RECITALS. WHEREAS, TOP SEED possess specialized knowledge and expertise in tennis instruction and the management of tennis services; and

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1 FACILITY USE AGREEMENT CALABASAS TENNIS AND SWIM CENTER This FACILITY USE AGREEMENT is entered into by and between the CITY OF CALABASAS, a California municipal corporation and TOP SEED TENNIS ACADEMY INC., a California corporation, ( TOP SEED ). RECITALS WHEREAS, the City owns and operates the Calabasas Tennis and Swim Center located at Park Sorrento, Calabasas, California 91302; and WHEREAS, TOP SEED has requested that the City permit TOP SEED to use the tennis courts at the Center for the operation and development of tennis programs; and WHEREAS, TOP SEED possess specialized knowledge and expertise in tennis instruction and the management of tennis services; and WHEREAS, TOP SEED desires to enter into an agreement with the City pursuant to which TOP SEED shall operate and manage the tennis program at the Center subject to the terms and conditions to be set forth in this Agreement; and NOW, THEREFORE, the City and TOP SEED in return for the mutual promises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, do agree as follows: 1. Grant of Certain Rights to TOP SEED. The City hereby grants to TOP SEED an exclusive license to enter and use certain specified areas of the Center for the purposes of operating and managing the tennis program and services, subject to such terms and conditions of this Agreement and TOP SEED hereby accepts such grant of rights. Through this license and subject to the terms of this Agreement, TOP SEED may use the tennis courts, tennis deck, locker rooms and reservation rooms. Use of the reservation rooms shall require prior permission by the Recreation Services Manager. 2. Independent Contractor. TOP SEED is and shall at all times remain as to the City a wholly independent contractor. Neither the City nor any of its officers, employees or agents shall have control over the conduct of TOP SEED or any of TOP SEED=S officers, employees or agents, except as expressly set forth in this Agreement. TOP SEED shall not at any time or in any manner represent that it or any of its officers, employees or agents are in any manner officers, employees or agents of the City. No City employee benefits shall be available to TOP SEED employees in connection with the performance of this Agreement. Except as provided in the Agreement, City shall not pay salaries, wages, or other compensation to TOP SEED for performing services hereunder for City. City shall not be liable for compensation of or indemnification to TOP SEED for injury or sickness arising out of performing services hereunder. In the event TOP SEED or any employee, agent, or subcontractor of TOP SEED providing services under this Agreement claims or is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of the City, TOP SEED shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of TOP SEED or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on

2 such contributions, which would otherwise be the responsibility of City. Should TOP SEED be required to pay PERS benefits, the benefits shall be paid out of the 522 Joint Expenditure. 3. Tennis Program Operation and Management Fee. In consideration of the services to be provided by TOP SEED under this agreement, TOP SEED shall receive fifty percent (50%) of the difference between the Gross Revenues (defined in paragraph 5. d.) and the 522 Expenditures (defined in paragraph 5. e.) (referred to herein as the Operation and Management Fee ). The difference between the Gross Revenues (defined in paragraph 5.d.) and the 522 Expenditures (defined in paragraph 5.e.) is defined for purposes of this Agreement as Net Revenues from the tennis program. Net Revenues shall be calculated on a monthly basis, but shall be paid on an annual basis with a monthly draw to TOP SEED against the net revenue. TOP SEED shall receive a draw of $15,000 per month from the 522 Joint Account. Such sums are to be credited against TOP SEED S Operation and Management Fee. The combined draws for the fiscal year will total $180,000. If that sum is more than TOP SEED S Operation and Management Fee (50% net revenues for the fiscal year), TOP SEED will be required to reimburse the difference. If that sum is less than TOP SEED S 50% net revenues for the fiscal year, the CITY will pay TOP SEED the balance within 120 days of year end. 4. Responsibilities of TOP SEED. In fulfillment of TOP SEED=S obligations under this Agreement, TOP SEED shall: a. Provide a comprehensive tennis program for youth through adults that meets the needs of beginner through advanced tennis program and is in accordance with the USTA, United States Tennis Association. b. Employ, train, schedule, supervise, discipline, and pay the employees and sub-contractors used to operate the tennis program. In order to operate the tennis program, TOP SEED shall employee add/or contract for the following positions: tennis professionals, social event coordinator, maintenance personnel and front desk personnel. TOP SEED will also employ an administrative assistant position to the office manager for hours per week depending on the season. The level of TOP SEED employment and staffing necessary to operate the tennis program shall be subject to the approval of the City. c. Have all program fees payable to the City of Calabasas and make a commercially reasonable good faith effort to collect all Gross Revenues derived from TOP SEED S tennis programs at the Center, both current and past due. Such effort shall not include judicial proceedings. d. Furnish the independent accounting firm, contracted by the City with pertinent accounting materials, books and records requested by the City from time to time with respect to TOP SEED S tennis related programs at the Center. e. TOP SEED will be required to provide the City with a copy of the Insurance coverage as outlined in item #10. f. Require TOP SEED S management and/or mid-management to attend a minimum of 3/4 of the staff meetings at the Center as

3 required by the City. g. Provide the indemnities and maintain the insurance required by the sections 9 and 10 of this Agreement. h. Agrees to comply with Public Resources Code 5164 which requires the City to take reasonable steps to determine if a prospective employee, contractor or volunteer has been convicted of any crimes specified in Penal Code Section TOP SEED further agrees to have all current/prospective employee s, contractor s, and volunteer s complete a Supplemental Application Form, screening them for criminal background and submit at the cost of TOP SEED fingerprints to the Department of Justice. 5. Responsibilities of the CITY. In fulfillment of TOP SEED s obligations under this Agreement, TOP SEED shall: a. Make the areas of the Center specified in Section 1, above, available to TOP SEED for the purposes stated in this Agreement. City shall not, except as specified herein, interfere with TOP SEED in the exercise of any of its rights or responsibilities under this Agreement. b. Employ a Recreation Services Manager to oversee the operation of the entire Center and all activities, including coordination of the front desk and maintenance personnel duties. c. Employ a Business Services Coordinator to coordinate and facilitate the TOP SEED (Tennis & Swim Center operation) accounting procedures, including; deposits, processing receivables, payroll, accounts payable, processing registration, and other duties as assigned by the Recreation Services Manager. The Business Services Coordinator s salary and benefits will be charged as a 522 Expenditure as agreed to by both parties. d. Deposit all revenues generated by TOP SEED S tennis programs (i.e. tennis memberships, daily court use, lessons, social events, leagues, tennis camps, and other related tennis programs) at the Center, defined herein as Gross Revenues, into the appropriate CITY account (the 910 Joint Account ) and provide TOP SEED monthly statements itemizing all such revenues. e. Establish and maintain the 910 Joint Account as depository for Gross Revenues derived from tennis membership and TOP SEED programs and services offered at the Center. City shall issue checks out of the 910 Joint Account, as mutually agreed upon by both parties, for the following expenses (defined as 522 Expenditures ): i. one-half of the water bill for the Center ii. all tennis related electricity charges iii. office supplies iv. custodial supplies v. all tennis court related repairs and maintenance (but not capital improvements)

4 vi. vii. reimbursement to TOP SEED for all salaries (and related benefits) for tennis professionals, maintenance and front desk personnel, the tennis social events coordinator, and the salary and benefits for the Business Services Coordinator and administrative assistant. All such sums shall be mutually agreed upon by both parties. Reimbursement for the insurance required to be maintained by TOP SEED pursuant to Section 12 of this Agreement. f. Provide TOP SEED with all pertinent accounting materials, books and records requested by TOP SEED from time to time relating to the 910 Joint Account and 522 Expenditures. (See memorandum dated January 22, 2001, revised May 6, 2002, for detailed TOP SEED expense allocations.) g. Pay expenses covered exclusively by the CITY and others, but not included in this Agreement or payable from the 910 Joint Account: pool related electricity charges, gas for the pool heater, Recreation Services Manager salary and benefits, non-tennis court related repairs of the Center (ie. repairs or maintenance in locker room, lights in parking lot or swimming pool area), and any capital improvement or expenditures (which are to be disbursed form the Capital Improvement Fund described at paragraph 7 below). h. Establish a line item within the City s 522 Joint Expenditures to reimburse TOP SEED for payroll, worker s compensation, and payroll taxes for tennis professionals, front desk and maintenance staff, social events coordinator, head pro, director of tennis, and administrative assistant subject to staffing levels approved by the City. i. Assist with marketing and promotion of TOP SEED and development of the tennis programs cooperatively with TOP SEED. Specifically, City shall provide 1 ½ pages in the quarterly program brochure for program material related to the City. The City will make available space for promotional banners and deck signage as approved by the Recreation Services Manager during the program season. j. Membership fees will increase by 5% (cost of Living) bi-annually, beginning in July City staff will also on a periodic basis, conduct a membership fee survey to access current membership rates in the local area. 6. Standards and Quality of Service. The City shall have the right to establish reasonable standards of performance for TOP SEED and to specify the kind and quality of operation to be conducted at the Center. Such standards and specifications shall be communicated in writing to TOP SEED. TOP SEED agrees to [in its best efforts] comply in every respect with such standards and specifications to the reasonable satisfaction of the City. If the City determines that TOP SEED is unable or unwilling to comply with reasonable standards of performance as outlined by the City, City will inform TOP SEED in writing of said deficiencies and allow TOP SEED thirty (60) days to comply. If the City determines, in its reasonable discretion, after thirty (60) days that TOP SEED is unable or unwilling to comply with said standards, the City will have the right to terminate this Agreement immediately. 7. Term and Termination. The Term of this Agreement shall commence on July 1,

5 2007, and shall continue in full force and effect for seven (7) years. Six (6) months prior to the expiration of the initial Term, TOP SEED shall have the right to exercise an option to renew the Agreement for an additional seven year Term and at a Facility Use Fee to be negotiated by both parties. This Agreement shall terminate automatically in the event TOP SEED becomes insolvent, has a receiver appointed for the benefit of creditors, is adjudged bankrupt, or is delinquent on the reimbursement of TOP SEED s unearned draw as provided in Section 3, above. 8. Capital Improvement Fund. From their respective shares of Net Revenues, Top Seed and the City shall contribute ten percent (10%) of Net Revenues to a Capital Improvement Fund established and maintained by the City, which provides funds to undertake capital repairs and/or facility improvements that are mutually agreed upon for the tennis program at the Center. In the event that Net Revenues exceed $60,000 during any quarter, the parties agree that their respective contributions to the Capital Improvement Fund shall be increased to twelve percent (12%) of their respective shares of Net Revenues for such quarter. 9. Film Revenues. All tennis related film revenues excluding required City film permit fees, will be equally divided 50% to the Capital Improvement Fund and 50% to the 910 Joint Account (Film Revenue) and treated as part of Gross Revenue. 10. TOP SEED Rates and Charges for Tennis Programs. All fees charged by TOP SEED for tennis programs shall be subject to review by the Center=s Recreation Services Manager and City Council to ensure that the fee structure is benchmarked against industry standards and fair market value for goods and services. TOP SEED has sole discretion and authority to set fees and costs with a cap of not to exceed an increase of Ten Percent (10%) per year. 11. Indemnification. TOP SEED, its employees and agents agree to, and shall defend, indemnify, protect and hold harmless the City, its elective and appointive boards, officers, officials, employees, agents and volunteers from and against any and all claims, demands, losses, defense cost, fines, penalties, expenses, causes of action and judgments at law or in equity, or liability of any kind or nature, whether known or unknown, (including without limitation, third party claims and reasonable attorneys= fees) which the City, its elective and appointive boards, officers, officials, employees, agents and volunteers may sustain or incur or which may be imposed upon them for injury to or death of persons, or damage to property arising out of or in any way connected to TOP SEED S negligent performance and/or use of the Center facilities under the terms of this Agreement, excepting only liability arising out of the affirmative misconduct or negligence of the City, provided such affirmative misconduct or negligence is determined by agreement between the parties or by the findings of a court of competent jurisdiction. In instances where CITY is shown affirmative misconduct or negligence and where City s affirmative misconduct or negligence accounts for only a percentage of the liability involved, the obligation of TOP SEED will be for that entire portion or percentage of liability not attributable to the affirmative misconduct or negligence of CITY. TOP SEED S obligation pursuant to this provision shall survive termination of this Agreement. 12. Insurance. TOP SEED shall obtain and keep in force during the term of this Agreement commercial general liability insurance, including property damage, against liability for bodily injury, personal injury, death, and damage to property occurring at the Center with combined single limit coverage of at least Two Million Dollars ($2,000,000.00) per occurrence and a general aggregate combined single limit of bodily injury and property damage liability of at least Two Million Dollars ($2,000,000.00); that policy shall include contractual liability, insuring TOP SEED S performance of indemnification obligations contained in this Agreement. The policy of insurance required to be carried by TOP SEED shall name City and any other parties in interest that City

6 reasonably designates as additional insureds; shall be primary insurance that provides that the insurer shall be liable for the full amount of the loss without the right of contribution from any other insurance coverage of City; shall be in a form satisfactory to City; shall be carried with companies reasonably acceptable to City; shall provide that the policy shall not be subject to cancellation, lapse, or change, except after at least thirty (30) days' prior written notice to City; and shall not have a deductible in excess of any amount reasonably approved by City. Premium for insurance shall be paid out of the 522 Joint Expenditure. 13. Assignment. TOP SEED shall not assign this Agreement or delegate any of its duties hereunder without written approval from the City. 14. Breach of Contract. In the event that City or TOP SEED is in default for cause under the terms of this Agreement, the non-defaulting party shall provide the defaulting party written notice of the alleged default and the defaulting party shall have sixty (60) days after service upon it of said notice in which to cure the default by rendering a satisfactory performance, thirty (30) days shall be the default period for non-payment. In the event that the defaulting party fails to cure its default within such period of time, the non-defaulting party shall have the right, notwithstanding any other provision of this Agreement, to terminate this Agreement without further notice and without prejudice to any other remedy to which it may be entitled at law, in equity or under this Agreement. 15. Notices. To be effective, any and all notices and other written communications given or required to be given pursuant to this Agreement shall be delivered by certified mail or next day delivery, return receipt requested, to the party to whom notice is being given and shall have effect from the day following notice date. Notices to be given to the City shall be delivered to: CITY: City of Calabasas Mureau Road Calabasas, CA ATTN: City Manager Notices to be given to TOP SEED shall be delivered to: TOP SEED: Top Seed Tennis Academy, Inc Park Sorrento Calabasas, CA ATTN: Mr. Steve McAvoy 16. Condition of Facilities. City makes no representation as to the quality, condition or status of the Center. TOP SEED shall assume responsibilities of the tennis courts and related facilities in Aas condition. 17. Severability. If one or more of the provisions of the Agreement shall be or become invalid, illegal or unenforceable, under any duly promulgated and applicable law, order, or regulation, the validity, and enforceability of the remaining provisions contained herein shall not be in any way affected, impaired, prejudiced, or disturbed as a result. 18. Entire Agreement. This Agreement contains the entire understanding between the City and TOP SEED. Any prior agreements, promises, negotiations or representations not expressly set forth herein are of no force or effect. Subsequent modifications to this Agreement shall be effective only if in writing and signed by all parties. If any term, condition or covenant of

7 this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions of this Agreement shall be valid and binding. 19. Waiver. Waiver by any party hereto of any term, condition, or covenant of this Agreement shall not constitute the waiver of any other term, condition, or covenant hereof. 20. Governing Law. This Agreement shall be interpreted and construed according to the laws of the State of California. 21. Counterparts. This Agreement may be executed in one or more counterparts. Each shall be deemed an original and all, taken together, shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. City of Calabasas, A Municipal Corporation TOP SEED Top Seed Tennis Academy, Inc. A California Corporation By: James Bozajian, Mayor Date: By: Steve McAvoy, Owner/President Date: ATTEST: By: Gwen Peirce, Assistant City Clerk Date: APPROVED AS TO FORM: By: Michael Colantuono, City Attorney Date:

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