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HomeMy WebLinkAboutA3717 - MOUNTAIN FALLS GOLF LEASE MO 5814 ASSIGNMENT & ASSUMPTION OF LEASE Mountain Falls Golf LLC • '� Palm Mountain Co. Assign & Assumpt Lease Agr AGREEMENT #3717 10-4-96 ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMEN i THIS ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENT ("Assignment"), is entered into this day of September, 1996, by and between THE PALM MOUNTAIN COMPANY, a California corporation ("Assignor"), and MOUNTAIN FALLS GOLF, LLC, a California limited liability company ("Assignee"), both of whom shall sometimes collectively be referred to herein as the "Parties," and is based upon the following facts: RECITALS A. Assignor, as the Lessee, and The Riverside County Flood Control and Water Conservation District ("District"), as the Lessor, are parties to that certain Lease (Tachevah Reservoir), dated March 12, 1996 ("Lease Agreement"). Capitalized terms used in this Assignment without definition shall have the meanings ascribed to such terms in the Lease Agreement. B. Pursuant to Paragraph 1(c) of the Lease Agreement, Assignor contemplated entering into a lease agreement with the City of Palm Springs with regard to the Adjacent Real Property. In lieu of Assignor entering into such lease agreement, Assignor has elected to cause Assignee, which is an affiliate of Assignor, to enter into such lease agreement with the City of Palm Springs with regard to the Adjacent Real Property. C. In accordance with the terms and conditions of the Lease Agreement, Assignee intends to construct and develop a golf course and related facilities on the leased premises described in the Lease Agreement and on the Adjacent Real Property. D. Pursuant to Paragraph 29(a) of the Lease Agreement, Assignor now desires to assign and transfer to Assignee the Lease Agreement and all of Assignor's right, title and interest therein, and Assignee desires to assume and perform all of Assignor's duties and obligations under the Lease Agreement. NOW, THEREFORE, for good aind valuable consideration, the receipt of which is hereby acknowledged, the Parties do hereby covenant and agree as follows: 1. Assignment. Assignor hereby assigns, transfers, sets over and delivers to Assignee the Lease Agreement and all of Assignor's right, title and interest in and to such Lease Agreement. 2. Assumption of Obligation. Assignee hereby accepts such assignment and unconditionally agrees to perform and fully discharge any and all covenants, agreements and obligations of Assignor under the Lease Agreement. 3. Indemnity by Assignor. Assignor hereby agrees to indemnify, defend and hold harmless Assignee, its officers, members, managers, employees, agents, successors and assigns, from and against any and all claims, liabilities, causes of action, losses, judgments, costs, fees and expenses, arising out of or relating to any obligations of Assignor under the Lease Agreement, which obligations arise or accrue priorto the effective date of this Assignment. -1- 0 �6 4. Indemnity by Assignee. Assignee hereby agrees to indemnify, defend and hold harmless Assignor, its officers, directors, shareholders, employees, agents, successors and assigns, from and against any and all claims, liabilities, causes of action, losses, judgments, costs, fees and expenses, arising out of or relating to the failure of Assignee to fully perform and discharge all covenants, agreements and obligations of Assignor under the Lease Agreement, which covenants and obligations arise or accrue subsequent to the effective date of this Assignment. 5. Miscellaneous Provisions. (a) Representation and Warranty. Assignor hereby represents and warrants to Assignee that it has not previously assigned the Lease Agreement or any of its right, title and interest therein, and that Assignor has full power and authority to enter into and execute this Assignment and to fully perform all of its covenants and agreements hereunder. (b) Further Assurances. Assignor shall, upon request of Assignee, execute such further documents, instruments or agreements as Assignee may reasonably request in order to effectuate the transaction contemplated in this Assignment. (c) Binding Effect. This Assignment shall be binding upon and inure to the benefit of the Parties hereto and their :successors and assigns. (d) Governing Law. This Assignment shall be governed by and construed and interpreted in accordance with the laws of the State of California. (e) Counterparts. This Assignment may be executed in counterparts, each of which shall be considered an original, and all of which when taken together shall constitute one and the same agreement. (f) Entire Agreement:. This Assignment shall constitute the entire agreement between the Parties with respect to the subject matter hereof, and shall supersede all prior or contemporaneous oral or written agreements, representations or warranties between the Parties other than those set forth herein. IN WITNESS WHEREOF, the Parties have executed this Assignment as of the date first written above. ASSIGNOR: THE PALM MOUNTAIN COMPANY, a California corporation Title -2- • �i ASSIGNEE: MOUNTAIN FALLS GOLF, LLC, a California limited liability company By— ��� I1 /� d Title -''-r''� /mbb/files/p/palm_mtn_co/2984/01-lachevah/documents/AssignLease -3- Mountain Falls Golf, LLC Ground Lease Agr. Sec 9 AGREEMENT #3717 MO 5814, 10-2-96 GROUND LEASE AGREEMENT dated _���� - 1996 between THE CIT.IC OF PALM SPRINGS, a municipal corporation, as Landlord and MOUNTAIN FALLS GOLF, LLC, a California limited liability company as Tenant 094/014084-0063/2152048.5 .09/12/96 TABLE OF CONTENTS ARTICLE I PREMISES . . . . . . . . . . . . . . . . . . . 2 ARTICLE II TERM . . . . . . . . . . . . . . . . . . . . . 2 2 . 1 Preliminary Term . . . . . . . . . . . . . . . 2 2 .2 Occupancy Term . . . . . . . . . . . . . . . . 2 2 .3 Landlord' s E:Lection to Sooner Terminate . . . 2 2 .4 Exclusive Right to Negotiate for Extension 5 2 .5 Memorandum of Lease . . . . . . . . . . . . . 5 2 . 6 Term . . . . . . . . . . . . . . . . . . . . 6 2 . 7 Lease Year . . . . . . . . . . . . . . . . . . 6 ARTICLE III RENT . . . . . . . . . . . . . . . . . . . . . 6 3 . 1 Base Annual Rent . . . . . . . . . . . . . . . 6 3 .2 Additional Consideration. . . . . . . . . . . 6 3 . 3 Net Lease . . . . . . . . . . . . . . . . . . 7 ARTICLE IV IMPROVEMENTS . . . . . . . . . . . . . . . . . 7 4 . 1 Construction of Improvements . . . . . . . . . 7 4 .2 Ownership of Improvements . . . . . . . . . . 7 4 . 3 Tenant' s Trade Fixtures . . . . . . . . . . . 8 4 .4 Utilities . . . . . . . . . . . . . . . . . . 9 4 .5 Development at Tenant' s Expense . . . . . . . 9 4 . 6 Approval of Plan Specifications; Construction of Improvements . . . . . . . . . . . . . . . 9 4 . 7 Alterations and Additions . . . . . . . . . . 10 4 . 8 Notices . . . . . . . . . . . . . . . . . . . 10 4 . 9 No Right to Grant Easements . . . . . . . . . 11 4 . 10 Performance and Completion Bond . . . . . . . 11 4 . 11 Maintenance and Repairs . . . . . . . . . . . 11 4 . 12 Tenant Liens . . . . . . . . . . . . . . . . . 11 ARTICLE V USE . . . . . . . . . . . . . . . . . . . . . 12 5 . 1 Use. . . . . . . . . . . . . . . . . . . . . . 12 5 .2 Governmental Approvals . . . . . . . . . . . . 12 5 . 3 Condition of Premises; Acquisition "AS-IS" . . 12 5 . 4 Environmental Limitations . . . . . . . . . . 13 5 . 5 Indemnification of Landlord . . . . . . . . . 14 5 . 6 General Limitations . . . . . . . . . . . . . 15 ARTICLE VI ASSIGNMENT AND SUBLETTING . . . . . . . . 15 6 . 1 Restrictions on Transfer . . . . . . . . . . . 15 6 .2 Definition of "Transfer" . . . . . . . . . . . 15 6 . 3 Landlord' s Consent . . . . . . . . . . . . . . 16 6 .4 Exceptions to Restrictions . . . . . . . . . . 16 6 . 5 Approval of Identity of Lender . . . . . . 17' 6 . 6 Right to Sublet Portions of the Premises . . . 17 ARTICLE VII TAXES . . . . . . . . . . . . . . . . . . . . 18 7 . 1 Payment by Tenant. . . . . . . . . . . . . . . 18 7.2 Improvement or Special Assessment District. 18 094/014084-006312152048.5 a09/12/96 i 7 . 3 Permitted Contests . . . . . . . . . . . . . . 18 7 .4 Personal Property Taxes . . . . . . . . . . . 18 ARTICLE VIII INSURANCE . . . . . . . . . . . . . . . . . . 19 8 . 1 Tenant' s Insurance . . . . . . . . . . . . . . 19 8 . 2 Form of Insurance Policies . . . . . . . . . . 19 8 . 3 Waiver of Subrogation . . . . . . . . . . . . 20 8 .4 Hold Harmless and Waiver of Claims . . . . . . 20 ARTICLE IX DAMAGE OR DESTRUCTION . . . . . . . . . . . . 20 9 . 1 Repair and Reconstruction After Insured Damage . . . . . . . . . . . . . . . . . . . . 20 9 .2 Repair and Reconstruction After Uninsured Damage . . . . . . . . . . . . . . . . . . . . . 21 9 .3 Damage Near End of Term . . . . . . . . . . . 21 9 .4 Election to Terminate . . . . . . . . . . . . 21 ARTICLE X CONDEMNATION . . . . . . . . . . . . . . . . . 22 10 . 1 Termination of Lease . . . . . . . . . . . . . 22 10 .2 Apportionment. of Award . . . . . . . . . . . . 22 ARTICLE XI LIENS AND ENCUMBRANCES . . . . . . . . . . . . 23 11. 1 Right to Encumber . . . . . . . . . . . . . . 23 11.2 Lienholder Defined . . . . . . . . . . . . . . 23 11 . 3 Consent of Lienholder . . . . . . . . . . . . 23 11 .4 Notice to Lienholder . . . . . . . . . . . . . 23 11.5 Notice of Default; Opportunity to Cure . . . . 23 11 . 6 Right to Cure! . . . . . . . . . . . . . . . . 24 11. 7 New Lease to Lienholder . . . . . . . . . . . 24 11. 8 Assignment . . . . . . . . . . . . . . . . . . 25 11 . 9 Obligations of Lienholder in Possession . . . 26 11 . 10 Designees and. Nominees . . . . . . . . . . . . 26 ARTICLE XII DEFAULT BY TENANT . . . . . . . . . . . . . . 26 12 . 1 Events of Default . . . . . . . . . . . . . . 26 12 .2 Right to Cure; Landlord' s Remedies . . . . . . 27 12 . 3 Notices . . . . . . . . . . . . . . . . . . . 28 ARTICLE XIII DEFAULT BY LANDLORD . . . . . . . . . . . . . 28 13 . 1 Events of Default . . . . . . . . . . . . . . 28 13 .2 Right to Cure; Tenant' s Remedies . . . . . . . 29 13 .3 Notices . . . . . . . . . . . . . . . . . . . 29 ARTICLE XIV SURRENDER . . . . . . . . . . . . . . . . . . 29 14 . 1 Surrender . . . . . . . . . . . . . . . . . . 29 14 .2 Holding Over . . . . . . . . . . . . . . . . . 29 ARTICLE XV RIGHTS RESERVED BY LANDLORD . . . . . . . . . 30 15 . 1 Inspection. . . . . . . . . . . . . . . . . . 30 ARTICLE XVI MISCELLANEOUS . . . . . . . . . . . . . . 30 16 . 1 Address for Notice and Rental Payments . . . . 30 16 .2 Commissions . . . . . . . . . . . . . . . . . 31 16 .3 Cumulative Remedies . . . . . . . . . . . . . 31 094/014084-0063/2152048.5 a09/12/96 i i 0 16 . 4 Governing Law . . . . . . . . . . . . . . . . 31 16 . 5 Construction . . . . . . . . . . . . . . . . . 31 16 . 6 Entire Agreement . . . . . . . . . . . . . . . 32 16 . 7 Captions . . . . . . . . . . . . . . . . . . . 32 16 . 8 Partial Invalidity . . . . . . . . . . . . . . 32 16 . 9 Covenants Running with the Land . . . . . . . 32 16 . 10 Not a Partnership . . . . . . . . . . . . . . 32 16 . 11 Merger . . . . . . . . . . . . . . . . . . . . 32 16 . 12 Force Maj eure . . . . . . . . . . . . . . . . 32 16 . 13 Facilitation . . . . . . . . . . . . . . . . . 33 16 . 14 Waiver . . . . . . . . . . . . . . . . . . . . 33 16 . 15 Statements by Landlord and Tenant 33 16 . 16 Attorneys' Fees . . . . . . . . . . . . . . . 33 16 . 17 Authority . . . . . . . . . . . . . . . . . .. 33 16 . 18 Interest . . . . . . . . . . . . . . . . . . . 33 1 0141014014-0011/2152048.5 09/12/96 GROUND LEASE AGREEMENT THIS GROUND LEASE AGREEMENT ( "Lease" ) is made and entered into as of 0, �z -7 , 1996 ( "Effective Date" ) , by and between THE CITY OF PALM SPRINGS, a municipal corporation ( "Landlord" ) , and MOUNTAIN FALLS GOLF, LLC, a California limited liability company ( "Tenant") . W I T N E S S E T H: WHEREAS, Landlord is the owner of certain unimproved land located in the City of Palm Springs, Riverside County, California, and more particularly described on Exhibit "A" hereto (the "Land") ; WHEREAS, Landlord, The Redevelopment Agency of the City of Palm Springs (the "Agency" ) and Tenant previously entered into a Memorandum of Understanding dated April 12 , 1995, as amended ( "MOU" ) , whereby Landlord and Tenant agreed to enter into a ground lease of the Land provided certain conditions precedent were satisfied; WHEREAS, Landlord has determined that it would be in the best interest of Landlord to lease the Land to Tenant at the rental and subject to the terms, provisions and conditions hereinafter set forth, provided that Tenant improves the Land and the "Adjacent Real Property" (as hereinafter defined) as an eighteen (18) hole PGA rated championship quality golf course (the "Golf Course" ) and related facilities (the "Golf Course Project" ) , open to the public for at least one-half (1/2) of play with a tie-in to Palm Springs hotels . The Golf Course Project will be more particularly described in a Development Agreement to be entered into between Landlord and Tenant ( "Development Agreement" ) ; and WHEREAS, the real property legally described in Exhibit "B" attached hereto ( "Adjacent Real Property" ) is owned by the County of Riverside Flood Control District ( "District" ) and is leased by Tenant pursuant to the terms and conditions of that certain Lease Agreement dated March 12, 1996 ( "District Lease" ) ; and WHEREAS, the City Council of Landlord has adopted Resolution No. A3519A which authorizes the City Manager to negotiate and enter into a lease of the Land to Tenant for the Golf Course Project. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereby agree as follows : 094/014084-0063/2152049.5 .09/12/96 ARTICLE I PREMISES Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, pursuant to the terms and conditions hereof, the Land, together with all other rights, privileges, easements and appurtenances belonging thereto or granted herein including, without limitation, any and all mineral rights and water rights associated or appurtenant to the Land (the "Premises" ) . ARTICLE II TERM 2 . 1 Preliminary Term. The preliminary term (the "Preliminary Term" ) of this Lease shall commence on the date of execution hereof and shall terminate on the first to occur of the following events : (a) Occurrence of the "Opening Date" (as defined in Section 2 .3 (e) below) ; or (b) Expiration of the "construction phase" of the term of the District Lease. 2 .2 Occupancy Term. The occupancy term (the "Occupancy Term" ) of this Lease shall commence on the expiration of the Preliminary Term (the "Commencement Date") and end fifty-five (55) years thereafter. 2 . 3 Landlord' s Election to Sooner Terminate. Notwith- standing Sections 2 . 1 and 2 .2 above, but subject to the provisions of Article XI hereof, Landlord may, at its sole election, terminate the Lease any time following occurrence of any one or more of the following events : (a) On the Access Rights Date, as said term is hereafter defined, unless Tenant has previously advised Landlord in writing that Tenant has acquired and/or secured fee title, a leasehold interest, an easement, a right of way and/or other right of access to the Golf Course Project ( "Access Rights" ) , which Tenant, in its sole and absolute discretion, determines will be economically feasible to acquire, construct, develop and operate and which will be adequate to serve the needs of the Golf Course Project ( "Access Rights" ) . For purposes hereof, the tern "Access Rights Date" shall mean that date which corresponds to the six (6) month anniversary of the Effective Date of this Lease. 094/014084-006312152048.5 a09/12/96 -2- (b) On the Access Rights Date, unless Tenant has previously submitted to the City a project design package, consisting of the following: (i) A detailed site plan showing all proposed improvements, surrounding properties, and equestrian trails; (ii) Aerial photograph with site plan superimposed; (iii) Golf course plan showing proposed routing, driving range, cart paths, and associated improvements (include maintenance area location and operations details) ; (iv) Preliminary landscape plan and irrigation plan including water consumption analysis (source of water shall be identified; chemicals used for golf course, lake, and surrounding area operation and maintenance should be provided) ; (v) Preliminary grading plan and site cross- sections (grading plan to show the limits of site disturbance (including trails) and include estimated grading quantities) ; (vi) Exterior lighting program (location, height, landscape, and specifications of all exterior lighting) ; (vii) Preliminary clubhouse plans (site, eleva- tions, landscape and exterior lighting) ; and (viii) Utility and services plan. (All utility and related services to be evaluated and consumption estimated and all existing and proposed easements to be described and mapped. ) (c) On the Access Rights Date, unless Tenant has previously submitted to the City those studies, reports and other information reasonably necessary to enable the City to commence and undertake the preparation of an Environmental Impact Report pursuant to the California Environmental Quality Act for the Golf Course Project, which studies and reports and other information shall be identified by City to Tenant, and include, without limitation, a hydrology study and soils study. (d) On the Access Rights Date, if Tenant has not delivered to the City all documents, applications, plans, processing fees and other information necessary for the processing of all "Development Approvals" required for the Golf Course Project . "Development Approvals" shall mean all discretionary 0941014084-006312152049.5 09112196 -3- entitlements for the Golf Course Project, including, without limitation, all specific plan, planned development district, conditional use, variance, subdivision map and similar approvals, exclusive of those improvement plans required for issuance of all grading and building permits required for construction of the Golf Course Project. Notwithstanding the foregoing, Tenant may defer submission of applications for subdivision approvals until not later than the City' s certification of the EIR and approval of those other Development Approvals required to be obtained from City. (e) Any time after the fifth (5th) anniversary of the Effective Date, if the Development Agreement has not been executed by Tenant and City. (f) Upon occurrence of Tenant' s "repeated failure" to diligently process to completion the Development Approvals, including, without limitation, repeated failure to cause Tenant' s planners, engineers and other consultants to submit in a timely manner all materials and documents required therefor. The term "repeated failure" shall be evidenced by the City' s delivery of more than two (2) written notices to Tenant that Tenant and/or its consultants have failed, for a period of more than ninety (90) days, to respond to City' s request for submission of documents, reports, fees or other items required in the normal processing of the Development Approvals; (g) Upon the fourth (4th) anniversary of the issuance of all Development Approvals for the Golf Course Project, unless Tenant has commenced the grading of the Golf Course Project pursuant to grading permits issued by the City; (h) Upon the third (3rd) anniversary of the commencement of grading of the Golf Course Project, unless Tenant has substantially completed the development and construction of the Golf Course Project and commenced operations of the entire Golf Course for public play ( "Opening Date" ) ; (i) Upon the failure of Tenant from and after the Opening Date, to continuously operate the Golf Course on the Premises and the Adjacent Real Property for a period in excess of six (6) months, other than by reason of Tenant' s restoration of the Golf Course Project, following a damage or destruction, and other than by reason of Tenant' s renovation of the Golf Course, provided the restoration or renovation, as applicable, is continuously and diligently prosecuted to completion over a period of time not longer than one (1) year; and (j ) Upon termination of the District Lease prior to the Opening Date. The times for performance of ,actions described in subparagraphs (a) through (h) above (the "Tasks") will be extended a day for each day that Tenant is prevented from proceeding to accomplish the Tasks by 094/014084-0063/2152048.5 09/12/96 -4- • i reason of (i) the filing of any lawsuit or similar proceeding which challenges this Ground Lease, the Development Agreement, the Development Approvals for the Golf Course Project or the Golf Course Project; and/or (ii) the City' s failure to cooperate with Tenant in good faith to accomplish the Tasks for a period extending more than thirty (30) days following the date Tenant notifies Landlord of the specific action or inaction which Tenant claims constitutes City' s failure to cooperate. Landlord and Tenant shall each use its respective good faith efforts to accomplish the Tasks prior to the outside dates for performance listed in subparagraphs (a) through (h) above. Nothing herein shall be construed to require City to process Tenant' s applications ahead of other projects in process in the City and City' s obligations hereunder shall be subject to the City' s workload and staffing at any given time. If Tenant elects, in its sole discretion, to request the City to incur overtime or additional consulting services to receive expedited processing by the City, Tenant shall pay all such overtime costs, charges or fees incurred by City for such expedited processing. The time for Tenant' s accomplishment of the Tasks described in subparagraphs (f) , (g) and (h) above only, shall also be subject to extension for the "force majeure" events described in Section 18 . 12 below. Tenant shall not be in default of its obligations under this Lease solely by reason of the occurrence of any one or more of the events listed in subparagraphs (a) through (i) above and Tenant shall have no liability to Landlord by reason of any such event. Occurrence of any one (1) or more of the listed events is solely a condition to Landlord' s right to elect to sooner terminate the Lease. 2 .4 Exclusive Right to Negotiate for Extension. Tenant shall have the right ( "Exclusive Negotiation Right" ) to exclusively negotiate with Landlord for the extension of this Lease or the execution of a new lease for an additional term ( "Extension Term") . The Exclusive Negotiation Right shall begin one (1) year prior to the stated expiration of the Term and continue for a period of six (6) months thereafter ( "Negotiation Period" ) . If the Lease is sooner terminated by Landlord pursuant to Section 2 .3 or Article XII, the Exclusive Negotiation Right shall terminate and be of no further force or effect . Landlord agrees that during the Negotiation Period, Landlord shall negotiate with Tenant in good faith to agree upon the terns of an extension of this Lease or a new lease for the Extension Term. Neither party shall be bound to agree to enter into an extension of this Lease or a new lease on any or all of the same terms and conditions of this Lease. Landlord shall be entitled to seek Tenant' s agreement to pay for an amount of rent during the Extension Period greater than the nominal rent now provided, as a condition to Landlord' s agreement to an extension of this Lease or a new lease for the Extension Term, and both parties may negotiate for a change or modification to any other provision or provisions of the Lease. 2 .5 Memorandum of Lease. Promptly following execution of the Development Agreement, Landlord and Tenant shall each execute 094/014094-0063/2152M.5 a09/12/96 -5_ y and deliver to the other a memorandum (the "Memorandum" ) in recordable form confirming the beginning and ending dates of the Preliminary Term and Occupancy Term in the form attached hereto as Exhibit "C" . Landlord shall record the Memorandum at Tenant' s request and expense. 2 . 6 Term. The Preliminary Term and the Occupancy Term are herein collectively referred to as the "Term" . 2 . 7 Lease Year. The term "Lease Year" shall mean each period of twelve (12) consecutive calendar months beginning on the Effective Date if such date occurs on the first day of the month; if not, then on the first day of the month next succeeding the Effective Date. Subsequent Lease Years shall run consecutively, each such Lease Year beginning on the first day of the month next succeeding the last month of the previous Lease Year. Rent and/or other matters which are computed with reference to a Lease Year shall be ratably adjusted, on a per diem basis, for any period prior to the first Lease Year and within the Term. ARTICLE III RENT 3 . 1 Base Annual Rent,. Tenant shall pay to Landlord a base annual rent in the amount of ONE DOLLAR ($1. 00) payable in advance, on the first day of each Lease Year. The base annual rent shall be paid to Landlord at the address of Landlord set forth in Section 18 . 1 below, or at such other place designated in writing by Landlord, without prior demand, and without any deduction, setoff or offset . Base rent may be prepaid by Tenant for any number of Lease Years . 3 .2 Additional Consideration. As material consideration to Landlord for its lease of the Premises to Tenant on the terms provided for in this Lease, Tenant covenants and agrees as follows: (a) To improve and operate the Golf Course Project on the Premises and the Adjacent Real Property in strict accordance with all of the terms, covenants, conditions and restrictions contained in the Development. Agreement; and (b) To continuously reserve not less than fifty percent (500) of all golf course play (during both prime and non- prime hours and days of play) for the public, including the establishment of long term tie-in relationships with Palm Springs Hotels. In connection with establishing the tie-in relationship, Tenant shall perform at least the following: (a) deliver to the local hotel association, at :Least annually, written information on the Golf Course and encouragement for the referral of guests to the Golf Course; and (b) negotiate in good faith with the five (5) largest hotels then operating in the City, which shall initially include the Hyatt, Hilton, Marquis, Wyndam and Riviera, for 0941014094-006312152048.5 .09/12/96 -6- purposes of arranging special play privileges, priority tee times and/or discounts, and/or arranging joint marketing or other joint activities designed to promote occupancy of the hotels and public play on the Golf Course. 3 . 3 Net Lease. Tenant shall pay all costs, charges, obli- gations, assessments and expenses of every kind and nature against, or relating to, the Premises, or the use or occupancy thereof, which may arise or become due during the Term hereof, except for the following: (a) any claims or obligations arising from events occurring on the Premises prior to the Effective Date, except as otherwise provided in Section 5 .5 below; and (b) Landlord' s contribution of fifty percent (500) of the costs up to but not exceeding One Hundred Thousand Dollars ($100, 000 . 00) of preparing and implementing the Environmental Impact Report for the Golf Course Project, any economic feasibility study requested by City and such other reports and studies as may be approved by both City and Tenant, upon satisfaction of certain conditions precedent, as provided for in Paragraph 21) (1) of the MOU. ARTICLE IV IMPROVEMENTS 4 . 1 Construction of Improvements . Tenant shall have the right to construct, develop, alter and restore any improvements ( "Improvements" ) to the Premises consistent with the development and operation of the Golf Course Project in accordance with the Development Agreement, subject to the provisions hereunder. All construction shall be completed in a good and workmanlike and in a first class manner, in accordance with all applicable permits, authorizations, laws, ordinances, orders, regulations and requirements of all governmental authorities having jurisdiction over the Land, and in conformity with the terms and provisions of this Article 4 . All references in this Lease to the "Improvements" shall mean all Improvements constructed or installed on, under or to the Premises pursuant to the terms and conditions of this Article IV, together with all, Alterations thereafter constructed or installed on, under or to the Premises pursuant to the terms and conditions of this Article IV. 4 .2 Ownership of Improvements . During the Term of the Lease, all Improvements shall be owned by Tenant until expiration or earlier termination of this Lease. Tenant shall not, however, remove the Improvements from the Premises, exclusive of "Tenant' s Trade Fixtures, " as said term is defined below, or destroy any part thereof . At the expiration or sooner termination of the Term, the Improvements (exclusive of Tenant' s Trade Fixtures) , shall become Landlord' s sole property, free and clear of any and all liens, claims of third parties, and claims of Tenant, without the payment of compensation or consideration of any kind to Tenant. If this Ground Lease expires or is terminated in accordance with its terms, including without limitation, termination pursuant to Section 2 .3 0941014084-0063/2152048.5 a09/ D% -7- or Article XII below, then Landlord shall not under any circumstances reimburse or make any payment for design or construction costs, alleged lost profits or otherwise. Upon the expiration or earlier termination of this Lease, Tenant, if requested by Landlord, shall execute any and all documents necessary to evidence that title to the Improvements (exclusive of Tenant' s Trade Fixtures) 3.s in Landlord and to extinguish and remove any cloud or potential cloud on the title to the Premises and/or the Improvements (exclusive of Tenant' s Trade Fixtures) created by Tenant. Notwithstanding the foregoing, Tenant' s Trade Fixtures shall at all times remain the property of Tenant and Tenant' s Trade Fixtures may be removed by Tenant, in its sole discretion, at any time and from time to time during the Lease Term and/or upon the expiration or earlier termination of this Lease. 4 . 3 Tenant' s Trade Fixtures . (a) Landlord agrees that all trade fixtures, machinery, equipment, furniture, signs, supplies, inventory, supplies and other personal property of whatever kind and nature, both tangible and intangible, kept or installed on, used at and/or used in conjunction with, the Premises by Tenant during the Term ( "Tenant' s Trade Fixtures") , shall not become the property of the Landlord or a part of the Land no matter how affixed to the Premises and may be removed, by Tenant, in its discretion, at any time and from time to time during the entire Lease Term and/or upon the expiration or earlier termination of this Lease, provided Tenant repairs any damage resulting from such removal at its sole cost and expense. (b) Landlord hereby waives and relinquishes any statutory or contractual Landlord' s lien it may now or in the future have as to any and all items constituting Tenant' s Trade Fixtures. Without limiting the foregoing, in the event any conditional seller, chattel mortgagee or other security holder requests, Landlord will execute a waiver of its statutory or contractual Landlord' s lien, if any, as to any items of Tenant' s Trade Fixtures purchased or leased by Tenant . In this regard, in the event Tenant shall enter into a bona fide lease agreement with any lessor whereby such lessor shall lease to Tenant any items of Tenant' s Trade Fixtures to be placed upon or used upon the Premises, or Tenant finances any items of Tenant' s Trade Fixtures before or after placement on the Premises, and if such lessor or financing institution requests, Landlord hereunder shall execute a conditional waiver of its statutory or contractual Landlord' s lien, if any, with respect to such items of Tenant' s Trade Fixtures, provided that any such waiver and/or, consent shall include an indemnity of Landlord by Tenant and by such lessor or financing institution for all personal injury or property damage resulting from any such removal and require any removal of Tenant' s Trade Fixtures to be completed no later than ten (10) days following the expiration or sooner termination of the Lease. 094/014084-0063/2152048.5 09/12/96 -8- 0 4 .4 Utilities . Tenant shall, at its sole cost and expense, cause to be installed on, under or about the Premises all facil- ities necessary to supply to the Land and the Improvements all water, storm sewer, sanitary sewer, gas, electric, telephone and other utility facilities and drainage facilities required in furtherance of Tenant' s use of the Premises . 4 . 5 Development at Tenant' s Expense. Tenant shall bear all expenses in connection with the construction, restoration or remodeling of any Improvements on the Premises and shall defend, indemnify and save Landlord and the Premises harmless therefrom. Tenant shall, at Tenant' s expense, deliver to Landlord, within sixty (60) days of the date upon which a certificate of occupancy is issued, at least one (1) copy of "as built" plans for any Improvements which were erected, constructed, or remodeled on, under or about the Premises by Tenant, which plans were prepared at the discretion of Tenant and which plans are in Tenant' s possession and control . 4 . 6 Approval of Plan Specifications ; Construction of Improvements . Landlord shall have the right to review and approve, which approval shall not be unreasonably withheld, all of Tenant' s Plans, as hereinafter defined, for development of the Golf Course Project and for the construction and installation of the Improvements on the Premises and the Adjacent Real Property. Landlord' s approval under this Lease shall be independent of its approval of the Plans in its capacity as a governmental agency with control over the grading and improvement of the Premises and Adjacent Real Property, which approval shall be exercised in accordance with the standard policies and procedures applicable to City' s actions as a governmental agency. Landlord' s approval of Tenant' s Plans under this Lease shall be solely for the purpose of assuring that the Golf Course Project substantially meets the standards anticipated by Landlord and Tenant for an 18 hole PGA- rated championship quality golf course, an outline of which standards is included as Exhibit I'D" attached hereto and incorporated herein. Such approval by Landlord shall not be unreasonably withheld or delayed. (a) All such Improvements shall be constructed or installed by Tenant at Tenant' s sole cost and expense; (b) Tenant shall have previously obtained all appro- priate permits and approvals for the construction and installation of the Improvements required by all applicable governmental agencies and in accordance with all applicable provisions of the Development Agreement; (c) The construction and installation of all Improve- ments shall be done in a skillful and workmanlike manner, shall be completed substantially in accordance with the Plans submitted to and approved or deemed approved by Landlord and shall be in compliance with all applicable governmental permits, laws, ordinances and regulations . 094/014084-0063/2152048 5 a09/12/96 -9- Any changes or modifications to such Plans shall be permitted without Landlord' s consent if they are not substantial or if such changes are made to comply with suggestions, requests, or require- ments of any governmental agency or official in connection with an application for a permit or approval of such Plans and/or the Golf Course Project . 4 . 7 Alterations and Additions. (a) Consent of Landlord; Ownership. Following the completion of the initial construction of the Golf Course Project, Tenant shall not make, or :suffer to be made, any alterations or additions to the Improvements, or any part thereof, which will entail the expenditure of more than Twenty-Five Thousand Dollars ($25, 000 . 00) , in any one transaction or in a series of related transactions (collectively "Alterations" ) , without the prior written consent of Landlord, which consent shall , not be unreasonably withheld or delayed. (b) Requirements . Any Alterations performed by Tenant shall be subject to strict conformity with the following requirements : (i) All Alterations shall be constructed or installed by Tenant at Tenant' s sole cost and expense. (ii) Prior to commencement of construction or installation of any Alterations, Tenant shall submit detailed plans of the proposed Alterations to Landlord, which plans shall be subject to the prior approval of Landlord in accordance with the terms of Section 4 . 6 hereof . (iii) Tenant shall have previously obtained all appropriate permits and approvals for the construction and installation of the Alterations required by all applicable governmental agencies. (iv) All Alterations shall be constructed and installed in a skillful and workmanlike manner substantially in accordance with the plans previously approved by Landlord and shall be in full compliance with all applicable governmental permits, laws, ordinances and regulations and the Development Agreement . 4 . 8 Notices. At least twenty (20) days prior to the com- mencement of construction and installation of the Improvements for the Golf Course Project as permitted in Section 4 . 6 above, and/or at least twenty (20) days prior to the commencement of construction and installation of any Alterations for the Golf Course Project pursuant to Section 4 . 7 above, Tenant shall notify Landlord in writing of Tenant' s intention to commence construction and installation of any Improvements or any Alterations, as applicable. Landlord shall have the right to post and maintain on the Premises 094/0140940063/21520485 a09/12196 -1 0- any notices of non-responsibility provided for under applicable law. 4 . 9 No Right to Grant Easements . Tenant shall not grant any easements or enter into any license agreements, granting access across the Premises to any adjacent property owner or other third party, without the prior written consent of Landlord unless such easement or access automatically terminates upon expiration or sooner termination of the Lease. Landlord agrees to join with Tenant in granting to public entities or public service corpor- ations, for the purpose of serving only the Premises, rights-of-way or easements, on over or under the Premises for telephone, elec- tricity, water, sanitary or storm sewers or both, drainage facil- ities, and for other utilities and municipal or special district services and for pedestrian and vehicular ingress, egress and access to and from the Premises . 4 . 10 Performance and Completion Bond. If the estimated cost of the Improvements or Alterations to be completed by Tenant exceeds Twenty-Five Thousand Dollars ($25 , 000 . 00) , before the commencement of such work, Tenant at its cost shall furnish to Landlord a performance and completion bond issued by an insurance company qualified to do business in California in a sum equal to the cost of the Improvements or Alterations (as determined by the construction contract between Tenant and its contractor) guaranteeing the completion of the Improvements or Alterations free and clear of all liens and other charges, and in accordance with the approved Tenant' s Plans . 4 . 11 Maintenance and Repairs . Subject to the provisions of Articles IX and X hereof, Tenant shall, at its sole cost and expense, keep and maintain the Land and the Improvements in good order and repair and in a clean and safe condition. Tenant shall make any and all additions to and all alterations and repairs in, on and about the Land and the Improvements which may be required by, and shall otherwise observe and comply with, all public laws, ordinances and regulations from time to time applicable to the Land and the Improvements. Tenant shall have the right to make Alter- ations to the Improvements in accordance with the provisions of Section 4 . 7 above. 4 . 12 Tenant Liens. Tenant agrees to keep the Premises and the Improvements free and clear of any and all mechanic' s, materialmen' s and other liens for work or labor done, services performed, or materials, appliances, transportation or power contributed, used or furnished to be used, to or on the order of Tenant and shall defend, 'indemnify and hold Landlord and the Premises harmless from, any mechanic' s, materialmen' s, contractor' s or subcontractor' s liens arising from any claim for damage, or growing out of the work of any construction, repair, restoration, replacement, or improvement done by or alleged to have been done by or on behalf of Tenant. If Tenant shall in good faith contest the validity of any such lien, claim, or demand, then Tenant shall, at its expense, defend itself a-ad Landlord against the same and shall 094/014084-006312152049.5 a09/12/96 -1 1- pay and satisfy any adverse judgment that may be rendered thereon prior to execution thereof and in the event of any such contest Tenant shall record a bond in the Office of the County Recorder of Riverside County, California conforming to the requirements of Civil Code Section 3143 (or any successor statute) in a penal sum of one and one-half (1-1/2) times the claim (or such other amount as may be prescribed by statute) so that the subject real property will be released from the mechanics' lien and will provide Landlord a conformed copy of such recording. No mechanics or materialmen' s liens, or mortgages, deeds of trust, or other liens of any char- acter whatsoever created or suffered by Tenant, shall in any way, affect Landlord' s title to, or rights in, the Premises . ARTICLE V USE 5 . 1 Use. Tenant shall use the Premises only for construc- tion, maintenance and operation of the Golf Course Project and for no other uses or purposes without the prior written approval of Landlord, which approval shall be granted or withheld in the sole and absolute discretion of Landlord. 5 .2 Governmental Approvals . Tenant shall prepare at its sole expense (except as otherwise provided in the MOU) , all studies and reports which are necessary to obtain all governmental approvals required for Tenant' s use of the Premises for the permitted purpose provided in Section 5 . 1 above, including, without limitation, environmental impact reports, soils reports, engineering studies and similar reports and studies . All requests or applications together with all supporting documentation for governmental approvals or permits which require discretionary action on the part of any governmental agency, whether or not such approvals are specifically :required to be obtained by this Ground Lease shall be submitted to, coordinated with and approved by Landlord prior to filing with the appropriate governmental agency. Tenant shall provide Landlord copies of all written communications between Tenant and any governmental agency processing such requests or applications . 5 . 3 Condition of Premises : Acquisition "AS-IS" . Tenant hereby represents and warrants to Landlord that Tenant is familiar with the Premises and has made such independent investigations as Tenant deems necessary or appropriate considering its obligation under this Ground Lease and development and use of the Premises including, without limitation, inspections and independent investi- gations concerning: the use, sale, development and suitability for development of the Premises; including, without limitation, any desired investigations or analyses of present or future laws, statutes, rules, regulations, ordinances, limitations, restrictions or requirements concerning the use, density, location or suitabil- ity of the Premises or any existing or proposed development or condition of the Premises or any adjacent real property (col- 094/014084-OO63/2152048.5 a09/12/96 -12- lectively "Regulations" ) , and including, without limitation, zoning, subdivision, environmental, agricultural or other Regulations; the necessity or the availability of any general or specific plan amendments, rezoning, zone variances, conditional use permits, building permits, environmental impact reports, parcel or subdivision maps, and entitlements necessary or desirable for Tenant' s development and use of the Premises, including without limitation approvals concerning the Premises (collectively, "Permits" ) ; the necessity or existence of any assessments that may be imposed in connection with any Regulations or the obtaining required Permits, from any governmental agency having jurisdiction over the Premises; the economic value of the Premises, the size, dimensions, locations or topography of the Premises; the adequacy or availability of access to the Premises, or of water, sewage or other utility serving the Premises; the presence or adequacy of infrastructure, subdrain and other improvements on, near or concerning the Premises; the extent or condition of any grading, compaction or other site work already performed or hereinafter required for the improvements proposed by Tenant; the surface, soil subsoil, geologic or ground water conditions or other physical conditions of or affecting the Premises such as climate, drainage, air, water or minerals or the existence of any contaminants or hazardous materials on or in the soil or the ground water; the existence of any special environmental, archaeological, botanical or other condition of or affecting the Premises which might impair the use or improvement of the Premises contemplated by Tenant; the extent of condition of title to the Premises (including but not limited to reviewing a current title report) ; and all other matters concerning the condition, use, development or ownership of the Premises . Tenant agrees and acknowledges that entry into this Ground Lease shall constitute a representation and warranty to Landlord that Tenant has made all such independent investigations and inspections as Tenant deems necessary or appropriate to satisfy itself completely that it will lease the Premises and accept and use the other portions of the Premises in the condition "AS IS" upon the Effective Date. Nothing herein shall diminish or change the obligations of City set forth in Paragraph 2b (1) through 2b (6) of the MOU. 5 .4 Environmental Limitations . Tenant shall not engage in any activity on or about the Premises that violates any Environ- mental Law, shall promptly, at Tenant' s sole cost and expense, take all investigatory and/or remedial action required or ordered by any governmental agency or Environmental Law for clean-up and removal of any contamination involving any Hazardous Material created or caused directly or indirectly by Tenant and shall promptly, at Tenant' s sole cost and expense, remove all Hazardous Materials contamination which is created, caused or permitted, directly or indirectly, by Tenant. The term "Environmental Law" shall mean any federal, state or local law, statute, ordinance or regulation pertaining to health, industrial hygiene or the environmental conditions on, under or about the premises, including, without limitation, (i) the Comprehensive Environmental Response, Compen- sation and Liability Act of 1980 ( "CERCLA" ) , 42 U.S .C. Sections 094/014084-0063/2152048.5 a09/12/96 -1 3- 9601 et seq. ; (ii) the Resource Conservation and Recovery Act of 1976 ( "RCRA") , 42 U.S .C. Sections 6901 et seq. ; (iii) California Health and Safety Code Sections 25100 et seq. ; (iv) the Safe Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety Code Section 25249 . 5 et seq. ; (v) California Health and Safety Code Section 25359 . 7; (vi) California Health and Safety Code Section 25915 ; (vii) the Federal Water Pollution Control Act, 33 U.S . C. Sections 1317 et seq. ; (viii) California Water Code Section 1300 et seq. ; and (ix) California Civil Code Section 3479 et seq. , as such laws are amended and the regulations and administrative codes applicable thereto. The term "Hazardous Material" includes, without limitation, any material or substance which is (i) defined or listed as a "hazardous waste" , "extremely hazardous waste" , "restrictive hazardous waste" or "hazardous substance or considered a waste, condition of pollution or nuisance under the Environmental Laws; (ii) petroleum or a petroleum product or fraction thereof; (iii) asbestos; and/or (iv) substances known by the State of California to cause cancer and/or reproductive toxicity. It is the intent of the parties hereto to construe the terms "Hazardous Materials" and "Environmental Laws" in their broadest sense. Tenant shall. provide all notices required pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety Code Section 25249 . 5 et seq. Tenant shall provide prompt written notice to Landlord of the existence of Hazardous Substances on the Premises and all notices of violation of the Environmental Laws received by Tenant. 5 . 5 Indemnification of Landlord. Tenant shall indemnify, defend (by counsel reasonably acceptable to Landlord) , protect and hold Landlord, and Landlord' s employees, agents and officials free and harmless from and against any and all claims, liabilities, penalties, forfeitures, losses or expenses (including attorneys' fees) or death of or injury to any person or damage to any property whatsoever, arising from or caused in whole or in part, directly or indirectly by (A) the presence in, on, under or about the Premises or the Improvements or discharge in or from the Premises or Improvements or Tenant' s use, analysis, storage, transportation, disposal, release, threatened release, discharge or generation of Hazardous Materials to, in, on, under, about or from the Premises or the Improvements, or (B) Tenant' s failure to comply with any Environmental Law. Tenant' s obligations hereunder shall include, without limitation, all damages, whether foreseeable or unfore- seeable, all costs of any required or necessary repair, cleanup or detoxification or decontamination of the Premises or Improvements and the preparation and implementation of any closure, remedial action or other required plan in connection therewith and shall survive the expiration or earlier termination of the term of the Lease. Without limiting the generality of the foregoing, Tenant shall be solely and completely responsible for responding to, defending against and/or complying with any administrative order, request or demand relating to potential or actual contamination on the Premises, or third party claim for response or remedial actions or for the costs of any such actions which the third party claimant has undertaken, whether such order, request, demand or claim names 094/014084A063/2152048.5 a09/12/96 -14- Tenant, Landlord or both, or refers to the Premises in any way. The responsibility conferred under this Section includes, but is not limited to responding to such orders, requests, demands and claims on behalf of Landlord and defending against any assertion of Landlord' s financial responsibility or individual duty to perform thereunder. Tenant shall assume, pursuant to the foregoing indemnity, any liabilities or responsibilities which are assessed against Landlord in any action described under this Section. In satisfying its obligations under this Section, Tenant shall provide to the Landlord copies of all communications, filings or other writings, photographs or materials given to or received from any person, entity or agency .in connection with any claim, order, request or demand described herein, or with any cleanup or remedial work conducted by Tenant, and shall notify Landlord of, and permit Landlord' s representatives to attend any meetings or oral communications relating thereto. 5 . 6 General Limitations . Tenant shall promptly comply with all laws, ordinances, orders and regulations affecting the Premises, and the cleanliness, safety, occupation and use thereof . ARTICLE VI ASSIGNMENT AND SUBLETTING 6 . 1 Restrictions on Transfer. Except to the extent expressly authorized pursuant to this Article VI or Article XI hereof, Tenant shall not "Transfer" (as hereinafter defined) all or any portion of its interests, rights or obligations under this Lease without the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed. 6 .2 Definition of "Transfer" . As used in this section, the term "Transfer" shall include any assignment, subletting, hypothe- cation, mortgage, pledge, or encumbrance of this Lease or Tenant' s interest in the Premises, or the Improvements thereon by Tenant. A Transfer shall also include the Transfer to any person or group of persons acting in concert of more than ninety percent (90%) of the present equity ownership and/or more than fifty percent (500) of the voting control of Tenant (jointly and severally referred to herein as the "Trigger Percentages") or any general partner of Tenant in the aggregate, taking all transfers into account on a cumulative basis, except transfers of such ownership or control interest between members of the same immediate family, or transfers to a trust, testamentary or otherwise, in which the beneficiaries are limited to members of the transferor' s immediate family. A transfer of interests (on a cumulative basis) in the equity ownership and/or voting control of Tenant in amounts less than Trigger Percentages shall not constitute a transfer subject to the restrictions set forth herein. In the event Tenant or any general partner or member comprising Tenant or its successor is a corpor- ation or trust, such transfer shall refer to the transfer of the issued and outstanding capital stock of Tenant or of beneficial 094/014084-006312152048.5 a09/12/96 -1 5- interests of such trust; in the event that Tenant or any general partner comprising Tenant is a limited or general partnership, such transfer shall refer to the transfer of more than the Trigger Percentages in the limited or general partnership interest; in the event that Tenant or any general partner is a joint venture, such transfer shall refer to the transfer of more than the Trigger Percentages of such joint venture partner, taking all transfers into account on a cumulative basis. 6 .3 Landlord' s Consent . Tenant shall not Transfer this Lease or any of Tenant' s rights hereunder, or any interest in the Premises or in the Improvements thereon, directly or indirectly, voluntarily or by operation of law, except as provided below, without the prior written approval of Landlord, which approval shall not be unreasonably withheld or delayed and if so purported to be transferred without such approval, the same shall be null and void. In considering whether it will grant approval to any Transfer by Tenant, which transfer requires Landlord approval, Landlord shall consider factors such as (i) whether the completion of the Golf Course Project is delayed or jeopardized; (ii) the financial strength and capability of the proposed transferee to perform Tenant' s obligations hereunder; and (iii) the proposed transferee' s experience and expertise in the planning, financing, development, ownership, and operation of similar projects . In addition, no attempted assignment of any of Tenant' s obligations hereunder shall be effective unless and until the successor entity to Tenant, :if applicable, executes and delivers to Landlord an assumption agreement in a form approved by the Landlord, assuming all of Tenant' s obligations under this Lease. No consent or approval by Landlord of any Transfer requiring Landlord' s approval shall constitute a further waiver of the provision of this Section 6 . 3 and, furthermore, Landlord' s consent to a Transfer shall not be deemed to release Tenant of liability for performance under this Lease unless such release is specific and in writing executed by Landlord. 6 . 4 Exceptions to Restrictions . The restriction against Transfers set forth in Sections 6 .2 and 6 . 3 hereof shall not apply to any of the following: (a) The granting of easements or dedications to any appropriate governmental agency or utility or permits to facilitate the development and/or operation of the Golf Course Project . (b) A sale or transfer resulting from or in connection with a reorganization as contemplated by the provisions of the Internal Revenue Code: of 1986, as amended or otherwise, in which the ownership interests of two corporations are consolidated or merged or in which the ownership interests of a corporation are assigned directly or by operation of law to a person or persons, firm or corporation which acquires the control of the voting capital stock of such corporation or all or substantially all of the assets of such corporation. 0941014084-0063/2152049.5 .09/12196 -1 6- (c) Transfers of the equity interest and/or voting rights in Tenant between members of the same immediate family, or similar Transfers to a trust, testamentary or otherwise, in which the beneficiaries consist solely of immediate family members of the trustor or similar Transfers to a corporation, partnership or limited liability company in which the immediate family members of the transferor own at least ten percent (10%) of the present equity ownership and/or at least fifty percent (50a) of the voting rights of the corporation, partnership or limited liability company. (d) A change in the respective percentage ownership interests exclusively of the equity holders comprising Tenant (as of the Effective Date) , but this shall not authorize the transfer of any interest to any person or entity who is not an equity holder of Tenant as of the Effective Date. (e) A Transfer permitted pursuant to Section 6 . 6 hereof. (f) A Transfer permitted pursuant to Article XI hereof. (g) A Transfer of less than the Trigger Percentages . 6 .5 Approval of Identity of Lender. Notwithstanding anything to the contrary set forth herein with regards to the approval by Landlord of hypothecation, encumbrances or mortgages, Landlord shall only have the right to approve the identity of Tenant' s lender, which approval will not be unreasonably withheld, taking into consideration such lender' s financial strength, reputation, and other relevant factors . Landlord shall not have any right to approve any of the terms or conditions of Tenant' s financing arrangements with third party lenders . 6 . 6 Right to Sublet Portions of the Premises . After the Opening Date, Tenant shall. have the absolute right to sublet portions of the Premises in connection with the grant of standard concessions for operation of the restaurant, pro-shop or other retail activities incident to the Golf Course Project, provided that each such sublease states that it is subject and subordinate to the terms and provisions of this Lease and does not extend beyond the term of this Lease, and (b) contains provisions satis- factory to Landlord requiring the subtenant, at Landlord' s sole election, to attorn to the Landlord, if Tenant defaults under this Lease and if the subtenant is notified of Tenant' s default and instructed to make subtenant' s rental payments to Landlord. Landlord agrees that if this Lease is terminated as a result of a default by Tenant, Landlord shall have the right but not the obli- gation to recognize and keep in effect any one or more of the sub- leases . Any sublease of all or substantially all of the Premises and/or the Golf Course shall. constitute a Transfer subject to the limitations and restrictions set forth in Sections 6 . 1 through 6 .4 above. 094/014084-0063/2152048.5 a09/12/96 -1 7- ARTICLE VII TAXES 7. 1 Payment by Tenant . Tenant shall pay and discharge, prior to delinquency, all taxes and assessments, general and special, water taxes and all other impositions, ordinary and extraordinary of every kind and nature whatsoever, which during the Term may be charged, levied or assessed against the Land, the Improvements and all of Tenant' s interests therein and Tenant' s Trade Fixtures ( "Taxes" ) . 7 .2 Improvement or Special Assessment District. If at any time during the term of this Lease any governmental subdivision shall undertake to create an improvement or special assessment district the proposed boundaries of which shall include any portion of the Premises, Landlord and Tenant shall each be entitled to appear in any proceeding relating thereto and to present their respective positions as to whether the Premises should be included or excluded from the proposed improvement or assessment district and as to the degree of benefit to the Premises resulting there- from. Each party shall promptly advise the other party, in writing of the receipt of any notice; or other information relating to the proposed creation of any such improvement or special assessment district, the boundaries of which include any portion of the Premises . Any assessment levied or assessed against the Premises by any such improvement or special assessment district shall con- stitute real property taxes and assessments for the purposes of this Article 7 and shall be payable by Tenant . 7 . 3 Permitted Contests . Tenant shall have the right to seek a reduction in the assessed valuation or to contest the amount or validity of any such Taxes by appropriate legal proceedings, diligently pursued, provided that: (a) Tenant shall first make all contested payments under protest, but if payment: under protest is not permitted by the taxing authority, such contested payment need not be made; (b) The Improvements or any part thereof or any interest therein shall not be in any danger of being sold, forfeited, lost or otherwise interfered with; (c) All expenses incurred in connection with such proceeding shall be paid by Tenant; and (d) Landlord shall have no obligation to participate with Tenant in connection with any such proceedings . 7.4 Personal Property Taxes . Tenant shall pay, prior to delinquency, all taxes assessed against and levied upon Tenant' s Trade Fixtures located on the Premises . 094/014084-006312152048.5 .09/12/96 -1 8- ARTICLE VIII INSURANCE 8 . 1 Tenant' s Insurance. Tenant shall procure and maintain, and pay all premiums, fees and charges for the purpose of procuring and maintaining continuously throughout the Term: (a) Insurance on the Improvements against loss or damage by fire or other casualty with endorsements providing what is commonly known as all risk fire and extended coverage (but not including flood or earthquake coverage) , vandalism and malicious mischief insurance, with extended coverage, special extended perils (all risk) , inflation guard endorsements in an amount equal to the full replacement cost thereof, with a d_eductiYzle of no greater than TEN THOUSAND DOLLARS ($10, 000 . 00) ; (b) At all times when any construction, change, alteration, repair, restoration, addition or improvement is in progress, workers' compensation insurance as required by statute and employers' liability insurance in an amount of not less than ONE MILLION DOLLARS ($1, 000, 000 . 00) (which amount shall be adjusted every five (5) years to reflect constant 1996 dollars using the CPI) covering all persons employed by Tenant in connection with the construction, change, alteration, repair, restoration, addition or improvement, general liability insurance for the mutual benefit of Tenant and Landlord, expressly covering the additional hazards because of the construction, change, alteration, repair, restor- ation, addition or improvement, and such increase in the fire and extended coverage insurance as may reasonably be required as a result of the increase in replacement cost of the Improvements because of the change or alteration; and (c) General liability insurance with a combined single limit of not less than FIVEMILLION DOLLARS ($5, 000, 000 . 00) combined single limit coverage (which amount shall be adjusted every five (5) years to reflect constant 1996 dollars using the CPI) provided, in no event shall the amount required hereunder exceed amounts required by governmental agencies for comparable projects in the Southern California region for any bodily injury or property damage, with a deductible of no greater than TEN THOUSAND DOLLARS ($10, 000 . 00) , which insurance shall be primary and noncon- tributory. Tenant shall be entitled to satisfy the insurance coverage requirements set forth in this Section 8 . 1 (c) through either primary coverage or umbrella coverage, or any combination thereof, in Tenant' s sole discretion. 8 .2 Form of Insurance Policies . All property, casualty and other policies of insurance referred to in this Lease shall include Landlord, as its interest may appear, as an additional insured, shall insure Landlord against liability arising out of Tenant' s negligence or the negligence of any other person, firm, or corporation and contain a contractual liability endorsement for liabilities assumed by Tenant under this Lease. All policies 0941014084-0063/2152048.5 a09/12/96 _19_ 0 • procured hereunder shall be on standard policy forms issued by insurers of recognized responsibility, rated A+XII or better by Best' s Insurance Rating Service, qualified to do business in California. A certificate of such insurance shall be delivered to Landlord prior to Tenant' s entry onto the Premises and thereafter not less than thirty (30) days prior to the expiration thereof and shall provide that such policy may not be cancelled or modified except upon not less than thirty (30) days' written notice to Landlord. 8 . 3 Waiver of Subrogation. Each of Landlord and Tenant severally waive any and every claim which arises or may arise in its favor and against the other during the term of this Lease for any and all loss of, or damage to, any of its property located within or upon, or constituting a part of, the Project, to the extent such loss or damage is covered by the form of insurance required pursuant to Section 8 . 1; provided, however, that the provisions of this Section 8 . 3 shall be of no force or effect to the extent the same shall invalidate any policy of insurance owned by Landlord or Tenant. 8 .4 Hold Harmless and Waiver of Claims . Except in the event of an occurrence caused by the active negligence or willful misconduct of Landlord, Tenant covenants and agrees that Landlord shall not at any time or to any extent whatsoever be liable, responsible, or in any way accountable, for any loss, injury, death or damage to persons or property which at any time may be suffered or sustained by Tenant or by any persons or property who or which may at any time be using, occupying or visiting the Premises, or be in, on or about the Premises,, or may be injured as a result of any act, omission or negligence of Tenant, Tenant' s agents or employees, whether arising from the sale of alcoholic beverages, or otherwise, whether or not such loss, injury, death or damage shall be caused by, or in any manner result from, or arise out of, any act, omission or negligence of Tenant or of any occupant, subtenant, customer or invitee of Tenant; and Tenant shall forever indemnify, defend, and hold Landlord free and harmless of, from, and against, any and all claims, liability, loss or damage whatsoever including, but not limited to, attorneys' fees, on account of any loss, injury, death or damage occurring in, on or about the Premises, or arising from the use of the Premises by any person during the Term of the Lease. ARTICLE IX DAMAGE OR DESTRUCTION 9 . 1 Renair and Reconstruction After Insured Damage. In the event the whole or any part of the Improvements shall be partially or wholly damaged or destroyed by fire or other casualty required to be insured against hereunder, such destruction or damage shall not operate to terminate this Lease, but rather, this Lease shall continue in full force and effect except as otherwise provided in 094/014084-0063/2152048.5 09/12/96 -2 0- 0 this Lease. In such case, subject to 'availability of, and to the extent of, available insurance proceeds, Tenant agrees to promptly restore, rebuild or repair the Improvements to a condition at least equal in value to the value of the Improvements immediately prior to the casualty. All work performed by Tenant pursuant to this Section 9 . 1 shall be done in accordance with the provisions of Article IV hereof . 9 .2 Repair and Reconstruction After Uninsured Damage. In the event the Improvements are partially or wholly damaged or destroyed by a casualty not required to be insured against hereunder to the extent of twenty-five percent (250) or more of the insurable value of the Improvements, at any time during the sixty (60) calendar day period following the date of occurrence of such casualty, Tenant may, at its option, elect to terminate this Lease. If the Improvements shall be damaged by a casualty not required to be insured against hereunder to the extent of less than twenty-five percent (25%) of the insurable value of the Improvements, Tenant shall, at its own cost and expense, be obligated to promptly restore, rebuild or repair said Improvements to a condition at least equal in value to the value of the Improvements immediately prior to the casualty. All work performed by Tenant pursuant to this Section 9 .2 shall be done in accordance with the provisions of Article IV hereof . 9 . 3 Damage Near End of Term. Notwithstanding the provisions of Section 9 . 1 and 9 .2 hereof, in the event the whole or any part of the Improvements shall be partially or wholly damaged or destroyed, Tenant shall be under no obligation to, but may (at Tenant' s sole discretion) , repair, restore or reconstruct the Improvements during the final ten (10) years of the Lease Term if: (1) the cost of such restoration exceeds twenty-five percent (25%) or more of the then full replacement value of all the Improvements; or (2) the damage or destruction is uninsured and is not required to be insured under the provisions of this Lease; or (3) Tenant is substantially prevented from carrying on its business and opera- tions at a level of at least seventy-five percent (75o) of the level of business and operations preceding such damage or destruc- tion; or (4) such damage or destruction cannot be repaired so as to permit resumption of Tenant' s business and operations, within ninety (90) calendar days of such damage or destruction to substan- tially the same level of such business and operations prior to such damage or destruction. In such event, notwithstanding any pro- vision in this Lease to the contrary, Tenant may, at its option, elect to terminate this Lease. 9 .4 Election to Terminate. In the event Tenant elects to terminate this Lease pursuant to the provisions of Section 9 .2 or Section 9 . 3 above, then Tenant may exercise its right to terminate subject to the following conditions: (1) said right to terminate must be exercised by written notice from Tenant to Landlord within sixty (60) days of such damage or destruction; (2) Tenant shall continue to perform all its obligations hereunder until the effective date of such termination; and (3) subject to the terms 094/014084-0063/2152048.5 a09/12/96 -2 1- and conditions of any Leasehold Mortgage, as said term is hereafter defined, Landlord shall be entitled to retain all insurance proceeds attributable solely to the repair and/or replacement of the Improvements which were damaged or destroyed and all other insurance proceeds including, without limitation, those attributable to Tenant' s Trade Fixtures, if any, shall belong to Tenant. ARTICLE X CONDEMNATION 10 . 1 Termination of Lease. In the event (a) all or any portion of the Adjacent Real Property; or (b) all or any portion of the Land or Improvements, shall be acquired for any public or quasi-public use through taking by condemnation, eminent domain or any like proceeding, or purchase in lieu thereof (a "Taking" ) , such that Tenant reasonably determines that the Premises cannot continue to be operated for the Golf Course Project, then the Term shall cease and terminate as of the date the condemning authority takes title or possession, whichever first occurs. 10 .2 Apportionment of Award. In the event of any Taking, whether whole or partial, Landlord and Tenant shall be entitled to receive and retain such separate awards and portions of lump sum awards as may be allocated to their respective interests in any condemnation proceedings . For purposes of allocating the award, the value of Tenant' s interest shall be determined as if Tenant was required to pay fair market rent for the Land under this Lease. Under no circumstances shall Tenant be entitled to an award of any so-called "bonus value" of the Lease. If the Premises shall be restored as herein provided, Tenant shall first be entitled to recover the costs and expenses incurred in such restoration out of any such award. Thereafter, in the event the condemning authority does not make separate awards and the parties are unable to agree as to amounts which are to be allocated to the respective interests of Landlord and Tenant, then each party shall select an independent M.A. I . real estate appraiser (an "Appraiser") . Each Appraiser shall separately determine the amount of the balance of the condemnation award which is to be allocated to the interests of Landlord and Tenant. In the event that the percentage of the balance of the total award each Appraiser allocates to Landlord (a) are within ten percent (10%) of each other, the two (2) allocations shall be averaged and such average shall be the final allocation of the award, or (b) are not within ten percent (100) of each other, the two Appraisers shall then select a third Appraiser who shall independently allocate the award between Landlord and Tenant, and the middle of such three (3) allocations shall be the final allocation of the award. In the event the two Appraisers are unable to agree on the selection of the third Appraiser, the third Appraiser shall be selected by the President of the Board of Realtors of Palm Springs, California, provided that such president is not an employee or an affiliate of either Landlord or Tenant. 094/014084-OO6312152048.5 09/12/96 -2 2- ARTICLE XI LIENS AND ENCUMBRANCES 11. 1 Right to Encumber. Tenant shall have the right to encumber this Lease and Tenant' s leasehold estate in the Premises and interest in the Improvements, furnishings, furniture, equip- ment, fixtures, and personal property thereon, from time to time by one or more mortgages, deeds of trust, deeds to secure debt or other appropriate instrument (a "Leasehold Mortgage" ) to one or more Lienholders approved by Landlord pursuant to Section 6 . 5 above. 11 .2 Lienholder Defined. As used in this Lease, the term "Lienholder" shall mean any lender which is now or in the future the holder and owner of the debt secured by a Leasehold Mortgage. 11.3 Consent of Lienholder. This Lease may not be terminated, surrendered or amended, nor may any provisions hereof be waived or deferred by Landlord or Tenant, without the prior written consent of any Lienholder which has requested notice in accordance with Section 11 . 4, unless Landlord complies with the terms and provisions of this Article XI . This provision is for the express benefit of any such Lienholder and may be enforced separately by it . 11 .4 Notice to Lienholder. After the execution of this Lease, Landlord shall send to any Lienholder a copy of all notices sent by Landlord to Tenant, or received by Landlord from Tenant, affecting or pertaining to the Premises . No notice from Landlord to Tenant shall be effective unless and until a copy has been actually received by any such Lienholder. However, Landlord shall have no duty to send a copy of any notice to any Lienholder which does not by written notice to Landlord request such notice and specify the address to which copies of same are to be sent pursuant to this Section 11.4 . Any Lienholder' s address for receipt of notices may be changed by written notice to Landlord. 11. 5 Notice of Default; Opportunity to Cure. As a precon- dition to terminating this Lease for any alleged default by Tenant, Landlord shall give written notice of the default to each Lienholder who has requested Landlord, in writing, to provide such written notice. In the event the Landlord gives such a written notice of default, the following provisions apply: (a) A "monetary default" means failure to pay when due any rent, taxes, assessment, utility charge, liens, insurance premium or other monetary obligation required by this Lease to be paid by Tenant . Any other event of default is a "non-monetary default" . The Lienholder shall have sixty (60) days after service of the notice of default within which to cure any monetary or non- monetary default, and Landlord shall not terminate the Lease during said sixty (60) day period. In the event of a non-monetary 094/014084-0063/2152048.5 09/12/96 -2 3- default, Landlord shall not terminate the Lease if the Lienholder commences to cure such default within said sixty (60) day period and thereafter prosecutes such cure with reasonable diligence. The Lienholder shall have the absolute right to substitute itself for the Tenant and perform the duties of the Tenant hereunder for purposes of curing such defaults . Landlord expressly consents to such substitution and authorizes the Lienholder to perform under this Lease with all the rights, privileges and obligations of the original Tenant hereunder. (b) The above-described sixty (60) day period shall be extended, and this Lease shall not terminate, during the time required for the Lienholder to perfect its right to cure any non- monetary default by obtaining possession of the Premises (including possession by a receiver) or by instituting foreclosure pro- ceedings, provided the Lienholder acts with reasonable and contin- uous diligence. (c) Neither the bankruptcy nor the insolvency of Tenant shall be grounds for terminating this Lease as long as the Base Annual Rent and all other monetary charges payable by Tenant hereunder are paid by the Lienholder in accordance with the terms of this Lease. 11 . 6 Right to Cure. Any Lienholder shall have the right, but not the obligation, to cure any default under this Lease, and Landlord shall accept such performance by or at the insistence of any such Lienholder as if the same had been made by Tenant. 11 . 7 New Lease to Lienholder. If this Lease terminates because of Tenant' s default or if the Leasehold Mortgage is foreclosed, then the Lienholder may elect to demand a new lease ( "New Lease" ) of the Premises by written notice to Landlord within thirty (30) days after such termination or foreclosure. Upon any such election, the following provisions shall apply: (a) The New Lease shall be for the remainder of the Term of the terminated or foreclosed Lease, effective on the date of termination or foreclosure, at the same rent and subject to the same covenants, agreements, conditions, provisions, restrictions and limitations contained in the terminated or foreclosed Lease. Such New Lease shall be subject to all existing subleases, provided the subtenants are not then in default . (b) The New Lease shall be executed by Landlord and Lienholder within thirty (30) days after receipt by Landlord of written notice of said Lienh'older' s election to enter into the New Lease provided, however, than Landlord' s obligation to enter into the New Lease shall be conditioned as follows : (i) Lienholder has remedied and cured all monetary defaults and has remedied and cured or has commenced and has diligently completed the cure of all non-monetary 094/014094-0063/2152048.5 a09/12196 -2 4- defaults of Tenant susceptible to cure by any party other than by the original tenant; (ii) That if more than one holder of a Leasehold Mortgage requests such New Lease, Landlord shall have no duty or obligation whatsoever to determine the relative priority of such Leasehold Mortgages, and in the event of any dispute between or among the holders thereof, Landlord shall have no obligation to enter into any such New Lease if such dispute is not resolved to the sole satisfaction of Landlord, within ninety (90) days after the date of termination of this Lease; and (iii) That Lienholder pays all costs and expenses of Landlord, including, without limitation, reasonable attorneys' fees, real property transfer taxes and any escrow fees and recording charges, incurred in connection with the preparation and execution of such New Lease and any conveyances related thereto. (c) Landlord' s execution and delivery of such New Lease shall be made without representation or warranty of any kind, whether express or implied, including, without limitation, any representation or warranty regarding title to the Premises or the priority of such New Lease. In no event shall Landlord' s fee interest in the Premises be subordinated to this Lease or to any such New Lease. (d) At the option of the Lienholder, the New Lease may be executed by a nominee of such Lienholder without the Lienholder assuming the burdens and obligations of Tenant thereunder beyond the period of its occupancy. (e) Upon execution and delivery of the New Lease, Lienholder, at its sole cost and expense, shall be responsible for taking such action as shall be necessary to cancel and discharge this Lease and to remove the Tenant named herein and any other occupant from the Premises . 11 . 8 Assignment. This Lease may be assigned to any party without Landlord' s consent as a result of foreclosure or as a result of a deed or assignment in lieu of foreclosure. Any Lienholder who acquires title to this Lease at foreclosure or by deed or assignment in lieu of foreclosure shall be able to assign this Lease to any Lienholder without Landlord' s consent . Notwith- standing the foregoing, any party who is assigning this Lease (or the assignee if the assignor does not do so) and the estate created hereby shall provide to Landlord notice of assignment and shall execute and deliver in a form reasonably acceptable to Landlord an assumption agreement from the assignee pursuant to which said assignee assumes the duties, obligations, covenants, conditions and restrictions of this Lease. Upon such assignment, the Lienholder shall be released of all liability hereunder arising after the assignment . 0941014084-0063/2152048.5 .09/12196 -2 5- r • • 11 . 9 Obligations of Lienholder in Possession. No Lienholder shall have any personal liability for performance of Tenant' s obligations under this Lease unless and until such Lienholder acquires title to Tenant' s leasehold estate or assumes possession of the Premises . Following acquisition of Tenant' s leasehold estate by the Lienholder as a result of either foreclosure or acceptance of any assignment in lieu of foreclosure, the Lienholder or party acquiring title to Tenant' s leasehold estate shall, as promptly as possible, commence the cure of all defaults of Tenant hereunder and thereafter diligently process such cure to comple- tion, except such defaults which cannot, in the exercise of reasonable diligence, be cured or performed by the Lienholder or such party, whereupon Landlord' s right to terminate this Lease based upon such default shall be deemed waived. Any default not susceptible of being cured by the Lienholder or party acquiring title to Tenant' s leasehold estate shall be deemed waived by Landlord upon completion of foreclosure proceedings or acquisition of Tenant' s interest in this Lease by any purchaser at the fore- closure sale (who may, but need not be, the Lienholder) , or who otherwise acquires Tenant' s interest from the Lienholder or by virtue of the Lienholder' s exercise of its remedies . Notwith- standing anything to the contrary in this Lease, while any party who is a Lienholder, or at any time was a Lienholder or is a designee or nominee of any existing or former Lienholder, holds title to this Lease or possession of the Premises through a receiver or otherwise, or is proceeding to foreclosure on a lien held by it against Tenant' s leasehold estate created hereby or to obtain title to Tenant' s leasehold estate created hereby by a deed in lieu of foreclosure, then no provision in this Lease requiring reconstruction or rehabilitation of any improvements or other property following a condemnation, a fire or other casualty, if any, shall be applicable to or enforceable against such party to an extent in excess of the condemnation award or net insurance proceeds actually received by reason of such fire or other casualty. 11. 10 Designees and Nominees . All references in this Lease to a Lienholder shall be construed to also refer to any such Lienholder' s designee or nominee. ARTICLE XII DEFAULT BY TENANT 12 . 1 Events of Default . The occurrence of any of the following events shall constitute a default by Tenant: (a) Failure to pay rent when due where such failure continues for a period of five (5) business days after such rent is due; or (b) Failure to perform any other provision of this Lease to be performed by Tenant if the failure to perform is not 0941014084-0063/2152048.5 .09/12196 -2 6- cured within thirty (30) days after Tenant receives written notice thereof from Landlord. In the event that such default cannot reasonably be cured within thirty (30) days, Tenant shall not be in default of this Lease if Tenant commences to cure the default within such thirty (30) day period and diligently and in good faith continues to cure the default until completion, provided the same is capable of being cured by Tenant. 12 .2 Right to Cure; Landlord' s Remedies . (a) If Tenant shall have failed to cure a default by Tenant after expiration of the applicable time for cure of a particular default, Landlord may, at its election, but without obligation therefor, subject to Article 11 hereof, terminate .this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which it may have for possession or arrearage in rent, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part thereof, without being liable for prosecution or any claim or damages therefore; and Landlord may recover from Tenant the following: (i) The worth at the time of award of the amount by which the unpaid rent which has been earned at the time of such termination; plus (ii) The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination unti:L the time of award exceeds the amount of such rental loss that could have been reasonably avoided; plus (iii) Any amount necessary to compensate Landlord for all the detriment directly caused by Tenant' s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom. (b) The "worth at the time of award" of the amounts shall be computed by allowing interest at the lesser of: (i) ten percent (10%) and (ii) the maximum permitted by law. (c) If Landlord does not elect to terminate this Lease on account of any default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies under this Lease, including the right to recover all rent as it becomes due, pursuant to California Civil Code Section 1951.4 (as modified or recodified from time to time) . (d) Landlord may, but shall not be required to cure a default by Tenant at Tenant' s cost, and the cost of such cure, together with interest thereon, at the lesser of (i) fifteen percent (150s) and (ii) the maximum rate permitted by law, shall be 094/014084-0063/2152M.5 a09/12/96 -2 7- immediately due from Tenant to Landlord as additional rent hereunder. (e) In the event of any default by Tenant, Landlord shall also have the right, with or without terminating this Lease, pursuant to California law, to reenter the Premises and remove all persons and personal property therefrom by summary proceedings or otherwise; such personal property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant . (f) In the event that Landlord shall elect to reenter as provided in Section 12 .2 (e) above or shall take possession of the Premises pursuant to legal proceeding or pursuant to any notice provided by law, and if Landlord does not terminate this Lease as provided in Section 12 .2 (a) , then Landlord may from time to time, without terminating this Lease, either recover all rental as it becomes due or relet the Premises or any part thereof for the account of Tenant on such term or terms and at such rental or rentals and upon such other terms and conditions as Landlord may reasonably determine with the right to make alterations and repairs to the Premises . In the event that Landlord shall relet, then rentals received by Landlord from such reletting shall be applied as follows : first, to the payment of any indebtedness, other than Base Annual Rent due hereunder, owed by Tenant to Landlord; second, to the payment of any cost of such reletting; third, to the payment of the cost of any alterations and repairs to the Premises; fourth, to the payment of Base Annual Rent due and unpaid hereunder other sums due from Tenant to Landlord under this Lease; and the residue, if any, shall be held by Landlord and applied in payment of future base annual rent and other sums payable by Tenant hereunder as the same may become due and payable. Should that portion of such rentals received from such reletting during any month, which is applied to the payment of :rent or other sums payable by Tenant hereunder, be less than the rent and other sums payable during that month by Tenant hereunder, then Tenant shall pay such deficiency to Landlord upon demand. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in such reletting or in making such alterations and repairs not covered by the rental received from such reletting. 12 .3 Notices . No such notice shall be deemed a forfeiture or termination of this Lease. ARTICLE XIII DEFAULT BY LANDLORD 13 . 1 Events of Default . Landlord shall be in default of this Lease if it fails to perform any provision of this Lease that it is obligated to perform and if the failure to perform is not cured within thirty (30) days after written notice of the default 094/014084-0063/2152049.5 a09/12/96 -2 S- has been given by Tenant to Landlord. If a default described above for which a cure period is provided cannot reasonably be cured within thirty (30) days, Landlord shall not be in default of this Lease if Landlord commences to cure the default within such thirty-day period and diligently and in good faith continues to cure the default until completion, provided the same is capable of being cured by Landlord. 13 .2 Right to Cure; Tenant' s Remedies . If Landlord shall have failed to cure a default by Landlord after expiration of the applicable time, if any, for cure of a particular default, Tenant may, at its election, but without obligation therefor either (a) seek specific performance of any obligation of Landlord, after which Tenant shall retain, and may exercise and enforce, any and all rights which Tenant may have against Landlord as a result of such default or (b) recover damages for such breach by Landlord. 13 . 3 Notices . Notices given under this Article 13 shall specify the alleged default and the applicable Lease provisions, and shall demand that Landlord perform the provisions of this Lease within the applicable period of time for cure. No such notice shall be deemed a forfeiture or termination of this Lease unless expressly set forth in such notice. ARTICLE XIV SURRENDER 14 . 1 Surrender. Upon the expiration or other termination of this Lease, Tenant shall quit and surrender to Landlord the Premises, together with the Improvements and all other property affixed to the Premises, excluding Tenant' s Trade Fixtures, in good order and condition, ordinary wear and tear, casualty and condemnation excepted. Tenant shall, prior to the expiration or other termination of this Lease, remove all items constituting Tenant' s Trade Fixtures and other property belonging to it and failing to do so, Landlord may cause all of said personal property to be removed. Tenant' s obligation to observe or perform this covenant shall survive the expiration or other termination of this Lease. In the alternative, Landlord may, at its option, treat any and all items not removed by Tenant on or before the date of expir- ation or of the termination of this Lease as having been relin- quished by Tenant and such items shall become the property of Landlord with the same force and effect as if Tenant had never owned or otherwise had any interest in such items . 14 .2 Holding Over. This Lease shall automatically terminate and be of no further force or effect upon the expiration of the Term, and any holding over by Tenant after such expiration shall not constitute a renewal hereof or provide Tenant with any rights hereunder except that Tenant shall be deemed to be in possession of the Premises on a month-to-month tenancy commencing on the first day following the expiration of this Lease and a tenant at suffer- 094/014084-0063/2152048.5 a09/12/96 -2 9- ance of Landlord. Any such tenancy shall be subject to the terms and conditions herein contained, except that said tenancy may be terminated at any time upon thirty (30) days' written notice by Landlord to Tenant or by Tenant to Landlord. The acceptance of rent under the provisions of this Section 14 .2 shall not, however, be construed as a waiver by Landlord of any rights of reentry as set forth in this Lease, or as a renewal hereof . ARTICLE XV RIGHTS RESERVED BY LANDLORD 15 . 1 Inspection. (a) Tenant agrees to permit Landlord, or the authorized representatives of Landlord, to enter the Premises during normal business hours at all reasonable times for the purposes of (a) inspecting the Premises, (b) making such repairs or reconstruction required or permitted by Landlord, and (c) performing any work therein that may be necessary by reason of Tenant' s default under the terms of this Lease, all without prior written notice to Tenant . Nothing herein shall imply any duty upon the part of Landlord to do any such work which, under the provisions of this Lease, Tenant may be required to perform, and the performance thereof by Landlord shall not constitute a waiver of Tenant' s default in failing to perform such work. In the event Landlord makes any repairs or maintenance which Tenant has failed to do, the cost thereof shall be paid to Landlord on demand. (b) Landlord is hereby given the right during usual business hours to enter the Premises and to exhibit the same to any prospective Tenant, ground lessor, purchaser or lender, and to post any signs on or about the :Premises or the building in which the Premises are located regarding such sale, lease or borrowing. (c) Subject to the performance by Tenant of all of its duties and obligations under this Lease, Landlord covenants and agrees that Tenant shall have, hold and quietly enjoy the use �and occupancy of the Premises . ARTICLE XVI MISCELLANEOUS 16 . 1 Address for Notice and Rental Payments. Any notice required or permitted to be given or served by either party to this Lease shall be in writing and deemed to have been given or delivered, as the case may be, when delivered, or seven (7) days after deposit in the United States Post Office, Certified or Registered Mail, Return Receipt Requested, postage prepaid, or one business day after deposit: with a national overnight express 094/014094-0063/2152048.5 a09/12/96 -3 0- carrier, such as Federal Express, charges prepaid, addressed as follows : Landlord: The City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263 Attn: City Manager Tenant : Mountain Falls Golf, LLC 11839 Sorrento Valley Road San Diego, CA 92121 Attn: Mr. Fred Grand All rental payments shall be made to Landlord at the above address. The addresses may be changed from time to time and at any time by either party by serving notices as above provided. 16 .2 Commissions . Each party hereto represents and warrants to the other that there are no fees, commissions or other payments due for bringing about the execution and delivery of this Lease. In the event of breach of such representation and warranty, each party hereby indemnifies and holds harmless the other of and from each and every claim for fees, commissions or other payments made against such other party, which claim is based on the agreement or undertaking of the indemnifying party. 16 .3 Cumulative Remedies . No remedy herein or otherwise conferred upon or reserved hereunder shall be considered exclusive of any other remedy, but the same shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute, and every power and remedy given by this Lease may be exercised, from time to time, as often as occasion therefor may arise or as may be deemed expedient . No delay or omission by either party to exercise any right or power arising from any breach by the other of any term or condition of this Lease, and no acceptance of full or partial rent during the continuance of any such breach, shall impair any such right or power or shall be construed to be a waiver of any such breach or an acquiescence therein; nor shall the exercise, delay or nonexercise of any such right or remedy impair the rights granted hereunder or be construed as a waiver of such right or remedy or as a waiver, acquiescence in or consent to any further or succeeding breach of the same or any other covenant. 16 .4 Governing Law. The terms of this Lease shall be governed by and construed in accordance with the laws of the State of California. 16 . 5 Construction. All provisions hereof are to be construed as covenants and agreements as though the words importing such covenants and agreements were used in each section hereof. The necessary grammatical changes required to make the provisions of this Lease apply in the plural sense where there is more than one Landlord or Tenant and to either corporations, associations, 094/014084-0063/2152048.5 a09/12/96 -3 1- partnerships or individuals, males or females, shall in all instances be assumed as though in each case fully expressed. This Lease has been the subject of extensive negotiations between the parties, and the interpretation hereof shall not be based upon any party being the draftsman hereof. 16 . 6 Entire Agreement . This Lease and the MOU are the only agreements between the parties as of the date hereof with regard to the Premises . 16 . 7 Captions . The headings of the several articles and sections contained herein are for convenience of reference only and do not define, limit or construe the contents of such articles and sections . 16 . 8 Partial Invalidity. If any term or provision of this Lease shall to any extent be held invalid or unenforceable, the remaining terms and provisions of this Lease shall not be affected thereby, but each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law. 16 . 9 Covenants Running with the Land. This Lease and each and every covenant, agreement, condition and undertaking shall be deemed to be running with the land during the Term of this Lease and shall be binding upon and inure to the benefit of the respec- tive parties hereto, their legal representatives, heirs, executors, administrators, successors and assigns . 16 . 10 Not a Partnership. Nothing herein contained shall be construed as creating a partnership, joint venture or any other relationship between Landlord and Tenant, other than that of landlord and tenant . 16 . 11 Merger. If both Landlord' s and Tenant' s estates in and to the Premises become vested in the same owner, this Lease shall not be destroyed by application of the doctrine of merger except by the Landlord' s express election and upon the consent of any Lienholder. 16 . 12 Force Majeure. Except as otherwise specifically pro- vided in Section 2 . 3 , the time within which Landlord or Tenant shall be required to perform any act under this Lease shall be extended by a period of time equal to the number of days during which performance of such act is delayed due to war, insurrection, strikes, lock-outs, riots, floods, earthquakes, fires, casualties, natural disasters, Acts of God, acts of a public enemy, epidemics, quarantine restrictions, freight embargoes, governmental agencies other than City or Agency, unusually severe weather, or any other similar causes beyond the control or without the fault of the Party claiming an extension of time to perform ( "Force Majeure Event") . An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if written notice by the party claiming such extension is sent to the other party within thirty (30) days 0941014094-0063/2152049.5 a09/12/96 -3 2- of knowledge of the commencement of the cause. Any act or failure to act on the part of a Party shall not excuse performance by that Party. 16 . 13 Facilitation. Each party agrees to perform such further acts and to execute and deliver such further documents as may be reasonably necessary to carry out the provisions of this Lease and are consistent therewith. 16 . 14 Waiver. No waiver of any of the terms or conditions of this Lease shall be binding or effective unless expressed in writing and signed by the party giving such waiver. 16 . 15 Statements by Landlord and Tenant . Each of the parties hereby agrees at any time and from time to time, upon not less than ten (10) days' prior written notice, to execute, acknowledge and deliver to the other party, a prospective purchaser, assignee or lender, including, but not limited to, a Lienholder, a statement in writing certifying that (a) this Lease is unmodified and in full force and effect (or, if there have been modifications, a statement that this Lease is in full force and effect as modified and stating the modifications) , (b) the dates to which the base annual rent and any other sums payable hereunder have been paid, (c) whether or not, to the knowledge of such party, there are then, existing any defaults under this Lease or any events which, with the giving of notice or the passage of time, or both, would constitute a default hereunder (and, if so, specifying the same) , and (d) such other information as the other party or any Lienholder or a prospective purchaser or assignee may reasonably require. Each party repre- sents and warrants that such statement may be relied upon by the other party hereto or any third party. 16 . 16 Attorneys' Fees . If either party hereto brings an action to enforce the terms hereof or declare rights hereunder, the prevailing party in such action shall be entitled to reasonable attorneys' fees and costs of suit . 16 . 17 Authority. Each individual executing this Lease per- sonally warrants and represents that he is authorized to enter into this Lease on behalf of his respective corporation or partnership and to bind said entity with respect to any transaction contemplated by or occurring under the provisions of this Lease. 16 . 18 Interest'. Wherever in this Lease a party is entitled to interest on sums it has expended, and in the event Tenant is delinquent in the payment of rent or any other sums hereunder, such amount shall bear interest from the date of expenditure until the date of repayment at an annual rate equal to the lesser of (i) two percent (20) above the prime rate of interest from time to time 094/014084-0063/2152048.5 09/12/96 -3 3- announced by Bank of America, N.A. , or (ii) the maximum rate permitted by law. IN WITNESS WHEREOF, the parties hereto have executed this Ground Lease Agreement as of the date first above written. THE CI OF PALM SPR S, a Muni ip 1 Corpor o By: Its :- ATTEST: r �_i, _ CT'I�]' CLERK APPROVED AS TO FO i' �/it� r?P/)fi David J�Aleshire, Esq. City Attorney MOUNTAIN FALLS GOLF, LLC, a California limited liability company Its : 094/014084-0063/2152048.5 a09/12/96 -3 4- EXHIBIT "A" LEGAL DESCRIPTION OF LAND THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF RIVERSIDE, AND IS DESCRIBED AS FOLLOWS : SECTION 9 , TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO BASE AND MERIDIAN, IN THE CITY OF PALM SPRINGS, ACCORDING TO THE OFFICIAL PLAT THEREOF. EXCEPTING THEREFROM PARCELS 6050-1 AND 6050-7 AS SHOWN ON RECORD OF SURVEY ON FILE IN BOOK 42 PAGES 43 TO 48, INCLUSIVE, RECORDS OF SURVEY, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA, AS CONDEMNED TO THE RIVERSIDE COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT, BY FINAL ORDER OF CONDEMNATION, A CERTIFIED COPY OF WHICH RECORDED JUNE 20 , 1973 AS INSTRUMENT NO. 80405 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. EXHIBIT "A" 094/014084-006312152048.5 .09/12/96 TO GROUND LEASE AGREEMENT EXHIBIT "B" LEGAL DESCRIPTION OF ADJACENT REAL PROPERTY BEING THAT PORTION OF SECTIONS 9 , 10 , 15 , AND 16, TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO BASE AND MERIDIAN, IN THE CITY OF PALM SPRINGS, RIVERSIDE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS : ALL THOSE PORTIONS OF PARCELS 6050-1, 6050-2 , 6050-3 , 6050-4, 6050-5, 6050-6, 6050-7, 6050-9, 6050-10, 6050-11, 6050-12 , 6050-13 , 6050-14, 6050 -15A, AS SHOWN ON RECORD OF SURVEY BOOK 42 , PAGES 43 THROUGH 48 , INCLUSIVE, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. _EXHIBIT "B" 094/014084-0063/2152048.5 a09/12/96 TO GROUND LEASE AGREEMENT EXHIBIT "C" RECORDING REQUESTED BY AND WHEN RECORDED, MAIL TO: (Space above this line for Recorder's use) MEMORANDUM OF GROUND LEASE THIS MEMORANDUM OF GROUND LEASE (this "Memorandum" ) is made and entered into as of the day of , 1996, between THE CITY OF PALM SPRINGS, a municipal corporation ( "Landlord" ) and MOUNTAIN FALLS GOLF, LLC, a California limited liability company ( "Tenant" ) . 1 . LEASE OF PREMISES . Landlord has leased to Tenant, and Tenant leased from Landlord that certain real property located in the City of Palm Springs, County of Riverside, State of California, as more particularly described on Exhibit "A" attached hereto and incorporated herein by reference (the "Premises" ) pursuant to and on the terms and provisions of that certain Ground Lease Agreement of even date herewith (the "Lease" ) . The provisions of the Lease are incorporated into this Memorandum by this reference as if set out in full herein. 2 . INITIAL TERM. The initial term of the Lease shall commence on the date of this Memorandum and shall expire on the fifty-fifth (55th) anniversary of the earlier of (a) the date Tenant opens for business from the Premises; or (b) the first to occur of completion of improvements under the Lease dated March 12 , 1996 between the Palm Mountain Company, a California corporation and the Riverside County Flood Control and Water Conservation District ( "District Lease" ) or March 12 , 1999, subject to earlier termination upon occurrence of certain events, as more particularly provided in the Lease. 3 . EXCLUSIVE RIGHT TO NEGOTIATE FOR EXTENSION. Pursuant to and subject to the conditions set forth in Section 2 .4 of the Lease, Tenant shall have the right to exclusively negotiate with Landlord for the extension of the Lease or the execution of a new lease for an additional term. 4 . PURPOSE OF MEMORANDUM. This Memorandum is prepared and executed for the purpose of recordation and in no way modifies the terms and provisions of the Lease. In the event of any inconsistency between the terms of the Lease and the terms of this Memorandum, the terms of the: Lease shall prevail . 094/014084-0063/2152048.5 .09112/96 EXHIBIT "C" TO GROUND LEASE IN WITNESS WHEREOF, the parties have executed this Memorandum of Ground Lease as of the day and year first above written. THE CITY OF PALM SPRINGS, a Municipal Corporation By: Its : ATTEST: CITY CLERK APPROVED AS TO FORM: David J. Aleshire, Esq. City Attorney MOUNTAIN FALLS GOLF, LLC, a California limited liability company By: Its- 094/014084-0063/2152048.5 .09/12/96 EXHIBIT "C" TO GROUND LEASE STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, personally appeared personally known to me (or proved to me on the basis of satisfac- tory evidence) to be the person(s) whose name (s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity (ies) , and that by his/her/their signature (s) on the instrument the person (s) or the entity upon behalf of which the person (s) acted, executed the instrument. Witness my hand and official seal . Notary Public [SEAL] STATE OF CALIFORNIA ) ss . COUNTY OF ) On before me, personally appeared personally known to me (or proved to me on the basis of satisfac- tory evidence) to be the person (s) whose name (s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity (ies) , and that by his/her/their signature (s) on the instrument the person (s) or the entity upon behalf of which the person (s) acted, executed the instrument. Witness my hand and official seal . idotary Public [SEAL] 094/014094-0063/2152M.5 a09/12/96 EXHIBIT "C" TO GROUND LEASE EXHIBIT "A" LEGAL DESCRIPTION OF PREMISES THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF RIVERSIDE, AND IS DESCRIBED AS FOLLOWS : SECTION 9 , TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO BASE AND MERIDIAN, IN THE CITY OF PALM SPRINGS, ACCORDING TO THE OFFICIAL PLAT THEREOF. EXCEPTING THEREFROM PARCELS 6050-1 AND 6050-7 AS SHOWN ON RECORD OF SURVEY ON FILE IN BOOK 42 PAGES 43 TO 48, INCLUSIVE, RECORDS OF SURVEY, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA, AS CONDEMNED TO THE RIVERSIDE COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT, BY FINAL ORDER OF CONDEMNATION, A CERTIFIED COPY OF WHICH RECORDED JUNE 20, 1973 AS INSTRUMENT NO. 80405 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. EXHIBIT "A" TO MEMORANDUM OF GROUND LEASE 094/014084-0063/2152048.5 .09/12/96 EXHIBIT "D" OUTLINE OF :STANDARDS FOR PGA-RATED CHAMPIONSHIP QUALITY GOLF COURSE MINIMUM STANDARDS FOR GOLF COURSE PROJECT 1 . Area: 150 acres minimum; 2 . A par 72 course with eighteen holes . Each 9 hole side shall include the following: (a) 2 - three pars (b) 5 - four pars (c) 2 - five pars 3 . A reasonable golf pro shop and club house facility should be an integral, on-site facility. The golf clubhouse should have a restaurant and a full service bar. 4 . The first and tenth holes should start near the club house or the golf starter. The ninth and eighteenth holes should end near the club house or golf starter. The ninth hole should end within a reasonable distance of the tenth hole tees . 5 . A putting green, with the ability to practice putting, chipping and sand bunker shots, should be located near the club house. This practice area should accommodate at least twelve (12) golfers at one time. A second putting green should be located near the first and tenth holes . It should be capable of allowing eight (8) golfers or two (2) foursomes, to practice putting concurrently. 6 . A Class A SCGA golf professional should be engaged as a full- time employee. 7 . There should be at least four (4) sets of tees with these recommended yardage lengths : (a) Championship tees black minimum of 6800 yds . (b) Men' s long tees blue 6500-6600 yds. (c) Men' s short tees white 6200-6500 yds . (d) Ladies' tees red minimum of 5200 yds . 8 . The tee boxes should be arranged so that the course can be set up for varying degrees of difficulty. Each tee box shall have the ability to change t=he location of the tees to allow for greater diversity of play at each hole and reduced wear and damage on the grass at the tees . 9 . The greens should be designed so that at least four separate pin placements are possible per hole. EXHIBIT "D" 094/014084-0063/2152048.5 n09/12196 TO GROUND LEASE AGREEMENT 10 . The course shall have some reasonable degree of difficulty and challenge. The use of sand bunkers, grass bunkers, trees, water hazards, open natural desert and other hazards should be identified and employed. 11 . A practice driving ranee should be on-site with the ability to allow a minimum of 32 golfers to practice at one time. The tee area of this driving range shall be natural grass, not an artificial surface. The driving range shall have a minimum distance of 300 yards measured from the middle of the tee area. The tee area should be no less than 50 yards measured from front to back. The range area should have at least eight (8) flag positions denoting the approximate distance from the middle of the tee area. 12 . A full and reasonable maintenance facility should be directly accessible to the golf course and practice areas. 13 . The City retains the right of approval with respect to the plans . EXHIBIT "D" 094/014084-0063/2152048.5 a09/12/96 TO GROUND LEASE AGREEMENT 3 EGEW 0 -95324 nkf 5 RECEIVED FOR RECORD �'�`1r �.:�FPS: AT 8:00 O'CLOCK _ RECORDING REQUESTED BY AND OCT 1;61996 WHEN RECORDED, MAIL TO: Mountain Falls Golf, LLC 1pAMSe" Memo of Ground Lse, Exh "C" �� ��.�R AGREEMENT #3717 CtTYOFPALMBPI 06 CM Signed, 10-4-96 BOX V43 PAW WNHOr CA IM (Space above this line for Recorder's use) ADZ 717 MEMORANDUM OF GROUND LEASE THIS MEMORANDUM OF GROUND LEASE (this ' emorandum°') is made and entered into as of the `�� day of �Lt, _ 1996, between THE CITY OF PALM SPRINGS, a municipal corporation ( "Landlord" ) and MOUNTAIN FALLS GOLF, LLC, a California limited liability company ( "Tenant") . 1 . LEASE OF PREMISIES . Landlord has leased to Tenant, and Tenant leased from Landlord that certain real property located in the City of Palm Springs, County of Riverside, State of California, as more particularly described on Exhibit "A" attached hereto and incorporated herein by reference (the "Premises" ) pursuant to and on the terms and provisions of that certain Ground Lease Agreement of even date herewith (the "Lease") . The provisions of the Lease are incorporated into this Memorandum by this reference as if set out in full herein. 2 . INITIAL TERM. The initial term of the Lease shall commence on the date of this Memorandum and shall expire on the fifty-fifth (55th) anniversary of the earlier of (a) the date Tenant opens for business from the Premises; or (b) the first to occur of completion of improvements under the Lease dated March 12 , 1996 between the Palm Mountain Company, a California corporation and the Riverside County Flood Control and Water Conservation District ( "District Lease" ) or March 12 , 1999 , subject to earlier termination upon occurrence of certain events, as more particularly provided in the Lease. 3 . EXCLUSIVE RIGHT TO NEGOTIATE FOR EXTENSION. Pursuant to and subject to the conditions set forth in Section 2 .4 of the Lease, Tenant shall have the right to exclusively negotiate with Landlord for the extension of the Lease or the execution of a new lease for an additional term. 4 . PURPOSE OF MEMORANDUM. This Memorandum is prepared and executed for the purpose of recordation and in no way modifies the terms and provisions of the Lease. In the event of any inconsistency between the terms of the Lease and the terms of this Memorandum, the terms of the Lease shall prevail . 094/014094-0063/2152048.5 a09/12/96 3'%53Z4 IN WITNESS WHEREOF, the parties have executed this Memorandum of Ground Lease as of the day and year first above written. THE CIT PRINGS, a M icipal Corpor on By: ATTEST: ( a-� C-% C TjI CLERK APPROVED AS TO FORM: City Attorney MOUNTAIN FALLS GOLF, LLC, a California limited liability company ,yr Its : /b 094/014094-0063/2152049.5 .09/12/96 EXHIBIT "C" TO GROUND LEASE I 39,5 324 EXHIBIT "A" LEGAL DESCRIPTION OF PREMISES THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF RIVERSIDE, AND IS DESCRIBED AS FOLLOWS : SECTION 9 , TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO BASE AND MERIDIAN, IN THE CITY OF PALM SPRINGS, ACCORDING TO THE OFFICIAL PLAT THEREOF. EXCEPTING THEREFROM PARCELS 6050-1 AND 6050-7 AS SHOWN ON RECORD OF SURVEY ON FILE IN BOOK 42 PAGES 43 TO 48, INCLUSIVE, RECORDS OF SURVEY, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA, AS CONDEMNED TO THE RIVERSIDE COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT, BY FINAL ORDER OF CONDEMNATION, A CERTIFIED COPY OF' WHICH RECORDED JUNE 20, 1973 AS INSTRUMENT NO. 80405 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. EXHIBIT "A" TO MEMORANDUM OF GROUND LEASE 094/014094-0063/2152048.5 a09/12196 CALIFORNIA ALL-PURPOSE A CKNOWLEDGMENT 0 3953241 No 5907 State of CALIFORNIA County of SAN DIEGO On 9/13/96 before me, SUSAN E. DORIN/NOTARY PUBLIC DATE NAME,TITLE OF OFFICER-E.G,"JANE DOE,NOTARY PUBLIC" personally appeared wILLIAM H. McwETxY, JR. NAME(S)OF SIGNER(S) 4 ; CK personally known to me - OR - ❑ proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and ac knowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the SUSAN E.DORIh1 COMM.1962297 person(s) acted, executed the instrument. {. Notary PIIDIIC—California - SAN DIEGO COUNTY fvlyComm.ExpiresJAN10,1997 WITNESS my hand and official seal. SIGNATURE OF NOTARY �.� OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent ") fraudulent reattachment of this form. I CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT ❑ INDIVIDUAL ❑ CORPORATE OFFICER TITLE(S) TITLE OR TYPE OF DOCUMENT ❑ PARTNER(S) ❑ LIMITED ❑ GENERALI '' ❑ ATTORNEY-IN-FACT NUMBER OF PAGES ❑ TRUSTEE(S) ❑ GUARDIAN/CONSERVATOR nI ❑ OTHER: DATE OF DOCUMENT ' SIGNER IS REPRESENTING: NAME OF PERSONS)OR ENTITY(IES) r SIGNER(S) OTHER THAN NAMED ABOVE o 01993 NATIONAL NOTARY ASSOCIATION•8236 Remmet Ave.,P O.Box 7184•Canoga Park,CA 91309-7184 ,CALIFORNIA ALL-PURP011ACKNOWLEDGMENT 3`Ia=4 ,�..err.,.—�.��,rv�r,P..�-si-u-u;1—„—� ., - �(,:�n,:x..rx�;.�,..^,���_,�,%�:`�.5�;�"�:r�l•,^:,i�l;^^^;'_u,��v^x^��,^„%�.> 0 State of 1 �1 I�. ICI r p� County ofI On / (o before me, �AZA-) ��K/�.D IVo ¢u 1aBuc K /Date J J r e Name and T of O�fhcsA�a.9 "Jae Doe,Notary Publ ') j3l << personally appeared _ W. c ncaeK�� f� Nam.(.)of Sig s) � I personally known to me-8R=-8-proved to be the persor(9) whose nam s is are subscribed to the within instrument �I and acknowled ed to me that he/sh the executed the same in In /he their authorized capacit les , and that b his/her heir ignature( on the instrument the person �D1 ELAINE L.WEDEKIND or the entity upon behalf of which the personaacted, 3 r, k° Notary-Public comm. ,C 1357 fornio _ executed the instrument. > a � t o RIVERSIDE[,,r couNTv WITNESS m hand and official seal. • -" ItAy Comm.Expires FE3 3,1999 y F. <SC r�l Signature of Not Publ ;c)I OPTIONAL <<! Though the information below is not regwred by law, it may prove valuable to persons relying on the document and could prevent )I Ii fraudulent removal and f eattachment of this form to another document. r, Description of Attached Document p Title or Type of Document: Document Date: Number of Pages: sJ f" Signer(s) Other Than Named Above: I�? f f Capachy(ies) Claimed by Signer(s) phi Signer's Name: Signer's Name: �I ❑ Individual ❑ Individual ❑ Corporate Officer ❑ Corporate Officer Title(s): Title(s): �'11 ❑ Partner—❑ Limited ❑ General ❑ Partner—❑ Limited ❑ General h, fc�1 ❑ Attorney-in-Fact ❑ Attorney-in-Fact ; El Trustee ❑ TrusteeI ❑ Guardian or Conservator 111LEMAMMUNINI. ❑ Guardian or Conservator 2} ❑ Other: Top of thumb hers ❑ Other: Top of thumb here ,; A � � Signer Is Representing: Signer Is Representing: �I Q w <�.. .� �� .-,r -^ - -��;r '���-'�'�C%�'�'�`-!,dam.:�`=%V%(:�(%=C%v-✓,.�.�J��r"�✓�,o�`�-G�..,6C.�:'. 1995 National Notary Assonatfon-8236 Rommel Ave PO Box 7184•Canoga Park,CA 91309-7184 Prod No 5907 Reorder:Call Toll-Fme 1-800-676-6827 i-7 y 365'728 RECORDING REQUESTED BY AND RECEIVED FOR RECORD WHEN RECORDED MAIL TO: AT 8:00 AM AUG 2 8 1998 Preserve Golf, LLC Mountain Falls Golf, LLC Assign & Assume Ground Lease AGREEMENT #3717 M06217, 7-29-98 ASSIGNMENT AND ASSUMPTION OF GROUND LEASE AGREEMENT THIS ASSIGNMENT AND ASSUMP ION OF GROUND LEASE AGREEMENT ("Assignment"), is entered into this IS± day of 1998, by and between MOUNTAIN FALLS GOLF, LLC, a California limited liability con any ("Assignor"), and PRESERVE GOLF COMPANY, LLC, a California limited liability company("Assignee"), both of whom shall sometimes collectively be referred to herein as the "Parties," with reference to the facts set forth below. RECITALS A. The City of Palm Springs, a municipal corporation, as the Lessor, and Assignor, as the Lessee, are parties to that certain Ground Lease Agreement, dated October 4, 1996 ("Lease'). A Memorandum of Lease was recorded on C) " 11. 199j(p as Instrument No. 'S in the Official Records of Riverside County, California. B. Assignor desires to assign and transfer to Assignee all of Assignor's right, title and interest in and to the Lease, and Assignee desires to assume all of Assignor's right, title and interest in and to the Lease and perform, satisfy and discharge all of Assignor's obligations under the Lease. NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the Parties hereby agree as follows: 1. Assignment of Lease. Assignor hereby assigns and transfers to Assignee, without representation or warranty of any kind, all of Assignor's right, title and interest in and to the Lease and the tenancy thereunder, together with all of Assignor's right, title and interest in and to all deposits, prepayments and similar amounts previously paid by Assignor pursuant to the Lease. 2. Acceptance of Assignment, Agreement to Perform and Satisfy. Assignee hereby accepts the assignment of the Lease and further hereby agrees to fully perform, satisfy and discharge all of Assignor's obligations under the Lease arising and/or accruing from and after the date of this Assignment. 3. Successors and Assigns.This Assignment shall be binding upon and inure to the benefit of Assignor and Assignee, and their respective successors and assigns. ORIGINAr 8113 ANIrVOR AGRFT A;-7NT 365728 4. Governing Law. The terms of this Assignment shall be governed by and construed in accordance with the laws of the State of California. 5. Counterparts. This Assignment may be executed in counterparts, each of which shall be deemed an original, and all of which when taken together shall be construed as one and the same document. IN WITNESS WHEREOF, the Parties have caused this Assignment to be executed and delivered as of the date hereof. ASSIGNOR: MOUNTAIN FALLS GOLF, LLC, a California limited liability company By UU CCLL-C/ Title C f ' ASSIGNEE: PRESERVE GOLF COMPANY, LLC, a California limited liability company By Title � -2- 366726 STATE OF CALIFORNIA ) SS. COUNTY OF SAN DIEGO ) On August 17 , 1998, before me, Susan E. Dorin a Notary Public, personally appeared William H. McWethy, J,,�personally known tome or 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. WITNESS my hand and official seal. sMaN E.oc,Rira Cor imi,,Icn aF 029271 Notary Paia4a: -- Sari DiegoCaurry � Signature of Notary Public \" My Comm.kPires Naar 1 i,2911 STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO SS. ) On August 17 1998, before me, Susan E. Dorin a Notary Public, personally appeared William H. McWethy, Jr,.personally known to me or 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. WITNESS my hand and official seal. y j No a,y F!,','." `r, cmla Signature of Notary Public - �.iSu:3�4Ry Ciifr,ril.Fxp,es I\Aar 11,'�'.Ol 4 I R:\Clients\P\Palm Mountain\01 Tahchevah\Doe ments\AssiguCity.wpd -3- • ( • bR 17 365729 RECORDING REQUESTED BY RECEIVED FOR RECORD AND WHEN RECORDED MAIL TO: AT 8:00 AM AU6 2 8 1998 56 dC,; a.,.�.� GEuvCwp,22n.�� CoOC�a Preserve Golf, LLC Amend #1 - Ground Lease Agr. AGREEMENT #3717 M06217, 7-29-98 FIRST AMENDMENT TO GROUND LEASE AGREEMENT J THIS FIRST AMENDMENT TO GROUND LEASE AGREEMENT ("First Amendment"), is entered into this�day of�D1998, by and between THE CITY OF PALM SPRINGS, r' a municipal corporation ("Lan or ' , MOUNTAIN FALLS GOLF, LLC, a California limited liability company("Mountain Falls"), and PRESERVE GOLF COMPANY, LLC, a California limited liability company("Tenant"), all of whom shall sometimes collectively be referred to herein as the"Parties," and is based upon the following facts: RECITALS A. Landlord and Mountain Falls are parties to that certain Ground Lease Agreement,dated October 4, 1996 ("Lease Agreement"). B. Pursuant to the terms and conditions of that certain Assignment and Assumption of Ground Lease Agreement, dated Q.(AA___, 1998, Mountain Falls, as the Assignor, assigned and transferred to Preserve Golf, as t�hec ,ssignee,the Lease Agreement and all of Mountain Falls' right, title and interest thereunder and Preserve Golf agreed to perform, discharge and fully satisfy all of Mountain Falls' obligations under the Lease Agreement. C. The Parties desire to amend the Lease Agreement to reflect the assignment described in Recital B above and to memorialize certain other modifications to the Lease Agreement which have been agreed to by the Parties. NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the Parties do hereby agree as follows: 1. Pursuant to Section 6.3 of the Lease Agreement, Landlord hereby approves of the assignment and transfer of the Lease Agreement and all of Mountain Falls' right, title and interest thereunder to Preserve Golf, and to the assumption by Preserve Golf of all duties and obligations of Mountain Falls under the Lease Agreement. Landlord further hereby consents and agrees that Mountain Falls shall have no further duties or obligations under the Lease Agreement and that Landlord will look solely to Preserve Golf forthe performance of all duties and obligations of Tenant under the Lease Agreement. Accordingly, all references in the Lease Agreement to the "Tenant" shall mean Preserve Golf. KTi'1G 144 hm ANI0/l7F.. AGRF� 365729 2. All references in the Lease Agreement to the"Lease" shall mean the Lease Agreement as amended by this First Amendment. 3. Except as modified by this First Amendment, all other terms and conditions of the Lease Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the Parties have caused this First Amendment to be executed and delivered as of the date hereof. LANDLORD: ATTEST: THE CITY OF PALM SPRINGS, a municipal corporation City Clerk u���/j Titl� r;+" ana r MOUNTAIN FALLS: MOUNTAIN FALLS GOLF, LLC, a California limited liability company By Title PRESERVE GOLF: PRESERVE GOLF COMPANY, LLC, �2 I'ia. - 1 m� a California limited liability company 1 Q ., _,_..,. . By Title • �� . 365729 STATE OF CALIFORNIA ) ) SS. COUNTY OF fi'/ On ,16,* �9 C 99.8, before me,V1C#oLds X J in/b�AZ a Notary Public, personally appe ecl �7J LL S f1rL'•nA� , personally known to me or 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. WITNESS my hand and official seal. Nicholas S. Singer () Comm.#1161359 ri �� 1 •}NOTARYPUBLIC CALIFORNIA- Sigriature of Notary Public RIVERSIDE COUNTY „ e Comm.Exp.Nov 10 2001 s STATE OF CALIFORNIA ) SS. COUNTY OF SAN DIEGO ) On August 17 , 199$ 1998, before me, Susan E. Dorin a Notary Public, personally appeared will iam H. McWethy, Jr. , personally known to me or 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. WITNESS my hand and official seal. rl -fin , ( �r -,rlrJ`i¢1 �' �{.• V °� � � (/' � ��' ��-s � C;orinl;;:ticr F➢r,".�).il �; ./Signature of Notary Public No4°ari,Mon County i�,y Comm rx[v6s Mar i 1.2031 �° • 365729 STATE OF CALIFORNIA ) SS. COUNTY OF SAN DIEGO ) On August 17 1998, before me, Susan E. Dorin a Notary Public, personally appearedwilliam H. McWethy .1,-_ personally known to me or 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. WITNESS my hand and official seal. �7 Cammisslon 8 1129271 ,. r OMY NotayR,Jlic—Cauorr9aSignature of Notary Public San Diego County Comm.Expires Mar 11,2001 lip 365729 CALIFORNIA ALL-PURPOSPACKNOWILEDGMENT No.5907 State of California County of Riverside On tjVCrUff- iZ,! /19?,C- before me, Nicholas S. Singer, Notary Public DATE NAME,TITLE OF OFFICER-E G,'JANE DOE,NOTARY PUBLIC" personally appeared ,T '1DVr1f ,SumfcN - 1`y Cz-f n1c NAME(S)OF SIGNER(S) ❑ personally known to me - OR - ❑ proved to me on the basis of satisfactory evidence to be the personX whose name(: is/aw subscribed to the within instrument and ac- knowledged to me that k�e/ he 4W executed the same in him he t#Isr authorized capacity(iEN), and that by Via/ie-7r/th;wrr signature(g) on the instrument the personX, ;.. NicholasS. Singer3 or the entity upon behalf of which the CommLI CALIFORNIA59 personX) acted, executed the instrument. UI NOTARY PUBLIC CA p 4Q� RIVERSIDE COUNTY „ Comm.Exp.Nov 10.2001 -+ WITNESS my hand and official siapl. SIGNATURE OF NOTARY OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT ❑ INDIVIDUAL ❑ CORPORATE OFFICER TITLE(S) TITLE OR TYPE OF DOCUMENT ❑ PARTNER(S) ❑ LIMITED ❑ GENERAL ❑ ATTORNEY-IN-FACT NUMBER OF PAGES ❑ TRUSTEE(S) ❑ GUARDIAN/CONSERVATOR ❑ OTHER: DATE OF DOCUMENT SIGNER IS REPRESENTING: NAME OF PERSON(S)OR ENTITY(IES) SIGNER(S) OTHER THAN NAMED ABOVE 01993 NATIONAL NOTARY ASSOCIATION•8236 Remmet Ave,P O.Box 7184•Canoga Park,CA 91309-7184 365'730 Isecording Requested By And RECEIVED FOR RECORD When Recorded Return To: AT 8:00 AM AN 2 8 1998 �� Preserve Golf, LLC L L� L Landlord Consent & Estoppel AGREEMENT #3717 M06216, 7-29-98 LANDLORD CONSENT AND ESTOPPEL h This LANDLORD CONSENT ("Agreement") dated as of August 1998, is executed by and between The City of Palm Springs, a municipal corporation ("Landlord") and Preserve Golf Company, LLC, a California limited liability company ("Tenant"), in favor of NationsCredit Commercial Corporation ("Lender"), with respect to that certain Ground Lease Agreement dated as of October 4, 1996 (the "Lease"), by and between Landlord and Mountain Falls Golf, LLC, a California limited liability company ("MFG"), as amended by that certain First Amendment to Ground Lease Agreement dated as of August -% 1998, by and between Landlord, MFG and Tenant ("Lease"), the interest of MFG in the Lease having been assigned to Tenant pursuant to that certain Assignment and Assumption of Ground Lease Agreement dated August °% 1998, which has been or will be recorded in the Official Records of Riversi�unty (the "Official Records"). Pursuant to the Lease Tenant, as assignee of MFG, has acquired an interest (the "Leasehold") in the real property described therein (the "Premises"). A Memorandum of Ground Lease was recorded October 16, 1996, as instrument no. 395324 in the Official Records. In the event of any conflict between the provisions of this Agreement and the provisions of the Lease, this Agreement shall control. 1. Landlord acknowledges notice of, and hereby consents to, Tenant's encumbrance of the Leasehold, or any part or parts thereof, under one or more deeds of trust, security deeds, mortgages, sale-and-leaseback documents, assignments of rents or leases, security agreements, financing statements and other similar documents (collectively, the "Mortgage"), and assigning the Lease or the Leasehold, or any part or parts thereof, and any subleases under the Lease, as collateral security for the obligations of Tenant under that certain Construction Loan Agreement between Tenant and Lender (as amended, the "Loan Agreement") and the instruments and documents executed in connection therewith. Lender shall have all of the rights of a "Lienholder" under the Lease. LA2:LLC\AGRUGR\I 1119293.3 080598 36-5730 2. Landlord hereby agrees that so long as the Mortgage shall remain unsatisfied of record or until written notice of satisfaction is given by Lender to Landlord, the following provisions shall apply: 2.1 No election, determination or waiver made by Tenant, by action or inaction, that has a material adverse effect on the value of the Leasehold to Tenant or Lender shall be effective as against Lender without the prior consent in writing of Lender, which consent shall not be unreasonably withheld or delayed. 2.2 Lender hereby requests that notices pursuant to Section 11.4 of the Lease be sent to Lender at the address provided for below. 2.3 Landlord agrrees that the name of Lender may be added to the "Loss Payable Endorsement" of any and all insurance policies required to be carried by Tenant under the Lease on condition that the insurance proceeds are to be applied in the manner specified in the Mortgage. 2.4 Landlord agrees that, in the event of termination of the Lease for any reason, including the disaffrrmance thereof by a receiver, liquidator or trustee for Tenant or its property, Lender shall have the right (but not the obligation) to cause Landlord to enter into a new lease of the Premises, as provided in Section 11.7 of the Lease. 2.5 Notwithstanding anything to the contrary expressed or implied in the Lease, any new lease made pursuant to paragraph 2.4, above or Section 11.7 of the Lease, shall be prior to any mortgage, deed of trust, or other lien, charge, or encumbrance on the fee of the Premises, and shall be accompanied by a conveyance of title to the improvements (free of any mortgage, deed of trust, lien, charge, or encumbrance created by Landlord) for a term of years equal to the term of the new lease, subject to the reversion in favor of Landlord upon expiration or sooner termination of the new lease. 2.6 Landlord shall not exercise any of its termination rights under paragraph 2.3 of the Lease without first giving Lender written notice of Landlord's intent to terminate and allowing Lender a reasonable time (in no event less than 150 days) to obtain possession of the Property and an additional period of time (in no event less than 180 days) after the date Lender or its nominee or a purchaser at a foreclosure sale acquires Tenant's interest in, and has possession of, the Premises to satisfy or perform such tasks. LA2.LLC\AGR\JGR\11119293.3 080598 -2- 355730 2.7 If Lender is prohibited from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof by any process or injunction issued by any court or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Tenant, the times specified in paragraph 11.5 of the Lease, for commencing or prosecuting foreclosure or other proceedings and the times for obtaining possession and completing tasks under paragraph 2.6 above, shall be extended for the period of the prohibition; provided that Lender shall have fully cured any default in the payment of any monetary obligations of Tenant under the Lease (other than the payment of any amount secured by a lien on the Leasehold that is junior to the Mortgage) and shall continue to pay currently those monetary obligations as and when the same fall due; and provided further that the period of extension pursuant to this paragraph 2.7 shall not exceed one (1) year for any cause stated in this paragraph 2.7 other than bankruptcy of Tenant. 2.8 Nothing herein contained shall require Lender to enter into a new lease pursuant to paragraph 2.4, above, or Section 11.7 of the Lease nor to cure any default of Tenant referred to above. 2.9 In the event a New Lease is entered into pursuant to Section 11.7 of the Lease and thereafter the New Lease is assigned to and assumed by an assignee permitted under the New Lease, then upon such assignment the tenant under the New Lease shall be released from all liability under the New Lease arising after the assignment. 2.10 The proceeds of any insurance policies or of any condemnation or taking in eminent domain which, pursuant to the provisions of the Lease, are to be paid to Tenant, shall instead be paid to and held by Lender and distributed, as between Tenant and Lender, in accordance with the provisions of the Mortgage. 2.11 Anything in the Lease to the contrary notwithstanding, any compensation or award for the talking of all or any part of the Premises shall be paid to Lender to the extent of the outstanding indebtedness secured by the Mortgage (the "Indebtedness"), and any balance shall be distributed as provided in the Lease. No termination of the Lease by Tenant due to a partial taking shall be effective without Lender's prior written consent unless the Indebtedness is paid in full. 3. The Leasehold shall not merge with the fee interest in all or any portion of the Premises, notwithstanding the ownership of the fee and the Leasehold by the same person(s) or entity(ies), without the written consent of Lender. LA2 LLC\AGRVGR\l 1119293.3 080598 -3- • 365730 4. Lender shall be entitled to request written statements pursuant to Section 16.15 of the Lease. 5. Any notices required to be given to Lender hereunder shall be given to Lender by overnight express courier at its address as follows: NationsCredit Commercial Corporation 187 Danbury Road Wilton, Connecticut 06897 Attn: Vice President Commercial Real Estate with a copy to: NationsCredit Commercial Corporation 187 Danbury Road Wilton, Connecticut 06897 Attn: General Counsel with a copy to: NationsCredit Commercial Corporation 400 Northridge Road, Suite 520 Atlanta, Georgia 30350 or at such other addresses or to the attention of such other persons as may from time to time be designated by Lender to be addressed by written notice to Landlord. 6. Landlord hereby further certifies and agrees as follows: 6.1 A true and complete copy of the Lease, together with all amendments, supplements, extensions and other modifications thereto of every nature, is attached as Exhibit "B" to a duplicate, unrecorded original of this Agreement which has been delivered to Lender. 6.2 The Lease is in full force and effect, and Landlord has not assigned its interests therein (other than assignments for security purposes that have not been foreclosed). LA2:LLC\AGR\1GR\11119293.3 ' 080598 -4- 9 ` 365730 6.3 Subject to paragraph 8, below, the termination rights contained in Sections 2.3(a), (b), (c), (d) and (e) of the Lease are of no further force or effect. 6.4 The time periods for Tenant to take certain actions as provided in Sections 2.3(g), (h) and (i) of the Lease have not elapsed. 6.5 Subject to paragraph 8, below, tenant has not failed to take any action that would constitute a failure under Section 2.3(f) of the Lease. 6.6 Subject to paragraph 8, below, to the best of Landlord's knowledge, there are no existing uncured defaults by Tenant under the Lease, nor has any event occurred which, with the passage of time or the giving of notice or both, would constitute such a default. 6.7 Subject to paragraph 8, below, there are no conditions or events (except as set forth in the Lease) that would prevent the Lease from becoming effective or would permit a cancellation or termination of the Lease by Landlord or by Tenant. 7. This Agreement and all rights hereby granted to Lender shall also apply to any leasehold mortgage of any successor of Tenant (including, but not limited to, any sublessee of Tenant). The terms and provisions of this Agreement shall bind Landlord and its successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Landlord understands and acknowledges that Lender is relying upon this Agreement in making the Loan. Notice of acceptance of this Agreement by Lender is waived. This document may be executed in counterparts with the same force and effect as if the parties had executed one instrument, and each such counterpart shall constitute an original hereof. This Agreement shall be governed by the laws of the State of California. 8. Notwithstanding any provision of Paragraph 6 hereof, including Paragraphs 6.3, 6.5, 6.6 and 6.7, Landlord believes conditions may exist which, if asserted, could permit a cancellation or termination of the Lease, but Landlord does not wish to assert them and wishes the Lease to continue in full force and effect. Accordingly, Landlord hereby agrees to waive all such matters; provided that should Tenant or Lender bring any legal action against Landlord to recover monetary damages arising out of Landlord's failure or refusal to approve the project described in the Lease or to perform Landlord's obligations under that certain Memorandum of Understanding dated April 12, 1995, as amended, or that certain Settlement Agreement and Release of Claims dated November 4, 1996, the provisions of Sections 6.3, 6.5, 6.6 and 6.7 of this Agreement shall be waived and Landlord may assert any defenses available to it. LA2 LLC\AGRUGR\l 1119293 3 080598 -5- • 365730 Moreover, it is expressly understood that this Agreement shall bind Landlord only in its capacity as Landlord and nothing herein shall limit the City of Palm Springs from exercising its police power in approving, modifying, or disapproving the project, and nothing herein shall subject City to any liability to any party hereunder for exercising its land use approval power as the City deems appropriate. "Landlord" ATTEST: The City of Palm Springs, a municipal corporation By _Q City Cler< City Manager r� G_I_'Q-Cs z . rL tr- �CT(I�Fj C4 [Printed Name and Title] AIC.' "Tenant" Preserve Golf Company, LLC, a California limited liability company y�,�,� By {�d [Printed Name and Title] LA2:LLC\AGR\1GR\l 1119293 3 090599 -6- 365730 CALIFORNIA ALL-PURPOSEPACKNOWLEDGMENT Na 5907 State of California County of Riverside On �UEual gT /99,? before me, Nicholas S. Singer, Notary Public DATE NAME,TITLE OF OFFICER-E G.,"JANE DOE,NOTARY PUBLIC" personally appeared -T ujo/-r B S vh, i s h/ — c t T y Cc Ej;, NAME(S)OF SIGNER(S) ❑ personally known to me - OR - ❑ proved to me on the basis of satisfactory evidence to be the person( whose name(q is/ subscribed to the within instrument and ac- knowledged to me that k a he 4w executed the same in his he tuw authorized capacity(iEFu), and that by 4ie/66'7,r/tk�arr 0 ,,., Nicholas S: Singer signature(0) on the instrument the personX, Camm.#1161359 (7 -� •'NorARVPueuc CALIFORNIA or the entity upon behalf of which the ^ RIVEflSIDE COUNTY 0 w Comm.Exp.Nov 10 2001 s person X) acted, executed the instrument. WITNESS my hand and officials al. SIGNATURE OF NOTARY OPTIONAL Though the data below is not required by law, It may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT ❑ INDIVIDUAL ❑ CORPORATE OFFICER TITLE(s) TITLE OR TYPE OF DOCUMENT ❑ PARTNER(S) ❑ LIMITED ❑ GENERAL ❑ ATTORNEYAN-FACT NUMBER OF PAGES ❑ TRUSTEE(S) ❑ GUARDIAN/CONSERVATOR ❑ OTHER: DATE OF DOCUMENT SIGNER IS REPRESENTING: NAME OF PERSON(S)OR ENTITY(IES) SIGNER(S) OTHER THAN NAMED ABOVE ©1993 NATIONAL NOTARY ASSOCIATION-8236 Remmet Ave.,P O.Box 71 B4-Canoga Park,CA 91309-7184 365730 State of California ) pti V 8 J r)iz ) ss. County of,l osAugolcs ) On -Yy S j,9 before me,l11al LL 0&c,-s s- J rfjU e o, Notary Public, personally appeared PP 0m4 F'A1 ,i- 1'L,..1 e.ice.�, ii C !P.NJ i C 0-Li i'Ud & A„. , a personally known to me or ❑ proved to me on the basis of satisfactory evidence to be the person( whose name( is/aye subscribed to the within instrument and acknowledged to me that he/slre/tlrey executed the same in his/hzrWwff- authorized capacity(mK), and that by his/her; ar signaturgA) on the instrument the personW,' or the entity upon behalf of which the personal acted, executed the instrument. WITNESS my hand and official real. r ,•; Nicholas S. Singeirq J U ' NOT PUOOMMBLIC CALIFORNIA,� � ' flIVERSIDE COUNTV 1Nota PUb11C v Comm Exp Nov 10 2001 ry State of California ) SAN DIEGO ) ss. County of Lp�Ang*s ) On August 17 , 199before me, Susan E. Dorin Notary Public, personally appeared William H. McWethy, Jr. ® personally known to me or ❑ proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) iV/W subscribed to the within instrument and acknowledged to me that he/shoe/thty executed the same in his/hbfGfMeir authorized capacity(i)69), and that by his/het/their signatureO on the instrument the person(s), or the entity upon behalf of which the person( acted, executed the instrument. WITNESS my hand and official seal. 1 awi:.sccvn.d'xr.asCSt,d^_+rPe.c -:a.33 .z., n, +� y/ a"y:.`.`•;';� ,th.ts�i;:.110RIfV a w ccxl'arucic:nE7112s2�t Notary Public s_! nuy�. ,,;;;I NoicayAublic--Ca;ifor;la I'A' Sao Diego COURIy V My Comm.Expires Mar 11,2()01 LA2:LLC\AGRUGR\l 1119293.3 080598 —7— • • 365i30 GROUND LEASE AGREEMENT S9 dated y— 1996 between THE CITY OF PALM SPRINGS, a municipal corporation, as Landlord and MOUNTAIN FALLS GOLF, LLC, a California limited liability company as Tenant o��o��au-rownis�ai.s .oviizros TABLE F CONILWS e 355730 ARTICLE I PREMISES . . . . . . . . . . . . . . . . . . . 2 ARTICLE II TERM . . . . . . . . . . . . . . . . . . . 2 2 . 1 Preliminary Term . . . . . . . . . . . . . . . 2 2 . 2 Occupancy Term . . . . . . . . . . . . . . . . 2 2 . 3 Landlord' s Election to Sooner Terminate . . . 2 2 . 4 Exclusive Right to Negotiate for Extension . . 5 2 . 5 Memorandum of Lease . . . . . . . . . . . . . 5 2 . 6 Term . . . . . . . . . . . . . . . . . . . . . 6 2 . 7 Lease Year . . . . . . . . . . . . . . . . . . 6 ARTICLE III RENT . . . . . . . . . . . . . . . . . . . . . 6 3 . 1 Base Annual Rent . . . . . . . . . . . . . . . 6 3 . 2 Additional Consideration . . . . . . . . . . . 6 3 . 3 Net Lease . . . . . . . . . . . . . . . . . . 7 ARTICLE IV IMPROVEMENTS . . . . . . . . . . . . . . . . . 7 4 . 1 Construction of Improvements . . . . . . . . . 7 4 . 2 Ownership of Improvements . . . . . . . . . . 7 4 . 3 Tenant ' s Trade Fixtures . . . . . . . . . . . 8 4 . 4 Utilities . . . . . . 9 4 . 5 Development at `tenant ' s Expense . . . . . . . 9 4 . 6 Approval of Plan Specifications ; Construction of Improvements . . . . . . . . . 9 4 . 7 Alterations and Additions . . . . . . . . . . 10 4 . 8 Notices . . . . . . . . . . . . . . . . . . . 10 4 . 9 No Right to Grant Easements . . . . . . . . . 11 4 . 10 Performance and Completion Bond . . . . . . . 11 4 . 11 Maintenance and Repairs . . . . . . . . . . . 11 4 . 12 Tenant Liens . . . . . . . . . . . . . . . . . 11 ARTICLE V USE . . . . . . . . . . . . . . . . . . . . . 12 5 . 1 Use . . . . . . . . . . . . . . . . . 12 5 . 2 Governmental Approvals . . . . . . . . . . . . 12 5 . 3 Condition of Premises ; Acquisition "AS- IS" . . 12 5 . 4 Environmental Limitations . . . . . . . . . . 13 5 . 5 Indemnification of Landlord . . . . . . . . . 14 5 . 6 General Limitations . . . . . . . . . . . 15 ARTICLE VI ASSIGNMENT AND SUBLETTING . . . . . . . 15 6 . 1 Restrictions on Transfer . . . . . . . . . . . 15 6 .2 Definition of ,,rransfer" . . . . . . . . . . . 15 6 . 3 Landlord' s Consent . . . . . . . . . . . . 16 6 . 4 Exceptions to Restrictions . . . . . . . . . . 16 6 . 5 Approval of Identity of Lender . . . . . . . . 17 6 . 6 Right to Sublet Portions of the Premises . . . 17 ARTICLE VII TAXES . . . . . . . . . . . . . . . . . . . . 18 7. 1 Payment by Tenant . . . . . . . . . . . . . 18 7 .2 Improvement or Special Assessment District . 18 094f0140{{-0067/217 2 017.3 .09/12/96 i 365730 7 . 3 Permitted Contests . . . . . . . . . . . . . . 10 7 . 4 Personal Propeity Taxes . . . . . . . . . . . 1B ARTICLE VIII INSURANCE . . . . . . . . . . . . . . . . . . 19 8 . 1 Tenant ' s Insurince . . . . . . . . . . . . . . 19 8 . 2 Form of Insurauc e Policies . . . . . . . . . . 19 8 . 3 Waiver of Subrogation . . . . . . . . . . . , 20 8 . 4 Hold Harmless end Waiver of Claims . . . . . . 20 ARTICLE IX DAMAGE OR DESTRUCTION . . . . . . . . . . 20 9 . 1 Repair and Reconstruction After Insured Damage . . . . . . . . . . . . . . . . . . 20 9 . 2 Repair and ]Reconstruction After Uninsured Damage . . . . . . . . . . . . . . . . . . 21 9 . 3 Damage Near End of Term . . . . . . . . 21 9 . 4 Election to Terminate . . . . . . . . . . _ , 21 ARTICLE X CONDEMNATION . . . . . . . . . . . . . . . 22 10 . 1 Termination of Lease . . . . . . . . . . . 22 10 . 2 Apportionment of Award . . . . . . . . . . . , 22 ARTICLE XI LIENS AND ENCUMBRANCES . . . . . . . 23 11 . 1 Right to EncumLer . . . . . . . . . . . . 23 11 . 2 Lienholder Defined . . . . . . . . . . . . 23 11 . 3 Consent of Lienholder . . . . . . . . . 23 11 . 4 Notice to Lienholder . . . . . . . . . . . 23 11 . 5 Notice of Default ; Opportunity to Cure . 23 11. 6 Right to Cure . . . . . . . . . . . . . . 24 11 . 7 New Lease to Lienholder . . . . . . . 24 11 . 8 Assignment . . . . . . . . . . . . . 25 11 . 9 Obligations of Lienholder in Possession 26 11 . 10 Designees and Nominees . . . . . . . . . . . . 26 ARTICLE XII DEFAULT BY TENANT . . . . . . . . . 26 12 . 1 Events of Default . . . . . . . 26 12 . 2 Right to Cure; Landlord' s Remedies . . 27 12 . 3 Notices . . . . . . . . . . . . . . . . . . . 28 ARTICLE XIII DEFAULT BY LANDLORD . , , , , . 28 13 . 1 Events of Default . . . . . . . 28 13 . 2 Right to Cure; Tenant ' s Remedies 29 13 . 3 Notices . . . . . . . . . . . . . . . . . . . 29 ARTICLE XIV SURRENDER . . . . . . . . . . . . . 29 14 . 1 Surrender . . . . . . . . . . 29 14 .2 Holding Over . . . . . . . . , . . , . . . . 29 ARTICLE XV RIGHTS RESERVED BY LANDLORD . . . 30 15 . 1 Inspection. . . . . . . . . . . . . . . . . . 30 ARTICLE XVI MISCELLANEOUS . . . . . . . . . 30 16 . 1 Address for Notice and Rental Payments . . . . 30 16 . 2 Commissions . . . . . . . . , 31 16 . 3 Cumulative Remedies . . . . . . . . . . . . . 31 09V0140+-0063M52043.5 .09112/% ii 365730 16 . 4 Governing Law . . . . . . . . . . . . . . . . 31 16 . 5 Construction . . . . . . . . . . . . . . . . . 31 16 . 6 Entire Agreement . . . . . . . . . . . . . . . 32 16 . 7 Captions . . . . . . . . . . . . . . . . . 32 16 . 8 Partial Invalidity . . . . . . . . . . . . . . 32 16 . 9 Covenants Running with the Land . . . . . . . 32 16 . 10 Not a Partnership . . . . . . . . . . . . . . 32 16 . 11 Merger . . . . . . . . . . . . . . . . . . . . 32 16 . 12 Force MajeurE: . . . . . . . . . . . . . . . . 32 16 . 13 Facilitation . . . . . . . . . . . . . . . . . 33 16 . 14 Waiver . . . . . . . . . . . . . . . . 33 16 . 15 Statements by Landlord and Tenant . . . . . . 33 16 . 16 Attorneys ' Fees . . . . . . . . . . . . . . . 33 16 . 17 Authority . . . . . . . . . . . . . . . . . . 33 16 . 18 Interest . . . . . . . . . . . . . . . . . . . 33 0%N14O -0ownuza9s .W/12 a iii 0ORO L-LEASE AGREEME 0 365730 THIS GROPM L,E/ASE�GREEMENT ( "Lease" ) is made and entered into as of /(1,' Ft Il t t , 1996 ( "Effective Date" ) , by and between THE CITY OF PALM SPRINGS, a municipal corporation ( "Landlord" ) , and MOUNTAIN FALLS GOLF, LLC, a California limited liability company ( "Tenant " ) . W I T N E S S E T H: WHEREAS, Landlord is the owner of certain unimproved land located in the City of Palm Springs , Riverside County, California , and more particularly described on Exhibit "A" hereto (the "Land" ) ; WHEREAS, Landlord, The Redevelopment Agency of the City of Palm Springs (the "Agency" ) and Tenant previously entered into a Memorandum of Understanding dated April 12 , 1995, as amended ( "MOU" ) , whereby Landlord and Tenant agreed to enter into a ground lease of the Land provided certain conditions precedent were satisfied; WHEREAS, Landlord has determined that it would be in the best interest of Landlord to lease the Land to Tenant at the rental and subject to the terms , provisions and conditions hereinafter set forth, provided that Tenant improves the Land and the "Adjacent Real Property" (as hereinafter defined) as an eighteen (18) hole PGA rated championship quality golf course (the "Golf Course" ) and related facilities (the "Golf Course Project" ) , open to the public for at least one-half (1/2 ) of play with a tie- in to Palm Springs hotels . The Golf Course Project will be more particularly described in a Development Agreement to be entered into between Landlord and Tenant ( "Development Agreement " ) ; and WHEREAS, the real property legally described in Exhibit "B" attached hereto ( "Adjacent ReaL Property" ) is owned by the County of Riverside Flood Control District ( "District" ) and is leased by Tenant pursuant to the terms and conditions of that certain Lease Agreement dated March 12 , 1996 ( "District Lease,, ) ; and WHEREAS, the City Council of Landlord has adopted Resolution No. A3519A which authorizes the City Manager to negotiate and enter into a lease of the Land to Tenant for the Golf Course Project . NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereby agree as follows : 09U0I OWOMf1I520/9.5 .091121% • 0 365730 ARTICLE I P3EMISE$ Landlord hereby leases to Tenant , and Tenant hereby leases from Landlord, pursuant to tl,e terms and conditions hereof, the Land, together with all other rights , privileges, easements and appurtenances belonging thereto or granted herein includiny , without limitation, any and all mineral rights and water rights associated or appurtenant to the Land (the " Premises " ) . ARTICLE II TERM 2 . 1 Preliminary Temp. The preliminary . term ( the "Preliminary Term" ) of this Lease shall commence on the date of execution hereof and shall terminate on the first to occur of the following events : (a) Occurrence at the "Opening Date,, (as defined in Section 2 . 3 (e) below) ; or (b) Expiration of the "construction phase" of the term of the District Lease . 2 .2 Occu an y Term. The occupancy term (the "Occupancy Term" ) of this Lease shall commence on the expiration of the Preliminary Term (the "Commencement Date" ) and end fifty- five (55) years thereafter. 2 . 3 Landlord' s Eleci;_on_ to Sooner. TQminate. Notwith- standing Sections 2 . 1 and 2 .2 above, but subject to the provisions of Article XI hereof, Landlord may, at its sole election, terminate the Lease any time following occurrence of any one or more of the following events : (a) On the Access Rights Date, as said term is hereafter defined, unless Tenant has previously advised Landlord in writing that Tenant has acquired and/or secured fee title, a leasehold interest, an easement , a right of way and/or other right of access to the Golf Course Project ( "Access Rights" ) , which Tenant, in its sole and absolute discretion, determines will be economically feasible to acquire, construct, develop and operate and which will be adequate to serve the needs of the Golf Course Project ( "Access Rights" ) . For purposes hereof, the term "Access Rights Date" shall mean that date which corresponds to the six (6) month anniversary of Lhe Effective Date of this Lease. 09410140H-0063ni52041.5 .m/12/% -2 - • • 365730 (b) On the Access Rights Date, unless Tenant has .previously submitted to the City a project design package, consisting of the following ; (i) A detailed site plan showing all proposed improvements , surrounding properties , and equestrian trails; (ii) Aerial photograph with site plan superimposed; (iii) Golf course plan showing proposed routing, driving range, cart paths, and associated improvements (include maintenance area location and operations details) ; (iv) Preliminary landscape plan and irrigation plan including water consumption analysis (source of water shall be identified; chemicals used for golf course, lake, and surrounding area operation and maintenance should be provided) ; (v) Preliminary grading plan and site cross- sections (grading plan to show the limits of site disturbance (including trails) and include estimated grading quantities) ; (vi) Exterior lighting program (location, height, landscape, and specifications of all exterior lighting) ; (vii) Preliminary clubhouse plans (site, eleva- tions, landscape and exterior lighting) ; and (viii) Utility and services plan. (All utility and related services to be evaluated and consumption estimated and all existing and proposed easements to be described and mapped. ) (c) On the Access Rights Date, unless Tenant has previously submitted to the City those studies, reports and other information reasonably necessary to enable the City to commence and undertake the preparation of an Environmental Impact Report pursuant to the California Environmental Quality Act for the Golf Course Project , which studies and reports and other information shall be identified by City to Tenant, and include, without limitation, a hydrology study and soils study. (d) On the Access Rights Date, if Tenant has not delivered to the City all documents, applications, plans, Processing fees and other information necessary for the processing of all "Development Approvals" required for the Golf Course Project . "Development Approvals" shall mean all discretionary 09410140"-OWU2152048 5 .09112/94 -3 - 365730 entitlements for the Golf Course Project, including, without. limitat=on, all specific plan, planned development district, conditional use, variance, subdivision map and similar approvals, exclusive of those improvement: plans required for issuance of all grading and building permits required for construction of the Golf Course Project . Notwithstanding the foregoing, Tenant may defer submission of application for subdivision approvals until not later than the City's certification of the EIR and approval of those other Development Approvals required to be obtained from City. (e) Any time after the fifth (5th) anniversary of the Effective Date, if the Development Agreement has not been executed by Tenant and City. M Upon occurrence of Tenant ' s "repeated failure" to diligently process to completion the Development Approvals, including, without limitation, repeated failure to cause Tenant ' s planners , engineers and ethc_r consultants to submit in a timely manr_er all materials and documents required therefor . The tern " repeated failure" shall be e,._d=_nced by the City' s d=_'_ ivery cf more than two (2) written notices to Tenant that Tenant and/or its consultants have failed, for a period of more than ninety (90) days , to resoond to City' s request for stbmis:;io❑ of ;iecuments , reports, fees or other items required in the normal processing of the Development Approvals; (g' Upon the four[h (4th) anniversary of the issuance of all Development Approvals for the Golf Course Proje^t , unless Tenant has commenced the grading of the Golf Course 1'roject pursuant to grading permits issued by t-e City; (h) Upon the third (3rd) anniversary of the commencement of grading of the Golf Course Project: , unless Tenant has substantially completed the development and construction of the Golf Course Project and commented operations of the entire Golf Course for public play ( ^Opening Date") ; (i) Upon the failure of Tenant from and after the Ogenino Date, to continuously ocerare the Golf Course on the Premises and the Adjacent Real Property for a period in excess of six (6) months, other than by reason_ of Tenant' s restoration of the Golf Course Project, following a damage or destruction, and other Chan by reason of Tenant' s renovation cf the Golf Course, provided the restoration or renovation, as applicable, is continuously and diligently prosecuted to completion over a period of time not longer than one (1) year; and (j ) Upon termination of the District Lease prior to the Opening Date. The times f_,r performance of actions described in subparagraphs (a) through (h) above Ithe "Tasks" ) will ba extended a day for each day that Tenant is prevented from proceeding to accomplish the Tasks by w 14Ou-o0e1m12a1.5 ,09/73,V6 -4- • • 365730 reason of (i) the filing of .any lawsuit or similar proceeding which challenges this Ground Lease, the Development Agreement , the Development Approvals for thu Golf Course Project or the Golf Course Project; and/or (ii) the City' s failure to cooperate with Tenant in good faith to accomplish the Tasks for a period extending more than thirty (30) days following the date Tenant notifies Landlord of the specific action or inaction which Tenant claims constitutes City' s failure to cooperate . Landlord and Tenant shall each use its respective good faith efforts to accomplish the Tasks prior to the outside dates for performance listed in subparagraphs (a) through (h) above . Nothing herein shall be construed to require City to process Tenant ' s applications ahead of other projects in process in the City and City' s obligations hereunder shall be subject to the City' s workload and staffing at any given time . If Tenant elects, in its sole discretion, to request the City to incur overtime or additional consulting services to receive expedited processing by the City, Tenant shall pay all such overtime costs, charges or fees incurred by City for such expedited processing . The time for Tenant ' s accomplishment of the Tasks described in subparagraphs (f) , (g) and (h) above only, shall also be subject to extension for the "force majeure" events described in Section 18 . 12 below. Tenant shall not be in default of its obligations under this Lease solely by reason of the occurrence of any one or more of the events listed in subparagraphs (a) through (i) above and Tenant shall have no liability to Landlord by reason of any such event . Occurrence of any one (1) or more of the listed events is solely a condition to Landlord' s right to elect to sooner terminate the Lease. 2 . 4 Exclusive Right to Negotiate for Extension. Tenant shall have the right ( "Exclusive Negotiation Right " ) to exclusively negotiate with Landlord for the extension of this Lease or the execution of a new lease for an additional term ( "Extension Term" ) . The Exclusive Negotiation Right shall begin one ( 1) year prior to the stated expiration of the Terre and continue for a period of six (6) months thereafter ( "Negotiation Period" ) . If the Lease is sooner terminated by Landlord pursuant to Section 2 . 3 or Article XII, the Exclusive Negotiation Right shall terminate and be of no further force or effect. Landlord agrees that during the Negotiation Period, Landlord shall negotiate with Tenant in good faith to agree upon the terms of an extension of this Lease or a new lease for the Extension 'Perm. Neither party shall be bound to agree to enter into an extension of this Lease or a new lease on any or all of the same terms and conditions of this Lease . Landlord shall be entitled to seek Tenant ' s agreement to pay for an amount of rent during the Extension Period greater than the nominal rent now provided, as a condition to Landlord' s agreement to an extension of this Lease or a new lease for the Extension Term, and both parties may negotiate for a change or modification to any other provision or provisions of the Lease . 2 . 5 Memorandum of Lease . Promptly following execution of the Development Agreement, Landlord and Tenant shall each execute 0941014064-006312152049 5 109/11/% -5- 0 365730 and deliver to the other a memorandum ( the "Memorandum" ) in recordable form confirming the beginning and ending dates of the Preliminary Term and Occupancy Term in the form attached hereto ds Exhibit 'C" . Landlord shall record the Memorandum at Tenant ' s request and expense . 2 . 6 Te . The Preliminary Term and the Occupancy Term are herein collectively referred to as the "Term" . 2 . 7 Lease Year. The term "Lease Year', shall mean each period of twelve (12) consecutive calendar months beginning on the Effective Date if such date occurs on the first day of the month; if not, then on the first day of the month next succeeding the Effective Date. Subsequent Lease Years shall run consecutively, each such Lease Year beginning on the first day of the month next succeeding the last month of the previous Lease Year. Rent and/or other matters which are computed with reference to a Lease Year shall be ratably adjusted, on a per diem basis, for any period prior to the first Lease Year and within the Term. ARTICLE III RENT 3 . 1 Base Annual Rent . Tenant shall pay to Landlord a base annual rent in the amount of ONE DOLLAR ($1 . 00) payable in advance, on the first day of each Lease Year. The base annual rent shall be paid to Landlord at the address of Landlord set forth in Section 18 . 1 below, or at such other place designated in writing by Landlord, without prior demand, and without any deduction, setoff or offset . Base rent may be prepaid by Tenant for any number of Lease Years . 3 .2 Additional Consideration. As material consideration to Landlord for its lease of the Premises to Tenant on the terms provided for in this Lease, Tenant covenants and agrees as follows : (a) To improve ,and operate the Golf Course Project on the Premises and the Adjacent Real Property in strict accordance with all of the terms, covenants, conditions and restrictions contained in the Development Agreement; and (b) To continuously reserve not less than fifty percent (50t) of all golf course play (during both prime and non- prime hours and days of play) for the public, including the establishment of long term tie- in relationships with Palm Springs Hotels . In connection with establishing the tie- in relationship, Tenant shall perform at least the following: (a) deliver to the local hotel association, at ]Least annually, written information on the Golf Course and encouragement for the referral of guests to the Golf Course; and (b) negotiate in good faith with the five (5) largest hotels then operating in the City, which shall initially include the Hyatt, Hilton, Marquis, Wyndam and Riviera, for 09410140640063ni52044.3 .osnvve -6_ 365 ; 30 purposes of arranging special play privileges , priority tee times and/or discounts, and/or arranging joint marketing or other joint activities designed to promote occupancy of the hotels and public play on the Golf Course . 3 . 3 Net Lease . Tenant shall pay all costs, charges , obli - gations, assessments and expenses of every kind and nature against , or relating to, the Premises , or the use or occupancy thereof , which may arise or become. due during the Term hereof , except for the following : (a) any claims or obligations arising from events occurring on the Premises prior to the Effective Date, except as otherwise provided in Section 5 . 5 below; and (b) Landlord' s contribution of fifty percent (50%) of the costs up to but not exceeding One Hundred Thousand Dollars ($100, 000 . 00 ) of preparing and implementing the Environmental Impact Report for the Golf Course Project, any economic feasibility study requested by City and such other reports and studies as may be approved by both City and Tenant, upon satisfaction of certain conditions precedent, as provided for in Paragraph 2b (1 ) of the MOU. ARTICLE IV I19PROVEMENTS 4 . 1 Construction of Improvemen s . Tenant shall have the right to construct, develop, alter and restore any improvements ( "Improvements" ) to the Premises consistent with the development and operation of the Golf Course Project in accordance with the Development Agreement , subject to the provisions hereunder. All construction shall be completed in a good and workmanlike and in a first class manner, in accordance with all applicable permits, authorizations , laws, ordinances, orders , regulations and requirements of all governmental authorities having jurisdiction over the Land, and in conformity with the terms and provisions of this Article 4 . All references in this Lease to the " Improvements" shall mean all Improvements constructed or installed ,on, under or to the Premises pursuant to the terms and conditions of this Article IV, together with all Alterations thereafter constructed or installed on, under or to the Premises pursuant to the terms and conditions of this Article IV. 4 .2 Ownership of Improvements . During the Term of the Lease, all Improvements shall be owned by Tenant until expiration or earlier termination of this Lease . Tenant shall not , however, remove the Improvements from the Premises, exclusive of "Tenant ' s Trade Fixtures , " as said term is defined below, or destroy any part thereof . At the expiration or sooner termination of the Term, the Improvements (exclusive of Tenant ' s Trade Fixtures) , shall become Landlord' s sole property, free and clear of any and all liens, claims of third parties, and claims of Tenant, without the payment of compensation or consideration of any kind to Tenant . If this Ground Lease expires or is terminated in accordance with its terms , including without limitation, termination pursuant to Section 2 . 3 09410140{4OOW21620483 .09/12196 -7- • � 365730 or Article XII below, then Landlord shall not under any circumstances reimburse or make any payment for design or construction costs, alleged lost profits or otherwise. Upon the expiration or earlier termination of this Lease, Tenant, if requested by Landlord, shall execute any and all documents necessary to evidence that title to the Improvements (exclusive of Tenant' s Trade Fixtures) is in Landlord and to extinguish and remove any cloud or potential cloud on the title to the Premises and/or the Improvements (exclusive of Tenant' s Trade Fixtures) created by Tenant . Notwithstanding the foregoing, Tenant ' s Trade Fixtures shall at all times remain the property of Tenant acid Tenant' s Trade Fixtures may be removed by Tenant, in its sule discretion, at any time and from time to time during the Lease Term and/or upon the expiration or earlier termination of this Lease . 4 . 3 Tenant ' s Trade ixtures . (a) Landlord agrees that all trade fixtures , machinery, equipment, furniture, signs , supplies, inventory, supplies and other personal property of whatever kind and nature, both tangible and intangible, kept or installed on, used at and/or used in conjunction with, the Premises by Tenant during the Term ( "Tenant' s Trade Fixtures" ) , shall not become the property of the Landlord or a part of the: Land no matter how affixed to t)ie Premises and may be removed by Tenant, in its discretion, at any time and from time to time during the entire Lease Term and/or upon the expiration or earlier termination of this Lease, provided Tenant repairs any damage resulting from such removal at its sole cost and expense. (b) Landlord hereby waives and relinquishes any statutory or contractual Landlord' s lien it may now or in the future have as Ea any and ,all items constituting Tenant ' s Trade Fixtures. Without limiting the foregoing, in the event any conditional seller, chattel, mortgagee or other security holder requests, Landlord will execute a waiver of its statutory or contractual Landlord' s lien, if any, as to any items of Tenant ' s Trade Fixtures purchased or leased by Tenant . In this regard, in the event Tenant shall enter into a bona fide lease agreement with any lessor whereby such lessor shall lease to Tenant any items of Tenant' s Trade Fixtures to be placed upon or used upon the Premises, or Tenant finances any items of Tenant ' s Trade Fixtures before or after placement on the Premises, and if such lessor or financing institution requests , Landlord hereunder shall execute a conditional waiver of its statutory or contractual Landlord' s lien, if any, with respect to such items of Tenant ' s Trade Fixtures, provided that any such waiver and/or consent shall include an indemnity of Landlord by Tenant and by such lessor or financing institution for all personal injury or property damage resulting from any such removal and require any removal of Tenant' s Trade Fixtures to be completed no later than ten (10) days following the expiration or sooner termination of the Lease . 09uo14094-006317152041.5 .091121% -8- • 365730 4 - 4 utilities - Tenant shall , at its sole cost and expense, cause - to be installed on, under or about the Premises all facil - ities necessary to supply to the Land and the Improvements all water, storm sewer, sanitary sewer, gas , electric, telephone and other utility facilities and drainage facilities required in furtherance of Tenant ' s use of the Premises . 4 . 5 Development a[ Tenant ' s Exnerysy . Tenant shall bear all expenses in connection with the construction, restoration or remodeling of any Improvements on the Premises and shall defend, indemnify and save Landlord and the Premises harmless therefrom. Tenant shall , at Tenant ' s expense , deliver to Landlord, within sixty (60) days of the date upon which a certificate of occupancy is issued , at least one (1) copy of "as built " plans for any Improvements which were erected, constructed, or remodeled on, under or about the Premises by Tenant , which plans were prepared at the discretion of Tenant and which plans are in Tenant ' s possession and control . 4 . 6 Approval of Plan Specifications - Construction of Improvements . Landlord shall have the right to review and approve, which approval shall not be unreasonably withheld, all of Tenant' s Plans , as hereinafter defined , for development of the Golf Course Project and for the construction and installation of the Improvements on the Premises and the Adjacent Real Property. Landlord' s approval under this Lease shall be independent of its approval of the Plans in its capacity as a governmental agency with control over the grading and improvement of the Premises and Adjacent Real Property, which approval shall be exercised in accordance with the standard 'policies and procedures applicable to City' s actions as a governmental agency. Landlord' s approval of Tenant ' s Plans under this Lease shall be solely for the purpose of assuring that the Golf Course Project substantially meets the standards anticipated by Landlord and Tenant for an 18 hole PGA- rated championship quality golf course, an outline of which standards is included as Exhibit "DH attached hereto and incorporated herein. Such approval by Landlord shall not be unreasonably withheld or delayed . (a) All such Improvements shall be constructed or installed by Tenant at Tenant ' s sole cost and expense; (b) Tenant shall have previously obtained' all appro- priate permits and approvals for the construction and installation of the Improvements required by all applicable governmental agencies and in accordance with all applicable provisions of the ' Development Agreement ; (c) The construction and installation of all Improve- ments shall be done in a skillful and workmanlike manner, shall be completed substantially in accordance with the Plans submitted to and approved or deemed approved by Landlord and shall be in compliance with all applicable governmental permits, laws, ordinances and regulations. OW10140U 0063MSINI 5 W9/17M6 -9 - 355730 Any changes or modifications to such PlanIthall be permitted without Landlord' s consent if they are not substantial or if such changes are made to comply with suggaetione, requests, or require- ments' of any governmental agency or official in connection with do application for a permit or approval of such Plans and/or the Golf Course Project . 4 . 7 Alterations and Additions . (a) Consent of Landlord; Owner6hiD . Following the completion of the initial construction of the Golf Course Project , Tenant shall not make, or cutter to be made, any alterations or additions to the Improvements , or any part thereof , which will entail the expenditure of more than Twenty- Five Thousand Dollars ($25 , 000 . 00) , in any one transaction or in a series of related transactions (collectively "Alterations" ) , without the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed. (b) ReguiremenYLa. Any Alterations performed by Tenant shall be subject to strict conformity with the following requirements : ( i) All Alterations shall be constructed or installed by Tenant at Tenant ' s sole cost and expense . (ii) Prior to commencement of construction or installation of any Alterations , Tenant shall submit detailed plans of the proposed Alterations to Landlord, which plans shall be subject to the prior approval of Landlord in accordance with the terms of Section 4 . 6 hereof . (iii) Tenant shall have previously obtained all appropriate permits and approvals for the construction and installation of the Alterations required by all applicable governmental agencies . (iv) All Alterations shall be constructed and installed in a skillful. and workmanlike manner substantially in accordance with the plans previously approved by Landlord and shall be in full compliance with all applicable governmental permits, laws , ordinances and regulations and the Development Agreement . 4 . 8 Notices . At least twenty (20) days prior to the com- mencement of construction and installation of the Improvements for the Golf Course Project as permitted in Section 4 . 6 above, and/or at least twenty (20) days prior to the commencement of construction and installation of any Alterations for the Golf Course Project pursuant to Section 4 . 7 above, Tenant shall notify Landlord in writing of Tenant ' s intention to commence construction and installation of any Improvements or any Alterations, as applicable. Landlord shall have the right to post and maintain on the Premises WV0140644)06312152048.3 .09117i9d - 10- • • 365730 'any 'notices of non-responsibility provided for under applicable law. 4 . 9 No Right to Grant Easements . Tenant shall not grant any easements or enter into any license agreements , granting access across the Premises to any adjacent property owner or other third party, without the prior written consent of Landlord unless such easement or access automatically terminates upon expiration or sooner termination of the Lease . Landlord agrees to join with Tenant in granting to public entities or public service corpor- ations, for the purpose of serving only the Premises, rights-of-way or easements, on over or under the Premises for telephone, elec- tricity, water, sanitary or storm sewers or both, drainage facil - ities, and for other utilities and municipal or special district services and for pedestrian and vehicular ingress , egress and access to and from the Premises . 4 . 10 performance and omglerion Bond . If the estimated cost of the Improvements or Alterations to be completed by Tenant exceeds Twenty- Five Thousand Dollars ($25 , 000 . 00) , before the commencement of such work, Tenant at its cost shall furnish to Landlord a performance and completion bond issued by an insurance company qualified to do business in California in a sum equal to the cost of the Improvements ur Alterations (as determined by the construction contract betwaan Tenant and its contractor) guaranteeing the completion of the Improvements or Alterations free and clear of all liens and other charges, and in accordance with the approved Tenant ' s Plans . 4 . 11 Maintenance and Repairs Subject to the provisions of Articles IX and X hereof, Tenant shall , at its sole cost and expense, keep and maintain the Land and the Improvements in good order and repair and in a clean and safe condition . Tenant shall make any and all additions to and all alterations and repairs in, on and about the Land and the Improvements which may be required by, and shall otherwise observe and comply with, all public laws, ordinances and regulations from time to time applicable to the Ladd and the Improvements . Tenant shall have the right to make Altui - ations to the Improvements in accordance with the provisions of Section 4 . 7 above. 4 . 12 Tenant Liens . Tenant agrees to keep the Premises and the Improvements free and clear of any and all mechanic' s, materialmen' s and other liens for work or labor done, services performed, or materials, appliances, transportation or power contributed, used or furnished to be used, to or on the order of Tenant and shall defend, indemnify and hold Landlord and the Premises harmless from, any mechanic' s, materialmen' s, contractor' s or subcontractor' s liens arising from any claim for damage, or growing out of the work of any construction, repair, restoration, replacement, or improvement done by or alleged to have been done by or on behalf of Tenant . If Tenant shall in good faith contest the validity of any such lien, claim, or demand, then Tenant shall , at its expense, defend itself and Landlord against the same and shall 09410140640W 52048.309nvvc - 11- i 365730 pay and satisfy any adverse judgment that may be rendered thereon prior to execution thereof and in the event of any such contest Tenant shall record a bond in the Office of the County Recorder of Riverside County, California conforming to the requirements of Civil Code Section 3143 (or any successor statute) in a penal sum of one and one-half (1- 1/2) times the claim (or such other amount as may be prescribed by statute) so that the subject real property will be released from the mechanics ' lien and will provide Landlord a conformed copy of such recording . No mechanics or materialmen ' s liens, or mortgages, deeds of trust , or other liens of any char - acter whatsoever created or suffered by Tenant , shall in any wuy, affect Landlord' s title to, of rights in, the Premises . ARTICLE V USE 5 . 1 ji@g. Tenant shall use the Premises only for construc- tion, maintenance and operation of the Golf Course Project and for no other uses or purposes without the prior written approval of Landlord, which approval shall be granted or withheld in the sole and absolute discretion of Landlord . 5 . 2 Governmental Approvals . Tenant shall prepare at its sole expense (except as otherwise provided in the MOU) , all studies and reports which are necessary to obtain all governmental approvals required for Tenant ' s use of the Premises for the permitted purpose provided in Section 5 . 1 above, including, without limitation, environmental impact reports, soils reports , engineering studies and similar reports and studies . All requests or applications together with all supporting documentation for governmental approvals or permits which require discretionary action on the part of any governmental agency, whether or not such approvals are specifically required to be obtained by this Ground Lease shall be submitted to, coordinated with and approved by I,qndlopd prior to filing with the appropriate governmental agency. TeA4nt shall provide Landlord copies of all written communications be�,Ween Tenant and any governmental agency processing such requests or applications . 5 . 3 Condition of Prpmisee , AcQu; sition °AS- IS' " . Tenant hereby represents and warrants to Landlord that Tenant is familiar with the Premises and has made such independent investigations as Tenant deems necessary or appropriate considering its obligation under this Ground Lease and development and use of the Premises including, without limitation, inspections and independent investi - gations concerning: the use, sale , development and suitability for development of the Premises,; including, without limitation, any desired investigations or analyses of present or future laws, statutes, rules, regulations, ordinances, limitations , restrictions or requirements concerning the use, density, location or suitabil - ity of the Premises or any existing or proposed development or condition of the Premises or any adjacent real property (co] - 094/a140944)X3M33at.3 .o3n3Ne -12- i 0 335733 lectively "Regulations" ) , and including, without limitation, toning, subdivision, environmental , agricultural or other Regulations; the necessity or the availability of any general or specific plan amendments, rezoning, zone variances , conditional use permits, building permits, environmental impact reports, parcel or subdivision maps, and entitlements necessary or desirable for Tenant' s development and use of the Premises, including without limitation approvals concerning the Premises (collectively, "Permits" ) ; the necessity or existence of any assessments that may be imposed in connection' with any Regulations or the obtaining required Permits, from any governmental agency having jurisdiction over the Premises; the economic value of the Premises, the size , dimensions, locations or topography of the Premises; the adequacy or availability of access to the Premises, or of water, sewage or other utility serving the Premises ; the presence or adequacy of infrastructure, subdrain and other improvements on, near or concerning the Premises ; the extent or condition of any grading , compaction or other site work already performed or hereinafter required for the improvements proposed by Tenant ; the surface, soil subsoil, geologic or ground water conditions or other physical conditions of or affecting the Premises such as climate, drainage, air, water or minerals or the existence of any contaminants or hazardous materials on or :in the soil or the ground water; the existence of any special environmental , archaeological , botanical or other condition of or affecting the Premises which might impair the use or improvement of the Premises contemplated by Tenant; the extent of condition of title to the Premises ( including but not limited to reviewing a current title report) ; and all other matters concerning the condition, use , development or ownership of the Premises . Tenant agrees and acknowledges that entry into this Ground Lease shall constitute a representation and warranty to Landlord that Tenant has made all such independent investigations and inspections as Tenant deems necessary or appropriate to satisfy itself completely that it will lease the Premises and accept and use the other portions of the Premises in the condition "AS IS " upon the Effective Date. Nothing herein shall diminish or change the obligations of City set forth in Paragraph 2b ( 1) through 2b (6 ) of the MOU. 5 .4 Environmental Limitations . Tenant shall not engage in any activity on or about the Premises that violates any Environ- mental Law, shall promptly, at Tenant' s sole cost and expense, take all investigatory and/or remedial action required or ordered by any governmental agency or Environmental Law for clean-up and removal of any contamination involving any Hazardous Material created or caused directly or indirectly by Tenant and shall promptly, at Tenant' s sole cost and expense, remove all Hazardous Materials contamination which is created, caused or permitted, directly or indirectly, by Tenant . The term "Environmental Law,, shall mean any federal , state or local law, statute, ordinance or regulation pertaining to health, industrial hygiene or the environmental conditions on, under or about the premises, including, without limitation, (i) the Comprehensive Environmental Response, Compen- sation and Liability Act of 1980 ( 110ERCLA11 ) , 42 U. S .C. Sections 0%M14094a063nJ52048.3 "ovnvsa - 13 - • 365730 9601 et seq. ; (ii) the Resource Conservation and Recovery Act of 1976 ( "RCRA" ) , 42 U.S . C. Sections 6901 et seq. ; ( iii) California Health and Safety Code Sections 25100 et seq. ; (iv) the Safe Drinking Water and Toxic Enforcement Act of 1986 , California Health and Safety Code Section 25249 . 5 at seq . ; (v) California Health and Safety Code Section 25359 . 7; (vi ) California Health and Safety Code Section 25915 ; (vii) the Federal Water Pollution Control Act , 33 U.S .C. Sections 1317 et seq. ; (viii) California Water Code Section 1300 at seq. ; and (ix) California Civil Code Section 3479 at seq . , as such laws are amended and the regulations and administrative codes applicable thereto. The term "Hazardous Material " includes , without limitation, any material or substance which is (i) definud or listed as a "hazardous waste" , "extremely hazardous waste" , "restrictive hazardous waste" or "hazardous substance" or considered a waste, condition of pollution or nuisance under the Environmental Laws; (ii) petroleum or a petroleum product or fraction thereof; (iii) asbestos; and/or (iv) substances known by the State of California to cause cancer and/or reproductive toxicity. It is the intent of the parties hereto to construe the terms "Hazardous Materials" and "Environmental Laws" in their broadest sense . Tenant shall. provide all notices required pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1986 , California Health and Safety Code Section 25249 . 5 at seq. Tenant shall provide prompt written notice to Landlord of the existence of Hazardous Substances on the Premises and all notices of violation of the Environmental Laws received by Tenant . 5 . 5 Indemnification of Landlord. Tenant shall indemnify, defend (by counsel reasonably acceptable to Landlord) , protect and hold Landlord, and Landlord' s employees, agents and officials free and harmless from and against any and all claims, liabilities , penalties, forfeitures, losses or expenses (including attorneys ' fees) or death of or injury to any person or damage to any property whatsoever, arising from or caused in whole or in part, directly or indirectly by (A) the presence in, on, under or about the Premises or the Improvements or discharge in or from the Premises or Improvements or Tenant' s use, analysis , storage, transportation, disposal, release, threatened release, discharge or generation of Hazardous Materials to, in, on, under, about or from the Premises or the Improvements, or (S) Tenant ' s failure to comply with any Environmental Law. Tenant' s obligations hereunder shall include, without limitation, all damages , whether foreseeable or unfore- seeable, all costs of any required or necessary repair, cleanup or detoxification or decontamination of the Premises or Improvements and the preparation and implementation of any closure, remedial action or other required plan in connection therewith and shall survive the expiration or earlier termination of the term of the Lease. Without limiting the generality of the foregoing, Tenant shall be solely and completely responsible for responding to, defending against and/or complying with any administrative order, request or demand relating to potential or actual contamination on the Premises, or third party claim for response or remedial actions or for the costs of any such actions which the third party claimant has undertaken, whether such order, request , demand or claim names 09410140WOOM 52049.7 SWI12196 - 14- 365730 Tenant, Landlord or both, or refers to the Premises in any way . The responsibility conferred under this Section includes, but is not limited to responding to such orders, requests , demands and claitis on behalf of Landlord and defending against any assertion of Landlord' s financial responsibility or individual duty to perform thereunder. Tenant shall assume, pursuant to the foregoing indemnity, any liabilities or responsibilities which are assessed against Landlord in any action described under this Section. In satisfying its obligations under this Section, Tenant shall provide to the Landlord copies of all communications, filings or other writings, photographs or materials given to or received from any person, entity or agency in connection with any claim, order, request or demand described herein, or with any cleanup or remedial work conducted by Tenant, and shall notify Landlord of , and permit Landlord' s representatives to attend any meetings or oral communications relating thereto. 5 . 6 General LimitatiLQLs . Tenant shall promptly comply with all laws, ordinances , orders and regulations affecting the Premises , and the cleanliness, safety, occupation and use thereof . AR'PICLE VI ASSIGNMENT AND SUBLETTING 6 . 1 Restrictions on Transfer. Except to the extent expressly authorized pursuant to this Article VI or Article XI hereof , Tenant shall not "Transfer" (as hereinafter defined) all or any portion of its interests , rights or obligations under this Lease without the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed . 6 . 2 Definition of "IrLn " . As used in this section, the term "Transfer" shall include any assignment, subletting, hypothe- cation, mortgage, pledge, or encumbrance of this Lease or Tenant ' s interest in the Premises, or the Improvements thereon by Tenant . A Transfer shall also include the Transfer to any person or group of persons acting in concert of more than ninety percent (90t) of the present equity ownership and/or more than fifty percent (501) of the voting control of Tenant (jointly and severally referred to herein as the "Trigger Percentages " ) or any general partner of Tenant in the aggregate, taking all transfers into account on a cumulative basis, except transfers of such ownership or control interest between members of the same inunediate family, or transfers to a trust, testamentary or otherwise, in which the beneficiaries are limited to members of the transferor' s immediate family. A transfer of interests (on a cumulative basis) in the equity ownership and/or voting control of Tenant in amounts less than Trigger Percentages shall not constitute a transfer subject to the restrictions set forth herein. In the event Tenant or any general partner or member comprising Tenant or its successor is a corpor- ation or trust, such transfer shall refer to the transfer of the issued and outstanding capital stock of Tenant or of beneficial 09410140"-aown52044 5 *WJ12/ a -15- interests of such st ; in the event that T nt 3 5�y3 peneral partner comprising Whant is a limited or genex�partnership, such transfer shall refer to the transfer of more than the Triyyc:r Percentages in the limited or general partnership interest; in the event that Tenant or any general partner is a joint venture, such transfer shall refer to the transfer of more than the Trlgyur Percentages of such joint venture partner, taking all transfers into account on a cumulative Lasis . 6 . 3 Landlord' s Cons • Tenant shall not Transfer this Lease or any of Tenant' s rights hereunder, or any interest in tht2 Premises or in the Improvements thereon, directly or indirectly, voluntarily or by operation of law, except as provided below, without the prior written approval of Landlord, which approval shall not be unreasonably withheld or delayed and if so purported to be transferred without such approval , the same shall be null and void. In considering whether it will grant approval to ally Transfer by Tenant, which transfer requires Landlord approval , Landlord shall consider factors such as (i) whether the completion of the Golf Course Project is delayed or jeopardized; ( ii ) the financial strength and capability of the proposed transferee to perform Tenant ' s obligations hereunder; and (iii) the proposed transferee' s experience and expertise in the planning, financing , development , ownership, and operation of similar projects . In addition, no attempted assignment of any of Tenant ' s obligations hereunder shall be effective unless and until the successor entity to Tenant, if applicable, executes and delivers to Landlord an assumption agreement in a form approved by the Landlord, assuming all of Tenant ' s obligations under this Lease . No consent or approval by Landlord of any Transfer requiring Landlord' s approval shall constitute a further waiver of the provision of this Section 6 . 3 and, furthermore, Landlord' s consent to a Transfer shall not be deemed to release Tenant of liability for performance under this Lease unless such release is specific and in writing executed by Landlord . 6 . 4 Exceptions to Be L rictiona . The restriction against Transfers set forth in Sections 6 . 2 and 6 . 3 hereof shall not apply to any of the following: (a) The granting of easements or dedications to any appropriate governmental agency or utility or permits to facilitate the development and/or operation of the Golf Course Project . (b) A sale or transfer resulting from or in connection with a reorganization as contemplated by the provisions of the Internal Revenue Code of 1986 , as amended or otherwise, in which the ownership interests of two corporations are consolidated or merged or in which the ownership interests of a corporation are assigned directly or by operation of law to a person or persons, firm or corporation which acquires the control of the votiiig capital stock of such corporation or all or substantially all of the assets of such corporation . 094101/094-0063t2152044.5 W9/12/% - 16- 9 • 365730 (c) Transfers of the equity interest and/or voting rights in Tenant between members of the same immediate family, ur aimilar Tranatere to a trust, testamentary or otherwise, in which the beneficiaries consist solely of immediate family members of the trustor or similar Transfers to a corporation, partnership or limited liability company in which the immediate family members of the transferor own at least ten percent (10U of the present equity ownership and/or at least fifty percent (sot) of the voting rights of the corporation, partnership or limited liability company. (d) A change in the respective percentage ownership interests exclusively of the equity Holders comprising Tenant (as of the Effective Date) , but this shall not authorize the transfeL of any interest to any person or entity who is not an equity holder of Tenant as of the Effective Date. (e) A Transfer permitted pursuant to Section 6 . 6 hereof . (f) A Transfer permitted pursuant to Article XI hereof . (g) A Transfer of less than the Trigger Percentages . 6 . 5 Approval of ICLPntity of Lender. Notwithstanding anything to the contrary set forth herein with regards to the approval by Landlord of hypothecation, encumbrances or mortgages, Landlord shall only have the right to approve the identity of Tenant ' s lender, which approval will not be unreasonably withheld, taking into consideration such lender' s financial strength, reputation, and other relevant factors . Landlord shall not have any right to approve any of the terms or conditions of Tenant ' s financing arrangements with third party lenders . 6 . 6 Right to Sublet Portions of the Premises . After the Opening Date, Tenant shall. have the absolute right to sublet portions of the Premises in connection with the grant of standard concessions for operation of the restaurant, pro-shop or other retail activities incident to the Golf Course Project , provided that each such sublease states that it is subject and subordinate to the terms and provisions of this Lease and does not extend beyond the term of this Lease, and (b) contains provisions satis- factory to Landlord requiring the subtenant, at Landlord' s sole election, to attorn to the Landlord, if Tenant defaults under this Lease and if the subtenant is notified of Tenant ' s default and instructed to make subtenant' s rental payments to Landlord. Landlord agrees that if this Lease is terminated as a result of a default by Tenant, Landlord shall have the right but not the obli - gation to recognize and keep in effect any one or more of the sub- leases . Any sublease of all or substantially all of the Premises and/or the Golf Course shall constitute a Transfer subject to the limitations and restrictions set forth in Sections 6 . 1 through 6 . 4 above. M/014064-000 S2049.s 109/12/96 - 17- 0 365730 ARTICLE VII TAXES 7 . 1 Payment by Tenaiar. Tenant shall pay and discharge, prior to delinquency, all taxes and assessments, general and special , water taxes and all other impositions , ordinary and extraordinary of every kind and nature whatsoever, which during the Term may be charged, levied or assessed against the Land, the Improvements and all of Tenant ' s interests therein and Tenant ' s Trade Fixtures ( "Taxes" ) . 7 . 2 Improvement or Social Assessment District . If at any time during the term of this Lease any governmental subdivision shall undertake to create an improvement or special assessment district the proposed boundaries of which shall include any portion of the Premises, Landlord and Tenant shall each be entitled to appear in any proceeding relating thereto and to present LheiL respective positions as to whether the Premises should be included or excluded from the proposed improvement or assessment district and as to the degree of benefit to the Premises resulting there- from. Each party shall promptly advise the other party, in writing of the receipt of any notice: or other information relating to the proposed creation of any such improvement or special assessment district , the boundaries of which include any portion of the Premises . Any assessment levied or assessed against the Premises by any such improvement or especial assessment district shall con- stitute real property taxes and assessments for the purposes of this Article 7 and shall be payable by Tenant . 7 . 3 Permitted Conte:. Tenant shall have the right to seek a reduction in the assessed valuation or to contest the amount or validity of any such Taxes by appropriate legal proceedinys , diligently pursued, provided that : (a) Tenant shall first make all contested payments under protest, but if payment under protest is not permitted by the taxing authority, such contested payment need not be made; (b) The Improvements or any part thereof or any interest therein shall not: be in any danger of being sold , forfeited, lost or otherwise: interfered with; (c) All expenses incurred in connection with such proceeding shall be paid by Tenant ; and (d) Landlord shall have no obligation to participate with Tenant in connection with any such proceedings . 7 .4 Personal Propert:v Taxes . Tenant shall pay, prior to delinquency, all taxes assessed against and levied upon Tenant ' s Trade Fixtures located on the Premises . 094/014094-006V2132041 5 .09112/96 -1 8- 365730 ARTICLE VIII INSURANCE 8 . 1 Tenant ' s Insurance . Tenant shall procure and maintain, and pay all premiums, fees and charges for the purpose of procuring and maintaining continuously throughout the Term: (a) Insurance oil the Improvements against loss or damage by fire or other casualty with endorsements providing what is commonly known as all risk fire and extended coverage (but not including flood or earthquake coverage) , vandalism and malicious mischief insurance, with extended coverage, special extended perils (all risk) , inflation guard endorsements in an amount equal to the full replacement cost thereof , with a deductible of no greater than TEN THOUSAND DOLLARS ($10, 000 . 00) ; (b) At all times when any construction, change, alteration, repair, restoration, addition or improvement is in progress, workers ' compensatijn insurance as required by statute and employers' liability insurance in an amount of not less than ONE MILLION DOLLARS ($1, 000, 000 . 00) (which amount shall be adjusted every five (5) years to reflect constant 1996 dollars using the CPI) covering all persons employed by Tenant in connection with the construction, change, alteration, repair, restoration, addition or improvement, general liability insurance for the mutual benefit of Tenant and Landlord, expressly covering the additional hazards because of the construction, change, alteration, repair, restor- ation, addition or improvement , and such increase in the fire and extended coverage insurance as may reasonably be required as a result of the increase in replacement cost of the Improvements because of the change or alteration; and (c) General liability insurance with a combined single limit of not less than FIVE MILLION DOLLARS ($5 , 000, 000 . 00) combined single limit coverage (which amount shall be adjusted every five (5) years to reflect constant 1996 dollars using the CPI) provided, in no event shall the amount required hereunder exceed amounts required by governmental agencies for comparable projects in the Southern California region for any bodily injury or property damage, with a deductible of no greater than TEN THOUSAND DOLLARS ($10, 000 . 00) , which insurance shall be primary and noncon- tributory. Tenant shall be entitled to satisfy the insurance coverage requirements set forth in this Section 8 . 1 (c) through either primary coverage or umbrella coverage, or any combination thereof, in Tenant' s sole discretion. 8 .2 Form of Insurancg Policies . All property, casualty and other policies of insurance referred to in this Lease shall include Landlord, as its interest may appear, as an additional insured, shall insure Landlord against liability arising out of Tenant' s negligence or the negligence of any other person, firm, or corporation and contain a contractual liability endorsement for liabilities assumed by Tenant under this Lease . All policies 094ro1409COW12152aI.3 &W11 V s -19 - 365730 procured hereunder shall be on standard policy forms issued by insurers of recognized responsibility, rated A+XII or better by Beat' s Insurance Rating Service, qualified to do business in California. A certificate of such insurance shall be delivered to Landlord prior to Tenant ' s entry onto the Premises and thereafter not less than thirty (30) days prior to the expiration thereof and shall provide that such policy may not be cancelled or modified except upon not less than thirty (30) days ' written notice to Landlord. 8 . 3 Waiver of Subrogation. Each of Landlord and Tenant severally waive any and every claim which arises or may arise in its favor and against the other during the term of this Lease for any and all loss of , or damage to, any of its property located within or upon, or constituting a part of, the Project, to the extent such loss or damage is covered by the form of insurance required pursuant to Section 8 . 1 ; provided, however, that the provisions of this Section 8 . 3 shall be of no force or effect to the extent the same shall invalidate any policy of insurance owned by Landlord or Tenant . 6 . 4 Hold Harmless and Waiver of Claims . Except in the event of an occurrence caused by the active negligence or willful misconduct of Landlord, Tenant covenants and agrees that Landlord shall not at any time or to any extent whatsoever be liable, responsible, or in any way accountable, for any loss, injury, death or damage to persons or property which at any time may be suffered or sustained by Tenant or by any persons or property who or which may at any time be using, occupying or visiting the Premises, or be in, on or about the Premises , or may be injured as a result of any act, omission or negligence of Tenant , Tenant ' s agents or employees, whether arising from the sale of alcoholic beverages , or otherwise, whether or not such loss , injury, death or damage shall be caused by, or in any mariner result from, or arise out of , any act, omission or negligence of Tenant or of any occupant, subtenant, customer or invitee of Tenant ; and Tenant shall forever indemnify, defend, and hold Landlord free and harmless of, from, and against, any and all claims , liability, loss or damage whatsoever including, but not limited to, attorneys' fees, on account of any lose, injury, death or damage occurring in, on or about the Premises, or arising from the use of the Premises by any person during the Term of the Lease . ARTICLE IX DAMAGE OR DESTRUCTION 9 .1 Repair and Reconstruction After Insured Damao. In the event the whole or any part of the Improvements shall be partially or wholly damaged or destroyed by fire or other casualty required to be insured against hereunder, such destruction or damage shall not operate to terminate this Lease, but rather, this Lease shall continue in full force and effect except as otherwise provided in 09W14094-O 2n1l2N$.5 W/I2M -20- . is 365730 this Lease . In such case, subject to availability of, and to the -extent of, available insurance proceeds, Tenant agrees to promptly restore, rebuild or repair the Improvements to a condition at least equal in value to the value Of the Improvementa immediately priur to the casualty. All work performed by Tenant pursuant to this Section 9 . 1 shall be done in accordance with the provisions of Article IV hereof . 9 .2 Repair and gecousLruccion After Uninsured Damage . in the event the Improvements are partially or wholly damaged or destroyed by a casualty not required to be insured against hereunder to the extent of twrenty- five percent (25%) or more of the insurable value of the Improvements, at any time during the sixty (60) calendar day period following the date of occurrence of such casualty, Tenant may, at its option, elect to terminate this Lease . If the Improvements shall be damaged by a casualty not required to be insured against hereunder to the extent of less than twenty- five percent (25%) of the insurable value of the Improvements , Tenant shall , at its own cost and expense, be obligated to promptly restore, rebuild or repair said Improvements to a condition at least equal in value to the value of the Improvements immediately prior to the casualty. All work performed by Tenant pursuant to this Section 9 . 2 shall be done in accordance with the provisions of Article IV hereof . 9 . 3 Damage Near Er;d of Term. Notwithstanding the provisions of Section 9 . 1 and 9 . 2 hereof , in the event the whole or any part of the Improvements shall be partially or wholly damaged or destroyed, Tenant shall be under no obligation to, but may (at Tenant' s sole discretion) , repair, restore or reconstruct the Improvements during the final ten (10) years of the Lease Term if : (1) the cost of such restoration exceeds twenty- five percent (25t) or more of the then full replacement value of all the Improvements; or (2) the damage or destruction is uninsured and is not required to be insured under the provisions of this Lease; or (3 ) Tenant is substantially prevented from carrying on its business and opera- tions at a level of at least seventy- five percent (75%) of the level of business and operations preceding such damage or destruc- tion; or (4) such damage or destruction cannot be repaired so as to permit resumption of Tenant' s business and operations, within ninety (90) calendar days of such damage or destruction to substan- tially the same level of such business and operations prior to such damage or destruction. In such event , notwithstanding any pro- vision in this Lease to the contrary, Tenant may, at its option, elect to terminate this Lease . 9 .4 Election to Terminate . In the event Tenant elects to terminate this Lease pursuant to the provisions of Section 9 . 2 or Section 9 . 3 above, then Tenant may exercise its right to terminate subject to the following conditions : (1) said right to terminate must be exercised by written notice from Tenant to Landlord within sixty (60) days of such damage or destruction; (2) Tenant shall continue to perform all its obligations hereunder until the f^^ effective date of such termination; and (3) subject to the terms 0941014064-OM/2152040.3 .o9n2196 -21- 365730 and conditions of any Leasehold Mortgage, as said term is hereafter defined, Landlord shall be entitled to retain all insurance procoods attributable 00161y to the repair and/or replacement of the improvements which were damaged or destroyed and all other insurance proceeds including, without limitation, those attributable to Tenant' s Trade Fixtures, if any, shall belong to Tenant . ARTICLE X S:QNDEMNATIOO 10. 1 Termination of Lease. In the event (a) all or any portion of the Adjacent Real Property; or (b) all or any portion of the Land or Improvements, shall be acquired for any public or quasi-public use through taking by condemnation, eminent domain or any like proceeding, or purchase in lieu thereof (a "Taking" ) , such that Tenant reasonably determines that the Premises cannot continue to be operated for the Golf Course Project , then the Term shall cease and terminate as of the date the condemning authority takes title or possession, whichever first occurs . 10 .2 Apportio m n of—Award . In the event of any Taking, whether whole or partial , Landlord and Tenant shall be entitled to receive and retain such separate awards and portions of lump sum awards as may be allocated to their respective interests in any condemnation proceedings . For purposes of allocating the award, the value of Tenant' s interest shall be determined as if Tenant was required to pay fair market rent ,for the Land under this Leasc . Under no circumstances shall Tenant be entitled to an award of any so-called "bonus value" of the Lease . If the Premises shall be restored as herein provided, Tenant shall first be entitled to recover the costs and expenses incurred in such restoration out of any such award. Thereafter, in the event the condemning authority does not make separate awards and the parties are unable to agree as to amounts which are to be: allocated to the respective interests of Landlord and Tenant, then each party shall select an independent M.A. I . real estate appraiser (an "Appraiser' ) . Each Appraiser shall separately determine the amount of the balance of the condemnation award which is to be allocated to the interests of Landlord and Tenant. In the event that the percentage of the balance of the total award each Appraiser allocates to Landlord (a) are within ten percent (lot) of each other, the two (2) allocations shall be averaged and such average shall be the final allocation of the award, or (b) are not within ten percent (10t) of each other, the two Appraisers shall then select a third Appraiser who shall independently allocate the award between Landlord and Tenant, and the middle of such three (3 ) allocations shall be the final allocation of the award. In the event the two Appraisers are unable to agree on the selection of the third Appraiser, the third Appraiser shall be selected by the President of the Board of Realtors of Palm Springs, California, provided that such president is not an employee or an affiliate of either Landlord or Tenant . o4101+064-00e3ni5204e.5 .09/12t% -22 - ARTICLE XI 365730 LIENS AND ENCUMBRANCES 11 . 1 Right to Encumlp-r_• Tenant shall have the right to encumber this Lease and Tenant ' s leasehold estate in the Premises and interest in the Improvements, furnishings, furniture, equip- ment, fixtures, and personal property thereon, from time to time by one or more mortgages, deeds of trust , deeds to secure debt or other appropriate instrument (a "Leasehold Mortgage" ) to one or more Lienholders approved by Landlord pursuant to Section 6 . 5 above. 11 . 2 Lienholder Defined . As used in this Lease, the term "Lienholder" shall mean any lender which is now or in the future the holder and owner of the debt secured by a Leasehold Mortgage . 11 . 3 Consent of Lienholder . This Lease may not be terminated, surrendered or amended, nor may any provisions hereof be waived or deferred by Landlord or Tenant, without the prior written consent of any Lienholder which has requested notice in accordance with Section 11 . 4 , unless Landlord complies with the terms and provisions of this Article XI . This provision is for the express benefit of any such Lienholder and may be enforced separately by it . 11 . 4 Notice to Lienholder. After the execution of this Lease, Landlord shall send to any Lienholder a copy of all notices sent by Landlord to Tenant„ or received by Landlord from Tenant, affecting or pertaining to the Premises . No notice from Landlord to Tenant shall be effective unless and until a copy has been actually received by any such Lienholder. flowever, Landlord shall have no duty to send a copy of any notice to any Lienholder which does not by written notice: to Landlord request such notice and specify the address to which copies of same are to be sent pursuant to this Section 11 . 4 . Any Lienholder' s address for receipt of notices may be changed by written notice to Landlord. 11 . 5 Notice of Default ; Opportunity to Cure . As a precon- dition to terminating this Lease for any alleged default by Tenant, Landlord shall give written notice of the default to each Lienholder who has requested Landlord, in writing, to provide such written notice. In the event the Landlord gives such a written notice of default, the following provisions apply ; (a) A "monetary default " means failure to pay when due any rent, taxes, assessment , utility charge, liens , insurance premium or other monetary obligation required by this Lease to be paid by Tenant . Any other event of default is a "non-monetary default" . The Lienholder shall have sixty (60) days after service of the notice of default within which to cure any monetary or non- monetary default, and Landlord shall not terminate the Lease during said sixty (60) day period. In the event of a non-monetary 0941014au.006MIS2044 5 .09112/96 -23 - 36E; 730 default, Landlord shall not terminate the Lease if the Lienholder commences to cure such default within said sixty (60) day period and thereafter prosecutes such cure with reasonable diligence. The -Lienholder shall have the absolute right to substitute itself for the Tenant and perform the duties of the Tenant hereunder for purposes of curing ouch defaults . Landlord expressly consents to such substitution and authorizes the Lienholder to perform under this Lease with all the rights , privileges and obligations of the original Tenant hereunder. (b) The above-described sixty (60) day period shall be extended, and this Lease shall not terminate, during the time required for the Lienholder to perfect its right to cure any non- monetary default by obtaining possession of the Premises (including possession by a receiver) or by instituting foreclosure pro- ceedings , provided the Lienholder acts with reasonable and contin- uous diligence . (c) Neither the bankruptcy nor the insolvency of Tenant shall be grounds for terminating this Lease as long as the Base Annual Rent and all other monetary charges payable by Tenant hereunder are paid by the Lienholder in accordance with the terms of this Lease . 11 . 6 Right to Cure . Any Lienholder shall have the right, but not the obligation, to cure any default under this Lease, and Landlord shall accept such performance by or at the insistence of any such Lienholder as if the same had been made by Tenant . 11 . 7 New Lease to L' nholder. If this Lease terminates because of Tenant ' s default or if the Leasehold Mortgage is foreclosed, then the Lienholder may elect to demand a new lease ( "New Lease" ) of the Premises by written notice to Landlord within thirty (30) days after such termination or foreclosure. Upon any such election, the following provisions shall apply: (a) The New Lease shall be for the remainder of the Term of the terminated or foreclosed Lease, effective on the date of termination or foreclosure, at the same rent and subject to the same covenants, agreements, conditions, provisions , restrictions and limitations contained in the terminated or foreclosed Lease . Such New Lease shall be subject to all existing subleases, provided the subtenants are not then in default . (b) The New Lease shall be executed by Landlord and Lienholder within thirty (30) days after receipt by Landlord of written notice of said Lienh,older' s election to enter into the New Lease provided, however, that Landlord' s obligation to enter into the New Lease shall be conditioned as follows : (i) Lienholder has remedied and cured all monetary defaults and has remedied and cured or has commenced and has diligently completed the cure of all non-monetary asue14044.006312152048.5 .09112196 -24 - 365730 defaults of Tenant susceptible to cure by any party other than by the original tenant ; (ii) That if more than one holder of a Leasehold Mortgage requests such New Lease, Landlord shall have no duty or obligation whatsoever to determine the relative priority of such Leasehold Mortgages , and in the event of any dispute between or among the holders thereof, Landlord shall have no obligation to enter into any such New Lease if such dispute is not resolved to the sole satisfaction of Landlord, within ninety (90) days after the date of termination of this Lease; and ( iii) That; Lienholder pays all costs and expenses of Landlord, including , without limitation, reasonable attorneys' fees, real property transfer taxes and any escrow fees and recording charges , incurred in connection with the preparation and execution of such New Lease and any conveyances related thereto. (c) Landlord' s execution and delivery of such New Lease shall be made without representation or warranty of any kind, whether express or implied, including, without limitation, any representation or warranty regarding title to the Premises or the priority of such New Lease . In no event shall Landlord' s fee interest in the Premises be; subordinated to this Lease or to any such New Lease. (d) At the option of the Lienholder, the New Lease may be executed by a nominee of such Lienholder without the Lienholder assuming the burdens and obligations of Tenant thereunder beyond the period of its occupancy. (e) Upon execution and delivery of the New Lease , Lienholder, at its sole cosh and expense, shall be responsible for taking such action as shall be necessary to cancel and discharge this Lease and to remove the Tenant named herein and any other occupant from the Premises . 11. 8 Assignment. This Lease may be assigned to any party without Landlord' s consent as a result of foreclosure or as a result of a deed or assignment in lieu of foreclosure . Any Lienholder who acquires title to this Lease at foreclosure or by deed or assignment in lieu of foreclosure shall be able to assign this Lease to any Lienholder without Landlord' s consent. Notwith- standing the foregoing, any, party who is assigning this Lease (or the assignee if the assignor does not do so) and the estate created hereby shall provide to Landlord notice of assignment and shall execute and deliver in a form reasonably acceptable to Landlord an assumption agreement from the assignee pursuant to which said assignee assumes the duties, obligations, covenants, conditions and restrictions of this Lease . Upon such assignment , the Lienholder shall be released of all liability hereunder arising after the assignment . owrouaat-oaMmsxM.s .MII V% -2 5- i 0 365730 11 . 9 obligations of Lienholder in Possession. No Lienholder shall have any personal liability for performance of Tenant ' s obligations under this Lease unless and until such Lienholder acquires title to Tenant ' s leasehold estate or assumes possession of the Premises . Following acquisition of Tenant ' s leasehold estate by the Lienholder as a result of either foreclosure or acceptance of any assignment in lieu of foreclosure, the Lienholder or party acquiring title to Tenant ' s leasehold estate shall , as promptly as possible, commence the cure of all defaults of Tenant hereunder and thereafter diligently process such cure to comple- tion, except such defaults which cannot , in the exercise of reasonable diligence, be cured or performed by the Lienholder or such party, whereupon Landlord' s right to terminate this Lease based upon such default shall be deemed waived. Any default not susceptible of being cured by the Lienholder or party acquiring title to Tenant' s leasehold estate shall be deemed waived by Landlord upon completion of foreclosure proceedings or acquisition of Tenant ' s interest in this Lease by any purchaser at the fore- closure sale (who may, but need not be, the Lienholder) , or who otherwise acquires Tenant' s interest from the Lienholder or by virtue of the Lienholder' s exercise of its remedies . Notwith- standing anything to the contrary in this Lease, while any party who is a Lienholder, or at any time was a Lienholder or is a designee or nominee of any existing or former Lienholder, holds title to this Lease or possession of the Premises through a receiver or otherwise, or is proceeding to foreclosure on a lien held by it against Tenant' s leasehold estate created hereby or to obtain title to Tenant' s leasehold estate created hereby by a deed in lieu of foreclosure, then no provision in this Lease requiring reconstruction or rehabilitation of any improvements or other property following a condemnation, a fire or other casualty, if any, shall be applicable to or enforceable against such party to an extent in excess of the condemnation award or net insurance proceeds actually received by reason of such fire or other casualty. 11 . 10 Designees and Nominees . All references in this Lease to a Lienholder shall be construed to also refer to any such Lienholder' s designee or nominee. ARTICLE XII PrIf'AULT BY TENANT 12 . 1 Events of Default . The occurrence of any of the following events shall constitute a default by Tenant : (a) Failure to pay rent when due where such failure continues for a period of five (5) business days after such rent is due; or (b) Failure to perform any other provision of this Lease to be performed by Tenant if the failure to perform is not 09//014044-0oonrnoa.5 ,W112/% -2 6- 0 365730 cured within thirty (30) days after Tenant receives written notice thereof from Landlord. In the event that such default cannot reasonably be cured within thirty (30) days, Tenant shall not be in default of this Lease if Tenant commences to cure the default within such thirty (30) day period and diligently and in good faith continues to cure the default until completion, provided the same is capable of being cured by Tenant . 12 . 2 Right to Cure: Landlord' s Remedies . (a) If Tenant shall have failed to cure a default by Tenant after expiration of the applicable time for cure of a particular default , Landlord may, at its election, but without obligation therefor, subject to Article 11 hereof , terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which it may have for possession or arrearage in rent, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part thereof , without being liable for prosecution or any claim or damages therefore; and Landlord may recover from Tenant the following : (i) The worth at the time of award of the amount by which the unpaid rent which has been earned at the time of such termination; plus (ii) The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that could have been reasonably avoided; plus ( iii) Any amount necessary to compensate Landlord for all the detriment directly caused by Tenant ' s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom. (b) The "worth at the time of award" of the amounts shall be computed by allowing interest at the lesser of: (i) ten percent (10%) and (ii) the maximum permitted by law. (c) If Landlord does not elect to terminate this Lease on account of any default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies under this Lease, including the right to recover all rent as it becomes due, pursuant to California Civil Code Section 1951 . 4 (as modified or recodified from time to time) . (d) Landlord may, but shall not be required to cure a default by Tenant at Tenant' s cost, and the cost of such cure, �w together with interest thereon, at the lesser of (i) fifteen r percent (15%) and (ii) the maximum rate permitted by law, shall be os41014064-00s32132048s .09112roe -2 7- 365730 immediately due from Tenant to Landlord as additional rent hereunder. (e) In the event of any default by Tenant, Landlord shall also have the right, with or without terminating this Lease, pursuant to California law, to reenter the Premises and remove all persons and personal property therefrom by summary proceedings or otherwise; such personal property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant . ( f) In the event that Landlord shall elect to reenter as provided in Section 12 . 2 (e) above or shall take possession of the Premises pursuant to legal proceeding or pursuant to any notice provided by law, and if Landlord does not terminate this Lease as provided in Section 12 .2 (a) , then Landlord may from time to time , without terminating this Lease, either recover all rental as it becomes due or relet the Premises or any part thereof for the account of Tenant on such term or terms and at such rental or rentals and upon such other terms and conditions as Landlord may reasonably determine with the right to make alterations and repairs to the Premises . In the event that Landlord shall relet , then rentals received by Landlord from such reletting shall be applied as follows : first, to the payment of any indebtedness, other than Base Annual Rent due hereunder, owed by Tenant to Landlord; second, to the payment of any cost of such reletting; third, to the payment of the cost of any alterations and repairs to the Premises; fourth, to the payment of Base Annual Rent due and unpaid hereunder other sums due from Tenant to Landlord under this Lease; and the residue, if any, shall be held by Landlord and applied in payment of future base annual rent and other sums payable by Tenant hereunder as the same may become due and payable. Should that portion of such rentals received from such reletting during any month, which is applied to the payment of rent or other sums payable by Tenant hereunder, be less than the rent and other sums payable during that month by Tenant hereunder, then Tenant shall pay such deficiency to Landlord upon demand. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in such reletting or in making such alterations and repairs not covered by the rental received from such reletting. 12 . 3 Notices . No such notice shall be deemed a forfeiture or termination of this Lease . ARTICLE XIII DEFAULT BY LANDLORD 13 . 1 Events of DefaijjL. Landlord shall be in default of this Lease if it fails to perform any provision of this Lease that it is obligated to perform and if the failure to perform is not cured within thirty (30) days after written notice of the default OW014094m63r215204I.s .W/12/% -2 8- • • 365730 has been given by Tenant to Landlord. If a default described above 'for which a cure period is provided cannot reasonably be cured within thirty (30) days, Landlord shall not be in default of this Lease if Landlord commences to cure the default within such thirty-day period and diligently and in good faith continues Lo cure the default until completion, provided the same is capable of being cured by Landlord. 13 . 2 Hight to Cure: Tenant ' s Remedies . If Landlord shall have failed to cure a default by Landlord after expiration of Lhe applicable time, if any, for cure of a particular default, Tenant may, at its election, but without obligation therefor either (a) seek specific performance of any obligation of Landlord, after which Tenant shall retain, and may exercise and enforce, any and all rights which Tenant may have against Landlord as a result of such default or (b) recover damages for such breach by Landlord. 13 . 3 Notices . Notices given under this Article 13 shall specify the alleged default and the applicable Lease provisions, and shall demand that Landlord perform the provisions of this Lease within the applicable period of time for cure . No such notice shall be deemed a forfeiture or termination of this Lease unless expressly set forth in such notice . .ARTICLE XIV SURRENDER 14 . 1 Surrender. Upon the expiration or other termination of this Lease, Tenant shall quit and surrender to Landlord the Premises , together with the Improvements and all other property affixed to the Premises, excluding Tenant ' s Trade Fixtures, in good order and condition, ordinary wear and tear, casualty and condemnation excepted. Tenant shall , prior to the expiration or other termination of this Lease, remove all items constituting Tenant' s Trade Fixtures and other property belonging to it and failing to do so, Landlord may cause all of said personal property to be removed. Tenant' s obligation to observe or perform this covenant shall survive the expiration or other termination of this Lease. In the alternative, Landlord may, at its option, treat any and all items not removed by Tenant on or before the date of expir- ation or of the termination of this Lease as having been relin- quished by Tenant and such items shall become the property of Landlord with the same force and effect as if Tenant had never owned or otherwise had any interest in such items . 14 .2 Holding Over. This Lease shall automatically terminate and be of no further force or effect upon the expiration of the Term, and any holding over by Tenant after such expiration shall not constitute a renewal hereof or provide Tenant with any rights hereunder except that Tenant shall be deemed to be in possession of the Premises on a month- to-month tenancy commencing on the first day following the expiration of this Lease and a tenant at suffer- as4roua4mwrtit2a9.s aMI121% -29- ante of Landlord. y such tenancy shall be 7 eLV Ltd the t s j( and conditions her contained, except that Oid tenancy may be terminated at any time upon thirty (30) days— written notice by Landlord to Tenant or by Tenant to Landlord. The acceptance of rent under the provisions of this Section 14 . 2 shall not, however, be construed as a waiver by Landlord of any rights of reentry as set forth in this Lease, or as a renewal hereof . ARTICLE XV RIGHTS REt9ERVED BY LANDLORD 15 . 1 Inspection. (a) Tenant agrees to permit Landlord, or the authorized representatives of Landlord, to enter the Premises during normal business hours at all reasonable times for the purposes of (a) inspecting the Premises, (b) making such repairs or reconstruction required or permitted by Landlord, and (c) performing any work therein that may be necessary by reason of Tenant' s default under the terms of this Lease, all without prior written notice to Tenant . Nothing herein shall imply any duty upon the part of Landlord to do any such work which, under the provisions of this Lease, Tenant may be required to perform, and the performance thereof by Landlord shall not constitute a waiver of Tenant ' s default in failing to perform such work. In the event Landlord makes any repairs or maintenance which Tenant has failed to do, the cost thereof shall be paid to Landlord on demand. (b) Landlord is hereby given the right during usual business hours to enter the Premises and to exhibit the same to any prospective Tenant, ground lessor, purchaser or lender, and to post any signs on or about the .Premises or the building in which the Premises are located regarding such sale, lease or borrowing . (c) Subject to the performance by Tenant of all of its duties and obligations under this Lease, Landlord covenants and agrees that Tenant shall have , hold and quietly enjoy the use and occupancy of the Premises . ARTICLE XVI MISCELLANEOUS 16 . 1 Address for Notice and Rental Payments . Any notice required or permitted to be given or served by either party to this Lease shall be in writing and deemed to have been given or delivered, as the case may be, when delivered, or seven (7) days after deposit in the United States Post Office, Certified or Registered Mail , Return Receipt Requested, postage prepaid, or one business day after deposit with a national overnight express 094101408+a0012152044.5 .0911256 - 30- 365730 carrier, such as Federal Express, charges prepaid, addressed as follows : Landlord: The City of Palm Springs 3200 E . Tahquitz Canyon Way Palm Springs, CA 92263 Attn: City Manager Tenant : Mountain Falls Golf , LLC 11839 Sorrento Valley Road San Diego, CA 92121 Attn: Mr . Fred Grand All rental payments shall be: made to Landlord at the above address . The addresses may be changed from time to time and at any time by either party by serving notices as above provided. 16 .2 Commissions . Each party hereto represents and warrants to the other that there are no fees, commissions or other payments due for bringing about the execution and delivery of this Lease . In the event of breach of such representation and warranty, each party hereby indemnifies and holds harmless the other of and from each and every claim for fees „ commissions or other payments made against such other party, which claim is based on the agreement or undertaking of the indemnifying party. 16 . 3 Cumulative Rem= ie . No remedy herein or otherwise conferred upon or reserved hereunder shall be considered exclusive of any other remedy, but the same shall be cumulative and shall be in addition to every other . remedy given hereunder or now or hereafter existing at law or in equity or by statute, and every power and remedy given by this Lease may be exercised, from time to time, as often as occasion therefor may arise or as may be deemed expedient . No delay or omission by either party to exercise any right or power arising from any breach by the other of any term or condition of this Lease, and no acceptance of full or partial rent during the continuance of any such breach, shall impair any such right or power or shall be; construed to be a waiver of any such breach or an acquiescence therein; nor shall the exercise, delay or nonexercise of any such right or remedy impair the rights granted hereunder or be construed as a waiver of such right or remedy or as a waiver, acquiescence in or consent to any further or succeeding breach of the same or any other covenant . 16 .4 Governing Law. The terms of this Lease shall be governed by and construed in accordance with the laws of the State of California. 16 . 5 Construction. All provisions hereof are to be construed as covenants and agreements as though the words importing such covenants and agreements were used in each section hereof . The necessary grammatical changes required to make the provisions of this Lease apply in the: plural sense where there is more than one Landlord or Tenant and to either corporations, associations, 0%1014064-0063nk52044s .09112/ a -31- 365730 partnerships or ifividuals, males or fem0s, shall in all instances be assumed as though in each case fully expressed. This Lease has been the subject of extensive negotiations between the parties, and the interpretation hereof shall not be based upon any party being the draftsman hereof . 16 . 6 Rntire Aq eemen);. This Lease and the MOU are the only agreements between the parties as of the date hereof with regard to the Premises . 16 . 7 Captions . The headings of the several articles and sections contained herein are for convenience of reference only and do not define, limit or construe the contents of such articles and sections . 16 . 8 Partial Invalidity. If any term or provision of this Lease shall to any extent be held invalid or unenforceable, the remaining terms and provisions of this Lease shall not be affected thereby, but each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law. 16 . 9 Covenants Running with the Land. This Lease and each and every covenant , agreement , condition and undertaking shall be deemed to be running with the land during the Term of this Lease and shall be binding upon and inure to the benefit of the respec- tive parties hereto, their legal representatives, heirs, executors , administrators, successors and assigns . 16 . 10 Not a Partnership. Nothing herein contained shall be construed as creating a partnership, joint venture or any other relationship between Landlord and Tenant , other than that of landlord and tenant. 16 . 11 Merger. If both Landlord' s and Tenant ' s estates in and to the Premises become vested in the same owner, this Lease shall not be destroyed by application of the doctrine of merger except by the Landlord' s express election and upon the consent of any Lienholder. 16 . 12 Force Majeure . Except as otherwise specifically pro- vided in Section 2 . 3 , the time within which Landlord or Tenant shall be required to perform any act under this Lease shall be extended by a period of time equal to the number of days during which performance of such act is delayed due to war, insurrection, strikes, lock-outs, riots, floods, earthquakes, fires, casualties, natural disasters, Acts of God, acts of a public enemy, epidemics, quarantine restrictions , freight embargoes, governmental agencies other than City or Agency, unusually severe weather, or any other similar causes beyond the control or without the fault of the Party claiming an extension of time to perform ( "Force Majeure Event" ) . An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if written notice by the party claiming /1�� such extension is sent to the other party within thirty (30) days t OW/014061-0063M52041.5 "112na - 32- • • 365730 of knowledge of the commencement of the cause . Any act or failure to act on the part of a Party shall not excuse performance by that Party. 16 . 13 Facilitation. Each party agrees to perform such further acts and to execute and deliver such further documents as may be reasonably necessary to carry out the provisions of this Lease and are consistent therewith. 16 . 14 Waiver. No waiver of any of the terms or conditions of this Lease shall be binding or effective unless expressed in writing and signed by the party giving such waiver. 16 . 15 Statements by Landlord and Tenant . Each of the parties hereby agrees at any time and from time to time, upon not less than ten (10) days' prior written notice, to execute, acknowledge and deliver to the other party, a prospective purchaser, assignee or lender, including, but not limited to, a Lienholder, a statement in writing certifying that (a) this Lease is unmodified and in full force and effect (or, if there have been modifications, a statement that this Lease is in full force and effect as modified and stating the modifications) , (b) the dates to which the base annual rent and any other sums payable hereunder have been paid, (c) whether or not, to the knowledge of such party, there are then existing any defaults under this Lease or any events which, with the giving of notice or the passage of time, or both, would constitute a default hereunder (and, if so, specifying the same) , and (d) such other information as the other party or any Lienholder or a prospective purchaser or assignee may reasonably require . Each party repre- sents and warrants that such statement may be relied upon by the other party hereto or any third party . 16 . 16 Attorneys' Fee@. If either party hereto brings an action to enforce the terms hereof or declare rights hereunder, the prevailing party in such action shall be entitled to reasonable attorneys' fees and costs of suit . 16 . 17 Authority. Each individual executing this Lease per- sonally warrants and represents that he is authorized to enter into this Lease on behalf of his respective corporation or partnership and to bind said entity with respect to any transaction contemplated by or occurring under the provisions of this Lease . 16. 18 Interest . Wherever in this Lease a party is entitled to interest on sums it has expended, and in the event Tenant is delinquent in the payment of rent or any other sums hereunder, such amount shall bear interest from the date of expenditure until the date of repayment at an annual rate equal to the lesser of (i) two percent (24) above the prime rate of interest from time to time elk o9um4094mW2152NIA .o9n2196 -3 3- • 365730 announced by Bank of America, N. A. , or ( ii) the maximum rate permitted by law. IN WITNE39 WHEREOF, the parties hereto have executed this Ground Lease Agreement as of the date first above written. THE CIT`L6 PALM N a Mun ' cipal Corpora n By: Its : /�. �.( . _ i t; , ATTEST: {) CITY CL RK 6 APPROVED AS TO FO Davi J eshire, Esq. City Atto ey MOUNTAIN FALLS GOLF, LLC, a California limited liability company / By: r Its : APPROVED BY TI IP CITY COUNCIL BY$ES. NO. .= f 09410140640063r2152048.5 .09i12)96 - 34- 365730 EXHIBIT "A" LEGAL DI^SCRIPTION OF LAND THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF RIVERSIDE, AND IS DESCRIBED AS FOLLOWS : SECTION 9 , TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO BASE AND MERIDIAN, IN THE CITY OF PALM SPRINGS , ACCORDING TO THE OFFICIAL PLAT THEREOF. EXCEPTING THEREFROM PARCELS 6050- 1 AND 6050-7 AS SHOWN ON RECORD OF SURVEY ON FILE IN BOOK 42 PAGES 43 TO 48 , INCLUSIVE, RECORDS OF SURVEY, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA, AS CONDEMNED TO THE RIVERSIDE COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT, BY FINAL ORDER OF CONDEMNATION, A CERTIFIED COPY OF WHICH RECORDED JUNE 20, 1973 AS INSTRUMENT NO. 80405 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. o j EXHIBIT "A" 094i014M-WW2132041s .mnzive TO GROUND LEASE AGREEMENT r 355730 EXHIBIT "B" I,EGAAL_DESC_RIPTI.ON- OF ADJACENT REAL, PROPERTY BEING THAT PORTION OF SECTIONS 9 , 10 , 15 , AND 16 , TOWNSHIP 4 SOUTH, RANGE ] EAST, SAN BERNARDINO BASE AND MERIDIAN, IN THE CITY OF PALM SPRINGS , RIVERSIDE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS : ALL THOSE PORTIONS OF PARCELS 6050 - 1 , 6050- 2 , 6050-3 , 6050- 4 , 6050 - 5 , 6050 - 6 , 6050- 7 , 6050 - 9 , 6050- 10 , 6050- 11, 6050- 12 , 6050 - 13 , 6050 - 14 , 6050 - 15A, AS SHOWN ON RECORD OF SURVEY BOOK 42 , PAGES 43 THROUGH 48 , INCLUSIVE, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. EXHIBIT "B" "9410140w woeninwe 5 m1i2196 TO GROUND LEASE AGREEMENT 365730 EXHIBIT "C" RECORDING REQUESTED BY AND WHEN RECORDED, MAIL TO: (Space above this line for Recorder' s use) MEMORANDUM OF GROUND LEASE THIS MEMORANDUM OF GROUND LEASE ( this "Memorandum" ) is made and entered into as of the day of 1 1996 , between THE CITY OF PALM SPRINGS , a municipal corporation ( "Landlord" ) and MOUNTAIN FALLS GOLF, LLC, a California limited liability company ( "Tenant " ) . 1 . LEASE OF PREMISES . Landlord has leased to Tenant , and Tenant leased from Landlord that certain real property located in the City of Palm Springs, County of Riverside, State of California, as more particularly described on Exhibit "A" attached hereto and incorporated herein by reference (the "Premises" ) pursuant to and on the terms and provisions of that certain Ground Lease Agreement of even date herewith (the "Lease" ) . The provisions of the Lease are incorporated into this Memorandum by this reference as if set out in full herein. 2 . INITIAL TERM. The initial term of the Lease shall commence on the date of this Memorandum and shall expire on the fifty- fifth (55th) anniversary of the earlier of (a) the date Tenant opens for business from the Premises; or (b) the first to occur of completion of improvements under the Lease dated March 12 , 1996 between the Palm Mountain Company, a California corporation and the Riverside County Flood Control and Water Conservation District ( "District Lease" ) or March 12 , 1999 , subject to earlier termination upon occurrence of certain events , as more particularly provided in the Lease . 3 . EXCLUSIVE RIGHT TO NEGOTIATE FOR EXTENSION. Pursuant- to and subject to the conditions set forth in Section 2 . 4 of the Lease, Tenant shall have the right to exclusively negotiate with Landlord for the extension of the Lease or the execution of a new lease for an additional term. 4 . PURPOSE OF MEMORANDUM. This Memorandum is prepared and executed for the purpose of recordation and in no way modifies the terms and provisions of the Lease . In the event of any inconsistency between the terms of the Lease and the terms of this Memorandum, the terms of the Lease shall prevail . 09410140"o 312152Nn5 u0112J% EXHIBIT "C" TO GROUND LEASE IN WI`PNESS WHEREOF, the parLies have executed this Memoran=111 of Ground Lease III of the day and year firs 41V bove written. 365730 THE CITY OF PALM SPRINGS, a Municipal Corporation By: Its : ATTEST: CITY CLERK APPROVED AS TO FORM: David J. Aleshire , Esq. City Attorney MOUNTAIN FALLS GOLF, LLC, a California limited liability company By: Its : 04/014084 0063/2152048 s .09/12/96 EXHIBIT "C" TO GROUND LEASE 09410140II 0063n 32W8s .09112196 EXHIBIT "C" TO GROUND LEASE 355330 EXHIBIT "D" OUTLINE OF STANDARDS FOR PGA-RATER CHAMPIONSHIP QUALITY GOLF COURSE MINIMUM .STANDARDS_ FOR _GOLF_COURSE _PROJECT 1 . Area : 150 acres minimum; 2 . A par 72 course with eighteen holes . Each 9 hole side shall include the following : (a) 2 - three pars (b) 5 four pail (c) 2 five pals 3 . A reasonable golf pro shop and club house facility should be an integral , on-site facility . The golf clubhouse should have a restaurant and a full service bar. 4 . The first and tenth holes should start near the club house or the golf starter. The ninth and eighteenth holes should end near the club house or golf starter. The ninth hole should end within a reasonable distance of the tenth hole tees . 5 . A putting green, with the ability to practice putting, chipping and sand bunker shots, should be located near the club house . This practice area should accommodate at least twelve (12) golfers at one time . A second putting green should be located near the first and tenth holes . It should be capable of allowing eight (8) golfers or two (2) foursomes, to practice putting concurrently. 6 . A Class A SCGA golf professional should be engaged as a full - time employee . 7 . There should be at least four (4 ) sets of tees with these recommended yardage lengths : (a) Championship tees black minimum of 6800 yds . (b) Man' s long tees blue 6500- 6600 yds . (c) Man' s short tees white 6200- 6500 yds . (d) Ladies ' tees Led minimum of 5200 yds . B . The tee boxes should be arranged so that the course can be set up for varying degrees of difficulty. Each tee box shall have the ability to change the location of the tees to allow for greater diversity of play at each hole and reduced wear and damage on the grass at the tees . 9 . The greens should be designed so that at least four separate pin placements are possible per hole . EXHIBIT "D" 094104084 006 312 1 5 2WS 5 .09111196 TO GROUND LEASE AGREEMENT 365730 10 . 'I'll, Course shall have some icasonable degree of difficulty and challenye . The use of sand bunkers , grass bunkers , trees , water hazards , open natural desert and other hazards should be identified and employed . 11 . A practice driving range should be on-site with the ability to allow a minimum of 32 golfers to practice at one time . The tee area of this driving range shall be natural grass , not an artificial surface . The driving range shall have a minimum distance of 300 yards measured from the middle of the tee area . The tee area should be no less than 50 yards measured from front to back . The range area should have at least eight (8) flag positions denoting the approximate distance from the middle of the tee area. 12 . A full and reasonable maintenance facility should be directly accessible to the golf course and practice areas . 13 . The City retains the right of approval with respect to the plans . EXHIBIT "D" V,410140e4 uueerisawu s .arn-9c TO GROUND LEASE AGREEMENT Preserve Golf, LLC Estoppel Certificate AGREEMENT #3717 M06216, 7-29-98 ESTOPPEL CERTIFICATE This Estoppel Certificate is executed as of August l , 1998, by The City of Palm Springs, a municipal corporation ('City"), and The Redevelopment Agency of the City of Palm Springs ('Agency") in favor of NationsCredit Commercial Corporation, a Delaware corporation ('Lender"), with respect to the following facts and circumstances: A. Agency and Pacific Hospitality Group ("PHG") entered into an Owner Participation Agreement dated January 7, 1991 (the "OPA"). The OPA was amended by a First Amendment to Owner Participation Agreement dated February 5, 1992, by and between the Agency and PHG. The OPA was also amended by a Second Amendment to Owner Participation Agreement dated as of October 4, 1996, by and between the Agency and PHG. The OPA as so amended is referred to herein as the "Participation Agreement." B. City, Agency and Palm Mountain Company, a California corporation ("Palm Mountain"), have entered into a Memorandum of Understanding dated April 12, 1995 (the "MOU"). The MOU was amended by a First Amendment to Memorandum of Understanding dated August , 1996, by and between the City, the Agency and Palm Mountain. The MOU as so amended is referred to herein as the "Memorandum of Understanding." C. William H. McWethy, Jr., Palm Mountain, City, and certain other individuals entered into a Settlement Agreement and Release of Claims dated November 4, 1996 (the "Settlement Agreement'). D. Mountain Falls Golf, LLC, a California limited liability company ("MFG"), and City entered into a Ground Lease Agreement, as amended by that certain First Amendment to Ground Lease Agreement dated as of August_, 1998, by and between City, MFG and Preserve Golf Company, LLC, a California limited liability company ('Tenant'). The interest of MFG in the Lease has been assigned to Tenant pursuant to that certain Assignment and Assumption of Ground Lease Agreement dated August _, 1998 and recorded in the Official Records of Riverside County. Pursuant to the Lease, Tenant as assignee of MFG has acquired an interest (the "Leasehold") in the real property described therein (the "Premises"). LA2.LLC\0THERVGR\11128668 3 '1' E. Tenant is encumbering the Leasehold and other property under one or more deeds of trust, security deeds, mortgages, security agreements, financing statements and other similar documents (collectively, the "Mortgage") as collateral security for the obligations of Tenant under a Construction Loan Agreement (the "Loan Agreement") between Tenant and Lender and the instruments and documents executed in connection therewith. The Loan Agreement provides for funding of a portion of the cost of constructing a golf course and clubhouse (the "Project") on the Premises and other property. F. Lender is relying on this Estoppel Certificate in making a construction loan to Tenant pursuant to the Loan Agreement, which is secured in part by the Mortgage on the Leasehold. Accordingly, Agency and City hereby certify and agree as follows: 1. Subject to Paragraph 6, there are no defaults on the part of PHG, Palm Mountain or Tenant under the Participation Agreement, the Memorandum of Understanding and/or the Settlement Agreement (collectively, the 'Related Agreements"). 2. No default under the Participation Agreement shall constitute a default under the Ground Lease. 3. No Development Agreement has been entered into pursuant to the Memorandum of Understanding. 4. No amounts are owing City or Agency under the Participation Agreement, the Settlement Agreement or the Memorandum of Understanding, which are now, or may become, liens on or obligations of the Premises. LA2:LLC\OTHERUGR\11128668 3 -2- 5. Nothing in any of the Participation Agreement in any way limits, restricts or impairs the ability of Tenant to construct and operate a golf course on the Premises or upon any other property which forms a part of the Project. 6. Notwithstanding any provision of Paragraph 1 hereof, City believes conditions may exist which, if asserted, could constitute a default under the Related Agreements, but City does not wish to assert them and wishes the Related Agreements to continue in full force and effect. Accordingly, City hereby agrees to waive all such matters; provided that should Tenant or Lender bring any legal action against City to recover monetary damages arising out of City's failure or refusal to approve the project described in the Related Agreements or to perform City's obligations under the MOU or the Settlement Agreement, the provisions of Paragraph 1 of this Agreement shall be waived and City may assert any defenses available to it. Moreover, it is expressly understood that nothing herein shall limit the City of Palm Springs from exercising its police power in approving, modifying, or disapproving the project, and nothing herein shall subject City to any liability to any party hereunder for exercising its land use approval power as the City deems appropriate. IN WITNESS WHEREOF, this Estoppel Certificate has been executed as of the date first above written. ATTEST: THE REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS � By sistant-S tecre�tary Executive Director n ��i l rks < . y��cc�st, r��1're�G t�yv�ut rr/� [Printed Name and Title] M)r2,:-:='T°rL--- ATTEST: THE CITY OF PALM SPRINGS, a municipal corporation '7lti �� BY if ° City Clerk �� /f City Manager p4c-c-. 5--F �c lG�/� riF1G .L'r7� fart [Printed Name and Title as rorm�a�r'aT q71f LA2 LLC\OTHERUOR\I 1128668 3 —3— ACORQ, CERTIFICA OF LIABILITY INSUR 5(213197 YY( E DATEI - � . 8797 PRODUCER (702) 831-3291 THIS GERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ROBS &ASSOCIATES INSURANCE SERVICES, iNC. ONLY AND CONFERS NO RIGHTS UPON THE. CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR 97.4 INCLINE WAY, SUITE D ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. INCLINE VILLAGE, NV 89451 COMPANIES AFFORDING COVERAGE COMPANY A FIREMAN'S FUND INSURANCE CO. INGURED _ COMPANY -'I WILLIAM 11. MCWETHY, JR. & FRED GRAND; PALM 13 MOUNTAIN COMPANY,A CALIFORNIA CORP; - -- ---------_--- --"--- -- HOSPITALITY INSURANCE GROUP, INC.; caM�ANv 11839 SORRENTO VALLEY ROAD I— ---------'- ---- ----------- --- SAN DIEGO, CA 92121 COMPANY rrrnn 1 D COVERAGES THIS IS TO CERTIFY THAT l'HE POLICIES OE INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED,NOTWITHSTANDING ANY REQUIREMENT,TERM OR CONDITION OF ANY CONTRACTOR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICAI E MAY BF_ISSUED OR MAY PERTAIN,THE INSURANCE AFFORDED B Y THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES,LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. CO POLICY EFFECTIVE POLICY EXPIRATION LIR TYPE OF INSURANCE POLICY NUMBER DATE(MMIOOP/Y) DATE(MWQDNY) 1 LIMITS GENERAL LIABILI rY GENERAL AGGREGATE 5 _ 2,000,000 A MXC80354515 06/01/97 06101(98 — -- X COMMERCIAL GENERAL UA➢ILITY I PRODUCTS-COMPIOPAGG S 2 QQQ QQQ -- -- l JCLAIMS MADE I X�OCCUR I PERSONAL B ADV INJURY S 1 OOD,000 - __. OWNFUS R CONTRACTOR'S PROT EACH OCCURRENCE I 1,000,QOO X LIOUOR LIABILITY FIRE DAMAGE (Anyanelire) $ 1 QQQ'000 MED EXP (Anyone person) S 500 AUTOMOBILE LIABILITY A X ANY AUTO MXAS0169120 06/01/97 06/01/98 COMBINED SINGLE LIMIT S 1 QQQQQQ At I OWNED AUTOS I BODILY INJURY 5 SCHEDULED AUTOS (Per person) X HIRED AUTOS BODILY INJURY X NON-OWNED AU'f05 (Per acc,denq S X GARAGEKF_EPERS L L. -- ---' '-- --- - _ — PROPERTY DAMAGE y GARAGE LIABILITY AUTO ONLY-EA ACCIDENT S I ANY AUTO -OTHER THAN AUTO ONLY j ! EACH ACCIDENT S - -- - —�- — AGGREGATE 5 EXCESS LIABILITY EACH OCCURRENCE S 1O QQQ 0OQ A - XSC 00074300104 06-1-97 I 06701/98 - - X IJMBRELLAFORM (AGGREGATE $ 1Q,000,000 1011IF_R T1IAN UMBRELLA FORM SIR OTH WORKER'S COMPENSATION AND IT SYSTATU LIWl1.S BMPLOYERS'LIAR' WCLITY —� 'EL EACH ACCIDENT Is rbF f'aOPRIETOF/ ,INCL ELDISEASE-POLICY LIMIT S frJERRiPMET c.ncnnaAlxE �EXCL� ELDISEASE-EA EMPLOYEE j $ --OTHER II QF.iSCRIPTION OF OPERATIONSILOCATIONSIVEHICLESISPEG RE. GROUND LEASE SEC 9 A3717 10 DAY CANCELLATION FOR NON PAYMENT OF PREMIUM. CERTIFICATE.HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCMERD POLICIES BE CANCELLED BEFORE THE CITY CLERK, CITY OF PALM SPRINGS EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL ENDEAVOR TO MAIL P.0 BOX 2743 30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, PALM SPRINGS, CA 92263-2743 BUT FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE COMPANY, ITS AGENTS OR REPRESENTATIVES. AUTHORIZED REPRESENTATIVE I n (©A O CORPORATION 1988 ACORD 25-S(1195( ISSUE DATE (MMiDDNY) aC//1:D® CEI TIN`ICATIMN= NISURANCA 04/01/2002 PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE Pehaim & Snipper Ins Svc, INC DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE P.O. BOX 720867 POLICIES BELOW. San Diego, CA 92172-0867 COMPANIES AFFORDING COVERAGE (619) 283-6533 Fax(619) 283-7552 LETRI7NY A Zurich-American Insurance COMPANY B ., ...... LETTER INSURED COMPANY LETTER ._i.lO': = PRESERVE GOLF, LLC 11839 SORRENTO VALLEY ROAD COMPANY p SAN DIEGO, CA 92121 COMPANY E LETTER ;COVERAGES, .,. „ .,. .. ,.:, ... .... THIS IS TO CERTIFY THAT 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. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS CO : TYPE OF INSURANCE POLICY NUMBER POLICY EFFECTNE POLICY EXPIRATION : LIMITS LTR: DATE (MMIDD/YY) DAM MM/DD" A.GENERAL LIABILITY GENERAL AGGREGATE $ 2, 000, 000 . . ............. .. . . .... . X :COMMERCIAL GENERAL LIABILITY CP0237892502 PRODUCTS-COMP/OP AGG. $ 1, 000, 000 CLAIMS MADE X OCCUR, 06/01/01 05/01/02i,.PERSONAL&ADV. INJURY :$ 1, 000, 000 OWNER'S&CONTRACTOR'S PROT. : EACH OCCURRENCE $ 1, 00 0, 0 0 0 FIRE DAMAGE(Any one Ore) $ 1, 000, 000 MED.EXPENSE(Any one person)'$ AUTOMOBILE LIABILITY COMBINED SINGLE $ 1, 0 0 0, 000 A: X ANY AUTO BAP237889402 ALL OWNED AUTOS '06/01/01 05/01/ 02:30DILY INJURY $ :SCHEDULED AUTOS ;(Per parson) X .HIRED AUTOS BODILY INJURY $ X .NON-OWNED AUTOS (Per accident) GARAGE LIABILITY .. PROPERTY DAMAGE $ EXCESS LIABILITY EACH OCCURRENCE s25, 000, 000 A UMBRELLA FORM CC237893102 06/01/01 ' 05/01/02.AGGREGATE I$25, 000, 000 'OTHER THAN UMBRELLA FORM . ...................... ..... ...,....,.. . . ...........,... .. ...... ....... WORKER'S COMPENSATION STATUTORY LIMITS AND - __ _�.- __ _. __._ _____ _-_ . _--_____ - -_ _-- E4CHACCIDENT __ _ _ --_ - DISEASE-POLICY LIMIT $ EMPLOYERS'LIABILITY DISEASE-EACH EMPLOYEE $ OTHER A Building CP0237892502 06/01/01 05/01/02 10, 000 Ded 2, 000, 000 Contents 100, 000 DESCRIPTION OF OPERATIONSILOCATIONSIVEHICLES/SPECIAL ITEMS CERTIFICATE HOLDER IS NAMED AS .ADDITIONAL INSURED AS THEIR INTEREST MAY APPEAR IN REGARDS TO THE LEASED LAND EARMARKED FOR DEVELOPMENT AS A GOLF COURSE. REFERENCE: 3717, GROUND LEASE SEC 9 A3717 CE7lFICATH"WOCOER CANCELLATION'' SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL ENDEAVOR TO MAIL 3 0 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE Office of the City Clerk LEFT, BUT FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR City of Palm Springs LIABILITY OF ANY KIND UPON THE COMPANY, IT AGENTS OR REPRESENTATIVES. 3200 Tahquitz Canyon Way AUTHORQED REPRESENTATIVE Palm Springs CA 92262