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HomeMy WebLinkAbout1996-04-01 City Council (20)TO: City of Palo Alto City Manager’s Summary Report HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE SERVICES AGENDA DATE: APRIL 1, 1996 CMR:206:96 SUBJECT:REQUEST FOR PROPOSALS FOR AN OPTION TO LEASE THE RESTAURANT AT THE PALO ALTO MUNICIPAL GOLF COURSE, 1875 EMBARCADERO ROAD REQUEST: This report transmits the Request for Proposals (RFP) for an option to lease the restaurant at the Palo Alto Municipal Golf Course at 1875 Embarcadero Road, for Council approval prior to solicitation. RECOMMENDATIONS: Staff recommends that Council approve the attached RFP package and direct staffto solicit proposals for an option to lease the restaurant at the Palo Alto Municipal Golf Course. POLICY IMPLICATIONS: The RFP and option to lease do not represent any change in existing City policies. EXECUT~ SUMMARY: On October 1, 1979, the Council approved an RFP to solicit proposals for operation of the restaurant at the Palo Alto Municipal Golf Course. On April 25, 1980, the City entered into a ten-year lease with Hazards, Inc. for the restaurant operation. This lease terminated on May 20, 1990 and was put on month-to-month holdover, pending resolution and approval of the Golf Course Master Plan, a conceptual proposal developed to upgrade various com- ponents of the Golf Course, including improvements to the restaurant. In May 1995, Council approved a Site and Design Application and a Mitigated Negative Declaration for the Golf Course Master Plan. CMR:206:96 Page 1 of 7 The intent of the attached RFP is to lease the Golf Course restaurant, under a 10 to 20-year lease, to an operator who will manage the restaurant operation in order to serve the public and customers using the Golf Course. Proposals are due July 2, 1996, and the bid items are the purchase price of the option, lease rental and the value of tenant-constructed capital improvements. The capital improvements that will be allowed to the restaurant are those improvements specified in the Golf Course Master Plan. The proposals received in response to the RFP will be reviewed and evaluated by a committee of representatives of staff and the Palo Alto Golf Course Advisory Committee for recommendation to the City Council. Once a successful proposer has been selected by the Council, and the option has been executed, the optionee will have up to twelve months to meet the conditions necessary to exercise the option, including obtaining all permits required for the proposed operation, obtaining City approval of the proposed operating plan and any proposed improvements, and providing evidence that sufficient finances are available to complete any proposed improvements. FISCAL IMPACT: The minimum annual rental revenue from the lease for the first year will be the greater of $36,000 or 5 percent of gross receipts. ENVIRONMENTAL IMPACT ASSESSMENT: An RFP is not a project under the requirements of the Califomia Environmental Quality Act (CEQA). An environmental impact assessment, as may be required by CEQA, will be prepared during the option period, in conjunction with the optionee’s application and approval of a conditional use permit for the proposed use and any improvements. ATTACHMENTS~XHIBITS: Attachments: Attachment A (Summary of RFP) Request for Proposal, including: Information Flyer Proposal Package CMR:206:96 Page 2 of 7 PREPARED BY: Janet Freeland, Senior Financial Analyst DEPARTMENT HEAD Emily Deputy City Manager, Administrative Services CITY MANAGER APPROVAL: Fleming Manager CC:Palo Alto Golf Course Advisory Committee Palo Alto Golf Course Corporation CMR:206:96 Page 3 of 7 City of Palo Alto City Manager’s Report REQUEST FOR PROPOSALS FOR AN OPTION TO LEASE THE RESTAURANT AT THE PALO ALTO MUNICIPAL GOLF COURSE, 1875 EMBARCADERO ROAD BACKGROUND: On October 1, 1979, the Council approved an RFP to solicit proposals for operation of the restaurant at the Palo Alto Municipal Golf Course. On April 25, 1980, the City entered into a ten-year lease with Hazards, Inc. for the restaurant operation. This lease terminated on May 20, 1990 and was put on month-to-month holdover, pending resolution and approval of the Golf Course Master Plan, a conceptual proposal developed to upgrade various com- ponents of the Golf Course, including improvements to the restaurant. In May 1995, Council approved a Site and Design Application and a Mitigated Negative Declaration for the Golf Course Master Plan. Due to the need for extensive repairs to the restaurant kitchen, which were not completed until November 1995, the RFP for a new lease has been delayed. POLICY IMPLICATIONS: The RFP and option to lease do not represent any change in existing City policies. DISCUSSION: The Palo Alto Municipal Golf Course is a 176-acre, 18-hole golf course with a driving range, located in the Palo Alto Baylands between Bayshore Freeway and the Palo Alto Airport. The Golf Course facilities include a 9,380 square foot clubhouse which contains a 4,480 square foot restaurant, lounge, meeting and dining area, with provisions for sale of on-site alcoholic beverages (refer to site and location maps in attached RFP Information Flyer). Request for Proposals The intent of the RFP is to lease the restaurant under a 10 to 20-year lease to an operator who will manage the restaurant operation, including the sale of alcoholic beverages, in order to serve the public and customers using the Golf Course and to make the meeting rooms available to golf-related groups. The bid items, on which the proposer is invited to make an offer, are the purchase price of the option to lease, the rent and the capital improvements to be made by the tenarit. The minimum acceptable bid for the purchase price of the option to lease is $2,500; minimum bids for rent and capital improvements are discussed below. CMR:206:96 Page 4 of 7 The RFP describes the minimum hours of operation for the food services (6 a.m. to 3 p.m. during daylight savings time and 7 a.m. to 4 p.m. for the rest of the year) and for the bar and meeting rooms (ll a.m. to dusk year-round). Food and beverage service must include an express line for golf customers requiring service before or in between rounds of golf. Meeting rooms are to be made available to various golf-related and public service groups at given hours. The RFP also identifies tenant-constructed restaurant improvements which, although not required, are desired and encouraged. These improvements, allowed by the Golf Course Master Plan, include the addition of a new deck with a pass-through food service from the bar area (highly desirable), the addition of a new meeting/seating area for golf and service club use and banquets, and expansion of the kitchen and bar. (For a more detailed description of improvements and estimated costs, refer to Exhibit A to the attached RFP Proposal Package.) These improve-ments are bid items and are not required; however, the optionee will be required to reimburse the City in the amount of $9,734 for carpeting which was recently installed in the restaurant, and the term of the lease will depend upon tenant-constructed improvements. The guidelines for the relationship between term and improvements is: Improvement Est. Cost Term No tenant improvements Addition of deck and pass through food service Addition of deck, expansion of bar, club room and kitchen No cost 10 years $124,935 15 years $255,485-$358,985 20 years The rent is also a bid item. The minimum annual rent for the first lease-year is $36,000, and will be adjusted for each subsequent lease year, based on 85 percent of the Consumer Price Index. The tenant must pay the greater of either the minimum annual rent or the percentage rental, which is calculated based on a percentage of gross receipts from business operations, as follows: Year First year Second Year Third-Tenth year Eleventh Year and Beyond Minimum Percentage Rent 5.0% 5.5% 6.0% To be negotiated CMR:206:96 Page 5 of 7 The minimum annual rent and percentage rent are based on the current rent paid by the existing operator of the Golf Course restaurant ($36,600) and a staff survey of other public Golf Course restaurant operations in the area. Evaluation of Proposals: Upon approval of the RFP by Council, staff will advertise in appropriate general and business newspapers and send the Information Flyer to operators of similar golf course restaurants and to those persons and groups who hav.e expressed an interest in leasing the site. Proposals will be accepted until July 2, 1996, when sealed proposals will be opened at 3:00 p.m. Proposals will be reviewed and evaluated for recommendation to the City Council by a proposal evaluation committee made up of representatives of City staff and the Citizens Advisory Golf Committee. Review of the proposals shall consider many factors, including but not limited to: 1)The proposed operational program with regard to providing the required and optional uses which best benefit the community, golf and general public customers, and the City; 2)The proposer’s capabilities to improve and operate a first- class golf course restaurant; 3) 4) The proposer’s experience in operating similar golf-related restaurants; and The proposed rent, proposed improvements and purchase price of the Option. The proposals and recommendation for a successful proposer will then be forwarded to the City Council. Option to Lease: Once a successful proposer has been selected by the City Council, and the Option to Lease has been executed, the optionee has up to 12 months to meet the conditions necessary to exercise the option. During the 12-month option period, the optionee must pay the purchase price of the option, pay the reimbursement for the carpeting, obtain all permits required for the proposed operation, obtain City approval of the proposed operating plan and tentative price schedule, obtain plan approvals for any proposed improvements and provide evidence that sufficient fmances are available to complete any proposed improvements. CMR:206:96 Page 6 of 7 Lease: The term of the lease will be 10 to 20 years, depending upon the value of proposed improvements; and the minimum rent will be the amount bid by the successful proposer, in accordance with the RFP-required minimums. Required improvements under the lease are those improvements identified and shown in the plans approved by the City during the option to lease term. The tenant will be required to provide evidence of insurance coverage acceptable to the City, will be responsible for all utilities supplied to the premises and for taxes and maintenance. The tenant will be responsible for maintenance of the leased premises except for the heating and air conditioning units. The City will be responsible for maintaining the heating and air conditioning units, the building exterior, common areas, and mechanical systems serving areas outside the leased premises. Golf Course Master Plan Bond Financing Issues Under current tax law, the use of tax-exempt bonds for portions of the Golf Course improvements limitS the amount of revenues allocable to provide business. However, a discrete portion of the operations, such as the restaurant, can be separated from the general Golf Course operations, if the improvements for that discrete portion are constructed without the use of tax-exempt financing. The proposed lease for the restaurant facility is structured in a way that would require the restaurant operator to finance and construct the improvements specified in the Golf Course Master Plan, in return for a longer-term lease. The only portion of the bond-financed improvements that might be proportionately attributable to the restaurant is the parking lot improvements, which is a sufficiently small portion of the entire tax-exempt financing so as to be well within the Internal Revenue Service limits. ALTERNATIVES: Since the RFP and Option to Lease are consistent with the City’s policy for the Leased Use of City Land!Facilities, no alternatives to approval of an RFP are addressed in this report. FISCAL IMPACT: The minimum annual rental revenue from the lease for the first year will be the greater of $36,000 or 5 percent of gross receipts. ENVIRONMENTAL IMPACT ASSESSMENT~ An RFP is not a project under the requirements of the California Environmental Quality Act (CEQA). An environmental impact assessment, as may be required by CEQA, will be prepared during the option period, in conjunction with the optionee’s application and approval of a conditional use permit for the proposed use and any improvements. CMR:206:96 Page 7 of 7 ATTACHMENT A SUMMARY - GOLF COURSE RESTAURANT REQUEST FOR PROPOSAL The Request for Proposal (RFP) consists of." I) the Information flyer and II) the Proposal Package The Information Flyer summarizes the offering and will be sent to interested persons or businesses. The Information Flyer includes the following information: A.A general description of the property to be leased, including a location and site maps. B.The date and place the proposals are due (July 2, 1996). The bid items ~urchase Price of the Option, the first year’s rent and the value of the capital improvements) and the minimum acceptable bids ($2,500 for Purchase Price for the Option; the greater of $36,000 or 5% of gross receipts for first year’s rent; and although there is no minimum bid for capital improvements, the optionee will be required to reimburse the City in the amount of $9,734 for carpeting recently installed in the restaurant). D. Instructions for obtaining the Proposal Package. II.Proposal Package The Proposal Package summarizes the desired operation and improvements for the golf course restaurant, the option to lease, the proposal requirements and procedures, and lists the valuation criteria. It includes the Proposal Forms, Proposal Questionnaire, the Option to Lease and the Lease. Option to Lease - The term of the Option is 12 months, and it may not be exercised until the Optionee has fulfilled the following conditions: Paid the Purchase price of the Option (minimum of $2,500) and the $9,734 reimbursement for carpeting. Submitted schematic plans of all proposed improvements within 2 months of the commencement of the Option. Obtained all permits required for the proposed operation, including a conditional use permit and a license to sell alcoholic beverages, c:c:golfsum 1 Obtained approval of the proposed operating plan and tentative price schedule from City Manager or designee. 5.Obtained Architectural Review Board approval of any development plans. Obtained approvals of the City Engineer and the Chief Building Official of the construction drawings, including a construction schedule. Satisfied the City Real Property Manager that sufficient funds are available to implement plans approved by the City. 8.Paid the security deposit required by the Lease ($5,000). B.Lease - the key provisions of the Lease are as follows: Premises: the 4,480 square foot restaurant and meeting rooms located at the Palo Alto Municipal Golf Course at 1975 Embarcadero Road, Palo Alto. Required uses: a food and beverage service, including sale of alcoholic beverages, to provide for the needs of the public and persons utilizing the Palo Alto Municipal Golf Course. Meeting rooms to be made available to various golf-related and public service groups at given hours. Term: 10 to 20 years, depending upon the value of improvements made by Tenant. Rent: Rent is a bid item; minimum bid for first year annual rent is the greater of $36,000 or 5% of gross receipts for the first year; 5.5% for the second year; 6% for the third to tenth year. Improvements to be made by Tenant: A bid item. While not required, the City encourages Tenant to make some or all the restaurant improvements allowed by the Golf Course Master Plan: i.e., the addition of new deck with a pass through food service from the bar area; the addition of a new meeting/seating area for club use and banquets, and the expansion of the kitchen and bar. Construction or additional alteration by tenant subsequent to the initial construction: Tenant may not make any changes to the property without prior City review and approval. Maintenance and repairs: Tenant shall be responsible for maintenance and repair of the leased premises including all plumbing and electrical, but c:c:golfsum 2 10. excluding the heating and air conditioning systems within or serving exclusively the leased premises. City shall maintain the heating and air conditioning systems, building exterior, public restrooms, exterior walkways, parking lot and landscaping and all .mechanical systems serving areas outside the leased premises. Any assignment or encumbrance of the lease must receive prior City approval. Taxes and Assessments, Utilities: Tenant shall be responsible for all costs for utilities and taxes and assessments for the property. Insurance: the Tenant shall maintain insurance providing the following limits and coverage: C. POLICY MINIMUM LIMITS OF LIABILI~ WORKER’S COMPENSATION Statutory COMPREHENSIVE A UTOMOBILE LIABIL1TE, including owned hired and non-owned automobiles Bodily Injury $1,000,000 ca. person Property Damage $I, 000, 000 ca. person COMPREHENSIVE Bodily Injury $1,000,000 eao. person GENERAL . $1,000,000 ca. occurrence LIABILITY $ I, 000, 000 aggregate including products Property Damage $1,000,000 ca. occurrence & completed operations,Personal Injury $I, 000, 000 ca. occurrence broad form contractual, and personal injury. FIRE LEGAL $500 000 Said sum represents the estimated cost of LIABILITY the improvements and fixtures within the care, custody and control of Tenant. Said sum shall be subject to annual review by Lessor’s Risk Manager to insure that coverage is adequate to cover changes in the replacement cost of improvements and fixtures within the care, custody and control of Tenant. CO URSE OF CONSTRUCTION Completed value of the project. c:c:golfsum 3 PALO ALTO MUNICIPAL GOLF COURSE RESTAURANT Information Flyer AMERICANS WITH DISABILITIES ACT (ADA) STATEMENT In compliance with the Americans with Disabilities Act (ADA) of 1990, this document may be provided in other accessible formats. For information, contact: Fred Herman, ADA Director City of Palo Alto 250 Hamilton Avenue (415) 329-2550 (voice) or (415) 328-1199 (TDD) For information concerning the Request for Proposals for the Golf Course Restaurant, contact: Bill Fellman, Real Property Manager City of Palo Alto, P.O. Box 10250 Palo Alto, CA 94303 (415) 329-2472 Information Flyer SUMMARY OF LEASE OPPORTUNITY WHAT IS IT? WHERE IS IT? IS THERE A MINIMUM BID? WHEN ARE PROPOSALS DUE? HOW DO I GET THE PROPOSAL PACKAGE? An opportunity to obtain a lease for operation of a 4,480 square-foot restaurant and bar at the City of Palo Alto Municipal Golf Course Clubhouse. The lease term depends upon the value of tenant-constructed improvements. Minimum term is 10 years and maximum is 20 years. The City’s Municipal Golf Course is located at 1975 Embarcadero Road, Palo Alto, between Bayshore Freeway and the Palo Alto Airport in the Palo Alto Baylands. See attached site and location maps. The bid terms are the rent, the purchase price for the Option to Lease and the value of capital improvements made by the Tenant. The minimum acceptable bids are: First Year’s Rent: the greater of the following: $36,000 or 5% of gross receipts; Purchase Price of the Option to Lease: $2,500 Capital Improvements: There is no minimum bid for capital improvements; however, the optionee will be required to reimburse the City in the amount of $9,734 for carpeting which was recently installed in the restaurant. Proposals to acquire an option to lease the site within the Municipal Golf Course for operation of a restaurant are due before 3:00 p.m. Tuesday, July 2, 1996 and should be submitted to: Manager, Contract Administration City of Palo Alto, First Floor P. O. Box 10250 Palo Alto, CA 94303 If, after reading this flyer, you would like to obtain the proposal package or discuss the offering, please contact: Bill Fellman, Real Property Manager City of Palo Alto, P.O. Box 10250 Palo Alto, CA 94303 (415) 329-2472 LOCATION iCAP PALO ALTO MUNICIPAL GOLF COURSE / AL’ro$ DRIVING RANGE & CLUBHOUSE LOCATIONS PALO ALTO MUNICIPAL GOLF COURSE / DRIVING RANGE 454 Ac ( 19"3,000 s,f. ) / / i I DRIVING RANGE TEE GOLF CLUBHOUSE---~"PRO SHOf COMPLEX PARKING REST~RO~, S LOT....................... /! / / / / i/" ~t// /, / / /!! Restauqant ~ seating -’,& food service .......’~ .............Scale : 1’ = 100 NORTH- 0 I0 20 30 SCALE PARKING LOT GOLF COURSE ~-(Premises to:b~ - :leased) areo .LEGEND PRO SHOP & GOLF CART STORAGE CITY MAINTENANCE Including BREEZE~WAY RESTAURANT/LOUNGE/MEETI.NG ROOMS (PREMISES TO BE LEASED) TOTAL net orea sq. 3,165 2,185 PALO. ALTO MUNICIPAL GOLF COURSE CLU£F~OUSE COMPLEX~875 ~EMBARCADERO ROAD PALO ALTO MUNICIPAL GOLF COURSE RESTAURANT PROPOSAL PACKAGE AMERICANS WITH DISABILITIES ACT (ADA) STATEMENT In compliance with the Americans with Disabilities Act (ADA) of 1990, this document may be provided in other accessible formats. For information, contact: Fred Herman, ADA Director City of Palo Alto 250 Hamilton Avenue (415) 329-2550 (voice) or (415) 328-1199 (TDD) For information concerning the Request for.Proposals for the Golf Course Restaurant, contact: Bill Fellman, Real Property Manager City of Palo Alto, P.O. Box 10250 Palo Alto, CA 94303 (415) 329-2472 LEASE/INVESTMENT OPPORTUNITY CITY OF PALO ALTO MUNICIPAL GOLF COURSE RESTAURANT I.GENERAL DESCRIPTION II. The Palo Alto Municipal Golf Course is a 176 acre, 18-hole golf course with a driving range located in the Palo Alto Baylands between Bayshore Freeway and the Palo Alto Airport. The existing golf course improvements include a 9,380 square foot clubhouse which contains a 4,480 square foot restaurant, lounge, mee, ting and dining area with provisions for sale of on-site alcoholic beverages. The City has recently approved a new Golf Course Ma~ter Plan which allows for improvements to the restaurant including the addition of a deck with pass through food service, the addition of a new meeting/seating area for club use and banquets, and expansion of the kitchen and bar. GOLF COURSE RESTAURANT - DESIRED OPERATIONS and IMPROVEMENTS A.GENERAL STATEMENT OF INTENT OF REQUEST FOR PROPOSALS Bo The City is searching for an operator for the 4,480 square foot restaurant which contains a bar for on-site sale of alcoholic beverages, and meeting rooms to serve the public and users of the golf course. Included in the lease are major kitchen fixtures and furnishings such as tables and chairs. DESIRED RESTAURANT SERVICES AND IMPROVEMENTS The City desires a quality, well-managed restaurant operation, including the sale of alcoholic beverages, in order to serve the public and customers using the golf course, and to make the meeting rooms available to golf-related groups. Minimum hours of operation for food service are 6 a.m. to 3 p.m. during daylight savings time and 7 a.m. to 3 p.m. for the remainder of the year. Minimum hours of operation for the bar and the meeting rooms are 11 a.m. to dusk year-round. Eood and beverage service must include an express line for golf customers requiring service before or in between rounds of golf. For more details, please refer to the Section III (REQUIRED AND OPTIONAL SERVICES AND USES) on page 2 0fthe attached lease. In addition, while not required, the City desires the Tenant to make some or all the restaurant improvements allowed by the Golf Course Master Plan. These improvements include the addition of a new deck with a pass through food service from the bar area (highly desirable ), the addition of a new meeting/seating area for club use and banquets, and expansion of the kitchen and bar. For a more detailed description of restaurant improvements and estimated costs covered in the Golf Course Master Plan, please refer to the attached Exhibit A. These improvements are bid items and are not required. However, the optionee will be required to pay the City $9,734 as reimbursement for recently installed carpeting in the restaurant. III.SUMMARY OF LEAS.E AND OPTION TO LEASE A.OPTION REQUIREMENTS The successful proposer will be awarded a 12-month Option to Lease. During the option period the optionee must pay the purchase price of the option (minimum $2,500), pay $9,734 for reimbursement for the carpeting, obtain all permits required for the proposed operation, including a conditional use permit and a license to sell alcoholic beverages, obtain City approval of the proposed operating plan and tentative price schedule, and obtain plan approvals for any proposed improvements. The option may be exercised at anytime within the option period that the optionee has satisfactorily met all the option requirements. B.OUTLINE OF LEASE PROVISIONS Some of the Lease provisions are higt~ghted below. This information is not intended to be definitive but is intended to provide a basic summary of the major lease provisions. It is the responsibility of each prospective tenant to review the Proposal Package and the documents contained in the package, examine the economic environment, and make such further investigation as necessary to insure that he/she fully understands the nature of the undertaking and the obligations he/she will assume if the proposal is accepted. Term of Lease: 10 to 20 years, depending upon the value of proposed improvements, as follows: Improvement Term No tenant improvements Addition of deck and pass through food service Addition of deck, expansion of bar, club room & kitchen 10 years 15 years 20 years Rent: A bid item; the minimum bid for the first year annual rent is the greater of $36,000 or 5% of gross receipts. The minimum bid for percentage rent (percentage of gross receipts from business operations conducted on or from the premises) is as follows: Year Percentage rent First year Second year Third to tenth year Eleventh year and beyond 5.0% 5.5% 6.0% To be negotiated Improvements to be made by tenant: A bid item. See attached Exhibit A for a description of the improvements allowed by the Golf Course Master Plan. Insurance: The tenant shall maintain the following insurance acceptable to the City throughout the terms of the Lease. The policy or policies of insurance maintained by the tenant shall provide the following limits and coverage, with the City being named as additional insured under the policy or policies: POLICY_MINIMUM LIMITS OF LIABILITY WORKER’S COMPENSATION COMPREHENSIVE A UTOMOBILE LIABILITZ, including owned hired, and non-owned automobiles Statutory Bodily Injury $1,000,000 ca. person Property Damage $1,000,000 ca. person COMPREHENSIVE Bodily Injury $1,000,000 ca.. person GENERAL $I, 000, 000 ea. occurrence LIABILITY $1, 000, 000 aggregate including products Property Damage $1,000,000 ca. occurrence & completedoperations,PersonalInjury $1,000,000 ca. occurrence broad form contractual, and personal injury. FIRE LEGAL $500 000 Said sum represents the estimated cost of LIABILITY the improvements and fixtures within the care, custody and control of Tenant. Said sum shall be subject to annual review by Lessor’s Risk Manager to insure that coverage is adequate to cover changes in the replacement cost of improvements and fixtures within the care, custody and control of Tenant. COURSE OF CONSTRUCTION Completed value of the project. o Assignments: Any assignment or encumbrance of the lease must receive prior City approval. °Utilities: The tenant shall be responsible for all utilities supplied to the premises. °Maintenance and Repair: The tenant shall be responsible for maintenance and repair of the leased premises including all plumbing, electrical, heating and air conditioning and mechanical systems within or serving exclusively the leased premises. City shall maintain the building exterior, public restrooms, exterior walkways, parking lot and landscaping and all mechanical systems serving areas outside the leased premises. °Taxes and Assessments: The tenant shall be responsible for all taxes and assessments (including but not limited to possessory interest tax). LEASE PROPOSAL PACKAGE RESTAURANT - PALO ALTO MUNICIPAL GOLF COURSE This Proposal Package includes a summary of the proposal requirements and procedures, and the Proposal Forms (Proposal, Questionnaire and Option to Lease and Lease). PROPOSAL REQUIREMENTS AND PROCEDURES A.HOW TO SUBMIT A PROPOSAL In order to submit your proposal you must: 1.Complete and sign the attached PROPOSAL FORM, PROPOSER’S QUESTIONNAIRE (Attachment A) and OPTION AGREEMENT (do not sign the lease at this time). 2.Attach a $1,000 PROPOSAL DEPOSIT (refundable) in the form of a cashier’s check or certified check made payable to: City of Palo Alto. 4.Return the above in a sealed envelope before the due date and time to: Manager, Contract Administration City of Palo Alto, First Floor 250 Hamilton Avenue P.O. Box 10250 Palo Alto, CA 94303 5.Mark the envelope: "Golf Course Restaurant - opening 7/2/96, 3:00 p.m." Proposals will be opened Tuesday, July 2, 1996 at 3:00 p.m. in the City Council Conference Room, 250 Hamilton Avenue, Palo Alto, CA. To be considered, all proposals must be received prior to this time. B.PROPOSALS SHALL BE UNCONDITIONAL The terms and conditions of the Option and Lease are fixed except for the proposed rent, proposed improvements and purchase price of the Option. The intent of the proposal format is to allow the proposer to examine, in detail, all the terms and conditions of both the Option and Lease. Any condition or qualification attached to a proposal may be sufficient cause for the proposal to be rejected at the discretion of the City Council of the City of Palo Alto. Co .REQUIRED PROPOSAL INFORMATION AND EVALUATION OF PROPOSALS Proposal documents will be reviewed and evaluated by a committee made up of representatives of City staff and the Citizens’ Advisory Golf Committee. Review of proposals shall consider many factors, including but not limited to the following: Proposed operational program with regard to providing the required and optional uses which best benefit the community, golf and general public customers and the City. The proposer’s capabilities to improve and operate a first-class golf course restaurant. 3.Experience of proposers in operating similar golf-related restaurants. The proposed rent, proposed improvements, and purchase price of the Option. All proposals, together with the evaluation committee’s recommendation for a successful proposer will then be forwarded to the City Council for its selection of the successful proposer. The City Council reserves the right to reject any and all proposals or to accept that proposal which, in it opinion, will best serve the public interest. D.MINIMUM PURCHASE PRICE OF OPTION TO LEASE The minimum bid for the purchase price of the Option is $2,500. PROJECT: GOLF COURSE RESTAURANT PROJECT NO: PROPOSAL PACKAGE (With Option to Lease) THIS IS A PROPOSAL TO ACQUIRE AN OPTION TO LEASE FOR PROPOSER Name: Address: (Please print) Phone No. Home ( ii)Work,,,( The undersigned ("PROPOSER"), hereby submits a proposal to the City of Palo Alto, ("CITY") to acquire a lease more fully described in the Option to Lease Agreement (AI-TACHMENT C) and its exhibits, in accordance with the terms, covenants, and conditions contained in this PROPOSAL and in the Option to Lease Agreement. A.PROPOSER HEREBY PROPOSES THE FOLLOWING: 1.Monetary Bid Items: a)PROPOSER agrees to pay to CITY as the purchase price o6 the option, as set forth in Clause 3 (PURCHASE PRICE OF OPTION) of 3,5RELEASES . i / PROPGOLF 1 the attached Option %o Lease Agreement: (Amount in Words)(Amount in Numbers) b)Additional monetary bid items (including proposed rental during lease term): 2. Proposed tenant constructed improvements (if any): B.TERMS AND CONDITIONS PROPOSER has carefully read and fully understands this PROPOSAL document and the Option to Lease Agreement attached to this PROPOSAL, including its exhibits. The Option to Lease Ag[eement, and its exhibits, is an integral part of this PROPOSAL and must be attached to this PROPOSAL. o PROPOSER warrants that it has the capability to successfully undertake and complete the responsibilities and obligations of OPTIONEE and TENANT contained in the Option to Lease Agreement and its exhibits. A PROPOSER’s Deposit in the sum of One Thousand Dollars ($1,000.00), in the form of a Cashier’s or Certified Check made payable to the City of Palo Alto, must be submitted with this PROPOSAL and is attached hereto. o The PROPOSER’s Deposit will be held by CITY as a guarantee securing the obligations PROPOSER agrees to assume in this PROPOSAL. In the 3.5RELEASES. 1/PROPGOLF 2 o o 10. 11. event this PROPOSAL is accepted by CITY and PROPOSER fails to meet the terms hereof, PROPOSER agrees that said sum represents a fair and reasonable estimate of CITY’s cost in preparing and soliciting this offering, and PROPOSER further agrees that said sum shall be retained by CITY as compensation for these costs. Upon execution of the Option to Lease Agreement, said sum shall, at PROPOSER’S option, be returned to PROPOSER or shall be credited toward the Security Deposi~ required under the Option to Lease Agreement. PROPOSER’s Deposit will be returned to each proposer not selected by the City upon City’s execution of an Option to Lease Agreement with the successful proposer. This PROPOSAL may be withdrawn at any time prior to the time set for opening the proposals but may not be withdrawn after the time set for such opening, i.e., Tuesday, July 2, 1996 at 3:00 p.m. Within ten (10) days after notification of the acceptance of this PROPOSAL by CITY, PROPOSER will execute copies of the Option to Lease Agreement in duplicate and deliver to CITY the executed copies of said agreement, the required Security Deposit and the balance of the purchase price of the option as set forth in the Option to Lease Agreement. PROPOSER has fully completed the Proposer’s Questionnaire (Attachment A). The completed Questionnaire and the Option to Lease Agreement with its exhibits, including the Lease (Attachment B), are attached to this. PROPOSAL together with any appropriate or requested supplemental material. PROPOSER represents that all of the information contained in or supplementing said Questionnaire is true and correct to the best of PROPOSER’s knowledge. CITY reserves the right to reject any or all PROPOSALS and to accept that PROPOSAL which will, in its opinion, best serve the public interest. By submission of this proposal, PROPOSER acknowledges and agrees that the CITY has the right to make any inquiry or investigation it deems appropriate to substantiate or supplement information contained in this Questionnaire, and authorizes the release to CITY of any and all information sought in such inquiry or investigation. 3.5RELEASES , I/PROPGOLF 3 12.ATTACHMENT A (Proposer’s Questionnaire), and ATTACHMENT B (Option to Lease Agreement) are attached to and by this reference made a part of this PROPOSAL. 13.PROPOSER acknowledges and agrees that the Option to Lease Agreement and its exhibits, including the Lease, may .be subject to change and further negotiation with the City, based on the proposed use by the successful PROPOSER for the property. PROPOSER (Please sign) (Corporate seal) Date 3.5RELEASES . ii PROPGOLF 4 PROPOSER’S OUESTIONNAIRE All information requested in this questionnaire MUST be furnished by the PROPOSER, and MUST be submitted with the PROPOSAL. Statements must be complete and accurate. Omission, inaccuracy, or misstatement MAY be cause for rejection of this PROPOSAL. How did you learn of this PROPOSAL offering? ( ( ( ) I. ) 2. ) 3. Received City direct mail flyer Word of mouth Read about offering in following newspaper, magazine or newsletter: I. PROPOSER Name of PROPOSER exactly as it appears on the PROPOSAL and as it will appear on any proposed agreement with the City: Address of PROPOSER for purposes of notices or other communication relating to the PROPOSAL: Telephone Number of PROPOSER: PROPOSER intends to operate as a Sole Proprietorship ( )- Partnership ( Corporation ( ): Joint Venture ( ); or ); 3.5RELEI£SES . 1/GOLFB ATTACHMENT A 1 II. SOLE PR@PRIETORSHIP STATEMENT If a Sole Proprietorship, furnish the following: 1. Name in full: 2. Address: 3. Bi rthdate:Place of Birth: 4. California Driver’s Lic. No. Is proprietor doing business under a fictitious business name? If so, furnish evidence that proprietor is authorized to do business under such fictitious business name (e.g.) notice published in newspaper of general circulation; no. of filing with a County Clerk). Ill. PARTNERSHIP STATEMENT If a Partnership, furnish the following: Date of Organization? General Partnership ( ) Limited Partnership ( ) 3. Statement of Partnership recorded? Yes ( ) No ( 3.5REL EASES . 1/GOLFB Date Book Page County Has the partnership done business in Santa Clara County? Yes ( )No ( )When? AI-FACHMENT A 2 Name, address, and partnership share of each partner. Name Address Share Furnish the birth date, place of birth, and California Driver’s License number of each person shown above. IV.CORPORATION STATEMENT If a Corporation, furnish the following: 2. 3. 4. o When incorporated? Where incorporated? Agent for service: Is the corporation authorized to do business in California? Yes ( ) No ( ) The corporation is held: If so, as of what date: Publicly ( ) Privately ( ) If publicly held, how and where is the stock traded? 3.5RELEASES . 1/GOLFB AI-IACHMENT A 3 List the following: a.Number of voting shares: b.Number of non-voting shares: c.Number of shareholders: Authorized Outstandi n_q d.Value per share of common stock: Par Book Market o 10. Furnish the name, title, address, and the number of voting and non-voting shares of stock held by each officer, director, and principal shareholder. Furnish the birth date, place of birth, and California Driver’s License number of each person shown under Item 7 above. Attach a copy of Certificate of Good Standinq obtainable from California Secretary of State. V. NON-PROFIT CORPORATION STATEMENT If a non-profit corporation, furnish one copy of the following: Articles of incorporation Bylaws A letter from .the Internal Revenue Service stating that the organization is tax exempt under Section 501(c)(3) or 101(b) of the IRS Code. A tax-exempt status under Section 170(b) or 509(a) is also acceptable. The IRS letter must contain the proper name and address of the organization, or a copy of the change notice which has been forwarded to them. A letter from the State of California stating that the organization is tax exempt. 3.5RELEASES . IlGOLFB ATTACHMENT A 4 2.State the mission of the organization:. Please attach an organization chart showing Board of Directors, members, i f any, management and staffing levels. Please include a membership list of your Board of Directors, their city of residence, occupations, and dates of service on the Board. How often does your Board meet? What was the average attendance of Board members at Board meetings last year? VI.JOINT VENTURE STATEMENT If a Joint Venture, answer the following: Date of Organization Joint Venture Agreement recorded? Yes ( ) No ( ) Has the Joint Venture done business in Santa Clara County? Yes ( ) No ( ) When? Name and address of each Joint Venturer: Name Address 3.5RELEA.SES. 1/GOLFB ATTACHMENT A S Furnish the birth date, place of birth, and California Driver’s License number of each person or principals or officers of any entity shown under Item 4 above: 6.Attach a complete copy of the Joint Venture Agreement and any amendments. Vll. FINANCIAL DATA A.FINANCIAL STATEMENT Attach complete audited financial statements, prepared in accordance with generally accepted accounting principles, reflecting your current financial condition and that of the previous five years. The report must include a balance sheet and income statement and must be audited by a licensed auditor. You must be prepared to substantiate all information shown. B.SURETY INFORMATION Have you ever applied for and obtained a bond? If so, provide details of most recent bond. Have you ever had a bond or surety denied, canceled or forfeited? Yes ( ) No ( ) If yes, attach a statement naming the bonding company, date, amount of bond, and reason for such cancellation or forfeiture. 3.5RELEASES . 1/GOLFB ATTACHMENT A 6 C.BANKRUPTCY INFORMATION Have you ever filed bankruptcy or been declared bankrupt? Yes ( ) No ( ) If yes, give details, state date(s), court jurisdiction(s), case docket number(s), amount of liabilities, and amount of assets. Do PROPOSED METHOD OF FINANCING REPAIRS/IMPROVEMENTS/USE/OPERATION The development and operation to which this proposal relates shall be financed in the following manner: Have you or any principals or officers of the partnership or officers or directors of the corporation, as applicable, ever been convicted of a felony? Yes ( ) No ( ) If yes, please state date(s), court location(s) and details of conviction. 3.5RELEASES . I/GOLFB ATTACHMENT A 7 Vlll. EXPERIENCE STATEMENT Describe in detail the duration and extent of your experience with special emphasis upon experience directly related to development and/or management of the type of operation proposed for this project. Also describe, in detail, the pertinent experience of the persons who will be directly involved in operation and/or management of the operation proposed for this project. Please include any construction experience. 3.5RELEASES. 1/GOLFB ATTACHMENT A 8 IX. REFERENCES List at least four persons or firms with whom you have conducted business transactions during the past three years. At least two references named should have knowledge of your ability to finance the proposed project and your debt payment history. At least two references should have knowledge of your abilities to operate the proposed facility. REFERENCE NO.1 Name: Firm: Title: Address: Zip Telephone: Nature and magnitude of purchase, sale, loan, business association, etc.: BIEFERENCE NO. 2 Name: Firm: Title: Address: Zip Tel ephone: Nature and magnitude of purchase, sale, loan, business association, etc.. 3.5RELEASES. 1/GOLFB AI-FACHMENT A 9 IX.REFERENCES List at least four persons or firms with whom you have conducted business transactions during the past three years. At least two references named should have knowledge of your ability to finance the proposed project and your debt payment history. At least two references should have knowledge of your abilities to operate the proposed facility. REFERENCE NO. 3 Name: Firm: Title: Address: Telephone: Zip. Nature and magnitude of purchase, sale, loan, business association, etc.: REFERENCE NO. 4 Name: Firm: Title: Address: Tel ephone: Zip. Nature and magn#tude of purchase, sale, loan, business association, etc.: 3,5RELEASES , 1/GOLFB ATTACHMENT A 10 X. METHOD OF OPERATION Describe your specific plan for development and/or operation of the proposed facility. Discuss any oPtional services and uses which you will seek permission to provide. 3.5RELEASES . i/GOLFB ATTACHMENT A 11 XI. FINANCIAL INFORMATION Ao ESTIMATE OF GROSS RECEIPTS - Provide your estimate of the expected average annual gross receipts to be derived during the first ten operating years from each required use or service and for each significant optional use or service which you plan to provide: 3,5RELEASES . I/GOLFB ATTACHMENT A 12 XI.FINANCIAL INFORMATION ESTIMATED CONSTRUCTION COSTS - Land Related Direct Construction Costs: Land Preparati on; i ncl udi ng off-sites, grading, etc. Landscaping Building Related Direct Construction Costs: Shell Construction Interior Finishes Fixtures & Other Improvements Indirect Costs: Architect & Engineering Legal, Appraisal & Accounting: Construction Loan Costs*: i.points ii.interest d. Other *Assumes construction loan of $ for will be: Sub-Total Sub-Total Sub-Total Total Estimated Construction Costs with interest estimated @ % months construction period. Source of construction loan payments PR0-FORMA ANALYSIS - On the attached page provide a five-year pro-forma analysis of income and expenses for the proposed project. 3.5RELEASES. 1/GOLFB ATTACHMENT A 13 ©E XII.OTHER INFORMATION Please provide any other information which you feel will be helpful in evaluating your ability to successfully develop and/or operate the proposed facility in compliance with the City’s Request for Proposals. 3.5RELEASES . 1/GOLFB AITACHMENT A 15 PROPOSER’s MINORITY EMPLOYMENT PLAN (TO BE COMPLETED UPON SELECTION ONLY) Using this form or additional sheets, please provide your proposed plans related to employment of minorities for all levels of employment opportunities related to the proposed operation on or from the Leased Premises. 1.What steps have been or will be taken to: a. Recruit Minorities? b. Assure equal employment opportunity for all persons? c.Provide training for new .hires where necessary to assure ample opportunities for less qualified to improve their qualifications? d.Provide opportunities for employee upgrading and training to assure equal opportunity for advancement and promotion? e.Provide counseling service for all who may need help to advance especially for newer employees? f. Educate supervisors regarding nondiscrimination practices? 2.Provide estimates of total employment by job classification and an estimate of the number of minorities, by job classification, for the proposed operation on and from the Leased Premises. Proposer Recommended for Acceptance:Accepted: Manager, Real Property Director of Purchasing Date: 3.5RELEASES . 1/GOLFATB [] City Manager [] Assistant City Manager ATTACHMENT A 16 Project: Parcel No. : CERTIFICATE OF NON-DISCRIMINATION BY SUPPLIERS As suppliers of goods or services to the public on or from the Premises described elsewhere in this Request for Proposal, Proposer certifies that it does not discriminate in its employment with regards to race, religion, creed, national origin or disability; that it is in compliance with all Federal, State and local directives and executive orders regarding non-discrimination in employment; and that it agrees to demonstrate positively and aggressively the principle of equal opportunity in employment. Proposer acknowledges that, if chosen as the successful proposer, the attached Proposer’s Minority Employment Plan will be completed with respect to the operation described elsewhere in this Request for Proposal. City’s City Manager shall determine whether or not the plan is adequate. It is Understood, however, that no estimate furnished as a part of the attached plans shall be construed as a hiring quota. It is further understood that a Tenant shall not be deemed in material breach of the lease upon award, when such Tenant has made a reasonable and substantial effort to comply with said Plan. Proposer: Title of Person Signing: Signature: Date: 3.5RELEASES. IlGOLFATB ATTACHMENT A 17 PROPOSED CHANGES TO DOCUMENT* If you believe changes to the forms of the document(s) (Option to Lease Agreement and/or Lease) are necessa{yfor you to successfully operate the proposed facility please identify the clauses requiring changes below and specifically indicate the nature of the required change on the document or on another sheet of paper. IMPORTANT -any proposed changes should relate to the particular proposed use. Remember that CITY may reject any or all proposals, and required revisions to the document(s) may be grounds for rejection. Notwithstanding the foregoing, the form of the documents may also be subject to change by the City and further negotiation, based on the City Council’s selection of the proposed use of the property. Clauses requiring Changes:Required Changes (use additional sheets if necessary) 3.5RELEASES , 1/GOLFAI’B ATTACHMENT A 18 Project: Project Number: Golf Course CL27/25-95/15 OPTION AGREEMENT This Agreement is made this ~ day of , 199_ bY and between the City Of Palo Alto, a municipal corporation, ("CITY") and , ("OPTIONEE"). RECITALS CITY owns property located in the City of Palo Alto, Santa Clara County commonly referred to as The Palo Alto Municipal Golf Course Restaurant "PROPERTY") more specifically described and shown in the Lease attached. hereto as Exhibit I, which Exhibit is made a part hereof. OPTIONEE desires to obtain an exclusive option to lease PROPERTY, in accordance with the terms and conditions of the Lease attached hereto as Exhibit I. CITY agrees to grant an exclusive option to OPTIONEE during which time OPTIONEE shall satisfy the conditions set forth below prior to the leasing and operation of PROPERTY. NOW THEREFORE, in consideration of the premises set forth above, the parties hereto mutually agree as follows: 1.GRANT OF OPTION (OL 4.0) S CITY hereby grants to OPTIONEE an exclusive option to purchase the rights to develop and operate PROPERTY upon the terms and subject to the covenants and conditions set forth below and in the Lease attached to this Option Agreement as Exhibit I. 2.TERM OF OPTION (OL 5.0) S The term of this option shall be twelve (12) months and shall commence upon execution of this agreement by CITY. 3.PURCHASE PRICE OF OPTION (OL 6.0) S The purchase price of this option shall be $ ( ) due and payable to CITY upon execution of this option by OPTIONEE. In addition, OPTIONEE shall pay CITY an additional $9,734.00 (Nine Thousand Seven Hundred Thirty-Four Dollars as reimbursement for the cost of the recently installed carpeting within the PREMISES. 4.CONDITIONS PRECEDENT (OL 7.0) S This option may not be exercised by OPTIONEE unless and until each and every following condition has been satisfied: Ao OPTIONEE shall have made the payment required in accordance with Clause 3 (PURCHASE PRICE OF OPTION) above. OPTIONEE shall have submitted schematic plans (the "Schematic Plans") to CITY Within 2 months of the commencement of this option. Schematic Plans shall include a site layout of all buildings, landscape developments, schematic floor plans for all structures, simple elevations of all structures, a plan for fulfilling parking requirements, identification of proposed architectural theme or style, a detailed description of all proposed improvements (including proposed uses and methods of operation and a general outline specification which identifies proposed construction material and methods), and an estimate of the total construction cost for all proposed improvements. OPTIONEE shall have applied for and received a conditional use permit for the proposed development and operation from CITY’s Zoning Administrator. OPTIONEE shall have submitted to, and shall have received approval of its development plans (the "Development Plans") for PROPERTY from CITY’s Architectural Review Board (ARB). The Development Plans shall be consistent with published submittal requirements of the ARB. At a minimum, Development Plans shall include the Schematic Plans, interior plans, structural plans, exterior elevations, and landscaping plans and shall indicate specific plans and details of the resource conservation features to be included. OPTIONEE shall have complied with the California Environmental Quality Act (CEQA), as amended, and all related CITY procedures for 3.5RELEASES.1/OLGOLF ATTACHMENT B 2 implementing CEQA, to allow the PROJECT to be implemented. OPTIONEE shall have submitted to CITY’s Chief Building Official certification that the plans for any proposed building construction comply, in all respects, with current building codes, the federal Americans with Disabilities Act of 1990, as amended, including any implementing regulations, and energy conservation requirements as set forth in California Code of Regulations. Title 24 for non- residential construction. The form and content- of said certifications shall be in conformance with the requirements of California Code of Regulations, Title 24 for non-residential construction. OPTIONEE shall have obtained approval of the construction drawings for the proposed development (the "Construction Drawings") from the City Engineer and Chief Building Official, Construction Drawings shall include: Complete architectural, landscaPe and engineering working drawings: Complete construction specifications: Complete construction contract form: and Proposed construction schedule. OPTIONEE shall have provided to CITY’s Real Property Manager evidence that OPTIONEE has obtained any and all permits necessary to conduct and carry out the activities and purposes specified in the Lease, from any and all agencies having jurisdiction. These permits include, but are not limited to, alcoholic beverage license, health permits, occupancy permits, and building permits if any alternations are proposed by OPTIONEE. OPTIONEE has submitted to the City Manager or designee for approval, OPTIONEE’s proposed operating plan and tentative price schedule as set forth in the Lease, and approval of said operating plan and tentative price schedule by City Manager or designee has been obtained. ao Ko 3.5RELEASES. 1/OLGOLF OPTIONEE shall have satisfied CITY’s Real Property Manager that OPTIONEE has sufficient finances or financial commitments to implement the plans approved by CITY in accordance with the above. OPTIONEE shall have submitted to CITY’s Real Property Manager, a ATTACHMENT B 3 security deposit in accordance with Clause XIII SECURITY DEPOSIT) of the attached Lease. If OPTIONEE proposes to hypothecate the leasehold as security for a loan in accordance with Clause XXIV (ASSIGNING, SUBLETTING & ENCUMBERING) of the attached Lease, OPTIONEE shall have submitted to CITY’S Real Property Manager, any and all documents related to such hypothecation and shall pay the necessary processing fees as set forth in the attached Lease. 5.EXERCISE OF OPTION (OL 8.0) S At any time during the option term that OPTIONEE has satisfied each and every condition precedent set forth in Clause 4 CONDITIONS PRECEDENT) above, to the satisfaction of CITY, OPTIONEE may exercise this option by giving CITY’S Real Property Manager written notice of its election to do so, accompanied by two properly executed copies of the attached Lease. CITY shall execute the Lease within one month of receipt of the request to exercise option in accordance with this clause. 6.RETENTION OF PURCHASE PRICE OF OPTION (OL 9.0) S In the event that OPTIONEE does not exercise this option in accordance with the terms hereof, the Purchase Price of the Option shall be retained by CITY in consideration for the granting of this option, and the reimbursement for the cost of carpeting shall be refunded by CITY to OPTIONEE. 7.GENERAL CONDITIONS (OL 10.0) S A.Review by City (OL 10.1) S OPTIONEE hereby acknowledges that one of the purposes of this option is to afford OPTIONEE and CITY the opportunity to determine whether or not OPTIONEE is able to meet the various conditions and obtain the required approvals as set forth in this option. Several of those conditions involve obtaining review and approval from officers, employees or agents of CITY. Each of those reviews shall be conducted in an independent manner and nothing contained herein shall be deemed to limit the jurisdiction or authority otherwise possessed by said officers, employees or agents in the conduct of such review. Nothing contained in this option shall be deemed to imply that said approvals will be forthcoming, and the failure to issue any such approval or permit by any officer, employee or agent 3.SRELEA~E$.I/OLGOLF AI-FACHMENT B 4 of CITY shall not be deemed in any manner a breach of this option, nor shall any such denial give raise to any claim, liability, obligation, or cause of action with respect to this option or the attached Lease. CITY agrees to consent to any application by OPTIONEE with respect to any permits or approvals related to activities or improvements agreed to or required by CITY in accordance with the option which may be required by any governmental or other regulatory agencies aside from CITY. Bo Assignment Prohibited (OL 10.2) S This option has been awarded based on the background and proposals of OPTIONEE; therefore, this Option cannot be sold, assigned or otherwise transferred without the prior written consent of CITY. Failure to obtain CITY’s required written consent shall render said sale, assignment, or transfer void. Extension of Option (10.3) S Upon written request of OPTIONEE stating the reasons therefore, the City Manager, or designee, may, at his or her sole .discretion, extend the term of this option in writing as follows: City Manager or designee may grant an extension of the term of this option for a reasonable period of time, as determined by the City Manager or designee in the event OPTIONEE is delayed in fulfilling the conditions precedent to the exercise of this option by reason of any cause not the fault of, or within the control of, OPTIONEE or its agents or employees; or City Manager or designee may grant an extension of the term of the option for a period not to exceed forty-five(45)days, in the event OPTIONEE is delayed in fulfilling the conditions precedent to the exercise of this option for any other reason. However, the City Manager or designee may grant such extension only upon the following conditions: Written request for such extension shall have been delivered by OPTIONEE to CITY’S Real Property Manager at least fifteen 15) days prior to the expiration of the option term; 3.5RELEASES.1/OLGOLF AI-FACHMENT B 5 Payment in an amount equal to one half the purchase price of the Option shall be submitted to CITY with the request for extension referred to above (in the event an extension is denied, CITY shall refund said amount to OPTIONEE.); and OPTIONEE shall submit, together with its request for extension, evidence of its progress, toward fulfilling the conditions precedent to the exercise of this option, documentation of its proposed actions and feasibility of satisfying said conditions within the term of the extension requested and such other information and material as may be required by the City Manager or designee. D. Termination of Option (OL 10.4) S Failure of OPTIONEE to meet the terms and conditions of this option fully and satisfactorily within the time limits stated shall absolutely and conclusively terminate OPTIONEE’S rights hereunder. Upon termination hereof without exercise of the option by OPTIONEE, OPTIONEE shall, within 5 business days of receipt of request from CITY’S Real Property Manager, deliver to CITY a properly executed Quitclaim Deed quitclaiming any and all interest in and to PROPERTY. Signing of a Lease by CITY and OPTIONEE substantially in the form of Exhibit I, attached hereto, shall be deemed a termination of this Option Agreement. Notices (OL 10.6) S Any notice, tender, or delivery to be given in accordance with this option by either party to the other shall be given in accordance with Clause XXIX(NOTICES) of the attached Lease. F. Representations (OL 10.7) S Each party represents to the other that it has employed no real estate broker or finder in connection with this agreement and hereby agrees to hold the other harmless, and free from any liability in connection with any commission or finder’s fee alleged to be incurred by it. G.Entire Agreement (OL 10.8) S This instrument contains the entire agreement between the parties relating to the option granted by this agreement. Any oral representations or modifications concerning this instrument shall be of no force and effect except in a subsequent modification which is made in writing, and signed by both parties. H.Recovery of Attorney’s Fees (OL 10.9) S In the event of any controversy, claim, or dispute between the parties hereto, arising out of or relating to this agreement or the breach thereof, the prevailing party shall be entitled to recover from the losing party reasonable expenses, including attorney’s fees, and other legal costs. I.Binding on Successors (OL 10.10) S This agreement~ shall bind and inure to the benefit of the respective heirs, personal representatives, successors, and assigns of the parties hereto except as may be expressly provided elsewhere in this agreement. IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement on the day and year first above written. CITY:OPTIONEE: CITY OF PALO ALTO ~ By:.By: Mayor Its ATTEST: City Cl erk By: Its APPROVED AS TO FORM: City Attorney APPROVED AS TO AUDIT AND ACCOUNTING: City Auditor RECOMMENDED FOR APPROVAL: Director, Planning and Community Environment Manager, Real Property Parks & Golf Course Administration, Community Services Department Director, Public Works Di rector, Admi ni strati ve Services Director, Community Services 3.5RELEASES. IZOLGOLF AI-I’ACHMENT B 8 Exhibit I Proj ect : Project Number: GOLF COURSE RESTALngANT CL27/25-95/15 LEASE # This Lease is made this day of , 19__ by and between the City of Palo Alto, a municipal corporation, (CITY) add (TENANT). RECITALS RL 2.0 S Now, therefore, in consideration of these covenants, terms and conditions, the parties hereto mutually agree as follows: CITY desires to lease the Premises to. provide for the operation and maintenance of a restaurant serving primarily the public and customers using the Municipal Golf Course. o TENANT desires to lease the Premises from City to operate and maintain a restaurant serving primarily the~ public and customers using the Municipal Golf Course. I.PREMISES (RL 3.0) S Subject to the terms and conditions set forth in this Lease, CITY leases to TENANT that certain property (PREMISES) described and shown in "Exhibit B" Exhibit B is attached to and, by this reference, made a part of this Lease. Unless specifically provided elsewhere in this Lease, TENANT accepts the PREMISES "as-is" on the date of execution of this Lease. REMASTERLZFORM / LZGOLFCF 1 II.PURPOSE (RL 4.0) S The purpose of this Lease is to provide for the operation and maintenance of restaurant serving primarily the public and customers using the Municipal Golf Course. Iii. REQUIRED AND OPTIONAL SERVICES AND USES (RL 5.0) NS In furtherance of the purposes stated above, the following required and optional services and uses shall be provided, permitted or prohibited: Required Services and Uses. Throughout the term of this Lease TENANT shall provide the following services and activities: TENANT is hereby authorized to and shall conduct in the Premises a food and beverage service, including sale of alcoholic beverages, in order to provide for the needs of the public and those persons utilizing the Pa!o Alto Municipal Golf Course in accordance with Exhibit D, attached hereto. In addition, TENANT is authorized to and shall make available to various golf related groups, meeting rooms which are a part of the Premises, except that TENANT shall not be required to make available such meeting rooms during lunch hour, i.e., between the hours of 11:30 a.m. and 2:00 p.m. (This exception shall prevail over the provision in the Golf Course Restaurant Policy Statement with respect to meeting rooms, attached hereto as Exhibit D.) Notwithstanding the above, TENANT shall give priority to the scheduling of meeting rooms for golf and golf-related activities including pre and post tournament activities in accordance with Exhibit D attached hereto. However, golf and golf-related activities shall not automatically bump already scheduled non-golf related activities. TENANT shall not charge room renta! fee for any golf-related activities which are scheduled during TENANT’s approved regular business hours. For golf-related meetings scheduled during TENANT’s non business hours, TENANT may charge a reasonable room rental fee when no food service is provided. TENANT may, in accordance with Clause 5 of the Genera! Conditions to this Lease, charge reasonable room rental fees for all other scheduled uses of the meeting rooms permitted by this Lease. TENANT shall REMASTERLZFORM / L ZGOLFCF 2 provide an express line or area for golf customers requiring service before or in between rounds of golf. B o Optional $@rvic@s and Uses. Subject to the prior written approval of the City Manager or designee, which approval shall be within the sole discretion of the City Manager or designee, and subject to agreement on Clause VI.B. (Rent for Optional Services and Uses) as provided below, TENANT may also use the demised PREMISES to provide additional services and uses which are ancillary to and compatible with the required services and uses set forth above. Examples of such ancillary services and uses may include but are not limited to the following: Vending machines, including games and convenience items. Meeting room rental for non-golf related activities. TENANT may, at its cost, place one identification sign on or beneath the existing golf course sign and one identification sign on the clubhouse building; and may place advertisements in newspapers, magazines or on radio. If, in the opinion of the City Manager, based upon his or her sole discretion, the number of non-golfing users is adversely affecting access to the facilities and services by the golfing public, TENANT agrees that upon 30 days’ written notice from the City Manager, advertising shall cease or be modified to eliminate such adverse effect. The signs shall be approved by LESSOR in iccordance with this Lease and applicable City of Palo Alto processes including ARB and Site and Design review prior to installation. IV.TERM (RL 6.0) NS This Lease shall commence on the date of execution by the CITY. The term of this Lease shall be in accordance with the following schedule: Extent of Leasehold Improvements Made by Tenant within First Five Years of Leas@ Initial, Term No tenant improvements Addition of deck and pass through food service Addition of deck, expansion of bar, club room & kitchen I0 years 15 years 20 years REMASTEP.L ZFORM/LZGOLFCF 3 The extent of TENANT’S leasehold improvements shall be determined according to actual costs for work and services performed on or supplied to the PREMISES by TENANT and a fair and reasonable estimate of value of donated materials or services excluding in either case, the costs or value of any TENANT furnishings and fixtures (other than plumbing and electrical and other fixtures essential to the operation of the PREMISES and which must remain) which may be removed by TENANT without damage to the PREMISES as documented in accordance with Clause XIX (AS BUILT PLANS) below. Such costs shall hereinafter be referred to collectively as "DOCUMENTED COSTS." V.TERMINATION OF PRIOR AGREEMENTS (RL 6.1) S This Lease supersedes any and all prior leases or agreements entered into by CITY for use of the PREMISES. All such prior leases or agreements are null and void. Vl.CONSIDERATION/RENT (RL 7.0) S Consideration of CITY.In consideration for TENANT’S use of the Premises provided by CITY, TENANT shall, in accordance with Clause X (RENT PAYMENT PROCEDURE), pay to CITY, the greater of the minimum annual rent or the percentage rent as follows: Minimum Annual Rent. The minimum annual rent for the first Lease year (being the first twelve months following the commencement of this Lease) shall be Thirty Six Thousand dollars ($36,000.00). The minimum annual rental for each subsequent lease year shall be adjusted automatically to the greater of the following: ao Seventy-five percent (75%) of the annual rent paid by TENANT to CITY in accordance with this Clause for the~previous Lease Year, or Th~ initial minimum annual rent adjusted in proportion to eighty-five percent (85%) of the REMASTERLZFORM/LZGOLFCF 4 change in the Consumer Price Index, All Urban Consumers (base years 1982-1984 = i00), San Francisco-Oakland-San Jose CSMA published by the United States Department of Labor, Bureau of Labor Statistics, or the official successor to this index. The adjustment shall be effective on each anniversary of the commencement of-this Lease and in no event shall the minimum rent be less than the minimum annual rent for the preceding lease year. Should this Lease be terminated during the Lease year, the applicable minimum annual rental shall be prorated. Percentage Renta!. Percentage rental for TENANT’S use of the PREMISES shall be calculated using the following percentages of gross receipts from business operations conducted on or from the PREMISES: Minimum Year Percentage Rent First Year Second Year Third - Tenth Year Eleventh Year and Beyond 5.0% 5.5% 6.0% Minimum of 6%, to be negotiated based on value of tenant improvements. Rent for Optional Services and ~es. TENANT shall, in addition to the above, pay to CITY rent for approved optional services and uses. Rent for optional services and uses approved in accordance with Clause III REQUIRED & OPTIONAL USES) subparagraph B., shall be mutually agreeable to the City Manager and TENANT. VII.CHARGE FOR UNAUTHORIZED SERVICES AND USES (RL 7.4) S TENANT shall pay CITY a sum equal to one hundred percent (100%) of the gross receipts for any service or use that is not permitted or authorized by Clause III (REQUIRED & OPTIONAL USES). This payment is subject to the "due date" requirement provided in Clause XI(CHARGE FOR LATE PAYMENT). The existence of such charge or the payment or receipt of money under this clause, does not constitute REMASTERL ZFORM / LZGOLFCF 5 an authorization of a particular service or use and does not constitute a waiver of CITY’S right to terminate such service or use. VIII. CONTROL OF HOURS, PRICES AND PROCEDURES (RL 8.0) NS TENANT shall continuously use the PREMISES for the uses specified in Subparagraph A of Clause III REQUIRED AND OPTIONAL SERVICES & USES) during all usual business hours and on all such days as comparable businesses in the area or as are customary for the Required and Optional Services and Uses permitted in accordance with Clause III (REQUIRED AND OPTIONAL SERVICES & USES). Minimum hours for food service are 6 a.m. to 3 p.m. during daylight savings time and 7 a.m. to 3 p.m. for the remainder of the year. Minimum hours of operation for the bar and meeting rooms are II:00 a.m. to dusk year-round. TENANT shall use only such space within the PREMISES for office, clerical or other non-sales or services uses as is reasonably required for TENANT’S required or approved uses of the PREMISES. TENANT shall at all times maintain a written schedule setting forth the operating hours and operating procedures for each required and optional use provided on or from the PREMISES. A schedule of prices charged for all goods and/or services related to the required and optional uses of this Lease shall also be maintained and individual merchandise must be clearly priced. TENANT agrees that when alternate forms of packaging are available, only items packaged in the manner most compatible with the goals of reducing litter and preserving the environment shall be sold. Upon written request, TENANT shall furnish the City Manager or designee a copy of the schedules and procedures. Should the City Manager or designee decide that any part of these schedules or procedures is not justified with regard to fairly satisfying the needs of the golfers using the restaurant, TENANT, upon written notice from the City Manager or designee, shall modify these schedules or procedures to the satisfaction of the City Manager. Prior to issuing such a notice, the City Manager or designee shall personally review the schedule and procedures and confer with TENANT or its representative. Primary consideration shall be given to the public’s benefit in implementing this clause. All prices charged for goods and/or REMASTERLZFORM/LZGOLFCF 6 service supplied to the public on or from the PREMISES shall be -fairand reasonable, based upon the following considerations: no The degree of public service involved in the sale of the goods and/or services: The market prices charged by other competing and/or comparable businesses; and C0 The reasonableness of the profit margin in relation to industry-wide standard. TENANT’S failure to comply with the provisions of this clause shall. constitute a material breach of this Lease and shall be grounds for termination of this Lease. TENANT agrees that it will operate and manage the services and facilities offered in a competent and efficient manner at least comparable to other well managed operations of a similar type. TENANT shall at all times retain active, qualified, competent, and experienced personne! to supervise TENANT’S operation and to represent and act for TENANT. TENANT shall require its attendants and employees to be properly dressed, clean, courteous, efficient, and neat in appearance at all times. TENANT shall not allow any person(s) in or about the PREMISES who shall use offensive language and/or act in a boisterous or otherwise improper manner. TENANT shall strictly monitor and supervise attendants and employees to insure the maintenance of a high standard of service to the public. TENANT shall replace any employee whose conduct is detrimental to the best interests of the public. IX.DEFINITION OF GROSS RECEIPTS (RL 9.0) S The term "gross receipts" upon which percentage rentals are to be based shall include: no The sale price of all goods, wares, merchandise, and products sold on or from the PREMISES by TENANT, whether for cash or credit and whether payment is actually made or not; B o The charges made by TENANT for sale or rendition on or from the PREMISES of services of any nature or kind whatsoever, REMASTERLZ FORM / LZGOLFCF 7 Co Fo whether for cash or credit and whether payment is actually made or not; All admission, entry rental, and other fees of any nature or kind charged by TENANT (including but not limited to deposits accepted by TENANT); All sums deposited in any coin-operated vending machine or other device maintained on the PREMISES, regardless of the ownership of the machine or device, or whether such sums are removed and counted by TENANT or others, and regardless of what percentage thereof TENANT is entitled to receive; The fair renta! value of facilities used by TENANT or its employees for purposes other than the business purposes for which the PREMISES are leased; Security deposits collected by TENANT from its subtenants, agents, concessionaires or licensees and not placed in an escrow or trust account with interest not accruing to the TENANT. Xo no B o RENT PAYMENT PROCEDURE (RL I0.!) S Payment of Rentals. On or before the twentieth day of each .month, TENANT shall pay rent to CITY as set forth in Clause VI (CONSIDERATION/RENT) and shall render to CITY a correct statement of all applicable gross receipts and rent due for that portion of the current accounting year which ends with and includes the last day of the preceding calendar month. The statement shall be signed by TENANT or its responsible agent under penalty of perjury, and shall be substantially in the form of Exhibit E attached to, and by this reference, incorporated into this Lease. Commencement of Obligation to Pay. TENANT’S obligation to pay percentage rent to CITY for activity or occupancy of any sublessee of all or a portion of the PREMISES shall commence with the earliest of the fol!owing dates (whether o9 not CITY has approved the sublease and regardless of whether or not a percentage rent was established by CITY): REMABTERLZFORM/LZGOLFCF 8 i.Commencement date of sublease; 2.Date of physical occupancy; or o Date of earliest activity (i.e., sale of goods, solicitation of business, construction or alteration by sub!essee, etc.). Acceptance of rental hereunder shall not constitute approval of any unauthorized sublease or use. Co Place of Payment and Filing. Rental payments shal! be delivered to, and statements required by this clause and Clause XII (RECORDS AND ACCOUNTS) shall be delivered to the Revenue Collections Division, 250 Hamilton Avenue, PO Box 10250, Palo Alto, California 94303. The designated place of payment and filing may be changed at any time by CITY upon ten (i0) days written notice to TENANT. Rental payments may be made by check made payable to City of Palo Alto, however, TENANT assumes all risk of loss or delay if payments are made by mai!. Do Acceptance of Late or Incorrect Rent. TENANT specifically agrees that acceptance of any late or incorrect rentals submitted by TENANT shall not constitute an acquiescence or waiver by CITY and shall not prevent CITY from enforcing Clause XI (CHARGE FOR LATE PAYMENT) or any other remedy provided in this Lease. Xl. CHARGE FOR LATE PAYMENT (RL ii.0) S If any payment of rent As specified in Clause VI (CONSIDERATION/RENT) or if any other sum due CITY is not received by CITY, a late charge determined in accordance with the following formula shall be added to the delinquent payment, and the tota! sum shall become immediately due and payable to CITY: Where : L = A + D[ (R + 2%)/12)] L = The charge for late payment due CITY A = The administrative costs involved with REMASTERLZFORM/LZGOLFCF 9 collection of past due sum, e.g., Delinquent Notices, legal fees, telephone contacts, etc., which for the purpose of this clause, shall be no less than $40.00. D = The amount of delinquent payments The current average annual rate of return on the City’s portfolio of invested funds As reported by Treasury Manager. Acceptance of late charges and/or any portion of the overdue payment by CITY shall in no event constitute a waiver of TENANT’S default with respect to such overdue payment, nor prevent CITY from exercising any of the other rights and remedies granted hereunder or by any provision of law. XII. RECORDS AND ACCOUNTS (RL 12.0) S A0 Records. TENANT shall, at all times during the term of this Lease, keep or cause to be kept true and complete books, records, and accounts of all financial transactions conducted in the operation of all business activities, of whatever nature, conducted pursuant to the rights granted herein. The records, books and accounts shall be kept or made available to CITY at a location within Santa Clara or San Mateo County. The records must be supported by source documents such as sale slips, cash register tapes, purchase invoices, or other pertinent documents. Except as may be otherwise provided by this Lease, all retail sales and charges shall be recorded by means of cash registers or other comparable devices which display to the customer the amount of the transaction and automatically issue a receipt. The registers shall be equipped with devices which lock in sales totals and other transaction records, or with counters which are not resettable and which record transaction numbers and sales details. Totals registered shall be read and recorded at the beginning and end of each day. Retail sales and charges may be recorded by a system other than cash registers or other comparable devices provided that system is approved by the City Auditor. In the event of admission charges or rentals, TENANT shall issue serially numbered tickets for each such admission or REM~.STERLZFORM/LZGOLFCF 10 rental and shall keep an adequate record of the tickets, both issued and unissued. Upon request of TENANT and at the City Auditor’s sole discretion, the City Auditor may authorize the keeping of the above-referenced books of account and records and supporting source documents in a single location outside the limits of Santa Clara or San Mateo County provided TENANT agrees to pay all expenses including, but not limited to, transportation, food, and lodging necessary for the City Auditor to send its representative to audit or review books and records. This right shall not be exercised by the City Auditor more than once each accounting year. The Accounting Year. The accounting year shall be twelve full calendar months. The accounting year may be established by TENANT, provided TENANT has notified CITY in writing of the accounting year to be used. The accounting year shall be deemed to be approved by CITY unless CITY objects to TENANT’S selection in writing within sixty (60) days of receipt of TENANT’S written notification. In the event TENANT fails to establish an accounting year of its choice, regardless of the cause, the accounting year shall be synonymous with the twelve (12) month period following commencement of this Lease. Once an accounting year is estabiished, it shall be continued through the term of the Lease unless CITY specifically approves in writing a different accounting year. CITY shall approve a change in accounting years only in the event of undue hardship being placed on either the TENANT or CITY, and not because of mere convenience or inconvenience. Financial Statements and Audit by CITY. Within ninety (90) days after the end of each accounting year, TENANT shall, at its own expense, submit to CITY a balance sheet and income statement prepared and audited by a Certified Public Accountant, reflecting business transacted on or from the PREMISES during the preceding accounting year. The Certified Public Accountant must attest that the balance and income statement submitted are an accurate representation of TENANT’S records As reported to the United States of America for income REMASTERLZFORM / LZGOLFCF 1 l tax purposes. At the same time, TENANT shall submit to CITY a statement certified As to the accuracy by a Certified Public Accountant wherein the total gross receipts for the accounting year are classified according to the categories of business established for percentage rental and listed in Clause VI (CONSIDERATION/RENT) and for any other business conducted on or from the PREMISES. The City Auditor may accept alterna- tives to the above Certified Public Accountant~audited statement provided that in the City Auditor’s sole opinion, the alternative provides sufficient assurance that the financial statement accurately reflect business transacted on or from the PREMISES. All of TENANT’S books of account and records and supporting source documents shall be made available to CITY’S representatives at any and all reasonable time during the term of this Lease and within two (2) years after expiration or termination of this Lease, for the purpose of determining the accuracy of the monthly statements of sales and monies received, and rent due and paid to CITY. Notwithstanding the previous paragraph, the full cost of any such audit by CITY, As determined by CITY, shall be borne by TENANT if either of the following conditions exists: The audit reveals an underpayment of more than two percent (2%) between the rent due as reported and paid by TENANT in accordance with this Lease and the rent due as determined by the audit; or o TENANT has failed to maintain true and complete books, records, accounts, and supporting source documents in accordance With subparagraph A above. The adequacy of records shall be determined by the City Auditor. Otherwise, CITY shal! bear the cost of any such audit. Upon the request of CITY, TENANT shall promptly provide, at TENANT’S expense, necessary data to enable CITY to fully comply with any and all requirements of the State of California or the United States of America for information or reports relating to this Lease and to TENANT’S use of the PREMISES. Such data shall include, if required, a detailed breakdown of TENANT’S use of the PREMISES, and/or a detailed breakdown of TENANT’S receipts and REMASTERL Z FORM/LZGOLFCF 12 expenses. XIII. SECURITY DEPOSIT (RL 13.0) S A security deposit in the sum of Five Thousand Dollars ($5,000.00) shal! be provided to CITY by TENANT. The security deposit shall take one of the forms set out below and shall guarantee TENANT’S full and faithful performance of all the terms, covenants, and conditions of this Lease. A. Cash. The assignment to CITY of a savings deposit held in a financial institution in Santa Clara or San Mateo County acceptable to CITY. At a minimum, such assignment shall be evidenced by the delivery to CITY of the original passbook reflecting the savings deposit and a written assignment of said deposit to CITY in a form approved by the Real Property Manager. Co A Time Certificate of Deposit from a financial institution in Santa Clara or San Mateo County wherein the principa! sum is made payabl$ to CITY or order. Both the financia! institution and the form of the certificate must be approved by the Real Property Manager. A Letter of Credit or other instrument of credit from a financial institution, subject to regulation by the state or federal government, pledging that fund necessary to secure performance of the Lease terms, covenants, and conditions, are on deposit and guaranteed for payment, and agreeing that the funds shall be trust funds securing TENANT’S performance and that all or any part shall be paid to CITY or order upon demand by CITY. Both the financial institution(s) and the form of the instrument(s) must be approved by the Real Property Manager. Regardless of the form in which TENANT elects to make said security deposit, all or any portion of the principal sum shall be available unconditionally to CITY~ for correcting any default or breach of this Lease incurred by CITY As a result of the failure by TENANT, its successors or assigns, to faithfully perform all of the terms, covenants, and conditions of this Lease. Should TENANT elect to provide a Time Certificate of Deposit, Letter of Credit, or other instrument of credit, hereinafter collectively referred to as "INSTRUMENT", to fulfil! the security deposit requirements of this Lease, the INSTRUMENT shall contain a provision whereby the institution issuing the INSTRUMENT agrees to provide CITY with written notice of its intent not to renew the INSTRUMENT at least thirty (30) days prior to expiration or termination of the INSTRUMENT. If TENANT has not provided CITY with an acceptable alternate form of security deposit at least ten (I0) days prior to expiration or termination of the INSTRUMENT, CITY may demand and obtain from the institution issuing the INSTRUMENT, the amount secured by the INSTRUMENT as satisfaction of the security deposit provision of this Lease. Should TENANT elect to assign the savings deposit to CITY, or provide an alternate INSTRUMENT, to fulfill the security deposit requirements of this Lease, the assignment, or issuance of the INSTRUMENT shall have the effect of releasing the depositor or creditor therein from liability on account of the payment of any or all of the principalsum to CITY or order upon demand of CITY. The agreement entered into by TENANT with a financial institution to establish the deposit necessary to permit assignment or issuance of a certificate As provided above, may allow the payment of interest accruing on account of the deposit toTENANT, or order. TENANT shall maintain the required security deposit throughout the Lease term. Failure to do so shal! be deemed a default and may be grounds for immediate termination of this Lease. The security deposit shall be rebated, reassigned, released, or endorsed to TENANT or order, as applicable, at the end of the Lease term, provided TENANT has fully and faithfully performed each and every term, covenant, and condition of this Lease. XIV. MAINTENANCE OBLIGATIONS OF TENANT (RL 14.0) NS TENANT shall, to the satisfaction of CITY, keep and maintain the demised premises and all improvements of any kind which may be erected, installed or made thereon in good condition and in substantial repair, including doors and locks, carpeting and fl~or coverings and replacement of broken windows, if such breakage is caused from within the demised premises. TENANT is responsible to keep and maintain all items owned and furnished by CITY listed in Attachment C (Inventory of Golf Course Restaurant Furnishings). It REMASTERL Z FORM / LZGOLFCF 14 shall be TENANT’S responsibility to take all steps necessary or appropriate to maintain such astandard of condition and repair, including plumbing and electrical systems within the demised premises or exclusively serving the demised premises. CITY shall conduct an annual inspection of all cooking, refrigeration and other fixed equipment to assure that it is being maintained in good and safe condition. TENANT expressly agrees to maintain the PREMISES in a safe, clean, wholesome, and sanitary condition and substantial repair, to the complete satisfaction of CITY and in compliance with all applicable laws. TENANT further agrees to provide approved containers for trash and garbage including recycling containers for recyclable trash and garbage, and to keep the PREMISES free and clear of rubbish and litter. CITY shall have the right to enter upon and inspect the PREMISES at any time for cleanliness and safety. TENANT shall designate in writing to CITY an on-site representative who shall be responsible for the day-to-day operation and level of maintenance, cleanliness, and general order. If TENANT fails to maintain or make repairs or replacements as required herein, CITY may notify TENANT in writing of the failure. Should TENANT fail to correct the situation within a reasonable time thereafter, as established by the City Manager, the Real Property Manager may make, or cause to be made, the necessary corrections and the cost thereof, including but not limited to the cost of labor, materials, and equipment and a fifteen percent (15%) charge for administration and overhead, shail be paid by TENANT within ten (I0) days of receipt of a statement of the cost from the Real Property Manager. CITY may also, at its option, choose other remedies available herein, or available by law. XV. MAINTENANCE OBLIGATIONS OF CITY NS CITY shall maintain the three HVAC units and boiler serving the premises, the exterior of the building, public restrooms, exterior walkways, parking lot and landscaping, all mechanical systems serving areas outside of the demised premises and replacement of broken windows if such breakage is caused from outside of the demised premises. CITY shall also be responsible for any major structural repairs REMASTERLZFORM/LZGOLFCF 15 required, not as a result of damage caused by TENANT,its employees, agents or clients. XVI.INITIAL CONSTRUCTION BY TENANT (RL 15.0) S Ao Minimum Construction and Timing. TENANT shall in an efficient and workerlike manner, cause to be designed, constructed, and installed within the PREMISES, at no cost to CITY, appropriate improvements to adequately accommodate those services and uses required by Clause III (REQUIRED & OPTIONAL SERVICES AND USES). The plans prepared by TENANT and approved by CITY during the option period proceeding execution of this Lease shall be a master plan for development of the PREMISES, and the working drawings prepared by TENANT and approved by the City Engineer during the same period shall be the plans, specifications, and time schedule for constructing such improvements. Development proposed by TENANT in the master plan may be scheduled in increments approved by the City Manager or designee. B o Development Plan and ConstructiQn Standards. All design and construction shall conform with the construction and architectural standards contained in City-approved plans and construction drawings and shall meet all other requirements contained in this Lease. XVII.CONSTRUCTION AND/OR ALTERATION BY TENANT (RL 15.1) S no CITY’S Consent. No structures, improvements, or facilities shall be constructed, erected, altered, or made within the PREMISES without the prior written consent of City Council if required by City of Pa!o Alto procedures or ordinances, or otherwise by the City Manager. Any conditions relating to the manner, method, design, and construction of the structures, improvements, or facilities established by CITY shall be conditions of this clause As though originally stated herein. TENANT may, at any time and at its sole expense, install and place business fixtures and equipment within any building constructed by CITY, provided such fixtures and installation have been reviewed and approved by the City Manager. REMASTERLZFORM/L ZGOLFCF 16 B o S%ric% Compliance with Plans ~nd Sp@¢ifications. All improvements constructed by TENANT within the PREMISES shall be constructed in an efficient and workerlike manner and in strict compliance with detailed plans and specifications approved by the City Council if required by City of Pa!o Alto procedures or ordinances or otherwise by the City Manager, or designee, and applicable City of Palo Alto codes and ordinances. Certificate of Inspection. Upon completion of construction of any improvement, TENANT shall submit to the Real Property Manager, a Certificate of Inspection, verifying that the construction was completed in conformance with Title 20 of the California Code of Regulations for residential construction, or in conformance with Title 24 of the California Code of Regulations for non-residential construction, whichever is applicable. XVIII.DAMAGE TO OR DESTRUCTION OF IMPROVEMENTS(RL 15.4) S Total Destruction. In the event the PREMISESor a substantial portion thereof are destroyed by any causethat renders the PREMISES unfit for the purposes designated in Clause III (REQUIRED & OPTIONAL USES) and if the PREMISES are so badly damaged that they cannot be repaired within ninety (90) days from the date of such damage, either party may terminate this Lease by giving to the other party written notice within thirty (30) days of the occurrence of such damage. After such notice of termination has been given, rental (excepting percentage rental, if any) shall be prorated to the date TENANT actually vacates the PREMISES which shall be no later than thirty (30) days from the giving of the notice of termination. B °Insured Partial Destruction. If the PREMISES are partially destroyed by any cause insurable under fire insurance with a standard extended coverage casualty endorsement and the destroyed portion can be rebuilt or repaired within ninety (90) days from the date of destruction, CITY shall repair the damage or destruction with reasonable diligence. In such event, this Lease shall remain in full force and effect; however, until the destroyed PREMISES are repaired, rental (excepting percentage rental, if any) paid by TENANT to CITY REMASTERLZFORM/LZGOLFCF l 7 shall be reduced in the same proportion that TENANT’s square footage is reduced by such destruction. However there shall be no rent abatement or offset should the damage or destruction be caused by TENANT, its employees, agents or contractors. Co Non-Insured Partial Destruction. If the PREMISES are partially destroyed by any cause not insurable by fire insurance with an extended coverage casualty endorsement but the PREMISES can still be used for the purposes designated in Clause III (REQUIRED & OPTIONAL USES), TENANT may, at its option, terminate this Lease unless CITY commences rebuilding or repair of the destroyed portion of the PREMISES within 90 days from the date of destruction. However, there shall be no rent abatement or offset should the damage or destruction be caused by TENANT, its employees, agents or contractors. Such termination by TENANT shall be accomplished by giving CITY written notice of termination not sooner than ninety (90) days nor later than one hundred (i00) days after the occurrence of such damage or destruction. This Lease shall terminate on the date such notice of termination is given to CITY. If CITY accomplishes such repair or if TENANT fails to exercise its option to terminate, this Lease shall remain in full force and effect, however, until the destroyed PREMISES are repaired, rental paid by TENANT to CITY (excepting percentage rent, if any) shall be reduced in the same proportion that TENANT’S leased square footage is reduced by such destruction. However, there shall be no rent abatement or offset should the damage or destruction be caused by TENANT, its employees, agents or contractors. Glass breakage shall not be deemed a partial destruction within the meaning of this clause. XIX. AS BUILT PLANS (RL 15.5) S Upon completion of any major TENANT-constructed improvements, TENANT shall provide the Real Property Manager with a complete set of reproducible "as built plans" reflecting actual construction within or upon the PREMISES. TENANT shal! also provide the Real Property Manager with a statement signed by TENANT under penalty of perjury certified as to accuracy and of actual construction costs REMASTERLZFORM/LZGOLFCF 1 8 for all such improvements. XX. OWNERSHIP OF IMPROVEMENTS (RL 16~0) NS City has furnished and is owner of all items listed in Exhibit C (Inventory of Golf Course Restaurant Furnishings), and City shall retain ownership of this property during and following termination of the lease. All improvements constructed, erected or installed upon the PREMISES must be free and clear of all liens, claims, or liability for labor or material and shall become the property of CITY, at its election, upon expiration or earlier termination of this lease and, upon City’s election, shall remain upon the PREMISES upon termination of this Lease. Title to all equipment, furniture, furnishings and trade fixtures placed by TENANT upon the PREMISES shall remain in name of TENANT, and replacements, substitutions and modifications thereof may be made by TENANT throughout the term of this Lease. TENANT may remove such fixtures and furnishings upon termination of this Lease if TENANT is not then in default under this Lease, provided that TENANT shall repair to the satisfaction of CITY any damage to the PREMISES and improvements caused by such removal and provided that usual and customary lighting, plumbing and heating fixtures shall remain upon the PREMISES upon termination of this Lease. XXI.UTILITIES (RL 17.2) S TENANT shall be responsible for and shall pay, prior to delinquency, all charges for utilities supplied to the PREMISES. However, as gas service is not separately metered and it would be uneconomical to separately meter this service, TENANT agrees to pay to CITY a monthly amount based on an estimate of TENANT’S consumption for this utility service. For the purposes of this clause, the estimated monthly TENANT consumption of this utility service is agreed to be 437* therms, and the amount due CITY for such period shall be the product of this consumption factor and the average rate charged by the supplier of this utility service for such period. TENANT shall include the required utility payment with each month’s rental payment, as shown on Exhibit E attached. *This amount is subject to adjustment by CITY should evidence indicate a change in TENANT’S consumption of gas therms. REMASTERL ZFORM/LZGOLFCF i 9 XXil.INSURANCE (RL 18.0) S TENANT shall maintain insurance acceptable to CITY in full force and effect throughout the term of this Lease. Minimum $cQpe of Insuranc@ Coverage shall be at least As broad As: 2 3) Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001) . Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile Liability, code 1 (any auto). Workers’ Compensation insurance As required by the State of California and Employer’s Liability Insurance. Course of Construction insurance form providing coverage for "all risks" of loss. The policy or policies of insurance maintained by TENANT shall provide the following limits and coverages: POLICY (i)WORKERS’ COMPENSATION MINIMUM LIMITS OF LIABILITY Statutory (2)COMPREHENSIVE Bodily Injury $I,000,000 ea. person AUTOMOBILE $i,000,000 ea. occurrence LIABILITY,Property Damage $I,000,000 ea. occurrence including owned, hired, and non-owned automobiles (3)COMPREHENSIVE GENERAL LIABILITY including products and Bodily Injury $I,000,000 ea. person $i,000,000 ea. occurrence $i,000,000 aggregate Property Damage $i,000,000 ea. occurrence Personal Injury $i,000,000 ea. occurrence completed operations, broad form contractual, and personal injurY. REMASTERLZFORM / LZGOLFCF 2 0 (4)FIRE LEGAL LIABILITY (5)COURSE OF CONSTRUCTION $ 500,000.00 Said sum represents the estimated cost of the improvements and fixtures within the care, custody and control of TENANT. Said sum shall be subject to annual review by LESSOR’s Risk Manager to insure that coverage is adequate to cover changes in the replacement cost of improvements and fixtures within the care, custody and control of TENANT. Completed value of the project. D@duc%ibles and Self-Insured Retentions Any deductibles or self-insured retentions must be declared to and approved by the CITY. At the option of the CITY either: the insurer shall reduce or eliminate such deductibles or self-insured retentions As respects the CITY, its officers, officials, employees and volunteers; or the TENANT shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. Insurance shall be in full force and effect commencing on the first day of the term of this Lease. Each insurance policy required by this Lease shall contain the following clauses: "Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except ~fter thirty (30) days’ prior written notice by certified mail, return receipt requested, has been given to the CITY." o "All rights of subrogation are hereby waived against the CITY OF PALO ALTO and the members of the City Council and elective or appointive officers or employees, when acting within the scope of their employment or appointment." o "The CITY OF PALO ALTO is named As a loss payee on the property and course of construction insurance policies described above." REMASTERLZ FORM/LZGOLFCF 2 i o "The CITY, its officers, officials, employees, agents and volunteers are to be covered As insureds As-respects: liability arising out of activities performed by or on behalf of the TENANT; products and completed operations of the TENANT; premises owned, occupied or used by the TENANT; or automobiles owned, leased, hired or borrowed by the TENANT. The coverage shall contain no special limitations on the scope of protection afforded to the CITY, its officers, officials, employees, agents or volunteers." "For any claims related to this Lease, the TENANT’s insurance coverage shall be primary insurance As respects the CITY, its officers, officials, employees, agents and volunteers. Any insurance or self-insurance maintained by the CITY, its officers, officials, employees, agents or volunteers shall be excess of the TENANT’s insurance and shall not contribute with it." o "Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the CITY, its officers, officials, employees, agents or volunteers." "The TENANT’s insurance shall apply sepa[ately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability." Acceptability of Insurers Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A:X. XXIII. INSURANCE (RL 18.2) TENANT agrees to deposit With the Real Property Manager, on or before the effective date of this Lease, certificates of insurance necessary to satisfy CITY that the insurance provisions of this Lease have been complied with, and to keep such insurance in effect and the certificates therefore on deposit with CITY during the entire term of this Lease. Should TENANT not provide evidence of such required coverage at least three (3) days prior to the expiration of any existing insurance coverage, CITY may purchase such insurance, on REMASTERLZ FORM / L ZGOLFCF 2 2 behalf of and at the expense of TENANT to provide six months of coverage. CITY shall retain the right at any time to review the coverage, form, and amount of the insurance required hereby. If, in the opinion of the Risk Manager, the insurance provisions in this Lease do not provide adequate protection for CITY and for members of the public using the PREMISES, the Real Property Manager may require TENANT to obtain insurance sufficient in coverage, form, and amount to provide adequate protection As determined by the Risk Manager. CITY’S requirements shall be reasonable and shal! be designed to assure protection from and against the kind and extent of risk which exists at the time a change in insurance is required. The Real Property Manager shall notify TENANT in writing of changes in the insurance requirements. If TENANT does not depositcopies of acceptable insurance policies with CITY incorporating such changes within sixty (60) days of receipt of such notice, or in the event TENANT fails to maintain in effect any required insurance coverage, TENANT shall be in default under this lease without further notice to TENANT. Such failure shall constitute a material breach and shall be grounds for immediate termination of this Lease at the option of CITY. The procuring of such required policy or policies of insurance shall not be construed to limit TENANT’S liability hereunder nor to fulfill the indemnification provision and requirements of this Lease. Notwithstanding the policy or policies of insurance, TENANT shal! be obligated for the ful! and tota! amount of any damage, injury, or loss caused by or connected with this Lease or with use or occupancy of the PREMISES. XXIV.ASSIGNING, SUBLETTING, AND ENCUMBERING (RL 19 . 0) S Any mortgage, pledge, hypothecation, encumbrance, transfer, sublease, or assignment (collectively referred to As ENCUMBRANCE) of TENANT’S interest in the PREMISES, or any part or portion there of, shall first be approved in writing by the City Manager or designee. Any ENCUMBRANCE which has not been approved by CITY in writing shall be void. Occupancy of the PREMISES by a prospective transferee, subtenant, or assignee before approval of the transfer, sublease, or assignment by CITY shal! constitute a breach of this Lease. REMASTERLZFORM / L ZGOLFCF 2 3 If TENANT is a corporation, an unincorporated association or partnership, the ENCUMBRANCE or transfer of any stock or interest in corporation, association, or partnership in the aggregate exceeding twenty-five percent (25%) shall be deemed an assignment within the meaning of this Lease. Should CITY consent to any ENCUMBRANCE, such consent shall not constitute a waiver of any of the terms, covenants, or conditions of this Lease. Such terms, covenants, or conditions shall apply to each and every ENCUMBRANCE hereunder and shall be severally binding upon each and every assignee, transferee, subtenant, or other successor in interest of TENANT. Any document to encumber, transfer, sublet, or assign the PREMISES or any part thereof shall incorporate directly or by reference all the provisions of this Lease. CITY agrees that it will not arbitrarily withhold consent to any encumbrance, but CITY may withhold consent at its sole discretion if any of the following conditions exist: no TENANT or any of its successors or assigns is in default of any term, covenant, or condition of this Lease, whether notice of default has or has not been given by CITY; B o The prospective ENCUMBRANCER does not indicate in writing that such ENCUMBRANCE is subject to all the terms, covenants, and conditions of this Lease; All the terms, covenants, and conditions of the proposed ENCUMBRANCE including the consideration therefore of any and every kind, have not been revealed in writing to CITY; Do Any construction required of TENANT As a condition of this Lease has not been completed to the satisfaction of CITY; m o The processing fee required by CITY and set forth in the then current Palo Alto Municipal Fee Schedule has not been paid to CITY; F 0 If an assignment or sublease is proposed, and TENANT has not provided CITY with sufficient information to permit CITY to completely evaluate the background, skills, financial position, proposed operating plan changes and references of the prospective assignee or subtenant; or REMA~TERI~Z FORM / L ZGODFCF 2 4 If the proposed assignee does not have the required skills, experience or financial standing to provide at least the same level of service As TENANT which determination shall be within the sole discretion of the City Manager. The above list is not inclusive but is intended to give TENANT some idea of the types of situation where CITY may withhold its consent to any ENCUMBRANCE. CITY reserves the right to withhold its consent to any ENCUMBRANCE that will, in CITY’S sole option, adversely affect the provision of service required by this Lease or adversely affect CITY’S interest in and to the land and structures covered by this Lease. Hypothecation of the leasehold interest created by this Lease is expressly prohibited and any attempted hypothecation shall be null and void. XXV.DEFAULT IN TERMS OF THE LEASE BY TENANT (RL 20.1) S Act of Default De..fined. The following events constitute acts of default under this Lease: Should TENANT fail to pay all or any portion of rental or any other, payment due CITY at the times and in the manner provided in this Lease; Should TENANT a.) abandon or vacate the PREMISES (absence from the PREMISES for ten (I0) days or more shall conclusively be deemed an abandonment of the PREMISES), b.) violate the provisions of Clause XXIV (ASSIGNING, SUBLETTING, and ENCUMBERING), or c.) fai! to provide evidence of insurance coverage throughout the term of this Lease in accordance with Clause XXII INSURANCE); and °Should TENANT violate any other provmsion of this Lease, and such violation shal! not be cured within thirty (30) days after written notice of such violation by CITY to TENANT. However, in the event of a violation which cannot reasonably be cured within thirty (30) days, TENANT shall have a reasonable period of time (As determined by the City Manager) to cure such violation. 4. Should TENANT: REMASTERLZFORM/LZGOLFCF 2 5 a o file a voluntary petition or have an involuntary petition filed against it in bankruptcy or under any insolvency act or law; b.be adjudicated a bankrupt; or C o attempt to make a general assignment for the benefit of its creditors. Rights and Remedies of CITY. In the event TENANT commits an act of default, As defined in Subparagraph A. of this clause, the following rights and remedies shall be available to CITY which rights and remedies shall not be exclusive, but which shal! be cumulative and in addition to any and all rights and remedies now. or hereafter allowed by law or otherwise specifically provided in other clauses in this Lease: CITY may, at its election, continue this Lease in full force and effect and not terminate TENANT’S right to possession of the PREMISES, in which event CITY shall have the right to collect rental and other payments when due; o CITY shall also have the right to terminate this Lease and TENANT’S right to possession of the PREMISES at any time after the occurrence of an act of default by TENANT upon written notice to TENANT together with the right to recover damages for such act of default; °CITY shall also have the right to have a receiver appointed to collect rentals and conduct TENANT’S business; °CITY may, at its election, at any time after TENANT commits an act of default and without notice, cure the act of default for the account and at the expense of TENANT. If CITY, by reason of an act of default by TENANT, is compelled to pay, or elect to pay, any sum of money or do any act that will require the payment of any sum of money, the sum or sums paid by CITY, together with an administrative charge equal to fifteen percent (15%) of said sum or sums, shall be deemed to be additional rental due CITY under this REMASTERLBFORM / L ZGOLFCF 2 6 o o Lease and shall be due from TENANT with ten (i0) days of CITY’S mailing an invoice therefore by certified mail; CITY shall also have the right to seek an action or suit in equity to enjoin any acts or things which may be unlawful or in violation of the rights of CITY; CITY shall also have the right to seek a mandamus or other suit, action of proceeding at law or in equity to enforce its right against TENANT and any of its officers, agents, employees, assigns or subtenants, and to compel it to perform and carry out its duties and obligations under the law, the covenants and agreements As provided in this Lease. C 0 Termination and....Damages CITY and TENANT specifically agree that acts of maintenance or preservation or efforts to relet the PREMISES (including the making of alterations and/or improvements .to the PREMISES in connection with any reletting), and/or the appointment of a receiver upon initiative of CITY to protect CITY’S interests under this Lease will not constitute a termination of TENANT’S right to possession. Upon a termination of TENANT’S right to possession, CITY shall have the right to recover from TENANT: ao The worth at the time of award of the unpaid rental which had been earned at the time of termination of the Lease; and b°The worth at the time of award of the amount by which the unpaid rental which would have been earned after the date of termination of this Lease until the time of award exceeds the amount of such rental loss that TENANT proved could have been reasonably avoided; and C o The worth at the time of award of the amount by which the unpaid rental for the balance of the term after the time of award exceeds the amount of such rental REMASTERL Z FORM/LZGOLFCF 2 7 loss that TENANT proves could be reasonably avoided; and do Any other amount necessary to compensate CITY for all detriment approximately caused by TENANT’S act of default or which in the ordinary course of things would be likely to result therefrom, including, without limitation, all costs incurred by CITY in connection with reletting the PREMISES, court costs and reasonable attorney’s fees. The phrase "the worth at the time of the award" As contained herein is to be computed by allowing interest at the ra£e equal to CITY’S average rate of returnon invested funds plus.two percent (2%), or the maximum allowed by law, whichever is greater. CITY’S efforts to mitigate the damages caused by TENANT’S act of default shall not constitute a waiver of CITY’S right to recover damages under the provisions of this clause. Upon termination of this Lease, pursuant to Subparagraph B. of this clause, CITY may immediately re-enter the PREMISES without due process of law, take possession of all buildings, improvements, additions, alterations, equipment, eject all parties in possession thereof therefrom, using such force for that purpose As may be necessary, without being liable to any prosecution for the re-entry or the use of such force. Any such re-entry by CITY shall be allowed by TENANT without hindrance, and CITY shall not be liable in damages or guilty of trespass because of any such re-entry. In the event of any re-entry or taking of possession of the PREMISES, CITY shall have the right, but not be obligated, to remove therefrom all of any part of the personal property located therein, and CITY may place the same in storage at a public warehouse at the expense and risk of owner or owners thereof. Nothing in this clause shall affect CITY’S right to indemnification for liability arising prior to termination of this Lease for personal injury or property damage pursuant to other provisions of this Lease. m o Appointment of .Receiver. If a receiver is appointed at the request of CITY in any action against TENANT to take possession of the PREMISES and/or to collect the rents or profits derived therefrom, the receiver may, if it is necessary or convenient in order to collect such rents from profits, conduct the business REMASTERLZFORM / LZGOLFCF 2 8 of TENANT then being carried on in the PREMISES, and may take possession of any personal property belonging to TENANT and used in the conduct of such business and may be used by the appointed receiver in conducting such business on behalf of CITY and TENANT. Neither the application for the appointment of such receiver nor the appointment of such receiver shall be construed As an election on CITY’S part to terminate this Lease unless a notice of such intention is given to TENANT. TENANT agrees to indemnify and hold CITY harmless from any liability arising out of the entry by any such receiver and the taking of possession of the PREMISES and/or use of personal property. XXVI.BANKRUPTCY BY TENANT (RL 20.2) S Neither TENANT’S interest in this Lease, nor any lesser interest of TENANT in this Lease, nor any estate of TENANT created by this Lease, shall pass to any trustee, receiver, assignee for the benefit of creditors, TENANT As a Debtor-In-Possession or any other person or entity (hereinafter collectively referred to As "TRUSTEE") by operation of law under the laws of any state having jurisdiction of the person or property of TENANT under any bankruptcy proceeding unless CITY shall specifically consent to such transfer (hereinafter referred to As "TRANSFER") or assignment in writing. Acceptance by CITY of rent or any other payments due CITY from any such TRUSTEE shall not be deemed to be a waiver of the need to obtain CITY’S consent to any such TRANSFER. CITY’S consent to any such TRANSFER and CITY’S right to terminate this Lease under any bankruptcy proceedings shall be governed by the f~llowing paragraphs of this Lease. no ~ITY’S Consent ~0 Transfer. CITY shall consent to TRANSFER only if the following terms and conditions have been satisfied: TRUSTEE has, in writing, elected to assume and has agreed to abide by all of the terms and conditions, specifically including the use restriction of this Lease within sixty (60) days from the date of the order for relief; o TENANT or TRUSTEE has cured, or provided adequate assurance that any monetary default under this Lease will be cured within thirty (30) days of such TRANSFER; 3. TENANT or TRUSTEE has compensated CITY or has provided CITY REMASTERLZFORM / LZGOLFCF 2 9 adequate assurance that within ten (i0) days of such TRANSFER, CITY will be compensated for any pecuniary loss incurred by CITY arising from the default of TENANT or TRUSTEE; TENANT or TRUSTEE has provided CITY with adequate assurance of the future performance of each and every obligation of TENANT or TRUSTEE under this Lease; o TENANT or TRUSTEE has deposited with CITY, As security for timely payment of rent, an amount equal to three (3) months rent and any other monetary charges which may accrue or come due within the three (3) months following such TRANSFER. Should rent be based on percentage rent, the rent shall be estimated by using the monthly average total rent paid by TENANT over the preceding three (3) years; o The TRANSFER shall not breach any provision relating to the leased PREMISES in any other lease, mortgage, financing agreement or other agreement by which CITY is bound. o TENANT or TRUSTEE has provided CITY with sufficient information regarding TRUSTEE, or any known proposed subsequent assignee, to enable CITY to determine that the TRUSTEE, or any known proposed subsequent assignee, has the skills, experience and financial standing to successfully provide the uses and services required by this Lease, which determination shall be within the discretion of the City Manager. For the purposes of this subparagraph A, CITY and TENANT acknowledge that, in the context of the bankruptcy proceeding of TENANT, "adequate assurance" shall, as a minimum, mean: TRUSTEE or TENANT has and shall continue to have sufficient unencumbered assets after the payment of all secured obligations and administrative expenses to assure CITY that TENANT or TRUSTEE will have sufficient funds to fulfil! the obligations of TENANT or TRUSTEE under this Lease, and to keep the PREMISES stocked with sufficient merchandise and/or supplies and properly staffed to conduct a fully operational actively promoted business on the PREMISES; and REMASTERLZFORM / LZGOLFCF 3 0 o The Bankruptcy Court shall have entered an order segregating sufficient cash payable to CITY and/or TRUSTEE shall have granted a valid and perfected first lien and security interest and/or mortgage in property of TENANT or TRUSTEE, acceptable in value and kind to CITY securing TENANT’S or TRUSTEE’S obligation to cure the monetary defaults under this Lease within the time limits set forth above, or TRUSTEE shall have obtained guarantees satisfactory in form and substance to CITY from one or more persons or entities who satisfy CITY’S standards of credit worthiness; and CITY has obtained all consents or waivers from any third party required under any lease, mortgage, financing arrangement or other agreement by which CITY is bound to permit CITY to consent to such TRANSFERS. B °Termination of Lease. This Lease shall, at CITY’S option, terminate if any of the following conditions exist: If TENANT or TRUSTEE fails to assume this Lease in accordance with the requirements of subparagraph Ao 1 above; o If a TRANSFER meeting each and every condition set forth in subparagraph A above has not been completed within 120 days of TENANT’S becoming a Debtor under Chapter 7 of the Bankruptcy Code, or within one hundred twenty (120) days of the date of filing of a Petition for reorganization or adjustment of debts under Chapter II or 13 of the Bankruptcy Code; or o If this Lease is assumed by a Trustee appointed for TENANT or by TENANT As Debtor-In-Possession under the provision of subparagraph A above and TENANT is thereafter liquidated or files a subsequent Petition for reorganization or adjustment of debts under Chapter Ii or 13 of the Bankruptcy Code. CITY’S election to terminate this Lease shall be delivered to TENANT in writing no later than thirty (30) days after the occurrence of any of the above events. CITY shall thereupon be immediately entitled to possession of the PREMISES without further obligation to TENANT or REMASTERLZ FORM / LZGOLFCF 3 I TRUSTEE, and this Lease shall be canceled, but CITY’S right to be compensated for damages in such liquidation proceeding shall survive. XXVII.RESERVATION OF NAVIGATIONAL EASEMENT (RL 21.0) S CITY hereby reserves for the use and benefitsof the public, a right of navigation, flight and resulting noise forthe passage of aircraft landing at, taking off or" operating fromthe adjacent airport operated by the County of Santa Clara. XXVIII.LIMITATION OF THE LEASEHOLD (RL 22.0) S This Lease and the rights and privileges granted TENANT in and to the PREMISES are subject to all covenants, conditions, restrictions, and physical or legal encumbrances, including those which are set out in The Golf Course Master Plan approved by City Council on May 15, 1995. Nothing contained in this Lease or in any document related hereto shall be construed to imply the conveyance to TENANT of rights in the PREMISES which exceed those owned by CITY. XXIX.NOTICES (RL 23.0) S All notices, statements, demands, requests, consents, approvals, authorizations, offers, agreements, appointments or designations hereunder give by either party to the other, shall be in writing and shall be sufficiently given and served upon the other party if (i) personally served, (2) sent by United States Certified mail, postage, prepaid, (3) sent by express delivery service, or (4) in the case of a facsimile, if sent to the telephone number(s) set forth below during norma! business hours of the receiving party and followed within 48 hours by delivery of hard copy of the material sent by facsimile, in accordance with (i), (2) or (3) above. Personal service shall include, without limitation, service by delivery service and service by facsimile transmission. Delivery of notices properly addressed shall be deemed complete when the notice is physically delivered to the Real Property Manager or the All notices pursuant to this lease shall be addressed As set forth below or As either party may subsequently~ designate by written notice. REM~STERLZFORM / L ZGOLFCF 3 2 TO: CITY TO: TENANT Real Property Manager City of Palo Alto P.O. Box 10250 250 Hamilton Avenue Palo Alto, CA 94303 FAX: (415) 323-1741 with a copy to: City Clerk, City of Palo Alto P.O. Box 10250 250 Hamilton Avenue Palo Alto, CA 94303 FAX: (415) 328-3631 and City Attorney, City of Palo Alto P.O. Box 10250 250 Hamilton Avenue Palo Alto CA 94303 FAX: (415) 329-2646 XXX. ATTACHMENT TO LEASE (RL 24.0) S This Lease includes the following exhibits, which are attached hereto and by this reference incorporated into this Lease: Exhibit A - General Conditions Exhibit B - Description of Leased Premises Exhibit C - Golf Course Restaurant Policy Statement Exhibit D - Inventory of Golf Course Restaurant Furnishings Exhibit E - Monthly Statement of Gross Receipts and Rent Due The inclusion of clauses in Exhibit A (GENERAL CONDITIONS) is not in any way intended to lessen the importance of these clauses, but is merely done to enhance the organization of various clauses and this Lease. REMASTERLZFORM/LZGOLFCF 33 IN WITNESS WHEREOF, the parties have executed this Lease the day and year first above written. CITY:TENANT: CITY OF PALO ALTO (LESSOR) BY" Mayor BY: Its: ATTEST:By: BY: City Clerk Its: (Corporate Seal) APPROVED AS TO FORM: By: City Attorney APPROVED AS TO AUDIT AND ACCOUNTING: By: City Auditor REMASTERLZFORM/LZGOLFCF 3 4 RECOMMENDED FOR APPROVAL: By: Parks andGolf Course Admin. By: Real Property Manager By: Director, Planning & Community Environment By: Director, Administrative Services By: Director, Public Works By: Director, Community Services REMASTERLZFORM / LZGOLFCF 3 5 (RL 27.0) EXHIBIT A GENERAL CONDITIONS !.DEFINITIONS (RL 27.1) S CITY shall mean the City Council of the City of Palo Alto, a municipal corporation. The City Manager is hereby authorized to take any actions under this Lease on behalf.of CITY except for termination of this Lease. Clauses in this lease refer to specific officers or employees of CITY. Should these positions be eliminated or the title changes, it is understood and agreed that such references shall be considered to be to the new title for renamed positions or to the replacement official designated with the responsibilities of any eliminated position. Any reference to a City officer or employee includes a reference to the officer’s or employee’s designated representative. 2.PARTNERSHIP/CORPORATE AUTHORITY & LIABILITY (RL 27.2) S If TENANT is a partnership, each general partner: no represents and warrants that the partnership is a duly qualified partnership authorized to do business in Santa Clara County; and shall be jointly and severally liable for performance of the terms and provisions of this Lease. If TENANT is a corporation, each individual signing this Lease on behalf of TENANT represents and warrants that; no he is duly authorized to do so in accordance with an adopted Resolution of TENANT’S Board of Directors or in accordance with the Bylaws of the corporation; and TENANT is a duly qualified corporation authorized to do business in State of California. As used in this Lease, the term "TENANT" shall include TENANT, its agents, sublessees, concessionaires, or licensees, or any person acting under contract with TENANT; however, the definition of TENANT REMASTERL Z FORM / L ZGOLFCF 3 6 used herein, shall not be construed to authorize or permit any sublease or licenses not authorized or permitted elsewhere in this Lease. 3.TIME (RL 27.3) S Time is of the essence of this Lease. 4.SIGNS (RL 27.4) S TENANT agrees not to construct, maintain, or allow any sign to be placed upon the PREMISES except As may be approved by CITY. Unapprovedsigns, banners, etc., may be removed by CITY. 5.PERMITS AND LICENSES (RL 27.5) S TENANT shall be required to obtain any and all permits and/or licenses which may be required in connection with the operation of, and any approved TENANT construction upon, the PREMISES As set forth in this Lease. 6.MECHANICS LIENS (RL 27.6) S TENANT shall at all times indemnify and save CITY harmless from all claims for labor or materials supplied in connection with construction, repair, alteration, or installation of structures, improvements, equipment, or facilities within the PREMISES, and from the cost of defending against such claims, including attorney fees. TENANT shall provide CITY with at least ten (I0) days written notice prior to commencement of any work which could give rise to a mechanics lien or stop notice. CITY reserves the right to enter upon PREMISES for the purposes of posting Notices of Non-Responsibility. In the event a lien is imposed upon the PREMISES As a result of such construction, repair, alteration, or installation, TENANT shall either: A.Record a valid Release of Lien; or Deposit sufficient cash with CITY to cover the amount of the claim on the lien in question and authorize payment to the extent of said deposit to any subsequent judgment holder that may arise As a matter of public record from litigation with REMASTERLZ FORM / L ZGOLFCF 3 7 regard to lienholder claim; or Procure and record a bond in accordance with Section 3143 of the Civil Code, which releases the PREMISES from the claim of the lien from any action brought to foreclose the lien. Should TENANT fail to accomplish one of the three optional actions within fifteen (15) days after the filing of such a lien, the Lease shall be in default and may be subject to immediate termination. 7.LEASE ORGANIZATION AND RULES OF CONSTRUCTION (RL 27.7) S Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context otherwise indicates, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include corporations and associations, including public bodies, As wel! As natura! persons. The terms "hereby", "hereof", "hereto", "herein", "hereunder" and any similar terms, As used in this agreement, refer to this agreement. All the terms and provisions hereof shall be construed to effectuate the purposes set forth herein, and to sustain the validity hereof. The titles and headings of the sections of this agreement have been inserted for convenience of reference only, are not to be considered a part hereof and shall not in any way modify or restrict any of the terms of provisions hereof or be considered or given any effect in construing this agreement or any provision hereof in ascertaining intent, if any question of intent shall arise. 8.AMENDMENTS (RL 27.8) S This Lease sets forth all of the agreements and understandings of the parties and any modifications must be written and properly executed by both parties. 9.UNLAWFUL USE (RL 27.9 S TENANT agrees that no improvements shall be erected, placed upon, operated, nor maintained within the PREMISES, nor any business conducted or carried on therein or therefrom, in violation of the REMASTERL Z FORM/L ZGOLFCF 3 8 terms of this Lease, or of any regulation, order of law, statute, or ordinance of a governmental agency having jurisdiction over TENANT’S use of the PREMISES. i0.NONDISCRIMINATION (RL 27.10) S Revised 8-19-93 TENANT and its employees shall not discriminate against any person because of race, color, religion, ancestry, age, sex, national origin, disability or sexual preference. TENANT shall not discriminate against any employee or applicant for employment because of race, color, religion, ancestry, sex, age, national origin, disability or sexual preference. TENANT covenants to meet all requirements of the Palo Alto Municipal Code pertaining to nondiscrimination in employment. If TENANT is found in violation of the nondiscrimination provision of the State of California Fair Employment Practices Act or similar provisions of federal law or executive order in the conduct of its activities under this Lease by the State of California Fair Employment Practices Commission or the equivalent federal agency or officer, it shall thereby be found in default under this Lease, and such default shall constitute a material breach of this Lease. CITY shall then have the power to cancel or suspend this Lease in whole or in part. ii.INSPECTION (RL 27.11) S CITY’S employees and agents shall have the right at all reasonable times to inspect the PREMISES to determine if the provisions of this Lease are being complied with. 12.HOLD HARMLESS (RL 27.12) S TENANT hereby waives all claims, liability and recourse against CITY including the right of contribution for loss or damage of or to persons or property arising from, growing out of or in any way connected with or related to this agreement. TENANT hereby agrees to indemnify, hold harmless and defend CITY, its officers, agents, and employees against any and all claims, liability, demands, damages, cost, expenses or attorneys’ fees arising out of the operation or maintenance of the .property described herein or TENANT’S performance or non performance of the terms of this Lease. In the event CITY is named As co-defendant, TENANT shall notify CITY of such fact and shall represent CITY in such lega! action unless CITY undertakes to represent itself As co-defendant in such legal action, in which event REMASTERLZ FORM/LZGOLFCF 3 9 TENANT shall pay to CITY its litigation costs, attorneys’ fees. expenses and 13.TAXES AND ASSESSMENTS (RL 27.13) S This Lease may create a possessory interest which is subject to the payment of taxes levied on such interest. It is understood and agreed that all taxes and assessments (including but not limited to the possessory interest tax) which become due and payable upon the PREMISES or upon fixtures, equipment, or other property installed or constructed thereon, shall be the full responsibility of TENANT and TENANT shall pay the taxes and assessments prior to delinquency. 14.SUCCESSORS IN INTEREST (RL 27.14) S Unless otherwise provided in this Lease, the terms, covenants, and conditions contained herein shall apply to and bind the heirs, successors, executors, administrators, and assigns of all the parties hereto, all of whom shall be jointly and severally liable hereunder. 15.CIRCUMSTANCES WHICH EXCUSE PERFORMANCE (FORCE MAJEURE) (RL 27.15) S If either party hereto shall be delayed or prevented from the performance of any act requiredhereunder by reason of acts of God, restrictive governmental laws orregulations, or other cause without fault and beyond the control of the party obligated (financial inability excepted), performanceof such act shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay. 16 ¯PARTIAL INVALIDITY (RL 27.16)S If any term, covenant, condition, or provision of this Lease is determined to be invalid, void, or unenforceable, by a court of competent jurisdiction, the remainder of the provisions hereof shall remain in full force and-effect and shall in no way be affected, impaired, or invalidated thereby. 17. WAIVER OF RIGHTS (RL 27.17) S The failure of CITY or TENANT to insist upon strict performance of REMASTERLZFORM / L ZGOLFCF 4 0 any of the terms, covenants, or conditions of this Lease shall not be deemed a waiver of any right or remedy that CITY or TENANT may have, and shall not be deemed a-waiver of the right to require strict performance of all the terms, covenants, and conditions of the Lease thereafter, nor a waiver of any remedy for the subsequent breach or default of any term, covenant, or condition of the Lease. 18.COSTS OF SUSTAINING AN ACTION FOR BREACH OR DEFAULT (RL 27.18) S In the event either CITY or TENANT commences legal action against the other claiming a breach or default of this Lease, the prevailing party in such litigation shall be entitled to recover from the other cost of sustaining such action, including reasonable attorney fees, As may be fixed by the Court. 19.RESERVATIONS TO CITY (RL 27.19) S The PREMISES are accepted "As is" and "where is" by TENANT subject to any and all existing easements, and encumbrances. CITY reserves the right to install, lay, construct, maintain, repair-, and operate such sanitary sewers, drains, storm water sewers, pipelines, manholes, and connections; water, oil, and gas pipelines; telephone and telegraph power lines; and the applications and appurtenances necessary or convenient for connection therewith, in, over, upon, through, across and along the PREMISES or any part thereof, and to enter the PREMISES for any and all such purposes. CITY also reserves the right to grant franchises, easements, rights of way, and permits, in, over, upon, through, across, and along any and all portions of the PREMISES. No right reserved by CITY in this clause shall be so exercised As to interfere unreasonably with TENANT’S operation hereunder. CITY agrees that rights granted to third parties by reason of this clause shall contain provisions that the surface of the land shall be restored As nearly As practicable to the original condition upon the completion of any construction. 20.HOLDING OVER (RL 27.20) S In the event TENANT shall continue in possession of the PREMISES after the term of the Lease, such possession shall not be considered a renewal of this Lease but a tenancy from month to month and shall be governed by the conditions, and covenants contained in this Lease. REMASTERLZ FORM/LZGOLFCF 4 i 21.CONDITION OF PREMISES UPON TERMINATION (RL 27.21) S Upon termination of this Lease, except As otherwise agreed to herein, TENANT shal! redeliver possession of the PREMISES to CITY in substantially the same condition that existed immediately prior to TENANT’S occupancy, reasonable wear and tear, flood, earthquake, war, and any act of war excepted. 22.DISPOSITION OF ABANDONED PERSONAL PROPERTY (RL 27.22) S If TENANT abandons the PREMISES or is dispossessed thereof by process of law or otherwise, title to any personal property belonging to TENANT and left on the PREMISES forty-five (45) days after such abandonment or dispossession shall be deemed to have been transferred to CITY. CITY shall have the right to remove and to dispose of such property without liability therefor to TENANT or to any person claiming under TENANT, and shall have no need to account therefor. 23.QUITCLAIM OF TENANT’S INTEREST UPON TERMINATION (RL 27.23) S Upon termination of this Lease for anyreason, including but not limited to termination because of defaultby TENANT, TENANT shall, at CITY’S request execute,, acknowledge and deliver to CITY within five (5) days after receipt of written demand thereof, a good and sufficient deed whereby all rights, title, and interest of TENANT in the PREMISES, is quitclaimed to CITY. Should TENANT fail or refuse to deliver the required deed to CITY, CITY may prepare and record a notice reciting the failure of TENANT to execute, acknowledge and deliver such deed and the notice shall be conclusive evidence of the termination of this Lease, and of all right of TENANT or those claiming under TENANT in and to the PREMISES. 24.CITY’S RIGHT TO RE-ENTER (RL 27.24) S TENANT agrees to yield and peaceably deliver possession of the PREMISES to CITY on the date of termination of this Lease, whatsoever the reason for such termination. Upon giving written notice of termination to TENANT, CITY shall have the right to re-enter and take possession of the PREMISES on the date such termination becomes effective without further notice of any kind and without institution of regular legal proceedings. Termination of the Lease and re-entry of the PREMISES by CITY shall in no way alter REMASTERLZFORM/LZGOLFC F 4 2 or diminish any obligation of TENANT under the Lease terms and shall constitute an acceptance or surrender. TENANT waives any and all rights of redemption under any existing or future law or statute in the event of eviction from or dispossession of the PREMISES for any ieason or in the event CITY re-enters and lawfully re-takes possession of the PREMISES. 25.CONFLICT OF INTEREST (RL 27.25) S TENANT warrants and covenants that no official or employee of CITY nor any business entity in which any official or employee of CITY is interested: (i) has been employed or retained to solicit or aid in the procuring of this agreement; or (2) will be employed in the performance of this agreement without the divulgence of such fact to CITY. In the event that CITY determines that the employment of any such official, employee or business entity is not compatible with such official’s or employee’s duties As an official or employee of CITY, TENANT upon request of CITY shall immediately terminate such employment. Violation of this provision constitutes a serious breach of this Lease and CITY may terminate this Lease As a result of such violation. 26.EMINENT DOMAIN (RL 27.26) S In the event the whole or any part of the PREMISES are condemned by a public entity in the lawful exercise of its power of eminent domain, this Lease shall cease As tothe part condemned. The date of such termination shall be the effective date of possession of the whole or part of the PREMISES by the condemning public entity. If only a part is condemned and the condemnation of that part does not substantially impair the capacity of the remainder to be used for the purposes required by this Lease, TENANT shall continue to be bound by the terms, covenants and conditions of this Lease. However, the then current minimum annual rent shall be reduced in proportion to the relationship that the compensation paid by the condemning public entity for the portion condemned bears to the value of the entire PREMISES As of the date of possession of the part condemned. If the condemnation of a part of the PREMISES substantially impairs the capacity of the remainder to be used for the purposes required by .this Lease, TENANT may: RE~La-~TERL Z FORM /LZGOLFCF 4 3 Ao Terminate this Lease and thereby be absolved of obligations under this Lease which have not accrued As of the date of possession by the condemning public entity; or B o Continue to occupy the remaining PREMISES and thereby continue to be bound by the terms, covenants and conditions of this Lease. If TENANT elects to continue in possession of the remainder of the PREMISES,- the then current annual minimum rental shall be reduced in proportion to the relationship that the compensation paid by the condemning public entity for the part condemned bears to the value of the entire leased PREMISES As of the date of possession by the condemning public entity. TENANT shall provide CITY with written notice advising CITY of TENANT’S choice within thirty (30) days of possession of the part condemned by the condemning public entity. CITY shall be entitled to and shall receive all compensation related to the condemnation of all or part of the PREMISES by the exercise of eminent domain except that TENANT shall be entitled to that portion of the compensation which represents the value of the TENANT constructed improvements for the remainder of the Lease term. The amount to which TENANT shall be entitled shall not exceed the actual cost of improvements constructed by TENANT reduced in proportion to the relationship of the remaining Lease term to the original Lease term, using a straight line approach. 27.HAZARDOUS SUBSTANCES (RL 27.29) S A0 D@finition. As used herein, the term "Hazardous Materials" means any substance or material which has been determined by any state, federal or local governmental authority to be capable of posing risk of injury to health, safety, and property, including petroleum and petroleum products and all of those materials and substances designated As hazardous or toxic by the U.S. Environmental Protection Agency, the California Water Quality Control Board, the U.S. Department of Labor, the California Department of Industrial Relations, the California Department of Health Services, the California Health and Welfare Agency in connection with the Safe Water and Toxic Enforcement Act of 1986, the UoS. Department of Transportation, the U.S. Department of Agriculture, the U.S. Consumer Product Safety Commission, the U.S. Department of Health and Human Services, the U.S. Food and REMASTERLZFORM/LZGOLFCF 4 4 m o Drug Administration or any other governmental agency now or herea£ter authorized to regulate materials and substances in the environment. Without limiting the generality of the foregoing, the term "Hazardous Materials" shall include all of those materials and substances- defined As "toxic materials" in Sections 66680 through 66685 of Title 22 of the California Code of Regulations, Division 4, Chapter 20, As the same may be amended from time to time. TENANT’S US@ of PREMISES. During the term of this Lease, TENANT shall abide and be bound by all of the following requirements: TENANT shall comply with all laws now or hereafter in effect relating to the use of Hazardous Materials on, under or about the PREMISES, and TENANT shall not contaminate the PR~MISES, or its subsurfaces, with any Hazardous Materials. ii.TENANT shall restrict its use of Hazardous Materials at the PREMISES to those kinds of materials that are normally used in constructing the Project. Disposal of any Hazardous Materials at the Premises are strictly prohibited. Storage of such permissible Hazardous Materials is allowed only in accordance with all applicable laws now or hereafter in effect. All safety and monitoring features of any storage facilities shall be approved by CITY’S Fire Chief in accordance with all laws. iii.TENANT shall be solely and fully responsible for the reporting of all Hazardous Materials releases to the appropriate public agencies, when such releases are caused by or result from TENANT’S activities on the PREMISES. TENANT shall immediately inform CITY of any release of Hazardous Materials, whether or not the release is in quantities that would otherwise be reportable to a public agency. iv.TENANT shall be solely and fully responsible and liable for such releases at the Premises, or into CITY’S sewage or storm drainage systems. TENANT shall take all necessary precautions to prevent any of its Hazardous Materials from entering into any storm or sewage drain system or from being released on the Premises. TENANT shall remove releases of its Hazardous Materials in accordance with all REMASTERLZFORM / L ZGOLFCF 4 5 laws. In addition to all other rights and remedies of CITY hereunder, if the release of Hazardous Materials caused by TENANT is not removed by TENANT within ninety (90) days after discovery by TENANT, CITY or any other third party, CITY may pay to have the same removed and TENANT shall reimburse CITY for such costs within five (5) days of CITY’S demand for payment. TENANT shall protect, defend, indemnify and hold harmless CITY from and against all loss, damage, or liability (including all foreseeable and unforeseeable consequentia! damages) and expenses (including, without limitation, the cost of any cleanup and remediation of Hazardous Materials) which CITY may sustain As a result of the presence or cleanup of Hazardous Materials on the PREMISES. vi.TENANT’S obligation under this Clause shall survive the expiration or earlier termination of this Lease. 28. ALL COVENANTS ARE CONDITIONS (RL 27.30) S All provisions of the Lease are expressly made conditions. 29.PARTIES OF INTEREST (RL 27.31) S Nothing in this agreement, expressed or implied, is intended to, or shall be construed to, confer upon or to give to any person or party other than CITY and TENANT the covenants, condition or stipulations hereof. All covenants, stipulations, promises and agreements in this Lease shall be for the sole and exclusive benefit of CITY and TENANT. REMASTERL Z FORM / LZGOLFCF 4 6 Project: Golf Course Restaurant Project #: CL 27/25-95/15 LEASE DESCRIPTION All the Demised Premises shown cross-hatched on a plot plan labeled "Exhibit B (2 of 2)" attached hereto and made a part hereof, being the restaurant, kitchen, lounge and meeting room portions of the Palo Alto Municipal Golf Course Clubhouse facility located at 1875 Embarcadero Road, Palo Alto, California, also including the fixtures and equipment listed on "Exhibit C" attached hereto and made apart hereof. EXHIBIT B (1 OF 2) I NORTH SCALE seating ~taurant seat~ ng& LOCATION OF DECK & PASS THRU WINDOW PARKING LOT LEGEND area net area sq. ft. ~PRO SHOP & GOLF CART STORAGE 5,165 ~CITY MAINTENANCE Including BREEZEWAY 2,185 ~RESTAURANT/LOUNGE/MEETING ROOMS TOTAL GOLF COURSE STAURANT 9,850 PALO, ALTO MUNICIPAL GOLF COURSE CLUBHOUSE COMPLEX 1875 IEMBARCADERO ROAD EXHIBIT B’(2 of 2) MEETING ROOMS: 1984 12 each (14) 7each (10) 2 each (18) 5each (5) 96 each (73) GOLF CLUBHOUSE COFFEE SHOP FURNI~ ( ) Denotes original 1980 inventory DESCRIPTION 36" square tables, w/oak tops and metal pedestal bases 24" x 48" tables w/oak plank table tops and metal bases chairs, stacking, armless, natural oak and leather window blinds solid oak arm chairs (Walsh & Simins #0529-2) SNACK LOUNGE: 10 each (10) 15 each (20) 24 each (20) 36" round tables with oak plant tops and metal pedestal bases chairs, oak with arms chairs, oak without arms CQCKTAIL LOUNGE: 3 each ( 6 ) 13 each (16) 8 each ( 8 ) 18" round tables, with oak plank tops and metal pedestal bases chairs, leather/chrome bar stools, leather/chrome, 30" high with foot rests SNACK BAR:, ? each 1 each (1) 8 each (8) 9 each (9) 1 each (1) 6 each (6) 24" round tables, oak plank and metal pedestal bases 36" table, oak plank and metal pedestal base chairs, oak, without arms chairs, oak, with arms 12-hour electric wall clock lockers,double tier with locks Hoflist Revised: October 3, 1995 EXHIBIT C (i of 3) FOOD SERVICE EQUIPMENT: 1995 1995 1995 1995 1995 1995 7 each (7) I each (1) 1 each (1) 1 each (1) 1 each (1) 1 each (1) 1 each (1) 1 each (1) 1 each (1) 2 each (1) 1 each (1) 1 each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) 2 each (1) each (1) each (1) each (1) each (1) each (I) each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) cantilever stool base undercounter water station - Delfield #243 coffee shop and pick-up counter assembly drought beer station - Perlick C5063 schpl w/compressor display case - Delfield V15248-28 (refi-igerated) pass-through shelf w/food warmer -Antco GKH24 utility unit - Delfield V16354-28 (w/sliding doors) ice cream cabinet - Delfield V13556-28 V12 (w/sink & dipper well) display case (wall mounted) - Delfield V11260 (non-refrigerated) paper cup dispenser - Shellymatic CD cabinet - Delfield custom utility cabinet - Delfield V 16136 (w/doors) freezer - Traulsen RLT-2-32 WUT microwave oven - Litton 20/20 B cold food table - Delfield V18466-28 sink - Delfield V22014-28 hot food table - Delfield V14148-28 shelf spreader plate griddle, gas-fired (Montague U’RLC 36R charbroiler) double deck high shelf refrigerator- Traulsen RUL-3-32WSC (w/drawers) cook top w/oven - Montague 136-5A hood - Aquamatic EX-MC walk-in refrigerator - Lech shelving - Metro work table - Computer Sinls WT8554030 grill - Montague 4’ saytor utility ovens - Montague 236 doublestock hood - Aquamatic EX-MC. scrapping table assembly - fabricated garbage disposer - Bus Boy 1500 BB450 (1 ½ hp) dishwasher - Steno SC 20-IW/K 55 KIT clean dish table assembly - fabricated work table - Computer Stain WT857230 freezer- Traulsen RLT3-32 WUT pre-rinse unit (wall-mounted) T&S B 133 wiB 109 br’kt toaster - Toastmaster #103 rack shelf- fabricated shelving draft beer tap and drainer assembly - Perlick Hoflist Revised: October 3, 1995 EXHIBIT C (2 of 3) 1 each (1) 1 each (1) 2-sect. backbar refrig, s/c w/drought beer system - Perlick C5063E glass chiller - Perlick 832455 Hoflist.doc FOOD SERVICE,,EOUIPMENT 1 1 1 1 1 1 1 1 1 1 each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) back bar assembly bar top and die assembly 1’2" wide bar blender station - Perlick TS-BD 2’0" lg. ice chest w/cond, shelf unit - Perlick TS24CH sink and drainboard assembly w/speedrail, 5’ long - Perlick T553C shelving fire system - Ansul refrigeration system- BaIly shelf- Perlick 705310 display case - Delfield V15248 (refrigerated) Hoflist Revised: October 3, 1995 EXHIBIT C (3 of 3) GOLF COURSE RESTAURANT POLICY STATEMENT It is the policy of the City of Palo Alto to provide a golf course and related facilities of the highest quality for the use of its golfing community. Inherent in this policy is the concept that the City collect revenue from golf course users sufficient to pay costs of administration, management, maintenance, and future capital improvement for operation of the golf facilities. The restaurant and meeting rooms have been constructed to primarily serve golfing interests as an integral adjunct of golf play. It is the function and purpose of the concessionaire - lessee to provide food and related services primarily for the benefit of golf course users, to accommodate and support the overall enjoyment of golf play. It is essential that the concessionaire understand the underlying attraction of the game of golf to its players and has an inner desire to be involved in the golf community. It is desired that the concessionaire’s business will be profitable and that profit will be directly proportionate to customer satisfaction. Golfer’s food purchasing habits and needs are extremely varied. However, to have a successful restaurant operation, these needs must be met. The following examples reflect the type of food purchases or services that concessionaire must be able to provide: 1.Hot or cold drink. A quick snack between nines. A more leisurely snack or meal follgwing play. A buffet following a toumament. An evening banquet or dinner. Light food service for periodic meetings of organized golf groups. 3.5RELEASES.1/GOLFPOL EXHIBIT D (Pg 1 of 2) Advantages and opportunities available to the concessionaire: Approximately 80,000 - 100,000 rounds are played annually which equates to approximately 500,000 people hours attracted to the golf course. The concessionaire has a food-bar service monopoly at this location. Additionally, the golf pro will be scheduling special events (tournaments). The men’s club, several women’s clubs, the Seniors, and others not only have periodic tournaments, but also hold prescheduled meetings. Coordination with these groups on the part of the Concessionaire can increase business volume not previously obtained. Meeting Room Use: The Concessionaire shall retain the right to schedule luncheon activities (banquets or overflow lunch) in the large meeting room. The following priorities shall apply to the small meeting room: Organized golf related activities involving service of a meal (breakfast, lunch or dinner) 2.Organized golf group without service of a meal 3.Non-golf related banquet involving service of a meal 4.Scheduled non-golf related meeting without service of a meal 5.Open access to room for non-organized golf-related activities (scoring etc.) 3.5RELEASES.1/GOLFPOL EXHIBIT D (Pg 2 of 2) MONTHLY STATEMENT OF GROSS RECEIPTS AND RENT DUE TENANT NAME:DATE: Gross Receipts This Month Applicable Percentage Rent Indicated Percentage Rent Due City this Month Bar $ Food $ Total $X 5%*(1) $ Indicated Minimum Rent Due $3,000/month*(2) $ Indicated Rent Due City [Greater of (1) or (2) above](3) Monthly Utility Reimbursement Due City 437 therms X ~ (current average rate per therm)** (4) TOTAL MONTHLY PAYMENT TO CITY [(3) + (4)](5) * Adjusted in accordance with Clause XXI of the Lease **Adjusted in accordance with rates charged by the supplier of gas utility (City of Palo Alto Utilities Department). Exhibit E