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2011032102 - Billy Jones Wildcat Railroad'�N4 N O ,;.� ..i�\ COUNCIL AGENDA REPORT Og` DATE: MARCH 21, 2011 MEETING DATE: 3/21/2011 ITEM NO: e TO: MAYOR AND TOWN COUNCIL FROM: GREG LARSON, TOWN MANAGER SUBJECT: BILLY JONES WILDCAT RAILROAD AGREEMENT A. AUTHORIZE THE TOWN MANAGER TO EXECUTE THE LEASE AGREEMENT BETWEEN THE TOWN OF LOS GATOS AND BILLY JONES WILD CAT RAILROAD. B. AUTHORIZE A ONE -TIME PAYMENT TO BILLY JONES WILDCAT RAILROAD OF $13,000 TO OFF -SET SOIL DISPOSAL COSTS ASSOCIATED WITH TRACK REPAIR WORK CONDUCTED IN 2010. RECOMMENDATION 1. Authorize the Town Manager to execute the Lease Agreement between the Town of Los Gatos and Billy Jones Wildcat Railroad. 2. Authorize a one -time payment to Billy Jones Wildcat Railroad of $13,000 to off -set soil disposal costs associated with track repair work conducted in 2010. BACKGROUND Billy Jones Wildcat Railroad has been providing railroad and carousel operations at Oak Meadow Park under a license agreement with the Town since 1968. The license agreement has been extended twice, and expired on December 31, 2009. The Town and Los Gatos Billy Jones Wildcat Railroad each desire a new agreement between them setting forth the specific lease terms for their facilities within Oak Meadow Park, including the responsibility for the costs related to utilities, and the circumstances under which Billy Jones Wildcat Railroad may make capital improvements to their facilities. PREPARED BY : TODD CAPURSO Director of Parks and Public Works Reviewed by: ' � Assistant Town Manager Town Attorney Clerk Administrator �°� F ance Community Development N: \PPW \MANAGEMENT \COUNCIL \COUNCIL REPORTS\2011 Reports\March 21 \BJRR Lease Agreement Memo.docx PAGE 2 MARCH 21, 2011 MAYOR AND TOWN COUNCIL SUBJECT: BILLY JONES WILDCAT RAILROAD AGREEMENT DISCUSSION Negotiations with Billy Jones Wildcat Railroad on the terms of this Lease Agreement have focused on the terms for lease of the buildings and land at Oak Meadow Park identified for operation of the railroad and carousel. The main proposed terms of the lease agreement are as follows: 1. The initial term of the agreement is 10 years, with an option of two renewal periods of 5 years each. 2. Billy Jones Wildcat Railroad will pay $1 /year in rent for the use of land and facilities at Oak Meadow Park related to railroad and carousel operations. 3. Billy Jones Wildcat Railroad is responsible for the cost of all utilities provided directly to their operations (for utilities metered separately), and 50% of electrical utilities for - the park — until such time that a separate electrical service and /or meter is available. 4. Billy Jones Wildcat Railroad will be responsible for the maintenance of their buildings associated with the operation of the railroad and carousel operations. 5. All tenant improvements must be approved by the Town Manager, and will be made at the expense of Billy Jones Wildcat Railroad. In 2010, Billy Jones Railroad performed a track replacement project that resulted in the disruption of several hundred yards of contaminated soil. This work occurred in the section of Vasona Park that the County had recently purchased from the Town. Staff worked closely with Billy Jones and County officials to dispose of the soil locally, but the material ultimately had to be shipped out of state, resulting in a disposal cost of approximately $127,000. These costs have significantly impacted Billy Jones Railroad. County Supervisor Mike Wasserman convened a meeting with County parks, Billy Jones Wildcat Railroad, and Town staff to discuss options to assisting with the costs associated with the disposal. At that meeting, Supervisor Wasserman requested that the Town consider reimbursing Billy Jones Wildcat Railroad for 10 % of the disposal costs, and that the County reimburse another 40 %. CONCLUSION: Staff is recommending that the Town Council authorize the Town Manager to execute the Lease Agreement between Town of Los Gatos and Billy Jones Wildcat Railroad, and authorize a one -time payment of $13,000 to off -set soil disposal costs associated with track repair in 2010. PAGE 3 MARCH 21, 2011 MAYOR AND TOWN COUNCIL SUBJECT: BILLY JONES WILDCAT RAILROAD AGREEMENT FISCAL IMPACT (cont'd.): The Town will be responsible for a one -tune payment of $13,000 to Billy Jones Wildcat Railroad to help off -set soil disposal costs associated with track repair work that occurred in 2010. There are sufficient funds in the Town's FY 2010/11 Operating Budget to cover this cost. ENVIRONMENTAL REVIEW: The recommended action is not a project defined under CEQA, and no further action is required. Attachments: 1. Proposed Lease Agreement between Town of Los Gatos and Billy Jones Wildcat Railroad for use of land and facilities at Oak Meadow Park. THIS PAGE INTENTIONALLY LEFT BLANK LEASE AGREEMENT BETWEEN TOWN OF LOS GATOS AND BILLY JONES WILDCAT RAILROAD INC. This lease agreement (herein "Lease ") is made and entered into this day of , 2011, by and between the TOWN OF LOS GATOS, a California municipal corporation (herein "Town ") and BILLY JONES WILDCAT RAILROAD INC., a non -profit corporation of the State of California (herein "Lessee "). Town and Lessee may be referred to individually as a "Party" or collectively as the "Parties" or the "Parties to this Lease." RECITALS The Town is the owner of Oak Meadow Park, located at 233 Blossom Hill Road. Lessee is a non- profit corporation of the State of California, operating the Bill Jones Wildcat Railroad, Carousel, and associated concessions within Oak Meadow Park. Lessee has operated the miniature railroad through a license agreement with the Town of Los Gatos and Santa Clara County since 1968. Town and Lessee each desire that Lessee continue to conduct miniature railroad and carousel operations at Oak Meadow Park. Town and Lessee each desire a new agreement between them setting forth in specific terms the circumstances under which Lessee may use the land and buildings at Oak Meadow Park, responsibility for maintenance of the facilities, responsibility for the costs related to utilities, and the circumstances under which Lessee may make capital improvements to the facilities. In consideration of these recitals and the following covenants, terms, and conditions, Lessee and Town mutually agree as follows: LEASE PROVISIONS 1. PREMISES Town hereby leases to Lessee, certain real property located in the Town of Los Gatos, County of Santa Clara, State of California, commonly known as a portion of Oak Meadow. Park (herein the "Premises ") and more particularly described in Exhibit A attached hereto and incorporated herein by reference. The Premises consists of land in Oak Meadow Park, which houses a railroad depot, engine storage and shop building, carousel building, railroad bridge, and tracks. Unless specifically provided, Lessee accepts the Premises "as -is" on the date of execution of this Lease. N:\PPW\MANAGEMENT\COUNCIL\COUNCILREPORTS\2011 Repoits\March 2lTinal Draft BJRR Lease.2011.docx 2. TERM 2.1 Original Term The term of this Lease shall be for ten (10) years, commencing on April 1, 2011 ( "Delivery Date ") and ending on March 31, 2021, unless extended in writing or sooner terminated. Lessee shall, at the expiration of the term of this Lease, or upon its earlier termination, surrender the Premises in as good condition as it is now at the date of this lease, reasonable wear and tear and damage by age and the elements excepted. 2.2 Option to Extend Provided Lessee is not in default hereunder, either at the time of exercise or at the time the extended term commences, Lessee shall have the option to extend the initial term of this Lease for two (2) additional periods of five (5) years each ( "Option Period ") . Lessee's option shall be automatically exercised without prior notice unless one of the parties objects to either extension in writing no less than sixty (60) days prior to the expiration of the then current term, in which event this Lease shall terminate at the expiration of the then current term. 2.3 Early Termination by Town If Town in its sole discretion determines that it requires the Premises for any public purpose, Town may terminate this Lease upon one hundred eighty (180) days written notice. In the event of an emergency, Town may terminate this Lease upon five (5) days written notice. "Emergency, for the purposes of this paragraph, is defined as when the Town Council declares a State of Emergency. Upon termination of this Lease in the event of an emergency, Town and Lessee will work cooperatively to develop a written plan for transition of services and vacation of Premises by Lessee. 2.4 Early Termination by the Parties Either Party may choose to terminate this Lease upon one hundred eighty (180) days written notice to the other Party. 3. RENT 3.1 Base Rent The rent to be paid by Lessee shall beset at $1 /year. 3.2 Payment Date /Late Charge Rent shall be payable in full on July l of each year. The first payment of Rent in the amount of $1.00 for the period from April 1, 2011 through June 30, 2012 shall be payable upon signing of this Lease. Payment shall be delivered to Town of Los Gatos, Finance Department, 110 E. Main Street (or P.O. Box 655), Los Gatos, CA 95030. 4. USE OF PREMISES 4.1 Required Uses Throughout the term of this Lease, Lessee shall provide the following uses, services and activities ( "Required Uses "): 4. 1.1 Uses consistent with Lessee's business purposes limited to the operation and N:\PPVAMANAGEMENT\COUNCIL\COUNCIL REPORTS\2011 Reports\March 2ITinal. Draft BJRR Lease.201 Ldoex maintenance of the Billy Jones Wildcat Railroad Inc.. 4.2 Prohibited Uses Lessee shall not use Premises for any purpose not expressly permitted hereunder. Lessee shall not create, cause, maintain or permit any nuisance or waste in, on, or about the Premises, or permit or allow the Premises to be used for any unlawful or immoral purpose. Lessee shall not do or permit to be done anything in any manner which unreasonably disturbs the occupants of neighboring property. Specifically, and without limiting the above, Lessee agrees not to cause any unreasonable odor, noise, vibration, power emission, or other item to emanate from the Premises. Lessee will not use Premises in a manner that increases the risk of fire, cost of fire insurance or improvements thereon. No unreasonable sign or placard. shall be painted, inscribed or placed in or on said Premises; and no tree or shrub thereon shall be destroyed or removed or other waste committed of said Premises.' No bicycles, motorcycles, automobiles or other mechanical means of transportation other than those owned by Lessee shall be placed or stored anywhere on the Premises except for the equipment building. 4.3 Condition, Use of Premises Except as otherwise expressly stated in this Lease, Town makes no warranty or representation of any kind concerning the condition of the Premises; or the fitness of the Premises for the use intended by Lessee, and hereby disclaims any personal knowledge with respect thereto, it being expressly understood by the parties that Lessee has personally inspected the Premises, knows its condition, finds it fit for Lessee's intended use, accepts it as is, and has ascertained that it can be used exclusively for the limited purposes specified in Section 5.1. 5. HAZARDOUS MATERIALS 5.1 Hazardous Materials Defined The term "Hazardous Material(s)" shall mean any toxic or hazardous substance, material or waste or any pollutant or contaminant, or infectious or radioactive material, including but not limited to, those substances, materials, or wastes regulated now or in the future under any of the following statutes or regulations and any and all of those substances included within the definitions of "hazardous substances," "hazardous waste," "hazardous chemical substance or mixture," "imminently hazardous chemical substance or mixture," "toxic substances," "hazardous air pollutant," "toxic pollutant" or "solid waste" in the (a) CERCLA or Superfund as amended by SARA, 42 U.S.C. Sec. 9601 et seq., (b) RCRA, 42 U.S.C. Sec. 6901 et seq., (c) CWA., 33 U.S.C. Sec. 1251 et seq., (d) CAA, 42 U.S.C. 78401 et seq., (e) TSCA, 15 U.S.C. Sec. 2601 et seq., (f) The Refuse Act of 1899, 33 U.S.C. Sec. 407, (g) OSHA, 29 U.S.C. 651 et seq. (h) Hazardous Materials Transportation Act, 49 U.S.C. Sec. 1801 et seq., (i) USDOT Table (40 CFR Part 302 and amendments) or the EPA Table (40 CFR Part 302 and amendments), .0) California Superfund, Cal. Health & Safety Code Sec. 25300 et seq., (k) Cal. Hazardous Waste Control Act, Cal. Health & Safety. Code Section 25100 et seq., (1) Porter- Cologne Act, Cal. Water Code Sec. 13000 et seq., (m) Hazardous Waste Disposal Land Use Law, Cal. Health &.Safety Code Sec. 25220 et seq., (n) Proposition 65, Cal. Health and Safety Code Sec. 25249.5 et seq., (o) Hazardous Substances Underground Storage Tank Law, Cal. Health & Safety Code Sec. 25280 et seq., (p) California Hazardous Substance Act, Cal. Health & Safety Code Sec. 28740 et N:\PPW\ MANAGEMENT \COUNCIL \COUNCIL REPORTS\2011 Reports\March 21\Final Draft BJRR Lease.201 l.docx seq., (q) Air Resources Law, Cal. Health & Safety Code Sec. 39000 et seq., (r) Hazardous Materials Release Response Plans and Inventory, Cal. Health & Safety Code Secs. 25500- 25541, (s) TCPA, Cal. Health and Safety Code Secs. 25208 et seq., and (t) regulations promulgated pursuant to said laws or any replacement thereof, or as similar terms are defined in the federal, state and local laws, statutes, regulations, orders or rules. Hazardous Materials shall also mean any and all other substances, materials, and wastes which are, or in the future become, regulated under applicable local, state or federal law for the protection of health or the environment, or which are classified as hazardous or toxic substances, materials or wastes, pollutants or contaminants, as defined, listed or regulated by any federal, state or local law, regulation or order or by common law decision, including without limitation: (i) trichloroethylene, tetracholo ethylene, perchloro ethylene and other chlorinated solvents; (ii) any petroleum products or fractions thereof; (iii) asbestos, (iv) polychlorinated biphenyls; (v) flaminable explosives; (vi) urea formaldehyde; and, (vii) radioactive materials and waste. 5.2. Compliance with Laws Lessee shall use, store and dispose of any Hazardous Materials (as defined in this Section 5) in reasonable quantities and necessary only to operate or maintain the Billy Jones Wildcat Railroad Inc. Lessee shall obtain and maintain any permit (local, State or Federal) required for the use, storage or disposal of Hazardous Materials. Lessess shall be obligated to fife a Hazard Materials Business Plan, if required by County. Lessee shall complete and submit a list of all Hazardous Materials, including quantity, used or stored on Premises to Town on July 1 St of each year during the term of this Lease. The Premises shall be subject to reasonable inspections by Town or County Fire personnel at all times during this Lease to insure that Hazardous Materials are being properly used, maintained and disposed. Lessee shall not dispose of any Hazardous Materials on the Premises at any time during this Lease. 5.3 Termination of Lease Town shall have the right to terminate the Lease in Town's sole and absolute discretion in the event that: (i) any anticipated use of the Premises by Lessee involves the generation" or storage, use, treatment, disposal, or release of Hazardous Material in a manner or for a purpose prohibited or regulated by any governmental agency, authority, or Hazardous Materials Laws; (ii) Lessee has been required by any lender or governmental authority to take remedial action in connection with Hazardous Material contaminating the Premises, if the contamination resulted from Lessee' s action or use of the Premises; or (iii) Lessee is subject to an enforcement order issued by any governmental authority in connection with the release, use, disposal, or storage of a Hazardous Material on the Premises. 5.4 Assignment and Subletting Lessee shall not assign or sublet the Premises. 5.5 Hazardous Materials Indemnity Lessee shall indemnify, defend (by counsel reasonably acceptable to the Town), protect, and hold the Town ( "Indemnified Party) harmless from and against any and all claims, liabilities, penalties, forfeitures, losses, and /or expenses, including without limitation, diminution in value of the Premises, N:\PPW\ MANAGEMENT \COUNCIL \COUNCIL REPORTS\2011 Reports\March 21\Final Draft BJRR Lease.201 Ldoex damages for the loss or restriction on use of the rentable or usable space or of any amenity of the Premises, damages arising from any adverse impact or marketing of the Premises and sums paid in settlement of claims, response costs, cleanup costs, site assessment costs, attorneys' fees, consultant and expert fees, judgments, administrative rulings or orders, fines, costs of death of or injury to any person, or damage to any property whatsoever (including, without limitation, groundwater, sewer systems, and atmosphere), arising from, caused, or resulting, either prior to or during the Lease Term, in whole or in part, directly or indirectly, by the presence or discharge in, on, under, or about the Premises by the Lessee, its agents, employees, licensees, or invitees or at the Indemnifying Party's direction, of Hazardous Material, or by the Indemnifying Party's failure to comply with any Hazardous Materials Law, whether knowingly or by strict liability. For purposes of the indemnity provided herein, any acts or omissions of an Lessee or its employees, agents, customers, sub lessees, assignees, contractors, or subcontractors (whether or not they are negligent, intentional, willful or unlawful) shall be strictly attributable to the Lessee. Lessee's obligations shall include, without limitation, and whether foreseeable or unforeseeable, all costs of any required or necessary Hazardous Materials management plan, investigation, repairs, cleanup or detoxification or decontamination of the Premises, and the presence and implementation of any closure, remedial action or other required plans, and shall survive the expiration of or early termination of the Lease Term. 5.6 ' Town's Rikht to Perform Tests At any time prior to the expiration of the Lease Term, Town shall have the right to enter upon the Premises in order to conduct tests of water and soil. Before exercising such right, Town shall give Lessee not less than three (3) days prior notice. Town agrees to exercise such right in a manner which is reasonably calculated to cause as little disturbance as possible to Lessee.. 6. UTILITIES AND OPERATING EXPENSES Lessee at Lessee's sole expense shall fully and promptly pay for all expenses associated with the operation of the Premises, including but not limited to the furnishing of gas, water, sewer, telephone service, garbage pickup and disposal, other public utilities and custodial service. Electricity is currently provided to the premises by a shared meter with the Town. Lessee shall pay for 50 % of the monthly Electric Use for Oak Meadow Park. If at some point in the future dedicated metering is provided, Lessee shall be responsible for electricity costs associated with their use of the property. Town, at its sole expense, shall maintain all exterior landscaping in a good and attractive condition. 7. TAXES. 7.1 Revenue and Taxation Code Lessee specifically acknowledges it is familiar with section 107.6 of the California Revenue and Taxation Code. Lessee realizes that a possessory interest subject to property taxes may be created, agrees to pay any such tax, and hereby waives any rights Lessee may have under said California Revenue and Taxation Code section 107.6. N: \PPW\ MANAGEMENT \COUNCIL \COUNCIL REPORTS\2011 Reports\March 21\Rinal Di-aft BJRR Lease.201 Ldoex 7.2 Personal Property Taxes Except for real property taxes (the payment of which is governed by Section 8.2), Lessee shall pay before delinquent, or if requested by Town, reimburse Town for, any and all taxes, fees, and assessments associated with the Premises, the personal property contained in the premises and other taxes, fees, and assessments regarding any activities which take place at the Premises. 8. MAINTENANCE 8.1 Town and Lessee Responsibilities Lessee at Lessee's expense, shall perform all interior maintenance and repairs, including all painting, necessary to keep the Premises in first -class order, repair, and condition, and shall keep the Premises in a safe, clean, wholesome, and sanitary condition in compliance with all applicable laws, throughout the term of this Lease. Lessee shall also be required to make structural repairs or replacements or repairs or replacements to building systems (e.g., plumbing, electrical, water, sewer, etc.). 8.2 Maintenance and Repairs Lessee farther agrees that if and when any repairs shall be made by Lessee as. required by Section 8. 1, Lessee shall promptly pay for all labor done or materials furnished and shall keep the Premises free and clear of any lien or encumbrance of any kind whatsoever; provided, that Lessee may contest and such lien by appropriate proceedings and in a manner which stays the enforcement of such lien. If Lessee fails to make any repairs or perform any maintenance work for which Lessee is responsible within a reasonable time (as determined by the Town Manager in the Town Manager's sole discretion) after demand by the Town, Town shall have the right, but not the obligation, to make the repairs at Lessee's expense; within ten (10) days of receipt of a bill, Lessee shall reimburse Town for the cost of such repairs, including a fifteen percent (15 %) administrative overhead fee. The making of such repairs or performance of maintenance by Town shall in no event be construed as a waiver of the duty of Lessee to make repairs or perform maintenance as provided in this Section. Any changes or alterations to the Premises other than routine maintenance and repair may require public bidding. If public bidding is required under the California Public Contracts Code, Lessee shall be responsible for all costs associated with the public bidding process. Lessee expressly waives the benefit of any statute now or hereinafter in effect, including the provisions of sections 1941 and 1942 of the Civil Code of California, which would otherwise afford Lessee the right-to make repairs at Town's expense. 83 Maintenance of Common Areas Town, at its expense, shall maintain or cause to be maintained, including repair and replacement as necessary, the parking lot associated with the park, as well as the pathways leading to the railroad and carousel buildings. 9. TENANT IMPROVEMENTS. 9.1 Improvements Permitted Subject to prior written approval of the Town Manager, which shall not be unreasonably withheld, Lessee shall be entitled to install improvements in an efficient and workmanlike manner within the Premises, at no cost to Town. N: \PPW\ MANAGEMENT \COUNCIL \COUNCIL REPORTS\2011 Reports\March 2ITina( Draft BJRR Lease.201 I.doex 9.2 Cost of Improvements All improvements shall be made at Lessee's sole expense, including expenses related to any requirement to utilize the public bidding process, . 9.3 Ownership of Improvements All improvements constructed, erected, or installed upon the Premises must be free and clear of all liens, claims, or liability for labor or material and shall become the property of Town, at its election, upon expiration or earlier termination of this lease and upon Town's election, shall remain upon the Premises upon termination of this Lease. Title to all equipment, furniture, furnishings, and trade fixtures placed by Lessee upon the Premises shall remain in Lessee, and replacements, substitutions and modifications thereof may be made by Lessee throughout the term of this Lease. Lessee may remove such fixtures and furnishings at any time during the term of this Lease and upon termination of this Lease if Lessee is not then in default under this Lease, provided that Lessee shall repair to the satisfaction of Town any damage to the Premises and improvements caused by such removal and provided that usual and customary lighting, plumbing and heating fixtures shall remain upon the Premises upon termination of this Lease. 9.4 Indemnity for Claims Arising Out of Construction Lessee shall defend and indemnify Town against all claims, liabilities, and losses of any type arising out of work performed on the Premises by Lessee, together with reasonable attorneys' fees and all costs and expenses reasonably incurred by Town in negotiating, settling, defending or otherwise protecting against such claims. 9.5 Certificate of Inspection Upon completion.of construction of any building, Lessee shall submit to the Town Manager a Certificate of Inspection, verifying that the construction was completed in conformance with Title 20 of the California Code of Regulations for residential construction, or in conformance with Title 24 of the California Code of Regulations for non - residential construction. 9.6 As Built Plans Lessee shall provide the Town Manager with a complete set of reproducible "as built plans" reflecting actual construction. within or upon the Premises upon completion of any: (i) new construction; (ii) structural alterations; or, (iii) non- structural alterations costing more than $25,000. 10. HOLD HARMLESS /INDEMNIFICATION 10.1 Indemnification To the extent permitted by law, Lessee agrees to protect, defend, hold harmless and indemnify the Town, its elected and appointed officials, commissions, officers, agents, volunteers, and employees from and against any claim, injury, liability, loss, cost, and /or expense or damage, however same may be caused, including all costs and reasonable attorney's fees in providing a defense to any claim arising therefrom for which the Town shall become legally liable arising from Lessee's negligent, reckless, or wrongful acts, errors, or omissions with respect to or in any way connected with this Lease. Lessee and Town shall both provide the other Party immediate notice of any claim, loss or liability hereby indemnified against. This indemnity provision shall be in N:\PPW\ MANAGEMENT \COUNCIL \COUNCIL REPORTS\2011 Reports\March 21\Final Draft BJRR Lease.201 Ldocx addition to the Hazardous Materials indemnity contained in this Lease and shall survive shall survive the expiration of or early termination of the Lease Tenn. 10.2 Waiver of Claims Lessee waives any claims against the Town for injury or damages to Lessee' business or any loss of income therefrom, for damage to Lessee's property, or for injury or death of any person in or about the Premises or the Town Property, from any cause whatsoever, except to the extent caused by the Town's willful misconduct. 11. DAMAGE, DESTRUCTION AND TERMINATION. 11.1 Restoration of Premises by Lessee 11.1.1 Destruction Due to Risk Covered by Insurance If, during the term of the Lease, the Premises are totally or partially destroyed from a risk covered by the insurance described in Section 18 (Insurance), rendering the Premises totally or partially inaccessible or unusable, Lessee shall restore the Premises, at their option if they wish to continue to operate, to substantially the same condition as it was in immediately before destruction, to the extent possible based on the insurance proceeds received by Lessee, it being agreed that Lessee shall not be obligated to expend more than the amount of the insurance proceeds received in restoring the Premises. All applicable insurance proceeds must be directed toward this purpose. Such destruction shall not terminate this Lease. If the laws existing at that time do not permit the restoration, either party can terminate this Lease immediately by giving notice to the other party. A. Minor Loss If, during the term of this Lease, the Premises are destroyed from a risk covered by the insurance described in Section 18 (Insurance), and the total amount of loss does not exceed twenty thousand dollars ($2.0,000), Lessee shall make the loss adjustment with the insurance company insuring the loss. The proceeds shall be paid directly to Lessee for the sole purpose of making the restoration of the Premises in accordance with this Lease. B. Major Loss - Insurance Trustee If, during the term of this Lease, the Premises are destroyed from a risk covered by the insurance described in Section 18 (Insurance), and the total amount of loss exceeds the amount set forth in paragraph (A), Lessee shall make the loss adjustment with the insurance company insuring the loss and on receipt of the proceeds shall immediately pay them to Town. 11.1.2 Destruction Due to Risk Not Covered by Insurance If, during the term, the Premises are totally or partially destroyed from a risk not covered by the insurance described in Section 18 (Insurance), rendering the Premises totally or partially inaccessible or unusable, Lessee shall restore the Premises, at their option if they wish to continue operations, to N:\PPW\ MANAGEMENT \COUNCIL \COUNCIL REPORTS\2011 Reports\March 21 \Final Draft BJRR Lease.201 I.docx substantially the same condition as it was in immediately before destruction, to the extent possible based on the insurance proceeds received by Lessee. All applicable insurance proceeds must be directed toward this purpose whether or not the insurance proceeds are sufficient to cover the actual cost of restoration. Such destruction shall not terminate this Lease. If the laws existing at that time do not permit the restoration, either party can terminate this Lease immediately by giving notice to the other party. 11.1.3 Procedure for Restoring Premises If Lessee decides to continue operations and to restore the Premises, then within sixty (60) days Lessee, at its own cost, shall prepare final plans, specifications, and working drawings complying with applicable Laws that will be necessary for restoration of the Premises. The plans, specifications, and working drawings must be approved by Town, which approval will not be unreasonably withheld. Town shall have thirty (30) days after receipt of the plans and specifications and working drawings to either approve or disapprove the plans, specifications, and working drawings and return them to Lessee. If Town disapproves the plans, specifications, and working drawings, Town shall notify Lessee of its objections and Town's proposed solution to each objection. Lessee acknowledges that the plans, specifications, and working drawings shall be subject to approval of the appropriate governmental bodies and that they will be prepared in such a manner as to obtain that approval. Lessee's restoration shall be subject to all applicable laws, Town standards, permits and fees for construction. 11. 1.4 Demolition. If Lessee decides not to restore the Premises after damage or destruction, partial or complete, then Lessee, at its sole expense shall obtain permits and demolish any remaining structures and return the site to its original condition, without any structures. Site should be returned to Town in a clean, uncontaminated condition, free from any structures or Lessee improvements. 11.2 Force Majeure Prevention, delay or stoppage due to strikes, lockouts, labor disputes, Acts of God, inability to obtain labor, inability to obtain materials or reasonable substitutes, governmental restrictions, governmental regulation, governmental controls, judicial orders, enemy or hostile governmental actions, civil commotion, fire or other casualty, and other causes beyond the reasonable control of Lessee (financial inability excepted), shall excuse the performance by Lessee for a period equal to the prevention, delay, or stoppage, except the obligations imposed with regard to rent to be paid by Lessee pursuant to this Lease. In the event any work performed by Lessee or Lessee's contractors results in a strike, lockout, and /or labor dispute, the strike, lockout, and /or labor dispute shall not excuse the performance by Lessee of the provisions of this Lease. 12. SIGNS AND MARKETING 12.1 Lessee shall not place, construct, maintain, or allow any signs upon the exterior of the Premises without prior written consent of the Town Manager, which consent will not N:\PPW\MANAGEMENT\COUNCIL\COUNCILREPORTS\2011 Reports\March 2lTinal Draft BJRR Lease.2011.docx be unreasonably withheld. Lessee shall include the Town logo on all signs and items marketing programs operated, conducted, sponsored, in whole or in part, by Lessee on the Premises. 12.2 Town shall include references to Lessee on signs and marketing programs prepared by or for Town in association with Lessee's operations on the Premises. 13. ASSIGNMENT AND SUBLETTING 13.1 Town's Consent Required Lessee shall not assign this Lease, nor any interest therein, and shall not sublet or encumber the Premises or any part thereof, nor any right or privilege appurtenant thereto, nor allow or permit any other person(s) to occupy or use the Premises, or any portion thereof. 14. DEFAULTS; REMEDIES 14.1 Defaults The occurrence of any one or more of the following events shall constitute a material default, or breach of this Lease, by Lessee: 14. 1.1 Abandonment of the Premises by Lessee as defined by California Civil Code section 1951.3; 14.1.2 Failure by Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as provided in this Lease, where such failure shall continue for a period of ten (10) business days after written notice thereof from Town to Lessee. In the event Town serves Lessee with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes, such Notice to Pay Rent or Quit shall be in addition to the notice required by this subparagraph; 14.1.3 Failure by Lessee to observe or perform any of the covenants, conditions or provisions of this Lease in any material respect where such failure shall continue for a period of thirty (30) days after written notice thereof from Town to Lessee; provided, however, that if the nature of Lessee's default is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be deemed to be in default if Lessee commenced such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion; 14.1.4 Making by Lessee of any general arrangement or assignment for the benefit of creditors; Lessee's becoming a "debtor as defined in 11 U.S.C. §101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within sixty (60) days); the appointment of a bankruptcy trustee or receiver to take possession of all or substantially all of Lessee's assets located at or on the Premises or of Lessee's interest in this Lease where possession is not restored to Lessee within thirty (30) days; or the attachment, execution or other judicial seizure of all or substantially all of N:\PPW\MANAGEMENT \COUNCIL \COUNCILREPORTS\2011 ReportsWarch 21 \Final Draft BJRR Lease.2011.docx Lessee's assets located at or on the Premises or of Lessee's interest in this Lease, where such seizure is not discharged within thirty (30) days. 14.2 Remedies In the event. of any material default or breach by Lessee, Town may at any time thereafter, following any notice required by statute, and without limiting Town in the exercise of any right or remedy which Town may have by reason of such default or breach: 14.2.1 Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession of the Premises and Improvements to Town. In such event, Town shall be entitled to recover from Lessee all damages incurred by Town by reason of Lessee's default including but not limited to: the cost of recovering possession of the Premises and Improvements; expenses of reletting, including necessary renovation and alteration of the Premises and Improvements; reasonable attorneys'. fees; the worth at the time of the award of the unpaid rent that had been earned at the time of termination of this Lease and the worth at the time of award of the amount by which the unpaid rent for the period of one hundred eighty (180) days after the time of such award exceeds the amount of such rental loss for the same period that Lessee proves could be reasonably avoided. 14.2.2 Maintain Lessee's right to possession, in which case this Lease shall continue in effect whether or not Lessee shall have abandoned the Premises. In such event, Town shall be entitled to enforce all of Town's rights and remedies under this Lease, including the right to recover rent and other payments as they become due hereunder. 14.2.3 Pursue any other remedy now or hereafter available to Town under the laws or judicial decisions of the State of California. Town shall have all remedies provided by law and equity. 14.3 No Relief from Forfeiture After Default. Lessee waives all rights of redemption or relief from forfeiture under California Code of Civil Procedure sections 1174 and 1179, and any other present or future law, in the event Lessee is evicted or Town otherwise lawfully takes possession of the Premises by reason of any default or.breach of this Lease by Lessee. 14.4 Disposition of Abandoned Personal PropertX If the Lessee fails to remove any personal property belonging to Lessee from the Premises after forty -five (45) days of the expiration or termination of this Lease, such property shall at the option of Town be deemed to have been transferred to Town. Town shall have the right to remove and to dispose of such property without liability to Lessee or to any person claiming under Lessee, and the Town shall have no need to account for such property. N:\PPW\ MANAGEMENT \COUNCIL \COUNCIL REPORTS\2011 Reports\March 21\Final Diaft BJRR Lease.201 Ldocx 15. INTEREST ON PAST -DUE OBLIGATIONS Except as expressly provided herein, any amount due Town when not paid when due shall bear interest at the lesser of ten percent (10 %) per year or the maximum rate then allowable by law from the date due. 16. HOLDING OVER If Lessee remains in possession of the Premises or any part thereof after the expiration of the term or option term hereof, such occupancy shall be a tenancy from month to month with all the obligations of this Lease applicable to Lessee and at a monthly rental obligation of the Rent in effect at the time of expiration. Nothing contained in this Lease shall give to Lessee the right to occupy the Premises after the expiration of the term, or upon an earlier termination for breach. 17. INSURANCE Lessee's responsibility for the Premises begins immediately upon delivery and Lessee, at its sole cost and expense, and at no cost to Town, shall purchase and maintain in fall force and effect during the entire term of this Lease insurance coverage in amounts and in a form acceptable to Town as set forth in Exhibit C attached hereto and incorporated herein by reference. Said policies shall be maintained with respect to Lessee's employees, if any, and all vehicles operated on the Premises. The policies shall include the required endorsements, certificates of insurance and coverage verifications as described in Exhibit C. Lessee shall deposit with the Town Manager, on or before the effective date of this Lease, certificates of insurance necessary to satisfy Town that the insurance provisions of this Lease have been complied with, and to keep such insurance in effect and the certificates therefore on deposit with Town during the entire term of this Lease. Should Lessee not provide evidence of such required coverage at least three (3) days prior to the expiration of any existing insurance coverage, Town may purchase such insurance, on behalf of and at the expense of Lessee to provide six months of coverage. Town shall retain the right at any time to review the coverage, form, and amount of the insurance required hereby. If, in the opinion of the Town's Risk Manager (or comparable official), the insurance provisions in this Lease do not provide adequate protection for Town and for members of the public using the Premises, the Town Manager may require Lessee to obtain insurance sufficient in coverage, form, and amount to provide adequate protection as determined by the Risk Manager. Town's requirements shall be reasonable and shall be designed to assure protection from and. against the kind and extent of risk that exists at the time a change in insurance is required. The Town Manager shall notify Lessee in writing of changes in the insurance requirements. If Lessee does not deposit copies of acceptable insurance policies with Town incorporating such changes within sixty (60) days of receipt of such notice, or in N:\PPW\ MANAGEMENT \COUNCIL \COUNCIL REPORTS\2011 Reports\March 2ITinal Draft BJRR Lease.201 Ldoex the event Lessee fails to maintain in effect any required insurance coverage, Lessee shall be in default under this lease without further notice to Lessee. Such failure shall constitute a material breach and shall be grounds for immediate terinination of this Lease at the option of Town. The procuring of such required policy or policies of insurance shall not be construed to limit Lessee's liability hereunder nor to fulfill the indemnification provision and requirements of this Lease. Notwithstanding the policy or policies of insurance, Lessee shall be obligated for the full and total amount of any damage, injury, or loss caused by or connected with this Lease or. with use or occupancy of the Premises. 18. DISPUTE RESOLUTION 18.1 Unless otherwise mutually agreed to, any controversies between Lessee and Town regarding the construction or application of this Lease, and claims arising out of this Lease or its breach shall be submitted to mediation within thirty (30) days of the written request of one Party after the service of that request on the other Party. 18.2 The Parties may agree on one mediator. If they cannot agree on one mediator, the Party demanding mediation shall request the Superior Court of Santa Clara County to appoint a mediator. The mediation meeting shall not exceed one day (eight (8) hours). The Parties may agree to extend the time allowed for mediation under this Lease. 18.3 The costs of mediation shall be borne by the Parties equally. 18.4 Mediation under this section is a condition precedent to filing an action in any court. In the event of litigation arising out of any dispute related to this Lease, the Parties shall each pay their respective attorney's fees, expert witness costs and cost of suit, regardless of the outcome of the litigation. 19. NON - LIABILITY OF OFFICIALS AND EMPLOYEES OF THE TOWN No official or employee of Town or Lessee shall be personally liable for any default or liability under this Lease. 20. NON- DISCRIMINATION 20.1 Non - discrimination in Lease Activities. Lessee agrees that in the performance of this Lease and in connection with all of the activities Lessee conducts on the Premises, it shall not discriminate against any employee or person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. Lessee acknowledges that is familiar with the provisions set forth in Section 2.30.510 of the Los Gatos Municipal Code relating to nondiscrimination in employment and Section 9.73 of the Los Gatos Municipal Code relating to Town policy against arbitrary discrimination. N:\PPW\MANAGEMENT \COUNCIL \COUNCIL REPORTS\2011 Reports\March 21\Final Draft BJRR Lease.2011.docx 20.2 Human Rights Policy. In connection with all activities that are conducted upon the Premises, Lessee agrees to accept and enforce the statements of policy set forth in Section 9.73.010 which provides: "It is the policy of the Town of Los Gatos to affinn, support and protect the human rights of every person within its jurisdiction. These rights include, but are not limited to, equal economic, political, and educational opportunity; equal accommodations in all business establishments in the Town; and equal service and protection by all public agencies of the Town. 21. INDEPENDENT CONTRACTOR It is agreed that Lessee shall act and be an independent contractor and not an agent nor employee of Town. 22. CONFLICT OF INTEREST Lessee shall at all times avoid conflict of interest or appearance of conflict of interest in performance of this agreement. Lessee warrants and covenants that no official or employee of Town nor any business entity in which. any official or employee of Town is interested: (1).has been employed or retained to solicit or aid in the procuring of this agreement; or (2) will be employed in the performance of this agreement without the divulgence of such fact to Town. In the event that Town determines that the employment of any such official, employee or business entity is not compatible with such official's or employee's duties as an official or employee of Town, Lessee upon request of Town shall immediately terminate such employment. Violation of this provision constitutes a serious breach of this Lease and Town may terminate this Lease as a result of such violation. 23. MEMORANDUM OF LEASE Following execution of this Lease, either party, at its sole expense, shall be entitled to record a Memorandum of Lease in the official records of Santa Clara County. Upon termination or expiration of this Lease, Lessee shall execute and record a quitclaim deed as to its leasehold interest. 24. ESTOPPEL CERTIFICATE Each Party shall, from time to time, upon at least thirty (30) days prior written notice from the other Party, execute, acknowledge and deliver to the requesting Party a statement in writing: (i) certifying this Lease is unmodified and in full force and effect, or, if modified, stating the nature of the modification and certifying that the Lease, as modified, is in full force and effect, and the date to which the rental and other charges, if any, have been paid; and, (ii) acknowledging that there are not to the responding Party's knowledge, any defaults, or stating if any defaults are claimed. Any such statement may be relied upon by any prospective purchaser or encumbrancer of the Town Property or any prospective assignee or sublessee. N:\PPW\MANAGEMENT\COUNCIL\COUNCILREPORTS\2011 Reports\March 21 \Final Draft BAR Lease.2011,doex 25. LIENS. Lessee agrees at its sole cost and expense to keep the Premises free and clear of any and all claims, levies, liens, encumbrances or attachments; provided, that Lessee may contest and such claim, levy, lien, encumbrance or attachment by appropriate proceedings and in a manner which stays the enforcement of the same. 26. VACATING Upon termination of the tenancy, Lessee shall completely vacate the Premises, including the removal of any and all of its property. Before departure, Lessee shall return keys and personal property listed on the inventory to Town in good, clean and sanitary condition, reasonable wear and tear excepted. Lessee shall allow Town to inspect the Premises to verify the condition of the Premises and its contents. 27. NOTICES All notices to the Parties shall, unless otherwise requested in writing, be sent to Town addressed as follows: Town of Los Gatos Attention: Town Manager 110 E. Main Street Los Gatos, CA 95030 And to Lessee addressed as follows: Billy Jones Wildcat Railroad Inc. P.O. Box 234 Los Gatos, CA 95031 Notices may be served upon either Party in person, by first class mail, or by certified mail whether or not said mailing is accepted. If notice is sent via facsimile, a signed, hard copy of the material shall also be mailed. The workday the facsimile was sent shall control the date notice was deemed given if there is a facsimile machine generated document on the date of transmission. A facsimile transmitted after 1:00 p.m. on a Friday shall be deemed to have been transmitted on the following Monday. These addresses shall be used for service of process. 28. TIME Time shall be of the essence in this Lease. 29. AMENDMENTS It is mutually agreed that no oral Leases have been entered into and that no alteration or N:\PPVAMANAGEMENT\COUNCIL\COUNCILREPORTS\2011 ReportsNarch 2lTinal Draft BJRR Lease.2011,docx variation of the terms of this Lease shall be valid unless made in writing and signed by the Parties to this Lease. 30. SIGNING AUTHORITY If this Lease is not signed by all Lessees named herein, the person actually signing warrants that he /she has the authority to sign for the others. 31. CAPTIONS The captions of the various sections, paragraphs and subparagraphs of this Lease are for convenience only and shall not be considered or referred to in resolving questions of interpretation. 32. SURRENDER OF LEASE NOT MERGER The voluntary or other surrender of this lease by Lessee, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Town, terminate all or any existing subleases or subtenancies, or may, at the option of Town, operate as an assignment of any and all such subleases or subtenancies. 33. INTEGRATED DOCUMENT This Lease, including any exhibits attached hereto, embodies the entire agreement between Town and Lessee. No other understanding, agreements, conversations or otherwise, with any officer, agent or employee of Town prior to execution of this Lease shall affect or modify any of the terms or obligations contained in any documents comprising this Lease. Any such verbal agreement shall be considered as unofficial information and in no way binding upon Town. All agreements with Town are subject to approval of the Town Council before Town shall be bound thereby. 34. WAIVER Waiver by Town of one or more conditions of performance or any breach of a condition under this Lease shall not be construed as a waiver of any other condition of performance or subsequent breaches. The subsequent acceptance by a Party of the performance of any obligation or duty by another Party shall not be deemed to be a waiver of any term or condition of this Lease. The exercise of any remedy, right, option or privilege hereunder by Town shall not preclude Town from exercising the same or any and all other remedies, rights, options and privileges hereunder and Town's failure to exercise any remedy, right, option or privilege at law or equity, or otherwise which Town may have, shall not be construed as a waiver. 35. INTERPRETATIONS In construing or interpreting this Lease, the word "or" shall not be construed as exclusive N;\PPW\ MANAGEMENT \COUNCIL \COUNCIL REPORTS\2011 Reports\March 21 \Final Draft BJRR Lease.201 Ldocx and the word "including" shall not be limiting. The Parties agree that this Lease shall be fairly interpreted in accordance with its terms without any strict construction in favor of or against any other Party. 36. 37. 38. 39. 40. 41 SEVERABILITY CLAUSE necessary to make the provision legal, valid and enforceable, and the other provisions of this Lease shall not be affected thereby. If any provision of this Lease is held to be illegal, invalid or unenforceable in full or in part, for any reason, then such provision shall be modified to the minimum extent GOVERNING LAW This Lease shall be governed and construed in accordance with the statutes and laws of the State of California. VENUE In the event that suit shall be brought by any Party to this Lease, the Parties agree that venue shall be exclusively vested in the state courts of the County of Santa Clara. COMPLIANCE WITH LAWS The Parties hereto shall comply with all applicable laws, ordinances, codes and regulations of the federal, state and local governments in.the performance of their rights, duties and obligations under this Lease. M1 Each party represents that is has not had dealings with any real estate broker, finder, or other person, with respect to this lease in any manner. Each Party shall hold harmless the other party from all damages resulting from any claims that may be asserted against the other party by any broker, finder, or other person with whom the Indemnifying Party has or purportedly has dealt. ATTACHMENTS TO LEASE The following exhibits are attached to and made a part of this Agreement: "A" — Description of Subject Premises B" — Inventory of Buildings "C" — Standard Insurance Requirements N:\PPW\ MANAGEMENT \COUNCIL \COUNCIL REPORTS\2011 Repoits\March 21\1 Draft BJRR Lease.201 Ldocx IN WITNESS WHEREOF, the parties have executed this Lease the day and year first above written. TOWN: Town of Los Gatos Greg Larson, Town Manager LESSEE: Billy Jones Wildcat Railroad Inc. ATTEST: Jackie Rose, Town Clerk Administrator APPROVED AS TO FORM: Judith J. Propp, Town Attorney N: \PPW\ MANAGEMENT \COUNCIL \COUNCIL REPORTS\2011 Reports\March 21\Pinal Draft BJRR Lease.201 Ldocx LEASE AGREEMENT BETWEEN TOWN OF LOS GATOS AND BILLY JONES WILDCAT RAILROAD INC. EXHIBIT A DESCRIPTION OF SUBJECT PREMISES Page 19 LEASE AGREEMENT BY AND BETWEEN TOWN OF LOS GATOS, CALIFORNIA AND BILLY JONES WILDCAT RAILROAD INC. EXHIBIT B INVENTORY OF BUILDINGS Page 20 LEASE AGREEMENT BY AND BETWEEN TOWN OF LOS GATOS, CALIFORNIA AND BILLY JONES WILDCAT RAILROAD INC. EXHIBIT C STANDARD INSURANCE REQUIREMENTS Insurance Requirements for Lessee: Lessee shall purchase and maintain the insurance policies set forth below on all of its operations under this Lease at its sole cost and expense. Such policies shall be maintained for the full term of this Lease and the related warranty period (if applicable). For purposes of the insurance policies required under this Lease, the term "Town" shall include the duly elected or appointed council members, commissioners, officers, agents, employees and volunteers of the Town of Los Gatos, California, individually or collectively. Coverages (RL 28.1A) S Minimum Scope of Insurance Coverage shall be at least as broad as: 1) Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001). 2) Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile Liability, code 1 (any auto). 3) Workers' Compensation insurance as required by the State of California and Employer's Liability Insurance (for lessees with employees). 4) Property insurance against all risks of loss to any tenant improvements or betterments The policy or policies of insurance maintained by Lessee shall provide the following limits and coverages; PO ,TCY (1) Commercial General Liability MINIMUM LIMITS OF LIABILITY $1,000,000 per each occurrence for bodily injury, personal injury and property damage (2) Automobile Liability Including Owned, Hired and Non -Owned Automobiles $ 1,000,000 Combined Single Limit Page 21 (3) Workers' Compensation Statutory Employers Liability $1,000;000 per accident for bodily injury or disease (4) Lessee's Property Insurance Lessee shall procure and maintain property insurance coverage for: (a) all office furniture, trade fixture, office equipment, merchandise, and all other items of Lessee's property in, on, at, or about the premises and the building, include property installed by, for, or, at the expense of Lessee; (b) all other improvements, betterments, alterations, and additions to the premises. Lessee's property insurance must fulfill the following requirements: (a) it must be written on the broadest available "all risk" policy form or an equivalent form acceptable to the Town of Los Gatos. (b) for no less than ninety percent (90 %) of the full replacement cost (new without deduction for depreciation) of the covered items and property; and (c) the amounts of coverage must meet any coinsurance requirements of the policy or policies. (RL 28.2) Deductibles and Self - Insured Retentions Any deductibles or self - insured retentions must be declared to and approved by the Town. At the option of the Town either: the insurer shall reduce or eliminate such deductibles or self - insured retentions as respects the Town, its officers, officials, employees and volunteers; or the Lessee shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. Insurance shall be in full force and effect commencing on the first day of the term of this Lease. Each insurance policy required by this Lease shall: 1. Be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to the Town. 2. Include a waiver of all rights of subrogation against the Town and the members of the Town Council and elective or appointive officers or employees, and each party shall indemnify the other against any loss or expense including reasonable attorney fees, resulting from the failure to obtain such waiver. The Town waives this requirement so long as the Lessee continues to participate in a self insurance pool of public entities that reserves the right of subrogation. A waiver of all rights of subrogation shall be required immediately upon the Lessee obtaining insurance Page 22 through a self insurance pool that does not reserve the right of subrogation or the Lessee obtaining insurance in the private insurance market. 3. Name the Town of Los Gatos as a loss,payee on the property policy. 4. Provide that the Town, its officers, officials, employees, agents and volunteers are to be covered as insureds as respects: liability arising out of activities performed by or on behalf of the Lessee; products and completed operations of the Lessee; premises owned, occupied or used by the Lessee; or automobiles owned, leased, hired or borrowed by the Lessee. The coverage limits defined in a memorandum of understanding of a self insurance pool of public entities through which Lessee obtains insurance coverage shall be acceptable in lieu of these requirements of this paragraph 4 which shall apply to coverage obtained in the private insurance market. Provide that for any claims related to this Lease, the Lessee's insurance coverage shall be primary insurance as respects the Town, its officers, officials, employees, agents and volunteers.. Any insurance or self - insurance maintained by the Town, its officers, officials, employees, agents or volunteers shall be excess of the Lessee's insurance and shall not contribute with it. 6. Provide that any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the Town, its officers, officials, employees, agents or volunteers. 7. Provide that Lessee's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. 8. Lessee agrees to promptly pay to Town as Additional Rent, upon demand, the amount of any increase in the rate of insurance on the Premises or on any other part of Building that results by reason of Lessee's act(s) or Lessee's permitting certain activities to take place. Acceptability of Insurers All insurance policies shall be issued by California- admitted carriers having current A.M. Best's ratings of no lower than A -:VII. Page 23 THIS PAGE INTENTIONALLY LEFT BLANK