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HomeMy WebLinkAboutGilroy Gardens - Lease Agreement SINGLE TENANT LEASE (Gilroy Gardens Property, Gilroy, California) THIS SINGLE TENANT LEASE ("Lease"), dated 2- ,,;2 L, 2008 (the "Commencement Date"), is entered into by and between GILROY GARDENS F AMIL Y THEME PARK, INC., a Delaware nonprofit corporation formerly known as "Bonfante Gardens, Inc." ("Tenant") and the CITY OF GILROY, a municipal corporation ("Landlord"). RECITALS WHEREAS, immediately prior to the effectiveness of this Lease, Landlord purchased from Tenant that certain real property located in Gilroy, California, as more particularly described in Exhibit A attached hereto (the "Land"), the buildings and improvements located on the Land (the "Improvements"), and certain other related assets (the Land, Improvements and other assets acquired by Landlord pursuant to the Sale Contract being the "Property"), all pursuant to and in accordance with the provisions of that certain Purchase and Sale Agreement, dated for reference purposes as of January 22, 2008, by and between Tenant, as "Seller," and Landlord, as "Purchaser" (the "Sale Contract"). WHEREAS, the Land is improved with a horticultural education and theme park known as "Gilroy Gardens," which was developed and constructed by Tenant, which has been operated by Tenant from its inception, and which shall continue to be operated by Tenant during the Term, subject to and under the terms of this Lease. WHEREAS, this Lease is being entered into as is contemplated by the provisions of the Sale Contract. WHEREAS, Landlord and Tenant are mutually desirous of setting forth herein their understanding with respect to the use and operation of the Premises (defined below) and the Licensed Property (defined below), and their respective rights, duties and obligations pertaining thereto, all upon the terms and subject to the conditions hereinafter set forth. AGREEMENTS NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration paid by each of the parties hereto to the other, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby covenant and agree as follows: 1. PREMISES. 1.1 Landlord hereby leases to Tenant and Tenant hereby hires from Landlord the Land and Improvements (collectively, the "Premises"), together with a concurrent license to IKKSI744417.12 022508-04706118 -1- use the other Property conveyed by Tenant to Landlord under the Sale Contract, such as personal property and intangible rights relating to the Premises sold to Landlord by Tenant (such other licensed Property being the "Licensed Property"), upon all of the conditions and agreements set forth in this Lease. The leasing of the Premises and licensing of the Licensed Property by Landlord to Tenant is expressly subject to all liens, encumbrances, restrictions, conditions, and other matters recorded against the Premises in the Official Records or Santa Clara County, California ("Official Records") as of the Commencement Date ("Existing Title Exceptions"). 1.2 Possible Use of Surplus Property. Tenant acknowledges that Landlord will be evaluating potential uses of the Premises prior to and following the expiration of the Term. At Landlord's request, Tenant agrees to meet and confer in good faith regarding Landlord's possible use of any portion of the Premises not used by Tenant in its business operations or otherwise needed by Tenant (including without limitation the Surplus Land described in Section 5.1 below), on such terms and conditions as are mutually acceptable to the parties. 2. LEASE TERM. 2.1 Term. The term of this Lease ("Term") shall be for approximately two (2) years, commencing on the Commencement Date, and expiring on February 28,2010. "Lease Termination" shall mean the expiration or sooner termination of this Lease. 2.2 Early Entry. Tenant acknowledges that Tenant's use and occupancy of the Premises and use of the Licensed Property prior to the Commencement Date has been and is at Tenant's sole risk, and at all times in accordance with Tenant's interest as owner thereof. 2.3 Acceptance. Tenant hereby accepts the Property in its "AS IS" and "WITH ALL FAULTS" condition, without representation or warranty of any kind, express or implied, and subject to all applicable Laws (defined in Paragraph 5.3 below). Tenant is the immediately prior owner of the Property and is highly familiar with and satisfied with the condition of the Property. Landlord shall have no obligation to maintain, repair, replace, or construct any portion of the Property, it being intended that all such obligations shall be the sole obligation of Tenant pursuant to this Lease. Neither Landlord nor Landlord's agents makes any representation or warranty as to the suitability of the Property for the conduct of Tenant's business, the condition of the Property, the use or occupancy which may be made thereof, or any other matter related to the Property, and Tenant is satisfied in all respects that the Property is and will be suitable for Tenant's intended use. None of the provisions of this Lease, including the Term as defined in Section 2.1 of this Lease shall be deemed to affect Tenant's corporate governing documents, including Tenant's corporate Bylaws, or serve to diminish or qualifY Landlord's rights and powers relating to such governing documents. 3. RENT. 3.1 Rent. (a) Base Rent. During each twelve (12) month period during the Term (each, a "Lease Year"), Tenant shall pay to Landlord as Base Rent the amount of One Dollar ($1.00) per Lease Year, without proration as to any partial Lease Year. Base Rent for the first -2- IKKSI7 44417.12 022508-04706118 Lease Year shall be paid upon execution of this Lease by Tenant, and Base Rent for the remaining Lease Year shall be paid on the first day of the remaining Lease Year. Base Rent shall be paid throughout the Term without offset, deduction, prior notice or demand. (b) Percentage Rent. During and for each fiscal year of Tenant (running from March 1 through the end of the following February) during the Term, Tenant shall pay annual percentage rent ("Percentage Rent") equal to ten percent (10%) percent of all of Tenant's positive "EBITDA" (hereinafter defined) from all operations, including in pertinent part resulting from business conducted in, on or from the Premises during the fiscal year. Within sixty (60) days after the close of each such fiscal year, Tenant shall furnish to Landlord a compilation prepared by an officer of Tenant setting forth the amount of EBITDA during the preceding fiscal year and showing the amount of Percentage Rent, if any, required to be paid by Tenant for such fiscal year. The full amount of any Percentage Rent due shall be paid to Landlord on the July 1 that follows the end of Ten ant's fiscal year (e.g., 4 months after the end of the fiscal year). (c) EBITDA. For the purposes of calculating Percentage Rent due under this Lease, the term "EBITDA" shall mean: the net income (but not loss) of Tenant for Tenant's fiscal year as set forth above, determined in accordance with generally accepted accounting principles ("GAAP"), plus, to the extent deducted in computation of such Net Income, any interest expense, the amount of depreciation and amortization expense, and any tax liability allocable to such period, all as determined in accordance with GAAP. For such purpose, Net Income (and accordingly EBITDA as that term is used herein) shall not include any addition for capital gains or deduction for capital losses on the sale or other disposition, of investments or fixed or capital assets, in that the intention of Landlord and Tenant is that Percentage Rent is to generally reflect the success of Tenant's business operations, which should not be distorted by such non-cash accounting charges. 3.2 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 Base Rent. "Rentals" as used in this Lease shall mean Base 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 at such other 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. Base Rent will be an absolutely net return to the Landlord throughout the Term, free of any expense, charge, or other deduction whatsoever with respect to the Property or the Landlord's interest therein, or the ownership, leasing, operation, management, maintenance, repair, use or occupation thereof. This Lease is a true "net lease" and Tenant's obligations arising or accruing during the Term to pay all Rentals and any other payments hereunder required to be made by Tenant will be absolute and unconditional and Tenant will pay all such amounts without notice, demand, counterclaim, set- off, deduction or defense and without abatement, suspension, deferment, diminution or reduction (except as otherwise expressly provided herein), free from any charges, assessments, impositions, expenses or deductions of any and every kind or nature whatsoever. All costs, -3- IKKSI7 44417 .12 022508-04706118 expenses and obligations of every kind and nature whatsoever relating to the Property and the use and occupancy thereof which may arise or become due and payable during or with respect to the Term (whether or not the same will become payable during such Term or thereafter) shall be paid by Tenant. Tenant assumes the sole responsibility for the condition, use, operation, maintenance, and management of the Property, and Landlord will have no responsibility in respect thereof and will have no liability for damage to the Property or any other assets of Ten ant on any account or for any reason whatsoever. 3.3 Tenant Required At All Times to Maintain Nonprofit Status. This Lease, including without limitation the nominal base rental amount reflected in Paragraph 3.1, has been negotiated specifically in consideration of Tenant's status as a nonprofit corporation, and Tenant's agreement to maintain its nonprofit status and to use the Property in accordance with the terms and conditions of this Lease. Accordingly, Tenant covenants and warrants that during the Term, Tenant shall at all times be (i) an organization described in Section 501(c)(3) of the Internal Revenue Code ("Code"), or corresponding provisions of prior law, (ii) exempt from federal income taxes under Section 501(a) of the Code (except for unrelated business income subject to taxation under Section 511 of the Code), and (iii) in compliance with the terms, conditions and limitations contained in said Code Sections. Any breach of the covenants in this Section shall be a material default by Tenant under this Lease. 4. TAXES. 4.1 Real Property Taxes. Tenant shall pay, before the same become delinquent, all Real Property Taxes imposed against the Premises during the Term or otherwise attributable to any period prior to or within the Term. As used in this Lease, "Real Property Taxes" means any form of assessment, license, fee, rent tax, levy, possessory interest or other tax (other than Landlord's 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, together with any taxes levied or assessed in lieu of, in substitution for, or in addition to existing taxes and assessments against the Premises, provided that the foregoing shall specially exclude any increases in Real Property Taxes resulting from a change in ownership occurring after the Commencement Date and not caused by Tenant, Tenant's subtenants or anyone claiming by or through Tenant or its subtenants. Tenant acknowledges that in connection with California Revenue and Taxation Code 107.6, upon Landlord's lease of the Premises to a nongovernmental entity, a possessory interest subject to property taxes may be created, and such parties in whom the possessory interest is vested may be subject to the payment of taxes levied on such interest, all of which shall be the obligation of Tenant hereunder. 4.2 Tax on Leasehold or Personalty. Tenant shall be responsible for and shall pay before delinquency all municipal, county or state taxes, levies and fees of every kind and nature including, but not limited to, general or special assessments assessed during or with respect to any period prior to or within the Term against any leasehold interest or trade fixtures or personal property of any kind, owned, leased or licensed by, or placed in, upon or about the Premises, by Tenant, including without limitation the Licensed Property. Tenant agrees to pay before delinquency the amount of all taxes levied upon or measured by the rent payable -4- IKKSI744417.12 022508-04706118 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. 5. COVENANTS OF TENANT. 5.1 Use of the Premises. Tenant shall use the Property solely for the continuous operation of the Gilroy Gardens horticultural education and theme park, at all times in substantial conformity with the manner of the operations engaged in by Tenant during the two (2) year period immediately prior to the Commencement Date. Notwithstanding the foregoing to the contrary, the parties acknowledge that the theme park is operated on approximately 70 acres of land and Tenant shall have the right to use the remaining acreage (hereinafter collectively referred to as the "Surplus Land" for any lawful short term use consistent with Tenant's charitable mission, or otherwise as shall be consented to in advance by Landlord in writing, in the reasonable exercise of Landlord's discretion. 5.2 Compliance with Law. Tenant, at its expense, shall comply promptly with all applicable Laws regulating the use by Tenant of the Property, foreseen or unforeseen, ordinary as well as extraordinary, even if the same will require structural or extraordinary repairs, alterations or additions; provided, however, if such compliance requires capital expenditures for or capital improvement to the Premises, costing in excess of a cumulative amount of Fifty Thousand Dollars ($50,000), then in lieu of bringing the Premises into compliance, the Tenant may elect to terminate this Lease on no less than thirty (30) days advance written notice to Landlord. Upon receipt of such termination notice, without any obligation to do so, Landlord may elect to keep this Lease in effect by agreeing in writing, within ten (10) business days after Landlord's receipt of Tenant's termination notice, to pay the cost of the requisite compliance costs in excess of Fifty Thousand Dollars ($50,000), in which event Tenant's termination notice shall be void. Tenant shall place no loads upon the floors, walls or ceilings in excess of the maximum designed load or which endanger the structure; nor place any harmful liquids in the drainage systems; nor dump or store waste materials or refuse or allow such to remain upon the Premises, except in designated enclosed trash areas. 5.3 Specific Compliance Obligations. Without limiting the generality of Paragraph 5.2 above, but subject to Tenant's right to terminate this Lease as provided therein, Tenant shall comply, at its sole cost and expense, with all present and future laws, statutes, codes, ordinances, permits, licenses, rules, orders, regulations and governmental approvals and requirements (including, but not limited to, any health and safety regulations, the American's With Disabilities Act and all zoning and land use ordinances or regulations affecting the Property or Tenant's use thereof) relating to the Property and any amendments thereto (collectively, "Laws"), regardless of whether any such law imposes the duty of compliance on Landlord or Tenant. The foregoing obligation will include making any alteration or other modification to the Property required by any such Laws. Tenant will not use, occupy, or permit the Property to be used or occupied, nor do or permit anything to be done in or on the Premises in a manner which would (a) violate any certificate of occupancy or equivalent certificate affecting the Premises, or -5- IKKSI744417.12 022508-04706118 (b) constitute a public or private nuisance or waste. Tenant further agrees that it will, at its own cost and expense, fully and faithfully perform and observe all requirements and conditions of all the Existing Title Exceptions insofar as the same imposes any obligation upon the Landlord. 5.4 Hazardous Materials. 5.4.1 As used in this Lease, the following terms are defined as follows: (a) "Hazardous Materials" shall mean any substance: (A) that now or in the future is regulated or governed by, requires investigation or remediation under, or is defined as a hazardous waste, hazardous substance, pollutant or contaminant under any Laws, including for example only and without limitation, the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. S 9601 et gm., and the Resource Conservation and Recovery Act, 42 U.S.c. S 6901 et gm., or (B) that is toxic, explosive, corrosive, flammable, radioactive, carcinogenic, dangerous or otherwise hazardous, including for example only and without limitation, gasoline, diesel, petroleum hydrocarbons, polychlorinated biphenyls (PCBs), asbestos, mold, radon and urea formaldehyde foam insulation. (b) "Environmeutal Req uirements" shall mean all Laws of any kind applicable to Hazardous Materials. (c) "Handle," "Handled," or "Handling" shall mean any installation, handling, generation, storing, treatment, use, disposal, discharge, release, manufacture, refinement, presence, migration, emission, abatement, removal, transportation, or any other activity of any type in connection with or involving Hazardous Materials. (d) "Environmental Losses" shall mean all costs and expenses of any kind, damages, fines and penalties incurred in connection with any violation of and compliance with Environmental Requirements by Tenant or Tenant's Representatives, or resulting from the activities of any person or entity (other than Landlord) upon any portion of the Premises prior to or during the Term, including without limitation all losses of any kind attributable to the diminution of value, loss of use or adverse effects on marketability or use of any portion of the Property, and all attorneys' and consultants' fees incurred in connection therewith. (e) "Tenant's Representatives" shall mean employees, officers, contractors, subtenants, assignees, licensees, representatives. Tenant's agents, transferees and 5.4.2 No Hazardous Materials shall be Handled at the Premises by Tenant, Tenant's Representatives or Tenant's visitors, invitees or guests without Landlord's prior written consent, which consent may be granted, denied, or conditioned upon compliance with Landlord's requirements, all in Landlord's sole, absolute discretion; except that Tenant shall have the right to use the Hazardous Materials to the extent necessary to the operation of the Gilroy Gardens amusement and recreational park but provided in all cases that any such Hazardous Materials stored at the Premises shall not exceed commercially reasonable quantities thereof and that all such Hazardous Materials shall at all times be Handled in accordance with all Environmental Requirements. All activities at the Premises, including without limitation the Handling of all Hazardous Materials by Tenant or Tenant's Representatives, shall comply at all -6- IKKSI744417.12 022508-04706118 times with all Environmental Requirements. At Lease Termination, Tenant shall have removed from the Premises all Hazardous Materials, other than those that may have migrated onto the Property from an offsite source and which were not caused by Tenant or Tenant's Representatives, and other than Hazardous Materials contamination to the extent caused by the acts of Landlord. Tenant shall keep Landlord fully and promptly informed of all Handling of Hazardous Materials by Tenant or Tenant's Representatives or otherwise occurring upon the Premises. 5.4.3 Subject to this Paragraph 5.4.3 below, Tenant shall, at its own expense, promptly take all actions required by any governmental authority in connection with any Hazardous Materials affecting the Premises which were improperly Handled by Tenant or Tenant's Representatives, including without limitation, inspection and testing, performing all cleanup, removal and remediation work required with respect to those Hazardous Materials, complying with all closure requirements and post-closure monitoring, and filing all required reports or plans. All of the foregoing work and all Handling of all Hazardous Materials shall be performed in a good, safe and workmanlike manner by consultants qualified and licensed to undertake such work and in compliance with all Environmental Requirements. Tenant shall deliver to Landlord prior to delivery to any governmental authority, or promptly after receipt from any such authority, copies of all permits, manifests, closure or remedial action plans, notices, and all other documents relating to Hazardous Materials affecting the Premises which were improperly Handled by Tenant or Tenant's Representatives. Tenant shall remove at its own expense, by bond or otherwise, all liens or charges of any kind filed or recorded against the Premises in connection with Hazardous Materials affecting the Premises which were improperly Handled by Tenant or Tenant's Representatives, within ten (10) days after the filing or recording of such lien or charge, and if Tenant fails to do so, Landlord shall have the right, but not the obligation, to remove the lien or charge at Tenant's expense in any manner Landlord deems expedient. Notwithstanding the foregoing, Tenant's obligations pursuant to this Paragraph 5.4.3 shall not apply to Hazardous Materials that were not caused by Tenant or Tenant's Representatives. 5.4.4 Tenant agrees to indemnifY, defend and hold harmless Landlord and Landlord's officers, council members, employees, agents, agencies and other affiliates and representatives from all Environmental Losses incurred by Landlord from or in connection with Hazardous Materials on the Premises arising out of the Handling of Hazardous Materials by Tenant or Tenant's Representatives, or Tenant's breach of its obligations pursuant to the provisions of Paragraph 5.4 above; provided however that Tenant's obligations pursuant to this Paragraph 5.4.4 shall not apply to Hazardous Materials that were not caused by Tenant or Tenant's Representatives. Tenant's obligations under this Paragraph 5.4 shall survive the expiration or termination ofthis Lease. 6. MAINTENANCE, REPAIRS. AND ALTERATIONS. 6.1 Tenant's Responsibility. Tenant shall, during the Term, keep in good order, condition and repair the Premises and every part thereof, including, without limitation, buildings, roofs and structures, all fixtures, interior walls and interior surface of exterior walls, exterior facade, exterior walls, rides, attractions, landscaping, sidewalks, parking areas and other exterior areas, electrical and plumbing systems, heating, ventilating and air conditioning systems, -7- IKKSI7 44417.12 022508-04706118 all equipment, windows, plate glass, downspouts, gutters, ceilings, floors and floor coverings, and doors, subject to Paragraphs 6.4 and 8.1 below. Tenant shall, during the Term, also keep in good order, condition and repair all of the personal property licensed to Tenant under this Lease. 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. Tenant's obligations under this Paragraph 6.1 shall include the obligation to replace any of the foregoing items, or any portion thereof, which cannot be fully repaired, subject to Paragraphs 6.4 and 8.1 below. In no event shall Landlord have any repair or maintenance responsibility for the Premises or Licensed Property, or any portion thereof. Notwithstanding the foregoing to the contrary, in the event such maintenance and repairs requires capital expenditures for or capital improvement to the Premises, then, in lieu of making such repairs, Tenant may elect to terminate this Lease on no less than thirty (30) days advance notice to Landlord. If Tenant fails to perform its obligations under this Paragraph 6.1, notwithstanding any other provision hereof and without waiving any other right or remedy Landlord may have, Landlord may, at its option, after ten (10) days' written notice to Tenant, enter upon the Premises and put the Premises and/or Licensed Property 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 immediately due and payable as Additional Rent by Tenant to Landlord upon demand. 6.2 Condition Upon Surrender. On Lease Termination, Tenant shall surrender the Premises and Licensed Property to Landlord in the same condition as exists on the Commencement Date, ordinary wear and tear excepted, subject to Paragraph 8.1 below. Upon Lease Termination, all of Tenant's rights with respect to the Premises and Licensed Property shall terminate. 6.3 Improvements by Tenant. Tenant shall not, without prior written consent of Landlord, which consent will not be unreasonably withheld except as provided in Paragraph 6.4 below, make any alterations, improvements, or additions (collectively, "Alterations") to the Premises. 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 cost and expense, in compliance with all applicable Laws and any covenants, conditions or restrictions of record, shall be done in a good and workmanlike manner by licensed contractors conforming in quality and design with the Premises existing as of the Commencement Date, and shall not diminish the value ofthe 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. 6.4 Limitation on Expenditures. Notwithstanding the prOVISIons of this Article 6 above, Tenant may only make or install, without Landlord's prior written approval, any Alterations, refurbishments, new attractions or capital improvements which in the aggregate in -8- IKKSI7 44417.12 022508-04706118 any Lease Year would not result in an expenditure of over One Hundred Thousand Dollars ($100,000). The foregoing limitation on expenditures does not apply to ordinary repairs and maintenance which are not in the nature of capital improvements. All alterations, refurbishments, new attractions or capital improvements made pursuant to the provisions of this Paragraph 6.4, shall remain on the Premises at Lease Termination and Tenant shall have no duty to remove same on Lease Termination. 7. INSURANCE AND INDEMNITY. 7.1 Tenant to Maintain. Tenant shall at all times maintain insurance coverage providing coverage at least as broad as the existing insurance coverage maintained by Tenant that is described in the schedule attached hereto as Exhibit C. Without limiting the scope of the insurance requirements of Exhibit C, but as a supplement to the requirements thereof, Tenant shall maintain in full force throughout the Term, commercial general liability insurance providing coverage on an occurrence form basis with limits of not less than Five Million and NollOOths Dollars ($5,000,000.00) each occurrence for bodily injury and property damage combined, Five Million and Noll OOths Dollars ($5,000,000.00) annual general aggregate, and Five Million and Noll OOths Dollars ($5,000,000.00) products and completed operations annual aggregate. Tenant's liability insurance policy or policies shall: (i) include premises and operations liability coverage, products and completed operations liability coverage, broad form property damage coverage including completed operations, blanket contractual liability coverage including, to the maximum extent possible, coverage for the indemnification obligations of Tenant under this Lease, and personal and advertising injury coverage; (ii) provide that the insurance company has the duty to defend all insureds under the policy; (iii) provide that defense costs are paid in addition to and do not deplete any of the policy limits; (iv) cover liabilities arising out of or incurred in connection with Tenant's use or occupancy of the Premises or the Property; and (v) extend coverage to cover liability for the actions of Tenant's Representatives. 7.2 Insurance Requirements. The policies required to be maintained by Tenant pursuant to Paragraph 7.1 above shall be with companies, on forms, with deductible amounts (if any), and loss payable clauses satisfactory to Landlord. All liability policies shall include Landlord as an additional insured, and shall provide that Landlord may, although an additional insured, recover for any loss suffered by Tenant's negligence. Certificates of insurance and, if requested by Landlord, certified copies of policies and endorsements evidencing the required coverage, shall be delivered to Landlord prior to the Commencement Date; a new certificate, or if requested by Landlord certified policy and endorsements, shall be delivered to Landlord at least thirty (30) days before expiration date of the old policy. Tenant shall obtain a written obligation on the part of Tenant's insurer(s) to notifY Landlord in writing of any delinquency in premium payments and at least thirty (30) days prior to any cancellation or modification of any policy. Tenant's policies shall provide coverage on an occurrence basis and not on a claims made basis. In no event shall the limits of any policies maintained by Tenant 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 -9- IKKSI7 44417 .12 022508-04706118 carried by such waiving party pursuant to this Lease 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 Indemnify. Tenant hereby agrees to defend, indemnifY and hold harmless Landlord and Landlord's officers, council members, employees, agents, agencies and other affiliates and representatives from and against any and all claims, damages, losses, liabilities or expenses (including without limitation reasonable attorneys' fees) due to any cause including without limitation, bodily injury and property damage, which arises out the use or occupancy of the Premises or any part thereof, the acts or omissions of Tenant or Tenant's Representatives, or Tenant's breach of this Lease, except to the extent caused by the willful misconduct or active negligence of Landlord. Tenant's obligation under this Paragraph 7.4 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 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, 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 Damage. Subject to this Paragraph 8.1 below, if at any time during the Term the Premises are damaged, 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 sixty (60) days following the event of damage. Notwithstanding the foregoing, if within thirty (30) days following the event of damage, the Landlord notifies Tenant in writing that: (i) Landlord has determined that the cost to repair or rebuild the Premises is estimated to exceed One Hundred Thousand Dollars ($100,000), and (ii) that Landlord will not consent to Tenant's repair or restoration of all or any part of such damage, then Tenant shall not have the right to contract for or commence any such work and Tenant shall have the option of either (x) continuing this Lease in full force or effect without making such repairs or restorations that were disapproved by Landlord, or (y) terminating this Lease by giving written notice of termination to Landlord within thirty (30) days following Tenant's receipt of Landlord's written notice, as described above. If Tenant fails to provide Landlord with written notice of termination within thirty (30) day period described in this Paragraph 8.1 above, Tenant shall be deemed to have elected to continue this Lease in full force and effect and, except to the extent prohibited by Landlord pursuant to this Paragraph 8.1 above, repair such damage. If Tenant elects to terminate this Lease pursuant to this Paragraph 8.1 above, or if Landlord has prohibited repairs pursuant to this Paragraph 8.1 above, then all insurance proceeds paid to Tenant or otherwise recoverable under the any insurance policy in connection with such casualty (other than business interruption insurance proceeds) shall be paid -10- IKKSI744417.12 022508-04706118 over to Landlord immediately upon receipt of such payment by Tenant, it being agreed that Tenant shall have no right to any such proceeds. If Tenant elects and has the right to repair the damage, Tenant shall be entitled to utilize the insurance proceeds paid as a result of such casualty to effectuate such repairs, with any excess proceeds to be paid over to Landlord 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, whether or not insurance proceeds are paid to Landlord. All repairs by Tenant shall be done in compliance with all applicable Laws and any covenants, conditions or restrictions of record, by a licensed contractor, and shall be done in a good workmanlike manner conforming in quality and design with the Premises existing as of the date the Premises were delivered to Tenant under this Lease. Before commencing repair of the Premises, Tenant shall submit plans and specifications to Landlord for Landlord's approval, which approval shall not be unreasonably withheld except to the extent Landlord has the right not to consent to repairs pursuant to this Paragraph 8.1 above. Tenant's obligations under this Paragraph 8.1 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, destruction, 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 Licensed Property, 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, the Premises or the Licensed Property (all of the foregoing being collectively referred to as a "Transfer"), without the prior written consent of Landlord, which consent may be granted, conditioned or denied by Landlord in the exercise of Landlord's sole and absolute discretion. Consent by Landlord to one or more Transfers shall not operate to exhaust Landlord's rights under this Article to consent to subsequent Transfers. If Tenant is a corporation, any dissolution, merger, consolidation or reorganization of Tenant, 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 Licensed Property 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. 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. Notwithstanding the foregoing to the contrary, the parties agree that (i) the entering into a management agreement with Cedar Fair, or some other management company to manage the theme park does not constitute a violation of this Paragraph 9.1, and (ii) entering into a short-term occupancy agreement consistent with Tenant's charitable purpose, such as -11- IKKSI744417.12 022508-04706118 allowing a week-end camping trip for a scouting group, shall not constitute a sublease requiring Landlord's consent for purposes of this Section 9.1. 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 shall 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; and (c) such other information as Landlord may reasonably request to evaluate the Transfer and Transferee. 9.3 Tenant Not Released. No Transfer, even with the consent of Landlord, shall relieve Tenant of its obligation to pay the Rentals and perform all ofthe 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. Ifthe entire Premises, or so much thereof as to make the Premises not reasonably adequate for the conduct of Tenant's business in Tenant's reasonable judgment, shall be taken under the power of eminent domain, this Lease shall automatically terminate as ofthe date on which the condemning authority takes possession. 10.2 No Rent Abatement. 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. 10.3 Condemnation Award. 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 ofthe fee, or otherwise. In no event shall Landlord be obligated to make any repairs or perform any restoration or other work required as a result of a taking. 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 waste disposal, telephone, janitorial service, 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 -12- IKKSI744417.12 022508-04706118 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 anyone or more ofthe 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 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. 12.1.3 The making by Tenant of any general assignment for the benefit of creditors; 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 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 terminate this Lease and Tenant's right to possession ofthe 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 thirty (30) days after written notice from Landlord; provided, however, that if the nature of Ten ant'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) 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 12.2.1 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 Tenant's personal property, signs and trade fixtures and store same at Tenant's cost and to recover from Tenant as damages: 12.2.1.1 The worth at the time of award of unpaid Rentals and other sums due and payable which had been earned at the time oftermination; plus 12.2.1.2 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 -13- IKKSI7 44417 .12 022508-04706118 termination until the time of award exceeds the amount of such Rental loss that Tenant proves could have been reasonably avoided; plus 12.2.1.3 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 12.2.1.4 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 or Licensed Property; (b) in maintaining, repairing, preserving, restoring, replacing, cleaning, altering or rehabilitating the Premises, Licensed Property or any portion thereof, including such acts for reletting to a new tenant or tenants; (c) for leasing commissions; or (d) for any other costs necessary or appropriate to relet the Premises; plus 12.2.1.5 Such other amounts in addition to or in lieu of the foregoing as may be permitted from time-to-time by the laws of the State of California. The "worth at the time of award" of the amounts referred to in Paragraphs 12.2.1.1 and 12.2.1.2 is computed by allowing interest at the Stipulated Rate (defined in Paragraph 16). 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 ofthe Federal Reserve Bank of San Francisco at the time of award plus one percent (1 %). 12.3 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. 12.4 Default bv Landlord. Landlord shall not 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 ifthe 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. 12.5 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 reasonable attorneys' fees from the other party. 12.5 Exculpation. Notwithstanding anything contained in this Lease to the contrary, any liability or obligation imposed upon Tenant under or with respect to this Lease shall not thereby constitute the personal liability of any officer or director of Ten ant, and shall -14- IKKSI744417.12 022508-04706118 not create or involve any claim against, or any personal liability on the part of any of them, and that in the event any such liability or obligation at any time exists, Landlord shall look solely to the assets of Tenant for the satisfaction thereof, and will not seek recourse against such officers or directors or any oftheir personal assets for such satisfaction. 13. SIGNS. Tenant's signs shall comply with all applicable Laws. 14. RIGHT OF ENTRY. Landlord and its agents 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 may be permitted to make hereunder (without obligation to do so), performing Landlord's obligations under this Lease, protecting the Premises (without obligation to do so), posting notices of nonresponsibility, and exhibiting the same to prospective purchasers, lenders or tenants. 15. TRANSFER OF LANDLORD'S INTEREST. Upon any transfer 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 and after the date of such transfer. Upon such transfer, Tenant shall have the election of either (i) terminating this Lease, or (ii) attorning to any transferee of Landlord's interest in the Premises. 16. INTEREST. Any amount due from Tenant to Landlord hereunder which is not paid when due shall bear interest from the due date until paid an annual rate of interest (the "Stipulated Rate") equal to ten percent (10%), provided that in no event shall such rate exceed the highest rate permissible under applicable law. Payment of such interest shall not excuse or cure any default by Tenant under this Lease. 17. MISCELLANEOUS. 17.1 Time of Essence. Time is of the essence with respect to the performance of every provision of this Lease. 17.2 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. 17.3 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. 17.4 Notice. Any notices, requests, demands or other communications required or permitted to be sent under this Agreement shall be delivered personally, sent by overnight courier or mailed by registered or certified mail, return receipt requested, to the following addresses: -15- IKKSI744417.12 022508-04706118 If to Purchaser: City of Gilroy 7351 Rosanna Street Gilroy, CA 95020 Attn: Anna Jatczak Tel: (408) 846-0212 Fax: (408) 846-0500 With a copy to: Berliner Cohen 10 Almaden Boulevard, Suite 1100 San Jose, CA 95113 Attn: Andrew Faber, Esq. Tel: (408) 286-5800 Fax: (408) 998-5388 Ifto Seller: Gilroy Gardens Family Theme Park, Inc. 3050 Hecker Pass Highway Gilroy, CA 95020 Attn: Bob Kraemer Tel: (408) 842-6949 Fax: (408) 846-6474 With a copy to: Miller, Morton, Caillat & Nevis, LLP 25 Metro Drive, 7th Floor San Jose, CA 95110 Attn: David Nevis, Esq. Tel: (408) 292-1765 Fax: (408) 292-4484 Any notice so given by mail shall be deemed effectively given two (2) 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 legal 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. 17.5 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, with Base Rent payable at the rate of One Dollars ($1) per month in advance, but otherwise on the same terms and conditions set forth in this Lease. If Tenant remains in possession of the Premises after Lease Termination without Landlord's consent or fails to surrender the Premises and Licensed Property in the condition required by Paragraph 6.2, Tenant shall indemnifY, defend and hold Landlord and Landlord's employees, representatives and agents harmless from and against any claims, losses, damages, expenses or liabilities (including without limitation reasonable attorneys' fees) resulting from Tenant's failure to surrender the Premises in the required condition, including without limitation, any claims made by any succeeding tenant based upon delay in the availability of the Premises. -16- IKKSI744417.12 022508-04706118 17.6 Brokers. Landlord and Tenant each warrants and represents to the other that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Lease. Each party agrees to defend, indemnifY and hold the other party and the other party's employees, representatives and agents harmless from and against any and all claims, losses, damages, liabilities or expenses (including without limitation reasonable attorney's fees) arising out of or in connection with the indemnifYing parties' breach of its representations and warranties set forth in this Paragraph 17.6. 17.7 Acceptance. The effectiveness of this Lease shall be conditioned upon the purchase of the Property by Landlord under the Sale Contract and full execution hereof by Landlord and Tenant. 17.8 Waiver. The waiver by one party 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 a party unless such waiver is in writing signed by such party. 17.9 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. 17.10 Liens. Tenant shall pay for all labor and services performed for, and all materials used by or furnished to Tenant or Tenant's Representatives and keep the Premises free from any liens arising out of work performed, materials furnished, or obligations incurred by Tenant or Tenant's Representatives 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, 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 Representatives 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 the removal of 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. -17- IKKSI7 44417 .12 022508-04706118 Tenant shall repay to Landlord on demand all sums disbursed or deposited by Landlord pursuant to the foregoing provisions of this Paragraph 17.10 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 ofnonresponsibility as are provided for in the mechanics' lien laws of California. 17.11 Subordination. Subject to this Paragraph 17.11 below, this Lease is subject and subordinate to all the Existing Title Exceptions, and to all renewals, modifications, consolidations, replacements and extensions thereof; provided, however, if the holder or holders of any such Existing Title Exception ("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 mortgages, deeds of trust, covenants, conditions and restrictions of record and all other liens and encumbrances (each a "Future Encumbrance") which 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 that the holder of such Future Encumbrance ("Future Holder") shall agree in writing for the benefit of Tenant that this Lease and Tenant's interest hereunder shall not be disturbed so long as Tenant is not in default under this Lease. Within ten (10) days after Landlord's written request, Tenant shall execute any and all documents reasonably required by Landlord or a Holder or Future Holder to confirm the current subordination of this lease to an Existing Title Exception or to make this Lease subordinate to any lien of a Future Encumbrance, provided that the Holder or Future Holder, as applicable, agrees that so long as Tenant is not in default under this Lease, this Lease and Tenant's interest hereunder shall not be disturbed. 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 any Existing Title Exception of Future Encumbrance so long as the Lease remains in effect. 17.12 Tenant's Obligation Not to Discriminate. Tenant covenants and agrees for itself, its successors, its assigns and every successor-in-interest to all or any portion of the Premises, that there shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, religion, sex, sexual orientation, marital status, national origin, ancestry, familial status, source of income, or disability, in the assignment, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall the Tenant, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of assignees, sub-tenants, sub-lessees or vendees ofthe Property. 17.13 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 -18- IKKSI744417.12 022508-04706118 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. 17.14 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 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, nor any of Landlord's officers, council members, employees, agents, agencies and other affiliates and representatives, shall be personally liable for any deficiency. Landlord's officers, council members, employees, agents, agencies and other affiliates and representatives, nor any oftheir respective assets, shall be liable for Landlord's breach of this Lease. 17.15 Exhibits. All exhibits, amendments, riders and addenda attached hereto are hereby incorporated herein and made a part hereof. 17.16 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. 17.17 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 Ten ant or any other party. 17.18 Construction. 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. 17.19 Binding Effect. Subject to the provisions of Article 9 and Article 15, 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. 17.20 Legal Representation. Tenant acknowledges and agrees that Berliner Cohen acts as legal counsel only to Landlord, and that Berliner Cohen has not and will not represent or give advice to the Tenant in connection with this Lease or any transactions contemplated by this Lease. Tenant shall rely upon the advice of its own legal counsel as to the legal and tax consequences ofthis Assignment and the transactions contemplated hereunder. 17.21 Recording. On or promptly following the Commencement Date, Landlord and Tenant shall execute and record in the Official Records a Memorandum of Lease in the form attached hereto Exhibit D, with the Commencement Date inserted in the blanks provided for such information in the introductory paragraph of the Memorandum of Lease. Promptly following Lease Termination, Tenant agrees to execute in recordable form, a memorandum, quitclaim deed or other document reasonably requested by Landlord to clear this Lease from -19- IKKSI744417.12 022508-04706118 title, with signatures notarized for recording in the Official Records. Tenant's obligation pursuant to this Paragraph 17.21 shall survive Lease Termination. IKKSI744417.12 022508-04706118 [Signatures on next page] -20- THIS LEASE is effective as of the Commencement Date set forth above. TENANT: GILROY GARDENS F AMIL Y THEME PARK, a Delaware nonprofit public benefit corporation formerly known as "Bonfante Gardens, Inc." By: /7 . ~7 I if .{.,/ ~~ ,,":,-/'(/'t- '[ I'- . LANDLORD: APPROVED AS TO FORM: /l . ~Zc (j" r~~ City Attorney -21- IKKSI744417.12 022508-04706118