CONFIDENTIAL Heads of Terms for proposed letting of Tor Sports & Leisure, Street Road, Glastonbury to Avalon Leisure

Ltd / Western Community Leisure Version Control: Version no. Date Prepared by 5 15th May 2012 Keith Pennyfather

GENERALLY Landlord: Mendip District Council Cannards Grave Road Shepton Mallet Somerset BA4 5BT Martin Evans Legal Services Mendip District Council Cannards Grave Road Shepton Mallet Somerset BA4 5BT Avalon Leisure Ltd Address tbc David Mears Thrings LLP The Paragon Counterslip Bristol BS1 6BX DMears@thrings.com Western Community Leisure tbc

Landlords solicitor:

Tenant:

Tenants solicitor:

Sub-tenant: Sub- tenants solicitor:

Costs:

Each party will bear their own legal and surveyors costs incurred in drafting the lease. The parties intend that the lease will be completed on 12th June 2012 (following landlords cabinet approval on 11th June). The tenants staffing complement may not be fully established until 1st July 2012 so until then appropriate support and assistance will be offered by the landlords staff who are currently involved in the operation.

Timescales:

Conditions:

The transaction is subject to:1. Contract. 2. Landlords Cabinet approval to the final form of lease agreed.

LEASE Premises: The whole of the site edged red on the attached plan which excludes only the Scout and Sea Cadet huts [plan to follow]. The right to run services through the premises to serve the remainder of the site. Access for maintenance, and compliance generally with the landlords covenants, as required. Term: 3 years from the date of completion of the lease, to be outside the security of tenure provisions of the Landlord & Tenant Act 1954. The lease will contain an option for the landlord to determine the lease at any time after the expiry of the second year of the term on six months notice; no compensation will be payable. 1 pa, if demanded. It is the intention that the tenant will manage the premises and all activities undertaken there in a

Specific rights reserved:

Break options:

Rent: Profit Share and KPIs:

manner which meets Mendips desire to provide and enhance a valuable community and sports / recreation facility, but also with a view to maximising financial returns. The tenant will provide each month an agreed range of KPI and P&L reports. The tenant will be incentivised to maximise profitability and all net profit will be shared monthly: 60% tenant / 40% landlord. Any losses made by the tenant in the earlier periods can be offset against profit in later periods before the profit share is allocated. Existing users: All existing users, groups, and community organisations will have the continued right to use the facilities at the premises on reasonable terms. In the event of a dispute concerning terms of use which cannot be resolved by the tenant the users will have the right to refer the matter for determination to a MDC Committee (comprising the Portfolio Holder, the Deputy Leader, and two officers) whose decision will be binding on all parties. TUPE and staffing: The tenant will take over employment of the existing bar manager, and responsibility for all other casual bar staff. All other Mendip personnel will return to their usual Mendip duties. The tenant will ensure that the premises are managed by staff who have appropriate skills and experience, and hold a Personal Licence when required. Outgoings: The tenant will pay directly all Business Rates, Council Tax, utilities, and all other outgoings relating to the premises. The tenant will be responsible for keeping the grounds properly maintained and marked out for the range of activities carried out at the premises, and will also

Repairs:

keep the interior of the clubhouse in tenantable repair. Both will be yielded up when the lease expires in no worse condition as exists when the lease commences (this will be evidenced by a photographic Schedule of Condition). An agreed Schedule of Works to the clubhouse will be undertaken by the landlord, at an estimated cost of 126k, as soon as possible after completion of the lease. The landlord will thereafter be responsible for keeping the clubhouse wind and watertight. If a substantial defect is identified or arises which in the landlords opinion is uneconomic to repair the lease will be determinable on 3 months notice; no compensation will be payable. Insurance: The landlord will maintain property insurances. The tenant will maintain public and occupiers liability insurances. Use: The permitted use is as a community sports and leisure facility. Access will be maintained for the general public so whilst subscriptions can be sold no private membership arrangements will be permitted. No change of use will be permitted. Alienation: Apart from the sub-letting of the whole or part of the premises to Western Community Leisure no other assignments nor sub-lettings will be permitted. No mortgages will be permitted. Alterations: Alterations to the structure or exterior of the clubhouse will be prohibited. Internal non-structural alterations, and measures to improve the quality and range of activities on the grounds will be allowed subject to the landlords consent, which shall not be unreasonably withheld.

Alterations will be authorised by the prior completion of a Licence to Alter in the landlords standard form. Amongst other things this will oblige the tenant to provide evidence, before the works commence, that all necessary consents to the works have been obtained (including planning and Building Regulations approvals) and that the works will be undertaking in full compliance of CDM regulations. No new or additional buildings or structures will be permitted. Other terms: BUSINESS PROPOSAL To be based on the landlords standard form of lease. A Memorandum of Understanding will be completed under which Western / Avalon will have the right to submit for MDCs consideration on [add date of expiry of the second year of the lease] a proposal for the improvement and management of the range of facilities offered at Tor Leisure over the longer term. This proposal will be informed by Western / Avalons experience of managing the operation, but MDC will not be obliged to accept it in view of the need to comply with procurement policies.