HomeMy WebLinkAboutReso 101-19 New 34W MLARESOLUTION NO. 101-19
RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF MORRO BAY, CALIFORNIA
APPROVING A 22.5-YEAR MASTER LEASE AGREEMENT FOR
LEASE SITE 34W BETWEEN THE CITY OF MORRO BAY AND
GLAUS LANDING LLC, LOCATED AT 225 MAIN STREET
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, Glad's Landing LLC (William Martony) submitted a proposal to own
and operate Lease Site 34W following a Request for Proposals (RFP) process to
manage the site; and
WHEREAS, Glad's Landing LLC's proposal was the only proposal received,
deemed responsive to the RFP and included maintenance, repair and operation of the
improvements on the Lease Site; and
WHEREAS, in accordance with the City's Master Lease Policy, the City and
Glad's Landing LLC have agreed to a new 22.5-year lease agreement for Lease Site
34W located at 225 Main Street.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Morro
Bay, California, as follows:
1. The attached new Master Lease Agreement for Lease Site 34W is hereby
approved.
2. The Mayor is hereby authorized to execute said Master Lease
Agreement,
3. This Resolution shall not become effective until the date Glad's Landing
LLC is validly registered with the California Secretary of State and
authorized to do business in California, as verified by the City Attorney.
PASSED AND ADOPTED by the City Council of the City of Morro Bay at a
regular meeting thereof held on the 10th day of December, 2019 on the following vote:
AYES:
NOES:
ABSENT
one
Headding, Addis,
None
N
ATTEST:
C^-S�
Dana Swanson, City Clerk
Davis, Heller, McPherson
LEASE
by and between
the CITY OF MORRO I3AY
("CITY")
GLAD' S LANDING I,LC
(""TENANT")
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TABLE OF CONTENTS
Article1 FIXED TERM.....................:...................................................too .................................2
Section1.01 Tezm..............................................................................................2
Section 1.02 No Extez�sions...............................................................................2
Section1.03 Hold Over......................................................................................2
Section 1.04 Intentionally Omitted....,...............................................................3
Article2 RENT..........................................................................................................................3
Section 2.01 Annual Minimum Rent.................................................................3
Section 2.02 CPI Adjustment to Azulual Miz3imuxn Rent..................................3
SectionCalculation of New Minimum Rent..............................................4
Section 2.04 Percentage Rent............................................................................5
Section 2.05 Reirnbtzrsements............................................................................8
Section 2.06 Penally and Interest.......................................................................8
A�•ticle 3 USE OF PREMISES...................................................................................................8
Section 3.01 Permitted Uses..............................................................................8
Section 3.02 Unauthorized Use..........................................................................9
Section 3.03 Operation of Business - Hours of Operation.................................9
Section 3.04 Competition...................................................................................9
Section 3.05 Hazardous Materials,
Section 3.06 Tidelands Trust...........................................................................11
Section 3.07 Compliance with Law. 11
Section 3.08 Waste or Nuisance, P%ot1*40#00 otly 0 to 0 0 6 Pose P*4*00*40000V 0 of#$## 0 0604 11
Section 3.09 Use by CITY...............................................................................12
Article 4 CONSTRUCTION, ALTERATION AND REPAIRS.............................................12
Section 4.01 Construction Approval................................................................12
Section 4.02 Construction Bond.00440...........60......0910...:..44....6.....511..4..404444461.4.64012
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Article 5
Article 6
Article 7
Article 8
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Section4.03 Mechanics' Liens...............................................................:.........13
Section 4.04 Ownerslup of unprovements.......................................................14
LEASEHOLD.MORTUAUES...........................................................:.....................14
REPAIRS, MAINTF..,NANCE AND RESTORATION..464.0.:..04.:..99.........5.04.9444.90004014
Section 6.01 Maintenance by TENANT..........................................................14
Section 6.02 Seawalls and Revetment.............................................................15
Section 6.03 Legal Requirelnents....................................................................15
Section 6.04 Failure to Repair:.:......................................................................15
SectionInspection by CITY.....................................................................16
SectionTermination of Lease for Destruction...............:.........................16
SectionDestruction Due to Risk
INDEMNITY AND INSURANCE..........................................................................18
Section 7.01 Indemnity Agreement.................................................................1$
Section 7.02 Liability Insuiance......................................................................19
Section 7.03 Worker's Compensato_�.........................................,....................19
Section 7.04 Property Insurance, 19 ...............................
Section 7.05 Additional Coverage,
Section 7.06 General Requirenlents.................................................................20
Section 7.07 No Subrogation.
Section 7.08 TENANT'S Waiver ........................... ............ .................. ..21
Section 7.09 Insurance Not a Limit.
TAXESAND FEES............................................:.........................:...........................22
Section 8.01 TENANT to Pay Taxes...............................................................22
Section 8.Q2 TENANT to Pay License and Permit Fees.............,.................,.22
Section 8.03 Utilities........................................................................................22
Article 9
Article 10
Article 11
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CONDEMNATIIN..................................................................................................22
Section 9.01 Total Condemnation. to W 6 2 A 6 s W ft I 1 4 W * b W 6 b V a 4 * * 4 *A 4 a A 4 d A 6 a 0 f 6 a 6 4 4 4 6 4 4 0 0 * * 4 * * * t 4 # & 4 0 4 6 9 0 0 4 6 LL
Section 9.02 Condemnation Award,
Section 9.03 Termination for Partial Taking...................................................24
Section 9.04 Rent Abatement for Partial Taking.............................................24
Section 9.OS Conveyance in Lieu of Eminent Domain....................................25
Section 9.06 Temporary Taking......................................................................25
ASSIGNMENT AND SUBLEASING.....................................................................25
Section 10.01 No Assignment Without CITY'S Consent..................................25
Section 10.03 Application for Assigllrrzent........................................................26
Section 10.04 Probate Transfer of Assignment.................................................27
Section 10.05 No Sublease Without CITY'S Consent.......................................27
Section 10.06 Subtenant Subject to Lease Ternls..............................................27
Section 10.07 Consent Fortin Agreement...........................................................28
Section 10.08 TENANT and Guarantor Remain Liable....................................28
Section 10.09 Nondisturbatrce....................,,...,.................................................28
DEFAULT AND TERMINATION..........................................................................29
Section 11.01 Abandonment by TENANT,
Section 11.02 Termination for Breach by TENANT, t 6 a * * 4 * 1 4 0 *29
Section 11.03 Termination for Failure to Pay Rent...........................................29
Section 11.04 Lender May Cure Default. . 6 0 * * 6 V V 0 M 1 9 K B x
Section.11.05 Intentionally Omitted..................................................................30
Section 11.06 Damages for Breach, . * 1 0 4 a 0 * 4 a * 4 a t A 4 6 A 0 **#to to I OOPOO*f 0 pot A Ott$ AA*1***%*%Vo930
Section. 11.07 Cumulative Rernedies.................................................................30
Section 11.08 Waiver of Breach, 6 Sol I tto4t4tq 4444te 0 040 04 #9900009114 *too*@ 09P00006400JU
Section 11.09 Surrender of Premises.................................................................31
0
Article 12
Article 13
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MISCELLANEOUS.0.......44..4.0.........4.....4.4..40.00.0..64.6.......0.6..5.:.0.4.44404..44.:..4444.4.....40.031
Section 12.01 Intentionally Omitted..................................................................31
Section I2.02 Notices........................................................................................31
Section 12.03 Governing Law and Jurisdiction. . 4 9 4 4 0 a 0 0 v 6 0 4 * 4 0 4 4 t 631
Sectiozi 12.04 Binding on Successors................................................................32
Section 12,05 Partial Iz�zvalidity..........................................................................32
Section 12.06 Sole and Only Agreeznerzt...........................................................32
Section 12.OT Modification....::..............................................:...........................32
Sectiozl 12.08 Time of Essence................>.:...........................:...........................33
SPECIAL PROVISIONS PECULIAR TO THIS LEASE SITE.................................3 3
Section 13.01 Improvements.............................................................................33
Section 13.02 Option to Extend Lease...............................................................35
Section 13.03 Future Constzuction of Harbarwallc............................................36
5
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 Glad's Landing LLC,
herein called TENANT.
WITNESSETI�
WHEREAS, the State of California granted certain. tide and. submerged lands located
within the CITY limits of CITY to the County of San Luis Obispo and to its successors, being
Chapter 1076, Statutes of 1947, as amended by Chapter 413, Statutes of 1955, Chapter 1874,
Statutes of 1957, and Chapter 70, Statutes of 1960, first extraordinary session; which Statutes
may be amended from time to time by the Legislature of the State of California; all of which
Statutes are expressly recognized and agreed to be in full force and effect by the parties hereto;
and
WHEREAS, the parties hereto recognize and agree that on July 17, 1964, the CITY of
Mozxo Bay, Lesson• herein, succeeded to all of the right, title and interest of the County of
San Luis Obispo in and to all of the tide and submerged lands conveyed to said County by the
State of California pursuant to the above mentioned acts; and
WHEREAS, judgment has been entered. on October 14, 1968, in the case of CITY 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 the CITY of Morro Bay upon the date of its incorporation as a CITY on
the 17th day of July, 1964; and
WHEREAS, TENANT accepts the within Lease with full knowledge that there is no
warranty of title in and to the 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
accommoAation of those using Morro Bay Harbor, CITY desires to lease to TENANT the within
described property upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the covenants to be performed and the rental to
be paid by TENANT to CITY, CITY leases to TENANT, and TENANT leases from CITY, alI of
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the following premises (herein collectively refezred to as the "Premises") in t11e CITY of
Morro Bay, County of San Luis Obispo, State of California, described as follows:
Lease Site 34W
This property is delineates on Parcel Map ki the CITY of Morro Bay No. &8-30, 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 22.5 years, commencing upon being executed
by both Parties on the date first written below (the "Commencement Date"). The term of this
Lease shall terminate without notice on the twenty second and one-half year anniversary of the
Commencement Date, unless sooner terminated or the Option to Extend Lease is exercised as
herein provided.
Section 1.02 No Extensions.
Except as provided in Section 13.01, the. term of this Lease shall .not be extended. This
Lease shall not be rezzewed. Requests foz• continued use of the Premises after this Lease expires,
however occurring, shall be treated as an application for a new lease and shall require
appropriate application to the CITY with all required supporting information and documents,
CITY Council approval and the execution of a new CITY lease, containing the then most current
terms, covenants, conditions and rent.
Section 1.03 Hold Over.
If TENANT holds the demised Premises after the expiration of the term of this Lease
with the consent of the CITY, express or implied, then such holding over (in the absence of a
written agreement between CITY and TENANT with respect thereto) shall be deemed to create a
tenancy from month to month, terminable on 30-days' written notice from either party to the
other, at a monthly rental equal to two hundred percent (200%) of the average total Rent per
month for the twelve (12) months iznnxediately preceding the expiration of the Lease, and
otherwise subject to each and every term, covenant and condition of this Lease.
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Section 1.04 Intentionally omitted
Article 2 RENT
Section 2.01 Annual Minimum Rent.
TENANT agzees to pay to CITY a minimum guaranteed annual rental for the use and
occupancy of the Premises, in an initial amount of $ $4,420 (four thousand four hundred twenty
dollars) per year (the "Minimum Rent"), payable in advance in equal semiannual installments on
January 1 and July 1 each year during the term of the Lease. If the Commencement Date is
other than January 1 or July 1, then TENANT shall pay, on the Commencement Date, the
proportionate amount of the Minimum Rent payable for the period from the Commencement
Date until the next payment date of January 1 or July 1, as the case may be. If the term of the
Lease expires on a date other than December 31 or June 30, then TENANT'S final installment of
Minimum Rent shall be proportionate to the time remaining in the term. All Rent, including the
Minimum Rent and the Percentage Rent, shall be paid in lawful money of the United States of
America, without offset or deduction and shall be paid to CITY at City Hall located at 595
Harbor Street, Morro Bay, California, or at such other place or places CITY may from time to
time designate by written notice delivered to TENANT.
Section 2.02 CPI Adjustment to Annual Minimum Rent.
(1) The parties agree, as of every July 1 following the Commencement Date (each, a
"CPI Adjustment Date"), except as outlined in section 2.03 hereof, the annual Minimum Rent
shall be adjusted in direct proportion to any upward. or downward movement in the Consumer
Price Index for January 1, 2020 (Base Index). The percentage adjustment for any given year
shall be based on the monthly average Index for the calendar year immediately preceding the
CPI Adjustment Date as compared with the Base Index. The Consumer Price Index referred to
herein is the Consumer Price Index (all items indexes, .all urban consumers) for Los Angeles —
Long Beach —Anaheim, Californa, 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
the Base Index (Jan. 1, 1999 CPI) is 166.1 and the monnthly 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.
G07953 -3-
{3) If the United States Department of Labor, Bureau of Labor Statistics, shall cease to
compile and make public the Index as now constituted and issued, but shall substitute another
index in its place, then said substituted index shall be used for the purpose of adjusting the
Minimum Rent for the Premises. If the Index is changed so that the base year differs fiom that in
effect on the Lease Commencement Date, the Index shall be converted in accordance with the
conversion factor published by the United States Department of Labor, Bureau of Labor
Statistics.
Section 2.03 Calculation of New Minimum Rent.
At the end of the initial five (5) years and of each five-year period thereafter, a new
Minimum Rent shall be calculated for the following five (5) year period (each, a "Subsequent
Rental Period") as follows:
A. The Minimum Rent shall be subject to adjustment by appraisal as of the fifth
anniversary of the Commencement Date and every five years thereafter (each, an "Appraisal
Adjustment Date"). CITY, at its own cost and expense, shall retain an independent qualified
appraiser for determination of the fair market value of said premises. Not more than nine (9)
months prior to each Appraisal Adjustment Date, CITY shall provide written notice to TENANT
of the pending appraisal and the appraiser selected by the CITY to determine the fair market
value of the Premises, excluding fixtures and improvements unless such are expressly included
in the description of the leasehold hereinabove. If TENANT does not reject CITY's appraiser: in
uniting and within thirty (30) days after CITY's notice of its determination, then the Minimum
Rent for the Subsequent Rental Period shall be in the amount determined by CITY as outlined in
this Section 2.03. If TENANT rejects CITY's appraiser within thirty (30) days following CITY's
notice to TENANT, then within fifteen (15) days after such 30-day period, each party, at its own
cost, shall select an independent professionally designated appraiser who is a member of the
American Institute of Real Estate Appraisers, or the Society of Real Estate Appraisers with a
designation of MAI (Member of American Institute), SRPA (Senior Real Estate Analysis), to
appraise the fair market value of the Premises. CITY may rely on its original appraisal, or select
a new appraiser, at its cost. If a party does not appoint an appraiser within fifteen (15) days after
the other party has given. notice of the name of its appraiser, then the single appraiser appointed
shall be the sole appraiser. Each appraiser shall conduct an independent appraisal within thirty
(30) days after appointment. If the parties are unable to agree on the Minimum Rent for the
Subsequent Rental Period within thirty (30) days after receiving the appraisal(s), then each party
shall select one member of a three -member committee. The two so selected members shall select
the third member, and this committee shall by majority vote select one or the other of the
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appraisals. The Minimiun Rent as -determined based on the selected appraisal shall be final and
binding and all costs associated with the three -member committee shall be paid equally by CITY
and TENANT.
B. If the appraisal process is not concluded on or before the Appraisal Adjustment Date,
then the Minimum Rent shall be adjusted retroactively to such Appraisal Adjustment Date as set
out herembelow when said appraisal process is completed.
C. The total Rent payable, including both the Minimum Rent and the Percentage Rent
for each year within the applicable previous five-year period, shall be averaged to produce the
average annual total Rent payable for such previous period.
D. The new Minimum Rent for the five-year period commencing on each Appraisal
Adjustment Date shall be eight percent (8%) of the fair market value of the Premises (as
established in paragraph A. above.) The new Minimum Rent shall be divided by two to
determine the semiannual payments and shall be paid by TENANT to CITY on the first of each
January and July thereafter, or paid monthly at the option of TENANT. This new Minimum
Rent shall be adjusted each following year in proportion to any increase in the Consumer Price
Index as set out in Section 2.02 of this Lease. The Base Index shall be adjusted upon each
Calculation of new Minimum Rent as set out in this section so that the Base Index for GPI
adjustment shall be the Consumer Price Index for January 1 of the year of the calculation of new
Minimum Rent.
Section 2.04 Percentage Rent.
A. In addition to the Minimum Rent, TENANT agrees to pay to CITY at the time and in
the manner hereinafter specified, as additional Rent for the use and occupancy of the Premises, a
sum equal to ten percent (10%) of TENANT'S Gross Sales, hereinafter defined, to the extent that
percentage of Gross Sales in any year exceeds the amount of the Minimum Rent due that year
pursuant to this Lease (the "Percentage Rent") as illustrated by the exemplar annual calculation
sheet attached as Exhibit C.
B. The term "Gross Sales," as used here>l1, shall mean (subject to the exceptions and
authorized deductions as hereinafter set forth), the total selling price and the total gross amount
received by TENANT from all rentals/license fees, merchandise sold and services rendered in,
on or from the Premises by TENANT, its sublessees, licensees, or concessionaires, both for cash
and on credit including, but not limited to, rentals of dockage space, leasing and servicing
operations and ticket sales, and if on credit whether or not payment be actually made therefore,
all charges for services, alterations or repairs made in or upon the Premises; the gross amount
received by TENANT for merchandise sold pursuant to orders received in the Premises if any,
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though filled elsewhere; and the gross amount received by TENANT from any and all other
sources of income derived from the business conducted upon the Premises.
C. Notwithstanding the other provisions of Section 2.04, the term "Gross Sales" shall not
include the following items, and such items may be deducted from Gross Sales to the extent they
have been included therein or have been included in a prior computation of Gross Sales or for
which a Percentage Rent has been paid under this Lease to CITY:
(1) Credits, offsets for other than something of value exchanged for the
merchandise or services, and refi�nds made to customers for merchandise
returned or exchanged or services cancelled;
(2) Security Deposits, if returned to the customer;
(3) Insurance proceeds, other than insurance coverage, if any, for lost
rental ome;
(4) Amounts received fiom subtenants/licensees as reimbursement for
damages, late fees or interest charged for late payments, bad check fees or
charges, or refunds in ordinary course of business.
(5) 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,
(6)
(7) With respect to credit card sales, fees retained or withheld by the
issuer and/or merchant bank pursuant to TENANT'S credit card or credit vendor
acceptance agreement, and
(8) Rental payments to TENANT from sublessees whose total gross
sales are included in gross sales computations.
D. TENANT shall keep or cause to be kept full, complete, and accurate records, and
books of account in accordance with accepted accoUDting practices showing the total amount of
Gross Sales, as defined herein, made each calendar month in, on or from the Premises.
TENANT shall keep said records and books of account within San Luis Obispo County and shall
notify CITY in advance of their location at all times. Furthermore, TENANT shall at the time of
sale and in the presence of the customer cause the full selling price of each piece of merchandise,
each rental received and each service rendered in, on or from the Premises to be recorded in a
cash register or cash registers that have cumulative totals and are sealed in accordance with
standard commercial practices. Said records, books of account and cash register tapes, including
any sales tax reports that TENANT may be required to furnish any government or governmental
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agency shall at all reasonable times be open to the inspection of CITY, CITY'S auditor, or other
authorized representative or agent of CITY. TENANT consents to the release of sales tax
information to CITY and on demand will furnish to CITY a copy of the sales tax reports,
quarterly reports and any audit reports of sales for confidential internal use of the CITY in
determining Gross Sales for TENANT. TENANT consents and authorizes CITY to request such
information directly from the State Board of Equalization or other state agency with which sales
tax information is filed.
E. By July 31 of each year, TENANT shall furnish CITY with a statement, to be
certified by TENANT as current, true and accurate, which shall set forth the Gross Sales of each
department, sublessee, licensee and concession operating in, on or from the Premises for the
previous twelve (12) calendar months, ending June 30, just concluded, and the authorized
deductions, if any, therefrom; and with it TENANT shall pay to CITY the amount of the
Percentage Rent which is due to CITY as shown thereby. If TENANT shall at any time cause an
audit of sales of TENANT'S business to be made by a public accountant, then TENANT shall
fiunish CITY with a copy of said audit without cost or expense to CITY. CITY may, once in
any twelve-month period, cause an audit of the business of TENANT to be made by a public
accountant of CITY'S own selection. TENANT shall, upon receiving written notice of CITY'S
desire for such an audit deliver and make available all such books, records and cash register
tapes to the public or certified public accountant selected by CITY. Furthermore, TENANT shall
promptly on demand reimburse CITY for the Rill cost and expense of said audit, should the audit
disclose that the questioned statement or statements understated Gross Sales by five percent (5%)
or more but less than ten percent (10%). If that an audit performed at CITY'S request discloses
TENANT understated Gross Sales by less than 5%, then the cost of such audit shall be paid by
CITY. In the event any audit or other review of records discloses that the amounts reported as
Gross Sales was understated by TENANT by ten percent (10%) or more, CITY shall not only be
entitled to recover from TENANT all costs of audit and review, but shall also be entitled to
recover from TENANT a penalty equal to two times the Percentage Rent due pursuant to this
Lease on such unreported amounts. Whenever any audit discloses that Gross Sales were
understated by any amount, TENANT shall immediately pay the additional Percentage Rent
therein shown to be payable by TENANT to CITY, together with interest at the Default Rate
thereon, from the date the Percentage Rent was payable until the date paid.
F. Unless, pursuant to Paragraph E., above, CITY has audited TENANT within the
immediately previous 12-month period, CITY shall be entitled at any time within five (5) years
after the receipt of any such Percentage Rent payment, to question the sufficiency of the amount
thereof and/or the accuracy of the statement or statements furnished by TENANT to justify the
same. For the purpose of enabling CITY to check the accuracy of any such statement or
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statements, TENANT shall for said period of five (5) years after submission to CITY of any such
statement keep all of TENANT'S records, including sales tax returns, all cash register tapes and
other data which in any way bear upon or are required to establish in detail TENANT'S Gross
Sales and any authorized deductions therefrom as shown by any such statements and shall upon
request make the same available to CITY for examination.
Section 2.05 Reimbursements.
If TENANT fails to peiforin any te17n or covenant of this Lease, then CITY may, but is
not obligated to, perform such term or covenant, and TENANT shall reimburse CITY therefore
as additional Rent hereunder. As an illustration and not as a limitation, if TENANT fails to
procure the insurance required by this Lease, then CITY may, but is not obligated to, obtain such
insurance, with the cost of the premiums being due to CITY upon demand as additional Rent.
Section 2.06 Penalty and Interest.
(1) If any Rent is not received within ten (1Q) days following the date on which the Rent
first became due, then TENANT shall pay a late penalty often percent (1 Q%) 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 uses permitted by applicable and valid City water lease
ntitl development eements, and for no other purpose. On the Commencement Date, such uses
include vessel slips, and managing a marina. Nothing in this section precludes such other or
additional uses as may, during the pendency of this Lease, be permitted by CITY, in writing and
-hrough all necessary land use entitlements.
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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.
Failure to actively and diligently conduct the business authorized herein constitutes a
breach of the agreement and shall, at the option of CITY, terminate this lease.
(1) TENANT shall during the term 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 and keep the
Premises available for the conduct of business continuously and without interruption use by
licensees. This provision shall not apply if the Premises shall be closed and the business of
TENANT is not usable due to damage or destruction and temporarily shut down for a period not
to exceed fourteen (14) calendar days in any calendar year to mare necessary repairs,
maintenance or other construction deemed necessary by TENANT. This provision shall not
apply if the Premises shall be closed and the business of TENANT is temporarily shut down as
authorized or required by the CITY Manager or on account of strikes, walkouts, or causes
beyond the control of TENANT or for not more than three (3) days out of respect to the memory
of an officer, employee, or close relative of any officer or employee of TENANT.
(2) TENANT shall operate TENANT'S business on the Premises with due diligence and
efficiency and in like manner as comparable businesses operated in the CITY or the coastal area
of San Luis Obispo County, so as to produce the maximum amount of Gross Sales and gross
receipts from services which may be produced from TENANT'S business; and, if applicable,
TENANT at all times shall carry on Premises, a stock or merchandise of such size, character, and
quality as is reasonable, designed to produce the maximum return to TENANT, when the sale of
merchandise is a permitted use under this Lease.
Section 3.04 Competition.
Duritlg the term of this Lease, TENANT shall not directly nor indirectly acquire or
establish any similar or competing business within a radius of fzve (5) miles from t11e 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
607953 -9-
Premises to another similar business owned by TENANT within the CITY but not upon a CITY
lease site from which CI I'Y is paid relit 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 refeixed to as "Hazardous Materials Activities"), nor permit 'I'ENAN1'S
employees, agents, or contractors to engage in Hazardous Materials Activities upon or about the
Premises, except in amounts consistent with and as allowed by applicable Legal Requirements.
The. terns. "Hazardous Material" for purposes hereof shall mean any chemical, substance, material
or waste or component thereof which is now ar hereafter listed, defined or regulated as a
hazardous or toxic chemical, substance, material or waste or component thereof by airy federal,
state or local. governing or regulatory body having jurisdiction, or which would trigger any
employee or community "right-to-lciow" requirements adopted by any such body. All
Hazardous Materials Activities at the Premises shall be conducted. strictly in accordance with all
Legal Requirements. If TENANT shall transport any Hazardous Materials fiom the Premises,
which transport is restricted to licensed contractors, then such transportation shall be done only
by a contractor duly licensed to haul hazardous waste and shall use only ct 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
properly, (ii) any demands or claims made or threatened by any party against TENANT or the
Premises relating to any lass or injury resulting from any Hazardous Material on or from the
Premises, and (iii) any masters where TENANT is rer-�ired by Legal Requirements to give a
notice to any govermmental or regulatory authority respecting any IIazardous Material on the
Premises. CITY shall have the right (but not the obligati��n) to inspecs the Premises, to take such
remedial action on the Premises, as CITY may deem app7�opriate, and to join and participate, as a
party, in any legal proceedings or actions affecting the Premises initiated in connection with any
e�wironmental, health or safety law.
(3) If any Hazardous Material is released, discharged or disposed of by TENANT or its
employees, agents or contractors, an or about. the Premises in violation of the foregoing
provisions, T'ENAN'I' shall immediately notify CITY. CITY inay 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
6Q7953
-10-
remediation. If CITY directs TENANT to perform the remediation, TENANT shall immediately
talce 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. Subject to an extension of time reasonably
necessary for 'TENANT to obtain all required permits, if CITY directs TENANT to perform
remediation hereunder and if TENANT shall fail to comply with the provisions of this
Section within five (5) days after written notice by CITY, or such shorter time as may be
required by Legal Requirements 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 Legal Requirements).
Section 3.06 Tidelands Trust.
TENANT shall use and occupy the Premises in strict compliance with the 'Tidelands
Trust purposes tinder 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 faith illy 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, including those regulating Hazardous Materials,
(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 raider this lease unless such Legal Requirement has been imposed or required
by a county, state or federal authority. The judgment of any court of competent jurisdiction, or
the admission of TENANT in any action or proceeding against TENANT, whether CITY be a
party thereto or not, that TENANT has violated any such Legal Requirement in the use of the
Premises shall be conclusive of that fact as between CITY and TENANT.
Section 3.08 Waste or Nuisance.
TENANT shall not commit or per the commission by others of any waste on tl�e
Premises; TENANT shall not n7aintain, conunit, or• permit the maintenance or commission of
any nuisance as de£irred by law on the Premises; and TENANT shall not use or permit, the use
607953 -11-
A the Premises for any unlawful purpose; provided, that CITY agrees TENANT shall not be
required to violate any right of a licensee or renter in complying with this paragraph.
Section 3.09 llse by CITY.
(1) Subject to 'TENANT'S and its renters or Licensees' 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, subject to CITY reasonably
protecting TENANT'S rights of quiet use of the Premises.
Article 4 CONSTRUCTION, ALTERATION AND REPAIRS
Section 4.01 Construction Approval.
(1) `TENANT shall not rnalce 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 ten thousand dollars ($10,000),
without the prior written consent of CITY. The consent to be obtained pursuant to this
Section 4.01(1) shall be requested from the Harbor Director, or the City's designee, for CITY. If
the Harbor Director or any future successor to the duties of the City's Harbor Director, or the
City's designee, gives such consent to proceed, 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) Where required by the Morro Bay Municipal Code, California Coastal Act, Corps of
Engineers or any other state or federal agency having authority over the proposed project, then
all Conditional Use Permits, Concept Plans, Precise Plans, Coastal Development Plans, and any
other required plans or permits shall be applied for and approved prior to any construction,
alteration or repairs.
Section 4.02 Construction Bond.
(1) Prior to the commencement of any construction the cost of which is greater than the
amount of one hundred thousand dollars ($100,000), TENANT shall file with the Morro Bay
CITY Cleric a final detailed Civil Engineer's, Registced. Architect's or Licensed and Bonded
G07453 -12-
General Contractor's estimate of the cost of construction and installation of improvements on the
Premises. Said estimate must be submitted to the CITY Engineer for approval. TENANT shall
file with the Morro Bay 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 Morro Bay CITY Clerlc 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
they 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 flee
and clear of all liens and claims of liens for labor, services, materials, supplies, or equipment
performed on or Rirnished to the Premises. TENANT further agrees to at all times, save CITY
fi•ee 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. Should TENANT fail 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, TENANT shall upon written notification be required to immediately
deposit with CITY a bond conditioned for payment in fiill of all claims on which said lien or levy
has been filed. Such bond shall be acknowledged by TENANT as principal and by a company or
Corporation, licensed by the Insurance Commissioner of the State of California to transact the
business of a fidelity and surety insurance company as surety. The beneficiary of any security
instrument which instrument is on record with CITY, shall have the right to file such a bond on
belialf 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
G07953 -13 -
notice at least twenty (20) days prior to commencement of any worts on the Premises to afford
CITY the opportunity to post such notices.
Section 4.04 Qwnership o#Improvements.
The parties. agree CITY has the option and tight to require TENANT to remove all
buildings, structures, installations, improvements of any kind or other property belonging to or
placed upon the Premises by TENANT at the termination of this Lease, however occurring,
providing CITY gives notice, in writing, no later than thirty (30) days prior to the termination of
the Lease, of its decision to require that such improvements be removed. The patties 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.
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 and clean condition. Furthermore, TENANT shall, at TENANT'S own
cost and expense, maintain at all times during the term of this Lease the whole of the Premises in
a clean, .sanitary, neat and orderly candition. CITY may, at the sole option of CITY, clean and
clear the Premises, at TENANT'S cast and expense, in the event TENANT fails to clean and
clear the Premises in accordance with this Section to the satisfaction of CITY after 1 S-days'
written notice to TENANT from CITY of CITY'S intent to exercise this option.
G07953 -1 �-
Section 6.02 Seawalls and Revetment.
At all times during the term of this Lease, after diligently pursuing and receiving all
necessary governmental permits, TENANT shall at TENANT'S own cost and expense repair,
maintain, replace and rebuild as necessary, the improvements, pilings, bulkheads, seawalls,
revetment, posts and any structures or other improvements located in the water portion of the
Premises. Further, TENANT shall at TENANT'S own cost and expense conduct maintenance
surveys at reasonable intervals to locate and determine needed repairs.
Section 6.03 Legal Requirements.
At all times during the term of this Lease, 'TENANT, at no cost to CITY, shall;
(1) Make all alterations, additions, or repairs to the Premises or the
improvements or facilities on the Premises required by any Legal Requirements (as defined in
Section 3.07 above) now or hereafter made or issued;
(2) Observe and comply with all Legal Requirements now or hereafter made
or issued respecting the Premises or the improvements or facilities located thereon;
(3) Obtain all required permits pursuant to the Morro Bay Municipal Code or
State law prior to the initiation of any repair or maintenance activity; and
(4) Indemnify and hold CITY and the property of CITY, including the
Premises, free and harmless from any and all liability, loss, damages, fines, penalties, claims and
actions resulting from TENANT'S failure to comply with and perform the requirements of this
section.
Section 6.04 Failure to Repair,
If TENANT's failure to repair results in a hazardous or unsafe condition, then 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 diligently pursue permitting and/or repair
any hazardous or unsafe condition within ten (10) days after written notice thereof hiom CITY,
CITY shall have the right, but not the obligation, to perform such repair at TENANT'S expense.
TENANT shall reimburse CITY for any such repair undertaken by CITY, promptly upon
CITY'S demand, as additional Rent. Failure by CITY to enforce any of the provisions of this
Article shall not constitute a waiver of these provisions and CITY may at any time enforce all of
the provisions of this Article, requiring all necessary repairs, rebuilding or replacement.
6o�9sa -15-
Section 6.05 Inspection by CITY.
CITY or CI1 S agents, representatives, or employees may enter the Premises at all
reasonable times for the purpose of inspecting the Premises to determine whether TENANT is
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 5.06 TENANT'S Duty to Restore Premises.
(1) Except as provided in Section 6.07 below, and subject to 6.02 above, if at any time
during this Lease, any improvements now or hereafter on the Premises are destroyed in whole or
in part by the elements, or any other cause not the fault of TENANT or CITY, this Lease shall
continue in full force and effect .and TENANT, at TENANT'S own cost and expense, shall repair
and restore the damaged or destroyed improvement(s) according to the original plan thereof or
according to such modified plans therefore as shall be approved in writing by CITY. The work
of permitting, repair and restoration shall be commenced by TENANT within one hundred eighty
(180) days after the damage or destruction occurs shall "be pursued with due diligence, and shall
be completed not later than one year after the work is commenced, unless the parties hereto
mutually agree, in writing, to an extension. In all other respects, the work of repair and
restoration shall be done in accordance with the requirements for construction work on the
Premises set forth in Article 4 of this Lease. Any failure by 'TENANT either to commence or to
complete repair and restoration as required by this Section 6.06 shall be a material default under
this Lease.
(2) Any and all TENANT'S approved 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 fiends are available from insurance proceeds.
Section 6.07 Termination of Lease for Destruction.
(1) Notwithstanding the provisions of Section 6.06 of this Lease, TENANT shall have the
option of terminating this Lease as provided in this Section 6.07 if:
(a) During the last fifteen (15) yearn 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
-16-
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 damages or
(b) During the last fien (10) years of the term of this Lease, any improvements
now or hereafter on the Premises are so damaged or destroyed by the elements or any cause not
the fault of TENANT or CITY, 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 IZundred 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, 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, o#the total Minimum Rent for the remainder of the Term; then
(e) the remaining proceeds, if any, to TENANT.
Section 8 ,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
607953 -17-
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 INSURANGE
Section 7.01 Indemnity Agreement.
Except as set forth elsewhere in this Lease:
(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 and volunteers from any and all liability, claims, loss,
damages, and expenses, including reasonable attorney's fees and litigation expenses, resulting
from TENANT'S occupation and use of the Premises or any negligent act or omission of the
TENANT or any of its subtenants, employees, contractors or anyone for whom TENANT may
be liable, specifically including, without limitation, any liability, claim, loss, damage, or expense
arising by reason of:
(a) The death or injury of any person, including TENANT or any person who is
an employee or agent of TENANT, or by reason of the damage to or destruction of any property,
including property owned by TENANT or by any person who is an employee or agent of
TENANT, from any cause whatever while such person or property is in or on the Premises or in
any way connected with the Premises or with any of the improvements or personal property on
the Premises;
(b) The death or injury of any person, including TENANT or any person who is
an employee or agent of TENANT, or by reason of Lite damage to or destruction of any property,
including property owned by TENANT or any person who is an employee or agent of TENANT,
caused or allegedly caused by either (i) the condition of the Premises or any improvement
placed on the Premises by TENANT, or (ii) any act or omission on the Premises by TENANT or
any person in, on, or about the Premises with or without the permission and consent of
TENANT;
(c) Any work performed on the Premises or materials furnished to the Premises at
the instance or request of TENANT or any person or entity acting for or on behalf of TENANT;
E07953 -18-
(d) TENANT'S failure Co perform any provision of this Lease or to comply with
any Legal Requirement imposed on 'TENANT or the Premises.
(2) TENANT'S obligations pursuant to this Section to indemnify and hold harmless do
not extend to any liability, claim, loss, damage or expense arising from CITY'S active negligence
or willful misconduct.
Section 7.02 Liability Insurance.
During the term of this Lease, TENANT shall maintain afi its cost Commercial General
Liability insurance with coverages at least as broad as ISO Forms labeled "City of Marro 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 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 tinder 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.
To the extent TENANT is legally required to do so, TENANT shall maintain at
TENANT'S own expense and keep in full force and effect during the term of this Lease,
Worker's Compensation Insurance as provided by law. Said 'insurance shall contain a waiver of
subrogation rights against CITY. TENANT shall also maintain employer's liability insurance
with minimum coverage of $1,000,000 per accident for bodily injury or disease.
Section 7.04 Property Insurance.
TENANT shall, at its cost, at all times during the term of this Lease keep all
improvements and other 'structures on the Premises, as well as any and all additions,
607953 -1 y-
improvements and betterments thereto, insured for one hundred percent ( I U07b) 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 Coverage.
TENANT shall also maintain, at its expense, the insurance described in this Section 7.05.
(I) 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, at TENANT's own expense, obtain and maintain any additional
insurance coverages that CITY may reasonably require. As illustration only and not as a
limitation, in appropriate circumstances such additional insurance may include increased general
liability limits, business interruption coverage, business automobile liability, boiler and
machinery insurance and/or builder's risk insurance. However, TENANT shall not be required to
maintain additional coverages that are in excess of those typically maintained by similarly
situated tenants in the Morro Bay area.
Section 7.06 General Requirements,
Except as specifically provided to the contrary, all the insurance requixed pursuant to this
Article Seven shall be subject to the requirements of this SCctlon 7.06,
(I) Maintenance of proper insurance coverage is a material element of this Lease and
failure to maintain or renew coverage or to provide evidence of coverage and/or renewal may be
treated by CITY as a material breach of cozltract. TENANT shall forward 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. Bests rating of no less than A:VII.
607953
-20-
(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 insur��nce 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
ot�icers, 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 t11e 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 CITY by virtue of the payment of
any loss under such insurance. Each insurance policy required under this Lease including those
insuring TENANT against claims, expense, or liability for injury to persons or property shall
provide that the insurer shall not acquire by subrogation any right to recovery which TENANT
has expressly waived in writing prior to the occurrence of the loss.
Section 7.08 TENANT'S 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
G07953 -21-
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 Limit.
The insurance requirements of this Article Seven are independent of, and do not limit or
modify, TENANT'S indemnification and other obligations pursuant to this Lease.
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 oi•
activities including construction by 'TENANT upon the Premises.
Section 8.03 Utilities.
TENANT shall pay, or cause to be paid, and ,hold CITY and the property of CITY,
including the Premises, free and harmless from all charges for the furnishing of gas, water,
electricity, telephone service, and for other public utilities to the Premises during the term of this
Lease and for the removal of garbage and rubbish from the Premises during the term of this
Lease.
ArticMe 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, alid 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.
607953 -22
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:
(l) All compensation or damages awarded or payable for the taking by eminent domaizi
of any land that is part of the Premises shall be paid to arzd 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
propezty 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
oI the improvements that equals the percentage of the cull term of this Lease that has, at the time
of the taking, not expired shall belong to and be the sole property of TENANT.
(b) That percentage of the compensation or damages awarded or payable because
of the improvements Chat equals the percentage of the hill term of this Lease that 11as, at the time
of the taking, expired shall belong to and be the sole property of CITY.
(c) The term "time of taping" 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, oz• the date that it
takes physical possession of the portion of the Premises, whichever shall first occur.
607953 -2.3-
(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.
Should, during the term of this Lease, title and possession of only a portion of the
Premises be taken for any public or quasi -public use under any statute, or by right of eminent
domain, 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 subtenaneies in or on the Premises or any portion of the
Premises created by TENANT finder 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.
Should, 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 domainn 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
impzovements 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.
GU7953 -24-
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 lip 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
consent to any subsequent assignment of this Lease by TENANT. CITY shall not unreasonably
or 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
G07953 -25-
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.
I or puzposes 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) Except as provided in Section 10.2(3), 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'I'ENANT 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 atwelve-month (12-month) period, of more
than an aggregate of twenty-five percent (25%) of the voting shares of TENANT (other than to
immediate family members by reason of gift or death); or b
(b) The dissolution, merger, consolidation, or other reorganization of TENANT.
(3) Since TENANT is a limited liability company with a single member, this Section
10.02 shall not apply upon death of that individual who was the sole member on the
Commencement Date, but rather the provisions of Section 10.04, "Probate Transfer of
Assignment" shall apply.
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, Concuzx•ently 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 cheek 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 successfiil operation of the Premises in
607953 -26-
compliance with all applicable CITY, County, State and federal requirements, CITY may
withhold approval of the assignment or condition it upon TENANT'S guarantee of such
assignee's obligations hereunder for such period as CITY deems advisable. Net worth shall
mean the amount by which the total of all assets shall exceed the total of all liabilities as
determined in accordance with general accepted accounting principles as approved by CITY'S
audztor, or other authorized representative oz• 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 fiom 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 pant 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 CIfY'S option, terminate this Lease. CITY shall not
tuueasonably nor arbitrarily withhold its consent to sublet to one who is qualified and financially
tellable. CITY'S consent to any occupation, use, or licensing shall be in CITY'S sole and
absolute discretion. Notwithstanding any provisions herein to the contrary, the terms
"assignment," "subletting," "occupation," or "use," shall not be construed or interpreted to mean
or include the temporary, short term renting or leasing of individual boat slips, motel, hotel, or
apartment accommodations on t11e Premises.
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
anA TENANT to all the remedies provided to CITY herein and by law. Failure by any subtenant
6U7953 -2�%-
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.
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 malting 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 tination of this Lease, shall inunediately 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
pursuarxt 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 allon-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.
607953 -28-
Article 11 DEFAULT AND TERMINATION
Section 11.01 Abandonment by TENANT.
Should TENANT breach this Lease and abandon all or any pal L of t11e Premises prioz• to
the scheduled expiration of the term of this Lease, CITY May continue this Lease in effect by not
terminating TENANT'S right to possession of the Premises, in which event CITY shall be
entitled to enforce all CITY'S rights and remedies under this Lease including the right to recover
the Rent specified in this Lease as it becomes due under this Lease.
Section 11.02 Termination for Breach by TENANT.
All covenants and agreements contained in this Lease are declared to be conditions to this
Lease and to the tezm 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
cured within three (3) days after written notice thereof is served on the TENANT, 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 bender under any Leasehold Encumbrance of record with CITY the
ziglzt to cure any default by TENANT of the covenants, conditions, or agreements hereof, as
provided in Article 5 of this Lease.
G07953 -29-
Section 11.05 Intentionally Omitted
Section 11.06 Damages for Breach.
If TENANT defaults in the performance of any covenant, condition or agreement
contained in this Lease and the default be incurable or not be cured within the time period set
forth hereinabove, then CITY may terminate this Lease and:
(l) Bring an action to recover fi•orn TENANT:
(a) The worth at the time of award of the unpaid rent which had been earned at
the time of terminations of the Lease;
(b) The worth at the time of award of the amount by which the .unpaid. rent which
would have been earned after termination of the Lease until the time of awand 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
pzoxiniately caused by TENANT'S failun•e to perform its obligations under this Lease, and
(2) Bring an action, in addition to qt in lieu of the action described in subparagraph (1) of
this Section; to re-enter and regain possession of the Premises in the manlier 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 A8 Waiver of Breach.
The waiver by CITY of any breach by TENAN I' of any of the provisions of this Lease
shall not constitute a continuing waiver or a waiver of any subsequent breach by '1 ENANT either
of the same or a different provision of this Lease.
�o�yss -30-
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
teat excepted.
Article 12 MISCELLANEOUS
Section 12.01 Intentionally Omitted
Section 12.02 Notices.
Any and alI 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
MoiTo 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 TENAN"1 maybe given at:
Glad's
Landing LLC
c/o William Martony
P.O. Box 294
Cayucos, CA 93430
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
607953 -31-
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 be 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 12A6 Sole and Only Agreement.
Subject to the provisions of the second paragraph of Section 1.�4, (i) this Lease,
including all exhibits incorporated by reference, constitutes the sole and only agreement between
CITY and TENANT respecting the Premises and the leasing of the Premises to TENANT and
(ii) any other agreements or representations respecting the Premises and their leasing to
TENANT by CITY, which are not expressly set forth in this Lease, are null and void. The terms
herein specified correctly set forth the obligations of CITY and 'TENANT as of the date of this
Lease: No modification, amendment, or alteration of this Lease shall be valid unless it is in
writing and signed. by both parties.
Section 12.07 Modification.
This Lease shall not be modified except. pursuant to a written agreement executed by the
MAYOR and CITY CLERIC pursuant to prior CITY Council approval. Notwithstanding CITY
Cotulc'I approval, no agreement shall become effective until such agreement is in fact executed
by the MAYOR and CITY CLERK. TENANT understands this Lease may not be modified by
oral statements by any person representing the CITY including the MAYOR and CITY CLERIC.
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
607953 -32-
action and a subsequent written modification signed by the 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 thus 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 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 Improvements.
(1) CITY and TENANT agree TENANT will. construct, repair or replace improvements
on the Premises as follows (hereinafter referred to as the Project):
• Repair or replace no fewer than two (2) existing pilings;
• Repair or replace the existing gangway, as -required by analysis fiam a qualified
engineer;
• Repair or replace the existing floating docks, as -required by analysis from a
qualified engineer,
• Provide adequate fire suppression facilities to the improvements on the Premises
as -determined by the CITY's Fhre Marshall;
• Repair or clean and maintain dock areas as needed.
In addition, TENANT agrees to the following regarding the private property
improvements located at 225 Main Street adjacent to the Premises:
• Provide and maintain at least one unisex restroom facility in the "boathouse" for
non-exclusive use of Premises' slip holders aiZd lawful users and guests of 225
�o�9s3 -33-
Main Street. Such restroom shall not be deemed a Premises improvement but
shall remain the ownership of the owner of that adjacent private property.
(2) TENANT aelcnowleclges the Project may require, but may not be limited to,
obtaining a Conditional Use Permit from CITY, a Coastal Development Permit or Waiver from
the California Coastal Commission, and a Building Permit from CITY. It is TENANT'S
obligation to fully investigate the issues and costs izi obtaining those permits, �aihire to obtaizi
My and all required permits and approvals for said construction shall not relieve TENANT of
complying with this LEASE, including this Section. Failure to complete the Project and to
comply with all eozlditions of the CUP, as evidenced by a final building permit inspection as
required by CITY in its governmental capacity, in addition to providing proof of expenses by
providing copies of invoices by the proscribed timeline shall be a material default of the Lease
and subject to any remedies outlined in Article 11 herein, including termination of the Lease.
(3) TENANT further acknowledges the Project znay require repaiz• oz• replacement of all
of docks, and other current improvements on the Premises to the standards of the City Engineer
and TENANT agrees to meet those standards through review and revision of the final Building
Plans prior to issuance of a Building Permit for the construction of improvements on the
Premises.
{4) TENANT further agrees to:
(a) Apply for Building Permits for the Project no later than six calendar
months from the Commencement Date.
(b) Coznmezice construction of the Project no later than twelve calendar
months from the Commencement Date, or such other date as may be necessitated by
delays in obtaining Coastal Commission and/or CITY permission to proceed, weather or
any other condition outside TENANT's control.
(
c) Completion of all components of the Project no later than twenty-four
calendar months from the Commencement late, or such other date as may be
necessitated by delays in obtaining Coastal Commission and/or CITY permission to
proceed, weather or any other condition outside TENANT's control.
{5) During construction of the Project, TENANT shall take all measures to:
(a) Minimize environmental impacts and manage construction debris to
ensure it is properly disposed of;
6o��s3 -34-
(b) Avoid any pollution of the atmosphere or littering of land or water by or
originating in or about the Premises or caused by TENANT'S construction activities;
{c) Keep the noise level on the Premises to a reasonable minimum to the
greatest extent feasible, so that persons in the neighborhood will be able to comfortably
enjoy business and facilities in the area;
(d) Prevent any Hazardous Material pollutants, including but not limited to
petroleum products, from entering Morro Bay waters;
(e) Prohibit storage of materials or equipment on public property and avoid
parking or traffic delays or impairment without prior consent of CITY;
(f) Avoid negative impacts on surrounding businesses and residences;
(g) Keep the Project site in a sightly, orderly, and safe manner at all times.
Section 13.02 Option to Extend Lease.
(1) TENANT shall have the right to extend the term of this Lease for all additional
twenty (20) years ("Option to Extend") contingent upon receipt of CITY'S approval of a
TENANT plan ("Tenant Plan") for substantial future capital expenditures to,
add/upgrade/replace improvements to the Premises, including the docks, pilings, and other work
as necessary to maintain the service life of the improvements as -needed.
Tenant Plan shall consist of such things as:
A. Repair or replace pilings, imger docks, floats and/or gangway as needed. as of the
date of exercise of the Option to Extend, and
B. Other improvements approved by the Harbor Director and/or City Council
TENANT shall deliver written notice to CITY of TENANT'S intent to exercise the Option to
Extend at least eighteen (18) months prior to expiration of this Lease, and obtain CI"IY'S
approval of the Tenant Plan prior to expiration of this Lease and;
(2) TENANT'S exercise of the Option to Extend shall be further
contingent upon TENANT not being in default utxder any term or condition of this
Lease at the time of 'TENANT'S exercise of the option and the time of
commencement of the option. Time is of the essence.
G07953 -3 5-
Section 13.03 Future Construction of Harborwalk.
(1) TENANT will allow CITY to build a public access Harborwalk through the Premises
to connect with a walkway on adjacent Lease Sites to provide reasonable public access to the
tidelands as required by State law, provided;
(a) CITY will take all reasonable steps so no part of the Harborwalk is less
than approximately 20-feet from the high water line at adjacent private property at 225
Main Street: provided that the exact location of the Harborwalk on the Premises shall be
reasonably agreed upon by TENANT and CITY prior to its installation to help ensure the
Harborwalk will not materially affect the Premises, TENANT'S improvements to or
operation of the Premises and real property at 225 Main Street; and provided, further, that
the Parties shall work in good faith to reach agreement. In addition, CITY acknowledges
an owner of property abutting a shoreline has littoral rights and recognizes adjacent
private property owner at 225 Main Street may enforce any such rights it may have.
(b) Costs for all planning, permitting, and construction of the Harborwalk will
be borne solely by CITY with no obligation of TENANT, including
relocation/reconstruction of any improvements on the Premises required to accommodate
the Iarborwalk.
(c) In no event shall access through. 22.5 Main Street property be a Condition
of construction or use of the Harborwalk.
(d) Costs for all ongoing maintenance and repair of the Harborwalk shall be
borne solely by CITY, imless said maintenance or repair was caused by action of
TENANT or any of its licensees or renters.
(e) As part of the Harborwallc's design and construction, accommodation will
be made to preclude public access (other than TENANT'S licensees or renters, or
CITY'S officials, employees and agents) from the Harborwalk to the docks and
walkways installed by TENANT on the Premises and to the adjacent private property at
225 Main Street.
(f) Once completed, the square footage taken by the footprint of the
Iarborwalk will be removed from the appraised value of the Premises.
G07953 -3 6-
(g) CITY shall indemnify, defend and hold harmless TENANT, and
the property of TENANT, and the TENANT'S members, officers, agents and employees
from any and all liability, claims, loss, damages, and expenses, including reasonable
attorney's fees and litigation expenses, resulting from construction, maintenance, or use
of the Harborwalk or any negligent act or omission of CITY or any anyone for whom
CITY may be liable regarding the Harborwalk, specifically including, without limitation,
any liability, claim, loss, damage, or expense arising by reason of:
(1) The death or injury of any person, or by reason of the damage to or
destruction of any property, including property owned by CITY or by any person who is
an officer, official, employee or volunteer of CITY, from any cause whatever while such
person or property is in or on the Harborwalk or in any way connected with the
Iarborwalk or with any of the improvements or personal property on. the Harborwalk;
(2) The death or injury of any person, or by reason of the damage to or
destruction of any property, including property owned by CITY or any person who is an
officer, official, employee or volunteer of CITY, caused or allegedly caused by either
(1) the condition of the Harborwalk or any improvement placed on the Harborwalk by
CITY, or (ii) any act or omission on the Harborwalk by CITY or any person in, on, or
about the Harborwalk with or without the permission and consent of CITY;
(3) Any work performed on the Harborwalk or materials furnished to
the Harborwalk at the instance or request of CITY or any person or entity acting for or on
behalf of CITY related to the Harborwalk;
(4) CITY'S failure to perform any provision of this Lease related to the
Harborwalk or to comply with any Legal Requirement imposed on CITY regarding the
Haz•boiwaM
CITY'S obligations pursuant to this Section to indemnify and hold. harmless do not
extend to any liability, claim, loss, damage or expense arising from TENANT'S active
negligence or willfiil misconduct.
607953 -3 %-
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EXECUTED on �3 , 2010, at �PnJ Lvi s •sea County, California.
CITY OF MORRO BAY
ATTEST:
Dana Swanson, City Clerk
APPROVED AS TO FORM:
Glads Landing, LLC
a Limited Liability Company
By:
607953 -3 g-
EXHIBIT A
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Exhibit B
595 Harbor St.
Morro Bay, CA 93442
(805) 772-6200
FAX (805) 772-7329
INSURANCE- REQUIREMENTS F�12 LESSEES
.Lessee shall procure and maintain for the duration of the contract. insurance against claims for
injuries to persons or damages to property which may arise from or in connection with the Lessee's
operation and use of the leased premises. The cost of such insurance shall be borne by the Lessee.
Minirttttnrt Scope of 1`rtsrtrtrrtce
Coverage shall be at Least as broad as:
1. Insurance Services Office Commercial General Liability coverage (occurrence
form CG 0001).
2. Workers' Compensation insurance as required by the State of California and
Employer's Liability Insurance (for lessees with employees).
3. Property insurance against all risks of loss to any tenant improvements or
betterments.
4. Insurance Services Office Form Number C A 0001 covering Automobile Liability,
code I (any auto).
Miftit�trctat Limits of Ittstcrartce
Lessee shall maintain limits no less than:
1. General Liability:
2. Employer's Liability:
3. Property Insurance:
$1,000,000 per, occurrence for bodily injury,
personal injury and property damage. If Commercial
General Liability Insurance or other form with a
general aggregate limit is used, either the general
aggregate limit shall apply separately to this
prof ect/location or the general aggregate limit shall be
twice the required occurrence limit,
$1,000,000 per accident for: bodily injury or disease.
Full replacement cost with no coinsurance penalty
provision,
Detlttctibles att�l ,Self=lizsur•e�l Reterttiorzs
Any deductibles or self -insured retentions must be declared to arld approved by the City. At the
option of the City, either: the insurer shall reduce or eliminate such deductibles or sel£ insured
retentions as respects the City, its officers, officials, employees and volunteers; or the Lessee shall
provide a financial guarantee satisfactory to the City guaranteeing payment of losses and related
investigations, claim administration and defense expenses,
EXhibit B
Other Insurance Provisions
The general liability policy is to contain, or be endorsed to contain, the following provisions:
1. The City, its officers, officials, employees, and volunteers are to be covered as
insureds with respect to liability arising out of ownership, maintenance or use of that
part of the premises leased to the Lessee.
2. The Lessee's insurance coverage shall be primary insurance as respects the City, its
officers, officials, employees, and volunteers. Any insurance or self-insurance
maintained by the City, its officers, officials, employees, or volunteers shall be excess
of the Lessee's insurance and shall not contribute with it.
3. Each insurance policy required by this clause shall be endorsed to state that coverage
shall not be canceled, except after thirty (30) days' prior written notice by certified
mail, return receipt requested, has been given to the City.
4. Coverage shall not extend to any indemnity coverage for the active negligence of the
additional insured in any case where an agreement to indemnify the additional
insured would be invalid under Subdivision (b) of section 2782 of the Civil Code.
Acce�ttttbr'lity of Insurers
Insurance is to be placed with insurers with a cu1-�•ent A.M. Best's rating of no less than A:VII.
Trerifretrtion of Coverage
Lessee shall fiu7l0sh the City with original certificates and amendatory eudorseinents effecting
coverage required by this clause. The endorsements should be on forms provided by the City 0I4 on
Alter than the City's forms, provided those endorsements or policies conform to the requirements.
All certificates and endorsements are to be received and approved by the City before use of City
premises. The City reserves the right to require complete, certified copies of all required insurance
policies, including endorsements effecting the coverage required by these specifications at any time.
Stub-Cessee
Lessee shall include all sub -lessees as insureds under its policies or shall finnish separate certificates
and endorsements for each sub -lessee, All coverages for sublessees shall be subject to all the
requirements stated herein.