HomeMy WebLinkAboutReso 02-19 MLA 96 Flying Dutchman Enterprises 945 EmbarcaderoRESOLUTION NO.02=19
RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF MORRO BAY, CALIFORNIA
APPROVING A 35-YEAR MASTER LEASE AGREEMENT FOR
LEASE SITE 96196W BETWEEN THE CITY OF MORRO BAY AND
FLYING DUTCHMAN ENTERPRISES, LOCATED AT 945 EMBARCADERO
THE CITY COUNCIL
City of Morro Bay, California
WHEREAS, the City of Morro Bay is the lessor of certain properties on the Morro
Bay Waterfront described as City Tidelands leases and properties; and
WHEREAS, Flying Dutchman Enterprises, Inc. (Stan Van Beurden) has been the
lessee of Lease Site 96/96WW since February 2010 following a Request for Proposals
process to redevelop the site, and is a tenant in good standing; and
WHEREAS, Flying Dutchman Enterprises was granted Consent of Landowner
approval for the proposed lease site redevelopment project consisting of a significant
building renovation and expansion, public access improvements including the
Harborwalk, structural improvements and better enclosure of the site's trash dumpsters;
and
WHEREAS, Flying Dutchman Enterprises has obtained all necessary approvals
from the Planning Commission and City Council for their proposed redevelopment
project; and
WHEREAS, in accordance with the City's Master Lease Policy, the City and
lessee have agreed to a new 35-year lease agreement for Lease Site 96/96W located at
945 Embarcadero.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Morro
Bay, California, as follows:
1. The attached new Master Lease Agreement for Lease Site 96/96W is
hereby approved.
2. The Mayor is hereby authorized to execute said Master Lease
Agreement.
PASSED AND ADOPTED by the City Council of the City of Morro Bay at
a regular meeting thereof held on the 8th day of January, 2019 on the following vote:
AYES:
NOES:
Headding, Addis, Davis, Heller, McPherson
TTEST ,
coon)
ana Swanson, City Clerk
by and between
the CITY OF MORRO BAY
and
FLYING DUTCHMAN ENTERPRISES
("TENANT")
Article 1
Article 2
Article 3
Article 4
TABLE OF CONTENTS
FIXEDTERM.............................................................................................................2
Section1.01 Term..............................................................................................2
Section 1.02 No Extensions...............................................................................2
Section1.03 Hold Over......................................................................................2
Section1.04 Replacement..................................................................................3
RENT..........................................................................................................................3
Section 2.01 Annual Minimum Rent.................................................................3
Section 2.03 Calculation of New Minimum Rent..............................................4
Section 2.04 Percentage Rent............................................................................5
Section 2.05 Reimbursements............................................................................8
Section 2.06 Penalty and Interest.......................................................................8
USE OF PREMISES...................................................................................................8
Section 3.01 Permitted Uses..............................................................................8
Section 3.02 Unauthorized Use..........................................................................8
Section 3.03 Operation of Business -Hours of Operation.................................9
Section 3.04 Competition....... 0004*99 00 so 00 00990 0 to 00909 eta ads bee *got o9opq 000 0 000* data ad 009
Section 3.05 Hazardous Materials. a 9 0 9 * * 0 0 0 & a * 4 * a 6 a * a 0 a 0 0 * a 0 0 0 0 * 0 0 0 0 4 0 0 a 0 0 a 0 a * 0 0 a 0 0 * a 0 * 0 0 a 9 0 0 0 a 9 4 9 9 9 10
Section 3.06 Tidelands Trust. . 0 0 * * 0 0 0 0 a 9 0 a 0 0 0 0 a 0 0 9 * a * 0 9 0 b 0 b 0 * a 0 a * a 4 * q * a # 6 a 0 & 0 0 & a a 0 0 a 0 0 a 0 0 a 6 0 a & 0 & 0 * a a 0 a 0 11
Section 3.07 Compliance with Law, 0 6*000&0*04 0 wee bee avowevoom Wood I I
Section 3.08 Waste or Nuisance. 0 0 9 0 0 4 0 9 9 0 9 0 P 0 9 0 0 4 * * 0 * 0 0 * 0 0 & 6 6 & 6 a & & * 6 a & 0 a a 0 a & 0 a a 0 0 & 0 a a 0 a & 0 0 0 0 & * 9 0 0 0 9 0 11
Section 3.09 Use by CITY...............................................................................12
CONSTRUCTION, ALTERATION AND REPAIRS.............................................12
Section 4.01 Construction Approval. .... 6 0*04 00 0 add so ad to @****of at dabbed wee 0909*9*99 add & I 2
Section 4.02 Construction Bond......................................................................12
01181.0024/526018.1 S/RWS/Cnlbcty.Harbor.O110ll.agr.MasterLease-l-
Article 5
Article 6
Article 7
Article 8
Section 4.03 Mechanics' Liens.........................................................................13
Section 4.04 Ownership of improvements... 00 @**@@vote 899*99 00*09009900 09909999 too@ goods be Pot
LEASEHOLD MORTGAGES.................................................................................14
REPAIRS, MAINTENANCE AND RESTORATION............................................14
Section 6.01 Maintenance by TENANT..........................................................14
Section 6.02 Seawalls and Revetment.............................................................15
Section 6.03 Legal Requirements....................................................................15
Section 6.04 Failure to Repair.........................................................................15
Section 6.05 Inspection by CITY.....................................................................15
Section 6.08 Destruction Due to Risk Not Covered by Insurance...................17
INDEMNITY AND INSURANCE..........................................................................18
Section 7.01 Indemnity Agreement.................................................................18
Section 7.02 Liability Insurance......................................................................19
Section 7.03 Worker's Compensation..............................................................19
Section 7.04 Property Insurance, be 00000 ***a debt 664 66*0 00000*00 00*000 00*00*9040*94 twoosoo 009 0 19
Section 7.05 Additional Coverage...................................................................20
Section 7.06 General Requirements. . 0 0 0 0 0 * 0 0 0 0 0 2 0 0 0 0 9 9 0 0 0 0 0 9 0 9 0 9 b 0 4 b 0 9 b q 9 0 0 0 w 0 0 0 0 * 0 0 0 a * 0 a & 0 0 & 6 0 & 6 a * 2 0
Section 7.07 No Subrogation.
Section 7.08 TENANT'S Waiver.
Section 7.09 Insurance Not a Limit. 04*00 66000404 @@set 00*00 006 00*00 debt boded too boded So OV22
TAXES AND FEES..................................................................................................22
Section 8.01 TENANT to Pay Taxes...............................................................22
Section 8.02 TENANT to Pay License and Permit Fees.................................22
Section 8.03 Utilities........................................................................................22
01181.0024/526018.1 S/RWS/Cmbcty.Harbor.01 101 I.agr.MasterLease-ll-
Article 9
Article 10
Article 11
CONDEMNATION..................................................................................................22
Section 9.01 Total Condemnation... ... to so 009 so *a Ogg o9poweve 060 **&*a OGLIL
Section 9.02 Condemnation Award.................................................................23
Section 9.03 Termination for Partial Taking...................................................24
Section 9.04 Rent Abatement for Partial Taking.............................................24
Section 9.05 Conveyance in Lieu of Eminent Domain....................................25
Section 9.06 Temporary Taking......................................................................25
ASSIGNMENT AND SUBLEASING.....................................................................25
Section 10.01 No Assignment Without CITY'S Consent..................................25
Section 10.03 Application for Assignment........................................................26
Section 10.04 Probate Transfer of Assignment.................................................27
Section 10.05 No Sublease Without CITY'S Consent.......................................27
Section 10.06 Subtenant Subject to Lease Terms..............................................27
Section 10.07 Consent Form Agreement...........................................................28
Section 10.08 TENANT and Guarantor Remain Liable....................................28
Section 10.09 Nondisturbance...........................................................................28
DEFAULT AND TERMINATION..........................................................................28
Section 11.01 Abandonment by TENANT........................................................28
Section 11.02 Termination for Breach by TENANT. .. 00400*00*000.0 *0*00 * a ***OW29
Section 11.03 Termination for Failure to Pay Rent*
Section 11.04 Lender May Cure Default. 0 0 0 0 * $ 0 0 0 0 a 6 a a & a & a 629
Section 11.05 Attorneys' Fees... 6**&Obo ad bad 0***a ob 60*00 004 000 6000 coo 008 to too 00 0690P999004929
Section 11.06 Damages for Breach. 0 6 6 a 0 0 * 0 0 0 0 0 0 9 0 a& 0 a 0 0 0 % 3 0
Section 11.07 Cumulative Remedies.................................................................30
Section 11.08 Waiver of Breach.
Section 11.09 Surrender of Premises.................................................................31
01181.0024/526018.1 S/RWS/Cmbcty.Harbor.O11011.agr.MasterLease-111-
Article 12
Article 13
MISCELLANEOUS.................................................................................................31
Section 12.01 Notices........................................................................................31
Section 12.02 Governing Law and Jurisdiction................................................031
Section 12.03 Binding on Successors.0.00000.0....00..00.000.0...0.06.0460.000.000494040..00...9..0.32
Section 12.04 Partial Invalidity..........................................................................32
Section 12.05 Sole and Only Agreement...........................................................32
Section 12.06 Modification................................................................................32
Section 12.07 Time of Essence..........................................................................33
SPECIAL PROVISIONS PECULIAR TO THIS LEASE SITE.................................33
Section 13.01 TENANT'S Obligation to Redevelop Site.................................33
01181.0024/526018.1 S/RWS/Cmbcty.Harbar.011011.agr.MasterLease-lV-
This LEASE is made and entered into by and between the CITY OF MORRO BAY, a
municipal corporation of the State of California herein called CITY, and The Flying Dutchman
Enterprises, a California corporation, herein called TENANT (CITY and TENANT are
sometimes collectively referred to as the Parties and individually as the Party).
WITNESSETH
WHEREAS, the State of California granted certain tide and submerged lands located
within the CITY limits of CITY to the County of San Luis Obispo and to its successors, being
Chapter 1076, Statutes of 1947, as amended by Chapter 413, Statutes of 1955, Chapter 1874,
Statutes of 1957, and Chapter 70, Statutes of 1960, first extraordinary session; which Statutes
may be amended from time to time by the Legislature of the State of California; all of which
Statutes are expressly recognized and agreed to be in full force and effect by the parties hereto;
and
WHEREAS, the parties hereto recognize and agree on July 17, 1964, CITY, Lessor
herein, succeeded to all of the right, title and interest of the County of San Luis Obispo in and to
all of the tide and submerged lands conveyed to said County by the State of California pursuant
to the above -mentioned acts; and
WHEREAS, judgment has been entered on October 14, 1968, in the case of CITY,
Plaintiff, versus County of San Luis Obispo, and State of California, Defendants, by the Superior
Court of the State of California in and for the County of San Luis Obispo, #30417, adjudging and
decreeing, among other things, that the title to said tide and submerged lands so conveyed by the
State of California to the County of San Luis Obispo in trust, as set forth above, passed
automatically to CITY upon the date of its incorporation as a CITY on the 17th day of July,
1964; and
WHEREAS, TENANT accepts the within Lease with full knowledge that there is no
warranty of title in and to the wn described premises by CITY to TENANT; and
WHEREAS, in order to develop and improve Morro Bay Harbor and to assist in carrying
out the provisions of the tideland grant as aforesaid, and in order to provide facilities for the
accommodation of those using Morro Bay Harbor, CITY desires to lease to TENANT the within
described property upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the covenants to be performed and the rental to
be paid by TENANT to CITY, CITY leases to TENANT, and TENANT leases from CITY, all of
the following premises (herein collectively referred to as the "Premises") in the City of
Morro Bay, County of San Luis Obispo, State of California, described as follows:
Lease Site 96/96W
This property is delineated on Parcel Map of the City of Morro Bay No. 68-30, which
map was recorded on October 10, 1968, in Book 3, Page 10 of Parcel Maps in the Office of the
County Recorder, San Luis Obispo County, California. A copy of said Map is attached hereto as
Exhibit A and made a part hereof by reference.
Section 1.01 Term.
The term of this Lease shall be a period of 35 years, commencing on the first day of the
complete calendar month following TENANT'S ability to obtain a Certificate of Occupancy for
the Project, as defined in Section 13.01 (the "Commencement Date"). The term of this Lease
shall terminate without notice on the thirty-fifth (35th) annual anniversary after the
Commencement Date, unless sooner terminated as herein provided. Within five days after the
Commencement Date, the Parties agree to sign a Commencement/Termination Date Memo,
substantially similar to Exhibit C, attached hereto.
Section 1.02 No Extensions.
The term of this Lease shall not be extended nor shall this Lease be renewed. Requests
for continued use of the Premises shall be treated as an application for a new lease and shall
require appropriate application to CITY with all required supporting information and documents,
CITY Council approval and the execution of a new CITY lease, containing the then most current
terms, covenants, conditions and rent schedules.
Section 1 M Hold Over.
If TENANT holds the demised Premises after the expiration of the term of this Lease
with the consent of the CITY, express or implied, then such holding over (in the absence of a
written agreement between CITY and TENANT with respect thereto) shall be deemed to create a
tenancy from month to month, terminable on 30-days' written notice from either party to the
other, at a monthly rental equal to two hundred percent (200%) of the average total Rent per
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month for the twelve (12) months immediately preceding the expiration of the Lease, and
otherwise subject to each and every term, covenant and condition of this Lease.
Section 1.04 Replacement.
As %J the Commencement Date, this Lease shall extinguish and replace every prior lease
between CITY and TENANT respecting the Premises, if any. Any right or interest held by the
TENANT pursuant to any existing lease with respect to the Premises, which is not granted
pursuant to this Lease, shall be extinguished as of the Commencement Date of this Lease.
Article 2 RENT
Section 2.01 Annual Minimum Rent.
TENANT agrees to pay to CITY a minimum guaranteed annual rental for the use and
occupancy of the Premises, in an initial amount of $13,500 per year (the "Minimum Rent"),
payable in advance in equal semiannual installments on January 1 and July 1 each year during
the term of the Lease. If the Commencement Date is other than January 1 or July 1, then
TENANT shall pay, on the Commencement Date, the proportionate amount of the Minimum
Rent payable for the period from the Commencement Date until the next payment date of
January 1 or July 1, as the case may be. If the term of the Lease expires on a date other than
December 31 or June 30, then TENANT'S final installment of Minimum Rent shall be
proportionate to the time remaining in the term. All Rent, including the Minimum Rent and the
Percentage Rent, shall be paid in lawful money of the United States of America, without offset or
deduction and shall be paid to CITY at City Hall located at 595 Harbor Street, Morro Bay,
California, or at such other place or places CITY may from time to time designate by
written notice delivered to TENANT.
Section 2.02 CPI Adjustment to Annual Minimum Rent.
(1) The parties agree, as of every July 1 following the Commencement Date (each, a
"CPI Adjustment Date"), except as outlined in section 2.03 hereof, the annual Minimum Rent
shall be adjusted in direct proportion to any upward or downward movement in the Consumer
Price Index for January I of the Commencement Date year (Base Index). The percentage
adjustment for any given year shall be based on the monthly average Index for the calendar year
immediately preceding the CPI Adjustment Date as compared with the Base Index. The
Consumer Price Index referred to herein is the Consumer Price Index (all items indexes, all
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urban consumers) for Los Angeles — Long Beach — Anaheim, California, compiled and published
by the United States Department of Labor, Bureau of Labor Statistics, 198244 Base Year = 100
the "Index").
(2) The Annual Minimum Rent shall be adjusted as of each CPI Adjustment Date, and
will remain in effect as adjusted until the next CPI Adjustment Date. As an illustration only, if
the Base Index (Jan. 1, 1999 CPI) is 166.1 and the monthly average CPI for 2000 is 171.6, then
the percentage increase is equal to 3.31%. Therefore, the Minimum Rent would be increased by
3.31% as of July 1, 2001 and would continue at that rate through June 30, 2002.
(3) If the United States Department of Labor, Bureau of Labor Statistics, shall cease to
compile and make public the Index as now constituted and issued, but shall substitute another
index in its place, then said substituted index shall be used for the purpose of adjusting the
Minimum Rent for the Premises. If the Index is changed so that the base year differs from that in
effect on the Lease Commencement Date, the Index shall be converted in accordance with the
conversion factor published by the United States Department of Labor, Bureau of Labor
Statistics.
Section 2.03 Calculation of New Minimum Rent.
At the end of the initial five (5) years and of each five-year period thereafter, a new
Minimum Rent shall be calculated for the following five (5) year period (each, a "Subsequent
Rental Period") as follows:
A. The Minimum Rent shall be subject to adjustment by appraisal as of the fifth
anniversary of the Commencement Date and every five years thereafter (each, an "Appraisal
Adjustment Date"). CITY, at its own cost and expense, shall retain an independent qualified
appraiser for determination of the fair market value of the Premises. Not more than nine (9)
months prior to each Appraisal Adjustment Date, CITY shall provide written notice to TENANT
of the pending appraisal and the appraiser selected by the CITY to determine the fair market
value of the Premises, excluding fixtures and improvements unless such are expressly included
in the description of the leasehold hereinabove. If TENANT does not reject CITY's appraiser in
writing and within thirty (30) days after CITY's notice of its determination, then the Minimum
Rent for the Subsequent Rental Period shall be in the amount determined by CITY as outlined in
this Section 2.03. If TENANT rejects CITY's appraiser within thirty (30) days following CITY's
notice to TENANT, then within fifteen (15) days after such 30-day period, each party, at its own
cost, shall select an independent professionally designated appraiser who is a member of the
American Institute of Real Estate Appraisers, or the Society of Real Estate Appraisers with a
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designation of MAI (Member of American Institute), SRPA (Senior Real Estate Analysis), to
appraise the fair market value of the Premises. CITY may rely on its original appraisal, or select
a new appraiser, at its cost. If a party does not appoint an appraiser within fifteen (15) days after
the other party has given notice of the name of its appraiser, then the single appraiser appointed
shall be the sole appraiser. Each appraiser shall conduct an independent appraisal within thirty
(30) days after appointment. If the parties are unable to agree on the Minimum Rent for the
Subsequent Rental Period within thirty (30) days after receiving the appraisal(s), then each party
shall select one member of a three -member committee. The two so selected members shall select
the third member, and this committee shall by majority vote select one or the other of the
appraisals. The Minimum Rent determined on the basis of the selected appraisal shall be final
and binding and all costs associated with the three -member committee shall be paid equally by
CITY and TENANT.
B. In the event the appraisal process is not concluded on or before the Appraisal
Adjustment Date, the Minimum Rent shall be adjusted retroactively to such Appraisal
Adjustment Date as set out hereinbelow when said appraisal process is completed.
C. The total Rent payable, including both the Minimum Rent and the Percentage Rent
for each year within the applicable previous five-year period, shall be averaged to produce the
average annual total Rent payable for such previous period.
D. The new Minimum Rent for the five-year period commencing on each Appraisal
Adjustment Date shall be the greater amount of seventy five percent (75%) of the average of the
total yearly Rent payable during the previous five-year period (as set out in paragraph C. above)
or eight percent (8%) of the fair market value of the Premises (as established in paragraph A.
above.) The new Minimum Rent shall be divided by two to determine the semiannual payments
and shall be paid by TENANT to CITY on the first of each January and July thereafter, or paid
monthly at the option of TENANT. This new Minimum Rent shall be adjusted each following
year in proportion to any increase in the Consumer Price Index as set out in Section 2.02 of this
Lease. The Base Index shall be adjusted upon each Calculation of new Minimum Rent as set out
in this section so that the Base Index for CPI adjustment shall be the Consumer Price Index for
January 1 of the year of the calculation of new Minimum Rent.
Section 2.04 Percentage Rent.
A. In addition to the Minimum Rent, TENANT agrees to pay to CITY at the time and in
the manner hereinafter specified, as additional Rent for the use and occupancy of the Premises, a
sum equal to the following for all TENANT'S Gross Sales as hereinafter defined: (i) three
percent (3%) for all restaurant sales and (ii) five percent (5%) for all beer and wine sales, less the
amount of the Minimum Rent paid pursuant to this Lease (the "Percentage Rent").
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B. The term "Gross Sales," as used herein, shall mean (subject to the exceptions and
authorized deductions as hereinafter set forth), the total selling price and the total gross amount
received by TENANT from all rentals, merchandise sold and services rendered in, on or from the
Premises by TENANT, its sublessees, licensees, or concessionaires, both for cash and on credit
including, but not limited to, rentals of dockage space, leasing and servicing operations and
ticket sales, and if on credit whether or not payment be actually made therefore, all charges for
services, alterations or repairs made in or upon the Premises; the gross amount received by
TENANT for merchandise sold pursuant to orders received in the Premises, though filled
elsewhere; and the gross amount received by TENANT from any and all other sources of income
derived from the business conducted upon the Premises.
C. Notwithstanding the other provisions of Section 2.04, the term "Gross Sales" shall not
include the following items, and such items may be deducted from Gross Sales to the extent they
have been included therein or have been included in a prior computation of Gross Sales or for
which a Percentage Rent has been paid under this Lease to CITY:
(1) Credits and refunds made to customers for merchandise returned or exchanged;
(2) Any sales or excise taxes otherwise includable in Gross Sales as defined in this
Section because such taxes are part of the total selling price of merchandise or services rendered
in, from, or on the Premises, where TENANT must account for and remit the taxes to the
government entity or entities by which they are imposed; and
(3) With respect to credit card sales, fees retained or withheld by the issuer and/or
merchant bank pursuant to TENANT'S credit card acceptance agreement, and
(4) Rental payments to TENANT from sublessees whose total gross sales are included in
gross sales computations.
D. TENANT shall keep or cause to be kept full, complete, and accurate records, and
books of account in accordance with accepted accounting practices showing the total amount of
Gross Sales, as defined herein, made each calendar month in, on or from the Premises.
TENANT shall keep said records and books of account within San Luis Obispo County and shall
notify CITY in advance of their location at all times. Furthermore, TENANT shall at the time of
sale and in the presence of the customer cause the full selling price of each piece of merchandise,
each rental received, and each service rendered in, on or from the Premises to be recorded in a
cash register or cash registers that have cumulative totals and are sealed in accordance with
standard commercial practices. Said records, books of account and cash register tapes, including
any sales tax reports that TENANT may be required to furnish any government or governmental
agency shall at all reasonable times be open to the inspection of CITY, CITY'S auditor, or other
authorized representative or agent of CITY. TENANT consents to the release of sales tax
information to CITY and on demand will furnish to CITY a copy of the sales tax reports,
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quarterly reports and any audit reports of sales for confidential internal use of the CITY in
determining Gross Sales for TENANT. TENANT consents and authorizes CITY to request such
information directly from the State Board of Equalization or other state agency with which sales
tax information is filed.
E. By July 31 of each year, TENANT shall furnish CITY with a statement, to be
certified by TENANT as current, true and accurate, which shall set forth the Gross Sales of each
department, sublessee, licensee and concession operating in, on or from the Premises for the
previous twelve (12) calendar months, ending June 30, just concluded, and the authorized
deductions, if any, therefrom; and with it TENANT shall pay to CITY the amount of the
Percentage Rent which is due to CITY as shown thereby. If TENANT shall at any time cause an
audit of sales of TENANT'S business to be made by a public accountant, then TENANT shall
furnish CITY with a copy of said audit without cost or expense to CITY. CITY may, once in
any twelve-month period, cause an audit of the business of TENANT to be made by a public
accountant of CITY'S own selection. TENANT shall, upon receiving written notice of CITY'S
desire for such an audit deliver and make available all such books, records and cash register
tapes to the public or certified public accountant selected by CITY. Furthermore, TENANT shall
promptly on demand reimburse CITY for the full cost and expense of the audit, if the audit
discloses the questioned statement or statements understated Gross Sales by five percent (5%) or
more but less than ten percent (10%). In the event that an audit performed at CITY'S request
discloses that TENANT understated Gross Sales by less than 5%, the cost of such audit shall be
paid by CITY. In the event any audit or other review of records discloses that the amounts
reported as Gross Sales was understated by TENANT by ten percent (10%) or more, CITY shall
not only be entitled to recover from TENANT all costs of audit and review, but shall also be
entitled to recover from TENANT a penalty equal to two times the Percentage Rent due pursuant
to this Lease on such unreported amounts. Whenever any audit discloses that Gross Sales were
understated by any amount, TENANT shall immediately pay the additional Percentage Rent
therein shown to be payable by TENANT to CITY, together with interest at the Default Rate
thereon, from the date the Percentage Rent was payable until the date paid.
F. CITY shall be entitled at any time within five (5) years after the receipt of any such
Percentage Rent payment, to question the sufficiency of the amount thereof and/or the accuracy
of the statement or statements furnished by TENANT to justify the same. For the purpose of
enabling CITY to check the accuracy of any such statement or statements, TENANT shall for
said period of five (5) years after submission to CITY of any such statement keep all of
TENANT'S records, including sales tax returns, all cash register tapes and other data which in
any way bear upon or are required to establish in detail TENANT'S Gross Sales and any
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authorized deductions therefrom as shown by any such statements and shall upon request make
the same available to CITY for examination.
Section 2.05 Reimbursements.
If TENANT fails to perform any term or covenant of this Lease, then CITY may, but is
not obligated to, perform such term or covenant and TENANT shall reimburse CITY therefore
as additional Rent hereunder. As an illustration and not as a limitation, if TENANT fails to
procure the insurance required by this Lease, then CITY may, but is not obligated to, obtain such
insurance, with the cost of the premiums being due to CITY upon demand as additional Rent.
Section 2.06 Penalty and Interest.
(1) If any Rent is not received within ten (10) days following the date on which the Rent
first became due, then TENANT shall pay a late penalty of ten percent (10%) of the amount of
the Rent in addition to the Rent.
(2) In addition to the penalty, TENANT shall pay interest at the rate of one percent (1%)
per month or fraction thereof or the maximum amount permitted by law as of the date this Lease
is signed, whichever is greater (the "Default Rate"), on the amount of the Rent, exclusive of the
penalty, from the date on which Rent first became delinquent until paid. The term "Rent"
includes any sums advanced by the CITY and any unpaid amounts due from TENANT to the
CITY.
Section 3.01 Permitted Uses.
The Premises shall, during the term of this Lease, be used for the purpose of operating
and conducting thereon and therein the uses permitted by, and in compliance with, Conditional
Use Permit No. UPO-448, as it may be amended from time to time, and for no other purpose. At
the Commencement Date, such uses include restaurant and beer/wine sales.
Section 3.02 Unauthorized Use.
TENANT agrees to allow only those uses authorized in Section 3.01, hereinabove and
any unauthorized use thereof shall constitute a breach of this Lease and shall, at the option of
CITY, terminate this Lease.
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Section 3.03 Operation of Business = Hours of Operation.
Failure to actively and diligently conduct the business authorized herein constitutes a
breach of the agreement and shall, at the option of CITY, terminate this lease.
(1) TENANT shall during the term %J this Lease conduct business of the nature specified
in Section 3.01 of this Lease on the Premises in an efficient and diligent manner and keep the
Premises open for the conduct of business continuously and without interruption for at least six
hours each day of the year except one day each week and legal holidays. This provision shall not
apply if the Premises shall be closed and the business of TENANT is temporarily shut down for
a period not to exceed fourteen (14) calendar days in any calendar year to make necessary
repairs, maintenance or other construction deemed necessary by TENANT. This provision shall
not apply if the Premises shall be closed and the business of TENANT is temporarily shut down
as authorized or required by the CITY Manager or on account of strikes, walkouts, or causes
beyond the control of TENANT or for not more than three (3) days out of respect to the memory
of an officer, employee, or close relative of any officer or employee of TENANT.
(2) TENANT shall operate TENANT'S business on the Premises with due diligence and
efficiency and in like manner as comparable businesses operated in the CITY or the coastal area
A San Luis Obispo County, so as to produce the maximum amount of Gross Sales and gross
receipts from services which may be produced from TENANT'S business; and TENANT at all
times shall carry on Premises, a stock or merchandise of such size, character, and quality as is
reasonable, designed to produce the maximum return to TENANT, when the sale of merchandise
is a permitted use under this Lease.
Section 3.04 Competition.
During the term of this Lease, TENANT shall not directly nor indirectly acquire or
establish any similar or competing business within a radius of five (5) miles from the location of
the Premises; provided, however, that TENANT may, with prior written approval from CITY,
own or operate more than one business, whether or not competing and similar along the
Embarcadero upon CITY lease sites. The purpose of this section is to prevent and prohibit
TENANT from reducing revenue to CITY by diverting business from the operation at the
Premises to another similar business owned by TENANT within the CITY but not upon a CITY
lease site from which CITY is paid rent based on Gross Sales.
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Section 3.05 Hazardous Materials.
(1) TENANT shall not transport, use, store, maintain, generate, dispose, release, treat or
discharge any "Hazardous Material" (as defined below) upon or about the Premises (such
activities being hereafter referred to as "Hazardous Materials Activities"), nor permit TENANT'S
employees, agents, or contractors to engage in Hazardous Materials Activities upon or about the
Premises, except as allowed by applicable law. The term "Hazardous Material" for purposes
hereof shall mean any chemical, substance, material or waste or component thereof which is now
or hereafter listed, defined or regulated as a hazardous or toxic chemical, substance, material or
waste or component thereof by any federal, state or local governing or regulatory body having
jurisdiction, or which would trigger any employee or community "right -to -know" requirements
adopted by any such body. All Hazardous Materials Activities at the Premises shall be
conducted strictly in accordance with all applicable laws and regulations. If TENANT shall
transport any hazardous waste from the Premises, such transportation shall be done only by a
contractor duly licensed to haul hazardous waste and shall use only a duly licensed disposal site
approved by TENANT'S liability insurer.
(2) TENANT shall promptly notify CITY of: (i) any enforcement, cleanup or other
regulatory action taken or threatened by any governmental or regulatory authority with respect to
the presence of any Hazardous Material on the Premises or the migration thereof from or to other
property, (ii) any demands or claims made or threatened by any party against TENANT or the
Premises relating to any loss or injury resulting from any Hazardous Material on or from the
Premises, and (iii) any matters where TENANT is required by applicable law to give a notice to
any governmental or regulatory authority respecting any Hazardous Material on the Premises.
CITY shall have the right (but not the obligation) to inspect the Premises, to take such remedial
action on the Premises, as CITY may deem appropriate, and to join and participate, as a party, in
any legal proceedings or actions affecting the Premises initiated in connection with any
environmental, health or safety law.
(3) If any Hazardous Material is released, discharged or disposed of by TENANT or its
employees, agents or contractors, on or about the Premises in violation of the foregoing
provisions, then TENANT shall immediately notify CITY. CITY may elect either to take such
remedial action as CITY deems appropriate, in which event TENANT shall reimburse CITY for
all costs thereof within ten (10) days after demand, or direct TENANT to perform such
remediation. If CITY directs TENANT to perform the remediation, then TENANT shall
immediately take such remedial action, as CITY shall direct. TENANT shall, properly and in
compliance with applicable laws clean up and remove the Hazardous Material from the Premises
and any other affected property at TENANT'S expense. If CITY directs TENANT to perform
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remediation hereunder and if TENANT shall fail to comply with the provisions of this
Section within five (5) days after written notice by CITY, or such shorter time as may be
required by applicable law or in order to minimize any hazard to persons or property, then CITY
may (but shall not be obligated to) arrange for such compliance directly or as TENANT'S agent
through contractors or other parties selected by CITY at TENANT'S expense (without limiting
CITY'S other remedies under this Lease or applicable law).
Section 3.06 Tidelands Trust.
TENANT shall use and occupy the Premises in strict compliance with the Tidelands
Trust purposes under which the Premises or any portion thereof are held by CITY pursuant to the
grants from the State of California as set forth in this Lease.
Section 3.07 Compliance with Law.
TENANT shall, at no cost to CITY, comply with all of the requirements of all local,
municipal, county, state and federal authorities now in force, or which may hereafter be in force,
pertaining to the Premises, and shall faithfully observe in the use of the Premises all local,
municipal and county ordinances and state and federal statutes, rules, regulations and orders now
in force or which may hereafter be in force (collectively, "Legal Requirements") provided that
TENANT shall not be required to comply with any Legal Requirement imposed by the CITY
that would substantially deprive TENANT of a material benefit under this lease unless such
Legal Requirement has been imposed or required by a county, state or federal authority. The
judgment of any court of competent jurisdiction, or the admission of TENANT in any action or
proceeding against TENANT, whether CITY be a party thereto or not, that TENANT has
violated any such Legal Requirement in the use of the Premises shall be conclusive of that fact as
between CITY and TENANT.
Section 3.08 Waste or Nuisance.
TENANT shall not commit or permit the commission by others of any waste on the
Premises; TENANT shall not maintain, commit, or permit the maintenance or commission of
any nuisance as defined by law on the Premises; and TENANT shall not use or permit the use of
the Premises for any unlawful purpose.
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Section 3.09 Use by CITY.
(1) Subject to TENANT s rights hereunder to possession of the Premises, CITY may
grant licenses to, or otherwise authorize, other persons and entities permitting uses of the Morro
Bay Harbor.
(2) CITY also retains and reserves for itself, its successors and assigns, all oil, gas,
petroleum and other mineral or hydrocarbon substances in and under the lands leased hereby
together with right to prospect and extract all such substances.
Section 4.01 Construction Approval.
(1) TENANT shall not make or permit any other person to make any alterations or
structuraI additions or structural modifications to the Premises or to any structure thereon or
facility appurtenant thereto if the cost thereof shall exceed ten thousand dollars ($10,000),
without the prior written consent of CITY. The consent to be obtained pursuant to this
Section 4.01(1) shall be requested from the Harbor Director, or the City's designee, for CITY. If
the Harbor Director or any future successor to the duties of the City's Harbor Director, or the
City's designee, gives such consent to proceed, then it is understood such consent is given by
CITY only in its capacity as the landlord under this Lease and not as the permit -issuing
authority. TENANT remains obligated to obtain any needed building permits and comply with
all applicable planning processes.
(2) Where required by the Morro Bay Municipal Code, California Coastal Act, Corps of
Engineers or any other state or federal agency having authority over the proposed project, then
all Conditional Use Permits, Concept Plans, Precise Plans, Coastal Development Plans, and any
other required plans or permits shall be applied for and approved prior to any construction,
alteration or repairs.
Section 4.02 Construction Bond.
(1) Prior to the commencement of any construction the cost of which is greater than the
amount of one hundred thousand dollars ($100,000), TENANT shall file with CITY' S City Clerk
a final detailed Civil Engineer's, Registered Architect's or Licensed and Bonded General
Contractor's estimate of the cost of construction and installation of improvements on the
Premises. Said estimate must be submitted to CITY' S City Engineer for approval. TENANT
shall file with the City Clerk a faithful performance bond, in a form and issued by a corporate
surety company satisfactory to CITY, in an amount satisfactory to CITY but not in excess of
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one hundred percent (I OWN) of the final detailed cost estimate, securing the faithful performance
of TENANT or its contractor in the completion of said construction.
(2) TENANT shall also file with the Morro Bay CITY Clerk a labor and materials bond,
in a form and issued by a corporate surety company satisfactory to CITY, in an amount
satisfactory to CITY but not in excess of one hundred percent (100%) of the final detailed cost
estimate, securing the payment of all claims for the performance of labor or services on, or the
furnishing of materials for, the performance of said construction.
(3) In lieu of the above referenced bonds, TENANT may post cash deposits or may make
other mutually satisfactory arrangements to guarantee the completion of construction projects.
In the event the contractor bonds the Project, CITY may be named as additional indemnitee to
comply with these requirements.
Section 4.03 Mechanics' Liens.
At all times during the term of this Lease, TENANT shall keep the Premises and all
buildings, installations and other improvements now or hereafter located on the Premises free
and clear of all liens and claims of liens for labor, services, materials, supplies, or equipment
performed on or furnished to the Premises. TENANT further agrees to at all times, save CITY
free and harmless and indemnify CITY against all claims for labor or materials in connection
with any improvement, repairs, or alterations on the Premises, and the cost of defending against
such claims, including reasonable attorneys' fees. If TENANT fails to pay and discharge or
cause the Premises to be released from such liens or claim of liens within ten (10) days after the
filing of such lien or levy, then TENANT shall, upon written notification, be required to
immediately deposit with CITY a bond conditioned for payment in full of all claims on which
said lien or levy has been filed. Such bond shall be acknowledged by TENANT as principal and
by a company or corporation, licensed by the Insurance Commissioner of the State of California
to transact the business of a fidelity and surety insurance company as surety. The beneficiary of
any security instrument which instrument is on record with CITY, shall have the right to file
such a bond on behalf of TENANT. CITY shall have right to post and keep posted on the
Premises notices of non -responsibility and any other notices that may be provided by law or
which CITY may deem proper for the protection of CITY and Premises from such liens.
TENANT shall give CITY notice at least twenty (20) days prior to commencement of any work
on the Premises to afford CITY the opportunity to post such notices.
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Section 4.04 Ownership of Improvements.
The parties agree CITY has the option and right to require TENANT to remove all
buildings, structures, installations, improvements of any kind or other property belonging to or
placed upon the Premises by TENANT at the termination of this Lease, however occurring,
providing CITY gives notice, in writing, no later than thirty (30) days prior to the termination of
the Lease, of its decision to require that such improvements be removed. The parties agree that
if the CITY exercises its option, then at the termination of this Lease, however occurring,
TENANT shall have sixty (60) days thereafter to remove all buildings, structures, facilities,
installations, improvements and other property belonging to TENANT from the Premises. If
CITY exercises such option and TENANT fails to remove all such improvements and other
property within sixty (60) days after the termination of this Lease, then CITY shall have the right
to have any or all such improvements and other property removed at the expense of TENANT.
If CITY does not exercise its option to remove (or require the removal of) the improvements and
other property, then title to such improvements and other property shall vest in CITY and
TENANT shall not remove same.
Tenant shall not mortgage, securitize or hypothecate the leasehold interest in
whole or any part without the prior written approval of CITY as evidenced by a resolution of the
City Council of CITY.
3ection 6.01 •
At all times during the term of this Lease, TENANT shall, at TENANT'S own cost and
expense, keep and maintain all improvements now or hereafter on the Premises in good order
and repair and in a safe and clean condition. Furthermore, TENANT shall, at TENANT'S own
cost and expense, maintain at all times during the term of this Lease the whole of the Premises in
a clean, sanitary, neat and orderly condition. CITY may, at the sole option of CITY, clean and
Hear the Premises, at TENANT'S cost and expense, in the event TENANT fails to clean and
Hear the Premises in accordance with this Section to the satisfaction of CITY after 15-days'
written notice to TENANT from CITY of CITY'S intent to exercise this option.
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Section 6.02 Seawalls and Revetment.
At all times during the term of this Lease, TENANT shall at TENANT'S own cost and
expense repair, maintain, replace and rebuild as necessary, the improvements, pngs, bulkheads,
seawalls, revetment, piers, posts and any structures or other improvements located in the water
portion of the Premises. Further, TENANT shall at TENANT'S own cost and expense conduct
maintenance surveys at reasonable intervals to locate and determine needed repairs.
Section 6.03 Legal Requirements.
At all times during the term of this Lease, TENANT, at no cost to CITY, shall:
(1) Make all alterations, additions, or repairs to the Premises or the
improvements or facilities on the Premises required by any Legal Requirements (as defined in
Section 3.07 above) now or hereafter made or issued;
(2) Observe and comply with all Legal Requirements now or hereafter made
or issued respecting the Premises or the improvements or facilities located thereon;
(3) Obtain all required permits pursuant to the Morro Bay Municipal Code or
State law prior to the initiation of any repair or maintenance activity; and
(4) Indemnify and hold CITY and the property of CITY, including the
Premises, free and harmless from any and all liability, loss, damages, fines, penalties, claims and
actions resulting from TENANT'S failure to comply with and perform the requirements of this
section.
Section 6.04 Failure to Repair.
In the event failure to repair results in a hazardous or unsafe condition, CITY shall have
the right and option but not the obligation to close and prohibit access to the unsafe portion of the
Premises until such repairs are completed and accomplished and the Premises rendered safe for
public use. In addition, if TENANT fails to repair any hazardous or unsafe condition within ten
(10) days after written notice thereof from CITY, CITY shall have the right, but not the
obligation, to perform such repair at TENANT'S expense. TENANT shall reimburse CITY for
any such repair undertaken by CITY, promptly upon CI demand, as additional Rent.
Failure by CITY to enforce any of the provisions of this Article shall not constitute a waiver of
these provisions and CITY may at any time enforce all of the provisions of this Article, requiring
all necessary repairs, rebuilding or replacement.
Section 6.05 Inspection by CITY.
CITY or CITY'S agents, representatives, or employees may enter the Premises at all
reasonable times for the purpose of inspecting the Premises to determine whether TENANT is
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complying with the terms of this Lease and for the purpose of doing other lawful acts that may
be necessary to protect CITY'S interest in the Premises under this Lease or to perform CITY'S
duties under this Lease.
Section 6.06 TENANT'S Duty to Restore Premises.
(1) Except as provided in Section 6.07 below, if at any time during this Lease, any
improvements now or hereafter on the Premises are destroyed in whole or in part by the
elements, or any other cause not the fault of TENANT or CITY, this Lease shall continue in full
Force and effect and TENANT, at TENANT'S own cost and expense, shall repair and restore the
damaged or destroyed improvement(s) according to the original plan thereof or according to such
modified plans therefore as shall be approved in writing by CITY. The work of permitting,
repair and restoration shall be commenced by TENANT within one hundred eighty (180) days
after the damage or destruction occurs shall be pursued with due diligence and shall be
completed not later than one year after the work is commenced, unless the parties hereto
mutually agree, in writing, to an extension. In all other respects, the work of repair and
restoration shall be done in accordance with the requirements for construction work on the
Premises set forth in Article 4 of this Lease. Any failure by TENANT either to commence or to
complete repair and restoration as required by this Section 6.06 shall be a material default under
this Lease.
(2) Any and all insurance proceeds that become payable at any time during the term of
this Lease because of damage to or destruction of any improvements on the Premises shall be
paid to TENANT and applied by TENANT toward the cost of repairing and restoring the
damaged or destroyed improvements in the manner required by this Section 6.06, or, if this
Lease is terminated, then applied as provided in Section 6.07. Except as set forth in Section 6.08
below, TENANT'S obligation to restore pursuant to this Section shall exist whether or not funds
are available from insurance proceeds.
Section 6.07 Termination of Lease for Destruction.
(1) Notwithstanding the provisions of Section 6.06 of this Lease, TENANT shall have the
option of terminating this Lease as provided in this Section 6.07 if.
(a) During the last fifteen (15) years of the term of this Lease, any improvements
now or hereafter on the Premises are so damaged or destroyed by the elements or any cause not
the fault of TENANT or CITY they cannot be repaired and restored as required by Section 6.06
of this Lease at a cost not exceeding thirty-five percent (35%) of the cost of replacing all
improvements if they had been totally destroyed at the time of such damage; or
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(b) During the last ten (10) years of the term of this Lease, any improvements
now or hereafter on the Premises are so damaged or destroyed by the elements or any cause not
the fault of TENANT or CITY they cannot be repaired and restored as required by Section 6.06
A this Lease at a cost not exceeding fifteen percent (15%) of the cost of replacing all
improvements if they had been totally destroyed at the time of such damage.
(2) TENANT may exercise its right to terminate pursuant to this Section 6.07 by
providing written notice to CITY within one hundred eighty (180) days following damage or
destruction as described herein. Such termination shall be effective on the last day of the
calendar month following the month in which TENANT provides its notice.
(3) If TENANT fails to commence or complete repair and restoration as required by
Section 6.06, then CITY shall have all rights and remedies with respect to TENANT's default,
including but not limited to termination of this Lease pursuant to Article 11.
(4) If this Lease is terminated as a result of damage or destruction, then any insurance
proceeds received with respect to the improvements shall be applied or distributed in the
Following order:
debris; then
then
(a) first, to the demolition of the improvements and removal of all demolition
(b) to any accrued and unpaid Rent as of the effective date of the termination;
(c) to each Lender under a Leasehold Encumbrance, in order of lien priority,
an amount not to exceed the amount due under such Leasehold Encumbrance; then
(d) to CITY, an amount equal to the present value, as of the date of
termination, of the total Minimum Rent for the remainder of the Term; then
(e) the remaining proceeds, if any, to TENANT.
Section 6.08 Destruction Due to Risk Not Covered by Insurance.
Notwithstanding anything to the contrary in Section 6.06 of this Lease, TENANT shall
have the right to terminate this Lease at any time if the improvements on the Premises are
damaged or destroyed by a casualty not caused by the fault of TENANT or CITY and for which
TENANT is not required under this Lease to carry insurance and the cost to repair or restore
such improvements exceeds fifty percent (50%) of the fair market value of all the improvements
on the Premises immediately prior to the damage or destruction.
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Section 7.01 Indemnity Agreement.
(1) TENANT shall indemnify and hold harmless CITY, and the property %J CITY
(including the Premises and any improvements now or hereafter on the Premises), and the
CITY'S officers, officials, employees and volunteers from any and all liability, claims, loss,
damages, and expenses, including attorney fees and litigation expenses, resulting from
TENANT'S occupation and use of the Premises or any negligent act or omission of the TENANT
or any of its subtenants, employees, contractors or anyone for whom TENANT may be liable,
specifically including, without limitation, any liability, claim, loss, damage, or expense arising
by reason of.
(a) The death or injury of any person, including TENANT or any person who is
an employee or agent of TENANT, or by reason of the damage to or destruction of any property,
including property owned by TENANT or by any person who is an employee or agent of
TENANT, from any cause whatever while such person or property is in or on the Premises or in
any way connected with the Premises or with any of the improvements or personal property on
the Premises;
(b) The death or injury of any person, including TENANT or any person who is
an employee or agent of TENANT, or by reason of the damage to or destruction of any property,
including property owned by TENANT or any person who is an employee or agent of TENANT,
caused or allegedly caused by either (i) the condition of the Premises or any improvement
placed on the Premises by TENANT, or (ii) any act or omission on the Premises by TENANT or
any person in, on, or about the Premises with or without the permission and consent of
TENANT;
(c) Any work performed on the Premises or materials furnished to the Premises at
the instance or request of TENANT or any person or entity acting for or on behalf of TENANT;
(d) TENANT'S failure to perform any provision of this Lease or to comply with
any Legal Requirement imposed on TENANT or the Premises.
(2) TENANT'S obligations pursuant to this Section to indemnify and hold harmless do
not extend to any liability, claim, loss, damage or expense arising from CITY'S active negligence
or willful misconduct.
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Section 1 02 Liability insurance.
During the term of this Lease, TENANT shall maintain at its cost Commercial General
Liability insurance with coverages at least as broad as ISO Forms labeled "City of Morro Bay
Insurance requirements for Lessees", Certificate of Insurance — City of Morro Bay", and
"Additional Insureds —Managers or Lessors of Premises" attached hereto as Exhibit B and made
a part hereof as may be updated or changed from time to time at the sole discretion of the CITY,
insuring against claims for bodily injury (including death), property damage, contractual liability,
personal injury and advertising injury occurring on the Premises or from operations located in
any part of the Premises. Such insurance shall afford protection in amounts no less than One
Million Dollars ($1,000,000) per occurrence for bodily injury, personal injury and property
damage, provided that if insurance with a general aggregate limit is used, either the general
aggregate limit shall apply separately to the Premises or the general aggregate limit shall be
twice the occurrence limit stated in this Section. All liability insurance carried by TENANT
hereunder shall name CITY, its officers, officials, employees and volunteers as additional
insureds, and shall be primary insurance with respect to such additional insureds. TENANT
shall include all its subtenants as insureds under TENANT's liability policies or shall furnish
separate certificates and endorsements for each subtenant. All coverages for subtenants shall
comply with all requirements of this Article Seven.
Section 7.03 Worker's Compensation.
TENANT shall maintain at TENANT'S own expense and keep in full force and effect
during the term of this Lease, Worker's Compensation Insurance as provided by law. Said
insurance shall contain a waiver of subrogation rights against CITY. TENANT shall also
maintain employer's liability insurance with minimum coverage of $1,000,000 per accident for
bodily injury or disease.
Section 7.04 Property Insurance.
TENANT shall, at its cost, at all times during the term of this Lease keep all
improvements and other structures on the Premises, as well as any and all additions,
improvements and betterments thereto, insured for one hundred percent (100%) of their full
replacement cost with no co-insurance provision against loss or destruction by the perils covered
by "all risk" (excluding earthquake) property damage insurance policies. Any loss payable under
such insurance shall be payable to TENANT, CITY, and any Lender under a Leasehold
Encumbrance pursuant to Article 5 of this Lease, as their interests may appear, and such proceeds
shall be used and applied in the manner required by Article 6 of this Lease.
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Section 7.05 Additional Coverage.
TENANT shall also maintain, at its expense, the insurance described in this Section 7.05.
(1) If TENANT has (or is required by any Legal Requirement to have) a liquor license
and is selling or distributing alcoholic beverages on the Premises, then TENANT shall maintain
liquor liability coverage in appropriate amounts. TENANT shall require any subtenant who has
or is required by any Legal Requirement to have) a liquor license and who is selling or
distributing alcoholic beverages on the Premises, to maintain such coverage.
(2) TENANT shall maintain "all risk" (excluding earthquake) property damage insurance
covering TENANT's personal property located at the Premises, in amounts not less than the full
replacement value of such personal property. CITY shall have no interest in the proceeds of
such insurance.
(3) TENANT shall, at TENANT'S own expense, obtain and maintain any additional
insurance coverages that CITY may reasonably require. As illustration only and not as a
limitation, in appropriate circumstances such additional insurance may include increased general
liability limits, business interruption coverage, business automobile liability, boiler and
machinery insurance and/or builder's risk insurance. However, TENANT shall not be required to
maintain additional coverages that are in excess of those typically maintained by similarly
situated tenants in the Morro Bay area.
Section 7.06 General Requirements.
Except as specifically provided to the contrary, all the insurance required pursuant to this
Article 7 shall be subject to the requirements of this Section 7.06.
(1) Maintenance of proper insurance coverage is a material element of this Lease and
failure to maintain or renew coverage or to provide evidence of coverage and/or renewal may be
treated by the CITY as a material breach of contract. TENANT shall forward the CITY
specifications and forms to TENANT'S insurance agent for compliance.
(2) CITY may at any time require TENANT to increase the minimum coverage limits for
insurance required by this Lease, but every such increase shall be reasonable under the
circumstances.
(3) All policies shall be issued by insurance companies authorized to issue such insurance
in California, with an A.M. Best's rating of no less than A:VII.
(4) Any deductibles or self -insured retentions must be declared to and approved by
CITY. At the option of CITY, either: the insurer shall reduce or eliminate such deductibles or
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self -insured retentions as respects CITY, its officers, officials, employees and volunteers; or the
TENANT shall provide a financial guarantee satisfactory to CITY guaranteeing payment of
losses and related investigations, claim administration and defense expenses.
(5) Each insurance policy required by this Lease shall be endorsed to state that coverage
shall not be cancelled or reduced, except after thirty-30-days' prior written notice by certified
mail, return receipt requested, has been given to CITY.
(6) TENANT shall furnish CITY with certificates and amendatory endorsements
effecting the coverage required by this Lease. The endorsements shall be on forms provided by
CITY or on other than CITY's forms, provided those endorsements or policies conform to the
requirements. All certificates and endorsements are to be received and approved by CITY before
use of the Premises, and promptly following any renewal or replacement. CITY reserves the
right at any time to require complete, certified copies of all required insurance policies, including
endorsements effecting the coverage required by these specifications.
(7) TENANT's insurance coverage shall be primary insurance as respects CITY, its
officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by
CITY, its officers, officials, employees, or volunteers shall be excess of TENANT's insurance
and shall not contribute with it.
Section 7.07 No Subrogation.
TENANT agrees that in the event of loss due to any of the perils for which it has agreed
to provide insurance, TENANT shall look solely to its insurance for recovery. TENANT hereby
grants to the CITY, on behalf of any insurer providing insurance to either TENANT or CITY
with respect to TENANT'S occupancy of the Premises, a waiver of any rights to subrogation
which any such insurer of said TENANT may acquire against the CITY by virtue of the payment
of any loss under such insurance. Each insurance policy required under this Lease including
those insuring TENANT against claims, expense, or liability for injury to persons or property
shall provide that the insurer shall not acquire by subrogation any right to recovery which
TENANT has expressly waived in writing prior to the occurrence of the loss.
Section 7.08 TENANT'S 1/Vaiver.
TENANT hereby waives any right of recovery against CITY for each claim, expense,
liability, or business interruption, or other loss, except where caused by CITY'S active
negligence or willful misconduct. TENANT agrees that to the extent that TENANT fails to
acquire insurance, TENANT shall not have any claim against CITY for any loss that results from
a risk or peril that would have been included in such insurance.
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Section 7.09 insurance ]VOL a Limit.
The insurance requirements of this Article Seven are independent of, and do not limit or
modify, TENANT'S indemnification and other obligations pursuant to this Lease.
Section 8.01 TENANT to Pav Taxes.
TENANT shall pay, before delinquency, all taxes and assessments levied upon or
assessed to TENANT on the Premises by reason of this Lease or of any equipment, appliances,
improvement, or other development of any nature whatsoever, erected, installed, or maintained
by TENANT or by reason of the business or other activity of TENANT upon or in connection
with the Premises. TENANT shall pay all possessory interest taxes applicable to the Premises.
Section 8.02 TENANT to Pav License and Permit Fees.
TENANT shall pay any fees imposed by law for licenses or permits for any business or
activities including construction by TENANT upon the Premises.
Section 8.03 Utilities.
TENANT shall pay, or cause to be paid, and hold CITY and the property of CITY,
including the Premises, free and harmless from all charges for the furnishing of gas, water,
electricity, telephone service, and for other public utilities to the Premises during the term of this
Lease and for the removal of garbage and rubbish from the Premises during the term of this
Lease.
Section 9.01 Total Condemnation.
If title and possession to all of the Premises is permanently taken for any public or quasi -
public use under any statute, or by the right of eminent domain, then this Lease shall terminate
on the date that possession of the Premises is taken, and both CITY and TENANT shall
thereafter be released from all obligations, including Rent, all of which shall be prorated to the
date of termination, except those specified in Section 9.02 of this Lease.
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Section 9.02 Condemnation Award.
Any compensation or damages awarded or payable because of the permanent taking of all
or any portion of the Premises by eminent domain shall be allocated between CITY and
TENANT as follows:
(1) All compensation or damages awarded or payable for the taking by eminent domain
A any land that is part of the Premises shall be paid to and be the sole property of CITY free and
clear of any claim of TENANT or any person claiming rights to the Premises through or under
TENANT.
(2) All compensation or damages awarded or payable which is specifically attributed by
the taking party to the "good will" of TENANT'S business shall be paid to and be the sole
property of TENANT.
(3) All compensation or damages awarded or payable because of any improvements
constructed or located on the portion of the Premises taken by eminent domain where only a
portion of the Premises is taken by eminent domain, and TENANT is not entitled to or does not
terminate this Lease, shall be applied in the manner specified in Section 9.04 toward the
replacement of such improvements with equivalent new improvements on the remaining portions
of the Premises.
(4) All compensation or damages awarded or payable because of any improvements
constructed or located on the portion of the Premises taken by eminent domain where this Lease
is terminated because of the taking by eminent domain, whether all or only a portion of the
Premises is taken by eminent domain, shall be allocated between CITY and TENANT as
follows:
(a) That percentage of the compensation or damages awarded or payable because
of the improvements that equals the percentage of the full term of this Lease that has, at the time
A the taking, not expired shall belong to and be the sole property of TENANT.
(b) That percentage of the compensation or damages awarded or payable because
of the improvements that equals the percentage of the full term of this Lease that has, at the time
of the taking, expired shall belong to and be the sole property of CITY.
(c) The term "time of taking" as used in this Section shall mean 12:01 a.m. of the
date that the agency or entity exercising the eminent domain power, takes, title, or the date that it
takes physical possession of the portion of the Premises, whichever shall first occur.
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(5) Any severance damages awarded or payable because only a portion of the Premises is
taken by eminent domain shall be the sole and separate property of CITY.
Section 9.03 Termination for Partial Taking.
If, during the term of this Lease, title and possession of only a portion of the Premises is
taken for any public or quasi -public use under any statute, or by right of eminent domain, then
TENANT may, at TENANT'S option, terminate this Lease by serving written notice of
termination on CITY within ninety (90) days after TENANT has been deprived of actual
physical possession of the portion of the Premises taken for such public use. This Lease shall
terminate on the first day of the calendar month following the calendar month in which the notice
of termination described in this section is served on CITY. On termination of this Lease
pursuant to this Article, all subleases and subtenancies in or on the Premises or any portion of the
Premises created by TENANT under this Lease shall also terminate and the Premises shall be
delivered to CITY free and clear of all such subleases and subtenancies; provided, however, that
CITY may, at CITY'S option, by mailing written notice to a subtenant allow any subtenant to
attorn to CITY and continue such subtenant's occupancy on the Premises as a TENANT of
CITY. On termination of this Lease pursuant to this section, however, both CITY and TENANT
shall be released from all obligations under this Lease, except those specified in Section 9.02 of
this Lease.
Section 9.04 Rent Abatement for Partial Taking.
If, during the term of this Lease, title and possession of only a portion of the Premises is
taken under the power of eminent domain by any public or quasi -public agency or entity and
TENANT does not terminate this Lease, then this Lease shall terminate as to the portion of the
Premises taken under eminent domain on the date actual physical possession of the portion taken
by eminent domain is taken by the agency or entity exercising the eminent domain power.
Furthermore, the Rent payable under this Lease shall, as of that time be reduced in the same
proportion of the Premises taken by eminent domain bears to the full value of the Premises at
that time; provided however, that TENANT shall make a good faith effort to replace any
improvements or facilities with equivalent new facilities on the remaining portion of the
Premises and do all other acts at TENANT'S own cost and expense required by the eminent
domain taking to make the remaining portion of the Premises fit for the use specified in this
Lease.
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Section 9.05 Conveyance in Lieu of Eminent Domain.
A voluntary conveyance by CITY, with the consent of TENANT, of title to all or a
portion of the Premises to a public or quasi -public agency or entity in lieu of and under threat by
such agency or entity to take the same by eminent domain proceedings shall be considered a
taking of title to all or such portion of the Premises under the power of eminent domain subject
to the provisions of this Article.
Section 9.06 Temporary Taking.
If the possession of the Premises or any portion thereof is taken under the power of
eminent domain by any public or quasi -public agency or entity for a limited period not extending
beyond the term of this Lease, then this Lease shall not terminate (except as provided in this
Section 9.06) and TENANT shall continue to perform all its obligations hereunder, except only
to the extent that TENANT is prevented from performing such obligations by reason of such
taking. TENANT shall be entitled to receive the entire amount of compensation or damages
awarded because of such temporary taking. If a temporary taking extends for more than
thirty-six (36) months, then TENANT shall have the right to terminate this Lease, and TENANT
shall be entitled to receive, out of the compensation or damages awarded because of such
temporary taking, the amount that is attributable to the period of time up until the effective date
of TENANT'S termination of this Lease.
Section 10.01 No Assignment Without CITY'S Consent.
Except as provided in this Article 10, TENANT shall not assign or otherwise transfer this
Lease, any right or interest in this Lease, or any right or interest in the Premises or any of the
improvements that may now or hereafter be constructed or installed on the Premises without the
express written consent of CITY evidenced by resolution first had and obtained. Any
assignment or transfer by TENANT without the prior written consent of CITY, whether it be
voluntary or involuntary, by operation of law or otherwise, is void and shall, at the option of
CITY, terminate this Lease. A consent by CITY to one assignment shall not be deemed to be a
consent to any subsequent assignment of this Lease by TENANT. CITY shall not unreasonably
nor arbitrarily withhold its approval to the assignment or transfer of this Lease to an assignee
who is financially reliable and qualified to conduct the business for which this Lease was
granted. It is mutually agreed that the TENANT'S qualifications are a part of the consideration
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for granting of this Lease and said party does hereby agree to maintain active control and
supervision of the operation conducted on the Premises.
Section 10.02 Change of Ownership as Assignment.
For purposes of this Article 10, the following transactions will be deemed to be
assignments or transfers:
(1) If TENANT is a partnership or limited liability company:
(a) A change in ownership effected voluntarily, involuntarily, or by operation of
law, within atwelve-month (12-month) period, of twenty-five percent (25%) or more of the
partners or members or twenty-five percent (25%) or more of the partnership or membership
interests; or
(b) The dissolution of the partnership or limited liability company without its
immediate reconstitution.
(2) If TENANT is a corporation whose stock is not publicly held and not traded through
an exchange or over the counter:
(a) The sale or other transfer, within atwelve-month (12-month) period, of more
than an aggregate of twenty-five percent (25%) of the voting shares of TENANT (other than to
immediate family members by reason of gift or death); or
(b) The dissolution, merger, consolidation, or other reorganization of TENANT.
Section 10.03 Application for Assignment.
A condition of an assignment shall be TENANT shall file with the CITY an application
to assign the leasehold prepared by the prospective assignee. Concurrently with filing the
application, TENANT shall pay a reasonable fee associated with the cost pf processing said
application, in cash or certified or cashier's check to enable CITY adequately to investigate the
proposed assignee's qualifications as a permitted assignee. CITY shall not be required to account
for the use of the sum paid. If the proposed assignee's net worth on the date of assignment is not
sufficient to reasonably guarantee successful operation of the Premises in compliance with all
applicable CITY, County, State and federal requirements, then CITY may withhold approval of
the assignment or condition it upon TENANT'S guarantee of such assignee's obligations
hereunder for such period as CITY deems advisable. Net worth shall mean the amount by which
the total of all assets shall exceed the total of all liabilities as determined in accordance with
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general accepted accounting principles as approved by CITY'S auditor, or other authorized
representative or agent.
Section 10.04 Probate Transfer of Assignment.
If TENANT is an individual, then nothing herein contained will prevent the transfer of
this Lease by will, or by operation of law under the intestacy provisions of the California Probate
Code as it may be amended from time to time. Probate sale of the leasehold interest will not be
permitted without the consent of CITY, evidenced by resolution, first had and obtained.
Section 10.05 No Sublease Without CITY'S Consent.
TENANT shall not sublease the whole nor any part of the Premises, or license, permit, or
otherwise allow any other person (the employees of TENANT excepted) to occupy or use the
Premises, or any portion thereof, without the prior written consent of CITY's Harbor Director, or
any future successor to the duties of the City's Harbor Director. A consent to one subletting,
occupation, licensing or use shall not be deemed to be a consent to any subsequent subletting,
occupation, licensing or use by another person. Any sublease or license without CITY'S
written consent shall be void, and shall at CITY'S option, terminate this Lease. CITY shall not
unreasonably nor arbitrarily withhold its consent to sublet to one who is qualified and financially
reliable. CITY'S consent to any occupation, use, or licensing shall be in CITY'S sole and
absolute discretion. Notwithstanding any provisions herein to the contrary, the terms
"assignment," "subletting," "occupation," or "use," shall not be construed or interpreted to mean
or include the temporary, short term renting or leasing of boat slips, motel, hotel, or apartment
accommodations on the Premises.
Section 10.06 Subtenant Subiect to Lease Terms.
Any and all subleases shall be expressly made subject to all the terms, covenants, and
conditions of this Lease. In no event shall the term of any sublease extend beyond the term of
this Lease. Subject to Section 10.09, termination of this Lease prior to the expiration of this
Lease term shall also terminate any and all subleases. A breach of the terms of this Lease by a
subtenant shall constitute a breach on the part of TENANT and shall subject both the subtenant
and TENANT to all the remedies provided to CITY herein and by law. Failure by any subtenant
to report Gross Sales or to pay Percentage Rent due from subtenant shall constitute a breach of
this lease. TENANT hereby agrees to and does guarantee payment of such Percentage Rent due
by a subtenant under the terms of this lease.
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Section 10.07 Consent Form Agreement.
Prior to any consent by CITY to any sublease hereof, TENANT shall cause to be
executed between TENANT and any subtenant an agreement making the CITY a third party
beneficiary, in a form acceptable to CITY, whereby the subtenant agrees to be bound by all of
the terms, covenants and conditions of this Lease. Further, it is agreed by TENANT that any
default by the subtenant of any of the terms, covenants and conditions of this Lease shall be
deemed to be violations by TENANT of this Lease and that all remedies of CITY for such
violation, including termination of this Lease, shall immediately be enforceable by CITY against
TENANT. TENANT shall apply any and all monies received from any subtenant first to the
payment of obligations of the subtenant to CITY.
Section 10.08 TENANT and Guarantor Remain Liable.
Prior to approval by CITY to any sublease hereof, TENANT shall agree to be primarily
and jointly and severally liable to CITY for all obligations due CITY by any subtenant, including
the payment of rents, and TENANT shall agree that CITY may proceed directly against
TENANT for any obligation owing CITY by the subtenant. If this Lease is guaranteed, neither
the sublease nor CITY'S approval thereof shall release the guarantor from its obligations
pursuant to the guaranty.
Section 10.09 Nondisturbance.
On the terms set forth below, CITY may enter into agreements with subtenants; provided,
that in the event of any termination of this Lease prior to the expiration date, CITY will not
terminate or otherwise disturb the rights of the subtenant under such sublease, but will instead
honor such sublease as if such agreement had been entered into directly between Landlord and
such subtenant, conditioned upon such subtenant's agreement to attorn to Landlord and full
performance of all obligations under the sublease in question ("Non -Disturbance Agreement").
CITY agrees to execute a Non -Disturbance Agreement in connection with a particular sublease
provided that Tenant provides CITY with a copy of the sublease, and the Non -Disturbance
Agreement is customary in form and substance and otherwise reasonably acceptable to CITY.
Section 11.01 Abandonment by TENANT
If TENANT breaches this Lease and abandons all or any part of the Premises prior to the
scheduled expiration of the term of this Lease, then CITY may continue this Lease in effect by
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not terminating TENANT'S right to possession of the Premises, in which event CITY shall be
entitled to enforce all CITY'S rights and remedies under this Lease including the right to recover
the Rent specified in this Lease as it becomes due under this Lease.
Section 11.02 Termination for Breach by TENANT.
All covenants and agreements contained in this Lease are declared to be conditions to this
Lease and to the term hereby demised to TENANT. If TENANT fails to perform any covenant,
condition, or agreement contained in this Lease, except for payment of any Rent or other
monetary amount due, and such failure is not cured within thirty (30) days after written notice
thereof is served on TENANT, then CITY may terminate this Lease immediately, and in the
event of such termination, TENANT shall have no further rights hereunder and TENANT shall
thereupon forthwith remove from the Premises and shall have no further right or claim thereto
and CITY shall immediately thereupon have the right to re-enter and take possession of the
Premises, subject only to appropriate legal process.
Section 11.03 Termination for Failure to PaV Rent.
If any payment of Rent is not made as herein provided and such failure to pay is not
cured within three (3) days after written notice thereof is served on the TENANT, then CITY
shall have the option to immediately terminate this Lease; and in the event of such termination,
TENANT shall have no further right or claim thereto and CITY shall immediately thereupon
have the right to re-enter and take possession of the Premises, subject only to appropriate legal
process.
Section 11.04 Lender May Cure Default.
CITY shall afford the Lender under any Leasehold Encumbrance of record with CITY the
right to cure any default by TENANT of the covenants, conditions, or agreements hereof, as
provided in Article 5 of this Lease.
Section 11.05 Attorneys' Fees.
In the event the CITY finds it necessary to retain an attorney in connection with the
default by the TENANT or enforcement of any of the terms, conditions, and covenants of this
Lease, even though litigation is not instituted, TENANT shall pay to CITY its reasonable
attorneys' fees. Non-payment of reasonable attorneys' fees by TENANT within three (3) days
after written notice is served on TENANT shall give rise to an independent legal action by CITY
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to collect same. If CITY is successful in such legal action, then CITY shall also be entitled to
reasonable attorney's fees and costs for the collection action.
Section 11.06 Damages for Breach.
If TENANT defaults in the performance of any covenant, condition or agreement
contained in this Lease and the default be incurable or not be cured within the time period set
forth hereinabove, then CITY may terminate this Lease and:
(1) Bring an action to recover from TENANT:
(a) The worth at the time of award of the unpaid rent which had been earned at
the time of termination of the Lease;
(b) The worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination of the Lease until the time of award exceeds the
amount of rental loss that TENANT proves could have been reasonably avoided;
(c) The worth at the time of award of the amount by which the unpaid rent for the
balance of the term after the time of award exceeds the amount of rental loss that TENANT
proves could be reasonably avoided; and
(d) Any other amount necessary to compensate CITY for all detriment
proximately caused by TENANT'S failure to perform its obligations under this Lease; and
(2) Bring an action, in addition to or in lieu of the action described in subparagraph (1) of
this Section, to re-enter and regain possession of the Premises in the manner provided by the
laws of unlawful detainer of the State of California then in effect.
Section 11.07 Cumulative Remedies.
The remedies available to CITY in this Article shall not be exclusive but shall be
cumulative with and in addition to all remedies now or hereafter allowed by law or elsewhere
provided in this Lease.
Section 11.08 Waiver of Breach.
The waiver by CITY of any breach by TENANT of any of the provisions of this Lease
shall not constitute a continuing waiver or a waiver of any subsequent breach by TENANT either
of the same or a different provision of this Lease.
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Section 11.09 Surrender of Premises.
On expiration or sooner termination of this Lease, TENANT shall surrender the Premises,
and, subject to Section 4.04, all improvements in or on the Premises, and all facilities in any way
appertaining to the Premises, to CITY in good, safe, and clean condition, reasonable wear and
tear excepted.
1
Section 12.01 Notices.
Any and all notice or demands by or from CITY to TENANT, or TENANT to CITY,
shall be in writing. They shall be served either personally, or by registered or certified mail.
Any notice or demand to CITY may be given to:
with a copy to:
Harbor Director
City of Morro Bay
1275 Embarcadero
Morro Bay, California 93442
City Manager
City of Morro Bay
595 Harbor Street
Morro Bay, CA 93442
Any notice or demand to TENANT may be given at:
The Flying Dutchman Enterprises
Attn: Stan Van Beurden
PO Box 1027
Morro Bay, CA 93443
Such addresses may be changed by written notice by either party to the other party.
Section 12.02 Governing Law and Jurisdiction.
This Lease, and all matters relating to this Lease, shall be governed by the laws of the
State of California in force at the time any need for interpretation of this Lease or any decision
concerning this Lease arises. CITY and TENANT consent to exclusive personal and subject
matter jurisdiction in the Superior Court of the State of California in and for the county where
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the Premises are located, and each party waives any claim that such court is not a convenient
forum. Each party hereby specifically waives the provisions of California Code of Civil
Procedure Section 394, and any successor statute thereto.
Section 12.03 Binding on Successors.
Subject to the provisions herein relating to assignment and subletting each and all of the
terms, conditions, and agreements herein contained shall be binding upon and inure to the benefit
of the successors and assigns of any and all of the parties hereto; and all of the parties hereto
shall be jointly and severally liable hereunder.
Section 12.04 Partial Invalidity.
If any provision of this Lease is held by a court of competent jurisdiction to be either
invalid, void, or unenforceable, then the remaining provisions of this Lease shall remain in full
Force and effect unimpaired by the holding.
Section 12.05 Sole and Only Agreement.
Subject to the provisions of the second paragraph of Section 1.04, (i) this Lease,
including all exhibits incorporated by reference, constitutes the sole and only agreement between
CITY and TENANT respecting the Premises and the leasing of the Premises to TENANT and
(ii) any other agreements or representations respecting the Premises and their leasing to
TENANT by CITY, which are not expressly set forth in this Lease, are null and void. The terms
and conditions herein specified correctly set forth the obligations of CITY and TENANT as of
the date of this Lease. No modification, amendment, or alteration of this Lease shall be valid
unless it is in writing and signed by both parties.
Section 12.06 Modification.
This Lease shall not be modified except pursuant to a written agreement executed by the
MAYOR and CITY CLERK pursuant to prior City Council approval. Notwithstanding City
Council approval, no agreement shall become effective until such agreement is in fact executed
by the MAYOR and CITY CLERK. TENANT understands this Lease may not be modified by
oral statements by any person representing the CITY including the MAYOR and CITY CLERK.
TENANT specifically agrees not to rely on oral statements, purported oral waivers, or purported
oral modifications and agrees not to rely upon purported written modifications unless they meet
the requirements of this paragraph and are approved in writing pursuant to formal City Council
action and a subsequent written modification signed by the MAYOR and CITY CLERK. If the
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title of any person authorized to act for CITY under this Lease shall be changed during the term
of this Lease, then the person who succeeds to substantially the same responsibilities with
respect to CITY shall have the authority to act for CITY under this Lease.
Section 12.07 Time of Essence.
Time is expressly declared to be the essence of this Lease.
Section 12.08 Memorandum of Lease for Recording.
CITY and TENANT shall, at the request of either at any time during the term of this
Lease, execute a memorandum or "short form" of this Lease, which shall describe the parties, set
forth a description of the Premises, specify the term of this Lease, and incorporate this Lease by
reference.
The following provisions apply to this Lease site only:
Section 13.01 TENANT'S Obligation to Redevelop Site
CITY and TENANT agree TENANT will construct improvements to the Premises as
outlined in Conditional Use Permit No. UP0448 (CUP) consisting of conversion of the existing
rear interior storage area to accommodate dining room and counter/employee expansion, addition
of an enclosure area on the north side of the building to accommodate the trash dumpsters
needed for the Premises, public access improvements along the northwest and west side of the
building, including better connectivity to the adjacent Anchor Memorial Park and Premises to the
south, replacement of the existing wood Harborwalk decking with fiberglass grating and
necessary structural piling and revetment repairs (Project) and coupled with TENANT'S initial
site redevelopment completed since 2009, collectively valued at a minimum of $637,000 of hard
construction costs. Failure to complete the Project and to comply with all conditions of the CUP,
as evidenced by a final building permit inspection as required by CITY in its governmental
capacity, in addition to providing proof of expenses as evidenced by copies of invoices by the
proscribed timeline shall be a material default of this Lease and subject to any remedies outlined
in Article 11 herein, including termination of the Lease.
TENANT acknowledges construction of the Project on the Premises as outlined in the
CUP requires, but may not be limited to, obtaining a permit from the California Coastal
Commission, a City Precise Plan, and a City Building Permit. It is TENANT'S obligation to
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fully investigate the issues and costs in obtaining those approvals. Failure to obtain any and all
required permits and approvals for the Project shall not be a reason for failure to comply with
this section. TENANT further acknowledges the CUP and construction of the Project may
require repair or replacement of all of portions of the docks, existing buildings, revetments,
access ways, sidewalks, drainage systems and other current improvements on the Premises to the
standards of the City Engineer and TENANT agrees to meet those standards through review and
revision of the final Building Plans prior to issuance of a Building Permit for the construction of
improvements on the Premises.
TENANT further agrees to:
A. In addition to complying with the bonding requirements set forth in Section
4.02, provide evidence of conditional or other financing necessary for completion
of the Project, as -approved by the Harbor Director, Finance Director and City
Attorney, no later than June 1, 2019.
B. File a complete application for construction drawings and plans to obtain a
Building Permit for the Project no later than June 1, 2019.
C. Obtain Building Permits for the Project no later than August 31, 2019.
D. Commence construction of the Project no later than October 1, 2019.
Commencement shall mean when the TENANT has incurred at least $50,000 of
hard construction costs for actual work satisfactorily completed for the Project on
the site pursuant to the approved Building Permit.
E. Completion construction of all components of the Project no later than March
31, 2020. Completion shall mean when the Project is entitled to be issued a final
Certificate of Occupancy.
During construction of the Project, TENANT shall take all measures to:
A. Avoid any pollution of the atmosphere or littering of land or water by or
originating in or about the Premises or caused by TENANT' S construction
activities.
B. Keep the noise level on the Premises to a minimum so that persons in the
neighborhood will be able to comfortably enjoy business and facilities in the area.
C. Prevent any pollutants, including but not limited to petroleum products, from
entering Morro Bay waters.
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D. Avoid negative impacts on surrounding businesses.
E. Prohibit storage of materials or equipment on public property and avoid
parking or traffic delays or impairment without prior consent of CITY.
F. Keep the construction site in a slightly, orderly, and $afe manner at all times.
EXECUTED on L a49 , 20�, at Q1 4-1. S %,Ob County, California.
CITY OF MORRO BAY
ATTEST:
Swanson, CITY CLERK
APPROVED AS TO FORM:
Aleshire & Wynder, LLP
W. Pannone, Partner
THE FLYING DUTCHMAN ENTERPRISES,
a California Corporation
Stan Van Beurden, President and Sole
Shareholder
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EXHIBIT A
COPY OF PARCEL MAP
(immediately behind this page)
A-1
595 Harbor L.
Morro Bay, CA 93442
(805)772-6200
FAX (805) 772-7329
AUTO RISKS)
Lessee shall procure and maintain for the duration of the contract insurance against claims for
injuries to persons or damages to property which may arise from or in connection with the
Lessee's operation and use of the leased premises. The cost of such insurance shall be borne by
the Lessee.
Minimum Scope of Insurance
Coverage shall be at least as broad as:
1. Insurance Services Office Commercial General Liability coverage (occurrence
form CG 0001).
2. Workers' Compensation insurance as required by the State of California and
Employer's Liability Insurance (for lessees with employees).
3. Property insurance against all risks of loss to any tenant improvements or
betterments.
Minimum Limits of Insurance
Lessee shall maintain limits no less than:
1. General Liability:
2. Employer's Liability
3. Property Insurance:
$1,000,000 per occurrence for bodily injury,
personal injury and property damage. If
Commercial General Liability Insurance or other
form with a general aggregate limit is used, either
thA general aggregate limit shall apply separately to
this project/location or the general aggregate limit
shall be twice the required occurrence limit.
$1,000,000 per accident for bodily injury or disease.
Full replacement cost with no coinsurance penalty
provision.
City of Morro nay
Insurance Requirements for Lessees
Deductibles and Self -maul c Retentions
Any deductibles or self -insured retentions must be declared to and approved by the City. At the
option of the City, either: the insurer shall reduce or eliminate such deductibles or self -insured
retentions as respects the City, its officers, officials, employees and volunteers; or the Lessee
shall provide a financial guarantee satisfactory to the City guaranteeing payment of losses and
related investigations, claim administration and defense expenses.
®theN Insurance Provisions
The general liability policy is to contain, or be endorsed to contain, the following provisions:
1. The City, its officers, officials, employees, and volunteers are to be covered as
insureds with respect to liability arising out of ownership, maintenance or use of
that part of the premises leased to the Lessee.
2. The Lessee's insurance coverage shall be primary insurance as respects the City,
its officers, officials, employees, and volunteers. Any insurance or self-insurance
maintained by the City, its officers, officials, employees, or volunteers shall be
excess of the Lessee's insurance and shall not contribute with it.
3. Each insurance policy required by this clause shall be endorsed to state that
coverage shall not be canceled, except after 30-days' prior written notice by
certified mail, return receipt requested, has been given to the City.
14cceptability of InsureNs
Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:VII.
Verification of CoveYage
Lessee shall furnish the City with original certificates and amendatory endorsements effecting
coverage required by this clause. The endorsements should be on forms provided by the City or
on other than the City's forms, provided those endorsements or policies conform to the
requirements. All certificates and endorsements are to be received and approved by the City
before use of City premises. The City reserves the right to require complete, certified copies of
all required insurance policies, including endorsements effecting the coverage required by these
specifications at any time.
01181.0024/526018.1
Spec C 6
City of Morro Bay
Insurance Requirements for Lessees
Sub -lessee
Lessee shall include all sub -lessees as insureds under its policies or shall furnish separate
certificates and endorsements for each sub -lessee. All coverages for sub -lessees shall be subject
to all of the requirements stated herein.
Insurance\SpecC
Rev. 8/01
01181.0024/�26018.1
SpecC 7
City of Morro Bay
Insurance Requirements for Lessees
Reproduction of Insurance Services Office, Inc. Form
INSURER: ISO Form CG 20 11 11 85 (Moed)
POLICY NUMBER: Commercial General Liability
ENDORSEMENT NUMBER:
THIS ENDORSEMENT CHANGES THE POLICY, PLEASE READ IT CAREFULLY.
e 1 1 ' 1 ► : ► '1 ►� : ► : !I�'.i.Y17:�w DF.XY/7�.Y17��711► I fy x
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART,
1
1. Designation of Premises (Part Leased to You):
2. Name of Person or Organization (Additional Insured): City of Morro Bay
3, Additional Premium:
(If no entry appears above, the information required to complete this endorsement
will be shown in the Declarations as applicable to this endorsement.)
WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in
the Schedule, but only with respect to liability arising out of the ownership, maintenance or use of that part of the
premises leased to you and shown in the Schedule and subject to the following additional exclusions:
This insurance does not apply to:
1. Any "occurrence" which takes place after you cease to be a tenant in that premises.
2. Structural alterations, new construction or demolition operations perfonned by or on behalf of the person
or organization shown in the schedule.
Modifications to ISO form CG 20 11 11 85:
1. The Insured scheduled above includes the Insured's elected or appointed officers, officials, employees
and volunteers.
2. This insurance shall be primary as respects the Insured shown in the schedule above, or if excess, shall
stand in an unbroken chain of coverage excess of the Named Insured's scheduled underlying primary
coverage. In either event, any other insurance maintained by the Insured scheduled above shall be in
excess of this insurance and shall not be called upon to contribute with it.
3. The insurance afforded by this policy shall not be canceled except after thirty days prior written notice
by certified mail return receipt requested has been given to the City.
Signature -Authorized Representative
Address
CG 20 11 11 85 Insurance Services Office, Inc. Form (Modified)
Insurance�Form#3
Rev. 8/O1
01181.0024/5260181
Spec C 8
ACERTIFICATELIABILITY C DATEIMM/DD/Y
04/19/2018 18
THIS CERTIFICATE IS ISSUED AS A (NATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE -HOLDER. THIS
CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGEAFFORDEDBY THEj POLICIES
BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE.ISSUING, INSORER(S), AUTHORIZED
REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER.LL
IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must hav@ ADDITIONAL INSURED provisions or be `endorsed.
If SUBROGATION IS WAIVED; subject to the terms and conditions of the policy, certain policies may require an endorseroaent:._A.statement on
this certificate does not confer rights to the certificate holder in lieu of such endorsement(s).
-PRODUCER
NAME: CONTACT Ron Calderon 4.
Van Beurden Ins. SerV, Inc. - Los Osos
PO Box 6750 aCNo t (805) 503-4732 aC.No:(805)'5(6-4786
E-MAIL U f I A
ADDRESS: rcaldeY on@vanbeucom
Los Osos CA 93412-6750
INSURER, (S) AFFORDING COVERAGE NAIC #
INSURERA: Nationwid - uttiaf Ins Co 23787
INSURED (805) 466-4588
INSURER B: National Casualty Company 11991
Flying Dutchman Enterprises, Inc
INSURER C :
P. 0. Box 1027 INSURERD:
Morro Bay CA 93443 INSURERE:
COVERAGES
CERTIFICATE NUMBERS Cert ID 30034
T��I�IC*I►��E�l rf:�X:�l
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD
INDICATED, NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS
CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS,
EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
INSR
LTR
OF INSURANCE
ADDLTYPE
INSD
WVD SUER
POLICY NUMBER
MMIDPOLDNYYY
MMIDDY�
LIMITS
A
X
COMMERCIAL GENERAL LIABILITY
EACH OCCURRENCE
$ 11000,000
DAMAGE TO RENTED
CLAIMS -MADE FXI OCCUR
Y
ACP7841520457
04/01/2018
04/01/2019
PREMISES (Ea occurrence)
$ 300,000
_
MED EXP (Any one person)
$ 11000
PERSONAL & ADV INJURY
$ 11000,000
GEN'L AGGREGATE LIMIT APPLIES PER:
..
GENERAL AGGREGATE
$ 2; 000; 000
X POLICY. JECT PRO- _,. LOC _.__.
PRODUCTS-COMP/OPAGG
$ 21000,000
OTHER:
-
AUTOMOBILE LIABILITY -
-
-
-'
COMBINED SINGLE LIMIT -
- (Ea accident)
$
BODILY INJURY (Per person)
$
ANY AUTO
_
OWNED SCHEDULED
BODILY INJURY (Per accident)
$.
AUTOS ONLY AUTOS
PROPERTY DAMAGE
$
HIRED NON -OWNED
AUTOS ONLY AUTOS ONLY
Per accident
$
UMBRELLA LIAB
OCCUR
EACH OCCURRENCE
$
Id
EXCESS LIAB
CLAIMS -MADE
AGGREGATE
$
DIED
I
I RETENTION $
$
WORKERTION
B
AND EMPLOYERS' LIABILITY
AND YERSTLIAILIT
WCNCC338586
05/01/2018
05/01/2019
STATUTE
EORH
YIN
ANYPROPRIETOR/PARTNER/EXECUTIVE
E.L. EACH ACCIDENT
$ 11000,000
OFFICER/MEMBER EXCLUDE D? ❑
NIA
(Mandatory in NH)
E.L. DISEASE - EA EMPLOYEE
$ 11000,000
If yes, describe under
DESCRIPTION OF OPERATIONS below
E.L. DISEASE - POLICY LIMIT
$ 11000,000
$
DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (ACORD 101, Additional Remarks Schedule, maybe attached if more space is required)
Certificate holder is named as additional insured on the General Liability Policy per the attached
form #PBAI02(01-01), as required by written contract. As respects to 901 Embarcadero, Morro Bay,
CA 93442
CERTIFICATE HOLDER CANCELLATION
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE
THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN
City of Morro Bay ACCORDANCE WITH THE POLICY PROVISIONS.
1275 Embarcadero AUTHORIZED REPRESENTATIVE
Morro Bay CA 934422041 4
@ 1988-2015 ACORD CORPORATION. All rights reserved.
ACORD 25 (2016/03) The ACORD name and logo are registered marks of ACORD
Page 1 of 1
EFFECTIVE DATE: 12:01 AM Standard Time,
(at your principal place of business)
► RMMkAM3Mj:
TYE CITY OF •2,9 =A
This form has been sent to you to acknowledge your status as an additional insured under our, meaning the
issuing Company stated below, insurance policy issued to the Named Insured shown below.
Under our Premier Businessowners Liability Coverage Form, Section II, WHO IS AN INSURED provides as
follows:
Any of the following persons or organizations are automatically insureds when you (i.e. the Named Insured stated
below) and such person or organization have agreed in a written contract or agreement that such person or
organization be added as an additional insured on your policy providing general liability coverage.
Owners or Other Interest from Whom Land has been Leased
Any person or organization from whom you lease premises is an additional insured, but only with respect to
their liability arising out of your maintenance or use of that part of the land leased to you, subject to the
following additional exclusion:
This insurance, including any duty we have to defend "suits", does not apply to structural alterations, new
construction or demolition operations performed by or for such person or organization. HOWEVER, their status as
additional insured under this policy ends when you cease to lease that land.
The policy language set forth above is subject to all of the terms and conditions of the policy issued to the Named
Insured shown below. For your information, our Named Insured, the Policy Number, Policy Term and Limits of
Insurance are stated below.
Named Insured
Issuing Company:
Policy Number:
Policy Term:
Limits of Insurance:
PB AI 10 (01 01y
FLYING DUTCHMAN ENTERPRISES INC A CALIFORNIA CORP - DBA
AMCO INSURANCE COMPANY
ACP BPF 7841520457
04-01-18 To 04-01-19
Per Occurrence $1,000,000
All Occurrences $2,000,000
ACP BPF 7841520457 INSURED COPY
Page 1 of 1
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