HomeMy WebLinkAboutResolution No. 09-069
CITY OF THE COLONY, TEXAS
RESOLUTION NO. 09-069
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF THE
COLONY, TEXAS, APPROVING THE SUBLEASE BY AND BETWEEN
OLD AMERICAN GOLF, LLC AND ESCALANTE - TRIBUTE, LLP,
WHICH IS ATTACHED HERETO AND INCORPORATED HEREIN AS
EXHIBIT A, FOR THE PURPOSES OF OPERATING A PORTION OF A
GOLF COURSE; AND PROVIDING AN EFFECTIVE DATE
WHEREAS, the City of The Colony is the owner of a portion of the property described
in and a part of the Sublease Agreement ("Agreement"), which is attached hereto and
incorporated herein as Exhibit A; and
WHEREAS, Old American Golf, LLC and Escalante - Tribute, LLP, desire to enter into
the Agreement and have requested that the City permit the use of property it leases from the
USACE (US Army Corps of Engineers) at Wynnewood Park for the placement of eight (8) holes
of the golf course; and
WHEREAS, the City Council, after review of the Agreement, hereby approves the
Sublease Agreement by and between Old American Golf, LLC and Escalante - Tribute, LLP,
and hereby authorizes the Mayor to execute all documents, if any, related to said Agreement on
behalf of the City of The Colony.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF THE COLONY, TEXAS THAT:
Section 1. The City Council hereby approves the Sublease Agreement by and between
Old American Golf, LLC and Escalante - Tribute, LLP, which is attached hereto and
incorporated herein, and approves the construction of a portion of the golf course on property
leased by the City from USACE at Wynnewood Park.
Section 2. The Mayor is hereby authorized to execute any and all documents necessary,
if any, relative to the Sublease Agreement.
Section 3. This Resolution shall become effective immediately from and after its
passage, as the law and charter in such cases provides.
PASSED, APPROVED and EFFECTIVE this 21St day of September, 2009.
e McCou , Mayor
ATTEST:
W
C istie Wilson, City Secretary,
APPRO AS TO FORM:
Robert E. Ha*CiAttome
y
Cit
y of The Colony, Texas
(REH/cdb)
TM 39196.76.091609
SUBLEASE AGREEMENT
This SUBLEASE AGREEMENT (this "Agreement) is entered into as of September_,
2009, to be effective May 1, 2010 or such earlier date of Substantial Completion as defined
under Section 2.5 herein (the "Effective Date"), by and between OLD AMERICAN GOLF,
LLC, a Texas limited liability company, as landlord ("Landlord"), and ESCALANTE -
TRIBUTE, L.P., a Texas limited partnership, as tenant ("Tenan
WITNESSETH:
WHEREAS, various Affiliates of Landlord are in the business of acquiring, building and
managing a residential development in the City of The Colony, Denton County, Texas (the
"City"), and Tenant is in the business of owning and operating recreational facilities, including
golf facilities, throughout the United States; and
WHEREAS, in accordance with the recommendation of a 1985 Master Plan for
Lewisville Lake, the City, a municipal corporation, leased from the Secretary of the Army, on
behalf of the United States, under Lease No. DACW63-1-97-0677 (and various subsequent
modifications and replacements thereof) (the "Corps Lease") a land area commonly known as
the Wynnwood Peninsula (the "Corps Land") administered by the U.S. Army Corps of Engineers
(the "Corps") for the construction of two (2) eighteen hole golf courses; and
WHEREAS, in 1997, an Affiliate of Landlord subleased from the City approximately 600
acres of this Corps Land (the "City Sublease") for development of two eighteen hole golf
courses, constructing an existing golf course known as "The Tribute" on a portion of the Corps
Land; and
WHEREAS, an Affiliate of Landlord has now constructed another eighteen (18) hole golf
course utilizing a portion of Corps Land (that portion being hereinafter referred to as the "Leased
Land") for eight (8) of the golf course holes and utilizing certain fee simple property (the
"Owned Land") for the remaining ten (10) golf course holes; and
WHEREAS, as Landlord's Affiliate nears completion of the golf course facilities and
support structures (the Owned Land, Leased Land and all improvements referred to herein
collectively as the "Golf Facility"), Landlord will lease same from such Affiliate (or Affiliates)
(whether one (1) or more, the "Affiliate Lease"); and
WHEREAS, Landlord, seeking Tenant's expertise in developing and operating such
recreational facilities, desires to sublease the Golf Facility to Tenant, and Tenant desires to
sublease the Golf Facility from Landlord on a turnkey basis, subject to and upon the other terms
and conditions herein set forth.
NOW, THEREFORE, for and in consideration of the mutual covenants, promises, and
agreements herein contained, the parties hereby agree as follows:
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ARTICLE 1
DEFINITIONS
1.1 Definitions. All capitalized terms referenced or used in this Agreement and not
specifically defined herein shall have the meanings set forth on Exhibit A attached hereto and
made a part hereof for all purposes.
ARTICLE 2
PRE-OPENING PERIOD RESPONSIBILITIES
2.1 Golf Facility Completion. During the Pre-Opening Period Landlord shall
Substantially Complete the Golf Facility. The parties agree that although Landlord shall have
the final decision on all issues related to the Golf Facility, Landlord shall seek Tenant's
perspective on the issues stated below:
2. 1.1 Clubhouse. Landlord shall consult with Tenant with regard to the location
(on the Leased Land), interior and exterior design and layout of the Clubhouse. Landlord shall
also consult with Tenant on Tenant's preferred Clubhouse decor to achieve Landlord's and
Tenant's desired operating objective. Landlord shall be responsible for purchasing or otherwise
providing at Landlord's expense all interior and exterior furnishings, including, but not limited
to, any displays, shelving, or accessories reasonably required by Tenant.
2.1.2 Maintenance and Cart Barn. Landlord shall consult with Tenant with
regard to the location, design and construction of the Maintenance and Cart Barn.
2.2 Tenant Responsibilities. During the Pre-Opening Period, Tenant shall perform
the following services for which Tenant shall not be paid a Management Fee or any other
compensation:
(a) Advise and consult on issues related to the Golf Facility as requested with
Landlord and Landlord's representatives.
(b) Prepare a schedule of the Tangible Personal Property, Intangible Personal
Property and Inventory required for initial furnishing and equipping the Golf Facility and
provide this list to Landlord within ninety (90) days after the execution hereof.
(c) If Landlord requests, Tenant shall, in good faith consultation with
Landlord and at Landlord's sole cost and expense, acquire on behalf of Landlord the
Tangible Personal Property, Intangible Personal Property and Inventory required for
initial furnishing and equipping the Golf Facility.
(d) Assist in the creation of, host and participate in pre-opening and
promotional events to encourage adjacent development residents' use of the Golf Facility,
the cost of which events shall be Landlord's sole cost and expense.
(e) Prepare an Operating Expense budget for the Golf Facility for the first (I")
through the twelfth (12th) Fiscal Months.
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2.3 Premier Access Package. In addition to the daily fee component offered to
patrons of the Golf Facility, . Tenant may in its discretion offer to the residents of the adjacent
residential development, residents of the City, and other individuals certain pre-paid access
privileges to the Golf Facility ("Premier Access"). The Premier Access membership shall be
structured in such a manner so as to allow the Premier Access buyer preferred tee times, long
lead times in order to reserve tee times, reduced golf fees and dining and reservation rights in
Golf Facility. Tenant acknowledges and agrees that Landlord has developed The Old American
Golf Course with the intent that it be operated and maintained by Tenant as one of the top three
courses, in terms of quality, perception and pricing, among other high end, non-private golf
courses in the Dallas-Fort Worth area. As well, Tenant acknowledges and agrees that it is
Landlord's expectation that, and Tenant shall, price both daily fee play and Premier Access
membership in such a manner so as to grant a pricing benefit to the purchasers of homes in the
adjacent residential development and to residents of the City. However, prior to the
commencement of any offering of Premier Access memberships, Landlord and Tenant shall
execute a separate agreement regarding the terms thereof, and the responsibilities and obligations
of each party.
2.4 Golf Facility Substantial Com lep tion. Landlord shall Substantially Complete the
Golf Facility on or before the Effective Date, subject to Force Majeure. Substantial Completion
shall be deemed to have occurred when all of the following five (5) conditions have been
performed to the reasonable satisfaction of Tenant and Landlord:
2.4.1 Tenant has inspected the Golf Course, Clubhouse, Maintenance and Cart
Barn and any other buildings or structures and has confirmed in writing to Landlord that each is
ready for use, subject only to the completion of minor punch list items. Tenant and Landlord
shall participate in the preparation of any punch list and the inspection and approval of all
corrective and additional work performed pursuant to such punch list; provided, however that,
Landlord shall be solely responsible for the cost of any punch list work.
2.4.2 Landlord shall have received certificate(s) of occupancy (or local
equivalent) for the Clubhouse, Maintenance and Cart Barn and any other buildings or structures
which are necessary for the operation of the Golf Facility.
2.4.3 Landlord shall have confirmed to Tenant that (a) to its best knowledge all
approvals (excluding liquor license and any business licenses) have been obtained and are in full
force and effect, including, but not limited to, any consent or approval required for the structures
under the Corps Lease or City Sublease, (b) Landlord has received no notice and has no actual
knowledge of any then existing violations or alleged violations by the Golf Facility of any
Applicable Laws, (c) to its best knowledge, all utilities required for the occupancy and use of the
Golf Facility, including, without limitation, electricity, sanitary sewer, storm sewer, drainage,
water, telephone and cable have been installed to the Golf Facility and are in good working order
and all fees and charges, including connection fees or tie-in charges, have been paid by Landlord,
(d) the Golf Facility has free and unhindered access to public streets, which access may be by
means of private, paved roads properly and permanently dedicated for such purpose so long as
Landlord has obtained and assigned to Tenant a perpetual, unhindered easement of ingress and
egress over such private streets, (e) all off-site entrance area work has been completed and an
entrance feature indicating the presence of the Golf Facility has been completed, and (f) to the
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best of its knowledge, there exists no lawsuit against Landlord or the Property regarding the
construction, operation or maintenance of the Golf Facility or any part thereof.
2.4.4 Landlord has obtained and delivered to Tenant the items comprising the
schedule of the Tangible Personal Property, Intangible Personal Property and Inventory required
for initial furnishing and equipping the Golf Facility and has assigned to Tenant (and Tenant has
assumed) Landlord's Golf Facility Equipment Leases, if any.
2.4.5 Landlord has delivered to Tenant copies of the plans and specifications for
the various Property improvements, an "as built" survey of the Property and copies of any third
party warranties or guarantees with respect to the Property improvements.
2.5 Acknowledgement of Substantial Completion. Tenant shall notify Landlord of its
agreement with Landlord's determination that Substantial Completion has occurred or with an
objection thereto within two (2) days of receipt. In the event Tenant notifies Landlord of its
reasonable objection to one or more of such items (citing with particularity its objections),
Substantial Completion shall not be deemed to occur until Landlord addresses such objections to
the reasonable mutual satisfaction of the parties hereto. If Tenant shall fail to, or elect not to,
notify Landlord of its acknowledgement or objection within two (2) days, Tenant shall be
deemed to have agreed that Substantial Completion with respect to the Golf Facility has
occurred. Upon Tenant's acknowledgement, or deemed acknowledgement, that Substantial
Completion has occurred, Tenant shall conclusively be deemed to have accepted the Property,
the Golf Facility, and all improvements thereon, and the physical condition thereof, "As-Is; With
All Faults," and Landlord shall have no further responsibility therefor, except such
responsibility, if any, as may be specifically set forth in this Agreement and such warranty
responsibility as Landlord may have for a period of one (1) year following the date of Substantial
Completion for Golf Facility improvements constructed by or on behalf of Landlord.
2.6 Opening Subject to Force Majeure. Tenant shall open the Golf Facility for use
and play by patrons on or after the later of Substantial Completion or the Effective Date, subject
to Force Majeure. With Landlord's consent, Tenant shall be authorized to permit play in
advance of the opening consistent with Landlord's promotion of the Golf Facility.
ARTICLE 3
SUBLEASE AND CONVEYANCE
3.1 Leased Land. Landlord exclusively subleases to Tenant, and Tenant accepts the
exclusive sublease of the Leased Land, subject to the Permitted Exceptions and the reservations
set forth in Section 3.5 below, from Landlord, for the Initial Term and any Extended Term
subject to the terms and conditions of the Corps Lease, the City Sublease, the Affiliate Lease and
the terms and conditions of this Agreement. Tenant acknowledges receipt and review of each of
the Corps Lease, the City Sublease and every intervening sublease (including the Affiliate Lease)
and shall comply with and abide by all requirements, terms, conditions and limitations contained
in each of them applicable to the Leased Land (other than the payment of a portion of rent due to
the City under the City Sublease, as provided in Section 4.5.6) with respect to the Business
conducted thereon by Tenant. Except for those obligations expressly assumed by Tenant
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hereunder, Landlord agrees to perform (or cause to be performed) the obligations of lessee under
the City Sublease and any intervening sublease (including the Affiliate Lease).
3.2 Owned Land. Landlord exclusively subleases to Tenant, and Tenant accepts the
exclusive sublease from Landlord of the Owned Land, subject to the Permitted Exceptions and
the reservations set forth in Section 3.5 below, for a term coterminous with the sublease of the
Leased Land described in Section 3.1 above, and subject also to all of the terms and conditions
stated in Section 3. 1, the Affiliate Lease and in this Agreement.
3.3 Personal Property Conveyance. As a part of the consideration for Tenant's
execution of this Agreement, on or before the Effective Date Landlord shall to convey to Tenant
for no additional charge and free and clear of all Liens and encumbrances: (i) all of Landlord's
right, title and interest in the Tangible Personal Property, Inventory and any and all other
personal property furnished to Tenant by Landlord under Section 2.4.4 by Bill of Sale (in
substantially the form attached as Exhibit D hereto, together with such changes to such form as
Landlord and/or Tenant may require); (ii) Landlord's rights and obligations under Equipment
Leases, if any, by an Agreement of Assignment and Assumption (in substantially the form
attached as Exhibit E hereto, together with such changes to such form as Landlord and/or Tenant
may require); and (iii) Landlord's Intangible Personal Property related to the Golf Facility, by an
Agreement of Assignment and Assumption (in substantially the form attached as Exhibit F
hereto, together with such changes to such form as Landlord and/or Tenant may require).
3.4 Condition of Property. TENANT ACKNOWLEDGES AND AGREES, THAT
EXCEPT AS EXPRESSLY MADE BY LANDLORD IN THIS AGREEMENT, LANDLORD
IS NOT MAKING AND SPECIFICALLY DISCLAIMS ANY WARRANTIES OR
REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE GOLF FACILITY, INCLUDING THE LEASED LAND, OWNED LAND
OR ANY OTHER PROPERTY (INCLUDING, WITHOUT LIMITATION, THE TANGIBLE
PERSONAL PROPERTY, INVENTORY AND EQUIPMENT) AND ALL IMPROVEMENTS
ON OR TO THE FOREGOING WHICH ARE SUBLEASED, LEASED, LICENSED OR
CONVEYED TO TENANT PURSUANT TO THIS AGREEMENT INCLUDING, BUT NOT
LIMITED TO, WARRANTIES OR REPRESENTATIONS AS TO MATTERS OF PHYSICAL
CONDITION AND THE VALUE, CONDITION, MERCHANTABILITY, MARKETABILITY,
PROFITABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE.
TENANT AGREES THAT TENANT HAS NOT RELIED UPON AND WILL NOT RELY
UPON, EITHER DIRECTLY OR INDIRECTLY, ANY REPRESENTATION OR
WARRANTY OF LANDLORD OR ANY AGENT OF LANDLORD OR OTHER THIRD
PARTY, EXCEPT AS EXPRESSLY MADE BY LANDLORD IN THIS AGREEMENT.
TENANT REPRESENTS THAT IT IS RELYING ON ITS OWN EXPERTISE AND THAT
TENANT WILL CONDUCT OR HAS CONDUCTED INSPECTIONS AND
INVESTIGATIONS OF ALL SUCH PROPERTY AND SHALL RELY UPON SAME, AND
SHALL ASSUME THE RISK THAT ADVERSE CONDITIONS MAY NOT HAVE BEEN
REVEALED BY TENANT'S INSPECTIONS AND INVESTIGATIONS. TENANT
ACKNOWLEDGES AND AGREES THAT LANDLORD HAS SUBLEASED, LEASED,
LICENSED AND CONVEYED AND TENANT ACCEPTS ALL SUCH PROPERTY "AS
IS/WHERE IS," WITH ALL FAULTS, AND THERE ARE NO ORAL AGREEMENTS,
WARRANTIES OR REPRESENTATIONS COLLATERAL TO OR AFFECTING ANY SUCH
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PROPERTY BY LANDLORD, ANY AGENT OF LANDLORD OR ANY THIRD PARTY,
EXCEPT AS EXPRESSLY MADE BY LANDLORD IN THIS AGREEMENT. THE TERMS
AND CONDITIONS OF THIS SECTION SHALL EXPRESSLY SURVIVE THE
TERMINATION OF THIS AGREEMENT.
3.5 Certain Reservations. Tenant acknowledges that the Property is adjacent to a real
estate development being undertaken by Landlord and various of its Affiliates. Accordingly,
Tenant acknowledges and agrees that, incident to such developments and to foster such
development for the mutual benefit of Landlord and Tenant with respect to increased patronage
of the Golf Facility, Tenant acknowledges and agrees that Landlord shall reserve and retain,
upon, across and under the Property, the right (but not the obligation) to retain or grant
easements for ingress and egress or access areas (as, for example, for driveways, sidewalks,
paths and trails), utilities and drainage; provided, however, that Landlord, in connection with the
exercise of the rights herein reserved and retained, shall seek Tenant's comments on (but not
consent to) at least thirty (30) days prior to the granting of such rights and that the granting of
such rights shall not unreasonably interfere with Tenant's Business or the operation of the Golf
Facility.
ARTICLE 4
LANDLORD RENT AND SECURITY DEPOSIT
4.1 Minimum Rent Pavable to Landlord. Commencing on the first day of the
thirteenth (13th) Fiscal Month after the Effective Date, and on the first day of each Fiscal Month
thereafter, Tenant shall pay to Landlord the Minimum Rent. All payments to Landlord shall be
made in readily available funds by such method and at such place as agreed upon by Landlord
and Tenant. All such payments shall, upon receipt by Landlord, be and remain the sole and
absolute property of Landlord. If Landlord shall at any time accept any such Minimum Rent or
other sums after the same shall become due and payable, or any partial payment of Rent, such
acceptance shall not excuse a delay upon subsequent occasions, or constitute or be construed as a
waiver of any Tenant default or of Landlord's rights hereunder.
4.2 No Abatement of Landlord Rent. Except to the extent, if any, otherwise expressly
provided in this Agreement, it is agreed and intended that Rent payable hereunder by Tenant to
Landlord shall be paid in all events, without notice, demand, counterclaim, set off, deduction or
defense and without abatement, suspension, deferment, diminution or reduction for any reason.
By way of illustration and not by way of limitation, a Force Majeure Event related to the
flooding of all or any portion of the Golf Facility or access thereto (unless such flooding persists
for more than forty-five (45) continuous days) shall not entitle Tenant to an abatement,
suspension, deferment, diminution or reduction in the timely payment of all Rent. (If such flood-
related Force Majeure Event persists for more than forty-five (45) days, Rent shall be equitably
adjusted.) Tenant's obligation to pay Rent throughout the Initial Term and any Extended Term is
independent, unconditional (except in the event of Landlord Default) and the respective
obligations and liabilities of Tenant and Landlord hereunder shall in no way be released,
discharged or otherwise affected for any reason, except as stated herein.
4.3 Landlord Percentage Rent. Commencing with the Fiscal Year beginning with the
first day of the thirteenth (13th) Fiscal Month, Tenant shall pay Landlord thirty percent (30%) of
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Tenant's Fiscal Year Available Cash Flow ("Percentage Rent"). Tenant shall pay such
Percentage Rent in quarterly installments within thirty (30) days after the last day of the first
three (3) Fiscal Quarters of each Fiscal Year. Each of these three installments shall be equal to
thirty percent (30%) of the Available Cash Flow for the then just ended Fiscal Quarter. Tenant
shall pay the fourth and final installment within seventy-five (75) days after the end of the Fiscal
Year. The amount of the fourth installment shall equal the difference, if any, between the
aggregate Percentage Rent owed for the Fiscal Year and the sum of the three prior Fiscal Quarter
installments. With each Percentage Rent payment, Tenant shall submit to Landlord an un-
audited (but certified by a duly authorized officer of Tenant) statement showing a detailed
breakdown of the calculation of Percentage Rent for that Fiscal Quarter or the Fiscal Year.
Tenant's obligation to pay Percentage Rent for the Fiscal Quarter which includes the date of
termination of this Agreement shall survive the termination hereof.
4.3.1 Landlord Audit of Percentage Rent Calculation. Landlord at its own
expense, except as provided herein, shall have the right, exercisable by Notice to Tenant to audit
to commence on a date reasonably agreed to by Landlord and Tenant during normal business
hours an audit of Tenant's books and records with respect to calculation of the Percentage Rent.
Landlord shall use commercially reasonable efforts to complete any such audit as soon as
practicable. If such audit discloses a deficiency in the payment of Percentage Rent, Tenant shall
pay to Landlord the amount of the deficiency together with interest at the Disbursement Rate
from the date such deficiency was due to the date actually paid. If such deficiency is more than
the greater of (i) ten percent (10%) of the Percentage Rent reported by Tenant for such Fiscal
Year or (ii) twenty thousand dollars ($20,000.00), Tenant shall also pay the costs of or
immediately reimburse Landlord for the cost of such audit and examination.
4.4 Net Premier Access Receipts. If Tenant sells Premier Access packages,
commencing with Tenant's sale of Premier Access packages, Tenant shall pay Landlord within
thirty (30) days after the last day of each Fiscal Quarter the Net Premier Access Receipts With
each Net Premier Access Receipts payment, Tenant shall submit to Landlord an un-audited (but
certified by a duly authorized officer of Tenant) statement showing a detailed breakdown of the
calculation of the payment amount.
4.5 Additional Charges. In addition to the Minimum Rent and Percentage Rent
payable to Landlord hereunder, after the Effective Date Tenant shall pay directly and discharge
as and when due hereunder the following (collectively the "Additional Charges"):
4.5.1 Taxes and Assessments. Tenant shall pay or cause to be paid (or, if paid
by Landlord for any reason, reimburse Landlord for the payment of) all taxes and assessments
required to be paid pursuant to Article 8.
4.5.2 Utility Charges. Tenant shall be liable for and shall promptly pay to the
utility company all charges and fees (together with any applicable taxes or assessments thereon)
when due for water, gas, electricity, air conditioning, heat, septic, sewer, refuse collection,
telephone and any other utility charges, impact fees, or similar items. So long as not resulting
directly or indirectly from an act or omission of Landlord, a Landlord Affiliate, or an agent,
contractor or subcontractor of Landlord after Substantial Completion, Landlord shall not be
responsible or liable for the quality, quantity, impairment, interruption, stoppage, or other
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interference with any utility service. Except as stated in the previous sentence, no interruption,
termination or cessation of utility services shall relieve Tenant of its duties and obligations
pursuant to this Agreement, including, without limitation, its obligation to pay all Rent as and
when the same shall be due hereunder. Notwithstanding the foregoing, Landlord, as owner of
the Golf Facility, agrees to cooperate with Tenant, at Tenant's sole cost and expense, to execute
any documentation or take any action necessary to restore utility service as required by the
applicable utility provider.
4.5.3 Insurance Premiums. Tenant shall pay or cause to be paid all premiums
for the insurance coverage required to be maintained pursuant to Article 9. If Tenant shall fail to
pay or cause to be paid any or all premiums for any such insurance, Landlord shall have the
right, but not the obligation, to obtain and pay for any such insurance, and Landlord shall be
entitled, promptly following written notice from Landlord to Tenant with respect thereto, to
prompt reimbursement of all premiums paid in connection therewith, together with interest
thereon at the Overdue Rate.
4.5.4 Licenses and Permits. Tenant shall pay or cause to be paid all fees, dues
and charges of any kind which are necessary in order to obtain and maintain in good standing all
Licenses and Permits required for operation of the Golf Facility in accordance with the terms of
Article 5. Notwithstanding the foregoing, in the event of the expiration or earlier termination of
this Agreement, Tenant shall assign, transfer or otherwise convey any licenses or permits
maintained in Tenant's name to Landlord or Landlord's designee to the extent not prohibited by
Applicable Laws.
4.5.5 Sales Tax. Tenant shall pay to Landlord the amount of any applicable
sales, use, excise or similar or other tax on any such Rent and Additional Charges, if any,
whether the same be levied, imposed or assessed by the State of Texas or any Governmental
Agencies, but specifically excluding any federal, state or municipal income taxes, assessments or
other similar governmental charges imposed on Landlord's net income. Landlord shall, upon
written request by Tenant, provide to Tenant on an annual basis such reasonable information in
Landlord's possession or control as shall be necessary to enable Tenant to pay such tax.
4.5.6 Cites. Tenant shall pay directly to Landlord, in readily available
funds, the portion of the City Sublease rent (the "City Rent") allocable to the Golf Facility on the
Leased Land. Landlord and Tenant shall use their respective good faith best efforts to establish
an agreed-upon method of allocating the City Rent between the Golf Facility and the existing
Tribute golf course on or before the Effective Date.
4.5.7 Other Charges. Tenant shall pay or cause to be paid all other amounts,
liabilities and obligations arising in connection with Tenant's use, occupancy and operation of
the Golf Facility, including, without limitation, Operating Expenses and any other costs and
expenses specifically identified as "Additional Charges" pursuant to this Agreement, except for
(i) any Indebtedness of Landlord, (ii) capital improvements forming the initial components of the
Golf Facility, or (iii) those obligations expressly stated not to be an obligation of Tenant pursuant
to this Agreement (collectively, "Landlord Charges").
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4.5.8 Penalties and Interest. Tenant shall pay or cause to be paid every fine,
penalty, interest and cost which may be added for non-payment or late payment of the items
referenced in this Section 4.5 so long as not resulting directly or indirectly from an act or
omission of Landlord, a Landlord Affiliate, or an agent, contractor or subcontractor of Landlord
after Substantial Completion.
4.6 Operating Expense Budget. Prior to the Effective Date, Landlord and Tenant
shall agree upon an Operating Expense budget for the Business for the first (1St) through the
twelfth (12th) Fiscal Months. On or before the first day of the thirteenth (13th) Fiscal Month,
Landlord and Tenant shall agree upon an Operating Expense budget for the Business for the
thirteenth (13th) through the twenty-fourth (24th) Fiscal Months. Landlord and Tenant agree that
these budgets shall include Tenant's Management Fee as an Operating Expense.
4.6.1 Request for Subsidy Payment. If Tenant experiences a negative EBITDA
for any Fiscal Month within the first (1S) to the twenty-fourth (24th) Fiscal Months, Tenant shall
by Notice to Landlord on or after the last day of such Fiscal Month request from Landlord the
negative EBITDA amount. Landlord shall advance 90% of such negative EBITDA amount
requested within five (5) Business Days of Tenant's Notice and the remaining 10% shall come
from Tenant's Security Deposit but in the aggregate shall not exceed the amount of Tenant's
Security Deposit.
4.6.2 Subsidy Payments "True-Up". Twice during the Term, in the thirteenth
(13th) Fiscal Month and in the twenty-fifth (25th) Fiscal Month, Tenant shall add together the
EBITDAs from each Fiscal Month having a positive EBITDA, if any, for each of the
immediately prior twelve (12) consecutive Fiscal Months (the "Sum of Positive EBITDAs").
Tenant shall also add together Landlord's portion (only) of any subsidy payments made to
Tenant in response to a Tenant request under Section 4.6.1 (the "Sum of Landlord Subsidies").
If both the Sum of Positive EBITDAs and the Sum of Landlord Subsidies is greater than zero for
such calculation, Tenant shall reimburse Landlord an amount equal to the Sum of Positive
EBITDAs, up to, and in no event exceeding, the Sum of Landlord Subsidies. Landlord shall
have no claim against Tenant for any reimbursement of the subsidy payments made under
Section 4.6.1 nor shall subsidy payments be deemed an Additional Charge or Additional Rent.
4.7 Landlord Advances. Except as specifically provided otherwise in this Agreement,
if Tenant does not pay or discharge all Additional Charges for which Tenant is responsible, and
provide proof of payment if requested by Landlord, prior to delinquency or, in the alternative,
proof of Tenant's contest of said Additional Charges and, in such case, a bond or other security
as reasonably required by Landlord, to cover any lien filed against the Golf Facility or other
liability affecting the Golf Facility related to the contest of the Additional Charges, Landlord
shall have the right but not the obligation to pay such Additional Charges on behalf of Tenant. If
Landlord shall make any such expenditure for which Tenant is responsible or liable under this
Agreement, or if Tenant shall become obligated to Landlord under this Agreement for any other
sum besides Minimum Rent or Percentage Rent as hereinabove provided, the amount thereof
shall be deemed to constitute "Additional Rent" and shall be due and payable by Tenant to
Landlord, together with interest at the Overdue Rate and all applicable sales or other taxes
thereon, if any, simultaneously with the next succeeding monthly installment of Minimum Rent
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or at such other time as may be expressly provided in this Agreement for the payment of the
same.
4.8 Late Payment of Rent. If Tenant fails more than once during any Fiscal Year to
make any payment of Rent on or before the fifth (5t'') Business Day after the date such Rent
payment is due and such failure to pay all or a portion of the Rent is not due to a dispute as to the
amount of Rent owed by Tenant, Tenant shall pay to Landlord an administrative late charge of
five percent (5%) of the amount of such Rent payment. In addition, such past due payment shall
bear interest at the Overdue Rate from the date first due until paid; provided, however, that the
sum of interest at the Overdue Rate and any administrative late charge shall not exceed the
highest non-usurious rate of interest under applicable law. Such late charge and interest shall
constitute Additional Rent and shall be due and payable with the next installment of Rent due
hereunder.
4.9 Net Agreement. Landlord and Tenant acknowledge and agree that both parties
intend that this Agreement shall be and constitute what is generally referred to in the real estate
industry as a "triple net" or "absolute net" lease, such that after the Effective Date Landlord shall
be entitled to receive all Rent without offset or deduction and Tenant shall be obligated
hereunder to pay any and all costs and expenses, of every type or nature, incurred after such date
with respect to, and associated with, the use and occupancy of the Property and Golf Facility and
all personal property thereon and therein and the business operated thereon and therein,
including, without limitation, Tenant's allocated portion of the City Rent, all taxes and
assessments, utility charges, insurance costs, maintenance costs and repair, replacement and
restoration expenses to the extent of the Reserve (as more particularly herein provided), together
with any and all other assessments, charges, costs and expenses of any and every kind or nature
whatsoever related to, or associated with, the Property, the Golf Facility and the Business other
than Landlord's financing costs and expenses related debt service and capital improvements;
provided, however, that Landlord shall nonetheless be obligated to pay Landlord's income taxes
with respect to the Rent and other amounts received by Landlord under this Agreement and all
Landlord Charges. Except as expressly provided herein, Landlord shall bear no cost or expense
of any type or nature with respect to, or associated with, the Property and the Golf Facility.
4.10 Tenant Security Deposit. On or before ninety (90) days prior to the Effective
Date, Tenant shall deliver to an escrow agent and upon escrow terms agreed upon by Landlord
and Tenant a security deposit of One Million and No/100 Dollars ($1,000,000.00) in cash (the
"Security Deposit"). The Security Deposit shall be held by the escrow agent as security for the
full and faithful performance by Tenant of all of the terms and obligations set forth in this
Agreement. Landlord may withdraw all or part of Tenant's Security Deposit only under the
circumstances stated in Section 12.3. In the event that the Security Deposit has not been
previously returned to Tenant in accordance with this Section 4.10, if Tenant performs all of
Tenant's obligations hereunder, at the expiration of the Term, and after Tenant has vacated the
Golf Facility, the Security Deposit, or so much thereof as remains shall be returned to Tenant and
the escrow shall be terminated.
4.10.1 Tenant Security Deposit Reduction Opportunities in the Event of Premier
Access Sales. In the event that Tenant offers Premier Access on behalf of Landlord, Landlord
agrees that the amount Tenant must maintain in escrow to meet its Security Deposit obligation
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under this Section 4.10 shall be reduced in increments of Two Hundred Thousand Dollars
($200,000.00) (and Tenant shall be permitted to withdraw from escrow any amount in excess of
such reduced amount) for each One Million Dollars ($1,000,000.00) of Premier Access sales;
provided, however, that any Tenant withdrawal from escrow is contingent upon Tenant being
current with respect to its obligations to pay Minimum Rent, Percentage Rent and Additional
Charges, and not otherwise in default under this Agreement.
4.10.2 Tenant Security Deposit Reduction - Financial Benchmarks. In addition
to or in lieu of the Security Deposit reduction possibilities stated in Section 4.10.1 above,
Landlord agrees that the amount Tenant must maintain in escrow to meet its Security Deposit
obligation under this Section 4.10 shall be reduced in increments of Two Hundred Thousand
Dollars ($200,000.00) (and Tenant shall be permitted to withdraw from escrow any amount in
excess of such reduced Security Deposit obligation) on or after the dates stated below contingent
upon Tenant achieving the financial benchmarks stated below; provided, however, that any
Tenant withdrawal from escrow is contingent upon Tenant being current with respect to its
obligations to pay Minimum Rent, Percentage Rent and Additional Charges, and not otherwise in
default under this Agreement.
(a) Reduction On or After the Thirty-Sixth (36th) Fiscal Month. If the
Reserve is at least Two Hundred Fifty Thousand Dollars ($250,000.00), and Tenant has
achieved an EBITDA of Six Hundred Thousand Dollars ($600,000.00) or more for any
twelve (12) consecutive Fiscal Month period.
(b) Reduction On or After the Forty-Eighth (48th) Fiscal Month. If the
Reserve is at least Five Hundred Thousand Dollars ($500,000.00), and Tenant has
achieved an EBITDA of Seven Hundred Thousand Dollars ($700,000.00) or more for any
twelve (12) consecutive Fiscal Month period.
(c) Reduction On or After the Sixtieth (60th) Fiscal Month. If the Reserve is
at least Seven Hundred Fifty Thousand Dollars ($750,000.00), and Tenant has achieved
an EBITDA of Eight Hundred Thousand Dollars ($800,000.00) or more for any twelve
(12) consecutive Fiscal Month period.
(d) Two Reductions On or After the Seventy-Second (72nd) Fiscal Month.
• If the Reserve is at least One Million Dollars
($1,000,000.00) and Tenant has achieved an EBITDA of Nine Hundred
Thousand Dollars ($900,000.00) or more for any twelve (12) consecutive
Fiscal Month period; and
• If the Reserve is at least One Million Dollars
($1,000,000.00) and Tenant has achieved an EBITDA of One Million
Dollars ($1,000,000.00) or more for any twelve (12) consecutive Fiscal
Month period.
4.10.3 Tenant Restoration. In the event that Tenant should qualify for one or
more Security Deposit reductions stated above, the Security Deposit required of Tenant shall
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thereafter be deemed to be such reduced amount regardless whether Tenant shall thereafter fail to
sustain the financial performance benchmark required for the reduction or any Tenant Default.
The Security Deposit shall not thereafter be increased to the previous amount nor shall Tenant be
required to redeposit the amount withdrawn.
ARTICLE 5
PROPERTY USE AND LEASE TERM
5.1 Permitted Use. Tenant covenants and agrees that it shall continuously use,
occupy and operate the Golf Facility for its Business and for such other uses as may be necessary
or incidental to such use, except for (a) customary closures for routine maintenance and
operational issues, (b) closures resulting from a Force Majeure Event, (c) closures resulting from
repairs and maintenance made by third parties pursuant to their easement or other property use
rights, or (d) other necessary interruptions in respect to portions of the Golf Facility for periods
provided herein for repairs, renovations, replacements and rebuilding all of which shall be
carried out pursuant to, and in accordance with the applicable provisions of this Agreement (the
foregoing being referred to as the "Permitted Use").
5.1.1 Necessaa Approvals. After the Effective Date Tenant shall maintain in
good standing all Permits and approvals (including, without limitation, a liquor license)
necessary under Applicable Law for its Permitted Use, the Golf Facility and the Business
operated thereon, and shall provide to Landlord upon Landlord's request a copy of any
documents or information pertaining to said Permits and approvals. Landlord shall, at no cost or
liability to Landlord, reasonably cooperate with Tenant in this regard, limited to executing all
applications and consents reasonably required to be signed by Landlord in order for Tenant to
obtain and maintain such Permits and approvals.
5.1.2 Lawful Use. Etc. After the Effective Date Tenant shall not suffer or
permit the use of the Golf Facility or any portion of the Property for any unlawful purpose, and
Tenant shall not commit or suffer to be committed any nuisance or waste on the Golf Facility or
any portion of the Property. Tenant shall not suffer nor permit the Golf Facility, or any portion
of the Property, to be used in such a manner as to (a) with respect to that portion of the Golf
Course subject to the City Sublease, impair Landlord's leasehold interest therein or otherwise
violate the Corps Lease, or the City Sublease (b) with respect to that portion of the Golf Course
on Owned Land, impair Landlord's leasehold interest therein or to any portion thereof, (c) allow
a claim or claims for adverse usage or adverse possession by the public, as such, or of implied
dedication of the Golf Facility or any portion thereof, or (d) impair the operation of the Golf
Facility for the allowed uses.
5.1.3 Compliance with Legal quirements. After the Effective Date Tenant
shall at all times at its sole cost and expense, keep and maintain the Golf Facility in compliance
with all Legal Requirements. Tenant agrees to give Landlord Notice of any notices, orders or
other communications relating to Legal Requirements affecting the Golf Facility which is served
upon, delivered to, or received by, Tenant, or a copy of which is posted on or fastened or
attached to the Golf Facility, within five (5) Business Days after service, receipt, posting,
fastening or attaching. At the same time, the Tenant will inform Landlord as to the work or steps
which Tenant proposes to do or take in order to comply therewith.
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5.2 Environmental Matters. Tenant shall on and after the Effective Date keep the
Golf Facility free of Hazardous Substances, except as otherwise allowed herein. Neither Tenant
nor any of its employees, agents, invitees, licensees, contractors, guests, or subtenants (if
permitted) shall use, generate, manufacture, refine, treat, process, produce, store, deposit, handle,
transport, release, or dispose of Hazardous Substances in, on or about the Golf Facility or the
groundwater thereof, in violation of any federal, state or municipal law, decision, statute, rule,
ordinance or regulation currently in existence or hereafter enacted or rendered. Tenant shall give
Landlord prompt Notice of any claim or notification received by Tenant from any person, entity,
or Governmental Agencies that a release or disposal of Hazardous Substances has occurred on
the Golf Facility or the groundwater thereof and shall promptly remediate same at its sole cost
and expense, unless such release or disposal first occurred prior to the Effective Date and Tenant
otherwise has no liability or responsibility with respect thereto. Notwithstanding anything to the
contrary contained herein, Tenant is not liable or responsible for any pre-existing (i.e. prior to the
Effective Date) environmental condition on the Property in violation of Applicable Laws.
5.3 Continuous Operations. Except as stated in Section 5.1, Tenant shall
continuously operate the Golf Facility after the Effective Date subject to a Force Majeure Event.
Tenant shall not enter into any property management agreement with respect to the Golf Facility
unless such property management agreement is approved in writing by Landlord, which approval
Landlord may grant or withhold as its sole and absolute discretion.
5.4 Compliance with Requirements, Restrictions Etc. After the Effective Date
Tenant, at its expense, shall comply in all material respects and perform all of the obligations set
forth in any deed of trust, covenants, conditions and restrictions appearing in the public record
and applicable to all or any portion of the Property or the Golf Facility, or to the extent that the
same would, if not complied with or performed, impair or prevent the continued use, occupancy
and operation of the Golf Facility for the purposes set forth in this Agreement. Further, in
addition to Tenant's payment obligations under this Agreement, Tenant shall pay any sums
charged, levied or assessed under any restrictive covenants, declaration, reciprocal easement
agreement or other title exceptions, Equipment Leases, leases and all other agreements affecting
the Golf Facility or the Property whether as of the date of this Agreement or hereafter, and
promptly as the same become due and shall promptly furnish Landlord evidence of payment
thereof, unless contested in good faith by Tenant. Notwithstanding the foregoing, Tenant shall
have no obligation to pay to any Mortgagee any debt service related to any deed of trust lien
encumbering the Property, nor shall Tenant have any obligation to comply with Landlord's
obligations or responsibilities under the Corps Lease, the City Sublease or any intervening
subleases (including the Affiliate Lease), subject to Tenant's obligation to do so under Section
3.1 of this Agreement.
5.5 No Landlord Control. Landlord and Tenant stipulate and agree that after the
Effective Date Tenant is obligated to undertake such actions as are reasonably necessary for the
operation of the Business as set forth herein, and that although Landlord shall have the right to
undertake all enforcement rights as provided herein, the means, pricing, policies and methods
used and actions taken to operate the Business are within the sole control and election of Tenant,
and are not specified by or under the control of Landlord. Accordingly, Landlord shall have no
responsibility for any action taken by Tenant in order to manage or operate the Business.
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5.6 Term. This Agreement shall commence on the date signed and continue until the
Effective Date (the "Pre-Opening Period"). Simultaneous with the expiration of the Pre-Opening
Period, this Agreement's initial term shall commence on the Effective Date and terminate at
11:59 p.m. on last day of the one hundred and twentieth (120th) Fiscal Month thereafter (the
"Initial Term"). At any time prior to the expiration of the Initial Term, Tenant and Landlord
may, each in their own unfettered discretion, agree to extend this Agreement for up to an
additional, uninterrupted one hundred twenty (120) consecutive Fiscal Months (the "Extended
Term") upon the same terms, covenants, conditions and for the Rent paid by Tenant upon the
expiration of the Initial Term or upon such changed or additional Rent, terms, covenants and
conditions as they may find to be mutually acceptable.
5.7 Early Termination. In the event of the early termination of the Corps Lease, City
Sublease or the Affiliate Lease for any reason, this Agreement shall automatically terminate
simultaneously therewith. In such event, Landlord and Tenant shall have no further rights
(except those stated in Section 12.3.2 if the termination of the Corps Lease, the City Sublease or
the Affiliate Lease is through default of Landlord) or obligations hereunder except for those
provisions of this Agreement that survive termination. Tenant shall not directly or indirectly
take, fail to take or permit the taking of, any action with respect to that portion of the Golf
Course Facility located on property subject to the Corps Lease or City Sublease in violation of
the Corps Lease or City Sublease. Landlord agrees at all times to comply with all of the material
terms and provisions of the Corps Lease, the City Sublease and any intervening sublease
including the Affiliate Lease.
5.8 Yield Um Tenant shall, on or before the last day of the Initial Term or Extended
Term, or earlier termination hereof, peaceably and quietly surrender and deliver to Landlord the
Golf Facility in good order, condition and repair, reasonable wear and tear excepted, and free and
clear of all Liens and encumbrances (other than Liens or encumbrances in favor of or granted by
Landlord, and any other encumbrances expressly permitted under the terms of this Agreement)
and fully cooperate with Landlord in transferring, to the extent transferable under Applicable
Laws and without consideration or fee, any of Tenant's Licenses and Permits, specifically
including without limitation, any liquor license, which Landlord determines would be necessary
or appropriate to continue to operate the Golf Facility for its Permitted Use. Furthermore,
Tenant shall to convey to Landlord for no additional charge and free and clear of all Liens and
encumbrances: (i) Tenant's ownership of the Tangible Personal Property, Intangible Personal
Property, Inventory, Equipment and any and all other personal property, excluding Tenant's
Personal Property, by Bill of Sale substantially in the form attached as Exhibit D hereto, together
with such changes to such form as Landlord and/or Tenant may require; (ii) Tenant's rights and
obligations under Equipment Leases, if any, by an Agreement of Assignment and Assumption
substantially in the form attached as Exhibit E hereto, together with such changes to such form as
Landlord and/or Tenant may require; and (iii) Tenant's Intangible Personal Property related to
the Golf Facility, excluding Tenant's Personal Property, if any, by an Agreement of Assignment
and Assumption substantially in the form attached as Exhibit F hereto, together with such
changes to such form as Landlord and/or Tenant may require.
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ARTICLE 6
TENANT MAINTENANCE AND REPAIR
6.1 Grounds Repair Obligation. On and after the Effective Date, Tenant shall, at its
sole cost and expense, keep the Golf Facility in good order and condition and shall promptly
(except for reasonable delay attributable to a Force Majeure Event) make all necessary and
appropriate repairs and replacements thereto of every kind and nature, whether interior or
exterior, specifically including the Golf Course and other buildings and structures whether or not
necessitated by a Force Majeure Event, wear and tear, or obsolescence and shall use all
reasonable precautions to prevent damage or injury. All repairs shall be made in a good,
workmanlike manner, consistent with industry standards for high-end, semi-private golf facilities
in the Dallas-Fort Worth Metroplex, and in accordance with all applicable federal, state and local
statutes, ordinances, by-laws, codes, rules and regulations relating to any such work.
6.2 Personal Pro e~rty Repair Obligation. On and after the Effective Date, Tenant
shall also, at its sole cost and expense, put, keep, repair, replace (with like kind and quality, or
better) and maintain Tangible Personal Property, Inventory, Equipment and any and all other
personal property in good repair and in good, safe and substantial condition, howsoever the
necessity or desirability for repairs or replacement may occur, and whether or not necessitated by
wear, tear, obsolescence or defects.
6.3 Prohibition. Except for work funded by Reserve expenditures and Minor
Alterations as hereinafter expressly provided in Section 6.4, no portion of the Golf Facility shall
be demolished, removed or altered by Tenant in any manner whatsoever without the prior written
consent and approval of Landlord which approval may be granted or withheld in the sole
discretion of Landlord. Notwithstanding the foregoing, however, Tenant shall be entitled and is
obligated to undertake all alterations to the Golf Facility required by any Legal Requirements
and, in such event, Tenant shall comply with the provisions of Section 6.4 below.
6.4 Permitted Renovations (other than Golf Course). The activities permitted
pursuant to Section 6.4.1 and Section 6.4.2 below shall collectively constitute "Permitted
Renovations".
6.4.1 Minor Alterations. Tenant may make minor, alterations and renovations
from time to time ("Minor Alterations") but only with the prior written consent of Landlord,
which consent may be withheld and/or conditioned in the same manner as provided in Section
6.4.2, below. Minor Alterations shall not weaken or impair the structural strength of any
buildings or other structural improvements which constitute part of the improvements, or alter
their exterior design or appearance, materially impair the use of any of the service facilities
located in, or fundamentally affect the character or suitability of, the improvements for the
Permitted Use specified in Section 5.1 above.
6.4.2 Additions, Expansions and Structural Alterations. Except as expressly
permitted in Section 6.4.1 above, nothing in this Article 6 or elsewhere in this Agreement shall
be deemed to authorize Tenant to construct and erect any additions to or expansions of the
improvements, or perform any alterations of a structural nature whatsoever (collectively referred
to herein as the "Major Alterations"). Tenant may perform Major Alterations only with the prior
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written consent and approval of Landlord, which consent and approval may be unreasonably
withheld and may be conditioned upon the payment by Tenant to Landlord of all reasonable
costs incurred by Landlord in evaluating the same, providing additional insurance and such other
reasonable conditions as Landlord may impose.
6.5 Permitted Renovations to Golf Course. Notwithstanding anything to the contrary
contained herein, Tenant shall not be permitted to make any renovations or improvements to the
golf course, including the tees, fairways, bunkers, greens, water hazards, or other landscaping
features forming a part thereof, that materially change the character or current design thereof
without the prior written consent of Landlord, which consent may be unreasonably withheld.
Tenant shall be permitted to make such renovations (need better clarity here) to the golf course
that are either routine or remedial so long as the renovations do not change design or character of
the golf course, including the tees, fairways, bunkers, greens, water hazards, or other landscaping
features forming a part thereof and in accordance with the following:
(a) Before the commencement of any such work, plans and specifications
therefore or a detailed itemization thereof prepared by a licensed architect approved by
Landlord or other design professional appropriate under the circumstances approved by
Landlord and Tenant shall be furnished to Landlord for its review and approval. Such
approval shall not constitute Landlord's agreement that the plans and specification are in
compliance with Legal Requirements or an assumption by Landlord of any liability in
connection with the renovation work contemplated thereby.
(b) Before the commencement of any such work Tenant shall obtain the
approval thereof by all Governmental Agencies having or claiming jurisdiction of or over
the Golf Facility, and with any public utility companies having an interest therein. In
connection with any such work Tenant shall comply with all Legal Requirements and
Applicable Laws, of all other Governmental Agencies having or claiming jurisdiction of
or over the Golf Facility and of all their respective departments, bureaus and offices, and
with the requirements and regulations, if any, of such public utilities, of the insurance
underwriting board or insurance inspection bureau having or claiming jurisdiction, or any
other body exercising similar functions, and of all insurance companies then writing
policies covering the Golf Facility or any part thereof. Note: need to discuss financing.
(c) All such work shall be performed free of any Liens on Landlord's interest
(both fee simple and leasehold) in, and Tenant's leasehold interest in, the Golf Facility
and the Property.
(d) Upon substantial completion of any such work, Tenant shall procure a
certificate of occupancy, certificate of completion or other final approvals, if applicable,
from the appropriate Governmental Agencies and provide copies of same to Landlord.
6.6 Salvage. Other than Tenant's Personal Property, all materials which are scrapped
or removed in connection with maintenance and repair and the making of Permitted Renovations
pursuant to Article 6 shall be disposed of by Tenant and the net proceeds thereof, if any, shall be
deposited in the Reserve.
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ARTICLE 7
CAPITAL REPLACEMENT AND REPAIRS
7.1 Capital Reserve Account. On and after the Effective Date, Tenant shall establish
an interest bearing capital reserve account (the "Reserve") in a federally insured bank chosen by
Tenant and reasonably acceptable to Landlord. All interest earned on the Reserve shall be added
to and remain a part of the Reserve. The Reserve shall belong to and remain the property of
Landlord; provided, however, Landlord agrees that so long as Tenant is not in Default hereunder,
Tenant, may use the Reserve funds for the Golf Facility capital expenditures. Upon the
occurrence of any Default hereunder, Landlord shall have the right to direct access to such
capital reserve bank account as well as the right to require Tenant to obtain Landlord's approval
prior to use of any Reserve funds.
7.1.1 Reserve Account Deposit. On and after the Effective Date, Tenant shall
on the last day of each Fiscal Quarter, transfer into the Reserve account an amount equal to five
percent (5%) or, within the first thirty-six (36) Fiscal Months and in Landlord's sole discretion, a
lesser percentage but in no event less than three percent (3%), of Total Facility Revenue for such
Fiscal Quarter. At the time Tenant provides Landlord the documentation described in
Section 4.3, Tenant shall also deliver to Landlord a statement setting forth the total amount of
deposits made to and expenditures from the Reserve.
7.2 Estimated Reserve Expense. Tenant shall prepare and submit to Landlord, for its
review and approval, on or before November 30 of the first Fiscal Year, and each Fiscal Year
thereafter, the proposed Estimated Reserve Expense for the next Fiscal Year. Landlord shall
approve or disapprove (and provide written comment on) any proposed Estimated Reserve
Expense and Reserve Expense prepared by Tenant within ten (10) business days following
Landlord's receipt of such Estimated Reserve Expense and Reserve Expense. In the event
Landlord fails to approve or disapprove any proposed Estimated Reserve Expense within such
ten (10) business day period, then the proposed Estimated Reserve Expense shall be deemed
approved by Landlord.
7.3 Disapproved Estimates. In the event Landlord disapproves any proposed
Estimated Reserve Expense or any specific item or items thereof prior to the commencement of
the Fiscal Year in question, pending resolution thereof, the proposed Estimated Reserve
Expense, or the specific item or items of expense not approved by Landlord, shall be suspended
and replaced for the Fiscal Year in question by an amount equal to such Estimated Reserve
Expense item or items for the prior Fiscal Year. If Landlord and Tenant cannot agree on the
replacement Estimated Reserve Expense or any specific item or items therein on or before the
commencement of the following Fiscal Year, then Tenant may, at its option, seek to resolve the
dispute through third party dispute mediation assistance or drop the request.
7.4 Variance. If at any time during the Term of this Agreement, the Tenant discovers
(or anticipates) substantial variances between the actual financial performance of the Golf
Facility and the performance contemplated by the Estimated Reserve Expense, Tenant may make
appropriate adjustments to the Estimated Reserve Expense and resubmit it to Landlord for
Landlord's review and approval. Until such time as Landlord has approved a revised or new
Estimated Reserve Expense, Tenant shall use commercially reasonable efforts to operate the
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Golf Facility in accordance within the existing Estimated Reserve Expense, subject to economic,
weather and other conditions beyond the control of Tenant.
7.5 Unanticipated Expenditures and Reallocation of Funds. Landlord agrees that the
Estimates are intended to be reasonable estimates and, accordingly, Tenant shall be entitled to
propose changes to the Estimated Reserve Expense to cover Capital Replacement and Repairs
which were unanticipated at the time of Estimated Reserve Expense preparation. Landlord may
(i) reallocate all or any portion of any amount budgeted with respect to any one item in the
Estimated Reserve Expense to another item in the Estimated Reserve Expense, and (ii) increase a
budgeted item due to increased expenditures incurred due to increased revenues or due to
unanticipated expenditures arising from economic, weather or other conditions beyond the
control of Tenant. Landlord acknowledges that Tenant has not made and, by proposing
Estimated Reserve Expenses, (i) does not make any guarantee, warranty, or representation of any
nature concerning the Estimated Reserve Expenses, the amounts of revenue or expense, cash
flow, or the Estimated Reserve Expense requirements to be generated or incurred from the
operation of the Golf Facility, and (ii) does not have any liability to Landlord for any deficits in
the Estimated Reserve Expenses arising from the operation on the Golf Facility.
ARTICLE 8
TAXES AND ASSESSMENTS
8.1 Obligation to Pay Taxes and Assessments. On and after the Effective Date
Tenant shall pay not later than thirty (30) days prior to the last day on which payment may be
made without penalty or interest, any and all taxes, assessments, charges, levies, fees and other
impositions and charges laid, levied, assessed, or imposed upon, or arise in connection with, the
use, occupancy, operation or possession of the Golf Facility and the Property. Notwithstanding
the foregoing, Tenant shall not be responsible for (a) net income taxes or other substitute for
income taxes (specifically excluding sales and any other lease or excise taxes) on the Rent
received by Landlord imposed by any Government Agency, (b) any Additional Charges due and
payable after the expiration of the Term to the extent that the same relate and apply interests and
benefits accruing to Landlord after the Term, or (c) Landlord Charges.
8.2 Tenant's Right to Contest Taxes. Tenant shall have the right to contest at its own
expense the amount and validity of any taxes affecting the Golf Facility by appropriate
proceedings under Legal Requirements conducted in good faith and with due diligence and to
postpone or defer payment thereof, provided and so long as:
(a) Such proceedings shall operate to suspend the collection of such taxes
with respect to the Golf Facility;
(b) Neither the Golf Facility nor any part thereof would be in immediate
danger of being forfeited or lost by reason of such proceedings, postponement or
deferment; and
(c) If requested by Landlord, Tenant shall have furnished Landlord with
security for payment of the contested taxes which is satisfactory to Landlord, and, in the
event that the preconditions set forth in (a) and (b) above are no longer met, Landlord
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shall have the right to draw upon such security to pay and discharge the taxes in question
and any Liens against the Golf Facility arising there under.
8.3 Tax and Insurance Escrow Account. In the event any of the Events of Default
specified in Section 12.1 hereunder shall occur Landlord shall have the right, by Notice to
Tenant, to require Tenant to pay or cause to be paid into a separate account (the "Tax and
Insurance Account") to be established by Tenant with a federally insured financial institution or
other third party escrow agent designated by Landlord and which Landlord may draw upon, a
reserve amount sufficient to discharge the annual obligations of Tenant under Section 8.1 and
Article 9 hereof (other than worker's compensation insurance premiums) with respect to real
estate taxes and insurance premiums for the applicable Fiscal Year as and when they become due
(such amounts, the "Tax and Insurance Escrow Amount"). During each Fiscal Month
commencing with the first full calendar month following the receipt of said Notice from
Landlord, Tenant shall deposit into the Tax and Insurance Account one twelfth of the Tax and
Insurance Escrow Amount so that as each installment of insurance premiums and real estate
taxes becomes due and payable, there are sufficient funds in the Tax and Insurance Account to
pay the same. If the Tax and Insurance Account is not sufficiently funded as premiums and/or
taxes become due and payable, Tenant shall, within five (5) Business Days following written
Notice from Landlord, deposit sufficient additional funds to pay same. If the amount of such
insurance premiums and real estate taxes has not been definitively ascertained by Tenant at the
time when any such monthly deposit is to be paid, Landlord shall require payment of the Tax and
Insurance Escrow Amount based upon the amount of premiums and real estate taxes paid for the
preceding year, subject to adjustment as and when the amount of such premiums and real estate
taxes are ascertained by Tenant.
ARTICLE 9
INSURANCE
9.1 General Insurance Requirements. On and after the Effective Date Tenant shall
keep the Golf Facility and all property located therein or thereon, insured against the following
risks in the following amounts:
(a) "All risk" property insurance on the improvements, specifically including
the Golf Course, all building structures, landscaping improvements (including trees and
shrubs, golf course tees, fairways and greens), and all items of business personal
property, including but not limited to signs, awnings, canopies, gazebos, fences and
retaining walls, including without limitation, insurance against loss or damage from the
perils under "All Risk" (Special) form, including but not limited to the following: fire,
windstorm, earthquake, sewer back-up, sprinkler leakage, vandalism and malicious
mischief, water damage, explosion of steam boilers, pressure vessels and other similar
apparatus, and other hazards generally included under extended coverage, all in an
amount equal to one hundred percent (100%) of the replacement value of the
improvements (excluding excavation and foundation costs);
(b) Business income insurance to be written on "Special Form" including
"Extra Expense", without a provision for co insurance, including an amount sufficient to
pay at least twelve (12) Fiscal Months of Minimum Rent for the benefit of Landlord, as
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its interest may appear, and at least twelve (12) Fiscal Months of EBITDA less Rent for
the benefit of Tenant;
(c) Occurrence form commercial general liability insurance, including bodily
injury, broad form property damage, personal and advertising injury, liquor liability, fire
legal liability, contractual liability and independent contractor's hazard and completed
operations coverage in an amount not less than $1,000,000.00 per occurrence and
$2,000,000.00 per location, aggregate;
(d) Umbrella coverage with follow form General Liability, Automobile
Liability, Employers' Liability, Malpractice and Liquor Liability, with limits in a
minimum amount of not less than $5,000,000.00 per occurrence/aggregate;
(e) Flood insurance for the full (100%) replacement value of the
improvements and all items of business personal property or any greater amount as may
be required by the National Flood Insurance Program;
(f) Hurricane insurance, including coverage for damage by flood and water in
an amount equal to the Probable Maximum Loss, as produced by the RMS 6.0 edition
wind model (or its most recent edition) using the 250 year value and to include all
exposed locations within the state when running the model;
(g) Worker's compensation coverage for all persons employed by Tenant on
the Golf Facility, if any, with statutory limits, and employers' liability insurance in an
amount of at least $1,000,000.00 per accident/disease;
(h) Business auto liability insurance, including owned, non owned and hired
vehicles for combined single limit of bodily injury and property damage of not less than
$1,000,000.00 per occurrence;
(i) Employment Practices Liability Insurance for damages resulting from the
wrongful acts of Tenant in an amount of at least $1,000,000 per occurrence with a
deductible of not more than $10,000 per occurrence, which coverage shall include Third
Party Employment Practices Liability in favor of Landlord; and
(j) Such other insurance or adjusted, requirements, coverage and/or limits as
the Corps or the City may require.
9.2 Waiver of Subrogation. Landlord and Tenant agree that with respect to any loss
which is covered by insurance then being carried by Landlord or Tenant, the party carrying such
insurance and suffering said loss releases the other of and from any and all claims with respect to
such loss. Landlord and Tenant further agree that their respective insurance companies shall
have no right of subrogation against the other on account thereof.
9.3 General Provisions. The property insurance deductible shall not exceed
$50,000.00 unless such greater amount is agreeable to both Landlord and Tenant, or if a higher
deductible for high hazard risks (i.e., wind or flood) is mandated by the insurance carrier. All
insurance policies pursuant to this Article 9 shall be issued by insurance carriers licensed to do
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business in the State of Texas, having a general policy holder's rating of no less than A /VII in
Best's latest rating guide, and shall contain clauses or endorsements to the effect that
(a) Landlord shall not be liable for any insurance premiums thereon or subject to any
assessments there under, (b) the coverage provided thereby will be primary and non-contributory
to any insurance carried by the Landlord, and (c) the insurer shall provide to all insureds at least
thirty (30) days advance written notice of cancellation, non-renewal and/or modification. All
such policies (except worker's compensation) described in Section 9.1 shall name Landlord, each
landlord under each Affiliate Lease and any Mortgagee whose name and address will be
provided to Tenant as additional insureds on form CG 2010, 11/85 edition or equivalent. All loss
adjustments shall be payable as provided in Article 10. In the event Tenant shall fail to effect
such insurance as herein required or to pay the premiums therefore, Landlord shall have the
right, but not the obligation, subject to the provisions of Section 12.5, to acquire such insurance
and pay the premiums therefore, which amounts shall be payable to Landlord, upon demand, as
Additional Rent, together with interest accrued thereon at the Overdue Rate from the date such
payment is made until (but excluding) the date repaid. In the event Tenant shall fail to effect
such insurance, Landlord shall have the right, but not the obligation, to acquire such insurance
immediately and, in view of the paramount need to keep the required insurance in place, shall not
be bound by any notice and cure provisions of this Agreement, including without limitation, the
provisions of Section 12.1 of this Agreement.
ARTICLE 10
CASUALTY
10.1 Total Destruction. If the Golf Facility shall become totally destroyed by casualty
and thereby rendered unsuitable for its Permitted Use, Tenant shall give Landlord prompt Notice
thereof. Either Landlord or Tenant may, by Notice to the other party within ninety (90) days
after such casualty occurs, terminate this Agreement, whereupon Landlord shall be entitled to
obtain and retain the insurance proceeds payable on account of such damage (exclusive of any
business interruption insurance which shall be payable to Landlord only to the extent of Rent due
through the date of termination). Tenant shall pay to Landlord the amount of any deductible.
Tenant further expressly acknowledges, understands and agrees that in the event that this
Agreement is terminated as aforesaid, Landlord may settle any insurance claims and Tenant
shall, upon request of Landlord, cooperate in any such settlement.
10.2 Partial Destruction. If the Golf Facility shall be destroyed or damaged in part by
fire, windstorm or any other cause whatsoever, but the Golf Facility either (a) is not rendered
unsuitable for its Permitted Use, or (b) is rendered unsuitable for its Permitted Use but neither
Landlord nor Tenant terminates this Agreement in the manner provided above, then, Tenant shall
give Landlord immediate Notice thereof and Tenant shall, subject to the provisions of
Section 10.2 below, repair, reconstruct and replace the Golf Facility, or the portion thereof so
destroyed or damaged. All such restoration work shall be started as promptly as practicable and
diligently completed at Tenant's sole cost and expense.
10.3 Salvage Proceeds. All salvage resulting from any risk covered by insurance shall
belong to Tenant, provided any rights to the same have been waived by the insurer. In addition,
notwithstanding anything in this Agreement to the contrary, Tenant shall be strictly liable and
solely responsible for the amount of any deductible and shall pay for all repairs, reconstruction or
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alterations up to the full amount of such deductible (and provide evidence of such payment to
Landlord by documentation reasonably acceptable to Landlord) before any insurance proceeds
are used for repairs, reconstruction or alterations.
10.4 No Abatement of Rent. Unless terminated in accordance with the provisions of
Section 10.1 above, this Agreement shall remain in full force and effect and Tenant's obligation
to make all payments of Rent and to pay all Additional Charges as and when required under this
Agreement shall remain unabated notwithstanding any casualty to the Golf Facility; provided,
however, that Landlord shall credit against the Rent any amounts paid to Landlord as a
consequence of such damage under Tenant's business interruption insurance. The provisions of
this Article 10 shall be considered an express agreement governing any event of casualty
involving the Golf Facility and, to the maximum extent permitted by law, Tenant hereby waives
the application of any local or state statute, law, rule, regulation or ordinance in effect which
provides for such abatement.
10.5 Tenant's Property and Business Interruption Insurance. All insurance proceeds
payable by reason of any loss of or damage to any of Tenant's Personal Property and the
business interruption insurance maintained for the benefit of Tenant shall be paid to Tenant;
provided, however, no such payments shall diminish or reduce the insurance payments otherwise
payable to or for the benefit of Landlord hereunder. Such business interruption proceeds shall be
considered part of the Total Facility Revenue. All insurance proceeds payable by reason of any
loss of or damage to any Tangible Personal Property, Equipment or Inventory shall also be paid
to Tenant; provided, however, if this Agreement is terminated due to a casualty that renders the
Golf Facility unsuitable for its Permitted Use, then such insurance proceeds (and the amount of
any insurance deductible) shall be paid to Landlord.
10.6 Restoration of Tenant's Property. If Tenant is required to restore the Golf Facility
as hereinabove provided, Tenant shall either (a) restore all alterations and improvements made
by Tenant, or (b) replace such alterations and improvements with improvements or items of the
same or better quality and utility in the operation of the Golf Facility.
ARTICLE 11
CONDEMNATION
11.1 Total Condemnation. If the whole of the Golf Facility shall be taken or
condemned for any public or quasi public use or purpose, by right of eminent domain or by
purchase in lieu thereof, or if a substantial portion of the Golf Facility shall be so taken or
condemned such that the portion or portions remaining is or are not sufficient and suitable for the
continued operation thereof as required herein, so as to effectively render the Golf Facility
unsuitable for its Permitted Use, then this Agreement shall cease and terminate (without
prejudice to Landlord's and Tenant's respective rights to an award under Section 11.3 below), as
of the date on which the Condemnor takes possession and all Rent shall be paid by Tenant to
Landlord up to that date or refunded by Landlord to Tenant if Rent has previously been paid by
Tenant beyond that date.
11.2 Partial Condemnation. If a portion of the Golf Facility is taken, and the portion or
portions remaining can be adapted and used for the conduct of the Business in accordance with
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the terms of this Agreement, such that the Golf Facility is not effectively rendered unsuitable for
its Permitted Use, then the Tenant shall, utilizing, as reasonably necessary, condemnation
proceeds paid to Landlord from the Condemnor, promptly restore the remaining portion or
portions thereof to a condition comparable to their condition at the time of such taking or
condemnation, less the portion or portions lost by the taking. In such event, this Agreement shall
continue in full force and effect with a reduction or abatement of Rent as agreed upon by the
parties.
11.3 Disbursement of Award. The entire award for the Golf Facility or the portion or
portions thereof so taken shall be apportioned between Landlord and Tenant as follows: (a) if
this Agreement terminates due to a taking or condemnation, Landlord shall be entitled to the
entire award; provided, however, that any portion of the award expressly made for the taking of
Tenant's leasehold interest in the Golf Facility, loss of business during the remainder of the
Term, and the taking of Tenant's Personal Property, if any, shall be the sole property of and
payable to Tenant, and (b) if this Agreement does not terminate due to such taking or
condemnation, Tenant shall be entitled to the award to the extent required for restoration of the
Golf Facility. In any condemnation proceedings, Landlord and Tenant shall each seek its own
award in conformity herewith, at its own expense. If this Agreement does not terminate due to a
taking or condemnation, Tenant shall, with due diligence, restore the remaining portion or
portions of the Golf Facility in the manner hereinabove provided to the extent of available
condemnation proceeds provided to Tenant. All proceeds in excess of those required for
restoration shall be disbursed to Landlord upon completion of such restoration. If the award is
insufficient to pay for the restoration, Landlord shall not be responsible for the remaining cost
and expense of such restoration, and Tenant may, at its election, provide the additional funds
necessary for restoration and this Agreement will not terminate; but if Tenant does to elect to do
so, then this Agreement shall cease and terminate as provided in Section 11.1 as if upon total
condemnation.
ARTICLE 12
DEFAULTS AND REMEDIES
12.1 Tenant Events of Default. Each of the following events shall be deemed an Event
of Default.
(a) If more than once during any Fiscal Year, Tenant shall fail to pay, when
due, Minimum Rent or City Rent and such failure shall continue for a period of five (5)
Business Days after such amounts are due under Section 4.1.
(b) If Tenant shall fail to (i) pay, when due, any Percentage Rent or
Additional Charge (other than City Rent); (ii) fully fund and maintain the Security
Deposit as required by Section 4.10; or (iii) fully fund and maintain the Reserve and fund
all Reserve Expenditures as required by Section 7. 1, and such failure shall continue for a
period of seven (7) days after Notice thereof from Landlord.
(c) If Tenant shall violate or fail to comply with or perform any other term,
provision, covenant, agreement or condition to be performed or observed by Tenant
under this Agreement and such violation or failure shall continue for a period of thirty
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(30) days after Notice thereof from Landlord; provided, however, if such violation or
failure is incapable of cure by Tenant within such thirty (30) days after Tenant's diligent
and continuous efforts to cure the same, Tenant shall have up to an additional period of
sixty (60) days for a total of one hundred twenty (90) days to cure the same.
(d) If any assignment, transfer or sublease of the Golf Facility shall be made
or deemed to be made that is in violation of the provisions of this Agreement.
(e) If any lien or encumbrance is placed upon the Golf Facility in violation of
the provisions of this Agreement and such violation shall continue for a period of thirty
(30) days after Notice thereof from Landlord.
(f) If Tenant shall cease the actual and continuous operation of the Business
and such cessation is not the result of casualty, condemnation or a Major Alteration or is
not otherwise permitted by Landlord or not the result of Applicable Laws or an
emergency or other Force Majeure Event, or if Tenant shall vacate, desert or abandon the
Golf Facility, or if the Golf Facility shall become empty and unoccupied, or if the Golf
Facility or improvements are used or are permitted to be used for any purpose, or for the
conduct of any activity, other than the Permitted Use.
(g) If Tenant shall file in any court, pursuant to any statute of either the
United States or of any State, a petition in bankruptcy or insolvency, or for reorganization
or arrangement, or for the appointment of a receiver or trustee of all or any portion of
Tenant's property, including, without limitation, Tenant's leasehold interest in the Golf
Facility, or if Tenant shall make an assignment for the benefit of its creditors or petitions
for or enters into an arrangement with its creditors.
(h) If there shall be filed against Tenant in any court pursuant to any statute of
the United States or of any State, a petition in bankruptcy or insolvency, or for
reorganization, or for the appointment of a receiver or trustee of all or a portion of
Tenant's property, including, without limitation, Tenant's leasehold interest in the Golf
Facility, and any such proceeding against Tenant shall not be dismissed within ninety
(90) days following the commencement thereof.
(i) If Tenant fails to cure or abate any violation of Legal Requirements that is
claimed by any Governmental Agency or any law, order, ordinance, rule, regulation or
Legal Requirements pertaining to the operation of the Business or the use of the Property
for its Permitted Use, and within the earlier of (i) the time permitted by such authority for
such cure or abatement or (ii) thirty (30) days after Notice thereof from Landlord.
12.2 Landlord Events of Default. Each of the following events shall be deemed an
Event of Default.
(a) If Landlord shall fail to cure, or fail to cause to be cured, any default under
the City Sublease resulting from the failure of any tenant, other than Tenant, to pay rent
due pursuant to the City Sublease.
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(b) If Landlord shall violate or fail to comply with or perform any other term,
provision, covenant, agreement or condition to be performed or observed by Landlord
under the City Sublease, except such violations or failures as result from any default of
Tenant under this Agreement.
(c) If Landlord shall violate or fail to comply with or perform any other term,
provision, covenant, agreement or condition to be performed or observed by Landlord
under this Agreement and such violation or failure shall continue for a period of thirty
(30) days after Notice thereof from Tenant; provided, however, if such violation or
failure is incapable of cure by Landlord within such thirty (30) days after Landlord's
diligent and continuous efforts to cure the same, Landlord shall have up to an additional
period of thirty (30) days for a total of ninety (90) days to cure the same.
(d) If any lien or encumbrance that materially impairs the operation of
Tenant's Business is placed upon the Owned Land or Leased Land in violation of the
provisions of this Agreement and such violation shall continue for a period of thirty (30)
days after Notice thereof from Tenant.
(e) If Landlord shall file in any court, pursuant to any statute of either the
United States or of any State, a petition in bankruptcy or insolvency, or for reorganization
or arrangement, or for the appointment of a receiver or trustee of all or any portion of
Landlord's property, including, without limitation, Landlord's interest in the City
Sublease or this Agreement, or if Landlord shall make an assignment for the benefit of its
creditors or petitions for or enters into an arrangement with its creditors.
(f) If there shall be filed against Landlord in any court pursuant to any statute
of the United States or of any State, a petition in bankruptcy or insolvency, or for
reorganization, or for the appointment of a receiver or trustee of all or a portion of
Landlord's property, including, without limitation, Landlord's leasehold interest in the
City Sublease or this Agreement, and any such proceeding against Landlord shall not be
dismissed within ninety (90) days following the commencement thereof.
(g) If Landlord, having the duty to cure or abate under the terms of this
Agreement, fails to cure or abate any violation of Applicable Law that is claimed by any
Governmental Agency or any law, order, ordinance, rule, regulation or Applicable Laws
pertaining to the use of the Property for its Permitted Use which materially impairs the
operation of Tenant's Business, and within the later of (i) the time permitted by such
authority for such cure or abatement or (ii) thirty (30) days after Notice thereof from
Tenant.
12.3 Remedies on Default. If any Event of Default remains uncured after Notice and
the expiration of the applicable cure period set forth herein, then the defaulting party shall be in
Default hereunder and the non-defaulting party, at any time thereafter, shall have and may
exercise any of the following rights and remedies:
12.3.1 Tenant Default. If Tenant is the defaulting party, Landlord may, with or
without terminating this Agreement, and peaceably or pursuant to appropriate legal proceedings,
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reenter, retake and resume possession of the Property for the Landlord's own account without
liability for trespass (Tenant hereby waiving any right to notice or hearing prior to such taking of
possession by Landlord). No reentry or taking possession of the Property shall be construed as
an election on Landlord's part to terminate this Agreement, unless Notice of such intention is
given to Tenant. Following a default by Tenant, Landlord may choose either: (a) to withdraw
from escrow and retain the balance of Tenant's Security Deposit then remaining in escrow
thereby accepting Tenant's Security Deposit as Landlord's sole and exclusive remedy hereunder,
or (b) pursue all other remedies available to Landlord, such as, by way of illustration only, to sue
Tenant to recover any and all sums and damages resulting from such default, including, without
limitation, (i) all sums, charges, payments, costs and expenses agreed and/or required to be paid
by Tenant hereunder prior to such termination, (ii) all costs and expenses resulting from the
Default, including reasonable attorney's fees based upon services rendered at hourly rates and
court costs, and (iii) all costs and expenses in connection with reletting the Property, including,
without limitation, brokerage fees, advertising costs, reasonable attorney's fees and the cost of
any alterations or repairs. Pursuit of any one remedy (other than as provided in subsection (a),
above) shall not preclude pursuit of any other remedy provided by law, nor shall pursuit of any
remedy constitute a forfeiture or waiver of any Rent or other sums due to Landlord hereunder, or
of any damages accruing to Landlord by reason of the breach by Tenant of any of the terms,
provisions and conditions contained in this Agreement. Landlord's acceptance of Rent or any
other sums from Tenant following an Event of Default by Tenant under this Agreement shall not
be construed as a waiver of such Event of Default. No waiver by Landlord of any violation or
breach of any of the terms, provisions and conditions contained in this Agreement shall be
deemed or construed to constitute a waiver of any other violation or default.
12.3.2 Landlord Default. If Landlord is the defaulting party, Tenant may pursue
discussions with the City to retain possession of the Property through a negotiated sublease
relationship directly with the City (Landlord hereby waiving any right to notice or hearing prior
to such discussions by Tenant). If Tenant negotiates a sublease relationship directly with the
City, then this Agreement shall immediately terminate, Tenant shall withdraw from escrow the
balance of Tenant's Security Deposit then remaining in escrow and Tenant may sue Landlord to
recover any and all sums and damages due or in existence at the time of termination, including,
without limitation, (i) all costs and expenses resulting from the Default, including reasonable
attorney's fees based upon services rendered at hourly rates and court costs, and (ii) all costs and
expenses in connection with negotiating with the City. If Tenant is unable to negotiate a
sublease relationship directly with the City, then this Agreement shall immediately terminate,
Tenant shall withdraw from escrow the balance of Tenant's Security Deposit then remaining in
escrow and Tenant may sue Landlord to recover any and all sums and damages resulting from
the Default, including reasonable attorney's fees based upon services rendered at hourly rates
and court costs.
12.4 Application of Funds. Any payments received by the non-defaulting party under
any of the provisions of this Agreement during the existence or continuance of any Event of
Default (and any payment made to the non-defaulting party rather than the defaulting party due
to the existence of any Event of Default) or when the defaulting party is in Default shall be
applied to the defaulting party's current and past due obligations under this Agreement in such
order as the non-defaulting party may determine or as may be prescribed by the laws of the State
of Texas.
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12.5 Right to Cure Default. The non-defaulting party may, but shall have no
obligation to, cure any Default of the defaulting party. If, at any time and by reason of such
Default, the non-defaulting party elects to pay any sum of money or do any act which will
require the payment of any sum of money, or elects to incur any expense in the enforcement of
its rights hereunder or otherwise, such sum or sums, together with interest thereon at the Overdue
Rate shall be repaid to the non-defaulting party promptly when billed therefore.
12.6 Landlord's Contractual Securitv Interest and Lien. Landlord will have a lien
upon, and Tenant hereby grants to Landlord a security interest in, all personal property
(including Equipment, Inventory and Tangible Personal Property as well as all other inventory,
fixtures, furniture and equipment) owned (not leased) by Tenant located in or on the Golf
Facility, as security for the payment of all Rent and the performance of all other obligations of
Tenant required by this Agreement. At any time after an Event of Default by Tenant occurs
hereunder, Landlord may take possession of any and all such personal property in accordance
with applicable law, and Landlord will have the right, after ten (10) days' written notice to
Tenant, to sell such personal property so taken at public or private sale and upon such terms and
conditions as may appear to Landlord to be advantageous. After the payment of all charges
incident to such sale, the proceeds of such sale will be applied to the payment of any and all
amounts due to Landlord pursuant to this Agreement. In the event there will be any surplus
remaining after the payment of all amounts due to Landlord, such surplus will be held by
Landlord and applied in payment of future Rent (whether or not due at the time) and any surplus
remaining after payment of all such Rent will be paid over to Tenant. In its exercise of rights
pursuant to this Section 12.6, Landlord will have all of the rights and remedies of a secured party
under the Uniform Commercial Code or other equivalent and applicable laws of the State of
Texas which relate to the grant and perfection of security interests of the nature granted pursuant
to this Section 12.6. Tenant hereby agrees that Landlord may file, or cause to be filed, a
financing statement or equivalent or similar applicable instrument in form sufficient under
applicable law to perfect the security interest of Landlord in the aforementioned personal
property, and all proceeds thereof, without limiting the generality of the foregoing. Landlord
reserves the right to file a copy of this Agreement in connection with or as an exhibit to any such
financing statement.
12.7 Landlord's Security Interest and Lien on Licenses and Permits. As additional
security for Tenant's performance of its obligations hereunder, Tenant hereby collaterally assigns
to Landlord, to the extent assignable, all of Tenant's right, title and interest on Licenses and
Permits necessary and used to operate the Golf Facility for its Permitted Use. Such collateral
assignment shall become an outright assignment and shall be effective upon the expiration or
earlier termination of this Agreement by Landlord as a result of Tenant's Default without the
need to execute any additional instruments evidencing such assignment. Tenant agrees to
execute and deliver to Landlord, upon the termination of this Agreement by Landlord as a result
of a Tenant's Default, such instruments evidencing the assignment contemplated hereby as may
be required by Landlord in its sole and absolute discretion.
12.8 Landlord Ri)zht of Termination. In addition to Landlord's right to terminate this
Agreement pursuant to Articles 10 and 11, as well as a remedy for Tenant Default under Section
12.3, Landlord shall also have the right to terminate this Agreement at any time by sending a
Notice stating its desire to terminate to Tenant and the payment to Tenant of the Termination
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Amount. After payment of the Termination Amount, Tenant shall cooperate with Landlord in
accordance with Section 5.8 of this Agreement, except that Landlord shall assume any and all
Tenant contractual obligations, employee obligations, Premier Access obligations (if any),
accounts payable obligations, and any other Tenant obligations with respect to the Business
existing on the date of turnover.
ARTICLE 13
HOLDING OVER
If Tenant or any other person or parry shall remain in possession of the Property
following the expiration of the Term or earlier termination of this Agreement without an
agreement in writing between Landlord and Tenant with respect thereto, Tenant, or the other
person or party remaining in possession shall be deemed to be a tenant at sufferance, and during
any such holdover, the Rent payable under this Agreement by such tenant at sufferance shall be
double the rate or rates in effect immediately prior to the expiration of the Term or earlier
termination of this Agreement. Such holding over shall not be deemed or construed to be or
constitute a renewal or extension of this Agreement.
ARTICLE 14
LIABILITY OF LANDLORD; INDEMNIFICATION
14.1 Liability of Landlord. Landlord shall defend, indemnify, save and hold Tenant
harmless from and against, such damage, injury, loss, expense, including reasonable attorneys'
fees and court costs, or such claim, including, but not limited to, claims for the interruption of or
loss to Tenant's business, based solely on, arising solely out of or resulting solely from, the
grossly negligent acts or omissions of Landlord, and its agents or employees within the
boundaries of the Property. In addition to the foregoing, Landlord shall defend, indemnify, save
and hold Tenant harmless from and against, such damage, injury, loss, expense, including
reasonable attorneys' fees and court costs, or such claim, including, but not limited to, claims for
the interruption of or loss to Tenant's business, based solely on, arising solely out of, or resulting
solely from (a) development activities (but only development activities undertaken by Landlord
or its Affiliates) on real property adjoining the Property, that materially disrupts Tenant's
business, including, but not limited to, Landlord's (or its Affiliates') development activities that
cause blockage of access to the Golf Facility across adjacent development streets, interruption of
utility service, loss of lateral support, and interruption with drainage, and (b) any and all liability
resulting from any individual's exercise of the rights granted by Landlord under Section 3.5,
unless such individual is an officer, director, shareholder partner, member, manager, employee,
agent, contractor, subcontractors customer, license, guest or invitee of Tenant. Notwithstanding
the generality of the foregoing provisions of this Section 3.5, Landlord shall not be liable for
indirect, consequential or punitive damages.
14.2 Indemnification of Landlord. Tenant shall defend, indemnify, pay, save and hold
Landlord harmless from and against any and all liabilities, obligations, losses, damages,
injunctions, suits, actions, fines, penalties, claims, demands, costs and expenses of every kind or
nature, including reasonable attorneys' fees and court costs, incurred by Landlord, arising
directly or indirectly from or out of the acts or omissions of Tenant, its Affiliates, and their
agents, employees, contractors and subcontractors, licensees, invitees, guests and customers,
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except for any liabilities, obligations, losses, damages, injunctions, suits, actions, fines, penalties,
claims, demands, costs and expenses for which Landlord is liable under Section 14.1.
14.3 Notice of Claim or Suit. Each party shall promptly notify the other of any claim,
action, proceeding or suit instituted or threatened against such party of which such party receives
notice or acquires knowledge. In the event a party is made a party to any action for damages or
other relief against which such party is indemnified by the other party, such party shall at its own
expense using counsel reasonably approved by the other party, diligently defend the action and
pay all costs in such action or, at the other parties' option and expense, engage its own counsel in
connection with its own defense or settlement of said action. In such event each party shall
cooperate with the other and make available to the other all information and data which such
party deems necessary or desirable for such defense.
ARTICLE 15
SUBLETTING AND ASSIGNMENT
15.1 Transfers Prohibited Without Consent. Tenant shall not, without the prior written
consent of Landlord which may be withheld in Landlord's sole unfettered discretion, sell, assign
or otherwise transfer or sublet all or any portion of this Agreement, or Tenant's interest in the
Golf Facility, or any rights or interest which Tenant may have under this Agreement, or sublet
any part of the Golf Facility. Notwithstanding the foregoing, in the event that Tenant elects to
sell, assign or otherwise transfer this Agreement, or Tenant's interest in the Golf Facility to an
Affiliate, then Landlord shall not unreasonably withhold its consent to such sale, assignment or
transfer provided (a) Tenant gives Landlord prior Notice of such sale or assignment, (b) Tenant
remains obligated for the performance of all obligations under this Agreement, and (c) such
assignee or purchaser shall continue to operate the Golf Facility in accordance with this
Agreement. Any sale, assignment, sublet or transfer of this Agreement, or any interest thereon,
without the prior written consent of Landlord shall be voidable at Landlord's option.
15.2 Adequate Assurances. Without limiting any of the foregoing provision of this
Article, if, pursuant to the U.S. Bankruptcy Code Tenant is permitted to assign or otherwise
transfer its rights and obligations under this Agreement in disregard of the restrictions contained
in this Article, the assignee shall be deemed to agree to provide adequate assurance to Landlord
(a) that any Percentage Rent shall not decline substantially after the date of such assignment,
(b) of the continued use of the Golf Facility solely in accordance with the Permitted Use thereof,
and (c) of the continuous operation of the Business on the Golf Facility in strict accordance with
the requirements of Article 5 hereof. Without limiting the foregoing, adequate assurance shall
include the requirement that any such assignee shall continue the Security Deposit. Such
assignee shall expressly assume this Agreement by an agreement in recordable form, an original
counterpart of which shall be delivered to Landlord prior to an assignment of this Agreement.
ARTICLE 16
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS
16.1 Estoppel Certificates. Tenant shall from time to time, within fifteen (15) days
after request by Landlord and without charge, give a Tenant Estoppel Certificate in the form
reasonably requested by Landlord to any person, firm or corporation specified by Landlord.
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16.2 Financial Statements. Tenant shall deliver to Landlord within thirty (30) days
after the end of each Fiscal Quarter, a profit and loss statement certified by an officer of Tenant
showing results from the operation of the Golf Facility during such Fiscal Quarter, including
without limitation, an accounting of the calculation of EBITDA, Percentage Rent and amounts
paid into and out of the Reserve. Tenant shall deliver to Landlord within seventy-five (75) days
after the end of each Fiscal Year, a profit and loss statement, balance sheet and statement of cash
flow certified by an officer of Tenant showing results from the operation of the Golf Facility
during such Fiscal Year, including without limitation, a reconciliation of the Fiscal Year
Percentage Rent and Reserve payments.
16.3 Records. Tenant shall keep and maintain at all times in accordance with GAAP
complete and accurate up to date books and records adequate to reflect clearly and correctly the
results of operations of the Golf Facility including but not limited to, each calculation of
Percentage Rent. Such books and records shall be kept and maintained at the Tenant's offices in
Littleton, Colorado. Within three (3) days after Tenant's receipt of Landlord's written request
(or such shorter period of time as may be required in order to comply with the provisions of
Section 4.04 of the City Lease) Tenant shall deliver to the Golf Facility such books and records
as reasonably requested by Landlord. Landlord or its representatives shall have, at all reasonable
times during normal business hours, reasonable access, on reasonable advance notice, to examine
and copy the books and records pertaining to the Golf Facility. Such books and records shall be
available for at least four (4) years after the applicable quarterly calculation of Percentage Rent.
ARTICLE 17
LANDLORD'S RIGHT TO INSPECT
Landlord, Mortgagee, the City and the Corps and their agents shall have the right to enter
upon the Golf Facility or any portion thereof during normal business hours and after providing
Tenant with reasonable prior notice to inspect the same, including but not limited to, the
operation, sanitation, safety, maintenance and use of the same, or any portions of the same and to
assure itself that Tenant is in full compliance with its obligations under this Agreement. In
making any such inspections, neither Landlord nor Mortgagee shall unduly interrupt or interfere
with the conduct of Tenant's Business.
ARTICLE 18
FACILITY MORTGAGES
18.1 Subordination. This Agreement and Tenant's interest hereunder are junior,
inferior, subordinate and subject in right, title, interest, lien, encumbrance, priority and all other
respects to any mortgage or mortgages and security interests (and to all modifications,
extensions, renewals and replacements thereof) now or hereafter in force and effect upon or
encumbering Landlord's or any of its Affiliates' interest in the Golf Facility and the Property, or
any portion thereof, and to all collateral assignments by Landlord to any third party or parties of
any of Landlord's rights under this Agreement or Landlord's Rents, issues and profits thereof or
there from as security for any liability or indebtedness, direct, indirect or contingent. Upon
recording of any such mortgage, mortgages or assignments (or any modification, extension,
renewal or replacement), the same shall be deemed to be prior in dignity, lien and encumbrance
to this Agreement, and Tenant's interest hereunder irrespective of the dates of execution,
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delivery or recordation of any such mortgage, mortgages or assignments (such mortgages,
mortgages, security interests, assignments, modifications, extensions, renewals, amendments,
supplements and replacement being a "Facility Mortgage"). The subordination of this
Agreement shall be upon the express condition that the validity of this Agreement shall be
recognized by the Mortgagee, and that, notwithstanding any default by the mortgagor, with
respect to such mortgage, Tenant's possession and right of use under this Agreement in and to
the Golf Facility (including rights to have insurance and condemnation proceeds made available
for proper reconstruction of the Golf Facility) shall not be disturbed by such Mortgagee unless
and until Tenant is in Default and this Agreement or Tenant's right to possession hereunder shall
have been terminated or shall be terminable in accordance with the provisions of this Agreement.
The foregoing subordination and non disturbance provisions of this Section shall be automatic
and self operative without the necessity of the execution of any further instrument or agreement
of subordination on the part of Tenant. Tenant acknowledges and agrees that notwithstanding
the foregoing automatic subordination, if Landlord or Mortgagee shall request that Tenant
execute and deliver any further instrument or agreement of subordination of this Agreement or
Tenant's interest hereunder or Tenant's interest in the Golf Facility to any such Facility
Mortgage, in confirmation or furtherance of or in addition to the foregoing subordination
provisions of this Section, Tenant shall promptly execute and deliver the same to the requesting
party (provided that such instrument or agreement also reflects the non disturbance provisions set
forth above). Further, Tenant agrees that it will, from time to time, execute such documentation
as may be requested by Landlord and any Mortgagee to facilitate or allow Landlord to encumber
the Golf Facility or any portion thereof as herein contemplated, provided said documentation
shall confirm Tenant's rights, including the non-disturbance provisions upon the occurrence of a
default under any Facility Mortgage.
18.2 Attornment. Tenant shall attorn to, and be bound under, all of the terms,
provisions, covenants and conditions of this Agreement, to any successor of the interest of
Landlord under this Agreement for the balance of the Term. In particular, in the event that any
proceedings are brought for the foreclosure of any Facility Mortgage, Tenant shall attorn to the
purchaser at any such foreclosure sale and recognize such purchaser as Landlord under this
Agreement.
18.3 Rights of Mortgagees and Assignees. Provided Landlord has given Tenant notice
thereof, any Mortgagee shall have the right to unilateral enjoyment, exercise or control over the
rights, remedies, powers and interests of Landlord hereunder, or otherwise arising under Legal
Requirements, as assigned or granted to such Mortgagee by Landlord or as provided in any
Facility Mortgage. At the time of giving any notice of default to Landlord, Tenant shall mail or
deliver to any Mortgagee, a copy of any such notice so long as Landlord has provided Tenant
Notice of the names and addresses of such Mortgagee(s). No notice of default or termination of
this Agreement by Tenant shall be effective until each Mortgagee shall have been furnished a
copy of such notice by Tenant. In the event Landlord fails to cure any default by it under this
Agreement, the Mortgagee shall have, at its option, a period of thirty (30) days after expiration of
any cure period of Landlord within which to remedy such default of Landlord or to cause such
default to be remedied. In the event that the Mortgagee elects to cure any such default by
Landlord, then Tenant shall accept such performance on the part of such Mortgagee as though
the same had been performed by Landlord, and for such purpose Tenant hereby authorizes any
Mortgagee to enter upon the Golf Facility to the extent necessary to exercise any of Landlord's
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rights, powers and duties under this Agreement. If, in the event of any default by Landlord
which is reasonably capable of being cured by a Mortgagee, the Mortgagee promptly commences
and diligently pursues to cure the default, then Tenant will not terminate this Agreement or cease
to perform any of its obligations under this Agreement so long as the Mortgagee is, with due
diligence, engaged in the curing of such default.
ARTICLE 19
LANDLORD'S COVENANTS AND REPRESENTATIONS
19.1 Landlord's Covenants and Representations. Landlord hereby covenants,
represents, and warrants to Tenant the following as of the Effective Date:
19. 1.1 No Default. To the best knowledge of Landlord, there exists no condition
of default, nor with the passage of time would a condition of default arise, with respect to any
Landlord debt secured by the Property or with respect to the City Sublease. To the best
knowledge of Landlord, Landlord has provided the annual certifications, obtained the approvals
and otherwise met each and every requirement and condition under the City Sublease and the
Corps Lease.
19.1.2 Re ulatory Compliance. To the best knowledge of Landlord, there are no
existing conditions in or about the Property which violate any Applicable Laws. To the best
knowledge of Landlord, all the improvements were constructed and installed in a good and
workmanlike manner and in compliance with all (i) Applicable Laws, (ii) restrictions of any kind
or nature affecting the Property, and (iii) any occupancy classification applicable to the Golf
Facility's operation. To the best knowledge of Landlord, Landlord has not received any notice,
written or otherwise, from any Government Agency requiring the correction of any condition
with respect to the Golf Facility, and Landlord has received no notice and has no knowledge of
any pending investigations, claims, proceedings, audits, enforcements, revocations or special
assessments by any Government Agency.
19.1.3 Condition of Personal Propert y. To the best knowledge of Landlord, all
Tangible Personal Property, Intangible Personal Property, Inventory and Equipment required for
furnishing and equipping the Golf Facility is in good working order, is in a state of good repair
and complies with all Applicable Laws.
19.1.4 Water. The Property has rights to water non-potable in an amount and of
a quality to irrigate and maintain the Golf Course. To the best knowledge of Landlord, Landlord
has assigned to Tenant (or will assign on written request of Tenant) all required permits or
licenses for irrigation and such permits, licenses or entitlements are current, valid and
enforceable.
19.1.5 Contracts. Landlord will provide Tenant with copies of all warranties,
guarantees, and maintenance contracts on the Tangible Personal Property, Intangible Personal
Property, Inventory and Equipment required for furnishing and equipping the Golf Facility and
will, if requested in writing, assist Tenant in making claims for reimbursement. To the best
knowledge of Landlord, Landlord has the right to the name and logos which Tenant and
Landlord use in connection with the operation of the Golf Facility and, to the best knowledge of
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Landlord, the use of such name and logos in the operation of the Golf Facility by Tenant do not
violate or infringe the rights of any other person or entity.
ARTICLE 20
RIGHT OF FIRST OFFER
20.1 Grant of Right. Landlord hereby grants to Tenant a right of first offer to purchase
Landlord's interest in the Golf Facility on the terms and subject to the conditions set forth below:
20.1.1 Exercise of Offer. If Landlord desires to sell Landlord's interest in the
Golf Facility then Landlord shall, before consummating such sale or making such transfer,
provide to Tenant Notice of such desire. In the event that Tenant elects to exercise its right of
first offer to purchase Landlord's interest in the Golf Facility, then Tenant shall have the right,
for a period of twenty (20) Business Days from its receipt of such Notice, to deliver to Landlord,
a written offer to purchase Landlord's interest in the Golf Facility acknowledging Landlord's
notice and specifying the purchase price offered by Tenant. Failure of Tenant to deliver to
Landlord an offer to purchase within such time period shall be deemed to constitute a waiver of
Tenant's right of first offer under this Agreement and Landlord shall be entitled to proceed to sell
Landlords interest in the Golf Facility, subject to the provisions of Section 20.1.3 below. If
Tenant delivers an offer to purchase meeting the requirements of this Article 20, then Landlord
shall have ten (10) Business Days from receipt of Tenant's written offer to deliver to Tenant
Notice of Landlord's acceptance or rejection of Tenant's offer. Failure of Landlord to deliver
such Notice of acceptance or rejection within said time period shall be deemed to constitute a
rejection of Tenant's offer by Landlord. If Landlord rejects Tenant's offer then Landlord shall
be entitled to proceed to sell Landlord's interest in the Golf Facility at a purchase price greater
than the purchase price offered by Tenant, subject to the provisions of Section 20.1.3 below,
without further offering the Golf Facility to Tenant; provided, however, that Landlord shall not
be entitled to sell Landlord's interest in the Golf Facility at a purchase price which is not higher
than ninety percent (90%) of the purchase price offered by Tenant unless Landlord shall first re-
offer Landlord's interest in the Golf Facility to Tenant (exercisable if at all within ten (10)
Business Days from notice thereof) for the same price. Notwithstanding the foregoing,
reductions of the purchase price, in an amount less than four percent (4%) of the purchase price,
to cure property-related defects discovered during any inspection by a prospective purchaser
shall not be considered a deduction from the purchase price for the purpose of this section and
Landlord shall not have to re-offer Landlord's interest in the Golf Facility to the Tenant if such
deductions result in a final purchase price being less than that in Tenant's offer.
20.1.2 Acceptance of Offer. Closing. If Landlord accepts Tenant's offer to
purchase Landlord's interest in the Golf Facility, then the assignment of Landlord's interest in
the Golf Facility shall be consummated upon the following terms and conditions:
(a) Earnest Money Deposit. Within five (5) Business Days of Landlord's
acceptance of Tenant's offer to purchase Landlord's interest in the Golf Facility, Tenant
shall deliver to Landlord in readily available funds an earnest money deposit equal to One
Hundred Thousand Dollars ($100,000.00), which earnest money deposit shall be
nonrefundable to Tenant except in the event of a default by Landlord in the performance
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of its obligations under this Article 20. Such earnest money deposit shall be applicable to
the purchase price at Closing.
(b) Purchase Price. The purchase price for Landlord's interest in the Golf
Facility shall be equal to the purchase price offered by Tenant and accepted by Landlord
in accordance with the terms of this Agreement.
(c) Assi ng ment. The assignment and other conveyance of the Property shall
be by Assignment of Landlord's interest in the City Sublease and by conveyance by
Special Warranty Deed of Landlord's ownership of the Owned Land free and clear of all
Liens and encumbrances, except liens, encumbrances and other matters affecting title to
the Property in existence on the Effective Date or which are permitted per the terms of
this Agreement or to which Tenant has consented.
(d) Closing. Closing shall occur not more than ninety (90) days following
Landlord's delivery to Tenant of notice of Landlord's acceptance of Tenant's offer.
(e) Closing Costs. All closing costs incurred in connection with the closing
shall be paid by Tenant, except for (i) Landlord's attorney fees and the costs of the title
policy (not including endorsements), which shall be paid by Landlord, and
(ii) documentary transfer taxes, deed stamps, recording fees and other costs associated
with the sale of the Owned Land and the recording of the Special Warranty Deed and the
title agent's escrow fee, which shall be paid one-half by Tenant and one-half by
Landlord.
(f) Prorations. There shall be no proration of revenue and expenses at
Closing. To the extent Landlord has received advance payment of Rent, or has advanced
sums on behalf of Tenant for pro-ratable or reimbursable expenses under this Agreement
for which Landlord has not been reimbursed (other than pursuant to Section 4.6) through
or as of the date of any Closing hereunder, the same shall be prorated. Any offer by
Tenant hereunder shall expressly state whether or not the purchase price there under is to
be paid net of or before consideration of the amount of any security or other deposits held
by Landlord hereunder, and the same shall be treated accordingly at Closing.
20.1.3 Waiver or Rejection of Offer. In the event that Tenant's right of first offer
is either waived or rejected, as applicable, pursuant to the provisions of Section 20. 1.1 hereof,
Landlord may proceed to sell Landlord's interest in the Golf Facility in accordance with the
provisions hereof subject to this Agreement continuing in full force and effect, in accordance
with the provisions hereof; provided, however, that if Landlord fails to enter into a valid contract
for the purchase and sale of the Golf Facility within two hundred seventy (270) days of the date
on which Tenant's right of first offer is either waived or rejected, as applicable, or if Landlord
enters into such a contract but the transaction contemplated thereby does not close and the
contract expires or is terminated without extension, then Tenant's right of first offer shall return
to full force and effect and shall be exercisable thereafter in accordance with the terms of this
Article 20. In the event that Landlord sells Landlord's interest in the Golf Facility in accordance
with the provisions of this Article 20, then Tenant's right of first offer granted herein shall be
void and of no further force and effect.
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20.1.4 Subordination of Right of First Offer. Tenant's right of first offer shall be
subject to any Facility Mortgage, or collateral assignments by Landlord of any of its rights under
this Agreement or the rents, issues and profits there from.
20.1.5 Applicability. Notwithstanding anything contained herein to the contrary,
Tenant's right of first offer shall not apply with respect to (i) the direct or indirect transfer of any
ownership interests in Landlord, or (ii) any transaction involving multiple properties including
the Golf Facility and one or more other properties of Landlord or any Affiliate of Landlord and
involving a single purchaser or affiliated purchasers, (iii) the transfer of Landlord's interest in the
Golf Facility (or any portion thereof) to an Affiliate of Landlord or (iv) any transfer in
connection with a foreclosure or deed-in-lieu of foreclosure with respect to a Facility Mortgage;
provided, however, that following any such transfer, Tenant's right of first offer hereunder shall
continue to remain in effect with respect to any subsequent transfer by any such person or
entities.
ARTICLE 21
MISCELLANEOUS
21.1 No Waiver. No release, discharge or waiver of any provision hereof shall be
enforceable against or binding upon Landlord or Tenant unless in writing and executed by
Landlord or Tenant. The failure of Landlord or Tenant to insist upon a strict performance of any
of the terms, provisions, covenants, agreements and conditions hereof and the acceptance of any
Rent by Landlord with knowledge of a breach of this Agreement by Tenant shall not be deemed
to constitute a waiver of any such rights or remedies, a waiver of any subsequent breach or
default or the waiver of the right to demand exact compliance with the terms hereof.
21.2 Remedies. Except as may be stated to the contrary in Section 12.3.1, to the
maximum extent permitted by law, each legal, equitable or contractual right, power and remedy
of a party, now or hereafter provided either in this Agreement or by statute or otherwise, shall be
cumulative and concurrent and shall be in addition to every other right, power and remedy.
21.3 Severability. Any clause, sentence, paragraph, section or provision of this
Agreement held to be invalid, illegal or ineffective shall not impair, invalidate or nullify the
remainder of this Agreement. This Agreement shall be construed as if such invalid, illegal or
ineffective provisions had never been contained therein.
21.4 Acceptance of Surrender. No surrender to Landlord of the Golf Facility or any
part thereof, or of any interest therein, shall be valid or effective unless agreed to and accepted in
writing by Landlord. No act by Landlord or any representative or agent of Landlord, other than
such a written acceptance by Landlord, shall constitute an acceptance of any such surrender.
21.5 No Merger of Title. It is the intent of the parties that there shall be no merger of
this lease or of the leasehold estate created hereby with the fee simple estate by reason of the fact
that the same person may acquire, own or hold, directly or indirectly.
21.6 Tenant's Representations. In addition to any other representation or warranty set
forth herein and as an inducement to Landlord to enter into this Agreement, Tenant hereby
represents and warrants to Landlord as follows:
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(a) Tenant is a limited partnership duly organized and validly existing and in
good standing under the laws of the State of Texas. Tenant has all requisite power and
authority under the laws of Texas and its limited partnership agreement to enter into and
perform its obligations under this Agreement.
(b) Tenant has taken all necessary action to authorize the execution, delivery
and performance of this Agreement and this Agreement shall constitute the valid and
binding obligation and agreement of Tenant, enforceable against Tenant in accordance
with its terms.
(c) There are no judgments presently outstanding and unsatisfied against
Tenant and Tenant is not involved in any material litigation at law or in equity or any
proceeding before any court, or by or before any governmental or administrative agency,
which litigation or proceeding could materially adversely affect Tenant.
21.7 Landlord's Representations. Landlord hereby represents and warrants to Tenant
as follows:
(a) Landlord is a Texas limited liability company which is duly organized and
validly existing and in good standing under the laws of Texas. Landlord has all requisite
power and authority under the laws of the State of Texas or other charter documents to
enter into and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. Landlord is duly authorized to transact business in any
jurisdiction in which the nature of the business conducted by it requires such
qualification.
(b) Landlord has taken all necessary action to authorize the execution,
delivery and performance of this Agreement, and upon the execution and delivery of any
document to be delivered by Landlord, prior to the date hereof, such document shall
constitute the valid and binding obligation and agreement of Landlord, enforceable
against Landlord in accordance with its terms.
(c) There are no judgments presently outstanding and unsatisfied against
Landlord and Landlord is not involved in any material litigation at law or in equity or any
proceeding before any court, or by or before any governmental or administrative agency,
which litigation or proceeding could materially adversely affect Landlord.
21.8 Quiet Enjoyment. Landlord covenants and agrees that so long as Tenant shall
timely pay all Rent and keep, observe and perform all covenants, promises and agreements,
including its obligations under this Agreement, Tenant shall and may peacefully and quietly
have, hold and occupy the Golf Facility free of any interference from Landlord or any person
claiming by, through or under Landlord, subject to matters affecting title to the Property on the
Effective Date and subject also to other matters affecting title to which Tenant has consented or
which do not materially adversely affect Tenant or Tenant's use and enjoyment of the Golf
Facility and otherwise subject to the terms, provisions and conditions of this Agreement.
Landlord shall not, without the prior written approval of Tenant, enter into or record any
document, other than a Facility Mortgage, which purports to or which by its terms will materially
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and adversely affect the Tenant, Tenant's use and enjoyment of the Golf Facility or Tenant's
rights under this Agreement.
21.9 Recordation of Memorandum of Agreement. At either party's option, a short
form memorandum of this Agreement, in substantially the same form and content as the form
attached hereto as Exhibit "G" , together with such changes to such form as Landlord and/or
Tenant may require may be recorded or filed among the appropriate land records of Denton
County, Texas and Tenant shall pay the transfer and all recording costs associated therewith. In
the event of a discrepancy between the provisions of this Agreement and such short form
memorandum thereof, the provisions of this Agreement shall prevail.
21.10 Notices. Any and all notices, demands, consents, approvals, offers, elections and
other communications required or permitted under this Agreement shall be deemed adequately
given if in writing delivered either in hand, by telecopier with written acknowledgment of
receipt, by mail or nationally-recognized overnight carrier, addressed to the recipient of the
notice, with all freight charges prepaid. Any notice, demand or request shall be deemed served
(i) upon being hand delivered in person, (ii) transmitted by facsimile transmission or deposited
with a nationally-recognized overnight carrier. Rejection or other refusal to accept or the
inability to deliver shall be deemed delivery. The addresses given above may be changed by any
parry by ten (10) days' prior notice to all other parties given in the manner provided herein. All
such notices shall be addressed,
if to Landlord to:
Old American Golf, L.P.
1660 S. Stemmons Fwy., Suite 100
Lewisville, Texas 75067
Attention: Mr. Kristian Teleki
Fax: 972-221-1217
and:
Hunton & Williams LLP
1445 Ross Avenue, Suite 3700
Dallas, Texas 75202
Attention: Mr. John Stenger
Fax: 214-740-7172
if to Tenant to:
Escalante - Tribute, LP
9850 Divot Trail
Colorado Springs, Colorado 80920
Attention: Mr. Elcio Silva
Fax:
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with copies to:
Taylor Advisors PC
4812 Cranbrook Drive West
Colleyville, Texas 76034
Attention: Terry Taylor, Esq.
Fax: (817) 835-0345
21.11 Construction; Nonrecourse. Anything contained in this Agreement to the contrary
notwithstanding, all claims against, and liabilities of, Tenant or Landlord arising prior to any date
of termination or expiration of this Agreement with respect to the Golf Facility shall survive such
termination or expiration. Each term or provision of this Agreement to be performed by Tenant
shall be construed as an independent covenant and condition. Time is of the essence with respect
to the performance by Tenant of its obligations under this Agreement, including, without
limitation, obligations for the payment of money. Nothing contained in this Agreement shall be
construed to create or impose any liabilities or obligations and no such liabilities or obligations
shall be imposed on any of the partners, members, shareholders, beneficial owners, direct or
indirect, officers, directors, trustees, employees or agents of Landlord or Tenant for the payment
or performance of the obligations or liabilities of Landlord or Tenant hereunder. The parties
have participated jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.
21.12 Counterparts; Headings. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but which, when taken together, shall
constitute but one instrument. Captions and headings in this Agreement are for purposes of
reference only and shall in no way define, limit or describe the scope or intent of, or otherwise
affect, the provisions of this Agreement.
21.13 Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas.
21.14 Brokerage. Landlord and Tenant hereby represent and warrant to each other that
they have not engaged, employed or utilized the services of any business or real estate brokers,
salesmen, agents or finders in the initiation, negotiation or consummation of the business and
real estate transaction reflected in this Agreement. On the basis of such representation and
warranty, each party shall and hereby agrees to indemnify, pay and save and hold the other party
harmless from and against the payment of any commissions or fees to or claims for commissions
or fees by any real estate or business broker, salesman, agent or finder resulting from or arising
out of any actions taken or agreements made by them with respect to the business and real estate
transaction reflected in this Agreement.
21.15 No Partnership or Joint Venture. Landlord shall not, by virtue of this Agreement,
in any way or for any purpose, be deemed to be a partner of Tenant in the conduct of Tenant's
business upon, within or from the Golf Facility or otherwise, or a joint venturer or a member of a
joint enterprise with Tenant.
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21.16 Entire Agreement. This Agreement contains the entire agreement between the
parties and, except as otherwise provided herein, can only be changed, modified, amended or
terminated by an instrument in writing executed by the parties. It is mutually acknowledged and
agreed by Landlord and Tenant that there are no oral agreements, representations, warranties or
other understandings affecting the same; and that Tenant hereby waives, as a material part of the
consideration hereof, all claims against Landlord for rescission, damages or any other form of
relief by reason of any alleged covenant, warranty, representation, agreement or understanding
not contained in this Agreement.
21.17 Costs and Attorneys' Fees. If either party shall bring an action to recover any
sum due hereunder, or. for any breach hereunder, and shall obtain a judgment or decree in its
favor, the court may award to such prevailing party its reasonable costs and reasonable attorney's
fees. Landlord shall also be entitled to recover its reasonable attorney's fees based upon service
rendered at hourly rates and costs incurred in any bankruptcy action filed by or against Tenant,
including, without limitation, those incurred in seeking relief from the automatic stay, in dealing
with the assumption or rejection of this Agreement, in any adversary proceeding, and in the
preparation and filing of any proof of claim.
21.18 Successors and Assigns. The agreements, terms, provisions, covenants and
conditions contained in this Agreement shall be binding upon and inure to the benefit of
Landlord and Tenant and, to the extent permitted herein, their respective successors and assigns.
21.19 Survival Upon Termination. Upon the expiration or any early termination of this
Agreement, obligations which, by their express terms, survive expiration or early termination
shall so survive.
21.20 Landlord's Knowledge Standard. Whenever in this Agreement reference is made
to the "knowledge" or "best knowledge" or "actual knowledge" or other similar knowledge-
related terms or expressions, all such references shall mean and refer to the current actual
knowledge of Kristian T. Teleki.
21.21 Subject to Mortgagee, City and Corps Approval. Landlord and Tenant
acknowledge and agree that this Agreement and the terms and conditions set forth herein are
subject to the review and approval of the Mortgagee, the Corps and the City. Landlord and
Tenant agree that if the Mortgagee, the City and the Corps have each failed to give their
respective approvals of this Agreement within thirty (30) days after the Effective Date, or if
either the Mortgagee, the City or the Corps shall disapprove this Agreement, then either
Landlord or Tenant may elect to terminate this Agreement by giving to the other written notice
of such termination; and the termination of this Agreement shall be effective on the tenth (10th)
day after the date of receipt of the termination notice by the addressee thereof.
[SIGNATURES ON FOLLOWING PAGE]
Old American Sublease Agreement Page 39
70526.000108 EMF US 2786612012
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date above
first written.
LANDLORD:
OLD AMERICAN GOLF, LLC,
a Texas limited liability company
By:
By:
Name:
Title:
TENANT:
ESCALANTE - TRIBUTE, L.P.,
a Texas limited partnership
By: Escalante - Tribute, LLC,
a Texas limited liability company
By: Escalante Golf, Inc.,
a Colorado corporation
By:
Name:
Title:
i
Old American Sublease Agreement Page 40
70526.000108 EMF US 27866124x12
EXHIBITS TO
SUBLEASE AGREEMENT
BY AND BETWEEN
OLD AMERICAN GOLF, LLC
AND
ESCALANTE - TRIBUTE, L.P.
Exhibits:
DEFINITIONS A
LEASED LAND B
OWNED LAND C
BILL OF SALE ...............................................................................................................................D
ASSIGNMENT AND ASSUMPTION OF LEASES E
ASSIGNMENT AND ASSUMPTION OF INTANGIBLE PERSONAL PROPERTY F
MEMORANDUM OF SUBLEASE AGREEMENT G
Schedules:
Old American Sublease Agreement
70526.000108 EMF_US 27866124v12
EXHIBIT A
DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly provided or unless the
context otherwise requires, (i) the terms defined in this Agreement shall have the meanings
assigned to them in this Exhibit A and include the plural as well as the singular, (ii) all
accounting terms not otherwise defined herein shall have the meanings assigned to them in
accordance with GAAP, (iii) all references in this Agreement to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions
of this Agreement, and (iv) the words "herein," "hereof," "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article, Section or other
subdivision.
"Accessibility Laws" shall mean all applicable laws, statutes, regulations, rules,
ordinances, codes and all applicable judicial and administrative and regulatory decrees,
judgments and orders, relating to accessibility for the disabled or handicapped, as the same may
be amended from time to time.
"Additional Charges" shall have the meaning given such term in Section 4.5.
"Additional Rent" shall have the meaning given such term in Section 4.7.
"Affiliate" shall mean a person that directly or indirectly controls, is controlled by, or is
under common control with the person in question, and any other party who owns ten percent
(10%) or more of such person. For purposes of this definition, the term "control" means the
ownership of ten percent (10%) or more of the beneficial interest of the voting power of the
appropriate entity.
"Agreement" shall mean this Lease and Sublease Agreement.
"Applicable Laws" shall mean all applicable laws, statutes, regulations, rules, ordinances
and codes, and all applicable judicial and administrative and regulatory decrees, judgments and
orders (including common law rulings and determinations of any kind) relating to (i) damage to,
or the protection of real or personal property, (ii) human health and safety (except those
requirements which, by definition, are solely the responsibility of employers), including
Accessibility Laws, and (iii) the Environment.
"Available Cash Flow" shall mean for any relevant period the Total Facility Revenue
actually received during that period by Tenant less the Operating Expenses for that period less
the Rent paid during that period less the Reserve for that period.
"Business" means the operation and conduct on the Property of the Golf Facilities and
hospitality services, including club and recreational sports related services, and all activities
related thereto in a manner comparable to and consistent with other semi-private, high-end golf
and hospitality facilities in the Dallas-Forth Worth Metroplex.
Exhibits to Old American Sublease Agreement Page A-1
70526.000108 EMF_US 27866124v12
"Business Day" shall mean any day other than Saturday, Sunday, or any other day on
which banking institutions in the State of Texas are authorized by law or executive action to
close.
"City" shall have the meaning given to it in the Recitals to this Agreement.
"City Rent" shall have the meaning given such term in Section 4.5.6.
"City Sublease" shall have the meaning given to it in the Recitals to this Agreement.
"Clubhouse" shall mean a fully functional golf clubhouse for which the City has issued a
certificate of occupancy or, if equivalent, a final green tag, and that (a) is painted and trimmed,
(b) has working utilities, surrounding irrigated landscaping, a paved and lighted parking lot
containing the number of parking spaces as required by the City and all exterior lighting, (c) is
furnished by Landlord with the applicable Tangible Personal Property required to be provided by
Landlord pursuant hereto, and (d) is ready on the Effective Date to serve members, subject only
to (i) Tenant's receipt of a liquor license, and (ii) Tenant's receipt of a mercantile business
license.
"Condemnation" shall mean (a) the exercise of any governmental power with respect to
the Golf Facility or any interest therein, whether by legal proceedings or otherwise, by a
Condemnor of its power of condemnation, (b) a voluntary sale or transfer of the Golf Facility or
any portion thereof by Landlord to any Condemnor, either under threat of condemnation or while
legal proceedings for condemnation are pending, or (c) a taking or voluntary conveyance of all or
part of the Golf Facility, or any interest therein, or right accruing thereto or use thereof, as the
result or in settlement of any Condemnation or other eminent domain proceeding affecting the
Golf Facility, whether or not the same shall have actually been commenced.
"Condemnor" shall mean any public or quasi public authority, or person having the
power of Condemnation.
"Corps" shall have the meaning given to it in the Recitals to this Agreement.
"Corps Lease" shall have the meaning given to it in the Recitals to this Agreement.
"Default" shall mean failure to cure an Event of Default within the applicable Notice and
cure period.
"Disbursement Rate" shall mean an annual rate of interest equal to the greater of, as of
the date of determination, (i) ten percent (10%) and (ii) the per annum rate for ten (10) year U. S.
Treasury Obligations as published in The Wall Street Journal plus three hundred fifty (350) basis
points.
"BBITDA" means, for any Fiscal Year during the term of this Agreement, the amount by
which Total Facilities Revenue exceeds Operating Expenses.
Exhibits to Old American Sublease Agreement Page A-2
70526.000108 EMF_US 27866124v12
parties. "Effective Date" shall mean January 1, 2010 or such later date agreed upon by the
"Environment" shall mean soil, surface waters, ground waters, land, streams, sediments,
surface or subsurface strata and ambient air.
"Equipment" shall mean all of the grounds keeping, landscaping, mowing, transporting,
hauling, lifting, digging, raking, or transporting equipment, machinery or implements used on or
about the Golf Facility as a part of or in connection with the Golf Facility operation, including,
but not limited to, golf carts, four wheel drive vehicles and pick-up trucks, as well as all
replacements of any thereof.
"Equipment Leases" shall mean the leases, if any, for the Equipment.
"Event of Default" shall mean the occurrence of any of the circumstances or conditions
stated in Section 12.1.
"Extended Term" shall have the meaning given such term in Section 5.6.
"Facility Mortgage" shall have the meaning given such term in Section 18.1.
"Fiscal Month" shall mean one complete calendar month with the first such Fiscal Month
commencing on the Effective Date.
"Fiscal Quarter" shall mean four periods each comprised of three Fiscal Months that
together comprise a Fiscal Year.
"Fiscal Year" shall mean a 12-month period comprised of four (4) Fiscal Quarters and
twelve (12) Fiscal Months.
"Force Majeure Event" means any circumstance which is not in the reasonable control of
either party hereto, and with respect to Tenant, any circumstance not under the control of Tenant
that interrupts in any way Tenant's conduct of the Business on the Property, including, but not
limited to, any strikes or labor unrest (except strikes or labor unrest resulting from Tenant's acts
or omissions), lockouts, acts of God, civil commotion, fire or any other casualty, governmental
action, local law enforcement action (except as to such action resulting from Tenant's acts or
omissions), civil defense, injunction issued by a court with jurisdiction over the Property, closure
of the sole access to the Property, interruption with public utility or other public services for any
reason other than failure of Tenant to pay the Additional Charges (as that term is hereafter
defined), or other similar cause or circumstance which is not in the control of the party from
whom performance is required hereunder. Notwithstanding the generality of the foregoing,
Tenant acknowledges that a portion of the Golf Facility lies in a flood prone area; accordingly,
flooding (or the results thereof) of all or any portion of the Golf Facility (or access thereto) that
persists for forty-five (45) or fewer continuous days shall not be deemed a Force Majeure Event.
"GAAP" shall mean generally accepted accounting principles consistently applied.
Exhibits to Old American Sublease Agreement Page A-3
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"Golf Course" shall mean a golf course of eighteen sequential, consecutive holes located
on the Leased Land and the Owned Land, certified as ready for play as provided herein,
undeveloped "rough", tees, continuous concrete cart paths, a driving range and golf practice area,
on-course restroom facilities, holding ponds, irrigation lines, drainage facilities, pump stations
(with any required utilities), an operating irrigation control computer (with assignable software
license), and any facilities reasonably necessary for operation of irrigation system.
"Golf Facility" shall mean the Golf Course, Clubhouse, Maintenance and Cart Barn
located on the Leased Land and the Owned Land.
"Government Agencies" shall mean any legislative body, court, agency, authority, board
(including, without limitation, health and long term care, environmental protection, planning and
zoning), bureau, commission, department, office or instrumentality of any nature whatsoever of
any governmental or quasi governmental unit of the United States, the State of Texas or any
county or any political subdivision of any of the foregoing, whether now or hereafter in
existence, having jurisdiction over Tenant, the Property or the Golf Facility.
"Hazardous Substances" shall mean any substance (i) the presence of which requires or
may hereafter require notification, investigation or remediation under any federal, state or local
statute, regulation, rule, ordinance, order, action or policy; (ii) which is or becomes defined as a
"hazardous waste", "hazardous material" or "hazardous substance" or "pollutant" or
"contaminant" under any present or future federal, state or local statute, regulation, rule or
ordinance or amendments thereto; (iii) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes
regulated by any governmental authority, agency, department, commission, board, agency or
instrumentality of the United States, any state of the United States, or any political subdivision
thereof.
"Indebtedness" shall mean all obligations, contingent or otherwise, which in accordance
with GAAP should be reflected on the obligor's balance sheet as liabilities.
"Initial Term" shall have the meaning given such term in Section 5.6.
"Insurance Requirements" shall mean all terms of any insurance policy required by this
Agreement and all requirements of the issuer of any such policy and all orders, rules and
regulations and any other requirements of the National Board of Fire Underwriters (or any other
body exercising similar functions) binding upon Landlord, Tenant or the Golf Facility.
"Intangible Personal Property" shall mean the transferable (as, for example, by
conveyance or license) or assignable (a) governmental permits, including licenses and
authorizations, required for the construction, ownership and operation of the improvements,
including without limitation, certificates of authority, certificates of occupancy, building permits,
signage permits, site use approvals, zoning certificates, environmental and land use permits and
any other approvals from state or local authorities and other approvals granted by any public
body or by any private party pursuant to a recorded instrument relating to such improvements or
the Property; (b) trade names, telephone exchange numbers identified with the Golf Facility, if
any; (c) certificates, licenses, warranties and guarantees and contracts other than such permits,
Exhibits to Old American Sublease Agreement Page A-4
70526.000108 EMF_US 27866124v12
operating permits, certificates, licenses and approvals which are to be held by, or transferred to,
the Tenant in order to permit Tenant to operate such improvements properly and in accordance
with the terms of this Agreement; (d) water rights; (e) any other intangible personal property
exclusively concerning the Golf Facility, including contract rights, causes of action, third party
claims; and (f) non-exclusive rights to any and all domain names and web sites, plans, drawings,
surveys, reports, studies and specifications exclusively regarding the Golf Facility, and to the
extent Landlord owns the logo, service marks, trade names, and other names utilized by the Golf
Facility, the non-exclusive right to their use. Notwithstanding the foregoing or anything to the
contrary contained herein, (A) Landlord and/or its Affiliates shall retain ownership in and to the
plans and specifications and any other plans, drawings, surveys, reports, studies, and
specifications related to the Golf Facility and included in the Intangible Personal Property, and
Landlord shall have no obligation to certify or reissue them to Tenant, (B) Tenant shall not use
any of the water rights, the names and logos or the Licenses and Permits or any other Intangible
Personal Property except in connection with running the Golf Facility, and (C) Landlord and/or
its Affiliates shall have the right to use the names and logos for marketing, operating and
maintaining its development.
"Inventory" shall mean all inventories, as such term is customarily used and defined in its
most broad and inclusive sense including, but not limited to, all inventories of merchandise,
food, beverages and other consumables for sale or use at or from the Golf Facility or in
connection with the Business, and operating supplies, building and maintenance supplies, tools
and spare parts.
"Landlord" shall have the meaning given such term in the preambles to this Agreement
and shall include its successors and assigns.
"Landlord Charges" shall have the meaning given such term in Section 4.5.6.
"Leased Land" shall mean the real property described on Exhibit B, together with the
entirety of Landlord's rights and interest in and to such real property as granted to Landlord
through one or more intervening subleases under the City Sublease and related to the portion of
the Corps Land upon which is constructed eight (8) golf holes, including, but not limited to, all
easements, rights and appurtenances relating to the Leased Land; all buildings, structures and
other improvements of every kind, including without limitation all roadways, alleyways, parking
areas, sidewalks, curbs, connecting tunnels, utility pipes, irrigation systems, conduits and lines
(on site and off site) appurtenant to or presently situated upon the Leased Land; and any related
improvements located or constructed on the Leased Land, but subject to the Permitted
Exceptions.
"Le ag 1 Requirements" shall mean all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and
injunctions, including Applicable Laws, affecting the Golf Facility or the maintenance,
construction, alteration or operation thereof, whether now or hereafter enacted or in existence.
"Licenses and Permits" shall mean all of Landlord's interest (i) on a non-exclusive basis
in any development permits or entitlements with respect to the Golf Facility, (ii) in any building
Exhibits to Old American Sublease Agreement Page A-5
70526.000108 EMF_US 2786612412
permits, variances and occupancy rights for the Golf Facility, (iii) in any licenses, permits,
franchises, certifications, authorizations, approvals and certificates of occupancy for the Golf
Facility, approved or granted by any governmental authority or body having jurisdiction over the
Golf Facility and relating to the operation, ownership or maintenance of the Property or any part
thereof, to the extent assignable, and (iv) in any licenses, certifications, authorizations, or
approvals, to the extent assignable, received from any entity for the use of utilities or, on a non-
exclusive basis, vehicular and pedestrian ingress and egress to the Golf Facility; (v) all liquor
licenses, business licenses, state and local health and environmental department licenses, and
(vi) any other licenses required in connection with the operation of the Golf Facility such as food
service licenses and licenses to conduct business obtained from any governmental, quasi
governmental or private person or entity whatsoever.
"Lien" shall mean any mortgage, security interest, pledge, collateral assignment, or other
encumbrance, lien or charge of any kind, including but not limited to construction, mechanics'
and materialmen's liens, or any transfer of property or assets for the payment of Indebtedness or
performance of any other obligation in priority to payment of the obligor's general creditors.
"Major Alterations" shall have the meaning given such term in Section 6.4.2.
"Maintenance and Cart Barn" shall mean a fully functional golf course maintenance
facility with a cart wash station and chemical storage area which is available for immediate
occupancy, has been issued a certificate of occupancy or, if equivalent, a final green tag, and has
parking and lighting, working utilities, surrounding landscaping, exterior lighting and all
applicable Tangible Personal Property required to be delivered by Landlord pursuant hereto.
"Management Fee" shall mean a fee paid to Tenant or an Affiliate as an Operating
Expense of the Business in an amount equal to the following: (i) for the first (1st) through the
twelfth (12th) Fiscal Months, $10,000.00 per Fiscal Month plus Landlord pre-approved and/or
budgeted out of pocket expenses; (ii) for the thirteenth (13th) through the twenty-fourth (24th)
Fiscal Month, $10,000.00 per Fiscal Month if Landlord makes a Tenant subsidy under Section
4.6 hereof for such Fiscal Month, otherwise four percent (4%) of Total Facility Revenue, plus
Landlord pre-approved and/or budgeted out of pocket expenses; and (iii) for the twenty-fifth
(25th) Fiscal Month through the end of the Term, four percent (4%) of Total Facility Revenue,
plus Landlord pre-approved and/or budgeted out of pocket expenses.
"Minimum Rent" shall mean the minimum rent payable to Landlord in accordance with
Section 4.1. For the first (1st) through the twelfth (12th) Fiscal Months, there shall be no
Minimum Rent; for Fiscal Months thirteen (13) through twenty-four (24), the Minimum Rent
shall be $29,166.67 per Fiscal Month; for Fiscal Months twenty-five (25) through thirty-six (36),
the Minimum Rent shall be $33,333.33 per Fiscal Month; for Fiscal Months thirty-seven (37)
through one hundred twenty (120), the Minimum Rent shall be $41,666.67 per Fiscal Month.
"Minor Alterations" shall have the meaning given such term in Section 6.4.1.
"Mortgagee" shall mean any lender to Landlord or its Affiliates having a lien on all or
any portion of the Property.
Exhibits to Old American Sublease Agreement Page A-6
70526.000108 EMF_US 2786612412
"Net Premier Access Receipts" shall mean: (i) cash received from sales of Premier
Access, plus (ii) if financed, cash principal payments received on Premier Access obligations,
less (iii) cash paid to cancel or recall existing Premier Access and refunds, if any and less (iv) a
Premier Access sales commission in the amount of fifteen percent (15%) of the aggregate face
amount of the Premier Access sold automatically withheld from the sale receipts by Tenant.
"Notice" shall mean a notice given in accordance with Section 21.10.
"Operating Expenses" means all those ordinary and necessary expenses in reasonable
amounts incurred in the operation of the Business, including: salaries, wages, employee benefits,
and payroll expenses, including payroll taxes, profit sharing programs, and insurance of all
employees; costs associated with permits and licenses; all taxes, assessments, charges, levies,
fees (including, without limitation, license, permit, inspection, authorization and similar fees),
but not "past due" charges, fines or penalties or the like, or interest thereon; marketing,
advertising, and promotional expenses; replacement of inventories of maintenance parts and
supplies, food stores and bar supplies; replacement of broken, lost, or damaged silver, chinaware,
glassware, cooking utensils, and other similar items of equipment; office supplies, postage,
printing, and routine office expenses; entertainment expenses; reasonable travel expenses;
accruals for insurance, property taxes, Reserve contributions and insurance premiums; accounts
receivable previously included within Total Facility Revenue, to the extent they remain unpaid
ninety (90) days after the first billing; auditing, accounting costs, computer fees, legal fees and
Management Fees; utility expenses, including, but not limited to, all electric, gas, and water
costs, and any other private utility charges; ordinary maintenance and repairs, to the extent same
are not paid from the Reserve; all lease payments on any item of furniture, fixtures, or
equipment; out-of-pocket expenses incurred by Tenant; City Rent and all other customary and
reasonable expenses incurred in the operation of the Golf Facility. Operating Expenses shall not
include (i) Rent (ii) depreciation or amortization, (iii) amounts contributed to the Reserve and
(iv) federal and state income taxes incurred by Tenant.
"Overdue Rate" shall mean, on any date, a per annum rate of interest equal to the lesser
of eighteen percent (18%) or the maximum rate then permitted under applicable law.
"Owned Land" shall mean the real property described on Exhibit C, including, but not
limited to, all easements, rights and appurtenances relating to the Owned Land; all buildings,
structures and other improvements of every kind, including without limitation all roadways,
alleyways, parking areas, sidewalks, curbs, connecting tunnels, utility pipes, irrigation systems,
conduits and lines (on site and off site) appurtenant to or situated upon the Owned Land; and any
related improvements located on or constructed on the Owned Land, but subject to the Permitted
Exceptions.
"Percentage Rent" shall have the meaning given such term in Section 4.3.
"Permitted Exceptions" shall mean all matters currently affecting title to the Property,
including, without limitation, all validly existing liens, leases, licenses, easements, reservations,
grants and restrictive covenants and all other matters applicable to the Property and recorded in
the real property records of Denton County, Texas; standby fees, taxes, and assessments by any
Exhibits to Old American Sublease Agreement Page A-7 ,
70526.000108 EMF_US 2786612412
taxing authority for the year 2010 and subsequent years, and subsequent taxes and assessments
by any taxing authority for prior years due to change in land usage or ownership; all mineral
reservations or conveyances; all matters approved in writing by Tenant and other matters
consented to or waived or deemed consented to or deemed waived by Tenant under the terms of
the Agreement; any discrepancies, conflicts, or shortages in area or boundary lines, or any
encroachments or protrusions, or any overlapping of improvements; and any valid rights, titles,
licenses or privileges asserted by anyone in connection with or relating to the Corps Lease and/or
the City Sublease and including, but not limited to, persons, the public, corporations,
governments, or other entities asserting any interest in (a) minerals, (b) timber, (c) lands
comprising the shores or beds of navigable or perennial rivers and streams or lakes, (d) lands
beyond the bulkhead lines or flood lines as established or changed by any government, (e) filled-
in lands or artificial islands, and/or (f) water rights, including riparian rights.
"Permitted Renovations" shall have the meaning given that term in Section 6.4.
"Premier Access" shall have the meaning given that term in Section 2.3.
"Permitted Use" shall mean any use of the Golf Facility permitted pursuant to
Section 5.1.
"Pre-Opening Period" shall have the meaning given such term in Section 5.6.
"Property" shall sometimes be used herein in reference to the Leased Land and the
Owned Land.
"Rent" shall mean, collectively, Minimum Rent, Percentage Rent and Additional Rent.
"Reserve" shall have the meaning given such term in Section 7.1.
"Reserve Expense" shall have the meaning given such term in Section 7.1.
"Security Deposit" shall have the meaning given such term in Section 4.10.
"Substantially Complete" shall have the meaning given such term in Section 2.4.
"Sum of Landlord Subsidies" shall have the meaning given such term in Section 4.6.2.
"Sum of Positive EBITDAs" shall have the meaning given such term in Section 4.6.2.
"Tangible Personal Property" shall mean the following items (and all replacements
thereof): the Golf Course irrigation system, including all sprinklers, lines, pipes, collection lines
and equipment, pumps, and the computer hardware and software required to operate the
irrigation system, all drainage improvements, Golf Course directional signage, hole signage, tee
box markers, yardage markers, flags, poles, ball cups, ball washers and trash baskets, but
excluding golf carts, maintenance equipment, grow-in equipment and any other items deemed
necessary by Tenant or which shall be provided by Tenant as expressly provided herein, the
Clubhouse (i) "built-in" items: Golf Club signage, a bar, television service jacks, sprinklers, fire
Exhibits to Old American Sublease Agreement Page A-8
70526.000108 EMF_US 2786612412
protections systems required by law and wiring and components for the alarm systems,
carpeting, doors, plumbing fixtures, wall coverings, window treatments, wall and ceiling light
fixtures, merchandise sales shelves and racks (if any), affixed kitchen equipment, and affixed bar
equipment, and (ii) "free standing" items: dining room tables, dining room chairs, bar stools,
couches, coffee tables, end tables and lamps; but excluding, (iii) decorative items, such as free-
standing merchandise sales shelves, wall hangings, plants, and rugs; (iv) merchandise and retail
inventories, such as food items, beverage items, pro-shop merchandise, and golf carts;
(v) telephone equipment, maintenance equipment, maintenance supplies, service tools, cleaning
supplies, cleaning tools, china, glass and silver, linens, cooking utensils, employee computers,
and point of sale and tee time reservation systems (hardware and software); and (vi) any other
items deemed necessary by Tenant or which shall be provided by Tenant as expressly provided
herein; and the Maintenance and Cart Barn furniture, desks, maintenance equipment, and
workbenches to the extent all of the foregoing are affixed, attached or built-in, movable
furniture, all hand tools, all inventories of chemicals and fertilizers, any other maintenance
equipment and any other items deemed necessary by Tenant.
"Tax and Insurance Account" shall have the meaning given such term in Section 8.3.
"Tax and Insurance Escrow Amount" shall have the meaning given such term in
Section 8.3.
"Tenant" shall have the meaning given it in the first paragraph of this Agreement and
shall include its successors and assigns expressly permitted hereunder.
"Tenant's Personal Property" shall mean any of Tenant's proprietary software,
proprietary operating systems, proprietary policy and procedure handbooks, Tenant's computers
or other personal property of Tenant, or replacements for such items which are owned by Tenant
prior to the Effective Date or which are acquired by Tenant with its own funds after the Effective
Date and located at the Golf Facility.
"Term" shall mean, collectively, the Initial Term and the Extended Terms, unless
otherwise noted.
"Termination Amount" shall mean (i) an amount equal to seventy percent (70%) of the
Termination Multiple multiplied by the average Available Cash Flow for the three (3) Fiscal
Years ending immediately prior to the date upon which Tenant receives Notice under Section
12.8, plus (ii) the amount of the Security Deposit, if any, on the date upon which Tenant receives
Notice under Section 12.8,
"Termination Multiple" shall mean:
five 5 , if there are more than three years of the Initial Term remaining; or
three (3), if there are only three years of the Initial Term remaining; or
two 2 , if there are only two years of the Initial Term remaining; or
one L1), if there is only one year of the Initial Term remaining.
Exhibits to Old American Sublease Agreement Page A-9
70526.000108 EMF_US 2786612402
"Total Facility Revenue" shall mean, for the applicable period of time, but without
duplication, all receipts of every kind derived by Tenant from operating or causing the operation
of the Golf Facility and all parts thereof, and all Business therefrom, including, but not limited
to, greens fees, guest fees, tournament fees, dues, cart rental or fees, club rental or other
equipment rental or fees, driving range fees; license, lease and concession fees and rentals;
parking fees; income from vending machines; food and beverage sales; retail sales of
merchandise (other than proceeds from the sale of furnishings, fixtures and equipment no longer
necessary to the operation of the Business, which shall be deposited in the Reserve); and service
charges; provided, however, that Total Facility Revenue shall not include the following: Net
Premier Access Receipts, Premier Access sale commissions, gratuities to employees; federal,
state or municipal excise, sales, use or similar taxes included as part of the sales price of any
goods or services; insurance proceeds (unless attributable to loss of business revenue i.e.,
business interruption proceeds); any proceeds from any sale of the Golf Facility or from the
refinancing of any debt encumbering the Golf Facility; proceeds from the disposition of
furnishings, fixture and equipment no longer necessary for the operation of the Business;
amounts deposited in the Reserve and interest which accrues on such amounts; and amounts paid
as Rent.
Exhibits to Old American Sublease Agreement Page A-10
70526.000108 EMF_US 2786612412
EXHIBIT B
LEASED LAND
Exhibits to Old American Sublease Agreement Page B
70526.000108 EMF_US 2786612412
EXHIBIT C
OWNED LAND
Exhibits to Old American Sublease Agreement Page C
70526.000108 EMF_US 27866124v12
EXHIBIT D
BILL OF SALE
STATE OF TEXAS §
§ KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DENTON §
THIS BILL OF SALE is made by the undersigned, OLD AMERICAN GOLF, LLC, a
Texas limited liability company (hereinafter referred to as "Seller"), in favor of ESCALANTE -
TRIBUTE, L.P., a Texas limited partnership (hereinafter referred to as "Purchaser").
WITNESSETH:
WHEREAS, Seller and Purchaser entered into that certain Sublease Agreement dated
September 2009 (the "Sublease Agreement"); and
WHEREAS, pursuant to Section 3.3 of the Sublease Agreement, Seller is to sell, convey,
and transfer to Purchaser by bill of sale all of Seller's right, title and interest in the Tangible
Personal Property, Inventory and any and all other personal property stated in Section 2.4.4 (said
Tangible Personal Property referred to as the "Property"), some of said Property being more
specifically identified on Schedule A attached hereto and incorporated herein for all purposes.
NOW, THEREFORE, pursuant to the Sublease Agreement, and in consideration of the
sum of TEN DOLLARS ($10.00) and of the premises, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Seller has GIVEN,
GRANTED, CONVEYED, ASSIGNED, TRANSFERRED, BARGAINED, SOLD, REMISED,
RELEASED, ALIENATED, SET OVER, and CONFIRMED, and by these presents does GIVE,
GRANT, CONVEY, ASSIGN, TRANSFER, BARGAIN, SELL, REMISE, RELEASE,
ALIENATE, SET OVER, and CONFIRM unto Purchaser, its successors and assigns all of
Seller's right, title, and interest in and to all of the Property.
PROVIDED, HOWEVER, that nothing herein shall be deemed to constitute an
assignment or an attempt to assign the Property or any licenses, franchises, permits, and other
governmental authorizations held by Seller relating to the Property which are not permitted to be
assigned by any federal, state, or local governmental or quasi-governmental authority, and if any
such license, franchise, permit, or other governmental authorization may not be fully assignable
except with the approval of any federal, state, or local governmental or quasi-governmental
authority, then assignment shall occur only upon obtaining such approval.
TO HAVE AND TO HOLD the Property unto Purchaser free and clear of all liens and
encumbrances, and Seller does hereby bind its successors and assigns to WARRANT AND
DEFEND all and singular the Property unto Purchaser and its successors and assigns against
every person whomsoever lawfully claiming or to claim such Property or any part thereof.
Exhibits to Old American Sublease Agreement Page D
70526.000108 EMF_US 2786612402
Except for the warranty of title set forth above concerning the Property, the Property
conveyed hereunder is conveyed by Seller and accepted by Purchaser ACKNOWLEDGES AND
AGREES, THAT EXCEPT AS EXPRESSLY MADE BY SELLER IN THIS AGREEMENT,
SELLER IS NOT MAKING AND SPECIFICALLY DISCLAIMS ANY WARRANTIES OR
REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE TANGIBLE PERSONAL PROPERTY, INVENTORY AND
EQUIPMENT, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OR
REPRESENTATIONS AS TO MATTERS OF PHYSICAL CONDITION AND THE VALUE,
CONDITION, MERCHANTABILITY, MARKETABILITY, PROFITABILITY,
SUITABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE. PURCHASER
AGREES THAT PURCHASER HAS NOT RELIED UPON AND WILL NOT RELY UPON,
EITHER DIRECTLY OR INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF
SELLER OR ANY AGENT OF SELLER OR OTHER THIRD PARTY, EXCEPT AS
EXPRESSLY MADE BY SELLER IN THIS AGREEMENT. PURCHASER REPRESENTS
THAT IT IS RELYING ON ITS OWN EXPERTISE AND THAT PURCHASER WILL
CONDUCT OR HAS CONDUCTED INSPECTIONS AND INVESTIGATIONS OF ALL
SUCH PROPERTY AND SHALL RELY UPON SAME, AND SHALL ASSUME THE RISK
THAT ADVERSE CONDITIONS MAY NOT HAVE BEEN REVEALED BY PURCHASER'S
INSPECTIONS AND INVESTIGATIONS. PURCHASER ACCEPTS ALL SUCH
PROPERTY "AS IS/WHERE IS," WITH ALL FAULTS, AND THERE ARE NO ORAL
AGREEMENTS, WARRANTIES OR REPRESENTATIONS COLLATERAL TO OR
AFFECTING ANY SUCH PROPERTY BY SELLER, ANY AGENT OF SELLER OR ANY
THIRD PARTY, EXCEPT AS EXPRESSLY MADE BY SELLER IN THIS AGREEMENT
This Bill of Sale may be executed in one or more identical counterparts, each of which
such counterpart shall be deemed an original for all purposes and all such counterparts
collectively consisting of one such Bill of Sale.
[SIGNATURE ON FOLLOWING PAGE]
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70526.000108 EMF_US 2786612412
IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be executed by its duly
authorized officer this day of September, 2009.
Seller
OLD AMERICAN GOLF, LLC,
a Texas limited liability company
By:
By:
Name:
Title:
STATE OF TEXAS §
COUNTY OF DENTON §
BEFORE ME, the undersigned authority, on this day personally appeared
of OLD AMERICAN GOLF, LLC,
a Texas limited liability company, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he executed the same for the purposes and
consideration therein expressed, as the act and deed of said corporation and in the capacity
therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the day of September,
2009.
Notary Public in and for
[SEAL] the State of Texas
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70526.000108 EMF US 27866124v12
EXHIBIT E
ASSIGNMENT AND ASSUMPTION OF EQUIPMENT LEASES
THIS ASSIGNMENT is to be effective as of September 2009, by and between OLD
AMERICAN GOLF, LLC, a Texas limited liability company, ("Assignor") and ESCALANTE -
TRIBUTE, L.P., a Texas limited partnership ("Assignee").
WITNESSETH
WHEREAS, Assignor subleased to Assignee the Golf Facility as defined in that certain
Sublease Agreement dated September 2009, between Assignor as "Landlord" and Assignee
as "Tenant" (hereinafter referred to as the "Sublease Agreement"); and
WHEREAS, the Sublease Agreement provides that Landlord will assign to Tenant
Landlord's rights and obligations under certain leases of equipment used in the maintenance and
operation of the Golf Facility listed on Exhibit A attached hereto and incorporated herein by this
reference (the "Equipment Leases").
NOW, THEREFORE, in consideration of the premises, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and
Assignee agree as follows:
1. Transfer and Assignment by Assignor. Assignor shall and does hereby transfer and
assign to Assignee all of Assignor's rights (including the right to any security deposit posted
with respect to any Equipment Lease) and obligations in and to the Equipment Leases accruing
after the date hereof. Assignor does hereby retain any and all obligations in and to the Equipment
Leases that accrued prior to the date hereof
2. Assum tip on by Assignee. Assignee shall and does hereby assume all of the duties,
obligations, liabilities and commitments of Assignor accruing after the date hereof with respect
to or arising from the Equipment Leases.
3. Indemnification. Assignee agrees to indemnify and hold Assignor harmless from any
and all duties, obligations, liabilities, and commitments arising under the Equipment Leases
after the date hereof. Assignor agrees to indemnify and hold Assignee harmless from any and all
duties, obligations, liabilities, and commitments arising under the Equipment Leases on or
before the date hereof.
4. Disclaimer. ASSIGNOR IS NOT MAKING AND SPECIFICALLY DISCLAIMS
ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE EQUIPMENT, INCLUDING, BUT NOT
LIMITED TO, WARRANTIES OR REPRESENTATIONS AS TO MATTERS OF PHYSICAL
CONDITION AND THE VALUE, CONDITION, MERCHANTABILITY,
MARKETABILITY, PROFITABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR
Exhibit E - Assignment and Assumption of Leases Page I
USE OR PURPOSE. ASSIGNEE AGREES THAT ASSIGNEE HAS NOT RELIED UPON
AND WILL NOT RELY UPON, EITHER DIRECTLY OR INDIRECTLY, ANY
REPRESENTATION OR WARRANTY OF ASSIGNOR OR ANY AGENT OF ASSIGNOR
OR OTHER THIRD PARTY, EXCEPT AS EXPRESSLY MADE BY ASSIGNOR IN THIS
AGREEMENT. ASSIGNEE REPRESENTS THAT IT IS RELYING ON ITS OWN
EXPERTISE AND THAT ASSIGNEE WILL CONDUCT OR HAS CONDUCTED
INSPECTIONS AND INVESTIGATIONS OF ALL SUCH EQUIPMENT AND SHALL
RELY UPON SAME, AND SHALL ASSUME THE RISK THAT ADVERSE CONDITIONS
MAY NOT HAVE BEEN REVEALED BY ASSIGNEE'S INSPECTIONS AND
INVESTIGATIONS. ASSIGNEE ACCEPTS ALL SUCH EQUIPMENT "AS IS/WHERE IS,"
WITH ALL FAULTS, AND THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR
REPRESENTATIONS COLLATERAL TO OR AFFECTING ANY SUCH EQUIPMENT BY
ASSIGNOR, ANY AGENT OF ASSIGNOR.
5. Survival of Provisions. The covenants, representations, and obligations contained in
this Assignment shall survive the consummation of all transactions contemplated herein, and
this Assignment shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns.
[SIGNATURES ON NEXT PAGE]
Exhibit E-Assignment and Assumption of Leases page 2
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be executed
by their duly authorized officers on the date first written above.
Assignor:
OLD AMERICAN GOLF, LLC,
a Texas limited liability company
By:
By:
Name:
Title:
Assignee:
ESCALANTE - TRIBUTE, L.P.,
a Texas limited partnership
By: Escalante - Tribute, LLC,
a Texas limited liability company
By: Escalante Golf, Inc.,
a Colorado corporation
By:
Name:
Title:
Exhibit E - Assignment and Assumption of Leases Page 3
EXHIBIT A
Schedule of Equipment Leases
Exhibit E - Assignment and Assumption of Leases Page 4
EXHIBIT F
ASSIGNMENT AND ASSUMPTION OF INTANGIBLE PERSONAL PROPERTY
This ASSIGNMENT AGREEMENT (this "Agreement) is entered into as of September
2009 by and between OLD AMERICAN GOLF, LLC, a Texas limited liability company, as
landlord ("Assignor"), and ESCALANTE - TRIBUTE, L.P., a Texas limited partnership, as
tenant ("Assignee").
WITNESSETH
WHEREAS, Assignor subleased to Assignee the Golf Facility as defined in that certain
Sublease Agreement dated September 2009, between Assignor as "Landlord" and Assignee
as "Tenant" (hereinafter referred to as the "Sublease Agreement"); and
WHEREAS, the Sublease Agreement provides that Landlord will assign to Tenant
Landlord's right, title and interest, if any, in the intangible personal property related to ownership
and operation of the Golf Facility.
NOW, THEREFORE, in consideration of the premises, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and
Assignee agree as follows:
1. Transfer and Assignment by Assignor. Assignor shall and does hereby transfer and
assign to Assignee all of Assignor's right, title, interest, and benefits in and to the intangible
personal property related to the Golf Facility, including (a) security deposits, (b) goodwill, (c)
contract rights, (d) causes of action, (e) third party claims, (f) non-exclusive rights to any and all
plans, drawings, surveys, reports, studies and specifications related to the Golf Facility, and (g)
rights to the logos, service marks, trade names, and other names related to the Golf Facility,
including the name "Old American Golf Club".
2. Governmental Restrictions. Nothing herein shall be deemed to constitute an
assignment or an attempt to assign any licenses, franchises, permits, and other governmental
authorizations held by Assignor relating to the intangible personal property which are prohibited
from being assigned by any federal, state, or local governmental or quasi-governmental
authority.
3. Assumption by Assignee. Except as provided in Section 2, Assignee shall and does
hereby assume all of the duties, obligations, liabilities and commitments of Assignor accruing
after the date hereof with respect to or arising from the intangible personal property.
4. Indemnification. Except as provided in Section 2, Assignor agrees to indemnify and
hold Assignee harmless from any and all duties, obligations, liabilities, and commitments
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70526.000108 EMF_US 27866124v12
arising with respect to the intangible personal property prior to the date hereof, and Assignee
agrees to indemnify and hold Assignor harmless from any and all duties, obligations, liabilities,
and commitments arising with respect to the intangible personal property after the date hereof.
5. Survival of Provisions. The covenants, representations, and obligations contained in
this Assignment shall survive the consummation of all transactions contemplated herein, and
this Assignment shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be executed
by their duly authorized officers on the date first written above.
Assim r:
OLD AMERICAN GOLF, LLC,
a Texas limited liability company
By:
By:
Name:
Title:
Assignee:
ESCALANTE - TRIBUTE, L.P.,
a Texas limited partnership
By: Escalante - Tribute, LLC,
a Texas limited liability company
By: Escalante Golf, Inc.,
a Colorado corporation
By:
Name:
Title:
Exhibits to Old American Sublease Agreement Page F
70526.000108 EMF_US 2786612412
EXHIBIT G
MEMORANDUM OF SUBLEASE AGREEMENT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
MEMORANDUM OF SUBLEASE AGREEMENT
1. Parties. This Memorandum of Sublease (this "Memorandum"), dated for
identification purposes only, September , 2009, is entered into by and between OLD
AMERICAN GOLF, LLC, a Texas limited liability company ("Landlord") and ESCALANTE-
TRIBUTE, L.P., a Texas limited partnership ("Tenant").
2. Grant of Sublease: Term. For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord subleases to Tenant, and Tenant
subleases from Landlord, that certain improved property (the "Premises") located in Denton
County, Texas, and more particularly described in Exhibit "A" attached hereto and incorporated
herein by this reference, for a term which the parties anticipate will commence on or about May
1, 2010 and end ten (10) years thereafter, subject to the terms, conditions and provisions of that
certain Sublease Agreement (the "Sublease") between the parties hereto dated for reference
September , 2009. All of the terms, conditions and provisions of the Sublease are
incorporated in this Memorandum of Sublease by reference as though written out at length
herein, and the Sublease and this Memorandum of Sublease shall be deemed to constitute a
single instrument or document.
3. Options to Extend Term. Reference is made to Section 5.6 of the Sublease
pursuant to which Landlord grants to Tenant an option to extend the term of the Sublease for ten
(10) years on the terms and conditions more specifically set forth therein.
4. Tenant's Right of First Offer. Referenced is made to Article 20 of the Sublease
pursuant to which Landlord grants to Tenant a right of first offer to purchase the Premises under
the circumstances and on the terms and conditions more specifically set forth therein.
5. Purpose of Memorandum. This Memorandum is prepared for recordation
purposes only, and in no way modifies the provisions of the Sublease. In the event of any
inconsistency between the provisions of this Memorandum and the provisions of the Sublease,
the provisions of the Sublease shall prevail.
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70526.000108 EMF_US 27866124v12
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum as of the
date first set forth above.
"LANDLORD"
OLD AMERICAN GOLF, LLC,
a Texas limited liability company
By:
Its:
"TENANT"
ESCALANTE-TRIBUTE, L.P.,
a Texas limited partnership
By:
Its:
STATE OF TEXAS §
COUNTY OF DENTON §
This instrument was acknowledged before me on 2009, by
of Old American Golf, LLC, a Texas
limited liability company, on behalf of said limited liability company.
SEAL
Notary Public in and for
the State of Texas
My Commission Expires:
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70526.000108 EMF_US 27866124vl2
STATE OF TEXAS §
COUNTY OF DENTON §
This instrument was acknowledged before me on 2009, by
of Escalante-Tribute, L.P., a Texas
limited partnership, on behalf of said limited partnership.
SEAL
Notary Public in and for
the State of Texas
My Commission Expires:
Exhibits to Old American Sublease Agreement Page G
70526.000108 EMF_US 2786612412