AGREEMENT FOR THE LEASE
AND
OPERATION OF THE JACK TONE ROAD GOLF COURSE
by and between
CITY OF RIPON
(“City”)
And
SGM, Inc, a California Corporation
(“Operator”)
i
TABLE OF CONTENTS
Page
ARTICLE 1 FACILITIES ..........................................................................................................- 1 -
1.1 The Property........................................................................................................- 1 -
1.2 Personal Inspection .............................................................................................- 1 -
1.3 Status of Title......................................................................................................- 2 - ARTICLE 2 TERM.....................................................................................................................- 2 -
2.1 Term....................................................................................................................- 2 -
2.2 Agreement Year..................................................................................................- 2 - ARTICLE 3 RENT .....................................................................................................................- 2 -
3.1 Base and Percentage Rent...................................................................................- 2 -
3.2 Payment to City...................................................................................................- 3 -
3.3 Gross Receipts ....................................................................................................- 3 -
3.4 Excluded from Gross Receipts............................................................................- 3 -
3.5 No Deductions ....................................................................................................- 4 -
3.6 Place of Payment.................................................................................................- 4 -
3.7 Payment and Late Charge ...................................................................................- 4 -
3.8 Accounting Records............................................................................................- 5 -
3.9 Audit ...................................................................................................................- 5 -
3.10 Recordation of Sales...........................................................................................- 5 -
3.11 Rent Net to City ..................................................................................................- 6 - ARTICLE 4 USE OF CAPITAL IMPROVEMENT ACCOUNT FUNDS ...............................- 6 -
4.1 General................................................................................................................- 6 -
4.2 Request of Funds for Long Term Capital Improvements.. .................................- 6 -
4.3 Request of Funds for Emergency Improvements and Repairs. ..........................- 6 - ARTICLE 5 ALTERATIONS, MAINTENANCE, REPAIR AND REPLACEMENT.............- 6 -
5.1 General................................................................................................................- 6 -
5.2 Alterations...........................................................................................................- 7 -
5.3 Construction Requirements.................................................................................- 7 - ARTICLE 6 USE OF PREMISES..............................................................................................- 7 -
6.1 Golf Course Use..................................................................................................- 7 -
6.2 Scope and Quality of Operations........................................................................- 8 -
6.3 Golf Fees and Prices ...........................................................................................- 8 - ii
6.4 Environmental Matters........................................................................................- 8 - ARTICLE 7 TAXES, ASSESSMENTS AND UTILITIES .....................................................- 11 -
7.1 Taxes and Assessments.....................................................................................- 11 -
7.2 Payment Before Delinquency ...........................................................................- 12 -
7.3 Contest of Tax...................................................................................................- 12 -
7.4 Tax Hold-Harmless...........................................................................................- 12 -
7.5 Payment by Nonresponsible Party....................................................................- 12 -
7.6 Utilities..............................................................................................................- 12 -
7.7 Signs and Promotions .......................................................................................- 12 -
7.8 Clubs.................................................................................................................- 13 - ARTICLE 8 INDEMNITY AND INSURANCE .....................................................................- 13 -
8.1 Indemnity Agreement .......................................................................................- 13 -
8.2 Liability Insurance ............................................................................................- 13 -
8.3 Fire and Property Insurance ..............................................................................- 14 -
8.4 Business Interruption ........................................................................................- 14 -
8.5 Deposit of Insurance with City .........................................................................- 14 -
8.6 Notice of Cancellation of Insurance .................................................................- 14 -
8.7 Business Automobile Liability Insurance. ......................................................- 14 -
8.8 Workers’ Compensation Insurance...................................................................- 15 -
8.9 Exclusion from Indemnity ................................................................................- 15 -
8.10 Insurance Coverage Adjustments .....................................................................- 15 -
8.11 Sub-Tenants ......................................................................................................- 15 - ARTICLE 9 PERSONNEL.......................................................................................................- 15 -
9.1 Employees.........................................................................................................- 15 -
9.2 Nondiscrimination.............................................................................................- 15 -
9.3 Independent Contractor.....................................................................................- 16 -
9.4 Golf Course Manager........................................................................................- 16 -
9.5 Other Employees. ............................................................................................- 16 - ARTICLE 10 ASSIGNMENT..................................................................................................- 16 -
10.1 Intention of the Parties......................................................................................- 16 -
10.2 No Assignment Without City’s Consent...........................................................- 17 -
10.3 Permitted Subletting..........................................................................................- 17 -
10.4 Change in Ownership Control ..........................................................................- 17 - iii
10.5 Liens and Encumbrances ..................................................................................- 17 - ARTICLE 11 EVENTS OF DEFAULT...................................................................................- 18 -
11.1 Events of Default ..............................................................................................- 18 -
11.2 Right of Termination Upon Default..................................................................- 18 -
11.3 City’s Remedies................................................................................................- 18 - ARTICLE 12 GENERAL PROVISIONS ................................................................................- 20 -
12.1 Time of Essence; Breach ..................................................................................- 20 -
12.2 Waiver of Breach ..............................................................................................- 20 -
12.3 Total Taking......................................................................................................- 20 -
12.4 Partial Taking....................................................................................................- 21 -
12.5 Eminent Domain Award ...................................................................................- 21 -
12.6 Entry and Inspection by City ............................................................................- 21 -
12.7 Abandonment....................................................................................................- 21 -
12.8 Attorneys’ Fees/Legal Costs.............................................................................- 21 -
12.9 Successors and Assigns.....................................................................................- 21 -
12.10 Prevailing Wage................................................................................................- 21 -
12.11 Amendments to Agreement ..............................................................................- 22 -
12.12 Notices to City ..................................................................................................- 22 -
12.13 Notices to Operator...........................................................................................- 22 -
12.14 Authority to Enter Agreement ..........................................................................- 22 -
12.15 Memorandum of Agreement for Recording .....................................................- 22 - - 1 -
AGREEMENT FOR THE LEASE AND OPERATION
OF THE
JACK TONE GOLF COURSE
THIS LEASE AGREEMENT (“Agreement”) is entered into effective January 1, 2025 (the “Effective Date”) by and between the City of Ripon, a political subdivision of the State of California (hereinafter referred to as “City”), and SGM, Inc, a California Corporation (hereinafter referred to as “Operator”).
RECITALS
WHEREAS, City is the owner of the real property described in Exhibit “A” attached hereto and made a part hereof (the “Land”);
WHEREAS, City and Operator desire to enter into an agreement whereby Operator will lease and be responsible for the operation, maintenance and improvement of the Jack Tone Golf Course in a manner consistent with the goals of City and in accordance with the terms and conditions of this Agreement;
WHEREAS, it is the intention of City to provide for a continuation of professional services to the public at the Jack Tone Golf Course;
NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions set forth herein, the parties hereto and each of them do agree as follows:
ARTICLE 1
FACILITIES
1.1 The Property. The property leased under this Agreement consists of the Land located at 1500 Ruess Road in Ripon, California (APN 257-300-20) with a developed 18-hole executive golf course, parking lot, irrigation well, practice area, club house, gazebo, and cart barn (collectively the ‘‘Property” and or the “Premises”). Personal Inspection. Operator acknowledges personal inspection of the Land and the surrounding area and evaluation of the extent to which the location and/or physical condition thereof will affect the operations of the Property subject to any warranties set forth in this Agreement. Operator accepts the Land in its present physical condition, and agrees to make no demands upon City for any improvements or alteration thereof, and, except as provided herein, City makes no warranties whatsoever concerning the condition of the land, soil, availability of water or utilities, except as provided herein. Operator accepts all aspects of the Land including, without limitation:
(a) the existing, adjoining City owned sewer ponds and any and all conditions related to their existence and operation, including but not limited to odor which may emanate from the ponds from time to time;
(b) the soils conditions;
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(c) adjacent river conditions which may result in seepage of water into the golf course during high water levels from time to time; (d) City is not aware of any Americans with Disabilities Act (ADA) claims; (e) water availability for irrigation via an on-site irrigation well; and (f) any and all existing and future ordinances, statutes and regulations.
Operator acknowledges that, except as otherwise set forth in this Agreement, City has made no representations of any nature whatsoever, express or implied, to Operator with regard to the Land for Operator’s purposes.
1.3 Status of Title. Title to the leasehold estate created by this Agreement is subject to all the exceptions, easements, rights, rights of way, and other matters of record set forth on the Preliminary Title Report issued by First American Title Company, dated November 3, 1995, Number 129545-CA, copy of which is attached as Exhibit “B”.
ARTICLE 2
TERM
2.1 Term. The term of this agreement shall be for a period of fifteen (15) years (“Initial Term”) beginning on January 1, 2025, and ending December 31, 2039, unless sooner terminated in the manner and under the conditions herein provided. The Operator shall have the right to extend the Initial Term for two (2) additional five year (5) periods with all terms and conditions set forth herein, upon written notice to the City no less than one hundred twenty (120) days prior to the commencement of the applicable extension period.
2.2 Agreement Year. For the purposes of this Agreement, each Agreement year shall begin on January 1 and end on December 31.
ARTICLE 3
RENT
3.1 Base and Percentage Rent. During each Agreement year and at the times prescribed herein, Operator shall pay to City as rent under this Agreement the greater of the Base Rent or the Percentage Rent, as hereinafter provided.
(a) Percentage Rent. The Percentage Rent shall be nine percent (9%) of the Gross Receipts, as defined below.
(i) The Percentage Rent received by the City shall be deposited into the Jack Tone Golf Capital Improvement Account as follows: 8% of first $500,000 in gross receipts, 7% of next $100,000 in gross receipts, 6% of next $100,000 in gross receipts, 5% of next $100,000 in gross receipts, 4% of next $100,000 in gross receipts, 3% of next $100,000 in gross receipts, 2% of next $100,000 in gross receipts, 1% of next $100,000 in gross receipts. (b) Base Rent. The monthly Base Rent shall be Two Thousand Dollars ($2,000.00).
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3.2 Payment to City. The Base Rent shall be paid monthly in advance. A Statement of Gross Receipts for each calendar quarter of each Agreement year shall be submitted by Operator to the City within fifteen (15) days of the end of the calendar quarter. If the percentage of the Gross Receipts due for the quarter is greater than the Base Rent paid during such quarter, a payment by Operator for the difference will accompany the delivery of the statement.
3.3 Gross Receipts. The term “Gross Receipts”, as used herein, shall mean the total of:
(a) All money, cash receipts, assets, property or other things of value, including but not limited to: gross charges, lesson fees or charges, sales, rentals, fees and commissions made or earned by Operator and/or all the assignees, sublessees, permittees or concessionaires thereof, whether collected or accrued from any business, use or occupation, or any combination thereof, originating, transacted, or performed in whole or in part, on the Premises, including but not limited to rentals, the rendering or supplying of services and the sale of goods, wares or merchandise; and
(b) all admission, entry, and other fees of any nature or kind charged by Operator, its agents, sublessees, concessionaires or licensees (including non-refundable deposits); and
(c) all sums deposited in any coin-operated vending machine or other device maintained on the Property, regardless of the ownership of the machine or device, or whether such sums are removed and counted by Operator or others, and regardless of what percentage thereof Operator is entitled to receive; and
(d) all rents received by Operator for any use of the Property including for office purposes; and
(e) proceeds from business interruption insurance, loss of earnings insurance, or other insurance of a similar kind. Except for reduced sales in the ordinary course of business each charge or sale on installment or credit or at no cost or at reduced cost is to be treated as a sale for the full price in the month during which the charge or sale is made, irrespective of the time when Operator receives payment. Except as specifically provided below, Gross Receipts reported by Operator must include the full usual charges for any services, goods, rentals or facilities provided by Operator or its sublessees, assignees, licensees, concessionaires or permittees.
3.4 Excluded from Gross Receipts. “Gross Receipts” shall exclude:
(a) All sums or credits received in settlement of claims for loss or damage to unsold merchandise.
(b) All gift certificates and gift cards issued by Operator. (c) In the ordinary course of business, proceeds from sale or trade-in value of any furniture, furnishings or equipment used by Operator, its sublessees, concessionaires, licensees, and others under contract with Operator.
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(d) In the ordinary course of business merchandise sold at Operator’s cost to independent golf shops.
(e) Sales and use taxes, consumers’ excise taxes and other similar taxes now or in the future imposed on the sale of goods or services and collected from the customers separately from the goods or services and paid directly to the imposing agency by the Operator. (f) All deposits accepted and treated as a (i.e., liability according to generally accepted accounting principles security deposit on a sublease or deposits on lockers) as opposed to rent.
(g) Casualty insurance proceeds provided all proceeds are reinvested in the Premises.
(h) There may be deducted from Gross Receipts if the amount has previously been included in the Gross Receipts reported:
(i) All credits or refund made to customers, guests or patrons; and (ii) Bad debts actually incurred and charged off by Operator. There shall, however, be no deduction for bad debts based on past experience or transfers to a bad debt reserve. Subsequent collection of bad debts previously not reported as Gross Receipts shall be included in Gross Receipts at the time they are collected.
3.5 No Deductions. Except as specifically provided herein, there shall be no deduction from Gross Receipts for any overhead or cost or expense of operations, such as, but without limitation to management fees, salaries, wages, costs of goods, interest, debt amortization, credit, collection costs, discount from credit card operations, insurance and taxes.
3.6 Place of Payment. All rent shall be paid to City or such other place or places as City may from time to time designate by written notice given to Operator.
3.7 Payment and Late Charge. The Base Rent monthly payment shall be due and payable in advance on or before the first day of the calendar month. The Percentage Rent quarterly payment, pursuant to Section 3.2, shall be due and payable within fifteen (15) days of the end of the calendar quarter to which such payments relate.
(a) If City does not receive all payment due hereunder within fifteen (15) business days of the due date, a late charge of five percent (5%) of the amount due shall become due and payable in addition to the amounts due. The parties agree that the late charge is to reimburse the City for administrative costs in processing late payments. Such costs include, but are not limited to, processing and accounting costs, lost interest and costs incurred if the income stream generated by this Agreement is not available to meet City obligations. The parties agree that this late charge represents a fair and reasonable estimate of the costs and expenses that City will incur as a result of the late payment by Operator and that such payment is a reasonable liquidated damage payment and not a penalty.
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(b) Base Rent monthly payments and quarterly Percentage Rent payments and other amounts due which are not paid when due shall bear simple interest commencing thirty (30) days after the due date at the rate of ten percent (10%) per annum.
3.8 Accounting Records. Operator shall keep in the County of San Joaquin true and accurate books and records showing all transactions of the business at the Property. The quarterly statement of Gross Receipts to be provided by Operator to the City shall set forth the source of revenues and other information as the City may reasonably require, and also shall set forth the items which have been deducted from Gross Receipts in accordance with the provisions of Section 3.4. Such statement shall be submitted by Operator to City together with the payment within the time period specified in Section 3.7 . In addition to the quarterly statements, Operator shall deliver to City a report within sixty (60) days of the end of each Agreement year which will set forth the Gross Receipts of City from the Property. Each statement and report shall be certified by Operator to be true and correct.
City shall have the right, at reasonable times, after receipt of each report to inspect Operator’s books and records with respect to the Gross Receipts of Operator including items Operator may have claimed as exclusions pursuant to Section 3.4. All books, records, and accounts of every kind or nature kept by the Operator relating to the operation of the Golf Course shall be maintained and safeguarded by Operator for three (3) years from the date of the latest entry into such book, record or account.
3.9 Audit. Once each Agreement Year, City shall have the option, in its sole discretion, of requiring Operator to provide an audited Statement of Gross Receipts including all exceptions, exclusions and deductions issued by a Certified Public Accountant at Operator’s cost. The audited Statement of Gross Receipts, if required, shall be completed and submitted to City within sixty (60) calendar days of City’s written request to Operator. The City shall also have at reasonable times and upon reasonable notice the option of performing a special audit itself or by a third party retained by City on any or all books, records, and accounts of the Operator for the current year or any of prior three (3) years for the purpose of determining Gross Receipts. If such audit by City shows that the percentage rent payment due to City for the Agreement year being audited is greater than the amount reported and paid by the Operator by at least one percent (1%), Operator shall pay the full costs of the audit in addition to the full amount of the underpayment which was demonstrated by such audit together with interest on the amount of underpayment all of which shall be due and payable within ten (10) business days after the audit report is furnished to the Operator.
3.10 Recordation of Sales. All sales and charges shall be recorded by sales invoices, tickets, or cash registers which display to the customer the amount of the transactions and either physically or automatically issue receipts certifying the amounts recorded. The approved forms or devices used in the recording of cash or charge sales transactions are as follows:
(a) Cash Registers. Cash registers shall display to the customer the amount of each transaction. The register shall be equipped with dual tapes which provide a receipt to customers and which provide a record of each transaction. Each register shall lock in sales totals and transaction records and use counters which are not resettable and which record on tapes the transaction numbers and sales details. Operator shall record cash register readings at the beginning and end of each business day.
(b) Cash Receipt and Charge Sales Books. Cash receipt and charge sales books shall be prenumbered by the manufacturer, and the amount of each transaction, including - 6 -
sales tax, shall be recorded on the original and all copies. The customer shall be given the original copy of the sales receipt that clearly records the total amount of the transaction. Sales shall be recorded consecutively, and the beginning and ending number of the receipt books shall be recorded at the end of each business day.
3.11 Rent Net to City. It is the intention of the parties that the rents to be paid to City under this Agreement shall be absolutely net and that City shall receive the rents free, from the obligation to pay any sums whatsoever, including without limitation, taxes, insurance, repairs, maintenance or improvements.
ARTICLE 4
USE OF CAPITAL IMPROVEMENT ACCOUNT FUNDS
4.1 General. Operator may make use of Jack Tone Capital Improvement Account funds in making capital improvements to the golf course. There shall be two categories of Capital Improvements, designated as “Emergency Improvements and Repairs” and “Long Term Capital Improvements”.
4.2 Request of Funds for Long Term Capital Improvements. The term “Long Term Capital Improvements” shall include capital improvements of a permanent nature, including the construction of new holes, replacement of improvement of greens, fairways, tee boxes, water features, buildings, structures, or other capital improvement expenditures approved by the City. This shall not include routine maintenance, equipment, or supplies.
(a) The allocation of funds for Long Term Capital Improvements shall fund 50% of the cost of the capital improvement project.
(b) Operator may request that funds in the Jack Tone Golf Capital Improvement Account be allocated to Long Term Capital Improvements on the golf course by making application to the Recreation Director. The allocation of funds shall be approved by the City Council.
4.3 Request of Funds for Emergency Improvements and Repairs. The term “Emergency Improvements and Repairs” shall include repairs and restoration of the golf course in the event of flooding or other “Acts of God” or resolving ADA claims. (a) The allocation of funds for Emergency Improvements and Repairs do not require matching funds by the Operator.
(b) Operator may request that funds in the Jack Tone Golf Capital Improvement Account be allocated to Emergency Improvements and Repairs on the golf course by making application to the Recreation Director. The allocation of funds shall be approved by the City Council.
ARTICLE 5
ALTERATIONS, MAINTENANCE, REPAIR AND REPLACEMENT
5.1 General. Operator, at Operator’s sole cost and expense, shall furnish all labor, materials and equipment to maintain the Property, and all facilities, improvements and equipment thereon, in good repair and condition. Operator shall be obligated to maintain, repair, refurbish and replace, when - 7 -
necessary, the Property and all facilities, improvements and equipment to operate the Property as a high quality publicly owned executive golf course with a pro-shop, driving range, snack bar, to a standard reflected by the courses shown on Exhibit “C” as revised from time to time. Operator acknowledges that extensive repairs and replacements will be required during the term of this Agreement and Operator acknowledges that he has entered this Agreement with the understanding that he is undertaking the responsibility to assure continuing quality of operation at his cost. Operator agrees to meet the maintenance and operations standards and criteria of the courses set forth in Exhibit “D”, attached hereto and incorporated herein by reference.
5.2 Alterations. Except for non-structural repairs or alterations having a cost of less than Fifty Thousand Dollars ($50,000.00), Operator shall not make any repair, alteration, addition or improvement on or to the Property unless City has approved, in writing, such work. At the time Operator requests City approval, Operator shall deliver to City the following:
(a) Plans and specifications for the proposed work prepared by a licensed professional.
(b) Operator’s schedule for commencement and completion of the work. (c) The name of Operator’s general contractor.
(d) Operator’s source of funds for payment for the work. (e) Any other information reasonably requested by City.
5.3 Construction Requirements. All construction by the Operator on the Property shall conform with all of the following:
(a) All proper permits and governmental consents shall be obtained prior to the commencement of construction.
(b) All work shall be done by licensed contractors.
(c) All work shall be done in a good and workmanlike manner with new materials suitable for the purpose for which they are used. (d) All work shall be done in substantial compliance with the approved plans and specifications.
(e) All work shall be done in a timely manner and in substantial compliance with the approved time schedule.
ARTICLE 6
USE OF PREMISES
6.1 Golf Course Use. The Property may be used for golf course and purposes incidental to golf course uses only. Uses incidental to golf course include: snack bar, driving range, pro shop, golf - 8 -
instruction, and both power and hand cart rentals. No other uses shall be made of the Property without prior written consent of City, which may be given or withheld, in the sole discretion of City.
6.2 Scope and Quality of Operations.
(a) Operator covenants to operate the golf course, weather excepting, every day of the year except Christmas with the following hours of operation: (a) during standard time from 7:00 a.m. to 5:00 p.m.; (b) during daylight savings time from 6:30 a.m. to 7:00 p.m.; and (c) with extension of said hours allowed with operator’s discretion. Operator may close at other times as are mutually agreed upon by the City and the Operator. Other closures for emergency causes or tor inclement weather are also approved by this Agreement. Any closures that are mutually agreed upon by the City and Operator other than emergency or for cause, shall be posted for public notice for a mutually agreed upon time period which will normally be a minimum of two weeks.
(b) Operator shall, at all times, operate the Property and conduct all operations therein in a good businesslike manner and incident thereto render to the public using said facilities, good quality products, and efficient and courteous service. Operator will be or will employ the services of an experienced, reputable, qualified golf course manager who can and does meet the requirements of this Agreement.
6.3 Golf Fees and Prices.
(a) The Property shall be open to the public at fees that are not in excess of the usual and customary fees for such activities as may be charged in San Joaquin and Stanislaus Counties. Green fees for Ripon residents shall be at least ten percent (10%) lower than those for non-residents.
(b) The prices to be charged by Operator for all services, food and beverages shall be fair and reasonable. City shall have the right to require Operator to provide a written explanation supporting the prices charged to be fair and reasonable. (c) Operator shall not increase the 2024 green fees, cart rentals, or driving range fees for the first year of this Agreement.
6.4 Environmental Matters.
(a) Definitions.
As used in this Agreement, the following items shall have the following meanings:
Hazardous Materials: Means any hazardous, toxic, contaminated or polluting materials, substances or wastes, including, without limitation, any “hazardous substances,” “hazardous wastes,” “hazardous materials,” or “toxic substances” under any Hazardous Materials Laws.
Hazardous Materials Claims: Any and all enforcement., cleanup, removal, remedial or other governmental or regulatory actions, agreements or orders threatened, instituted or completed pursuant to any Hazardous Materials Laws, together with all claims made or - 9 -
threatened by any third party against the Operator of the Premises relating to damage, contribution, cost recovery compensation, loss or injury resulting from the presence, release or discharge of any Hazardous Materials.
Hazardous Materials Laws: Any federal, state or local laws, ordinances, regulations or policies relating to the environment, health and safety, any Hazardous Materials (including, without limitation, the use, handling, transportation, production, disposal, discharge or storage thereof) or to industrial hygiene or the environmental conditions on, under or about the Premises, including, without limitation, soil, groundwater and indoor and ambient air conditions. (b) Conditions of the Premises. The Parties acknowledge that the Premises has been operated as a public golf since 1996 and that prior thereto, the City acquired the subject property in 1988 and that prior thereto, the Premises had been used for agricultural purposes. The parties further acknowledge that the City has not made, nor has it caused to be made, any inspections or assessments of the Property. The City hereby represents and warrants that to the best of its current actual knowledge, that the Premises are free from Hazardous Materials, and no portion of such land is subject to federal, state or local regulation or liability because of the presence of stored, leaked or spilled petroleum products, waste materials or debris, “PCB’s” or PCB items (as defined in 40 C.F.R. §761.3), underground storage tanks, “asbestos” (as defined in 40 C.F.R. §763.63) or the past or present accumulation, spillage or leakage of any such substance. The City shall not create any lien upon the Premises imposed pursuant to any Hazardous Materials Law which arises from the condition of the Premises prior to the effective date of this Agreement.
(c) Remediation. If it should be determined that the Premises is in violation or noncompliance with any Hazardous Materials Laws as a result of circumstances or acts relating to Hazardous Materials, underground storage tanks, or any other material referenced in Section herein, which occurred on or before the effective date of this Agreement, then the City shall, at its own expense, promptly take any and all necessary remedial action to correct or respond to the environmental condition; provided, however, that the City shall take such remedial action in good faith so as to minimize any impairment to the Premises and the golf course business in operation thereon. If it should be determined that the Premises is in violation or noncompliance with any Hazardous Materials Laws as a result of circumstances or acts relating to Hazardous Materials, underground storage tanks, or any other material referenced in Section 6.4(b) herein, which occurred on or after the effective date of this Agreement, then the Operator shall, at its own expense, promptly take any and all necessary remedial action to correct or respond to the environmental condition; provided, however, that the Operator shall take such remedial action in good faith so as to minimize any impairment to the Premises and the golf course business in operation thereon. In the event any such remedial action is undertaken such action shall be in compliance with all applicable federal, state and local laws, regulations, rules, ordinances and policies, and be in accordance with the orders and directives of all federal, state and local governmental authorities.
(d) Compliance with Environmental Laws. Operator shall at all times and in all respects comply with all Hazardous Materials Laws.
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(e) Hazardous Materials Handling. Operator shall at its own expense procure, maintain in effect and comply with all conditions of any and all permits, licenses and other governmental and regulatory approvals required for Operator’s use of the Premises, including, without limitation, discharge of (appropriately treated) materials or wastes into or through a sanitary sewer serving the Premises. Operator shall in all respects handle, treat, deal with and manage any and all Hazardous Materials in, on, under or about the Premises in total conformity with all applicable Hazardous Materials Laws and prudent golf course industry practices regarding management of such Hazardous Materials.
(f) Indemnification by Operator. Operator shall indemnify, defend (by counsel reasonably acceptable to City) protect and hold City and each of City’s employees, attorneys, agents, successors and assigns, free and harmless from and against any and all claims, liabilities, penalties, forfeitures, losses and expenses (including, without limitation, reasonable attorneys’ fees and costs and expenses of investigation) or death of or injury to any persons or damage to the Premises of any property whatsoever, arising from or caused in whole or in part, directly or indirectly, by
(i) the presence in, on, under or about the Premises due to a discharge in or from the Premises of any Hazardous Materials or Operator’s use, analysis, storage, transportation, disposal, release, threatened release, discharge, or generation of Hazardous Materials to, in, on, under, about or from the Premises, or which occurred after the effective date of this Agreement.
(ii) Operator’s failure to comply with any Hazardous Materials Law relating to Operator’s actions which occurred after the effective date of this Agreement.
Operator’s obligations hereunder shall include, without limitation, and whether foreseeable or unforeseeable, all costs of any required or necessary repair, cleanup or detoxification or decontamination of the Premises or Building, and the preparation and implementation of any closure, remedial action or other required plans in connection therewith, and shall survive the expiration or earlier termination of the term of the Agreement. For purposes of the release and indemnity provisions hereof, any acts or omissions of Operator, or by employees, agents, assignees, contractors or subcontractors of Operator or others acting for or on behalf of Operator (whether or not they are negligent, intentional, willful or unlawful) which occurred after the effective date of this Agreement shall be strictly attributable to Operator. (g) Indemnification by City of Operator. If remedial action is required by City under Section 6.4(b) herein, then City shall indemnify, defend (by counsel reasonably acceptable to Operator and Lender), protect and hold Operator , and its’ directors, officers, employees, attorneys, agents and assigns, , and any permitted successors to any such other Person, and all directors, officers, employees, attorneys and agents of all of the aforementioned indemnified parties, harmless from and against any and all actual or potential claims, proceedings, lawsuits, liabilities, damages, losses, fines, penalties, judgments, awards, costs and expenses (including, without limitation, attorneys’ fees and costs and expenses of investigation) which arise out of or relate in any way to the remedial action or any related environmental condition.
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(h) Remedies Upon Default. In the event that either City or Operator shall fail to timely comply with any of the provisions of this Section 6.4, then, in such event the other party may, after (a) delivering written notice to the non-complying party which notice specifically states that the failure to comply with the provisions of this Agreement, and (b) the expiration of the cure period, if any, permitted under the applicable law, rule, regulation or order with which the non-complying party shall have failed to comply, do or cause to be done whatever is necessary to cause the Premises to comply with the applicable law, rule, regulation or order and the cost thereof shall constitute an Expense hereunder and shall become immediately due and payable without notice. The party attempting to institute compliance and its agents and employees shall have access to the Premises for the purpose of effecting such compliance and is hereby specifically granted a license, effective upon expiration of the applicable cure period, if any, to do whatever is necessary to cause the Premises to so comply, including, without limitation, to enter the Premises and remove therefrom any Hazardous Materials.
(i) Survival. The City and Operator understand, agree and acknowledge that the environmental obligations set forth herein, including, without limitation, the obligation to pay expenses hereunder, shall survive the termination of this Agreement and any foreclosure, assignment of the Agreement in lieu of foreclosure or similar proceedings by or through which Lender or any of its permitted successors or assigns may obtain an interest in the Premises or any portion thereof.
(j) Notices. Operator and City agree to immediately notify the other in writing of:
(i) any Hazardous Materials Claims; and
(ii) any reports made to any environmental agency arising out of or in connection with any Hazardous Materials in or removed from the Premises, including any complaints, notices, warnings or asserted violations in connection therewith.
ARTICLE 7
TAXES, ASSESSMENTS AND UTILITIES
7.1 Taxes and Assessments. Operator shall pay any and all taxes (including any possessory interest tax), assessments, and other charges of any description levied or assessed against or on the Property or any portion thereof, and any interest therein during the term of this Agreement by any government agency or entity, Operator shall pay any and all taxes and other charges of any description levied on or assessed against any improvements located on the Property during the term of this Agreement and any personal property located on or in the land or improvements. The City informs the Operator that a possessory interest tax liability may be assessed and Operator is solely responsible for its payment.
(a) Proration of First and Last Years Taxes. Notwithstanding the provisions of Section 7.1 of this Agreement, all taxes, assessments, or other charges levied or assessed during the tax years in which the term of this Agreement commences and ends shall be prorated between City and Operator as of 12:01 a.m. on the date the term commences and on the date the - 12 -
term ends, respectively, on the basis of tax years that commence on July 1 and end on June 30 of each year. City shall pay the taxes, assessments, or other charges for the year in which the term of this Agreement commences and Operator shall promptly, on service of written request by City, reimburse City for Operator’s share of those taxes, assessments, or other charges. Operator shall pay the taxes, assessments, and other charges for the year in which this Agreement is to end; and City shall promptly, on service of written request by Operator, reimburse Operator for City’s share of those taxes, assessments, and other charges.
7.2 Payment Before Delinquency. Any and all taxes and assessments and installments of taxes and assessments required to be paid under this Agreement shall be paid before any such tax, assessment, or installment of tax or assessment becomes delinquent. It is understood and agreed that the provisions of this section shall not obligate Operator to pay off the total amount of any special assessment levied on the Property by reason of special assessment proceedings but that Operator shall be obligated to pay only those installments of special assessments, together with interest thereon, which become due during the period of this Agreement.
7.3 Contest of Tax. Operator shall have the right to contest, oppose or object to the amount or validity of any tax, assessment, or other charge levied on or assessed against said Premises or any part of said Premises; provided, however, that the contest, opposition or objection must be filed before the tax, assessment or other charge at which it is directed becomes delinquent and written notice of the contest, opposition, or objection must be given to the City at least ten (10) days before the date the tax, assessment, or other charge becomes delinquent.
7.4 Tax Hold-Harmless. Operator shall defend, indemnify, and hold City, including said Premises and any improvements now or hereafter on said Premises, free and harmless from any liability, loss or damage resulting from any taxes, assessments or other charges required by this Article 7 to be paid by Operator and from all interests, penalties, and other sums imposed thereon and from any proceedings to enforce collection of any such taxes, assessments, or other charges.
7.5 Payment by Nonresponsible Party. Should Operator fail to pay or contest within the time specified in this Article any taxes, assessments or other charges required by this Article 7 to be paid by Operator, City may, but is not obligated to, without notice to or demand on Operator, pay, discharge or adjust such tax, assessment or other charge for its benefit. In such event, Operator shall promptly, on written demand of City, reimburse City for the full amount paid by it in paying, discharging or adjusting such tax, assessment or other charges together with interest thereon at the rate of ten percent (10%) per annum from the date of payment by City until the date of repayment.
7.6 Utilities. Operator shall pay or cause to be paid, and hold City and the property of City free and harmless from all charges, for the installation, connection, maintenance and furnishing of all necessary utilities, utility facilities, and services, including but not limited to, gas, water, electricity, telephone and internet service, C.A.T.V., sewage and other public utilities, to said Premises during the term of this Agreement and for the removal of garbage, rubbish, and weeds from said Premises during the term of this Agreement.
7.7 Signs and Promotions. Operator shall be entitled to erect signs and notices as are reasonable for the operation envisioned, provided further that all such signs shall be subject to review and approval by City, and are in conformance with City sign standards as to size and general - 13 -
compatibility. Operator shall promote the public use of the facility at all times in accordance with accepted community standards of good taste.
7.8 Clubs. Operator agrees to operate the golf course only for recreational purposes and shall operate said golf course “open to the public” as such term is generally understood in golfing and recreational usage. Operator may have and maintain such men’s and women’s clubs as are normal in golf course operation provided that no revenue charged or received by reason of membership in any such club shall accrue to Operator.
ARTICLE 8
INDEMNITY AND INSURANCE
8.1 Indemnity Agreement. Operator shall indemnify, defend and hold City and the property of City, including the Property and any buildings or improvements now or hereafter on the Property, free and harmless from any and all liability, claim, loss, damage, or expense arising by reason of:
(a) The death or injury of any person, including the public and any person who is an employee, agent, licensee, or invitee of Operator, or by reason of the damage to or destruction of any property, owned by any licensee, invitee, or by Operator or by any person who is an employee or agent of Operator, from any cause whatever while such person or property is in or on said Premises or in any way connected with said Premises or with any of the improvements or personal property on said Premises;
(b) The death or injury of any person, including Operator or any person who is an employee or agent of Operator, or by reason of the damage to or destruction of any property, including property owned by Operator or any person who is an employee or agent of Operator, caused or allegedly caused by either (1) the condition of said Premises or some building or improvements on said Premises, or (2) some act or omission on said Premises of Operator or any person in or about said Premises with the permission and consent of Operator; (c) Any work performed on said Premises or materials furnished to said Premises at the insistence or request of Operator or any person or entity acting for or on behalf of Operator; or
(d) Operator’s failure to perform any provision of this Agreement or to comply with any requirement imposed on Operator or the Property by any duly authorized governmental agency or political subdivision.
8.2 Liability Insurance. Operator shall, at Operator’s own cost and expense, secure promptly upon execution of this Agreement and maintain and provide Certificates of Insurance and endorsements during the entire term of this Agreement, Commercial General Liability insurance at least as broad as Insurance Services Office (ISO) form CG 00 01, issued by any insurance company reasonably acceptable to City and authorized to issue liability insurance in California, with an AM Best rating of A- VII or higher, insuring Operator and City against loss or liability caused by or in connection with Operator’s occupation, use, disuse, or maintenance of the Property under this Agreement. The aforementioned liability insurance shall provide coverage of not less than - 14 -
$2,000,000.00 per occurrence, $4,000,000 general aggregate, and $2,000,000 products and completed operations, and shall be renewed each policy renewal period. The policy shall include, or be endorsed to include, the City, its officers, officials, employees, and agents, as additional insureds on ISO form CG 20 10 (or equivalent) for ongoing operations, and, for construction or service agreements, ISO form CG 20 37 (or equivalent) for completed operations. The policy shall be endorsed as primary and not seek contribution from the City’s coverage. Coverage shall allow, or be endorsed, to include a waiver of subrogation in favor of the City and its officers, officials, employees, and agents. Any failure to comply with reporting provisions of the policies by Operator shall not affect coverage provided to the City. Coverage shall state that Operator’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.
8.3 Fire and Property Insurance. Operator shall, at Operator’s own cost and expense, at all times during the term of this Agreement, keep all buildings, improvements, and other structures on said Premises, as well as any and all additions thereto in the same condition as they are upon commencement of this Agreement, and Operator shall insure and keep in good operating condition, all equipment, trade fixtures, inventory and leasehold improvements. , Basic Insurance Requirements, by insurance companies authorized to issue such insurance in California against loss or destruction by fire and the perils commonly covered under the standard extended coverage endorsement to fire and property insurance policies in the county where the Property is located. The amount of said fire and property insurance shall be sufficient to cover replacement of all buildings, structures and improvements on the Premises.
8.4 Business Interruption. Operator shall, at its sole cost and expense, maintain business interruption insurance by which the base monthly rent will be paid to City for a period of up to three (3) months if the Premises are destroyed or rendered inaccessible by a risk insured against by a policy of standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements.
8.5 Deposit of Insurance with City. Operator shall within ten (10) days after the execution of this Agreement, and promptly thereafter when any such policy is replaced, rewritten or renewed, deliver to City a true and correct copy of each insurance policy required by this Article of this Agreement and a certificate executed by the insurance company or companies or their authorized agent evidencing such policy or policies.
8.6 Notice of Cancellation of Insurance. Each insurance policy required by this Article 8 of this Agreement shall contain a provision that it cannot be canceled for any reason unless thirty (30) days’ prior written notice of the cancellation is given to City in the manner required by this Agreement for service of notice on City by Operator. If a carrier will not provide the required notice of cancellation, the Operator shall provide written notice to the City of a cancellation no later than thirty (30) days before cancellation.
8.7 Business Automobile Liability Insurance. Operator shall provide auto liability coverage for owned, non-owned, and hired autos using ISO Business Auto Coverage form CA 00 01 (or equivalent) with a limit of not less than $1,000,000 per accident. The policy shall provide that the City, its officers, officials, employees, and agents are included or named as additional insureds. The policy shall allow, or be endorsed, to include a waiver of subrogation in favor of the City, its officers, officials, employees, and agents.
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8.8 Workers’ Compensation Insurance. Operator and any contractor engaged by Operator to perform any services in or about the Property, including any construction or landscaping, shall maintain throughout the term of this Agreement or any contract with Operator, a policy providing Workers’ Compensation Insurance coverage with the statutory limits of liability, as set forth by the laws of the State of California, and including a minimum of $1,000,000 Employers’ Liability (Coverage B).
Operator shall provide City with a copy of a Certificate of Insurance indicating evidence of Workers’ Compensation Insurance, as set forth herein, for any and all employees of the Operator. Coverage shall allow and be endorsed, to include a waiver of subrogation in favor of the City and its officers, officials, employees, and agents.
8.9 Exclusion from Indemnity. Notwithstanding Section 8.1, Operator’s obligation to indemnify and hold City and the property of City free and harmless shall expressly exclude any liabilities, claims, losses, damages or expenses to the extent caused by the sole negligence or willful misconduct of City or City’s employees, agents, representatives, or contractors.
8.10 Insurance Coverage Adjustments. The Operator shall, at Operator’s expense and cost, increase the levels and limits of insurance on the fifth anniversary date of this Agreement and every five years thereafter in accordance with the City’s then current Basic Insurance Requirements, as amended in accordance with reasonable and prudent golf course industry practices for similar courses.
The City shall furnish to Operator a copy of the revised Basic Insurance Requirements, on a material increase of exposure as revised, at each five-year increment and Operator shall procure additional insurance, if necessary, in conformance with the Basic Insurance Requirements and in accordance with reasonable and prudent golf course industry practices for similar courses, issued by an insurance company reasonably acceptable to City, and authorized to issue liability insurance in California.
8.11 Sub-Tenants. Should any rights under this Agreement be sublet, upon prior written approval of the City, the Operator shall require each of its sub-tenants to provide the aforementioned coverage, or Operator may insure sub-tenants under its own policies.
ARTICLE 9
PERSONNEL
9.1 Employees. At all times when the Premises are operational, Operator shall provide sufficient staff with the skills and experience necessary to reasonably provide for the services envisioned and the safety, good conduct, and good order of its customers.
9.2 Nondiscrimination.
(a) In the performance of work under this Agreement, Operator or its contractor or subcontractors will not refuse or fail to hire or employ any qualified person, or bar or discharge from employment any person, or discriminate against any person, with respect to his or her compensation, terms, conditions or privileges of employment, because of such person’s race, color, creed, religion, national origin, ancestry, sex, age or disability, except for valid reasons of health and safety.
(b) Operator, or its assigns, will not discriminate in the providing of admission or service hereunder against any person on the basis of sex, race, color, creed, - 16 -
religion, national origin or residency, nor for age or disability, except for valid reasons of health and safety.
(c) Operator shall include in any subcontract a nondiscrimination clause forbidding discrimination against any person in the providing of service hereunder because of sex, race, color, religion, creed, national origin or residency( nor for age or disability except for valid reasons of health and safety.
(d) Operator shall comply with the applicable provisions of Title VI of the Civil Rights Act of 1964, Title VII and the Americans with Disabilities Act.
9.3 Independent Contractor. The parties hereto mutually agree that Operator and Operator’s employees hired to perform hereunder are and shall be at all times independent contractors and not agents or employees of the City and that Operator and Operator’s employees shall not be entitled to any salary, fringe benefits, Pension, Workers’ Compensation, sick leave, insurance or any other benefit or right connected with employment by the City or any compensation other than as prescribed herein.
9.4 Golf Course Manager. City relies on a Golf Course Manager to be in active control of the daily operations of the course and shall supervise the operations and employees of the course.
Operator shall submit to the City for City’s reasonable approval the name of a Golf Course Manager and documentation requested by City to demonstrate the qualifications of such proposed manager. (a) If the Operator does not provide a Golf Course Manager approved by City, on a full-time basis, it shall be deemed a breach of the Agreement.
9.5 Other Employees. At all times when the Premises are operational, Operator shall provide sufficient staff with the skills and experience necessary to reasonably provide of the services envisioned and the safety, good conduct and good order of its customers. All employees of Operator shall be of good moral character, shall present a pleasant appearance and pleasing manner to the public, and shall conduct themselves in such a manner as to not reflect discredit on the City.
ARTICLE 10
ASSIGNMENT
10.1 Intention of the Parties.
(a) Operator acknowledges that the operation and maintenance of a high quality public golf course, driving range and related services are undertakings that require experience, knowledge, skill and an ability to work with and serve the public. Further, the successful operation and maintenance of a high quality public golf course requires the financial ability:
(i) to continuously maintain the golf course and related activities, and (ii) to make improvements and capital expenditures that will keep the Premises to the then standard of a high quality public golf course with related services. - 17 -
(b) City has negotiated the percentage rent based, in part, on the agreements contained in this Article 10 and on the fact the Operator has agreed not to transfer, assign or (except as set forth below) sublet, any or all of Operator’s right, title or interest under this Agreement.
10.2 No Assignment Without City’s Consent. Operator may assign this Agreement or any interest in this Agreement, subject to the prior written consent of City. City may not unreasonably withhold or delay its consent, and may grant consent if the proposed assignee is financially qualified and has the necessary experience in the operation and management of a golf course facility, to satisfactorily perform all the agreements, undertakings, and covenants of this Agreement and all other agreements entered into by Operator which relate to the management, operation, maintenance, construction, and restoration of the improvements and the Premises. To assist City in determining whether or not the proposed assignee is so qualified, Operator shall furnish to City at no expense to City, prior to that assignment, detailed and complete financial statements of the proposed assignee, audited by a certified public accountant reasonably satisfactory to City (if the proposed transferee causes its statements to be so audited in its normal course of business), last three (3) years prior to the proposed assignment federal income tax return together with detailed and complete information about the business and net worth of the proposed assignee, including its experience in operating golf course facilities, the use to be made of the Premises and improvements by the proposed assignee, projections by the proposed assignee of the sources of funds to be used to repay any indebtedness of Operator that the proposed assignee will assume or take subject to, or agree to pay to Operator, and other claims on and requirements for those funds, together with any other information as City may reasonably require to assist City in determining whether or not the proposed assignee is so qualified. City shall have 30 days after receipt of the information described above to notify Operator of whether it consents or does not consent to the proposed assignment. Absent any such notification by City during the 30-day period, City shall be conclusively deemed not to have consented to the assignment. A consent by City to one assignment shall not be deemed to be a consent to any subsequent assignment. Any assignment made contrary to the terms of this Section shall be null and void unless otherwise permitted by this Article.
10.3 Permitted Subletting. Operator may sublet the merchandising operation in the golf pro shop, the food and beverage dispensing operation at Operator’s sole discretion, but any revenue earned by any sublessee shall continue to be considered part of Gross Receipts and shall be subject to rent pursuant to this Agreement.
10.4 Change in Ownership Control. A withdrawal or change, voluntary, involuntary, by operation of law, testamentary transfers or otherwise, of Operator’s ownership interest shall be deemed an assignment prohibited hereby. Any of the following events shall constitute an “assignment” for purposes of this Article:
(a) Any assignment, transfer or conveyance, either at one time or from time to time, of an interest of the Operator, except as otherwise provided herein, so that the ownership interest assigned or conveyed shall equal thirty percent (30%) of the total then outstanding ownership of Operator.
10.5 Liens and Encumbrances.
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(a) It is understood that the real property constituting the Premises cannot, as public property, be subjected to any lien or encumbrance of any kind to satisfy or secure any private obligation. However, Operator’s right to the occupation of the Premises and use of the improvements thereon for the purposes as stipulated herein may be subject to any lien or encumbrance, but only subject to the terms hereinafter set forth. (b) A lien or encumbrance upon Operator’s right to occupation of this land and use of the improvements for the purposes as provided in this Agreement shall be valid only if first approved by the City in writing.
(i)
[This Section Left Blank Intentionally]
ARTICLE 11
EVENTS OF DEFAULT
11.1 Events of Default. The following events constitute a default of this Agreement:
(a) Any action taken or suffered by the Operator under any insolvency or bankruptcy act, including the appointment of a receiver to take possession of all or substantially all of the assets of the Operator, provided that if such action is not initiated by Operator, Operator shall have ninety (90) days in which to terminate, set aside or otherwise cure such actions.
(b) Any general assignment by Operator on behalf of creditors. (c) Breach of Breach of Covenant of Continuous Operation as described in Section 6.2(a) including the abandonment, vacation or failure to continuously operate the golf course for more than twenty-four (24) consecutive hours with the intention of not resuming operations.
11.2 Right of Termination Upon Default.
(a) Right to Retake Possession.
(b) Rent Obligation Survives Default.
11.3 City’s Remedies.
(a) City’s Termination Rights. On termination of this Agreement under the provisions of Section 11.2, City has the right to receive from Operator:
(i) The worth, at the time of the award, of the unpaid rent that has been earned at the time of termination of this Agreement. (ii) The worth, at the time of the award, of the amount by which the unpaid rent that would have been earned after the date of termination of this Agreement until the - 19 -
time of award, exceeds the amount of the loss of rent the Operator proves could have been reasonably avoided.
(iii) The worth, at the time of the award, of the amount by which the unpaid rent for a period of three (3) years after the time of the award or the balance of the term after the time of the award, whichever is less, exceeds the amount of the loss of rent that Operator proves could have been reasonably avoided.
(iv) Any other amount and court costs necessary to compensate city for all detriment approximately caused by Operator’s default. (v) “The worth, at the time of the award” as used in Sections
11.3(a)(i) through 11.3(a)(iv) is to be computed by allowing interest at the rate of ten percent (10%) per annum.
(vi) For purposes of determining the percentage rent that would have been earned after termination, Operator shall be deemed to have been required to pay annual percentage rent equal to the average annual percentage rent due to City for the three (3) calendar years preceding the calendar year in which City files an action for rent under this section. (b) Continue Agreement After Default. Following any default by Operator, City may continue this Agreement in full force and effect and City shall have the right to collect any rent payable by Operator when due. During the period Operator is in default, City may enter the Premises and relet them or any part of them to third parties for Operator’s account. Operator shall be liable immediately to City for all costs City incurs in reletting the Premises. Reletting can be for a period shorter or longer than the remaining term of this Agreement. Operator shall pay to City the rent due under this Agreement on the date such rent is due which payment shall be adjusted by the amount of rent City receives from any reletting. No effort to relet or any other act by City allowed by this paragraph shall terminate this Agreement unless City notifies Operator that City elects to terminate this Agreement.
(c) Cure at Option of City. City may, at any time after Operator commits a default, cure such default at Operator’s expense. If City at any time, by reason of Operator’s default, pays any sum or does any act that requires the payment of any sum, the sum paid by City shall be due immediately from Operator to City at the time the sum is paid, and if paid at a later date, shall bear interest at the rate of ten percent (10%) per annum from the date the sum is paid by City until City is reimbursed by Operator. The sum, together with interest on it, shall constitute additional rent hereunder.
(d) City’s Default. City shall be in default of this Agreement if it fails or refuses to perform any provision of this Agreement that it is obligated to perform if the failure to perform is not cured within thirty (30) days after notice of default has been given by Operator to City. Operator shall have the option of including in the notice that Operator shall commence to cure the default at City’s expense. If such default cannot be reasonably cured within thirty (30) days, City shall not be in default of this Agreement if City commences to cure the default within the thirty (30) day period and thereafter diligently and in good faith continues to cure the default. - 20 -
(e) Relocation Assistance. Operator agrees that nothing contained in this Agreement shall create any right in Operator for relocation assistance or payment pursuant to the provisions of Title 1, Division 7, Chapter 16 of the Government Code from the City upon the termination of this Agreement (whether by lapse of time or otherwise). (f) No Waiver of Rights. No payment by Operator or receipt by City of a lesser amount than the amount required to be paid under this Agreement shall be deemed to be other than on account of the earliest stipulated sum due. No endorsement or statement on any check or any letter accompanying any check or payment shall be deemed an accord and satisfaction and City, in either instance, may accept such check or payment without prejudice to City’s right to recover the balance of such sum or pursue any other remedy in this Agreement or at law or in equity. Receipt of the rent due hereunder by City from any third party shall be without prejudice and shall not operate as consent to any purported sale, assignment, hypothecation, sublease or other transfer of this Agreement, as a waiver of any breach by Operator, or as a release of Operator from its obligations.
ARTICLE 12
GENERAL PROVISIONS
12.1 Time of Essence; Breach. Where performance by either party of a covenant as specified in this Agreement, to be on or before a certain date, time shall be of the essence of said covenant.
Performance by Operator of each and every covenant or provision of this Agreement is material, the breach of which shall constitute a material breach, for which the City may terminate this Agreement.
12.2 Waiver of Breach. The waiver by City of any breach of any term, covenant or condition herein contained shall not be deemed to be a waiver of any other term, covenant or condition herein contained. Any consent or approval given by City to an act of Operator for which consent or approval is required under this Agreement shall not be deemed to waive or render unnecessary the need for City’s consent or approval to or of any subsequent similar act of Operator. The subsequent acceptance of fees hereunder by the City shall not be deemed to be a waiver of any preceding breach by Operator of any term, covenant or condition of this Agreement other than the failure of Operator to pay the particular fees so accepted, regardless of City’s knowledge of such preceding breach at the time of the accepting of such fees.
12.3 Total Taking. If all or substantially all of the Premises and/or other improvements shall be taken by right of eminent domain or otherwise for any public or quasi-public use, then, when possession shall be taken thereunder by the condemnor, or the Operator is deprived of its practical use of the Premises for the operation of a golf course comparable to golf courses shown on Exhibit “C”, whichever date is earlier, this Agreement and all rights of City and Operator hereunder shall terminate and any rent payments required of Operator shall be apportioned between the parties. In the event of a partial taking, as a result of which the remaining portion of the Premises or any improvements on the Property cannot be restored to an economically operable facility of a comparable kind and quality to the facility existing prior to the taking with the condemnation awards received by Operator, then this Agreement, at Operator’s or City’s election, shall be terminated as of the time when possession of the premises shall be taken by the condemner or Operator is deprived of its practical use thereof, whichever date is earlier.
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12.4 Partial Taking. If a portion of the Premises or any improvements shall be taken by right of eminent domain or otherwise for any public or quasi-public use and the remaining portion of the Premises and improvements can be restored by Operator, by expending sums no greater than its share of the award, to an economically operable facility of comparable kind and quality to the facility existing prior to the taking, then this Agreement shall not be terminated, and Operator shall retain the remaining portion of the Premises. There shall be no adjustment in rent to be paid by Operator hereunder. If, at any time during the term of this Agreement, a partial taking occurs that is less than a Total Taking and affects the public parking areas on the Premises, all compensation and damages payable for that taking shall be made available to and used, to the extent reasonably needed, by Operator to repair any portion of the remaining parking areas damaged by the taking and to replace the parking areas taken with other new parking areas on the portion of the Premises not taken, provided that replacement is then permitted by existing law. Plans and specifications for the replacement parking areas must be first approved in writing by City.
12.5 Eminent Domain Award. If there is a taking by right of eminent domain, the rights and obligations of the parties with reference to the award and the distribution thereof shall be determined in accordance with the provisions of California eminent domain law as set forth in the California Code of Civil Procedure. Operator shall have the right to participate in any settlement proceeding.
12.6 Entry and Inspection by City. City reserves and shall always have the right to enter the Property for the purpose of viewing and ascertaining the condition of the same, or to protect its interest in the Property or to inspect the operations conducted on the Property. In the event that such entry or inspection by City discloses, in the reasonable opinion of the City, that the Property is not in a safe, healthy, and satisfactory condition or a violation of any municipal, state or federal ordinance, statue or law, or any breach of condition of lease, City shall have the right, but not the obligation, after ten (10) days written notice to Operator, to have any necessary maintenance work done for and at the expense of Operator. Operator agrees to pay promptly any and all costs incurred, including reasonable expenses to City in having such necessary work done in order to keep the Property in a safe, healthy, and satisfactory condition and to cure any violations or breach of conditions of this Agreement. Repayment thereof shall be deemed to be a part of the payments and paid as such on the next day upon which said payment become due.
12.7 Abandonment. Vacation or Surrender of Property During Term. If the Operator should abandon the Property, then in that event, unless and except to the extent otherwise specifically provided by other provisions of this Agreement, any personal property belonging to the Operator and left on the Premises for thirty (30) days shall be deemed to be abandoned, at the option of the City.
12.8 Attorneys’ Fees/Legal Costs. If any action at law or in equity shall be brought to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to recover from the other party as part of the prevailing party’s costs reasonable attorneys’ fees, the amount of which shall be fixed by the court and shall be made a part of any judgment or decree rendered.
12.9 Successors and Assigns. This Agreement and all terms and conditions shall apply to and bind the successors and assigns of the respective parties.
12.10 Prevailing Wage. The Operator shall be solely responsible for determining necessary compliance, if any, with the prevailing wage laws of the State of California, including, but not limited - 22 -
to, the applicable provisions of Sections 1774 and 1775 of the Labor Code of the State of California.
Operator has represented to City that construction of the Project is not subject to the aforementioned prevailing wage laws, and City has relied upon such representations. In the event said laws are applicable or become applicable at any time during this Agreement, then the parties expressly acknowledge that the general prevailing rate of per diem wages and the general prevailing rate for holiday and overtime work in this locality for each craft, classification or type of worker needed to execute this Agreement is that ascertained by the Department of Industrial Relations of the State of California. Said prevailing rates are on file in the Office of the City Clerk and shall be available to any interested party upon request and said prevailing rates are hereby made a part hereof, incorporated herein by reference as though set forth in full. The holidays upon which such prevailing rates shall apply shall be all holidays recognized in the collective bargaining agreement applicable to the particular craft, classification or type of worker employed by Operator.
12.11 Amendments to Agreement. Any amendment or modification of this Agreement must be in writing duly executed by both parties.
12.12 Notices to City. Except as otherwise expressly provided by law, any and all notices or other communications required or permitted by this Agreement or by law to be served on or given to City by Operator shall be in writing and shall be deemed duly served and given when personally delivered to City, to any managing employee of City, or, in lieu of personal service, when deposited in the United States mail, first-class postage prepaid, addressed to City Administrator, 259 North Wilma Avenue, Ripon, CA 95366. City may change City’s address for the purpose of this section by giving written notice of that change to Operator in the manner provided in Section 12.13.
12.13 Notices to Operator. Except as otherwise expressly provided by law, any and all notices or other communications required or permitted by this Agreement or by law to be served on or given to Operator by City shall be in writing and shall be deemed duly served and given when personally delivered to Operator of this Agreement, any managing employee of Operator or, in lieu of personal service, when deposited in the United States mail, first-class postage prepaid, addressed to Operator at SGM, Inc (Attn: Jeff Christensen), P.O. Box 788 Chowchilla, CA 93610. Operator may change mailing address for the purpose of this section by giving written notice of that change to City in the manner provided herein.
12.14 Authority to Enter Agreement. Operator warrants that SGM, Inc is a California corporation in good standing under the laws of the State of California, and that all parties comprising Operator possess the legal authority to enter into this Agreement.
12.15 Memorandum of Agreement for Recording. City and Operator shall execute a memorandum or “short form” of this Agreement for purposes of, and in a form suitable for, recordation. The memorandum or “short form” of this Agreement shall describe the parties, set forth a description of the leased premises, specify the term of this Agreement, incorporate this Agreement by reference, and include any other provisions required by Lender(s). - 23 -
Date:________________
“City”
CITY OF RIPON
By:___________________________
Leo Zuber
Mayor
Date:________________
“Operator”
SGM, INC
By:___________________________
Jeff Christensen
President