05-114, Cupertino Sports Center Lease.
ARTICLE 1.
1.01.
1.02.
1.03.
1.04.
ARTICLE 2.
2.01.
ARTICLE 3.
3.01.
3.02.
ARTICLE 4.
4.01.
4.02.
4.03.
4.04.
4.05.
ARTICLE 5.
5.01.
5.02.
5.03.
5.04.
ARTICLE 6.
6.01.
LEASE OF A PORTION OF THE
CUPERTINO SPORTS CENTER
TABLE OF CONTENTS
LEASED PREMISES
Agreement to Lease
"Leased Premises" Defined
Right to Use Common Areas
Independent Mailing Address
TENANT'S BUSINESS USEINON-COMPETITION
Permitted Business Use
TERM OF LEASE
Commencement Date and Term
Term
RENT AND OTHER CHANGES
Rent
Maintenance and Repair Costs
Utility Costs/Separation of Utilities
Taxes
Additional Rent
MAINTENANCE AND USE OF COMMON AREAS
Maintenance and Control
"Common Areas" Defined
Tenant's Right to Use Common Areas
Tenants Parking
CONSTRUCTION AND REPAIRS
City Construction/Condition of Premises
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
OJ-((tj
Page 1 of 22
6.02.
6.03.
6.04.
6.05.
6.06.
6.07.
6.08.
6.09.
ARTICLE 7.
7.01.
7.02.
7.03.
7.04.
ARTICLE 8.
8.01.
8.02.
8.03.
8.04.
8.05.
ARTICLE 9.
9.01.
9.02.
9.03.
9.04.
ARTICLE 10.
10.01.
10.02.
10.03.
10.04.
10.05.
ARTICLE 11.
11.01.
11.02.
11.03.
11.04.
11.05.
11.06.
Tenants Construction
Alterations and Improvements Conducted By City
to Meet Various Building Code Requirements
Other Alterations and Improvements By City
Inability ofthe Tenants to Utilize the Leased Premises
Due to City Construction, Alteration Maintenance, or Repair
Alterations and Improvements by Tenants
Repairs to Premises
Ownership of Improvements
Purchase and Installation of All Weather Enclosure
Surrounding Pool by Tenants
DESTRUCTION OF LEASED PREMISES OR SPORTS CENTER
Notice of Damage
Damage or Destruction From Insured Casualty
Right to Terminate Lease
Payment of Insurance Proceeds
USE OF LEASED PREMISES
Business Hours
Prohibited Actions
Compliance with Laws
Advertising and Signs
Assignment and Sublease
INDEMNITY AND INSURANCE
Indemnity
Insurance By Tenants
Subrogation Waiver
Proceeds
CONDEMNATION
Termination of Lease
Continuation of Lease
Option to Terminate Lease
Condemnation Award
Waiver
DEF AUL T AND TERMINATION
"Default" Defined
Termination of Lease and Recovery of Damages
City's Right to Continue Lease in Effect
City's Right to Relet
City's Right to Cure Tenants Defaults
Cumulative Remedies
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
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SPORTS CENTER LEASE
This Lease is entered into on December 6,2005, by and between the City of
Cupertino, a California municipality ("City") and Joseph He and Xiaohong Wang
individually and d/b/a California Dolphin Swim School (hereinafter referred to as CDSS),
a California corporation ("Tenants"), organized under the laws of the state of California.
ARTICLE 1. LEASED PREMISES
Agreement to Lease
1.01. In consideration ofthe agreements and covenants contained in this Lease
to be kept and performed by both City and Tenants, City leases to Tenants and Tenants
lease from City the premises described in Paragraph 1.02. of this Lease.
"Leased Premises" Defined
1.02. "Leased Premises" means that certain space which includes the pool,
detached Men's and Women's locker rooms, mechanical room, and storage/office area of
the building known as the Cupertino Sports Center located at 21111 Stevens Creek Blvd.,
Cupertino, California. Tenants have the exclusive right to use these areas except for the
rest rooms, which will be made available for the tennis program between June 15 and
August 31 each year.
Right to Use Common Areas
1.03. Except as specifically stated in subsection 5.03. (a), Tenants have the
non-exclusive right to use, in common with others, and subject to the restrictions and
conditions contained in the Lease, the Common Areas ofthe Sports Center. The term
"Common Area" is defined in Paragraph 5.02. of this Lease.
Independent Mailing Address
1.04. City shall secure an independent mailing address for the leased premises.
ARTICLE 2. Tenants' Business Use/Non-Competition
Permitted Business Use
2.01. Tenants are leasing the leased premises for the purpose of operating and
conducting the business of providing a swim instruction program. Tenants may sell
merchandise related to swimming and nonalcoholic beverages. Tenants may not use the
leased premises or permit the leased premises to be used for any unrelated purpose,
unless agreed upon in writing by the City.
ARTICLE 3. TERM OF THE LEASE
Commencement Date and Term
3.01. The original term of this Lease shall be for a period of five years beginning
on the Commencement Date. The Commencement Date is)une 1,2006; however this
City of Cupertino
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commencement date may be delayed for a period not to exceed 120 days for causes
beyond the reasonable control of the City. Any such delay in the commencement date
shall also postpone accordingly the date at which the Tenants' monthly rent begins as
described in Section 3.02.
Tenants will have access to the leased premises on and after April 1, 2006, to
construct the pool enclosure. This work must be coordinated with the City Architect and
Building Official.
Term
3.02. The period beginning on the Commencement Date and continuing until the
expiration date or earlier termination of this Lease shall be the Term of this Lease.
Tenants' obligation to pay rent and/or other monetary amounts required under this Lease
shall be abated from the commencement date until six months after commencement of
the lease; otherwise, all provisions, covenants, and conditions ofthis Lease shall apply to
Tenants during the Term.
ARTICLE 4. RENT AND OTHER CHARGES
Rent
4.01. Throughout the term of the Lease, Tenants shall pay a monthly rent to City
of $4,166.67 per month due on the first of each month commencing six months after the
Commencement Date and ending upon expiration of the Lease. When the commencing
month and the ending month are shorter than the calendar months than the rent will be
prorated.
Said rent shall be paid to City without deductions or offsets at the address
set forth in this Lease for giving notices to City.
Maintenance and Repair Costs
4.02. City shall be responsible, at its sole cost, for maintaining the Leased
Premises, including the roof, foundation and structure of the building, doorways,
windows, sidewalks, and walls adjacent to the Leased Premises in good repair and
sanitary order, condition, and repairs, normal wear and tear excepted; provided, however,
Tenants shall be responsible for any maintenance or repair of any damage to the Leased
Premises or to the Cupertino Sports Center caused by the intentional or negligent conduct
of Ten ants, Tenants' employees, customers, or guests. Backed-up drains or toilets will be
the responsibility of the tenant. Any costs incurred by City for any maintenance or repair
of any damage caused by Tenants, its employees, customers, or guests described above
shall be charged and collected by the City as additional rent.
Utility Costs/Separation of Utilities
4.03. Beginning on the commencement date, CDSS shall be responsible for
payment of all utility costs applicable to the Leased Premises, including water, electricity,
gas, garbage collection, janitorial, and daily pool maintenance. Upon execution ofthis
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
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Lease, City shall cause the utilities of the Leased Premises to be separated from the
utilities, which service the rest ofthe Sports Center.
Tenants shall be responsible for its own telephone service, and shall provide its
own office equipment, furnishings, and cleaning services. Tenants shall pay for the cost
of separating utilities of the Leased Premises from the City's Sports Center operation.
Upon execution ofthis Lease, Tenants shall deposit the sum of $25,000. with City to pay
for said utility separation. The City shall deposit said sum in a separate interest bearing
account and will draw from said account to pay for said utility separation which will be
administered by the City which shall be completed within 18 months of occupancy.
Tenant shall review and agree on the expenditures. Any unused portion of said fund,
together with accrued interest, shall be returned to Tenants upon the cancellation or
completion of the utility separation. In the event that the estimated cost of separating
said utilities exceeds $25,000, plus accrued interest, City shall either be responsible for
payment of any costs in excess of $25,000 plus accrued interest, or cancel (including
postpone) the utility separation effort. Then either party may, in lieu of said utility
separation, share utility costs with the tenant paying to the City, as additional rent, the
following monthly sums for electrical and water utilities:
April I, 2006 - March 31, 2007
April 1, 2007 - March 31, 2008
April 1, 2008 - March 31, 2009
April 1, 2009 - March 31, 2010
April 1, 2010 - March 31, 2011
$6l5/month
$655/month
$698/month
$743/month
$79l/month
In no event, shall Tenants be required to pay an amount for the said separation greater
than a total of $25,000.00, plus accrued interest provided, however, that the contingency
fund described in Section 6.03. may be utilized to defray any additional costs.
Taxes
4.04. Beginning on the commencement date, Tenants shall pay all applicable
taxes associated with its tenancy including, but not limited to, any possessory interest
property tax and business license tax levied by any governmental entity.
Additional Rent
4.05. In addition to the Rent payable by Tenants under this Lease, any other
monetary sum required to be paid under this Lease to be paid by Tenants to City or to
others is deemed under this Lease to be additional rent payable by Tenants under this
Lease whether or not the monetary sum is so designated as additional rent. Unless
otherwise provided, all undisputed additional rent is due and payable at the same time as
Rent, and City has the same remedies for Tenants' failure to pay undisputed additional
rent as it has for Tenants' failure to pay Rent.
ARTICLE 5. MAINTENANCE AND USE OF COMMON AREAS
Maintenance and Control
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
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5.01. All common areas (defined in Paragraph 5.02. of this Lease) of the
Cupertino Sports Center are subject to the exclusive control of the City. City may
construct, maintain, operate, illuminate, and manage the common areas in a manner
determined appropriate by City in its sole discretion. Subject to the provisions of Article
6 ofthis Lease (regarding construction and repairs), City reserves the right from time to
time during the term of this Lease to 1) reduce or change the number, size, type, location,
and use of any facilities in the common area, (2) to construct new improvements,
buildings, or facilities, or (3) remove existing improvements, buildings, or facilities in the
common areas. City may employ and discharge all personnel hired in connection with
the common areas; police, and maintain security services for, the common areas for any
purpose; regulate parking by Tenants, its employees, customers and guests; establish,
modify, and enforce rules and regulations for the common areas and subject to the
provisions of Article 6 of this Lease, close the common areas when necessary to make
repairs, changes, or alterations to the common areas. In the event of a temporary closure
of the common areas or the alteration, rearrangement, or other changes in the facilities of
the common areas (1) City shall not be liable to Tenants for any resulting loss or damage,
(2) Tenants shall not be entitled to any abatement of rent or other compensation, and (3)
the closure, alteration, rearrangement or other change shall not constitute an actual or
constructive eviction of Tenants or other grounds for Tenants to terminate this Lease.
"Common Areas" Defined
5.02. "Common Areas" means those areas, facilities, space and equipment
made available by City for common and joint use and benefit of City, Tenants arid other
users of the Cupertino Sports Center, including their respective employees, customers
and guests. "Common Areas" includes only the following, to the extent provided by
City: parking areas, driveways, access roads, landscaped areas, truck service ways,
loading facilities, ramps, sidewalks area.
Tenants' Right to Use Common Area
5.03 (a) Subject to the provisions of Articles 5 and 6 ofthis Lease, Tenants
and its employees shall have the exclusive use of the swimming pool, pool deck and
detached poolside locker rooms, mechanical room and storage/office area from
September 1 through June 14 of each year of the term of this Lease. The rest rooms will
be shared with the tennis program from June 15 to August 31 each year for the term of
the lease.
5.03 (b) Subject to the provisions In Articles 5 and 6 ofthis Lease, City,
during the term ofthis lease, grants to Tenants and their employees, customers and
guests, the non-exclusive right in common with City and all others to whom the City has
or may grant the right, to use the Common Areas subject to Tenants' compliance with
any rules and regulations enacted or modified by City that govern the use of the Common
Areas. Tenants agree to abide by and to use its best effort to cause its employees,
customers and guests to abide by City's rules and regulations for the Common Areas.
Tenants Parking
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
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5.04. Notwithstanding Tenants' right to the non-exclusive use of the parking
area at the Cupertino Sports Center, City reserves the right, should the available parking
not be sufficient to meet the demands of all users of the Sports Center, to designate no
more than 20 parking spaces for Tenants' exclusive: use. In the event of said designation,
Tenants shall insure that Tenants, their employees, customers and guests shall park only
in those spaces designated for Tenants' use. Notwithstanding the above, Tenants'
employees, contractors, consultants are required to park behind tennis courts #2 through
#5 on the premises.
ARTICLE 6. CONSTRUCTION AND REPAIRS
City Construction/Condition of Premises
6.01. (b) Tenants have at the time of execution of this lease inspected the
leased premises and accepts it in its "as is" condition. If significant changes negatively
impact the "as is" condition of the leased space after the time of the execution of the lease
but before commencement, the City will restore the leased space to the original "as is"
condition.
Tenant Construction
6.02. (a) Tenants assume all liability for personal injury or property damage
in any way arising out of the performance of Ten ants' Work. Further, Tenants agree to
defend, indemnify, and hold harmless City against all damages, liabilities, or other costs
or expenses (including legal fees and costs) that City may pay as a result of any claim or
lawsuit arising from Tenants' Work or Tenants' operation ofthe Leased Premises.
Alterations and Improvements Conducted By the City to Meet
Various Building Code Requirements
6.03. Prior to, or during the term of this Lease, <;ity shall cause to be performed
certain upgrades to the pool bathhouse to comply with various building code provisions
as described in the proposal from California Dolphin Swim School Exhibit A attached
hereto. The time schedule for commencement and completion of said improvements are
described in the attached schedule described as Exhibit B. Within 7 days of the execution
ofthis Lease, Tenants will deposit with the City the sum of $1 00,000. to pay for the cost
of said improvements. The City shall retain said funds in a separate interest bearing
account, to pay for the costs of said improvements as they are constructed. Any unused
portion ofthe account, together with interest, shall be returned to the Tenants upon
completion of the improvements. In the event that said improvements cost more than
$100,000 to construct, then upon depletion of said separate account, Tenants shall
forthwith replenish said account by depositing contingency funds with the City to
complete construction of said improvements, but, in no event, shall Tenants be required
to pay an amount greater than a total of$130,000.00 plus accrued interest for said
improvements. The City shall pay for all costs of said improvements in excess of
$100,000 plus accrued interest. . The City shall contract for the work of said
improvements in the same manner as it contracts for all public improvements under its
ordinance code. The $30,000.00 contingency account can be used for any aspect of the
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
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project including construction of the enclosure, bathhouse, improvements, or utility
separation.
Other Alterations and Improvements by City
6.04. City may, at any time with thirty (30) days prior notice to Tenants, make
additions or alterations to the Cupertino Sports Center, including the Leased Premises.
City may also construct additional improvements or buildings in the Cupertino Sports
Center, expand or reduce the size of the Cupertino Sports Center, and enclose any open
areas of the Center. Further, City may at any time use any part of the exterior walls, roof,
or airspace above finished ceiling of the Leased Premises to carry out any construction
described in this paragraph or any repairs described in Paragraph 6.07. or Article 7.
Inability ofthe Tenants to Utilize the Leased Premises
Due to City Construction. Alteration Maintenance. or Repair
6.05. In the event that the City's construction, alterations, maintenance or
repairs of the Cupertino Sports Center (as described in Paragraphs 5.01, 6.03, 6.04 and
7.02 ofthis Lease) result in the inability ofthe Tenants to use the Leased Premises for its
swim instruction program, the rent described in Paragraph 4.01 of this Lease shall be
abated during said period of inability. In the event that said inability continues for a
period of 90 consecutive days, or more, Tenants, upon written notice to the City, may
terminate this Lease prior to its expiration without further obligation or duty on the part
of either party. The remedies contained in this subsection constitute the sole remedies
available to the Tenants should it be unable to use the Leased Premises due to City's
construction, alteration, maintenance, or repair of the Cupertino Sports Center. Neither
the City nor its officers or employees will be liable to for any damages or loss caused by
the Tenants' inability to utilize the Leased Premises under the above-described
conditions. Except as described herein, the construction, alteration, maintenance or
repair which causes the Tenants to be unable to utilize the Leased Premises shall not
constitute an actual or constructive eviction of Tenants or other grounds for Tenants to
terminate this Lease. City shall provide Tenants with a minimum of 90 days written
notice prior to undertaking construction alterations, maintenance or repairs of the
Cupertino Sports Center which will result in the Tenants' inability to use the Leased
Premises.
Alterations and Improvements by Tenants
6.06. Except for Tenants' Work described in Paragraph 6.02, Tenants may not
make any major alterations or improvements including installation of storage units to the
Leased Premises during the term of this Lease without first obtaining written consent of
City. City's consent to any such alterations or improvements shall not be unreasonably
withheld. Any alterations or improvements approved by City shall be performed pursuant
to plans and specifications previously approved by City for specific alterations and
improvements shall not in any way interfere with normal operations of the Cupertino
Sports Center, and in all respects shall comply with the requirements for Tenants' Work
described in Paragraph 6.02. of this Lease.
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
Page 9 of 22
Repairs to Premises
6.07. City shall, at its sole cost, maintain and keeping good order, condition,
and repair the Leased Premises. City's obligation for repairs under this Paragraph
extends only to damage not caused by Tenants or Tenants' employees, customers and
guests. City is not obligated to make any repair, except in the case of emergency, until it
receives written notice from Tenants of the necessity for the repair. In making any
repairs, City shall use its best efforts to perform the work with a minimum of disruption
to Tenant's business. Any emergency repair will be completed within 24 hours on
notification. City agrees to commence all other repair work within one working week of
notification.
Ownership of Improvements
6.08. All alterations, additions, and improvements, except for Tenants' stock in
trade, trade fixtures including air heater, pool enclosure HV AC, pool equipment, and
solar panel, furniture and furnishings or storage units, made or placed in or on the Leased
Premises by Tenants or any other person shall on expiration or earlier termination ofthis
Lease, become the property of City and remain on the Leased Premises. City shall have
the option, however, on expiration or termination of this Lease, of requiring Tenants to
remove any or all such alteration, additions, and improvements from the Leased
Premises.
Purchase and Installation of an All Weather Enclosure Surrounding Pool by Tenants
6.09. Tenants shall, at their own cost, purchase and install an all-weather
enclosure which will surround the pool, provided that the enclosure and the manner of
installation are first approved by the City prior to the enclosure being ordered by Tenants.
Tenants will have the right to begin installation of this enclosure after April 1, 2006, with
a right of entry from the City. The enclosure will be owned by Tenants. In the event that
Tenants vacate the Leased Premises for any reason, the City will have the option to
purchase said enclosure by payment to Tenants of the original purchase price (including
of any taxes or costs of installation and transportation) less an amount based upon a
straight line depreciation for the remaining useful life of the enclosure. The useful life of
the enclosure equals the length of its warranty period. The schedule for installation of the
enclosure is to be agreed upon by the City and Tenants and is dependent on the
manufacturer's delivery date and coordination with other construction on the Leased
Premises.
ARTICLE 7. DESTRUCTION OF PREMISES OR CUPERTINO SPORTS CENTER
Notice of Damage
7.01. Within 24 hours of its occurrence, Tenants shall notify City of any damage
or accident occurring on the Leased Premises.
Damage or Destruction From Insured Casualty
7.02. Subject to the limitations set forth in this Paragraph, if at any time during
the term of this Lease, the Premises are damaged or destroyed by fire or any other
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
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casualty covered by City's fire and extended coverage insurance, City shall promptly
repair, rebuild, or restore the Premises to substantially the same condition as was
originally delivered to Tenants under this Lease. Notwithstanding the foregoing, City
shall not be obligated to expend for repairs or rebuilding an amount in excess of the net
insurance proceeds for damage to the Premises recovered by it. "Net Insurance
Proceeds" means the total amount of proceeds recovered and attributable to the Premises,
less any expenses incurred by City in recovering the proceeds. City shall commence
repair, restoration, or rebuilding work, as appropriate, not later than 60 days after the
occurrence of the event causing damage or destruction, and shall cause construction to be
completed not later than 6 months after the occurrence of the event causing damage or
destruction. If City does not commence or complete construction within the time periods
described in this Paragraph, Tenants shall have the right to terminate the Lease by giving
City written notice within 10 days after expiration of the applicable time period.
Right to Terminate Lease
7.03. Notwithstanding Paragraph 7.02. ofthis Lease, City shall have the right to
terminate this Lease and shall have no obligation to repair, restore, or rebuild the
Premises or the Cupertino Sports Center, as the case may be, under any ofthe following
circumstances:
(a) The leased Premises are damaged or destroyed by a casualty not
covered by City's insurance.
(b) The pool in the Leased Premises is damaged or destroyed by any
cause (whether or not the damage or destruction actually includes the Premises), and the
cost of repair, restoration, or rebuilding exceeds a total of forty-five percent (45%) ofthe
then-replacement cost of the pool.
If City elects to terminate this Lease under any of the above circumstances, City
shall give written notice to Tenants not later than 30 days after occurrence ofthe casualty.
This notice shall set forth the date on which the termination is to be effective. That date
shall be not less than 30 days nor more than 60 days after the date ofthe termination
notice.
Payment of Insurance Proceeds
7.04. All insurance proceeds payable with respect to the Premises shall belong to
and be payable to City. If City does not elect to terminate this Lease, the insurance
proceeds, shall be disbursed in the following order: first, to City's cost of rebuilding or
restoration; second, to Tenants' cost of rebuilding or restoration, excluding costs covered
by Tenants' insurance.
ARTICLE 8. USE OF PREMISES
Business Hours
8.01. Beginning on the commencement date, Tenants shall maintain an office
facility at all times during its normal hours of operation. Tenants shall determine its own
hours of operation provided that said hours are between 7:00 a.m. and 9:30 p.m. Monday
through Friday and 8:00 a.m. through 5:30 p.m. Saturday through Sunday. The City
City of Cupertino
Lease of a Portion ofthe Cupertino Sports Center
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reserves the right to close the facility for holidays and annual maintenance through a
schedule to be determined annually for the subsequent calendar year.
Prohibited Actions
8.02. Tenants may not do any of the following on the Leased Premises:
(a) Permit or commit any waste.
(b) Operate, cause, or permit to be operated any catalogue, mail, or
telephone order sales in or from the Premises, except for the incidental sale of
merchandise that Tenants are permitted to sell on the Leased Premises to customers,
except as otherwise approved in writing by the City.
(c) Permit or conduct any public or private auction on the Leased
Premises or any sale, that would or would tend to indicate that Tenants are going out of
business, is bankrupt? or has lost its lease.
(d) Place or permit the placement of amusement or video games on
the Leased Premises.
(e) Use or permit the Common Areas adjacent to the Leased premises
to be used for the display or sale of merchandise for any other business purpose unless
consented to in writing by City.
(f) Permit the making of any noise or sounds that carry beyond the
boundaries of the Leased Premises, whether through loudspeakers, other types of
electronic devices, or otherwise.
(g) Conduct or permit any type of unlawful conduct on the Leased
Premises.
(h) Other than for daily maintenance, store or use of hazardous
substances or materials on the Leased Premises must follow City, State, and Federal law.
Compliance with Laws
8.03. At its sole expense, Tenants shall comply with all governmental laws,
rules, regulations, orders, and ordinances relating to the Leased Premises and to the use
and occupancy ofthe Leased Premises. Tenants shall also maintain and keep in force all
licenses and permits required by government authorities and shall comply with all
requirements, recommendations, and regulations of City's and Tenants' insurance
companIes.
Advertising and Signs
8.04. (a) Tenants shall include the name of Cupertino Sports Center in any
advertising of its swim lesson instruction business, except that permitted signs located on
the Leased Premises or at the Cupertino Sports Center need not contain the name of the
Center.
(b) Tenants may place, install, or maintain a sign at the entrance to the
Sports Center providing it conforms with the City's sign ordinance, awning, canopy,
advertising, or other matter on the exterior ofthe Leased Premises (whether out of doors
or indoors), including any window or door, signage must be done after approval of City.
Tenants shall maintain all signs and other items described in the Paragraph in good
condition and repairs.
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
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Assignment and Sublease
8.05. (a) Tenants shall not do any of the following without first obtaining
written consent of City: assign, sell, mortgage, or in any other manner transfer this lease
or any interest of Ten ants in the Lease; sublet the whole or any part ofthe Leased
Premises; or permit all or any part of the Leased Premises to be occupied by others
(whether through the grant of a concession, license, or otherwise). Any consent
requested from City may be given or withheld by City as City in its sole discretion
determines. Any consent given by City under this Paragraph applies only to the specific
transfer transaction for which it is given, and City's consent to a specific transfer
transaction does not relieve or excuse Tenants from the requirement that Tenants obtain
the prior written consent of City for any subsequent transaction. Any transfer described
in this Paragraph, whether made with or without City's prior written consent, does not
relieve Tenants of applicable terms and covenants under this Lease (including the
payment of rent), unless City executes a written agreement for a specific transfer that
provides otherwise. The prohibition against transfer described in this Paragraph includes
any transfer transaction described above that occurs by operation of law, legal process,
receivership, bankruptcy or otherwise, whether voluntary or involuntary.
(b) Without in any way waiving its right to approve or disapprove any
transfer transaction described in this Paragraph, City may (1) collect rent from any
assignee, Subtenant, user, or occupant of the Leased Premises following any transfer
described in this Paragraph, whether or not City gave its prior written consent for the
transfer, and (2) apply the collected amount to the rent due from Tenants under this
Lease.
(c) The transfer of corporate shares of the corporate Tenants by
assignment, sale, bequest, inheritance, operation of law, or their disposition shall not be
considered a prohibited transfer transaction under this Lease if it results in the individual
Tenants remaining as the authorized representative ofthe corporate Tenants for purposes
of the agreement.
ARTICLE 9. INDEMNIFICATION AND INSURANCE
Indemnity
9.01. Tenants agree to indemnify and hold harmless City, its officers,
employees, and elected officials, boards, and commissions from all suits, actions, claims,
causes of action, costs, demands, judgments and liens arising out of Tenants'
performance under the Lease, including Lessee's failure to comply with or carry out any
of the provisions of this Lease.
Insurance by Tenants
9.02. (a) Tenants shall, at their own cost and expense, procure and maintain
during the entire term of this Lease the following insurance coverage:
1) Comprehensive general public liability insurance insuring
against the risks of bodily injury, property damage, and personal injury liability occurring
on the Leased Premises or arising out of Tenants' use or occupancy ofthe Premises and
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
Page 13 of22
the Cupertino Sports Center, with a combined single limit of liability of at least
$2,000,000.00 including, but not limited to, coverage for Premises' operations, broad
form blanket contractual coverage, and standard personal injury coverages A, B, and C.
2) Fire and extended coverage insurance, and vandalism and
malicious mischief insurance, insuring Tenants' fixtures, goods, wares, and merchandise
in or on the Leased Premises for 100% of their insurable and replacement cost, without
deduction for depreciation.
3) Business interruption insurance, payable in the event of a
loss covered by fire and extended coverage or vandalism and malicious mischief
insurance Tenants is required to maintain, in an amount not less than the amount of
Tenant's Rent for a twelve month period following any damage or destruction.
4) Worker's compensation insurance as required by the laws
ofthe State of California.
(b) Any insurance policy Tenants is required to procure and maintain
under this Lease shall be issued by a responsible insurance company or companies
licensed to do business in the State of California. Further, each such policy shall provide
that it may not be canceled, terminated, or changed except after 30 days prior written
notice to City. Tenants may maintain all or part of the insurance required under this
Lease by means of a blanket insurance policy so long as the provisions of this Article are
satisfied. Tenants must deliver to City duplicate originals or certificates of all insurance
policies procured by Tenants.
(c) Tenants may not do, omit to do, permit to be done, or keep
anything in or on the Leased Premises that will violate the provisions of City's fire and
extended coverage insurance policy or otherwise adversely affect the premiums paid by
City or City's ability to maintain the insurance in effect. If any such act or omission by
Tenants results in an increase in City's premiums for any policies on the Premises or the
Cupertino Sports Center, Tenants shall pay the amount of the increase. City may also, at
City's option, rectify the condition causing the increase if Tenants fail to do so. In that
case, on demand of City, the amount expended by City shall be immediately due and
payable by Tenants as Additional Rent.
(d) If during the term of this Lease Tenants fail to secure or maintain
the insurance required under this Lease, City may obtain the insurance for the Premises in
Tenants' name or as the agent of Tenants, and Tenants shall compensate City for the cost
of the insurance premiums. Tenants shall reimburse City the full amount paid no later
than 30 days from the date written notice is received that the premiums have been paid.
A failure by Tenants to make reimbursement within the time required under this
Subparagraph shall be considered a default under this Lease.
Subrogation Waiver
9.03. City and Tenants agree that in the event ofloss due to any of the perils for
which they have agreed to provide insurance, each party shall look solely to its insurance
for recovery. City and Tenants hereby grant to each other, on behalf of any insurer
providing insurance to either of them with respect to the Premises, a waiver of any right
of subrogation that any such insurer of one party may acquire against the other by virtue
of payment of any loss under that insurance.
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
Page 14 of22
Proceeds
9.04. Except as otherwise provided in this Lease, proceeds from any policy or
policies shall be payable to the party responsible for the payment of insurance premiums.
ARTICLE 10. CONDEMNATION
Termination of Lease
10.0 I. If at any time during the term of this Lease, title and possession of all of
the Premises or of 10 percent or more of the gross floor area of the Leased Premises is
taken under the power of eminent domain by any public or quasi-public agency or entity,
this Lease shall terminate as of 12.01 A.M. of the date actual physical possession ofthe
leased Premises is taken by the agency or entity exercising the power of eminent domain.
Thereafter, both City and Tenants shall be released from all obligations under this Lease,
subject to the provisions of Paragraph 10.04. of this Lease.
Continuation of Lease
10.02. If the portion of the leased Premises taken under the power of eminent
domain is less than 10 percent of the gross floor area of the leased Premises, the
following will occur:
(a) This Lease shall terminate as to the portion taken as of 12:01 A.M.
of the day actual physical possession of that portion of the Premises is taken by the
agency or entity exercising the power of eminent domain (the "date oftaking").
(b) This Lease shall continue in effect for the remainder of the
Premises not taken. Beginning on the day and at the time described in Subparagraph (a)
of this Paragraph, the Fixed Rent payable by Tenants under this Lease shall be reduced
by the same proportion that the gross floor area taken bears to the gross floor area of the
Premises prior to the taking. Promptly after the taking described above, City shall, at
City's expense, restore the Premises not taken by eminent domain to a condition making
the Premises tenantable by Tenants for the uses permitted by this Lease; and Tenants
shall, at Tenants' expense, make all necessary repairs to Tenants' fixtures, equipment,
and furnishings.
Option to Terminate Lease
10.03. City shall have the right to terminate this Lease if title and possession of
the following is taken under the power of eminent domain, whether or not the taking
includes any portion of the leased Premises:
(a) More than 50 percent of the pool area containing the Leased
Premises;
(b) More than 25 percent of the Common Areas of the Cupertino
Sports Center;
( c) All or a portion of the parking area of the Cupertino Sports Center,
provided the taking causes the Center to violate the requirements of the then-applicable
zoning law governing the size, location, layout, or other features of the parking area.
Notwithstanding the foregoing, this Lease shall continue in full force and effect if City,
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
Page 15 of22
immediately after the agency or entity exercising the power of eminent domain takes
actual physical possession of the parking area, commences to correct the circumstances
giving rise to the right to terminate this Lease, either through obtaining a variance or an
exception to the then-applicable zoning law or by providing additional substitute parking
areas. This action must be at City's sole cost and expense.
City may exercise the foregoing right to terminate this Lease by giving written
notice to Tenants within 7 days after it's known to City and at least 30 days prior to the
termination date, which shall be the date actual physical possession of the Premises is
taken by the agency or entity exercising the power of eminent domain.
Condemnation Award
10.04. If at any time during the term ofthis Lease, title and possession of all or
any portion of the Premises or the Cupertino Sports Center is taken under the power of
eminent domain, the compensation or damages for the taking shall be awarded to and be
the sole property of City, and Tenants shall have no right or claim to that compensation
or damages.
Waiver
10.05. City and Tenants each agree that this Lease shall govern the respective
rights and obligations of each party in the event of a taking by eminent domain. City and
Tenants each hereby waives any right either may have at law to petition the court for
termination of this Lease in the event of a partial taking of the leased Premises.
ARTICLE 11. DEFAULT AND TERMINATION
"Default" Defined
11.01. The occurrence of any of the following constitutes a default and breach of
this Lease by Tenants:
(a) Any failure by Tenants to pay the rent or to make any other
payment required to be made by Tenants under this Lease, when the failure continues for
10 or more days after written notice from City to Tenants.
(b) The abandonment of the Premises by Tenants. For these purposes,
the absence of Ten ants from or the failure by Tenants to conduct business on the
Premises for a period in excess of 30 consecutive days after the commencement date shall
constitute an abandonment.
(c) A failure by Tenants to observe or perform any other provision of
this Lease to be observed or performed by Tenants when the failure continues for 30 days
or more after written notice of Tenants' failure is given by City to Tenants; provided,
however, that if the default cannot reasonably be cured within the 30 day cure period,
Tenants shall not be deemed to be in default if Tenants commences the cure within the 30
day cure period and thereafter completes the curative action within a reasonable time.
(d) The making by Tenants of any general assignment for the benefit
of creditors; the filing by or against Tenants of a petition to have Tenants adjudged a
bankrupt or of a petition for reorganization or arrangement under any law relating to
bankruptcy the appointment of a trustee or receiver to take possession of substantially of
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
Page 16 of22
all Tenants' assets located at the premises or of Tenants' interest in this Lease, when
possession is not restored to Tenants within 30 days; or the attachment, execution, or
other judicial seizure of substantially all of Ten ants' assets located at the Premises or of
Tenants' interest in this Lease, when that seizure is not discharged within 30 days.
Termination of Lease and Recovery of Damages
11.02. (A) In the event of any default by Tenants under this Lease, in addition to
any other remedies available to City at law or in equity, City shall have the right to
terminate this Lease and all rights of Tenants under this Lease by giving written notice of
the termination. No act of City shall be construed as terminating this Lease except
written notice given by City to Tenants advising Tenants that City elects to terminate the
Lease. In the event City elects to terminate this Lease, City may recover the following
from Tenants:
(a) The worth at the time of award of any unpaid rent that had been
earned at the time of termination of the Lease;
(b) The worth at the time of award of the amount by which the unpaid
rent that would have been earned after termination of the Lease until the time of award
exceeds the amount of rental loss that Tenants proves could have been reasonably
avoided;
(c) The worth at the time of award of the amount by which the unpaid
rent for the balance of the term of this Lease after the time of award exceeds the amount
of rental loss that Tenants prove could be reasonably avoided; and
City shall apply reasonable effort to re-Iet the Leased Premises. Only if it
fails to re-Iet or the new rent is less than the rent of this lease, then the difference between
the rents shall be recovered from Tenant for the balance of the term.
(d) Any other amount necessary to compensate compensation
detriment approximately caused by Tenants' failure to perform its obligations under this
Lease.
The term "rent" as used in this Paragraph shall mean the Rent, and all
other sums required to be paid by Tenants pursuant to the terms ofthis Lease. As used in
Subparagraphs (a) and (b) of this Paragraph, the "worth at the time of award" is computed
by allowing interest at the rate of 10 percent per year. As used in Subparagraph (c) of
this Paragraph, the "worth at the time of award" is computed by discounting the amount
at the discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus 1 percent.
(B) If City fails to deliver possession to Tenants by the commencement date,
Tenants shall have rights to get back all the investment money not exceeding
$125,000 spent on the improvement projects (as defined in Paragraph 4.03 and
6.03), and terminate the lease without further obligation to City.
Citv's Right to Continue Lease in Effect
11.03. If Tenants breach this Lease and abandons the Premises before the natural
expiration of the term of this Lease, City may continue this Lease in effect by not
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
Page 17 of22
terminating Tenants' right to possession of the Premises, in which event City shall be
entitled to enforce all its rights and remedies under this Lease, including the right to
recover the rent specified in this Lease as it becomes due under this Lease. No act of
City (including an entry on the Premises, efforts to relet the Premises, or maintenance of
the Premises) shall be construed as an election to terminate this Lease unless a written
notice of termination is given to Tenants or the termination of this Lease is decreed by a
court of competent jurisdiction.
City's Right to Relet
11.04. In the event Tenants default, breach and abandon this Lease, City may
enter on and relet the Premises or any part of the Premises to a third party for any term, at
any rental, and on any other terms and conditions that City in its sole discretion may
deem advisable, and shall have the right to make alterations and repairs to the Premises.
Tenants shall be liable for all of City's costs in reletting, including remodeling costs
required for the reletting. In the event City relets the premises, Tenants shall pay all rent
due under and at the times specified in this Lease, less any amount or amounts actually
received by City from the reletting.
City's Right to Cure Tenants Defaults
11.05. If Tenants reach or fail to perform any of the covenants or provisions of
this Lease, City may upon written notice, cure Tenants' breach. Any sum expended by
City, with the then-maximum legal rate of interest, shall be reimbursed by Tenants to
City with the next due rent payment under this Lease.
Cumulative Remedies
11.06. The remedies granted to City in this Article shall not be exclusive but
shall be cumulative and in addition to all remedies now or hereafter allowed by law or
provided in this Lease.
Waiver of Breach
11.07. The waiver by City of any breach by Tenants of any of the provisions of
this Lease shall not constitute a continuing waiver or a waiver of any subsequent breach
by Tenants either of the same or another provisions ofthis Lease.
Surrender on Termination
11.08. On expiration of the term of this Lease or the earlier termination of this
Lease, Tenants agree to surrender the Premises in good order and condition (reasonable
wear and tear excepted). Further, Tenants shall, at Tenants' expense, remove all of its
merchandise, inventory, and trade fixtures, and repair any damage caused by the removal.
City shall also have the right to require Tenants, at Tenants' expense, to remove any
improvements made to the Premises by Tenants and to repair any damage caused by the
removal.
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
Page 18 of22
Holdover Tenancy
11.09. If Tenants remain in possession of the Premises after expiration of the
term of this Lease without renewing or extending this Lease or entering into new lease
with City, Tenants' continued occupancy ofthe Premises, at City's option, shall be
considered a month-to-month tenancy that may be terminated by either party on 30 days'
prior notice to the other. All terms of this Lease shall be fully applicable to the month-to-
month tenancy insofar as consistent with a month-to-month tenancy, except that Tenants
must pay 150 percent of the Fixed Rent, and any Additional Rent provided for under this
Lease.
Attorneys' Fees
11.10. If any litigation is commenced between the parties to this Lease
concerning the Premises, this Lease, or the rights and duties of either in relation to the
Premises or the Lease, the party prevailing in that litigation shall be entitled, in addition
to any other reliefthat may be granted in the litigation, to a reasonable sum as and for its
attorneys' fees in the litigation, which shall be determined by the court in that litigation or
in a separate action brought for that purpose.
Renewal of Lease
11.11 One year prior to the expiration of this lease, tenant and City shall discuss
renewal at mutually agreed upon terms.
Tenancy Statement (Estoppel Certificate)
11.12 Tenant shall execute and return a tenancy statement (estoppel certificate),
delivered to Tenant by City (the landlord) or City's agent, within seven (7) days after the
receipt. The tenancy statement shall acknowledge that this Lease agreement, upon selling
the leased premises to a buyer, will be unmodified and in full force, or in full force as
modified with Tenant's approval in writing and stating the modifications. Failure for
Tenant to comply with this requirement shall be deemed Tenant's acknowledgement that
the tenancy statement is true and correct.
ARTICLE 12. MISCELLANEOUS
Landlord-Tenant Relationship
12.01 This Lease establishes a Landlord-Tenant relationship between the parties.
It shall not be construed or deemed to create any other type of relationship between them,
including one of agency, partnership, or joint venture.
City's Right of Entry
12.02. At any time Tenants are open for business or is required by this Lease to
be open for business, City shall have the right to enter the Premises to inspect the
Premises; show the Premises to a third party; or perform any repairs City is permitted or
required to make under this Lease, whether to the Premises, adjoining premises, or the
building containing the Premises. For any entry made while Tenants are open for
business, City shall use its best efforts to minimize interference with the conduct of
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
Page 19 of22
Tenants' business. Repairs required or permitted to be made by City may, at City's
option, be scheduled for times when Tenants' business is not open, provided prior written
notice is given to Tenants. In the case of an emergency, City may enter the Premises at
any time without prior notice to Tenants, but shall notify Tenants promptly afterwards of
its emergency entry.
Interest on Obligations
12.03. The payment of any sum due to City under this Lease, however
designated, shall be due promptly as provided for in this Lease. Any payment that is not
paid promptly shall bear interest from its due date until paid at the then-maximum legal
rate of interest.
Notices
12.04. Except as otherwise expressly provided by law, any and all notices or
other communications required or permitted by this Lease or by law to be served on or
given to either party to this Lease by the other party to this Lease shall be in writing and
shall be deemed duly served and given when personally delivered to the party to whom
they are directed or any managing employee ofthat party, or in lieu of personal service,
within forty-eight (48) hours when deposited in the United States mail, first-class postage
prepaid, addressed to City at 10300 Torre Avenue, Cupertino, California 95014 or to
Tenants at 32517 Carmel Way, Union City, CA 94587. Either party may change its
address for purposes of this Paragraph by giving written notice of that change to the other
party in the manner provided in this Paragraph.
Binding on Heirs and Successors
12.05. This Lease shall be binding on and shall inure to the benefit ofthe heirs,
executors, administrators, successors, and assigns of City and Tenants, but nothing in this
Paragraph shall be construed as a consent by City to any assignment of this Lease or any
interest in this Lease by Tenants.
Time of Essence
12.06. Time is expressly declared to be of the essence in this Lease.
Sole and Only Agreement
12.07. This Lease, together with the attached Exhibit ofthis Lease, constitutes
the sole and only agreement between City and Tenants respecting the Premises, the
leasing of the Premises to Tenants, or the lease term created under this Lease, and
correctly sets forth its date. Any agreements or representations respecting the premises or
their leasing by City to Tenants not expressly set forth in this instrument are null and
void. This Lease may be modified or amended only by an instrument in writing signed
by both City and Tenants.
Invalidity or Unenforceabi1itv
12.08. If any provision of this Lease is held by a court of competent jurisdiction
to be either invalid, void, or unenforceable, the remaining provisions of this Lease shall
remain in full force and effect.
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
Page 20 of 22
Waivers
12.09. No waiver of any term, condition, or covenant of this Lease shall be
presumed or implied. Any such waiver must be expressly made in writing by the party
waiving the term, condition, or covenant. The acceptance by City from Tenants of any
amount paid for any reason under this Lease in a sum less than what is actually owing
shall not be deemed a compromise, settlement, accord and satisfaction, or other final
disposl-tion of the amount owing unless City agrees otherwise in writing.
Captions
12.10. The captions and numbers of the Articles and Paragraphs of this Lease are
for convenience only and are not intend to reflect in any way on the substance or
interpretation of the provisions of this Lease.
Executed on D..lL.~ ,2005, at
~~~
.
, California.
Date: 12 -6--0-1
CITY:
Date: /.;1/ f..- /(IS
ATTEST:
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City Clerk
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City Attorney
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TENANTS: H ~
JOSEPH HE, as an individual
City of Cupertino
Lease of a Portion of the Cupertino Sports Center
Page 21 of22
Business Proposal
Table of Contents
1. EXE CUTIVE SUMMARy...... ............. ..................... .............. ......... ........... ........ ....... .......... ..... ...... ............. ....1
2. 0 PPO R TUNITY AND SITU A TIO N ................. ...................................... .......... .......... ............... ............... ......1
3. PROPOSED POOL RENOVATION ...............................................................................................................1
4 . PRO PO SED NEW TENANT ........ ............ .... ......... ............... .......... .................. ..... ................. ...... ........... ......... 2
5. LEASIN G TERMS ....... ................... ...... .............. ......... ................. ................. ................. ......... ......... ................ 3
6. AQUATIC PROGRAMS . ....... ............. ..... ......... ......... ............................................ ....... ............. ........... ..... ...... 4
7 . MARKET AND CO MPE TITI ON........ ................................. ......... ........ ............................ ............. ................. 4
8 . FINAN C IAL 0 UTLO 0 K ... ........... ................... ................ ................ ........... ................. .................................... 5
9. MARKE TIN G SUP PO R T .. ...... ........ ............... ................... ....... ..................... ............................ ........... ..... ...... 6
10. BUSINESS OPERA TI ON ............................................................................................................................6
11. RISK MANAGEMENT AND INSURAN CES ........................................................................................... 6
12 . LICENSE FEES AND TAXES ....................................................................................................................6
13 . APPENDIX - RESUME S ................................... ........ ................. ....................... ......................... ................. 7
RESUMES - XIAOHONG W ANG...........................................,.............................,.....,...............,.....................,............. 7
MAJOR ACHIEVEMENTS ,.,.......,.,.,..,.,............,.......,.,...."...,..."",.....,..,..............,.........,.........,...........,..,.,..".".7
CERTIFICATES AND STATUS ..................,..", ,......,........,.......,......,.. ",..,..., ..... ,...,... ........... ..............., ... ........,... 7
COACHING EXPERIENCES .....................,....,...,..............,.,...,.....,.,..."...,......,.,..,................,........,................... 7
EDUCATION..,.,....,...,..,...,.,..".......,.,.."..............,.""...........,......,...................................................,.........,.,.......7
IT EXPERIENCES .,.,.,.,.,......... ,...,..... .., ............ ,....,....,....,., ,.,.,....,..,.,.,." "...,.",.,..,..,.,.,..,.,., ..., ,., ,. ,..,...,. "..,........, 7
RESUME - JOSEPH HE ..........................................................................................,.....................................................8
PROFESSIONAL EXPERIENCES.,., ,......,.., ..........,.....,...,...,.......... ..,. ........,." .,...... ........ ....,... ..........,..........,..,.".8
TRAININGS AND STATUS............".....,..., ,..., ,..,.....,.,.", ,.. ,.....,...... ,.., .", ".....,.",.,.....,...,....,., ,.,.,....." "........,..,..,.8
EDUCATION...,..................,.......,...,...........,..............,.,..,..,.....,..,........".",...".,.,......,....,.......,............,..."...,..,.,., 8
California Dolphin Swim School
Business Proposal
Version 2.1
1. Executive Summary
CDSS, a fast-growing swim school, is looking for a long-term win-win partnership with the
city of Cupertino and requesting a five-year lease starting at $60K/yr for the swimming pool
facility at the Cupertino Sports Center. Recognizing the needs for the renovation of the aged
pool facility, CDSS is proposing a two phases renovation project with a total estimated costs of
$1.8M and considering to contribute up to $500K to the project on the second phase. CDSS is
co-founded by a former world champion. We believe that we can bring tremendous goodwill to
the city, offering high quality swim lessons and rich aquatic programs to the local citizens and
communities. This document is just a proposal to lease and renovate the pool, not a contract
between the proposed tenant CDSS and the city.
2. Opportunity and Situation
The small swimming pool at the Cupertino Sports Center (21111 Stevens Creek Blvd), 18yd
long and 7 yard wide, is currently leased to DACA swim school. This lease will expire at the end
of March 2006 and DACA will move its swim school to its new facility. The pool landlord, city of
Cupertino, is looking for a new tenant partner to enhance the pool and to provide superior
swimming instructional services to its citizens and the members of the local communities.
3. Proposed Pool Renovation
Through the recent on-site visual inspections and meetings with architects and engineers,
we believe the pool systems including the enclosure dome are approaching their life expectancy
though they are still operating condition. Talking with the DACA director for their swim school
program on site, he expressed that they have no intention to leave the dome and heating
equipment to their competitor. Based on the observations and estimates, we suggest a two-
phase renovation of the pool facility totaling a $1.8M investment with $800K for the first phase.
The construction project shall be initiated and managed by the city with inputs taken from the
future proposed tenant.
Phase I. The renovation of this phase includes the complete rebuild of the pool systems with
an expanded pool, the sunroom enclosure, the office, locker rooms, restrooms and separated
utility lines or meters, since the existing building has too many areas that are not compliant with
today's building codes. On this phase, the city needs to raise the entire construction cost of
$800K to make it happen. The construction will take 4-6 months to complete. So the new lease
should start in Oct, 2006.
Phase II. One year prior to the expiration of the first phase lease, we should kick off the
second phase renovation, the expansion of the pool facility to one adjacent tennis court with an
estimated costs totaling $1 M on construction. On this phase, we propose to build a larger 6
lanes 25 yd pool out of the adjacent tennis court. CDSS considers to contribute half of the costs
which is $500K as taxable business cost for the second phase lease. The phase II construction
is expected to finish in six months, by the end of the first phase lease. The new lease shall be
renewed for a ten year term with a starting rate of $100K a year. Obviously, the city needs to
contribute one tennis court to be used as land for the pool expansion, match up or raise funds to
cover the rest of the cost $500K to make the second phase project happen.
California Dolphin Swim School
Page 1
Business Proposal
Version 2.1
4. Proposed New Tenant
CDSS (California Dolphin Swim School), a s-corporation registered in California since 2003,
is currently based in Union City. It provides various levels of swimming lessons to about 300
hundred young swimmers in both South Bay and East Bay areas. Its co-founder and the head
swim coach, Xiaohong Wang, was a world champion and Olympic silver medalist in early
1990s. She is now a Level-4 coach certified by ASCA (American Swim Coach Association),
bearing also the valid Red-Cross certificates in CPR, First Aid and Water Safety trainings. There
are currently seven part-time coaches and instructors working for the school.
The vision of the tenant is to become a premier aquatic club offering the best value swim
lessons and other diversified aquatic services in the bay area. The tenant is looking for and
planning to build together a long-term win-win tenancy and partnership with the landlord. The
tenant strikes hard to provide competitive market rents and make necessary financial
contributions to enhance the pool facility for the city of Cupertino, while maximizing its return of
investment for its investors and the business growth.
CDSS is an outstanding candidate for the new tenant. The reasons for that and the
strengths of the swim school are summarized below:
01t buys in and supports the win-win cooperation model: the city contributes land and
facility, while the private sector leases and runs the facility, contributing funds for facility
update and renovation.
01t will consider to contribute up to $500K as business improvement costs to renovate the
pool facility on the second phase before the first phase lease expires.
0With hundreds of in-school swimmer students, they have the necessary expertise and
experiences to grow and run a successful swim school, since they've been there and
done that.
01ts co-founder and head coach is a highly respected and experienced coach with top-
notch skills and world-class expertise in swimming.
0The well-known fame and reputation of its head coach will also help attracting swimmers
to the new facility, which is critical for the new tenant to pay rent, to survive and to thrive in
this extremely competitive environment. Her fame and reputation will also help promote
the attraction and bring great goodwill to the city.
01t has been profitable and maintaining a great credit since its inception. As a great and
responsible tenant, it always pays rents on time and takes good care of the pool facility.
01t will provide multiple aquatic programs to the Cupertino citizens and communities.
01t is professionally managed, capable to doing business and manage the pool facility
renovating construction right.
On the whole, CDSS is an outstanding, ready, willing and able candidate. Refer also to the
resumes of the tenant's chief officers in the appendix.
California Dolphin Swim School
Page 2
Business Proposal
Version 2.1
5. Leasing Terms
5.1. Leasing Period. We expect a five year exclusive lease right after the first phase
construction, probably from Oct 1st 2006 to Sept 30, 2011. In practice, it starts from the
date of occupancy certificate issuance upon the completion of construction and
inspections, or Oct 1st, 2006, which ever is later.
5.2. Leasing Rate. A flat rate starting at $60K annual rate for the first 12 months.
5.3. Lease payment. It should be monthly, due by the 5th of the month. The payment is for
the use of the facility for the upcoming month. The first payment shall be due on the
lease effective day for the whole upcoming month or a partial month prorate if the lease
effects in the middle of a month.
5.4. Annual adjustment. The lease rate increases or decreases based on the national CPI.
5,5. Utilities. All utilities, including water, power, gas, telephone and garbage, needed to run
the pool facility will be responsible by the tenant during the leasing period.
5.6. The pool cleaning, maintenance and chemical supplies are the responsibility of the
tenant.
5.7. The pool equipment maintenance including the heating, ventilation, the pump, the filter,
and the control systems are the responsibilities of the tenant.
5,8. The lease includes the use of the whole pool facility seven days a week, 52 weeks a
year, with an operation hours from 6:30am to 10pm.
5.9. The lease includes the use of the parking lots on the current first come first serve basis
without additional charges, at the Cupertino Sports Center year round during the
operation days and hours including all weekends and all holidays.
California Dolphin Swim School
Page 3
Business Proposal
Version 2.1
6. Aquatic Programs
We plan to offer various quality swim lessons suitable for citizens from 6 months old to adult.
The lessons will be 30minute long. .
The small 900 pool renovated and finished in Phase I can attract swimmers with most
majority of them aging under 9. When the larger cooler 25yd pool is completed in Phase II, the
pools together will be able to attractive swimmers of all ages. By then we can consider to offer
aquatic fitness, exercises and therapies to adult and senior citizens.
7. Market and Competition
We discover that the pool facility is located in an extremely competitive environment with
many strong competitors located within 3 mile radius: DACA, Sutton, YMCA-Cupertino, Santa
Clara Inti Swim Center, CSC in Sunnyvale, West Coast Aquatics, and etc.
The following are the estimated number of swimmers for the top three competitors within
1-2 miles:
(1) DACA. 2300 swimmers in its learn-to-swim programs, 700 in its pre-competitive
program and 1000 in its competitive programs, totaling over 4000 swimmers. It is the
current pool tenant, moving to its new 1 OOOOsf indoor swim center. It's been in business
over 12 years.
(2) Sutton Swim School. It has over 1000 swimmers, in business for over 5 years, using its
new indoor pool facility just a couple of blocks away.
(3) YMCA-Cupertino. It has also over 1000 swimmers using its like new indoor pool facility
just around the corner, which is closest among these three competitive.
These top competitors all have their own new indoor swimming facilities. Therefore, it will be
extremely difficult to attract swimmers to an old or outdoor pool facility in Cupertino area.
Santa Clara Est. Swim
· ..County Lesson Mountain
In Yr 2000 Signu Rate Cupertino Sunn ale View Cambell Saratogas
1,680,000 50500 132000 71000 38000 30000
100.00% 5% 2525 6600 3550 .1900 1500
7.10% 10% 359 937 504 270 213
8.00% 20% 808 2112 1136 608 480
9.70% 15% 735 1921 1033 553 437
under 17 1901 4970 2673 3840 1431 1130
under 9 1167 3049 1640 2356 878 693
under 17 7012
under 9 4302
As one you see in the market analysis table above, the total estimated market size for a
small pool in the Cupertino area is about 4300 swimmers under 9, who come partly from
Cupertino and partly from the above five other neighboring cities. Since there are already some
3500 swimmers of them signed up to the top competitors, the market is rather saturated and
challenging to support another profitable small pool facility.
California Dolphin Swim School
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Business Proposal
Version 2.1
We develop the following financial number providing the completion of the first phase
swimmin 001 renovation see the Phase I sea e definition above .
Yr1 Q1 Q2 Q3 Q4
Customers 0 0 0 150
Tuition Ilesson $0 $0 $0 $13
Revenue $0 $0 $0 $30,086
Fix Cost $0 $0 $0 $29,850
Var Cost $0 $0 $0 $30,000
Tot Cost $0 $0 $0 $59,850
Net Inc $0 $0 $0 $29,764
Yr2 Q1 Q2 Q3 Q4
Customers 200 300 400 450
Tuition /Iesson $15 $15 $15 $15
Revenue $42,429 $69,429 $115,714 $104,143
Fix Cost $31,050 $31,050 $31,050 $31,050
Var Cost $36,300 $36,300 $36,300 $36,300
Tot Cost $67,350 $67,350 $67,350 $67,350
Net Inc ($24,921) $2,079 $48,364 $36,793
Yr 3 Q1 Q2 Q3 Q4
Customers 475 525 575 625
Tuition /Iesson $15 $15 $15 $15
Revenue $100,768 $121,500 $166,339 $144,643
Fix Cost $32,214 $32,214 $32,214 $32,214
Var Cost $48,900 $48,900 $48,900 $48,900
Tot Cost $81 , 114 $81 ,114 $81 ,114 $81 , 114
Net Inc $19,654 $40,387 $85,226 $63,529
Yr4 Q1 Q2 Q3 Q4
Customers 650 700 750 800
Tuition /lesson $15 $15 $15 $15
Revenue $137,893 $162,000 $216,964 $185,143
Fix Cost $33,391 $33,391 $33,391 $33,391
Var Cost $55,500 $64,500 $64,500 $64,500
Tot Cost $88,891 $97,891 $97,891 $97,891
Net Inc $49,002 $64,109 $119,073 $87,252
8. Financial Outlook
Total - 2006
$30,086
$331,714
$269,400
$62,314
Total - 2008
$533,250
$324,454
$208,796
Total - 2009
$702,000
Customers 825 875 950 1000
Tuition Ilesson $15 $15 $15 $15
Revenue $175,018 $202,500 $274,821 $231 ,429 $883,768
Fix Cost $34,883 $34,883 $34,883 $34,883
Var Cost $72,900 $72,900 $72,900 $72,900
Tot Cost $107,783 $107,783 $107,783 $107,783 $431 ,131
Net Inc $67,235 $94,717 $167,039 $123,646 $452,637
Note that the fix costs consist of rent, insurance, utilities, clean service, chemicals, and the
pool deck equipment amortization; where as the variable costs consists of wages, ad, office
supplies, overhead and etc.
California Dolphin Swim School
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Business Proposal
Version 2.1
9. Marketing Support
In order for the new tenant to survive, to pay the rent and to fight the competition, we
request the privileges for the following marketing support from the City of Cupertino:
9,1. Assign a physical address to the pool facility for conducting business and utilities.
9.2. Announce and publicize the renovation of the pool and the new swim school program
on the activity catalog of Cupertino Parks and Recreation for all four distributions of the
first full year.
9.3. Update the sign "Cupertino Sports Center" off the street and put the swim school sign
side by side with the original sign.
9.4. Grant permission for the proposed tenant to put a sign on the front trim of the pool
facility.
9.5. Hold a grant opening ceremony with the mayor and the recreational manager's
attendance.
10. Business Operation
We set our own prices based on the market demand and the types of the aquatic programs
offered. The tenant reserves all rights to operate the swim school for profit in any legal and
ethical ways without the intervention or interference from the city.
The same operating hours as of now shall be permitted for the new tenant: from 6:30am to
9:30pm. The parking will be permitted to share and park on the parking lot of the Cupertino
Sports Center without additional parking fees or permits charged to us or to our clients.
Permission to sell swim-ware and soft drinks (non-alcohol). Permission for snack and soft
drink vending machines. Freedom to determine and hire best qualified coaches, instructors and
other employees under equal opportunities.
Time is of essence. The city is responsible of reviewing the project documents, making
approvals, and inspecting the constructions on a timely basis.
11. Risk Management and Insurances
The hazardous insurance to cover the damages such as fires will be responsibility of the
landlord.
However, the tenant must carry a general business liability insurances. Prior to the start of
its swim program, the swim school must provide to the landlord a proof of insurance to cover its
general liability for its swimming instructional activities. The limit of the insurance coverage shall
be $1,000,000 per occurrences and $2,000,000 aggregate. The insurance certificate must name
the property owner of the City of Cupertino, their officers and employees as "additional insured".
12. License Fees and Taxes
The property tax of the pool facility, if any, is responsibility of the landlord, the City of
Cupertino. The sale taxes of any swim-ware items and soft drinks will be the responsibility of
the tenant. The business income taxes and license fees are also the responsibilities of the
tenant.
California Dolphin Swim School
Page 6
Business Proposal
Version 2.1
13. Appendix - Resumes
Resumes - Xiaohona Wana
MAJOR ACHIEVEMENTS
. 200M Butterfly Silver Medal at Olympic Games in Spain
. 100M & 200M Butterfly Champions at World Cup Final
. Butterfly Gold Medals and Record Times at Asia Games
. Butterfly National Record Times and Champions in China
1992
1991
1990
1987-1992
CERTIFICATES AND STATUS
. American Swimming Coach Association - Level 4 Coach Certificate (Top level is 5).
. Red Cross Certificates: Water Safety Training, Child CPR, and First Aid.
. USA Swimming - Pacific Region: Member Coach,
. USA Citizen.
COACHING EXPERIENCES
CA Dolphin Swim School, Bay Area, CA 2003 - Present
Co-founder, Head Coach
. Co-founded this private swim school, offering swim lessons currently on weekends basis.
. Design swimming instruction procedures, coaching guidelines and grading standards.
. Responsible for coaching swimmers from 5-18 as well as training coach staff.
. Coached 300+ swimmers at various levels on standard classes or in private classes.
. Organized internal swimming meets, evaluating and testing swimmers' swimming skills.
San Jose Aquatic Club, San Jose, CA 1999 - 2000
Senior Group Coach, coached 30+ competitive senior swimmers in daily training and meets.
Carson Aquatic Club Carson City, NV 1995 - 1998
Head Coach, Responsible of designing effective general training plans.
. Built up coaching team and coached over 120 swimmers aging from 5 to 19..
. One of the coached swimmers made USA Olympic trial and won national champions.
EDUCATION
Swim Coach National Clinics at Napa, CA
Bachelor's in PE at Nanjing Institute of Physical Education
Continued Education in Computer Sciences at UNR
Continued Education in Communication at UNLV
1995 -1998
1985 - 1990
1997 - 1998
1994 - 1995
IT EXPERIENCES
Software QA engineer:
LSI Logic - Milpitas, CA
Lucent Technologies - Alameda, CA
Microsoft - Mountain View, CA
2003 - Present
2001 - 2003
2000 - 2001
California Dolphin Swim School
Page 7
Business Proposal
Version 2.1
Resume - Joseoh He
PROFESSIONAL EXPERIENCES
CA DOLPHIN SWIM SCHOOL, Union City, CA 2003 to Present
Co-founder, President
Responsible for strategic business planning, business development, pool rental, enrollment,
registration, insurance, marketing, accounting, and IT system. Successfully grew the in-school
students from zero to over 300.
RE/MAX & ZipRealty Fremont & Emeryville, CA 2004 to Present
CA-Licensed Realtor, Sales Consultant
. Close as many as five transactions per months including a commercial building.
. Honored with Certificates of Excellence and Rookie of the Quarter.
SINOMAS PAYMENT (startups, Co-founder) 2002 to 2003
. Establish product architecture, entry strategy and roadmap.
. Engaged with prospect customers to validate customer needs.
. Conducted market research. Made competitive and R01 analysis for business plan.
CYBERSOURCE, Mountain View, CA 2000 to 2002
Senior Engineering Manager
CyberSource is a online payment andfraud service provider for Fortune 2000 merchants.
. Responsible for Internet Payment & E-Commerce Server systems and teams, generating over
$lOM annual revenues, processing one million transactions per day.
MANAGEMARK., Sunnyvale, CA 1998 to 2000
Engineering Manager
Managemark, a spin-off from Intuit, was a producer of B2B financial web applications for
corporations and e-businesses using the Application Service Provider (ASP) model.
. Managed engineering teams to enhance the award-winning Quicken ExpensAble,
contributing to quality shipments of two million copies of the software.
GE POWER SYSTEMS - BENTLY NEVADA CORP 1994 to 1998
Project Team Lead, Minden, NY
Managed engineering groups located in USA and India to design the industrial data acquisition,
which generated millions in sales, experiencing with the entire software life cycle with best
practices and 1SO-9000 quality standards in this Fortune 500 company.
TRAININGS AND STATUS
. The Aquatic CEO Seminar. Colorado Springs, CO April, 2005
. National Build-A-Pool Conference. Colorado Springs, CO April, 2005
-- A national conference organized and sponsored by USA Swimming for swimming facility development.
. USA Citizen.
EDUCATION
Master in Business Administration, University of Nevada Reno
Master in Computer Science, University of Nevada Reno
Bachelor in Computer Engineering, Beijing Institute of Technology
Dec 1997
Aug 1991
July 1982
California Dolphin Swim School
Page 8
Dolphin Swim Club. Pool House ADA Upgrade Rev 0 -11.17.05
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