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HomeMy WebLinkAboutReso 46-15RESOLUTION NO.46-15 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MORRO BAY, CALIFORNIA APPROVAL OF A TEN YEAR LEASE AGREEMENT FOR MOORING AREA A14 BETWEEN THE CITY OF MORRO BAY AND MORRO BAY MARINA THE CITY COUNCIL City of Morro Bay, California WHEREAS, the City of Morro Bay is the lessor of certain waters and properties on the Morro Bay Waterfront described as City Tidelands leases and properties; and WHEREAS, Morro Bay Marina is the current lessee of Mooring Area Al-4 located offshore of Marina Square at 601/699 Embarcadero and is a tenant in good standing; and WHEREAS, in accordance with the City's Master Lease Policy, the City and lessee have agreed to a new ten year lease agreement for Mooring Area Al-4. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Morro Bay, California, that the attached new Lease Agreement for Mooring Area Al-4 with Morro Bay Marina is hereby approved. BE IT FURTHER RESOLVED, that the Mayor is hereby authorized to execute said Mooring Agreement. PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting thereof held on the 23th day of June, 2015 on the following vote: AYES: Irons, Headding, Johnson, Makowetski, Smukler NOES: None ABSENT: None Y,- JA IE L. IRONS, M yor ATTEST: ANA SWANSON, City Clerk LEASE by and between the CITY OF MORRO BAY ("CITY") and ("TENANT") 01181. 00241255853.1 U.•/LEASES - LEASE FORMSMOORING ZONE Al-4 2003 TABLE OF CONTENTS 1.0d Article1 FIXED TERM .............................................................................................................2 Section1.01 Term..............................................................................................2 Section 1.02 No Extensions...............................................................................2 Section1.03 Hold Over......................................................................................2 Section1.04 Replacement..................................................................................3 Article2 RENT..........................................................................................................................3 Section 2.01 Annual Minimum Rent.................................................................3 Section 2.02 CPI Adjustment to Annual Minimum Rent..................................3 Section 2.03 Calculation of New Minimum Rent..............................................4 Section 2.04 Reimbursements............................................................................4 Section 2.05 Penalty and Interest.......................................................................5 Article 3 USE OF PREMISES...................................................................................................5 Section 3.01 Permitted Uses..............................................................................5 Section 3.02 Unauthorized Use..........................................................................5 Section 3.03 Operation of Business - Hours of Operation.................................5 Section 3.04 Competition...................................................................................6 Section 3.05 Hazardous Materials.....................................................................6 Section 3.06 Tidelands Trust.............................................................................7 Section 3.07 Compliance with Law...................................................................7 Section 3.08 Waste or Nuisance........................................................................8 Section 3.09 Use by CITY.................................................................................8 Article 4 CONSTRUCTION, ALTERATION AND REPAIRS...............................................8 Section 4.01 Construction Approval..................................................................8 Section 4.02 Construction Bond........................................................................9 Section 4.03 Mechanics' Liens...........................................................................9 ./ 01181.0024/255853.1 Mooring Zone A1-4 2003 -i- Section 4.04 Ownership of Improvements.......................................................10 Article 5 LEASEHOLD MORTGAGES.................................................................................10 Article 6 REPAIRS, MAINTENANCE AND RESTORATION............................................10 Section 6.01 Maintenance by TENANT..........................................................10 Section 6.02 Seawalls and Revetment............................................................. I I Section 6.03 Legal Requirements.................................................................... I I Section 6.04 Failure to Repair.........................................................................11 Section 6.05 Inspection by CITY.....................................................................12 Section 6.06 TENANT'S Duty to Restore Premises........................................12 Section 6.07 Termination of Lease for Destruction.........................................13 Section 6.08 Destruction Due to Risk Not Covered by Insurance...................14 Article 7 INDEMNITY AND INSURANCE..........................................................................14 Section 7.01 Indemnity Agreement.................................................................14 �w Section 7.02 Liability Insurance......................................................................15 Section 7.03 Worker's Compensation..............................................................15 Section 7.04 Property Insurance......................................................................16 Section 7.05 Additional Coverage...................................................................16 Section 7.06 General Requirements.................................................................16 Section 7.07 No Subrogation...........................................................................17 Section 7.08 TENANT'S Waiver.....................................................................18 Section 7.09 Insurance Not a Limit.................................................................18 Article 8 TAXES AND FEES..................................................................................................18 Section 8.01 TENANT to Pay Taxes...............................................................18 Section 8.02 TENANT to Pay License and Permit Fees.................................18 Section 8.03 Utilities........................................................................................18 01181.0024/255853.1 Mooring Zone A1-4 2003 -ii- Article9 CONDEMNATION..................................................................................................19 Section 9.01 Total Condemnation....................................................................19 Section 9.02 Condemnation Award.................................................................19 Section 9.03 Termination for Partial Taking...................................................20 Section 9.04 Rent Abatement for Partial Taking.............................................20 Section 9.05 Conveyance in Lieu of Eminent Domain....................................21 Section 9.06 Temporary Taking......................................................................21 Article 10 ASSIGNMENT AND SUBLEASING.....................................................................21 Section 10.01 No Assignment Without CITY'S Consent..................................21 Section 10.02 Change of Ownership as Assignment.........................................22 Section 10.03 Application for Assignment........................................................22 Section 10.04 Probate Transfer of Assignment.................................................23 Section 10.05 No Sublease Without CITY'S Consent.......................................23 Section 10.06 Subtenant Subject to Lease Terms..............................................23 Section 10.07 Consent Form Agreement...........................................................24 Section 10.08 TENANT and Guarantor Remain Liable....................................24 Section 10.09 Nondisturbance...........................................................................24 Article 11 DEFAULT AND TERMINATION..........................................................................24 Section 11.01 Abandonment by TENANT........................................................24 Section 11.02 Termination for Breach by TENANT .........................................25 Section 11.03 Termination for Failure to Pay Rent...........................................25 Section 11.04 Lender May Cure Default...........................................................25 Section 11.05 Attorneys' Fees............................................................................25 Section 11.06 Damages for Breach....................................................................26 Section 11.07 Cumulative Remedies.................................................................26 Section 11.08 Waiver of Breach........................................................................26 Section 11.09 Surrender of Premises.................................................................27 01181.0024/255853.1 Mooring Zone A1-4 2003 -iii- ..% n Article12 MISCELLANEOUS.................................................................................................27 Section 12.01 Attorneys' Fees............................................................................27 Section12.02 Notices........................................................................................27 Section 12.03 Governing Law and Jurisdiction.................................................28 Section 12.04 Binding on Successors................................................................28 Section 12.05 Partial Invalidity..........................................................................28 Section 12.06 Sole and Only Agreement...........................................................28 Section 12.07 Modification................................................................................29 Section 12.08 Time of Essence..........................................................................29 Section 12.09 Memorandum of Lease for Recording........................................29 Article 13 SPECIAL PROVISIONS PECULIAR TO THIS LEASE SITE.................................29 Section 13.01 Modification of Boundary Lines and/or Termination of Lease ..29 Section 13.02 Mooring Zone AI-4 Configuration.............................................30 Section 13.03 TENANT Shall Commit to Clean Marinas Program Certification. 3 0 Section 13.04 CITY Specifications....................................................................30 01181.0024/255853.1 Mooring Zone Al 4 2003 -iv- ,%W LEASE 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 Morro Bay Marina, a California general partnership, herein called TENANT. WITNESSETH WHEREAS, the State of California granted certain tide and submerged lands located within the limits of CITY to the County of San Luis Obispo ("County") 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 succeeded to all of the right, title and interest of County in and to all of the tide and submerged lands (the "Tidelands") conveyed to 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 of Morro Bay, Plaintiff, v. County of San Luis Obispo and State of California, Defendants, #30417, by the Superior Court of the State of California in and for the County of San Luis Obispo, adjudging and decreeing, among other things, the title to the Tidelands passed automatically to CITY upon the date of its incorporation as a city, on the 17th day of July, 1964; and WHEREAS, TENANT accepts this Lease with full knowledge there is no warranty of title in and to the within 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 Premises 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 01181.0024/255853.1 Mooring Zone Al — 2003 the following premises (herein collectively referred to as the "Premises") in CITY, described as follows: Mooring Zone A14 as delineated on Diagram 15.28.020 codified in and made a part of chapter 15.28 of the Morro Bay Municipal Code. Such map as approved and adopted by resolution of the City Council. The Premises consists of an area sufficient to accommodate W to twenty-six moorings with a minimum swing radius of fifty feet. The Premises is delineated on CITY Parcel Map 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. Article 1 FIXED TERM Section 1.01 Term. The term of this Lease shall be a period of TEN (10) years, commencing July 1, 2015 (the "Commencement Date"). The term of this Lease shall terminate without notice on June 30, 2025, unless sooner terminated as herein provided. 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' S City Council approval and the execution of a new lease, containing the then most current terms, covenants, conditions and rent schedules. Section 1.03 Hold Over. If TENANT holds the Premises after the expiration of the term of this Lease with the consent of the CITY, express or implied, 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 thirty -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 month for the twelve months immediately preceding the expiration of this Lease, and otherwise subject to each and every term, covenant and condition of this Lease. 01181.0024/255853.1 Mooring Zone Al 4 - 2015 -2- Section 1.04 Replacement. As of 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 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. 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 $25,500.00 per year (the "Minimum Rent"), payable in advance in equal semiannual installments on January 1 and July 1 each year during the term of this 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 this 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"), the annual Minimum Rent shall be increased or decreased in direct proportion to any upward or downward movement in the Consumer Price Index for January 2015 which is hereby agreed to be 239.72 (Base Index). The percentage adjustment for any given year shall be based on the monthly average Consumer Price 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 urban consumers) for Los Angeles - Anaheim - Riverside, California, compiled and published by the United States Department of Labor, Bureau of Labor Statistics, 1982-84 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 01181.0024/255853.1 Mooring Zone Al - 2015 -3- 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, ceases to compile and make public the Consumer Price Index as now constituted and issued, but shall substitute another index in its place, then that substituted index shall be used for the purpose of adjusting the Minimum Rent for the Premises. If the Consumer Price Index is changed so the base year differs from that in effect on the Commencement Date, then the Consumer Price 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-year period (each, a "Subsequent Rental Period") as follows: (1) The Minimum Rent shall be subject to adjustment as of the fifth anniversary of the Commencement Date and every five years thereafter (each, an "Adjustment Date"). The adjustment shall be based on the current Master Fee Schedule rate for privately -owned moorings, commensurate to TENANT's number of moorings, rounded -up to the nearest $500 increment. As an illustration only, if the current Master Fee Schedule rate for privately -owned moorings is $960/ ear $80/month) and there are 26 non -transient moorings in TENANT's Al-4 mooring field, the annual Minimum Rent shall be $24,960, and rounded -up to $25,000. If the new adjusted Minimum Rent is less than the current Minimum Rent prior to adjustment, then the current Minimum Rent shall be maintained until the next Adjustment Date. (2) 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. 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. Section 2.04 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 01181.0024/255853.1 Mooring Zone A1-4 - 2015 4- procure the insurance required by this Lease, 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 2.05 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. Article 3 USE OF PREMISES 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 following: Installation and operation of a mooring facility consisting of twenty-six individual moorings and for uses normally incident to and directly allied to such purpose and for no other purpose. 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. Section 3.03 Operation of Business - Hours of Operation. (1) Failure to actively and diligently conduct the business authorized herein constitutes a breach of this Lease and shall, at the option of CITY, terminate this Lease. TENANT shall during the term of this Lease conduct business of the nature specified in Section 3.01 of this Lease on the Premises in an efficient and diligent manner. 01181.0024/255853.1 Mooring Zone A1-4 - 2015 -5- 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. 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, then 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 01181.0024/255853.1 Mooring Zone Al 4 - 2015 -6- 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 remediation hereunder and if TENANT fails 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 or gpplied generally throughout the community and was adopted to protect the public health, safety or welfare. The judgment of any court of competent jurisdiction, or the admission of TENANT 01181.0024/255853.1 Mooring Zone A1-4 - 2015 -7- in any action or proceeding against TENANT, whether CITY be a party thereto or not, TENANT has violated any Legal Requirement in the use of the Premises shall be conclusive of that fact as 1.04 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. 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. Article 4 CONSTRUCTION, ALTERATION AND REPAIRS Section 4.01 Construction Approval. (1) TENANT shall not make or permit any other person to make any alterations or structural additions or structural modifications to the Premises or to any structure thereon or facility appurtenant thereto if the cost thereof shall exceed fifty thousand dollars ($50,000), 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 for CITY. If the Harbor Director gives such consent to proceed, then it is understood that 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) When 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. 01181.0024/255853.1 Mooring Zone AI-4 - 2015 -8- 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. That estimate must be submitted to CITY'S City Engineer for approval. TENANT shall file with CITY'S 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 one hundred percent (100%) 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 CITY'S 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 01181.0024/255853.1 Mooring Zone Al 4 - 2015 -9- 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. 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 this 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. Article 5 LEASEHOLD MORTGAGES 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. Article 6 REPAIRS, MAINTENANCE AND RESTORATION Section 6.01 Maintenance by TENANT. 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 condition. Installation, maintenance and inspection of moorings shall be in accordance with and subject to CITY specifications and conditions as detailed in the Morro Bay Municipal Code as amended from time to time. Installation, maintenance and inspection 01181.0024/255853.1 Mooring Zone A1-4 - 2015 -10- costs shall be at the expense of TENANT. Each mooring shall be inspected for general condition and safety bi-annually and by a qualified person hired by TENANT subject to approval by CITY. CITY may, at the sole option of CITY, inspect and repair the moorings on the Premises at TENANT'S cost and expense, in the event TENANT fails to inspect and maintain the moorings on the Premises in accordance with this Section to the satisfaction of CITY after fifteen (15) days' written notice to TENANT from CITY of CITY's intent to exercise this option. 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, pilings, 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, defend and hold harmless CITY and each of its officers, employees and agents and property of CITY, including the Premises, 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, then 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 CITY'S demand, as additional Rent. 01181.0024/255853.1 Mooring Zone A1-4 - 2015 -1 1- 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 moorings on the Premises to determine whether TENANT is 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, then 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. 01181.0024/255853.1 Mooring Zone Al-4 - 2015 -12- 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 five (5) 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, that 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 (b) During the last two (2) 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, that they cannot be repaired and restored as required by Section 6.06 of 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 01181.0024/255853.1 Mooring Zone Al-4 - 2015 -13- (e) the remaining proceeds, if any, to TENANT. 14 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 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. Article 7 INDEMNITY AND INSURANCE Section 7.01 Indemnity Agreement. (1) TENANT shall indemnify, defend and hold harmless CITY, and the property of CITY (including the Premises and any improvements now or hereafter on the Premises), and the CITY'S officers, officials, employees, agents and volunteers from any and all liability, claims, loss, damages, and expenses, including reasonably attorney fees and litigation expenses (the "Damages"), resulting from TENANT'S occupation and use of the Premises or any negligent act or omission of the TENANT or any of its officers, agents, invitees, 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; 01181.0024/255853.1 Mooring Zone A1-4 - 2015 -14- (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 are only to the extent TENTANT or its officers, agents, invitees, subtenants, employees, contractors or anyone for whom TENANT may be liable have caused the Damages. Section 7.02 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. 01181.0024/255853.1 Mooring Zone A1-4 - 2015 -15- 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. Section 7.05 Additional Coveraqe. 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 Reauirements. Except as specifically provided to the contrary, all the insurance required pursuant to this Article Seven 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 01181.0024/255853.1 Mooring Zone A14 - 2015 -16- 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 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, 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 01181.0024/255853.1 Mooring Zone A14 - 2015 -17- 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 Waiver. 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. Section 7.09 Insurance Not a Lim 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. Article 8 TAXES AND FEES Section 8.01 TENANT to Pay 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 Pay 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 harmless CITY and the property of CITY, including the Premises, 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. 01181.0024/255853.1 Mooring Zone Al-4 - 2015 -18- 0 Article 9 CONDEMNATION 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. 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 of 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 too of the taking, not expired shall belong to and be the sole property of TENANT. Ol 181.0024/255853.1 Mooring Zone A14 - 2015 -19- (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. (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 be 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 01181.0024/255853.1 Mooring Zone A14 - 2015 -20- 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. 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 should be 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. Article 10 ASSIGNMENT AND SUBLEASING 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 01181.0024/255853.1 Mooring Zone Al 4 - 2015 -21- 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 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 a twelve-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 closely held corporation (i.e., one whose stock is not publicly held and not traded through an exchange or over the counter): (a) The sale or other transfer, within a twelve-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 that 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, CITY may 1, 01181.0024/255853.1 Mooring Zone A1-4 - 2015 -22- 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 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, 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 the 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. Section 10.06 Subtenant Subject 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. 01181.0024/255853.1 Mooring Zone A1-4 - 2015 -23- 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 providing 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. Article 11 DEFAULT AND TERMINATION Section 11.01 Abandonment by TENANT. Should TENANT breach this Lease and abandon all or any part of the Premises prior to the scheduled expiration of the term of this Lease, CITY may continue this Lease in effect by not 01181.0024/255853.1 Mooring Zone Al 4 - 2015 -24- 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. Should TENANT fail 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 Pay Rent. If any payment of Rent is not made as herein provided and such failure to pay is not 0 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 CITY finds it necessary to retain an attorney in connection with the default by 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 to collect same. If 0 CITY is successful in such legal action, then CITY shall also be entitled to reasonable attorney 01181.0024/255853.1 Mooring Zone A14 - 2015 -25- fees and costs for the collection action. To the extent CITY is represented by the City Attorney, a reasonable sum for such attorneys' services will be included as attorneys' fees. Section 11.06 Damages for Breach. If TENANT default 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 this 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 this 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. n 01181.0024/255853.1 Mooring Zone Al-4 - 2015 -26- 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. Article 12 MISCELLANEOUS Section 12.01 Attorneys' Fees. If any litigation is commenced between the parties to this Lease concerning the Premises, this Lease, or the rights and duties of either in relation thereto, then the party, CITY or TENANT, prevailing in such litigation shall be entitled, in addition to such other relief as may be granted in the litigation, to a reasonable sum as and for its attorneys' fees in such litigation, which shall be determined by the court in such litigation or in a separate action brought for that purpose. The "prevailing" party shall mean the party who obtains substantially the relief sought by that party. To the extent CITY is represented by CITY' S City Attorney, a reasonable sum for such attorneys' services will be included as attorneys' fees. Section 12.02 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 1275 Embarcadero Morro Bay, California 93442 City Manager of the City of Morro Bay City Hall 595 Harbor Street Morro Bay, CA 93442 Any notice or demand to TENANT may be given at: 01181.0024/255853.1 Mooring Zone Al - 2015 -27- Morro Bay Marina Stan Trapp 699 Embarcadero, Suite 10 Morro Bay CA 93442 Such addresses may be changed by written notice by either party to the other party. Section 12.03 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 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 12.04 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 12.05 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 12.06 Sole and Only Agreement. 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. 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 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. 01181.0024/255853.1 Mooring Zone Al-4 - 2015 -28- Section 12.07 Modification. This Lease shall not be modified except pursuant to a written agreement executed by CITY' S Mayor and City Clerk pursuant to prior CITY Council approval. Notwithstanding CITY' S City Council approval, no agreement shall become effective until such agreement is in fact executed by CITY' S Mayor and City Clerk. TENANT understands that this agreement may not be modified by oral statements by any person representing CITY including its 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 CITY'S Mayor and City Clerk. If the 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 12.08 Time of Essence. Time is expressly declared to be the essence of this Lease. Section 12.09 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 leased premises, specify the term of this Lease, and incorporate this Lease by reference. Article 13 SPECIAL PROVISIONS PECULIAR TO THIS LEASE SITE The following provisions apply to this Lease site only: Section 13.01 Modification of Boundary Lines and/or Termination of Lease Notwithstanding the specific description of the location of the leased premises contained in paragraph 1, page 2 hereinabove, in the event that circumstances (including both natural circumstances and action by CITY or other government agencies, such as the re -alignment of the navigable channel, dredging operations, or the implementation of an adopted Harbor Plan) reduce the area or depth of water, said location of the leased premises may be modified by CITY to insure that pp to twenty six (26) moorings remain functional. All costs and expense of moving the mooring equipment or other property of TENANT shall be borne by TENANT. 01181.0024/255853.1 Mooring Zone A1-4 - 2015 -29- If such relocation is impossible or not provided for within a reasonable amount of time by CITY,. then the rent payable by TENANT shall be reduced by an amount equal to the percentage of moorings determined by CITY to be no longer usable. CITY reserves the right to terminate this lease without other cause and without reimbursement to TENANT in the event such relocation is not possible or practicable. In the event of such early termination, TENANT waives any claims against CITY by reason of such termination, the loss of use of the leased premises, loss of profits under this lease or any and all other damages TENANT might incur. CITY shall bear the costs and expense of removing moorings, tackle and other property of TENANT from the mooring site to the shore in the event CITY fails to provide substitute moorings sites or completely terminates this lease as a result of an adopted Harbor Plan. Section 13.02 Mooring Zone A1-4 Configuration The original configuration of the Al-4 Mooring Zone consisted of 26 moorings. TENANT was authorized in March of 2002 to pull three existing moorings at the northernmost end of the mooring field and to replace them with 2 moorings for large vessels. Currentlythere here area total of 25 moorings in Mooring Zone Al-4. Should TENANT propose any changes to the mooring field configuration during the term of this agreement, including reconfiguration to a 26- mooring field, said proposal shall be made in writing and must be approved by CITY in writing in advance of any mooring field modification. Section 13.03 TENANT Shall Commit to Clean Marinas Program Certification. TENANT shall commit to certification under the Clean Marinas Program (www.cleanmarina.org,), or equivalent as determined by CITY should the Clean Marinas Program cease, at TENANT's sole cost and expense. Section 13.04 CITY Specifications Installation, maintenance and inspection of moorings shall be in accordance with and subject to CITY specifications and conditions as detailed in the Morro Bay Municipal Code as amended from time to time. Installation, maintenance and inspection costs shall be at the expense of TENANT. Each mooring shall be inspected for general condition and safety at a frequency and byqualified person hired by TENANT subject to approval by CITY. 01181.0024/255853.1 Mooring Zone Al-4 - 2015 -30- 0 1 EXECUTED on CITY OF MORRO BAY 2015, at County, California. TENANT Morro Bay Marina By: Jamie L. Irons, MAYOR APPROVED AS TO FORM: ® Joseph W. Pannone, CITY ATTORNEY ATTEST: Dana Swanson, CITY CLERK 01181.0024/255853.1 Mooring Zone A14 - 2015 -31- EXHIBIT A COPY OF PARCEL MAP 01181.0024/255853.1 S/RWS/Cmbety.Harbor. 011011.agr.MasterLeaseA-I E irP5► r / l •�:Ir y� O�C•iCG .a r C h Apo ng °n r � I no. pep I I Ir � I � J U 1 i Q = v� v ril 14 LLJ t� IJ_ 0 M 0 O