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HomeMy WebLinkAboutC-241411 (;t- AMENDMENT NO. 1 TO THE ARCADIA PAR 3 GOLF COURSE ° . • A.­ 190J LEASE AGREEMENT BY AND BETWEEN THE CITY OF ARCADIA AND AMERICAN GOLF CORPORATION 2aj�&!n, , _, This Amendment No. 1 ( "Amendment No. 1") is hereby entered into this f� day of 20 by and between the City of Arcadia, a municipal corporation of the State of CaMfornia, and American Golf Corporation, a California Corporation, with respect to that certain Agreement between the parties dated December 29, 2008 ( "Agreement). The parties agree as follows: 1. Section 8 of the Agreement is amended by extending the term from December 1, 2013 to November 30, 2018 ( "Extended Term "). 2. All of the remaining terms and provisions of the contract are hereby reaffirmed. In witness whereof the parties have executed this Amendment No. 1 on the date set forth below. CITY OF ARCADIA By: ' _ -tea Dominic Lazzarett City Manager Dated: --:S 2. 20 1 L - (SEAL) APPROVED AS TO FORM �0 Steph n P. Deitsch City Attorney AMERICAN GOLF CORPORATION By: Title: Dated: By: Title: crctc Dated: LIEU/ F- CONCUR: T m Tait Public Works Services Director fl IS. f LEASE AGREEMENT ARCADIA PAR 3 GOLF COURSE I (DU - `$d C- a41 L- EXECUTION ORIGINAL This Lease Agreement (the "Lease" or the "Agreement') is by and between the City of Arcadia, a municipal corporation, (hereafter referred to as City) and American Golf Corporation (hereafter referred to as Lessee.) In consideration of the mutual promises and covenants set forth herein, both parties agree as follows: SECTION 1 — PROPERTY LEASED The City leases to Lessee, for its management and operation, the real property known as the Arcadia Par 3 Golf Course located at 620 East Live Oak Avenue, Arcadia, which is fully described in Attachment A, incorporated as part of this Agreement (the "Facility "). The name of the golf course shall not be changed unless authorized in writing by the City. SECTION 2 — USE (A) Primary Use. Lessee agrees that the Facility is designed to provide the general public with golf and golf - related recreational facilities and Lessee shall not materially alter this use without the written consent of City. Lessee agrees to promote the site and its facilities and to operate the course so that it meets the golfing needs of the general public to the reasonable satisfaction of the City. Lessee further agrees to provide instructional services in golfing technique and practice and to coordinate and promote the activities of golf clubs (organizations), training programs and local and regional tournaments. Lessee shall also provide starter and driving range services and shall monitor the play of the course to assure that proper golf etiquette is practiced by course participants. Lessee shall have the privilege of using the site and facility solely for the purpose set forth in this Agreement. It is understood and agreed that the Arcadia Par 3 Golf Course is one of the public recreational facilities owned by the City of Arcadia, and its conduct and operation are for service to and for the benefit of the general public. (B) Recreational Use. Lessee shall collaborate with the Recreation and Community Services Department to provide a reasonable variety of quality golf related, affordable recreational 03674 - 00004/1662123.6 1 0 programs to the City of Arcadia residents. These recreational opportunities should be used to enhance and increase recreational golf participation in the community year round. Programs and activities shall be offered through the City, while both advertising and marketing will be a shared responsibility by the City and Lessee; provided that any advertising and /or marketing materials to be used by the City and /or Lessee shall be subject to the reasonable prior approval by City and Lessee. Staffing and a Golf Professional for programs and activities shall be provided by Lessee at no cost to the City; provided that the rates for such programs and activities shall be structured so that the proceeds therefrom shall be sufficient to cover City's and Lessee's costs of administering and implementing the programs and activities. Such programs and activities shall be as set forth on Attachment B, attached hereto and incorporated herein by this reference. SECTION 3 — FACILITIES (A) Lessee agrees that at its own expense, it will maintain and operate the Facility listed below in accordance with the terms and conditions of this .Agreement. Lessee shall operate and maintain the Facility in accordance with the following standard and requirements (the "Operating Standard "): (i) as a quality municipal golf facility comparable in quality with other municipal golf facilities in the Southern California market having similar revenue and costs structures as that of the Facility; and (ii) with appropriate agronomic, maintenance and playing conditions, comprehensive customer service, and operational efficiencies, all in a manner to meet the maintenance standards set forth on Attachment E attached hereto and incorporated herein by this reference. The Operating Standard shall be modified from to time to account for certain events including but not limited to the events set forth in Section 14, any reconfiguration of the Facility pursuant to Section 3(D), or any damage, destruction or condemnation of the Facility. Minimum operational requirements shall include: i. An eighteen hole par 3 golf course illuminated for night play; ii. A practice putting green illuminated for night play; iii. A driving range illuminated for night play; iv. A clubhouse and pro shop for the sale and rental of golfing related equipment and supplies; V. A coffee shop serving sandwiches and refreshments; vi. Adequate parking facilities; 2 03674 - 00004/1662123.6 0 ,},. vii. Course and range irrigation system; and viii. Restrooms and drinking fountains on course. (B) Subject to Section 14 of this Agreement, Lessee also agrees that it will use reasonable commercial efforts to complete all improvements and renovations to the reasonable satisfaction of the City as detailed in Attachment C of this Agreement (the `Improvements "). Both Lessee and City agree that time is of the essence with respect to the completion of the Improvements and Lessee shall use reasonable commercial efforts to complete the improvements in compliance with the construction schedule set forth in Attachment C (the "Completion Schedule "). City shall approve any modification or deviation from the Completion Schedule and shall have the opportunity to approve the construction of the Improvements as set forth in Section 3(C) below; provided that such approval shall not be unreasonably withheld or delayed. Any changes to the scope, design or specification of the Improvements shall be made only pursuant to a change order executed by Lessee and City. (C) Construction of Improvements. i. Approved Designs. Lessee shall be responsible for the design of the Improvements, including, without limitation, grading, irrigation, lighting, pathway design and installation, kitchen griddle upgrade and related plans and specifications (collectively, the "Designs "). Lessee shall provide City with a copy of the Designs no less than thirty (30) days prior to the construction of the Improvements for its review and approval. City shall have ten (10) business days from receipt of Designs to review, accept or reject the Designs. In the event the Designs are rejected, in whole or in part, City shall provide written notice of such rejection, together with a detailed description of the rejected portion or portions of the Designs ( "Design Rejection Notice "). City shall not unreasonably reject or delay the review and/or approval of the Designs, it being understood that the review and approval process is intended to ensure that the Designs conform with the description and scope of the Improvements set forth on Attachment C. If City fails to provide a Design Rejection Notice to Lessee within ten (10) business days of receipt, City shall be deemed to have accepted such Design(s). Lessee shall correct or modify any Design noted in the Design Rejection Notice and resubmit the corrected or modified Design to City. City shall have five (5) 03674 - 0000411662123.6 3 business days to re- inspect the corrected Design and accept or reject such Design, which review and notice process shall continue until City accepts the Design. If City fails to provide a Design Rejection Notice within five (5) business days of receipt of the re- submitted Design, City shall be deemed to have accepted the Design. Lessee shall cooperate with City in good faith to address any concerns which City may have with the Design(s). The City agrees that the review and approval of the Designs (or re- submitted Designs) shall not result in a material increase in the project budget or actual costs to complete such Improvements and shall not result in a material deviation from the Completion Schedule. Accordingly, the review and approval of such Designs shall be conducted within the parameters of the project budgets, scope of work and Completion Schedule set forth on Attachment C. ii. Modification of Designs. Lessee shall not modify the approved Designs without the written consent and approval of City which shall not be unreasonably withheld. iii. Completion Schedule and Requirements. Subject to Section 14, Lessee shall use all reasonable commercial efforts to complete the construction of the Improvement in accordance with the Completion Schedule and shall give City notice of any material delay in the Completion Schedule. iv. Construction Costs. Lessee shall be responsible for all costs and expenses associated with the construction and design of the Improvements, including, but not limited to, construction costs, design changes, licenses, permits and insurance. In the event that a delay by Lessee in commencing construction of the Improvements results in an increase in the cost of the Improvements beyond the scope set forth in Attachment C, Lessee shall be responsible for such additional cost. V. Inspection. City, its experts and consultants, shall have the right to inspect and approve the Improvements and shall have the opportunity to accept or reject such construction of such Improvements (the "Work') when performed; provided that such inspections and approvals shall not be unreasonably withheld or 0 03674 - 00004/1662123.6 delayed. Lessee shall provide City with written notice of completion of each improvement or renovation ( "Inspection Notice "). City shall have ten (10) business days from receipt of an Inspection Notice to inspect, or have inspected, the Work and to accept or reject the Work in its reasonable discretion. In the event any Work is rejected, City shall provide written notice of such rejection, together with a detailed description of the rejected Work and requested correction ( "Rejection Notice "). If City fails to provide a Rejection Notice to Lessee within ten (10) business days of receipt of an Inspection Notice, City shall be deemed to have accepted such work. Lessee shall correct any Work noted in the Rejection Notice and reissue an Inspection Notice to City. City shall have five (5) business days to re- inspect the corrected Work and accept or reject such Work, which inspection and notice process shall continue until City accepts the Work, in its reasonable discretion. If City fails to provide a Rejection Notice within five (5) business days of receipt of the reissued Inspection Notice, City shall be deemed to have accepted the Work contained within the reissued Inspection Notice. If Lessee fails to correct the Work in accordance with this Section 3(D), City shall have the right to terminate this Agreement in accordance with the procedures outlined in Section 12. (D) Reconfiguration of Course. City shall have the right, at any time during the term of this Lease, to sell one or more portions of the real property which makes up the Facility, subject to the following conditions: i. At all times while this Lease remains in effect, City shall retain sufficient real property to allow for an 18 hole par 3 golf course at the Facility. Such real property shall allow for the reconfigured Facility to contain elements and features comparable to the condition of the Facility prior to the reconfiguration; ii. In the event that the reconfiguration and /or sale of any portion of the Facility renders a portion of the golf course unusable, then City shall be responsible for all costs associated with the reconfiguration of the golf course to allow for such sale, including without limitation, all design, development, construction, landscaping and other necessary infrastructure in order to meet the requirements of Section 3(D)(i). Subject to Lessee's rights under Section 3(D)(iv), Lessee shall cooperate with City in carrying out such activities, provided, however, that Lessee shall be entitled to additional compensation for any work in connection with such 5 03674 -00003! 1662123.6 reconfiguration which is outside of the scope of Lessee's obligations under this Lease; iii. During any period in which construction related to a reconfiguration results in a loss or impairment of the use of the Facility as a full 18 hole golf course ( "Period of Impairment "), City shall guarantee to Lessee minimum net cash flow from the operation of the Facility for each calendar month (or portion thereof) during the Period of Impairment. For the purposes of this section, the "minimum net cash flow" for any calendar month shall be calculated as a running average of the difference between gross revenue received by Lessee in that calendar month from all fees, charges and concessions during the past three (3) years of full golf course operations minus the operating costs and monthly expense accruals for such calendar month during the past three (3) years of full golf course operations. If the actual net cash flow during each calendar month or portion thereof during the Period of Impairment falls below the minimum net cash flow, then Lessee shall have the right to offset the monthly rent by the amount of the difference. If the difference exceeds the monthly rent, then the City shall pay such excess to Lessee. Such payment shall be made on the fifteenth day following each calendar month or portion thereof during the Period of Impairment. The foregoing payment shall be Lessee's sole and exclusive remedy for any loss of revenue during the Period of Impairment and all of Lessee's obligations under the Lease, including the payment of rent, shall continue without offset or abatement. V. Lessee shall be included in planning meetings and discussions with the designer in connection with any proposed reconfiguration of the course and shall have the opportunity to provide input and comments with respect to the effect of the design on course operating costs and revenue. City shall consider Lessee's comments and concerns as part of the design process. Lessee shall notify City in writing if it believes that any design for a reconfiguration being submitted by staff for final approval by the City Council will result in an adverse economic impact on the operation or economic performance of the Facility. If Lessee determines that there will be an adverse economic impact on the operation or economic performance of the Facility and the City Council approves the final design notwithstanding such determination, then Lessee shall elect to either: (a) terminate this Lease upon six (6) months notice to the City; or (b) continue to 0 03674 - 0000411662123.6 lease the Facility and modify the Lease in accordance with Section 3(D)(v). Such election by Lessee shall be made within thirty (30) days after the completion of the reconfiguration. In the event Lessee elects to terminate the Lease pursuant to this Section 3(D)(iv), City shall pay to Lessee a reimbursement amount to compensate Lessee for (i) that portion of the actual cost of the original Improvements which remains unrecovered by Lessee as of the date of termination; and (ii) that portion of the actual cost of any subsequent Improvements which remains unrecovered. The applicable recovery and reimbursement amounts are set forth on Attachment I. V. If Lessee elects to continue to lease the Facility and modify the Lease pursuant to Section 3(D)(iv), the Lease shall continue in full force and effect for a period of two (2) years after the completion of the reconfiguration (the "Interim Period "). At the end of the Interim Period, Lessee and City shall in good faith negotiate a mutually acceptable modification to the Lease after taking into account the actual impact of the reconfiguration on the economic performance of the golf course. If City and Lessee are unable to agree on the modification of the Lease, then Lessee shall have the right to terminate the Lease upon sixty (60) days prior written notice to City. In the event Lessee elects to terminate the Lease pursuant to this Section 3(D)(v), City shall pay to Lessee a reimbursement amount to compensate Lessee for (i) that portion of the actual cost of the original Improvements which remains unrecovered by Lessee as of the date of termination; and (ii) that portion of the actual cost of any subsequent Improvements which remains unrecovered. The applicable recovery and reimbursement amounts are set forth on Attachment I. SECTION 4 — HOURS OF OPERATION All said facilities shall be operated and opened, weather permitting, for business at least twelve (12) hours per day during the winter season and sixteen (16) hours per day during the spring and summer season, three hundred sixty (365) days per year during business hours that will be established at the discretion of the Lessee. In no event shall the Facility be opened for business during the hours of 10:00 p.m. to 5:30 a.m. without the written approval of the City Manager. Lessee shall operate business on a daily schedule which enables the largest number of participants to enjoy the facility. 7 03674- 00004/1662123.6 SECTION 5 — FACILITY FEES Lessee shall have the right to set and charge fees for the use of the facility. Initial fees and charges shall be as set forth on Attachment D. Upon written notice to the City, Lessee shall have the right to adjust said fees at its discretion based upon increases in the Consumer Price Index (Los Angeles -Long Beach - Glendale, CA) ( "CPI Index ") for the period October 1 through September 30 immediately preceding the proposed increase. Notwithstanding the foregoing, if the proposed increase of the fees and charges (on a blended basis of all fees and charges) is greater than three (3 %), such increase shall be subject to City action and approval pursuant to the following process: Lessee shall provide City with a written request to increase such fees or charges at least thirty (30) days prior to implementation, provided, however, such written request shall not be required for any charges related to the sale of goods, driving range fees, food or beverage which can be set at the discretion of the Lessee. Written request shall be addressed to the City Manager and a copy shall be sent to the Public Works Services Director. Lessee's written request (for increases greater than 3 %) shall provide justification for the increase in fees and charges. City reserves the right to disallow the establishment of any service fee increases greater than 3% which are substantially inconsistent with those of other similar type facilities. In the event City believes the increase in Lessee's service fees in excess of 3% are substantially inconsistent with those other similar type facilities, City shall forward a letter to Lessee describing City's objections to a new fee or fee adjustment. Lessee shall respond in writing to the City within fifteen (15) days explaining in detail its rationale for the proposed new fee adjustment. City staff and Lessee shall discuss Lessee's reply. If within an additional forty -five (45) days from submittal of the Lessee's request, City staff still disagrees with Lessee's request, the matter shall be submitted by City staff to City Council for final determination. An uncured default by Lessee in the compliance with the above procedure shall be cause for termination pursuant to Section 13. No fees shall be charged for parking without prior written approval of the City. Lessee shall maintain a preferential reduced golf fee structure for senior citizens over the age of 62 years, students who are enrolled in public or private schools in the City through grade 12, and certain recreational uses as set forth on Attachment B. 8 03674 - 00004/1662123.6 SECTION 6 — MAINTENANCE Lessee shall have the exclusive duty to maintain the golf course and all site facilities in accordance with the Operating Standard, including comparable agronomic, turf and playing conditions on a year round basis. At a minimum Lessee's regular maintenance schedule shall conform with the schedule set forth in Attachment E, incorporated as part of this Agreement, and Lessee's capital improvement and repair requirements shall be set forth on Attachment C, incorporated as part of this Agreement. Lessee shall perform its duties and obligations under this Agreement in a prudent and professional manner in order to meet the Operating Standard. Maintenance shall include, but shall not be limited to, regular mowing, edging, vericutting, aerifying, fertilizing, irrigating and all necessary landscape procedures which are required to keep the golf course and driving range and practice green consistent with the Operating Standard. Regular maintenance shall also include, but shall not be limited to, the requirement to change cups, top dress playing areas, repair divots, rake sand traps, renovate turf, provide weed and insect control, maintain watering systems including pumps and controls and to conduct re- sodding and re- seeding when necessary to meet the Operating Standard. The pruning of trees, shrubs and plants and the clipping of grass around all poles, fences and walkways located within the Facility shall also be part of the regular maintenance. Lessee shall be responsible for maintaining the clubhouse, pro shop, coffee shop, public course restrooms, parking lot area and all storage areas to meet the Operating Standard. Maintenance of these facilities shall include regular exterior and interior painting and repair so that all facilities meet the Operating Standard. In addition, all interior furnishings shall be kept clean and maintained in accordance with the Operating Standard, subject to reasonable wear and tear. All equipment shall be maintained in accordance with the Operating Standard and at the reasonable request of City, Lessee shall provide City with its existing schedule and /or policy for the replacement of equipment in the ordinary course of business in order to meet the Operating Standard. Storage areas shall be kept clean and orderly and shall be reasonably screened from public view when not in use. Kitchen and dining facilities shall be maintained in accordance with all applicable health and safety requirements. No offensive or refuse matter, nor any substance constituting an unnecessary, unreasonable or unlawful fire or health hazard shall be permitted to remain on the site and Lessee shall prevent any such matter or material from being or from accumulating at the Facility. Lessee shall furnish trash receptacles for use by the public and shall empty and clean each in order to maintain the Operating Standard. 0 03674 - 0000411662123.6 Lessee shall maintain the course and all related facilities in order to meet the Operating Standard, and in accordance with all applicable City Code provisions applicable to public facilities, including property maintenance requirements, or such higher standards as may be set forth elsewhere in this Agreement. SECTION 7 — MERCHANDISE Lessee shall provide and maintain an inventory in the pro shop and the coffee shop of quality golf equipment and food and beverage products. All merchandise, food and alcoholic beverages sold on the site shall conform to all federal, state and municipal laws and ordinances. At the request of City, Lessee shall sell branded merchandise containing the name of the City and /or Facility in the pro shop, provided, however, that Lessee shall have discretion to set pricing and inventory levels of such merchandise in response to customer demand. City shall have final approval on the design and logo used on any City or Facility branded merchandise in its sole and absolute discretion. Within thirty (30) days of the execution of this Lease, City and Lessee shall meet to review any existing branded products and to discuss what design and logo shall be used on a going forward basis. SECTION 8 — LEASE TERM (A) The term of this Lease shall be for five (5) years commencing December 1, 2008, and ending November 30, 2013. Lessee shall have the option to extend the Lease term for three (3) additional five (5) year terms. Lessee may request to exercise each option during the period beginning twelve (12) months and ending six (6) months prior to the scheduled expiration of the initial term or either of the first two extension periods. As part of the request of Lessee to exercise for the first option term, Lessee shall submit a written acknowledgment that Lessee shall complete the Option Term 1 Projects (described on Attachment C) in accordance with and subject to the review and approval process set forth in Section 3(C) above. (B) If Lessee exercises one or more options to renew the term, and provided that Lessee is not in material breach of any of its obligations under this Lease, this Lease shall be extended for the option term. The rent for the option term shall be as set forth on Attachment F. 10 03674 - 00004/1662123.6 (C) In the event that Lessee is in material breach of any of its obligations under the Lease, then City shall have the right to deny the request for extension and this Lease shall expire at the end of the then current term. SECTION 9 — RENT (A) For the uses granted herein, Lessee agrees to pay City and City agrees to accept annual rental payments equal to the amounts indicated in Attachment F incorporated as part of this Agreement. (B) Rent shall be payable quarterly in arrears with the first rental payment being earned for the period commencing December 1, 2008 and terminating December 31, 2008. All subsequent rental payments shall be due and payable in full within forty -five (45) days of the end of each calendar quarter; provided, however, the first rental payment under this Lease shall be due and payable in full on or before February 14, 2009. All rental payments shall be paid in lawful money of the United States by check or draft to the order of the City of Arcadia, mailed or delivered to the Administrative Services Department, City of Arcadia, City Hall, 240 West Huntington Drive, P.O. Box 60021 Arcadia, CA 91007. (C) Each quarterly payment submitted by Lessee shall be accompanied with a financial statement indicating the gross sales by category with respect to such quarter. Categories shall include golf course, driving range, cart rental, equipment rental, merchandise, food and beverage sales for each month of the proceeding quarter. (D) Lessee acknowledges that Lessee's failure to pay any rental payment as and when due may cause City to incur costs not contemplated by City when entering into this Lease, the exact nature and amount of which would be extremely difficult and impracticable to ascertain. Accordingly, if any rental payment is not received by City as and when due, then, without any notice to Lessee, Lessee shall pay to City an amount equal to five percent (5 %) of the past due amount, with an added penalty of 5% of said due amount on the last day of each month after the due date thereof, providing that the amount of such penalty to be added shall in no event exceed one hundred (100 %) of the amount of rental payment due. 11 03674 -0000411662123.6 SECTION 10 — RECORDS AND INSPECTIONS (A) Lessee shall be required to maintain a method of accounting, to the satisfaction of the City, which correctly and accurately reflects the gross receipts and disbursements of the Lessee in connection with the site operations. The method of accounting including bank account, shall be separated from the accounting system used for any other business operated by Lessee. Such method shall include the keeping of the following documents: i. Regular books of accounting such as general ledgers; ii. Journals including any supporting and underlying documents such as vouchers, checks, tickets, bank statements, etc.; iii. Cash register tapes (daily tapes may be separate but shall be retained so that from day to day the sales can be identified), golf starter sheets and golf cart rental forms; and iv. Any other reasonable reporting records that the City deems necessary for proper reporting of receipts. (B) Within ninety (90) days after the close of the Lease's fiscal year, Lessee shall provide, at no cost to the City, a certified statement with an opinion prepared by a Certified Public Accountant detailing all gross revenue as defined in Attachment G, incorporated as part of this Agreement, derived from green fees, driving range services, food sales, beverage sales, sale of merchandise, cart rentals and miscellaneous rentals and all other concessions and services. The statement shall include computations which show all rent due to the City and Lessee shall include a payment for any rents due at the time that the statement is submitted to the City. (C) At the direction of the City, Lessee shall provide City with a Certified Financial Audit with an opinion prepared by a Certified Public Accountant selected by the Lessee covering all financial aspects of the course operation. The City shall have the right to require that the audit be prepared by auditors selected by the City. The City will assume all costs related to the preparation of an audit by a City - selected auditor except that the Lessee will - assume the cost if the City audit reveals a discrepancy of three percent (3 %) or greater in revenue or expenses for capital improvements previously reported to the City or if the City determines that the audit is necessary to determine the validity of service or fee changes proposed by the Lessee which are not in conformance with this Lease. If an audit shall reveal a discrepancy in the revenues or expenses for capital improvements, Lessee shall, 12 03674 -00004/ 1662123.6 within thirty (30) days of such audit, remit payment of the full amount plus 5% of such discrepancy to City. Likewise, in the event such discrepancy is found to have been in favor of City, City shall remit payment of the full amount of such discrepancy to Lessee within thirty (30) days of such audit. (D) All documents, books and accounting records shall be open for inspection and re- inspection at any reasonable time during the term of this Lease and for twelve (12) months thereafter. In addition, the City or its auditors or representatives, may from time to time at its discretion, conduct an audit and re -audit of the documents, books and accounting records and the business conducted by Lessee and/or observe the site operations of the Lessee, as needed, to determine the accuracy of the Lessee's records and to confirm operations. Lessee shall not be required to retain any documents, books or accounting records for more than seven (7) years. (E) The City shall have the exclusive right to inspect the Facility at any time during Lessee's normal business hours to determine maintenance and operational compliance and to observe Facility operations. SECTION 11 — EMPLOYEES (A) Lessee shall recruit, hire, train, discharge, promote, supervise, manage the work of, and compensate all employees necessary to operate the Facility in accordance with the terms of this Agreement, including any management staff working at the Facility. Lessee shall be solely responsible for the payment of all wages and compensation, the payment of all payroll taxes and any required withholding of taxes for Facility employees. Lessee shall provide all eligible employees with employee benefits similar to those offered at similar facilities leased or managed by Lessee. Lessee shall establish or follow established policies concerning safety in the workplace, equal opportunity employment, anti - discrimination in the workplace and such other employee policies as may be required by applicable state, federal and local laws. Lessee shall use reasonable efforts to maintain a consistent workforce and supervisory personnel and to reduce employee turnover. (B) Lessee shall employ and supervise appropriate personnel in order to meet the Operating Standard. City shall have the right to participate in the interview process with 13 03674-00004/1662123,6 respect to the hiring of the General Manager of the Facility and Lessee shall reasonably consider any input from the City regarding the candidates for such position, provided that the decision to hire the General Manager shall be made by Lessee. Lessee shall keep City informed of the hiring of the General Manager and any proposed change in the General Manager. The General Manager shall have a copy of this Agreement at the Facility and shall be able to administer and implement the terms and specifications set forth in this Agreement. City shall have the right to request the termination or re- assignment, at the discretion of Lessee, of any employee at the Facility for cause if such employee has acted in an inappropriate manner which City reasonably believes (i) is in violation of law or presents a threat to public safety; or (ii) is materially inconsistent with or materially violates the Operating Standard (subject to Lessee's employment disciplinary practices and procedures). Subject to Lessee's employment disciplinary practices and procedures, Lessee shall reasonably cooperate with such request unless it would result in a violation of federal, state or local labor laws. The foregoing rights and obligations are intended to ensure that the Facility is managed in a manner consistent with the Operating Standard, however, the City shall not directly or indirectly supervise the activities of the General Manager or any other employee of Lessee at the Facility. The hiring, supervision and termination of employees at the Facility shall remain the sole responsibility of Lessee. (C) Any liability, fine, penalty or award (including the cost of defense and attorney fees, collectively, "Damages ") with respect to claims, demands, arbitration or litigation arising with respect to violations of federal, state or local laws, ordinances or regulations governing the employment or working conditions of the employees arising out of acts or omissions of a Lessee employee, or the failure of a Lessee employee to properly supervise Lessee's employees or administer employment practices, or other wrongful conduct of Lessee shall be the sole responsibility of Lessee and Lessee shall not be entitled to any reimbursement by the City for such Damages unless such Damages were (1) the result of a policy or procedure which was required in writing by the City, or (ii) the result of working conditions at the Facility which were identified in writing as non- compliant by Lessee and were the responsibility of City which were not remedied after written notice to City. 14 03674 - 00004/1662123.6 SECTION 12 — NOTICE TO COMPLY In the event that the Lessee fails to comply with any terms or conditions of this Lease including, but not limited to, provisions related to operational standards, maintenance standards, rental payments, records submitted or capital improvement programs, the City Manager shall provide the Lessee with a written notice of the deficiencies causing the non - compliance and Lessee shall have thirty (30) days to comply with the notice unless otherwise extended or amended in writing by the City Manager or unless compliance cannot be properly achieved within thirty (30) days, in which case Lessee shall have such additional time as necessary, as reasonably determined by City, in writing, in order to achieve compliance, so long as Lessee is proceeding in good faith with efforts to achieve compliance. Failure to comply within the thirty (30) day period, or any amended period, shall be grounds for default and eventual termination of this Lease. SECTION 13 — DEFAULT AND TERMINATION (A) Following the provisions set forth in Section 13, in the event Lessee fails in the performance of any terms, conditions or provisions of this Lease, including all operational and maintenance requirements, or fails to conform to the rules and regulations or any of the directions or instructions that may be reasonable and properly made by City or fails, neglects or refuses to pay the full rent amount within thirty (30) days after the same shall become due, or becomes unable through corporate incapacity or files a petition under the United States Bankruptcy code or the subject of a petition for involuntary bankruptcy filed against it, or defaults in the performance of a petition for involuntary bankruptcy filed against it, or defaults in the performance of any of the other terms, conditions or provisions herein required, or makes any misrepresentations to the City, City shall have following options without further notice or authorization to Lessee: City may give Lessee a written notice of default. If the Lessee fails to cure said default within twenty (20) business days, City may assume the operations of the Facility and City may perform such work as it deems necessary to cure said default and shall charge Lessee for the full cost of all labor and materials expended plus ten percent (10 %) of said costs for administrative overhead and may exclude Lessee from the Facility. ii. City may seek to recover at law any and all claims which may be due to it. 15 03674 -00004/1662123.6 City may retain any of Lessee's money in its possession and any of Lessee's property at the Facility and may seek to apply this to any and all claims due to the City. iv. In the event of bankruptcy, this Agreement shall terminate automatically with no action by City; may not be assigned to a third party; and will be subject to all costs incurred by City upon early termination. (B) Except for a default caused by the filing of a bankruptcy, petition, after providing Lessee with a written notice of a default pursuant to Subsection (i),above, City may terminate the Lease upon forty -five (45) days written notice following expiration of the twenty (20) business day cure period. (C) The acceptance of all or part of a rental payment by City for any period after a default, shall not be deemed a waiver of any of these options, nor a waiver of the default or any subsequent default of the same or any other term, covenant and condition. Any waiver by City of a default on the part of the Lessee shall not be construed as, or constitute a waiver of, any subsequent default of the same or any other term, covenant or condition. (D) City's choice of any option above shall in no way waive or limit its right to select any other option to cure a default or terminate the Lease. (E) Surrender. Upon termination or expiration of this Lease, Lessee shall reasonably cooperate with City and any new management company under this or a similar lease or management agreement in the transition of management responsibility as set forth in Section 21. SECTION 14 — FORCE MAJEURE Should either of the, parties to this Lease be delayed in or prevented, in whole or in part, from performing an of the obligations or conditions hereunder by reason of acts of terrorism, acts of God, landslides, lightning, forest fires, storms, floods, severe weather, freezing, earthquakes, other natural disasters, the threat of such natural disasters, epidemics, pandemics, quarantines, civil disturbances, acts of the public enemy, wars, blockades, public riots, governmental or regulator prohibitions or restraints, or other causes, whether of the kind enumerate or otherwise, and whether foreseeable or unforeseeable, that are not reasonably within the control of the 16 03674 - 00004/1662123.6 affected parties (each, a "Force Majeure Event'), then either party shall be excused from such performance to the extent caused by said acts and the rights and obligations of parties hereto shall not be otherwise affected by such failure. In the event that there is drought resulting in the imposition of mandatory water conservation or restrictions on water use at the Facility, such event shall not be a "Force Majeure Event', however, City and Lessee shall meet within thirty (30) days of such restrictions being imposed to discuss the impact of the restrictions on the operation of the Facility. Lessee and City agree to negotiate in good faith to make temporary or permanent modifications, as appropriate, to the terms of the Lease in the event that the restrictions have a material adverse effect on the condition or operation of the Facility. In the event that the drought causes material damage to the Facility and City and Lessee are unable to agree upon a mutually acceptable modification to this Lease, City acknowledges and agrees that: (i) Lessee shall not be obligated to repair such damage caused by the drought; and (ii) the Operating Standard shall be reasonably modified to account for such damage. SECTION 15 — LEGAL COMPLIANCE Lessee shall be solely responsible for compliance with all Legal Requirements. "Legal Requirements" shall mean any and all laws, statutes, ordinances, codes, orders, rules, regulations, permits, licenses, authorizations, entitlements, official orders and requirements of, or conditions imposed by, all federal, state and local governmental regulatory agencies and authorities which are as of the date hereof or hereafter become applicable to the Facility, its operation and employees, including, without limitation, any of the foregoing relating in any way to (i) occupational health and safety; and (ii) hazardous materials or hazardous waste. Lessee shall, at its own cost and expense, obtain and maintain all licenses and permits required to operate the Facility, including but not limited to, obtaining and maintaining a liquor license. Lessee shall comply with all federal, state and local laws and regulations pertaining to the storage, use and disposal of "hazardous or toxic wastes, substances, or materials" as defined by applicable law. SECTION 16 — INDEMNIFICATIONS (A) Hold Harmless Agreement. Lessee shall indemnify and hold harmless the City, its elected and appointed officials, officers, boards, commissions, agents and employees, against and from any and all claims, demands, causes of action, actions, suits, 17 03674- 00004/1662123.6 proceeding, damages, costs or liabilities (including costs or liabilities of the City with respect to its employees), including but not limited to damages for injury or death or damage to person or property including any reasonable attorney fees, arising out of or pertaining to the performance and activities of the Lessee pursuant to this Lease. (B) Defense of Litigation. Lessee shall at the sole risk and expense of Lessee, upon demand of the City, made by and through the City Attorney, appear in and defend any and all suits, actions, or other legal proceedings, whether judicial, quasi-judicial, administrative, legislative, or otherwise, brought or instituted by third persons or duly constituted authorities against or affecting the City, its elected and appointed officials, officers, boards, commissions, agents, or employees, and' arising out of or pertaining to the performance and activities of the Lessee pursuant to this Lease. (C) Lessee shall pay and satisfy and shall cause to be paid and satisfied any judgment, decree, order, direction, or demand rendered, made or issued against Lessee, the City, its elected and appointed officials, officers, boards, commissions, agents, or employees for which Lessee is required to indemnify and hold harmless the City pursuant to Section 16(A). Such indemnity shall exist and continue without reference to or limitation by the amount of any bond, policy of insurance, deposit, undertaking or other assurance required hereunder or otherwise; provided that, neither Lessee nor City shall make or enter into any compromise or settlement of any claim, demand, cause of action, action, suit, or other proceeding, without first obtaining the written consent of the other which consent shall not be unreasonably withheld. SECTION 17— INSURANCE REQUIRED (A) Lessee shall, as a condition precedent to execution of this Lease by City, furnish to the City and file with the City Clerk and City Attorney, and at all times during the existence of this Lease, maintain in full force and effect, at its own cost and expense, a general comprehensive liability insurance policy, including but not limited to coverage for premises operations, explosion and collapse hazard, underground hazard, contractual insurance, property damage, independent contractors and personal injury or death, and automobile liability in comprehensive from, in protection of the City, its elected and appointed officials, officers, boards, commissions, agents and employees, by a company approved by the City Manager and in a form satisfactory to the City Attorney, protecting the City and all 18 03674 -00004/1662123.6 persons against liability for loss or damage for personal injury, death and property damage, occasioned by the operations of Lessee under this Agreement, with minimum liability limits of Two Million Dollars ($2,000,000) for personal injury or death of any one person and Five Million Dollars ($5,000,000) for personal injury or death of two or more persons in any one occurrence, and One Million Dollars ($1,000,000) for damage to property resulting from any one occurrence. (B) The City shall be named as an additional insured in the insurance policies referenced in Section 17(A). Such insurance shall contain a provision that a written notice of cancellation or reduction in coverage of said policy shall be delivered to the City Clerk, with a courtesy copy to the City Attorney, at least thirty (30) days in advance of the effective date thereof. Said insurance policy shall contain the following endorsements: i. The naming of an additional insured as herein provided shall not affect any recovery to which such additional insured would be entitled under this policy if not named as such additional insured; and ii. The provision of the policy will not be changed, suspended, cancelled or otherwise terminated as to the interest of the additional insured named herein without first giving such additional insured thirty (30) days written notice. (C) Fire Insurance. Throughout the term of this Agreement, Lessee shall insure all structures erected or installed on the site under a policy of extended fire insurance coverage in an amount equal to the replacement value of said structures. Lessee shall be a named insured and City shall be a 'loss payee" under the said policies of fire insurance. Any payment resulting from damage or destruction to said property shall be paid into an escrow account and shall be used by Lessee solely and exclusively for the repair, reconstruction or replacement of said buildings or facilities. In the event that Lessee fails to undertake such repairs, construction or replacement within one hundred twenty (120) days, or such additional time as may be approved by the City, following the damage or destruction to said buildings or facilities, the entire proceeds of the fire insurance policy shall be paid to City. In the event that Lessee shall fail or neglect to take out or to 19 I» 03674 -00004/1662123.6 maintain said fire insurance, City may, but nothing herein contained shall be deemed to create any obligation or liability on its part to do so, secure fire insurance for such period as Lessee shall fail or neglects to do so, and City shall have the right to collect the cost of the insurance policy from Lessee. Fire insurance shall be obtained from an insurance company authorized to do business in the State of California with a rating by Best & Company of Los Angeles as B +, XII or above, and issued by its office or authorizing an agent in the County of Los Angeles. Lessee shall file with the City Clerk a policy or example certificate, subject to the approval of the City Attorney, indicating that the required insurance is in full force and effect. (D) Workers' Compensation. Concurrently with the execution of this franchise, Lessee shall furnish to the City and file with the City Clerk a certificate of Workers' Compensation Insurance and at all times during the term of this Lease, maintain in full force and effect, at its own cost and expense a policy of Workers' Compensation Insurance. (E) Umbrella or Excess Liability Insurance with a limit of not less than Five Million Dollars ($5,000,000). SECTION 18 —SECURITY (A) Security Deposit. Within thirty (30) days after the execution of this Lease, the Lessee shall deposit with the City Treasurer an-amount equal to three (3) months minimum rent in cash as a security deposit for the term of the Lease to guarantee the payment of any compensation, rental payments penalties or fees which are set forth in this Agreement (the "Security Deposit "); provided that any security deposit currently on deposit with the City shall be applied to the payment of the Security Deposit. Within fifteen (15) days after the termination of the Lease, the balance of the Security Deposit shall be refunded to Lessee. Upon an uncured default by Lessee, the City Manager shall have the right to withdraw sums for any due rent, damage or destruction to the Facility or any other fee or penalty to which City shall be entitled pursuant to this Agreement, as reasonably determined by the City Manager. No interest shall be paid to the Lessee on the Security Deposit. Such utilization of the Security Deposit by the City shall not be in lieu &other remedies available to City and shall not be deemed a waiver of any other rights and remedies of the City, or an exoneration of Lessee. Remedies shall be cumulative. If the 20 03674 - 00004/1662123.6 term is extended, the Security Deposit shall remain on deposit and no additional deposit shall be required. In the event the City Manager properly withdraws funds from the security deposit account, Lessee shall, within ten (10) days of notice of such withdrawal, replenish the Security Deposit. The failure to timely replenish such account shall be deemed a default under this Agreement and City may terminate this Agreement if the default remains uncured after the expiration of the cure period under Section 13. (B) Facility Account. Within fifteen (15) days prior to the commencement of the construction of the driving range work and the irrigation replacement work outlined on Attachment C, Lessee shall establish a bank account at a banking institution reasonably approved by the City ( "Facility Account "). Lessee shall deposit into the Facility Account funds in a sufficient amount to pay for the driving range work and the irrigation replacement. Subject to customary terms and conditions, the City shall be authorized to draw upon the Facility Account to pay for such work in the event Lessee has failed to complete such work in accordance with this Lease. SECTION 19 — DESTRUCTION OF PREMISES In the event that the facilities located or installed on the site during the term of this Lease are partially destroyed for any circumstances beyond its control, whether or not foreseeable, including, without limitation, a Force Majeure Event, then the affected party shall receive an abatement or reduction of rent to the extent the destruction interferes with the use of the Facility. Lessee waives the provisions of Civil Code Section 1932(2) and 1933(4) with respect to any destruction of the Facility. Lessee and City shall meet to discuss the extent of destruction and required remediation, repair or reconstruction required to restore the Facility to meet the Operating Standard. Both City and Lessee shall each have the right to terminate this Agreement in the event the destruction is deemed, in either party's sole and absolute discretion, to be so pervasive as to make restoration, remediation, repair or reconstruction inadvisable or infeasible. In the event of such termination, City and Lessee shall reasonably agree on a termination payment to be payable from the insurance proceeds to compensate Lessee for that portion of the actual cost of the Improvements which remains unrecovered based upon an amortization of such cost recovery over a term of twenty (20) years. If the Improvements are damaged or destroyed, the Lessee and City shall cooperate in the filing of insurance claims and the application of insurance proceeds to the restoration, remediation, repair or reconstruction of the Improvements. 21 I- 03674-00004/1662123.6 SECTION 20 — IMPROVEMENTS Lessee agrees that no Improvements now existing or later constructed at the Facility shall be removed or permitted to be removed by Lessee at any time when Lessee is in default (after the expiration of the applicable cure period) of any provision of this Lease nor removed contrary to any provision of this Lease. In the event that this Lease is terminated by the City for any reason resulting from any default of any provision herein, including the failure to pay rent and to maintain all facilities as required herein, all Improvements located at the Facility at the time of termination shall, at the election of the City, be and become the sole property of the City. SECTION 21 — SURRENDER OF PROPERTY At the termination or expiration of this Lease, Lessee agrees to return the Facility, including any improvements to the City in the same condition less ordinary wear or tear and subject to any Force Majeure Events, reconfigurations and /or modifications of the Facility. Attachment I identifies the only property approved by the City that can be removed by the Lessee at the termination or expiration of this Lease; provided that all proprietary information, non - capital improvement operating expense data, systems, equipment, information, materials and instruments ( "Lessee's Proprietary Materials ") shall remain the property of Lessee and may be removed by Lessee upon the surrender of the Facility. Lessee shall surrender and vacate the Facility and the Improvements in broom clean condition, and City may reenter and take possession of the Facility and the Improvements and eject all parties .in possession, or eject some and not others or eject none. Any alterations or improvements authorized by the City at the Facility shall become the sole property of the City at the termination or expiration of this Agreement. Upon termination or expiration of this Lease, Lessee shall reasonably cooperate with City and any new management company under this or a similar lease or management agreement in the transition of management responsibility. In connection with such transition, Lessee agrees to provide all requested documentation and information (excluding Lessee's Proprietary Materials) in its possession regarding the Facility and the operation of the Facility and to facilitate a smooth, seamless and efficient transition of management responsibility. In the event that the Lease has been terminated by City after an uncured event of default, then Lessee further agrees that all equipment used in the operation of the Facility shall remain in use by City, new management company or a new operator for a period not to exceed six (6) months following any such termination, at no charge to City or new management company or operator; 22 03674 - 00004/1662123.6 provided that if such equipment is leased to Lessee pursuant to a lease agreement with a third party lessor and City elects to retain such equipment for continuity of operations, then such lease shall be assigned to and assumed by City and Lessee shall be released therefrom. As soon as replacement equipment has been delivered, Lessee shall remove the leased equipment from the Facility and make arrangements for such third party contract to be terminated unless Lessee and the new operator agree to an assumption of the existing equipment lease in lieu of procuring replacement equipment. Termination shall not relieve Lessee from the payment of any sums then due to City hereunder plus interest thereon from the date due at the Prime Rate, which shall be the reference rate as announced by Bank of America from time to time, or from any claim for damages previously accrued or then accruing against Lessee up to the date of termination. SECTION 22 — CONDEMNATION Lessee takes and leases the Facility subject to all encumbrances, easements, rights and right - of -way of record and upon the condition and understanding that in the event of condemnation by any legal entity having the power to do so, Lessee shall be deemed to have a leasehold interest in the land and shall be entitled to a portion of any payments made as a result of the condemnation in accordance with applicable law. Lessee shall have a leasehold interest in the Facility under or by virtue of this Lease, including an interest as to the value of any Improvements thereon erected by Lessee. Such claim of interest shall be made only if Lessee is not in default (after the expiration of the applicable cure period) of any substantive provisions contained herein. For the purpose of this Section 22, the value of any Improvements erected by Lessee shall be equal to their value at the time the eminent domain proceedings are filed by the condemnor, depreciated in proportion to the ratio between the remaining life of the Lease and the entire Lease period. If the entire or a material portion of the leased property is taken by condemnation, either party shall have the election to terminate this Lease. The termination date shall be the date of taking. SECTION 23 — TAXES Lessee shall be responsible for the payment of any taxes that may be assessed against the Facility or fixtures, improvement and equipment thereon, or imposed upon the sale of products or prepared foods and beverages. 03674 - 00004/1662123.6 23 SECTION 24 — UTILITIES AND PERMITS Lessee shall be responsible to pay for all utilities used on the property and in connection with the operations of the site. Lessee shall also be required to pay for any permits or licenses, at standard City rates, required by the City as part of its operation. SECTION 25 — LIMITATIONS (A) Any permission required by this Agreement shall be secured in writing by the Lessee from the City and any errors or omissions therein shall not relieve the Lessee from its obligation to faithfully perform the conditions herein. (B) Lessee hereby acknowledges that it has inspected the Facility and that it accepts the Facility in its present condition and that it agrees not to call upon the City to make any repairs or improvements to the Facility. Any alterations or improvements authorized by the City on the Facility shall become the sole property of the City at the termination or expiration of this Agreement. SECTION 26 — ATTORNEY'S FEES (A) If either party commences any action against the other party arising out of or in connection with this Agreement, the prevailing party shall be entitled to have and recover from the losing party reasonable attorney's fees and cost of suit. (B) In case any suit shall be brought for an unlawful retainer of the Facility, or for the recovery of any rent due under the provisions of this Lease, or because of any breach by Lessee of any condition or term herein contained, Lessee shall pay to City a reasonable attorney's fees which shall be fixed by the court. SECTION 27 - NOTICE Any notices to be given hereunder shall be in writing and deemed to be duly given if and when deposited in the U.S. mail properly stamped and sent by certified mail to the party for whom it was intended at the address of such party as herein specified or at such other address of such party as herein specified or at such other address as the party may designate by proper notice from time to time. 24 03674 - 00004/1662123.6 American Golf Corporation Legal Department 2951 281h Street Santa Monica, CA 90405 City Manager City of Arcadia 240 W. Huntington Drive P.O. Box 60021 Arcadia, CA 91066 -6021 SECTION 28 — NO SUBLETTING OR ASSIGNMENT; NON - TRANSFERABLE Lessee shall not voluntarily assign, transfer or encumber its interest in this Lease or in the Facility, or sublease all or part of the Facility, or grant a license to any other person or entity, or allow any other person or entity to occupy or use all or any part of the Facility, without first obtaining the City's written consent. Any assignment, encumbrance, or sublease without the City's consent shall be voidable, and at City's election, shall constitute a default. No consent to any assignment, encumbrance, or sublease shall constitute a further waiver of the provisions of this Section. SECTION 29— DEPARTMENT RESPONSIBILITIES The City of Arcadia Public Works Services Department (PWSD) Director or the City Manager's Designee shall be responsible under the City Manager for supervising the maintenance of the Facility pursuant to this Lease; the Administrative Services Department (ASD) Director or the City Manager's Designee shall be responsible under the City Manager for supervising the payment of rent pursuant to this Lease; the Recreation and Community Services Department Director or the City Manager's Designee shall be responsible under the City Manager to monitor the quality of the golfing program offered to the community pursuant to this Lease. Lessee shall cooperate with the above named City officials in their respective area of responsibility. SECTION 30 — EFFECTIVE DATE The effective date of this Lease, for all purposes hereof, shall be December 1, 2008. 25 03674 - 00004/1662123.6 SECTION 31 — MISCELLANEOUS PROVISIONS (A) Captions. The captions used in this Lease are for the purpose of convenience only and shall not be construed to limit or extend the meaning of any part of this Lease. (B) Counterparts. Any executed copy of this Lease shall be deemed an original for all purposes. This Lease may be executed in one or more counterparts, each of which shall be an original, and all of which together shall constitute a single instrument. (C) Time of Essence. Time is of the essence for the performance of each covenant and term of this Lease. (D) Severability. If any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Lease, but this Lease shall be construed as if such invalid, illegal or unenforceable provision had not been contained herein. (E) Interpretation. This Lease shall be construed and enforced in accordance with the laws of the State of California. The language .in all parts of this Lease shall in all cases be construed as a whole according to its fair meaning, and not strictly for or against either Lessee or City. When the context of this Lease requires, the neuter gender includes the masculine, the feminine, a partnership or corporation or joint venture or other entity, and the singular includes the plural. Unless otherwise specified "days" shall mean calendar days. (F) Successors and Assigns. The covenants and agreements contained in this Lease shall be binding upon and shall inure to the benefit of the parties hereto and their respective permitted heirs, successors, and assigns (to the extent this Lease is assignable with the written consent of City). (G) Waivers. The waiver of any breach of any term, covenant or condition herein contained shall not be deemed to be a waiver of such term, covenant or condition or any subsequent breach of the same or any other term, covenant or condition herein contained. (H) Remedies. All remedies herein conferred shall be deemed cumulative and no one remedy shall be exclusive of any other remedy herein conferred or created by law. (1) Good Faith. Except where a party hereto is specifically permitted to act in its sole and absolute discretion, each party hereto agrees to act reasonably and in good faith with respect to the performance and fulfillment of the terms of each and every covenant and condition contained in this Lease. 26 03674 - 00004/1662123.6 (J) No Partnership. The parties hereto agree that nothing contained in this Lease shall be deemed or construed as creating a partnership, joint venture, or association between Lessee and City, or cause either party to be responsible in any way for the debts or obligations of the other party, and neither the method of computing rental payments nor any other provision contained in this Lease nor any acts of the parties hereto shall be deemed to create any relationship between Lessee and City other than the'relationship of landlord and tenant. (K) Integration. This Lease, and the Attachments, Schedules and addenda, if any, attached hereto, constitute the entire agreement between the parties, and there are no agreements or representations between the parties except as expressed herein. All prior negotiations and agreements between Lessee and City with respect to the subject matter hereof are superseded by this Lease. Except as otherwise provided herein, no subsequent change or addition to this Lease shall be binding unless in writing and signed by the parties hereto. (L) Commissions. Lessee and City each represent and warrant to the other that they have employed no broker, finder or other person in connection with the transactions contemplated under this Lease which might result in the other party being held liable for all or any portion of a commission hereunder. Lessee and City each hereby agree to indemnify and hold the other free and harmless from and against all claims and liability arising by reason of the incorrectness of the representations and warranties made by such party in this Section, including, without limitation, reasonable attorneys' fees and litigation costs. (M) Survival. Notwithstanding anything to the contrary contained in this Lease, the provisions (including, without limitation, covenants, agreements, representations, warranties, obligations, and liabilities described therein) of this Lease which from their sense and context are intended to survive the expiration or earlier termination of this Lease (whether or not such provision expressly provides as such) shall survive such expiration or earlier termination of this Lease and continue to be binding upon the applicable party. (N) IRCA. Lessee will comply with the requirements of Immigration Reform and Control Act ( "IRCA ") with respect to the operation, management, maintenance, and improvement of the Facility. Lessee agrees to indemnify, defend and hold harmless the City, its agents, officers and employees, from any liability, damages or causes of action arising out of or relating to any claims related to Lessee's failure to comply with the IRCA. 27 I. 111614-111104/1661121,6 � IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the291" day of ems, 2008, by their respective officers duly authorized in their behalf. ATTEST: By: s, City Clerk APPROVED AS TO FORM: By: Steven P. Deitsch, City Attorney CITY OF ARCADIA, a Municipal Corporation By: `rJ Donald Penman, City Manager GOLF CORPORATION, a California Corporation A i I By: I By: Secretary 28 03674 - 00004/1662123.6 ATTACHMENT A LEGAL DESCRIPTION EXISTING PAR 3 GOLF COURSE That certain real property in the City of Arcadia, County of Los Angeles, State of California, described as follows, to wit: A portion of Lob B, Tract 7465, per map recorded in Book' 84, page 98, of Maps; and a portion of Lots 12, 16, and 17 of the Western Two - thirds Rancho San Francisquito, per map recorded in Book 42, pages 93 and 94 of Miscellaneous Records in the office of the Recorder of said County, described as follows: Beginning at a point of intersection of the westerly boundary of the City of Arcadia as same existed on October 1, 1957, with the southerly line of said Lot B, thence North 56 45' 03" East along said southerly line to the westerly line of Santa Anita Wash as shown on Los Angeles County Flood Control District Map No. 36 -RW 11.1; thence South 10 30' 11" East 723.23 feet; thence southwest along a curve concave to the northwest and having a radius of 594.12 feet, 504.99 feet; thence South 38 11' 50 "; West 448.74 feet; thence South 45 05' 57" West 273.59 feet; thence North 74 52" 45" West 301.27 feet more or less to a point of intersection with the previously mentioned westerly boundary of the City of Arcadia; thence northerly and easterly along the various courses and distances of the said boundary to the point of the beginning. 29 03674-00004/1662123.6 LEGAL DESCRIPTION OF EXISTING OVERFLOW PARKING AREA JUST NORTH OF PAR 3 GOLF COURSE EAST OF ACCESS ROAD That certain real property in the City of Arcadia, County of Los Angeles, State of California, described as follows, to wit: That portion of Lot B, Tract 7465, per map recorded in Book 84, page 98, of Maps, in the office of the Recorder of said County, lying westerly of the Santa Anita Wash, as shown on Los Angeles County Flood Control District Map No. 36 -RW 11. 1, excepting therefrom the northerly 1177.96 feet and the westerly 25 feet of said LOMB. LEGAL DESCRIPTION EXISTING 25' ACCESS ROAD FROM LIVE OAK AVENUE TO PAR 3 GOLF COURSE That certain real property in the City of Arcadia, County of Los Angeles, State of California, described as follows, to wit: The Westerly 25 feet of Lot B, Tract 7465, per map recorded in Book 84, page 98, of Maps in the office of the Recorder of Los Angeles County 30 03674 - 00004/1662123.6 ATTACHMENT B RECREATIONAL USE Lessee shall collaborate with the Recreation and Community Services Department to provide a variety of quality golf related, affordable recreational programs to the City of Arcadia residents. These recreational opportunities should be used to enhance and increase recreational golf participation in the community year round. Programs and activities shall be offered through the City, while both advertising and marketing will be a shared responsibility by the City and Lessee' provided that City and Lessee shall each have reasonable approval rights over the advertising and marketing materials. Staffing and a Golf Professional for programs and activities shall be provided by Lessee at no cost to the City. Such programs and activities shall include: • A minimum of four (4) golf tournaments per year for the community. • A minimum of four (4), beginner level Golf clinics per year offered in the City's Recreational Classes Brochure. • A minimum of four (4), intermediate level Golf clinics per year offered in the City's Recreational Classes Brochure. • Provide a summer golf camp program for children. • A minimum of two (2) special events per year that would be geared toward the family and run in conjunction with the Recreation and Community Services Department. (ex. Family golf events, promote health /wellness, life long sport, picnics, contests, etc). • Work with Director of Recreation and Community Services to increase level of service to the community by marketing the golf course, programs, classes, tournaments and activities to the general public. • Work with the City's Director of Recreation and Community Services to promote the course on the City's website. Create link from City website to www.arcadia.americangolf.com. Highlight special events and classes on City website and through City publications. Rates shall be set for the foregoing activities such that the proceeds shall be sufficient to cover Lessee's and City's costs of administering and implementing the programs and activities. 31 03674- 00004/1662123.6 ATTACHMENT C IMPROVEMENTS Lessee shall complete the following capital Improvements on or before July 1, 2010: Driving Range: • $300,000 project budget • Remove synthetic turf and dispose • Rough grade landing areas and construct six target (mounded green -like complexes) • Install irrigation to landing area • Sod landing area with Bermuda 419 hybrid Bermuda sod Anticipated Driving Range Schedule: • Work starts weather permitting April 1, 2009 • Expected completion July 1, 2009 Golf Course Irrigation Replacement: • $600,000 project budget • Install Wall to wall irrigation system including new Mainline • "Valve in Head" irrigation heads • Stand alone irrigation field satellites • Designed with the goal of converting to reclaimed water as soon as it is available. • Quick coupler valves around greens to hand water. • Professionally designed by an irrigation designer to optimize the system Anticipated Golf Course Irrigation Replacement schedule: • Work starts weather permitting April 1, 2009 • Trenching will be done on one to two holes at a time. Interruption will require one to two holes closed at certain times. Scheduling will be done to keep interruptions to a minimum and to allow for continued play on unaffected holes. • Expected completion July 1, 2009 Driving range and golf course irrigation projects above require scheduling after wet season and require sodding during hot late- Spring /Summer months. Work will be subject to weather conditions and normal force majeure delays. Subject to force majeure or extreme weather interruptions, work will not extend past July 1, 2010. 32 03674 - 00004/1662123.6 Option Term 1 Projects: Installation of a 2- burner, 24 inch heavy duty griddle (minimum size with actual size to be determined due to spatial restrictions and exhaust hood and ancillary costs — total cost not to exceed project budget). Including the installation of health department exhaust hood requirement. Project budget $65,000 Installation of concrete path to the dirt road along holes #1 and #18 with 750 feet of 7 foot wide concrete. Project budget $35,000 Option Term 1 Project Schedule: • To commence in Year 1 of the first Option Term and to be completed by the end of Year 1 of the first Option Term subject to permitting and approval delays. CAPITAL RESERVE FUNDS and ELIGIBLE WORK Use of 2.5% Capital Reserve Funds shall be as follows: Starting in Year 3, American Golf Corporation shall make quarterly payments to the City in the amount of 2.5% of Annual Gross Revenues for future capital improvements ( "Capital Reserve Fund ") The Capital Reserve Fund shall be available exclusively to pay for capital improvements and major repairs at the Facility ( "Eligible Work "), but not for ordinary maintenance or routine, minor repairs. The Capital Reserve Fund shall be expended to depletion during the Term of this Lease on Eligible Work that is mutually agreeable to Lessee and City. Beginning January 2010, City and Lessee shall meet every January to discuss and identify future project needs to be funded by the Capital Reserve Fund. City and Lessee shall reasonably approve all such project proposals with the understanding that Eligible Work shall include without limitation capital improvements or major repairs that cost in excess of $2,000 (approximately 7% of the anticipated annual Capital Reserve Fund payment) and extend the useful life of the Facility including major repair and or replacement of major mechanical systems. Such projects agreed upon shall commence in July with written notice submitted by Lessee to City. City shall promptly pay all invoices for the completed Eligible Work submitted by Lessee. Notwithstanding the foregoing, Eligible Work shall also include, and Lessee shall be permitted to make emergency, and /or health and life safety capital improvements at the Facility prior to obtaining City approval as determined by urgency. Eligible Work may include but is not limited to: • Design and construction of a nursery. • Design and construction of a short game practice area for chipping and sand bunker shots. • Install new fencing and screening along the back of the golf course. • Install new energy efficient air conditioning units for the Facility. • Install new Air Quality Management District compliant gas dispensing pumps. • Installation of double pane windows for the Facility clubhouse. 33 03674 - 00004/1662123.6 • Upgrade indoor /outdoor lighting to energy efficient fixtures. • Installation of waterless urinals in men's restroom. • Equipment Repair or Replacement (except golf carts or course maintenance vehicles or small tools) • Interior or Exterior painting to the extent costing in excess of $2,000 • Hot water heater and other major clubhouse mechanical repairs or replacement in excess of $2,000 • Major roof repair or replacement in excess of $2,000 34 03674 - 0000411662123.6 ATTACHMENT D INITIAL FEES AND CHARGES Rate Type Current Weekday Weekend As of January 1, 2009 Weekday Weekend Rack Rate before 4PM $12.00 $15.00 $12.25 $15.50 Rack Rate after4 PM $12.50 $15.00 $12.75 $15.50 Senior Rate before 4PM $9.00 n/a $9.25 n/a Senior Rate after 4PM n/a n/a n/a n/a Junior Rate before 4PM $7.00 n/a $7.25 n/a Junior Rate after 4PM n/a n/a n/a n/a Twilight Rate after 8PM $5.75 $5.75 $6.00 $6.00 Replay Rate $5.00 $5.00 $5.25 $5.25 112 Cart Rate $6.00 $6.00 $6.25 $6.25 Single Rider Cart Rate $9.00 $9.00 $9.25 $9.25 Pull Cart Rate $3.00 $3.00 $3.00 $3.00 35 03674 - 00004/1662123.6 ATTACHMENT E MINIMUM MAINTENANCE STANDARDS Golf Course Maintenance Standards 1. Greens, Practice Putting Greens $ Nurseries A. Mowing.— At least five (5) days per week at a height of 3116" — 5/16" during the growing season. B. Change cup locations on all greens and practice putting greens daily during the active season and at least five (5) times weekly in the off - season. C. Repair ball marks, divots, or any other damaged turf on all greens and practice greens daily. D. Aerify all greens practice putting greens and nurseries at least three (3) times per year during the growing season, i.e., March /April, June, and September /October, or more frequently as directed by the Public Works Services Director or his designee. E. Topdress all greens, practice putting greens and nurseries: a. After any aerification performed with 1/2" or larger tines; b. And additionally, as needed to maintain a smooth putting surface. Topdressing will be sand or a mix similar to that used to construct the greens. F. Light vertical mowing of all greens, practice putting greens and nurseries shall be performed as appropriate to smooth and true the putting surfaces. G. Spiking of all greens and practice greens shall be performed as needed between aerifications to maintain water infiltration. H. Fertilization — All greens, practice greens, and nurseries shall be fertilized with nitrogen, phosphorous, potash, and other elements as needed to maintain color, growth, health and turgidity of the turf, without allowing excessive or excessively succulent growth. Fungicide - All greens, practice greens and nurseries shall have appropriate fungicide applications to prevent and /or control fungal disease activity. J. Pre - emergent herbicides such as Balan, Dacthal, etc., shall be used if necessary in the appropriate amounts and appropriate times to prevent intrusion into the greens of weeds difficult to eradicate such as goosegrass, crabgrass, etc. K. Weed I Control — All greens, practice greens and nurseries shall be maintained free of undesirable grasses and weeds. L. Insecticides — All greens, practice greens and nurseries shall be treated as necessary to prevent or halt insect damage. 36 03674- 00004/1662123.6 M. All greens shall be kept substantially free of other types of grass. Only Poa annua shall be the predominant type of grass in the greens 2. Fairways — to include area around concrete tees A. Mowing — All fairways shall be mowed three (3) times per week at a height of 1/2° — 7/8" during the growing season and as needed for the balance of the year. B. Aerification — All fairways shall be aerified a minimum of three (3) times per year, in the spring and in the summer, i.e., March, June, September. Aerification holes or the use of the Aerway slicer (no plugs) shall be permitted. C. Fertilization — All fairways shall be fertilized with nitrogen, phosphorous, potash, or other elements as needed to maintain color, growth, health and turgidity of the turf, without allowing excessive or excessively succulent growth. D. Vertical Mowing — All fairways will be vertically mowed as necessary to control mat or thatch buildup. E. Weed Control — Fairways shall be kept weed free to an extent of at least 90% of the area by the proper and timely application of pre- emergent and /or post- emergent herbicides. The goal of this standard is to not overseed the fairway's but to follow other accepted landscape practices that will maintain good quality turf coverage throughout the year subject to normal weather, pest infestations and reasonable water quality, quantity and availability. The goal is to produce a product that provides a quality municipal golf experience for our guests. If these practices fail, the City may require that the contractor overseed the fairway's in the fall with perennial rye or a fine fescue at a rate not less than 275 lbs. per 1,000 sq. ft. acre. G. Any improvements to the turf areas shall be completed within thirty (30) days of written notification from the Public Works Services Director or his designee to the Maintenance Superintendent at the golf course. 3. Roughs A. Aerification a) Shall be performed wall to wall at least two (2) times per year, i.e. February/March and September /October. b) Within wooded play areas — as necessary to establish and /or maintain turf. B. Fertilization — Roughs shall be fertilized as necessary to maintain turf C. Weed Control — Shall be performed as necessary to control seed formation, or to allow proper play. D. Mowing — Roughs shall be mowed at a height not less than 1 '/ " 37 03674- 00004 /1662123.6 4. Driving Range A. Mowing — Lessee shall mow the driving range a minimum of once per week at a height of 1/2" — 7/8" during the growing season and as needed for the balance of the year. B. Aerification - Driving range shall be aerified a minimum of three (3) times per year in the .spring and summer season, i.e. March /April, June, and September /October. Aerification holes shall not exceed a spacing of eight (8) inches on center or be of a diameter of less than 1/2° C. Fertilization — Driving range shall be fertilized with nitrogen, phosphorous, potash, or other elements as needed to maintain color, growth, health and turgidity of the turf, without allowing excessive or excessively succulent growth. D. Vertical Mowing — Shall be vertically mowed as necessary to control mat or thatch buildup. E. Weed Control — Shall be kept weed free to an extent of at least 90% of the area by the proper and timely application of pre- emergent and /or post- emergent herbicides. F. Natural grass tees shall be available two (2) weekdays per week and one (1) weekend day per week. G. The goal of this standard.is to maintain the good quality of turf coverage throughout the year subject to normal weather, pest infestations and reasonable water quality, quantity and availability. The goal is to produce a product that provides quality a quality municipal golf experience for the guests. H. Any improvements to the turf areas shall be completed within thirty (30), days of written notification from the Public Works Services Directoi or his designee to the General Manager or his designee at the golf course. 5. Planters — A. Clean -up — Daily, all planters shall be maintained free of trash and debris such as paper, drinking cans, bottles, fallen limbs and leaves, etc. B. Weed Control — As needed, all planters shall be maintained free of weeds or grass whether by mechanical or chemical means. C. Trimming — Monthly, the plant material (trees, shrubbery and ground covering) in planters shall be trimmed for protection from wind, insect damage, and for appearance. 6. Trees —All Trees Within the Prooertv Lines of the Golf Course All trees shall be maintained according to International Society of Agriculture (I.S.A) specifications, or the following specifications, whichever is greater. 38 03674- 00004/1662123.6 - A. Stakes — Trees shall be staked as necessary until sufficient size to stand unassisted. Stakes shall be installed and maintained. Stakes shall be removed as soon as possible. B. Pruning — All trees shall be properly pruned for protection from wind and pests as well as for appearance and safety at least once every four (4) years, or 114 annually. Trees or limbs that are deemed hazardous shall be removed immediately. C. Irrigation — All trees shall be irrigated to provide adequate moisture for normal growth. D. Mowing — Large area mowers shall not be used within one foot of the trunk of any tree. E. Removal and Replacement — All dead trees, for whatever cause, or diseased shall be removed within twenty (20) working days from written notification from the Public Works Services Director or his designee. Replacement shall be a 24' tree of appropriate type within ten (10) working days of the removal. Lessee shall be responsible for replacing up to ten (10) trees per year as part of the normal operating costs and as reasonably determined by Lessee. F. Unsightly sucker growths (i.e., water sprouts) shall be removed as necessary from all tree bases and trunks. 7. Irrigation A. Lessee shall monitor the requirements of the plant material, soil conditions, seasonal temperature variation, wind conditions, and rainfall and make appropriate changes in duration of watering cycles. All landscaped areas shall be irrigated as required to maintain adequate growth and appearance. B. Lessee shall provide personnel fully trained in all phases of the irrigation systems operation, maintenance, adjustments and repair; in all types of components to include electrical and battery operated control clocks, valves and sprinkler heads. C. All systems shall be adjusted in order to provide adequate coverage of all landscape areas; prevent runoff and /or erosion; prevent water roadways, hard surface areas and private property. Persistent puddling of water for more than one hour directly resulting from the use of the irrigation system is unacceptable. D. All system malfunctions, damage, and obstructions shall be repaired immediately within 72 hours following written notification from Public Works Services Director or his designee. E. In addition to required testing, all irrigation systems shall be tested and inspected as necessary when damage is suspected, observed or reported. Daily testing may be required if necessary. F. In areas where wind creates a problem of spraying onto private property, the controller must be set to operate during the period of lowest wind velocity. G. A solid probe or tensiometer shall be used to determine the soil moisture content in various areas when necessary. 39 03674 -00004 /1662123.6 H. Lessee shall observe and note all deficiencies occurring from the original design and review these findings with the Inspector, so necessary improvements can be made. Lessee shall repair all leaking or defective valves within 72 hours following written notification from the Public Works Services Director or his designee of such a deficiency (problematic with obsolete pars). J. Lessee shall repair /replace sprinklers that are causing excessive run -off or puddling within 24 hours following written notification from the Public Works Services Director or his designee of such a deficiency. K. In the event of a reduction of the volume of water supplied to a golf course during peak demand periods, or during water conservation efforts as required by the City Council for the community as a whole, the priority of water distribution by Lessee shall be as follows: 1. Greens 2. Tees 3. Fairways 4. Other turf and landscaped areas In no event will overseeding be allowed during mandatory water conservation phases as required by the City Council. If mandatory water conservation results in damage to the Facility,, Lessee may use funds from the Capital Reserve Fund (as defined in Attachment C) to repair such damage and otherwise restore the Facility. L. Irrigation part requirements: a. Plastic pipe shall be polyvinyl chloride (PVC), Type 1 b. Plastic Pipe fittings and connections shall be PVC Schedule 40, except nipples, which shall be Schedule 80 c. All sprinkler heads shall match existing heads in the system M. Notification .of work to be performed. Lessee shall provide written notification to the Public Works Services Director at least ten (10) days prior to any major improvements to the course including major trimming, planting, or removal of trees. 8. Fences — All Fences and Walls, Block Chain Link or Barbed Wire etc on or Within Boundaries of the Prooert v A. ,Repair all broken or damaged fencing as necessary within twenty (20) days of written notification from the Public Works Services Director or his designee. B. Repair or replace as necessary all fences, gates, and locking devices needed for the protection of the golf course or equipment within seven (7) days of written notification from the Public Works Services Director or his designee. 9. Edging 40 03674 - 00004/1662123.6 All sidewalks, patios and concrete cart paths must be kept edged. Edging around valve boxes, meter boxes, backflow preventers, etc. shall be done as needed (minimum monthly to insure that there is no obstruction of play or maintenance from growth around these items. 10 Sand Traps All sand traps shall be edged as necessary to maintain an appropriate lip, raked daily and filled with fresh sand as needed to maintain a minimum 4 inch depth on slopes and in the bottom. Replacement sand will be of a dust -free type, suitable for trap use. Sand traps shall drain and not hold standing water. Contractor shall be responsible, as part of maintenance operations, to install French drains or gravel pits below the traps to accomplish the standard of "no standing water'. 11. Color Areas The various planting areas throughout the course shall be cultivated, weeded, and pruned on a regular basis, with at least three (3) re- planting programs for annuals scheduled each year, i.e., March, June, October. 12. Construction and Remodeling Any change in the physical characteristics of any area of the golf course, such as addition or removal of sand traps, addition or removal of any hazards (water, trees, or native vegetation), movement of soil exceeding 20 cubic yards in any single area, or the modification of any portion of the golf course or the buildings, shall not be undertaken without the direct approval of the Public Works Services Director or his designee. 13. Crews American Golf shall have sufficient staff assigned to the golf course daily to meet the requirements and provisions contained in these specifications. These employees shall be supervised by an on -duty superintendent. Regular hours will be established and maintained. The superintendent's hours shall normally be the same as those of his crew. 14. Trash and Refuse Shall be collected daily and removed from the property as necessary to ensure minimal problems from refuse odors, insects, etc. Approved trash receptacles shall be conveniently stationed on tees and other appropriate areas and emptied daily. All outdoor trash receptacles shall have seal tight lids so as to prevent odors, insects, etc. 15. Vertebrate Pest Control Shall be routinely performed throughout the property on an on -going basis, in such a manner that vertebrate pest populations are steadily reduced and eventually eliminated. 16. Soil and Water Analysis will be performed annually in September by an approved professional laboratory. The results of these tests shall be used to guide the type and amount of fertilization, aerification, or 41 03674 - 00004/1662123.6 other maintenance standards required to provide healthy plant growth. Results of the analysis shall be forwarded to the Public Works Services Director with recommendations for corrective action if reasonably. required to maintain the Operating Standard no later than October 31 of each year. ,. 17 Lighting Any repairs or replacement of lighting system to ensure proper night lighting shall be completed within twenty (20) days of written notification. 18. Monthly Inspections /Course Walks The Public Works Services Director or his designee shall walk the course and inspect the driving range, practice areas and the clubhouse and appurtenant facilities during the first week of each month with the General Manager of the Lessee. These walks shall be performed quarterly with the Regional Director in January, April, July and October of each year. 42 03674- 00004/1662123.6 Building and Facility Maintenance Standards Clubhouse and Structures — All Structures within the Boundaries of the Golf Course A. Course Restrooms — All course restrooms shall be maintained daily in a manner so as to provide clean and sanitary facilities for the public as well as employees of the course. Soap, towels, toilet paper, etc. shall be provided in adequate quantity at all times. Portable facilities shall be maintained similarly. B. All buildings and structures shall be maintained in good repair at all times. Surrounding areas shall be maintained free of weeds, brush, disorganized junk or broken -down equipment, trash piles, etc. Interior areas shall be clean and neatly organized, safe and sanitary, for customers and employees. Painting, rodent and insect control shalt be performed as necessary. "Housekeeping" duties shall be assigned to all maintenance crew members and shall be performed daily. C. Lessee shall be responsible for all maintenance and repairs to the Course Monument/Entrance Sign. D. City shall be responsible for all maintenance along the driveway from Live Oak Avenue to the parking lot. E. The golf course superintendent is responsible for all facilities and structures maintenance not within the clubhouse area proper, whether performed by his own staff or some other. F. Proposed Facility Maintenance Inspection for Par Three Golf Course Normal Maintenance: a. Clean cobwebs and dust from the exterior of building; four (4) times a year or as necessary, June, September, December, March; b. Carpet and hard surface floors shall be vacuumed & swept daily. Carpets shall be wet or dry cleaned and hard surface floors shall be stripped and waxed four (4) times a year, June, September, December, March; c. Clean and disinfect restaurant eating areas daily per Department of Health standards; d. Clean and disinfect bathrooms daily; e. Clean grease traps monthly per Department of Health standards; f. Spray interior and exterior of building for insects monthly; g. Wash all windows inside and out, four (4) times a year or as necessary, June, September, December, March; and h. Paint walls and cabinets inside of the Facility in a manner to meet the Operating Standard; provided that the obligation to perform such work may be satisfied pursuant to Attachment C. If required to meet the Operating Standard, use 43 03674 -00004 /1662123.6 gloss /semi -gloss finish for snack bar area and restrooms and use eggshell finish for all other areas. i.. Doors and cabinets should be in properly working condition so as to close completely and properly. j. Check for and repair all water leaks on the Facility. k. Use energy efficient light bulbs for all lighting fixtures in the Facility. I. All outdoor electrical outlets and panels shall be in compliance with the electrical building code and inspected monthly to ensure safe and proper working condition. m. Chemicals, cleaning products and paint shall be stored appropriately in proper storage facilities as required by the California Fire Code. n. All electrical wiring throughout the Facility shall be concealed and in compliance with the electrical building code. o. Bi- monthly visual inspection of the Facility. 44 03674- 0000411662123.6 ATTACHMENT RENTAL PAYMENT SCHEDULE The rental payments from AGC to the City shall be the greater of either: Percentage Year 1 -5: Fifteen (15) percent of all green fees, cart fees, and range fee revenues, and Eight (8) percent on all other revenue (excluding green fees, cart fees and range fees) Year 6 -10: Seventeen (17) percent of all green fees, cart fees, and range fee revenues, and Eight (8) percent on all other revenue (excluding green fees, cart fees and range fees) Notwithstanding the foregoing, the increase in rent for years 6 -10 will be contingent upon the Facility generating annual Gross Revenue of no less than $1,200,000 in Year 5. If the Facility generates Gross Revenue less than $1,200,000 in Year 5, then the rent shall remain unchanged until Gross Revenue has hit the $1,200,000 threshold in any subsequent year. Once the threshold has been reached, the rent will go into effect for the next contract year and shall remain in effect thereafter. Year 11 -20: Nineteen (19) percent of all green fees, cart fees, and range fee revenues, and for each and every dollar thereafter, and Eight (8) percent on all other revenue (excluding green fees, cart fees and range fees) Notwithstanding the foregoing, the increase in rent for years 11 -20 will be contingent upon the Facility generating annual Gross Revenue of no less than $1,350,000 in Year10. If the Facility generates Gross Revenue less than $1,350,000 in Year 10, then the rent shall remain unchanged until Gross Revenue has hit the $1,350,000 threshold in any subsequent year. Once the threshold has been reached, the rent will go into effect for the next contract year and shall remain in effect thereafter. W 45 03674 -0000411662123.6 Minimum Rent Beginning at $125,000 in Year One and increasing to $150,000 annually thereafter for Year Two through Year Twenty. AND Capital Improvement Reserve: Starting in Year 3, Lessee shall make quarterly payments to the City in the amount of 2.5% of Annual Gross Revenues for future capital improvements and ongoing repair requirements, as more fully set forth on Attachment C. Terms herein used shall be as defined in Attachment F (Gross Revenue — defined). 46 03674 - 00004/1662123.6 ATTACHMENT G GROSS REVENUE — DEFINED For purposes of calculating percentage rent, gross revenue shall mean all money received by Lessee as a result of the sales and rental of all goods and services at the Facility, but shall not include: (1) Cash refunds or credits allowed on returns by customer; (2) Sales taxes, excise taxes, gross receipts taxes and other similar taxes nor or later imposed upon the sale of food, beverages, merchandise or services and paid by Lessee or the appropriate taxing authority, whether added to or included in the selling price; (3) Fees charged for golf lessons and instruction; (4) The actual uncollectible amount of any check or bank draft received by Lessee as payment for goods or services and returned to Lessee from a customer's bank as being uncollectible (commonly "non - sufficient funds" checks) but only after Lessee has made reasonable efforts to collect on the check; (5) The actual uncollectible amount of any charge or credit account (commonly "bad debts ") incurred by Lessee for the sale of merchandise or services; provided, however, that the credit was extended to the customer by Lessee, and that reasonable efforts to collect said account have been made; (6) The actual uncollectible amount of any sale of merchandise or services for which Lessee accepted a credit card; provided, however, that Lessee has made reasonable efforts to collect the debt after being notified by the issuing bank of the invalidity or uncollectibility or the charge; (7) Interest or other charges paid by customers for extension of credit; (8) Sales made by any concessionaire or licensee of City, it being the intention of this Lease that only Lessee's share of the receipts of such concessionaires or licensees, if any, are to be included in the calculation of Lessee's gross revenue, subject to approval by the City of Arcadia of all concession or license agreements prior written; (9) Sales or trade -ins of machinery, vehicles, trade fixtures or personal property used in connection with Lessees operation of the leased premises; (10)Unless otherwise disallowed by City, the value of any merchandise, supplies or equipment exchanged or transferred from or to other locations of business of Lessee where such exchange or transfer is not made for the purpose of avoiding a sale which would otherwise be made from or at the leased premises; (11)Receipts in the form of refunds from or the value of merchandise, supplies or equipment returned to shippers, suppliers or manufacturers; 47 03674- 00004/1662123.6 (12)The amount any cash or quantity discounts received from sellers, suppliers or manufacturers; (13)The amount of any gratuities paid or given by customers to or for employees of ,Lessee; (14)Receipts from the sales of uniforms or clothing required, to be worn by employees; (15)Amounts attributed to meals served or provided to employees of Lessee; (16)Receipts from the sale of waste or scrap materials resulting from Lessee's operations; (17)Amounts attributable to play by members of the American Golf Club exercising their membership right to play a limited number of rounds without separate payment of greens fees; and provided that the City can, at its option, require this activity to be included as gross revenue if in the opinion of the City, this activity is causing a reduction in green fees. (18)The amount of any cash received from operation of an advance reservation system; provided that the Lessee receives prior approval from City to operate a cash advance reservation system. 48 03674- 00004/1662123.6 ATTACHMENT H PROPERTY INVENTORY Property Inventory to be removed • All Maintenance Equipment (mowers, blowers, trimmers hand tools, ball retriever etc.) • POS System (computer's, printers and related items) • Golf Carts, riding and pull along • Shade cover over a portion of the driving range tees • Range balls • Ball dispensing machine • TV, flat screen in clubhouse • Score Cards • Video camera (swing analysis machine and system) • PA System • Time Clock • Refrigerator (owned by Coca Cola) in kitchen [large and small] • All merchandise in pro shop • Lessee's Proprietary Materials EN 03 674-00004/3662123.6 ATTACHMENT RECOVERY AND REIMBURSEMENT AMOUNT SCHEDULE Year in which Termination Occurs Column 1 Reimbursement Amount Payable to Lessee for Initial $900,000 Capital Improvements Reimbursement Amount Payable to Lessee for Option Term 1 $100,000 Capital Improvements Total Reimbursement Amount Payable to Lessee if Termination Occurs in Year stated in Column 1 Year1 $900,000 $0 $900,000 Year2 $900,000 $0 $900,000 $0 $900,000 $847,059 $0 $847,059 $794,118 $0 $794,118 N$900,000 $741,176 $100,000 $841,176 $688,235 $92,857 $781,092 $635,294 $85,714 $721,008 $582,353 $78,571 $660,924 $529,412 $71,429 $600,840 Year 11 $476,471 $64,286 $540,756 Year 12 $423,529 $57,143 $480,672 Year 13 $370,588 $50,000 $420,588 Year 14 $317,647 $42,857 $360,504 Year 15 $264,706 $35,714 $300,420 Year 16 $211,765 $28,571 $240,336 Year 17 $158,824 $21,429 $180,252 Year 18 $105,882 $14,286 $120,168 Year 19 $52,941 $7,143 $60,084 Year20 $0 $0 $0 50 03674 - 0000411662123.6