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CITY OF CARMEL-BY-THE-SEA

CITY COUNCIL
Staff Report
SR 2017-090
June 6, 2017
Orders

TO: Honorable Mayor and City Council Members

SUBMITTED BY: Chip Rerig, City Administrator

SUBJECT: Authorization of the City Administrator to Execute Lease Agreements between the City
and Sunset Cultural Center Inc. for Management and Operations of the Sunset Center
and the Forest Theater for the Term of July 1, 2017 to June 30, 2032.

RECOMMENDATION

Adopt a resolution authorizing the City Administrator to execute Lease Agreements between the City of
Carmel-by-the-Sea and Sunset Cultural Center, Inc. for management and operations of the Sunset Center and
Forest Theater for the term of July 1, 2017 through June 30, 2032.

BACKGROUND / SUMMARY

The City and Sunset Cultural Center, Inc. (SCC) entered into an Agreement for the purpose of managing and
operating the Sunset Center on July 2, 2013. In June of 2016, the City Council extended the agreement for an
additional 12 months with direction that the City work with SCC on a new long-term agreement.

The City and SCC representatives began initial discussions by coordinating a public workshop in September
2016 that included a tour of the Sunset facility. SCC reviewed their financial statement and business model
with the Council as well as the Sunset management and operations model. SCC communicated that while the
utilization of Sunset is robust, the limited theater capacity associated with higher production costs create
significant economic limitations; factors that deter use by larger (conglomerate) producers.

Shortly thereafter, the Council appointed an ad hoc committee comprised of Councilmembers Theis and
Hardy, and City Administrator Chip Rerig to negotiate directly with SCC, and report back to the full Council in
Closed Session under Government Code Section 54956.8 real property negotiations. The ad hoc committee
received legal support from City Attorney Don Freeman and attorney Glen Mozingo. SCCs negotiating
committee included Board of Trustees Chair Stan Meresman, Board of Trustees Member Steve Pearson, and
Executive Director Christine Sandin.

During the initial meetings the Citys ad hoc committee shared its objectives a lease term linked with
termination of the debt service for the facility remodel, empirical cost controls associated with any operating
grant, and funding-raising obligations on the part of SCC. Most importantly, the City insisted that SCC assume
management and operations of the Forest Theater because of their expertise in the field.

After eight months of rigorous negotiations, the negotiating parties reached a consensus in mid-May. On May
24, 2017, the SCC board unanimously approved the lease agreements for the management of the Sunset
Center and the Forest Theater. The underlying theme of the lease agreements is one of partnership and
cooperation, while protecting taxpayer funds and interests in a responsible manner. Language throughout the
lease agreement for Sunset Center has been tightened, and increased protections for both the City and SCC
have also been incorporated into the two lease agreements.
Lease terms of key importance within the lease agreement with SCC for the management of Sunset Center
include:

Defines agreement as a lease


15-year lease term (to coincide with the debt service expiration)
Reestablishment of performance benchmarks for SCC (Section 3.2.2 and Exhibit B)
Quarterly reporting to the City Administrator, and semi-annual reporting to the City Council
Reinforcement of the facility use fee and allowed use of the fee (Sections 4.4 and 4.5)
Protection of historic users of Sunset Center
Operating grant (Section 5.4) of $750,000 for the first three (3) years of the agreement
o An evaluation of the operating grant after year three
o City fiscal emergency clause, with minimum operating grant of not less than $600,000
Increased free theater days for use by the City (or designee) to 12
Establishment of an endowment fund for Sunset for the operation, management, and maintenance of
the facility
Contemporary photographic/video inventory of City and SCC property (Section 6.1)
Clarification of roles regarding maintenance, repair, and capital improvement responsibilities

As mentioned previously, one of the ad hoc committees key goals was that SCC assume the operation and
management of the Forest Theater because of the natural alignment of their professional expertise and
experience in the same. Due to the restricted nature of any outdoor theater, the ad hoc committee worked
towards an agreement that would provide SCC with management flexibility and assurance of support, while still
divorcing the City of a role that is not traditionally a core function of a municipal government. The lease
agreement for the Forest Theater before the City Council achieves this goal, protects historic users, and
provides SCC a level of support beyond that of a customary operating grant.

Lease terms of key importance within the lease agreement with SCC for the management and operations of
the Forest Theater include:

Clearly defined management and operations scope of services (Section 2.4)


15-year lease term (to coincide with the SCC lease agreement for Sunset Center)
Defined reporting requirements to the City Administrator and City Council
SCC with flexibility regarding concessions
Allocation of all revenue from the Forest Theater to SCC
o Guarantees SCC $25,000 per year to be paid by City if equivalent revenues are not realized
from the Theater user groups
Permission for SCC to establish a facility use fee
Protection of historic users of the Forest Theater
Establishment of five (5) free theater use days by City (or designee)
Creation of an annual operating grant of $20,000 for the first three (3) years of the agreement
o An evaluation of the operating grant after year three
Clarification that the City will retain all maintenance responsibilities for the site and pay all utilities
during the term of the agreement

The agreements before Council represent a significant amount of attention to the common goals of enhancing
the performing arts in the City through a collaborative and meaningful relationship with Sunset Cultural Center,
Inc. Accordingly, the ad hoc committee recommends that the City Council adopt a resolution authorizing the
City Administrator to execute Lease Agreements between the City of Carmel-by-the-Sea and Sunset Cultural
Center, Inc. for management and operations of the Sunset Center and Forest Theater for the term of July 1,
2017 through June 30, 2032.

FISCAL IMPACT

For fiscal year 2017/18, the City has budgeted $750,000 for the Sunset Center operating grant and $20,000 for
the Forest Theater operating grant. The City has also eliminated the $25,000 in user group revenue.
PRIOR CITY COUNCIL ACTION

There is no prior action on the full scope of the matter before the City Council.

ATTACHMENTS

1. Resolution
2. Lease Agreement with Sunset Cultural Center, Inc. for Sunset Center
3. Lease Agreement with Sunset Cultural Center, Inc. for the Forest Theater
CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL

RESOLUTION NO. 2017-___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA AUTHORIZING THE


CITY ADMINISTRATOR TO EXECUTE LEASE AGREEMENTS BETWEEN THE CITY OF CARMEL-BY-THE-
SEA AND SUNSET CULTURAL CENTER, INC. FOR MANAGEMENT AND OPERATIONS OF THE SUNSET
CENTER AND FOREST THEATER FOR THE TERM OF JULY 1, 2017 THROUGH JUNE 30, 2032.

WHEREAS, the City and Sunset Cultural Center, Inc. entered into an agreement in July 2013, which
was extended in June 2016; and

WHEREAS, the City and Sunset Center Cultural, Inc. held a Tour of Inspection and Workshop in
September 2016 to open up a dialogue about the structure and management of Sunset Cultural Center, Inc.to
inform negotiations; and

WHEREAS, an ad hoc committee was appointed by the Council to negotiate new lease terms with
representatives of Sunset Cultural Center, Inc.; and

WHEREAS, after 8 months of negotiations agreement as to terms were reached and the Sunset Center
Cultural, Inc. board approved agreements for the management of the Sunset Cultural Center and the Forest
Theater; and

WHEREAS, the agreements reflect the theme of partnership and cooperation between City and the
Sunset Cultural Center, Inc., as well as the interest of the taxpayers.

NOW THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF CARMEL-BY-
THE-SEA DOES HEREBY:

Authorizethe City Administrator to execute Lease Agreements between the City of Carmel-by-the-Sea
and Sunset Cultural Center, Inc. for management and operations of the Sunset Center (Exhibit A) and
Forest Theater (Exhibit B) for the term of July 1, 2017 through June 30, 2032.

PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA this
6th day of June, by the following roll call vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

SIGNED: ATTEST:

_______________________ ___________________________
Steve G. Dallas, Mayor Ashlee Wright, City Clerk
AMENDED AND RESTATED

LEASE AGREEMENT

Between

CITY OF CARMEL-BY-THE-SEA

A Municipal Corporation

and

SUNSET CULTURAL CENTER

A California Nonprofit Public Benefit Corporation

___________, 2017
AMENDED AND RESTATED LEASE AGREEMENT

THIS AMENDED AND RESTATED LEASE AGREEMENT (Agreement) is entered


into on ______________, 2017, by and between the CITY OF CARMEL-BY-THE-SEA, a
municipal corporation (CITY) and SUNSET CULTURAL CENTER, a California nonprofit
public benefit corporation (SCC).

RECITALS

WHEREAS, CITY owns property and improvements located between San Carlos Street
and Mission Street, and between 8th and 10th Avenues, Carmel-by-the-Sea, California, known as
Sunset Community and Cultural Center (Sunset Center) occupying two city blocks, hereinafter
defined as Blocks 97 & 110; APN: 010-143-001, in the Community and Cultural (A-2) zoning
district which contains the Theater (as defined in Section 1.1.8, below);

WHEREAS, SCC was incorporated in 2004 as a California nonprofit public benefit


corporation for the express purpose of managing and operating Sunset Center;

WHEREAS, SCC and the CITY desire that Sunset Center be operated and managed as a
place for public entertainment, community meetings, cultural activities, and conference events in
accordance with the provisions of this Agreement so that Sunset Center serves as an economic
and cultural stimulant for the community; and, so that the CITY will be relieved of the
responsibility of operating Sunset Center, except that portion commonly referred to as the North
Parking Lot, as defined herein;

WHEREAS, the CITY and SCC agree that the sustainability and success of the Sunset
Center is dependent upon the long-term stability of SCC, including consistent leadership, annual
and long-term fundraising and annual CITY financial support;

WHEREAS, it is the intent of both parties to achieve these mutual goals through
continuing their long-term cooperative partnership;

WHEREAS, CITY and SCC previously entered into an Agreement dated June 8, 2004
(the First Agreement) and a subsequent Agreement dated July 1, 2013 (the Second
Agreement);

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WHEREAS, neither party is in breach of the First Agreement or the Second Agreement;

WHEREAS, the Second Agreement, as amended, terminates on June 30, 2017;

WHEREAS, SCC and the CITY desire to Amend and Restate the Second Agreement, in
its entirety pursuant to the provisions of this Agreement.

NOW, THEREFORE, for and in consideration of the mutual covenants, terms,


provisions, conditions and limitations herein set forth, the parties agree as follows:

ARTICLE 1
DEFINITIONS

For purposes of the Agreement, words not herein specifically defined shall be given
their normal and usual English language meaning. The following terms, phrases, words, and
their derivations shall have the meaning given herein. References to governmental entities
(whether persons or entities) refer to those entities or their successors in authority.

1.1 Definitions. Certain terms in this Agreement are specifically defined and set
forth as follows:

1.1.1 Agreement. Agreement means this Agreement, as it may be


amended, restated or supplemented in writing and executed by both Parties from time to time in
accordance with the terms hereof. References to Sections are to this Agreement unless otherwise
qualified.

1.1.2 Board of Trustees. Those persons acting as Trustees of SCC as of the


Effective Date and such substitutions, replacements, and new Trustees as shall be selected from
time to time by the then sitting Board of Trustees in accordance with the Bylaws of SCC.

1.1.3 Box Office Parking Lot. The paved lot used for Facility parking located
in front of the main Theater and Box Office building in Block 97, Lot 19, including the driveway
entering from San Carlos Street, southeast of Ninth Avenue.

1.1.4 Capital Expenditures. Investments in assets over $10,000 in value that


will have a life expectancy of not less than five years as authorized by a depreciation schedule,
approved by the Internal Revenue Code, which may be modified from time to time by the

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Internal Revenue Service. Such property shall include but not be limited to real property, plant
and equipment, and will be depreciated over multiple periods.

1.1.5 City Administrator means the City Administrator of Carmel-by-the-


Sea.

1.1.6 City Council. The sitting City Council of the City of Carmel-by-the-Sea,
at any given point in time during the duration of this Agreement.

1.1.7 Endowment. Endowment or Endowment Fund shall mean the fund


established by SCC pursuant to Section 3.1.1(viii) and as further provided in Section 5.6, below.

1.1.8 Executive Director. The person, regardless of name, selected, engaged


and authorized by the SCCs Board of Trustees to act as the chief executive officer of the Sunset
Center.

1.1.9 Facility. Facility shall mean the grounds and improvements, excluding
the North Parking Lot as set out below, known as Sunset Community and Cultural Center
(hereinafter Sunset Center) whose principal building, including, but not limited to, the
auditorium, lobby, meeting rooms, outside plaza and box office parking lot which are commonly
known as the Sunset Theater (hereinafter the Theater).

1.1.10 Fiscal Year. A one year period beginning July 1 and ending the
following June 30. The Fiscal Years for SCC and for CITY shall coincide.

1.1.11 Improvements. Improvements shall mean and include the Facilitys


structures and all other improvements now or hereafter affixed to the Facility.

1.1.12 Law. Law or Laws shall include any judicial decision, statute,
constitution, ordinance, resolution, regulation, rule, administrative order, or other requirement of
any municipal, county, state, federal or other governmental agency or authority having
jurisdiction over the Parties hereof or affecting or governing the Facility, in effect either at the
effective date hereof or at any time during the Term.

1.1.13 Lease Year. Lease Year shall consist of the twelve (12) month period
commencing July 1 and ending June 30 of each year for the term of this Agreement.

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1.1.14 Manage. Manage, or any derivation thereof, shall mean to direct,
control, operate, maintain, govern, determine, oversee, and administer the operations of the
Facility in accordance and compliance with the terms and conditions of this Agreement and all
applicable laws, rules, and regulations.

1.1.15 Operating Grant shall mean the financial support payable by CITY to
SCC pursuant to Section 5.5 for the purposes of subsidizing SCCs Operating Budget.

1.1.16 North Parking Lot means the CITY paved lot used for public parking
located at the northern end of the Facility in Block 97, Lots 1 through 10, including the driveway
in Block 97, Lots 18 and 20, that enters from San Carlos Street, southeast of Eighth Avenue.

1.1.17 North Wing. All public spaces located at the north end of the Facility.

1.1.18 Parties mean CITY and SCC exclusively and collectively.

1.1.19 Party means CITY or SCC individually.

1.1.20 Person means and includes natural persons, corporations, limited


partnerships, general partnerships, joint stock companies, joint ventures, associations, limited
liability companies, limited liability partnerships, trusts, land trusts, business trusts, or other
organizations, whether or not legal entities.

1.1.21 Premises shall mean the entire two block area of the Sunset Community
and Cultural Center located along San Carlos and Mission Streets, between 8th Avenue and 10th
Avenue, Carmel-by-the-Sea, California, including the Theater and other buildings located
thereon, but excluding the CITY parking lot located at the Sunset Center to the north of the
buildings on the Premises (North Parking Lot).

1.1.22 Operator Improvements. Operator Improvements means all property


(such as equipment, fixtures and furnishings, whether the property is physically affixed to the
Facility or not) which is used in the scheduling or presentation of events at the Facility,
including, but not limited to, lighting, sound system, curtains, seating, carpeting, phone system,
lift, piano(s), stage rigging, and computerized box office system. Operator Improvements do not
include any modification or alteration to the structure and core of the Facility, interior walls,

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structural supports or flooring of the Facility; HVAC, plumbing, electrical and mechanical
systems; elevator; and stage.

1.1.23 Term. Term shall mean the Agreement Term as defined in Section
2.10.

ARTICLE 2
PURPOSE, SERVICES, DESCRIPTION OF FACILITY, TERM OF AGREEMENT

2.1 Incorporation of the Recitals. The Parties acknowledge and agree that the
above stated Recitals are true and correct to the best of their knowledge and are incorporated as
though fully set forth herein.

2.2 General. The CITY desires the services of SCC to operate and manage the
Facility. The purpose of this Agreement is to set forth the rights, duties and obligations of the
Parties with regard to operation and management of the Facility.

2.3 Principal Function. The principal function of SCC shall be to operate and
manage the Facility as a place for public cultural activities, entertainment, community, and
conference events to ensure the long-term economic stability of the Facility.

2.4 Strategic Plan. SCC shall develop, and in all times have in effect, a Strategic
Plan that is revised and updated every three (3) years in August by the SCC Board of Trustees
which provides for such matters as necessary to fulfill the purposes of this Agreement. The
intent of the Strategic Plan is to maintain the Facility and SCC financially and operationally
vibrant in service to the citizens of Carmel-by-the-Sea. The Strategic Plan shall be regularly
reviewed and updated by SCC and shall be submitted to the City Administrator for review and
comment prior to adoption or amendment by the SCC Board, as provided in Section 3.2.

2.5 Services. CITY and SCC hereby agree that SCC shall provide to CITY the
services hereinafter set forth, subject to the oversight and direction of CITY as set forth herein

2.6 Reservations. CITY reserves to itself the right, from time to time, to grant,
without the consent of SCC, such easements, rights and dedications that CITY deems necessary,
and to cause the recordation of parcel maps and restrictions, so long as such easements, rights,
dedications, maps and restrictions do not unreasonably interfere with the permitted use and

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management of the Facility by SCC. SCC agrees, if requested by CITY, to execute in a timely
manner, not more than ten (10) calendar days from the date of request, any and all documents
necessary to effectuate any such easement rights, dedications, maps or restrictions.

2.7 Parking Area. CITY and SCC agree to meet on a schedule that permits adequate
time for coordinating calendars to identify and eliminate potential conflicts in connection with
large events that may fill the North City Parking lot. The parties anticipate and agree that
scheduling should be done one (1) to two (2) years in advance, to the extent that scheduled
events can be identified. Each party will provide schedules to the other as soon as is known.
CITY agrees that when a performance is scheduled at Sunset Center, free parking spaces in the
North Parking Lot will be made available up to the number of spaces needed to accommodate
ticketed patrons when possible. SCC will be responsible with its users to manage the reserving of
spaces and directing patrons to those reserved spaces.

2.8 Condition of Facility. CITY and SCC acknowledge that the Facility presently
consists of the Theater, adjacent spaces and other buildings in various conditions of maintenance
and repair, as depicted in Exhibit A photographs. SCC agrees to accept the Facility in its
present condition and return the Facility to CITY, upon completion of this Agreement in the
same or improved condition, reasonable wear and tear excepted, and subject to the maintenance
responsibilities of CITY as specified in this Agreement.

2.9 Effective Date. The effective date of this Agreement shall be June 1, 2017.

2.10 Agreement Term. The term of this Agreement (Term) shall be for a period of
fifteen (15) years commencing on the Effective Date and shall expire on June 30, 2032, unless
extended as provided herein.

2.11 Right to Terminate. Subject to, and superseded by, Section 10.1 Termination
Upon Default, which specifies that the Parties have the right to terminate this Agreement on
sixty (60) days notice in the event of an uncured breach of this Agreement, each Party shall have
the right to terminate this Agreement at the end of ten (10) years into the Term, or at the end of
the Agreement Term, by providing written notice to the other Party of its election to terminate
("Termination Notice"). Such notice shall be given no less than two (2) years prior to
termination. In exercising a Party's right to elect to terminate this Agreement, either Party may

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propose to forbear from its right to terminate by entering into an agreement, executed by both
Parties, to modify or amend any provision or provisions of this Agreement.

ARTICLE 3
OPERATION AND MANAGEMENT

3.1 Lease Payment. CITY hereby acknowledges the public benefit of the services
offered by the non-profit organization SCC and the value of the in-kind services that SCC
provides to the community. Therefore, in consideration of those public contributions which the
CITY recognizes are considered a core function of the CITY, providing a significant social
service, and the contractual obligations SCC bears under the provision of the Lease, CITY
hereby agrees that the cash lease payment for the duration of the Agreement shall not exceed
One Dollar ($1.00) per year.

3.2 CITY Contracts Out Operation and Management Functions. Subject to the
terms, covenants and conditions set forth in this Agreement, and also subject to all recorded
covenants, conditions and restrictions, utility easements, other recorded private easements,
reciprocal easement agreements and any other recorded instruments affecting the use of the
Facility as they may exist as of the date of this Agreement, and which may be modified from
time to time, with prior notice to SCC, CITY hereby grants to SCC the exclusive right to operate
and manage the Facility. SCC agrees to operate and manage the Facility in a professional and
business-like manner.

3.2.1 CITY and SCC Goals and Objectives. The goals and objectives of the
CITY and SCC concerning the operation and management of the Facility are to: (i) ensure proper
SCC leadership and staffing levels; (ii) deliver diverse arts programming of the highest quality,
including collaboration with Sunset Centers current resident companies; (iii) maintain a vibrant
community center serving the needs of Carmel residents and community organizations; (iv)
expand arts engagement and education programs for all ages; (v) operate, maintain and, as
appropriate, ensure that the Sunset Center is a state-of-the-art facility that is responsive to the
needs of audiences and performers; (vi) ensure the long-term financial viability and stability of
SCC; (vii) operate in a fiscally responsible manner; (viii) for SCC to continue to maintain,
promote and fund, on a best-efforts basis, an endowment fund to provide stable and permanent
funding for the operation, capital preservation, programs, and improvement of the Facility.

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3.2.2 Five Year Benchmarks. Notwithstanding the Term of this Agreement
as set out in Section 2.10, at the end of each five (5) year period under this Agreement, CITY
shall evaluate whether SCC has achieved during the previous five (5) years (the Covered
Period) its goals and objectives as provided in Exhibit B which is attached hereto and
incorporated herein (the Five Year Benchmarks). Within one (1) month following the end of
each five (5) year period, CITY shall identify any of the Five Year Benchmarks which it asserts
that SCC has not met during the Covered Period (the Benchmark Notice). Upon delivery of
the Benchmark Notice, CITY may terminate this Agreement upon twenty-four (24) months
written notice (the Notice Period) from CITY to SCC; provided, however, this Agreement
shall not terminate in the event that during the Notice Period, CITY and SCC agree that the
identified Five Year Benchmarks set forth in the Benchmark Notice have been met or cured. At
the end of the second five (5) year period, if CITY determines that SCC has achieved the Five
Year Benchmarks as provided in Exhibit B, then SCC and CITY may consider for mutual
benefit an extension of the Term of this Agreement.

3.3 Operation and Management. SCC shall exclusively operate and manage the
Facility in accordance with the terms and conditions of this Agreement and SCCs Strategic
Plan, which shall be provided to the CITY thirty (30) days prior to adoption, providing CITY
with the opportunity to comment on the Strategic Plan for its own planning and coordination
with SCC.

3.4 Managing Authority. SCC shall be the sole Operator and Manager of the
Facility and shall do all things necessary for such operation and management in promoting
Sunset Center to attract performances and to encourage utilization of the Theater, meeting rooms
and office rentals. These include, but are not limited to, approving or denying requests for the
use of the Facility; adopting, without limitation, rental and use fees, ticket pricing and policies;
and negotiating all employment relationships and union agreements. SCC shall use its discretion
and shall have full control of all aspects of the operation, management and use of the Facility
including, without limitation, establishing, implementing and publishing its booking,
presentation and rental policies, operating concessions on its own behalf or through others,
determining its procedures, rates and fees (including, without limitation, discounts and free
usage) for any and all uses of the Facility.

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3.5 SCC Bylaw Covenants. Throughout the Term of this Agreement, SCCs
bylaws, as amended, shall provide that no less than one third (1/3) of the Trustees serving on the
SCC Board shall be residents of the City of Carmel-by-the-Sea, and not less than two thirds
(inclusive of Carmel-by-the-Sea residents) shall be residents of Monterey County. The Board of
Trustees shall maintain and provide the CITY with a current roster of SCC Trustees. The Board
of Trustees shall not adopt any policy or take any action regarding the operation and
management of Sunset Center which would violate the rules and regulations under Section
501(c)(3) of the Internal Revenue Code or conflict with SCCs tax exempt status under said
Section 501(c)(3), specifically that which would provide a direct or indirect financial benefit to
any individual member of the Board of Trustees, or create any other prohibited conflict of
interest between any member of the SCC Board of Trustees or any entity which any such
member directly or indirectly represents, owns, or controls.

3.6 Executive Director. The Executive Director shall be an employee of SCC and
shall report to and serve at the pleasure of the SCC Board of Trustees.

3.7 Budget. After adoption by the Board, SCC shall submit its annual budget to
CITY.

3.8 Reporting and Coordination between the Parties. Notwithstanding reporting


requirements in 5.9.4, SCC shall report its activities, financial data, indicators, and condition to
the CITY in the following ways:

3.8.1 Quarterly Report to City Administrator. Within sixty (60) days


following the end of a fiscal quarter, SCC shall provide to the CITY a report presented at a
meeting with the City Administrator in a form approved by the CITY setting out the anticipated
activities for the upcoming quarter and reporting on the prior quarters activities, finances, and
contract compliance issues, if any. The first such report shall be due by August 30, 2017,
reporting on the quarter-ended June 30, 2017.

3.8.2 Semi-Annual Report to the City Council. At least twice each Fiscal
Year, or at the discretion of the City Administrator, SCC shall provide a written report to the
City Council on the operation and performance of the Sunset Center.

3.8.3 Strategic Workshop. CITY and SCC principals will participate in


periodic strategic workshop sessions together, schedule and agenda to be mutually determined by
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City Administrator and SCC Executive Director, and shall be scheduled to enhance the strategic
planning process of SCC.

ARTICLE 4

AUTHORIZED USE OF FACILITY

4.1 Permitted Uses. Subject to the terms, covenants and conditions of this
Agreement, SCC shall use the Facility solely for the operation and management of the Facility
for cultural events, performing arts presentations, educational programs, presentations, films,
meetings/conferences, general community purposes, SCC fundraising endeavors, rehearsals and
other related activities, SCC offices, and such other activities that are incidental to the foregoing.
SCC shall keep the Facility in a neat, clean, attractive and orderly condition, free of odors, dust,
debris or nuisances and prohibit unnecessary, excessive and annoying noises. SCC may use the
Facility to engage in concession and catering activity only as provided in this Agreement. SCC
may use the Facility for additional purposes with the prior written approval of the City
Administrator.

4.2 Concessions and Catering Activity.

4.2.1 Definitions. As used in this section, unless the context clearly requires a
different meaning,

4.2.1.1 Concession and catering means and includes the preparation,


service, free distribution, or sale of food or any beverage, including any alcoholic beverage, or
the free distribution or sale of any concession merchandise or service; and

4.2.1.2 Concession merchandise means and includes inedible goods,


souvenirs, novelties and tickets to events at other venues.

4.2.1.3 Conference Room Catering means the food and beverage


service provided to meeting room users of the Sunset Center.

4.2.2 Grant of Right. CITY grants to SCC the exclusive right to engage in
concession and catering activity and to enter into agreements authorizing one or more
concessionaires to engage in such activity for and on behalf of, or under the auspices of, SCC at
the Facility subject to the terms of this Agreement. If SCC decides to retain any such

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concessionaire(s), SCC shall select such concessionaire(s). If SCC enters into any such
agreement(s), SCC shall remain ultimately responsible for compliance with terms and
conditions, and performance of obligations under this Agreement. Any such agreement shall
incorporate terms and conditions related to concessions and catering activity under this
Agreement.

4.2.3 Right Not Effective During CITY Use Periods. The concession and
catering rights granted in this section shall not be effective during any period of time when the
Facility is used by CITY, unless by express request of CITY, with the exception of the box
office.

4.2.4 Merchandise Sales Commissions. Should SCC or performance related


merchandise be sold during performances, SCC shall determine whether or not sales
commissions will be collected. If so determined, collection of merchandise sales commissions
shall be the responsibility of SCC with any and all commissions inuring to the benefit of SCC.

4.2.5 Coordinate Conference Catering. SCC shall coordinate and indirectly


provide Conference Room Catering to North Wing users or users who attend the Facility for
Conference Events.

4.2.6 Permits. When serving food or alcohol at the Facility, SCC shall abide
by all rules and laws governing their permit, use and consumption including any caterer/supplier
limitations established by CITY in effect at that time. SCC shall ensure that all permits are
obtained including an ABC license as required by law.

4.2.7 Food Service Establishment Permit Required. SCC, or any


concessionaire(s), shall ensure that all food offered for sale on or from the Facility has been
prepared, transported, served and otherwise provided only by a person or entity issued a current
valid Food Service Establishment permit by the Monterey County Department of Public Health
or its successor.

4.2.8 Licenses and Permits Required. SCC, or any concessionaire(s), shall


be responsible for obtaining and maintaining, at no cost to CITY, all licenses, permits and other
authorization required to legally conduct the concession and catering activity contemplated
herein. CITY shall have no obligation to issue such licenses, permits, or other authorization.
CITY shall issue such licenses, permits, or other authorization in accordance with applicable
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CITY rules and regulations. The inability of SCC, or any such concessionaire(s), to secure or to
maintain any such license, permit or other authorization shall not invalidate the concession and
catering right granted herein.

4.3 Revenue. All revenue generated from rental or performance fees from the
Theater and other parts of the Facility, room rental fees for conference rooms, room rental fees
for offices, Facility Use Fees as defined in Section 4.4, concessions, ticket sales for all activities
for which SCC is the promoter or presenter, and all proceeds from any grants, donations,
sponsorships, advertising, reimbursements or other sources received by SCC or obtained by
SCCs efforts shall be used by SCC for the operation and management of the Facility, and for
ongoing program development and promotion of the Sunset Center. Restrictions attached to gifts
shall be honored by SCC and CITY during and after the Term of this Agreement consistent with
Section 5.6, entitled Endowment Fund, of this Agreement.

4.4 Facility Use Fee. SCC has adopted a facility use fee of Three Dollars ($3.00) per
ticket with a value of Forty Dollars ($40.00) or more; Two Dollars ($2.00) per ticket with a value
of Twenty Dollars ($20.00) but less than Forty Dollars ($40.00); and One Dollar ($1.00) per
ticket valued under Twenty Dollars ($20.00) (Facility Fee). No Facility Fee will be charged for
any event for which admission is free. SCC may waive the fee for events charging Five Dollars
($5.00) or less. SCC may increase or decrease the Facility Fee, or revise the Facility Fee policy
at any time, but shall do so after consultation with CITY; provided, however, that SCC shall not
increase or decrease the Facility Use Fee without CITYs consent, if the effective date of such
increase or decrease is within one hundred eighty (180) days before the start of the next fiscal
year.

4.5 Equipment Repair & Replacement Fund. SCC shall maintain a separate
account designated as the Equipment Repair & Replacement Fund into which the Facility Use
Fee shall be deposited. The funds deposited in such account shall be used for the specific
maintenance of theater equipment (outside capital expenditures) such as, but not limited to, the
stage rigging system, the sound system, the stage lighting system, and other items which
uniquely relate to performances within Sunset Centeras opposed to items which are common
to general use structures. SCC may, in its sole discretion, access such account to execute
emergency repairs to non-performance related components of Sunset Center. A multi-year

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Facility capital plan of not less than three (3) years shall outline proposed major capital
purchases and repairs.

4.6 Naming Rights. SCC shall have the right to raise revenue in any future fund-
raising campaign it conducts by accepting gifts in return for naming any portion of the Facility
on behalf of the donor, provided, that Centers name shall remain Sunset Community and
Cultural Center and the Theaters name shall remain the Sunset Theater. Names granted
during the Campaign for Sunset shall not be deleted by SCC without the written consent of any
originally named person or entity. Any such naming opportunities shall be consistent with the
CITYs Policy for Named Gift Opportunities (Policy No. C99-05, revised by Resolution No.
2001-22) attached as Exhibit C which shall be used as an historical reference. Any new
naming opportunities that arise for Sunset Center will first be approved by CITY and shall
conform to agreed-upon policies currently utilized by SCC, attached as Exhibit D.

4.7 Sponsorships. SCC may, at its sole discretion, sell sponsorship rights and
advertising on its website, brochures, tickets and theater programs for performances, concerts or
performing arts series presented by SCC. In addition, SCC may develop special promotions,
performance sponsorships, booster organizations, or similar Sunset Center support groups as
SCC shall determine appropriate. The sponsorship revenue shall belong to SCC.

4.8 Compliance with Laws. SCC shall not use or permit any person or entity to use
the Facility in any manner that violates any law applicable to the Facility or any activity
conducted or allowed thereon.

4.9 Booking and Rental Policies. SCC shall exclusively establish and implement
Facility booking and scheduling policies, rental rates, and fee schedules for all spaces throughout
the Facility. The Executive Director shall book the Facility in accordance with such policies,
procedures, rates, and charges, and shall invoice users consistently in accordance with the
established rates and charges for the use and occupancy of the Facility, related components, and
equipment.

4.10 Protection for Historic Users. SCC and CITY agree that the privilege to
schedule dates in the Theater should be coordinated with the presenting organizations that have
historically used the Theater (Historic Presenting Partners or HPPs). The Historic Presenting
Partners are: The Carmel Bach Festival, The Monterey Symphony, The Carmel Music Society,

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and Chamber Music Monterey Bay. SCC shall use its best reasonable effort to devise an
equitable policy that will provide scheduling precedence for Historic Presenting Partners while
maintaining SCCs capacity to book other events that contribute to the cultural opportunities,
Strategic Plan goals and objectives, and/or financial health of the Carmel area and SCC. SCC
agrees to retain a rate structure that includes reduced rental rates for non-profit users. SCC shall
be entitled to use its own discretion with respect to the rental rates and fees charged to non-profit
community and historic users, except that SCC shall never charge less than sixty-five (65)
percent of the commercial rental rates for such users. The CITY shall pay the same rates as
Historic Presenting Partners for all applicable occupancy, labor, equipment, and fees. Booking
and rental agreements shall, to the extent reasonable and practical, be based upon standard
contract terms and conditions adopted by SCC. CITY recognizes that market conditions may
occasionally require non-standard terms and conditions and that in such circumstances, SCC
shall, in its sole discretion, have the authority to use a non-standardized agreement.

4.11 User and Community Input. SCC shall publish a comprehensive annual report
for public distribution and establish, solicit, and manage web-based input for feedback from
customers and Facility users.

4.12 Use by CITY. CITY shall have the right to use the Theater and lobby access
and dressing rooms for up to twelve (12) full days each fiscal year without charge (CITYs Free
Theater Days), provided that CITY may not use any space previously committed to rental
customers by SCC. Additionally, the CITY has the right to use free of charge the Box Office
Parking Lot for the CITY birthday party the last Saturday of every October and the North
Parking Lot every Saturday before Thanksgiving for the annual Homecrafters Fair.

4.12.1 SCC shall provide, during CITYs Free Theater Days (whether used by
CITY or offered by CITY to another appropriate user), at no cost to CITY, up to a maximum of
8 hours per specified staff person per day, one (1) production manager and one (1) front-of-the-
house supervisory staff member for such events. Direct costs and staff requirements provided
beyond those listed in this Section 4.11.1 shall be borne by user at the rates specified in Section
4.11.2.

4.12.2 CITY also reserves the right to use the Theater on additional days on a
space available basis that shall not compete with dates requested by SCC rental customers. If
CITY uses the Theater for any days in addition to CITYs Free Days, SCC may charge CITY the
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following: (1) a space use charge at SCCs usual per diem non-profit rate; (2) staff time for any
staff member who performs services for CITY at the Theater, at SCCs usual hourly non-profit
rate.

4.12.3 CITY shall be allowed to use the North Wing during normal business
hours, when available, without rental charge, but shall pay the expense of extra staffing or
equipment charges arising from its use. Such use shall not be construed as a free theater day as
described in this Agreement.

4.12.4 Support Group Use. CITY shall not assign its free use of the Facility,
other than the Theater, to other users, except for officially sanctioned Carmel Support Groups.
The Support Groups may use the Facility, other than the Theater, without charge Monday
through Thursday during regular business hours; however, Support Groups may not use such
rooms previously committed to a third party by SCC, or which are necessary to the presentation
of a scheduled event.

4.13 Art, Furniture and Other Decorative Objects. SCC and CITY understand and
agree that CITY may, from time to time, wish to display at Sunset Center works of art, pieces of
furniture and/or other decorative objects in a manner that does not disrupt or otherwise interfere
with the decoration, displays, or operations of SCC. CITY and SCC shall mutually agree upon
such exhibitions, their scheduling, and security. Any special insurance related to such exhibitions
shall be the responsibility of the event sponsor. SCC understands that offers of art, furniture and
other decorative objects may be made as donations. Such donations will be accepted only if
CITY agrees to the accession and all such property shall be owned by CITY.

ARTICLE 5
EXPENSES

5.1 Costs. SCC agrees to assume the full and complete responsibility for all costs of
operation and management of the Sunset Center, except for those specific costs of repair,
maintenance, and capital expenditures for which CITY is obligated under the terms of this
Agreement as set forth in Article 7 below.

5.2 Operating and Capital Budget. The SCC preliminary, proposed annual
operating budget, approved by the Board of Trustees, shall be submitted to the CITY by
April 30th each year, with the understanding that SCCs budget will not be finalized until
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June 30th, or thereafter, after the CITYS budget is adopted. Further, SCC will participate in the
CITYs capital planning process each spring and will submit SCCs capital budget for CITY
review and inclusion in the CITYs overall capital plan.

5.3 Notwithstanding its obligation to confer with CITY under paragraph 5.2, SCC
shall have the final determination concerning any Operating Expense.

5.4 Operating Grant.

5.4.1 The Operating Grant shall be used to fulfill the purpose of SCC to
manage and operate the Sunset Center for the benefit of the CITY and the region, the residents
and visitors, and the users of Sunset Center. CITY agrees to pay to SCC Seven Hundred Fifty
Thousand Dollars ($750,000) for each of the first three consecutive years of this Agreement in
quarterly installments paid in advance. The first quarterly payment shall be made on July 1, 2017
for the period from July 1, 2017 through and including September 30, 2017 and on the first day
of every third month thereafter (October 1, January 1, April 1, and July 1) throughout the Term
of this Agreement.

5.4.2 After the third consecutive year of this Agreement, and for each three-
year period thereafter, the Operating Grant shall be established every three years through mutual
agreement between SCC and the CITY. The CITY may evaluate the level, necessity and
capability of its financial support. Additionally, measures for adjustment in the Operating Grant
may include consideration of any change in the Consumer Price Index, [All Urban Consumers]
(CPI) for San Francisco-Oakland-San Jose CMSA published by the United States Department
of Labor, Bureau of Labor Statistics (Index), which is in effect on July 1, 2020 compared with
the Index on July 1, 2017 (Beginning Index). In the event that the Parties are unsuccessful in
reaching an agreement as to an adjustment amount, the Operating Grant will remain unchanged.

5.4.3 However, beginning in the year 2020 and thereafter during the Term of
this Agreement, if the City Council declares a financial emergency in a CITY Resolution
declaring same, the following years Operating Grant will be adjusted to reflect the overall
annual CITY budget percentage reduction. However, the yearly Operating Grant shall not be less
than Six Hundred Thousand Dollars ($600,000).

5.5 Reserve Fund. The parties acknowledge that the presentation of artistic and
entertainment events, while a benefit to the citizens of Carmel, bears a financial risk. SCC shall
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have the right to create from any positive difference between its incomes and expenses, a
reasonable amount to reserve against losses in subsequent years (Reserve Fund). The Reserve
Fund is separate from the Equipment Repair & Replacement Fund.

5.6 Endowment Fund. The parties acknowledge and agree that the primary function
of SCC is the day-to-day operation, management and maintenance of the Facility.
Notwithstanding that acknowledgment and agreement, SCC shall have the right and power to
raise funding for the purpose of benefiting the Sunset Center to further the mutual goals and
objectives of SCC and the CITY as stated in Section 3.1.1. To further the long-term commitment
to the quality and value of Sunset Center as an asset in the community, SCC shall establish The
Sunset Center Endowment Fund. Upon termination of this Agreement the Endowment Fund
shall be transferred to, and maintained in perpetuity by, Community Foundation for Monterey
County or its successor in interest, for stewardship. Allocation of the fund shall be consistent
with the purpose of the Endowment Fund and will be predicated on the recommendations and
guidance offered by the CITY as needs, consistent with the stated objective of the Endowment
Fund, become known to the CITY. During the period of this Agreement, SCC shall submit an
Endowment Fund Plan by December 31, 2017, demonstrating its fundraising plan and shall
further provide CITY with an accounting of its fundraising efforts on an annual basis beginning
December 31, 2018.

5.7 Sunset Presents. SCC shall be responsible for all costs and expenses associated
with Sunset Presents, including but not limited to all talent and related costs, brochures,
marketing, and related expenses incurred on behalf of Sunset Presents. All ticket sale revenues
and all other revenue, grant proceeds, sponsorship revenues and all incidental income produced
by or resulting from SCCs production of Sunset Presents shall be considered SCCs revenue.

5.8 Accounting Records, Reporting, and Audits.

5.8.1 SCC shall maintain books, records, documents and other accounting
procedures and practices in accordance with Generally Accepted Accounting Principles
(GAAP) consistently applied (e.g., a unitary, internally consistent system of accounts and
records) that sufficiently and properly reflect all receipts and direct and indirect costs of any
nature associated with the exercise of rights and the performance of obligations by SCC under
this Agreement.

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5.8.2 SCC shall provide quarterly reports in a form acceptable to CITY. This
financial reporting could be included as a component of the quarterly reporting called for in
Section 3.7.2 above. The reports shall include, at a minimum, unaudited financial statements
(balance sheet and income and cash flow statements depicting performance against budget),
profit and loss statements, and fund development progress.

5.8.3 SCCs books shall be audited annually by an independent Certified


Public Accountant engaged by SCC, and this audit report, and any comment letter, shall be
provided to the City Administrator within one hundred and twenty (120) days of the close of
each fiscal year. If deficiencies are identified, SCC shall also provide a work plan for
improvements to address any deficiencies. SCC shall provide an annual financial report to CITY.
The annual financial report shall include a budget for the forthcoming year that provides
adequate funding for operation, management and maintenance of the Facility.

5.8.4 SCC agrees, upon reasonable notice, that all of its books and records
pertaining to the financial operation and management of Sunset Center shall be open to
inspection by the City Administrator and other such CITY officers and employees as may be
designated, and shall be available at Sunset Center for inspection during regular business hours.
During document inspection, a representative of SCC shall be present in observance.

ARTICLE 6
PERSONAL PROPERTY

6.1 Use of Personal Property.

6.1.1 Title to all property and equipment contained within the Facility that as
of the Effective Date is owned in accordance with the previously CITY supplied inventory
(attached as Exhibit E) shall remain with CITY. Any property or equipment CITY furnished
to SCC shall, unless otherwise provided herein or approved by CITY, be used by SCC in
accordance with this Agreement. All personal property, equipment, and portable items within
and on the Facility as of the Effective Date which was obtained with SCCs own funds and not
permanently affixed to the building structure which cannot be removed without structural
damage to the building or its interior, shall be deemed owned by SCC. This provision intends no
assertion of ownership contrary to the rights of any third party. SCC shall maintain and
administer that property in accordance with sound operation and management practices. Upon

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loss or destruction of, or damage to, any CITY property, SCC shall notify CITY thereof and shall
take reasonable steps to protect that property from further damage. Except as provided in Article
10 hereof, SCC shall retain the title to all property and equipment it obtained with the exception
of those items donated or gifted to the CITY, with SCCs own funds or by donation until the
termination or expiration of this Agreement at which time title to all personal property shall
transfer to the CITY.

6.1.2 On the termination of this Agreement, or at the end of the Initial Term or
any Extended Term, SCCs administrative records, books of accounts and operating software
created or purchased by SCC during the Initial Term of this Agreement or any Extended Term
shall be delivered to CITY for retention and storage. CITY shall grant reasonable access to said
administrative records, books of accounts and operating software as may be requested by SCC,
or its successors in interest as may be required by SCC or by law.

ARTICLE 7
MAINTENANCE, REPAIR AND CAPITAL IMPROVEMENTS

7.1 CITYs Responsibilities. CITY agrees to maintain, repair and replace, at its sole
cost and expense, the structural integrity, the exterior walls and roof of the buildings located on
the Facility, and to maintain the seismic soundness of the buildings located on the Facility. CITY
agrees to maintain and repair all nonstructural improvements, utility and plumbing improvements
and to fund Capital Expenditures that are not otherwise the responsibility of SCC pursuant to
Section 7.2 below. CITY agrees to allocate funds in the Capital Improvement Plan for the repair
and replacement of performance related components, such as the stage rigging system, the sound
system, the stage lighting system, and other items which uniquely relate to performances within
the Sunset Theater but which are not included in Section 7.2 below. CITY shall also direct,
manage and pay for all tree trimming in, on or around the Facility, and resurfacing and re-
striping of the parking lots. SCC agrees to give CITY written notice of any defect or need for
repair to any improvement that is to be maintained by CITY pursuant to this Agreement
(including, without limitation, the exterior walls and roof); or the need for seismic repair to
ensure the soundness of the buildings located on the Facility; or the need for tree trimming in, on
or around the Facility. Rubbish, trash, garbage and other refuse removal shall be performed by
CITY under its waste hauler franchise agreement.

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7.2 SCCs Responsibilities.

7.2.1 SCC is responsible for maintenance and repair of the interior of the
Facility which shall include operator improvements, non-theatrical audio/visual systems,
telephone equipment, lighting and plumbing fixtures and appliances. SCCs responsibility for
plumbing fixtures and appliances extends through fixture drain and trap down to the junction
with the line into wall or floor, and includes attempting to clear clogs by means of plunger and
toilet auger. SCCs janitorial and routine maintenance responsibilities include: timely repair of
light fixtures or bulbs, electrical switches or controls; cleaning, repair or replacement of seating,
curtains, carpets, flooring, and faucets; cleaning windows and walls; and servicing of audience
areas and restrooms. Further, SCC shall be responsible for the monitoring of any accumulation
of mold or its spores and shall notify CITY in writing of an accumulation or visible signs of
mold so as to allow a joint effort of SCC and CITY to eliminate and clean the affected areas, if
any, with the cost of remediation to be shared equally by SCC and CITY.

7.2.2 SCC shall timely pay all utility charges for utility service to the Facility
including, but not limited to, electricity, water, storm water, sewer, and telephone. SCC shall, at
its expense, keep and maintain the Facility in good condition and repair, including all custodial
maintenance. All landscape maintenance, other than tree trimming or removal, shall be
performed by SCC, as well as general exterior maintenance and repairs, including cleaning,
sweeping, planting and maintenance of landscape, lighting, and watering, maintenance and repair
and replacement of common signage, directional signs, markers, bollards, and bumpers, and
maintenance of all electrical, plumbing, heating, ventilation, air conditioning, and other similar
equipment and facilities servicing the buildings on the Facility.

7.2.3 SCCs budget contains estimates for the cost of maintenance it


undertakes in this Agreement, and for its payment of utilities, including water. In connection
with SCCs quarterly financial reports to CITY, SCC shall update its maintenance and utility
cost estimates as appropriate.

7.2.4 The CITY may, upon request of SCC, and mutual agreement as to terms,
make its staff available to SCC, on a case-by-case basis to facilitate and support the routine
maintenance and repairs of the Facility at no cost to SCC.

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7.3 Capital Improvements. Capital improvements, modifications and additions to
the Facility shall be the responsibility of CITY and shall be included in the CITYs Capital
Improvement Plan and performed only after good faith consultation with SCC. SCC shall
identify and recommend capital improvements for inclusion in the CITYs Capital Improvement
Plan; develop capital improvement or modification plans and obtain cost estimates; and
recommend such plans to CITY. CITY may, at its option, delegate to SCC the supervision and
completion of any such capital improvements, modifications or additions. Funding of capital
improvements shall be a committed source appropriated by the City Council for completion of
the specified capital improvement.

ARTICLE 8

INSURANCE

8.1 CITYs Insurance. CITY shall maintain and keep in force during the Term of
this Agreement, for the mutual benefit of CITY and SCC, at CITYs sole cost and expense, such
insurance as it deems appropriate and its insurance policies shall name SCC as additional
insured.

8.2 SCCs Insurance. SCC shall procure and maintain for the duration of the
Agreement, insurance against claims for injuries to persons or damage to property which may
arise from or in connection with the SCCs operation and use of the Facility.

8.2.1 No Limitation. SCCs maintenance of insurance as required by the


agreement shall not be construed to limit the liability of SCC to the coverage provided by such
insurance, or otherwise limit CITYs recourse to any remedy available at law or in equity.

8.2.2 Minimum Scope of Insurance. SCC shall maintain and keep in force
during the Term of this Agreement insurance of the types described below:

8.2.2.1 Commercial General Liability insurance shall be written on


Insurance Services Office (ISO) occurrence form CG 00 01 and shall cover Facility and
contractual liability. CITY shall be named as an insured on SCCs Commercial General
Liability insurance policy using ISO Additional Insured-Managers or Lessors of Facility Form
CG 20 11 or a substitute endorsement providing equivalent coverage.

8.2.2.2 Property insurance shall be written on an all risk basis.


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8.2.2.3 Directors and officers liability insurance.

8.2.2.4 Workers Compensation insurance for all its employees as


required by State law.

8.2.3 Minimum Amount of Insurance. SCC shall maintain the following


insurance limits:

8.2.3.1 Commercial General Liability insurance shall be written with


limits no less than $2,000,000 each occurrence, $5,000,000 general aggregate which shall name
CITY as additional insured.

8.2.3.2 Property insurance shall be written covering the full value of


SCCs property and improvements with no coinsurance provisions.

8.2.4 All insurance shall be obtained from insurers having an office located in
the State of California.

8.2.5 Other Insurance Provisions.

8.2.5.1 The insurance policies are to contain, or be endorsed to contain,


the following provisions for Commercial General Liability insurance:

a. SCCs insurance coverage shall be primary insurance with


respect to CITY. Any Insurance, self-insurance, or insurance pool
coverage maintained by CITY shall be excess of SCCs insurance.

b. SCCs insurance shall be endorsed to state that coverage shall


not be cancelled by either party, except after thirty (30) days prior written
notice by certified mail, return receipt requested, has been given to CITY.

8.2.6 Acceptability of Insurers. Insurance is to be placed with insurers with a


current A.M. Best rating of not less than A:VII.

8.2.7 Verification of Coverage. SCC shall furnish CITY with original


certificates and a copy of the amendatory endorsements, including but not necessarily limited to
the additional insured endorsement, evidencing the insurance requirements of SCC.

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8.2.8 Waiver of Subrogation. SCC and CITY hereby release and discharge
each other from all claims, losses and liabilities arising from or caused by any hazard covered by
property insurance on or in connection with the Facility or said building. This release shall apply
only to the extent that such claim, loss or liability is covered by insurance.

8.2.9 CITYs Property Insurance. CITY shall purchase and maintain during
the Term of this Agreement all-risk property insurance covering the Facility for their full
replacement value without any coinsurance provisions.

8.2.10 SCC shall notify CITY immediately after a casualty occurs to the
Facility or the building.

ARTICLE 9
DAMAGE TO FACILITY; INDEMNIFICATION

9.1 Destruction or Substantial Damage of Facility. In the event of damage to or


destruction of the Facility, CITY, in consultation with SCC, will determine the appropriate
course of action to restore full condition and use of the Facility if possible. CITY retains the
absolute right to terminate this Agreement in the event of substantial damage to or complete
destruction of the Facility, thereby preventing any further damage to property or person.

9.2 Indemnification by SCC. SCC agrees to indemnify, defend and hold CITY, its
officers, directors, employees agents and representatives, harmless from any injury to any person
or to any personal property or to any part of the Facility caused by the negligent or intentional act
of SCC, its officers, directors, employees, agents, servants or representatives. SCCs insurance
coverage shall be in an amount not less than Two Million Dollars ($2,000,000) per occurrence
and Five Million Dollars ($5,000,000) total coverage. Said policy shall name CITY as an also
Named Insured and shall provide that CITY is to be notified in the event of notice of
cancellation or failure to make premium payments. In addition, SCC agrees that it shall require
in all agreements with any users of the Facility, or any part thereof, proof of insurance in the
amount of not less than One Million Dollars ($1,000,000) general liability five (5) days prior to
the event and that such users shall indemnify, defend and hold harmless CITY and SCC from
any injury to any person or to any personal property, or to any part of the Facility, caused by the
negligent or intentional act of such users, their officers, directors, employees, agents, or
representatives. In the event of legal action by Third Parties CITY shall retain the right to
approve SCCs legal counsel retained pursuant to this section.
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9.3 Indemnification by CITY. As provided in Section 7.1, above, CITY agrees to
indemnify, defend and hold SCC, its officers, trustees, employees, agents and representatives,
harmless from any injury to any person or to any property or to any part of the Facility caused by
the negligent or intentional act of CITY, its employees, elected or appointed officials, agents,
servants or representatives.

ARTICLE 10

DEFAULT AND TERMINATION FOR CAUSE

10.1 Termination Upon Default. Except as otherwise provided in this Agreement


either Party may terminate this Agreement upon the material breach thereof by the other Party,
provided that prior to such termination, the Party terminating this Agreement shall give the other
party not less than sixty (60) days prior written notice of such breach (to allow for the cure of
said breach if possible), unless the breach is of a nature that cannot be cured by the passage of
time, in which event, the Party terminating the Agreement shall give not less than thirty (30)
days written notice of termination.

10.2 Default.

10.2.1 Default. Any of the following events shall constitute a default and
material breach of this Agreement:

10.2.1.1 The failure to comply with any of the terms of this Agreement
regarding insurance;

10.2.1.2 The material violation of any law, ordinance, rule or regulation


which, after notice and reasonable time to cure, remains uncured after 30 calendar days;

10.2.1.3 The abandonment or vacating of the Facility;

10.2.1.4 The absence of any scheduled performing arts event for a period
of ninety (90) days or more, when not due to repair problems or maintenance work for which
CITY is responsible or repairs or upgrades undertaken, with permission of CITY, by SCC;

10.2.1.5 The dissolution of SCC or the merger of SCC with another


entity without the prior written approval of CITY;

10.2.1.6 The assignment or transfer of this Agreement without the prior


written consent of CITY as described in Section 11 of this Agreement; or

10.2.1.7 The failure to perform any other condition or covenant of this


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Agreement where such failure in performance is not remedied within the time allowed by this
Agreement, or such other period for remedial action as is expressly otherwise provided for in this
Agreement, or agreed upon by both parties.

10.2.1.8 Extension of Period to Remedy Default. Neither CITY nor SCC


shall be in default unless such party fails to perform an obligation required of it within thirty (30)
days after written notice from the aggrieved party has been sent to the other, specifying the
particular obligation that the other has failed to perform; provided, that if the nature of the other
partys obligation is such that more than thirty (30) days are reasonably required for
performance, then the other party shall not be in default if it commences performance within
such thirty (30) day period, and thereafter diligently prosecutes the same to completion within
one hundred eighty (180) days, unless extended by mutual agreement.

10.2.1.9 Remedies upon default and material breach. Upon the


occurrence of any material Event of Default by SCC, CITY shall have the option to pursue any
one or more of the following remedies:

10.2.1.10 Reduce or eliminate CITY financial support to SCC;

10.2.1.11 Terminate this Agreement, in which event SCC shall surrender


the Facility to CITY, and if SCC fails to do so, CITY may, without prejudice to any other
remedy it may have for possession, enter upon and take possession of the Facility and expel or
remove SCC and any other person who may be occupying such Facility or any part thereof. The
surrender of the Facility by SCC to CITY upon an Event of Default shall take place at such time
as SCC and CITY shall agree and absent such agreement, no sooner than 60 days nor later than
120 days from written notice by CITY to SCC of its intent to exercise its rights under this
Section 10.2.3.

10.2.1.12 Pursuit of one remedy shall not preclude pursuit of any other
remedies, such remedies being cumulative and non-exclusive. No agreement to terminate this
Agreement or accept a surrender of said Facility shall be valid unless approved by the City
Council. No waiver by CITY of any violation or breach of this Agreement shall be deemed or
construed to constitute a waiver of any other violation or breach of any of the terms of this
Agreement. Forbearance by CITY to enforce one or more of the remedies upon an event of
default shall not be deemed or construed to constitute a waiver of such default or of CITYs right
to enforce any remedies with respect to such default or any subsequent default.

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10.2.1.13 If CITY employs the services of an attorney in connection with
an event of default by SCC under this Agreement, or if either party brings an action or
proceeding against the other party arising out of or concerning performance or interpretation of
this Agreement, the prevailing party shall be entitled to recover from the other party its
attorneys fees and costs.

10.3 Termination for Cause. In addition to all other termination remedies set out
above (supra), each Party shall have the right to terminate this Agreement for Cause, as
described below, by providing written notice to the other Party no less than two (2) years prior to
termination, as described in and required by Section 2.11, above. In exercising a right to
terminate for Cause the Party terminating this Agreement shall give the other party not less than
sixty (60) days prior written notice of the intention to terminate for Cause, to allow for the cure
of said Cause, if possible.

10.3.1 Revenue Shortfall. If SCC depletes reserves accumulated for the


purpose of funding budget shortfalls or unexpected expenses and at the same time fails to
achieve at least eighty percent (80%) of the total projected revenue in any fiscal year (excluding
consideration of the Operating Grant amount), then CITY may give SCC notice that this
Agreement shall be terminated effective at the end of the Termination Period, unless SCC
achieves 80% of the total projected revenues for the fiscal year following the fiscal year in which
SCC has failed to achieve projected revenue.

10.3.2 In consultation with SCC, if the CITY determines that fundraising,


appropriate use of reserves and prudent fiscal operation and management does not result in SCC
having the ability to continue to perform its obligations under this Agreement the CITY shall
have the right to assume any and all duties and functions contained in this Agreement.

10.3.3 In the event that this Agreement is terminated, SCC shall surrender the
Facility to CITY. CITY shall not owe SCC any refund or other compensation for contributions
made by SCC for Operator Improvements to the Facility.

10.4 Transfer of Assets and Assumption of Liabilities. Upon termination of this


Agreement, CITY shall be assigned and shall own all of SCCs assets, excluding the Endowment
Fund, and shall immediately be deemed to have assumed all contractual and financial obligations
of SCC and shall be responsible directly to the contracting parties and creditors for the prompt

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payment and performance thereof. Upon default by SCC or Termination for Cause by the
CITY, the CITY may choose to take control and operate Sunset Center to preserve contractual
obligations with employees, vendors, artists and others. The SCC Board of Trustees agrees, for
itself and future Trustees, to facilitate a smooth and seamless transfer of control to the CITY.
However, any obligations of pension liabilities or labor union contracts entered into by SCC are
and shall remain the ongoing obligation of SCC. SCC hereby indemnifies and holds CITY
harmless for any such contract or agreement and will defend, at SCC sole expense, any claim
brought by any labor union against CITY.

ARTICLE 11

ASSIGNMENT, SUBLETTING AND FINANCING

11.1 No Assignment. Obligations or rights of SCC under this Agreement may not be
assigned or otherwise transferred by SCC, without the prior written consent of CITY, which
consent may be withheld at the sole discretion of CITY. The assignment or transfer of this
Agreement without such consent shall constitute an Event of Default. In the event of any
proposed assignment or transfer of this Agreement, SCC shall cause to be delivered to CITY
simultaneously with such proposed assignment or transfer, an instrument in writing, executed by
the assignee, in which the assignee shall assume and agree to accept all the terms and conditions
of this Agreement. However, in no event shall CITY offer or accept a novation agreement
requiring CITY to look exclusively to the assignee for performance under the terms and
condition of this Agreement.

11.2 Liens and Encumbrances. SCC shall keep the Facility and the Operator
Improvements free and clear of any liens and encumbrances. At CITYs request, SCC shall
furnish CITY written proof of payment of any items that would or might constitute the basis for
such a lien on the Facility.

ARTICLE 12

GENERAL PROVISIONS

12.1 Administration. This Agreement shall be administered on behalf of SCC by the


Board of Trustees of SCC, which may appoint the Executive Director or any Trustee or Trustees
for such purpose.

12.2 CITYs Right to Enter. At any time, CITY and its agents shall have the right to
27 | P a g e
enter the Facility for the purpose of inspection, posting notices of any kind permitted or required
by law, performing CITYs obligations hereunder or taking possession in the event of a default
by SCC in accordance with the provisions of this Agreement.

12.3 Government Compliance, Licenses and Similar Authorization. SCC, its


officers, agents and employees shall comply with all federal, state, local and municipal
regulations, ordinances, statutes, rules, laws, and constitutional provisions applicable to SCCs
operation and management of the Facility hereunder. SCC, at no expense to CITY, shall secure
and maintain in full force and effect during the Term of this Agreement all required licenses,
permits and similar legal authorizations, and comply with all requirements thereof. CITY shall
have no obligation to issue such licenses, permits, or authorizations. CITY shall issue such
licenses, permits, or authorizations in accordance with applicable CITY rules and regulations.

12.4 Attendance and Safety Standards. SCC agrees to conduct its activities with
full regard to public safety and will observe and abide by all applicable regulations and requests
by duly authorized governmental agencies responsible for public safety to assure such safety.
The CITY Fire Chief or his/her designee shall have the authority to determine, in the reasonable
exercise of his/her discretion, the number of persons that may be admitted to, and safely and
freely move about in the Facility. SCC shall not sell or issue tickets or credentials for admission
to the Facility in an aggregate number that exceeds the CITY Fire Chiefs determined number.
SCC shall not admit to the Facility more people than the number so determined by the CITYS
Fire Chief. SCC shall not permit any chair or movable seat or other obstruction to be erected or
placed in any passageway or fire exit. Sidewalks, grounds, entries, passages, vestibules, halls,
elevators, abutting streets and all ways of access to the Facility shall not be obstructed by SCC or
used for any purpose other than for ingress and egress to the Facility for persons or property. The
CITY shall be responsible for assuring compliance with each of the foregoing requirements
during periods of CITY use of the Facility under this Agreement.

12.5 Website and Sunset Center brand: SCC will operate a website and market the
facility in accordance with the terms of this contract. SCC shall transfer immediately to CITY
all rights, title, and interest in the website domain names, copyrights, and trademark logos
Sunset Theater, Sunset Cultural Center, Carmel Sunset Center, or designations deceptively
similar taken in their or any other name. CITY will grant SCC the right to use such names and
trademark logos and to maintain control of and access to the website; however SCCs rights shall

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cease upon termination of this Agreement. Any trademarks, copyrights or website domains
acquired by SCC shall be released, transferred and returned, without cost to CITY.

12.6 No Waiver. No consent or waiver by any of the Parties to any breach or default
by another Party under this Agreement shall be valid unless given in writing and shall not be
deemed or construed to be a consent or waiver to any other breach or default under this
Agreement, whether with respect to the same obligation or any other obligation. Furthermore,
failure on the part of any Party to act or to complain or to declare another Party in default,
irrespective of how long such failure continues, shall not constitute a waiver by such Party of its
rights hereunder. The giving of consent by any Party in any one instance shall not limit or waive
the necessity to obtain such Partys consent in any future instances.

12.7 Removal from the Facility. Immediately prior to the expiration, or upon sooner
termination of this Agreement, SCC shall remove from the Facility all personal property
belonging to SCC not transferred to CITY pursuant to this Agreement, and ensure that the
Facility is in commercially reasonable good condition, normal reasonable wear and tear
excepted, except that SCC shall not be responsible for any condition issues that are due to failure
of maintenance or deferred repairs that are CITYS responsibility under this Agreement.

12.8 Contract Representatives. Except as otherwise agreed in writing by the Parties,


SCCs Executive Director and the CITYS City Administrator shall be the individuals for all
communications regarding the performance and terms of this Agreement. All CITY consent or
authorizations provided for under this Agreement may be given in writing by the City
Administrator except as to such consents or authorizations that are reserved to the City Council
by this Agreement, State law or local ordinance.

12.9 Notices. Any notice required under this Agreement must be in writing, and may
be given either personally, by facsimile, or by registered or certified mail, return receipt
requested. If by facsimile, a notice shall be deemed to have been given and received at the time
and date the facsimile is received at the number provided below with evidence of the document
being sent and received. If personally delivered, a notice shall be deemed to have been given and
received when delivered to the party to whom it is addressed. If given by registered or certified
mail, the same shall be deemed to have been given and received on the first to occur of (i) actual
receipt by any of the addressees designated below as the party to whom notices are to be sent, or
(ii) five (5) days after a registered or certified letter containing such notice, properly addressed,
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with postage prepaid, is deposited in the United States mail, which has not been returned to
sender through no fault of the intended recipient. Such notices or communications shall be given
to the parties at their addresses set forth as follows:

CITY: SCC:
City Administrator Executive Director
City of Carmel-by-the-Sea Sunset Cultural Center
P. O. Box CC P.O. Box 1950
Carmel, CA 93921 Carmel, CA 93921
Telephone: (831) 620-2000 Telephone: (831) 620-2040
Facsimile: (831) 620-2004 Facsimile: (831) 624-0147

12.10 Address Change. Either party may change its address for receipt of reports,
notices or payments without the formal amendment of this Agreement by giving the other party
written notice of such change not less than fifteen (15) days prior to the effective date thereof.

12.11 Dispute Resolution. The Parties are fully committed to working with each other
throughout the Term of this Agreement and agree to communicate regularly with each other at
all times so as to avoid or minimize disputes. The Parties agree to act in good faith to prevent and
resolve potential sources of conflict before they escalate into a question or controversy. If any
dispute arises between the parties relating to or arising under this Agreement, the Parties each
commit to resolving such dispute in an amicable, professional, and expeditious manner and agree
to use the following procedure for resolving the dispute: (a) either party may give notice to the
other of the dispute and the City Administrator and the SCC Executive Director or their
designees will meet within three (3) CITY business days to attempt to resolve the dispute; (b) a
meeting or meetings shall be held promptly between representatives of the parties regarding the
dispute to attempt in good faith to negotiate a resolution of the dispute; (c) if within thirty (30)
days after a dispute has arisen, the parties have not succeeded in negotiating a resolution of the
dispute, they agree to submit the dispute to mediation; (d) the mediator shall be jointly selected
by the parties, or failing agreement on the selection of a mediator within thirty (30) days after the
parties fail to negotiate an informal resolution of any dispute, the mediator shall be a retired
judge or justice selected by the supervising judge of the Civil Division of the Monterey County
California Superior Court. In any mediation conducted pursuant to this section, the provisions of
California Evidence Code section 1152 shall be applicable to limit the admissibility of evidence
disclosed by the parties in the course of the mediation; and (e) if the parties are not successful in
resolving the dispute through the mediation, then the parties agree that the dispute shall be
submitted to binding arbitration to a single arbitrator in accordance with the existing Rules of
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Practice and Procedure of Judicial Arbitration and Mediation Services, Inc. (JAMS) within thirty
(30) days of the close of mediation as declared by the mediator.

12.12 Equal Availability. SCC shall make Facilities and all events, performances,
shows, meeting rooms and offices, available and open to the public on a fair, equal and non-
discriminatory basis, and further agrees and promises not to discriminate against or segregate any
person or group of persons on account of race, color, creed, religion, sex, sexual orientation, age,
handicap, marital status, ancestry or national origin in the operation of the Facilities, including
without limitation Title III of the Americans with Disabilities Act and the provision of such
auxiliary aids or alternate services as may be required by the ADA.

12.13 Royalties, License fees and Similar Payments. SCC shall pay, before
delinquency, all royalties, license fees, and other charges due and payable to any person or entity
as the consequence of any public performance(s) or display(s) of copyrighted work(s) during its
use of the Facilities. SCC shall be responsible for the payment to BMI (Broadcast Music
Institute, Inc.) and/or ASCAP (American Society of Composers, Arrangers and Publishers), or
any other entity having legal jurisdiction for any contract licensing fees incurred through the use
of copyrighted material over which such licensing agents have jurisdiction, during a SCC event.

12.14 Conflict of Interest. No member, official, or employee of the CITY shall have
any personal interest, direct or indirect, in this Agreement, nor shall any such member, official,
or employee of the CITY participate in any decision relating to this Agreement, which affects
their personal interests or interests in any corporation, partnership, or association in which they
are directly or indirectly interested.

12.15 Severability. Should any provision hereof prove to be invalid or illegal, such
invalidity shall in no way affect, impair or invalidate any other provision hereof and such
remaining provisions shall remain in full force and effect.

12.16 Time of the Essence. Time is of the essence with respect to the performance of
every provision hereof in which time of performance is a factor.

12.17 Binding on Successor and Assigns. This Agreement shall, subject to the
provisions regarding assignment, apply to and bind the respective heirs, successors, executors,
administrators and assigns of CITY and SCC.

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12.18 California Law. This Agreement shall be construed and enforced in accordance
with the laws of the State of California.

12.19 Warranties and Indemnities.

12.19.1 SCCs Representations and Warranties. SCC hereby represents and


warrants to CITY that it has full power and authority to enter into this Agreement and perform in
accordance with its terms and provisions; that the Parties signing this Agreement on behalf of the
SCC have the authority to bind SCC and to enter into this transaction; and that SCC has taken all
requisite action and steps to legally authorize the execution, delivery, and performance of this
Agreement.

12.19.2 CITYs Representations and Warranties. CITY hereby represents and


warrants to SCC that it has full statutory right, power, and authority to enter into this Agreement
and perform in accordance with its terms and provisions; that the individuals signing this
Agreement on behalf of CITY have the authority to bind CITY and to enter into this transaction;
and that CITY has taken all requisite action and steps to legally authorize the execution, delivery,
and performance of this Agreement.

12.20 Construction. The language in all parts of this Agreement shall in all cases be
construed as a whole according to its fair meaning, and not strictly for or against either CITY or
SCC. The captions used in this Agreement are for convenience only and shall not be considered
in the construction or interpretation of any provision hereof. The terms shall, will, and
agree are mandatory. The term may is permissive. When a party is required to do something
by this Agreement, it shall do so at its sole cost and expense without right of reimbursement from
the other party unless specific provision is made therefor. All Parties hereto acknowledge that
they have been represented by independent counsel of their own choice through all of the
negotiations that preceded the execution of this Agreement. This Agreement shall be construed
fairly as to all Parties and not in favor of or against any of the Parties, regardless of which Party
actually prepared this Agreement in its final form. The Parties further agree that California Civil
Code Section 1654 will not apply in the event of uncertainty with respect to this Agreement as
asserted or identified.

12.21 Days/Dates. Unless otherwise stated herein, as used in this Agreement, the term
days shall mean calendar days which shall include all Saturdays, Sundays and State or

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National Holidays, provided that if the last date or last date to perform any act or give any notice
with respect to this Agreement shall fall on a Saturday, Sunday or State or National holiday, such
act or notice may be timely performed or given on the next succeeding day which is not a
Saturday, Sunday or State or National Holiday. If the term business days is used, all Saturdays,
Sundays and State or National Holidays shall be excluded.

12.22 Entire Agreement. This Agreement and the exhibits attached hereto constitute
the entire agreement between the parties, and there are no other binding agreements or
representations between the parties relating to the matters covered herein. Neither CITY nor
CITYs agents has made any representation or warranty as to (a) whether the Facility may be
used for SCCs intended use under existing Law, or (b) the suitability of the Facility for the
conduct of SCCs business. SCC expressly waives all claims for damage by reason of any
statement, representation, warranty, promise, or other agreements of CITY or CITYs agents,
whether written or oral, express or implied if any, not contained in this Agreement or in any
addendum or amendment hereto. No subsequent change or addition to this Agreement shall be
binding unless in writing and signed by the parties hereto.

12.23 Survival. The provisions of this Agreement with respect to representations,


warranties and indemnifications, and obligations which may or must be performed after
termination or expiration of this Agreement shall survive the termination or expiration of this
Agreement and shall be enforceable in accordance with their terms, covenants and conditions.

12.24 Acceptance by CITY. This Agreement shall not be valid or binding unless and
until accepted by CITY upon approval of CITYs City Council and a fully executed copy
delivered to SCC.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
set forth above.

CITY SCC

CITY OF CARMEL-BY-THE-SEA, a municipal SUNSET CULTURAL CENTER, a California


corporation nonprofit public benefit corporation

By By
__________________________ (PRINT NAME) __________________________ (PRINT NAME)
Its Authorized Signatory Its Authorized Signatory
By By
__________________________ (PRINT NAME) __________________________ (PRINT NAME)
Its Authorized Signatory Its Authorized Signatory

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EXHIBIT A

[Photographic inventory to be inserted here]

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EXHIBIT B

FIVE YEAR BENCHMARKS

The Five Year Benchmarks referenced in Section 3.1.2 of this Agreement shall be as
follows:

(i) Ensure proper SCC leadership and staffing levels;

(ii) Deliver diverse arts programming of the highest quality, including collaboration with
Sunset Centers current resident companies;

(iii) Maintain a vibrant community center serving the needs of Carmel residents and
community organizations;

(iv) Expand arts engagement and education programs for all ages;

(v) Operate, maintain and, as appropriate, ensure that the Sunset Center is a state-of-the-
art facility that is responsive to the needs of audiences and performers;

(vi) Ensure the long-term financial viability and stability of SCC;

(vii) Operate in a fiscally responsible manner;

(viii) Continue concerted efforts by SCC to promote, fund and maintain an Endowment
Fund to provide stable and permanent funding for the operation, capital preservation
and improvement of the Facility.

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EXHIBIT C

CITY OF CARMEL-BY-THE-SEA POLICY AND PROCEDURE

Subject: Named Gift Opportunities for the Po/icy/Procedure No: C99-05


Campaign for Sunset

I Effective Date: 14 September 1999 I Authority: Resolution No. 99-99

Purpose:
To establish a policy for named gift opportunities related to the Sunset Theater Project.

Policy/Procedure:
As fully set forth in the policy document attached.

Responsible Party:
Sunset Center Staff

Revision Dates:
6 February 2001 (Resolution No. 2001-22}

Rescinded Date:

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City of Carmel-by-the-Sea City Council

Resolution No. 2001-22

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA AMENDING POLICY C99-0S -
NAMED GIFT OPPORTUNITIES FOR THE CAMPAIGN FOR SUNSET

WHEREAS, Nancy Doolittle, President of Sunset Center for the Arts has made a presentation to the Community
& Cultural Commission proposing new "Naming Opportunities"; and

WHEREAS, the Community & Cultural Commission has identified and approved the conductors Room, the
Large Warm-Up Room, the two Warm-Up Rooms on the lower level, the Sound Control Room, the Lighting
Booth, the Recording Room, and the Lighting Cat Walk as further naming opportunities for the Sunset Theater
Renovation;

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA DOES:

1. Amend Policy C99-0S increasing "Named Gift Opportunities" as submitted by the Community &
Cultural Commission.

2. Authorize the Sunset Center of the Arts to solicit donations for these Named Gift Opportunities.

PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA this 6th day
h of February,
2001, by the following roll call vote:

AYES: COUNCIL MEMBERS: Ely, Hazdovac, Livingston, Rose, McCloud

NOES: COUNCIL MEMBERS: None

ABSENT: COUNCIL MEMBERS: None

SIGNED:
ATTEST:

SUE McCLOUD, MAYOR Karen Crouch


City of Carmel-by-the-Sea City Clerk

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MEMORANDUM

TO: Ken White, Mayor


Members of the City Council

FROM: Community and Cultural Commission

THROUGH: Elisabeth Ungaretti, Chair


Carolyn Hardy and Linda Anderson, Subcommittee Members

SUBJECT: Campaign for Sunset - Establishing a Policy for Named Gift Opportunities

DATE: September 7, 1999

As requested by the Building Committee, our Commission appointed a subcommittee consisting of Carolyn
Hardy and Linda Anderson to meet with representatives from Sunset Center for the Arts (Referred to as "the
Arts"), and their fundraising consultants from Ketchum, Inc. The purpose of their meetings was to explore
Named Gift Opportunities in the Campaign for Sunset. Commissioners Hardy and Anderson presented their
reports to the Commission at two special meetings held August 9 and again on September 3, 1999.

The Commission recognizes that an integral part of any successful fund-raising campaign is a donor recognition
program. One of the many traditional ways to do this is to name a segment of the capita I project in honor of a
significant donor. Bearing in mind the long-standing tradition of naming after donors at Sunset Community and
Cultural Center, we endorse the continuation of this practice within certain parameters.

The Community and Cultural Commission has approved the follow and recommends that the City Council adopt
these policies as set forth below:

1. The Sunset Community and Cultural Center is a historically significant name, tracing its
origin to the original school. Because of its historical significance, the name of the center
should remain unchanged.

Also, such a name change could cause much confusion, for the term Sunset Community and Cultural Center is
used by the Commission to describe not only the theater, but also a complex of buildings. These include:
Cottages and spaces surrounding Sunset Center
Scout House
Forest Theater
Vista Lobos

2. Portions of the Sunset Center buildings and cottages, spaces outside the scope of the theater
renovation, have previously been named after significant donors. These areas should maintain
their existing names. They include:
Marjorie Evans Gallery
Chapman Room
Bingham Room
Carpenter Hall (and Bates Mural)
Harriet Rowntree Cottage
Hamilton-Brown Terrace

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Information Directory/Kiosk at Eighth and San Carlos dedicated to the late former Cultural
Commissioner Ann Borden

3. The most appropriate areas for naming opportunities are within the scope of the theater
renovation project.

These include indoor elements and spaces, rooms, equipment, and the outdoor plaza.

The dollar value assigned to each "Naming Opportunity" should remain the responsibility of the Arts group.

4. Acknowl edgements of these specific gifts should be tastefully displayed in a centralized


prominent location (e.g., lobby wall) within the structure for which they are designated.

For all gifts of $25,000 or more, the donor's name will appear in a centralized prominent location, preferably in the
lobby area on a "donor wall plaque". This could result in a total of 60+ names in the central location. If the
campaign achieves fewer gifts at the highest levels, more gifts at the lower levels will be needed. This could
increase the number of names on the lobby plaque. (Thus the figure of 60+).

This location should include donations connected with the outside area. Donations for outside areas should
not involve outside plaques. An exception currently existing in the garden is the Burl Ives plaque mounted on a
rock. This should be retained and placed in an appropriate space in the new landscaping, perhaps at the base of
another tree.

5. A selection of significant donors' names ($100,000 and above) may additionally be displayed
more prominently, such as on the theater or lobby or architectural elements.

Such names should be displayed inside the building and not on an exterior wall. This eliminates any confusion with
the Sunset Community and Cultural Center name displayed outside.

6. When new seats are installed inthe renovated theater, the fundraising group may start over
with naming the seats.

In 1968, the Cultural Commission raised funds by selling 116theater seats for $50 each. Over the years, the small
brass plaques have come off, some have been lost, and some have not been saved. There appears to be no
registry or list of these donors. Donors of $25,000 and above will receive two prime seat plaques.

7. Any purchase, commission or donation for art or sculpture for the new facility must go
through the Committee for Art in Public Places and comply with the guidelines of Policy No.
C97-01.

Recommendations are made to the Community and Cultural Commission for approval and forwarded to the
City Council for acceptance.

8. The Babcock room will most likely be displaced in the renovation project. As far as can be
ascertained, no members of the Babcock family remain in Carmel. Because this family has given
$10-25,000 to the center, we recommend that some kind of acknowledgment of this remain
somewhere within the structure. This is not intended to be included on the main donor
plaque wall.

On August 11, 1999, the Building Committee reviewed our Commission's work to date. The Committee asked that
the following work be completed before presenting to the City Council the subject of naming
opportunities:

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1. The Arts should assign dollar values to the various naming opportunities
2. The Commission should address what is appropriate for Carmel with respect to
naming opportunities which could include donations from businesses, groups,
foundations and corporations in addition to those from individuals.
3. The Commission should return the revised recommendations to the Building Committee before
forwarding them to the City Council.

After further discussions with the Arts, Commissioners Anderson and Hardy recommended and the Cultural
Commission adopted the following items at their September 3, 1999 meeting:

9. The Commission approved the Campaign for Sunset - Named Gift Opportunities with
recommended donation amounts as submitted to them by the Campaign Committee for the
Arts. They now forward them (via the Building Committee) to the City Council for approval.
Naming opportunities can include "memorials" and "honorariums". At the present time,
26 naming opportunities have been identified.

Please refer to the "Campaign for Sunset - Named Gifts" attachment to this document.

The list has been pared down from 55 naming opportunities originally identified and approved by
the Commission. It has been revised to 26 and includes the value of each named gift. The 26 items
and the amounts assigned to these equals $15.95 million of the $16.65 million needed for the
project.

10. The "naming elements"** (e.g., plaques) should be discreet, but uniformly designed, be
appropriate to the site and design of the renovation, be tastefully displayed, and be
appropriate for Carmel. The specific size, style, font and material used should be approved
by the Building Committee and like the entire design project, should pass further design
review by appropriate commissions.

[**The Commission wished to use "Naming element" here to allow the architect all design considerations and
did not wish to limit the idea to "plaques".]

In reviewing the naming opportunities the Commission evaluated the number of those naming elements
potentially visible in public areas ("front of house") and those that would be displayed in "back of house", in other
words backstage. While those in back of house may be less visible to the public they are no less desirable to
donors.
We conclude that half would be in "front of house" public areas, of which 4 would be less visible. Those more
visible include:
1. Performance Hall (Theater)
2. Public Plaza
3. Lobby
4. Promenade
5. Proscenium Arch
6. House Curtain
7. Restrooms
8. Heating-Ventilation-Air Condition (HVAC) plaque positioned at front of house
9. Gift Shop
Those less visible are:
10. Balcony
11. Mezzanine
12. Box
13. Box

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The remaining locations within the project would be displayed "back of house", behind the public areas and not
as visible to the general public.

Based on the 55 naming opportunities originally identified, which included a number of outdoor elements, the
Cultural Commission adopted a policy that donations for outside areas should not involve outdoor plaques.
The list of naming opportunities now includes only one outside element. In acknowledgment of the difficult task
of raising funds, we further recommend that if the Arts group receives a donation of $3 million for the Public
Plaza, the display and placement of the naming element be open for negotiation and handled on an
individual basis.

11. The Commission recommends to the Sunset Center for the Arts and the Building Committee that in
exchange for the City's $5 million commitment to the project the City of Carmel retain the name
"Sunset Theater".

We recommend that this name remain unchanged. We believe by retaining the name "Sunset Theater", we honor
the historical aspects of the center and former school.

12. The Commission recommends that donations not be limited in any way to exclude businesses or
corporations from participation and recognition in the donor program. We recognize in any
fundraising campaign that in addition the giving by individuals, foundations, families, and groups
there is the possibility of receiving donations from businesses and corporations.

Corporate names would appear alone, without addition of any corporate logos.

Many corporations contribute to the betterment of their communities and many community projects could not
happen without the help of those entities. In today's world, it would be unrealistic to think otherwise. We do not
find it objectionable nor offensive to have such names appear on a centralized "donor board" and would
recognize that all those names are a part of a community "family", committed to the same goal of an improved
community theater.

We believe that any group will to contribute such amounts of money who want their name displayed, can be
so recognized by name. At the same time, we do not feel it appropriate for corporate logos to be displayed
anywhere in conjunction with this project. Not all donors will want their names prominently displayed. By
limiting the number of names displayed and by requiring naming elements to be discreet and tasteful this
should be acceptable to the average, resident or visitor.

The Commission's recommendations adopted on August 9 and September 3, 1999 reflected in this
Memorandum dated September 7, 1999 will be referred to the City Council (via the Building Committee) for
placement on their September 14th agenda for approval of naming opportunities relating to the Sunset Theater
Project.

The Community and Cultural Commission recognizes that this is a work in progress. Further design changes or
other circumstances may cause us to re-examine this policy.

Elisabeth Ungaretti, Chair

Community and Cultural Commission

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Cc: Nancy Doolittle, President, Sunset Center for the Arts
Members of the Building Committee
Members of the Community and Cultural Commission
Brian Donoghue, Director

Attachments:

1. Ketchum, Inc. Campaign for Sunset


Named Gift Opportunities
Background Information and Guidelines

2. Campaign for Sunset - Named Gifts


Prepared by Sunset Center for the Arts Corporation

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CAMPAIGN FOR SUNSET

NAMED GIFT OPPORTUNITITES

BACKGROUND INFORMATION AND GUIDELINES

Named gifts are an important philanthropic tradition. Donors with the capacity to make major charitable
investments have many options for their giving. Once they have researched and selected a not-for-profit
organization for their gift, they take pride in their decision and want their investment to become a permanent
part of the project or program. Donors find pleasure in giving when they know their investment is truly
appreciated. Named gift opportunities allow an organization to express its appreciation to a donor by naming a
part of the project or program in honor of their gift.

The Campaign for Sunset will benefit from having named gift opportunities. Gifts of $100,000 and above will be
recognized by naming areas of the Sunset Theater, such as the performance hall or lobby, in honor of the
donor. Gifts of $25,000 and above will be recognized on a lobby wall plaque. Each of these gifts will also have
two prime seats named in their honor. Remaining seats will be named for $5,000 each. All levels of giving will
be recognized in written materials associated with opening events and historical documentation.

A list of proposed giving opportunities is attached. The following guidelines were used by the Sunset Center for
the Arts in making its determinations:

Named gifts will be available at a variety of pledge levels to both attract giving interest and raise the
sights of donors.

The value assigned to named area will be based on desirability rather than actual costs. It will relate to
perceived visibility and overall appeal.

Named gift opportunities will be included in the campaign brochure and in presentation folders.

Named gifts will assist campaign volunteers by providing an opportunity to "sell" a gift, especially one
that is of interest to the donor but at a higher level of giving than the donor had originally planned. The
volunteer will be assisted in motivating and raising the sights of the donor she/he is soliciting.

Family gifts can be combined for naming purposes.

Memorials and honorariums can be designed for naming purposes.

If a change in the project affects the desirability of a reserved named gift, the donor will be notified,
and arrangements will be made for an alternative selection.

The Sunset Center for the Arts will maintain a named gifts registry for the accurate and timely
reservation of named gifts.

This list of naming opportunities as a guidelines to reassure the City Council that our approach to a successful
campaign is to raise the sights of potential donors and show appropriate appreciation. The suggested dollar
amounts are not meant to restrict the fundraisers who need maximum flexibility in assigning final dollar
amounts.

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DONOR WALL PLAQUE IN LOBBY
All gifts of $25,000 and above. (Could result in 60+ names.) It is recommended that donors be listed by giving
categories, without listing dollar amounts.

$5,000,000 (1 potential naming opportunity)


Performance Hall

$3,000,000 (1potential naming opportunity)


Public Plaza

$2,000,000 (1potential naming opportunity)


Lobby

$1,000,000 (2 potential naming opportunities)


Promenade
Stage - naming element to be positioned backstage

$500,000 (3 potential naming opportunities)


Proscenium Arch
House Curtain
Green Room - Backstage

$250,000 (5 potential naming opportunities)


Balcony
Mezzanine Box
Box
Electronic Enhancement System

$100,000 (13 potential naming opportunities) most naming elements positioned backstage
Star Dressing Rooms (2)
Orchestra Pit
Orchestra Shell
Fly loft
Sprung Dance Floor
Chorus Dressing Rooms (2)
Stage Right Wing
Stage Left Wing
Gift Shop - Front of house
Restrooms - Front of house
Heating, Ventilation, Air Conditioning (HVAC) - Front of house

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TOTAL
There would be 26 potential naming opportunities (i.e. individual naming elements where appropriate and
desirable). Naming opportunities also mean memorial and honorarium naming opportunities.

If the Campaign achieves fewer gifts than required at the highest level, we will need to seek more gifts at the
lower levels. This would increase the number of names on the lobby plaque.

Special Consideration
Concession Stand: Reserved for Friends of Sunset Foundation

Naming Opportunities for Seats


Donors of $100,000 or more will receive 2 prime seat plaques.

Donors of $25,000 to $99,999 will also receive 2 prime seat plaques.

Remaining seats will be designated for $5,000 each.

Recognition for all Donations


All donors at all levels will receive program credit for one year and/or listing in other commemorative/historical
materials.
EXHIBIT D

[SCCs Naming Opportunities Policy to be inserted here]

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EXHIBIT E

[CITY inventory list previously supplied to SCC to be inserted here]

2|Page
FOREST THEATER

LEASE AGREEMENT

Between

CITY OF CARMEL-BY-THE-SEA

A Municipal Corporation

and

SUNSET CULTURAL CENTER

A California Nonprofit Public Benefit Corporation

___________, 2017
FOREST THEATER LEASE AGREEMENT

THIS LEASE AGREEMENT (Agreement) is entered into on ______________, 2017,


by and between the CITY OF CARMEL-BY-THE-SEA, a municipal corporation (CITY) and
SUNSET CULTURAL CENTER, a California nonprofit public benefit corporation (SCC).

RECITALS

WHEREAS, CITY owns property and improvements in the public parkland bordered by
Santa Rita and Guadalupe Streets, and Mountain View and Josselyn Lane footpath (aka Seventh
Avenue on lot maps), surrounded by residential properties in Carmel-by-the-Sea, California,
known as the Forest Theater more specifically described as: Lots One to Fifteen inclusive in
Block 85 as designated on the map of Addition Number 5 to Carmel-by-the-Sea, Monterey
County, California, filed on February 9, 1910, and on record in the office of the County Recorder
of the County of Monterey, State of California, in Map Book Two, Cities and Towns, at page 22.

WHEREAS, SCC was incorporated in 2004 as a California nonprofit public benefit


corporation for the express purpose of managing and operating CITYS Sunset Community &
Cultural Center (Sunset Center), including the Sunset Theater;

WHEREAS, the CITY desires uniformity in the management of all its theater assets and
theater operations to ensure consistency of practices, procedures and accounting methods and
further desires to assign the management of the Forest Theater to SCC who has the proven
expertise and experience of operating CITY theater facilities for the benefit of a variety of users;

WHEREAS, SCC and the CITY desire that Forest Theater be operated and managed as a
place for public entertainment in accordance with the provisions of this Agreement so that Forest
Theater continues to serve as a cultural stimulant for the community and for the Theaters two
historic user groups, while demonstrating sensitivity to and consideration for the residential
environment surrounding the open-air facility, and recognizing that seasonal weather conditions
limit the year-round use of the outdoor theater;

WHEREAS, it is the intent of both Parties to achieve these mutual goals through
continuing their long-standing partnership in the operation of another theater venue in the
community.

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NOW, THEREFORE, for and in consideration of the mutual covenants, terms,
provisions, conditions and limitations herein set forth, the Parties agree as follows:

ARTICLE 1
DEFINITIONS

For purposes of the Agreement, words not herein specifically defined shall be given
their normal and usual English language meaning. The following terms, phrases, words, and
their derivations shall have the meaning given herein. References to governmental entities
(whether persons or entities) refer to those entities or their successors in authority.

1.1 Definitions. Certain terms in this Agreement are specifically defined and set forth
as follows:

1.1.1 Agreement. Agreement means this Agreement, as it may be amended,


restated or supplemented in writing and executed by both Parties from time to time in
accordance with the terms hereof. References to Sections are to this Agreement unless
otherwise qualified.
1.1.2 Board of Trustees. Those persons acting as Trustees of SCC as of the
Effective Date and such substitutions, replacements, and new Trustees as shall be
selected from time to time by the then sitting Board of Trustees in accordance with the
Bylaws of SCC.

1.1.3 City Administrator. The City Administrator of Carmel-by-the-Sea.

1.1.4 City Council. The sitting City Council of the City of Carmel-by-the-Sea,
at any given point in time during the duration of this Agreement.

1.1.5 Executive Director. The person, regardless of name, selected, engaged


and authorized by the SCCs Board of Trustees to act as the chief executive officer of the Sunset
Center and of the Forest Theater.

1.1.6 Facility. Facility shall mean the grounds and improvements in the
public parkland known as Forest Theater (hereinafter Theater) that include the outdoor stage,
indoor theater and function space, audience seating area, concessions building, public restroom
building, pedestrian pathways, parking lot, individual parking spaces, and driveway.
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1.1.7 Fiscal Year. A one-year period beginning July 1 and ending the
following June 30.

1.1.8 Improvements. Improvements shall mean and include the structures


and all other improvements now or hereafter affixed to the Theater.

1.1.9 Law. Law or Laws shall include any judicial decision, statute,
constitution, ordinance, resolution, regulation, rule, administrative order, or other requirement of
any municipal, county, state, federal or other governmental agency or authority having
jurisdiction over the parties hereof or affecting or governing the Facility, in effect either at the
effective date hereof or at any time during the Term.

1.1.10 Lease Year. Lease Year shall consist of the twelve (12) month period
commencing July 1 and ending June 30 of each year for the term of this Agreement.

1.1.11 Manage. Manage, or any derivation thereof, shall mean to direct,


control, operate, maintain, govern, determine, oversee, and administer the operations of the
Facility in accordance and compliance with the terms and conditions of this Agreement and all
applicable laws, rules, and regulations.

1.1.12 Operating Grant. The financial support payable by CITY to SCC


pursuant to Section 5.5 to offset a portion of SCCs expenses (Operating Budget).

1.1.13 Parties. Parties mean CITY and SCC exclusively and collectively.

1.1.14 Party. Party means CITY or SCC individually.

1.1.15 Person. Includes natural persons, corporations, limited partnerships,


general partnerships, joint stock companies, joint ventures, associations, limited liability
companies, limited liability partnerships, trusts, land trusts, business trusts, or other organizations,
whether or not legal entities.

1.1.16 Premises shall mean the premises described as set out in the first
paragraph of the Recitals of this Agreement.

1.1.17 Operator Improvements shall refer to non-capital improvements and


personal property additions, not permanently affixed to existing or subsequently built structures.
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1.1.18 Term shall mean the original fixed term of this Agreement as may be
extended by mutual written agreement of the Parties.

ARTICLE 2
PURPOSE, SERVICES, DESCRIPTION OF FACILITY, TERM OF AGREEMENT

2.1 Incorporation of the Recitals. The Parties acknowledge and agree that the above
stated recitals are true and correct to the best of their knowledge and are incorporated as though
fully set forth herein.

2.2 General. The CITY desires the services of SCC to operate and manage the
Facility. The purpose of this Agreement is to set forth the rights, duties and obligations of the
respective Parties with regard to operation and management of the Facility.

2.3 Principal Function. The principal function of SCC shall be to rent, operate and
manage the Facility as a place for public entertainment and community events, as further detailed
in the specific scope of services described in this Agreement based on the compensation agreed to
be provided to SCC for providing such specific services.

2.4 Scope of Services.

2.4.1 CITY and SCC hereby agree that SCC shall operate and manage the
Forest Theater. Management and operation includes, but is not limited to: (1) Acting as a liaison
to all user groups; (2) Monitoring the use of the Facility by the user groups; (3) Entering into Use
Agreements with user groups (including approval of all insurance and indemnity requirements);
(4) Monitoring the condition of the Facility; (5) Establishing, implementing and publishing its
booking, presentation and rental policies; (6) Approving or denying requests for use of the
Facility; (7) Monitoring and ensuring that all appropriate use and consumption permits are
obtained; (8) Adopting rental and use fees for any and all uses of the Facility; (9) Auditing ticket
sales by the users; (10) Collecting rental revenue and charges for use of the Facility; and, (11)
reporting the collected rental revenue, commissions, and Facility charges in the required annual
report to the City Council.

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2.4.2 SCC shall coordinate and attend Facility walk-through(s) upon arrival and
departure of each user group, establish and implement all aspects of booking and scheduling, and
operate concessions on its own behalf or through others.

2.4.3 SCC shall enforce the Facility restrictions and limitations in concert with
the CITY, but shall not be required to monitor or enforce any building permit regulations which
will remain under the sole and exclusive purview of the CITY.

2.5 Reservations. CITY reserves to itself the right, from time to time, to grant,
without the consent of SCC, such easements, rights and dedications that CITY deems necessary,
and to cause the recordation of parcel maps and restrictions, so long as such easements, rights,
dedications, maps and restrictions do not unreasonably interfere with the permitted use of the
Facility by SCC. SCC agrees, if requested by CITY, to execute in a timely manner, not more than
ten (10) calendar days from the date of request, documents to effectuate any such easement rights,
dedications, maps or restrictions.

2.6 Parking Area. CITY grants to SCC the right to oversee and manage the utilization
of the parking spaces located at the Facility and to condition any rental agreement with such right
of oversight and management.

2.7 Condition of Facility. CITY and SCC acknowledge that the Facility consists of
the Theater and adjacent spaces and other buildings in various conditions of maintenance and
repair, as depicted in a photographic inventory in Attachment A. CITY and SCC shall work
with the photographer to inventory the Facility condition. Such inventory will be executed by
mutual agreement within ninety (90) days from the date of execution of this Agreement and
photographers fees shall be borne by CITY.

2.8 Effective Date. The effective date of this Agreement shall be July 1, 2017.

2.9 Lease Term. The term of this Lease (Term) shall be for a period of fifteen (15)
years commencing on the Effective Date and shall expire on June 30, 2032.

2.10 Right to Terminate. Subject to, and superseded by, Section 9.1 Termination
Upon Default which specifies that the Parties have the right to terminate this Agreement on sixty
(60) days notice in the event of an uncured breach of this Agreement, each Party shall have the

5|Page
right to terminate this Agreement at the end of ten (10) years into the Term, or at the end of the
Agreement Term, by providing written notice to the other Party of its election to terminate
(Termination Notice"). Such notice shall be given no less than two (2) years prior to termination.
In exercising a Party's right to elect to terminate this Agreement, either Party may propose to
forbear from its right to terminate by entering into an agreement, executed by both Parties, to
modify or amend any provision or provisions of this Agreement.

ARTICLE 3
OPERATION AND MANAGEMENT

3.1 Lease Payment. CITY hereby acknowledges the public benefit of the services
offered by the non-profit organization SCC and the value of the in-kind services that SCC
provides to the community. Therefore, in consideration of those public contributions which the
CITY recognizes are considered a core function of the CITY, providing a significant social
service, and the contractual obligations SCC bears under the provision of the Lease, CITY
hereby agrees that the cash lease payment for the duration of the Agreement shall not exceed
One Dollar ($1.00) per year.

3.2 CITY Leases and Contracts out Operation and Management Functions.
Subject to the terms, covenants and conditions set forth in this Agreement, and also subject to all
recorded covenants, conditions and restrictions, utility easements, other recorded private
easements, reciprocal easement agreements and any other recorded instruments affecting the use
of the Facility as they may exist as of the date of this Agreement, and which may be modified
from time to time, CITY hereby grants to SCC the exclusive right to operate and manage the
Facility as specified in Section 2.4 Scope of Services agreed to by the Parties. SCC agrees to
operate and manage the Facility in a professional and business-like manner.

3.3 SCC Bylaw Covenants. Throughout the term of this Agreement, SCCs bylaws,
as amended, shall provide that no less than one-third (1/3) of the Trustees serving on the SCC
Board shall be residents of the City of Carmel-by-the-Sea, and not less than two thirds (inclusive
of Carmel-by-the-Sea residents) shall be residents of Monterey County. The Board of Trustees
shall maintain and provide the CITY with a current roster of SCC Trustees. The Board of Trustees
shall not adopt any policy or take any action regarding the operation and management of Forest
Theater which would violate the rules and regulations under Section 501(c)(3) of the Internal

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Revenue Code or conflict with SCCs tax exempt status under said Section 501(c)(3), which
would create a prohibited conflict of interest between any member of the SCC Board of Trustees
or provides a direct or indirect financial benefit to any individual member of the Board of
Trustees, or any entity which any such member directly or indirectly represents, owns or controls.

3.4 Executive Director. The Executive Director shall be an employee of SCC and
shall report to and serve at the pleasure of the SCC Board of Trustees.

3.5 Budget. After adoption by the Board, SCC shall submit its annual budget to the
CITY which shall include SCCs anticipated revenue and expenses relating to the services SCC
will provide in connection with the Forest Theater for purposes of reporting on the Scope of
Services provided by SCC and the compensation to be received. SCC shall not prepare a separate
budget for the services SCC provides in connection with the Forest Theater but such budget
information shall be separately identified and included in SCCs complete budget covering all its
operations.

3.6 Reporting and Coordination between the Parties. SCC shall report its activities,
financial data, indicators, and condition to the CITY in the following ways:

3.6.1 Semi-Annual Report to City Administrator. At least every six months,


SCC shall provide to the CITY a report presented at a meeting with the City Administrator in a
form approved by the CITY. The report shall include, but is not limited to: (i) The status of
anticipated activities for the upcoming year; (ii) Reporting on the activities for the prior six
months, finances, and attendance statistics; and, (iii) Reporting issues relating to activities or
contract compliance, if any. The first such report shall be due by December 30, 2017, covering
the preceding six months.

3.6.2 Annual Report to the City Council. At the end of each calendar year,
or at the discretion of the City Administrator, SCC shall provide a written report and oral
presentation to the City Council on the finances, operation and performance of the Forest
Theater.

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ARTICLE 4

AUTHORIZED USE OF FACILITY

4.1 Permitted Uses. Subject to the terms, covenants and conditions of this Agreement,
SCC shall use the Facility solely for the operation and management of the Facility for cultural
events, performing arts presentations, films, general community purposes, rehearsals, private
events and other related activities. SCC shall assist the CITY in seeing that the Facility is kept in
an orderly condition, free of debris or nuisances and prohibit unnecessary, excessive and
annoying public disturbances such as noise or excessively bright lighting which would intrude on
the quiet enjoyment of the residential neighbors. SCC may use the Facility to engage in
concession activity only as provided in this Agreement and in accordance with City Ordinances
and State Statutes. SCC may use the Facility for additional purposes with the prior written
approval of the City Administrator.

4.2 Concessions and Catering Activity.

4.2.1 Definitions. As used in this section, unless the context clearly requires a
different meaning,

4.2.1.1 Concession and catering means and includes the preparation,


service, free distribution, or sale of food or any beverage, including any alcoholic beverage, or
the free distribution or sale of any concession merchandise or service; and

4.2.1.2 Concession merchandise means and includes inedible goods,


souvenirs, and novelties.

4.2.2 Grant of Right. CITY grants to SCC the right to engage in concession
sales or to allow outside parties to engage in concession sales as may be agreed upon in the
individual rental agreements. SCC shall be further permitted the right to participate in a
percentage of consumer sale receipts generated by tenants under a rental agreement, provided that
all concession sales are subject to City Ordinances and State Statutes as they relate to the sale of
consumables and alcohol.

4.2.3 Right Not Effective During CITY Use Periods. The concession rights
granted in this section shall not be effective during any period of time when the Facility is used by

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CITY, unless by express request of CITY.

4.2.4 Merchandise Sales Commissions. SCC may incorporate a sales


commission participation agreement with renters of the Facility, retaining for itself any agreed
upon sales commissions.

4.2.5 Permits. When serving food or alcohol at the Facility, SCC shall abide
by all rules and laws governing any permit for use and consumption including any
caterer/supplier limitations established by CITY in effect at that time. SCC must ensure that all
permits are obtained including an ABC license as required by law.

4.2.6 Food Service Establishment Permit Required. SCC, or any


concessionaire(s), shall ensure that all food offered for sale on or from the Facility has been
prepared, transported, served and otherwise provided only by a person or entity issued a current
valid Food Service Establishment permit by the Monterey County Department of Public Health or
its successor.

4.2.7 Licenses and Permits Required. SCC, or any concessionaire(s), shall be


responsible for obtaining and maintaining, at no cost to CITY, all licenses, permits and other
authorization required to legally conduct the concession and catering activity contemplated
herein. CITY shall have no obligation to issue such licenses, permits, or other authorization.
CITY shall issue such licenses, permits, or other authorization in accordance with applicable
CITY rules and regulations. The inability of SCC, or any such concessionaire(s), to secure or to
maintain any such license, permit or other authorization shall not invalidate the concession and
catering right granted herein.

4.3 Revenue. All revenue generated from rental or performance fees from the Theater
and other parts of the Facility, concessions, or percentage of ticket sales for all activities shall
inure to the benefit of SCC for the operation and management of the Facility. Based on the
CITYs experience in collecting such revenues, it is estimated that SCC will receive at least
Twenty Five Thousand Dollars ($25,000) per year, including in the first Lease Year. In the event
that SCC collects less than that amount in revenue in any Lease Year, CITY agrees to pay to SCC
the shortfall amount. Upon verification in SCCs financial accounting to CITY of revenue for the
preceding year, CITY shall pay such differential sum at the time advance payment of the
Operating Grant is made.
9|Page
4.4 Facility Use Fee. SCC shall be permitted to establish a facility use fee per ticket
and may increase or decrease the Fee or review its Facility Fee policy at any time. No Facility
Use Fee will be charged for any event for which admission is free. The established fee shall be
retained by SCC as additional revenue.

4.5 Compliance with Laws. SCC shall not use or permit any person or entity to use
the Facility in any manner that violates any law applicable to the Facility or any activity
conducted or allowed thereon.

4.6 Booking and Rental Policies. SCC is hereby granted the right to establish and
implement Facility booking and scheduling policies, rental rates, and fee schedules for all spaces
throughout the Facility. The Executive Director shall book the Facility in accordance with such
policies, procedures, rates, and charges, and shall invoice users consistently in accordance with
the established rates and charges for the use and occupancy of the Facility, related components,
and equipment.

4.7 Protection for Historic Users.

4.7.1 SCC and CITY agree that the privilege to schedule dates in the Theater
should be coordinated with the groups that have historically used the Theater. For purposes of this
Agreement, the Historic Users are defined and limited to the Forest Theater Guild and Pacific
Repertory Theatre. SCC shall use its reasonable effort to devise an equitable policy that will
provide scheduling precedence for Historic Users while maintaining SCCs capacity to book other
events that contribute to the cultural opportunities and/or financial health of the Carmel area and
SCC.

4.7.2 CITY holds separate User Agreements with the Historic Users, the Forest
Theater Guild and Pacific Repertory Theatre, that expire on March 31, 2018, at which time SCC
will have the exclusive right to enter into new rental agreements with said Historic Users for use
of the Facility. As a condition precedent to SCC entering into this Agreement, CITY shall obtain
an amendment to the current User Agreements in which each user shall agree to add SCC as an
additional insured on each policy of insurance covering such users liability for operations at
Forest Theater and shall also obtain from each user an indemnification of SCC from any liability
caused by such users.

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4.7.3 Booking and rental agreements shall, to the extent reasonable and
practical, be based upon standard contract terms and conditions adopted by SCC. CITY
recognizes that market conditions may occasionally require non-standard terms and conditions
and that in such circumstances, SCC shall, in its sole discretion, have the authority to use a non-
standardized agreement.

4.8 Use by CITY. CITY shall have the right to use the outdoor Forest Theater for up
to five (5) full days each Lease Year without charge (CITYs Free Theater Days), provided that
CITY may not use any space previously committed to SCCs Forest Theater rental customers . In
the event the CITY elects not to use any of its allocated time, SCC may utilize that time
allocation.

4.8.1 SCC shall provide, during CITYs Free Theater Days (whether used by
CITY or offered by CITY to another appropriate user), at no cost to CITY, up to a maximum of
eight hours per specified staff person per day, one (1) production manager and one (1) front-of-
the-house supervisory staff member for such events. Direct costs and staff requirements provided
beyond those listed in this Section 4.8.1 shall be borne by user at the rates specified in Section
4.8.2

4.8.2 CITY also reserves the right to use the Theater on additional days on a
space available basis that shall not compete with dates requested by Forest Theater rental
customers. In the event CITY uses the Theater for any days in addition to CITYs Free Days,
SCC may charge CITY the following: (1) a daily rental fee at the Historic Users rate for
occupancy and use of equipment; (2) staff time for any staff member who performs services for
CITY at the Theater, at SCCs usual hourly non-profit rate.

ARTICLE 5
EXPENSES

5.1 Costs. SCC agrees to assume the full and complete responsibility for all costs of
management and supervision of rental agreements and user liaison as detailed in the Scope of
Services to be provided by SCC for the Forest Theater. CITY shall be responsible for all other
costs, including costs of repair, maintenance, and capital expenditures for which CITY is
obligated under the terms of this Agreement as set forth in Article 6 below.

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5.2 Operating and Capital Budget. The SCC preliminary, proposed annual operating
budget, approved by the Board of Trustees, which shall include SCCs budget for its services to
be provided for the Forest Theater, shall be submitted to the CITY by April 30th each year, with
the understanding that SCCs budget will not be finalized until June 30th, or thereafter, after the
CITYS budget is adopted. SCC shall have the final determination concerning any Operating
Expenses included in the SCC budget. Additionally, SCC will participate in the CITYs capital
planning process each spring and will submit SCCs capital budget by March 1st for the Forest
Theater for CITY review.

5.3 Fiscal Year. The fiscal year for SCC shall begin July 1 and end June 30 of each
year to coincide with CITYs fiscal year.

5.4 Operating Grant.

5.4.1 CITY agrees to pay to SCC Twenty Thousand Dollars ($20,000) per year
as compensation for the management and operation the Forest Theater (the Grant) beginning
July 1, 2017 for the period from July 1, 2017 through and including June 30, 2018 and thereafter
on July 1 of each Lease Year during the term of this Agreement as set out in Section 2.9.

5.4.2 After the third consecutive Lease Year and for each three-year period
thereafter, the Operating Grant may be reviewed every three years through mutual agreement
between SCC and the CITY. Measures for adjustment in the Operating Grant may be a
consideration of empirical income and expense data provided by SCC for the Forest Theater
operations and the Scope of Services that SCC is required to perform. If the Parties are
unsuccessful in reaching an agreement as to an adjustment amount, the Operating Grant will
remain in existence at the time and will remain unchanged.

5.4.3 Unanticipated Expenses Review. The Parties to this Agreement have


taken into consideration the respective responsibilities and associated costs of operating the Forest
Theater, given the CITYs long standing management experience with that venue. Further, the
Parties recognize that management of the Forest Theater under SCC may suggest alternative
operational procedures, resulting in associated additional and unanticipated expense. Therefore,
the parties hereby agree to confer at the end of the second Lease Year to consider any additional
unanticipated related expenses that have become necessary to fulfill the CITYs various
operational guidelines, as set out in this Agreement. In order to insure proper monitoring of these
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potential unanticipated expenses, if any, SCC will notify CITY prior to incurring the expenses.
This prior notification procedure will allow the Parties to discuss both the necessity and possible
mitigation of the proposed expenditure.

5.5 Accounting Records, Reporting, and Audits.

5.5.1 For purposes of accurately reporting attendance and gross receipts for any
and all performances at Forest Theater, SCC may control ticket sales through its box office, or by
other means as SCC deems feasible, and shall maintain an accurate accounting of all ticket
proceeds and commissions.

5.5.2 SCC shall maintain books, records, documents and other accounting
procedures and practices in accordance with Generally Accepted Accounting Principles
(GAAP) consistently applied (e.g., a unitary, internally consistent system of accounts and
records) that sufficiently and properly reflect all receipts and direct and indirect costs of any
nature associated with the exercise of rights and the performance of obligations by SCC under this
Agreement.

5.5.3 SCC shall provide to CITY an annual financial report that shall include
attendance data in addition to gross sales and net profits. The annual financial report shall include
a budget for the forthcoming year that provides adequate funding to meet the Scope of Services as
set forth in this Agreement for operation and management of the Facility.SCC agrees, upon
reasonable notice, that all of its books and records pertaining to the financial operation and
management of Forest Theater shall be open to inspection by the City Administrator and other
such CITY officers and employees as may be designated and shall be made available at Sunset
Center for inspection during regular business hours. During document inspection, a representative
of SCC shall be present in observance.

ARTICLE 6

MAINTENANCE, REPAIR AND CAPITAL IMPROVEMENTS


6.1 City Responsibilities.
6.1.1 CITY agrees to maintain, repair and replace, at its sole cost and expense,
the structural integrity, the walls and roof of any buildings located on the Facility, and to maintain
the seismic soundness of the buildings located on the Facility. CITY agrees to maintain and

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repair all nonstructural improvements, utility and plumbing improvements and to fund Capital
Expenditures.
6.1.2 CITY agrees to pay all utility charges for utility service to the Facility
including, but not limited to, electricity, water, storm water, sewer, and portable toilets
maintenance.
6.1.3 SCC agrees to give CITY written notice of any defect or need for repair to
any improvement that is to be maintained by CITY pursuant to this Agreement; or the need for
tree trimming in, on or around the Facility. CITY shall perform all landscape maintenance, as
well as general maintenance and repairs, planting and landscaping, plumbing, electrical and
lighting maintenance and repair, and replacement of common signage, directional signs, markers,
bollards, and bumpers. CITY shall also direct, manage and pay for all tree trimming in, on or
around the Facility, and repairs or resurfacing of the parking lot. Rubbish, trash, garbage and
other refuse removal shall be performed by CITY under its waste hauler franchise agreement.
6.2 SCCs Responsibilities.
6.2.1 SCC is responsible for operation and management of the Facility which
shall include the execution and oversight of a User Agreement which meets the requirements of
CITY, which are set out in Attachment B of this Agreement, for each and every user.
6.2.2 Inclusions to User Agreements. The Use Agreements shall address the
following: Grant of license; license area; condition of license area; permitted uses; submittal of
performance/rehearsal/technical work schedules; move-in-and move-out procedures; outdoor
theater hours of operation (including restrictions and limitations); rental rates; housekeeping
responsibilities; payment schedules; Forest Theater rules and regulations; building use
regulations; handling of hazardous building materials; compliance with legal requirements,
including maintenance of Workers Compensation Insurance; indemnity; liability of user;
retention of deposit; security; inspection; liability insurance; and books and records; protection of
property and facilities and food and beverage service.
6.2.3 SCC may, upon request of CITY, and upon mutual agreement as to terms,
make its staff available to CITY on a case-by-case basis to facility and support the routine
maintenance and repairs of the Facility.
6.3 Capital Improvements. Capital improvements, modifications and additions to the
Facility shall be the responsibility of CITY and shall be included in the CITYs Capital
Improvement Plan and performed only after good faith consultation with SCC. SCC shall identify
and recommend capital improvements for inclusion in the CITYs Capital Improvement Plan;
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develop capital improvement or modification plans; and recommend such plans to CITY. In the
event CITY agrees to proceed with any recommended capital improvements, CITY may, at its
option, delegate to SCC the supervision and completion of any such capital improvements,
modifications or additions. Funding of capital improvements shall be appropriated by the City
Council for completion of any approved capital improvement.
6.4 Fundraising. For the term of this agreement, SCC shall not fundraise for the
specific benefit of any Forest Theater capital improvement, operation, programming, or
endowment in order to preclude direct competition with any SCC fundraising efforts for the
Sunset Cultural Center.

6.5 Temporary Closure. During the improvement and retrofitting of certain elements
of the Forest Theater in years 2015-2016, the CITY intended to develop a master plan for further
improvements to the Forest Theater. The City Council may pursue further discussions and
implementation of future improvements to elements of the Forest Theater which may require
temporary closure of the Facility for a period of time. In the event of such a closure, the
obligation of the CITY to make operating grant payments to SCC will cease during the time of
construction or modification to the Facility. Thereafter, pro-rated payments for any partial Lease
Year will resume once the Facility is operational and can safely accommodate occupancy and
public attendance. SCC shall have no obligations or responsibilities with respect to Forest Theater
during any period of closure. Fully-funded operating grants will resume the following Lease
Year.

ARTICLE 7

INSURANCE

7.1 CITYs Insurance. CITY shall maintain and keep in force during the Term of
this Agreement, for the mutual benefit of CITY and SCC, at CITYs sole cost and expense, such
insurance as it deems appropriate and its insurance policies shall name SCC as additional insured.

7.2 SCCs Insurance. SCC shall procure and maintain for the duration of the
Agreement, insurance against claims for injuries to persons or damage to property which may
arise from or in connection with SCCs providing the services required by CITY in connection
with operation and management of the Facility.

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7.2.1 No Limitation. SCCs maintenance of insurance as required by this
Agreement shall not be construed to limit the liability of SCC to the coverage provided by such
insurance, or otherwise limit CITYs recourse to any remedy available at law or in equity.

7.2.2 Minimum Scope of Insurance. SCC shall maintain and keep in force
during the Term of this Agreement insurance of the types described below:

7.2.2.1 Commercial General Liability insurance shall be written on


Insurance Services Office (ISO) occurrence form CG 00 01 and shall cover Facility and
contractual liability. CITY shall be named as an insured on SCCs Commercial General
Liability insurance policy using ISO Additional Insured-Managers or Lessors of Facility Form
CG 20 11 or a substitute endorsement providing equivalent coverage.

7.2.2.2 Directors and officers liability insurance;

7.2.2.3 Workers Compensation insurance for all its employees as


required by State law;

7.2.3 Minimum Amount of Insurance. SCC shall maintain Commercial


General Liability insurance written with limits no less than Two Million Dollars ($2,000,000)
each occurrence, Five Million Dollars ($5,000,000) general aggregate which shall name CITY as
additional insured.

7.2.4 All insurance shall be obtained from insurers having an office located in
the State of California.

7.2.5 Other Insurance Provisions

7.2.5.1 The insurance policies are to contain, or be endorsed to contain,


the following provisions for Commercial General Liability insurance:

a. SCCs insurance coverage shall be primary insurance as respect


to CITY. Any Insurance, self-insurance, or insurance pool coverage
maintained by CITY shall be excess of SCCs insurance and shall not
contribute with it.

b. SCCs insurance shall be endorsed to state that coverage shall


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not be cancelled by either party, except after thirty (30) days prior written
notice by certified mail, return receipt requested, has been given to CITY.

7.2.6 Acceptability of Insurers. Insurance is to be placed with insurers with a


current A.M. Best rating of not less than A:VII.

7.2.7 Verification of Coverage. SCC shall furnish CITY with original


certificates and a copy of the amendatory endorsements, including but not necessarily limited to
the additional insured endorsement, evidencing the insurance requirements of SCC.

7.2.8 Waiver of Subrogation. SCC and CITY hereby release and discharge each
other from all claims, losses and liabilities arising from or caused by any hazard covered by
property insurance on or in connection with the Facility or said building. This release shall apply
only to the extent that such claim, loss or liability is covered by insurance.

7.2.9 CITYs Property Insurance. CITY shall purchase and maintain during the
term of this Agreement all-risk property insurance covering the Facility for the full replacement
value without any coinsurance provisions.

7.2.10 SCC shall notify CITY immediately after a casualty occurs to the Facility
or any of the buildings.

ARTICLE 8
DAMAGE TO FACILITY; INDEMNIFICATION

8.1 Destruction or Substantial Damage of Facility. In the event of damage to or


destruction of the Facility, CITY, in consultation with SCC, will determine the appropriate course
of action to restore full condition and use of the Facility if possible. CITY retains the absolute
right to terminate this Agreement in the event of substantial damage to or complete destruction of
the Facility. SCC shall include appropriate provisions in rental and user agreements to allow for
cancellation of SCC and CITYs responsibilities under such agreements if the Facility is
substantially damaged or destroyed.

8.2 Indemnification by SCC. SCC agrees to indemnify, defend and hold CITY, its
officers, directors, employees, agents and representatives, harmless from any injury to any person
or to any personal property or to any part of the Facility caused by the negligent or intentional act
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of SCC, its officers, directors, employees, agents, servants or representatives. SCCs insurance
coverage shall be in an amount not less than Two Million Dollars ($2,000,000) per occurrence
and Five Million Dollars ($5,000,000) total coverage. Said policy shall name CITY as an also
Named Insured and shall provide that CITY is to be notified in the event of notice of
cancellation or failure to make premium payments. In addition, SCC agrees that it shall require in
all agreements with any users of the Facility, or any part thereof, proof of insurance in the amount
of not less than One Million Dollars ($1,000,000) general liability five (5) days prior to the event
and that such users shall indemnify, defend and hold harmless CITY and SCC from any injury to
any person or to any personal property, or to any part of the Facility, caused by the negligent or
intentional act of such users, their officers, directors, employees, agents, or representatives. In the
event of legal action by Third Parties CITY shall retain the right to approve SCCs legal counsel
retained pursuant to this section.

8.3 Indemnification by CITY. As provided in Section 7.1, above, CITY agrees to


indemnify, defend and hold SCC, its officers, trustees, employees, agents and representatives,
harmless from any injury to any person or to any property or to any part of the Facility caused by
the negligent or intentional act of CITY, its employees, elected or appointed officials, agents,
servants or representatives.

ARTICLE 9

DEFAULT AND TERMINATION FOR CAUSE

9.1 Termination Upon Default. Except as otherwise provided in this Agreement


either Party may terminate this Agreement upon the material breach thereof by the other Party,
provided that prior to such termination, the Party terminating this Agreement shall give the other
Party not less than sixty (60) days prior written notice of such breach (to allow for the cure of said
breach if possible), unless the breach is of a nature that cannot be cured by the passage of time, in
which event, the Party terminating the Agreement shall give not less than thirty (30) days written
notice of termination.

9.2 Default.

9.2.1 The following events shall constitute a default and material breach of this
Agreement:

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9.2.1.1 The failure to comply with any of the terms of this Agreement
regarding insurance;

9.2.1.2 The material violation of any law, ordinance, rule or regulation


which, after notice and reasonable time to cure, remains uncured after thirty (30) calendar days;

9.2.1.3 The abandonment or vacating of the Facility;

9.2.1.4 The dissolution of SCC or the merger of SCC with another


entity without the prior written approval of CITY;

9.2.1.5 The assignment or transfer of this Agreement without the prior


written consent of CITY as described in Section 10 of this Agreement; or

9.2.1.6 The failure to perform any other condition or covenant of this


Agreement where such failure in performance is not remedied within the time allowed by this
Agreement, or such other period for remedial action as is expressly otherwise provided for in this
Agreement, or agreed upon by both parties.

9.2.2 Extension of Period to Remedy Default. Neither CITY nor SCC shall be
in default unless such party fails to perform an obligation required of it within thirty (30) days
after written notice from the aggrieved party has been sent by the other, specifying the particular
obligation that the other has failed to perform; provided, that if the nature of the other partys
obligation is such that more than thirty (30) days are reasonably required for performance, then
the other party shall not be in default if it commences performance within such thirty (30) day
period, and thereafter diligently prosecutes the same to completion within one hundred eighty
(180) days, unless extended by mutual agreement.

9.2.3 Remedies upon default and material breach. Upon the occurrence of any
Event of Default by SCC, CITY shall have the option to pursue any one or more of the following
remedies:

9.2.3.1 Reduce or eliminate the Operating Grant and other funding due
to SCC under this Agreement.

9.2.3.2 Terminate this Agreement, in which event SCC shall surrender

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any responsibilities it has with regard to the Facility to CITY, and if SCC fails to do so, CITY
may, without prejudice to any other remedy it may have for possession, enter upon and take
possession in and responsibility for the Facility and agreements entered into by SCC and remove
SCC any other person who may be occupying such Facility or any part thereof. The surrender of
the Facility and SCCs responsibilities with respect to the Facility to CITY upon an Event of
Default shall take place at such time as SCC and CITY shall agree and absent such agreement,
no sooner than 60 days nor later than 120 days from written notice by CITY to SCC of its intent
to exercise its rights under this Section 9.2.3.

9.2.4 Pursuit of one remedy shall not preclude pursuit of any other remedies,
such remedies being cumulative and non-exclusive. No agreement to terminate this Agreement or
accept a surrender of said Facility shall be valid unless approved by the then sitting City Council
of Carmel-by-the-Sea. No waiver by CITY of any violation or breach of this Agreement shall be
deemed or construed to constitute a waiver of any other violation or breach of any of the terms of
this Agreement. Forbearance by CITY to enforce one or more of the remedies upon an event of
default shall not be deemed or construed to constitute a waiver of such default or of CITYs right
to enforce any remedies with respect to such default or any subsequent default.

9.2.5 If CITY employs the services of an attorney in connection with an event


of default by SCC under this Agreement, or if either party brings an action or proceeding against
the other party arising out of or concerning performance or interpretation of this Agreement, the
prevailing party shall be entitled to recover from the other party its attorneys fees and costs.

ARTICLE 10

ASSIGNMENT, SUBLETTING AND FINANCING

10.1 No Assignment. Obligations or rights of SCC under this Agreement may not be
assigned or otherwise transferred by SCC, without the prior written consent of CITY, which
consent may be withheld at the sole discretion of CITY. The assignment or transfer of this
Agreement without such consent shall constitute an Event of Default. In the event of any
proposed assignment or transfer of this Agreement, SCC shall cause to be delivered to CITY
simultaneously with such proposed assignment or transfer, an instrument in writing, executed by
the assignee, in which the assignee shall assume and agree to accept all the terms and conditions
of this Agreement.

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10.2 Liens and Encumbrances. SCC shall keep the Facility and any Operator
Improvements free and clear of any liens and encumbrances and shall include the same obligation
in any agreement for the renter or user. At CITYs request, SCC shall furnish CITY copies of
such renter and user obligations and written proof of payment of any items that would or might
constitute the basis for such a lien on the Facility.

ARTICLE 11

GENERAL PROVISIONS

11.1 Administration. This Agreement shall be administered on behalf of SCC by the


Board of Trustees of SCC, which may appoint the Executive Director or any Trustee or Trustees
for such purpose.

11.2 CITYs Right to Enter. At any time, CITY and its agents shall have the right to
enter the Facility for the purpose of maintenance, repairs, inspection, posting notices of any kind
permitted or required by law, performing CITYs obligations hereunder or taking possession in
the event of a default by SCC in accordance with the provisions of this Agreement.

11.3 Government Compliance, Licenses and Similar Authorization. SCC, its


officers, agents and employees shall comply with all federal, state, local and municipal
regulations, ordinances, statutes, rules, laws, and constitutional provisions applicable to SCCs
operation and management of the Facility hereunder. SCC, at no expense to CITY, shall secure
and maintain in full force and effect during the term of this Agreement all required licenses,
permits and similar legal authorizations, and comply with all requirements thereof relating to the
services to be performed by SCC. CITY shall have no obligation to issue such licenses, permits,
or authorizations. CITY shall issue such licenses, permits, or authorizations in accordance with
applicable CITY rules and regulations.

11.4 Attendance and Safety Standards.

11.4.1 SCC agrees to conduct its activities with full regard to public safety and
will observe and abide by all applicable regulations and requests by duly authorized governmental
agencies responsible for public safety to assure such safety. The Fire Chief or his/her designee
shall have the authority to determine, in the reasonable exercise of his/her discretion, the number
of persons that may be admitted to, and safely and freely move about in the Facility.

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11.4.2 SCC shall not, nor shall SCC allow any renter or user groups to, sell or
issue tickets or credentials for admission to the Facility in an aggregate number that exceeds the
CITY Fire Chiefs determined number or, in any event, that exceeds the historic seating capacity
of Five Hundred Forty (540) seats. SCC shall not admit, nor shall SCC allow any renter or user
groups to admit to the Facility more people than the number so determined by the CITYS Fire
Chief.

11.4.3 SCC shall not permit, nor shall SCC allow any renter or user groups to
permit any chair or movable seat or other obstruction to be erected or placed in any passageway
that is not designed as an area for handicapped seating or any fire exit. Sidewalks, grounds,
entries, passages, vestibules, abutting streets and all ways of access to the Facility shall not be
obstructed by SCC or used for any purpose other than for ingress and egress to the Facility for
persons or property. The CITY shall be responsible for assuring compliance with each of the
foregoing requirements during periods of CITY use of the Facility under this Agreement.

11.5 No Waiver. No consent or waiver by any of the Parties to any breach or default
by another Party under this Agreement shall be valid unless given in writing and shall not be
deemed or construed to be a consent or waiver to any other breach or default under this
Agreement, whether with respect to the same obligation or any other obligation. Furthermore,
failure on the part of any Party to act or to complain or to declare another Party in default,
irrespective of how long such failure continues, shall not constitute a waiver by such Party of its
rights hereunder. The giving of consent by any Party in any one instance shall not limit or waive
the necessity to obtain such Partys consent in any future instances.

11.6 Removal from the Facility. Immediately prior to the expiration, or upon sooner
termination of this Agreement, SCC shall remove from the Facility any personal property
belonging to SCC and ensure that the Facility is in reasonably good condition, normal reasonable
wear and tear excepted, except that SCC shall not be responsible for any condition issues that are
due to failure of maintenance or deferred repairs that are the CITYs responsibility under this
Agreement.

11.7 Contract Representatives. Except as otherwise agreed in writing by the Parties,


SCCs Executive Director and the CITYS City Administrator shall be the individuals for all
communications regarding the performance and terms of this Agreement. All CITY consent or

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authorizations provided for under this Agreement may be given in writing by the City
Administrator except as to such consents or authorizations that are reserved to the City Council by
this Agreement, State law or local ordinance.

11.8 Notices. Any notice required under this Agreement must be in writing, and may
be given either personally, by facsimile, by registered or certified mail, return receipt requested.
If by facsimile, a notice shall be deemed to have been given and received at the time and date the
facsimile is received at the number provided below. If personally delivered, a notice shall be
deemed to have been given and received when delivered to the party to whom it is addressed. If
given by registered or certified mail, the same shall be deemed to have been given and received
on the first to occur of (i) actual receipt by any of the addressees designated below as the party to
whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing
such notice, properly addressed, with postage prepaid, is deposited in the United States mail. Such
notices or communications shall be given to the parties at their addresses set forth below:

CITY: SCC:
City Administrator Executive Director
City of Carmel-by-the-Sea Sunset Cultural Center
P. O. Box CC P.O. Box 1950
Carmel, CA 93921 Carmel, CA 93921
Telephone: (831) 620-2000 Telephone: (831) 620-2040
Facsimile: (831) 620-2004 Facsimile: (831) 624-0147

11.9 Address Change. Either party may change its address for receipt of reports,
notices or payments without the formal amendment of this Agreement by giving the other party
written notice of such change not less than fifteen (15) days prior to the effective date thereof.

11.10 Dispute Resolution. The Parties are fully committed to working with each other
throughout the term of this Agreement and agree to communicate regularly with each other at all
times so as to avoid or minimize disputes. The Parties agree to act in good faith to prevent and
resolve potential sources of conflict before they escalate into a question or controversy. If any
dispute arises between the parties relating to or arising under this Agreement, the Parties each
commit to resolving such dispute in an amicable, professional, and expeditious manner and agree
to use the following procedure for resolving the dispute: (a) either party may give notice to the
other of the dispute and the City Administrator and the SCC Executive Director or their designees
will meet within three (3) CITY business days to attempt to resolve the dispute; (b) a meeting or
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meetings shall be held promptly between representatives of the parties regarding the dispute to
attempt in good faith to negotiate a resolution of the dispute; (c) if within thirty (30) days after a
dispute has arisen, the parties have not succeeded in negotiating a resolution of the dispute, they
agree to submit the dispute to mediation; (d) the mediator shall be jointly selected by the parties,
or failing agreement on the selection of a mediator within thirty (30) days after the parties fail to
negotiate an informal resolution of any dispute, the mediator shall be a retired judge or justice
selected by the supervising judge of the Civil Division of the Monterey County California
Superior Court. In any mediation conducted pursuant to this section, the provisions of California
Evidence Code section 1152 shall be applicable to limit the admissibility of evidence disclosed by
the parties in the course of the mediation; and (e) if the parties are not successful in resolving the
dispute through the mediation, then the parties agree that the dispute shall be submitted to binding
arbitration to a single arbitrator in accordance with the existing Rules of Practice and Procedure of
Judicial Arbitration and Mediation Services, Inc. (JAMS) within thirty (30) days of the close of
mediation as declared by the mediator.

11.11 Equal Availability. SCC shall, and shall require that all renters or user groups,
make Facilities and all events, performances, shows, available and open to the public on a fair,
equal and non-discriminatory basis, and further agrees and promises not to discriminate against or
segregate any person or group of persons on account of race, color, creed, religion, sex, sexual
orientation, age, handicap, marital status, ancestry or national origin in the operation of the
Facility, including without limitation Title III of the Americans with Disabilities Act and the
provision of such auxiliary aids or alternate services as may be required by the ADA

11.12 Royalties. License Fees and Similar Payments. Unless SCC is the booking
agency for copyright material, SCC shall not be responsible for payment, before delinquency, of
any royalties, license fees, and other charges due and payable to any person or entity as the
consequence of any public performance(s) or display(s) of copyrighted work(s) during its use of
the Facilities but shall include such obligation in the rental or user group contracts that are entered
into for performances at the Facility.

11.13 Conflict of Interest. No member, official, or employee of the CITY shall have
any personal interest, direct or indirect, in this Agreement, nor shall any such member, official, or
employee of the CITY participate in any decision relating to this Agreement, which affects their
personal interests or interests in any corporation, partnership, or association in which they are
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directly or indirectly interested.

11.14 Severability. Should any provision hereof prove to be invalid or illegal, such
invalidity shall in no way affect, impair or invalidate any other provision hereof and such
remaining provisions shall remain in full force and effect.

11.15 Time of the Essence. Time is of the essence with respect to the performance of
every provision hereof in which time of performance is a factor.

11.16 Binding on Successor and Assigns. This Agreement shall, subject to the
provisions regarding assignment, apply to and bind the respective heirs, successors, executors,
administrators and assigns of CITY and SCC.

11.17 California Law. This Agreement shall be construed and enforced in accordance
with the laws of the State of California.

11.18 Warranties and Indemnities.

11.18.1 SCCs Representations and Warranties. SCC hereby represents and


warrants to CITY that it has full power and authority to enter into this Agreement and perform in
accordance with its terms and provisions; that the Parties signing this Agreement on behalf of the
SCC have the authority to bind SCC and to enter into this transaction; and that SCC has taken all
requisite action and steps to legally authorize the execution, delivery, and performance of this
Agreement.

11.18.2 CITYs Representations. CITY hereby represents and warrants to SCC


that it has full statutory right, power, and authority to enter into this Agreement and perform in
accordance with its terms and provisions; that the individuals signing this Agreement on behalf of
CITY have the authority to bind CITY and to enter into this transaction; and that CITY has taken
all requisite action and steps to legally authorize the execution, delivery, and performance of this
Agreement.

11.19 Construction. The language in all parts of this Agreement shall in all cases be
construed as a whole according to its fair meaning, and not strictly for or against either CITY or
SCC. The captions used in this Agreement are for convenience only and shall not be considered
in the construction or interpretation of any provision hereof. The terms shall, will, and
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agree are mandatory. The term may is permissive. When a party is required to do something
by this Agreement, it shall do so at its sole cost and expense without right of reimbursement from
the other party unless specific provision is made therefore. All Parties hereto acknowledge that
they have been represented by independent counsel of their own choice through all of the
negotiations that preceded the execution of this Agreement. This Agreement shall be construed
fairly as to all Parties and not in favor of or against any of the Parties, regardless of which Party
actually prepared this Agreement in its final form. The Parties further agree that California Civil
Code Section 1654 will not apply in the event of uncertainty with respect to this Agreement as
asserted or identified.

11.20 Days/Dates. Unless otherwise stated herein, as used in this Agreement, the term
days shall mean calendar days which shall include all Saturdays, Sundays and State or National
Holidays, provided that if the last date or last date to perform any act or give any notice with
respect to this Agreement shall fall on a Saturday, Sunday or State or National holiday, such act
or notice may be timely performed or given on the next succeeding day which is not a Saturday,
Sunday or State or National Holiday. If the term business days is used, all Saturdays, Sundays
and State or National Holidays shall be excluded.

11.21 Entire Agreement. This Agreement and the exhibits attached hereto constitute
the entire agreement between the parties, and there are no other binding agreements or
representations between the parties relating to SCCs obligations to perform services in
connection with the Forest Theater. SCC and CITY are parties to a separate and distinct
agreement that covers the Parties relationship, responsibilities, obligations and liabilities in
connection with SCCs management of the Sunset Community and Cultural Center. Neither CITY
nor CITYs agents has made any representation or warranty as to (a) whether the Facility may be
used for the services required to be performed by SCC under existing Law, or (b) the suitability of
the Facility for the conduct of SCCs responsibilities. SCC expressly waives all claims for
damage by reason of any statement, representation, warranty, promise, or other agreements of
CITY or CITYs agents, whether written or oral, express or implied if any, not contained in this
Agreement or in any addendum or amendment hereto. No subsequent change or addition to this
Agreement shall be binding unless in writing and signed by the parties hereto.

11.22 Survival. The provisions of this Agreement with respect to representations,


warranties and indemnifications, and obligations which may or must be performed after
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termination or expiration of this Agreement shall survive the termination or expiration of this
Agreement and shall be enforceable in accordance with their terms, covenants and conditions.

11.23 Acceptance by CITY. This Agreement shall not be valid or binding unless and
until accepted by CITY upon approval of CITYs City Council and a fully executed copy
delivered to SCC.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
set forth above.

CITY SCC

CITY OF CARMEL-BY-THE-SEA, a municipal SUNSET CULTURAL CENTER, a California


corporation nonprofit public benefit corporation

By By

__________________________ (PRINT NAME) __________________________ (PRINT NAME)

Its Authorized Signatory Its Authorized Signatory

By By

__________________________ (PRINT NAME) __________________________ (PRINT NAME)

Its Authorized Signatory Its Authorized Signatory

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ATTACHMENT A

[PHOTOGRAPHS OF FACILITY AND GROUNDS]

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