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American Golf Corporation - 2008-04-07
Council/Agency Meeting Held: lie- Deferred/Continued to: 1A Appfqveq ❑ Conditionally Approved ❑ Denied City CI k's igrAture Council Meeting Date: 4/7/2008 Department ID Number: ED 08-14 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL. ACTION SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMB RS SUBMITTED BY: PAUL EMERY, INTERIM CITY ADMINISTRATO PREPARED BY: JIM B. ENGLE, DIRECTOR, COMMUNITY SERVI STANLEY SMALEWITZ, DIRECTOR, ECONOMIC VELOPMENT SUBJECT: APPROVE CONSENT TO SUBLEASE MEADOWLARK GOLF COURSE Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s) Statement of Issue: The City Council is asked to approve the Consent to Sublease Agreement by and between the City of Huntington Beach and American Golf Corporation, a California Corporation, CNL Income EAGL Meadowlark, LLC, a Delaware limited liability company, as subtenant, and Evergreen Alliance Golf Limited, L.P., which will operate the premises. Funding Source: Not applicable. Recommended Action: Motion to: 1. Approve the Consent to Sublease Agreement by and between the City of Huntington Beach and American Golf Corporation, a California corporation, as the lessee, and CNL Income EAGL Meadowlark, LLC, a Delaware limited liability company, as the subtenant of the lessee, and Evergreen Alliance Golf Limited, L. P., a Delaware limited partnership, which will operate the premises. 2. Authorize the Mayor and City Clerk to sign and execute the Consent to Sublease Agreement. 3. Authorize the Director of Community Services and Director of Economic Development or designee to take any action and execute any and all documents and agreements necessary to implement this agreement. Alternative Action(s): E -9 Do not approve the Consent to Sublease agreement. REQUEST FOR CITY COUNCIL ACTION MEETING DATE: 4/7/2008 DEPARTMENT ID NUMBER: ED 08-14 Analysis: In 1974, the City of Huntington Beach entered into a lease agreement with American Golf Corporation for the operation of Meadowlark Golf Course. On July 6, 1992, a new agreement was approved by City Council. The revised agreement provided for major capital improvements to the golf course and gave the city additional control over the operational standards of the course. The current agreement expires on February 5, 2018, with an additional ten-year renewal option through February 5, 2028. American Golf Corporation and certain affiliates have recently entered into an agreement for the transfer of 42 golf course properties across the United States; one of which is Meadowlark Golf Course. The buyers under contract are CNL Income Partners, LP (CNL) and Evergreen Alliance Golf Limited, L. P. (EAGL), a wholly -owned subsidiary of Premier Golf Management, Inc. Pursuant to Section 24 of the current lease agreement, American Golf is requesting the City's consent, under the terms of the existing contract, to sublease the golf course to CNL Income EAGL Leasehold Golf, LLC, a wholly -owned subsidiary of CNL, which will further sublease the golf course to EAGL for the day-to-day operation and maintenance of the golf course. CNL is a real estate investment trust (REIT) that invests in income -producing properties with a focus on lifestyle -related industries. Properties include golf courses, ski resorts, marinas, amusement/theme parks, entertainment centers, and other lifestyle and recreation assets. CNL currently has a net worth of approximately $1.4 billion. Because of the rules applicable to REIT's, CNL is unable to operate golf courses directly. Therefore, it leases the operation of its golf course properties to experienced golf course management companies such as EAGL. EAGL is a well -established company that is led by respected leaders in the golf industry, one of whom has served as president and CEO of American Golf and the other as a senior executive of American Golf. Staff has reviewed CNL's marketing materials and securities filing with the United States Securities and Exchange Commission and has determined that CNL Income EAGL Meadowlark Golf, LLC is well -qualified to act as landlord of the golf course. CNL, in conjunction with EAGL, has also been known for achieving a high standard of excellence in the maintenance of their grounds as well as improved marketing strategies. Additionally, the Consent to Sublease agreement provides that CNL and EAGL will comply with the City's exclusive concessionaire agreement with Coca-Cola, as well as the utilization of recyclable products for food and beverage service, and excluding the use of Styrofoam products. -2- 3/25/2008 1:04 PM REQUEST FOR CITY COUNCIL ACTION MEETING DATE: 4/7/2008 DEPARTMENT ID NUMBER: ED 08-14 Community Services staff is working with EAGL to ensure the operation and maintenance of the golf course. Staff recommends that City Council approve the Consent to Lease Agreement. Staff determined that this sublease will directly benefit the operations and maintenance of the Meadowlark Golf Course. Strategic Plan Goal: L-4 Create an environment that promotes tourism to increase revenues to support community services and transform the city's economy into a destination economy. Environmental Status: Not applicable. Attachment(s): -3- 3/31/2008 9:55 AM ATTACHMENT #1 BEACH — Inter -Department Communication TO: JOAN FLYNN, City Clerk FROM: JENNIFER MCGRATH, City Attorney DATE: May 21, 2009 SUBJECT: Consent to Sublease between American Golf Corporation and CNL Income EAGL Meadowlark Golf, LLC, In response to your inquiry regarding the recording of the Consent to Sublease between American Golf Corporation and CNL Income EAGL Meadowlark Golf, LLC, the terms of the lease contemplate recordation to be at the discretion of the parties. Recordation is not a requir ent in this lease. JENNIFER MCGRATH, City Attorney /K c: Tina Krause, Economic Development 09-2096/34081 OFFICIAL BUSINESS Document entitled to free recording per Government Code Sections 6103 and 27383 Recording Requested By: The City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: City Clerk SPACE ABOVE THIS LINE FOR RECORDER'S USE CONSENT TO SUBLEASE THIS CONSENT TO SUBLEASE (hereinafter "Agreement") is made this 7 th day of April , 2008, by and between THE CITY OF HUNTINGTON BEACH ("City"), under the Lease described below, and (a) AMERICAN GOLF CORPORATION, a California corporation, the Lessee under the Lease (the "Lessee"), (b) CNL INCOME EAGL MEADOWLARK, LLC, a Delaware limited liability company, as subtenant (the "Subtenant") of the Lessee, and (c) EVERGREEN ALLIANCE GOLF LIMITED, L.P., a Delaware limited partnership ("EAGL"), which will operate the premises described by the Lease under a further sublease agreement with the Subtenant. Subtenant and EAGL shall be collectively referred to as ("Subtenants"). RECITALS: A. City and Lessee are parties to that certain Lease Agreement, dated as of July 6, 1992, by and between City, as City, and Lessee, as lessee, and the other documents listed on Exhibit A hereto (collectively, the "Lease"), relating to the golf course property known as "Meadowlark Golf Course" and more particularly described in the Lease (the "Golf Course"). B. Lessee, as sublandlord, has entered into a contract to sublease certain rights and interests in and to the Golf Course to the Subtenant under the terms of the sublease described below, subject to the City's approval, and subject to the terms and conditions of the Lease. C. The Subtenant desires to take a sublease of the Golf Course and to further sublease certain rights and interests in and to the Golf Course to EAGL, subject to the City's approval, and subject to the terms and conditions of the Lease, under the terms of the further sublease agreement described below. 08-150613-21 Meadowlark Consent to Sublease lease (3) (3) D. Pursuant to section 24 of the Lease, Lessee and the Subtenant have requested City's consent to the sublease of the Golf Course to the Subtenant, and the Subtenant has requested the City's consent to the further sublease of the Golf Course to EAGL. NOW, THEREFORE, in consideration of the foregoing, and the undertakings of the parties under the Lease and under the sublease and the further sublease agreement referred to herein, and for other good and valuable consideration, the receipt and sufficiency of which the City hereby acknowledges, the City hereby agrees as follows: 1. City consents to the sublease of Lessee's rights and interest in and to the Golf Course to Subtenant. In the event any terms or conditions contained in the CNL Sublease conflict with terms and conditions set forth in the Lease, the terms of the Lease shall control. 2. City consents to the further sublease of such right, title and interest in and to the Golf Course to EAGL. In the event any terms or conditions contained in the EAGL Sublease conflict with terms and conditions set forth in the Lease, the terms of the Lease shall control. 3. The parties have provided copies of the proposed sublease between Lessee and Subtenant (the "CNL Sublease") and the proposed sub -sublease between Subtenant and EAGL (the "EAGL Sublease"). For identification purposes, and without binding the City to the terms thereof, a copy of the CNL Sublease is attached hereto as Exhibit B and a copy of the EAGL Sublease is attached hereto as Exhibit C. Notwithstanding the foregoing, City shall not be bound by any of the terms and conditions of the CNL Sublease or the EAGL Sublease. 4. City confirms that the attached Exhibit A sets forth a complete list of documents that make up the Lease. The Lease represents the entire agreement between Lessee and City with respect to the Golf Course. Except as provided in the Lease, City does not represent or warrant in any way its title to the Golf Course or improvements thereto or any other property referenced in this transaction. 5. Lessee hereby expressly agrees to remain bound by the obligations responsibilities and duties under the Lease. The Lease is in full force and effect and has not been assigned, modified, supplemented or amended in any way except as described in Exhibit A. City confirms that the operation of the Golf Course under the CNL Sublease and the EAGL Sublease, subject to the terms and conditions of the Lease and the provisions of Sections 1 and 2 hereof, will not constitute a default under the Lease. 6. Any additional subleases and/or assignments including lessees and/or sublessees securing financing not described in this Consent to SubLease must be approved in writing by the City in accordance with the requirements of the Lease. 7. In addition to the hold harmless/indemnification provision in the Lease, Lessee agrees to defend and indemnify the City from any and all claims, actions, judgments, liabilities, proceedings and costs, including reasonable attorneys' fees and other costs of defense and damages, resulting from the transaction contemplated herein. City shall first look 08-1506/3.21 Meadowlark Consent to Sublease lease (3) (3) 2 to Lessee to satisfy all claims, actions, judgments, liabilities, proceedings and costs, including reasonable attorneys' fees and other costs of defense and damages resulting from non- performance of the obligations under the Lease. Without limiting the foregoing, in the event subtenants fail to perform obligations required in the Lease, City may pursue any and all rights and remedies against subtenants that it has against Lessee pursuant to the Lease. 8. In addition to the hold harmless/indemnification provision in the Lease, Subtenants agree to defend and indemnify the City from any and all claims, actions, judgments, liabilities, proceedings and costs, including reasonable attorneys' fees and other costs of defense and damages resulting from the transaction contemplated herein. City shall first look to Lessee to satisfy all claims, actions, judgments, liabilities, proceedings and costs, including reasonable attorneys' fees and other costs of defense and damages resulting from non-performance of the obligations under the Lease. 9. The City, in executing its consent to the CNL Sublease and the EAGL Sublease, does not release Lessee from any claims or remedies it may have against Lessee under the Lease. 10. Without limiting Lessee's obligations to City under the Lease, City agrees to accept performance from Subtenant and/or EAGL of operational and administrative matters,_ such as the payment of percentage rent, the maintenance of financial records, the delivery of financial reports to the City, obligations to maintain, repair and operate the Golf Course in accordance with the Lease, coordination of tournaments provided for under the Lease, and other matters required by the Lessee in the Lease. All of the aforementioned obligations, in addition to those not mentioned herein, shall be in accordance with the Lease. Percentage rent shall continue to be calculated in the manner described in the Lease, based on the operating revenues of the golf course, whether such revenues are collected by Lessee, Sublessee, EAGL or another operator approved by City. 11. City shall provide Subtenant and EAGL with copies of all notices which may be provided to Lessee pursuant to the terms and provisions of the Lease. In the event of a default by either City or Lessee or any other party under the Lease, City shall give prompt written notice to Lessee, Subtenant and EAGL. Subtenant and EAGL shall provide City all notices, requests and other communications to the parties specified in the Lease and sublease(s) in writing. All notices to Subtenant and EAGL shall be given to such party at its address set forth below (or to such other address as such party may hereafter specify for the purpose of notice in accordance with the terms of the Lease). Subtenant: CNL Income EAGL Meadowlark, LLC c/o CNL Income Properties, Inc. 450 S. Orange Avenue Orlando, Florida 32801 Attention: Tammie A. Quinlan, Chief Financial Officer EAGL: Evergreen Alliance Golf Limited, L.P. 4851 LBJ Freeway, Suite 600 Dallas, Texas 75244 Attention: Lynn Marie Mallery Fax: (214) 722-6052 08-1506/3-21 Meadowlark Consent to Sublease lease (3) (3) 3 Attention: Amy Sinelli, Esq., Senior Vice President /Corporate Counsel Fax: (407) 540-2544 With a copy to: Lowndes, Drosdick, Doster, Kantor and Reed, P.A 215 North Eola Drive P.O. Box 2809 Orlando, Florida 32801 Attention: William T. Dymond, Jr., Esq. Fax: (407) 843-4444 With a copy to: The Addison Law Firm 14901 Quorum Drive, Suite 650 Dallas, Texas 75254 Attn: Randy Addison, Esq. Fax: (972) 960-7719 The addresses set forth above may be changed as to any party by such party delivering to the other parties at least thirty (30) calendar days' written notice as to such change of address. 12. By accepting this Agreement, Subtenant and EAGL agree that, as subtenants, they are bound by all of terms and conditions of the Lease that are binding upon Lessee from and after the effective date of this Agreement. Any specific references to the Lease contained herein are for emphasis and/or addition, and not intended to limit this clause in any way. 13. Subtenant(s) agree to comply with City's exclusive concessionaire agreement with Coca Cola Bottling dated February 16, 1999. In addition, all food and beverages shall be offered or sold in recyclable paper or plastic containers. No pull -top cans or Styrofoam containers are to be vended or dispensed from the Leased Property. 14. The original of this Agreement and one or more copies hereto have been prepared and signed in counterparts as duplicate originals, each of which so executed shall, irrespective of the date of its execution and delivery, be deemed an original. Each duplicate original shall be deemed an original instrument as against any party who has signed it. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their authorized officers the day, month and year first above written. SIGNATURES CONTINUED ON NEXT PAGE 08-1506/3-21 Meadowlark Consent to Sublease lease (3) (3) 4 LESSEE: AMERICAN GOLF CORPORATION, a California corporation ME print name ITS: (circle one) Chairman/President/Vice President Mark J. Friedman, Secretary SUBTENANT: CNL INCOME EAGL MEADOWLARK, LLC, a Delaware limited liability company In Amy Sinelli, Senior Vice President AND print name ITS: (circle one) Secretary/Chief Financial Officer/Asst. Secretary —Treasurer CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California '/. i Mayor ity Clerk INITIATE�DAND APPROVED: Director of Econ is Development f Community APPWOVED AS TO FORM: City Attorney rnY- 3 dl-Q� REVVD AND APPROVED: Cit Administrator SIGNATURES CONTINUED ON NEXT PAGE 08- t506/3-2 1. Meadowlark Consent to Sublease lease (3) (3) CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT r:�S :�_-�-'S�,.c�.'S S S g�S • g�.•�-'. 5�,.--�.'S;:���.!z�S;c�S�S g.,,:�.�-.�-'S�--�-'.�..•�-S!:�.�,---�-'S�--�-'.,�4s�.;�5�:�---�-'.�-.�-'S�,--�-'.�-.-�_'S;z�C�S�,--�-':�>�:�4%-.�-'S .�-`a'.�--, �-'.�S! State of California County of Q E On /qy L 7� AX Fbefore me, Date personally appeared Place Notary Seal Above -•� Here Insert Name and Title of the E who proved to me on the basis of satisfactory evidence to be the person(A) whose name(so are subscribed to the within instrument and acknowledged to me that _hesh thw executed the same in Ner authorized capacity(*), and that by UiG er 4& signature(Q on the instrument the person(A), or the entity upon behalf of which the person() acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS y ha n �6seal. Signature Signature c OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document s Title or Type of Document: ,, 00AJSCAB T 7a Document Date: 1 0A/L h, Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: ❑ Individual ❑ Corporate Officer — Title(s): 11 Partner — :'� Limited ❑ General ❑ Attorney in Fact Ci Trustee ❑ Guardian or Conservator Other: Signer Is Representing ,RIGHTTHUMBP;RINT OFSIGNER Signer's Name: ❑ Individual Cl Corporate Officer — Title(s): ❑ Partner — ❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee _1 Guardian or Conservator Other: Signer Is Representing 'RIGHTTHUMBPRINT', OF SIGNER rr4�✓4�4�✓�✓4�;✓�.C•✓,4�`✓, L�.v �4`✓4�%4�✓4'✓L�LC'✓.4'✓LC'✓..LC✓.4"ri4�✓•4�4"� •,•74�✓,: ✓.�'✓.�"'✓4C%4'•✓�-:v �4'v v4�4'tr •ai4'y4�'✓.�`✓4"�✓4� � �Lv �4'y CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT :..>�>�s;=.< >�>�s;...;�.�c e;:.c;�e , > >�c;..c;�s ..�.,;�c ;;�..;�s >�,;..c;�.,�s • >,�e�.,=.c s e„sz!�.�,!�,;�.s;�;.!.;.,_. State of California County of /il C On l` L O before me, 7 L_. Date Here Insert Name and Title of the personally appeared Place Notary Seal Above Z_- /zY/U J who proved to me on the basis of satisfactory evidence to be the person(, whose name( Is subscribed to the within instrument and acknowledged to me that 46 ham` eyr executed the same in ' er Iaeir authorized capacity(ip5), and that by'b+ � signature(V on the instrument the persono;), or the entity upon behalf of which the personop acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS y h d Ic al se Signature " Signature of Notar ublic OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Title or Type of Document: ! 0A 3 t-7A) T ; ��- Document Date:/e/L cp,00? Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: ❑ Individual ❑ Corporate Officer — Title(s): ❑ Partner — ❑ Limited D General ❑ Attorney in Fact El Trustee Top of thumb here ❑ Guardian or Conservator ❑ Other: Signer Is Representing: Signer's Name: ❑ Individual Corporate Officer — Title(s): _ El Partner — ❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: RIGHTTHUMBPRINT OFSIGNER.'.` ., . O /1 • • 1.• ••1 • �1 •/ C11 LESSEE- AMERICAN GOLF CORPORATION, a California corporation By: print name ITS: (circle one) Chairman/President/Vice President go AND Mark J. Friedman, Secretary SUBTENANT: CNL INCOME EAGL MEADOWLARK, LLC, a Delaware lirmtqLd liability company By: Joseph T. k*rn Senior Vice President ,AND Y= print name ITS: (circle one Secretary/Chief Financial Officer sst. Secretar Treasurer CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California Mayor City Clerk INITIATED AND APPROVED: Director of Economic Development Director of Community Services APPROVED AS TO FORM: cc City Attorney AkY- 3-,7(-oe REVIEWED AND APPROVED: City Administrator SIGNATURES CONTINUED ON NEXT PAGE 08-1506/3-21 Meadowlark Consent to Sublease lease (3) (3) STATE OF FLORIDA COUNTY OF ORANGE The foregoing instrument was acknowledged before me this � day of March, 2008, by Joseph T. Johnson as Senior Vice President of CNL INCOME EAGL MEADOWLARK, LLC, a Delaware limited liability company. He is personally known to me or has produced as identification. (NOTARY SEAL) Cathleen A. Coffey Commission # D0466308 Expires September 24, 2009 Bondeo Troy Fain - Insurance. Inc 800-385-7019 STATE OF FLORIDA COUNTY OF ORANGE C ct'vplr-� Notary Public Signature CATSLEW A. COFFEY (Name typed, printed or stamped) Notary Public, State of Florida Commission No.: My Commission Expires: The foregoing instrument was acknowledged before me this � day of March, 2008, by Linda Scarcelli as Assistant Secretary of CNL INCOME EAGL MEADOWLARK, LLC, a Delaware limited liability company. She is personally known to me or has produced as identi Icat>on. (NOTARY SEAL) yli 11 rs ;�,�a • �; Cathleen A. Coffey Commission # DD466308 p °= Expires September 24, 2009 1 e1�05onaed Troy Fain - Insurance Inc 300-385-7019 C ry "k�n� :A `2f7 Notary Public Signature CATHLEEN A. COFFEX (Name typed, printed or stamped) Notary Public, State of Florida Commission No.: My Commission Expires: 0914625\1 30607\1 137673\1 Notary for Meadowlark consent LESSEE: GOLF CORPORATION, a California By: 6 Paul Ma'or p' to ITS: (circle one Chairm residetn' ice President .9 J. Friedman, Secretary SUBTENANT: CNL INCOME EAGL MEADOWLARK, LLC, a Delaware limited liability company By: Joseph T. Johnson, Senior Vice President AND By: print name ITS: (circle one) Secretary/Chief Financial Officer fsst. Secretar Treasurer CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California Mayor City Clerk INITIATED AND APPROVED: Director of Economic Development Director of Community Services APPROVED AS TO FORM: City Attorney Mv- 3-fit-off' 2i• U�5 REVIEWED AND APPROVED: SIGNATURES CONTINUED ON NEXT PAGE City Administrator 08-150613-21 Meadowlark Consent to Sublease. lease (3) (3) 5 STATE OF CALIFORNIA ) SS. COUNTY OF Los Angeles ) Onefore me, _Elyse Cook , Notary Public, (here insert name and title of the officer) personally appeared Paul Major, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. ELYSE COOK Q Commission # 1479395 Nola Los rY Public - Calirornia SEAL COMM. County Expires Apr 26,201 NotVryublic ( P„UC - 0'_8987:000002 - 2682202 v 1 STATE OF CALIFORNIA ) SS. COUNTY OF Los Angeles ) On ` 4V before me, _Elyse Cook , Notary Public, (here insert name and title of the officer) personally appeared Mark J. Friedman, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. I E S hand and o 1c'a se ELYSE COOK Commission # 1479395 Z -� - Notary Public - California ®• Los Angeles County My Comm. Expires Apr 26, 2008 SEAL. VODC - 0289871000002 - 268-02 vi Notary ublic ( al) TENANT: EVERGREEN ALLIANCE GOLF LIMITED, L.P., a Delaware limited partnership By: PREMIER GOLF EAGL GP, LLC., a Delaware limited liability co n G era l Partner "Lynn Mari Mallery, Vice President AND By: CA�.oL o w print hamkj ITS: (circle one Secretary/Chief Financial Officer Asst. Secretary Treasurer NOTICE: THIS SUB -SUBLEASE CONTAINS WAIVERS AND INDEMNITIES BY THE TENANT OF THE LANDLORD'S OWN NEGLIGENCE. EAGL: EVERGREEN ALLIANCE GOLF LIMITED, COUNTERPART L.P. a Delaware limited partnership By: PREMIER GOLF EAGL GP, LLC., a Delaware li liability co any, General Partner By: so print name „� ITS: (circle one) Chairrnan/Presiden ice President r A By: Llyfin �e iv all ry, ice Preside Exhibit A: Lease Agreement, dated July 6, 1992, between the City of Huntington Beach and American Golf Corporation. Exhibit B: Form of CNL Sublease Exhibit C: Fonn of EAGL Sublease 08.150613-21 Meadowlark Consent to Sublease lease (3) (3) 6 STATE OF TEXAS COUNTY OF DALLAS This instrument was acknowledged before me on the day of March, 2008, by Lynn Marie Mallery, Vice President and Secretary of PREMIER GOLF EAGL GP, L.L.C, the general partner of EVERGREEN ALLIANCE GOLF LIMITED, L.P., on behalf of said partnership. Notary Public in an CAROL L. BOROWY the State of Texas 1PPY Notary Public, State of Texas My Commission Expires My commission expires: Ug d3/ d-0/0 ®bfNQry 23, 3010 STATE OF TEXAS COUNTY OF DALLAS This instrument was acknowledged before me on the,7-V day of March, 2008, by Joe Munch, Vice President of PREMIER GOLF EAGL GP, L.L.C, the general partner of EVERGREEN ALLIANCE GOLF LIMITED, L.P., on behalf of said partnership. Notary Public i the State of Tex �1P;Y: B CAROL L. BOROWY '_�' = Notary Public, State of Texas My Commission Expires My commission expires: U� 3 �co �i��� F � pobruoty 23, 2010 STATE OF TEXAS COUNTY OF DALLAS This instrument was acknowledged before me on theA day of March, 2008, by Carol Borowy, Assistant Secretary of PREMIER GOLF EAGL GP, L.L.C, the general partner of EVERGREEN ALLIANCE GOLF LIMITED, L.P., on behalf of said partnership. 0o, 00,1)0� tary Public in and for the State of Texas My commission expires: [ a `,,,11111„, CHARLA REEVES ro.• ,'s Notary Public, State of Texas My Commission Expires ' �'�nii� :a:•` November 21, 2009 a LEASE AGREEMENT AMERICAN GOLF CORPORATION AND CITY OF HUNTINGTON BEACH Exhibit A TABLE OF CONTENTS PAGE 1. DESCRIPTION OF PREMISES .............................1 2. CONSTRUCTION AND USE OF LEASED PREMISES.............2 3. QUIET ENJOYMENT.....................................2 4. TERM................................................2 5. TERMINATION.........................................3 6. LEASE YEAR DEFINED..................................3 7. IMPROVEMENTS TO THE GOLF COURSE.....................4 8. RENT...............................................10 9. GROSS REVENUE......................................12 10. REPORTING AND PAYMENT OF PERCENTAGE RENT ........... 14 11. MAINTENANCE AND EXAMINATION OF RECORDS.............14 12. SERVICES TO BE PROVIDED BY LESSEE..................15 13. TAXES..............................................19 14. UTILITIES..........................................20 15. CAPITAL IMPROVEMENTS...............................20 16. MAINTENANCE AND REPAIRS .. ..........................21. 17. LESSOR'S COOPERATION.... .........................21 18. INDEMNIFICATION, DEFENSE, HOLD HARMLESS ............ 22 ----------9-.---- WORKER-S-CGM- PEN-SATI.ON- INSURANCE ................. 24 20. INSURANCE..........................................24 1 TABLE OF CONTENTS PAGE 21. DAMAGE AND RESTORATION..............................27 22. EMINENT DOMAIN......................................27 23. FRUSTRATION OF PURPOSE..............................28 24. ASSIGNMENT..........................................29 25. BREACH AND REMEDIES.................................30 26. NOTICES AND ADDRESSES...............................33 27. GOVERNING LAW.......................................34 28. CAPTIONS............................................34 29. DEFAULT WAIVER......................................34 30. INTEGRATION..........................................35 31. PUBLIC ACCOMMODATION................................35 32. TIME IS OF THE ESSENCE..............................35 33. MINERAL RIGHTS......................................35 ii LEASE AGREEMENT BETWEEN THE CITY OF HUNTINGTON BEACH AND AMERICAN GOLF CORPORATION FOR THE PROPERTY KNOWN AS THE MEADOWLARK GOLF COURSE THIS LEASE AGREEMENT is made and entered into this day of 1992, by and between the CITY OF HUNTINGTON BEACH, a municipal corporation, hereinafter referred to as "LESSOR", and AMERICAN GOLF CORPORATION, a California corpora- tion, hereinafter referred to as "LESSEE". WHEREAS, LESSOR owns certain real property (hereinafter referred to as "Premises"), in the City of Huntington Beach, and LESSEE desires to lease said PREMISES for the use and purposes set forth below, and LESSOR and LESSEE had previously entered into that certain lease for the same Premises effective as of January 1, 1975 (Previous Lease), and the parties now wish to terminate such Previous Lease and replace it with this new Lease, NOW, THEREFORE, the parties covenant and agree as follows: 1. DE,G RT TTON QF PREMISES LESSOR hereby leases to LESSEE that certain real property located in the City of Huntington Beach, County of Orange, State of California, and more particularly described in the attached Exhibit "A" and incorporated herein by this ----r-e-f-e-rence� -commonly known as �'Iea3owlark Golf Course for all purposes, along with all easements, covenants, water well rights and other appurtenant rights associated therewith (collectively, the "Real Property") together with the improvements constructed on or to be constructed on the Real Property (the "Improvements") and the property described in Residential Rental Agreement, Exhibit "B" attached hereto and incorporated herein by this reference. The Real Property and the Improvements are hereinafter collectively referred to as the "Leased Premises". LESSEE agrees it will use'the Leased Premises exclu- sively for the operation of a public golf course and other activ- ities customarily associated with or incidental to the operation of a public golf course, including without limitation, sale or rental of golf -related merchandise at a golf professional's shop, furnishing of .lessons by a golf professional, operation of a driving range, and sales of food and both alcoholic and non- alcoholic beverages. LESSEE shall not use the Leased Premises for any unlaw- ful purpose and shall comply with all laws, rules and regula- tions, zoning and licensing regulations applicable.to the Leased Premises or the businesses conducted on the Leased Premises. 3. QUIET ENJOYMENT Subject only to the terms of this Lease, so long as LESSEE complies with each and all of its obligations under this Lease, LESSOR shall secure to LESSEE the quiet and peaceful enjoyment of the Leased Premises and the sole and exclusive___ possession of the Leased Premises without objection or inter- ference from LESSOR or any party claiming under LESSOR. 4. TERM The PREVIOUS LEASE between the parties is hereby 2 r terminated as of the commencement date of the new Term herein set forth below. The term of this Lease ("Term") shall be for twenty-five (25) years, beginning on the first day of the calendar month six (6) months following the date of approval by City Council. Provided that LESSEE is not in default pursuant to Section 25.1 of this Lease, LESSEE shall have the option to re- quest to extend the Term of the Lease for an additional period of ten (10) years, and LESSEE shall provide written notice to LESSOR of LESSEE's request for such extension at least eighteen (18) months prior to -the expiration of the initial term of the Lease. LESSOR shall determine if LESSEE is in default pursuant to Section 25.1 and, if not, grant the extension within ninety (90) days of receipt.of such request. If Lease is extended, all terms and conditions of this Lease shall continue to be applicable,. unless it is mutually agreed to change any term or condition. This Agreement is subject to termination by LESSOR under Sections 25.1, 25.2 and 29 hereof. 6. LEASE YEAR DEFINED A "Lease Year" is that period of twelve (12) consecu- tive calendar months beginning with the first month of the Lease as defined in Section 4 and each anniversary thereof dur. g_the__.._.— Term. The Lease Year may be changed by written agreement of the parties. If this Lease is terminated prior to the end of a Lease Year, minimum rent for such partial year shall be prorated based on the number of days in such partial year. Each Lease Year will 3 constitute a separate accounting period for the purpose of computing "Percentage Rent" (as hereinafter defined), and gross revenue for any Lease Year shall not be carried forward or backward into any other Lease Year. 7.1 LESSOR's obligations. The obligations identified in this subsection 7.1 shall be referred hereafter as "LESSOR's Obligations." LESSOR shall provide to LESSEE possession of the Leased Premises and LESSOR shall perform, secure and/or provide each and all of the following: a) Approval of all plans and specifications sub - witted to LESSOR from LESSEE that meet city code requirements; fees by LESSEE; b) All necessary building permits upon payment of c) At the point of current connection, all required utilities, including without limitation, if available, gas, electricity, water, sewer, storm drain and fire hydrants. a)- Required Improvements. The obligations identified in this subsection 7.2 (a) shall be referred to as "LESSEE's Required Improvements." LESSEE shall construct the following improvements within the first two years of the Lease Term at an approximate minimum investment including design, engineering, consulting, permits and licenses, supervision and management, fixtures, equipment, and all direct and indirect construction costs of Three Million Two Hundred Thousand ($3,200,000) Dollars: 4 t Golf Course I. Design and implementation of new and/or re- placement of waterwise irrigation system that will hookup to reclaimed water system. LESSEE shall meet all federal, state and local requirements for' hook- up to such system no later than six (6) months from LESSOR notification of availability of such water. II. Lake lining and drainage improvements III. Fencing IV. Tee work V. Cart paths Driving Range I. 61 stalls w/mats Ii. Two tiers III. New lighting IV. New netting V. Synthetic target mounds VI. Deeper hitting area Maintenance Building I. Meet all Cal -OSHA requirements II. Fenced for security III. Proper chemical storage Clubhouse I. New building/coffee shop/lounge II. Banquet room III. Golf shop IV. Cart storage for 85 carts b) LESSEE shall obtain all necessary environ- mental studies, mitigations, and permits, such as an environ- mental impact report or negative declaration; c) Mutually approved changes to or substitutions for LESSEE's Required Improvements shall be in writing and signed by both parties; d) LESSEE shall make all improvements required by this Lease in compliance with the right-of-way for Graham Street. LESSOR may, at its option, choose to improve Graham Street at any time during the term of this Lease. If LESSOR so chooses to improve Graham Street, LESSOR shall be responsible for all costs of such improvements. 5 e) Additional Improvements. Subject to written approval of LESSOR, LESSEE may elect to construct certain addi- tional facilities which are compatible with the LESSEE's Required Improvements and which provide additional city approved services for the Leased Premises. f) The period for construction of the improve- ments described in this section 7.2 shall be extended by the period of any delay caused by inclement weather or other acts of God, shortage of materials or supplies, labor strike or walkout, delay in obtaining permits, licenses, or approvals from govern- mental agencies, or any other force majeure event not within the control of LESSEE. Upon the occurrence of any of these events, LESSEE shall provide written notice to LESSOR of the occurrence of such event and the length of the delay caused by such event. a) Schematic Plans. LESSEE will submit schematic plans for improvements of the golf course to LESSOR not later than sixty (60) days following execution of this Lease for LESSOR's approval.- LESSOR's response to the schematic plans, including any recommendations for change, is to be submitted to LESSEE not later than thirty (30) days following LESSOR's receipt of the schematic plans. b) Development Plan and Final Construction Plans. Within one hundred twenty (120) days following approval of LESSEE's schematic plans, LESSEE shall submit to LESSOR a devel- opment plan, final construction plans, and specifications for 6 ' t k LESSOR's approval, subject to city review which may include Com- munity Services Commission, Planning Commission, or City Council. LESSOR shall make every effort to expedite the approval process. c) "As Built" Plans. Within sixty (60) days following completion of LESSEE's Required Improvements, LESSEE shall furnish LESSOR a complete set of reproducibles and three sets of prints of mylar "as built" plans. 7.4 Construction. Promptly following LESSOR's approv- al -of the development plan and final construction plans and issu- ance of necessary permits, LESSEE shall commence LESSEE's Re- quired Improvements and construction of any Optional Improvements in accordance with the Approved Plans. LESSEE shall substantial- ly comply with the Approved Plans unless a change order or alter- ation is otherwise approved in advance by LESSOR. LESSOR shall have the right to inspect all construction for the purpose of confirming that LESSEE is adhering to the Approved Plans, pro- vided that LESSOR's failure to so discover or object to construc- tion that does not adhere to the Approved Plans shall not be con- strued to constitute a waiver by LESSOR of the requirement that such construction be in accordance with the Approved Plans. LESSEE shall also construct or cause to be constructed upon the Leased Premises all lines, structures and facilities required in order to provide the Leased Premises with all necessary utility services and drainage. a) Mechanics Liens or Stop -Notices. LESSEE shall at all times indemnify and hold LESSOR harmless from all claims 7 for labor and materials in connection with the construction, repair, alteration or installation of structures, improvements, equipment or facilities upon the Leased Premises by LESSEE and from cost of defending against such claims, including reasonable attorney fees. In the event a lien or stop -notice is imposed upon Leased Premises as a result of such construction, repair, alteration or installation, LESSEE shall, within thirty (30) days after notice of the filing of such lien or stop -notice, either: i) Record a valid release of lien; or ii) Procure and record a bond in accordance with Section 3143 of the California Civil Code, which frees the Leased Premises from the claim of the lien or stop -notice and from any action brought.to foreclose the lien. 7.5 T,PRS_F.E°s AgtaLrance of o=leti_on. Prior to LESSEE signing a construction contract and commencement of construction, LESSEE shall furnish LESSOR suitable evidence of money available, approved as to form by the City -Attorney, in an amount of not less than Three Million Two Hundred Thousand ($3,200,000) Dollars in order to complete LESSEE's Required Improvements in the form of one of the following: a) A performance bond containing the provisions of a labor and material bond supplied by LESSEE's contractor or contractors, provided said bonds are issued jointly to LESSEE and LESSOR as obligees; or b) An irrevocable letter of credit, in an amount W � r , not less than Three Million Two Hundred Thousand ($3,200,000) Dollars; or c) A certified letter from a qualified bank certifying that it is holding funds in an amount of not less than Three Million Two Hundred ($3,200,000) Dollars which will be released to LESSEE solely for the construction of LESSEE's Required Improvements. d) Cash deposited in an escrow acceptable to LESSOR, with interest to accrue to LESSEE, but with instructions to the escrow agent to the effect that until construction is completed, funds deposited in escrow may not be released or pledged without LESSOR's written approval; or any combination of the above. e) All bonds and letters of credit must be issued by a company qualified to do business in the State of California. a) All buildings, improvements and facilities, other than personal property, placed upon the Leased Premises by LESSEE, shall become LESSOR's property upon the termination of the Lease Agreement. b) The parties acknowledge and agree that LESSEE owns (or leases from third parties other than_.-LESS9B)-___a11-------------- personal property located on the Leased Premises or used in connection with the operation, maintenance, or improvement of the Leased Premises and that LESSOR has no present or future right or interest in such personal property. Within 30 days after the 9 expiration of this Lease, LESSEE shall remove all such personal property from the Leased Premises. c) Upon completion of the improvements and annually thereafter, LESSOR and LESSEE will jointly prepare a complete inventory of all items located upon the Leased Premises�,� (form attached), and shall distinguish each item as to whether it shall be considered real or personal property for purposes of this Lease. This list and any additions will be used as a guideline in determining ownership upon termination of the Lease. 8. RENT In addition to the rent specified in Exhibit "B", LESSEE shall pay an annual rent in an amount that will be the greater of either (i) the minimum rental payment as set forth below, or (ii) a rent based upon percentages of gross revenue as set forth below. 8.1 Minimum Rent. LESSEE will pay to LESSOR an annual minimum rent thirty (30) days in arrears in equal monthly installments on the following schedule: Years 1-2 $175,000.00 ($14,583.33 per month) Years 3-10 $300,000.00 ($25,000.00 per month) Years 11-18 $500,000.00 ($41,666.67 per month) Years 19-25 75% of the average of actual percentage rent during Years 11-18 Option Period 75% of the average of actual percentage rent during Years 19-25 8.2 Percentage Rent. In any Lease- Year in which the amount of Percentage Rent set forth below exceeds the Minimum Rent specified in subsection 8.1, LESSEE shall pay to LESSOR Percentage Rent based upon the following formula: 10 Years 1-2 Five percent (5%) of gross revenue from greens fees, cart rentals, driving range fees; Four percent (4%) of sales of the golf pro- fessional's shop; Ten percent (10%) of food and beverage sales, including liquor; and Twenty-five percent (25%) of non-food, banquet room rentals. Years 3-10 Nine percent (9%) of gross revenue from greens fees, cart rentals, driving range fees; Four percent (4%) of sales of the golf pro- fessional's shop; Ten percent (10%) of food and beverage sales, including liquor; and Twenty-five percent (25%) of non-food, banquet room rentals. Years 11-18 Eighteen percent (18%) of gross revenue from greens fees, cart rentals, driving range fees; Four percent (4%) of sales of the golf pro- fessional's shop; Ten percent (10%) of food and beverage sales, including liquor; and Twenty-five percent (25%) of non-food, banquet room rentals. Years 19-25 Twenty-five percent (25%) of gross revenue from greens fees, cart rentals, driving range fees; Four percent (4%)of sales of the golf pro- fessional's shop; Ten percent (10%) of food and beverage sales, including liquor; and Twenty-five percent (25%) of non-food, banquet room rentals. Option Period Twenty-five percent (25%) of gross revenue from greens fees, cart rentals, driving range fees; Four percent (4%)of sales of the golf pro- fessional's shop; Ten percent (10%) of food and beverage sales, including liquor; and Twenty-five percent (25%) of non-food, banquet 8.3 Late Payment Charge. If any payment of rent or any other sum due is not received on or postmarked as of the due date, a late charge of ten percent (10%) of the payment due will 11 be added to the payment obligation and the total sum shall be immediately due and payable to LESSOR. An additional charge of ten percent (10%) of said payment, excluding late charges, shall accrue for each additional month that said payment remains unpaid; provided, however, that in the event that LESSEE contests the obligation to pay a sum allegedly due and it is ultimately determined that the sum is not owed, LESSEE shall not be required to pay late charges pursuant to this subsection. 9. GROSS REVENUE For purposes of calculating Percentage Rent, gross revenue shall mean all money received by LESSEE as a result of the sale of merchandise or the provision of services on the Leased Premises, but shall not include: (a) Cash refunds or credits allowed on returns by customers; (b) Sales taxes, excise taxes, and similar taxes now or later imposed upon the sale of goods, merchandise or services and paid by LESSEE to the appropriate taxing authority, whether added to or included in the sales price; (c) Fees charged for golf lessons and instructions; (d) The actual uncollectible amount of any check or draft received by LESSEE as payment for goods or services and. returned to LESSEE from a customer's bank as being uncollectible (commonly "non -sufficient funds" checks), but only after LESSEE has made a reasonable effort to collect on the check; (e) The actual uncollectible amount of any charge or 12 account (commonly "bad debts") incurred by LESSEE for the sale of merchandise or services; provided, however, that the charge or account was extended to the customer by LESSEE, and that reason- able efforts to .collect said charge or account have been made; (f) The actual uncollectible amount of any sale of merchandise or services for which LESSEE accepted a credit card; provided, however, that LESSEE has made reasonable efforts to collect the debt after being notified by the issuing bank of the invalidity or uncollectibility of the charge; (g) Interest or other charges paid by customers for extension of credit; (h) Sales made by any concessionaire or licensee of LESSOR, it being the intention of this Lease that only LESSEE's share of the receipts of such concessionaires or licensees, if and to the extent actually received by LESSEE, are to be included in the calculation of LESSEE's gross revenue; (i) Sales or trade-ins of machinery, vehicles, trade fixtures or personal property used in connection with LESSEE's operation of the Leased Premises; (j) The value of any merchandise, supplies or equip- ment exchanged or transferred from or to other locations of bus- -LESSEE __whe_r_e---s-uch—e-x_c_ha-nge the purpose of avoiding a sale which would otherwise be made from or at the Leased Premises; (k) Receipts in the form of refunds from or the value of merchandise, supplies or equipment returned to shippers, 13 suppliers or manufacturers; (1) The amount of any cash or quantity discounts received from sellers, suppliers or manufacturers; (m) The amount of any gratuities paid or given by customers to or for employees of LESSEE; (n) Receipts from the sales of uniforms or clothing required to be worn by employees; (o) Amounts attributed to meals served or provided to employees of LESSEE; (p) Receipts from the sale of waste or scrap materials resulting from LESSEE's operations; and (q) Amounts attributable to play by members of the American Golf Club exercising their membership right to play not more than two (2) rounds per year without separate payment of greens fees not to exceed 300 total rounds per year. WRINF-TgZoNaw.►MENu siou wel 40 umi 14owyawil Within thirty (30) days following the end of each Lease Month, LESSEE will submit to LESSOR a statement signed by LESSEE or a person authorized by LESSEE showing, in reasonable detail acceptable to LESSOR, the .amount and types of gross revenue for the year to date, and a remittance, if appropriate, of the amount by which the Percentage Rent for such year__to _date_ exceeds- th_e-------- Minimum Rent. 11. MAINTENANCE AND RX MTNATLON OF RECORDS LESSEE agrees to maintain its financial records per- taining to the operation of the Leased Premises for a period of 14 7 four (4) years after the conclusion of any Lease Year and further agrees that such financial records shall be open and available to LESSOR or LESSOR's representative for an examination at all reasonable times during business hours. LESSOR shall give LESSEE notice of such examination at least forty-eight (48) hours before LESSOR intends to conduct such examination. LESSOR shall be entitled at any time within four (4) years after the conclusion of a Lease Year to question the sufficiency of any rent payments or the accuracy of the report furnished by LESSEE. At the end of each Lease Year, LESSEE shall submit an annual statement of gross receipts pursuant to Section 9, certi- fied as correct by LESSEE. LESSOR may, at its option, require an outside audit of LESSEE's financial reporting. LESSOR shall pay for such outside audit unless such audit shows that LESSEE under- reported applicable income by an amount of five percent (5%) or - greater. If such under -reporting is determined by outside audit, LESSEE shall immediately reimburse LESSOR with the determined amount of under -payment, plus the cost of the outside audit that determined such under -payment. WENT • •;s r r Pursuant to this Lease, LESSEE shall provide the serv- ices and operate Meadowlark Golf Course facilities.as 12.1 Management. LESSEE agrees to operate and manage the golf course facilities and services offered in. a high quality manner and shall maintain the Leased Premises in accordance with the minimum maintenance standards as listed in the attached 15 5 Exhibit C and incorporated herein by this reference. LESSEE agrees it shall provide an overall standard of service at least equal to a "B" or better rating as described in the monthly course evaluation report (Exhibit D), with no single category maintained below a "C". In the event the evaluation report indicates that the premises do not meet the minimum rating requirements set forth in Section 12.1 above, the Director shall so indicate by a detailed, itemized list of all items that need to be corrected, improved, or repaired on the "Evaluation Form". The Evaluation Form shall serve as the LESSOR'S written notice pursuant to Section 25.1 b). Director and LESSEE shall meet and discuss the monthly Evaluation Form, and shall, in good faith, attempt to agree upon the steps LESSEE shall take to correct, improve, or repair the items in- cluded on the Evaluation Form and the time schedule for doing so. Except as provided below, LESSEE shall have sixty (60) days after receipt of the monthly Evaluation Form to correct, improve, or repair each of the items on the Form, provided that if any item cannot be corrected, improved, or repaired in such period, LESSEE shall have such additional time as reasonably necessary to com- plete such correction, improvement, or repair so -long as LESSEE is diligently Pr_wit_s_ueh co�r_ection-,--_i-mpr-co-nt— or-- — - oceedin 9 h repair ("Correction Period"). In the event LESSEE disagrees with anything on the monthly Evaluation Form or LESSOR and LESSEE disagree as to whether an item has been properly corrected, improved, or repaired, then the parties agree that the matter in 16 disagreement shall be submitted for resolution to the Greens Section of the United States Golf Association, or any other person or entity agreed to by the parties, and the parties shall abide by the recommendation of such person or entity. The Correction Period shall be stayed during the period of time that an item is being disputed by either party and is being considered by the Greens Section of the United States Golf Association or such other person or entity agreed to by the parties. The parties acknowledge and understand that the purpose of the monthly evaluation reports is to determine whether LESSEE is in compliance with Section 12.1 of this Lease and to identify those areas, if any, which LESSEE needs to correct, improve, or repair in order to be in compliance with Section 12.1. The par- ties further acknowledge and understand that the Director's de- termination whether the quality standards set forth in Exhibit D have been satisfied and, if not, the number of points that should be deducted for failing to meet these standards is subjective in nature, and LESSOR hereby agrees that Director shall act reason- ably and in good faith in making such determinations. 12.2 Hours of Operation. Subject to LESSOR's approval, LESSEE will establish hours of operation for the golf course facilities that shall meet the public demand for said facilities. 12.3 LESSEE's Employees. LESSEE will ensure that its employees shall at all times conduct themselves in a creditable manner. LESSEE will maintain a staff adequate to operate and 17 ` 1 administer all facilities located on the Leased Premises in meeting standards set forth in the attached Exhibit C. 12.4 Dress and Conduct Standards. LESSEE shall set dress and conduct standards, with LESSOR's approval, and shall be permitted to deny permission to play to anyone who fails to con- form to standards. LESSEE shall have the right to refuse admis- sion to persons who are drunk, disorderly, under the influence of drugs, or who conduct themselves in a manner that may result in injury or harm to themselves, other persons or property on the premises. 12.5 Merchandise and Equipment. LESSOR retains the right to require LESSEE to refrain from sale or use of items that are of substandard quality as determined by LESSOR in the exer- cise of LESSOR's reasonable judgment. 12.6 Tournaments. LESSOR shall have the right two (2) times during each calendar year to schedule a tournament or tour- naments. LESSEE and LESSOR will agree in advance, once a year, on the dates for such tournaments. Tournament participants will be given special rates as mutually agreed for golf tournament fees. 12.7 Charity t y Tournament. One of the two times per year, LESSOR will have the right to organize and conduct a tournament at no charge for greens fees or equipment rentals which shall be for the purpose of raising money for City of Huntington Beach charities that will be mutually agreed to by LESSOR and LESSEE. 18 12.8 Rate Rnhedules. Prior to March 1 of each year, LESSEE shall provide to LESSOR a schedule of rates for green fees, golf cart rental, and driving range use for the ensuing year. LESSEE hereby agrees that the rates for green fees, golf cart rental, and driving range will be based on rates charged for similar golf courses in Los Angeles and Orange Counties. if there is a dispute regarding fees and rates, both parties agree to meet and confer in good faith to resolve any dispute. 13. lAxEs is not the intent of the parties that this Lease create a posses- sory interest subject to taxation; provided, however, that if this Lease should create a possessory interest in LESSEE which is subject to taxation, LESSEE agrees to pay such taxes prior to delinquency, which is not a waiver of the right to protest. LESSEE will have the right to contest the validity or amount of possessory interest taxes by means of appropriate proceedings diligently pursued at LESSEE's sole expense. LESSEE agrees that, upon final determination of liability, it will promptly pay the amount of taxes found owing, along with any interest, penalties or cost that may result from LESSEE's contest. Director will cooperate with LESSEE in any such_ can_teef_o_f_the_val-id-i_y—o-r-- amount of such taxes, provided that LESSOR is not required to incur any cost or expense as a result of such cooperation. 13.2 Other Taxes. LESSEE shall pay before they become delinquent, all real property taxes, or possessory interest taxes 19 and assessments levied or assessed against the Premises by any governmental agency, including any special assessments imposed on or against the Premises for the construction or improvement of public works, in, on, or about the premises. 14. UTILITIES LESSEE will pay, before delinquency, all charges for utilities, including electricity, gas, heating, cooling, tele- phone and water, used by LESSEE on the Leased Premises. LESSEE shall pay all charges for groundwater produced from water wells used and operated by LESSEE. Said charges shall include fees, assessments and other charges assessed or imposed on the City of Huntington Beach by the Orange County Water District, Metropoli- tan Water District or any other agency for groundwater extracted by the LESSEE. All charges shall be paid to the city before de- linquency by LESSEE as invoiced. It shall be the responsibility of LESSEE to contact LESSOR's Water Operations Manager at least annually to discuss any charges that may be forthcoming. 4P2 u Unless made on an emergency basis to prevent injury to person or property, LESSEE will submit plans for any alteration or addition with a value of more than Ten Thousand ($10,000) Dollars, to LESSOR for LESSOR's prior approval, such approval not to be unreasonably withheld or delayed. LESSEE shall not have the right to create or permit the creation of any lien attaching to LESSOR's interest in the Leased Premises as a result of any construction of capital improvements. 20 Starting in the first year, LESSEE will begin a major renovation and modernization program as set forth in Section 7.2. Work shall be paid for and performed by LESSEE. As indicated in Section 8.2, the percentage rent has been decreased in years 1 through 10 to compensate LESSEE for the capital improvements. If LESSEE's Required Improvements are not constructed pursuant to Section 7.2, then LESSOR shall have the option either to cancel the Lease or to unilaterally change the percentage rent for Lease Years 1-10 to the percentages which apply for Lease Years 11-18. LESSEE acknowledges it is acquiring the Leased Premises in their current "as is" condition. 16.1 LESSEE'S Obligations. LESSEE assumes sole re- sponsibility for maintenance and repair of the Leased Premises and LESSEE will maintain the Leased Premises in good order and in sanitary and safe condition at LESSEE's sole expense. LESSEE agrees it will maintain the Leased Premises in conformance with maintenance standards set in Exhibit C, subject to monthly performance evaluations as set forth in Exhibit D. ROMMUNSMme ••• •� LESSOR recognizes and acknowledges that LESSEE will need the assistance and cooperation of Director in order to properly perform and fulfill LESSEE's covenants and obligations' under this Lease. Therefore, LESSOR agrees Director will assist in securing for LESSEE, as needed, all permits or licenses that are within the jurisdiction and authority of LESSOR's various 21 departments, agencies officers, boards or councils, and that are required in order for LESSEE to fulfill its obligations under this Lease. LESSOR agrees Director will designate a specific staff person having appropriate experience and authority whose responsibility it is to work with LESSEE in assisting LESSEE to obtain the full cooperation and assistance of Director, subject to the terms of this Lease and all applicable laws. 17.1 Initial Improvement Phase. During the improve- ment phases, Director's agent shall organize meetings with all appropriate agencies for the purpose of acquiring design and construction information; facilitate the submitting and securing of the necessary planning approvals, grading permits, and build- ing permits; and shall aid in developing alternative solutions to issues raised in the planning and plan check phases. LESSEE agrees to indemnify and save harmless LESSOR, its officers and employees against any and all claims by or on behalf of any person or persons, firm or firms, corporation or corporations, arising from the conduct or management of LESSEE or from any work or thing whatsoever done in or about the Leased Premises or any buildings and improvements thereon during the term of the Lease, and will further indemnify and save LESSOR harmless against any and all claims arising during the term of the Lease from any conditions of the buildings on the Leased Premises or from any activity on the Leased Premises which affects any street, curb or sidewalk adjoining the Leased Prem- 22 ises or any vaults, passageways or spaces therein or appurtenant thereto, or arising from any breach or default on the part of LESSEE in the performance of any covenant or agreement on the part of LESSEE to be performed, pursuant to the terms of this Lease, or arising from any act of negligence of LESSEE, or any of its agents, contractors, servants, employees or licensees, or arising from any accident, injury or damage whatsoever caused to any person, firm or corporation occurring during the term of this Lease, in or about the Leased Premises or any buildings and improvements thereon, or upon or under the sidewalks and the land adjacent thereto and related to any activity on the Leased Premises, and from and against all costs, counsel fees, expenses and liabilities incurred in or on account of any such claim or action or proceeding brought thereon; and in case any action or proceeding be brought against LESSOR by reason of any such claim, LESSEE, upon notice from LESSOR, covenants to resist or defend such action or proceeding by counsel reasonably satisfactory to LESSOR. LESSEE will conduct all defense at its sole cost and expense. Any costs of defense or attorney's fees incurred by LESSOR in enforcing this obligation will be reimbursed to LESSOR by LESSEE or may be awarded to LESSOR -by a court of competent jurisdiction as costs pursuant to California Code of Civil Procedur_e—Se-�.--10�1.—�-E-S�£E'—s--o�lga-irons—urtzler this erection shall not apply to any claims, liabilities, costs and expenses resulting from the sole negligence or willful misconduct of LESSOR or LESSOR'S employees or agents. 23 t Pursuant to California LabQr code Sec. 1861, LESSEE acknowledges awareness of Section 3700 et seq. of said code, which requires every employer to be insured against liability for Workers' Compensation; LESSEE covenants that it will comply with such provisions prior to commencing performance of the work hereunder. LESSEE shall maintain such Workers' Compensation Insurance in an amount of not less than Five Hundred Thousand ($500,000) Dollars bodily injury by accident, each accident, Five Hundred Thousand ($500,000) Dollars bodily injury by disease, each employee, and One Million ($1,000,000) Dollars bodily injury by disease, policy limit, at all times incident hereto, in forms and underwritten by insurance companies satisfactory to LESSOR; and LESSEE shall, prior to the commencement of this Agreement, furnish to LESSOR, on a form approved by the City Attorney, a certificate evidencing such insurance; said certificate shall include a provision that the insurer shall notify LESSOR at least thirty (30) days prior to any cancellation or modification of said insurance policy; and LESSEE shall notify LESSOR at least thirty (30) days prior to any cancellation or modification of such policy. Said insurance shall not derogate from the provi- sion for indemnification of LESSOR by LESSEE under Section 18 of this agreement. In addition to LESSEE's covenant to indemnify LESSOR, 24 LESSEE shall obtain and furnish to LESSOR, the following certifi- cates of insurance for the following policies: 20.1 (; n al Liability Insurance. A policy of general liability insurance, including coverage for bodily injury, prop- erty damage, products/completed operations, and blanket contrac- tual liability. Said insurance shall also include automotive bodily injury and property damage liability insurance. All insurance shall be underwritten by insurance companies in forms satisfactory to LESSOR for all operations, subcontract work, contractual obligations, product or completed operations and all owned vehicles and non -owned vehicles. Said insurance shall name the LESSOR, its officers, agents and employees and all public agencies as determined by the LESSOR as Additional Insureds.. LESSEE shall subscribe for and maintain said insurance policies in full force and effect during the life of this Agreement, in an amount of not less than One Million ($1,000,000) Dollars combined single limit coverage. If coverage is provided under a form which includes a designated general aggregate limit, such limit shall be no less than twice the per occurrence limit. In the event of aggregate coverage, LESSEE shall immediately notify LESSOR of any known depletion of limits. LESSEE shall require its insurer to waive its subrogation rights a_ ag inst LESSOR__and.—---- agrees to provide certificates evidencing the same. 20.2 Fire Insurance. LESSEE shall maintain in force during the term of this Agreement, a standard broad form fire insurance policy for full replacement of the structure itself, in 25 • I e which the LESSOR is named as loss payee. The face amount of said policy shall be equal to the full replacement value of the structure itself. LESSOR may, upon thirty (30) days written notice to LESSEE, require said fire insurance coverage to be increased by an amount determined by LESSOR. Prior to the commencement of this Agreement, LESSEE shall furnish to LESSOR certificates of insurance subject to approval of the City Attorney evidencing the foregoing insurance coverages; said certificates shall provide the name and policy number of each carrier and policy, and shall state that the policy is currently in force and will not be cancelled without thirty (30) days written notice to LESSOR. LESSEE shall maintain the foregoing insurance coverages in force during the entire term of this Agreement unless waived in writing by the LESSOR's Risk Manager. The requirement for carrying the foregoing insurance shall not derogate from the provisions for indemnification of LESSOR by LESSEE under Section 18 of this Agreement. LESSOR or its representatives shall at all times have the right to inspect the original or a copy of all said policies of insurance. LESSEE shall pay, in a prompt and timely manner, the premiums on all insurance hereinabove required. The parties acknowledge and agree that any insurance ma nta-ine-d._b_y__LESS-E-E--pins-uan-t—to—t-is-------- Lease may contain deductible provisions and self-insurance or self -assumption provisions up to $250,000 per occurrence or such greater amount as the parties may approve in writing. 26 41.1101.�� If the.buildings or other improvements on the Leased Premises, should be partially damaged or totally destroyed by fire, storm, earthquake, or other casualty not caused by negli- gence of LESSOR, LESSEE will repair, reconstruct or replace the buildings, improvements or personal property to a condition as nearly similar as possible. In performing such repairs, recon- struction, or replacement, LESSEE shall not be obligated to expend more than the amount of insurance proceeds received by LESSEE. If the parties should decide among themselves that reconstruction or replacement is not warranted, this Lease shall terminate without further obligation on the part of either party, and all insurance proceeds for personal property shall be kept by LESSEE. All fixed assets proceeds shall be kept by LESSOR. 21.1 Rental Abatement and Term Extension. If LESSEE is unable to use all or a significant portion of the Leased Premises during repair, reconstruction or replacement as provided for in this section, LESSEE's rental obligations under Section 8.1 during the period of repair, reconstruction, or replacement shall only be percentage rent (and not the greater of minimum rent or percentage rent). The term of this Lease shall also be extended for a period equivalent to th_e-_1_en_gth_of—time--n-eeded--f-o-r------ -= LESSEE to restore the Leased Premises for LESSEE's use pursuant to Section 2 of this Lease. 22. EmTN .NT DO A N If at any time during the term of this Lease, title to 27 all or substantially all of the Leased Premises shall be taken by condemnation or by right of eminent domain, this Lease shall terminate on the date of such taking and all rental payments already made shall be apportioned as of the date of the taking. For purposes of this section, substantially all of the Leased Premises shall be deemed to have been taken if that portion of the Leased Premises not taken cannot be economically utilized by LESSEE for those purposes permitted under Section 2 of this Lease. In the event that title to less than all or substan- tially all of the Leased Premises is taken by condemnation or by right of eminent domain, this Lease shall not terminate, but the minimum rent due during the remainder of the Lease Term shall be reduced as of the date of such partial taking in proportion to the extent LESSEE's operation of the Leased Premises pursuant to Section 2 of this Lease is affected by the partial taking. If there is a taking by condemnation or right of eminent domain, the award shall belong to and be paid to LESSOR, except that LESSEE shall receive from the award a sum attribu- table to the value of LESSEE's leasehold estate, including without limitation any improvements constructed by LESSEE. 23. FRUSTRATION OF PURPOSE At any time during the term of this Lease, if the governing body of any political subdivision having competent jurisdiction over the Leased Premises should enact any valid zoning ordinance, law or regulation which prohibits the use of 28 the whole or a substantial part of the Leased Premises for the purposes as provided in Section 2 of this Lease, or if an event of force majeure occurs, including without limitation, declared or undeclared war, sabotage, riot or other acts of civil diso- bedience, acts of government, labor disputes, shortages of fuel, accidents, fires, explosions, floods, earthquakes,or other acts of God, which substantially prevents LESSEE's fulfillment of its obligations as provided for in Section 2 of this Lease, it is agreed that LESSEE may elect, within one hundred twenty (120) days after the effective date of such ordinance, law, regulation or the occurrence of the event of force majeure, to cancel this Lease and surrender possession of the Leased Premises. Any such cancellation and surrender will act to release and discharge LESSEE from any further obligation under this Lease. Except as otherwise provided below, LESSEE shall not assign this Lease or sublet all or part of the Leased Premises without the prior written consent of LESSOR and such consent shall not be unreasonably withheld. LESSEE shall notify LESSOR of any proposed assignment or subletting at least sixty (60) days prior to the proposed effective date of such assignment or sub- letting-- In --the ev-e-nt that any suc-h assignment or sub7etfing is -----... approved by LESSOR, the assignee or sublessee shall agree in writing to be bound by all of the covenants of this Lease required of LESSEE. 29 24.1 Right of First Refusal. In the event that prior to the stated expiration date of the Lease Term, LESSEE should elect to assign all of its interest in this Lease pursuant to the provisions of Section 24 above, LESSEE shall submit the proposed terms and conditions of any such assignment in writing to LESSOR and LESSOR shall then have the right, to be exercised by means of a written notice delivered to LESSEE no later than sixty (60) days following LESSOR's receipt of LESSEE's initial notice, to terminate this Lease and operate the Leased Premises itself, or to assign LESSEE's interest in the Lease to another third -party lessee of LESSOR's choosing. Should LESSOR exercise this right of first refusal, such exercise shall serve to release LESSEE from all further liability under this Lease other than for events Which may have occurred during the term of LESSEE's operation of the Leased Premises. . a11 ► SIR : v The following conditions will constitute a breach of this Lease and a default thereunder: 25.1 Conditions of Default a) If LESSEE fails to pay rent, any assessed late fees, or fulfill any other monetary obligation of LESSEE to ---- vESS©R--------- a-nd—L-ES-SEE---fads--to cure -such monetary —default within ten (10) days after written notice from LESSOR to LESSEE of such monetary default. b) If either party fails to perform any of its other non -monetary obligations under this Lease when due or 30 1 called for, and the party in default fails to cure such non - monetary default within sixty (60) days after written notice from the non -defaulting party of such non -monetary default; provided, however, that if the nature of the non -monetary default is the result of a force majeure occurrence or is otherwise of a nature such that it cannot be fully cured within that sixty (60) day period, the party in default shall have such additional time as is reasonably necessary to cure the default so long as the party in default is proceeding diligently to complete the necessary cure after service of notice by the non -defaulting party. c) If LESSEE shall be adjudged bankrupt, or a receiver be appointed for LESSEE's property, or if LESSEE's interest in this Lease shall pass by operation of law to any person other than LESSEE and such adjudication, appointment or order is not vacated, dismissed, or set aside within one hundred twenty (120) days from its entry. 25.2 Remedies of LESSOR. Without waiving any remedies, LESSOR may, in the event of a default by LESSEE, at LESSOR's option: a) Continue this Lease in effect without term- inating LESSEE's right to possession, even if LESSEE has breached - ____ _.. this-Leas-e-end--aband-on�d the-L- ea-sed-P re3n-ices-; and erif o r c�I l- o f- ---- - LESSOR's rights and remedies under this Lease, including the right to recover, by suit or otherwise, all sums and installments required to be paid in accordance with the provisions of this Lease, or other monetary performance as it becomes due hereunder, 31 or to enforce, by suit or otherwise any other term or provision hereof on the part of LESSEE required to be performed; provided, however, that LESSOR may, at any time thereafter, elect to term- inate this Lease for such previous uncured breach by notifying LESSEE, in writing, that LESSEE's right to possession of the Leased Premises has been terminated; or b) Immediately terminate LESSEE's right to possession of the Leased Premises and repossess the same by summary proceedings or appropriate action, and LESSOR shall thereupon be entitled to receive from LESSEE the following: i) The worth, at the time of the award, of the unpaid rent that had been earned at the time of termination of this Lease; ii) The worth, at the time of the award of the amount by which the unpaid rent that would have been earned after the date of termination of this Lease until the time of award exceeds the amount of the loss of rent that LESSEE proves could have been reasonably avoided; and iii) The worth, at the time of the award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of the loss of rent that LESSEE proves could have been reasonably avoided; and iv) "The worth at the time of the award", as used in Sections 25.2(b)(i) and 25.2(b)(ii) is to be computed by allowing interest at the rate of ten percent (10%) per annum. "The worth, at the time of the award", as referred to in Section 32 25.2(b)(iii), is to be computed by discounting the amount at the discount rate of ten percent (100) per annum. 25.3 Interest and Attorney, Fees. If either party at any time by reason of the other party's default pays any sum or does any act that requires the payment of any sum, the sum paid by the non -defaulting party shall be immediately due and owing by the defaulting party to non -defaulting party at the time the sum is paid and, if repaid at a later date, shall bear interest at the rate of ten percent (10%) per annum from the date the sum is paid by the non -defaulting party until the non - defaulting party is reimbursed by the defaulting party. All notices, demands, requests or replies required or. permitted by this Lease shall be in writing and may be delivered by any one of the following methods: (1) by personal delivery; (2) by deposit with the United States Postal Service, certified or registered mail, return receipt requested prepaid to the addresses stated below; (3) by prepaid messenger; or (4) by deposit with an overnight express delivery. Notice deposited with the United States Postal Service in the manner described above shall be deemed effective three (3) business days after ----- deposit -with tY�e-postal Service. Notice by telegram or overnight express delivery service shall be deemed effective one (1) business day after transmission to the telegraph company or after deposit with the express delivery service. Notice by personal delivery shall be deemed effective at the time of such delivery. 33 For purposes of notice, demand, request, reply or payment, the address of LESSOR shall be: Community Services Department Director City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 The address of the LESSEE shall be: American Golf Corporation 1633 Twenty -Sixth Street Santa Monica, CA 90404-4024 Attention: Legal Department Each party shall have the right to designate a differ- ent address within the United States of America by the giving of notice in conformity with this section. 27. GOVERNING LAW This Lease and the rights and liabilities of the parties to the Lease shall be governed by the laws of the State of California. If any provision of this Lease is invalidated by judicial decision or statutory enactment, the invalidity of any such provision will not affect the validity of any other pro- vision of the Lease. 28. CAPTIONS Captions in this Lease are included for convenience only and are not to be taken into consideration in any construction or interpretation of this Lease or any of its provisions. .29. DEFAULT WAIVER LESSOR's failure to act on any default on the part of LESSEE shall not be construed as a waiver thereof, nor shall any 34 custom or practice that may exist between the parties in the course of administering this Agreement be construed to waive any provision thereof. 1W6562MUNN s.. This Lease represents the entire agreement between the parties regarding Meadowlark Golf Course, and supersedes and replaces that certain Lease dated October 21, 1974 between LESSOR and LESSEE. All exhibits attached to this Lease are hereby made a part of and incorporated into this Lease. No previous agree- ment or understanding, verbal or written, of the parties or any of their agents shall be binding or enforceable. 31. PUBLIC AccommoDATTON LESSEE agrees not to discriminate against any person or class of persons by reason of race, color, creed or national origin in the use of the Leased Premises. LESSEE shall make its accommodations and services available. to the public on fair and reasonable terms without unjust discrimination on the basis of race, creed, color or national origin. 32. TIME IS OF THE ESSENCE Time is of the essence of this Lease Agreement. 33. MTNERA• RIGHTS Sub -surface mineral rights to the demised premises, in - eluding a right to construct and maintain one or more drilling sites, have been reserved to LESSOR'S predecessors in title. LESSEE agrees to permit reasonable ingress and egress to said drilling sites by the holders of said rights. 35 `h 1 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their authorized officers on the date above written. LESSOR: CITY OF HUNTINGTON BEACH, a munici al corporation Mayor ATTEST: City Clerk LESSEE: AMERICAN GOLF CORPORATION, a California or ration r r By: Gu Crai' Price Its: Execu%' .V' a President By: w d R. Sause Its: Chief Finance Officer APPROVED AS TO F City At o ey REVIEWED AND APPROVED: INITIATED AND PPROVED: City Atclminlistrat6r Co%rrunitjKtervices Director 36 EXHIBIT A Parcel 1: The southwest quarter of the southeast quarter and the - south two-thirds of the west half of the northwest quarter of the southeast quarter of Section 21, Township 5 south, Range 11 west, in the Rancho La Bolsa Chica, City of Huntington Beach, County of Orange, State of California, as per map recorded in Book 51 Page 13 of Miscellaneous Maps, in the office of the County Recorder of said County. Parcel 2: The east half of the northwest quarter of the southeast quarter and the west half of the northeast quarter of the southeast quarter of Section 21, Township 5 south, Range 11 nest, in the Rancho La Bolsa Chica, City of Huntington Beach, County of Orange, State of California, as per map recorded in Book 51 Page 13 of Miscellaneous Maps, in the office of the County Recorder of said County. Except the north 447.30 feet of the east 427.00 feet of said west half. Parcel 3: The northwest quarter of the southeast quarter of the south- east quarter. of Section 21, Township 5 south, Range 11 west, in the Rancho La Bolsa Chica, City of Huntington Beach, County -of Orange, State of California as per map recorded In Book 51: Page 13 of Miscellaneous Maps, in the office of the County Recorder of said County. Parcel 4: That portion of Block 4 of Tract No. 86 in the City of Huntington Beach, County of Orange, State of California as per Map recorded in Book 10 Pages 35 and 36 of Miscellaneous Maps, in the office of the County Recorder of said County, described as follows: Beginning at a point on the north and south quarter section line of Section 21 Township 5 south, Range 11 west, south 00 46' 30" east 660.74 feet from the center of said section, said point being the southeast corner of the land described in the deed to Cyril B. Bell et ux -rccvrvcu Avveraver 4.3, i7yv us XXJU& LTV" rage Lys va Official Records; thence south 89R 36' 00" west 580.80. - -- feet along the southerly line of said land and the westerly prolongation thereof; thence south V 46' 30" east 300.00 feet; thence north 89' 36' 00" east 580.80 feet to said north and south quarter section line; thence north 00 46' 30" west 300.00 feet to the point of beginning. Parcel 6: That portion of Block 4 of Tract No. 86 in the City of Huntington Beach,.County of Orange, State of California, as per map recorded in Book 10 Pages 35 and 36 of Miscellaneous Maps, in the office of the County Recorder of said County described as follows: Beginning at the southwest corner of the land described as Parcel 1 in the deed to Edmund J. Newbegin et ux, recorded October 3,.1947 in Book 1561 Page 91 of Official Records; thence north 0* 46' 30" west 300.00 feet; thence south 89° 36, 00" west 82.10 feet to the west line of said block; thence south '00'46" 30" east 300.00 feet along said west line to the northwest corner of the land described in the deed to bloria.Ampolilla et al, recorded July 30, 1959 in Book 4818 Page 497 of Official Records; thence north 89°- 361 00" east 82.10 feet to the point of beginning. 2. AMERICAN GOLF CORPORATION':'d"TCAL ) 1;XlL1JS1'1' "J3" P It U N t K I Y Regional Office: RENTAL AQREENfir-NT 19406 East Mountaln View Drive Yorba Linda, California 92686 •.Month To Month Tenancy) JU1_ 0 b 1988 THIS 12 INTENDED TO BE A LEGALLY BINDINd AGREEMENT — RiAD IT CAREFUt MANAGEMENT r :• CALIFORNIA ASSOCIATION OF R[ALTORIIe STANDARD FORM ' Htnti'ngton ' Beach t " ,California June' 10' :gag_ The City of Huntington Bpaf-h. ' a__mimiri? al L-f%;-:PGr1t4Gn. _ Landlord, end _A�mgrican Golf Corporation, Tenant, agree as follows: 1. L WIlord rents to Tenant and Tenant hies from Landlord those promises described at: 16782 Graham St. Hut op Beach, CA 92 9 ' •jSi,l�lP �'am•jly�PsiclPn�a1 jotherwith the►att�s1rI�p lurnjwro, and appflanceA,11 any, and tlxtur•e: all P -r in _nt_ to fig structure including ng out uilG3ttgs garages `naort "a shown on Exhibit A attached htroto"ondattach the exhibit If rho list Isixtensim) 2. The term shell commence on April 1, , 19• $$ , and shall continue from month to narsth. This rental agreement may be terminated at any time by either party by giving written notice 30 days in adverse. Tenant agrees to pay $ 350.00 rent per month payable In advance on the first day of each nonth and S reprotentlog prorated rent from date of possession. 3. The tent shall bepaid At City Hall, City of Huntington Beach, 2000 Main, P.O. BOx 190, 11B, CA 92648 it It any address designated by the Landlord in writing. 4. $ 0 as security has been deposited. Landlord may use. therefrom such amounts as are reasonably necossary to temody Tenant's defaults In the payment of rent, to tapair damages caused by Tenant,'and to clean the premises II necestaNy upon tormination of tenancy. If used toward tent a► damages during the term of tenancy, Tonont sgtees to relitttate told total security deposit upon live days wtltten notice delivered to Tenant In person or by malWig. Security deposit ot.balotice tlietoaf, If any; together with on Itamited accounting, thell be mailed to Tenant at test known addrats within 14 days of s6trander of premises: S. Tenant wool to pay for Of utilities aid sarykes based upon occupancy of the ptemises and lhn following charges: Any and all taxes, if any except —Prone whlclt shall be paid for by Landlord. 6, Tenant has examined the.promices.ond,all furniture, furnishings and appliances II any, onJ fixtures contained therein, and Accepts the same as being clean. In good order, condition. and repair, with the following exceptions: ' Any and all cost of repairs to be charges to tenant. 7. The Oremiseo are rented for use as a residence by the following named persons: 'Jody Picconi_ and family, or nominee as apnroded by the Citv.71/f elGs 4-,9tIA . 9-- 5r-It) No animal, bird, or pat except �r4 shall be kept on or about the promises without Landlord's prlor written consent. 8. Tenant shell not disturb, annoy. en longer or Interfere with other Tanana of the building ar neighbors, nor uto the,premise't for any ursia ,;A putpotas. nor violate any law at ordinance, nor commit waste or nuisance upon or about the premises. 6. Tenant agrees to comply with al3 tansonable rules or regulations post ed.on the premises.or dallvereci to Teriant*by•Lanclord. 10. Tenant shall keep the premises and furniture, furnishings and appliances,_11 Any, and fixtures. welch are rented !or h!t eyciuslye !ire In good order and condition And pay for any repairs to the property caused by -Tenant's negligence or*misuse or that of Tenant's Invitees. Landlord shall otherwise maintain the property. Tenant's personal property is not Insured by Landlord. ATTACMIENT: 21. The future rental schedule will be as follows - 1st year - .April 1st 1988 through March 31st 1989 will be $350.00/per mo. 2nd year - April. 1st 1989 through March 31st 1990 will be $500.00/per mo. 3rd year - April lst 1990 through March 31st 1991 will be $650.00/per mo. 4th year - April 1st 1991 through March 31st 1992 will be $800.00/per mo. Each year thereafter starting April 1st 1992 the rents will be increased in the amount of 7% of the previous years monthly rental amount, example 501 year amount of $856.00/per mo. etc. These yearly increases of 7% will continue until the term of the present lease the City has with American Golf Corporation or their Successors. LANDL 4 u / ' : S Y au�TENANT By: Ken Davidson LANDLORD TENANT d 7 10 cW, e'A* ' p Z-& V r,? . • p EXHIBIT "C" MAINTENANCE STANDARDS Meadowlark Golf Course City of Huntington Beach A. Prepare Greens for Daily ilqj-. On a daily basis, change cup location and repair ball marks, divots and other damage. B. Mow Careens. Mow to maintain a grass height of not less than 1/8 inch and not more than 1/4 inch. Vertical mow at least twice monthly from February to November. C. A -r�Grpg-ng. Aerify greens at least twice per year with the plugs removed the same day. p. Tondrass are--ns. After vertical mowing and aerifying, a good quality, medium grade nursery sand with particle size of approximately 2.0 mm shall be brushed into the surface of the green. E. Herbicide and Peat Control. As turf and weather con- ditions dictate, apply herbicides, pesticides and preemergent herbicides to the greens. F. Ugergeed Greens. Overseed greens as weather condi- tions dictate. After overseeding a preventive program of fungicide application shall be followed. Prior to overseeding, greens to be aerified and vertically mowed. II. Maintain Tees A. .P- t i1p es. On a daily basis, move and/or replace tee markers, tee benches and ball washers for proper teeing and wearing of turf. Keep ball washers filled to proper level with water plus an appropriate cleaning agent. Tee towels to be changed weekly. B. Repair Tee Areas. Overseed and topdress or resod worn and damaged tee areas with the same type of turf grass. C. Mow Tee Areas. Mow tee areas to maintain a grass height of 1/2 inch or less. Vertical mow as necessary for thatch removal. D. Aarify Tees. Two (2) times per year, aerify the tee areas and topdress with good quality, medium grade nursery sand. E. Ft-.rj- i j_ ize Tee Areas. Apply eight ( 8 ) to twelve (12 ) pounds of actual nitrogen for every thousand (1,000) square feet of turf per year in a manner to provide uniform growth. Four (4) pounds of nitrogen shall be supplied through the application of a N-P-K formulation of approximately a 4-1-2 ratio. F. Herbicide and Rest control. As turf and weather con- ditions dictate, apply herbicides, pesticides and preemergent herbicides to tees. G. Overseed and Topdress Tee Areas . Monthly, the turf areas are to be overseeded and topdressed. Apply a preventive fungicidal treatment prior to overseeding. 2 A. Repair Turf Areaa. Overseed worn and damaged turf areas with the same type of turf grass. 0 B. Mow Turf Areas. Mow as necessary to maintain a grass height of 1/2 inch to 3/4 inch in fairway and 3/4 inch to 1 1/2 inches in roughs. Contour mow as to master plan of fairways and roughs at the golf courses. Vertical mow as necessary to prevent mat or thatch buildup. a year. C. A ri y Turf Areas. Aerify turf areas three (3) times D. Fertilize Turf Areas. Apply six (6) pounds of actual nitrogen for every thousand (1,000) square feet of turf per year in a manner to provide uniform growth of turf. Two (2) pounds of nitrogen shall be supplied through the application of a fertilizer with N-P-K formulation of approximately a 4-1-2 ratio. Aerification shall precede fertilization each time. E. Herbicide and ReSt ControL. As turf and weather con- ditions dictate, apply herbicides, pesticides and preemergent herbicides to the fairways. IV. Maintain Sod N rs riF+S A. Maintain Sod Areas. Maintain and mow sod of the same ..._. _. _hype-of-g-r-ass-a-nd-so "- ondit-i<n --a -use& f-o-r t-he-tees-a-nd-green B. Replace sod. After removal of sod, replace the proper soil and reseed the area. 3 V• EdQe All sidewalks, curbs, parkways, walkways, driveways, parking lots and cart paths are to be edged at least once per week. Valve boxes, meter boxes, backflow preventers and other structures are to be edged or trimmed regularly. VI. Maintain Laken and Ponds A. Remove- W da. Periodically remove weeds from water areas. B. Check and maintain Water Level. Periodically check water level and fill or drain the water areas as necessary. C. Control Algae. Establish a regular program to control the growth of algae. VII. Maintain Sand Traps A. Edge Sand Traps. As necessary, edge sand traps to maintain a neat lip. B. Rake and Clean Trapps. Rake traps daily, eliminate weeds and fill traps with fresh sand as necessary to maintain at least a four (4) inch depth in bottom and on slopes, replace rakes as necessary. Sand to be, of a dust -free type. VIII. Irrigate and Majntain Irrigation systems A. Evaluate Sni_l and Envi onmPntal onditions• As neces- sary, determine soil texture, porosity, water holding capacity, drainage, compaction, precipitation rate, runoff, infiltration rate, percolation rate, evapotranspiration, seasonal temperatures, prevailing wind conditions, time of day or night, type of grass plant and root structure. 4 B. Trrigate Course. Irrigate all turf areas, trees and planting areas to maintain adequate moisture for healthy growth. Every effort should be made to employ water conservation practices without compromising the level of maintenance. C. Inspect and Repair Irrigation System. 1. Inspect Operating ConditiQn. On a daily basis, inspect and test irrigation systems including controllers, heads, valves and lines. 2. Correct or Repair Irrigation System. On a daily basis, adjust sprinklerheads and controllers, unplug clogged heads, remove obstacles and flush lines to insure proper operating conditions. IX. Maintain n TrPPs ,,_ Shrubs and Ground Cover A. Prune TrAAA. Trim and prune trees to maintain safe vehicular and pedestrian clearance and visibility, to prevent or eliminate hazardous situations and to maintain playable standards. B. Repair Damaged Trees. Major and minor damage to trees shall be remedied as directed by Project Manager. Damage occurring from either spray drift or lateral leaching shall be corrected and the soil conditioned to ensure its ability to support -plant life. C. plant NPW TrP R. Any new trees or replacement trees shall be planted in accordance with the policy of one for one. Replacement trees shall be acceptable trees for the situation and, if possible, a minimum of a 24" box. ki D. Make Trees. All newly planted trees shall be staked as necessary for protection. The stakes used to secure the tree shall be checked frequently and either retied to prevent girdling or removed along with the stakes when no longer required. E. PeRt Vnntrnl. Control insects, disease and other pests as necessary to maintain healthy and attractive trees, shrubs and ground cover. F. Clean Up Debris. Pick up and remove all trash and debris such as paper, drinking cans, bottles, fallen limbs and leaves. G. Remove Weeds. Periodically remove weeds and grass from shrubs and ground cover areas and edge planting areas. H. Prune Shrubs. Prune shrubs to protect from wind and insect damage and to maintain appropriate appearance. I. Removal of Dead Ptants. All dead, diseased, damaged and unsightly branches, vines, plants, spent flowers and blooms or other growth shall be removed and replaced with the same type of plant or plant material, if possible, or with similar plants approved by the city. X. Maintain RestReRt RooMa A. Clean Rest-Rooma. On a daily basis, clean, disinfect, — eo 6rize an ree o eposits free floors,-fToor drains, wash basins, piping, toilets, toilet seats, walls and partitions around the toilets, urinals, mirrors, and supplies dispensers. n On a weekly basis, clean, disinfect, deodorize and free of deposits the walls and ceiling. B. Replenish SLg lies. on a daily basis, replenish the rest room supplies including all paper supplies and cleaning materials. C. Empty JrAgh. Empty, clean and disinfect trash recep- tacles prior to opening the golf course each day. D. Remove a ; i. Repaint to matching surface or scrub off graffiti on all interior and exterior surfaces on a daily basis. E. Check Lighting. Check daily to ensure that all inter - for and exterior lighting fixtures and lights are in good con- dition and operable. Replace light bulbs or tubes as necessary. F. Maintain g_r ctjir=. As necessary, maintain and repair walls, ceilings, roofs, floors,. doors and partitions of structures. G. Re]2air Leaks and Clogs. On a daily basis, repair all leaking fixtures, stopped -up or damaged basins, toilets and urinals and all clogged drains. Xi. Maintain Nantnrf Areac A. Maintain cart Paths. Maintain cart paths -in a smooth, clear, clean and -safe condition and rep air damaged concrete, asphalt or ruts. B. Maintain Drainage L.i_nes. Inspect, clean and deweed all surface flow lines, barranca channels, catch basins and other drainage structures. 7 C. Clean Up Debris. Remove all litter and debris from golf course and especially around walls and fences. Empty trash receptacles daily, repair and replace as necessary. D. Maintain water Fountains. Maintain and clean all ex- terior water fountains and repair all leaks and clog daily. E. Clean Parking Lot. Remove all debris and litter from parking lot and sweep parking lot not less than three (3) times per week. Repaint and replace signs in parking lot. F. Maintain FAnnA and Fence T-ing-S. periodically inspect and repair the fence and fence lines within and around the golf course including, but not limited to, those fences designed to control the flight of golf balls. XII. A. Clean and Chank operation of_ Carta. a. After the golf carts are returned -from use, remove all trash and litter, and wash the carts to remove dirt, mud and grass. Check operating condition of the carts. B. Recharge atteries. Recharge batteries to electri- cally power golf carts through two, 18-hole rounds of golf. C. Cart Maintenance. Repair and adjust golf carts to maintain in good operating condition. 8 EXHIBIT "D" CITY OF HUNTINGTON BEACH MEADOWLARK GOLF COURSE EVALUATION REPORT AMERICAN GOLF CORPORATION MONTH YEAR TODAY'S DATE INSPECTED BY SUMMARY SHEET MAINTENANCE INSPECTION OPERATIONAL INSPECTION POINTS PQI NTS AREA AVAILABLE EARNED AREA. AVAILABLE EARNED GOLF SHOP 125 GREENS 120 CARTS 80 TEES 80 CLUBHOUSE 170 FAIRWAYS & ROUGHS 80 FOOD;& BEVERAGE 200 IRRIGATION SYSTEM 50 RESTROOMS 100 DRIVING RANGE 120 LAKES 45 TREES & SHRUBS 40 CART PATHS 70 ENTRANCE & PK'ING LOT 80 MAINT. EMPLOYEES 25 MA1NT. SHOP & EQUIP. 60 FENCES 50 SUB -TOTAL 820 COMMENTS PERCENTAGE RATING 98 - 100 A 95 - 97 A- 90-94 B+ 85 - 89 B 80 - 84 B- 77 - 79 C + 74-76 C 70 - 73 C- 0-69 D SUB -TOTAL 675 ♦w.waawwwwwwwawaa w wwaaaiwa a aaaawawwai ea ww•waf aw is wa TOTAL POINTS EARNED PERCENTAGE % RATING The percentage is determined by dividing the total points earned by the total points available 1495. RECEIVED BY AMERICAN GOLF DATE GREENS TEES QUALITY STANDARD- Smooth, uniform turf, firm but not hard, well defined, consistent, and of suitable speed. Cups placed in accordance with USGA recommendations. Flag sticks are of good quality, standing straight, and are uniform on all greens. 1. QUALITY AND PLAYABILITY 100% Turf cover, smooth and uniform POINTS texture. Greens hold approach shots. Cups are cut cleanly and in proper location. Generly free of AVAILABLE EARNED weeds, insects, or rodents. 60 2.APPEARANCE Turf uniform in color POINTS and in mowing direction. Collars and aprons cut to AVAILABLE EARNED maintenance standard. 40 3. SAND TRAPS Sand surface is uniform POINTS and smoothly raked and is of adequate depth AVAILABLE EARNED for play. Sand is silica, washed plaster, or nursery 20 grade sand. Traps are edged, geneedly free of weeds, rocks, or debris in traps. Rakes are adequate in number and in good condition. Traps are uniform throughout the course. TOTAL POINTS AVAILABLE 120 TOTAL POINTS EARNED COMMENTS: QUALITY STANDARD: Tees are completely turfed, smooth, level, and firm. Tees drain well with no mud buildup. Tee amenities including, trash cans, signs, tee markers, ball washers, towels, and benches are in good condition and repair. Tees are consistent throughout the course. 1. TEE QUALITY 100% Turf cover with smooth level surface. Geneadly free of weeds, disease, or rodents. Uniform mowing, adequate top dressing and seeding program is evident. 2. PERIMETER AREAS AROUND TEES Area between cartpath and tees is uniformly mowed and smoothly turfed. Generally free of identifiable traffic pattern into tees, and mud or hard dirt areas. Ballwashers are clean and filled with water. Towels are in good condition, benches are in good condition, and signs are clear and in good condition. All surrounding landscape is in good condition and adequately planted. POINTS AVAILABLE EARNED 50 POINTS AVAILABLE EARNED 30 TOTAL POINTS AVAILABLE 80 TOTAL POINTS EARNED COMMENTS: FAIRWAYS AND ROUE DRIVING RANGE QUALITY STANDARD: Fairways are smooth with a uniform turf 1. LANDING AREA cover. Turf is firm, but not hard. Well defined, and.properly supports the ball for play. Rough properly mowed to specification height Surface is smooth and P01NTS which is distinct in height from fairways. uniform. Artificial greens dearly identified. AVAILABLE EARNED 1. QUALITY AND PLAYABILiTY 10 100% turf cover, smooth and POINTS uniform texture. Fairway 2. TEE LINE - TURF AREA turf properly supports AVAILABLE EARNED the ball for play. Geneadly Turf area is smooth and POINTS free of diseases, weeds, or rodents. 50 uniform. There is evidence of ongoing top dressing AVAILABLE EARNED and overseeding. 2. APPEARANCE 20 Fairways have been mown POINTS 3. TEE LINE - MATS consistently throughout the course. Turf is uniform AVAILABLE EARNED All mats are in good, POINTS in height and color with the usable condition. appearance of being manicured. Holes, rips, or tears are AVAILABLE EARNED Fairways easily distinguishable repaired. Concrete pad is clean from roughs- 30 and edged, no cracks, lightly abrasive. 20 4. PERIMETER AREAS TOTAL POINTS AVAILABLE 80 Genearliy clean around POINTS driving.area. Benches TOTAL POINTS EARNED are clean and in good repair. AVAILABLE EARNED Buckets with water are placed in strategic COMMENTS: positions. Fences are .in good repair. Lighting is -adequate and all bulbs 50 are working. Flags for distances are clearly marked. Directions for use signs are IRRIGATION SYSTEMS clearly visible and in good condition. QUALITY STANDARD: Even, adequate, uniform irrigation coverage throughout the entire facility. Sprinkler heads and valve boxes. level with grade and trimmed for clearance. No broken heads, valves, or S. RANGE BALLS lines are in evidence. Range balls are in good POINTS 1. IRRIGATION SYSTEM condition. Not smooth or cracked. Balls are AVAILABLE EARNED Course shows good irrigation, POINTS clean and in plentiful neither too wet or too dry. supply. 20 Low spots are filled. AVAILABLE EARNED Irrigation does not throw on drinking fountains. s0 TOTAL POINTS AVAILABLE 120 TOTAL POINTS AVAILABLE 50 TOTAL POINTS EARNED TOTAL POINTS EARNED COMMENTS: COMMENTS: LAKE AREAS QUALITY STANDARD: Lakes are clean, free of weeds and other growth. Shorelines are well defined and attractive. Lakes are free of litter and debris. Lakes are suitable for wildlife habitat. 1. APPEARANCE Water is genewily clean POINTS of weeds or other growth, foul order, or floating AVAILABLE EARNED litter or debris. Banks are trimmed. 15 2. PERIMETER AREA Ground around lakes and streams POINTS is mown, trimmed, and has a smooth and clean surface. AVAILABLE EARNED Geneadly free of debris. 20 3. SUPPORT EQUIPMENT Pumps and aerators are POINTS operating smoothly and properly. All lake equipment AVAILABLE EARNED is in good condition and properly maintained. 10 TOTAL POINTS AVAILABLE 45 TOTAL POINTS EARNED COMMENTS: TREES AND SHRUBS QUALITY STANDARD: Trees and scrubs are maintained in -a safe, healthy, structurally sound and aesthetically pleasing condition. 1. PRUNING Trees and scrubs are pruned POINTS to maintain cart, mower, and pedestrian traffic clearance AVAILABLE EARNED for a minimum of 7 feet.• AN automobile, service, and delivery traffic areas pruned to a minimum of 14 feet. 40 Tree basis are neat clean and clear of stumps or down limbs. 'OTAL POINTS AVAILABLE 40 TOTAL POINTS EARNED COMMENTS: CART PATHS QUALITY STANDARD: Smooth surface no raised concrete or asphalt surfaces. Curbs properly edged. Paths free of weeds and debris. 1. QUALITY Condition is smooth POINTS with cracks, holes, or breaks repaired. AVAILABLE EARNED 30 2. TRAFFIC CONTROL Ropes, stakes, and other POINTS traffic control devices are clean, in good condition AVAILABLE EARNED and repaired as necessary. 20 3. PERIMETER AREAS Routes used by golf cartsPOINT'S are well maintained and geneadly free of pot holes AVAILABLE EARNED and present a clean appearance. 20 TOTAL POINTS AVAILABLE 70 TOTAL POINTS EARNED COMMENTS: ENTRANCE AREA AND PARKING LOTS QUALITY STANDARD: Entry area is attractively landscaped and well maintained. Parking lot has good traffic flow and directional signs Surface is clean and smooth, geneadly free of pot holes, cracks or excessive wear. Stripping is bright and clearly evident. Entrance signs are clearly visible and in good condition. 1. ENTRANCE AREA AND SIGNS Entrance area is attractively PWNTS. landscaped. All planter areas have healthy plant material AVAILABLE EARNED and are free from weeds and debris. 40 Directional signs are in good operational condition and are informative and attractive. 3. PARKING LOTS Parking lot surface is clean and POINTS smooth genearlly free of pot holes, or signs of excessive wear. AVAILABLE EARNED Stripping is bright and clear. . 40 TOTAL POINTS AVAILABLE s0 TOTAL POINTS EARNED COMMENTS: MAINTENANCE EMPLOYL . -QUALITY STANDARD: Golf course superintendent has proper education background and license. Maintenance crews are sufficient in number and wear appropriate clothing and shoes. 1. QUALIFICATIONS Golf course superintendent POINTS is class A qualified. All required licenses for AVAILABLE EARNED chemical handling are obtained. 10 2. QUANTITY The number of maintenance POINTS crew is sufficient to maintain the course per AVAILABLE EARNED the specifications. 10 3. DRESS AND CONDUCT All maintenance crew POINTS wear appropriate clothing and shoes. All crew AVAILABLE EARNED are courteous and trained in their area of responsibility. 5 TOTAL POINTS AVAILABLE 2S TOTAL POINTS EARNED COMMENTS: MAINTENANCE SHOP AND EQUIPMENT QUALITY STANDARD: Shop area is clean and orderly, with no obvious safety hazards. Chemical storage is well organized and done according to local and state law. Equipment is in good repair, building is in good repair. 1. BUILDING AREA Maintenance building POINTS area is clean and neat. Walls are painted, storage AVAILABLE EARNED areas are secured, building is properly maintained. 40 2. EQUIPMENT Equipment is in good repair POINTS clean and properly maintained. Equipment meets all AVAILABLE EARNED OSHA requirements. 20 TOTAL POINTS AVAILABLE 60 TOTAL POINTS EARNED COMMENTS: FENCES QUALITY STANDARD: Perimeter and protective fences are free of holes, splits and are stretched to original design. Support posts are in place, straight and properly anchored. Fence lines are maintained_ clean and clear of weeds or other growth. 1. FENCE CONDITION All fences and screens POINTS are geneadly free of holes, tears, and splits. AVAILABLE EARNED Support posts are in place and tied tightly to all fence material. 50 TOTAL POINTS AVAILABLE 50 TOTAL POINTS EARNED COMMENTS: GOLF SHOP QUALITY STANDARD: Golf shop is clean and in good, repair. Staff is.courteous; all signs clearly marked, ample merchandise, floor and window coverings clean and looking new. Storage areas well maintained. Bulletins boards well organized. 1. OPERATIONS Staff is courteous POINTS and responsive to public. Staff is dressed in AVAILABLE EARNED appropriate attire with a clean and neat appearance. Al required signs are prominently displayed and contain correct information. Starter operations are in compliance with specifications. Merchandise displays are amply supplied with prices clearly marked. Exterior and interior walls, windows, and ceilings are well maintained and in good repair. 125 TOTAL POINTS AVAILABLE 125 TOTAL POINTS EARNED COMMENTS: j CARTS `QUALITY STANDARD: Carts are sufficient in number to meet customer demand. Seats are in good repair. Floor mats are clean. Carts work properly. Cart storage area is clean and orderly. Carts pre clear of trash and graffiti. 1. APPEARANCE Carts are clean and in POINTS good repair. Graffiti is removed. AVAILABLE EARNED Mats are clean. Bag holders, roofs, and tires all in good condition. 40 2. QUANTITY Carts are provided in sufficient POINTS quantity to meet public demand. Check in, check out easily AVAILABLE EARNED done by customers. 20 3. STORAGE AREA Storage area used for can POINTS storage only. Area is clean and neat. AVAILABLE EARNED Carts are being maintained at a level that insures good service. Area meets all OSHA requirements. 20 i OTAL POINTS AVAILABLE 80 TOTAL POINTS EARNED COMMENTS CLUBHOUSE QUALITY STANDARD: Clubhouse is well maintained, obviously in excellent condition. Exterior and interior surfaces well maintained, all signs are in good condition. Walkways are clean and edged. All equipment well maintained. All window and floor coverings in good condition. Office areas well organized and clean. 1. QUALITY AND APPEARANCE All areas of clubhouse POINTS operations are in good condition and properly maintained. AVAILABLE EARNED AN surfaces are painted, wall and window coverings clean and new looking. All equipment well maintained. Employee areas clean and organized. All operations are done according to health dept. requirements and city codes. 170 TOTAL POINTS AVAILABLE 170 TOTAL POINTS EARNED COMMENTS: FOOD AND BEVERAGE QUALITY STANDARD: All restaurant and snack bar operations are of the highest quality. Bar operations are well maintained. All kitchen areas meet or exceed health department requirements. Food service operations are well organized. Staffing is adequate to minimize customer wait. Menu variety is adequate to please customers and presented in an attractive manner. 1. OPERATIONS Food is well prepared POINTS and served attractively. Both snack bar and AVAILABLE EARNED restaurant service operate adequate hours as posted. Adequate staff to maintain excellent service is provided. Bar area is attractive, serving of alcoholic beverages meet all code requirements. Kitchen area meets all health department and local code requirements. 200 TOTAL POINTS AVAILABLE 200 TOTAL POINTS EARNED COMMENTS: RESTROOMS CORRECTION LIST QUALITY STANDARD: Restrooms are continually cleaned and well ITEM AGREED UPON ACTION AND TIMELINE maintained. All fixtures properly work. Interior and exterior are properly clean and .painted. Restrooms are attractive to the public. 1. WOMEN'S RESTROOM Entry mats or carpet POINTS clean, entry door fingermark free, file AVAILABLE EARNED and painted wall clean toilets clean: bowls, rims, tank tops, and bodies, clean toilet. seats, tops and under sides, mirrors clean and streak free, soap dispenser clean and full, paper towel dispenser clean and full, toilet paper dispenser clean and full, counter top clean, ashtrays emptied and washed, sink and faucet fixtures clean and scoured, light fixtures clean, functional and bug free, room air freshener clean and functional, trash receptacle: clean and liner, reasonably empty, napkin receptacles clean with liner, interior recently swept and washed, exterior of building clean, cobweb free, grass trimmed. 50 2. MEN'S RESTROOM Entry mats or carpet POINTS clean, entry door fingermark free, tile AVAILABLE EARNED and painted wall clean toilets clean: bowls, rims, tank tops, and bodies; clean toilet seats, tops and under sides, mirrors clean and streak free, soap dispenser clean and full, paper towel dispenser clean and, full, toilet paper dispenser dean and full, counter top clean, ashtrays emptied and washed, sink and faucet fixtures clean and scoured, light fixtures clean, functional and bug free, room air freshener clean and functional, trash receptacle: dean and liner, reasonably empty, Interior recently swept and washed, exterior of building clean, cobweb free, grass trimmed. 50 TOTAL POINTS AVAILABLE 100 DIRECTOR AMERICAN GOLF TOTAL POINTS EARNED DATE: COMMENTS: SUBLEASE AGREEMENT BY AND BETWEEN AMERICAN GOLF CORPORATION, a California corporation AND CNL INCOME EAGL MEADOWLARK, LLC, a Delaware limited liability company This SUBLEASE AGREEMENT (this "Sublease") dated as of this _day of , 2008 (the "Effective Date"), is made by and between AMERICAN GOLF CORPORARATION, a California corporation, (hereinafter referred to as the "Sublandlord"), and CNL INCOME EAGL MEADOWLARK, LLC, a Delaware limited liability company (hereinafter refereed to as the "Subtenant"). WITNESSETH: WHEREAS, pursuant to that certain Lease Agreement dated July 6, 1992, by and between THE CITY OF HUNTINGTON BEACH, a municipal corporation, as "Lessor" (the "Master Landlord") and Sublandlord, as "Lessee", the Master Landlord leased to the Sublandlord the land and improvements currently operated as the Meadowlark Golf Course in the City of Huntington Beach, California, land and improvements are described more fully on Exhibit B attached hereto (the "Premises"); WHEREAS, NGP REALTY SUB, L.P., AMERICAN GOLF CORPORATION, and certain affiliates thereof, as sellers (the "Sellers"), and CNL INCOME PARTNERS, LP ("CNL"), as buyer, are parties to that certain Purchase and Sale Agreement and Joint Escrow Instructions dated as of October 29, 2007 (the "Purchase Agreement"), which Purchase Agreement is joined in by, among others, EVERGREEN ALLIANCE GOLF LIMITED, L.P., a Delaware limited partnership ("EAGL"); WHEREAS, Subtenant has been designated pursuant to the Purchase Agreement to sublease the Premises from Sublandlord on the terms set forth herein; WHEREAS, a true copy of the Lease, including that certain Residential Rental Agreement dated June 10, 1988, regarding he premises at 16782 Graham Street, Huntington Beach, CA, which is incorporated into the Lease (collectively, the "Master Lease") is attached hereto as Exhibit A, - Meadowlark Sublease Page 1 \\DC - 028987/000002 - 2688979 v4 Exhibit B NOW, THEREFORE, in consideration of the mutual agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge, the parties hereto covenant and agree as follows: ARTICLE 1 SUBLEASE OF PREMISES 1.01 Sublease. Sublandlord hereby subleases to Subtenant the Premises and leases to Subtenant Sublandlord's interest in all improvements located thereon, and Subtenant hereby subleases the Premises and leases such improvements from Sublandlord, for a term (the "Sublease Term") beginning on the date hereof and, subject to earlier termination pursuant to the terms hereof or of the Master Lease, expiring on December 31, 2016, subject to extension as provided in Section 1.04 hereof. The effectiveness of this Sublease is conditioned upon Sublandlord's delivery to Subtenant of the Master Landlord's written consent to this Sublease and to the further sublease of the Premises to EAGL pursuant to the sub -sublease agreement attached hereto as Exhibit D. 1.02 Premises. This Sublease applies to the entire Premises leased to Sublandlord pursuant to the Master Lease, including any changes, improvements, alterations, expansions or reductions thereof as may occur from time to time consistent with the provisions of the Master Lease and this Sublease. 1.03 Permitted Use. The Premises may be used by Subtenant solely for the purpose of operating a public golf course and any related operations permitted under the Master Lease (or, in the case of the premises described in the Residential Rental Agreement identified in the recitals hereto, for residential purposes only). Subtenant shall at all times use and maintain the Premises in a manner that is consistent with all use restrictions contained in the Master Lease and in compliance with applicable laws. Unless otherwise expressly permitted by Master Landlord, Subtenant will not permit any operations or other activities on the Premises that would violate the terms of the Master Lease. 1.04 Extension of Sublease Term. The Sublease Term shall be extended by such periods as shall be granted to the Lessee under Section 21.1 of the Master Lease to restore the property following a casualty event. Subtenant shall have the right at any time following the first anniversary of the Effective Date to extend the Sublease Term for a period coinciding with the term of the Master Lease by giving Sublandlord written notice of its election to extend the term, and the Sublease Term shall be so extended immediately upon receipt of such notice. Provided Subtenant is not then in default under this Sublease, Subtenant shall have the right at any time during the first year of the Sublease Term to request that Sublandlord exercise (and Sublandlord agrees to exercise if so requested by Subtenant), at Subtenant's cost, Sublandlord's right under Section 4 of the Master Lease to extend the term of the Master Lease for an additional 10-year period. Subtenant shall not be obligated to exercise such extension right but, upon making such request, and upon the extension of the Term of the Master Lease at Subtenant's request, the Sublease Term shall be extended until the last day of the extended term under the Master Lease. The extension term referred to in the preceding sentence may only be exercised if the extension Meadowlark Sublease Page 2 \\DC - 028987/000002 - 2688979 v4 option referred to in the second sentence of this Section 1.04 has been exercised. Such request shall be in a written notice delivered to Sublandlord not later than thirty (30) days prior to the last date on which Sublandlord may make such election under the Master Lease. ARTICLE 2 RENT 2.01 Rent; Payments of Rent. In addition to any other amounts payable hereunder or under the Purchase Agreement with respect to the Premises, Subtenant agrees to pay Sublandlord, as rent hereunder, all amounts of Minimum Rent, Percentage Rent, additional rent, late charges, and all other amounts that are due to Master Landlord from time to time under the Master Lease (collectively the "Rent"). Such payments of Rent shall be made to Sublandlord two (2) business days prior to the date on which Sublandlord is required to make such payments to the Master Landlord; provided, however, that if the election described in Section 2.05 is made, Subtenant shall make all such payments, ,as Sublandlord's agent, directly to Master Landlord on or prior to the date each such payment is due to Master Landlord under the Master Lease. For purposes of this Sublease, a "business day" is any day other than a Saturday, Sunday, or day on which banks in the state of California are not authorized to do business. In the event that this Sublease commences or ends on some date other than the first or last day of any period for which any amounts are due under the Master Lease, Subtenant shall pay a prorated portion of such amounts equal to a fraction, the numerator of which is the number of days in such period that fall on or after the date hereof and the denominator of which is the total number of days in such period. 2.02 All Payments are Rent. Except as provided in Section 7.04 hereof, Subtenant's obligations under Section 2.01 hereof apply to all amounts that may be or become due and payable by the Lessee under the Master Lease, including, without limitation: (a) payments of taxes, assessments, and other charges that Lessee is required to pay under the Master Lease; (b) late charges assessed against Sublandlord under the Master Lease as a result of Subtenant's failure to make payments when due; and (c) any and all other fees, charges and expenses assessed to Sublandlord under the Master Lease from and after the date hereof, all of which shall be included in the term "Rent" as used herein. All payments in respect of amounts described due under the Master Lease as "Minimum Rent" or "Percentage Rent" shall be made when due, without demand, invoice or notice for payment. All other payments of Rent, and any other amounts payable hereunder, shall be due and payable ten (10) days after written demand therefor. All payments of Rent and other sums due under this Sublease, whether to be paid to Sublandlord or directly to Master Landlord, shall be unconditionally paid by Subtenant in full and when due, without defense, set-off or counterclaim. Meadowlark Sublease Page 3 \\DC - 028987/000002 - 2688979 v4 2.03 Late Payments. If Subtenant shall fail to make any payment of Rent when due under this Sublease, in addition to any late charges that may be imposed under the Master Lease, Subtenant shall be required to pay Sublandlord interest on such payment at a rate of twelve percent (12%) per annum from the date such payment is due until such payment is made; provided, however, that the foregoing late payment charge shall be due and payable to Sublandlord only if and to the extent Sublandlord has made any payments due under the Master Lease to Master Landlord that Subtenant has not paid to Sublandlord. 2.04 Reimbursement of Sublandlord Payments. Unless and until an election is made under Section 2.05 hereof to have Subtenant pay sums due under the Master Lease directly to Master Landlord, Sublandlord shall have the right, but not the obligation, to pay any sums due to the Master Landlord under the Master Lease even if Subtenant has not paid those amounts to Sublandlord pursuant to Section 2.01 hereof. Unless reasonably contested by Subtenant before Sublandlord pays such amounts to the Master Landlord (and provided such contested payments are permitted to be withheld and contested under the Master Lease), all amounts so paid by Sublandlord to Master Landlord shall be reimbursed by Subtenant to Sublandlord within ten (10) days after Sublandlord's demand therefor and shall bear interest from the date such amounts are paid by Sublandlord until such amounts are reimbursed by Subtenant pursuant to this Section 2.04 hereof, at the rate specified in Section 2.03 hereof. Any payment obligations that Subtenant desires to contest shall be contested in accordance with the Master Lease and at Subtenant's sole cost and expense; Subtenant shall indemnify and hold harmless the Sublandlord against the consequences thereof. 2.05 Direct Payments by Subtenant. At any time following the date that is ninety (90) days after the Effective Date, either Sublandlord or Subtenant may elect to cause Subtenant to make payments of all amounts due by the Lessee under the Master Lease directly to Master Landlord, as Sublandlord's agent. Following such election, (a) Subtenant shall be irrevocably obligated to pay the Master Landlord, when due, all amounts that become due and payable by Lessee under the Master Lease and (b) Subtenant shall indemnify and hold harmless Sublandlord from and against any claims or damages that may be imposed upon or asserted against Sublandlord resulting from the failure of Subtenant to pay in full and when due, on Sublandlord's behalf, any amounts owing to the Master Landlord under the Master Lease (including, but not limited to, payment of any attorneys' fees and court costs incurred by Sublandlord in defending against any Claim asserted by the Master Landlord in connection with such nonpayment); provided, however, that Subtenant's obligations under this Section 2.05 shall not apply to obligations arising under the Master Lease that would not be due and payable except because of a Sublandlord Default. 2.06 Sublandlord Not Liable. As between Subtenant and Sublandlord (but without affecting Sublandlord's obligations to Master Landlord under the Master Lease), following the election under Section 2.05, if made, Sublandlord shall have no obligation to make payments to the Master Landlord under the Master Lease (except for any Sublandlord Default Payments), and Sublandlord shall have no liability to Subtenant for any termination of the Master Lease or any other harm or damage Subtenant may suffer as result of the nonpayment of any sums by Sublandlord under the Master Lease (except for any Sublandlord Default Payments); provided, that the foregoing waiver of liability shall not apply to damages, losses penalties and liabilities Meadowlark Sublease Page 4 \\DC - 028987/000002 - 2688979 v4 that may be imposed upon or asserted against Subtenant resulting from payments made by Subtenant to Sublandlord under Section 2.01 above, prior to the making of an election under Section 2.05, that are not paid by Sublandlord to Master Landlord when due under the Lease Except as provided in this Section 2.06 or in Section 7.04 hereof, Subtenant hereby waives any claim Subtenant may have against Sublandlord at law, under principles of equity, under contract, or otherwise for the consequences of any nonpayment of rent or other sums due and payable under the Master Lease. 2.07 No Recovery of Amounts Paid. If the Master Lease shall be terminated as a result of any action or inaction of Subtenant, including, but not limited to, any failure by Subtenant to pay amounts under Section 2.01 above when due or any breach or default under the Master Lease that is the result of a breach or default by Subtenant under this Sublease, Subtenant shall not be entitled to a refund or recovery of any amounts previously paid to Sublandlord in respect of the Premises, and Subtenant shall be liable for all costs, fees, expenses or other sums payable by Sublandlord to the Master Landlord as a result of any such breach or default by Subtenant. Subtenant shall also be obligated to pay all costs and expenses incurred by Sublandlord in connection with any claims asserted by Master Landlord against Sublandlord arising out of any such breach or default by Subtenant, including, without limitation, court costs and reasonable attorneys' fees. 2.08 Accounting and Records. Subtenant will be responsible for maintaining all books and records necessary to compute the payments of rent due hereunder and all amounts due from time to time by Sublandlord to Master Landlord under the Master Lease and to ensure timely and full payment of all such amounts. Subtenant shall give the Master Landlord the same access to its books and records as is required of the Lessee under the Master Lease. 2.09 Sublandlord Covenants. Except to the extent Sublandlord has directed Subtenant to make payments of Rent due under the Master Lease directly to Master Landlord, Sublandlord agrees, provided that Subtenant has complied with its obligations under Section 2.01 hereof, to make payments of all amounts when due to the Master Landlord under the Master Lease. Sublandlord shall continue to carry the insurance required under the Master Lease, without limitation of Subtenant's obligation to maintain in effect the insurance required by this Sublease. ARTICLE 3 COMPLIANCE WITH MASTER LEASE 3.01 Master Lease Incorporated. The terms of the Master Lease are hereby incorporated into this Sublease as if set forth in full herein. To the extent any term or provision of this Sublease conflicts with any terms or provision of the Master Lease, the terms and provisions of the Master Lease, as they affect the rights and obligations of Master Landlord, shall control. Notwithstanding the foregoing, to the extent that any of the express provisions of this Sublease shall conflict with any provisions incorporated by reference from the Master Lease, the terms of this Sublease shall control as between Sublandlord and Subtenant (but nothing in this Sublease shall be deemed to limit Subtenant's obligation not to act or fail to act in a manner that results in a default under the Master Lease). Sublandlord shall not be required to fulfill the covenants, agreements or obligations of the Master Landlord under the Master Lease (including, Meadowlark Sublease Page 5 UDC - 028987/000002 - 2688979 v4 but not limited to, Master Landlord's obligations under Section 7.1 thereof), but Sublandlord agrees to cooperate with Subtenant pursuant to Sections 3.05, 3.06 and 6.01 hereof, at Subtenant's sole cost, risk and expense, in satisfying requests reasonably made by Subtenant for enforcement of the Master Landlord's covenants, agreements and obligations under the Lease. The provisions of this Section 3.01 and the Sections referred to in the preceding sentence shall be Sublandlord's sole obligation to Subtenant with respect to action or inactions of the Master Landlord. 3.02 Subtenant Obligation to ComWly. Without limitation of Subtenant's other obligations under this Sublease, Subtenant agrees to perform, as Sublandlord's agent, all of the obligations of the Lessee under the Master Lease. Subtenant accepts the appointment as Sublandlord's agent and agrees, on Sublandlord's behalf, to perform all obligations of the Lessee under the Master Lease, including, but not limited to, obligations to maintain the Premises, to adhere to certain operating and use restrictions, to adhere to established hours of operation, to maintain books and records, to prepare required financial reports and to perform the obligations described on Exhibit C attached hereto. The agency hereby granted (a) is limited solely to those actions necessary for Subtenant to comply with the obligations of the Lessee under the Master Lease as in effect on the date hereof and (b) shall not give Subtenant the right or power to amend or terminate the Master Lease or to enter into agreements or obligations on behalf of Sublandlord or to take any other actions on behalf of Sublandlord. 3.03 Sublandlord Held Harmless. Subtenant acknowledges and agrees that any failure by Subtenant to fulfill, on Sublandlord's behalf, the obligations of the Lessee under the Master Lease (except for payment obligations expressly retained by Sublandlord pursuant to Section 2.09 hereof), or any act or failure to act by Subtenant that results in a default under the Master Lease, may result in liability on the part of Sublandlord under the Master Lease or in a termination of the Master Lease and/or this Sublease. Subtenant agrees to indemnify and hold Sublandlord harmless from and against any claims, damages, losses, costs, penalties, actions, causes of action or other liabilities of any kind that may be asserted against Sublandlord arising out of or resulting from any action or inaction of Subtenant in breach of its obligations under this Sublease that results in a breach or default by Lessee under the Master Lease. Subtenant further acknowledges that, as a result of Sublandlord's interest in the Premises, Subtenant's operations, actions and inactions on the Premises may result in claims being asserted against Sublandlord, and Subtenant agrees to the indemnification and hold -harmless obligations described in Section 6.02(f) hereof with respect to all Claims (as defined in that Section) relating to or arising out of the actions or inactions of Subtenant on, or the use, operation, maintenance or condition of, the Premises from and after the date of this Sublease. In the event that, despite Subtenant's good faith efforts, Lessor refuses to accept performance by the Subtenant, as Sublandlord's agent, of the obligations of the Lessee under the Master Lease, Sublandlord will cooperate with Subtenant, (and Subtenant shall cooperate with Sublandlord), at Subtenant's sole, cost, risk and expense, in the performance of those obligations. Other than the Subtenant's obligation to bear the cost, risk and expense of Sublandlord's efforts to perform such obligations, the parties shall have no liability to each other if the Master Landlord refuses, despite the parties' good faith efforts, to accept performance by the Subtenant of the Lessee's obligations Meadowlark Sublease Page 6 V\DC - 028987/000002 - 2688979 v4 3.04 Rijhts in Premises Limited. Other than subleasehold title pursuant to this Sublease, Subtenant shall have no ownership or other title to the Premises. Subtenant shall have title to the personal property located at the Premises, which shall be conveyed by separate bills of sale and assignment documents on or about the date hereof, subject to any rights of the Master Landlord under the Master Lease. 3.05 No Privity with Master Landlord; Sublandlord to Cooperate. Except as provided in the Consent to Sublease dated as of April _, 2008 between the Master Landlord, Sublandlord, Subtenant, and EAGL, Subtenant shall have no privity of contract with the Master Landlord under the Master Lease. Subject to the provisions of this Section 3.05 and the provisions of Sections 2.05, 3.06 and 6.01 hereof as well as those relevant provisions in Exhibit C hereof, (a) Subtenant shall not deal directly with the Master Landlord on any matter related to the Lease or the Premises, but shall act only with the cooperation or written authorization of Sublandlord, and (b) neither Subtenant nor Sublandlord shall, without the prior written consent of the other party, enter into any agreement with the Master Landlord that would increase the obligations of Lessee or decrease Lessee's rights under the Master Lease Whenever Subtenant seeks Sublandlord's approval or cooperation with respect to any matter requested of Sublandlord pursuant to this Section 3.05 or otherwise under this Sublease, Sublandlord agrees that its approval or cooperation shall not be unreasonably withheld, conditioned or delayed, but such approval or cooperation may be conditioned on Sublandlord's satisfaction that (a) Subtenant will, and has the financial wherewithal to, indemnify and hold harmless the Sublandlord from the effects thereof and (b) Subtenant will pay all costs, expenses or other sums that Sublandlord may incur in connection with any matter that Sublandlord is requested to cooperate in, authorize or approve. On the terms set forth above, Sublandlord agrees to cooperate with Subtenant, at Subtenant's sole cost, risk and expense, in all dealings with the Master Landlord, including, but not limited to, making requests for amendments to or waivers or approvals under the Master Lease. All costs reasonably incurred by Sublandlord in cooperating pursuant to this Section 3.05 hereof shall be borne by Subtenant and shall constitute additional Rent under this Sublease. Such additional Rent shall be due and payable within ten (10) days after written demand therefor. 3.06 Alterations. Except for alterations or improvements that do not require the Master Landlord's consent under the Master Lease, and except as provided below in this Section 3.06, Subtenant shall not make any alterations or improvements to the Premises without the prior written consent of the Sublandlord. Subtenant agrees to present to Sublandlord such information concerning the proposed alteration or improvement as Sublandlord shall reasonably request, and Sublandlord agrees to respond and provide comments to such request within ten (10) days after receipt of such information. If Sublandlord fails to respond within such ten (10) day period, Sublandlord shall irrevocably be deemed to have approved of the requested alteration or improvement, provided it is not in violation of the Master Lease. Sublandlord agrees that, so long as the conditions described in clauses (a) and (b) of Section 3.05 are satisfied, (x) its Meadowlark Sublease Page 7 \\DC - 028987/000002 - 2698979 v4 consent to any alteration of improvement that does not violate the Master Lease shall not be unreasonably withheld, conditioned or delayed and (y) it shall not withhold its consent or approval of any alteration or improvement that is approved by Master Landlord. Subtenant agrees to comply with all obligations of the Lessee under the Master Lease with respect to any construction activities, including, but not limited to, the obligation to obtain all necessary permits and to keep the Premises free of liens. To the extent Sublandlord's cooperation is required to make permit applications or obtain permits, Sublandlord agrees to cooperate reasonably with Subtenant in that regard, at Subtenant's sole risk, cost and expense. Sublandlord agrees that it will not make any alterations or improvements to the Premises during the Sublease Term without Subtenant's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed where Sublandlord is required to make such alterations or improvements to comply with or avoid liability under applicable law or the terms of the Master Lease. All alterations or improvements that Subtenant would be required to make if Subtenant were the Lessee under the Master Lease shall be made at Subtenant's sole risk, cost and expense and, to the maximum extent possible, shall be made by Subtenant. 3.07 Notices of Default or Violation. If Subtenant or Sublandlord receives notice from the Master Landlord alleging a default under or violation of the Master Lease, or if either such party shall receive notice of a violation or alleged violation of applicable law relating to the Premises, such party shall give prompt written notice thereof to the other party. Subtenant shall be responsible for curing any such alleged default or violation, at Subtenant's sole cost, within the period required by Section 7.01 hereof, except that, if the nature of the default or violation is such that it can only be cured by Sublandlord, Subtenant shall notify Sublandlord that such default requires action by Sublandlord, whereupon Sublandlord shall use commercially reasonable best efforts to cure the same, at Subtenant's expense (except in the case of a Sublandlord Default) and with Subtenant's full cooperation, within the period required under the Master Lease. 3.08 No Liability for Defaults by Master Landlord. Sublandlord shall, at Subtenant's reasonable request and at Subtenant's sole cost, risk and expense, make commercially reasonable best efforts to enforce the obligations of the Master Landlord under the Master Lease. So long as Sublandlord is making the efforts required of it under this Section 3.08, Sublandlord shall not be liable to Subtenant for any nonperformance of or noncompliance with or breach or failure to observe any term, covenant or condition to be observed or kept by the Master Landlord under the Master Lease or for any delay or interruption in Master Landlord's performing its obligations thereunder. 3.09 No Representations. It is expressly understood and agreed that, except for the representations of Sublandlord expressly set forth in this Sublease or in the Purchase Agreement, Sublandlord makes no representations or warranties of any kind with respect to the Master Lease or the Premises. Subtenant agrees that, upon the commencement of the Sublease Term, Subtenant shall conclusively be deemed to have accepted the Premises in their then -existing condition as described in Article 12 of the Purchase Agreement, the terms of which are hereby incorporated into this Section 3.09 as if set forth in full herein. ARTICLE 4 ADDITIONAL TENANT COVENANTS Meadowlark Sublease \\DC - 028987/000002 - 2688979 v4 Page 8 4.01 Utilities and other Expenses. Subtenant shall pay or cause to be paid when due all costs of using, operating and maintaining the Premises during the Sublease Term, including, but not limited to, the costs of all utilities, all water charges, all employment costs, all taxes, assessments and other impositions against the Premises, all maintenance and grounds -keeping costs, all insurance costs, all costs necessary to comply with the terms of the Master Lease and all other costs of every kind or nature relating to the Premises and the operation of the golf course and other business activities conducted thereon in a manner consistent with the requirements of the Master Lease and this Sublease. Subtenant shall indemnify and hold Sublandlord harmless against all such costs, charges and expenses and against any consequences of Subtenant's failure to pay when due any such costs, charges, expenses or other any amounts due and payable by Subtenant in connection with the use, operation or maintenance of the Premises. 4.02 Insurance. Subtenant shall be required to cause to be procured and maintained in effect, at all times during the Sublease Term, with companies licensed to do business in the state in which the Premises are located, and having a size and financial rating reasonably satisfactory to Sublandlord, the following insurance: (a) workers' compensation insurance satisfying all applicable requirements of law covering all of Subtenant's employees (and, if Subtenant leases or subleases all or a portion of the Premises to another person or entity in compliance with this Sublease, or if Subtenant engages another person or entity to provide staffing at the Premises, Subtenant shall require each such person or entity to maintain such insurance in effect); (b) property insurance (including contents, boiler and machinery coverage) against loss or damage by fire, wind, lightning and all other risks covered by standard extended coverage endorsements with deductible limits not greater than $100,000 per occurrence, in an amount from time to time equal to the full replacement cost of the improvements; Sublandlord shall be named as the loss payee of any proceeds of such insurance, which proceeds shall be made available for (1) payment of the cost of the repair and restoration of the Premises or the improvements thereon as such costs become due (unless the Master Lease does not require restoration and Subtenant does not otherwise elect to restore the Premises), (2) the payment when due of any amounts owed to the Master Landlord or Sublandlord in connection with any damage to or destruction of the Premises or the improvements thereon (including, without limitation, costs incurred in connection with the adjustment of the claim), and (3) the balance, if any, for application as Subtenant may direct; (c) comprehensive general liability and property damage insurance, with contractual liability, personal injury, fire damage, legal liability and broad form property damage coverage, having primary limits of liability of not less than $2,000,000 per occurrence for bodily injury, $1,000,000 per occurrence for property damage, and $5,000,000 per occurrence for combined aggregate bodily injury and property damage, and excess liability insurance in an amount equal to not less than $25,000,000 when combined with the primary insurance, with no deductible amount (and, if Subtenant leases or subleases all or a portion of the Premises to another person or entity in compliance with this Sublease, Subtenant shall require each such Meadowlark Sublease Page 9 \\DC - 028987/000002 - 2688979 v4 person or entity to maintain such liability insurance as shall be reasonable and customary in light of its business operations); (d) comprehensive automobile liability insurance with a combined limit per occurrence for bodily injury and property damage of at least $1,000,000, with no deductible amount; (e) business interruption insurance covering expenses and losses due to business interruption caused by an insured peril in an amount sufficient to cover one (1) year of rent and fixed charges associated with the Premises; and (f) if there are liquor sales or service operations at the Premises, liquor liability insurance in an amount of not less than $1,000,000 per occurrence (which shall be subject to the additional coverage of the umbrella liability policy described in clause (c) above), insuring against all liabilities and losses arising out of the sale, distribution, service or use of alcoholic beverages on or from the Premises. To the extent the foregoing insurance is not sufficient to satisfy the requirements of the Master Lease, Subtenant shall be required to maintain insurance satisfying such requirements. In addition, if Subtenant subleases any or a portion of this sublease, Subtenant shall require sub - sublessee to maintain all insurance as required by the Master Lease. All policies of insurance shall be primary in coverage, and any insurance carried by Sublandlord shall be secondary. Subtenant shall have no direct right of access to Sublandlord's insurance. All policies shall contain an express waiver of subrogation clause benefiting Sublandlord and its successors and assigns. All liability policies of Subtenant and its lessees, sublessees and other persons required to maintain insurance hereunder shall name Master Landlord and Sublandlord as an additional insured. Subtenant shall deposit with Sublandlord prior to the date hereof and at least 30 days prior to the scheduled expiration of any policy of insurance required hereby, a certificate or certificates of insurance showing the scope of coverage and limits of liability of each policy and of each replacement policy and demonstrating that all insurance coverage required hereby will be maintained continuously in effect without lapse of coverage. Such certificates shall contain an agreement by the insurer to provide to Sublandlord thirty (30) days' advance notice before canceling or substantially modifying any such policy or policies. ARTICLE 5 REPRESENTATIONS OF THE PARTIES 5.01 Representations of Sublandlord. Sublandlord hereby warrants and represents to Subtenant as follows: (a) Good Standing. Sublandlord is a corporation organized, validly existing and in good standing under the laws of the State of California. Sublandlord has the requisite right, power, legal capacity, and authority to enter into this Sublease. (b) Due Authorization. This Sublease has been duly authorized, executed and delivered by Sublandlord and constitutes a legal, valid and binding obligation of Sublandlord enforceable against Sublandlord in accordance with its terms. Meadowlark Sublease Page 10 \\DC - 028987/000002 - 2688979 v4 (c) Master Lease. The documents attached hereto as Exhibit A comprise, in all material respects, the entire Master Lease, including all amendments or modifications thereof, all supplements thereto and all assignments of the Lessee's interest thereunder. The Master Lease is in full force and effect, and Sublandlord has not received any notice of default thereunder which remains uncured as of the date hereof. To Sublandlord's knowledge, the Master Landlord is not in default under the Master Lease. The term of the Master Lease expires on December 31, 2017, subject to provisions in the Master Lease providing for extensions of the term. Except as stated above, and except for such representations and warranties as may expressly survive the execution of this Sublease pursuant to the terms of the Purchase Agreement, Sublesse's right, leasehold title, and interest in, to and under the Lease are subleased hereunder without representation or warranty of any kind or nature whatsoever, whether statutory, express or implied. 5.02 Representations of Subtenant. Subtenant hereby warrants and represents to Sublandlord as follows: (a) Good Standing. Subtenant is a limited liability company organized, validly existing and in good standing under the laws of the State of Delaware. Subtenant has the requisite right, power, legal capacity, and authority to enter into this Sublease and to fully perform each and all of its respective obligations under this Sublease. (b) Due Authorization. This Sublease has been duly authorized, executed and delivered by Subtenant and constitutes a legal, valid and binding obligation of Subtenant enforceable against Subtenant in accordance with its terms. 5.03 Purchase Agreement and Master Lease Control. Each party acknowledges and confirms that this Sublease is expressly made subject to the terms and provisions of the Purchase Agreement and of the Master Lease. The delivery of this Sublease will not affect, enlarge, diminish or otherwise impair any of the terms or provisions of the Purchase Agreement or of the Master Lease. In the event of a conflict between the terms and provisions of this Sublease and the terms and provisions of the Purchase Agreement, the terms and provisions of the Purchase Agreement shall govern and control. In the event of a conflict between the terms and provisions of this Sublease and the terms and provisions of the Master Lease, the terms and provisions of the Master Lease shall govern and control as between Master Landlord, on the one hand, and Sublandlord and Subtenant, on the other hand, and the terms and provisions of this Sublease shall control as between Sublandlord and Subtenant. The indemnification obligations of the parties described in the Purchase Agreement as they relate to the Master Lease and the Premises shall survive the execution and delivery of this Sublease, subject to the limitations thereon contained in the Purchase Agreement. Any and all indemnification obligations of the parties set forth in this Sublease shall be subject to the limitations on indemnification obligations under the Purchase Agreement. ARTICLE 6 COVENANTS OF THE PARTIES Meadowlark Sublease UDC - 028987/000002 - 2688979 v4 Page 11 6.01 Covenants of Sublandlord. During the Sublease Term, Sublandlord covenants with Subtenant that Sublandlord: (a) shall not (i) voluntarily amend, modify, assign (or provide Master Landlord with notice of any proposed assignment), sublease, surrender or terminate the Master Lease or (ii) cause to be done or suffer or permit any act to be done that would constitute a breach or default of Lessee's obligations under the Master Lease, including without limitation, any breach or default that would cause the Master Lease to be terminated or forfeited by reason of any right to termination or forfeiture reserved or vested in the Master Landlord under the Master Lease, but not including any breach or default under the Master Lease caused by the actions or inactions of Subtenant; (b) shall cooperate with and join with Subtenant, to the extent reasonably necessary for Subtenant to assert its rights, in any claims, counterclaims defenses or suits that may be brought or asserted by the Lessee against the Master Landlord under the Master Lease, provided that such participation shall be without cost, expense or risk of liability to Sublandlord (except for costs, expenses or liabilities against which Sublandlord is secured or indemnified in a manner acceptable to Sublandlord); and (c) shall cooperate in good faith with Subtenant and Master Landlord in connection with the negotiation and execution of any amendment, modification, assignment, termination, approval, consent, surrender or waiver of or under the Master Lease reasonably requested by Subtenant and/or Master Landlord or in the contesting of payments that may be contested under the terms of the Master Lease, which, in each instance, does not adversely affect Sublandlord in any material respect and does not result in any cost or expense to Sublandlord unless such cost or expense is paid for by Subtenant or any party other than Sublandlord. 6.02 Covenants of Subtenant. During the Sublease Term, Subtenant covenants with Sublandlord that Subtenant: (a) shall pay all Rent and other amounts when due and in accordance with the provisions of this Sublease; (b) shall observe each and every term, covenant and condition of the Master Lease binding on the Lessee under the Master Lease (except as expressly provided otherwise in this Sublease); (c) except as otherwise provided herein, and except for the sub -sublease to EAGL that has been approved by the Master Landlord on or prior to the date hereof, shall not further sub -sublet all or any part of the Premises nor assign this Sublease or any interest in it, or amend the sublease to EAGL in any manner that would result in a default under the Master Lease, without Master Landlord's and Sublandlord's prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed so long as Sublandlord is satisfied that such action will not result in a default under the Master Lease or expose Sublandlord to any expense or any material risk of liability; Meadowlark Sublease Page 12 \\DC - 028987/000002 - 2688979 v4 (d) shall timely perform all of its covenants and obligations under this Sublease and, as Sublandlord's agent, all of the covenants and obligations of the Lessee under the Master Lease to the extent arising from and after the date hereof, (e) shall not cause or permit anything to be done that would constitute a default or breach of Sublandlord's obligations as Lessee under the Master Lease, including, without limitation, any breach or default that would cause the Master Lease to be terminated or forfeited by reason of any right of termination or forfeiture reserved or vested in the Master Landlord under the Master Lease; (f) without limitation of any rights Subtenant may have under Section 7.04 hereof, shall indemnify, defend and hold Sublandlord harmless from and against any and all liability, penalties, losses, damages, costs and expenses, demands, causes of action, claims or judgments of any kind or nature whatsoever (collectively, the "Claims") arising with respect to the Master Lease, this Sublease, or the use, operation, maintenance or condition of the Premises, to the extent such Claims relate to injuries, losses, defaults, occurrences, conditions or circumstances existing, arising or occurring on or about the Premises from and after the date of this Sublease, including, but not limited to, claims of employees under applicable employment, wage and hours, workers' compensation, anti -discrimination or other laws, Claims arising out of accidents, conditions or actions of Subtenant, its lessees, or the officers, directors, employees, contractors, guests or invitees of any of the foregoing, Claims relating to tournaments, sports camps, receptions, bookings or other events conducted on the Premises, Claims relating to death, injury or property loss or damage on or relating to the condition or operation of the Premises, Claims of nuisance, trespass or other Claims by neighbors of the Premises, and all other Claims associated with the Premises to the extent such Claims are and based on facts, circumstances or conditions occurring or existing during the Sublease Term, it being understood and agreed that Sublandlord shall have no liability for, and shall be held absolutely harmless from the consequences of, the use, operation, maintenance or condition of the Premises during the Sublease Term; the foregoing indemnity includes all legal, court and other costs and charges incurred by Sublandlord with respect to any such Claims but shall not include Claims based on or arising out of (1) the gross negligence or willful misconduct of Sublandlord, (2) any breach or default by Sublandlord of its obligations under this Sublease or the Purchase Agreement, or (3) any Sublandlord Default. Except for those matters described in the foregoing clauses (1), (2) and (3), Subtenant hereby waives any claim Subtenant may have against Sublandlord at law, under principles of equity, under contract, or otherwise for the condition, use, title, maintenance or operation of the Premises or the improvements or otherwise relating thereto or to the Master Lease; (g) shall indemnify and hold Master Landlord harmless to the same extent as Master Landlord is entitled to indemnification from the Sublandlord under the Master Lease (and Sublandlord agrees that this paragraph shall not limit Subtenant's rights against Sublandlord under Section 7.04) (h) shall indemnify and hold Master Landlord and Sublandlord harmless from all claims for labor and materials in connection with the provision of services to the Premises or in connection with the construction, repair, alteration, or installation of structures, improvements, Meadowlark Sublease Page 13 \\DC - 028987/000002 - 2688979 v4 equipment or facilities upon the Premises by or on behalf of Subtenant and against all costs of defending against such claims, including reasonable attorneys' fees (and, in the event a lien or stop -notice is imposed upon the Premises as a result of any such construction, repair, alteration or installation, performed on or after the date of this the Sublease, Subtenant shall, within twenty (20) days after notice of the filing of such lien or stop -notice, either (i) record a valid release of the lien or cancellation of the stop -notice or (ii) procure a bond complying with the requirements of the Master Lease); and (i) shall, at the expiration of the Sublease Term, deliver the Premises to Sublandlord, in at least the condition required under the Master Lease, without need of notice of or from Subtenant or Sublandlord. Notwithstanding any contrary provisions of the Master Lease, and subject to Section 9.13 hereof, if Subtenant retains possession of the Premises or any part thereof after the expiration or earlier termination of the Sublease Term, Subtenant will reimburse Sublandlord for all of Sublandlord's damages, costs and expenses, including reasonable attorneys' fees, incurred as a result of Subtenant's retention of possession. The provisions of this Section 6.02(h) do not exclude Sublandlord's rights of re-entry or any other right hereunder to remove Subtenant through summary proceedings for holding over beyond the expiration or earlier termination of the Sublease Term. ARTICLE 7 DEFAULTS 7.01 Subtenant Default. The following shall be events of default (each an "Event of Default") under this Sublease (and shall, prior to the giving of notice and the expiration of any applicable cure periods, be a "default" hereunder): (a) Subtenant's failure to pay any amount of Rent or other sum due hereunder when due, which default continues for more than seven (7) days after receipt by Subtenant of written notice thereof from Sublandlord or its designee; (b) Subtenant's failure to perform any of its non -monetary obligations under this Sublease (except for any failure that is addressed in clause (d) below), which failure continues for more than thirty (30) days after receipt by Subtenant of written notice thereof from Sublandlord; (d) Subtenant's failure to keep the Premises in good condition and repair in compliance with the Master Lease and to take such actions as Sublandlord may reasonably request to keep the Premises in such condition and repair within forty-five (45) days after Sublandlord's written request; provided, however, that if such repairs are not reasonably susceptible of being completed within such 45-day period, it shall not be an Event of Default if Subtenant commences such repairs within such period and thereafter makes continuous good faith efforts to complete such repairs as soon as reasonably practicable; (e) An action or inaction of Subtenant that results in the service of a written notice of default from the Master Landlord under the Master Lease, which failure continues for more than twenty-five (25) days following notice thereof from Sublandlord or Master Landlord to Meadowlark Sublease Page 14 \\DC - 028987/000002 - 2688979 v4 Subtenant (provided, however, that if the default is of a nature that is not reasonably capable of being cured within such twenty-five (25) day period, and if additional time to cure is provided to the Lessee under the Master Lease, it shall not be an Event of Default hereunder if Subtenant commences to cure such default before the end of such twenty-five (25) day period and (subject to Sublandlord's rights described below) thereafter makes continuous diligent efforts to cure such default). Notwithstanding the foregoing, if such default is not cured within the shorter of (a) one hundred twenty (120) days after receipt of the written notice of default described above or (b) ten (10) days prior to the date on which the Master Landlord would have the right to terminate the Master Lease because of such default, then Sublandlord shall have the right, but not the obligation, to reenter the Premises and take such actions as Sublandlord may deem necessary or appropriate to cure such default (and all costs incurred by Sublandlord in so doing shall be due and payable to Sublandlord as additional Rent hereunder within ten (10) days after receipt of Sublandlord's invoice therefor); or (f) Subtenant files for protection under any applicable state or federal bankruptcy law, there is filed against Subtenant a petition seeking protection of creditors under any such law that is not dismissed within sixty (60) days after the filing thereof, or Subtenant is adjudged bankrupt or if a trustee or other person is appointed or ordered to take title to or control over Subtenant's assets by operation of law and such adjudication, appointment or order is not vacated within one hundred twenty (120) days from its entry. 7.02 Remedies on Default. Upon the occurrence and during the continuation of an Event of Default, Sublandlord may, at its option, terminate this Sublease by giving written notice of termination to Subtenant, in which event this Sublease shall terminate (a) five (5) days following the delivery of such written notice if the default is a monetary default and (b) thirty (30) days after delivery of such written notice if the default is not a monetary default, unless in each case the default is fully cured before such date. Such termination shall become effective automatically, without any further notice from Sublandlord, whereupon Subtenant shall vacate the Premises, leaving all personal property in place (to the extent the Master Landlord has rights therein under the Master Lease), and neither Subtenant nor any person claiming through or under Subtenant shall be entitled to remain in possession of the Premises. Upon any such termination, Sublandlord shall have the right to enter the Premises, remove Subtenant's property and effects therefrom, and take and hold possession thereof. At Sublandlord's option, this Sublease shall remain in effect and Sublandlord shall have the right to take possession of the Premises without terminating this Sublease or releasing Subtenant in whole or in part from Subtenant's obligations to pay rent and other amounts hereunder for the remainder of the Sublease Term. In such event, Sublandlord shall have the right to re -let the Premises or any part thereof, either in the name or for the account of Subtenant, for reasonable market rent and subject to such terms and for such lease period as Sublandlord may reasonably elect, which lease period may extend beyond the balance of the term of this Sublease. Subtenant shall pay Sublandlord any deficiency between the Rent hereby reserved and covenanted to be paid and the net amount of the rents collected on such reletting, for the balance of the Sublease Term, as well as any expenses incurred by Sublandlord in such reletting including, but not limited to brokers' fees, attorneys' fees, or costs of readying the Premises for re -letting and any other reasonable costs or expenses incurred by Sublandlord with respect to the Premises. All such expenses shall be paid by Subtenant as additional Rent upon demand by Sublandlord. Any deficiency in rental shall be paid in monthly Meadowlark Sublease Page 15 \\DC - 028987/000002 - 2688979 v4 installments, upon statements rendered by Sublandlord to Subtenant. Any suit brought to collect the amount of the deficiency for any one or more months shall not preclude any subsequent suit to collect the deficiency for any subsequent months. 7.03 Additional Remedies of Sublandlord. In addition to any and all remedies set forth herein, Sublandlord shall have all remedies available at law or in equity and any and all remedies shall be cumulative and nonexclusive, provided that any claim for damages by Sublandlord shall be limited in the manner described in Section 9.13. 7.04 Sublandlord Defaults. The provisions of this Sublease neither limit nor expand any rights Subtenant may have under the Purchase Agreement relating to a breach by Sublandlord prior to the date hereof of any of its representations, warranties, covenants or obligations under the Purchase Agreement as they relate to the Premises or the Master Lease. Sublandlord shall be liable for any such breach in accordance with the terms of the Purchase Agreement. For purposes of this Sublease, the following terms shall have the meanings given to them below: (a) "Sublandlord Default" means (1) bankruptcy or insolvency proceedings affecting the Sublandlord that cause the Master Lease to be terminated or to be amended in a manner that materially and adversely affects Subtenant, (2) any injunction or court order binding against Sublandlord that causes the Master Lease to be terminated or the term thereof to be reduced or that materially impairs Subtenant's right to occupy the Premises in accordance with this Sublease, (3) a breach by Sublandlord of any representation, warranty or covenant made by Sublandlord in this Sublease, or (4) any action taken by Sublandlord on or after the date hereof, without Subtenant's request or consent, that causes the Master Lease to be terminated, that results in a material reduction in Subtenant's rights to occupy and operate the Premises hereunder, or that requires the expenditure of money by Subtenant to cure a default under the Master Lease that results from such action by Sublandlord. (b) "Sublandlord Default Payments" means all amounts that become due and payable under the Master Lease that would not have been due and payable except for a Sublandlord Default. (c) "Sublandlord Default Damages" means damages or expenses suffered or incurred by Subtenant that would not have been suffered or incurred in the absence of a Sublandlord Default. Sublandlord shall be responsible for the payment of all Sublandlord Default Payments to the Master Landlord. Sublandlord shall indemnify and hold harmless the Subtenant against the consequences of a Sublandlord Default and, subject to the provisions of this Sublease, Subtenant shall have all remedies available at law or in equity in connection with such Sublandlord Default, and any and all such remedies shall be cumulative and nonexclusive, provided that any claim for damages by Subtenant shall be limited in the manner described in Section 9.13. Notwithstanding anything in this Sublease to the contrary, in the event that there are any Sublandlord Default Payments that are not paid by Sublandlord to Master Landlord when due, Subtenant shall have Meadowlark Sublease Page 16 \\DC - 028987/000002 - 2688979 v4 the right (unless the same are reasonably contested by Sublandlord before Subtenant pays such amounts to the Master Landlord, and provided such contested payments are permitted to be withheld and contested under the Master Lease), but not the obligation, to pay such Sublandlord Default Payments to the Master Landlord, and the amounts so paid shall be reimbursed by Sublandlord to Subtenant within ten (10) days following demand therefore and the same shall bear interest from the date such amounts are paid by Subtenant until such time such amounts are reimbursed to Subtenant pursuant to this Section 7.04 at the rates specified under Section 2.03 hereof. ARTICLE 8 NOTICE Any notice required or permitted to be given hereunder shall be in writing and sent by express or certified mail, postage pre -paid, to the respective party at the address set forth below. Either party may, by providing notice to the other party pursuant to the provision of this Article 8, specify a different address for notice purposes. All notices or other communications shall be deemed duly given and received when delivered in person (with receipt therefor), on the next business day after deposit with a recognized overnight delivery service, or on the second day after being sent by certified or registered mail, return receipt requested to the aforesaid addresses. ARTICLE 9 MISCELLANE®US PROVISIONS 9.01 Entry by Sublandlord. Subtenant shall make the Premises available to Master Landlord or any of its authorized agents or representatives as and to the extent required under the Master Lease, and to Sublandlord or any of its authorized agents or representatives, during normal business hours and upon at least two (2) days prior notice, for the purpose of entering the Premises to make necessary repairs and for any other purpose set forth in the Master Lease or this Sublease. 9.02 Consent. Wherever any approval or consent is required by either party under this Sublease, such approval or consent shall not be unreasonably withheld, conditioned or delayed. 9.03 Time of Essence. Time is of the essence for this Sublease and for each and all of its provisions in which performance is a factor. 9.04 Waiver. The waiver of any breach of any term, covenant or condition herein contained in any one instance shall not be deemed to be a waiver of any other term, covenant or condition contained herein or a waiver of such term, covenant or condition in any other instance. 9.05 Quiet Possession. Sublandlord covenants that upon compliance with the terms and conditions of this Sublease, Subtenant shall and may peaceably and quietly hold and enjoy the Premises for the Sublease Term. Meadowlark Sublease Page 17 \\DC - 028987/000002 - 2688979 v4 9.06 Entire Agreement. This Sublease, together with all the exhibits attached hereto, contains the entire agreement between the parties and no representations, inducements, promises, or agreements, oral or otherwise, not embodied herein shall be of any force and effect. 9.07 Attorneys' Fees. In the event that any action shall be commenced by either party hereto arising out of or concerning this Sublease or any right or obligation derived therefrom, then in addition to all other relief at law or in equity the prevailing party shall be entitled to recover reasonable attorneys' fees and costs as fixed by the court. 9.08 Submission. Submission of this instrument for examination or signature does not constitute a reservation of or option for sublease, and is not effective as a sublease or otherwise until executed by both Sublandlord and Subtenant and, if required, consented to by the Master Landlord. 9.09 Brokers. Each of the parties hereto represents and warrants to the other that it has not dealt with any broker or finder in connection with this Sublease. Sublandlord and Subtenant indemnify and hold the other harmless from any and all costs incurred as a result of any breach of the foregoing warranty. 9.10 Subordination. The Sublease shall be subject and subordinate at all times to the Master Lease and all of its provisions, covenants and conditions. 9.11 Estoppel Certificates. Within ten (10) days following written request, Sublandlord agrees to deliver to Subtenant an Estoppel Certificate certified to such parties as may be requested by Subtenant and certifying as to matters reasonably requested by Subtenant. 9.12 Recognition Agreement. Sublandlord acknowledges that Subtenant may, subject to any required consent of the Master Landlord under the Master Lease, obtain sub -leasehold financing encumbering its interest under this Sublease ("Subleasehold Financing"). Provided the Master Landlord consents to any Subleasehold Financing, Sublandlord's consent to the same shall not be required and Sublandord agrees to recognize and accept performance of the obligations of Subtenant under this Sublease by the lender, or any assignee of lender, under the Subleasehold Financing or any purchaser at a foreclosure. 9.13 Damages. Notwithstanding any provision of this Agreement to the contrary, in no event shall Sublandlord or Subtenant be liable to each other for any consequential, indirect, special, speculative or punitive damages arising out of or in connection with this Sublease or any breach of or default under this Sublease or the Master Lease; damages claims shall be limited to direct damages suffered by one party as a result of the other party's breach, and other amounts necessary to make the party not -in -breach economically whole against the consequences of a breach by the other party, (including, but not limited to, costs incurred to comply with obligations under the Master Lease, money judgments or settlements that the party not -in -breach is required to pay as a result of the other party's breach, court costs, attorneys' fees and other out-of-pocket expenses arising out of such breach or default). [REMAINDER OF PAGE INTENTIONALLY BLAND] Meadowlark Sublease \\DC - 028987/000002 - 2688979 va Page 18 IN WITNESS WHEREOF, the parties have executed this Sublease, under seal, as of the date written above. SUBLANDLORD: AMERICAN GOLF CORPORATION By: Name: Mark J. Friedman Title: Secretary SUBTENANT: CNL INCOME EAGL MEADOWLARK, LLC By: Name: Amy Sinelli Title: Senior Vice President Meadowlark Sublease Page 19 C: IDOC UME—/'XellyNJILOCALS—h 7'empl iScrub Meadowlark Sublease (6). DOC. \\DC - 028987/000002 - 2689979 v4 EXHIBIT A TO SUBLEASE COPY OF LEASE Meadowlark Sublease Page 20 C:IDOC(/MF, lWellyNJTOCALS—l11empbScrubMeadowlark Sublease (6).DOC \\DC - 028987/000002 - 2688979 v4 EXHIBIT B TO SUBLEASE PREMISES Meadowlark Sublease Page 21 C: IDOCUME-1lKellyN.PLOCALS—IlTempliSenibIMeadowlark Sublease (6).DOC \\DC - 028987/000002 - 2688979 v4 EXHIBIT C TO SUBLEASE PARTICULAR SUBTENANT OBLIGATIONS (Meadowlark) Without limitation of the provisions of the Sublease to which this Exhibit B is attached, Subtenant agrees to adhere to the following covenants (sections references below are to the sections of the Master Lease defined in said Sublease), as agent for and as a direct obligation to Sublandlord: 1. Observe all obligations of Tenant under the residential rental agreement attached to the Master Lease. 2. Cooperate with Master Landlord to prepare an inventory each year according to Section 7.6(c) 3. Make all calculations of percentage rent under Section 9 as if all Subtenant revenues were revenues of the Lessee. 4. Act on behalf of Sublandlord, as Sublandlord's authorized representative under Section 10 to deliver a report of gross revenues every month to the Master Landlord, and indemnify and hold Sublandlord harmless from any failure to make such reports accurately, completely and when due. 5. Maintain financial records for 4 years, as required by Section 11. Certify to Master Landlord, at the times and in the manner required by Section 11, an annual statement of gross revenues at the end of each year, and recognize Master Landlord's audit rights and Master Landlord's remedies in case of error. Subtenant shall indemnify and hold Sublandlord harmless from any failure to make such reports accurately, completely and when due and from any errors in Subtenant's accounting. 6. Comply with all requirements of Section 12.1, including meeting with the Director every month to discuss course maintenance and taking all required maintenance actions. 7. Comply with all requirements under Sections 12.2 through 12.7. 8. Provide Master Landlord an annual schedule of rates in compliance with Section 12.8. 9. Check water rates every year pursuant to Section 14. 10. Satisfy all restoration obligations under Section 21 in the event of a casualty. Meadowlark Sublease Page 22 C: �DOCUME—llKellyNJ�LOCALS—P7'emp)iScrub Meadowlark Sublease (6).DOC \\DC - 028987/000002 - 2688979 v4 MEADOWLARK GOLF COURSE HUNTINGTON BEACH, CALIFORNIA SUB -SUBLEASE AGREEMENT DATED AS OF .2008 BY AND BETWEEN CNL INCOME EAGL MEADOWLARK, LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS LANDLORD, n► o EVERGREEN ALLIANCE GOLF LIMITED, L.P. A DELAWARE LIMITED PARTNERSHIP, AS TENANT \\DC - 028987/000002 - 2700649 Q Sub -Sublease Agreement: Meadowladc Exhibit TABLE OF CONTENTS ARTICLE 1 DEFINITIONS.............................................................................2 ARTICLE 2 LEASED PROPERTY AND TERM............................................2 2.1 Leased Property.............................................................................. 2 2.2 Condition of Leased Property; "AS IS, WHERE IS" ...................... 2 2.3 Initial Term..................................................................................... 2 2.4 Extended Term................................................................................2 2.5 Yield Up........................................................................................... 2 ARTICLE3 RENT...........................................................................................2 3.1 Rent.................................................................................................2 3.2 Minimum Rent................................................................................ 2 3.3 Additional Minimum Rent..............................................................2 3.4 Additional Charges.........................................................................2 3.5 Landlord Advances.........................................................................2 3.6 Late Payment of Rent..................................................................... 2 3.7 Net Lease.........................................................................................2 3.8 No Abatement of Rent....................................................................2 3.9 Tenant Security Deposit................................................................. 2 3.10 Security for Sub-Sublease...............................................................2 3.11 Security Agreement........................................................................2 ARTICLE 4 USE OF THE LEASED PROPERTY..........................................2 4.1 Permitted Use.................................................................................2 4.2 Environmental Matters.................................................................. 2 4.3 Continuous Operations................................................................... 2 4.4 Compliance With Restrictions, Etc................................................2 4.5 Standard of Operation....................................................................2 4.6 Standards, Not Control...................................................................2 4.7 Application of Groundlease and Sublease Agreement..................2 4.8 Survival...........................................................................................2 ARTICLE 5 MAINTENANCE AND REPAIRS..............................................2 5.1 Tenant's Obligations....................................................................... 2 5.2 Reserve............................................................................................2 ARTICLE 6 IMPROVEMENTS, ETC.............................................................2 6.1 Prohibition.......................................................................................2 6.2 Permitted Renovations other than Golf Course Renovations ....... 2 6.3 Renovations to Golf Course............................................................2 6.4 Conditions to Reserve Expenditures, Permitted Renovations and Major Alterations...................................................... 6.5 Salvage............................................................................................2 ARTICLE 7 LANDLORD'S INTEREST NOT SUBJECT TO LIENS ............ 2 7.1 Liens, Generally..............................................................................2 7.2 Construction or Mechanics Liens ................................................... 2 7.3 Contest of Liens..............................................................................2 7.4 Notices of Commencement of Construction...................................2 \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark ARTICLE 8 TAXES AND ASSESSMENTS....................................................2 8.1 Obligation to Pay Taxes and Assessments....................................2 8.2 Tenant's Right to Contest Taxes....................................................2 8.3 Tax and Insurance Escrow Account ............................................... 2 ARTICLE 9 INSURANCE...............................................................................2 9.1 General Insurance Requirements.................................................. 2 9.2 Waiver of Subrogation.................................................................... 2 9.3 General Provisions.......................................................................... 2 9.4 Indemnification of Landlord........................................................... 2 ARTICLE10 CASUALTY................................................................................2 10.1 Restoration and Repair...................................................................2 10.2 Escrow and Disbursement of Insurance Proceeds .........................2 10.3 No Abatement of Rent....................................................................2 10.4 Tenant's Property and Business Interruption Insurance .............2 10.5 Restoration of Tenant's Property ................................................... 2 10.6 Waiver.............................................................................................2 10.7 Subject to Groundlease...................................................................2 ARTICLE 11 CONDEMNATION....................................................................2 11.1 Total Condemnation, Etc................................................................ 2 11.2 Partial Condemnation.....................................................................2 11.3 Disbursement of Award.................................................................. 2 11.4 No Abatement of Rent....................................................................2 11.5 Subject to Groundlease...................................................................2 ARTICLE 12 DEFAULTS AND REMEDIES.................................................2 12.1 Events of Default............................................................................2 12.2 Remedies on Default....................................................................... 2 12.3 Application of Funds....................................................................... 2 12.4 Landlord's Right to Cure Tenant's Default....................................2 12.5 Landlord's Security Interest and Lien...........................................2 12.6 Collateral Assianment.................................................................... 2 12.7 Landlord Default.............................................................................2 ARTICLE 13 HOLDING OVER......................................................................2 ARTICLE 14 LIABILITY OF LANDLORD; INDEMNIFICATION ..............2 14.1 Liability of Landlord....................................................................... 2 14.2 Indemnification of Landlord........................................................... 2 14.3 Notice of Claim or Suit...................................................................2 14.4 Limitation on Liability of Landlord...............................................2 ARTICLE 15 REIT AND UBTI REQUIREMENTS.......................................2 15.1 Limitations on Rents Attributable to Personal Property ..............2 15.2 Basis for Sub -Sublease Rent Restricted.........................................2 15.3 Landlord Affiliate Subleases Restricted........................................2 15.4 Landlord Interests in Tenant Restricted.......................................2 15.5 Landlord Services...........................................................................2 15.6 Certain Subtenants Prohibited......................................................2 \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 15.7 Future Amendment........................................................................2 ARTICLE 16 SUBLETTING AND ASSIGNMENT........................................2 16.1 Transfers Prohibited Without Consent..........................................2 16.2 Indirect Transfer Prohibited Without Consent .............................2 16.3 Adequate Assurances......................................................................2 ARTICLE 17 ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS..........................................................................................2 17.1 Estoppel Certificates.......................................................................2 17.2 Periodic Financial Statements.......................................................2 17.3 Annual Financial Statements........................................................2 17.4 Records............................................................................................ 2 17.5 General Operations Budget............................................................ 2 17.6 Quarterly Meetings.........................................................................2 17.7 Tenant Financial Statements.........................................................2 ARTICLE 18 LANDLORD'S RIGHT TO INSPECT.......................................2 ARTICLE 19 FACILITY MORTGAGES.........................................................2 19.1 Subordination..................................................................................2 19.2 Attornment...................................................................................... 2 19.3 Rights of Mortgagees and Assignees..............................................2 19.4 Effect of Facility Mortgage.............................................................2 ARTICLE 20 ADDITIONAL COVENANTS OF TENANT ............................2 20.1 Maintenance of Status and Licenses..............................................2 20.2 Additional Covenants of Tenant.....................................................2 20.3 Leasehold Financing Prohibited.....................................................2 20.4 Additional Covenants Upon Transfer of Sub-Sublease.................2 ARTICLE 21 INTENTIONALLY OMITTED..................................................2 ARTICLE 22 MEMBERSHIP DOCUMENTS................................................2 22.1 Implementation of Membership Documents..................................2 ARTICLE 23 MISCELLANEOUS................................................................... 2 23.1 Limitation on Payment of Rent ...................................................... 2 23.2 No Waiver........................................................................................2 23.3 Remedies Cumulative..................................................................... 2 23.4 Severability..................................................................................... 2 23.5 Acceptance of Surrender.................................................................2 23.6 No Merger of Title........................................................................... 2 23.7 Tenant's Representations............................................................... 2 23.8 Quiet Enjoyment............................................................................. 2 23.9 Recordation of Memorandum of Sub -Sublease .............................. 2 23.10 Notices.............................................................................................2 23.11 Construction; Nonrecourse.............................................................2 23.12 Counterparts; Headings.................................................................2 23.13 Applicable Law................................................................................2 23.14 Right to Make Agreement...............................................................2 23.15 Brokerage........................................................................................2 V\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark in 23.16 No Partnership or Joint Venture...................................................2 23.17 Entire Aueement....................................................................•--....2 23.18 Costs and Attorneys' Fees.............................................................. 2 23.19 Approval of Landlord...................................................................... 2 23.20 Successors and Assigns................................................................... 2 23.21 Waiver of Jury Trial........................................................................ 2 23.22 Treatment of Lease......................................................................... 2 23.23 Transfer of Licenses........................................................................ 2 23.24 Tenant's Personal Property............................................................ 2 23.25 No Effect on Groundlease or Sublease ........................................... 77 ADC - 029987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark iv TABLE OF EXHIBITS Exhibit "A" - Initial Landlord P&E Exhibit "B" - Initial Term Minimum Rent Exhibit "C" - Permitted Encumbrances Exhibit "D" - Initial Tenant Personal Property Exhibit ` E" - The Land Exhibit "F" - Tenant Estoppel Certificate Exhibit "G" - Memorandum of Sub -Sublease Exhibit "H" - Permitted Agreements With Affiliated Persons of Tenant TABLE OF SCHEDULES Schedule 1 - Affiliated Leases Schedule 16.2 - Tenant Organizational Chart Schedule 20.4 - Additional Covenants Upon Transfer of Sub -Sublease VVDC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark v SUB -SUBLEASE AGREEMENT THIS SUB -SUBLEASE AGREEMENT is entered into as of , 2008 (the "Effective Date") by and between CNL INCOME EAGL MEADOWLARK, LLC, a Delaware limited liability company, as landlord ("Landlord'), and EVERGREEN ALLIANCE GOLF LIMITED, L.P., a Delaware limited partnership, as tenant ("Tenant"). WITNESSETH: WHEREAS, Landlord has heretofore subleased pursuant to the terms and conditions of the "Sublease Agreement" (as defined herein), the Land and other Leased Property (these and other capitalized terms used and not otherwise defined herein having the meanings ascribed to such terms in Article 1); and WHEREAS, Landlord wishes to sub -sublease all of Landlord's rights and interests in and to the Sublease Agreement and the Leased Property to Tenant, and Tenant wishes to sublease all of Landlord's rights and interests in and to the Sublease Agreement and the Leased Property from Landlord, all subject to and upon the terms and conditions herein set forth. NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows: ARTICLE 1 DEFINITIONS For all purposes of this Sub -Sublease, except as otherwise expressly provided or unless the context otherwise requires, (i) the terms defined in this Article and used in this Sub -Sublease shall have the meanings assigned to them in this Article and include the plural as well as the singular, (ii) all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP, (ill) all references in this Sub -Sublease to designated "Articles," "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Sub -Sublease, and (iv) the words "herein," "hereof," "hereunder" and other words of similar import refer to this Sub -Sublease as a whole and not to any particular Article, Section or other subdivision. "Accessibility Laws" shall mean all applicable laws, statutes, regulations, rules, ordinances, codes, licenses, permits and orders, from time to time in existence, of all courts of competent jurisdiction and Government Agencies, and all applicable judicial and administrative and regulatory decrees, judgments and orders, including common law rulings and determinations, relating to accessibility \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark for the disabled or handicapped, including, but not limited to, any applicable provisions of The Architectural Barriers Act of 1968, The Rehabilitation Act of 1973, The Fair Housing Act of 1988, The Americans With Disabilities Act, the accessibility code(s), if any, of the State in which the Leased Property is located, and all regulations and guidelines promulgated under any all of the foregoing, as the same may be amended from time to time. "Accounting Period" shall mean each calendar month accounting period of Tenant. If Tenant shall, for a bona fide business reason, change its accounting period during the Term, appropriate adjustments, if any, shall be made with respect to the timing of applicable accounting and reporting requirements of this Sub -Sublease; provided, however, that in no event shall any such change or adjustment alter the amount or frequency of payment of Minimum Rent within any Fiscal Year, or otherwise increase or reduce any monetary obligation under this Sub -Sublease. "Accounting Year" shall mean each period of twelve (12) consecutive Accounting Periods during the Term of this Sub -Sublease; provided, however, the first Accounting Year shall commence on the Commencement Date and shall expire on December 31, 2008. "ACM" shall have the meaning given such term in Section 4.2. "ADA" shall have the meaning given such term in Section 23.7. "Additional Charges" shall have the meaning given such term in Section 3.4. "Additional Minimum Rent" shall have the meaning given such term, and shall be calculated in accordance with, Section 3.3. "Additional Minimum Rent Statement" shall have the meaning given such term in Section 3.3. "Additional Rent" shall have the meaning given such term in Section 3.5. "Adjusted Lease Basis" shall mean for any point in time during the Term hereof, the sum of Landlord's Original Investment and Landlord's Additional Investment from time to time, reduced by (i) any proceeds received by Landlord from a Governmental Agency in connection with a condemnation or conveyance in lieu thereof or other taking of any portion of the Leased Property, or any business interruption insurance proceeds received by Landlord in connection with such condemnation or taking, which proceeds are not otherwise applied to the repair or restoration of the Leased Property less any business interruption insurance proceeds received by Tenant in connection with such condemnation or taking, or (ii) VADC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 2 any sales proceeds received by Landlord from a sale of any portion of the Leased Property. "Affiliate or Affiliated Person" shall mean, with respect to any Person, (i) any Person directly or indirectly Controlling, Controlled by or under common Control with any such Person, (ii) in the case of any such Person which is a partnership, any partner in such partnership, (ill) in the case of any such Person which is a limited liability company, any member of such company, (iv) in the case of any such Person which is a corporation, any officer, director or stockholder of such corporation, (v) any other Person which is a Parent, a Subsidiary, or a Subsidiary of a Parent with respect to such Person or to one or more of the Persons referred to in the preceding clauses (i) through (iv), (vi) any other Person who is an officer, director, trustee or employee of, or partner in, such Person or any Person referred to in the preceding clauses (1) through (v) and (vii) any other Person who is a member of, or trustee of any trust for the benefit of, the Immediate Family of such Person or of any Person referred to in the preceding clauses (i) through (vi). Provided, however, a Person shall not be deemed to be an Affiliated Person solely by virtue of the ownership of shares of stock registered under the Securities Act of 1934, as amended, unless such Person, as holder of such stock, is required to file a Schedule 13 D, pursuant to Section 13(d) of such Act and Rule 13 d 1 promulgated thereunder. "Affiliated Lease(sf shall mean, collectively, the Existing Leases and the New Leases. The Affiliated Leases are set forth on Schedule 1 attached hereto. At such time as the "Landlord" under any such lease ceases to be an Affiliate of Landlord, or the "Tenant" under any such lease ceases to be Tenant or an Affiliate of Tenant, by any means permitted pursuant to the terms thereof, such lease shall automatically cease to be considered an Affiliated Lease. "Affiliated Leased Properties" shall mean, collectively, the Existing Leased Properties and the New Leased Properties. "Agreement to Lease" shall mean that certain Agreement to Enter Into Leases dated October 26, 2007, between CIP and Tenant, pursuant to which, among other things, Landlord and Tenant agreed to enter into this Sub -Sublease. "Annual Operations Statement" shall have the meaning given such term in Section 3.3.2. "Applicable Laws" shall mean all applicable laws, statutes, regulations, rules, ordinances, codes, licenses, permits and orders, whether currently in existence or hereafter amended, enacted or promulgated, of all courts of competent jurisdiction and Government Agencies, and all applicable judicial and administrative and regulatory decrees, judgments and orders, including common law rulings and determinations of any kind, including without limitation, those \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 3 relating to (i) damage to, or the protection of real or personal property, (ii) human health and safety (except those requirements which, by definition, are solely the responsibility of employers), (iii) the Environment, including, without limitation, all valid and lawful requirements of courts and other Government Agencies pertaining to reporting, licensing, permitting, investigation, remediation and removal of underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or emissions, discharges, releases or threatened releases of Hazardous Substances, chemical substances, pesticides, petroleum or petroleum products, pollutants, contaminants or hazardous or toxic substances, materials or wastes whether solid, liquid or gaseous in nature, into the Environment, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances, underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or pollutants, contaminants or hazardous or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature, (iv) Accessibility Laws or (v) securities, including, without limitation, the marketing thereof. "Applicable Reserve Percentage" shall mean, with respect to any Accounting Period, or portion thereof, (i) for Accounting Year 1 and Accounting Year 2, zero percent (0.0%) of Total Facility Revenue, (ii) for Accounting Year 3, two percent (2.0%) of Total Facility Revenue, and (III) for Accounting Year 4 and each Accounting Year thereafter during the Term hereof, three percent (3.0%) of Total Facility Revenue. "Approved Reserve Estimate" shall have the meaning given such term in Section 5.2.3. 4.1.1. "Bank" shall have the meaning given such term in Section 3.9. "Beverage Affiliate" shall have the meaning given such term in Section "BMPP" shall have the meaning given such term in Section 4.2. "Business" means the operation of the golf course, clubhouse, pro shop, restaurant, and other facilities and activities related thereto conducted on the Land. "Business Day" shall mean any day other than Saturday, Sunday, or any other day on which federal banking institutions are authorized by law or executive action to close. "CapEx Ayreement" shall have the meaning given such term in Section 5.3. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 4 "Cash Security Deposit" shall have the meaning given such term in Section 3.9. "CIP" shall mean CNL Income Partners, LP, a Delaware limited partnership, and an Affiliated Person of Landlord. "CIP's Initial Capital Investment" shall have the meaning given such term in Section 5.3. "Claim" shall have the meaning given such term in Section 14.3. "Code" shall mean the Internal Revenue Code of 1986 and, to the extent applicable, the Treasury Regulations promulgated thereunder, each as amended from time to time. "Commencement Date" shall mean the Effective Date of this Sub - Sublease. "Comparable Golf Course Facilities" shall mean Golf Course Facilities (1) offering facilities and services, (ii) charging fees and rates, and (iii) employing operating standards that generally reflect the facilities, services, fees, rates and operating standards of other Golf Course Facilities in the County in which the Leased Property is located. "Condemnation" shall mean (a) the exercise of any governmental power with respect to the Leased Property, or any interest therein, whether by legal proceedings or otherwise, by a Condemnor of its power of condemnation, (b) a voluntary sale or transfer of the Leased Property, or any portion thereof, by Landlord to any Condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending, or (c) a taking or voluntary conveyance of all or part of the Leased Property, or any interest therein, or right accruing thereto or use thereof, as the result or in settlement of any Condemnation or other eminent domain proceeding affecting the Leased Property, whether or not the same shall have actually been commenced. "Condemnor" shall mean any public or quasi public authority, or Person having the power of Condemnation. "Control" (including the correlative meanings of the terms "Controlling", "Controlled by", and "under common control with") as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person whether through the ownership of voting securities, by contract or otherwise. "Default" shall mean any event or condition existing which with the giving of notice and/or lapse of time would ripen into an Event of Default. VADC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 5 "Disbursement Rate" shall mean an annual rate of interest equal to the greater of, as of the date of determination, (i) ten percent (10%) and (ii) the per annum rate for ten (10) year U.S. Treasury Obligations as published in The Wall Street Journal plus three hundred fifty (350) basis points. "EAGL Properties" shall have the meaning set forth in the Agreement to Lease. "EAGL Properties Expenses" shall mean all costs and expenses incurred, paid or reimbursed by CIP under the Purchase Agreement in connection with the acquisition of the EAGL Properties, including, but not limited to, all due diligence costs and expenses, title premiums and related charges, survey and environmental report costs, transfer taxes, recording charges and attorneys' fees. "Effective Date" shall have the meaning given such term in the introductory paragraph of this Sub -Sublease. "Emergency" shall have the meaning given such term in Section 5.2.3. "Entity" shall mean any corporation, general or limited partnership, limited liability company, partnership, stock company or association, joint venture, association, company, trust, bank, trust company, land trust, business trust, cooperative, any government or agency or political subdivision thereof or any other entity. "Environment" shall mean soil, surface waters, ground waters, land, streams, sediments, surface or subsurface strata and ambient air. "EP" shall have the meaning given such term in Section 4.2. "Event of Default" shall have the meaning given such term in Section 12.1. "Existing Leases" shall mean, collectively, those Affiliated Leases identified on Schedule 1 attached hereto, entered into prior to the Effective Date hereof between Tenant and certain Affiliated Persons of Landlord. "Existing Leased Properties" shall mean, collectively, the Leased Property described and defined under the Existing Leases. "Extended Terms" shall have the meaning given such term in Section 2.4. "Facility Mortgage" shall mean any encumbrance placed upon the Leased Property as referenced in Article 19. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 6 "First Minimum Rent Payment Date" shall have the meaning given such term in Section 3.2. "Fiscal Half Year" shall have the meaning given such term in Section 3.3. "Fiscal Quarter" shall mean the first, second, third and fourth three month period (each consisting of three Accounting Periods) during each Fiscal Year. "Fiscal Year" shall mean Tenant's Fiscal Year which as of the Commencement Date begins on January 1 and ends on December 31 in each calendar year. Any partial Fiscal Year between the Commencement Date and the commencement of the first full Fiscal Year (except with respect to the calculation and payment of Minimum Rent as referenced in Section 3.1 of this Sub -Sublease), shall constitute a separate Fiscal Year. A partial Fiscal Year between the end of the last full Fiscal Year and the termination of this Sub -Sublease shall also constitute a separate Fiscal Year. "Force Majeure Event" means any circumstance which is not in the reasonable control of either party hereto, caused by any of the following: strikes, lockouts; acts of God; civil commotion; fire or any other casualty; governmental action; or other similar cause or circumstance which is not in the reasonable control of either party hereto. Neither lack of financing nor general economic and/or market conditions or factors is a Force Majeure Event. "GAAP" shall mean generally accepted accounting principles consistently applied. "Golf Club" shall mean that certain non -equity golf club which offers golf and social facilities located on the Leased Property known as the Meadowlark Golf Course. "Golf Course Facility(ies)" shall mean an eighteen (18) hole full-length golf course, golf maintenance center, clubhouse, dining room, bar, snack bars, swimming pool, golf pro shops, card rooms, men's and women's locker rooms, golf halfway houses and other facilities and services consistent with the operation thereof. "Government Agencies" shall mean any legislative body, court, agency, authority, board (including, without limitation, health and long term care, environmental protection, planning and zoning), bureau, commission, department, office or instrumentality of any nature whatsoever of any governmental or quasi governmental unit of the United States or the State or any county or any political subdivision of any of the foregoing, whether now or hereafter in existence, having jurisdiction over Tenant or the Leased Property or any portion thereof or the Golf Course Facility operated thereon. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 7 "Groundlease" shall mean that certain Lease Agreement dated July 6, 1992 by and between the Groundlessor, as "Lessor", and Seller, as "Lessee", as the same is amended, modified or affected by the Sublease Agreement. corporation. "Groundlessor" shall mean City of Huntington .Beach, a municipal "Hazardous Substances" shall mean any substance: (a) the presence of which requires or may hereafter require notification, investigation or remediation under any federal, state or local statute, regulation, rule, ordinance, order, action or policy; or (b) which is or becomes defined as a "hazardous waste", "hazardous material" or "hazardous substance" or "pollutant" or "contaminant" under any present or future federal, state or local statute, regulation, rule or ordinance or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. et seq.) and the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) and the regulations promulgated thereunder; or (c) which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by any governmental authority, agency, department, commission, board, agency or instrumentality of the United States, any state of the United States, or any political subdivision thereof; or (d) the presence of which on the Leased Property causes or materially threatens to cause an unlawful nuisance upon the Leased Property or to adjacent properties or poses or materially threatens to pose a hazard to the Leased Property or to the health or safety of persons on or about the Leased Property, including without limitation molds/microbial organisms which affect health, indoor air quality and/or structural integrity; or (e) without limitation, which contains gasoline, diesel fuel or other petroleum hydrocarbons or volatile organic compounds; or (f) without limitation, which contains polychlorinated biphenyls (PCBs) or asbestos or urea formaldehyde foam insulation; or (g) without limitation, which contains or emits radioactive particles, waves or material; or (h) without limitation, constitutes materials which are now or may hereafter be subject to regulation pursuant to the Material Waste Tracking Act of 1988, or any Applicable Laws promulgated by any Government Agencies. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 8 "HUD Materials" shall have the meaning given such term in Section 4.2. "Immediate Family" shall mean, with respect to any individual, such individual's spouse, parents, brothers, sisters, children (natural or adopted), stepchildren, grandchildren, grandparents, parents in law, brothers-in-law, sisters- in-law, nephews and nieces. "Indebtedness" shall mean all obligations, contingent or otherwise, which in accordance with GAAP should be reflected on the obligor's balance sheet as liabilities. "Initial Landlord P&E" shall mean and refer to all P&E of any kind or description which are owned by Landlord and located on or in the Leased Improvements as of the Commencement Date, including without limitation those items enumerated on Exhibit "A" attached hereto and made a part hereof, but specifically excluding items of Tenant's Personal Property. "Initial Term" shall have the meaning given such term in Section 2.3. "Insurance Requirements" shall mean all terms of any insurance policy, certificate or endorsement required by this Sub -Sublease and all requirements of the issuer of any such policy and all orders, rules and regulations and any other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) binding upon Landlord, Tenant or the Leased Property. "Inventories" shall mean all inventories, as such term is customarily used and defined in its most broad and inclusive sense including, but not limited to, all inventories of merchandise, food, beverages and other consumables held by Tenant for sale or use at or from the Leased Property or in connection with the Business, and operating supplies, building and maintenance supplies and spare parts. "Land" shall have the meaning given such term in Section 2.1(a). "Landlord" shall have the meaning given such term in the preambles to this Sub -Sublease and shall include its successors and assigns. "Landlord Charges" shall have the meaning given such term in Section 3.4.6. "Landlord's Additional Investment" shall mean the sum of all costs of any repairs, maintenance, renovations or replacements pursuant to Article 5 or Article 10 hereof and other expenditures made by Landlord in connection with the Leased Property which are not paid out of the Reserve, including, without \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 9 limitation, those paid out of CIP's Initial Capital Investment, or which are in excess of the budgeted Reserve Expenditures pursuant to Section 5.2.8 hereof. "Landlord's Original Investment" shall mean the sum of (i) Sixteen Million Nine Hundred Forty -Four Thousand Five Hundred and No/100 Dollars ($16,944,500.00); being the actual purchase price paid by Landlord for the Leased Property after pro rations due from Seller and actually credited to Landlord, plus (ii) an allocated portion of all costs and expenses incurred, paid or reimbursed by CIP in connection with the acquisition of the New Leased Properties and the lease thereof to Tenant, including, without limitation, all of Purchaser's due diligence costs, survey and environmental costs, title premiums and charges, escrow fees, transfer taxes, recording fees and other costs attorneys' fees, accountants'/auditors' fees, prorations paid to the Seller and/or for the benefit of Tenant in connection with Landlord's acquisition of the New Leased Properties; plus (iii) an allocated portion of the EAGL Properties Expenses, all of the foregoing being allocated by Landlord among the New Leased Properties pursuant to a methodology reasonably determined by Landlord. The amount of all costs set forth above shall be adjusted and finally agreed upon by Landlord and Tenant on or before the True -Up Date, whereupon an amendment to this Sub -Sublease shall be executed evidencing the agreed -upon amount of such Landlord's Original Investment. Section 3.9. "LBP" shall have the meaning given such term in Section 4.2. "LC Due Date" shall have the meaning given such term in Section 3.9. "LC Security Deposit" shall have the meaning given such term in "Lease Rate" shall have the meaning given such term on Exhibit "B". "Lease Year" shall mean any Fiscal Year during the Term and any partial Fiscal Year at the beginning or end of the Term. "Leased Improvements" shall have the meaning given such term in Section 2.1(b). "Leased Intangible Property" shall mean all transferable or assignable (a) governmental permits, including licenses (including any applicable and transferable liquor license) and authorizations, required for the construction, ownership and operation of the Leased Improvements, including without limitation, certificates of authority, certificates of occupancy, building permits, signage permits, site use approvals, zoning certificates, environmental and land use permits and any and all necessary approvals from state or local authorities and other approvals granted by any public body or by any private party pursuant to a recorded instrument relating to such Leased Improvements or the Land; (b) development rights, trade names, telephone exchange numbers identified with \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 10 the Leased Property, if any (including without limitation the exclusive use of the trade name "Meadowlark Golf Course" and any other trade name utilized in connection with the Leased Property, and all associated logos); and (c) certificates, licenses, warranties and guarantees and contracts other than such permits, operating permits, certificates, licenses and approvals which are to be held by, or transferred to, the Tenant in order to permit the Tenant to operate such Leased Improvements properly and in accordance with the terms of this Sub -Sublease. The term Leased Intangible Property shall specifically exclude items of Tenant's Personal Property. "Leased Property" shall have the meaning given such term in Section 2.1. "Legal Requirements" shall mean all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting the Leased Property or the maintenance, construction, alteration or operation thereof, whether now or hereafter enacted or in existence, including, without limitation, (a) all permits, licenses, authorizations, certificates and regulations necessary to operate the Leased Property for its Permitted Use, (b) all covenants, agreements, declarations, restrictions and encumbrances contained in any instruments at any time in force affecting the Leased Property or to which Tenant has consented or which are required to be granted pursuant to Applicable Laws, including those which may (i) require material repairs, modifications or alterations in or to the Leased Property, or (ii) in any way materially and adversely affect the use and enjoyment thereof, but excluding any requirements arising as a result of Landlord's status as a real estate investment trust, and (c) Applicable Laws. "Letter of Credit" shall have the meaning given such term in Section 3.9. "Lien" shall mean any mortgage, security interest, pledge, collateral assignment, or other encumbrance, lien or charge of any kind, including but not limited to construction, mechanics' and materialmen's liens, or any transfer of property or assets for the payment of Indebtedness or performance of any other obligation in priority to payment of the obligor's general creditors. "Major Alterations" shall have the meaning given such term in Section 6.2.2. "Materiality Threshold Period" shall have the meaning given such term in Section 17.7. "Membership Documents" shall have the meaning given such term in Section 22.1.1. \\DC - 028987/000002 - 2700649 Q Sub -Sublease Agreement: Meadowlark m "Minimum Rent" shall mean annual rent as set forth in Section 3.2, subject to prorations and adjustments as set forth in Section 3.2. 6.2.1. "Minor Alterations" shall have the meaning given such term in Section "Mortgagee" shall mean the holder of any Facility Mortgage. "New Leases" shall mean, collectively, those Affiliated Leases identified on Schedule 1 attached hereto, entered into as of the Effective Date hereof, between Tenant and certain Affiliated Persons of Landlord. "New Leased Properties" shall mean, collectively, the Leased Property described and defined under the New Leases. Section 3.9. Section 7.4. "Non -Renewal Notice" shall have the meaning given such term in "Notice" shall mean a notice given in accordance with Section 23.10. "Notice of Commencement" shall have the meaning given such term in "O&M Plan" shall have the meaning given such term in Section 4.2. "Overdue Rate" shall mean, on any date, a -per annum rate of interest equal to the maximum rate then permitted under applicable law. "P&E" shall mean all items of personal property, as defined under the Model Uniform Commercial Code, including, but not limited to: (a) all equipment, machinery, fixtures, and other items of property, now or hereafter permanently affixed to or incorporated into the Leased Improvements, including, without limitation, all furnaces, boilers, heaters, electrical equipment, heating, plumbing, lighting, ventilating, refrigerating, incineration, air and water pollution control, waste disposal, air cooling and air conditioning systems and apparatus, sprinkler systems and fire and theft protection equipment, and irrigation equipment, all of which, to the maximum extent permitted by law, are hereby deemed by the parties hereto to constitute real property, together with all replacements, modifications, alterations and additions thereto; (b) all furniture, furnishings, movable walls or partitions, computers or trade fixtures or other personal property of any kind or description used or useful in the Business on or in the Leased Improvements, and located on or in the Leased Improvements, and all modifications, replacements, alterations and additions to such personal property; (c) all global positioning system and similar equipment; (d) all range balls and range ball retrieval systems, including but not limited to any vehicle or apparatus used in connection therewith; (e) all rental clubs and other rental equipment offered through the golf pro shop or V\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 12 by the Golf Club; (f) all linen, china, glassware, tableware, uniforms and similar items, whether used in connection with public space or tenant rooms; (g) "Property and Equipment," "P&E," and "FF&E" (as such terms are customarily used and defined in the most broad and inclusive sense), as well as all other items included within the category of Inventory; (h) all replacements of or additions to items set forth in clause (a) through (g) above; and (i) the Initial Landlord P&E. The term "P&E" shall specifically exclude items of Tenant's Personal Property. "P&E Leases" shall have the meaning given such term in Section 7.1. "P&E Replacements" shall mean all items of P&E purchased with funds from the Reserve established under Article 5 of this Sub -Sublease, or with insurance proceeds payable with respect to P&E or P&E Replacements (specifically excluding all insurance proceeds payable with respect to items of Tenant's Personal Property) and all other items of P&E added and used at the Leased Property during the Term of this Sub -Sublease (specifically excluding items of Tenant's Personal Property), together with all leasehold improvements made by Tenant during the Term of this Sub -Sublease to the extent not constituting real property affixed to the Land, whether purchased from the Reserve or with other funds of Tenant, all subject to disposal and further replacement at the end of their useful lives. "Parent" shall mean, with respect to any Person, any Person which directly, or indirectly through one or more Subsidiaries or Affiliated Persons, (i) owns more than fifty percent (50%) of the voting or beneficial interest in, or (ii) otherwise has the right or power (whether by contract, through ownership of securities or otherwise) to Control, such Person. "Permits" means all licenses, permits and certificates used or useful in connection with the ownership, operation, use or occupancy of the Leased Property or the Business, including, without limitation, liquor licenses, business licenses, state and local health and environmental department licenses, any other licenses required in connection with the operation of the Leased Property for Golf Course Facility purposes, food service licenses, licenses to conduct business and all such other permits, licenses and rights, obtained from any governmental, quasi governmental or private person or entity whatsoever. "Permitted Encumbrances" shall mean all rights, restrictions, and easements of record set forth on Exhibit "C" attached hereto and by this reference incorporated herein, together with any other such encumbrances as may have been consented to in writing by Landlord from time to time. "Permitted Renovations" shall have the meaning given such term in Section 6.2. "Permitted Use" shall mean any use of the Leased Property permitted pursuant to Section 4.1.1. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 13 "Person" shall mean any individual or Entity, and the heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so admits. "Pooling greement" shall mean that certain Pooling Agreement dated as of the Effective Date hereof, between Landlord, Tenant and each of the landlords under the Affiliated Leases, including any amendments, restatements, supplements or modifications thereto in accordance with the terms thereof. "Prior Employees" shall have the meaning given such term in Section 23.7. "Purchase Agreement" shall mean that certain Purchase and Sale Agreement and Joint Escrow Instructions dated as of October 29, 2007, Seller, CIP, Tenant and Premier Golf Properties, Inc., a Delaware corporation and parent of Tenant, governing the sale and conveyance of the Leased Property, as the same may have been amended or assigned. "Rent" shall mean, collectively, Minimum Rent, Additional Minimum Rent and Additional Rent. "REIT" shall have the meaning given such term in Section 15. "REIT Personal Property Limitation" shall have the meaning given such term in Section 15. "Release" shall have the meaning given such term in Section 4.2. "Reserve" shall have the meaning given such term in Section 5.2.1. "Reserve Estimate" shall have the meaning given such term in Section 5.2.3. "Reserve Expenditures" shall have the meaning given such term in Section 5.2.1. "SEC" shall mean the Securities and Exchange Commission. "Security Deposit" shall have the meaning given such term in Section 3.9. "Seller" shall mean, individually or collectively as the context requires, American Golf Corporation, a California corporation, NGP Realty Sub, L.P., a Delaware limited partnership, Shandin Hills Golf Club, Inc., a California corporation, and Golf Enterprises, Inc., a Kansas corporation. VADC - 028987/000002-2700649 v2 Sub -Sublease Agreement: Meadowlark 14 "Security Deposit" shall have the meaning given such term in Section 3.9. "Side Letter Agreement" shall mean that certain Side Letter Agreement by and between CIP and Tenant executed as of the Effective Date hereof regarding amounts credited to CIP by Seller at the closing under the Purchase and Sale Agreement which amounts have been made available to Tenant to be used for the completion of certain work and improvements and other activities at the Leased Property or at other Affiliated Properties as more particularly set forth therein. 4.2. "Site Development" shall have the meaning given such term in Section "State" shall mean the State in which the Land is located. "Sublease Agreement" shall mean that certain Sublease Agreement dated as of the Effective Date hereof, by and between Seller, as "Sublessor", and Landlord, as "Sublessee", pursuant to which Seller has subleased all of its right, title and interest in and to the Groundlease to Landlord. "Sublessor" shall mean the Seller. "Sub -Sublease" shall mean this Sub -Sublease Agreement, including all Exhibits and Schedules hereto, as it and they may be amended or restated from time to time as herein provided. "Subsidiary" shall mean, with respect to any Person, any Entity in which such Person directly, or indirectly through one or more Subsidiaries or Affiliated Persons, (a) owns more than fifty percent (50%) of the voting or beneficial interest or (b) which such Person otherwise has the right or power to Control (whether by contract, through ownership of securities or otherwise). "Tax and Insurance Account" shall have the meaning given such term in Section 8.3. "Tax and Insurance Escrow Amount" shall have the meaning given such term in Section 8.3. "Tenant" shall be the entity identified in the preamble to this Sub - Sublease and shall include its successors and assigns expressly permitted hereunder. "Tenant's Golf Operating Business" shall mean the operation of (i) the Business conducted on the Land, and (ii) the golf course and country club facilities, and any tennis facilities, fitness and spa facilities, member lodging facilities, retail \\DC - 029987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 15 operations, food and beverage operations and athletic facilities operated as a part thereof, of Tenant and/or its Affiliates, now or hereafter acquired. "Tenant's Personal Property" shall mean any specific items of P&E and Inventory listed on Exhibit "D" to this Sub -Sublease (collectively, the "Initial Tenant Personal Property"), or which are hereafter acquired by Tenant with its own funds after the Commencement Date, or replacements for such items, or items of intangible property owned by Tenant prior to the Commencement Date, including any proprietary software or systems of Tenant, but specifically excluding (i) any proprietary software or systems acquired by Tenant after the Commencement Date for the benefit and operation of the Golf Club, and specifically excluding any property purchased with funds from the Reserve established under Section 5.2, and (ii) any and all personal property of Tenant utilized or owned by Tenant and located at other Golf Course Facilities, at its corporate offices, or at any other property owned, managed or leased by Tenant or its Affiliates "Term" shall mean, collectively, the Initial Term and the Extended Terms, unless sooner terminated pursuant to the provisions of this Sub -Sublease. "Threshold" shall mean, (i) with respect to the six (6) month period ending June 30 of each Fiscal Year during the Term, the sum of Two Million Seven Hundred Forty -One Thousand and No/100 Dollars ($2,741,000.00), and (ii) with respect to the six (6) month period ending December 31 of each Fiscal Year during the Term, the sum of Two Million Seven Hundred Forty -One Thousand and No/100 Dollars ($2,741,000.00). "Total Facility Revenues" shall mean, for the applicable period of time, but without duplication, all gross revenues and receipts of every kind derived by or for the benefit of Tenant, or its Affiliated Persons, from operating or causing the operation of the Leased Property and all parts thereof, including, but not limited to: revenues under any applicable Membership Documents, greens fees, guest fees, tournament fees, initiation fees, dues, cart rental or fees, club rental or other equipment rental or fees, driving range fees, golf instruction or lesson fees (net of any amounts actually paid to independent instructors), and handicap and locker room fees; license, lease, sublease and concession fees and rentals; parking fees; income from vending machines; food and beverage sales; retail sales of merchandise (other than proceeds from the sale of furnishings, fixtures and equipment no longer necessary to the operation of the Business, which proceeds shall be deposited in the Reserve); and service charges; provided, however, that Total Facility Revenue shall not include the following: gratuities to employees; federal, state or municipal excise, sales, use or similar taxes included as part of the sales price of any goods or services; insurance proceeds (unless attributable to loss of business revenue; i.e., business interruption insurance proceeds); any proceeds from any sale of the Leased Property or from the refinancing of any debt encumbering the Leased Property; proceeds from the disposition of furnishings, fixture and equipment no longer \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 16 necessary for the operation of the Business; and interest which accrues on amounts deposited in the Reserve. "True -Up Date" shall mean that date which is the later of (a) ninety (90) days following the Commencement Date, or (b) thirty (30) days following the date upon which the last "Follow -On Closing" (as defined in the Purchase Agreement) shall occur. "Trust Assumption Agreement" shall mean that certain Amended and Restated Membership Deposit Assumption Agreement dated September 14, 2002, by and between Seller and the Trusts related to the obligations of the Trusts with respect to certain Refundable Membership Deposits. "Trusts" shall mean, collectively, the David G. Price Trust dated March 5, 1998 and the Dallas P. Price Trust dated May 14, 1998. "Unfunded Reserve Expenditures" shall have the meaning given such term in Section 5.2.8. "Unsuitable for Its Permitted Use" shall mean a state or condition of the Leased Property such that following any damage or destruction involving the Leased Property, the Leased Property cannot be operated, in the reasonable judgment of Landlord after consultation with Tenant, on a commercially practicable basis for its Permitted Use, and it cannot reasonably be expected to be restored to substantially the same condition as existed before such damage or destruction and as is otherwise required by Article 12 within (i) twelve (12) months following such damage or destruction, or (ii) eighteen (18) months following such damage or destruction in the event that Tenant has extended the term of the business interruption insurance to pay at least eighteen (18) months Rent for the benefit of Landlord or provides other reasonably acceptable security for any uninsured portion of the eighteen (18) months Rent. ARTICLE 2 LEASED PROPERTY AND TERM 2.1 Leased Property. Upon and subject to the terms and conditions hereinafter set forth, Landlord hereby leases or sub -subleases, as the case may be, to Tenant and Tenant hereby leases or sub -subleases, as the case may be, from Landlord all of Landlord's rights, interests and obligations in, to and under the Sublease Agreement (including rights, .interests and obligations under the Groundlease acquired or undertaken by Landlord pursuant to the Sublease Agreement) and all of the following (collectively, the "Leased Property"), and grants to Tenant the right to use and occupy the Leased Property for the purposes and subject to the limitations and obligations set forth in the Groundlease, Sublease Agreement and this Sub -Sublease: VADC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 17 (a) all that certain tract, piece and parcel of land, as more particularly described in Exhibit "E", attached hereto and made a part hereof (the "Land"); (b) all existing buildings, structures and other improvements located on the Land, including, without limitation, clubhouse buildings, events pavilions, maintenance facilities, golf courses and all other improvements located on the Land, and all fixtures attached to and forming a part of the Land, including, without limitation, all roofs, plumbing systems, electric systems and HVAC systems, roadways, alleyways, parking areas and facilities, landscaping, sidewalks, curbs, connecting tunnels, utility pipes, irrigation systems, conduits and lines (on site and off site) appurtenant to or presently situated upon the Land (collectively, the "Leased Improvements"); (c) all appurtenances, hereditaments, easements, and all other rights, privileges and entitlements, if any, belonging to or running with the Land; (d) all right title and interest of Landlord, if any, in and to all water rights, water allocations and water stock associated with irrigating and/or draining the Golf Club, which may be subleased or assigned by Landlord to Tenant; (e) all Initial Landlord P&E and P&E Replacements; (f) all of the Leased Intangible Property; and (g) all other transferable interests of Landlord in any property located at the Leased Property or used in connection with the operation of the Golf Club, conveyed or assigned to Landlord pursuant to the Purchase Agreement, but specifically excluding the "Excluded Property" as defined and described in the Purchase Agreement. 2.2 Condition of Leased Property "AS IS, WHERE IS". TENANT ACKNOWLEDGES AND AGREES, THAT EXCEPT AS EXPRESSLY MADE BY LANDLORD IN THIS SUB -SUBLEASE, LANDLORD IS NOT MAKING AND SPECIFICALLY DISCLAIMS ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTY, THE BUSINESS, OR ANY OF THE OTHER ITEMS INCLUDING, BUT NOT LIMITED TO, WARRANTIES OR REPRESENTATIONS AS TO MATTERS OF TITLE, ZONING, TAX CONSEQUENCES, PHYSICAL OR ENVIRONMENTAL CONDITIONS INCLUDING WEATHER -RELATED CONDITIONS, AVAILABILITY OF ACCESS, INGRESS OR EGRESS, WATER RIGHTS OR ENTITLEMENTS, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, GOVERNMENTAL REGULATIONS, THE VALUE, CONDITION, MERCHANTABILITY, MARKETABILITY, PROFITABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE. TENANT AGREES THAT TENANT HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF LANDLORD OR ANY AGENT OF LANDLORD OR OTHER THIRD PARTY, INCLUDING ANY REAL ESTATE BROKER OR AGENT, EXCEPT AS EXPRESSLY MADE BY LANDLORD IN THIS SUB -SUBLEASE. TENANT REPRESENTS THAT IT IS RELYING ON ITS OWN EXPERTISE AND THAT OF TENANT'S l DC - 028997/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 18 CONSULTANTS, AND THAT TENANT WILL CONDUCT INSPECTIONS AND INVESTIGATIONS OF THE LEASED PROPERTY, THE BUSINESS AND THE OTHER ITEMS INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AND SHALL RELY UPON SAME, AND SHALL ASSUME THE RISK THAT ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS MAY NOT HAVE BEEN REVEALED BY TENANT'S INSPECTIONS AND INVESTIGATIONS. TENANT ACKNOWLEDGES AND AGREES THAT LANDLORD HAS LEASED TO TENANT AND TENANT ACCEPTS THE LEASED PROPERTY, THE BUSINESS AND ANY OTHER ITEMS LEASED HEREBY "AS IS WHERE IS," WITH ALL FAULTS, AND EXCEPT AS SET FORTH IN THIS SUB -SUBLEASE THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR REPRESENTATIONS COLLATERAL TO OR AFFECTING THE LEASED PROPERTY BY LANDLORD, ANY AGENT OF LANDLORD OR ANY THIRD PARTY. THE TERMS AND CONDITIONS OF THIS SECTION SHALL EXPRESSLY SURVIVE THE TERMINATION OF THIS SUB -SUBLEASE. 2.3 Initial Term. The initial term of this Sub -Sublease (the "Initial Term") shall (subject to any earlier termination of the Groundlease) commence on the Commencement Date and shall terminate and expire at 11:59 p.m. on the last calendar day of the month on which the twentieth (20th) annual anniversary of the Commencement Date shall occur. In no event shall the Initial Term hereunder extend beyond the expiration or earlier termination of the term, or any extended term, of the Sublease Agreement. 2.4 Extended Term. Tenant shall have and is hereby granted four (4) option(s) to extend this Sub -Sublease for an additional five (5) years each (individually an "Extended Term"), upon the terms, covenants, conditions and rental as set forth herein, provided (i) there exists no continuing Event of Default hereunder or under any Affiliated Lease, or an Event of Default hereunder or under any Affiliated Lease, which Tenant has had an opportunity but failed to cure as provided hereunder, at the commencement of the respective Extended Term, and (ii) Tenant concurrently elects to extend all other New Leases; provided however, in no event shall any Extended Term extend beyond the expiration or earlier termination of the initial term, or any extended term, of the Groundlease/Sublease Agreement, and any option to extend the term of the Sublease Agreement shall be at the sole and absolute discretion of Landlord, subject to any approval of Groundlessor required under the Groundlease. Subject to the foregoing provision, and without limiting the Groundlessor's approval rights, the Term shall automatically extend into each Extended Term unless, prior to such date that is twelve (12) months prior to the respective expiration of the Initial Term of this Sub -Sublease, or of the then applicable Extended Term, Tenant provides to Landlord written notice that Tenant is terminating this Sub -Sublease as of the expiration of the Initial Term or the Extended Term, as the case may be. 2.5 Yield Up. Tenant shall, on or before the last day of the Term or upon the sooner termination thereof, peaceably and quietly surrender and deliver to Landlord the Leased Property, including, without limitation, all Leased Improvements and P&E and all additions thereto and replacements thereof made from time to time during the Term, together with and including, without limitation, the P&E Replacements, in good order, condition and repair, reasonable wear and tear excepted, and free and clear of all Liens and encumbrances (other than Permitted Encumbrances, Liens or encumbrances in favor of or granted by Landlord, and any other encumbrances expressly permitted under the terms of this Sub -Sublease), and Tenant shall \\DC - 028987/000002 - 2700649 d2 Sub -Sublease Agreement: Meadowlark Z fully cooperate with Landlord in transferring, to the extent transferable under Applicable Laws and without consideration or fee, any of Tenant's Permits, specifically including, without limitation, any liquor licenses, which Landlord determines, in its sole and absolute discretion, would be necessary or appropriate to continue to operate the Leased Property for its Permitted Use. Tenant acknowledges that both the Initial Landlord P&E described on Exhibit "A" attached hereto and consumable items of Inventory located at the Leased Property as of the Commencement Date may be completely consumed and/or otherwise disposed of in the course of operation of the Leased Property during the Term of this Sub -Sublease. Tenant agrees that, at the expiration or earlier termination of this Sub -Sublease, Tenant shall fully restore the Initial Landlord P&E, inclusive with and after consideration of all P&E Replacements which will become the property of Landlord, to at least the approximate types and amounts (with reasonably equivalent value) as shown on Exhibit "A", and shall fully restore an adequate supply of Inventory consistent with the full stocking levels at the applicable time of the Fiscal Year to be maintained by Tenant pursuant to this Sub -Sublease. ARTICLE 3 RENT 3.1 Rent. Tenant shall pay, in lawful money of the United States of America which shall be legal tender for the payment of public and private debts, without offset, abatement, demand or deduction (unless otherwise expressly provided in this Sub -Sublease), Rent, together with all applicable sales, use or excise tax thereon now or hereafter applied to rental receipts by the State in which the Land is located, to Landlord during the Term at the address to which notices to Landlord are to be given or to such other party or to such other address as Landlord may designate from time to time by written notice to Tenant. All payments to Landlord shall be made by wire transfer of immediately available federal funds or by other means acceptable to Landlord in its sole discretion and all such payments shall, upon receipt by Landlord, be and remain the sole and absolute property of Landlord. If Landlord shall at any time accept any such Rent or other sums after the same shall become due and payable, or any partial payment of Rent, such acceptance shall not excuse a delay upon subsequent occasions, or constitute or be construed as a waiver of any of Landlord's rights hereunder. 3.2 Minimum Rent. Tenant shall pay annual base minimum rent ("Minimum Rent") for the Leased Property to Landlord in equal installments in advance, on the first (1st) Business Day of each Accounting Period. The first payment of Minimum Rent shall be due and payable on the first day of the first calendar month following the Effective Date (the "First Minimum Rent Payment Date") and shall include Minimum Rent prorated on a per diem basis for any partial Accounting Period prior to the First Minimum Rent Payment Date based upon the installment of Minimum Rent payable on such First Minimum Rent Payment Date. If applicable, the last payment of Minimum Rent shall be prorated on a per diem basis based upon the installment of Minimum Rent payable for the last full Accounting Period. 3.2.1 Calculation of Initial Term Minimum Rent. Subject to proration as set forth above, Tenant shall pay Minimum Rent during each Accounting Year of the Initial Term of this Sub -Sublease in the amounts set forth on Exhibit "B" attached hereto and made a part hereof. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 20 3.2.2 Calculation of Extended Term Minimum Rent. Subject to proration as set forth above, Tenant shall pay Minimum Rent under this Sub -Sublease during each Accounting Year of each Extended Term in the amounts set forth on Exhibit "B" attached hereto and made a part hereof. 3.3 Additional Minimum Rent. In addition to and not in lieu of Minimum Rent, Tenant shall pay percentage rent ("Additional Minimum Rent"), together with all applicable sales, use or excise tax thereon now or hereafter applied to rental receipts by the State in which the Land is located, to Landlord semi-annually for each Fiscal Year or portion thereof. Installments of Additional Minimum Rent shall be due and payable in arrears within thirty (30) days following the end of the six (6) month period ending June 30 and the six (6) month period ending December 31 of each Fiscal Year (each a "Fiscal Half Year") of the Term hereof, based upon Total Facility Revenues for such Fiscal Half Year and the Threshold amount allocated to each such Fiscal Half Year on an aggregated basis, such that Additional Minimum Rent due and payable for the second Fiscal Half Year in any Fiscal Year shall be based upon aggregate Total Facility Revenues for such Fiscal Year in excess of aggregate Threshold amounts for such Fiscal Year less amounts actually paid as Additional Minimum Rent for the first Fiscal Half Year. Along with each Additional Minimum Rent payment Tenant shall submit to Landlord an unaudited (but certified by a duly authorized officer of Tenant or Tenant's general partner or managing member, as applicable) statement showing a detailed breakdown of the calculation of Additional Minimum Rent for such Fiscal Half Year and for the Fiscal Year to date on a cumulative basis (each an "Additional Minimum Rent Statement"). Additional Minimum Rent for any partial Fiscal Half Year in the final Fiscal Year shall be prorated proportionately. Tenant's obligation to pay Additional Minimum Rent for the Fiscal Half Year which includes the date of termination of this Sub -Sublease shall survive the termination hereof. 3.3.1 Calculation of Additional Minimum Rent. Subject to proration as set forth above, Tenant shall pay Additional Minimum Rent in respect of each Fiscal Year under this Sub - Sublease equal to (i) from the Commencement Date through the expiration of the fifth (5t') full Fiscal Year, ten percent (10.0%) of the Total Facility Revenues for such Fiscal Year in excess of the Threshold, (ii) for the sixth (61h) full Fiscal Year through the expiration of the tenth (1 Oth) full Fiscal Year, eleven and one -quarter percent (11.25%) of the Total Facility Revenues for such Fiscal Year in excess of the Threshold and (iii) for the eleventh (I Ith) full Fiscal Year through the expiration of the Initial Term, and for each Fiscal Year during any Extended Term thereafter, twelve and one -quarter percent (12.25%) of the Total Facility Revenues for such Fiscal Year in excess of the Threshold. 3.3.2 Annual Reconciliation of Additional Minimum Rent. Tenant shall, no later than seventy-five (75) days following the end of each Fiscal Year during the Term hereof furnish to Landlord for such Fiscal Year a complete statement (the "Annual Operations Statement") certified true and correct by the Chief Financial Officer of Tenant, or of Tenant's general partner or managing member, if applicable, setting forth, with respect to such Fiscal Year in reasonable detail the Total Facility Revenues for the Golf Club for such Fiscal Year. If the Annual Operations Statement for any Fiscal Year indicates that the aggregate of the installment payments theretofore made with respect to such Fiscal Year pursuant to Section 3.3.1 exceeds the Additional Minimum Rent due for such Fiscal Year, Landlord shall credit such overpayment against the next installment or installments of Minimum Rent falling due (or will pay the amount \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 21 of such overpayment to Tenant if this Sub -Sublease shall have terminated other than by reason of Tenant's default or if Landlord so elects to do so). If, on the other hand, the Annual Operations Statement indicates that the aggregate of the installment payments theretofore made with respect to such Fiscal Year is less than the Additional Minimum Rent due for such Fiscal Year then Tenant shall pay the balance or excess, as the case may be, together with interest thereon determined as set forth below in this paragraph, to Landlord concurrently with the submission of the Annual Operations Statement. Interest shall accrue on payments pursuant to this paragraph at the Disbursement Rate from the date when first due and payable until the date when the adjusted amount is fully paid in the manner as set forth above, except to the extent of de minimus adjustments of not more than ten percent (10%) of the amount initially paid resulting from the calculation method used or unintentional errors which could not reasonably have been avoided by reasonable care and diligence. 3.3.3 Landlord Audit of Annual Operations Statement. Notwithstanding the foregoing, Landlord and Groundlessor at its own expense, except as provided herein below, shall have the right, exercisable by Notice to Tenant given within 365 days after receipt of the applicable Annual Operations Statement, by its accountants or representatives, to commence within such 365 day period and during normal business hours an audit of the information set forth in such Annual Operations Statement and, in connection with such audit, to examine all of Tenant's books and records with respect thereto (including supporting data and sales and excise tax returns); provided, however, if Landlord or Groundlessor reasonably believes Tenant has intentionally misrepresented Total Facility Revenues on any such Annual Operations Statement, the said 365 day period shall commence to run on the date Landlord or Groundlessor obtains credible evidence that Tenant has intentionally misrepresented Total Facility Revenues on any such Annual Operations Statement. If Landlord does not commence an audit within such 365 day period, such Annual Operations Statement shall be deemed to be accepted by Landlord as correct. Landlord or Groundlessor shall use commercially reasonable efforts to complete any such audit as soon as practicable. If such audit discloses a deficiency in the payment of Additional Minimum Rent, Tenant shall forthwith pay to Landlord the amount of the deficiency, together with interest at the Disbursement Rate from the date such payment should have been made to the date of payment therefore. If such deficiency is more than three percent (3%) of the Total Facility Revenues reported by Tenant for such Fiscal Year, Tenant shall also pay the costs of or immediately reimburse Landlord or Groundlessor for the cost of such audit and examination. In addition, Tenant shall provide directly to the Groundlessor, all financial and other records to which Groundlessor would be entitled if the Tenant were the direct tenant under the Groundlease, and Groundlessor may exercise directly against Tenant any audit or other rights relating to the financial operation of the Premises or the calculation of rent or other amounts owing under the Groundlease. 3.4 Additional Charges. In addition to the Minimum Rent and Additional Minimum Rent payable hereunder, Tenant shall pay to the appropriate parties and discharge as and when due and payable hereunder the following (collectively the "Additional Charges"): 3.4.1 Taxes and Assessments. Tenant shall pay or cause to be paid all taxes and assessments required to be paid pursuant to Article 8. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 22 3.4.2 Utility Charges. Tenant shall be liable for and shall promptly pay directly to the utility company all deposits, charges and fees (together with any applicable taxes or assessments thereon) when due for water, gas, electricity, air conditioning, heat, septic, sewer, refuse collection, telephone and any other utility charges, impact fees, or similar items in connection with the use or occupancy of the Leased Property. Landlord shall not be responsible or liable in any way whatsoever for the quality, quantity, impairment, interruption, stoppage, or other interference with any utility service, including, without limitation, water, air conditioning, heat, gas, electric current for light and power, telephone, or any other utility service provided to or serving the Leased Property. No interruption, termination or cessation of utility services shall relieve Tenant of its duties and obligations pursuant to this Sub -Sublease, including, without limitation, its obligation to pay all Rent as and when the same shall be due hereunder. Notwithstanding the foregoing, Landlord hereby agrees to execute any reasonable documentation and to otherwise reasonably cooperate with Tenant, at Tenant's sole cost and expense, in taking any action necessary or required by any utility provider to obtain or restore utility service at the Leased Property. 3.4.3 Insurance Premiums. Tenant shall pay or cause to be paid all premiums for the insurance coverage required to be maintained pursuant to Article 9. 3.4.4 Licenses and Permits. Tenant shall pay or cause to be paid all fees, dues and charges of any kind which are necessary in order to acquire and keep in effect and good standing all licenses and permits required for operation of the Leased Property in accordance with the terms of Article 4. Tenant shall maintain, in Tenant's name, those licenses and permits related to the operation of the Leased Property, except those required by Applicable Laws to be maintained by Landlord and which cannot be assigned to or maintained by Tenant, or those otherwise agreed by Landlord and Tenant to be maintained by Landlord. Notwithstanding the foregoing, in the event of the expiration or earlier termination of this Sub -Sublease, Tenant shall assign, transfer or otherwise convey any licenses or Permits maintained in Tenant's name to Landlord or Landlord's designee, to the extent not prohibited by Applicable Laws. 3.4.5 Sales Tax. Simultaneously with each payment of Rent and Additional Charges hereunder, Tenant shall pay to Landlord the amount of any applicable sales, use, excise or similar or other tax on any such Rent and Additional Charges, whether the same be levied, imposed or assessed by the State in which the Leased Property is located or any Governmental Agencies, but specifically excluding any federal, state or local taxes, franchise taxes, capital, estate, succession, inheritance, value added, or similar tax or charge or substitute therefore, imposed on Landlord's net income. Landlord shall, upon written request by Tenant, provide to Tenant on an annual basis such reasonable information in Landlord's possession or control as shall be necessary to enable Tenant to pay such tax. 3.4.6 Other Charges. Tenant shall pay or cause to be paid all other amounts, liabilities and obligations arising in connection with the Tenant's use, occupation or operation of the Leased Property, including, without limitation, all rent, additional rent and other charges or costs due and payable to the Groundlessor or any third party under the Sublease Agreement or the Groundlease, but excluding (i) debt service or any related costs and expenses in connection with any Indebtedness of Landlord, (ii) Landlord's federal, state or local taxes, franchise taxes, capital, estate, succession, inheritance, value added, or similar tax or charge or substitute \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 23 therefor, with respect to the Rent and other amounts received by Landlord under this Lease, or (iii) those obligations expressly stated not to be an obligation of Tenant pursuant to this Sub - Sublease (collectively, "Landlord Charges"). 3.4.7 Penalties and Interest; Filing. Tenant shall pay or cause to be paid every fine, penalty, interest and cost which may be added for non payment or late payment of the items referenced in this Section 3.4. Tenant shall prepare and file at its expense, to the extent required or permitted by Applicable Laws, all tax returns and other reports in respect of any Additional Charge as may be required by Governmental Agencies. 3.5 Landlord Advances. Except as specifically provided otherwise in this Sub - Sublease, if Tenant does not pay or discharge all Additional Charges when due, and provide proof of payment if requested by Landlord or, in the alternative, proof of Tenant's contest of said Additional Charges and, in such case, a bond or other security as reasonably required by Landlord in its sole discretion to cover any lien filed against the Leased Property or other liability affecting the Leased Property related to the contest of the Additional Charges„ Landlord shall have the right but not the obligation to pay such Additional Charges on behalf of Tenant. If Landlord shall make any such expenditure for which Tenant is responsible or liable under this Sub -Sublease, or if Tenant shall become obligated to Landlord under this Sub -Sublease for any other sum besides Minimum Rent or Additional Minimum Rent as hereinabove provided, the amount thereof shall be deemed to constitute "Additional Rent" and shall be due and payable by Tenant to Landlord, together with interest at the Overdue Rate and all applicable sales or other taxes thereon, if any, simultaneously with the next succeeding monthly installment of Minimum Rent or at such other time as may be expressly provided in this Sub -Sublease for the payment of the same. 3.6 Late Payment of Rent. If Tenant fails to make any payment of Rent on or before the fifth (5th) Business Day after the date such payment is due and payable, Tenant shall pay to Landlord an administrative late charge of five percent (5%) of the amount of such payment. In addition, such past due payment shall bear interest at the Overdue Rate from the date first due until paid. Such late charge and interest shall constitute Additional Rent and shall be due and payable with the next installment of Rent due hereunder. 3.7 Net Lease. Landlord and Tenant acknowledge and agree that both parties intend that this Sub -Sublease shall be and constitute what is generally referred to in the real estate industry as a "triple net" or "absolute net" lease, such that Tenant shall be obligated hereunder to pay all costs and expenses incurred with respect to, and associated with, the Leased Property and all personal property thereon and therein and the business operated thereon and therein, including, without limitation, all rent, additional rent or other charges due and payable to the Groundlessor or any third party under the Sublease Agreement or the Groundlease, all taxes and assessments, utility charges, insurance costs, maintenance costs and repair, replacement and restoration expenses (all as more particularly herein provided), together with any and all other assessments, charges, costs and expenses of any kind or nature whatsoever related to, or associated with, the Leased Property, the use, occupation or operation thereof, and the Business operated thereon and therein, other than Landlord Charges; provided, however, that Landlord shall nonetheless be obligated to pay Landlord's federal, state or local taxes, franchise taxes, capital, estate, succession, inheritance, value added, or similar tax or charge or substitute UDC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 24 therefore with respect to the Rent and other amounts received by Landlord under this Sub - Sublease. Except as expressly provided herein, Landlord shall bear no cost or expense of any type or nature with respect to, or associated with, the Leased Property, or the use, occupation or operation thereof. Except to the extent otherwise expressly provided in this Sub -Sublease, it is agreed and intended that Rent payable hereunder by Tenant shall be paid without notice, demand, counterclaim, set off, deduction or defense and without abatement, suspension, deferment, diminution or reduction and that Tenant's obligation to pay Rent throughout the Term and any applicable Extended Term is absolute and unconditional and the respective obligations and liabilities of Tenant and Landlord hereunder shall in no way be released, discharged or otherwise affected for any reason, including without limitation: (a) any defect in the condition, merchantability, design, quality or fitness for use of the Leased Property or any part thereof, or the failure of the Leased Property to comply with Applicable Laws, including any inability to occupy or use the Leased Property by reason of such non compliance; (b) any damage to, removal, abandonment, salvage, loss, condemnation, theft, scrapping or destruction of or any requisition or taking of the Leased Property or any part thereof, or any environmental condition on the Leased Property or any property in the vicinity of the Leased Property; (c) any restriction, prevention or curtailment of or interference with any use of the Leased Property or any part thereof, including eviction; (d) any defect in title to or rights to the Leased Property or any Lien on such title or rights to the Leased Property; (e) any change, waiver, extension, indulgence or other action or omission or breach in respect of any obligation or liability of or by any Person; (f) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceedings relating to Tenant or any other Person or any action taken with respect to this Sub -Sublease by any trustee or receiver of Tenant or any other Person or by any court, in any such proceedings; (g) any right or claim that Tenant has or might have against any Person, including, without limitation, Landlord or any vendor, manufacturer or contractor of or for the Leased Property (other than a claim resulting from any willful misconduct or gross negligence of Landlord); (h) any failure on the part of Landlord or any other Person to perform or comply with any of the terms of this Sub -Sublease, or of any other agreement; (i) any invalidity, unenforceability, rejection or disaffirmance of this Sub -Sublease by operation of law or otherwise against or by Tenant or any provision hereof, 0) the impossibility of performance by Tenant or Landlord, or both; (k) any action by any court, administrative agency or other Government Agencies; (1) any interference, interruption or cessation in the use, possession or quiet enjoyment of the Leased Property or otherwise; or (m) any other occurrence whatsoever whether similar or dissimilar to the foregoing, whether foreseeable or unforeseeable, and whether or not Tenant shall have notice or knowledge of any of the foregoing. Except as specifically set forth in this Sub -Sublease, this Sub -Sublease shall be non cancelable by Tenant for any reason whatsoever and, except as expressly provided in this Sub -Sublease Tenant, to the extent now or hereafter permitted by Applicable Laws, waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Sub -Sublease or to any diminution, abatement or reduction of Rent payable hereunder. Except as specifically set forth in this Sub -Sublease, under no circumstances or conditions shall Landlord be expected or required to make any payment of any kind hereunder or have any obligations with respect to the use, possession, control, maintenance, alteration, rebuilding, replacing, repair, restoration or operation of all or any part of the Leased Property, so long as the Leased Property or any part thereof is subject to this Sub - Sublease, and Tenant expressly waives the right to perform any such action at the expense of Landlord pursuant to any law. UDC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 25 3.8 No Abatement of Rent. No abatement, diminution or reduction (a) of Rent, charges or other compensation, or (b) of Tenant's other obligations hereunder shall be allowed to Tenant or any person claiming under Tenant, under any circumstances or for any reason whatsoever and to the maximum extent permitted by law, Tenant hereby waives the application of any local or state statutes, land rules, regulations or ordinance providing to the contrary. 3.9 Tenant Security Deposit. On the Commencement Date, Tenant shall deliver to Landlord a security deposit, in the amount of Six Hundred Fifteen Thousand and No/100 Dollars ($615,000.00) to be comprised of (i) cash in the amount of Four Hundred Thirty -Nine Thousand and No/100 Dollars ($439,000.00) (the "Cash Security Deposit"), and (ii) an irrevocable letter of credit ("Letter of Credit"), which Letter of Credit shall be upon the terms and conditions set forth below (the "LC Security Deposit"), in the amount of One Hundred Seventy -Six Thousand and No/100 Dollars ($176,000.00) (the Cash Security Deposit and the LC Security Deposit are collectively referred to herein as the "Security Deposit"). (a) The Letter of Credit shall (i) be delivered to Landlord within eighteen (18) months of the Effective Date (the "LC Due Date"), (ii) name Landlord as beneficiary, (iii) be issued by a commercial bank acceptable to Landlord (the `Bank"), and (iv) be in form and substance satisfactory to Landlord. Such Letter of Credit shall have an initial term of not less than one (1) year, but shall automatically renew without amendment for consecutive periods of one (1) year unless the Bank gives Landlord notice of non -renewal (a "Non -Renewal Notice") by certified or registered mail, return receipt requested, at least sixty (60) days before the then expiration date of the Letter of Credit. The final expiration date of such Letter of Credit shall be at least ninety (90) days following the expiration of this Sub -Sublease (including all Extended Terms hereunder). Such Letter of Credit shall be clean, irrevocable, transferable one (1) or more times without payment of any fee by the beneficiary, and payable in whole or in partial drawings. Tenant shall be solely responsible for the payment of any such transfer fees. The Letter of Credit shall be payable upon presentation of the Letter of Credit and a sight draft, with a form of the required sight draft annexed to such Letter of Credit. If Landlord, at any time, or from time to time, reasonably requests an amendment to the Letter of Credit (for example, to change the Landlord's address for notices or to change the identify of the Landlord beneficiary to reflect a merger or other change in the identity of Landlord), Tenant shall promptly cause the Letter of Credit to be so amended. If the Letter of Credit is lost, stolen or mutilated, Tenant shall cooperate with Landlord, promptly upon Landlord's request, to replace such Letter of Credit. In the event that the Letter of Credit is not delivered to Landlord by the LC Due Date, the Lease Rate. shall be increased by one -quarter of one percent (0.25%) for each Accounting Year unless and until Tenant delivers the Letter of Credit to Landlord in accordance with this Section 3.9, and, accordingly, Tenant shall pay Minimum Rent calculated with such increased Lease Rate; provided, however, that such increases in the Lease Rate shall not exceed a maximum amount of one percent (1 %). For all periods in which the foregoing increases in the Lease Rate shall apply, all references in this Sub -Sublease to "Lease Rate" shall be deemed to refer to the increased Lease Rate. (b) If a Non -Renewal Notice is sent to Landlord, Landlord may draw on the Letter of Credit in whole or in part unless Tenant replaces the Letter of Credit with \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 26 a substitute Letter of Credit meeting the criteria of this Section 3.9 at least thirty (30) days prior to the then expiration date of the Letter of Credit. Any proceeds held by Landlord may be applied as provided in this Section 3.9 and/or may be used by Landlord to obtain a replacement Letter of Credit. (c) Landlord may draw on the Letter of Credit in whole or in part and use, apply or retain the whole or any part of such proceeds, as the case may be, for all purposes set forth below, if (i) an Event of Default shall occur and be continuing under this Sub -Sublease or any Affiliated Lease, (ii) but for the providing of a notice to Tenant, an Event of Default would have otherwise occurred under this Sub -Sublease or any Affiliated Lease and the giving of such notice is barred by or stayed by Applicable Law, (iii) Tenant fails to timely deposit into the Reserve any amounts which are required to be deposited by Tenant pursuant to Section 5.2.2 hereof, (iv) Tenant, or any person or entity holding possession of the Leased Property through Tenant, holds over in possession of the Leased Property after the expiration or sooner termination of this Sub -Sublease, or (v) the Bank sends a Non -Renewal Notice as hereinbefore provided, subject to Tenant's opportunity to obtain a replacement Letter of Credit as provided in Section 3.9(b). If Landlord draws on the Letter of Credit, Tenant shall, within five (5) days after demand by Landlord, deliver to Landlord a replacement Letter of Credit meeting the requirements of this Section 3.9 or amend the existing Letter of Credit so that, at all times, the amount of the Letter of Credit held by Landlord, together with any cash held by Landlord not yet applied to any default by Tenant, equals the original full amount of the Security Deposit required hereunder. (d) Landlord (including any future Landlord) may transfer the Letter of Credit to any purchaser of the Leased Property or any lessee to which Landlord leases the entire Leased Property or any part thereof, and the transferring Landlord shall thereupon be released by Tenant from all liability for the return of such Letter of Credit and any proceeds thereof. In such event, Tenant agrees to look solely to the new Landlord for the return of said cash proceeds or Letter of Credit. (e) Landlord's use of the Letter of Credit proceeds shall not be deemed a waiver of Tenant's default or a waiver of any other rights and remedies to which Landlord may be entitled under the provisions of this Sub -Sublease or any guaranty of this Sub -Sublease by reason of such default, it being intended that Landlord's rights to use the whole or any part of the Letter of Credit proceeds shall be in addition to, but not in limitation of, any such other rights and remedies; and Landlord may exercise any of such other rights and remedies independent of or in conjunction with its rights under this Cectinn I A The Security Deposit shall be held by Landlord as security for the full and faithful performance by Tenant of all of the terms and obligations set forth in this Sub -Sublease and for the full and faithful performance by Tenant of all of the terms and obligations set forth in each Affiliated Lease. If an Event of Default shall occur and be continuing under this Sub -Sublease or any Affiliated Lease, then in addition to and not exclusive of any other remedies available under this Sub -Sublease, Landlord may use, apply or retain all or any portion of the Cash Security Deposit and/or make demand upon the LC Security Deposit for the payment of any Rent, the funding of \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 27 Additional Charges or other charges in Default, or for the payment of any sum to which Landlord may become obligated by reason of such Event of Default. Without limiting the foregoing, in the event Tenant fails to timely deposit into the Reserve any amounts which are required to be deposited by Tenant pursuant to Section 5.2.2 hereof, then Landlord may use the Security Deposit to fund such amounts and Tenant shall replenish the amount of the Security Deposit so expended to Landlord upon receipt of written notice from Landlord. If Landlord so uses or applies all or any portion of the Cash Security Deposit, Tenant shall, within five (5) days after written demand therefor, deposit cash with Landlord in an amount sufficient to restore the Cash Security Deposit to the full amount of the Cash Security Deposit. If Landlord so uses or applies all or any portion of the LC Security Deposit, Tenant shall, within five (5) days .after written demand therefor, deliver to Landlord a replacement irrevocable letter of credit representing any amounts so drawn, upon the terms and conditions set forth above. Landlord shall not be required to keep the Cash Security Deposit separate from its general accounts and may commingle the Cash Security Deposit with other funds of Landlord. If Tenant performs all of its obligations hereunder and under the applicable Affiliated Leases, at the expiration of the Term, and after Tenant has vacated each Affiliated Leased Property, the Cash Security Deposit, or so much thereof as has not been applied or used by Landlord as provided in this Sub -Sublease or the Affiliated Leases, shall be returned to Tenant, without payment of interest or other increment for its use, and the documents evidencing the LC Security Deposit shall be terminated. No trust relationship is created herein between Landlord and Tenant with respect to the Security Deposit. Notwithstanding any provision herein to the contrary, so long as the Leased Property is included as a Pooled Property under the terms of the Pooling Agreement, the terms and provisions thereof shall govern and control the calculation and application of the Security Deposit hereunder. 3.10 Security for Sub -Sublease. Tenant acknowledges that the Security Deposit constitutes security for the faithful observance and performance by Tenant of all the terms, covenants and conditions of this Sub -Sublease to be observed and performed and for the full and faithful performance by Tenant of all of the terms, covenants and obligations set forth in each Affiliated Lease. If any Event of Default shall occur and be continuing under this Sub -Sublease or any Affiliated Lease, Landlord may, at its option and without prejudice to any other remedy which Landlord may have on account thereof, appropriate and apply the amount of the Security Deposit in accordance with the terms set forth herein and as may be necessary to compensate Landlord toward the payment of the Rent or other sums due Landlord under this Sub -Sublease or under any Affiliated Lease as a result of such breach by Tenant. It is understood and agreed that the Security Deposit is not to be considered as prepaid rent, nor shall damages hereunder be limited to the amount of the Security Deposit. 3.11 Security Agreement. Tenant hereby grants to Landlord a security interest in the Security Deposit and the Reserve as set forth below, as security for Tenant's obligations to Landlord hereunder and agrees to execute and deliver all such instruments as may be required by Landlord to evidence and perfect these security interests. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark ARTICLE 4 USE OF THE LEASED PROPERTY 28 4.1 Permitted Use. 4.1.1 Permitted Use. Tenant covenants and agrees that it shall, throughout the Term of this Sub -Sublease, continuously use and occupy the Leased Property solely and exclusively as a Golf Course Facility, in full compliance with the terms and provisions of the Sublease Agreement and the Groundlease, and in a manner consistent with Comparable Golf Course Facilities, and for such other uses as may be necessary or incidental to such use and to the operation thereof, with appropriate amenities for the same and for no other purpose without interruption except for (a) Force Majeure Events, (b) closures reasonably required due to repairs or maintenance by third parties having a right to do so pursuant to any Permitted Encumbrance, or (c) other minimum necessary interruptions in respect to portions of the Leased Property for periods provided herein for repairs, renovations, replacements and rebuilding all of which shall be carried out pursuant to, and in accordance with the applicable provisions of this Sub -Sublease (the foregoing being referred to as the "Permitted Use"). Without the prior written consent of the Landlord, no Affiliated Person of Tenant may be a subtenant or concessionaire in the Leased Property, provided that, notwithstanding the foregoing, Tenant shall be entitled to enter into a sublease, concession agreement or other similar agreement with an Affiliated Person of Tenant for the purpose of procuring, holding and utilizing a license to serve alcoholic beverages on the Premises (the `Beverage Affiliate"). No use shall be made or permitted to be made of the Leased Property and no acts shall be done thereon which will cause an event of default or a termination under the terms and provisions of the Sublease Agreement or the Groundlease, or the cancellation of any insurance policy covering the Leased Property or any part thereof (unless another adequate policy is available), nor shall Tenant sell or otherwise provide or permit to be kept, used or sold in or about the Leased Property any article which may be prohibited by law, by the Sublease Agreement or the Groundlease, or by the standard form of fire insurance policies, or any other insurance policies required to be carried hereunder, or fire underwriter's regulations. Tenant shall, at its sole cost, comply with all Insurance Requirements under the Groundlease, the Sublease Agreement and this Sub -Sublease. Tenant shall not take or omit to take any action, the taking or omission of which materially impairs the value or the usefulness of the Leased Property or any part thereof for its Permitted Use, or causes the Leased Property to no longer be considered or generally recognized as a Comparable Golf Course Facility. In addition, Tenant shall not take or omit to take any action, the taking or omission of which will cause the Membership Documents to terminate or which will entitle the members thereof to terminate their memberships, except as otherwise permitted thereunder. In accordance with the terms and provisions of the Groundlease and the Sublease Agreement, the Leased Property may not be operated at any time during the term thereof as a private golf club. Therefore, at no time during the Term hereof, shall Tenant initiate, offer or implement any Membership Documents, without first obtaining the prior written consent of Groundlessor, Sublessor and Landlord, which consent by Landlord shall not be unreasonably withheld if the consent of the Groundlessor has been obtained. 4.1.2 Necessary Approvals. Tenant shall maintain and shall cause Beverage Affiliate to maintain, as applicable, in good standing all Permits and approvals necessary to use and operate, for its Permitted Use, the Leased Property and the Business operated thereon under Applicable Law and shall provide to Groundlessor and Landlord a copy of any documents or information pertaining to said Permits and approvals upon Landlord's request. Landlord shall, at no cost or liability to Landlord, reasonably cooperate with Tenant in this regard, limited to \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 29 executing all applications and consents reasonably required to be signed by Landlord in order for Tenant or Beverage Affiliate, as applicable, to obtain and maintain such approvals. 4.1.3 Lawful Use, Etc. Tenant shall not use or suffer or permit the use of the Leased Property or Tenant's Personal Property, if any, for any unlawful purpose. Tenant shall not commit or suffer to be committed any waste on the Leased Property nor shall Tenant cause or permit any unlawful nuisance thereon or therein. Tenant shall not suffer nor permit the Leased Property, or any portion thereof, to be used in such a manner as (a) might impair Landlord's title thereto or to any portion thereof, (b) might allow a claim or claims for adverse usage or adverse possession by the public, as such, or of implied dedication of the Leased Property or any portion thereof, or (c) might impair the operation of the Leased Property as a Golf Course Facility. 4.1.4 Compliance with Legal Requirements. Tenant shall at all times at its sole cost and expense, keep and maintain the Leased Property in compliance with all Legal Requirements. Tenant agrees to give Landlord Notice of any notices, orders or other communications relating to Legal Requirements affecting the Leased Property which is or are enacted, passed, promulgated, made, issued or adopted, a copy of which is served upon, or received by, Tenant or Beverage Affiliate, or a copy of which is posted on or fastened or attached to the Leased Property, within five (5) Business Days after service, receipt, posting, fastening or attaching. At the same time, the Tenant will inform Landlord as to the work or steps which Tenant proposes to do or take in order to comply therewith. Tenant shall manage the use of all pesticides, fertilizers and other Hazardous Substances stored at or used in connection with the Leased Property and Business in accordance with best industry practices and the standards and practices established by the Golf Course Superintendents Association of America. 4.2 Environmental Matters. Except as permitted by Applicable Law, Tenant shall at all times during the Term keep the Leased Property free of Hazardous Substances. Neither Tenant nor any of its employees, agents, invitees, licensees, contractors, guests, or subtenants (if permitted) shall use, generate, manufacture, refine, treat, process, produce, store, deposit, handle, transport, Release (as defined below), or dispose of Hazardous Substances in, on, at, under, from or about the Leased Property or the Environment thereof, in violation of any Applicable Law(s). Tenant shall give Landlord and Groundlessor prompt Notice of any claim received by Tenant from any person, entity, or Governmental Agencies that a Release or disposal of Hazardous Substances has occurred or otherwise been identified on the Leased Property or the Environment thereof, and shall strictly comply with and correct, at Tenant's sole cost and expense, any and all violations of Applicable Law(s) to the written satisfaction of the Governmental Agencies and Landlord. Under this Section 4.2, the term "Release" shall mean shall mean any potential or actual presence in, on, at, under, from, or the spilling, leaking, migrating, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the Environment of any Hazardous Substance(s). Notwithstanding any provision herein to the contrary, Tenant shall have no liability for any Hazardous Substance existing at the Leased Property as of the Effective Date hereof in violation of any Applicable Law, except to the extent any action or inaction of Tenant or any manager of Tenant, or of any employee, agent or representative of Tenant or any manager of Tenant, contributes to or compounds the effects of such Hazardous Substance. \\DC - 028997/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 30 Tenant shall not discharge or permit to be discharged into any septic facility or sanitary sewer system serving the Leased Property any Hazardous Substance(s), toxic or hazardous sewage or waste other than that which is permitted by Applicable Law or which is normal domestic waste water for the type of business contemplated by this Sub -Sublease to be conducted by Tenant on, in, at or from the Leased Property. Any Hazardous Substance(s) toxic or hazardous sewage or waste which is produced or generated in connection with the use or operation of the Leased Property shall be handled and disposed of as required by and in strict compliance with all Applicable Law(s), or shall be pre treated to the level of domestic wastewater, as specified by Applicable Law(s), prior to discharge into any septic facility or sanitary sewer system serving the Leased Property. Within ten (10) days from the Effective Date, Tenant, at its sole cost and expense, shall cause a qualified properly licensed professional environmental engineering/consulting firm (`BP"), approved by Landlord in its reasonable discretion, to prepare a best management practice protocol in strict compliance with Applicable Law(s) ("BMPP") to prevent any future Releases (as defined hereafter) during the Term of this Sub -Sublease of Hazardous Substances to, at, in, on or under the Environment, from or otherwise associated with the Permitted Use, including and not by way of limitation, any Releases of petroleum, grease, herbicides and/or pesticides associated with the existing golf course maintenance building, cart storage building and wash area. The draft BMPP shall be made available to Landlord for review, comment and approval within twenty-five (25) days from the Effective Date. Tenant shall fully implement the final BMPP within twenty-five (25) days from the date that Landlord approves the BMPP. The costs and expenses of preparation and implementation of the BMPP shall be paid from the Reserves pursuant to the provisions of Article 5 hereof. If the Tenant fails to complete and/or fully implement the BMPP, then the Landlord shall have the right, but not the obligation, to undertake, complete and/or implement the BMPP, or any portion thereof and all costs and expenses incurred by Landlord in connection therewith shall be added to the Adjusted Lease Basis. Tenant acknowledges and understands that Landlord has or shall be conducting surveys of all Leased Property improvements for asbestos/asbestos containing materials ("ACM") and suspect lead based paint ("LBP") (collectively, "HUD Materials"), including preparation of an ACM survey and LBP survey prepared by an approved, independent, qualified, licensed and insured environmental professional ("EP") in accordance with any and all guidelines and/or regulations promulgated by the applicable Governmental Authorities associated with HUD Materials and all Applicable Laws. If Landlord determines, in its sole discretion, that HUD Materials are present based on the ACM survey and LBP survey, Tenant covenants and warrants to Landlord that (a) Tenant shall immediately (and in no event later than fifteen (15) Business Days from the date of Tenant's receipt of the ACM and/or LBP survey reports) prepare and implement (including all required employee training), at Tenant's sole cost and expense and using an EP pre -approved by and otherwise acceptable to Landlord in its sole discretion, an operations and maintenance plan ("O&M Plan") to properly manage \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 31 any and all the HUD Materials at the Leased Property in accordance with any and all guidelines promulgated by the applicable Governmental Authorities associated with HUD Materials and all Applicable Laws, and (b) if any development, construction, renovation or any other work to be conducted on the Leased Property (collectively, "Site Development") may or actually disturbs, damages, or otherwise affects any HUD Materials on the Leased Property, Tenant shall adhere to the guidelines and/or regulations promulgated by the applicable Governmental Authorities and Applicable Laws in connection with Tenant's timely, lawful and proper abatement, management and removal of the HUD Materials prior to any such Site Development. Any and all abatement, management and removal of HUD Materials from the Leased Property shall be undertaken at Tenant's sole cost, charge and expense, which cost, charge and expense may be paid from the Reserves pursuant to Article 5 hereof. Tenant shall also be liable for any cost, charge, expense or other damages which Landlord may incur as a result of the failure of Tenant to timely comply with its obligations, if any, under this provision. If the Tenant fails to complete and/or fully implement the O&M Plan, then the Landlord shall have the right, but not the obligation, to undertake, complete and/or implement the O&M Plan, or any portion thereof, and all costs and expenses incurred by Landlord in connection therewith shall be added to the Adjusted Lease Basis. The O&M Plan obligation shall terminate when all HUD Materials have been properly abated at and disposed of from the Leased Property. 4.3 Continuous Operations. Except during the continuance of a Force Majeure Event, Tenant shall continuously operate the Leased Property and maintain sufficient skilled staff and employees, either directly or through a qualified management company approved by Landlord, at Landlord's sole and absolute discretion, and shall maintain adequate levels and quality of P&E to operate the Leased Property as a Golf Course Facility as required herein and as otherwise required in the Sublease Agreement or the Groundlease, at its sole cost and expense throughout the entire Term of this Sub -Sublease. Tenant shall not enter into any property management agreement with respect to the Leased Property unless such property management agreement (a) has been approved in writing by Landlord, (b) has been approved in writing by Sublessor, if required pursuant to the terms and provisions of the Sublease Agreement, and (c) such property management agreement contains provisions subordinating such property management agreement and any management fees due and payable thereunder to this Sub -Sublease and to the Rent, Additional Charges and any other fees due and payable under this Sub -Sublease, the Sublease Agreement and the Groundlease. 4.4 Compliance With Restrictions, Etc. Tenant, at its sole cost and expense, shall comply with all Permitted Encumbrances affecting the Leased Property as of the date of this Sub -Sublease, including without limitation, the Sublease Agreement and the Groundlease, and shall comply with and perform all of the obligations set forth in the same to the extent that the same are applicable to the Leased Property or to the extent that the same would, if not complied with or performed, impair or prevent the continued use, occupancy and operation of the Leased Property for the purposes set forth in this Sub -Sublease. Further, in addition to Tenant's payment obligations under this Sub -Sublease, Tenant shall pay all sums charged, levied or assessed under any restrictive covenants, declaration, reciprocal easement agreement or other \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 32 title exceptions, equipment leases, leases and all other agreements affecting the Leased Property whether as of the date of this Sub -Sublease or hereafter, and promptly as the same become due and shall promptly furnish Landlord evidence of payment thereof, unless contested in good faith by Tenant and, in such case, Tenant shall provide to Landlord a bond or other security as reasonably required by Landlord in its sole discretion to cover any lien filed against the Leased Property or other liability affecting the Leased Property related to the contest of any sums charged, levied or assessed under any restrictive covenants, declaration, reciprocal easement agreement or other title exceptions, equipment leases, leases and all other agreements affecting the Leased Property. 4.5 Standard of Operation. Throughout the Term of this Sub -Sublease, Tenant shall continuously operate the Leased Property (except during the continuance of a Force Majeure Event) in full compliance with the terms hereof and of the Groundlease and/or Sublease Agreement, in a manner consistent with the level of operation of Comparable Golf Course Facilities, including, without limitation, the following: (a) to operate the Leased Property and Business in a prudent manner and in compliance with Applicable Laws, Accessibility Laws, Legal Requirements and regulations relating thereto and cause all Permits and any other agreements necessary for the use and operation of the Business; (b) to maintain sufficient P&E and Inventories, and Tenant Personal Property, of types and quantities at the Business to enable Tenant adequately to operate the Business and, upon expiration or earlier termination of this Sub -Sublease or upon an Event of Default, Tenant shall return, transfer and convey by bill of sale or other appropriate document all Inventories to Landlord; (c) to keep all Leased Improvements and P&E located on the Land or used or useful in connection with the Business in good repair, working order and condition, reasonable wear and tear excepted, and from time to time make all needed and proper repairs, renewals, replacements, additions and improvements thereto to keep the same in good operating condition; (d) to maintain sufficient working capital to operate the Leased Property as a Golf Course Facility (working capital shall mean assets which are reasonably necessary and used for the day to day operation of the Leased Property, including, without limitation, amounts sufficient for the maintenance of change and petty cash funds, amounts deposited in operating bank accounts, receivables, prepaid expenses, and funds required to maintain Inventories and pay all operating expenses as they become due, less accounts payable and accrued current liabilities); (e) to operate and use the Leased Property to a standard consistent with Comparable Golf Course Facilities and to operate the Business with all required licenses and permits for such operation, if any; \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 33 (f) to follow and conform to all of the same insurance, risk management and management standards and practices employed at Comparable Golf Course Facilities; (g) recruit, train and employ appropriate personnel, or retain management services from an Affiliated Person or other qualified operator or service provider, provided (i) in all cases such Affiliated Person or other qualified operator or service provider shall be approved by Landlord for same, and (ii) Tenant shall not enter into any agreement with an Affiliated Person or otherwise which purports to obligate the Landlord or which survives the expiration or earlier termination of this Sub -Sublease without the prior written approval of Landlord. The agreements with Affiliated Persons referenced on Exhibit "H" attached hereto and incorporated herein by this reference are deemed approved by Landlord; and (h) provide prompt written notice to Landlord of material or extraordinary developments, lawsuits, violation of any Legal Requirements and fines relating to the use and operation of the Leased Property or the Business. Throughout the term of this Sub -Sublease, Tenant shall continuously operate the Leased Property as a Golf Course Facility in the manner set forth above. Tenant shall endeavor and use its best efforts to maximize Total Facility Revenue for the Leased Property, the value of the Business and the long-term value of the Leased Property. Tenant shall further provide, or cause to be provided, all services, facilities and benefits generally available to Comparable Golf Course Facilities. 4.6 Standards, Not Control. Landlord and Tenant stipulate and agree that Tenant is obligated to undertake such actions as are reasonably necessary to properly achieve the standard of operation for the Business as set forth herein, and that although Landlord shall have the right to undertake all enforcement rights as provided herein in the event that the required standard of operation is not maintained by Tenant, the means, pricing, policies and methods used and actions taken to operate the Business are within the sole control and election of Tenant, and are not specified by or under the control of Landlord. Accordingly, as between Landlord and Tenant, Landlord shall have no responsibility for any action taken by Tenant in order to manage or operate the Business. 4.7 Application of Groundlease and Sublease Agreement. Notwithstanding any provision herein to the contrary, and without limitation of any rights of Groundlessor under the Groundlease, Tenant covenants and agrees in favor of Landlord that: (a) Tenant shall assume, observe, perform and be bound by all of the terms, covenants, conditions, agreements and obligations of the tenant under the terms of the Groundlease and the Sublease Agreement from time to time; (b) Tenant shall not do or neglect to do any act or thing which would bring about any breach of any of the provisions of the Groundlease or the Sublease Agreement at any time; \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 34 (c) If Groundlessor or Sublessor shall default in any of its or their material obligations under the Groundlease or the Sublease Agreement, as the case may be, with respect to the Leased Property, Landlord use commercially reasonable efforts to seek to enforce the Landlord's rights thereunder, or, so long as no Event of Default has occurred hereunder, Tenant, may, at Tenant's sole cost, risk and expense, upon the prior written consent of Landlord, which consent may be given or withheld at Landlord's sole and absolute discretion, seek to enforce Landlord's rights against the Groundlessor or the Sublessor, as the case may be. In such event, any settlement by Tenant of such action shall be subject to the prior written consent and approval of Landlord, and Tenant shall indemnify and save harmless the Landlord from all costs, liability, damages, or expenses suffered or incurred by Landlord in connection with any such action. In the event that Tenant shall not request that Landlord seek to enforce Landlord's rights, or Tenant shall not itself seek to enforce Landlord's rights in accordance with the provisions hereof, Landlord may, at Landlord's sole option and expense, seek to enforce the same; and (d) Except as otherwise provided for herein, if any term of this Sub - Sublease is contradictory to any term of the Sublease Agreement or the Groundlease, the terms of this Sub -Sublease shall, as between the Landlord and the Tenant only, prevail, provided the same shall not result in a default under the Sublease Agreement or the Groundlease (it being acknowledged and agreed by the parties hereto that nothing in this Sub -Sublease shall limit, expand, or otherwise in any manner affect the rights or obligations of (a) the Groundlessor and Seller under the Groundlease or (b) the Seller and Landlord under the Sublease Agreement). 4.8 Survival. As to conditions and uses of Tenant existing or occurring prior to the expiration or sooner termination of this Sub -Sublease, the provisions of this Article 4 shall survive the expiration or earlier termination of this Sub -Sublease to the extent of any ongoing effects on Landlord or its successors with respect to the Leased Property. ARTICLE 5 MAINTENANCE AND REPAIRS 5.1 Tenant's Obligations. Tenant shall, at its sole cost and expense, keep the Leased Property in good order and repair, and shall promptly make, or cause to be made, all necessary and appropriate repairs and replacements thereto of every kind and nature, whether interior or exterior, structural or nonstructural, ordinary or extraordinary, foreseen or unforeseen or arising by reason of a condition existing prior to the commencement of the Term and whether or not necessitated by wear, tear, obsolescence or defects, latent or otherwise, and shall use all reasonable precautions to prevent damage or injury. All repairs shall be made in a good, workmanlike manner, consistent with the industry standards for other Golf Course Facilities, and in accordance with the Groundlease and all applicable federal, state and local statutes, ordinances, by laws, codes, rules and regulations relating to any such work. In addition, Tenant shall also, at its sole cost and expense, put, keep, replace and maintain Tenant's Personal Property in good repair and in good, safe and substantial order, howsoever the necessity or desirability for repairs may occur, and whether or not necessitated by wear, tear, obsolescence or defects. Tenant may at any time and from time to time remove and dispose of any of Tenant's \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 35 Personal Property which has become obsolete or unfit for use or which is no longer useful in the operation of the Business; provided, however, that Tenant's Personal Property so disposed of shall be promptly replaced with other Tenant's Personal Property not necessarily of the same character, but of at least equal usefulness and quality as, and having a value at least equal to the value of, those disposed of, and in any event in accordance with and in compliance with the standards required by and the provisions of this Sub -Sublease. Tenant shall further at all times maintain the grounds, landscaping and golf course in accordance with the standards of Comparable Golf Course Facilities. 5.2 Reserve. 5.2.1 Tenant shall establish an interest bearing reserve account (the "Reserve") in a bank designated by Tenant and approved by Landlord. All interest earned on the Reserve shall be added to and remain a part of the Reserve. Both Tenant and Landlord shall be signatories on the Reserve, provided only one signature shall be required to withdraw funds and Landlord agrees that so long as Tenant is not in Default hereunder, Landlord shall not be required to sign on any checks and Landlord shall not withdraw any funds from such account. Upon the occurrence and continuation of any Default or Event of Default hereunder the Tenant signatory party shall no longer be an authorized signatory on the Reserve account. Such account shall be established in Landlord's name and control for the benefit of Tenant and shall not include or contemplate "overdraft protection" and Tenant shall not request or attempt to draw or draft any funds which are not actually on deposit in such Reserve account. The purpose of the Reserve is to cover the cost of the following, to the extent carried out in accordance with this Sub -Sublease (collectively, "Reserve Expenditures"): (a) Replacements (including P&E Replacements), renewals and additions to the P&E located at the Land or used in connection with the Business (other than Inventory); (b) Repairs, alterations, improvements, renewals, replacements and additions, whether routine, non routine or major, to the Leased Improvements and/or the Golf Course Facilities, including without limitation those which are normally capitalized under GAAP such as repairs, alterations, improvements, renewals, replacements and additions to the structure, the exterior facade, the mechanical, electrical, heating, ventilating, air conditioning, plumbing and vertical transportation elements of the Leased Improvements, which expenditures Tenant believes should be made for the Leased Property for the following Fiscal Year; and (c) Notwithstanding any provision in this Sub -Sublease to the contrary, all repairs, alterations, improvements, renewals, replacements and additions to the Leased Property shall be subject to and completed in accordance with the terms and provisions of the Groundlease. 5.2.2 Commencing with the Commencement Date and continuing throughout the Term, Tenant shall on the last day of each Accounting Period during the Term, transfer into the Reserve an amount equal to the Applicable Reserve Percentage for such Accounting Period (based upon estimates of Total Facility Revenue if necessary, to be adjusted as soon as Tenant UDC - 028987/000002 - 2700649 vz Sub -Sublease Agreement: Meadowlark 36 has had an opportunity to confirm actual Total Facility Revenue, but in no event later than seven (7) days after the end of such Accounting Period). At the time Tenant provides Landlord the documentation described in Section 3.3, Tenant shall also deliver to Landlord a statement setting forth the total amount of deposits made to and expenditures from the Reserve for the preceding Fiscal Year. 5.2.3 On or before October 31 of each Fiscal Year, Tenant shall prepare an estimate (the "Reserve Estimate") of Reserve Expenditures anticipated during the ensuing Fiscal Year and shall submit such Reserve Estimate to Landlord for its review; provided, however, the Reserve Estimate for Fiscal Year 2008 shall be due on or before that date which is ninety (90) days from the Commencement Date hereof. Such Reserve Estimate shall reflect by line item the projected budget for Reserve Expenditures for the Leased Property and assumptions on the basis of which such line items were prepared in narrative form if necessary, including separate budget items for all projected expenditures for replacements, substitutions and additions to Tenant's Personal Property. Tenant shall provide to Landlord reasonable additional detail, information and assumptions used in the preparation of the Reserve Estimate as requested by Landlord and shall also submit to Landlord with the Reserve Estimate good faith longer range projections of planned Reserve Expenditures for an additional three (3) Fiscal Years. Tenant shall review the Reserve Estimate with Landlord, and subject to Landlord's approval, Tenant shall implement such Reserve Estimate for the successive Fiscal Year (during which it shall, if approved by Landlord, be referred to as the "Approved Reserve Estimate"). In addition, Landlord shall have the right to disapprove any expenditures to be made pursuant to the Reserve Estimate which are not in compliance with Applicable Laws. Further, Landlord's approval of any expenditure pursuant to the Reserve Estimate shall not be, or be deemed to be, an assumption by Landlord of any liability in connection with the expenditures made. Pending resolution of any dispute, the specific disputed item of the Reserve Estimate shall be suspended and replaced for the Fiscal Year in question by an amount equal to the lesser of (a) that proposed by Tenant for such Fiscal Year or (b) such budget item for the Fiscal Year prior thereto. Tenant shall not make any expenditures from the Reserve, nor shall Tenant deviate from the Approved Reserve Estimate without the prior approval of Landlord, except in the case of Emergency where immediate action is necessary to prevent imminent danger to person or property (an "Emergency") in such circumstances Tenant shall use good faith efforts to obtain the approval of Landlord if practicable and if such efforts would not pose a risk to the condition of the Leased Property or harm to any person, and in any event provide notice to Landlord as promptly as possible of such expenditure, the amount of and the reason for the same. 5.2.4 Tenant shall, consistent with the Approved Reserve Estimate, from time to time make Reserve Expenditures from the Reserve as it reasonably deems necessary in accordance with Section 5.2.1 and Section 5.2.3. Tenant shall provide to Landlord, within thirty (30) days after the end of each Fiscal Quarter, an itemized statement setting forth Reserve Expenditures made to date during the Fiscal Year. 5.2.5 In the event Reserve Expenditures not set forth in the Approved Reserve Estimate are required (a) as a result of Legal Requirements, a Force Majeure Event and/or are otherwise required for the continued safe and orderly operation of the Leased Property, (b) due to an emergency threatening the Leased Property, its guests, invitees or employees, or (c) because the continuation of a given condition will subject Tenant or Landlord to civil or criminal liability, \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 37 then Tenant shall request Landlord's approval in writing specifying the amount of and the reason for such expenditure, approval for which Landlord shall promptly grant or withhold, in its reasonable discretion In the event that Landlord does not promptly respond, Tenant's request shall be deemed to have been approved by Landlord, as submitted by Tenant. 5.2.6 All interest earned on the Reserve shall be added to and become a part thereof, and all property purchased with funds from the Reserve shall be and remain the property of Tenant until the end of the Term of the Sub -Sublease or earlier expiration or termination of this Sub -Sublease (subject to Landlord's lien rights hereunder), at which time all P&E at the Leased Property, including without limitation all P&E Replacements or other items purchased with funds from the Reserve (but not including Tenant's Personal Property except as specifically provided herein) shall be and become the sole property of Landlord. All funds in the Reserve shall be and remain the property of Landlord throughout the Sub -Sublease Term, and following expiration or earlier termination of this Sub -Sublease and payment in full. on all contracts entered into prior to such expiration or termination for work to be done or furniture, furnishings, fixtures and equipment to be supplied in accordance with this Section 5.2 out of the Reserve, ownership of the Reserve shall be vested in Landlord. It is understood and agreed that the Reserve pursuant to this Sub -Sublease shall be maintained and used solely in connection with the Leased Property. 5.2.7 If Landlord wishes to grant a security interest in or create another encumbrance on its interest in the Reserve in connection with a Facility Mortgage, all or any part of the existing or future funds therein, or any general intangible in connection therewith, the instrument granting such security interest or creating such other encumbrance shall expressly provide that such security interest or encumbrance is prior in right to the rights of Tenant with respect to the Reserve as set forth herein. 5.2.8 If, at any time, or from time to time, funds in the Reserve shall be insufficient or are reasonably projected by Tenant to be insufficient for necessary and permitted Reserve Expenditures, or funding is necessary for unforeseen expenditures which are otherwise necessary and permitted, including, without limitation, those set forth in Section 5.2.5 hereof (collectively, the "Unfunded Reserve Expenditures"), Tenant shall give Landlord Notice thereof, which Notice shall set forth, in reasonable detail, the nature of the Unfunded Reserve Expenditures and the estimated cost thereof, and Landlord, in Landlord's sole discretion, shall fund the amount necessary to pay for such Unfunded Reserve Expenditures and the amounts so funded shall constitute part of Landlord's Additional Investment. 5.3 Initial Capital Expenditures. Pursuant to that certain Agreement Regarding Initial Capital Investment and Improvements dated November 30, 2007, by and between CIP and Tenant (the "CapEx Agreement"), CIP agreed to fund certain initial capital expenditures up to an aggregate amount of Twelve Million and No/100 Dollars ($12,000,000.00) (the "CIP's Initial Capital Investment") allocated among the Leased Property and the New Leased Properties in such amounts and for such initial capital improvements as may be agreed to between CIP and Tenant in accordance with the terms and provisions of the CapEx Agreement. If and when CIP shall disburse any amount of CIP's Initial Capital Investment for initial capital improvements at the Leased Property, such amount \\DC - 028987/000002 - 2700649 Q Sub -Sublease Agreement: Meadowlark 38 shall constitute a portion of Landlord's Additional Investment and, therefore, shall be added to the Adjusted Lease Basis hereunder. Any initial capital improvements at the Leased Property shall be completed in accordance with the terms and provisions of the CapEx Agreement and this Lease. A default by Tenant under the CapEx Agreement shall constitute an Event of Default hereunder and under the Affiliated Leases. ARTICLE 6 IMPROVEMENTS, ETC. 6.1 Prohibition. Except for work funded by Reserve Expenditures and Minor Alterations as hereinafter expressly provided in Section 6.2, no portion of the Leased Property shall be demolished, removed or altered by Tenant in any manner whatsoever without the prior written consent and approval of Landlord. Notwithstanding the foregoing, however, Tenant shall be entitled and obligated to undertake all alterations to the Leased Property required by any Legal Requirements and, in such event, Tenant shall comply with the provisions of Section 6.2 below. Further, notwithstanding any provision in this Lease to the contrary, all alterations, renovations or improvements to the Leased Property shall be subject to and be completed in accordance with the terms and provisions of the Groundlease. 6.2 Permitted Renovations other than Golf Course Renovations. The activities permitted pursuant to Section 6.2.1 and Section 6.2.2 below shall collectively constitute "Permitted Renovations". 6.2.1 Minor Alterations. Landlord acknowledges that certain minor, alterations and renovations to the Leased Improvements may be undertaken by Tenant from time to time ("Minor Alterations"). Landlord hereby agrees that Tenant shall be entitled to perform such Minor Alterations on or about the Leased Improvements; provided, however, that the cost of the same shall not exceed Ten Thousand and No/100 Dollars ($10,000.00) per occurrence, and the same shall not weaken or impair the structural strength of any buildings or other structural improvements which constitute part of the Leased Improvements, or alter their exterior design or appearance, materially impair the use of any of the service facilities located in, or fundamentally affect the character or suitability of, the Leased Improvements for the Permitted Use specified in Section 4.1.1 above or materially lessen or impair their value. If Tenant elects to perform any Minor Alterations, the cost thereof shall be borne by Tenant unless the Minor Alteration constitutes an Approved Reserve Estimate or an Unfunded Reserve Expenditure which has been approved by Landlord pursuant to Section 5.2.8 hereof. 6.2.2 Additions, Expansions and Structural Alterations. All alterations, additions, expansions and renovations to the Leased Improvements which do not qualify as Minor Alterations shall constitute "Major Alterations". Except as expressly permitted in Section 6_1 and Section 6.2.1 above, nothing in this Article 6 or elsewhere in this Sub -Sublease shall be deemed to authorize Tenant to construct and erect any additions to or expansions of the Leased Improvements, or perform any Major Alterations; it being understood that Tenant may do so only with the prior written consent and approval of Landlord, which consent and approval may be withheld by Landlord in its sole and absolute discretion, and may be conditioned upon the \\DC - 028987/000002 - 2700649 Q Sub -Sublease Agreement: Meadowlark 39 payment by Tenant to Landlord of all reasonable costs incurred by Landlord in evaluating the same providing additional insurance and such other conditions as Landlord may impose. If Tenant elects to perform any Major Alterations, the cost thereof shall be borne by Tenant unless the Major Alteration constitutes an Approved Reserve Estimate or an Unfunded Reserve Expenditure which has been approved by Landlord pursuant to Section 5.2.8 hereof. 6.3 Renovations to Golf Course. Notwithstanding anything to the contrary contained herein, Tenant shall not be permitted to make any renovations or improvements to the golf course, including the tees, fairways, bunkers, greens, water hazards, or other landscaping features forming a part thereof, that materially change the character or current design thereof without the prior written consent of Landlord, which consent may be withheld at Landlord's sole and absolute discretion. Tenant shall be permitted to make any renovations or improvements to the golf course that are either routine or remedial as long as they do not change the design or character of the golf course, including the tees, fairways, bunkers, greens, water hazards, or other landscaping features forming a part thereof, and the same shall be deemed to be a Minor Alteration pursuant to Section 6.2.1 hereof. 6.4 Conditions to Reserve Expenditures, Permitted Renovations and Major Alterations. In connection with any Reserve Expenditures, Permitted Renovations or Major Alterations of the Leased Property the following conditions shall be met, to wit: (a) Before the commencement of any such work, plans and specifications therefor or a detailed itemization thereof prepared by a licensed architect approved by Landlord or other design professional appropriate under the circumstances approved by Landlord and Tenant shall be furnished to Landlord for its review and approval. Such approval shall not constitute Landlord's agreement that the plans and specification are in compliance with Applicable Laws or an assumption by Landlord of any liability in connection with the renovation work contemplated thereby. (b) Before the commencement of any such work Tenant shall, with Landlord's cooperation, obtain all necessary or required approvals thereof by all Governmental Agencies having or claiming jurisdiction of or over the Leased Property, and with any public utility companies having an interest therein. In connection with any such work Tenant shall comply with all Legal Requirements and Applicable Laws, of all other Governmental Agencies having or claiming jurisdiction of or over the Leased Property and of all their respective departments, bureaus and offices, and with the requirements and regulations, if any, of such public utilities, of the insurance underwriting board or insurance inspection bureau having or claiming jurisdiction, or any other body exercising similar functions, and of all insurance companies then writing policies covering the Leased Property or any part thereof. (c) Tenant represents and warrants to Landlord that all such work will be performed in a good and workmanlike manner and in accordance with the plans and specifications therefor approved by Landlord, the terms, provisions and conditions of this Sub -Sublease and all governmental requirements. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 40 (d) Landlord shall have the right to inspect any such work, at Tenant's expense, at all times during normal working hours using such inspector(s) as it may deem necessary so long as such inspections do not unreasonably interfere with Tenant's work (but Landlord shall not thereby assume any responsibility for the proper performance of the work in accordance with the terms of this Sub -Sublease, nor any liability arising from the improper performance thereof). (e) All such work shall be performed free of any Liens on Landlord's fee simple interest on or Tenant's leasehold interest in the Leased Property. (f) Upon substantial completion of any such work, Tenant shall procure any necessary or required certificate of occupancy, certificate of completion or other final approvals, if applicable, from the appropriate Governmental Agencies and provide copies of same to Landlord. (g) Tenant shall, and hereby agrees to, indemnify, save, pay, insure and hold Landlord and its Affiliated Parties harmless from and against and reimburse Landlord for any and all loss, damage, cost, liability, fee and expense (including, without limitation, reasonable attorney's fees based upon service rendered at hourly rates) incurred by or asserted against Landlord which is occasioned by or results, directly or indirectly, from any such work conducted upon the Leased Property; whether or not the same is caused by, or is the fault of Tenant or any agent, employee, manager, contractor, subcontractor, laborer, supplier, materialmen or any other third party; provided, however, Tenant shall not be obligated to indemnify Landlord from any loss as aforesaid caused by Landlord's gross negligence or willful misconduct. 6.5 Salvaize. Other than Tenant's Personal Property, all materials which are scrapped or removed in connection with maintenance and repair performed pursuant to Article 5 and the making of Permitted Renovations pursuant to Article 6 shall be disposed of by Tenant and the net proceeds thereof, if any, shall be deposited in the Reserve. ARTICLE 7 LANDLORD'S INTEREST NOT SUBJECT TO LIENS 7.1 Liens, Generally. Tenant shall not, directly or indirectly, create or cause to be imposed, claimed or filed upon the Leased Property, or any of Tenant's assets, properties or income or any portion thereof, related to the Leased Property or upon the interest of Landlord therein, any Lien of any nature whatsoever. If, because of any act or omission of Tenant, any such Lien shall be imposed, claimed or filed by any party whosoever or whatsoever, Tenant shall, at its sole cost and expense, cause the same to be promptly (and in no event later than thirty (30) days following receipt of notice of such Lien) fully paid and satisfied or otherwise promptly discharged of record (by bonding or otherwise) and Tenant shall indemnify, save, pay, insure and hold Landlord harmless from and against any and all costs, liabilities, suits, penalties, claims and demands whatsoever, and from and against any and all reasonable attorney's fees, at both trial and all appellate levels, resulting or on account thereof and therefrom. In the event that Tenant shall fail to comply with the foregoing provisions of this Section 7.1, Landlord shall have the \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 41 option, but not the obligation, of paying, satisfying or otherwise discharging (by bonding or otherwise) such Lien and Tenant agrees to reimburse Landlord, upon demand and as Additional Rent, for all sums so paid and for all costs and expenses incurred by Landlord in connection therewith, together with interest thereon, until paid. Notwithstanding the foregoing, Tenant shall be entitled to enter into leases for new or replacement items of P&E (collectively, "P&E Leases"), provided that the aggregate rent payments for all such P&E Leases do not exceed One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) per year. 7.2 Construction or Mechanics Liens. Landlord's interest in the Leased Property shall not be subjected to Liens of any nature by reason of Tenant's construction, alteration, renovation, repair, restoration, replacement or reconstruction of any improvements on or in the Leased Property, or by reason of any other act or omission of Tenant (or of any person claiming by, through or under Tenant) including, but not limited to, construction, mechanics' and materialmen's liens. All persons dealing with Tenant are hereby placed on notice that such persons shall not look to Landlord or to Landlord's credit or assets (including Landlord's interest in the Leased Property) for payment or satisfaction of any obligations incurred in connection with the construction, alteration, renovation, repair, restoration, replacement or reconstruction thereof by or on behalf of Tenant. Tenant has no power, right or authority to subject Landlord's interest in the Leased Property to any construction, mechanic's or materialmen's lien or claim of lien. If a Lien, a claim of lien or an order for the payment of money shall be imposed against the Leased Property on account of work performed, or alleged to have been performed, for or on behalf of Tenant, Tenant shall, within thirty (30) days after written notice of the imposition of such Lien, claim or order, cause the Leased Property to be released therefrom by the payment of the obligation secured thereby or by furnishing a bond or by any other method prescribed or permitted by law. If a Lien is released, Tenant shall thereupon furnish Landlord with a written instrument of release which has been recorded or filed in the appropriate office of land records of the County in which the Leased Property is located, and otherwise sufficient to establish the release as a matter of record. Before commencing any work relating to alterations, additions, or improvements affecting the Leased Property, Tenant shall notify Landlord in writing of the expected date of commencement thereof. Landlord shall then have the right at any time and from time to time to post and maintain on the Land and Improvements such notices as Landlord reasonably deems necessary to protect the Leased Property and Landlord from mechanics' liens, materialmen's liens, or any other Liens. In any event, Tenant shall pay when due all claims for labor or materials furnished to or for Tenant at or for use in the Land and. Improvements. Tenant shall not permit any mechanics' or materialmen's liens to be levied against the Leased Property for any labor or material furnished to Tenant or claimed to have been furnished to Tenant or to Tenant's agents or contractors in connection with work of any character performed or claimed to have been performed on the Land or the Leased Improvements by or at the direction of Tenant, and shall immediately cause the release of any such Liens as provided hereinabove. 7.3 Contest of Liens. Tenant may, at its option, contest the validity of any Lien or claim of lien if Tenant shall have first posted an appropriate and sufficient bond in favor of the claimant or paid the appropriate sum into court, if permitted by and in strict compliance with Applicable Laws, and thereby obtained the release of the Leased Property from such Lien. If judgment is obtained by the claimant under any Lien, Tenant shall pay the same immediately after such judgment shall have become final and the time for appeal therefrom has expired without appeal having been taken. Tenant shall, at its sole cost and expense, using counsel \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 42 reasonably approved by Landlord, diligently defend the interests of Tenant and Landlord in any and all such suits; provided, however, that Landlord may, nonetheless, at its election and expense, engage its own counsel and assert its own defenses, in which event Tenant shall cooperate with Landlord and make available to Landlord all information and data which Landlord deems necessary or desirable for such defense. 7.4 Notices of Commencement of Construction. If required by the laws of the State in which the Leased Property is located, prior to commencement by Tenant of any work on the Leased Property which shall have been previously permitted by Landlord as provided in this Sub -Sublease, Tenant shall record or file a notice of the commencement of such work or similar notice required by Applicable Law (the "Notice of Commencement") in the land records of the County in which the Leased Property is located, identifying Tenant as the party for whom such work is being performed, stating such other matters as may be required by law and requiring the service of copies of all notices, Liens or claims of lien upon Landlord. Any such Notice of Commencement shall clearly reflect that the interest of Tenant in the Leased Property is that of a leasehold estate and shall also clearly reflect that the interest of Landlord as the fee simple owner of the Leased Property shall not be subject to construction, mechanics or materialmen's liens on account of the work which is the subject of such Notice of Commencement. A copy of any such Notice of Commencement shall be furnished to and approved by Landlord and its attorneys prior to the recording or filing thereof, as aforesaid. ARTICLE 8 TAXES AND ASSESSMENTS 8.1 Obligation to Pay Taxes and Assessments. Throughout the entire Term, Tenant shall bear, pay and discharge as Additional Charges and not later than the last day on which payment may be made without penalty or interest, any and all taxes, assessments, charges, levies, fees (including, without limitation, license, permit, inspection, authorization and similar fees) and other impositions and charges of every kind and nature whatsoever, extraordinary as well as ordinary, foreseen or unforeseen, and each and every installment thereof which shall or may during or with respect to the Term hereof accrue and/or be charged, laid, levied, assessed, or imposed upon, or arise in connection with, the use, occupancy, operation or possession of the Leased Property or any part thereof or the Business conducted thereon, including, without limitation, ad valorem real and personal property taxes, all taxes charged, laid, levied, assessed or imposed in lieu of or in addition to any of the foregoing by virtue of all present or future laws, ordinances, requirements, orders, directions, rules or regulations of Governmental Agencies, and all assessments and charges imposed pursuant to the Permitted Encumbrances or other documents of record affecting title to the Leased Property, whether or not such Additional Charges become due and payable during or after the Term. Notwithstanding the foregoing, Tenant shall not be responsible for Landlord Charges or for Additional Charges due and payable after the expiration of the Term to the extent that the same relate and apply interests and benefits accruing to Landlord after the Sub -Sublease Term. Upon Landlord's request, Tenant shall promptly furnish to Landlord satisfactory evidence of the payment of all such taxes, assessments, impositions or charges. Tenant shall have no right to approve any Facility Mortgage or other documents relating to indebtedness of Landlord and Tenant shall have no responsibility to pay any tax, charge or imposition levied with respect to any Facility Mortgage. \\DC - 028987/000002 - 2700649 Q Sub -Sublease Agreement: Meadowlark 43 8.2 Tenant's Right to Contest Taxes. Notwithstanding the foregoing, Tenant shall have the right, after prior written notice to Landlord, to contest at its own expense the amount and validity of any taxes affecting the Leased Property by appropriate proceedings under Applicable Law conducted in good faith and with due diligence and to postpone or defer payment thereof, provided and so long as: (a) Such proceedings shall operate to suspend the collection of such taxes with respect to the Leased Property; (b) Neither the Leased Property nor any part thereof would be in immediate danger of being forfeited or lost by reason of such proceedings, postponement or deferment; and (c) Tenant shall have furnished Landlord with security for payment of the contested taxes which is satisfactory to Landlord, and, in the event that the preconditions set forth in (a) and (b) above are no longer met, Landlord shall have the right to draw upon such security to pay and discharge the taxes in question and any Liens against the Leased Property arising thereunder. 8.3 Tax and Insurance Escrow Account. In the event any of the Events of Default specified in Section 12.1 hereunder shall occur, or upon request of Landlord's lender, Landlord shall have the right, by written notice to Tenant effective as of the date of such notice, to require Tenant to pay or cause to be paid into a separate account (the "Tax and Insurance Account") to be established by Tenant with a lending institution or other third party escrow agent designated by Landlord (which Tax and Insurance Account shall not be removed from such lending institution or other third party escrow agent without the express prior approval of Landlord), and which Landlord may draw upon, a reserve amount sufficient to discharge the obligations of Tenant under Section 8.1 and Article 9 hereof (other than worker's compensation insurance premiums) with respect to real estate taxes and insurance premiums for the applicable Fiscal Year as and when they become due (such amounts, the "Tax and Insurance Escrow Amount"). During each month commencing with the first full calendar month following the receipt of said notice from Landlord, Tenant shall deposit into the Tax and Insurance Account one twelfth (1/12th) of the Tax and Insurance Escrow Amount so that as each installment of insurance premiums and real estate taxes becomes due and payable, there are sufficient funds in the Tax and Insurance Account to pay the same. If the amount of such insurance premiums and real estate taxes has not been definitively ascertained by Tenant at the time when any such monthly deposit is to be paid, Landlord shall require payment of the Tax and Insurance Escrow Amount based upon the amount of premiums and real estate taxes paid for the preceding year, subject to adjustment as and when the amount of such premiums and real estate taxes are ascertained by Tenant. The Tax and Insurance Escrow Amount in the Tax and Insurance Account shall be and constitute additional security for the performance of Tenant's obligations hereunder and shall be subject to Landlord's security interest therein and shall, if there are sufficient funds in escrow, be used to pay taxes and insurance premiums when due. Landlord and Tenant shall execute such documentation as may be necessary to create and maintain Landlord's security interest in the Tax and Insurance Account. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 44 ARTICLE 9 INSURANCE 9.1 General Insurance Requirements. Tenant shall, at all times during the Term and at any other time Tenant shall be in possession of the Leased Property, keep the Leased Property and all property located therein or thereon, insured against the following risks in the following amounts. The following Insurance Requirements are intended to supplement and not to contravene any insurance requirements under the Groundlease or the Sublease Agreement. In the event that any Insurance Requirement under this Sub -Sublease is greater than any insurance requirement under the Groundlease or the Sublease Agreement, as the case may be, the Insurance Requirement set forth herein shall control. In the event that any insurance requirement under the Groundlease or the Sublease Agreement, as the case may be, is greater than any Insurance Requirement under this Sub -Sublease, Tenant shall comply, at Tenant's sole cost and expense, with such greater requirement in addition to the Insurance Requirement hereunder. (a) "All risk" property insurance (and to the extent applicable, Builder's Risk Insurance) on the Leased Improvements, specifically including the Golf Course Facility, all building structures, landscaping improvements (including trees and shrubs, golf course tees, fairways and greens) and all items of business personal property, including but not limited to signs, awnings, canopies, gazebos, fences and retaining walls, and all P&E, including without limitation, insurance against loss or damage from the perils under "All Risk" (Special) form, including but not limited to the following: fire, windstorm (including hurricanes), sprinkler leakage, vandalism and malicious mischief, water damage, explosion of steam boilers, pressure vessels and other similar apparatus, and other hazards generally included under extended coverage, all in an amount equal to one hundred percent (100%) of the replacement value of the Leased Improvements (excluding excavation and foundation costs), business personal property and P&E, without a co insurance provision, and shall include an Agreed Value endorsement; (b) Ordinance or Law Coverage with limits of not less than the full value of the Leased Improvements for Coverage A (Loss to the undamaged portion of the building), limits not less than $500,000.00 for Coverage B (Demolition Cost Coverage), and limits not less than $500,000.00 for Coverage C (Increased Cost of Construction Coverage); (c) Business income insurance to be written on "Special Form" (and on "Earthquake" and "Flood" forms if such insurance for those risks is required) including "Extra Expense", without a provision for co insurance, including an amount sufficient to pay at least twelve (12) months of Rent for the benefit of Landlord, as its interest may appear, and at least twelve (12) months of "Net Operating Income" less Rent for the benefit of Tenant, with an additional twelve (12) months extended period of indemnity and coverage for off -premises utility interruption; (d) Occurrence form commercial general liability insurance, including bodily injury and property damage, personal injury, liquor liability (if applicable), fire legal liability, contractual liability and independent contractor's hazard and completed UDC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 45 operations coverage in an amount not less than $1,000,000.00 per occurrence and $2,000,000.00 general aggregate, and shall include a "per location aggregate" endorsement; (e) Umbrella coverage with follow form General Liability, Automobile Liability, Employers' Liability and Liquor Liability (if applicable), with limits in a minimum amount of not less than $5,000,000.00 per occurrence/aggregate; (f) Flood insurance (if the Leased Property is located in whole or in part within an area identified as a "special flood hazard area" under the National Flood Insurance Program) in an amount equal to the replacement value of the Leased Improvements or the maximum amount available through the National Flood Insurance Program; and any additional excess limits as determined by Landlord and/or Mortgagee; (g) Worker's compensation coverage for all persons employed by Tenant on the Leased Property, if any, with statutory limits, and Employers' Liability insurance in an amount of at least $1,500,000.00 per accident; $500,000.00 disease - policy limit; and $500,000.00 disease -per employee; (h) Business auto liability insurance, including owned, non owned and hired vehicles for combined single limit of bodily injury and property damage of not less than $1,000,000.00 per occurrence; (i) "Earthquake" insurance, if the Leased Property is currently, or at any time in the future, located within a major earthquake disaster area, in amount, and in such form and substance and with such limits consistent with current marketplace and reasonably satisfactory to Landlord and/or Mortgagee; 0) Crime insurance covering employee theft in an amount not less than $500,000; (k) Coverage for Employment Practices Liability including third party liability with limits in a minimum amount of not less than $1,000,000.00 per occurrence; (1) Pollution liability insurance with a limit of not less than $1,000,000.00 per occurrence providing coverage for operations usual to a golf course (i.e., herbicide/pesticide applicators coverage); and (m) Such additional insurance or increased insurance limits as may be reasonably required, from time to time, by Landlord (including, without limitation, any mortgage, security agreement or other financing permitted hereunder and then affecting the Leased Property, any declaration, ground lease or easement agreement affecting the Leased Property), Groundlessor, Sublessor, or any Mortgagee, provided the same is customarily carried by a majority of comparable golf course facilities in the area. 9.2 Waiver of Subrogation. Landlord and Tenant agree that with respect to any property loss which is covered by insurance then being carried by Landlord or Tenant, respectively, the party carrying such insurance and suffering said loss releases the other of and \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 46 from any and all claims with respect to such loss, and they further agree that their respective insurance companies shall have no right of subrogation against the other on account thereof. 9.3 General Provisions. The property insurance deductible shall not exceed $50,000.00, unless such greater amount is agreeable to both Landlord and Tenant, or if a higher deductible for high hazard risks (i.e., wind or flood) is mandated by the insurance carrier. All insurance policies pursuant to this Article 9 shall be issued by insurance carriers having a general policy holder's rating of no less than A /VII in Best's latest rating guide, and shall contain clauses or endorsements to the effect that (a) Landlord shall not be liable for any insurance premiums thereon or subject to any assessments thereunder, and (b) the coverages provided thereby will be primary and any insurance carried by any additional insured shall be excess and non-contributory to the extent of the indemnification obligation pursuant to Section 9.4 below. All such policies described in Section 9.1 shall name Landlord, CNL Income Properties, Inc., a Maryland corporation, or its designated subsidiary, affiliate or assigns, and any Mortgagee whose name and address has been provided to Tenant as additional insureds, Mortgagee's loss payees, or mortgagees, as their interests may appear and to the extent of their indemnity. All loss adjustments shall be payable as provided in Article 10. Tenant shall deliver certificates of liability (Accord 25) and Evidence of Commercial Property Insurance (Accord 28) thereof to Landlord prior to their effective date (and, with respect to any renewal policy, no less than thirty (30) days prior to the expiration of the existing policy), which certificates shall state the nature and level of coverage reported thereby, as well as the amount of the applicable deductible. Upon Landlord's request, duplicate original copies of all insurance policies to be obtained by Tenant shall be provided to Landlord by Tenant. All such policies shall provide Landlord (and any Mortgagee whose name and address has been provided to Tenant if required by the same) thirty (30) days prior written notice of any material change or cancellation of such policy. In the event Tenant shall fail to effect such insurance as herein required, to pay the premiums therefor or to deliver such certificates to Landlord or any Mortgagee at the times required, Landlord shall have the right, but not the obligation, subject to the provisions of Section 12.4, to acquire such insurance and pay the premiums therefor, which amounts shall be payable to Landlord, upon demand, as Additional Rent, together with interest accrued thereon at the Overdue Rate from the date such payment is made until (but excluding) the date repaid. 9.4 Indemnification of Landlord. Except as expressly provided herein, and subject to the provisions of Section 9.2 hereof, Tenant shall protect, indemnify, save, pay, insure and hold harmless Landlord and Groundlessor for, from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and reasonable expenses (including, without limitation, reasonable attorneys' fees), to the maximum extent permitted by law, imposed upon or incurred by or asserted against Landlord or Groundlessor by reason of. (a) any accident, injury to or death of persons or loss of or damage to property of third parties occurring on or about the Leased Property or adjoining sidewalks or rights of way under Tenant's control, (b) any liability related to the refund of deposits, securities violations, or other liabilities associated with any Membership Documents, and (c) any use, misuse, condition, management, maintenance or repair by Tenant or anyone claiming under Tenant of the Leased Property or Tenant's Personal Property, or any litigation, proceeding or claim by Governmental Agencies relating to such use, misuse, condition, management, maintenance, or repair thereof to which Landlord or \\DC - 028987/000002 - 2700649 Q Sub -Sublease Agreement: Meadowlark 47 Groundlessor is made a party; provided, however, that Tenant's obligations hereunder shall not apply to any liability, obligation, claim, damage, penalty, cause of action, cost or expense arising from any negligence or willful misconduct of Landlord or its employees, agents, contractors or invitees, or from any act or omission of Groundlessor or its employees, agents, contractors or invitees. Any such claim, action or proceeding asserted or instituted against Landlord or Groundlessor covered under this indemnity shall be defended by counsel selected by Tenant at no cost to Landlord or Groundlessor. Notwithstanding the foregoing, indemnification with respect to Hazardous Substances is governed by Section 4.3, and the Tenant shall have no liabilty for any Hazardous Substances existing at the Leased Premises as of the Effective Date in violation of any Applicable Law. The obligations of Tenant under this Section 9.4 shall survive the expiration or any early termination of this Sub -Sublease. ARTICLE 10 CACTTATTV 10.1 Restoration and Repair. If during the Term the Leased Property shall be totally or partially destroyed and thereby rendered Unsuitable for Its Permitted Use, Tenant shall give Landlord prompt Notice thereof. Either Landlord or Tenant may, by the giving of Notice thereof to the other party within sixty (60) days after such casualty occurs, terminate this Sub -Sublease, without affecting any of the Affiliated Leases, whereupon Landlord shall be entitled to retain the insurance proceeds payable on account of such damage (exclusive of any business interruption insurance which shall be payable to Landlord only to the extent of Rent due through the date of such termination) and Tenant shall pay to Landlord the amount of any deductible; provided, however, in the event that the exercise by any Person of any of its rights with respect to the Leased Property pursuant to any of the Permitted Encumbrances shall cause damage or destruction to the Leased Property, or which actions render the Leased Property Unsuitable for Its Permitted Use, Tenant shall not have the option to terminate this Sub -Sublease and shall be obligated to promptly proceed with the complete restoration and repair of the Leased Property first using available proceeds from any insurance policy then in place naming Tenant as an insured party, plus the amount of any deductible thereunder. In the event that the total amount of such available insurance proceeds and any deductible to be paid by Tenant thereunder are insufficient to pay all necessary repair and restoration costs and expenses, Landlord and Tenant shall share equally any additional costs or expenses to repair and restore the same. Tenant further expressly acknowledges, understands and agrees that in the event that this Sub -Sublease is terminated as aforesaid, Landlord may settle any insurance claims and Tenant shall, upon request of Landlord, cooperate in any such settlement. If during the Term, the Leased Property shall be destroyed or damaged in whole or in part by fire, windstorm or any other cause whatsoever, but the Leased Property either (i) is not rendered Unsuitable for Its Permitted Use or (ii) is rendered Unsuitable for Its Permitted Use but neither Landlord nor Tenant terminate this Sub -Sublease in the manner provided above, then, Tenant shall give Landlord immediate Notice thereof and Tenant shall, subject to the provisions of Section 10.2 below, repair, reconstruct and replace the Leased Property, or the portion thereof so destroyed or damaged, at least to the extent of the value and character thereof existing immediately prior to such occurrence and in compliance with all Legal Requirements, including any alterations to the Leased Property required to be made by any Governmental Agencies due to any changes in code or building regulations (which Tenant acknowledges may increase the replacement value of the Leased \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 48 Property which Tenant will then be required to insure, due to any changes in code or building regulations), and in compliance with the provisions of the Groundlease and the Sublease, as applicable. All such restoration work shall be started as promptly as practicable and diligently completed at no out-of-pocket cost or expense to Landlord (using available insurance proceeds). Tenant shall, however, immediately take such action as is necessary to assure that the Leased Property (or any portion thereof), does not constitute a nuisance or otherwise present or constitute a health or safety hazard. 10.2 Escrow and Disbursement of Insurance Proceeds. If this Sub -Sublease is not otherwise terminated pursuant to Section 10.1, then in the event of a casualty resulting in a loss to the Leased Improvements and/or P&E in an amount greater than One Hundred Thousand and No/100 Dollars ($100,000.00) (as determined by an architect or engineer selected by Landlord), the proceeds of all insurance policies maintained by Tenant shall be deposited in Landlord's name in an escrow account at a bank or other financial institution designated by Landlord, and shall be used by Tenant for the repair, reconstruction or restoration of the Leased Property to its original condition. Tenant shall, at the time of establishment of such escrow account and from time to time thereafter until said work shall have been completed and paid for, furnish Landlord with adequate evidence acceptable to Landlord that at all times the undisbursed portion of the escrowed insurance proceeds, together with any funds made available by Tenant, is sufficient to pay for the repair, reconstruction or restoration in its entirety. Landlord may, at its option, require, prior to advancement of said escrowed insurance proceeds (i) approval of plans and specifications by an architect or other design professional appropriate under the circumstances and approved by Landlord and Tenant (which approval shall not be unreasonably withheld or delayed), (ii) general contractors' estimates, (iii) architect's certificates, (iv) unconditional lien waivers of general contractors, if available, (v) evidence of approval by all Governmental Agencies and other regulatory bodies whose approval is required, and (vi) such other terms as a Mortgagee or lender of Landlord may reasonably require. The escrowed insurance proceeds shall be disbursed by Landlord, not more than bi-weekly, upon (y) certification of the architect or engineer selected by Tenant (with the approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed) and having supervision of the work that such amounts are the amounts paid or payable for the repair, reconstruction or restoration and (z) submittal by Tenant of a written requisition and substantiation therefor on AIA Forms G702 and G703 (or on such other form or forms as may be reasonably acceptable to Landlord). Tenant shall obtain, and make available to Landlord, receipted bills and, upon completion of said work, full and final waivers of lien. In the event of a casualty resulting in a loss payment for the Leased Improvements in an amount equal to or less than the amount stated above, the proceeds shall be paid to Tenant, and shall be applied towards repair, reconstruction and restoration. Any and all loss adjustments with respect to losses payable hereunder shall require the prior written consent of Landlord, which consent may be withheld in Landlord's sole and absolute discretion. All salvage resulting from any risk covered by insurance shall belong to Tenant, provided any rights to the same have been waived by the insurer. In addition, notwithstanding anything in this Sub -Sublease to the contrary, Tenant shall be strictly liable and solely responsible for the amount of any deductible and shall pay for all repairs, reconstruction or alterations up to the full amount of such deductible (and provide evidence of such payment to Landlord by documentation reasonably acceptable to Landlord) before any insurance proceeds are used for repairs, reconstruction or alterations. ADC - 028987/000002 - 2700649 Q Sub -Sublease Agreement: Meadowlark 49 10.3 No Abatement of Rent. Unless terminated in accordance with the provisions of Section 10.1 above, this Sub -Sublease shall remain in full force and effect and Tenant's obligation to make all payments of Rent and to pay all Additional Charges as and when required under this Sub -Sublease shall remain unabated during the Term notwithstanding any casualty to the Leased Property (provided that Landlord shall credit against such payments any amounts paid to Landlord as a consequence of such damage under any business interruption insurance obtained by Tenant hereunder). The provisions of this Article 10 shall be considered an express agreement governing any event of casualty involving the Leased Property and, to the maximum extent permitted by law, Tenant hereby waives the application of any local or state statute, law, rule, regulation or ordinance in effect during the Term which provides for such abatement. 10.4 Tenant's Property and Business Interruption Insurance. All insurance proceeds payable by reason of any loss of or damage to any of Tenant's Personal Property and the business interruption insurance maintained for the benefit of Tenant shall be paid to Tenant; provided, however, no such payments shall diminish or reduce the insurance payments otherwise payable to or for the benefit of Landlord hereunder. Such business interruption proceeds shall be considered part of the Total Facility Revenue. 10.5 Restoration of Tenant's Property. If Tenant is required to restore the Leased Property as hereinabove provided, Tenant shall either (i) restore all alterations and improvements made by Tenant and Tenant's Personal Property, or (ii) replace such alterations and improvements and Tenant's Personal Property with improvements or items of the same or better quality and utility in the operation of the Leased Property. 10.6 Waiver. Tenant hereby waives to the maximum extent permitted by law, any statutory or common law rights of termination which may arise by reason of any damage or destruction of the Leased Property and agrees that its rights shall be limited to those set forth in Section 10.1. 10.7 Subject to Groundlease. Notwithstanding any provision in this Lease to the contrary, all rights and obligations of Tenant under this Article 10 are subject to the rights and obligations of the "Lessor" as set forth in the Groundlease, and further, all repairs and restoration to be completed by Tenant pursuant to Article 10 shall be completed in accordance with the provisions thereof. ARTICLE 11 CONDEMNATION 11.1 Total Condemnation, Etc. If the whole of the Leased Property shall be taken or condemned for any public or quasi public use or purpose, by right of eminent domain or by purchase in lieu thereof, or if a substantial portion of the Leased Property shall be so taken or condemned such that the portion or portions remaining is or are not sufficient and suitable for the continued operation thereof as required herein, so as to effectively render the Leased Property Unsuitable for its Permitted Use, then this Sub -Sublease and the Term hereby granted shall cease and terminate (without prejudice to Landlord's and Tenant's respective rights to an award under Section 11.3 below), without affecting any of the Affiliated Leases, as of the date on which the \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 50 Condemnor takes possession and all Rent shall be paid by Tenant to Landlord up to that date or refunded by Landlord to Tenant if Rent has previously been paid by Tenant beyond that date. 11.2 Partial Condemnation. If a portion of the Leased Property is taken, and the portion or portions remaining can be adapted and used for the conduct of the Business in accordance with the terms of this Sub -Sublease, such that the Leased Property is not effectively rendered Unsuitable for its Permitted Use, then the Tenant shall, utilizing, as reasonably necessary, condemnation proceeds paid to Landlord from the Condemnor, promptly restore the remaining portion or portions thereof to a condition comparable to their condition at the time of such taking or condemnation, less the portion or portions lost by the taking, and this Sub - Sublease shall continue in full force and effect with no reduction or abatement of Rent. 11.3 Disbursement of Award. The entire award for the Leased Property or the portion or portions thereof so taken shall be apportioned between Landlord and Tenant as follows: (a) if this Sub -Sublease terminates due to a taking or condemnation, Landlord shall be entitled to the entire award; provided, however, that any portion of the award expressly made for the taking of Tenant's leasehold interest in the Leased Property, loss of business during the remainder of the Term, and the taking of Tenant's Personal Property shall be the sole property of and payable to Tenant, and (b) if this Sub -Sublease does not terminate due to such taking or condemnation, Tenant shall be entitled to the award to the extent required for restoration of the Leased Property, and Landlord shall be entitled to the balance of the award not applied to restoration. In any condemnation proceedings, Landlord and Tenant shall each seek its own award in conformity herewith, at its own expense. If this Sub -Sublease does not terminate due to a taking or condemnation, Tenant shall, with due diligence, restore the remaining portion or portions of the Leased Property in the manner hereinabove provided to the extent of condemnation proceeds made available to Tenant. In such event, the proceeds of the award to be applied to restoration shall be deposited with a bank or financial institution designated by Landlord as if such award were insurance proceeds, and the amount so deposited will thereafter be treated in the same manner as insurance proceeds are to be treated under Section 10.2 of this Sub -Sublease until the restoration has been completed and Tenant has been reimbursed for all the costs and expenses thereof. If the award is insufficient to pay for the restoration, Landlord shall be responsible for the remaining cost and expense of such restoration. All proceeds in excess of those required for restoration shall be disbursed to Landlord upon completion of such restoration. 11.4 No Abatement of Rent. This Sub -Sublease shall remain in full force and effect and Tenant's obligation to make all payments of Rent and to pay all other charges as and when required under this Sub -Sublease shall remain unabated during the Term notwithstanding any Condemnation involving the Leased Property. The provisions of this Article 11 shall be considered an express agreement governing any Condemnation involving the Leased Property and, to the maximum extent permitted by law, no local or State statute, law, rule, regulation or ordinance in effect during the Term which provides for such abatement shall have any application in such case. 11.5 Subject to Groundlease. Notwithstanding any provision in this Lease to the contrary, all rights and obligations of Tenant under this Article 11 are subject to the rights and obligations of the "Lessor" as set forth in the Groundlease, and further, all repairs and restoration VVDC - 028987/000002 - 2700649 Q Sub -Sublease Agreement: Meadowlark 51 to be completed by Tenant pursuant to Article 11 shall be completed in accordance with the provisions thereof. ARTICLE 12 DEFAULTS AND REMEDIES 12.1 Events of Default. Each of the following events after written notice and failure to cure within the specified time period shall be an Event of Default hereunder by Tenant and shall constitute a breach of this Sub -Sublease: (a) If Tenant shall fail to (i) pay, when due, any Rent due hereunder, and such failure shall continue for a period of five (5) Business Days after such amounts become due. Provided, however, no more than once per each Fiscal Year, Tenant shall be entitled to ten (10) days after receipt of written notice from Landlord prior to such failure being an Event of Default hereunder. (b) If Tenant shall fail to (i) pay, when due, or any Additional Charge due hereunder; (ii) fully fund and maintain the Security Deposit as required by Section 3.9; or (iii) fully fund and maintain the Reserve and fund all Reserve Expenditures as required by Section 5.2 , and such failure in each such event shall continue for a period of seven (7) days after receipt of written notice from Landlord. (c) If Tenant shall violate or fail to comply with or perform any other term, provision, covenant, agreement or condition to be performed or observed by Tenant under this Sub -Sublease which is not otherwise identified in this Section 12.1, and such violation or failure shall continue for a period of sixty (60) days after written notice thereof from Landlord; provided, however, if such violation or failure is incapable of cure by Tenant within such sixty (60) days after Tenant's diligent and continuous efforts to cure the same, Tenant shall have up to an additional period of sixty (60) days for a total of one hundred twenty (120) days to cure the same. (d) If Tenant shall fail to pay, when due, any rent, additional rent or other charges or costs under the Sublease Agreement or the Groundlease, as the case may be, or if Tenant shall violate or otherwise fail to comply with or perform any other term, provision, covenant, agreement or condition to be performed or observed by the tenant thereunder, and such violation or failure shall continue beyond any cure period provided for thereunder. (e) If any assignment, transfer, lease or further sublease of or concerning the Leased Property, specifically excluding the P&E, shall be made or deemed to be made that is in violation of the provisions of this Sub -Sublease. (f) If any lien or encumbrance of the Leased Property or if any assignment, transfer, lease, further sub -sublease, lien or encumbrance of the P&E shall be made or deemed to be made that is in violation of the provisions of this Sub -Sublease and such violation or failure shall continue for a period of sixty (60) days after written notice thereof from Landlord. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 52 (g) If Tenant shall cease the actual and continuous operation of the Business contemplated by this Sub -Sublease to be conducted by Tenant upon the Leased Property (and such cessation is not the result of casualty, condemnation or a major renovation and accompanying restoration or is not otherwise permitted by Landlord or is not the result of Applicable Laws or during an Emergency or other Force Majeure Event); or if Tenant shall vacate, desert or abandon the Leased Property; or if the Leased Property shall become empty and unoccupied; or if the Leased Property or Leased Improvements are used or are permitted to be used for any purpose, or for the conduct of any activity, other than the Permitted Use. (h) If, at any time during the Term of this Sub -Sublease, Tenant shall file in any court, pursuant to any statute of either the United States or of any State, a petition in bankruptcy or insolvency, or for reorganization or arrangement, or for the appointment of a receiver or trustee of all or any portion of Tenant's property, including, without limitation, the leasehold interest in the Leased Property, or if Tenant shall make an assignment for the benefit of its creditors or petitions for or enters into an arrangement with its creditors. (i) If, at any time during the Term of this Sub -Sublease, there shall be filed against Tenant in any court pursuant to any statute of the United States or of any State, a petition in bankruptcy or insolvency, or for reorganization, or for the appointment of a receiver or trustee of all or a portion of Tenant's property, including, without limitation, the leasehold interest in the Leased Property, and any such proceeding against Tenant shall not be dismissed within ninety (90) days following the commencement thereof. 0) If Tenant's leasehold interest in the Leased Property or any property therein (including without limitation any material portion of Tenant's Personal Property) shall be seized under any levy, execution, attachment or other process of court where the same shall not be vacated or stayed on appeal or otherwise within sixty (60) days thereafter, or if Tenant's leasehold interest in the Leased Property is sold by judicial sale and such sale is not vacated, set aside or stayed on appeal or otherwise within sixty (60) days thereafter. (k) If any of the Permits material to the operation of the Business or the use of the Land for its Permitted Use are at any time suspended and the suspension is not stayed pending appeal within sixty (60) days of the date of the notice of the suspension of any Permits material to the operation of the Business or the use of the Land for its Permitted Use, or voluntarily terminated without the prior written consent of Landlord, which consent may be withheld in Landlord's sole opinion and discretion. (1) If Tenant fails during the Term of this Sub -Sublease to cure or abate any violation of Applicable Law occurring during the Term that is claimed by any Governmental Agency of any law, order, ordinance, rule, regulation or Applicable Laws pertaining to the operation of the Business or the use of the Land for its Permitted Use, and within the later of (i) the time permitted by such authority for such cure or abatement, or (ii) thirty (30) days after written notice thereof from Landlord. UDC - 028987/000002 - 2700649 Q Sub -Sublease Agreement: Meadowlark 53 (m) If there shall be a default by Tenant under the Pooling Agreement and such default is not cured within any applicable cure period. (n) If there shall be a default by Tenant under any Affiliated Lease and such default is not cured within any applicable cure period. (o) If there shall be a default by Tenant under the Side Letter Agreement and such default is not cured within any applicable cure period. (p) If there shall be a default by Tenant under the CapEx Agreement and such default is not cured within any applicable cure period. Notwithstanding the foregoing or any provision herein to the contrary, a default by Sublessor or Landlord under the Groundlease or a default by Landlord under the Sublease Agreement shall not constitute and Event of Default hereunder or under any of the Affiliated Leases, provided that such default was not caused by a default by Tenant hereunder or otherwise by any action or inaction of Tenant. 12.2 Remedies on Default. If any of the Events of Default hereinabove specified shall occur, Landlord, at any time thereafter, shall have and may exercise any of the following rights and remedies: (a) Landlord may, pursuant to written notice thereof to Tenant, immediately terminate this Sub -Sublease and, peaceably or pursuant to appropriate legal proceedings, reenter, retake and resume possession of the Leased Property for Landlord's own account without liability for trespass (Tenant hereby waiving any right to notice or hearing prior to such taking of possession by Landlord) and, for Tenant's breach of and default under this Sub -Sublease, recover immediately from Tenant any and all sums and damages due or in existence at the time of such termination, including, without limitation, (i) all Rent and other sums, charges, payments, costs and expenses agreed and/or required to be paid by Tenant to Landlord hereunder prior to such termination, (ii) in the event of any Event of Default hereunder which is caused by a default on the part of Tenant under the terms and provisions of the Groundlease or the Sublease Agreement, which results in a termination of the Groundlease or the Sublease Agreement, as the case may be, or the acceleration by the Groundlessor or the Sublessor, as the case may be, of any amounts owed thereunder, including, without limitation, any unpaid past due rent, additional rent or other charges or costs, including attorneys' fees, which may be due and payable as a result of such default, Tenant shall be liable to Landlord for such amounts, (iii) all costs and expenses of Landlord in connection with the recovery of possession of the Leased Property, including reasonable attorney's fees and court costs, and (iv) all costs and expenses of Landlord in connection with any reletting or attempted reletting of the Leased Property or any part or parts thereof, including, without limitation, brokerage fees, advertising costs, reasonable attorney's fees and the cost of any alterations or repairs or tenant improvements which may be reasonably required to so relet the Leased Property, or any part or parts thereof. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 54 (b) Landlord may, pursuant to any prior notice required by law, and without terminating this Sub -Sublease, peaceably or pursuant to appropriate legal proceedings, reenter, retake and resume possession of the Leased Property for the account of Tenant, make such alterations of and repairs and improvements to the Leased Property as may be reasonably necessary in order to relet the same or any part or parts thereof and, directly or through a qualified management or operating company which may include an Affiliated Person of Landlord, operate and manage the Leased Property, and relet or attempt to relet the Leased Property or any part or parts thereof for such term or terms (which may be for a term or terms extending beyond the Term of this Sub -Sublease), at such rents and upon such other terms and provisions as Landlord, in its sole discretion, may deem advisable. If Landlord takes possession and control of the Leased Property and operates the same, Tenant shall, for so long as Landlord is actively operating the Leased Property, have no obligation to operate the Leased Property but agrees that Landlord, any contract manager or operator, or any new tenant or sublessee may, to the extent permitted by Applicable Laws, operate the Business under Tenant's Permits, including, unless prohibited by Applicable Laws, its liquor license, if any, until same are issued in the name of the Landlord or the new manager/operator or tenant or sublessee, as applicable. In addition, Tenant will reasonably cooperate with Landlord in transferring, to the extent transferable, any of Tenant's Permits which Landlord determines would be necessary or appropriate to continue to operate the Leased Property for its Permitted Use. If Landlord relets or attempts to relet the Leased Property, or obtains a contract manager or operator for the Leased Property, Landlord shall at its sole discretion determine the terms and provisions of any new lease or sublease, or management or operating agreement, and whether or not a particular proposed manager or operator, or new tenant or sublessee, is acceptable to Landlord. Upon any such reletting, or the operation of the Leased Property by a contract manager or operator, all rents or incomes received by the Landlord from such reletting or otherwise from the operation of the Leased Property shall be applied, (i) first, to the payment of all costs and expenses of recovering possession of the Leased Property, (ii) second, to the payment of any costs and expenses of such reletting and or operation, including brokerage fees, advertising costs, reasonable attorney's fees, a reasonable management fee (if considered necessary by good business practices), and the cost of any alterations and repairs reasonably required for such reletting or operation of the Leased Property; (iii) third, to the payment of any indebtedness, other than Rent, due hereunder from Tenant to the Landlord, (iv) fourth, to the payment of all Rent and other sums due and unpaid hereunder, and (v) fifth, the residue, if any, shall be held by the Landlord and applied in payment of future Rent as the same may become due and payable hereunder. If the rents received from such reletting or net income from the operation of the Leased Property during any period shall be less than the Rents and Additional Charges required to be paid during that period by the Tenant hereunder, Tenant shall promptly pay any such deficiency to the Landlord and failing the prompt payment thereof by Tenant to Landlord, Landlord shall immediately be entitled to institute legal proceedings for the recovery and collection of the same. Such deficiency shall be calculated and paid at the time each payment of Minimum Rent, Additional Minimum Rent or any other sum shall otherwise become due under this Sub -Sublease, or, at the option of Landlord, at the end of the Term of this Sub -Sublease. Landlord shall, in addition, be immediately entitled to sue for and otherwise recover from Tenant any other \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 55 damages occasioned by or resulting from any abandonment of the Leased Property or other breach of or default under this Sub -Sublease other than a default in the payment of Rent. No such reentry, retaking or resumption of possession of the Leased Property by the Landlord for the account of Tenant shall be construed as an election on the part of Landlord to terminate this Sub -Sublease unless a written notice of such intention shall be given to the Tenant or unless the termination of this Sub -Sublease be decreed by a court of competent jurisdiction. Notwithstanding any such re entry and reletting or attempted reletting of the Leased Property or any part or parts thereof for the account of Tenant without termination, Landlord may at any time thereafter, upon written notice to Tenant, elect to terminate this Sub -Sublease or pursue any other remedy available to Landlord for Tenant's previous breach of or default under this Sub -Sublease. (c) Landlord may, without reentering, retaking or resuming possession of the Leased Property, sue for all Rent and all other sums, charges, payments, costs and expenses due from Tenant to Landlord hereunder (discounted to present value) either: (i) as they become due under this Sub -Sublease, taking into account that Tenant's right and option to pay the Rent hereunder on a monthly basis in any particular Fiscal Year is conditioned upon the absence of a Default on Tenant's part in the performance of its obligations under this Sub -Sublease, or (ii) at Landlord's option, accelerate the maturity and due date of the whole or any part of the Rent for the entire then remaining unexpired balance of the Term of this Sub -Sublease, as well as all other sums, charges, payments, costs and expenses required to be paid by Tenant to Landlord hereunder, including, without limitation, damages for breach or default of Tenant's obligations hereunder in existence at the time of such acceleration, such that all sums due and payable under this Sub -Sublease shall, following such acceleration, be treated as being and, in fact, be due and payable in advance as of the date of such acceleration. Landlord may then proceed to recover and collect all such unpaid Rent and other sums so sued for from Tenant by distress, levy, execution or otherwise. Regardless of which of the foregoing alternative remedies is chosen by Landlord under this subparagraph (c), Landlord shall not be required, except as may be required by Applicable Law, to relet the Leased Property nor exercise any other right granted to Landlord pursuant to this Sub -Sublease, nor, except as may be required by Applicable Laws, shall Landlord be under any obligation to minimize or mitigate Landlord's damages or Tenant's loss as a result of Tenant's breach of or default under this Sub -Sublease. Notwithstanding the foregoing, following such time as Landlord may obtain possession of the Leased Property, Landlord or its successor Landlord at the time of any Sub -Sublease termination, shall continue to make the Leased Property available for lease, on an "as is" basis, and shall turn over the net proceeds thereof to Tenant to the extent actually received by Landlord in respect of any time period for which Landlord shall have received the full amount of Rent payable with respect thereto (albeit perhaps on a basis reasonably discounted for the time value of money or present value basis). (d) Landlord may, in addition to any other remedies provided herein, enter upon the Leased Property or any portion thereof and take possession of (i) any and all of Tenant's Personal Property, if any, (ii) Tenant's books and records necessary to operate the Leased Property, and (iii) all the bank accounts concerning, or established for, the Leased Property, without liability for trespass or conversion (Tenant hereby waiving \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 56 any right to notice or hearing prior to such taking of possession by Landlord) and sell the same by public or private sale, after giving Tenant reasonable notice of the time and place of any public or private sale, at which sale Landlord or its assigns may purchase all or any portion of Tenant's Personal Property, if any, unless otherwise prevented by law. Unless otherwise provided by Applicable Law and without intending to exclude any other manner of giving Tenant reasonable notice, the requirement of reasonable notice shall be met if such notice is given at least ten (10) days before the date of sale. The proceeds from any such disposition, less all expenses incurred in connection with the taking of possession, holding and selling of such Property (including reasonable attorneys' fees) shall be credited against Rent which is due hereunder. (e) Tenant acknowledges that one of the rights and remedies available to Landlord under Applicable Law is to apply to a court of competent jurisdiction for the appointment of a receiver to collect the rents, issues, profits and income of the Leased Property and to manage the operation of the Leased Property. Therefore, in addition to any other right or remedy of Landlord under this Sub -Sublease, Landlord may petition any appropriate court for appointment of a receiver to manage the operation of the Leased Property (or any portion thereof), to collect and disburse all rents, issues, profits and income generated thereby. The receiver shall be entitled to a reasonable fee for his services as receiver. All such fees and other expenses of the receivership estate shall be payable as Additional Charges under this Sub -Sublease. To the extent permitted by Applicable Law, Tenant hereby irrevocably stipulates to the appointment of a receiver under such circumstances and for such purposes and agrees not to contest such appointment. (f) In addition to the remedies hereinabove specified and enumerated, Landlord shall have and may exercise the right to invoke any other remedies allowed at law or in equity as if the remedies of reentry, unlawful detainer proceedings and other remedies were not herein provided. Accordingly, the mention in this Sub -Sublease of any particular remedy shall not preclude Landlord from having or exercising any other remedy at law or in equity. Nothing herein contained shall be construed as precluding the Landlord from having or exercising such lawful remedies as may be and become necessary in order to preserve the Landlord's right or the interest of the Landlord in the Leased Property and in this Sub -Sublease, even before the expiration of any notice periods provided for in this Sub -Sublease, if under the particular circumstances then existing the allowance of such notice periods will prejudice or will endanger the rights and estate of the Landlord in this Sub -Sublease and in the Leased Property. In addition, any provision of this Sub -Sublease to the contrary notwithstanding, no provision of this Sub -Sublease shall delay or otherwise limit Landlord's right to seek injunctive relief or Tenant's obligation to comply with any such injunctive relief. 12.3 Application of Funds. Any payments received by Landlord under any of the provisions of this Sub -Sublease during the existence or continuance of any Event of Default (and any payment made to Landlord rather than Tenant due to the existence of any Event of Default) shall be applied to Tenant's current and past due obligations under this Sub -Sublease in such order as Landlord may determine or as may be prescribed by the laws of the State. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 57 12.4 Landlord's Right to Cure Tenant's Default. If an Event of Default shall occur and be continuing beyond any applicable cure period, Landlord may, but shall have no obligation to perform the same for the account and at the expense of Tenant. If, at any time and by reason of such default, Landlord is compelled to pay, or elects to pay, any sum of money or do any act which will require the payment of any sum of money, or is compelled to incur any expense in the enforcement of its rights hereunder or otherwise, such sum or sums, together with interest thereon at the Overdue Rate shall be deemed Additional Rent hereunder and shall be repaid to Landlord by Tenant promptly when billed therefor, and Landlord shall have all the same rights and remedies in respect thereof as Landlord has in respect of the rents herein reserved. 12.5 Landlord's Security Interest and Lien. (a) Landlord shall have, and Tenant hereby grants, a security interest (a) in Tenant's Personal Property (specifically excluding any proprietary software or proprietary operating systems of Tenant) or the equity of Tenant therein located at the Leased Property, (b) Tenant's books and records necessary to operate the Leased Property, and (c) all of the bank accounts concerning or established for the Leased Property. This security interest is granted for the purpose of securing the payment of Rent, Additional Charges, assessments, penalties and damages herein covenanted to be paid by Tenant. Upon an Event of Default hereunder or under any of the Affiliated Leases, Landlord shall have all remedies available under the Uniform Commercial Code enacted in the State where the Leased Property is located, including, without limitation, the right to take possession of the above -mentioned property and dispose of it by sale in a commercially reasonable manner. Tenant hereby authorizes Landlord to file such financing statements as Landlord deems necessary and appropriate in such jurisdictions as Landlord deems necessary and appropriate for the purpose of serving notice to third parties of the security interest herein granted. (b) Landlord shall have at all times during the Term of this Sub - Sublease, a valid lien for all Rent, Additional Charges and other sums of money becoming due hereunder from Tenant, upon all goods, accounts, wares, merchandise, Inventory, furniture, fixtures, equipment, vehicles and other personal property and effects of Tenant situated in or upon the Leased Property, including Tenant's Personal Property (specifically excluding any proprietary software or proprietary operating systems of Tenant) and any interest of Tenant in P&E Replacements, and such property shall not be removed therefrom except in accordance with the terms of this Sub -Sublease without the approval and consent of Landlord until all arrearages in Rent, Additional Charges or other sums of money then due to Landlord hereunder shall first have been paid and discharged in full. Alternatively, the lien hereby granted may be foreclosed in the manner and form provided by law for foreclosure of security interests or in any other manner and form provided by law. The statutory lien for Rent, if any, is not hereby waived and the express contractual lien herein granted is in addition thereto and supplementary thereto. Tenant agrees to execute and deliver to Landlord from time to time during the Term of this Sub - Sublease such financing statements as Landlord deems necessary and appropriate in such jurisdictions as Landlord deems necessary and appropriate in order to perfect the Landlord's lien provided herein or granted or created by state law. Tenant further agrees that during an Event of Default, Tenant shall not make any distributions to its \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 58 shareholders, partners, members or other owners and any such distributions shall be considered and deemed to be fraudulent and preferential and subordinate to Landlord's claim for Rent and other sums hereunder. 12.6 Collateral Assignment. As additional security for Tenant's performance of its obligations hereunder, Tenant hereby collaterally assigns to Landlord, to the extent assignable, all of Tenant's right, title and interest in Permits, contracts, and other agreements and documents held by Tenant and necessary and used to operate the Leased Property for its Permitted Use. Such collateral assignment shall become an outright assignment and shall be effective upon the expiration or sooner termination of this Sub -Sublease by Landlord as a result of an Event of Default by Tenant without the need to execute any additional instruments evidencing such assignment. Tenant agrees and acknowledges that any third party may rely upon a written statement by Landlord as to an Event of Default by Tenant and the termination of this Sub - Sublease. Notwithstanding the foregoing, Tenant agrees to execute and deliver to Landlord, upon the termination of this Sub -Sublease by Landlord as a result of Event of Default by Tenant, such instruments evidencing the assignment contemplated hereby as may be required by Landlord in its sole and absolute discretion. 12.7 Landlord Default. In the event of a default by Landlord under any material obligation of Landlord hereunder, Landlord shall have thirty (30) days from Tenant's written notice to Landlord specifying the nature of the default to cure such default. If the default is of such nature that it cannot reasonably be corrected within such thirty (30) day period, Landlord shall have such additional period as is reasonably necessary to sure such default, provided that Landlord diligently and continuously prosecutes the cure of such default. In the event that Landlord fails to cure any default, and is not otherwise pursuing a cure thereof, for which it has received notice, as specified herein, Tenant shall have the right to either: (i) cure such default and deduct the reasonable costs of such cure from Rent payable hereunder; or (ii) terminate this Sub - Sublease upon sixty (60) days written notice to Landlord. Tenant's failure to notify Landlord of any material default hereunder shall not act as a waiver of such default. ARTICLE 13 HOLDING OVER If Tenant or any other person or party shall remain in possession of the Leased Property or any part thereof following the expiration of the Term or earlier termination of this Sub -Sublease without an agreement in writing between Landlord and Tenant with respect thereto, the person or party remaining in possession shall be deemed to be a tenant at sufferance, and during any such holdover, the Rent payable under this Sub -Sublease by such tenant at sufferance shall be double the rate or rates in effect immediately prior to the expiration of the Term or earlier termination of this Sub -Sublease. In no event, however, shall such holding over be deemed or construed to be or constitute a renewal or extension of this Sub -Sublease. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 59 ARTICLE 14 LIABILITY OF LANDLORD; INDEMNIFICATION 14.1 Liability of Landlord. Landlord and its Affiliates shall not be liable to Tenant, its employees, agents, invitees, licensees, customers or clients for any damage, injury, loss, compensation or claim, including, but not limited to, claims for the interruption of or loss to Tenant's Business, based on, arising out of or resulting from any cause whatsoever (other than Landlord's gross negligence or willful misconduct), including, but not limited to: (a) repairs to any portion of the Leased Property; (b) interruption in Tenant's Business or Tenant's use of the Leased Property; (c) any accident or damage resulting from the use or operation (by Landlord, Tenant or any other person or persons) of any equipment within the Leased Property, including without limitation, heating, cooling, electrical or plumbing equipment or apparatus; (d) the termination of this Sub -Sublease by reason of the condemnation or destruction of the Leased Property in accordance with the provisions of this Sub -Sublease; (e) any fire, robbery, theft, mysterious disappearance or other casualty; (f) the actions of any other person or persons; (g) any leakage or seepage in or from any part or portion of the Leased Property, whether from water, rain or other precipitation that may leak into, or flow from, any part of the Leased Property, or from drains, pipes or plumbing fixtures in the Leased Improvements; (h) any condition relating to the Environment; and (i) the existence of any Hazardous Substance located at, on or in the Land. Any goods, property or personal effects stored or placed by the Tenant or its employees in or about the Leased Property including Tenant's Personal Property, shall be at the sole risk of the Tenant. Groundlessor and its Affiliates shall not be liable to Tenant, its employees, agents, invitees, licensees, customers or clients for any damage, injury, loss, compensation or claim, including, but not limited to, claims for the interruption of or loss to Tenant's Business, based on, arising out of or resulting from any of the foregoing matters except to the extent caused by the acts or omissions of Groundlessor or its employees, agents, invitees, licensees, customers or clients. 14.2 Indemnification of Landlord. Tenant shall defend, indemnify, pay, save, insure and hold Landlord harmless from and against any and all liabilities, obligations, losses, damages, injunctions, suits, actions, fines, penalties, claims, demands, costs and expenses of every kind or nature, including reasonable attorneys' fees and court costs, incurred by Landlord, arising directly or indirectly from or out of. (a) any failure by Tenant to perform any of the terms, provisions, covenants or conditions of this Sub -Sublease, on Tenant's part to be performed including but not limited to the payment of any fee, cost or expense which Tenant is obligated to pay and discharge hereunder, (b) any accident, injury or damage which shall happen at, in or upon the Leased Property, however occurring; (c) any matter or thing growing out of the condition, occupation, maintenance, alteration, repair, use or operation by any person, including Tenant or a Tenant Affiliate, their employees, agents, invitees, customers, licensees or contractors, of the Leased Property, or any part thereof, or the operation of the business contemplated by this Sub -Sublease to be conducted thereon, therein, or therefrom; (d) any failure of Tenant to comply with the Legal Requirements; (e) any contamination of the Leased Property, or the groundwaters thereof, during the Term hereof, whether by of Tenant or Tenant Affiliate, their employees, agents, invitees, customers, licensees or contractors; (f) any discharge of toxic or hazardous sewage or waste materials from the Leased Property into any septic facility or sanitary sewer system serving the Leased Property arising on or after the date Tenant takes \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 60 possession of the Leased Property, whether by Tenant or Tenant Affiliate, their employees, agents, invitees, customers, licensees or contractors; (g) reciprocal rights granted to Golf Club members in any club associated with the Leased Property; (h) any other act or omission of Tenant or Tenant Affiliate, its employees, agents, invitees, customers, licensees or contractors; or (i) subject to the provisions of Section 10.1 hereof, any exercise by any Person of any of its rights with respect to the Leased Property pursuant to the Permitted Encumbrances; provided, however, Tenant shall not be liable for or be obligated to indemnify Landlord from and against any damages resulting from Landlord's gross negligence or willful misconduct. Tenant shall defend, indemnify, pay, save, insure and hold Groundlessor harmless from and against any and all liabilities, obligations, losses, damages, injunctions, suits, actions, fines, penalties, claims, demands, costs and expenses of every kind or nature, including reasonable attorneys' fees and court costs, incurred by Groundlessor , arising directly or indirectly from or out of. (a) any failure by Tenant to perform any of the terms, provisions, covenants or conditions of the Groundlease, on Tenant's part to be performed including but not limited to the payment of any fee, cost or expense thereunder which Tenant is obligated to pay and discharge hereunder, (b) any accident, injury or damage which shall happen at, in or upon the Leased Property, however occurring during the term hereof-, (c) any matter or thing growing out of the condition, occupation, maintenance, alteration, repair, use or operation by Tenant or a Tenant Affiliate, their employees, agents, invitees, customers, licensees or contractors, of the Leased Property, or any part thereof, or the operation of the business contemplated by this Sub -Sublease to be conducted thereon, therein, or therefrom; (d) any failure of Tenant to comply with the Legal Requirements; (e) any contamination of the Leased Property, or the groundwaters thereof, during the Term hereof by Tenant or Tenant Affiliate, their employees, agents, invitees, customers, licensees or contractors; (f) any discharge of toxic or hazardous sewage or waste materials from the Leased Property into any septic facility or sanitary sewer system serving the Leased Property arising on or after the date Tenant takes possession of the Leased Property by Tenant or Tenant Affiliate, their employees, agents, invitees, customers, licensees or contractors; (g) reciprocal rights granted to Golf Club members in any club associated with the Leased Property; (h) any other act or omission of Tenant or Tenant Affiliate, its employees, agents, invitees, customers, licensees or contractors; or (i) subject to the provisions of Section 10.1 hereof, any exercise by any Person (other than Groundlessor or its successors or assigns) of any of its rights with respect to the Leased Property pursuant to the Permitted Encumbrances; provided, however, Tenant shall not be liable for or be obligated to indemnify Groundlessor from and against any damages resulting from the acts or omissions of Groundlessor or its employees, agents, invitees, customers, licensees or contractors. THE INDEMNIFICATION OF LANDLORD HEREUNDER IS INTENDED TO AND SHALL EXPRESSLY INCLUDE INDEMNIFICATION AGAINST LANDLORD'S OWN NEGLIGENCE, UNLESS SPECIFICALLY PROVIDED OTHERWISE HEREIN. TENANT'S INDEMNITY OBLIGATIONS UNDER THIS ARTICLE 14 AND ELSEWHERE IN THIS SUB -SUBLEASE ARISING PRIOR TO THE TERMINATION OR PERMITTED ASSIGNMENT OF THIS SUB - SUBLEASE SHALL SURVIVE SUCH TERMINATION OR ASSIGNMENT. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 61 14.3 Notice of Claim or Suit. Tenant shall promptly notify Landlord and Groundlessor of any claim, action, proceeding or suit instituted or threatened against Tenant, or against Landlord or Groundlessor concerning or affecting the Leased Property, the Business or the Tenant of which Tenant receives notice or of which Tenant acquires knowledge ("Claim"). In the event Landlord or Groundlessor is made a party to any action for damages or other relief against which Tenant has indemnified Landlord or Groundlessor, as aforesaid, Tenant shall at its own expense using counsel reasonably approved by Landlord (and, to the extent Groundlessor is made a party to such action, Groundlessor), diligently defend Landlord and Groundlessor, as applicable. Tenant shall pay all costs in such litigation or, at Landlord's option, and expense, Landlord may nonetheless engage its own counsel in connection with its own defense or settlement of said litigation. Tenant shall cooperate with Landlord (and, if applicable, Groundlessor) and make available to Landlord (and, if applicable, Groundlessor) all information and data which Landlord (or Groundlessor, if applicable) deems necessary or desirable for such defense. In the event Landlord is required to secure its own counsel due to a conflict in the interests of Tenant and Landlord in any action for damages or other relief against which Tenant has indemnified Landlord, Tenant shall pay all of Landlord's costs in such litigation. To the extent the Seller would be required under the Groundlease to pay Groundlessor's costs in such litigation, Tenant shall pay such costs. Without limiting Groundlessor's rights to approve a settlement in any such litigation, Tenant is required to approve a settlement agreement for any such claim or suit as requested by Landlord and which is consistent with applicable insurance company requirements, unless Tenant posts a bond or other security acceptable to Landlord for any potentially uninsured liability amounts. Notwithstanding any provision herein to the contrary, on or before the end of each Fiscal Quarter, Tenant shall provide Landlord (and, to the extent such Claims are made against Groundlessor, the Groundlessor) with a status report with respect to all Claims, which status report shall include a summary as to the status of each Claim. Nothing in this Section 14.3 shall be deemed to limit or expand any of the Groundlessor's indemnification rights under the Groundlease. 14.4 Limitation on Liability of Landlord. In the event Tenant is awarded a money judgment against Landlord, Tenant's sole recourse for satisfaction of such judgment shall be limited to execution against the Landlord's interest in the Leased Property. In no event shall any partner, member, officer, director, stockholder or shareholder of Landlord or any partner thereof or Affiliated Person or Subsidiary thereof, be personally liable for the obligations of Landlord hereunder. ARTICLE 15 REIT AND UBTI REQUIREMENTS Tenant understands that, in order for Landlord to qualify as a real estate investment trust (a "REIT") under the Code, the following requirements must be satisfied. The parties intend that amounts to be paid by Tenant hereunder and received or accrued, directly or indirectly, by Landlord with respect to the Leased Property (including any rents attributable 'to personal property that is leased with respect thereto) will qualify as "rents from real property" (within the meaning of Code Section 856(d) and Section 512(b)(3)), and that neither party will take, or \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 62 permit to take, any action that would cause any amount received by the Landlord under this Sub -Sublease to fail to qualify as such under the Code. Consistent with this intent, the parties agree that: 15.1 Limitations on Rents Attributable to Personal Property. "Rents attributable to any personal property" leased to the Tenant cannot exceed fifteen percent (15%) of the total rent received or accrued by Landlord under this Sub -Sublease for the Fiscal Year of the Landlord. In addition, Landlord's customary practice is to limit "rents attributable to any personal property" to twelve and one-half percent (12.5%) of the total rent received or accrued by Landlord pursuant to any lease agreement. Consistent therewith, the average of the fair market values of the personal property (within the meaning set forth in Section 1.512(b) l(c)(3)(ii) of the applicable Treasury Regulations) that is leased to Tenant with respect to the Leased Property at the beginning and end of a Fiscal Year cannot exceed twelve and one-half percent (12.5%) of the average of the aggregate fair market values of the real and personal property comprising such Leased Property that is leased to Tenant under such lease at the beginning and end of such Fiscal Year (the "REIT Personal Property Limitation"). If Landlord reasonably anticipates that the REIT Personal Property Limitation will be exceeded with respect to the Leased Property for any Fiscal Year, Landlord may, at Landlord's sole option and absolute discretion (i) notify Tenant, and Landlord and Tenant shall negotiate in good faith the purchase by Tenant of items of personal property anticipated by Landlord to be in excess of the REIT Personal Property Limitation, provided, in such event, Tenant's responsibility to purchase such personal property would be offset by Landlord in some mutually agreeable manner, which would not result in the Landlord earning income which would constitute "unrelated business taxable income" within the meaning of Section 512 of the Code, if the Landlord was a "qualified trust" within the meaning of Section 856(h)(3)(E) of the Code; or (ii) restructure the ownership of Landlord and/or Landlord's ownership of the personal property and lease, or cause an Affiliate to lease to Tenant, pursuant to a separate lease agreement, such personal property, and Tenant agrees that it shall cooperate with Landlord in good faith in connection with such restructuring and shall execute any separate or amended lease agreements, provided the same do not materially affect Tenant's rights and. obligations under this Sub -Sublease, and, in addition, Tenant shall cooperate with Landlord in good faith to obtain any and all necessary consents or approvals from Governmental Authorities or other third parties, including, without limitation, the Groundlessor and the Sublessor, to such restructuring or to any amended sublease agreement or assignment required in connection therewith. 15.2 Basis for Sub -Sublease Rent Restricted. Tenant cannot sublet the property that is leased to it by Landlord, or enter into any similar arrangement, on any basis such that the rental or other amounts paid by the sublessee thereunder would be based, in whole or in part, on either (a) the net income or profits derived by the business activities of the sublessee or (b) any other formula such that any portion of the rent paid by Tenant to Landlord would fail to qualify as "rent from real property" within the meaning of Section 856(d) and Section 512(b)(3) of the Code and regulations promulgated thereunder. 15.3 Landlord Affiliate Subleases Restricted. Anything to the contrary in this Sub - Sublease notwithstanding, Tenant shall not sublease the Leased Property to, or enter into any similar arrangement with, any person in which Landlord owns, directly or indirectly, a ten percent (10%) or more interest, with the meaning of Section 856(d)(2)(B) of the Code, and any \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 63 such action shall be deemed void ab initio. Anything to the contrary in this Sub -Sublease notwithstanding, Tenant shall not sublease the Leased Property to, or enter into any similar arrangement with, any Person that Landlord would be deemed to control within the meaning of Section 512 (b)(13) of the Code. 15.4 Landlord Interests in Tenant Restricted. Anything to the contrary in this Sub - Sublease notwithstanding, neither party shall take, or permit to take, any action that would cause Landlord to own, directly or indirectly, a ten percent (10%) or greater interest in the Tenant within the meaning of Section 856(d)(2)(B) of the Code, and any similar or successor provision thereto, and any such action shall be deemed void ab initio. In addition, anything to the contrary in this Sub -Sublease notwithstanding, Tenant shall not take or permit to take, any action that would cause Landlord to own, directly or indirectly, such interest in Tenant such that amounts received from Tenant would represent amounts received from a controlled entity within the meaning of Section 512(b)(13) of the Code. 15.5 Landlord Services. Any services provided by, or on behalf of, Landlord will not prevent any amounts received or accrued from qualifying as "rents from real property" (within the meaning of Section 856(d)(2) or Section 512(b)(3) of the Code). 15.6 Certain Subtenants Prohibited. Anything to the contrary in this Sub -Sublease notwithstanding, Tenant shall not sublease the Leased Property to, or enter into any similar arrangement with, any Person that would be described in Section 514(c)(9)(13)(iii) or (iv) of the Code. 15.7 Future Amendment. Tenant hereby agrees to amend this Article 15 from time to time as Landlord deems necessary or desirable in order to effectuate the intent hereof. ARTICLE 16 SUBLETTING AND ASSIGNMENT 16.1 Transfers Prohibited Without Consent. Tenant shall not, without the prior written consent of Landlord in each instance, which may be withheld in Landlord's sole opinion and discretion, and without obtaining any consent of Groundlessor required under the Groundlease, sell, assign or otherwise transfer this Sub -Sublease, or Tenant's interest in the Leased Property together with all interests of Tenant in all property of any nature located and used at the Leased Property (including without limitation Tenant's Personal Property and the P&E Replacements, but excluding sales in the ordinary course of business), in whole or in part, or any rights or interest which Tenant may have under this Sub -Sublease, or sublet any part of the Leased Property, or grant or permit any Lien or encumbrance on or security interest in Tenant's interest in this Sub -Sublease. Notwithstanding the foregoing, and subject to the provisions of Section 16.2 hereof, and without limiting in any way Groundlessor's approval rights under the Groundlease, in the event that Tenant elects to sell, assign or otherwise transfer this Sub - Sublease, or Tenant's interest in this Sub -Sublease or the Leased Property, in whole but not in part, to an Affiliated Person of Tenant then Landlord shall not unreasonably withhold its consent to such sale, assignment or transfer provided (i) Tenant gives Landlord prior written notice of such sale or assignment, (ii) Tenant shall remain liable under this Sub -Sublease for the remaining \\DC - 028987/000002 - 2700649 Q Sub -Sublease Agreement: Meadowlark 64 d Term, unless the purchaser or assignee of Tenant's interest in the Sub -Sublease and the Leased Property shall have a financial net worth equivalent to or greater than the financial net worth of Tenant as of the Effective Date hereof and an equivalent number of years and quality of experience in operating Golf Course Facilities, in which event, Tenant shall be released from any further liability hereunder upon such purchase or assignment, (iii) such assignee or purchaser shall continue to operate the Leased Property as a Golf Course Facility consistent with other Golf Course Facilities being operated by Tenant and/or its Affiliated Persons, and (iv) Groundlessor shall have approved the transaction. Any sale, assignment or transfer of this Sub -Sublease without the prior written consent of Landlord, or of the Groundlessor or the Sublessor, if required pursuant to the terms and provisions of the Groundlease or the Sublease Agreement, as the case may be, shall be voidable at Landlord's option. In the event that Groundlessor or Sublessor shall consent to such sale, assignment or transfer, and Landlord shall not consent thereto, such sale, assignment or transfer shall be deemed not to be approved and shall be voidable at Landlord's option. 16.2 Indirect Transfer Prohibited Without Consent. Schedule 16.2 attached hereto sets forth the current ownership and Control of Tenant. A (i) sale, assignment, pledge, transfer, exchange or other disposition of the stock, partnership interests, membership interests, or other equitable interests in Tenant or any Person Controlling Tenant, which results in a change or transfer of Control or a change or transfer of management of the Tenant such that Joe R. Munsch is no longer a key principal and manager of Tenant, or (ii) merger, consolidation or other combination of Tenant with another entity which results in a change or transfer of Control or a change or transfer of management of Tenant such that Joseph Munsch is no longer a key principal and manager of Tenant, shall be deemed an assignment hereunder and shall be subject to Section 16.1 hereof. For purposes hereof, exchange or transfer of management or Control or effective Control, shall mean a transfer of fifty percent (50%) or more of the economic benefit of, or Control of, any such entity. 16.3 Adequate Assurances. Without limiting any of the foregoing provisions of this Article, if, pursuant to the U.S. Bankruptcy Code, as the same may be amended from time to time, Tenant is permitted to assign or otherwise transfer its rights and obligations under this Sub - Sublease in disregard of the restrictions contained in this Article, the assignee shall be deemed to agree to provide adequate assurance to Landlord (a) that any Additional Minimum Rent shall not decline substantially after the date of such assignment, (b) of the continued use of the Leased Property solely in accordance with the Permitted Use thereof, (c) of the continuous operation of the business in the Leased Property in strict accordance with the requirements of Article 4 hereof, and (d) of such other matters as Landlord may reasonably require at the time of such assumption or assignment. Without limiting the generality of the foregoing, adequate assurance shall include the requirement that any such assignee shall have a net worth (exclusive of good will) of not less than the aggregate of the Rent due and payable for the previous Fiscal Year. Such assignee shall expressly assume this Sub -Sublease by an agreement in recordable form, an original counterpart of which shall be delivered to Landlord prior to an assignment of this Sub - Sublease. Any approval of such successor Tenant shall not affect or alter Landlord's approval rights of each manager of the Leased Property or successor Tenants. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 65 ARTICLE 17 ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS 17.1 Estoppel Certificates. Provided that the information set forth therein is then true and correct, Tenant shall from time to time, within fifteen (15) days after request by Landlord and without charge, give a Tenant Estoppel Certificate in the form (or substantially the form) attached hereto as Exhibit "F" and containing such other matters as may be reasonably requested by Landlord to any person, firm or corporation specified by Landlord. 17.2 Periodic Financial Statements. Throughout the Term of this Sub -Sublease, Tenant shall prepare and deliver to Landlord (a) within ten (10) calendar days after the end of each month during the Term hereof, an estimated statement of Total Facility Revenues for the immediately preceding month and for the Fiscal Year to date (with the final form of such statement to be provided within twenty (20) calendar days after the end of each month); and (b) within fifteen (15) calendar days after the end of each month during the Term hereof, an estimated income (or profit and loss) statement and operating balance sheet showing the results of the operation of the Leased Property for the immediately preceding month, for the Fiscal Quarter and for the Fiscal Year to date (with the final form of such income (or profit and loss) statement and operating balance sheet to be provided within twenty (20) calendar days after the end of each month), an accounts receivable member's aging report and a manager's summary report covering trading results and significant operating issues. Tenant shall deliver the statement of Total Facility Revenues required under within the designated time periods in the form customarily provided in the industry and approved in advance by the Landlord. The aforesaid financial statements shall be accompanied by an Officer's Certificate which, for purposes hereof shall mean a Certificate of the Chief Financial Officer of Tenant (or of Tenant's general partner or managing member, if applicable) in which such Officer shall certify (i) that such statements have been properly prepared in accordance with GAAP and are true, correct and complete in all material respects and fairly present the consolidated financial condition of the Tenant at and as of the dates thereof and the results of its operations for the period covered thereby, and (ii) that no Event of Default has occurred or is continuing hereunder. 17.3 Annual Financial Statements. Tenant shall deliver to Landlord within seventy five (75) days after the end of each Fiscal Year, a profit and loss statement, balance sheet and statement of cash flow certified by an independent certified public accountant who is actively engaged in the practice of his profession and who is acceptable to Landlord or, as provided for below, by the Chief Financial Officer of Tenant (which statement shall also be certified by an officer, partner or member in Tenant) showing results from the operation of the Leased Property during such Fiscal Year, including without limitation, an accounting if the calculation of Additional Minimum Rent and amounts paid into the Reserve, and reasons for material variations from the approved budget for such year. Tenant shall also deliver to Landlord at any time and from time to time, upon not less than twenty (20) days notice from Landlord, any financial statements or other financial reporting information required to be filed by Landlord with the SEC or any other governmental authority or required pursuant to any order issued by any Governmental Agencies or arbitrator in any litigation to which Landlord is a party for purposes of compliance therewith. The financial statements required herein are in addition to the statements required under Section 3.3.2 hereof. Notwithstanding the foregoing, in the event that \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 66 Tenant's financial records are not otherwise being reviewed or audited by an independent certified public accountant then the Landlord will accept financial statements certified true and correct by the Chief Financial Officer of Tenant (or of Tenant's general partner or managing member, if applicable). In connection with Landlord's responsibility to maintain effective internal controls over financial reporting and the requirements for complying with the Sarbanes- Oxley Act of 2002, Tenant hereby agrees to provide reasonable access to the Leased Property, including the Leased Property's books and records, and reasonable assistance necessary to Landlord that will allow Landlord to conduct activities necessary to satisfy such responsibilities, including, but not limited to, the activities stipulated by the Public Company Accounting Oversight Board in its release 2004-1, or other similarly promulgated guidance by other regulatory agencies. Landlord agrees to provide Tenant with appropriate notice regarding the conduct of activities anticipated in this provision. Tenant agrees to provide, at Landlord's request, evidence of Tenant's documented policies, if any, regarding "whistle -blower" procedures and regarding the reporting of fraud or misstatements involving financial reporting. 17.4 Records. Tenant shall keep and maintain at all times in accordance with GAAP (separate and apart from its other books, records and accounts) complete and accurate up to date books and records adequate to reflect clearly and correctly the results of operations of the Leased Property, on an accrual basis, including but not limited to, each calculation of Additional Minimum Rent. Such books and records shall be kept and maintained at the Leased Property or Tenant's principal office at c/o Evergreen Alliance Golf Limited, L.P., 4851 LBJ Freeway, Suite 600, Dallas, Texas 75244. Landlord or its representatives shall have, at all reasonable times during normal business hours, reasonable access, on reasonable advance notice, to examine and copy the books and records pertaining to the Leased Property. Such books and records shall be available for at least four (4) years after the applicable quarterly calculation of Additional Minimum Rent for Landlord's inspection, copying, review and audit at Landlord's expense during reasonable business hours and upon reasonable notice for the purpose of verifying the accuracy of Tenant's calculation of Additional Minimum Rent. 17.5 General Operations Budget. In addition to the Reserve Estimate, Tenant shall furnish to Landlord, on or before November 1 of each Fiscal Year proposed annual budgets and business plan in a form satisfactory to Landlord and consistent with the then standards for other Golf Course Facilities setting forth the strategic plans of the Golf Club with specific departmental support plans, and projected income and costs and expenses projected to be incurred by Tenant in managing, leasing, maintaining and operating the Business during the following Fiscal Year. 17.6 Quarterly Meetings. At Landlord's request, Tenant shall make the Tenant's property management team and the executive officers of Tenant (or of Tenant's general partner or managing member, if applicable) available to meet with Landlord once during each Fiscal Quarter to discuss the Reserve Estimate, the annual budgets and any other items related to the operation of the Business, which Landlord wishes to discuss. Tenant agrees to give good faith consideration to any suggestions or requests that Landlord may have. 17.7 Tenant Financial Statements. For so long as Landlord is an Affiliate of CNL Income Properties, Inc., or its successors, Landlord shall have the right, at Landlord's sole discretion, to require Tenant to prepare and deliver to Landlord, within sixty (60) days after the \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 67 end of each Fiscal Year during which a Materiality Threshold Period (as hereinafter defined) occurs, a balance sheet, income statement, statement of owner's equity, cash flows and footnotes with respect to Tenant audited and certified by an independent certified public accountant who is actively engaged in the practice of his profession and who is acceptable to Landlord. The foregoing financial statements and reports shall be certified to Landlord by such independent certified public accountant that such statements have been properly prepared in accordance with GAAP and are true, correct, and complete in all material respects and fairly present the consolidated financial condition of Tenant at and as of the dates thereof and the results of all of its operations for the period covered thereby. For the purposes hereof, the term "Materiality Threshold Period" shall mean any period of time during o-the Term during which Tenant, either itself or together with its Affiliates, leases, operates or manages properties owned by Landlord or its Affiliates that, in the aggregate, comprise more than twenty percent (20%) of the total assets of CNL Income Properties, Inc., or its successors, as reasonably determined by Landlord. 17.8 Groundlessor's Rights. In addition to the obligations of Tenant to Landlord under this Article 17, Tenant shall provide directly to Groundlessor all reports and financial information to which Groundlessor is entitled under the Groundlease and shall honor all rights that Groundlessor may have to audit the financial records pertaining to the Leased Property, inspect books and records, meet with Tenant's officers or employees or otherwise obtain information regarding the operation of the Leased Property, in the same manner and to. the same degree as if the Tenant were the direct tenant under the Groundlease. ARTICLE 18 LANDLORD'S RIGHT TO INSPECT Landlord, Mortgagee and their agents shall have the right to enter upon the Leased Property or any portion thereof at any reasonable time to inspect the same, including but not limited to, the operation, sanitation, safety, maintenance and use of the same, or any portions of the same and to assure itself that Tenant is in full compliance with its obligations under this Sub -Sublease, the Sublease Agreement and the Groundlease, as applicable (but Landlord and Mortgagee shall not thereby assume any responsibility for the performance of any of Tenant's obligations hereunder, nor any liability arising from the improper performance thereof). In making any such inspections, neither Landlord nor Mortgagee shall unduly interrupt or interfere with the conduct of Tenant's business. ARTICLE 19 ACILITY MORTGAGES 19.1 Subordination. This Sub -Sublease, Tenant's interest hereunder and Tenant's leasehold interest in and to the Leased Property are hereby agreed by Tenant to be and are hereby made junior, inferior, subordinate and subject in right, title, interest, lien, encumbrance, priority and all other respects to any mortgage or mortgages and security interests now or hereafter in force and effect upon or encumbering Landlord's interest in the Leased Property, or any portion thereof, and to all collateral assignments by Landlord to any third party or parties of any of \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 68 Landlord's rights under this Sub -Sublease or the rents, issues and profits thereof or therefrom as security for any liability or indebtedness, direct, indirect or contingent, of Landlord to such third party or parties, and to all future modifications, extensions, renewals, consolidations and replacements of, and all amendments and supplements to any such mortgage, mortgages or assignments, and upon recording of any such mortgage, mortgages or assignments, the same shall be deemed to be prior in dignity, lien and encumbrance to this Sub -Sublease, Tenant's interest hereunder and Tenant's leasehold interest in and to the Leased Property irrespective of the dates of execution, delivery or recordation of any such mortgage, mortgages or assignments (such mortgages, mortgages, security interests, assignments, modifications, extensions, renewals, amendments, supplements and replacement being a "Facility Mortgagee"). Tenant shall reasonably cooperate with Landlord and any Mortgagee or potential Mortgagee in connection with a Facility Mortgage, including, but not limited to, consenting to such non -material and reasonable amendments to this Sub -Sublease as may be requested by such Mortgagee. The foregoing subordination provisions shall be automatic and self operative without the necessity of the execution of any further instrument or agreement of subordination on the part of Tenant. Tenant acknowledges and agrees that notwithstanding the foregoing automatic subordination, if Landlord or Mortgagee shall request that Tenant execute and deliver any further instrument or agreement of subordination of this Sub -Sublease or Tenant's interest hereunder or Tenant's leasehold interest in the Leased Property to any such Facility Mortgage, in confirmation or furtherance of or in addition to the foregoing subordination provisions of this Section, Tenant shall promptly execute and deliver the same to the requesting party. Notwithstanding any provision herein to the contrary, Landlord shall, in connection with any subordination of this Sub -Sublease by Tenant, exercise commercially reasonable good faith efforts to obtain a written agreement from Mortgagee that the validity of this Sub -Sublease shall be recognized by Mortgagee, and that, notwithstanding any default by Landlord as mortgagor with respect to such Facility Mortgage, Tenant's possession of and right to use the Leased Property pursuant to the terms of this Sub -Sublease shall not be disturbed by such Mortgage unless and until an Event of Default shall have occurred or Tenant's right to possession shall have been terminated or be terminable in accordance with the provisions hereof. Tenant agrees that it will, from time to time, execute such documentation as may be requested by Landlord and any Mortgagee (a) to assist Landlord and such Mortgagee in establishing or perfecting any security interest in Landlord's interest in the Reserve and any funds therein; and (b) to facilitate or allow Landlord to encumber the Leased Property or any portion thereof as herein contemplated. If, within thirty (30) days following Tenant's receipt of a written request by Landlord or the holder or proposed holder of any such Facility Mortgage, Tenant shall fail or refuse or shall have not executed any such further instrument or agreement of subordination, for whatever reason, Tenant shall be in breach and default of its obligation to do so and of this Sub -Sublease and Landlord shall be entitled thereupon to exercise any and all remedies available to Landlord pursuant to this Sub - Sublease or otherwise provided by law. 19.2 Attornment. Tenant shall and hereby agrees to attorn, and be bound under all of the terms, provisions, covenants and conditions of this Sub -Sublease, to any successor of the interest of Landlord under this Sub -Sublease for the balance of the Term of this Sub -Sublease remaining at the time of the succession of such interest to such successor. In particular, in the event that any proceedings are brought for the foreclosure of any Facility Mortgage, Tenant shall attorn to the purchaser at any such foreclosure sale and recognize such purchaser as Landlord under this Sub -Sublease. Tenant agrees that neither the purchaser at any such foreclosure sale \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 69 nor the foreclosing Mortgagee or holder of any such Facility Mortgage shall have any liability for any act or omission of Landlord, be subject to any offsets or defenses which Tenant may have as claims against Landlord, or be bound by any advance rents which may have been paid by Tenant to Landlord for more than the current period in which such rents come due. 19.3 Rights of Mortgagees and Assignees. Any Mortgagee of Landlord shall have the right to unilateral enjoyment, exercise or control over the rights, remedies, powers and interests of Landlord hereunder, or otherwise arising under Applicable Law, as assigned or granted to such Mortgagee by Landlord or as provided in any Facility Mortgage. At the time of giving any notice of default to Landlord, Tenant shall mail or deliver to any Mortgagee of whom Tenant has notice, a copy of any such notice. No notice of default or termination of this Sub -Sublease by Tenant shall be effective until each Mortgagee shall have been furnished a copy of such notice by Tenant. In the event Landlord fails to cure any default by it under this Sub -Sublease, the Mortgagee shall have, at its option, a period of thirty (30) days after expiration of any cure period of Landlord within which to remedy such default of Landlord or to cause such default to be remedied. In the event that the Mortgagee elects to cure any such default by Landlord, then Tenant shall accept such performance on the part of such Mortgagee as though the same had been performed by Landlord, and for such purpose Tenant hereby authorizes any Mortgagee to enter upon the Leased Property to the extent necessary to exercise any of Landlord's rights, powers and duties under this Sub -Sublease. If, in the event of any default by Landlord which is reasonably capable of being cured by a Mortgagee, the Mortgagee promptly commences and diligently pursues to cure the default, then Tenant will not terminate this Sub -Sublease or cease to perform any of its obligations under this Sub -Sublease so long as the Mortgagee is, with due diligence, engaged in the curing of such default. 19.4 Effect of Facility Mortgaj4e. Provided Tenant is not in monetary or other material default under the terms and conditions of the Sub -Sublease beyond the expiration of the applicable grace period therein provided for curing such default, then: 19.4.1 the right of possession of Tenant to the Leased Property and Tenant's rights arising under the Sub -Sublease shall not be affected or disturbed by Mortgagee in the exercise of any of its rights under the Facility Mortgage or any note secured thereby, nor shall Tenant be named as a party defendant in any action to foreclose the lien of the Facility Mortgage, unless required by law (and then only as and to the extent so required for the foreclosure of such Facility Mortgage), nor in any other way be deprived of its rights under the Sub -Sublease; and 19.4.2 if Mortgagee or any other person acquires rights to the Sublease Agreement pursuant to the exercise of any remedy provided for in the Facility Mortgage or as a result of a default by Landlord thereunder: 19.4.2.1 the Sub -Sublease shall not be terminated or affected by any foreclosure or sale or by any such proceeding; 19.4.2.2 Mortgagee shall covenant that any sale by it of the Leased Property pursuant to the exercise of any rights and remedies under the Facility Mortgage or otherwise shall be made subject to the Sub -Sublease and the rights of Tenant thereunder; and \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 70 19.4.2.3 Tenant's agreement to attorn to Mortgagee or such person as its new landlord pursuant to Section 19.2 hereof, shall be subject to new landlord's agreement to assume and perform all of the obligations of the landlord under the Sub -Sublease accruing from and after such acquisition of title. ARTICLE 20 ADDITIONAL COVENANTS OF TENANT 20.1 Maintenance of Status and Licenses. Tenant shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect and in good standing its corporate, limited partnership, limited liability company or other entity status and existence and its rights and licenses necessary to conduct its business. 20.2 Additional Covenants of Tenant. In addition to the other covenants and representations of Tenant herein and in this Sub -Sublease, Tenant hereby covenants, acknowledges and agrees that Tenant shall: (a) Not guaranty any obligation of any Person, except guarantees in the ordinary course of Tenant's Golf Operating Business. Notwithstanding the foregoing, Tenant shall have the right, upon the prior written consent of CIP, which consent shall be determined in CIP's sole discretion, to guaranty the obligations of a Person, which guaranty is not otherwise in the ordinary course of Tenant's Golf Operating Business; (b) Pay or cause to be paid all lawful and proper claims for labor and rents with respect to the Leased Property in the ordinary course of Tenant's Business; (c) Pay or cause to be paid all trade payables in the ordinary course of Tenant's business; provided, however, Tenant shall not be obligated to pay or cause to be paid any trade payables to which Tenant legitimately and in good faith objects pending resolution of such objection, provided that Tenant shall indemnify and hold Landlord harmless from and against any claim, loss, cost, liability or expense in connection with the same; (d) Not declare, order, pay or make, directly or indirectly, any distribution or any payments to any members or Affiliated Persons as to Tenant (including payments in the ordinary course of business and payments pursuant to any management agreements with any such Affiliate), or set apart any sum of property therefor, or agree to do so, if, at the time of such proposed action or immediately after giving effect thereto, any Event of Default shall exist; (e) Except as otherwise permitted by this Sub -Sublease, not sell, lease (as lessor or sublessor), transfer or otherwise dispose of or abandon, all or any material portion of its assets utilized in the Business to any Person, or sell, lease, transfer or otherwise dispose of or abandon any of the P&E; provided, however, Tenant may dispose of portions of the P&E which have become inadequate, obsolete, worn out, unsuitable, \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 71 undesirable or unnecessary, provided substitute equipment or fixtures having equal or greater value and utility have been provided. (f) Provide and maintain throughout the Term, all Tenant's Personal Property, the P&E and any P&E Replacements as shall be necessary in order to operate the Leased Property in compliance with applicable legal requirements and insurance requirements and otherwise in accordance with customary practice in the industry for the Permitted Use; provided, however, Landlord and Tenant hereby acknowledge and agree that Tenant shall be permitted to maintain and use Tenant's Personal Property in connection with the operation of the Affiliated Leased Properties, provided that such maintenance and use does not adversely affect the compliance of the Leased Property as set forth above. If, from and after the Commencement Date, Tenant acquires an interest in any items of tangible personal property (other than motor vehicles) on, or in connection with the Leased Property which belong to anyone other than Tenant, Tenant shall use best efforts to require that any agreement permitting such use to provide that Landlord may assume Tenant's rights and obligations under such agreement upon the termination of this Sub -Sublease and any assumption of management or operation of the Leased Property by Landlord or its designee. (g) Not, except as approved in writing by Landlord or otherwise in accordance with industry practice or the ordinary course of Tenant's business, either directly or indirectly, for itself, or through, or on behalf of, or in connection with any Person, divert or attempt to divert any business or customer of the Leased Property to any competitor, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the good will associated with the Landlord or the Leased Property. 20.3 Leasehold Financing Prohibited. Tenant shall be prohibited from encumbering the Leased Property with leasehold financing without the prior written consent of Landlord, which consent may be withheld in Landlord's sole and absolute discretion; provided, however, notwithstanding the foregoing to the contrary, Landlord hereby agrees that Landlord shall not unreasonably withhold its consent to leasehold financing, if and provided that, (i) such financing does not encumber or otherwise impair Landlord's interest in and to the Leased Property, (ii) such financing is obtained from an institutional lender reasonably approved by Landlord, and (iii) such financing is upon terms and conditions reasonably acceptable to Landlord, including, but not limited to, that any leasehold mortgage shall provide that any assignee of Tenant's leasehold interest pursuant to a foreclosure or assignment -in -lieu of foreclosure, shall be subject to Landlord's prior written approval, which approval shall not be unreasonably withheld, if and provided that, such assignee shall (a) expressly assume all of Tenant's obligations under this Sub -Sublease, including, but not limited to, the obligation to operate the Leased Property as a Golf Course Facility in the manner and to the standards set forth herein, (b) have a net worth sufficient, in Landlord's reasonable opinion, to meet and discharge tenant's obligations under this Sub -Sublease, (c) have a demonstrated history of successfully operating other Golf Course Facilities in the manner and to the standards set forth herein, (d) not have a reputation as a Person of bad moral character, (e) not be currently in default under any other lease or agreement with Landlord or any Affiliated Person of Landlord, and (f) not be involved in any material dispute or litigation with Landlord. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 72 20.4 Additional Covenants Upon Transfer of Sub -Sublease. Notwithstanding the foregoing or any provision herein to the contrary, upon any permitted direct or indirect sale, assignment or other transfer of all of Tenant's right, title and interest in and to this Sub -Sublease and the Leased Property to any Person which is not an Affiliated Person of Tenant, or upon any permitted merger, consolidation or reorganization of Tenant, the foregoing Sections 20.1 through 20.3 shall be null and void and of no further force or effect and the provisions of Sections 20.1 through 20.3 as more particularly set forth on Schedule 20.4, attached hereto and incorporated herein by this reference, shall replace the same and become a part hereof and shall be fully enforceable against Tenant or any replacement tenant on and after the date of any such sale, assignment or other transfer. ARTICLE 21 INTENTIONALLY OMITTED ARTICLE 22 MEMBERSHIP DOCUMENTS 22.1 Implementation of Membership Documents. In the event that Tenant desires to implement, and Landlord and Groundlessor consent, in its and their sole and absolute discretion, to the implementation of a membership plan at the Golf Club, the following provisions shall apply: 22.1.1 Operation of Club in Compliance With Membership Documents. Tenant acknowledges that in connection with this Sub -Sublease, Tenant shall be obligated to operate the Golf Club in accordance with the requirements and conditions set forth in those membership agreements, bylaws, rules and regulations, and such other membership documents as have been approved by Landlord, and by Groundlessor and by Sublessor (collectively, the "Membership Documents"). 22.1.2 Preservation of Value. Tenant shall maintain and enhance the Golf Club and the membership thereof with the goal of preserving and maximizing the value of the memberships in the Golf Club, all in accordance with the Membership Documents. 22.1.3 Indemnification. Tenant shall protect, indemnify, pay, save, insure and hold harmless Landlord for, from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, reasonable attorneys' fees), to the maximum extent permitted by law, imposed upon or incurred by or asserted against Landlord by reason of any liability related to the refund of deposits, securities violations, or other liabilities associated with the Golf Club or the Membership Documents; provided, however, Tenant's obligations hereunder shall not apply to any liability, obligation, claim, damage, penalty, cause of action, cost or expense arising from any gross negligence or willful misconduct of Landlord, its employees, agents, contractors or invitees. Any such claim, action or proceeding asserted or instituted against Landlord covered under this indemnity shall \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 73 be defended by counsel selected by Tenant and reasonably acceptable to Landlord, at Tenant's expense. The obligations of Tenant pursuant hereto shall survive the expiration or sooner termination of this Sub -Sublease. 22.1.4 Assignment. Upon expiration or earlier termination of this Sub -Sublease, Tenant, at Landlord's sole option, shall be required to assign the Membership Documents to Landlord, or at Landlord's sole election and discretion, any Person designated by Landlord, provided such assignee assumes all of the obligations of Tenant under the Membership Documents effective as of the date of such assignment. 22.1.5. No Modification. Tenant shall make no material modification, amendment, waiver or release of such Membership Documents, rules and regulations, or related membership documents or agreements, or with respect to the collection and refund of any membership deposits without the prior written consent of Landlord and of Sublessor, which consent may be withheld at its and their sole and absolute discretion. ARTICLE 23 MISCELLANEOUS 23.1 Limitation on Payment of Rent. All agreements between Landlord and Tenant herein are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of Rent, or otherwise, shall the Rent or any other amounts payable to Landlord under this Sub -Sublease exceed the maximum permissible under Applicable Laws, the benefit of which may be asserted by Tenant as a defense, and if, from any circumstance whatsoever, fulfillment of any provision of this Sub -Sublease, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, or if from any circumstances Landlord should ever receive as fulfillment of such provision such an excessive amount, then, i so facto, the amount which would be excessive shall be applied to the reduction of the installment(s) of Minimum Rent next due and not to the payment of such excessive amount. This provision shall control every other provision of this Sub -Sublease and any other agreements between Landlord and Tenant. 23.2 No Waiver. No release, discharge or waiver of any provision hereof shall be enforceable against or binding upon Landlord or Tenant unless in writing and executed by Landlord or Tenant, as the case may be. Neither the failure of Landlord or Tenant to insist upon a strict performance of any of the terms, provisions, covenants, agreements and conditions hereof, nor the acceptance of any Rent by Landlord with knowledge of a breach of this Sub -Sublease by Tenant in the performance of its obligations hereunder, or the following of any practice or custom at variance with the terms hereof, shall be deemed or constitute a waiver of any rights or remedies that Landlord or Tenant may have or a waiver of any subsequent breach or default in any of such terms, provisions, covenants, agreements and conditions or the waiver of the right to demand exact compliance with the terms hereof. 23.3 Remedies Cumulative. To the maximum extent permitted by law, each legal, equitable or contractual right, power and remedy of Landlord, now or hereafter provided either in this Sub -Sublease or by statute or otherwise, shall be cumulative and concurrent and shall be in \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 74 addition to every other right, power and remedy and the exercise or beginning of the exercise by Landlord of any one or more of such rights, powers and remedies shall not preclude the simultaneous or subsequent exercise by Landlord of any or all of such other rights, powers and remedies. 23.4 Severability. Any clause, sentence, paragraph, section or provision of this Sub - Sublease held by a court of competent jurisdiction to be invalid, illegal or ineffective shall not impair, invalidate or nullify the remainder of this Sub -Sublease, but rather the effect thereof shall be confined to the clause, sentence, paragraph, section or provision so held to be invalid, illegal or ineffective, and this Sub -Sublease shall be construed as if such invalid, illegal or ineffective provisions had never been contained therein. 23.5 Acceptance of Surrender. No surrender to Landlord of this Sub -Sublease or of the Leased Property or any part thereof, or of any interest therein, shall be valid or effective unless agreed to and accepted in writing by Landlord and no act by Landlord or any representative or agent of Landlord, other than such a written acceptance by Landlord, shall constitute an acceptance of any such surrender. 23.6 No Merger of Title. It is expressly acknowledged and agreed that it is the intent of the parties that there shall be no merger of this Sub -Sublease or of the leasehold estate created hereby by reason of the fact that the same Person may acquire, own or hold, directly or indirectly, this Sub -Sublease or the leasehold estate created hereby and the fee estate or ground landlord's interest in the Leased Property. 23.7 Tenant's Representations. In addition to any other representation or warranty set forth herein and as an inducement to Landlord to enter into this Sub -Sublease, Tenant hereby represents and warrants to Landlord as follows: (a) Tenant is a limited partnership which is duly organized and validly existing and in good standing under the laws of the State of Delaware. Tenant has all requisite power and authority under the laws of the State of Delaware and its partnership or operating agreement, articles of incorporation, by laws, or other charter documents to enter into and perform its obligations under this Sub -Sublease and to consummate the transactions contemplated hereby. Tenant is duly authorized to transact business in any jurisdiction in which the nature of the business conducted by it requires such qualification. (b) Tenant has taken all necessary action to authorize the execution, delivery and performance of this Sub -Sublease, and upon the execution and delivery of any document to be delivered by Tenant, prior to the date hereof, such document shall constitute the valid and binding obligation and agreement of Tenant, enforceable against Tenant in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors and except to the extent that the availability of equitable relief may be subject to the discretion of the court before which any proceeding may be brought. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 75 (c) There are no judgments presently outstanding and unsatisfied against Tenant or any of its properties, and neither Tenant nor any of its properties are involved in any material litigation at law or in equity or any proceeding before any court, or by or before any governmental or administrative agency, which litigation or proceeding could materially adversely affect Tenant, and no such material litigation or proceeding is, to the knowledge of Tenant, threatened against Tenant and no investigation looking toward such a proceeding has begun or is contemplated. (d) To the knowledge of Tenant, neither this Sub -Sublease nor any other document, certificate or statement furnished to Landlord by or on behalf of Tenant in connection with the transaction contemplated herein contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. To the knowledge of Tenant there is no fact or condition which materially and adversely affects the business, operations, affairs, properties or condition of Tenant which has not been set forth in this Sub -Sublease or in other documents, certificates or statements furnished to Landlord in connection with the transaction contemplated hereby or in connection with Landlord's acquisition of the Leased Property. (e) Tenant hereby represents to Landlord that, in the reasonable opinion of Tenant, the Leased Property and the Leased Improvements therein are adequately furnished and contain adequate P&E and Inventories consistent with the amount of P&E and Inventories which is customarily maintained at Golf Course Facilities of the type and character of the Leased Property as otherwise required to operate the Leased Property in a manner contemplated by this Sub -Sublease and in compliance with all legal requirements. (f) Tenant acknowledges that Tenant's failure or repeated delays in making prompt payment in accordance with the terms of any agreement, leases, invoices or statements for purchase or lease of P&E, Inventories or other goods or services will be detrimental to the reputation of Landlord and Tenant. (g) All employees of Tenant or any Affiliate, if any, are solely employees of Tenant or such Affiliate and not Landlord. Neither Tenant nor any Affiliate of Tenant is Landlord's agent for any purpose in regard to Tenant's or any Affiliate of Tenant's employees or otherwise. Further, Tenant expressly acknowledges and agrees that Landlord does not exercise any direction or control over the employment policies or employment decisions of Tenant or any Affiliate of Tenant. NOTWITHSTANDING ANY PROVISION HEREIN TO THE CONTRARY, TENANT HEREBY EXPRESSLY ACKNOWLEDGES AND AGREES THAT TENANT MAY ENGAGE CERTAIN EMPLOYEES OF THE GOLF CLUB WHO WERE EMPLOYEES OF THE SELLER OR MANAGER OF THE GOLF CLUB (THE "PRIOR EMPLOYEES"). TENANT FURTHER ACKNOWLEDGES AND AGREES THAT LANDLORD MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER AS TO COMPLIANCE OF THE SELLER OR MANAGER OF THE GOLF CLUB WITH THE TERMS OR CONDITIONS OF ANY WRITTEN OR VERBAL EMPLOYMENT CONTRACTS OR AGREEMENTS, WRITTEN OR UNWRITTEN EMPLOYEE \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 76 POLICIES OR PROCEDURES, OR COMPLIANCE OF THE SELLER OR MANAGER WITH APPLICABLE LAWS REGARDING SUCH PRIOR EMPLOYEES, INCLUDING, WITHOUT LIMITATION, OSHA, THE AMERICANS WITH DISABILITIES ACT ("ADA"), THE WARN ACT OR THE COBRA ACT, AND TENANT ACKNOWLEDGES THAT ITS EMPLOYMENT OF SUCH PRIOR EMPLOYEES IS AT TENANT'S SOLE RISK, AND FURTHER, THAT TENANT SHALL INDEMNIFY, SAVE, PAY, INSURE AND HOLD HARMLESS LANDLORD WITH RESPECT TO ANY LOSS, COST, LIABILITY OR EXPENSE IN CONNECTION WITH ANY CLAIMS THEREUNDER OR THEREFOR. (h) Tenant has not (i) made any contributions, payments or gifts to or for the private use of any governmental official, employee or agent where either the payment or the purpose of such contribution, payment or gift is illegal under the laws of the United States or the jurisdiction in which made, (ii) established or maintained any unrecorded fund or asset for any purpose or made any false or artificial entries on its books or (iii) made any payments to any person with the intention or understanding that any part of such payment was to be used for any purpose other than that described in the documents supporting the payment. Tenant shall not take any such actions during the Term of this Sub -Sublease. 23.8 Quiet Enjoyment. Notwithstanding any provision herein to the contrary, Landlord covenants and agrees that so long as Tenant shall timely pay all rents due to Landlord from Tenant hereunder and keep, observe and perform all covenants, promises and agreements on Tenant's part to be kept, observed and performed hereunder, Tenant shall and may peacefully and quietly have, hold and occupy the Leased Property free of any interference from Landlord or any Person claiming by, through or under Landlord; subject, however, and nevertheless to the terms, provisions and conditions of this Sub -Sublease, the Permitted Encumbrances (including, without limitation, the lawful exercise by any Person of its rights with respect to the Leased Property pursuant to any of the Permitted Encumbrances), any Facility Mortgage, any other documents affecting record title to or the use and occupancy of the Leased Property immediately prior to the conveyance thereof to Landlord on or about the date hereof, and documents affecting title to the Leased Property approved by Tenant. 23.9 Recordation of Memorandum of Sub -Sublease. At either party's option, a short form memorandum of this Sub -Sublease, in the form attached hereto as Exhibit "G" shall be recorded or filed among the appropriate land records of the County in which the Leased Property is located, and Tenant shall pay the transfer and all recording costs associated therewith. In the event of a discrepancy between the provisions of this Sub -Sublease and such short form memorandum thereof, the provisions of this Sub -Sublease shall prevail. 23.10 Notices. Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Sub -Sublease shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or another nationally -recognized overnight carrier, addressed to the recipient of the notice, with all freight charges prepaid (if by Federal Express or similar carrier). VADC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 77 (a) Any notice, demand or request which shall be served upon any of the parties in the manner aforesaid shall be deemed sufficiently given (i) upon being hand delivered in person, (ii) transmitted by facsimile transmission provided a copy is sent pursuant to (iii) or the following business day, (iii) upon being deposited with Federal Express or another nationally -recognized overnight carrier; provided, however, the time period in which any response to such notice, demand or request must be given shall commence on the date of actual delivery of the notice, demand or request to the address to which it is sent (rather than delivery to the specific addressee). Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given as provided below shall be deemed delivery of the notice, demand or request sent. The addresses given above may be changed by any party by ten (10) days prior notice to all other parties given in the manner provided herein. (b) All such notices shall be addressed, if to Landlord to: and: CNL Income EAGL Meadowlark Golf, LLC c/o CNL Income Properties, Inc. 450 S. Orange Avenue Orlando, Florida 32801 Attention: Tammie A. Quinlan, Chief Financial Officer Attention: Amy Sinelli, Esq., Senior Vice President and Corporate Counsel Fax: (407) 540-2544 Lowndes, Drosdick, Doster, Kantor and Reed, P.A. 215 North Eola Drive P.O. Box 2809 Orlando, Florida 32801 Attention: William T. Dymond, Jr., Esq. Fax: (407) 843-4444 \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 78 if to Tenant to: and: c/o Evergreen Alliance Golf Limited, L.P. 4851 LBJ Freeway, Suite 600 Dallas, Texas 75244 Attention: Joe R. Munsch, President Lynn Marie Mallery, Senior Vice President and General Counsel Fax: (214) 722-6052 The Addison Law Firm 14901 Quorum Drive, Suite 650 Dallas, Texas 75254 Attn: Randy Addison, Esq. Fax: (972) 960-7719 (c) By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Sub -Sublease to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America. 23.11 Construction; Nonrecourse. Anything contained in this Sub -Sublease to the contrary notwithstanding, all claims against, and liabilities of, Tenant or Landlord arising prior to any date of termination or expiration of this Sub -Sublease with respect to the Leased Property shall survive such termination or expiration. Each term or provision of this Sub -Sublease to be performed by Tenant shall be construed as an independent covenant and condition. Time is of the essence with respect to the performance by Tenant of its obligations under this Sub -Sublease, including, without limitation, obligations for the payment of money. Except as otherwise set forth in this Sub -Sublease, any obligations arising prior to the expiration or sooner termination of this Sub -Sublease of Tenant (including without limitation, any monetary, repair and indemnification obligations) and Landlord shall survive the expiration or sooner termination of this Sub -Sublease. In addition, solely with respect to Landlord, nothing contained in this Sub - Sublease shall be construed to create or impose any liabilities or obligations and no such liabilities or obligations shall be imposed on any of the shareholders, beneficial owners, direct or indirect, officers, directors, trustees, employees or agents of Landlord or Tenant for the payment or performance of the obligations or liabilities of Landlord hereunder. The parties have participated jointly in the negotiation and drafting of this Sub -Sublease. In the event an ambiguity or question of intent or interpretation arises, this Sub -Sublease shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Sub -Sublease. UDC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 79 23.12 Counterparts; Headings. This Sub -Sublease may be executed in two or more counterparts, each of which shall constitute an original, but which, when taken together, shall constitute but one instrument and shall become effective as of the date hereof when copies hereof, which, when taken together, bear the signatures of each of the parties hereto shall have been signed. Captions and headings in this Sub -Sublease are for purposes of reference only and shall in no way define, limit or describe the scope or intent of, or otherwise affect, the provisions of this Sub -Sublease. 23.13 Applicable Law. This Sub -Sublease shall be governed by, and construed in accordance with, the laws of the State in which the Leased Property is located. 23.14 Right to Make Agreement. Each party warrants, with respect to itself, that neither the execution and delivery of this Sub -Sublease, nor the compliance with the terms and provisions hereof, shall violate any provision of any law, or any judgment, writ, injunction, order or decree of any court or Governmental Authority; nor result in or constitute a breach or default under or the creation of any lien, charge or encumbrance upon any of its property or assets under, any indenture, mortgage, deed of trust, contract, other commitment or restriction to which it is a party or by which it is bound; nor require any consent, vote or approval which has not been given or taken, or at the time of the transaction involved shall not have been given or taken. Each party covenants that it has and will continue to have throughout the term of this Sub -Sublease and any extensions thereof, the full right to enter into this Sub -Sublease and perform its obligations hereunder. 23.15 Brokerage. Landlord and Tenant hereby represent and warrant to each other that they have not engaged, employed or utilized the services of any business or real estate brokers, salesmen, agents or finders in the initiation, negotiation or consummation of the business and real estate transaction reflected in this Sub -Sublease. On the basis of such representation and warranty, each party shall and hereby agrees to indemnify, pay and save and hold the other party harmless from and against the payment of any commissions or fees to or claims for commissions or fees by any real estate or business broker, salesman, agent or finder resulting from or arising out of any actions taken or agreements made by them with respect to the business and real estate transaction reflected in this Sub -Sublease. 23.16 No Partnership or Joint Venture. Landlord shall not, by virtue of this Sub - Sublease, in any way or for any purpose, be deemed to be a partner of Tenant in the conduct of Tenant's business upon, within or from the Leased Property or otherwise, or a joint venturer or a member of a joint enterprise with Tenant. 23.17 Entire Agreement. This Sub -Sublease contains the entire agreement between the parties and, except as otherwise provided herein, can only be changed, modified, amended or terminated by an instrument in writing executed by the parties. It is mutually acknowledged and agreed by Landlord and Tenant that there are no verbal agreements, representations, warranties or other understandings affecting the same; and that Tenant hereby waives, as a material part of the consideration hereof, all claims against Landlord for rescission, damages or any other form of relief by reason of any alleged covenant, warranty, representation, agreement or understanding not contained in this Sub -Sublease. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 80 23.18 Costs and Attorneys' Fees. In addition to Landlord's rights under Sections 12.2 and 14.2, if either party shall bring an action to recover any sum due hereunder, or for any breach hereunder, and shall obtain a judgment or decree in its favor, the court may award to such prevailing party its reasonable costs and reasonable attorney's fees, specifically including reasonable attorney's fees incurred in connection with any appeals (whether or not taxable as such by law). Landlord shall also be entitled to recover its reasonable attorney's fees and costs incurred in any bankruptcy action filed by or against Tenant, including, without limitation, those incurred in seeking relief from the automatic stay, in dealing with the assumption or rejection of this Sub -Sublease, in any adversary proceeding, and in the preparation and filing of any proof of claim. 23.19 Approval of Landlord. Whenever Tenant is required under this Sub -Sublease to do anything to meet the satisfaction or judgment of Landlord, the reasonable satisfaction or judgment of Landlord shall be deemed sufficient. The foregoing provision of this Section shall not apply in any instance where the provisions of this Sub -Sublease expressly state that the provisions of this Section do not apply or where the provisions of this Sub -Sublease expressly state that such consent, approval or satisfaction are subject to the sole and absolute discretion or judgment of Landlord, and in each such instance Landlord's approval or consent may be unreasonably withheld or unreasonable satisfaction or judgment may be exercised by Landlord. 23.20 Successors and Assigns. The agreements, terms, provisions, covenants and conditions contained in this Sub -Sublease shall be binding upon and inure to the benefit of Landlord and Tenant and, to the extent permitted herein, their respective successors and assigns. 23.21 Waiver of Jury Trial. TENANT AND LANDLORD HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAWS, THE RIGHT EITHER OF THEM OR THEIR HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS OR ASSIGNS MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION PROCEEDINGS OR COUNTERCLAIM, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LEASE OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, THE RELATIONSHIP OF LANDLORD AND TENANT HEREUNDER, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT TO LANDLORD'S ACCEPTING THIS LEASE. 23.22 Treatment of Lease. Landlord and Tenant each acknowledge and agree that: (i) this Sub -Sublease is a "true lease" and not a financing lease, capital lease, mortgage, equitable mortgage, deed of trust, trust agreement, security agreement or other financing or trust arrangement, and the economic realities of this Sub -Sublease are those of a true lease; (ii) the business relationship created by this Sub -Sublease and any other related documents is solely that of a long term commercial lease between Landlord and Tenant, the Sub -Sublease has been entered into by both parties in reliance upon the economic and legal bargains contained herein, and none of the agreements contained herein is intended, nor shall the same be deemed or construed to create a partnership between Landlord and Tenant, to make them joint venturers, to make Tenant an agent, legal representative, partner, or subsidiary of Landlord, nor to make Landlord in any way responsible for the debts, obligations or losses of Tenant; (iii) each party \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 81 will treat this Sub -Sublease as a true lease for tax purposes and an operating lease under generally accepted accounting principles, and for federal income tax purposes, each party shall report this Sub -Sublease as a true lease with Landlord as the owner of the Leased Property and Tenant as the tenant of the Leased Property; (iv) each party will not, nor will it permit any Affiliate to, at any time, take any action or fail to take any action with respect to the preparation or filing of any statement or disclosure to any governmental authority, including, without limitation, any income tax return (or amended return), to the extent that such action or such failure to take action would be inconsistent with the intention of the parties expressed in this Section 23.22; (v) the Minimum Rent is the fair market value for the use of the Leased Property and was agreed to by Landlord and Tenant on that basis, and the execution and delivery of, and the performance by Tenant of its obligations under this Sub -Sublease do not constitute a sale, transfer or conveyance of the Leased Property by Landlord to Tenant; (vi) each of Landlord and Tenant waives any claim or defense based upon the characterization of this Sub -Sublease as anything other than a true lease, and each party stipulates and agrees that it will not challenge the validity, enforceability or characterization of this Sub -Sublease as a true lease, nor will it assert or take or omit to take any action inconsistent with the agreements and understandings of this Cectinn 7I 77 23.23 Transfer of Licenses. Upon the expiration or sooner termination of this Sub - Sublease, Tenant shall use its best efforts to transfer and assign to Landlord or its designee or assist Landlord or its designee in obtaining transfer or assignment of all Leased Intangible Property, including without limitation and together with any contracts, licenses (including without limitation all licenses identified as part of the Initial Tenant Personal Property and any replacements thereof and additions thereto), permits, development rights, trade names (except for trade names as included within the Initial Tenant Personal Property), telephone exchange numbers identified with the Leased Property, approvals and certificates and all other intangible rights, benefits and privileges of any kind or character with respect to the Leased Property, useful or required for the then operation of the Leased Property (except for proprietary software as included within the Initial Tenant Personal Property). If requested by Landlord and to the extent permitted by Applicable Law, the Tenant shall provide a collateral assignment or similar pledge of such licenses and other intangible rights upon Landlord's request and as further security for Tenant's obligations hereunder. 23.24 Tenant's Personal Property. Upon the expiration or sooner termination of the Term of this Sub -Sublease, Landlord may, in its sole and absolute discretion, elect to give Tenant Notice that Tenant shall be required, within ten (10) Business Days after such expiration or termination, to remove all of Tenant's Personal Property from the Leased Property. 23.25 No Effect on Groundlease or Sublease. Landlord subleases the Leased Property from Seller pursuant to the Sublease Agreement. Seller leases the Leased Property from the Groundlessor pursuant to the Groundlease. Notwithstanding anything to the contrary contained in this Sub -Sublease, or in the Groundlease, the Sublease Agreement or the Purchase Agreement, or in any other agreement or document executed in connection herewith or therewith, the parties hereto acknowledge and agree that neither the Seller nor the Groundlessor is a party to or otherwise bound by the terms hereof. This Sub -Sublease shall have no effect on the rights and obligations of the Seller or the Landlord under the Sublease Agreement or of the Seller or the Groundlessor under the Groundlease. Neither the Groundlessor's nor Seller's consent to or \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 82 recognition of this Sub -Sublease shall bind such party to the terms hereof. The Groundlessor's consent to or recognition of the Sublease Agreement, the Purchase Agreement, or any such other agreements or documents, nor any reference herein or therein to the Purchase Agreement or the Sublease Agreement, shall bind the Groundlessor to the terms and provisions thereof, nor shall any such documents or agreements, nor Groundlessor's consent to or recognition of them, in any way limit or expand the rights or obligations of the Groundlessor under the Groundlease. In addition, in the event of a conflict between any provision in this Sub -Sublease and a provision in the Groundlease or Sublease, the Groundlease shall control as between Groundlessor, on the one hand, and Landlord and Tenant, on the other hand. IN WITNESS WHEREOF, the parties have executed this Sub - Sublease as a sealed instrument as of the date above first written. [SIGNATURES APPEAR ON FOLLOWING PAGES] \\DC - 028987/000002 - 2700649 Q Sub -Sublease Agreement: Meadowlark 83 UDC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark LANDLORD: CNL INCOME EAGL MEADOWLARK, LLC, a Delaware limited liability company M. Name: Amy Sinelli Title: Senior Vice President 84 TENANT: EVERGREEN ALLIANCE GOLF LIMITED, L.P., a Delaware limited partnership By: PREMIER GOLF EAGL GP, L.L.C., a Delaware limited liability company, General Partner By: Name: Title: NOTICE: THIS SUB -SUBLEASE CONTAINS WAIVERS AND INDEMNITIES BY THE TENANT OF THE LANDLORD'S OWN NEGLIGENCE. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark 85 \ADC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark Exhibit "A" Initial Landlord P&E (See attached) Exhibit A Exhibit "B" Initial 'Perm Minimum Rent The amount of Minimum Rent due during the Term shall be calculated as follows: From the Commencement Date of this Sub -Sublease until the last day of the Term, which shall include the Initial Term and any Extended Term, total Minimum Rent for each Accounting Year will be an annual amount equal to the sum of the product of (i) Adjusted Lease Basis multiplied by (ii) a rate equal to the following (the "Lease Rate"): From the Commencement Date through the end of Accounting Year 1 8.75% For Accounting Year 2 For Accounting Year 3 For Accounting Year 4 For Accounting Year 5 For Accounting Year 6 through Accounting Year 20 of the Initial Term and during each Extended Term \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark - 8.90% 9.05% 9.20% - 9.35% - 9.45% Exhibit B \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark EXHIBIT "C" Permitted Encumbrances (See attached) Exhibit C \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark Exhibit "D" Initial 'Tenant Personal Property (See attached) Exhibit D \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark Exhibit "E" The Land (See attached) Exhibit E Exhibit "IF" Tenant Estoppel Certificate THIS TENANT'S ESTOPPEL CERTIFICATE ("Certificate") is given this day of , 20, by EVERGREEN ALLIANCE GOLF LIMITED, L.P., a Delaware limited partnership whose address is 4851 LBJ Freeway, Suite 600, Dallas, Texas 75244, as Tenant ("Tenant"), in favor of a with principal office and place of business at ("Beneficiary"). RECITALS: A. Pursuant to the terms and conditions of that certain Sub -Sublease Agreement ("Sub -Sublease") dated , CNL INCOME EAGL MEADOWLARK, LLC, a Delaware limited liability company ("Landlord"), leased or sub -subleased, as the case may be, to Tenant certain real property in Huntington Beach, California ("Leased Property"), which Leased Property is more particularly described in the Sub -Sublease. B. Pursuant to the terms and conditions of the Sub -Sublease, the Beneficiary has requested that the Tenant execute and deliver this Certificate with respect to the Sub -Sublease. NOW, THEREFORE, in consideration of the above Leased Property, the Tenant hereby makes the following statements for the benefit of the Assignee: 1. The copy of the Sub -Sublease attached hereto and made a part hereof as Exhibit "A" is a true, correct and complete copy of the Sub -Sublease, which Sub -Sublease is in full force and effect as of the date hereof, and has not been modified or amended. 2. The Sub -Sublease sets forth the entire agreement between the Landlord and the Tenant relating to the leasing of the Leased Property, and there are no other agreements, written or oral, relating to the leasing of the Leased Property. 3. There exist no uncured or outstanding defaults or events of default under the Sub - Sublease, or events which, with the passage of time, and the giving of notice, or both, would be a default or event of default under the Sub -Sublease. 4. No notice of termination has been given by Landlord or Tenant with respect to the Sub -Sublease. 5. All payments due the Landlord under the Sub -Sublease through and including the date hereof have been made, including the monthly installment of Minimum Rent (as defined in the Sub -Sublease) for the period of to in the amount of 6. As of the date hereof, the annual Minimum Rent under the Sub -Sublease is S \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark Exhibit F-1 7. Additional Minimum Rent (as defined in the Sub -Sublease) has been paid through and including the Fiscal Year ending 8. There are no disputes between the Landlord and the Tenant with respect to any rental due under the Sub -Sublease or with respect to any provision of the Sub -Sublease. 9. Notwithstanding any provisions of the Sub -Sublease to the contrary, the Tenant hereby consents to the collateral assignment of the Sub -Sublease by the Landlord to the Beneficiary, and agrees that no terms and conditions of the Sub -Sublease shall be altered, amended or changed as a result of such assignment. 10. The Tenant hereby agrees that from and after the date hereof copies of all notices which Tenant is required to deliver to the Landlord under the Sub -Sublease with respect to defaults, events of default or failure to perform by the Landlord under the Sub -Sublease, shall be delivered to Beneficiary at the following address: 11. The Tenant represents and warrants that (a) all improvements constructed on the Leased Property have been approved and accepted by Tenant, (b) all utility sources and utility companies which service the Leased Property have been approved and accepted by Tenant and utility service is available to the Leased Property, (c) Tenant is in occupancy of the Leased Property pursuant to the Sub -Sublease, and (d) Tenant has no offsets, counterclaims or defenses with respect to its obligations under the Sub -Sublease. 12. The Tenant understands and acknowledges that Beneficiary is relying upon the representations set forth in this Certificate, and may rely thereon in connection with the [collateral] assignment of the Sub -Sublease to Beneficiary. IN TESTIMONY WHEREOF, witness the signature of the Tenant as of the day and year first set forth above. \ADC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark EVERGREEN ALLIANCE GOLF LIMITED, L.P., a Delaware limited partnership By: PREMIER GOLF EAGL GP, L.L.C., a Delaware limited liability company, General Partner Name: Exhibit F-2 Title: STATE OF COUNTY OF The foregoing instrument was acknowledged before me this day of 20 by , as of , a , on behalf of the He/she is personally known to me or has produced as identification. (NOTARY SEAL) \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark Notary Public Printed Name: Notary Public, State of _ Commission #: My Commission Expires: Exhibit F-3 Exhibit "G" Memorandum of Sub -Sublease THIS MEMORANDUM OF SUB -SUBLEASE ("Memorandum"), entered into as of this day of , 200_, by and between CNL INCOME EAGL MEADOWLARK, LLC, a Delaware limited liability company, whose address is 450 South Orange Avenue, Orlando, Florida 32801, as landlord ("Landlord"), and EVERGREEN ALLIANCE GOLF LIMITED, L.P., a Delaware limited partnership, whose address is 4851 LBJ Freeway, Suite 600, Dallas, Texas 75244, as tenant ("Tenant"). WITNESETH: THAT, Landlord and Tenant have heretofore entered into a certain Sub -Sublease Agreement dated , 200._ (the "Sub -Sublease") covering certain Leased Property consisting of, among other things, certain real property located in Huntington Beach, California, more particularly described on Exhibit "A" attached hereto upon which there is constructed and located certain improvements (together the "Leased Property"); and WHEREAS, it is the desire of both Landlord and Tenant to memorialize the Sub -Sublease and set forth certain pertinent data with respect thereto. NOW THEREFORE, with respect to the Sub -Sublease, Landlord and Tenant hereby acknowledge and agree as follows: 1. Demise. The Leased Property has been and is hereby demised, let and leased or sub -subleased, as the case may be, by Landlord to Tenant, and taken and accepted by Tenant from Landlord, all pursuant to and in accordance with the Sub -Sublease and subject to the terms and provisions of that certain Lease Agreement dated July 6, 1992 by and between the City of Huntington Beach (the "City"), as "Lessor", and American Golf Corporation, as "Lessee", as the same is amended, modified or affected by that certain Sublease Agreement dated 200_, by and between American Golf Corporation, as "Sublessor" and Landlord, as "Sublessee". 2. Term. The initial Term of the Sub -Sublease is from 200, until , 20_. Tenant has the right, privilege and option to renew and extend the initial Term of the Sub -Sublease for up to four (4) additional periods of five (5) years each, subject to the provisions and conditions of the Sub -Sublease; provided, however, the Initial Term, or any extended Term of the Sub -Sublease may not exceed the initial term, or any extended term, under the Sublease Agreement. UDC - 028987/000002 _ 2700649 v2 Sub -Sublease Agreement: Meadowlark Exhibit G-1 3. Possession. Landlord has delivered possession of the Leased Property to Tenant and Tenant has accepted delivery and taken possession of the Leased Property from Landlord in the "as is" condition of the Leased Property on the Commencement Date. 4. Liens on Landlord's Interest Prohibited. By the terms of the Sub -Sublease, Landlord's interest in the Leased Property may not be subjected to liens of any nature by reason of Tenant's construction, alteration, repair, restoration, replacement or reconstruction of any improvements on or in the Leased Property, including those arising in connection with or as an incident to the renovation of the improvements located on the Leased Property, or by reason of any other act or omission of Tenant (or of any person claiming by, through or under Tenant) including, but not limited to, construction, mechanics' and materialmen's liens. Accordingly, all persons dealing with Tenant are hereby placed on notice that such persons shall not look to Landlord or to Landlord's credit or assets (including Landlord's interest in the Leased Property) for payment or satisfaction of any obligations incurred in connection with the construction, alteration, repair, restoration, renovation, replacement or reconstruction thereof by or on behalf of Tenant. Tenant has no power, right or authority to subject Landlord's interest in the Leased Property to any construction, mechanic's or materialmen's lien or claim of lien. 5. Subordination and Attornment. The Sub -Sublease specifically provides that the Sub -Sublease and Tenant's leasehold interest in and to the Leased Property are junior, inferior, subordinate and subject in all respects to any mortgage or mortgages now or hereafter in force and effect upon or encumbering the Leased Property or any portion thereof, and that Tenant shall, and has agreed to, attorn to any successor of the interest of Landlord under the Sub -Sublease, including the purchaser at any foreclosure sale occasioned by the foreclosure of any such mortgage or mortgages, for the balance of the Term of the Sub -Sublease remaining at the time of the succession of such interest to such successor. 6. Inconsistent Provisions. The provisions of this Memorandum constitute only a general description of the content of the Sub -Sublease with respect to matters set forth herein. Accordingly, third parties are advised that the provisions of the Sub -Sublease itself shall be controlling with respect to all matters set forth herein. In the event of any discrepancy between the provisions of the Sub - Sublease and this Memorandum, the provisions of the Sub -Sublease shall take precedence and prevail over the provisions of this Memorandum. 7. Termination of Sub -Sublease. All rights of Tenant shall terminate upon the earlier to occur of (i) the expiration or earlier termination of the Sub -Sublease, or (ii) the expiration or earlier termination of the Sublease Agreement. A termination of the Sub -Sublease may be evidenced by a written \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark Exhibit G-2 notice of such expiration or termination recorded or filed by Landlord among the appropriate land records of the County in which the Leased Property is located. [SIGNATURES APPEAR ON FOLLOWING PAGES] \\DC - 029987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark Exhibit G-3 IN WITNESS WHEREOF, Landlord and Tenant have caused this Memorandum of Sub -Sublease to be duly executed on or as of the day and year first above written. Signed, sealed and delivered CNL INCOME EAGL MEADOWLARK, in the presence of: LLC, a Delaware limited liability company By: Name: Its: "LANDLORD" STATE OF COUNTY OF The foregoing instrument was acknowledged before me this day of 20_ by , as of , a , on behalf of said He/she is personally known to me or has produced as identification. (NOTARY SEAL) \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark Notary Public Printed Name: Notary Public, State of Commission #: My Commission Expires: Exhibit G-4 EVERGREEN ALLIANCE GOLF LIMITED, L.P., a Delaware limited partnership By: PREMIER GOLF EAGL GP, L.L.C., a Delaware limited liability company, General Partner I' m Name: Its: STATE OF COUNTY OF "TENANT" The foregoing instrument was acknowledged before me this _ day of 20_ by , as of PREMIER GOLF EAGL GP, L.L.C., a Delaware limited liability company and general partner of EVERGREEN ALLIANCE GOLF LIMITED, L.,P. a Delaware limited partnership, on behalf of said company and partnership. He/she is personally known to me or has produced as identification. (NOTARY SEAL) \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark Notary Public Printed Name: Notary Public, State of Commission #: My Commission Expires: Exhibit G-5 Exhibit " H" Permitted Agreements With Affiliated Persons of Tenant \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark Exhibit H-1 Schedule 1 Affiliated Leases Existing Leases That certain Second Amended and Restated Lease Agreement, dated as of November 30, 2007, between Canyon Springs LLC, as landlord, and Tenant, as tenant. 2. That certain Second Amended and Restated Lease Agreement, dated as of November 30, 2007, between Cinco Ranch LLC, as landlord, and Tenant, as tenant. 3. That certain Second Amended and Restated Lease Agreement, dated as of November 30, 2007, between Fossil Creek LLC, as landlord, and Tenant, as tenant. 4. That certain Second Amended and Restated Lease Agreement, dated as of November 30, 2007, between Plantation LLC, as landlord, and Tenant, as tenant. 5. That certain Amended and Restated Sub -Concession Agreement, dated as of November 30, 2007, between Clear Creek LLC, as landlord, and Tenant, as tenant. 6. That certain Second Amended and Restated Sub -Concession Agreement, dated as of November 30, 2007, between Lake Park LLC, as landlord, and Tenant, as tenant. 7. That certain Second Amended and Restated Sublease Agreement, dated as November 30, 2007 between Mansfield LLC, as landlord, and Tenant, as tenant. 8. That certain Amended and Restated Lease Agreement, dated as of November 30, 2007, between Mesa Del Sol LLC, as landlord, and Tenant, as tenant. . 9. That certain Amended and Restated Lease Agreement, dated as of November 30, 2007, between Lakeridge LLC, as landlord, and Tenant, as tenant. 10. That certain Amended and Restated Lease Agreement, dated as of November 30, 2007, between Royal Meadows LLC, as landlord, and Tenant, as tenant. 11. That certain Amended and Restated Lease Agreement, dated as of November 30, 2007, between Painted Hills LLC, as landlord, and Tenant, as tenant. 12. That certain Amended and Restated Lease Agreement, dated as of November 30, 2007, between Fox Meadow LLC, as landlord, and Tenant, as tenant. 13. That certain Amended and Restated Lease Agreement, dated as of November 30, 2007, between Weymouth LLC, as landlord, and Tenant, as tenant. 14. That certain Amended and Restated Lease Agreement, dated as of November 30, 2007, between Signature of Solon LLC, as landlord, and Tenant, as tenant. \ADC - 028987/000002 - 2700649 Q -2- New Leases 15. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL Southwest Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Ancala Country Club" located in Scottsdale, Arizona. 16. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL Southwest Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Arrowhead Country Club" located in Glendale, Arizona. 17. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL Southwest Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Continental Golf Course" located in Scottsdale, Arizona. 18. That certain Lease and Sublease Agreement, dated as of November 30, 2007, between CNL Income EAGL Southwest Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Desert Lakes Golf Course" located in Bullhead City, Arizona. 19. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL Southwest Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Foothills Golf Club" located in Phoenix, Arizona. 20. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL Southwest Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Kokopelli Golf Club" located in Gilbert, Arizona. 21. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL Southwest Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Legend at Arrowhead" located in Glendale, Arizona. 22. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL Southwest Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "London Bridge Golf Club" located in Lake Havasu, Arizona. 23. That certain Lease and Sublease Agreement, dated as of November 30, 2007, between CNL Income EAGL Southwest Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Stonecreek Golf Club" located in Phoenix, Arizona. 24. That certain Lease Agreement, dated as of November 30, 2007; between CNL Income EAGL Southwest Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Superstition Springs Golf Club" located in Mesa, Arizona. 25. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL Southwest Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Tatum Ranch Golf Club" located in Cave Creek, Arizona. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark Schedule 1 26. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL West Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Arrowhead Golf Club" located in Littleton, Colorado. 27. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL West Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Painted Desert Golf Club" located in Las Vegas, Nevada. 28. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL North Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Eagle Brook Country Club" located in Geneva, Illinois. 29. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL North Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Mission Hills Country Club" located in Northbrook, Illinois. 30. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL North Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Ruffled Feathers Golf Club" located in Lemont, Illinois. 31. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL North Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Tamarack Country Club" located in Naperville, Illinois. 32. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL North Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Majestic Oaks Golf Club" located in Ham Lake, Minnesota. 33. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL Midwest Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Deer Creek Golf Club" located in Overland Park, Kansas. 34. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL Midwest Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Tallgrass Country Club" located in Wichita, Kansas. 35. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL Midwest Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Meadowbrook Golf & Country Club" located in Tulsa, Oklahoma. 36. That certain Lease Agreement, dated as of November 30, 2007, between CNL Income EAGL Mideast Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Hunt Valley Golf Club" located in Phoenix, Maryland. 37. If and when executed, that certain Sub -Concession Agreement to be executed between CNL Income EAGL Leasehold Golf, LLC, as landlord, and Tenant, as tenant, with \\DC - 028987/000002 - 2700649 Q Sub -Sublease Agreement: Meadowlark Schedule 2 respect to the golf course property known as "David L. Baker Memorial Golf Course" located in Fountain Valley, California. 38. That certain Sublease Agreement, dated as of March 7, 2008, between CNL Income EAGL Leasehold Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Shandin Hills Golf Course" located in San Bernardino, California. 39. That certain Sublease Agreement, dated as of December 19, 2007, between CNL Income EAGL Leasehold Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "The Norman K. Probstein Community Golf Courses and Youth Learning Center in Forest Park" located in St. Louis, Missouri. 40. That certain Sub -Sublease Agreement, dated as of December 19, 2007, between CNL Income EAGL Leasehold Golf, LLC, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Micke Grove Golf Course" located in Lodi, California. 41. If and when executed, that certain Sub -Management Agreement to be executed between CNL Income EAGL Las Vegas, LLC and Tenant, with respect to the golf course property known as "Las Vegas Golf Club" located in Las Vegas, Nevada. 42. That certain Sub -Sublease Agreement, dated as of January 1, 2008, between Grapevine Golf Club, LP, as landlord, and Tenant, as tenant, with respect to the golf course property known as "Cowboys Golf Club" located in Grapevine, Texas. UDC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark Schedule 3 \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark Schedule 16.2 Tenant Organizational Chart Schedule 16.2 Schedule 20.4 Additional Covenants Upon Transfer of Sub -Sublease ITIONAL COVENANTS OF TENANT 20.4.1 Conduct of Business. Tenant shall not engage in any business other than the leasing and operation of the Leased Property for the Permitted Use and activities incidental thereto, and shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect and in good standing its corporate, limited partnership, limited liability company or other entity status and existence and its rights and licenses necessary to conduct such business. 20.4.2 Additional Covenants of Tenant. In addition to the other covenants and representations of Tenant herein and in this Sub -Sublease, Tenant hereby covenants, acknowledges and agrees that Tenant shall: (a) Not guaranty any obligation of any Person; (b) Pay or cause to be paid all lawful claims for labor and rents with respect to the Leased Property; (c) Pay or cause to be paid all trade payables; (d) Not declare, order, pay or make, directly or indirectly, any distribution or any payments to any members or Affiliated Persons as to Tenant (including payments in the ordinary course of business and payments pursuant to any management agreements with any such Affiliate), or set apart any sum of property therefor, or agree to do so, if, at the time of such proposed action or immediately after giving effect thereto, any Event of Default shall exist; (e) Except as otherwise permitted by this Sub -Sublease, not sell, lease (as lessor or sublessor), transfer or otherwise dispose of or abandon, all or any material portion of its assets or business to any Person, or sell, lease, transfer or otherwise dispose of or abandon any of the P&E; provided, however, Tenant may dispose of portions of the P&E which have become inadequate, obsolete, worn out, unsuitable, undesirable or unnecessary, provided substitute equipment or fixtures having equal or greater value and utility have been provided. (f) Provide and maintain throughout the Term, all Tenant's Personal Property and P&E Replacements as shall be necessary in order to operate the Leased Property in compliance with applicable legal requirements and insurance requirements and otherwise in accordance with customary practice in the industry for the Permitted Use. If, from and after the Commencement Date, Tenant acquires an interest in any items of tangible personal property (other than UDC - 028987/000002 - 2700649 vz Sub -Sublease Agreement: Meadowlark Schedule 16.2 motor vehicles) on, or in connection with the Leased Property which belong to anyone other than Tenant, Tenant shall require the agreement permitting such use to provide that Landlord or its designee may assume Tenant's rights and obligations under such agreement upon the termination of this Sub -Sublease and any assumption of management or operation of the Leased Property by Landlord or its designee. (g) Not, except as approved in writing by Landlord, either directly or indirectly, for itself, or through, or on behalf of, or in connection with any Person, divert or attempt to divert any business or customer of the Leased Property to any competitor, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the good will associated with the Landlord or the Leased Property. (h) Except for liabilities incurred in the ordinary course of business, not create, incur, assume or guarantee, or permit to exist or become or remain liable directly or indirectly upon, any Indebtedness except Indebtedness of Tenant to Landlord (or, if unsecured and expressly subject to the terms of this Sub -Sublease and Landlord's interest hereunder, and payable solely out of excess cash flow after payment of all Rent hereunder, to Tenant's shareholders, partners or members, as applicable). Tenant further agrees that the obligee in respect of any such Indebtedness shall agree in writing, in form and substance satisfactory to Landlord, that (w) the payment of such Indebtedness shall be expressly subordinate in all respects to all of Tenant's obligations under this Sub -Sublease, (x) no remedies may be exercised by the obligee with respect to enforcement or collection of such Indebtedness until such time as this Sub -Sublease shall be terminated and all of Tenant's obligations hereunder shall have been discharged in full; (y) such Indebtedness shall not be assigned by the obligee to any other party; and (z) the obligee shall not initiate or join in any bankruptcy proceedings against Tenant. As used in this Section 20.4.2(h) (and notwithstanding any other definition of Indebtedness herein), Indebtedness shall mean all obligations, contingent or otherwise, to pay or repay monies irrespective of whether, in accordance with GAAP, such obligations should be reflected on the obligor's balance sheet as debt. 20.4.3 Leasehold Financing Prohibited. Tenant shall be prohibited from encumbering the Leased Property with leasehold financing without the prior written consent of Landlord, which consent may be withheld in Landlord's sole and absolute discretion; provided, however, notwithstanding the foregoing to the contrary, Landlord hereby agrees that Landlord shall not unreasonably withhold its consent to leasehold financing, if. and provided that, (i) such financing does not encumber or otherwise impair Landlord's interest in and to the Leased Property; (ii) such financing is obtained from an institutional' lender reasonably approved by lender, and (iii) such financing is upon terms and conditions reasonably acceptable to Landlord, including, but not limited to, that any leasehold mortgage shall provide that any assignee of Tenant's leasehold interest pursuant to a foreclosure or assignment -in -lieu of foreclosure, shall be subject to Landlord's prior written approval, which approval shall not be unreasonably withheld, if \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark Schedule 16.2 and provided that, such assignee shall (a) expressly assume all of Tenant's obligations under this Sub -Sublease, including, but not limited to, the obligation to operate the Leased Property as a Golf Course Facility in the manner and to the standards set forth herein, (b) have a net worth sufficient, in Landlord's reasonable opinion, to meet and discharge tenant's obligations under this Sub -Sublease, (c) have a demonstrated history of successfully operating other Golf Course Facilities in the manner and to the standards set forth herein, (d) not have a reputation as a Person of bad moral character, (e) not be currently in default under any other lease or agreement with Landlord or any Affiliated Person of Landlord, and (f) not be involved in any material dispute or litigation with Landlord. \\DC - 028987/000002 - 2700649 v2 Sub -Sublease Agreement: Meadowlark Schedule 16.2 ATTACHMENT #2 :7%2007 10:42 FAX 310 664 6165 AMERICAN GOLF U 002 � f1C®R® CERTIFICATE E OF LIABILITY INSURAiVC DA8/27/20007 Y 7/27/2005 PRODUCER LOCICTON COMPANIES, LLC-N DALLAS THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION 717 N. IiAkWOOD, L8427 ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE DALLAS, TX 75201 HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. 214969 67D0 INSURERS AFFORDING) COVERAGE NAIC # INSURED American GolfCorporution INSURER A; Arch Insuranrc COtn T2 1064290 National Golf Properties, Golf Enterprises, INSURER e: AGC LLC Holding, New AGC, LLC INSURER C: 2951 28th St INSURER D; Santa Monica, CA 90405 INSURER E: COVERAGES AMGOLFI Z THIS CERTIFICATE OF INSURANCE DOES NOT CONATITUTEA COWMCT INWAER(S AUTHORIZED REPRN86NTATIVa OR PRODUCER AND THE BETWEEN THE ISSUING CFRTIPICATE HOLPM THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES, AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS, IN9R D' LTA NSR TYPE OF INSURANCE POLICY NUMBER POLICY EFFECTIVE POLICY DCPIRATION DAT6 MM/bb DgTE MM/D LIMITS X GENERAL LIABILITY rbcw O RREN 1 000 OD A X COMMERCIAL GENERAL UABILITY 41 GPP4937502 NTED 7/27/2007 7/27/2009 D M RE T RE ❑ $ l00 000 CLAIMS MADE r A OCCUR MEO EXP (Any One peraon $ Excluded X Liquor Linbility PERSONAL & ADV INJURY $ 1,000,000 X $IMMOcc/SIMMAgg. GENERA4ADGREGATE $ 2,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: PRODUCTS • COMP/OP AGO $ Z D00,000 POLICY n PRO. JECT I,OC AUTOMOBILE LIABILITY COMBINED SINGLEt)MIT $ 1,OOQDOD A ANYAUYo 41CAB4925702 9 7/ 27/2007 7/27/2008 (Ea atcldont) BODILY INJURY 5 X.Xi{i{�X ALL OWNED AUTOS SCHEDULED AUTOS T f iili S x�71 T, F (Perpprgpn) X HIRED AUTOS BODILY INJURY X NON -OWNED AUTOS p g 'l y_. 1vMCG TH, A p/'J (Per ecclden}) }FXXXXXX X Excludes PROPERTY DAMAGE $ 1LvXXX7CX Physical Damage (Peru --dent) GARAGE LIAVILI Y AUTO ONLY -EA ACCIDENT $ XX.XXXXX OTHER THAN EA ACC S XXXXXXX ANY AUTO NOT APPLICABLE $ XXXXXXX AUTO ONLY: AGG EXCESS/UMBRELLA LIABILITY EACH OCCURRENCE $ XXXXXX % OCCUR CLAIMS MADE NOT APPLICABLE AGGREGATE $ X?C�CX xx $ XX XXXX UMBRELLA S XXXXY—CY DEDUCTIBLE FORM S XXXX RETENTION A WORttERB COMPENSATION AND 4) WC14925602 7/27/2007 7/27/2008 X OC STATUS OTH�- E.L. EACH ACCIDENT $ 1,000,000 EMPLOYERS' LIABILITY ANY PROPRIETOR/PARTNER/FJCEGUYIVE OFFICERIMEMBER EXCLUDED? NO E,L. DISEASE - EA EMPLOYEE] $ 1,000 D00 E.L, DISEASE -POLICY LIMIT I $ 1,000,000 If yas, deecribe, Under SPECIAL PROVISIONS blow OTHER DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLE$ I EXCLUSIONS ADDED BY ENOORSEhMENT I SPECIAL PROVISIONS City of Huntington Beach, its Agents, Off Cers tend Employees arc included as Additional insurcds as respects Commercial General Liability. 2351092 SHOULD ANY OF THE ABOVE OESCRIBED POLICIES BE CANCELLED BEFORE THE FxPIRATiOM City of Huntington Beach DATE THEREOF, THE ISSUING INSURER WILL ENDEAVOR TO MAIL 30 DAYS WRITTEN Attn: Cheryl Sales NOTICE TO THE CERTIPICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO DO 50 SHALL Risk Management Division IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE INSURER, ITS AGENTS OR 2000 Main Street REPRESENTATIVES. HUntington SCach CA 92649 AUTHOR=-0REPRHSENTATIVE s • i.sd�mei-r ACORD 25 (2001/081 F.r9—wdonsmgaMlirowl.�rrtmaotf,cmt.4mo number a�ealn.'PMdU=e.w,roanmsvgne®ACORD CORPORATION 19SE 200 i 10: 43 FAX 310 664 6165 tuucni .� POLICY NUMBER: 41GPP4937502 COMMERCIAL GENERAL LIABILITY CG 20 26 OT04 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. ADDITIONAL INSURED - DESIGNATED PERSON OR ORGANIZATION This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE Name Of Additional Insured Person(s) Or Organlzation(s) City of Huntington Beach, its Agents, Officers and Employees Information required to complete this Schedule, if not shown above, will be shown In the Declarations_ Section II - Who Is An Insured Is amended to include as an additional insured the person(s) or organization(s) shown in the Schedule, but only with respect to liability for "bodily Injury", "property damage" or "personal and advertising injury" caused, in whole or in part, by your acts or omissions or the acts or omissions of those acting on your behalf: A. In the performance of your ongoing operations; or B. In connection with your premises owned by or rented to you. CG 20 26 07 04 S _ ' INSURANCE AND INDEMNIFICATION WAIVER Hun �®' MODIFICATION REQUEST E IV 1. Requested by: Risk Management MAR 17 2008 2. 3. Date: March 13, 2008 City of Huntington '3_ , City Attorney's otiicx, Name of contractor/permittee: Evergreen Alliance Golf Limited, L.P. 4. Description of work to be performed: Lease of Meadowlark Golf 5. Value and length of contract: N/A 6. Waiver/modification request: Property Insurance Deductible 7. Reason for request and why it should be granted: unable to comply with zero deductible 8. Identify the risks to the City in approving this waiver/modification: N/A De�p_aqarent Head Signature Date: APPROVALS Approvals. must be obtained in the order listed on this form. Two approvals are required for request to be granted. Approval from the, City. Administrator's Office is only. required if Risk Management and e City,Attorney's Office disagree.. 1. i k Management Approved ❑ Denied �� ✓� �� f r / lw Signature Date 2. City Attorney's Office proved ❑ Denied J / -7• 60' S gnature Date 3. City Administrator's Office — ❑ Approved ❑ Denied Signature Date If approved;.the completed waiver/modification request is to be submitted to the City Attorney's Office along with the contract for approval.Once the contract has been approved, this form is to be filed with the Risk Management: Division of Human Resources ACO CERTIFICATE OF LIABILITY INSUR1" NCE DATEYYYj " . 10/1/2008 310/2008 PRODUCER LOCKTON COMPANIES, LLC-N DALLAS THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION 717 N. HARWOOD, LB427 DALLAS TX 75201 214-969-6700 ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. INSURERS AFFORDING COVERAGE NAIC # INSURED Evergreen Alliance Golf Limited, L.11. 1300213 Premier Golf Management, Inc. 4851 L BJ Freeway, Suite 600 Dallas'I'X 75244 INSURER A_ I'edeMl I1ISDTIttICC COIII all 20281 INSURER B: Great Northern Insurance Company 20303 INSURER C: INSURER D: INSURER E: GUVERACiES EVFAL02 J(".. ulNc THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT. TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR ADIYL 14SRE TYPE OF INSURANCE POLICY NUMBER POLICY EFFECTIVE DATE (MMIDD1YYI POLICY EXPIRATION DATE MMIODfYY) LIMITS GENERAL LIABILITY EACH OCCURRENCE S�000 A X COMMERCIAL GENERALLiABILIrY CLAIMS MADE J OCCUR 35852387 10/1/2007 10/1/2008 pAMAC'ETORENTED PREMISE Ea ocaaence S 1,000,000 MED EXP (Any one perWa) $ 1000 X Liquor Liability PERSONAL BADV 114JURY $ 1,00Q000 X $1,000,0o0 GENERAL AGGREGATE S 10,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: PRODUCTS - COMPIOP AGG S 2,000,000 POLICY jECa El LOG B AUTOMOBILE LIABILITY X ANY AUTO 70215975 ,(,j� /�� �y�/p ►ei 1/2008 COMBINED SINGLE LIMIT (Ea accident) $ I,000,0W ALLOWNEDAUTOS SCHEDULED AUTOS HIRED AUTOS NON -OWNED AUTOS til ,CIS �.aT. _person) lC� BODILY INJURY S XXXXXXX BODILY INJURY (Per accident) S XXXXXXX PROPERTY DAMAGE (Per accident) S XXXXXXX GARAGE LIABILITY AUTO ONLY - EA ACCIDENT S XXXXj(xx ANY AUTO HAUTO NOT APPLICABLE OTHER THAN EA ACC S XXXXXXX — ONLY: AGG $ XXXXXXX A EXCESSIUMBRELLA LIABILITY X OCCUR CIAIMs MADE 79857000 10/1/2007 10/1/2008 EACH OCCURRENCE S l0 OW IXl0 AGGREGATE S 10 000 000 $ XXXXXXX UMBRELLA DEDUCTIBLE r "• r FORM S XXXXXXX $ XXXXXXX RETENTION S WO EMPLOYERS' LIABILITY RKERS COMPENSATION AND NOT APPLICABLE TORY LIMITS O£R E.L. EACH ACCIDENT S XXXXXXX ANY PROPRIETORIPARTNERIEXECUTIVE E.L. DISEASE -EA EMPLOYEE $ XXXXXXX OFFICERIMEMBEREXCLUDED? If yea, descobe under E.L. DISEASE •POLICY LIMIT S XXXXXXX SPECIAL PROVISIONS below OTHER A plop" 35852387 10/1/2007 10/1/2008 SeeDescriptim DESCRIPTION OF OPERATIONS ILOCATIONS I VEHICLES f EXCLUSIONS ADDED BY ENDORSEMENT SPECIAL PROVISIONS Building, Contents, and Equipment are covered at Replacement Cost subject to Policy Limits. Re: CNL Income EAGL Meadowlark Golf, LLC, 16782 Graham SL, Huntington Beach, CA 92649; TIV $8,647,133 3585045 City of l luntinglon Beach SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING INSURER WILL ENDEAVOR TO MAIL 30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO DO SO SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE INSURER, ITS AGENTS OR REPRESENTATIVES. AGORD 25 (2001108) Forque Il tegardingIbis c¢diflcate.cont=lthenumt-llsWinUw'PteAxni : ,t]—ab—and lipmill Om clie t vae EVEAtar. 0ACORD CORPORATION 1988 ACORD,a, EVIDENCE CIF COMMERCIAL PROPERTY INSURANCE DATE3DIYYYY, /10/2 /10l2008 THIS IS EVIDENCE THAT INSURANCE AS IDENTIFIED BELOW HAS BEEN ISSUED, IS IN FORCE, AND CONVEYS ALL THE RIGHTS AND PRIVILEGES AFFORDED UNDER THE POLICY. PRODUCER NAME, CONTACT AHON. No. 21$-%O-6700 COMPANY NAME AND ADDRESS NAIC NO: 20281 PERSON AND ADDRESS FAX —._._-- Federal InsuranceCompauy nlc No: E-MAIL �— - PA. Box 1615 ADDRE : _ Warren NJ 07061-1615 LOCKTON COMPANIES, LLC-N DALLAS 717 N. HARWOOD,1,Bfi27 DALLAS TX 75201 IF MULTIPLE COMPANIES, COMPLETE SEPARATE FORM FOR EACH CODE: sue CODE: AGENCY CERI b: E V EA1.02 NA MED INSURED AND ADDRESS lvergreen Alliance Golf Limited, L.P. LOAN NUMBER POLICY NUMBER 1 100-168 Premier Golf Management, Inc- 35852387 LBJ Freeway, Suite. 6(l0 EFFECTIVE DATE EXPIRATION DATE CONTINUED UNTIL Dallas TX 75244 Dail 10/I/2007 10/1/2008 TERMINATED IF CHECKED ADDITIONAL NAMED INSURED($) THIS REPLACES PRIOR EVIDENCE DATED: PKUPtK 1 T INhUKMA I IUN (Use additional sheets It more Space is required) JC LOCATIONIDESCRIPTION Cn\IFRAr_F IMCnI*AAAYInM nnncc nc r nco cnoaa X COMMERCIAL PROPERTY COVERAGE AMOUNT OF INSURANCE: S SEE A7'TACIIED DED: 5,000 ES NO BUSINESS INCOME I RENTAL VALUE X if YES, LIMITS X 1 Actual Loss Sustained # of months: BLANKET COVERAGE x If YES, indicate amount of insurance on properties identified above: $ Per Loc TERRORISM COVERAGE X Attach signed Disclosure Notice I DEC IS COVERAGE PROVIDED FOR "CERTIFIED ACTS" ONLY? X If YES, SUB LIMIT: Policy Limit DED: IS COVERAGE A STAND ALONE POLICY? X If YES, LIMIT: DED: DOES COVERAGE INCLUDE DOMESTIC TERRORISM? X If YES, SUB LIMIT: DED: COVERAGE FOR MOLD X if YES, LIMIT: DED: MOLD EXCLUSION (If "YES", specify organization's form used) X REPLACEMENT COST X AGREED AMOUNT X COINSURANCE X If YES, % EQUIPMENT BREAKOOVIJN (If Applicable) X If YES, LIMIT: Policy Limit DED: 5,000 LAW AND ORDINANCE -Coverage for loss to undamaged portion of building X If YES, LIMIT: Policy Limit DED: 5,000 Demolition Costs X It YES, LIMIT. Policy Limit DED: 5,000 Ina. Cost of Construction x If YES, LIMIT: Policy Limit DED: 5,000 EARTHQUAKE (If Applicable) x if YES, LIMIT: Varies by Loc DED: Varies by Loc FLOOD (If Applicable) X If YES, LIMIT: Varies by Loc DED: Varies by Lou WIND I HAIL (If Separate Policy) X If YES, LIMIT: Policy Limit DED: Varies by Loc PERMISSION TO WAIVE SUBROGATION PRIOR TO LOSS X tctmAKna - inciuofng Apeciai L.onoitionS fuse additional sneets IT more space is required) Building, Contents, and Equipment are covered at Replacement Cost subject to Policy Limits. Crime Limit: $2,000,000. Re: CNL Income EAGL Meadowlark Golf, LLC, 16782 Graham St., Huntington Beach, CA 92649; TIV $8,647,133 CANCELLATION THE POLICY IS SUBJECT TO THE PREMIUMS, FORMS, AND RULES IN EFFECT FOR EACH POLICY PERIOD. SHOULD THE POLICY BE TERMINATED, THE COMPANY WILL GIVE THE ADDITIONAL INTEREST IDENTIFIED BELOW 30 DAYS WRITTEN NOTICE, AND WILL SEND NOTIFICATION OF ANY CHANGES TO THE POLICY THAT WOULD AFFECT THAT INTEREST, IN ACCORDANCE WITH THE POLICY PROVISIONS OR AS REQUIRED BY LAW. ADDITIONAL INTEREST IEAGL31 JEAGL41(EAGt.5) NAME AND ADDRESS LENDER SERVICING AGENT NAME AND ADDRESS 304627 City of Huntington Beach MORTGAGEE - AUTHORIZED REPRESENTATIVE LOSS PAYEE - - .`- ACORD 28 (2003110) O ACORD CORPORATION 2003 For queallons regarding Ih{s ceral"rcate, eonlad dw number Bated Inthe Troausei aecaon above and apecgy the Client code'EVEAIA2'. LIMIT COVERAGE COVERAGE SYNOPSIS Provides coverage for direct physical loss or damage to tees, fairways, $2,000,000 putting surfaces and other playing Includes surfaces used to play golf, practice $250,000 Golf Course driving ranges, and private roadways Sublimit for Property Per on golf course (except parking lots). Debris Occurrence/Each Coverage is provided on a Named Removal Location Perils Basis. Coverage is EXCLUDED at any Golf Course Mood location in Flood Zones A,D,V $50,000 Sublimit Unknown and NMA Coverage for outdoor Trees, Shrubs Per and Plants located on the Golf Course $3,000 Tree/Shrub/Plant on an Named Perils Basis $100,000 Annual Aggregate Including Debris Removal Limits apply per location $250,000 Dams, Dikes and Limits apply Retaining Walls Coverage is provided on a Named per Property Damage Perils Basis. Valuation is on an Actual occurrence Limit of Insurance Cash Value Basis. Dams, Dikes and $100,000 Retaining Walls Limits apply Business Income or per Rental Income Coverage is provided on a Named occurrence Limit of Insurance Perils basis Standard Attachment: EAGL3 Mister 1D: 1100368 DEDUCTIBLES: $5,000 $1,000 12 Hour Waiting Period $500 $1,000 $5,000 72 Hour BI Waiting Period $1,000 $50,000 72 Hour BI Waiting Period $100,000 72 Hour BI Waiting Period $500,000 72 Hour BI Waiting Period $50,000 72 Hour BI Waiting Period r7a1: Standard Attachment: EAGLA Master ID: 1100368 Property Deductible Per Occurrence Mobile Equipment Deductible Per Occurrence BI/EE Deductible Per Occurrence Personal Property of Others Deductible Per Occurrence Golf Course Property Deductible Per Occurrence Golf Course Flood Deductible Outdoor Trees, Plants and Shrubs on the Golf Course Flood Zones C or X within 1,000 feet or less of A.B,D or V Flood Zones B. X 500 Flood Zones A, D. V. Unknown & NMA Earthquake CHUBS CUSTOMARQ V3 POLICY All Risk Unless Otherwise Noted Including Dams, Dikes and Retaining Walls Golf Course Flood coverage is excluded for locations in Flood Zones A,D,V, Unknown and NMA See schedule for applicable locations See schedule for applicable locations See schedule for applicable locations Direct Physical Loss or Damage subject to policy exclusions and limitations ISO I Commercial Auto Forms 102/01/99 POLICY NUMBER: 7021-59-75 COMMERCIAL AUTO CA 20 48 02 99 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. DESIGNATE® INSURE® This endorsement modifies insurance provided under the following: BUSINESS AUTO COVERAGE FORM GARAGE COVERAGE FORM MOTOR CARRIER COVERAGE FORM TRUCKERS COVERAGE FORM With respect to coverage provided by this endorsement, the provisions of the Coverage Form apply unless modified by this endorsement. This endorsement identifies person(s) or organization(s) who are "insureds" under the Who Is An Insured Provision of the Coverage Form. This endorsement does not alter coverage provided in the Coverage Form. This endorsement changes the policy effective on the inception date of the policy unless another date is indicated below. Endorsement Effective: March 13, 2008 Countersigned By: AY0Xze6e*p;etative) Named Insured: Evergreen:t,.Alliance Golf Limited, IP scrltuut_t �r� v Name of Person(s) or Organization(s) City of Huntington Beach, its agents, officers and employees CNL Income EAGL Meadowlark Golf, LLC (If no entry appears above, information required to complete this endorsement will be shown in the Declarations as applicable to the endorsement. ) Each person or organization shown in the Schedule is an "insured" for Liability Coverage, but only to the extent that person or organization qualifies as an "insured" under the Who Is An Insured Provision contained in Section 11 of the Coverage Form. CA 20 48 02 99 0 Insurance Services Office, Inc.,1998 @ISO Properties, Inc. 02008 SilverPlume Reference Systems, Inc. All Rights Reserved. A. - CERTIFICATE = LIA131LiTY INSURANCE 3%5`/2008 PRt)DLMCFR THIS CERTIFICATE IS 1,-�3CIER AS A &MTIPER OF INFORMATION M Cs SKINNER & ASSOCIATES ONLY AND CONFERS NO RIGHTS UPON ME CERTIFICATE 11030 Santa Modica Blvd #207 HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES DELOW. Los Angeles, CA 50025 (310) 47B-5041 INSURERS AFFORDING COVERAGE NAIC# INSURED Evergreen X1.liancg Galt" X.tti Lia.._._�__— iNSUlKNA' Fe—daralnsurarE' �'Zo:`�{C�' 4851 Ua F'roewray Ste #600 INStftRW _ _._.__ _---.-.._, . Dallas, TX 75244 W319"G: 'OVERAGE$ THE POLICIES OF INSURANCE LISTED GELOW HAVE BEEN ISSUED TO THE INSURED HAMED ANOVE FOR THE PODGY PERIOD INDICATED. NOTWMISTAM MUG ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUIWNT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR [FAY PERTAML THE INS )RANCE AFFORDED BY THE POLICIES DI SCRIBED HEREIN IS SUBJECT TO ALL THE TERMS. EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.AGGREGATELIMITS SHOWN MAYHAVE BEEN REOUCEO BY PAID CLAIMS. v POLICY NUMBER TNf LAIRS QENERAL LW59JTY EACH OCC IRRENCE S CO%WERCIAL OFTi€RAL LM6ttITY PftttMSES Fa wxa'eClce t _ ... A CLAWWADE; L OCCUR MEDEXYD "awpomon) I P£RSONALSADV04AM $ A _ _- -- GENERAL ACaGRECrATE S GERLAGGREGATELVkNTAPPLIESP" PRODUCTS-COL"'AGO $ M � O - - PDi.xy LOG - ADiI%OMEUMWITY MTYAUTO COA f)5R1{y.ELBNT (EeaptiAeFt) ALL VJVRrDAUTT)S BOB0.Y1NJIIRY ^ SCIWOOLEDADYOS Worm") S i3 W&C-OAMOS It(kNLV INJI)RY E NON•OWNEI)AUTOS PRWERTY DAMAGE t - . IrdraadPnl) GAF+AGELiATItIliY AUTO MV-EAACCIDENT f ANYAUJO OTHERTHAN EAACC S _ S AETTOONLY: AGO EJfC,fS$AMARhET.LA WiR;t.iTY EAt::I OCfiAUtENCE i i Deem E1 CLAIM$MAI* _ . ' AGGREGATE S^ S A UCDI)CT�EE RETENTION S S 11U?WERS00WfiWA?MONAND _ $ T Yl ER ¢ta>LDYeftsLwaulTY AHY PArd`WE{bR1'MTae[Lk1'EGIliNE 71?1-55-43 01 2/15/08 2/15/09 ELfAaTAcce�£N* _ _ s 1000 flflfl I I .. arEu:eA. uasea ea cLt,ePm El. niSF11.5E - CA CMNOYEt S 1 000 000 E.1„ MEASE-PoLtGYLCHT SFF,Gvu.PtiOVIStONSkwk+w S 1 F 000, 000 OTtit=ft + f + OE�CRFPTIONOFiK'ENATfONSILOCATWN51VEIifCLES1EXCLIiS1UN5ADDED BYENDORSEA1EItT/SYECy4E PROVISIONS The Wox'k Comp policy will be issued with the Blanket Waiver of Subrogation endorsement which will Cover all Ti ntities as required by contract. Pulte Homes, inc.and its subsidiaries and affiliates Insurance Compliance PO Box 12010-P1 Hemet, CA 92546-0010 SHMt) ANY OF TW AMY& COESCRWED POLICIES BE CANCEIlED BEFORE -ITiE L)U` l IDt) DATE i)tUiEof, TMTE RSStl6JC it 1Ri:R 1YH.f. E7IDEAVOR TO ►aAiaO* BAYS IA:mn" NOTICE TO RIE CI RTIFIP,ATE HOLM NAMED TO THE LEFT, BUT FA# tW TO DO So SHML IMPOSE NO ORLIGAT" ON LIABILRY OF AM KIND IAION THE INSI)RR, 115 AGENTS OR REPRESENTAT W,8. a .. ;Zft Liability Insurance Endorsement Policy Period October 01, 20fl7 to October 01, 2008 Effective Date March 13, 2008 Policy Number 3583-23-87PHL Insured Evergreen Alliance Golf- Limited, LP Name of Company GREATNORTHERNINSURANCECOWANY Date Issued March 13, 2008 This Endorsementapplies to the following forms: GENERALLIABILITY Under Who Is An Insured, the following provision is added: Who Is An Insured ScheduledPerson Or Subject to all of the terms and conditions of this insurance, any person or organization shown in the Organization Schedule, acting pursuant to a written contract or agreement between you and such person or organization, is an insured; but they are insureds only with respect to liability arising out of your operations, or your premises, if you are obligated, pursuant to such contract or agreement, to provide them with such insurance as is afforded by this policy. However, no such person or organization is an insured with respect to any: assumption of liability by them in a contract or agreement. This limitation does not apply to the liability for damages for injury or damage, to which this insurance applies, that the person or organization would have in the absence of such contract or agreement. damages arising out of their sole negligence. Schedule City of Huntington Beach, its agents, officers and employees CNL Income EAGL Meadowlark Golf, LLC with respect to the following club: Meadowlark Golf Club 16782 Graham Huntington.Beach, CA 92649 uat airy insurance Additional Insured -Scheduled RE40 Pe ftet4ftpy wnUnued Fo m 80-02-2367(Rev. 8-04) Endorsement a?aye 1 Liability Endorsement (continued) All other terns and conditions remain unchanged. Authorized Representative PaA Liability Insurance Additional Insured -Scheduled Persfj@¢Q~rCopy lastpage Form 80-02-2367(Rev. 8-04) Endorsement Page 2 Lowndes Drosdick Doster Kantor Reed, pA. A T T O R N E Y S A T L A W March 14, 2008 VIA FEDERAL EXPRESS Mr. Justin Wessels City of Huntington Beach Business License Bureau 2000 Main Street Huntington Beach, California 92648 Re: CNL Income EAGL Meadowlark, LLC ("CNL") Dear Mr. Wessels: PATTI A. COOK, ESQ.* DIRECT DIAL: 407-418-6453 NORTH EOLA DRIVE OFFICE POST OFFICE BOX 2809 ORLANDO, FLORIDA 32802-2809 patti. cooknlowndes-1 aw. com *Law Clerk (Admitted to practice in New York only) m MERITAS LAW FIRMS WORLDWIDE On behalf of CNL, please find enclosed a Declaration of Non -Employer Status, originally executed by CNL. Please let us know if you need anything further in connection with the attached. Best Regards, Patti Cook /enc C. Mr. Paul Bellam Ms. Lynne Marie Mallory Peter L. Lopez, Esq. Nevin J. Kelly, Esq. Amy Sinelli, Esq. 215 NORTH EOLA DRIVE 450 SOUTH ORANGE AVENUE, SUITE 80- ORLANDO, FLORiDA 32801-2028 TEL: 407-8434600 e FAx :407-843-4444 • wvw.lowndes-law.com ORLANDO, FLORIDA 32801-334 0914625/130607/1135769/1 CITY OF HUNTINGTON BEACH 2000 Main Street, Huntington Beach, CA 92648 Declaration of Non -Employer Status In order to comply with the City Council Resolution No. 6277, you are required to provide proof of Workers' Compensation Insurance. If you have no employees, this form must be signed and returned to: City of Huntington Beach z000 Main Street Huntington Beach, CA 92648 1 certify that in the performance of the activity or work for which this permit is issued, I shall not employ any person in any manner so as to become subject to California Workers' Compensation Insurance requirements. I authorize the City of Huntington Beach to immediately and retroactively revoke the license or permit issued under this declaration if I hire any employee(s) or become subject to the provision of the laws requiring Workers' Compensation Insurance. Applicant/Company Name: CNL INCOME EAGL MEADOWLARK, LLC Address: Applicant's Signature: A. Quinlan Title: Executive Vice President Location Signed: 450 South Orange Ave., Orlando FL 328ol Date Signed: March 14, 20o8 Telephone Number: (407) 6 0-1000 Em RCA ROUTING SHEET INITIATING DEPARTMENT: Economic Development SUBJECT: Approve Consent to Sublease Meadowlark Golf Course COUNCIL MEETING DATE: April 7, 2008 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Attached ❑ Not Applicable Resolution (w/exhibits & legislative draft if applicable) Attached ❑ Not Ap licable Tract Map, Location Map and/or other Exhibits Attached ❑ Not Applicable Contract/Agreement (w/exhibits if applicable) Attached (Signed in full by the City Attorney) Not Applicable ❑ Subleases, Third Party Agreements, etc. Attached (Approved as to form by City Attorney) Not Applicable ❑ Certificates of Insurance (Approved by the City Attorney) Attached Not Applicable ❑ Fiscal Impact Statement (Unbudgeted, over $5,000) Attached ❑ Not Applicable Bonds (If applicable) Attached t Applicable Staff Report (If applicable) Attached El Not Applicable Commission, Board or Committee Report (If applicable) Attached ❑ Not Applicable Findings/Conditions for Approval and/or Denial Attached ❑ Not Applicable EXPLANATIOH FOR 0SVHG ATTACHMii EDITS Wet signatures are still necessary on the Consent to Sublease agreement. All parties are out of state and will be forwarding signature pages via FedEx within the next few days. REVIEWED RETURNED FORWARDED Administrative Staff Deputy City Administrator (Initial) ( ) ( ) City Administrator Initial ( ) City Clerk ( ) I EXPLANATION FOR RETURN OF ITEM: I RCA Author: Tina Krause ext. 1529 RECORDING REQUESTED BY: WESTERN RESOURCES TITLE COMMERCIAL DIVISION UPON RECORDATION RETURN TO: Lowndes Drosdick Doster Kantor & Reed, P.A. 215 North Eola .Drive Orlando, Florida 32801 Attn: Peter L. Lopez, Esq. Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder II IIIIIIIIIIIIIII IIIIIIIIIIIIIIIIIIIIIIIIIIII INII INIIIIIII NI 44.00 2008000186602 04:30pm 04/21/08 102 27 M10 7 0.00 0.00 0.00 20.00 18.00 0.00 0.00 0.00 SPACE ABOVE THIS LINE FOR RECORDER'S USE MEMORANDUM OF SUBLEASE AGREEMENT This MEMORANDUM OF SUBLEASE AGREEMENT ("Memorandum"), is made and entered into as of this 0 day of April, 2008 (the "Effective Date"), by and between AMERICAN GOLF CORPORATION, a California corporation (the "Sublandlord"), and CNL INCOME EAGL MEADOWLARK, LLC, a Delaware limited liability company (the "Subtenant"). WITNESETH: WHEREAS, pursuant to that certain Lease Agreement dated July 6, 1992 (the "Master Lease"), by and between The City of Huntington Beach, a municipal corporation, as "Lessor" (the "Master Landlord"), and Sublandlord, as "Lessee", the Master Landlord leased to Sublandlord the land and improvements currently operated as the Meadowlark Golf Course in the City of Huntington Beach, California, which land and improvements are described more fully on Exhibit A attached hereto (the "Premises"); and WHEREAS, Sublandlord, NGP Realty Sub, L.P., and certain affiliates thereof, as sellers, and CNL Income Partners, LP, an affiliate of Subtenant, as buyer, are parties to that certain Purchase and Sale Agreement and Joint Escrow Instructions dated as of October 29, 2007 (as amended, the "Purchase Agreement"), which Purchase Agreement is joined in by other parties; and WHEREAS, pursuant to the Purchase Agreement, Subtenant has been designated to sublease the Premises from Sublandlord, and, in connection therewith, has entered into that certain Sublease Agreement, dated as of the Effective Date, between Sublandlord and Subtenant (the "Sublease Agreement"); and WHEREAS, it is the desire of both Sublandlord and Subtenant to memorialize the Sublease Agreement and set forth certain pertinent data with respect thereto. 0914625\1306ON 141846\1 Memorandum of Sublease Agreement NOW THEREFORE, with respect to the Sublease Agreement, Sublandlord and Subtenant hereby acknowledge and agree as follows: 1. Demise. The Premises has been and is hereby demised, let and subleased by Sublandlord to Subtenant, and taken and accepted by the Subtenant from Sublandlord, all pursuant to and in accordance with the Sublease Agreement. 2. Term. The term (the "Sublease Term") of the Sublease Agreement shall commence on the Effective Date and expire on December 31, 2016, subject to earlier termination pursuant to the terms of the Sublease Agreement and the Master Lease. Subtenant shall have the right, at any time following the first anniversary of the Effective Date, to extend the Sublease Term for a period coinciding with the term of the Master Lease (as the same may be extended) by giving Sublandlord written notice of Subtenant's election to extend the Sublease Term, and the Sublease Term shall be so extended immediately upon receipt of such notice. 3. Rents. The rentals to be paid by Subtenant to Sublandlord are set forth in Section 2.01 of the Sublease Agreement. 4. Master Lease. The Sublease Agreement shall be subject and subordinate at all times to the Master Lease and all of its provisions, covenants and conditions. 5. Inconsistent Provisions. The provisions of this Memorandum constitute only a general description of the content of the Sublease Agreement with respect to matters set forth therein. Accordingly, third parties are advised that the provisions of the Sublease Agreement itself shall be controlling with respect to all matters set forth herein. In the event of any discrepancy between the provisions of the Sublease Agreement and this Memorandum, the provisions of the Sublease Agreement shall take precedence and prevail over the provisions of this Memorandum. This Memorandum shall not be construed to impose or give rise to any obligations of the Subtenant in addition to those contained in the Sublease Agreement. 09146251130607U 14184611 Memorandum of Sublease Agreement [Remainder of Page Intentiona➢➢y Blank] 2 IN WITNESS WHEREOF, the Sublandlord and the Subtenant have caused this Memorandum of Sublease Agreement to be duty executed on or as of the day and year first above written. By:-- .- Printed SUBLANDLORD: A11iEltICAN GOLF C® TION, --..''CC,,''// p a California corpo ' n 1c 4�t FCt r [ S By: Name: Mark. J. I Title: Secretary STATE OF CALIFORNIA SS. COUNTY OF /t On _ before me, � , Notary Public, (here Wien name and tide of the officer) personally appeared Mark J. Friedman, eet?porM.—, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California. that the foregoing paragraph is true and correct. WITNESS my hand and official seal. d .r—an civet `< Commission # 1479395 Notary Public • California dos Angeles County _ My Comm. Expires Apr 26, 2oot1 SEAL Rotary Fy6fic 09 t a62 s13OWN > a t 846� t Memorandum of Sublease Agreement 3 SIGNED IN THE PRESENCE OF: f STATE OF FLORIDA § COUNTY OF ORANGE § SUBTENANT: CNL INCOME EAGL MEADOWLARK, LLC, a Delawa limited liability company By: Name: Jo . Jo nson Title: Sen r ice President The foregoing instrument was acknowledged before me this i day of April, 2008, by Joseph T. Johnson, Senior Vice President of CNL Income EAGL Meadowlark, LLC, a Delaware limited liability company, on behalf of such company. He is personally known to me or has produced as identification. (NOTARY SEAL) 0914625\1 10607\1141946\1 Memorandum of Sublease Agreement 0 Notary Public Signdture V V % } CAT1.EEN A. COFFEY � J (Name typed, printed or stamped) Notary Public, State of Florida Commission No.: My Commission Expires: Cathleen A. Coffey r`N Commission # DD466308 0. Expires September 24, 2009 8cnd01 Troy Fain - insuraaca Inc 800.385-7019 EXHIBIT A 0914625\1 3060A 1 141846\ 1 Memorandum of Sublease Agreement Parcel Is The southwest quarter of the southeast quarter and the south two-thirds of the vast halt of the northwest quarter of the southeast quarter of section 21, Township 5 south, Range li west, In the Rancho La Balsa Chita, City of Huntington Beach, County or orange, state of California, as per map recorded in Beck 51 Page 13 of miscellaneous Maps, in the office of the County Recorder of said County. Parcel 2: The east half of the northwest quarter of the southeast quarter and the west hair of tbt northeast quarter of the southeast quarter of 3sation 21, Township 5 south, Range ll Best, in the Rancho La Sole& Chita City of Huntington Beach, County of orange, state of Callfoftia, as per map recorded in Book 51 Page 13 of Miseellaneo" naps, in the office of the County Recorder of said County. Except the north 441-30 feet of the scat 427.00 feet of said west halt. Perot 1 3: The northwest quarter at the southeast quarter of the south- east quarter of Section 21, Township 5 south, Range 11 west. in the Rancho La Bola^ Chios, City of Huntington Beach County of Orange, state of California as per uap rec"d In Book 51 Page 13 of Miscellaneous Maps, in the office of the Count* Retarder at said County. Parcel 4. That portion of Block M of Tract No. 86 in the City of Huntington Beach County of Orange, State at California as per Map recorded in Book 10 Pagis 35 and 36 of Misaellaasous Baps, in the office of the County Recorder of said County, described as follows Beginning at a point on the north and south quarter section line of section 21 Township 5 south, Range 11 west, south 0. 461 300 sent 660-i4 feet from the center of said section, said point being the southeast corn*r of the land described in the dead to Cyril B. Bell et ux, recorded November 23. 1946 in Boom 1504 Page 195 of official Records; thence south 690 36' 000 west 580.80 - feet along the southerly line of said land and the westerly prolongation thereof; thence south 00 461 301 0 teat 9o0.o0 feet; thence north 89° 360 00" east 580.80 feet to said north and south quarter section line; thence north 0' 460 30" greet 300.00 feet to the point of beginning. Parcel 6: That portion of block 4 of Tract No. 86 in the City of Huntington Beach, County of Orange. State of Califomia, At per soap recorded in Book 10 Pagse 35 and 36 of lfiscellaeaeous Mpg, in the office of the County Recorder of Paid County 4escribed an follows: B*Slnnlag at the southwest corner of the land described as Parcel 1 in the deed to Zd arnd J. Notbegin et ua, recorded October 3. 1947 in Book 1567 Page 91 of Official Records; these* north 0' 46' 30" went 300.00 feet; thence south 89$ 36' 001 west 82.10 to*t to tlaa ~rant line of *aid block; thenco south 00, 469 30" east 300.00 feet alon3 *aid went line to the northwest corner of the laud described in the dee4 to Gloria Ampolills of al recorded July 30, 1959 in Sock 4$18 rage 49 of Otfcial Records; thence north 890 361 00" east 9.10 test to the point of b*91nniag. Np�- )146 -tg1- 09 Lf P 4 6-oZ- 2. b 5 AJtH ��w �3A 4i,- ..iK q'' Jtf A 'U r teaW,. AA 1 4 1 . THIS IS A TRUE CERTIFIED COPY OF THE C RECORD IF IT SEARS THE SEAL. �� IMPRINTED IN PURPLE, OF THE ORANGE COUNTY CLERK-RBCORDFJL DATE: ti 2AQ� CERTIFICATION FEE: a ORANGE COLINTY STATE OF CALIFORNIA