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Old City Hall - Fran and Bobby Beaudet - Single Tenant LeaseSINGLE TENANT LEASE (Old City Hall) THIS LEASE for reference purposes only dated November 2, 2012, is entered into by and between the City of Gilroy, a municipal corporation ( "Landlord ") and Fran Beaudet and Bobby Beaudet (collectively, "Tenant "). 1. PREMISES. Landlord hereby leases to Tenant and Tenant hereby hires from Landlord that certain real property, together with the improvements constructed thereon, consisting of a free standing building (the "Building "), with appurtenant garden area and parking lot, commonly known as Old City Hall located at 7400 Monterey Street, Gilroy, California as shown on EXHIBIT A -1 attached hereto (Assessor's Parcel No. 841 -06 -061) (the "Old City Hall Property ") and that certain parking lot located on the south side of Sixth Street and west of the existing railroad tracks as shown on Exhibit A -2 attached hereto (Assessor's Parcel No. 841 -08- 044) (the "Parking Lot "), subject to and upon all of the terms and conditions set forth in this Lease. The Old City Hall Property and the Parking Lot are collectively referred to in this Lease as the "Premises "). 2. LEASE TERM. ``'" 2.1 The termm f this Lease ( "Term ") shall be for a term of sixty (60) months, commencing on November 2012 (the "Commencement Date "), subject to extension and earlier termination as provided in this Lease and subject to Sections 2.2 and 2.3 below. "Lease Termination" shall mean the expiration or sooner termination of this Lease. "Initial Term" shall mean the initial sixty (60) months of the Term, subject to earlier termination as provided in this Lease. In the event the first day of the Term is not the first day of the calendar month, then for purposes of determining the length and expiration date of the Initial Term pursuant to this Section 2.1 and Section 2.2 below (but not the two (2) month free rent period described in Section 3. 1), the first month of the Term shall be deemed to consist of the first partial calendar month and the first full calendar month of the Term. 2.2 Delivery of Possession. Subject to Section 2.3 below, if Landlord is unable to deliver possession of the Premises to Tenant on November 9, 2012 for any reason, Landlord shall not be subject to liability therefor, nor shall such failure affect the validity of this Lease or the obligations of Tenant; provided however that the Commencement Date shall be extended by the number of days Landlord delays in delivering possession of the Premises to Tenant and the expiration date shall be sixty (60) months thereafter (computed as described in Section 2.1 above), except to the extent the delay in delivering possession of the Premises was caused or contributed to by Tenant or Tenant's agents, officers, employees, representatives, contractors, servants or invitees (collectively "Tenant's Agents "). Delivery of possession of the Premises to Tenant shall be deemed to have occurred on the date the Premises could have been delivered to Tenant but for such delay caused by Tenant or Tenant's Agents. Notwithstanding the foregoing, if Landlord has not delivered or been deemed to have delivered possession of the Premises by November 30, 2012, Tenant may, at Tenant's option, terminate this Lease by delivering to Landlord written notice of termination, which notice shall be delivered prior to the date that Landlord delivers or is deemed to have delivered possession of the Premises to Tenant. -1- 1KKV 071827.5 As to any delay caused or contributed to by Tenant or Tenant's Agents, there shall be no extension of the Commencement Date or expiration date. 2.3 Existing Lease Termination. Tenant acknowledges that (i) the Old City Hall Property is currently leased by Saffron Restaurant Group, LLC, a California limited liability company ( "Saffron ") pursuant to a Single Tenant Lease dated as of May 6, 2003 (as such lease has been amended, the "Existing Lease "), (ii) Tenant and Saffron have advised Landlord that Tenant desires to purchase from Saffron and Saffron desires to sell to Tenant the restaurant business operated by Saffron at the Old City Hal Property, and (iii) Tenant and Saffron have requested that in connection with the sale of such business to Tenant, that the Existing Lease be terminated and that this Lease be entered in to between Landlord and Tenant. Landlord has advised Tenant that Landlord is willing to enter into this Lease only if Landlord is able to negotiate and enter into a an agreement for the termination of the Existing Lease with Saffron on terms and conditions acceptable to Landlord in Landlord's sole and absolute discretion. Commencement of the Term pursuant to this Lease shall therefore be conditioned and contingent upon all of the following occurring not later than November 30, 2012 (the "Lease Termination Condition): (i) Landlord and Saffron have entered into an agreement for the termination of the Existing Lease on terms and conditions acceptable to Landlord in Landlord's sole and absolute discretion (the "Lease Termination Agreement "), and (ii) termination of the Existing Lease occurs pursuant to the Lease Termination Agreement. If the Lease Termination Condition has not been fully satisfied by November 30, 2012, this Lease shall automatically terminate. Landlord makes no representation or warranty that the Lease Termination Condition can or will be fully satisfied by November 30, 2012, and Landlord shall not have any liability to Tenant in the event it is not satisfied by such date for any reason. 2.4 Acceptance; Landlord's Property; Saffron Property. By taking possession of the Premises, Tenant shall be deemed to have accepted the Premises as being in good and sanitary order, condition and repair, and in the condition required by the Lease, subject to all applicable Laws, and subject to Section 6.1 below. Landlord shall have no obligation to construct any improvements within the Premises for the benefit of Tenant, except that Landlord agrees that at the time the Premises are delivered or are deemed to have been delivered to Tenant, the landscape irrigation system at the Old City Hall Property shall be operational. Except as otherwise expressly provided in this Lease, neither Landlord nor Landlord's agents, employees or other representatives makes any representation or warranty as to the suitability of the Premises for the conduct of Tenant's business, the condition of the Premises, or the use or occupancy which may be made thereof and Tenant has independently investigated and is satisfied that the Premises are and will be suitable for Tenant's intended use. Except for Landlord's obligations expressly set forth in this Lease, the Premises are being leased to Tenant "AS IS AND WITH ALL FAULTS ", without representation or warranty of any kind, express or implied. Attached hereto as Exhibit C is the current list of property owned by Landlord which Saffron is required to surrender to Landlord upon termination of the Existing Lease. Landlord makes no representation or warranty to Tenant as to whether all or any portion of the property listed on Exhibit C will be surrendered with the Premises to Landlord upon termination of the Existing Lease. Following termination of the Existing Lease and surrender of the -2- ► =1`ur RI'm Premises by Saffron to Landlord, Landlord agrees to conduct an inventory to determine which items set forth on Exhibit C were surrendered to Landlord with the Premises. Upon completion of such inventory, Landlord shall deliver to Tenant a list of such surrendered items (such surrendered items being collectively, "Landlord's Property "). The Premises will be delivered to Tenant with Landlord's Property in place. During the Term of this Lease, Tenant shall have the right to use Landlord's Property, without additional charge. Landlord makes no representation or warranty of any kind, express or implied, with respect to Landlord's Property, shall have no obligation to maintain, repair or replace any of Landlord's Personal Property and shall have no liability to Tenant with respect thereto. All of Landlord's Property is being delivered in "AS IS and WITH ALL FAULTS" condition. All of Landlord's Property shall maintained and repaired by Tenant in as good condition as received by Tenant, and shall be surrendered by Tenant to Landlord at Lease Termination in as good condition and repair as existed as of the Commencement Date. As to any item of Landlord's Property that is lost, stolen, destroyed or cannot be repaired Tenant, Tenant shall be required to replace such item with a comparable item reasonably satisfactory to Landlord, at Tenant's cost. In connection with the Lease Termination Agreement, Landlord intends to provide therein that Saffron may leave Saffron's personal property and trade fixtures in the Premises upon Lease Termination, to the extent consented to by Tenant. Landlord makes no representations or warranties to Tenant as to any of Saffron's trade fixtures or personal property left by Saffron in the Premises. Saffron's trade fixtures and personal property do not include any of Landlord's Property. If on the Commencement Date there is any personal property or trade fixtures owned by Saffron which is not wanted by Tenant, Tenant shall be solely responsible for removing such items. All of Saffron's trade fixtures and personal property left at the Premises by Saffron shall, from and after the Commencement Date, be deemed the trade fixtures and personal property of Tenant under this Lease, subject to removal by Tenant as provided in Section 6.3 below. 2.5 Extended Term. Landlord hereby grants to Tenant one (1) option to extend the Initial Term (the "Option "), for a period of sixty (60) months immediately following the expiration of the Initial Term (such sixty (60) month extension period being the "Extended Term "), upon the following terms and conditions: (a) Tenant shall give Landlord written notice of its exercise of the Option to extend the Term not later than six (6) months before the date the Term would end but for said exercise, time being of the essence. If Tenant does not deliver to Landlord notice of Tenant's election to exercise the Option within the time required by the prior sentence, the Option shall automatically terminate and be of no further force or effect. (b) Tenant shall not have the right to exercise the Option if Tenant has been in default of its obligations under this Lease at any time during the Term. (c) All terms and conditions of this Lease shall apply during an Extended Term, except that Rent shall be determined as provided below in Sections 3.1 and 3.2, there shall be no free rent period, and there shall be no extension of this Lease beyond the one (1) Option granted pursuant to this Section 2.5. -3- 1KKS11071 A97 5 (d) The Option is personal and granted solely to the individuals named as the Tenant in the introductory paragraph of this Lease, and is not exercisable by any other person or entity whether or not a Transfer has occurred unless Landlord consents to permit exercise of any Option by any assignee or subtenant in Landlord's sole and absolute discretion. The Option provided to Tenant in this Lease shall terminate upon the expiration or sooner termination of this Lease. 3. RENT. 3.1 Rent. During each month of the Term, Tenant shall pay to Landlord as Rent the amounts set forth below, it being agreed by Landlord and Tenant that the increases in the Rent amount shall occur on January 1 of each year during the Term commencing on January 1, 2014 regardless of whether the Term commences or is deemed to have commenced on November 9, 2012 or on some other date, subject to this Section 3.1 below as it relates to the two (2) month free rent period: Time Parind Amnlint November of 2012 through December 31, 2013 One Thousand Dollars ($1,000.00) per month (subject to the two (2) month free rent period described in this Section 3.1 below) January 1, 2014 — December 31, 2014 January 1, 2015 — December 31, 2015 January 1, 2016 — December 31, 2016 January 1, 2017 — December 31, 2017 January 1, 2018 — December 31, 2018 January 1, 2019 through the expiration of the Extension Term One Thousand Eight Hundred Dollars ($1,800) per month Two Thousand Two Hundred Fifty Dollars ($2,250) per month Three Thousand Two Hundred Fifty Dollars ($3,250) per month Four Thousand Two Hundred Fifty Dollars ($4,250) per month Five Thousand Five Hundred Dollars ($5,500) per month In accordance with Section 3.2 below. Notwithstanding the foregoing Rent schedule, (i) for only the first two (2) full calendar months of the Lease Term the monthly Rent shown in the above Rent schedule shall be abated and shall not be due from Tenant, and (ii) if the Term commences on a day other than the first day of the calendar month, then Rent for that first partial calendar month of the Term shall be at the rate of One Thousand Dollars ($1,000), prorated for the partial month and shall be paid to Landlord on or before the first day of the Term. Except as provided in the prior sentence, Rent shall be paid in advance on the first day of each calendar month throughout the Term without offset or deduction, except that Rent for the third (3rd) full calendar month of the Term, in the amount of One Thousand Dollars ($1,000), and for the last full calendar month of the ME 1KKS11071827.5 Initial Term, in the amount of Four Thousand Two Hundred Fifty Dollars ($4,250), shall be paid upon the execution of this Lease by Tenant. Landlord agrees to endeavor to deliver an invoice to Tenant for the Rent and Maintenance Cost Reimbursements (defined in Section 6.1 below) due from Tenant for a calendar month by the twenty fifth (25th) day of the prior calendar month; provided however that Landlord's delay in delivering such statement shall not excuse Tenant's obligation to deliver Rent on the first day of the calendar month, although the Maintenance Cost Reimbursement shall not be due until ten (10) days after such invoice has been delivered to Tenant. Rent shall be prorated based on a thirty (30) day month for any partial calendar month of the Term. 3.2 CPI Rent Increases During Extended Term. Beginning on January 1, 2019 and on every January 1 thereafter during the Term, (each, an "Adjustment Date "), the then - payable monthly Rent shall be subject to increase based on the increase, if any, in the Consumer Price Index that has occurred during the twelve (12) months preceding the then - applicable Adjustment Date, subject to this Section 3.2 below. The initial basis for computing the adjustment shall be the U.S. Department of Labor, Bureau of Labor Statistic's Consumer Price Index for All Urban Consumers, All Items, 1982 -84 =100, for the San Francisco - Oakland -San Jose area ( "Index "). The Index most recently published preceding January 1, 2018 shall be considered the "Base Index" for the first adjustment. Thereafter, the Index most recently published preceding the previous Adjustment Date shall be considered the "Base Index." If the Index most recently published preceding the current Adjustment Date ( "Comparison Index ") is greater than the Base Index, the then - payable monthly Rent shall be increased by multiplying the then - payable monthly Rent by a fraction, the numerator of which is the Comparison Index and the denominator of which is the Base Index; provided however that in no event shall the monthly rent be increased on an Adjustment Date to more than one hundred and ten percent (110 %) of the Rent in effect immediately before such adjustment. In addition, notwithstanding the foregoing or any actual increase or decrease in the Index, the increase in monthly Rent for any Adjustment Date shall never be less than the monthly Rent in effect immediately prior to the Adjustment Date. On adjustment of the monthly Rent, Landlord shall notify Tenant by letter stating the new monthly Rent. Landlord's calculation of the monthly Rent escalation shall be conclusive and binding unless Tenant objects to said calculation within thirty (30) days of Tenant's receipt from Landlord of such calculation. Notwithstanding Tenant's timely objection to Landlord's calculation of the monthly Rent escalation, Tenant shall pay monthly Rent as adjusted according to Landlord's computation, pending resolution of such dispute; provided that upon resolution of the dispute, any overpayment of monthly Rent made by Tenant shall be credited against the first monthly Rent payments due thereafter. Landlord's failure to adjust monthly Rent on an Adjustment Date shall not prevent Landlord from retroactively adjusting it at any subsequent time during the Term. If the Index base year is changed so that it differs from 1982 -84 =100, the Index shall be converted in accordance with the conversion factor published by the United States Department of Labor, Bureau of Labor Statistics. If the Index is changed, revised or discontinued for any reason, there shall be substituted in lieu thereof and the term "Consumer Price Index" shall thereafter refer to the most nearly comparable official price index of the United States Government in order to obtain substantially the same result as would have been obtained had the original Consumer Price Index been not been discontinued, revised or changed, which alternative index shall be selected by Landlord and shall be subject to Tenant's written reasonable approval. -5- IKKS11071827.5 3.3 Rentals. "Rentals" as used in this Lease shall mean Rent, together with Additional Rent and all other sums owed to Landlord under this Lease, which shall constitute additional rent hereunder (including without limitation Maintenance Cost Reimbursements). All Rentals shall be paid in lawful money of the United States to Landlord at the address specified in this Lease for purposes of notice, or to such other persons or at such other places as may be designated in writing by Landlord from time to time. All Rentals shall be paid without deduction or offset and, except as otherwise expressly provided in this Lease, without prior notice or demand. 3.4 Late Charges; Interest. If any Rent or Rentals is unpaid after the fifth day after the due date, Tenant shall pay a late charge of ten percent (10 %) of the amount overdue. The parties agree that this late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of the late payment by Tenant. In no event shall this provision for a late charge be deemed to grant to Tenant a grace period or extension of time within which to pay any installment of Rent or other Rentals or prevent Landlord from exercising any right or remedy available to Landlord upon Tenant's failure to pay such amounts when due, including, without limitation, the right to terminate this Lease. Any installment of Rent not received by Landlord by the thirtieth (30th) day after its due date, and any installment of Rentals not received by Landlord when due, shall thereafter bear interest at a rate equal to the greater of the following (the "Stipulated Rate ") (i) the discount rate of the Federal Reserve Bank of San Francisco plus five (5 %) percent per annum, as of the twenty -fifty (25th) day of the month immediately preceding Tenant's default, on advances to member banks under Section 13 and 13(a) of the Federal Reserve Act, as now in effect or hereafter from time to time amended, or (ii) ten percent (10 %) per annum. 3.5 Additional Rent. All amounts which Tenant is required to pay under this Lease, and all damages, costs and expenses which Landlord may incur by reason of any default by Tenant under this Lease shall be deemed to be additional rent hereunder ( "Additional Rent "). Upon nonpayment of Additional Rent, Landlord shall have all of the rights and remedies with respect thereto as Landlord has for the non - payment of Rent. 3.6 Security Deposit. Concurrently with Tenant's execution of this Lease, Tenant shall deposit with Landlord the amount of Three Thousand Dollars ($3,000) (the "Security Deposit "), to be held by Landlord as security for the timely and full performance by Tenant of all of the terms, covenants, and conditions of this Lease to be kept and performed by Tenant during the Term. If Tenant defaults with respect to any provision of this Lease, including, but not limited to, the provisions relating to the payment of Rentals, Landlord may (but shall not be mandated to) use, apply or retain, as applicable, that portion of the Security Deposit that will compensate Landlord for any amounts due from Tenant that have not been paid or any other amount which Landlord may spend to cure Tenant's default, or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant's default, including without limitation loss of future Rent due under this Lease upon termination of this Lease due to a default by Tenant and other damages recoverable under California Civil Code Section 1951.2. Tenant hereby waives California Civil Code Section 1950.7, or any similar Laws now or hereafter in effect which may have the effect of limiting the circumstances under which Landlord would be allowed to use or apply the Security Deposit or amount that could be rig MM1071827.5 so used or applied, or imposing a deadline for the return of the Security Deposit, it being agreed that the Security Deposit shall be governed by the terms and conditions of this Lease. If any portion of the Security Deposit is so used or applied, Tenant shall, within ten (10) days after written demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount. Tenant's failure to do so shall be a material breach of this Lease. Landlord shall not be required to keep the Security Deposit separate from its general funds, and Tenant shall not be entitled to interest on the Security Deposit. If Tenant fully and faithfully performs every provision of this Lease to be performed by it, the Security Deposit or any balance thereof shall be returned to Tenant, or Tenant's assignee if applicable, within thirty (30) days after the expiration of the Term and Tenant has vacated the Premises in the condition required by this Lease. In the event of the sale or transfer of Landlord's interest in the Premises, Landlord shall have the right to transfer the Security Deposit not yet used or applied in accordance with this Section 3.6 to the transferee of Landlord's interest, in which event Tenant shall look only to the new landlord for the return of the Security Deposit, and the transferring Landlord shall thereupon be released from all liability to Tenant for the return of the Security Deposit 4. TAXES. 4.1 Real Property Taxes. Tenant shall pay all applicable Real Property Taxes before the same become delinquent. As used in this Lease, the term "Real Property Taxes" means any form of assessment, license fee, rent tax, levy, possessory interest or other tax (other than net income, estate, successor or inheritance taxes), now or hereafter imposed by any authority having the direct or indirect power to tax or by any city, county, state or federal government or any improvement or other district or division thereof, whether or not now customary or within the contemplation of the parties, ordinary or extraordinary, general or special, or resulting from increased rate or valuation, together with any taxes levied or assessed in lieu of, in substitution for, or in addition to existing taxes and assessments against the Premises. In accordance with California Revenue and Taxation Code Section 107.6(a), Landlord advises Tenant that by entering into this Lease, a possessory interest subject to property taxes may be created. Tenant or any other party in whom the possessory interest is vested may be subject to the payment of property taxes levied on such interest. 4.2 Tax on Leasehold or Personal Propert y. Tenant shall be responsible for and shall pay before delinquency all municipal, county or state taxes, levies and fees of every kind and nature applicable to Tenant by virtue of its leasing the Premises including, but not limited to, general or special assessments assessed during the Term against any leasehold interest or trade fixtures or personal property of any kind, owned or leased by or placed in, upon or about the Premises by Tenant. Tenant agrees to pay before delinquency the amount of all taxes levied upon or measured by the rent payable hereunder, whether as a so- called sales tax, transaction privilege tax, excise tax, or otherwise. If such taxes, levies or fees are assessed, levied, or imposed upon Landlord or any portion of the Premises, Landlord shall give Tenant a statement of the amount applicable to the Premises. If a separate assessment of the improvements is not available from the appropriate governmental authority, Landlord's good faith allocation shall be binding on Tenant. In such event, Tenant shall pay Landlord on demand for such taxes, levies and fees applicable to the Premises. -7- IKKS11071827.5 5. CONDUCT OF BUSINESS BY TENANT. 5.1 Use of the Premises. Tenant shall use the Old City Hall Property as a bona fide eating place, as that term is defined in Section 23038 of the California Business & Professions Code or a successor statute, and shall use the Parking Lot for parking of Tenant's employees and patrons while visiting the Old City Hall Property. Tenant shall hold the Old City Hall Property open as a bona fide eating place for regular meal service for a minimum five (5) evenings per week, City holidays excepted, during the hours from 5:00 p.m. until 8:00 p.m. Nothing contained herein shall be construed to restrict the days and times that Tenant may hold open the Premises if more days or hours are permitted under a valid permit issued by the City of Gilroy. In addition, Tenant may use the Premises for the following incidental purposes so long as Tenant complies with all laws, ordinances and other legal requirements ( "Laws ") relating to such uses, including without limitation obtaining all City, State and other governmental or quasi - governmental permits required with respect to such uses, so long as Tenant continues to also use the Premises as a bona fide eating place, subject to Section 5.2 below (collectively, the "Incidental Uses "): private parties and meetings; dancing; weddings and banquets; area for service of alcoholic or non - alcoholic beverages; and office space for Tenant's use only. Tenant shall not use the Premises for any other purposes without the prior written consent of Landlord, which approval may be withheld in Landlord's sole and absolute discretion. 5.2 Compliance with Law. Tenant at its expense shall comply promptly with all applicable laws and permits regulating the use by Tenant of the Premises, which, subject to Articles 6, 8 and 10, shall include without limitation required structural alterations. Tenant at its expense shall take all steps required to cause the Premises to be kept, maintained, used and occupied in compliance with the American With Disabilities Act of 1990, as the same may be amended from time to time ( "ADA "). Tenant shall not use or permit the use of the Premises in any manner that will tend to create a nuisance or tend to injure the reputation of the Premises. In no event shall the listing of any particular use in Section 5.1 above be construed as a requirement that Landlord grant any permits with respect to such uses. Issuance of any City permits shall be subject to all permit requirements legally imposed by the City of Gilroy. In no event shall Tenant offer hip hop, rap, heavy metal, punk rock, grunge or similar music at the Premises. If any one or more of the Incidental Uses results in the violation of any permits issued with respect to the Premises, the creation of any public disturbance or the need to call police to the Premises (each of such occurrences being an "Incidental Use Violation "), then after the second (2nd) Incidental Use Violation in any twelve (12) month period the Incidental Uses resulting in any such violation shall no longer be an allowed use of the Premises unless Tenant demonstrates to Landlord's reasonable satisfaction that Tenant has implemented measures to prevent Incidental Use Violations from happening thereafter. In addition, notwithstanding the preceding sentence, regardless of whether Tenant has implemented any measures to prevent an Incidental Use Violation, if a third Incidental Use Violation occurs within any twelve (12) month period, then Tenant shall be deemed to have committed a non - curable default under this Lease, giving Landlord all rights and remedies under this Lease, at law or in equity, including without limitation the right to terminate this Lease. 1KKS11071827.5 Tenant shall place no loads upon the floors, walls or ceilings in excess of the maximum designed load determined by Landlord or which endangers the structure; nor place any harmful liquids in the drainage systems; nor dump or store waste materials or refuse or allow such to remain outside the Premises proper, except in the enclosed trash areas provided, if any. Tenant shall not store or permit to be stored or otherwise placed any other material of any nature whatsoever outside the Building. Tenant and Tenant's Agents shall not use, store or dispose, or allow the use, storage or disposal of, any Hazardous Materials on any portion of the Premises. Tenant shall indemnify, defend, and hold Landlord and Landlord's officers, employees, agents, counsel members, and other representatives harmless from and against any and all claims, demands, causes of action, losses, damages, liabilities, suits, costs, fees, or expenses (including without limitation attorneys' fees) (collectively, "Claims and Liabilities ") arising in connection with the breach of the obligations described in the previous sentence. As used in this Lease, Hazardous Materials means any chemical, substance or material which has been or is hereafter determined by any federal, state or local governmental authority to be capable of posing risk of injury to health or safety, including without limitation, petroleum, asbestos, polychlorinated biphenyls, radioactive materials and radon gas. All of Tenant's obligations to defend, hold harmless and indemnify pursuant to this Lease shall survive Lease Termination. If required by Chapter 1 (commencing with section 1720) of Part 7 of Division 2 of the California State Labor Code, Tenant shall pay not less than the prevailing rate of per diem wages for construction work to all workers as required by that Chapter. Tenant shall be solely responsible for implementing such security measures as are necessary to keep the Premises and the operations thereon safe and for the safety of all persons or property upon the Premises. Without limiting the generality of the foregoing, Tenant shall obtain a special entertainment permit from the Gilroy police department, or such other City department that may be in charge of issuing such permits from time to time, as it relates to dancing and other Incidental Uses, to the extent required by law, and shall adhere to all requirements under such permit, including without limitation all security requirements imposed thereunder. Landlord shall have no obligation or liability with respect to the provision or lack of provision of any security devices, services or other measures. 6. MAINTENANCE, REPAIRS, AND ALTERATIONS. 6.1 Landlord's Responsibility. Subject to the provisions of Article 8, Landlord shall keep in good order, condition and repair (i) the structural aspects of the Building's roof and walls, (ii) the conduits, wires and plumbing which are located and enclosed within the walls of the Building, and (iii) the Building's exterior facade, except for any damage thereto caused by the negligence or willful misconduct of Tenant or Tenant's Agents, except for any modifications to existing electrical or other building systems necessitated by any Alterations (defined in Section 6.4) made by or on behalf of Tenant, and except for reasonable wear and tear; provided, however, that Landlord shall have no obligation to repair until a reasonable time after the receipt by Landlord of a written notice of the need for repairs. The cost and expense incurred by Landlord pursuant to this paragraph shall be paid for by Landlord, except to the extent that any costs are incurred as a result of the acts or negligence of Tenant or Tenant's Agents, in which 0 1KKS11071827.5 event Tenant shall reimburse Landlord for such costs and expenses not later than ten (10) days after written demand for payment is made by Landlord. Subject to the provisions of Article 8, Landlord shall also keep in good order, condition and repair the Building's heating, ventilating and air - conditioning system and elevator, except for any damage thereto caused by the negligence or willful misconduct of Tenant or Tenant's Agents, and except for reasonable wear and tear; provided, however, that Landlord shall have no obligation to repair until a reasonable time after the receipt by Landlord of a written notice of the need for repairs. The cost and expense incurred by Landlord pursuant to this paragraph shall be paid for by Tenant not later than ten (10) days after written demand for payment is made by Landlord; except that the cost to replace the Building's heating and cooling system and elevator which constitute capital expenditures in accordance with generally accepted accounting principles shall not be subject to reimbursement by Tenant except to the extent that such replacement becomes necessary due to the negligence or willful misconduct of Tenant or Tenant's Agents. In addition, Landlord reserves the right to enter the Premises for the purpose of maintaining, repairing and winding the main clock mechanism comprising a portion of the Premises, at Landlord's cost, except to the extent repairs or maintenance are required due to the negligence or willful misconduct of Tenant or Tenant's Agents, in which event it shall be Tenant's cost and shall be payable by Tenant not later than ten (10) days after demand for payment is made by Landlord. In no event shall Landlord be required to keep the clock in operating condition. Tenant shall not have the right or responsibility to maintain, repair, alter, wind or move the clock. Promptly after Tenant becomes aware of any graffiti affecting the exterior surface of the exterior walls of the Building, Tenant shall report same to Landlord. Landlord shall have the right to remove all such graffiti, the cost of which shall be paid for by Tenant not later than ten (10) days after written demand for payment is delivered to Tenant. All sums required to be paid by Tenant to Landlord pursuant to this Section 6.1 are collectively referred to in this Lease as the "Maintenance Cost Reimbursements ". Landlord shall have no obligation to make any repairs required of Landlord until a reasonable time after the receipt by Landlord of a written notice of the need for repairs. Tenant waives the provisions of California Civil Code Sections 1941 and 1942 and any similar law now or hereafter in effect. 6.2 Tenant's Responsibility. Except as provided in Section 6.1 above, Tenant shall, during the Term, keep in good order, condition and repair the Premises and every part thereof, including, without limitation, all fixtures, interior walls and interior surface of exterior walls, landscaped areas, exterior courtyards, sidewalks within the boundaries of the Premises (but not the public sidewalks outside the exterior boundaries of the Premises), parking area and other exterior common areas, electrical and plumbing systems, fire extinguishers and fire alarm system, equipment, windows, plate glass, downspouts, gutters, ceilings, floors, and floor coverings, and doors and all of the Landlord's Property. Tenant's obligations under this Section 6.2 shall include the obligation to replace any of the foregoing items, or any portion thereof, which cannot be fully repaired. The Premises shall be maintained by Tenant in an attractive, -10- 1KKSM71827.5 clean, safe, and fully operative condition at all times during the Term. In no event shall Landlord have any repair or maintenance responsibility except as expressly set forth in Section 6.1 above or in Article 8 below. Notwithstanding Section 6.1 above, Tenant is responsible for removing any and all graffiti or other unauthorized markings from the Premises, other than the exterior surface of the exterior walls of the Building, within twenty -four (24) hours of when such markings were first observed or should have been observed or were brought to the attention of Tenant, at Tenant's sole cost. All maintenance and repairs required by law to be performed by a licensed contractor shall be performed by a licensed contractor reasonably acceptable to Landlord. All maintenance and repairs required to be performed by Tenant shall be performed in compliance with all applicable Laws, permit requirements and any covenants, conditions or restrictions of record and shall be done in a good and workmanlike manner conforming in quality and design with the Premises existing as of the date the Premises are delivered to Tenant, and shall not diminish the value of the Premises. Not later than five (5) business days after completion of any repairs, Tenant shall notify Landlord of the work just completed. Tenant's obligation to maintain and repair the fire extinguishers and fire alarm system shall include, without limitation, obtaining and maintaining in effect throughout the Term at Tenant's cost a service contract with a licensed service contractor approved by Landlord (the "Fire Service Contract "), providing for periodic inspection and maintenance (but not less frequently than quarterly) of the fire extinguishers and fire alarm system in conformance with the manufacturer's recommendations. Tenant shall provide Landlord a copy of the Fire Service Contract and paid invoices for the periodic inspection and maintenance and any recommended work not later than five (5) business days after request from Landlord. Not less frequently than quarterly, Tenant shall provide Landlord with a copy of an inspection and maintenance report from the licensed service contractor for such quarter evidencing the performance of the required inspection and maintenance of the fire extinguishers and fire alarm system. In no event shall Landlord's approval of, or consent to, any particular contractor or service provider constitute a representation or warranty by Landlord of the qualification of such contractor or service provider, and Tenant agrees that Landlord shall incur no liability by reason of such approval or consent. If Tenant fails to perform its obligations under this Section 6.2, notwithstanding any other provision hereof and without waiving any other right or remedy Landlord may have, Landlord may, at its option, after five (5) days written notice to Tenant, enter upon the Premises and put the same in good order, condition and repair and at Landlord's further option, continue such maintenance and repair obligation for the remainder of the Term, and the cost thereof shall become due and payable as Additional Rent by Tenant to Landlord upon demand. 6.3 Condition Upon Surrender. On Lease Termination, Tenant shall remove its personal property and trade fixtures from the Premises, surrender the Premises to Landlord in at least as good, clean, safe and condition and working order (except that with respect to the personal property and trade fixtures left by Saffron at termination of the Existing Lease, Tenant shall be obligated to remove such items), damage by fire or the elements (except to the extent not covered by Net Insurance Proceeds and caused by Tenant or Tenant's Agents) and ordinary wear and tear excepted. At Landlord's option, Landlord shall have the right to require that Tenant remove any and all Alterations and Signs made or installed by Tenant and perform any necessary repair caused by such removal. In no event shall Tenant surrender the Premises with any non- code compliant Alterations. -11- 1KKS11071827.5 6.4 Improvements by Tenant. Tenant shall not, without prior written consent of Landlord, not to be unreasonably withheld (except as provided below), make any alterations, improvements, or additions (collectively, "Alterations ") to the Premises or to fixtures installed therein, or mark, paint, nail, drill or in any way deface any portion of the Premises. Tenant acknowledges and agrees that the Old City Hall Property (both interior and exterior) is a registered National Historic Landmark, being a unique and fragile building, and Tenant is subject to any additional restrictions which may be necessary or desirable to preserve the features of the Building relating to its historic designation. In no event shall Tenant make any structural Alterations or any Alterations which would have any impact on the National Historic Landmark status of the Building without Landlord's approval, which Landlord may withhold in its sole and absolute discretion. Without limiting the foregoing prohibition, Tenant understands and agrees that Landlord may restrict proposed construction that is not totally free standing from the historic building structure and interior surfaces, and may require special precautions be taken with regard to improvements affecting the structure and interior surfaces of the Building. Before commencing any Alterations, Tenant shall submit plans and specifications to Landlord for Landlord's approval. At least ten (10) days prior to undertaking construction of any Alterations, Tenant shall give written notice to Landlord setting forth the date work is to commence. Landlord shall have the right at all reasonable times to post and keep posted on the Premises such notices of nonresponsibility as Landlord may deem necessary for the protection of Landlord and the Premises from mechanic's and materialman's liens. All Alterations shall be installed at Tenant's sole expense, by a licensed contractor reasonably acceptable to Landlord, in compliance with all applicable Laws, permit requirements and any covenants, conditions or restrictions of record and shall be done in a good and workmanlike manner conforming in quality and design with the Premises existing as of the date the Premises are delivered to Tenant, and shall not diminish the value of the Premises. All Alterations made by Tenant shall be and become the property of Landlord upon installation and shall not be deemed Tenant's personal property; provided, however, that Landlord may, at its option, require that Tenant, at Tenant's expense, remove any or all Alterations installed by Tenant and return the Premises to their condition as of the Commencement Date, normal wear and tear excepted. Tenant shall be solely responsible for the maintenance and repair of any Alterations made by Tenant to the Premises. In no event shall Landlord's approval of, or consent to, any architect, contractor, engineer or other consultant or professional, any Alterations, or any plans, specifications and drawings for any Alterations constitute a representation or warranty by Landlord of (i) the accuracy or completeness of the plans, specifications, drawings and Alterations or the absence of design defects or construction flaws therein, or the qualification of any person or entity, or (ii) compliance with applicable Laws, and Tenant agrees that Landlord shall incur no liability by reason of such approval or consent To the fullest extent permitted by law, Tenant shall defend through counsel approved by Landlord (which approval shall not by unreasonably withheld), indemnify and hold harmless Landlord and Landlord's officers, employees, agents, counsel members, and other representatives, against any and all Claims and Liabilities, to the extent arising or resulting directly or indirectly from any act or omission of Tenant or Tenant's Agents related to Tenant's Alterations. Tenant's obligations under this Section 6.5 shall survive the expiration or sooner termination of this Lease. -12- 1KKS11071827.5 6.5 Sanitary Condition. Tenant shall keep the Premises at all times in a neat, clean and sanitary condition, shall neither commit nor permit any waste or nuisance thereon, and shall keep the walks and all exterior areas thereto free from Tenant's waste or debris. 6.6 Fixtures. Tenant shall properly use and operate all electrical, gas, and plumbing fixtures, and shall immediately notify Landlord of any condition needing repair. 7. INSURANCE AND INDEMNITY. 7.1 Tenant to Maintain. Tenant shall at all times during the Term, at Tenant's cost and expense, maintain in effect: (i) Workers compensation insurance in the minimum amounts required by law, (ii) Commercial general liability insurance (at least as broad as the most commonly available ISO Commercial General Liability policy form CG 00 01), or such successor comparable form of coverage in the broadest form then available, for the mutual benefit of Landlord and Tenant, against any and all claims and liabilities arising out of the ownership, use, occupancy or maintenance of the Premises, or Tenant's activities thereon. The minimum limit of coverage of such policy shall be in the amount of not less than One Million Dollars ($1,000,000) per occurrence and annual aggregate, shall include an extended liability endorsement providing contractual liability coverage (which shall include without limitation coverage for Tenant's indemnification, defense and hold harmless obligations in this Lease), and shall contain a severability of interest clause or a cross liability endorsement. Such insurance shall further insure Landlord and Tenant against liability for property damage of at least One Million Dollars ($1,000,000); and (iii) Liquor liability and special events insurance in amounts and form acceptable to Landlord; and (iv) Business automobile liability insurance having a combined single limit of not less than One Million Dollars ($1,000,000) per occurrence and insuring Tenant against liability for claims for bodily injury, death, or property damage, arising out of ownership, maintenance, or use of any owned, hired or non -owned automobiles. The minimum limits specified above are the minimum amounts required by Landlord, and may be reasonably revised by Landlord from time to time to meet changed circumstances, including without limitation changes in the purchasing power of the dollar, approved changes in Tenant's use, and changes consistent with the standards required by other landlords in the county in which the Premises are located. All such insurance shall specifically insure Tenant's performance of the indemnity, defense and hold harmless agreements of Tenant pursuant to this Lease, although Tenant's obligations shall not be limited to the amount of any insurance required of or carried by Tenant under this Section 7.1 and Tenant is responsible for insuring that the amount of liability insurance carried by Tenant is sufficient for Tenant's purposes. -13- IKKS11071827.5 7.2 Insurance of Landlord's Property, Personal Property and Plate Glass. Tenant shall at all times during the Term, at its cost and expense, maintain in effect policies of insurance covering Landlord's Property, Tenant's trade fixtures, personal property and equipment located on the Premises, and all Alterations made to the Premises by Tenant, in an amount not less than their full replacement value, providing protection on an "All Risk" basis, which shall include, without limitation, insurance against sprinkler damage, vandalism and malicious mischief. Landlord shall be named as a loss payee as it relates to the Alterations and Landlord's Property. The proceeds of such insurance, so long as this Lease remains in effect, shall be used by Tenant to repair or replace the Landlord's Property, fixtures, personal property, equipment, plate glass and Alterations so insured. Following Lease Termination, any proceeds of insurance covering Alterations which become the property of Landlord upon Lease Termination or Landlord's Property shall be paid over to Landlord. 7.3 Landlord Approval. All insurance required to be carried by Tenant hereunder shall be in companies, on forms and with loss payable clauses satisfactory to Landlord and copies of policies of such insurance, certified by the insurer to be a true and correct copy of the insurance policies, evidencing such insurance shall be delivered to Landlord by Tenant prior to Tenant's entry on the Premises; a new certified policy shall be delivered to Landlord at least thirty (30) days before expiration of the old policy. No policy shall be cancelable except after thirty (30) days' written notice to Landlord. All policies to be carried by Tenant under this Lease shall name Landlord and its agents and designated lenders as additional insureds. Such insurance shall be the primary insurance as respects Landlord and shall contain a cross liability endorsement. Such policies shall provide coverage on an occurrence basis and not on a claim made basis. In no event shall the limits of such policies be considered as limiting the liability of Tenant under this Lease. No policy maintained by Tenant under this Lease shall contain a deductible greater than Two Thousand Five Hundred Dollars ($2,500). All deductibles under policies held by Tenant shall be deemed self insured with full waiver of subrogation. 7.4 Waiver of Liability. Landlord and Tenant each hereby waives any and all rights of recovery against the other party for loss of or damage to such waiving party or its property or the property of others under its control, arising from any cause to the extent insured against under any insurance policy carried by such waiving party and to the extent such waiver is permitted under such insurance policy and does not prejudice coverage under such policy. Tenant shall obtain and furnish evidence to Landlord of the waiver by Tenant's insurance carriers of any right of subrogation against Landlord. 7.5 Tenant to Hold Landlord Harmless. Subject to the last sentence of Section 7_4 above, Tenant hereby agrees to defend, indemnify and hold harmless Landlord and Landlord's officers, employees, agents, counsel members, and other representatives from and against any and all Claims and Liabilities, due to any cause including, without limitation, bodily injury and property damage, to the extent arising out of or related to the use or occupancy of the Premises or any part thereof by Tenant or Tenant's Agents, the acts or omissions of Tenant or Tenant's Agents or Tenant's breach of or default under this Lease, except to the extent caused by the willful misconduct or negligence of Landlord. Tenant's obligations under this Section 7.5 shall survive the expiration or sooner termination of this Lease. -14- IKKS11071827.5 7.6 Landlord's Disclaimer. Landlord shall not be liable for injury or damage which may be sustained by the person, goods, wares, merchandise or property of Tenant, its employees, invitees or customers or any other person in or about the Premises caused by or resulting from fire, steam, electricity, gas, water or rain which may leak or flow or into any part of the Premises, or from the breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures of the same, or from any other cause, whether such damage or injury results from conditions arising upon the Premises or from other sources. 8. REPAIRS AND RESTORATION. 8.1 Insubstantial Insured Damage. Subject to the provisions of Section 8.3, if at any time during the Term the Premises are damaged and such damage is not "Substantial" as that term is defined in Section 8.6, and insurance proceeds net of costs of recovery ( "Net Insurance Proceeds ") are available to cover the cost of restoration, then Landlord shall promptly repair such damage at Landlord's expense and this Lease shall continue in full force and effect. 8.2 Substantial or Uninsured Damage. Subject to the provisions of Section 8.3, if at any time during the Term the Premises are damaged and (a) if such damage is "Substantial" as defined in Section 8.6, or (b) if such damage was caused by a casualty for which no insurance proceeds are available or the Net Insurance Proceeds are insufficient to meet the cost of restoration, then Landlord may at its option either (i) promptly repair such damage at Landlord's expense, in which event this Lease shall continue in full force and effect, or (ii) cancel and terminate this Lease, by giving Tenant written notice of its election to do so within ninety (90) days after the date of occurrence of such damage. 8.3 Damage Near End of Term. If the Premises are damaged during the last nine (9) months of the Term, and the estimated cost of repair exceeds ten percent (10 %) of the Rent then remaining to be paid by Tenant for the balance of the Term, Landlord may at its option cancel and terminate this Lease upon written notice to Tenant. If Landlord does not elect to so terminate this Lease, the repair of such damage shall be governed by Section 8.1 or Section 8.2, as the case may be. 8.4 Notice, Rent Abatement, Refixturing. Tenant shall notify Landlord in writing immediately upon the occurrence of any damage or destruction to all or any portion of the Premises. If the Premises are damaged and Landlord repairs or restores them pursuant to the provisions of this Article, Tenant shall continue the operation of its business in the Premises to the extent reasonably practicable from the standpoint of prudent business management, and the Rent payable hereunder for the period during which such damage, repair or restoration continues shall be abated in proportion to the degree to which Tenant's use of the Premises is impaired, as reasonably determined by Landlord. There shall be no abatement of other Rentals payable hereunder and Tenant shall have no claim against Landlord for any damage suffered by Tenant by reason of any such damage, destruction, repair or restoration. Upon completion of such repair or restoration Tenant shall promptly refixture the Premises to the condition prior to the casualty and shall reopen for business if closed by the casualty. In no event shall any damage, destruction, restoration or repair of any portion of the Premises result in an extension of the expiration date of the Lease. -15- 1KKS11071827.5 8.5 Tenant's Option to Cancel. If Landlord is obligated to repair or restore the Premises under the provisions of this Article 8 and does not commence such repair or restoration within ninety (90) days after such obligation accrues, Tenant may at its option cancel and terminate this Lease by giving Landlord written notice of its election to do so at any time prior to the commencement of such repair or restoration, which termination shall be effective on the date such notice is received by Landlord. 8.6 "Substantial" Defined. For the purpose of this Article, "Substantial" damage to the Premises shall mean damage to the Premises, the estimated cost of repairs of which exceed one -fifth (115) of the then estimated replacement cost of the same. The determination in good faith by Landlord of the estimated cost of repair of any damage and /or of the estimated replacement costs shall be conclusive for the purpose of this Article. In no event shall Landlord be obligated to repair or restore any Alterations made by Tenant or equipment, trade fixtures, inventory, fixtures or personal property in or about the Premises. Tenant waives the provisions of California Civil Code Section 1932 and 1933(4) and any similar law now or hereafter in effect. 9. ASSIGNMENT AND SUBLETTING. 9.1 Landlord's Consent Required. Tenant shall not, either voluntarily, involuntarily or by operation of law (i) assign, sell or otherwise transfer all or any part of the Tenant's interest in this Lease or in the Premises, or (ii) permit any part of the Premises to be sublet, occupied or used by anyone other than Tenant or (iii) permit any person to succeed to any interest in this Lease or the Premises, (all of the foregoing being collectively referred to as a "Transfer "), without Landlord's prior written consent in each instance, which consent shall not be unreasonably withheld. In no event shall Tenant have the right to Transfer its rights under this Lease or interest in the Parking Lot separate from the Old City Hall Property, it being acknowledged by Tenant that Landlord has included the Parking Lot as part of the Premises only to provide additional off -site parking for operation of Tenant's business at the Old City Hall Property. Consent by Landlord to one or more Transfers shall not operate to exhaust Landlord's rights under this Article 9 to receive consent to subsequent Transfers. The voluntary or other surrender of this Lease by Tenant or a mutual cancellation hereof shall not work a merger and Landlord shall have the option of terminating all or any existing subtenancies or Transfers or shall operate as an assignment to Landlord of all or any such subtenancies or Transfers. If Tenant is a corporation, limited liability company, unincorporated association, partnership or other legal entity, the sale, assignment, cancellation, surrender, exchange, conversion or any other transfer or hypothecation of any stock, membership or other ownership interest in such entity (whether occurring at one time or over a period of time) in the aggregate of more than fifty percent (50 %) (determined cumulatively) shall be deemed an assignment of this Lease; in the case of a partnership, any withdrawal or substitution (whether occurring at one time or over a period of time) of any partners owning fifty percent (50 %) or more (cumulatively) of the partnership, or the dissolution of the partnership shall be deemed an assignment of this Lease; provided that, the foregoing provisions of this sentence shall not apply to a transfer of stock in a corporation whose stock is publicly traded on a public stock exchange. If Tenant is an entity, any sale of all or substantially all of its assets shall be deemed an assignment of this Lease. If Tenant is a corporation whose stock is not publicly traded on a public stock exchange, any dissolution, -16- 1KKSM71827.5 merger, consolidation or reorganization of Tenant shall be deemed a Transfer. Tenant agrees to reimburse Landlord for Landlord's reasonable costs and attorneys' fees incurred in conjunction with the processing and documentation of any requested Transfer, whether or not consent is granted. In no event shall Tenant hypothecate, mortgage, pledge or encumber Tenant's interest in this Lease or in the Premises or otherwise use the Lease as a security device in any manner, nor shall Tenant transfer any right appurtenant to this Lease or the Premises separate from a permitted Transfer, without the consent of Landlord, which consent Landlord may withhold at its sole discretion. Tenant expressly agrees that the provisions of this Article are not unreasonable standards or conditions for purposes of Section 1951.4(b)(2) of the California Civil Code, as amended from time to time, under the federal Bankruptcy Code, or for any other purpose. 9.2 Notice to Landlord. If Tenant desires at any time to effect a Transfer, it shall first notify Landlord of its desire to do so and submit in writing to Landlord (a) the name of the proposed Transferee; (b) the nature of the proposed Transferee's business to be carried on in the Premises; (c) the terms and provisions of the proposed Transfer; (d) such reasonable financial information, including financial statements, and information regarding the Transferee's experience as Landlord may request concerning the proposed Transferee; and (e) such other information as Landlord may reasonably request to evaluate the Transfer and Transferee. 9.3 Bonus Rent. If for any proposed Transfer, Tenant receives rent or any other consideration, either initially or over the term of the Transfer in excess of the Rent called for hereunder, or, in case of the sublease of a portion of the Premises, in excess of such Rent fairly allocable to such portion, Tenant shall pay to Landlord as Additional Rent hereunder one -half (1/2) of the excess of each such payment of rent or other consideration received by Tenant promptly after its receipt. 9.4 Collection of Rentals. Tenant irrevocably assigns to Landlord, as security for Tenant's obligations under this Lease, all rent and other consideration payable by a Transferee and not otherwise payable to Landlord by reason of any Transfer. Landlord, as assignee of Tenant, or a receiver for Tenant appointed on Landlord's application, may collect such rent and other consideration and apply it toward Tenant's obligations under this Lease; provided, however, that until the occurrence of any default by Tenant, Tenant shall have the right to collect such rent and other consideration. 9.5 Tenant Not Released. No Transfer, even with the consent of Landlord, shall relieve Tenant of its obligation to pay the Rentals and perform all of the other obligations to be performed by Tenant hereunder. The acceptance of Rentals by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be a consent to any Transfer. 10. EMINENT DOMAIN. 10.1 Automatic Termination. If the entire Premises, or so much of either as to make the Premises not reasonably adequate for the conduct of Tenant's business in Landlord's reasonable judgment notwithstanding restoration by Landlord as hereinafter provided, shall be taken under the power of eminent domain, this Lease shall automatically terminate as of the date on which the condemning authority takes possession. -17- 1KKS11071827.5 10.2 Rent Abatement. Upon any taking of any portion of the Building under the power of eminent domain which does not result in a termination of this Lease, the Rent payable hereunder shall be reduced, effective as the date on which the condemning authority takes possession, in the same proportion which the rentable area of the portion of the Building taken bears to the rentable area of the entire Building prior to the taking. Landlord shall promptly at its expense restore the portion of the Premises not taken to as near its former condition as is reasonably possible, and this Lease shall continue in full force and effect. 10.3 Condemnation Award. Except as provided in the next sentence, the entire award for any taking of all or any part of the Premises under the power of eminent domain shall be the property of Landlord, including without limitation (except as provided in the next sentence) any award made as compensation for diminution in value of the leasehold, for any bonus value attributable to the Lease or for taking of the fee. Nothing contained herein, however, shall be deemed to preclude Tenant from obtaining, or to give Landlord any interest in, any award to Tenant for loss of or damage to Tenant's trade fixtures and removal of personal property and Tenant's loss of goodwill and moving expenses. 10.4 Sale Under Threat of Condemnation. A sale by Landlord to any authority having the power of eminent domain, either under threat of condemnation or while condemnation proceedings are pending, shall be deemed a taking under the power of eminent domain for all purposes under this Article. Each party waives the provisions of California Code of Civil Procedure Section 1265.130 allowing either party to petition the Superior Court to terminate this Lease in the event of a taking. 11. UTILITY SERVICES. Tenant shall arrange for, and shall timely pay directly to the appropriate utility or service supplier all charges for water, gas, heat, light, power, sewer, electricity, refuse and water disposal, telephone, janitorial service, kitchen and refrigeration service, fire alarm system, or any other service or utility metered, supplied or provided to the Premises during the Term of this Lease. Landlord shall not be liable in damages or otherwise for any failure or interruption of any utility or service being furnished to the Premises and no such failure or interruption shall entitle Tenant to terminate this Lease or shall otherwise affect Tenant's obligations under this Lease. Landlord shall be entitled to cooperate voluntarily and Tenant agrees to cooperate, with the efforts of governmental authorities or utility suppliers in reducing energy or other resource consumption. 12. DEFAULTS, REMEDIES. 12.1 Defaults. The occurrence of any one or more of the following events shall constitute a default hereunder by Tenant: 12. 1.1 The abandonment of the Premises by Tenant. Abandonment is defined to include, but is not limited to, any absence by Tenant from the Premises for five (5) consecutive days or longer. 12.1.2 The failure by Tenant to make any payment of Rent or other Rentals as and when due. IKKS11071827.5 12.1.3 The failure by Tenant to timely observe or perform any of the express or implied covenants or provisions of this Lease to be observed or performed by Tenant, other than as specified in Section 12. 1.1 or 12.1.2 above. 12.1.4 (a) The making by Tenant of any general assignment for the benefit of creditors; (b) the appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where possession is not restored to Tenant within thirty (30) days, or (c) the attachment, execution or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where seizure is not discharged within thirty (30) days. 12.2 Remedies. Upon a default, Landlord shall have the following remedies, in addition to all other rights and remedies provided by law or otherwise provided in this Lease, to which Landlord may resort cumulatively or in the alternative: 12.2.1 Landlord may continue this Lease in full force and effect, and this Lease shall continue in full force and effect as long as Landlord does not terminate this Lease, and Landlord shall have the right to collect Rent and Rentals when due. No act by Landlord other than giving written notice to Tenant shall terminate this Lease. Acts of maintenance, efforts to relet the Premises or the appointment of a receiver on Landlord's initiative to protect Landlord's interest under this Lease shall not constitute a termination of Tenant's right to possession. 12.2.2 Landlord may terminate this Lease and Tenant's right to possession of the Premises at any time if (i) such default is in the payment of Rentals and it is not cured within three (3) days after written notice from Landlord, or, (ii) with respect to the defaults referred to in Section 12.1.1, or 12.1.3, other than any uncurable default described in this Lease, such default is not cured within thirty (30) days after written notice from Landlord; provided, however, that if the nature of Tenant's default is such that more than thirty (30) days are reasonably required for its cure, if Tenant does not commence to cure the default within the thirty (30) day period or does not diligently and in good faith prosecute the cure to completion within a reasonable time thereafter, or (iii) upon the occurrence of an non - curable default as described in this Lease (as to which Tenant shall have no right to cure), upon delivery to Tenant of not less than thirty (30) days prior notice of termination, or (iv) with respect to the default specified in Section 12.1.4, such default is not cured within the respective time specified in that Section. The parties agree that any notice given by Landlord to Tenant pursuant to this Section 12.2.2 shall be sufficient notice for purposes of California Code of Civil Procedure Section 1161 and Landlord shall not be required to give any additional notice in order to be entitled to commence an unlawful detainer proceeding. On termination, Landlord has the right to remove all of Tenants' personal property, signs and trade fixtures and store same at Tenant's cost and to recover from Tenant as damages: (a) The worth at the time of award of unpaid Rentals and other sums due and payable which had been earned at the time of termination; plus (b) The worth at the time of award of the amount by which the unpaid Rentals and other sums due and payable which would have been payable after -19- IK V 071827.5 termination until the time of award exceeds the amount of such Rentals loss that Tenant proves could have been reasonably avoided; plus (c) The worth at the time of award of the amount by which the unpaid Rentals and other sums due and payable for the balance of the Term after the time of award exceeds the amount of such Rentals loss that Tenant proves could be reasonably avoided; plus (d) Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform Tenant's obligations under this Lease, or which, in the ordinary course of things, would be likely to result there from, including, without limitation, any costs or expenses incurred by Landlord: (a) in retaking possession of the Premises; (b) in maintaining, repairing, preserving, restoring, replacing, cleaning, altering or rehabilitating the Premises or any portion thereof, including such acts for reletting to a new tenant or tenants; (c) for leasing commissions; or (d) for any other cost necessary or appropriate to relet the Premises; plus (e) Such other amounts in addition to or in lieu of the foregoing as may be permitted form time to time by the Laws of the State of California. The "worth at the time of award" of the amounts referred to in Sections 12.2.2 (a) and b is computed by allowing interest at the Stipulated Rate. The "worth at the time of award" of the amount referred to in Section 12.2.2 (c) is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (I%). 12.2.3 No delay or omission of Landlord to exercise any right or remedy shall be construed as a waiver of any such right or remedy or of any default by Tenant hereunder. 12.3 Default by Landlord. Landlord shall not be deemed to be in default in the performance of any obligation required to be performed by it hereunder unless and until it has failed to perform such obligation within thirty (30) days after written notice by Tenant to Landlord specifying wherein Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for its performance then Landlord shall not be deemed to be in default if it shall commence such performance within such thirty (30) day period and thereafter diligently prosecute the same to completion. Notwithstanding any other provision of this Lease, in no event shall Landlord be liable to Tenant for consequential damages, or loss of or interference with Tenant's business, including without limitation lost profits. 12.4 Expenses of Prevailing Part y. If either party incurs any expense, including reasonable attorneys' fees, in connection with any action or proceeding instituted by either party arising out of this Lease, the party prevailing in such action or proceeding shall be entitled to recover its reasonable expenses including attorneys' fees from the other party. 13. PARKING. Landlord shall have the right to close all or any portion of the parking areas at reasonable times to prevent a dedication thereof, or the accrual of rights in any person or the public therein. The parking areas shall not be used by Tenant or Tenant's Agents -20- WKSM71827.5 for any purpose other than the parking of motor vehicles and the ingress and egress of pedestrians and motor vehicles without Landlord's written consent, which consent may be withheld in Landlord's sole and absolute discretion. 14. SIGNS. Tenant shall not, without Landlord's prior written consent (which consent may be withheld in Landlord's sole discretion), install or affix to any portion of the Premises, any exterior or interior window, door, or other area, signs, lettering, placards or the like (collectively "Signs "). If Landlord consents to the erection of any Signs, such Signs shall comply with any sign criteria imposed by Landlord and all Laws. 15. TENANT STATEMENTS. 15.1 Estoppel Certificate. Tenant shall at any time and from time to time not later than seven (7) days after written request from Landlord execute, acknowledge and deliver to Landlord a statement in writing (a) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the dates to which the Rent and other charges are paid in advance, if any, (b) acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder, or specifying such defaults if any are claimed and (c) certifying and acknowledging such other facts as may be reasonably requested by Landlord. Any such statement may be relied upon by any prospective purchaser or encumbrancer of the Premises or of all or any portion of the real property of which the Premises are a part. Tenant's failure to deliver such statement within such time shall, in addition to constituting a default under this Lease, be conclusive upon Tenant (i) that this Lease is in full force and effect, without modification except as may be represented by Landlord, (ii) that there are no uncured defaults in Landlord's performance, and (iii) that not more than one month's Rent has been paid in advance. 16. RIGHT OF ENTRY. Landlord and its agents, employees and other representatives shall have free access to the Premises during all reasonable hours for the purpose of examining the same to ascertain if they are in good repair, making repairs or installations which Landlord maybe required or permitted to make hereunder, performing Landlord's obligations under this Lease, including providing maintenance services, protecting the Premises (without any obligation on the part of Landlord to do so), posting notices of nonresponsibility, and exhibiting the same to prospective purchasers, lenders or tenants. If any examination by Landlord reveals that the Premises are not being maintained and repaired by Tenant as required by this Lease, then the cost of such inspection by Landlord, including without limitation the cost of City staff time (to be billed at the City's division hourly rate plus direct costs), shall be reimbursed by Tenant to Landlord not later than ten (10) business days after demand for payment is made by Landlord to Tenant. 17. TRANSFER OF LANDLORD'S INTEREST. Upon any transfer or transfers of Landlord's interest in the Premises, the transferor shall be automatically relieved of any and all obligations and liabilities on the part of Landlord accruing from and after the date of such transfer, provided that the transferee is liable for any and all obligations and liabilities on the part of Landlord accruing from the after the date of such transfer. Tenant shall attorn to any transferee of Landlord's interest in the Premises. -21- 1KKS11071827.5 18. MISCELLANEOUS. 18.1 Time of Essence. Time is of essence with respect to the performance of every provision of this Lease (except delivery of possession of the Premises to Tenant). 18.2 Captions. The article and section captions contained in this Lease are for convenience of reference only and shall not be considered in the construction or interpretation of any provision hereof. 18.3 Entire Agreement and Amendments. This Lease contains all of the agreements of the parties hereto with respect to any matter covered or mentioned in this Lease, and no other agreement or understanding pertaining to any such matter shall be effective for any purpose. No provision of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors in interest. 18.4 Notice. Unless otherwise expressly provided herein, all notices or other communications required or permitted hereunder shall be in writing, and shall be personally delivered (including by means of professional messenger service), sent by U.S. Mail (postage prepaid), sent by nationally recognized overnight courier, sent via facsimile (only if a facsimile number is set forth below for such party), or sent via electronic mail (only if an e-mail address is set forth below for such party), to a party at the appropriate addresses (or e -mail address or facsimile number) set forth below for such party, or to such other place as such party may from time to time designate in a written notice given to the other party in the manner detailed in this Section 18.4; provided, however, in no event shall a party's address for purposes hereof be a P.O. Box, and if neither an e -mail address nor facsimile number is provided as part of a party's address then in no event shall a party's address for purposes hereof be located outside the Santa Clara County, California. Any notice or other communication will be deemed given on the date of receipted delivery, the date of refusal to accept delivery, or when delivery is first attempted but cannot be made due to incorrect contact information being provided by the intended recipient or a change of address for which no notice was given; except that any notice or communication sent via facsimile or electronic mail, as the case may be, shall be deemed given when transmitted to the facsimile number or e -mail address, as applicable, provided that such notice or communication is promptly followed by a copy sent by messenger, U.S. Mail or overnight courier in accordance with this paragraph above. To Landlord: City of Gilroy 7351 Rosanna Street Gilroy, CA 95020 -6141 Attn: Landlord Administrator To Tenant: Fran Beaudet and Bobby Beaudet 21160 Valle San Juan Dr. Salinas, CA 93907 -22- MS11071827.5 18.5 Holdover. This Lease shall terminate without further notice at the expiration of the Term. Any holding over after Lease Termination with the consent of Landlord shall be construed to be a tenancy from month to month, at one hundred twenty -five percent (125 %) of the Rent for the month immediately preceding Lease Termination in addition to all other Rentals payable hereunder, and shall otherwise be on the terms and conditions herein specified insofar as applicable (but expressly excluding any free rent or extension rights). If Tenant remains in possession of the Premises after Lease Termination without Landlord's consent, or fails to timely surrender the Premises to Landlord in the condition required by this Lease, Tenant shall indemnify, defend and hold Landlord and Landlord's officers, employees, agents, counsel members, and other representatives harmless from and against any and all Claims and Liabilities resulting from Tenant's failure to so surrender the Premises, including without limitation, any claims made by any succeeding tenant based upon delay in the availability of the Premises, which obligation shall survive Lease Termination. 18.6 Broker. Tenant warrants and represents that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Lease. Tenant agrees to defend, indemnify and hold Landlord and Landlord's officers, employees, agents, counsel members, and other representatives harmless from and against any and all Claims and Liabilities arising out of or in connection with claims made by any broker or agent for commissions or fees resulting from Tenant's execution of this Lease. 18.7 Acceptance. Delivery of this Lease, duly executed by Tenant, constitutes an offer to lease the Premises, and under no circumstances shall such delivery be deemed to create an option or reservation to lease the Premises for the benefit of Tenant. This Lease shall only become effective and binding upon full execution hereof by Landlord and delivery of a signed copy to Tenant. 18.8 Waiver. The waiver by Landlord of any breach of any term, condition or covenant of this Lease shall not be deemed to be a waiver of such provision or any subsequent breach of the same or any other term, condition or covenant of this Lease. The subsequent acceptance of Rentals hereunder by Landlord shall not be deemed to be a waiver of any preceding breach at the time of acceptance of such payment. No covenant, term or condition of this Lease shall be deemed to have been waived by Landlord unless such waiver is in writing signed by Landlord. 18.9 Separability. If one or more of the provisions contained herein, except for the payment of Rentals, is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Lease, but this Lease shall be construed as if such invalid, illegal or unenforceable provision had not been contained herein. 18.10 Liens. Tenant shall pay for all labor and services performed for, and all materials used by or furnished to Tenant or Tenant's Agents and keep the Premises free from any liens arising out of work performed, materials furnished, or obligations incurred by Tenant or Tenant's Agents with respect to the Premises. Tenant shall indemnify, hold harmless and defend Landlord and Landlord's officers, employees, agents, counsel members, and other representatives from and against any and all liens, Claims and Liabilities arising out of any work -23- USM71827.5 or services performed for or materials used by or furnished to Tenant or Tenant's Agents with respect to the Premises. Tenant shall do all things necessary to prevent the filing of any mechanic's or other liens against the Premises or any part thereof by reason of work, labor, services or materials supplied or claimed to have been supplied to Tenant, or anyone holding the Premises, or any part thereof, through or under Tenant. If any such lien shall at any time be filed against the Premises, Tenant shall either cause the same to be discharged of record within ten (10) days after the date of filing of the same, or, if Tenant in Tenant's discretion and in good faith determines that such lien should be contested, Tenant shall furnish such security as may be necessary or required to (a) prevent any foreclosure proceedings against the Premises during the pendency of such contest, and (b) cause a mutually satisfactory title company to remove such lien as a matter affecting title to the Premises. If Tenant shall fail to discharge such lien within such period or fail to furnish such security, then, in addition to any other right or remedy of Landlord resulting from Tenant's said default, Landlord may, but shall not be obligated to, discharge the same either by paying the amount claimed to be due or by procuring the discharge of such lien by giving security or in such other manner as is, or may be, prescribed by law. Tenant shall repay to Landlord on demand all sums deposited or disbursed by Landlord pursuant to the foregoing provisions of this Section 18.10 including Landlord's costs, expenses and reasonable attorneys' fees incurred by Landlord in connection therewith, with interest thereon at the Stipulated Rate. Nothing contained herein shall imply any consent or agreement on the part of Landlord to subject Landlord's estate to liability under any mechanics' or the lien law. Tenant shall give Landlord adequate opportunity and Landlord shall have the right to post such notices of nonresponsibility as are provided for in the mechanics' lien laws of California. Tenant's obligations under this Section 18.10 shall survive Lease Termination. 18.11 Subordination. This Lease is subject and subordinate to ground and underlying leases, mortgages, deeds of trust and other monetary liens (collectively "Encumbrances ") which may now affect the Premises, to any covenants, conditions or restrictions of record, and to all renewals, modifications, consolidations, replacements and extensions thereof, provided, however, if the holder or holders of any such Encumbrance ( "Holder ") shall require that this Lease be prior and superior thereto, within seven (7) days after written request of Landlord to Tenant, Tenant shall execute, have acknowledged and deliver any and all documents or instruments, in the form presented to Tenant, which Landlord or Holder deems necessary or desirable for such purposes. Landlord shall have the right to cause this Lease to be and become and remain subject and subordinate to any and all Encumbrances which are now or may hereafter be executed covering the Premises or any renewals, modifications, consolidations, replacements or extensions thereof, for the full amount of all advances made or to be made thereunder and without regard to the time or character of such advances, together with interest thereon and subject to all the terms and provisions thereof, provided only, that in the event of termination of any such lease entered into after the Effective Date or upon the foreclosure of any such mortgage or deed of trust recorded against the Premises after the Effective Date, Holder agrees to recognize Tenant's rights under this Lease as long as Tenant is not then in default and continues to pay the Rentals and observe and perform all the provisions of this Lease to be observed and performed by Tenant. Within ten (10) days after Landlord's written request, Tenant shall execute any and all documents required by Landlord or the Holder to make this Lease subordinate to any lien of the Encumbrance. If Tenant fails to do so, then in addition to such failure constituting a default by Tenant, it shall be deemed that this Lease is so subordinated to such Encumbrance. Notwithstanding anything to the contrary set forth in this -24- 1KKV 071827.5 paragraph, Tenant hereby attorns and agrees to attorn to any entity purchasing or otherwise acquiring the Premises at any sale or other proceeding or pursuant to the exercise of any other rights, powers or remedies under such Encumbrance. 18.12 Landlord's Right to Perform Tenant's Covenants. If Tenant fails to make any payment or perform any other act on its part to be made or performed under this Lease, Landlord may, but shall not be obligated to and without waiving or releasing Tenant from any obligation of Tenant under this Lease, make such payment or perform such other act to the extent Landlord may deem desirable, and in connection therewith, pay expenses and employ counsel. All sums so paid by Landlord and all penalties, interest and costs in connection therewith shall be due and payable by Tenant immediately on demand, together with interest at the Stipulated Rate from the date of payment by Landlord to the date of payment by Tenant to Landlord, plus collection costs and attorneys' fees. 18.13 Tenant's Remedy. If, because of a default by Landlord under this Lease, Tenant recovers a money judgment against Landlord, such judgment shall be satisfied only out of the proceeds of sale received upon execution of such judgment and levied thereon against the right, title and interest of Landlord in the Premises and out of rent or other income from the Premises receivable by Landlord, and neither Landlord, its partners nor its agents shall be personally liable for any deficiency. Neither Landlord's partners nor agents, nor any other person or entity other than Landlord, nor any of their respective assets, shall be liable for Landlord's breach of this Lease. 18.14 Exhibits. All exhibits attached hereto are hereby incorporated herein and made a part hereof. 18.15 Conditions. All agreements of Tenant contained in this Lease, whether expressed as conditions or covenants, shall be construed to be both conditions and covenants, conferring upon Landlord, in the event of a breach thereof, the right to terminate this Lease. 18.16 No Partnership or Joint Venture. Nothing in this Lease shall be construed as creating a partnership or joint venture between Landlord, Tenant, or any other party, or cause Landlord to be responsible for the debts or obligations of Tenant or any other party. 18.17 Construction. This Lease shall not be construed either for or against Tenant or Landlord, but shall be construed in accordance with the Laws of the State of California. 18.18 Joint and Several Liability. If Tenant consists of more than one (1) person or entity, the obligations of each Tenant under this Lease shall be joint and several. 18.19 Binding Effect. Subject to the provisions of Section 17 and Article 9, all of the provisions hereof shall bind and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns. 18.20 Recordin ;. Concurrently with Tenant's execution and delivery of this Lease to City, Tenant shall execute in recordable form and deliver to City the Memorandum -25- 1KKS11071827.5 attached hereto as Exhibit `B" acknowledging the existence of this Lease, which may be recorded by City in the Official Records of Santa Clara County, California ( "Official Records ") upon execution of this Lease by City. Following Lease Termination, Tenant shall, promptly following demand from Landlord, execute a quitclaim deed or other document requested by Landlord to evidence the termination of this Lease, which document shall be in recordable form, with signatures notarized, for recording in the Official Records. 18.21 Prohibited Transaction. Tenant represents and warrants that neither Tenant nor any of its affiliates have engaged in any dealings or transactions, directly or indirectly, (i) in contravention of any U.S., international or other money laundering regulations or conventions now or hereafter in effect, or any enabling legislation or executive order relating thereto, or (ii) in contravention of Executive Order No. 13244 issued by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism) or any regulations promulgated thereunder, as may be amended or supplemented from time to time ( "Anti- Terrorism Order "), or (iii) on behalf of terrorists or terrorist organizations, including those persons or entities that are included on any relevant lists maintained by the United Nations, North Atlantic Treaty Organization, Organization of Economic Cooperation and Development, Financial Action Task Force, U.S. Office of Foreign Assets Control, U.S. Securities & Exchange Commission, U.S. Federal Bureau of Investigation, U.S. Central Intelligence Agency, U.S. Internal Revenue Service, or any country or organization, all as may be amended from time to time. Tenant represents and warrants that neither Tenant nor any of its affiliates are a person described in section 1 of the Anti- Terrorism Order and neither Tenant nor any of its affiliates have engaged in any dealings or transactions, or otherwise been associated with any such person. If at any time any of the representations and warranties in this Section becomes false then it shall be considered a non- curable default by Tenant under this Lease. THIS LEASE is effective, as of the date that last signatory necessary to execute the Lease shall have executed this Lease. Dated: / 1 141 — Lz Dated: ll Z �/1 I MM1071827.5 TENANT: Fran Beaudet Bobby Beaudet LANDLORD: -26- CI ILROY, a municipal corporation Dated: ZJ �' Z By: Name: Thomas J. Haglund, City Administrator ATTE 1 Dated: S awna Freels, APPROVED AS TO FORM: Dated: ( :- L/'I' l G� Linda A. Callon, City Attorney -27- 1KKS11071827.5 EXHIBITS A -1 AND A -2 TO BE ATTACHED ME IKKS11071827.5 EXHIBIT A -1 The land referred to is situated in the County of Santa Clara, City of Gilroy, State of California, and is described as follows: PARCEL ONE: Commencing at the Northeast corner of Monterey & Sixth Streets, and running thence along the East line of Monterey Street, Northerly Forty-Two and Ten One Hundredths (42 10 /100) feet; thence Easterly Eighty-Eight and Five One- Hundredths (88 5/100) feet; thence Southerly Four and Thirty Eight One- Hundredths (4 38/100) feet; thence Easterly One Hundred and Four and Ninety Five One- Hundredths (104 95/100) feet to the West line of an alley; thence Southerly along the last mentioned line Thirty -Six and Seventy-Six One- Hundredths (36 76/100) feet to the North line of Sixth Street, and thence along the last mentioned line Westerly One Hundred and Ninety Three (193) feet to the point of commencement. Being Lot Eleven (11) in Block One (1) North, of Range One (1) East, as designated upon Map Number Six (6) Accompanying the Report of the Referees in Re the Partition Suit of Henry Miller et al, vs. Massey Thomas, et al. PARCEL TWO: Beginning at a point 42.10 feet Northerly from the Northeast corner of Monterey and Sixth Streets (said point being in the East line of Monterey Street); thence Northerly and along said East line of Monterey Street 34.20 feet; thence Easterly 193.00 feet to the West line of Railroad Alley; thence Southerly along last mentioned line 39.60 feet; thence Westerly 104.95 feet; thence Northerly 4.38 feet; and thence again Westerly 88.05 feet to the point of beginning, and being Lot No. 10, in Block 1, North Range 1 East of the City of Gilroy as the same is shown on Map No. 5 Accompanying the Report of the Referees in the Partition Suit of Henry Miller, et al, vs. Massey Thomas, et al, in the Superior Court of the County of Santa Clara, State of California. APN: 841 -06 -061 EXHIBIT A -2 The land referred to is situated in the County of Santa Clara, City of Gilroy, State of California, and is described as follows: A parcel of land situated in the City of Gilroy, County of Santa Clara, State of California, described as follows: Beginning at the intersection of the southwesterly line of Railroad Street with the southeasterly line of Sixth Street; thence South 20 deg. 00' East, along said southwesterly line 337.96 feet to a point distant northeasterly 15 feet measured radially from the center line of the most northeasterly spur track of Southern Pacific Transportation Company; thence northwesterly, concentric, parallel with and distant northeasterly 15 feet from said center line a distance of 345.08 feet to said southeasterly line of Sixth Street; thence North 70 deg. 00' East, along last said line, 63 feet to the point of beginning, containing an area of 0.29 of an acre, more or less. The property hereby conveyed excepts that portion thereof lying below a depth of 500 feet, measured vertically, from the contour of the surface of said property. APN: 841 -08 -044 Exhibit C CITY OF GILROY OLD CITY HALL - 7400 MONTEREY STREET LANDLORD'S PROPERTY INVENTORY 11/2/2012 QUANTITY DESCRIPTION KITCHEN 2 Large gas restaurant ranges 2 Fryers (Pitco) 1 Ansul fire protection system and hood 1 Walk -in refrigerator and freezer box 8 Wire shelving units for refrigerator and freezer 1 6' stainless steel counter at range with 4 drawers 1 Winco soup kettle 1 8' stainless steel sink unit 3 5 -shelf wire shelving units (blue) 1 5' Formica serving station 1 6' stainless steel wheeled sandwich table w/ refrigerator base 1 3' Formica wheeled prep table w/ two warming drawers 1 12' stainless steel prep table w/ sink 1 5' x 3'8" stainless steel prep table w/ overhead pipe rack 1 10' 3 -tier food warming shelf unit 1 15' (3 section) prep table w/ sink, drawers and cabinets 1 Stainless steel wall lining. DISHWASHING AREA 2 10' L- shaped stainless steel dishwashing tables, one w/ sink 1 Istainles s steel 3 -sink unit STOREROOM 5 1wire racks DOWNSTAIRS BAR 1 Stainless steel ice bin & wall -mount sink. 1 7 -door back bar refrigerator unit 1 8' Quad stainless steel sink unit UPSTAIRS BAR 2 2 -door back bar refrigerator units 1 5' stainless steel bar sink & ice bin 1 Ice bin MISCELLANEOUS 1 Large chandelier in upstairs room 5 Large historic photos of Gilroy area 8 Fire extinguishers 52 Track lights upstairs 60 Salvaged bricks w/ brass plates 1 Built -in pizza oven n;;tP Fntered- 12/05/2012 ACOOR ° CERTIFICATE OF LIABILITY INSURANCE DATE (MWDDNrM 12/5/2012 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the- terms - and - conditions. of the-policy,--certain _ policies .may _require.an endorsement.. A statement-on this certificate_does not_confer rights to the certificate holder in lieu of such endorsement(s). 5ROOUCER AL PINHEIRO INSURANCE AGENCY 190 First St Gilroy, CA 95020 CONTACT. NAME- ?HC NE .'(408) 842 -4619 JC No: (408) 842 -3587 IF E -MAIL 'al@pinheiroinsurance.com ADDRESS: p INSURER (S) AFFORDING COVERAGE NAIC q INSURER A: TRUCK INSURANCE EXCHANGE S WVD NSURED Old City Hall Restaurant Fran & Bobby Beaudet INSURER 8: FARMERS INSURANCE EXCHANGE IPOLDpY� INSURERC :MID CENTURY INSURANCE GENERAL LIABILITY 7400 Monterey St INSURER D: Gilroy, CA 95020 INSURER E: B INSURER F: COMMERCIAL GENERAL LIABILITY COVERAGES CERTIFICATE NUMBER: RhV151UN NumtstK: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION' OF.ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED 6Y-THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. NSR ADDL SUER POLICY LIMITS LTR TYPE OF INSURANCE S WVD POLICY NUMBER' IPOLDpY� GENERAL LIABILITY EACH OCCURRENCE $2,000,000 B COMMERCIAL GENERAL LIABILITY x 604801052 oz /z7 /zolz 2/27/2013 PREMISES EacccuEnence $5001000 CLAIMS -MADE ®OCCUR MED EXP (Any one person) $5,000 PERSONAL & ADV INJURY $2,000,000 m e - ��I POLICY CMBINED AUTOMOBILE LIABILITY EaaccidentSINGLELIMiT $2,000,000 BODILY INJURY (Per person) $ B ANY AUTO -�1 OWNE =+ schEDI ii _ - BODILY INJURY IPer acdd =n ±! UMBRELLA LIAB I ' OCCUR EXCESS LIAB I�—jl CLAIMS -MADE EACH OCCURRENCE ;$$ AGGREGATE WORKERS COMPENSATION FR AND EMPLOYERS' LIABILITY YIN B ANY PROPRIETOR/PARTNER/EXECUTIVE N/A A19143233 02/27/2012 2/27/2013 E.L. EACH ACCIDENT $.1,000,000 (Mandatory OFFICERIMEMBER EXCLUDED? u.I E.L. DISEASE - EA EMPLOYEE $ 1,000,000 (Mandatory in NH) _ If yes, describe under E.L. DISEASE - POLICY LIMIT $ 1 1000,000 DESCRIPTION OF OPERATIONS below 1. DESCRIPTION OF OPERATIONS 1 LOCATIONS / VEHICLES (Attach ACORD 101, Additional Remarks Schedule, if more space is required) :ertificate holder is also named insured per "'form GN 01';88 Liquor liability included CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN City of Gilroy, and its officers, employees, ;"( pCCORDANCE WITH THE POLICY PROVISIONS. agents,council members, &other represenitives 7351 Rosanna St AUTHORIZED REPRESENTATIVE Gilroy, CA 95020 ©1988 -2010 ACORD CORPORATION. All rights reserved. ACORD 25 (2010/05) The ACORD name and logo are registered marks of ACORD roduced using Forms Boss Plus software. www.FormsBoss.com; Impressive Publishing 800 -208 -1977 POLICY NUMBER: 604801052 BUSINESSOWNERS THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. ADDITIONAL INSURED - MANAGERS OR LESSORS OF PREMISES This endorsement modifies insurance provided under the following: BUSINESSOWNERS POLICY SCHEDULE* Designation of Premises (Part Leased to You): 7400 Monterey St Gilroy, CA 95020 Name of Person or Organization (Additional Insured): 'City of Gilroy Additional Premium: 2484.00 A. The following is added to Paragraph C. WHO IS AN INSURED in the Businessowners Liability Coverage Form: 4. The person or organization shown in the Schedule is also an insured, but only with re- spect to liability arising out of the ownership, maintenance or use of that part of the prem- ises leased to you and shown in the Schedule. B. The following exclusions are added: This insurance does not apply to: 1. Any "occurrence" that takes place after you cease to be a tenant in the premises described in the Schedule. 2. Structural alterations, new construction or demolition operations performed by or for the person or organization designated in the Schedule. *Information required to complete this Schedule, if not shown on this endorsement, will be shown in the Declara- tions. BP 04 02 01 87 Copyright, Insurance Services Office, Inc., 1985, 1991 Page 1 of 1 ❑ EXHIBIT "B" RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Gilroy 7351 Rosanna Street Gilroy, California 95020 Attn: City Clerk RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTIONS 6103 AND 27383. APN 841 -06 -061 and 841 -08 -044 SPACE ABOVE THIS LINE FOR RECORDER'S USE MEMORANDUM OF LEASE THIS MEMORANDUM OF LEASE ( "Memorandum ") is entered into as of , 2012, by and between the CITY OF GILROY, a municipal corporation ( "Landlord ") and FRAN BEAUDET AND BOBBY BEAUDET (collectively "Tenant "), with respect to that certain Lease dated concurrently herewith by and between Landlord and Tenant ( "Lease "). Pursuant to the Lease, Landlord has leased to Tenant, and Tenant has leased from Landlord, the real property and improvements thereon located in the City of Gilroy, County of Santa Clara, State of California commonly known as Old City Hall and having a street address of 7400 Monterey Street, the land upon which such improvements are located being more particularly described on Exhibit A -1 attached hereto and made a part hereof, and that certain real property located generally on the south side of Sixth Street and west of the existing railroad tracks more particularly described on Exhibit A -2 attached hereto, upon the terms and conditions of the Lease. The initial term of the Lease is for a period of sixty (60) months commencing on November 9, 2012, and Tenant has been granted one option to extend the initial term for a period of sixty (60) months, subject to earlier termination as described in the Lease. This Memorandum shall incorporate all of the provisions of the Lease as though fully set forth herein. This Memorandum is entered by the parties for purposes of recordation and shall not be deemed to modify, amend, alter, limit or otherwise change any of the provisions of the Lease. In the event of any conflict or ambiguity between the terms of this Memorandum and the terms of the Lease, the terms of the Lease shall prevail. [Continued on next page] RKS11071827.5 -1- 110212- 04706084 IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Memorandum as of the date first set forth above. LANDLORD: CITY OF GILROY, a municipal corporation Attest: By: By: Its: City Clerk Approved as to form: By: By: Its: City Attorney -2- 1KKS11071827.5 TENANT: Fran Beaudet Bobby Beaudet