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resolution.council.035-11
RESOLUTION NO. 35 Series of 2011 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASPEN, COLORADO, APPROVING A LEASE AGREEMENT, BETWEEN THE CITY OF ASPEN AND VALLEY FINE ART, LTD, AND AUTHORIZING THE MAYOR OR CITY MANAGER TO EXECUTE SAID AGREEMENT ON BEHALF OF THE CITY OF ASPEN, COLORADO. WHEREAS, there has been submitted to the City Council a lease agreement for the 497 square feet of space on the first floor of the Wheeler Opera House currently occupied by Valley Fine Art, LTD with a street address of 213 S. Mill Street, between the City of Aspen and Valley Fine Art, LTD, a true and accurate copy of which is attached hereto as Exhibit "A"; NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ASPEN, COLORADO: That the City Council of the City of Aspen hereby approves that lease agreement, between the City of Aspen and Valley Fine Art, LTD, a copy of which is annexed hereto and incorporated herein, and does hereby authorize the Mayor or City Manager to execute said agreement on behalf of the City of Aspen. INTRODUCED, READ AND ADOPTED by the City Council of the City of Aspen on the 2day of _, 2011. ichae C. eland, Mayor I, Kathryn S. Koch, duly appointed and acting City Clerk do certify that the foregoing is a true and accurate copy of that resolution adopted by the City Council of the City of Aspen, Colorado, at a meeting held on the day he - inabove stated. Kathryn S. Ko City Clerk TLN- 5/16,2011- 34304- G: \Tara\FILES M- Z\RESOS \Valley Fine Art .docxx Valley Fine Art Page 1 LEASE AGREEMENT WHEELER OPERA HOUSE VALLEY FINE ART THIS LEASE AGREEMENT is made and entered into this 1 .4- day of 2011 by and between the City of Aspen, 130 South Galena Street, Aspen, Colorado 611 ( "Landlord ") and Valley Fine Art LTD, whose address is 213 S. Mill Street, Aspen, CO 81611 ( "Tenant "). WITNESSETH: WHEREAS, Landlord is the owner of the real property and all of the improvements thereon, known as the Wheeler Opera House, 328 East Hyman Avenue, Aspen, Colorado 81611; and, WHEREAS, the parties hereto desire to enter into a Lease Agreement for a certain portion of the Wheeler Opera House as more fully described herein. NOW, THEREFORE, for and in consideration of the payments to be made hereunder, and in further consideration of the terms, conditions, covenants and mutual promises contained herein, the parties hereto agree as follows: 1. Lease of Premises. Landlord does hereby rent to Tenant the following described premises ( "Leased Premises ") subject to the covenants and conditions hereinafter contained, to wit: That portion of the first floor of the Wheeler Opera House currently occupied by Valley Fine Art, LTD with a street address of 213 S. Mill Street consisting of 497 square feet, as more fully described and depicted in the attached Exhibit A. for the term, at the rents, and upon the conditions and covenants hereinafter set forth. Taking possession of the lease premises by Tenant shall constitute acknowledgment that such premises are in good condition and neither the Tenant nor Landlord shall be required to make any alterations thereto, unless agreed to in advance and in writing by Landlord. 2. Term. Unless sooner terminated, as provided herein, the initial term of this Lease Agreement shall be for a period of five (5) years (the "Initial Term "), extended for an additional period of five (5) years at the option of the Tenant. The Tenant shall have the right to extend the lease for an additional five years by giving notice to the Landlord sixty days prior to the end of the initial term. The Initial Term shall commence at 12:00 noon on December 1, 2011, and shall expire at 12:00 noon on November 30, 2016. A Lease Year shall be a calendar year starting on the commencement date of the Initial Term through 12:00 noon of the following calendar year and each calendar year thereafter. Tenant's occupancy of the Leased Premises shall be limited as set forth below. Valley Fine Art Page 2 3. Early Termination of Term by Tenant. Tenant shall have the right to terminate this Lease Agreement before the end of the initial term. Early termination, except as provided herein, may only occur on July 1 of each calendar year, provided that the Tenant provides the Landlord written notice of an intent to terminate this lease on or before April 30` of the year of the proposed early termination. However, in the case of a water damage event in which significant damage to a piece of art occurs or a significant loss of the use of the Lease Premises occurs and in which the Tenant cannot adequately recover from the Landlord, the Landlord's insurance company, or the Tenant's insurance company (without cancellation of Tenant's coverage), the Tenant shall have the right to terminate this Lease Agreement effective in thirty days by providing the Landlord written notice of an intent to terminate this Lease no less than thirty days before the proposed termination date. The notice of intent to terminate shall state that the Tenant is availing itself of this provisions of the Lease and shall state the reasons the Tenant believes that it is entitled to avail itself of this provisions of the Lease. 4. Rent. Tenant agrees to pay Landlord a fixed minimum annual rental for each Lease Year during the term of this Lease Agreement, which initial rent shall be $80.00 per square feet of the Lease Premises for the period of December 1, 2011, through November 30. 2016. (Monthly rent has been calculated as follows: $80.00 X 497 feet / 12 months = $3,313.33 per month). Commencing the after the first Lease Year (December 1, 2012) and every Lease year thereafter, the minimum annual rent shall be adjusted upward, based upon increases (if any) in the cost of living during the preceding Lease Year using the "Price Index ", all as more fully described in Exhibit B appended hereto and made part hereof. Throughout the term of this Lease, rent shall be payable no later than the first day of each month for the succeeding month. Rent payments shall commence one month after occupancy of the Leased Premises. If the Leased Premises are not available for occupancy by December 1, 2011, the Tenant shall receive two months free rent for each month that occupancy is delayed. 5. Security Deposit. Landlord is in receipt of Tenant's $5,000.00 security deposit. Interest shall not be paid on the amount of security. In the event Tenant is in default of its obligations under the terms of this Lease, Landlord may, at its option, use the security amount to ensure the faithful performance by Tenant of all terms of this Lease. In the event required, Tenant may not use or apply any portion of the deposit in lieu of rent, and said deposit shall be retained by Landlord until the termination of this Lease, at which time the deposit will either be returned to Tenant or retained in whole or in part by Landlord in accordance with the provisions of Section 38 -12 -101, et seq., C.R.S. 1973. Landlord may, at its election, have recourse to such security deposit to make good any default by Tenant, in which event Tenant shall, on demand, promptly restore said security deposit to its original amount. Liability to repay the security deposit to Tenant shall run with the reversion and title to the Leased Premises and Landlord shall assign the security deposit, for the benefit of Tenant, to any subsequent owner or holder of the reversion or title to the Leased Premises, in which case the assignee shall become liable for the repayment thereof, and Landlord shall be deemed to be released by Tenant from all liability in connection therewith. 6. Occupancy of the Leased Premises. Tenant shall be entitled to occupy the Leased Premises throughout the term of the lease; provided, however, that Tenant uses the premises as set forth in Paragraph 7 below, and all other terms and conditions of this Lease Agreement. The Valley Fine Art Page 3 parties agree to meet no less than once every three months to discuss Tenant's performance and any other issues relating to the terms and conditions of this Lease Agreement. 7. Permitted Uses and Required Performance Standards. Tenant shall use and occupy the Leased Premises for retail space including, but not limited to, an art gallery, and for no other purpose without Landlord's written consent. 8. Prohibited Uses. Tenant shall not use, occupy, or permit the Leased Premises or any part thereof to be used or occupied for any unlawful or illegal business, use, or purposes deemed by Landlord to be disreputable, or hazardous, nor in such manner as to constitute a nuisance of any kind, nor for any purpose or in any way in violation of any present or future laws, rules, requirements, orders, directions, ordinances or regulations of the United States of America, State of Colorado, County Pitkin, City of Aspen, or other municipal, governmental, or lawful authority whatsoever. Tenant shall not do or permit anything to be done in or about the Leased Premises or bring or keep anything therein which will in any way increase the rate of fire insurance upon the Building wherein the Premises are situated. Tenant shall, at its sole cost and expense, comply with any and all requirements pertaining to the Leased Premises of any insurance company necessary for the maintenance of reasonable fire and public liability insurance covering the Leased Premises. Tenant shall promptly comply with all laws, ordinances, orders, and regulations affecting the Leased Premises and the cleanliness, safety, and use of the same, including installation of additional facilities as required for the conduct and continuance of Tenant's business on the Leased Premises. No auction for fire or bankruptcy sales may be conducted on the Leased Premises without Landlord's consent. 9. Service to Patrons/No Discrimination. The service provided to patrons by Tenant shall be rendered courteously and efficiently and within the limits for which the facility is designed. Landlord reserves the right to prohibit the sale of any item that it deems objectionable, and shall have the right to order the improvement of the quality of either the merchandise or the services rendered. Landlord's right to prohibit the sale of any item shall not be unreasonably withheld. Tenant shall not discriminate against any employee or applicant for employment because of race, religion, color, creed, ancestry, sex, age, sexual orientation or national origin. Tenant and Tenant's employees shall not discriminate against any person because of race, religion, color, creed, ancestry, sex, age, sexual orientation or national origin by refusing to furnish such person any service or privilege offered to or enjoyed by the general public. Neither Tenant nor Tenant's employees shall publicize the services provided hereunder in any manner that would directly or inferentially reflect on the acceptability of the patrons of any person because of race, religion, color, creed, ancestry, sex, age, sexual orientation or national origin. 10. Late Charges. The Tenant hereby acknowledges that late payment by Tenant to Landlord of rent or other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which shall be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges and the late charges. Accordingly, if any bona fide installment of rent or any other sum due from Tenant hereunder shall not be received by Landlord or Landlord's designee on or before the twentieth (20th) day of each calendar month that a rent payment is due, then Tenant shall pay to Landlord a late charge of ten percent (10 %) on such overdue amount. The parties hereby agree that such a Valley Fine Art Page 4 late charge will represent a fair and reasonable settlement of the cost that Landlord would incur by reason of the late payment by Tenant. Acceptance of such late charges 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 unless the entire amount due, plus late charge, is accepted by Landlord. In addition, any sum for which the Tenant shall be obligated to the Landlord, which is not received on the due date thereof, shall bear interest at the rate of ten percent (10 %) per annum from and after the due date until paid. 11. Personal and Real Property Taxes. Tenant shall be responsible to pay all real or personal property taxes assessed against the personal property used by Tenant and located on the Leased Premises or upon the leasehold interest of the Tenant of the Leased Premises. Likewise, Tenant shall be responsible for any and all sales, use, withholding and other taxes assessed against the Leased Premises for Tenant's business operation therein. 12. Fire and Casualty Insurance. The Tenant, at its own cost and expense, shall provide and keep in full force for the benefit of the Tenant and the City and the Landlord (as named or additional insureds) during the term hereof or any extension or renewal period, insurance to insure the Leased Premises against fire, normal extended coverage perils, vandalism, malicious mischief, and liability. Throughout the term of this Lease, the Tenant shall carry and maintain in effect casualty insurance covering its trade fixtures, equipment, furnishings, leasehold improvements and plate glass, which insurance shall protect against fire, normal extended coverage perils, vandalism, malicious mischief, and sprinkler malfunction. Such insurance shall provide coverage to the extent of at least one hundred percent (100 %) of the insurable replacement cost of the insured property. Both the Landlord and the Tenant waive any right of subrogation that their respective insurers may acquire against either of them. Both of these waivers shall automatically terminate at such time as either party's insurer requires that an additional premium be paid as a consequence of this waiver provision. 13. Liability Insurance. The Tenant, at its own cost and expense, shall provide and keep in full force for the benefit of the Tenant and the Landlord (as named or additional insureds) during the term hereof or any extension or renewal period, general public liability insurance for claims of liability arising out of, occasioned by or resulting from an accident or otherwise in or about the Leased Premises, for Five Hundred Thousand Dollars ($500,000.00) each occurrence with a One Million Dollar ($1,000,000.00) general aggregate combined single limit covering bodily injury, property damage, and personal injury. In addition, if Tenant serves, manufactures, or distributes alcoholic beverages on the Leased Premises, Tenant shall carry liability insurance for such activity with limits in the same amounts as stated above. The policy or policies of insurance (or binders of insurance therefore) shall be issued by a reputable company or companies authorized to do business in this State and shall name Landlord as an additional insured. Tenant shall provide evidence of such insurance coverage to Landlord prior to the commencement of the term hereof. The Tenant also agrees to and shall save, hold and keep harmless and indemnify the Landlord from and against any and all payments, expenses, costs, attorneys' fees and/or damage to property or injuries to persons occasioned wholly or in part by or resulting from any acts or omissions by the Tenant or any subtenants, assignees or successors. If for any reason as a result of Tenant's activities, use, or business, it shall be impossible to obtain fire and other hazard insurance on the buildings and improvements on the Valley Fine Art Page 5 Leased Premises, in an amount and with insurance companies acceptable to the Landlord, the Landlord may terminate this Lease and the term hereof, upon giving to Tenant fifteen (15) days notice in writing of the Landlord's intention to do so and upon the expiration of the time provided in said notice, this Lease and the term hereof shall terminate. If by reason of the use of the Leased Premises by the Tenant or by character or manner in which the Tenant's business is carried on, Landlord's insurance rates for fire and other hazards shall be increased, the Tenant shall pay, as additional rent, the amounts by which the premiums for such insurance are increased. The Tenant waives all rights of recovery against the Landlord or Landlord's agents, employees or other representatives, for any loss, damages or injury of any nature whatsoever to property or persons for which the Tenant is insured. Each party shall give the other party prompt notice of any claim coming to the knowledge of any party that in any way directly or indirectly affects either party, and both parties shall have the right to participate in the defense of such claim to the extent of its interest. 14. Notice of Cancellation of Insurance Coverage. The above insurance policies shall contain clauses substantially similar to the following: (a) Notwithstanding any other provision in this policy, the insurance afforded hereunder to the Landlord shall be primary as to any other insurance or reinsurance covering the Landlord and such other insurance or reinsurance shall not be required to contribute to any liability until the appropriate limit of liability afforded hereunder is exhausted. (b) This policy may not be canceled or changed until forty -five (45) days after receipt by Landlord of a written notice of such cancellation or change in coverage, as endorsed by receipt of a certified letter, unless such cancellation is a result of nonpayment of premium due, in which case, this policy may not be canceled until ten (10) days after receipt by Landlord of a written notice of such cancellation, as endorsed by receipt of a certified letter. 15. Utilities. All utilities shall be metered separately. Tenant shall be responsible for any and all utility charges that are separately metered or contracted for by Tenant. Utilities shall include water, sanitary sewer, electric, gas, heat, phone. Trash service shall continue to be shared with the Wheeler. 16. Improvements. Prior to re- occupancy of the Leased Premises by Tenant, the Landlord intends to make certain improvements to the Wheeler Opera House which will reduce the size of the Leased Premises to 497 square feet (net leasable). In the altered areas affecting the Leased Premises, the Landlord shall return those areas to the following conditions: • Plans and specifications for all work will be provided to Tenant for all work done by Landlord. All work will comply with applicable codes and regulations. • Work done on the Leased Premises shall be done under a separate building permit from adjacent premises. • Walls shall be covered with drywall, finished with smooth texture, and painted with primer only. • Valley Fine Art Page 6 • Mechanical systems shall be in working order, with separate controls and utility metering. • All mechanical, plumbing, and electrical systems shall be in finished condition including fixtures, devices, and cover plates so as to be useable by Tenant. The exception to this shall be the light fixtures. Existing light fixtures must be removed and stored by tenant prior to commencement of improvements by the Landlord. Tenant must provide new lighting plan to be incorporated into Landlord's electrical plan which will be used for implementation of the improvements to the Leased Premises. Lighting plan must be designed by a qualified professional and meet all applicable electrical and energy codes. Landlord will then make necessary alterations, returning the Leased Premises with fully operational electrical circuits with capped junction boxes. It will then be the responsibility of the Tenant to re- install all light fixtures and insure that all fixtures meet the current electrical and energy codes. • Sound and odor mitigation improvements will be installed between the Leased Premises and adjacent premises to mitigate infiltration as much as is practical. Some odors may still enter the space through mechanical equipment which draws fresh air from outside the building. 17. Alterations. Except as noted in section 16, above, Landlord shall deliver the Leased Premises to Tenant on or before the commencement date of this Lease Agreement. No alterations, additions, or improvements shall be made, and no fixtures shall be installed in or attached to the Leased Premises that are not pre- approved in writing by Landlord. Unless otherwise provided herein, all such alterations, additions or improvements when made, installed in or attached to the said Leased Premises, shall belong to and become the property of the Landlord and shall be surrendered with the Leased Premises as part thereof upon the expiration or sooner termination of this Lease, without hindrance, molestation, or injury. Notwithstanding that they may have become an integral part of the Leased Premises, Landlord may require Tenant to remove all or any part of such alterations, additions, improvements or fixtures at the expiration or earlier termination of this Lease, restoring the Leased Premises to the same condition existing at the beginning of the original term, ordinary wear and tear excepted. If Landlord does so require, Tenant shall repair all damages resulting from such removal and should Tenant fail to repair damages resulting from such removal, Landlord may remove the same or make such repairs for Tenant's account, and Tenant shall pay to Landlord, on demand, an amount equal to Landlord's costs incurred in such removal or repair. All work with respect to any permitted alterations, additions, or improvements shall be done at Tenant's sole expense in a good and workmanlike manner, strictly in accordance with the plans and specifications approved by Landlord. In doing said work, other Tenants of Landlord (if any) shall not be adversely affected nor unreasonably inconvenienced. Tenant shall, at its own expense, obtain all necessary building or other permits or approvals required by appropriate governmental authorities prior to beginning such work. If any mechanics' or other liens shall be created or filed against the Leased Premises by reason of labor performed or materials furnished for the Tenant in the alteration, addition or repair to any building or improvement, the Tenant shall within ten (10) days thereafter, at the Tenant's own cost and expense, cause such lien or liens to be satisfied and discharged of record together with any Notices of Intention that may have been filed. Failure to do so shall entitle Landlord to resort to such remedies as are provided herein in the case of any default of this Lease, in addition to such as are permitted by law. Any goods, inventory or other personal Valley Fine Art Page 7 property of Tenant not affixed to the Leased Premises and not removed by Tenant upon the termination of this Lease, or upon any quitting, vacating or abandonment of the Leased Premises by the Tenant, or upon the Tenant's eviction, shall be considered abandoned and Landlord shall have the right, without any notice to the Tenant, to sell or otherwise dispose of the same, at the expense of the Tenant, and shall not be accountable to the Tenant for any part of the proceeds of such sale, if any. 18. Repairs. The Tenant has examined the Leased Premises and has entered into this Lease without any representation on the part of the Landlord as to the condition thereof, other than as stated in this Lease Agreement. Tenant shall take good care of the Leased Premises and shall, at the Tenant's own cost and expense, make all repairs, including painting and decorating, and shall maintain the Leased Premises in good condition and state of repair, and at the end or other expiration of the term hereof, shall deliver up the Leased Premises in good order and condition, wear and tear from reasonable use thereof, and damage by the elements not resulting from the neglect or fault of the Tenant, excepted. The Tenant shall neither encumber nor obstruct the sidewalks, driveways, yards, entrances, hallways and stairs, but shall keep and maintain the same in a clean condition, free from debris, trash, refuse. In case of destruction of, or any damage to the glass in the Leased Premises, or the destruction of, or damage of any kind whatsoever to the Leased Premises, caused by the carelessness, negligence or improper conduct on the part of the Tenant or the Tenant's agents, employees, guests, licenses, invitees, subtenants, assignees or successors, the Tenant shall repair the said damage or replace or restore any destroyed parts of the Leased Premises, as speedily as possible, at the Tenant's own cost and expense. 19. Maintenance and Repairs. Tenant shall during the term of this Lease keep in condition and repair equal to that which existed at the commencement of this lease the Leased Premises and every part thereof, including without limiting the generality of the foregoing, all plumbing fixtures, within the Leased Premises, refrigeration, electrical fixtures and lighting fixtures, additional fixtures, interior walls, wall coverings and paint, ceilings, floors and floor coverings, windows, doors, plate glass, awnings, and entrances. Landlord shall have responsibility for the repair and maintenance of the building structure, roof, foundation and structural integrity of any additional stories above or below the Leased Premises, and shall, at its expense provide structural repairs and required replacement to mechanical systems situated within the Leased Premises that were originally provided by the Landlord. 20. Damage to Premises. If the Leased Premises shall be so damaged by fire or other catastrophe (which is not caused by the fault or negligence of the Tenant or imputable to the Tenant) as to render said Leased Premises untenantable, the Tenant thereupon shall surrender the Leased Premises to the Landlord. The Tenant shall pay rent, duly apportioned, up to the time of such termination of this Lease. Notwithstanding the foregoing, in lieu of any termination of the Lease, Landlord may elect, at its sole option, within thirty (30) days after the event of such damage, to continue the Lease without regard of such damage, whereupon Landlord shall at its expense make the Leased Premises fit for occupancy and the rent shall be abated only for the period during which the Tenant shall be deprived of the use of said Leased Premises by reason of such damage and the repair thereof. If said Leased Premises, without the fault of the Tenant, shall be slightly damaged by fire or other catastrophe but not so as to render the same Valley Fine Art Page 8 untenantable for any substantial period of time, the Landlord, after receiving notice in writing of the occurrence of the injury, shall cause the same to be repaired with reasonable promptness; and in such event, rent shall be proportionately abated, according to the loss of use, until the Leased Premises are substantially restored. 21. Sublease /Assignment. Tenant shall not assign, sublease, mortgage, pledge or otherwise hypothecate or transfer all or any part of Tenant's leasehold estate hereunder, or permit the Leased Premises or any portion thereof to be occupied by anyone without Landlord's prior written consent in each instance, which consent shall not unreasonably be withheld. In the event Tenant is a corporation, these provisions shall apply to any transfer, sale or other disposition, whether voluntary or involuntary, of any stock in Tenant or to any merger, consolidation or dissolution or any other transaction, the effect of which would be in any way to avoid or circumvent such prohibitions. Any assignment or subletting contrary to the provisions of this Paragraph shall be void and shall, at the option of the Landlord, constitute a default under the terms of this Lease. 22. Signs. The Tenant shall not place nor allow to be placed any signs of any kind whatsoever, upon, in or about the said Leased Premises or any part thereof that are visible from the exterior of the Wheeler Opera House, except of a design and structure and in or at such places as may be indicated and consented to by the Landlord in writing, this consent will not be unreasonably denied. In case the Landlord or the Landlord's agents, employees or representatives shall deem it necessary to remove any such signs in order to paint or make any repairs, alterations or improvements in or upon the Leased Premises, they shall be replaced at the Landlord's expense when the said repairs, alterations or improvements shall have been completed. Any signs permitted by the Landlord shall at all times conform with all municipal ordinances or other laws and regulations applicable thereto. 23. Compliance with Law. Tenant shall obtain and pay for all permits or licenses that may be required for the operation of the Leased Premises in accordance herewith. A copy of such permits or licenses shall be submitted to Landlord for verification of this requirement prior to occupancy. The Tenant shall promptly comply with all laws, ordinances, rules, regulations, requirements, and directives of the federal, state, and municipal governments or public authorities and of all their departments, bureaus and subdivisions, applicable to and affecting the said Leased Premises, their use and occupancy, and shall promptly comply with all orders, regulations, requirements and directives of the Board of Fire Underwriters or similar authority and of any insurance companies which have issued or are about to issue policies of insurance covering the said Leased Premises and its contents, for the prevention of fire or other casualty, damage or injury, all at Tenants own cost and expense. Tenant shall obtain and maintain during the life of this Lease, worker's compensation insurance and employer's liability insurance for Tenant's employees in strict compliance with state laws. Certificates evidencing such insurance or approved self - insurance shall be submitted to Landlord prior to occupancy. Tenant shall not use the Leased Premises for any purposes deemed unlawful, disreputable, or extra hazardous. 24. Quiet Enjoyment. So long as the Tenant is not in default hereunder during the term hereof or any renewal or extension hereof, the Landlord covenants that the Tenant shall peacefully and quietly occupy and enjoy the Leased Premises subject to the terms hereof. The Valley Fine Art Page 9 Landlord warrants that it has full power and authority to execute this Lease, be bound by, and perform all its obligations hereunder. 25. Condemnation. If the land and the Leased Premises leased herein, or of which the Leased Premises are a part, or any portion hereof, shall be taken under eminent domain or condemnation proceedings, or if suit or other action shall be instituted for the taking or condemnation thereof, or if in lieu of any formal condemnation proceedings or actions, if any, the Landlord shall grant an option to purchase and/or shall sell and convey the said Leased Premises, or any portion thereof, to the governmental or other public authority, agency, body or public utility seeking to take said land and Leased Premises or any portion thereof, then this Lease, at the option of Landlord, shall terminate and the term hereof shall end as of such date as the Landlord shall fix by notice in writing; and the Tenant shall have no claim or right to claim or be entitled to any portion of any amount which may be awarded as damages or paid as the result of such condemnation proceedings or paid as the purchase price for such option, sale or conveyance in lieu of formal condemnation proceedings; and all rights of the Tenant to damages, if any, are hereby assigned to the Landlord. The Tenant agrees to execute and deliver any instruments, at the expense of the Landlord, as may be deemed necessary or required to expedite any condemnation proceedings or to effectuate a proper transfer of title to such governmental or other public authority, agency, body, or public utility seeking to take or acquire the said lands and Leased Premises or any portion thereof. The Tenant covenants and agrees to vacate said Leased Premises, remove all the Tenant's personal property there from and deliver up peaceable possession thereof to the Landlord or to such other party designated by the Landlord in the aforementioned notice. Failure by the Tenant to comply with any provisions in this clause shall subject the Tenant to such costs, expenses, damages and losses as the Landlord may incur by reason of the Tenant's breach hereof. 26. Landlord's Lien. Tenant hereby grants to Landlord a security interest in any and all of Tenant's furniture, fixtures, equipment whenever acquired, their proceeds and the proceeds of any and all insurance policies carried thereon as and for additional security for the faithful performance by Tenant of all of its obligations hereunder. Landlord shall not have any security interest, lien, or claim whatsoever on any artifact, artwork, paintings, or sculptures in the leased premises; as such items are generally displayed or sold on a consignment basis. Tenant agrees to execute and deliver to Landlord, upon request, such additional documents as Landlord may require establishing and perfecting such security interest including, without limitation, a financing statement in form satisfactory to Landlord. The exercise by Landlord of any rights in and to such furniture, fixtures, equipment and inventory upon default hereunder shall be governed by Article 9 of the Colorado Uniform Commercial Code, as in effect at the time of such default, but such exercise shall not preclude Landlord from exercising any or all other rights and remedies hereunder or as provided by law. 27. Inspection and Repair. The Tenant agrees that the Landlord and the Landlord's agents, employees or other representatives, shall have the right to enter into and upon the Leased Premises or any part thereof, at all reasonable hours and upon reasonable notice, for the purpose of examining the same or making such repairs or alterations therein as may be necessary for the safety and preservation thereof. Nothing in this section is intended to restrict access to the premises by an authorized City of Aspen inspector conducted pursuant to law, including, but not Valley Fine Art Page 10 limited to Environmental Health employees conducting routine health inspections. This clause shall not be deemed to be a covenant by the Landlord nor be construed to create an obligation on the part of the Landlord to make such inspection or repairs. Tenant expressly waives and releases any claim, demand, or cause of action it might have by reason of any inconvenience, annoyance to Tenant, its guests, licensees or invitees arising from any maintenance, alteration or repair to any portion of the Leased Premises, the building in which it is located or the property upon which it is situate. Tenant grants to Landlord the right to temporarily discontinue utilities or any of them at any such time or times as may be necessary by reason of any such maintenance work, alteration or repair. 28. Landlord Remodel of Premises. In the event Landlord desires to remodel any portion of the Leased Premises during the term of this lease agreement, it may do so, provided it is solely at Landlord's expense and, provided further, that any remodel work commenced by Landlord shall not interfere with or disrupt Tenant's business within the Leased Premises. 29. Minimum Hours. Tenant shall be fully stocked and staffed and open for business on the Leased Premises continuously Monday through Saturday, inclusive, according to the minimum hours established in the following schedule: MINIMUM HOURS December 16 — March 31 12 noon - 6:00 p.m. April 1 - June 14 12:00 noon - 5:00 p.m. (Subject to Tenant's option to close the Premises) June 15 - August 31 12 noon - 6:00 p.m. September 1 - December 15 12:00 noon - 5:00 p.m. (Subject to Tenant's option to close the Premises) Landlord agrees to cooperate in good faith to adjust seasonal minimum hours based upon Tenant's actual business operations. Tenant shall have the option to close the Premises for any purpose for thirty (30) days between April 1 - June 14 and for an additional thirty (30) days between September 1 - November 30. At all times during which the Premises are closed for business, Tenant shall keep Premises lighted in a manner acceptable to the City, consistent with the City's lighting regulations, so as to give the exterior of the Premises the appearance of liveliness and invitation. 30. Default. If there should occur any default on the part of the Tenant in the performance of any conditions or covenants herein contained or if, during the term hereof, the Leased Premises or any part thereof shall be or become abandoned or deserted, vacated or vacant, or should the Tenant be evicted by summary proceedings or otherwise, the Landlord, in addition to any other remedies herein contained or as may be permitted by law, may either by force or otherwise, without being liable for prosecution therefore or for damages, re -enter the Valley Fine Art Page 11 said Leased Premises and again possess the same with or without terminating this Lease; and as agent for the Tenant or otherwise, re -let the Leased Premises and receive the rents therefore and apply the same, first to the payment of such expenses and costs, as the Landlord may have been put in re- entering and repossessing the same and in making such repairs and alterations, as may be necessary; and second to the payment of the rents due hereunder. Whether or not the Landlord shall terminate this Lease, the Tenant shall remain liable for such rents as may be in arrears and also the rents as may accrue subsequent to the re -entry by the Landlord, to the extent of the difference between the rents reserved hereunder and the rents, if any, received by the Landlord during the remainder of the unexpired term hereof, after deducting the aforementioned expenses, fees, and costs; the same to be paid as such deficiencies arise and are ascertained each month. In addition, upon any such default, or if Tenant be adjudicated a bankrupt, insolvent or placed in receivership, or should proceedings be instituted by or against the Tenant for bankruptcy, insolvency, receivership, agreement of composition or assignment for the benefit of creditors, or if this Lease or the estate of the Tenant hereunder shall be transferred by virtue of any court proceedings, writ of execution or levy sale, the Landlord may, if the Landlord so elects, at any time thereafter, terminate this Lease, upon written notice to Tenant or to any trustee, receiver, or other person in charge of or acting as custodian of the assets or property of the Tenant. In the event of default, except in the payment of rent or additional rent hereunder, Landlord, prior to the exercise of any of its rights or remedies hereunder, shall give Tenant notice of such default together with a ten (10) day right to cure should such default be in the payment of any other sums due Landlord hereunder or a twenty (20) day right to cure should such default be in any of the other conditions or covenants of this Lease to be performed by Tenant, unless the same by its or their nature require immediate or earlier attention, and provided further that if the alleged default is such that more than twenty (20) days are reasonably required for its cure, that it shall not be deemed a default if Tenant commences such cure within the twenty (20) day period and diligently prosecutes the cure to completion. Upon the giving of such notice, this Lease and the term hereof shall, unless the default shall be cured during the applicable period, end on the date fixed in such notice as if the said date were originally fixed in this Lease for the expiration hereof; and the Landlord shall have the right to remove all persons, goods, fixtures and chattels therefrom, by force or otherwise, without liability for damages. No right of redemption shall be exercised under any present or future law of the State of Colorado in case the Tenant shall be dispossessed for any cause or if the Landlord shall, in any other manner, obtain possession of the Leased Premises in consequence of the violation of any of the covenants and agreements of the Tenant. The Landlord shall have a lien paramount to all others on every right and interest of the Tenant in and to this Lease, and on any furnishings, equipment, fixtures, or other personal property of any kind belonging to the Tenant, or the equity of the Tenant therein, on the leased property except for artifacts and art work. Such lien is granted for the purpose of securing the payment of rents, taxes, assessments, insurance charges, liens, penalties and damages herein covenanted to be paid by the Tenant and for the purpose of securing the performance of all of the Tenant's obligations under this Lease. Such lien shall be in addition to all rights of the Landlord given under statutes of this State, which are now or shall hereinafter be in effect. 31. Attorneys' Fees. In the event of any litigation or other action or proceeding between the parties hereto arising out of the performance or non - performance of this Lease, or enforcement of any rights or remedies hereunder, including any indemnities herein contained, the Valley Fine Art Page 12 prevailing party shall be entitled in such litigation, action or proceeding to also recover as part of any judgment, award or other relief, its reasonable attorneys' fees and costs incurred. 32. Delays. Whenever a period of time is provided in this Lease for either Landlord or Tenant to do or perform any act or thing, neither Landlord nor Tenant shall be liable or responsible for performing any obligation hereunder as a result of any unavoidable delay due to strikes, lockouts, casualties, acts of God, or other governmental regulations or control or other causes beyond such party's reasonable control, and the time for performance specified herein shall be extended for a period of time corresponding to such delay. 33. Mortgage Priority. This Lease shall not be a lien against the Leased Premises with respect to any mortgages or trust deeds now or hereafter placed upon the Leased Premises or the building. The recording of such mortgage or mortgages shall have preference and precedence and be superior and prior in lien to this Lease, irrespective of the date of recording and the Tenant agrees to execute any instruments, without costs, which may be deemed necessary or desirable, to further effect the subordination of this Lease to any such mortgage or mortgages. Tenant shall, upon request, execute any estoppel certificates or attornment agreements that may be required by the holder of any mortgage or trust deed now or hereafter placed upon the Leased Premises or the building or by the Owner of the building in which the Leased Premises are located. A refusal by the Tenant to execute any such instruments shall entitle the Landlord to at once terminate this Lease. Tenant agrees not to record or file this Lease in the real estate records affecting the building in which the Leased Premises is located. Any such recording in violation hereof shall be considered a slander of Landlord's title and a breach of this entire Lease. This covenant shall survive the expiration or earlier termination of this Lease. 34. Holding Over. This Lease shall expire of its own accord without notice at the end of the term or earlier, as herein specified. If, after the expiration of this Lease, Tenant remains in possession of the Leased Premises with the Landlord's consent, such holding over shall be a tenancy -at -will at a rental equal to the last monthly rental provided in this Lease, and otherwise subject to all the obligations and conditions of this Lease. 35. Cumulative Remedies. The various rights, remedies, options and elections of the Landlord expressed herein are cumulative and the failure of the Landlord to enforce strict performance by the Tenant of the conditions and covenants of this Lease or to exercise any election or option or to resort or have recourse to any remedy herein conferred or the acceptance by the Landlord of any installment of rent after any breach by the Tenant, in any one or more instances, shall not be construed or deemed to be a waiver or a relinquishment for the future by the Landlord of any such conditions and covenants, options, elections or remedies, but the same shall continue in full force and effect. 36. Cleanliness; Waste and Nuisance. Tenant shall keep the Leased Premises at all times in a neat, clean and sanitary condition, shall neither commit nor permit any waste or nuisance thereon. Tenant shall store all trash in the containers provided for that purpose. Valley Fine Art Page 13 37. Brokers. Each party represents to the other that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Lease. 38. Waiver. No waiver by Landlord or Tenant of any provision of this Lease shall be effective unless in writing nor shall such waiver be deemed a waiver of any other provision hereof, nor of any subsequent breach by Tenant of the same or of any other provision. 39. Surrender of Premises. At the end of the lease period of possession of the Leased Premises by Tenant, as well as at the termination of this Lease, Tenant shall surrender the Leased Premises to Landlord in good condition and repair, excepting for reasonable wear and tear and acts of God. Tenant shall have the right at the end of the term hereof to, and upon demand by Landlord Tenant shall, remove any equipment, furniture, trade fixtures not affixed to the realty, and other personal property placed in the Leased Premises by Tenant and Tenant shall promptly repair any damage to the Leased Premises caused by such removal. 40. Governing Law. This Lease shall be construed and enforced in accordance with the laws of the State of Colorado. In the event of any litigation arising out of this Lease, jurisdiction and venue shall rest with any court of competent jurisdiction in Pitkin County. 41. Time of Essence. Time is of the essence with respect to the performance of every provision of this Lease in which the time of performance is a factor. 42. Severability. The terms, conditions, covenants, and provisions of this Lease shall be deemed to be severable. If any clause or provision herein contained shall be adjudged to be invalid or unenforceable by a court of competent jurisdiction or by operation of any applicable law, it shall not affect the validity of any other clause or provision herein, but such other clauses or provisions shall remain in full force and effect. 43. Notices. All notices required under the terms of this Lease shall be given in person or by mailing such notices by certified or registered mail, return receipt requested, to the address of the party as shown at the beginning of this Lease, or to such other address as may be designated in writing, which notice of change of address shall be given in the same manner. If not sooner received, any notice given by mail shall conclusively be deemed received three (3) days after the date of certification or registration. 44. Entire Lease. This Lease contains the entire contract between the parties and there are no other agreements, understandings, representations, or warranties except as expressly set forth herein. No additions, changes or modifications, renewals or extensions hereof shall be binding unless reduced to writing and signed by the Landlord and Tenant. 45. References. In all references herein to any parties, persons, entities or corporations, the use of any particular gender or the plural or singular number is intended to include the appropriate gender or number as the text of the within Lease may require. 46. Tenant is an Independent Contractor. This Lease is not a contract of employment. No relationship of employer and employee, joint venture or partnership, exists Valley Fine Art Page 14 between Landlord and Tenant or between the Landlord and any employee or agent of the Landlord. Tenant shall at all times be deemed to be an independent contractor. Tenant is not authorized to bind Landlord to any agreements or obligations. 47. Binding Effect. All the terms, covenants, and conditions herein contained shall be for and shall inure to the benefit of and shall bind the respective parties hereto, and their heirs, executors, administrators, personal or legal representatives, successors and assigns respectively. 48. Guaranty. In the event Tenant hereunder is a corporation, or partnership, this Lease and the performance of all the payments, obligations, conditions and covenants contained herein shall be personally guaranteed by the shareholders of Tenant by execution of a guaranty of lease in a form provided by Landlord. IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and year above first written. TENANT: VALLEY FINE ARTS, LTD By: ! 14140 . L — GG-- -- Mia Valley Title: PRESIDENT LANDLORD: THE CITY OF ASPEN APPROVED AS TO FORM: APPROVED AS TO CONTENT: a a2a2C er, Esq., Steve arwick City Attorney City Manager Valley Fine Art Page 15 List of Exhibits Appended to Lease Agreement A - Description of Leased Premises B — Calculation of Cost of Living Increases. Valley G,Art Page 6 EXHIBIT 11 E. . w / �§ � § ■+ W � . ea ■ q)§ 2 2 §d 6�w « » ° bu 4 § §G / §En yr . . ' . +� - � . . _ : _■ ra \ X • . / cc © %\ ■ $i 40. L.L. - . m. la \ ~ : \ M :I„ \ � •' § ci . :• cci —I ~ } ^ ' �..I i /a% 1 }, 1 Valley Fine Art Page 17 EXHIBIT B COST OF LIVING INCREASE CALCULATION a) "Price Index" shall mean the Consumer Price Index - All Urban Consumers (CPI -U) - U.S. City Average - All Items less Food and Energy, or a successor or substitute index published or authorized by the United States Department of Labor, Bureau of Labor Statistics. b) The following formula shall be used for determining the adjustment, if any, in the fixed minimum annual rent: "Price Index" for the next fiscal year Current Index Number = (January 1) Base Index Number "Price Index" of preceding year (January 1) c) As promptly as practicable after the commencement of the first adjustment year, and thereafter as promptly as practicable after the first day of each succeeding adjustment year, Landlord shall compute the increase, if any, in the cost of living for the year immediately preceding said adjustment year. Such computation shall be made by use of current and base index numbers provided for each adjustment year as set forth in Paragraph c) above. d) In computing increases for each adjustment year the current index number shall be divided by the base index number. From the quotient thereof, there shall be subtracted the integer 1 and any resulting positive number shall be deemed to be the percentage of increase of cost of living. e) The percentage of increase in the cost of living shall be multiplied by the minimum annual rental including increases for the year preceding the adjustment year for which the increase is being computed. f) The Landlord shall, within a reasonable time after obtaining the appropriate data necessary for computing such increases, give the Tenant notice of any increase so determined, and the Landlord's computation thereof shall be conclusive and binding but shall not preclude any adjustment of the index figures upon which the computation was based and Tenant shall, within sixty (60) days after receiving such notice, notify Landlord of any claimed error therein; provided, however, nothing herein shall be construed to extend the time when rents, as determined by Landlord, are due and payable by Tenant. g) Minimum annual rent for each adjustment year, together with increases calculated in accordance with Paragraphs b) through 0 of this Section, shall be due and payable to Landlord in equal monthly installments due on the first day of each calendar month of each adjustment year (retroactive payments then due being payable within thirty (30) days after giving notice thereof by Landlord to Tenant). Valley Fine Art Page 18 h) If publication of the pertinent Consumer Price Index shall be discontinued, the parties hereto shall thereafter accept comparable statistics on the cost of living for the average of all U.S. cities, all items, as the same shall be computed and published by an agency of the United States or by a responsible financial periodical of recognized authority then to be selected by the parties hereto. In the event of (1) use of comparable statistics in place of the Consumer Price Index as above mentioned, or (2) publication of the Index figures at other than bi- monthly intervals, there shall be made in the method of computation above provided revisions as the circumstances may require to carry out the intent of this Article. Valley Fine Art Page 19 GUARANTY OF LEASE FOR VALUE RECEIVED, and in consideration for, and as an inducement to the aforesaid Landlord to make the foregoing Lease with Valley Fine Arts LTD, as Tenant, the undersigned Mia Valley unconditionally guarantees the full performance and observance of all the covenants, conditions, and agreements therein provided to be performed and observed by Tenant, and expressly agrees that the validity of this agreement and the obligations of the guarantors hereunder shall in no wise be terminated, affected or impaired by reason of the assertion by Landlord against Tenant of any of the rights or remedies reserved to Landlord pursuant to the provisions of the within Lease or by the relief of Tenant from any of Tenant's obligations under the Lease by operation of law or otherwise (including, but without limitation, the rejection of the Lease in connection with proceedings under the bankruptcy laws now or hereafter enacted); the undersigned hereby waiving all suretyship defenses. The undersigned further covenants and agrees that this guaranty shall remain and continue in full force and effect as to any renewal, modification, or extension of this Lease, whether or not the undersigned shall have received any notice of or consented to such renewal, modification or extension. The undersigned further agrees that his liability under this guaranty shall be primary, and that in any right of action which shall accrue to landlord under the Lease, landlord may, at Landlord's option, proceed against the undersigned and Tenant, jointly or severally, and may proceed against the undersigned without having commenced any action against or having obtained any judgment against Tenant. The undersigned further represents to Landlord as an inducement for Landlord to make the Lease, that the undersigned owns 100% all of the entire outstanding capital stock of Tenant. It is agreed that the failure of Landlord to insist in any one or more instances upon a strict performance or observance of any of the terms, provisions or covenants of the foregoing Lease or to exercise any right therein contained shall not be construed or deemed to be a waiver or relinquishment for the future of such term, provision, covenant or right, but the same shall continue and remain in full force and effect. Receipt by Landlord of rent with knowledge of the breach of any provision of the foregoing Lease shall not be deemed a waiver of such breach. Except as may be otherwise specifically provided in the Lease subletting, assignment, or other transfer of the within Lease, or any interest therein, shall not operate to extinguish or diminish the liability of the undersigned guarantors under this guaranty; and wherever reference is made to the liability of Tenant named in the within Lease, such reference shall be deemed likewise to refer to the undersigned guarantors. It is further agreed that all of the terms and provisions hereof shall inure to the benefit of the respective heirs, personal representatives, successors and assigns of Landlord, and shall be binding upon the heirs and assigns of the undersigned. IN WITNESS WHEREOF, the undersigned guarantor has caused this guaranty to be executed effective as of the 12 day of May, 2011. Valley Fine Art Page 20 Address: nQ \ _ c� E JPW- saved: 5 /12/2011- 8535 -G: \john\ word \agr\ wheeler- goldenarts- lease- 4- 6- 04.doc