Document Moscow_doc_fc3a9aaf19

EXTENSION OF AGREEMENT FOR LEASE, PROGRAMS AND OPERATIONS MANAGEMENT BETWEEN CITY OF MOSCOW, IDAHO, AS CITY AND HEART OF THE ARTS, INC., AS OPERATOR 412 EAST 3RD STREET, MOSCOW, IDAHO ;2..D I 7 - 00 I ---PAGE BREAK--- TABLE OF CONTENTS Page 1. BACKGROUND . . . . . 1 1.1 Goal I 1.2 Control . . . . . 1 1.3 Benefit. . . . . . . . . . 1 1 .4 Civic Purpose . . . . . . . . . 1 1 .5 Authority . . . 1 2. DEFINITIONS . . . . . . 2 2.1 Agreement . . . 2 2.2 CITY . 2 2.3 OPERA TOR . . . . . 2 2.4 Premises . . . . 2 2.5 Permitted Use . . . . . . 2 2.6 Term and Commencement Date . 2 2.7 Rent 3 3. GRANT OF PREMISES AND POSSESSION . . 3 3 .1 Grant of Premises . . . 3 3.2 Possession . . . . . . 3 3.3 CITY's Title . . . . . . . . . . 3 3 .4 City Arts Department . 3 3.5 CITY and OPERATOR . . . 3 4. INITIAL TERM AND RENEW AL . . 3 4.1 Initial Term 3 4.2 Renewal Term . . . . . 4 4.3 Conditions Precedent to Renewal Option . . .4 4.3.1 Default. . . 4 4.3.2 Financial Commitment. 4 4.4 OPERA TOR's Notice of Exercise of Renewal Option .4 5. PAYMENTS . . . . . . . . . . . 4 5.1 Term Fees 4 5.2 Fee Condition . . . . . . 5 5.3 Appropriation . . . 5 5.4 Non-Appropriation . . . . . 5 6. OPERATION OF PREMISES . 5 6.1 OPERA TO R's Use of Premises 5 6.1.1 Great Room, Plaza and Kitchen Area . . 6 6.1 .2 Existing Leases . . . . 6 6.1 .3 Future Occupancy of City Arts Department . 6 ---PAGE BREAK--- 6.2 Operating Hours . . 6 6.3 Approved Holidays 6 6.4 Subleasing of Premise and Approved Uses 6 6.5 Operational Performance Plan and Assessment . . 6 6.6 Uses Prohibited . . 7 6.6.1 OPERATOR Compliance with Rules . . . . 7 6.7 OPERATOR's Duties . . . . . . 7 6. 7 .1 Minor Repairs . . . 7 6.7.2 Utilities . . 7 6.7.3 General Maintenance . . . . . . 8 6.7.4 Financial Accounting . 8 6.7.4.1 HVAC and Elevator System . . . . . 8 6.7.4.2 Snow Removal . . . 8 6.7.4.3 Interior Maintenance . . . 8 6. 7 .4.4 Additional Duties . . . 9 6.7.5 OPERATOR Improvements 9 6. 7.5.1 Minor OPERA TOR Improvements . 9 6.7.5.2 Major OPERATOR Improvements . . . 10 6.8 CITY's Duties . 10 6.8.1 Major Repairs . . . 10 6.8.2 Utilities . . . . . . . . . . . . 10 6.8.3 Maintenance . . . . 10 6.8.4 Failure by CITY to Make Major Repairs or to Perform Maintenance 11 6.9 Labor Assistance . . . . . . . . . . 11 6.10 Signs . . . . . . . . 11 6.11 Hazardous Materials 11 6.11.1 OPERATOR's Hazardous Material Use . 11 6.11.2 Hazardous Material Definition . . . . 11 6.12 Covenant Against Liens . . . 12 7. REAL AND PERSONAL PROPERTY TAXES .12 7.1 OPERATOR's Payment ofTaxes . . 12 7.2 Tax Notices . . 12 8. CITY'S RIGHT OF ENTRY AND INSPECTION . . . .12 9. CHANGES IN THE PARTIES . . . . 13 9 .1 Relationship of Parties . . 13 9 .2 Designation of Representatives . . . . . 13 9 .3 Successors and Assigns . 13 9.4 OPERATOR's Assignment and Subleasing with CITY's Consent.. 13 9.5 CITY's Transfer . . . . . . . . . . . . . . . . . . 14 9.6 Mortgage . . . . . 15 11 ---PAGE BREAK--- 10. SUBORDINATION, QUIET ENJOYMENT, ATTORNMENT, ESTOPPEL CERTIFICATE . . 15 10.1 Subordination . . 15 10.2 Quiet Enjoyment . . . . 15 10.3 Attornment . 15 10.4 Estoppel Certificate . . . 15 1 1 . INDEMNIFICATION AND INSURANCE . . . . 16 11.1 Mutual Release; Waiver of Subrogation . . . 16 1 1 .2 Mutual Indemnification . . . . . . 16 1 1 .3 Liability Insurance . . . 17 11.4 Property Insurance . . . . . 17 1 1 .5 Workers' Compensation Insurance . . . 17 1 1 .6 Auto Insurance . . 17 1 1 . 7 Insurance Requirements . . . . 1 7 1 1 .8 Noncontribution . 18 1 1 .9 Blanket Policy . . . . . . . . 18 1 1 .10 Effect of One Party's Actions on Other Party's Insurance 18 1 1 .1 1 Effect ofCITY's Insurance on OPERATOR's Obligation . . . 1 8 12. DAMAGE OR DESTRUCTION OF PREMISES . . . . 18 13. CONDEMNATION 19 13.1 Entire or Substantial Taking 19 13.2 Awards 19 13 .3 Sale Under Threat of Condemnation . . . 19 13.4 Partial Taking and OPERATOR's Option . . .20 14. DEFAULT BY OPERATOR OR CITY . . . . 20 14.1 Default by OPERA TOR . 20 14.2 Remedies of CITY . . . . . . . . . . 20 14.2.1 Legal and Equitable Remedies . . 20 14.2.2 Termination of Agreement.. . . . . . . 20 14.2.3 Advance . . . . . . . 21 14.3 Default by CITY . . . . . 21 14.4 Remedies of OPERATOR . . 21 15. TERMINATION OF AGREEMENT . . . . . . . . 21 15.1 Events ofTermination . . . . 21 15.2 Surrender of Possession . . . . . . . . . . 21 15.3 Holding Over 22 15.4 Condition of Premises upon Termination . .22 15.4. l Removal of Property . . 22 15.4.2 Restoration of Premises . . . . 22 16. CLAIMS AND DISPUTES . . . 22 16.1 Rights and Remedies Cumulative . . 22 111 ---PAGE BREAK--- 16.2 Nonwaiver of Remedies . . . . . . . . . . 22 16.3 Attorney Fees and Costs . 23 16.4 Interpretation . . . . . . 23 16.5 Waiver of Jury Trial . . . . . . 23 17. GENERAL PROVISIONS . . 23 18. 17.1 Notices . . 23 1 7 .2 Brokers . 24 17 .3 Non-recording . . . . . 24 17 .4 Time is of the Essence . 24 17.5 Joint and Several Liability . . . . . . . 24 17 .6 Entire Agreement -Modification in Writing - Captions 24 17. 7 Severability . 25 17.8 Force Majeure . . . 25 SIGNATURES 26 Exhibit A - Site Plans . . . . . . . . 27 Exhibit B -Existing Leases . . . . . . . . 30 Exhibit C -Maintenance Schedule . . . . . . 31 Exhibit D - Cleaning Quality Requirements . . . . . . 33 IV ---PAGE BREAK--- RENEWAL OF AGREEMENT FOR LEASE, PROGRAMS AND OPERATIONS MANAGEMENT BETWEEN CITY OF MOSCOW, IDAHO, AS CITY AND HEART OF THE ARTS, INC., AS OPERATOR 412 EAST 3RD STREET, MOSCOW, IDAHO THIS RENEWAL OF AGREEMENT FOR LEASE, PROGRAMS AND OPERATIONS MANAGEMENT BETWEEN CITY OF MOSCOW, IDAHO, AS CITY AND HEART OF THE ARTS, INC., AS OPERATOR 412 EAST 3Ro STREET, MOSCOW, IDAHO (hereinafter "Agreement") is made and effective this 1 st day of October, 201 1 , by and between the City of Moscow, Idaho, a municipal corporation of the State ofldaho ("City"), and Heart of the Arts, Inc., an Idaho non-profit organization acting as programs and operations manager ("OPERA TOR"). 1 . BACKGROUND. 1 .1 Goal. CITY wishes to renew its contract for services of OPERA TOR for purposes of marketing, fundraising, operation, maintenance, and day-to-day control of the 1912 Center. 1 .2 Control. CITY desires to transfer such control of the 1912 Center to OPERA TOR for an extended period of time. 1 .3 Benefit. The City Council of Moscow believe that, because the terms of the original Agreement between the parties for operation of the 1912 Center allows it to be modified and, among other things, the parties wish to reduce the renewal term from twenty (20) years to a five­ year term with an optional five-year extension with the modified conditions contained herein, it is in the best interest of CITY to renew the transfer to OPERA TOR those annual and day-to-day maintenance, operation and program management matters in order to promote efficiency and to allow for the marketing, fund raising and development of the 1912 Center in a manner consistent with CITY policies and programs. 1 .4 Civic Purpose. CITY wishes to ensure the continuance of established and proposed civic uses in the 1912 Center in order to maximize CITY's current investment via donations and grants. 1 .5 Authority. This Agreement is authorized by Idaho Code 50-301 et seq., and other provisions of the Idaho Code. Amendments and changes contained herein are authorized by the "Agreement For Lease, Programs and Operations Management Between City Of Moscow, Idaho, As City And Heart OfThe Arts, Inc., As Operator 412 East 3rd Street, Moscow, Idaho" and by this Agreement. 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 1 OF 35 ---PAGE BREAK--- 2. DEFINITIONS The following terms shall have the definitions: 2.1 Agreement. Shall mean this document and all exhibits, attachments and amendments hereto. 2.2 CITY. City of Moscow, Idaho, whose mailing address is P 0 Box 9203, Moscow, Idaho, 83843. 2.3 OPERA TOR. Heart of the Arts, Inc., an Idaho non-profit organization whose mailing address is P 0 Box 8851 , Moscow, Idaho, 83843. 2.4 Premises. That certain real property located at 412 East 3rd Street, Moscow, Idaho, 83843 consisting ofland and improvements, "as is'', in the current state ofrepair and condition as of the date of the execution of this Agreement, all as more fully illustrated on Exhibit attached hereto and incorporated herein, commonly known as the 1912 Center. The Premises includes CITY's personal property located in the common areas of the Premises but specifically excludes any personal property of OPERA TOR or tenants within the Premises. 2.5 Permitted Use. To the extent practicable, the Premises shall be used in furtherance of civic, community and/or philanthropic purposes ideally serving a broad spectrum of the community in age, gender, race, ability and need. Uses should be or have the potential to be self sustaining and be able to contribute toward the costs of maintenance, operation and repair of the Premises. Users of the Premises should remain adaptable and flexible in how they use and occupy the Premises so as to maximize opportunities for shared use and minimize dedicated spaces. 2.6 Term and Commencement Date. The Term of the original "Agreement for Lease, Programs and Operations Management Between City of Moscow, Idaho, As City and Heart of the Arts, Inc., As Operator, 412 East 3rd Street, Moscow, Idaho" commenced January 7, 2007 with its initial term ending at midnight September 30, 2011 unless extended or modified. Section 4.2 of the original Agreement allowed for the one-time extension of said original Agreement for a period of an additional twenty (20) years " . . . upon the terms and conditions set forth in [that] Agreement or is mutually agreed upon in writing . . . The original Agreement, as well as this Agreement, allows for amendments to provisions to be made in writing, executed by CITY and OPERA TOR. Based upon such provisions, this Agreement has been modified so that the parties understand and agree that the use of the word "Term" in this Agreement shall reflect that the one-time extension contained in the original Agreement shall be reduced from twenty (20) years to a period of not more than one five-year initial term followed by an optional five-year renewal term and such one­ time extension shall consist of an initial term that shall commence on October 1, 2011 ("Commencement Date") and shall end at midnight September 30, 2016 ("Initial Term"), unless terminated earlier in accordance with the terms of this Agreement or as extended pursuant to Section 4 of this Agreement. Accordingly, the Initial Term (October 1 , 2011 - September 30, 2016) and the Renewal Term (as defined in Section 4.2) are collectively referred to as the "Term" of this Agreement. 2. 7 Rent. There shall be no rent due under this Agreement. Instead, OPERA TOR shall be obligated to operate, repair, maintain and replace the Premises as set forth in this Agreement. 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 2 0F 35 ---PAGE BREAK--- 3. GRANT OF PREMISES AND POSSESSION 3.1 Grant of Premises. CITY leases to OPERATOR and OPERATOR leases from CITY the Premises "as is", in the current state of repair and condition as of the Commencement Date, subject to the terms and conditions of this Agreement. 3.2 Possession. Subject to the rights and privileges of the tenants under the leases described in Exhibit B attached hereto and made a part hereof, CITY shall deliver possession of the Premises in the Premises' existing condition (including the rights, privileges, benefits, rights-of-way and easements now or in the future appurtenant to the Premises) to OPERATOR on the Commencement Date. During the Term, CITY covenants not to disturb the quiet enjoyment or possession of the Premises by OPERATOR, except as permitted by this Agreement. 3.3 CITY's Title. CITY shall have and retain paramount title to the Premises free and clear of any act or inaction of OPERA TOR that may restrict or encumber the Premises. 3.4 CITY Arts Department. CITY and OPERATOR agree to negotiate in good faith to locate the City of Moscow Arts Department within the Premises at such time as CITY may seek to relocate such Department to the Premises. 3.5 CITY and OPERATOR. Present uses of the Great Room, Plaza, Kitchen area, Friendship Hall, Fiske Room, Arts Workshop, and Senior Center shall not be discontinued by OPERA TOR without express written consent of CITY. 4. INITIAL TERM AND RENEWAL 4.1 Initial Term. The Initial Term of this Agreement is set forth in Section 2.6. 4.2 Renewal Term. Subject to the conditions precedent set forth in Section 4.3, OPERATOR may extend the Initial Term of this Agreement for one consecutive, additional period of five years ("Renewal Term") beyond the expiration of the Initial Term upon the terms and conditions set forth in this Agreement or as mutually agreed upon in writing. The Parties agree to exercise the one time five year renewal option. This Extension of Agreement shall be in effect from October 1 , 2016, for a term of five years, ending September 30, 2021 . 4.3 Conditions Precedent to Exercise of Renewal Option. OPERA TOR shall not be entitled to exercise the Renewal Option (or if OPERA TOR has previously exercised the Renewal Option, the exercise shall be negated), in the exercise of CITY's sole and absolute discretion, unless each and every of the following conditions in paragraphs 4.3.1 and 4.3.2 herein have been met in full, without exception or limitation of any kind, unless otherwise agreed to by CITY: 4.3.1 Default. OPERA TOR has not been in default, as defined in this Agreement, in any manner, during the Initial Term of this Agreement and OPERA TOR has not received any notice of default which is pending cure either at the time OPERATOR delivers to CITY OPERATOR's election to extend the term of this Agreement, at the expiration of the Initial Term or at the commencement of the Renewal Term. Such default may, however, be waived by CITY pursuant to this Agreement. 4.3.2 Financial Commitment. OPERATOR has demonstrated to CITY, in CITY's reasonable opinion, that OPERA TOR has the continuing financial ability to operate, repair 1 912 CENTER LEASE AND OPERA TJ ONS AGREEMENT PAGE 3 OF 35 ---PAGE BREAK--- and maintain the Premises for the foreseeable future in its then-current condition and operation, taking into consideration all relevant factors including, without limitation, the then-current tenants, current and projected fundraising efforts of OPERA TOR and the likelihood of success of those efforts, OPERATOR's then-current financial health, assets and balance sheet (or the financial health, assets and balance sheet of any willing guarantor of OPERA TOR, provided that such guarantor enters into a guaranty of this Agreement acceptable to CITY in CITY's sole and absolute discretion), and the past payment history of OPERA TOR in all aspects of its business. OPERA TOR agrees to provide CITY with any documentation requested by CITY in order for CITY to make its determination. 4.4 OPERATOR's Notice of Exercise of Renewal Option. OPERATOR may exercise OPERATOR's Renewal Option by giving written notice of the exercise to CITY not less than one year before the expiration of the Initial Term. 5. PAYMENTS 5.1 Term Fees. During the first year of the Term of this Agreement, CITY shall pay to OPERA TOR a fee of Five Thousand Dollars ($5,000) per month. In each succeeding year of the Term, upon submission of a budget request in accordance with CITY' s policies and procedures as established from time to time on or before April 1st of each year and subject to appropriation by the City Council of the City of Moscow as set forth in Section 5.3, CITY shall pay to OPERA TOR five thousand dollars ($5,000) per month for each month during the term of this Agreement on or before the first day of each month during the Term. This Fee amount of Five Thousand Dollars ($5,000) per month shall remain unchanged for the duration of the Term. 5.2 Fee Condition. Notwithstanding Section 5.1 to the contrary, the Fee shall not be due if OPERA TOR is in default of this Agreement or upon termination of this Agreement pursuant to Section 15. 5.3 Appropriation. CITY, by entering into this Agreement, acknowledges its current intention to make all Fee payments due (and the utility fee payments addressed in 6.7.2 of this Agreement) during the fiscal year such Fee payments are due, but CITY does not commit to a legal or other obligation to make such Fee payments or to incur any liability beyond the revenue and income provided during the then-current fiscal year. OPERA TOR has no right to compel CITY to levy or to collect taxes to pay the Fee or utility fee, or to expend funds beyond the amount provided for in the then-current fiscal year of CITY. CITY agrees during the current fiscal year and during each fiscal year during the Term to use reasonable efforts to obtain authorization and appropriation of the Fee and utility fee and that CITY shall, for the ensuing fiscal year in which the Fee payments are scheduled to be made, consider a budget and appropriation of the expenditure of an amount sufficient to allow CITY to make all Fee payments and utility fee payments due in such fiscal year; and (ii) that, to the extent sufficient funds have been appropriated for the current fiscal year, it will make all such Fee payments and utility fee payments. 5.4 Non-Appropriation. In the event CITY fails to receive appropriated funds sufficient to pay the Fee or utility fee in the full amount, CITY shall notify OPERA TOR in writing of such occurrence, including the amount of the appropriation, if any, upon CITY's confirmation of such event. Within sixty (60) days after OPERATOR's receipt ofCITY's written non-appropriation notice, OPERA TOR may elect by written notice to CITY to terminate this Agreement effective as of sixty (60) days following CITY's receipt of OPERATOR's election to 1 9 12 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 4 0F 35 ---PAGE BREAK--- terminate this Agreement. In the event OPERATOR should fail to deliver OPERATOR's election to terminate this Agreement because of non-appropriation within the sixty (60) days after OPERATOR's receipt of CITY's written non-appropriation notice, this Agreement shall continue in full force and effect through the subsequent year when, if applicable, OPERA TOR again submits its budget request for the Fee and the utility fee and this Section 5.4 shall again take effect. 6. OPERATION OF PREMISES 6.1 OPERATOR's Use of Premises. Subject to any existing leases or sub-leases described in Exhibit and the following provisions, the Premises shall be occupied and used by OPERATOR and any permitted subtenants of OPERATOR only for the Permitted Use and for no other purpose. 6.1 .1 Great Room, Plaza, Fiske Room, Arts Workshop, Friendship Hall, Senior Center, and Kitchen Area: OPERA TOR shall preserve the existing uses of the Great Room, Plaza, Fiske Room, Arts Workshop, and Kitchen Area as public meeting and activity areas available upon a reservation basis during the term of the Agreement. OPERA TOR shall be responsible for the acceptance, coordination, and collection of fees for such activities and the provision of a facility supervisor during such reserved use of the Premises. All revenues generated from fees received for the rental of the Great Room, Plaza, Fiske Room, Arts Workshop, Friendship Hall, Senior Center, and Kitchen areas shall be retained by OPERA TOR. All policies, procedures and rental fees shall first be reviewed by the Use Committee as specified within Section 9.4 of this Agreement. 6.1 .2 Existing Leases: OPERA TOR shall honor any existing leases, sub-leases, and agreements between CITY and any other party related to the Premises and subsequent renewals for the respective portions of the Premises and shall negotiate in good faith to ensure the opportunity for such leases, sub-leases, and uses associated with such leases and sub-leases to continue during the term of this Agreement. 6.1 .3 Future Occupancy of CITY Arts Department. CITY and OPERA TOR agree to negotiate in good faith to locate the City of Moscow Arts Department within the Premises at such time as CITY may seek to relocate such Department to the Premises. The terms of such occupancy shall be mutually agreed upon in writing. 6.2 Operating Hours. OPERA TOR shall be responsible for the management and operations of the Premises which shall include ensuring that the building is unlocked and open for public access between the hours of 9:00 a.m. and 6:00 p.m. Monday through Friday with the exception of the list of approved holidays included within Section 6.3 of this Agreement and during maintenance (where granting access to the public is unsafe or impractical). OPERATOR shall be responsible for and shall ensure that there is a properly trained, equipped and designated facility supervisor within the Premises at all times that the Premises are open for public use and access. OPERA TOR shall be responsible for properly and appropriately locking and otherwise securing the Premises during times other than the operating hours listed above. 6.3 Approved Holidays. For the purposes of this Agreement the following are the approved holidays: New Year's Day, Thanksgiving Day, Idaho Human Rights Day, Presidents' Day, Memorial Day, Independence Day, Labor Day, Veterans' Day, and Christmas Day. Nothing 1 9 12 CENTER LEASE AND OPERATI ONS AGREEMENT PAGES OF 35 ---PAGE BREAK--- in this Agreement shall prevent OPERA TOR from operating the Premises in accordance with this Agreement on such holidays. 6.4 Subleasing of Premise and Approved Uses. Subleases shall only be allowed in accordance with Sections 2.6 and 9.4 of this Agrt:t:mt:nL 6.5 Operational Performance Plan and Assessment. Upon execution of this Agreement, OPERA TOR and CITY shall negotiate in good faith to define an Operational Performance Plan that shall identify objectives and milestones to assess the performance of OPERA TOR in meeting the objectives of CITY for the development and operations of the Premises. Such mutually agreed upon Plan shall be used to assess the performance of the OPERA TOR in meeting the requirements of this Agreement by supporting the existing community uses of the Premises, in promoting, identifying and securing additional users and tenants for the Premises and in securing funds or other means of continuing the capital improvement and development of the Premises. Such Plan shall also include a fundraising plan which shall include proposed fundraising activities to support the development and operation of the Premises. OPERA TOR shall attend quarterly meetings with a designated CITY representative for the purpose of evaluating OPERATOR's performance toward meeting the objectives of the Operational Performance Plan during the proceeding quarter. OPERATOR and CITY shall meet at least annually to assess the performance of OPERATOR and CITY in accordance with this Agreement. 6.6 Uses Prohibited OPERA TOR covenants and agrees that it will not use or suffer or permit any person or persons to use the Premises or any part thereof for any use or purpose in violation of the laws of the United States of America or the State of Idaho, or the ordinances, regulations and requirements of the City of Moscow, County of Latah, or other lawful authorities. 6.6.1 OPERA TOR Compliance with Rules. OPERA TOR shall comply with any building rules and regulations of CITY as may now or hereafter be established or from time to time be amended by CITY. CITY shall not be liable to OPERA TOR for any violation of such rules. 6.7 OPERATOR's Duties 6.7.1 Minor Repairs. OPERATOR shall be responsible for minor repairs to the personal property included as part of the Premises. For purposes of this Agreement, "minor repairs" shall be defined as the repair, maintenance or replacement of furniture and fixtures that are not the property of current and/or future tenants of the Premises. 6.7.2 Utilities. During the Term of this Agreement, OPERATOR shall be solely responsible for and shall pay all charges, when due, for natural gas, electricity, water, sewer, garbage, janitorial services, telephone, cable, computer, security, and any other utility or other service used upon or furnished to the Premises. During the Term of this Agreement, CITY shall provide OPERA TOR thirty five thousand dollars ($35,000.00) annually for utilities, in addition to the Fee, that shall be payable in twelve (12) installments and which is intended to fund the utility and janitorial services necessary to service the Premises in their current state of development and use. This utility fee amount of Thirty-Five Thousand Dollars ($35,000) per year shall remain unchanged for the duration of the Renewal Term. Such utility fee payment shall be paid subject to 5.3 and 5.4 of this Agreement 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE6 0F 35 ---PAGE BREAK--- 6.7.3 General Maintenance. OPERATOR agrees at all times, from and after delivery of possession of the Premises to OPERA TOR, and at its own cost and expense, to maintain, repair and/or replace in good and tenantable condition the Premises and every part thereof, including fixtures and equipment, and excluding only specific parts of the Premises that are to be maintained by CITY, as set forth in this Agreement. If OPERA TOR refuses or neglects to make repairs and/or maintain the Premises, or any part thereof, in a manner reasonably satisfactory to CITY, CITY shall have the right, upon giving OPERA TOR reasonable written notice of its election to do so, to make such repairs or perform such maintenance on behalf of and for the account of OPERATOR. In such event such work shall be paid for by OPERATOR upon receipt of a bill therefor. 6.7.4 Financial Accounting. OPERATOR agrees that its accounting books and other financial records pertaining to this Agreement, including, but not limited to, operations and fundraising activities related to Premises shall be open and available for examination at all times by CITY within a reasonable time upon request. OPERA TOR shall maintain complete accounting records for all activities, including fundraising activities conducted during the term of this Agreement. Such accounting shall include the expenses of the fund raising activity, the funds collected and the expenditures of the collected funds. These records shall be preserved and made available for inspection to CITY upon request throughout the term of this Agreement. OPERA TOR also agrees that it shall maintain fiscal records and accounts in accordance with systems and procedures prescribed by law or regulation as applicable to the financial affairs of CITY and that OPERA TOR shall annually render a written independent financial review as mutually agreed upon by OPERATOR and CITY within ninety (90) days after the end of each fiscal year of OPERA TOR. 6.7.4.1 HVAC and Elevator System. OPERATOR, at OPERATOR's sole cost and expense, shall be responsible for the routine maintenance of the HVAC and elevator system and shall enter into a maintenance contract reasonably acceptable to CITY for the performance of the same. 6.7.4.2 Snow Removal. OPERATOR shall be responsible for snow removal from all interior sidewalks upon or adjacent to the Premises, the Outdoor Plaza as shown on Exhibit and all stairways, landings, walkways and parking areas within or adjacent to the Outdoor Plaza. OPERA TOR shall be responsible for snow removal from all public sidewalks those parallel to CITY streets) and for snow removal in the 1912 Center parking lots as shown on Exhibit 6.7.4.3 Interior Maintenance. OPERATOR shall be responsible for performing all general maintenance and cleaning to the interior of the Premises, including, but not limited to the Maintenance Schedule as set out in Exhibit and incorporated herein by this reference. 1 9 12 CENTER LEASE AND OPERATI ONS AGREEMENT PAGE 7 0F 35 ---PAGE BREAK--- 6. 7.4.4 Additional Duties a. OPERA TOR shall perform all obligations under Section 6. 7 in a good and workmanlike manner and in conformance with the Cleaning Quality Requirements attached hereto as Exhibit and incorporated herein. b. OPERA TOR shall be responsible for securing the Premises upon completion of any repairs or maintenance by OPERATOR or OPERATOR's employees or agents. c. Repair and maintenance activities shall be coordinated in such manner as to minimize the impacts upon current programs and uses to the greatest extent reasonably possible. d. OPERA TOR shall provide a schedule of periodic floor, window and upholstery cleaning dates in advance to CITY and shall ensure the performance of the same. e. OPERA TOR shall attend a quarterly meeting with City of Moscow officials, as designated by CITY, for the purpose of evaluating the previous quarter's maintenance. 6. 7 .5 OPERA TOR Improvements. Upon execution of this Agreement, OPERATOR and CITY shall continue with the joint 1912 Center Facility Development Committee (hereinafter "Development Committee") which shall be appointed by CITY and shall include the CITY Building Official, CITY Facilities Manager, a City Council member, a representative of OPERATOR, and two representatives from the community. Community members serving on the Development Committee may also be members of the 1912 Center Use Advisory Committee (hereinafter "Use Committee"). The Development Committee shall develop and recommend a Renovation Plan for the Premises that shall be approved by the CITY and shall define the life safety, structural and utility infrastructure requirements for the Premises (including common use areas, the site and the building envelope) to allow for the use of the undeveloped portions of the Premises. The Renovation Plan shall include standards to be followed for all capital improvements to the Premises. The Development Committee shall also serve as a review board for all Major OPERA TOR Improvements, as specified in this Agreement. 6.7.5.1 Minor OPERATOR Improvements: Minor OPERATOR Improvements shall include such items as painting of interior walls, replacement of existing lighting fixtures, refinishing/polishing of flooring surfaces and other non-structural surface finishes. Prior to conducting any Minor OPERATOR Improvements, OPERATOR shall be required provide a written request describing the proposed improvements and to meet with the CITY's designated official regarding such improvements to ensure that such Minor OPERATOR Improvements shall not jeopardize the historic or structural integrity of the Premises. OPERA TOR shall not conduct such improvements without prior written approval of CITY's designated representative. 6.7.5.2 Major OPERATOR Improvements: Major OPERATOR Improvements shall include structural, and/or mechanical alterations to the Premises, including 1 9 12 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 8 OF 35 ---PAGE BREAK--- but not limited to, replacement of windows, alterations to structural walls, alterations to plumbing or electrical systems, replacement of floor coverings, and all items defined as Major Repairs within Section 6.8.1 of this Agreement. Requests to conduct Major OPERATOR Improvements shall be made in writing by OPERA TOR to the Development Committee and CITY with construction drawings and diagrams of sutlicient detail and scale to convey the scale and scope of the proposed improvements. Such request shall include details of the proposed improvement including the proposed project manager, anticipated cost and proposed funding of the proposed improvements, who would complete the work, how the work would be conducted, the anticipated time necessary to complete the proposed improvements, and any proposed dispensation proposed in relation to the proposed improvements. The Development Committee shall review such requests for Major OPERA TOR Improvements and may request any additional information deemed necessary by the Development Committee to assess and render a decision regarding such Major Improvement Requests. The Development Committee shall make a recommendation to CITY regarding the proposed Major OPERA TOR Improvements and CITY shall make the final decision regarding all Major Capital Improvements. CITY reserves the right to deny any Major OPERA TOR Improvement request, require a performance bond of the OPERA TOR for any such Major OPERA TOR Improvement, inspect any Major OPERA TOR Improvement during construction, and/or issue a stop work order to any contractor or agent of OPERA TOR should the CITY determine that the construction activity threatens the historic or structural integrity of the Premises. 6.8 CITY's Duties. 6.8.1 Major Repairs. Unless otherwise agreed in writing, CITY shall be responsible for major repairs to the Premises. For purposes of this Agreement, "Major Repairs" shall be defined as structural repairs to the building foundation, roof, elevator, and plumbing (excluding fixtures), the heating, ventilation and air conditioning (HVAC) system, sidewalks, and underground utilities, including but not limited to water, sewer and irrigation lines appurtenant to the building when such repairs are necessary to remedy conditions constituting a threat to life and/or safety of the public and/or occupants of the Premises, unless the major repairs were caused by the negligent or wrongful act or omission of OPERATOR, or OPERATOR's employees, agents, contractors or invitees and OPERA TOR shall, at its sole cost and expense, properly repair any and all damage to any part of the Premises resulting from the negligent or wrongful acts or omissions of OPERATOR, OPERATOR's employees, agents, contractors or invitees. 6.8.2 Utilities. CITY's responsibility for utilities to the Premises shall be in accordance with this Agreement. 6.8.3 Maintenance. OPERATOR shall be responsible for snow removal from the parking lot of the Premises, pruning the trees on the Premises as needed, and for all general maintenance to the exterior of and grounds of the Premises, including painting, mowing, weeding, irrigation, and general grounds maintenance. 6.8.4 Failure by CITY to Make Major Repairs or to Perform Maintenance. Anything to the contrary notwithstanding contained in this Agreement, if CITY shall fail to commence the making of Major Repairs or perform maintenance as it is obliged to do, in accordance with Sections 6.8.1 and 6.8.3 of this Agreement, with within thirty (30) days after written notice given by OPERATOR to CITY, specifying the particulars of CITY's failure, OPERATOR's sole right and remedy for such failure on the part of CITY shall be, after further notice to CITY, to cause such Major Repairs to be made or such maintenance to be performed and 1 9 12 CENTER LEASE AND OPERA TIO NS AGREEMENT PAGE 9 0F35 ---PAGE BREAK--- to submit to CITY its invoice for the costs and expense thereof, which invoice CITY shall pay, provided that the costs and expense shall not exceed the reasonable value of such Major Repairs or maintenance. Except as stated in Section 6.8, CITY is not required to perform any maintenance, repairs, replacements, improvements or alterations at any time during the Term of the Agreement. 6.9 Labor Assistance. OPERA TOR may request labor assistance from CITY in discharging OPERATOR's obligations pursuant to this Agreement. CITY may, in its sole discretion, provide such assistance. In the event that CITY agrees to provide such assistance to OPERA TOR, CITY shall submit invoices representing time spent in the performance of such assistance to OPERA TOR and OPERA TOR shall remit payment for such invoices within twenty (20) days of receipt thereof. 6.10 Signs. All interior and exterior signs on the Premises (including building directories, wall and door signs, and exterior building signs) shall be designed, installed, maintained, repaired, replaced or improved by OPERATOR at OPERATOR's expense with CITY's prior written consent. CITY's consent under the Agreement shall not negate OPERATOR's obligation to obtain any necessary consents, approvals or permits as otherwise required by applicable law, rule or regulation. 6.11 Hazardous Materials. 6.11 .1 OPERATOR's Hazardous Material Use. OPERATOR shall not cause or permit any Hazardous Material to be brought upon, kept, or used in or about the Premises by OPERA TOR, its agents, employees, contractors, customers, clients, patients, guests or invitees, except as incidental to OPERATOR's permitted use of the Premises or only in quantities that are less than the quantities required to be reported to governmental or other authorities under applicable law or regulations. OPERA TOR shall comply with all applicable laws and regulations regulating the use, reporting, storage, and disposal of Hazardous Material. 6.11 .2 Hazardous Material Definition. As used in the Agreement, the term "Hazardous Material" means any hazardous or toxic substance, material or waste which is or becomes regulated by any federal, state or local governmental authority or political subdivision. The term "Hazardous Material" includes, without limitation, any material or substance that is defined as a "hazardous substance" under applicable law, (ii) petroleum, (iii) asbestos, (iv) biphenyl designated as a "hazardous substance" pursuant to Section 311 of the Federal Water Pollution Control Act (33 U.S.C. § 1321), (vi) defined as a "hazardous waste" pursuant to Section 1004 of the Solid Waste Disposal Act (42 U.S.C. § 6903), (vii) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601), (viii) defined as a "regulated substance" pursuant to Section 9001 of the Solid Waste Disposal Act (Regulation of Underground Storage Tanks), 42 U.S.C. § 6991, (ix) considered a "hazardous chemical substance and mixture" pursuant to Section 6 of the Toxic Substance Control Act (15 U.S.C. § 2605), or defined as a "pesticide" pursuant to Section 2 of the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. § 136). 6.12 Covenant Against Liens. OPERATOR shall not directly or indirectly create or cause to be created or to remain, and shall discharge, at OPERA TOR's sole expense, any mechanics' lien or similar lien against the Premises which OPERATOR created or caused to be created by OPERA TOR's work on the Premises. OPERA TOR has no authority or power to cause 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 1 0 0F 35 ---PAGE BREAK--- or permit any mechanics' lien or similar lien created by act of OPERA TOR, operation oflaws, or otherwise to attach to or be placed upon CITY's title or interest in the Premises. Any lien against the OPERATOR shall attach only to OPERATOR's leasehold interest in the Premises. OPERA TOR consent to any such lien shall be authorized by the CITY in writing. 7. REAL AND PERSONAL PROPERTY TAXES7. 1 OPERATOR's Payment of Taxes. OPERA TOR agrees to pay, before they become delinquent, all taxes (both general and special), assessments, or governmental charges lawfully levied or assessed against the Premises or OPERATOR's personal property. 7 .2 Tax Notices. CITY shall furnish to OPERA TOR the tax statement for the Premises immediately upon receipt from the taxing authority in the event the tax statement is sent to CITY. If allowed by the applicable taxing authority, OPERA TOR may request that all tax bills and notices be sent directly to OPERA TOR, and OPERA TOR shall provide a copy of such statements to CITY 8. CITY'S RIGHT OF ENTRY AND INSPECTIONOPERATOR shall permit CITY and its agents at all reasonable times during normal office hours and at any time in the event of an emergency, to enter the Premises for the purpose of inspecting the same or for the purpose of protecting the interest therein of CITY, and (ii) to take all required materials and equipment into the Premises and perform all required work therein, as may be provided for by this Agreement, as may be required by law, or as may be reasonably necessary to maintain any service provided by CITY to OPERA TOR hereunder. OPERA TOR shall permit CITY and its agents, upon request, to enter and/or pass through the Premises or any part thereof, at reasonable times during normal business hours to show the Premises to holders of encumbrances on the interest of CITY under the Agreement, to prospective purchasers, mortgagees or lessees as an entirety; and during the period of one year prior to the expiration date of this Agreement, CITY may exhibit the Premises to prospective lessee and/or operators. CITY shall also have the right to enter on and/or pass through the Premises, or any part thereof, at such times as such entry shall be required by circumstances of emergency affecting the Premises or any portion thereof. If during the last month of the term hereof OPERA TOR shall have removed substantially all ofOPERATOR's property and personnel from the Premises, CITY may enter the Premises and repair, alter and redecorate the same, without liability to OPERA TOR, and such acts shall not relieve OPERA TOR of any obligation under this Agreement. 9. CHANGES IN THE PARTIES9. l Relationship of Parties. Nothing contained in this Agreement shall be construed as creating the relationship of principal or agent, employer/employee, partnership or joint venture between the parties hereto. Neither the method of computation of fees or utility fee payments nor any other provision of this Agreement, nor any act of the parties, shall be deemed to create any relationship other than that of CITY and OPERATOR. It is understood by the parties that OPERATOR's employees shall not be considered employees of CITY for any purpose, including, without limitation, tax, retirement system, or social security (FICA) withholding. 9.2 Designation of Representatives. Each party shall designate, in writing, one representative to coordinate and implement the party's obligations and to accept responsibility for the party's compliance with this Agreement. If the representative is changed, then the party shall notify the other party in writing within seven days. CITY' s current representative is the City 1 9 12 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 1 1 OF 35 ---PAGE BREAK--- Parks and Recreation Director. OPERATOR's current representative is the Heart of the Arts, Inc., Executive Director. 9.3 Successors and Assigns. Subject to Section 9.4, this Agreement shall benefit and bind the successors and permitted assigns of CITY and OPERATOR. 9.4 OPERATOR's Assignment and Subleasing with CITY's Consent. Upon execution of this Agreement OPERATOR and CITY shall continue with the joint Use Committee whose members shall be appointed by CITY and shall be made up of five members which shall include two representatives of OPERA TOR, a City Council member and two members of the community. Community members serving on the Use Committee may also be members of the Development Committee. Requests for subleasing shall be submitted in writing to the Use Committee with sufficient detail to describe the area of the Premises proposed to be subleased, the proposed OPERA TOR of such sublease, the uses that are proposed under such sublease and the compensation proposed under such sublease agreement. The Use Committee shall review the uses proposed within such sublease request for compliance with the following criteria: 1 . The use reflects community need or desire 2. The use has demonstrated sustainability and/or support for specified program or activity 3. The use promotes multi-generational participation and sense of community 4. The use provides opportunity for flexibility and adaptability within the building and sharing of many spaces with other uses and users 5. The use and/or user group evidences ability to contribute financially (via on-going revenue, or in-kind assistance, help in securing grants, etc.) 6. The user group or use will require a level of finish and renovation for specified program and activities that is achievable, realistic, and does not compromise historic integrity of the building 7. The use avoids unnecessary duplication of programming 8. The use does not pose unreasonable concern to maintenance, ease of operation, security, or consume all available parking resources The Use Committee may request any additional information it deems necessary to evaluate the proposed sublease request. When multiple requests have been received for the same area of the Premises, the proposed use which best meets the criteria listed above shall be selected. The Use Committee's decision regarding the sublease request shall be final. The Use Committee shall also be charged with the supervision of the Great Room, Plaza, Kitchen, Fiske Room, and Arts Workshop areas rental policies and procedures and shall review and make recommendations regarding any proposed rental fee changes for such areas. 9.5 CITY's Transfer. CITY may sell, assign or otherwise transfer the Premises without the consent of OPERA TOR; however, CITY shall notify OPERA TOR of all reasonable offers to purchase and shall grant to OPERA TOR the right of first refusal and the opportunity to match any offer of purchase on or prior to the closing date. If CITY should sell or transfer CITY's interest in the Premises, then with not less than ninety (90) days notice and effective with the date of the 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 12 0F 35 ---PAGE BREAK--- sale or transfer, CITY shall be released and discharged from any and all further obligations and responsibilities under this Agreement (except those already accrued). CITY shall give OPERA TOR not less than ninety (90) days notice of CITY' s intent to sell, assign, or otherwise transfer the Premises. After such notice, OPERA TOR shall have;: sixty (60) days within which to exercise its option to terminate this Agreement and to vacate the Premises at the time of sale, assignment, or other transfer (unless otherwise agreed with the buyer, assignor, or other transferee). If OPERA TOR fails to exercise such option to terminate hereunder, the terms of this Agreement shall continue to bind OPERATOR and the buyer, assignee, or other transferee. 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 1 3 OF 35 ---PAGE BREAK--- 9.6 Mortgage. OPERA TOR shall not, either voluntarily or by operation of law, encumber, pledge, transfer or hypothecate all or any part of the Premises or OPERATOR's rights hereunder. 10. SUBORDINATION, QUIET ENJOYMENT, ATTORNMENT, ESTOPPEL CERTIFICATEl O. l Subordination. This Agreement, at CITY's option, shall be subject and subordinate to the lien of any mortgages or deeds of trust in any amount or amounts whatsoever now or hereafter placed on or against the land or improvement or either thereof, of which the Premises are a part, or on or against CITY' s interest or estate therein, without the necessity of the execution and delivery of any further instruments on the part of OPERA TOR to effectuate such subordination; provided, however, that so long as the OPERA TOR shall not be in default under the terms of this Agreement, the Agreement shall not be terminated nor shall any of the OPERATOR's rights and obligations under the Agreement be disturbed by such lender in the exercise of its rights under the deed of trust or mortgage. If any mortgagee or beneficiary shall elect to have this Agreement prior to the lien of its mortgage or deed of trust, and shall give written notice thereof to OPERA TOR, this Agreement shall be deemed prior to such mortgage or deed of trust, whether this Agreement is dated prior to or subsequent to the date of the mortgage or deed of trust, or the date of the recording thereof. OPERA TOR covenants and agrees to execute and deliver upon demand without charge therefor, such further instruments evidencing such subordination of this Agreement to the lien of any such mortgages or deeds of trust as may be required by CITY. 10.2 Quiet Enjoyment. CITY agrees that OPERA TOR, upon paying any monetary sums due under this Agreement and performing the covenants and conditions of this Agreement and upon recognizing any subsequent purchaser as CITY, may quietly have, hold and enjoy the Premises during the term hereof; subject, however, to all restrictions and covenants contained or referred to in this Agreement. 10.3 Attornrnent. In the event of a foreclosure or the exercise of the power of sale under any mortgage or deed of trust made by CITY covering the Premises, OPERA TOR shall attom to the purchaser upon any such foreclosure or sale and recognize such purchaser as the CITY under this Agreement, provided the purchaser expressly agrees in writing to be bound by the terms of this Agreement. 10.4 Estoppel Certificate. OPERA TOR shall, from time to time, upon written request of CITY, execute, acknowledge and deliver to CITY a written statement certifying that this Agreement is unmodified and in full force and effect (or that the same is in full force and effect as modified, listing the instruments of modification), and whether or not to the best of OPERA TO R's knowledge, CITY is in default hereunder (and, if so, specifying the nature of the default), it being intended that any such statement delivered pursuant to this paragraph may be relied upon by a prospective purchaser of CITY's interest or a mortgagee of CITY's interest or assignee of any mortgage upon CITY's interest in the Premises. If OPERA TOR shall fail to respond within ten (10) days of receipt by OPERA TOR of a written request by CITY as herein provided, OPERA TOR shall be deemed to have given such certificate as above provided without modification. 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 1 4 0F 35 ---PAGE BREAK--- 1 1 . INDEMNIFICATION AND INSURANCE! 1 .1 Mutual Release; Waiver of Subrogation. CITY and OPERA TOR hereby each release the other party and anyone claiming through or under the other party by way of subrogation or otherwise from any and all insured loss of or damage to Premises, or OPERA TOR's personal property, whether or not caused by the negligence or fault of the other party. ln addition, OP ERA TOR shall cause any property insurance policy carried by it which insures the Premises or the contents thereof to be written to provide that the insurer waives all rights of recovery by way of subrogation against CITY in connection with any loss or damage covered by the policy. 11.2 Mutual Indemnification. Subject to the terms of Section 11.1 above, OPERA TOR hereby releases CITY and does covenant and agree to indemnify, defend, protect and hold CITY harmless against and from any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements or expenses of any kind or of any nature whatsoever (including, without limitation, attorneys' and experts' fees and disbursements) which may at any time be imposed upon, incurred by or asserted or awarded against CITY arising from or in connection with the loss oflife, personal injury and/or damage to property occasioned by any negligent or willful act or omission of OPERA TOR or its agents, contractors, servants or employees during the Term of the Agreement. Subject to the limits of liability specified in Idaho Code 6-901 through 6-929, known as the Idaho Tort Claims Act, CITY shall indemnify and hold OPERA TOR, its agents and assigns, harmless from and/or against any and all claims, damages, and liabilities (including reasonable attorney's fees) that may be suffered or incurred and that arise as a direct result of and which are caused by CITY' s possession, control, operations or performance under this Agreement. CITY' s liability coverage is provided through a self-funded liability program administered by the State of Idaho Office of Insurance Management. Limits ofliability, and this indemnification, are $500,000 Combined Single Limits, which amount is the CITY's limit of liability under the Idaho Tort Claims Act. In addition, OPERA TOR covenants and agrees to indemnify, defend, protect and hold CITY harmless against and from any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements or expenses of any kind or of any nature whatsoever (including, without limitation, attorneys' and experts' fees and disbursements) which may at any time be imposed upon, incurred by or asserted or awarded against CITY and arising from or in connection with the loss oflife, personal injury and/or damage to property arising from or out of any occurrence in or upon the Premises, unless caused by any negligent or willful act or omission of CITY or its agents, contractors, servants or employees. An indemnified party shall have the right to engage its own attorneys in connection with any of the provisions of this Section 1 1 .2 or any of the provisions of this Agreement, including, but not limited to, any defense of or intervention by such party, notwithstanding any contrary provisions of the laws or court decisions of the state in which the Premises is located. 1 1 .3 Liability Insurance. OPERA TOR shall provide and maintain commercial general liability insurance (Occurrence Basis) with broad form coverage endorsement covering its obligations under this Section 11 and insuring it against claims for personal injury, bodily injury or death, and property damage or destruction. Such insurance shall be written with an insurer licensed to do business in the state of Idaho, shall name CITY as additional insured on the policy and shall contain a waiver of subrogation endorsement in favor of CITY. The initial limits of liability of all such insurance shall be not less than one million dollars ,000,000) for personal injury or bodily injury or death of any one person, one million dollars ($1,000,000) for personal injury or bodily injury or death of more than one person in one occurrence and five hundred 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 1 5 0F 3 5 ---PAGE BREAK--- thousand dollars ($500,000) with respect to damage to or destruction of property; or, in lieu of such coverage, a combined single limit (covering personal injury, bodily injury or death and property damage or destruction) with a limit of not less than two million dollars ($2,000,000) per occurrence. Furthermore, CITY shall have the right to reasonably adjust the dollar amounts required by this Section 11.3 from time to time in CITY' s sole discretion upon thirty (30) days prior written notice to OPERATOR. 11.4 Property Insurance. CITY, at CITY's sole cost and expense, shall purchase and maintain casualty insurance insuring the replacement cost of all improvements, buildings, structures, furniture, fixtures, and equipment located on the Premises in such amounts and in such form as CITY may determine. 1 1 .5 Workers' Compensation Insurance. OPERATOR, at OPERATOR's sole cost and expense, shall carry Workers' Compensation Insurance as required by Idaho law. No "alternative" forms or self insurance coverage shall be allowed. 1 1 .6 Auto Insurance. OPERATOR, at OPERATOR's sole cost and expense, shall carry Commercial Business Automobile Liability Insurance (Occurrence Basis) with one million dollars ($1,000,000) combined single limit coverage. Such insurance shall be endorsed with a waiver of subrogation endorsement in favor of CITY and include coverage for hired and non-owned vehicles and owned vehicles if OPERA TOR owns a vehicle. Furthermore, CITY shall have the right to reasonably adjust the dollar amounts required by this Section 11.6 from time to time in CITY's sole discretion. 1 1 .7 Insurance Requirements. For all insurance which OPERATOR is required to maintain hereunder, OPERA TOR shall furnish CITY with certificates evidencing such insurance. All policies shall be obtained from an insurer licensed to do business in the State of Idaho, with a Best's Rating of"A" or higher and a Financial Size Category of"VIII" or higher, or the equivalent thereof. The policies of insurance shall provide that the insurance represented by the certificates shall not be cancelled, materially changed or nonrenewed without the giving of thirty (30) days' prior written notice to the holders of the insurance and the holders of the certificates. If OPERA TOR shall fail to obtain any policy of insurance required hereunder, CITY may obtain the same and keep the insurance in effect, and OPERA TOR shall pay CITY the cost thereof plus a ten percent (10%) service charge to cover CITY's administration costs within ten (10) days after receipt of an invoice. No policy will contain a deductible or self-insured retention in excess of five thousand dollars ($5,000) without CITY's prior written approval. If requested by CITY, OPERA TOR will deliver to CITY a certified copy of any insurance policies required by this Agreement. If the forms of policies, endorsement, certificates, or evidence of insurance required by this Section 11 are superseded or no longer available or the rating service of insurers is no longer available or modified, CITY will have the right to require other equivalent or better forms. Furthermore, CITY shall have the right to adjust the dollar amounts required by this Section 11 from time to time in CITY's sole discretion. 11.8 Noncontribution. All insurance carried by OPERA TOR hereunder shall be primary and not contributory with any other insurance which is maintained by CITY. 1 1 .9 Blanket Policy. All insurance which OPERA TOR is required to maintain hereunder may be provided under a blanket policy provided such policy otherwise complies with 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 16 0F 35 ---PAGE BREAK--- the requirements of this Agreement and is endorsed with an Aggregate Limits of Insurance (Per Location) endorsement. 11.10 Effect of One Party's Actions on Other Party's Insurance. Neither party shall do or permit to be done anything which shall invalidate any insurance carried by the other party. Each party shall pay the entire increase in the insurance premium ifthe increase is specified by the other party's insurer as caused by the actions or omissions of the party. 1 1 .11 Effect of CITY's Insurance on OPERATOR's Obligation. From time to time and without obligation to do so, CITY may purchase insurance against damage or liability arising out of or related to the Premises. The purchase or failure to purchase insurance shall not release or waive the obligations of OPERA TOR set forth in this Agreement. OPERA TOR waives all claims on insurance purchased by CITY. 12. DAMAGE OR DESTRUCTION OF PREMISESif at any time during the Term hereof, the Premises are damaged and such damage is not "substantial" as that term is hereinafter defined, and OPERA TOR is not responsible for the repair of such damage pursuant to Section 6.7 hereof, then CITY shall repair such damage at CITY's expense, and this Agreement shall continue in full force and effect. If at any time during the term hereof the Premises are damaged and if such damage is "substantial" as that term is hereinafter defined, then CITY may at its option either repair such damage as soon as reasonably possible at CITY' s expense, in which event, this Agreement shall continue in full force and effect, or cancel and terminate this Agreement as of the date of the occurrence of such damage, by giving OPERATOR written notice of its election to do so within sixty (60) days after the date of occurrence of such damage. If the Premises are destroyed or damaged and CITY repairs or restores them pursuant to the provisions of this section, then OPERA TOR shall continue operations in the Premises to the extent reasonably practicable from the standpoint of prudent business management. OPERA TOR shall have no claim against CITY for any damages suffered by OPERA TOR by reason of any such damage, destruction, repair or restoration, provided CITY undertakes and accomplishes repairs in a reasonably timely fashion. In the event the damage to the Premises, requiring new construction or need of repair of the same, is caused by the negligence or willful acts of OPERA TOR or OPERA TOR' s employees and agents, there shall be no duty to repair the same on the part of the CITY and OPERA TOR shall be responsible for said repairs. For the purpose of this section, "substantial" damage to the Premises or the building in which the Premises are located shall be deemed to be damaged, the estimated cost of repair of which exceeds ten percent (10%) of the then estimated replacement cost of the Premises or building, as the case may be. The determination in good faith by CITY of the estimated cost of repair of any damage and/or of the estimated replacement cost of the Premises or building, as the case may be, or any part thereof shall be conclusive for the purpose of this section. 1 9 12 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 1 7 0F 35 ---PAGE BREAK--- 13 . CONDEMNATIONin the event of a condemnation or taking under power of eminent domain, the parties shall have the following rights: 13 .1 Entire or Substantial Taking. If the entire Premises, or so much thereof as to make the balance not reasonably adequate for the conduct of OPERATOR's operations, notwithstanding restoration by CITY as herein provided, shall be taken under the power of eminent domain, this Agreement shall automatically terminate as of the date on which the condemning authority takes title or possession, whichever shall first occur. 13 .2 Awards. Any award for any taking of all or any part of the Premises under the power of eminent domain shall be the property of CITY, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee. Nothing contained herein, however, shall be deemed to preclude OPERA TOR from obtaining, or to give CITY any interest in, any award to OPERATOR for loss of or damage to OPERATOR's fixtures and removable personal property or for damage for cessation or interruption of OPERATOR's business. 13.3 Sale Under Threat of Condemnation. A sale by CITY to any authority having the power of eminent domain, either under threat of condemnation or while condemnation proceedings are pending, shall be deemed a taking under the power of eminent domain for all purposes under this section. 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 1 8 OF 35 ---PAGE BREAK--- 13.4 Partial Taking and OPERATOR's Option. A taking of twenty percent (20%) or more of the leased floor area of the Premises shall confer upon OPERA TOR the option, to be exercised only within sixty (60) days after OPERA TOR shall have received written notice thereof, to terminate this Agreement effective as of the date of such taking, upon written notice to CITY. Failure of OPERATOR to exercise such option shall constitute OPERATOR's agreement that the balance of the Premises is reasonably adequate for the conduct of OPERATOR's business, and this Agreement shall remain in effect. 14. DEFAULT BY OPERATOR OR CITY14.1 Default by OPERATOR. OPERATOR shall be in default under this Agreement if any of the following occur: OPERA TOR fails to pay when due any payment(s) required to be paid by OPERATOR pursuant to this Agreement and the failure shall not be cured within ten (10) days after delivery of written notice to OPERATOR of the failure; (ii) OPERATOR fails to perform or observe any other covenant, agreement or condition which OPERATOR is required to perform or observe and the failure shall not be cured within thirty (30) days after delivery of written notice to OPERA TOR of the failure (or, if the cure cannot be effected within the thirty (30) day period, then within the additional period of time as may be required to cure the default provided OPERA TOR is diligently and continuously pursuing the cure to completion); or (vi) OPERA TOR vacates or abandons all or a substantial portion of the Premises (OPERA TOR shall be conclusively deemed to have abandoned the Premises if OPERA TOR shall be absent from the Premises for ten ( 10) or more consecutive days). In the event OPERA TOR cures a default within the applicable time frame set forth above, no default shall be deemed to have occurred under this Agreement. 14.2 Remedies of CITY. In the event of OPERATOR's default as set forth in Section 14.1, CITY, upon the giving of thirty (30) days' (ten [10] days in the event of a failure to pay money) prior written notice to OPERATOR and OPERATOR's failure to remedy the default within such notice period, shall have the remedies set forth in this Agreement including termination of all payments by CITY to OPERATOR. CITY' remedies are cumulative and not alternative remedies. 14.2.1 Legal and Equitable Remedies. CITY and OPERA TOR shall have all remedies available at law or in equity. 14.2.2 Termination of Agreement. In addition to all other rights and remedies available to CITY in law and equity, CITY may change the locks and lock the doors to the Premises and exclude OPERA TOR from the Premises, (ii) enter the Premises and remove all persons and property therefrom without being liable for prosecution or any claim for damages for the removal, (iii) declare the Agreement terminated, (iv) commence litigation for any damages sustained by CITY, continue the Agreement in effect and relet the Premises on such terms and conditions as CITY may deem advisable, and (vi) hold the OPERATOR liable for the reasonable cost of obtaining possession of the Premises, the reasonable cost of reletting the Premises (including broker's commissions), and the reasonable cost of any repairs and alterations necessary to prepare the Premises for reletting, less any money actually received from the reletting, if any. 14.2.3 Advance. In the event ofOPERATOR's breach, CITY may remedy the breach for the account and at the expense of OPERA TOR. If CITY at any time, by reason of the breach, is compelled to pay, or elects to pay, any money or to do any act which will require the 1 91 2 CENTER LEASE AND OPERATI ONS AGREEMENT PAGE 1 9 0F 35 ---PAGE BREAK--- payment of any money, or is compelled to incur any expense, including reasonable attorneys' fees, in instituting or prosecuting any action or proceeding to enforce CITY's rights under this Agreement, the money paid by CITY, with interest from the date of payment, shall be deducted from any Fees due pursuant to this Agreement. 14.3 Default by CITY. CITY shall be in default under this Agreement if CITY fails to perform or observe any covenant, agreement or condition which CITY is required to perform or observe and the failure shall not be cured within thirty (30) days after delivery of written notice to CITY by OPERATOR of the failure (or, if the cure cannot be effected within the thirty (30) day period, then within the additional period of time as may be required to cure the default provided CITY is diligently and continuously pursuing the cure to completion). 14.4 Remedies of OPERA TOR. In the event of CITY' s default, as set forth in Section 14.3, OPERATOR shall have all rights provided at law or in equity, except OPERATOR expressly waives any right to withhold performance of any of OPERATOR's maintenance, repair or replacement obligations set forth in this Agreement. 15. TERMINATION OF AGREEMENT15. l Events of Termination. This Agreement shall terminate upon the occurrence of one or more of the following events: by mutual written agreement of CITY and OPERA TOR; (ii) by CITY pursuant to this Agreement; (iii) by OPERATOR pursuant to this Agreement; (iv) upon lapse of the Term; any time prior to October 1 , 2011 upon CITY's receipt of thirty (30) days' prior written notice from OPERA TOR; or (vi) by reason of Sections 12 or 1 3 relating to casualty or condemnation of the Premises. 1 5.2 Surrender of Possession. Upon termination of this Agreement, OPERA TOR will immediately surrender possession of the Premises to CITY. If possession is not immediately surrendered, CITY may, in compliance with the laws of the state in which the Premises are located, re-enter and repossess the Premises and remove all persons or property. 1 91 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 20 0F 35 ---PAGE BREAK--- 1 5.3 Holding Over. If OPERATOR fails to deliver actual possession of the Premises to CITY upon termination of this Agreement, CITY shall have all remedies available at law or in equity to a lessor ofreal property in the State of the Premises' location, plus one of the following remedies: CITY may recover damages from OPERA TOR in an amount equal to all damages sustained by CITY by reason of OPERA TO R's failure to deliver actual possession of the Premises to CITY; or (ii) CITY may accept OPERATOR's failure to deliver actual possession of the Premises to CITY as an irrevocable offer to renew this Agreement for a month to month period. 1 5.4 Condition of Premises upon Termination. OPERA TOR, upon termination or abandonment of this Agreement or termination of OPERA TOR's right of possession, agrees as follows: 15.4.1 Removal of Property. Except as permitted by this Agreement, OPERA TOR shall not remove any alterations, improvements or additions made to the Premises by OPERA TOR or others without the prior written consent of CITY, which consent may be withheld for any reason or for no reason. OPERA TOR shall immediately remove, in a good and workmanlike manner all personal property of OPERA TOR. All damage occasioned by the removal shall be repaired by OPERA TOR in a good and workmanlike manner. If OPERA TOR fails to remove any property, CITY may accept the title to the property without credit or compensation to OPERATOR, or (ii) remove and store the property, at OPERATOR's expense, in any reasonable manner that CITY may choose. 1 5.4.2 Restoration of Premises. OPERA TOR shall restore the Premises to a broom clean condition and in the condition existing on the Commencement Date, with the exception of ordinary wear and tear. If OPERA TOR fails to properly restore the Premises, CITY, at OPERATOR's expense, may restore the Premises in any reasonable manner that CITY may choose. 16. CLAIMS AND DISPUTES16. l Rights and Remedies Cumulative. Except as expressly provided in this Agreement, each party's rights and remedies described in this Agreement are cumulative and not alternative remedies. 16.2 Nonwaiver of Remedies. A waiver of any condition stated in this Agreement shall not be implied by any neglect of a party to enforce any remedy available by reason of the failure to observe or perform the condition. A waiver by a party shall not affect any condition other than the one specified in the waiver and any waiver shall waive the specified condition only for the time and in the manner specifically stated in the waiver. The acceptance by CITY of compensation from OPERATOR after termination of the Agreement, after termination of OPERATOR's right of possession, after the occurrence of a default, or after institution of any remedy by CITY shall not alter, diminish, affect or waive the Agreement termination, termination of possession, default or remedy. 16.3 Attorney Fees and Costs. IfCITY incurs attorney fees or costs to enforce any term, covenant or condition of this Agreement, including to recover possession of the Premises, OPERATOR shall pay CITY a reasonable sum for attorney's fees and costs and, iflegal action is taken, such fees shall be deemed to have accrued on the commencement of such action and shall be paid whether or not such action is prosecuted to judgment. Likewise, if OPERA TOR incurs attorney fees or costs to enforce any term, covenant, or condition of this Agreement, CITY shall 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 2 1 OF 35 ---PAGE BREAK--- pay OPERATOR a reasonable sum for attorney's fees and costs, and iflegal action is taken, such fees shall be deemed to have accrued on the commencement of such action and shall be paid whether or not such action is prosecuted to judgment. Should CITY, without fault of CITY, be made a party to any litigation instituted by OPERA TOR or by any third party against OPERA TOR, or by or against any person holding or using the Premises through or under OPERATOR, or for the foreclosure of any lien for labor or materials furnished to or for OPERA TOR, or otherwise arising out of or resulting from any act or omission of OPERA TOR, OPERA TOR covenants to save and hold CITY harmless from any judgment rendered against CITY and/or the Premises or any part thereof, and all costs and expenses, including reasonable attorney's fees, incurred by CITY in or in connection with such litigation. 1 6.4 Interpretation and Jurisdiction. It is agreed that this AGREEMENT shall be construed under and governed by the laws of the State of Idaho. In the event of litigation concerning it, it is agreed that proper venue shall be the District Court of the Second Judicial District of the State of Idaho, in and for the County of Latah. The invalidity of any portion of this Agreement shall not affect the validity of any other portion of this Agreement. This Agreement constitutes the entire, completely integrated agreement among the parties and supersedes all prior memoranda, correspondence, conversations and negotiations. Whenever the consent of either party is required to an action under this Agreement, consent shall not be unreasonably withheld or delayed. 1 6.5 Waiver of Jury Trial. CITY and OPERATOR hereby agree that each of them shall waive trial by jury in any action, proceeding or counterclaims brought by either CITY or OPERA TOR against the other. This waiver applies to any matters whatsoever arising out of or in any way connected with this Agreement, or the relationship of CITY and OPERA TOR, or OPERA TO R's use of the Premises, or any emergency statute, or any remedy authorized by statute. 17. GENERAL PROVISIONS 17 .1 Notices. All notices given pursuant to this Agreement shall be in writing and shall be given by personal service, by United States certified mail, return receipt requested, or by United States express mail or other established express delivery service (such as Federal Express) with signature confirmation required, postage or delivery charge prepaid, addressed to the appropriate party at the address set forth in Section 2 of this Agreement. The person and address to which notices are to be given may be changed at any time by such party upon written notice to the other party. All notices given pursuant to this Agreement shall be deemed given upon receipt. For the purpose of this Agreement, the term "receipt" shall mean the earlier of any of the following: the date of delivery of the notice or other document to the address specified pursuant to Section 2 as shown on the return receipt, (ii) the date of actual receipt of the notice or other document by the person or entity specified pursuant to, or (iii) in the case of refusal to accept delivery or inability to deliver the notice or other document, the earlier of the date of the attempted delivery or refusal to accept delivery, the date of the postmark on the return receipt, or the date of receipt of notice of refusal or notice of nondelivery by the sending party. 17.2 Brokers. CITY and OPERATOR each represent and warrant that it has neither employed nor associated with any broker or agent in connection with this Agreement and have not agreed to pay any commissions or finders fees to any other broker. CITY and OPERA TOR each hereby agrees to indemnify and defend the other against any and all commissions, finders fees or 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 22 0F 35 ---PAGE BREAK--- other fee or any claim therefor by any broker in connection with this Agreement claiming through the indemnifying party. 17.3 Non-recording. This Agreement or any memorandum of this Agreement shall not be recorded unless all parties further consent. 17.4 Time is of the Essence. Time is of the essence with respect to the obligations to be performed under this Agreement. 17.5 Joint and Several Liability. If there is more than one OPERATOR, the obligations imposed by this Agreement upon OPERA TOR shall be joint and several. 17 .6 Entire Agreement - Modification in Writing - Captions. This Agreement contains the entire agreement of the parties. No representations, promises, or agreements oral or otherwise between the parties not contained in this Agreement shall be of any force and effect. Neither this Agreement nor any provisions hereof may be changed, waived, discharged, or terminated except in writing executed by CITY and OPERA TOR. The parties acknowledge that minor changes to this Agreement may be necessary from time to time and hereby agree that such may be proposed in writing to the other party. A response to a proposal for modification shall be given within forty five ( 45) days of receipt of the proposed change. The captions for Agreement Sections are for convenience only and shall have no effect upon the construction or interpretation of any part of this Agreement. 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 23 OF 35 ---PAGE BREAK--- 17.7 Severability. The illegality, invalidity or unenforceability of any term, condition, or provision of the Agreement shall in no way impair or invalidate any other term, condition, or provision of the Agreement. All such other terms, conditions, and provisions shall remain in full force and effect. 17.8 Force Majeure. Time periods for CITY's performance under this Agreement, including services to be furnished by CITY as provided for in this Agreement, shall be extended for periods of time during which CITY' s performance is prevented due to circumstances beyond CITY's control. This would include, without limitation, strikes, embargoes, repairs, alterations, governmental action, acts of God, war, or other strife. CITY shall not be liable for any costs or damages incurred by OPERA TOR due to such circumstances. Suspension or interruption of any services provided by CITY shall not be deemed an eviction, or relieve OPERA TOR of any obligation under this Agreement. 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 24 0F 35 ---PAGE BREAK--- SIGNATURES. OPERATOR Heart of the Arts, Inc. Date: STATE OF IDAHO ) ) SS. COUNTY OF LATAH ) CITY City of Moscow, Idaho ACKNOWLEDGMENT . \ l On this l day of ,  ,..2Gt6, before me, a Notary Public in and for said State, appeared Jay Pengilly, President known to me to be the person named above and acknowledged that he executed the foregoing document as the duly authorized representative for Heart of the Arts, Inc. 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT tary Public for the State of Idaho Residing at N) D.::Cb )  My commission expires / PAGE 25 OF 35 ---PAGE BREAK--- I . I l r- l l I 1 . EXHIBIT A SITE PLANS r _c - _ - 11J- lr\\-IS I IU•l·T · . , · • I . 1 ' ' I . j i I i ' l ·c : I .  F- . i r - - 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT / L I I . . PAGE 260F 35 ---PAGE BREAK--- CITIZEN COMMITTEE USE PLAN PLAZA LEVEL FLOOR PLAN 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 27 OF 35 ---PAGE BREAK--- open to Great Room below CITIZEN COMMITTEE USE PLAN GROUND LEVEL FLOOR PLAN 1 912 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 28 0F 35 ---PAGE BREAK--- EXHIBIT B EXISTING LEASES Friendly Neighbors Senior Citizens, Inc. lease with Heart of the Arts, Inc. (HAI), renewed on an annual basis, for use of the Senior Center Monday through Friday 9:00 a.m. to 4:00 p.m. in Jrade for a volunteer to staff the Senior Center during the hours of operation and use of the Great Room and Kitchen Tuesday and Thursday, 7:00 a.m. to 2:00 p.m. for the Senior Meal Program and the Kitchen alone on Mondays and Wednesdays, 9:00 a.m. to noon for prep work for the meal program, for a rental fee. 1 9 1 2 CENTER LEASE AND OPERATIONS AGREEMENT PAGE 29 0F 35 ---PAGE BREAK--- EXHIBIT C MAINTENANCE SCHEDULE Daily Maintenance. Daily Maintenance shall be performed Monday through Friday, excluding federal and state holidays: Waste. Empty all waste baskets into dumpster Empty and clean ash urns Restrooms. Floors. Wet mop floors Clean mirrors Clean and sanitize sinks, toilets, urinals and other restroom fixtures Clean stall walls in restrooms Clean and refill all restroom dispensers Sweep and/or dust mop all floor surfaces Vacuum all carpets including elevator Sweep interior stair landings and steps Furniture/Fixtures/Other. Dust cleared desks, chairs, tables and other office surfaces Dust counters, file cabinets, all ledges and other surfaces within reach Clean entrance doors and entrance exterior and interior glass Clean drinking fountains Keep janitor closet clean and orderly Clean all sinks, counters and tables in conference rooms and kitchens Weekly Maintenance. OPERATOR shall perform the following maintenance on a weekly basis or as otherwise stated below: Floors. Damp mop all vinyl and tile floors three days per week: (Monday, Wednesday and Friday) Remove scuff marks as necessary Clean stains or spots on carpets as necessary Sweep exterior stair landings and steps Buff all tile floors to maintain a high shine Auto-scrub wood floors 1 9 1 2 CENTER LEASE ANO OPERATIONS AGREEMENT PAGE 30 OF 35 ---PAGE BREAK--- Furniture/Fixtures/Other Clean cleared desk tops, counter tops, file cabinets, wastebaskets, drawer faces Dust outside of interior light fixtures Vacuum all uphulslere