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CC 2014-08-12_08.h. Waiver of Utility Fees - Historical SocietyMEMORANDUM TO: CITY COUNCIL FROM: STEVEN ADAMS, CITY MANAGER SUBJECT: CONSIDERATION OF ELIMINATING THE WAIVER OF UTILITY FEES FOR THE SOUTH COUNTY HISTORICAL SOCIETY DATE: AUGUST 12, 2014 RECOMMENDATION: It is recommended the City Council: 1) approve eliminating the waiver of water and sewer costs for South County Historical Society facilities on City property and direct the City Manager to notify the South County Historical Society in writing; and 2) approve funding for installation of water conservation irrigation retrofits on the properties. IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: The estimated cost of the irrigation retrofit is $5,000. It will be funded from revenues available from the Water Neutralization In-Lieu Fee Fund. In addition, there is a total of $20,000 budgeted for community and social service organization grants. There is minimal impact to personnel resources. BACKGROUND: Three of the properties operated by the South County Historical Society are owned by, and leased from, the City. These include the properties that house the Heritage House, Ruby's House and the Santa Manuela School. The original leases were all established during the period of 1997 to 1999. In 2008, the City Council expressed an interest to provide financial support to the South County Historical Society. As a result, the leases were modified to waive " water costs. At that time, the City did not pay for water and sewer service to City properties. Therefore, the leased properties were included in the list of City-owned properties exempted from water charges. This appeared to be an effective way to assist the South County Historical Society without a cost to the General Fund or creating a precedent of financially supporting community organizations. ANALYSIS OF ISSUES: The City's recent water rate study determined that it is necessary for the City to begin paying the cost of utilities for City-owned properties in order to comply with existing I Item 8.h. - Page 1 CITY COUNCIL CONSIDERATION OF ELIMINATING THE WAIVER OF UTILITY FEES FOR THE SOUTH COUNTY.HISTORICAL SOCIETY AUGUST 12, 2014 PAGE 2of3 State regulations. As a result, the City can no longer waive the utility fees for the · S9uth County. Historical Society. This may result in an increased cost to their budget of $4,000 to $5,000 annually. Staff met with representatives of the South.County Historical Society to discuss ways in which to reduce the financial impact of this change. It is recommended to fund an irrigation retrofit project to reduce water use and expenses, which will also address the City's water conservation goals. In addition, the City has budgeted funds for the first time for assistance of community and social service organizations. The process for determining recipients is under development and staff is targeting October for implementation. The South County Historical Society was encouraged to submit an application. These special circumstan·ces will be identified when their application is presented to the review committee. · The current leases includes the provision that "the decision to waive such charges may be rescinded at any time ,in the sole and absolute discretion of the City Council." Therefore, it can be modified by Council action to direct the City Manager to notify the South County Historical Society of the chang~. · ALTERNATIVES: The following alternatives are presented for consideration: • Approve ~taff recommendations; • Do not approve staff's recommendations; • Appropriate func~ing to pay the water costs from the General Fund; • Identify the South County Historical Society as a priority for community service funds up fr9nt to ·ensure they receive an allocation; • Do. not approve the funding for the irrigation retrofit; or • Provide staff other direction. ADVANTAGES: The recommendations are designed to ensure the City complies with existing State law, but also reduces the financial impact on the South County Historical Society. DISADVANTAGES: The recommendations will likely not eliminate the entire financial impact on the South County Historical Society. · · -· ENVIRONMENTAL REVIEW: No environmental review is required for this item. PUBLIC NOTIFICATION AND COMMENTS: The agenda was posted in front bf City Hall on Thursday, August 7, 2014 and on the City's website on Friday, August 8, 2014. No comments were received. Item 8.h. - Page 2 CITY COUNCIL CONSIDERATION OF ELIMINATING THE WAIVER OF UTILITY FEES FOR THE SOUTH COUNTY HISTORICAL SOCIETY AUGUST 12, 2014 PAGE 3of3 Attachment: 1. Historical Society Lease for Ruby's House Property 2. Historical Society Lease for Heritage House Property 3. Historical Society Lease for Santa Manuela School Property Item 8.h. - Page 3 ' FIRST AMENDMENT TO LEASE AGREEMENT [RUBY'S HOUSE] THIS FIRST AMENDMENT TO LEASE AGREEMENT is made and entered into this 22nd day of April, 2008, by and between the CITY OF ARROYO GRANDE ("CITY"), a municipal corporation duly organized and existing pursuant to the Constitution and laws of the State of California, and SOUTH COUNTY HISTORICAL SOCIETY (HISTORICAL SOCIETY"), a California nonprofit corporation, with reference to the following facts and intentions: WHEREAS, the parties entered into a Lease Agreement dated September 28, 1999, (hereinafter referred to as the "Lease Agreement"); and WHEREAS, the parties do hereby desire to amend the Lease Agreement. NOW, THEREFORE, in consideration of the premises herein contained, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is agreed by and between the parties as follows: 1 . Section 3.2 of the Lease Agreement is hereby deleted in its entirety and replaced as follows: Section 3.2 Additional Rent. In addition to the base rent, Historical Society shall pay an additional rent comprised of the payment of all utilities (Article 5) unless waived in writing by City, payment of assessment and possessory interest taxes (Article 6), and the payment of insurance (Article 7). 2. Section 5.1 of the Lease Agreement is hereby deleted in its entirety and replaced as follows: Section 5.1 Payment of Utility Services as Additional Rent. Historical Society shall initiate, contract for, and obtain, in its name, all utility services required for the Premises, including gas, electricity, telephone, water, janitorial, trash removal, sewer, and any other utility used or consumed in the Premises during the Lease term. Historical Society shall pay, and hold City and the property of City free and harmless from, all charges for utility services as they become due as part of the rental of the Premises. All such charges shall be paid by Historical Society directly to the provider of the service and shall be paid as they become due and payable but in any event before delinquency. City, at its sole discretion, may waive charges for City water services, exclusive of Lopez charges, and for City sewer services, exclusive of South County Sanitation District charges. The decision to waive charges shall be made in the sole and absolute discretion of, and is subject to the prior written approval of the City Council. The decision to waive such charges may be rescinded at any time in the ATTACHMENT 1 Item 8.h. - Page 4 sole and absolute discretion of the City Council. City may elect to terminate this Lease if Historical Society fails or refuses to pay the charges for utility services as assessed or incurred. 3. Except as modified herein, the Lease Agreement and each and every term and condition thereof shall remain in full force and effect. SOUTH COUNTY HISTORICAL SOCIETY: By: Title: ATTEST: CITY OF ARROYO GRANDE: ATTEST: APPROVED AS TO FORM: TiTHYJ.ME( CITY ATTORNEY 2 Item 8.h. - Page 5 LEASE AGREEMENT THIS LEASE AGREEMENT ("Lease") is made and entered into this 28th day of Se.ptember , 1999, in the City of Arroyo Grande, County of San Luis Obispo, California, by and between the CITY OF ARROYO GRANDE ("City"), a municipal corporation duly organized and existing pursuant to the Constitution and laws of the State of California, and SOUTH COUNTY IDSTORICAL SOCIETY ("Historical Society"), a California non-profit corporation, with reference to the following facts and intentions: RECITALS A. City is the owner of a building and real property located at 134 South Mason Street in the City of Arroyo Grande, State of California ("hereinafter referred to as the "Premises"). B. City is also the owner of two other parcels of real property which are currently being leased by the Historical Society, and which are located adjacent to the Premises. C. The Historical Society proposes to lease the Premises from City for the purpose of office and storage space for the Historical Society's use and related functions. D. Although habitable, the premises are in need of repair and refurbishment. E. The Historical Society also proposes to restore and rehabilitate the Premises, consolidate development of the heritage gardens on the premises, and use the Premises in a manner which promotes the history and local heritage of City. F. City holds a unique place in the history of California as the site of an early Chumash Indian Village and as part of a great Mexican Rancho. G. The parties find that it would be to their mutual advantage and public benefit for City to lease the Premises to Historical Society as described herein. NOW, THEREFORE, IT IS AGREED as follows: ARTICLE 1. DEFINITIONS. The following terms shall, for all purposes of this Lease, have the following meaning as set forth below. 1 ------___ .) Item 8.h. - Page 6 -_,. 1.1 City. City has the meaning assigned thereto in the preamble hereto. 1.2 Historical Society. Historical Society has the meaning assigned thereto in the preamble hereto. 1.3 Improvements. The term "improvements" or "improvement" includes, but iS not limited to, restorations, alterations, rebuilding, additions, changes, repairs, upgrades, replacements, remodeling, ·reconditioning, or modifications of any and all portions of the Premises. 1.4 Laws and Orders. The term "laws and orders" includes all laws, statutes, ordinances, standards, rules, requirements, regulations, decrees, judgments, or orders now in force or hereafter enacted, promulgated, or issued by all federal, state, county, city, or other governmental agencies, courtS, departments, commissions, boards, and officers. The term also includes government measures regulating or enforcing public access, occupational, health, fire, earthquake, or safety standards for employers, employees, landlords, or tenants. 1.5 Lease Commencement Date. The Lease commencement date is the date of Lease set forth in Article 1, section 1.6. 1.6 Lease Term. This Lease shall be effective as of the day and year first above written and shall remain in effect for an initial term of twenty (20) years therefrom; provided, however, that begin.ning with the first day of January of the year in which the Lease will have an unexpired term of nineteen (19) years, and each first day of January thereafter, a year shall be added automatically to the remainder of the initial term unless a notice of nonrenewal is given as provided herein. If either party desires not to renew this Lease, that party shall serve written notice of nonrenewal of this Lease on the other party at least ninety (90) days prior to the automatic annual renewal date of this Lease specified above. 1.7 Premises. The Premises refers to the building and real property located at 134 South Mason Street in the City and which is the subject of this Lease. ARTICLE 2. LEASE, CONDITION, AND RESERVATION OF RIGHTS. 2.1 Lease of Premises. In consideration of the rents, covenants, and agreements contained in this Lease, City hereby leases to Historical Society, and Historical Society hereby leases from City the Premises. 2.2 Name of Landlord and Tenant. The landlord is the City of Arroyo Grande and the tenant is the South County Historical Society. 2.3 Present Condition of Building and Premises. Historical Society represents that it has conducted an inspection and examination of the Premises that are the subject of this Leas_e and 2 Item 8.h. - Page 7 --. acknowledges that the building requires improvements to make the building fit for use and operation by Historical Society. Historical Society accepts the Premises in their pres~nt condition and agrees to rehabilitate the Premises so that they are in suitable shape and condition for occupancy and operation by Historical Society. 2.3.1 As-Is Condition. Historical Society accepts the Premises as-is, in their present condition or state as of the date of Lease, including any and all patent or latent defects, without any representation or warranty, express or implied in fact or by law, by City and without recourse to City as to the nature, condition, or usability of the Premises. 2.4 Reservation of Rights. City reserves all rights in the economic value of the leasehold, and all rights reserved to the City by operation of law. ARTICLE 3. RENT AND ADDITIONAL RENT. 3 .1 Base Rent. Historical Society shall pay to City on or before the last business day of the first month of each Lease year a base rent in the sum of One Dollar ($1.00) per year for each year of the Lease term. 3. 2 Additional Rent. In addition to the base rent, Historical Society shall pay an additional rent comprised of the payment of all utilities (Article 5), payment of assessments and possessory interest taxes (Article 6)., and the payment of insurance (Article 7). ARTICLE 4. USE OF PREMISES. 4.1 . Permitted Use and Maintenance of Premises. During the Lease term, Historical Society shall use the Premises solely for Historical Society office and storage space, and for such other uses generally appurtenant to the business of the Historical Society. Historical Society may use the Premises for special openings and events relating to historical and community events. Historical Society will landscape and maintain the grounds outside the building in a manner similar to that for the museum on the adjacent lot and incorporate these grounds into the master garden plan for the museum. · The amended master garden plan combining the adjacent grounds shall be submitted to the City's Director of Parks and Recreation for written approval prior to implementation of the plan. Historical Society shall not use or permit the Premises to be used for any other purpose without City's prior written consent, which may be granted or withheld in City's sole discretion. During the Lease Term, Historical Society, at its own cost and expense and at no cost and expense to City, shall contniuously and without exception repair, maintam, and make improvements to all portions of the Premises to ensure that all portions thereof are in a good order, condition, and repair in compliance with all laws and orders. 4.2 City's Right of Access to and Use of Premises. City and its agents shall have the right at all reasonable times to enter the Premises to perform functions, including, but not limited to the following: inspect the Premises; show the Premises to prospective purchasers or 3 Item 8.h. - Page 8 - mortgagees; serve, post, and keep posted notices required by law or that City considers necessary for the protection of City or the Premises; inspect the Premises for any purpose connected with the care and management of the Premises; perform services required of City; take possession due to any breach of this Lease; perform any covenants of Historical Society that Historical Society fails to perform, or for any other purpose reasonably connected with City's interest in the Premises. City expressly reserves the right to enter upon and make any improvements to the Premises that are part of the City's adopted Creek Path project for the south side bluffs of Arroyo Grande Creek, including placement of pedestrian trails and benches, as City may choose at its sole discretion. Any such work will be done in a reasonable and expeditious manner so as to cause the least practical interference with Historical Society's use of the Premises. City also reserves the right to use the grounds outside the building and may use the building itself without charge for functions, activities, or meetings of the City on mutually agreed upon dates and times by requesting the same from Historical Society, whose consent to such use by City shall not be unreasonably withheld. ARTICLE S. UTILITIES. 5.1 Payment of Utility Services as Additional Rent. Historical Society shall initiate, contract for, and obtain, in its name, all utility services required for the Premises, including gas, electricity, telephone, water, janitorial, trash removal, sewer, and any other utility used or consumed in the Premises during the Lease term. Historical Society shall pay, and hold City and the property of City free and harmless from all charges for utility services a8 they become due as part of the rental of the Premises. All such charges shall be paid by Historical Society directly to the provider of the service and shall be paid as they become due and payable but in any event before delinquency. City may elect to terminate this Lease if Historical Society fails or refuses to pay the charges for utility services as assessed or incurred. ARTICLE 6. TAXES AND ASSESSMENTS. 6.1 Payment of Taxes and Assessments as Additional Rent. The execution of this lease may create a taxable property mterest for the Historical Society. In such event Historical Society shall pay such possessory interest taxes when due and hold the City harmless therefor. In the event that a special assessment is imposed on the Premises that relates to Historical Society's use of the Premises, the parties agree to meet and discuss a satisfactory means of paying the assessment. ARTICLE 7. EXCULPATION, INDEMNIFICATION, AND INSURANCE. 7.1 Definition of Historical Society Parties and City Parties. The term "Historical Society parties" refers singularly and collectively to Historical Society and Historical Society's officers, members, agents, employees, and independent contractors as well as to all persons and entities claiming through any of these persons or entities. The term "City parties" refers 4 Item 8.h. - Page 9 -------------------- ~. singularly and collectively to City and the respective officers, representatives, agents, servants, employees, and independent contractors of these persons or entitles. 7.2 Exculpation. To the fullest extent permitted by law, Historical Society, on its behalf and on behalf of all Historical Society parties, waives all claims, in law, equity, or otherwise, against City parties and knowingly and voluntarily assumes the risk of, and agrees that City parties shall not be liable to Historical Society parties, for any of the following: injury to or death of any person; or loss of, injury or damage to, or destruction of any tangible or intangible property, including the resulting loss of use, economic losses, and consequential or resulting damage of any kind from any cause. City parties shall not be liable under this clause regardless of whether the liability results from any active or passive act, error, omission, or negligence of any of City parties; or is based on claims in which liability without fault or strict liability is imposed or sought to be imposed on any of City parties. This exculpation clause shall not apply to claims against City parties to the extent that a final judgment of a court of competent jurisdiction establishes that the injury, loss, damage, or destruction was proximately caused by City parties' fraud, willful injury to person or property, sole active negligence, or violation of law. Such exculpation shall survive the expiration or earlier termination of this Lease until all claims within the scope of this exculpation clause are fully, finally, and absolutely barred by the applicable statutes of limitations. Historical Society acknowledges that this section was negotiated with City, · that the consideration for it is fair and adequate, and that Historical Society had a fair opportunity to negotiate, accept, reject, modify, or alter it. With respect to the exculpation provided iµ this Article, Historical Society waives the benefits of Section 1542 of the Civil Code, that provides that "a general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." 7.3 Insurance. Without limiting Historical Society's indemnification of City, Historical Society shall procure and maintain, for the duration of the Lease, insurance against claims for injuries to persons or damages to property which may arise from or in connection with Historical Society's operation and use of the Premises. The cost of such insurance shall be borne by Historical Society. 7.3.l Minimum Scope of Insurance. Coverage shall be at least as broad as: a. Insurance Services Office Commercial General Liability coverage ("occurrence" form CG 0001); 7.3.2 Minimum Limits of Insurance. Historical Society shall maintain limits no less than: a. General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability Insurance or other form 5 Item 8.h. - Page 10 ,-.... ) _,.,.,, with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit; 7.3.3 Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and approved by City. At the option of City, either: the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects City, its officers, officials, employees and volunteers; or Historical Society shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. 7.3.4 Other Insurance Provisions. The general liability policy is to contain, or be endorsed to contain, the following provisions: a. City, its officers, officials, employees and volunteers are to be covered as insureds as respects: liability arising out of premises owned, occupied or used by Historical Society. The coverage shall contain no special limitations on the scope of protection afforded to City, its officers, officials, employees or volunteers; b. Historical Society's insurance coverage shall be primary insurance as respects City, its officers, officials, employees and volunteers. Any insurance or self-insurance maintained by City, its officers, officials, employees or volunteers shall be excess of Historical Society's insurance and shall not contribute with it; c. Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage p~ovided to City, its officers, officials, employees or volunteers; d. Coverage shall state that Historical Society's insurance shall apply· separately to each insured against whom a claim is made or suit is brought, except with respect to the limits of the insurer's liability; e. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled, reduced in coverage or in limits except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to City. · 7.3.5 Accej>tability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:V. 7.3.6 Verification of Coverage. Historical Society shall furnish City with original endorsements effecting coverage required by this clause prior to commencing any work on or occupying the Premises. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. All endorsements are to be received and approved by City before Historical Society takes possession of the Premises and any work commences. As an 6 Item 8.h. - Page 11 ---·-·------------ alternative to City's forms, Historical Society's insurer may provide complete, certified copies of all required insurance policies, including endorsements effecting the coverage required by these specifications. . 7.3.7 Aggregate Limits/Blanket Coverage. If any of the required insurance coverage's contain aggregate limits, or apply to other operations or tenancy of Historical Society outside this Lease, Historical Society shall give City prompt, written notice of any incident, occurrence, claim, settlement or judgment against such insurance which in Historical Society's best judgment will diminish the protection such insurance affords City. Further, Historical Society shall immediately take all steps to restore such aggregate limits or shall provide other insurance protection for such aggregate limits. 7.3.8 Modification of Coverage. City reserves the right at any time during the term of this Lease to change the amounts and types of insurance required hereunder by giving Historical Society ninety (90) days advance written notice of such change. 7.3.9 Failure to Procure Insurance. Within the foregoing constraints, Historical Society's failure to procure or maintain required insurance or a self-insurance program shall constitute a material breach of contract under which City may immediately terminate this Lease or, at its discretion, procure or renew such insurance to protect City's interests and pay any and all premiums in connection therewith, and recover all monies so paid from Historical Society. 7.3.10 Underlying Insurance. Historical Society shall be responsible for requiring indemnification and insurance from its employees receiving mileage allowance, consultants, agents and subcontractors, if any, in the same amounts and including the same terms as specified herein, to protect Historical Society's and City's interests, and for ensuring that such persons comply.with any applicable insurance statutes. 7.3.11 Personal Properta of Historical Society. City may continue to provide property insurance for the Premises. Said property insurance shall not provide coverage for Historical Society's personal property. Historical Society waives any claim against the City's insurance for or relating to damage to its personal property. 7.4 lndeinnification. Historical Society, its Board of Directors, and the directors individually, shall, at Historical Society's sole expense, and with counsel reasonably acceptable to City, indemnify, ·defend, and hold harmless the City and City parties from and against any and all claims from any cause, that arise out of, result from, or relate to this Lease, the tenancy created under this Lease, or the Premises, including the use or occupancy, or manner of use or occupancy, of the Premises by Historical Society parties; any negligent act of Historical Society parties or of any invitee, guest, or licensee of Historical Society, or any other person authorized by Historical Society to use the Premises or any portion thereof; Historical Society's conducting of its business; any improvements, activities, work, or things done, omitt~, permitted, allowed, or suffered by Historical Society parties in, at, or about the Premises,, including the violation of or failure to 7 Item 8.h. - Page 12 --------- comply with any applicable laws and orders in existence on the date of Lease or enacted, promulgated, or issued after the date of Lease; and any breach or default in performance of any obligation of Historical Society's part to be performed linder this Lease, whether before or dUrlng the Lease term or after its expiration or earlier termination. The intention of the parties being that with respect to compliance with laws and ordei:s that Historical Society, during the Lease term, shall discharge and perform all the obligations of City, as well as all the obligations of Historical Society, related to the Premises, and indemnify City therefrom, so that at all times the rental of the Premises shall be net to City without deduction or expenses on account of any such laws and orders. 7.5 Definition of Claims. For purposes of this Lease, "claims" means any and all claims, losses, costs, damage, expenses, liabilities, liens, actions, cause of action (whether in tort . or contract, law or equity, or otherwise), charges, assessments, fmes, and penalties of any kind (including consultant and expert expenses, court costs, and attorney fees as defined in this Lease). 7.6 Tupe of Injury or Loss Defined. This indemnification extends to and includes claims for injury to any persons (including death at any time resulting from that injury); loss of, injury or damage to, or destruction of property (including all loss of use resulting from that loss, injury, damage, or destruction); and all economic losses and consequential or resulting damage of any kind. · 7. 7 Effect of Negligence. Strict Liability. or Willful Misconduct. Such indemnification shall apply regardless of the active or passive negligence of City parties and regardless of whether liability without fault or strict liability is imposed or sought to be imposed on City parties. The indemnification shall not apply to the extent that a final judgment of a court of competent jurisdiction establishes. that a claim against one City party was proximately caused by the sole active negligence or willful misconduct of that City party. In that event, however, this indemnification shall remain valid for all other City parties. 7 .8 Survival of Indemnification. The clauses of this Article shall survive the expiration or earlier termination of this Lease until all claims against City parties fuvolving any of the indemnified matters are fully, finally, and absolutely barred by the applicable statute of limitations. ARTICLE 8. ASSIGNMENT. 8 .1 Approval of Assignment. Historical Society shall not, without the City's prior written consent, permit assignment of any of .its rights, delegation of any of its duties, assignment of all or any interest in this Lease, by operation of law or otherwise; sublet all or any part o_f the Premises or any right or privilege appurtenant to the Premises; or suffer any other person, other than City's agents and servants, to occupy or use all or any part of the Premises. In City's sole and absolute discretion, City may withhold its consent to any assignment, sublease, occupation, or use. City shall not be bound by any standard of reasonableness in exercising this discretion. Any assignment, subletting, occupation, or use by another person or entity without City's prior 8 Item 8.h. - Page 13 ----------·----- written consent shall be void and shall, at City's option, terminate this Lease. If Historical Society requests City to consent to a proposed assignment, subletting, occupation, or use by any other person or entity, Historical Society shall pay to City, whether or not consent is ultimately given, City's actual attorney fees and costs, as defined in this Lease, incurred in connection with each such request. City's co~ent to one assignment, subletting, occupation, or use by any other person or entity shall not be deemed to be a consent to any subsequent assignment, subletting, occupation, or use by another person or entity. As used in this provision, "assignment" and "delegation" shall mean any sale, gift, pledge, hypothecation, encumbrance, or other transfer of all or any portion of the rights, obligations, or liabilities in or arising from this Lease to any person or entity, whether by operation of law or otherwise, and regardless of the legal form of the transaction in which the attempted transfer occurs. 8.2 Successors and Assigns. Subject to section 8.1, this Lease shall be binding on and shall inure to the benefit of the parties and their respective legal representatives, successors, and assigns. ARTICLE 9. TERMINATION OF LEASE BEFORE EXPIRATION OF LEASE TERM. 9 .1 Grounds for Termination. 9 .1.1 Breach of Lease. Either party to the Lease may terminate this Lease if the other party has committed a breach of the Lease as defined in Article 11. There is no monetary penalty for such termination except for any costs and fees expressly provided for in Articles 9, 11, 13 and 14. 9.2 Termination Procedure. The party exercising the right to terminate shall provide written notice of the intent to terminate to the other party. · If the termination is pursuant to section 9 .1.1, the party shall give a prior written notice of at least ninety (90) calendar days prior to the date of the intended termination. The notice shall state the reason for the termination. 9.3 City's Purchase of Improvements Upon Termination. Upon termination of the Lease by City, as set forth in subsection 9 .1.1, City shall reimburse Historical Society for the actual out of pocket cost of the permanent improvements that Historical Society made to the Premises. For purposes of this Article, "permanent improvements" shall mean those improvements that are affixed or attached to the Premises and not removable without material injury to the Premises. 9.4 Rights and Obligations Cease. All rights and obligations of the parties shall cease on termination of the Lease unless otherwise provided by the terms of the Lease. Neither party shall be liable to the other for damages of any kind, inclu~ing without limitation incidental or consequential damages, resulting from any termination of this Lease, except as specifically provided for herein. 9 Item 8.h. - Page 14 ARTICLE 10. SURRENDER OF PREMISES. 10.1 Removal of Historical Society ·Property. On the expirati,on or earlier termination of the Lease term, Historical Society shall quit the Premises and surrender possession to City. On expiration or termination Historical Society shall remove or cause to be removed from the Premises all debris and rubbish, any iteins of personal property owned by Historical Society, and any other improvements that Historical Society placed on the Premises, unless City approves their remaining on the Premises in which case ownership of any such improvements automatically passes to City. Historical Society shall repair all damage or injury that may occur to the Premises caused by Historical Society's removal of those items and shall restore the Premises to their condition that existed when the Lease commenced. ARTICLE 11. DEFAULT. 11.1 Acts of Default. Any of the following events or occurrences shall constitute a material.breach of the Lease by Historical Society and, after the expiration of any applicable grace period, shall constitute an event of default, each being a separate event of default: 11.1.1 Failure to Pay Costs or Charges. The failure by Historical Society to pay any amount in full when it is due under the Lease. 11.1.2 Failure to Perform Obligation. The failure by Historical Society to perform any obligation under the Lease~ which by its nature Historical Society has no capacity to Cl:ll'e. 11.1.3 Failure to Perform After Notification. The failure by Historical Society to perform any other obligation under this Lease, if the failure has continued for a period of ten (10) days after City demands in writing that Historical Society cure the failure. If, however, by its nature the failure cannot be cured within ten (10) days, Historical Society may have a longer period as reasonably needed to cure the failure, but this is conditioned upon Historical Society promptly commencing to cure within the ten (10) day period and thereafter diligently completing the cure. Historical Society shall indemnify and defend City against any liability, claim, damage, loss, or penalty that may be threatened or may in fact arise from that failure during the period the failure is uncured. · 11.1.4 Assignment. Any of the following: A general assignment by Historical Society for the benefit of Historical Society's creditors; any voluntary filing, petition, or application by Historical Society under any law relating to insolvency or bankruptcy, whether for a declaration of bankruptcy, a reorganization, an arrangement, or otherwise; the abandonment, vacation, or surrender of the Premises by Historical Society without City's prior written consent; or the dispossession of Historical Society from the Premises (other than by City) by process oflaw or otherwise; 10 --------------·· -----Item 8.h. - Page 15 - . ../ 11.1.5 A1mointment of Trustee or Receiver. The appointment of a trustee or receiver to take possession of all or substantially all of Historical Society's assets; or the attachment, execution or other judicial seizure of all or substantially all of Historical Society's assets located at the Premises or of Historical Society's interest in this Lease, unless the appointment or attachment, execution, or seizure is discharged within thirty (30) days; or the involuntary filing against Historical Society, or any general partner of Historical Society if Historical Society is a partnership, of: a. A petition to have Historical Society, or any partner of Historical Society if Historical Society is a partnership, declared bankrupt, or b. A petition for reorganization or arrangement of Historical Society under any law relating to insolvency or bankruptcy, unless, in the case of involuntary filing, it is dismissed within sixty (60) days; 11.1.6 Abandonment. The abandonment of the Premises by Historical Society. 11.1. 7 Waiver. Waiver by City of any default in perfoi'mance by Historical Society of any of the terms, promises, or conditions contained herein shall not be deemed a continuing waiver of the same or any subsequent default. In the event any officer, agent or employee of City shall consent to an act or failure to act in violation of any provisions of this Lease, such act or failure to act shall be immediately corrected upon a request from City in writing. 11.2 Remedies on Event of Default. If an event of Default occurs, the nondefaulting party shall have the right to terminate the Lease and to pursue any remedy now or later available to the nondefaulting party at law or in equity. ARTICLE 12. EXPIRATION OF THE LEASE TERM. 12.1 Ownership of Improvements by City. Upon the expiration or termination of the Lease, any and all improvements made to the Premises and left there by Historical Society shall automatically, without compensation to and without any act of Historical Society or any third party become the City's property. ARTICLE 13. ARBITRATION. 13.1 Disputes Subject to Arbitration. Any controversy or dispute between the parties to this Lease may be submitted to an arbitration panel, and such arbitration shall comply with and be governed by the provisions of the California Arbitration Act, Sections 1280 et seq. of the California Code of Civil Procedure, to the extent that such provisions have not been modified 11 Item 8.h. - Page 16 - pursuant to this Lease. The losing party shall pay all costs and attorney fees, as defined in this Lease. 13.2 Rules Governing Arbitration. 13.2.1 Limited Discovery. No more than thirty (30) calendar days before the arbitration, a party may serve a document request calling for any document that would be discoverable in civil litigation. The party served with this request shall deliver the requested documents and any objections within five (5) business days. The arbitrators shall resolve any dispute over the exchange of documents as they would be resolved in civil litigation. Thereafter, each party may take no more than three (3) depositions, each of which shall last no more than· four (4) hours each. The arbitrators shall resolve any dispute over the depositions as they would be resolved in civil litigation. 13 .2.2 ·Arbitrators' Powers. The arbitrators shall have the same powers as those of a judge of the superior court of the State of California, and shall render a decision as would a judge of a superior court of the State of California in accordance with the law and the facts. 13.2.3 Written Decision. Within fifteen (15) days after completion of the arbitration, the arbitration panel shall submit a tentative decision in writing, issuing fmdings of fact and specifying the reasoning for the decision and any calculations necessary to explain the award. Each party shall have fifteen (15) days in which to submit written comments to the tentative decision. Within ten (10) days after the deadline for written comments, the arbitration panel shall mail a written decision of the final award to each party. 13.2.4 Costs. Each party to the arbitration shall pay a pro rata share of the arbitrators' expenses and fees. The arbitrators s~l award the prevailing party its expenses and fees of arbitration, including reasonable attorney fees, as defined in this Lease. If it becomes necessary to enforce an award made by the arbitratprs or a judgment based on such award, the prevailing party shall be entitled to attorneys' fees, as defined in this Lease. · 13.2.5 Judicial Review of Award. Th~ parties shall be entitled to judicial review of an arbitrator's ef!Or or mistake of fact or law, and to judicial review of any issue that would have been entitled to judicial review if such issue had been addressed or decided by a superior court of the State of California. ARTICLE 14. ATTORNEYS' FEES. 14.1 Attorneys' Fees. Costs. and Emenses. In any litigation, arbitration, or other proceeding in law or equity by which one party to the Lease seeks to enforce its contract rights under the Lease, to resolve an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Lease, to seek a declaration of any rights or obligations under this Lease, or to interpret the provisions of this Lease, the prevailing party shall be entitled to 12 Item 8.h. - Page 17 recover from the losing party actual attorneys' fees incurred to resolve the dispute and to enforce the final judgment, award, decision, or order and such fees, costs; or expenses shall be in addition to any other relief to which the prevailing party may be entitled. The award of attorneys' fees shall be deemed to have accrued upon the commencement of the action and shall be paid whether or not such action is prosecuted to judgment, award, decision, or order. "Pr~g" shall mean any action, suit, claim, arbitration, alternative dispute resolution mechanism, investigation, administrative hearing, or any other proceeding, including but not limited to civil, criminal, administrative, regulatory, or investigative. The attorneys' fees to be awarded the prevailing party may be determined by the court or other decision maker in the same action or proceeding or in a separate action brought for that purpose. Any judgment, award, decision, or order entered in such action or proceeding shall contain a specific provision providing for the recovery of actual attorneys' fees incurred in enforcing such judgment, award, decision, or order. The award of attorneys' fees shall not be computed in accordance with any court schedule, but shall be made so as to fully reimburse the prevailing party for all attorneys' fees, paralegal· fees, and expenses actually incurred in good faith, regardless of the size of the judgment, award, decision, or order, it being the intention of the parties to fully compensate the prevailing party for all actual attorneys' fees, paralegal fees, and costs and expenses paid or incurred in good faith. This provision applies to the entire Lease. ARTICLE 15. CONDEMNATION. 15.1 Condemnation Sums. In the event that the Premises shall be taken, in whole or in part, through the exercise of any power of eminent domain exercised by any federal, state, or local municipality having the power thereof, the Lease temi shall terminate and expire on the date of such taking and any sums· paid by such condemning authority shall be paid to the City. The Historical Society shall be reimbursed for actual out of pocket cost of the pennanent improvements made to the premises. ARTICLE 16. MISCELLANEOUS. 16.1 Notices. To be effective, all notices, requests, demands, and other communications required or permitted under this Lease ~hall be in writing and shall be delivere4 either in person or by certified mail, postage prepaid, return receipt requested. Notice is deemed effective on delivery if served personally on the party to whom notice is to be given and delivery is confirmed by a receipt. Notice is deemed effective on the second day after mailing if mailed to the party to whom notice is to be given, by first class mail, registered or certified, return receipt requested, postage prepaid, and properly addressed as set forth below. Any correctly addressed notice that is refused, unclaimed, or undeliverable because of an act or omission of the party to be notified shall be deemed effective as of the first date that said notice was refused, unclaimed, or deemed undeliverable by the postal authorities. The addresses for purposes of giving notice are as set forth below but each party may change its address by written notice in accordance with this paragraph. 13 Item 8.h. - Page 18 HISTORICAL SOCIETY: CITY: South County Historical Society P.O. Box 633 Arroyo Grande? CA 93421-0633 City of Arroyo Grande Attn: City Manager P.O. Box 550 Arroyo Grande, CA 93421-0550 16.2 Discrimination Prohibited. No person shall, on the grounds of race, religion, color, national origin, or sex, be excluded from participation in, be denied the benefit of, or be subjected to discrimination under this Lease. 16.3 Nondiscrimination. Eqµal Employment Practices. and Affirmative Action Program. Historical Society shall comply with the nondiscrimination laws of the United States of America, the State of California, and City in performing this Lease. Historical Society shall not discriminate in its employment practices against any employee, or applicant for employment because of such person's race, religion, national origin, ancestry, sex, age, or physical handicap. 16.4 No Mortgaging Leasehold. Historical Society shall have no right to subject the leasehold estate or the Premises to any mortgage, deed of trust or other security interest. 16.5 Time of Essence. Time is of the essence in this Lease. 16.6 Effectiveness. This Lease shall be effective only when signed by both parties to the Lease and approved by formal action of the City Council of City. 16.7 Necessary Acts/Other Instruments. The parties shall at their own cost and expense execute any and all other documents and instruments and shall take any and all actions as may be reasonably required, necessary, or appropriate to evidence or carry out the intent and purposes of this Lease. 16.8 Go~ Faith. Each party to this Lease shall act in good faith in performing. their respective obligations set forth in this Lease. 16. 9 Waiver. The waiver of any breach of any condition, covenant, term, or provision of this Lease by any party to this Lease shall not be deemed to be a waiver of any preceding or subsequent breach under the Lease, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver. 16.10 Authorizations. All officers and individuals executing. this and other documents on behalf of the respective parties do hereby certify and warrant that they have the capacity and have been duly authorized to so execute said documents on behalf of the entity so indicated. Each 14 Item 8.h. - Page 19 signatory shall also indemnify the other party to this Lease, and hold them hannless, from any and all damages, costs, attorneys' fees, and other expenses, if the signatory is not so authorized. 16.11 Headings and Captions. The captions and headings of this Lease are inserted for convenience only and shall not be deemed a part of this Lease and shall not be used in interpreting this Lease or in determining any of the rights or obligations of the parties to this Lease. 16.12 Word Usage. Unless the context clearly requires otherwise, the plural and singular words shall each be deemed to include the other; "shall," "will," or "agrees" are mandatory~ and "may" is permissive or discretionary; "or" is not exclusive; the masculine, feminine, and neuter genders shall each be deemed to include the others; and "includes" and "including" are not limiting. 16.13 Severability. If any term, provision, covenant, or condition of this Lease shall be or become illegal, invalid, null, void, unenforceable, or against public policy, in whole or in part, or shall be held by any court of competent jurisdiction to be illegal, invalid, null, or void, or against public policy, the term, provision, covenant, or condition shall be deemed severable, and the remaining provisions of this Lease shall remain in full force and effect and shall not be affected, impaired, or invalidated. The term, provision, covenant, or condition that is so invalidated, voided, or held to be unenforceable shall be modified or changed by the parties to the extent possible to carry out the intentions and directives set forth in this Lease. 16.14 Countemart Execution. This Lease may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. 16.15 Entire Agreement. This Lease constitutes the final, complete, and exclusive statement of the terms of the agreement between the parties pertaining to the Lease and supersedes all prior and contemporaneous agreements, promises, representations, warranties, understandings, or undertakings by either of the parties, either oral or written, of any character or nature. No party has been induced to enter into this Le~e by, nor is any party relying on, any representation or warranty outside those expressly set forth in this Lease. 16.16 Amendments: This Lease may be altered, amended, modified, or supplemented only by an instrument in writing, executed by the parties to this Lease and by no other means. No alteration, amendment, modification, or supplement of this Lease shall be binding unless it is in writing and signed by both parties. Each party waives their future right to claim, contest, or assert that this Lease was modified, canceled, superseded, or changed by any oral agreement, course of conduct, waiver, or estoppel. 16.17 Ambiguities. Each party and its counsel have participated fully in the review and revision of this Lease. Any rule of construction to the effect that.ambiguities are to be resolved against the drafting party shall not apply in interpreting this Lease. 15 ... Item 8.h. - Page 20 ,--- IN WITNESS WHEREOF, City has executed the Lease with the approval of its City Council, and caused its official seal to be affixed and Historical Society has executed the Lease in accordance with the authorization of its Board of Directors and has caused its official seal to be affixed. ATTEST: BOAfID SECRETARY ?~.t8..h-~ ATTEST: ~ Director of Administrative Services/ Deputy City Clerk APPROVED AS TO FORM: SOUTH COUNTY IDSTORICAL SOCIETY By~~ (NaIIle) Ways and Means Chairman CITY OF ARROYO GRANDE By: ~~~R South Cotmty Historical Society Post Office Box 633 Arroyo Grande, Ca. 93420 Item 8.h. - Page 21 ,. .. ------·---··----··· ···----- South Cotmty listorical Society Post Off ice Box 633 Arroyo Grande, Ca. 93420 Clarification of Leases between the City of Arroyo Grande and the South County Historical Society Description Lease# 1: 126 Mason Street (Heritage House Museum) Effective: June 1, 1997 Legal: Block 6 of the Short Mason and Whiteley subdivision Lots 10 & 11 City of Arroyo Grande, CA Amendment to Lease # 1: Changes Lease term. Effective June 8, 1999 Lease# 2: 127 Short St. (Santa Manuela Schoolhouse) Effective November 24, 1998 Legal: Block 6 of the Short Mason and Whiteley subdivision Lot 2 City of Arroyo Grande, CA First Amendment to Lease #2: Corrects legal description from bet--1 to Lot 2 of the original lease dated November 24, 1998. Effective: June 30, 1999 Second Amendment to Lease #2: Adds Lot 3, 133 Short Street (Vacant lot south of Santa Manuela Schoolhouse) Effective: April 10, 2001 Lease# 3: 134 Mason Street (Ruby's House) Effective: September 28, 1999 Legal: Block 6 of the Short Mason and Whiteley subdivision Lot 9 City of Arroyo Grande, CA Combined, these three leases include Lots 2, 3, 9, 10 & 11 of block 6 of the Short Mason and Whiteley subdivision, City of Arroyo Grande, County of San Luis Obispo, State of California. Item 8.h. - Page 22 SECOND AMENDMENT TO LEASE AGREEMENT [HERITAGE HOUSE] THIS SECOND AMENDMENT TO LEASE AGREEMENT is made and entered into this 22nd day of April, 2008, by and between the CITY OF ARROYO GRANDE ("CITY"), a municipal corporation duly organized and existing pursuant to the Constitution and laws of the State of California, and SOUTH COUNTY HISTORICAL SOCIETY (HISTORICAL SOCIETY"), a California nonprofit corporation, with reference to the following facts and intentions: WHEREAS, the parties entered into a Lease Agreement dated June 1, 1997, (hereinafter referred to as the "Lease Agreement"); and WHEREAS, the parties entered into a First Amendment to the Lease Agreement on June 30, 1999; and · WHEREAS, the parties do hereby desire to further amend the Lease Agreement. NOW, THEREFORE, in consideration of the premises herein contained, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is agreed by and between the parties as follows: 1. Section 3.2 of the Lease Agreement is hereby deleted in its entirety and replaced as follows: Section 3.2 Additional Rent. In addition to the base rent, Historical Society shall pay an additional rent comprised of the payment of all utilities (Article 8) unless waived in writing by City, payment of assessment and possessory interest taxes (Article 9), and the payment of insurance (Article 11 ). 2. Section 8.1 of the Lease Agreement is hereby deleted in its entirety and replaced as follows: Section 8.1 Payment of Utility Services as Additional Rent. Historical Society shall initiate, contract for, and obtain, in its name, all utility services required for the Premises, including gas, electricity, telephone, water, janitorial, trash removal, sewer, and any other utility used or consumed in the Premises during the Lease term. Historical Society shall pay, and hold City and the property of City free and harmless from, all charges for utility services as they become due as part of the rental of the Premises. All such charges shall be paid by Historical Society directly to the provider of the service and shall be paid as they become due and payable but in any event before delinquency. City, at its sole discretion, may waive charges for City water services, exclusive of Lopez ATTACHMENT 2 Item 8.h. - Page 23 charges, and for City sewer services, exclusive of South County Sanitation District charges. The decision to waive charges shall be made in the sole and absolute discretion of, and is subject to the prior written approval of the City Council. The decision to waive such charges may be rescinded at any time in the sole and absolute discretion of the City Council. City may elect to terminate this Lease if Historical Society fails or refuses to pay the charges for utility services as assessed or incurred. 3. Except as modified herein, the Lease Agreement, as amended, and each and every term and condition thereof shall remain in full force and effect. SOUTH COUNTY HISTORICAL SOCIETY: Title: ATTEST: Title: CITY OF ARROYO GRANDE: ATTEST: APPROVED AS TO FORM: 2 Item 8.h. - Page 24 FIRST AMENDMENT TO LEASE AGREEMENT [HERITAGE HOUSE] THIS FIRST AMENDMENT TO LEASE AGREEMENT is made and entered into this 1Q:ot day of .:mtJE , 1999, by and between the CITY OF ARROYO GRANDE (°CITY"), a municipal corporation duly organized and existing pursuant to the Constitution and laws of the State of. California, and SOUTH COUNTY HISTORICAL SOCIETY (uHISTORICAL SOCIETY"), a California nonprofit corporation, with reference to the following facts and intentions: WHEREAS, the parties entered into a Lease Agreement dated June 1 , 1997,. (hereinafter referred to as the "Lease Agreement"); an~ WHEREAS, the parties desire to amend the Lease Agreement. NOW, THEREFORE, in consideration of the premises herein contained, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is agreed by and between the parties as follows: 1 . Section 1 . 7 of the Lease Agreement is hereby deleted in its entirety and replaced as follows: Section 1.7 Lease Term. This Lease shall be effective as of the day and year first above written and shall remain in effect for an initial term of twenty (2d) years therefrom; provided, however, that beginning with the first day of January of the year in which the Lease will have an unexpired term of nineteen (19) years, and each first day of January thereafter, a year shall be added automatically to the remainder of the initial term unless a notice of nonrenewal is given as provided herein. If either party desires not to renew this Lease, that party shall serve written notice of nonrenewal of this Lease on the other party at least ninety (90) days prior to the automatic annual renewal date of this Lease specified above. 2. Section 1.6 of the Lease Agreement, entitled "Lease Expiration Date," and Section 2.6 of the Lease Agreement, entitled "Extension of Lease Term," are hereby deleted in their entirety. Item 8.h. - Page 25 -·:] 3. Except as modified herein, all terms and conditions of the Lease Agreement shall remain in full force and effect. ATIEST: ~· ~fuRY ATTEST: .u/p/,zu~ KELL'f.EORE Director of Administrative Services/ Deputy City Clerk APPROVED AS TO FORM: Z:IARROYOIAGMTS\haritage lease.emd --------.. --. ------- SOUTH COUNTY HISTORICAL SOCIETY By:~ :PO?sJd.fut (Title) CITY OF ARROYO GRANDE By:~ MiCHAELA.LA~AYOR Item 8.h. - Page 26 LEASE AGREEMENT THIS LEASE ("Lease") is made and entered into this 1st day of June, 1997, in the City of Arroyo Grande, County of San Luis Obispo, California, by and between the CITY OF ARROYO GRANDE ("City"), a municipal corporation duly organized and existing pursuant to the Constitution and laws of the State of California, and SOUTH COUNTY HISTORICAL SOCIETY ("Historical Society"), a California non-profit corporation, with reference to the following 'facts and intentions: RECITALS A. City is the owner of a building and mil property located at 126 South Mason Street in the City of Arroyo Grande, State of California. B. City holds a unique place in the history of califomia as the site of an early Chumash Indian Village and as part of a great Mexican Rancho. C. The building at 126 South Mason Street has not been used or occupied by the City for eleven (11) months. D. Although structurally sound, the building is in a cosmetically poor condition. E. . Historical Society proposes to restore and rehabilitate said building, develop heritage gardens on the premises, and use the building and premises for a mstory Center and Museum of local heritage which shall be open to the public. F. The History Center and Museum will exhibit a large collection of historical artifacts, photographs, and papers that are owned by the Historical Society, inclu~g educational materials for children, exhibits to attract tourists to City, appropriate historical materials for special openings and events in conjunction with the City and the Business Improvement Association within City. This facility will include an office and historical book shop. G. The parties find that it would be to their mutual advantage and public benefit for City to lease the building and property to Historical Society to use as a mstory Center and Museum. H. The City has inspected this building and approved its fitness for occupancy. NOW, THEREFORE, IT IS AGREED as follows: 1 ·------------------Item 8.h. - Page 27 ARTICLE 1. DEFINITIONS. The following terms shall, for all purposes of this Lease, have the following meaning as set forth below. 1.1 .citJ. City has the meaning assigned thereto in the preamble hereto. 1.2 Historical Society. Historical Society has the meaning assigned thereto-in the preamble hereto. 1.3 Impmyemeow. The term •improvements" or "improvement• includes, but is not limited to, restorations, alterations, rebuilding, additions, changes, .repairs, upgrades, replacements, remodeling, reconditioning, or modifications of any and all portions of the Premises. 1.4 Laws and Orders. The term "laws and orders" includes all laws, statutes, ordinances, standards, rules, requirements, ~ns, decrees, judgments, or orders now in force or hereafter enacted, promulgated, or issued by all federal, state, county, city, or other governmental agencies, courts, departments, commissions, boards, and officers. The term also includes government measures regulating or enforcing public access, occupational, health, fire, earthquake, or safety standards for employers, employees, landlords, or tenants. 1.5 I ase Commencement Date. The Lease commencement date is the date of Lease set forth in Article 2. 1.6 I ease Expiration Date. The last day of the month in which the 20th anniversary of the Lease commencement date occurs, or subsequent anniversaries if the term of the Lease is renewed or extended. 1. 7 I case Tenn. The term of this I.ease shall commence on the date of Lease or Lease commencement date and shall continue in full force and effect until December 31, 2047, unless terminated sooner in accordance with the terms of this Lease, and includes any period in· which the term of the Lease is renewed or extended in accordance with the terms of this Lease. 1.8 Lease Year. The term •tease year• means each consecutive twelve-month (12) period during the Lease term provided that the first Lease year commences on the Lease commencement date, which is the date of Lease, and ends on the last day of the eleventh (11th) calendar month thereafter; the second and each succeeding Lease year commences on the first day of the next calendar month; and the last Lease year ends on the Lease expiration date or earlier date of termination. 1.9 Operation. "~ration" refers to Historical Society's obligation to complete the pre-use restorations such that Historical Society is in actual use and operation of the Premises as 2 ---------------------------------------Item 8.h. - Page 28 L_ ______ _ a History Center and Museum that is open to the public within a specified time period after the Lease commencement date. 1.10 Premises. The Premises refers to the building and real property located at 126 South Mason Street in the City and which is the subject of this Lease as more specifically described below. 1.11 Presence. Presence, for purposes of this Lease, refers to Historical Society's obligation to employ reasonable means or methods to establish its existence at the Premises to show that the Premises ate no longer unoccupied and unused. 1.12 Pre-Use Restorations. Pre-use restorations means those initial improvements that are required to be made to the Premises in order for the Premises to be restored and rehabilitated in order to permit the actual use and operation of the Premises as a History Center and Museum that is open to the public. ARTICLE 2. REAL PROPERTY, BUILDING, AND PREMISF.S. 2.1 Date of Vase. The Lease shall commence on June 1, 1997. 2.2 Name of landlord and Tenant. The landlord is the City of Arroyo Grande and the tenant is the South County Historical Society. 2.3 Buildin& And J>remises. The building is the certain one story building located at 126 South Mason Street in the City of Arroyo Grande, County of San Luis Obispo, State of California, together with the lands on which ·the building stands, described in Exhibit •A• attached hereto and incorporated herein by this reference. _ 2. 4 Present Condition of Buildine and Premises. Historical Society represents that it has conducted an inspection and examinBtion of the Premises that are the subject of this Lease and acknowledges that the building requires improvements to make the building fit for use and operation of the building as a History Center and Museum that is open to the public. Historical Society accepts the Premises in their present condition and agrees to rehabilitate the Premises so that they are in suitable shape and condition for occupancy and operation by Historical Society as specified herein. 2.4.1 As-Is Condition. Historical Society accepts the Premises as-is, in their present condition or state as of the date of Lease, including any and all patent or latent defects, without any :representation or warranty, ~ or implied in fact or by law, by City and without recourse to City as to the nature, condition, or usability of the Premises. 2.5 Lease of 'Premises. In considerati~n of the rents, covenants, and agreements contained in this Lease and to be observed and performed by Historical Society, City leases to 3 ------------=-------Item 8.h. - Page 29 Historical Society and Historical Society rents from City the Premises located at 126 South Mason Street in the City of Arroyo Grande, California. 2.6 Extemrion of Jase Tenn. This Lease may be renewed or extended for sucCeeding terms of ten (10) years each, by the written agreement of the ·parties executed at least thirty (30) calendar days before expimtion of the twenty (20) year Lease term. Nothing in this Lease shall be interpreted as requiring either party to renew or extend this Lease. 2. 7 Re.wyation of Ri&hts. City reserves all rights in the economic value of the leasehold, and all rights reserved to the City by operation of law. ARTICLE 3. RENT AND ADDmONAL RENT. 3.1 Base Rent. Historical Society shall pay to City on or before the last business day of the first month of each Lease year a base rent in the sum of One Dollar ($1.00) per year for each year of the Lease tenn. 3.2 Additional Rent.. In addition to the base rent, Historical Society shall pay an additional rent comprised of the payment of all utilities (Arti~le 8), payment of assessment and possessory interest taxes (Article 9), and the payment of insurance (Article 11). ARTICLE 4. USE. 4.1 Pennitted Use. During the Lease tenn, Historical Society shall use the Premises solely for the purpose of operating a History Center and Museum open to the public, and for such other uses generally appurtenant to the business of a public museum and gardens. In addition to regular operating hours of the History Center and Museum, Historical Society may use the Premises for special openings and events relating to historical and community events. Historical Society shall provide City with a yearly calendar of events. Historical Society shall not use or pennit the Premises to be used for any other purpose without City's prior written consent, which may be granted or withheld in City's sole discretion. ARTICLES. CITY'S ACC~S AND USE OF PREMIS~. 5 .1 City's Ri&ht of Access to Premises. City and its agents shall have the right at all reasonable times to enter the Premises to perform functions, including, but not limited to: inspect the Premises; show the Premises to prospective purchasers, mortgagees, or tenants; serve, post, · and keep posted notices required by law or that City considers nee~ for the protection of City or the Premises; inspect the Premises for any purpose connected with the care and management of the Premises; perform services required of City; take possession due to any breach of this Lease; perform any covenants of Historical Society that Historical Society fails to perform, or for any other purpose reasonably connected with City's interest in the Premises. 4 Item 8.h. - Page 30 n \ ' ._. 5.2 City's llie of Premises. City may use the gardens for functions, activities, or meetings of the City on mutually agreed upon dates and times by requesting the same from Historical Society, whose consent to such use by City shall not be unreasonably withheld. ARTICLE 6. SIGNS. 6.1 Sip.s. All permanent signs and graphics of every kind visible from public view, corridors, or the exterior of the Premises will be subject to city's prior written approval and will be subject to any applicable governmental laws, ordinances, and regulations. Historical Society must remove all signs and graphics prior to the termination of this Lease. Insta11ations and removals must be made in a manner so as to avoid injury or defacement of the Premises. Historical Society must repair any injury or defacement, including, without limitation, discoloration caused by installation or removal at its sole cost and expense. Historical Society signs shall not be considered a permanent improvement for purposes of Article 13. ARTICLE 7. PRE-USE RESTORATIONS. In addition to the improvements set forth in Article 10, Historical Society shall perform the following pre-use restorations: 7 .1 Immediate Presence. Historical Society shall make pre-use restorations to the Premises, which are presently not occupied, prior to actual use and operation of the Premises as a History Center and Museum. The parties acknowledge that Historical Society may not be able to commence work on all pre-use restorations on the Lease commencement date, and therefore, there may be a delay between the date of Lease and the date of operation. In order to discourage illegal entries and vandalism, Historical Society shall establish an immediate presence of the Premises on the date of Lease, but in no event more than thirty (30) calendar days from the date of Lease. 7.2 Buildjn~ and Premises Inspection. Historical Society acknowledges that the Premises do not presently satisfy current building codes. Historical Society shall, at its sole expense, cause licensed persons to inspect for termites, perform all other necessary inspections of the Premises, and make improvements to any and all defects, including, but not limited to, the roof and windows of the Premises, to assure that the Premises are in good order. 7 .3 Lawns and Gantens. Historical Society shall, at its sole expense, develop and implement a master plan for heritage gardens that may include memorial trees, bushes, benches, tables, a guebo, and other garden adornments or landscaping that is suitable for use for a public museum. The master garden plan shall first be approved by the City in writing, and such approval by the City shall not be unreasonably withheld. Historical Society shall, at its sole expense, install a sign on the front lawn of the Premises to identify the History Center and Museum in accordance with Article 6. Historical Society shall, at its sole expense, maintain the exterior portions of the 5 ----------------- I I -----_J Item 8.h. - Page 31 c Premises, including the heritage gardens and appurtenances. The City shall continue to maintain the existing lawn and irrigation system. 7.4 Security Measures: Fire, Theft. and YandaUsm pmreajm. Historical Society shall install, at its sole expense, equipment to provide detection for tire, theft, and vandalism of the Premises, including, but not limited to, the installation of smoke detectors, a security alarm, outdoor sensor lights, and replacement of, if necessary, locks on doors and windows. 7.5 Utility Equipment. City does not guarantee the condition and efficiency of equipment used for all utilities, including, but not limited to the boilers, furnaces, hot water heaters, electrical wiring, electrical units, electrical circuit boxes, water meters, plumbing and pipes, or any other equipment used for utility services, and makes no representation or warranty, express or implied in fact or by law as to the nature, condition, or usability of such equipm~t. Historical Society shall cause the inspection of all equipment used for utilities to determine the useability of the equipment and the nature and extent of improvements thereto. Historical Society is solely responsible for the purchase, cleaning, and improvement of all such equipment or instruments needed to enable the use of utilities in good working order. 7. 6 Clean-Up. Historical Society shall promptly clean up the Premises to place the Premises in a condition suitable for use as a public museum. Such clean up activities include, but are not limited to, removing debris and painting walls in need of paint. 7. 7 Ap,pmyals. Historical Society shall first obtain .the written approval of City before commencing improvements to the Premises, and such approval by City shall not be unreasonably withheld. The City's approval is required for all of the plans and specifications for all improvements. 7. 8 Completion and Qperatjon. Historical Society shall cause work on the pre-use restorations to be diligently commenced and pursued without unnecessary interruption, and shall cause the completion of such pre-use restorations of the History Center and Museum so that it is ready for operation on or before five (5) years from the date of Lease, it being the intention of the parties that Historical Society may have a reasonable period of time after obtaining full and complete possession of the Premises within which to complete pre-use restorations of the Premises. Completion means that work on the pre-use restorations shall be substantially completed in accordance with the approved plans and specifications, except for incomplete work and defects that do not unreasonably interfere with Historical Society's use of the Premises as a museum open to the public. All pre-use restorations shall be perfonned in accordance with Article 10. Historical Society shall furnish City with receipts for all materials used and work performed on the Premises. Historical Society's failure to comply with these completion requirements shall immediately terminate this Lease. 6 Item 8.h. - Page 32 r--. . ' ·-· ARTICLE 8. UTILI'fIFS. 8.1 Payment of Utility Services as Additional Rent. Historical Society shall initiate, contract for, and obtain, in its name, all utility services required for the Premises, including gas, electricity, telephone, water, janitorial, trash removal, sewer, and any other utility used or consumed in the Premises during the Lease term. Historical Society shall pay, and hold City and the property of City free and harmless from, all charges for utility services as they become due as part of the rental of the Premises. All such charges shall be paid by Historical Society directly to the provider of the service and shall be paid as they become due and payable but in any event before delinquency. City may elect to terminate this Lease if Historical Society fails or refuses to pay the charges for utility servi-ces as assessed or incurred. ARTICLE .9. TAXF.s AND ASSF.sSMENTS. 9 .1 Payment of T.axa and Aswsments as Additional Rent. In the event that a tax or assessment is imposed on the Premises that 1'Clates to Historical Society's use of the Premises, the parties agree to meet and discuss a satisfactory means of paying the tax or assessment ARTICLE 10. IMPROVEMENTS. 10.1 Re.pairs and Maintenance. Historical Society has examined and inspected the Premises, and, by its entry of the Premises under this Lease, Historical Society acknowledges that the Premises are not in good order and repair. During the Lease term, Historical Society, at its own cost and expense and at no cost and expense to Gty, shall continuously and without exception repair, maintain, and make improvements to all portions of the Premises to ensure that all portions of the Premises are in a good order, condition, and repair in compliance with all laws and orders. 10.2 Consent Pmceclure. Historical Society shall include with this Lease an exhibit of planned pre-use repairs of the building for approval by the City's Building Division. 10.3 Manner of Construction. Historical Society shall make repairs or improvements in confonnance with City's construction rules and regulations. All work relating to any repair or improvement shall be done in a good and workmanlike manner, using materials equivalent in quality to those used in the construction of the initial improvements to the Premises. All work shall be diligently prosecuted to completion. 10.4 Covenant Apinst Liens. Historical Society shall submit to the City every six (6) months from the anniversary date of this Lease a list of planned repairs, renovations, and iestorations with exhibits, as deemed necessary, and in· no case shall changes in the Premises be made without the Historical Society providing notice to Oty. The City's Division of Building and Life Safety will endeavor to provide objections, concerns or approval within a twenty--one (21) day period. Historical Society shall not assume indebtedness for more than thirty (30) days for any materials, labor or contract. 1 Item 8.h. - Page 33 0 10.5 AsbMtos Notification. Historical Society acknowledges that City has advised Historical Society that the building contains, or, because of its age, may contain asbestos- containing materials (ACMs). Historical Society shall undertake the repairs and improvements in a manner that avoids disturbing any ACMs present in the building. If ACMs are likely to be disturbed in the course of such work, Historical Society shall encapsulate or remove the ACMs in accordance with an approved asbestos-removal plan and otherwise in accordance with all applicable environmental laws, including Health and Safety Code Sections 25915-25919.7. 10.6 Waiver of Duty to Keep J>remia Tenantahle. Historical Society hereby expressly waives the provisions of Civil Code Sections 1941 and 1942 and any other statute or law requiring City to put or maintain the leased Premises in a condition fit for human occupancy and to repair all subsequent dilapidad.on of the Premises that render them untenantable and granting Historical Society the right to offset against the rent due under the Lease expenditures by Historical Society for repairs or improvements. 10. 7 Enyiroomental CompliaJJCe. Historical Society shall comply with, and shall cause its agents, employees, representatives, contractors, subtenants, representatives, and invitees to comply with, all environmental laws relating to the Premises. Should a violation be discovered during or after the Lease term, Historical Society agrees to notify the City within three (3) calendar days of such discovery of any and all information of which Historical Society becomes aware that would indicate the potential existmc:e of any adverse environmental condition, mishap, or impact on Premises or noncompliance with any environmental laws, promptly undertake all steps necessary or appropriate to bring the Premises into compliance with all environmental laws at the sole cost and expense of Historical Society, and indemnify and hold City hannlea against any and all liabilities arising therefrom. The tenn •environmental laws• shall include all laws, statutes, regulations, ordinances, rules, decrees, orders, policies or other requirements of any federal, state, or local government authority with jurisdiction which relates to the quality of water, land, soils, air, fish, wildlife, arid other natural resources. 10. 8 CnitateraJ Esto.pJJCl. The judgment of any court of competent jurisdiction, or the admission of Historical Society in any judicial or administrative action or proceeding that Historical Society has violated any laws and orders shall be conclusive, between City and Historical Society, of that fact, whether or not City is a party to that action. or proceeding. ARTICLE 11. EXCULPATION, INDEMNmCATION, AND INSURANCE. 11.1 Definition of Histmica] Societ)' Parties and City Parties. The term •Historical Society parties" refers singularly and collectively to Historical Society and Historical Society's officers, members, agents, employees, and independent contractors as well as to all persons and entities claiming through any of these jJersons or entities. The term "City parties" refers singularly and collectively to City and the respective officers, representatives, agents, servants, employees, and independent contractors of these persons or entitles. 8 -------------------- i _______ _J Item 8.h. - Page 34 11.2 Exculpation. To the fullest extent permitted by law, Historical Society, on its behalf and on behalf of all Historical Society parties, waives all claims, in law, equity, or ·otherwise, against City parties and knowingly and voluntarily assumes the risk of, and agrees that City parties shall not be liable to Historical Society parties, for any of the following: injury to or death of any person; or loss of, injury or damage to, or destruction of any tangible or intangible property, including the resulting loss of use, economic losses, and consequential or resulting damage of any kind from any cause. City parties shall not be liable under this clause regardless of whether the liability results from any active or passive act, error, omission, or negligence of any of City parties; or is based on claims in which µability without fault or strict liability is imposed or sought to be imposed on any of City parties. This exculpation clause shall not apply to claims against City parties to the extent that a final judgment of a court of competent jurisdiction establishes that the injury, loss, damage, or destruction was proximately caused by City parties' fraud, willful injury to person or property, sole active· negligence, or violation of law. Such exculpation shall survive the expiration or earlier termination of this Lease until all claims within the scope of this exculpation clause are fully, finally, and absolutely barred by the applicable statutes of limitations. Historical Society acknowledges that this section was negotiated with City, that the consideration for it is fair and adequate, and that Historical Society had a fair opportunity to negotiate, accept, reject, modify, or alter il With respect to the exculpation provided in this Article, Historical Society waives the benefits of Section 1542 of the Civil Code, that provides that "a general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." 11.3 Insurance. · Without limiting Historical Society's indemnification of City, Historical Society shall procure and maintain, for the duration of the Lease, insurance against claims for injuries to persons or damages to property which may arise from or in connection with Historical Society's operation and use of the Premises. The cost of such insurance shall be borne by Historical Society. a. Minimum Scope of Insurance Coverage shall be at least as broad as: (1) Insurance Services Office Commercial General Liability coverage ("occurrence" form CG 0001); b. Minimum Limits of Insurance Historical Society shall maintain limits no less than: (1) General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is 9 -----------·· --~-------- I I ___ _! Item 8.h. - Page 35 used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit; c. Peductible., and Self-Insured Retentions Any deductibles or self-insured retentions must be declared to and approved by City. At the option of City, either: the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects City, its officers, officials, employees and volunteers; or Historical Society shall procure a bond guarant.eeing payment of losses and related investigations, claim administration and defense expenses. d. Other Insurance Provisions The general liability policy is to contain, or be endorsed to contaµl, the following provisions: · (1) City, its officers, officials, employees and volunteers are to be covered as insureds as respects: liability arising out of premises owned, occupied or used by Historical Society. The coverage shall contain no special limi1ations on the scope of protection afforded to City, its officers, officials, employees or volunteers; (2) Historical Society's insurance coverage shall be primary insurance as respects City, its officers, officials, employees and volunteers. Any insurance or self-insurance maintained by City, its officers, officials, employees or volunteers shall be excess of Historical Society's insurance and shall not contnbute with it; (3) Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to City, its officers, officials, employees or volunteers; (4) Coverage shall state that Historical Society's insurance shall apply separa!ely to each insured against whom a claim is made or suit is brought, except with respect to the limits of the insurer's liability; (5) :Each insurance policy tequired by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled, reduced in coverage or in limits except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to City. 10 Item 8.h. - Page 36 _ _., e. Acceptability of Insurers Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:V. f. Verification of Coveraie Historical Society shall furnish City with original endorsements effecting coverage required by this clause prior to commencing any work on or occ1ipying the Premises. The endorsements are to be signed by a person authori7.ed by that insurer to bind coverage on its behalf. The endorsements are to be on forms provided by City. All endorsements are to be received and approved by City before work commences. As an alternative to City's fonns, Historical Society's insurer may provide complete, certified copies of all required insurance policies, including endorsements effecting the coverage required by these specifications. g. Awe&att Limits/Blanket Coyera&'e If any of the required insurance coverage's contain aggregate limits, or apply to other operations or tenancy of Historical Society outside this Lease, Historical Society shall give City prompt, written notice of any incident, occurrence, claim, settlement or judgment against such insurance which in Historical Society's best judgment will diminish the protection such insurance affords City. Further, Historical Society shall immediately take all steps to restore such aggregate limits or shall provide other insurance protection for such aggregate limits. h. Modification of Caveraie City :reserves the right at any time during the term of this Lease to change the amounts and types of insurance iequired hereunder by giving Historical Society ninety (90) days advance written notice of such change. i. Failure to Procure Insurance Within the foregoing constraints, Historical Society's failure to procure or maintain required insurance or a self-insurance program shall constitute a material breach of contract under which City may immediately terminate this Lease or, at its discretion, procure or renew such insurance to protect City's interests and pay any and all premiums in connection therewith, and i:ecover all monies so paid from Historical Society. 11 Item 8.h. - Page 37 j. Undedyin& Insurance Historical Society shall be responsible for requiring indemnification and insurance from its employees receiving mileage allowance, consultants, agents and subcontractors, if any, in the same amounts and including the same terms as specified herein, to protect Historical Society's and City's interests, and for ensuring that such persons comply with any applicable insurance statutes. k. Personal Pmperty of HistoricaJ Society City shall continue to provide p1operty insurance for the Premises. Said property insurance ~all not provide coverage for Historical Society's personal property. Historical Society waives any claim against the City for or relating to damage to its personal property. 11.4 Indenmification. Historical Society, its Board of Directors, and the directors individually shall, at Historical Society's sole expense and with counsel reasonably acceptable to City, indemnify, defend, and hold harmless the City and City parties from and against any and all claims from any cause, that arise out of, result from, or relate to this Lease, the tenancy created under this Lease, or the Premises, including the use or occupancy, or manner of use or occupancy, of the Premises by His«;rical Society parties; any negligent act of Historical Society parties or of any invitee, guest, or licensee of Historical Society, or any other person authomed by Historical Society to use the Premises or any portion thereof; Historical Society's conducting of its business; any improvements, activities, work, or things done, omitted, permitted, allowed, or suffered by Historical Society parties in, at, or about the Premises, including the violation of or failure to comply with any applicable laws and orders in existence on the date of Lease or enacted, promulgated, or issued after the date of Lease; and any breach or default in perfonnance of any obligation of Historical Society's part to be pelfonned under this Lease, whether before or during the Lease tenn or after its expiration or earlier termination. The intention of the parties being that with respect to compliance with laws and orders that Historical Society, during the Lease term, shall discharge and perform all the obligations of City, as well as all the obligations of Historical Society, arising as stated in Article 10, and indemnify City therefrom, so that at all times the rental of the Premises shall be net to City without deduction or expenses on account of any such laws and orders. 11.5 nCfinition of Claims. For purposes of this Lease, "claims" means any and all claims, losses, costs, damage, expenses, liabilities, liens, actions, cause of action (whether in tort or contract, law or equity, or otherwise), charges, assessments, fines, and penalties of any kind (including consultant and expert expenses, court costs, and attorney fees as defined in this Lease). 11.6 I)!PC of Injury or Loss Defined. This indemnification extends to and includes claims for injury to any persons (including death at any time resulting from that injury); loss of, injury or damage to, or destruction of property (including all loss of use resulting from that loss, 12 Item 8.h. - Page 38 injury, damage, or destruction); and all economic losses and consequential or resulting damage of any kind. 11. 7 Etfe&t of Ne&Ji&ence, Strict Llahi1ity. or Willful Misronduct. Such indemnification shall apply tegardless of the active or pas.Uve negligence of City parties and regardless of whether liability without fault or strict liability is imposed or sought to be imposed on City parties. The indemnification shall not apply to the extent that a final judgment of a court of competent jurisdiction establishes that a claim against one City party was proximately caused by the sole active negligence or willful misconduct of that City party. In that event, however, this indemnification shall remain valid for all other City parties. 11.8 Smyiyal of In<iemnifiglfion. The clauses of this Article shall survive the expiration or earlier termination of this Lease until all claims against City parties involving any of the indemnified matters are fully, finally, and absolutely barred by the applicable statute of limitations. ARTICLE 12. ASSIGNMENT. 12.1 AJlproyal of Assi&11ment. Historical Society shall not, without the City's prior written consent, permit mignment of any of its rights, delegation of any of its duties, assignment of all or any interest in this Lease, by operation of law or otherwise; sublet all or any part of the Premises or any right or privilege appurtenant to the ~; or suffer any other person, other than City's agents and servants, to occupy or use all or any part of the Premises. In City's sole and absolute discretion, City may withhold its consent to any assignment, sublease, occupation, or use. City shall not be bound by any standard of reasonableness in exercising this discretion. Any assignment, subletting, occupation, or use by another person or entity without City's prior written consent shall be void and shall, at City's option, terminate this Lease. If Historical Society requests City to consent to a proposed assignment, subletting, occupation, or use by any other person or entity, Historical Society shall pay to City, whether or not consent is ultimately given, City's actual attorney fees and costs, as defined in this Lease, incurred in connection with each such request City's consent to one assignment, subletting, occupation, or use by any other person or entity shall not be deemed to be a consent to any subsequent assignment, subletting, occupation, or use by another person or entity. As used in this provision, •amgnment• and "delegation• shall mean any sale, gift, pledge, hypothecation; encumbrance, or other transfer of all or any portion of the rights, obligations, or liabilities in or arising from this U8Se to any person or entity, whether by operation of law or otherwise, and regardless of the legal fonn of the transaction in which the attempted transfer occurs. 12.2 Successors and Assi&Jls. This Lease shall be binding on and shall inure to the benefit of the parties and their respective legal representatives, successors, and assigns. 13 ---·-------------------Item 8.h. - Page 39 0 ARTICLE 13. TERMINATION OF LEASE BEFORE EXPIRATION O:Jr LEASE TERM. 13.1 Grounds for Termination. 13.1.1 Breach of Tease. Either party to this Lease may terminate during this time period if the other party has breached a term, condition, or covenant of this Lease, notwithstanding that the Lease does or does not expresdy provide that tennination is a remedy for a breach of a particular tenn, condition, or covenant. There is no penalty for such termination. 13.2 Tennjnation Procedure. The party exercising the option to terminate shall provide written notice with reason of the intent to terminate to the other party at least ninety (90) calendar days prior to the date of the intended termination. 13.3 City's Options at Termination. Upon termination of the Lease by City, and excluding termination by Historical Society'~ breach of the Lease as set forth in subsection 13.1.1, the natural expiration of the Lease tenn or failure to renew or e_xtend, City shall either purchase the improvements made by Historical Society as set forth in subsection 13.3 .1 or, with the written agreement of Historical Society, sell the building to Historical Society and have Historical Society relocate the building to another site or, with the written agreement of Historical Society, pursue any other reasonable method of disposition of the improvements made by Historical Society. 13.3.1 City's Purchase of Impmyements Upon Tennination. Upon termination of the Lease by City, and excluding termination by Historical Society's breach of the Lease as set forth in subsection 13.1.1., the natural expiration of the Lease tenn, City shall reimburse Historical Society for the actual out of pocket cost of the permanent improvements that Historical Society made to the Premises. For purposes of this Article, "permanent improvements" shall mean those improvements that are affixed or attached to the Premises and not removable without material injury to the Premises. 13.3.2 Historical Society's Removal of the Buildin& to Another Site. Upon termination of the Lease by City, and excluding termination by Historical Society's breach of the Lease as set forth in subsection ·13.1.1., the natural expiration of the Lease term or failure to renew or extend, in the event that City desires the building to be removed from the real property, City may allow Historical Society to purchase the building at an agreed upon price and· then remove the building, at Historical Society's sole expense, to another site. 13.4 Ri&hts and Obli&fllions Case. All rights and obligations of the parties shall cease on tennination of this Lease unless otherwise provided by the terms of this Lease. Neither party shall be liable to the other for damages of any kind, including without limitation incidental or consequential damages, resulting from the termination of this Lease. 14 _J Item 8.h. - Page 40 .!") ' - ARTICLE 14. SURRENDER OF PREMIS~. 14.1 Remoyal of Historical Societ)' Property. On the expiiation or earlier tennination of the Lease term, Historical Society shall quit the Premises and surrender possession to City. On expiration or termination, City shall have the option to require Historical Society to, without expense to City, remove or cause to be removed from the Premises: all debris and rubbish; any items of personal property owned by Historical Society; and, any improvements that Historical Society is required to remove. Historical Society shall, at Historlcal Society's sole expense, repair all damage or injury that may occur to the Premises caused by Historical Society's removal of those items and shall restore the Premises to a good condition. ARTICLE 15. DEFAULT. 15 .1 Acts of Default. Any of the following events or occurren~ shall constitute a material breach of this Lease by Historical Society and, after the expiration of any applicable grace period, shall constitute an event of default (each an event of default): 15 .1.1 Failure to Pay Costs or Cbames. The failure by Historical Society to pay any amount in full when it is due under the Lease. 15.1.2 Failure to Pedonn Obliption. The failure by Historical Society to perform any obligation under this Lease, which by its nature Historical Society has no capacity to cure. 15.1.3 Failure to perform After Notification. The failure by Historical Society to perform any other obligation under this Lease, if the failure has continued for a period of ten (10) days after City demands in writing that Historical Society cure the failure. If, however, by its nature the failure cannot be cured within ten (10) days, Historical Society may have a longer period as is neresc;ary to cure the failure, but this is conditioned upon Historical Society promptly commencing to cure within the ten (10) day period and thereafter diligently completing the cure. Historical Society shall indemnify and defend City against any liability, claim, damage, loss, or penalty that may be threatened or may in fact arise from that failure during the period the failure is uncured. 15.1.4 AssilPJment. Any of the following: A general assignment by Historical Society for the benefit of Historical Society's creditors; any voluntary filing, petition, or application by Historical Society under any law relating to insolvency or bankruptcy, whether for a declaration of bankruptcy, a reorganization, an arrangement, or otherwise; the abandonment, vacation, or surrender of the Premises by Historical Society without City's prior written consent; or the dispossession of Historical Society from the Premises (other than by City) by process of law or otherwise; 15 .1.5 Appointment of Trustee or Receiver. The appointment of a trustee or receiver to take possession of all or substantially all of Historical Society's assets; or the 15 Item 8.h. - Page 41 I -0 attachment, execution or other judicial seizure of all or substantially all of Historical Society's assets located at the Premises or of Historical Society's interest in this Lease, unless the appointment or attachment, execution, or seizure is discharged within thirty (30) days; or the involuntary filing against Historical Society, or any general partner of Historical Society if Historical Society is a partnership, of: a. A petition to have Historical Society, or any partner of Historical Society if Historical Society is a partnership, declared bankrupt, or b. A petition for reorgani7.ation or arrangement of Historical Society under any law relating to insolvency or bankruptcy, unless, in the case of involuntary filing, it is dismissed within sixty (60) days; 15 .1.6 Abandonment. The abandonment of the Premises by Historical Society. 15 .1. 7 Waiver. Waiver by City of any defiwlt in performance by Historical Society of any of the tenns, promises, or conditions contained herein shall not be deemed a continuing waiver of the same or any subsequent default In the event any officer, agent or employee of City shall consent to an act or failure to act in violation of any provisions of this Lease, such act or failure to act shall be immediately corrected upon a request from City in writing. 15.2 Remedies op Event of Default. If an event of Default occurs, the nondefaulting party shall have the right to terminate the Lease and to pursue any remedy now or later available to the nondefaulting party at law or in equity. ARTICLE 16. EXPIRATION OF THE LEASE TERM. 16.1 Qwnership of Improvements by City. Upon the expiration of the Lease term, any and all improvements. made to the Premises shall, without compensation to Historical Society, then automatically and without any act of Historical Society or any third party become the City's property. Historical Society shall surrender such improvements to City free and clear of any and all liens and encumbrances. Historical Society agrees to execute, acknowledge, and deliver to City any instrument requested by City as necessary in City's oi>inion to perfect City's right, title, and interest t9 the Premises, including improvements. ARTICLE 17. ARBITRATION. 17 .1 Disputes Subject to Arbitration. Any controversy or dispute between the parties to this Lease may be submitted to an aibitralion panel, and such arbitration shall comply with and be governed by the provisions of the California Arbitration Act, Sections 1280 et seq. of the California Code of Civil Procedure, to the extent that such provisions have not been modified pursuant to this Lease. The losing party shall pay all costs and attorney fees, as defined in this Lease. 16 -----------. Item 8.h. - Page 42 · .... _.. 17.2 Rules Goyemin& Arbitration. 17.2.1 Limited Djscoyecy. No more than thirty (30) calendar days before the arbitration, a party may serve a document request calling for any document that would be discoverable in civil litigation. The party served with this request shall deliver the requested documents and any objections within five (S) business days. The arbitrators shall resolve any dispute over the exchange of documents as they would be resolved in civil litigation. Thereafter, each party may take no more than three (3) depositions, each of which shall last no more than four (4) hours each. The arbitrators shall resolve any dispute over the depositions as they would be resolved in civil litigation. 17 .2.2 Arbitrators' Powers. The arbitrators shall have the same powers as those of a judge of the superior court of the State of California, and shall render a decision as would a judge of a superior court of the State of California in accordance with the Jaw and the facts. 17.2.3 Written Decision. Within fifteen (15) days after completion of the arbitration, the arbitration panel shall submit a tentative decision in writing, issuing findings of fact and specifying the reasoning for the decision and any calculations necessary to explain the award. Each party shall have fifteen {15) days in which to submit written comments to the tentative decision. Within ten (10) days after the deadline for written comments, the arbitration panel shall mail a written decision of the final award to each party. 17 .2.4 .QWa. F.ach party to the arbitration shall pay a pro rata share of the arbitrators' expenses and fees. The arbitrators shall award the prevailing party its expenses and fees of arbitration, including reasonable attorney fees, as defined in this Lease. If it becomes necessary to enforce an award made by the arbitrators or a judgment based on such award, the prevailing party shall be entitled to attorneys' fees, as defined in this Lease. 17 .2.5 Iudicial Review of Awarcl. The parties shall be entitled to judicial review of an arbitrator'~ error or mistake of fact or law, and to judicial review of any issue that would have been entitled to judicial review if such issue had been addressed or decided by a superior court of the State of California. ARTICLE 18. ATIORNEYS' ~. 18.1 Attorneys' Fees. Costs, and Expenses. In any litigation, arbitration, or other proceeding in law or equity by which one party to this Lease seeks to enforce its contract rights under this Lease, to resolve an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Lease, to seek a declaration of any rights or obligations under this Lease, or to interpret the provisions of this Lease, the prevailing party shall be entitled to recover from the losing party actual attorneys' fees incurred to resolve the dispute and to enforce the final judgment, awaid, decision, or order and such fees, costs, .or expenses shall be in addition to any other relief to which the prevailing party may be entitled. The award of attorneys' fees 17 Item 8.h. - Page 43 0 shall be deemed to have accrued upon the commencement of the action and shall be paid whether or not such action is prosecuted to judgment, award, decision, or order. "Proceeding" shall mean any action, suit, claim, arbitration, alternative dispute resolution mechanism, investigation, administrative hearing, or any other proceeding, including but not limited to civil, criminal, administrative, regulatory, or investigative. The attorneys' fees to be awarded the prevailing party may be determined by the court or other decision maker in the same action or proceeding or in a separate action brought for that purpose. Any judgment, award, decision, or order entered in such action or proceeding shall contain a specific provision providing for the recovery of actual attorneys' fees incurred in enforcing such judgment, award, decision, or order. The award of attorneys' fees shall not be computed in accordance with any court schedule, but shall be made so as to fully reimburse the prevailing party for all attorneys' fees, paralegal fees, and expenses actually incuned in good faith, regardless of the size of the judgment, award, decision, or order, it being the intention of the parties to fully compensate the prevailing party for all actual attorneys' fees, paralegal fees, and costs and expenses paid or incurred in good faith. This provision applies to the entire Lease. · ARTICLE 19. CONDEMNATION. 19.1 Condemnafinp Sums. In the event that the leased Premises shall be taken, in whole or in part, through the exercise of any power of eminent domain exercised by any federal, state, or local municipality having the power thereof, the Lease term shall terminate and expire on the date of such taking and any sums paid by such condemning authority shall be paid to the City. The Historical Society shall be reimbursed for the actual out of pocket cost of the permanent improvements made to the Premises. ARTICLE 20. MISCELLANEOUS. 20.1 Notice.,. To be effective, all notices, requests, demands, and other communications required or permitted under this Lease shall be in writing and shall be delivered either in person or by certified mail, postage prepaid, return receipt requested. Notice is deemed effective on delivery if served personally on the party tO whom notice is to be given and delivery is confirmed by a receipt . Notice is deemed effective on the second day after mailing if mailed to the party to whom notice is to be given, by first class mail, registered or certified, return receipt reques~, postage prepaid, and properly addressed as set forth below. Any correctly addressed notice that is refused, unclaimed, or undeliverable because of an act or omission of the party to be notified shall be deemed effective as of the first date that said notice was refused, unclaimed, or deemed undeliverable by the postal authorities. The addresses for purposes of giving notice are as set forth below but each party may change its address by written notice in accordance with this paragraph. HISTORICAL SOCIETY: South County Historical Society P.O. Box 633 Arroyo Grande, CA 93421-0633 18 Item 8.h. - Page 44 0 ,_ CITY: City of Arroyo Grande Attn: City Manager P.O. Box 550 Arroyo Grande, CA 93421-0550 20.2 Discrimination Prohibited. No person shall on the grounds of race, religion, color, national origin, or sex, be excluded from participation in, be denied the benefit of, or be subjected to discrimination under this program/project. For purposes of this Section S70.60l(b) d~fines specific discriminatory actions which are prohibited and corrective action which shall be taken in situation as defined therein. 20.3 Nondiscrimination, Equal Employment Practi~. and Affirmative Action Pqram. Historical Society shall comply with the nondiscrimination laws of the United States of America, the State of California, and Oty in performing this Lease, Historical Society shall not discriminate in its employment practices against any employee, or applicant for employment because of such person's race, religion, national origin, ancestry, sex, age, or physical handicap. 20.4 No Relocation Assistance. Historical Society acknowledges that it is occupying property of a public agency on a temporary basis. Upon termination of this Lease, upon its expiration or otherwise, Historical Society shall not be entitled to receive any compensation or relocation assistance or benefits which may be provided by the Uniform Relocation Acts or other laws of the United States or of the State of California. All improvements constructed on the Premises shall, upon expiration or sooner termination of this Lease, become the sole property of City. 20.5 No Mortp.&in& I casehold. Historical Society shall have no right to subject the leasehold estate or the Premises to any mortgage, deed of trust or other security interest. 20.6 Time of 'Essence. Time is of the essence in this Lease. 20. 7 Effectiveness. This Lease shall be effective only when signed by both parties to the Lease and approved by formal action of the City Council of City. 20.8 Neressaxy Acts/Other Instruments. The parties shall at their own cost and expense execute any and all other documents and instruments and shall take any and all actions as may be reasonably required, necessary, or appropriate to evidence or carry· out the intent and purposes of this Lease. 20.9 Good Faith. F.ach party to this Lease shall act in good faith in performing their respective obligations set forth in this Lease. 20.10 Waiver. The waiver of any breach of any condition, covenant, tenn, or provision of this Lease by any party to this Lease shall not be deemed to be a waiver of any preceding or 19 Item 8.h. - Page 45 subsequent breach under the Lease, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver. 20.11 Authorizations. All officers and individuals executing this and other documents on behalf of the respective parties do hereby certify and warrant that they have the capacity and have been duly authoriz.ed to so execute said documents on behalf of the entity so indicated. Each signatory shall also indemnify the other party to this Lease, and hold them harmless, from any and all damages, costs, attorneys' fees, and other expenses, if the signatory is not so authoriz.ed. 20.12 Headin2s and Captions. The captions and headings of this Lease are inserted for convenience only and shall not be deemed a part of this Lease and shall not be used in interpreting this Lease or in determining any of the rights or obligations of the parties to this Lease. 20.13 Word JJsa&e. Unless the context clearly requires otherwise, the plural and singular words shall each be deemed to include the other; "shall," "will," or "agrees" are mandatory, and "may" is pennissive or discretionary; "or• is not exclusive; the masculine, feminine, and neuter genders shall each be deemed to include the others; and "includes" and "including" are not limiting. 20.14 Seyerabjlity. If any term, provision, covenant, or condition of this Lease shall be or become illegal, invalid, null, void, unenforceable, or against public policy, in whole or in part, or shall be held by any court of competent jurisdiction to be illegal, invalid, null, or void, or against public policy, the term, provision, covenant, or condition shall be deemed severable, and the remaining provisions of this Lease shall remain in full force and effect and shall not be affected, impaired, or invalidated. The term, provision, covenant, or condition that is so invalidated, voided, or held to be unenforceable shall be modified or changed by the parties· to the extent possible to carry out the intentions and directives set forth in this Lease. 20.15 Counterpart Execution. This Lease may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. 20.16 Choice of Law. This Lease shall be governed by and construed and enforced in accmdance with the laws of the State of California, with venue for all purposes to be proper only in the County of San Luis Obispo, State of California. 20.17 Entire A21=ment. This Lease constitutes the final, complete, and exclusive statement of the terms of the agreement between the parties pertaining to the lease and supersedes all prior and contemporaneous agreements, promises, representations, warranties, understandings, or undertakings by either of the parties, either oral or written, of any character or nature. No party has been induced to enter into this Lease by, nor is any party relying on, any representation or warranty outside those expressly set forth in this Lease. 20 -----------------------------Item 8.h. - Page 46 ' - 20.18 Amendments. This Lease may be altered, amended, modified, or supplemented only by an instrument in writing, executed by tl)e parties to this Lease and by no other means. No alteration, amendment, modification, or supplement of this Lease shall be binding unless it is in writing and signed by both parties. F.ach party waives their future right to claim, contest, or assert that this Lease was modified, canceled, superseded, or changed by any oral agreement, course of conduct, waiver, or estoppel. 20.19 Ambi&Jlities. :Each party and its counsel have participated fully in the review and revision of this Lease. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party ·shall not apply in interpreting this Lease. IN WITNF.sS WHEREOF, City has executed this Lease with the approval of its City Council, and caused its official seal to be affixed and Historical Society has executed this Lease in accordance with the authorization ·of its Board of Directors and has caused its official seal to be affixed. soum J::]HISTORICAL SOCIETY By: ~ (NamL:,/,J, (Title) ATI'EST: fl a.~-NANc~, City Clerk APPROVED AS TO FORM: LYON & CARMEL ·~~ By: ;_j _ ~ lillOthi:~ City Attorney 21 --------------------------Item 8.h. - Page 47 .,,_, THIRD AMENDMENT TO LEASE AGREEMENT [SANTA MANUELA SCHOOL] THIS THIRD AMENDMENT TO LEASE AGREEMENT is made and entered into this 22nd day of April, 2008, by and between the CITY OF ARROYO GRANDE ("CITY"}, a municipal corporation duly organized and existing pursuant to the Constitution and laws of the State of California, and SOUTH COUNTY HISTORICAL SOCIETY (HISTORICAL SOCIETY"), a California nonprofrt corporation, with reference to the following facts and intentions: WHEREAS, the parties entered into a Lease Agreement dated November 30, 1998, (hereinafter referred to as the "Lease Agreement''); and WHEREAS, the parties entered into a First Amendment to the Lease Agreement on June 30, 1999; and WHEREAS, the parties entered into a Second Amendment to the Lease Agreement on April 10, 2001; and WHEREAS, the parties do hereby desire to further amend the Lease Agreement. NOW, THEREFORE, in consideration of the premises herein contained, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is agreed by and between the parties as follows: 1. Section 3.2 of the Lease Agreement is hereby deleted in its entirety and replaced as follows: Section 3.2 Additional Rent. In addition to the base rent, Historical Society shall pay an additional rent comprised of the payment of all utilities (Article 5) unless waived in writing by City, payment of assessment and possessory interest taxes (Article 6), and the payment of insurance (Article 7). 2. Section 5.1 of the Lease Agreement is hereby deleted in its entirety and replaced as follows: Section 5.1 Payment of Utility Services as Additional Rent. Historical Society shall initiate, contract for, and obtain, in its name, all utility services required for the Premises, including gas, electricity, telephone, water, janitorial, trash removal, sewer, and any other utility used or consumed in the Premises during the Lease term. Historical Society shall pay, and hold City and the property of City free and harmless from, all charges for utility services as they become due as part of the rental of the Premises. All such charges shall be paid by Historical Society directly to the provider of the service and shall be paid as ATTACHMENT 3 Item 8.h. - Page 48 they become due and payable but in any event before delinquency. City, at its sole discretion, may waive charges for City water services, exclusive of Lopez charges, and for City sewer services, exclusive of South County Sanitation District charges. The decision to waive charges shall be made in the sole and absolute discretion of, and is subject to the prior written approval of the City Council. The decision to waive such charges may be rescinded at any time in the sole and absolute discretion of the City Council. City may elect to terminate this Lease if Historical Society fails or refuses to pay the charges for utility services as assessed or incurred. 3. Except as modified herein, the Lease Agreement, as amended, and each and every term and conditions thereof, shall remain in full force and effect. SOUTH COUNTY HISTORICAL SOCIETY: Title: ATTEST: Title: CITY OF ARROYO GRANDE: APPROVED AS TO FORM: ~zfuig TITHYJ MEL~ATTORNEY 2 Item 8.h. - Page 49 SECOND AMENDMENT TO LEASE AGREEMENT [SANTA MANUELA SCHOOL] THIS SECOND AMENDMENT TO LEASE AGREEMENT is made and entered into this /p7 # day of ftfei L , 2001, by and between the CITY OF ARROYO GRANDE ("CITY"), a municipal corporation duly organized and existing pursuant to the Constitution and laws of the State of California, and SOUTH COUNTY HISTORICAL SOCIETY ("HISTORICAL · SOCIETY"), a California nonprofit corporation, with reference to the following facts and intentions: WHEREAS, the parties entered into a Lease Agreement dated November 30, 1998 (hereinafter referred to as the "Lease Agreement"); and WHEREAS, the parties entered into a First Amendment to the Lease Agreement on June 30, 1999; and WHEREAS, the parties do ·hereby desire to further amend the Lease Agreement to include additional real property. NOW, THEREFORE, in consideration of the premises herein contained, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is agreed by and between the parties as follows: 1 . Exhibit "A" to the Lease Agreement is hereby deleted and replaced with Exhibit "1" attached hereto and incorporated herein by this reference. 2. Except as modified herein, all terms and co11ditions of the Lease Agreement, as amended, shall remain in full force and effect. SOUTH COUNTY HISTORICAL SOCIETY By: z;j~ (Name} (Title) ATTEST: ~tJ, ~-{J~,{ BOARD SRE RY Item 8.h. - Page 50 CITY OF ARROYO GRANDE By: =-I~ Mayor ATTEST: APPROVED AS TO FORM: LYON & CARMEL Item 8.h. - Page 51 EXHIBIT "1 " That certain real property in the City of Arroyo Grande, County of San Luis Obispo, State of California, described as follows: Lots 2 and 3 of Block 6 of the Short, Mason, and Whiteley Subdivision (127 and 133 Short Street), of the City of Arroyo Grande, County of San Luis Obispo, State of California, as per map filed in Book A, Page 48 of Maps in the Office of the County Recorder of said County. [Assessor Parcel Number 007-492-015] Item 8.h. - Page 52 FIRST AMENDMENT TO LEASE AGREEMENT [SANTA MANUELA SCHOOL] THIS FIRST AMENDMENT TO LEASE AGREEMENT is made and entered into this.3DTJf day of .:NrJe , 1999, by and between the CITY OF ARROYO GRANDE ("CITY"), a municipal corporation duly organized and existing pursuant to the Constitution and laws of the State of California, and SOUTH COUNTY HISTORICAL SOCIETY ("HISTORICAL SOCIETY"), a California nonprofit corporation, with reference to the following facts and intentions: WHEREAS, the parties entered into a Lease Agreement dated November 30, 1998 (hereinafter referred to as the "Lease Agreement"); and WHEREAS, the parties desire to amend the Lease Agreement. NOW, THEREFORE, in consideration of the premises herein contained, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is agreed by and between the parties as follows: 1 . Exhibit "A" to the Lease Agreement is hereby deleted and replaced with Exhibit "1" attached hereto and incorporated herein by this reference. 2. Except .as modified herein, all terms and conditions of the Lease Agreement shall remain in full force and effect. SOUTH COUNTY HISTORICAL SOCIETY By:_~~~~~- ( Name) (Title) ATTEST: ~~ BOA~ETARY Item 8.h. - Page 53 CITY OF ARROYO GRANDE By: ~(,,;;;/ __ M_l_C-HA-EL_A ..... ._LA-~-y""""'~~-A-Y_O_R ___ _ ATTEST: APPROVED AS TO FORM: LYON & CARMEL Item 8.h. - Page 54 EXHIBIT 1'1" That certain real property in the City of Arroyo Grande, County of san Luis Obispo, State of California, described as follows: Lot 2 of Block 6 of the Short, Mason, and Whiteley Subdivision (127 Short Street), of the City of Arroyo Grande, County of San Luis Obispo, State of California, as per map filed in Book A, Page 48 of Maps in the Office of the County Recorder of said County. [Assessor Parcel Number 007~492-015] Z VvulOYO\AGMTS\manuela lease.amd Item 8.h. - Page 55 LEASE AGREEMENT THIS LEASE ("Lease") is made and entered into this 30th day of November, 1998, in the City of Arroyo Grande, County of San Luis Obispo, California, by and between the CITY OF ARROYO GRANDE ("City"), a municipal corporation duly organized and existing pursuant to the Constitution and laws of the State of California, and SOUTH COUNTY HISTORICAL SOCIETY ("Historical Society"), a California non-profit corporation, with reference to the following facts and intentions: RECITALS A. City is the owner of certain real property located on the South bluff of the Arroyo Grande Creek between Mason, Nelson and Short Streets in the City of Arroyo Grande, State of California. B. City in 1997 leased a portion of this property to the Historical Society for it to manage and maintain the Heritage House museum for the benefit of the community. . C. Historical Society is the owner of the Santa Manuela school building which has important historical value for the community. For many years the school was located at the Lopez Lake recreational area, but its condition had deteriorated. In 1987 the Historical Society moved the school and restored it at a location on Stanley Avenue where it has been open for the public to tour and enjoy. D. City and Historical Society wish to move the school to the City's property on the creek bluff adjacent to the Heritage House museum where both buildings can conveniently be visited by the community. E. To accomplish this move, the parties agree that the Historical Society should lease the necessary property from the City. NOW, THEREFORE, IT IS AGREED as follows: ARTICLE 1. DEFINITIONS. The following terms shall, for all purposes of this Lease, have the following meaning as set forth below. 1. 1 Cit.¥. City has the meaning assigned thereto in the preamble hereto. 1.2 Historical Society. Historical Society has the meaning assigned thereto in the preamble hereto. 1 Item 8.h. - Page 56 1.3 Improvements. The term "improvements" or "improvement" includes, but is not limited to, restorations, alterations, rebuilding, additions, changes, repairs, upgrades, replacements, remodeling, reconditioning, or modifications of any and all portions of the Premises. 1.4 Laws and Orders. The term "laws and orders" includes all laws, statutes, ordinances, standards, rules, requirements, regulations, decrees, judgments, or orders now in force or hereafter enacted, promulgated, or issued by all federal, state, county, city, or other governmental agencies, courts, departments, commissions, boards, and officers. The term also includes government measures regulating or enforcing public access, occupational, health, fire, earthquake, or safety standards for employers, employees, landlords, or tenants. 1.5 Lease Commencement Date. The Lease commencement date is the date the Lease term begins as set forth in Article 2, section 2.2. 1.6 Premises. The Premises refers to the real property located at 127 Short Street in the City which is the subject of this Lease as more specifically described in Exhibit A, attached hereto and incorporated herein by this reference. ARTICLE 2. PREMISES, TERM, AND EXTENSIONS. 2.1 Premises. In consideration of the rents, covenants, and agreements contained in this Lease, City hereby leases to Historical Society and Historical Society leases from City the Premises. 2.2 Ierm. This Lease shall be effective as of the day and year first above written and shall remain in effect for an initial term of twenty (20) years therefrom; provided, however, that beginning with the first day of January of the year in which the Lease will have an unexpired term of nineteen ( 19) years, and each first day of January thereafter, a year shall be added automatically to the remainder of the initial term unless a notice of nonrenewal is given as provided herein. 2.3 Notice of Nonreoewal. If either party desires not to renew this Lease as described in Section 2.2, that party shall serve written notice of nonrenewal of this Lease on the other party at least ninety (90) days prior to the automatic annual renewal date of this Lease specified above. ARTICLE 3. RENT AND ADDITIONAL RENT. 3.1 Base Bent. Historical Society shall pay to City the sum of One Dollar ( $1 .00) per year as rent, the first payment due on or before the· Lease commencement date and subsequent payments due on the anniversary of that date for each year of the Lease term. 2 Item 8.h. - Page 57 3.2 Additional Bent. In addition to the base rent, Historical Society shall pay an additional rent comprised of the payment of all utilities (Article 5), payment of assessments and possessory interest taxes (Article 6), and the payment of insurance (Article 7). ARTICLE 4. USE OF PREMISES. 4.1 Permitted Use and Maintenance of Premjses. During the Lease term, Historical Society shall use the Premises solely for operating and maintaining the Santa Manuela school building as a site of historical interest, and for such other uses generally appurtenant to the business of a public museum and gardens. The school building shall be open to the public during reasonable hours and days of the week in accordance with a schedule that has been approved in writing by the City's Director of Parks and Recreation. No charge to the public for entry shall be made without the prior written consent of the City. In addition to regular operating hours of the school building, Historical Society may use the Premises for special openings and events relating to historical and community events. Historical Society will landscape and maintain the grounds outside the school building in a manner similar to that for the museum on the adjacent lot and incorporate these grounds into the master garden plan for the museum. The amended master garden plan combining the two grounds shall be submitted to the City's Director of Parks and Recreation for written approval prior to implementation of the plan. Historical Society shall provide City with a yearly calendar of events at the site. Historical Society shall not use or permit the Premises to be used for any other purpose without City1 s prior written consent, which may be granted or withheld in City's sole discretion. During the Lease Term, Historical Society, at its own cost and expense and at no cost and expense to City, shall continuously and without exception repair, maintain, and make improvements to all portions of the Premises and the school building to ensure that all portions thereof are in a good order, condition, and repair in compliance with all laws and orders. 4.2 Present Condition of Premises. Historical Society represents that prior to entering into the Lease it has conducted an inspection and examination of the Premises and acknowledges that they are satisfactory to it for the relocation .of the school building and the necessary appurtenant foundation structure required and that said Premises are fit for use and operation as a historical site that is open to the public. Historical Society accepts the Premises in their present condition "as is" including any latent or patent defects and agrees it will make any modifications it deems necessary in preparation of receiving the school building. For any such site preparation work, Historical Society agrees to comply with all applicable City and state laws. Prior to moving the building on to the Premises, Historical Society will obtain the written approval of the City's Director of Parks and Recreation of a site plan showing the location of the building and any other structures and improvements for the Premises. City expressly disclaims and makes no warranties, express or implied, as to the suitability or usability of the Premises for the above purposes. 3 Item 8.h. - Page 58 4.3 Relocation of School Building. Historical Society agrees it will act diligently to take the necessary steps to relocate the school building to the Premises as soon as reasonably possible after the Lease commencement date. The relocation shall be accomplished within 12 months from the Lease commencement date and the master garden plan will also be implemented and the school building commence its normal hours of being open to the public by the end of this 12 month period. 4.4 City's Bight of Access to and Use of Premjses. City and its agents shall have the right at all reasonable times to enter the Premises to perform functions, including, but not limited to: inspect the Premises; show the Premises to prospective purchasers or mortgagees; serve, post, and keep posted notices required by law or that City considers necessary for the protection of City or the Premises; inspect the Premises for any purpose connected with the care and management of the Premises; perform services required of City; take possession due to any breach of this Lease; perform any covenants of Historical Society that Historical Society fails to perform, or for any other purpose reasonably connected with City's interest in the Premises. City expressly reserves the right to enter upon and make any improvements to the Premises that are part of the City's adopted Creek Path project for the south side bluffs of Arroyo Grande Creek, including placement of pedestrian trails and benches, as City may choose at its sole discretion. Any such work will be done in a reasonable and expeditious manner so as to cause the least practical interference with Historical Society's use of the Premises. City also reserves the right to use the grounds outside the school building and may use the school building itself without charge for functions, activities, or meetings of the City on mutually agreed upon dates and times by requesting the same from Historical Society, whose consent to such use by City shall not be unreasonably withheld. ARTICLE 5. UTILITIES. 5.1 Payment of Utility Services as Additional Bent. Historical Society shall initiate, contract for, and obtain, in its name, all utility services required for the Premises, including gas, electricity, telephone, water, janitorial, trash removal, sewer, and any other utility used or consumed in the Premises during the Lease term. Historical Society shall pay, and hold City and the property of City free and harmless from, all charges for utility services as they become due as part of the rental of the Premises. All such charges shall be paid by Historical Society directly to the provider of the service and shall be paid as they become due and payable but in any event before delinquency. City may elect to terminate this Lease if Historical Society fails or refuses to pay the charges for utility services as assessed or incurred. ARTICLE 6. TAXES AND ASSESSMENTS. 6. 1 Payment of Taxes and Assessments as Additional Bent. The execution of this Lease may create a taxable property interest of the Historical Society. In such 4 Item 8.h. - Page 59 event Historical Society shall pay such possessory interest taxes when due and hold the City harmless therefor. In the event that a special assessment is imposed on the Premises that relates to Historical Society's use of the Premises, the parties agree to meet and discuss a satisfactory means of paying the assessment. ARTICLE 7. EXCULPATION. INDEMNIFICATION, AND INSURANCE. 7 .1 Definition of Historjcal Society Partjes and City panjes. The term "Historical Society parties" refers singularly and collectively to Historical Society and Historical Society's officers, members, agents, employees, and independent contractors as well as to all persons and entities claiming through any of these persons or entities. The term "City parties" refers singularly and collectively to City and the respective officers, representatives, agents, servants, employees, and independent contractors of these persons or entitles. 7.2 Exculpation. To the fullest extent permitted by law, Historical Society, on its behalf and on behalf of all Historical Society parties, waives all claims, in law, equity, or otherwise, against City parties and knowingly and voluntarily assumes the risk of, and agrees that City parties shall not be liable to Historical Society parties, for any of the following: injury to or death of any person; or loss of, injury or damage to, or destruction of any tangible or intangible property, including the resulting loss of use, economic losses, and consequential or resulting damage of any kind from any cause. City parties shall not be liable under this clause regardless of whether the liability results from any active or passive act, error, omission, or negligence of any of City parties; or is based on claims in which liability without fault or strict liability is imposed or sought to be imposed on any of City parties. This exculpation clause shall not apply to claims against City parties to the extent that a final judgment of a court of competent jurisdiction establishes that the injury, loss, damage, or destruction was proximately caused by City parties' fraud, willful injury to person or property, sole active negligence, or violation of law. Such exculpation shall survive the expiration or earlier termination of this Lease until all claims within the scope of this exculpation clause are fully, finally, and absolutely barred by the applicable statutes of limitations. Historical Society acknowledges that this section was negotiated with City, that the consideration for it is fair and adequate, and that Historical Society had a fair opportunity to negotiate, c;1ccept, reject, modify, or alter it. With respect to the exculpation provided in this Article, Historical Society waives the benefits of Section 1542 of the Civil Code, that provides that n a general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." 7.3 Insurance. Without limiting Historical Society's indemnification of City, Historical Society shall procure and maintain, for the duration of the Lease, insurance against claims for injuries to persons or damages to property which may arise from 5 Item 8.h. - Page 60 or in connection with Historical Society's operation and use of the Premises. The cost of such insurance shall be borne by Historical Society. 7.3.1 Minimum Scope of Insurance. Coverage shall be at least as broad as: a. Insurance Services Office Commercial General Liability coverage ("occurrence" form CG 0001 ); 7.3.2 Minimum Limits of Insurance. Historical Society shall maintain limits no less thari: a. General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit; 7 .3.3 Deductibles and Self-Insured Retentions. Any deductibles or self- insured retentions must be declared to and approved by City. At the option of City, either: the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects City, its officers, officials, employees and volunteers; or Historical Society shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. 7 .3.4 Other Insurance Provisions. The general liability policy is to contain, or be endorsed to contain, the following provisions: a. City, its officers, officials, employees and volunteers are to be covered as insureds as respects: liability arising out of premises owned, occupied or used by Historical Society. The coverage shall contain no special limitations ~n the scope of protection afforded to City, its officers, officials, employees or volunteers; b. Historical Society's insurance coverage shall be primary insurance as respects City, its officers, officials, employees and volunteers. Any insurance or self-insurance maintained by City, its officers, officials, employees or volunteers shall be excess of Historical Society's insurance and shall not contribute with it; c. Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to City, its officers, officials, employees or volunteers; 6 Item 8.h. - Page 61 d. Coverage shall state that Historical Society's insurance shall apply separately to each insured against whom a claim is made or suit is brought, except with respect to the limits of the insurer's liability; e. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled, reduced in coverage or in limits except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to City. 7 .3.5 Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:V . . 7.3.6 Verification of Coverage. Historical Society shall furnish City with original endorsements effecting coverage required by this clause prior to commencing any work on or occupying the Premises. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. All endorsements are to be received and approved by City before Historical Society takes possession of the Premises and any work commences. As an alternative to City's forms, Historical Society's insurer may provide complete, certified copies of all required insurance policies, including endorsements effecting the coverage required by these specifications. 7 .3. 7 Aggregate Limits/Blanket Coverage. If any of the required insurance coverage's contain aggregate limits, or apply to other operations or tel'.lancy of Historical Society outside this Lease, Historical Society shall give City prompt, written notice of any incident, occurrence, claim, settlement or judgment against such insurance which in Historical Society's best judgment will diminish the protection such insurance affords City. Further, Historical Society shall immediately take all steps to restore such aggregate limits or shall provide other insurance protection for such aggregate limits. 7 .3.8 Modification of Coverage. City reserves the right at any time during the term of this Lease to change the amounts and types of insurance required hereunder by giving Historical Society ninety (90) days advance written notice of such change. 7.3.9 Failure to Procure Insurance. Within the foregoing constraints, Historical Society's failure to procure or maintain required insurance or a self-insurance program shall constitute a material breach of contract under which City may immediately terminate this Lease or, at its discretion, procure or renew such insurance to protect City's interests and pay any and all premiums in connection therewith, and recover all monies so paid from Historical Society. 7 Item 8.h. - Page 62 ·- 7 .3. 10 Underlying Insurance. Historical Society shall be responsible for requiring indemnification and insurance from its employees receiving mileage allowance, consultants, agents and subcontractors, if any, in the same amounts and including the same terms as specified herein, to protect Historical Society's and City's interests, and for ensuring that such persons comply with any applicable insurance statutes. 7.3.11 Personal Property of Historical Society. City may continue to provide property insurance for the Premises. Said property insurance shall not provide coverage for Historical Society's personal property· or the school building. Historical Society waives any claim against the City's insurance for or relating to damage to its personal property or school building. 7.4 lndemojfjcatjon. Historical Society, its Board of Directors, and the directors individually, shall, at Historical Society's sole expense, and with counsel reasonably acceptable to City, indemnify, defend, and hold harmless the City and City parties from and against any and all claims from any cause, that arise out of, result from, or relate to this Lease, the tenancy created under this Lease, or the Premises, including the use or occupancy, or manner of use or occupancy, of the Premises by Historical Society parties; any negligent act of Historical Society parties or of any invitee, guest, or licensee of Historical Society, or any other person authorized by Historical Society to use the Premises or any portion thereof; Historical Society's conducting of its business; any improvements, activities, work, or things done, omitted, permitted, allowed, or suffered by Historical Society parties in, at, or about the Premises, including the violation of or failure to comply with any applicable laws and orders in existence on the date of Lease or enacted, promulgated, or issued after the date of Lease; and any breach or default in performance of any obligation of Historical Society's part to be performed under this Lease, whether before or during the Lease term or after its expiration or earlier termination. The intention of the parties being that with respect to compliance with laws and orders that Historical Society, during the Lease term, shall discharge and perform all the obligations of City, as well as all the obligations of Historical Society, related to the Premises, and indemnify City therefrom, so that at all times the rental of the Premises shall be net to City without deduction or expenses on account of any such laws and orders. 7.5 Defjnjtjon of Claims. For purposes of this Lease, "claims" means any and all claims, losses, costs, damage, expenses, liabilities, liens, actions, cause of action (whether in tort or contract, law or equity, or otherwise}, charges, assessments, fines, and penalties of any kind (including consultant and expert expenses, court costs, and attorney fees as defined in this Lease). 7.6 Type of Injury or Loss Defined. This indemnification extends to and includes claims for injury to any persons (including death at any time resulting from that injury); loss of, injury or damage to, or destruction of property (including all loss 8 Item 8.h. - Page 63 ·..._. of use resulting from that loss, injury, damage, or destruction}; and all economic losses and consequential or resulting damage of any kind. 7. 7 Effect of Negligence. Strict Liability. or Willful Misconduct. Such indemnification shall apply regardless of the active or passive negligence of City parties and regardless of whether liability without fault or strict liability is imposed or sought to be imposed on City parties. The indemnification shall not apply to the extent that a final judgment of a court of competent jurisdiction establishes that a claim against one City party was proximately caused by the sole active negligence or willful misconduct of that City party. In that event, however, this indemnification shall remain valid for all other City parties. 7 .8 Survival of Indemnification. The clauses of this Article shall survive the expiration or earlier termination of this Lease until all claims against City parties involving any of the indemnified matters are fully, finally, and absolutely barred by the applicable statute of limitations. ARTICLE 8. ASSIGNMENT. 8. 1 Approval of Assignment. Historical Society shall not, without the City's prior written consent, permit assignment of any of its rights, delegation of any of its duties, assignment of all or any interest in this Lease, by operation of law or otherwise; sublet all or any part of the Premises or any right or privilege appurtenant to the Premises; or suffer any other person, other than City's agents and servants, to occupy or use all or any part of the Premises. In City's sole and absolute discretion, City may withhold its consent to any assignment, sublease, occupation, or use. City shall not be bound by any standard of reasonableness in exercising this discretion. Any assignment, subletting, occupation, or use by another person or entity without City's prior written consent shall be void and shall, at City's option, terminate this Lease. If Historical Society requests City to consent to a proposed assignment, subletting, occupation, or use by any other person or entity, Historical Society shall pay to City, whether or not consent is ultimately given, City's actual attorney fees and costs, as defined in this Lease, incurred in connection with each such request. City's consent to one assignment, subletting, occupation, or use by any other person or entity shall not be deemed to be a consent to any subsequent assignment, subletting, occupation, or use by another person or entity. As used in this provision, "assignment" and "delegation" shall mean any sale, gift, pledge, hypothecation, encumbrance, or other transfer of all or any portion of the rights, obligations, or liabilities in or arising from this Lease to any person or entity, whether by operation of law or otherwise, and regardless of the legal form of the transaction in which the attempted transfer occurs. · 9 Item 8.h. - Page 64 8.2 Successors and Assigns. Subject to section 8.1, this Lease shall be binding on and shall inure to the benefit of the parties and their respective legal representatives, successors, and assigns. ARTICLE 9. TERMINATION OF LEASE BEFORE EXPIRATION OF LEASE TERM. 9.1 Grounds for Termjnatjon. 9.1.1 Breach of Lease. Either party to the Lease may terminate this Lease if the other party has committed a breach of the Lease as defined in Article 11. There is no monetary penalty for such termination except for any costs and fees expressly provided for in Articles 9, 11, 13 and 14. 9.2 Termination Procedure. The party exercising the right to terminate shall provide written notice of the intent to terminate to the other party. If the termination is pursuant to section 9.1.1, the party shall give a prior written notice of at least ninety (90) calendar days prior to the date of the intended termination. The notice shall state the reason for the termination. 9.3 City's Obligations and Options at Termjoatjoo. Upon termination of the Lease by City pursuant to section 9.1.1 due to a breach by Historical Society, City shall allow Historical Society to remove the school building within the ninety (90) -day grace period and any additional period reasonably needed for that purpose. 9.4 Historical Society's Obligations and Options At Termination. Upon expiration of the term of the Lease, or termination of the Lease by City pursuant to section 9. 1 .1 due to a breach by Historical Society, Historical Society shall remove the school building and return the Premises to their condition before the school building was moved to the Premises within the ninety (90) -day grace period at its sole cost (the ninety (90) -day period applies for an expiration of the Lease term). City may remove the school building upon Historical Society's failure to do so as required by this section and charge the reasc;mable costs therefor to Historical Society, including cost for any temporary storage of the school building. 9.5 Rights and Obligations Cease. All rights and obligations of the parties shall cease on termination of the Lease unless otherwise provided by the terms of the Lease. Neither party shall be liable to the other for damages of any kind, including without limitation incidental or consequential damages, resulting from any termination of this Lease, except as specifically provided for herein. lO Item 8.h. - Page 65 ARTICLE 10. SURRENDER OF PREMISES. 10. 1 Removal of Hjstorjcal Society Property. On the expiration or earlier termination of the Lease term, Historical Society shall quit the Premises and surrender possession to City in accordance with the time periods specified in Article 9. On expiration or termination Historical Society shall remove or cause to be removed from the Premises all debris and rubbish, any items of personal property owned by Historical Society, the school building and any other improvements that Historical Society placed on the Premises, unless City approves their remaining on the Premises in which case ownership of any such improvements automatically passes to City. Historical Society· shall repair all damage or injury that may occur to the Premises caused by Historical Society's removal of those items and shall restore the Premises to their condition that existed when the Lease commenced. ARTICLE 11. DEFAULT. 11 . 1 Acts of Default. Any of the following events or occurrences shall constitute a material breach of the Lease by Historical Society and, after the expiration of any applicable grace period, shall constitute an event of default, each being a separate event of default: 11. 1. 1 Failure to Pay Costs or Charges. The failure by Historical Society to pay any amount in full when it is due under the Lease. 11 .1 .2 Failure to Perform Obljgatjoo. The failure by Historical Society to perform any obligation under the Lease, which by its nature Historical Society has no capacity to cure. 11.1.3 Failure to Perform After Notification. The failure by Historical Society to perform any other obligation under this Lease, if the failure has continued for a period of ten (10) days after City demands in writing that Historical Society cure the failure. If, however, by its nature the failure cannot be cured within ten (10) days, Historical Society may have a lon,ger period as reasonably needed to cure the failure, but this is conditioned upon Historical Society promptly commencing to cure within the ten (10) day period and thereafter diligently completing the cure. Historical Society shall indemnify and defend City against any liability, claim, damage, loss, or penalty that may be threatened or may in fact arise from that failure during the period the failure is uncured. 11.1.4 Assignment. Any of the following: A general assignment by Historical Society for the benefit of Historical Society's creditors; any voluntary filing, petition, or application by Historical Society under any law relating to· insolvency or bankruptcy, whether for a declaration of bankruptcy, a reorganization, an arrangement, or otherwise; the abandonment, vacation, or surrender of the 11 Item 8.h. - Page 66 Premises by Historical Society without City's prior written consent; or the dispossession of Historical Society from the Premises (other than by City) by process of law or otherwise; 11.1.5 Appointment of Trustee or Becejyer. The appointment of a trustee or receiver to take possession of all or substantially all of Historical Society's assets; or the attachment, execution or other judicial seizure of all or substantially all of Historical Society's assets located at the Premises or of Historical Society's interest in this Lease, unless the appointment or attachment, execution, or seizure is discharged within thirty (30) days; or the involuntary filing against Historical Society, or any general partner of Historical Society if Historical Society is a partnership, of: a. A petition to have Historical Society, or any partner of Historical Society if Historical Society is a partnership, declared bankrupt, or b. A petition for reorganization or arrangement of Historical Society under any law relating to insolvency or bankruptcy, unless, in the case of involuntary filing, it is dismissed within sixty (60) days; 11 . 1. 6 Abandonment. The abandonment of the Premises by Historical Society which shall include, but not be limited to, the failure to maintain the school building open to the public during reasonable hours and days of the week for a continuous period of 60 days without the consent of the City's Director of Parks and Recreation at any time after the first 12 months following the Lease commencement date, or the Historical Society 1 s losing its status as a non-profit, public benefit corporation, or ceasing to exist as a legal entity. 11 . 1 . 7 Waiver. Waiver by City of any default in performance by Historical Society of any of the terms, promises, or conditions contained herein shall not be deemed a continuing waiver of the same or any subsequent default. In the event any officer, agent or employee of City shall consent to an act or failure to act in violation of any provisions of this Lease, such act or failure to act shall be immediately corrected upon a request from City,in writing. 11.2 Remedies on Event of Default. If an event of Default occurs, the nondefaulting party shall have the right to terminate the Lease and to pursue any remedy now or later available to the nondefaulting party at law or in equity. ARTICLE 12. EXPIRATION OF THE LEASE TERM. 12.1 Ownership of lmproyernents by City. Upon the expiration or termination of the Lease, any and all improvements made to the Premises and left there by Historical Society shall, without compensation to Historical Society, then 12 Item 8.h. - Page 67 \.._.· automatically and without any act of Historical Society or any third party become the City's property. ARTICLE 13. ARBITRATION. 13.1 Disputes Subject to Arbjtratjoo. Any controversy or dispute between the parties to this Lease may be submitted to an arbitration panel, and such arbitration shall comply with and be governed by the provisions of the California Arbitration Act, Sections 1280 et seq. of the California Code of Civil Procedure, to the extent that such provisions have not been modified pursuant to this Lease. The losing party shall pay all costs and attorney fees, as defined in this Lease. 13.2 Rules Governing Arbjtratjon. 13.2.1 Limited Discovery. No more than thirty (30) calendar days before the arbitration, a party may serve a document request calling for any document that would be discoverable in civil litigation. The party served with this request shall deliver the requested documents and any objections within five (5) business days. The arbitrators shall resolve any dispute over the exchange of documents as they would be resolved in civil litigation. Thereafter, each party may take no more than three (3) depositions, each of which shall last no more than four (4) hours each. The arbitrators shall resolve any dispute over the depositions as they would be resolved in civil litigation. 13.2.2 Arbitrators' Powers. The arbitrators shall have the same powers as those of a judge of the superior court of the State of California, and shall render a decision as would a judge of a superior court of the State of California in accordance with the law and the facts. 13.2.3 Written Decision. Within fifteen (15) days after completion of the arbitration, the arbitration panel shall submit a tentative decision in writing, issuing findings of fact and specifying the reasoning for the decision and any calculations necessary to explain the award. Eac;h party shall have fifteen (15) days in which to submit written comments to the tentative decision. Within ten (10) days after the deadline for written comments, the arbitration panel shall mail a written decision of the final award to each party. 13.2.4 Costs. Each party to the arbitration shall pay a pm rata share of the arbitrators' expenses and fees. The arbitrators shall award the prevailing party its expenses and fees of arbitration, including reasonable attorney fees, as defined in this Lease. If it becomes necessary to enforce an award made by the arbitrators or a judgment based on such award, the prevailing party shall be entitled to attorneys' fees, as defined in this Lease. 13 Item 8.h. - Page 68 13.2.5 Judjcjal Review of Award. The parties shall be entitled to judicial review of an arbitrator's error or mistake of fact or law, and to judicial review of any issue that would have been entitled to 'judicial review if such issue had been addressed or decided by a superior court of the State of California. ARTICLE 14. ATTORNEYS' FEES. 14. 1 Attorneys' Fees. Costs. and Expenses. In any litigation, arbitration, or other proceeding in law or equity by which one party to the Lease seeks to enforce its contract rights under the Lease, to resolve an alleged dispute, breach, default, or misrepresentation· in connection with any of the provisions of this Lease, to seek a declaration of any rights or obligations under this Lease, or to interpret the provisions of this Lease, the prevailing party shall be entitled to recover from the losing party actual attorneys' fees incurred to resolve the dispute and to enforce the final judgment, award, decision, or order and such fees, costs, or expenses shall be in addition to any other relief to which the prevailing party may be entitled. The award of attorneys' fees shall be deemed to have accrued upon the commencement of the action and shall be paid whether or not such action is prosecuted to judgment, award, decision, or order. "Proceeding" shall mean any action, suit, claim, arbitration, alternative dispute resolution mechanism, investigation, administrative hearing, or any other proceeding, including but not limited to civil, criminal, administrative, regulatory, or investigative. The attorneys' fees to be awarded the prevailing party may be determined by the court or other decision maker in the same action or proceeding or in a separate action brought for that purpose. Any judgment, award, decision, or order entered in such action or proceeding shall contain a specific provision providing for the recovery of actual attorneys' fees incurred in enforcing such judgment, award, decision, or order. The award of attorneys' fees shall not be computed in accordance with any court schedule, but shall be made so as to fully reimburse the prevailing party for all attorneys' fees, paralegal fees, and expenses actually incurred in good faith, regardless of the size of the judgment, award, decision, or order, it being the intention of the parties to fully compensate the prevailing party for all ~ctual attorneys' fees, paralegal fees, and costs and expenses paid or incurred in good faith. This provision applies to the entire Lease. ARTICLE 15. CONDEMNATION. 15.1 Condemnation Sums. In the event that the leased Premises shall be taken, in whole or in part, through the exercise of any power of eminent domain exercised by any federal, state, or local municipality having the power thereof, the Lease term shall terminate and expire on the date of such taking and any sums paid by such condemning authority shall be paid to the City. The Historical Society shall be reimbursed for the value of the school building from any applicable condemnation proceeds received specifically therefor, unless the building is removed by the Historical Society. 14 Item 8.h. - Page 69 ARTICLE 16. MISCELLANEOUS. 16. 1 Notices. To be effective, all notices, requests, demands, and other communications required or permitted under this Lease shall be in writing and shall be delivered either in person or by certified mail, postage prepaid, return receipt requested. Notice is deemed effective on delivery if served personally on the party to whom notice is to be given and delivery is confirmed by a receipt. Notice is deemed effective on the second day after mailing if mailed to the party to whom notice is to be given, by first class mail, registered or certified, return receipt requested, postage prepaid, and properly addressed as set forth below. Any correctly addressed notice ·that is refused, unclaimed, or undeliverable because of an act or omission of the party to be notified shall be deemed effective as of the first date that said notice was refused, unclaimed, or deemed undeliverable by the postal authorities. The addresses for purposes of giving notice are as set forth below but each party may change its address by written notice in accordance with this paragraph. HISTORICAL SOCIETY: CITY: South County Historical Society P.O. Box 633 Arroyo Grande, CA 93421-0633 City of Arroyo Grande Attn: City Manager P.O. Box 550 Arroyo Grande, CA 93421-0550 16.2 Djscrjmjoatjoo Prohibited. No person shall, on the grounds of race, religion, color, national origin, or sex, be excluded from participation in, be denied the benefit of, or be subjected to discrimination under this program/project. For purposes of this section, Section 570.601 (b) defines specific discriminatory actions which are prohibited and corrective action which shall be taken in situation as defined therein. 16.3 Noodjscrjmjoatjon. Egual Employment Practices. and Affjrmatjve Action Program. Historical Society shall comply with, the nondiscrimination laws of the United States of America, the State of California, and City in performing this Lease, Historical Society shall not discriminate in its employment practices against any employee, or applicant for employment because of such person's race, religion, national origin, ancestry, sex, age, or physical handicap. 16.4 No Mortgaging Leasehold. Historical Society shall have no right to subject the leasehold estate or the Premises to any mortgage, deed of trust or other security interest. 16.5 Time of Essence. Time is of the essence in this Lease. 15 Item 8.h. - Page 70 16.6 Effectiveness. This Lease shall be effective only when signed by both parties to the Lease and approved by formal action of the City Council of City. 16. 7 Necessary Acts/Other Instruments. The parties shall at their own cost and expense execute any and all other documents and instruments and shall take any and all actions as may be reasonably required, necessary, or appropriate to evidence or carry out the intent and purposes of this Lease. 16.8 Good Faith. Each party to this Lease shall act in good faith in performing their respective obligations set forth in this Lease. 16.9 Waiver. The waiver of any breach of any condition, covenant, term, or provision of this Lease by any party to this Lease shall not be deemed to be a waiver of any preceding or subsequent breach under the Lease, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver. 16.10 Authorizations. All officers and individuals executing this and other documents on behalf of the respective parties do hereby certify and warrant that they have the capacity and have been duly authorized to so execute said documents on behalf of the entity so indicated. Each signatory shall also indemnify the other party to this Lease, and hold them harmless, from any and all damages, costs, attorneys' fees, and other expenses, if the signatory is not so authorized. 16. 11 Headings and Captions. The captions and headings of this Lease are inserted for convenience only and shall not be deemed a part of this Lease and shall not be used in interpreting this Lease or in determining any of the rights or obligations of the parties to this Lease. 16. 12 Word Usage. Unless the context clearly requires otherwise, the plural and singular words shall each be deemed to include the other; "shall," "will," or "agrees" are mandatory, and "may" is permissive or discretionary; "or" is not exclusive; the masculine, feminine, and neuter. genders shall each be deemed to include the others; and "includes" and "including" are not limiting. 16. 13 Severability. If any term, provision, covenant, or condition of this Lease shall be or become illegal, invalid, null, void, unenforceable, or against public policy, in whole or in part, or shall be held by any court ~f competent jurisdiction to be illegal, invalid, null, or void, or against public policy, the term, provision, covenant, or condition shall be deemed severable, and the remaining provisions of this Lease shall remain in full force and effect and shall not be affected, impaired, or invalidated. The term, provision, covenant, or condition that is so invalidated, voided, or held to be unenforceable shall be modified or changed by the parties to the extent possible to carry out the intentions and directives set forth in this Lease. 16 Item 8.h. - Page 71 16. 14 Counterpart Execution. This Lease may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. 16. 15 Entire Agreement. This Lease constitutes the final, complete, and exclusive statement of the terms of the agreement between the parties pertaining to the lease and supersedes all prior and contemporaneous agreements, promises, representations, warranties, understandings, or undertakings by either of the parties, either oral or written, of any character or nature. No party has been induced to enter into this Lease by, nor is any party relying on, any representation or warranty outside those expressly set forth in this Lease. 16.16 Amendments. This Lease may be altered, amended, modified, or supplemented only by an instrument in writing, executed by the parties to this Lease and by no other means. No alteration, amendment, modification, or supplement of this Lease shall be binding unless it is in writing and signed by both parties. Each party waives their future right to claim, contest, or assert that this Lease was modified, canceled, superseded, or changed by any oral agreement, course of conduct, waiver, or estoppel. 16.17 Ambiguities. Each party and its counsel have participated fully in the. review and revision of this Lease. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in interpreting this Lease. IN WITNESS WHEREOF, City has executed the Lease with the approval of its City Council, and caused its official seal to be affixed and Historical Society has executed the Lease in accordance with the authorization of its Board of Directors and has caused its official seal to be affixed. ATTEST: ~- BOARD SECRET ARY SOUTH COUNTY HISTORICAL SOCIETY By:~'~ 1o/~ (Title) 17 Item 8.h. - Page 72 LYON & CARMEL 18 Item 8.h. - Page 73 EXHIBIT •A" That certain real property in the City of Arroyo Grande, County of San Luis Obispo, State of California, described as follows: Assessor Parcel Number 007-492-015, Lot 1 of Block 6 of the Short, Mason and Whiteley Subdivision (127 Short Street), of the City of Arroyo Grande, County of San Luis Obispo, State of California, as per map filed in Book A, Page 48 of Maps in the Office of the County Recorder of said County. Z:IARROYO\AGMTS\SCHOOUE.003 Item 8.h. - Page 74 ,5' @{;> 0 '° co ID @ 1- 0:: 0 J: (/) 2) 0 IO 0 65 60 51· 1s·w. '3 . . 4 .34., CONnO. 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