HomeMy WebLinkAbout10/22/2008 - STAFF REPORTS - 1.B.MANAGEMENT AGREEMENT
1 HIS MANAGLMLN I AGILLLMLN 1 ("Agreement") is made this day of October, ZUUii
("Effective Date"), by and between the City of I ihii Sprints, a ('ah fornia charter city ("City") and
Ccmury Golf Partners HolJingy lit, i.P (' Nian.igci").
RECITALS:
A. The Ciiy owns municipal golf Innlilies consigting nfa championship golfcoursc and
related amenities within the City of Palni Springs comniunly known as the I.eeends and Resort Golf
Courses (collectnely, "harihty'").
B. Manager has managed the hacihty since 1995 on behalf of Arnold Palmer Golf
Management, LLC.
C. The City' and Manager desire for Manager to rnntmue managing the Facility during the
Term nfrhis Agreement on the icrnis established hcrcin.
NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein
and for other good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. In addition to other terms which are defined elsewhere in this Agreement,
the following terms, for purposes of this Agreement, shall have the meanings set forth in
this section:
"Affiliate" of a specified person or entity shall mean a person or entity that directly or
indirectly, through one or more intermediaries, controls, or is controlled by, or is under
common control with, the specified person or entity. For purposes of this definition
`"control" shall mean the ownership, either directly or indirectly, of equity securities or
other ownership interests which represent more than 50% voting power in the controlled
entity.
"Authorized Representative" shall mean the City Manager Recreation or his designee.
"Budget" shall mean the budget prepared by Manager pursuant to Article 4.
"Capital Expenditure" shall mean all expenditures for additions, alterations to, or
rebuilding, renovation or Improvcmcnis of, all or any portion of the Facility considered
under GAAP to be fixed assets.
"Compensation'" shall mean salaries, wages, and fringe benefits pa7hraccrucc
"Improvements" shall mean the buildings, strictures (surface and subsurface) and other
improvements now or hereafter located at the Facility.
"Legal Requirement" shall mean the laws, rules and regulations (including statutory and
judicial interpretations) of the United States of America, the State of California and all
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other governmental bodies having jurisdiction over the Facility, including, but not limited
to, the City.
"Maintenance and Repair Obligations" shall mean Manager's obligations to maintain the
Facility, including the grounds, parking lot, driving range, tee areas, electrical and
plumbing fixtures and writing, plate glass, wall and floor coverings, painting and
decorating, the irrigation system, fixtures, trade fixtures, equipment, including HVAC,
utilities and landscaping, in good condition, reasonable wear and tear excepted, and
maintenance procedures to keep the Facility and all such items in good condition and
working order, reasonable wear and tear excepted. "Maintenance and Repair
Obligations" shall not include any item that is, by its nature a Capital Expenditure.
"Net Operating Income" shall mean the positive difference between Operating Revenues
and Operating Expenses.
"Operating Expenses" shall have that moaning established in Exhibit "B" hereto.
"Operating Revenues' shall have that meaning established in Exhibit "C'" hereto.
"Termination Event" shall mean anv events which establish a right by either Party to
terminate This Agreement.
12 [Reserved.]
ARTICLE 2
INTRODUCTION
2.1 Grant of Authoritv. City hereby grants to Manager, and Manager hereby accepts, the sole
and exclusive riglut and obligation to manage, operate, usc, possess, occupy, promote and market the
Facility on behalf of City and, in connection therewith, to perform and furnish, or cause to be performed
and furnished, all management operation, promotion, marketing and administration of the Facility in
accordance with all Legal Requirements, all on terns and subject to the limitations of this Agreement.
Without in any way limiting Manager's right to manage and operate the Facility in accordance with the
terms of this Agreement, Manager, with the active participation of the City, shall have the authority and
responsibility to: (a) determine, establish, and implement the policies, standards, and schedules for the
operation and maintenance of the Facility' and all matters affecting customer relations-, (b) hire, train, and
supervise the genoral manager, course superintendent, and all Facility employees; (c) supervise and direct
all pbascs of advertising, sales, and business promotion for the Facility; (d) establish accounting and
payroll procedures and functions for the Facility. City agrees that it will cooperate with Manager to
permit and assist Manager ro carry out its duties under this Agreement.
2.2 Nature of Relationshio. The parties agree that the only relationship created by this
Agreement is and shall be that between City as owner of the Facility, and Manger, as an independent
contractor, providing management, marketing, promotional and operating services, and not as agent,
employee, joint venturer, partner or lessee of City.
2-3 Term. The lernt of this Agreement Shull begin on October 29, 3009 and shall cx}>iic at
the close of business on December 1], 2000. Nniwith5tundingthe li reguine ur any other provision of lhts
1�grcument, the City shall hdNo the right to ternuinaic 1111 :ygiccincnt earl without Cause upon ;0 daya
written notice aher May 31, 2009 1 he I erm of Ihis Agreemeni is the earlier of flecemher 31, 2009 or
the date upon which cal Iy Icrinination iy clle•c•live
2A [Reserved.]
2.5 [Reserved.]
2.6 [Reserved.
2.7 Reuresentations and Warranties. Each party represents and warrants to the other that (i)
it has the hill power and right to enter into and duly perform this Agreement, (ii) it is under no contractual
or other legal obligations and there exists no lien or claim which will in any way interfere with its full,
prompt and complete performance hereunder, and (iii) the individual executing this Agreement on its
behalf has the authority to do so.
2.9 [Reserved.]
ARTICLE 3
RESPONSIBILITIES OF MANAGER
From the Effective Date of this Agreement through the end of the Term, Manager shall perform
the Scope of Work attached hereto as Exhibit "A
ARTICLE 4
RECORDS, ACCOUNTS AND REPORTS
4.1 Books. Manager shall maintain in accordance with GAAP, adequate books of account
with respect to its management and operation of the Facility and shall maintain such books at Manager's
corporate offices and promptly make such books available to City upon reasonable request.
4.2 Access to hnfonmation. City shall have the right to obtain from Manager such
information, and to inspect such books and records concerning the management and operation of the
Facility during nonnal business hours.
4.3 Audit. On or before May 21, 2009, Manager shall furnish to City a balance sheet, a
statement of profit or loss and a statement ol'cash flow, for the period between October 28, 2008 and
April 30, 2009, prepared in accordance with GAAP and accompanied by an independent auditor's report
containing an opinion of the independent certified public accountant preparing the report, which shall be a
reputable firm selected by Manager with the prior consent and approval of the City's Authorized
Representative.
1.4 Monthly Report. Within twenty (20) days after the end of each month, Manager shall
furnish to City a report in the general form as attached hereto as Exhibit 'T".
4.5 Ooerating Budget. Not later than November 15, 2009, Manager shall submit to City, for
its approval, a budget for the period from October 29, 200E to June 30, 2010. ("Budget"), listing all
projected Operating Revenues and Operating Expenses by category, and including a contingency item
equal to five percent (50 �) of total projected Operating Expenses.
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4.6 BudL*et ADoroval. City shall promptly review the proposed Budget and shall deliver its
comments no later than December 15, 2009, The Budget is subject 10 approval by the City Council of the
City of Palm Springs.
4.7 No Exocnklitureb in Pawls of Budeel. M,mager shall nut, without written authorization
by City, incur obligations with respect to any line item of Operating Fxpertses 11-1,11 exceed the local
Operating Expenses is contemplated fur that line item of evprnsr by the Budget, nor incur any Expenses
Thal exceed Iola] Operalin^ Fxpentics ns cnulclrlplulcd by the Rudecl
4.8 [Reserved.]
ARTICLE 4
FUNDS AND ACCOUNTS
5.1 OneratinR Fund. Manager shall collect all Operating Revenues and deposit them in an
Operating Fund in an account maintained by Manager in its name in the Depository. Manager shall have
complete control and authority with respect to the Operating Fund. Monies in the Operating Emrd and
any interest thereon shall be applied first to the payment of Management Fees accrued through the end of
the prior month and thereafter to any other Operating Expenses then accrued. The balance shall be
retained in the Operating Fund as reserve for payment of future Operating Expenses. Notwithstanding the
foregoing, Manager shall be entitled to maintain funds in reasonable amounts in "cash register banks" or
in petty cash funds at the Facility, pruvided dud the .unuunla of such funds shall he reported in the
Monthly Report. City chnll dcposil Two-1 lundred I hougand Dollars (S200,000) as an initial dcposil info
the Operating Fund on or before October ^ , 2008.
5.2 [Reserved.]
5.3 [Reserved.]
5.4 Security for and Investment of Funds. All funds and accounts required to be maintained
by Manager under this Agreement shall be maintained in the Depository, which shall be a bank or branch
located in the City, in a manner compliant with Lc. -al Requirements applicable to the deposit of funds by
the City. Money on deposit in the operating Fund must be retained in a fully -secured, interest -bearing,
demand account or invested as instructed by the City's Authorized Representative.
5.5 No Obligation of Manager to Advance Funds. Manager shall be obligated to perform its
duties only to the extent that funds are made availublc 10 Manager for such purpose. Manager shall not be
obligated to make any advance to or for the account of the City or to pay any sums incurred for the
performance of City, nor shall Manager be obligated to incur any liability or obligation for the account of
City, nor shall Manager be responsible for [lie failure of its performance of its obligations hereunder as a
result of City's failure to provide sufficient binds.
5.6 [Reserved]
5.7 Manager Accounting Software. The parties acknowledge and understand that the
accounting sollware used at the Facility is owned by manager, and City shall have no rights or interests -in
such software.
ARTICLE 6
[Reserved.]
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ARTICLE 7
POWERS AND FUNCTIONS
7.1 Authority of Manager, Except as otherwise specifically provided in this Agreement,
Manager shall have the exclusive right and authority to exercise, or delegate the exercise of, all rights,
powers and duties conferred or imposed on Manager in this Agreement. The powers of Manager with
respect to the Facility shall be complete, subject only to the limitations expressly set forth in this
Agreement.
7? Contractinti for Facility Use and Purchase of Suuulies and Services. Subject to the
limitations imposed by the Budget, Manager shall have full authority and discretion as to contracting for
the use of the Facility and the purchase or lease of all equipment, materials, supplies and inventories
reasonably required by Manager. Manager, however, shall make all such purchases at the hest available
price known to Manager, considering the quantities required, the time available for the delivery and the
sources of supply.
ARTICLE 8
COMPENSATION
8.1 For services to he performed by Manager rlurin�_, the period until Dcccmbcr 31, 2009,
City shall pay to Manager, in advance, on thr first day o1 eaelh month beginning on Novernber I. 200x, a
-Management Pee" equal to Sixteen Thoutiand Dollar~ ($1 t),000) pe•r month. Any payment due on
Dcccmbcr 1, 2009 shall be fur a total of Seventeen I huusand Dullain ($17,000), brimmin, the total
Manaaernernl Fee for the Tum of the A-rccmcnl to I wo-Hundred I wenty-Five Thousand Dollars
($225,0001 If early termination should result m ternunatinn nn an cftcciivc dare bclorc the 30'' da}' of
the morrlh, the Management Fee for that month shall be prorated at the amount of Five -I lundred "Flutty-
Three Dollars ($533.00) per day
8? [Reserved.]
8.3 [Reserved.]
8A [Reserved.]
ARTICLE 9
INSURANCE
9.1 Manager shall comply with the insurance obligations established in Exhibit "D".
ARTICLE 10
[Reserved
ARTICLE 11
TERMINATION
11.1 'termination by City. in addiliou to ilic City"y uthrr lennination rights, City shall have
the right to ternunale this Agreement upon the occurrence nl any one 01 the tidlowirrs evenly:
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(a) IResened.]
(b) [Reserved-1
(c) I Reserved.I
(d) Two (2) material preaches of the Agreement pv Manager within a sixty (60) day
pot rod, after written notice For each such breach, or three (3) material breaches of
the Agreement, after written noticr for each such breach, shall conclusively be
deemed to be :in incurahlo rcpctitivo failure by Manager.
(e) I Reserved.I
(1) [Rcserve(l.I
11.2 Termination by Manager. Manager shall h,lve lhr right to terminate this Agrccnrenl upon
the ncrum•rter of any nne of the lollnv, in;, event~.
(a) IReserved. I
(b) [Reserved.]
(c) [Rcsened.]
(d) Two (2) material breaches of the \grccmcnt by City )Aithin a sixty (60) clay
period, alter written nnttcc lot, each such bleach, or three (3) material breaches of
the Agreement, alter written notice for each such breach. shall conclusively be
deemed to be ,m incurable rcpctili\c failure by City.
(e) [Reset -Ned.]
113 [Reserved.]
11.4 [Reserved.]
11.5 Surrender of Facility and Imm-C)"emonrs. Upon expiraton or termination of -this
Agreement, Manager shall promptly surrender the Facility to City, leaving all equipment,
materials, supplies, books and records, manuals and inventories that are the properly of
City or that have boon purchased with Operating Revenues or from finds made available
by City and title thereto shall vest in City, to the extent not earlier vested in City, without
any further compensation from City. All hinds and accounts maintained by Manager in
the Depository shall be transl'orred to City within five (5) business days of the expiration
or termination of this Agreement.
11.6 [Reserved.
11.7 [Reserved.]
6
GUilil I
11.8 Remedies Cumulative. Neither the right of termination, nor the right to sue for damage,
nor any other remedy available to a party under this Agreement shall be exclusive of any
other remedy given under this Agreement or now or hereafter existing at law or in equity
including (a) the right to reasonably cure, at the defaulting party's cost and expense, any
default, and (b) the right to seek specific performance of the defaulted obligation.
11.9 Indemnification re Future Business. City shall indemnify and hold harmless Manager
and its owners, officers, directors, and employees from all costs, expenses, claims,
damages, and liabilities arising or resulting from the failure of City following the
expiration or earlier termination (for whatever cause) of this Agrccment to provide any of
the services contracted for under this Agreement (or contracted for prior to the Term)
relating to the management and operation of the Facility, which services are to be
provided after the expiration or termination of this Agreement, including tournaments,
banquets, meetings, and other group functions to be held at the Facility: provided,
however, that in no event shall Manager enter into any contract to provide any such
service at the Facility where the date of the service to be provided occurs after the end of
the Tenn, without first obtaining the City's written approval.
ARTICLE 12
ASSIGNMENT ORSUBCONTRACTING
12.1 [Reserved.]
12,2 [Reserved.]
123 Assignment.
(a) By City. City may assign its interest in this Agreement at any time without
Manager's consent, provided the party to which City assigns its obligations
agrees in writing, concurrently with such assignment, to assume all of City's
obligations under this Agreement.
(b) T3) Manager. N9ana cr shall not N oluntanly isslgn or encumber its inleresl in This
Agreement. or subcontract Its duties under this Agrccment without lrst obtaining
C itv's consent.
ARTICLE 13
[Reserved.]
ARTICLE 14
MISCELLAINEOUS
14.1 Facility Names. City agrees that (1) City has no right as a result of this Agreement to use
Manager's trade names. and (2) no right or rcmedv of City for any default on the part of
Manager under this Agreement confer upon City or its successor or assigns the right to
use my of Manager's trade names. In the event of any breach of this covenant by City,
manager, in addition to any remedies available to it under this Agreement or at law or in
equity, shall have the right to injunctive relief.
wlifl 1
14 2 Notices. Any communication required or permitted to be given under this Agreement
shall be in writing and deemed to have been duly given if and when delivered personally
(with receipt acknowledged); or the fourth (0) day after mailing (by certiFed mail return
receipt requested ) with proper postage prepaid; by facsimile transmission with evidence
confirming transmission; by email, with email confirmation by the recipient; or when
delivered by a national commercial courier service (such as Federal Express) for
overnight delivery to be confinned in writing by such courier.
To City: City Manager
City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, CA 92262
With a copy to: City Attorney
Woodruff, Spradlin & Smart
555 Anton Blvd., Ste. 1200
Costa Mesa, CA 92626
Fax: (714) 835-7787
To Manager: Century Golf Partners
5080 Spectrum Dr., Suite 1000 East
Addison, TX 75001
With a copy to: Dallas Addison
Addison Law Finn
14901 Quorum Drive, Suite 650
Dallas, Texas
14.3 Amendments. This Agreement may be amended only by the written consent of the
parties.
14.4 [Reserved.]
14.5 [Reserved.]
14.6 [Reserved.]
14.7 Entire Agreement, This Agreement contains the entire agreement of the parties and
supersedes all prior and contemporaneous agrucmenls and understandings, oral or
otherwise, among the parties with respect to the matters contained in this Agreement and
may not be modified or amended except as set forth in this Agreement.
14.8 Counterparts. This Agreement may be executed in one or more counterparts and each of
such counterparts, for all purposes, shall be deemed to be an original, but all of such
counterparts together shall constitute but one and the same instrument, binding upon the
parties, notwithstanding that all of the parties may not have executed the same
counterpart.
605171 1
14.9 Anolicable Law, This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California and the applicable venue shall be
Riverside County.
14.10 No Representation as to Profitability. In performing its obligations hereunder, noting
herein contained is intended to impose upon Manager any obligation to achieve, for the
benefit of City, any Net Operating income. Manager has made no representations,
warranties or promises that Manager (on behalf of City) will be able to achieve or obtain
any Net Operating Income from the Facility and City acknowledges that no such
representations, warranties or promises have been made by manager.
14.11 Limitation of Liabilitv.
(a) City agrees that no partner, co -venturer, employer, agent, director, officer,
shareholder or employer or Manager, shall be personally liable to City or anyone
claiming by, through or under City, by reason of any default by Manager under
this Agreement or for any amount that may become due to City by Manager
under the terms of this Agreement or otherwise.
(b) Manager agrees that no offieers, agents, or employees of City shall be personally
liable to Manager or anyone claiming by, through, or under Manager by reason
of any default by City under the Agreement, or for any amount that may become
due to Manager by City under the terms of this Agreement or otherwise.
14.12 [Reserved.]
14.13 [Reserved.]
14.14 Force Maieure. Neither party shall be liable or responsible to the other party for any,
delay, damage, loss, failure, or inability to perform caused by "Force Majeure" if notice
is provided to the other party within ten (10) days or the actual knowledge of the event of
"Force Majeure' that such party is unable to perform. The term "Force Majeure" as used
in this Agreement shall include all causes which are not reasonably within the control of
the parties hereto and which by the exercise of due diligence could not be reasonably
prevented or overcome.
14.15 Survival of Covenants. Any covenant, term or provision of this Agreement which in
order to be effective must survive the termination of this Agreement shall survive any
such termination.
14.16 Third Parties. None of the obligations under this Agreement of either party shall run to
or be enforceable by any party other than a party to this Agreement or by a valid
assignee.
14.17 [Reserved.]
14.18 No Presumption Re2ardin�y Drafter. City and Manager acluiowledge and agree that the
terms and provisions of this Agreement have been negotiated and discussed between City
and Manager, and that this Agreement reflects their mutual a reement regarding the
subject miter of this Agreement. Because of the nature of such negotiations and
discussions, it would he inappropriate to dlccm either City or Manager to be the drafter of
nn5171 I
this Agreement, and therefore no presumption for or against the drafter shall be
applicable in interpreting or enforcing this Agreement.
14.19 [Reserved.]
14.20 [Reserved.]
14 21 1Reserved.]
14.22 [Reserved.]
14.23. Release. The Paitics to this Agreement, and each of them, for themsehes and their
subsidiaries. Inemhers, pariricrs, n•preventatroes, empinvcc , officers- directors,
predecessors, SUCCCburS, assigns, alliliales and ,1g rats, and each of them, do horebv fully
remise, release and lorevcr discharge the each other and their representatives, members.
partners, Predecessors, successors. nccitns, officers, agents, dlrCCTOYS, stockholders,
ovvnels, scrvuils, employees, attorneys, ativ,ns, affiliated parent and subsidiary
corporations or companies, past and prevent, and each or Mien, of and from any and all
manner of actions, soils, liens. debts. dues, dania"es, Maims, sutras of money, obligations.
liabilities, _ludgntents, bonds, cvccuUons and demand~ or every nature, kind and
description whalcocvcr, whether known or unknown, and whether suspeced or
Unsuspected, either at law, in equity or ulherwlsc, which may have arisen larder and by
vinuc ol'Ihe laws of any lurlsdlcilon. which the Parties have had or claim to hive had or
now have or claim to now have against cacti nthci.
Further, with respect to ncC relencr contained in this A_rccmunt, the Parties expresslti
waive and relinquish ,ill rights and benefits allorcled by Section 1542 of the California
Ovil Code, which provides sti follows
"A General Rcicatic does not extend to d,nmy which the creditor does
not know or suspect to exist in his or her favor at the time of cxccuting
the release which if known by hini or her must have materially ul•lcclal
his or her cclticnent with the debtor."
I he Parties herehv warrant and '-u,lr:anlce that they have lull and complete aulhori(y to
release all such claims on behalf of thenlsclvec, (heir heirs, assigns and successors in
interest.
This release dooti nut and shall not extend to ariy claims which may accrue alict Oclobcr
28. 2008.
IN WITNESS WHEREOF, the parties hereto have executed this Management Agreement as of
the date set forth above. --
[Signatures on the following page.]
10
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"CITY"
CITY OF PALM SPRINGS,
a public body, corporate and politic
Mayor
ATTEST:
City Cleric
APPROVED AS TO FORM:
City Attorney
-MANAGER"
Century Golf Partners Holdings III, LP
By:
[Management Agreement - October 27, 20081
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EXHIBIT A
SCOPE OF WORK
Manager shall perform the following Scope of Work:
1. Responsibilities of Manager.
(a) Negotiate, execute and perform contracts, use agreements, and other agreements (1) with
concessionaries and tenants, suhlerl In prtnr wrirten approval by the City's Authorized
Rcpreseutativo; and other intended users of the Facility or any part thereof, or (2) that
otherwise pertain to the use, operation, markering and promotion of the Facility or any
part thercoF;
(b) [Reserved.];
(c) Coordinate all advertising, promotional activities, marketing, and public relations for the
Facility;
(d) [Rcscrved.];
(e) Execute and perform contracts, use agreements, licenses and other agreements (1) with
prior approval of the City', Authui i.cd Rcprescnlative, for all sponsorships, including the
use of advertising space in or about the Facilitv and all advertising rights of whatever
kind or nature relation to the Facility; and (') for the sale, promotion, marketing and use
of all names, trademarks, trade names, logos and similar intangible property relating to
The Facility.
(f) Operate, procure or cause to he operates] ( I ) concessions within the Facility for the sale of
food, beverages, souvenirs, novelties and programs. and (2) clubs and restaurants within
the Facilitv;
(g) Establish and maintain consistent procedures for cost estimating and reporting and
payment of invoices, including preparation of budgets and reports;
(h) [Reserved.];
(i) Retain legal counsel in connection with Manager's duties herein; provided, however, that
City shall have the right to approve such counsel in the event that City may ultimately be
liable for such costs, which consent shall not be unreasonably withheld;
0) [Reserved.]
(k) [Reserved.]
(1) [Reserved.]
(m) Furnish all services, materials, tools, machinery, equipment, furnishings and other items
necessary to accomplish this Scope of Work;
EXHIBIT A
TO MANAGEMENT AGREEMENT
60S 171 1
(n) Devise and implement procedures reasonably designed to keep the Facility in good order
and condition, subject to ordinary wear and tear, and maintain the Facility in such order
and condition, subject to the responsibilities of City;
(o) Provide quarterly performance updates to the City Council, either in written or oral form
at the request of the Contract 01 icer; and
(p) Perform 404 Permit inspections (pursuant to Federal Clean Water Act § 404) of the
Facility by May 31, 2009 and provide to City by June 30, 2009, a written evaluation of
the Facility's 404 Permit compliance and deficiencies, if any, in a form acceptable to the
City
2. Personnel.
(a) General Manager. Manager shall select, and City shall have the right to approve, the
General Manager and Course Superintendent who will he placed on site at the Facility.
The foregoing persons may not be replaced or nor may their responsibilities be
substantially reduced by Manager without written approval of the City's Authorized
Representative-
(b) General. in addition, Manager shall employ or contract for the employment of all of the
employees of the Facility. Manager shall recruit, hire, tram, discharge, promote and
supervise the management staff of the Facility and shall supervise, through the
management staff, shall supervise the recruiting, hiring, training, discharge, promotion
and work of all other employees of the Facility. All employees of the Facility shall be
properly qualified for their positions, and the compensation of such persons shall be
comparable to the compensation of employees of other comparable golf courses in the
Coachella Valley. The compensation of the management staff and all other Facility
employees shall be an expense of the Facility payable by City as established in the
Bud, -*et.
(c) Pension and Benefit Plans. Manager shall have the right to provide eligible employees of
the Facility with pension, profit sharing and other employee retirement benefits and
disability, health and welfare benefits and other benefit plan or plans now or hereafter
available to employees of other Manager -owned and/or operated golf courses and country
clubs and to charge the Facility with its allocable share of such Manager plan or plans to
the extent established in the Budloei
(d) Temnorary Assignment of Manager's Other Personnel. If Manager shall reasonably
deem it advisable, Manager may temporarily assign to the Facility the general manager,
the head golf professional and other members of the management staff from the
employees of Manager or Affiliates of Manager or from the staff of other manager -
owned and/or operated gol f oourses and country clubs. During such time as these
employees are temporarily assigned to the Facility, all such employees will be paid their
regular Compensation, and the pro-rata share of such employees' Compensation equal to
the actual time such employees worked at the Facility shall be an expense of the Facility -
Any Compensation paid to any such employee will be included in the Budgeted limits for
amounts to he paid for Facility personnel. Notwithstanding the foregoing, .mv such
assignment of more than two persons or Inr moic 11ian 31 calendar days during the Term
is sulijecl to 1he Ciiy's prior approval
hXH1BIT A
TO MANAGEMENT AGREEMENT
cnsi71 1
3. Reimbursement to Manager. Subject to the limitations imposed by the Budget, Manager shall be
entitled to be reimbursed for all costs and expenses incurred by Manager as the result of
Manager's performance under this Agreement, including (a) all costs and reasonable attorneys'
fees incurred by Manager, including attorneys' fees of both in-house legal counsel and outside
legal counsel, in connection with defending any claims or actions against Manager relating to the
Facility, except any such claims brought by the City or against which Manager is required to
indemnify the City and (b) all extraordinary expenses not reasonably anticipated by the parties or
otherwise provided for in this Agreement, if and only if to otherwise require Manager to assume
such expenses would be inconsistent with the role of a manager performing on behalf of an
owner. Manager shall have the burden to show that requiring Manager to assume the expenses
described in this paragraph would be inconsistent with the role of a manager performing on
behalf of the owner.
4. Duty and Liabilitv,. Manager shall owe to City a duty to perform its obligations under this
Agreement and to manage and operate the Facility at all times in a manner consistent with the
Performance Standards described below. Manager shall not be liable, responsible or accountable
in damages or otherwise to City or to any other person for any act or omission that is within, or
that the Manager reasonably believes to be within, the scope of its authority under this
Agreement; provided however, that Manager shall be liable for that portion of any loss sustained
by City or any other person which is caused by:
(a) acts or omissions of the Manager in had faith or proximately resulting from Manager's
negligence or intentional misconduct, or
(b) any Termination Event caused by Manager.
5. Performance Standards. Manager agrees to:
(a) Manage and operate the Facility as a first-class facility in a condition commensurate with
other first-class golf course facilities operated in the Coachella Valley, so as to minimize
Operating Expenses and Maximize Operating Revenue;
(b) Refrain from permitting the Facility to be used without reasonable charge for such use,
absent the prior written consent of the City's Authorized Representative;
(c) Perform the Maintenance and Repair Obligations;
(d) [Reserved.];
(e) Require that all persons using the Facility or attending events therein comply with all
Legal Requirements of all governmental authorities having jurisdiction over the Facility;
(f) [Reserved.];
(g) Perform its obligations under, this Agreement in accordance with the T_egal Requirements
of all governmental authorities having _jurisdiction over such obligations, or any part
thereof; provided, however, that if any Legal Requirement enacted after the execution
liereor neocsbilates any structural change to all or any portion of the Facility, City shall be
responsible, at ITS sole COST and expense, for complying with such Legal Requirement;
and
EY1-11BIT A
TO MANAGEMENT AGREEMENT
605171 1
(f) Promptly and fully discharge and pay all of its obligations under this Agreement at or
prior to the times specified for performance or payment; provided, however, that nothing
herein shall prohibit Manager from reasonably contesting the validity of any claim
against Manager (any such elaim due and owing to be promptly paid by Manager upon
the conclusion of such dispute by Final non -appealable judgment or otherwise),
6. Measurable Oualitv Standards. Manager also agrees to meet or exceed each performance
standard established on Exhibit"F" hereto.
Measurable Performance Standards. Manager also agrees that, throughout ilte Tenn (but except
as provided below), the average number of paid rounds played at the Facility, measured on a two-
year basis ("Measurement Period") shall in no event be less than M'Vo of the average number of
paid rounds played at the Facility for the three (3) year period ending one year prior to the last
day of the Measurement Period. Notwithstanding the foregoing, Manager's inability to satisfy
the requirements of the foregoing sentence shall not constitute a terminating event under this
Agreement if any of the following is true during the Measurement Period, and only to the extent
thereof,
(a) Any force Majeure event has occurred and materially and adversely affected Manager's
operations at the Facility,
(b) A substantial and adverse change has occurred in market conditions (including, for
example, the addition of an unusual number of new golf course in Palm Springs or an
extraordinary decline in hotel occupancy in Palm Springs);
(c) [Reserved.]
(d) [Resemcd.]
(e) All or any material portion of the Facility was temporarily closed for a significant amount
of time to accommodate construction and/or installation of City -approved Capital
Improvements.
The first measurement performed under this Section shall be with respect to the Measurement Period
ending December 31, 2008 and shall include all periods preceding this Agreement.
8. [Reserved.]
9. [Reserved.]
10 fees and Charges. Manager ~hall recommend, and the l'ny shall approve the green fee rates
(including any iowlk:nl Breen frr disruuutti), the rates fur rental ulubn and the rates for the drivin,, rang;.
Manager shill set all other rares. All I, es, charges, and prim~ Shall he comretitive with other lirst class
public golf courses in the Coachella Valley.
LXHJBIT A
TO MANAGEMENT ACRr,,rMENT
EXl-11Blf B
OPERATING EXPENSES
"Operating Expenses" shall mean and include all expenditures or obligations of whatever kind or nature
incurred or accrued by Manager in any specified period during the Tenn, as limited by the Budget and
within (or reasonably believed by Manager to be within) the scope of Manager's authority or
responsibility tinder this Agreement. Lxcepl as oihcrwise set fOITh in this agreement, Operating
Expenses shall not include any expenses of Manal ei's corporate office, or any services rendered by
Nlanaocr's corporate offices, rn the cumpcnsation of any Lorponae or regional employee of Manager.
Operating Expenses shall include, to the exleril catablished in the Agreement:
• all payments made or liabilities incurred to obtain Operating Revenues;
• salaries, wages, applicable payroll taxes, benefits, costs and expenses of personnel working at the
Facility;
• contract labor
• maintenance and repairs (whether ordinary or extraordinary, and whether foreseen or
unforeseen);
• utilities;
• telephone;
• telecommunications and broadcast facilities;
• dues, memberships and subscriptions;
• security;
• audit and accounting fees;
• legal fees, to the extent estahlitihcd in the Agrermcul;
• other professional service tees, sal lect to the pi wr writlai consent oflhe f ily's Authorized
RepresenMU e;
• fees payable to concessionaries or other subcontractors;
• refuse removal;
• cleaning;
• sales and other applicable taxes;
• building supplies;
• ticket or other sales cormnissions;
• premiums for insurance required by the Agrretm, nt;
• data processing;
• advertising;
• marketing and market research;
• pest control;
EXT-IJBIT B
TO MANAGEMF.NT AGREEMENT
eusin 1
• office supplies;
• freight and delivery;
• lease of equipment or furnishings;
■ credit card and debit card fees and charges and telecheck fees and expenses;
• travel (economy class), lodging and related out-of-pockcl expenses of officers, directors and
corporate personnel of Manager properly allocable to the performance of Manager's obligations
Linder this agreement;
• travel (economy class), lodging and related out-of-pocket expenses of employees of the Facility
conducting business on behalf of the Facility;
• Management Fees;
• charges for fidelity bonds;
• expenses incurred in complying with all Legal Requirements;
• and all other costs and expenses incurred in accordance with the terms of this Agreement by or
for the account of City reasonably related to manager's performance of this Agreement,
v including all damages, losses or expenses suffered or paid by Manager or its agents or
emplovees as the result of any and all claims, demands, suits causes of action,
proceedings, judgments and liabilities, including court costs and attorneys' fees, incurred
or sustained by or against Manager;
o but excluding
• any portion of any Capital Expenditures expended,
• any portion of any loss or damages suffered by Manager or its agents or
employees as a result of
• any actor omission of Manager made in bad faith or involving
negligence or intentional misconduct; or
• any Termination Event willfully caused by Manager and/or
• non -cash expenses such as depreciation.
Operating Expenses shall not include and Manager shall not be responsible for the payment of any debt
service relating to the construction, expansion or development of any portion of the facility.
Manager or its Affiliate may perlcn in nurnccs as .1 representative of a manufacturer to secure the benefits
of Inwer costs to the City, provided that any resulting say ings shall be passed on to the Ciry, including
representatives' fees. in addition, .ill trade discounts, rebates and refunds pertaining directly to purchases
rot' the Facility shall accrue to the henel71 n1-1he City If any purchases of goods or services for the
Facility are made linen or through an Affiliate of Alana,m, the charges to the Facility for such goods ni
services shall be on the same terms as ihosc m,ide to other of f cuur5ca operated by Manager and shall not
exceed the market pnres for such goods and services
FXT-T113TT 13
TO MANAGEMENT AGREEMENT
6u917I 1
EX1711BIT C
OPERATING REVENUES
"Operating Revenue" shall mean all money received as a result of the operation of the facility and the
sale of goods and services at the Facility, determined on an accrual basis in accordance with GAAP
consistently applied. All UpLMIln12 1Zevenueti ,hall be the property of the• City managed by the Manager
Operating Revenue shall include:
• Green fees;
• Membership initiation fees, dues, and other payments by members;
• Rental fees for golf carts, hand carts, golf dubs, and other rental items;
• Range balls;
• Rental and concession payments:
• Food and beverage sales;
• Liquor sales;
• Revenue generated from space rentals and From meetings, banquets, parties, receptions,
tournaments, and other group gatherings;
• New and used merchandise sales;
• Instruction fees;
• Vending sales (or, if applicable, receipts from vending companies); and
• Proceeds from business interruption insurance.
Operating Revenue shall not include:
• Cash refunds or credits allowed on returns by customers;
• Sales taxes, excise taxes, gross receipts taxes and other similar taxes now or later imposed upon
the sale of food, beverages, merchandise or services and paid by Manager to the appropriate
taxing authority, but only if collections from the customer are accounted separately from the
selling price;
• Fees charged by a golf professional or other golf instruction entity functioning as an independent
contractor for the teaching of golf lessons and instruction if Manager receives no revenue from
such golf lessons; -
• The actual uncollectible amount of any check or bank draft received by Manager as payment for
hoods or services and returned to Manager from a customer's ban]c as being uncollectible
(commonly "non -sufficient funds" checks), but only after Manager has made commercially
reasonable efforts to collect on the check;
• The actual uncollectible amount of any charge or credit account (commonly "bad debts") incurred
by Manager for the sale of merchandise or services; provided, however, that the credit was
extended to the customer by Manager, and that commnerclally reasonable efforts to collect said
account have been made;
EXHIBIT C
TO MANAGEMENT AGREEMENT
(n5171 1
• The actual uncollectible amount of any sale or merchandise or services for which Manager
accepted a credit card; provided, however, that Manager has made commercially reasonable
efforts to collect the debt after being notified by the issuing bank of the invalidity or
uncolleclibility of the charge;
• interest or other charges paid by customers For extension of credit by Lessee and the associated
costs therefor;
• Interest earned on funds held in the Operating Fund:
• Sales or trade-ins of machinery, vehicles, trade fixtures or personal properly used in connection
with Manager's operation of the Facility (sulcs of any such items owned by Manager shall
convlilutc Man,Igcr's colt revenues; sales nFsuch items owned by City is prohibited without the
prior wriaen consent of tlic C'ily'ti Aullioricud Representativel;
• The value attributed to an exchange or transfer of any merchandise, supplies or equipment
exchanged or transferred from or to other locations of business of Manager where such exchange
or transfer is not made for the purpose of avoiding a sale which would otherwise be made from or
at the Facility; provided, however, that revenues generated From the sale of any such
merchandise, supplies or equipment to customers at the Facility shall not be excluded from
Operating Revcnue;
• Receipts in the form of refunds from or the value of merchandise, supplies or equipment returned
to shippers, suppliers or manufactures;
• The value of any cash or quantity discounts received from sellers, suppliers or manufacturers;
• The amount of any gratuities paid or given by customers to or for employees of Manager;
• Receipts from the sales of uniforms or clothing required to be worn by employees;
• Amounts attributed to meals served or provided to employees of Manager;
• Receipts from the sale of waste or scrap materials resulting from Manager's operations:
• Amounts attributable to play by members of any frequent user or affinity or card -based loyalty
program associated with or contracted for by Manager, exercising their membership right to play
it limited number of rounds without separate payment of greens fees (except that Manager shall
separately acawarl fur such rounds and Cray and Manngcr will rcnegotiu(e this provision if the
number of such rounds played in any celcnd,rr nxmth exceeds two percent IZ°'�I ofall rounds
playcd,tl the 0 acuity);
• The amount of any funds received by reason of reservation or similar service charges imposed
over and above any green fees, cart fees, and the like, for operation of an advance reservation
system (except that Manager shall separately account For such funds and City and Manager will
renegotiate this provision if the umunn( Of such funds exceeds an amount equal to live percent
(51f)) of total Operating Revenues);
• Any amount received from a hospitality (or similar) establishment, including any hotel chain, by
reason of a premium or fee paid to Manager by such establishment for the privilege of offering
and/or advertising "package deals" to its prospective customers, provided that the Crly's
Authortied ➢:cprcycnlative has given her prior written couseul to any discounts offered in
consideration for said premiums or Ices;
• Procccds of borrowutt by C'nv,
• pmcecds paid e15 a result Oran insurable loss, unless paid [or Ilic loss or inlerruplion of business,
to the extent such surm .ire utir:el to remedy said Insv, and
o Any deposits by the l'rt� to the Operating hund.
Nltmager shall not engage in any in -kind, harlcr, or like transactions with reference to the Facility without
the prior wriuun consent of the Cily's Authorized Represemarivc.
LYHIBIT C
TO MANAGEMENT AGRLLMLNT
1,01r!1 1
EXHIBIT D
11►lamm ►1d1t1
Coveraee.
(a) Manager shall cooperate with City to procure and maintain, as a budgeted expense, all
property, business interruption, comprehensive liability, automobile liability and workers
compensation insurance necessary for the effective operation of the Facility which is
required by the City's Authorized Representative.
(b) Manager agrees to procure and maintain, at all times during the Term, and at Manager's
expense, fidelity insurance covering all Facility employees who are Manager's
employees, in an amount not less than five -hundred thousand dollars ($500,000).
(c) Manager agrees to provide all certificates of insurance evidencing the existing of
insurance required by the City-
(d) [Reserved.]
(e) [Reserved.]
Policies and Endorsements.
(a) [Reserved.]
N [Reserved.]
(c) Blanket Policies. Any insurance policies provided by City or Manager may be effected
under policies of blanket insurance which cover other properties in addition to the
Facility, and in such case an allocable portion oftbc premiums for such blanket policies
of insurance shall be charged to the Facility.
3. Waiver of Subrogation. Neither Manager nor City shall assert against the other, and Manager and
City hereby waive with respect to each other, any claims and rights to recovery for any losses,
damages, liability or expenses (including reasonable attorneys' fees) incurred or sustained by
either of them on account of injury to persons or damage to property arising out of the ownership,
operation and maintenance of the Facility, to the extent that the same are covered by insurance.
City and Manager hereby grant to each other, on hehal f of any insurance company providing
insurance under this Agreement, a waiver of any right of subrogation which any insurer or party
may acquire against the other party by virtue of payment of any loss under any insurance policy.
City and Manager shall cause each such insurance company to provide a written subrogation
waiver indicating that such insurance company waiveS all right of recovery by way of subrogation
which such insurance company may acquire against City or Manager (as the case may be) and
their insurance companies.
4. [Reserved.]
EXHIBIT D
'CO MANAGEMENT AGREEMENT
G05 1t 1 1
EXHIDIT E
[Reserved.]
T-tXl4TT3TT E
TO MANAGEMENT AGREEMENT
bu51^I I
LXHIBIT F
MEASURABLE OUAIJTY STANDARDS,
FXTTTBIT F
TO MANAGEMENT AGRrF.N4EN'['
m3171 1
�4pAI.M Sp ry
� � c
4�0 1
DATE: October 22, 2008
Citv Council Staff Report
NEW BUSINESS
SUBJECT: AGREEMENTS FOR CITY -OWNED GOLF COURSES
FROM: David H. Ready, City Manager
BY: City Manager's Office
SUMMARY:
At the direction of the City Council, City staff has negotiated the buy-out and
termination of the leasehold interest on the city -owned Legends Golf Course.
Concurrently, staff has negotiated a new fourteen (14) month Agreement for the
joint management and operation of the two city -owned courses, the Legends and
Resort Courses. Approval of these Agreements provides for:
1. The City's buy-out and termination for 1.19 million dollars of the lease of the
city -owned Legends Golf Course held by Arnold Palmer Golf Management,
LLC.
2. A new short-term management Agreement between the City and Century
Golf Partners Holdings III, LP, for the management and operation of the city -
owned Legends and Resort Golf Courses beginning October 27, 2008
through December 31, 2009, for not -to -exceed $225,000.
3. The appropriate resolutions amending the fiscal year 2008-2009 City Budget
for funding the buy-out and termination of the lease on the Legends Golf
Course Agreement and funding and implementing the Agreement for the
management and operation of the two golf courses.
RECOMMENDATION:
1. Approve the termination and the expenditure of $1,190,000 to terminate the
lease with Olympus Real Estate Partners for the Legends Golf Course;
2. Approve an Agreement with Century Golf Partners Holdings III, LP, Arnold
Palmer Golf Management, LLC, for the management of the Legends and \,,
P, �1No A\ Vd�o\G
0 0
Resort Golf Courses for the period of October 27, 2008 through December
31, 2009 in an amount not -to -exceed $226,000:
3. Adopt Resolution No. , "A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING THE FISCAL.
YEAR 2008-09 BUDGET;"
4. Adopt Resolution No. , "A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING THE FISCAL
YEAR 2008-2009 BUDGET;" A3469. A
5. Upon review and approval by the City Attorney of the provisions and form of
the Agreements, authorize the City Manager, or his designee, to execute all
the necessary documents.
FISCAL IMPACT:
The 1.19 million dollar buy-out of the lease on the Legends Golf Course is a
capital expense. The operating costs for the two courses will require an initial
"start-up" fund of $250,000 which is projected to be recovered through golf
revenues within eighteen (18) months. The management fee of approximately
$16,000 per month will be paid by golf revenues. It is projected, based upon past
years' operations, that approximately $300,000 to $600,000 of new annual golf
revenue will accrue to the City.
David H. Ready, Cit a§er Thomas Wds ,'Assistant City Manager
2
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, AMENDING THE BUDGET
FOR THE 2008-09 FISCAL YEAR.
WHEREAS, Resolution No. 22265 approving the budget for the Fiscal Year 2008-09
was adopted on June 18, 2008; and
WHEREAS, the City Manager has recommended, and the City Council desires to
approve, certain amendments to said budget.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS
DOES HEREBY RESOLVE, that the Director of Finance is authorized to record inter -fund
cash transfers as required in accordance with this Resolution, and that Resolution No.
22265, adopting the Fiscal Year 2008-09 budget is hereby amended as follows:
SECTION 1. ADDITIONS
Fund Activity Account Amount
430 Golf Course 7022 Golf Course Pending $1,190,000
Operations Golf Course Lease
Termination
Pending $250,000
Advance to Mgmt.
Co.
Purpose: Establish funding for payment of current Golf Course lease agreement
termination and for operating advance to Management Company.
SECTION 2. SOURCE: Transfer of $1,440,000 from General Fund to Golf Course
Fund. The City made a partial advance call on a note receivable from the CRA to cover
this transfer.
Fund Activity Account Amount
430 Golf Course 29301 $1,440,000
Fund Balance
ADOPTED THIS 22"d DAY OF OCTOBER, 2008.
David H. Ready, City Manager
ATTEST:
James Thompson, City Clerk
Resolution No.
Page 2
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS)
I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that
Resolution No. is a full, true and correct copy, and was duly adopted at a regular
meeting of the City Council of the City of Palm Springs on by the
following vote.
AYES:
NOES:
ABSENT:
ABSTAIN:
James Thompson, City Clerk
City of Palm Springs, California
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, AMENDING THE BUDGET
FOR THE 2008-09 FISCAL YEAR.
WHEREAS, Resolution No. 22265 approving the budgetforthe Fiscal Year 2008-09
was adopted on June 18, 2008; and
WHEREAS, the City Manager has recommended, and the City Council desires to
approve, certain amendments to said budget.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS
DOES HEREBY RESOLVE, that the Director of Finance is authorized to record inter -fund
cash transfers as required in accordance with this Resolution, and that Resolution No.
22265, adopting the Fiscal Year 2008-09 budget is hereby amended as follows:
SECTION 1. ADDITIONS
Fund Activity Account Amount
001 General Fund 29301 $1,440,000
Fund Balance
Purpose: Establish funding for payment of current Golf Course lease agreement
termination and for operating advance to Management Company.
SECTION 2. SOURCE: Transfer of $1,440,000 from General Fund to Golf Course
Fund. The City made a partial advance call on a note receivable from the CRA to cover
this transfer.
Fund Activity
430 Golf Course
ADOPTED THIS 22nd DAY OF OCTOBER, 2008.
ATTEST:
Account
29301
Fund Balance
Amount
$1,440,000
David H. Ready, City Manager
James Thompson, City Clerk
Resolution No.
Page 2
AA[aIla[47_1IIs] ►1
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS)
I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that
Resolution No. is a full, true and correct copy, and was duly adopted at a regular
meeting of the City Council of the City of Palm Springs on by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
James Thompson, City Clerk
City of Palm Springs, California
MANAGEMENT AGREEMENT
TI-11S NiANAGi^MENT AGREENILNI )"Agreement") 1s made this day of October, 2005
("El7ective Date"). by and between the City of Palm Springs, a California charter city ("City'") anJ
Cenwry Gol l'Pnrincr� Holdings 111, LP)"Manager").
RECITALS:
A. The City n\w ns municipul gull' facilities consislin of a championship golf course and
mated amrmtics within the City of Palm Springs commonly Lno�en a� the Legends and Resort Golf
Courscc (collcclircly,
8 Manager hus managed the hacihly since 11)95 on hehalfof Arnoki Palmer Goll'
Management, LLC.
C The City and Nlurlagci desire I'm Manager to continue rnanaginng the Facility during the
Perm of this Agreenicnt on the terms cstallishcd herein.
NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein
and for other good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereby agree as follows -
OU51711
ARTICLE 1
DEFINITIONS
1.1 Definitions. In addition to other terms which are defined elsewhere in this Agreement,
the following terms, for purposes of this Agreement, shall have the meanings set forth in
this section:
"Affiliate" of a specified person or entity shall mean a person or entity that directly or
indirectly, through one or more mtennedianes, controls, or is controlled by, or is under
common control with, the specified person or entity. For purposes of this definition
""control" shall mean the ownership, either directly or indirectly, of equity s=iritics or
other ownership interests which represent more than 50% voting power in the controlled
entity.
"Authorized Representative" shall mcan the City Manager Recreation or his designee.
"Budget" shall mean the budget prepared by Manager pursuant to Article 4.
"Capitul Expenditure" shall mean all rspenditures for additions, alterations to, or
rebuilding, renovation or Improvements of, all or any portion oClhe Facility considered
under GAAP to be fixed assers.
-Compensation" shall mcan salaries, wages, and tinge benefits paid or accrued.
"Improvements" shall mean the buildings, structures (surface and subsurface) and other
improvements now or bereafter located at the Facility.
"Legal Requirement" shall mean the laws, rules and regulations (including statutory and
judicial interpretations) of the United States of America, the State of California and all
i D/aa/boa 8
r�� �•X6
other governmental bodies having jurisdiction over the Facility, including, but not limited
to, the City.
"Maintenance and Repair Obligations" shall mean Manager's obligations to maintain the
Facility, including the grounds, parking lot, driving range, tee areas, electrical and
plumbing fixtures and writing, plate glass, wall and floor coverings, painting and
decorating, the irrigation system, fixtures, trade fixtures, equipment, including HVAC,
utilities and landscaping, in good condition, reasonable wear and tear excepted, and
maintenance procedures to keep the Facility and all such items in good condition and
working order, reasonable wear and tear excepted. "Maintenance and Repair
Obligations" shall not include any item that is, by its nattue a Capital Expenditure.
"Net Operating Income" shall mean the positive difference between Operating Revenues
and Operating Expenses.
"Operating Expenses' shall have that mcanmg established in Exhibit "13" hereto.
"Operating Revenues" shall have that meaning established in Exhibit "C"' hereto.
"Ternnnation Event" shall mean any events which establish a right by either Party to
terminate this Agreement.
12 [Reserved.]
ARTICLE 2
INTRODUCTION
2.1 Grant of Authornt City hereby granrs to Manager, and Manager hereby accepts, the sole
t and obligation to manage, operate, use, possess, oecupy, promote and market the and c clusivu rig]
Facility on hehal f of City and, in connection therewith, to perform and furnish, or cause to be performed
and fuinished, all management operation, promotion, marl.cting and administration of the Facility in
acoordancc with all Legal Requirements, all on terms and subject to the limitations of this Agreement.
Without in any way limiting Manager's right to manage and operate the Facility in accordance with the
terns of this Agreement, Manager, with the active participalion of the City, shall have the authority and
riespoiisibihty to: (a) dcicmime, establish, and implement the policies, standards, and schedules for the
operation and maintenance of the Facility and all matters affecting customer relations; (b) hire, train, and
supenasc the general manager, course superintendent, and all Facility employees; (c) supervise and direct
all phases of advertising, sales, and business promotion for the Facility; (d) establish accounting and
payroll procedures and functions for the Facility. City agrees that it will cooperate with Manager to
permit and assist Manager to carry out its duties under this Agreement.
2.2 Nature of Relationship. The parties agree that the only relationship created by this
Agreement is and shall be that between City as owner of the Facility, and Manger, as an independent
contractor, providing management, marketing, promotional and operating services, and not as agent,
employee, joint venturer, partner or lessee of City.
2.3 Term. Thu torn ol'tlus Agrccmcnl shall begin on October 29, 2008 and shall expire at
the close of br15111055 on Dcccmbei 31, 2009. Notwithstanding the foregoing or any other provision of this
Agreement. the Cnv shall hare the i ight to terminate this Agreement early without cause upon 30 dayb
rcrtarui
written notice after May 31. 2009, The Tcrm of this Agreement iti the earlier of December 31, 2009 or
the date upon which early ternhinalion is effective.
2.4 [Reserved.]
2.5 [Reserved.]
2.6 [Reserved.]
2.7 Reuresentations and Warranties. Each party represents and warrants to the other that (i)
it has the full power and right to enter into and duly perform this Agreement, (ii) it is under no contractual
or other legal obligations and there exists no lien or claim which will in any way interfere with its full,
prompt and complete performance hereunder, and (m) the individual executing this Agreement on its
behalf has the authority to do so.
2.8 [Reserved.]
ARTICLE 3
RESPONSIBILITIES OF MANAGER
From the iiffective Date of this Agreement through the end of the Term, Manager shall perform
the Scope of Work attached hereto as Exhibit "A".
ARTICLE 4
RECORDS, ACCOUNTS AND REPORTS
4.1 Books. Manager shall maintain in accordance with GAAP, adequate books of account
with respect to its management and operation of the Facility and shall maintain such books at Manager's
corporate offices and promptly make such books available to City upon reasonable request.
4.2 Access to Information. City shall have the right to obtain from Manager such
information, and to inspect such books and records concerning the management and operation of the
Facility during normal business hours.
4.3 Audit. On or before May 21, 2009, Managei shall furnish to City a balance sheet, a
statement of prol71 or loss and a statement of cash flow, for the period between October 28, 2008 and
April 30, 2009, prepared in accordance with GAAP and accompanied by an independent auditor's report
containing an opinion of -the independent certified public accountant preparing the report, which shall be a
reputable firm selected by Manager with the prior consent and approval of the City's Authorized
Representative,
4A Monthly Report. Within twent}r (20) days after the end of each month. Manager shall
furnish to City a report in the general form as attached hereto as Exhibit " F".
4.5 9p;rating Budget. Not later than November 15, 2009, Manager shall subrmt to City, for
its approval. a budget for the period horn October 28, 2008 ro ,Tune 30, 2010, ("Budget"), listing all
projected Operating Revenues and Operating Expenses by category, and including a contingency item
equal to five perccni (5'.'/o) of total projected Operating Expenses.
n0i 171 1
4.6 Budget ADnroval. City shall promptly review the proposed Budget and shall deliver its
comments no later than December 15, 2009. The Budget is subject to approval by the City Council of the
City of Palm Springs,
43 No Exncnditures in EXCess of Rudect. Mnnagcr shall not, without wl7ticn tmthorization
by City, incur obligations �i ith respect to any line item of Operating Espcnses that exceed the iohd
)peratmg Expenses as contemplated for ih;lt line• ncm of expense by the Rudgel. nor incur any Expenses
that exceed total Operating F,,,\pcoscs as contemplated by the Rudl;ef.
4.8 [Reset-ved.]
ARTICLE 4
FUNDS AND ACCOUNTS
5A OUCiating Fund. Manager shall collect all Operating Revenues and deposit them in an
Operating Fund in an account maintained by Manager in its name in the Depository. Manager shall have
complete control and authority with respect to the Operating Fund. Monies in the Operating Fund and
any interest thereon shall be applied first to the payment of Management Fees accrued through the end of
the prior month and thereafter to any other Operating Expenses then accrued. The balance shall be
retained in the Operating Fund as reserve for payment of future Operating Expenses. Notwithstanding the
foregoing, Manager shall be entitled to maintain funds in reasonable amounts in "cash register banks" or
in petty cash finds at the Facility, provided that the amounts of such funds shall be reported in the
Monthly Report. City shall deposit'1'wn-I lundred Thousand Dollars ($200.000) as an initial deposit into
the Operating Fund on or bclorc October 28, 2008.
5.2 [Reserved.]
53 [Reserved.]
5A Security for and Investment of Funds. All tends and accounts required to lie maintained
by Manager under this Agreement shall be maintained in the Depository, which shall be a bank or branch
located in the City, in a manner compliant wilh Legal Rcquinments applicable to the deposit of funds by
the City. Money on deposit in the operating Fund must he retained in a fully -secured, interest -hearing,
demand account ni invcsled as instructed by the C itv's Authorized Representative.
5.5 No Obligation of Manager to Advance Funds. Manager shall be obligated to perform its
duties only to the extent that funds arc made available to Manager for such purpose. Manager shall not he
obligated to make any advance to or for the account of the City or to pay any stuns incurred for the
performance of City, nor shall Manager be obligated to incur uny liability or obligation for the account of
City, nor shall Manager be responsible for the future of its performance of its obligations hereunder as a
result of City's failure to provide sutMCient funds.
5.6 [Reserved.]
5.7 Manager Accounting Software. The parties acknowledge and understand that the
accounting sofhvare used at the Facility is owned by manager, and City shall have no rights or interests in
such software.
ARTICLE G
[Reserved.]
05171 1
ARTICLE 7
POWERS AND FUNCTIONS
7.1 Authority of Manauer. Except as otherwise specifically provided in this Agreement,
Manager shall have the exclusive right and authority to exercise, or delegate the exercise of, all rights,
powers and duties conferred or imposed on Manager in this Agreement The powers of Manager with
respect to the Facility shall be complete, subject only to the limitations expressly set forth in this
Agreement.
7.2 Contracture for Facility Use and Purchase of Sulmlics and Services. Subject to the
limitations imposed by the Budget, Manager shall have full authority and discretion as to contracting 1'or
the use of the Facility and the purchase or lease of all equipment, materials, supplies and inventories
reasonably required by Managcr. Manager, however, shall make all such purchases at the best available
price known to Manager, considering the quantiues required, the time available for the delivery and the
sources ofsupply.
ARTICLE 8
COMPENSATION
81 Fur ecrt'tccs to be perCormed by Munaeer during the period until Dcccmbcr 31, 2009,
City shall pry to N12nuger, in adtcice, on the lirsT day of each niontli beginning on NovcmbcT 1, 2008. a
`Management Fee" equal to Sixteen 1 housand DOIIar9 ($10,000) per month. Any payment due on
December 1, 1-009 shall he tier a total of Setentecn Thousand Dollars ($17,000), N urging the total
Management Fee for the Term of the Agi-ccmrnt to I'wn-1 lundred 1\venty-Five Thousand Dollars
($225,000). Tf early termination should retiult in terniinahnu on an effective date before the 301' day of
the month, the Management Fee fur that month shall be prorated at the amount of Frye -Hundred Fhirty-
'I hree Dollars ($533.00) per day.
8.2 [Reserved.]
8.3 [Reserved.]
8.4 [Reserved.]
ARTICLE 9
INSURANCE
9.1 Managcr shall comply with the insurance obligations established in Exhibit "D".
[Reserved.]
ARTICLE 10
ARTiCi.E I I
TERMINATION
11.1 Termination by City. In addition to the Caty's other termination rights. City shall hat e
the right to terminate this Afrci•ment upom the oceurrence nfany one of the following events:
wj5jel 1
(a) IResclved.I
(b) Il.cscrvcd ]
(d) I wo (2) material brcaclwn of the Agrccmviit by Maria cr wrthm a sixiv (60) day
period. alter written notice for each such breach, or three (3) material breaches of
the Agreement, after written notice for each such breach, shall conclusively be
deemed to be an incurable rcp6ilne failure by Nlnnager,
(e) [Reserved.
(f) IRcscrred. I
( g ) [Rcscrvcd.I
112 Termination by Manaucr. Mara,,*uv shal I have the i i,,N tq terminate this Agreement upon
the ocaurreuce of anv one of the lollowma events:
(a) [RcscrNed.I
(b) [Reserved.]
(c) [Reser•ved.J
(d) Two (2) material breaches nl-ihe Agreement by City within a sixty (00) day
pet iod. alter %a ritten notice Inr cash such breach, or throe (3) material brcachcc of
the Agreemcnt, after written notice• for each such breach, shall conclusively he
deemed to br an incurable rcpeiili%c lailurc by City-
(e) [Reserved.]
11.3 [Reserved.]
11.E [Reserved.]
11.5 Surrender of Facility and hmorovements. Upon expiration or termination of -this
Agreement. Manger shall promptly surrender the Facility to City, leasing all equipment,
materials, supplies, books and records, manuals and inventories that are the property of
City or that have been purchased with Operating Revenues or fi•om funds made available
by City and title thereto shall vest in City, to the extent not earlier vested in City. without
any further compensation from City. All funds and accounts maintained by Manager in
the Depository shall be iransterred to City within five (5) business days of the expiration
or termination of this Agreement.
11.6 [Reserved.]
11.7 [Reserved.]
6
nfigl7� �
11.8 Remedies Cumulative. Neither the right of termination, nor the right to sue for damage,
nor any other remedy available to a patty under this Agreement shall be exclusive of any
other remedy given under this Agreement or now or hereafter existing at law or in equity
including (a) the right to reasonably cure, at the defaulting party's cost and expense, any
default, and (b) the right to seek specific performance of the defaulted obligation.
11.9 lndenmification re Future Business. City shall indemnify and hold harmless Manager
and its owners, officers, directors, and employees from all costs, expenses, claims,
damages, and liabilities arising or resulting from the failure of City following the
expiration or earlier termination (for whatever cause) of this Agreement to provide any of
the services contracted for under this Agreement (or contracted for prior to the Term)
relating to the management and operation of the Facility, which services arc to be
provided after the expiration or termination of this Agreement, including tournaments,
banquets, meetings, and other group functions to be held at the Facility; provided,
however, that in no uvcnt shall Manager enter into any contract to provide any such
service at the Facility where the date of the service to be provided occurs after the end of
the Tenn, without first obtaining the City's written approval.
ARTICLE 12
ASSIGNMENT OR SaiBCONTRAC'T1NG
12.1 [Reserved.]
12.2 [Reserved.]
12.3 Assignment.
(a) By City. City may assign its interest in this Agreement at any time without
Manager's consent, provided the party to which City assigns its obligations
agrees in writing, concurrently with such assignment, to assume all of City's
obligations under this Agreement.
(b) By Nfanager, Nlunagur shall not � uluntarily assign or encumber its interest in this
Agreement, or subcontract irs duties under this Agrecment without first obtaining-
City's conscint.
ARTICLE 13
[Reserved]
ARTICLE 14
MISCELLANEOUS
14.1 Facility Names. City agrees that (1) City has no right as a result of this Agreement to use
Manager's trade names, and (2) no right or remedy of City for any default on the part of
Manager under this Agreement confer upon City or its successor or assigns the right TO
use any of Manager's trade names. In the event of any breach of this covenant by City,
manager, in addition to any remedies available to it under this Agreement or at law or in
equity, shall have the right to mjunuhvc rc}tcf.
w5171 1
142 Notices. Any communication required or permitted to be given under this Agreement
shall be in writing and deemed to have been duly given if and when delivered personally
(with receipt acknowledged); or the fourth (4°i) day after mailing (by certified mail return
receipt requested) with proper postage prepaid; by facsimile transmission with evidence
confimmng transmission; by email, with email confirmation by the recipient; or when
delivered by a national commercial courier service (such as Federal Express) for
overnight delivery to be confirmed in writing by such courier.
To City: City Manager
City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, CA 92262
With a copy to: City Attorney
Woodruff, Spradlin & Smart
555 Anton Blvd., Ste, 1200
Costa Mesa, CA 92626
Fax: (714) 835-7787
To Manager: Century Golf Partners
5080 Spectrum Dr., Suite 1000 East
Addison, TX 75001
With a copy to: Dallas Addison
Addison Law Firm
14901 Quorum Drive, Suite 650
Dallas, Texas
14.3 Amendments. This Agreement may be amended only by the written consent of the
parties.
14.4 [Reserved.]
14.5 [Reserved.]
14.6 [Reserved.]
14.7 Entire Agreement. This Agreement contains the entire agreement of the parties and
supersedes all prior and contemporaneous agreements and understandings, oral or
otherwise, among the parties with respect to the matters contained in this Agreement and
may not be modified or amended except as set forth in this Agreement.
14.8 Counter -Darts. This Agreement may be executed in one or more counterparts and each of
such counterparts, for all proposes, shall be deemed to be an original, but all of such
counterparts together shall constitute but one and the same instrument, binding upon the
parties, notwithstanding that all of the parries may not have executed the same
counterpart.
I,U5171 1
14.9 ADDlicable Law. This Agreement shall he governed by, and construed and enforced in
accordance with, the laws of the State of California and the applicable venue shall be
Riverside County.
14.10 No Representation as to Profitability. In performing its obligations hereunder, noting
herein contained is intended to impose upon Manager any obligation to achieve, for the
benefit of City, any Net Operating Income. Manager has made no representations,
warranties or promises that Manager (on behalf of City) will be able to achieve or obtain
any Net Operating Income from the Facility and City acknowledges that no such
representations, warranties or promises have been made by manager.
14.11 Limitation of Liability.
(a) City agrees that no partner, co -venturer, employer, agent, director, officer,
shareholder or employer or Manager, shall be personally liable to City or anyone
claiming by, through or under City, by reason of any default by Manager under
this Agreement or for any amount that may become due to City by Manager
under the terms of this Agreement or otherwise.
(b) Manager agrees that no officers, agents, or employees of City shall be personally
liable to Manager or anyone claiming by, through, or under Manager by reason
of any default by City under the Agreement, or for any amount that may become
due to Manager by City under the terms of this Agreement or otherwise.
14.12 [Reserved.]
14.13 [Reserved]
14.14 Force Majeure. Neither party shall be liable or responsible to the other party for any
delay, damage, loss, failure, or inability to perform caused by "Force Majeure" if notice
is provided to the other party within ten (10) days or the actual lcnowdedge of the event of
'*Force Majeure" that such party is unable to perform. The term "Force Majeure" as used
in this Agreement shall include all causes which are not reasonably within nce control of
the parses hereto and which by the exercise of duc diligence could not be reasonably
prevented or overcome.
14.15 Survival of Covenants. Any covenant, term or provision of this Agreement which in
order to be effective must survive the termination of this Agreement shall survive any
such termination.
14,1 G Third Parties. None of the obligations under this Agreement of either party shall run to
or be enforceable by any party other than a party to this Agreement or by a valid
assignee.
14,17 [Reserved.]
14.18 No Presumption Reaardina Drafter. City and Manager acknowledge and agree that the
terms and provisions of this Agreement have been negotiated and discussed between City
and Manager, and that this Agreement reflects their mutual agreement regarding the
subject mater of this Agreement. Because of the nature of such negotiations and
discussions, it would be inappropriate to deem either City or Manager to be the drafter of
mwwn
this Agreement, and therefore no presumption for or against the drafter shall be
applicable in interpreting or enforcing this Agreement,
14.19 [Reserved.]
14.20 [Reserved.]
14.21 [Reserved.]
14.22 [Reserved.]
14.23. Rcicasc, 'Ile Parties to this Agreement, and each of them. for themselves and thou
subsidiaries. menibers, partners. rcpresentatrves, employees, officers, directors,
predecessors. successors, assigns. aflihatcs and agents. and cueh of them. do hereby fully
remise, release and lbi ever discharge the each other and then representatives, members,
partners. predecessors, successors, assigns, offtccis, agents, direotors, stoulholdcis,
owners, servants, employees. attomcys. assi_ms, arlihaled parent and suhsidian�
corporations or companies, past and pi esenl, and each or them, of and from any and all
manner of actions, suits, liens, debts, does. damages. claims. sums of money obligations.
liabilities, judgments. bonds, exccutinns and demands of cvcry nature, kind and
description whatsocyor, whether known or unknown, and whether suspected or
unsuspected, either at law, in equity or otherwise, which may have ansen under and by
virtue of the lairs of any Jurisdiction, which the Parties have had or Maim to ha vc had or
now have or claim to now hove ggnnht each other.
Further, with respect to the release contained In this Agrccmont, the Parties expressly
ti�,Live and relinquish all rights and benefits aflhrded by Section 1542 of the C'aliiornia
C'i,, d Code. w hic•h prop ides as rollu ti:
"A General Release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of cxcculing
the release which il• known by hirn ov her musi have materially arlected
his or her sclllemenl with the debioi.'•
The Parties hereby warrant and gu:nantrr that they have full and complete authoritY to
release all such claims on bchall or thcruselves, their heirs, assigns and successors in
m I Brest.
this release does not :md shall nil extend to any claims which may_ demur after Oc•tobcr
2N- 2005.
IN WiTNTSS WHEREOF, the parties hereto have executed this Management Agreement as of
the date set forth above,
[Signatures on the following page.]
10
"CITY"
CITY OF PALM SPRINGS,
a public body, corporate and politic
LE
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
Mayor
"MANAGER"
Century Golf Partners Holdings III, LP
By:
[Management Agreernent — October 27, 20081
w 1-171 I
EXHMIT A
SCOPE OF WORK
Manager shall perform the following Scope of Work:
Responsibilities of Manager.
(a) Negotiate, execute and perform contracts, use agreements, and other agreements (1) with
concessionaries and tenants. subject to prior writLm approval by the Crty's Au111011ted
Rcprescntutive; and other intended users of the Facility or any part thereof; or (2) that
otherwise pertain to the use, operation, marketing and promotion of the Facility or any
part thereof;
(b) [Reserved.];
(c) Coordinate all advertising, promotional activities, marketing, and public relations for the
Facility,
(d) [Reserved.];
(e) E.eccute and perform contracts, use ag cements, licenses and other agreements (1) with
prior approval of the City's Authorized Representative, for all sponsorships, including the
use of advertising space in or about the Facility and all advertising rights of whatever
kind or nature relation to the Facility, and (2) for the sale, promotion, marketing and use
of all names, trademarks, trade names, logos and similar intangible property relating to
the Facility.
(f) Operate, procure or cause to he operated (1) concessions within the Facility for the sale of
food, beverages, souvenirs, novelties and prograrnis. and (2) clubs and restaurants within
the Facility;
(g) Establish and maintain consistent procedures for cost estimating and reporting and
payment of invoices, including preparation of budgets and reports;
(h) [Reserved.];
(i) Retain legal counsel in connection with Manager's duties herein; provided, however, that
City shall have the right to approve such counsel in the event that City may ultimately be
liable for such costs, which consent shall not be unreasonably withheld;
(j) [Reserved.]
(Ic) [Reserved.]
(1) [Reserved.]
(m) Furnish all services, materials, tools, machinery, equipment, furnishings and other items
necessary to accomplish this Scope of Work;
EXITTBIT A
TO MANAGEMENT AGREEMENT
(n) Devise and implement procedures reasonably designed to keep the Facility in good order
and condition, subject to ordinary wear and tear, and maintain the Facility in such order
and condition, subject to the responsibilities of City;
(o) Provide quarterly perfomiance updates to the City Council, either in written or oral form
at the request of the Contract Officer; and
(p) Perform 404 Permit inspections (pursuant to Federal Clean Water Act § 404) of the
Facility by May 31, 2009 and provide to City by June 30, 2009, a written evaluation of
the Facility's 404 Pernut compliance and deficiencies, if any, in a form acceptable to the
City
2. Personnel.
(a) General Manager. Manager shall select, and City shall have the right to approve, the
General Manager and Course Superintendent who will be placed on site at the Facility.
The foregoing persons may not be replaced or nor may their responsibilities be
substantially reduced by Manager without written approval of the City's Authorized
Representative.
(b) General. tin addition, Manager shall employ or contract for the employment of all of the
cmployccs of the Facility. Manager shall recruit, hire, train, discharge, promote and
supervise the management staff of the Facility and shall supervise, through the
management staff, shall supervise the recruiting, hiring, training, discharge, promotion
and work of all other employees of the Facility All employees of the Facility shall be
properly qualified for their positions, and the compensation of such persons shall be
comparable to the compensation of employees of other comparable golf courses in the
Coachella Valley. The compensation of the management staff and all other Facility
employees shall be an expense of the Facility payable by City as established in the
Rudgel.
(c) Pension and Benefit Plans. Manager shall have the right to provide eligible employees of
the Facility with pension, profit sharing and other employee retirement benefits and
disability, health and welfare benefits and other benefit plan or plans now or hereafter
available to employees of other Manager -owned and/or operated golf courses and country
clubs and to charge the Facility with its allocable share of such Manager plan or plans to
the extent established in the Rudgel,
(d) Temtaorary Assixmment of Manager's Othcr Personnel, If Manager shall reasonably
deem it advisable, Manager may temporarily assign to the facility the general manager,
the head golCprohessionul and other members of the management staff from the
employees of Manager or Affiliates ol-A42nager or from the staff of other manager-
ovvncd and/or operated ,golf courses and county clubs. During such time as these
employees are temporarily assigned to the 17a6111y, all such employees will be paid their
regular C:ompensalion, and the pro-rata share of such emplovees' Compensation equal to
the actual time such employees wniked ai the Facility shall be an expense of the Facility.
Any Compensation paid to any such emplovee will be included in the Budgeted limits for
amounts to be paid Cor facility personnel. NlolNb ilhstanding the foregoing, any such
assirmment oCmorn than Iwo persons or for more than 31 calendar days during the Term
IS subject to the City's prior approval.
FXHA3TT A
TO MANAGEMENT AGREEMENT
uof171 1
Reimbursement to Manauer. Subject to the limitations imposed by the Budget, Manager shall be
entitled to be reimbursed for all costs and expenses incurred by Manager as the result of
Manager's performance under this Agreement, including (a) all costs and reasonable attorneys'
fees incurred by Manager, including attorneys' fees of both in-house legal counsel and outside
legal counsel, in connection with defending any claims or actions against Manager relating to the
Facility, except any such claims brought by the City or against which Manager is required to
indemnify the City and (b) all extraordinary expenses not reasonably anticipated by the parties or
otherwise provided for in this Agreement, if and only if to otherwise require Manager to assume
such expenses would be inconsistent with the role of a manager performing on behalf of an
owner. Manager shall have the burden to show that requiring Manager to assume the expenses
described in this paragraph would be inconsistent with the role of a manager performing on
behalf of the owner.
4. Duty and Liabilitv. Manager shall owe to City a duty to perform its obligations under this
Agreement and to manage and operate the Facility at all times in a manner consistent with the
Performance Standards described below. Manager shall not be liable, responsible or accountable
in damages or otherwise to City or to any other person for any act or omission that is within, or
that the Manager reasonably believes to be within, the scope of its authority under this
Agreement; provided however, that Manager shall be liable for that portion of any loss sustained
by City or any other person which is caused by:
(a) acts or omissions of the Manager in bad faith or proximately resulting from Manager's
negligence or intentional misconduct, or
(b) any' Termination Event caused by Manager.
Pcrfor manse Standards. Manager agrees to:
(a) Manage and operate the Facility as a first-class facility in a condition commensurate with
other first-class golf course facilities operated in the Coachella Valley, so as to mimimze
Operating Expenses and Maximize Operating Revcnue;
(b) Refrain from permitting the Facility to be used without reasonable charge for such use,
absent the prior written consent of the City's Authorized Representative;
(c) Perform the Maintenance and Repair Obligations;
(d) [Reserved.];
(e) Require that all persons using the Facility or ahciiding events therein comply with all
Legal Requirements of all governmental authorities having junsdiction over the Facility;
(f) [Reserved.];
(g) Perform its obligations under this Agreement in accordance with the Legal Requirements
of all governmental authorities havmgjurisdiction over such obligations, or any part
thcrcof, provided, however, that if any Legal Requirement enacted after the execution
hereof necessitates any structural change to all or any portion of the Facility, City shall be
responsible, at its sole cost and ecpense_ for complying with such Legal Requirement;
and
EXHIBIT A
TO MANAGEMENT AGRFFIVIF,NT
nu5171 I
(f) Promptly and fully discharge and pay all of its obligations under this Agreement at or
prior to the times specified for performance or payment; provided, however, that nothing
herein shall prohibit Manager from reasonably contesting the validity of any claim
against Manager (any such claim due and owing to be promptly paid by Manager upon
the conclusion of such dispute by final non -appealable judgment or otherwise).
6. Measurahle Quality Standards. Manager also agrees io meet or exceed each performance
standard eslablishcd on lxhihit"F" hereto.
Measurable Performance Standards. NRanager also agrees that, throughout the Term (but except
Lis provided below), the average number of paid rounds played at the facility, measured on a two-
year basis ("Measurement Period") shall in no event he less than 80% of the average number of
paid rounds played at the Facility [or the three (3) year period ending one year prior to the last
day of the Nleasurement Period. Notwithstanding the foregoing. Manager's inability to satisfy
the requirements of the foregoing sentence shall not constitute a tenninating event under this
Ag ecincnt if any of -the following is rue during the Measurement Period, and only to the extent
thereot:
(a) Any Force Majeure event hus occurred and materially and adversely affected Nlanagcr's
operations at the Facility;
(b) A substantial and adverse change has occurred in market conditions (including, for
example, the addition of an unusual number of new golf course in Palm Springs or an
extraordinary decline in hotel occupancy in Palm Springs);
(c) [Reserved.]
(d) [Reserved.]
(e) All or any material portion of the Facility was temporarily closed for a significant amount
of time to accommodate construction and/or installation of City -approved Capital
Improvements.
The first measurement performed under this Section shall be with respect to the Measurement Period
ending December 31, 2008 and shall include all periods preceding this Agreement-
S. [Reserved.]
9, [Reserved.]
10. fees and Clia s Manager ~hall recommend, and the (:•iiy shall approve the green fee rates
t including any resident green fee discounts), the rates for rental clubs and the rates for the driving ramgc.
Manager shall set all other rates. All fees, charges, and prices shall be competitive with other first class
public golf courses in the CoaCI1C11a Valley.
rYHTBIT A
TO MANAGEMENT AGREEMZNT
obi 17J,I
EXHIBIT B
OPERATING EXPENSES
"Operating Expenses" shall mean and include all expenditures or obligations of whatever land or nature
incurred or accrued by Manager in any specified period during the Tenn, as limited by the Budget and
within (or reasonably believed by Manager to be within) the scope of Manager's authority or
responsibility under this Agreement. E'.XQcpt us oihcr�� tsc set forth in this A reemem. Operating
Expenses shall not include any expenses of Manager's corporate of ice. or any services rcndcrcd by
Ranager's corporate ofticcs, or the compensation of any corporate or regional employee of Manager.
Operating Expenses shall include, to the e�lent c+tahllshe l in the Art c•cnlcnt:
• all payments made or liabilities incurred to obtain Operating Revenues;
• salaries, wages, applicable payroll taxes, benefits, costs and expenses of personnel working at the
Facility;
• contract labor
• maintenance and repairs (whether ordinary or extraordinary, and whether foreseen or
unforeseen);
• utilities;
• telephone;
• telecommunications and broadcast facllitics;
• dues, memberships and subscriptions;
• security;
• audit and accounting fees;
• legal fees, to the cxtcnt established in the Agrcentcut;
• other professional service fees. suhlcet to the prior wruten consent of the C ity's Authorized
R epresenl311 ve;
• fees payable to concessionaries or other subcontractors;
• refuse removal;
• cleaning;
• sales and other applicable taxes;
• building supplies;
• ticket or other sales conunissions;
• premiums for insurance required by the Agreement;
• data processing;
• advertising;
• marketing and market research;
• pest control;
EXHIBIT B
TO MANAGEMENT AGREEMENT
• office supplies;
• freight and delivery;
• lease of equipment or furnishings;
• credit card and debit card fees and charges and telecheck fees and expenses;
• travel (economy class), lodging and related out-of-pocket expenses of officers, directors and
corporate personnel of Manager properly allocable to the performance of Manager's obligations
under this agreement;
• travel (economy class), lodging and related out-of-pocket expenses of employees of the Facility
conducting business on behalf of the Facility;
• Management Fees;
• charges for fidelity bonds;
• expenses incurred in complying with all Legal Requirements;
• and all other costs and expenses incurred to accordance with the terms of this Agreement by or
for the account of City reasonably related to manager's performance of this Agreement,
o including all damages, losses or expenses suffered or paid by Manager or its agents or
employees as the result of any and all claims, demands, suits causes of action,
proceedings, judgments and liabilities, including court costs and attorneys' fees, incurred
or sustained by or against Manager;
o but excluding
• any portion of any Capital Expenditures expended,
• any portion of any loss or damages suffered by Manager or its agents or
employees as a result of
• any act or omission of Manager made in bad faith or involving
negligence or intentional misconduct; or
• any Termination Event willfully caused by Manager and/or
• non -cash expenses such as depreciation.
Operating Expenses shall not include and Manager shall not be responsible for the payment of any debt
service relating to the construction, expansion or development of any portion of the facility.
Nlunager of ily Aflilialc niay perfol m yCrblLOh a5 a rcpresenl,dive of a manulucturcr to secure the benefits
or lower costs to the City. provided that anv resulting sav11129 shall he passed on to the City, including
reps esentatives' levy. In addition, all trade discounts, rebates and rclbrlds pertaining directly to purchases
for the Facility shall accrue to the bcncl't of the Cnv. I1'anv purchases of goods or services liir the
Facility are made from or throug h an Affiliate of N'lanager, the char ges to the Facility for such goods or
services shall be on the same Icmrs us those made to other golf courses operated by Manager and shall not
c.\cccd the market prices for such good~ and sefvlccn.
EX11131T B
TO MANAGEMENT AGREEMENT
OPERATING REVENUES
"Operating Revenue" shall mean all money received as a result of the operation of the Facility and the
sale of goods and services at the Facility, determined on an accrual basis in accordance with GAAF
consistently applied. All Operating Rex enues shall be the property of the City managed by the Manager.
Operating Revenue shall include:
• Green fees;
• Membership initiation fees, dues, and other payments by members;
• Rental fees for golf carts, hand carts, golf clubs, and other rental items;
• Range balls;
• Rental and concession payments;
• Food and beverage sales;
• Liquor sales;
• Revenue generated from space rentals and from meetings, banquets, parties, receptions,
tournaments, and other group gatherings;
• New and used merchandise sales;
• Instruction fees;
• Vending sales (or, if applicable, receipts from vending companies); mid
• Proceeds from business interruption insurance.
Operating Revenue shall not include:
• Cash refunds or credits allowed on returns by customers;
• Sales taxes, excise taxes, gross receipts taxes and other similar taxes now or later imposed upon
the sale of food, beverages, merchandise or services and paid by Manager to the appropriate
taxing authority, but only if collections from the customer are accounted separately from the
selling price;
• Fees charged by a golf professional or other golf instruction entity functioning as an independent
contractor for the teaching of golf lessons and instruction if Manager receives no revenue from
such golf lessons;
• The actual uncollectible amount of any check or bank draft received by Manager as payment for
goods or services and returned to Manager from a customer's bank as being uncollectible
(commonly "lion -sufficient funds' checks), but only after Manager has made commercially
reasonable efforts to collect on the check;
• The actual uncollectible amount of any charge or credit account (commonly "bad debts") incurred
by Manager, for the sale of merchandise or services; provided, however, that the credit was
extended to the customer by Manager, and that conimcrcially reasonable efforts to collect said
account have been made,
EXHIBIT C
TO MANAGEMENT AGREEMENT
• The actual uncollectible amount of any sale of merchandise or services for which Manager
accepted a credit card; provided, however, that Manager has made commercially reasonable
efforts to collect the debt after being notified by the issuing hank of the invalidity or
uncollectibility of the charge;
• Interest or other charges paid by customers for extension of credit by Lessee and the associated
costs therefor;
• Interest earned on funds held in the Operating Fund;
• Sales or trade-ins of machinery, vehicles, trade fixtures or personal property used in connection
with Manager's operation of the Facility (sales of .rny such rtcros owned by Manager shall
consliu.ue d;uiagcr's sole revenues: sales of Such I1CIIIS Owned by City In prohibited milhout the
prior written consent of the Ciry's Au(horivcd RcpTcScntalivr);
• The value attributed to an exchange or transfer of any merchandise, supplies or equipment
exchanged or transferred from or to other locations of business of Manager where such exchange
or transfer is not made for the purpose of avoiding a sale which would otherwise be made from or
at the Facility; provided, however, that revenues generated from the sale of any such
merchandise, supplies or equipment to customers at the Facility shall not be excluded from
Operating Revenue;
• Receipts in the form of reftmds from or the value of merchandise, supplies or equipment returned
to shippers, suppliers or manufactures;
• The value of any cash or quantity discounts received from sellers, suppliers or manufacturers;
• The amount of any gratuities paid or given by customers to or for employees of Manager;
• Receipts from the sales of uniforms or clothing required to be worn by employees;
• Amounts attributed to meals served or provided to employees of Manager;
• Receipts from the sale of waste or scrap materials resulting from Manager's operations;
• Arnounts attributable to play by members of any frequent user or affinity or card -based loyalty
program associated with or contracted for by Manager, exercising their membership right to play
a limited number of rounds without separate payment of greens fees (except that Manager shul l
separately account for such rounds and ('Ily and Ndnnagcr will renegotiate this provision if the
number ol'such rounda played 1n am calendar month exceeds two percent ( ^.;,) ol'all rounds
played at the FaO111ty);
• The amount of any funds received by reason of reservation or similar service charges imposed
over and above any green fees, cart fees, and the like, for operation of an advance reservation
system (cxccpt that Manager shall separately account nFur such funds and City and Manager will
renegollatc thiti provision itlhe alr ollnl ol'suell funds evcccds an amount equal to five percent
(5%) of total Operating Revenues.);
• Any amount received from a hospitality (or similar) establishment, including any hotel chain, by
reason of a premium or lee paid to Manager by such establishment for the privilege of offering
and/or advertising "package deals" to its prospective customers, provided that the City's
Authoriaud Representative has gwcn her prior w illcn cunscnl to any discounts offered in
consideration for said premiums or Ices:
a Proceeds ofborrnwirlg by City;
e Proceeds paid as a result of an insurable loss, unless paid tirr the loss of inten•uption ofbusiness,
to the eXtenl Suuh mums arc used 10 rcmedv s;nd Inns: and
a Any deposits by the City to t1Le Operating Fund,
Manager shall not engage in any iu-kind. barter, or like llansnction.� with reference to the Facility nithoul
the prior written Consent of the Ciiy'n Authurizcd Represcnlatnc,
EXHIBIT C
TO MANAGEMENT AGREEMENT
nf1551'I 1
EXHIBIT D
INSURANCE
1. Coverage.
(a) Manager shall cooperate with City to procure and maintain, as a budgeted expense, all
property, business interruption, comprehensive liability, automobile liability and workers
compensation insurance necessary for the el'fcclivc operation of the Facility which is
required by the City's Authorized Representative-
(b) Manager agrees to procure and maintain, at all times during the Term, and at Manager's
expense, fidelity insurance covering all Facility employees who are Manager's
employees, in an amount not less than five -hundred thousand dollars ($500,000).
(c) Manager agrees to provide all certificates of insurance evidencing the existing of
insurance required by the City.
(d) [Reserved.]
(c) [Reserved.]
3. Policies and Endorsements.
(a) [Deserved.]
(b) [Reserved.]
(c) Blanket Policies. Any insurance policies provided by City or Manager maybe effected
under policies of blanket insurance which cover other properties in addition to the
Facility, and in such case an allocable portion of the premiums for such blanket policies
of insurance shall be charged to the Facility.
3. Waiver of Subrogation. Neither Manager nor City shall assert against the other, and Manager and
City hereby waive with respect to each other, any claims and rights to recovery for any losses,
damages, liability or expenses (including reasonable attorneys' fees) incurred or sustained by
either of them on account of injury to persons or damage to property arising out of the ownership,
operation and maintenance of the Facility, to the extent that the same are covered by insurance.
City and Manager hereby grant to each other, on behalf of any insurance company providing
insurance under this Agreement, a waiver of any right of subrogation which any insurer or party
may acquire against the other party by virtue of payment of any loss under any insurance policy.
City and Manager shall cause each such insurance company to provide a written subrogation
waiver indicating that such insurance company waives all right of recovery by way of subrogation
which such insurance company may acquire against City or Manager (as the case may be) and
their insurance companies.
4. [Reserved.]
EXHIBIT D
TO MANAGEMENT AGREEMENT
[Reserved.]
EXHIBIT E
EXHIBIT E
TO MANAGEMENT AGREEMENT
EXH1B11' F
MEASURABLE OUAL11'Y STANDARDS
EXHIBIT F
TO MANAGEMENT AGREEMENT
oo-17l I
1.B. AGREEMENTS FOR CITY OWNED GOLF COURSES:
RECOMMENDATION: 1) Approve the termination and the expenditure of
$1,190,000 to terminate the lease with Olympus Real Estate Partners for the
Legends Golf Course; 2) Approve an agreement with Century Golf Partners
Holdings, III, LP, Arnold Palmer Golf Management, LLC, for the management of
the Legend and Resort Golf Courses for the period of October 27, 2008, through
December 31, 2009, in an amount not -to -exceed $225,000; 3) Adopt Resolution
No. , "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
SPRINGS, CALIFORNIA, AMENDING THE FISCAL YEAR 2008-09 BUDGET;"
and 4) Adopt Resolution No. , "A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING THE FISCAL
YEAR 2008-09 BUDGET;" A3469. A�.
MATERIALS TO FOLLOW
Item No. 1 . B .