May 3, 1982

Carnoustie will observe and perform all the terms, coven- ants and conditions contained in the lease;

failure to comply with conditions of nos. 3, 4 and 5 will constitute a default under the mortgage;

upon default Crown Life Insurance Company can enter on the lands for the remainder of the term of the lease with the exception of the last day thereof;

Crown Life will be able to exercise the right of renewal contained in the original lease; and

if Carnoustie pays the $500,000.00 pursuant to the terms of the mortgage the mortgage will be void.

in view of the fact that the mortgage of the lease is for one

day shorter than the head lease Carnoustie will still be the tenant under the lease and will remain liable on it even if he defaults on the mortgage and Crown Life goes into possession of the lands. Consequently if Crown Life does some act which is contrary to a covenant in the lease, the City cannot sue Crown Life but can only sue Carnoustie. However,

the lease does have a proviso for re-entry by the City on non- payment of rent, nonperformance of covenant, on seizure or on forfeiture of the term. Therefore if Crown Life goes into possession of the golf

course they must abide by the covenants of the lease or risk forfeiture of the term.

It is likely that if Carnoustie defaulted on the mortgage and Crown Life went into possession of the lands they would consult with the City and agree upon a suitable party to operate the golf course.

Yours truly

MacKENZIE LIDSTONE

Sandra J. Watson ' SJW:cl

ec; Mr. Bryan R. Kirk, City Administrator

Note: Morlyage cdoevuent attached. Cit Ceen