HomeMy WebLinkAboutReso 69-19 Approving a 1 YR commercial building lease agreement lease site 69-70 - 69W-70W located 595 Embarcadero Rd Three Stacks & A Rock Brewing CompanyRESOLUTION N0.69-19
RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF MORRO BAY, CALIFORNIA
APPROVING A ONE-YEAR COMMERCIAL BUILDING LEASE AGREEMENT
FOR PORTIONS OF THE BUILDING ON LEASE SITE 69-70/69W-70W3
LOCATED AT 595 EMBARCADERO ROAD,
BETWEEN THE CITY OF MORRO BAY AND
THREE STACKS AND A ROCK BREWING COMPANY, LLC
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, Lease Site 69-70/69W-70W (the former Morro Bay Aquarium lease
site) has stood vacant since September, 2018 and no Master Leaseholder currently
occupies the site; and
WHEREAS, Three Stacks and a Rock Brewing Company, LLC wishes to
complete significant improvements to, occupy and operate from certain portions of the
building on Lease Site 69-70/69W-70W; and
WHEREAS, City wishes to lease those portions of the building to Three Stacks
and a Rock Brewing Company under a Commercial Building Lease arrangement; and
WHEREAS, the City and Three Stacks and a Rock Brewing company have
agreed to a one-year building lease agreement for Lease Site 69-70/69W-70W located
at 595 Embarcadero, with options to renew for additional terms.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Morro
Bay, California, as follows:
1. The attached Commercial Building Lease Agreement for portions of
Lease Site 69-70/69W-70W is hereby approved.
2. The Mayor is hereby authorized to execute said Building Lease
Agreement.
PASSED AND ADOPTED by the City Council of the City of Morro Bay at
a regular meeting thereof held on the 13"' day of August, 2019 on the following vote:
AYES:
NOES:
Headding, Addis, Davis, Heller, McPherson
ATTEST:
d�
ana Swanson, City Clerk
COMMERCIAL BUILDING LEASE AGREEMENT
by and between
CITY OF MORRO BAY,
a municipal corporation
"Landlord"
and
Three Stacks and a Rock Brewing Company, LLC
a California limited liability company
"Tenant"
01181.0024/568292.3
TABLE OF CONTENTS
Section Title Page
1. Lease of Premises; Condition of Premises 4
2. Effective Date; Term 4
3. Rent and Performance Standard 6
4. Uses 8
5. Real Estate Taxes 9
6. Personal Property Taxes 10
7. Maintenance & Repairs 10
8. Alterations 12
9. Compliance with Laws 12
10. Insurance 12
11. Indemnification 14
12. No Liens 14
13. Signs 15
14. Utilities 15
15. Entry and Inspection 15
16. Damage and Destruction 16
17. Assignment and Subletting 17
18. Default and Remedies; Termination 18
19. Surrender of Premises 20
20. Force Majeure 20
21. Estoppel Certificate 21
22. Subordination 21
23. Condemnation 21
24. Use of Landlord's Name 21
25. Trade Fixtures 21
26. Quiet Enjoyment 22
27. Holdover 22
01181.0024(568292.3 1
28. Notice and waiver Regarding Relocation, Goodwill, Property 22
Interest and Condemnation
29. Miscellaneous
Exhibit A Depiction of Premises
01181.0024/568292.3 2
23
COMMERCIAL BUILDING LEASE AGREEMENT
THIS COMMERCIAL BUILDING LEASE AGREEMENT ("this Lease") is made
effective this I" day of August, 2019, by and between the CITY OF MORRO BAY, a municipal
corporation ("Landlord"), and Three Stacks and a Rock Brewing Company, LLC., a California
limited liability company ("Tenant"). Landlord and Tenant are sometimes individually referred
to as a "Party" and jointly as the "Parties."
RECITALS:
A. The State of California passed certain tide and submerged lands located within the
Morro Bay City Limits 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 Statues
expressly recognize and agreed to be in full force and effect by the Parties hereto.
B. The Parties hereto recognize and agree on July 17, 1964, Landlord 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.
C. Judgement has been entered on October 14, 1964, in the case of the CITY OF
MORRO BAY, 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 Landlord upon the date of its
incorporation as a city on the 171h day of July, 1964.
D. Tenant accepts this Lease with the full knowledge there is no warranty of title in
and to the Premises, as defined below, by Landlord to Tenant.
E. 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, Landlord desires to lease to Tenant the
Premises upon the terms and conditions set forth below:
The portions of the Building, as defined below, which housed the former "Morro Bay Aquarium"
and identified as Spaces A, B, C and D, as described and depicted on the attached Exhibit A, is
the subject of this Lease, and is also referred to as the "Premises."
The upstairs second story portions of the Building, outside portions of the rear (ocean -side) of
the building, wharf and boat dock (the "Remainder") are expressly excluded from this Lease, and
Landlord retains the right (i) to rent or lease those portions of the Building to a third party or
parties, or (ii) to use the Reminder of the Building for Landlord's own needs, at Landlord's
option; provided, that said third party rents, leases or Landlord uses (i) do not unduly interfere
01181.0024/568292.3 3
with Tenant's quiet enjoyment of the Premises as stipulated in Section 26, and (ii) are not a
business or entity that directly competes or conflicts with Tenant's business.
F. In order to develop and improve Morro Bay Harbor and to assist in carrying out
the provisions of this Lease, the Premises are located in the structure (the "Building") located at
595 Embarcadero Road on Lease Site 69-70/69W-70W (the "Lease Site") on Landlord's
waterfront (the "Waterfront Area").
G. The Parties desire to enter into a written lease agreement and to confirm the rights
and obligations of both Parties therein. Pursuant to the terms of this Lease, Landlord desires to
lease to Tenant, and Tenant desires to lease from Landlord, the Premises, for Tenant's sole
exclusive use, subject to the rights of Landlord to use and lease, to others, the Remainder, as
provided in Recital E., above.
NOW, THEREFORE, in consideration of the above Recitals and the mutual promises of the
Parties set forth in this Lease, Landlord and Tenant hereby agree as follows:
1. LEASE OF PREMISES; CONDITION OF PREMISES.
1.1. Lease. Landlord hereby leases to Tenant and Tenant hereby hires from Landlord the
Premises (as defined in the Recitals incorporated herein) solely for the uses specified
in Section 4.
1.2. Condition of Premises. Tenant acknowledges it has and shall accept the Premises
from Landlord in its "AS IS" condition without representation or warranty. Tenant
has inspected the Premises and is aware of its condition. Pursuant to California Civil
Code Section 1938, Tenant is advised the Premises have not undergone an inspection
by a Certified Access Specialist; and, therefore, Landlord is not aware if the Premises
comply with the applicable construction -related accessibility standards pursuant to
Civil Code Section 55.53.
2. EFFECTIVE DATE; TERM.
2.1. Effective Date. This Lease shall be deemed effective as of August 8, 2019 (the
"Effective Date"). All other Tenant's rights and obligations under this Lease shall
commence as of the Effective Date.
2.2. Initial Term. The term of this Lease shall commence upon Tenant receiving a
Certificate of Occupancy or Final Inspection, as applicable, for the improvements
satisfactorily completed pursuant to Section 3.3 of this Lease, but in no case slater
than December 1, 2019 (the "Commencement Date") for a fixed term of twelve full
calendar months after the Commencement Date (the "Initial Term"), and terminate
without notice twelve at the end of the "Initial Term, unless otherwise amended by
the Parties pursuant to Section 2.4 and 29.15.
2.3. Right to Terminate. Tenant shall have the right to terminate this Lease at any time
within the Initial Term, or any Extended Term (as defined below), upon providing
Landlord at least sixty -days' written notice to Landlord.
01181.0024/568292.3 4
2.4. Exclusive Right to Negotiate Term Extension. If Tenant has not been in default of
any %J its obligations under this Lease at any time during the previous six months of
the Initial Term or any subsequent Extended Term, as defined below„ then Tenant
shall have the exclusive right to negotiate ("ERN") (but not the obligation) an
extension of this Lease upon mutually acceptable terms (including, but not limited to,
rent payments) for up to two additional full 12-calendar-month periods (the
"Extended Term(s)") (the `ERN Right"); provided, that the ERN Right is not
applicable if the Central Coast Aquarium is prepared to take possession of the
Premises for its proposed site redevelopment project (the "Aquarium Project") and is
fully funded and received all necessary permits for the Aquarium Project. Tenant
must exercise the ERN Right by sending a written notice to Landlord specifying its
exercise of the ERN Right, which notice must be delivered to Landlord not less than
ninety days prior to the expiration of the Initial Term, or the Extended Term, as
applicable, (the "ERN Notice"). Within fifteen business days after receipt of the ERN
Notice, Tenant and Landlord will meet to begin negotiations for an amendment to this
Lease to extend the Initial Term or Extended Term, as applicable. If prior to the end
of the Initial Term or Extended Term, as applicable, the Parties agree to an extension
and other modifications, then such terns shall be effective only if this Lease is
amended in accordance with Section 290.15. If the Parties do not agree to an
amendment, then this Lease shall terminate without further notice at the end of the
Initial Term or Extended Term, as applicable.
2.5. Exclusive Right to Negotiate New Long -Term Ground Lease Agreement and Site
Redevelopment Project. If this Lease is extended for the maximum time allowed for
the Extended Terms and if at the end of the last of the Extended Terms Lite Aquarium
Project is not fully funded and permitted and if Tenant has not been in default of any
of its obligations under this Lease at any time during the previous six months of the
Initial Term or any Extended Term, then Tenant shall have the right to enter into a
ninety -day period of exclusive negotiation with Landlord to redevelop the Premises,
Building and entirety of Lease Site in exchange for a long-term ground lease
agreement.
01181.0024/568292.3 5
3. RENT & PERFORMANCE STANDARD.
3.1. Monthly Rent. Tenant agrees to pay Twenty-three Thousand Dollars ($23,000I per
12-month period on an equally -divided monthly basis, in advance, due no later than
the 10 ' day of month for which rent is being paid (the "Rent"). The first monthly
payment of the Rent shall be due, on a prorated basis, upon the Commencement Date;
provided, that if the Commencement Date is other than the first of a calendar month,
then that first payment prorated amount shall be due on the 10' day after the
Commencement Date..
3.2. Percentage Rent. In partial consideration of completing the improvements stipulated
in Section 3.3 of this Lease, Tenant shall have no percentage rent payment obligations
for the first twelve full -calendar months of tenancy after the Commencement Date.
At least sixty days prior to the end of the Initial Term, Tenant and Landlord agree in
good faith to negotiate an equitable Percent Rent rate for any future tenancy of the
Premises.
3.3. Performance Standards -Tenant. As material consideration for this Lease, Tenant
covenants to diligently maintain and repair the Premises in compliance with Section
7.1, as well as satisfactorily complete the items listed in Sections 3.3.1 and 3.3.2 (the
"Tenant Performance Standard"); provided, Tenant shall expend as least $120,000 on
actual hard construction costs for the items listed in Section 3.3.2; and provided,
further, that Tenant shall provide the Harbor Director with satisfactory documentation
evidencing those expenditures,.
3.3.1. On or before December 1, 2019:
• Remodel Space A to accommodate a beer tasting, food and retail room for
guests
• Enlargement of the existing restroom under the stairs in Space A to meet the
American with Disability Act (ADA) accessibility standards,
• Clean up/restoration of floors, walls and windows and supply. all necessary
fixtures to accomplish renovation of the Space A portion of the building,
• Construct a deck in the open-air Space C portion of the building over the old
aquarium seal tanks,
• Install a power wheelchair lift for ADA access to the Space C deck, if
required by the ADA,
• Complete all necessary lighting improvements,
• Complete plumbing improvements, including correction of the floor drainage
in Space B to drain to the municipal sewer system,
• Complete improvements necessary to make the front entrance door ADA-
compliant, if required by the ADA,
• Appropriate tenant improvements to realize Tenant's vision for the Premises
and necessary to operate as a brewery and beer tasting/food service facility
regularly open to the public.
01181.0024/568292.3 6
3.3.2. On or before sixty days prior to the expiration of the Initial Term, provide the
City Manager and Harbor Director a financial report of Tenant's Gross Sales, as
defined, to be used for negotiation of any Extended Term(s) for this Lease.
"Gross Sales," as used herein, shall mean (subject to the exceptions and authorized
deductions as herein set forth) the total selling price and the total gross amount
received by Tenant from all merchandise sold and services rendered in, on or from
the Premises by Tenant, its sublessees, licensees or concessionaires, both for cash or
on credit, and if on credit whether or not payment be actually made therefore, the
gross amount received by Tenant for merchandise sold pursuant to orders received in
the Premises, even if filled elsewhere, and the gross amount received by Tenant from
any and all other sources of income derived from the business being conducted upon
the Premises.
Notwithstanding the other provisions of Section 3.2.2, the term "Gross Sales" shall
not include the following items, and such may be deducted from Gross Sales to the
extent they have been included therein:
• Credits and refunds made to customers for merchandise returned or
exchanged,
• 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,
• 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
• Rental payments to Tenant from sublessees, licensees or concessionaires
whose total gross sales are included in gross sales computations.
3.4. Performance Standards —Landlord. As material consideration for this Lease,
Landlord covenants to diligently maintain and repair the Premises in compliance with
Section 7.2, as well as satisfactorily complete the items listed in Subsection 3.4.1
3.4.1 On or before December 1, 2019:
• Remove and dispose of the chain link fencing and support structure enclosing
the open-air portion of Space C of the Premises,
• Ensure the various electrical panels and electrical components such as, but not
limited to, power to light switches and power outlets are code -compliant and
in working, operational condition and with all unused electrical components
removed in Spaces A, B, C and D, and
• Remove the old aquarium fish tanks and tank stand structures for the fish
tanks in the center section of Space B, and remove the fish tanks only (leaving
the tank stand structures in place) for the fish tanks stationed around the
perimeter of Space B.
01181.0024/568292.3 7
3.5. Payment of Rent. All Rent and all other monetary obligations to be paid by Tenant
to Landlord shall be in lawful money of the United States of America at the address
specified in Section 29.12, or such other address as Landlord shall notify Tenant in
writing.
3.6. i ate Payment. Any payment of any sum to be paid by Tenant, not paid within ten
days after its due date, shall be subject to a ten percent late charge.
3.7. Security Deposit. Tenant is not required to provide, and has not provided, a security
deposit to Landlord.
4. USES.
4.1. Authorized Uses; Minimum Program Requirements.
4.1.1. Authorized Uses. Tenant shall use the Premises solely as brewery and
beer/food tasting facility, including ancillary sales and services related to
those uses.
4.2. Prohibited Uses. Tenant shall not use, or permit the Premises, or any part thereof, to
be used for any purpose or purposes other than those express uses specified in Section
4.1.1.
Tenant shall not sell or permit to be displayed, performed, sold, kept, or used in or
about the Premises any conduct, which may be prohibited by standard forms of fire
insurance policies.
Tenant shall not violate any and all requirements, pertaining to the use of the
Premises, of any insurance organization or company necessary for the maintenance of
reasonable fire and public liability insurance, covering the buildings within the
Premises and appurtenances.
Tenant shall not permit smoking or vaping on any portion of the Premises.
Tenant shall not commit, or suffer to be committed, any waste upon the Premises, or
any nuisance or other act or thing which may disturb the quiet enjoyment of any other
tenant or occupant of the Waterfront Area. Tenant shall not conduct or permit to be
conducted any sale by auction in, upon or from the Premises, whether said auction be
voluntary, involuntary, pursuant to any assignment for the payment of creditors, or
pursuant to any bankruptcy or .other solvency proceeding nor display any "going out
of business" or similar sign.
Tenant shall not engage in any activity in, on or about the Premises that violates any
Environmental Law; as defined below„ and shall promptly, at Tenant's sole cost and
expense, take all investigatory and/or remedial action required or ordered by any
governmental agency or Environmental Law for clean-up and removal of any
contamination involving any Hazardous Material created or caused directly or
indirectly, by Tenant. The term "Environmental Law" shall mean any federal, state or
01181.0024/568292.3 8
local law, statute, ordinance or regulation pertaining to health, industrial hygiene or
the environmental conditions on, under or about the Premises, including, without
limitation, (i) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), 42 U.S.C. Sections 9601, et seq.; (ii) the
Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section
6901, et seq.; (iii) California Health and Safety Code Section 25100, et seq.; (iv) the
Safe Drinking Water and Toxic Enforcement Act of 1986, California Health and
Safety Code Section 25249.5, et seq.; (v) California Health and Safety Code Section
25359.7; (vi) California Health and Safety Code Section 25915; (vii) the Federal
Water Pollution Control Act, 33 U.S.C. Sections 1317, et seq.; (viii) California Water
Code Section 13000, et seq.; and (ix) California Civil Code Section 3479, et seq., as
such laws are amended and the regulations and administrative codes applicable
thereto. The term "Hazardous Material" includes, without limitation, any material or
substance which is (i) defined or listed as a "hazardous waste", "extremely hazardous
waste," "restrictive hazardous waste," or "hazardous substance" or considered a
waste, condition of pollution or nuisance under the Environmental Laws; (ii)
petroleum or a petroleum product or fraction thereof, (iii) asbestos; and/or (iv)
substances known by the State of California to cause cancer and/or reproductive
toxicity. It is the intent of the Parties hereto to construe the terms "Hazardous
Materials" and "Environmental Laws" in their broadest sense. Tenant shall provide
all notices required pursuant to the Safe Drinking Water and Toxic Enforcement Act
of 1986, California Health and Safety Code Section 25249.5, et seq. Tenant shall
provide prompt written notice to Landlord of the existence of Hazardous Materials on
the Premises and all notices of violation of the Environmental Laws received by
Tenant. Notwithstanding the foregoing, Tenant is not responsible for the remediation
or removal of any Hazardous Materials, which Tenant did not directly or indirectly
cause to be placed at the Premises.
4.3. Abandonment. Tenant shall not vacate or abandon the Premises at any time during
the Initial Term or any Extended Term. Upon termination of this Lease for any
reason, any personal property belonging to Tenant and left on the Premises shall be
deemed to be abandoned and, at the option of Landlord, shall become the property of
Landlord.
5. REAL ESTATE TAXES. Tenant shall pay any and all real property taxes applicable to
Tenant's possessory interest in the Premises. All such payments shall be made at least ten
days prior to the due date of the applicable installment. Tenant shall promptly (at least five
days prior to the due date) furnish Landlord with satisfactory evidence such taxes have been
paid. If any such taxes to be paid by Tenant shall cover any period of time after the
expiration or earlier termination of the Term hereof, then Tenant's share of such taxes shall
be equitably prorated to cover only the period of time within the tax fiscal year that this
Lease is in effect; and Tenant may apply to the County of San Luis Obispo (the "County")
for reimbursement of any overpayments after such proration. Notwithstanding anything
above to the contrary, to the extent any assessment is levied against the Premises payable in
installments, Tenant shall pay all installments coming due and payable during the Initial
Term and any Extended Term.
01181.0024/568292.3 9
Tenant acknowledges, although Landlord is a municipal entity exempt from real property
taxes, Tenant's possessory interest under this Lease may be subject to real property taxation.
Upon request, Landlord agrees to work with Tenant to assist in providing information to the
County Tax Assessor to reduce the valuation of Tenant's possessory interest in the Premises.
Landlord provides no assurance to Tenant that it will be successful in such efforts and that
Tenant may be required to pay real property taxes.
6. PERSONAL PROPERTY TAXES. During the Initial Tenn or any Extended Term,
Tenant shall pay prior to delinquency all taxes assessed against the levied upon fixtures,
furnishings, equipment and all other personal property owned by Tenant (excluding
Landlord's personal property) located in the Premises, and when possible, Tenant shall
cause said fixtures, furnishings, equipment and other personal property to be assessed and
billed separately from Landlord's personal property. In the event any or all of Tenant's
fixtures, furnishings, equipment and other personal property shall be assessed and taxed with
Premises, Tenant shall pay its share of such taxes within ten days after delivery to Tenant by
Landlord of a statement in writing setting forth the amount of such taxes applicable to
Tenant's property.
7. MAINTENANCE AND REPAIRS.
7.1. Maintenance and Repair by Tenant. Except the specific maintenance obligations
of Landlord as set forth in Sections 3.4 and 7.2, Tenant shall at all times during the
Term, and at Tenant's sole cost and expense, keep, maintain and repair the Premises
in good and sanitary order, condition, and repair. Such maintenance obligations shall
include, but not be limited to, any equipment installed by Tenant, furnishings (such as
seating, carpeting and drapes, mirrors, and interior repainting) and landscaping.
Tenant shall keep the Premises in good and sanitary order on a daily basis. Upon
termination of this Lease, the Premises shall be surrendered in a good, clean and
sanitary "broom clean" condition, except for reasonable use and wear. Tenant agrees
to surrender the Premises in the condition after all improvements or alternations,
which have been approved by Landlord and installed by Tenant pursuant to Section
8.1, have been satisfactorily completed. If Landlord wants to reserve the right to
require Tenant to remove any of those improvements and alterations upon the
expiration or earlier termination of this Lease, then Landlord must reserve such right
in its notice of approval any of those improvements or alterations. If Tenant is
required to remove any improvements from the Premises upon termination of this
Lease, then Tenant shall do so at Tenant's sole cost and expense, and Tenant will
repair any damage to the Premises caused by such removal. Tenant shall promptly
notify Landlord in writing of any condition in the Premises that require necessary
repairs by Landlord (the "Repair Notice"), which shall be made by Landlord as set
forth in Section 7.2.
Tenant .acknowledges Tenant's maintenance obligations under this Section are
material considerations to Landlord for this Lease; and, therefore, this Section 7.1
shall be construed liberally for the protection and preservation of the Premises.
01181.0024/568292.3 10
7.2. Limited Maintenance and Repair by Landlord. Landlord shall be responsible to
maintain in good repair and in compliance with all applicable laws, ordinances and
regulations, at Landlord's sole cost and expense, only (i) the physical structure of the
Premises, such as the structural elements, roof, plumbing, water heating system,
electrical systems, HVAC equipment and exterior painting, and (ii) subject to the
financial limitations set forth below.
Notwithstanding the foregoing, Landlord shall not be required to make repairs
necessitated by reason of (i) the negligence or willful misconduct of Tenant, or any of
Tenant's staff, volunteers, students, contractors, invitees, subtenants, patrons or
customers, (ii) the failure of Tenant to perform or observe and promptly report to
Landlord any conditions the repair of which are Landlord's responsibility or (iii) the
failure of Tenant to perform or observe the conditions or agreements in this Lease, or
caused by unauthorized alterations, additions or improvements made by Tenant or
anyone claiming under Tenant (collectively the "Tenant Caused Damages"). Tenant
shall be solely responsible, at its sole cost and expense, to repair any Tenant Caused
Damages.
Upon receipt of a Repair Notice, Landlord shall have a reasonable period of time (not
to exceed five business days) to commence necessary repairs. Upon commencement
of necessary repairs, Landlord shall use reasonable efforts to diligently complete
same. At a time and date reasonably agreed to by the Parties, the Parties shall jointly
conduct an annual inspection of the Premises to aid Landlord in determining if any
repairs by Landlord may be necessary.
Any renovation work performed by Landlord to the Premises shall not unreasonably
interfere with Tenant's operations, to the extent practicable.
Notwithstanding the foregoing and Landlord's Performance Standard obligations
under Section 3.4, Landlord's repair obligations are specifically limited in that
Landlord shall not be required to make repairs the cost of which exceeds the Rent
actually received by Landlord from Tenant as set forth below. During the Term,
Landlord shall maintain a cumulative on -going record of all Rent received by
Landlord ("Landlord Repair Fund"). Any repairs and maintenance costs incurred
by Landlord under this Section 7.2 shall reduce the Landlord Repair Fund. If at any
time when a repair or maintenance item, which is Landlord's responsibility under this
Section 7.2, then Landlord shall only be obligated to make such repair to the extent
the current balance of the Landlord Repair Fund is sufficient to pay the cost of such
repair. However, if the repair item is critical for Tenant's operation of the Premises,
then Landlord shall promptly make such repair, but the cost of such shall reduce the
Landlord Repair Fund. If Landlord elects, in its sole discretion, to make repairs
notwithstanding the foregoing limitations, then such election shall not be deemed a
waiver of this limitation with respect to future repairs and the cost of such repairs
shall reduce the Landlord Repair Fund.
01181.0024/568292.3 11
8. ALTERATIONS
8.1 To Premises. Tenant shall not make any alterations to the Premises, or any part
thereof, outside those stipulated in Section 3.3 without the prior written consent of
Landlord and in compliance with any and all necessary permits and/or entitlements. If
Tenant wishes to make additional improvements to the Premises, then Tenant shall
notify Landlord in writing specifying in reasonable detail the proposed alterations and
the cost thereof. Within fifteen days after receiving such notice from Tenant,
Landlord shall send written notice to Tenant indicating whether Landlord approves or
disapproves of the contemplated improvements. The City Manager may act on behalf
of Landlord for approvals or disapprovals under this Section. Landlord's approval
shall not be unreasonably withheld and any disapproval shall be in writing and shall
explain the reasons for the denial. However, as a condition to granting its approval to
any of the improvements, Landlord may require Tenant to provide Landlord with
reasonably satisfactory evidence of Tenant's financial ability to pay for the costs of
the improvements and may require a completion bond be provided to Landlord or
other security reasonably acceptable to Landlord. Any such alterations shall comply
with all applicable laws and regulations. All improvements (excluding minor
improvements as determined by Landlord) shall be under the supervision of a
licensed architect or structural engineer (at Tenant's cost) and made in accordance
with plans and specifications approved in writing by Landlord, in its governmental
and landlord capacities, prior to the commencement of such work. All work shall be
done in a good and workmanlike manner, diligently prosecuted to completion and
completed in compliance with Section 12. All such improvements shall immediately
be deemed a part of the Premises and may not be removed by Tenant. Prior to
commencing any work of improvement hereunder, Tenant shall notify Landlord so
that Landlord can post and record an appropriate Notice of Non -Responsibility.
9. COMPLIANCE WITH LAWS. Except as to the specific obligations of Landlord under
Section 7.2, Tenant shall, at its sole cost and expense, comply with all of the requirements of
all municipal, state and federal authorities now in force or which may hereafter be in force
pertaining to the use of the Premises, and shall faithfully observe in said use all municipal
ordinances, including, but not limited to, the General Plan and zoning ordinances, state and
federal statutes, or other governmental regulations now in force or which shall hereinafter be
in force. The judgment of any court of competent jurisdiction, or the admission of Tenant in
any action or proceeding against Tenant, whether Landlord be a party thereto or not, that
Tenant has violated any such order or, statute in said use, shall be conclusive of that fact as
between Landlord and Tenant.
10, INSURANCE.
10.1. Landlord to Provide Property Insurance. Landlord shall maintain, at Landlord's
sole cost and expense, fire, and excess coverage insurance throughout the term of this
Lease, on all buildings and improvements located on the Premises (and fixtures
thereto), in an amount equal to one hundred percent of the replacement value of the
Premises, together with such other insurance, coverages and endorsements as
Landlord may determine in its sole discretion. Tenant hereby waives any right of
01181.0024/568292.3 12
recovery from Landlord, its officers and employees, and Landlord hereby waives any
right of loss or damage (including consequential loss) resulting from any of the perils
insured against as a result of said insurance.
10.2. Tenant`s Insurance Obligations.
10.2.1. Liability Insurance. During the entire terns of this Lease, Tenant shall, at
Tenant's sole cost and expense, for the mutual benefit of Landlord and
Tenant, maintain comprehensive general liability insurance insuring
against claims for bodily injury, death or property damage occurring in,
upon or about the Premises, written on a per occurrence basis in an
amount not less than either (i) a combined single limit of Five Million
Dollars ($5,000,000) for bodily injury, death, and property damage or (ii)
bodily injury limits of Five Hundred Thousand Dollars ($500,000) per
person, One Million Dollars ($1,000,000) per occurrence and One Million
Dollars ($1,000,000) products and completed operations and property
damage limits of Two Hundred Fifty Thousand Dollars ($250,000) per
occurrence and One Million Dollars ($1,000,000) in the aggregate.
10.2.2. Worker's Compensation Insurance. Tenant shall, at Tenant's sole cost
and expense, maintain a policy of worker's compensation insurance in an
amount as will fully comply with the laws of the State of California and
which shall indemnify, insure and provide legal defense for both Tenant
and Landlord against any loss, claim or damage arising from any injuries
or occupational diseases occurring to any worker employed by or any
persons retained by Tenant in the course of conducting Tenant's business
in the Premises.
Business Automobile Coverage Insurance. Tenant shall, at Tenant's
sole cost and expense, for the mutual benefit of Landlord and Tenant,
maintain Business Auto Coverage on ISO Business Auto Coverage from
CA 00 01 including symbol 1 (Any Auto) or the exact equivalent, with
combined single limits of liability not less than One Million Dollars
($1,000,000) per accident. If Tenant owns no vehicles, then this
requirement may be satisfied by a non -owned auto endorsement to the
general liability policy described above. If Tenant or Tenant's employees
will use personal autos in any way for the operation of any business on the
Premises, then Tenant shall provide evidence of personal auto liability
coverage for each such person.
10.2.4. General Provisions. All of the policies of insurance required to be
procured by Tenant pursuant to this Section 10.2 shall be primary
insurance and pursuant to Subsections 10.2.1 and .3 shall name Landlord,
its employees and agents as additional insureds. All policies shall waive
all rights of subrogation and provide that said insurance may not be
amended or canceled without providing thirty -days' prior written notice
by registered mail to Landlord, unless the cancellation is for non-payment
01181.0024/568292.3 13
of a premium and then such written notice shall be no less than ten days.
Within ten business days after execution of this Lease by the last Party to
sign, and at least thirty days prior to the expiration of any insurance
policy, Tenant shall provide Landlord with certificates of insurance and
full copies of the insurance policies evidencing the mandatory insurance
coverages written by insurance companies acceptable to Landlord,
licensed to do business in California and rated A:VII or better by Best's
Insurance Guide. Landlord may require an increase in the coverage and/or
the types of coverage from time to time upon written notice to Tenant.
Each of the Parties, on behalf of their respective insurance companies
insuring such property of either Landlord or Tenant against such loss,
waive any right of subrogation that it may have against the other.
ll. INDEMNIFICATION. Tenant shall indemnify, protect, defend and hold harmless the
Premises, Landlord and its managers, officers, directors, members, employees, agents,
contractors, partners and lenders, from and against any and all claims, and/or damages,
costs, liens, judgments, penalties, permits, reasonable attorneys' and consultant's fees,
expenses and/or liabilities arising out of, involving, or in dealing with, the occupancy of the
Premises by Tenant, the conduct of Tenant's business, any act, omission or neglect of
Tenant or any of, its officers, directors, members, employees, agents, invitees, customers or
contractors, and out of any breach by Tenant in the performance in a timely manner of any
obligation on Tenant's part to be performed under this Lease, except for matters which are
the result of Landlord's gross negligence, intentional wrongful acts, or in default of this
Lease. The foregoing shall include, but not be limited to, all costs of the defense or pursuit
of any claim or any action or proceeding involved therein, and whether or not (in the case of
claims made against Landlord) litigated and/or reduced to judgment. In case any action or
proceeding is brought against Landlord by reason of any of the foregoing matters, Tenant
upon notice from Landlord shall defend the same at Tenant's expense by counsel reasonably
satisfactory to Landlord and Landlord shall cooperate with Tenant in such defense.
Landlord need not have first paid any such claim in order to be so indemnified. In addition,
Landlord may require Tenant to pay Landlord's reasonable attorneys' fees and costs in
defending against or participating in such claim, action or proceeding if Landlord shall
decide, in its exercise of reasonable judgment, it is unsatisfied with the representation of its
interest by Tenant or its counsel.
Landlord shall not be liable for injury or damage to the person or goods, wares, merchandise
or other property of Tenant, Tenant's employees, contractors, invitees, customers, or any
other person in or about the Premises, whether such damage or injury is caused by or results
from fire, earthquake, flood, terrorism, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other any other cause, whether the said injury or damage
results from conditions arising upon the Premises or from other source or places, unless such
injury or damage is finally determined to be the result of the gross negligence or willful
misconduct of Landlord or any of Landlord's employees, contractors or agents.
12. NO LIENS. Tenant shall keep the Premises, free from any liens arising out of any work
performed, material furnished, or obligation incurred by Tenant or alleged to have been
incurred by Tenant. If Tenant shall fail to pay any charge for which a mechanic's lien claim
01181.0024/568292.3 14
aMU suit to foreclose the lien have been filed, and shall not have obtained the release of said
lien from the property subject to such lien, then Landlord may (but shall not be so required
to) pay said claim and any costs, and the amount so paid, together with reasonable attorneys'
fees incurred in connection therewith, shall be immediately due and owing from Tenant to
Landlord, together with interest at the rate prescribed in Section 30.6, on the amount of the
mechanic's lien claim.
13. SIGNS. Tenant shall not place or permit to be placed any signs upon the exterior or in the
windows of the Premises without Landlord's prior written consent. Any sign installed
without such approval shall be immediately removed by Tenant and, if said sign is not
removed by Tenant within three days of written notice from Landlord to Tenant, then
Landlord may remove and destroy said sign without Tenant's approval and without any
liability to Tenant. Tenant shall not modify or alter any of the signs without the prior written
approval of the City Manager for Landlord, which approval shall not be unreasonably
withheld or delayed. Landlord shall reply to any proposed alteration within fourteen days
from submission. Any revision shall comply with the Morro Bay Municipal Code
requirements related to signage prior to any revisions actually being made to the signs.
Tenant shall maintain the signs in good condition and repair at all times during the entire
term at its sole cost and expense.
14. UTILITIES.
14.1. Tenant's Responsibilities. Tenant shall pay, before delinquency, all charges for
water, gas, heat, electricity, power, sewer, telephone service, solid waste collection
and all other services and utilities used in, upon, or about the Premises by Tenant or
any of its subtenants, licensees, or concessionaires during the entire term of this
Lease. Tenant shall pay such fees, assessments or charges as may be levied for the
operation, maintenance and service of such facilities and shall comply with
reasonable rules and regulations established from time to time for use thereof. Tenant
shall insure that trash and debris produced by the activities on Premises do not
accumulate on the Premises. Tenant shall not be responsible for any utility charges of
any other tenant to whom Landlord may lease other portions of the Building, wharf or
dock behind the Building; and each such tenant shall have utilities separately metered
or otherwise monitored to account for utility charges to be paid by that tenant. As
between Landlord and Tenant, Landlord shall be responsible for having metering and
accounting provided.
15. ENTRY AND INSPECTION. Tenant shall permit Landlord and its employees and agents
to enter into and upon the Premises at all reasonable times for the purpose of inspecting the
same, or for the purpose of making repairs, alterations or additions or performing the
improvements to any portion of said building(s), including the erection and maintenance of
such scaffolding, canopy, and fences as may be required, or for the purpose of posting
notices of non -responsibility for alterations, additions or repairs, or for the purpose of placing
upon the Premises any usual or ordinary signs for public safety as determined by Landlord.
Landlord shall be permitted to do any of the above without any rebate of Rent and without
any liability to Tenant for any loss of occupation or quiet enjoyment of the Premises thereby
occasioned. Landlord shall make reasonable efforts to coordinate times for any repairs
01181.0024/568292.3 15
deemed necessary with Tenant to reduce to the extent practicable any interference with
Tenant's use of the Premises. Tenant shall permit Landlord, at any time within ninety days
prior to the expiration of the Term, to place upon the. Premises any usual or ordinary "For
Lease" or "For Sale" signs, and during such ninety -day period, Landlord or its agents may,
during normal business hours, enter upon said Premises and exhibit the same to prospective
tenants or purchasers.
16. DAMAGE AND DESTRUCTION.
U.I. Notice to Landlord. Tenant shall give prompt notice to Landlord in case of any fire
or other damage to the Premises.
16.2. Partial Casualty to Premises. If the Premises shall be damaged by any casualty
including, but not limited to, civil unrest, vandalism, a fire, flood or earthquake, such
that (i) the cost of replacement or repair of the Premises is less than or equal to fifty
percent of the total replacement cost thereof, or (ii) the cost of replacement or repair
of damage to the Premises, and any structures comprising the Premises, when
aggregated together is less than or equal to fifty percent of the total replacement cost
thereof, then Landlord shall promptly repair and restore the same to substantially the
condition thereof immediately prior to said damage or destruction. If insurance
proceeds are forthcoming, then Landlord shall not be obligated to commence the
restoration and/or repair until Landlord has received said insurance proceeds.
Landlord shall take all reasonable steps necessary so as to obtain such insurance
proceeds promptly so as to prevent delay in restoring and/or repairing the Premises to
its prior condition.
16.3. Substantial DamaEe to Premises. If the Premises shall be damaged or destroyed by
any casualty (or the other matters described above), such that (i) the cost of
replacement or repair of the Premises exceeds one -years' rent; or (ii) the cost of
replacement or repair of damage to the Premises, and any of the other structures
comprising the Premises, when aggregated together exceeds one -years' rent total,
then Landlord may elect to either replace or repair the damage as aforesaid, cancel
this Lease by written notice of cancellation given to Tenant within ninety days after
the date of the casualty, or allow Tenant to cause repairs to be made to City standards.
This Lease shall cease and terminate twenty days following Tenant's receipt of
Landlord's cancellation notice; and Tenant shall vacate and surrender the Premises to
Landlord in accordance with the terms of this Lease.
16.4. Reconstruction. In the event of any reconstruction of the Premises under this
Section 16, Landlord shall be obligated to reconstruct the Premises only to the extent
of the condition of the Premises prior to the damage.
16.5. Rent Abatement. In the event any casualty to the Premises is such that operations
are impossible or impractical during the reconstruction as determined by Tenant,
Tenant shall be entitled to abatement of the Rent for actual number of business days
closed based on a pro-rata ratio of the total days in the month.
01181.0024/568292.3 16
16.6. Termination. Upon any termination of this Lease under any of the provisions of this
Section 16, the Parties shall be released thereby without further obligations to the
other Party coincident with the surrender of possession of the Premises to Landlord,
except for obligations which have theretofore accrued and be then unpaid, and except
for Tenant's obligations under Section 1 l .
16.7. Determination of Percentage of Damage or Destruction. If either Landlord or
Tenant contends the percentage of the damage or destruction referred to above
exceeds one -year's rent total and the other Party disagrees, then the determination of
the percentage shall be made in writing by a senior officer of the insurance company
that is to make insurance proceeds available for replacement or repair. If said
insurance company elects not to render such a determination in a timely manner, or
no determination is rendered for any other reason, then, in such event, upon fifteen -
days' prior written notice to Tenant, then Landlord's determination shall be deemed
the agreed upon determination of the damage or destruction.
17. ASSIGNMENT AND SUBLETTING.
17.1. Assignment and Subletting. Tenant shall not sublet the Premises or assign this
Lease without the prior written consent of Landlord. Landlord shall not unreasonably
withhold its consent to an assignment or sublease to a proposed assignee or subtenant.
In no event shall Landlord be required to approve of any assignment or sublease,
which would result in a violation of any other agreements to which Landlord is a
party and/or for which all of the following criteria are not met:
a. The proposed assignee or subtenant has submitted to Landlord financial
statements showing the proposed assignee's or subtenant's financial
condition, including net worth and liquidity, is equal to or greater than
Tenant's financial condition;
b. The proposed assignee or subtenant is morally and financially responsible;
and
c. Tenant is not in default in the payment of Rent or the performance of any
obligations under this Lease.
Any such assignment shall be subject to all of the terms and conditions of this Lease,
including, but not limited to, the use restrictions, and the proposed assignee or
subtenant shall assume the obligations of Tenant under this Lease in writing in form
satisfactory to Landlord. The proposed assignee or subtenant shall simultaneously
provide to Landlord an estoppel certificate in the form described in Section 21.
Consent by Landlord to one assignment or subletting shall not be deemed to be
consent to any subsequent assignment or subletting. Any assignment or subletting
without the prior written consent of Landlord shall be void, shall constitute a material
breach of this Lease, and shall, at the option of Landlord, terminate this Lease.
Neither this Lease nor any interest therein shall be assignable as to the interest of
Tenant by operation of law.
01181.0024/568292.3 17
Landlord shall be under no obligation to consider a request for its consent to an
assignment or sublease until Tenant shall have submitted in writing to Landlord a
request for Landlord's consent to such assignment or sublease, a history of the
proposed assignee's or subtenant's business experience and financial viability and
such other information as required by Landlord to verify that the criteria set forth
herein are met.
18. DEFAULT AND REMEDIES; TERMINATION.
18.1. Default by Tenant. The occurrence of any one or more of the following events shall
constitute a default and breach of this Lease by Tenant:
(i) Failure to pay any Rent or other monetary payment required hereunder to
Landlord within five days after receiving notice from Landlord of
Tenant's failure to pay any such obligation when due under this Lease.
(ii) Failure to perform any provision of this Lease (other than the payment of
money), if the failure to perform is not cured within thirty days after
receiving written notice of the default from Landlord. If the default cannot
be reasonably cured within thirty days, then Tenant shall not be in default
of this Lease if Tenant commences to cure the default within the thirty -day
period and diligently and in good faith continues to cure the default, but
within no more than one hundred eighty days from commencement of the
cure.
(iii) Failure of Tenant to meet or comply with any Tenant Performance
Standard.
(iv) Vacation or abandonment of the Premises by Tenant.
(v) Making a general assignment for the benefit of creditors.
(vi) Filing of a voluntary petition in bankruptcy or the adjudication of Tenant
as a bankrupt.
(vii) Appointment of a receiver to take possession of all or substantially all the
assets of Tenant located at the Premises or of Tenant's leasehold interest
in the Premises.
(viii) Filing by any creditor of Tenant of an involuntary petition in bankruptcy
which is not dismissed within sixty days after filing.
(ix) Attachment, execution or other judicial seizure of all or substantially all of
the assets of Tenant or Tenant's leasehold where such an attachment,
execution or seizure is not discharged within sixty days.
In the event of any such default or breach by Tenant, Landlord may at any
time thereafter, without further notice or demand, rectify or cure such default, and any
01181.0024/568292.3 18
sums expended by Landlord for such purposes shall be paid by Tenant to Landlord
upon demand and as additional Rent hereunder. In the event of any such default or
breach by Tenant, Landlord shall have the right to continue the lease in full force and
effect and enforce all of its rights and remedies under this Lease, including the right
to recover the Rent as it becomes due under this Lease or Landlord shall have the
right at any time thereafter to elect to terminate the Lease and Tenant's right to
possession thereunder. Upon such termination, Landlord shall have the right 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;
(b) The worth at the time of award of the amount by which the
unpaid Rent which would have been earned after termination until the time of
award exceeds the amount of such Rent loss that Tenant proves could have been
reasonably avoided; and
(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 such Rent loss that Tenant proves could be reasonably avoided.
The "worth at the time of award" of the amounts referred to in subparagraphs
(a), b), and (c) above shall be computed by allowing interest (or by discounting in the
case of subparagraph (c)) at three percent over the prime rate, but in no event greater
than the maximum rate permitted by law.
For purposes of this Section. "Rent" shall include all sums payable pursuant to this
Lease on a regular basis; including reimbursement of real estate taxes and any similar
amounts. The payment shall be computed on the basis of the average monthly amount
thereof accruing during any preceding twelve-month period selected by Landlord,
except that if it becomes necessary to compute such Rent before such a twelve-month
period has occurred, then the Rent shall be computed on the basis of the average
monthly amount hereof accruing during such shorter period.
Such efforts as Landlord may make to mitigate the damages caused by Tenant's
breach of this Lease shall not constitute a waiver of Landlord's right to recover
damages against Tenant hereunder.
Notwithstanding any of the foregoing, the breach of this Lease by Tenant, or an
abandonment of the Premises by Tenant, shall not constitute a termination of this
Lease, or of Tenant's right of possession hereunder, unless and until Landlord elects
to do so, and until such time Landlord shall have the right to enforce all of its rights
and remedies under this Lease, including the right to recover rent, and all other
payments to be made by Tenant hereunder, as they become due. Failure of Landlord
to terminate this Lease shall not prevent Landlord from later terminating this Lease or
constitute a waiver of Landlord's right to do so.
01181.0024/568292.3 19
18.2. No Waiver. Acceptance of any payment under this Lease shall not be deemed a
waiver of any default or a waiver of any of Landlord's remedies.
18.3. Landlord's Default. Except as may be elsewhere expressly provided in this Lease,
Landlord shall not be in default, unless Landlord fails to perform obligations required
of Landlord within a reasonable time, but in no event later than thirty days after
written notice by Tenant to Landlord, specifying wherein Landlord has failed to
perform such obligation; provided, however, that if the nature of Landlord's
obligation is such that more than thirty days are required for performance, then
Landlord shall not be deemed in default if Landlord commences performance within
the thirty -day period and thereafter diligently prosecutes the same to completion.
18.4. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive
but shall, wberever possible, be cumulative with all other remedies at law or in
equity, except Tenant i) cannot seek money damages or pursue an action in law; and
ii) is instead _limited to bringing a proceeding in the nature of specific performance,
injunctive relief or mandamus, or any other action in equity to enforce any applicable
provision of this Lease.
Termination.
18.5.1. The Parties acknowledge this Lease shall be terminated immediately at the
occurrence of any of the following events:
a. By expiration of the Lease;
b. By mutual agreement of both Parties; or
c. In the case of casualty as provided for in Section
18.5.2. The Parties acknowledge this Lease may be terminated by Landlord upon
thirty -days' written notice if Tenant fails to meet any Performance
Standard.
18.5.3. Except as set forth in Section 2.3, termination of this Lease shall not
extinguish Tenant's obligations to pay Rent or its other obligations
including indemnification of Landlord.
19. SURRENDER OF PREMISES. The voluntary or other surrender of the Premises by
Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of
Landlord, terminate all or any existing subleases or licensees, or may, at the option of
Landlord, operate as an assignment to it of any or all of such subleases or licenses.
20. FORCE MAJEURE. If either Party hereto shall be delayed or prevented from the
performance of any act required hereunder by reason of acts of God, strikes, lockouts, labor
troubles, inability to procure materials, restrictive governmental laws or regulations or other
cause without fault and beyond the control of the Party obligated (financial inability
excepted), then performance of such act shall be excused for the period of the delay and the
01181.0024/568292.3 20
period for the performance of any such act shall be extended for a period equivalent to the
period of such delay; provided, however, nothing in this Section 20 shall excuse Tenant
from the prompt payment of any Rent.
21. ESTOPPEL CERTIFICATE. Tenant shall, at any time and from time to time upon not
less than twenty -days' prior notice from Landlord, execute, acknowledge and deliver to
Landlord a statement in writing certifying this Lease is umnodified and is in full force and
effect, and the dates to which the Rent has been paid, and stating whether or not to the best
knowledge Landlord is in default under this Lease, and, if in default, specifying in
reasonable detail each such default, and such other matters as Landlord may reasonably
request, it being intended that any such statement delivered by Tenant may be relied upon by
Landlord or any prospective purchaser of the fee or any prospective mortgagee or
encumbrancer thereof.
22. SUBORDINATION. The rights of Tenant shall be and are subject and. subordinate at all
times to the lien of any mortgage now or hereafter in force against the Premises, and Tenant
shall promptly execute and deliver such further instruments subordinating this Lease to the
lien of any such mortgage as shall be requested by Landlord.
23. CONDEMNATION. In the event a condemnation or transfer in lieu thereof results in a
taking of any substantial and/or material portion of the Premises. Landlord or Tenant may,
upon written notice given to the other Party within thirty days after such taking or transfer in
lieu thereof, terminate this Lease. In connection therewith, Landlord and Tenant
acknowledge that:
a. Landlord (acting as the City of Morro Bay) possesses the power to take the
Premises through eminent domain proceedings; and
b. The business to be conducted by Tenant upon the Premises is not a viable
business without financial assistance from Landlord, therefore if Tenant must
vacate the Premises, it will be extremely impractical, if not impossible, for
Tenant to operate its business elsewhere.
Therefore, upon such termination Tenant shall have the right to claim and recover from
Landlord and/or the condemning authority only the amount equal to the value of any
improvements installed by Tenant. Tenant shall not receive any value related to the
leasehold value of the property which shall be paid solely to Landlord.
24. USE OF LANDLORD'S NAME. Tenant shall not use Landlord's name for advertising or
promotion without Landlord's prior written consent, which may be granted or withheld in its
sole discretion.
25. TRADE FIXTURES. Tenant has the right to use the Landlord's personal property located
on the Premises, but Tenant shall, at its own cost and expense, install and equip the Premises
with all furniture, fixtures, trade fixtures, equipment and personal property reasonably
required for the operation of Tenant's business. Any and all fixtures and appurtenances
01181.0024/568292.3 21
installed by Tenant shall conform with the requirements of all applicable laws and
regulations. All furniture, equipment, and trade fixtures installed by Tenant shall remain the
property of Tenant during the Term of this Lease, but Tenant shall not remove any trade
fixtures during the Term hereof without Landlord's prior written consent which may be
provided by the City Manager on behalf of the Landlord. On termination of this Lease,
Tenant may, provided Tenant is not in default of this Lease, remove at its own expense all
trade fixtures, equipment and its personal property. At termination of this Lease, if Tenant
has left any merchandise, furniture, equipment, signs, trade fixtures or other personal
property in the Premises, then Landlord may give Tenant written notice to remove such
property. In the event such property is not removed within fifteen days after the date of said
notice, Landlord may dispose of said property in any manner whatsoever and Tenant hereby
waives any claim or right to said property or any proceeds derived from the sale thereof.
Any damage to the Premises resulting from the installation or removal of any of said trade
fixtures or equipment shall be repaired by Tenant at Tenant's sole cost and expense.
26. QUIET ENJOYMENT. As long as Tenant is not in default under this Lease, Tenant shall
have quiet enjoyment of the Premises during the Term.
27. HOLDOVER. Tenant has no right to retain possession of the Premises or any part thereof
beyond the expiration or earlier termination of this Lease. Any holding over after the
expiration or earlier termination of the Initial Term or any Extended Term, as applicable,
with the consent of Landlord, express or implied, shall be construed to be a tenancy from
monthAo-month, cancelable upon thirty -days' written notice, and at a monthly rent equal to
two hundred percent of the Rent set forth in Section 3.1 and upon terms and conditions as
existed during the last month of the Initial Term or Extended Term, as applicable.
28. NOTICE AND WAIVER REGARDING
INTEREST AND
RELOCATION, GOODWILL, PROPERTY
28.1. Tenant knowingly and voluntarily acknowledges and agrees upon its vacation of the
Premises at the end of the Lease term, upon the sooner termination thereof for any
reason, or vacation, of the Premises under any circumstances, in no event shall Tenant
be entitled or shall Landlord, including its employees, agents and assignees, be
required to provide any relocation benefits, compensation for loss of goodwill, or
assistance under any applicable federal, state, or local laws or regulations including
without limitation, the Uniform Relocation Assistance Laws, California Government
Code Section 7260 et seq. Further, Tenant being fully informed of any and all of its
rights and obligations and all laws and regulations (including without limitation, the
Uniform Relocation Assistance Laws, California Government Code Section 7260 et
seq.) in connection therewith fully waives, releases and rejects any and all relocation
assistance and benefits relating to or in any respect connected with Tenant vacating
the Premises.
28.2. Tenant knowingly and voluntarily acknowledges and agrees upon its vacation of the
Premises at the end of the Term, upon the sooner termination thereof for any reason,
or vacation, of the Premises under any other circumstances, in no event shall Tenant
be entitled or shall Landlord be required to provide any compensation or
01181.0024/568292.3 22
consideration to Tenant for the leasehold interest of Tenant, improvements pertaining
to realty, personal property, fixtures and equipment, pre -condemnation damages,
severance damages or interest and litigation expenses, whether based on
condemnation, inverse condemnation or any other reason. Upon vacation of the
Premises or termination of the Lease, Tenant knowingly waives and surrenders any
claims or rights to the leasehold interest, improvements pertaining to realty, personal
property, fixtures and equipment, pre -condemnation damages, severance damages or
interest and litigation expenses.
29. MISCELLANEOUS.
29.1. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties, their
successors and assigns and be governed by the laws of the State of California. Any
litigation between the Parties hereto concerning this Lease shall be initiated in the
Superior Court of the State of California for the County.
29.2. Partial Invalidity. If any term, covenant, condition or provision of this Lease is
held by a court of competent jurisdiction to be invalid, void, or unenforceable, then
the remainder of the provisions hereof shall remain in full force and effect and shall
in no way be affected, impaired or invalidated thereof.
29.3. Successors in Interest. The covenants herein contained shall, subject to the
provisions as to assignment, apply to and bind the heirs, successors, executors,
administrators and assigns of all the Parties hereto, and each and all, including the
Party making the assignment, shall be jointly and severally liable hereunder.
29.4. No Oral Agreements. This Lease covers in full each and every agreement of every
kind or nature whatsoever between the Parties hereto concerning this Lease, and all
preliminary negotiations and agreements of whatsoever kind or nature are merged
herein, and there are no oral agreements. Tenant acknowledges no representations or
warranties of any kind or nature not specifically set forth herein have been made by
Landlord or its employees, agents or representatives.
29.5. Interest. Any sum due to Landlord under this Lease shall bear simple interest from
and after its due date at a rate equal to ten percent per month until paid to Landlord,
but not in excess of the maximum rate permitted by law.
29.6. Authori .Each individual executing this Lease on behalf of Tenant represents and
warrants that he or she is duly authorized to execute and deliver this Lease on behalf
of Tenant and that this Lease is binding upon Tenant in accordance with its terms.
29.7. Time. Time is of the essence of this Lease.
29.8. Consistency. Each provision herein shall be interpreted so as to be consistent with
every other provision.
29.9. Relationship of Parties. The relationship of the Parties is that of Landlord and
Tenant, and it is expressly understood and agreed Landlord does not in any way or
01181.0024/568292.3 23
for any purpose become a partner of Tenant in the conduct of Tenant's business or
otherwise, or a joint venture with Tenant.
29.10. Non. Discrimination. Tenant herein covenants by and for Tenant, Tenant's
successors, heirs, executors, administrators and assigns, and all persons claiming
under or through Tenant, and this Lease is made and accepted upon and subject to
the following conditions: that there shall be no discrimination against or segregation
of any person or group of persons, on account of race, color, creed, religion, sex,
marital status, national origin, sexual preference or identity or ancestry, in the
leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the
Premises, nor shall the Tenant, or any person claiming under or through Tenant,
establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants,
Tenants, subtenants, subtenants or vendees of the Premises.
29.11. Non -Collusion. No official, officer, or employee of Landlord has any financial
interest, direct or indirect, in this Lease, nor shall any official, officer, or employee
of Landlord participate in any decision relating to this Agreement which may affect
his/her financial interest or the financial interest of any corporation, partnership, or
association in which (s)he is directly or indirectly interested, or in violation of any
interest of any corporation, partnership, or association in which (s)he is directly or
indirectly interested, or in violation of any State or municipal statute or regulation.
The determination of "financial interest" shall be consistent with State law and shall
not include interest found to be "remote" or non interest pursuant to California
Government Code Sections 1091 and 1091.5. Tenant represents and warrants that (i)
it has not paid or given, and will not pay or give, to any third party including, but
not limited to, Tenant or any of its officials, officers, or employees, any money,
consideration, or other thing of value as a result or consequence of obtaining this
Lease; and (ii) it has not engaged in any act(s), omission(s), or other conduct or
collusion that would result in the payment of any money, consideration, or other
thing of value to any third party including, but not limited to, any official, officer, or
employee of Landlord, as a result or consequence of obtaining this Lease. Tenant is
aware of and understands that any such act(s), omission(s) or other conduct
resulting in the payment of money, consideration, or other thing of value will render
this Lease void and of no force or effect.
29.12. Notices. Wherever in this Lease it shall be required or permitted that notice and
demand be given or served by either Party to this Lease to or on the other, such
notice or demand shall be given or served in writing and shall not be deemed to
have been duly given or served unless in writing, and personally served or
forwarded by certified mail, postage prepaid, addressed as specified below. Either
Party may change the address set forth below by written notice by certified mail to
the other. Any notice or demand given by certified mail shall be effective one (1)
day subsequent to mailing.
01181.0024/568292.3 24
Landlord: City of Morro Bay
Attn: City Manager
595 Harbor Street
Morro Bay, CA 94585
With a copy to: Aleshire & Wynder5 LLP
Attn: Chris F. Neumeyer, City Attorney
18881 Von Karman Ave., Suite 1700, Irvine CA
92612
Tenant: Three Stacks and a Rock Brewing Company, LLC
Attn: Ananda Nettnin
3118 Main Street
Morro Bay, California 93442
29.13. Not an Offer. The submission of this Lease and any ancillary documents to Tenant
shall not constitute an offer to lease, and Landlord shall have no obligation of any
kind, express or implied, to lease the Premises to Tenant until Landlord has
approved, executed and returned to Tenant a fully signed copy of this Lease.
29.14. Amendments. This Lease may be modified or amended only in writing executed
by both Parties and approved by Landlord in accordance with applicable law.
2915. Exhibits. Exhibit A is attached hereto and incorporated herein by reference.
29.16. Acknowledgement of Content. Each Party acknowledges they have read and fully
understand the contents of this Lease and have had an opportunity to consult with an
attorney regarding the same. This Lease represents the entire and integrated
agreement between the Parties with respect to the subject matter hereof and
supersedes all prior negotiations, representations or agreements, either written or
oral.
01181.0024/568292.3 25
IN WITNESS WHEREOF, the Parties have duly executed this Lease on the day and year
first above written in Morro Bay, California.
LANDLORD:
CITY OF MORRO BAY,
a municipal corporation
By:
lins, City Manager
ana Swingon, City Clerk
APPROVED AS TO FORM:
ALESHIRE & WYNDER, LLP
By:
Chris F. Neumeyer, Cityattorney
01181.002M5682923 2C
TENANT:
THREE STACKS AND A ROCK
BREWING COMPANY, LLC., a
California limi Iliability com - >
By: ,
U< VON
Its 171rvw(4 n VY) OK
(Attach Notary
Tenant)
Acknowledgements for
{i�rrn an h
` QOGwVG�
N
ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
validity of that document.
State of California
County of 5,n L(~ 1,5 Ob � sU U SS.
On 0 � � b c �- I D , :�, O I �1 ,before me, Nla� K H e �m a.I'► n ,Notary Public,
DA
personally appeared G ha I �u (,, ( IV } n r ,who proved to me on the
basis of satisfactory evidence to be the person) whose nameare subscribed to the within instrument
and acknowledged to me that e she/they executed the
same in( authorized capacity), and that
by her/their signature on the instrument the
person8), or the entity upon behalf of which the
person acted, executed the instrument.
,�., .+LL°�� MARK HERMANN
"i&MMYSVEOXPIA�sSw
C#oN
. ea. 14, 2023 i
PLACE NOTARY SEAL IN ABOVE SPACE
I certify under PENALTY OF PERJURY under the
laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand ayd-6fficial
SIGNATURE
The information below is optional. However, it may prove valuable and could prevent fraudulent attachment
of this form to an unauthorized document.
CAPACITY CLAIMED BY SIGNER (PRINCIPAL) DESCRIPTION OF ATTACHED DOCUMENT
INDIVIDUAL
CORPORATE OFFICER
PARTNER(S)
ATTORNEY -IN -FACT
GUARD IAN/CONSERVATOR
SUBSCRIBING WITNESS
OTHER:
TITLES )
SIGNER (PRINCIPAL) IS REPRESENTING:
NAME OF PERSONS) OR ENTITY(IES)
Corn I►'1 z r-c I c(. I D (.t. (I J
(RCi (�Q`aG TITLE OR TYPE OF DO ENT
oC 6 pG� % e;Kamplzs
— T NUMBER OF PAGES
DATE OF DOCUMENT
RIGHT
THUMBPRINT
OF
SIGNER
OTHER
4'(
APA(ll/2015 NOTARYBONDS,SUPPLIESANDFORMSATHTTP://WWW.VALLEY-SIERRA.COM ?2005-2017VALLEY-SIERRA INSURANCE
EXHIBIT A
DEPICTION OF PREMISES
The Premises consist of Spaces A, B, C and D as depicted on the figure following.
(The Building on Lease Site 69-70/69W-70W)
01181.0024/568292.3
NOT TO SCALE. DOORS, WIN-
DOWS NOT SHOWN.
(BAY)
(EMBARCADERO)
EXHIBIT A