenant by operation of law.
City shall be under no obligation to consider a request for City's consent to an
assignment until Tenant shall have Submitted in writing to City a request for City'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 City the
criteria for assignment as set forth herein are met. In information as required by City the criteria
for assignment as set forth herein are met. In addition, if City determines that the Monthly Rent
payable to City under this Lease is less than the fair market rental value, as detennined by City,
City 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.
IRV#15925 vl _12_ jig-i3
(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 City which shall not
be unreasonably witlilield. 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 City.
(b) Any encumbrance must be confined to the leasehold interest of Tenant
or the sub-leasehold 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 riot to
repay any part of the outstanding mortgage. Tenant agrees to fumish, as requested, any financial
statements or analysis pertinent to the encumbrance that City may deem necessary to justify the
amount, purpose and terms of said encumbrance.
(c) In the event of default by the Tenant of the terns 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 City 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 City shall be given an additional thirty (30) days in which to cure- the
default after the tone 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 City 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 tenns 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, City shall have the right to correct
such defaults at any time prior to the date of sale or foreclosure, and to tenninate such leasehold
upon paying to the encumbrancer the balance of the encumbrance as hereinafter defined.
(0 "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 hlsurance 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 City, amortized over the tenn 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.
IRV#15975 vI -13- J )q / Y
(g) City agrees to provide encumbrancer written notice of any default by
Tenant Linder 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 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 City more than five (5) days after written notice from City to Tenant
that Tenant has failed to pay rent when due; (b) the failure to perform any of Tenant's
agreements or obligations hereunder (exclusive of a default in the payment of money) where
such default shall continue for a period of thirty (30) days after written notice thereof from City
to Tenant which notice shall be deemed to be the statutory notice so long as such notice complies
with statutory requirements, or in the event such failure cannot be cured within such 30 day
period, Tenant has not commenced curative measures within such period and Tenant is not
diligently pursuing same; (c) the vacation or abandomnent of the Demised Promises by Tenant;
(d) the making by Tenant of a general assig anent 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 tile 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, City may at any time
thereafter, without further notice or demand, rectify or cure such default, and any sums expended
by City for such purposes shall be paid by Tenant to City upon demand and as additional rental
hereunder. In the event of any such default or breach by Tenant, City shall have the right (i) to
continue the lease in full force and effect and enforce all of its rights and remedies under this
Lease, including the right to recover the rental as it becomes due under this Lease, or (ii) City
shall have the right at any time thereafter to elect to terminate the Lease and Tenant's right to
possession thereunder. Upon such termination, City 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;
IRV#15925 vl -14- /���
(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 tern 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 City for all the
detriment proximately caused by Tenant's failure to perform its obligations under the lease or
which in the ordinary course of things would be likely to result therefrom.
The "worth at the time of award" of the amounts ref erred to in subparagraphs (i)
and (ii) above shall be computed by allowing interest at three percent (3%) over the prime rate
then being charged by Bank of America, N.A. but in no event greater than the maximum rate
permitted by law. The worth at the time of award of the amount referred to in subparagraph (iii)
above shall be computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award phis 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 City may make to mitigate the damages caused by Tenant's breach
of this Lease shall not constitute a waiver of City's right to recover damages against Tenant
hereunder, nor shall anything herein contained affect City's right to indemnification against
Tenant for any liability arising prior to the tennination of this Lease for personal injuries or
property damage, and Tenant hereby agrees to indemnify and hold City harmless from any such
injuries and damages, including all attorney's fees and costs incurred by City in defending any
action brought against City 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 hot constitute a termination of this
Lease, or of Tenant's right of possession hereunder, unless and until City elects to do so, and
until such time City 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 City to terminate this Lease shall not prevent City from later
terminating this Lease or constitute a waiver of City'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 City's remedies.
12V#15925 vl -15 304 Ap
11.3 City's Default. City shall not be in default unless City f ails to perform
obligations required of City within a reasonable time, but In no event later than thirty (30) days
after written notice by Tenant to City and to the holder of any first mortgage or deed of trust
covering the Premises whose name and address shall have theretofore been furnished to Tenant
in writing, specifying wherein City has failed to perform such obligation; provided, however,
that if the nature of City's obligation is such that more than thirty (30) days are required for
performance then City shall not be deemed in default if City commences perforniance within a
(30) day period and thereafter diligently prosecutes the same to completion. hi no event shall
Tenant have the right to terminate this Lease as a result of City's default and Tenant's remedies
shall be limited to damages and/or an injunction.
12. CONDEMNATION.
In the event a condemnation or a transfer in lieu thereof results in a taking of any
portion of the Demised Premises. City may, or in the event a condemnation or a transfer in lieu
thereof results in a taking of ten percent (10%) 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 City), any amounts
necessary to reimburse Tenant for the cost of removing stock and fixtures. If this Lease is not
terminated as above provided, City shall use a portion of the condemnation award to restore the
Demised Premises.
13. MISCELLANEOUS.
13.1 Entry and Inspection. Tenant shall permit City and his agents to enter into
and upon the Demised Premises at all reasonable times following prior notice by City (except in
emergencies) for the purpose of inspecting the sarne or for the purpose of maintaining the
Demised Premises as required by the terms of this Lease or for tile 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 City. City 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 pen-nit City, 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 City 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 City, 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 "C', addressed to any
existing or proposed mortgagee or proposed purchaser, and to the City provided, and only to the
extent, the statements in such letter are accurate at such time. Tenant shall be liable for any loss
IRV NI5925 vl -16-
1
or liability resulting from any incorrect information certified, and such mortgagee and purchaser
shall have the right to rely an such estoppel certificate and financial statement.
13.3 Jurisdiction and Venue. The parties hereto agree that the State of
California is the proper jurisdiction for litigation of any matters relating to this Lease. and service
mailed to the address of tenants set forth herein shall be adequate service for such litigation. The
parties further agree that Riverside County, California is the proper place for venue as to any
such litigation and Tenant agrees to submit to the personal jurisdiction of such court in the event
of such litigation.
13.4 Partial Invalidity. If any term, covenant, condition or provision of this
Lease is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the provisions hereof shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereof.
13.5 Successors in Interest. The covenants herein contained shall, subject to
the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators
and assigns of all the parties hereto; and all of the parties hereto shall be jointly and severally
liable hereunder,
13.6 No Oral Agreements. This (i) Lease covers in full each and every
agreement of every kind or nature whatsoever between the parties hereto concerning this Lease,
(ii) supersedes any and all previous obligations, agreements and understandings, if any, between
the parties, oral or written, and (iii) merges all preliminary negotiations and agreements of
whatsoever kind or nature herein. Tenant acknowledges that no representations or warranties of
any kind or nature not specifically set forth herein have been made by City or its agents or
representatives.
13.7 Authority. In the event that either party 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. Each party represents and warrants to the other that the entering into this Lease
does not violate any provisions of any other agreement to which such party is bound.
13.8 Relationship of Parties. The relationship of the parties hereto is that of
City and Tenant, and it is expressly understood and agreed that City 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
IRV#15925 vl -17- ����
discrimination against or segregation of any person or group of persons on account of race, sex,
marital status, color, creed, national origin or ancestry, in the leasing, subleasing, transferring,
use, occupancy, tenure or enjoyment of the Demised Premises herein leased, nor shall the Tenant
itself, or any person claiming under or through it, establish or permit any such practice or
practices. of discrimination or segregation with reference to the selection, location, number, use
or occupancy of tenants, lessees, sublessees, subtenants or vendees in the Demised Premises.
13.10 Notice. 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 nor 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 City, 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 with a copy to SIGNATURE
COMBS, , Attn: General Counsel. 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 2 part hereof as if frilly set forth herein. hi 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.
13.13 At Expiration of Termination of Lease. Upon the expiration or sooner
termination of this Lease, Tenant shall promptly deliver to City a quit claim deed conveying its
interest in the Demised Premises to City.
13.14 FAA Required Provisions. Tenant shall comply with the provisions set
forth in Exhibit "C" at all times during the tern of this Lease, as such term may be extended.
IRV 1115925 vl -18-
�*
EXHIBIT "A"
LEGAL DESCRIPTION OF DEMISED PREMISES
Those certain portions of section 13, Township 4 South, Range 4 East, San Bernardino
Base and Meridian, in the City of Palm Springs, County of Riverside, State of California, being
more particularly described as follows:
Commencing at the Northeast corner of said section 13, thence along the northerly line of
section 13, South 89*48'00" West a distance of 508.91 feet; thence South 0*12'00" East a
distance of 71.11 feet to the true point of beginning, thence North 51*10'25" West a distance of
66.28 feet; thence South 0*18'36" East a distance 336.50 feet; thence South 89*48'00" West a
distance of 253.27 feet; thence South 0*12'00" East a distance of 252.58 feet, thence North
89*33'00" East a distance of 370.73 feet, thence North 2*05'05" East a distance of 145.95 feet;
thence South 89*48'00" West a distance of 15.82 feet; thence North 0*12"00" West a distance
of 399.89 feet; thence South 89*48'00" West a distance of 56.61 feet to the point of beginning.
Said parcel containing 2.882 acres.
J`0�
IRV#15925 vl _20-
EXHIBIT "B"
DEPICTION OF DEMISED PREMISES
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EXHIBIT "C"
FAA PROVISIONS
Tenant shall comply with the following provisions at all times during the terin of this Lease, as
such term may be extended
A NONDISCRIMINATION
1. Tenant, for itself, its personal representatives, successors in interest, and assigns,
as a part of the consideration hereof, does hereby covenant and agree that:
a. No person on the grounds of race, color, or national origin shall be
excluded from participation, denied the benefits of, or be otherwise subjected to
discrimination in the use of the Demised Premises.
b. In the construction of any improvements on, over, or under the Demised
Premises 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 subjected to discrimination.
c. Tenant shall use the Lease Area in compliance with all other requirements
imposed by or pursuant to Title 49, Code of Federal Regulations ("CFR"), Department of
Transportation, Subtitle A, Office of the Secretary, Part 21, 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.
2. In the event of breach of any of the above nondiscrimination covenants, City shall
have the right to terminate the Lease and to re-enter 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 21 are followed and completed,
including expiration of appeal rights.
3. Tenant shall furnish its accommodations and/or services on a fair, equal and hot
unjustly discriminatory basis to all users thereof and it shall charge fair, reasonable and not
unjustly discriminatory prices for each unit or service.
4. Noncompliance with the provisions in this Exhibit C shall constitute a material
breach thereof and in the event of such noncompliance City shall have the right to terminate this
Lease and the estate hereby created without liability therefore or at the election of City or the
United States either or both said Governments shall have the right to judicially enforce the
provisions in this Exhibit.
S. Tenant agrees that it shall insert the above four Provisions - in any lease
(agreement, contract, etc.) by which said Tenant grants a right or privilege to any person, firm or
corporation to render accommodations and/or service to the public on the Demised Premises.
IRV C5925 vi -22- / A J\
B. DEVELOPMENT OF AIRPORT. City reserves the right to further develop or improve
the airport, including but not limited to, the terminal, runways, and landing areas of the Airport
as it sees fit, regardless of the desires or view of Tenant, and without interference or hindrance
by Tenant. Tenant shall not be entitled to any damages as a result of such alteration other than
rent reduction in proportion to that portion of the Demised Premises taken by City for such
development or improvement; provided, however, that Tenant may tenninate this Lease upon
thirty (30) days written notice to City if such portion taken by the City materially interferes with
Tenant's ability to perform its business operations at the Demised Premises. Any written notice
provided by Tenant to City hereunder shall specifically describe the nature of such material
interference.
D. LEASE SUBORDINATE TO AGREEMENT WITH U.S.A. This Lease shall be
subordinate to the provisions and requirements of any existing or firture agreement between City
and the United States or any lawful requirement of the United States relative to the development,
operation, or maintenance of the Airport.
E. USE TO CONFORM WITH FEDERAL AVIATION REGULATIONS. Tenant agrees
that Tenant's use of the Lease Area, including all construction thereon, shall conform to
applicable Federal Aviation Regulations. Tenant agrees to comply with, the notification and
review requirements covered in Part 77 of the Federal Aviation Regulations (as same may be
amended from time to time or such other regulation replacing Part 77 as may be adopted by
Federal authority) prior to the constriction of the improvements described herein and prior to the
construction of any future structure or building upon the Lease Area or in the event of any
planned modification or alteration of any present or future building or structure situated on the
Lease Area.
F. NONEXCLUSIVE RIGHT. 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.C. 1349).
G. RESERVATION OF AVIATION EASEMENT. City hereby reserves for itself, its
successors and assigns, for the use and benefit of the public, a right of flight for the passage of
aircraft in the air space above the surface of the Lease Area, together with the right to cause in
said air space such noise as may be inherent in the operation of aircraft now known or hereafter
used for navigation of, or flight in the air, using said air space, or landing at, taking off from, or
operating at the Airport.
H. HEIGHT LIMITATION OF STRUCTURES. Tenant by accepting this Lease expressly
agrees for itself, its successors and assigns that it will not erect nor permit the erection of any
stricture or object nor pen-nit the growth of any tree on the land leased hereunder which would
penetrate the imaginary surfaces as defined in Part 77 of the Federal Aviation Regulations (as
same may be amended from time to time or as such regulation replacing Part 77 may be adopted
by federal authority) or such other lesser altitude as may be required by City. In the event the
aforesaid covenants are breached, City 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 Tenant.
IRV#15925 vl _23_ 0
L NONINTERFERENCE WITH AIRCRAFT. Tenant by accepting this Lease agrees for
itself, its successors and assigns that it will not make use of the Lease Area in any mariner which
might interfere with the landing and taking off of aircraft from the Airport or otherwise
constitute a hazard. In the event the aforesaid covenant is breached, City reserves the right to
enter upon the premises hereby leased and cause the abatement of such interference at the
expense of Tenant.
J. WAR OR NATIONAL EMERGENCY. This Lease and all the provisions hereof shall be
subject to whatever right the United States Govenunent now has or in the future may have or
acquire, affecting the control, operation, regulation and taking over of Airport or the exclusive or
nonexclusive use of Airport by the United States during the time of war or national emergency.
IRV#15925 v1 -24-
MINUTE ORDER NO.
APPROVING THE TERMINATION OF
LEASE AGREEMENT NO. 3308 WITH
ILLINOIS TOOL WORKS AS A
CONCURRENT ACTION OF THE
RESOLUTION CREATING A NEW LEASE
WITH KARBZ, INC. D/B/A SSC RACING.
- - - - - - - - - - - - - - - - - - - -
I HEREBY CERTIFY that this Minute Order approving the termination of
Lease Agreement No. 3308 with Illinois Tool Works as a concurrent action
of the resolution creating a new lease with KARBZ, Inc. d/b/a SSC Racing,
was adopted by City Council of the City of Palm Springs, California in a
meeting thereof held on the 18th, day of September, 2002.
PATRICIA A. SANDERS
City Clerk
3E>
RESOLUTION NO.
OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS,
CALIFORNIA,APPROVING LEASE AGREEMENT NO. _
WITH KARBZ, INC. D/B/ASSC RACING INC. FOR ATERM
OF TEN (10) YEARS WITH A MONTHLY PAYMENT OF
$4,708.
WHEREAS, on or about November 1, 1997, Tenant entered into a sublease agreement
("Sublease") with Illinois Tool Works Inc. ("Sublessor") for the sublease of the Demised
Premises (as that term is defined at Section 1.1 below) for a term of five (5) years expiring
October 31, 2002, with an option to extend the term until July 31, 2006 pursuant to the terms
of the Sublease; and
WHEREAS, under the Sublease,Tenant has operated the corporate headquarters of its go-
cart manufacturing business at the Demised Premises and wishes to continue to operate
such business at the Demised Premises; and
WHEREAS, concurrently with the execution of this Lease, City and Sublessor have
terminated the ground lease ("Ground Lease") under which Sublessor leased the Demised
Premises from City; and
WHEREAS, in light of the termination of the Ground Lease, Tenant wishes to enter into this
Lease to permit it to continue to occupy the Demised Premises and operate its corporate
headquarters for its go-cart manufacturing business thereon; and
WHEREAS, Tenant wishes to lease from City and City wishes to lease to Tenant the
Demised Premises upon the terms and subject to the conditions of this Lease; and
NOW THEREFORE BE IT RESOLVED by the CITY COUNCIL of the City of Palm Springs
as follows:
Section 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 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 at 3101 East Alejo Road, Palm Springs, in the County
of Riverside, State of California, as more particularly described in Exhibit"A"
hereof together with the improvements located thereon and as depicted as
the cross-hatched portions on the Plot Plan attached as Exhibit "B" hereof.
V
Resolution No.
September 18, 2002
Page 2
1.2 Lease. Commencement Date. The term of this Lease shall commence
on September , 2002 and shall terminate on September
2012.
ADOPTED this day of 2002.
AYES:
NOES:
ABSENT:
ATTEST: CITY OF PALM SPRINGS, CALIFORNIA
By
City Clerk City Manager
REVIEWED & APPROVED AS TO FORM
EXHIBIT "A"
LEGAL DESCRIPTION OF DEMISED PREMISES
Those certain portions of section 13, Township 4 South, Range 4 East, San Bernardino
Base and Meridian, in the City of Palm Springs, County of Riverside, State of California, being
more particularly described as follows:
Commencing at the Northeast corner of said section 13, thence along the northerly line of
section 13, South 89*48'00" West a distance of 508.91 feet; thence South 0*12'00" East a
distance of 71.11 feet to the true point of beginning, thence North 51*10'25" West a distance of
66.28 feet; thence South 0*18'36" East a distance 336.50 feet; thence South 89*48'00" West a
distance of 253.27 feet; thence South 0*12'00" East a distance of 252.58 feet, thence North
89*33'00" East a distance of 370.73 feet, thence North 2*05'05" East a distance of 145.95 feet;
thence South 89*48'00" West a distance of 15.82 feet; thence North 0*12"00" West a distance
of 399.89 feet; thence South 89*48'00" West a distance of 56.61 feet to the point of beginning.
Said parcel containing 2.882 acres.
� v3
IRV#15925 vl -20-
EXHIBIT `B"
DEPICTION OF DEMISED PREMISES
II
N89*47'20'E 660 70'
12
S59'46'0'W 668 77' 159 e6' \ 308 91' 13 18
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-21- 3Cq