ES CenterCal, LLC - Due Diligence and Ground Lease Agreement #4924-1B4924-1 B
AMENDMENT NO.2 to the
DUE DILIGENCE AND GROUND LEASE AGREEMENT
Between the City of El Segundo, a General Law Municipal corporation
("Lessor" or "City") and ES CenterCal, LLC, a Delaware limited liability company
("Lessee")
Dated February 2, 2016
This Amendment No.2 to Due Diligence and Ground Lease Agreement (this "Amendment") is
entered into this 6th day of June, 2017 by and between Lessor and Lessee.
RECITALS
Lessor and Lessee (collectively, the "Parties") entered into a Due Diligence and
Ground Lease Agreement (the "Lease") on February 2, 2016, as amended by that
certain Amendment No.I to Due Diligence and Ground Lease Agreement by and
between Lessor and Lessee dated December 20, 2016 (collectively, the "Original
Lease"). The Original Lease sets forth a number of deadlines for specific actions
required to be taken by the Parties. The Parties now wish to extend some of these
deadlines.
2. The Lease contemplates that the Parties will have negotiated an extension to the
License Agreement between the City of El Segundo as Licensee and Southern
California Edison as Licensor, within 60 days. The Parties wish to delete this item as
a condition precedent.
The Lease gives Lessor 60 days to review and approve CenterCal's Guarantor's,
TGI's and TGI's Subsidiary Guarantor's financial condition and ability to
respectively guaranty the construction of the Premises Improvements, the Golf Couse
Improvements, and the operation of the Premises during the Operating Period and to
guarantee Rent payments through completion of the Operating Period as expressly
required by the Lease and as set forth in the Topgolf Guaranties. The Parties wish to
extend this deadline to June 30, 2017.
4. The Parties wish to extend the deadline for the Due Diligence Period to September
30, 2017.
5. The Original Lease provides that the "Permitted Exceptions" be finalized and
attached to this Lease by February 28, 2017. The Parties would like to extend this
deadline to August 31, 2017
6. Capitalized terms used but not otherwise defined herein shall have the same meanings
as set forth for such terms in the Origiml L,carse.
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7. The Parties desire to amend the Original Lease as provided herein.
NOW, THEREFORE, in consideration of the foregoing, the Parties agree as follows:
1. Section 2.1: The term "Premises Turnover Date" at the end of the first sentence
of Section 2.1 is hereby deleted and the following is inserted in lieu thereof: "Fixed Rent
Commencement Date".
2. Section 5.1: The following language is added to the end of Section 5.1 of the
Original Lease: "Notwithstanding anything to the contrary contained or implied in this Lease, the
outside date for the expiration of the Due Diligence Period is hereby extended to September 30,
2017. Lessee shall use diligent efforts to complete its due diligence for the Premises and
determine whether it shall proceed with the leasing of the Premises or terminate this Lease
expeditiously, but in no event later than September 30, 2017."
3. Section 5.3: The first sentence of Section 5.3 of the Original Lease is hereby
deleted and the following is set forth in lieu thereof. "At the Premises Turnover Date, the real
property comprising the Premises must be free from all easements, encumbrances, or restrictions
other than those set forth on Exhibit "E", which will be finalized and attached hereto on or before
uyust 31 201.7 (the "Permitted Exceptions")."
4. Section 5.5 of the Lease is hereby amended to read as follows:
"5.5 Conditions Precedent. The following shall be conditions precedent to the Premises
Turnover Date and commencement of the Basic Term hereunder (items (i) through (xiv) shall be
collectively referred to as the "Conditions Precedent"):
(i) (A) Lessee filed an application by December 15, 2016 for the Required Project
Entitlements which Required Project Entitlements the City Council may in its sole and absolute
discretion either approve or disapprove and (B) prior to the end of the Due Diligence Period,
Lessee has obtained such Required Project Entitlements;
(ii) Lessee has prepared and the City has approved final building plans for the Golf
Course Improvements and the Premises Improvements (collectively, the "Plans and
Specifications"), which Plans and Specifications for the Golf Course Improvements shall be
approved by Lessor if they are consistent in all material respects with the description of the Golf
Course Improvements described on Exhibit "D" and all zoning and building and safety laws and
regulations, and for the Premises Improvements that shall be approved by the City if they are
consistent in all material respects with the Prototype Facility and all applicable zoning and
building and safety laws and regulations; Lessee shall cause the City to be named as an
additional insured under the certificate(s) of insurance issued by the architects and design
professionals responsible for preparing the plans for the Golf Course and Premises
Improvements;
(iii) Lessee has entered into construction contracts consistent with this Lease, for the
completion of the Golf Course Improvements on Exhibit "D" hereto, and Topgolf has entered
into construction contracts consistent with this Lease, for the completion of the Premises
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Improvements as described and depicted on Exhibit `13-1" hereto but such shall not relieve
Lessee as being obligated for completing such improvements and Lessee shall cause the City to
be named as an additional insured under the certificate(s) of insurance issued by the general
contractor(s) for construction of the Golf Course Improvements and Premises Improvements;
(iv) Lessee has entered into a Sublease of the Premises with Topgolf El Segundo that
requires Topgolf to operate the Premises for at least seven (7) years in accordance with the
Continuous Operation Requirement (the "Operating Period");
(v) Lessee has delivered within ten (10) business days following the expiration of the Due
Diligence Period written notice to Lessor that it desires to have this Lease become effective
("Due Diligence Acceptance Notice");
(vi) Intentional) Omitted;
(vii) Lessee has received written confirmation from Chevron USA, Inc., a Pennsylvania
corporation ("Chevron"), prior to the expiration of the Otte Diligence Period, approving of the
Premises Improvements and use of the Premises as contemplated by this Lease in a recordable
form acceptable to Lessee in its sole and absolute discretion); however, such approval from
Chevron may not impose any obligations on the City or on the Property but may place
obligations on the Lessee and the Premises during the term of this Lease which arise from
Lessee's use of the Premises;
(viii) Lessor has in its sole and absolute discretion determined by June 30 017 that the
CenterCal Guarantor has sufficient financial strength to guarantee the construction of the Golf
Course Improvements, TGI has sufficient financial strength to guarantee construction of the
Premises Improvements, and TGI Subsidiary Guarantor has sufficient financial strength to
guarantee the operation of the Premises during the Operating Period and to guarantee Rent
payments through completion of the Operating Period as expressly required by this Lease,
together with all amendments hereto, and as set forth in the Topgolf Guaranties. In the event
that despite Lessor's efforts as set forth above, the financial review of the CenterCal Guarantor
and the Topgolf Guarantors cannot be completed byJune 30, 2017, Lessor shall notify Lessee
and the period shall be automatically extended for an additional 30 days;
(ix) (A) TGI shall have executed the Guaranty for the Premises Improvements in the
form attached hereto as Exhibit "H" and delivered such to the Lessor and TGI Subsidiary
Guarantor shall have executed a guaranty for the operation of the Premises during the Operating
Period and to guarantee Rent payments through completion of the Operating Period in the form
attached hereto as Exhibit "H" and delivered such to the Lessor, and (B) the CenterCal Guarantor
shall have executed the Guaranty in the form attached hereto as Exhibit "H" and delivered such
to Lessor (Delivery of these Guaranties shall also constitute performance of Condition Precedent
item (iv); and neither the Topgolf Guarantors nor the CenterCal Guarantor shall have withdrawn
such Guarantees within five (5) business days as set forth in Section 5.5 of this Lease; in
addition, all guarantees shall extend to, cover, and include all relevant obligations set forth in or
modified by any subsequent amendments to this Lease);
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(x) Lessee shall have entered into an irrevocable license with the Lessor that grants the
Lessor ingress and egress to and from the parking lot located on the Premises and the right to use
seventy (70) parking spaces on the parking lot on the Premises and provides that up to thirty (30)
of such seventy (70) parking spaces will be marked with appropriate signage to indicate that they
are to be used exclusively by the patrons of the Golf Course during the Golf Course's hours of
operation as provided in ','xhi .Jt.."D " ("Parking License");
(xi) Lessor and Lessee have entered into an Access Agreement granting Lessee the right
to have access to the Golf Course to construct the Golf Course Improvements;
(xii) Lessee shall have prepared at its expense by Tune 30, 2017, the legal descriptions
for Exhibits "A-1" and "A-2" for Lessor's approval;
(xiii) Lessor and Lessee shall have agreed upon the Land Value (as defined in Section
17.2.1.1 hereof) in their respective sole and absolute discretion by the end of the Due Diligence
Period; and
(xiv) provided Topgolf has received all necessary permits and approvals to commence
construction of its Topgolf facility upon the Premises, Lessee shall deposit four hundred
thousand dollars ($400,000) into an escrow account with the Title Company ("Escrow Holder")
and entered into an escrow agreement (the "Escrow Agreement") with Lessor and Escrow
Holder solely for the purpose of funding a portion of the cost to purchase and install lights on the
golf course on the Property for the purpose of allowing golf to be played on the golf course
during twilight and after sunset hours. The Escrow Agreement shall provide that if the City shall
not have installed lights on the golf course within five (5) years from the date of the Escrow
Agreement, then the funds shall be promptly returned to the Lessee. Notwithstanding any
provision hereof to the contrary, the parties agree and acknowledge that in connection with
obtaining the Required Project Entitlements Lessee has obtained a parking study from a third
party consultant. In the event that such parking study reveals that the parking requirements for
the Golf Course and the Premises require an adjustment of the total number of parking spaces
needed for the Golf Course or that providing Lessor with thirty (30) exclusive parking spaces
during the Golf Course's hours of operation as described in clause (x) hereof is incompatible
with the Permitted Use and Lessor's use of the Golf Course, then prior to the end of the Due
Diligence Period, the parties shall work together to modify the Parking License (and the number
of parking spaces and exclusive parking spaces granted thereunder) in such a manner so as to be
compatible with the Permitted Use and the Lessor's operation of the Golf Course."
5. Section 8: The first paragraph of Section 8 of the Original Lease is hereby deleted in
its entirety and the following is inserted in lieu thereof. " Lessee, at its expense, shall maintain or
cause to be maintained by Topgolf or any other sublessee at all times during the Lease Term
commercial general liability insurance in respect of the Premises and use of the Premises with
Lessor as additional insured, with five million dollars ($5,000,000.00) minimum combined
single -limit coverage, or its equivalent. Such insurance shall include contractual liability
coverage in such amount for Lessee's indemnification and other obligations contained herein.
Such insurance policy shall be written as a primary policy and shall not be contributing with or
be in excess of the coverage that either Lessor or Lessee may carry and shall be issued in the
name of Lessee, with Indemnified Parties as being included in the insurance policy definition of
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who is an additional insured, and shall be primary to any insurance available to Lessor. Lessee
shall also maintain or cause to be maintained by To poll° or any other— sublessee during the
Basic Term, at no expense to Lessor, fire and extended coverage insurance sufficient to replace
all Premises Improvements notwithstanding the amounts set forth below. Such policies of
insurance shall be issued by good, responsible companies that are reasonably acceptable to
Lessor and qualified to do business in the state of California. An insurance certificate or
certificates evidencing such insurance shall be delivered to Lessor prior to the Commencement
Date (evidencing coverage in the amount of two Million Dollars ($2,000,000) covering the Due
Diligence Period), and thereafter prior to the Premises Turnover Date (evidencing coverage in
the amount of five million dollars ($5,000,000)), and renewal policies shall be delivered to
Lessor within ten (10) days before the expiration of the term of each such policy or policies. As
often as any such policy or policies shall expire or terminate, renewal or additional policies shall
be procured and maintained by Lessee in like manner and to like extent. All policies of
insurance must contain a provision that the company writing the policy will give Lessor thirty
(30) days' written notice in advance of any cancellation, non -renewal substantial change of
coverage, or the effective date of any reduction in amount of insurance."
6. Except as modified by Amendment No. 1 and this Amendment No. 2 (collectively, the
"Amendments"), all other terms and conditions of the Original Lease shall remain the same. The
Original Lease and the Amendments constitute the entire agreement between Lessor and Lessee
with respect to the subject matter hereof and supersede all prior written agreements of the Parties
with respect to the subject matter hereof. Neither Lessor nor Lessee is relying upon any
statement, promise or representation not herein expressed, and the Original Lease as amended by
the Amendments is in full force and effect in accordance with all of its terms, except as expressly
modified by this Amendment No. 2, and may not be modified or altered in any respect except by
a writing executed and delivered in the same manner as required by the Original Lease.
7. This Amendment may be executed in counterparts each of which shall be deemed an
original.
8. Subject to the limitations set forth in Section 18 of the Original Lease, the covenants and
agreements contained in this Amendment shall bind and inure to the benefit of Lessor, its
successors and assigns, and Lessee, its successors and assigns.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK:
SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, Lessee and Lessor have caused this Amendment to be
executed by their duly authorized representatives as of the date first hereinabove written.
Lessor: THE CITY OF EL SEGUNDO, a general law City
and imii°661),Ifl ccrix,vatim
Name:
Attest:
Vin ............. ..
T'� I C ire ", :ity C lc I(
Approved as Form:
Hensley, m" - -.. .
..._� . n:........
Mark l:) y, t0ttonicy
Lessee: ES CENTERCAL, LLC,
a Delaware limited liability company
By: CENTERCAL, LLC,
a Delaware limited liability company
By: CENTERCAL ASSOCIATES, LLC,
a Delaware limited liab'Hty company
r
By( ".
.gym
riN
1 me
Prte: Its Manager
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