Staff report with attachments
PREPARED BY: Arn Andrews
Assistant Town Manager
Reviewed by: Town Manager, Town Attorney, Economic Vitality Manager, and Finance Director
110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 06/28/2022 ITEM NO: 3
DATE: June 21, 2022
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Authorize the Town Manager to Negotiate and Execute a Lease Agreement
with CineLux Theatres Co. LLC for the Operation and Program Management
of the Los Gatos Theatre in Substantially the Form Presented
RECOMMENDATION:
Authorize the Town Manager to negotiate and execute a Lease Agreement with CineLux
Theatres Co. LLC for the operation and program management of the Los Gatos Theatre in
substantially the form presented.
BACKGROUND:
On November 16, 2021, the Town Council authorized the Town Manager to negotiate and
execute a Donation Agreement for the Los Gatos Theatre Donation Property and issue a
Request for Proposals (RFP) for the management and programming of the theatre. On
December 30, 2021, the Town completed the transfer of the Los Gatos Theatre property to the
Town’s ownership.
On February 4, 2022, staff released a RFP for the Operation and Program Management of the
Los Gatos Theatre (Attachment 1). The RFP sought qualified individuals or firms to operate and
manage the Los Gatos Theatre (Theatre) on behalf of the Town. The RFP stressed that
respondents should advance the theatre’s long-term financial viability while advancing the
following goals:
1. Preservation of the Theatre as one of the most significant historical, cultural and
architectural resources in the Town of Los Gatos;
2. Enrichment of the community through the promotion and presentation of high-
quality entertainment, cultural events, and community education programs of
interest to all segments of the community;
PAGE 2 OF 4 SUBJECT: Los Gatos Theatre Lease Agreement DATE: June 21, 2022
BACKGROUND (continued):
3. Identification of the Theatre as a central destination point for cinematic and
performing arts which drives economic activity in downtown Los Gatos and the
broader region; and
4. Long-term financial sustainability.
By the March 4, 2022 RFP submission deadline, staff received proposals from the following
three respondents:
• Guggenheim Entertainment
• Pruneyard Cinemas LLC
• CineLux Theatres Co. LLC
The RFP review panel consisted of the Assistant Town Manager, Economic Vitality Manger, and
Director of Parks and Public Works. After careful consideration of the RFP responses, the
review panel selected CineLux Theatres Co. LLC as the best option for the management and
operation of the Theatre. CineLux has over 55 years of theatre experience and is the largest
independent regional theatre operator in the South Bay. CineLux currently operates seven
locations with 53 screens. In addition, CineLux has demonstrated the successful acquisition and
operation of seven previously closed or failed motion picture theatres.
DISCUSSION:
Provided below are the salient elements of the draft Lease Agreement (Agreement) staff is
utilizing as the basis of agreement between the Town of Los Gatos and CineLux Theatres Co. LLC
(Attachment 2).
Agreement Elements Comments
Term Five (5) year initial agreement with two (2) five-year
options.
Theatre Management CineLux would operate and manage the Theatre
independently of Town in compliance with agreed upon
performance expectations and Town, state, and federal
rules, regulations, and laws. The nature of this
relationship is that of an independent contractor.
Theatre Programming Professional film programming shall be a prioritized use
in the Theatre.
Profit Sharing Town shall receive 5% of the Theatre’s gross revenue
annually.
PAGE 3 OF 4 SUBJECT: Los Gatos Theatre Lease Agreement DATE: June 21, 2022
DISCUSSION (continued):
Agreement Elements Comments
Monthly Rent - For the first (1) year after the Delivery Date, Cinelux
shall pay no Rent for the Premises. The Delivery Date is
the date that CineLux assumes responsibility for the
Theatre under the Agreement.
- For the second (2) year after the Delivery Date, Cinelux
will pay base rent of $5,000 per month.
- In year three (3) after the Delivery Date, Cinelux will
pay monthly rent of $10,000 per month.
Annual Reporting - An annual financial report for Cinelux’s previous fiscal
year.
- An annual narrative report on the operations of the
Theatre for the previous fiscal year.
- A report assessing the status of physical condition of
the Theatre, preventive maintenance activities
completed, and any needed Capital Replacements.
- Cinelux’s proposed budget for the Theatre operations
and maintenance for the current fiscal year.
Town, Non-profit, and Community-
Based Organization Theatre Use
- Not less than 6 times per year, Cinelux
shall make the Theatre available for rental to Los Gatos
community-based organizations and non-profit
organizations at no cost.
- Cinelux shall maintain a tiered fee structure that
includes discounted rates with specified eligibility criteria
for Los Gatos community-based organizations and non-
profit organizations.
- Not less than 2 times per year, Cinelux shall make the
Theatre available to the Town at no cost.
Maintenance & Repairs - Cinelux shall be responsible for all routine daily
maintenance of the interior shell of Theatre Facility.
- Cinelux shall be responsible for the routine and
preventive maintenance services of all building systems.
- As stated in Exhibit D, Maintenance Matrix, to the Draft
Agreement (Attachment 2), Town shall be responsible for
the structural foundation, bearing and exterior walls, and
subflooring among other items
PAGE 4 OF 4 SUBJECT: Los Gatos Theatre Lease Agreement DATE: June 21, 2022
CONCLUSION:
Staff recommends that the Council authorize the Town Manager to negotiate and execute a
Lease Agreement with CineLux Theatres Co. LLC for the operation and program management of
the Los Gatos Theatre.
COORDINATION:
This staff report was coordinated with the Town Manager, Town Attorney, Economic Vitality
Manager, Director of Parks and Public Works, and Finance Director.
FISCAL IMPACT:
Income derived from this agreement will be deposited to a Special Revenue Fund and would be
utilized for the ongoing capital needs of the Theatre.
ENVIRONMENTAL ASSESSMENT:
In accordance with CEQA Guidelines Section 15301, this lease is categorically exempt from
CEQA because it is a lease of an existing structure and will involve negligible expansion of an
existing structure.
Attachments:
1. Los Gatos Theatre RFP
2. Draft Lease Agreement
Page 1 of 10
Town of Los Gatos
Theatre Operation and Program Management Services
REQUEST FOR PROPOSALS (RFP)
Operation and Program Management of the Los Gatos Theatre
Proposals Due: Deliver To:
March 4, 2022 by 5:00 p.m. Town of Los Gatos
Town Manager’s Office
RFP Contact: 110 E. Main Street
Arn Andrews Los Gatos, CA 95030
Assistant Town Manager
aandrews@losgatosca.gov
408-354-6836
ATTACHMENT 1
Page 2 of 10
TABLE OF CONTENTS
1. INTRODUCTION
2. TOWN OVERVIEW
3. THEATRE BACKGROUND
4. THE FACILITY
5. SCOPE OF SERVICES
6. PROPOSED TENTATIVE TIMELINE
7. SUBMITTAL INSTRUCTIONS
8. PROPOSAL FORMAT REQUIREMENTS
9. REVIEW AND SELECTION PROCESS
10. ATTACHMENTS
Page 3 of 10
1. INTRODUCTION
The Town of Los Gatos Town Manager’s Office, (“Town”) is pleased to offer an exciting
opportunity for a well-qualified individual(s) or company (“Proposer”) to operate and
manage the Los Gatos Theatre (“Theatre”) on behalf of the Town.
This Request for Proposals (RFP) is an invitation for qualified vendors to submit
proposals to operate the Theatre on an exclusive basis. The Town envisions an initial
period of three (3) years with the potential of two (2) additional consecutive five-year
periods if mutually agreeable. The Town is open to various options but expects the
Proposer to detail and justify any alternative contract term.
The successful Proposer shall demonstrate the ability to perform in this type of business
and clearly articulate financially sustainable plans for operation of the Theatre. The
Town’s preferred operational model is a blend of presenting films and other cultural
programming combined with facility rentals which results in the theatre’s long-term
financial viability and advances the following goals:
1. Preservation of the Theatre as one of the most significant historical,
cultural and architectural resources in the Town of Los Gatos;
2. Enrichment of the community through the promotion and presentation
of high-quality entertainment, cultural events, and community education
programs of interest to all segments of the community;
3. Identification of the Theatre as a central destination point for cinematic
and performing arts which drives economic activity in downtown Los
Gatos and the broader region; and
4. Long-term financial sustainability.
2. TOWN OVERVIEW
The Town of Los Gatos is a small community nestled at the base of the Santa Cruz
Mountains, approximately 60 miles south of San Francisco. The Town of Los Gatos is
guided by the principles of Small Town Service, Community Stewardship, and Future
Focus. The Town government is fiscally healthy, and focuses on teamwork,
collaboration, and civic engagement. Los Gatos is a General Law Town with a five-
member Council and an annually rotating Mayor’s position. The Town Council sets the
policies for which the Town employees implement under the leadership of the Town
Manager.
The Town operates one Civic Center, one Police Operations building, one Service Center,
and one Library and employs approximately 150 personnel.
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3. THEATRE BACKGROUND
The Los Gatos Theatre has been a fixture in Los Gatos since 1915, the dawn of the age of
motion picture exhibition. Opening as the Strand Theatre it was remodeled after a 1929
fire. The remodel included a new Art Deco look, complete with marquee and murals. It
became the Gatos Theatre in the 1940s, and then in the late 1980s the original “single”
was turned into a “twin” with a modest interior renovation, at which time Camera
Cinemas was brought in to operate the facility.
The Goetz family purchased the building in 2011 as a philanthropic project. A key
priority of the Goetz family was to reinvigorate the building, which had fallen into
disrepair. The theatre underwent a complete restoration between 2012 to 2014 which
returned the building to its Art Deco glory days. The Goetz family ran the theatre until
their recent donation of the theatre to the Town with the understanding that the Town
would carefully steward this Los Gatos treasure.
4. THE FACILITY
The Los Gatos Theatre is located in the heart of downtown Los Gatos. The Theatre is
considered to be an important contributor to the economic and social fabric of the Los
Gatos community.
Main Theatre: The main theatre has inclined stadium-style seating for up to 244 in
rocking, leather-covered loungers rising up 14 rows. At the top, an intimate balcony
offers two additional rows of premium seating for 21 in oversized velour-upholstered
rocking chairs and loveseats. A state-of-the-art Barco 4K digital cinema projector, with
3D capability, can show films and presentations on a 38-by-19 foot screen.
Lounge Theatre: The lounge theatre is located on the second floor and offers an 18’ x
10’ screen. The smaller theatre, while more intimate with leather reclining and other
seating for 38, has a total room capacity of 100, creating an ideal venue for both
business and personal gatherings. The space also offers an outdoor balcony and a full
caterer’s kitchen.
Green Room: A green room is located near the main stage of the Main Theatre with its
own private entrance and is provided for artists and guests to wait before being called
for their appearance, or to wait between appearances.
Restrooms: One restroom core is located on each floor.
5. SCOPE OF SERVICES
At the conclusion of the process outlined in this RFP, the Town intends to enter into a
contract for services to operate and manage the Los Gatos Theatre described herein. The
Town intends to retain ownership of the Theatre and will maintain a close working
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relationship with the chosen operator. The Town contemplates quarterly meetings to
review theatre operations, event scheduling and content, resource development and
community relations as well as other relevant issues.
The scope that will be incorporated into the contract may include but not be limited to
the following items:
1. Proposer shall be responsible for all day-to-day functions and operations of the Los
Gatos Theatre in accordance with the highest professional and ethical standards.
2. The expectation that the Proposer will strive for the maximum utilization of the
venue to ensure its financial sustainability.
3. Proposer shall negotiate and execute all agreements for use of the Theatre space for
events.
4. Proposer shall be responsible for recommending for Town approval all rental rates,
fees, and charges for services provided through the agreement.
5. Proposer will have oversight responsibility over any and all subcontractors
associated with theatre programming.
6. Proposer shall prepare and submit annual budgets for the operation of the Theatre.
The Proposer shall also establish a system of internal controls to provide reasonable
assurance that the Town’s/Theatre’s resources are used in an effective and efficient
manner. The Proposer shall keep full and accurate accounting records relating to its
activities at the Theatre in accordance with generally accepted accounting principles.
7. Proposer shall be considered an independent contractor and consequently, shall be
considered responsible for all employment and payroll functions related to their
operation of the Los Gatos Theatre.
8. Proposer shall thoroughly train and closely supervise all employees so that they
provide high standards of service to patrons.
9. Proposer shall maintain administrative and operating policies and procedures to
ensure the efficient and effective management of the Theatre.
10. Proposer shall abide by all applicable local, state, county, state, and federal laws
pertaining to its operation and shall secure all licenses and permits necessary for the
operation of the Theatre. The successful Proposer shall be responsible for, and pay
all federal, county, Town, and state taxes arising as a result of managing theater
operations.
11. Proposer shall be responsible for possessory interest tax through the County of
Santa Clara.
12. Proposer shall be responsible for returning the Theatre and all Furniture, Fixtures
and Equipment (FFE) to the Town in the same condition in which they were provided
except for normal wear and tear.
13. Proposer will ensure the Theatre shall be kept clean, orderly, attractive, and sanitary
at all times and in strict accordance with the applicable laws, ordinances, rules, and
regulations as well as the standards of the Town.
14. Proposer shall constantly endeavor to improve the operation of the Theatre with a
view toward developing the most efficient and highest quality of service to the
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customers, minimizing operating costs, increasing the quality of maintenance, and
maximizing gross receipts without negatively impacting costs.
15. The Town has a preference for a triple net lease with structured oversight of
financial operations, maintenance, and capital replacement.
16. Roles and responsibilities regarding execution of routine maintenance issues versus
larger construction projects.
17. Town has a preference to be able to use the Los Gatos Theatre on occasion for
specified Town events subject to Proposer’s previously booked events.
18. Town has a preference for the Proposer to establish and maintain a consistent policy
regarding discounts or subsidies that would be offered to nonprofits, community
groups, or other designated categories subject to Proposer’s previously booked
events.
6. PROPOSED TENTATIVE TIMELINE
Pre-proposal Meeting Date and Time (voluntary, but highly recommended): February 10,
2022 at 10:00 a.m. at the Los Gatos Theatre.
7. SUBMITTAL INSTRUCTIONS
The Town of Los Gatos invites qualified firms to submit proposals to provide operation
and program management of the Los Gatos Theatre. Proposals must be received by
5:00 p.m. on Friday March 4, 2022 to the address indicated on the cover of this RFP.
The submittal package shall include the following:
• One executed original and four printed copies of the proposal
• One electronic copy (sent via email)
8. PROPOSAL FORMAT REQUIREMENTS
Each Proposer must carefully examine the requirements contained herein. Upon receipt
of responses hereunder, each Proposer shall be thoroughly familiar with all
requirements contained herein. The failure or omission to examine any form or
document shall in no way relieve a Proposer from any obligation in respect to this
proposal submitted. Any misinterpretation of the requirements is solely that of the
Proposer.
Timeline
Distribution of RFP 02/04/2022
Deadline for Questions 02/18/2022
Proposals Due to the Town 03/04/2022
Selection Panel Review of Proposals Weeks of March 7 & 14, 2022
Vendor Presentations/Interviews Week of March 21, 2022
Council Consideration of RFP Award 04/5/2022
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In addition, any material that will add to the persuasiveness of your proposal may be
included. However, if the materials do not directly address the stated requirements,
please include them in an appendix or separate volume. The Town will review and
consider all material submitted but will concentrate on the material that directly
addresses the Town’s stated needs.
Proposals must include in the following, specified order:
A. COVER LETTER
The cover letter should include the title of this RFP; name and mailing address of firm;
contact person, telephone number, fax number and email address.
B. PROGRAM APPROACH
Provide a detailed description of how the Proposer will achieve the objectives outlined
in the RFP, which illustrates the Proposer’s ability to ensure the financial stability and
sustainability of the Theatre, ensure the Theatre will continue to serve as a cultural
resource for the community that attracts quality entertainment clients and audiences,
and ensure the Theatre will act as an economic catalyst for the downtown.
The description should include, but is not limited to, providing the
following:
Management Terms
Town Responsibilities: Proposers must detail what the Town will be expected to provide
in terms of the Town’s financial contribution; expected role in building operations,
maintenance, and capital projects; and/or other parameters. The Town is open to
various options but expects the Proposer to detail and justify these expectations.
Operator Responsibilities: Proposers must detail what the Operator’s role will be in
terms of building operations, maintenance, and capital projects. The Town is open to
various options but expect the Proposer to detail and articulate these responsibilities.
Programming
Describe your view of a representative mix of high-quality events, such as film, music,
comedy, community events, lectures, private and commercial events, etc. and how you
will achieve it. This list of genres is exemplary, not mandatory. Include your view on the
Town’s role in determining the appropriateness of recommended content. Give
examples of specific productions, artists, events, etc. previously programmed by your
organization that demonstrate this targeted quality and variety.
Include a description of capital investments that would be necessary to successfully
meet the programming goals.
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Operations
Describe your approach to the following significant components of managing a theatre
facility specific to the Los Gatos Theatre:
• Staffing plan;
• Marketing, community outreach, and audience development;
• Concessions;
• Ticket/Event/Rental pricing;
• Event management and accounting systems;
• Operating policies and procedures;
• Routine and capital maintenance;
• Relationship to building retail tenants; and
• Strategies to build and maintain a strong working relationship with the Town’s
program liaison(s). Include your expectations in working with Town program
liaison(s).
C. FIRM PROFILE AND EXPERIENCE
Include a profile of the firm including firm history, stability, and organizational structure;
additional firm locations; and profiles of representative projects/locations that best
demonstrate the firm’s qualifications and experience maintaining, operating, and
programming film and other cultural events.
The firm’s profiles of the representative projects will be used as references and
therefore shall identify the client contact persons with telephone numbers, and services
provided by the firm.
D. FINANCIAL PROPOSAL
One of the goals of this RFP is to select an operator that can establish consistent
financial stability and sustainability for Los Gatos Theatre operations, while minimizing
the financial contribution provided by the Town, if any. The Town has not determined a
set financial or payment structure for the successful Operator but favors a lease
arrangement. Town is open to various options and expects Proposers to detail their
expectations.
Provide a pro forma projection detailing all anticipated sources of revenue and all
expenses by category, including proposed lease payments to the Town for the initial
three-year term. Based on projected net income (if positive) after taxes, describe
potential revenue sharing arrangements with the Town. The Town has no specific pre-
formulated requirements for lease payments or revenue sharing.
Provide any information regarding the financial capacity of the organization which
demonstrates the organizations’ ability to meet the obligations of the proposal [e.g.,
current financial statements (balance sheet and income statement), bank account
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statements and/or letters from bank reporting on deposit, and/or federal tax returns for
most recent year)].
E. CONFLICT OF INTEREST
The proposal must include the name of entities associated with the firm and any
associated service provider who may have a conflict of interest with any activity of this
RFP. Provide details and reasons. Firms/service providers are subject to disqualification
based on conflict of interest as determined by the Town of Los Gatos.
F. EXCEPTIONS
Describe all proposed exceptions, alterations, or amendments to the scope of services
or other requirements of this RFP. The nature and scope of the proposed exceptions
may negatively affect the evaluation of the submittal and the Town’s determination of
whether it is possible to successfully negotiate a contract with the firm.
9. REVIEW AND SELECTION PROCESS
Award of the Theatre operations shall be made to the responsible and responsive
Proposer whose proposal is determined, through a formal evaluation process, to be the
most advantageous to the Town.
The successful Proposer will enter a contract with the Town incorporating all prescribed
requirements and conditions of this request for proposal. If the successful Proposer
refuses or fails to execute the contract, the Town may consider the next most qualified
Proposer. The Town shall be the sole judge as to the successful Proposer.
The Town reserves the right to reject any or all responses to this RFP and to waive any
informality or irregularity in this RFP or in responses, to negotiate with all qualified
sources, or to cancel, in past or in its entirety, this RFP, in the best interest of the Town.
This RFP does not commit the Town to award a contract, or to procure or contract for
services or goods.
Before award, Proposers may be required to furnish evidence of capability and financial
resources to adequately perform the job as specified above.
SELECTION PANEL
A Selection Panel comprised of Town staff will be established for this project by the
Town. The Panel will review and rank the proposals and negotiate with qualified firms
based on the content of the proposals relative to firm experience, qualifications, and
past record of performance. The Town may request an interview and/or site visit from
any or all the qualified firms to further assist in the selection process.
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SPECIAL CONSIDERATIONS
• Public Records: All proposals submitted in response to the RFP become the
property of the Town and are subject to release under the California Public
Records Act and may be subject to public review.
• Right to Cancel: The Town reserves the right to cancel, in part or in its entirety,
this RFP. If the Town cancels or revises this RFP, the Town will notify all
proposers in writing.
• Additional Information: The Town reserves the right to request additional
information and/or clarifications from any or all proposers to this RFP.
• Insurance Requirements, Permits, Licenses, Agreement: The successful firm shall
always maintain in force at its own cost during the performance of the
assignment insurance. If the firm cannot or will not provide insurance as
identified, the Town will not contract with the firm
• Contractual Requirements: The successful firm will be required to enter a
contract with the Town using the Town’s Standard Agreement for Services.
Provisions include, but are not limited to, indemnification, insurance
requirements, applicable compliance to ordinances, laws, regulations, and
licenses, Town business tax licenses and other terms and conditions. If a firm is
not prepared to accept the terms of this Agreement, the firm should not submit
a proposal. No changes will be made to the general contract requirements.
• Waiver: By submitting a response to this RFP, each proposer expressly waives
any and all rights it may have to object to, protest, or seek legal remedies
whatsoever related to any aspects of this RFP, Town’s selection of consultant or
rejection of any or all responses.
• Preparation of Proposals: The Town will not reimburse the costs to prepare a
response to this RFP.
10. ATTACHMENTS
The following attachments are incorporated into the Request for Qualifications and are
required to be completed to be considered a complete proposal:
ATTACHMENT 1 – CONFLICT OF INTEREST STATEMENT (FOR SUBMITTAL)
ATTACHMENT 2 – NON-COLLUSION DECLARATION (FOR SUBMITTAL)
ATTACHMENT 3 – REFERENCES (FOR SUBMITTAL)
ATTACHMENT 4 – STATEMENT REGARDING INSURANCE COVERAGE AND WORKER’S
COMPENSATION INSURANCE ACKNOWLEDGMENT CERTIFICATE (FOR SUBMITTAL)
Page 1 of 6
ATTACHMENT 1 - CONFLICT OF INTEREST STATEMENT
THIS FORM MUST BE PRINTED OUT, COMPLETED AND SUBMITTED WITH THE PROPOSAL
PROFESSIONAL AUDITING SERVICES
The undersigned declares:
I/We ___________________________ (Insert Name) have the following financial, business, or other
relationship with Town of Los Gatos that may have an impact upon the outcome of the contract. If none,
please specify that no other relationships may have an impact on this contract or Project.
I/We (Insert Name) have the following current clients who may have a
financial interest in the outcome of this contract. If none, please specify that no other clients may have a
financial interest with an impact on this contract or Project.
Pursuant to Government Code section 1090 and any other laws, rules and regulations that may apply, the
Proposer covenants that neither it, its subcontractors nor employees presently have an interest, and shall
not acquire any interest, direct or indirect, financial or otherwise that would conflict in any manner or
degree with contract awarded from this RFP. Proposer certifies that to the best of its knowledge, no one
Page 2 of 6
who has or will have any financial interest in the contract awarded from this RFP is an officer or employee
of the Town. Through its submittal of a proposal, Proposer acknowledges that it is familiar with Section
87100 et seq. and Section 1090 et seq. of the Government Code of the State of California and will
immediately notify the Town if it becomes aware of any facts concerning the contract to be awarded that
constitute a violation of said provisions.
Furthermore, if there is reason to believe that collusion exists among the Proposers, the Town may refuse to
consider proposals from participants in such collusion. No person, firm, or corporation under the same or
different name, shall make, file, or be interested in more than one proposal for the same work unless
alternate proposals are called for. A person, firm, or corporation who has submitted a sub-proposal to a
Proposer, or who has quoted prices on materials to a Proposer, is not thereby disqualified from submitting a
sub-proposal or quoting prices to other Proposers. Reasonable ground for believing that any Proposer is
interested in more than one proposal for the same work will cause the rejection of all proposals for the work
in which a Proposer is interested. If there is reason to believe that collusion exists among the Proposers, the
Town may refuse to consider proposals from participants in such collusion. Proposers shall submit as part of
their proposals documents the completed Non-Collusion Declaration provided herein.
I, on behalf of the Proposer, declare under penalty of perjury under the laws of the State of California that
the foregoing is true and correct and that this declaration is executed on __________________ [date], at
___________________[city], _______________[state].
_________________________________ ___________________________________
Proposer Name (Person, Firm, Corp.) Title of Authorized Representative
_________________________________ ___________________________________
Address Name of Authorized Representative
_________________________________
City, State, Zip
________________ ___________________________________
Date Signed
Page 3 of 6
ATTACHMENT 2 – NON-COLLUSION DECLARATION
THIS FORM MUST BE PRINTED OUT, COMPLETED AND SUBMITTED WITH THE PROPOSAL
PROFESSIONAL AUDITING SERVICES
The undersigned declares:
I am the ______________________ [Insert Title] of ____________________________,[Insert name of
company, corporation, LLC, partnership or joint venture] the party making the foregoing proposal.
The proposal is not made in the interest of, or on behalf of, any undisclosed person, partnership, company,
association, organization, or corporation. The proposal is genuine and not collusive or sham. The
Respondent has not directly or indirectly induced or solicited any other respondent to put in a false or
sham proposal. The Respondent has not directly or indirectly colluded, conspired, connived, or agreed with
any bidder or anyone else to put in a sham proposal, or to refrain from responding. All statements
contained in the proposal are true.
Any person executing this declaration on behalf of a respondent that is a corporation, partnership, joint
venture, limited liability company, limited liability partnership, or any other entity, hereby represents that
he or she has full power to execute, and does execute, this declaration on behalf of the respondent.
Page 4 of 6
ATTACHMENT 3 - REFERENCES
THIS FORM MUST BE PRINTED OUT, COMPLETED AND SUBMITTED WITH THE PROPOSAL
PROFESSIONAL AUDITING SERVICES
List three (3) references for work of a similar nature to the Services performed within the last five (5) years.
Use additional sheets as necessary.
1. _________________________________ ____________________________ ___________
Name of Agency Agency Address
_________________________________ ________________________________________
Contact Name Contact Title
_________________________________ ________________________________________
Contact Telephone Contact Email Address
_________________________________ ________________________________________
Contract Period Contract Amount
___________________________________________________________________________
___________________________________________________________________________
Description of services performed including costs.
2. _________________________________ ________________________________________
Name of Agency Agency Address
_________________________________ ________________________________________
Contact Name Contact Title
_________________________________ ________________________________________
Contact Telephone Contact Email Address
_________________________________ ________________________________________
Contract Period Contract Amount
Page 5 of 6
___________________________________________________________________________
___________________________________________________________________________
Description of services performed including costs.
3. _________________________________ ________________________________________
Name of Agency Agency Address
_________________________________ ________________________________________
Contact Name Contact Title
_________________________________ ________________________________________
Contact Telephone Contact Email Address
_________________________________ ________________________________________
Contract Period Contract Amount
___________________________________________________________________________
___________________________________________________________________________
Description of services performed including costs.
I hereby certify that the Proposer performed the work listed above.
_____________________ ______________________ ____________________
Signature of Proposer Name Date
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and
correct and that this declaration is executed on ________[date], at ______________[city], ___[state].
By: _____________________
Name: _____________________
Title: _____________________
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ATTACHMENT 4 - STATEMENT REGARDING INSURANCE COVERAGE AND WORKER’S COMPENSATION
INSURANCE ACKNOWLEDGMENT CERTIFICATE
THIS FORM MUST BE PRINTED OUT, COMPLETED AND SUBMITTED WITH THE PROPOSAL
PROFESSIONAL AUDITING SERVICES
PROPOSER HEREBY CERTIFIES that the Proposer has reviewed and understands the insurance coverage
requirements specified in the RFP. Should the Proposer be awarded a contract for Services, Proposer
further certifies that the Proposer can meet the specified requirements for insurance, including insurance
coverage of any subcontractors, and agrees to name the Town as additional insured for the Services
specified.
By certifying this form, the Proposer also understands the Worker’s Compensation insurance requirement
per the California Labor Code, Sections 1860 and 1861:
I am aware of the provisions of Section 3700 of the Labor Code, which
require every employer to be insured against liability for worker's
compensation or to undertake self-insurance in accordance with the
provisions of that code, and I will comply with such provisions before
commencing the performance of the work of this contract.
_____________________________________________
Name of Proposer (Person, Firm, or Corporation)
_____________________________________________
Signature of Proposer's Authorized Representative
_____________________________________________
Name & Title of Authorized Representative
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LEASE AGREEMENT
BETWEEN
TOWN OF LOS GATOS
AND
CINELUX THEATRES CO. LLC
THIS AGREEMENT (“Use Agreement”) is made and entered into this ___ day of ___, 2022, by and between the TOWN OF LOS GATOS, a California municipal corporation (herein "Town") and CINELUX
THEATRES CO. LLC, a California limited liability company (herein "Cinelux"). Town and Cinelux may be referred to individually as a "Party" or collectively as the ''Parties" or the "Parties to this Lease Agreement." The Town Manager serves as Contract Administrator for this Lease Agreement
(“Agreement”) on behalf of the Town Council.
RECITALS
A. Whereas, The Goetz family purchased the Los Gatos Theatre (“Theatre”) in 2011 as a philanthropic project and completely renovated the Theatre between 2012 and 2014; and B. Whereas, on April 18, 2021, the Goetz family provided the Town with a proposal for the donation of the Theatre to the Town; and
C. Whereas, on November 16, 2021, the Town Council formerly accepted the donation and directed staff to negotiate and execute a donation agreement and issue a Request for Proposal (“RFP”) for the
management and programming of the Theatre; and D. Whereas, on December 30, 2021, the property transfer was recorded with Santa Clara County and the
Town became the sole owner of the Theatre; and E. Whereas, on February 4, 2022, the Town released an RFP seeking qualified vendors to submit proposals to operate the Theatre on an exclusive basis; and F. Whereas, on March 4, 2022, the Town received three (3) submissions and after extensive review deemed the Cinelux proposal worthy of award; and F. Whereas, the Town and Cinelux now wish to enter into this Agreement which meets or exceeds the objectives stipulated in the RFP. In consideration of the above recitals, the parties mutually agree as follows:
SECTION 1. Definitions. Except as otherwise provided in this Agreement, the terms set forth below have the following meanings, unless the context clearly otherwise requires. A. “Cinelux” means Cinelux Theatre Co. LLC whose President is Paul Gundy. ATTACHMENT 2
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B. “Capital Repair” means the repair of items which is made necessary either by some unusual or unforeseen occurrence which renders the item unsuitable for its
intended use or causes it to perform in an inadequate manner. C. “Capital Replacement” means the full replacement of building system assets or its components, such as HVAC systems, that have reached the end of their useful life. D. “Capital Replacement and Repair Plan” is defined in Section 10.3.C. E. "FF&E" means furniture, fixtures and equipment furnished by Town or Cinelux for installation or use in the Theatre and any replacement furniture, fixtures and equipment required due to obsolescence or normal wear and tear.
F. "Material Alterations" is defined in Section 11(A).
G. “Ordinary Maintenance and Repairs” means the work that is required to keep the Theatre in a safe, clean, and sanitary condition and which is made necessary due to the day to day operation of the Theatre, as determined by the Town’s Director of
Parks and Public Works or designee. H. "Permanent Improvement" means any building, monument, or statue that is installed at the Theatre. The term "Permanent Improvement" also includes any other structure constructed or installed at the Theatre in such a manner that it is affixed to the real property. I. "Replacement Cost" means the cost to replace property at its then current price, without deduction for depreciation. J. "Term" is defined in Section 3.
K. “Theatre” is defined in Section 2. B.
SECTION 2. Location and Description of the Los Gatos Theatre. A. The Theatre is located at 43 North Santa Cruz Avenue, Los Gatos, CA 95030. As shown in Exhibit
A, the leased Premises consists of approximately eleven thousand six hundred and four (11,604) square
feet of space for the screening of films (the “Premises”). Cinelux accepts the Premises "as-is" on the
date of execution of this Use Agreement.
C. The Theatre was fully reconstructed during 2012-2014 and is comprised of the following improvements: (1) The main theatre has inclined stadium-style seating for up to 244 in rocking, leather-covered
loungers rising up 14 rows. At the top, an intimate balcony offers two additional rows of premium seating for 21 in oversized velour-upholstered rocking chairs and loveseats. A state-of-the-art Barco 4K digital cinema projector, with 3D capability, can show films and presentations
on a 38-by-19 foot screen; (2) Downstairs lobby/reception area, administrative office area, food and beverage area, green room, and storage areas;
(3) The lounge theatre is located on the second floor and offers an 18’ x 10’ screen. The smaller
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theatre, while more intimate with leather reclining and other seating for 38, has a total room capacity of 100. The space also offers an outdoor balcony and a full caterer’s kitchen;
(4) One restroom core is located on each floor;
(5) Town-owned furniture, fixtures, and equipment as described in Exhibit B.
SECTION 3. Term. 3.1 Original Term. The term of this Agreement will commence as of Jun 28, 2022, regardless of the date of execution ("Commencement Date") and will expire on June 30, 2027 ("Expiration Date"), unless sooner terminated as provided elsewhere in this Agreement. Cinelux shall, at the expiration of the term of this Agreement, or upon its earlier termination, surrender the Premises in as good condition as it is now at the date of this Agreement. The Parties expect reasonable wear and tear. 3.2 Option to Extend. Provided Cinelux is not in default hereunder, either at the time of exercise or at the time the extended term commences, Town and Cinelux may elect to extend the term of this Agreement for two (2) additional terms (“Extended Terms”) of five (5) years each. No Extended Term shall commence unless an Extended Term is requested by either party by providing a written notice of the party’s intent to extend the term, delivered not less than twelve (12) months prior to the expiration of the initial term or any Extended Term, and an agreement is executed by both parties.
3.3 Delivery Date. The Town and Cinelux will undertake initial improvements to the Theatre as determined by mutual agreement. At the completion of those improvements, the Town will establish a
delivery date of the Premises to Cinelux on which the Term, and rent and monetary obligations of this Agreement will begin (“Delivery Date”). This Agreement will not be amended, changed, or extended except by written agreement signed by both parties hereto. SECTION 4. Facility Operations. Cinelux shall operate the Theatre in accordance with the Town’s Request for Proposals distributed on February 4, 2022 and incorporated by reference into this Agreement and the following objectives and parameters: 1. Cinelux, in conjunction with the Town, shall preserve the Theatre as one of the most significant historical, cultural and architectural resources in the Town of Los Gatos.
2. Cinelux, with input from the Town as necessary, will enrich the community through the promotion and presentation of high-quality cinematic entertainment, cultural events, and community education programs of interest to all segments of the community.
3. Cinelux recognizes the Theatre is a central destination point for cinematic and performing arts which drives economic activity in downtown Los Gatos and the broader region, and as such will maintain an evolving and sustainable programming and operational model that emphasizes the cinematic arts.
4. Cinelux understands that the long-term financial sustainability of the Theatre is paramount to the Town and as such programming and the operational model will be developed along the following elements: financial sustainability, robust programming, full facility activation, and a management system for facility maintenance. 5. Cinelux understands that Town’s continued ownership of the Theatre is contingent upon availability, as scheduling permits, for use by community-based organizations at preferential rental rates. 6. Cinelux understands that long-term financial sustainability will be dependent on building and maintaining a pipeline of future audiences and future facility rentals.
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SECTION 5. Cinelux’s Responsibilities to Operate the Theatre 5.1. Theatre Uses. A. Town and Cinelux agree that Cinelux will operate and manage the Theatre independently of Town in compliance with agreed upon performance expectations and Town, state and federal rules, regulations, and laws. The nature of this relationship is that of an independent contractor and shall not be considered to be an agency, joint venture, partnership, or subsidiary relationship. Town and Cinelux agree further that Cinelux shall not hold itself out as, act as, or be the agent of Town without Town’s express written authority. It is the intent of the parties that Cinelux will be delegated actual authority by Town over the day-to-day operation of the Theatre.
B. Cinelux shall have the obligation and the exclusive right to provide the programs and services at the Theatre in general accordance with this Agreement.
C. Cinelux shall have full responsibility for managing, monitoring and supervising all use of the Theatre pursuant to this Section 5.
D. All use of the Theatre shall be subject to the terms and conditions of this Agreement. E. Cinelux shall have exclusive right to operate the Theatre and to conduct activities at the Theatre in accordance with this Agreement in a prudent and business-like manner, with due concern for the safety of the public, and in compliance with all applicable laws, governmental regulations and the terms and conditions of this Agreement. Without limiting the generality of the foregoing, Cinelux shall comply with all laws related to Hazardous Materials utilized by or under the direction, control or management of Cinelux in the operation of the Theatre, including without limitation, laws related to the disposal of Hazardous Materials. As used in this Agreement, “Hazardous Materials” shall include, but not be limited to, hazardous, toxic, and radioactive
materials and those substances defined as “hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or other similar designations in any local, state, or federal regulation. F. Cinelux shall have exclusive right to operate the Theatre so as to provide the fullest use of the Theatre over the widest time period consistent with good administrative practices for like facilities and within its available resources.
5.2. Community Use of Theatre Facility and Fee Schedules.
A. Professional film programming shall be a prioritized use in the Theater. B. When not utilizing the Theatre for core programming needs, but not less than 6 times per year, Cinelux shall make the Theatre available for rental to Los Gatos community-based organizations (Lions, Rotary, Kiwanis, etc.) and non-profit organizations at no cost. C. Cinelux shall maintain a tiered fee structure that includes discounted rates with specified eligibility criteria for Los Gatos community-based organizations (Lions, Rotary, Kiwanis, etc.) and non-profit organizations. D. Cinelux shall be responsible for and shall manage and supervise all use of the
Theatre pursuant to this Section 5.2. Without limiting the generality of the foregoing, Cinelux expressly agrees and acknowledges that Cinelux shall bear the sole and
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full responsibility for monitoring and supervising all use of the Theatre pursuant to this Section 5.2, and that its indemnification set forth at Section 14 hereof and its
maintenance obligation set forth at Section 10 hereof include indemnification for and maintenance related to such community use of the Theatre. E. All use shall be subject to the terms and conditions of this Agreement including without limitation Section 14. 5.3. Town Use of Theatre A. Professional film programming shall be a prioritized use in the Theater. B. When not utilizing the Theatre for core programming needs, but not less than 2 times per year, Cinelux
shall make the Theatre available to the Town at no cost. 5.4. Operating Procedures.
Cinelux will establish such reasonable rules and regulations to govern the public's use of the Theatre in order to assure the level, quality and character of the Theatre operations
as required by this Agreement ("Theatre Rules). SECTION 6. Rent and Monetary Obligations. 6.1 Monthly Rent. For the first (1) year after the Delivery Date, Cinelux shall pay no Rent for the Premises. For the second (2) year after the Delivery Date, Cinelux will pay base rent of $5,000 per month. In year three (3) after the Delivery Date, Cinelux will pay monthly rent of $10,000 per month. In no event shall rent exceed Ten Thousand Dollars ($10,000) per month during the initial 5-year period. Prior to any extension of the Term of this Agreement, if an Extended Term is sought by the Parties, the Town reserves the right to review the accounts and financial records of Cinelux and open negotiations for a potential increase in rent. 6.2 Profit Sharing. The Town shall receive 5% of the Theatre’s gross revenue annually. Gross revenue includes, but is not limited to, revenue from ticket sales, event rentals, concession sales of food and
alcohol, and other sources.
6.3 Revenue and Taxation Code Section 107.6. Cinelux specifically acknowledges that, in accordance with
Revenue and Taxation Code Section 107.6, the Premises may be subject to possessory interest tax and
that Cinelux is responsible for any possessory interest tax levied on Cinelux’s leasehold interest in the
Premises.
6.4 Personal Property Taxes. Cinelux shall pay before delinquent, or if requested by Town, reimburse Town
for, any and all taxes, fees, and assessments associated with the Premises, the personal property
contained in the Premises and other taxes, fees, and assessments regarding any activities which take
place at the Premises. Cinelux recognizes and understands in accepting this Lease that its interest
therein may be subject to a possible possessory interest tax that Town or County may impose on such
interest and that such tax payment shall not reduce any rent due Town hereunder and any such tax shall
be the liability of and be paid by Cinelux.
6.5 Payment Date/late Charge. Rent shall be payable on the first day of each and
every month commencing on the Delivery Date, at Los Gatos Town Hall,
Finance Department, or a place as may be designated in writing from time to
time by Town. Cinelux acknowledges late payment of rent may cause Town to
incur costs not contemplated by this Agreement, the exact amount of such
costs being extremely difficult and impracticable to fix. Such costs include,
without limitation, processing. accounting and late charges that may be
imposed on Town. Therefore, if Town does not receive any installment of rent
due from Cinelux within ten (10) days after the date such rent is due, Cinelux
shall pay to Town an additional sum of five percent (5%) of the overdue rent
as a late charge. The parties agree this late charge represents a fair and
reasonable estimate of the costs Town will incur by reason of late payment by
Cinelux. Acceptance of any late charge shall not constitute a waiver of
Cinelux's default with respect to the overdue amount, nor prevent Town from
extending any of the other rights and remedies available to Town.
6.6 Payment Procedures. Cinelux's obligation to pay rent shall commence one
year fromthe Delivery Date. If the term commences or terminates on a date
other than the first of any month, monthly rent for the first and last month of
this Agreement shall be prorated based on a 30-day month. Payments shall be
effective upon receipt. Town may apply any payment received from Cinelux
at any time against any obligation due and owing by Cinelux under this
Agreement regardless of any statement appearing on or referred to in any
remittance from Cinelux or any prior application of such payments.
6.7 Partial Payment. The receipt by Town of a partial payment of any amount
due to Town endorsed as payment in full will be deemed to be a partial
payment only. Town may accept and deposit said check without prejudice to
its right to recover the balance. Any endorsements or statements on the check
or any letter accompanying the check shall not be deemed an accord and/or
satisfaction. Cinelux's obligation (without prior notice or demands) to pay
rent and all other amounts due hereunder shall be absolute and
unconditional, and not subject to any abatement, set off, defense, recoupment
or reduction.
6.8. Utilities at the Theatre. Cinelux shall be responsible for the cost of all utilities at the Theatre, including but not limited to: (1) Electrical and gas services (2) Telephone services (3) Water services (4) Trash services (5) Data and internet services.
Town shall be responsible for the utility costs associated with the retail tenants based on a pro rata proportion of square footage to be deducted from the Town’s annual
profit share. SECTION 7. Books, Records and Accounts. A. Cinelux shall maintain any and all ledgers, books of account, invoices, vouchers, cancelled checks, and other records or documents evidencing or relating to the
operation of the Theatre ("Theatre Records") for a minimum period of three (3) years, throughout the Term of this Agreement.
B. Cinelux shall maintain all Theatre Records which demonstrate performance under this Use Agreement for a minimum period of three (3) years, or for any longer period required by law, from the date of termination or completion of this Agreement.
C. Any Theatre Records required to be maintained pursuant to this Agreement shall be made available for inspection or audit at no cost to Town, at any time during regular business hours, upon written request by the Town Attorney, Town Manager, or their designees. Copies of such documents shall be provided to Town for inspection at Town Hall when it is practical to do so. Otherwise, unless an alternative is mutually agreed upon, the records shall be available at Cinelux's address indicated for receipt of notices in this Agreement. D. Where Town has reason to believe that Theatre Records may be lost or discarded due to dissolution, disbandment or termination of Cinelux’s business, Town may, by
written request by any of the above-named officials, require that custody of the records be given to Town and that the records and documents be maintained by the Town. Access to such Theatre Records shall be granted to any party authorized by
Cinelux, or Cinelux’s representatives. SECTION 8. Budgets, Audits and Reporting Requirements. 8.1 Budget Review.
Both parties acknowledge the need and the intent to work together in a cooperative and supportive manner in Town's budgetary processes. Cinelux shall provide to Town, upon Town's request, timely and accurate information to support estimated and actual profit share revenues under this Agreement. Such information may include draft budgets, revenue projections, proposed fee schedules, capital and special funding needs and any other information that Town deems useful. Town will likewise provide Cinelux with timely and accurate information on Town's budgetary schedule and processes and other information that Cinelux can show is relevant to carry out this Agreement. 8.2. Annual Reporting.
Within ninety (90) days following the end of Cinelux’s fiscal year during the Term, Cinelux shall provide Town with the following:
A. An annual financial report for Cinelux’s previous fiscal year.
B. An annual narrative report on the operations of the Theatre for the previous fiscal year. The report shall also contain milestones and metrics achieved relative to the
Principles set forth in Section 4 of this Agreement. Such milestones and metrics shall include, but not be limited to, the following: 1. Number of cinematic and other cultural offerings provided; 2. Number of rentals by community groups and other Non-profit organizations, including number of days facility was rented by community groups and other organizations at discounted rates; 3. Number of outside corporate/private organizations that accessed the Theatre; 4. Total audience in Theatre for all ticketed events; 5. Total income and expenses from Theatre operations; and C. A report assessing the status of physical condition of the Theatre, preventive
maintenance activities completed, and any needed Capital Replacements. D. Cinelux’s proposed budget for the Theatre operations and maintenance for the current fiscal year.
E. Anticipated program outreach and event schedule to the extent available for the current fiscal year. 8.3. Additional Reporting Requirements. Cinelux shall also furnish to the Town Manager any additional financial statements, reports, documents, and other information as the Town Manager may reasonably require for the development of an annual presentation to the Town Council or a subcommittee thereof regarding the progress of the development of the financially sustainable and diverse programming model for the Theatre. If requested, Cinelux shall send a representative to the annual presentation to assist in responding to questions from Town Council or a subcommittee thereof. Furthermore, during the Term of this Agreement, Cinelux shall make available its financial information provided to the Town for inclusion with similar Town reports. The financial information submitted to Town by Cinelux is submitted for purposes of
this Agreement only and does not alter or change any other Town requirement to which Cinelux is subject that is not directly required by this Agreement. Furthermore, review by Town of Cinelux’s financial information shall be for the purpose of protecting
Town’s interest as owner of the Theatre. Cinelux is solely responsible for management of its own fiscal resources, and any indebtedness incurred by Cinelux to a third party shall be the responsibility of Cinelux. Nothing in this Agreement shall be construed so as to render Town responsible for any debts, liabilities or obligations of Cinelux. 8.4. City's Right to Audit. Town reserves the right at its own expense to conduct audits of Cinelux's operations under this Agreement. All accounting records, basic or secondary, used in the ordinary course of business and all banking deposit tickets, statements and any other banking records, purchase invoices, and all records of sales, excise or other taxes paid or payable by Cinelux for sales, fees and charges from the operation of the Theatre shall be made available to Town's Manager, Town's Attorney, Town's Director of Finance, and/or the Town’s Director for inspection and/or auditing purposes upon Town's request.
SECTION 9. Ownership of Furniture, Fixtures and Equipment.
A. All furniture, fixtures, and equipment purchased by Town or by Cinelux with Town funding ("Town FF&E") shall be and remain the property of Town, which shall have sole right to possession upon expiration or sooner termination of this Agreement. Cinelux shall have the right to use Town FF&E during the term of this Agreement at no charge. B. The Town owns FF&E that is sited throughout the Theatre. Town-owned FF&E is listed in Exhibit B and includes furniture, theatre equipment, furnishings, electronics, and stages. The Town acknowledges that the FF&E will depreciate over time and need replacement.
C. As part of the annual facility assessment and prioritization of capital maintenance, Cinelux and the Town will prioritize the repairs to fixed assets over the replacement of equipment. Cinelux is encouraged to develop an FF&E replacement plan.
D. Cinelux will perform an initial inventory of all Cinelux FF&E in the Theatre and an annual inventory thereafter. It is the responsibility of Cinelux to track new FF&E
purchased by Cinelux. Surplus Town-owned FF&E is to be returned to the Town and disposed of according to Town policy. Town FF&E shall remain in the Theatre at all times and may not be used in other Cinelux facilities. If Town FF&E items are not in the Theatre at the time of expiration or sooner termination of this Agreement, Cinelux shall reimburse the Town for the missing items at the then fair market value. E. FF&E that is affixed to the Theatre, including theatrical lighting, sound, stage rigging and associated control panels, becomes property of the Town upon expiration or sooner termination of this Agreement. For FF&E that is not fixed to the Theatre, upon expiration or sooner termination of this Agreement, Town shall have the right to purchase at the then fair market value, all FF&E purchased by Cinelux from sources other than Town ("Cinelux FF&E") that is essential to the operations or programming of the Theatre. If Town and Cinelux are unable to agree on the fair market value of the Theatre FF&E, Cinelux shall be allowed to remove the Theatre
FF&E from the Theatre. Cinelux will perform an annual inventory of all Cinelux FF&E in the Theatre and shall provide the Town with an accounting of all Town and Cinelux FF&E at the end of this Agreement.
SECTION 10. Maintenance, Repair and Security of the Theatre. 10.1. Ordinary Maintenance and Repairs. A. Cinelux agrees to maintain the Theatre at a high level of quality, at or above the level received, acknowledging that the maintenance level shall be significantly higher than that of a typical municipal facility. This shall include maintaining interior wall and window surfaces, flooring, and paint, in an excellent condition, as determined in the reasonable discretion of the Town’s Director of Parks and Public Works. All damages shall be promptly repaired such that the repairs are indistinguishable from adjacent like finishes in material type, texture, color, and quality. Maintenance activities shall retain all facility elements in their existing style and quantity in order to continue to enhance the cultural aspects of the Theatre.
B. As stated in Exhibit D, Maintenance Matrix, Town shall be responsible for the structural foundation, bearing and exterior walls, and subflooring among other items.
With the exception of new or replacement signage, Town shall also be responsible for exterior shell including roofing, external wall assemblies, and exterior doors. C. Cinelux shall be responsible for all routine daily maintenance of the interior shell of Theatre Facility. Cinelux shall keep the Theatre in a neat, clean and orderly condition at all times during the term hereof and shall not permit refuse or debris to accumulate at any time nor commit, suffer or permit any destruction of any portion of the Theatre Facility. D. Cinelux shall be responsible for the routine and preventive maintenance services of all building systems to include, Custodial, Fire Life Safety, Elevator, Electrical,
HVAC, Plumbing, and other building systems such as rigging and stage equipment and provide reports of its annual preventive maintenance activity to the Town as requested. Preventive maintenance activities of the Theater shall be in accordance
with all local, State or Federal regulations, equipment manufacturer recommendations and industry standards. The Town, through a preventive maintenance oversight program, will monitor the performance of preventive
maintenance work. E. Should the Town determine, at its reasonable discretion, that ordinary maintenance and/or repairs are not being performed as required by this Agreement, Town shall promptly notify Cinelux in writing and if no action is taken within thirty (30) days, the Town may cause the maintenance and/or repairs to be completed and shall be reimbursed by Cinelux. 10.2. Janitorial Services/Maintenance of FF&E. Cinelux shall provide at its sole cost and expense janitorial services to the Theatre necessary to maintain the Theatre in a clean, safe and serviceable condition for the public and staff. Cinelux shall maintain all FF&E in use at the Theatre in accordance with any applicable manufacturer's warranty requirements, manuals and records. Cinelux
shall promptly notify City's Director of Parks and Public Works in the event that any of the Town FF&E is lost, stolen or damaged. 10.3 Capital Repairs and Capital Replacements. A. Cinelux and Town shall be responsible for the cost of Capital Repairs and
Replacements as specified in Exhibit D, Maintenance Matrix. All work performed in connection with Capital Repair shall be authorized by the Town, and supervised by Cinelux and performed by duly licensed, qualified, contractors agreed to by Town and Cinelux. To the extent that any of the work to be performed with Town Funds constitutes a “public works project,” Town shall observe all public bidding requirements associated with such projects as prescribed in Town’s Purchasing Policy and the Town’s Municipal Code, and all applicable local, state, and federal laws, rules and regulations, and policies regarding public works construction shall be adhered to, including but not limited to the payment of prevailing wages. B. Only where reasonable, Cinelux and the Town will prioritize the repairs to fixed
assets over the replacement of assets. Cinelux and Town’s Department of Parks and
Public Works staff shall meet to discuss and monitor the Theatre’s Capital Replacement and Repair Plan.
C. The Town shall coordinate the development of a Capital Replacement and Repair Plan in the following manner: (1) Prior to January 15 of each year, Cinelux shall submit to Town’s Director a proposed Capital Repair and Replacement Plan for the Town’s next fiscal year which shall describe the work anticipated to be performed and projected costs. (2) Town shall review the proposed Capital Repair and Replacement Plan in order to determine whether public bidding will be required, to determine the
reliability of cost estimates, to review the budget in the proposed Capital Repair and Replacement Plan in light of available funding, and to prioritize proposed expenditures. Town may make any revision to such Capital Repair
and Replacement Plan as Town, in its sole reasonable discretion, deems is consistent with both Cinelux’s duties and the Applicable Standard and, prior to the start of that next fiscal year, shall approve a Capital Repair and
Replacement Plan for that next fiscal year. (3) Once the Capital Repair and Replacement Plan is approved, Cinelux shall inform Town in writing of any work of Capital Repair or Capital Replacement to be performed during that fiscal year which is contained in the approved Capital Repair and Replacement Plan prior to commencing such work but in such event no further approvals of such work are required from Town. (4) For items of Capital Repair and Capital Replacement which are not included in the approved Capital Repair and Replacement Plan and do not involve any emergency work, Cinelux shall first request Town approval from the Assistant Town Manager or designee for such work prior to commencing such work. The request shall be in writing, describe the work, the justification for it and the projected costs thereof. Within sixty (60) days of the request, Assistant Town Manager or designee shall either approve such request, as
may be modified or shall provide a written statement in reasonable detail describing why such request has been denied. Town may make emergency capital repairs and replacements consistent with established Town procedures
for handling emergencies. Town shall provide Cinelux with the names and telephone numbers of the Town Manager’s Office to contact in the event of an emergency involving the Theatre. If Cinelux reasonably determines that
any delay would present a material risk to human life or the structural integrity of the Theatre, or would prevent the holding of a scheduled event, Cinelux may immediately commence emergency capital repairs and replacements. In all other events, Cinelux shall notify the Town Manager’s Office at the emergency number provided to Cinelux, and shall either receive the Assistant Town Manager or designee’s prior approval or wait 48 hours without receiving a response before commencing emergency capital repairs and replacements. The Maintenance Matrix, Exhibit D, shall indicate the responsible party for the costs of repairs.
10.4. Security.
Cinelux shall maintain at its sole cost and expense the monthly costs associated with a security system, electronic fire protection, and security services at the Theatre. Cinelux shall have sole responsibility and bear all expense related to the system and responding to any and all alarm calls from the electronic system and from security services. Cinelux shall provide the Town’s Parks and Public Works Director or his or her designee, the current access code. Cinelux shall also provide Town a copy of all exterior and interior keys for the Theatre. The Town’s Police Department is solely responsible for responding to any Police incidents at the Theatre.
SECTION 11. Alterations to the Theatre.
A. "Material Alterations" shall mean any Permanent Improvement at the Theatre; structural changes; changes to the exterior appearance of the Theatre, including signage referring to the name or branding of the Theatre; changes in permanent floor
and wall surfaces; changes in the interior of Theatre structures (excluding changes in exhibits); and changes in major components of electrical, HVAC and other building systems. B. Cinelux shall not make any Material Alterations to the Theatre without the prior written consent of Town. The approval of the Town Manager is required for Material Alterations covered by Section 10, and the approval of Town's Parks and Public Works Director is required in all other instances. Any alteration to the Theatre approved by Town shall be done with materials of an equal quality and durability to those in which the Theatre was originally constructed or renovated, shall be consistent with the design of the Theatre as originally constructed or renovated and shall be accomplished in accordance with any reasonable conditions imposed upon Town's consent. C. Notwithstanding Subsection B, Cinelux may make nonstructural alterations for
exhibits or programs so long as such alterations are temporary in nature and reviewed in advance by the Town’s Chief Building Official or designee. Cinelux shall give Town thirty (30) days advance notice before commencing such alterations, unless it is
impossible to foresee the need for the alteration thirty (30) days in advance, in which case Cinelux shall give Town notice as soon as practically possible. Town has the right to require Cinelux to repair and take all actions to return the Theatre to substantially its pre-existing condition at the end of such temporary period. D. Cinelux acknowledges and agrees that all Material Alterations constructed by Cinelux shall become the property of Town upon installation at the Theatre. E. Cinelux shall not alter the marquee signage of the Theatre, which identifies the Theatre as the “Los Gatos Theatre.” Cinelux may use other corporate branding for other elements of the Theatre.
SECTION 12. Alteration and Construction Requirements. 12.1. Application. The provisions of this Section are in addition to any requirements for alterations or construction set forth elsewhere in this Agreement. 12.2. Plans and Specifications. A. The plans and specifications (the "Plans") for any Material Alteration to the Theatre (collectively, "Construction Work") shall be in conformance with Town's Standard Specifications then in effect. The Plans must set forth Cinelux’s proposed schedule for completion of the Construction Work.
B. The Plans for the Construction Work shall be subject to the prior review and approval of the Town’s Community Development Director. Town's approval of the
Plans shall not release Cinelux of the responsibility for the correction of mistakes, errors or omissions contained in the Plans, including any mistakes, errors or omissions which may be the result of circumstances unforeseen at the time the Plans were developed or
approved. If, during the course of construction of the Construction Work, the Town’s Community Development Director determines in her/his sole discretion that the public safety requires modification of, or the departure from, the Plans, the Town’s Community Development Director shall have the authority to stop the construction and to require such modification or departure and to specify the manner in which the same may be made. The parties acknowledge that the Plans, once approved by the Town’s Community Development Director, shall be final and that, except as expressly provided in this subsection, no revisions to the Plans shall be permitted unless the Town’s Community Development Director approves the proposed revision in writing. 12.3. Inspection of Construction Work. The Town’s Chief Building Official shall, at all times during the progress of work on the Construction Work, have free access to the Construction Work site for inspection
purposes. If the Town’s Chief Building Official determines that all or any portion of the work done on the Construction Work is not in compliance with the Plans, the Town’s Community Development Director shall notify Cinelux of the same and Cinelux shall
promptly cure such defect to the Town’s Community Development Director's satisfaction. 12.4. Bidding Requirements. In the event, and to the extent, that any of the Construction Work constitutes a “public works project,” as defined in the Town Purchasing Policy or Municipal Code, Cinelux shall observe all public bidding requirements associated with such projects. 12.5. Approvals. All applicable local, state, and federal laws, rules and regulations, and all necessary and required approvals of plans and specifications, including review by the Town Engineer of the Town’s Parks and Public Works Department, permits and all other
approvals and documents required, shall be fully applicable to, and
obtained by Cinelux for Construction Work carried out by Cinelux under this Use Agreement. 12.6. Prevailing Wages. Cinelux acknowledges that laborers employed relative to any construction on the Premises must be paid the prevailing per diem wage rate for their labor classification, as determined by the State of California, pursuant to California Labor Code Sections 1720 et seq and agrees to comply with Labor Code Sections 1720 and following. Cinelux agrees with Town that Cinelux shall assume the responsibility and be solely responsible for determining whether or not laborers employed relative to an construction on the Premises undertaken by Cinelux must be paid the prevailing per diem wage rate for their labor classification as determined by the State of California, pursuant to California Labor
Code Sections 1720 et seq. Town shall not be under any duty to monitor or ensure the compliance of Cinelux with any State of California labor laws, including, without limitation, prevailing wage laws. Cinelux shall indemnify Town against any claims
pursuant to California Labor Code Section 1781 arising from Cinelux’s construction of any improvements, work, or alterations on the Premises. 12.7. Costs. All costs associated with Construction Work, including without limitation, Town's charges for Plan review and inspection, shall be the sole responsibility of Cinelux. 12.8. Bonding Requirements. Cinelux shall comply with the bonding requirements as a condition of the Town’s Parks and Public Works Director's approval of the Plans for any Construction Work. 12.9. Notice to Proceed. Cinelux may not begin the Construction Work unless and until the Town’s Community Development Director gives Cinelux a written notice to proceed ("Notice to Proceed").
The Notice to Proceed may specify additional conditions related to the prosecution of the Construction Work. The Notice to Proceed will not be issued unless and until the following conditions are met:
A. The Town Manager is satisfied that Cinelux has or will have sufficient funds, donated services or both to complete the Construction Work in a timely manner.
B. The Town’s Community Development Director has issued a written notice to Cinelux approving the Plans for the Construction Work. C. The insurance requirements and bonding requirements have been met. 12.10 Alternative Procedures. Notwithstanding Sections 12.2 and 12.3 and 12.9 above, with the prior approval of the Town’s Community Development Director and the Department of Parks and Public Works Director, may review the Plans for the Construction Work where appropriate, provide any approvals related thereto as applicable, and inspect the finished Construction Work for State Building Code compliance. Cinelux shall submit all
applications, Plans, and pay all fees required by Town as applicable. However, Cinelux
shall not commence Construction Work unless and until the Town’s Community Development Director has issued the Notice to Proceed specified in Section 12.9. In
such case, the parties agree that the provisions of Section 12.9B shall not apply. SECTION 13. Pre-existing Theatre Tenants. The parties acknowledge that the Theatre is adjacent to two retail tenants leasing space from the Town. The parties further acknowledge that Cinelux as the operator of the Theatre requires good relations with the adjoining tenants. As such, Cinelux agrees to maintain any day-to-day relations with the adjoining tenants necessary to maintain effective Theatre operations. The Town is solely responsible for responding to any tenant requests. In addition, per
Section 6.8 the Town will reimburse Cinelux for the pro rata share of tenant utility costs.
SECTION 14. Hold Harmless/Indemnification.
14.1 Indemnification.
Cinelux shall indemnify, protect, defend (at Cinelux’s sole cost and with legal counsel
acceptable to Town) and hold harmless, Town, its elected or appointed officials, employees,
and agents, from and against any and all claims, judgments, causes of action, damages,
penalties, costs, liabilities, and expenses, including all court costs and attorney fees, arising
at any time during or after the Term, as a result (directly or indirectly) of or in connection
with (i) default in the performance of any obligation on Cinelux’s part to be performed under
the terms of this Agreement, or (ii) Cinelux’s use of the Premises, the conduct f Cinelux’s
business or any activity, work or things done, permitted or suffered by Cinelux or Cinelux’s
employees, agents, customers, visitors, invitees, licensees, contractors, assignees, or
subtenants (individually, a “Tenant Party” and collectively, “Tenant’s Parties) in or about
the Premises, except as provided by law or for claims caused solely by Town’s gross
negligence or willful misconduct. Cinelux’s indemnity is not intended to nor shall it relieve
any insurance carrier of its obligations under policies required to be carried by Cinelux
pursuant to the provisions of this Agreement to the extent such policies cover the results of
negligent acts or omissions of Town, its elected or appointed officials, employees, and
agents, or the failure of Town to perform any of its obligations under this Agreement. The
obligations of Cinelux under this Section shall survive the termination or earlier expiration
of this Agreement.
14.2 Waiver of Claims.
Cinelux waives any claims against Town for injury to Cinelux's business or any loss
of income there from, for damage to Cinelux's property, or for injury or death of any
person in or about the Premises or the Town Property, from any cause whatsoever,
except to the extent caused by Town's active negligence or willful misconduct.
SECTION 15. Damage, Destruction and Termination.
15.1 Nontermination and Nonabatement.
Except as provided herein, no destruction or damage to the Premises by fire, flood
or other casualty, whether insured or uninsured, shall entitle Cinelux to terminate
this Agreement. Town and Cinelux waive the provisions of any statutes which
relate to termination of a lease when leased property is destroyed and agree that
such event shall be governed by the terms of this Agreement.
15.2 Force Majeure.
Prevention, delay or stoppage due to strikes, lockouts, labor disputes, Acts of God,
inability to obtain labor, inability to obtain materials or reasonable substitutes,
governmental restrictions, governmental regulation, governmental controls,
judicial orders, enemy or hostile governmental actions, civil commotion. fire or
other casualty, and other causes beyond the reasonable control of Cinelux
(financial inability excepted), shall excuse the performance by Cinelux for a period
equal to the prevention, delay, or stoppage, except the obligations imposed with
regard to rent to be paid by Cinelux pursuant to this Agreement. In the event any
work performed by Cinelux or Cinelux's contractors results in a strike, lockout,
and/or labor dispute, the strike, lockout, and/or labor dispute shall not excuse the
performance by Cinelux of the provisions of this Agreement.
15.3 Restoration of Premises by Lessee.
15.3.1 Destruction Due to Risk Covered by Insurance. If during the
term, the Premises are totally or partially destroyed from a risk covered
by the insurance described in Section 20 (Insurance), rendering the
Premises totally or partially inaccessible or unusable, Cinelux shall
restore the Premises to substantially the same condition as it was in
immediately before destruction, whether or not the insurance proceeds are
sufficient to cover the actual cost of restoration. Such destruction shall
not terminate this Agreement. If the laws existing at that time do not
permit the restoration, either party can terminate this Lease immediately
by giving notice to the other party.
15.3.2 Destruction Due to Risk Not Covered by Insurance. If during the
term, the Premises are totally or partially destroyed from a risk covered
by the insurance described in Section 20 (Insurance), rendering the Premises
totally or partially inaccessible or unusable, Cinelux shall restore the
Premises to substantially the same condition as it was in immediately
before destruction, whether or not the insurance proceeds are sufficient to
cover the actual cost of restoration. Such destruction shall not terminate
this Agreement. If the laws existing at that time do not permit the
restoration, either party can terminate this Agreement immediately by
giving notice to the other party.
If the cost of restoration exceeds ten percent (l0%) of the then
replacement value of the Premises totally or partially destroyed, Cinelux
can elect to terminate this Agreement by giving notice to Town within
sixty (60) days after determining the restoration cost and replacement
value. If Cinelux elects to terminate this Agreement, Town, within thirty
(30) days after receiving Cinelux's notice to terminate, can elect to pay to
Cinelux, at the time Town notifies Cinelux of its election, the difference
between ten percent (10%) of the replacement value of the Premises and
the actual cost of restoration, in which case Cinelux shall restore the
Premises. On Town's making its election to contribute, each party shall
deposit immediately the amount of its contribution with such institutional
lender or title company as may be jointly selected by the parties ("the
Insurance Trustee"). If the destruction does not exceed ten percent (10%)
of the then replacement value of the Premises, Cinelux shall immediately
deposit the cost of restoration with the Insurance Trustee. This
Agreement shall terminate if Cinelux elects to terminate this Agreement
and Town does not elect to contribute toward the cost of restoration as
provided in this Section.
If the Premises are destroyed from a risk not covered by the insurance
described in Section 20 (Insurance), and Cinelux has the obligation to
restore the Premises as provided in subsection (8), both parties shall
deposit with the Insurance Trustee their respective contributions toward
the cost of restoration. All sums deposited with the Insurance Trustee
shall be held for the following purposes and the Insurance Trustee shall
have the following powers and duties:
The sums shall be paid in installments by the Insurance Trustee to the
contractor retained by Cinelux as construction progresses, for payment of
the cost of Restoration. A 10% retention fund shall be established that will
be paid to the contractor on completion of restoration, payment of all costs,
expiration of all applicable lien periods, and proof that the Premises are
free of all mechanics' liens and lienable claims.
Payments shall be made on presentation of certificates or vouchers from
the architect or engineer retained by Cinelux showing the amount due. If
the Insurance Trustee, in its reasonable discretion, determines that the
certificates or vouchers are being improperly approved by the architect or
engineer retained by Cinelux, the Insurance Trustee shall have the right
to appoint an architect or an engineer to supervise construction and to
make payments on certificates or vouchers approved by the architect or
engineer retained by the Insurance Trustee. The reasonable expenses and
charges of the architect or engineer retained by the Insurance Trustee
shall be paid by the insurance trustee out of the trust fund. Both parties
shall promptly execute all documents and perform all acts reasonably
required by the Insurance Trustee to perform its obligations under this
Section.
If the sums held by the Insurance Trustee are not sufficient to pay the
actual cost of restoration, Cinelux shall deposit the amount of the
deficiency with the Insurance Trustee within fifteen (15) days after
request by the Insurance Trustee indicating the amount of the deficiency.
Any undisbursed funds after compliance with the provisions of this
Section shall be delivered to Town to the extent of Town's contribution to
the fund. and the balance, if any, shall be paid to Cinelux. All actual costs
and charges of the Insurance Trustee shall be paid by Cinelux.
If the Insurance Trustee resigns or for any reason is unwilling to act or
continue to act, Town shall substitute a new trustee in the place of the
designated insurance Trustee. The new trustee must be an institutional lender
or title company.
15.3.3 Procedure for Restoring Premises. When Cinelux is obligated to
restore the Premises, within sixty (60) days Cinelux at its cost shall
prepare final plans, specifications, and working drawings complying with
applicable laws that will be necessary for restoration of the Premises. The
plans, specifications, and working drawings must be approved by Town.
Town shall have thirty (30) days after receipt of the plans and
specifications and working drawings to either approve or disapprove the
plans, specifications, and working drawings and return them to Cinelux.
If Town disapproves the plans, specifications, and working drawings,
Town shall notify Cinelux of its objections and Town's proposed solution
to each objection. Cinelux acknowledges that the plans, specifications,
and working drawings shall be subject to approval of the appropriate
governmental bodies and that they will be prepared in such a manner as to
obtain that approval. The restoration shall be accomplished as follows:
A. Cinelux shall complete the restoration within 60 working days after
final plans and specifications and working drawings have been
approved by the appropriate governmental bodies and all required
permits have been obtained (subject to a reasonable extension for
delays resulting from causes beyond Cinelux's reasonable control).
B. Cinelux shall retain a licensed contractor that is bondable. The
contractor shall be required to carry public liability and property
damage insurance, standard fire and extended coverage insurance, with
vandalism and malicious mischief endorsements, during the period of
construction in accordance with Section 20 (Insurance). Such insurance
shall contain waiver of subrogation clauses in favor of Town and
Cinelux in accordance with the Provisions of Exhibit C.
C. Cinelux shall notify Town of the date of commencement of the
restoration at least ten ( I0) days before commencement of the restoration
to enable Town to post and record notices of nonresponsibility. The
contractor retained by Cinelux shall not commence construction until a
performance bond and a labor and materials bond have been delivered
to Town to insure completion of the construction.
D. Cinelux shall accomplish the restoration in a manner that will cause
the least inconvenience, annoyance, and disruption at the Premises.
E. On completion of the restoration, Cinelux shall immediately record a
notice of completion in the county in which the Premises are located.
The restoration shall not be commenced until sums sufficient to cover the cost of restoration are placed with the Insurance Trustee as
provided in this Section.
SECTION 16 Assignment and Subletting.
16.1 Town's Consent Required. Cinelux shall not assign this
Agreement, nor any interest therein, and shall not sublet or encumber the
Premises or any part thereof, nor any right or privilege appurtenant
thereto, nor allow or permit any other person(s) to occupy or use the
Premises, or any portion thereof, without the prior written consent of
Town. This Agreement shall be binding upon any permitted assignee or
successor of Cinelux. Consent by Town to one assignment, subletting,
occupation or use by another person shall not be deemed to be consent
to any subsequent assignment, subletting, occupation or use by another
person. No assignment, subletting, or encumbrance by Cinelux shall
release it from or in any way alter any of Cinelux's obligations under this
Agreement. Cinelux may have the Premises delivered to a subsidiary
company of Cinelux, but such arrangement shall in no way alter
Cinelux's responsibilities hereunder with respect to the Premises. Any
assignment, subletting, encumbrances, occupation, or use contrary to
the provisions of this Agreement shall be void and shall constitute
breach of this Agreement. Town may assign any of its rights hereunder
without notice to Cinelux.
16.2 No Release of Cinelux. No subletting or assignment as approved by
Town shall release Cinelux of Cinelux's obligation or alter the
primary liability of Cinelux to pay the rent and to perform all other
obligations by Cinelux hereunder. The acceptance of rent by Town
from any other person shall not be deemed to be a waiver by Town of
any provision hereof. In the event of default by any assignee of
Cinelux or any successor of Cinelux in the performance of any of the
terms hereof: Town may proceed directly against Cinelux without the
necessity of exhausting remedies against said assignee.
SECTION 17 DEFAULTS; REMEDIES.
17.1 Defaults by Cinelux. The occurrence of any one or more of the following
events shall constitute a material default, or breach of this Agreement, by
Cinelux:
17.1.1 Abandonment of the Premises by Cinelux as defined by California
Civil Code section 1951.3;
17.1.2 Failure by Cinelux to make any payment of rent or any other
payment required to be made by Cinelux hereunder, as provided in
this Agreement, where such failure shall continue for a period of ten
( I 0) business days after written notice thereof from Town to
Cinelux. In the event Town serves Cinelux with a Notice to Pay
Rent or Quit pursuant to applicable Unlawful Detainer statutes,
such Notice to Pay Rent or Quit shall also constitute the notice
required by this subparagraph;
Failure by Cinelux to observe or perform any of the covenants,
conditions or provisions of this Agreement in any material respect
where such failure shall continue for a period of thirty (30) days after
written notice thereof from Town to Cinelux, provided. however, that
if the nature of Cinelux's default is such that more than thirty (30) days
are reasonably required for its cure, then Cinelux shall not be deemed
to be in default if Cinelux commenced such cure within said thirty
(30) day period and thereafter diligently prosecutes such cure to
completion;
17.1.3 Making by Cinelux of any general arrangement or assignment for the
benefit of creditors; Cinelux's becoming a "debtor" as defined in
11 U.S.C. §IO I or any successor statute thereto (unless, in the
case of a petition filed against Cinelux, the same is dismissed within
sixty (60) days): the appointment of a bankruptcy trustee or receiver
to take possession of all or substantially all of Cinelux's assets
located at or on the Premises or of Cinelux's interest in this
Agreement where possession is not restored to Cinelux within
thirty (30) days; or the attachment. execution or other judicial
seizure of all or substantially all of Cinelux's assets located at or on
the Premises or of Cineluxs interest in this Agreement, where such
seizure is not discharged within thirty (30) days.
17.2 Remedies. In the event of any material default or breach by Cinelux,
Town may at any time thereafter, following any notice required by statute,
and without limiting Town in the exercise of any right or remedy which
Town may have by reason of such default or breach:
17.2.1 Terminate Cinelux's right to possession of the Premises by any lawful
means, in which case this Agreement shall terminate and Cinelux shall
immediately surrender possession of the Premises and Improvements to Town.
In such event. Town shall be entitled to recover from Cinelux all damages
incurred by Town by reason of Cinelux default, including but not limited to: the
cost of recovering possession of the Premises and improvements; expenses of
reletting, including necessary renovation and alteration of the Premises and
improvements; reasonable attorneys' fees; the worth at the time of the award of
the unpaid rent that had been earned at the time of termination of this Agreement
and the worth at the time of award of the amount by which the unpaid rent for
the balance of the Term after the time of such award exceeds the amount of such
rental loss for the same period that Cinelux proves could be reasonably avoided.
17.2.2 Maintain Cinelux’s right to possession. in which case this Agreement
shall continue in effect whether or not Cinelux shall have abandoned the
Premises. In such event, Town shall be entitled to enforce all of Town's rights
and remedies under this Agreement. including the right to recover rent and
other payments as they become due hereunder.
17.2.3 Pursue any other remedy now or hereafter available to Town under the
laws or judicial decisions of the State of California. Town shall
have all remedies provided by law and equity.
18.3 No Relief from Forfeiture After Default. Cinelux waives all rights of
redemption or relief from forfeiture under California Code of Civil
Procedure sections 1174 and 1179, and any other present or future law, in
the event Cinelux is evicted or Town otherwise lawfully takes possession of
the Premises by reason of any default or breach of this Agreement by
Cinelux.
18.4 Disposition of Abandoned Personal Property. If Cinelux fails to remove any
personal property belonging to Cinelux from the Premises after forty-five (45)
days of the expiration or termination of this Agreement, such property shall at
the option of Town be deemed to have been transferred to Town. Town
shall have the right to remove and to dispose of such property without
liability to Cinelux or to any person claiming under Cinelux, and the Town
shall have no need to account for such property.
SECTION 18 INTEREST ON PAST-DUE OBLIGATIONS.
Except as expressly provided herein, any amount due Town when not paid
when due shall bear interest at the lesser of ten percent ( I0%) per year or the
maximum rate then allowable by law from the date due.
SECTION 19 HOLDING OVER. If Cinelux remains in possession of the Premises or any part thereof after the
expiration of the Term or Option Terms hereof, such occupancy shall be a tenancy
from month to month with all the obligations of this Agreement applicable to
Cinelux and at a monthly rental obligation of two (2) times the Base Rent in
effect at the time of expiration. Nothing contained in this Agreement shall give
to Cinelux the right to occupy the Premises after the expiration of the Term, or
upon an earlier termination for breach. SECTION 20 INSURANCE. Cinelux's responsibility for the Premises begins immediately upon the Delivery
Date and Cinelux, at its sole cost and expense, and at no cost to Town, shall
purchase and maintain in full force and effect during the entire term of this
Agreement insurance coverage in amounts and in a form acceptable to Town
as set forth in Exhibit C attached hereto and incorporated herein by reference.
Said policies shall be maintained with respect to Cinelux's employees and
contractors, if any, and all vehicles operated on the Premises. The policies shall
include the required endorsements, certificates of insurance and coverage
verifications as described in Exhibit C. Cinelux also agrees to secure insurance
coverage for the Premises, its contents, and personal property maintained on the
Premises.
In the event that Cinelux opts to require its contractor to provide the insurance
required by the Town for construction, the contractor will provide an
endorsement or rider, in a form to be approved by the Town Attorney, stating
that the insurance policy insures performance of this Agreement and that the
Town is an additional insured.
Cinelux shall deposit with the Town Manager, on or before the effective date
of this Agreement, certificates of insurance and endorsements in conformance
with this Agreement and keep such insurance in effect and the certificates
therefore on deposit with Town during the Term of this Agreement. Should
Cinelux not provide evidence of such required coverage at least three (3) days
prior to the expiration of any existing insurance coverage, Town may purchase
such insurance, on behalf of and at the expense of Cinelux to provide six
months of coverage.
Town shall retain the right at any time to review the coverage, form, and amount
of the insurance required hereby. It in the opinion of the Town's Risk Manager
(or comparable official), the insurance provisions in this Agreement do not
provide adequate protection for Town and for members of the public using the
Premises, the Town Manager may require Cinelux to obtain insurance sufficient
in coverage, form, and amount to provide adequate protection as determined by
the Risk Manager. Town's requirements shall be reasonable and shall be designed
to assure protection from and against the kind and extent of risk that exists at the
time a change in insurance is required.
The Town Manager shall notify Cinelux in writing of changes in the insurance
requirements. If Cinelux does not deposit copies of acceptable insurance
policies with Town incorporating such changes within sixty (60) days of
receipt of such notice, or in the event Cinelux fails to maintain in effect any
required insurance coverage, Cinelux shall be in default under this Agreement
without further notice to Cinelux. Such failure shall constitute a material breach
and shall be grounds for immediate termination of this Agreement at the option
of Town.
The procuring of such required policy or policies of insurance shall not be
construed to limit Cinelux's liability hereunder nor to fulfill the indemnification
provision and requirements of this Agreement. Notwithstanding the policy or
policies of insurance, Cinelux shall be obligated for the full and total amount of
any damage, injury, or loss caused by or connected with this Agreement or
with use or occupancy of the Premises.
SECTION 21 DISPUTE RESOLUTION.
21.1 Unless otherwise mutually agreed to, any controversies between
Cinelux and Town regarding the construction or application of this
Agreement, and claims arising out of this Agreement or its breach
shall be submitted to mediation within thirty (30) days of the
written request of one Party after the service of that request on
the other Party.
21.2 The Parties may agree on one mediator. lf they cannot agree on one
mediator, the Party demanding mediation shall request the
Superior Court of Santa Clara County to appoint a mediator. The
mediation meeting shall not exceed one day (eight (8) hours). The
Parties may agree to extend the time allowed for mediation under
this Agreement.
21.3 The costs of mediation shall be borne by the Parties equally.
21.4 Mediation under this section is a condition precedent to filing an
action in any court.
SECTION 22 NON-LIABILITY OF OFFICIALS AND EMPLOYEES OF THE TOWN. No official or employee of Town shall be personally liable for any default or liability
under this agreement.
SECTION 23 NON-DISCRIMINATION
23.l Non-discrimination. Cinelux agrees that in the performance of this Agreement
and in connection with all of the activities Cinelux conducts on the Premises, it
shall not discriminate against any employee or person because of the race, skin
color. gender, age, religion, disability, national origin, ancestry, sexual orientation,
housing status, marital status, familial status, weight or height of such person.
Cinelux acknowledges that is familiar with the provisions set forth in Section
2.30.985 of the Los Gatos Municipal Code relating to nondiscrimination in
employment.
SECTION 24 INDEPENDENT CONTRACTOR.
lt is agreed that Cinelux shall act and be an independent contractor and not an agent nor employee of Town. SECTION 25 CONFLICT OF INTEREST.
Cinelux shall at all times avoid conflict of interest or appearance of conflict of
interest in performance of this Agreement. Cinelux warrants and covenants that
no official or employee of Town nor any business entity in which any official
or employee of Town is interested: (1) has been employed or retained to solicit
or aid in the procuring of this Agreement; or (2) will be employed in the
performance of this Agreement without the divulgence of such fact to Town. In
the event that Town determines that the employment of any such official,
employee or business entity is not compatible with such official's or employee's
duties as an official or employee of Town, Cinelux upon request of Town shall
immediately terminate such employment. Violation of this provision
constitutes a serious breach of this Agreement and Town may terminate this
Agreement as a result of such violation.
SECTION 26 MEMORANDUM OF AGREEMENT. Following execution of this Agreement, Town shall be entitled to record a
Memorandum of Agreement in the official records of Santa Clara County.
SECTION 27 ESTOPPEL CERTIFICATE.
Cinelux shall, from time to time, upon at least thirty (30) days prior written
notice from Town, execute, acknowledge and deliver to Town a statement in
writing: (i) certifying this Agreement is unmodified and in full force and effect,
or, if modified, stating the nature of the modification and certifying that the
Agreement, as modified, is in full force and effect, and the date to which the
rental and other charges, if any, have been paid; and, (ii) acknowledging that
there are not to Cinelux's knowledge, any defaults, or stating if any defaults are
claimed, any statement may be relied upon by any prospective purchaser or
encumbrance of the Town Property.
SECTION 28 LIENS.
Cinelux agrees at its sole cost and expense to keep the Premises free and clear of
any and all claims, levies, liens, encumbrances or attachments.
SECTION 29 VACATING. Upon termination of this Agreement, Cinelux shall completely vacate the Premises,
including the removal of any and all of its property. Before departure, Cinelux shall
return keys and personal property listed on the inventory to Town in good, clean
and sanitary condition, reasonable wear and tear excepted. Cinelux shall allow Town to inspect the Premises to verify the condition of the Premises and its
contents.
SECTION 30 ABANDONMENT.
Cinelux's absence from the Premises for thirty (30) consecutive days, without
prior notice, during which time rent or other charges are delinquent, shall be
deemed abandonment of the Premises. Such abandonment will be deemed
cause for immediate termination without notice. Town shall thereupon be
authorized to enter and take possession and to remove and dispose of the
property of Cinelux or its invitees without any liability whatsoever to Town.
SECTION 31 NOTICES.
All notices to the Parties shall, unless otherwise requested in writing, be sent to
Town addressed as follows:
Town of
Los Gatos
Attention:
Town
Manager
110 E.
Main
Street
Los Gatos, CA 95030
E-Mail: Manager@LosGatosca.gov
And to Cinelux addressed as follows:
CineLux Theatres Co. LLC
Attention: Paul Gunsky
P.O. Box 541000
San Jose, CA 95154
E-Mail: paul@cineluxmovies.com
Notices may be served upon Cinelux in person, by first class mail, or by certified
mail whether or not said mailing is accepted by Cinelux. If notice is sent via
facsimile or e-mail, a signed, hard copy of the material shall also be mailed. The
workday the facsimile was sent shall control the date notice was deemed given if
there is a facsimile machine generated document on the date of transmission. A
facsimile transmitted after I :00 p.m. on a Friday shall be deemed to have been
transmitted on the following Monday. These addresses shall be used for service
of process.
SECTION 32 TIME.
Time shall be of the essence in this Agreement.
SECTION 33 AMENDMENTS. It is mutually agreed that no oral agreements have been entered into and that no
alteration or variation of the terms of this Agreement shall be valid unless made in
writing and signed by the Parties to this Agreement.
SECTION 34 INTEGRATED DOCUMENT. This Agreement, including any exhibits attached hereto, embodies the entire
agreement between Town and Cinelux. N o other understanding, agreements.
conversations or otherwise, with any elected or appointed official, agent or
employee of Town prior to execution of this Agreement shall affect or modify
any of the terms or obligations contained in any documents comprising this
Agreement. Any such verbal agreement shall be considered as unofficial
information and in no way binding upon Town. All agreements with Town are
subject to approval of the Town Council before Town shall be bound thereby.
SECTION 35 WAIVER.
Waiver by Town of one or more conditions of performance or any breach of a
condition under this Agreement shall not be construed as a waiver of any other
condition of performance or subsequent breaches. The subsequent acceptance
by a Party of the performance of any obligation or duty by another Party shall
not be deemed to be a waiver of any term or condition of this Agreement. The
exercise of any remedy, right, option or privilege hereunder by Town shall not
preclude Town from exercising the same or any and all other remedies. rights.
options and privileges hereunder and Town's failure to exercise any remedy. right,
option or privilege at law or equity, or otherwise which Town may have. shall not
be construed as a waiver.
SECTION 36 INTERPRETATIONS.
In construing or interpreting this Lease. the word "or" shall not be construed as
exclusive and the word "including" shall not be limiting. The Parties agree that
this Lease shall be fairly interpreted in accordance with its terms without any
strict construction in favor of or against any other Party.
SECTION 37 SEVERABILITY CLAUSE. If any provision of this Agreement is held to be illegal, invalid or unenforceable in
full or in part. for any reason, then such provision shall be modified to the minimum
extent necessary to make the provision legal. valid and enforceable, and the other
provisions of this Agreement shall not be affected thereby.
SECTION 38 GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the statutes
and laws of the State of California.
SECTION 39 VENUE.
In the event that suit shall be brought by any Party to this Agreement, the Parties
agree that venue shall be exclusively vested in the state courts of the County of
Santa Clara.
SECTION 40 COMPLIANCE WITH LAWS.
The Parties hereto shall comply with all applicable laws, ordinances, codes and
regulations of the federal, state and local governments in the performance of their
rights, duties and obligations under this Agreement.
SECTION 41 BROKERS. Each party represents that is has not had dealings with any real estate broker,
finder, or other person, with respect to this Agreement in any manner. Each Party
shall hold harmless the other party from all damages resulting from any claims that
may be asserted against the other party by any broker, finder, or other person with
whom the Indemnifying Party has or purportedly has dealt.
ATTACHMENTS TO AGREEMENT.
The following exhibits are attached to and made a part of
this Agreement: "A" - Description of Subject
Premises
“B" - Town-Owned Furniture, Fixtures, and Equipment
"C" - Insurance Requirements
“D” - Maintenance Matrix
EXHIBIT A
Exhibit A
EXHIBIT B
Exhibit B
�lliant IUTEGRATEI) INSURANCE & FINANCIAL SERVICES ---------------------
Insurance Requirements :tor Lesjees
(Not For Daily or Short Term Rentals) Lessee shall procure and maintain for the duration of the conrract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the Lessue 's operation and use of the leased premises. The cost of &ucb insurance shall be borne by the Les:,ee. MINIMUM SCOPE AND LIMIT ()F INSURANCE Coverage shall be at least as broad as: 1.Commercial General Liability (CGL): Insurance Services Office Form CG 00 01covering CGL on an "occurrence" basis, includbg products and completed operations,property damage, bodily injury and personal & advertising injury with limits no less than$2,000,000 per occurrence. If a general aggregate l:.mit applies, either the general aggregatelimit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the gen�ralaggregate limit shall be twice the required occmre nee limit.2.Workers' Compensation insurance as required by the State of California, with Statu.1oryLimits, and Employer's Liability Insurance with limits of no less than $1,000,000 peraccident for bodily injury or disease. (This applies to lessees with employees).3.Property insurance against all risks ofloss to _any tenant improvements or bettennenti;, atfull replacement cost with no coinsurance pena]ty provision.If the Lessee maintains broader coverage and/or higher l:mits than the minimums shown above, the Entity requires and shall be entitled to the broader coverage and/or the higher limits maintained by the Lessee. Any available insurance proceeds in excc,ss of the specified minimum limiti; of insurance and coverage shall be available to the Entity. Other Insurance Provisions The insurance policies are to contain, or be endorsed to ccintain, the following provisions: Additional Insured Status The Entity, its officers, officials, employees, and volunteers ar,;: to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations perforrned by or on behalf of the Contractor including materials, parts, or equipment furnished in connection with such work or eperations. General liability coverage can be provided in the form of an endorsement to the Contractor's insmance (at least as brm.d as ISO Form CG 20 10 11 85 or if not available, through the addition of both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 if a later edition is used). Primary Coverage For any claims related to this contract, the Lessee's insurance coverage shall be primary and non-contributory and at least as broad as ISO CG 20 01 ,)4 13 as respects the Entity, its officers, officials, employees, and volunteers. Any insurance or sel:f-insw·ance maintained by the Entity, its officers, officials, employees, or volunteers shall be exc:es:; of the Lessee's insurance and shall not contribute with it. This requirement shall also apply to m:, Excess or Umbrella liability polici,�s. Insurance Requil-eme11ts in Contracts 1022.I Ver�io11 57
EXHIBIT C
Exhibit C
��lliant INTEGRATE!) INSURANCE & FINANCIAL SERVICES
: Insurance Requirements for Construction contt::'lcts Contractor shall procure and maintain for the d·.ll'a.tion of the contract, �d for x years thereafter, insurance against claims for injuries to persons or damages to property which mayarise from or in connection with the performance of the work hereunder by the Contractor, his agents, representatives, employees, or subcontractors. MINIMUM SCOPE AND LIMIT OF INSURANCE Coverage shall be at least as broad as: 1.Commercial General Liability (CGE): Im:urance Services Office (ISO) Form CG 0001 covering CGL on an "occurrence" basis, including products and completedoperations, property damage, bodily injury and personal & advertising injury withlimits no less than $5,000,000 per occurrence. If a general aggregate limit applies,either the general aggregate limit shall apply separately to this project/location (] SOCG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrencelimit.2.Automobile Liability: Insurance Services Office F01m CA 0001 covering Code 1(any auto), with limits no less than $5,000,000 per accident for bodily injury andproperty damage.3.Workers' Compensation insurance as rcq1,;,jred by the State of California, withStatutory Limits, and Employers' Liability insurance with a limit of no less than$1,000,000 per accident for bodily injury or disease.4.Builder's Risk (Course of Construction) insurance utilizing an "All Risk" (SpecialPerils) coverage form, with limits equal to the completed value of the project and nocoinsurance penalty provisions.5.Surety Bonds as described below.6.Professional Liability (if Design/Build), with limits no less than $2,000,000 peroccurrence or claim, and $2,000,000 policy aggregate.7.Contractors' Pollution Legal Liability an<Vor Asbestos Legal Liability and/or En-orsand Omissions (if project involves environmental hazards) with limits no less than$1,000,000 per occurrence or claim, and $2!000,000 policy aggregate.If the contractor maintains broader coverage and/or higher limits than the minimums shown above, the Entity requires and shall be entitled to th1, broader coverage and/or the higher limits maintained by the contractor. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the Entity. Self-Insured Retentions Self-insured retentions must be declared to and approved by the Entity. The Entity may require the Contractor to purchase coverage with a lower retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or Entity. The CGL and any policies, Im,11ram:e Requiremellls in Contracts 2020.1 Ver!iio11 77
Structural
Foundation
Bearing & Exterior Walls
Subflooring
Exterior Shell
Roofing
Exterior Wall Assembles
Windows & Hardware
Doors & Hardware
Marouee/Signage
Interior Shell
Ceiling Finishes
Wall Surface Finishes
Window Coverings
Doors & Hardware
Floor Coverings
Nonbearing Walls
HVAC/ Electrical System
HVAC System
Air Handling System
Controls
Electrical Panels
Outlets & Switches
Light Fixtures
Lamps
Cabling -Electrical
Exterior Lighting
Phone System
Network Cabling
Elevator
Plumbing
Water Heater
Water Lines
Sewer
EXHIBIT D
Preventative Emergency Ooeration Servicing Maintenance Reoairs
N/A Town Town N/A Town Town N/A Town Town
N/A Town Town N/A Town Town N/A CineLux CineLux N/A CineLux CineLux
Town CineLux CineLux
N/A CineLux (custodial CineLux N/A CineLux (custodial Cinelux
CineLux CineLux (custodial CineLux
CineLux CineLux (custodial CineLux N/A CineLux (custodial CineLux N/A CineLux (custodial Cinelux
CineLux CineLux CineLux
CineLux CineLux Cinelux
CineLux CineLux CineLux
n/a n/a CineLux
CineLux CineLux CineLux
CineLux CineLux CineLux
CineLux CineLux CineLux
n/a n/a Town
CineLux CineLux CineLux
CineLux CineLux CineLux
CineLux CineLux CineLux
Town Town Town
CineLux CineLux CineLux
n/a n/a Town
CineLux Cinelux Cinelux
Unit Minor Replacement Improvements (under $5,000)
Town Town
Town Town
Town Town
Town Town
Town Town
Town CineLux
Town CineLux
Town CineLux
Town CineLux
CineLux CineLux
CineLux CineLux
Town CineLux
Town CineLux
Town CineLux
Town CineLux
Town CineLux
Town CineLux
Town CineLux
CineLux CineLux
Town CineLux
CineLux CineLux
Town Town
Town CineLux
CineLux CineLux
CineLux CineLux
Town Town
Town CineLux
Town Town
Town CineLux
EXHIBIT D