Document Pasco_doc_d45bd960cc

,f • GolfCourse Lease Agreement This Agreement (the "Agreement" or "Lease") is entered into, this 27th day of December, 2000, between the CITY OF PASCO, a municipal corporation ofthe State of Washington, herein called the "City" and IRI SUN WILLOWS ASSOCIATES LLC, a Delaware limited liability company, herein called "Lessee". Whereas, the City desires to have a responsible, qualified and competent entity operate and maintain the Sun Willows Golf Course, hereinafter called "Golf Course", located in the City of Pasco, Washington; and Whereas, Lessee desires to obtain the right, license and privilege to provide such operation and maintenance services; Now, Therefore, the City and Lessee agree as follows: ARTICLE I CERTAIN DEFINITIONS 1.1 Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the terms defined in this Article I shall have the following meanings: "AdditionalCapitalImprovements"shall meanimprovementstothegolf course for which the Additional Capital Improvement Amount is expended. "Additional Capital Improvement Amount" shall meap. an amount equal to the sum of $100,000, plus (ii) the differehce between $100,000.00 and sums actually expended for RequIred Capital Improvements. "AdditionalConcession Fee"shall have the meaning setforth inSection 2.2(d)(i) hereof. "Additional Payment"shall have the meaning set forth in Section 2.2(b)(i) hereof. "Annual Concession Fee"shall have the meaning set forth in Section 2.2(c)fi) hereof. "Annual Lease Payment" shall have the meaning set forth in Section 2.2(a)(i) hereof. Page ---PAGE BREAK--- • • "Bonds" shall mean a performance bond, or otherbonds, or combination of bonds and insurance, acceptable to the City Manager, in the amount of One Hundred Thousand Dollars ($100,000.00). "Buildings" shall mean and include the Clubhouse/Restaurant, the Pro­ Shop andotherabove groundenclosedstructures and anyandall alterations, replacements or modifications thereto during the Term ofthis Lease. "Business Day" shall mean a day that is not a Saturday, a Sunday, a legal holiday or a day on which banks are required or permitted by law or other governmental action to close in the City of Pasco, Washington. G) "Capital Improvement Budget" shall mean an annual budget for the applicable Lease Year covering the installation of Capital Improvements to the GolfCourse, which shall include an estimate ofany capital replacements, substitutions, and/or additions to the GolfCourse or any componentthereof to be accomplished during such Lease Year. "CapitalImprovements"shall mean anyimprovements, replacements or modifications to the Buildings or Other Improvements which are ofa capital nature and which do not constitute routine repair and maintenance operations and which are made for the purpose of creating a long term beneficial impact on the quality and success ofthe Golf Course. 0) "Capital Replacement Amount"shall have the meaning set forth in Section 4.2(b) hereof. "Capital Reserve Account"shall have the meaning set forth in Section 4.2(a) hereof. "CityConstruction Election" shall mean the election bythe Cityto either proceedwiththeconstructionofthe Renovation Improvements onits own behalf or (ii) require Lessee to proceed with the construction of the Renovation Improvements. "City Re.presentative" shall mean the City Manager or his designee. "City's Environmental Covenant" shall have the meaning set forth in Section lq.2.(C). hereof. "ClubhouseConstructionCostAmount"shall meantheaggregatecosts incurred by the City or Lessee in connection with the construction of the Renovation Improvements. Page ---PAGE BREAK--- "Clubhouse Renovation Date" shall mean the date upon which: the renovation of the Clubhouse/Restaurant has been substantially completed so that the Food and Beverage Operations can be commenced without unreasonable interference from contractors or subcontractors who are in the process of completing the balance of construction ofthe ofthe Renovation Improvements, (ii) the equipment necessary for the operation ofthe Food and Beverage Operations has been installed and is fully operational, and (iii) All Permits have been issued and/or obtained by Lessee to permit Lessee to operate the Food and Beverage Operations in accordance with applicablelaworare availableupon properapplication byLessee. "Clubhouse/Restaurant" shall mean the existing building containing clubhouse and restaurant/food service facilities. "Comparable Facilities" shall mean Columbia Point GolfCourse, Canyon Lakes Golf Course, and Horn Rapids Golf Course. "Commencement Date" shall mean January 1, 2001. "Contract Documentation" shall mean all contracts and other documentation with third parties regarding the development and construction ofthe Renovation Improvements. "Course Manager" who shall mean a full time, on-site, competent golf course managerwho shall be a PGA"ClassA" golfprofessional or certifiedby the Country Club Manager's Association and with at least three years experience in the operation of golf courses comparable to the Golf Course, whose operations include the operation ofa pro shop. "Default Rate" shall mean a rate of interest equal to one and one-half percent per month. "Environmental Activity" shall mean: any past, present or future storage, holding, presence, existence, release, threatened release, emission, discharge, generation, processing, use, abatement, disposition, handling ortransportationof any Hazardous Substance in violation of any applicable Environmental Laws from, under, into or on the Golf Course, or otherwise relating to the GolfCourse orthe ownership, use, operation or occupancy thereof, or any threat ofsuch activity, or Page ---PAGE BREAK--- • • (ii) the migration ofany Hazardous Substance to or from other property, or (iii) the loss or injury resulting from any underground or aboveground storage tanks located on or at the Golf Course, whether filled, empty, or partially filled with any substance, as defined in any applicable Environmental Laws, including any Hazardous Substance and the release thereof into the air, atmosphere, ground, water supply or sewer systems from the Golf Course. "Environmental Laws" shall mean all applicable federal laws and regulations relating to pollution ofthe environment (including without limitation, ambient air, surface water, ground water, land surface or subsurface strata), or emissions, discharges, releases or threatened releases of Hazardous Substances or otherwise relatingtothe manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances, (ii) any and all state and local laws similar to, in whole or in part, federal toxic waste laws, which from time to time are in effect in the jurisdiction in which the GolfCourse are located, and the regulations adopted pursuant thereto, (iii) any laws or regulations governing "wetlands", and (iv) any common law theory based on nuisance or strict liability. (aa) "Environmental liabilities" shall mean any and all actual or potential obligations to pay the amount of any judgment or settlement, the cost of complying with any settlement, judgment or order for injunctive or other equitable relief, the costofcomplianceorcorrectiveaction in response to any notice, demand or request from any department, agency or other body or component of any government authority that exercises any form of jurisdiction or authority under any Environmental Laws, the amount ofany civil penaltyorcriminalfine, andanycourtcosts and reasonable amountsfor attorney's fees, fees for witnesses and experts, and costs ofinvestigation and preparationfor defense ofany claim oranyjudicialaction, suit or proceeding (whether civil or criminal), any administrative proceeding (whether formal or informal), any investigation by a governmental authority or entity Page ---PAGE BREAK--- (includinga grandjury), andanyarbitration, mediation orother non-judicial process for dispute resolution, regardless of whether such proceeding is threatened, pending orcompleted, that maybe or have been assertedagainst or imposed upon the City, Lessee, the Golf Course or any property used therein and arising out of failure to comply at any time with all Environmental Laws applicable to the Golf Course; (ii) presence ofany EnvironmentalActivity on, in, under, at or in any way affecting the Golf Course; (iii) identification of Lessee or the City as a potentially responsible party under any Environmental Laws; (iv) presence at any time of any underground or aboveground storage tanks, whether filled, empty, or partially filled with any substance, as defined in any applicable Environmental Laws on, in, at or under the Golf Course; or any and all claims for injury or damage to persons or propertyarising out of exposure to Hazardous Substances originating or located at or migrating from the Golf Course to adjacent properties, or resulting from operation thereof. (bb) "Equipment Replacement Account"shall have the meaning set forth in Section 4.1(a) hereof. (cc) "ExistingFacilities" shall meanthefollowing facilities situatedonthe Real Property: Pro Shop (ii) Driving Range (iii) Clubhouse/Restaurant (iv) Maintenance Building and Yard Course Restroom (vi) Parking Lot (dd) "Expiration Date" shall mean December 31, 2010. Page ---PAGE BREAK--- • • (ee) "Fees"shall have the meaning set forth in Section 7.1. hereof. (ff) "Food & Beverage Concession Fee"shall have the meaning set forth in Section 2.2(e)(i) hereof. (gg) "Food and Beverage Operations" shall mean the restaurant and food and beverage services offered from time to time at the Golf Course. (bh) "Food and Beverage Revenues" shall mean all gross income, revenues and consideration ofwhatever form or nature, received by or paid to Lessee, its agents or employees, from any and all sources attributable to the operation, leasing, licensing or occupancy ofthe GolfCourse, determined on a cash basis, from: food and beverage sales (including alcohol sales) at the Golf Course and at bars and restaurants now or hereafter situated on the Golf Course, and (ii) proceeds of business interruption or similar insurance payable in connection with any loss of revenues described in this Subparagraph (bh). In no event shall "Food and Beverage Revenues" include any income, revenue orotherconsideration arising from GolfCourse Play Revenues, Golf Course Ancillary Revenues and Merchandise Sales. (ii) "GolfCourse" shall mean and include the Real Property and the Facilities, including the Buildings and Other Improvements. liD "GolfCourseAncillary Revenue" shall mean all gross income, revenues and consideration, ofwhateverform or nature, received byor paidto Lessee, its agents or employees, from any and all sources attributable to the operation, leasing, licensing and occupancy ofthe Golf Course, determined on a cash basis, for: golf cart rentals, (ii) driving range revenues, (iii) trail fees, (iv) parking fees, rentals, rents and receipts from licenses, concessions, vending machines and similar items, Page ---PAGE BREAK--- (vi) otherfees, charges or payments not determined as rental, but payable for or in connectionwith the rental ofoffice, retail, storage, parking or other space in the Golf Course, and (vii) proceeds of business interruption or similar insurance payable in connection with theloss ofrevenue described in this Subparagraph (ti). The term "Golf Course Ancillary Revenues" shall include all other sources of revenue or income of Lessee or its agents or employees with respectto the use, operation and activities associatedwith the GolfCourse to the extent not clearly included within the definitions of Golf Course Play Revenues, Merchandise Sales, or Food and Beverage Revenues, as appropriate, using common sense application to specific sources of revenue not specifically identified above. (kk) "GolfCourse Play Revenues" shall mean all gross income, revenues and consideration, ofwhatever form or nature, received by or paid to Lessee, its agents or employees, from any and all sources attributable to the operation, leasing, licensing and occupancy of the Golf Course, determined on a cash basis, for: green fees, (ii) tournaments, (iii) group outings, (iv) season passes, similar charges for the right to play golf on or otherwise use the Golf Course, and (vi) proceeds of business interruption or similar insurance payable in connection with any loss of revenues described in this Subparagraph (kk). In no event shall "Golf Course Play Revenues" include any income, revenue or otherconsideration arisingfrom GolfCourse Ancillary Revenues, Merchandise Sales and Food and Beverage Revenues. 01) "Hazardous Substance" shall mean any substance, material or waste which is regulated or governed by any Environmental Law, and includes, without being limited to, Page ---PAGE BREAK--- • any substance, material or waste defined, used or listed as "hazardous waste", "extremely hazardous waste", "restricted hazardous waste", "hazardous substance", "hazardous material", "toxic substance" or other similar or related term as defined, used or listed in any Environmental Laws, (ii) any asbestos or any substance containing asbestos, (iii) any petroleum products stored in bulk or biphenyl, (iv) any additional substances or materials which are now or hereafter hazardousortoxicsubstancesunderanyEnvironmental Laws relating to the Golf Course, and as ofanydateofdetermination, anyadditionalsubstancesormaterials which are from and after the Effective Date incorporated in or added to the definition of "hazardous substance" for purposes of any Environmental Law. (mm)"Irrigation Renovation Date" shall mean a date which is no later than June 30, 2003. (nn) "Irrigation Renovation Plan" shall mean a planfor the Irrigation System Improvements. (00) "Irrigation System" shall mean the irrigation system located on the Golf Course, including the on-site pump station (which on-site pump station includes three pumps) and the off-site pump station (which off-site pump station includes one pump) located near 40th Avenue and Argent. (pp) meanthe improvementstothe Irrigation System contemplated by the Irrigation Renovation Plan. (qq) "Late Charge"shall have the meaning set forth in Section 2.4. hereof. (rr) "Lease Year" shall mean, other than the initial Lease Year, any 12-month period from January 1 to December 31 during the Lease Term; providedthat the initial Lease Year shall be the period beginning on the Commencement Date and ending December31, 2001. To the extent anycomputation or other provision hereofprovides for an action to be taken on a Lease Year basis, an appropriate proration or other adjustment shall be made, if the context requires, in respect of the initial and final Lease Years to reflect that such periods are less than full calendar year periods. Page ---PAGE BREAK--- • • (ss) "Lessee Default"shall have the meaning set forth in Section 17.2(a). hereof. (tt) "Lessee Representative" shall mean Mr. Jeffrey M. Silverstein or Mr. Dave Flickwir, Mrs. Debbie Pedersen or another individual designated by Lessee in writing to the City. (uu) "Lessee's Environmental Covenant" shall have the meaning set forth in Section 19.1. hereof. (vv) "Maintenance Eguipment"shall have the meaning set forth in Section 13.1. hereof. (ww) "MaintenanceStandards"shall meanthe maintenancestandardssetforth on Exhibit"E"attachedhereto reference incorporatedherewith. (xx) "Merchandise Sales" shall mean all gross income, revenues and consideration, ofwhatever form or nature, received by or paid to Lessee, its agents or employees, from any and all sources attributable to the operation, leasing, licensing and occupancy of the Golf Course, determined on a cash basis, from: retail and wholesale sales of merchandise and products (including, without limitation, receipts from the pro shop now or hereafter located at the Golf Course), and (ii) proceeds ofbusiness interruption orsimilar insurance payable in connection with any loss of revenues described in this Subparagraph (xx). In no event shall "Merchandise Sales" include any income, revenue or other consideration arising from Golf Course Play Revenues, Golf Course Ancillary Revenues and Food and Beverage Revenues. (yy) "Permits" shall mean all certificates, permits, licenses, approvals and franchises relating to the Renovation Improvements or any part thereof, including, but not limited to, building permits and certificates ofoccupancy. (zz) havethe meaningsetforth in Section 5.2. hereof. (aaa) "Project Cost(s)" shall mean all costs of construction of the Renovation Improvements including the following: the cost of all labor, materials, utilities, equipment (acquired or rented) and similar items incorporated into or consumed in the Page ---PAGE BREAK--- • • construction and development of the Renovation Improvements, including fees of contractors or materialmen; (ii) expenses paid to outside architects, surveyors, consultants and engineers in connection with the planning and construction of the Renovation Improvements, and any utility work; (iii) to the extent not included in fee and expense statements from architects and engineers, costs of reproducing plans and specifications; (iv) all rents, office supplies, utilities and related expenses; all costs of Permits for the Renovation Improvements; (vi) costsincurredinconnectionwiththeTemporaryFacilities,including the temporary construction ofsewer and water lines; (vii) a fair and reasonable charge for cost of capital based upon a reasonable rate ofinterest, such rateto besetforth in the Renovation Budget; (viii) all reasonable third party expenses, incurred in connection with the construction ofthe Renovation Improvements including: reasonable travel expenses of employees of Lessee or the City incurred in the discharge of duties connected with the construction of the Renovation Improvements and included in the Renovation Budget; supplies of whatever nature contemplated by the Renovation Budget; cost of water, power, and fuel directly related to construction; (D)cost oftelephone and telecopyservice, data processing services, telegrams, postage,blueprints, photographs,field officesupplies, stationery, and similar items; cost ofsurveys; sales, or other similar taxes based upon labor performed and materials furnished; (G)fees for Permits; Page -10­ ---PAGE BREAK--- • surety bond premiums; premiums on insurance directly related to construction; cost of discharging liens; and (K)reasonable attorneys' fees and expenses growing out of the performance of the construction of the Renovation Improvements; and (ix) such other fees and expenses as may be contemplated by the Renovation Budget. (bbb) "Pro-Shop" shall mean the existing building containing pro-shop facilities. (ccc) "Optional Capital Improvements" shall mean the improvements to the Golf Course or additions to the equipment used and maintained at the Golf Course to be made by Lessee at its sole cost and expense identified in Exhibit attached hereto. (ddd) "Optional Capital Improvement Amount" shall mean the amount expended by Lessee in respect to the Optional Capital Improvements. (eee) "Other Improvements" shall mean any and all improvements to the Real Property other than the Buildings which may from time to time exist during the Term of this Lease, including the Irrigation System, parking lots, septic tanks and similar improvements. (fft) "Real Property" shall mean the real property depicted on the sketch attached as Exhibit hereto and incorporated herein bythis reference, on propertylegallydescribed on Exhibit hereto and incorporated herein by reference. (ggg) "Records"shall have the meaning set forth in Section 5.2. hereof. (hhh)"Regulation(sl" shall mean any and all laws, ordinances, rules, regulations, statutes, building and fire codes, zoning ordinances, restrictions, orders or decrees, health and environmental laws and regulations and other matters of all governmental authorities having jurisdiction over the Renovation Improvements or the Golf Course. (iii) "Renewal Option" shall mean a one-time right to renew the Term of this Lease for an additional five years in accordance with the provisions forth in the Renewal Term Rider attached hereto and made a part hereof for all Page -11­ ---PAGE BREAK--- • purposes. (iiD "Renovation Budget"shall mean a budget to cover the Project Costs for the construction ofthe Renovation Improvements. (kkk) "Renovation Election Date"shall mean February 1,2001. 011) "RenovationImprovements"shall mean the improvements contemplated by the Renovation Plan. (mmm) "Renovation Improvement Outside Completion Date"shall mean, in the eventthatthe City is responsiblefor the consturction of the Renovation Improvements, December 31, 2001, to the extent of a renovation as opposed to a replacement of the Clubhouse/Restaurant, or April 1, 2002, to the extent of the replacement ofthe Clubhouse/Restaurant and the Pro-Shop. (nnn)"Renovation Plan"shall mean a plan for the renovation or replacement of the Clubhouse/Restaurant which shall include: preliminary plans regarding the scope of the renovation or replacement, (ii) any interior or exterior modifications or improvements to the Clubhouse/Restaurant to the extent of a renovation as opposed to replacement, (iii) a list of proposed furniture, fixtures and equipment, and (iv) drawings as to location of improvements to the extent alteration of existing structural components or drawings of the replacement improvements. (000) "Rent"shall mean the aggregate oftheAnnual Lease Payment, theAdditional Payment, the Annual Concession Fee, the Additional Concession Fee and the Food & Beverage Concession Fee, together with any and all other sums due and payable hereunder. (ppp)"Rental Credit"shall have the meaning set forth in Section 2.2(0 hereof. (qqq) "RequiredCapitalImprovements" shall meanthose improvementstothe Golf Course to be constructed at Lessee's sole cost and expense identified in Exhibit "F"attachedhereto notlaterthan the dates specified in Exhibit and to the reasonable satisfaction ofthe City. Page -12­ ---PAGE BREAK--- • (rrr) "Required Capital Improvement Amount" shall be an amount to be expended by Lessee in respect to the Required Capital Improvements which shall be not more than the sum of $100,000.00. (sss) "Revenues" shall mean the aggregate of Golf Course Play Revenues, Golf Course Ancillary Revenues, Merchandise Sales and Food and Beverage Revenues. (ttt) "Superintendent"shall mean afull time, on-sitegolfcoursesuperintendent, certified by the Golf Course Superintendents Association ofAmerica who has at least three years experience in maintenance ofgolfcourses comparable to the Golf Course, in the supervision of grounds maintenance activities. (uuu)"Security Interests" shall have the meaning set forth in Section 20.14 hereof. (vvv) "TemporaryFacilities" shall meantemporaryfacilities, improvements and equipmentto beusedforthe purpose ofconductinglimitedFoodand Beverage Operations, until the Clubhouse Renovation Date. (www) "Term" shall mean a period often (10) years. (xxx) "Unamortized Capital Amount" shall mean the sum ofthe following: The unamortized cost ofthe Required Capital Improvements, plus (ii) The unamortized cost ofthe Additional Capital Improvements, plus (iii) The unamortized cost of that portion of the Optional Capital Improvements which Lessee is unable to remove from the Golf Course as ofthe early termination date of the Lease or which were designed exclusively for use at and which shall remain at the Golf Course. The unamortized cost of the foregoing items shall be determined by using straight line depreciation over the lesser of the useful life of the Capital Improvement in question, or the Term hereof, assuming that the Renewal Option has been exercised. 1.2 Inclusive Nature ofRevenue Definitions. The parties intend that all gross income, revenues and consideration from the Golf Course not expressly excluded as setforth in Section 1.3. below shall be included as Golf Course Play Revenues, Golf Course Ancillary Revenues, Merchandise Sales, or Food and Beverage Revenues, as appropriate, using common sense application to specific sources of revenue. Page -13­ ---PAGE BREAK--- • • 1.3 Specific Exclusions to the Revenue Definitions. Go If Co u r s e PIay Revenues, GolfCourseAncillaryRevenues, Merchandise Salesand Foodand Beverage Revenues shall exclude the following items: Federal, state or municipal taxes collected from the consumer (regardless ofwhether the amountthereofis stated to the consumer as a separate charge) and paid over periodically by Lessee to a governmental agency accompanied by a tax return or statement as required by law (provided that any leasehold excise tax shall not be so excluded); (ii) Charges attributable to goods which have been returnedto Lessee or deposits which are subject to refund, until such deposits have been forfeited to Lessee; (iii) Proceeds from the sale of assets which have been clearly identified as being owned by Lessee (including the sale of Lessee's leasehold estate hereunder, if such sale is otherwise permitted by the City); (iv) Proceeds from insurance or insurable losses related to the Golf Course, provided that all such proceeds shall be used to repair or restore corresponding losses or destruction of the Golf Course, includingimprovements, unless the Cityconsents inwriting to other use ofthe proceeds; Additional sums or funds provided by Lessee or its partners on an equity or loan basis; and (vi) Customary and reasonable fees, salaries, bonuses andtips earnedby golf instructors, employees and agents as payment of, or services rendered for, golf instruction, golf lessons and waiter and waitress services at the Golf Course. ARTICLE II TERM; RENT; RENTAL CREDIT; EXCISE TAXES; LATE CHARGE; BONDS 2.1 Term. Initial Term. For and in consideration of the Rent and faithful performance by Lessee ofthe terms and conditions and the mutual covenants hereof, the City hereby grants to Lessee the exclusive right to operate and maintain the Golf Course for the Term commencing on the Commencement Page -14­ ---PAGE BREAK--- • Date and ending on the Expiration Date. DeliveryofPossession. IfLessor, for anyreasonwhatsoever, cannot deliver possession of the Golf Course to Lessee on the Commencement Date, Lessor shall not be subject to any liability nor shall the validity of the Lease be affected; provided, the Term of this Lease shall commence on the date possessionisactuallytenderedto Lessee; provided, further, thatthe Expiration Date ofthe initial Term shall in all events occur on December 31, 2010. Remedies for Failure to Deliver Possession. In the eve nt t hat possession ofthe GolfCourse is not delivered bythe Cityto Lessee onorbefore March 31, 2001, Lessee shall, at its option, have the right to terminate this Lease by the delivery ofwritten notice to the City of its election to terminate, in which event neither party hereto shall have any further obligation hereunder, one to the other. The foregoing option to terminate may be exercised at any time commencing on April 1, 2001, and prior to the date the City delivers possession ofthe GolfCourse to Lessee. Option to Renew. Lessee is hereby granted the Renewal Option, subject to the provisions forth in the Renewal Term Rider attached hereto and made a part hereoffor all purposes. Term. The word "Term" whenever used herein refers to the initial Term of this Lease and any valid extension or renewal thereof. 2.2 Rent; Payment; Rental Credit. Lessee agrees to pay the City for the right, license and privilege ofleasing, operating and maintaining the GolfCourse, food and beverage concession, and other concessions, the following payments: GolfCourse Annual Lease Payment. Lessee agrees to payan annual lease payment (the "Annual Lease Payment") for each Lease Year in the amount of $150,000, pro­ rated for a partial Lease Year. (ii) Lessee shall pay the Annual Lease Payment in equal installments of $12,500 on or before the 5 th day of each calendar month during the term ofthis Lease, commencing on the 5th day of the first full month following the Commencement Date. GolfCourse Additional Payment. In additionto theAnnual Lease Payment, Lesseeagreesto pay, onan annual basis, the amount, ifany, by which 17.5% ofGolfCourse Play Revenues exceeds an amount equal to the Annual Lease Payment Page -15­ ---PAGE BREAK--- • • (the "Additional Payment"). (ii) Any Additional Payment shall be due and payable on January 31 of each Lease Year of the Term of this Agreement, commencing on January 31,2002, for the Golf Course Play Revenues generated in the prior Lease Year. GolfCourse Concession Fee. Lessee agrees to pay, for the right to offer golf related merchandise for sale, lessons andother golfrelatedservices, an annual concession fee for each Lease Year in the amount of $75,000 (the "Annual Concession Fee"), pro-rated for a partial Lease Year. (ii) Lessee shall pay the Annual Concession Fee in equal installments of $6,250 on or before the 5th day of each calendar month during the Term ofthis Lease, commencing on the 5th day of the first full month following the Commencement Date. Golf Course Additional Concession Fee. In addition to the Annual Concession Fee, Lessee agrees to pay, on an annual basis, the amount, ifany, bywhich 20% ofGolfCourse Ancillary Revenues, plus 6% of Merchandise Sales, exceeds the Annual Concession Fee (the "Additional Concession Fee"). (ii) Any Additional Concession Fee shall be due and payable on January 31 ofeach LeaseYearoftheTermofthisAgreement, commencing on January 31, 2002, for Golf Course Ancillary Revenues and Merchandise Sales generated in the prior Lease Year. (iii) Example: If during the Lease Year in question Golf Course Ancillary Revenues are $415,000 and Merchandise Sales are $150,000, the Additional Concession Fee payable under this Section 2.2(dl shall be $17,000, calculated as follows: 20% of Golf Course Ancillary Revenues $83,000 6% of Merchandise Sales 9,000 Subtotal $92,000 Less Golf Course Concession Fee ($75,000) Additional Concession Fee $17,000 Food & Beverage Concession Fee. Page -16­ ---PAGE BREAK--- • Lessee agrees to pay for the right to operate the Food and Beverage Operations an annual food and beverage concession fee (the "Food & Beverage Concession Fee") in the amount of: 6% of the Food and Beverage Revenues, commencing on the Commencement Date, plus $10,000 per Lease Year, commencing with the Lease Year in which the Clubhouse Renovation Date occurs, pro-rated for a partial Lease Year. (ii) The portion of the Food & Beverage Concession Fee attributable to 6% ofthe Food and Beverage Revenues for the prior calendar month shall be due and payable on or before the 25th day of each calendar month during the Term ofthe Lease, commencing on the 25th ofthe second full month following the Commencement Date. (iii) The remaining portion of the Food & Beverage Concession Fee ($10,000.00 per annum) shall be payable in equal installments of $833.00, payable on the 5th ofeach calendar month, commencing on the 5th day of the first full month following the Clubhouse Renovation Date. Rental Credit. In the event that the City elects to require Lessee to construct the Renovation Improvements in accordance with the provisions of Section 9.3. below, Lessee shall be entitledto a credit (the "RentalCredit") against sums due in respect to the Annual Lease Payment, the Additional Payment, the Annual Concession Fee, the Additional Concession Fee and the Food and Beverage Concession Fee, until such time as the amount of the Clubhouse Construction Cost Amount has been reduced to zero through any combination ofthe Rental Credits contemplated by this Subparagraph the application of the Additional Capital Improvement Amount and/or the application offunds from the Capital Reserve Account. Place ofPayment. All required payments due and payable under this Section 2.2. shall be directed to City Treasurer, 525 N. 3M Avenue, Pasco, Washington, 99301, or to such other place as the City may from time to time designate. PartialMonth Rental. Totheextentthat, duringtheTerm, Rent is payable for a partial month, the Annual Lease Payment, Annual Concession Feeand Food &Beverage Feeshallbe pro-ratedbaseduponthe actual number ofdays in the month in question. Page -17­ ---PAGE BREAK--- • 2.3 Leasehold Excise Taxes. The City shall be responsible for and shall remit to the State of Washington leasehold excise tax payable on the "taxable rent" due under this Lease in accordance with Chapter 82.29A RCW with respect to: the Annual Concession Fee, (ii) the Additional Concession Fee, and (iii) payments made by Lessee with respect to the Required Capital Improvements, the Additional Capital Improvements, and the Capital Replacement Amount. Lessee shall be responsible for and shall remit to the City (and the City shall thereafter remit to the State of Washington) leasehold excise tax payable on the "taxable rent" due under this Lease in accordance with Chapter 82.29A RCW with respect to: the Annual Lease Payment, (ii) the Additional Payment, and (iii) the Food &Beverage Concession Fee. 2.4 Late Charge; Interest. Lessee hereby acknowledges that late payments of any sums due hereunder will cause the City to incur costs not otherwise contemplated by this Lease. Accordingly, ifany payment due from Lessee is not received bythe Citywithin five Business Days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall pay the City a late charge (the "Late Charge") equal to five percent ofthe overdue amount. The parties agree that the Late Charge represents a fair and reasonable estimate ofthe costs the City will incur by reason oflate payment by Lessee. Acceptance ofthe Late Charge bythe City shall in no event constitute a waiver of Lessee's default with respect to such overdue amount, nor prevent the City from exercising any ofthe other rights and remedies granted hereunder. In addition to the Late Charge providedfor in this Section 2.4., interest shall accrue on Rent, or anyothersums due hereunder, atthe Default Ratefrom and after the 6th Business Day following the date due until paid. Page -18­ ---PAGE BREAK--- • • 2.5 Performance Bonds. Performance Bonds. Onorbeforethe CommencementDate, Lessee shall deliver to the City Manager the Bonds in a form and executed by a surety acceptable to the City. The Bonds shall secure the faithful performance ofthe terms and conditions of this Agreement by the Lessee. Renewal ofthe Bonds. To the extent that the Bonds have a term shorter than theTerm ofthe Lease, Lessee shall from time to time renewor replace the applicable Bond on or before thirty (30) days prior to the expiry date of the Bond in question. ReductioninAmount or Cancellation ofthe Bonds. The City Manager may elect to reduce the amount of or cancel the requirement for the Bond(s) during the course ofthis Agreement. Presentation ofthe Bonds for Payments. Subject to the provisions of Section 17.3. hereof, if a Lessee Default shall occur with respect to any covenant or condition ofthis Lease, including but not limited to the payment of Rent or any other payment due under this Lease, the City may present the Bonds for payment and applyall or anypartthereofto the paymentofanysum in default or any other sum which the City may be required or may in its reasonable discretion deem necessary to spend or incur by reason ofa Lessee Default. In such event, Lessee shall, within five Business Days ofwritten demand therefor by the City, deposit with the City the amount so applied. Return ofthe Bonds. If Lessee shall have fully complied with all ofthe covenants and conditions of this Lease, but not otherwise, the Bonds or amount of the Bond proceeds (with interest) then held by the City shall be returned or repaid to Lessee within thirty (30) days after the expiration or sooner termination ofthis Lease. Remedies. Subject to the provisions of Section 17.3. hereof, in the event ofthe occurrenceofa Lessee Default underthis Lease, the City's right to retain the Bond proceeds shall be deemedto be in addition to any and all other rights and remedies at law or in equity available to the City. ProtectionofProceedsofthe Bonds. Tothe extent that the City has presented the Bonds for payment and has not expended all of the proceeds thereof in respect to the payment of sums required to cure a Lessee Default hereunder, the City shall be required to keep the unexpended balance ofthe proceeds of the Bonds separate from its general funds and Lessee shall be entitledto interest thereon at the rate the City receives from time to time from the investment ofthe City's funds on a short term basis. Page -19­ ---PAGE BREAK--- • • ARTICLE III UTILITIES; IRRIGATION WATER FEES 3.1 Utilities. Basic Utilities. Lessee agrees to pay for all utilities required for the operationofthe GolfCourse includinggas, water, electricity, and telephone services and for trash collection. LackofLiabilityfor Failure to Deliver Utilities. The City shall not be liable to Lessee in damages or otherwise: ifanyutilityshallbecome unavailablefrom anyentity (including the City) supplying or distributing such utility, or (ii) for any interruption in any utility service (including, without limitation, any heating, air-conditioning or sprinkler) caused bythe making of any necessary repairs or improvements or by any cause beyond the City's reasonable control. Interruption of Utilities; Unavailability ofUtilities; Lessee's Right to Terminate. Ifany utilityservice used at the GolfCourse shall be interrupted, for which the City is responsible, the City shall use reasonable efforts to restore such utility service as soon as reasonably possible. (ii) In the event that one or more of the utility services become partially or totally permanently unavailable and Lessee determines, in good faith, that the unavailability of such utility services to the Golf Course will cause a material adverse economic impact on the operations ofthe Golf Course, in the ordinary course, then insuchevent, Lesseeshall havethe rightto terminatethis Lease upon ten (10) days prior written notice, in which event neither party heretoshallhaveanyfurtherobligationshereunder, onetotheother, otherthan Lessee's obligationto pay Rent on a currentbasis through the date oftermination. 3.2 Irrigation Water Fees. AnnualIrrigationWater Fee; City's Responsibility. lhe Cityshall pay the annual irrigation water fee assessed by the Franklin County Irrigation District ("FCID") up to a maximum amount of Twelve Thousand Dollars ($12,000.00) in any Lease Year. Page -20­ ---PAGE BREAK--- • Lessee's Payment Responsibility. The Lesseeshallberesponsible to pay any irrigation water fees imposed by FCID in excess of Twelve Thousand Dollars ($12,000.00) in any Lease Year. Adjustmentto City's Payment Responsibility. Following the initial five years of the Term of this Agreement the maximum amount of the City's payment to FCID shall be adjusted by an amount equal to the percentage increase inthe Consumer Price Index (all items, US CityAverage, as published by the Department of Labor Bureau of Labor Statistics) last published before January 1,2006 in relation to the Consumer Price Index last publishedbefore January 1,2001. ARTICLE IV REPLACEMENT AND RESERVE ACCOUNTS; ANNUAL CAPITAL IMPROVEMENT BUDGET 4.1 Eqyipment Replacement Account. Eguipment Replacement Account. Beginning on the Commencement Date, the Cityshall establish andmaintainan equipment replacement account (the "Equipment Replacement Account"), into which Lessee shall make the payments identified in Exhibit to be used solely for the purposes set forth below. The Equipment ReplacementAccount shall be initiallyfunded by the City with the sum of $116,000.00. The payments to be made by Lessee underthisSubparagraph are in additionto the payment ofRent andthe performance ofthe other obligations set forth herein. Book EntryAccount. The Equipment Replacement Account maybe a book entry account on the City's records and commingled with other City funds, but shall be exclusively available to fund the cost ofreplacement ofthe Maintenance Equipment. Purpose ofEguipment Replacement Account. The purpose of the Equipment ReplacementAccount is to establish a reserve to fund the costs of replacing the Maintenance Equipment, as needed, and as further provided in Section 13.1. below. Lessee and the City agree in good faith to adjust the required deposits into the Equipment Replacement Account to reflect the anticipated replacement cost ofthe Maintenance Equipment. Expiration ofTerm. At the expiration or earlier termination ofthis Lease, any funds remaining in the Equipment Replacement Account shall be retained by the City. Page -21­ ---PAGE BREAK--- • 4.2 Capital Reserve Account. Capital ReserveAccount. CommencingJanuary1, 2003, the City shall establish and maintain a capital reserve account (the "Capital Reserve Account") to be used solely for the purposes set forth in this Section 4.2. Capital Replacement Amount. Commencing on January 1,2003, Lessee shall pay to the City and the City shall deposit into the Capital Reserve Account on an annual basis (ie for each Lease Year) an amount (the "Capital Replacement Amount") equal to the greater of: four percent of Golf Course Play Revenues, or (ii) the sum of $20,000.00. Timing ofFunding. Lessee shall fund the sums contemplated by Subparagraph on a To the extentthatthe amounts so funded into the Capital Reserve Account for any Lease Year do not equal the sum of$20,000.00 (pro-ratedfor a partial LeaseYear), Lessee shall fundsuch deficit into the Capital Reserve Account on or before January 31 of the following Lease Year. The sums to be deposited by Lessee into the Capital Reserve Account shall be in addition to the payment of Rent and the performance ofthe other obligations set forth herein." CommencementofLessee's Obligations. Lessee'sobligation to fund the full Capital Replacement Amount shall not begin until the Clubhouse Renovation Date. Priortothe Clubhouse Renovation Date Lessee shall only be obligated to fund fifty percent (50%) ofthe Capital Replacement Amount, and the minimum funding amount contemplated by Subparagraph (b)(ii) shall be the sum of $10,000.00. Book EntryAccount. The Capital Reserve Account may be a book entry account on the City's records and commingled with other Cityfunds, but shall beexclusivelyavailabletofundthe amounts contemplatedbySubparagraph below. Use ofFunds. Funds in the Capital Reserve Account shall be used and applied as follows: From and after January 1, 2003, two percent of Golf Course Play Revenues (being one hundred percent (100%) of the Capital Reserve Amount until the Clubhouse Renovation Date) shall be applied to the cost of Capital Improvements to the Golf Course, as required by the then applicable Capital Improvement Budget or as Page -22­ ---PAGE BREAK--- • otherwise mutually determined by Lessee and the City. From and after the Clubhouse Renovation Date, the application ofthe Capital Reserve Amount may include the renovation or replacement of the Irrigation System, or the reduction of the Clubhouse Construction Cost Amount. (ii) Lessee and the City agree to cooperate in good faith to identify and agree upon Capital Improvements to the Golf Course, with the intention ofallocating the applicable portion ofthe Capital Reserve Account to Capital Improvements that will have a long term beneficial impact on the quality and success ofthe Golf Course. (iii) From and after the Clubhouse Renovation Date, fifty percent (50%) ofthe Capital ReserveAccount (twopercent ofGolfCourse Play Revenues) shall be utilized, as directed by the City, in the payment of: costs associated with the renovation and/or replacement ofthe Irrigation System, or costs associated with the renovation of the Clubhouse/Restaurant in reduction of the Clubhouse Construction Cost Amount. (iv) From and after the date the Clubhouse Construction Cost Amount has been reimbursed in its entirety, and the costs of the Irrigation System havebeen reimbursed in their entirety, one hundred percent (100%) ofthe Capital Reserve Amount shall be applied to the cost of Capital Improvements. Payments byLessee. The Citymayrequire funds deposited in respect to the Capital ReserveAmount to be applied Lessee (in lieu ofplacing funds into the Capital Reserve Account) to accomplish all or a portion of: the renovation or replacement ofthe Irrigation System, or (ii) the installation of Capital Improvements, or (iii) the reimbursement ofthe Clubhouse Construction Cost Amount. Lessee's Expenditures. Additionally, to the extent that Lessee expends sums in respect to Capital Improvements, as contemplated by the Capital Improvement Budgetor otherwise approved bythe City, it shall either receive a credit against amounts required to be funded in respect to the Capital ReplacementAmountoritshall be entitledto reimbursementfrom the Capital Page -23­ ---PAGE BREAK--- • • Reserve Account. Expiration ofTerm. At the expiration or earlier termination of this Lease, any funds remaining in the Capital Reserve Account shall be retained by the City. 4.3 Annual Capital Improvement Budget. Submission ofBudget. No later than forty-five (45) days prior to the commencement of each Lease Year, commencing with the Lease Year beginning January 1, 2002, Lessee shall submit to the City a proposed Capital Improvement Budget for the Golf Course for such Lease Year. City's Approval ofBudget. Within thirty (30) days after the proposed Capital Improvement Budget is so submitted to the City, the City shall endeavor to approve such proposed Capital Improvement Budget or notify Lessee of any proposed revisions therein that the City deems reasonably necessary. Failure to AImrove. In the event the Cityfails to approve the proposed Capital Improvement Budget or make proposed revisions to the proposed Capital Improvement Budgetwithinthirty(30) days after itissubmittedtothe City by Lessee, such proposed Capital Improvement Budget shall be deemed to be disapproved; provided, however, that the City shall respond in a timely manner to insure that a final Capital Improvement Budget may be prepared prior to the commencement ofeach Lease Year. Final Approval ofCapital Improvement Budget. 1fth e Cit y approves the proposedCapital Improvement Budget, or Lessee does not make reasonable objections to such proposed revisions within ten (10) days after receipt of any proposed revisions to the proposed Capital Improvement Budget, then such proposed Capital Improvement Budget and proposed revisions shall be deemed thereafter to constitute the "Capital Improvement Budget" for the Lease Year in question for all purposes hereof. Budget Approval Process; Cooperation. In the event Lessee timely makes any reasonable objection to any proposed revisions to the proposed Capital Improvement Budget, the City and Lessee shall cooperate with each other to resolve any questions with respect to such proposed revisions to the proposedCapital ImprovementBudgetandshall usetheirbestefforts to agree upon an approved Capital Improvement Budget for the Golf Course for the Lease Year in question prior to the beginning ofthe Lease Year to which such Capital Improvement Budget relates. Page -24­ ---PAGE BREAK--- Operation Pending Approval of Budget. In the event the City fail to agree upon an Capital Improvement Budget for any Lease Year prior to the commencementthereof, Lesseeshallcontinueto manage, maintain, supervise, direct, and operate the Golf Course in accordance with the Capital Improvement Budget for the previous Lease Year until a new Capital 1mprovement Budget is approved. Resolution ofDisputes. To the extent that Lessee and the City are ultimately unable to agree upon a proposed Capital Improvement Budget after using good faith efforts to do so, either the City or Lessee shall be entitled to submit the disputed matters to the submitted to Dispute Resolution Procedures contemplated by Section 17.4. hereof. In submitting proposed expenditures and in approving or disapproving ofproposed expenditures, the parties shall use reasonable efforts to make decisions based upon the purpose of maintaining and keeping the Golf Course in good working order and attractive and functional to meet the reasonable needs and desires of the public. BudgetAmendment. Lesseeshall havethe timetotime during each Lease Year to submit revised budgets and amendments to the Capital Improvement Budget to the City for approval. The City shall endeavor rejectorto approvethe same or make such revisions thereto as the City may deem reasonably necessaryand proper. Once approved orso revised, such revised budgets and amendments shall be incorporated and become part ofthe Capital ImprovementBudgetforthe remaining portionofthe LeaseYear in question. Decisions ofCity Representative. All decisions to be made by the City with respect to the Capital Improvement Budget shall be made by the City Representative. ARTICLE V ACCOUNTING, REPORTS, RECORDS 5.1 Accounting Method. Lessee shall maintain a cash method of accounting in accordance with sound accounting principles which accurately reflects the Revenues of Lessee in connection with the operation ofthe Golf Course. 5.2 MaintenanceofRecords: Reports. Lessee shall maintain accurate and complete records (the "Records") showing the all receipts from all sources of Revenue from the operation of the Golf Course and shall deliver to the City an itemized report (the Report") of all Revenues subject to the following: Page -25­ ---PAGE BREAK--- • The record keeping for the operation of the Golf Course shall be maintained separatelyfrom the records usedfor anyotherbusiness Lessee. The Reportshall include abreakdown ofthe number ofrounds ofgolf played, by category and month, and shall separately itemize Golf Course Play Revenues, Golf Course Ancillary Revenues, Merchandise Sales and Food and Beverage Revenues. The Reportshallbesubmittedonorbeforethe 20th dayofeach month for the preceding month in a form reasonably acceptable to the City, commencing on the 2ath day of the second full month following the Commencement Date. The Report shall be accompanied by a copy of the Lessee's or quarterly B & 0 Tax Report filed with the State of Washington Department of Revenue. 5.3 Records. Inspection of Records. The City or its authorized auditors and representatives shall have access to and the right to audit and reproduce any of the Records related to the generation of Revenues to the extent the City deems necessary to insure the City is receiving all moneys to which the City is entitledunderthisAgreementorfor otherpurposes relatingtothisAgreement. Preservation ofRecords. Lessee shall maintain and preserve all the Records for at least three years after termination of this Agreement. If Lessee fails to make the Records available within the city limits ofthe City or at a mutually agreed upon place, Lessee shall reimburse the City for all reasonable costs incurred in conducting the inspection at another location, including but not limitedto expenses for personnel, salaries, private auditors, travel, lodging, meals and overhead. ARTICLE VI DESCRIPTION OF GOLF COURSE AND FACILITIES; CONDITION OF THE GOLF COURSE; OWNERSHIP; NAME 6.1 Description ofthe GolfCourse. The City agrees to provide Lessee with the the GolfCourse inthe mannerandfor the purposes as herein provided. Lesseehereby acknowledges that the term "GolfCourse" shall not include the cart storage sheds which are owned and managed by the City. 6.2 Acceptanceofthe Condition ofthe GolfCourse. Except as expressly set forth herein in respecttothe Lessee Page -26­ ---PAGE BREAK--- • agreesto acceptthe GolfCourse, includingthe Buildings andthe Other Improvements in an "as is" condition, without representation or warranty of any kind or nature whatsoever. 6.3 Ownership ofthe GolfCourse, Equipment and Improvements. During and after the Term ofthis Agreement, the City shall retain ownership ofthe Golf Course and all Buildings and Other Improvements. For purposes offederal andstatetax law, the Cityand Lessee agree that Lessee shallbe consideredas "owner" ofall equipmentand improvements purchased, improvedand maintainedby Lessee during the Term ofthisAgreement, to the extent paid for by Lessee. 6.4 Name ofGolfCourse. Lessee agrees that the GolfCourse shall bear the name of "Sun Willows GolfCourse." ARTICLE VII FEES 7.1 Standard For Fees. Fees charged to the public and referred to in this Article VII shall be the "base IS-hole regular weekday and weekend rates and trail fees" (the "Fees" herein). Any discounts or promotions offeredby Lessee in respect to the Fees may be offered in Lessee's reasonable discretion. 7.2 Initial Fee Structure. All Fees which Lessee charges to the public for the first thirty-six (36) months of the Term of this Lease have been initially established, in concert with the City, based upon the fee structure currently in place at the Comparable Facilities. Fees for the first 36 months ofthe Term ofthis Lease will be as set forth in Exhibit attached hereto, and may only be amended with the consent ofthe City Representative. 7.3 Adjustment to Fees. Adiustment to Fees. At the beginning of the 3ih month ofthe Term hereof, and on January I ofeach subsequent LeaseYear, Lesseeshall establish rates for Fees for such Lease Year based upon the structure contemplated by this Article VII., subject to the prior approval of the City Representative, which approvalwill notbe unreasonablywithheld, solong as the rate structure complies with the provisionssetforth herein, which rates so establishedin the manner set forth herein shall remain constant throughout such Lease Year. Subject to the limitations set forth in Subparagraph below, at the beginning ofthe 37th month ofthe Term hereof, Lessee may increase any Fee Page -27­ ---PAGE BREAK--- • which it charges the public as provided in this Lease at such times as Lessee deems appropriate. Limitations on Increases in Fees. Any inc rea s e i nth e Fee s contemplated bySubparagraph above shall not result in the Fees being in excess ofeighty-five percent (85%) ofthe average regular rates then being charged at the Comparable Facilities, unless the consent of the City Representative is obtained, which shall not be unreasonably withheld. When adjustment to the Fees are established, they may be rounded upward to the nearest one-half dollar. Special Programs. Lessee shall not discontinue programs such as Senior Discounts, Senior Passes, Junior Discounts, Season Passes and similar programsbenefittingthe publicwhichhavebeenhistoricallymaintainedatthe Golf Course without the prior consent ofthe City, which consent shall not be unreasonably withheld so long as such programs have been discontinued at one or more of the Comparable Facilities or the maintenance of such programs is nolongereconomicallyviablefor the operationofthe GolfCourse. Tothe extentthat Lesseedesiresto increasethefees or charges relatingto such programs, such increases shall be determined and governed in the same manner as applicable to the Fees under Subparagraphs and above. 7-4 Charges For Cart Rental. Golf cart rental fees shall be charged based upon market rental charges and other factors such as the cost thereof and a reasonable return of and on investments in golfcarts or the leasing thereof. ARTICLE VIII OLD COURSE; RELEASE OF PORTIONS OF THE REAL PROPERlY; SALE OF THE GOLF COURSE; RESIDENTIAL BUFFER ZONES; RESIDENTIAL DEVELOPMENT 8.1 Old Course. Lessee shall maintain that portion of real property adjacent to the GolfCourse commonly referred to as "the old course" and as further illustrated in Exhibit in accordance with the Maintenance Standards set forth herein and shall be entitled to use "the old course" at no additional charge. 8.2 Sale ofPortions ofthe Real Property. Sale ofthe Old Course. The City reserves the right to sell or otherwise transfer all or any part of "the old course"and any other portions of area described on Exhibit as a golfcourse atanytime for anyuse, withoutotherwise affectingtheotherprovisions ofthisAgreement, so long as the sale of such adjacent land does not negatively impact the operation ofthe Golf Course in any material manner. Page -28­ ---PAGE BREAK--- • • City's Right ofEarly Termination. In recognition of the potential opportunities for the Cityto sell or otherwise transfer all or substantiallyall of the Real Property involved in this Lease, Lessee agrees that the City reserves the expressed right to terminate this Agreement effective December 31 ofany Lease Year provided that: The City gives written notice ofsuch termination at least ninety (90) calendar days prior to such termination date, (ii) The City has entered into a bona fide binding agreement for the sale or other transfer of all or substantially all of the Golf Course in a transaction that makes continued operation of the Golf Course as contemplated by this Lease impractical; and (iii) The City pays to Lessee the Unamortized Capital Amount. 8.3 Residential Buffer Zones. Lessee acknowledges that portions of the Golf Courseareadjacentto residentialdevelopment. Providedthe Cityinstalls, atthe City's sole cost and expense, all required irrigation facilities, Lessee agrees to plant grass and to maintain to "rough" standards, buffer zones between the adjacent residential developments and the Golf Course. 8.4 ModificationtoAccommodate Residential Development. Lessee agrees to cooperate in good faith and permit modifications to the Lease and the GolfCourse to the extent determined reasonably necessary by the City to facilitate development of the remaining undeveloped residential subdivision adjacent to the Golf Course and commonly known as the Villa of Sun Willows. Such modifications may include the relocation of tee boxes, a reconfiguration of portions of the Golf Course, or similar mattersto accommodate such residential development. All costs and expenses ofany such modification shall be at the sole cost and expense of the City and/or the residential developer. Followingsuch modifications, the Leaseshall Golf Course, as so modified. ARTICLE IX CAPITAL IMPROVEMENTS 9.1 Lessee's Required CAPital Improvements. Lessee agrees to make the Required Capital Improvements to the Golf Course at its sole cost and expense not laterthan the dates specifiedin Exhibit and to the reasonable satisfaction ofthe City. Lessee shall not be required to expend sums in excess ofthe Required Capital Improvement Amount in respect to the Required Capital Improvements. 9.2 Lessee's Optional Improvements. Lessee may, in Lessee's sole discretion, Page -29­ ---PAGE BREAK--- make the Optional Capital Improvements at its sole cost at such cost and within such time parameters as Lessee may reasonably determine. 9.3 The Clubhouse/Restaurant - Renovation or Replacement. Clubhouse/Restaurant. The City and Lessee recognize that the Clubhouse/Restaurant is in need of renovation and modification and that the conditionofthe Clubhouse/RestaurantdoesnotsatisfyLessee's requirements for the operation ofthe Food & Beverage Operation. City's Election to Renovate or Replace. On or before the Renovation Election Date, the City shall made an election in writing and deliver same to Lessee as to whether or not it desires to renovate or replace the Clubhouse/Restaurant. (ii) In the eventthe Cityelects to replacethe Clubhouse/Restaurant, the construction of new facilities shall include the demolition of the existing Pro-Shop andthe inclusion offacilities for a pro-shop in the buildingwhich is constructed inplace ofthe Clubhouse/Restaurant. (iii) The election by the City to replace the Clubhouse/Restaurant and the Pro-Shop shall be deemed to be an election by the City to also be responsible for the construction thereof and the payment and funding of construction costs (from sources including the Capital Improvement Amount and the Capital Replacement Account), (iv) In no event shall Lessee be required to make any improvements to the Pro-Shop as part ofthe Required Capital Improvements prior to the City Construction Election and then only in the event the City electsto have theClubhouse/Restaurantrenovatedand not replaced. Preparation ofthe Renovation Plans and Renovation Budget. As soon after the Renovation Election Date as may be reasonable practical the City and Lessee shall do the following: Developthe Renovation Planforthe Renovation Improvements; and Prepare and develop the Renovation Budget. (ii) The City and Lessee shall use all reasonable efforts to complete the Renovation Plan and the Renovation Budget on or before February 28,2001. Page -30­ ---PAGE BREAK--- • The Renovation Improvements shallincludethefurnishing ofsuchequipment as may be reasonably necessary to operate the Food and Beverage Operations to meet the reasonable requirements for the operation ofthe GolfCourse and serving the public in the ordinary course of business in a manner jointly contemplated by Lessee and the City, taking into consideration the nature of the Golf Course, its quality and the public nature of its operations. City Construction Election. Within fifteen (IS) days following completion ofthe Renovation Plan and the Renovation Budget, the City shall make the City Construction Election. The City shall deliver to Lessee written evidence ifits election within the fifteen (15) day period. To the extent that the Cityhas electedto havethe Restaurant/Clubhouseand Pro-Shop replaced, the City Construction Election shall be deemed to be an election by the City to be responsible for the construction of the new facilities and the payment of the cost thereof. Development and Construction ofthe Renovation Improvements. In the eventthatthe Cityelectsto be responsible for the construction ofand the payment ofthe cost ofthe Renovation Improvements: The City shall proceed with all reasonable diligence to commence and complete construction of the Renovation Work as quickly as reasonable possible, subject to compliance with applicable Regulations; Constructionofthe Renovation Improvements,totheextentthat the Clubhouse/Restaurant is to be renovated and not replaced, shall in all events commence no later than forty-five (45) days following the date the City makes the City Construction Election or such additional period of time which may be reasonably necessary for the City to complete the public bidding process; To the extent that the Clubhouse/Restaurant and Pro-Shop are to be replaced, construction shall commence within ninety (90) days following the date of the City Construction Election is made; and (D)The City shall cause the Renovation Improvements to be completed, at its sole cost and expense, no later than the Renovation Improvement Outside Completion Date. (ii) In the event that the City makes the City Construction Election, electingto construct the Renovation Improvements itself, and inthe event the Clubhouse Renovation Date has not occurred on or before the Renovation Improvement Outside Completion Date, subject to Page -31­ ---PAGE BREAK--- • delays beyond the City's reasonable control: Lessee shall have the right to terminate this Agreement at any time thereafter until the Clubhouse Renovation Date actually occurs upon delivery of written notice to the City of its election to terminate this Lease. The effective date of such termination shall be sixty (60) days following the date such notice is delivered to the City, unless the Clubhouse Renovation Date occurs prior to the expiration of such sixty (60) day period. In the event ofsuch termination, the City shall pay to Lessee the Unamortized Capital Amount. Lessee's Responsibilities With Regard to the Renovation Improvements. In the event the City elects to require Lessee to construct the Renovation Improvements, Lessee shall supervise, manage, and direct all activities necessaryto develop, construct, install, andequip the Renovation Improvements pursuant to the Contract Documentation andthe terms setforth herein. Lessee shall have the discretion and authority to perform, on behalfofthe City, such acts deemednecessaryordesirablefor theconstructionanddevelopment ofthe RenovationImprovementsconsistentwiththisAgreement, the Renovation Budget, the Regulations, the Contract Documentation and the restrictions, approval requirements, conditions and terms recited herein. (ii) In the event that Lessee is responsible for the construction of the Renovation Improvements, the following provisions shall apply: Permits. Lessee shall secure all requisite Permits required by applicablegovernmentalauthoritiesto constructthe Renovation Improvements. Standard of Care. In regard to the construction of the Renovation Improvements, Lessee shall act in good faith and in a manner that Lessee reasonably believes to be in the best interest of the City, and shall conduct the development, construction, equipping and installation of Renovation Improvements using the standard of care of a prudent development manager. Construction Contracts. Lessee shall prepare, or cause to be Page -32­ ---PAGE BREAK--- prepared, recommendations concerning potential contractors who shall be qualified to perform all or any portion ofthe work for the Renovation Improvements, including the estimated economic costs of each proposal. Based on a review of the alternative proposals, bids and estimates and the City's approval of the specific proposals to be pursued, Lessee shall work with the prospective contractors to secure the services necessary for development of the Renovation Improvements. Lessee and the City shall approve the Contract Documentation to be executed between Lessee and the Contractors. All contracting shall be in compliance with applicable Regulations. (D)Costs of Construction. Lessee shall use its best efforts to cause the Renovation Improvements to be completed within the parameters of the Renovation Budget. The City recognizes that the Renovation Budget will be a reasonable estimate of the necessary costs to complete the construction of the Renovation Improvements and that there will be no guaranteed cost coverage for such construction. Any cost increases in the Project Costs outside ofthe original scope ofthe work shall be incurred only be pursuant to change orders approved by Lessee and the City. Lessee shall fund the Clubhouse Construction Cost Amount and shallbe reimbursedfor the aggregate Clubhouse Construction Cost Amount by way of Rental Credits as contemplated herein and at the City's election, from application ofthe Additional Capital Improvement Amount and the Capital Reserve Account. Interim Food and Beverage Operations; Temporary Facilitie§. As soon as the City furnishes the Clubhouse/Restaurant with sufficient equipment and furnishings to operate Food and Beverage Operations and Lessee is able to secure necessarylicenseswith which to operate the Food and Beverage Operations, Lessee shall use reasonable efforts to use the existing facilities to provide a minimum level of food and beverage service until the Clubhouse Renovation Date. (ii) From and after April 30, 2001, during the construction of the Renovation Improvements, so long as the Food and Beverage Operations cannotbe reasonably conducted in the existing facilities, taking into consideration construction interference, noise and disruption, Lessee shall have the right to rent and/or install the Temporary Facilities for the purpose ofconducting limited Food and Beverage Operations until the Clubhouse Renovation Date. Page -33­ ---PAGE BREAK--- 9.4 Irrigation System. Preparation ofthe Irrigation Renovation Plan.The City and Lessee recognize that the Irrigation System is in need of renovation, modification or replacement. The City and Lessee shall, as soon as reasonably practical following the Commencement Date, but no later than December 31, 2001, conduct and complete a study, bythemselves or using third party consultants, which study shall make recommendations as to the improvements, replacements, modifications or repairs requiredto bringthe Irrigation System in good working order and to provide reasonably adequate irrigation for the Golf Course. Based upon the studies and reports the City and Lessee shall prepare and approvethe Irrigation Renovation Planfor the construction ofthe Irrigation System Improvements. City's Responsibility for Completion of the Irrigation System Improvements. TheCityshalluse reasonableeffortstocausetheIrrigation System Improvements to be completed, at its sole cost and expense, no later than the Irrigation Renovation Date. Maintenance ofIrrigation System. To the extent that the Irrigation System Improvements are not completed by the Irrigation Renovation Date, the City shall be solely responsible for all maintenance and repair costs for the wells and pumps constituting portions of the Irrigation System and fifty percent (50%) of the maintenance and repair costs of the balance of the Irrigation System throughout the Golf Course, until the date the Irrigation System Improvements are completed. Rental Abatement. During the period in which the Irrigation System Improvements are being constructed, to the extent that all or a portion ofthe GolfCourse mustbe shut down on a temporarybasis to permitthe completion ofthe renovation, the Rent payable hereunder shall be abated on an equitable basis taking into consideration the length of time of the shut down and whether or not play is shut down in its entirety or interrupted or impaired in a material manner. To the extent that a dispute arises as to the amount of reasonable Rent abatement, such dispute shall be resolved by the Dispute Resolution Procedures set forth in Section 17.4. hereof. 9.5 Additional Capital Improvement Amount. The City may, on or after January 1, 2002, require Lessee to, and Lessee agrees to, contribute the Additional Capital Improvement Amount, which shall be used towards the costs of: paymentofthe costs ofthe renovation ofthe Clubhouse/Restaurant, and/or (ii) reimbursementoftheClubhouse Construction CostAmount, and/or Page -34­ ---PAGE BREAK--- (iii) payment ofthe costs ofthe Irrigation System Improvements. The City shall direct in writing to Lessee the manner in which the Additional Capital Improvement Amount is to be applied and paid. ARTICLE X GOLF COURSE USES; HOURS OF OPERATION; CERTAIN RESTRICTIONS 10.1 GolfCourse Uses. Primary Use. Lessee shall maintain the Golf Course as a public 18 hole golf course. The general public shall not be wholly or permanently excluded from any portion ofthe GolfCourse, except during non-business hours or for scheduled tournaments. Reasonable Restrictions on Use. Lessee may develop reasonable restrictions for the use ofthe GolfCourse providedtheyare consistentwiththe rights of the general public and are designed to allow Lessee to use the Golf Course for the purposes specified herein. Limited Right to Deny Permission to Use the GolfCourse. Lessee shall be permitted to deny entry or permission to play to anyone who refuses to conform to those reasonable rules and regulations from time to time established by Lessee. (ii) Lessee shall have the right to refuse admission and/or service to persons who are drunk, disorderly, under the influence ofdrugs, or who conduct themselves in a manner that could result in injury or . harm to persons or property on the Golf Course. 10.2 Hours ofOperation. DaysofOperation. TheGolfCourseandrelatedfacilities (including the restaurant/food service facility) shall be open every day except Christmas. Closure for Weather. Lessee may close the Golf Course and related facilities on any day weather does not reasonably permit play. HoursofOperation. Hoursofoperationshallbegenerallydawn to dusk, subject to adjustment based upon the mutual approval ofthe City and Lessee. IfLessee andthe Citycannot agree on adjustment to such hours, sameshallbe set in accordance with the hours of operation followed by the Comparable Page -35­ ---PAGE BREAK--- • Facilities. Hours ofFood and Beverage Operation. Lessee shall have the right to shut down Foodand Beverage Operations at anytime the GolfCourse is closed for play. 10.3 Certain Restrictions onUseofClubhouse. No other usage ofthe portions of the Clubhouse/Restaurant designated for restaurant use shall be allowed unless priorwritten consentis obtainedfrom the City Representative, whichshall be granted or not granted at the absolute discretion ofthe City. 10.4 Restrictions on Operations ofthe Restaurant. Lessee may not sublet or license the operation of the restaurant and Food and Beverage Operations without prior written approval from the City Representative. Lessee shall not grant to any third party the right to sell food and/or beverages at the Golf Course. ARTICLE XI REPRESENTATIVES; COURSE MANAGERAND COURSE SUPERINTENDENT; EMPLOYEE UNIFORMS, IDENTIFICATION AND QUALIFICATION. 11.1 Representatives ofThe City and Lessee. City Representative. The City Representative shall be the person generally responsible for administering and monitoring this Agreement on behalfofthe City. Lessee Representative. The Lessee Representative shall be the person generally responsible for administering and monitoring this Agreement on behalfofLessee in respect to all material issues and decisions dealing with the Golf Course or this Agreement. 11.2 Course Management Standards. Throughout the Term ofthis Lease, Lessee shall providecompetentmanagementofthe GolfCoursetothe reasonablesatisfaction ofthe City. Forthe purposes ofthis paragraph, "competentmanagement" shall mean demonstrated ability in the management and operation of a golf course, restaurant, clubhouse, greens keeping and related activities in a manner consistent to those standards adhered to at the Comparable Facilities. 11.3 GolfCourse Manager. Lessee, at its cost, shall obtain the services ofa full time, on-site, competent Course Manager. The Course Manager shall be reasonably available during normal working hours to meet with the City Representative. After normal working hours, the Course Manager shall be reasonably available to appear at the Golf Course if deemed necessary by the City Representative. The Course Page -36­ ---PAGE BREAK--- Manager shall not have the authority to act for Lessee on any matters relating to the performance of services under this Agreement, other than day to day operational matters. The Course Manager shall be the principal contact person with the City Representative in respect to day to day operational issues. The personal andbusiness telephone number ofthe Course Managershallbe providedtothe CityRepresentative at all times. 11.4 GolfCourse Superintendent. Lessee, at its cost, shall also obtain the services of a full time, on-site golf course Superintendent. 11.5 Replacement ofCourse Manager or Superintendent. The Course Manager and the Superintendent, if terminated by Lessee, shall be replaced as soon as reasonably practical following termination. Each person replacing the Course Manager or the Superintendent shall satisfy the criteria for such Person set forth in the definition of "Course Manager" and "Superintendent," Lessee agrees to consult with the City in regard to the hiring ofsuch replacement personal, however Lessee shall have make the ultimate hiring decision, so long as the foregoing criteria are satisfied. 11.6 EmployeeUniforms, Identification and Qualification. Lessee agrees to the following in regard to its employees: Each of Lessee's employees on the Golf Course shall carry appropriate identification. The identification system shall be furnished at the Lessee's expense and shall include appropriate attire, name badges and/or name plates. (ii) Where required by law, the employees performing services under this Agreement, shall possess the appropriate and currently valid licenses or certificates. (iii) Lessee's employees shall perform services in a courteous and business-like fashion. (iv) Lessee shall maintain an adequate and proper staff and shall discharge any employee whose conduct or activity shall, in the reasonable exercise ofdiscretion, bedeemedto bedetrimental to the interests ofthe public patronizing the Golf Course. ARTICLE XII SCOPE OF SERVICES AND OPERATION AND MAINTENANCE 12.1 ComparableGolfCourseQperations. Lesseeagreesto operate and maintain the GolfCourse and relatedfacilities inaccordancewiththestandards ofmaintenance Page -37­ ---PAGE BREAK--- and service providedfor herein. The condition ofthe GolfCourse and the operations, maintenance and services provided by Lessee shall be consistent with prudent golf course maintenance and management practices and at a minimum shall be comparable to the standards followed at the Comparable Facilities. 12.2 Personnel; Services and Equipment. Lessee agrees to furnish the personnel, material, supplies, equipment, tools, services, supervision and administration necessary to: Operate the Golf Course and related facilities including but not limited to collecting all fees (includingfees for golfplay and golfcart usage), scheduling tournaments, arranging reservations, sending golfers tothe tee, startinggolfers in proper intervals and renting golf carts; (ii) Provide maintenance services including but not limited to mowing, edging, trimming, over seeding, fertilizing, aerating, sodding, changing cups, servicing tees, top dressing, raising divets, raking traps, spraying, spot irrigating, syringing and renovating turf and other plantings, as well as providing weed, disease and pest control, tree maintenance, maintenance of hazards (sand traps and lakes) and the monitoring and maintaining of irrigation systems, in conformance with the Maintenance Standards; and (iii) Provide, subject to the provisions ofArticles XIII and XIVbelow, maintenance of Golf Course facilities such as restrooms, maintenance yard, tool sheds, golf cart maintenance area and maintenance ofequipment. (iv) Operate the Restaurant/Food and Beverage Operations in conformance with applicable city ordinances and state and federal laws; Display and maintain a professional shop inventory comparable to the Comparable Facilities, which shall include golfing equipment, supplies, shoes and apparel which shall be offered for sale to the public and, in particular, to patrons of the Golf Course at prices reasonable and comparable to prices being paid for equipment, supplies, and apparel at the Comparable Facilities; (vi) Furnish such personnel as may be required to marshal the play of golfers without substantial delay; and (vii) Set dress and conduct standards consistent with those imposed at the Comparable Facilities. Page -38­ ---PAGE BREAK--- ARTICLE XIII GOLF COURSE MAINTENANCE EQUIPMENT. 13.1 Maintenance Equipment. ThepropertyleasedbyLesseehereunderin respect to the Golf Course includes the golf course maintenance equipment (the "MaintenanceEquipment") listedin Exhibit"D" attachedhereto. Subjecttothe provisions set forth below regarding replacement of the Maintenance Equipment, Lessee shall keep the Maintenance Equipmentingoodcondition and repair, ordinary wear and tear excepted. 13.2 Replacement ofMaintenance Equipment. Lessee agrees to replace the Maintenance Equipment generally in accordance with the replacement schedule set forth in Exhibit and may use the funds held or deposited in the Equipment Replacement Account to do so, including the initial $116,000.00 funded by the City. 13.3 Early Replacement. In the event an item ofMaintenance Equipment must be replacedearlierthan asscheduledpursuantto Exhibit"D", Lesseeshall replacesuch piece ofMaintenance Equipment early, but shall have the right to be reimbursed for the costthereoffrom the EquipmentReplacementAccountasfunds becomeavailable. 13.4 ExpirationofTerm. Atthe expirationoftheTerm orearliertermination ofthe Lease, the City shall be entitled to retain all Maintenance Equipment (including all replacement Maintenance Equipment acquired pursuant hereto), in their then existing condition, together with any funds then held on deposit in the Equipment Replacement Account. ARTICLE XIV MAINTENANCE AND REPAIR OF BUILDINGS AND OTHER IMPROVEMENTS 14.1 Acceptance ofthe Buildings and Other Improvements. Except with respecttothe Clubhouse/Restaurant,the Irrigation Systemandthe Restaurant/Food and Beverage Operations, Lessee has examined the GolfCourse and accepts the Golf Course (including the Buildings and the Other Improvements) in its present condition. 14.2 Maintenance ofthe Buildings. I&ssee's Res,ponsibilities. Lessee shall be responsible for the general maintenance of the condition ofthe Buildings and for all repairs ofthe roof, structure and heating and cooling systems ofthe Buildings costing less than $1,000 per repair. Page -39­ ---PAGE BREAK--- City's Responsibilities. The Cityshallbe responsiblefor repairsofthe roof, structure, and heating and ofthe Buildings costing $1,000.00 or more per repair, and are not the result ofany actions, omissions, negligence or lack of reasonable maintenance on part ofthe Lessee, or its employees. 14.3 Maintenance ofthe Other Improvements. L e sse e s h a II be responsible for the general maintenance of the condition of the Other Improvements, including the Irrigation System and for all repairs necessary inconnectiontherewith. All monitoringandmaintenance obligations required hereunder in respect to the Other Improvements shall be conducted in conformance with the Maintenance Standards. Maintenance ofthe Irrigation System. Lessee shall repair and maintain in good condition, ordinary wear and tear excepted, the Irrigation System, including pump stations, and Lessee shall document any revision or major repair of the Irrigation System, including but not limited to pumps, values, lines and heads, with as-built drawings andsuch documents shallbe timely filed with the City Representative. (ii) Notwithstanding the foregoing, any repair or group ofrepairs to the Irrigation System which costs or cost in excess of $500.00 per item or $3,000.00 in the aggregate per Lease Year shall be considered as a Capital Improvement and shall befunded from the Capital Reserve Account. (iii) To the extent that improvements to the Irrigation System contemplated herein are not completed by Irrigation Renovation Date, the City shall be responsible for a share of the maintenance costs of the Irrigation System until the date the improvements in questionarecompletedinaccordance with theprovisionsofSection 9.4(C) above. Maintenance ofthe Parking Lots. Lessee shall keep the parking lots swept and free ofdebris. The City shall be responsible for the construction of and payment of the cost of any improvements to the parking lot of a capital nature. Maintenance BuildingandYard. The Maintenance Building and Yard shallbe deliveredto Lesseebythe Cityin a neat andorderlyfashion and Lessee shall maintain or keep such areas during the Term in a neat and orderly fashion. Page-40­ ---PAGE BREAK--- • Roadways, Restrooms and Cart Paths. The maintenance roadways at the Golf Course shall be delivered to Lessee by the City graded and graveled as appropriate and Lessee shall maintain or keep such roadways during the Term graded and graveled as needed. (ij) Restrooms on the Golf Course shall be cleaned daily and stocked with paper products as necessary. (iii) Cart paths shall be edged atleast once during each LeaseYear. Holes existing in or occurring in the cart paths will be repaired within a reasonable period oftime following discovery. 14.4 Use ofCapital Reserve Accounts. Upon mutual approval of Lessee and the City, portions ofthe Capital Reserve Account established pursuant to Section 4.2. may be used for unexpected or material repairs to the Buildings and Other Improvements at the Golf Course. 14.5 Alteration or Modification to the Buildings or Other Improvements. Exceptas expresslyauthorizedhereunderinrespecttothe Renovation Improvements, Lessee shall not demolish, remove, alter, modify, replace or add to the Buildings or Other Improvements on the Golf Course during the Term of this Lease Agreement other than in connection with the removal of obsolete equipment or improvements unless Lessee secures the prior written approval ofthe City, which approval may be granted or withheld in the City's sole discretion. To obtain approval ofany proposed demolition, remodel, modification or alternation, Lessee shall submit detailed plans and specifications of the proposed action to the City, together with a statement of Lessee's reasons therefor. Any such approved demolition, removal, alteration, modification, replacement or addition shall be commenced and completed in accordance with all ofthe provisions ofthis Lease. ARTICLE XV LESSEE'S COVENANfS 15.1 Subcontracting. Lessee agreestobe responsible forthestandardsofperformance ofany subcontractor engaged by it. Lessee agrees to assure that the work or services performed by any such subcontractor shall satisfy the terms of this Agreement. Lessee agrees that no subcontractor shall relieve Lessee of any obligation under this Agreement. All subcontracts shall first be approved by the City. The City agrees not to unreasonably withhold approval of any subcontract. 15.2 Security. Lessee agrees to provide reasonable security for and to safeguard all City property under the care ofand used by Lessee and to provide for the reasonable Page -41­ ---PAGE BREAK--- • safety of the patrons while on the Golf Course. 15.3 Easements. Lessee shall recognize all existing easements on the GolfCourse and shall not obstruct their use. Lessee shall join in and consent to any amendments to such existing easements (or new easements) as reasonably requested by the City. 15.4 Cross Lesseeagreestohonorthe commitmentofthe City totheWashington InterscholasticActivitiesAssociationto hostthestatecross country championships at the Golf Course in 2001 and 2002. 15.5 Liens. Lessee shall keep the Golf Course free from any liens arising out of any work performed, materials furnished or obligations incurred by Lessee and hold the City harmless therefrom including all costs and attorney's fees. 15.6 GolfInstruction and Junior Golf Program. Lessee shall promote golf instruction and a Junior Golf Program by providing, at a reduced charge, to the City rangeballs, general golfinstruction, actualplay andjuniortournaments. Lessee'sgolfprofessionals and publicity for same shall be coordinated through the City's Parks and Recreation Department. Golf shall be taught only by qualified instructors. 15.7 DisorderlyPersons. Lesseeagreestousereasonableeffortsto remove from the Golf Course any unreasonably loud, boisterous or disorderly persons. 15.8 Illegal Activities. Lessee shall not knowingly permit any illegal activities to be conducted upon the Golf Course. 15.9 GolfClubs/Organizations. Lessee acknowledges that there is a benefit to the operating of the Golf Course to have responsible golfing organizations. Without granting any special privileges to any person or group, Lessee may encourage, create andaccommodate organizations,includingwithoutlimitation, seniorcitizens andany general nondiscriminatory golf club organizations. Patron Forms. Lessee agrees to supply and have readily available at all times appropriate forms for patrons of the Golf Course to present their comments, criticisms, commendations or complaints regarding Lessee's operationandmaintenance ofthe GolfCourse. Ona regularbasis, Lesseeshall provide the City Representatives with copies ofsuch forms returned to Lessee by patrons. CompliancewithLaw- Non-Discrimination. Lessee shall conform to and abide by all City and County ordinances, and all State and Federal laws and regulations, insofar as the same are applicable and where permits and/or licenses are required for the Golf Course operation, the same must be first obtainedfrom theregulatoryagencyhavingjurisdictionthereof. Lesseeagrees to keep the Golf Course equipped with all safety equipment reasonably Page -42­ ---PAGE BREAK--- • • required and otherwise required by law. Lessee shall comply with all laws concerning alcoholic beverages, including licensing requirements. In such regard, Lessee shall have the right to sell alcoholic beverages for consumption during all hours ofcourse operation, including the sale ofalcoholic beverages on the Golf Course from beverage carts and related facilities and from or in club house facilities. Responsibilityfor Taxes. Lesseeshall be responsiblefor all fees, taxes and charges which maybe levied upon Lessee in relation to its performance of services under this Agreement. This Section 15.12. does not apply to the payment of leasehold excise tax, for which payment responsibility is specifically provided for elsewhere in this Agreement. The City agrees that it will not design or adopt any new tax specifically targeted to golf course operations during the Term ofthis Agreement. ARTICLE XVI INSURANCE; DAMAGE BY FIRE, OTHER CASUALlY; EMINENT DOMAIN. 16.1 Insurance. Lessee's Responsibilities. Lessee shall procure and maintain for the duration ofthe Agreement, insurance against claims for injuries to persons or damage to property which may arise from or in connection with the Lessee's operation and use ofthe Golf Course. Minimum Scope ofInsurance. Lessee shall obtain insurance ofthe types described below: Commercial General Liability. Commercial general liability insurance shall be written on Insurance Services Office (ISO) occurrence form CG 00 01 and shall cover premises and contractual liability. The City shall be named as an insured on Lessee's Commercial General Liabilityinsurance policyusing ISO Additional Insured-Lessees or Lessors of Premises Form CO 20 11 or a substitute endorsement providing equivalent coverage. (ii) Liquor Liability Insurance. In the event Lessee offers alcoholic beverages in or around the Golf Course, "Dram Shop" and/or "Innkeeper's Liability" insurance against claims or liabilities arising directly or persons or property on account ofthe sale or dispensing of beer, wine or other alcoholic beverages, with a combined single limit coverage of $1,000,000 bodily injury and property damage liability, or in greater amounts if required by law, Page -43­ ---PAGE BREAK--- • in form and substance reasonablyacceptableto the City, and naming the Cityandits employees, officers and agents as additional insureds. (iii) Property Insurance. Property insurance on Lessee's property shall be written on an all risk basis. Minimum Amounts of Insurance. Lessee shall maintain the following insurance limits; Commercial General Liability insurance shall be written with limits no less than $1,000,000 each occurrence, $2,000,000 general aggregate. (ii) Propertyinsuranceshallbewritten coveringthe full value ofLessee's property and improvements with no coinsurance provisions, 100% replacement value with no coinsurance penalty. Other Insurance Provisions. The insurance policies are to contain, or be endorsedto contain,thefollowing provisionsfor CommercialGeneral Liability insurance: The Lessee's insurance coverage shall be primary insurance with respect the City. Any Insurance, self-insurance, or insurance pool coverage maintained by the City shall be excess of the Lessee's insurance and shall not contribute with it. (ii) The Lessee's insurance shall be endorsed to state that coverage shall not be cancelled by either party, except after thirty (30) days prior written notice by certified mail, return receipt requested, has been given to the City. Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best rating ofnot less than A/VII. Verification of Coverage. Lessee shall furnish the City with original certificates and a copy of the amendatory endorsements, including but not necessarily limited to the additional insured endorsement, evidencing the insurance requirements ofthe Lessee. Waiver ofSubrogation. Lessee and the City hereby release and discharge each other from all claims, losses and liabilities arising from or caused by any hazard covered by property insurance required to be carried by this Lease or actually carried by such party. Each party shall obtain any special endorsements, ifrequired by its insurer, whereby the insurer waives its rights of subrogation against the other party. This provision is intended to waive fully, and for the benefit ofthe parties hereto, any rights and/or claims which Page -44­ ---PAGE BREAK--- • might give rise to a right ofsubrogation in favor of any insurance carrier. The City's PropertyInsurance. The Cityshall purchase and maintain during theterm ofthe Lease all-riskpropertyinsurance coveringthe Buildings for their full replacement value without any coinsurance provisions. Such insurance maybe included as part ofa blanket insurance program maintained by the City. Worker's Compensation. Lesseeagreesthatall personsfurnishingservices to the City pursuant to this Agreement are, for purposes of workmen's compensation liability, employees solely of Lessee and not employees of the City. Lessee shall bear the sole responsibility and liability for furnishing workmen's compensation benefits to any person for injuries arising form or connected with services performed on behalf of Lessee pursuant to this Agreement. Lessee agrees to provide and maintain workman's compensation insurance in amounts required by state law. G) The City's Right to Obtain. In the event the insurance required under this Section 16.1. is not maintained, orifa defaultby Lessee occurs, the Cityshall have the right (but not the obligation) to place and maintain the Insurance required to be placed and maintainedby Lessee hereunder. Lessee agrees, on demand, to payto the Citythe amounts expended therefor with interest at the Default Rate from the time the City incurs saidcosts ofinsurance. In the event Lessee fails to place and maintain the insurance required under Section 16.1(b)Oi),the Cityshall havethe right (but not the obligation) to require the immediate cessation ofthe sale ofalcoholic beverages at the Golf Course. 16.2 Damage by Fire. other Casualty. Material Casualty. In the event of casualty to a material part ofthe Golf Course, where: Lesseeshall reasonablydetermine thatthe GolfCourseinitsentirety cannotbeeffectivelyusedoroperatedby Lessee (whetheronaccount economic, aesthetic or other reasons), or (ii) the Buildings and Other Improvements cannot be appropriately repaired with available insurance proceeds within one hundred eighty (180) days ofsuch casualty to a substantial similar economic function, Lessee shall have the right to terminate this Lease in which event Lessee shall forward a written notice to the City ofsuch determination not more than sixty (60) days after the date ofsuch damage. InsufficiencyofInsurance Proceeds. Totheextent ofan occurrence Page -45­ ---PAGE BREAK--- of a casualty and to the extent that Lessee does not elect to terminate this Lease as contemplated by Subparagraph above, in the event that proceeds of insurance are not sufficient to repair or restore the damage resulting from the casualty in question, the City shall have the right to terminate this Lease unless Lessee commits to pay the costs of repair or restoration in excess of available insurance proceeds. Lessee's or the City's Right to Terminate.The term of this Lease shall expire upon such date as Lessee shall specify in such notice contemplated by Subparagraph (a)(ii) above but not earlier than thirty (30) days after the date ofsuch notice. likewise, theterm ofthis Leaseshall expire upon suchdate as the City shall specify in such notice contemplated by Subparagraph above but not earlier than thirty (30) days after the date ofsuch notice, unless Lessee commits in writing to pay the costs of repair or renovation within fifteen (15) days following the City's written notice. Abatement in Rent. Ifthis Lease is not terminated as aforesaid, it shall continueinfull force and effectandthe Rent shall be equitably reduced during such reconstruction, unless the casualty was due to the negligence or intentional misconduct of Lessee, in which event Rent shall not be abated. Limitation orCity's Liability. Ifthis Lease is terminated as aforesaid, no damages, compensation or claim shall be payable by the City for inconvenience, loss of business or annoyance arising from any damage or destruction to any portion ofthe Golf Course. Lessee's Acknowledgment. Lessee hereby acknowledges that the City will not carry insurance ofany kind on any improvements paid for by Lessee oron Lessee's furniture, furnishings, fixtures, equipment or appurtenances of Lessee under this Lease and the City shall not be obligated to repair any damage thereto or replace the same. Lessee's Waiver. As a material inducement to the City entering into this Lease, with respect to any destruction (including any destruction necessary in order to make repairs required by declaration of any authorized public authority) which the City makes or is obligated to make, Lessee hereby irrevocably waives the provisions of any law, code, or ordinance permitting Lessee to make repairs at the City's expense or to terminate this Lease in the event ofdamage or destruction to Lessee's property. AvailabilityofInsurance Proceeds. Inthe event ofthe occurrence ofa casualty and in the event neither the City or Lessee exercises its rights to terminate this Lease as contemplated above, all insurance proceeds maintained hereunder shall be made available for the purpose of paying the costs of such repair or renovation, with any remaining proceeds to be paid to the City. Page -46­ ---PAGE BREAK--- • 16.3 Eminent Domain. Taking ofAll ofthe GolfCourse. If all ofthe Golf Course is taken by eminent domain, this Lease shall automatically terminate as ofthe date title vests in the condemning authority. MaterialTaking. Inthe eventofa takingofa material part, butlessthan all, of the Golf Course, where either the City or Lessee shall determine that the remaining portions ofthe GolfCourse cannot be economically and effectively used by Lessee (whether on account economic, aesthetic or other reasons) or where the City or Lessee determines the Golf Course should be restoredinsuchawayasto materiallyalteritsuse orfunctionality, eitherparty shall forward a written notice to the other party of such determination not more than sixty (60) days after the date oftaking. Termination ofthe Lease. The Term of this Lease shall expire upon such date as the City or Lessee shall specify in such notice but not earlier than sixty (60) days after the date ofsuch notice. Partial Taking. In case oftaking ofa part ofthe GolfCourse, or a portion thereof not reasonably or substantially interfering with the continued use of the GolfCoursefor its intended purposes, then this Lease shall continue in full force and effect and the Rent shall be unchanged. Allocation ofDamages. Except as expressly set forth herein, the City reserves all rights to damages to the GolfCourse for any partial, constructive, or entire takingby eminent domain, and Lessee hereby assigns to the City any right Lessee may have to such damages or award, and Lessee shall make no claim against the City or the condemning authority for damages for termination of the leasehold interest or interference with Lessee's business. Lessee's Right to Damages. Lessee shall have the right to recover from a portion of the City's award an amount equal to the Unamortized Capital Amount. Lessee shall also have the right, however, to claim and recover from the condemning authority compensation for any loss to which Lessee may be put for Lessee's moving expenses, business interruption or taking of Lessee's personal property (not including Lessee's leasehold interest) provided that such damages may be claimed only if they are awarded separately in the eminent domain proceedings and not out of or as part of the damages recoverable by the City. Page -47­ ---PAGE BREAK--- • ARTICLE XVII INDEMNIFICATION / HOLD HARMLESS; DEFAULT; DISPUfE RESOLUfION 17.1 Indemnification. Lessee's Indemnity. Lessee hereby agrees that it will protect, indemnify, hold harmless and defend the City from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, reasonable attorney's fees and expenses), to the extent permitted by law, by reason of: any accident, injury to or death of persons or loss of or damage to property occurring on or about the golf course or the real property, during the Term or while the Golf Course is in the possession or control of Lessee; (ii) any failure on the part of Lessee to pay, perform or any ofthe terms ofthis Lease; or (iii) all liabilities arising from events between the commencement date ofthis lease throughthe termination date hereofandwhich result in a failure to comply with Lessee's Environmental Covenants. Lessee'sWaiverofCertain Rights. Solelyfor the purpose of effectuating Lessee's indemnification obligations under this Lease, and not for the benefit ofanythird parties (including but not limited to employees ofLessee), Lessee specifically and expressly waives any immunity that may be granted it under applicable federal, state or local worker compensation acts, disability benefit acts or other employee benefit acts. Furthermore, the indemnification obligations under this Lease shall not be limited in any way by any limitation on the amount or type ofdamages, compensation or benefits payable to or for any third party under worker compensation acts, disability benefit acts or other employee benefit acts. The parties acknowledge that the foregoing provisions of this section have been specifically and mutually negotiated between the parties. Exclusions From Lessee's Indemnity. Lessee shall be relieved from the indemnity obligations set forth above to the extent that such liabilities, obligations, claims, damages, penalties, causes or action, costs and expenses orthose imposedupon orincurredbyor Cityare thedirect result of(a) the City's negligence or willful misconduct or the City's breach of its obligations under this Lease. . City's Indemnity. The City hereby agrees that it will protect, indemnify, Page -48­ ---PAGE BREAK--- • • hold harmless and defend Lessee from and against all liabilities, obligations, claims, damages, penalties, causesofaction, costs and expenses imposedupon or incurred by or asserted against any Lessee indemnified party as a result of: all liabilities arising from the City's failure to perform the City's Environmental Covenants. (ii) the negligence or willful misconduct ofthe City; or (iii) any failure on the part ofthe City to perform or comply with any of the terms ofthis Lease. Exclusions FromTheCity'sIndemnity. TheCity shall be relieved from the indemnity obligations set forth above to the extent that such liabilities, obligations, claims, damages, penalties, causes ofaction, costs and expenses or imposed upon or incurred by or asserted against a lessee indemnified party are the direct result Lessee's negligence or willful misconduct or Lessee's breach of its obligations under this Lease. (0 Payment ofSums Due. Any amounts that become payable by an indemnifying party under this Section 17.1. shall be paid within thirty (30) days afterliabilitytherefor onthe part ofthe indemnifyingpartyis determined by litigation or otherwise, and if not timely paid, shall bear interest (to the extent permitted by law) at the Default Rate from the date of such determination to the date ofpayment. Any such amounts shall be reduced by insurance proceeds received and any other recovery (net ofcosts) obtained by the indemnified party. Defenses ofClaims. An indemnifying party, upon request, shall, at its sole expense, resist and defend any proceeding, claim or action, or cause the same to be resisted and defended by counsel designated by the indemnified party and approved by the indemnifying party; provided, however, that such approval shall not be required in the case ofdefense by counsel designated by any insurance company undertaking such defense pursuant to any applicable policy ofinsurance. ParticipationinDefenseQfClaims. Eachindemnified party shall have the right to employ separate counsel in any such proceeding, claim or action and to participate in the defense thereof, butthe fees and expenses ofsuch counsel will be at the sole expense of such indemnified party unless a conflict of interest prevents representation of such indemnified party by the counsel selected by the indemnifying party and such separate counsel has been approved by the indemnifying party. Settlement ofClaims. The indemnifying party shall not be liable for any settlementofanysuchproceeding,claimoraction made withouttheirconsent, Page -49­ ---PAGE BREAK--- but if settled with the consent ofthe indemnifying party, or ifthere be a final, non-appealablejudgmentfor an adversary partyin anysuch proceeding, claim or action, the indemnifying party shall indemnify and hold harmless the indemnified party from and against any liabilities incurred by such indemnified party by reason of such settlement or judgment. G) Survival. Lessee's and the City's obligations under the provisions of this Section 17.1 shall survive any termination ofthis Lease. 17.2 Default. Default By Lessee. The occurrence of anyone or more of the following events shall constitute a material default andbreach ofthis Lease by Lessee (a "Lessee Default"): the abandonment ofthe GolfCourse by Lessee or the vacatingofthe GolfCoursefor morethan thirty (30) consecutivedays, otherthan as a result ofthe damage or destruction ofthe GolfCourse as a result of fire or other casualty; (ii) the failure by Lessee to make any payment of Rent or any other payment required to be made by Lessee hereunder, and such failure continues for more than ten (10) days after written notice from the City; (iii) the failure by Lessee to observe or perform any of the other covenants, conditions or provisions ofthe Lease, where such failure shall continue for a period of thirty (30) days after written notice from the City; provided, however, if more than thirty (30) days are reasonably required for its cure then Lessee shall not be deemed to be in default if Lessee commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion; (iv) the making by Lessee of any general assignment or general arrangement for the benefit ofcreditors; the filing by or against Lessee ofa petition to have Lessee adjudged bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Lessee, the same is dismissed within sixty (60) days); (vi) the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Golf Course or of Lessee's interest in the Lease, where possession is not restored to Lessee within thirty (30) days; Page -50­ ---PAGE BREAK--- (vii) Lessee is adjudged insolventby any court or competentjurisdiction; (viii) theattachment, executionorotherjudicialseizureofsubstantiallyall ofLessee's assets located atthe GolfCourse or of Lessee's interest in this Lease, where such seizure is not discharged within thirty (30) days; or (ix) the assignment or other transfer of all or any interest of Lessee in this Lease, or the subletting of all or any portion ofthe GolfCourse, in either case which is in violation ofSection 20.2. below. Affect ofNotice and Cure Periods. All notice and cure periods set forth above are in lieu of and not in addition to any notice required pursuant to applicable unlawful detainer/eviction statutes. TheCity's Remedies Upon Lessee Default. All rights and remedies ofthe City herein enumerated shall be cumulative, and none shall exclude any other right or remedy allowed bylaw or in equity, and all ofthe following may be exercised with or without legal process as then may be provided or permitted by the laws ofthe State ofWashington: Upon any default under this Lease, the City may reenter the Golf Course and remove or put out Lessee or any other persons found therein. No such reentry shall be construed as an election on the City's part to terminate this Lease unless a written notice of such intention is given to Lessee. (ii) The City may elect to re-Iet the GolfCourse or any part thereofupon such terms and conditions, including rent, term and remodeling or renovation, as the Cityin itssole discretion may deem advisable. To thefullest extentpermittedbylaw, theproceedsofanyrelettingshall be applied: first, to pay the City all costs and expenses of such reletting (including without limitation, costs and expenses incurred in retaking or repossessing the Golf Course, removing persons or securing new Lessees, and, ifthe Citymaintains and operates the GolfCourse, the costs thereof); second, to pay any indebtedness ofLessee to the City other than rent; third, to the rent due and unpaid hereunder; and fourth, the residue, if any, shall be Cityandappliedinpaymentofother orfuture obligations of Lessee to the City as the same may become due and payable, and Lessee shall not be entitled to receive any portion ofsuch revenue. (iii) The Citymayalso electto terminatethe Leaseandall rightsofLessee by giving notice to Lessee of such election. If the City elects to terminate the Lease, the City shall have the right to reenter the Golf Page -51­ ---PAGE BREAK--- • Courseandremoveall persons, andtotakepossession ofand remove all equipment and fixtures of Lessee in the Golf Course. Lessee hereby waives all damages that may be caused by the City's reentering and taking possession ofthe Golf Course or removing or storingthe and Lessee shall save the City harmless therefrom, and no such reentry shall be considered a forcible entry. Ifthe City so elects to terminate the Lease, the City may also recover from Lessee: (iv) The worth at the time of the award of the unpaid rent which had been earned at the time oftermination; The worth at the time of the award of the amount by which the unpaid rent which would have been earned after termination until the time of the award exceeds the amount of rental loss that the Lessee proves could have been reasonably avoided; (vi) The worth at the time of the award of the amount by which the unpaid rent for the balance of the term after the time of the award exceeds the amount of rental loss that the Lessee proves could be reasonably avoided; (vii) Any other amount necessary to compensate the City for all the detriment proximately caused by the Lessee's failure to perform its obligations underthe Lease orwhich inthe ordinary course ofthings would be likely to result therefrom; and (viii) At the City's election, such other amounts in addition to or in lieu of the foregoing that maybe permitted from time to time by applicable law. (ix) The "worth at the time of the award" of the amounts referred to in paragraphs and above is computed by allowing interest at twelve percent The "worth at the time of the award" of the amount referred to in paragraph above is computed by discounting such amount atthe discount rate ofthe Federal Reserve Bank of San Francisco at the time of the award plus one percent Indemnification ProvisionsUnaffected. Nothinginthis Section 17.2. shall be deemed to affect the City's right to indemnification for liability or liabilities arising prior to termination of this Lease for personal injury or property damage under the indemnification provisions or other provisions of this Lease. MitigationofDamages. Notwithstanding anythingcontainedherein to the Page -52­ ---PAGE BREAK--- contrary, the Cityshall use reasonable efforts to mitigate its damages incurred as a result of Lessee's default hereunder, as and to the extent required by applicable Washington law. 17.3 Lessee's RightToTerminate. Atanytime duringtheTerm, commencing with the sixth (6th) Lease Year, whether or not a Lessee Default has occurred, Lessee shall have the right to terminate this Lease upon the satisfaction ofthe following conditions: Delivery ofwritten notice to such effect to the City at least eight months prior to the proposed termination date, which shall take place on the last day ofthe Lease Year in which the election is made; (ii) All Rent then due through the date oftermination is paid in full; and (iii) Lessee has complied in all material respects to its obligations in respecttothe maintenance ofthe GolfCourse in accordancewith the Maintenance Standards; and (iv) Lessee has fully completedthe Required Capital Improvementsand fully funded the Additional Capital Improvement Amount. In such event the Bonds or the proceeds thereof then held by the City shall be returned to Lessee, the City shall have no obligation to fund the Unamortized Capital Amount to Lessee, and the parties thereafter shall have no further obligation one to the other except for those obligations which expressly survive the termination ofthis Lease. 17.4 Dispute Resolution Procedure. Disputes Subject to Dispute Resolution Procedures. The purpose of this Section 17.4. is to provide a mechanism whereby the parties hereto can resolve a bona fide dispute with respect to the following matters: the determination ofthe Fair Market Rental for any Renewal Term as set forth in the Renewal Term Rider attached hereto; (it) the finalization ofandapproval ofanyCapital Improvement Budget; (iii) the determination of whether or not Lessee is performing or in compliance with the Maintenance Standards; (iv) A determination of a reasonable amount of Rent abatement as contemplated by the provisions ofSection 16.2.(d). AdeterminationofGolfCourse PlayRevenues, GolfCourseAncillary Revenues, Merchandise Sales and Food and Beverage Revenues; Page -53­ ---PAGE BREAK--- • (vi) the determination ofthe Clubhouse Renovation Date, and matters relating to the construction ofthe Renovation Improvements; (vii) the determination of the adequacy of the repairs to the Irrigation System; and (viii) similar issues regarding the manner of operating and maintaining the GolfCourse and the Other Improvements. Notwithstanding the foregoing, the Dispute Resolution Procedure shall not apply to claims ofa material default by a party under this Lease whereby the party alleging the default asserts in good faith that, as a result ofsuch default, this Lease has terminated or the party desires to so terminate this Lease, in accordance with the provisions hereof. Dis,pute Resolution Procedure. If the provisions of this Section 17.4. are instituted by a party hereto, the City and Lessee shall immediately attempt to agree upon an independent appraiser, accountant, golf course operator or anotherperson qualifiedto resolvethe dispute inquestion, who shall have at least ten (10) years of real estate appraisal experience, accounting experience orother experience in or for the management and operation ofgolfcourses similar to the GolfCourse to make the determination in question (such Person is hereinafter called a "Decision Maker"). (ii) Ifthe Cityand Lesseecannotagree upon a DecisionMakerwithin ten (10) days after the initiation ofthis procedure, then: The party initiating this procedure (the "First Party") shall notify the other party (the "Second Party") and in such notice shall designate the first Decision Maker. If the first Decision Maker is acceptable to the Second Party, the Second Party shall immediately so notify the First Party and the first Decision Maker shall proceed to make the determination within fifteen (15) days thereafter. (B)Ifthe first Decision Maker is not acceptable to the Second Party, then within twenty (20) days after receipt of the First Party's notice, the Second Party shall designate, in a written notice, the second Decision Maker. If the Second Party fails to timely approve the first Decision maker or designate the second Decision Maker, then the first Decision Maker shall proceed to make the determination within fifteen (15) days thereafter. Page -54­ ---PAGE BREAK--- If a second Decision Maker is designated, the first and second Decision Makers shall meet within ten (10) days after the designation ofthe second Decision Maker, and proceedto make the determination within fifteen (15) days thereafter. (D)If the first and second Decision Makers are unable to reach a decision within such fifteen (15) day period, they shall jointly appoint a third Decision Maker who shall make an independent evaluation of the analysis and the determinations made by the first and second Decision Makers and who shall, within an additional fifteen (15) day period, elect the analysis and determination of the first two Decision Makers which, in the opinion ofsuch third Decision Maker, most closely adopts the proper analysis. FinalDecision. AdecisionoftheDecisionMaker or Decision Makers shall be binding and conclusive on the parties hereto. Refusal to Act. Ifany Decision Maker shall fail, refuse, orbecome unable to act, a new Decision Maker shall be appointed in his place following the same method as was originally followed with respect to the Decision Maker to be replaced. DecisionMaker Fees. TheCityand Lesseeshall paythefees and expenses ofthe Decision Maker appointed by them, and if only one Decision Maker is used, orifa third Decision Maker is required, the fees and expenses ofthe sole Decision Maker or the third Decision Maker, as applicable, and all other Decision Making expenses shall be borne equally by the Party. All hearings and proceedings held and all investigations and actions taken bythe Decision Makers shall take place in the City of Pasco, Washington. Independence. Any Decision Maker designated to serve in accordance with the provisions ofthis Section 17.4.00 shall be independent ofthe City, Lessee or any oftheir respective affiliates. ARTICLE XVIII SVRRENDERUPON LEASE TERMINATION. 18.1 Surrender ofGolfCourse. At the expiration ofthe Term ofthis Lease, or at the earlier termination of this Lease, Lessee shall surrender the Golf Course in good condition, reasonable wear and tear excepted. 18.2 Removal ofFixtures. Lessee mayplaceanypersonal propertyorequipmentinthe Page -55­ ---PAGE BREAK--- Golf Course for use in connection with the business of Lessee, and the title ofsaid personal property or equipment shall remain in Lessee regardless of whether or not such property or equipment is attached to or made a part of the building or real property covered by this Lease. Upon the expiration or sooner termination of this Lease, Lessee shall have the right to remove any such property whether or not the same is attached to the real property covered hereby, provided that upon any such removal, the GolfCourse hereby leased shall be replaced in as good condition as the same now are, reasonable wear and tear excepted. Provided, further, except as expressly set forth in Section 17.3. hereof in respect to Lessee's right to terminate this Lease, that Lessee shall not have the right to remove any such personal property or equipment ifLessee is in default in the payment ofrentals due under this Lease or if Lessee is in default if any ofthe terms and conditions ofthis Lease. 18.3 RightsofLesseeUponTerminationby the City. In the event that the City exercises its right to terminate this Lease pursuant to Sections 8.2(b) or Lessee exercises its right to terminate this Lease pursuant to Section 19.2(b) the City shall pay to Lessee the Unamortized Capital Amount. ARTICLE XIX ENVIRONMENTAL MATTERS. 19.1 Lessee's Environmental Covenants Regarding Operations of the Golf Course. Lessee hereby covenants and agrees with the City that it shall use reasonable efforts not to do or permit, except for the use offertilizer, pesticides and gasoline products inthe ordinarycourse ofbusiness in connectionwith the operation of the Golf Course, to be used in commercial quantities similar to those quantities usuallyused, released, keptordisposedofinthe Comparable Facilities, andwhich are used, released, kept or disposed of in compliance with applicable Environmental Laws, any Environmental Activityto take place in, on or under the GolfCourse, or to beincorporatedinthe GolfCourse. Additionally, Lessee herebyagreestoholdthe City harmless from and against any Environmental Liabilities arising from the acts of Lessee during the Term of this Lease (the foregoing covenants herein called "Lessee's Environmental Covenant"). 19.2 The City's EnvironmentalCovenantsRegardingthe GolfCourseandPrior Operations. City's Obligations and Covenants. The Cityshall be responsible for any and all liabilities arising from Environmental Activity at the GolfCourse prior totheCommencementDate, includingbut notlimitedtoexistingunderground or aboveground storage tanks, asbestos or other Hazardous Wastes. Page -56­ ---PAGE BREAK--- • Lessee's Right to Terminate. In the eventthat Hazardous Wastes existing on orat the GolfCourse as ofthe Commencement Date are found and in the event that as a result ofrequirements to comply with Environmental Laws the City is legally required to remove or remediate such Hazardous Wastes, the City, at its election, mayor may not, remove or remeidate such Hazardous Wastes. (ii) In the event, the City does not elect to remove or remediate such Hazardous Waste, and such removal or remediation is be required to permit Lessee to operate the Golf Course in the ordinary course without undue interference or risk, economic or otherwise, Lessee may terminate this Lease. (iii) Notwithstanding anything contained herein to the contrary, the City's right to elect not to remove or remediate Hazardous Substances shall not apply to its obligations with respect to underground storage tanks and any removal or remediation obligation with respect thereto, if the City's failure to do so would preventLesseefrom operationthe GolfCourseintheordinarycourse without undo interference or risk, economic or otherwise. In such event such removal or remediation shall be conductedby the City at its solecostandexpense within a reasonable periodoftime following the determination that such removal or remediation is necessary or required. City's EnvironmentalCovenants. TheCityherebyagreesto hold Lessee harmlessfrom andagainstanyEnvironmental Liabilities existingin respect to the GolfCourse as ofthe Commencement Date, or arising from the acts of the City or its agents prior to or after the Commencement Date, or the existence of Hazardous Wastes at the Golf Course as of the Commencement Date, or the performance of the City's covenants set forth in Subparagraph (b)(iii) above (the foregoing covenants herein called the "City's Environmental Covenants"). ARTICLE XX MISCELlANEOUS 20.1 IndependentContractorStatus. ThisAgreementis notintended, and should not be construed, to create a relationship ofagent, servant, employee, joint venture, orassociation, asbetweenthe City and Lessee. Lessee shall at all times be considered an independent contractor under this Agreement. Page -57­ ---PAGE BREAK--- 20.2Transfer. No Assignment. Subletting, Licensing or other Transfer. Neither this Lease nor any interest therein may be assigned, mortgaged, transferred, hypothecatedorencumberedby Lessee, nor shall all or any part ofthe Golf Course be sublet or licensed (each of which, a "Transfer"), without the City's prior consent, which may be withheld in its sole discretion. Oi) IfLessee is a corporation, partnership, limited liability company, or any other entity, any transfer of a controlling ownership interest in such entity or anytransfer ofthis Lease by merger, consolidation or liquidation shall be deemed a Transfer requiring the City's consent. (iii) Transfersinclude, withoutlimitation, oneor moresalesortransfers, by operation oflaw or otherwise, or creation ofnew stock, by which an aggregate of more than fifty percent (50%) of Lessee's stock, or partnership or membership interests, as applicable, shall be vested in a party or parties who are non-stockholders or non-partners or non-members, as applicable, as ofthe date hereof. Transfer bythe City. Ifthe City shall assign its interest under this Lease or transfer its interest in the Golf Course, the City shall be relieved of any obligation accruing hereunder after such assignment or transfer, and such transferee shall thereafter be deemed to be the City hereunder. 20.3 Notice ofDelays. When either Lessee or the City has knowledge that any actual or potential situation is delaying or threatens to delay the timely performance of this Agreement, that party shall, within five days, give notice thereof, including all relevant information with respect thereto to the other party. 20.4Severability. The invalidityin whole or in part ofany provision ofthis Agreement shall not void or affect the validity ofany other provision. 20.5Waiyer. No waiver of a breach of any provision ofthis Agreement by either Lessee or the City shall constitute a waiver ofany other breach ofthe same provision or any other provision of this Agreement. Failure of either the City or Lessee to enforce at any time, or from time to time, any provision ofthis Agreement, shall not be construed as a waiver of such provision or breach. The remedies herein reserved shall be cumulative and additional to any other remedies in law or in equity. 20.6Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if in writing and hand delivered, including delivery by courier service, sent by facsimile, or sent by certified mail, return receipt requested, postage prepaid, addressed as shown below, or to such other Page -58­ ---PAGE BREAK--- address as the party concerned may substitute by written notice to the other. If the notice is sent by facsimile, it must be properly addressed, reflecting the facsimile phone number of the addressee(s), and must be transmitted by a facsimile which producesa datedmessage completedconfirmation. Facsimile noticesshall bedeemed received on the date of confirmed transmission if during normal business hours in Pasco, Washington, otherwise on the next Business Day. All notices hand delivered shall be deemed received on the date of delivery. All notices forwarded by mail shall be deemed received on a date three days (excluding Sundays and legal holidays when the U.S. mail is not delivered) immediatelyfollowing date ofdeposit inthe U.S. mail;provided, however, the returnreceipt indicatingthe dateupon which all notices were received shall be prima facie evidence that such notices were received on the date on the return receipt. The addresses and addressees may be changed by giving notice of such change in the manner provided herein for giving notice. Unless and until such written notice is received, the last address and addressee given shall be deemed to continue in effect for all purposes. Any notice to Lessee may be delivered personallyor bymail addressedto Mr. Dave Flickwir, c/o lRI GolfManagement, L.P., 16236 San Dieguito Road, Ste. 4-13, Rancho Santa Fe, CA 92067, Telephone: 858­ 756-6333, Facsimile: [PHONE REDACTED], E-mail: [EMAIL REDACTED] may be delivered personally or by mail addressed to City Manager, City ofPasco, 525 N. 3rd, P.O. Box 293, Pasco, Washington 99301, or such other place as the City may designate in writing. 20.7 Expenses ofEnforcement. Lessee and the City agree to pay all reasonable costs, attorney's fees (including the reasonable value ofthe services rendered by the City Attorney) and expenses, including investigation fees, expert witness fees, to the prevailing party in any dispute involving the terms and conditions or interpretation or breach ofthis Agreement. 20.8SuccessorsandAssigns. ThisAgreementshall bebindinguponand inure to the benefit ofthe heirs, executors, administrators, successors and assigns ofthe City and, ifpermitted by the City hereunder, the successors and assigns of Lessee. 20.9Time ofEssence. Time is ofthe essence in regardto the performance ofany ofthe terms or conditions ofthis Agreement. 20.10 Governing Laws. This Agreement shall be construed, and the rights and duties of the City and Lessee shall be determined, in accordance with and governed by the laws of the State of Washington. Venue shall be in the Franklin County Superior Court. 20.11 Entire Agreement. This Agreement constitutes the entire agreement between the City and Lessee. It supersedes all prior communications, agreements, contracts and promises, either oral or written, by the City and Lessee. No modification of the terms of this Agreement shall be effective unless agreed to in writing and signed by both the City and Lessee. Page -59­ ---PAGE BREAK--- • 20.12 Quiet Possession. The City covenants that, subject to the limitations, covenants and conditions expressly set forth in this Lease, and, so long as Lessee is not in default hereunder beyond applicable cure periods, Lessee may quietly have, hold, and enjoy the Golf Course during the period commencing on the Commencement Date hereofand ending upon the expiration or earlier termination of this Lease, without hindrance or interruption by the City, subject to the City's right to enter upon the Golf Course as provided herein. 20.13 The City's Entry. The City and any of its agents shall at any time upon reasonable notice to Lessee have the right to go upon and inspect the Golf Course and improvements erected or constructed, or in the course of being erected or constructed, repaired, added to, rebuilt or restored thereon. The City shall have the right to serve or to post and to keep posted on the Golf Course, or on any part thereof, any notice permitted by law or by this Lease, any other notice or notices that may at any time be required or permitted by law or by this Lease. The City shall not be liable in any manner for any inconvenience, disturbance, loss of business, or other damages arising out of the City's entry on the Golf Course as providedinthis clauseexceptfor suchdamagethat iscauseddirectly by, or through the negligence of, the City, their employees, agents, or representatives. 20.14 Subordination. This Lease shall be subordinate to any deed of trust, mortgage or other security instrument now or in the future encumbering the City's interest in the Golf Course, or any part thereof, all obligations secured thereby, and all renewals, modifications, consolidations, replacements and extensions thereof (collectively, "Security Interests"), providedthatthe Cityfirst obtainstheagreement ofthe holderofsuch Security Interest that Lessee's rights under this Lease will not be abrogated by any foreclosure or other remedy exercised by such holder against the City as long as Lessee complies with all of its obligations under this Lease. Lessee's obligation to subordinate this Lease to any future Security Interest is conditioned on the agreement of the holder of such Security Interest that Lessee's rights under this Lease will not be abrogated by any foreclosure or other remedy exercised by such holder against the City as long as Lessee complies with all of its obligations under this Lease. 20.15 Estoppel Certificates. Lessee shall, from time to time, upon written requestofthe City, execute, acknowledge and deliver to the Cityor itsdesignee a written statement certifying that: this Lease is in full force and effect and has not been assigned or amended in Page -60­ ---PAGE BREAK--- • any way (or specifying the date and terms of agreement so affecting this Lease); this Lease represents the entire agreement between the parties as to this leasing; that all obligations under this Lease to be performed by the City have been satisfied; on this date there are no existing claims, defenses or offsets which the Lessee has against the enforcement ofthis Lease by the City; no Rent has been paid more than one month in advance; and that no security has been deposited with the City (or, if so, the amount thereof); and such other items as the City shall reasonably request. Itis intended that anysuchstatementdelivered pursuantto thisSection 20.15. may be relied upon by a prospective purchaser of the City's interest or holder of any mortgage upon the City's interest in the Golf Course. IfLessee shall fail to respond within ten (10) days of receipt by Lessee of a written request by the City as herein provided, Lessee shall be deemed to have given such certificate as above provided without modification and shall be deemed to have admitted the accuracy of any informationsuppliedby the Cityto a prospective purchaser or mortgagee andto have certified that this Lease is in full force and effect, that there are no uncured defaults in the City's performance, that the security deposit is as stated in the Lease, and that not more than one month's rent has been paid in advance. Amendmentto Lease; Material Agreements. Any amendment to this Lease shall be made in writing and only with the approval of Lessee, and Lessee's Representative, and the City, and the City Representative. Any decision or consent or approval ofany material matter dealing with this Lease or the Golf Course or its operations shall be made only by Lessee's Representative and the City Representative and neither the Course Manager or the Superintendent shall have the right or power to bind Lessee in any material manner. Page -61­ ---PAGE BREAK--- • CITY OF PASCO: Mayor ATTEST: APPROVED AS TO FORM: CATHERINE D. SEAMAN LELAND B. KERR Deputy City Clerk City Attorney STATE OF WASHINGTON ) ) ss. County of Franklin ) I ,certify th~ I ,~know or have satisfactory evidence that < isthepersonwhoappearedbeforeme,andsaidperson acknowledged that sai ' erson signed this instrument, on oath statedthat said person was authorized to execute the instrument and acknowledged it as the of the City of Pasco, a Washington municipal corporation, to be efree andvoluntaryact ofsuch municipal corporationfor the uses and purposes mentioned in the instrument. GIVEN under my hand and official seal this Page -62­ ---PAGE BREAK--- LESSEE: IRI SUNWILLOWS ACCOCIATES LLC, a Delaware limited liability company By: IRI GOLF MANAGEMENT, L.P., a Delaware limited liability company, Its Manager By: GoltMark Corporation, a Delaware corporation, Its General Partner Name: Title: STATE OF LA I, tVl ) ) ss. County0& If) tJo ) ~ certify that I know or have satisfactory evidence that Si' lIevS,k'b- is the personwho appearedbefore me, andsaidperson acknowle ged that saidperson signed this instrument, on oath statedthat said person was authorized to execute the instrument and acknowledged it as the President of GolfMark Corporation, a Delaware corporation, General Partner ofIRI GOLF MANAGEMENT, L.P., a Delaware limited partnership, Manager of lRI SUNWILLOWS ASSOCIATES, LLC, a Delaware limited liability company, to be the free and voluntary act ofsuch corporation, limited partnership and limited liability company for the uses and purposes mentioned in the instrument. \.YCl.lJLl official seal this dB day of December, 2000. C:\LJBdocs\SILVERSTEIN\SUN WILLOWS GOLF COURSE\LEASE AGREEMENT\LJB DRAFTS\LJB LEASE AGREEMENT.12.22.00.wpd Page -63­ ---PAGE BREAK--- SCHEDULE OF EXHIBITS: Renewal Term Rider Exhibit A Sketch of Golf Course and Old Course Exhibit B Legal Description of Golf Course and Old Course Exhibit C Rate Schedule for First 36 Months Exhibit D List of Equipment/Replacement Schedule Exhibit E Golf Course Maintenance Standards Exhibit F Course Improvements Page -64­ ---PAGE BREAK--- Renewal Term Rider Provided Lessee is not then in material default, and provided that neither this Lease nor any interest in the Golf Course has been assigned, sublet, licensed, or otherwise transferred by Lessee other than in accordance with the provisions ofthis Lease, Lessee shall have the right to renewand extend this Lease (the "Renewal Option") with respect to the Golf Course for the Renewal Term upon and subject to the following terms and conditions: 1.1 Lessee may renew the initial Term ofthis Lease for one Renewal Term offive years. Subject to the provisions of this Renewal Term Rider, the Renewal Term, herein so called, shall commence immediately upon the expiration of the original Term by Lessee's giving written notice thereof to City no later than twelve (12) months' prior to the expiration of the original Term. If Lessee does not renew this Lease for the Renewal Term, then Lessee shall have no further renewal rights. 1.2 The exercise by Lessee of any Renewal Option must be made, if at all, by written notice executed by Lessee and delivered to City on or before the date set forth in Paragraph 1.2 above. Once Lessee shall exercise the Renewal Option, Lessee may not thereafter revoke such exercise. Lessee shall not have the right to exercise the Renewal Option at a time a Lessee Default has occurred and remains uncured. Lessee's failure to exercise timelythe Renewal Optionfor any reason whatsoevershall conclusively be deemed a waiver ofsuch Renewal Option. 1.3 Lessee shall take the GolfCourse "asis" for the Renewal Term and Cityshallhave no obligation to make any improvements or alterations to the Golf Course. 1-4 Rent for the Renewal Term shall be the greater ofthe Rent in effect for the year prior tothe commencementofthe Renewal Term, or the FairMarket Renewal Rate. IfCity and Lessee have not agreed upon the Fair Market Renewal Rate at least four RenewalTerm, such Fair Market Rate shall be determined as provided in Section 17.4. ofthe Lease. 1.5 In determining the Fair Market Renewal Rate, the parties (and Decision Makers, as applicable) shall take into account all revenue sources then existing with respect to the use and operation ofthe Golf Course, and a market rate return to the City with respect thereto. The parties may elect to follow the allocation ofthe rent to different sources of revenues as provided in this Lease, or use other another formula to establish the Fair Market Renewal Rent hereunder. Page ---PAGE BREAK--- • EXHIBIT A SKETCH OF GOLF COURSE AND OLD COURSE ---PAGE BREAK--- fir1 r ~ I l. , I c I ~ ~ ~ L: % • ' " " , QJ Jl. . _ o = GOLF LEASE AREA ttlbv"'i ~ ~ UVLr Fertilizing Greens AU greens shall be fertilized with nitrogen, phosphorous, potash, and other elements as needed to maintain color, growth, health, and turgidity of the turfwithout allowing excessive or succulent growth. (ii) The goal ofthe greens fertilization program is to provide the best possible putting surface, not to produce the maximum amount ofgrowth. (iii) Greens shall not be closed for fertilization, unless required by State law. Pest Control on Green$ Pest control management ofthe greens is considered to be a constant ongoing' responsibility of the superintendent. (ii) The greens shall be checked daily for fungus activity, insect infestations. or any other pest problem which will adversely affect the quality of the putting surface. The appropriate controls for these pests shall be applied as soon as necessary after their detection. . (iii) Develop an Integrated Pest Management Plan for Pest Control practices Weed Control on Greens AU greens shall be maintained free ofundesirable grasses and weeds. Preernergent herbicides shall be used as necessary to prevent intrusion into the greens of weeds difficult to eradicate such as goose grass, crabgrass, etc, Repair of Greens Any damage done to the greens from any source which affects the putting surface shall be repaired immediately by the crew, All such areas shall be sodded or plugged from similar base material and same species of grass. 0) Other Greens Requirements The crew shall repair ball marks on all greens on a daily basis, (ii) The crew shall change the pin placement on the greens every day utilizing a systematic rotation. Page ---PAGE BREAK--- 11/03/2000 12:29 ¥AX [PHONE REDACTED] 1 1< 1 \;>ULr \;>.t\uur 4. MAINTENANCE OF TEES AND APRONS Mowing of Tees and Aprons The crew shall mow all tee areas and aprons around the greens not less frequently than three times per week. Tees and aprons shall be cut at a maximum height of 5/8 inch, but may be adjusted for different types ofgrasses. (ii) The crew shall not use mowing implements intended for mowing fairways for the mowing oftees or aprons. Watering of Iees and Aprons Tees and aprons are to be watered as necessary to keep the grass in optimal growing condition. Hand-watering shall be used by the crew where necessary to augment the irrigation system. Aeration and Top-Dressing of Iees and Aprons The tees shan be aerated two times per year or more as needed. They shall be top-dressed two times'per yearusing 1/4 yard ofsand per square foot per application (ii) The aprons shall be aerated two times per year. Plugs shall be chopped and returned to the apron surface. (iii) A recognized greens aerator, manufactured for the purpose, shall be used for each area. Vertical Mowing or Tees and Aprons Tees and aprons shall be vertically mowed as necessary to prevent thatching. They shall be mowed at different angles each time to assure the most benefit from the process. Fertilizing orIees and Aprons All tees and aprons shall be fertilized with nitrogen, phosphorous, potash, and other elements as needed to maintain color, growth, health, and turgidity ofthe . turfwithout allowing excessIve or succulent growth. Page ---PAGE BREAK--- Pest Control of T!r~s and Aprons The tees and aprons shall be checked daily for fungus activity and insect infestations or any other pest, gopher, or burrowing animal infestations which would interfere with the playing surface or the health ofthe turfgrasses. The appropriate controls for these pests shall be put into force as soon as necessary after their discovery, utilizing Integrated Pest Management procedures. Weed Control on Tees and Aprons Tees and aprons shall be kept weed-free to an extent ofat least 90 percent ofthe area by the proper and timely application of preemergent and/or postemergent herbicides. Overseeding of Tees and Aprons The tees shall be overs~ded in the Fall with erennial Rye at the rate often (10) pounds per 1,000 square feet. This process may be combined with the aerationltop.dressing process ifthe superintendent so desires. (ii) All divots on tees are to be filled with seed/sand mixture weekly or as needed, using a seed mixture if Tifway 419 is used on the tee.boxes. ~ Tee markers and all tee equipment shall be moved daily for proper play and control ofturf wear. 5. :MAINTENANCE OF FAIRWAYSIDRIVING RANGE Mowing Range The fairways shall be mowed at a height of 5/8 inch. The mowing heights may be adjusted as needed to provide a difference in height between fairways and the rough. (ii) The driving range shall be mowed one time per week at a height of 1" or as needed. (iii) Excess grass clippings shall be removed mechanically to prevent damage to existing grass. (iv) During periods oframy weather which interfere with the normal Page ---PAGE BREAK--- 11/03/2000 12:32 FAX fairway mowing schedule, the crew shall be expected to use additional mowing resources to catch up on mowing requirements so as to prevent overlying long grass. Watering of Fairways!Driving Range Fairways and the driving range are to be watered as necessary to keep the grass in optimal playing condition. Aeration Range The fairways and driving range shall be aerated a minimum of two times per year or as needed, using an aerator with 5/8" diameter spoon and a minimum penetration depth ofthree inches. Vertical Mowing ofFajrwaysIDriving Range Vertical mowing offairways and the driving range is not required except in extraordinary circumstances for disease control or to reduce thatch of stoniferous weed grasses. Fertilization Rap8e All fairways/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 succulent growth. (ii) Fairways and the driving range are to be fertilized four times per year. Pest Control on Range The fairways and the driving range shan be checked daily for any pest infestation, gophers, and other burrowing animals which will affect the playing surface ofthe ongoing health ofthe turfgrass. (ii) Any pest problem recognized as such shall be dealt with as soon as possible. 6. HAZARD MAlNTENANCE Sand Mi\intenance Page ---PAGE BREAK--- 11/03/2000 12:34 FAX [PHONE REDACTED] 1 1< 1 liVL.l<' liKVUr 't!>lVVQ • All sand traps shall be edged as necessary to maintain an appropriate lip, raked daily, and filled with USGA trap sand of proper color as needed to maintain a minimum 3" depth on stopes and 5" in the bottom. (ii) The sand shall be raked five times per week, Monday, Wednesday, Friday, Saturday and Sunday in each sand trap. (iii) The sand traps shall be kept weed-free. 7. TREES. SHRUBS AND ' The superintendent will be responsible for the maintenance of all the landscaping at the course. All landscaped planter areas shall be kept weed-free. All trees and shrubs shall be pruned as necessary to provide ease ofplay on the course and to provide ease ofplay on the course and to provide aesthetic value throughout. the crew shall replace trees damaged by wind, etc., and provide staking as necessary. Any pruning on larger trees that necessitates the use of the ladders and/or mechanical raising and lowering devices to carry a person about in order to prune, thin out dead wood or debris or unwanted growth is the responsibility ofthe crew. The crew shall irrigate all tree shrubs and other landscape plants as necessary to maintain them in the optimum condition for growth. All dead trees, for whatever cause, shall be removed as soon as reasonably possible. Replacement trees shall be planted as soon as reasonably possible with a tree of appropriate type and size. The landscaped slope separating the golf course from the adjacent housing shall be cultivated, weeded and pruned on a regular basis. The crew is to keep grass adjacent to trees mowed at the same frequency and to the same height as is applicable to the location ofeach tree whether fairway or rough). Large area mowers shall not be used within one foot ofthe trunk of any tree. All newly planted trees, existing.specimen trees and other landscaping shall be fertilized a minimum of one time each year to maintain color, growth and vigor- Page ---PAGE BREAK--- • • 11/03/2000 12:37 FAX [PHONE REDACTED] 1 R 1 GULl' GRUUt' l({J UUl:I 8. ROUGHS Mowing All roughs shall be mowed weekly during the growing season, and as necessary . during the balance ofthe year, at heights between 3/4" and 1 112". Rough height shall not exceed 2" without the direct approval ofthe regional superintendent, and rough mowing shall not be suspended for any tournament without such approval. Vegetation within and along drainage ditch slopes shall be mowed or weedeatered as required to maintain a suitable appearance, Aeration Fairway-to-tree-line play areas shall be aerated at least two times per year. (ii) Within wooded play areas, aeration shall be performed as necessary to establish andlor maintain turf. Fertilization Roughs shall be fertilized as necessary to maintain turf. Weed Control Shall be perfonned as necessary to prevent seed formation and to allow proper play, 9. WETLANDS All areas that are designated wetlands shall be maintained in their natural condition. Exotic weed species such as tamarisk, pampas grass, grant reed, and castor bean shall be removed.. 10. NON-HORTICULTURAL MAINTENANCE RELATED TO PLAY ON THE COURSE Lessee shall be responsible for the maintenance of all tee markers, cups, flags, ball washers, trap rakes, yardage signs, and benches on the course. Maintenance shall include repairing, painting, -replacing, furnishing towels, and otherwise keeping these amenities in a good condition that is conducive to player enjoyment of and respect for the course. Page ---PAGE BREAK--- 11/03/2000 12:31$ l'AA The cups on each green and the tee markers on each tee shall be relocated every day or as dictated by weather, The ball washers located around the course shall be services Monday, Wednesday, Friday, Saturday, and Sunday. The towels for the ball washers shall be changed on the same schedule with clean towels furnished as needed. The superintendent shall have the responsibility to mark temporary hazards, out·of·bounds areas, and other course conditions as they occur or are required by tournament play. Definition oftournament requirements will be furnished by the starter staffin the Pro Shop at the clubhouse ofthe course. The crew shall pick up litter throughout the course on a daily basis, Litter receptacles are to be furnished by the Lessee and maintained by the lessee. Vertebrate pest control'shall be routinely performed throughout the property on an ongoing basis in such a manner that vertebrate pest populations are steadily reduced and eventually eliminated. A soil analysis shall be perfonned yearly by an approved professional laboratory, Any change in the physical characteristics of any area ofthe golf course such as addition or removal of sand traps, addition or removal of any hazards (water, trees, or native vegetation)~ movement ofsoil exceeding 20 cubic yards in any single area, or the modification ofany portion ofthe golfcourse or the buildings shall only be undertaken with the direct approval ofthe City Manager or his designated representative, u. GENERAL MAINTENANCE STATEMENT These specifications indicate minimum practices necessary for the proper maintenance of any golf course. In no way do they limit the responsibility ofthe golfcourse superintendent for the professional care and maintenance ofthe property. ---PAGE BREAK--- EXHIBITF COURSE CAPITAL IMPROVEMENTS 1.1 Required Capital Improvements. Lessee shall, subject to the terms of this Exhibit perform the following Required Capital Improvements at its sole expense, such work to be completed on or before June 1, 2001: Rebuild and level tees (estimated cost $25,000). Replace sand bunkers (estimated cost $15,000). Remove silt from lakes (estimated cost $10,000). Repair existing cart paths (estimated cost $10,000). Repair and improve drainage (estimated cost $10,000). Trim trees (estimated cost $7,500). Refurbish existing restrooms and cart storage areas (estimated cost $5,000). Lessee and the City, acting in good faith, shall prioritize the construction of the improvementslistedabove andtothe extent that Lessee has expended the Maximum Amount, as defined below, it shall be relieved of further obligation to complete the balance ofthe such improvements. 1.2 Above andUndergroundStorageTanks. Lessee shall install new above-ground fuel tanks, in priority ofthe items listed in Paragraph 1.2 above, in accordancewith all applicable codes on or before June 1, 2001. The existing undergroundtanks shall thereafterbe abandonedand notusedfor GolfCourseoperations. Adecision whether to removethe undergroundfuel tanks orto abandon suchtanks inplaceshall be made by the City. Any costs to remove the existing underground tanks or abandon such tanks in place shall be the responsibility ofthe City. 1.3 DelayinCommencementofImprovements. Intheevent that the City makes the CityConstruction Election pursuantto which itelects to constructthe Renovation Improvements, Lessee's obligation to start commencement of the necessary construction or installation of the improvements or equipment contemplated by Paragraph 1.1. or 1.2 above shall be delayed until ten (10) days following the date the City'sbiddingprocedureshave beencompliedwith andcompleted, a construction contract has been awarded and executed by the City and the City has issued a Notice to Proceed to its Contractor. 1.4 Cap on Expenditures. Notwithstanding the foregoing, Lessee shall not be requiredto incur more than $100,000 (the "MaximumAmount") in direct, actual, Page ---PAGE BREAK--- • verifiable costs to complete the improvements under Paragraphs 1.1 and 1.2. If Lessee incurs less than $100,000 in direct, actual, verifiable costs to complete such improvements, any remaining amount shall be added to and constitute a portion of the Additional Capital Improvement Amount. 1.5 Plans. The foregoing work (the "Improvements") shall be subject to City's prior approval, notto be unreasonablywithheld, and shallbesubjecttothe otherterms and conditions ofthis Exhibit All architectural, engineering and other design fees shall be paid by Lessee. Lessee shall use its architect, engineers and other design professionals, all ofwhom requirements in the state in which the Golf Course are situated. 1.6 Contractors. All contractorsandsubcontractorsparticipatinginconstructionofthe Improvements shall be reputable and shall meet all licensing and insurance requirements of the state in which the Golf Course are situated, and be reasonably satisfactoryto City. Lessee's choice ofsubcontractors shall not materially affect any guaranties or warranties relating to the improvements on the Golf Course. 1.7 Construction Work and Costs. Lessee shall complete all Improvements at Lessee's sole risk, cost and expense. The construction shall be performed in a good and workmanlike manner and in compliancewith all applicable rules, laws, codes and regulations, including all applicable safety procedures established by City. 1.8 Construction Insurance. During construction, Lessee or its Contractor shall procure and maintain in effect the following insurance coverages with an insurance company or companies authorized to do business in the State where the Golf Course are located in amounts and with coverages reasonably acceptable to City, including without limitation builders risk coverage. Lessee shall furnish the City with certificates ofinsurance evidencingsuch coverage prior to the commencement ofthe constructionwork. All insurance shall be carried in companies reasonablyacceptable to the City. The carrying of any of the insurance required hereunder shall not be interpretedas relievingtheinsuringpartyofanyresponsibilitytothe other party, and the other party does not waive any rights that it may have against the other party and/or its representatives for any expense and damage to persons and property (tangible and intangible) from any cause whatsoever with respect to the insuring party's work. 1.9 As-Builts. Upon completion ofthe Improvements, Lessee's Contractorshall submit to City copies ofall as-built Construction Documents and specifications indicating reconfiguration of Lessee's Golf Course, including changes to the mechanical, electrical, architectural, plumbing, cabling, sprinkler and fire alarm, as applicable; and (ii) original permit with inspector(s) final acceptance (if any permit was required). 1.10 Legal Title. Legal title to all Improvements shall immediately vest in City upon substantial completion thereof. Page ---PAGE BREAK--- • 1.11 No City Liability. The City shall not be liable for any injury, loss or damage to any person (including death) or property on or about the Golf Course during the performance of the work, unless caused by the City, its employees or agents, and Lesseeshall indemnifyandholdthe Cityharmless against and from anysuchliability, andanycosts or charges (including, withoutlimitation, reasonable attorney'sfees and court costs) which the City may incur on account of any such injury, loss or damage. Lessee's Contractor shall carry commercial general liability insurance which shall include coverage ofthe foregoing contractual liability. City's collection rights to any amounts due shall be deemed the same as for additional rent under the Lease. Page ---PAGE BREAK--- • EXHIBITG OPfIONAL CAPITAL IMPROVEMENTS ---PAGE BREAK--- • EXHIBIT OPTIONAL IMPROVEMENTS Capital Expenditures - Clubhouse Start-up pas System Office Supplies Rental Sets Merchandise Bags Fixtures Time Clock Television Office Furniture PA System Telephone System Vacuum Cleaner Security System Range Picker Ball Washer Range·other Cart Tools Air Compressor Power Washer 28,000 500 1,775 100 3,000 500 - 500 1,000 1,100 1,800 250 1,200 1,800 2,400 550 500 525 500 46,000 Contingency 4,000 Total $50,000 ---PAGE BREAK--- • Proposed Golf <:;ourse Maintenance, Equipment and Staffing plans Sun Willows Course Supplies and Equipment Number of Items !tJm! ~ 2 Edgers $ 1,112.00 2 Weed eaters 1,000.00 5 Square shovels 150.00 5 Scoop shovels 210.00 5 Maintenance rakes 280.00 5 Steel rakes 160.00 4 Leaf rakes 160.00 2 Pumps 1,500.00 1 Chain saw 400.00 36 Flags 428.00 27 Flag poles 490.00 18 Ballwashers , 4,284.00 108 Tee markers 2,500,00 80 Bunker rakes 940.00 12 Divot containers 575.00 2 Spreaders 600.00 1 Drop spreader 200.00 200 Stakes 1,300.00 4,800 Rope 150.00 2 Cup cutters 140.00 2 Blowers 705.00 3 Whipping poles 140.00 100 Signs 1,825,00 1 Parts cleaner 650.00 (per rental) 1 Tee towels 90.00 1 Wheel blower 1,131.00 2 Fuel tanks 10,000.00 Shop tools 4,000.00 Aerator, Fairway 4,000,00 Topdresser 6,000.00 Overseeders 4,800.00 Sod Cutter' 5,000.00 Verticutters 2,800.00 Rollers 5,000.00 2-way radios 1AOO.00 1 Tool chest 250.00 1 Drag brushes 465.00 Wood benches 174.00 (each) Sweepers 10,000.00 Aerway Trailer aOQQ.oo $ 83,009.00 ---PAGE BREAK--- • • ) Amendment No.1 Golf Course Lease Agreement sJ.. This Amendment is entered into this S ( day of fJJ'-tkj ,2005 between the CITY OF PASCO, a municipal corporation of the State of Washington, herein called the "City" and IRI SUN WILLOWS ASSOCIATES LLC, A Delaware limited liability company, here in called "Lessee". Whereas, the City and Lessee entered into that certain Golf Course Agreement dated December 27, 2000; and Whereas, the City and Lessee desire to amend said Agreement as set forth herein below; Now, Therefore, the City and Lessee agree as follows: Section 1 Section 4.2 Capital Reserve Account, sub paragraph b is hereby amended to read as follows: Capital Replacement Amount. Commencing on January 1, 2003, Lessee shall pay to the City and the City shall deposit to the Capital Reserve Account on an annual basis (ie for each Lease Year) an amount (the "Capital Replacement Amount") equal to the greater of: four percent (4 of Golf Course Play Revenues, or (ii) the sum of $20,000.00. Commencing on July 1, 2005, Lessee's payment requirement shall increase to six and one half percent of Golf Course Play Revenues. Section 2 Section 15.12 Responsibility for Taxes, is hereby amended to read as follows: 15.12 Responsibility for Taxes. Lessee shall be responsible for all fees, taxes and charges which may be levied upon Lessee in relation to its performance of services under this Agreement. This Section 15.12, does not apply to the payment of leasehold excise tax, for which payment responsibility is specifically provided for elsewhere in this Agreement. The City agrees that it will not design or adopt any new tax specifically targeted to golf course operations during the Term of this Agreement. The City agrees that effective July 1, 2005, except for spectator admissions, the golf course and driving range shall not be subject to the City Admission Tax as imposed by Section 3.02.020 of the Pasco Municipal Code. Section 3 That all other provisions of said Lease Agreement shall remain as originally written. ---PAGE BREAK--- • • {Q113{O~ Date' ' ATTEST: APPROVED AS TO FORM: SANDY NWORTHY LELAND B. KERR Deputy City Clerk City Attorney LESSEE: IRI SUNWILLOWS ASSOCIATES LLC, a Delaware limited liability company By: IRl GOLF MANAGEMENT, L.P., a Delaware limited liability company, Its Manager By: Golf/Mark Corporation, a Delaware corporation, Its General Partner By: ~IZCC>S Name: Je rey M. Silverstein Date Title: President ---PAGE BREAK--- • • Amendment No.2 Golf Course Lease Agreement This Amendment is entered into this 'ZoTf-4 day of JANU.A~'1 ,2006 between the CITY OF PASCO, a municipal corporation of the State of Washington, herein called the "City" and IRI SUN WILLOWS ASSOCIATES LLC, a Delaware limited liability company, here in called "Lessee". Whereas, the City and Lessee entered into that certain Golf Course Agreement dated December 27,2000; and Whereas, the City and Lessee desire to amend said Agreement as set forth herein below; Now, Therefore, the City and Lessee agree as follows: Section 1 Section 2.2 Rent; Payment; Rental Credit, sub paragraph is hereby amended to read as follows: Golf Course Annual Lease Payment. Lessee agrees to pay an annual lease payment (the "Annual Lease Payment") for each Lease Year in the amount of$150,000, prorated for a partial Lease Year. (ii) Lessee shall pay the Annual Lease Payment in equal installments of $12,500 on or before the 5th day of each calendar month during the term of this Lease, commencing on the 5th day of the first full month following the Commencement Date. Provided, however, commencing on January I, 2006, Lessee shall pay installments according to the following schedule: January $0 February $6,250.00 March $12,500.00 April $21,875.00 May $21,875.00 June - December $12,500.00 Section 2 Section 2.2 Rent; Payment; Rental Credit; sub paragraph is hereby amended to read as follows: Golf Concession Fee. Lessee agrees to pay, for the right to offer golf-related merchandise for sale, lessons and other golf related services, an annual concession fee for each Lease ---PAGE BREAK--- • • Year in the amount of $75,000 (the "Annual Concession Fee"), pro-rated for a partial Lease Year. (ii) Lessee shall pay the Annual Concession Fee in equal installments of $6,250 on or before the 5th day of each calendar month during the Term of this Lease, commencing on the 5th day of the first £1.111 month following the Commencement Date. Provided, however, commencing on January 1, 2006, Lessee shall pay installments according to the following schedule: January $0 February $3,125.00 March $6,250.00 April $10,937.50 May $10,937.50 June - December $6,250.00 Section 3 Section 2.2 Rent; Payment; Rental Credit; sub paragraph is hereby amended to read as follows: Food & Beverage Concession Fee. Lessee agrees to pay for the right to operate the Food and Beverage Operations an annual food and beverage concession fee (the "Food & Beverage Concession Fee") in the amount of: 6% of the Food and Beverage Revenues, commencing on the Commencement Date, plus $10,000 per Lease Year, commencing with the Lease Year in which the Clubhouse Renovation Date occurs, pro-rated for a partial Lease Year. (ii) The portion ofthe Food & Beverage Concession Fee attributable to 6% of the Food and Beverage Revenues for the prior calendar month shall be due and payable on or before the 25th day of each calendar month during the Term of the Lease, commencing on the 25th day of the second month following the Commencement Date. (iii) The remaining portion of the Food & Beverage Concession Fee ($10,000 per annum) shall be payable in equal installments of$833.00, payable on the 5th of each calendar month, commencing on the 5th day of the first full month following the Clubhouse Renovation Date. Provided, however, commencing on January 1, 2006, Lessee shall pay installments according to the following schedule: January $0 February $416.70 ---PAGE BREAK--- • • March $833.33 April $1458.33 May $1,458.33 June - December $833.33 Section 4 Section 4.2 Capital Reserve Account, sub paragraph b is hereby amended to read as follows: Capital Replacement Amount. Commencing on January 1,2003, Lessee shall pay to the City and the City shall deposit to the Capital Reserve Account on an annual basis (ie for each Lease Year) an amount (the "Capital Replacement Amount") equal to the greater of: four percent of Golf Course Play Revenues, or (ii) the sum of $20,000.00. Commencing on July 1,2005, Lessee's payment requirement shall increase to six and one half percent of Golf Course Play Revenues. Commencing on January 1,2006, Lessee's payment requirement shall increase to six and one half percent of Golf Course Play Revenues plus two and one half percent of driving range revenues. Section 5 That all other provisions of said Lease Agreement shall remain as originally written. CITY OF PASCO ~.OlufrV JOY 0 ON Date May ATTEST: APPROVED AS TO FORM: LESSEE: IRI SUN WILLOWS ASSOCIATES LLC, a Delaware limited liability company By: IRI GOLF MANAGEMENT, L.P., ---PAGE BREAK--- • • a Delaware limited liability company, Its Manager By: Golf/Mark Corporation, a Delaware corporation, Its General Partner Name Jeffrey M. Silverstein _ Title: President ---PAGE BREAK--- • • Amendment No.3 Golf Course Lease Agreement This Amendment is entered into this day of May, 2007 between the CITY OF PASCO, a municipal corporation of the State of Washington, herein called the "City" and IRI SUN WILLOWS ASSOCIATES LLC, a Delaware limited liability company, herein called "Lessee". Whereas, the City and Lessee entered into that certain Golf Course Agreement dated December 27, 2000; and Whereas, the City and Lessee desire to amend said Agreement as set forth herein below; Now, Therefore, the City and Lessee agree as follows (deletions by interlineation, additions by underline): Section 1 Section 1.1 Definitions, sub paragraph is hereby amended to read as follows: 1.1 Definitions. For all purposes ofthis Agreement, except as otherwise expressly provided or unless the context otherwise requires, the terms defined in this Article I shall have the following meanings: "Comparable Facilities" shall mean Columbia Point Golf Course, and Canyon Lakes Golf Course , and Hom R~ids Golf Course. Section 2 Section 2.2 Rent; Payment; Rental Credit; sub paragraph is hereby amended to read as follows: 2.2 Rent; Payment; Rental Credit. Lessee agrees to pay the City for the right, license and privilege of leasing and operating and maintaining the Golf Course, food and beverage concession, and other concessions, the following payments: Golf Course Additional Payment. In addition to the Annual Lease Payment, Lessee agrees to pay on an annual basis, the amount, if any, by which 17.5% of Golf Course Play Revenues exceeds an amount equal to the annual Lease Payment (the "Additional Payment"). Effective January 1st, 2009, the Additional Payment will be 17.5% of Golf Course Play Revenues generated in excess of the amount of Golf Course Play Revenues for the 2008 calendar year. Section 3 Section 4.2, Capital Reserve Account, sub paragraph is hereby amended to read as follows: ---PAGE BREAK--- • • 4.2 Capital Reserve Account. Capital Replacement Amount. Commencing on January 1,2003, Lessee shall pay to the City and the City shall deposit to the Capital Reserve Account on an annual basis (i.e. for each Lease Year) an amount (the "Capital Replacement Amount") equal to the greater of: four percent of Golf Course Play Revenues, or (ii) the sum of $20,000.00. Commencing on July 1, 2005, Lessee's payment requirement shall increase to six and one half percent of Golf Course Play Revenues. Commencing on January 1,2006, Lessee's payment requirement shall increase to six and one half percent ofGolf Course Play Revenues plus two and one half percent of driving range revenues. Commencing on January 1,2009, Lessee's payment requirement shall increase to seven and one half percent of Golf Course Play Revenues plus two and one half percent ofdriving range revenues. Section 4 Section 7.3 Adjustment to Fees, sub paragraphs and are hereby amended to read as follows: Limitations on Increases in Fees. Any increase in the Fees contemplated by Subparagraph above shall not result in the Fees being in excess of eight-five percent (85%) of the average regular rates then being charged at the Comparable Facilities, unless the consent of the City Representative is obtained, which shall not be unreasonably withheld. When adjustment to the Fees are established, they may be rounded upward to the nearest one-half dollar. Effective for the 2009 calendar year, any increase in the Fees shall not result in the Fees being in excess ofthe average of the regular rates then being charged at the Comparable Facilities. Special Programs. Lessee shall not discontinue programs such as Senior Discounts, Senior Passes, Junior Discounts, Season Passes, (including a 15% discount on season passes for Pasco residents), and similar programs benefiting the public which have been historically maintained at the Golf Course without the prior consent ofthe City, which consent shall not be unreasonably withheld so long as such programs have been discontinued at one or more ofthe Comparable Facilities or the maintenance of such programs is no longer economically viable for the operation of the Golf Course. To the extent that Lessee desires to increase the fees or charges relating to such programs, such increases shall be detennined and governed in the same manner as applicable to the Fees under Subparagraphs and above. ---PAGE BREAK--- • • Section 5 Renewal Term Rider is hereby amended to read as follows: Provided Lessee is not then in material default, and provided that neither this Lease nor any interest in the Golf Course has been assigned, sublet, licensed, or otherwise transferred by Lessee other than in accordance with the provisions ofthis Lease, Lessee shall have the right to renew and extend this Lease (the "Renewal Option"), together with all existing terms and conditions, with respect to the Golf Course for the Renewal Term upon and subject to the following terms and conditions: 1.1 !ill Lessee may renew the initial Term ofthis Lease for one Renewal Term of five years. Subject to the provisions ofthis Renewal Term Rider, the Renewal Term, herein so called, shall commence immediately upon the expiration ofthe original Tenn by , Lessee's giving written notice thereof to City no later than twelve (12) months' prior to the expiration ofthe original Term. If Lessee does not renew this Lease for the Renewal Tenn, then Lessee shall have no further renewal rights. Lessee desires to install a pavilion, the estimated cost ofwhich is in excess of $50,000, to accommodate large group events, tournaments, etc. In the event that Lessee completes such improvements, in compliance with all applicable pennits and plans approved by the City, by March 31, 2008, Lessee shall have the right to exercise the Renewal Option, subject to the Rent provisions (Section 2.2) in effect beginning with the 2009 calendar year, for the tenn ofthe renewal, in lieu ofthe provisions for Rent as determined in paragraphs 1.4 and 1.5, below, by giving written notice as in paragraph 1.1 above. 1.2 The exercise by Lessee of any Renewal Option must be made, if at all, by written notice executed by Lessee and delivered to City on or before the date set forth in Paragraph 1.2 above. Once Lessee shall exercise the Renewal Option, Lessee may not thereafter revoke such exercise. Lessee shall not have the right to exercise the Renewal Option at a time a Lessee Default has occurred and remains uncured. Lessee's failure to exercise timely the Renewal Option for any reason whatsoever shall conclusively be deemed a waiver of such Renewal Option. 1.3 Lessee shall take the Golf Course "as is" for the Renewal Tenn and City shall have no obligation to make any improvements or alterations to the Golf Course. 1.4 Rent for the Renewal Tenn shall be the greater of the Rent in effect for the year prior to the commencement of the Renewal Term, or the Fair Market Renewal Rate. If City and Lessee have not agreed upon the Fair Market Renewal Rate at least four months prior to the commencement of the Renewal Tenn, such Fair Market Rate shall be detennined as provided in Section 17.4. of the Lease. ---PAGE BREAK--- • • 1.5 In determining the Fair Market Renewal Rate, the parties (and Decision Makers, as applicable) shall take into account all revenue sources then existing with respect to the use and operation of the Golf Course, and a market rate return to the City with respect thereto. The parties may elect to follow the allocation ofthe rent to different sources of revenues as provided in this Lease, or use etheF another formula to establish the Fair Market Renewal Rent hereunder. Section 6 That all other provisions of said Lease Agreement shall remain as originally written. CITY OF PASCO Date ATTEST: APPROVED AS TO FORM: l ~ LELAND B. KERR City Attorney LESSEE: IRI SUN WILLOWS ASSOCIATES LLC, a Delaware limited liability company By: IRI GOLF MANAGEMENT, L.P., a Delaware limited liability company, Its Manager By: Jeffrey M. Silverstein resident Name: Title: Golf/Mark Corporation, a Delaware corporation, Its G era! artner S k+h.,OOI Date