Pacific Grove City Council
July 3, 2024

TENANT LEASE
By and Between

CITY OF PACIFIC GROVE
a California charter city
("Landlord")
and
SUNSET HOSPITALITY GROUP, INC.
a California corporation
("Tenant")
Dated: August __, 2024
PGCC 7-3-24

1 TENANT LEASE

BASIC LEASE PROVISIONS

1. Tenant: Sunset Hospitality Group, Inc.
500 Hartnell Street
Monterey, California 93933
Phone: (310) 403-0210

2. Landlord: City of Pacific Grove
300 Forest Avenue
Pacific Grove, California 93950
Phone: (831) 648-3174
Attention: City Manager

3. Premises: That certain building of approximately 270 square feet in interior floor space located generally on the southwest portion of the City’s Lover’s Point Park and Beach, as depicted in Exhibit B attached hereto

4. Use: Snack bar (e.g., beverages, sandwiches, and light fare)

5. Term: Five (5) years, with one optional extension for an additional five-year term, if both parties agree to such extensions

6. Lease Commencement
Date:

August __, 2024 ("Commencement Date").

7. Rent Commencement
Date:

August __, 2024 ("Rent Commencement Date").

8. Base Rent: The initial monthly base rent shall be $1,500 plus an annual payment equal to a proportion of annual gross sales in the following amounts:
0% for annual gross sales under $300,000
2% for annual gross sales $300,000 - $399,999
3% for annual gross sales $400,000 - $499,999
4% for annual gross sales $500,000 - $599,999
5% for annual gross sales $600,000 - $699,999
6% for annual gross sales $800,000 and above.

Tenant is separately responsible for paying for utilities and services (including electric, water and sewer).

PGCC 7-3-24

2 The Basic Lease Information set forth above and the Exhibits listed below and attached hereto are incorporated into and made a part of the following Lease. Each reference in this Lease to any of the Basic Lease Information shall mean the respective information above and shall be construed to incorporate all of the terms provided under the particular Lease section pertaining to such information. In the event of any conflict between the Basic Lease Information and the provisions of the Lease, the latter shall control.

The following Exhibits are attached to this Lease and incorporated herein by this reference:

Exhibit A – Premises Description
Exhibit B – Rules and Regulations
Exhibit C – Ongoing Maintenance Schedule
Exhibit D – List of Lessor-owned Furnishings
Exhibit E – Initial Improvement Schedule
Exhibit F – Insurance Certificate
PGCC 7-3-24

3 This Lease Agreement (this “Lease”) is made and entered into effective as of August __, 2024 (“Effective Date”) by and between the City of Pacific Grove, a California charter city (“Landlord”) and Sunset Hospitality Group, Inc., a California corporation (“Tenant”).

1. PREMISES.

1.1 Premises. Landlord is the owner of certain real property developed into a municipal park and beach commonly known as Lover’s Point Park and Beach, located generally at the northeast intersection of Ocean View Boulevard and 17th Street, situated in the City of Pacific Grove, Monterey County, State of California (“Property”). The Property is also improved with an approximately 270 square foot building (“Premises”) owned by Landlord and located in the southwest portion of the Property, and described and depicted in Exhibit A, attached hereto and incorporated herein by this reference. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, on the terms and subject to the covenants, conditions and uses stated herein, the Premises. The Premises are leased to Tenant in their “as is” condition. The Premises are leased on an “AS-IS” basis, “WITH ALL FAULTS,” with all furniture, fixtures and equipment located within the Premises as of the Commencement Date (except such as are already owned by Tenant), also being subject to this Lease. Tenant shall also be permitted to use the locked storage area located at the beach level of the Property to store items associated with the operation of the Premises.

1.2 Public Area. Tenant may, subject to rules made by Landlord, and on a nonexclusive basis, use those areas on the Property exterior to the Building designated by Landlord from time to time for the common use of Landlord and members of the public, such as patio and other public areas adjacent to the Building (the “Public Area”). Landlord has sole discretion to determine the design and location of the Public Area and to determine the manner in which the Public Area is maintained and operated. The Public Area does not include space within Tenant’s Premises.

1.3 Parking. During the Term, Tenant shall be entitled to utilize the number of parking spaces within the parking area for the Property as designated by Landlord from time to time. Landlord shall at all times have the right to establish and modify the nature and extent of the parking areas for Premises. Tenant shall not use more parking spaces than its allotment and shall not use any parking spaces specifically assigned by Landlord to other tenants, if any, or for such other uses such as visitor, handicapped or other special purpose parking.

1.4 Reserved Rights.

1.4.1 Landlord’s Right of Entry. Landlord reserves the right to enter the Premises upon reasonable notice to Tenant (except that advance notice shall not be required in case of an emergency) for the following purposes: (i) to inspect the condition of the Premises; (ii) to ascertain the performance by Tenant of the terms and conditions hereof; (iii) to respond to an emergency at the Premises; (iv) to maintain, inspect and repair the Premises to the extent required or permitted under this Lease; (v) to post notices of non-responsibility for alterations, additions or repairs undertaken by Tenant; and (vi) to show the Premises to prospective tenants or purchasers or persons acting on their behalf; (vii) to post a leasing sign in or about the Premises; and (viii) to perform any other right or duty of Landlord under this Lease. Landlord PGCC 7-3-24

4 may exercise this right of entry without any rent credit to Tenant for any loss of occupancy or quiet enjoyment of the Premises.

1.4.2 Additional Reserved Rights. In addition, Landlord reserve(s) the right upon reasonable notice to Tenant (except that advance notice shall not be required in case of an emergency) to undertake the following: (i) install, use, maintain, repair, alter, relocate or replace any improvements in the Public Area; (ii) grant easements encumbering the Property which do not unreasonably interfere with Tenant’s use of the Premises and dedicate for public use portions thereof; and (iii) affix reasonable signs and displays.

1.5 Compliance with ADA. Notwithstanding anything to the contrary contained in this Lease, Landlord and Tenant agree that responsibility for compliance with the Americans With Disabilities Act of 1990, as amended (the “ADA”) shall be allocated as follows: (i) Landlord shall be responsible for compliance with the provisions of Title III of the ADA for all Public Areas not included within the Premises; (ii) Landlord shall be responsible for compliance with the provisions of Title III of the ADA for any construction, renovations, alterations and repairs made within the Premises if such construction, renovations, alterations or repairs are made by Landlord, its employees, agents or contractors, at the direction of Landlord or done pursuant to plans and specifications prepared or provided by Landlord or Landlord’s architect or space planner; (iii) Tenant shall be responsible for compliance with the provisions of Title III of the ADA for any construction, renovations, alterations and repairs made within the Premises if such construction, renovations, alterations and repairs are made by Tenant, its employees, agents or contractors, at the direction of Tenant or done pursuant to plans and specifications prepared or provided by Tenant or Tenant’s architect or space planner.

1.5.1 Accessibility Disclosure. Landlord hereby advises Tenant that the Premises has not undergone an inspection by a certified access specialist, and except to the extent expressly set forth in this Lease, Landlord shall have no liability or responsibility to make any repairs or modifications to the Premises in order to comply with accessibility standards. The following disclosure is hereby made pursuant to applicable California law:

A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of constructionrelated accessibility standards within the premises.” [Cal. Civ.

Code Section 1938(e)]. Any CASp inspection shall be conducted in compliance with reasonable rules in effect at the Building with PGCC 7-3-24

5 regard to such inspections and shall be subject to Landlord’s prior written consent.

2. TERM.

2.4 Lease Commencement Date. The initial term of this Lease shall be for a period of five (5) years commencing on the Effective Date (“Initial Term”). Any reference to “Term” in this Lease shall include the Initial Term and the Extension Term where Tenant and Landlord have extended the Lease pursuant to Section 2.2.

2.5 Optional Extension.

2.5.1 Provided that (i) Tenant is not in default under the terms of this Lease at the time the optional extension is exercised or at the commencement of the Extension Term (defined below), and (ii) Tenant has not been in default more than twice in any 12-month period, Landlord and Tenant may mutually agree to renew this Lease for an additional five-year period (“Extension Term”). The Extension Term shall commence, if at all, upon the expiration of the Initial Term and end sixty months later. There shall be no additional extension term beyond the Extension Term set forth herein.

2.5.2 The Extension Term shall be on all the terms and conditions of this Lease.

2.5.3 Base Rent for the Extension Term shall be determined as set forth in section 3.5 below.

2.5.4 Tenant must exercise its option to extend this Lease by giving Landlord a minimum of six (6) months written notice prior to the end of the Initial Term. If Tenant fails to give notice in a timely manner, Tenant shall lose the ability to exercise its extension option.

Landlord may in its discretion waive such failure.

2.5.5 The extension option set forth herein is personal to Tenant and shall not be included in any assignment of this Lease without prior written approval from Landlord.

3. RENT.

3.4 Rent Commencement Date. Tenant’s obligation to pay Rent under this Lease shall commence as of the Effective Date. Rent shall be paid as set forth in this Section 3.

3.5 Base Rent; Rent Adjustment. The monthly Base Rent for the Initial Term shall be $1,500, for a total of $18,000 per year. Base Rent shall be adjusted as set forth in this Section 3.2 and may be adjusted as set forth in Section 3.5, below. Tenant shall pay to Landlord, at Landlord’s Address designated in Item 2 of the Basic Lease Information, or at such other address as Landlord may from time to time designate in writing to Tenant for the payment of Rent, the Base Rent herein defined, without notice, demand, offset or deduction, in advance, on the first day of each calendar month. Upon the execution of this Lease, Tenant shall pay to Landlord the first month’s Base Rent due as of the Rent Commencement Date. All sums other than Base Rent which Tenant is obligated to pay under this Lease shall be deemed to be additional rent PGCC 7-3-24

6 (“Additional Rent”) due on the same date as Base Rent unless otherwise specified hereunder or otherwise requested by Landlord. Notwithstanding the foregoing, late charges under Section

3.3.4 shall be due and payable immediately as incurred. The term “Rent” means the Base Rent and all Additional Rent payable hereunder. If Rent is due for a period of less than a full month, it shall be prorated for such partial month on the basis of a thirty (30) day month. On the first anniversary of the commencement date of this Lease, and annually thereafter, the rent payable by Tenant shall be increased to an amount determined by multiplying the basic monthly rental by a fraction, the denominator of which shall be the most recent Consumer Price Index figure, as hereinafter defined, published prior to the date of this Lease, and the numerator of which shall be the most recent Consumer Price Index figure published prior to the particular anniversary date; provided, however, that in no event shall the rent for any month after such anniversary be less than the rent for the month immediately preceding such anniversary. As used herein, the term “Consumer Price Index” shall mean Consumer Price Index for All Urban Consumers (CPI-U) for the San Francisco- Oakland-San Jose Average for All Items, 1982-84=100, or the successor of that Index, as published by the Bureau of Labor Statistics, U.S. Department of Labor. Tenant shall make the rent payment on or before the 10th day of each month. Application of Payments.

All payments received by Landlord from Tenant shall be applied to the oldest obligation owed by Tenant to Landlord. No designation by Tenant, either in a separate writing, on a check or money order, or otherwise shall modify this clause or have any force or effect.

3.6 Percentage Rent.

3.6.1 Payment. In addition to the Base Rent, Tenant agrees to pay to Landlord, as Rent for each Lease Year or partial Lease Year, the amount by which the percentage of Tenant's Gross Sales from the Premises set forth in Paragraph 8 of the Basic Lease Provisions for such Lease Year or partial Lease Year (the “Percentage Rent”). Percentage Rent will be determined and paid, without any prior demand within forty-five days (45-days) after the end of such Lease Year, including the last Lease Year of the term of the Lease, and Tenant's obligation will survive the expiration of the Lease Term. Each Lease Year will be considered as an independent accounting period for the purpose of computing the amount of Percentage Rent due.

The amount of Gross Sales of any Lease Year will not be carried over into any other Lease Year.

3.6.2 Gross Sales Reports. Tenant agrees to submit to Landlord on or before the forty-fifth day (45th) day following the end of each Lease Year or partial Lease Year (including the last Lease Year hereof, as to which Tenant's obligation will survive the expiration of the Lease Term) a written statement signed and verified by an authorized representative of Tenant as true and correct, showing the amount of such Gross Sales during the preceding Lease Year or partial Lease Year and an itemization of all permissible deductions from Gross Sales.

The annual statement will also be duly certified by Tenant or an officer of Tenant to be true and correct in compliance with the definition of Gross Sales in this Lease in accordance with sound and accepted accounting practice consistently applied. The statements referred to in this Section

3.3.2 of this Lease must be in such form and style and contain such details and information as Landlord may reasonably designate and will be delivered to the address set forth in Paragraph 2 of the Basic Lease Provisions or such other address as Landlord may from time to time designate. The acceptance by Landlord of payments of Percentage Rent or Gross Sales reports is without prejudice and does not constitute a waiver of Landlord's right to claim a deficiency in the payment of Percentage Rent or to audit Tenant's books and records. The Gross Sales for any PGCC 7-3-24

7 portion of a calendar month prior to the commencement of the first full calendar month, will be included in the report due for the next succeeding month.

3.6.3 Records and Audit Reports. Tenant agrees to prepare and keep for a period of at least thirty-six (36) months following the end of each Lease Year, true and accurate books of account and records, conforming to generally sound and accepted accounting principles consistently applied, including, but not limited to, sales tax and other reports filed with governmental agencies, all purchases and receipts of merchandise, inventories and all sales and other transactions by Tenant from which Gross Sales at, upon or from the Premises can be determined. Tenant agrees to record all sales, at the time each sale is made, and to retain cumulative cash register tapes or such other cumulative records concerning such Gross Sales as are approved by Landlord. Notwithstanding the foregoing, Landlord agrees that it will not unreasonably refuse to allow Tenant to maintain its books and records in computerized form, provided: (i) that Tenant's computerized books and records provide the same level of information as the print books and records described in this Section 3.3.3 of the Lease; (ii) such computerized books and records are retained for the full thirty-six (36) month retention period, and are made accessible for Landlord's inspection on request; (iii) print copies are made available to Landlord's representatives engaged in inspecting Tenant's books and records upon request. Landlord's consent to computerized record keeping, once given, may be revoked by Landlord on not less than sixty (60) days’ prior written notice to Tenant, if Tenant fails to comply with the foregoing requirements.

If Tenant's Gross Sales are required to be reported on any federal, state or local sales tax return, and Gross Sales so reported on any of the sales tax returns exceed the Gross Sales as reported by Tenant under this Lease, then the Gross Sales will be taken at the highest figure so reported. If any governmental authority increases the Gross Sales reported by Tenant on any such tax return for any Lease Year for which such Gross Sales have been reported, then Tenant will notify Landlord promptly of such increase, supply to Landlord a true copy of such governmental action and pay any additional Percentage Rent due under this Lease together with interest at the late rent Interest Rate set forth in Section 3.3.4 of the Lease from the date such Percentage Rent was due.

Landlord has the right, upon thirty (30) days' notice to Tenant to cause a complete audit of all statements of Gross Sales and in connection with such audit, to examine Tenant's books of account and records (including all supporting data and any other records from which Gross Sales may be tested or determined) of Gross Sales disclosed in any statement provided or required to be provided to Landlord by Tenant. Tenant will make all such records available for such examination at the location set forth in Paragraph 1 of the Basic Lease Provisions. Landlord will have the right to copy and duplicate such information as Landlord may require. If any such audit discloses that the actual Gross Sales transacted by Tenant exceed those reported, then Tenant will pay Landlord such additional Percentage Rent as may be payable together with interest at the late rent Interest Rate pursuant to Section 3.3.4 of the Lease from the date such additional Percentage Rent was due. If the excess so disclosed is ten percent (10%) or more, Tenant will also pay the reasonable costs of Landlord's audit and examination. If the excess is less than ten percent (10%), then Landlord will pay for the services of its auditors. The furnishing by Tenant of any fraudulent statement will constitute a non-curable Event of Default. If an audit is commenced by Landlord, all supporting data and any other records from which Gross Sales may PGCC 7-3-24

8 be tested or determined will be preserved and retained by Tenant until a final resolution of such audit, dispute or difference. Any information obtained by Landlord as a result of such audit will be treated as confidential, except in any litigation or proceeding between the parties.

For purposes of this lease, the term “gross sales” means sum of the full sale price at which all beverages, food stuffs, catering services and other such goods, room rental fees charged by Tenant, specialty contracted services, wares and merchandise are sold at any time during the term of the Agreement by Tenant, its employees or agents in. Gross sales shall exclude credit card service charges that are not included in the sale price to customers.

3.6.4 Late Charge and Interest. The late payment of any Rent will cause Landlord to incur additional costs, including administration and collection costs and processing and accounting expenses and increased debt service (“Delinquency Costs”). If Landlord has not received any installment of Rent within five (5) calendar days after such amount is due, Tenant shall pay a late charge in the amount of One Hundred Twenty Five Dollars ($125.00) immediately. This late charge represents a reasonable estimate of the Delinquency Costs incurred by Landlord. In addition, all delinquent amounts shall bear interest from the date such amount was due until paid in full at a rate per annum (“Applicable Interest Rate”) equal to the lesser of (a) the maximum interest rate permitted by law, or (b) five percent (5%) above the rate publicly announced by JPMorgan Chase Bank, N.A. (or if JPMorgan Chase Bank, N.A. ceases to exist, the largest bank then headquartered in the United States of America) (“Bank”) at its “Reference Rate.” If the use of the announced Reference Rate is discontinued by the Bank, then the term Reference Rate shall mean the announced rate charged by the Bank which is, from time to time, substituted for the Reference Rate. Landlord and Tenant recognize that the damage which Landlord shall suffer as a result of Tenant’s failure to pay such amounts is difficult to ascertain and said late charge and interest are the best estimate of the damage which Landlord shall suffer in the event of late payment. Landlord’s acceptance of late Rent, partial Rent and late charges does not equate with a waiver of Tenant’s default with respect to the overdue amount, or prevent Landlord from exercising any rights and remedies available under this Lease and/or by operation of law.

3.7 Additional Rent. In addition to paying the Base Rent specified in Item 8 of the Basic Lease Information and in Section 3.2, and pursuant to any Addendum or Amendment to this Lease that Landlord and Tenant may execute, Tenant shall pay as Additional Rent all Utilities and Services, defined and described in Section 4, not directly paid by Tenant to the utility company, and any other amounts of any kind that become due or payable by Tenant to Landlord under the terms of this Lease. Unless Landlord elects otherwise pursuant to this Lease, all amounts due under this section as Additional Rent are payable for the same periods and in the same manner, time and place, as the Base Rent. Tenant’s obligation to pay Rent under this Lease survives the Term to the extent such obligation has not been fulfilled during that Term.

3.8 Renegotiation of Base Rent Amount Upon Leasehold Improvements. If Tenant anticipates undertaking significant and costly renovations to the Property during the Term, upon the issuance of a building permit by City to commence such renovations, City and Tenant may meet to discuss a renegotiation of the rent amount to account for the improvements.

PGCC 7-3-24

9 3.9 Security Deposit. Tenant shall not be required to deposit any sums with Landlord as security for Tenant’s performance of its obligations under this Lease. Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code and agrees that the provisions of this Section 3.5 shall govern the treatment of Tenant’s Security Deposit in all respects for this Lease.

4. UTILITIES AND SERVICES.

4.4 Utilities and Services. Tenant shall be solely responsible for contracting for, and shall promptly pay any and all shall pay when due any and all water, heat, gas, electricity, telephone and other utilities and services (“collectively, “Services”) provided to or for the Premises, including taxes thereon. Tenant shall establish its own accounts for all utility Services, including garbage collection services, to the extent such Services can be separately metered and billed. In the case of any Services that are not separately metered and billed directly to Tenant, but are metered jointly with other premises, Tenant shall pay Landlord upon demand a pro rata share, as determined by Landlord, of all charges. Landlord shall bill Tenant its pro rate share of any Services that are not separately metered within one hundred twenty (120) days of the date that Landlord receives such bills from the Service provider (e.g., utility company). Tenant will also procure, or cause to be procured without cost to Landlord, any and all necessary permits, licenses, or other authorization s required for the lawful and proper installation and maintenance upon the Premises of wires, pipes, conduits, tubes, and other equipment and appliances for use in supplying any such service to and upon the Premises. Landlord, upon request of Tenant, and at the sole expense and liability of Tenant, will join with Tenant in any application required for obtaining or continuing any such services.

4.2 Pest Control. Tenant, at Tenant’s cost, shall at all times keep the Premises free of pests, including the obligation to maintain a pest control service contract with a licensed pest control operator. If Tenant fails to promptly and fully comply with this Section, Landlord shall have the right, but not the obligation, to enter the Premises to perform such spraying or inspections at Tenant’s expense. Performance of such work by Landlord shall not constitute a waiver of Tenant’s default in failing to do the same nor shall it entitle Tenant to any damage for any injury or inconvenience occasioned thereby nor to any abatement of Rent. Tenant shall reimburse Landlord for any cost incurred by Landlord pursuant to this Section upon demand therefor.

4.3 Exculpation of Liability. Landlord shall not be liable for any loss or damage suffered by Tenant or others, by reason of Landlord’s failure to furnish any of the Services, or furnishing reduced Service; no such failure or reduction shall constitute or be construed as a constructive or other eviction of Tenant, nor shall Landlord be liable for loss of business or injury to property however occurring, through or in connection with or incidental to such failure to furnish or reduction of any of the Services. Should Landlord elect to provide a security patrol or system, Landlord shall not be responsible for any damage or injury to Tenant, Tenant’s officers, agents, employees, independent contractors, invitees, customers, visitors, licensees, assignees or subtenants (individually and collectively, “Tenant’s Parties”), or the Premises or property due to failure, action or inaction of such patrol or system. Landlord reserves the right to stop Services when necessary, by reason of accident or emergency or for inspection, repairs, alterations, decorations, additions or improvements which, in the judgment of Landlord, are PGCC 7-3-24

10 desirable or necessary to be made, until same shall have been completed, and shall further have no responsibility or liability for failure to supply any Services in such instance. Landlord shall use reasonable efforts to minimize the inconvenience to Tenant from any such disruptions or interruptions of Services and shall provide Tenant with reasonable notice of such disruptions or interruptions to the extent that Landlord is aware of or has been provided with advance notice of the disruptions or interruptions. The exculpation of liability under this Section shall not apply to the extent claims are caused by Landlord’s sole or active negligence.

4.4 No Representation. Landlord makes no representation with respect to the adequacy or fitness of any heating, air conditioning or ventilation equipment in the Premises to maintain temperatures which may be required for, or because of, any equipment of Tenant, and Landlord shall have no liability for loss or damage suffered by Tenant or others in connection therewith.

4.5 Conservation and Use Policies. In the event of imposition of federal, state, or local governmental controls, rules, regulations, or restrictions on the use or consumption of energy or other utilities during the Term, both Landlord and Tenant shall be bound thereby. In the event of a difference in interpretation by Landlord and Tenant of any such controls, the interpretation of Landlord shall prevail, and Landlord shall have the right to enforce compliance therewith, including the right of entry into the Premises to effect compliance.

5. TAXES.

5.3 Taxes. As used in this Lease “Taxes” means Possessory Interest Taxes and Personal Taxes. Tenant’s obligations for Taxes for the last full or partial year of the Term and for any prior unpaid Taxes shall survive the expiration or earlier termination of this Lease.

5.4 Statement Regarding Possessory Interest Tax. This Lease creates a possessory property interest in Tenant. Tenant’s property interest may be subject to property taxation, and Tenant or the party in whom the possessory interest is vested may be subject to the payment of property taxes levied on the interest. Such taxes are referred to herein as “Possessory Interest Taxes”.

5.5 Personal Taxes. Tenant shall pay directly to the taxing authority all taxes and assessments levied upon trade fixtures, alterations, additions, improvements, inventories and other personal property located and/or installed on the Premises by Tenant. Such taxes are referred to herein as “Personal Taxes”.

5.6 Payment of Taxes. Tenant shall pay all Taxes prior to delinquency. To the extent any such taxes are not separately assessed or billed to Tenant by the taxing authority, Landlord shall deliver to Tenant copies of the assessment and tax bill together with Landlord’s proposed allocation between Landlord and Tenant. Tenant shall pay the amount reasonably allocated to Tenant no later than ten (10) business days prior to the date on which such Taxes are due. Taxes attributable to any of Tenant’s personal property situated within the Public Area shall be charged to Tenant. Should Tenant fail to pay its Taxes, Landlord may elect to do so on Tenant’s behalf.

Tenant will thereafter be required to reimburse Landlord for such Taxes together with interest at PGCC 7-3-24

11 the Applicable Interest Rate, from the date Landlord tendered payment, until the date Tenant fully reimburses Landlord.

5.5 Records and Accounting.

5.5.1 Tenant shall keep proper records and accounts of the gross sales. Such records and accounts, including any sales tax reports that Tenant is required to furnish to any governmental authority, shall be open at all reasonable times to the inspection of Landlord or Landlord’s auditor or authorized representative, with prior notice and during business hours.

5.5.2 Monthly accounting of gross sa1es shall be compiled and furnished to Landlord and attached to the payment of Monthly Gross Sales Rent as described in Section 3.2.

5.5.3 Tenant shall provide to Landlord annual compiled financial statements of Tenant’s business at the premises. The annual financial statements shall be due to Landlord within three (3) months after the end of each twelve (12) month operating period

6. INSURANCE.

6.3 Landlord. Landlord may elect to maintain insurance or an insurance equivalent (including but not limited to, e.g., that offered to a municipality through and by a joint powers authority, a self-insurance pool of liability coverage authorized pursuant to California Government Code Section 6500, or similar collective) insuring the Premises on an occurrence basis against fire and extended coverage (including, if Landlord elects, “all risk” coverage, earthquake/volcanic action, flood and/or surface water insurance) similar in type and coverage limits to that carried by Landlord on its other properties. Landlord may also carry such other insurance as Landlord may deem prudent or advisable, in such amounts and on such terms as Landlord shall determine.

6.4 Tenant. Tenant shall, at Tenant’s expense, obtain and keep in force at all times the following insurance, and shall be liable for all premiums, deductibles, and self-insured amounts, if any, in connection therewith:

6.4.1 Commercial General Liability Insurance (Occurrence Form). A policy of commercial general liability insurance (occurrence form) having a combined single limit of not less than One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) annual aggregate, providing coverage for, among other things, blanket contractual liability, premises, products/completed operations and personal injury, death and advertising injury coverage, with deletion of (a) the exclusion for operations within fifty (50) feet of a railroad property (railroad protective liability), if applicable, and (b) the exclusion for explosion, collapse or underground hazard, if applicable, and, if necessary, Tenant shall provide for restoration of the aggregate limit.

6.4.2 Workers’ Compensation and Employer’s Liability Insurance. Workers’ compensation insurance that complies with all applicable state statutes and regulatory requirements, and, if Tenant hires any employees, employer’s liability insurance coverage in the amount of at least One Million Dollars ($1,000,000).

PGCC 7-3-24

12 6.4.3 Property Insurance. “All risk” property insurance including boiler and machinery comprehensive form, if applicable, covering damage to or loss of any improvements, personal property, fixtures and equipment of Tenant (collectively “Tenant’s Property”) (and coverage for the full replacement cost thereof including business interruption of Tenant), together with, if the property of Tenant’s invitees is to be kept in the Premises, warehouser’s legal liability or bailee customers insurance for the full replacement cost of the property belonging to invitees and located in the Premises.

6.5 General.

6.5.1 Insurance Companies. Insurance required to be maintained by Tenant shall be written by companies licensed to do business in California and having a “General Policyholders Rating” of at least A:VIII (or such higher rating as may be required by a lender having a lien on the Premises) as set forth in the most current issue of “Best’s Insurance Guide.”

6.5.2 Certificates of Insurance. Tenant shall deliver to Landlord certificates of insurance for all insurance required to be maintained by Tenant pursuant to this Lease, in the form of the ACORN standard certificate of insurance, prior to the Commencement Date. Tenant shall, at least ten (10) days prior to expiration of the policy, furnish Landlord with certificates of renewal or “binders” thereof. Each certificate shall expressly provide that such policies shall not be cancelable or otherwise subject to modification except after sixty (60) days’ prior written notice to the parties named as additional insureds as required in this Lease (except in the case of cancellation for nonpayment of premium in which case cancellation shall not take effect until at least ten (10) days’ notice has been given to the parties named as additional insureds). If Tenant fails to maintain any insurance required in this Lease, Tenant shall be liable for all losses and cost resulting from said failure.

6.5.3 Additional Insureds. Landlord shall be named as an additional insured on the policy as required by Section 6.2.1. An additional insured endorsement naming such parties as additional insured(s) shall be attached to the certificate of insurance.

6.5.4 Primary Coverage. All insurance to be maintained by Tenant shall be primary without right of contribution from insurance of Landlord.

6.5.5 Umbrella/Excess Insurance. Any umbrella liability policy or excess liability policy (which shall be in “following form”) shall provide that if the underlying aggregate is exhausted, the excess coverage will drop down as primary insurance. The limits of insurance maintained by Tenant shall not limit Tenant’s liability under this Lease,

6.5.6 Waiver of Subrogation. Tenant waives any right to recover against Landlord for claims for damages to Tenant’s Property to the extent covered (or required by this Lease to be covered) by Tenant’s insurance. The coverage obtained by Tenant pursuant to this Lease shall include a waiver of subrogation endorsement attached to the certificate of insurance.

6.5.7 Notification of Incidents. Tenant shall notify Landlord within twenty four (24) hours after the occurrence of any accident or incident in/at Property or any portion thereof which could give rise to a claim against Landlord, its coverage, Tenant or Tenant’s PGCC 7-3-24

13 insurance. Tenant’s notice shall be accompanied by a copy of any accident/incident form prepared by Tenant, reporting and/or relating to the accident/incident.

6.3.8 Adjustment of Insurance Levels. Landlord reserves the right at any time during the term of this Lease to change the amounts and types of insurance required hereunder upon giving Tenant three (3) months prior written notice.

7. INDEMNITY; LIABILITY EXEMPTION.

7.3 Indemnity. Except with respect to claims solely caused by Landlord’s active negligence or willful misconduct, Tenant shall indemnify, protect, defend, and hold harmless Landlord and its elected and appointed officers, officials, employees, volunteers, lenders, agents, and contractors and each of their successors and assigns from and against any and all claims, judgments, causes of action, damages, penalties, costs, liabilities, and expenses, including all costs, attorneys’ fees, expenses and liabilities incurred in the defense of any such claim or any action or proceeding brought thereon, arising at any time during or after the Term directly or indirectly as a result of or in connection with (i) any default in the performance of any obligation on Tenant’s part to be performed under the terms of this Lease; (ii) Tenant’s use of the Premises or the Property, including the conduct of Tenant’s business or any activity, work or things done, permitted or suffered by Tenant in or about the Premises, the Public Area, or other portions of the Property; (iii) any act, error or omission of Tenant or of any invitee, licensee or guest of Tenant, in or about the Premises, the Public Area, or other portions of the Property; (iv) loss of, injury, or damage to or destruction of property (including loss of use resulting from that loss, injury, damage or destruction); (v) all resulting economic losses, consequential and/or exemplary damages; and (vi) any subleases, assignments and related activities, (all of the foregoing, collectively, the “Indemnification”). Tenant shall provide such Indemnification by and through counsel reasonably acceptable to Landlord. The obligations of Tenant under this Section shall survive the expiration or sooner termination of this Lease.

7.4 Exemption of Landlord from Liability. Tenant, as a material part of the consideration to Landlord, hereby assumes all risk of damage to property including, but not limited to, Tenant’s fixtures, equipment, furniture and alterations or injury to persons in, upon or about the Premises, the Public Area, or other portions of the Property arising from any cause, and Tenant hereby waives all claims in respect thereof against Landlord, except to the extent such claims are caused by Landlord’s sole or active negligence or willful misconduct, Tenant hereby agrees that Landlord shall not be liable for injury to Tenant’s business or any loss of income therefrom or for damage to the property of Tenant, or injury to or death of Tenant, Tenant’s Parties or any other person in or about the Premises, the Public Area, or the Property, whether such damage or injury is caused by fire, steam, electricity, gas, water or rain, or from the breakage, leakage or other defects of sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or from any other cause, whether said damage or injury results from conditions arising upon the Premises, the Public Area, or other portions of the Property or from other sources or places, and regardless of whether the cause of such damage or injury or the means of repairing the same is inaccessible to Tenant, except damage or injury caused solely by Landlord’s sole or active negligence or willful misconduct. Landlord shall not be liable for any damages arising from any act or neglect of any other tenant, if any, of the Premises, the Public PGCC 7-3-24

14 Area or other portions of the Property or Landlord’s failure to enforce the terms of any agreements with parties other than Tenant.

8. REPAIRS AND MAINTENANCE.

8.3 Landlord’s Obligations.

8.3.1 At Landlord’s Election on Tenant’s Behalf, Landlord shall not be required to make or bear the costs of any repair resulting from (i) any alteration or modification to the Premises or to mechanical equipment within the Premises performed by, for or because of Tenant or to special equipment or systems installed by, for or because of Tenant, (ii) the installation, use or operation of Tenant’s property, fixtures and equipment, (iii) the moving of Tenant’s property in or out of the Premises, or the Property, or in and about the Premises, (iv) Tenant’s use or occupancy of the Premises in violation of Section 10 of this Lease or in the manner not contemplated by the parties at the time of the execution of this Lease, (v) the acts or omissions of Tenant or Tenant’s Parties, (vi) fire and other casualty, except as provided by Section 12 of this Lease, (vii) condemnation, except as provided in Section 13 of this Lease, or (viii) or any condition which might require repair. If Landlord elects to undertake repairs and maintenance necessitated by causes set forth in the preceding sentence, then Tenant shall pay as Additional Rent, Landlord’s actual costs paid or incurred in connection therewith.

8.3.2 Tenant’s Waiver. Notwithstanding anything to the contrary, whether stated or implied in this Lease, Tenant waives and releases its rights to make repairs at Landlord’s expense or deduct such expenses from Rent, except as expressly stated in this Lease.

8.4 Tenant’s Obligations. Tenant, at Tenant’s expense, shall maintain the Premises in good order, condition and repair, including, without limitation, interior floor surfaces and floor coverings, interior walls and wall coverings, Signs and Graphics, and any items required for compliance with applicable laws, rules and regulations. In the event Tenant fails, in the reasonable judgment of Landlord, to maintain the Premises in good order, condition and repair, Landlord shall, upon five (5) days’ written notice to Tenant, have the right to perform such maintenance, repairs or refurbishing at Tenant’s expense, provided Tenant fails to do so within that five-day period.

8.3 Beginning Condition. On the Commencement Date, Tenant shall accept the Premises in its “AS IS” condition. Tenant acknowledges that it has inspected the Premises and agrees that the Premises are suitable for Tenant’s intended use and Tenant agrees that it is not relying on any warranty or representation made by Landlord or its officers concerning the use of the Premises or the Property. Landlord does not represent or warrant that the Premises or the Property conform to applicable restrictions, zoning ordinances, setback lines, parking requirements, impervious ground cover ratio requirements, or other matters that may relate to Tenant’s intended use.

8.4 Condition Upon Surrender. Upon the expiration of termination of this Lease, Tenant shall surrender the Premises to Landlord broom clean, and, subject to reasonable wear and tear, in the condition which Tenant shall have been required to maintain the Premises under this Lease with the heating, ventilation, plumbing, electrical, lighting, man doors, dock doors, PGCC 7-3-24

15 levelers, shelters, seals and bumpers (if any), windows and floors serving the Premises in good operating condition. Tenant shall repair all damage to the Premises caused by the installation or removal of its trade fixtures and other property of Tenant. Tenant shall restore the Premises to the same condition or better as existed immediately prior to the installation of any item removed.

9. ALTERATIONS.

9.3 Condition of Premises. Tenant acknowledges that Landlord has made no representation or warranty regarding the condition of the Premises, Public Area, or Property except as specifically stated in this Lease.

9.3.1 Landlord Improvements to Premises. The Premises are leased in an as-is condition.

9.4 Tenant Improvements to Premises. Tenant, at Tenant’s sole cost and expense, may install interior improvements, subject to Landlord’s prior written approval (“Work”). Plans, specifications, and drawings for the Work shall be subject to prior written approval by Landlord’s Public Works Director, and Tenant shall be responsible for obtaining any and all required permits. Tenant may perform those components of the Work which constitute minor cosmetic alterations (i.e., painting), are non-structural, do not require a permit, and are not typically performed by a licensed contractor or tradesperson. Any other Work shall be performed by licensed contractors and in accordance with all applicable laws, including without limitation, any applicable State laws regarding prevailing wage requirements. In no event shall Tenant undertake any structural, electrical or plumbing work in connection with, or work on the exterior of, the Building, the Property or the Premises without Landlord’s advance written consent.

9.5 Trade Fixtures: Alterations. Subject to Section 9.6, Tenant may install necessary trade fixtures, equipment and furniture in the Premises, provided that such items are installed and are removable without structural or material damage to the Premises. For purposes of this Lease, the term “trade fixture” shall mean specialty fixtures or equipment used in Tenant’s trade or business as identified by Tenant and agreed to by Landlord in writing. Tenant shall not construct, or allow to be constructed, any alterations or physical additions in, about or to the Premises without the prior written consent of Landlord.

9.6 Standard of Work. All work to be performed by or for Landlord or Tenant pursuant hereto shall be performed diligently and in a first-class, workmanlike manner, and in compliance with all Laws applicable to the Premises and insurance carrier requirements.

Landlord shall have the right, but not the obligation, to inspect periodically the Work, and Landlord may require changes in the method or quality of the Work. In no event shall the Work obstruct access to the Property and/or Public Area.

9.7 Damage; Removal. Tenant shall repair all damage to the Property and the Premises caused by the installation or removal of Tenant’s fixtures, equipment, furniture and alterations. Upon the termination of this Lease, Tenant shall remove any or all alterations, additions, improvements and partitions made or installed by Tenant and restore the Premises to their condition existing prior to the construction of any such items and perform any closure work, investigation and environmental remedial work required by any Hazardous Materials Laws (as PGCC 7-3-24

16 hereinafter defined) or by any other applicable laws, ordinances, regulations or permits by any governmental authority having jurisdiction; provided, however, Landlord may require, upon written notice to Tenant no less than fifteen (15) days before the expiration of the Term, any such items (except trade fixtures) designated by Landlord to remain on the Premises, in which event they shall be and become the property of Landlord upon the termination of this Lease. All such removals and restoration shall be accomplished in a good and workmanlike manner so as not to cause any damage to the Premises, the Public Area, or the Property whatsoever and in strict accordance with all applicable laws, regulations and governmental orders.

9.8 Liens. Tenant shall promptly pay and discharge all claims for labor performed, supplies furnished, and services rendered at the request of Tenant and shall keep the Property and the Premises free of all mechanics’ and materialmen’s liens in connection therewith. Tenant shall provide at least ten (10) days’ prior written notice to Landlord before any labor is performed, supplies furnished or services rendered on or at the Premises and Landlord shall have the right to post on the Premises notices of non-responsibility. If any lien is filed, Tenant shall cause such lien to be released and removed within ten (10) days after the date of filing, and if Tenant fails to do so, Landlord may take such action as may be necessary to remove such lien, without the duty to investigate the validity of it (unless Tenant has commenced an action to contest, dispute or defend the claims of lienholders and has provided Landlord with written notice of the pendency of the action), and Tenant shall pay Landlord such amounts expended by Landlord together with interest thereon, at the Applicable Interest Rate, from the date of expenditure.

9.9 Satellites and Antennae. Notwithstanding anything in this Lease to the contrary, Landlord and Tenant agree that it shall be reasonable for Landlord to withhold its consent to (i) installation in or about the Premises or Property of equipment comprising or relating to relays, monopoles, satellite dishes, antennae, wireless telecommunications devices, transmitters, roof mounts, two-way radios, or similar apparatus (collectively, “Transmission Devices”) or (ii) any assignment or subletting which permits or contemplates installation of such Transmission Devices.

10. USE.

10.3 Usage. The Premises will be used for the operation of a snack bar serving sandwiches, other light menu items, and beverages, and for no other uses without the prior written consent of Landlord, which may be granted or withheld in Landlord’s sole and absolute discretion. Tenant acknowledges that neither Landlord nor any of Landlord’s agents has made any representation or warranty with regard to the Premises, the Public Area, or the Property with respect to their suitability for the conduct of Tenant’s business. Tenant’s execution of this Lease and entry of the Premises hereunder shall conclusively establish that the foregoing were at such time in satisfactory condition. Tenant, at Tenant’s expense, shall comply with all laws, rules, orders, ordinances, directions, regulations and requirements of federal, state, county and municipal authorities now in force or which may hereafter be in force (“Laws”), which shall impose any duty upon Landlord or Tenant with respect to the use, occupancy, or alteration of the Premises. Tenant shall be responsible for obtaining any permit or business license required by any governmental agency permitting Tenant’s use of the Premises. Tenant shall comply with the Rules and Regulations, including observance of prohibited uses, attached hereto as Exhibit B and incorporated by reference, together with such reasonable additional rules and regulations as PGCC 7-3-24

17 Landlord may from time to time prescribe. Tenant shall not commit waste, overload the floors or structure of the building, subject the Property or any portion thereof to any use which would damage the same or increase the risk of loss or violate any insurance coverage, permit any unreasonable odors, smoke, dust, gas, substances, noise or vibrations to emanate from the Premises, take any action which would constitute a nuisance or would disturb, obstruct or endanger any other tenants, take any action which would abrogate any warranties, or use or allow the Premises to be used for any unlawful purpose. Landlord shall not be responsible for non-compliance by any other tenant or occupant with, or Landlord’s failure to enforce, any of the rules and regulations or any other terms or provisions of such tenant’s or occupant’s lease.

Tenant shall promptly comply with the reasonable requirements of any board of fire insurance underwriters or other similar body now or hereafter constituted. Tenant shall not do any act which shall in any way encumber the title of Landlord in and to the Property or any portion thereof.

10.4 Quiet Enjoyment. Tenant, upon paying Rent and performing all of its obligations under this Lease, shall peaceably and quietly enjoy the Premises, subject to the terms of this Lease, and any mortgage, deed of trust, lease, or other agreement to which this Lease may be subordinate. Tenant acknowledges that the Premises are adjacent to a City-owned public park and beach. Tenant acknowledges that Tenant is leasing the Premises with full awareness of this adjacent use.

10.5 Access. Tenant shall be permitted 24-hour a day access to the Premises.

10.6 Operations.

10.6.1 Hours of Operation. Tenant agrees that the hours of operation shall be posted at the location and any Tenant website that is primarily used for the space. Hours of operation shall be in compliance with the Rules and Regulations attached hereto as Exhibit B.

10.4.2 General Method of Operation. Tenant shall operate the business on the Premises continuously during the entire term of this Lease with such due diligence and efficiency as will reasonably produce the maximum return to Tenant.

10.4.3 Management. A manager shall be present during all times the facility is open for business.

10.4.4 Licenses and Permits. Tenant shall obtain all permits and licenses required by the laws of any federal, state, or other governmental agency to allow Tenant to meet the obligations under this Lease. All permits and licenses shall be maintained in Tenant’s name.

Tenant shall pay, at Tenant’s own expense, all charges and fees incidental to the lawful conduct of the services, and keep fully informed on all existing Federal, State and local laws, ordinances, and regulations which in any manner affect the fulfillment of this agreement. Tenant shall pay, when due, all taxes and assessments levied upon the Premises and personal property situated in the Premises. Tenant recognizes and understands that this Lease may create a real property possessory interest tax that may subject the Tenant to real property truces. Nonpayment of taxes may result in Tenant being in default under Section 5.4.

10.4.5 Restaurant Name. The restaurant name shall be “Lover’s Point Snack PGCC 7-3-24

18 Bar.” Any change to this name shall require the advance written approval of Landlord. This name shall attach to the Premises and be exclusively available to Landlord and any successor restaurant operator, upon termination of the Lease.

10.4.6 Health and Sanitation. Tenant shall insure that all its employees are neatly attired in clean and appropriate uniforms whenever on duty. The Landlord requires that all Tenant’s employees engaged in the preparation, handling, serving, and storage of food meet both State of California and Monterey County Health Department requirements and the Landlord’s health requirements for such activity.

10.4.7 Recycling Program. Tenant, at Tenant’s cost, shall participate in any and all recycling programs in which Landlord is obligated to participate by law or if Tenant is otherwise required to do so pursuant to any federal, state or local law, rule or regulation

10.5 Sewer Damage. Tenant agrees not to discharge any harmful or dangerous chemicals into the sewer system, whether it be inside the Premises area or inside the main system leading from the Premises to the main sewer line. Should Tenant discharge any harmful chemicals into the sewer system, Tenant shall be fully responsible for the cost and repair of such damage. Landlord reserves the right to select an expert of its choosing to inspect any damage at Tenant’s cost. Tenant shall not be responsible for cost of expert if it is determined such damage is not caused by Tenant. Tenant accepts responsibility for any damage if the following conditions exist: (i) the damage to the sewer system is determined to be due to the chemicals used in the operation of Tenant’s business; or (ii) the damage exists only in the designated portion of the sewer system connecting to the Premises.

11. ENVIRONMENTAL MATTERS.

11.3 Environmental Compliance. Tenant shall, at its sole cost and expense, comply with all federal, state and local laws from time to time in effect (“Hazardous Materials Laws”) concerning the management, use, generation, storage, transportation, presence, discharge or disposal of hazardous, toxic, radioactive or carcinogenic materials, substances or wastes (“Hazardous Materials”). Neither Tenant nor its agents, employees, contractors, sublessees, assignees or invitees shall use, handle, store, transport, release or dispose of any Hazardous Materials anywhere in, on, under or about the Premises. Tenant shall cause any and all Hazardous Materials brought onto, used, generated, stored or discharged in the Premises to be removed from the Premises and transported for disposal in accordance with applicable Hazardous Materials Laws. Landlord shall have the right to enter the Premises from time to time to conduct tests, inspections and surveys concerning Hazardous Materials and to monitor Tenant’s compliance with its obligations concerning Hazardous Materials and Hazard Materials Laws. Tenant shall immediately notify Landlord in writing of any voluntary clean-up or removal action instituted or proposed by Tenant, any enforcement, clean-up, removal or other governmental or regulatory action instituted or threatened, or any claim made or threatened by any person against Tenant, the Premises relating to Hazardous Materials or Hazardous Materials Laws, Tenant shall also supply to Landlord as promptly as possible, and in any event within five (5) business days after Tenant receives or sends same, copies of all claims, reports, complaints, notices, warnings or asserted violations relating in any way to the Premises or Tenant’s use thereof and concerning Hazardous Materials or Hazardous Materials Laws.

PGCC 7-3-24

19 11.4 Tenant’s Indemnification. Except to the extent caused by Landlord’s sole or active negligence, Tenant shall indemnify, defend and hold Landlord harmless from any claims, causes of action, liabilities, losses, damages, injunctions, suits, fines, penalties, costs or expenses (including attorneys’ fees and expenses) caused or alleged to have been caused by the presence, use or release of Hazardous Materials in or about the Premises, including, without limitation, any personal injury, death, property damage, decrease in value of the Premises, caused or alleged to have been caused by the use, storage, generation, presence or release of Hazardous Materials, whether such claims, causes of action or liabilities are first asserted during the Term or thereafter, and including without limitation, claims made against Landlord with respect to personal injury, death or property damage sustained by third parties caused or alleged to have been caused by the use, storage, generation, presence or release of Hazardous Materials in violation of Tenant’s obligations under this Lease. Tenant’s obligations under this Section shall survive the expiration or earlier termination of this Lease.

12. DAMAGE AND DESTRUCTION.

12.3 If, during the Term, the building and other improvements that are part of the Premises are totally or partially destroyed from any cause, rendering the Premises totally or partially inaccessible or unusable, and at least one (1) year of the Term remains, Landlord shall restore said building and improvements to substantially the same condition as they were in immediately before destruction, if the restoration can be made under then existing laws and can be completed within 180 working days after obtaining all necessary permits therefore, and if the cost of such repairs does not exceed the amount of insurance proceeds received by Landlord from Tenant’s Insurance pursuant to Section 6 above, on account of such damages. Such destruction shall not terminate this Lease. In case of destruction, there shall be an abatement or reduction of Rent, between the date of destruction and the date of completion of restoration if restoration takes place, based on the extent to which the destruction actually interferes with Tenant’s use of the Premises. Tenant hereby waives the provisions of Sections 1932, Subdivision 2, and 1933, Subdivision 4, of the Civil Code of California. If the restoration cannot be made in the time stated in this paragraph, then within 15 days after the parties determine that the restoration cannot be made in the time stated in this paragraph, Tenant can terminate this Lease immediately by giving written notice to Landlord. If Tenant fails to terminate this Lease and if restoration is permitted under the existing laws, Landlord, at its election, can either terminate this Lease or restore the building and other improvements that are part of the Premises within a reasonable time and this Lease shall continue in full force and effect. If the existing laws do not permit the restoration, either party can terminate this Lease immediately by giving notice to the other party. In the event of the giving of such notice of termination by Landlord or Tenant as provided herein, this Lease and all interest of Tenant in the Premises shall terminate 15 days after receipt of such notice by the other party.

12.4 Uninsured or Underinsured Casualty. In the event that the Premises are (i) damaged to the extent Tenant is unable to use the Premises and such damage is not covered by insurance proceeds received by Landlord, (ii) the Premises are damaged to the extent that the estimated repair cost exceeds the insurance proceeds, if any, available for such repair (not including the deductible(s), if any, on Landlord’s property and other applicable insurance) plus any amount that Tenant is obligated or elects to pay for such repair, (iii) the estimated repair cost, even though covered by insurance, exceeds fifty percent (50%) of the full replacement cost PGCC 7-3-24

20 of the Premises, or (iv) in the event that the holder of any indebtedness secured by the Premises requires that the insurance proceeds be applied to such indebtedness, then Landlord shall have the right at Landlord’s option either (a) to repair such damage as soon as reasonably possible at Landlord’s expense, or (b) to give written notice to Tenant within thirty (30) days after the date of the occurrence of such damage of Landlord’s intention to terminate this Lease as of the date of the occurrence of such damage.

12.5 Tenant’s Fault; Repair Limitation. If the Premises are damaged resulting from the negligence or breach of this Lease by Tenant or any of Tenant’s Parties, Rent shall not be reduced during the repair of such damage and Tenant shall be liable to Landlord for the cost of the repair caused thereby to the extent such cost is not covered by insurance proceeds.

Notwithstanding anything in this Lease to the contrary, and except to the extent caused by Landlord’s sole or active negligence, Landlord shall not be required to repair any injury or damage, by fire or other cause to the property of Tenant or to make repairs or replacements of any decorations, or any improvements installed on the Premises by or for Tenant, unless Landlord has received insurance proceeds from Tenant’s property insurance as provided in Section 6.2.3 above, and neither Tenant nor Landlord have opted to terminate this Lease as provided in Section 19.13.

13. EMINENT DOMAIN.

13.3 Effect on Rights and Obligations. If any portion of the Premises is permanently taken by condemnation, this Lease shall remain in effect, except that Tenant can elect to terminate this Lease if 15% or more of the total number of square feet in the Premises is taken or if the remaining portion of the Premises is rendered unsuitable for Tenant’s continued use. If Tenant elects to terminate this Lease, Tenant must exercise its right to terminate by giving written notice to Landlord within 30 days after the nature and the extent of the taking have been finally determined, as of the date of termination, which date shall not be earlier than 30 days nor later than 90 days after Tenant has notified Landlord of its election to terminate; except that this Lease shall terminate on the date of taking if the date of taking falls on a date before the date of termination as designated by Tenant. If Tenant does not terminate this Lease within the 30-day period, this Lease shall continue in full force and effect, except that the monthly Rent thereafter to be paid shall be reduced on a pro-rata basis. Tenant shall notify Landlord in writing of any condemnation or threatened condemnation within ten (10) days after Tenant receives notice of said action or threatened action.

14. DEFAULT.

14.3 Events of Default. When used in this Lease with reference to Tenant, the term “default” refers to any breach of Tenant’s obligations under this Lease, however brief. When any such default continues for the applicable period specified below, such default shall constitute an Event of Default hereunder, entitling Landlord to exercise the remedies set forth in Sections 14.2 and 14.3 of this Lease. The occurrence of any of the following events shall constitute an “Event of Default”:

14.3.1 Failure to comply with Assignment and Subletting provisions as set forth in Section 15.1;
PGCC 7-3-24

21 14.3.2 Abandonment of or vacating the Premises for a period of thirty (30) consecutive days;

14.3.3 Failure to pay Rent on the date when due and the failure continuing for a period of ten (10) days after such payment is due;

14.3.4 Failure to perform Tenant’s covenants and obligations hereunder (except default in the payment of Rent) where such failure continues for a period of thirty (30) days;

14.3.5 The making of a general assignment by Tenant for the benefit of creditors; the filing of a voluntary petition by Tenant or the filing of an involuntary petition by any of Tenant’s creditors seeking the rehabilitation, liquidation or reorganization of Tenant under any law relating to bankruptcy, insolvency or other relief of debtors and, in the case of an involuntary action, the failure to remove or discharge the same within sixty (60) days of such filing; the appointment of a receiver or other custodian to take possession of substantially all of Tenant’s assets or this leasehold; Tenant’s insolvency or inability to pay Tenant’s debts or failure generally to pay Tenant’s debts when due; any court entering a decree or order directing the winding up or liquidation of Tenant or of substantially all of Tenant’s assets; Tenant taking any action toward the dissolution or winding up of Tenant’s affairs; the cessation or suspension of Tenant’s use of the Premises; or the attachment, execution or other judicial seizure of substantially all of Tenant’s assets or this leasehold; or

14.3.6 The making of any material misrepresentation or omission by Tenant or any successor in interest of Tenant in any materials delivered by or on behalf of Tenant to Landlord or Landlord’s lender pursuant to this Lease.

14.4 Remedies.

14.4.1 Termination. In the event of the occurrence of any Event of Default, Landlord shall have the right to give a written termination notice to Tenant and, on the date specified in such notice (which date is at least two (2) business days following the date of delivery of such notice), this Lease shall terminate unless on or before such date all arrears of Rent and all other sums payable by Tenant under this Lease and all costs and expenses incurred by or on behalf of Landlord hereunder shall have been paid by Tenant and all other Events of Default at the time existing shall have been fully remedied to the satisfaction of Landlord.

A. Repossession. Following termination, without prejudice to other remedies Landlord may have, Landlord may (i) peaceably re-enter the Premises upon voluntary surrender by Tenant or remove Tenant therefrom and any other persons occupying the Premises, using such legal proceedings as may be available; (ii) repossess the Premises or re-let the Premises or any part thereof for such term (which may be for a term extending beyond the Term), at such rental and upon such other terms and conditions as Landlord in Landlord’s sole discretion shall determine, with the right to make reasonable alterations and repairs to the Premises; and (iii) remove all personal property therefrom.

B. Unpaid Rent. Landlord shall have all the rights and remedies of a landlord provided by applicable law, including the right to recover from Tenant: (a) the worth, at the time of award, of the unpaid Rent that had been earned at the time of termination, (b) the PGCC 7-3-24

22 worth, at the time of award, of the amount by which the unpaid Rent that would have been earned after the date of termination until the time of award exceeds the amount of loss of rent 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 the loss of rent that Tenant proves could have been reasonably avoided, and (d) any other amount, and court costs, necessary to compensate Landlord for all detriment proximately caused by Tenant’s default. The phrase “worth, at the time of award,” as used in (a) and (b) above, shall be computed at the Applicable Interest Rate, and as used in (c) above, shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

14.4.2 Continuation. Landlord shall have the remedy described in California Civil Code section 1951.4 (as amended from time to time, and successor statutes thereto) and Landlord may continue the Lease in effect after Tenant’s breach and abandonment and recover Rent as it becomes due. In the event and for so long as Landlord elects this remedy, Tenant shall have the right to sublet its Premises, assign its interest in the Lease, or both, subject to Landlord’s prior written consent, which shall not be unreasonably withheld. In addition, even though an Event of Default may have occurred, this Lease shall continue in effect for so long as Landlord does not terminate Tenant’s right to possession, and Landlord may enforce all of Landlord’s rights and remedies under this Lease, including the right to recover Rent as it becomes due. Landlord, without terminating this Lease, may, during the period Tenant is in default, enter the Premises and re-let the same, or any portion thereof, to third parties for Tenant’s account and Tenant shall be liable to Landlord for all costs Landlord incurs in re-letting the Premises, including, without limitation, brokers’ commissions, expenses of remodeling the Premises and like costs. Re-letting may be for a period shorter or longer than the remaining Term. Tenant shall continue to pay the Rent on the date the same is due. No act by Landlord hereunder, including acts of maintenance, preservation or efforts to lease the Premises or the appointment of a receiver upon application of Landlord to protect Landlord’s interest under this Lease, shall terminate this Lease unless Landlord notifies Tenant that Landlord elects to terminate this Lease. In the event that Landlord elects to re-let the Premises, the rent that Landlord receives from re-letting shall be applied to the payment of, first, any indebtedness from Tenant to Landlord other than Base Rent and Additional Rent; second, all costs, including maintenance, incurred by Landlord in re-letting; and, third, Base Rent and Additional Rent. After deducting the payments referred to above, any sum remaining from the rental Landlord receives from re-letting shall be held by Landlord and applied in payment of future Rent as Rent becomes due under this Lease. In no event shall Tenant be entitled to any excess rent received by Landlord. If, on the date Rent is due under this Lease, the rent received from the re-letting is less than the Rent due on that date, Tenant shall pay to Landlord, in addition to the remaining Rent due, all costs, including maintenance, which Landlord incurred in re-letting the Premises that remain after applying the rent received from re-letting as provided hereinabove. So long as this Lease is not terminated, Landlord shall have the right to remedy any default of Tenant, to maintain or improve the Premises, to cause a receiver to be appointed to administer the Premises and new or existing subleases and to add to the Rent payable hereunder all of Landlord’s reasonable costs in so doing, with interest at the Applicable Interest Rate from the date of such expenditure.

PGCC 7-3-24

23 14.5 Remedies Cumulative. Each right and remedy of Landlord provided for herein or now or hereafter existing at law, in equity, by statute or otherwise shall be cumulative and shall not preclude Landlord from exercising any other rights or remedies provided for in this Lease or now or hereafter existing at law or in equity, by statute or otherwise. No payment by Tenant of a lesser amount than the Rent nor any endorsement on any check or letter accompanying any check or payment as Rent shall be deemed an accord and satisfaction of full payment of Rent; and Landlord may accept such payment without prejudice to Landlord’s right to recover the balance of such Rent or to pursue other remedies.

14.6 Default of Landlord. Except to the extent caused by reasons beyond Landlord’s reasonable control, Landlord’s failure to perform any obligation required of it pursuant to the terms of this Lease within thirty (30) days following written notice from Tenant or, in the case of any obligation which cannot reasonably be performed within thirty (30) days, Landlord’s failure to commence such performance within said thirty (30) day period and thereafter diligently pursue such performance to completion, shall constitute a default by Landlord under the terms of this Lease. In the event of a default by Landlord, Tenant shall have the right to seek any and all remedies provided for in this Lease or otherwise existing at law.

15. ASSIGNMENT AND SUBLETTING.

15.3 Landlord’s Consent. Tenant shall not assign, sublet or otherwise transfer, whether voluntarily or involuntarily or by operation of law, the Premises or any part thereof, without Landlord’s prior written approval, which shall not be unreasonably withheld. Any sublease or assignment or other transfer agreements shall be subject to Landlord’s prior written approval.

Tenant’s attempted assignment/subletting without first obtaining Landlord’s written consent shall be void at Landlord’s election. Landlord’s consent to one assignment or subletting shall not be deemed a consent to subsequent assignments and/or sublettings. The parties agree that it shall be reasonable for Landlord to withhold its consent to a proposed assignment or subletting if the proposed assignee or sublessee or the nature of its business would require Landlord to incur additional expense in construction work or other work to the Premises that would not otherwise be required if Tenant remained, for example, if the proposed assignee or sublessee is subject to compliance with additional requirements of the Americans with Disabilities Act (42 U.S.C. § 12101 et seq.) (including related regulations) beyond those requirements which are applicable to the tenant desiring to assign or sublease, if the proposed assignee’s or sublessee’s activities in, on or about the Premises or the Property involve the use, analysis, handling, storage, transport, discharge, release, generation or disposal of any Hazardous Materials, or if the proposed assignment or subletting would violate any section of this Lease.

15.4 Notice. If Tenant desires to assign this Lease or sublet any or all of the Premises, Tenant shall give Landlord written notice thereof (“Tenant’s Transfer Request”) with copies of all related documents and agreements associated with the assignment or sublease, including without limitation, a description of the space Tenant proposes to assign or sublet, the anticipated effective date of the assignment or sublease, the financial statements of any proposed assignee or sublessee, at least forty-five (45) days prior to the anticipated effective date of the assignment or sublease. A condition to Landlord’s consent to any Transfer of this Lease will be the delivery to Landlord of a true copy of the fully executed instrument of assignment, sublease, transfer or hypothecation, in form and substance reasonably satisfactory to Landlord. Landlord shall have a PGCC 7-3-24

24 period of thirty (30) days following receipt of Tenant’s Transfer Request and all related documents and agreements to notify Tenant in writing of Landlord’s election to disapprove the Sublease or Assignment. In any event, if Landlord fails to notify Tenant in writing of Landlord’s election, Landlord shall be deemed to have disapproved such assignment or subletting, nor shall failure by Landlord to approve a proposed tenant shall cause a termination of this Lease. This Lease may not be assigned by operation of law. Any purported assignment or subletting contrary to the provisions hereof shall be void at Landlord’s election and shall constitute an Event of Default hereunder.

15.5 Subject to Lease. Any assignments or sublets must be subject to and in accordance with the terms and conditions of this Lease, and must be consistent with the use requirements provided in Section 10 herein. In no event may any sublessee encumber this Lease.

Tenant shall remain fully liable under this Lease and shall not be released from performing any of the terms, covenants and conditions of this Lease.

15.6 Indemnification. Tenant shall ensure that any sublessees or assigns through their subleases or assignment agreements shall indemnify, protect, defend, and hold harmless Landlord and its elected and appointed officers, officials, employees, volunteers, lenders, agents, contractors and each of their successors and assigns to the same extent that Tenant shall so indemnify Landlord as set forth in this Lease.

15.7 Relocation Waiver. Each sublease or rental agreement shall contain a relocation waiver in substantially the following form: “Relocation Waiver. Sublessee fully releases and discharges the City of Pacifica (in its capacity as Landlord and otherwise as a municipal corporation) from all and any manner of rights, demands, liabilities, obligations, claims, or cause of actions, in law or equity, of whatever kind or nature, whether known or unknown, whether now existing or hereinafter arising, which arise from or relate in any manner to the sale of the Property, Building, Premises, or the Subleased Premises, the full or partial termination of Sublessee’s leasehold interest as permitted under this Sublease, or the relocation of Sublessee’s business operations or the relocation of any person or persons, business or businesses, or other occupant or occupants located on the Subleased Premises, including, without limitation, the specific waiver and release of any right to any relocation benefits, assistance and/or payments under Government Code sections 7260 et seq. (“Relocation Assistance Law”), notwithstanding that such relocation assistance, benefits and/or payments may be otherwise required under the Relocation Assistance Law or other state or federal law. Sublessee acknowledges and agrees that the release and waiver set forth in this section is material consideration for Landlord’s consent to the sublease by Sublandlord of the Subleased Premises to Sublessee on the terms set forth herein and that, but for this release and waiver, Landlord would not have consented to the sublease of the Subleased Premises by Sublandlord to Sublessee. It is hereby intended that the above release relates to both known and unknown claims that the Sublessee may have, or claim to have, against the Landlord or the City of Pacifica with respect to the subject matter contained herein or the events relating thereto. By releasing and forever discharging claims both known and unknown which are related to or which arise under or in connection with the items set out above, the Sublessee expressly waives any rights under California Civil Code section 1542, which provides:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS

WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
PGCC 7-3-24

25 TO EXIST IN HIS OR HER FAVOR AT THE TIME OF

EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM

OR HER MUST HAVE MATERIALLY AFFECTED HIS OR
HER SETTLEMENT WITH THE DEBTOR.”

15.8 Liability. Landlord may, without waiving any rights or remedies, collect rent from the assignee, sublessee or occupant and apply the net amount collected to the Rent herein reserved and apportion any excess rent so collected in accordance with the terms of the preceding sentence. Tenant (and successor tenants) shall continue to be liable as a principal and not as a guarantor or surety to the same extent as though no assignment or subletting had been made. In addition, Tenant shall make all legally required disclosures to the proposed assignee or sublessee. Landlord may consent to subsequent assignments or subletting of this Lease or amendments or modifications to the Lease by assignees of Tenant without notifying Tenant or any successor of Tenant and without obtaining their consent; Landlord’s consent shall not be construed as relieving Tenant or any successor tenant of any liability or obligation under the Lease. No transfer shall be effective until there has been delivered to Landlord a counterpart of the transfer instrument in which the transferee agrees to be and remain jointly and severally liable with Tenant (and if applicable, successor tenants) for the payment of Rent pertaining to the Premises and for the performance of all the terms and provisions of this Lease relating thereto arising on or after the date of the transfer. No transfer will release Tenant of Tenant’s obligations under this Lease or alter the primary liability of Tenant to pay the rent and to perform all other obligations to be performed by Tenant hereunder. In the event of default by any transferee of Tenant or any successor of Tenant in the performance of any of the terms hereof, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against such transferee or successor. Notwithstanding any contrary provision of this Lease, if Tenant or any proposed transferee claims that Landlord has unreasonably withheld or delayed its consent to a proposed transfer or otherwise has breached its obligations under this Section, Tenant’s and such transferee’s only remedy shall be to seek a declaratory judgment and/or injunctive relief, and Tenant, on behalf of itself and, to the extent permitted by law, such proposed transferee waives all other remedies against Landlord, including without limitation, the right to seek monetary damages or to terminate this Lease.

16. ESTOPPEL, ATTORNMENT AND SUBORDINATION.

16.3 Estoppel. Within ten (10) days after request by Landlord, Tenant shall deliver an estoppel certificate duly executed (and acknowledged if required by any lender or purchaser) to any proposed mortgagee, purchaser or Landlord, in a form substantially similar to that requested by the proposed mortgagee, purchaser or Landlord. Tenant’s failure to deliver said estoppel certificate in such time period shall be an Event of Default hereunder and shall be conclusive upon Tenant that (a) this Lease is in full force and effect, without modification except as may be represented by Landlord; (b) there are no uncured defaults in Landlord’s performance and Tenant has no right of offset, counterclaim or deduction against Rent hereunder; and (c) no more than one month’s Base Rent has been paid in advance. In addition, except to the extent caused by Landlord’s sole or active negligence, Tenant shall indemnify and hold Landlord harmless from and against any and all damages, penalties, fines, taxes, costs, liabilities, losses and expenses (including, without limitation, reasonable attorneys’ fees and court costs) which Landlord may sustain or incur as a result of or in connection with Tenant’s failure or delay in delivering such PGCC 7-3-24

26 estoppel certificate. Landlord reserves the right to substitute a different form of estoppel certificate upon the request of any proposed mortgagee or purchaser. If any financier should require that this Lease be amended (other than in the description of the Premises, the Term, the Permitted Uses, the Rent or as will substantially, materially and adversely affect the rights of Tenant), Landlord shall give written notice thereof to Tenant, which notice shall be accompanied by a Lease supplement embodying such amendments. Tenant shall, within ten (10) days after the receipt of Landlord’s notice, execute and deliver to Landlord the tendered Lease supplement,

16.4 Subordination. This Lease shall be subject and subordinate to all Leases, and the lien of all mortgages and deeds of trust which now or hereafter affect the Premises or the Property or Landlord’s interest therein, and all amendments thereto, all without the necessity of Tenant’s executing further instruments to effect such subordination; provided, however, that Tenant’s rights hereunder shall not be disturbed, except in accordance with the terms and provisions of this Lease. If requested, Tenant shall execute and deliver to Landlord within ten (10) days after Landlord’s request, whatever documentation that may reasonably be required to further effect the provisions of this section.

Notwithstanding anything to the contrary set forth herein, Tenant acknowledges and agrees that this Lease is subordinate and subject to any Lease, license, or other property right or permission the Landlord has obtained from the Commission authorizing the occupancy and use of the Property and the Premises by the Landlord. In the event of a conflict between this Lease and any lease, license, or other similar document between the Landlord and the Commission, the document between the Landlord and the Commission shall control.

16.5 Attornment. In the event of a foreclosure proceeding, the exercise of the power of sale under any mortgage or deed of trust or the termination of a Lease, Tenant shall, if requested, attorn to the purchaser thereupon and recognize such purchaser as Landlord under this Lease.

The transferee shall not be liable for any acts, omissions or defaults of Landlord that occurred before the sale or conveyance, or the return of any security deposit except for deposits actually paid to transferee, and except as reduced as expressly provided for by operation of law.

17. RELOCATION.

17.3 Tenant fully releases and discharges Landlord (in its capacity as Landlord and otherwise as a municipal corporation) from all and any manner of rights, demands, liabilities, obligations, claims, or cause of actions, in law or equity, of whatever kind or nature, whether known or unknown, whether now existing or hereinafter arising, which arise from or relate in any manner to the sale of the Property, Building, or Premises, the full or partial termination of Tenant’s leasehold interest as permitted under this Lease, or the relocation of Tenant’s business operations or the relocation of any person or persons, business or businesses, or other occupant or occupants located on the Premises including, without limitation, the specific waiver and release of any right to any relocation benefits, assistance and/or payments under Government Code sections 7260 et seq. (“Relocation Assistance Law”), notwithstanding that such relocation assistance, benefits and/or payments may be otherwise required under the Relocation Assistance Law or other state or federal law. Tenant acknowledges and agrees that the release and waiver set forth in this section is material consideration for Landlord’s lease of the Premises to Tenant on the terms set forth herein and that, but for this release and waiver, Landlord would not have PGCC 7-3-24

27 leased the premises to Tenant. It is hereby intended that the above release relates to both known and unknown claims that the Tenant may have, or claim to have, against the Landlord or the City of Pacifica with respect to the subject matter contained herein or the events relating thereto. By releasing and forever discharging claims both known and unknown which are related to or which arise under or in connection with the items set out above, the Tenant expressly waives any rights under California Civil Code section 1542, which provides:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS

WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT

TO EXIST IN HIS OR HER FAVOR AT THE TIME OF

EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM

OR HER MUST HAVE MATERIALLY AFFECTED HIS OR
HER SETTLEMENT WITH THE DEBTOR.”

18. NON-DISCRIMINATION COVENANT. Tenant herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this Lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, physical or mental disability or medical condition, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the Premises herein leased nor shall the Tenant himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the Premises herein leased

19. MISCELLANEOUS.

19.1 General.

19.1.1 Entire Agreement. This Lease sets forth all the agreements between Landlord and Tenant concerning the Property, the Premises, the Building and the Public Area; and there are no agreements either oral or written other than as set forth herein.

19.1.2 Time of Essence. Time is of the essence of this Lease.

19.1.3 Attorneys’ Fees. In any action or proceeding which either party brings against the other to enforce its rights hereunder, the unsuccessful party shall pay all costs incurred by the prevailing party, including reasonable attorneys’ fees, which amounts shall be a part of the judgment in said action or proceeding.

19.1.4 Severability. If any provision of this Lease or the application of any such provision shall be held by a court of competent jurisdiction to be invalid, void or unenforceable to any extent, the remaining provisions of this Lease and the application thereof shall remain in full force and effect and shall not be affected, impaired or invalidated.

19.1.5 Governing Law; Venue. This Lease shall be construed and enforced in accordance with the laws of the state of California without regard to principles of conflicts of PGCC 7-3-24

28 laws. Any action filed to enforce or interpret this Lease shall be filed and heard exclusively in the Superior Court of Monterey County or the federal district court for the Northern District of California.

19.1.6 No Option. Submission of this Lease to Tenant for examination or negotiation does not constitute an option to lease, offer to lease or a reservation of, or option for, the Premises; and this document shall become effective and binding only upon the execution and delivery hereof by Landlord and Tenant.

19.1.7 Successors and Assigns. This Lease shall be binding upon and inure to the benefit of the successors and assigns of Landlord and, subject to compliance with the terms of Section 15, Tenant.

19.1.8 Third Party Beneficiaries. Nothing herein is intended to create any thirdparty benefit.

19.1.9 Memorandum of Lease. Landlord may elect to have either this either this Lease or a short form memorandum hereof recorded pursuant to the requirements of California Government Code section 37393. Tenant shall cooperate with Landlord in executing and acknowledging any such memorandum of lease. Upon the expiration or other termination of this Lease, Tenant shall immediately execute and deliver to Landlord a quitclaim deed to the Premises, Building, and/or Property, as required, in recordable form, designating Landlord as transferee or grantee.

19.1.10 No Agency, Partnership or Joint Venture. Nothing contained herein nor any acts of the parties hereto shall be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent or of partnership or of joint venture by the parties hereto or any relationship other than the relationship of landlord and tenant.

19.1.11 Merger. The voluntary or other surrender of this Lease by Tenant or a mutual cancellation thereof or a termination by Landlord shall not work a merger and shall, at the option of Landlord, terminate all or any existing sub tenancies or may, at the option of Landlord, operate as an assignment to Landlord of any or all of such sub tenancies.

19.1.12 Headings. Section headings have been inserted solely as a matter of convenience and are not intended to define or limit the scope of any of the provisions contained herein.

19.2 Signs. All signs and graphics of every kind visible in or from public view or corridors, the exterior of the Premises, the exterior of the Building, or on monuments installed or caused to be installed by, for the benefit of, or at the request of Tenant (“Signs and Graphics”) shall be subject to Landlord’s prior written approval, shall be in keeping with the character of the Building and shall be subject to any applicable governmental laws, ordinances, and regulations and in compliance with Landlord’s signage program, Tenant shall remove all such Signs and Graphics prior to the termination of this Lease. Such installations and removals shall be made in such manner as to avoid injury or defacement of the Premises; and Tenant shall repair any injury or defacement, including without limitation, discoloration caused by such installation or removal.

Tenant shall be responsible for all fees, costs and expenses associated with installation and PGCC 7-3-24

29 removal of Signs and Graphics. In the event any such fees, costs or expenses are incurred by Landlord (whether directly or indirectly), Landlord shall deliver to Tenant an invoice, with reasonable supporting documentation, and Tenant shall reimburse Landlord for those amounts within fifteen (15) days after receipt of such invoice. Notwithstanding anything in this Lease to the contrary, Landlord is not required to provide Signs and Graphics beyond the standards set forth in the Rules and Regulations. Under no circumstances shall Tenant install or operate lighted signage.

18.3 Proprietary and Governmental Roles; Actions by City. Except where clearly and expressly provided otherwise in this Lease, the capacity of the City in this Lease shall be as owner and lessor of property only (“Proprietary Capacity”), and any obligations or restrictions imposed by this Lease on the City shall be limited to that capacity and shall not relate to, constitute a waiver of, supersede or otherwise limit or affect its governmental capacities, including enacting laws, inspecting structures, reviewing and issuing permits, and all of the other legislative and administrative or enforcement functions pursuant to federal, state or local law (“Governmental Capacity”). When acting in its Proprietary Capacity, discretionary actions may be undertaken by the City Manager or other designees as designated by the City Manager to the extent otherwise provided for in this Lease. In addition, nothing in this Lease shall supersede or waive any discretionary or regulatory approvals required to be obtained from the City under applicable law, nor guarantee that the City, in its Governmental Capacity, will grant any particular request for a license, permit or other regulatory approval. Lessee understands that the City may grant or deny such request in its sole discretion and may impose such terms and conditions as it deems consistent with that discretion and applicable law.

18.4 Waiver. No waiver of any default or breach hereunder shall be implied from any omission to take action on account thereof, notwithstanding any custom and practice or course of dealing. No waiver by either party of any provision under this Lease shall be effective unless in writing and signed by such party. No waiver shall affect any default other than the default specified in the waiver and then such waiver shall be operative only for the time and to the extent therein stated. Waivers of any covenant shall not be construed as a waiver of any subsequent breach of the same.

18.5 Limitation of Liability. The obligations of Landlord under this Lease are not personal obligations of the individual officials, officers, agents or employees of Landlord, and Tenant shall look solely to the Premises for satisfaction of any liability of Landlord and shall not look to other assets of Landlord nor seek recourse against the assets of the individual officials, officers, agents or employees of Landlord. Whenever Landlord transfers its interest, Landlord shall be automatically released from further performance under this Lease and from all further liabilities and expenses hereunder and the transferee of Landlord’s interest shall assume all liabilities and obligations of Landlord hereunder from the date of such transfer.

18.6 Notices. All notices to be given hereunder shall be in writing and mailed postage prepaid by certified or registered mail, return receipt requested, or delivered by personal or courier delivery, or sent by facsimile (immediately followed by one of the preceding methods), to Landlord’s Address and Tenant’s Address, as applicable, as set forth in Item 1 and 2 of the Basic Lease Information, or to such other place as Landlord or Tenant may designate in a written PGCC 7-3-24

30 notice given to the other party. Notices shall be deemed served upon the earlier of receipt or three (3) days after the date of mailing.

18.7 Brokerage Commission. Landlord and Tenant each represents that neither has been represented by any broker in connection with this Lease, and that no real estate broker’s commission, finder’s fee or other compensation (“Commission”) is due or payable. Tenant agrees to indemnify and hold harmless Landlord from any claims or liability, including reasonable attorneys’ fees, in connection with a claim by any person for a Commission based upon any statement, representation or agreement of Tenant.

18.8 Authorization. Each individual or entity executing this Lease on behalf of Tenant represents and warrants that he or she is duly authorized to execute and deliver this Lease on behalf of Tenant and that such execution is binding upon Tenant.

18.9 Holding Over; Surrender.

18.9.1 Holding Over, If Tenant holds over the Premises or any part thereof after expiration or earlier termination of the Term, such holding over shall constitute a month-tomonth tenancy, at a rent equal to one hundred thirty percent (130%) of the Base Rent in effect immediately prior to such holding over and shall otherwise be on all the other terms and conditions of this Lease. This section shall not be construed as Landlord’s permission for Tenant to hold over. Acceptance of Rent by Landlord following expiration or termination shall not constitute a renewal of this Lease or extension of the Term except as specifically set forth above.

If Tenant fails to surrender the Premises upon expiration or earlier termination of this Lease, Tenant shall indemnify and hold Landlord harmless from and against all loss or liability resulting from or arising out of Tenant’s failure to surrender the Premises, including, but not limited to, any amounts required to be paid to any tenant or prospective tenant who was to have occupied the Premises after the expiration or earlier termination of this Lease and any related attorneys’ fees and brokerage commissions.

18.9.2 Surrender. Upon the termination of this Lease or Tenant’s right to possession of the Premises, Tenant will surrender the Premises, together with all keys, in good condition and repair, reasonable wear and tear excepted. Conditions existing because of Tenant’s failure to perform maintenance, repairs or replacements shall not be deemed “reasonable wear and tear.”

18.10 Joint and Several. If Tenant consists of more than one person, the obligation of all such persons shall be joint and several.

18.10 Compliance with Law. Tenant and its officers, employees, agents and assigns shall be bound by and comply with all applicable federal, state and local laws, statutes, ordinances, administrative orders, rules or regulations relating to its duties, obligations, rights and performance under the terms of this Lease.

18.11 Covenants and Conditions. Each provision to be performed by Tenant hereunder shall be deemed to be both a covenant and a condition. This Lease shall be construed as though the covenants between Landlord and Tenant are independent and not dependent. Tenant expressly waives the benefit of any statute to the contrary, and agrees that even if Landlord fails PGCC 7-3-24

31 to perform its obligations under this Lease, Tenant shall not be entitled to make repairs or perform any acts at Landlord’s expense, or to any setoff against Rent or other amounts owing under this Lease against Landlord.

18.12 Force Majeure. A Party shall not be considered to be in default or breach of this Agreement, and shall be excused from performance or liability for damages to the other Party, if and to the extent it shall be delayed in or prevented from performing or carrying out any of the provisions of this Lease, arising out of or from any action, inaction, order, ruling, moratorium, regulation, statute, condition or other decision of any governmental agency having jurisdiction over any portion of the Property, over the construction anticipated to occur thereon or over any uses thereof, or by fire, flood, inclement weather, strikes, lockouts or other labor or industrial disturbance (whether or not on the part of agents or employees of either party hereto engaged in the construction of the Premises), civil disturbance, epidemic, pandemic, quarantine, order of any government, court or regulatory body claiming jurisdiction or otherwise, acts of terrorism, act of public enemy, war, riot, sabotage, blockade, embargo, failure or inability to secure materials, supplies or labor through ordinary sources by reason of shortages or priority, discovery of hazardous or toxic materials, earthquake, or other natural disaster, or any cause whatsoever beyond the reasonable control (excluding financial inability) of the party whose performance is required, or any of its contractors or other representatives, whether or not similar to any of the causes hereinabove stated.

Any Party claiming a Force Majeure event shall use reasonable diligence to remove the condition that prevents performance and shall not be entitled to suspend performance of its obligations in any greater scope or for any longer duration than is required by the Force Majeure event. Each Party shall use its best efforts to mitigate the effects of such Force Majeure event, remedy its inability to perform, and resume full performance of its obligations hereunder. A Party suffering a Force Majeure event (“Affected Party”) shall notify the other Party (“Non-Affected Party”) in writing (“Notice of Force Majeure Event”) as soon as reasonably practicable specifying the cause of the event, the scope of commitments under the Agreement affected by the event, and a good faith estimate of the time required to restore full performance. Except for those commitments identified in the Notice of Force Majeure Event, the Affected Party shall not be relieved of its responsibility to fully perform as to all other commitments in the Agreement. If the Force Majeure event continues for a period of more than 90 days from the date of the Notice of Force Majeure Event, the Non-Affected Party shall be entitled, at its sole discretion, to terminate the Agreement.

For the avoidance of doubt, Force Majeure shall not include a party’s financial inability to perform its obligations hereunder. Notwithstanding the preceding, upon the occurrence of a Force Majeure event, Landlord may, at Landlord’s sole discretion, reduce the amount of rent due during the Force Majeure event, provided, however, that the amount of any such reduction shall be repaid in monthly installments during the remainder of the term of the Lease following the cessation of the Force Majeure event. Any unpaid balance at the end of the term of the Lease shall be due and payable in full. In the event of a Force Majeure event that limits or prevents Tenant’s access to the Premises, Rent shall be abated for the duration of such Force Majeure event.

PGCC 7-3-24

32 18.13 Rights to Terminate. Both Tenant and Landlord may terminate this Lease upon sixty (60) days’ prior written notice, only on the grounds of a material default of the Lease.

Notwithstanding the foregoing, Landlord may terminate this Lease absent a material default in the event that Landlord determines that the Premises require repair or restoration, Landlord may terminate this Lease upon sixty (60) days prior written notice to Tenant. Landlord shall also have the right to terminate this Lease upon thirty (30) days prior written notice to Tenant in the event that the California Coastal Commission (i) prohibits commercial activity on the Property or (ii) takes any other action that would materially conflict with Tenant’s use of the Premises. [Signatures on Following Page]
PGCC 7-3-24

33 IN WITNESS WHEREOF, the parties have executed this Lease as of the Effective Date, City of Pacific Grove,
a California charter Sunset Hospitality Group, Inc., a
California corporation
Name:________________________
Bill Peake, Mayor By:___________________________
Title:_________________________
By:___________________________
Title:_________________________
Attest:

By:

City Clerk
Approved as to form:

By:

City Attorney
PGCC 7-3-24

Exhibit A-1

EXHIBIT A

PREMISES DESCRIPTION AND DEPICTION
Approximate 270 square foot building located at the northeast corner of the intersection of Ocean View Boulevard and 17th Street, at the southerly end of Lover’s Point Park and Beach, located in the City of Pacific Grove.

PGCC 7-3-24

Exhibit B-1

EXHIBIT B

RULES AND REGULATIONS
Tenant shall comply with the following Rules and Regulations. Landlord shall not be responsible to Tenant for the nonperformance of any of these Rules and Regulations.

1. Tenant shall not obstruct any sidewalks, halls, passages, exits, entrances, elevators, escalators or stairways of the Building. The halls, passages, exits, and entrances are not for the general public, and CITY shall in all cases retain the right to control and prevent access thereto of all persons whose presence in the judgment of CITY would be prejudicial to the safety, character, reputation and interests of the Building and its tenants; provided, that nothing herein contained shall be construed to prevent such access to persons with whom any tenant normally deals in the ordinary course of its business, unless such persons are engaged in illegal activities.

Tenant and no employee, invitee, agent, licensee or contractor of Tenant shall go upon or be entitled to use any portion of the roof of the Building unless authorized by the City.

2. CITY will furnish Tenant, free of charge, two keys to each door lock in the Premises.

CITY may impose a reasonable charge for any additional keys. Tenant may not make or have made additional keys, and Tenant shall not alter any lock or install a new additional lock or bolt on any door or window of its Premises. Tenant, upon termination of its tenancy, shall deliver to CITY the keys of all doors which have been furnished to, or otherwise procured by Tenant, and, in the event of loss of any keys, shall pay CITY the cost of replacing the same or of changing the lock or locks opened by such lost key if CITY shall deem it necessary to make such change.

3. IT cables and equipment, telephone lines and security systems shall not be installed in the Premises except with the approval and under the direction of CITY.

4. No furniture or equipment of any kind shall be brought into the Building without prior notice to CITY and all moving of the same into or out of the Building shall be done at such time and in such manner as CITY shall designate. Deliveries during normal office hours shall be limited to normal office supplies and other small items. No deliveries shall be made which impede or interfere with other tenants or the operation of the Building.

5. Tenant shall not use or keep in the Premises any hazardous materials, kerosene, gasoline or inflammable or combustible fluid or material other than those limited quantities necessary for the operation or maintenance of food service equipment. Tenant shall not use the Premises in a manner offensive or objectionable to CITY or other occupants of the Project by reason of noise, odors or vibrations, nor shall Tenant bring into or keep in or about the Premises any animals.

6. The normal hours of operation shall be 10:30 am until sunset, unless otherwise approved in writing by the CITY. CITY reserves the right to exclude from the Building between the hours of 7:00 p.m. and 6:00 a.m., or such other hours as may be established from time to time by CITY, and on legal holidays, any person unless that person is known to the person or employee in charge of the Building and has a pass or is properly identified. CITY shall not be liable for damages for any error with regard to the admission to or exclusion from the Building of any PGCC 7-3-24

Exhibit B-2
person. Tenant shall be responsible for all persons for whom it requests passes and shall be liable to CITY for all acts of such persons.

7. Tenant shall close and lock all doors of its Premises and entirely shut off all water faucets or other water apparatus, and, except with regard to Tenant’s computers and other equipment which reasonably require electricity on a 24-hour basis, all electricity, gas or air outlets before Tenant and its employees leave the Premises. Tenant shall be responsible for any damage or injuries sustained by other tenants or occupants of the Building or by CITY for noncompliance with this rule.

8. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed.

9. Tenant shall not sell, or permit the sale at retail, of newspapers, magazines, periodicals, theater tickets, or any other goods or merchandise to the general public in or on the Premises.

10. Tenant shall not install any radio or television antenna, loudspeaker or other device on the roof or exterior walls of the Building. Tenant shall not interfere with radio or television broadcasting or reception from or in the Building or elsewhere.

11. Except as expressly permitted in the Lease, Tenant shall not mark, drive nails, screw or drill into the partitions, window mullions, woodwork or plaster, or in any way deface the Premises or any part thereof, except to install normal wall hangings. Tenant shall repair any damage resulting from noncompliance under this rule.

12. Canvassing, soliciting and distribution of handbills or any other written material, and peddling in and around the Project or the Buildings are expressly prohibited, and each tenant shall cooperate to prevent same.

13. CITY reserves the right to exclude or expel from the Buildings any person who, in CITY’s judgment, is intoxicated or under the influence of liquor or drugs or who is in violation of any of the Rules and Regulations of the Project.

14. All garbage and refuse disposal shall be made in accordance with directions reasonably issued from time to time by CITY.

15. The Premises shall not be used for (a) the storage, use, or sale of marijuana, (b) any repair, servicing, or storage of vehicles or (c) lodging or for manufacturing of any kind.

16. Tenant shall not use in any space any hand trucks except those equipped with rubber tires and side guards, or such other material-handling equipment as CITY may approve.

17. Tenant agrees that it shall comply with all fire and security regulations that may be issued from time to time by CITY, and Tenant also shall provide CITY with the name of a designated responsible employee to represent Tenant in all matters pertaining to such fire or security PGCC 7-3-24

Exhibit B-3
regulations. Tenant shall cooperate fully with CITY in all matters concerning fire and other emergency procedures.

18. Tenant assumes any and all responsibility for protecting its Premises from theft, robbery and pilferage. Such responsibility shall include keeping doors locked and other means of entry to the Premises closed.

19. CITY may waive any one or more of these Rules and Regulations for the benefit of Tenant or any other tenant, but no such waiver by CITY shall be construed as a waiver of such Rules and Regulations in favor of Tenant or any other such tenant, nor prevent CITY from thereafter enforcing any such Rules and Regulations against any and all of the tenants in the Building.

20. These Rules and Regulations are in addition to, and shall not be construed to in any way modify or amend, in whole or in part, the terms, covenants, agreements and conditions of any lease of premises in the Buildings.

21. CITY reserves the right to make such other and reasonable Rules and Regulations as, in its judgment, may from time to time be needed for safety, security, care and cleanliness of the Buildings and for the preservation of good order therein. Tenant agrees to abide by all such Rules and Regulations hereinabove stated and any additional rules and regulations which are adopted.

22. Tenant shall be responsible for the observance of all of the foregoing rules by Tenant’s employees, agents, clients, customers, invitees or guests.

23. Tenant shall not without CITY’s consent, which may be given or withheld in CITY’s sole and absolute discretion, receive, store, discharge, or transport firearms, ammunition, or weapons or explosives of any kind or nature at, on or from the Premises.

24. EXCEPT WITH THE PRIOR WRITTEN PERMISSION OF CITY, NO OVERNIGHT PARKING IS PERMITTED AT THE PREMISES. A VIOLATION SHALL CONSTITUTE A DEFAULT HEREUNDER AND A DAILY FEE OF ($100) SHALL BE CHARGED AS RENT FOR EACH VIOLATION.

25. SMOKING IS NOT PERMITTED ON THE PROPERTY EXCEPT IN SPECIFIC

AREAS DESIGNATED BY CITY SHALL CONSTITUTE A DEFAULT HEREUNDER AS ALSO A FEE OF ($50) SHALL BE CHARGED AS RENT FOR EACH VIOLATION.

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Exhibit C-1

EXHIBIT C

ONGOING MAINTENANCE SCHEDULE
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Exhibit D-1

EXHIBIT D

LIST OF LESSOR-OWNED FURNISHINGS
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Exhibit E-1

EXHIBIT E

INITIAL IMPROVEMENT SCHEDULE
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Exhibit F-1

EXHIBIT F

INSURANCE CERTIFICATE
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Exhibit A-1

LICENSE AGREEMENT
This License Agreement (“Agreement”) is made as of ____________, 20__ (“Effective Date”) by and between the CITY OF PACIFIC GROVE, a California charter city (“City”), and the SUNSET HOSPITALITY GROUP, INC., a California corporation (“Licensee”). City and Licensee are at times referred to herein individually as “Party” and collectively as “Parties.” RECITALS:

A. City owns that certain real property developed into a municipal park and beach commonly known as Lover’s Point Park and Beach, improved with a building consisting of approximately 270 square feet, located generally at the northeast intersection of Ocean View Boulevard and 17th Street, situated in the City of Pacific Grove, Monterey County, State of California (“Property”).

B. City and Licensee are in lease negotiations for a portion of the Property for the purpose of operating a restaurant/snack bar, which lease will be subject to approval by the City Council by ordinance.

C. Licensee has requested the right to use, during the negotiation and lease approval process, the 270 square foot building that is the subject of lease negotiations (“Licensed Area”), as described and depicted on Exhibit A, attached hereto and incorporated herein by this reference.

D. City and Licensee mutually acknowledge that a license is a form of limited, revocable permission to use property that does not constitute a sale, lease, encumbrance, or disposition of real property, and does not create or give rise to an interest in real property held by the licensee.

E. Licensee understands the limitations and risks inherent in a license and accepts such risks, including the risk of loss of any investment or expenditure.

F. For good and valuable consideration, receipt of which is acknowledged hereby, City is willing to permit Licensee to use the Licensed Area pursuant to the terms and conditions set forth in this Agreement.

AGREEMENT:

1. Recitals. The recitals set forth above are true and correct, and are incorporated by this reference herein as a substantive part of this Agreement.

2. Grant of License. City grants to Licensee a license (“License”) to use the Licensed Area for the permitted uses specified in Section 3 during the Term, together with the right of ingress and egress to and from the Licensed Area.

3. Uses. Licensee shall have the right to use the Licensed Area solely for the operation of a snack bar serving sandwiches, other light menu items, and beverages, and for no other uses without the prior written consent of City, which may be granted or withheld in City’s sole and absolute discretion. Licensee acknowledges that neither City nor any of City’s agents has made PGCC 7-3-24

any representation or warranty with regard to the Licensed Area with respect to its suitability for Licensee’s purposes. Licensee, at Licensee’s sole cost and expense, shall comply with all laws, rules, orders, ordinances, directions, regulations and requirements of federal, state, county and municipal authorities now in force or which may hereafter be in force (“Laws”), which shall impose any duty upon Licensee with respect to the use, occupancy, or alteration of the Licensed Area. Licensee shall be responsible for obtaining any permit or business license required by any governmental agency permitting Licensee’s use of the Licensed Area. Licensee shall comply with the Rules and Regulations, including observance of prohibited uses, attached hereto as Exhibit B and incorporated by reference, together with such reasonable additional rules and regulations as City may from time to time prescribe. Without limiting the foregoing, Licensee agrees not to use or permit use of the Licensed Area for any unlawful purpose, and not to commit or permit any waste or nuisance in or about the Licensed Area. Licensee will not use the Licensed Area in a manner that increases the risk of fire, cost of fire insurance or improvements thereon.

4. Term. The term of this Agreement (“Term”) shall commence as of the Effective Date and shall continue until September 30, 2024, unless terminated earlier pursuant to Section

10.2 or Section 15.

5. License Fee. Licensee shall pay to City an monthly license fee of $1,500 for the use of the Licensed Area.

6. Security. City shall have no obligation to provide security (including, but not limited to, lighting) for the Licensed Area. Any security for the Licensed Area shall be the sole responsibility of Licensee at Licensee’s sole cost and expense.

7. Licensee Obligations.

7.1 Limit Use. Licensee shall ensure that the Licensed Area is used only for the purposes set forth in Section 3 hereof.

7.2 Damage. During the Term, Licensee shall be responsible to repair any damage to the Licensed Area arising from or connected to Licensee’s use of the Licensed Area except only damages caused directly by City or its employees, invitees, agents, or contractors.

7.3 No Nuisance or Waste. Licensee shall not commit, suffer, or permit any nuisance or waste, environmental waste, damage, or destruction to occur in or about the Licensed Area and shall not permit the use of the Licensed Area for any illegal or immoral purpose. Licensee further agrees to comply with all State and federal laws and local ordinances concerning the Licensed Area and the use of the Licensed Area. During the Term Licensee shall comply with all federal, state, and local laws, regulations, and ordinances and the terms of this Agreement.

8. City’s Right to Inspect. City, through its employees or agents, shall have the right to enter upon the Licensed Area at all reasonable times during the Term of this Agreement for the purpose of inspecting the same and making such repairs as City may deem desirable, upon providing Licensee with reasonable advance notice, whenever practicable.

9. No Transfer or Assignment. This License is personal to Licensee. Any attempt to transfer or assign this License shall be void and this License shall immediately terminate.

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10. Hazardous Materials.

10.1 Compliance with Laws. Licensee shall not cause or permit any Hazardous Material (as defined below) to be brought upon, kept or used in or about the Licensed Area or Project by Licensee, its agents, employees, contractors or invitees.

10.2 Termination of License. City shall have the right to terminate the License in City’s sole and absolute discretion in the event that (i) any anticipated use of the Licensed Area by Licensee involves the generation or storage, use, treatment, disposal or release of Hazardous Material in a manner or for a purpose prohibited or regulated by any governmental agency, authority or Hazardous Materials laws; (ii) Licensee has been required by any lender or governmental authority to take remedial action in connection with Hazardous Material contaminating the Licensed Area, if the contamination resulted from Licensee’s action or use of the Licensed Area; or (iii) Licensee is subject to an enforcement order issued by any governmental authority in connection with the release, use, disposal or storage of a Hazardous Material on the Licensed Area.

10.3 Hazardous Materials Defined. The term “Hazardous Material(s)” shall mean any toxic or hazardous substance, material or waste or any pollutant or contaminant or infectious or radioactive material, including but not limited to, those substances, materials or wastes regulated now or in the future under any of the following statutes or regulations and any and all of those substances included within the definitions of “hazardous substances,” “hazardous waste,” “hazardous chemical substance or mixture,” “imminently hazardous chemical substance or mixture,” “ toxic substances,” “hazardous air pollutant,” “toxic pollutant” or “solid waste” in the (a) “CERCLA” or “Superfund” as amended by SARA, 42 U.S.C. Sec. 9601 et seq., (b) RCRA, 42 U.S.C. Sec. 6901 et seq., (c) CWA., 33 U.S.C. Sec. 1251 et seq., (d) CAA, 42 U.S.C. 78401 et seq., (e) TSCA, 15 U.S.C. Sec. 2601 et seq., (f) The Refuse Act of 1899, 33 U.S.C. Sec. 407, (g) OSHA, 29 U.S.C. 651 et seq. (h) Hazardous Materials Transportation Act, 49 U.S.C. Sec. 1801 et seq., (i) USDOT Table (40 CFR Part 302 and amendments) or the EPA Table (40 CFR Part 302 and amendments), (j) California Superfund, Cal. Health & Safety Code Sec. 25300 et seq., (k) Cal.

Hazardous Waste Control Act, Cal. Health & Safety Code Section 25100 et seq., (l) PorterCologne Act, Cal. Water Code Sec. 13000 et seq., (m) Hazardous Waste Disposal Land Use Law, Cal. Health & Safety Code Sec. 25220 et seq., (n) “Proposition 65,” Cal. Health and Safety Code Sec. 25249.5 et seq., (o) Hazardous Substances Underground Storage Tank Law, Cal. Health & Safety Code Sec. 25280 et seq., (p) California Hazardous Substance Act, Cal. Health & Safety Code Sec. 28740 et seq., (q) Air Resources Law, Cal. Health & Safety Code Sec. 39000 et seq., (r) Hazardous Materials Release Response Plans and Inventory, Cal. Health & Safety Code Secs. 25500-25541, (s) TCPA, Cal. Health and Safety Code Secs. 25208 et seq., and (t) regulations promulgated pursuant to said laws or any replacement thereof, or as similar terms are defined in the federal, state and local laws, statutes, regulations, orders or rules. Hazardous Materials shall also mean any and all other substances, materials and wastes which are, or in the future become regulated under applicable local, state or federal law for the protection of health or the environment, or which are classified as hazardous or toxic substances, materials or wastes, pollutants or contaminants, as defined, listed or regulated by any federal, state or local law, regulation or order or by common law decision, including, without limitation, (i) trichloroethylene, tetracholoethylene, perchloroethylene and other chlorinated solvents, (ii) any petroleum products PGCC 7-3-24

or fractions thereof, (iii) asbestos, (iv) polychlorinated biphenyls, (v) flammable explosives, (vi) urea formaldehyde, and (vii) radioactive materials and waste.

10.4 City’s Right to Perform Tests. At any time prior to the expiration of the License Term, City shall have the right to enter upon the Licensed Area in order to conduct tests of water and soil and to deliver to Licensee the results of such tests to demonstrate that levels of any Hazardous Materials in excess of permissible levels has occurred as a result of Licensee’s use of the Licensed Area. Licensee shall be solely responsible for and shall indemnify, protect, defend and hold City harmless from and against all claims, costs and liabilities including actual attorneys’ fees and costs arising out of or in connection with any removal, remediation, cleanup, restoration and materials required hereunder to return the Licensed Area and any other property of whatever nature to their condition existing prior to the appearance of the Hazardous Materials. The testing shall be at Licensee’s expense if City has a reasonable basis for suspecting and confirms the presence of Hazardous Materials in the soil or surface or groundwater in on, under, or about the Licensed Area or the Project, which has been caused by or resulted from the activities of Licensee, its agents, employees, contractors or invitees.

10.5 Hazardous Materials Indemnity. Licensee shall indemnify, defend (by counsel reasonably acceptable to City), protect and hold the City harmless from and against any and all claims, liabilities, penalties, forfeitures, losses and/or expenses, including, without limitation, diminution in value of the Licensed Area or Project, damages for the loss or restriction on use of the rentable or usable space or of any amenity of the Licensed Area or Project, damages arising from any adverse impact or marketing of the Licensed Area or Project and sums paid in settlement of claims, response costs, cleanup costs, site assessment costs, attorneys’ fees, consultant and expert fees, judgments, administrative rulings or orders, fines, costs of death of or injury to any person or damage to any property whatsoever (including, without limitation, groundwater, sewer systems and atmosphere), arising from, or caused or resulting, either prior to or during the License Term, in whole or in part, directly or indirectly, by the presence or discharge in, on, under or about the Licensed Area or Project by Licensee, Licensee’s agents, employees, licensees or invitees or at Licensee’s direction, of Hazardous Material, or by Licensee’s failure to comply with any Hazardous Materials Law, whether knowingly or by strict liability. Licensee’s indemnification obligations shall include, without limitation, and whether foreseeable or unforeseeable, all costs of any required or necessary Hazardous Materials management plan, investigation, repairs, cleanup or detoxification or decontamination of the Licensed Area or Project, and the presence and implementation of any closure, remedial action or other required plans, and shall survive the expiration of or early termination of the License Term. For purposes of the indemnity provided herein, any acts or omissions of Licensee or its employees, agents, customers, subLicensees, assignees, contractors or subcontractors of Licensee (whether or not they are negligent, intentional, willful or unlawful) shall be strictly attributable to Licensee.

11. Improvements. Licensee may construct improvements upon the Licensed Area (“Improvements”), provided that said Improvements shall be approved in writing by City prior to the commencement of any work and provided further that all Improvements are completed in: (i) accordance with the plans and specifications approved by City, (ii) a good and workmanlike manner, (iii) conformity with all county, city, state and federal regulations, and any and all applicable permits. Licensee shall provide City with not less than ten (10) days’ notice prior to the commencement of any work in, on or about the Licensed Area so that City, at City’s option, may PGCC 7-3-24

post a Notice of Non Responsibility as provided by law. All work shall be completed by duly licensed and insured contractors, which contractors shall be acceptable to City. City makes no representation with respect to the applicability of public bidding procedures or requirements for the payment of prevailing wages hereunder.

11.1 Cost of Construction. All costs of construction shall be the sole responsibility of Licensee and shall be paid by Licensee when due. The Licensee shall conduct any construction program in such a manner so that no mechanic's liens or materialmen's liens shall be asserted, or purportedly asserted, against the Licensed Area or any improvements thereon. If any such lien shall be asserted, Licensee shall indemnify, defend and hold harmless City and the Licensed Area in accordance with Section 13, Indemnification, of this License. If requested by City, in City’s sole discretion, Licensee shall post a surety bond to release the Licensed Area from any mechanic’s liens recorded against the Licensed Area. Said bond shall be issued by a surety qualified to do business in California and shall be in an amount prescribed by law.

12. Insurance. Licensee shall procure and maintain for the duration of this Agreement insurance against claims for injuries to persons or damages to property which may arise from or in connection with the Licensee’s operation and use of the Licensed Area. The cost of such insurance shall be borne by the Licensee.

12.1 Minimum Scope And Limit Of Insurance. Coverage shall be at least as broad as:

12.1.1 Commercial General Liability (CGL): Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $2,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit.

12.1.2 Workers’ Compensation Insurance as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limits of no less than $1,000,000 per accident for bodily injury or disease.

12.1.3 Property insurance against all risks of loss to any Licensee improvements or betterments, at full replacement cost with no coinsurance penalty provision.

If the Licensee maintains broader coverage and/or higher limits than the minimums shown above, the City requires and shall be entitled to the broader coverage and/or the higher limits maintained by the Licensee. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.

11.2 Other Insurance Provisions. The insurance policies are to contain, or be endorsed to contain, the following provisions:

11.2.1 Additional Insured Status: The City, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect PGCC 7-3-24

to liability arising out of work or operations performed by or on behalf of the Licensee including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the Licensee’s insurance (at least as broad as ISO Form CG 20 10).

11.2.2 Primary Coverage: For any claims related to this contract, the Licensee’s insurance coverage shall be primary insurance coverage at least as broad as ISO CG 20 01 04 13 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 Licensee’s insurance and shall not contribute with it.

11.2.3 Legal Liability Coverage: The property insurance is to be endorsed to include Legal Liability Coverage (ISO Form CP 00 40 04 02 or equivalent) with a limit equal to the replacement cost of the Licensed Area.

11.2.4 Notice of Cancellation: Each insurance policy required above shall provide that coverage shall not be canceled, except with thirty (30) days’ prior written notice to the City.

11.2.5 Waiver of Subrogation: Licensee hereby grants to City a waiver of any right to subrogation which any insurer of said Licensee may acquire against the City by virtue of the payment of any loss under such insurance. Licensee agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer.

11.2.6 Acceptability of Insurers: Insurance is to be placed with insurers authorized to conduct business in the state with a current A.M. Best’s rating of no less than A: VII, unless otherwise acceptable to the City.

11.2.7 Self-Insured Retentions: Self-insured retentions must be declared to and approved by the City. The City may require the Licensee to purchase coverage with a lower retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City.

11.2.8 Verification of Coverage: Licensee shall furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements to City before occupying the Licensed Area. However, failure to obtain the required documents prior to the work beginning shall not waive the Licensee’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements, required by these specifications, at any time.

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11.2.9 Special Risks or Circumstances: City reserves the right to modify these requirements at any time, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.

13. Indemnification. Licensee agrees to indemnify, defend (with counsel reasonably approved by City) and hold harmless the City and its authorized officers, employees, agents and volunteers, from any and all claims, actions, losses, damages, and/or liability arising out of this License from any cause whatsoever, including the acts, errors or omissions of any person and for any costs or expenses incurred by the City on account of any claim except where such indemnification is prohibited by law. This indemnification provision shall apply regardless of the existence or degree of fault of indemnitees. The Licensee’s indemnification obligation applies to the City’s “active” as well as “passive” negligence but does not apply to the City’s “sole negligence” or “willful misconduct” within the meaning of Civil Code Section 2782. The provisions of the Section shall survive the termination of this Agreement.

14. Covenants Against Discrimination. Licensee covenants that, by and for itself, its heirs, executors, assigns, and all persons claiming under or through them, there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the performance of this Agreement.

15. Termination. This License may be terminated by either Party at any time, with or without cause, by providing written notice of termination to the other Party. Such termination will be effective thirty (30) days after such notice is received.

16. Duties upon Termination. Upon termination of this Agreement, Licensee, at its sole expense, shall be solely responsible to perform the following:
a. Licensee shall clean and restore the Licensed Area to a condition similar to that existing prior to the Effective Date, subject to reasonable wear and tear. b. Remove all personal property on the Licensed Area.

Should Licensee fail to vacate the Licensed Area in a clean and undamaged condition and remove all personal property, City may arrange for the cleaning and/or repair of the Licensed Area and the removal of personal property, the cost of which will be immediately reimbursed by Licensee.

The Parties’ obligations under Section 13 shall survive termination of this Agreement.

17. Proprietary and Governmental Roles; Actions by City. Except where clearly and expressly provided otherwise in this License, the capacity of the City in this License shall be as City and licensor of real property only (“Proprietary Capacity”), and any obligations or restrictions imposed by this License on the City, in its capacity as owner of the Licensed Area shall be limited to that capacity and shall not relate to, constitute a waiver of, supersede or otherwise limit or affect its governmental capacities, including enacting laws, inspecting structures, reviewing and issuing permits, and all of the other legislative and administrative or enforcement functions pursuant to federal, state or local law (“Governmental Capacity”). When acting in its PGCC 7-3-24

Proprietary Capacity, discretionary actions may be undertaken by the City Manager or other designees as designated by the City Manager to the extent otherwise provided for in this License.

In addition, nothing in this License shall supersede or waive any discretionary or regulatory approvals required to be obtained from the City under applicable law, nor guarantee that the City, in its Governmental Capacity, will grant any particular request for a license, permit or other regulatory approval. Licensee understands that the City may grant or deny such request in its sole discretion, and may impose such terms and conditions as it deems consistent with that discretion and applicable law.

18. No Interest in Real Property. This Agreement does not grant Licensee, its successors, assigns or transferees any interest, legal or equitable, in the Licensed Area, and this Agreement shall become null and void and without legal effect if it is recorded in the official records of the County of Monterey.

19. Notices. All notices required or permitted under this Agreement shall be in writing and shall be served on the parties at the addresses set forth below. Any such notices shall, unless otherwise provided herein, be given or served (i) by depositing the same in the United States mail, postage paid, certified, and addressed to the party to be notified, with return receipt requested, (ii) by overnight delivery using a nationally recognized overnight courier, or (iii) by personal delivery.

Notice deposited in the mail in the manner hereinabove described shall be effective upon receipt or rejection of such notice. A party’s address may be changed by written notice to the other party.

To Licensee: Sunset Hospitality Group, Inc.
500 Hartnell Street
Monterey, California 93933
Phone: (310) 403-0210
Attn:

With a Copy to:

To City: City of Simi Valley
300 Forest Avenue
Pacific Grove, CA 93950
Phone: (831) 648-3174
Attn: City Manager
With a Copy to: Burke, Williams & Sorensen, LLP
2310 East Ponderosa Drive, Suite 25
Camarillo, CA 93010-4747
Phone: (805) 987-3468
Attn: Brian Pierik, City Attorney
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20. GENERAL PROVISIONS.

20.1 Attorneys’ Fees. In any action between the parties hereto, seeking enforcement of any of the terms and provisions of this Agreement, or in connection with the Licensed Area, the prevailing party in such action shall be entitled to have and to recover from the other party its reasonable attorneys’ fees and other reasonable expenses in connection with such action or proceeding, in addition to its recoverable court costs.

20.2 Governing Law; Venue. This Agreement shall be construed and enforced in accordance with the laws of the State of California with regard to conflicts of laws principles or rules. Any legal action to interpret or enforce any term or conditions of this Agreement shall be brought in the Superior Court of California or the County of Ventura.

20.3 No Waiver. No delay or omission by either party in exercising any right or power accruing upon the compliance or failure of performance by the other party under the provisions of this Agreement shall impair any such right or power or be construed to be a waiver thereof. A waiver by either party of a breach of any of the covenants, conditions or agreements hereof to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions hereof.

20.4 Modifications and Amendment. In order to be effective, any modification or amendment of this Agreement shall be made by written instrument or endorsement thereon and in each such instance executed on behalf of both parties.

20.5 Severability. If any term, provision, condition or covenant of this Agreement or the application thereof to any party or circumstances shall, to any extent, be held invalid or unenforceable, the remainder of this instrument, or the application of such term, provisions, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

20.6 Final Agreement. This Agreement contains the entire understanding and agreement of the parties with respect to the subject matter of this Agreement and all prior or contemporaneous agreements, understandings, representations and statements shall be of no force or effect.

20.7 Construction. This Agreement shall be construed according to its fair meaning as if prepared by all parties to this Agreement. Headings used in this Agreement are provided for convenience only and shall not be used to construe meaning or intent.

20.8 Execution in Counterparts. This Agreement may be executed in several counterparts, and all so executed shall constitute one agreement binding on all parties hereto, notwithstanding that all parties are not signatories to the original or the same counterpart.

20.9 Non-Liability of Officials or Employees. No officer, official or employee of City shall be personally liable for any obligations under the terms of this Agreement. [SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date set forth above.

Dated: _______________, 2024 Dated: _______________, 2024 SUNSET HOSPITALITY GROUP, INC.
a California corporation

CITY OF PACIFIC GROVE
a California charter city
By:

Name:

Its:

By:

Name:

Its:

By: ____________________________
Name:

Its: City Manager
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EXHIBIT A

LICENSED AREA
Approximate 270 square foot building located at the northeast corner of the intersection of Ocean View Boulevard and 17th Street, at the southerly end of Lover’s Point Park and Beach, located in the City of Pacific Grove
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4883-4298-2091 v1 Page 12

EXHIBIT B

RULES AND REGULATIONS
Licensee shall comply with the following Rules and Regulations. Landlord shall not be responsible to Licensee for the nonperformance of any of these Rules and Regulations.

1. Licensee shall not obstruct any sidewalks, passages, exits, entrances, or stairways of the Property.

2. City will furnish Licensee, free of charge, two keys to each door lock in the Licensed Area.

City may impose a reasonable charge for any additional keys. Licensee may not make or have made additional keys, and Licensee shall not alter any lock or install a new additional lock or bolt on any door or window of its Licensed Area. Licensee, upon termination of its tenancy, shall deliver to City the keys of all doors which have been furnished to, or otherwise procured by Licensee, and, in the event of loss of any keys, shall pay City the cost of replacing the same or of changing the lock or locks opened by such lost key if City shall deem it necessary to make such change.

3. IT cables and equipment, telephone lines and security systems shall not be installed in the Licensed Area except with the approval and under the direction of City.

4. No furniture or equipment of any kind shall be brought into the Licensed Area without prior notice to City and all moving of the same into or out of the Licensed Area shall be done at such time and in such manner as City shall designate. Deliveries during normal office hours shall be limited to normal office supplies and other small items.

5. Licensee shall not use or keep in the Licensed Area any hazardous materials, kerosene, gasoline or inflammable or combustible fluid or material other than those limited quantities necessary for the operation or maintenance of food service equipment. Licensee shall not use the Licensed Area in a manner offensive or objectionable to City or to members of the public and patrons of the Property by reason of noise, odors or vibrations, nor shall Licensee bring into or keep in or about the Licensed Area any animals.

6. City reserves the right to exclude from the Licensed Area between the hours of 7:00 p.m. and 6:00 a.m., or such other hours as may be established from time to time by City, and on legal holidays, any person unless that person is known to the person or employee in charge of the Licensed Area and has a pass or is properly identified. City shall not be liable for damages for any error with regard to the admission to or exclusion from the Licensed Area of any person. Licensee shall be responsible for all persons for whom it requests passes and shall be liable to City for all acts of such persons.

7. Licensee shall close and lock all doors of its Licensed Area and entirely shut off all water faucets or other water apparatus, and, except with regard to Licensee’s computers and other equipment which reasonably require electricity on a 24-hour basis, all electricity, gas or air outlets before Licensee and its employees leave the Licensed Area. Licensee shall be responsible for any damage or injuries sustained by others or by City for noncompliance with this rule.

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4883-4298-2091 v1 Page 13

8. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed.

9. Licensee shall not sell, or permit the sale at retail, of newspapers, magazines, periodicals, theater tickets, or any other goods or merchandise to the general public in or on the Licensed Area.

10. Licensee shall not install any radio or television antenna, loudspeaker or other device on the roof or exterior walls of the Licensed Area.

11. Except as expressly permitted in the License, Licensee shall not mark, drive nails, screw or drill into the partitions, window mullions, woodwork or plaster, or in any way deface the Licensed Area or any part thereof, except to install normal trade fixtures and wall hangings. Licensee shall repair any damage resulting from noncompliance under this rule.

12. Canvassing, soliciting and distribution of handbills or any other written material, and peddling in and around the Licensed Area are expressly prohibited, and each Licensee shall cooperate to prevent same.

13. City reserves the right to exclude or expel from the Licensed Area any person who, in City’s judgment, is intoxicated or under the influence of liquor or drugs or who is in violation of any of the Rules and Regulations of the Project.

14. All garbage and refuse disposal shall be made in accordance with directions reasonably issued from time to time by City.

15. The Licensed Area shall not be used for (a) the storage, use, or sale of marijuana, (b) any repair, servicing, or storage of vehicles or (c) lodging or for manufacturing of any kind.

16. Licensee shall not use in any space any hand trucks except those equipped with rubber tires and side guards, or such other material-handling equipment as City may approve.

17. Licensee agrees that it shall comply with all fire and security regulations that may be issued from time to time by City, and Licensee also shall provide City with the name of a designated responsible employee to represent Licensee in all matters pertaining to such fire or security regulations. Licensee shall cooperate fully with City in all matters concerning fire and other emergency procedures.

18. Licensee assumes any and all responsibility for protecting its Licensed Area from theft, robbery and pilferage. Such responsibility shall include keeping doors locked and other means of entry to the Licensed Area closed.

19. City may waive any one or more of these Rules and Regulations for the benefit of Licensee, but no such waiver by City shall or prevent City from thereafter enforcing any such Rules and Regulations against Licensee.

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4883-4298-2091 v1 Page 14

20. City reserves the right to make such other and reasonable Rules and Regulations as, in its judgment, may from time to time be needed for safety, security, care and cleanliness of the Licensed Area and for the preservation of good order therein. Licensee agrees to abide by all such Rules and Regulations hereinabove stated and any additional rules and regulations which are adopted.

21. Licensee shall be responsible for the observance of all of the foregoing rules by Licensee’s employees, agents, clients, customers, invitees or guests.

22. Licensee shall not without City’s consent, which may be given or withheld in City’s sole and absolute discretion, receive, store, discharge, or transport firearms, ammunition, or weapons or explosives of any kind or nature at, on or from the Licensed Area.

23. EXCEPT WITH THE PRIOR WRITTEN PERMISSION OF CITY, NO OVERNIGHT PARKING IS PERMITTED AT THE LICENSED AREA. A VIOLATION SHALL CONSTITUTE A DEFAULT HEREUNDER AND A DAILY FEE OF ($100) SHALL BE CHARGED FOR EACH VIOLATION.

24. SMOKING IS NOT PERMITTED ON THE PROPERTY EXCEPT IN SPECIFIC AREAS

DESIGNATED BY CITY SHALL CONSTITUTE A DEFAULT HEREUNDER AS ALSO A FEE OF ($50) SHALL BE CHARGED AS RENT FOR EACH VIOLATION.

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Agenda No. 12 A

CITY OF PACIFIC GROVE
300 Forest Avenue, Pacific Grove, California 93950
TO: Honorable Mayor and Members of the City Council
FROM: Brian Pierik, City Attorney
MEETING DATE: July 03, 2024
SUBJECT: Resolution Amending Council Policy 000-17 ‘Order of Agenda’ CEQA: Does not constitute a Project per California Environmental Quality Act Guidelines Section 15378

RECOMMENDATION

1. Motion to adopt a Resolution Amending Council Policy 000-17 'Order of Agenda’.

2. Alternative, discuss and take other action related to this item.

DISCUSSION
Council Policy 000-17 ‘Order of Agenda’ establishes the general practice to be followed with respect to the management of agenda items before the City Council.

On May 15, 2024, the City Council gave direction for the City Attorney to prepare a Resolution to amend Council Policy 000-017 “Order of Agenda”. The amendments are proposed to clarify the protocol for deliberation on regular agenda items.

Proposed Policy 000-17 amendments in Attachment 1 are shown by deletion of all text shown in red strikeout text (strikeout text) and the addition of all text shown in red underscored text (underscored text). Policy 000-17 without this markup is provided in Attachment 2.

Amendments serve to promote greater understanding of when meeting participants, i.e. public, staff, and Councilmembers, have the opportunity to speak.

Amendments provide an orderly and efficient process by which everyone has an opportunity to contribute before Council takes appropriate action.

OPTIONS
N/A
FINANCIAL IMPACT:

There is no fiscal impact.

FOCUSED PRIORITY AREA: Not Applicable.

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Attachments

1. Policy 000-17 Order of Agenda with markup

2. Policy 00-17 Order of Agenda without markup

3. Resolution Amending Council Policy 000-17 'Order of Agenda' PGCC 7-3-24

City of Pacific Grove
Council Policy
Subject Policy Effective Date Page
Order of Agenda for Council
Meetings 000-17 December 20, 2017 Page 1 of 4
A. Council meeting agendas are designed to facilitate the orderly conduct of City business, provide adequate time for the City Council to make informed, deliberative decisions, and provide members of the public an opportunity to present information to the City Council on any matter within the subject matter jurisdiction of the City.

B. This policy establishes the general practice to be followed with respect to the management of agenda items before the City Council. This policy shall not be construed to limit or impair rights of the public as set forth in the Ralph M. Brown Act, the Public Records Act, or any other provision of law.

C. In the development of a specific meeting’s agenda, the City Manager may adjust this order, when warranted. The Mayor and Council may also adjust the order in which matters are considered at the meeting. Deviation from the order of the agenda set in this policy, by itself, shall not provide a basis to reverse or invalidate any action of the City Council.

D. The standard order of the City Council agenda shall be as follows:

Call to Order
Pledge of Allegiance

1. Approval of the Agenda
Councilmembers shall have an opportunity to request changes to the order of items, to postpone items to a future meeting, or to add new matters in accord with the emergency or urgency requirements set forth in the Government Code.

2. Presentations
Presentations shall be made on behalf of the City to persons or organizations, and/or brief presentations (not to exceed 5 minutes, each) made to the Council by others upon approval of the City Manager. Presentations shall neither receive Council action nor provide a reason for Council debate. Council may ask brief questions or refer matters to staff for consideration on a future agenda.

3. Council and Staff Announcements
Announcements shall be limited to City-related items and shall neither receive Council action nor provide a reason for Council debate. Council may ask brief questions or refer matters to staff for consideration on a future agenda.

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Report out of any closed session held prior to the Regular meeting will be provided as the first announcement.

4. Public Comment
These are comments from the public on matters that are on the agenda (including the Consent Agenda) as well as for matters not on the agenda during General Public Comment which are within the subject matter jurisdiction of the City.

Persons who wish to address the Council shall use the microphone and are asked to state their name. It is helpful if speakers also indicate the subject matter of their comments. (Note: Even if a speaker refuses to state his or her name or the subject matter of the comment, the speaker shall not be denied the right to speak.) Accommodations will be made for persons with disabilities.

Public commentshall be limited to three minutes perspeaker for each item on the Agenda.

For General Public Comment, each speaker shall be limited to three minutes.

In the discretion of the Mayor, the length of the public comment on an item on the Agenda may be reduced to lower than three minutes when appropriate based on the number of speakers for an item and/or the Mayor may limit the total time for public comment on an item on the Agenda.

Communication to the Council under General Public Comment will be received without comment while the public comment period is open. When public comment during General Public Comment Communications is closed, questions from the public may be referred to staff for a brief response.

Pursuant to Government Code Section 54954.3 (c), the City Council shall not prohibit public criticism of the policies, procedures, programs, or services of the agency, or of the acts or omissions of the legislative body.

Pursuant to Government Code Section 54957.9, in the event that any meeting is willfully interrupted by a group or groups of persons so as to render the orderly conduct of such meeting unfeasible, and order cannot be restored by the removal of individuals who are willfully interrupting the meeting, the Mayor may order the meeting room cleared and continue in session. Only matters appearing on the agenda may be considered in such a session. Representatives of the press or other news media, except those participating in the disturbance, shall be allowed to attend any session held pursuant to this section. After the meeting room has been cleared, the Mayor may readmit an individual or individuals not responsible for willfully disturbing the orderly conduct of the meeting.

Pursuant to Government Code Section 54957.95, the Mayor may cause the removal of any individual for disrupting the meeting subject to the following rules:
(1) Prior to removing an individual, the Mayor shall warn the individual that their behavior is disrupting the meeting and that their failure to cease their behavior PGCC 7-3-24

may result in their removal.
(2) The Mayor may then cause the removal of the individual if they do not promptly cease their disruptive behavior.
(3) “Disrupting” means engaging in behavior during a meeting of a legislative body that actually disrupts, disturbs, impedes, or renders infeasible the orderly conduct of the meeting and includes, but is not limited to, one of the following:
(A) A failure to comply with reasonable and lawful regulations adopted by a legislative body pursuant to Section 54954.3 or any other law. (B) Engaging in behavior that constitutes use of force or a true threat of force. (4) “True threat of force” means a threat that has sufficient indicia of intent and seriousness, that a reasonable observer would perceive it to be an actual threat to use force by the person making the threat.
(5) If there has been a use of force or a true threat of force, there is no obligation for the Mayor to provide a warning to the individual before causing the individual to be removed from the meeting.

Consent Agenda
The Consent Agenda deals with routine and noncontroversial matters, and may include action on resolutions and second readings of ordinances, provided no public comment is anticipated on those items. The purpose of the Consent Agenda is to make efficient use of available time by considering all routine and non-controversial items under one motion. The Consent Agenda is structured so that any Councilmember, staff, or the public may pull an item for discussion or questions.

A single vote on the Consent Agenda shall apply to each item that has not been removed.

Councilmembers may notify the City Clerk if they want a specific vote or abstention recorded as to any individual item.

The standard elements of the Consent Agenda are:

5. Approval of City Council Meeting Minutes

6. Resolutions

7. Ordinances

8. Reports – Information Only
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9. Reports – Requiring Action

10. Meeting Minutes of Commissions, Boards, andCommittees When a Councilmember wishes to remove an item the Councilmember will discuss his/her question(s) with staff prior to the meeting in order for staff to research the answer(s), which shall be provided ahead of time to all members (e.g., in the blue folders).

The Mayor will first ask the members of the Council, then members of the public if anyone wants to pull an item from consent. The person pulling the item will simply state the item number and subject.

Unless a specific item is pulled for discussion, the Council shall ordinarily approve all action items or recommendations on the entire Consent Agenda under a single motion.

Council’s vote to approve the Consent Agenda is a direction to staff to proceed with each action as recommended.

Items Removed from the Consent Agenda
The Council shall separately consider and act on each item removed from the Consent Agenda. Such items shall be heard in their normal place on the Regular Agenda. That placement will be noted on each consent item. The discussion format for those items will follow the protocol for the Regular Agenda.

Regular Agenda
The protocol for deliberation on regular agenda items is:
1) The agenda report is presented by staff (or other person who prepared the report) at the discretion of the City Manager. The report can be concise yet sufficient to establish context and key facts for the item.
2) Public comment is received, then closednormally without response, as described above.
3) Council deliberates and takes action as appropriate for the item. Staff or the public may speak to the item during Council deliberation if called upon by a member of Council.

This protocol explicitly omits the practice of clarifying questions from council prior to opening for public comment. Councilmembers can ask for clarification prior to the Council meeting and can also ask questions during the council deliberation phase.

11. Public Hearings
The Public Hearing agenda includes matters for which a public hearing notice was posted or published and for which public comment is anticipated.

12. Unfinished and Ongoing Business
The Unfinished Business agenda shall consist of matters that return to the Council for action, the same matter having been considered at or continued from a prior meeting or are updates or actions for long term and ongoing topics.

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13. New Business
The New Business agenda shall consist of matters not previously considered by the Council.

14. Full Presentations
Presentations under this item are those that may exceed five minutes and are made to the Council upon invitation of the Mayor or City Manager. Presentations shall neither receive Council action nor provide a reason for Council debate. Council may ask brief questions or refer matters to staff for consideration on a future agenda.

15. Closed Sessions (if required)
Closed Sessions are held in compliance with the Brown Act. The specific time for any Closed Session may be set at other times at the convenience of Council. The Council may adjourn to Closed Session on any other agenda item if authorized by law, upon advice of the City Attorney.

16. Public Announcement of Action Taken in Closed Session This announcement shall immediately follow any Closed Session.

Adjournment
E. Whenever practical, closed session items are best addressed during a special meeting prior to a regular meeting, as a convenience to the public, beginning at 5:00 pm.

F. All agenda reports recommending Council action shall include the following: title, recommendation, background, justification, and financial impact. Closed session agenda reports shall be confidential pursuant to California Government Code 54963 and PGMC §2.04.080.

G. The Agendas the meetings of all Legislative Bodies shall include the following Statement:
““Under the Brown Act, public comment for matters on the agenda must relate to that agenda item and public comments for matters not on the agenda must relate to the subject matter jurisdiction of this legislative body. This is a warning that if a member of the public attending this meeting remotely or in-person violates the Brown Act by failing to comply with these requirements of the Brown Act, then the Mayor or Chair may request that speaker be muted. If a member of the public attending this meeting in-person engages in disruptive behavior that disturbs the orderly conduct of the meeting, they may be removed from the meeting after a warning, pursuant to Council Policy 000-17.” Adopted May 2, 2001 - Resolution No.1-025
Amended June 3, 2009 - Resolution No. 9-021
Amended February 3, 2010 - Resolution No.10-014
Amended September 1, 2010 - Resolution No.10-068
Amended November 17, 2010 - Resolution No.10-099
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Amended February 2, 2011 - Resolution No. 11-008
Amended January 20, 2016 - by motion of Council
Amended December 20, 2017 - Resolution No. 17-032
Amended September 1, 2021 - Resolution 21-028
Amended February 1, 2023 – by Minute Order
Amended March 6, 2024 by Resolution No. 24-005
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City of Pacific Grove
Council Policy
Subject Policy Effective Date Page
Order of Agenda for Council
Meetings 000-17 December 20, 2017 Page 1 of 4
A. Council meeting agendas are designed to facilitate the orderly conduct of City business, provide adequate time for the City Council to make informed, deliberative decisions, and provide members of the public an opportunity to present information to the City Council on any matter within the subject matter jurisdiction of the City.

B. This policy establishes the general practice to be followed with respect to the management of agenda items before the City Council. This policy shall not be construed to limit or impair rights of the public as set forth in the Ralph M. Brown Act, the Public Records Act, or any other provision of law.

C. In the development of a specific meeting’s agenda, the City Manager may adjust this order, when warranted. The Mayor and Council may also adjust the order in which matters are considered at the meeting. Deviation from the order of the agenda set in this policy, by itself, shall not provide a basis to reverse or invalidate any action of the City Council.

D. The standard order of the City Council agenda shall be as follows:

Call to Order
Pledge of Allegiance

1. Approval of the Agenda
Councilmembers shall have an opportunity to request changes to the order of items, to postpone items to a future meeting, or to add new matters in accord with the emergency or urgency requirements set forth in the Government Code.

2. Presentations
Presentations shall be made on behalf of the City to persons or organizations, and/or brief presentations (not to exceed 5 minutes, each) made to the Council by others upon approval of the City Manager. Presentations shall neither receive Council action nor provide a reason for Council debate. Council may ask brief questions or refer matters to staff for consideration on a future agenda.

3. Council and Staff Announcements
Announcements shall be limited to City-related items and shall neither receive Council action nor provide a reason for Council debate. Council may ask brief questions or refer matters to staff for consideration on a future agenda.

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Report out of any closed session held prior to the Regular meeting will be provided as the first announcement.

4. Public Comment
These are comments from the public on matters that are on the agenda (including the Consent Agenda) as well as for matters not on the agenda during General Public Comment which are within the subject matter jurisdiction of the City.

Persons who wish to address the Council shall use the microphone and are asked to state their name. It is helpful if speakers also indicate the subject matter of their comments. (Note: Even if a speaker refuses to state his or her name or the subject matter of the comment, the speaker shall not be denied the right to speak.) Accommodations will be made for persons with disabilities.

Public commentshall be limited to three minutes perspeaker for each item on the Agenda.

For General Public Comment, each speaker shall be limited to three minutes.

In the discretion of the Mayor, the length of the public comment on an item on the Agenda may be reduced to lower than three minutes when appropriate based on the number of speakers for an item and/or the Mayor may limit the total time for public comment on an item on the Agenda.

Communication to the Council under General Public Comment will be received without comment while the public comment period is open. When public comment during General Public Comment Communications is closed, questions from the public may be referred to staff for a brief response.

Pursuant to Government Code Section 54954.3 (c), the City Council shall not prohibit public criticism of the policies, procedures, programs, or services of the agency, or of the acts or omissions of the legislative body.

Pursuant to Government Code Section 54957.9, in the event that any meeting is willfully interrupted by a group or groups of persons so as to render the orderly conduct of such meeting unfeasible, and order cannot be restored by the removal of individuals who are willfully interrupting the meeting, the Mayor may order the meeting room cleared and continue in session. Only matters appearing on the agenda may be considered in such a session. Representatives of the press or other news media, except those participating in the disturbance, shall be allowed to attend any session held pursuant to this section. After the meeting room has been cleared, the Mayor may readmit an individual or individuals not responsible for willfully disturbing the orderly conduct of the meeting.

Pursuant to Government Code Section 54957.95, the Mayor may cause the removal of any individual for disrupting the meeting subject to the following rules:
(1) Prior to removing an individual, the Mayor shall warn the individual that their behavior is disrupting the meeting and that their failure to cease their behavior PGCC 7-3-24

may result in their removal.
(2) The Mayor may then cause the removal of the individual if they do not promptly cease their disruptive behavior.
(3) “Disrupting” means engaging in behavior during a meeting of a legislative body that actually disrupts, disturbs, impedes, or renders infeasible the orderly conduct of the meeting and includes, but is not limited to, one of the following:
(A) A failure to comply with reasonable and lawful regulations adopted by a legislative body pursuant to Section 54954.3 or any other law. (B) Engaging in behavior that constitutes use of force or a true threat of force. (4) “True threat of force” means a threat that has sufficient indicia of intent and seriousness, that a reasonable observer would perceive it to be an actual threat to use force by the person making the threat.
(5) If there has been a use of force or a true threat of force, there is no obligation for the Mayor to provide a warning to the individual before causing the individual to be removed from the meeting.

Consent Agenda
The Consent Agenda deals with routine and noncontroversial matters, and may include action on resolutions and second readings of ordinances, provided no public comment is anticipated on those items. The purpose of the Consent Agenda is to make efficient use of available time by considering all routine and non-controversial items under one motion. The Consent Agenda is structured so that any Councilmember, staff, or the public may pull an item for discussion or questions.

A single vote on the Consent Agenda shall apply to each item that has not been removed.

Councilmembers may notify the City Clerk if they want a specific vote or abstention recorded as to any individual item.

The standard elements of the Consent Agenda are:

5. Approval of City Council Meeting Minutes

6. Resolutions

7. Ordinances

8. Reports – Information Only
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9. Reports – Requiring Action

10. Meeting Minutes of Commissions, Boards, andCommittees When a Councilmember wishes to remove an item the Councilmember will discuss his/her question(s) with staff prior to the meeting in order for staff to research the answer(s), which shall be provided ahead of time to all members (e.g., in the blue folders).

The Mayor will first ask the members of the Council, then members of the public if anyone wants to pull an item from consent. The person pulling the item will simply state the item number and subject.

Unless a specific item is pulled for discussion, the Council shall ordinarily approve all action items or recommendations on the entire Consent Agenda under a single motion.

Council’s vote to approve the Consent Agenda is a direction to staff to proceed with each action as recommended.

Items Removed from the Consent Agenda
The Council shall separately consider and act on each item removed from the Consent Agenda. Such items shall be heard in their normal place on the Regular Agenda. That placement will be noted on each consent item. The discussion format for those items will follow the protocol for the Regular Agenda.

Regular Agenda
The protocol for deliberation on regular agenda items is:
1) The agenda report is presented by staff (or other person who prepared the report) at the discretion of the City Manager. The report can be concise yet sufficient to establish context and key facts for the item.
2) Public comment is received, normally without response, as described above. 3) Council deliberates and takes action as appropriate for the item. Staff or the public may speak to the item during Council deliberation if called upon by a member of Council.

This protocol explicitly omits the practice of clarifying questions from council prior to opening for public comment. Councilmembers can ask for clarification prior to the Council meeting and can also ask questions during the council deliberation phase.

11. Public Hearings
The Public Hearing agenda includes matters for which a public hearing notice was posted or published and for which public comment is anticipated.

12. Unfinished and Ongoing Business
The Unfinished Business agenda shall consist of matters that return to the Council for action, the same matter having been considered at or continued from a prior meeting or are updates or actions for long term and ongoing topics.

PGCC 7-3-24

13. New Business
The New Business agenda shall consist of matters not previously considered by the Council.

14. Full Presentations
Presentations under this item are those that may exceed five minutes and are made to the Council upon invitation of the Mayor or City Manager. Presentations shall neither receive Council action nor provide a reason for Council debate. Council may ask brief questions or refer matters to staff for consideration on a future agenda.

15. Closed Sessions (if required)
Closed Sessions are held in compliance with the Brown Act. The specific time for any Closed Session may be set at other times at the convenience of Council. The Council may adjourn to Closed Session on any other agenda item if authorized by law, upon advice of the City Attorney.

16. Public Announcement of Action Taken in Closed Session This announcement shall immediately follow any Closed Session.

Adjournment
E. Whenever practical, closed session items are best addressed during a special meeting prior to a regular meeting, as a convenience to the public, beginning at 5:00 pm.

F. All agenda reports recommending Council action shall include the following: title, recommendation, background, justification, and financial impact. Closed session agenda reports shall be confidential pursuant to California Government Code 54963 and PGMC §2.04.080.

G. The Agendas the meetings of all Legislative Bodies shall include the following Statement:
““Under the Brown Act, public comment for matters on the agenda must relate to that agenda item and public comments for matters not on the agenda must relate to the subject matter jurisdiction of this legislative body. This is a warning that if a member of the public attending this meeting remotely or in-person violates the Brown Act by failing to comply with these requirements of the Brown Act, then the Mayor or Chair may request that speaker be muted. If a member of the public attending this meeting in-person engages in disruptive behavior that disturbs the orderly conduct of the meeting, they may be removed from the meeting after a warning, pursuant to Council Policy 000-17.” Adopted May 2, 2001 - Resolution No.1-025
Amended June 3, 2009 - Resolution No. 9-021
Amended February 3, 2010 - Resolution No.10-014
Amended September 1, 2010 - Resolution No.10-068
Amended November 17, 2010 - Resolution No.10-099
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Amended February 2, 2011 - Resolution No. 11-008
Amended January 20, 2016 - by motion of Council
Amended December 20, 2017 - Resolution No. 17-032
Amended September 1, 2021 - Resolution 21-028
Amended February 1, 2023 – by Minute Order
Amended March 6, 2024 by Resolution No. 24-005
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RESOLUTION NO. 24-XXX
RESOLUTION AMENDING COUNCIL POLICY 000-017 ORDER OF AGENDA

FINDINGS

1. Council Policy 000-17 ‘Order of Agenda’ establishes the general practice to be followed with respect to the management of agenda items before the City Council.

2. On May 15, 2024, the City Council gave direction for the City Attorney to prepare a Resolution to amend Council Policy 000-017 “Order of Agenda”.

3. The amendments are proposed to clarify the protocol for deliberation on regular agenda items.

4. Amendments provide an orderly and efficient process by which everyone has an opportunity to contribute before Council takes appropriate action.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PACIFIC GROVE:

1. The Council determines that each of the Findings set forth above is true and correct, and by this reference incorporates those Findings as an integral part of this Resolution.

2. Policy 000-17 amendments in Attachment 1 are shown by deletion of all text shown in red strikeout text (strikeout text) and the addition of all text shown in red underscored text (underscored text).

3. Policy 000-17 without this markup is provided in Attachment 2.

4. Attachment 2 is hereby approved as attached to this Resolution, which by this reference are incorporated as set forth in its entirety. .

5. This Resolution shall become effective immediately following passage and adoption thereof.

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF PACIFIC GROVE this 3rd day of July, 2024, by the following vote:

AYES:

NOES:

ABSENT:

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APPROVED:
_______________________________
BILL PEAKE, Mayor
ATTEST:

DATED:_______________________
_______________________________
SANDRA KANDELL, City Clerk
APPROVED AS TO FORM:
_______________________________
BRIAN A. PIERIK, City Attorney
PGCC 7-3-24