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MEDLIN Johnny R From: LIDZ Jerome Sent: Friday, September 21, 2001 5:30 PM To: RHAY Tim W; WEISS Carolyn J Cc: MEDLIN Johnny R Subject: Re: document review request Carolyn and Tim, I have reviewed the lease between the County and Emerald Valley BMX, and I've spoken with Johnny for a few minutes about his concerns. I've also checked on Emerald Valley's status as a non - profit corporation: it still exists, but its status is that it has been involuntarily dissolved nearly a year ago, probably meaning it didn't file an annual report and /or pay fees. (That is easy to remedy; the Secretary of State's records show that has happened several times before.) Scott Snook is the President and registered agent. Questions: do we have a file on this lease, other than the info that you sent? Do we have evidence that Emerald Valley's insurance, as required by the lease, is current? Are they paying the annual rent ($1.00)? Do we have a current, signed copy of the "management contract "? Do we have any record of the terms of the county's transfer of the park to the city, insofar as it concerns the lease? Brief, tentative answers to the questions posed in Carolyn's e-mail: 1. It is not yet clear to me whether the "management contract" is an assignment of the lease, which requires consent, or simply a management contract similar to a building lessee hiring a building manager. If the EVBMX never meets and has no members, the management contract looks more like an assignment, but there's no bright line. 2. The lease does not specifically require EVBMX to maintain non -profit status, but to the extent it doesn't exist anymore, that suggests there must have been an assignment; someone or something must be the lessee. Of course, there are a number of other things that EVBMX or its assignee is required to do under the lease - - including obtaining the lessor's consent for an assignment, which obviously did not occur. 3. Liability: The lease requires EVBMX (or its assignee if the lease has been assigned) to indemnify and hold the county (city) harmless from all damages (etc.) arising from its use and occupancy of the premises. EVBMX also must maintain liability insurance of $1,000,000, and the policy must name the county (city) as an additional insured. The insurance is what makes the indemnity worth something, because I doubt Snook or EVBMX has assets to pay a judgment. If the insurance is current, I think the City's risk of liability for injuries at the track is very slight. If there's no insurance, the risk is substantial. Even if there is insurance, I think the City still has a legitimate interest in assuring itself that the track is reasonably safe; our interest in the safety of our citizens is not limited to our concerns about being sued. 4. You certainly have a right to ask for a copy of the bylaws. Nothing in the lease requires them to provide it; I'm not sure if there's anything in state law that does. (I'll check.) A copy of the bylaws, by itself, won't necessarily tell us whether or not EVBMX is complying with them. The bigger issue may be what evidence Snook can provide that EVBMX continues to exist as an entity - - e.g., minutes of a meeting, list of members, etc. Apart from the question of whether the lease has or has not been assigned, I think the status of EVBMX is probably less important than making sure the required insurance is in place. Johnny asked me for a list of questions that he could use in an informal meeting with Scott Snook. After I review whatever additional information you have in our files, I can work up a short list. Thanks much. Jerome Lidz Harrang Long Gary Rudnick P.C. (541) 485 -0220 ierome.s.lidz@harrang.com