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Thomas Road Properties - Oakbrook Subdivision Lease Agreement LEASE (Oakbrook Subdivision) THIS LEASE, for reference purposes only dated /2 ~ 1(9 - g 7 is entered into by and between THE CITY OF GILROY, a municipal corporation ("Landlord"), and THOMAS ROAD PROPERTIES, a California Limited Partnership ("Tenant"). RECIT ALS A. Tenant is the developer of that certain real property development in Gilroy, California which is the subject of Tract Map dated MAY , '0 hi q q 7 relating to Tract No. e ~ 26 '()\~e..oo~hown on Exhibit "A" attached hereto (t e "Tract"). B. As a portion of the improvements to be completed pursuant to the development of the Tract, the Tenant will install certain landscaping and structural elements at the southeast comer of the intersection of Thomas Road and Luchessa Avenue. The said improvements ("Entry Improvements") are shown on Exhibit "B" attached hereto. Upon completion of the Entry Improvements, they will be dedicated to the City of Gilroy, subject to acceptance thereof by the City of Gilroy. C. When seeking the City of Gilroy's approval of the Entry Improvements, Tenant requested that it be allowed to install and construct, as part of the Entry Improvements, a combined retaining wall/sign wall ("Sign Wall") and lighting improvements installed for the purpose of illuminating the Sign Wall ("Lighting Improvements"). The Sign Wall and Lighting Improvements are identified as being a portion of the Bid alternate A Entry Features on Exhibit "B" attached hereto. Landlord was agreeable to such request provided that Tenant agreed that such Lighting Improvements would be installed only on a temporary basis, to be removed upon Landlord's request. Landlord and Tenant desire to enter into this Lease to allow the Tenant to maintain the Lighting Improvements in place for the term of this Lease to illuminate the Sign Wall and certain other Entry Improvements, on the terms and conditions as set forth in this Lease. NOW, THEREFORE, for valuable consideration, the parties agree as follows: 1. PREMISES. Landlord hereby leases to Tenant and Tenant hereby hires from Landlord the real property more particularly on Exhibit "c" attached hereto, together with the Sign Wall and Lighting Improvements (collectively the "Premises"), upon all of the conditions and agreements set forth in this Lease. The Premises does not include any improvements on th land other than the Sign Wall and Lighting Improvements. 2. LEASE TERM. 2.1 Term. The tern1 of this Lease ("Term") shall be ten (10) year, ubject to sooner termination as provided in this Lease, commencing when all of the following have occurred (i) this Lease has been executed by Landlord and Tenant, and (ii) Tenant has completed installation and construction of all the Entry Improvements and the City of Gilroy has accepted the dedication of the Entry Improvements; provided that if the Term has not commenced by J 1, 1998, this Lease shall tenninate effective as of J I, 1998, and Tenant shall be required to remove the Lighting Improvements, or if such Ligh . 19 Improvements have not yet been installed, Tenant shall not be allowed to install such Li hting Improvements on the Premises thereafter. The date of the commencement of the Te 1 is referred to in this Lease as the "Commencement Date". "Lease Term' 11 mea the expiration or sooner termination of this Lease. 2.2 Earl Tern1 ation. Notwi tanding Section 2.1 above, at any time commencing on the second anniversary of the Commencement Date, either Landlord or Tenant shall have the right to terminate this Lease at any time during the Term by providing the other party with not less than sixty (60) days prior written notice of termination. IKKS\35571102 72-111504706002 -1- 2.3 Acceptance. Tenant hereby accepts the Premises in its "AS IS" condition without representation or warranty of any kind, express or implied, and subject to a11 applicable laws. Landlord shall have no obligation to construct any improvements within the Premises for the benefit of Tenant. Neither Landlord nor Landlord's agents makes any representation or warranty as to the suitability of the Premises for Tenant's purposes, the condition of the Premises, or the use or occupancy which may be made thereof. As the prior owner of the Premises, Tenant is satisfied that the Premises are and will be suitable for Tenant's intended use and assumes all risks in connection with the use and lease of the Premises. Without limiting the foregoing, Tenant assumes all risk and liability in connection with any flooding which may occur on or about the Premises. 3. RENT. 3.1 Rent. During each year of the Term and extensions thereof, Tenant shall pay to Landlord as Rent the amount of One Dollar ($1.00). Rent for the first year shall be paid upon execution of this Lease by Tenant, and thereafter on each anniversary of the Commencement Date throughout the Term, in advance without offset, deduction, prior notice or demand. There shall be not proration of rent for partial years. 3.2 Additional Rent. A11 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. "Rentals" as used in this Lease shall mean Rent and all Additional Rent. 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 places as may be designated in writing by Landlord from time to time. All Rentals shall be paid without offset or deduction and, except as otherwise expressly provided in this Lease, without prior notice or demand. 4. TAXES. 4.1 Real Property Taxes. Tenant shall pay, before the same become delinquent, all Real Property Taxes imposed against Landlord or Tenant in connection with this Lease or against the Premises. As used in this Lease, Real Property Taxes means any form of assessment, license, fee, rent tax, levy or 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, including without limitation any possessory interest tax. In connection with California Revenue and Taxation Code Section 107.6, Landlord states and Tenant acknowledges that by entering into this Lease, a possessory interest subject to property taxes may be created. Tenant or other parties 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 Personality. Tenant shall be responsible for and shall pay before delinquency a11 municipal, county or state taxes, levies and fees of every kind and nature 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 used in connection with the Premises by Tenant. Tenant agrees to pay before delinquency the amount of a11 taxes levied upon or measured by the rent payable hereunder, whether as a so- ca11ed 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. Ifa 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 sha11 pay Landlord on demand for such taxes, levies and fees applicable to the Premises. \KKS\355711.02 72-111504706002 -2- 5. CONDUCT OF BUSINESS BY TENANT. 5.1 Use of the Premises. Tenant sha11 use the Premises solely for the purpose of illuminating the Sign Wall and other Entry Improvements by means of the Lighting Improvements, and for no other purposes without the prior written consent of Landlord, which may be withheld in Landlord's sole discretion. 5.2 Compliance with Law. Tenant, at its expense, shall comply promptly with all applicable laws regulating the use by Tenant of the Premises, which shall include required structural alterations. Tenant, at its expense, sha11 take all steps required to cause the Premises to be kept, maintained, used and occupied in compliance with the Americans With Disabilities Act of 1990, as the same may be amended from time to time. In the event Tenant becomes aware of any alterations required by this Section 5.2 above, in lieu of making such required alterations, Tenant may terminate this Lease by giving written notice of termination to Landlord; provided, however, that Tenant shall indemnify Landlord from any and all claims, damages, losses, liabilities or expenses (including without limitation attorneys' fees) arising as a result of Tenant's failure to make such alterations during the Lease Term. Upon such termination, Tenant shall comply with the provisions of Section 6.2 of this Lease. In no event shall Tenant allow any personal property or any other material to be stored upon or to remain unattended on the Premises. Tenant shall not use or permit the use of the Premises in any manner, that will tend to create a nuisance or constitute waste. Tenant shall not dump or store waste materials or refuse or allow such to remain on the Premises. Tenant and Tenant's agents, officers, directors, employees, contractors, representatives, servants, licensees or invitees (collectively "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. As used in this paragraph, 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. Tenant's obligation to defend, hold harmless and indemnify pursuant to this Paragraph shall survive Lease Termination. 6. MAINTENANCE. REPAIRS AND ALTERATIONS. 6.1 Tenant's Responsibility. Tenant shall, during the Term, keep in good, safe and clean order, condition and repair the entire Premises; provided that Tenant shall not be obligated to irrigate the landscaping or maintain the landscaping or improvements located on the real property comprising the Premises (other than the Sign Wall and Lighting Improvements, which Tenant shall maintain), except to the extent such landscaping or other improvements are damaged by Tenant's activities on the Premises. Tenant's obligations pursuant to this Section 6.1 shall include, without limitation, graffiti removal. In no event shall Landlord have any repair or maintenance responsibility for the Premises, or any portion thereof or any landscaping or other improvements located on the real property comprising the Premises. Tenant waives the provisions of California Civil Code section 1941 and 1942 and any similar law now or hereafter in effect. 6.2 Condition Upon Surrender. On Lease Termination, Tenant shall have removed the Lighting Improvements , and sha11 have otherwise surrendered the Premises to Landlord in as good condition as when received by Tenant under this Lease, subject to Section 6.1 as it relates to landscaping, all at Tenant's sole cost and expense. the Commencement Date, Tenant shall deliver to Landlord a Certificate of Deposit ("CD" a te of at least one (1) year, evidencing an account established by Tenant in Landlo ' a federally insured financi~l institution satisfactory to Landlord, which accoupt p . . hdrawals by Landlord only, 111 the amount of ()V\( H~.{)lj~ 1-ul() VtU\l~WDol r dO. (the "Account"), as security for Tenant's obligations pursuant to this I n 6.2. Such CD shall provide for automatic renewal of the tern1 thereof until such time as the holder of the CD notifies the financial institution not to renew the tenn. All interest accruing on the Account shall remain on deposit as part of the Account as additional security for Tenant's obligations under this Section 6.2, although the accrued interest shall for tax purposes be deemed to accrue for the benefit of Tenant, and Tenant shall be responsible for the payment of all income taxes attributable to the accrual of interest on such Account. If on Lease Termination, Tenant has failed \KKS\35571102 72-111504706002 -3- to perform any of Tenant's obligations under this Section 6.2, Landlord shall have the right to withdraw the funds in the Account to cure Tenant's default (without obligation to do so) and to compensate Landlord for any damages suffered by Landlord as a result of Tenant's default. Provided that Tenant has performed all of Tenant's obligations under this Section 6.2 at Lease Termination, Landlord shall return said Certificate of Deposit to Tenant following Lease Termination. Landlord shall have no liability to Tenant as the result of any penalties imposed by the financial institution due to withdrawal of funds from the Account by Landlord pursuant to this Section 6.2. In no event shall Tenant's liability to Landlord pursuant to this Section 6.2 be limited to the funds in the Account. 6.3 Improvements by Tenant. Tenant shall not, without prior written consent of Landlord, which consent may be withheld in Landlord's sole discretion, make any alterations, improvements, or additions (collectively, "Alterations") to the Premises. 7. INSURANCE AND INDEMNITY. 7.1 Tenant to Maintain. Tenant shall at all times during the Term, at Tenant's sole cost and expense, maintain in effect workmen's compensation insurance in the minimum amounts required by law, and comprehensive general liability and property damage insurance in the minimum amounts of One Million Dollars ($1,000,000) per occurrence and aggregate, combined single limit for both bodily injury and property damage which includes blanket contractual liability, broad form property damage, personal injury, completed operations, products liability, and fire damage legal (the "Liability Policy"). The types of insurance and minimum limits specified above are the minimum required by Landlord, and Landlord may from time to time require changes and/or additions thereto to meet changed circumstances, including without limitation changes in the purchasing power of the dollar and changes consistent with the standards required by other landlords in the county in which the Premises is located. The Liability Policy shall specifically insure Tenant's performance of the indemnity, defense and hold harmless agreements contained in Paragraph 7.4, although Tenant's obligations pursuant to Paragraph 7.4 shall not be limited to the amount of any insurance required of or carried by Tenant under this Paragraph 7.1 and Tenant is responsible for insuring that the amount of liability insurance carried by Tenant is sufficient for Tenant's purposes. 7.2 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, certi fied by the insurer to be a true and correct copy of the insurance policies, shall be delivered to Landlord by Tenant prior to the Commencement Date. A new certified policy shall be delivered to Landlord at least thirty (30) days before expiration of the old policy. No such policy shall be cancelable except after thirty (30) days' written notice to Landlord. The Liability Policy to be carried by Tenant under this Lease shall name Landlord and its agents and designated lenders as additional insureds. All insurance shall be the primary insurance as respects Landlord and the Liability Policy shall contain a cross liability endorsement. Such policies shall provide coverage on an occurrence basis and not on a claims made basis. In no event shall the limits of such policies be considered as limiting the liability of Tenant under this Lease. 7.3 Waiver of Liability. Landlord and Tenant each hereby waives any and all rights of recovery against the other or against the employees, representatives and agents of such 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. 7.4 Tenant to Hold Landlord Harmless. Tenant hereby agrees to defend, indemnify and hold harmless Landlord and Landlord's employees, representatives and agents from and against any and all claims, damages, losses, liabilities or expenses (including without limitation attorneys' fees) due to any cause including without limitation, bodily injury and property damage, which arises out of or is in any way attributable to the use or occupancy of the IKKS\35571102 72-111504706002 -4- 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 this Lease, except to the extent caused by the willful misconduct or negligence of Landlord. This provision and Tenant's obligation hereunder shall survive Lease Termination. 7.5 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, flooding or rain which may leak or flow from or into any part of the Premises, or from the breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires, appliances, plumbing 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 Damage. If at any time during the Term the Premises are damaged by a force beyond Tenant's reasonable control, whether partially or entirely, Tenant shall have the option to either (i) promptly repair such damage or rebuild the Premises at Tenant's sole cost and expense, in which event this Lease shall continue in full force and effect, or (ii) terminate this Lease by giving written notice of termination to Landlord within thirty (30) days following the event of damage, in which event Tenant shall remove the Lighting Improvements and comply with the other terms and conditions of Section 6.2 of this Lease as to those improvements not damaged by a force beyond Tenant's reasonable control. If Tenant fails to provide Landlord with written notice of termination within thirty (30) days after the event of damage, Tenant shall be deemed to have elected to terminate this Lease on the thirtieth day following the event of damage pursuant to (ii) of this Paragraph 8.1 above. In no event shall Landlord be obligated to repair or rebuild the Premises in the event of any damage or destruction to the Premises from any cause. All repairs by Tenant shall be done in compliance with all applicable laws, permit requirements and any covenants, conditions or restrictions of record, by a licensed contractor, and shall be done in a good workmanlike manner. Before commencing repair of the Premises, Tenant shall submit plans and specifications to Landlord for Landlord's approval, such approval not to be unreasonably withheld. This provision and Tenant's obligations hereunder shall survive Lease Termination. 8.2 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. There shall be no abatement of Rent or other Rentals payable hereunder and Tenant shall have no claim against Landlord for any damage suffered by Tenant by reason of any such damage, destmction, repair or restoration. 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. 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) pennit any person to succeed to any interest in this Lease or the Premises, (all of the foregoing being collectively referred to as a "Transfer"). In no event shall Landlord be required to consent to any Transfer. If Tenant is a corporation, any dissolution, merger, consolidation or reorganization of Tenant, the transfer, assignment or hypothecation of any stock or interest in such corporation in the aggregate in excess of twenty-five percent (25%), or the sale (cumulatively) of fifty percent (50%) or more of the value of Tenant's assets shall be decmed a Transfer. If Tenant is a partnership, a withdrawal or substitution of any partner(s) owning twenty-five percent (25%) or more of the partnership cumulatively), any assignment(s) of twcnty-five percent (25%) or more (cumulatively) of any interest in the capital or profits of the partnership, the sale (cumulatively) of fifty percent (50%) or more of the value of Tenant's assets, or the dissolution of the partncrship shall be deemed a Transfer. If Tenant is a limited liability company, any dissolution, merger, consolidation or IKKS\35571102 72-111504706002 -5- reorganization of Tenant, the transfer, assignment or hypothecation of a membership, economic or other interest in the limited liability company in the aggregate in excess of twenty-five percent (25%), or the sale (cumulatively) of fifty percent (50%) or more of the value of the limited liability company's asscts shall be deemed a Transfer. In the case of any other entity comprising Tenant, any transfer, assignment or hypothecation of any interest in such entity in the aggregate in excess of twenty-five percent (25%), or the sale (cumulatively) of fifty percent (50%) or more of the value of Tenant's assets shall be deemed a Transfer. In no event shall Tenant hypothecate, mortgage, pledge or encumber Tenant's interest in this Lease or in the Premises or otherwise use this Lease as a security devicc in any manner, nor shall Tenant transfer any right appurtenant to the Lease or the Premises separate from a permitted Transfer. 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. Any Transfer by Tenant in violation of this Paragraph 9.1 shall be a default by Tenant undcr this Lease. 10. EMINENT DOMAIN. If a portion of the Premises is taken by power of eminent domain, which does not result in a termination of this Lease, then this Lease shall continue in full force and effect as to the part of the Premises not so taken. There shall be no abatement of Rent or other Rentals payable hereunder and Tenant shall have no claim against Landlord for any damage suffered by Tenant by reason of any taking of the Premises under the power of eminent domain. Any award for any taking of all or any part of the Premises under the power of eminent domain shall be the property of Landlord, whether such award shall be made as compensation for diminution in value of the leasehold or for taking of the fee. In no event shall Landlord be obligated to make any repairs or perfonn any restoration or other work required as a result of a taking. 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. 11. UTILITY SERVICES. Tenant shall arrange for, and shall timely pay directly to the appropriate utility or service supplier all charges for electricity consumed by the Lighting Improvements. Landlord shall not be liable in damages or otherwise for any failure or interruption of any utility or service to the Premises and no such unavailability 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 resourcc consumption. 12. DEFAULTS. REMEDIES. 12.1 Defaults. The occurrence of anyone or more of the following events shall constitute a default hereunder by Tenant: 12.1.1 The failure by Tenant to make any payment required by this Lease as and when due. 12.1.2 Thc 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 Paragraph 12.1.1. 12.1.3 (a) The making by Tcnant 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 Ten ant'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: IKKS\355711.02 72-111504706002 -6- 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 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 tern1inate 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 Paragraph 12.1.2 such default is not cured within the fifteen (15) days after written notice from Landlord; provided, however, that if the nature of Tenant's default is such that more than fifteen (15) days are reasonably required for its cure, if Tenant does not commence to cure the default within fifteen (15) day period or does not diligently and in good faith prosecute the cure to completion within a rcasonable time thereafter, or (iii) with respect to the default specified in Paragraph 12.1.3, such default is not cured within the respective time specified in that paragraph. The parties agree that any notice given by Landlord to Tenant pursuant to this Paragraph 12.2.2 shall be sufficient notice for purposes of California Code of Civil Procedure section 1161 and Landlord shall not be rcquired to give any additional notice in order to be entitled to commence any unlawful detainer proceeding. On termination, Landlord has the right to remove all of Tenant's personal propcrty, signs and trade fixtures (provided that the foregoing shall not be construed as consent to the maintenance of such property at the Premises) and store same at Tenant's cost and to recover from Tenant as damages: 12.2.2.1 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 12.2.2.2 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 termination until the time of award exceeds the amount of such Rental loss that Tenant proves could have been reasonably avoided; plus 12.2.2.3 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 rental loss that Tenant proves could be reasonably avoided; plus 12.2.2.4 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 therefrom, including, without limitation, any costs or expenses incurred by Landlord: (a) in retaking possession of the Premises; and (b) in maintaining, repairing, preserving, restoring, replacing, cleaning, altering or rehabilitating the Premises or any portion thereof; plus 12.2.2.5 Such other amounts in addition to or in lieu of the foregoing as may be permitted from timc to time by the laws of the State of California. The "worth at thc time of award" of the amounts referred to in Paragraphs 12.2.2.1 and 12.2.2.2 is computed by allowing interest at the Stipulated Rate (defined in Paragraph 15). The "worth at the time of award" of the amount referred to in Paragraph 12.2.2.3 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 (1 %). 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. No termination by Landlord pursuant to this Article 12 shall relieve Tenant of any of its obligations under Section 6.2. of this Lease. 12.3 Default by Landlord. Landlord shall not be deemed to be in default in the performance of any obligation required to bc performed by it hereunder unless and until it has \KKS\355711.02 72-111504706002 -7- 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-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 Party. 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. RIGHT OF ENTRY. Landlord and its agents shall have free access to the Premises at all times for the purpose of examining the same to ascertain if they are in good repair, protecting the Premises, posting notices of nonresponsibility, and exhibiting the same to prospective purchasers, lenders or tenants. In addition, notwithstanding any other provision of this Lease, Landlord reserves the right to enter the Premises at all times to install, maintain and repair any utilities, services or other public improvements, and for any other public purpose, provided that such activities do not unreasonably interfere with the illumination of the Entry Improvements and provided further that the foregoing shall not relieve Tenant of any of Tenant's obligations under Article 6 of this Lease. 14. 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 thc transferee is liable for any and all obligations and liabilities on the part of Landlord accruing from and after the date of such transfer. Tenant shall attorn to any transferee of Landlord's interest in the Premises. 15. INTEREST. Any amount due from Tenant to Landlord hereunder which is not paid when due shall bear interest from the due date until paid at an annual rate of interest (the "Stipulated Rate") equal to the greater of (i) ten percent (10%); or (ii) five percent (5%) plus the rate established by the Federal Reserve Bank of San Francisco, as of the Twenty-five (25th) day of the month immediately preceding the due date, on advances to member banks under Sections 13 and 13(a) of the Federal Reserve Act, as now in effect or hereafter from time to time amended. Payment of such interest shall not excuse or cure any default by Tenant under this Lease. 16. MISCELLANEOUS. 16.1 Time of Essence. Time is of the essence with respect to the performance of every provision of this Lease. 16.2 Captions. The article and paragraph captions contained in this Lease are for convenience only and shall not be considered in the construction or interpretation of any provision hereof. 16.3 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 hcrcto or their respective successors in interest. 16.4 Notice. Any notice required or permitted to be given hereunder shall be in writing and may be served personally or by mail. If served by mail it shall be addressed as follows: IKKS\35571102 72-111504706002 -8- Landlord: City of Gilroy 7351 Rosanna Street Gilroy, CA 95020-6141 Attn: City Administrator Tenant: Thomas Road Properties c/o Glen Loma Group 7888 Wren Avenue, Ste. D-143 Gilroy, CA 95020 Any notice so given by mail shall be deemed effectively given three (3) days after being deposited in the United States mail, registered or certified, postage prepaid and addressed as specified herein. Either party may by written notice to the other specify a different address for notice purposes. Notwithstanding the foregoing, any Icgal notices required to be sent by one party to the other (including without limitation, a notice pursuant to California Code of Civil Procedure section 1161) shall be delivered in the manner required or allowed by law. 16.5 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, but otherwise on the same terms and conditions set forth in this Lease. If Tcnant remains in possession of the Premises after Lease Termination without Landlord's consent or fails to surrender the Premises in the condition required by Paragraph 6.2, Tenant shall indemnify, defend and hold Landlord and Landlord's employees, representatives and agents harnlless from and against any claims, losses, damages, expenses or liabilities (including without limitation attorneys' fees) resulting from Tenant's failure to surrender the Premises in the required condition. 16.6 Brokers. Tenant warrants and represents that it has had no dealings with any real estate broker or agcnt in connection with the negotiation of this Lease. Tenant agrees to defend, indemnify and hold Landlord and Landlord's employees, representatives and agents harmless from and against any and all claims, losses, damages, liabilities or expenses (including without limitation attorneys' fees) arising out of or in connection with claims made by any other broker or individual for commissions or fees resulting from Tenant's execution of this Lease. 16.7 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. 16.8 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 tern1, 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. 16.9 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. 16.10 Liens. Tenant shall pay for all labor and services performed for, and all materials used by or furnished to Tenant or Tcnant'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 employees, representatives and agents from and against any liens, \KKS\355711.02 72-111504706002 -9- demands, claims, judgments or encumbrances (including all attorneys' fees) arising out of any work or services performed for or materials used by or furnished to Tenant or Tenant's Agents with respect to Premises. Tenant shall do all things necessary to prevent the filing of any mechanic's or other liens against the Premises or any part thercof 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) prevcnt 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 disbursed or deposited by Landlord pursuant to the foregoing provisions of this Paragraph 16.10 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 other lien law. Tenant shall give Landlord adequate opportunity and Landlord shall have the right to post such notices ofnonresponsibility as are provided for in the mechanics' lien laws of California. 16.11 Tenant's Representation and Warranty Re~arding Encumbrances. Tenant represents and warrants to Landlord that no portion of the Premises is subject to a mortgage, deed of trust or other encumbrance resulting from the acts or omissions of Tenant. 16.12 Recording. Concurrently with Tenant's execution and deliver of this Lease to Landlord, Tenant shall execute and deliver to City the Memorandum attached hereto as Exhibit "D" acknowledging the existence of the Lease, which may be recorded by City in the Official Records of Santa Clara County, California upon execution of this Lease by City. Following Lease Termination, Tenant shall, promptly following demand from Landlord, execute a quitclaim deed in favor of Landlord quitclaiming all of Tenant's right, title and interest under this Lease; provided, however, that Tenant's failure to deliver such quitclaim deed when requested shall not delay or prevcnt, or otherwise affect the expiration or termination of this Lease. 16.13 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 Tcnant immediately on demand, togcther 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. 16.14 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 by way of an offset against any Rent due to Landlord under this Lease. Neither Landlord, nor its employees, representatives or agents, shall be personally liable for any deficiency. Neither Landlord's employees, agents, representatives, 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. 16.15 Exhibits. All cxhibits, amendmcnts, riders and addenda attached hereto are hereby incorporated herein and made a part hereof. 16.16 Conditions. All agreements of Tenant contained in this Lease, whcther \KKS\35571102 72-111504706002 -10- 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. 16.17 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. 16.18 Constmction. This Lease shall not be construed either for or against Tenant or Landlord, but shall be construed in accordance with the general tenor of the language. This Lease shall be construed in accordance with the laws of the State of California. 16.19 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. 16.20 Binding Effect. Subject to the provisions of Paragraph 14 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. THIS LEASE is effective as of the date the last signatory necessary to execute the Lease shall have executed this Lease. Dated: 1'1 - I 0 - q 1 TENANT: THOMAS ROAD PROPERTIES, a Ca . ia Limited Partn Its: Dated: ,- 3 c" c \ ~1 LANDLORD: -'" ,-'":7~{! !lel {~ "-,t:~ ( ( , <' Rhonda Pcllin, City Clerk APPROVED AS TO FORM: ~~~ CITY ATTORNEY \KKS\35571102 72-111504706002 -11- f/~~' "' ~:-.... . ~~. r. 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"..... .\Sl co () - T --- EXHIBIT C LEGAL DESCRIPTION LANDSCAPE AREA LEASEBACK (OAKBROOK- TRACT 8928) All that certain real property situate in the Las Animas Rancho, in the City of Gilroy, County of Santa Clara, S tate of California, being a portion of Thomas Road and L uchessa Avenue, as said Road and A venue are shown on that certain Map entitled "Tract 8928 - California Oakbrook Unit I", which was filed for Rec'ord on May 16, 1997 in Book 688 of Maps, at Pages 20, 21 and 22, Official Records of Santa Clara County, California, described as as follows: Be~nnin~ at a point in the Westerly boundary line of said Thomas Road, also being a comer common to Lot 9 and Lot 8, as said Lots are shown on said Map of Tract 8928; thence along said Westerly boundary line of said Thomas Road, also being along the Easterly boundary line of said Lot 8, South 00 DO' 00" West 28.22 feet; thence leaving said Westerly boundary ILTJe of said Thomas Road at right angles North 900 DO' 00" East 6.00 feet; thence North 0000' 00" West 142.29 feet to a point of curvature; thence along a tangent curve to the left with a radius of 10.00 feet, through a central angle of580 34' 22" an arclength of 10.22 feet; thence North 58034' 22" West 12.74 feet to a point of curvature; thence along a tangent curve to the left with a radius of 20.00 feet. through a central angle of 58034' 07" an arc length of20.44 feet; thence along a non-tangent curve to the right whose radius point bears North 270 08' 28" West 1310.00 feet, through a central angle of 020 43' 32" an arc length of 62.32 feet to a Northerly comer of said Lot 9, also being in the Southerly boundary line of said L uchessa A venue; thence along the boundary line of said Luchessa Avenue and said Lot 9, South 580 35' 32" East 99.97 feet to the Northeasterly comer of said Lot 9, also being in the Westerly boundary line of said Thomas Road; thence along the boundary line common to said Lot 9 and said Thomas Road South 0000' 00" East 50.78 feet to the Point o{B~nnin~. . Containing 4,643 square feet or 0.107 acres, more or less. This legal description of real property was prepared by me, or under my direction. pursuant to the requirements of the Professional Land Surveyors Act. ;;~ 6. ~~ Frank G. Fong, California R.C.E. N .27852 License Expires on March 31, 1998 /0/ /o/q 7 , ' Date ~.~~~'~ : /~r'</ ) ..-;,,\'f-- G. F 0 -1/~ ~. \~" ff~ ~-Q \~~\\ ~ r.~. ,- I~' ~ \ No. 2785Z I ~; \\ c- '\ Exp. 3/31 /<fB ! -.., il 'I: I I /: II \ -;: " ~. II \\ J"l>-', f"/ljl\ ..-y...' ~ '..2.... --.' - ,'.-.~ ..,. ,~' 'j:' .- :,,,-,,,"':/ ....... - c .~ "': ~........ 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