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03308 - ILLINOIS TOOL WORKS STATIC CONTROL KARBZ SSC RACING SUBLEASE R18234
KARBZ, Inc. dba SSC Racing, . Sublessee AGREEMENT #3308 M06054, 11-19-97 SUBLEASE AGREEMENT This Sublease Agreement (the "Sublease") is made and entered into as of the �day of 1997, by and between Illinois Tool Works Inc., a Delaware corporation ("Sublessor") and KARBZ, Inc. d/b/a SSC Racing ("Sublessee") (Sublessor and Sublessee are hereinafter collectively referred to as the "Parties"). WITNESSETH: WHEREAS, City of Palm Springs, a municipal corporation ("Landlord") as landlord, and Static Control Services, Inc. ("Static") as tenant, entered into that certain Lease dated December 10, 1993 (the "Master Lease"), which Master Lease is attached hereto as Exhibit A; and WHEREAS, Sublessor has succeeded to all of Static's right, title and interest as tenant under the Master Lease; and WHEREAS, pursuant to the terms of the Master Lease, Sublessor is leasing from Landlord the free standing building (the "Building") located at the property commonly known an 3101 East Alejo Road, Palm Springs, California (the; Building and the property at which it is located are referred to herein as the "Premises"); and WHEREAS, the term of the Master Lease expires on July 31, 2006; and WHEREAS, Sublessor desires to sublease the Premises to Sublessee and Sublessee desires to sublease the Premises from Sublessor, all upon the terms and subject to the conditions hereinafter set forth; and WHEREAS, Landlord has consented to the sublease of the Premises and has reviewed this Sublease and has agreed to be bound by its terms specifically as they relate to obligations of the Landlord under the Master Lease and this Sublease. NOW, THEREFORE, in consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by all Parties hereto, the Parties hereby covenant, acknowledge, represent and agree as follows: 1. DEMISE: TERM. Sublessor hereby subleases the Premises to Sublessee and Sublessee hereby subleases the Premises from Sublessor, for a term of five (5) years commencing as of November 1, 1997 (the "Commencement Date") and expiring October 31, 2002 or on such earlier date upon which said term may expire or terminate (the "Sublease Term") pursuant to any of the provisions of the Master Lease or this Sublease or pursuant to taw or on such later date upon which said term may be extended pursuant to the terms of this Sublease. Provided that Sublessee is not then in default hereunder, Sublessee shall have: the option to extend the Sublease Term until July 31, 2006 on all of the same terms and provisions as are contained in this Sublease by giving written notice to Sublessor of such exercise no later than May 1, 2002. 2. RENT. Sublessee agrees to pay to Sublessor, without previous demand therefor and without right of set-off, abatement, credit or deduction, rent for the Premises (the "Rent"), payable at the address of Sublessor set forth in Paragraph 14 of this Sublease or at such other address as Sublessor may from time to time designate by notice to Sublessee, in the initial amount of$5,775.00 per month, subject to adjustment on the basis of the formula set forth in Section 3.3 of the Master Lease in the event Sublessee exercises its option pursuant to Section 1 of this Sublease; provided, however, with respect to any adjustment in the Rent hereunder as provided in Section 3.3 of the Master Lease, Sublessee shall only be obligated to pay to Sublessor such adjustment commencing November 1, 2002 (being the commencement of the option period hereunder), said adjustment to be based on the initial Sublease Term of November 1, 1997 through October 31, 2002. Rent shall be payable to Sublessor in advance commencing on December 1, 1997 and thereafter on the first day of each month during the Sublease Term. Rent for any partial month shall be prorated on a per diem basis. Rent and real estate taxes hereunder, but not including any other Additional Obligations (as defined in Section 3 hereof), shall abate for the period commencing on the Commencement Date and continuing through November 30, 1997. Sublessor agrees to pay and be solely liable for all realty costs associated with the transfer of the Premises under this Sublease to Sublessee. 3. NET MASTER LEASE - ADDITIONAL OBLIGATIONS. The Parties intend that the Rent provided in this Sublease shall be a net payment to Sublessor; that the Sublease shall continue for the full Sublease Term notwithstanding any occurrence preventing or restricting use and occupancy of the Premises, including any damage or destruction affecting the Premises, and any action by any governmental authority relating to or affecting the Premises except as otherwise specifically provided in this Sublease; that the Rent shall be absolutely payable without offset, reduction or abatement for any cause except as otherwise specifically provided in this Sublease; that Sublessor shall not be required to pay any costs or expenses or provide any services or do any act in connection with the Premises and that Sublessee shall bear all costs and expenses relating to the Premises to the extent required under the Master Lease. Accordingly, subject to the provisions of the Master Lease, Sublessee covenants and agrees to pay in addition to the Rent, all costs and expenses relating to the Premises which are the responsibility of Sublessor pursuant to the terms of the Master Lease ("Additional Obligations"). Except as specifically excluded hereunder, the Additional Obligations payable by Sublessee shall include, but not be limited to, the costs and expenses of (a) taxes and assessments; (b) utility charges; (c) maintenance and repair expenses (other than for repairs required to be made by Landlord pursuant to the terms of the Master Lease); (d) other costs and expenses of whatever nature relating to the Premises arising during or attributable to the Sublease Term, to the extent such costs and expenses are the obligation of Sublessor pursuant to the terms of the Master Lease. With respect to any insurance required to be provided by Sublessee pursuant to the terms of this Sublease, all such insurance shall name both Landlord and Sublessor as additional insureds, to the extent provided for in the Master Lease. 4. ASSIGNMENT; SUBLETTING. Sublessee will not sublet the Premises, or any portion thereof, or assign this Sublease in whole or in part, for collateral purposes or otherwise, or permit use or occupancy of the Premises, or any portion thereof, by others without the prior written consent of Sublessor and Landlord in each instance being first obtained, which consent shall not be unreasonably withheld, subject to the conditions set forth in Section 9 of the Master Lease. In the -2- • event Sublessor and Landlord shall consent to any specific assignment, subletting, or occupancy, such consent shall not be construed as relieving Sublessee from any liability under this Sublease or from responsibility for obtaining Sublessor's and Landlord's prior written consent to any further assignment, subletting or occupancy. 5. INCORPORATION OF THE MASTER LEASE. (a) The terms, covenants, conditions and definitions of the Master Lease (except such that are specifically excluded from this Sublease), including but not limited to those set forth in Section 4.4 of the Master Lease, are hereby incorporated in and made a part of this Sublease with the same force and effect as though set forth at length herein. By virtue of such incorporation, the term "Landlord" and "Tenant" in the Master Lease shall be deemed, for the purposes of this Sublease, to refer to Sublessor and Sublessee respectively. (b) All of the rights and obligations conferred and imposed by the Master Lease upon Sublessor are hereby conferred and imposed upon Sublessee with respect to the Premises, except as hereinafter expressly set forth. Sublessee shall, with respect to the Premises, duly and fully keep, observe and perform each and every term and covenant on Sublessor's part to be observed and performed as lessee under the Master Lease, except as such terns and covenants are expressly modified by the terms of this Sublease. Notwithstanding anything to the contrary contained herein, Sublessee shall not (i) take any action inconsistent with the terms of the Master Lease, (ii) do or permit to be done by its agents, contractors, employees, invitees, visitors or licensees, anything prohibited to Sublessor as the lessee under the Master Lease, or which would constitute, with or without the giving of notice or the passage of time or both, a default under the Master Lease; or (iii) take any action or do or permit anything which would result in any additional cost or other liability to Sublessor under the Master Lease. With respect to any provision of the Master Lease which is incorporated herein and provides for an abatement of rent under certain circumstances, Sublessee shall not be entitled to any rent abatement thereunder unless Sublessor actually receives a rent abatement under the Master Lease. Any inconsistency between the Master Lease and this Sublease which relates to obligations of or restrictions on, Sublessee, shall be resolved in favor of that obligation which is more onerous to Sublessee or that restriction which is more restrictive of Sublessee, as the case may be. In the event of any other inconsistency between the terms of this Sublease and the Master Lease, the terms of this Sublease shall control. (c) In the event of Sublessee's default under this Sublease, Sublessor shall have available to it all of the remedies available to Landlord under the Master Lease in the event of a like default on the part of the Sublessor as lessee thereunder. Such remedies shall be in addition to all other remedies available to Sublessor at law or in equity. (d) Sublessor shall not be obligated to perform and shall not be liable for the performance by Landlord of any of the obligations of Landlord under the Master Lease. Sublessor shall not be liable with respect to any representations or warranties of Landlord contained in the Master Lease, nor shall Sublessor be deemed to have made any representations or warranties to Sublessee by virtue of the incorporation of the Master Lease into this Sublease. Sublessee shall have no claim against Sublessor by reason of any default on the part of Landlord. Sublessee shall not make any claim -3- against Sublessor for any damages which may arise by reason of any act or omission, whether intentional or negligent, of Landlord. Nothing herein contained shall be deemed to authorize Sublessee to represent Sublessor in connection with any. suit or claim by or against Landlord. Sublessor shall have no obligation to render any services to Sublessee in or to the Premises of any nature whatsoever or to expend any money for the preservation or repair of the Premises. Sublessee agrees to look solely to Landlord for the furnishing of any services to which Sublessor may be entitled under the Master Lease. Provided Sublessee in not in default under this Sublease, Sublessor agrees to cooperate with Sublessee, and to use reasonable efforts (without, however, incurring any liabilities or expenses (other than those liabilities or expenses which Sublessee agrees to reimburse)) to enforce for the benefit of Sublessee the obligations of Landlord to Sublessor under the Master Lease insofar as they relate to the Premises. Any and all out-of-pocket expenses of Sublessor arising from Sublessor's action taken pursuant to this Paragraph shall be promptly reimbursed by Sublessee within ten (10) days after receipt of written demand thereof in reasonable detail. The foregoing covenant shall not be deemed to require that Sublessor commence legal action to enforce the obligations of Landlord. (e) If Landlord shall default in any of its obligations to Sublessor with respect to the Premises and such default continues notwithstanding Sublessor's demands that Landlord provide such services then and in such event and provided that Sublessor received "Adequate Assurance" (as defined below), Sublessee may either in its own name or in the name of Sublessor commence legal action against Landlord. As used herein"Adequate Assurance" means Sublessee providing Sublessor with an indemnity agreement in form reasonably satisfactory to Sublessor and its counsel indemnifying Sublessor against any and ,all claims, charges, costs or expenses (including reasonable attorney's fees) that may be incurred in connection with or arising out of Sublessee's enforcement or attempted enforcement of such rights described hereunder. (f) The following provisions of the Master Lease are specifically agreed to be inapplicable as between Sublessor and Sublessee: Section 1.8, Exhibit "C" and Exhibit "D" (except that portion of Exhibit "D" at paragraph no. 6, wherein Sublessee agrees that Landlord shall not be obligated to provide any improvements to the Premises). 6. CONSENT OF LANDLORD. In any case where this Sublease (including the provisions of the Master Lease which are incorporated herein by reference) requires Sublessee to obtain the consent or approval of Sublessor, whether prior to the taking of any action or otherwise, Sublessee shall, in addition to obtaining the consent or approval of Sublessor, obtain (at the time required) the consent or approval of Landlord, if such consent or approval Is required by the Master Lease. In the event that Landlord's consent or approval is so required, Sublessee shall not contact Landlord directly, but shall deliver a written request for such consent or approval to Sublessor. Sublessor shall not have any duty or responsibility with respect to obtaining the consent or approval of Landlord when the same is required other than the prompt transmission by Sublessor to Landlord of Sublessee's request for such consent or approval. Sublessee shall keep Sublessor apprised of any communications between Landlord and Sublessee to the extent any such communications have a material affect on Sublessor, whether under this Sublease, the Master Lease, or otherwise. 7. INDEMNIFICATION. Sublessee hereby indemnifies and agrees to defend and hold Sublessor and Landlord harmless from and against any and all costs, claims, actions, damages, -4- demands, expenses (including reasonable attorneys' and consultants' fees), injuries, judgments, liabilities, penalties, losses and suits, suffered sustained or incurred by Sublessor and Landlord in connection with, or as a result of, any accident, act or omission, claim, hazard, injury, violation of any environmental, health, fire, zoning, building or safety codes, ordinances or regulations, death or damage to person or property arising, directly or indirectly, in whole or in part, out of the business conducted in, or the use or occupancy of the Premises, or occurring in, on or about the premises, or any portion thereof, or arising, directly or indirectly, in whole or in part, from any act or omission of Sublessee or its licensees, servants, agents, employees, invitees, guests, suppliers or contractors or the breach or default by Sublessee of any term, provision, covenant, or condition contained in the Master Lease or this Sublease. The scope of this indemnification shall, at Sublessor's option, include, but not be limited to, defending or resisting, with attorneys reasonably satisfactory to Sublessor, any actions suit, claim, demand or proceeding that may be filed, instituted or brought against Sublessor or to which Sublessor may be made a party. In addition, Sublessee also hereby indemnifies Sublessor and Landlord and agrees to defend and hold each of them harmless from and against any and all actions, including remediation or removal action, claims, costs, damages, demands, expenses (including reasonable attorneys' and consultants' fees), injuries, judgments, liabilities, losses and suits of any and every kind, whatsoever paid, sustained, suffered or incurred, arising out of or in connection with, or as a direct or indirect result of, Sublessee or its agents', suppliers', guests', employees', invitees' or contractors' use, manufacture, generation, storage, disposal, release or threat of release, presence, on or under the Premises, or Sublessee's or its agents', suppliers', guests', employees', invitees' or contractors' transportation to, across, or from the Premises of any hazardous material (as defined herein), or the escape, seepage, leakage, spillage discharge, emission, release, or threat of release of any hazardous material from the Premises. As used herein, the term "hazardous material" shall mean petroleum or any fraction thereof, natural gas, liquefied synthetic gas, any mixture of natural and synthetic gas, and asbestos, and any material defined as "hazardous substances," "hazardous waste," "hazardous constituents," "solid waste," "hazardous materials," "extremely hazardous waste," or "toxic substances," or words of similar meaning or import in any federal, state or local statute, rule, regulation, or ordinance, as they may be enacted, amended, or reauthorized, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et sect, the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.• the Toxic Substances Control Act, 15 U.S.C. Section 2601 et sea., and the Hazardous Materials Transportation Act, 49 U.S.C. Section 6901, et seq., and in the regulations adopted and publications promulgated pursuant to said laws (the"Environmental Laws"). 8. CONDITION AND USE OF PREMISES. Sublessee acknowledges that it has fully inspected the Premises, is satisfied with the condition thereof and, except as specifically provided in Article 17 hereof, is taking the Premises in an "as-is" and "where-is" condition, and other than the express representations and warranties contained in this Sublease, Sublessor makes no representations or warranties (either express or implied) of merchantability or fitness for a particular purpose. Except as specifically provided in Article 17 hereof, no promise of Sublessor to alter, remodel or improve the Premises, or any portion of the Premises, and no representation respecting the condition of the Premises has been made by Sublessor or any employee, agent or representative of Sublessor to -5- Sublessee. Sublessee's taking of possession of the Premises shall constitute an unconditional acceptance by it of the condition thereof. 9. WAIVER OF CLAIMS. Sublessee hereby waives any claim which may arise against Landlord or Sublessor during the Sublease Term for any loss, or damage to any of Sublessee's property or the property of any of its agents, employees or invitees, located upon or constituting a part of the Premises, or for any liability relating to personal injury or death in or about the Premises which loss, damage or liability is covered by insurance policies. Inasmuch as the aforesaid waiver will preclude the assignment of any such claim by way of subrogation or otherwise to an insurance company or any other person, Sublessee agrees to give each insurance company which has issued fire and extended coverage, personal property, property or public liability coverage, written notice of the terns of said waiver immediately and shall have said insurance policies properly endorsed with a waiver of subrogation. Evidence of said waiver shall be forwarded to Sublessor upon request. 10. COMPLIANCE WITH LAWS. Sublessee shall, throughout the Sublease Term, and at Sublessee's sole cost and expense, promptly comply or cause compliance with (including compliance by all employees, agents, representatives or others acting on its behalf), and in any event shall not commit any act or omission which would result in any breach or violation of, any and all laws, including Environmental Laws, whether present or future, foreseen or unforeseen, ordinary or extraordinary, whether or not the same shall be presently within the contemplation of Sublessor and Sublessee or shall involve any change of governmental policy, or require structural or extraordinary repairs, alterations, or additions, irrespective of the cost thereof, which may be applicable to the Premises. 11. DEFAULT. If Sublessee shall default in the fulfillment of any of its covenants and agreements set forth herein or under the Master Lease, and Sublessee shall fail to cure the default within any applicable cure periods, Sublessor shall have the same rights and remedies with respect to such default as provided to Landlord under the Master Lease. In addition to the foregoing, and not in limitation thereof, Sublessor shall have the right, but shall not be obligated, to cure any breach or default of Sublessee under this Sublease, or the Master Lease, and any and all costs incurred by Sublessor in connection with the curing of any such breach or default shall become immediately due and payable by Sublessee to Sublessor. 12. NON-WAIVER. Failure of Sublessor to declare any default immediately upon occurrence thereof, or delay in taking any action in connection therewith, shall not waive such action in law or in equity, as might be lawful or authorized hereunder. No waiver by Sublessor of a default by Sublessee shall be implied, and no express waiver by Sublessor shall affect any default other than the default specified in such waiver and then only for the time and extension therein stated. All rights and remedies specifically granted to Sublessor herein, shall be cumulative and not mutually exclusive. 13. SURRENDER. Upon expiration of the Sublease Term hereof, or if, at any time prior to expiration of the Sublease Term, this Sublease shall be terminated as a result of the Sublessee's default hereunder or otherwise, Sublessee shall immediately quit and surrender up to Sublessor possession of the Premises in a broom-clean condition and in good order and repair, ordinary wear and tear excepted, and Sublessee shall remove all of its property therefrom, and at the option of and -6- upon notice from Sublessor, any alterations or improvements made by or on behalf of Sublessee, all in accordance with the terms of the Master Lease. Sublessee's obligation to observe or perform this covenant shall survive the expiration or termination of this Sublease. 14. NOTICES. All notices, requests, demands and other communications required or permitted to be given hereunder shall be by hand-delivery, first class air mail, telex, telecopier, or air courier to the parties set forth below. Such notices shall be deemed given: at the time delivered by hand, if personally delivered; seven business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the first business day after timely delivery to the courier, if sent by air-courier. If to: If to: If to: Sublessor: Sublessee: Landlord: Illinois Tool Works Inc. KARBZ, Inc. d/b/a SSC Racing Palm Springs 3600 West Lake Avenue 3101 East Alejo Road Regional Airport Glenview, Illinois 60025-5011 Palm Springs, CA 92262 3400 East Tahquitz Attention: Frank M. Donovan Attention: Joe Ramos, President Canyon Way Director, Corporate Palm Springs, CA 92262 Real Estate Attn: Director of Aviation 15. SECURITY DEPOSIT. On or prior to November 1, 2001, Sublessee shall deposit with Sublessor the sum of $5,775.00 as security for the full and faithful performance of every provision of this Sublease to be performed by Sublessee. If Sublessee defaults, with respect to any provision of this Sublease, including but not limited to the provisions relating to the payment of Rent, Sublessor may use, apply or retain all or .any part of said security deposit for the payment of any Rent and any other sum and default or for the payment of any other amount which Sublessor may spend or become obligated to spend by reason of Sublessee's default or to compensate Sublessor for any other loss or damage which Sublessor may suffer by reason of Sublessee's default. Provided Sublessor does not deposit the security deposit in an interest bearing account, Sublessee shall not be entitled to interest on any security deposit. If Sublessor elects to deposit the security deposit in an interest bearing account, Sublessee shall be entitled to the accrued interest. If Sublessee shall fully and faithfully perform every provision of this Sublease to be performed by it, said security deposit or any balance thereof shall be returned to Sublessee upon the first to occur of (a) the date which is thirty (30) days after the expiration of the Sublease Term and Sublessee's vacation of the Premises; and (b) the date which is thirty (30) days after the exercise by Sublessee of its option to extend the Sublease Term under Section 1 hereof; provided, however, if Sublessee so elects to extend the Sublease Term as aforesaid, on or prior to August 1, 2005, Sublessee shall again deposit with Sublessor the sum of $5,775 as a security deposit hereunder subject to all of the other terms and provisions of this Section 15, with said security deposit, or any balance thereof, to be returned to Sublessee within thirty (30) days after the expiration of the Sublease Term and Sublessee's vacation of the Premises (provided Sublessee has fully and faithfully performed every provision of this Sublease to be performed by it). -7- 16. RECORDING. Sublessee shall not record this Sublease, or any memorandum or summary thereof without the prior written consent of Sublessor. 17. ROOF/REPAIR OBLIGATION. Promptly upon commencement of the Sublease Term, Sublessor shall, at its sole cost and expense, install a new roofing system for the Building and provide to Sublessee a ten (10) year contractor's warranty for such work. In addition, Sublessor shall, at its sole cost and expense, repair the water damage to the existing office area in the Building. All work performed by Sublessor under this Article 17 shall be done in a good and workmanlike manner and in as expeditious a manner as. possible. 18. MISCELLANEOUS. (a) This Sublease constitutes the entire agreement of the Parties relative to the subject matter hereof, and all prior negotiations, conversations, representations, agreements and understandings are specifically merged herein and superseded hereby. This Sublease may be modified only by a written instrument executed by the Parties hereto. This Sublease is the result of the prior negotiations, conversations, representations, agreements and understandings of the Parties and is to be construed as the jointly prepared product of the Parties. (b) The terms and provisions of this Sublease shall inure to the benefit of and shall be binding upon the Parties and their respective successors, representatives and assigns (subject to the provisions hereinabove). (c) Time is of the essence of this Sublease. (d) This Sublease shall be construed in accordance with and governed by the laws of California (e) The paragraph headings used in this Sublease have been inserted for convenience and reference only and should not be construed to limit or restrict the terms and provisions, covenants and conditions hereof, (f) If any term or provision of this Sublease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Sublease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each remaining term and provision of this Sublease shall be valid and be enforced to the fullest extent permitted by law. (g) This Sublease and any modifications or amendments thereto shall not take effect and be binding upon Sublessor until Sublessor executes this Sublease. (h) In the event either party receives a notice from Landlord, the receiving party agrees to irmnediately forward a copy of such notice to the other party. -8- (i) Sublessee and Sublessor each warrants and represents to the other and to Landlord that they know of no broker or agent other than Marilyn Perlin Realtor who has been instrumental in procuring this Sublease. Sublessee and Sublessor each agrees to defend and hold the other and Landlord harmless from any claims resulting from any breach by the indemnifying party of the warranties, representations and covenants contained in this paragraph. 0) Notwithstanding the provisions of Section 1.6 of the Master Lease to the contrary, Sublessee shall be entitled to use the Premises for distribution, warehousing and assembly in connection with racing "go carts" and related accessories, including protective gear. IN WITNESS WIIEREOF, the Parties have executed this Sublease as of the date set forth above. SUBLESSOR: SUBLESSEE: ILLINOIS TOOL WORKS INC., KARBZ, INC. d/b/a SSC RACING a Delaware corporation By: By: Title:_ rre e�E Title: r CONSENTED TO BY LANDLORD THIS --F/,J DAY OF4e- 1997. LANDLORD: CITY OF PALM SPRINGS, a municipal corporation ATT City Clerk City Manager >rP,,n.- *� D S � --�ip� tfi's U. I,rY - 1'' li 6 A�V ELV �'d ➢ O FORS t A iFaa '. �� �� �tC� al! Cl;n2y _9_ Date 30090173.5 TABLE OF CONTENTS Pane 1. LEASE SUMMARY . . . . . . . . . . . . . . 1 1.2 Demised Premises . . . . . . . . . . . . . . . . . . I 1.2 Lease Commencement Date . . . . . . . . . . . . . . . . . . 1 1.3 Extension Options . . . . . . . . . . . . . . . . . . . . I 1.4 Monthly Rental . . . . . . . . . . . . . . . . . . . . . 1 1.5 Security Deposit . . . . . . . . . . . . . . . . . . . I 1.6 Use of Demised Premises . . . . . . . . . . . . . . . . . . 1 1.7 Not Applicable Section . . . . . . . . . . . . . . . . . 1 1.6 Tenant's Address for Notices . . . . . . . . . . . . . . . 1 2. TERM . . . . . . . . . . . . . . . . . . . . . . . . 1 2.1 Initial Term . . . . . . . . . . . . . . . . . . . . . . . 1 2.2 Option Term . . . . . . . . . . . . . . . . . . . . . . . . 1 2.3 Time . . . . . . . . . . . . . . . . . . . . . . 1 2.4 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . 1 2.5 Holding Over . . . . . . . . . . . . . . . . . . . . . . . 2 3. RENTAL . . . . . . . . . . . . . . . . . . . . . . 2 3.1 Monthly Rental . . . . . . . . . . . . . . . . . . . . . 2 3.2 Percentage Rental . . . . . . . . . . . . . . . . . 2 3.3 Cost of Living Adjustment . . . . . . . . . . . . . . . . . 3 3.4 Additional Rental . . . . . . . . . . . . . . . . . . . . . 3 3.5 Real Property Taxes . . . . . . . . . . . . . . . . . . . . 3 3.9 Personal Property Taxes . . . . . . . . . . . . . . . . . . 3 3.7 Utilities . . . . . . . . . . . . . . . . . . . . . . . 3 3.8 Late Payment . . . . . . . . . . . . . . . . . . . . . . . 3 3.9 Interest . . . . . . . . . . . . . . . . . . . . . 3 3.10 Security Deposit . . . . . . . . . . . . . . . . . . . . . 4 4. USE OF THE PREMISES . . . . . . . . . . . . . . 4 4.1 Permitted Use . . . . . . . . . . . . . . . . . . . . . . . 4 4.2 Prohibited Uses . . . . . . . . . . 4 4.3 Compliance with Laws , _ , , , , , , , . 4 4.4 Non-Discrimination 6 FAA Required Clauses . . . . . . . . . 5 4.5 Signs . . . . . . . . . . . . . . . . . . . . . 6 4.6 Public Facilities . . . . . . . . . . . . . . . . 6 4.7 Rules and Regulations . . . . . . . . . . . . . 6 S. ALTERATIONS .AND REPAIRS . . 6 5.1 Improvements, Alterations and Fixtures . . . . . . . . . 6 5.2 Maintenance and Repair . . . . . . . . . . . . . . . . . . 6 5.3 Free from Liens . . . . . . . . . . . . . . . . . . . . 7 5.4 Construction Obligations . . . . . . . . . . . . . . . . . 7 5.5 Landlord's Reserved Rights . . . . . . . . . . . . . . . . 7 6. INSURANCE AND INDEMNIFICATION . . . . . . . . . . . . . . 7 6.1 Insurance Provided by Tenant . . . . . . . . . . . . . . . 7 6.2 Indemnification of Landlord . . . . . . . . . . . . . . . . 6 7. ABANDONMENT AND SURRENDER . . . . . . . . . . . . . . . . . . 7.1 Abandonment 9 7.2 Surrender of Lease . . . . . . . . . . . . . . . . . . . . 9 B. DAMAGE AND DESTRUCTION OF PREMISES . . . . . . . . . . . . . . . . 9 9. ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . 9 10. ENCUMBRANCES . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ' 11. DEFAULT AND 'REMEDIES . . . . . . . . . . . . . . . . . . . . . 11 11.1 Default by Tenant . . . . . . . . . . . . . . . . . . . . 11 11.2 No Waiver . . . . . . . . . . . . . . . . . . . . 12 11.3 Landlord's Default. . . . . . . . . . . . . . . . . . . . . 12 12. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . 12 L 2 A S i THIS LEASE {"Lease") is made and entered into this 10th day of December 19 c)J, by and between the CITY OF PALM SPRINGS, a municipal corporation ("Landlord") , and STATIC CONTROL SERVICES, INC. ("Tenant") . 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 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 on the Plot Plan attached as Exhibit "B" hereof. 1.2 Lease Commencement Date. December 10. 1993, subject to concurrent cancellation of Lease Agreement k524. Term: July 31 2006. (See Section 2.1) . 1.3 Extension Options. None— options for a term of years each. (See Section 2.2) . 1.4 Monthly Rental. $ See Exhibit "C". (See Section 3 1) . Percentage Rental: None 4 per month of Tenant's gross sales. (See Section 3.2) . 1.5 Security Deposit. $ None (See Section 3.10) . 1.6 Use of Demised Premises. Manufacture of ionization equirment suited for prevention of electrostatic discharge and particle contamination; services applicable to the aviation industry parts handling d shipping (See Section 4.1) . 1.7 Not Applicable Sections. Sections 2.2, 3 2 3 10 4 4 (b) 4 4 (R) shall not be applicable to this lease. 1.8 Tenant's Address for Notices. Static Control Services Inc 18 g7 CQIl on Avpn 1 Redlands CA 92374 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 Dotion Term. Tenant is given the option(a) to extend the term on all of the provisions contained in this Lease for the period specified in Section 1.3 ("extendled 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 ineffecti ve 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 bereunder 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 .m avx ion»e.o"oo�o Diva .pin in 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 Lem 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 (150k) of the last applicable Monthly Rental and upon terms and conditions as existed during the last year of the term hereof. 3. RENTAL. 3.1 Monthly Rental Tenant shall pay to Landlord, during the term of this Lease from and after the Commencement Date as monthly rental ("Monthly Rental") for the Demised Premises the sum specified in 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 12.10 hereof. 3.2 Percentage Rental. (a) In addition to the Monthly Rental hereinabove agreed to be paid by Tenant, 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 difference between (A) the product of the Percentage Rental Rate specified in Section 1.4 above, times the amount of Tenant's gross sales made in, upon, or from the Demised Premises during each month of the term hereof, less (S) the aggregate amount of the Monthly Rental previously paid by Tenant for said month. (b) Within fifteen (15) days after the end of each calendar month of the term hereof, commencing with the fifteenth (15thl 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 (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 the total monthly gross sales made in, upon, or from the Demised Premises during each calendar month, less the Monthly Rent for each such calendar month (or fractional month, if applicable) , if previously paid. (c) The term "gross sales" as used herein means the total gross receipts of all goods, wares and merchandise sold and leased including the actual charges for all services performed by Tenant and fees charged by Tenant and by anyone including any subtenant, licensee sr 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, leases and services. 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 :include any amount allowed upon any "trade-in, " the full retail price of any merchandise delivered or redeemed for trading stamps or coupons and all deposits not refunded to purchasers. Gross Sales shall not include sales taxes, so-called luxury taxes, consumers excise taxes, gross receipts taxes and other similar taxes now or hereafter imposed upon the sale of merchandise or services, but only if collected separately from the selling price of merchandise or services and collected from customers. (d) The Tenant shall keep at the Demised Premises (and shall require any permitted subtenant to keep at the Demised Premises) full, complete and Proper books, records and accounts of its daily gross sales, both for cash and on credit, at any time operated in the Demised Premises. The Landlord and its agents and employees shall have the right at any and all times, during regular business hours, to examine and inspect all of the books and records of the Tenant, including any sales tax reports pertaining to the business of the Tenant conducted in, upon, or from the Demised Premises, for the purpose of investigating and verifying the vsoV u�o....g a000��m vu Wi 1/1� -2- 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 (34) error with respect to the amount of gross sales reported by Tenant for the period of said report, then the Tenant shall immediately pay to Landlord the cost of such audit; otherwise, the cost of such audit shall be paid by Landlord. 3.3 Cost of Living Adjustment, Upon each fifth-year anniversary date of the Commencement Date or if the Commencement Date is not on the first day of a month, then on the first day of the next calendar month, the Monthly Rental shall be adjusted in proportion to changes in the Consumer Price Index except that no five year adjustment shall exceed 254. 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, 1969, the index to be used for the numerator is the index for the month of March 1909 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 C (All Items) for the L '' 1 -An h R r d metropojjtan Area, published by the United States Department of Labor, Bureau of Labor Statistics (19B2-84 = 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 arount shall be paid on the date that is twenty (20) days prior to the delinquent date or, if Landlord receives the tax bill, ten (10) days after receipt of a copy of the tax bill from Landlord, whichever is later. Even though the term of this Lease has expired and Tenant has vacated the Demised Premises, when the final determination is made of Tenant's share of such taxes and assessments, Tenant shall immediately pay to Landlord the amount of any additional sum owed. 3.6 Personal Property Taxes. During the term hereof Tenant shall pay prior to delinquency all taxes assessed against and levied upon fixtures, furnishings, equipment and all other Personal property of Tenant contained in the Demised Premises, and when possible Tenant shall cause said fixtures, furnishings, equipment and other personal property to be assessed and billed separately from the real property of Landlord. 3.7 Utilities. Tenant shall pay before delinquency all charges for water, gas, heat, electricity, power, sewer, telephone service, trash removal and all other services and utilities used in, upon, or about the Demised Premises by Tenant or any of its subtenants, licensees, or concessionaires during the term of this Lease. 3.8 Late Payment. Tenant hereby acknowledges that late payment by Tenant to Landlord of rental or other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which is extremely difficult to ascertain. Such coats 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 (5t) 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 rn u+e�ornn x000v xavu u. vom nx _3_ paid at a rate equal to three percent (3t) over the reference rate being charged by Bank of America, N.A. from time to time during such period so long as the rate does not exceed the maximum non-usurious rate permitted by law in which case interest shall be at the maximum non-usurious rate allowed by law at the time the sum became due. 3.10 Security Deposit. Tenant contemporaneously with the execution of this Lease, has deposited with Landlord the sum specified in Section 1.5 hereof, receipt of which is hereby acknowledged by Landlord, said deposit being given to secure the faithful performance by the Tenant of all terms, covenants, and conditions of this Lease by the Tenant to be kept and performed during the term hereof. Tenant agrees that if the Tenant shall fail to pay the rent herein reserved or any other sum required hereby promptly when due, said deposit may, at the option of the Landlord (but Landlord shall not be required to) be applied to any rent or other sum due and unpaid, and if the Tenant violates any of the other terms, edvenants, and conditions of this Lease, said deposit may, at Landlord's option, be applied to any damages suffered by Landlord as a result of Tenant's default to the extent of the amount of the damages suffered. Nothing contained in this Section shall in any way diminish or be construed as waiving any of the Landlord's other remedies as provided in Section 10.0 hereof, or by 'Law or in equity. Should the entire security deposit, or any portion thereof, be appropriated and applied by Landlord for the payment of overdue rent or other sums due and payable to Landlord by Tenant hereunder, then Tenant shall, on the written demand of Landlord, forthwith remit to Landlord a sufficient amount in cash to restore said security deposit to its original amount, and Tenant's failure to do so within five (5) days after receipt of such demand shall constitute a breach of this Lease. Should Tenant comply with all of the terms, covenants, and conditions of this Lease and promptly pay all of the rental herein provided for as it falls due, and all other sums payable by Tenant to Landlord hereunder, said security deposit shall be returned in full to Tenant at the end of the term of this Lease, or upon the earlier termination of this Lease as specified herein except in the event the Demised Premises are sold as a result of the exercise of any power of sale under any mortgage or deed of trust, in which event this Lease shall be automatically amended to delete any reference to this Section and Tenant shall be entitled to immediate reimbursement of its security deposit from the party then holding said deposit. 4. USE OF THE PRMIISES. 4.1 Permitted use. The Landlord hereby leases to Tenant and Tenant hires from Landlord 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 (c) any alcoholic beverages unless 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. 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, rules and regulations of the Palm Springs Regional Airport ("Airport") , 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, (i) the Comprehensive Environmerntal Response, Compensation and Liability Act of 19BO ("CERCLA") , 42 U.S.C. Sections m\n qo»nfa000w oaam mp1i11 -4- • • / 9601 et sea.; (ii) the Resource Conservation and Recovery Act of 1976 (-RCP-A,,) , 42 U.F C. Sections 6901 et sue.; (iii) California Health and Safety Code Sections 25100 at sea.; (iv) the Safe Drinking Water and Toxic Enforcement Act of 1996, California Health and Safety Code Section 25249.5 et seo.; (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 sue. ; (viii) California Water Code Section 13oo et sea. ; and (ix) California Civil Code Section 3479 at sec., as such laws are amended and the regulations and administrative codes applicable thereto. The term "Hazardous Material" includes, without limitation, any material or substance which is (i) defined or listed as a "hazardous waste", "extremely hazardous waste", "restrictive hazardous waste" or "hazardous substance" or considered a waste, condition of pollution or nuisance under the Environmental Laws; (if) petroleum or a petroleum product or fraction thereof; (iii) asbestos; and/or (iv) substances known by the State of California to cause cancer and/or reproductive toxicity. It is the intent of the parties hereto to construe the terms "Hazardous Materials" and "Environmental Laws" in their broadest sense. Tenant shall provide all notices required pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety Code Section 25249.5 et seq Tenant shall provide prompt written notice to Landlord of the existence of Hazardous Substances on the premises and all notices of violation of the Environmental Laws received by Tenant, 4.4 Non-Discrimination G FAA Required Clauses (a) Tenant, in the operations to be conducted pursuant to the provisions of this Lease and otherwise in the use of the Airport, shall not discriminate against any person or class of persons by reason of race, color, sex, creed or national origin as in any manner prohibited by Part 15 of the Federal Aviation regulations ar 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 on-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) Noncompliance with these provisions shall constitute a material breach of this Lease. In the event of such noncompliance, Landlord shall have the right to terminate without liability, or, at the election of the City or the United States, both shall have the right to judicially enforce the above provisions. (d) 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 corporations to render accommodations and/or services to the public on the Demised Premises. (e) Landlord 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. (f) 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 planned modification or alteration of any present or future building or structure situate on the Demised Premises. (g) Landlord hereby reserves a right of flight for the passage of ai.reraft 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. (h) 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 (500) feet. In such an event, Landlord reserves the right to enter upon the Demised Premises and cause the abatement of the interference or hazard at the expense of the Tenant. (i) Tenant, by accepting this Lease, expressly agrees far itself, its successors and assigns that it shall not use the Demised Premises in any manner which might interfere with the landing and taking rs:b a�orr n•a 000�:oum I0/]1R] -5- off of aircraft from on or off the Airport or otherwise create a hazard. - In such an event, Landlord reserves the right to enter upon the demised Premises and cause the abatement of the interference or hazard at the expense of the Tenant. (7) This agreement and all the provisions hereof shall be subject to whatever right the United States Government now has or in the x future may have y or acquire affecting the control, operation, regulation ' commandeering of the Airport or the exclusive or non-exclusive use of the Airport by the United States during the time of war of national emergency. (k) 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, without discrimination on the grounds of sec, race, color or national origin and to refrain from imposing or levying excessive, discriminatory or otherwise unreasonable charges or fees for any use of its facilities or services. Nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of Section 308 of the Federal Aviation Act of 1958, as amended. 4.5 Si.ons. 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 sagn is not removed by Tenant within ten (10) days of written notice from Landlord to Tenant, then Landlord may remove and destroy said sign without Tenant's approval and without any liability to Tenant. 4.6 Public Facilities. Ingress Egress d Quiet Eniovment 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 gto use, in common with others, the public facilities art 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. 4.7 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 he 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 non-performance 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 Improvements, 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 Landlord, and any alterations or improvements to the Demised Premises, except movable fsrn,s.tuxe and trade fixtures, shall become at once a part of the realty and shall at the expiration or earlier termination of this Lease belong to Landlord free and clear of any liens or encumbrances. 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 requirements 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 alterations or improvements be removed prior to the expiration of the term hereof. Any removal of alterations or improvements or furniture and trade fixture shall be at Tenant's expense and accomplished in a god and workmanlike manner. Any damage occasioned by such removal shall be repaired at Tenant's expense so that the Demised Premises can be 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 hereina]ter 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 within the Demised Premises in good and sanitary order, condition, and repair (except as hereinafter provided) including without limitation, the maintenance and repair of any store front, doors, window casements, glazing, heating and air conditioning system, plumbing, pipes, electrical wiring and conduits. Tenant shall also at its sole cost and expense be responsible for any alterations or improvements to the Demised Premises rzz�»non»�-z 000vouxu zo,rn/u -6- 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 Landlord, and Tenant hereby waives all rights provided for by the Civil Code of the State of California to make said repairs. 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 term or sooner termination of this Lease to surrender the Demised i 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. 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. Landlord and Tenant agree to construct the improvements to the extent shown on the attached Exhibit "D" (Landlord's Work" and "Tenant's Work," as applicable) at each party's sole cost and expense. 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 of national emergency, Landlord shall have the right to lease the landing are 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 a 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 ARD INDEMNIFICATION. 6.1 Insurance Provided by Tenant (a) Food Preparation. 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 Premises are located. (b) Tenant to Provide Fire and Extended Cove is Te 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 their full replacement value. (c:) (b) Tenant to Provide Liabilit 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 (i) a combined single limit of ONE MILLION DOLLARS ($1,000,OD0.00) for bodily injury, death, and property damage or (if) 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 par 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 coat of said insurance on the same basis as provided in Section 6.1 above. rn�x�c�oee nsa000 waivou mmnn -7- r (c) Tenant to Provide Worker's Comoensation In u a c . 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 Aoolic bl t Tenant's Insurance. All of the policies of insurance required to be procured by Tenant pursuant to this Section 6.2 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 hinders 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 ('it) 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 Landlord within ten (10) 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 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 the negligent performance of the work, operations or activities of Tenant, its agents, employees, subcontractors, or invitees, provided for herein, or 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 arising from the negligent acts or omissions of Tenant hereunder, or 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; (f) Tenant will promptly pay any judgment rendered against the Landlord, its officers, agents or employees for any such claims or liabilities arising out of or in connection with the negligent performance rec�n c�aerrn soot uonm ,o,o ila -B_ 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; (g) 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. AHANDONHKNT 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. S. 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 other than Tenant's act, use or occupation, which declaration requires repairs to the Demised Premises, Landlord shall forthwith make said repairs provided Tenant gives to Landlord thirty (30) days written notice of the necessity therefor. No such partial destruction (including any destruction necessary in order to make repairs required by any declaration made by any public authority) shall in .any way annul or void this Lease except that Tenant shall be entitled to a proportionate reduction of Monthly Rental while such repairs are being made, such proportionate reduction to be based upon the extent to which the making of such repairs shall interfere with the business carried on by Tenant in the Demised Premises. However, if during the last two (2) years of the term of this Lease the Demised Premises are damaged as a result of fire or any other insured casualty to an extent in excess of twenty-five percent (251) of the then replacement cost (excluding foundations) , Landlord may within thirty (30) days following the date such damage occurs terminate this Lease by written notice to Tenant. If Landlord, however, elects to make said repairs, and provided Landlord uses due diligence :in making said repairs, this Lease shall continue in full force and effect, and the Monthly Rental shall be proportionately reduced while such repairs are being made as hereinabove provided. Nothing in the foregoing to the contrary withstanding, if the Demised Premises or said building is damaged or destroyed at any time during the term hereof to an extent of more than twenty- five percent (25t) of the then replacement cost (excluding foundations) as a result of a casualty not insured against, Landlord may within thirty (30) days, following the date of such destruction terminate this Lease upon written notice to Tenant. If Landlord does not elect to terminate because of said uninsured casualty, Landlord shall promptly rebuild and repair the Demised Premises and/or the building and the Monthly Rental shall be proportionately reduced while such repairs are being made as hereinabove provided. If Landlord elects to terminate this Lease, all rentals shall be prorated between Landlord and Tenant as of the date of such destruction. In respect to any partial or total destruction (including any destruction necessary in order to make repairs required by any such declaration of any authorized public authority) which Landlord is obligated to repair or may elect to repair under the terms of this Section, Tenant waives any statutory right it may have to cancel this Lease as a result of such destruction. 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. Landlord may withhold its consent to an assignment or sublease to a proposed assignee or sublessee, and Tenant agrees that Landlord shall not be unreasonable for doing so, unless all the following criteria are met: (a) The proposed assignee's or sublessee's general financial condition, including liquidity and net worth, verified by audited financial statements prepared by a Certified Public Accountant in conformity with Generally rn\��•\o»>naoouVovu>�. avn/n _g_ Accepted Accounting principles is equal to or greater than that of Tenant; (b) the proposed assignee or sublessee has a demonstrated merchandising capability equal to or greater than that of Tenant as to the use for which the Demised Premises are leased; (c) the proposed assignee or sublessee is morally and financially responsible; and (d) the failure of tenant's use of the Demised Premises to fit the business plan of Landlord to promote Aviation in the City of Palm Springs (e) the proposed assignee or sublessee shall not carry out business that compete with AMR Combs' Fixed Base Operation. Any such assignment shall be subject to all of the terms and conditions of this Lease and the proposed assignee shall assume the obligations of 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 12.2 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 Tenant and the proposed assignee, a history of the proposed assignee's business experience and such other information as required by Landlord to verify that the criteria for assignment as set forth herein are met. If Landlord approves such assignment, Tenant shall pay to Landlord one-half (1/2) of any consideration, received by Tenant for such assignment. 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 laud. The encumbrance shall provide that the proceeds from fire or extended coverage insurance shall be used for the repair or rebuilding of the leasehold improvement sand not to repay any 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 shalt 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) deys 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 writing to be bound by all the terms and conditions of the Lease. Upon 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 eo•\r111oPcnea000wanm W/1/11 -10- • paying to the encumbrancer the balance of the encumbrance as hereinafter defined. (£) ^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 but 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 improvement sin marketable condition, such adjusted principal to be paid in case or, at the option of Landlord, amortized over the tern 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. fS) 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 Demised Premises to cure said default by Tenant. 11. DEFAULT AND RMJEDIES. 11.1 Default by Tenant. In addation to the defaults described in _ Section 9.0 hereinabove, the occurrence of any one or more of the following events shall constitute a default and breach of this Lease by Tenant: (a) the failure to pay any rental or other payment required hereunder to or on behalf of Landlord more than three (3) days after written notice from Landlord to Tenant that Tenant has failed to pay rent when due; (b) the failure to perform any of Tenant's agreements or obligations hereunder (exclusive of a default in the payment of money) where such default shall continue for a period of thirty (30) days after written notice thereof from Landlord to Tenant which notice shall be deemed to be the statutory notice so long as such notice complies with statutory requirements; (c) the vacation or abandonment of the Demises Premises by Tenant; (d) the making by Tenant of a general assignment for the benefit of creditors; (a) 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 harkruotcy which is not dismissed within sixty (60) days after filing; or (h) the attach- ment, 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 (r) 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 c—he unpaid rental which would have been earned after termination until ¢.cue rsew>c voee ne a000�xovvm m/n/n -11- time of award exceeds the amount of such rental loss that the Tenant proves could have been reasonably avoided; (c) The worth at the time of award of the amount by which the unpaid rental for the balance of the term after the time of award exceeds the amount of such rental loss that the Tenant proves could be reasonably avoided; and (d) Any other amount necessary to compensate the Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under the lease or which in the ordinary course of things would be likely to result therefrom. The "worth at the time of award" of the amounts referred to in subparagraphs (i) and (ii) above shall be computed by allowing interest at three percent (3t) over the prime rate then being charged by Hank 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 Hank of San Francisco at the time of award plus one percent (It) , but in no event greater than ten percent (lot) . 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 night to enforce all of its rights and remedies under this Lease, including the right to recover rent, and all other payments to be made by Tenant hereunder, as they become due. Failure of Landlord to terminate this Lease shall not prevent Landlord from later terminating this Lease or constitute a waiver of Landlord's right to do so. 11.2 No Waiver. Acceptance of rental hereunder shall not be deemed a waiver of any default or a waiver of any of Landlord's remedies. 11.3 Landlord's Default, Landlord shall not be in default unless Landlord fails to perform obligations required of Landlord within a reasonable time, but in no event later than thirty (30) days after written notice by Tenant to Landlord and to the holder of any first mortgage or deed of trust covering the Premises whose name and address shall have theretofore been furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for performance then Landlord shall not be deemed in default if Landlord commences performance within a (30) day period and thereafter diligently prosecutes the same to completion. In no event shall Tenant have the right to terminate this Lease as a result of Landlord's default and Tenant's remedies shall be limited to damages and/or an injunction. 12. CONDSMN,ATION. 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. rn yea pose nsa 000vonve o.nvn -12- 13. MISCELLANEOUS. 13.2 Entry and Inspection. Tenant shall permit Landlord and his agents to enter into and upon the Demised Premises at all reasonable times for the purpose of inspecting the same or for the purpose of maintaining the Demised Premises as required by the terms of this Lease or for the purpose of posting notices of non-liability for alterations, additions or repairs, or for the Purpose of Placing upon the property in which the Demised Premises are located any usual or ordinary "For Sale" signs or any signs for public safety as determined by Landlord. Landlord shall be permitted to do any of the above without any rebate of rent and without any liability to Tenant for any loss of occupation or quiet enjoyment of the Demised Premises thereby occasioned Tenant shall permit Landlord, at any time within six (6) months prior to the expiration of this Lease, to place upon the Demised Premises any usual or ordinary "For Lease,- signs, and during such six (6) month period Landlord or his agents may, during normal business hours, enter upon said Demised Premises and exhibit same to prospective tenants. 13.2 Estoppel Certificate. If, as a result of a proposed sale, assignment, or hypothecation of the Demised Premises or the land thereunder by Landlord, or at any other time, an estoppel certificate shall be requested of Tenant, Tenant agrees, within ten (10) days thereafter, to deliver such estoppel certificate in the form attached hereto as Exhibit ^E" addressed to any existing or proposed mortgagee or proposed purchaser, and to the Landlord. Tenant shall be liable for any loss or liability resulting from any incorrect information certified, and such mortgagee and purchaser shall have the right to rely on such estoppel certificate and financial statement. 13.3 Jurisdiction and Venue. The parties hereto agree that the State of California is the proper jurisdiction for litigation of any matters relating to this Lease, and service mailed to the address of tenants set forth herein shall be adequate service for such litigation The parties further agree that Riverside County, California is the proper place for venue as to any such litigation and Tenant agrees to submit to the personal jurisdiction of such court in the event of such litigation. 13.4 Partial Invalidity. If any term, covenant, condition or Provision of this Lease is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the provisions hereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereof. 13.5 Successors in Interest. The covenants herein contained shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of all the parties hereto; and all of the parties hereto shall be jointly and severally liable hereunder. 13.6 No oral Aareeme t This (i) Lease ccuars 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 unner 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 rsz�:�cwn•e aoo o�zov you voi nin -13- 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. r 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 Palm Springs Regional Airport, 3400 E. Tahquitz Canyon Way, Palm Springs, California„ 92262, Attn: Director of Aviation, and if to Tenant, as specified in Section 1.7. Either party may change the address Bet 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. IN WITNESS WHEREOF, the parties have duly executed this Lease together with the herein referred to Exhibits which are attached hereto, on the day and year first above written in Palm Springs, California. ATTEST: CITY F PALM SPkINGS, unicipal l ccrp anon By:�_ V� L By r� Cityflerk City M a r "LANDLORD" REVIEWED AND APPROVED RUTAN 6 TUCKER n By: / David J. e hir City Attorney By: ic/GJatL ,,ffE-�sG/� I te: PreC/JG/�)/� APPROVED BY THE CITY COUNCIL By: 6Y RES. NO. //-/7-53 33 , ItB: "TENANT„ rszv is�o>w!s 0000�zw vu vain H� -14- EXHIBIT "A" LEGAL DESCRIPTION OF THE DEMISED PREMISES r LEGAL DESCRIPTION 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 51010'25" West a distance of 66.28 feet, thence South M8'36" 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 56.6I feet to the point of beginning Said parcel containing 2.982 acres. EXHIBIT "A^ TO LEASE rezone wens-eoeoV ov¢m vain/» EXHIBIT ^B° PLOT PLAN OF DEMISED PREMISES N89'47'20'E 668.70' l _�SB9480'W 7 12 89 5 '4B'0'W 668.7T 159.86' \ k28, 18 oc � A^ 5012'DO'E 71 1 N5110'25'., i S89'48'00'W \\\� 66.28' I 56.61' \ b n Val 1J.-ltilA.uA..M,V�w�.N,A l NCm Fs.^Cc lu�c o n I o J t ,:.., ... - -.._.v... .r,.BB9'48'00'W 253.27' o z 81 w oh Si 15,82' 'DO'W 5.82' Z NB_9'33'00'E 37C.73' NO SCALE PARCEL EXHIBIT ^B" TO LEASE rtz�zia�^...�..0000vevvau voinm EXHIBIT "E" ESTOPPEL CERTIFICATE Tenant: r Landlord: CITY OF PALM SPRINGS, a municipal corporation Date of Lease: Shopping Center: 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 19 and, including any presently exercised option or renewal term, will expire on 19 Tenant has accepted possession of the Demised Premises and is the actual occupant in possession thereof and has not sublet, assigned or hypothecated its leasehold interest. All improvements to be constructed on the Demised Premises by Landlord have been completed and accepted by Tenant and any tenant construction allowances have been paid in full. 4. As of this date, to the best of Tenant's knowledge, there exists no breach or default, nor state of facts which, with notice, the passage of time, or both, would result in a breach or default on the part of either Tenant or Landlord. To the best of Tenant's knowledge, no claim, controversy, dispute, quarrel or disagreement exists between Tenant and Landlord. S. 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 19 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 DO 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. B. There has not been filed by or against Tenant a petition in bankruptcy, voluntary or otherwise, any assignment for the benefit of creditors, any petition seeking reorganization or arrangement under the bankruptcy laws of the United States, Or any state thereof, or any other action brought under said bankruptcy laws with respect to Tenant. EXHIBIT 'E" TO LEASE rn�nno.errs oo"ow"ne.. vvnm 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 lg By: Its: -18- m�nnos�osaovowoauu mn,m Static Control Services . Consent to Assign & Assumption Lease Agr. AGREEMENT #3308 M05744, 5-28-96 CONSENT TO ASSIGNMENT AND ASSUMPTION--- LEASE AGREEMENT #3308 This CONSENT TO ASSIGNMENT AND ASSUMPTION is issued by the City of Palm Springs ("Landlord"), with reference to the following facts: A. The City of Palm Springs, a municipal corporation ("Landlord"), and Static Control Services, Inc., a California corporation, ("Tenant"), entered into that certain Lease Agreement #3308 dated as of December 01, 1993, (the "Lease"), for the premises described therein (the "Premises"). Tenant has informed Landlord that Tenant is a wholly-owned subsidiary of Richmond Technology, Inc., a California corporation ("RTI"), and that RTI is a wholly-owned subsidiary of Richmond Holdings, Inc., a Delaware corporation ("Richmond"). Tenant has further informed Landlord that Richmond has agreed to be acquired by Illinois Tool Works Inc., a Delaware corporation ("ITW"). For tax reasons, this acquisition will be accomplished by a merger of a new wholly-owned subsidiary of ITW with and into Richmond (the "Merger"). B. Tenant has complied with all of the conditions of "Section 9, Assignment & Subletting" of said Lease. C. Tenant desires that Landlord consent to the Assignment and Landlord desires to consent to the Assignment upon the: terms and conditions hereinafter set forth. NOW THEREFORE, in consideration of the Assignment and the Agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord agrees as follows: 1 . Consent. Landlord hereby consents to the Merger and any transfer or assignment of the Lease (or other transfer requiring consent) that may be deemed to occur as a result of the Merger. This consent is subject to ratification of the Palm Springs City Council on May 28, 1996 and shall be effective as of the closing of the Merger. This consent shall be limited to the Merger, and shall not be deemed to be a consent to any future assignments, subleases or other transactions. CITY OF P RIN Dated: b I21 R b By. Name: Rob Parkins Title: City Manager ACKNOWLEDGED & ACCEPTED ILLINOIS TOOL WORKS INC. Dated: May 1996 By: k6lc.,z4)z��f_ ' Name: Stewart S. Hudnut Title: co,,;,,.. v;,.p President and S__ - `ary Static Control Services Inc. Airport Lease AGREEMENT #3308 R18234, 11-17-93 L E A S E THIS LEASE ("Lease") is made and entered into this 10th day of December 1 19_4,1 , by and between the CITY OF PALM SPRINGS, a municipal corporation ("Landlord") , and STATIC CONTROL SERVICES, INC. ("Tenant") . 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 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 on the Plot Plan attached as Exhibit "B" hereof. 1.2 Lease Commencement Date. December 10, 1993, subject to concurrent cancellation of Lease Agreement #524. Term: July 31, 2006. (See Section 2.1) . 1.3 Extension Options. None options for a term of years each. (See Section 2.2) . 1.4 Monthly Rental„ $ See Exhibit "C" . (See Section 3.1) . Percentage Rental: None % per month of Tenant's gross sales. (See Section 3 .2) . 1.5 Security Deposit. $ None (See Section 3 .10) . 1.6 Use of Demised Premises. Manufacture of ionization equipment suited for prevention of electrostatic discharge and particle contamination; services applicable to the aviation industry parts handling and shipping. (See Section 4 .1) . 1.7 Not Applicable Sections. Sections 2.2, 3 .2, 3.10, 4.4 (b) , 4 .4 (K)_ shall not be applicable to this lease. 1.8 Tenant's Address for Notices. Static Control Services Inc. $97 Colton AyPnue l RedRedlands , CA 92174 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) moriths 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 Majeure. If either party hereto shall be delayed or prevented from the performance of any act required hereunder by reason of acts of God, strikes, lockouts, labor troubles, inability to procure materials, 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 es2�276\999999-3000\3011249. i0/27/93 r � 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 (1500) of the last applicable Monthly Rental and upon terms and conditions as existed during the last year of the term hereof. 3 . RENTAL. 3 .1 Monthly Rental. Tenant shall pay to Landlord, during the term of this Lease from and after the Commencement Date as monthly rental ("Monthly Rental") for the Demised Premises the sum specified in 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 12.10 hereof. 3 .2 Percentage Rental. (a) In addition to the Monthly Rental hereinabove agreed to be paid by Tenant, 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 difference between (A) the product of the Percentage Rental Rate specified in Section 1.4 above, times the amount of Tenant's gross sales made in, upon, or from the Demised Premises during each month of the term hereof, less (B) the aggregate amount of the Monthly Rental previously paid by Tenant for said month. (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 (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 the total monthly gross sales made in, upon, or from the Demised Premises during each calendar month, less the Monthly Rent for each such calendar month (or fractional month, if applicable) , if previously paid. (c) The term "gross sales" as used herein means the total gross receipts of all goods, wares and merchandise sold and leased 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, leases and services. 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 include any amount allowed upon any "trade-in, " the full retail price of any merchandise delivered or redeemed for trading stamps or coupons and all deposits not refunded to purchasers. Gross Sales shall not include sales taxes, so-called luxury taxes, consumers excise taxes, gross receipts taxes and other similar taxes now or hereafter imposed upon the sale of merchandise or services, but only if collected separately from the selling price of merchandise or services and collected from customers. (d) The Tenant shall keep at the Demised Premises (and shall require any permitted subtenant to keep at the Demised Premises) full, complete and proper books, records and accounts of its daily gross sales, both for cash and on credit, at any time operated in the Demised Premises. The Landlord and its agents and employees shall have the right at any and all times, during regular business hours, to examine and inspect all of the books and records of the Tenant, including any sales tax reports pertaining to the business of the Tenant conducted in, upon, or from the Demised Premises, for the purpose of investigating and verifying the RS2\296\099999-3000\2011248. 10/27/93 -2- 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 (30) error with respect to the amount of gross sales reported by Tenant for the period of said report, then the Tenant shall immediately pay to Landlord the cost of such audit; otherwise, the cost of such audit shall be paid by Landlord. 3 .3 Cost of Living Adjustment. Upon each fifth-year anniversary date of the Commencement Date or if the Commencement Date is not on the first day of a month, then on the first day of the next calendar month, the Monthly Rental shall be adjusted in proportion to changes in the Consumer Price Index except that no five 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, 1989, the index to be used for the numerator is the index for the month of March 1989 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 unofficial indices are published, the official index shall be used. If said Consumer Price Index is no longer published at the adjustment date, it shall be constructed by conversion tables included in such new index. 3.4 Additional Rental. For purposes of this Lease, all monetary obligations of Tenant under this Lease, including, but not limited to, insurance premiums, property taxes, maintenance expenses, late charges and utility costs shall be deemed to be additional rental. 3 .5 Real Property Taxes. In addition to all rentals herein reserved, Tenant shall pay, at the election of Landlord, either directly to the taxing authority or to Landlord, annual real estate taxes and assessments levied upon the Demised Premises (including any possessory interest taxes) , as well as taxes of every kind and nature levied and assessed in lieu of, in substitution for, or in addition to, existing real property taxes. Such amount shall be paid on the date that is twenty (20) days prior to the delinquent date or, if Landlord receives the tax bill, ten (10) days after receipt of a copy of the tax bill from Landlord, whichever is later. Even though the term of this Lease has expired and Tenant has vacated the Demised Premises, when the final determination is made of Tenant's share of such taxes and assessments, Tenant shall immediately pay to Landlord the amount of any additional sum owed. 3 .6 Personal Property Taxes. During the term hereof Tenant shall pay prior to delinquency all taxes assessed against and levied upon fixtures, furnishings, equipment and all other personal property of Tenant contained in the Demised Premises, and when possible Tenant shall cause said fixtures, furnishings, equipment and other personal property to be assessed and billed separately from the real property of Landlord. 3 .7 ' Utilities. Tenant shall pay before delinquency all charges for water, gas, heat, electricity, poorer, 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 (5t) 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 P52\276\099999-3000\2011249. 10/27/93 -3- paid at a rate equal to three percent (3%) over the reference rate being charged by Bank of America, N.A. from time: to time during such period so long as the rate does not exceed the maximum non-usurious rate permitted by law in which case interest shall be at the maximum non-usurious rate allowed by law at the time the sum became due. 3.10 Security Deposit. Tenant contemporaneously with the execution of this Lease, has deposited with Landlord the sum specified in Section 1.5 hereof, receipt of which is hereby acknowledged by Landlord, said deposit being given to secure the faithful performance by the Tenant of all terms, covenants, and conditions of this Lease by the Tenant to be kept and performed during the term hereof. Tenant agrees that if the Tenant shall fail to pay the rent herein reserved or any other sum required hereby promptly when due, said deposit may, at the option of the Landlord (but: Landlord shall not be required to) be applied to any rent or other sum due and unpaid, and if the Tenant violates any of the other terms, covenants, and conditions of this Lease, said deposit may, at Landlord's option, be applied to any damages suffered by Landlord as a result of Tenant's default to the extent of the amount of the damages suffered. Nothing contained in this Section shall in any way diminish or be construed as waiving any of the Landlord's other remedies as provided in section 10.0 hereof, or by law or in equity. Should the entire security deposit, or any portion thereof, be appropriated and applied by Landlord for the payment of overdue rent or other sums due and payable to Landlord by Tenant hereunder, then Tenant shall, on the written demand of Landlord, forthwith remit to Landlord a sufficient amount in cash to restore said security deposit to its original amount, and Tenant's failure to do so within five (5) days after receipt of such demand shall constitute a breach of this Lease. Should Tenant comply with all of the terms, covenants, and conditions of this Lease and promptly pay all of the rental herein provided for as it falls due, and all other sums payable by Tenant to Landlord hereunder, said security deposit shall be returned in full to Tenant at the end of the term of this Lease, or upon the earlier termination of this Lease as specified herein except in the event the Demised Premises are sold as a result of the exercise of any power of sale under any mortgage or deed of trust, in which event this Lease shall be automatically amended to delete any reference to this Section and Tenant shall be entitled to immediate reimbursement of its security deposit from the party then holding said deposit. 4. USE OF THE PREMISES. 4.1 Permitted Use. The Landlord hereby leases to Tenant and Tenant hires from Landlord 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 (c) any alcoholic beverages unless 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. 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, rules and regulations of the Palm Springs Regional Airport ("Airport") , 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 parity 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, (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") , 42 U.S.C. Sections FS2\276\099999-3000\2011240. 10/27/93 -4- b 9601 et seq. ; (ii) the Resource Conservation and Recovery Act of 1976 ("RCRA") , 42 U.S.C. Sections 6901 et seg. ; (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 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 sec . ; (viii) California Water Code Section 1300 et seq. ; and (ix) California Civil Code Section 3479 et seq. , as such laws are amended and the regulations and administrative codes applicable thereto. The term "Hazardous Material" includes, without limitation, any material or substance which is (i) defined or listed as a "hazardous waste", "extremely hazardous waste" "restrictive hazardous waste,- or "hazardous substance" or considered a waste, condition of pollution or nuisance under the Environmental Laws; (ii) petroleum or a petroleum product or fraction thereof; (iii) asbestos; and/or (iv) substances known by the State of California to cause cancer and/or reproductive toxicity. It is the intent of the parties hereto to construe the terms "Hazardous Materials" and "Environmental Laws" in their broadest sense. Tenant shall provide all notices required pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety Code Section 25249.5 et seq. Tenant shall provide prompt written notice to Landlord of the existence of Hazardous Substances on the premises and all notices of violation of the Environmental Laws received by Tenant. 4 .4 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 of the Airport, shall not discriminate against any person or class of persons by reason of race, color, sex, creed or national origin as in any manner prohibited by Part 15 of the Federal Aviation regulations ar 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 on-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) Noncompliance with these provisions shall constitute a material breach of this Lease. In the event of such noncompliance, Landlord shall have the right to terminate without liability, or, at the election of the City or the United States, both shall have the right to judicially enforce the above provisions. (d) 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. (e) Landlord 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. (f) 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 planned modification or alteration of any present or future building or structure situate on the Demised Premises. (g) Landlord 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. (h) 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 (500) feet. In such an event, Landlord reserves the right to enter upon the Demised Premises and cause the abatement of the interference or hazard at the expense of the Tenant. (i) 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 F52\276\099999-300"\2"11240. 10/27/93 -5- off of aircraft from on or off the Airport or otherwise create a hazard. In such an event, Landlord reserves the right to enter upon the demised Premises and cause the abatement of the interference or hazard at the expense of the Tenant. (j) This agreement 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 or commandeering of the Airport: or the exclusive or non-exclusive use of the Airport by the United States during the time of war of national emergency. (k) 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, without discrimination on the grounds of sec, race, color or national origin and to refrain from imposing or 'levying excessive, discriminatory or otherwise unreasonable charges or fees for any use of its facilities or services. Nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of Section 308 of the Federal Aviation Act of 19513, as amended. 4.5 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) 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. 4.6 Public Facilities, Ingress, Egress and Ouiet Enjoyment Landlord agrees that Tenant, upon payment of the rental hereunder and performing the covenants of the Lease, may quietly have, hold and enjoy the Demised Premises during the term of the Lease, and that Tenant shall have the non-exclusive right gto use, in common with others, the public facilities art 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. 4.7 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 non-performance 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 Improvements, 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 Landlord, and any alterations or improvements to the Demised Premises, except movable furniture and trade fixtures, shall become at once a part of the realty and shall at the expiration or earlier termination of this Lease belong to Landlord 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 requirements 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 alterations or improvements be removed prior to the expiration of the term hereof. Any removal of alterations or improvements or furniture and trade fixture shall be at Tenant's expense and accomplished in a god and workmanlike manner. Any damage occasioned by such removal shall be repaired at Tenant's expense so that the Demised Premises can be 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 within the Demised Premises in good and sanitary order, condition, and repair (except as hereinafter provided) including without limitation, the maintenance and repair of any store front, doors, window casements, glazing, heating and air conditioning system, plumbing, pipes, electrical wiring and conduits. Tenant shall also at its sole cost and expense be responsible for any alterations or improvements to the Demised Premises FS2\276\099999-3000\2011249. 10/27/93 • i 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 Landlord, and Tenant hereby waives all rights provided for by the Civil Code of the State of California to make said repairs. 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 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. 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. Landlord and Tenant agree to construct the improvements to the extent shown on the attached Exhibit "D" (Landlord's Work" and "Tenant's Work, " as applicable) at each party's sole cost and expense. 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 of national emergency, Landlord shall have the right to lease the landing are 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 a 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) Food Preparation. 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 Premises are located. (b) 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 their full replacement value. (c) (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 (i) a combined single limit of ONE MILLION DOLLARS ($1, 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. FS2\295\099999-3000\2011348. 10/29/93 -7- i • (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 6.2 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 (i) 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 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 (10) 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 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 the negligent performance of the work, operations or activities of Tenant, its agents, employees, subcontractors, or invitees, provided for herein, or 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 arising from the negligent acts or omissions of Tenant hereunder, or 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: (e) 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; (f) Tenant will promptly pay any judgment rendered against the Landlord, its officers, agents or employees for any such claims or liabilities arising out of or in connection with the negligent performance FS2\276\099999-3000\2011249. 10/27/93 _8 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; (g) 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. a. 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 other than Tenant's act, use or occupation, which declaration requires repairs to the Demised Premises, Landlord shall forthwith make said repairs provided Tenant gives to Landlord thirty (30) days written notice of the necessity therefor. No such partial destruction (including any destruction necessary in order to make repairs required by any declaration made by any public authority) shall in any way annul or void this Lease except that Tenant shall be entitled to a proportionate reduction of Monthly Rental while such repairs are being made, such proportionate reduction to be based upon the extent to which the making of such repairs shall interfere with the business carried on by Tenant in the Demised Premises. However, if during the last two (2) years of the term of this Lease the Demised Premises Eire damaged as a result of fire or any other insured casualty to an extent in excess of twenty-five percent (25%) of the then replacement cost (excluding foundations) , Landlord may within thirty (30) days following the date such damage occurs terminate this Lease by written notice to Tenant. If Landlord, however, elects to make said repairs, and provided Landlord uses due diligence in making said repairs, this Lease shall continue in full force and effect, and the Monthly Rental shall be proportionately reduced while such repairs are being made as hereinabove provided. Nothing in the foregoing to the contrary withstanding, if the Demised Premises or said building is damaged or destroyed at any time during the term hereof to an extent of more than twenty- five percent (25%) of the then replacement cost (excluding foundations) as a result of a casualty not insured against, Landlord may within thirty (30) days following the date of such destruction terminate this Lease upon written notice to Tenant. If Landlord does not elect to terminate because of said uninsured casualty, Landlord shall promptly rebuild and repair the Demised Premises and/or the building and the Monthly Rental shall be proportionately reduced while such repairs are being made as hereinabove provided. If Landlord elects to terminate this Lease, all rentals shall be prorated between Landlord and Tenant as of the date of such destruction. In respect to any partial or total destruction (including any destruction necessary in order to make repairs required by any such declaration of any authorized public authority) which Landlord is obligated to repair or may elect to repair under the terms of this Section, Tenant waives any statutory right it may have to cancel this Lease as a result of such destruction. 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. Landlord may withhold its consent to an assignment or sublease to a proposed assignee or sublessee, and Tenant agrees that Landlord shall not be unreasonable for doing so, unless all the following criteria are met: (a) The proposed assignee's or sublessee's general financial condition, including liquidity and net worth, verified by audited financial statements prepared by a Certified Public Accountant in conformity with Generally F92\276\099999-3000\2011246. 10/27/93 -9- Accepted Accounting Principles is equal to or greater than that of Tenant; (b) the proposed assignee or sublessee has a demonstrated merchandising capability equal to or greater than that of Tenant as to the use for which the Demised Premises are leased; (c) the proposed assignee or sublessee is morally and financially responsible; and (d) the failure of tenant's use of the Demised Premises to fit the business plan of Landlord to promote Aviation in the City of Palm Springs (e) the proposed assignee or sublessee shall not carry out business that compete with AMR Combs' Fixed Base Operation. Any such assignment shall be subject to all of the terms and conditions of this Lease and the proposed assignee shall assume the obligations of 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 12.2 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 Tenant and the proposed assignee, a history of the proposed assignee's business experience and such other information as required by Landlord to verify that the criteria for assignment as set forth herein are met. If Landlord approves such assignment, Tenant shall pay to Landlord one-half (1/2) of any consideration received by Tenant for such assignment. 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 subleasel'nold 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 improvement sand not to repay any 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 writing to be bound by all the terms and conditions of the Lease. Upon 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 PS2\376\099999-3000\2011290. 10/27/93 -10- 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 but 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 improvement sin 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 Demised Premises to cure said default by Tenant. 11. DEFAULT AND REMEDIES. 11.1 Default by Tenant. In addition to the defaults described in Section 9.0 hereinabove, the occurrence of any one or more of the following events shall constitute a default and breach of this Lease by Tenant: (a) the failure to pay any rental or other payment required hereunder to or on behalf of Landlord more than three (3) days after written notice from Landlord to Tenant that Tenant has failed to pay rent when due; (b) the failure to perform any of Tenant' s agreements or obligations hereunder (exclusive of a default in the payment of money) where such default shall continue for a period of thirty (30) days after written notice thereof from Landlord to Tenant which notice shall be deemed to be the statutory notice so long as such notice complies with statutory requirements; (c) the vacation or abandonment of the Demised Premises by Tenant; (d) the making by Tenant of a general assignment for the benefit of creditors; (e) the filing by Tenant of a voluntary petition in bankruptcy or the adjudication of Tenant as a bankrupt; (f) the appointment of a receiver to take possession of all or substantially all the assets of Tenant located at the Demised Premises or of Tenant's leasehold interest in the Demised Premises; (g) the filing by any creditor of Tenant of an involuntary petition in bankruptcy which is not dismissed within sixty (60) days after filing; or (h) the attach- ment, 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 (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) 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 Fs2\276\099999-3000\201124e, io/27/93 -11- time of award exceeds the: amount of such rental loss that the Tenant proves could have been reasonably avoided; (c) The worth at the time of award of the amount by which the unpaid rental for the balance of the term after the time of award exceeds the amount of such rental loss that the Tenant proves could be reasonably avoided; and (d) Any other amount necessary to compensate the Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under the lease or which in the ordinary course of things would be likely to result therefrom. The "worth at the time of award" of the amounts referred to in subparagraphs (i) and (ii) above shall be computed by allowing interest at three percent (3W) 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 (196) , 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 theretofore been furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for performance then Landlord shall not be deemed in default if Landlord commences performance within a (30) day period and thereafter diligently prosecutes the same to completion. In no event shall Tenant have the right to terminate this Lease as a result of Landlord's default and Tenant' s remedies shall be limited to damages and/or an injunction. 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. P52\276\099999-3000\2011248. 10/27/93 -12- 13 . MISCELLANEOUS. 13.1 EntrV and Inspection. Tenant shall permit Landlord and his agents to enter into and upon the Demised Premises at all reasonable times for the purpose of inspecting the same or for the purpose of maintaining the Demised Premises as required by the terms of this Lease or for the purpose of posting notices of non-liability for alterations, additions or repairs, or for the purpose of placing upon the property in which the Demised Premises are located any usual or ordinary "For Sale" signs or any signs for public safety as determined by Landlord. Landlord shall be permitted to do any of the above without any rebate of rent and without any liability to Tenant for any loss of occupation or quiet enjoyment of the Demised Premises thereby occasioned. Tenant shall permit Landlord, at any time within six (6) months prior to the expiration of this Lease, to place upon the Demised Premises any usual or ordinary "For Lease" signs, and during such six (6) month period Landlord or his agents may, during normal business hours, enter upon said Demised Premises and exhibit same to prospective tenants. 13 .2 Estoppel Certificate. If, as a result of a proposed sale, assignment, or hypothecation of the Demised Premises or the land thereunder by Landlord, or at any other time, an estoppel certificate shall be requested of Tenant, Tenant agrees, within ten (10) days thereafter, to deliver such estoppel certificate in the form attached hereto as Exhibit "E" addressed to any existing or proposed mortgagee or proposed purchaser, and to the Landlord. Tenant shall be liable for any loss or liability resulting from any incorrect information certified, and such mortgagee and purchaser shall have the right to rely on such estoppel certificate and financial statement. 13 .3 Jurisdiction and Venue. The parties hereto agree that the State of California is the proper jurisdiction for litigation of any matters relating to this Lease, and service mailed to the address of tenants set forth herein shall be adequate service for such litigation. The parties further agree that Riverside County, California is the proper place for venue as to any such litigation and Tenant agrees to submit to the personal jurisdiction of such court in the event of such litigation. 13 .4 Partial Invalidity. If any term, covenant, condition or provision of this Lease is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the provisions hereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereof. 13 .5 Successors in Interest. The covenants herein contained shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of all the parties hereto; and all of the parties hereto shall be jointly and severally liable hereunder. 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 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 Fs2\27e\099999-300"\201124e. 3"/27/93 -13- status, color, creed, national origin or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the Demised Premises herein leased, nor shall the Tenant itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the Demised Premises. 13 .10 Notices. Wherever in this Lease it shall be required or permitted that notice and demand be given or served by either party to this Lease to or on the other, such notice ot- 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 Palm Springs Regional Airport, 3400 E. Tahquitz Canyon Way, Palm Springs, California, 92262, Attn: Director of Aviation, 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. IN WITNESS WHEREOF, the parties have duly executed this Lease together with the herein referred to Exhibits which are attached hereto, on the day and year first above written in Palm Springs, California. ATTEST: CITY V PALM SPRING a municipal corp rat' BY: By: Ctty-,Clerk City 95d r er "LANDLORD" REVIEWED AND APPROVED RUTAN & TUCKER By: David J. `�shire, Esq` City Attorney p BY�32.FylGp/,L�f�CiF�- dE"�;'V'_jY°�:�el F:ur',�" �`'9F'„"fiG Its: Y Z6P ;C/Pfl� 330�' Its: "TENANT" F92\276\099999-3000\2011219. 10/27/93 -14- EXHIBIT "A" LEGAL DESCRIPTION OF THE DEMISED PREMISES LEGAL DESCRIPTION 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. EXHIBIT "A" TO LEASE F52\256\099999-3000\2011248. 10/27/93 EXHIBIT "B" PLOT PLAN OF DEMISED PREMISES I I N89'47'20"E 668.70' S89'48'0'W 668.77' 159.86' 91, " ,u„�,....,..,..n.;..,•,;{� S012'00"E �\ 66.28''25" I 56.61' '00"W 66.28' 56.61' \ W r-�"e"YY-y"Y'"Y"'YY't"YYYWY'v"W-rYYl•.yy,ly•• I M N I Ahl./�.1../..I..A.M.,l�F✓�.1.A,�.V.,A.hw.+1...1,.�.�4.A,h.l.w NGW F�nCe l.ha o n I ao M %. ...;_,.��.,,.�....;.-y_...........:.vv-� S89'48'00"W 253.27' 3 iV O Z N89'48'0'E �00.00' — W No N S89"48'00"W �O1 15.82' I �� �—————— N89'33'00"E 370.73' i I I I I I NO SCALE EXHIBIT "B" TO LEASE FS2\276\099999-3000\2011248. 10/27/93 EXHIBIT "C" MONTHLY RENTAL AND OTHER CONSIDERATIONS 1. "Landlord is currently neolotiating a cancellation of the existing lease which encumbers the Demised Premises and, in connection therewith, Landlord expects to receive; a payment from the tenant under said lease for accepting a surrender of said lease prior to its expiration. Landlord hereby agrees to make available to Tenant up to a maximum of Forty-Six Thousand Dollars ($46, 000.00) of the funds actually received from said Tenant for the early surrender of the lease to be used by Tenant for the payment of any real estate broker's commissions or finder's fees payable by Tenant with respect to this Lease and to pay for the improvements required to be performed by tenant pursuant to Exhibit 'D' . " 2. Basis For Rental Rate: An appraisal was obtained for the subject property which established the monthly rental value between $.11 and $.13 per square foot of building. Leasable area as defined in the appraisal is 38, 109 square feet; however, 3341 square feet is a low ceiling loft only good for dead storage, and 1280 square feet is second floor office which must be removed to meet code, thus 33,488 square feet is the established leasable area. 3 . Rental: Year one $.08/sq ft x 33,488 = $2679/mo Year two $.11/sq ft x 33,4B8 = $3684/mo Year three through five $.13/sq ft x 33,468 = $4353/mo Years six through thirteen As adjusted per Section 3 .3 of this agreement itial EXHIBIT "D" CONSTRUCTION OBLIGATIONS 1. Tenant shall install six foot chain link fence with three strands of barbed wire to separate the warehouse building covered by the lease from the adjacent hangar. Said fence to be as shown on Exhibit "B. " 2. Tenant shall make necessary repairs and improvements to the main entrance roadway and gate on Alejo Road. 3. "Tenant shall be responsible for improving the Demised Premises such that the restroom facilities within the Demised Premises comply with all applicable codes and regulations based on the number of employees at the Demised Premises and for connecting all sanitary sewage facilities to the sewer main serving the Demised Premises, which is located approximately forth (40) feet south of the building, " if necessary. 4. Tenant shall have no obligation to remove the second floor mezzanine space in the assembly building. Said space may be utilized for light storage not to exceed 76 lbs/ sq Et. Tenant shall have no inspection enforced liability for modification of electrical systems in areas of the facility that the tenant does not remodel or otherwise modify. S. "All work performed by Tenant pursuant to this Exhibit "D" shall be governed by the terms and provisions of the Lease, including, but not limited to, sections 5.1 and 5.3. " 6. Landlord shall provide no improvements. EXHIBIT "D" EXHIBIT "E" ESTOPPEL CERTIFICATE Tenant: Landlord: CITY OF PALM SPRINGS, a municipal corporation Date of Lease: Shopping Center: 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 19 and, including any presently exercised option or renewal term, will expire on 19 Tenant has accepted possession of the Demised Premises and is the actual occupant in possession thereof and has not sublet, assigned or hypothecated its leasehold interest. All improvements to be constructed on the Demised Premises by Landlord have been completed and accepted by Tenant and any tenant construction allowances have been paid in full. 4. As of this date, to the best of Tenant's knowledge, there exists no breach or default, nor state of facts which, with notice, the passage of time, or both, would result in a breach or default on the part of either Tenant or Landlord. To the best of Tenant's knowledge, no claim, controversy, dispute, quarrel or disagreement exists between Tenant and Landlord. S. 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 19 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 bankruptcy laws of the United States, or any state thereof, or any other action brought under said bankruptcy laws with respect to Tenant. EXHIBIT TO LEASE SS2\206\099999-3000\3011240, 10/27/93 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 , 19 By: Its: -18- PS2\276\099999-3000\201124B. 10/27/93 LEASE PALM SPRINGS REGIONAL AIRPORT CITY OF PALM SPRINGS, a municipal corporation "Landlord" and STATIC CONTROL SERVICES, INC. "Tenant" 1 TABLE OF CONTENTS Page 1. LEASE SUMMARY . . . . . . . . . . . . . . . . . . . . 1 1.1 Demised Premises . . . . . . . . . . . . . . . . . 1 1.2 Lease Commencement Date . . . . . . . . . . . . . . . 1 1.3 Extension Options . . . . . . . . . . . . . . . . 1 1.4 Monthly Rental . . . . . . . . . . . . . . . . . . 1 1.5 Security Deposit . . . . . . . . . . . . . . . . 1 1.6 Use of Demised Premises . . . . . . . . . . . . . . . 1 1.7 Not Applicable Section . . . . . . . . . . . . . . 1 1.8 Tenant's Address for Notices . . . . . . . . . . . . . . . 1 2. TERM . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.1 Initial Term . . . . . . . . . . . . . . . 1 2.2 Option Term . . . . . . . . . . . . . . . . . . . . . . . . 1 2 .3 Time . . . . . . . . . . . . . . . . . . . . 1 2 .4 Force Majeure . . . . . . . . . . . . . . . . . . . . . 1 2.5 Holding Over . . . . . . . . . . . . . . . . . . . . . . . 2 3. RENTAL . . . . . . . . . . . . . . . . . . . . . . . . 2 3 .1 Monthly Rental . . . . . . . . . . . . . . . . . . . . . 2 3.2 Percentage Rental . . . . . . . . . . . . . . . . 2 3 .3 Cost of Living Adjustment . . . . . . . . . . . . . . . . . 3 3 .4 Additional Rental . . . . . . . 3 3.5 Real Property Taxes . . . . . . . . . . . . 3 3.6 Personal Property Taxes . . . . . . . . . . . . . . . . 3 3 .7 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . 3 3.8 Late Payment . . . . . . . . . . . . . . . . . . . . . 3 3.9 Interest . . . . . . . . . . . . . . . . . . . 3 3 .10 Security Deposit . . . . . . . . . . . . . . . . . . . . 4 4. USE OF THE PREMISES . . . . . . . . . . . . . . . . . . . . 4 4.1 Permitted Use . . . . . . . . . . . . . . . . . . . . . . . 4 4.2 Prohibited Uses . . . . . . . . . . . . . . . . . . . . 4 4.3 Compliance with Laws . . . . . . . . . . . . . 4 4.4 Non-Discrimination & FAA Required Clauses . . . . . . . . . 5 4.5 Signs . . . . . . . . . . . . . . . . . . . . 6 4.6 Public Facilities . . . . . . . . . . . . . . . . 6 4.7 Rules and Regulations . . . . . . . . . . . . . . . . . . . 6 5. ALTERATIONS AND REPAIRS . . . . . . . . . 6 5.1 Improvements, Alterations and Fixtures . . . . . . 6 5.2 Maintenance and Repair . . . . . . . . . . . 6 5.3 Free from Liens . . . . . . . . . . . . . . . . . . 7 5.4 Construction Obligations . . . . . . . . . . . . . . . 7 5.5 Landlord's Reserved Rights . . . . . . . . . . . . . . . . 7 G. INSURANCE AND INDEMNIFICATION . . . . . . . . . . . . . . . 7 6.1 ' Insurance Provided by Tenant . . . . . . . . . . . . . . . 7 6.2 Indemnification of Landlord . . . . . . . . . . . . . . . . 8 7. ABANDONMENT AND SURRENDER . . . . . . . . . . . . . . . 9 7.1 Abandonment . . . . . . . . . . . . . . . . . . . . . 9 7.2 Surrender of Lease . . . . . . . . . . . . . . . . . . . . 9 8. DAMAGE AND DESTRUCTION OF PREMISES . . . . . . . . . . . . . . . . 9 9. ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . 9 10. ENCUMBRANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 11. DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . 11 11.1 Default by Tenant . . . . . . . . . . . . . . . . . 11 11.2 No Waiver . . . . . . . . . . . . . . . . . . 12 11.3 Landlord's Default. . . . . . . . . . . . . . . . . . . . . 12 12. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 ............ Ir -ISSUE DATE HOWDONYj ...... 01/11/94 PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND Beall Insurance Services CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE 308 W.State St.,Suite 1 B DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE I POLICIES BELOW. Redlands,Ga. 92373 COMPANIES AFFORDING COVERAGE COMPANY LETTER A SAFECO INSURANCE COMPANY COMPANY iisum* LETTER B INC. _E RICHMOND TECHNOLOGY COMPANY C , TrER Qz_ P.O.Box 1129 COMPANY Redlands,CA. 92373 LETTER D COMPANY LETTER THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED,NOTWITHSTANDING ANY REQUIREMENT,TERM OR CONDITION OF ANY CONTRACTOR OTHER DOCUMENT WITH RF,9PECT TO WHICH THIS CEFiliFICATE MAYBE ISSUED ORMAY'-PERTAIf4, friE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. co LTH TYPE OF INSURANCE POLICY NUMBER POLICY EFFECTIVE POLICY EXPIRATION DATE(MMIDONY) DATE MM/DDNY) LIMITS GENE HAL LIABILITY GENERAL AGGREGATE $X 2,000,000 AGGR ........ .....0. COMMERCIAL GENERAL LIABILITY : . $ . , 1,000, 00 : CLAIMS MADE X OCCUR. PERSO NAL&A DV.INJURY $A CP8150761 09/01/93 09/01/94 .... . .OWNERS&CONTRACTOR'S ROT, ........ EACH OCCURRENCE 1,000,000 FIRE DAMAGE(Aryon.fire) $ 50,000 . ........ RED.EXPENSE(Anyone person) $ 5,000 AU.YOMOBILE LIABILITY COMBINED SINGLE ANY AUTO LIMIT $ ALL OWNED AUTOS SCHEDULED AUTOS (Pere INJURYrson) $ HIRED AUTOS BODILY INJURY NON-OWNED AUTOS (Per accident) GARAGE LIABILITY PROPERTY DAMAGE EXCESS LIABILITY EACH OCCURENCE UMBRELLA FORM ........ . ........... AGGREGATE OTHER THAN UMBRELLA FORM WORKER'S COMPENSATION STATUTORY LIMITS AND EACHACCID'UT ....... .......... EMPLOYERS'LIABILITY DISEASE-POLICY LIMIT DISEAS&EACH EMPLOYEE $ OTHER A PERSONAL PROP LIMIT DED: COVERAGE CP8150761 09/01/93 09/01/94 1,900,000 $1,000 DESCRIPTION OF OPERATi6NS/LOCATIONSNEHICLESISPECIAL ITEMS ALL OPERATIONS OF THE INSURED PEFORMED FOR THE CERTIFICATE HOLDER SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE ATTN. ALLEN SMOOT EXPIRATION DATE THEREOF,THE ISSUING COMPANY WILL ENDEAVOR TO MAIL 20 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE PALM SPRINGS LEFT,BUT FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR REGIONAL AIRPORT LIABILITY OF ANY KIND UPON THE COMPANY,ITS AGENTS OR REPRESENTATIVES. 3400 E.TAHOUITZ-MCCALLUM PALM SPRINGS,CA. 92263-2743 City of Palm Itprings y w Office of the City Clerk � 4 ;t (760) 323-8204 c'141FOVL MEMORANDUM Date: July 2, 1998 To: Airport From: City Clerk AGREEMENT #3308 - Static Control Services (also suibles, SSC Racing Please let us know the status of the above agreement, and if it may be closed. STATUS: COMPLETED: REMAIN OPEN UNTIL: Date & Initials V CLOSE AGR Signature CITY CLERK Client : 19265 SSCPAC ACOR& CERTIFICA OF LIABILITY INSOANCE 01%2s%o PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION Bell-Anderson Insurance, Inc . ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE P. O. BOX 40509 HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. 330 - 112th Ave. N. E. Suite 301 Bellevue, WA 98015-4509 INSURERS AFFORDING COVERAGE INSURED INSURER A: Evanston Ins CO oCO.UTd,(} 7W,ide SSC Racing Karbz, Inc INSURERc: l " 3101 E Alejo Rd F4 RD: j C.? FM Palm Springs, CA 92262 wSURERE: COVERAGES THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDI DF.�'I`p1WTTHSTANDIN ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFIC IvtAY BE ISSUED O MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBTECT TO ALL THE TERMS,EXCLUSIONS AND CONDITIONS OF SUC POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR POLICYEFFECTIVE POLICYEXPIRWRON LTR TYPE OF INSURANCE POLICY NUMBER DATE MMMD DA MD LIMITS A GENERAL LIABILITY MCB02236 01/01/02 01/01/03 EACH OCCURRENCE aIncluded X COMMERCIALGENERALLIABILI'Y FIRE DAMAGE(Anyoncfim) $50 000 X CLAIMS MADE 71 OCCUR MME P(MyonePenon) $Excluded X R/D 1-1-98 PERSONAL&ADV INJURY aIncluded GENERAL AGGREGATE s2 , 000 , 000 GENT.AGGREjLIMHAPPLMS PER: PRODUCTS -COMP/OPAGG s2 , 000, 000 POLICY PRO 71 LOC AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT ANY AUTO (Ea ndd.l) $ ALL OWNED AUTOS BODILY INJURY SCHEDULED AUTOS (Pei Pelson) $ AIRED AUTOS BODILY INJURY NON-OWNED AUTOS (Pecaccide t) S PROPERTY DAMAGE $ (Per ecc,dmt) GARAGE LIABILITY AUTO ONLY-EA ACCIDENT S ANY AUTO OTHER THAN EA ACC $ AUTO ONLY: AGG $ EXCESS LIABILITY EACH OCCURRENCE S OCCUR 171 CLAIMS MADE AGGREGATE $ S DEDUCTIBLE $ RETENTION S $ WORKERWC STATU- OTH- EMPLOY RS'LLA COMPENSATION AND _ _ _ _ __ _ �• RMPLOYERS'LIABILITY - - - - - E.L.EACH ACCIDENT $ E.L.DISEASE -EA EMPLOYEE $ E.L.DISEASE -POLICY LIMIT $ OTHER DESCRIPTION OF OPERATIONS/LOCATIONS/VEIRCLES/EXCLUSIONS ADDED BY FNDORSEMENT/SPECIAL PROVISIONS Certificate Holder is Additional Insured with respects to operations of the named insured @ 3101B E Alejo Rd, Palm Springs . CERTIFICATE HOLDER ADDDIONALINSURRD;INSURRRLETIER: CANCELLATION SHOULDANYOFTHEABOVEDESCRMEDPOLICIESBECANCELLEDBEFORETHEEX MATJON City of Palm Springs City Clerk DATE THEREOF,THEISSUING INSURER WH.L7=0LXMXWIAM3_0—DAYS WRITTEN P O Box 2743 NOTICETOTHE CERTHTCATEIIOLDERNAMEDMMMLEFT-4 }j MQXU"X Palm Springs, CA 92263xoualxaoN�QxawrucraQ�cnna�arrxi�seaLaox sB AUTHORIZED REPREEENTA E aMl.�'Y ACORD 25-S(7197) 1 of 2 #15191 CRM © ACORD CORPORATION 1988