HomeMy WebLinkAboutC39440A-B PD iHUB ProjectCONTRACT NO. C39440A-B
STAFF REPORT
CITY OF PALM DESERT
ECONOMIC DEVELOPMENT
MEETING DATE: October 10, 2019
PREPARED BY: Martin Alvarez, Director of Economic Development
REQUEST: Authorize and approve various actions relating to the implementation
of the Palm Desert iHUB project.
Recommendation
By Minute Motion, that the City Council:
1. Acknowledge the City Council's approval of a seven-year lease with
Sinatra and Cook Project, LLC located at 37023 Cook Street, Suite 102
to establish the Palm Desert iHUB (PD iHUB);
2. Acknowledge the City Council's approval of a seven-year sublease with
California State University San Bernardino (CSUSB) at 37023 Cook
Street, Suite 102;
3. Authorize a project budget of $1,400,000 to design and construct the
tenant improvements at the PD iHUB;
4. Authorize the City Manager to approve required change orders relating to
the Palm Desert iHUB tenant improvements up to the authorized ten (10)
percent contingency totaling $140,000.
Funds are available in Economic Development Fund, Account No. 4254430-
4395000.
Strategic Plan Objective:
The establishment of a Palm Desert business incubation center (PD IHUB) aligns with
the City's Envision Palm Desert Strategic Plan, Priority 1: Expand job and business
creation opportunities.
2018 Economic Development Strategic Plan — High priority initiative: Entrepreneur
Development/Business Incubation Program
October 10, 2019 — Staff Report
PD HUB Project
Page 2 of 3
2019 City Goals:
No. 1 — Open the Palm Desert HUB to attract high tech entrepreneurial
businesses and jobs.
Backqround
On August 22, 2019, the City Council approved a seven-year lease with Sinatra and Cook
Project, LLC to occupy a 10,290 square foot unit located 37023 Cook Street, Suite 102
for the establishment of the Palm Desert HUB. The City Council also approved a seven-
year sublease with California State University San Bernardino (CSUSB) to occupy 3,368
square feet of the PD HUB space for their faculty offices and the establishment of a
cybersecurity program.
Contained in the lease, the City will work with the lessor to pay for and complete the
tenant improvements for the office space. Below is the breakdown of the project costs:
Tenant Improvements (T.I.)
$1,444,390 j
Architectural Design
$34,600
Total T.I./Design Cost
$1,478,990
10% Project Contingency
$140,000
Construction Management Flat Fee
$100,000
Total T.I. Project Cost
$1,718,990
j Lessor's T.I. Share
$411,600
Total City Cost
$1,307,390
As part of the lease, the lessor will be contributing $411,600 towards the tenant
improvement costs. As part of the City's sublease with CSUSB, the University has agreed
to pay the City a total of $225,500, in seven equal annual installments for their share of
the tenant improvement costs.
Discussion
The tenant improvement project will commence on October 7, 2019, and will take 12
weeks to complete. The project is anticipated to be completed by the beginning of
January 2020. In order to meet this construction schedule, and because of the limited
number of meetings of the City Council during this period, staff is seeking City Council
authorization to allow the City Manager to approve any necessary change orders to
complete the project within the authorized ten (10) percent of the tenant improvements
contingency totaling $140,000.
G xEcon DevelopmenWartin Alvarez\2019tSR\PD CHUB CO 10 10 19 A aocx
October 10, 2019 — Staff Report
PD iHUB Project
Page 3of3
Fiscal Analvsis:
The Palm Desert iHUB project budget of up to $1,400,000 was approved and
appropriated by the City Council on August 22, 2019. Funds for the project are available
in the City's Fiscal Year 2019/20 Economic Development Fund.
LEGAL REVIEW DEPT. REVIEW FINANCIAL ASSISTANT CITY
Approved as to REVIEW MANAGER
Form
I
N/A
Robert W. Martin Alvarez
Hargreaves Economic
City Attorney Development
Director
4 °ianVrof
Direance
City Manager Lauri Aylaian: —,
Attachments: Sinatra and Cook Project, LLC Lease
CSUSB Sublease
Citv
Andyit stine
Assis City
Manager
G �Econ DevelopmennManin A1varez\2019\SR\PD iHUB CO 10 W-19-A doc.
COMMERCIAL LEASE AGREEMENT
THIS COMMERCIAL LEASE AGREEMENT (the "Lease") dated for reference
purposes only as of August 22, 2019 and is made and entered into by and between
SINATRA AND COOK PROJECT, LLC, a California limited liability company ("Landlord")
and THE CITY OF PALM DESERT, a municipal corporation ("Tenant") under the
following terms and conditions:
1. Description of the Leased Premises. Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord a portion of the building(s) located at 37023 Cook
Street, Suite No. 102, Palm Desert, California, consisting of approximately 10,290 square
rentable square feet, hereinafter referred to as the "Premises" and as shown on
Exhibit A attached hereto. The Premises are part of a larger building referred to herein
as the "Building." Tenant's share of the Building shall be 56.75% ("Tenant's Share") for
purposes of Operating Expenses, as further described in Section 5.
2. Term, Occupancv, and Renewal.
A. Term. The Term of this Lease shall be for Eighty -Four (84) months. The
Lease Term shall commence upon Substantial Completion of the Tenant Improvements
and Landlord's turnover of the Premises to Tenant. The Lease shall expire on the date
that is Eighty -Four (84) months following the turnover of the Premises, provided, however,
if the turnover of the Premises occurs on any day other than the first day of the month
then the Lease Term shall expire at the end of the 841h month following the partial month
immediately following the turnover of the Premises and the first (1St) month of the Lease
Term shall be deemed to be the first full month following the partial month following the
turnover of the Premises. The "Commencement Date" of the Lease shall be the date
that Landlord turns the Premises over to Tenant.
B. Occupancv. Tenant may, upon execution of this Lease by Landlord and
Tenant, occupy the Premises on the Commencement Date subject to all terms and
conditions of this Lease, provided Tenant complies with Section 17 (Insurance) and
delivers an insurance certificate to Landlord prior to entry. Upon delivery of the insurance
certificate, first month's Rent and any Security Deposit, Landlord shall deliver the keys
and possession to Tenant.
C. Option to Renew. Provided Tenant is not in default in any terms of this
Lease, Tenant is hereby granted an option to renew this Lease under the same terms
and conditions as set forth in this Lease for one (1) additional seven (7) year term
("Option Term"). Tenant shall give Landlord written notice of Tenant's intent to exercise
its Option, which notice shall be delivered to Landlord no less than six (6) months and no
more than twelve (12) months prior to the last day of the Initial Term. Rent for the Option
Term shall be determined in accordance with Section 3.E, below.
Page 1 of 38
3. Rent.
Annual Rent. Tenant shall pay to Landlord as Rent for the Premises in twelve (12)
equal monthly installments, each in advance on the first day of each and every calendar
month during the Term of this Lease, except the first month's rent shall be paid upon the
execution hereof (the "Rent"). The Rent shall be subject to increase 3% as shown in the
table herein below:
Month Base Common Area Rent/Foot + Monthly Rent Annual Rent
Rent/Foot (NNN) NNN
1-12 $1.00 $0.53 $1.53 $1.5,666.53 $187,998.30
13-24
$1.03
$0.54
$1.57
$16,136.52
$193,638.25
25-36
$1.06
$0.56
$1.62
$16,620.62
$199,447.40
37-48
$1.09
$0.57
$1.66
$17,1 19.23
$205,430.82
49-60
$1.12
$0.59
$1.71
$17,632.81
$211,59174
61-72
$1.16
$0.61
$1.77
$18,161.80
$217,941.56
73-84
$1.19
$0.63
$1.82
$18,706.65
$224,479.80
If possession is taken on other than the first of the month, Rent shall be prorated
accordingly based on actual days in the month.
Notwithstanding anything contained elsewhere in this Lease all monetary
obligations due from Tenant to Landlord under the terms of this Lease is hereby deemed
to be "Rent."
A. Late Charqe. Tenant acknowledges that late payment by Tenant to
Landlord of Rent will cause Landlord to incur costs not contemplated by this Lease. If
any installment of Rent due from Tenant is not received by Landlord within five (5) days
after it becomes due, Tenant shall pay to Landlord an additional 10% of the overdue Rent
as a late charge, provided the first instance of any late payment shall not incur a late fee.
The parties agree that this late charge represents a fair and reasonable estimate of the
costs that Landlord will incur by reason of late payment by Tenant. Acceptance of any
late charge shall not constitute a waiver of Tenant's default with respect to the overdue
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amount or prevent Landlord from exercising any of the other rights and remedies available
to Landlord.
B. Interest on Unpaid Rent. Rent or other charges under this Lease not paid
within five (5) days of the date due shall, in addition to any late charges under Section 4.A,
above, bear interest at the lesser of the maximum legal rate or 10% per annum from the
date due until paid.
C. Holdover. Tenant may not hold over after the expiration or earlier
termination of the Term hereof without the express prior written consent of Landlord.
Acceptance of Rent is not Landlord's consent to holdover. Without Landlord's express
consent Tenant shall become a tenant at sufferance only at a rental rate equal to 125%
of the Rent in effect upon the date of such expiration. Acceptance by Landlord of Rent
after such expiration or earlier termination shall not constitute a holdover hereunder or
result in a renewal. The foregoing provisions of this Section 4 are in addition to and do
not affect Landlord's right of re-entry or any rights of Landlord hereunder or as otherwise
provided by law. If Tenant fails to surrender the Premises upon the expiration of this
Lease, Tenant shall indemnify, protect, defend and hold Landlord harmless from all loss
or liability, including without limitation, any claim made by any succeeding tenant founded
on or resulting from such failure to surrender. Such indemnity shall survive the expiration
of this Lease.
D. Increase in Rent in Option Term. The Base Rent for the Option Term shall
be at Fair Market Value. Upon Tenant exercising its Option, Landlord shall notify Tenant
of its good faith determination of the Fair Market Rent, hereinafter referred to the Fair
Market Notice," for the extended Term. Within thirty (30) days after the effective date of
the Fair Market Notice, Tenant must notify Landlord in writing of Tenant's acceptance
or rejection of the Fair Market Notice; if such acceptance or rejection is not timely
received by Landlord, Tenant's Option to renew shall lapse and this Lease shall
terminate pursuant to the terms herein on the Lease Expiration Date.
If Tenant rejects the Fair Market Notice and if Landlord and Tenant cannot agree
upon a single Broker within ten (10) days of Tenant's rejection of the Fair Market Notice,
then Landlord and Tenant shall each appoint one Broker no later than one hundred eighty
(180) days prior to the Lease Expiration Date. Within ten (10) days thereafter, the two (2)
appointed Brokers shall appoint a third Broker who shall determine the Fair Market Value.
If either Landlord or Tenant fails to appoint its Broker within the prescribed time period,
the single Broker appointed shall determine the Fair Market Value of the Leased
Premises. If both parties fail to appoint Brokers within the prescribed time periods, then
the first Broker thereafter selected by a party shall determine the Fair Market Value of the
Leased Premises. Each party shall bear the cost of its own Broker and the parties shall
share equally the cost of the single or third Broker. In no event shall the annual Fair Market
Value of the Rent be less than 103% of the last year of the initial Term of the Lease. The
agreed Rent for the first year of the Option shall increase annually thereafter based on
Fair Market Value increases, provided however, the annual increases shall not be less
than 3% annually throughout the Term of the Option Term. Common Area Operating
Expenses, Real Property Taxes and Insurance hereinafter collectively referred to as
"CAM" for the first year of the Option Term shall be $6,379.80 per month for the first
twelve (12) months of the Option Period and shall increase 3% annually thereafter on
each anniversary of the Option Term, provided, however, there shall be no CAP on Real
Property Taxes or Insurance. If the Real Property Taxes and/or the buildings Insurance
Page 3 of 38
increases during the Term of the Option Term Tenant shall be responsible to pay for
Tenant's Share of the increase in the Real Property Taxes and/or Insurance in addition
to the CAM at the same time and in the same manner as Rent is due and payable to
Landlord.
In the event of an increase in Real Property Taxes or Insurance during the Option
Term Landlord shall provide Tenant with reasonable evidence of the amount of the
increase in Real Property Taxes and/or Insurance and Landlord and Tenant hereby agree
to adjust Tenant's CAM payment due to Landlord based on the amount of the increase in
the Real Property Taxes and/or Insurance.
Securitv Deposit. Concurrently with Tenant's execution of this Lease, Tenant
has deposited with Landlord the Security Deposit in the amount of $20,000.00. Said
Security Deposit shall be held by Landlord as security for the faithful performance by
Tenant of all the terms, covenants, and conditions of this Lease to be kept and performed
by Tenant during the Lease Term hereof. If Tenant defaults with respect to any provisions
of this Lease including, but not limited to, the provisions relating to the payment of rent,
additional rent, and or CAM Landlord may (but shall not be required to) use, apply or
retain any or all of the Security Deposit for the payment of any rent, additional rent, and
or CAM or any other sum in default, or for the payment of any amount that Landlord may
spend or become obligated to spend by reason of Tenant's default, or to compensate
Landlord for any other loss or damage that Landlord may suffer by reason of Tenant's
default. It is expressly agreed between the parties that the Security Deposit shall not be
considered an advance payment of rent or a measure of Landlord's damages in case of
default by Tenant. If any portion of said Security Deposit is so used or applied, Tenant
shall, within five (5) days after written demand therefor, deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to its original amount, and Tenant's
failure to do so shall be a default under this Lease Landlord shall not be required to keep
the Security Deposit separate from its general funds, and Tenant shall not be entitled to
interest on such Security Deposit. If Tenant shall fully and faithfully perform every
provision of this Lease to be performed by it, the Security Deposit, or any balance thereof,
shall be returned to Tenant (or, at Landlord's option, to the last assignee of Tenant's
interest hereunder) within thirty (30) days following the expiration of the Lease Term. In
the event of a termination of Landlord's interest in this Lease, said Security Deposit, or
any portion thereof not previously applied, may be released by Landlord to Landlord's
transferee; and, if so released, Tenant agrees to look solely to such transferee for proper
application of the Security Deposit in accordance with the terms of this Section and the
return thereof in accordance herewith. In the event of bankruptcy or other debtor relief
proceedings by or against Tenant, the Security Deposit shall be deemed to be applied
first to the payment of rent, additional rent, and other charges due Landlord, in the order
that such rent, additional rent, or charges became due and owing, for all periods prior to
filing of such proceedings.
E. 4. Place of Pavment of Rent. Rent and all other sums which shall
become due under this Lease, including but not limited to late charges and additional
rent, shall be payable by hand delivery or mail at the office of the Landlord located at
42600 Caroline Court, Suite 102, Palm Desert, CA 92211, or at such other place as
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Landlord may designate from time to time in writing. Mailed payments must be received
(not postmarked) by Landlord by the date due.
5. Operatinq Expenses. Tenant shall pay to Landlord during the Term hereof, in
addition to the Annual Rent, Tenant's Share of all Common Area Operating Expenses in
the form of CAM charges as shown in Section 3.A, above. Neither Tenant's Share of
Operating Expenses nor the CAM charges increase or decrease during the initial Term
of this Lease except for the CAM charge amounts shown in Section 3.A hereinabove.
6. All real property taxes ("Real Property Taxes") shall be included in the CAM
charges provided, however, in addition to the CAM Tenant shall be responsible for any
additional Real Property Taxes levied and assessed against the Premises or the Tenant
Improvements during the initial Lease Term and any such additional Taxes shall be paid
at the same time as the Rent and CAM.
7. Condition of, and Improvements to, Premises.
A. Improvements. Landlord shall improve the Premises pursuant to the Terms
of the Work Letter attached hereto as Exhibit C ("Work Letter"). Landlord, as part of the
consideration of this Lease, shall provide an Allowance of up to $40.00 per rentable
square foot ("Allowance"). The Allowance shall be used for the improvements to the
Premises for general office space based on plans to be mutually agreed to and approved
by Landlord and Tenant and pursuant to the Work Letter (the "Tenant Improvements").
The Allowance may not be used to purchase furniture, trade fixtures, and/or trade
equipment, but may be used for or applied to heating and air conditioning, lighting/electric
meter, plumbing/water meter, walls and ceilings, fees, permits and for the hard costs of
construction. The Allowance shall be used for the Tenant Improvements for general office
space based on plans to be mutually agreed to and approved by Landlord and Tenant
and pursuant to the Work Letter. Landlord, to the best of Landlord's knowledge,
represents that as of the Commencement Date the Building's systems (plumbing, HVAC,
electrical, and life/safety) are in good working order and repair, and that the Building is
water tight and leak free.
B. As -is Condition. Subject to the provisions of Section 7.A, above, Tenant
warrants and agrees that Tenant has inspected the Premises. Tenant agrees to take
possession of the Premises in an AS -IS condition (which exists on the date this Lease is
signed) and Tenant further agrees that the terms of the Work Letter set forth Landlord's
obligations to make repairs or improvements to the Premises, prior to, or as a condition
of Tenant's occupation of the Premises.
C. Condition Upon Surrender. Upon termination of this Lease, Tenant shall
surrender the Premises to Landlord in as good condition as when received on the
Commencement Date, ordinary wear and tear excepted.
D. CASo Disclosure. Landlord discloses that the Building have not undergone
inspection by a Certified Access Specialist as referenced in California Civil Code
Section 1938 subsection (e) of which provides: "A Certified Access Specialist (CASp)
Page 5 of 38
can inspect the subject premises and determine whether the subject premises comply
with all of the applicable construction -related accessibility standards under state law.
Although state law does not require a CASp inspection of the subject premises, the
commercial property owner or Landlord may not prohibit the lessee or tenant from
obtaining a CASp inspection of the subject premises for the occupancy or potential
occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall
mutually agree on the arrangements for the time and manner of the CASp inspection, the
payment of the fee for the CASp inspection, and the cost of making any repairs necessary
to correct violations of construction -related accessibility standards within the premises."
Pursuant to the foregoing Section 1938(e), Tenant acknowledges and agrees that, if
Tenant wishes to have the Premises inspected by a CASp: (i) Tenant must notify
Landlord on or before the date when Tenant executes this Lease pursuant to the election
below; (ii) the inspection will be at Tenant's sole cost and expense; (iii) the inspection
must be scheduled through Landlord and in coordination with the Building's property
manager; (iv) Tenant must provide a copy of the CASp report to Landlord on completion.
For repairs or modifications noted in the CASp report necessary to correct any violation
of laws in force as of the Commencement, Landlord shall bear such expense. For repairs
or modifications necessary to correct any violation related to laws enacted since the
Commencement Date, the Tenant's Share of the cost of such capital improvements
amortized over their useful life may be passed through to Tenant as an additional
operating expense due and payable at the same time as Rent. By initialing below, Tenant
represents that:
Tenant wishes to have a CASp inspection of the Premises: Initials: _
Tenant hereby waives its right to have a CASp inspection of the Premises: Initials: ��
8. Use. The Premises shall be used only for the operation of office space. Tenant
shall not use any portion of the Premises for purposes other than those specified without
first obtaining the written consent of Landlord. Tenant shall not do, bring, or keep anything
in, on, or about the Premises which will in any way increase the premium rate or cause
the cancellation of any fire or other insurance upon the Premises, the building in which
the Premises are located, or any of its contents. Tenant shall have the non-exclusive
right to use the parking area and driveways, sidewalks, hallways, restrooms (to the extent
not entirely contained in the Premises), common area pathways to and from the parking
area and Premises in common with the other tenants of the Building as well as with
Landlord's use of same.
Notwithstanding anything contained elsewhere in this lease, Lessee may not
install or use any type of an ATM Machine in, on, or about the Premises as Bank Of
America has exclusivity for the Center related to the Use of an ATM machine (Automated
Teller Machine.)
9. Compliance with Laws/Hazardous Materials.
A. As used in this Lease, the term "Hazardous Material" means any flammable
items, explosives, radioactive materials, materials, including any substances defined as
Page 6 of 38
or included in the definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "toxic substances" or similar term now or subsequently regulated under any
applicable federal, state or local laws or regulations including without limitation petroleum -
based products, paints, solvents, lead, cyanide, DDT, printing inks, acids, pesticides,
ammonia compounds and other chemical products, asbestos, PCBs, and similar
compounds, and including any different products and materials which are subsequently
found to have adverse effects on the environment or the health and safety of persons.
B. Tenant shall not cause or permit any Hazardous Material to be generated,
produced, brought upon, used, stored, treated or disposed of in or about the Premises,
the Center or the property on which the Center is located by Tenant its agents,
employees, contractors, sub Tenants or invitees without the prior written consent of
Landlord. Landlord shall be entitled to take into account such factors or facts as Landlord
may determine to be relevant in determining whether to consent to Tenant's proposed
activity with respect to Hazardous Materials, and Landlord may attach conditions to any
such consent if such conditions are necessary, in Landlord's sole discretion, to protect
Landlord's interests in avoiding potential liability to Landlord or damage to the Center or
surrounding or nearby property arising from Tenant's activities with respect to Hazardous
Materials. In no event shall Landlord be required to consent to the installation or use of
any storage tanks on the property on which the Center is located.
C. Tenant shall comply with all federal, state, and local laws, rules, regulations,
orders, and ordinances pertaining to Hazardous Materials and Tenant shall, within ten
(10) business days after receipt thereof, at its own cost and expense, take all investigatory
and/or remedial action required or ordered for any cleanup of any hazardous Materials or
contamination of the Premises, the Center or the elements surrounding same created or
suffered by Tenant, its agents, employees or invitees. Tenant shall promptly notify
Landlord and shall provide Landlord with copies of the following relating to Hazardous
Materials with respect to the Premises: notices of violation, notices to comply, citations,
inquiries, reports filed pursuant to self -reporting requirements and reports filed pursuant
to any law or regulation, permits and permit applications.
D. Tenant shall indemnify and hold Landlord, its agents, employees, lenders,
ground lessee, if any, harmless from any and all costs, liabilities, claims, expenses,
penalties, and damages of any kind, including but not limited to attorneys' fees and the
cost of any investigation, remediation, cleanup and/or abatement which Landlord in its
reasonable opinion deems necessary as a result of Tenant's violation of this Section. No
release agreement entered into by Landlord and Tenant nor any termination cancellation
or cessation of this Lease shall release Tenant from its obligations under this Section 9.D,
unless such release agreement expressly sets forth Landlord's intention to release
Tenant from its obligations hereunder for Hazardous Material.
E. Landlord and Landlord's agents shall have the right to enter the Premises
to inspect, monitor and/or take remedial action with respect to Hazardous Material in, on,
under or affecting the Premises, or to discharge Tenant's obligations hereunder with
respect to Hazardous Materials when Tenant has failed to do so within the time specified
by Landlord.
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F. In accordance with the California Health and Safety Code, Section
25359.7(b), if Tenant has knowledge, or has reasonable cause to believe, that any
Hazardous Materials have come to be located on, under or about the Premises, Tenant
shall, upon discovery of the presence or suspected presence of Hazardous Materials,
give written notice of that condition to Landlord. Failure of Tenant to provide written notice
to Landlord as herein defined shall make this Agreement and the Lease voidable at the
discretion of Landlord. If Tenant has knowledge of the presence of any Hazardous
Materials located on, under, or about the premises and knowingly and willfully fails to
provide written notice to Landlord when herein defined, Tenant may be liable for a civil
penalty by governmental authorities not to exceed Five Thousand Dollars ($5,000.00) for
each separate violation.
G. Tenant's obligations under this Section 9 shall survive the expiration or other
early termination of this Lease.
10. Waste; Nuisance; Quiet Eniovment. Tenant shall not suffer or commit any waste
or nuisance on the Premises, nor shall Tenant interfere with or obstruct the rights of or
disturb the quiet enjoyment of any other tenant or occupant of the building or injure or
annoy them. Tenant shall not use or allow the Premises to be used for any improper,
immoral, or objectionable purposes, to be determined Landlord's sole and absolute
judgment.
11. Repair and Maintenance.
A. Maintenance Obligations. Tenant agrees at all times from and after delivery
of possession of the Premises to Tenant, and at its own cost and expense, to repair and
maintain in good and tenantable condition the Premises and every part thereof no matter
where located including, without limitation, floor coverings, utility meters, pipes and
conduits, all fixtures, cooling equipment installed by Landlord pursuant to Exhibit "C", and
other equipment therein, the storefront or storefronts, all Tenant's signs, locks and closing
devices, and all window sash, casement or frames, doors and door frames, and all items
of repair, maintenance and improvement or reconstruction as may at any time or from
time to time be required with respect to the Premises by any governmental agency having
jurisdiction. Tenant shall not be responsible for repair of any items located in the common
areas of the Building or otherwise outside of the Premises. If maintenance and repairs in
the Common Areas are caused solely by Tenant, its agents, contractors, employees,
licensees or invitees, Tenant shall pay to Landlord, as additional rent, the actual cost of
such maintenance and repairs. All glass, both exterior and interior, shall be maintained
at Tenant's sole cost and expense, and any glass broken shall promptly be replaced by
Tenant with glass of the same kind, size and quality. Tenant shall, at its own expense,
procure and keep in force during the Lease Term a program or contract, reasonably
acceptable to Landlord, for the period preventive maintenance of the heating and air
conditioning system serving the Premises, or at Landlord's option Landlord may maintain
such system and charge Tenant therefor. The program or service contract must include
all services suggested by the equipment manufacturer within the operation/maintenance
manual and must become effective and a copy thereof delivered to Landlord within thirty
(30) days of the Rental Commencement Date. Tenant shall at Tenant's expense also
Page 8 of 38
perform necessary pest extermination. Except as expressly included in this Lease,
Tenant acknowledges that neither Landlord nor any agent, employee or representative of
Landlord has made any representation or warranty with respects to the Building or
Premises or with respect to the suitability or fitness of the Building or Premises for the
conduct of Tenant's business or any other purpose. Landlord shall keep and maintain in
good and tenantable condition and repair the roof, exterior walls, structural parts and
structural floor of the Premises. Tenant, as a material inducement to Landlord's entering
into this Lease, irrevocably waives and releases its rights under the provisions of Sections
1941 and 1942 of the Civil Code of the State of California, it being the intention of the
parties hereto that the express terms of this Lease shall control under any circumstances
in which those provisions might otherwise apply.
B. Tenant's Failure to Maintain. if Tenant fails, refuses or neglects to make
repairs and/or maintain the Premises or any portion thereof, including Tenant's
storefront(s), in a manner reasonably satisfactory to Landlord, Landlord shall have the
right (but not the obligation), upon giving Tenant written notice of its election to do so
(except in the case of an emergency, in which case no notice shall be required), to make
such repairs or perform such maintenance on behalf of and for the account of Tenant. In
such event the cost of such work shall be deemed additional Rent and shall be paid by
Tenant within 30 days of written demand by Landlord. Upon any surrender of the
Premises, Tenant shall re -deliver the Premises to Landlord in good order, condition and
state of repair, ordinary wear and tear excepted, and excepting such items of repair as
may be Landlord's obligation hereunder.
C. Limit on Landlord's Duty. It is understood and agreed that Landlord shall be
under no obligation to make any repairs, alterations, renewals, replacements or
improvements to or upon the Premises or the mechanical equipment exclusively serving
the Premises at any time except as otherwise expressly provided in Section 11.13 above
and Exhibit C attached hereto.
D. Right to Enter. Tenant agrees to permit Landlord and its authorized
representatives to enter the Premises at all times for the purpose of making emergency
repairs and for the purpose of inspecting the same. Tenant further agrees that Landlord
may (but shall not be obligated to) go upon the Premises and make any necessary repairs
thereto and perform any work therein which may be necessary to comply with any laws,
ordinances, rules or regulations of any public authority, or the Pacific Fire Rating Bureau
or of any similar body, or that Landlord may deem necessary to prevent waste or
deterioration in connection with the Premises if Tenant does not make or cause such
repairs to be made or performed or cause such work to be performed promptly after
receipt of written demand from Landlord. Nothing herein contained shall imply any duty
on the part of Landlord to do any such work which under provisions of this Lease Tenant
may be required to do, nor shall it constitute a waiver of Tenant's default in failing to do
the same. No exercise by Landlord of any rights herein reserved shall entitle Tenant to
any damage for any injury or inconvenience occasioned thereby nor to any abatement of
Rent.
Page 9 of 38
E. Grant of License. Tenant hereby grants to Landlord such licenses or
easements in or over the Premises or any portion thereof as shall be reasonably required
for the installation or maintenance of mains, conduits, shafts, pipes or other facilities to
serve any building or any part thereof, including, but not limited to, the premises of any
occupant of the Center; provided, however, that Landlord shall pay for any alteration
required on the Premises as a result of any such exercise, occupancy under or enjoyment
of any such license or easement used by Landlord in connection with some other
occupant of the Center, and provided further that no exercise, occupancy under or
enjoyment of such license or easement shall result in any unreasonable interference with
Tenant's use, occupancy or enjoyment of the Premises as contemplated by this Lease.
12. Utilities.
A. Tenant's Obliqation. Tenant shall pay for all utilities and services furnished
to or used by Tenant upon the Premises, including gas service, water, trash, electrical
service, janitorial, cable service, telephone services, and all connection charges. Tenant
shall contract directly with the following utilities/service providers and pay for such
services directly water, gas service, trash, electrical service, janitorial, cable service,
telephone services, real estate taxes and all connection charges. Tenant shall deposit
all trash only in designated areas.
B. Interruption of Service. Landlord shall not be responsible for any
interruptions or disturbance of service regardless of whether Tenant is paying directly for
such services or if such services are being contracted for by Landlord, nor shall there be
any abatement of Rent resulting from any cessation or interruption of utility service or
other service contemplated by this section unless such interruption is caused by
Landlord's gross negligence or willful misconduct in which case Tenant may receive
abatement of Rent on a day for day basis after 3 consecutive business days of interruption
if such interruption causes material interference with Tenant's business or Tenant is not
able to occupy the Premises.
13. Rules. Tenant shall comply with the rules and regulations below and attached to
this Lease as Exhibit B and all modifications thereof and additions thereto from time to
time put into effect by Landlord so long as reasonably prompt notice is given by Landlord
of any changes (the "Rules and Regulations").
14. Alterations and Liens. Tenant shall not make or cause to be made any alterations,
additions, or improvements to or of the Premises or any part thereof except as set forth
in Section TA and in the Work Letter attached as Exhibit C.
15. Assignment and Sublettinq.
A. Transfers. Landlord and Tenant agree that the Center consists of an
interdependent group of retail enterprises and that the realization of the benefits of this
Lease, both to Landlord and Tenant, is dependent upon Tenant's creating and
maintaining a successful and profitable retail operation in the Premises. Landlord and
Tenant further agree that the "tenant mix" of the Center is also vital to the realization of
Page 10 of 38
the benefits of this Lease, both to Landlord and Tenant. Accordingly, Tenant shall not
transfer, assign, sublet, mortgage or otherwise hypothecate this Lease, or Tenant's
interest in and to the Premises, nor enter into any license or concession agreements with
respect thereto, without first procuring the written consent of Landlord. Any such
attempted or purported transfer, assignment, subletting, mortgage or hypothecation, or
license or concession agreement (hereinafter collectively referred to as a "Transfer")
without Landlord's prior written consent shall be void and of no force or effect and shall
not confer any interest or estate in the purported transferee, and shall at Landlord's option
constitute an incurable default under this Lease. Notwithstanding the foregoing, Tenant
shall be permitted to sublet to California State University, San Bernardino for faculty
offices and student training (the "Permitted Transfer") without first obtaining Landlord's
consent, provided, however, Tenant shall provide Landlord with written notice of said
assignment or sublease.
B. Landlord's Consent. The consent of Landlord required under this Section
15 shall not be unreasonably withheld; provided, however, that Landlord and Tenant
agree that it shall not be unreasonable for Landlord to withhold its consent to any
proposed Transfer for any of the following reasons, which are not exclusive:
(i) A conflict of the contemplated use of the Premises by the proposed
transferee, assignee, or subtenant (the "Transferee") with the "Use of Premises" clause
contained in this Lease;
(ii) The financial worth and/or financial stability of the Transferee is not
sufficient in Landlord's reasonable judgement to meet the obligations of the Lease for the
remainder of the Lease Term;
(iii) In the judgment of Landlord, the Transferee is of a character or
engaged in a business which is not in keeping with the standards of Landlord for the
Center;
(iv) A Transferee which would breach any covenant of Landlord
respecting radius, location, use or exclusivity in any other lease, financing agreement, or
other agreement relating to the Center;
(v) Tenant is in default under this Lease;
(vi) The Transferee does not have sufficient experience or expertise in
owning, operating or running a similar business in Palm Desert, California; or
(vii) The transfer or contemplated use would cause a breach of any other
lease or agreement by which Landlord is bound.
C. Tenant's Remedies. In no event whatsoever shall Landlord be held liable
for its failure or refusal to consent, whether reasonably or unreasonably; and Tenant's
sole and exclusive remedy shall be to obtain injunctive relief to effect the proposed
transfer. As a material consideration of this Lease, Tenant waives all other rights and
remedies.
Page 11 of 38
D. Procedure for Transfer. Should Tenant desire to make a Transfer
hereunder, Tenant shall, in each instance, give written notice of its intention to do so to
Landlord at least sixty (60) days prior to the effective date of any such proposed Transfer,
specifying in such notice whether Tenant proposes to assign or sublet, or enter into
license or concession agreements, and the proposed date thereof, and specifically
identifying the proposed Transferee. Such notice shall be accompanied by a copy of the
proposed sale or other transfer agreement, sublease, license or concession agreement,
or if same is not available, a letter of commitment or a letter of intent, and any other
documents or financial information Landlord may require, and a nonrefundable fee in an
amount equal to $750.00 in order to make a determination as to the suitability of the
Transferee based upon the criteria set forth in Section 15.13 above. Landlord shall, within
thirty (30) days after its receipt of such notice of a proposed Transfer from Tenant, by
mailing written notice to Tenant of its intention to do so, pursuant to Section 15.A, (a)
withhold consent to the Transfer; (b) consent to such Transfer; or (c) terminate this Lease,
such termination to be effective thirty (30) days after receipt of such notice by Tenant;
and if this Lease be so terminated, Tenant shall remain liable for Rent and other charges
to the termination date even though Rent and other charges may be adjusted
subsequently. The Transferee shall agree to comply with and be bound by all of the
terms, covenants, conditions, provisions and agreements of this Lease to the extent of
the space transferred, assigned or sublet; and Tenant shall deliver to Landlord promptly
after execution an executed copy of each such transfer document, an agreement of
compliance by each such Transferee, and such other documents as Landlord may
require, and Landlord's consent may be conditional upon receipt of same. No Transfer
of this Lease or agreement entered into with respect thereto, whether with or without
Landlord's consent, shall relieve Tenant or any guarantor of the Lease from liability under
this Lease. No subtenant or assignee not complying with the foregoing requirements
shall have any interest in the Security Deposit. Any assignee that does comply with the
foregoing requirements shall automatically succeed to Tenant's position with respect to
the Security Deposit, and Landlord shall have the right to refund all or any portion of the
Security Deposit to the assignee at any time or under any circumstances with no liability
to the assignor.
E. Required Documents. Each Transfer to which Landlord has consented shall
be evidenced by a written instrument in form satisfactory to Landlord, executed by Tenant
and the Transferee, under which the Transferee shall agree in writing for the benefit of
Landlord to assume, to perform and to abide by all of the terms, covenants and conditions
of this Lease to be done, kept and performed by Tenant, including the payment of all
amounts due or to become due under this Lease directly to Landlord and the obligation
to use the Premises only for the purpose specified herein or, in the case of the Permitted
Transfer, for the use specified in Section 15.A. Tenant agrees to reimburse Landlord for
Landlord's attorneys' and administrative fees incurred in conjunction with the processing
of and documentation for each such requested Transfer, whether or not the Transfer is
approved or consummated.
F. Merger and Consolidation. If Tenant is a corporation which, under the
current laws, rules or guidelines promulgated by the governmental body or agency having
jurisdiction and authority to promulgate the same, is not deemed a public corporation, or
Page 12 of 38
is an unincorporated association or partnership, the transfer, assignment or
hypothecation, in the aggregate, of more than forty-nine percent (49%) of the total
outstanding stock (or the voting rights of such stock) or interest in such corporation,
association or partnership, whether in one transaction or a series of related or unrelated
transactions, shall be deemed a Transfer within the meaning and provisions of this
Section 15. If Tenant is a partnership, a permitted withdrawal or change, whether
voluntary, involuntary, or by operation of law, of any partner or the dissolution of the
partnership, shall be deemed a Transfer within the meaning and provisions of this Section
15.
G. Event of BankruptcV.
(i) If this Lease is assigned to any person or entity pursuant to the
provisions of the United States Bankruptcy Code, 11 U.S.C. 101 et seq. (the
"Bankruptcy Code"), any and all monies or other consideration payable or otherwise to
be delivered in connection with such assignment shall be paid or delivered to Landlord,
shall be and remain the exclusive property of Landlord, and shall not constitute property
of Tenant or of the estate of Tenant within the meaning of the Bankruptcy Code. Any and
all monies or other considerations constituting Landlord's property under this Section
15.G not paid or delivered to Landlord shall be held in trust for the benefit of Landlord and
shall be promptly paid or delivered to Landlord.
(ii) Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code shall be deemed without further act or deed to have
assumed all of the obligations arising under this Lease on and after the date of such
assignment, including the obligation to operate the business which Tenant is required to
operate pursuant to this Lease.
H. Transfer Premiums Recapture.
(i) In the event that Tenant shall make a transfer hereunder, Landlord
shall be entitled to any key money paid to Tenant by the Transferee. In addition, any
sums or other economic consideration received by Tenant as a result of a Transfer,
including Rent, however denominated, which exceed, in the aggregate, (i) the total sums
which Tenant is obligated to pay Landlord under this Lease (prorated to reflect obligations
allocable to any portion of the Premises subleased), plus (ii) any real estate brokerage
commissions or fees payable by Tenant in connection with such Transfer, plus (iii) costs
of renovation or construction of improvements to the Premises for the benefit of the
Transferee required to be paid for by Tenant as a part of the Transfer, shall be shared by
Landlord and Tenant 50/50 and Landlord's share shall be paid as additional Rent under
this Lease promptly following Tenant's receipt of the same. Such payments shall not
affect or reduce any obligations of Tenant hereunder. Landlord shall have the right to
audit Tenant's books and records at either the Premises or Tenant's principal place of
business upon advance written notice for the purpose of verifying Tenant's compliance
with its obligations hereunder.
Page 13 of 38
16. Entry by Landlord. Except for emergencies such as fire, water intrusion and the
like which may be at any time, Landlord and its agents shall have the right to enter the
Premises upon twenty-four (24) hours prior notice from Landlord to Tenant and/or at other
reasonable times to inspect and examine the same and to make such repairs to the
Premises as the Landlord shall deem advisable, and to show the Premises to prospective
tenants, buyers or lenders.
17. Indemnification and Insurance.
A. Indemnification and Waiver. Except as may be prohibited by law, Tenant
agrees that Landlord shall not be liable for any damage or liability of any kind or for any
injury to or death of persons or damage to property of Tenant or any other person during
the Lease Term, from any cause whatsoever, by reason of the use, occupation or
enjoyment of the Premises or the operation of business therein or therefrom by Tenant
or any person thereon or holding under said Tenant, and Tenant hereby agrees to defend,
indemnify and save harmless Landlord from all liability whatsoever, including, without
limitation, such liability on account of any such real or claimed damage or injury and from
all liens, claims and demands arising out of the use of the Premises, the Center, and its
facilities, or any repairs or alterations which Tenant may make upon said Premises, but
Tenant shall not be liable for damage or injury occasioned by the gross negligence or
willful misconduct of Landlord and its designated agents, servants or employees. This
obligation to indemnify shall include the reasonable costs of legal counsel and
investigation costs and all other reasonable costs, expenses and liabilities incurred in
connection with any and all claims of damage and shall survive the expiration or other
early termination of this Lease. In the event that any action or proceeding be brought
against Landlord or Landlord's agents, employees, affiliates or successors in interest by
reason of any such claim, Tenant upon notice from Landlord shall defend such action or
proceeding at Tenant's cost and expense by counsel approved by Landlord, such
approval not to be unreasonably withheld. To the extent such loss or damage is covered
by insurance, Landlord and Tenant each hereby waive any rights one may have against
the other, and Tenant waives any rights it may have against any trust deed holder or any
of the parties to any REA(s), on account of any loss or damage occasioned to Landlord
or Tenant, as the case may be, their respective properties, the Premises or their contents,
or to other portions of the Center arising from any risk generally covered by fire and
extended coverage insurance or from vandalism, malicious mischief or sprinkler leakage.
The parties hereto, on behalf of their respective insurance companies insuring such
losses, waive any right of subrogation that one may have against the other, and Tenant
on behalf of its said insurance company waives any right of subrogation which such
insurer may have against any trust deed holder or any of the parties to any REA(s). The
foregoing waivers of subrogation shall be operative provided that no policy of insurance
required herein is invalidated thereby.
B. Tenant's Insurance Obliqation. Tenant further covenants and agrees that it
shall carry and maintain during the entire Lease Term hereof, at Tenant's sole cost and
expense, the following types of insurance, in the amounts specified and in the form
hereinafter provided:
Page 14 of 38
(i) Public Liability and Property Damage. Tenant shall at all times
during the Lease Term maintain in effect a policy or policies of bodily injury liability
insurance with limits of not less than Two Million Dollars ($2,000,000.00) combined single
limit insuring against any and all liability of the insured with respect to the Premises or
arising out of the maintenance, condition, use or occupancy thereof, and property damage
liability insurance with a limit of not less than One Million Dollars ($1,000,000.00) per
accident or occurrence. Without hereby implying any authorization therefor unless
otherwise specifically contemplated herein, if at any time during the term hereof any
alcoholic beverages of any nature are served in the Premises, Tenant shall also maintain
a liquor liability insurance policy with a limit of liability of not less than One Million Dollars
($1,000,000.00). All such insurance shall specifically insure the performance by Tenant
of the indemnity agreement as to liability for injury to or death of persons and injury or
damage to property contained in Section 17.A.
(ii) Plate Glass. Tenant shall insure the plate glass on the Premises.
(iii) Tenant Improvements. Insurance covering all of Tenant's Work as
referenced in Exhibit "C", Tenant's leasehold improvements, alterations or additions
permitted under Section 11 hereof, and Tenant's trade fixtures, merchandise and
personal property from time to time in, on or upon the Premises, in an amount not less
than one hundred percent (100%) of their full replacement cost, without depreciation, from
time to time during the Lease Term, providing protection against any peril included within
the classification "Fire and Extended Coverage", together with insurance against sprinkler
damage, vandalism, and malicious mischief. Any policy proceeds shall be used for the
repair or replacement of the property damaged or destroyed unless this Lease shall cease
and terminate under the provisions of Section 18 hereof, whereupon any proceeds of
insurance covering Tenant's Work, Tenant's leasehold improvements and any alterations
or additions permitted under this Lease shall be payable to Landlord. Tenant shall also
carry such other insurance in such amounts during construction as Landlord may require
from the majority of its other tenants.
(iv) Boiler or Machinery Insurance. Tenant shall at all times during the
Lease Term maintain in effect a policy or policies of insurance covering all pressure
vessels, boiler, air conditioning equipment, or similar equipment, if any, in, on, adjoining,
above or beneath the Premises, in an amount of Five Hundred Thousand Dollars
($500,000.00)
(v) Worker's Compensation Insurance. Tenant shall at all times during
the Lease Term maintain in effect a policy or policies of insurance covering all persons
employed, directly or indirectly, in connection with any work performed by Tenant or any
repair or alteration authorized by this Lease or consented to by Landlord, and all
employees and agents of Tenant with respect to whom death or bodily injury claims could
be asserted against Landlord or Tenant, as required by the law of the State of California.
(vi) Products Liability Insurance. Tenant shall at all times during the
Lease Term maintain in effect a policy or policies of insurance covering products liability
for merchandise sold by Tenant on the Premises.
Page 15 of 38
(vii) Business Interruption Insurance. Tenant shall maintain business
income rental insurance in an amount equal to two (2) times the Annual Rent,
Percentage Rent, and all additional Rent paid or payable by Tenant for the twelve (12)
calendar months preceding the month of the casualty, or, if less than twelve (12) months
of the term of the Lease Term has elapsed, annualized for such number of months which
have elapsed.
(viii) Other. Upon notice from Landlord, Tenant shall obtain and thereafter
maintain in effect all other types of insurance covering perils as may be reasonably
required by Landlord and customarily carried by owners or operators of similar types of
businesses in Palm Desert, California.
C. Policv Requirements. All policies of insurance provided for in this Section
17 shall be issued by insurance companies with a general policy holder's rating of not
less than A and a financial rating of not less than Class XV as rated in the most current
available Best's Insurance Reports and qualified to do business in the State of California.
All such policies shall be issued in the names of Landlord, as an additional insured, and
Tenant, and if requested by Landlord, Landlord's mortgagees or trust deed beneficiaries
as additional insureds, which policies shall be for the mutual and joint benefit and
protection of Landlord, Tenant and Landlord's mortgagees or trust deed beneficiaries and
Tenant shall cause its insurer to issue the appropriate waiver of subrogation rights
endorsements to all such insurance policies. Executed copies of such policies of
insurance or certificates thereof shall be delivered to Landlord within ten (10) days prior
to delivery of possession of the Premises to Tenant and thereafter at least thirty (30) days
prior to the expiration of the term of each such policy. All public liability and property
damage policies shall contain a provision that Landlord, although named as an insured,
shall nevertheless be entitled to recovery under said policies for any loss occasioned to
it, its servants, agents and employees by reason of any act or omission of Tenant or its
servants, agents, employees or contractors. As often as any such policy shall expire or
terminate, renewal or additional policies shall be procured and maintained by Tenant in
like manner and to like extent. All policies of insurance delivered to Landlord must contain
a provision that the company writing said policy will give Landlord at least thirty (30) days'
notice in writing in advance of any cancellation or lapse of the effective date of any
reduction in the amount of insurance. All public liability, property damage or other
casualty policies shall be written as primary policies, not contributing with coverage that
Landlord may carry.
D. Increase in Coveraqe. In the event Landlord or the holder of any mortgage
or trust deed on the Center deems it necessary to increase the amounts or limits of
insurance required to be carried by Tenant hereunder, Landlord may increase said
amounts or limits and Tenant shall increase the amounts or limits of the insurance
required to be carried by Tenant hereunder and shall provide Landlord with policies or
certificates indicating the increased amounts or limits as provided in Section 17.C.
E. Blanket Coveraqe. Notwithstanding anything to the contrary contained in
this Section 17, Tenant's obligations to carry the insurance provided for herein may be
brought within the coverage of a so-called blanket policy or policies of insurance carried
Page 16 of 38
and maintained by Tenant; provided, however, that Landlord and Landlord's mortgagees
or trust deed beneficiaries shall be named as an additional insured thereunder as their
interest may appear; and that the coverage afforded Landlord will not be reduced or
diminished by reason of the use of such blanket policy of insurance, and provided further
that the requirements set forth herein are otherwise satisfied. Tenant agrees to permit
Landlord at all reasonable times to inspect the policies of insurance of Tenant covering
risks upon the Premises for which policies or copies of certificates thereof are not required
to be delivered to Landlord.
F. Landlord's Insurance Obliqations. Landlord shall maintain or cause to be
maintained in effect a policy or policies of insurance covering the Center, including the
leasehold improvements included within "Landlord's Work" as referenced in Exhibit "C"
(but not "Tenant's Work" as referenced in Exhibit "C", Tenant's leasehold improvements,
alterations or additions permitted under Section 11 hereof, Tenant's trade fixtures,
merchandise or other personal property), in an amount of not less than eighty percent
(80%) of its full replacement cost (exclusive of excavations, foundations and footings)
during the Lease Term, providing protection against any peril generally included within
the classification "Fire and Extended Coverage" (and "Earthquake insurance" and "Flood
Insurance" if Landlord in its sole discretion deems such additional coverage desirable),
together with insurance against sprinkler damage, vandalism and malicious mischief, and
such further insurance as Landlord or Landlord's lender deems necessary or desirable.
Landlord's obligation to carry the insurance provided for herein may be brought within the
coverage of a so-called blanket policy or policies of insurance carried and maintained by
Landlord, provided that the coverage afforded will not be reduced or diminished by reason
of the use of such blanket policy of insurance.
G. Insurance Use Restrictions. Tenant agrees that it will not at any time during
the Lease Term carry any merchandise or do anything in or about the Premises which
will tend to increase the insurance rates upon the building of which the Premises are a
part. Tenant agrees to pay to Landlord forthwith upon demand the amount of any
increase in premiums for insurance against loss by fire or any other peril normally covered
by fire and extended coverage insurance that may be charged during the Lease Term on
the amount of insurance to be carried by Landlord on the Center resulting from the
foregoing or from Tenant doing any act in or about the Premises which does so increase
the insurance rates, whether or not Landlord shall have consented to such act on the part
of Tenant. If Tenant installs upon the Premises any electrical equipment which
constitutes an overload on the electrical lines of the Premises, Tenant shall at its own
expense make whatever changes or provide whatever equipment safeguards are
necessary to comply with the requirement of the insurance underwriters and any
governmental authority having jurisdiction there over, but nothing herein contained shall
be deemed to constitute Landlord's consent to such overloading.
18. Destruction of Premises.
A. Insured Casualtv. In the event that the Premises are damaged by fire or
any other peril covered by insurance maintained by Landlord, Landlord shall, within a
period of one hundred eighty (180) days after the occurrence of such destruction, but only
Page 17 of 38
to the extent that proceeds of such insurance are available to Landlord for such purpose,
commence reconstruction and restoration of the Premises and prosecute the same
diligently to completion, in which event this Lease shall continue in full force and effect.
In the event insurance proceeds are not sufficient to pay the cost of such reconstruction,
or if the damage or destruction is due to the acts or omissions of Tenant, its agents,
employees or contractors, or if Landlord is restricted by any governmental authority,
Landlord may elect to either terminate this Lease or pay the cost of such reconstruction.
Such reconstruction and restoration shall be only to the extent necessary to restore the
Landlord's Work in the Premises as described in Exhibit "C". Tenant shall be obligated
for the restoration of all of the items specified as Tenant's Work in said Exhibit "C" in the
event of such reconstruction, as well as Tenant's other leasehold improvements, trade
fixtures and other personal property on the Premises.
B. Uninsured Casualtv. In the event that the Premises are damaged as a result
of any casualty or peril not covered by Landlord's insurance, Landlord may within a period
of one hundred eighty (180) days after the occurrence of such destruction (a) commence
reconstruction and restoration of the Premises and prosecute the same diligently to
completion, in which event the Lease shall continue in full force and effect, or (b) notify
Tenant in writing that it elects not to so reconstruct or restore the Premises, in which event
this Lease shall cease and terminate as of the date of service of such notice, unless
Tenant is unable to continue the operation of its business after the occurrence of such
destruction, in which event this Lease shall cease and terminate as of the date of such
destruction. In the event of any reconstruction of the Premises by Landlord following any
damage as a result of any casualty or peril not covered by Landlord's insurance, such
reconstruction shall be only to the extent necessary to restore the Landlord's Work in the
Premises as described in Exhibit "C" Tenant shall be obligated for the restoration of all
the items specified as Tenant's Work in said Exhibit "C" in the event of such
reconstruction, as well as Tenant's other leasehold improvements, trade fixtures and
other personal property on the Premises.
C. Damage to the Center. Notwithstanding anything to the contrary contained
in Sections 18.A and 18.13 above, in the event of a total destruction of the Center or a
partial destruction of the Center, the cost of restoration of which would exceed twenty
percent (20%) of the then replacement value of the Center, by any cause whatsoever,
whether or not insured against, Landlord may, within a period of one hundred eighty (180)
days after the occurrence of such destruction, notify Tenant in writing that it elects not to
so reconstruct or restore the Center, in which event this Lease shall cease and terminate
as of the date of such destruction.
D. Damage Near End of Term. Notwithstanding anything to the contrary
contained in Sections 18.A, 18.13 and 18.0 above, in the event that the Premises are
damaged during the last two years of the Lease Term, regardless of the cost of restoration
and the amount of insurance proceeds, Landlord shall have the option to terminate this
Lease by giving written notice to the Tenant of the exercise of such option within thirty
(30) days after such destruction, in which event this Lease shall cease and terminate as
of the date of such notice.
Page 18 of 38
E. Release of Liabilitv. In the event of any termination of this Lease in
accordance with this Section 18, the parties shall be released thereby without further
obligation to the other party coincidental with the surrender of possession of the Premises
to Landlord, except for (i) items which have theretofore accrued and are then unpaid or
unperformed, and (ii) the obligations of Tenant under Sections 9 and 17 hereof.
F. Abatement of Rent. Except as expressly provided in this Section 185, in
no event shall any Rent payable under this Lease abate or otherwise be subject to
reduction or offset. In the event of reconstruction and restoration as herein provided,
then, except to the extent that same shall be covered by the business interruption
insurance required to be carried by Tenant pursuant to Section 17 above, the Annual
Rent to be paid under this Lease shall be abated in the same proportion that the square
footage of the Premises has been destroyed or damaged if such damage has, in the
reasonable judgment of Landlord, rendered such portion of the Premises unusable
commencing from the date of destruction and continuing during the period of such
reconstruction or restoration. Tenant shall continue the operation of its business on the
Premises during any such period to the extent reasonably practicable from the standpoint
of prudent business management, and the obligation of Tenant to pay Percentage Rent
and all other charges, except the entire Annual Rent, shall remain in full force and effect.
Tenant shall not be entitled to any compensation or damages from Landlord for loss of
use of the whole or any part of the Premises, Tenant's personal property or any
inconvenience or annoyance occasioned by such destruction, reconstruction or
restoration. Tenant hereby waives any statutory rights of termination or abatement which
may arise by reason of any partial or total destruction of the Premises which Landlord is
obligated to restore or may restore under any of the provisions of this Lease. In the event
any holder of a mortgage or deed of trust on the Center should require that the insurance
proceeds payable upon damage or destruction to the Center by fire or other casualty be
used to retire the debt secured by such mortgage or deed of trust, or in the event any
Landlord under any underlying or ground lease should require that such proceeds be paid
to such Landlord, Landlord shall in no event have any obligation to rebuild and at
Landlord's election this Lease shall terminate. Tenant, as a material inducement to
Landlord's entering into this Lease, irrevocably waives and releases its rights under the
provisions of Sections 1932(2) and 1933(4) of the California Civil Code, it being the
intention of the parties hereto that the express terms of this Lease shall control under any
circumstances in which those provisions might otherwise apply.
19. Default and Landlord's Remedies.
A. Events of Default. The occurrence of any of the following shall constitute
an event of default and material breach of this Lease by Tenant:
(i) Any failure by Tenant to pay any Rent, additional Rent or any other
charge required to be paid under this Lease, where such failure continues for five (5)
days; or
(ii) Any failure by Tenant to observe or perform any other provision,
covenant or condition of this Lease to be observed or performed by Tenant where such
Page 19 of 38
failure continues for thirty (30) days after written notice thereof from Landlord to Tenant;
provided that if the nature of such default is such that the same cannot reasonably be
cured within such period, Tenant shall not be deemed to be in default if it shall commence
such cure within such period, and thereafter rectify and cure said default with due
diligence; or
(iii) Abandonment or vacation of the Premises by Tenant, without
payment of rent; or
(iv) To the extent permitted by law, a general assignment by Tenant or
any guarantor of the Lease for the benefit of creditors, or the filing by or against Tenant
or any guarantor of any proceeding under an insolvency or bankruptcy law, unless in the
case of a proceeding filed against Tenant or any guarantor the same is dismissed within
sixty (60) days, or the appointment of a trustee or receiver to take possession of all or
substantially all of the assets of Tenant or any guarantor, unless possession is restored
to Tenant or such guarantor within thirty (30) days, or any execution or other judicially
authorized seizure of all or substantially all of Tenant's assets located upon the Premises
or of Tenant's interest in this Lease, unless such seizure is discharged within thirty (30)
days; or
B. Remedies Upon Default. Upon the occurrence of any event of default by
Tenant, Landlord shall have, in addition to any other remedies available to Landlord at
law or in equity, the option to pursue any one or more of the following remedies (each
and all of which shall be cumulative and nonexclusive) without any notice or demand
whatsoever.
(i) Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, without
prejudice to any other remedy which it may have for possession or arrearage in Rent,
enter upon and take possession of the Premises and expel or remove Tenant and any
other person who may be occupying the Premises or any part thereof, without being liable
for prosecution or any claim or damages therefor; and Landlord may recover from Tenant
the following:
(a) The worth at the time of award of any unpaid Rent which has
been earned at the time of such termination; plus
(b) The worth at the time of award of the amount by which the
unpaid Rent which would have been earned after termination until the time of award
exceeds the amount of such rental loss that Tenant proves could have been reasonably
avoided; plus
(c) The worth at the time of award of the amount by which the
unpaid Rent for the balance of the Lease Term after the time of award exceeds the
amount of such rental loss that Tenant proves could have been reasonably avoided; plus
(d) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its obligations under this
Page 20 of 38
Lease or which in the ordinary course of things would be likely to result therefrom,
specifically including but not limited to, brokerage commissions and advertising expenses
incurred, expenses of remodeling the Premises or any portion thereof for a new tenant,
whether for the same or a different use, and any special concessions made to obtain a
new tenant; an
(e) At Landlord's election, such other amounts in addition to or
in lieu of the foregoing s may be permitted from time to time by applicable law. The term
"Rent" as used in this Section 19.13 shall be deemed to be and to mean all sums of every
nature required to be paid by Tenant pursuant to the terms of this Lease, whether to
Landlord or to others. Any such sums which are based on percentages of income,
increased costs or other historical data shall be reasonable estimates or projections
computed by Landlord on the basis of the amounts thereof accruing during the 24-month
period immediately prior to default, except that if it becomes necessary to compute such
sums before a 24-month period has expired, then the computation shall be made on the
basis of the amounts accruing during such shorter period. As used in Paragraphs
19.2(a)(i) and (ii), above, the "worth at the time of award" shall be computed by allowing
interest at the maximum per annum rate then allowed by law. As used in Paragraph
19.2(a)(iii) above, the "worth at the time of award" shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1 %).
(ii) If Landlord does not elect to terminate this Lease on account of any
default by Tenant, Landlord may, from time to time, without terminating this Lease,
enforce all of its rights and remedies under this Lease, including the right to recover all
Rent as it becomes due.
(iii) Whether or not Landlord elects to terminate this Lease on account of
any default by Tenant, Landlord shall have the right to terminate any and all subleases,
licenses, concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole discretion, succeed to
Tenant's interest in such subleases, licenses, concessions or arrangements. In the event
of Landlord's election to succeed to Tenant's interest in any such subleases, licenses,
concessions or arrangements, Tenant shall, as of the date of notice by Landlord of such
election, have no further right to or interest in the Rent or other consideration receivable
thereunder.
C. Form of Pavment After Default. Following the occurrence of an event of
default by Tenant, Landlord shall have the right to require that any or all subsequent
amounts paid by Tenant to Landlord hereunder, whether in the cure of the default in
question or otherwise, be paid in the form of cash, money order, cashier's or certified
check drawn on an institution acceptable to Landlord, or by other means approved by
Landlord, notwithstanding any prior practice of accepting payments in any different form.
D. Waiver of Default. No waiver by Landlord or Tenant of any violation or
breach of any of the terms, provisions and covenants herein contained shall be deemed
or construed to constitute a waiver of any other or later violation or breach of the same or
Page 21 of 38
any other of the terms, provisions, and covenants herein contained. Forbearance by
Landlord in enforcement of one or more of the remedies herein provided upon an event
of default shall not be deemed or construed to constitute a waiver of such default. The
acceptance of any Rent hereunder by Landlord following the occurrence of any default,
whether or not known to Landlord, shall not be deemed a waiver of any such default,
except only a default in the payment of the Rent so accepted.
E. Additional Remedies Upon Default. In addition to any rights or remedies
hereinbefore or hereinafter conferred upon Landlord under the terms of this Lease, the
following remedies and provisions shall specifically apply in the event Tenant engages in
any one or more of the acts contemplated by the provisions of Section 19.13 of this Lease:
(i) In all events, any receiver or trustee in bankruptcy shall either
expressly assume or reject this Lease within sixty (60) days following the entry of an
"Order for Relief" or within such earlier time as may be provided by applicable law;
(ii) In the event of an assumption of this Lease by a creditor or by a
trustee, such creditor or trustee shall within fifteen (15) days after such assumption (i)
cure any default or provide adequate assurance that defaults will be promptly cured; and
(H) compensate Landlord for actual pecuniary loss or provide adequate assurance that
compensation will be made for actual pecuniary loss, including, but not limited to, all
attorneys' fees and costs incurred by Landlord resulting from any such proceedings; and
(iii) provide adequate assurance of future performance;
(iii) Where a default exists in this Lease, the trustee or creditor assuming
this Lease may not require Landlord to provide services or supplies incidental to this
Lease before its assumption by such trustee or creditor, unless Landlord is compensated
under the terms of this Lease for such services and supplies provided before the
assumption of such Lease;
(iv) The creditor or trustee may assign this Lease only if (1) it is assumed;
and (2) adequate assurance of future performance by the assignee is provided, whether
or not there has been a default under this Lease. Any consideration paid by any assignee
in excess of the rental reserved in this Lease shall be the sole property of, and paid to,
Landlord;
(v) Landlord shall be entitled to the fair market value for the Premises
and the services provided by Landlord (but in no event less than the rental reserved in
this Lease) subsequent to the commencement of a bankruptcy event;
(vi) Any security deposit given by Tenant to Landlord to secure the future
performance by Tenant of all or any of the terms and conditions of this Lease shall be
automatically transferred to Landlord upon the entry of an "Order of Relief';
(vii) The parties agree that Landlord is entitled to adequate assurance of
further performance of the terms and provisions of this Lease in the event of an
assignment under the provisions of the Bankruptcy Code. For purposes of any such
Page 22 of 38
assumption or assignment of this Lease, the parties agree that the term "adequate
assurance" shall include at least the following without limitation:
(a) Any proposed assignee must have as demonstrated to
Landlord's satisfaction a net worth (as defined in accordance with generally accepted
accounting principles consistently applied) of an amount sufficient to assure that the
proposed assignee will have the resources with which to conduct the business to be
operated in the Premises, including the payment of all Rent. The financial condition and
resources of Tenant are material inducements to Landlord entering into this Lease.
(b) Any proposed assignee must have engaged in the permitted
Use described elsewhere herein hereof for at least five (5) years prior to any such
proposed assignment.
(c) In entering into this Lease, Landlord considered extensively
Tenant's permitted use and determined that such permitted business would add
substantially to the tenant balance in the Center, and were it not for the Tenant's
agreement to operate only Tenant's permitted business on the Premises, Landlord would
not have entered into this Lease. Landlord's operation of the Center will be materially
impaired if a trustee in bankruptcy or any assignee of this Lease operates any business
other than Tenant's permitted business.
(viii) Any assumption of this Lease by a proposed assignee shall not
adversely affect Landlord's relationship with any of the remaining tenants in the Center
taking into consideration any and all other "use" clauses and/or "exclusivity" clauses
which may then exist under their leases with Landlord; and
(ix) Any guarantee of this Lease shall remain in full force and effect.
F. Efforts to Re -let. For the purposes of this Section, Tenant's right to
possession shall not be deemed to have been terminated by efforts of Landlord to Re -let
the Premises, by its acts of maintenance or preservation with respect to the Premises, or
by appointment of a receiver to protect Landlord's interests hereunder. The foregoing
enumeration is not exhaustive, but merely illustrative of acts which may be performed by
Landlord without terminating Tenant's right to possession.
G. Notice. Any notice of default given by Landlord, whether or not required,
may also have the effect of constituting any notice required to be given by Landlord for
purposes of initiating any unlawful detainer or other similar action; and any notice period
under Section 19.1 shall be inclusive of, and not in addition to, any notice period required
by law.
20. aLqqq. Tenant shall not place any sign upon the Premises or the Building without
Landlord's prior written consent. Under no circumstances shall Tenant place a sign on
any roof of the Building.
21. Parking. Tenant shall have the nonexclusive use, in common with Landlord and
Landlord's other tenants, of the parking area owned by Landlord at and around the
Page 23 of 38
Premises; provided; however, that no tenant may park in an area designated, identified,
and/or reserved for parking by any other tenant or tenants, if any. Should any damages
to the Premises, the parking area, and/or the vehicles of Tenant or their
invitees/licensees/employees be occasioned by the invitees, licensees, tradesmen, or
customers of Tenant, such damage shall be repaired at Tenant's sole cost and expense.
It is expressly understood and agreed the Tenant's right to the use of said parking area
shall be non-exclusive and subject to the Rules and Regulations, and that Landlord
reserves the right to establish and enforce other rules with respect to the use thereof, and
Tenant agrees to abide by and conform to the same, as revised from time -to -time.
22. Estoppel Certificate. Tenant shall execute and deliver to Landlord within ten
(10) days of request a commercially reasonable estoppel statement. Landlord and
Tenant intend that any estoppel statement delivered pursuant to this Section may be
relied upon by any mortgagee, beneficiary, purchaser or prospective purchaser of the
building or any interest therein and failure to execute and return such estoppel shall be a
material breach of the Lease. Tenant's refusal to timely execute such certificate, or such
other certificate as the party (other than Landlord) to the sale, assignment or
hypothecation may request, shall constitute an acknowledgment by Tenant that the
statements in such certificate as prepared by Landlord and submitted to Tenant are true
and correct without exception.
23. Eminent Domain. In case the whole of the Premises, or such part thereof that
substantially interferes with the reasonable use of the Premises as office space, shall be
taken for any public or quasi -public purpose by any lawful power or authority by exercise
of the right of appropriation, condemnation or eminent domain, or sold to prevent such
taking, either party shall have the right to terminate this Lease effective as of the date
possession is required to be surrendered to said authority. Tenant shall not assert any
claim against Landlord or the taking authority for any compensation because of such
taking and Landlord shall be entitled to receive the entire amount of any award without
deduction for any estate or interest of Tenant. In the event the amount of property or the
type of estate taken shall not substantially interfere with the reasonable use of the
Premises as office space, Landlord shall be entitled to the entire amount of the award
without deduction for any estate or interest of Tenant. If there is no substantial
interference or if there is substantial interference, but neither party elects to terminate,
Landlord shall promptly proceed to restore the Premises to substantially the same
condition as the Premises existed prior to such partial taking, to the extent possible by
application of the condemnation proceeds only, and a proportionate allowance shall be
made to Tenant for the Rent corresponding to the time during which, and to the part of
the Premises of which Tenant shall be so deprived on account of such taking and
restoration. Nothing contained in this Section shall be deemed to give Landlord any
interest in any award made to Tenant for the taking of personal property and fixtures
belonging to Tenant. Each party waives the provisions of California Code of Civil
Procedure Section 1265.130 allowing either party to petition the Superior Court to
terminate this Lease in the event of a partial taking of the premises.
24. Monument Siqn. Notwithstanding anything contained elsewhere in the Lease,
Tenant shall have the right to install its name on the monument sign located at the Cook
Page 24 of 38
Street entrance to the property. Tenant hereby acknowledges that it may use the second
position from the top of the sign. All costs to add Tenant's name to the monument sign,
including any cost to change the configuration of the monument sign shall be borne by
Tenant. All other requirements for signs including the monument sign shall be as outlined
in the sign criteria attached hereto.
25. Brokers. The parties recognize that the broker who negotiated this Lease is
Maggie Montez of Lee & Associates ("Broker"). Landlord agrees to pay a leasing
commission per Landlord's separate agreement with Broker. Tenant and Landlord each
represent and warrant to each other that, other than Broker, no other broker has
represented either of them or is otherwise entitled to a commission or fee in connection
with the transactions contemplated in this Lease. Each party hereby indemnifies, defends
and holds the other party harmless from all loss, cost and expense (including reasonable
attorneys' fees) arising out of a breach of its representation set forth in this Section 25.
The provisions of this Section 25 shall survive the termination of the Lease. This
Section 25 is for the benefit of Landlord and Tenant only and is not intended to give any
third person, including Broker, any right of subrogation or action over or against any party
to this Lease.
26. Attornevs' Fees. If either party commences an action against the other party
arising out of or in connection with this Lease, the prevailing party shall be entitled to have
and recover from the losing party reasonable attorney's fees and costs of suit.
27. Notices.
Any notice required or permitted to be given hereunder may be given by personal delivery
or by United States certified mail, postage prepaid, addressed to Tenant at the Premises
and to Landlord at 42600 Caroline Court, Suite 102, Palm Desert, California 92211 and
with a copy to 9777 Wilshire Blvd., Suite 900, Beverly Hills, California 90212 or at such
other address as the Landlord shall designate in writing.
28. Waiver; Accord and Satisfaction. No delay or omission in the exercise of any right
or remedy of Landlord on any default by Tenant shall impair such right or be construed
as a waiver. The receipt and acceptance by Landlord of delinquent Rent shall not
constitute a waiver of any other default; it shall constitute only a waiver of timely payment
for the particular Rent payment involved. No payment by Tenant or receipt by Landlord
of a lesser amount than the Rent payment herein stipulated shall be deemed to be other
than on account of the Rent, nor shall any endorsement or statement on any check or
any letter accompanying any check or payment as Rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such Rent or pursue any other remedy provided
in this Lease.
29. Time is of the Essence. Time is of the essence of this Lease as to the performance
of all terms, covenants, and conditions stated herein.
Page 25 of 38
30. Successors and Assiqns. Except as otherwise provided herein, all of the terms
and conditions hereof shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. In the event of any transfer, assignment or
other conveyance or transfers of any such title or tenant, Landlord herein named (and in
case of any subsequent transfers or conveyances, the then grantor) shall be automatically
freed and relieved from and after the date of such transfer. Landlord may transfer its
interest in the Premises without the consent of Tenant and such transfer or subsequent
transfer shall not be deemed a violation on Landlord's part of any of the terms and
conditions of this Lease.
31. Titles and Definitions. The titles of Sections herein are for identification only. They
shall not be considered to be a part of this Lease and shall have no effect upon the
construction or interpretation thereof. The word "Landlord" and "Tenant" as used in this
Lease shall include both singular, plural, masculine, feminine, and neuter as the context
shall require.
32. Intentionally deleted.
33. Choice of Laws: Interpretation. This Lease shall be governed by and construed
pursuant to the laws of the State of California. The provisions of this Lease shall be
construed in accordance with the fair meaning of the language used and shall not be
strictly construed against either party.
34. Authority. Each of the persons executing this Lease on behalf of Tenant warrants
and represents that Tenant is a duly organized and validly existing entity, that Tenant has
full right and authority to enter into this Lease and that the persons signing on behalf of
Tenant are authorized to do so and have the power to bind Tenant to this Lease. Tenant
shall provide Landlord upon request with evidence reasonably satisfactory to Landlord
confirming the foregoing representations.
35. No Merqer. 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, operate
as an assignment to it of any or all subleases or sub -tenancies.
36. Non Discrimination. Tenant herein covenants by and for himself or herself, his or
her heirs, executors, administrators and assigns, and all persons claiming under or
through him or her, and this lease is made and accepted upon and subject to the following
conditions: That there be no discrimination against or segregation of any person or group
of persons, on account of age, race, color, creed, religion, sex, marital status, national
origin, or ancestry, in the leasing, subleasing transferring, use or occupancy, tenure or
enjoyment of the land herein leased nor shall the Tenant practice or practices of
discrimination or segregation with reference to the selection, location, number, use or
occupancy of tenants, licensees, sub Tenant, subtenants or vendees in the land herein
leased.
37 Separability. It is agreed that if any provision of this Lease shall be determined to
be void by a court of competent jurisdiction, then such determination shall not affect any
Page 26 of 38
other provision of this Lease and all such other provisions shall remain in full force and
effect.
38. Entire Aqreement. It is understood and acknowledged that there are no oral
agreements between the parties hereto affecting this Lease, and this Lease supersedes
and cancels any and all previous negotiations, arrangements, brochures, agreements and
understandings, if any, between the parties hereto or displayed by Landlord to Tenant
with respect to the subject matter thereof, and none thereof shall be used to interpret or
construe this Lease. This Lease contains all of the terms, covenants, conditions,
warranties and agreements of the parties relating in any manner to the rental, use and
occupancy of the Premises, shall be considered to be the only agreement between the
parties hereto and their representatives and agents, and none of the terms, covenants,
conditions or provisions of this Lease can be modified, deleted or added to except in
writing signed by the parties hereto. All negotiations and oral agreements acceptable to
both parties have been merged into and are included herein. There are no other
representations or warranties between the parties, and all reliance with respect to
representations is based totally upon the representations and agreements contained in
this Lease.
39. Cumulative Riqhts. The various rights, options, elections, powers and remedies
contained in this Lease shall be construed as cumulative and no one of them shall be
exclusive of any of the others, or of any other legal or equitable remedy which either party
might otherwise have in the event of breach or default in the terms hereof, and the
exercise of one right or remedy by such party shall not impair its right to any other right
or remedy until all obligations imposed upon the other party have been fully performed.
40. Exculpation. The obligations of Landlord under this Lease do not constitute
personal obligations of the individual members of the limited liability company which is
Landlord, and Tenant shall look solely to the real estate that is the subject of this Lease
and to no other assets of Landlord or the partners of the Landlord or the officers, directors,
trustees, employees, or agents of Landlord or Landlord's partners for satisfaction of any
liability with respect to this Lease and will not seek recourse against the individual
members of the limited liability company which is Landlord herein, nor against any of their
personal assets for such satisfaction.
41. Mutual Execution. Neither the submission of this Lease by Landlord to Tenant nor
any negotiations between them nor any course of conduct by either or both of them shall
create or imply any rights of Tenant or reservations in or to the Premises until this Lease
has been fully executed by both Landlord and Tenant. Tenant hereby specifically waives
all such rights prior to such mutual execution of this Lease.
Page 27 of 38
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the
day and year set forth below.
LANDLORD:
SINATRA AND COOK PROJECT, LLC
a California limited liability cgmpan ---D
Name: Steven Gilfenb in
r
Its: Managing e er
TENANT:
CITY OF PALM DESERT,
a municipal corporation
By: S- 'Ud -
Name: Susan Marie Weber, Mayor
Dated: '6
r
Dated
Z "i� 1
Page 28 of 38
EXHIBIT A
FLOOR PLAN OF PREMISES
Page 29 of 38
09
�..�:
Y:?;
Exhibit "B"
RULES AND REGULATIONS
Use of Store Premises
(a) All floor areas, including vestibules, entrances and returns, doors, fixtures,
windows and plate glass, shall be maintained in a safe, neat and clean condition.
(b) All trash, refuse and waste material shall be regularly removed from the
Premises of each occupant and until removal shall be stored (i) in adequate containers,
which containers shall be located so as not to be visible to the general public shopping in the
Center, and (ii) so as not to constitute any health or fire hazard or nuisance to any occupant.
(c) No portion of the Center shall be used for lodging purposes.
(d) Neither sidewalks nor walkways shall be used to display, store or place any
merchandise, equipment or devices.
(e) No advertising medium, device, instrument or apparatus shall be utilized that
can be heard or experienced outside the Premises, including, without limiting the generality
of the foregoing, flashing lights, searchlights, phonographs, organs, radios or television.
(f) No auction, fire, bankruptcy, or going -out -of -business sale shall be conducted
in, at, or about the Center or any portion or portions thereof, except pursuant to court order.
(g) No use shall be made of the Center or any portion or portions thereof that would
(i) violate any law, ordinance or regulation, (ii) constitute a nuisance, (iii) constitute a
hazardous use, or (iv) violate, suspend, or void any policy or policies of insurance.
(h) All occupants of the Center shall use their best efforts to cause all trucks
servicing retail facilities within the Center to load and unload prior to the hours of the Center
opening for business to the general public.
2. Conduct of Persons
The following rules and regulations govern the use of roadways, walkways, the
enclosed mall, parking areas, and other common areas and facilities:
(a) No person shall use any roadway, walkway, or mall, except as a means of
egress from or ingress to any floor area and to parking areas within the Center or adjacent
public streets. Such use shall be in an orderly manner and in accordance with directional or
other signs or guides. Roadways shall not be used at a speed in excess of twenty (20) miles
per hour and shall not be used for parking or stopping, except for the immediate loading or
unloading of passengers. No walkways, hallways, corridors or mall shall be used for other
than pedestrian travel.
(b) No person shall use any parking area, except for the parking of motor vehicles
during the period of time such person or the occupants of such vehicle are customers or
Page 30 of 38
business invitees of the retail establishments within the Center. All motor vehicles shall be
parked in an orderly manner within the painted lines defining the individual parking places.
During peak periods of business activity, limitations may be imposed as of the length of time
for parking use. Such limitations may be made in specified areas.
(c) No person shall use any utility area, truck court or other area reserved for use
in connection with the conduct of business, except for the specific purpose for which
permission to use such area is given.
(d) No tenant, contractor, agent or employee of any business in the Center shall
use any area for motor vehicle parking, except the area or areas specifically designated for
employee parking and for the particular period of time such use is to be made as determined,
or as established by ordinance.
(e) No person shall, in or on any part of the common areas:
(i) Vend, peddle or solicit orders for sales or distribution of any
merchandise, device, service, periodical, book, pamphlet or other matter whatsoever.
(ii) Except as permitted by law, exhibit any sign, placard, banner, notice or
other written material; distribute any circular, booklet, handbill, placard, or other material;
solicit signatures or registration for membership in any organization, group or association or
contribution for any purpose; parade, rally, patrol, picket, demonstrate, or engage in any
conduct that might tend to interfere with or impede the use of any of the common areas by
any person entitled to use the same; create a disturbance, attract attention or harass, annoy,
disparage or be detrimental to the interest of any of the retail establishments within the
Center.
(iii) Use any common areas for any purpose when none of the retail
establishments within the Center is open for business or employment.
(iv) Throw, discard, or deposit any paper, glass or extraneous matter of any
kind, except in designated receptacles, or create litter or hazards of any kind.
(v) Use any sound -making device of any kind or create or produce in any
manner noise or sound that is annoying, unpleasant, or distasteful to occupants or invitees.
(vi) Deface, damage or demolish any sign, light standard or fixture,
landscaping material or other improvements within the Center, or the property of customers,
business invitees or employees situated within the Center.
3. Prohibited Operations and Nuisances
No use or operation shall be made, conducted or permitted on any part of the Center
site which use or operation is clearly objectionable to the development or operation of the
Center. Included among the uses or operations that are objectionable are uses or operations
that produce or are accompanied by the following characteristics, which list is not intended
to be all-inclusive:
Page 31 of 38
(a) Any noise, litter, dust, dirt, odor or other activity that may constitute a public
or private nuisance;
(b) Any unusual firing, explosive or other damaging or dangerous hazards
(including the storage, display or sale of explosives or fireworks);
(c) Any warehouse operation, or any assembling, manufacturing, distilling,
refining, smelting, industrial, agriculture, drilling or mining operation; provided, however, that
any area used for the storage of goods to be sold at any retail establishment in the Center
shall not be deemed to be a warehouse operation;
(d) Any trailer court, mobile home park, lot for sale of new or used motor vehicles,
labor camp, junk yard, stock yard or animal raising (other than pet shops if Exhibit "B" hereto
permits such use);
(e) Any dumping, disposal, incineration or reduction of garbage or refuse other
than handling or reducing such waste if produced on the Premises from authorized uses and
if handled in a reasonably clean, sanitary and noiseless manner;
(f) Any commercial laundry or dry cleaning plant, laundromat, veterinary hospital,
car washing establishment, bowling alley, mortuary or similar service establishment; and
(g) Any automobile body and fender repair work.
Page 32 of 38
Exhibit "C"
Work Letter Agreement attached to:
STANDARD MULTI -Tenant SHOPPING CENTER LEASE - NET
37023 Cook Street, Suite 102, Palm Desert, California 92211
THIS WORK LETTER AGREEMENT (this "Work Letter") is made effective as of the
day of August 2019 (the "Effective Date"), and is entered into by and between Sinatra
& Cook Project, LLC, a California limited liability company ("Landlord"), and The City
of Palm Desert, a municipal corporation ("Tenant"). As used in this Work Letter the
following terms shall have the following meanings: "Tenant Improvements" means all
improvements to be constructed in the Premises pursuant to this Work Letter. "Landlord's
Work" means the construction of the Tenant Improvements, together with any related work
(including demolition) that is necessary to construct the Tenant Improvements.
RECITALS
A. Landlord and Tenant entered into that certain Lease Agreement, dated of even
date herewith (the "Lease"), which Lease covers certain premises consisting of
approximately 10,290 rentable square feet, comprised of Suite 102 located at 37023 Cook
Street, Suite 102, Palm Desert, California 92211 (the "Premises"). Capitalized terms used
but not defined herein shall have the meanings ascribed to them in the Lease.
B. Tenant has requested that Landlord construct certain improvements within the
Premises and this Work Letter shall set forth the terms and conditions relating to Landlord's
construction of such improvements.
C. Landlord shall provide Tenant with a one-time tenant improvement allowance
up to $40.00 per rentable square foot of the Premises hereinafter referred to as the
"Allowance."
AGREEMENT
Now therefore, in consideration of the agreements of Landlord and Tenant herein
contained and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Cost and Fundinq of Improvements
Landlord has allocated an amount (the "Allowance) not to exceed Four Hundred Eleven
Thousand Six Hundred and 00/100 ($411,600.00) (i.e., $40.00 per rentable square foot of
the Premises) for the costs of designing and constructing the Tenant Improvements. The
Allowance may not be used for or applied toward the purchase of furniture, trade fixtures,
and/or trade equipment. The Allowance shall only be used for or applied to costs for the initial
design and improvement of the Premises including for heating and air conditioning systems,
installations of (i) a lighting/electric meter, (ii) a plumbing/water meter, (iii) walls and ceilings,
or for architectural and space planning fees, permits and plan check fees, construction and
Page 33 of 38
contractor fees including contractor's insurance, plumbing, mechanical equipment and
including fees associated therewith and directly related to the overall improvement of the
Premises and for other hard costs of construction, and Landlord's Supervision Fee
collectively hereinafter all referred to as (the "Total Project Cost"). The Total Project Cost of
the Tenant Improvements is estimated to be $1,578,987.93 hereinafter referred to as (the
"Estimated Amount"). The Estimated Amount exceeds the Allowance and the amount by
which the Estimated Amount exceeds the Allowance shall be hereinafter referred to as (the
"Over -Allowance Amount").
Upon Tenant's execution of this Lease Tenant shall pay an amount equal to twenty-five
percent (25%) of the Total Project Cost to Landlord as a deposit to be later applied to the
Over -Allowance Amount, hereinafter referred to as (the "Over -Allowance Deposit") The
balance of the Over -Allowance Amount, after deducting therefrom the Over -Allowance
Deposit, shall be paid by Tenant to Landlord based on Landlord's draw requests to be
submitted by Landlord to Tenant. Landlord's draw request #1 shall be an amount equal to
30% of the Total Project Cost. Landlord's draw request #2 shall be an amount equal to the
product of the Over -Allowance Amount minus the 55% of the Total Project Cost already paid
by Tenant to Landlord in the form of the Over -Allowance Deposit and draw request #1.
For Example: If the Total Project Cost were to equal $1,578,987.93 and the Allowance is
$411,600 then the Over -Allowance amount would be $1,167,387.93 and upon execution of
the lease the amount due would be $394,746.98, draw request #1 would be $ 473,696.38,
and draw request #2 would be $ 298,944.57 and once a100% of the Over -Allowance has
been paid to the Contractor the Landlord will then use the Allowance toward the Total Project
Cost. This example does not take into consideration that there may be change orders and if
there are change orders Tenant will fund the Change Orders as described herein below.
Landlord's draw requests submitted to Tenant shall include a copy of an approved Contractor
pay application and a written formal request from Landlord to Tenant. Tenant shall fund
Landlord's draw requests in the form of a wire transfer from Tenant to Landlord at Wells
Fargo Bank account #1050475837, routing number 122000247, and to the account of
Sinatra and Cook Project, LLC within five (5) business days of Landlord's draw request being
submitted to Tenant.
Landlord's draw requests shall be submitted to Tenant within three (3) business days of
Landlord's approval of Contractor's pay applications.
The Over -Allowance Amount shall be disbursed by Landlord to the Contractor based on
Landlord's approved Contractor pay application(s) and prior to the disbursement of any
remaining portion of Landlord's contribution to the construction of the Tenant Improvements.
Subject to the Allowance, notwithstanding anything to the contrary herein or in the Lease,
Tenant shall be responsible for, and shall pay to Landlord, any and all costs and expenses
incurred by Landlord in connection with the construction of the Tenant Improvements.
Landlord's Representative shall be paid a supervision fee equal to $100,000.00 and for
purposes of this Work Letter the supervision fee shall not increase nor decrease as a result
of the Total Project Costs being more or less than the Estimated Amount and the supervision
fee is included in the Total Project Cost.
Page 34 of 38
Landlord and Tenant hereby acknowledges and agrees that Landlord's draw requests may
or may not be equal to the same amount as the Contractor's pay application(s).
Landlord and Tenant hereby agree that if at any time Tenant does not fund a draw request
in a timely manner as is described hereinabove Landlord shall have the right, but not the
obligation, to stop the Contractor's work in progress and Landlord shall not be required to
have the Contractor re -start work until such time as Tenant has funded any amounts due to
Landlord as described hereinabove together with any additional costs that may have been
or may be incurred as a result of stopping the work. If Landlord stops the work as a result
Tenant's failure to fund a draw request as required herein, Landlord shall further have the
right to terminate the agreement with the Contractor paying only for work already performed
to date. Any improvements already in place and paid for by way of the Over -Allowance
Amount shall remain in place with no obligation on the part of the Landlord to reimburse
Tenant for any such Over -Allowance amount already paid.
2. Construction Drawings
2.1 Construction Documents. Landlord and Tenant have approved that certain
space plan, specifications and related documents for the Premises [DESCRIPTION OF
PLANS AND SPECIFICATIONS TO BE INSERTED — prepared by McGee Sharron
Architects, dated as of Auqust 28, 2019, job number 81821 (the "Approved Construction
Drawings"). Immediately following Tenant's execution and delivery of this Lease, Tenant
shall cooperate in good faith with Landlord's architects and engineers to supply such
information as is necessary to allow the Landlord's architects and engineers to complete the
architectural and engineering drawings for the Premises, and the final architectural working
drawings in a form which is complete to allow subcontractors to bid on the work and obtain
all applicable permits and in a manner consistent with, and which are a logical extension of,
the Approved Construction Drawings (as reasonably determined by Landlord) and otherwise
in accordance with Building standards (collectively, the "Working Drawings"). Landlord shall
promptly cause the Working Drawings to be prepared in a manner consistent with the
Approved Construction Drawings and delivered to Tenant for approval. Tenant shall approve
or reasonably disapprove the Working Drawings within five (5) business days of receipt.
Landlord shall cause three (3) general contractors to bid for construction of the Tenant
Improvements using Prevailing Wages. If Tenant so desires, Tenant may also select a
general contractor reasonably acceptable to Landlord, to bid the Landlord's Work. All bids
will be opened together with Landlord selecting the general contractor to construct the
Tenant Improvements (the "General Contractor"), subject to the reasonable approval of
Tenant. Landlord shall also cause to be prepared, within three (3) business days of the
selection of the General Contractor, an estimate of the total cost for the Tenant
Improvements (the "Cost Estimate"), which shall be based on the approved bid. Within five
(5) days after receipt thereof, Tenant shall approve the Cost Estimate or deliver to Landlord
the specific written changes to the plans that are necessary, in Tenant's opinion, to reduce
costs. Tenant shall make no changes or modifications to (i) the Approved Construction
Drawings, or (ii) once completed, the Working Drawings without the prior written consent of
Landlord, which consent may be withheld in Landlord's sole discretion if such change or
modification would directly or indirectly delay the "Substantial Completion" as the term is
defined below in Section of this Work Letter of the Premises or increase the cost of
designing or constructing the Tenant Improvements, unless Tenant agrees to be responsible
for the delay or increased cost.
Page 35 of 38
2.2 Change Orders. In the event Tenant desires to change the Approved
Construction Drawings, Tenant shall deliver notice (the "Drawing Change Notice") of the
same to Landlord, setting forth in detail the changes (the "Tenant Change") Tenant desires
to make to the Approved Construction Drawings. Landlord shall, promptly following receipt
of a Drawing Change Notice either (i) approve the Tenant Change, or (ii) disapprove the
Tenant Change and deliver a notice to Tenant specifying in reasonably sufficient detail the
reasons for Landlord's disapproval. In addition, and in connection with any approved
Tenant Change, Landlord shall also promptly cause the contractor to estimate the increased
costs in completing the Tenant Improvements, if any, which would result from the proposed
Tenant Change and shall report such estimate to Tenant.
Prior to Landlord implementing any such Tenant Change, a) Tenant must agree in
writing within two (2) business days after delivery of the estimated cost from Landlord to
Tenant; and b) pay for any increased costs associated with such Tenant Change within 5
business days of receipt of Landlord's draw request associated with any such change order.
No Tenant Change shall be deemed approved by Landlord until Tenant shall have paid the
cost of any such change to Landlord. Tenant shall have the right to withdraw any requested
change if Tenant is unwilling to pay for any increased costs. Notwithstanding anything to the
contrary herein, Tenant may not refuse to pay the cost of any required modifications due to
code, City requirements, applicable Law or which are otherwise required due to local zoning
or permitting requirements.
3. Construction of the Tenant Improvements
3.1 Construction of Tenant Improvements. Landlord shall, through Landlord's
Contractor use reasonable diligence to cause the Tenant Improvements to be constructed
promptly following execution of this Work Letter. The Tenant Improvements shall be
performed pursuant to a construction contract containing such construction schedules and
delivery conditions as reasonably approved by Landlord. The Tenant Improvements shall be
constructed and installed in material conformance with the Approved Construction Drawings
and all laws. Except as otherwise set forth in the Approved Construction Drawings, the type
and quality of the Tenant Improvements shall be typical of standard interior improvements
constructed by Landlord which are of the nature and quality required by specifications
developed for the Building containing the Premises by Landlord's Architect and as may be
shown in other spaces already built out in the Building.
3.2 Substantial Completion. The term Substantial Completion shall mean when
Landlord has delivered to Tenant a written notice stating that the Tenant Improvements have
been completed substantially in accordance with the Working Drawings and approved
Tenant Changes, except "punch list" items which may be completed without materially
impairing Tenant's use of the Premises or a material portion thereof.
3.3 Delav of the Substantial Completion. Except as provided in this Section 3.3 or
Section 4.3 below, the Commencement Date shall occur as set forth in the Lease. If there
shall be a delay or there are delays in the Substantial Completion of the Premises or in the
occurrence of any of the other conditions precedent to the Commencement Date, as set forth
in the Lease, as a direct, indirect, partial, or total result of: (i) Tenant's failure to timely
approve any matter requiring Tenant's approval including timely responding to Landlord's
request for information or approvals required for the completion of the construction plans and
Page 36 of 38
specifications, (ii) any changes requested by Tenant, (iii) any failure by Tenant to timely pay
any amounts due from Tenant hereunder, including any additional costs resulting from any
change (it being acknowledged that if Tenant fails to make or otherwise delays making such
payments, Landlord may stop work on the Landlord's Work rather than incur costs which
Tenant is obligated to fund but has not yet funded and any delay from such a work stoppage
will be a Tenant Delay, (iv) Tenant's failure to respond within three (3) business days to
reasonable inquiries by Landlord or General Contractor regarding the construction of the
Landlord's Work, (v) Tenant's requirements including for materials, components, finishes or
improvements which are not available in a commercially reasonable time given the
anticipated date of Substantial Completion of the Premises, as set forth in the Lease, or
which are different from, or not included in, Landlord's standard improvement pack items for
the Building; and (vi) any other delay requested or caused by Tenant, its agents or
employees. Each of the foregoing is referred to herein as a "Tenant Delay", then,
notwithstanding anything to the contrary set forth in the Lease or this Work Letter, Tenant
shall be responsible for any such delay in the commencement or completion of the Landlord's
Work and any increase in the cost of the Landlord's Work and regardless of the actual date
of the Substantial Completion of the Premises, the date of Substantial Completion of the
Premises and turnover shall be deemed to be the date the Substantial Completion of the
Premises would have occurred if no Tenant Delay, as set forth above, had occurred.
3.4 Meetings. Following written request by Landlord, Tenant shall participate in
periodic meetings at reasonable times regarding the progress and the preparation of
Construction Drawings and the construction of the Tenant Improvements, which meetings
shall be held at a location reasonably designated by Landlord.
4. Miscellaneous
4.1 Tenant's Representative. Tenant has designated Martin Alvarez as its sole
representative with respect to the matters set forth in this Work Letter, who shall have full
authority and responsibility to act on behalf of the Tenant as required in this Work Letter.
4.2 Landlord's Representative. Landlord has designated CPMC Realty as its sole
representative with respect to the matters set forth in this Work Letter, who shall have full
authority and responsibility to act on behalf of the Landlord as required in this Work Letter.
4.3 Tenant's Lease Default. Notwithstanding any terms to the contrary
contained in this Lease, if Tenant is in default of the Lease, or in default of this Work Letter,
at any time on or before the completion of the Tenant Improvements, then (i) in addition to
all other rights and remedies granted to Landlord pursuant to the Lease, Landlord shall have
the right to cease or cause General Contractor to cease the construction of the Tenant
Improvements (in which case, Tenant shall be responsible for any delay in the Substantial
Completion of the Tenant Improvements caused by such work stoppage or inaction by
Landlord and (ii) the Commencement Date shall be the date Landlord would have
substantially completed the Tenant Improvement but for such Tenant default), and (iii) all of
the obligations of Landlord under the terms of this Work Letter shall be suspended until such
time as such default is cured pursuant to the terms of the Lease.
4.4 Entire Aqreement. With exception to the provisions of the Lease, this Work
Letter contains the entire agreement of the parties hereto with respect to the subject matter
hereof, and no representations, inducements, promises or agreements, oral or otherwise,
Page 37 of 38
between the parties, not embodied herein or therein, shall be of any force and effect.
4.5 Warranties. Landlord hereby assigns to Tenant all warranties and guaranties
by the contractor who constructs the Tenant Improvements, and Tenant hereby waives all
claims against Landlord relating to, or arising out of the construction of the Tenant
Improvements. The General Contractor shall be designated and retained by Landlord to
construct the Tenant Improvements.
4.6 Cooperation by Tenant. Tenant acknowledges that the timing of the
completion of the Working Drawings and the Tenant Improvements is of the utmost
importance to Landlord. Accordingly, Tenant hereby agrees to fully and diligently cooperate
with all reasonable requests by Landlord in connection with or related to the design and
construction of the Tenant Improvements, and in connection therewith, shall respond to
Landlord's requests for information and/or approvals, except as specifically set forth herein
to the contrary, within three (3) business days following request by Landlord.
4.7 Titles. The titles of sections herein are for identification only. They shall not
be considered to be a part of this Work Letter and shall have no effect upon the construction
or interpretation thereof.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Work Letter as of
the date first above written
LANDLORD:
SINATRA AND COOK PROJECT, LLC
a California limited liaaility corppany
PVame: Steven Gilfen in
Its
TENANT:
CITY OF PALM DESERT,
a municipal corporation
Name: Susan Marie Weber, Mayor
Dated: 944
Dated: a-3 a o N g
Page 38 of 38
CONTRACT NO. C39440B
THE TRUSTEES OF THE CALIFORNIA STATE
UNIVERSITY d/b/a CALIFORNIA STATE
UNIVERSITY, PALM DESERT NET LEASE FORM
THE CITY OF PALM DESERT AS LANDLORD
Lease covers Premises located at:
37023 Cook Street, Suite 102
Palm Desert, CA 92211
Campus for which the space is leased:
California State University Palm Desert Campus
The Trustees of the California State University on behalf of
California State University, San Bernardino
Tenant's Name, Address & Telephone Number:
The Vineyards Commercial Center:
37023 Cook Street
Building B, Suite. 102
Palm Desert, CA 92211
CONTRACT NO. C39440B
THE TRUSTEES OF CALIFORNIA STATE UNIVERSITY
STANDARD NET LEASE FORM
THE CITY OF PALM DESERT AS
LANDLORD
1. PARTIES. This lease is made as of August 22, 2019 (Effective Date) by and
between THE TRUSTEES OF CALIFORNIA STATE UNIVERSITY, the State of California
acting in its higher education capacity, on behalf of CSU PALM DESERT ("Tenant") and
THE CITY OF PALM DESERT CALIFORNIA ("Landlord").
2. PREMISES. Landlord hereby leases to Tenant and Tenant leases from Landlord
for the term, in exchange for the rent, and upon all of the conditions set forth herein, a
portion of certain real property situated in the County of Riverside, State of California
commonly known as the The Vineyards Commercial Center ("Center") located at 37023
Cook Street, Suite 102 Palm Desert, CA 92211 and more specifically described as three
thousand three hundred sixty eight (3,368) square feet of office classroom space, located
in Building B, (the "Premises) as defined in Exhibit A, which is attached and incorporated
herein.
2.1 Non -Exclusive Use Areas. Tenant shall also have the non-exclusive right
to use, in common with other tenants in the Building, any and all of the following areas
which may be appurtenant to the Premises: common entrances, lobbies, elevators,
stairways and access ways, loading and unloading areas, visitor parking areas, ramps,
drives, platforms, public restrooms, and common walkways and sidewalks necessary for
access to the Premises.
2.2 Parking. Tenant, its officers, agents and contractors shall be required to
display a parking permit ("Permit") at all times when parking at the Center parking lot
particularly described in the attached Exhibit A Tenant, its officers, agents and contractors
shall be required to purchase said Permits directly from CSU PDC Transportation and
Parking Services ("TAPS") priced as directed from time to time by CSU PDC. Permit
holders may park at the Center twenty-four (24) hours a day Monday through Friday and
during weekends. In the event that an issued Permit is lost or stolen, a "Replacement
Permit" may be obtained from TAPS at the then prevailing Permit cost.
K�i�.1►�
3.1 Term. The term of this Lease (the "Lease Term" shall be for seven years,
commencing January 1, 2020 and ending December 31, 2026 ("Lease Expiration
Date"), unless sooner terminated pursuant to any provision hereof.
3.2 Options. Intentionally Omitted.
Page 2 of 33
3.3 Delay in Possession. Notwithstanding said Lease Commencement Date, if
for any reason Landlord cannot deliver possession of the Premises to Tenant on said date,
Landlord shall not be subject to any liability, nor shall such failure affect the validity of this
Lease or the obligations of Tenant hereunder or extend the term hereof, but in such case,
Tenant shall not be obligated to pay rent until possession of the Premises is tendered
to Tenant; provided further, however, that if Landlord shall not have delivered
possession of the Premises within sixty (60) days from said Lease Commencement
Date, Tenant may, at Tenant's option, by notice in writing to Land lord within ten (10)
days thereafter, cancel this Lease, in which event the parties shall be discharged from all
obligations hereunder; provided, however, that if such written notice of Tenant is not
received by Landlord within said ten (10) day period, Tenant's right to cancel this Lease
hereunder shall terminate and be of no further force or effect.
3.4 Early Possession. If Tenant occupies the Premises prior to said Lease
Commencement Date, such occupancy shall be subject to all provisions hereof, such
occupancy shall not advance the termination date, and Tenant shall pay rent for such
period at the initial monthly rates set forth below.
4. RENT. Except as otherwise provided in Addendum 2, Tenant shall pay to Landlord
as Monthly Rent for the Premises, the sum of Five thousand one hundred and fifty three
dollars ($5,153.04), payable in advance, on or before the first day of each month
commencing, January 1, 2020 ("Rent Commencement Date"). Rent for any period during
the term hereof which is for less than one month shall be a pro rata portion of the monthly
installment.
Rent shall be payable to Landlord at the address stated herein or at such other address
as Landlord may from time to time designate in writing. On the first day of the month
following each anniversary of the Lease Commencement Date, the Monthly Rent for the
Premises shall increase by two and one-half percent (2.5%) over the amount of rent
payable for the immediately preceding month.
5. SECURITY DEPOSIT. Intentionally Omitted.
6. NOTICES. All notices or correspondence provided for herein shall be effective only
if made in writing, personally delivered with an executed acknowledgment of receipt or
deposited in the United States mail, certified, postage prepaid, and addressed as follows:
To Landlord: The City of Palm Desert
Attn: City Manager
73510 Fred Waring Drive
Palm Desert, CA 92260
Page 3 of 33
To Tenant: The Trustees of the California State University, San
Bernardino Attn: Procurement and Contract Services
5500 University Parkway
San Bernardino, CA 92407
Rent payments shall be sent to (need not be sent certified mail):
The City of Palm Desert
Attention: Martin Alvarez, Dir. Economic Development
73510 Fred Waring Drive
Palm Desert, CA 92260
Any notice shall be deemed delivered five (5) days after notice is mailed or, if personally
delivered, when acknowledgment of receipt is signed, as provided above. By written
notice to the other, either party may change its own mailing address.
7. TENANT IMPROVEMENTS. Tenant Improvement up to the first forty dollars
($40.00) per square foot will be provide by the landlord. Any improvement plan greater
than $40 per square foot requires written prior approval from the tenant. Tenant will not
accept or pay an invoice for work performed without prior written approval.
8. USE.
8.1 Use. The Premises shall be used and occupied only for general office use
any other use which, in Landlord's sole opinion, is reasonably comparable and for no
other purpose.
8.2 Compliance with Law.
(a) Landlord warrants to Tenant that the Premises, in its state existing on
the date that the Lease term commences, but without regard to the use for which Tenant
will use the Premises, does not violate any covenants or restrictions of record, or any
applicable building code, regulation or ordinance in effect on such Lease term
commencement date. If this warranty has been violated, then Landlord shall, after written
notice from Tenant, promptly, at Landlord's sole cost and expense, rectify any such
violation. If Tenant does not give to Landlord written notice of violation of this warranty
within six (6) months from the Lease Commencement Date, the correction of same shall
be the obligation of the Tenant at Tenant's sole cost. The warranty contained in this
paragraph shall be of no force or effect if, prior to the date of this Lease, Tenant was the
owner or occupant of the Premises, and, in such event, Tenant shall correct any such
violation at Tenant's sole cost.
(b) Except as provided in this paragraph, Tenant shall, at Tenant's
expense, comply promptly with all applicable statutes, ordinances, rules, regulations,
orders, covenants and restrictions of record, and requirements in effect during the term or
Page 4 of 33
any part of the term hereof, regulating the use by Tenant of the Premises. Tenant shall
not use nor permit the use of the Premises in any manner that will tend to create waste or
a nuisance or, if there shall be more than one tenant in the building containing the
Premises, shall tend to disturb such other tenants.
8.3 Condition of Premises.
(a) Landlord shall deliver the Premises to Tenant clean and free of debris
on Lease Commencement Date (unless Tenant is already in possession) and Landlord
further warrants to Tenant that the plumbing, lighting, air conditioning, and heating
systems, in the Premises shall be in good operating condition on the Lease
Commencement Date. If this warranty has been violated, then Landlord shall, after receipt
of written notice from Tenant setting forth with specificity the nature of the violation,
promptly, at Landlord's sole cost, rectify such violation. Tenant's failure to give such written
notice to Landlord within thirty (30) days after the Lease Commencement Date shall cause
the conclusive presumption that Landlord has complied with all of Landlord's obligations
hereunder. The warranty contained in this paragraph shall be of no force or effect if prior
to the date of this Lease, Tenant was the owner or occupant of the Premises.
(b) Except as otherwise provided in this Lease, Tenant hereby accepts
the Premises in the condition existing as of the Lease commencement date or the date
that Tenant takes possession of the Premises, whichever is earlier, subject to all
applicable zoning, municipal, county and state laws, ordinances and regulations
governing and regulating the use of the Premises, and any covenants or restrictions of
record, and accepts this Lease subject thereto and to all matters disclosed thereby and
by any exhibits attached hereto. Tenant acknowledges that neither Landlord nor any agent
of Landlord has made any representation or warranty as to the present or future suitability
of the Premises for the conduct of Tenant's business.
9. MAINTENANCE AND REPAIRS.
9.1 Landlord and Tenant's Obligations. The respective repair and
maintenance responsibilities of Landlord and Tenant are set forth in Exhibit D, Summary
of Repair and Maintenance Responsibilities, which by this reference is incorporated
herein.
9.2 Surrender. On the last day of the term hereof, or on any sooner termination,
Tenant shall surrender the Premises to Landlord in the same condition as when received,
ordinary wear and tear excepted, clean and free of debris. Tenant shall repair any damage
to the Premises occasioned by the installation or removal of Tenant's trade fixtures,
furnishings and equipment.
9.3 Landlord's Rights. If Tenant fails to perform Tenant's obligations under
this paragraph, or under any other paragraph of this Lease, Landlord may at its option (but
shall not be required to) enter upon the Premises after ten (10) days' prior written notice
to Tenant (except in the case of an emergency, in which case no notice shall be
Page 5 of 33
required), perform such obligations on Tenant's behalf and put the same in good order,
condition and repair, and the cost thereof together with interest thereon at the
maximum rate then allowable by law shall become due and payable as additional rental to
Landlord together with Tenant's next rental installment.
10. ALTERATIONS AND ADDITIONS.
(a) Tenant shall not, without Landlord's prior written consent make any
alterations, improvements, additions, or Utility Installations in, on or about the Premises
without Landlords prior consent. As used in this paragraph, the term "Utility Installation"
shall mean carpeting, window coverings, air lines, power panels, electrical distribution
systems, lighting fixtures, space heaters, air conditioning, plumbing, and fencing. Landlord
may require that Tenant remove any or all of said alterations, improvements, additions or
Utility Installations at the expiration of the term, and restore the Premises to their prior
condition. Landlord may require Tenant to provide Landlord, at Tenant's sole cost and
expense, a lien and completion bond in an amount equal to one and one-half times the
estimated cost of such improvements, to insure Landlord against any liability for
mechanics' and materialmen's liens and to insure completion of the work. Should Tenant
make any alterations, improvements, additions or Utility Installations without the prior
approval of Landlord, Landlord may require that Tenant remove any or all of the same.
(b) Any alterations, improvements, additions or Utility Installations in, on, or
about the Premises that Tenant shall desire to make and which requires the consent of
the Landlord shall be presented to Landlord in written form, with proposed detailed plans.
If Landlord shall give its consent, the consent shall be deemed conditioned upon Tenant
acquiring a permit to do so from appropriate governmental agencies, the furnishing of a
copy thereof to Landlord prior to the commencement of the work and the compliance by
Tenant of all conditions of said permit in a prompt and expeditious manner.
(c) Tenant shall pay, when due, all claims for labor or materials furnished or
alleged to have been furnished to or for Tenant at or for use in the Premises, which claims
are or may be secured by any mechanics' or materialmen's liens against the Premises or
any interest therein. Tenant shall give Landlord not less than ten ( 10) days' notice prior to
the commencement of any work in the Premises, and Landlord shall have the right to post
notices of non -responsibility in or on the Premises as provided by law. If Tenant shall, in
good faith, contest the validity of any such lien, claim or demand, then Tenant shall, at its
sole expense defend itself and Landlord against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement thereof
against the Landlord or the Premises, upon the condition that if Landlord shall require,
Tenant shall furnish to Landlord a surety bond satisfactory to Landlord in an amount equal
to such contested lien claim or demand indemnifying Landlord against liability for the
same and holding the Premises free from the effect of such lien or claim. In addition,
Landlord may require Tenant to pay Landlord's attorneys' fees and costs in participating
in such action if Landlord shall decide it is in its best interest to do so.
Page 6 of 33
(d) Unless Landlord requires their removal, as set forth in paragraph 10(a), all
alterations, improvements, additions and Utility Installations (whether or not such Utility
Installations constitute trade fixtures of Tenant), which may be made on the Premises,
shall become the property of Landlord and remain upon and be surrendered with the
Premises at the expiration of the term. Notwithstanding the provisions of this paragraph,
Tenant's machinery and equipment, other than that which is affixed to the Premises so
that it cannot be removed without material damage to the Premises, shall remain the
property of Tenant and may be removed by Tenant subject to the provisions of paragraph
9.2.
11. INDEMNIFICATION.
11.1 Landlord's Obligation. Landlord shall indemnity, defend and hold harmless
Tenant, its officers, partners, agents, and employees from and against any claims,
damages, costs, expenses, or liabilities (collectively "Claims") arising out of or in any way
connected with this Lease including, without limitation, Claims for loss or damage to any
property, or for death or injury to any person or persons, but only in proportion to and to
the extent that such Claims arise from the negligent or wrongful acts or omissions of
Landlord, its officers, agents, or employees.
11.2 Tenant's Obligation. Tenant shall indemnify, defend and hold harmless
Landlord, its officers, agents, and employees from and against any Claims arising out of
or in any way connected with this Lease including, without limitation, Claims for loss or
damage to any property or for death or injury to any person or persons, but only in
proportion to and to the extent that such Claims arise from the negligent or wrongful acts
or omissions of Tenant, its officers, partners, agents, or employees.
12. INSURANCE REQUIREMENTS.
12.1 Landlord's Insurance. Landlord, at its sole cost and expense, shall insure
its activities in connection with this Lease and obtain, keep in force and maintain
insurance as follows:
a. General Liability Self -Insurance Program (contractual liability included) with
minimum limits as follows:
I. Each Occurrence $1,000,000.00
2. Products/Completed Operations Aggregate $2,000,000.00
3. Personal and Advertising Injury $1,000,000.00
4. General Aggregate $2,000,000.00
b. Business Automobile Liability Self -Insurance Program for owned, non -owned,
or hired automobiles with a combined single limit of not less than One Million
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dollars ($1,000,000.00) per occurrence.
c. Property, Fire and Extended Coverage Self -Insurance Program in an amount
equal to one hundred percent (100%) of the full replacement value of the Building
(excluding land and the footings, foundations and installations below the
basement level) and the costs of demolition and debris removal.
d. Workers' Compensation as required by California law.
The coverages referred to under a. and b. of this paragraph shall include Tenant as an
additional insured. Such a provision shall apply only in proportion to and to the extent of
the negligent acts or omissions of Landlord, its officers, agents and employees. Landlord,
upon the execution of this Lease, shall furnish Tenant with certificates of insurance
evidencing compliance with all requirements. Certificates shall provide for thirty (30) days
advance written notice to Tenant of any material modification, change or cancellation of
any of the above insurance coverages.
The coverages required herein shall not limit the liability of Landlord.
12.2 Tenant's Insurance. Tenant, at its sole cost and expense, shall insure
its activities in connection with this Lease and obtain, keep in force and maintain
insurance as follows:
a. Commercial Form General Liability Insurance (contractual liability included)
with minimum limits as follows:
1. Each Occurrence $1,000,000.00
2. Products/Completed Operations Aggregate $2,000,000.00
3. Personal and Advertising Injury $1,000,000.00
4. General Aggregate $2,000,000.00
If the above insurance is written on a claims -made form, it shall continue for three (3)
years following termination of this Lease. The insurance shall have a retroactive date of
placement prior to or coinciding with the Lease Commencement Date.
b. Business Automobile Liability Insurance for owned, scheduled, non -owned,
or hired automobiles with a combined single limit of not less than One Million
dollars ($1,000,000.00) per occurrence.
c. Property, Fire and Extended Coverage Insurance in an amount sufficient to
reimburse Tenant for all of its equipment, trade fixtures, inventory, fixtures
and other personal property located on or in the Premises including leasehold
improvements hereinafter constructed or installed.
d. Workers' Compensation as required by California law.
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e. Such other insurance in such amounts which from time to time may be
reasonably required by the mutual consent of Tenant and Landlord against
other insurable risks relating to performance.
The coverages referred to under a. and b. of this paragraph shall include Landlord as an
additional insured. Such a provision shall apply only in proportion to and to the extent of
the negligent acts or omissions of Tenant, its officers, partners, agents, and employees.
Tenant, upon the execution of this Lease, shall furnish Landlord with certificates of
insurance evidencing compliance with all requirements. Certificates shall provide for thirty
(30) days ten (10) days for non-payment of premium) advance written notice to Landlord
of any material modification, change or cancellation of any of the above insurance
coverages.
The coverages required herein shall not limit the liability of Tenant.
12.3 Waiver of Subrogation. Notwithstanding the provisions of Article 11,
Tenant hereby waives any right of recovery against the Landlord due to loss of or damage
to the property of Tenant when such loss of or damage to property arises out of an act of
God or any of the property perils included in the classification of fire or extended perils
("all risk" as such term is used in the insurance industry) whether or not such perils have
been insured, self -insured or non-insured.
12.4 Exemption of Landlord from Liability. Tenant hereby agrees that Landlord
shall not be liable for injury to Tenant's business or any loss of income therefrom or for
damage to the goods, wares, merchandise or other property of Tenant, Tenant's
employees, invitees, customers, or any other person in or about the Premises, nor shall
Landlord be liable for injury to the person of Tenant, Tenant's employees, agents or
contractors, as a result of any condition of the Premises or the Building, whether such
damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or
from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other cause in or
about the Premises, whether the said damage or injury results from conditions arising in
the Premises or in other portions of the building of which the Premises are a part, or from
other sources or places and regardless of whether the cause of such damage or injury or
the means of repairing the same is inaccessible to Tenant. Landlord shall not be liable
for any damages arising from any act or neglect of any other tenant, if any, of the building
in which the Premises are located.
13. DAMAGE OR DESTRUCTION.
13.1 Definitions.
(a) "Premises Partial Damage" shall herein mean damage or destruction, when
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and as determined by Landlord, to the Premises to the extent that the cost of repair is less
than 10% of the then replacement cost of the Premises. "Premises Building Partial
Damage" shall herein mean damage or destruction to the building of which the Premises
are a part to the extent that the cost of repair is less than 10% of the then replacement
cost of such building as a whole.
(b) "Premises Total Destruction" shall herein mean damage or destruction,
when and as determined by Landlord, to the Premises to the extent that the cost of repair
is 1 0% or more of the then replacement cost of the Premises. "Premises Building Total
Destruction" shall herein mean damage or destruction to the building of which the
Premises are a part to the extent that the cost of repair is 10% or more of the then
replacement cost of such building as a whole.
(c) "Insured Loss" shall herein mean damage or destruction which was caused
by an event required to be covered by the insurance described in this paragraph.
13.2 Partial Damage --Insured Loss. Subject to the provisions of paragraphs
13.4, 13.5 and 13 .6, if at any time during the term of this Lease there is damage which is
an Insured Loss and which falls into the classification of Premises Paltial Damage or
Premises Building Partial Damage, then Landlord shall, at Landlord's expense, repair such
damage, but not Tenant's fixtures, equipment or tenant improvements unless the same
have become a part of the Premises pursuant to paragraph 10 hereof as soon as
reasonably possible, and this Lease shall continue in full force and effect.
13.3 Partial Damage --Uninsured Loss. Subject to the provisions of paragraphs
13.4 and 13.5 and 13.6, if at any time during the term of this Lease there is damage which
is not an Insured Loss and which falls within the classification of Premises Partial Damage
or Premises Building Partial Damage, unless caused by a negligent or willful act of Tenant
(in which event Tenant shall make the repairs at Tenant's expense), Landlord may at
Landlord's option either (i) repair such damage as soon as reasonably possible at
Landlord's expense in which event this Lease shall continue in full force and effect, or (ii)
give written notice to Tenant within thirty (30) days after the date of the occurrence of such
damage of Landlord's intention to cancel and terminate this Lease, as of the date of the
occurrence of such damage. In the event Landlord elects to give such notice of Landlord's
intention to cancel and terminate this Lease, Tenant shall have the right within ten (10)
days after the receipt of such notice to give written notice to Landlord of Tenant's intention
to repair such damage at Tenant's expense, without reimbursement from Landlord, in
which event this Lease shall continue in full force and effect, and Tenant shall proceed to
make such repairs as soon as reasonably possible. If Tenant does not give such notice
within such ten (10) day period this Lease shall be canceled and terminated as of the date
of the occurrence of such damage.
13.4 Total Destruction. If at any time during the term of this Lease there is
damage, whether or not an Insured Loss, (including destruction required by any
authorized public authority), which falls into the classification of Premises Total
Destruction or Premises Building Total Destruction, this Lease shall automatically
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terminate as of the date of such total destruction.
13.5 Damage Near End of Term.
(a) If at any time during the last nine (9) months of the term of this Lease there
is damage, whether or not an Insured Loss, which falls within the classification of Premises
Partial Damage, Landlord may at Landlord's option cancel and terminate this Lease as of
the date of occurrence of such damage by giving written notice to Tenant of Landlord's
election to do so within thirty (30) days after the date of occurrence of such damage.
(b) Notwithstanding paragraph 13.5(a), in the event that Tenant has an option
to extend or renew this Lease, and the time within which said option may be exercised has
not yet expired, Tenant shall exercise such option, if it is to be exercised at all, no later
than twenty (20) days after the occurrence of an Insured Loss falling within the
classification of Premises Partial Damage during the last six months of the term of this
Lease. If Tenant duly exercises such option during said twenty (20) day period, Landlord
shall at Landlord's expense, repair such damage as soon as reasonably possible and this
Lease shall continue in full force and effect. If Tenant fails to exercise such option during
said twenty (20) day period, then Landlord may at Landlord's option terminate and cancel
this Lease as of the expiration of said twenty (20) day period by giving written notice to
Tenant of Landlord's election to do so within ten (10) days after the expiration of said
twenty (20) day period, notwithstanding any term or provision in the grant of option to the
contrary.
13.6 Abatement of Rent; Tenant's Remedies.
(a) In the event of damage described in paragraphs 13.2 or 13.3, and Landlord
or Tenant repairs or restores the Premises pursuant to the provisions of this paragraph,
the rent payable hereunder for the period during which such damage, repair or restoration
continues shall be abated in proportion to the degree to which Tenant's use of the
Premises is impaired. Except for abatement of rent, if any, Tenant shall have no claim
against Landlord to any damage suffered by reason of any such damage, destruction,
repair or restoration.
(b) If Landlord shall be obligated to repair or restore the Premises under the
provisions of this paragraph and shall not commence such repair or restoration within
ninety (90) days after such obligations shall accrue, Tenant may at Tenant's option cancel
and terminate this Lease by giving Landlord written notice of Tenant's election to do so at
any time prior to the commencement of such repair or restoration. In such event this Lease
shall terminate as of the date of such notice.
13.7 Termination --Advance Payments. Upon termination of this Lease pursuant
to this paragraph, an equitable adjustment shall be made concerning advance rent and
any advance payments made by Tenant to Landlord. Landlord shall, in addition, return to
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Tenant so much of Tenant's security deposit as has not theretofore been applied by
Landlord.
13.8 Waiver. Tenant waives the provisions of any statutes which relate to
termination of leases when leased property is destroyed and agree that such event shall
be governed by the terms of this Lease.
14. TAXES.
14.1 Payment of Taxes. Landlord specifically calls to Tenant's attention the fact
that this Lease may create a possessory interest subject to property taxation, and Tenant
may be subject to property tax levied on such interest. Tenant alone shall pay such tax. If
the right is given to pay any of the taxes, assessments or other impositions which Tenant
is herein obligated to pay either in one sum or in installments, Tenant may elect either
mode of payment.
14.2 Personal Property Taxes. Tenant shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Tenant contained in the Premises or elsewhere. Tenant shall cause
said trade fixtures, furnishings, equipment and all other personal property to be assessed
and billed separately from the real property of Landlord.
15. OPERATING EXPENSES. This is a full -service Lease except that Tenant shall be
responsible for its own telephone service and data/internet access.
16. SERVICES, UTILITIES. Will be proportionately bill to the tenant based on
percentage of the building the tenant occupies. Tenant occupies three thousand three
hundred sixty eight square feet 3,368 sq.ft. of 10,290 total building square footage. Tenant
will pay 32.7% percent of actual utility bill and actual custodial invoice.
17. ASSIGNMENT AND SUBLETTING.
17.1 Landlord's Consent Required. Tenant shall not voluntarily or by operation
of law assign, transfer, mortgage, sublet, or otherwise transfer or encumber all or any part
of Tenant's interest in this Lease or in the Premises, without Landlord's prior written
consent, which Landlord shall not unreasonably withhold. Landlord shall respond to
Tenant's request for consent hereunder in a timely manner and any attempted assignment,
transfer, mortgage, encumbrance or subletting without such consent shall be void, and
shall constitute a breach of this Lease.
17.2 No Release of Tenant. Regardless of Landlord's consent, no subletting or
assignment shall release Tenant of Tenant's obligation or alter the primary liability of
Tenant to pay the rent and to perform all other obligations to be performed by Tenant
hereunder. The acceptance of rent by Landlord from any other person shall not be deemed
Page 12 of 33
to be a waiver by Landlord of any provision hereof Consent to one assignment or
subletting shall not be deemed consent to any subsequent assignment or subletting. In the
event of default by any assignee of Tenant or any successor of Tenant, in the performance
of any of the terms hereof, Landlord may proceed directly against Tenant without the
necessity of exhausting remedies against said assignee. Landlord may consent to
subsequent assignments or subletting of this Lease or amendments or modifications to
this Lease with assignees of Tenant, without notifying Tenant, or any successor of Tenant,
and without obtaining its or their consent thereto and such action shall not relieve Tenant
of liability under this Lease.
17.3 Excess of Consideration. If the value of the consideration to be received
by Tenant for such assignment or sublease (after deducting leasing commissions, rental
paid during any period in which the Premises were vacant, the unamortized part of
Tenant's contribution to tenant improvements, if any, and any other reasonable out-of-
pocket expenses of Tenant incurred in connection with such subleasing or assignment of
the Premises) will exceed the sum of the Base Rent and the Additional Rent, or prorated
portion thereof as the case may be, Tenant shall pay to Landlord, as additional base
Rent, one hundred percent (100%) of the excess of the consideration paid in connection
with or pursuant to the assignment or sublease, over the sum of the Base Rent and the
Additional Rent then due applicable to the assigned or subleased space.
17.4 Administrative Fees. In the event Tenant shall assign or sublet the
Premises or request the consent of Landlord to any assignment or subletting or if Tenant
shall request the consent of Landlord for any act Tenant proposes to do, then Tenant
shall pay Landlord's reasonable administrative fees (including attorneys' fee) incurred
in connection therewith, such fees not to exceed $350.00 for each such request.
18. DEFAULTS; REMEDIES.
18.1 Defaults by Tenant. The occurrence of any one or more of the following
events shall constitute a material default and breach of this Lease by Tenant:
(a) The vacating or abandonment of the Premises by Tenant.
(b) The failure by Tenant to make any payment of rent or any other payment
required to be made by Tenant hereunder, as and when due, where such failure shall
continue for a period of three (3) days after written notice thereof from Landlord to Tenant.
In the event that Landlord serves Tenant with a Notice to Pay Rent or Quit pursuant to
applicable Unlawful Detainer statutes such Notice to Pay Rent or Quit shall also constitute
the notice required by this subparagraph.
(c) The failure by Tenant to observe or perform any of the covenants, conditions
or provisions of this Lease to be observed or performed by Tenant, other than described
in paragraph (b) above, where such failure shall continue for a period of thirty (30) days
Page 13 of 33
after written notice thereof from Landlord to Tenant; provided, however, that if the nature
of Tenant's default is such that more than thirty (30) days are reasonably required for its
cure, then Tenant shall not be deemed to be in default if Tenant commenced such cure
within said 30-day period and thereafter diligently prosecutes such cure to completion.
(d) The making by Tenant of (i) any general arrangement or assignment for
the benefit of creditors; (ii) Tenant becomes a "debtor" as defined in 11 U.S.C. § 10 1 or
any successor statute thereto (unless, in the case of a petition filed against Tenant, the
same is dismissed within sixty (60) days); (iii) the appointment of a trustee or receiver to
take possession of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where possession is not restored to Tenant within thirty
(30) days; or (iv) the attachment, execution or other judicial seizure of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such
seizure is not discharged within thirty (30) days. Provided, however, in the event that any
provision of this paragraph is contrary to any applicable law, such provision shall be of no
force or effect.
(e) The discovery by Landlord that any financial statement given to Landlord by
Tenant, any assignee of Tenant, any subtenant of Tenant, any successor in interest of
Tenant or any guarantor of Tenant's obligation hereunder, and any of them, was materially
false.
18.2 Remedies. In the event of any such material default or breach by Tenant,
Landlord may at any time thereafter, with or without notice or demand and without limiting
Landlord in the exercise of any right or remedy which Landlord may have by reason of
such default or breach;
(a) Terminate Tenant's right to possession of the Premises by any lawful means,
in which case this Lease shall terminate and Tenant shall immediately surrender
possession of the Premises to Landlord. In such event Landlord shall be entitled to recover
from Tenant all damages incurred by Landlord by reason of Tenant's default including, but
not limited to, the cost of recovering possession of the Premises; expenses of reletting,
including necessary renovation and alteration of the Premises, and reasonable attorneys'
fees; the wo1 ih at the time of award by the court having jurisdiction thereof of the amount
by which the unpaid rent for the balance of the term after the time of such award exceeds
the amount of such rental loss for the same period that Tenant proves could be reasonably
avoided.
(b) Maintain Tenant's right to possession in which case this Lease shall continue
in effect whether or not Tenant shall have abandoned the Premises. In such event
Landlord shall be entitled to enforce all of Landlord's rights and remedies under this
Lease, including the right to recover the rent as it becomes due hereunder.
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(c) Pursue any other remedy now or hereafter available to Landlord under the
laws or judicial decisions of the state wherein the Premises are located. Unpaid
installments of rent and other unpaid monetary obligations of Tenant under the terms of
this Lease shall bear interest from the date due at the maximum rate then allowable by
law.
18.3 Default by Landlord. 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 thi11 y (30) days after written notice by Tenant to Landlord and to the holder of any
first mot tgage 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 in default if Landlord commences performance within such 30-day period and
thereafter diligently prosecutes the same to completion.
18.4 Late Charges. Tenant hereby acknowledges that late payment by Tenant to
Landlord of rent and other sums due hereunder will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which will be extremely difficult to
ascertain. Such costs include, but are not limited to, processing and accounting charges
and late charges which may be imposed on Landlord by the terms of any mortgage or trust
deed covering the Premises. Accordingly, if any installment of rent or any other sum due
from Tenant shall not be received by Landlord or Landlord's designee within ten (10) days
after such amount shall be due, then, without any requirement for notice to Tenant, Tenant
shall pay to Landlord a late charge equal to 6% of such overdue amount. The parties
hereby agree that such late charge represents a fair and reasonable estimate of the costs
Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge
by Landlord shall in no event constitute a waiver of Tenant's default with respect to such
overdue amount, nor prevent Landlord from exercising any of the other rights and
remedies granted hereunder. In the event that a late charge is payable hereunder, whether
or not collected, for three (3) consecutive installments of rent, then rent shall automatically
become due and payable qual 1 erly in advance, rather than monthly, notwithstanding
paragraph 4 or any other provision of this Lease to the contrary.
18.5 Impounds. In the event that a late charge is payable hereunder, whether or
not collected, for three (3) installments of rent or any other monetary obligation of Tenant
under the terms of this Lease, Tenant shall pay to Landlord, if Landlord shall so request,
in addition to any other payments required under this Lease, a monthly advance
installment, payable at the same time as the monthly rent, as estimated by Landlord, for
any expenses on the Premises which are payable by Tenant under the terms of this Lease.
Such fund shall be established to insure payment when due, before delinquency, of any
or all such obligations. If the amounts paid to Landlord by Tenant under the provisions of
this paragraph are insufficient to discharge the obligations of Tenant to pay such expenses
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as the same become due, Tenant shall pay to Landlord, upon Landlord's demand, such
additional sums necessary to pay such obligations. All the moneys paid to Landlord
under this paragraph may be intermingled with other moneys of Landlord and shall not
bear interest. In the event of a default in the obligations of Tenant to perform under
this Lease, then any balance remaining from funds paid to Landlord under the provisions
of this paragraph, at the option of Landlord, in lieu of being applied to the payment of such
expenses, may be applied to the payment of any monetary default of Tenant.
19. CONDEMNATION. If the Premises or any portion thereof are taken under the power
of eminent domain, or sold under the threat of the exercise of said power (all of which are
herein called "condemnation"), this Lease shall terminate as to the part so taken as of the
date the condemning authority takes title or possession, whichever first occurs. If more
than 10% of the floor area of the building on the Premises, or more than 25% of the land
area of the Premises which is not occupied by any building, is taken by condemnation,
Tenant may, at Tenant's option, to be exercised in writing only within ten ( 1 0) days
after Landlord shall have given Tenant written notice of such taking (or in the absence
of such notice, within ten ( 1 0) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes such
possession. If Tenant does not terminate this Lease in accordance with the foregoing,
this Lease shall remain in full force and effect as to the portion of the Premises remaining,
except that the rent shall be reduced in the propo11 ion that the floor area of the building
taken bears to the total floor area of the building situated on the Premises. No reduction
of rent shall occur if the only area taken is that which does not have a building located
thereon. Any award for the taking of all or any patl of the Premises under the power of
eminent domain or any payment made under threat of the exercise of such power shall
be the property of Landlord, whether such award shat I be made as compensation for
diminution in value of the leasehold or for the taking of the fee, or as severance damages;
provided, however, that Tenant shall be entitled to any award for loss of or damage to
Tenant's trade fixtures and removable personal propel 1y. In the event that this Lease is
not terminated by reason of such condemnation, Landlord shall to the extent of
severance damages received by Landlord in connection with such condemnation, repair
any damage to the Premises caused by such condemnation except to the extent that
Tenant has been reimbursed therefor by the condemning authority. Tenant shall pay
any amount in excess of such severance damages required to complete such repair.
20. BROKER'S FEE. Tenant represents and warrants to Landlord that it has not
engaged any broker, finder or other person who would be entitled to any commission or
fees in respect of the negotiation, execution or delivery of this lease and shall indemnify
and hold harmless Landlord against any loss, cost, liability or expense incurred by
Landlord as a result of any claim asset led by any such broker, finder or other person on
the basis of any arrangements or agreements made or alleged to have been made by or
on behalf of Tenant. The provisions of this paragraph shall not apply to brokers with whom
Landlord has an express written brokerage agreement.
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21. ESTOPPEL CERTIFICATE.
(a) Tenant shall at any time upon not less than ten (1 0) days' prior written notice
from Landlord execute, acknowledge and deliver to Landlord a statement written on
Landlord's estoppel certificate form (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and certifying that
this Lease, as so modified, is in full force and effect) and the date to which the rent and
other charges are paid in advance, if any, and (ii) acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of Landlord hereunder, or specifying
such defaults if any are claimed. Any such statement may be conclusively relied upon by
any prospective purchaser or encumbrancer of the Premises.
(b) At Landlord's option, Tenant's failure to deliver such statement within such
time shall be a material breach of this Lease or shall be conclusive upon Tenant (i) that
this Lease is in full force and effect, without modification except as may be represented by
Landlord, (0) that there are no uncured defaults in Landlord's performance, and (iii) that
not more than one (1) month's rent has been paid in advance, or such failure may be
considered by Landlord as a default by Tenant under this Lease.
(c) If Landlord desires to finance, refinance, or sell the Premises, or any patl
thereof, Tenant hereby agrees to deliver to any lender or purchaser designated by Landlord
such financial statements of Tenant as may be reasonably required by such lender or
purchaser. Such statements shall include the past three (3) years' financial statements of
Tenant. All such financial statements shall be received by Landlord and such lender or
purchaser in confidence and shall be used only for the purposes herein set forth.
22. SEVERABILITY. The invalidity of any provision of this Lease as determined by a
court of competent jurisdiction, shall in no way affect the validity of any other provision
hereof.
23. INTEREST ON PAST -DUE OBLIGATIONS. Except as expressly herein provided,
any amount due to Landlord not paid when due shall bear interest at the maximum rate
then allowable by law from the date due. Payment of such interest shall not excuse or cure
any default by Tenant under this Lease, provided, however, that interest shall not be
payable on late charges incurred by Tenant nor on any amounts upon which late charges
are paid by Tenant.
24. TIME OF ESSENCE. Time is of the essence.
25. ADDITIONAL RENT. Any monetary obligations of Tenant to Landlord under the
terms of this Lease shall be deemed to be rent.
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26. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease
contains all agreements of the parties with respect to any matter mentioned herein. No
prior agreement or understanding pertaining to any such matter shall be effective. This
Lease may be modified in writing only, signed by the parties in interest at the time of the
modification. Except as otherwise stated in this Lease, Tenant hereby acknowledges
that neither the Landlord or any employees or agents of the Landlord have made any
oral or written warranties or representations to Tenant relative to the condition or use by
Tenant of said Premises and Tenant acknowledges that Tenant assumes all responsibility
regarding the Occupational Safety Health Act, the legal use and adaptability of the
Premises and the compliance thereof with all applicable laws and regulations in effect
during the terms of the Lease except as otherwise specifically stated in this Lease.
27. WAIVERS. No waiver by Landlord or any provision hereof shall be deemed a waiver
of any other provision hereof or of any subsequent breach by Tenant of the same or any
other provision. Landlord's consent to, or approval of, any act shall not be deemed to
render unnecessary the obtaining of Landlord's consent to or approval of any subsequent
act by Tenant. The acceptance of rent hereunder by Landlord shall not be a waiver of any
preceding breach by Tenant of any provision hereof, other than the failure of Tenant to
pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding
breach at the time of acceptance of such rent.
28. HOLDING OVER. If Tenant, with Landlord's consent, remains in possession of the
Premises or any part thereof after the expiration of the term hereof, such occupancy shall
be a tenancy from month to month upon all the provisions of this Lease pertaining to the
obligations of Tenant, with the exception of rent which shall be at 100% of the then current
rent, but all options and rights of first refusal, if any, granted upon the terms of this Lease
shall be deemed terminated and be of no further effect during said month to month
tenancy.
29. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at law or in
equity.
30. COVENANTS AND CONDITIONS. Each provision of this Lease performable by
Tenant shall be deemed both a covenant and a condition.
31. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof restricting
assignment or subletting by Tenant and subject to the provisions of paragraph 21, this
Lease shall bind the parties, their personal representatives, successors and assigns. This
Lease shall be governed by the laws of the State wherein the Premises are located.
Page 18 of 33
32. SUBORDINATION.
(a) This Lease, at Landlord's option, shall be subordinate to any ground lease,
mortgage, deed of trust, or any other hypothecation or security now or hereafter placed
upon the real property of which the Premises are a part and to any and all advances made
on the security thereof and to all renewals, modifications, consolidations, replacements
and extensions thereof. Notwithstanding such subordination, Tenant's right to quiet
possession of the Premises shall not be disturbed if Tenant is not in default and so long as
Tenant shall pay the rent and observe and perform all of the provisions of this Lease, unless
this Lease is otherwise terminated pursuant to its terms. If any mortgagee, trustee or
ground lessor shall elect to have this Lease prior to the lien of its mortgage, deed of trust
or ground lease, and shall give written notice thereof to Tenant, this Lease shall be deemed
prior to such mortgage, deed of trust, or ground lease, whether this Lease is dated prior or
subsequent to the date of said mortgage, deed of trust, or ground lease, or the date of
recording thereof.
(b) Tenant agrees to execute any documents required to effectuate an
attornment, a subordination or to make this Lease prior to the lien of any mortgage, deed
of trust or ground lease, as the case may be. Tenant's failure to execute such documents
within ten ( 1 0) days after written demand shall constitute a material default by Tenant
hereunder, or, at Landlord's option, Landlord shall execute such documents on behalf of
Tenant as Tenant's attorney -in -fact. Tenant does hereby make, constitute and irrevocably
appoint Landlord as Tenant's attorney -in -fact and in Tenant's name, place and stead, to
execute such documents in accordance with this paragraph.
33. ATTORNEYS' FEES. If either party brings an action to enforce the terms hereof or
declare rights hereunder, the prevailing patty in any such action, on trial or appeal, shall
be entitled to reasonable attorneys' fees to be paid by the losing patty as fixed by the court.
34. LANDLORD'S ACCESS. Landlord and Landlord's agents shall have the right to
enter the Premises at reasonable times for the purpose of inspecting the same, showing
the same to prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the building of which they are a
part as Landlord may deem necessary or desirable. Landlord may at any time place on or
about the Premises any ordinary "For Sale" signs and Landlord may at any time during the
last one hundred twenty (120) days of the term hereof place on or about the Premises any
ordinary "For Lease" signs, all without rebate of rent or liability to Tenant.
35. SIGNS. Tenant shall not place any sign upon the Premises without Landlord's prior
written consent.
36. MERGER. The voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation thereof, or a termination by Landlord, shall not work a merger, and shall, at
the option of Landlord, terminate all or any existing sub tenancies or may, at the option of
Page 19 of 33
Landlord, operate as an assignment to Landlord of any or all of such sub tenancies.
37. QUIET POSSESSION. Upon Tenant paying the rent for the Premises and
observing and performing all of the covenants, conditions and provisions on Tenant's part
to be observed and performed hereunder, Tenant shall have quiet possession of the
Premises for the entire term hereof subject to all of the provisions of this Lease. The
individuals executing this Lease on behalf of Landlord represent and warrant to Tenant
that they are fully authorized and legally capable of executing this Lease on behalf of
Landlord and that such execution is binding upon all parties holding an ownership
interest in the Premises.
38. MULTIPLE TENANT BUILDING. In the event that the Premises are part of a larger
building or group of buildings then Tenant agrees that it will abide by, keep and observe
all reasonable rules and regulations, as designated in Exhibit E which Landlord may make
from time to time for the management, safety, care, and cleanliness of the building and
ground, the parking of vehicles and the preservation of good order therein as well as for
the convenience of other occupants and tenants of the building. The violations of any
such rules and regulations shall be deemed a material breach of this Lease by Tenant.
39. SECURITY MEASURES. Tenant hereby acknowledges that the rental payable to
Landlord hereunder does not include the cost of guard service or other security measures,
and that Landlord shall have no obligation whatsoever to provide same. Tenant assumes
all responsibility for the protection of Tenant, its agents and invitees from acts of third
parties.
40. EASEMENTS. Landlord reserves to itself the right, from time to time, to grant such
easements, rights and dedications that Landlord deems necessary or desirable, and to
cause the recordation of Parcel Maps and restrictions, so long as such easements, rights,
dedications, Maps and restrictions do not unreasonably interfere with the use of the
Premises by Tenant. Tenant shall sign any of the aforementioned documents upon request
of Landlord and failure to do so shall constitute a material breach of this Lease.
41. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the provisions hereof:
the party against whom the obligation to pay the money is asserted shall have the right to
make payment "under protest" and such payment shall not be regarded as a voluntary
payment, and there shall survive the right on the part of said party to institute suit for
recovery of such sum. If it shall be adjudged that there was no legal obligation on
the part of said palty to pay such sum of any parl thereof: said party shall be entitled
to recover such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.
42. AUTHORITY. If Tenant is a corporation, trust, or general or limited partnership,
each individual executing this Lease on behalf of such entity represents and warrants that
Page 20 of 33
he or she is duly authorized to execute and deliver this Lease on behalf of said entity. If
Tenant is a corporation, trust or partnership, Tenant shall, within thirty (30) days after
execution of this Lease, deliver to Landlord evidence of such authority satisfactory to
Landlord.
43. CONFLICT. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or handwritten
provisions.
44. EMISSIONS; STORAGE, USE AND DISPOSAL OF MATTER.
44.1 Definitions. For purposes of this paragraph, the following terms shall be
defined as set forth herein:
(a) The term "Hazardous Material" shall mean include, but shall not be limited
to (i) any material, substance or waste which is or hereafter shall be listed, regulated or
defined by Applicable Law to be hazardous, acutely hazardous, extremely hazardous,
radioactive toxic, or dangerous; (ii) asbestos or asbestos -containing materials; (iii)
polychlorinated biphenyls (PCBs); (iv) radon gas; (v) laboratory wastes; (vi) experimental
products, including genetically engineered microbes; (vii) RESG 8/05 SFLA LL (LI00) J7
petroleum, natural gas, or other petroleum product; and (viii) medical waste as defined in
the Medical I Waste Management Act, div. 20, chap. 6.1 of the California Health and Safety
Code.
(b) The term "Applicable Law" shall include federal, state and local statutes,
regulations, rules, ordinances, and all other governmental requirements.
44.2 Compliance and Response. During the term of this Lease:
(a) Lessee shall comply with Applicable Law in all respects, including, but not
limited to, (i) acquisition of and compliance with all permits, licenses, orders, requirements,
approvals, plans and authorizations which are or may become necessary for conduct of
Lessee's operations on the Premises; (ii) compliance with all regulatory requirements
relating to such operations or the substances and equipment used therein or the
emissions, emanations and wastes generated thereby; and (iii) reporting, investigation,
and remediation of, or other response to the exposure or potential exposure, of any person
to, or the emission, discharge or other release of any Hazardous Material into the Premises
or the environment.
(b) Lessee shall promptly respond to and remedy (by removal and proper
disposal or such other methods as shall be reasonably required) to the satisfaction of
applicable governmental agencies any release or discharge of any Hazardous Material
connected with Lessee's operation or Lessee's presence on the Premises. All such action
shall be done in Lessee's name, and at Lessee's sole cost and expense. For purposes of
Page 21 of 33
this paragraph (b), the term "respond" shall include, but not be limited to, the investigation
of environmental conditions, the preparation of feasibility reports or remedial plans, and
the performance of any cleanup, remediation, containment, maintenance, monitoring or
restoration work. Any such actions shall be performed in a good, safe, workmanlike
manner and shall minimize any impact on the businesses or operations conducted at the
Premises. In its discretion, Lessor may, but shall not be required to, enter the Premises
personally or through its agents, consultants or contractors and perform all or any part of
the response activity or remedial action which it feels is reasonably necessary to comply
with the terms of this Lease, and shall be reimbursed for its costs thereof and for any
liabilities resulting therefrom.
(c) Lessee will promptly notify Lessor of Lessee's receipt of any notice, request,
demand, inquiry or order, whether oral or written, from any government agency or any
other individual or entity relating in any way to the presence or possible presence of any
Hazardous Material on, in, under or near the Premises or the Lessee's compliance with,
or failure to comply with, Applicable Law. Receipt of such notice shall not be deemed to
create any obligation on the patl of Lessor to defend or otherwise respond to any such
notification.
(d) Promptly upon discovery thereof, Lessee will notify Lessor of the discovery
of any release, discharge, or emission of any Hazardous Material or of the existence of
any other condition or occurrence which may constitute or pose a significant presence or
potential hazard to human health and safety or to the environment, whether or not such
event or discovery necessitates any repol 1 to any other person or government agency.
44.3 Other Emissions. Lessee shall not:
(a) Applicable Law; Permit any vehicle on the Premises to emit exhaust which
is in violation of any;
(b) Create, or permit to be created, any sound pressure level which will interfere
with the quiet enjoyment of any real property adjacent to the Premises, or which will create
a nuisance or violate any Applicable Law;
(c) Transmit, receive, or permit to be transmitted or received, any
electromagnetic, microwave or other radiation which is harmful or hazardous to any person
or property in, on or about the RESG 8l05 SFLA LL (LI 00) 1 8 Premises, or anywhere
else, or which interferes with the operation of any electrical, electronic, telephonic or other
equipment wherever located, whether on the Premises or anywhere else;
(d) Create, or permit to be created, any ground or Building vibration that is
discernible outside the Premises; and
Page 22 of 33
(e) Produce, or permit to be produced, any intense glare, light or heat except
within an enclosed or screened area and then only in such manner that the glare, light or
heat shall not be discernible outside the Premises.
44.4 Indemnification. Lessee shall pay for all costs associated with, and defend
(with attorneys reasonably satisfactory to Landlord), indemnify and hold harmless
Landlord from, claims, damages, expenses, encumbrances, fees, fines, penalties or costs
(including, but not limited to, legal fees; the costs of notice to any other person; the
costs of environmental or technical risk assessment; any cleanup or remedial costs;
the costs of any monitoring, sampling or analysis; and any diminution in property value
or losses due to non -rentability arising out of or in any way connected with the presence
of any Hazardous Material on the Premises or Lessee's alleged violation of Applicable
Law). This obligation shall not apply, if and to the extent that (a) such claims, damages,
expenses, encumbrances, fees, fines, penalties, or costs arose solely out of conditions
existing on the Premises prior to the commencement of Lessee's first possession of the
Premises or conditions created on the Premises after Lessee has quit the Premises;
and (b) Lessee did not violate any Applicable Law or act negligently with respect to, or
otherwise contribute to, the condition or the hazard posed by the condition.
44.5 Survival. The duties set forth in this paragraph shall survive the termination
of this Lease.
44.6 Disposal of Other Matter.
(a) Refuse Disposal. Lessee shall not keep any trash, garbage, waste or
other refuse on the Premises except in sanitary containers and shall regularly and
frequently remove and dispose of the same from the Premises. Lessee shall keep all
incinerators, containers or other equipment used for storage or disposal of such matter
in a clean and sanitary condition, and shall promptly dispose of all other waste.
(b) Sewage Disposal. Lessee shall properly dispose of all sanitary
sewage and shall not use the sewage disposal system (i) for the disposal of anything
except sanitary sewage, or (ii) in excess of the lesser of the amount allowed by the sewage
treatment works, or permitted by any governmental entity. Lessee shall keep the sewage
disposal system free of all obstructions and in good operating condition.
45. ADDENDUM. Attached hereto is Exhibits A, B, C, D, and E, Addendum 1, and
Addendum 2 all of which are incorporated into this Lease.
46. REGULATORY MATTERS. (a) Landlord and Tenant enter into this Lease with the
intent of conducting their relationship and implementing the agreements contained herein
in full compliance with applicable federal, state and local law, including without limitation,
the Medicare/Medicaid Anti -Kickback statute and regulations, as amended (the "Anti -
Page 23 of 33
Kickback Law"), and Section 1877 of the Social Security Act, as amended and the
regulations promulgated thereunder (the "Stark Law"). Notwithstanding any unanticipated
effect of any of the provisions of this Lease, neither party will intentionally conduct itself
under the terms of this Lease in a manner that would constitute a violation of the Anti -
Kickback Law or the Stark Law' Without limiting the generality of the foregoing, Landlord
and Tenant expressly agree that nothing contained in this Lease shall require either party
to refer any patients to the other, or to any affiliate or subsidiary of the other.
(b) If any legislation, regulation or government policy is passed or adopted, the
effect of which would cause either party to be in violation of such laws due to the existence
of any provision of this Lease, then Landlord and Tenant agree to negotiate in good faith
for a period of ninety (90) days to modify the terms of this Lease to comply with applicable
law. Should the parties hereto fail to agree upon modified terms to this Lease within this
time, either Landlord or Tenant may immediately terminate this Agreement by giving
written notice to the other party.
(c) Tenant represents and warrants to Landlord that Tenant (i) is not currently
excluded, debarred or otherwise ineligible to participate in Medicare or any federal health
care program under section 1128 and 1128A of the Social Security Act, as amended or
as defined in 42 U.S.C. § 1320a-7b(f), as amended (the "Federal Health Care
Programs"); (ii) has not been convicted of a criminal offense related to the provision of
healthcare items or services but has not yet been excluded, debarred, or otherwise
declared ineligible to participate in any Federal Health Care Program; and (iii) is not under
investigation or otherwise aware of any circumstances which may result in Tenant being
excluded from participation in any Federal Health Care Program. The foregoing
representation shall be an ongoing representation and warranty during the Term of this
Lease and Tenant shall immediately notify Landlord of any change in the status of the
representation and warranty set fo11 h in this Section.
(d) For purposes of this Section of this Lease, "Protected Health Information",
or "PHI", shall have the meaning defined by the Standards for Privacy of Individually
Identifiable Health Information, 45 C.F.R. Part 160 and Subparts A and E of Part 164 (the
"Privacy Standards"), as promulgated by the Department of Health and Human Services
("HHS") pursuant to the Administrative Simplification provisions of the Health Insurance
Portability and Accountability Act of 1996 ("HIPAA"), as amended from time to time.
Tenant agrees to reasonably safeguard PHI from any intentional or unintentional
disclosure in violation of the Privacy Standards by implementing appropriate
administrative, technical and physical safeguards to protect the privacy of PHI. Tenant
further agrees to implement appropriate administrative, technical and physical safeguards
to limit incidental disclosures of PHI, including disclosures to Landlord, its subcontractors
and agents. The parties agree that neither the Landlord nor its contractors, subcontractors
or agents shall need access to, nor shall they use or disclose, any PHI of Tenant.
However, in the event PHI is disclosed by Tenant or its agents to Landlord, its contractors,
subcontractors or agents, regardless as to whether the disclosure is inadvertent or
Page 24 of 33
otherwise, Landlord agrees to take reasonable steps to maintain, and to require its
contractors, subcontractors and agents to maintain, the privacy and confidentiality of such
PHI. The parties agree that the foregoing does not create, and is not intended to create,
a "Business Associate" relationship between the parties as that term is defined by the
Privacy Standards.
(e) If the Stark Law applies to this Lease and there are any other contracts or
agreements between Landlord and Tenant (or any "immediate family member" (as defined
by the Stark Law) of Tenant), then Landlord shall include this Lease and such other
agreements and contracts on Landlord's centrally maintained and updated master list of
contracts. Such list of contracts is and shall be available for review by the Secretary of the
U.S. Department of Health and Human Services upon request.
(f) Tenant represents and warrants to Landlord that (a) neither Tenant nor any
person or entity that owns a five percent (5%) or greater equity interest in Tenant nor any
of Tenant's officers, directors, members, general or limited partners (Tenant and such
owners, officers, directors, members and partners shall be referred to collectively as the
"Tenant Owner") is a "Blocked Party" (as defined below);
(b) Tenant is not controlled by, or acting, directly or indirectly, for or on behalf
of, any Blocked Party; and
(c) Tenant has not instigated, negotiated, facilitated, executed or otherwise
engaged in this Lease, directly or indirectly, for or on behalf of any Blocked Party. The
foregoing representation shall be an ongoing representation and warranty during the Term
of this Lease and Tenant shall immediately notify Landlord of any change in the status of
the representation and warranty set forth in this Section. Landlord shall have the right to
immediately terminate this Lease in the event the representation and warranty set forth in
this Section is or becomes untrue at anytime. As used herein "Blocked Party" shall mean
any party or nation that (a) is listed on the Specially Designated Nationals and Blocked
Persons List maintained by the Office of Foreign Asset Control, Department of the U.S.
Treasury ("OFAC") pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept.
25, 200 1) or other similar requirements contained in the rules and regulations of OFAC
(the "Order") or in any enabling legislation or other Executive Orders in respect thereof
(the Order and such other rules, regulations, legislation, or orders are collectively called
the "Orders") or on any other list of terrorists or terrorist organizations maintained
pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable
Orders (such lists are collectively referred to as the "Lists"), all as amended from time to
time; or (b) has been determined by competent authority to be subject to the prohibitions
contained in the Orders.
47. ADDENDUM. Attached hereto is Exhibits A, B, C, D, and E and Addendum 1,
and Addendum 2 all of which are incorporated into this Lease.
Page 25 of 33
The parties hereto have executed this Lease at the place and on the dates specified
immediately adjacent to their respective signatures.
LANDLORD
By: Susan Marie Weber
Its: Mayor
Date:
TENANT
THE TRUSTEES OF THE CALIFORNIA STATE UNIVERSITY, SAN BERNARDINO
By: Nancy K. Murray
Its: Director, Procurement and Contract Services
California State University, San Bernardino
Date:
Page 26 of 33
EXHIBIT A
DESCRIPTION OF PREMISES
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Page 27 of 33
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EXHIBIT B
CONFIRMATION OF LEASE TERM
(Intentionally Omitted)
Page 28 of 33
EXHIBIT C
SUMMARY OF SERVICES AND UTILITIES
The following is a summary of service and utility responsibilities of Landlord and Tenant:
Paper Supplies, dispensers and waste containers (premises & restrooms)
Light bulbs & fluorescent light tubes and starters
Ballasts and transformers for- fluorescent lights, light switches and electrical
outlets
Heating and air conditioning control switches
Janitorial service for interior of premises (dust, waste removal, vacuum, mop,
cleaning)
Janitorial service for exterior of premises and common areas
Carpet, title and linoleum
Gas
Electric
Water
Window washing interior
Landscaping and gardening
Drapes, blinds, window shades
Kitchen appliances
Refuse, rubbish & garbage disposal
Pest control
Telecom and internet access
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Page 29 of 33
EXHIBIT D
SUMMARY OF REPAIR AND MAINTENANCE RESPONSIBILITIES
The following is a summary of repairs and maintenance responsibilities of Landlord and Tenant:
Landlord Tenant Not
Applicable
Foundations
X
Exterior & Bearing Walls
X
Roof
X
Electrical Systems
X
Lighting Systems
X
Plumbing Systems
X
Heating Systems
X
Ventilation Systems
X
Air Conditioning Systems
X
Alarm Systems
X
Plate Glass
X
Windows & Window Frames
X
Gutters, Drains, Downspouts
X
Elevators
X
Floor Slabs
X
Common Areas
X
Ceilings
X
Interior Walls
X
Interior Doors
X
Interior Surfaces & Windows
X
Appliances & Fixtures
X
Repainting of Interior Walls
X
Base and/or moldings
X
Parking Lot Area
X
Other:
Page 30 of 33
Exhibit E
LANDLORD'S RULES AND REGULATIONS
Sidewalks, doorways, vestibules, halls, stairways and similar areas shall not be
obstructed by tenants or used for any purpose other than ingress and egress to and
from the leased premises and for going from one to another part of the building.
2. Plumbing fixtures and appliances shall be used only for purposes for which
constructed, and no sweepings, rubbish, rags or other unsuitable material shall be
thrown or placed therein. Damage resulting to any such fixtures or appliances from
misuse by a tenant shall be paid by Tenant, and Landlord shall not in any case be
responsible therefor.
3. No signs, advertisements or notices shall be painted or affixed on or to any windows
or doors, or other part of the building, except of such color, size and style and in
such places as shall be first approved in writing by Landlord.
4. Directories will be placed by Landlord, at its own expense, in conspicuous places
in the building. No other directories shall be permitted unless previously consented
to by Landlord in writing.
5. Tenants shall not do, or permit anything to be done in or about the building, or bring
or keep anything therein, that will in any way increase the rate of fire or other
insurance on the building, or on property kept therein, or obstruct or interfere with
the rights of or otherwise injure or annoy, other tenants, or do anything in conflict
with the valid pertinent laws, rules or regulations of any governmental authority.
6. Landlord shall have the power to prescribe the weight and position of iron safes or
other heavy equipment, which shall in all cases, to distribute weight, stand on plank
strips at least two inches thick. Any damage to the building caused by installation
or removal of tenant's property, or done by tenant's property while in the building,
shall be repaired at the expense of tenant.
7. Tenant shall notify the building manager when safes or other heavy equipment are
to be taken in or out of the building, and the moving shall be done under the
supervision of the building manager, after written permit from Landlord. Persons
employed to move such property shall be approved by Landlord.
8. Corridor doors, when not in use, shall be kept closed.
9. Each tenant shall cooperate with Landlord's employees in keeping leased premises
neat and clean. Tenants shall not employ persons for the purpose of such cleaning.
Page 31 of 33
10. To insure orderly operation of the building, no ice, mineral or other water, towels,
newspapers, etc., shall be delivered to any leased premises, except by persons
appointed or approved in writing by Landlord.
11. Should a tenant require telegraphic, telephonic, annunciator or other
communications service, Landlord will direct the electricians where and how wires
are to be introduced and placed, and none shall be introduced or placed except as
Landlord shall direct. Electric current shall not be used for power or heating without
Landlord's prior written permission.
12. Landlord shall, at reasonable hours, have the right to enter premises leased to
tenants, to examine same or to make such alterations and repairs as may be
deemed necessary, or to exhibit the same to prospective tenants.
13. Tenants shall not make or permit any improper noises in the building, or otherwise
interfere in any way with other tenants, or persons having business with them.
14. Nothing shall be swept or thrown into the corridors, halls, elevator shafts or
stairways. No birds or animals shall be brought into or kept in or about the building.
15. Tenant shall not use or keep in the building any inflammable or explosive fluid or
substance.
16. Landlord reserves the right to rescind any of these rules and make such other and
further rules and regulations as in its judgment shall from time to time be needed
for the safety, protection, care and cleanliness of the building, the operation thereof
the preservation of good order therein, and the protection and comfort of its tenants,
their agents, employees and invitees.
Page 32 of 33
ADDENDUM 1 - PARKING PROVISIONS TO LEASE
AGREEMENT BY AND BETWEEN
THE CITY OF PALM DESERT CALIFORNIA
U-1►I f.
THE TRUSTEES OF CALIFORNIA STATE UNIVERSITY
Tenant shall have the right to park at the Premises as set 37023 Cook Street Palm Desert,
CA in Article 2.2 of the Lease.
Page 33 of 33