06 Agr.finaldraft.LAG Imwalle Master Lease Los Gatos .Tait.200728.Final ATTACHMENT 1 4829-3592-1989v4 SLF\NEW..NEW..
LEASE AGREEMENT
MASTER LEASE
by and between
TOWN OF LOS GATOS, a California municipal corporation
(“Landlord”)
and
TAIT FIREHOUSE, LLC, a California limited liability company
(“Master Tenant”)
Los Gatos, California
TABLE OF CONTENTS
Page
-i-
OAK #4810-7729-4116 v8 4829-3592-1989v4 SLF\NEW..NEW..
SECTION 1. BASIC LEASE PROVISIONS AND DEFINITIONS. ........................................................... 1
1.1 Premises and Address of Premises. .................................................................................. 1
1.2 Rentable Area of Tait Property.. ........................................................................................ 1
1.3 Lease Term.. ...................................................................................................................... 1
1.4 Lease Contingency. ........................................................................................................... 1
1.5 Minimum Monthly Rent.. .................................................................................................... 2
1.6 Percentage Rent.. .............................................................................................................. 2
1.7 Capital Reserve Fund.. ...................................................................................................... 2
1.8 Maintenance of Premises.. ................................................................................................ 2
1.9 Rent Commencement Date.. ............................................................................................. 2
1.10 Subtenant.. ......................................................................................................................... 2
1.11 Permitted Uses.. ................................................................................................................. 2
1.12 Town Manager.. ................................................................................................................. 2
1.13 Master Tenant’s Work and Tenant Improvement Loan Amortization.. .............................. 2
SECTION 2. LEASED AREA. ................................................................................................................. 2
2.1 Premises.. .......................................................................................................................... 2
SECTION 3. TERM.. ............................................................................................................................... 2
3.1 Initial Term ……………………………………………………………………………………….3
3.2 Extended Term …………………………………………………………………………………..3
SECTION 4. RENT. ................................................................................................................................ 3
4.1 General.. ............................................................................................................................ 3
4.2 Minimum Monthly Rent.. .................................................................................................... 3
4.3 Percentage Rent. ............................................................................................................... 3
4.4 Late Payment Fees.. .......................................................................................................... 5
SECTION 5. USE OF PREMISES. ......................................................................................................... 6
5.1 Restricted Use.. .................................................................................................................. 6
5.2 Prohibited Uses. ................................................................................................................. 6
5.3 Compliance With Laws.. .................................................................................................... 7
SECTION 6. LEASEHOLD IMPROVEMENTS. ...................................................................................... 7
6.1 Condition of the Premises.. ................................................................................................ 7
6.2 Leasehold Improvements. .................................................................................................. 7
6.3 Master Tenant Work Improvement Loans. ........................................................................ 7
6.4 Liens.. ................................................................................................................................. 8
6.5 Ownership and Removal………………………………………………………………… ……..8
6.6 Abandonment.. ................................................................................................................... 9
SECTION 7. MASTER TENANT OBLIGATIONS – OPERATION OF PREMISES. ............................... 9
7.1 Responsibility of Master Tenant.. ....................................................................................... 9
7.2 Leasing Standards. ............................................................................................................ 9
7.3 Signage and Displays. ..................................................................................................... 10
7.4 Deliveries.. ....................................................................................................................... 11
7.5 Wireless Communications Equipment or Device…………………………………………….11
7.6 MHDA. .............................................................................................................................. 11
SECTION 8. MAINTENANCE, REPAIRS, AND ALTERATIONS. ........................................................ 11
8.1 Master Tenant’s Obligations. ........................................................................................... 11
TABLE OF CONTENTS
(continued)
Page
8.2 Landlord’s Obligations. .................................................................................................... 11
8.3 Surrender. ........................................................................................................................ 12
8.4 Landlord’s Rights.. ........................................................................................................... 12
8.5 Improvements.. ................................................................................................................ 12
8.6 Capital Reserve Fund.. .................................................................................................... 12
SECTION 9. INSURANCE. ................................................................................................................... 13
9.1 General.. .......................................................................................................................... 13
SECTION 10. INDEMNIFICATION BY MASTER TENANT. ................................................................... 13
10.1 General………………………………………………………………………………………...…14
SECTION 11. ENVIRONMENTAL LIABILITY. ........................................................................................ 14
11.1 Environmental Law........................................................................................................... 14
11.2 Hazardous Materials.. ...................................................................................................... 14
11.3 Release of Hazardous Materials.. .................................................................................... 14
11.4 Master Tenant’s Use of Hazardous Materials.. ................................................................ 14
11.5 Environmental Indemnity. ................................................................................................ 14
SECTION 12. TAXES AND ASSESSMENTS/ POSSESSORY INTEREST TAX. ................................. 15
12.1 General. ........................................................................................................................... 15
SECTION 13. INTENTIONALLY OMITTED. ........................................................................................... 15
SECTION 14. ASSIGNMENT AND SUBLETTING. ................................................................................ 16
14.1 General……………………………………………………………………...……………………17
14.2 Conditions for Landlord's Consent to Assignment…………………………………………...17
14.3 Approval by Town Manager………………………………………………………...………….17
14.4 Recognition Agreement……………………………………………….………………………..17
SECTION 15. MORTGAGE OF LEASEHOLD. ...................................................................................... 17
15.1 Prohibited Encumbrances. ............................................................................................... 17
15.2 Permissible Encumbrances…………………………………………………………………….18
15.3 Notice to Landlord.. .......................................................................................................... 18
15.4 Mortgages Subordinate to Lease.. ................................................................................... 18
15.5 Extent of Encumbrance.. .................................................................................................. 18
15.6 Disposition of Insurance Proceeds and Condemnation Awards…………………………...19
15.7 Permitted Mortgagee……………………………………………………………………………19
15.8 Continuing Terms and Covenants……………………………………………………………..19
15.9 Affirmation of Lease in Bankruptcy…………………………………………………………....19
15.10 Notice Required.. ............................................................................................................. 19
15.11 Landlord's Right To Cure Master Tenant's Defaults on Leasehold Mortgages…….…….20
15.12 Notice to Landlord.. .......................................................................................................... 20
15.13 Rights and Obligations of Permitted Mortgagees. ........................................................... 20
15.14 Assignment by Mortgagee.. ............................................................................................. 23
SECTION 16. DAMAGE TO PREMISES………………………………………………………………………24
TABLE OF CONTENTS
(continued)
Page
16.1 Landlord's Obligation to Repair………………………………………………………………..24
16.2 Election to Terminate……………………………………………………………………………24
16.3 Abatement of Rent.. ......................................................................................................... 24
16.4 Application of Insurance Proceeds…………………..………………………………………..25
SECTION 17. CONDEMNATION………………………………………………………………………………25
17.1 Total Condemnation…………………………………………………………………………….25
17.2 Partial Condemnation…………………………………………………………………………...25
17.3 Condemnation Award…………………………………………………………………………...25
17.4 Effect of Termination.. ...................................................................................................... 25
SECTION 18. DEFAULT, REMEDIES, AND TERMINATION. ............................................................... 25
18.1 Master Tenant’s Default. .................................................................................................. 25
18.2 Landlord’s Default.. .......................................................................................................... 27
SECTION 19. TOWN REQUIREMENTS………………………………………………………………………28
19.1 Non-discrimination……………………………………….……………………………………..28
19.2 Enforcement of Town Requirements………………………………………………………….28
SECTION 20. COMPLIANCE WITH LAW…………………………………………………………………….28
20.1 General…………………………………………………………………………………………..28
20.2 Regulations Requiring Modifications to
Premises……………………………………………………………………………….....
29
SECTION 21. GENERAL PROVISIONS………………………………………………………………………29
21.1 Notices, Demands, and Communications Between the Parties………….………………..29
21.2 Warranty Against Payment of Consideration for Agreement……………….………………30
21.3 Non-liability of Town Officials and Employees……………………………………………….30
21.4 Enforced Delay; Extension of Time of Performance………………………….……………..30
21.5 Approvals and Town Manager's Authority……………………………………………………30
21.6 Holding Over.. .................................................................................................................. 30
21.7 Time of the Essence…………………………………………………………………………….31
21.8 Successors and Assigns………………………………………………………………………..31
21.9 Landlord's Access……………………………………………………………………………….31
21.10 Legal Relationship………………………………………………………………………………31
21.11 Consents…………………………………………………………………………………………31
21.12 General………………………………………………………………………….………………..31
21.13 Quiet Enjoyment.. ............................................................................................................. 30
21.14 Regulatory Authority......................................................................................................... 31
21.15 Costs and Expenses…………………………………………………………………………….32
21.16 Entire Agreement………………………………………………………………………………..32
21.17 Severability……………………………………………………………………………………….32
21.18 Joint and Several……………………………………………………………………………..…32
21.19 Memorandum of Agreement……………………………………………………………………32
21.20 CASp Inspection ………………………………………………………………………………..32
UPDATE TABLE OF CONTENTS PRIOR TO FINALIZING MASTER LEASE
[Type here]
TABLE OF EXHIBITS
Exhibit A Legal Description of Premises
Exhibit B Site Plan Showing Location of Premises
Exhibit C Form of Notice of Lease Term Dates
Exhibit D Condition of Premises Upon Delivery
Exhibit E Insurance Requirements for Master Tenant and Subtenants
Exhibit F Memorandum of Lease Agreement
MASTER LEASE
This Master Lease (“Lease”) is made and effective as of this _____ day of_______________,
2020 (“Effective Date”), by and between THE TOWN OF LOS GATOS, a California Municipal Corporation
(hereinafter “Landlord” or the “Town”), and TAIT FIREHOUSE, LLC, a California Limited Liability
Company (“Master Tenant”).
RECITALS
A. The Town owns certain improved real property, commonly referred to as the Tait
Property, legally described on Exhibit A attached hereto and made a part hereof, suitable for office,
restaurant, retail and other commercial operations (the “Property”). The building situated on such real
property shall be referred to as the “Tait Building.”
B. The Town has solicited proposals to develop the Tait Building and the future
development of the Property will require significant capital improvements to make the area usable for
commercial operators.
C. Master Tenant has been selected by the Town to develop the Tait Building and to
sublease space within the Property to subtenant(s) consented to by the Town.
Now therefore, in consideration of their mutual promises as set forth in this Lease, the Town and
Master Tenant agree as follows:
SECTION 1. BASIC LEASE PROVISIONS AND DEFINITIONS.
1.1 Master Tenant’s Managing Member. Imwalle Asset Management, LLC, a California
Limited Liability Company.
1.2 Premises and Address of Premises: The Premises consist of the Property and the Tait
Building situated thereon. The address of the Premises is as follows:
4 Tait Avenue
Los Gatos, CA 95030
1.3 Rentable Area of Tait Building. As depicted in Exhibit B, the Rentable Area of the Tait
Building is approximately 3400 square feet.
1.4 Lease Term. As provided in Section 3 below, the Term of the Lease commences on the
Commencement Date and terminates, unless earlier terminated 34 years and 11 months from the
Commencement Date as provided in Section 3.1 below.
1.5 Lease Contingency. This Lease is contingent on the Master Tenant submitting the
necessary applications and documents to the Town for approval of the improvements and use of the
property, such as, but not limited to, general plan amendment, a proposed site plan, concept drawings
for the site plan, massing diagrams, and renderings identifying the location, general configuration, and
proposed design characteristics of the buildings, parking spaces, landscaping, property subdivision, and
other aspects of the improvement and uses. The Master Tenant acknowledges that the Project Proposal
requires approvals and entitlements from the Town and shall submit a formal application for the Planning
Approvals. Costs and fees associated with the Planning Approvals review shall be borne by the Master
Tenant. Nothing in this Agreement shall be construed to compel the Town to approve or make any
findings with respect to Planning Approvals. If Master tenant is unable to obtain Planning Approvals,
either Landlord or Master Tenant may terminate this Lease by giving written notice of termination to the
other party Upon the giving of such notice of termination, this Lease shall terminate without liability of
either party to the other.
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This Lease is also contingent on Master Tenant and a Subtenant having executed a binding initial
Sublease for any portion of the Premises and occupancy by Subtenants (the “Contingency”). If the
Contingency has not been satisfied or waived by Landlord on or before the date twelve (12) months
following the Effective Date, either Landlord or Master Tenant may terminate this Lease by giving written
notice of termination to the other party Upon the giving of such notice of termination, this Lease shall
terminate without liability of either party to the other.
1.6 Minimum Monthly Rent. The Minimum Monthly Rent shall be $0.40 per Rentable Area of
Tait Building (which equates to $1,360 per month) payable to Landlord as provided in Section 4 below.
1.7 Percentage Rent. The Percentage Rent shall be that Rent specified in Section 4.3
below.
1.8 Capital Reserve Fund. For each month that Master Tenant pays to Landlord the
Minimum Monthly Rent, Landlord shall deposit on a monthly basis to the account described in Section 8.6
below, the Minimum Monthly Rent received by Landlord.
1.9 Maintenance of Premises. The Master Tenant’s obligations for Maintenance of the
Premises are as set forth in Section 8 below.
1.10 Rent Commencement Date. The Rent Commencement Date shall be the date the first
Subtenant opens for business on the Premises. The Rent Commencement Date shall be memorialized
between Landlord and Master Tenant as set forth in Exhibit D (Form of Notice of Lease Terms).
1.11 Subtenant. The individual commercial operator(s) physically occupying the Premises to
provide the services required under this Lease, as selected by Master Tenant and accepted by the Town
(subject to Section 7.2 and Section 14.2 below). The Master Tenant cannot also be a Subtenant.
1.12 Permitted Uses. The operation of businesses providing office, retail , restaurant, and
other services approved by Master Tenant and Town, and any other lawful use, except as otherwise
prohibited under this Lease pursuant to Section 5.2.
1.13 Town Manager. The Town Manager of the Town (“Town Manager”) or his or her
designated representative, shall serve as the Town’s principal contact and liaison for coordinating all
Town requests of Master Tenant and responses to Master Tenant’s requests, and shall assist in the
implementation of the Town’s obligations hereunder, during the term of this Lease. The Town Manager
may change his or her authorized representative at any time by giving written notice of the change to
Master Tenant.
1.14 Master Tenant’s Work and Tenant Improvement Loan Amortization. “Master Tenant’s
Work” is defined in Section 6.2. “Tenant Improvement Loan Amortization” is defined in Section 6.3.
SECTION 2. LEASED AREA.
2.1 Premises. Landlord hereby leases to Master Tenant, and Master Tenant hereby leases
from Landlord the Premises referred to in Section 1.2 above, located at 4 Tait Avenue, Los Gatos,
California 90530, as depicted on Exhibit B.
SECTION 3. TERM.
3.1 Term. The “Term” of this Lease shall commence as of the Effective Date
(“Commencement Date”) and shall end, unless earlier terminated or extended pursuant to the terms and
conditions of this Lease, on the date 34 years and 11 months after the Commencement Date
(“Termination Date”).
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SECTION 4. RENT.
4.1 General. From and after the Rent Commencement Date, Master Tenant agrees to pay
Landlord as rent for the Premises, in the manner and at the times set forth in this Lease, the Minimum
Monthly Rent and the Percentage Rent, as further described in this Section 4.
4.1.1 All rent payments shall be sent to the Landlord’s address in Section 21.1 and
shall be addressed to the attention of the Town Finance Department, and shall be free from all credits,
claims, demands, off-sets or counterclaims of any kind against the Town.
4.1.2 Minimum Monthly Rent shall be paid by Master Tenant to Landlord on a
monthly basis in advance on or before the first day of each month during the Term.
4.1.3 Percentage Rent shall be paid in arrears on or before April 15 each calendar
year for the amount due and owing for the preceding calendar year (or 90 days after any Termination
Date).
4.2 Minimum Monthly Rent. The Minimum Monthly Rent shall be the amount indicated in
Section 1.6. Minimum Monthly Rent shall be paid in advance on or before the first day of each calendar
month during the Lease Term.
4.3 Percentage Rent.
4.3.1 Manner and Time of Payment. Percentage Rent shall equal 60% of the
Sublease Income received by Master Tenant during each calendar year, remaining after Distribution of
Sublease Income in accordance with Section 4.3.4(a) through Section 4.3.4(d) below.
4.3.2 Definition of Sublease Income. “Sublease Income” shall mean the sum of (a)
all base rents actually received by Master Tenant from its Subtenants of the Premises (excluding
reimbursements from Subtenants for any operating costs such as, but not limited to, taxes, insurance,
utilities, and maintenance and repair costs, to the extent such reimbursements do not exceed Master
Tenant’s actual costs of such operating costs), (b) any interest earned on security deposits of Subtenants,
(c) security deposits forfeited by Subtenants (to the extent applied to delinquent rentals owing by such
applicable Subtenant) and any fees paid by Subtenants to Master Tenant for cancellation of their
subleases; and (d) proceeds of business interruption or rental loss insurance actually collected by Master
Tenant as a result of loss of sublease income. Sublease Income shall not include (i) the proceeds of any
casualty insurance or condemnation awards, (ii) any management fee reimbursements received by
Master Tenant from a Subtenant of the Premises, or (iii) the proceeds from any financing of any interest
in the Premises or any Improvements. Sublease Income shall be determined on a cash basis for each
calendar year.
4.3.3 Definition of Sublease Expenses. “Sublease Expenses” shall be determined
on a cash basis for each calendar year and shall mean the sum of:
(a) all tenant improvement and remodeling costs paid by Master Tenant
(other than costs of Master Tenant’s Work or other Improvements, which will be repaid to Master Tenant
through Tenant Improvement Loan Amortization Amounts);
(b) all leasing commissions paid by Master Tenant (excluding leasing
commissions paid to Master Tenant or to persons or entities affiliated with Master Tenant);
(c) all legal and accounting expenses incurred and paid by Master Tenant in
connection with the Premises and/or any Subleases;
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(d) all possessory interest taxes and other property taxes paid by Master
Tenant (to the extent not reimbursed to Master Tenant by Subtenants);
(e) all insurance costs paid by Master Tenant in connection with the
Premises (to the extent not reimbursed to Master Tenant by Subtenants);
(f) all other costs incurred and paid by Master Tenant in connection with
operating, maintaining, repairing, replacing, and subleasing the Premises, or applicable portion thereof,
including, without limitation, costs incurred and paid by Master Tenant pursuant to Section 20.1 and/or
Section 20.2(b) of this Lease (to the extent not reimbursed to Master Tenant by Subtenants).
Sublease Expenses shall not include any management fee of Master Tenant; however, Master
Tenant may, through its agent or otherwise, collect a management fee on any sublease.
4.3.4 Distribution of Sublease Income. All Sublease Income shall be used by
Master Tenant for the following uses and shall be distributed by Master Tenant in the following priority:
(a) First, to pay to Landlord the Minimum Monthly Rent as set forth in
Section 4.2 above, which sum is payable by Master Tenant to Landlord whether or not Master Tenant
collects and receives Sublease Income;
(b) Second, to pay Master Tenant its Sublease Expenses as defined in
Section 4.3.3 above;
(c) Third, to pay Master Tenant funded Master Tenant Work Improvement
Loans as provided by Section 6.3 below.
(d) Forth, to pay to Master Tenant the amount of Minimum Monthly Rent
paid in that calendar year.
(e) Fifth, as provided by Section 4.3.1 above, to pay Percentage Rent to
Landlord and the balance to Master Tenant.
4.3.5 Annual Statements. On or before April 15 of each calendar year, with the
payment of Percentage Rent, Master Tenant shall furnish to the Town a statement (the “Annual
Statement”) duly certified by the Chief Financial Officer or the Managing Member or the equivalent of the
Master Tenant, setting forth in reasonable detail the Sublease Income from the Premises and the amount
of the Percentage Rent which was required to be paid to the Town during the preceding calendar year in
accordance with the provisions of this Lease. The Annual Statement shall also contain a detailed
breakdown showing how Master Tenant calculated Sublease Income and Sublease Expenses. In
addition, Master Tenant shall provide to Landlord a copy of Master Tenant’s federal income tax return
promptly following filing same with the Internal Revenue Service. The amounts reported to Landlord by
Master Tenant for Sublease Income and Sublease Expenses shall conform to the amounts reported on
Master Tenant’s federal income tax return filed with the Internal Revenue Service. Master Tenant’s
federal income tax return shall cover only income and expenses from the Premises and shall not include
income and expenses from any other property.
4.3.6 Books and Records. Master Tenant shall keep and maintain at its
headquarters full, complete and appropriate books, records and accounts relating to the Premises,
including all such books, records and accounts necessary or prudent to evidence and substantiate in full
detail Master Tenant’s calculation of the Percentage Rent. Books, records and accounts relating to
Master Tenant’s compliance with the terms, provisions, covenants and conditions of this Lease shall be
kept and maintained on a cash basis (except as otherwise expressly provided herein), in accordance with
generally accepted accounting principles consistently applied, and shall be consistent with the
requirements of this Lease which provide for the calculation of Percentage Rent. All such books, records
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and accounts shall be open to and available for inspection by the Town, its auditors or other authorized
representatives at reasonable intervals during normal business hours. Copies of all tax returns and other
reports that Master Tenant may be required to furnish any governmental agency which would evidence or
substantiate Master Tenant’s calculation of the Percentage Rent shall at all reasonable times be open for
inspection by the Town at the place that the books, records and accounts of Master Tenant are kept.
Master Tenant shall preserve records on which any statement of Percentage Rent is based for a period of
not less than four years after such statement is rendered, and for any period during which there is an
audit undertaken pursuant to Subsection 4.3.6 hereof then pending.
4.3.7 Town Audits. The receipt by the Town of any statement pursuant to
Subsection 4.3.5 above, or any payment by Master Tenant or acceptance by the Town of any Percentage
Rent for any period shall not bind the Town as to the correctness of such statement or such payment;
provided, however, the Town shall accept the correctness of such statement if it conforms to the amounts
shown on Master Tenant’s federal income tax return for the period covered by such statement. Within
four years after the receipt of any such statement, the Town or any designated agent or employee of the
Town at any time and at the Town’s cost (except as provided below) shall be entitled to audit the books,
records and accounts pertaining to the Premises and the operation thereof. Such audit shall be
conducted during normal business hours at the principal place of business of Master Tenant and other
places where records are kept. Provided that Master Tenant has fully cooperated, any audit undertaken
pursuant to this Subsection shall be completed within 180 days of the commencement thereof, subject to
extensions of time for any periods of delay by any third party due to no fault of the Town or its auditors,
and in no event later than four years after the Town’s receipt of the statement or statements being
audited. Immediately after the completion of an audit, the Town shall deliver a copy of the results of such
audit to Master Tenant. The Town shall not be entitled to more than one audit for any particular year,
unless it shall appear from a subsequent audit that fraud or concealment may have occurred with respect
to the Sublease Income of a previously audited year. If it shall be determined as a result of such audit
that there has been a deficiency in any Percentage Rent, then such deficiency shall become immediately
due and payable with interest at the legal rate of 10% per annum, such payment to be determined as of
and accruing from the date that said payment should have been made. In addition, if Master Tenant’s
statement for any calendar year shall be found to have intentionally understated Sublease Income by
more than five percent and the Town is entitled to a supplementary payment as a result of said
understatement, then Master Tenant shall pay, in addition to the interest charges referenced
hereinabove, all of the Town’s reasonable costs and expenses connected with any audit or review of
Master Tenant’s accounts and records.
4.4 Late Payment Fees. Any rentals, fees or charges required to be paid by Master Tenant
pursuant to the terms of this Lease shall be paid on or before the dates specified in Subsection 4.1 above
(“due date”) without any requirement of notice from the Town and without deduction or offset. Master
Tenant hereby acknowledges that late payment to the Town of any fee, charge or other sum due
hereunder will cause the Town to incur costs not contemplated by this Lease, the exact amount of which
will be extremely difficult to ascertain. If any such fee, charge or other sum due from Master Tenant is not
received by the Town within 30 days after its due date (10 days for Minimum Monthly Rent), then Master
Tenant shall pay to the Town a late payment fee equal to one percent per month of the amount not paid,
calculated, for each day or portion thereof, from the due date until the date that payment is received by
Town. The parties hereby agree that such late fee represents a fair and reasonable estimate of the cost
that the Town will incur by reason of Master Tenant’s late payment. The Town’s acceptance of such late
fees shall not constitute a waiver of Master Tenant’s default with respect to such overdue amount or stop
the Town from exercising any of the other rights and remedies granted hereunder or at law or in equity. A
failure to pay any fee on the due date shall constitute an event of default under this Lease.
Notwithstanding any right or remedy of the Town on account of any nonpayment by Master Tenant, the
obligation to pay the outstanding amounts due shall survive termination of this Lease.
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SECTION 5. USE OF PREMISES.
5.1 Restricted Use. The Premises shall be used and occupied by Master Tenant, and any
Subtenants approved by Town in accordance with Section 14 below only for Permitted Uses, and for no
other purpose.
5.2 Prohibited Uses. Master Tenant shall not:
5.2.1 use or knowingly allow the use of the Premises by Master Tenant or any of its
Subtenants or any of their respective agents, employees, contractors, other representatives or invitees for
any unlawful purpose; or
5.2.2 cause, maintain, or knowingly permit any nuisance in, on, or about the
Premises by Master Tenant or any of its Subtenants or any of their respective agents, employees,
contractors, other representatives or invitees; commit or suffer to be committed any physical waste in or
upon the Premises by Master Tenant or any of its Subtenants or any of their respective agents,
employees, contractors, other representatives or invitees; or
5.2.3 display or sell merchandise outside the defined exterior walls and doorways of
the Tait Building; however, said restriction shall not apply to outside seating for a restaurant or other
permitted use; or
5.2.4 cause or knowingly permit the undue accumulation of garbage, trash, rubbish
or any other refuse in or about the Premises by Master Tenant or any of its Subtenants or any of their
respective agents, employees, contractors, other representatives or invitees; or
5.2.5 use or knowingly permit the use of any advertising such as, without limitation,
loudspeakers, phonographs, public address systems, sound amplifiers, radio or broadcast within the
Premises by Master Tenant or any of its Subtenants or any of their respective agents, employees,
contractors, other representatives or invitees in such a manner that any sounds reproduced, transmitted
or produced shall be directed primarily beyond the interior of the Tati Building, and will keep all
mechanical apparatus free of objectionable vibration and noise which may be transmitted beyond the
interior of the Premises; or
5.2.6 Cause or knowingly permit obnoxious odors to emanate or be dispelled from
the Premises by Master Tenant or any of its Subtenants or any of their respective agents, employees,
contractors, other representatives or invitees; or
5.2.7 Cause or knowingly permit any use of the Premises by Master Tenant or any
of its Subtenants or any of their respective agents, employees, contractors, other representatives or
invitees which violates any Town zoning code applicable to the Premises; or
The preceding to the contrary notwithstanding, Landlord agrees that if any Subtenant or
any of Subtenant’s agents, employees, contractors, other representatives or invitee acts or fails to act in
any manner that causes Master Tenant to be in violation of any of the provisions of Section 5.2.1 through
Section 5.2.7 above, then Master Tenant shall not be in breach or default under this Lease due to such
act(s) or failure(s) to act by such applicable Subtenant or any of its agents, employees, contractors, other
representatives or invitees so long as Master Tenant exercises commercially reasonable efforts to
prevent such violation(s) from occurring and shall have taken steps in good faith within thirty (30) days
after receipt of written notice from Landlord to remedy such failure and is continuing to so act with
diligence and continuity and further, where possession of the Premises or portion thereof is necessary to
cure a default under this Lease, Master Tenant will not be considered to be in default under this Lease as
a result of a breach by a Subtenant or any of Subtenant’s agents, employees, contractors, other
representatives or invitee under its sublease so long as Master Tenant has sent notice of default to, and
commenced legal action against the Subtenant and is diligently and continuously pursuing an unlawful
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detainer action or other legal proceedings required to regain possession of the Premises or portion
thereof from such Subtenant.
As used in the provisions of Section 5.2.1 through Section 5.2.7, the term “knowingly”
includes what Master Tenant reasonably should have known with the exercise of reasonable inquiry and
investigation.
5.3 Compliance with Laws. Master Tenant shall carry out, or cause to be carried out, all
obligations under this Lease, including without limitation Master Tenant’s Work, in conformity with all
applicable state, federal, and local laws and regulations, including all applicable state labor laws and
standards; Town zoning and development standards; building, plumbing, mechanical and electrical
codes; all other provisions of the Town of Los Gatos Municipal Code; and all applicable disabled and
handicapped access requirements, including the Americans With Disabilities Act, 42 U.S.C. Section
12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and
the Unruh Civil Rights Act, Civil Code Section 51, et seq. (“Applicable Laws”). Master Tenant’s
obligations under this Section 5.3 shall include the obligation to undertake all appropriate inquiries with
state and federal governmental enforcement and regulatory agencies as necessary to fully comply with all
Applicable Laws, including any applicable prevailing wage requirements in connection with the
construction of the Master Tenant’s Work. Master Tenant also shall require that its Subtenants (to the
extent expressly made applicable to such Subtenants) and their respective agents, employees,
contractors and subcontractors, comply with all Applicable Laws in connection with the construction of the
Subtenant’s Work and Improvements.
SECTION 6. LEASEHOLD IMPROVEMENTS.
6.1 Condition of the Premises. Landlord shall deliver the Premises to Master Tenant on the
Effective Date clean and free of debris, and in the condition of the Premises upon delivery as described in
Exhibit D.
6.2 Leasehold Improvements. Master Tenant agrees to install, or cause to be installed, in
the Premises all improvements, fixtures, furniture and equipment within the Premises, as reasonably
necessary for Master Tenant to attract and retain high quality Subtenants. Within one hundred eighty
(180) calendar days after the Effective Date, Master Tenant shall provide Landlord a detailed description
of work it proposes to undertake to ready the Premises for initial lease up to Subtenants (“Initial Master
Tenant’s Work”). In addition to providing Landlord all relevant information regarding a proposed
Subtenant necessary for Landlord to evaluate and provide its consent to a proposed Subtenant pursuant
to Section 14.2, Master Tenant shall provide Landlord a detailed description of the additional work, if any,
to be undertaken by Master Tenant (“Additional Master Tenant’s Work”) as well as the work to be
undertaken by a Subtenant (“Subtenant’s Work”) in connection with said applicable sublease.
The Initial Master Tenant’s Work and all Additional Master Tenant’s Work undertaken in
connection with a sublease consented to by Landlord in accordance with 14.2 below, shall collectively be
referred to herein as the “Master Tenant’s Work”. The term “Master Tenant’s Work” does not include
“Subtenant’s Work” to be performed by Subtenants. It is acknowledged and agreed that the Subtenants
of Master Tenant will install additional improvements, fixtures, furniture, and equipment as necessary for
conduct of their operations, and shall all be responsible for complying with all applicable federal, state,
and local statutes, laws, ordinances, rules, and regulations, and obtaining all necessary permits, to
perform such work.
6.3 Master Tenant Work Improvement Loans.
6.3.1 As provided in Section 4.3.4 above, Master Tenant may utilize Sublease
Income to repay itself for funds it advances or borrows from a third party lender for Master Tenant’s Work,
and any subsequent Improvements within the Premises that are neither Subtenant’s Work nor funded by
the Town’s Capital Reserve Fund (“Master Tenant Work Improvement Loans”), on the following basis:
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(a) Interest. Interest shall be on the basis of actual days elapsed, at a fixed
rate of 3% per annum if funded by Master Tenant, or at the actual rate of interest charged by Master
Tenant’s lender if funded by a third-party lender, as of the date of each advance.
(b) Repayment Term. Whether funded by Master Tenant or a third-party
lender, the repayment term shall be no greater than the Lease Term.
(c) Amortization. For each Master Tenant Work Improvement Loan funded
by Master Tenant, interest only payments until the later of (i) first day of the month following the final
advance under the loan, or (ii) the date subrent is due, and thereafter equal monthly payments of
combined principal and interest necessary to fully amortize the loan over the remaining repayment term. If
funded by a third-party lender, the loan shall be fully amortized in accordance with the terms of the loan.
6.4 Liens. All Master Tenant’s Work and Subtenant’s Work shall be completed free of
mechanic’s liens, with first-class materials and workmanship, and in compliance with all applicable rules,
regulations, and laws applicable to the Premises.
6.5 Letter of Credit (LOC). All Master Tenant’s Work or Subtenant’s Work shall be approved
by Landlord (which consent shall not be unreasonably withheld, conditioned or delayed). Such consent
shall be deemed given if not denied in writing to Master Tenant within ten (10) business days following
Landlord’s receipt of such information required for Landlord to evaluate such applicable Master Tenant’s
Work or Subtenants Work. Master Tenant shall furnish to Town, at no cost or expense to the Town, a
letter of credit (“LOC”) in the amount not less than the sum of One Hundred Percent of the cost estimate
of the Master Tenant’s Work, in a form subject to the review and approval by the Town Manager or his or
her designee (which approval shall not be unreasonably withheld, conditioned or delayed), which LOC
shall secure Master Tenant’s obligation to complete, and pay for the cost of completion of, the
construction of the Master Tenant’s Work within the time reasonably fixed by the Landlord, or such
extension thereof as may be allowed. Master Tenant shall refrain from performing, or causing the
performance of, any work related to the construction of Master Tenant’s Work until Master Tenant
furnishes a LOC satisfying this Section 6.5.
In the event Master Tenant fails to complete the Master Tenant’s Work within the time fixed by
Landlord or such extension period as determined by Landlord, and following Master Tenant’s receipt of
written notice of such failure from Landlord, Master Tenant fails to promptly commence action to complete
the Master Tenant’s Work within ten (10) calendar days of receipt of such notice, then Landlord may
terminate this Lease for cause as specified in this Lease and Landlord shall be entitled to call on such
LOC to the extent necessary to pay or reimburse Landlord for costs reasonably incurred by Landlord to
complete the Master Tenant’s Work (and the balance of such LOC proceeds or the LOC itself after
payment or reimbursement to Landlord as provided immediately above shall be paid or returned to
Master Tenant). In the event that Master Tenant fails to complete the Master tenant’s Work within the time
fixed by Landlord or such extension period as determined by Landlord, and following Master Tenant’s
receipt of written notice of such failure from Landlord, Master Tenant commences action to complete
Master Tenant’s Work within ten (10) calendar days of receipt of such notice but thereafter fails to
diligently process such cure to completion, then, Landlord shall give a second, written notice to Master
Tenant and if Master Tenant does not commence action to complete the Master tenant’s Work within
fifteen (15) days following Master Tenant’s receipt of such second, written notice or thereafter diligently
process such cure to completion, then Landlord may terminate this Lease for cause as specified in this
Lease and Landlord shall be entitled to call on such LOC to the extent necessary to pay or reimburse
Landlord for costs reasonably incurred by Landlord to complete Master Tenant’s work (and the balance of
such LOC proceeds or the LOC itself after payment or reimbursement to Landlord as provided
immediately above shall be paid or returned to Master Tenant).
6.6 Ownership and Removal. All personal property not affixed in any way to the Premises
including inventory, kitchen equipment, those nonstructural alterations as the Town approves for removal
as were installed under this Lease and do not affect the structure of the Tait Building or the Premises,
together with Master Tenant’s Trade Fixtures, (collectively, “Master Tenant’s Property”) shall remain the
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property of Master Tenant. Upon the termination or expiration of the Lease Term, if Master Tenant is not
then in default under the Lease, Master Tenant may remove Master Tenant’s Property from the Premises
no later than the termination or expiration date. In addition, Master Tenant may remove from the
Premises all items and Alterations installed by Master Tenant that are indicative of Master Tenant’s
business and may otherwise “de-identify” the Premises, as Master Tenant reasonably believes necessary
or appropriate for the protection of Master Tenant’s interest in Master Tenant’s trademarks, trade names
or copyrights. Master Tenant shall repair any damage to the Premises caused by such removal, including
patching and filling holes. In no event shall Master Tenant remove or be required to remove any
restrooms, flooring, ceilings, utility or electrical components located inside the walls or HVAC systems. All
other utility systems will be capped and returned to a condition compatible with code requirements.
6.6.1 Subtenant’s Personal Property. Landlord waives any statutory liens and rights
of distress with respect to the personal property (non-affixed trade fixtures, equipment, inventory and
merchandise) of each Subtenant from time to time located with the Premises, or applicable part thereof
(“Subtenant’s Personal Property”). This Lease (and each sublease entered into between Master Tenant
and a Subtenant) does not grant a contractual lien or any other security interest to Landlord or in favor of
Landlord with respect to Subtenant’s Personal Property. In the event Landlord becomes the direct
sublessor or landlord of a Subtenant, then, respecting any lender of any Subtenant having a security
interest in any Subtenant’s Personal Property (“Subtenant’s Lender”), Landlord agrees: (i) to provide such
Subtenant’s Lender, upon written request of a Subtenant (accompanied by the name and address of
Subtenant’s Lender), with a copy of any default notice given to Subtenant under its sublease,
concurrently with delivery of such default notice to Subtenant, and (ii) to allow Subtenant’s Lender, prior
to any termination of the sublease or repossession by Landlord of the applicable premises subleased by
such Subtenant, the same period of time, after its receipt of such copy of default notice, to cure such
default as is allowed the Subtenant under its sublease, and (iii) to permit Subtenant’s Lender to enter the
subleased premises for the purpose of removing Subtenant’s Personal Property anytime within thirty (30)
days after the effective date of any termination of the applicable sublease or any repossession of the
subleased premises by Landlord (with Landlord having given Subtenant’s Lender prior written notice of
such date of termination or possession). Landlord will not be required to allow Subtenant’s Lender to
enter the subleased premises after entry of judgment in a forcible entry and detainer action, but agree to
delay the filing of any such forcible entry and detainer action for thirty (30) days after delivery of written
notice of such action to Subtenant’s Lender, and will permit Subtenant’s Lender to enter the subleased
premises for the purpose of removing Subtenant’s Personal Property any time within such thirty (30)
days. Landlord further agrees to execute and deliver such instruments reasonably requested by
Subtenant’s Lender from time to time to evidence and effect this waiver and agreement of Landlord.
6.7 Abandonment. Any of Master Tenant’s Property not removed from the Premises within
sixty (60) business days of the date the Lease terminates or expires shall be deemed abandoned and
shall thereupon become the property of Landlord. Landlord may possess and dispose of such property
provided that Landlord shall not use or permit anyone holding under Landlord to use on the Premises (a)
any trademark, trade name, millwork, copyrighted floor plan, copyrighted color palette, or sign used by
Master Tenant in the Premises; or (b) any item similar to any other item protected by Master Tenant’s
intellectual property rights. This provision shall apply under all circumstances, including default by Master
Tenant under this Lease.
SECTION 7. MASTER TENANT OBLIGATIONS – OPERATION OF PREMISES.
7.1 Responsibility of Master Tenant. Master Tenant shall serve as the master developer and
sublandlord for the Subtenants and shall be obligated to ensure that the Premises are properly and fully
operated, in good condition, for the approved commercial uses. Master Tenant shall be the primary point
of contact for the Town with regard to all operational, administrative, and compliance issues under this
Lease.
7.2 Leasing Standards. Subject to the provisions of Section 14.1 and 14.2 below, Master
Tenant shall use its commercially reasonable efforts, consistent with good property management
practices, to obtain first class commercial Subtenants for the Premises. However, if after reasonable
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effort, Master Tenant is unable to attract Subtenants of similar type and quality on terms and conditions
satisfactory to Master Tenant, Master Tenant may, subject to Section 14.2 below, sublease to Subtenants
who may be considered less desirable in terms commercial type and quality. Landlord shall not
unreasonably withhold its approval of any potential Subtenant who Master Tenant reasonably determines
is the best available Subtenant on terms and conditions satisfactory to Master tenant.
7.3 Continuous Operations. Master Tenant shall use its commercially reasonable efforts,
subject to the provisions of Section 7.2 above, to continuously sublet the Premises to approved
Subtenants for commercial purposes during the term of this lease. If, for any reason, a Subtenant quits its
business operations on the Premises, Master Tenant shall use its commercially reasonable efforts, in
accordance with the provisions of Section 7.2 above, to promptly secure another Subtenant reasonably
acceptable to Master Tenant and Landlord.
If for any reason during the first three (3) years after the Commencement Date the Premises in
their entirety are left unleased for a continuous period of eighteen (18) months or more, then either the
Landlord or Master Tenant may terminate this Lease by giving written notice of termination to the other, in
which case, upon the giving of such notice of termination, each party shall be released of any future
liability to the other, except as provided herein.
If for any reason after the first three (3) years following the Rent Commencement Date the
Premises are more than fifty percent (50%) unleased for six (6) consecutive months, then Landlord may
require Master Tenant to prepare and provide to Landlord, for its review and approval, a marketing plan to
lease said unleased space. Master Tenant shall prepare and provide said marketing plan to Landlord
within thirty (30) calendar days following written notice from Landlord to prepare said marketing plan.
Landlord shall complete its review and approval of the marketing plan within thirty (30) calendar days
following its submission by Master Tenant to Landlord. If for any reason the Premises remain more than
fifty percent (50%) unleased for six (6) consecutive months following Landlords approval of the marketing
plan, and Master Tenant can document to Landlord’s reasonable satisfaction that Master Tenant has
diligently, and in good faith, pursued the lease of said unleased space in accordance with the approved
marketing plan, then Landlord shall provide Master Tenant no less than an additional six (6) month period
of time to lease the unleased space. If following said additional period of time granted by Landlord, the
Premises are more than fifty percent (50%) unleased, then either the Landlord or Master tenant may
terminate this Lease by giving written notice of termination to the other, in which case, upon the giving of
such notice of termination, each party shall be released of any future liability to the other, except as
provided herein.
If Landlord terminates the Lease pursuant to this Section 7.3, then Landlord shall assume the
repayment of all outstanding Master Tenant Work Improvement Loans with the right to prepay such loans
at Landlord’s election without penalty. However, the Town’s general fund shall assume no obligation for
repayment of the Master Tenant Work Improvement Loans, which shall be repaid solely from future
Sublease Income generated from the future operation of the Premises. Landlord’s obligations under the
immediately preceding sentence shall survive the termination of this Lease pursuant to this Section 7.3. If
Master Tenant terminates the Lease pursuant to this Section 7.3, then Master Tenant shall assume the
repayment of all outstanding Master Tenant Work Improvement Loans and no portion of Sublease
Income or any other revenue generated by the Premises shall be obligated or utilized for repayment of
said outstanding.
7.4 Signage and Displays. With respect to signage on the Premises, Landlord and Master
Tenant agree as follows:
7.4.1 Landlord may allow Master Tenant may place a sign(s) on the exterior of the Tait
Building to the extent such signage is allowed by law, provided that (i) the design and location of any such
sign is approved in advance in writing by Landlord, and (ii) Master Tenant secures all necessary permits
and approvals from the Town and/or any other applicable governmental authority. Any such signage shall
be designed and installed in a manner that maintains the existing building system warranties, if any,
applicable to the Tait Building. Upon expiration or earlier termination of this Lease, Master Tenant shall
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remove Master Tenant’s sign(s) from the exterior of the Tait Building, if applicable, and restore the
exterior of the Tait Building to condition existing prior to the placement of such sign(s) on the exterior of
the Tait Building, unless otherwise approved by Landlord.
7.5 Utilities. Master Tenant shall pay, or cause to be paid, for any and all costs, fees and
expenses of water, gas, electricity, telephone, trash collection and recycling used by Master Tenant or
any Subtenant in connection with the Premises during the Term of this Lease.
7.6 Deliveries. All deliveries shall be made at the hours not in violation of municipal
ordinances.
7.7 Wireless Communications Equipment or Devices. The location of any equipment or
device for the purpose of telecommunication or wireless access to services over the internet, by any party
or for Master Tenant’s or any Subtenants business operations, shall be coordinated with the Town and
shall be subject to Town’s reasonable approval.
7.8 PBID. Master Tenant will exercise commercially reasonable efforts to encourage its
Subtenants to pay, if applicable, all Los Gatos Downtown Property Based Improvement District (“PBID”)
assessments for the Premises, which accrue during the term of this lease.
SECTION 8. MAINTENANCE, REPAIRS, AND ALTERATIONS.
8.1 Master Tenant’s Obligations. Subject to the provisions of Section 8.2 below, and except
for damage caused by fire or other casualty, whether or not insured or insurable, Master Tenant, at
Master Tenant’s sole cost and expense, shall keep, or cause to be kept, the Premises, in good condition
and repair, including maintaining and repairing, or causing to be maintained or repaired, as necessary, all
Master Tenant’s Work, and all plumbing, HVAC, electrical and lighting facilities and equipment within the
Premises, and any Master Tenant signage, and all doors and plate glass windows (both interior and
exterior), interior walls, and flooring in the Premises. Master Tenant shall provide a contract for regular
maintenance of the HVAC with an HVAC company reasonably approved by Landlord. Master Tenant
shall be required to implement a program, reasonably acceptable to Landlord, for control and elimination
of rodents and vermin on or around the Premises. Master Tenant shall be required to maintain any
Outdoor Use Areas located on the Premises. Master Tenant shall remove graffiti from the exterior of the
Premises within a reasonable time and shall always otherwise keep the exterior of the Premises in a
clean and well-maintained condition. Notwithstanding any provision to the contrary, Master Tenant’s
obligations under this Section 8.1 shall not include making (a) any repair or improvement necessitated by
the negligence or willful misconduct of Landlord, its agents, employees or servants; (b) any repair or
improvement caused by Landlord’s failure to perform its obligations hereunder or under any other
agreement between Landlord and Master Tenant or (c) any capital repairs or capital improvements not
funded by the Capital Reserve Fund.
8.2 Landlord’s Obligations.
8.2.1 Except for repairs and maintenance to the Premises that Master Tenant must
make under Section 8.1 above, Landlord shall be responsible, at its sole cost and expense, for the
remediation of any Hazardous Materials discovered in, on, or about the Premises during the work
performed under Section 6 above or discovered thereafter, provided, said discovery and presence of
Hazardous Materials are not directly arising out of or attributable to Master Tenant or any subtenants use
and/or occupancy of the Premises, Further, Landlord shall be responsible for, at its sole cost and
expenses, the roof structure, roof membrane and supports, HVAC (excluding Master Tenant’s
maintenance contract), sprinkler system, foundation, exterior walls, and all structural components of the
Tait Building. In the event of an emergency, Master Tenant may give Landlord such notice as is
practicable under the circumstances (if any), and if Landlord fails to make such repairs immediately,
Master Tenant may immediately undertake such repairs and submit an invoice for the reasonable costs
thereof to Landlord for reimbursement. Notwithstanding any provision to the contrary, Landlord’s
obligations under this Section 8.2.1 shall not include making (a) any repair or improvement necessitated
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by the negligence or willful misconduct of Master Tenant, Subtenants, or their agents, employees or
servants; or (b) any repair or improvement caused by Master Tenant’s failure to perform its obligations
(including obligations which a Sublease obligates a Sublessee) hereunder or under any other agreement
between Landlord and Master Tenant.
8.3 Surrender. Upon the expiration or termination of this Lease, Master Tenant shall
surrender the Premises to Landlord in good order and condition, except for ordinary wear and tear,
condemnation, and damage caused by fire or other casualty, whether or not insured or insurable,
alterations and leasehold improvements made by Master Tenant and Subtenants, and in a broom clean
condition.
8.4 Landlord’s Rights. If Master Tenant fails to perform Master Tenant’s obligations under
Section 8.1 above, Landlord may, but shall not be required to, enter upon the Premises, after twenty (20)
calendar days prior written notice to Master Tenant, and put the same in good order, condition and repair,
and the actual costs thereof and an administrative fee of not more than 10% of the actual costs thereof,
shall become due and payable as additional rent to Landlord together with Master Tenant’s next Minimum
Monthly Rent installment payment falling due after Master Tenant’s receipt of an invoice for such costs;
provided, however, Landlord shall not be able to exercise such remedies so long as Master Tenant
commences to cure its failure within said twenty (20) day period and diligently pursues the cure to
completion.
8.5 Improvements. The installation of the leasehold improvements necessary for Master
Tenant’s operation of its business in the Premises shall be performed in accordance with Section 6.
Once such improvements are completed, Master Tenant shall not thereafter make any alterations,
improvements, additions, upgrades or utility installations in, on or about the Premises, or install any
further fixtures, furniture, or equipment therein (together, “Improvements”) without Landlord’s consent,
which consent shall not be unreasonably withheld, conditioned or delayed, provided, however, that minor
interior Improvements that do not exceed the amount of $50,000, and do not otherwise require permits
under Applicable Laws (“Minor Improvements”), shall not require Landlord’s consent under this Lease. All
other Improvements exceeding $50,000 for construction, or which require permits under Applicable Laws,
or involve alterations to the exterior of the Premises (“Major Improvements”) shall be subject to Landlord’s
review and approval under this Lease. Landlord may review all proposed Improvements for their
consistency with the final as-built plans for the Tait Building and may approve variations from such
drawings in its reasonable discretion. Town Manager is authorized to make such determination to
approve Major Improvements which otherwise comply with Applicable Laws under this Lease.
Notwithstanding Landlord’s approval of Major Improvements under this Lease, Master Tenant shall be
required to obtain all required permits for such Major Improvements under Applicable Law.
8.6 Capital Reserve Fund. On or before the fifteenth day following Landlord’s receipt of the
Minimum Monthly Rent, Landlord shall deposit the Minimum Monthly Rent to the account described in this
Section 8.6 (“Capital Reserve Fund”).
8.6.1 Maintenance of Capital Reserve Fund. The Capital Reserve Fund shall be
maintained in a state or nationally chartered bank, the Local Agency Investment Fund Pooled Money
Investment Account, or other such institution acceptable to Landlord.
8.6.2 Use of Capital Reserve Fund. Landlord may use monies in the Capital
Reserve Fund to fund capital improvements to maintain the quality of the Premises or other purposes
reasonably related to this Lease, subject to the reasonable consent of Master Tenant. The use of monies
in the Capital Reserve Fund shall be controlled and directed by Landlord in its sole discretion, with input
by Master Tenant, but will be used primarily for capital improvements to the Premises. Unused amounts
in the Capital Reserve Fund on the Termination Date will be retained by the Town.
8.6.3 Master Tenant shall utilize Sublease Income to repay Landlord for funds it
advances from the Capital Reserve Fund for uses identified in Section 8.6.2 above (“Capital Reserve
Fund Improvement Loans”), on the following basis:
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(a) Interest. Interest shall be on the basis of actual days elapsed, at a fixed
rate of 4% per annum, as of the date of each advance.
(b) Repayment Term. The repayment term shall be the lesser of ten years
or the initial term of the applicable Sublease if the Capital Reserve Fund Improvement Loan is related to
Subtenant Work.
(c) Amortization. For each Capital Reserve Fund Improvement Loan,
interest only payments until the later of (i) first day of the month following the final advance under the
loan, or (ii) the date subrent is due if the Capital Reserve Fund Improvement Loan is related to Subtenant
Work, and thereafter equal monthly payments of combined principal and interest necessary to fully
amortize the loan over the remaining repayment term.
SECTION 9. INSURANCE.
9.1 General. Prior to commencing any work or operations under this Lease, and for the full
term of this Lease and any extensions thereof, Master Tenant and any Subtenants, at each parties’ sole
cost and expense, shall obtain and maintain or shall cause to be obtained and maintained insurance
against claims for injuries to persons or damages to property which may arise from or in connection with
the activities of Master Tenant and its Subtenants, agents, employees and contractors, meeting at least
the minimum insurance requirements set forth in Exhibit E on terms and conditions and in amounts as
reasonably required by Town from time to time and with insurers reasonably acceptable to the Town and
within commonly applicable industry standards for the type of operation. The Town shall not be obligated
to take out insurance on Master Tenant’s or Subtenant’s property, including the Master Tenant’s Work.
Master Tenant shall be responsible for obtaining property insurance to cover the cost of repair or
replacement of the Master Tenant’s Work. Master Tenant and its Subtenants shall provide the Town with
certificates of insurance or copies of all policies and such endorsements as may be reasonably required
by the Town. These requirements are subject to reasonable amendment or waiver if so approved in
writing by the Town Manager. From time to time at the request of the Finance Department of the Town of
Los Gatos, Master Tenant shall provide a written statement of the replacement cost of the Master
Tenant’s Work.
During the term of the Lease, Landlord shall maintain general liability insurance in an amount of
no less than $2,000,000 per occurrence for bodily injury, property damage and personal injury, as well as
property insurance covering the cost of repair or replacement of the Premises (excluding therefrom the
Master Tenant’s Work).
SECTION 10. INDEMNIFICATION BY MASTER TENANT.
10.1 General. Master Tenant shall defend, indemnify, and hold Landlord and Landlord’s
agent, officers, directors, employees, and contractors harmless against and from any and all injuries,
costs, expenses, liabilities, losses, damages, injunctions, suits, actions, fines, penalties, and demands of
any kind or nature (including reasonable attorneys’ fees) in connection with any and all third party claims
to the extent arising out of Master Tenant’s use of the Premises (“Claims”), including, but not limited to:
(a) injuries occurring within the Premises; (b) any intentional acts or negligence of Master Tenant or
Master Tenant’s officers, agents, employees, subtenants, or contractors; (c) any breach or default in the
performance of any obligation on Master Tenant’s part to be performed under this Lease; (d) any violation
by Master Tenant or any of its officers, agents, employees, subtenants or contractors of any law,
ordinance or regulation governing the use of the Premises, (e) any injuries (including death of any
person), claims, or causes of action relating to or involving the sale of alcoholic beverages on the
Premises; or (f) the failure of any representation or warranty made by Master Tenant herein to be true
when made. This indemnity does not include any Claims caused by or arising out of the intentional or
negligent acts or omissions of Landlord or its agents, officers, contractors or employees. This indemnity
shall survive termination of this Lease only as to claims arising out of events that occur prior to
termination of the Lease.
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SECTION 11. ENVIRONMENTAL LIABILITY.
11.1 Environmental Law. The term “Environmental Law” means collectively: (i) the
Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. §
9601, et seq., (ii) the Hazardous Materials Transportation Act, as amended, 49 U.S.C. § 1801, et seq., (iii)
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. § 6901, et seq., (iv) the Federal
Water Pollution Control Act, as amended, 33 U.S.C. § 1251, et seq., (v) the Clean Air Act, as amended,
42 U.S.C. § 7401, et seq., (vi) the Toxic Substances Control Act, as amended, 15 U.S.C. § 2601, et seq.,
(vii) the Clean Water Act, as amended, 33 U.S. Code § 1251, et seq., (viii) the Oil Pollution Act, as
amended, 33 U.S.C. § 2701, et seq., (ix) California Health & Safety Code § 25100, et seq. (Hazardous
Waste Control), (x) the Hazardous Substance Account Act, as amended, Health & Safety Code § 25300,
et seq., (xi) the Unified Hazardous Waste and Hazardous Materials Management Regulatory Program, as
amended, Health & Safety Code § 25404, et seq., (xii) Health & Safety Code § 25531, et seq. (Hazardous
Materials Management), (xiii) the California Safe Drinking Water and Toxic Enforcement Act, as
amended, Health & Safety Code § 25249.5, et seq., (xiv) Health & Safety Code § 25280, et seq.
(Underground Storage of Hazardous Substances), (xv) the California Hazardous Waste Management Act,
as amended, Health & Safety Code § 25170.1, et seq., (xvi) Health & Safety Code § 25501, et seq.,
(Hazardous Materials Response Plans and Inventory), (xvii) Health & Safety Code § 18901, et seq.
(California Building Standards), (xviii) the Porter-Cologne Water Quality Control Act, as amended,
California Water Code § 13000, et seq., (xix) California Fish and Game Code §§ 5650-5656, (xx) the
Polanco Redevelopment Act, as amended, Health & Safety Code § 33459, et seq., (xxi) Health & Safety
Code § 25403, et seq. (Hazardous Materials Release Cleanup), and (xxii) any other federal, state or local
laws, ordinances, rules, regulations, court orders or common law related in any way to the protection of
the environment, health or safety, or industrial hygiene.
11.2 Hazardous Materials. “Hazardous Materials” means any substance, material, or waste
which is or becomes regulated by any local governmental authority, the State of California, or the United
States Government under any Environmental Laws, including any material or substance which is defined
as “hazardous,” “extremely hazardous,” “hazardous waste,” “extremely hazardous waste,” “restricted
hazardous waste,” “hazardous substance” or “hazardous material” under any Environmental Laws,
including, without limitation, chlorinated solvents, petroleum, or any fraction thereof, friable asbestos, and
polychlorinated biphenyls.
11.3 Release of Hazardous Materials. Except as provided below in Section 11.4, Master
Tenant shall not store, dispose of, transport, generate or otherwise introduce any Hazardous Material in,
on or around the Premises. If any Hazardous Material is deposited, released, stored, disposed,
transported, generated or otherwise introduced by Master Tenant in, on, or around the Premises, Master
Tenant, at Master Tenant’s sole cost and expense, shall comply with all applicable laws, rules,
regulations and policies of any governmental body with jurisdiction over the same, to remove, transport
and dispose of such substances and perform all remediation and cleanup necessary or advisable to
remediate any damage to persons, property or the environment as a result of the presence of such
Hazardous Materials.
11.4 Master Tenant’s Use of Hazardous Materials. Notwithstanding the above and provided
that Master Tenant complies with all Applicable Laws and Environmental Laws, Master Tenant shall have
the right to use Hazardous Materials on the Premises to the extent such Hazardous Materials (i) are
contained in restaurant and/or household products, office supply products or janitorial products customarily
used in the maintenance, rehabilitation, operation or management of facilities similar to the Premises; or (ii)
are commonly used by a significant portion of the population living within the region of the Premises,
including, but not limited to, alcoholic beverages, aspirin, tobacco products, NutraSweet and saccharine, so
long as Master Tenant provides the appropriate warning, if required to do so under any Applicable Law or
Environmental Law.
11.5 Environmental Indemnity. Master Tenant shall protect, indemnify, and hold harmless
Landlord and Landlord’s officer’s employees, agents, representatives, contractors, and subcontractors
from and against any and all loss, damage, cost, expense, or liability (including attorneys’ fees), and the
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costs of repairs and improvements necessary to return the Premises to the physical condition existing
prior to Master Tenant’s undertaking any activity related to any Hazardous Substance, directly arising out
of or attributable to Master Tenant’s or Master Tenant’s agents’, contractors’, employees’ or Subtenants’
use, manufacture, storage, release, or disposal of a Hazardous Substance on the Premises. Landlord
shall protect, indemnify, and hold harmless Master Tenant and Master Tenant’s employees, agents,
parents, representatives, subtenants, contractors, subcontractors and subsidiaries from and against any
and all loss, damage, cost, expense, or liability (including attorneys’ fees) and the costs of repairs and
improvements necessary to return the Premises, or applicable portion thereof, to the physical condition
existing prior to undertaking any activity related to any Hazardous Substance directly arising out of or
attributable to Landlord’s or Landlord’s agents’, contractors’, or employees’ use, manufacture, storage,
release, or disposal of a Hazardous Substance on the Premises. The provisions of this Section 11.5 shall
survive the termination of this Lease.
SECTION 12. TAXES AND ASSESSMENTS/ POSSESSORY INTEREST TAX.
12.1 General. Master Tenant acknowledges and agrees that this Lease will create a
possessory interest subject to property taxation. Master Tenant agrees to pay and discharge, as
additional rent for the Premises during the term of this Lease, before delinquency, all taxes (including,
without limitation, possessory interest taxes associated with the Premises, this Lease and any so-called
value added tax), assessments (including, without limitation, all assessments for public improvements or
benefits, whether or not commenced or completed prior to the date hereof and whether or not to be
completed within the term of this Lease), fees, levies, water and sewer rents, rates and charges, vault
license fees or rentals, license and permit fees and other governmental charges of any kind or nature
whatsoever, general and special, ordinary and extraordinary, foreseen and unforeseen, or hereinafter
levied or assessed in lieu of or in substitution of any of the foregoing (all of the foregoing collectively
called “taxes”) which are or may be at any time or from time to time during the term of this Lease levied,
charged, assessed or imposed upon or against the Premises or any improvements which are now or
hereafter located thereon, or against any of Master Tenant’s personal property now or hereafter located
thereon, or which may be levied, charged, assessed or imposed upon or against the leasehold estate
created hereby or which may be imposed upon any taxable interest of Master Tenant acquired pursuant
to this Lease on account of any taxable possessory right which Master Tenant may have acquired
pursuant to this Lease. Master Tenant shall pay or reimburse Landlord, as the case may be, for any
fines, penalties, interest or costs which may be added by the collecting authority for the late payment or
nonpayment of any taxes required to be paid by Master Tenant hereunder.
SECTION 13. PROHIBITION AGAINST CHANGE IN MASTER TENANT AND CONTROL OF MASTER
TENANT AND THE PREMISES, AND TRASNFER OF MASTER TENANT’S RIGHTS UNDER THIS
LEASE.
13.1 Qualifications of Master Tenant. Master Tenant acknowledges that the qualifications and
identity of Master Tenant, including in particular Master Tenant’s Managing Members, are of particular
concern to the community and the town, in view of the following:
13.1.1 The importance of the proper subleasing of the Premises to the general
welfare of the community;
13.1.2 The reliance by the Town upon Master Tenant to assure the quality of the
Premises and its use, operation and maintenance;
13.1.3 The fact that a change in Master Tenant or control of all or a portion of Master
Tenant, or any act or transaction involving or resulting in a change in Master Tenant is for practical
purposes a Transfer or disposition of the Premises; and
13.1.4 The importance to the Town and the community of the standards for the use,
operation and maintenance of the Premises and associated areas.
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13.2 Acknowledgment of Importance of Qualifications. Master Tenant further recognizes that it
is because of such qualifications and identity that the Landlord is entering into this Lease with Master
Tenant. No voluntary or involuntary successor-in-interest of Master Tenant shall acquire any rights or
powers under this Lease except as expressly set forth in this Lease.
13.3 Completion of Master Tenants Work. Prior to the completion of Master Tenant’s Work,
Master Tenant shall not (i) assign all or any part of its rights or obligations under this Lease, (ii) lease or
sublease any portion of the Premises (other than subleases of portions of the Premises to permitted
Subtenants as otherwise provided in the Lease), (iii) make or permit to be made any changes in the
composition of Master Tenant’s ownership, limited liability company status, or members, or (iv) effect any
transaction which would in any way change the Master Tenant’s ownership, management, control or
obligations relating to the Premises.
13.4 Permitted Transfers. Following the period described in Section 13.3 above (i.e.
completion of Master Tenant’s Work), Master Tenant may, with the prior review and approval of the Town
Manager (which shall not be unreasonably withheld, conditioned or delayed), make changes in the
composition of Master tenant’s ownership, corporate or other entity status, shareholders, members or
partners (if applicable), provided that Master Tenant’s managing Member, retains the power to control
Master Tenant’s active, day-to-day management responsibilities (“Day-to-Day management”). For
purposes of the immediately preceding sentence, “control” shall mean the power to direct or cause the
direction of the Day-to-Day Management of the Master tenant. Five years from the Commencement
Date, provided Master Tenant has performed all of its obligations under this Lease, Master Tenant may
appoint, with the consent of Landlord which shall not be unreasonably withheld, a new Master Tenant
Managing Member.
13.5 Notification of Changes in Ownership or Control. During the term of this Lease, the
Master Tenant shall promptly notify the Town of any and all changes whatsoever in the Master tenant’s
ownership, corporate or other status, management or control of the Master tenant and the degree thereof,
of which it or any of its officers have been notified or otherwise have knowledge or information.
13.6 Termination for Transfer. This Lease shall terminate pursuant to Section 18 if there is
any voluntary or involuntary assignment or Transfer other than provided in in Section 13.4 or as otherwise
expressly provided in this Lease.
SECTION 14. ASSIGNMENT AND SUBLETTING.
14.1 General. Except for those Subtenants approved by Town as provided herein, Master
Tenant shall not assign, let or sublet the whole or any portion of the Premises.
14.2 Conditions for Landlord’s Consent to Subtenants. Landlord’s decision to grant or withhold
its consent to a Subtenant may be based upon standards relevant to the type of subtenant and its
proposed operation, including but not limited to: (i) experience or lack of experience in operating a retail
establishment; (ii) the operating standards of such subtenant and whether it will provide the premium
caliber of facilities and services acceptable to Landlord; (iii) the financial capacity to perform the
provisions of this Lease and produce a fair return to Landlord; (iv) the experience of the proposed
subtenant; (v) the ability of the Master Tenant and subtenants to perform the provisions of this Lease.
However, Landlord shall not unreasonably withhold, condition or delay its approval of any potential
Subtenant who Master tenant reasonably determines is the best available Subtenant on terms and
conditions satisfactory to Master tenant, so long as Master tenant has made reasonable efforts to attract
the highest quality potential Subtenants available on terms and conditions satisfactory to Master tenant.
14.3 Conditions for Landlord’s Consent to Assignment. Landlord’s decision to grant or
withhold its consent to any assignment of this Lease by Master tenant shall be at the Landlord’s sole and
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exclusive discretion, but otherwise may be based upon standards of commercial reasonableness,
including but not limited to the financial capacity, experience and ability of assignee to perform the
provisions of the Lease.
14.4 Approval by Town Manager. Any such consent, if given by Landlord, shall be in writing
and may be approved by the Town Manager on behalf of Landlord.
14.5 Recognition Agreement. In connection with each Sublease consented to by Landlord,
Landlord shall agree in writing in favor of the applicable Subtenant that if this Lease terminates, then
Landlord shall attorn to such applicable Subtenant on the terms and conditions of such Subtenant’s
sublease. In the event of such attornment, Landlord shall assume all of the Master Tenant’s obligations
under the applicable sublease accruing from and after the date the Master Lease terminates. Landlord
shall indemnify, defend and hold Master Tenant harmless from and against any and all claims, damages,
liabilities, demands, actions, causes of action, judgments, injuries, liens, costs and expenses (including,
without limitation, reasonable attorneys’ fees and costs of suit) arising from any breach or default by
Landlord of any of its assumed obligations under the applicable sublease; however, such indemnification,
defense and hold harmless obligation shall not be applicable to any claims, damages, liabilities,
demands, actions, causes of action, judgments, injuries, liens, costs and expenses (including, without
limitation, reasonable attorneys’ fees and costs of suit) to the extent arising from any breach by Master
Tenant of any obligations of the sublessor under the applicable sublease occurring prior to the date
Landlord attorns to the applicable Subtenant under the terms of the applicable Subtenant’s sublease.
Landlord’s obligations under this Section 14.5 shall survive the termination of this Lease.
SECTION 15. MORTGAGE OF LEASEHOLD.
15.1 Prohibited Encumbrances. Except as permitted in Section 0 below, Master Tenant shall
not:
15.1.1 Engage in any financing or other transaction placing any mortgage or deed of
trust upon the Property, or upon Master Tenant’s leasehold estate therein or the improvements
constructed thereon; or
15.1.2 Place or suffer to be placed upon Master Tenant’s leasehold estate or the
improvements thereon any lien, levy, attachment or other encumbrance (other than a lien upon said
leasehold estate for taxes and assessments levied but not delinquent or payable with penalty); provided,
however, the foregoing notwithstanding, Master Tenant shall have the right to contest or appeal the
validity of any such lien, levy, encumbrance or attachment, provided that Master Tenant shall first furnish
adequate security to the reasonable satisfaction of Landlord to protect the Premises during the pendency
of such contest or appeal.
Any such mortgage, deed of trust, levy, attachment, encumbrance or lien (collectively, “encumbrance”)
not permitted pursuant to the terms of this Lease and caused or created by Master Tenant shall be
deemed to be a violation of this covenant on the date of its execution or filing of record, regardless of
whether or when it is foreclosed or otherwise enforced, unless Master Tenant shall, within twenty (20)
days of such date of execution or filing of record, remove such encumbrance or provide adequate security
to the reasonable satisfaction of Landlord to protect the Premises and the improvements thereon from
such encumbrance.
15.2 Permissible Encumbrances.
15.2.1 Anything in this Lease to the contrary notwithstanding, with Landlord’s prior
written consent (which shall not be unreasonably withheld, conditioned or delayed), Master Tenant’s
Work may be funded by debt, and accordingly Master Tenant may assign or encumber the estate created
by this Lease, by way of leasehold mortgages, leasehold deeds of trust, or otherwise.
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15.2.2 With Landlord’s prior written consent (which shall not be unreasonably
withheld, conditioned or delayed), Master Tenant may assign or encumber the estate created by this
Lease by way of not more than two leasehold mortgages and/or leasehold deeds of trusts at any one time
encumbering Master Tenant’s leasehold interests, provided that such leasehold mortgages and/or
leasehold deeds of trusts comply with the requirements of this Section 15. Landlord shall have no
obligation to make any changes to this Lease to accommodate any Permitted Mortgagee but agrees to
work with Master Tenant in good faith in Master Tenant’s efforts to obtain a Permitted Mortgage.
15.2.3 The fee title to the Premises cannot be encumbered pursuant to this Section
15; only the leasehold interest of the Master Tenant under this Lease (including, without limitation, Master
Tenant’s interest in the Premises, Master Tenant’s Work, Subtenant’s Work and Master Tenant’s Property
and any personal property of any Subtenant) may be so encumbered.
15.2.4 An encumbrance permitted by this Section 15 shall be referred to as a
“Permitted Mortgage.” The holder of a Permitted Mortgage is herein referred to as a “Permitted
Mortgagee.”
15.3 Notice to Landlord. Except when Landlord’s prior approval or consent shall be required,
Master Tenant shall notify Landlord within twenty (20) days of the time of creation of any lien or
encumbrance which has been created on or attached to Master Tenant’s leasehold estate therein or the
Master Tenant improvements thereon, whether by act of Master Tenant or otherwise. If such lien or
encumbrance is not created by an act of Master Tenant, Master Tenant shall notify Landlord of such
creation as of the time Master Tenant first knows of such creation or attachment.
15.4 Mortgages Subordinate to Lease. Any mortgage permitted under Section 15 hereof shall
be subject and subordinate to this Lease and, except as otherwise expressly provided herein or in any
separate written agreement between Landlord and a Permitted Mortgagee, the rights of Landlord
hereunder.
15.5 Extent of Encumbrance. A Permitted Mortgage shall encumber no interest in property
other than Master Tenant’s interest in the leasehold and improvements to the Premises, including without
limitation, Master Tenant’s interest in the Premises, Master Tenant’s Work, Subtenant’s Work and Master
Tenant’s Property, and any personal property of any Subtenant.
15.6 Disposition of Insurance Proceeds and Condemnation Awards. A Permitted Mortgage
shall contain provisions permitting the disposition and application of the insurance proceeds and
condemnation awards in the manner provided in this Lease. In the event that the Premises, or any portion
thereof, are damaged or destroyed or condemned by power of eminent domain, in whole or in part, to the
extent required by the provisions of the Permitted Mortgage, the proceeds therefrom shall be held by the
Permitted Mortgagee, to be applied in the case of damage or destruction pursuant to the terms of the
Permitted Mortgage with any excess to be paid to Landlord and Tenant as their interests may appear and
to be applied in accordance with Section 17.3 hereof in the case of condemnation.
15.7 Permitted Mortgagee. Except as otherwise approved in writing by Landlord, a Permitted
Mortgage may be given only to a responsible bona fide institutional lender. For the purposes hereof, the
term “institutional lender” shall mean any one of the following lending institutions: a commercial or
savings bank; a state bank or national bank, a trust company; an insurance company; a savings and loan
association; a building and loan association; a credit union; an investment banking firm; an educational
institution; a pension, retirement or welfare fund; a charity; a real estate investment trust (“REIT”) but only
if the REIT is publicly traded and registered with the U.S. Securities & Exchange Commission, and the
amount of the Permitted Mortgage does not exceed two percent of the value of the REIT’s assets; an
endowment fund or foundation authorized to make loans in the State of California; or any other
responsible financial institution.
15.8 Continuing Terms and Covenants. Except as otherwise expressly provided in this Lease
or in a separate document executed by Landlord, all rights acquired by said Permitted Mortgagee under
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said Permitted Mortgage shall be subject to each and all of the covenants, conditions and restrictions set
forth in this Lease, and to all rights of Landlord hereunder, none of which covenants, conditions and
restrictions is or shall be waived by Landlord by reason of the giving of such Permitted Mortgage, except
as expressly provided in this Lease or in a separate document executed by Landlord. Notwithstanding
any foreclosure of any Permitted Mortgage and so long as this Lease has not been terminated, unless
and until a Permitted Mortgagee takes possession of the Premises (subject to any Subleases then in
existence, if applicable) and to the extent Master Tenant is receiving the revenues from the Premises,
Master Tenant shall remain liable for the payment of Minimum Monthly Rent, Percentage Rent and all
other payments payable pursuant to this Lease, and for the performance of all of the terms, covenants
and conditions of this Lease which by the terms hereof are to be carried out and performed by Master
Tenant.
15.9 Affirmation of Lease in Bankruptcy. In the event of the filing of a petition in bankruptcy by
the Master Tenant, and the Master Tenant rejects this Lease under Section 365 of the Bankruptcy Code,
the Landlord shall, upon the request of a Permitted Mortgagee, affirm this Lease, and the Landlord will
enter into a new Lease on the same terms and conditions with the Permitted Mortgagee immediately
upon Master Tenant’s rejection of this Lease. In the event of the filing of a petition in bankruptcy by the
Landlord, and the Landlord rejects this Lease and the Master Tenant does not affirm it, a Permitted
Mortgagee will have the authority to affirm the Lease on behalf of the Master Tenant and to keep the
Lease in full force and effect.
15.10 Notice Required. Master Tenant shall submit to Landlord within the times set forth in this
Section 15 a written notice of its intention to enter into a Permitted Mortgage, and shall submit to Landlord
such information and detail as will enable Landlord to determine the compliance of such intended
Permitted Mortgage with the provisions of this Section 15 and this Lease. If Landlord has not objected to
the intended Permitted Mortgage on the grounds of noncompliance with provisions of this Lease within 45
days of receipt by Landlord of such notice and information, the intended Permitted Mortgage shall be
deemed to comply with the provisions of this Section 15 and this Lease and be deemed approved by
Landlord, provided that in no event shall any such deemed approval act or operate to subordinate
Landlord’s fee title to the Property to the Permitted Mortgage. Master Tenant shall thereafter promptly
submit to Landlord final documents in connection with such Permitted Mortgage upon their execution or
receipt by Master Tenant, or upon the funding of the loan secured by the Permitted Mortgage, for review
by Landlord for compliance with the provisions of this Section 15 and this Lease.
15.11 Landlord’s Right to Cure Master Tenant’s Defaults on Leasehold Mortgages. Master
Tenant agrees that any Permitted Mortgage shall provide:
15.11.1 That the Permitted Mortgagee shall in writing by certified or registered mail (or
recognized overnight courier service) give notice to Landlord of the occurrence of any event of default
under said Permitted Mortgage; and
15.11.2 That Landlord shall be given at least 30 days’ notice of default in debt service
payments or any other obligation of Master Tenant under a Permitted Mortgage before such Permitted
Mortgagee will initiate any mortgage foreclosure action or accelerate the indebtedness or exercise its
power of sale. If any payments required to be made under the provisions of the Permitted Mortgage shall
not be paid, or any other act or omission shall occur which constitutes a default under the terms of such
Permitted Mortgage, Landlord may cure such default during any period that Master Tenant is in default
thereunder, provided that Landlord shall comply with the provisions of Section 18 hereof calling for prior
notice to Master Tenant except in cases of emergency where earlier action is required, notifying Master
Tenant of Landlord’s intention to cure such default on Master Tenant’s behalf. Landlord shall not
commence to cure such default if (a) Master Tenant shall have cured such default within said 30-day
period, or (b) except for defaults in the payment of money, Master Tenant shall have commenced to cure
such default and is diligently pursuing such cure in full compliance with the terms of the Permitted
Mortgage, or (c) Master Tenant shall have obtained from the Permitted Mortgagee a written extension of
time in which to cure such default, together with a separate written extension of time granting Landlord
reasonable additional time to cure said default if said default is not cured within said extended time, and
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executed copies thereof are delivered to Landlord. Any Permitted Mortgage shall further expressly
provide that, in the event Master Tenant fails to cure any default thereunder, Landlord shall have a
reasonable period of time (considering the nature of the default) to cure such default following the
expiration of all periods (including any extensions of time and periods during which performance is
waived) allowed for Master Tenant’s cure of such default.
15.11.3 If Landlord shall elect to cure any default under a Permitted Mortgage, Master
Tenant shall pay the costs reasonably incurred by Landlord in curing such default to Landlord, together
with interest thereon at the “Reference Rate” of the Bank of America plus three percent and not to exceed
the maximum rate for which the parties may lawfully contract, as Additional Rent. Master Tenant hereby
authorizes Landlord, in Landlord’s name, without any obligation or duty to do so, to do any act or thing
required of or permitted to Master Tenant to prevent any default under said Permitted Mortgage or any
acceleration thereof, or the taking of any portion of the security for the Permitted Mortgage by foreclosure
or other action to enforce the collection of the indebtedness, and Master Tenant agrees to indemnify and
hold Landlord harmless from any costs, damages, expenses or liabilities (including reasonable attorneys’
fees) resulting from Landlord exercising its rights pursuant to this Section 15. Notwithstanding any
provisions of this Lease to the contrary, if Landlord shall elect to cure any default under a Permitted
Mortgage and such Permitted Mortgage is non-recourse to Master Tenant, Master Tenant shall not be
obligated to reimburse Landlord for any costs incurred by Landlord, provided; however, any payments
made by Landlord shall be payable to the extent Master Tenant is receiving rental payments under this
Lease and such payments to Landlord shall be payable prior to any other payments.
15.12 Notice to Landlord. No Permitted Mortgagee shall have the rights or benefits mentioned
in this Section 15 nor shall the provisions of this Section 15 be binding upon Landlord, unless and until
the name and address of the Permitted Mortgagee shall have been delivered to Landlord, notwithstanding
any other form of notice, actual or constructive.
15.13 Rights and Obligations of Permitted Mortgagees. If Master Tenant, or Master Tenant’s
successors or assigns, shall mortgage this Lease in compliance with the provisions of this Section 15,
then, so long as any such Permitted Mortgage shall remain unsatisfied of record, the following provisions
shall apply:
15.13.1 Landlord, upon serving upon Master Tenant any notice of default pursuant to
the provisions of Section 18 hereof, or any other notice under the provisions of or with respect to this
Lease, shall also serve a copy of such notice upon any Permitted Mortgagee at the address of such
Permitted Mortgagee provided pursuant to Section 15.12 above, and no notice by Landlord to Master
Tenant hereunder shall affect any rights of a Permitted Mortgagee unless and until thirty (30) days after a
copy thereof has been so served to such Permitted Mortgagee. Notwithstanding any event of default by
Master Tenant under this Lease, Landlord shall have no right to terminate this Lease unless Landlord
shall have given the Permitted Mortgagee written notice of such default and Permitted Mortgagee shall
have failed to remedy such default as provided below or acquire Master Tenant’s estate created hereby
or commence foreclosure or other appropriate proceedings in the nature thereof, as all set forth in, and
within the time specified by this Section 15.13.
15.13.2 In case Master Tenant shall have failed to cure any default hereunder within
the period provided for Master Tenant to cure such default, Landlord shall so notify any Permitted
Mortgagee of such failure and any Permitted Mortgagee shall, within thirty (30) days of receipt of such
notice have the right, but not the obligation, to remedy such default or cause the same to be remedied,
and Landlord shall accept such performance by or at the instance of the Permitted Mortgagee as if the
same had been made by Master Tenant; provided, however, that if the breach or default is with respect to
the Master Tenant’s Work, nothing contained in this Section or any other Section or provision of this
Lease shall be deemed to permit or authorize such Permitted Mortgagee, either before or after
foreclosure or action in lieu thereof, to undertake or continue the construction or completion of the
improvements beyond the extent necessary to conserve or protect the improvements or construction
already made without first having expressly assumed the obligation to Landlord to complete, in the
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manner provided in this Lease, the improvements on the Premises or the part thereof to which the lien or
title of such Permitted Mortgagee relates.
15.13.3 For the purposes of this Section 15 no event of default, other than an event of
default due to a default in the payment of money, shall be deemed to exist under Section 18 hereof with
respect to the performance of work required to be performed, or of acts to be done or of conditions to be
remedied, if steps shall, in good faith, have been commenced by Master Tenant or a Permitted
Mortgagee within the time permitted therefor to rectify the same and shall be prosecuted to completion
with diligence and continuity as Section 18 hereof provides.
15.13.4 Anything herein contained to the contrary notwithstanding, upon the
occurrence of an event of default, other than an event of default due to a default in the payment of money
(for which the Permitted Mortgagee shall have no more than thirty (30) days following receipt of written
notice from Landlord to cure such monetary default), Landlord shall take no action to effect a termination
of this Lease without first giving to any Permitted Mortgagee written notice thereof and a reasonable time
thereafter which shall not be less than ninety (90) days within which to either (a) obtain possession of the
mortgaged property (including possession by a receiver), or (b) institute, prosecute and complete
foreclosure proceedings or otherwise diligently acquire Master Tenant’s interest under this Lease. A
Permitted Mortgagee, upon acquiring Master Tenant’s interest under this Lease, shall be required
promptly to cure all defaults then reasonably susceptible to being cured by such Permitted Mortgagee;
provided, however, that: (1) such Permitted Mortgagee shall not be obligated to continue such possession
or to continue such foreclosure proceedings after such defaults shall have been cured; (2) nothing herein
contained shall preclude Landlord, subject to the provisions of this Section 15, from exercising any rights
or remedies under this Lease with respect to any other default by Master Tenant (subject to Permitted
Mortgagee’s cure rights set forth in this Section 15), during the pendency of such foreclosure
proceedings; and (3) such Permitted Mortgagee shall agree with Landlord, in writing, to comply during the
period of such forbearance with such of the terms, conditions and covenants of this Lease as are
reasonably susceptible to being complied with by such Permitted Mortgagee (however, consistent with
the provisions of Section 15.13.10 below, the provisions of this clause (3) shall not obligate such
Permitted Mortgagee to cure any defaults of the Master Tenant, or to expend any monies or to take any
actions to comply with the terms, conditions or covenants of this Master Lease, prior to such Permitted
Mortgagee acquiring Master Tenant’s interest under this Lease). Any default by Master Tenant not
reasonably susceptible to being cured by such Permitted Mortgagee, or the occurrence of any of the
events specified in Section 18, shall be deemed waived by Landlord upon completion of such foreclosure
proceedings or upon such acquisition of Master Tenant’s interest in this Lease, except that any such
events of default which are reasonably susceptible to being cured after such completion and acquisition
shall then be cured with reasonable diligence. Such Permitted Mortgagee, or its designee or other
purchaser in foreclosure proceedings, may become the legal owner of the leasehold estate of this Lease
through such foreclosure proceedings or by assignment of this Lease in lieu of foreclosure. A Permitted
Mortgagee or its designee or other party which becomes the legal owner of the leasehold estate of this
Lease through foreclosure proceedings or by an assignment of this Lease in lieu of foreclosure shall be
deemed by such acquisition to have assumed all of Master Tenant’s rights and obligations under this
Lease accruing during the period of such Permitted Mortgagee’s or its designee’s ownership of the
leasehold estate of this Lease. If a Permitted Mortgagee is prohibited by any process or injunction, or any
bankruptcy, insolvency or other judicial proceeding involving Master Tenant from commencing or
prosecuting foreclosure or other appropriate proceedings in the nature thereof, the times specified for
commencing or prosecuting such foreclosure or other proceedings in the nature thereof, the times
specified for commencing or prosecuting such foreclosure or other proceedings shall be extended for the
period of such prohibition; provided that the Permitted Mortgagee shall have fully cured any default in the
monetary obligations of Master Tenant under this Lease and shall continue to pay currently such
monetary obligations as and when the same fall due, and provided that the Permitted Mortgagee shall
diligently attempt to remove any such prohibition.
15.13.5 In the event of the termination of this Lease prior to the natural expiration of
the then current Term due to default of Master Tenant or operation of law (except by eminent domain) as
provided in Section 18, including, without limitation, due to any rejection of this Lease in any bankruptcy,
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insolvency or other debtor relief proceeding, Landlord shall immediately serve upon the holder of the
senior Permitted Mortgage written notice that the Lease has been terminated, together with a statement
of any and all sums which would at that time be due under this Lease but for such termination, and of all
other defaults, if any, under this Lease then known to Landlord. The senior Permitted Mortgagee or its
nominee, purchaser or assignee shall thereupon have the option to obtain a new lease in accordance
with and upon the following terms and conditions:
(a) Upon the written request of said Permitted Mortgagee, within sixty (60)
days after service of such notice that the Lease has been terminated, or within sixty (60) days after the
expiration of this Lease if Master Tenant was unable to renew the Term hereof, Landlord shall enter into a
new lease of the Property and improvements thereon with such holder, or its designee or assignee, as
follows:
(i) Such new lease shall be the same priority as this Lease, shall be
effective as of the date of termination of this Lease, and shall be for the remainder of the Term and at the
rent and upon all the agreements, terms, covenants and conditions hereof, including any applicable rights
of renewal and the use provisions for restaurant and food service purposes specified above. Such new
lease shall require that the tenant perform any unfulfilled obligation of Master Tenant under this Lease
which is reasonably susceptible to being performed by such tenant. Upon the execution of such new
lease, the tenant named therein shall pay any and all sums which would at the time of the execution
thereof be due under this Lease but for such termination, and shall pay all expenses, including
reasonable counsel fees, court costs and disbursements incurred by Landlord in connection with such
defaults and termination, the recovery of possession of the Property, and the preparation, execution and
delivery of such new lease. Upon the execution and delivery of the new lease, title to all leasehold
improvements (including, without limitation, all of the Master Tenant’s Work) as well as all Master
Tenant’s Property, shall automatically vest in the Permitted Mortgagee or its nominee as the new Master
Tenant under this Lease until the expiration of the term or sooner termination of the new lease.
(ii) Effective upon the commencement of the term of any new lease
executed pursuant to this Subsection 15.13.5, all subleases then in effect shall be assigned and
transferred without recourse by Landlord to the tenant under such new lease, and all monies on deposit
with Landlord which Master Tenant would have been entitled to use but for the termination or expiration of
this Lease may be used by the tenant under such new lease for the purposes of and in accordance with
the provisions of such new lease, unless credited against expenses in accordance with Subsection
15.13.5(a)(i) above.
15.13.6 Any notice or other communication which Landlord shall desire or is required
to give to or serve upon the holder of a Permitted Mortgage under this Lease shall be in writing and shall
be served by certified mail, return receipt requested, addressed to such holder at the address provided for
pursuant to Section 15.12 hereof, or at such other address as shall be designated by such holder in
writing given to Landlord by certified mail, return receipt requested. Any notice or other communication
which the holder of a Permitted Mortgage under this Lease shall desire or is required to give to or serve
upon Landlord shall be deemed to have been duly given or served if (a) sent by certified mail, return
receipt requested, addressed to Landlord at Landlord’s address as set forth in Subsection 21.1 of this
Lease or at such other addresses as shall be designated by Landlord by notice in writing given to such
holder by certified mail, return receipt requested, and (b) sent by certified mail, return receipt requested,
to the Landlord’s other mortgages, if any.
15.13.7 Anything herein contained to the contrary notwithstanding, the provisions of
this Section 15 shall inure only to the benefit of the holders of Permitted Mortgages. Neither a Permitted
Mortgagee nor any other holder or owner of the indebtedness secured by a leasehold mortgage or
otherwise shall be liable upon the covenants, agreements or obligations of Master Tenant contained in
this Lease, unless and until such Permitted Mortgagee or that holder or owner acquires the interest of
Master Tenant.
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15.13.8 During such period of time that any Permitted Mortgage is in existence,
Landlord shall not agree to any mutual termination or accept any surrender of this Lease (except upon the
expiration of the term of this Lease, or upon the earlier termination of this Lease (x) in connection with a
casualty or condemnation in accordance with the provisions of this Lease, or (y) by reason of a default by
Master Tenant that is not cured or remedied within the applicable notice and cure period set forth in this
Lease in accordance with the provisions of this Lease, in either case subject to the Permitted Mortgagee’s
rights under this Lease, including, without limitation, the provisions of this Section 15.13), nor shall
Landlord consent to any amendment or modification of this Lease, without the prior consent of a
Permitted Mortgagee, which consent shall not be unreasonably withheld, conditioned or delayed and shall
be given within ten (10) business days of written request therefor.
15.13.9 Landlord shall mail or deliver to Permitted Mortgagee at the address of
Permitted Mortgagee provided to Landlord a duplicate copy of all notices which Landlord may from time
to time give to Master Tenant pursuant to this Lease.
15.13.10 Foreclosure of a Permitted Mortgage or any sale thereunder, whether by
judicial proceedings or by virtue of any power of sale contained in the Permitted Mortgage, or any
conveyance of the leasehold estate created hereby from Master Tenant to Permitted Mortgagee by virtue
or in lieu of foreclosure or other appropriate proceedings in the nature thereof, shall not require the
consent of Landlord or constitute a breach of any provision of or a default under this Lease. Upon such
foreclosure, sale or conveyance, Landlord shall recognize the Permitted Mortgagee, or any other
foreclosure sale purchaser, as Master Tenant hereunder and such party shall attorn to Landlord, be
subject to the provisions regarding assignment set forth in Section 15.14 below and shall fully perform
Master Tenant’s obligations hereunder. The preceding to the contrary notwithstanding, a Permitted
Mortgagee shall have no liability for Master Tenant’s obligations under this Lease unless and until it
becomes the Master Tenant under this Lease by means of foreclosure or deed in lieu thereof or pursuant
to any new lease obtained pursuant to the terms above, and thereafter the Permitted Mortgagee or its
successor or assign or designee shall be liable under this Lease or such new lease only for the period of
time that such Permitted Mortgagee or its successor, assign or designee remains tenant hereunder or
thereunder. Nothing herein shall be construed to obligate any Permitted Mortgagee to remedy any
default of Master Tenant, and any failure of a Permitted Mortgagee to complete any such cure after
commencing the same shall not give rise to any liability of the Permitted Mortgagee to Landlord or Master
Tenant.
15.14 Assignment by Mortgagee. If any Permitted Mortgagee shall acquire title to Master
Tenant’s interest in this Lease by foreclosure of a mortgage thereon, or by assignment in lieu of
foreclosure or by an assignment from a designee or wholly-owned subsidiary corporation of such
mortgagee, or under a new lease pursuant to this Section 15, such Permitted Mortgagee or its successor,
assign or designee may assign such lease and shall thereupon be released from all liability for the
performance or observance of the covenants and conditions in such lease contained on Master Tenant’s
part to be performed and observed from and after the date of such assignment, provided that Landlord
shall receive an executed counterpart copy of such assignment, together with the name and address of
the assignee.
SECTION 16. DAMAGE TO PREMISES.
16.1 Landlord’s Obligation to Repair. If subsequent to completion of Master Tenant’s Work, a
material part of the Premises provided by Landlord in Exhibits B and D, shall, by reason of fire,
earthquake, the elements, acts of God or other unavoidable casualty, be destroyed or so damaged as to
become unusable in whole or in part and the damage can, by proceeding with reasonable diligence, be
repaired within 365 days from the date of such destruction or damage, Landlord shall promptly and
diligently repair the damage (subject to the limitations set forth in Section 20.2) and this Lease shall
remain in full force and effect. If a material part of the Premises provided by Landlord in Exhibits B and D,
are damaged, and the damage cannot, by proceeding with reasonable diligence, be repaired within 365
days from the date of such destruction or damage, this Lease may be terminated by Landlord by written
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notice given to Master Tenant within thirty (30) days after the date of the casualty. Such notice shall
terminate this Lease as of the date of the casualty.
16.2 Election to Terminate. If subsequent to completion of Master Tenant’s Improvements a
material part of the Premises provided by Landlord in Exhibits B and D, are damaged, and the damage
cannot, by proceeding with reasonable diligence, be repaired within 365 days from the date of such
destruction or damage, and Landlord has not terminated this Lease pursuant to Subsection 16.1 above,
then this Lease may be terminated by Master Tenant by written notice given to Landlord within sixty (60)
days after the date of the casualty. Such notice shall terminate this Lease as of the date of the casualty.
If Master Tenant does not make the foregoing election within the required period and Landlord has not
terminated the Lease, then Landlord shall promptly and diligently repair the damage and this Lease shall
remain in full force and effect (subject to the provisions of Subsection 16.3 below regarding completion of
Landlord’s repairs). If Landlord is required or elects to repair the Premises under the provisions of
Subsection 16.1 and fails to complete such repair within 365 days after the casualty described in
Subsection 16.1 above (or at least to complete such repair, within such 365 day period, to the extent that
permits substantial resumption of Master Tenant’s business (and the businesses of the Subtenants in
existence as of the date of the damage or destruction) in the Premises, provided that Landlord thereafter
continuously and diligently pursues any remaining required repairs to completion), then thereafter Master
Tenant, at Master Tenant’s option, may terminate this Lease by giving Landlord written notice of Master
Tenant’s election to do so at any time prior to the substantial completion of such repair. In such event this
Lease shall terminate as of the date of Master Tenant’s notice.
16.3 Abatement of Rent. If a material part of the Premises provided by Landlord in Exhibits B
and D, is damaged, and Landlord is required or elects to repair them pursuant to the provisions of
Subsection 16.1, the Minimum Monthly Rent and Percentage Rent payable pursuant to Section 4 shall be
abated from the date of the casualty until such Premises is sufficiently restored to allow Master Tenant to
occupy the Premises and operate within the same manner as existed immediately prior to such damage
or destruction. If, however, Master Tenant is able to occupy and operate its business within a portion of
the Premises, Minimum Monthly Rent or Percentage Rent shall be abated only for the portion of the
Premises that Master Tenant cannot occupy and operate within in the same manner as existed
immediately prior to such damage or destruction. Such partial abatement shall be calculated on a square
foot basis. The abatement of Minimum Monthly Rent and Percentage Rent (and Master Tenant’s right to
terminate this Lease as provided in Subsection 16.2 above, shall be Master Tenant’s sole remedies due
to the occurrence of the casualty. Landlord shall not be liable to Master Tenant or any other person or
entity for any direct, indirect or consequential damage due to or arising from the casualty.
16.4 Application of Insurance Proceeds. If any part of the Master Tenant’s Work or any other
leasehold improvements constructed by or on behalf of Master Tenant is damaged or destroyed, and at
the time of such damage or destruction, the leasehold interest of the Master Tenant hereunder, or
applicable portion thereof, was encumbered by a Permitted Mortgage, then the proceeds of insurance
allocable to such Master Tenant’s Work or other leasehold improvements constructed by or on behalf of
Master Tenant first shall be applied to pay off or pay down the loan encumbered by the Permitted
Mortgage unless the applicable Permitted Mortgagee allows such insurance proceeds to be used to
restore such Master Tenant’s Work or other leasehold improvements.
SECTION 17. CONDEMNATION.
17.1 Total Condemnation. If, during the term of this Lease, the whole of the Premises shall be
taken pursuant to any condemnation proceeding or a part of the Premises is taken pursuant to any
condemnation proceeding and the remaining portion is not suitable for the purposes for which Master
Tenant was using the Premises prior to the taking, then this Lease shall terminate as of the date that actual
physical possession of the Premises is taken, and after that date, both Landlord and Master Tenant shall be
released from any future obligations arising under this Lease.
17.2 Partial Condemnation. If, during the term of this Lease, only a part of the Premises is
taken pursuant to any condemnation proceeding and the remaining portion is suitable for the purposes for
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which Master Tenant was using the Premises prior to the taking in the sole discretion of Master Tenant,
then this Lease shall, as to the part so taken, terminate as of the date that actual physical possession of
such portion of the Premises is taken, and after that date, both Landlord and Master Tenant shall be
released from any future obligations under this Lease with respect to such portion of the Premises taken.
17.3 Condemnation Award. If the whole or any part of the Premises are taken pursuant to any
condemnation proceeding, then Landlord shall be entitled to the entirety of any condemnation award
except that portion allocable to the value of Master Tenant’s leasehold interest of the unexpired term of
this Lease, any Master Tenant’s Property, Subtenant’s Personal Property and/or any unsalvageable trade
fixtures or furnishings owned by Master Tenant, any amounts specifically awarded or agreed upon by the
Master Tenant and the condemning authority for the unamortized portion of Master Tenant’s leasehold
improvements and each Subtenant’s leasehold improvements shall be the property of Master Tenant
(except that the portion of the condemnation award allocable to each Subtenant’s Personal Property and
each Subtenant’s leasehold improvements shall be awarded to Master Tenant or the applicable
Subtenant(s), as their interests may appear, or as provided in the applicable Sublease) (“Master Tenant’s
Award”). The foregoing notwithstanding, if the whole or a portion of the Premises shall be taken pursuant
to any condemnation proceeding and at that time the leasehold interest of the Master Tenant, or
applicable portion thereof, was encumbered by a Permitted Mortgage, then Master Tenant’s Award first
shall be applied to pay off or pay down the loan encumbered by the Permitted Mortgage. Master Tenant
shall require in any sublease of the Premises, that any Subtenant waive any and all rights against any
public entity and/or the Landlord for any portion of the condemnation award relating to the Subtenant(s)
value of the leasehold interest of any unexpired term.
17.4 Effect of Termination. In the event this Lease is canceled or terminated pursuant to any
of the provisions of this Section 17 all rentals and other charges payable on the part of Master Tenant to
Landlord hereunder shall be paid either as of the date upon which actual physical possession shall be
taken by the condemner, or as of the date upon which Master Tenant ceases doing business in, upon or
from the Premises, whichever first occurs; and the parties shall thereupon be released from all further
liability hereunder, except for any liability arising prior to the date upon which actual physical possession
shall be taken by the condemner.
SECTION 18. DEFAULT, REMEDIES, AND TERMINATION.
18.1 Master Tenant’s Default. If: (i) Master Tenant shall fail to comply with any of the
provisions herein providing for the construction of the Master Tenant’s Work, and such failure shall
continue for thirty (30) days after receipt of written notice thereof, unless Master Tenant shall have taken
steps in good faith within such period to remedy such failure and is continuing to so act with diligence and
continuity; or (ii) Master Tenant shall fail to pay any rent or other monies due under this Lease after the
same are due, and such failure shall continue for ten (10) days after receipt of written notice thereof to
Master Tenant, or (iii) Master Tenant shall fail to perform any other term, covenant, or condition herein
contained, and such failure shall continue for thirty (30) days after receipt of written notice thereof, unless
Master Tenant shall have taken steps in good faith within such period to remedy such failure and is
continuing to so act with diligence and continuity and further, where possession of the Premises or portion
thereof is necessary to cure a default under this Lease, Master Tenant will not be considered to be in
default under this Lease as a result of a breach by a Subtenant under its sublease so long as Master
Tenant has sent notice of default to, and commenced legal action against the Subtenant and is diligently
and continuously pursuing an unlawful detainer action or other legal proceedings required to regain
possession of the Premises or portion thereof from such Subtenant, or (iv) the Master Tenant’s interest
herein or any part thereof be assigned or transferred, either voluntarily or by operation of law, except
pursuant to a Permitted Transfer or Section 14.2 or Section 15, whether by judgment, execution, death or
any other means, or (v) the Master Tenant shall file any petition or institute any proceedings under any
bankruptcy act, state or federal, or if such petition or proceeding be filed or be instituted or taken against
the Master Tenant and such petition remains undischarged for a period of 90 days; or if any receiver of
the business or of the property or assets of Master Tenant shall be appointed by any court (except a
receiver appointed at the instance or request of the Landlord) and Master Tenant fails to obtain
dissolution of the receiver within 90 days after appointment of the receiver; or (vi) Master Tenant shall
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make a general or any assignment for the benefit of its creditors; or (vii) Master Tenant shall abandon
(other than a temporary cessation of operations in connection with renovations of the Premises to which
Master Tenant has obtained Landlord’s approval, if applicable, as required by the terms hereof) the
Premises; or (viii) Master Tenant has made any written or oral representation to the Landlord in
connection with this Lease that Master Tenant knows was false in any material respect as of the date
made or submitted, Master Tenant knew or should have known that the Landlord would rely on such false
representation, and the Landlord relies on such false representation to its detriment in any material
respect, then in any of such events Landlord shall have the following options, subject to the provisions of
Section 15:
18.1.1 To collect, by suit or otherwise, each installment of rent or other sum as it
becomes due hereunder, or to enforce by suit or otherwise, any other term or provision hereof on the part
of Master Tenant required to be kept or performed; and/or
18.1.2 To reenter the Premises, remove all persons therefrom, take possession of
the Premises and of all equipment, fixtures and personal property thereon or therein, and either with or
without terminating this Lease to make commercially reasonable efforts to relet the Premises or any
portion thereof (but nothing contained herein shall be construed as obligating Landlord to relet the whole
or any portion of the Premises) for such term or terms (which may be for a term extending beyond the
term of the Lease) and at such reasonable rental or rentals and upon such other terms and conditions as
Landlord in its sole discretion may deem advisable. In addition to the foregoing, Landlord shall have the
right, but not the obligation to, make such alterations and repairs to the Premises, or to divide or
subdivide the Premises, as may be required or occasioned by any such reletting. Provided, however,
Landlord’s right to make alterations, repairs or improvements to the Premises after Master Tenant’s
default shall be limited to those alterations, repairs, and/or improvements necessary for the purpose of re-
letting the Premises. In the event Landlord relets the Premises, or any portion thereof, it shall execute
any such lease in its own name, but the Master Tenant in such lease of reletting shall be under no
obligation whatsoever to see to the application by Landlord of any rent collected by Landlord for the
account of Master Tenant, nor shall Master Tenant hereunder have any right or authority whatsoever to
collect any rent as the Master Tenant in the lease of reletting. Upon any such reletting, the rents received
on any such reletting shall be applied first to the expenses of reletting and collecting, including necessary
renovations and alterations of the Premises and reasonable attorneys’ fees and any real estate
commissions actually paid, and thereafter toward payment of all sums due or to become due to Landlord
hereunder; if a sufficient sum shall not be thus realized to pay such rent and other charges, Master
Tenant shall pay to Landlord monthly any deficiency, and Landlord may sue therefor as each such
deficiency shall arise, but if the Premises are relet for an amount in excess of that necessary to pay such
rent and other charges, Master Tenant shall not be entitled to any such excess; and/or
18.1.3 To terminate this Lease, in which event Master Tenant agrees immediately to
surrender possession of the Premises and to pay to the Landlord as the amount of damage sustained by
Landlord by reason of Master Tenant’s breach of this Lease, the following:
(a) The worth at the time of award of any unpaid Rent which had been
earned at the time of such termination; plus
(b) The worth at the time of award of the amount by which the unpaid Rent
which would have been earned after termination until the time of award exceeds the amount of such
rental loss Master Tenant proves could have been reasonably avoided; plus
(c) The worth at the time of award of the amount by which the unpaid Rent
for the balance of the Term after the time of award exceeds the amount of such rental loss that Master
Tenant proves could be reasonably avoided.
As used in Sections 18.1.3(a) and 18.1.3(a) above, the term “worth at the time of
award” is computed by allowing interest from the date such amount becomes due and payable at one
percent (1%) per annum above the rate which the Bank of America announces publicly at its San
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Francisco or Los Angeles executive offices as its “Reference Rate” for unsecured commercial loans.
As used in Section 18.1.3(b) above, the term “worth at the time of the award” is
computed by discounting the amount determined pursuant to Section 18.1.3(b) at the discount rate of the
Federal Reserve Bank of San Francisco at the time of the award, plus one percent (1%).
18.1.4 Pursuant to its rights of re-entry, Landlord may remove all persons from the
Premises (but not any Subtenants to which Landlord is obligated to attorn) using such force as may be
reasonably necessary therefor and may, but shall not be obligated to, remove all property therefrom,
including, but not limited to, Master Tenant’s property (but not any Subtenant’s Personal Property), and
may, but shall not be obligated to, enforce any rights Landlord may have against said property, or store
the same in any public or private warehouse or elsewhere at the cost and for the account of Master
Tenant or the owners or owner thereof, or to treat all or portions of said property as having no value and
to dispose of said property accordingly. Anything contained herein to the contrary notwithstanding,
Landlord shall not be deemed to have terminated this Lease or the liability of Master Tenant to pay any
rent or other sum of money thereafter to accrue hereunder, or Master Tenant’s liability for damages under
any of the provisions hereof, by any such re-entry, or by any action in unlawful detainer or otherwise to
obtain possession of the Premises, unless Landlord shall have notified Master Tenant in writing that
Landlord has so elected to terminate this Lease. Master Tenant covenants and agrees that the service
by Landlord of any notice in unlawful detainer and the surrender of possession pursuant to such notice
shall not (unless Landlord elects to the contrary at the time of, or at any time subsequent to, the service of
such notice, and Landlord’s election be evidenced by written notice thereof to Master Tenant) be deemed
to be a termination of this Lease, or the termination of any liability of Master Tenant hereunder to
Landlord.
18.2 Landlord’s Default. If Landlord fails to comply with or defaults in the performance of any
provision of the Lease, Master Tenant shall have the right (but not the obligation) in addition to any and all
other rights and remedies available to Master Tenant at law or in equity, to cure such nonconformance or
default on behalf of Landlord, upon 30 days prior written notice to Landlord and to any mortgagee of
Landlord, if the name and address of such mortgagee has been previously provided to Master Tenant by
Landlord, except in an emergency, Master Tenant may cure such nonconformance or default without
such written notice so long as Master Tenant makes reasonable efforts to notify Landlord of such
emergency. Upon receipt from Master Tenant of notice of such cure and demand for payment, Landlord
shall repay any expenditure made by Master Tenant within 30 days of written request therefor. If
Landlord fails to make such repayment within such 30 day period, then, anything herein to the contrary
notwithstanding, Master Tenant may offset the amount owed it by Landlord pursuant to this Section 18.2
against the Minimum Monthly Rent and/or Percentage Rent payable by Master Tenant to Landlord
hereunder until fully offset.
SECTION 19. TOWN REQUIREMENTS.
19.1 Non-discrimination. Master Tenant shall not restrict the rental, use, occupancy, tenure,
or enjoyment of the Premises or any portion thereof, on the basis of race, sex, color, age, religion, sexual
orientation, actual or perceived gender identity, disability, ethnicity, or national origin of any person.
During the term hereof, any contracts or subleases relating to the construction, use or occupancy of the
Premises or any portion thereof, shall contain or be subject to substantially the following
nondiscrimination and nonsegregation clauses:
“There shall be no discrimination against or segregation of, any person, or group
of persons, on account of race, sex, color, age, religion, sexual orientation, actual or
perceived gender identity, disability, ethnicity, or national origin, in the sale, lease,
transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee,
himself or herself, or any person claiming under or through him or her, establish or permit
any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, or vendees of the
land.”
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19.2 Enforcement of Town Requirements. In enforcing Section 19.1, Landlord may require
Master Tenant to terminate the sublease of any Subtenant that fails to comply with that Section. Failure
of Master Tenant to commence actions to terminate the subleases of noncomplying Subtenants within 90
days of notice from Landlord shall constitute an event of default by the Master Tenant.
SECTION 20. COMPLIANCE WITH LAW.
20.1 General. During the Lease term, Master Tenant, at its sole cost and expense, shall
comply promptly with all federal, state, county, municipal and other governmental statutes, laws, rules,
orders, regulations and ordinances (“Laws”) pertaining to Master Tenant’s use of the Premises or the
improvements thereon, including those which require the making of any structural, unforeseen or
extraordinary changes to the Premises, whether or not any such Laws which may be hereafter enacted
were within the contemplation of the parties at the time of execution of this Lease, or involve a change of
policy on the part of the governmental body enacting the same. In connection with the foregoing, Master
Tenant acknowledges that Landlord, acting not as Landlord but in its governmental capacity, has certain
governmental regulatory authority over the Premises and agrees that “Law” as defined herein includes
any legal requirement imposed by Landlord acting not as Landlord but in its capacity as a governmental
regulatory body.
20.2 Regulations Requiring Modifications to Premises. If, under its regulatory authority, Town
adopts new laws, rules or ordinances that are generally applicable to commercial buildings and which
require upgrades, changes, or modifications to the Premises in order to comply with such Town-adopted
laws, rules, or regulations, then the cost or expense of compliance shall be as follows:
(a) Town shall bear the cost or expense of compliance to the extent that
such laws, rules or regulations require modifications to the structure or shell of the Premises in the
condition delivered to Master Tenant in Exhibit D.
(b) During the first ten years following the Rent Commencement Date,
Master Tenant shall bear the cost or expense of compliance to the extent that such new laws, rules, or
regulations require modifications to Master Tenant’s Work and any subsequent alterations thereto. After
the tenth year following the Rent Commencement Date, Landlord and Master Tenant shall split equally all
such costs.
SECTION 21. GENERAL PROVISIONS.
21.1 Notices, Demands, and Communications Between the Parties. All notices and other
communications required or permitted to be given under this Agreement shall be in writing and may be
delivered by hand, by facsimile transmission with verification of receipt, by email, by overnight courier
service, or by United States mail, postage prepaid and return receipt requested, addressed to the
respective parties as follows:
Town: Town of Los Gatos
110 E. Main Street
Los Gatos, CA 95030
Attention: Town Manager
Email: manager@losgatosca.gov
With copy to: Town of Los Gatos
110 E. Main Street
Los Gatos, CA 95030
Attention: City Attorney
Email: attorney@losgatosca.gov
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To Tenant: Tait Firehouse, LLC
223 West Main Street Suite B
Los Gatos CA 95030
Attn: Donald Imwalle, Jr.
Email: don@imwalledev.com
CC: jimfoley@pennantproperties.com
Jason@farwellrashkis.com
or to such other address as any party may designate by notice in accordance with this Section.
A copy of any notice of a legal nature, including, but not limited to, any claims against Town, its
officers or employees shall also be served in the manner specified above to the following address:
Town of Los Gatos
City Attorney’s Office
110 E. Main Street
Los Gatos, CA 95030
Notice shall be deemed effective on the date of personal delivery by hand or the date of receipt of
facsimile transmission (with verification of receipt) or email, or if sent by overnight courier service, then
one business day after delivery of such notice to such courier service or, if mailed, three days after
deposit in the mail.
21.2 Warranty Against Payment of Consideration for Agreement. Master Tenant warrants that
it has not paid or given, and will not pay or give, any third party (other than Colliers International who
introduced Landlord and Master Tenant to one another) any money or other consideration for obtaining
this Agreement.
21.3 Non-liability of Town Officials and Employees. No member, official, or employee of the
Town shall be personally liable to Master Tenant or any successor in interest of Master Tenant, in the
event of any default or breach by the Town or for any amount which may become due to Master Tenant
or to its successor, or on any obligations under the terms of this Agreement.
21.4 Enforced Delay; Extension of Time of Performance. The specific provisions of this
Agreement to the contrary notwithstanding, except for payment of any monetary payments required under
this Agreement, neither party shall be in default under this Agreement if an obligation to perform is
delayed due to war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; inability to
obtain or delay in obtaining materials due to lack of supply; acts of God; acts of the public enemy;
epidemics; quarantine restrictions; freight embargoes; governmental restrictions or enjoining to the
performance of the terms of this Agreement. An extension of time for any such cause shall be for the
period of the enforced delay and shall commence to run from the time of the commencement of the
cause, if notice by the party claiming such extension is sent to the other party within ten days of the
commencement of the cause. The foregoing notwithstanding, the total time period excused under this
Section shall not exceed two years.
21.5 Approvals and Town Manager’s Authority. Approvals required of the Town (except for
approvals expressly identified herein as being in the sole discretion of the Town) or Master Tenant shall
not be unreasonably withheld, and approval or disapproval shall be given within a reasonable time. The
Town Manager or his/her designee shall have the authority to act on behalf of the Town with regard to
any and all actions required of the Town under this Lease. Such actions include but are not limited to the
issuance of approvals and disapprovals and execution of all documents, including minor amendments to
this Lease.
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21.6 Holding Over. If Master Tenant shall hold over the term of this Lease, without Landlord’s
prior written consent, such holding over shall be construed as a tenancy from month to month, on the
same terms and conditions as this Lease, and at 150% of the Minimum Monthly Rent or the monthly
Percentage Rent, whichever is higher, in effect during the final full calendar of the term of this Lease.
21.7 Time of the Essence. Time is of the essence hereof, and waiver by the Landlord or
Master Tenant of a breach of any term, covenant or condition herein contained, whether express or
implied, shall not constitute a waiver of any subsequent breach thereof, or a breach of any other term,
covenant, or condition herein contained, and acceptance of rent hereunder shall not be a waiver of any
breach, except a breach of covenant to pay the rent so accepted. No acceptance by Landlord of any
partial payment of any sum due hereunder shall be deemed an accord and satisfaction or otherwise bar
Landlord from recovering the full amount due, even if such payment is designated “payment in full,” bears
any restrictive endorsement, or is otherwise conditionally tendered. The times for Master Tenant’s
performance of any obligations set forth in this Lease and the Exhibits may be extended by the Landlord’s
Town Manager, if he finds, at his sole discretion, that Master Tenant has been delayed for reasons not in
Master Tenant’s control. Any such extension shall be in writing.
21.8 Successors and Assigns. Subject to the provisions of Section 14 hereof, this Lease shall
be binding upon and inure to the benefit of the heirs, executors, administrators, successors and permitted
assigns of the parties hereto.
21.9 Landlord’s Access. Landlord and its agents shall have the right, subject to the rights of
the Subtenants then in effect, to enter the Premises upon 72 hours prior written notice for the purpose of
inspecting the same, and making such alterations, repairs, improvements or additions to the Premises as
are deemed necessary or desirable consistent with this Lease. Notwithstanding the foregoing, in the
event of an emergency requiring Landlord’s entry into the Premises, Landlord may give Master Tenant
shorter notice in any manner that is practicable under the circumstances. When entering or performing
any repair or other work in the Premises, Landlord, its agents, employees and/or contractors (a) shall
identify themselves to Master Tenant’s personnel immediately upon entering the Premises, and (b) shall
not, in any way, materially or unreasonably affect, interrupt or interfere with Master Tenant’s (or any of its
Subtenants’) use, business or operations on the Premises or obstruct the visibility of or access to the
Premises.
21.10 Legal Relationship. Nothing contained in this Lease shall be deemed or construed by the
parties hereto or by any third party to create the relationship of principal and agent, partnership, joint
venturer or any association between Landlord and Master Tenant. Landlord and Master Tenant
expressly agree that neither the method of computation of rent nor any act of the parties hereto shall be
deemed to create any relationship between Landlord and Master Tenant other than the relationship of
Landlord and Master Tenant.
21.11 Consents. Whenever the right of approval or consent is given to a party pursuant to this
Lease, the party shall not unreasonably withhold, condition or delay its consent unless this Lease
expressly provides otherwise. All approvals and reviews required of Landlord under this Lease may be
undertaken and/or given by Landlord’s Town Manager.
21.12 General. The terms “Landlord” and “Master Tenant” herein or any pronouns used in
place thereof shall mean and include the masculine or feminine, the singular or plural number, and jointly
and severally individuals, firms or corporations, and each of their respective heirs, executors,
administrators, successors and permitted assigns, according to the context hereof. The headings of
Sections herein are inserted only for convenience and reference and shall in no way define or limit the
scope or intent of any provisions of this Lease. This Lease shall be construed under the laws of the State
of California, and venue shall be in in the applicable courts located in Santa Clara County, California.
21.13 Quiet Enjoyment. Upon payment of the rent as aforesaid and upon the observance and
performance by Master Tenant of all of the terms and provisions to be observed by Master Tenant under
31
this Lease, Master Tenant shall peaceably hold and enjoy the Premises for the term hereof without
hindrance or interruption by Landlord or any other person, except as herein expressly provided.
21.14 Regulatory Authority. Master Tenant acknowledges that, at any time when the Town is
the Landlord hereunder, Landlord shall have certain governmental regulatory authority over the Premises.
Master Tenant agrees and expressly acknowledges that any approval or consent required or permitted
hereunder by the Town, acting in its capacity as Landlord under this Lease, (1) is distinct from any
approval or consent of such entity acting in the capacity of governmental regulatory authority, whether or
not related to the same matter, and (2) shall not compromise, diminish or in any way limit the authority of
such entity to give, deny or condition its approval or consent when acting as a governmental regulatory
authority.
21.15 Costs and Expenses. Whenever this Lease provides that either party shall be entitled to
recover fees, costs or expenses from the other, such fees, costs or expenses shall be reasonable in
nature.
21.16 Entire Agreement. This Lease and the exhibits attached hereto (which are incorporated
herein by this reference) represent the entire agreement between the parties concerning the subject
matter hereof and supersede any prior written or verbal agreements or understandings with respect
thereto.
21.17 Severability. If any term, covenant, condition or provision of this Agreement, or the
application thereof to any person or circumstance, shall to any extent be held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms, covenants, conditions or
provisions of this Agreement, or the application thereof to any person or circumstance, shall remain in full
force and effect and shall in no way be affected, impaired or invalidated thereby.
21.18 Joint and Several. If Master Tenant is more than one party, then the parties and entities
who comprise Master Tenant under this Agreement from time to time, are jointly and severally liable to
the Town for the performance of all of the promises and obligations of Master Tenant under this
Agreement. In the event of any default by Master Tenant hereunder, the Town may proceed against any
one or more of the aforementioned parties who comprise Master Tenant without waiving its rights to
proceed against any of the others.
21.19 Memorandum of Agreement. The parties hereto shall execute, acknowledge and record
the Memorandum of Agreement, in the form attached hereto as Exhibit F, within ten days after the Rent
Commencement Date.
21.20 CASp Inspection. Pursuant to California Civil Code Section 1938, Landlord hereby
discloses, and Tenant hereby acknowledges, that the Premises has not been inspected by a Certified
Access Specialist (“CASp”). California Civil Code Section 1938 also requires that this Lease contain the
following statement:
“A Certified Access Specialist (CASp) can inspect the subject premises and determine whether
the subject premises comply with all of the applicable construction related accessibility standards under
state law. Although state law does not require a CASp inspection of the subject premises, the
commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp
inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if
requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and
manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making
any repairs to correct violations of the construction related accessibility standards within the premises.”
In accordance with the foregoing, Master Tenant, upon at least thirty (30) days’ prior written
notice to Landlord, shall have the right to require a CASp inspection of the Premises. If Master Tenant
requires a CASp inspection of the Premises, then: (i) Landlord and Tenant shall mutually agree on the
32
arrangements for the time and manner of the CASp inspection during such thirty (30) day period; (ii)
Master Tenant shall be solely responsible to pay the cost of the CASp inspection as and when required
by the CASp. It is understood by the parties that Landlord shall not be required to perform, or cause to be
performed, any and all repairs needed to correct violations of the construction related accessibility
standards within or relating to the Premises and Master Tenant can terminate this lease if it is
determined, by Master Tenant that any repairs to correct violations would be too costly. .
21.21 First Right of Refusal. If Landlord receives from a third party a bona fide offer to
purchase the Premises, before Landlord may accept such an offer, Landlord must first give written notice
to Master Tenant of said offer. Master Tenant shall have thirty (30) days from the date of receipt of said
offer, to provide Landlord with written acceptance of the offer, upon the same terms and conditions as set
forth therein (but in addition thereto, such sale shall include all rights of Landlord in and to this Lease). If
Master Tenant accepts said offer, closing shall take place within sixty (60) days from the date of
acceptance. Master Tenant may elect to assign Master Tenant's rights to purchase the Premises to the
parent of or a subsidiary of the Master Tenant, or other entity wholly owned by Master Tenant or its
Managing Member. If Master Tenant fails to accept said offer within the thirty (30) days provided herein,
Landlord may proceed to sell to said third party in accordance with the terms of the offer. If Landlord has
not consummated a sale within one hundred eighty (180) days after the expiration of Master Tenant's
option rights hereunder, the restrictions and options herein provided shall be restored and shall continue
in full force and effect, and so long as these restrictions and options remain in effect the Landlord shall
not thereafter sell or transfer the Premises without first giving Master Tenant notice as herein provided
and otherwise complying with the foregoing provisions.
33
IN WITNESS WHEREOF, the parties hereto have executed this Lease the day and year first
above written.
LANDLORD:
THE TOWN OF LOS GATOS
By: ___________________________
Print Name: ____________________
Officer Title: ____________________
Approved as to form: Attest:
____________________ __________________________
Town Attorney Town Clerk
MASTER TENANT:
Tait Firehouse, LLC,
a California Limited Liability Company
By: Imwalle Asset Management, LLC
a California Limited Liability Company
By: _____________________________
Don Imwalle, Jr., Managing Member
Exhibit A 4829-3592-1989v4 SLF\NEW..NEW..
Exhibit A
Legal Description of Premises
Exhibit B
OAK #4810-7729-4116 v8 4829-3592-1989v4 SLF\NEW..NEW..
Exhibit B
Site Plan of Premises
Exhibit C 4829-3592-1989v4 SLF\NEW..NEW..
Exhibit C
Form of Notice of Lease Term Dates
[On Town Letterhead]
[Date]
Tait Firehouse, LLC
223 West Main Street Suite B
Los Gatos, CA 95030
Attn: Donald Imwalle, Jr.
Email: don@imwalledev.com
CC: jimfoley@pennantproperties.com
Jason@farwellrashkis.com
Re: Master Lease – 4 Tait Ave, Los Gatos, CA 95030
Dear Mr. Imwalle:
In accordance with that certain Master Lease dated ____________, 2020, by and between the Town of
Los Gatos and Tait Firehouse, LLC for the above referenced property, this letter is to confirm that the
Rent Commencement Date as defined in Section 1.11 of the Master Lease is [insert date. Please
countersign this letter in the space below to acknowledge your agreement.
Please don’t hesitate to contact me should you have any questions.
Sincerely yours,
______________, Town Manager
Acknowledged and Agreed this _____ day of _______, 202_,
on behalf of
Tait Firehouse, LLC,
a California Limited Liability Company
By: Imwalle Asset Management, LLC
a California Limited Liability Company
By: _____________________________
Don Imwalle, Jr., Managing Member
Exhibit D-1 4829-3592-1989v4 SLF\NEW..NEW..
Exhibit D
Condition of Premises Upon Delivery
[TO BE INSERTED]
Exhibit E-1
OAK #4810-7729-4116 v8 4829-3592-1989v4 SLF\NEW..NEW..
Exhibit E
Insurance Requirements for Master Tenant and Subtenants
Master Tenant is required to procure and provide proof of the insurance coverage required by
Master Tenant as outlined in this Exhibit in the form of certificates and endorsements. Master Tenant
shall obtain and maintain insurance against claims which may arise from or in connection with the
activities of Master Tenant and its Subtenants, including agents, invitees, employees, and contractors of
Master Tenant and its Subtenants, and must remain in full force and effect at all times during the period
covered by the Lease Agreement. The coverages may be arranged under a single policy for the full limits
required or by a combination of underlying policies with the balance provided by excess or “umbrella”
policies, provided each such policy complies with the requirements set forth herein. If Master Tenant fails
to provide any of the required coverage in full compliance with the requirements set forth herein, Town
may, at its sole discretion, terminate the Lease for default. Master Tenant further understands that the
Town reserves the right to reasonably modify the insurance requirements set forth herein, with thirty (30)
days’ notice provided to Master Tenant, at any time as deemed necessary to protect the interests of the
Town.
(A) Insurance Types and Limits. The following insurance types and limits are required
unless otherwise specified in the Lease Agreement:
(1) Commercial General Liability Insurance (“CGL”): Master Tenant shall maintain
CGL and shall include coverage for liability arising from Master Tenant and its
Subtenants, including invitees, employees, agents, or contractors of Master Tenant
and its Subtenants, against claims and liabilities for personal injury, death, or
property damage providing protection in the minimum amount of: One Million Dollars
($1,000,000.00) for bodily injury or death to any one person for any one accident or
occurrence and at least One Million Dollars ($1,000,000.00) for property damage.
i. Liquor Liability: Master Tenant shall maintain Liquor Liability, either under
its CGL policy or as a separate policy, providing protection in the minimum
amount of One Million Dollars ($1,000,000.00) each claim.
(2) Workers’ Compensation Insurance and Employer’s Liability: Master Tenant
shall maintain Workers Compensation coverage, as required by law. The policy must
comply with the requirements of the California Workers’ Compensation Insurance
and Safety Act and provide protection in the minimum amount of One Million Dollars
($1,000,000.00) for any one accident or occurrence. If Master Tenant is self-insured,
Master Tenant must provide its Certificate of Permission to Self-Insure, duly
authorized by the Department of Industrial Relations.
(3) Automobile Liability: Master Tenant shall maintain Automobile Liability covering all
owned, non-owned and hired automobiles, against claims and liabilities for personal
injury, death, or property damage providing protection in the minimum amount of One
Million Dollars ($1,000,000.00) for bodily injury or death to any one person for any
one accident or occurrence and at least One Million Dollars ($1,000,000.00) for
property damage.
(4) Property: Master Tenant shall maintain All Risk Property coverage for the
appropriate limit to cover all personal property of Master Tenant, in, on, or about the
Premises, covering the full replacement cost of such personal property to include
furniture, installed fixtures, improvements, equipment, inventory and any other
personal property of the Master Tenant. Master Tenant, and not any of the
Subtenants, also shall maintain All Risk Property coverage for the full replacement
cost of the Master Tenant’s Work.
Exhibit E-2 4829-3592-1989v4 SLF\NEW..NEW..
i. Business Interruption: Master Tenant shall maintain adequate protection
against business interruption and loss of income, either as part of a
comprehensive Business Owner’s Policy or under its Property Insurance.
(B) Required Endorsements. Master Tenant shall provide proof of the following
endorsements, listed for each policy for which endorsements are required, as outlined below:
(1) ALL Policies:
“Waiver of Subrogation” - Each required policy must include an endorsement
providing that the carrier agrees to waive any right of subrogation it may have
against the Town of Los Gatos and the Town’s elected or appointed officials,
boards, agencies, officers, agents, employees, and volunteers.
(2) General Liability:
a. “Additionally Insured” - The Town of Los Gatos, its elected or appointed officials,
boards, agencies, officers, agents, employees, and volunteers are named as
additional insureds;
b. “Primary and Non-Contributing” - Insurance shall be primary non-contributing;
c. “Separation of Insureds” - The inclusion of more than one insured will not operate
to impair the rights of one insured against another, and the coverages afforded
will apply as though separate policies have been issued to each insured.
(C) Subtenants. Master Tenant must ensure that each Subtenant is required to maintain the
equal or greater insurance coverages required in this Exhibit, including those requirements
related to the additional insureds and waiver of subrogation. However, Subtenants which do not
engage in the sale and/or serving of alcohol in, on, or about the Premises, are not required to
maintain Liquor Liability. Also, Subtenants shall not be obligated to insure the Master Tenant’s
Work.
(D) Qualification of Insurers. All insurance required pursuant to this Lease Agreement must
be issued by a company licensed and admitted, or otherwise legally authorized to carry out
insurance business in the State of California, and each insurer must have a current A.M. Best's
financial strength rating of “A-” or better and a financial size rating of “VII” or better.
(E) Certificates. Master Tenant shall furnish the Town with copies of all policies or
certificates maintained by Master Tenant as outlined herein, whether new or modified, promptly
upon receipt. Further, upon request by the Town, Master Tenant shall furnish the Town with
copies of all policies or certificates maintained by Subtenants as outlined herein, whether new or
modified. No policy subject to the Master Tenant’s Lease with the Town shall be reduced,
canceled, allowed to expire, or materially changed except after thirty (30) days' notice by the
insurer to Town, unless due to non-payment of premiums, in which case ten (10) days written
notice must be made to Town. Certificates, including renewal certificates, may be mailed
electronically to ____________________________ or delivered to the Certificate Holder address
provided herein.
Certificate Holder address:
Town of Los Gatos
Attn: Risk Management
110 E. Main Street
Los Gatos, CA 95030
Exhibit F-1 4829-3592-1989v4 SLF\NEW..NEW..
Exhibit F
Memorandum of Lease Agreement
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Town of Los Gatos
110 E. Main Street
Los Gatos, CA 95037
Attn: Town Manager
THIS DOCUMENT IS EXEMPT FROM
RECORDING FEES PURSUANT TO CALIFORNIA
GOVERNMENT CODE §§ 6103, 27383
SPACE ABOVE THIS LINE FOR RECORDER'S USE ONLY
MEMORANDUM OF LEASE AGREEMENT
This Memorandum of Lease Agreement (this “Memorandum”) is dated as of _______________,
2020, and is between the Town of Los Gatos, a California municipal corporation (“Landlord”), and Tait
Firehouse, LLC, a California limited liability company (“Master Tenant”).
Recitals
A. Landlord and Master Tenant entered into that certain Lease Agreement, effective
___________, 2020 ("Lease"), pursuant to which Landlord leased to Master Tenant and Master Tenant
leased from Landlord the space located on the real property described in the attached Exhibit A (the
“Premises”).
B. Landlord and Master Tenant desire to execute this Memorandum to provide constructive
notice of Master Tenant’s rights under the Lease to all third parties.
For good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
Agreement
1. Term. Landlord leases the Premises to Master Tenant for an initial term of thirty-four
years and eleven months (34 years 11 months) commencing on the Commencement Date of
____________, 202_, and expiring on ____________, 205_.
2. Lease Terms. The lease of the Premises to Master Tenant is pursuant to the Lease,
which is incorporated in this Memorandum by reference.
3. Assignment. Except as otherwise expressly provided in the Lease, Master Tenant's rights
and obligations under the Lease may not be assigned without Landlord's prior written consent, which
consent may be granted or withheld by Landlord in its sole and exclusive discretion, and any assignment
without this consent will be void.
4. Successors and Assigns. This Memorandum and the Lease are binding and inure to the
benefit of the parties and their respective heirs, successors, and assigns, subject, however, to the
provisions of the Lease on assignment.
Exhibit F-2 4829-3592-1989v4 SLF\NEW..NEW..
5. Governing Law. This Memorandum and the Lease are governed by California law.
Executed as of the date first above written.
LANDLORD:
Town of Los Gatos,
a California municipal corporation
By: _______________________________
Print Name:________________________
Title: _____________________________
MASTER TENANT:
Tait Firehouse, LLC,
a California Limited Liability Company
By: Imwalle Asset Management, LLC
a California Limited Liability Company
By: __________________________
Don Imwalle, Jr., Managing Member
Exhibit F-1 4829-3592-1989v4 SLF\NEW..NEW..
A Notary Public or other officer completing this certificate verifies only the identity of the individual who
signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity
of that document.
STATE OF CALIFORNIA
COUNTY OF _____________ ss.
On _________________, before me, ___________________________________, Notary Public,
personally appeared __________________________, who proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
(Seal)
(Signature)
Exhibit A 4829-3592-1989v4 SLF\NEW..NEW..
EXHIBIT A
Legal Description of the Premises
[Need legal description of Premises]