DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A
MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT ("Agreement") is made and entered into to be effective as of June 1, 2023 (the "Commencement Date") by and between the City of San Bernardino, California, a charter city and municipal corporation ("City"), and Local Golf Management LLC, a California limited liability company ("Manager"). City and Manager may be individually referred to as a "Party" and collectively as the "Parties".
RECITALS
A. Manager, together with its affiliates, is engaged in the ownership, management and operation of golf courses and country clubs in the United States.
City is the owner of that certain real property located in San Bernardino, California, known as "Shandin Hills Golf Club" which includes an 18-hole golf course, clubhouse and other related amenities, buildings, structures and improvements related thereto, as depicted on Exhibit "A" to this Agreement (the "Facility").
C. The Facility has previously been operated by Arcis Golf ("Prior Operator") under an agreement with City which has expired.
D. City desires to utilize the services and expertise of Manager in the management, and operation of the Facility, and Manager desires to render such services upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, City and Manager hereby agree as follows:
ARTICLE 1 - DEFINITIONS
As used in this Agreement, terms not otherwise defined in the body of this Agreement shall have the respective meanings set forth in Exhibit "B" to this Agreement.
ARTICLE 2 - TERM OF AGREEMENT
Term. The term of this Agreement shall commence on the Commencement Date and shall continue for a period of five (5) years (the "Term"). Upon the expiration of the Term, this Agreement may continue on a month-to-month basis upon the mutual Agreement of the Parties. In the event that this Agreement continues on a month-to-month basis, the Agreement may be terminated by either Party upon sixty (60) days written notice.
ARTICLE 3 - MANAGER RESPONSIBILITIES
3.1 Grant to Manager. Except as otherwise expressly provided in this Agreement, City grants to Manager the right to manage and operate the Facility pursuant to the terms of this Agreement, and Manager agrees it will manage and operate the Facility in accordance with the approved Annual Plan, and in a manner comparable to and consistent with the management and operational practices of the Comparable Facility to the extent established in the Annual Plan and approved by City (except as otherwise set forth in this Agreement). Manager shall perform its 1 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A services in a professional, timely and diligent manner. Without in any way limiting Manager's right to manage and operate the Facility in accordance with the terms of this Agreement, Manager, subject to the approval of City and in accordance with the Annual Plan and the terms of this Agreement, shall have the authority and responsibility to: (a) implement each approved Annual Plan; (b) determine, establish, and implement the policies, standards, and schedules for the operation and maintenance of the Facility and all matters affecting customer relations; (c) hire, train, and supervise the general manager, course superintendent, and all Facility employees; (d) supervise and direct all phases of advertising, sales, marketing and business promotion for the Facility; and (e) establish payroll procedures and functions for the Facility. To the extent the foregoing duties are discussed, detailed or included in the Annual Plan, Manager will carry out such duties consistent with the Annual Plan. City agrees it will reasonably cooperate with Manager to permit and assist Manager to carry out its duties under this Agreement. Manager shall work with, and obtain any necessary approvals from, the City's designated project manager, the City of San Bernardino City Manager, and/or the City's designated Department Director.
3.2 Annual Plans.
3.2.1 Preparation. Manager will submit to City at least sixty (60) days in advance of each Operating Year an "Annual Plan" consisting of (a) a budget which shall include for the ensuing year estimates covering the projected revenues of the Facility (broken down on a line item basis) and the projected expenditures for (i) property operations and ordinary repairs, replacements, alterations and maintenance, (ii) Furnishings and Equipment and Operating Inventory, (ill) advertising, sales, and business promotion and (iv) employee compensation and (b) an operating/business plan for the Facility setting forth a marketing and promotions plan, a schedule of proposed golf charges, an operating schedule (which shall include hours of operation and staffing levels), a maintenance plan, and to the extent applicable, membership sales plans, membership dues and initiation fee schedules. City acknowledges that the Annual Plans and budgets and operating/business plans contained therein are estimates and will not and do not constitute a guarantee of the actual revenues or expenses of operating the Facility. The Parties understand that, as provided in Article 10, budgets for Major Capital Improvements will be treated separately and will not form part of the Annual Plans. The Annual Plan for the Initial Operating Year is attached as Exhibit "C" to this Agreement.
3.2.2 Approvals. Each Annual Plan shall be subject to the prior written approval of City, and the new Annual Plan for a given Operating Year cannot go into effect without such approval from the City's designated project manager, the City of San Bernardino City Manager, and/or the City's designated Department Director, such approval not to be unreasonably withheld It is contemplated by the Parties that the Annual Plan will be agreed upon by the Parties not later than forty (45) days following delivery of the Annual Plan by Manager to City. If City fails to advise Manager of any objections to the Annual Plan within such 45-day period, then City shall be deemed to have approved the Annual Plan as submitted. In the event of a dispute with regard to an Annual Plan, the Parties shall use good faith efforts to resolve such dispute. Pending the resolution of such dispute, Manager shall continue to manage and operate the Facility in accordance with the standards set forth in this Agreement and the most recent approved Annual Plan, as it may have been mutually amended by the Parties during the preceding year in accordance with the Agreement, at a level of expenditures comparable to those of the preceding year subject to reasonable increases in Operating Expenses requested by Manager and approved by City due to (a) DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A increases in the number of guests using the Facility, (b) increases in Gross Revenues, or (c) other matters beyond the reasonable control of Manager (e.g., without limitation, increases in utility charges, etc.). Once approved, Manager may propose amendments or revisions to the Annual Plan to take into consideration variables or events that did not exist, or could not be anticipated by Manager, at the time the Annual Plan was prepared. Any such proposed amendments or revisions shall be submitted in writing and shall be subject to City's prior approval. City must advise Manager of any objects to amendments/revisions to the Annual Plan within fifteen (15) days of receipt. If City fails to advise Manager of any objects to the amendments/revisions during this 15-day period, then the City shall be deemed to have approved the revisions/amendments as submitted. Further, Manager and City shall meet on a quarterly basis during the Term to review the Annual Plan, discuss the revenues and expenditures during the prior quarter, identify any discrepancies between the Annual Plan and actual expenditures, and to the extent commercially reasonable and practicable in order to permit Manager to continue operating the Facility to the standards required herein, consider potential revisions to the Annual Plan as may be necessary to address any reduced revenues or increased expenses which were not contemplated in the Annual Plan.
3.2.3 Compliance. Manager shall use its best efforts to operate the Facility in accordance with the applicable Annual Plan. If Manager reasonably anticipates that Operating Expenses will exceed amounts so budgeted in the Annual Plan for a given Operating Year, it shall promptly notify City of the same.
3.2.4 Emergency Expenditures. Notwithstanding anything in this Agreement to the contrary, in the event an emergency arises by act of God or any event or act beyond the control of Manager, or a dangerous condition exists that requires immediate repair, or a governmental directive or order is issued to City, Manager is authorized to take such actions as may in its reasonable discretion be required (including expending any funds reasonably necessary to respond to such condition or event) to the extent required by that emergency; provided, however, that Manager shall immediately notify City of the emergency situation (or governmental directive or order) and the action Manager proposes to take, or has taken (including the amount of any expenditures).
3.3 Consulting Services. Upon City's prior written request and approval, Manager may provide to the Facility additional consulting services not contemplated by this Agreement which would not otherwise be performed in the ordinary course of day-to-day operations of the Facility, including but not limited to special legal consultation, construction and design consultation and construction supervision related to Major Capital Improvements ("Consulting Services"). Upon City's written request for the performance of a Consulting Services project, Manager shall prepare a scope of work and budget and submit to City for review and approval.
Manager shall not commence any Consulting Services project without City's prior approval.
3.4 Responsibilities of Manager. Without in any way limiting Manager's right and obligation to manage and operate the Facility in accordance with and subject to the Annual Plan, Manager shall perform the following services, or cause the same to be performed for the Facility:
(a) Upon prior written approval of City, enter into contracts for the furnishing of utilities and maintenance and other services to the Facility. Manager shall ensure that any DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A contracts comply with applicable Legal Requirements, including, but not limited to, prevailing wage and maintain insurance in forms acceptable to the City In the event that, that (i) any such contract which is for a term terminating after the next Annual Plan is due and for an aggregate cost in excess of five thousand dollars ($5,000) and is not otherwise approved via an Annual Plan shall be approved in advance by City, and (ii) in the event of a termination of this Agreement for any reason, City or City's designee shall assume any such contracts which are then in effect and unexpired at the time of such termination and indemnify and hold harmless Manager from and against any additional obligations thereunder which may accrued after termination of this Agreement;
(b) make all repairs, decorations, revisions, alterations and improvements to the Facility as shall be reasonably necessary for maintenance of the Facility in good, safe and sanitary order, condition and repair; all such maintenance, repairs, decorations, revisions, alterations and improvements noted in this section to be Operating Expenses of the Facility; (c) incur such expenses, as Operating Expenses of the Facility, as shall be necessary for the operation and maintenance of the Facility to the quality standards contemplated by this Agreement and the Annual Plans, including without limitation incurring lease expenses for Furnishings and Equipment and costs for Operating Inventory, expenses for insurance premiums in accordance with insurance coverage required hereunder, and payment of attorney's fees and other costs of legal compliance;
(d) maintain a level of Operating Inventory necessary to satisfy the quality standards contemplated by this Agreement and the Annual Plans and to supply the needs of the Facility and its customers;
(e) apply for, and use its commercially reasonable efforts to obtain and maintain, in addition to the liquor license described in section 3.8 below, all licenses and permits reasonably required by City (or by applicable Legal Requirements) in connection with the operation and management of the Facility, in Manager's name; and City agrees to execute any and all applications and such other documents as shall be reasonably required and to otherwise cooperate, in all reasonable respects, with Manager in the application for, and obtaining and maintenance of, such licenses and permits;
(f) use its commercially reasonable efforts to do, or cause to be done, all such acts and things in and about the Facility as shall be reasonably necessary to comply with all Legal Requirements, and to discharge any lien, encumbrance or other charge on the Facility, including, with City's prior written consent, hiring legal representation and paying attorney's fees, as an Operating Expense of the Facility, as necessary to comply with Legal Requirements and defend the Facility against legal claims;
(g) maintain a method of accounting in accordance with generally accepted accounting principles consistently applied ("GAAP") which accurately reflects the Gross Revenues and Operating Expenses and disbursements of Manager in connection with the Facility's operations;
4 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A (h) routinely inspect and report on the condition of golf course improvements, facilities and equipment;
submit a 5-year Capital Improvements program plan, updated annually, to City before the end of November of each contract year;
(i) assist, as needed, in the preparation of the Master Plan for the Facility; (k) work with City in establishing realistic goals and practices in limiting golf course irrigation water consumption;
(1) allow the meeting room to be available for City meetings at no cost to City unless the room has been rented and generating revenue; (m) comply with all applicable ordinances, resolutions and local policies; and (n) comply with all applicable laws and regulations, including State-required prevailing wages, as this is a "public work," in accordance with Labor Code Section 1770 et seq. as further described in Section 11.27 of this Agreement. Manager shall pay wages in accordance with the determination of the Director of the Department of Industrial Relations regarding the prevailing rate of per diem wages. Copies of those rates are on file with the Public Works Director and are available to any interested party upon request.
3.5 Personnel.
3.5.1 General. Subject to the Annual Plan and the terms of this Agreement, Manager shall employ all of the employees of the Facility, and all such employees shall be deemed employees of Manager and not employees of City or joint employees of City and Manager.
Manager shall recruit, hire, train, discharge, promote and supervise the management staff of the Facility (i.e., the general manager or course manager, the assistant managers, the course superintendent, department heads and other key personnel), and Manager shall supervise through the management staff the recruiting, hiring, training, discharge, promotion and work of all other employees of the Facility. For a period of one year after the date of termination of this Agreement pursuant to Section 7.1, City shall not solicit or hire as an independent contractor, agent or employee any general manager or superintendent hired or employed by Manager after the Effective Date for the Facility, without the written consent of Manager; provided however, City may solicit or hire or engage any general manager or superintendent employed at the Facility prior to the Effective Date without the consent of Manager. In the event that City is dissatisfied with the performance of any Manager personnel, the following procedure shall be followed: (i) City shall communicate any complaints regarding personnel below the rank of general manager to the general manager and shall communicate complaints regarding the general manager to Manager's president or vice-president, and (ii) Manager shall reasonably and promptly investigate and take appropriate action, as determined by Manager, with respect to City's complaints. The Compensation of the management staff and all other Facility employees shall be approved by City as part of the Annual Plan (or, in the event that a change in management staff occurs during an Operating Year and after the Annual Plan has been finalized, then as otherwise approved in writing by City) and be an Operating Expense of the Facility payable by City in accordance with this Agreement.
DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A
3.5.2 Benefit Plans. Manager shall have the right to provide eligible employees of the Facility with 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 Facilities, if such benefits have been approved in the Annual Plan, and to charge the Facility with its allocable share of such Manager plan or plans.
3.5.3 Temporary Assignment of Other Manager Personnel. If Manager shall reasonably deem it advisable, and after City's prior written approval, 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 Facilities. 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 Operating Expense of the Facility.
3.5.4 Nondiscriminatory Treatment. Manager shall not unlawfully discriminate against any individual based on race, color, religion or religious creed, national origin, ancestry, ethnic group identification, primary language, physical disability, mental disability, medical condition, genetic information, marital status, gender, gender identity, gender expression, sex, sexual orientation, age, immigration status, citizenship or military and veteran status. Manager understands and agrees that it is bound by and will comply with all legal nondiscrimination mandates. Manager shall take commercially reasonable steps to ensure that its subcontractors, if any, comply with this Section 3.6.4.
Liquor License. Manager shall, as an Operating Expense of the Facility, obtain from Prior Operator the current liquor license issued by the State of California in Manager's name, permitting the sale of alcoholic beverages (including beer, wine and liquor) at the Facility.
Manager, as City's agent, shall be solely responsible for liquor sales at the Facility and agrees to comply with all requirements of the rules and regulations of the State of California governing the sale of alcoholic beverages. As an Operating Expense of the Facility, Manager shall maintain in its name (and City shall reasonably cooperate with Manager in maintaining) the liquor license(s) in good standing, pay all required fees in connection therewith, and otherwise ensure the proper right and permission to sell alcoholic beverages at the Facility. Upon the termination of this Agreement for any reason, Manager shall cooperate in all respects and take all steps necessary to effectuate the transfer of the Facility's liquor license to City or City's designee, at no cost to City other than ordinary regulatory fees and reasonable attorneys' fees. From and after the termination date and continuing until the date which is six (6) months thereafter, Manager shall cooperate with City in City's efforts to obtain its own liquor licenses (or a transfer of Manager's liquor licenses) to serve alcoholic beverages at the Facility. Manager agrees, on the termination date, to cause Manager to enter into (or cause the holders of the current liquor licenses to enter into) mutually acceptable bills of sale, interim management agreements, concession agreements, leases and other documents reasonably relating to, among other things, the continued sale and service of alcoholic beverages at the Facility pending the transfer or issuance of all appropriate licenses and permits to City. 6 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A ARTICLE 4 - INSURANCE
4.1 Coverage.
(a) Manager agrees to procure and maintain, as an Operating Expense of the Facility, at all times during the Term, the insurance set forth on Exhibit "D":
(b) Manager shall have the right to raise the minimum amount of any insurance to be maintained with respect to the Facility under Subsections 4.1(a) above to make such coverage comparable to the amount of insurance carried with respect to Other Manager Facilities, taking into account the size, character and location of the Facility. At least sixty (60) days prior to the beginning of each Operating Year, the Party procuring such insurance will submit to the other Party a schedule setting forth any changes to the insurance pursuant to this Section to be maintained by the procuring Party during the ensuing Operating Year in connection with the Facility.
4.2 Policies and Endorsements.
4.2.1 Policies. All insurance coverage provided for under Section 4.1 above shall be secured through policies issued by insurance companies of good reputation and of sound and adequate financial responsibility which are approved to do business in the State of California. The Party procuring such insurance shall deliver to the other Party all of the policies of insurance so procured, naming the other Party as an additional insured, and in the case of insurance about to expire, shall deliver certificates of insurance with respect to renewal policies not less than ten (10) days prior to the respective dates of expiration.
4.2.2 Endorsements. All policies of insurance provided for under this Article 4 shall, to the extent obtainable, have attached an endorsement that such policy shall not be cancelled or materially changed without at least thirty (30) days prior written notice to City and Manager. All insurance policies required under Section 4.1 shall contain an endorsement to the effect that such insurance shall be primary and non-contributory to any similar insurance that may be carried by the other Party.
4.3 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 of recovery for any losses, damages, liability or expenses (including 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 the insurance required under this Article 4. 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 give notice to the insurance companies providing insurance under this Agreement of the mutual waiver of subrogation contained in this Section 4.3, and 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.
DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A ARTICLE 5 - MANAGEMENT FEES
5.1 Management Fee. In consideration of Manager's services during the Term, City shall pay to Manager a "Management Fee" equal to One Hundred Eighty Thousand Dollars ($180,000.00) per year, payable in twelve (12) monthly installments of $15,000.00. The Management Fee shall be paid to Manager in accordance with Section 5.2 of this Agreement. The Management Fee shall be increased annually by CPI.
5.2 Payment Schedule. City shall pay Manager the Management Fee in advance, no later than five (5) days following the first day of each month during the Term. City shall permit and hereby authorizes Manager to pay to Manager, from the Operating Account, the Management Fee and other fees and expenses which are legally due and owing hereunder.
ARTICLE 6
BANK ACCOUNTS; WORKING FUNDS;
RECORDS AND REPORTS; MANAGER PROPERTY
6.1 Bank Accounts. In connection with operation and management of the Facility, the following bank accounts shall be established by City and Manager in a bank or banks approved by City, and shall be subject to City's control, audit and inspection (the "Bank Accounts"):
6.1.1 City Account and Operating Account. Manager shall establish a bank account for the Facility at a banking institution or institutions approved by City, such account to be in City's name, and individuals designated and approved by City and Manager shall be signatories on the account (the "Operating Account"). Manager will collect, receive and deposit into the Operating Account all monies received by Manager from the operation of the Facility. City shall deposit all funds required to be furnished by City as working capital funds under Section 6.3 of this Agreement into the Operating Account, and Manager will disburse those monies from the Operating Account only for the purposes set forth in this Agreement. Notwithstanding the provisions of the foregoing, Manager shall be entitled to maintain funds in reasonable amounts in "cash register banks" or in petty cash funds at the Facility but Manager shall not open any other bank accounts related to the Facility except for the Operating Account. All records and bank statements shall be subject to access and inspection by City pursuant to the terms recited herein.
All Gross Revenues of the Facility shall be collected, received and deposited by Manager exclusively through the Operating Account. Upon termination of this Agreement for any reason, any funds remaining in the Operating Account after payment of all final expenses, costs and obligations of the Facility incurred during the Term shall be paid to City.
6.2 Expenditures. Manager is authorized to pay, from the Operating Account such amounts at such times as are required in connection with the ownership, operation, maintenance, repair, and improvement of the Facility and related facilities and Manager's performance under this Agreement in accordance with the approved Annual Plan, subject to the provisions of this Agreement, including but not limited to all amounts specifically payable to or reimbursable to Manager hereunder.
6.3 Account Funding. City shall deposit into the Operating Account all funds required for Manager to operate and maintain the Facility in accordance with this Agreement and 8 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A the Annual Plans, including, without limitation, funds for Manager to timely fund Operating Deficits, if any. Upon execution of this Agreement, City shall cause the working capital sum established in the Annual Plan for the Initial Operating Year (the "Working Capital Amount") to be deposited into the Operating Account as initial working capital for the Facility. On the first day of each month during the Term, Manager shall notify City of the total funds then in the Operating Account, and within seven (7) business days following such notification, City shall deposit additional funds into the Operating Account in the amount required to bring the Operating Account balance to an amount necessary to pay the projected Operating Expenses for the upcoming month, which amount Manager shall request along with a detailed accounting of the projected Operating Expenses for the upcoming month. Manager shall not, under any circumstance, be required to, or be deemed to have any duty to, advance any of its own funds for the operation of the Facility. Manager shall analyze all bills received for services, work and supplies in connection with maintaining and operating the Facility. Manager shall pay, on behalf of City, all such bills in accordance with the Annual Plan as and when the same shall become due and payable. If there are insufficient funds in the Operating Account to make any payment, Manager shall promptly notify City prior to any delinquency so that City shall have an opportunity to transfer sufficient funds for Manager to make such payment prior to the imposition of any penalty or late charge as provided herein. In the event that Manager should advance any of its own funds for the operation of the Facility due to the failure of City to timely fund the Working Capital Amount as required hereunder, or to make any other payment to Manager required hereunder, Manager shall be entitled, without any further approval or authorization of City, to reimburse itself for such advances, from the Operating Account upon funding of the Operating Account by City; provided, however, that in such situation Manager shall notify City in writing of such reimbursement.
6.4 Accounting Procedures.
6.4.1 Inspection and Disclosure of Records. Upon advance written notice to Manager setting forth the time of inspection and records to be inspected during normal business hours, City or its authorized auditors and representatives shall have access to and the right to audit and reproduce any of Manager's records to the extent City deems necessary to ensure City is receiving all monies to which City is entitled under this Agreement or for other purposes relating to this Agreement. Manager acknowledges that the City must comply with the California Public Records Act (Cal. Gov. Code §§ 6250 et seq.). Accordingly, any and all records required to be provided to City under this Agreement are subject to public disclosure at any time, without notice, pursuant thereto, including but not limited to this Agreement in its entirety.
6.4.2 Records Preservation. Manager shall maintain and preserve all such records for a period of at least three (3) years after termination of this Agreement. Upon termination of the Agreement, Manager shall transfer currently maintained records to the City.
6.5 No Default due to Lack of Funds. If Manager is unable to perform any of its agreements or covenants under this Agreement because of the failure on the part of City to provide the funds pursuant to Section 6.3, such failure of performance on the part of Manager shall not be deemed a default on the part of Manager and shall not give rise to any right of termination, damages or any other remedy against Manager, unless the failure to provide the funds is due to the 9 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A occurrence of a breach of this Agreement by Manager or the gross negligence, willful misconduct or fraud by Manager.
6.6 Books and Records. Manager shall keep full and accurate books of account and such other records as are necessary to reflect the results of the operation of the Facility. For this purpose, City agrees it will make available to Manager, or Manager's representatives, all books and records in City's possession relating to the Facility, including contract documents, invoices and construction records. All books and records for the Facility shall be located at the Facility.
6.7 Reports to City. Manager will deliver, or will cause to be delivered, to City the following forecasts and statements:
(a) within twenty (20) days after the end of each calendar month, an update to the Annual Plan together with monthly and year-to-date financial statements which shall include a balance sheet, a profit and loss statement (on an accrual basis) showing the results of operation of the Facility for such month and for the year to date; and (b) within sixty (60) days after the end of each Operating Year, financial statements, including a balance sheet, a profit and loss statement and actual versus budget comparison showing the results of operation of the Facility for such year (it being understood and agreed that such annual statement will reflect the annual Management Fee paid to Manager, calculated as provided in Article 5).
6.8 Accounting Firm; Audit. Manager shall, if requested by City, but not more than one time during a twelve month period, hire an independent certified public accounting firm selected by City to audit the financial statements required under this Agreement and/or all other records or written materials used by Manager in generating the financial statements or perform agreed upon procedures requested by City. Manager shall promptly furnish all documents requested by City, train the accounting firm with respect to the use and application of Manager's accounting software and supervise the work of the accounting firm. All fees and charges of the accounting firm shall be an Operating Expense of the Facility.
6.9 Manager Accounting Software; Other Personal Property Owned by Manager. The Parties acknowledge and understand that the accounting software used at the Facility is owned or licensed or leased by Manager, and City shall have no rights or interests in such software. Upon the expiration or earlier termination of this Agreement, the accounting software and other personal property at the Facility owned by Manager shall be removed from the Facility by Manager within thirty (30) days of such expiration or termination; provided, however, the financial data of and related exclusively to the Facility shall remain the property of City.
Manager shall transfer such data to the City during this 30-day period.
ARTICLE 7 - TERMINATION RIGHTS
7.1 Termination by City. City shall have the right to terminate this Agreement upon the occurrence of any one of the following events:
Manager fails to keep, observe or perform any material covenant, agreement, term or provision of this Agreement, to be kept, observed or performed by Manager, 10 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A and such default continues for a period of thirty (30) days after written notice of such default by City to Manager; or
(b) (i) Manager applies for or consents to the appointment of a receiver, trustee or liquidator of Manager or of all or a substantial part of its assets; (i) Manager files a voluntary petition in bankruptcy or commences a proceeding seeking reorganization, liquidation, or an arrangement with creditors; (iii) Manager files an answer admitting the material allegations of a bankruptcy petition, reorganization proceeding, or insolvency proceeding filed against Manager; (iv) Manager admits in writing its inability to pay its debts as they come due; (V) Manager makes a general assignment for the benefit of creditors; or (vi) an order, judgment or decree is entered by a court of competent jurisdiction, on the application of a creditor, adjudicating Manager a bankrupt or insolvent or approving a petition seeking reorganization of Manager or appointing a receiver, trustee or liquidator of Manager or of all or a substantial part of its assets, and such order, judgment or decree continues unstayed and in effect for any period of sixty (60) consecutive days.
City's right to terminate pursuant to this Section 7.1 shall be exercised upon thirty (30) days additional written notice to Manager given at any time after the applicable cure period has expired. City's termination notice shall specify the effective date of such termination.
7.2 Termination by Manager. Manager shall have the right to terminate this Agreement upon the occurrence of any one of the following events:
(a) City fails to keep, observe, or perform any other material covenant, agreement, term or provision of this Agreement to be kept, observed or performed by City, and such default continues for a period of thirty (30) days after notice of such default by Manager to City; or
(b) (i) City applies for or consents to the appointment of a receiver, trustee or liquidator of City or of all or a substantial part of its assets; (ii) City files a voluntary petition in bankruptcy or commences a proceeding seeking reorganization, liquidation, or an arrangement with creditors; (iii) City files an answer admitting the material allegations of a bankruptcy petition, reorganization proceeding, or insolvency proceeding filed against City; (iv) City admits in writing its inability to pay its debts as they come due; (v) City makes a general assignment for the benefit of creditors; or (vi) an order, judgment or decree is entered by a court of competent jurisdiction, on the application of a creditor, adjudicating City a bankrupt or insolvent or approving a petition seeking reorganization of City or appointing a receiver, trustee or liquidator of City or of all or a substantial part of the assets of City, and such order, judgment or decree continues unstayed and in effect for any period of sixty (60) consecutive days;
Manager's right to terminate pursuant to this Section 7.2 shall be exercised upon thirty (30) days additional written notice to City given at any time after the applicable cure period has expired. Manager's termination notice shall specify the effective date of such termination.
7.3 Curing Defaults. Any default by Manager or City under the provisions of Section 7.1 or 7.2, as the case may be, which is susceptible of being cured shall not constitute a basis for termination of this Agreement if the nature of such default shall not permit it to be cured within the cure period allotted; provided that within such cure period the alleged Party in default 11 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A shall have given notice of its intent to cure, has commenced to cure such default, and is proceeding to complete the cure in good faith and with reasonable diligence by a date which is not more than six (6) months after the date of notice of default.
7.4 Effect of Termination. The termination of this Agreement under the provisions of this Article 7 shall not affect the rights of the terminating Party with respect to pursuing any remedies available to it including pursuing specific performance and/or the collection of damages it has suffered as a result of any breach of this Agreement, nor shall it affect the rights of either Party with respect to any liability or claims accrued, or arising out of events occurring, prior to the date of termination. Should either Party hereto institute any action or proceeding in court to enforce any provision hereof or for damages by reason of any alleged breach of any provision of this Agreement or for any other judicial remedy, the prevailing Party shall be entitled to receive from the losing Party all reasonable attorneys' fees and costs incurred in connection with said proceeding
7.5 Remedies Cumulative. Neither the right of termination, nor the right to sue for damages, 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.
Indemnification for Post-Termination Events. 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 fulfill its legal obligations to assume and provide any tournaments, banquets, meetings, and other group functions to be held at the Facility (collectively, "Events") contracted for by Manager prior to such expiration of termination of the Agreement pursuant to its rights and obligations under this Agreement (or contracted for prior to the Commencement Date), which Events are to be provided after the expiration or termination of this Agreement, provided that, on or before termination of the Agreement, Manager has paid to City an amount equal to all deposits received from clients for reservation of such Events.
7.7 Transition. Upon the proper termination of this Agreement, City and Manager shall cooperate, in good faith, to ensure an orderly transition of the management and operation of the Facility from Manager to City.
7.7.1 Licenses and Permits. Upon termination of this Agreement, Manager shall, at no cost to Manager and City, if possible (and if not possible to do so at no cost to either Party, then at City's cost), transfer any and all licenses and permits which are in Manager's name to City or City's designated new operator, and/or assist City or City's designated new operator in obtaining new licenses and permits as necessary.
ARTICLE 8 - ASSIGNMENT
8.1 Assignment.
8.1.1 Prohibited Assignments. Except as provided in Sections 8.1.2 and 8.1.3, neither Party shall assign this Agreement without the prior written consent of the other Party, which shall not be unreasonably withheld, delayed or conditioned. It is understood and agreed that 12 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A any consent granted by a Party to any such assignment shall not be deemed a waiver of any consent required under this Section 8.1.1 as to any future assignment.
8.1.2 Permitted Assignment by Manager. Manager shall have the right, without the consent of City, to assign this Agreement to any Affiliate of Manager or in connection with the sale of all or a substantial portion of Manager's assets by providing notice to City, provided that the Affiliate or purchaser of Manager's assets expressly assumes all of Manager's obligations hereunder, and further provided that in the event of a sale of all or a substantial portion of Manager's assets to a third party, City shall have the right but not the obligation to terminate this Agreement with thirty (30) days written notice to Manager.
8.1.3 Permitted Assignment by City. City shall have the right, without the consent of Manager, to assign this Agreement to any Affiliate or to any third party in connection with the sale of the Facility, provided that the Affiliate, assignee or transferee (as applicable) expressly assumes all of City's obligations hereunder, and further provided that in the event of a sale of the Facility to a third party, Manager shall have the right but not the obligation to terminate this Agreement upon fifteen (15) days advance written notice to both City and its assignee.
8.1.4 Remedies. Any assignment by either Party of this Agreement in violation of the provisions of this Section 8.1 shall be null and void and shall result in a termination of this Agreement. In addition to any other remedies available to the Parties, the provisions of this Section 8.1 shall be enforceable by injunctive proceeding or by a suit for specific performance.
8.2 Successors and Assigns. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the Parties and their respective heirs, legal representatives, successors and assigns.
ARTICLE 9 - DAMAGE OR DESTRUCTION; EMINENT DOMAIN
9.1 Damage or Destruction. Should the Facility be destroyed or substantially damaged by fire or other casualty, City, by written notice to Manager given within sixty (60) days following the occurrence of such event, shall have the right to terminate this Agreement, and in such event neither Party shall have any further obligation to the other Party under this Agreement, except with respect to liabilities accruing, or based upon events occurring, prior to the effective date of such termination. For the purpose of this Section 9.1, the Facility shall be deemed to have been substantially damaged if, in the reasonable opinion of City, full and productive economic use of the Facility cannot be made and the estimated length of time required to restore the Facility substantially to its condition and character just prior to the occurrence of such casualty shall be in excess of six (6) months. If this Agreement is not terminated in the event of damage to the Facility because the damage does not amount to substantial damage as described above, then City shall proceed with all due diligence to commence restoration of the Facility, but only to the extent that City has received insurance proceeds in connection with such damage or destruction.
9.2 Eminent Domain. If all of the Facility or premises (or such a substantial portion of the premises so to make it unfeasible, in the reasonable opinion of City, to restore and continue to operate the remaining portion of the premises for the purposes contemplated in this Agreement) shall be taken through the exercise (or by agreement in lieu of the exercise) of the 13 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A power of eminent domain, then upon the date that City shall be required to surrender possession of the premises or of that substantial portion of the premises, this Agreement shall terminate and neither Party shall have any further obligation to the other Party under this Agreement except with respect to liabilities accruing, or based upon events occurring, prior to the effective date of such termination. If such taking of a portion of the Facility shall not make it unfeasible, in the reasonable opinion of City, to restore and continue to operate the remaining portion of the premises for the purposes contemplated in this Agreement, then this Agreement shall not terminate, and City shall proceed to repair any damage to the Facility, but only to the extent that City has received compensation in connection with such taking.
ARTICLE 10 - MAJOR CAPITAL IMPROVEMENTS
Any Capital Improvement involving an addition to the Facility or renovation or refurbishing designed to upgrade or change the nature or image of the Facility, which costs more than $25,000 in the aggregate, shall be deemed to be a "Major Capital Improvement." Any Major Capital Improvement project is in City's sole control and discretion, and all costs and expenses of any Major Capital Improvement shall be paid solely by City. The Parties acknowledge and agree that this Agreement imposes no responsibilities or obligations on the part of Manager with respect to any aspect of a Major Capital Improvement project, including design, construction, or supervision.
ARTICLE 11 - GENERAL PROVISIONS
11.1 Purchases by Manager. Manager shall use reasonable efforts to obtain the optimum combination of quality, price and terms for all purchases for the Facility utilizing its extensive contacts and experience in purchasing golf course related items.
11.2 Purchases from Manager Affiliates. If any purchases of goods or services for the Facility are made from or through an Affiliate of Manager, the charges to the Facility for such goods or services shall be on the same terms as those made to Other Manager Facilities, and such charges shall not exceed the market prices for such goods and services.
11.3 Indemnities.
11.3.1 Manager's Indemnity. Manager agrees to indemnify, protect, defend and hold harmless City and City's officials, officers, and employees from and against any and all claims, demands, actions, lawsuits, proceedings, damages, liabilities, judgments, penalties, fines, attorneys' fees, costs, and expenses:
(a) which result from any act or omission constituting gross negligence or willful misconduct or fraud by Manager or any Affiliate, officer, director, agent, independent contractor, or employee of Manager in connection with Manager's performance under this Agreement or under the Annual Plans; or
(b) which result from any action taken by Manager or its Affiliates, employees or agents relating to the Facility (i) that is expressly prohibited by this Agreement or by any Annual Plan (unless an exception to the Annual Plan was approved by City or is otherwise permitted herein), or (ii) that is not within Manager's delegated authority under this Agreement or 14 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A under any Annual Plan (unless an exception to the Annual Plan was approved by City or is otherwise permitted herein).
Manager's indemnity obligations under this Section 11.3.1 shall not apply to any acts or omissions taken (or in the case of omissions, not taken) to the extent they are at the express direction or with the express approval of City, or to the extent any acts or omissions taken (or in the case of omissions, not taken) constitute gross negligence or willful misconduct by City, unless such act or omission constitutes gross negligence or willful misconduct or fraud on the part of any employee of Manager.
11.3.2 City's Indemnity. City agrees to indemnify, protect, defend, and hold harmless Manager and its owners, officers, directors, and employees from and against any and all claims, demands, actions, lawsuits, proceedings, damages, liabilities, judgments, penalties, fines, attorneys' fees, costs and expenses relating to the Facility, or the operations thereof:
(a) To the extent resulting from any act or omission by Manager in connection with the management and operation of the Facility (i) that is expressly authorized by this Agreement, or (ii) that is within the scope of Manager's duties under this Agreement, or (iii) that is within Manager's delegated authority under this Agreement, or (iv) that was at the express direction or with the express approval of City, unless and to the extent that such act or omission constitutes gross negligence or willful misconduct or fraud on the part of any employee of Manager (and was neither at the express direction of City nor with the express approval of City) in which event Manager shall not be indemnified, protected, defended or held harmless under this Section 11.3.2.
11.4 Facility Names. The Facility shall be known by such trade names and/or trademarks or logos as may from time to time be determined by City. All names, logos and designs used at the Facility shall be the exclusive property of City; provided, however, during the term of this Agreement Manager shall have a non-exclusive license to use such names, logos and designs in connection with the operation of the Facility. Manager may identify the Facility as a golf course managed and operated by Manager.
Notices. All notices, demands, requests, consents, approvals, replies and other communications ("Notices") required or permitted by this Agreement shall be in writing and may be delivered by any one of the following methods: (a) by personal delivery; (b) by deposit with the United States Postal Service as certified or registered mail, return receipt requested, postage prepaid to the addresses stated below; or (c) by deposit with an overnight express delivery service.
Notice deposited with the United States Postal Service in the manner described above shall be deemed effective three (3) business days after deposit with the Postal Service. Notice by overnight express delivery service shall be deemed effective one (1) business day after deposit with the express delivery service. Notice by personal delivery shall be deemed effective at the time of personal delivery. Notice also may be given by means of e-mail; provided, however, that in order for an e-mail Notice to be deemed effective, the Party giving notice by e-mail shall provide a "hard copy" of the e-mail Notice thereafter to the other Party pursuant to one of the three methods of "hard copy" delivery specified in this Section.
15 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A For purposes of Notices hereunder, the address of City shall be:
City of San Bernardino, California
Vanir Tower, 290 North D Street
San Bernardino, CA 92401
Attention: City Manager
With a copy to:
City Attorney
City of San Bernardino
Vanir Tower, 290 North D Street
San Bernardino, CA 92401
For purposes of Notices hereunder, the address of Manager shall be:
Local Golf Management LLC
3433 Parkside Dr.
San Bernardino, California 92404
Attention: Ken Arimitsu
With a copy to:
Addison Law Firm
5429 LBJ Freeway, Suite 400
Dallas, Texas 75240
Attention: Timothy J. Clow
Each Party shall have the right to designate a different address within the United States of America by the giving of notice in conformity with this Section 11.5.
11.6 No Partnership or Joint Venture. Nothing contained in this Agreement shall be construed to be or create a partnership or joint venture between City and its successors and assigns, on the one part, and Manager and its successors and assigns, on the other part. Manager shall perform all activities hereunder as an independent contractor, and no employer-employee or principal-agent relationship shall be established by this Agreement or the performance hereof.
11.7 Modification and Changes. This Agreement may be amended or modified only by a writing signed by both Parties.
11.8 Understandings and Agreements. This Agreement constitutes all of the understandings and agreements of whatever nature or kind existing between the Parties with respect to Manager's management and operation of the Facility.
11.9 Headings. The Article, Section and Subsection headings contained in this Agreement are for convenience and reference only and are not intended to define, limit or describe the scope or intent of any provision of this Agreement. 16 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A
11.10 Consents. Each Party agrees that it will not unreasonably withhold any consent or approval requested by the other Party pursuant to the terms of the Agreement, and that any such consent or approval shall not be unreasonably delayed or qualified. Similarly, each Party agrees that any provision of this Agreement which permits such Party to make requests of the other Party shall not be construed to permit the making of unreasonable requests.
11.11 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.
11.12 Third Parties. None of the obligations under this Agreement of either Party shall run to or be enforceable by any Party other than the Parties to this Agreement or by a Party deriving rights under this Agreement as a result of an assignment, subordination or similar agreement permitted pursuant to the terms hereof.
11.13 Waivers. No failure by Manager or City to insist upon the strict performance of any covenant, agreement, term or condition of this Agreement or to exercise any right or remedy consequent upon the breach of this Agreement shall constitute a waiver of any such breach or any subsequent breach of the same covenant, agreement, term or condition. No covenant, agreement, term or condition of this Agreement and no breach of this Agreement shall be waived, altered or modified except by a written instrument. A waiver of any breach of this Agreement shall only affect this Agreement to the extent of the specific waiver, and all covenants, agreements, terms and conditions of this Agreement shall continue in full force and effect.
11.14 Applicable Law: Venue. This Agreement shall be construed and interpreted in accordance with, and shall be governed by, the laws of the State of California. Venue for any action relating to this Agreement shall be properly in San Bernardino County.
11.15 No Presumption Regarding 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 matter 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 this Agreement, and therefore no presumption for or against the drafter shall be applicable in interpreting or enforcing this Agreement.
11.16 Enforceability of Any Provision. If any term, condition, covenant, or obligation of this Agreement shall be determined to be unenforceable, invalid, or void, such determination shall not affect, impair, invalidate, or render unenforceable any other term, condition, covenant, or obligation of this Agreement.
11.17 United States Currency. All amounts payable pursuant to this Agreement shall be paid in lawful money of the United States of America.
11.18 Counterparts. This Agreement and any amendment may be executed in counterparts, and upon all counterparts being so executed each such counterpart shall be considered as an original of this Agreement or any amendment and all counterparts shall be considered together as one agreement. A signed copy of this Agreement transmitted by fax or 17 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A email to either of City or Manager shall be deemed to have the same legal effect as delivery of an original executed copy of this Agreement for all purposes. This Agreement and any amendment may be executed using an electronic signature.
11.19 Gender and Number. Whenever appropriate in this Agreement, the singular shall be deemed to refer to the plural and the plural to the singular, and pronouns of certain gender shall be deemed to include either of both of the other genders.
11.20 Further Assurance. City and Manager agree that at any time or from time to time after the execution of this Agreement, each shall, upon the request of the other, execute and deliver such further documents and do such further acts and things as such Party may reasonably request in order to fully effect the purpose of this Agreement.
11.21 Waiver of Jury Trial. The Parties hereby waive trial by jury in any action, proceeding, or counterclaim brought by either of the Parties hereto on any matter whatsoever arising out of or in any way connected with this Agreement.
11.22 Conflict of Interest. City acknowledges that an affiliate of Manager owns and operates the Comparable Facility and City hereby waives any claim that such ownership and operation violates City's conflict of interest code or policy. Nothing contained in this Agreement shall be construed to restrict or prevent, in any manner, any Party or any Party's affiliates, parent corporation or representatives or principals from engaging in any other businesses or investments.
11.23 Force Majeure. Neither City nor Manager shall be responsible for delays or failures in performance resulting from acts beyond the control of either Party. Such acts shall include but are not be limited to acts of God, riots, acts of war, epidemics, fire, earthquakes, or other disasters.
11.24 Taxes. Manager shall be liable for and agrees to pay promptly and prior to delinquency, at its own expense and not as an Operating Expense of the Facility, any tax or assessment which may be levied by any governmental authority solely against Manager, related to Manager's corporate existence or corporate operations, separate and independent from any taxes which are levied by any governmental authority and related to the ownership, operation or possession of the Facility, which shall be Operating Expenses of the Facility.
11.25 Exclusive Negotiating Period. As additional consideration for the execution of this Agreement, until the date provided for in this Section, City shall not, directly or indirectly, negotiate, initiate, solicit or encourage any inquiries or the making or implementation of any proposal or offer with any person or entity other than Manager regarding the development or re-development of the Facility or any portion thereof, or solicit or entertain bids or proposals to do so. For purposes of this Section, the term "Manager" shall mean Manager as of the date of this Agreement or an entity formed by Manager, in which Manager is a general partner or administrative member or managing member, for the purpose of developing or re-developing the Facility. Manager acknowledges, however, that City may, from time to time, be contacted by other developers regarding the Facility and that such contact is permitted so long as City does not initiate the contact and indicates to such other developers that City has executed this Agreement with Manager and that City is unable to discuss negotiations with Manager, or entertain any offer or 18 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A proposals, or to negotiate with any other developer with respect to the Facility, until this Exclusive Negotiating Period expires or the Agreement is terminated. City will cause its directors, officers, employees, agents and other representatives to comply with this Section 11.25. During the final year of the Term of this Agreement, City and Manager shall negotiate potential terms of an Agreement extension. If the City and Manager have not agreed to a contract extension by October 1, 2027, then the Exclusive Negotiating Period outlined in this Section shall end and the City shall be free to negotiate, initiate, solicit or encourage with any person or entity regarding the Facility.
Notwithstanding the foregoing, this Section shall not include the negotiation for Major Capital Improvements as further described in Article 10 of this Agreement.
11.26 Independent Entity. City recognizes and acknowledges that Manager is an independent entity, chartered under the laws of the State of California, to whom City will solely look and who is solely responsible for the obligations and liabilities of Manager related to the transactions contemplated hereby. City further recognizes and acknowledges that no other entity or entities, including any individual or any entity affiliated with Manager, is in any manner liable or responsible for the obligations and liabilities of Manager related to the transactions contemplated hereby. City agrees that the parent or affiliated entities of Manager may form, organize, provide services to, provide loans and funds to, negotiate for, provide personnel to, make representations on behalf of, and from time to time take actions on behalf of or for the benefit of Manager by direct dealings with City or those acting for it, and that any such actions shall be deemed to be the actions of Manager and not of the affiliate, even if the affiliate is paid a fee by Manager.
11.27 Benefit of Shandin Hills Golf Club. City and Manager agree that any actions taken by Manager under this Agreement shall be for the sole benefit of the operations of the Shandin Hills Golf Club and not in furtherance of other golf courses that are managed in Manager within the City's jurisdiction. To that extent, City and Manager agree to expressly to deal with each other honestly, fairly and in good faith in all respects in furtherance of their mutual performances with respect to this Agreement. In the interest of transparency, Manager agrees to allow City to inspect certain records related to Manager's operations at other golf courses within the City's jurisdiction. Such requests may not occur more than once per year.
11.28 Prevailing Wage. Manager is aware of the requirements of California Labor Code Sections 1720 et seq. and 1770 et seq., as well as California Code of Regulations, Title 8, Section 16000, et seq., ("Prevailing Wage Laws"), which require the payment of prevailing wage rates and the performance of other requirements on certain "public works" and "maintenance" projects. If the Services are being performed as part of an applicable "public works" or "maintenance" project, as defined by the Prevailing Wage Laws, Manager agrees to fully comply with such Prevailing Wage Laws, if applicable. It shall be mandatory upon the Manager and all subcontractors to comply with all California Labor Code provisions, which include but are not limited to prevailing wages (Labor Code Sections 1771, 1774 and 1775), employment of apprentices (Labor Code Section 1777.5), certified payroll records (Labor Code Sections 1771.4 and 1776), hours of labor (Labor Code Sections 1813 and 1815) and debarment of contractors and subcontractors (Labor Code Section 1777.1).
If the Services are being performed as part of an applicable "public works" or "maintenance" 19 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A project, then pursuant to Labor Code Sections 1725.5 and 1771.1, the Manager and all subcontractors performing such Services must be registered with the Department of Industrial Relations. Manager shall maintain registration for the duration of the Project and require the same of any subcontractors, as applicable. This Project may also be subject to compliance monitoring and enforcement by the Department of Industrial Relations. It shall be Manager's sole responsibility to comply with all applicable registration and labor compliance requirements. [REMAINDER OF PAGE IS INTENTIONALLY BLANK]
20 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A IN WITNESS WHEREOF, the Parties have executed or caused this Agreement to be executed effective as of the day and year first written above. "CITY"
CITY OF SAN BERNARDINO, CALIFORNIA
Approved By:
By: Charles E. MeMely
Name: Charles E. McNeely
Title: Interim city Manager
Attested By:
By: Tenemen Pocke
Name:
Title: Genoveva Rocha, City Clerk
Approved as to Form:
thomas Rice
By:
Name: Thomas Rice
Title: Chief Assistant City Attorney
"MANAGER"
LOCAL GOLF MANAGEMENT LLC
Mahabhi
By: Michael winm
Name: _
Title: owner
21 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A
EXHIBIT A
FACILITY MAP
(See Attached)
Anta Mountain Da
Shandin Hills
Bond st.
kapalay Do WSI A Prima de don Georgel
Edgehill Condominiuns
titan Expressa Lopez Chi
lexican
oration
Bond st
Shandin Hills Golf cius
Little Mountain Dr Blair Park
Nicalifornia St
Highland skatepark
Gardena St Brenda MacDonal
Elegant & Beauty Spa Lewis Group Marshall Blvd
Bussey StW
Glenview Ave NPennsy vania Al
CajonBivds Hallowed Chapel
Motwon nternational
22 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A Shandin Hills Golf Club
ES3 Little Mountain Dr
Highland
Mojave Fwy
beauty spa Lewis Group Ma
Bus:
N Penn
isylvania Ave CajonBivd Ha
Motvion
ISI Darby St
iS House
square church
Delmann Lit
Heighte Park Rorh ero's tools Preschool
Cora's transpontation
Mobil
wiMallorys
23 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A
EXHIBIT B - DEFINITIONS
Affiliate means any and all corporations, partnerships, trusts, limited liability companies and other entities directly or indirectly controlled by, controlling, or subject to direct common control of an entity or person.
Capital Improvements means any alteration or addition to, or rebuilding or renovation of, the Facility which is considered a capital expenditure under GAAP, the cost of which is not charged to ordinary property operations, repair, replacement, alteration and/or maintenance.
Community Special Events means hosting a variety of golf and non-golf events such as movie nights, 4 of July, concerts at the course, food/beverage tastings, 5k or 10k runs, tournaments, disc golf, foot golf and youth activities/programs.
Comparable Facility means Arrowhead Country Club in San Bernardino, California.
Compensation means the direct salaries and wages paid to or accruing for the benefit of any manager or other employee, together with all fringe benefits payable to or accruing for the benefit of such manager or other employee, including employer's contribution under the Federal Insurance Contributions Act ("FICA"); unemployment compensation, or other employment taxes; pension fund contributions, worker's compensation, group life and accident and health insurance premiums as well as any payments made by Manager which fall within the deductible amounts of any such policies; profit sharing; retirement; disability; and other similar benefits but only to the extent established in the Annual Plan and approved by City or otherwise approved by City as set forth in Section 3.6.1.
CPI means The United States Department of Labor, Bureau of Labor Statistics, All Items Consumer Price Index for All Urban Consumers (all items for Riverside, San Bernardino, Ontario, California on the basis of 1982 - 1984 equals 100). Notwithstanding the foregoing, if the format or components of the CPI are materially changed after the date hereof, then City and Manager shall mutually agree to a substitute index which is published by the Bureau of Labor Statistics or similar agency and which is most nearly equivalent to the CPI in effect as of the date hereof.
Furnishings and Equipment means all furniture, furnishings, trade fixtures, apparatus and equipment, including golf course maintenance vehicles and equipment, golf carts, driving range pickers and pullers, mats, buckets, cash registers, rental golf clubs, ball washers, benches, uniforms, and other personal property used in or held in storage for use in the operation of the Facility, other than Operating Inventory and fixtures attached to and forming part of the Improvements.
Gross Revenues means all amounts 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 and consistent with the income/operating statements generated by Manager in the ordinary course of business. Gross Revenues shall include, without limitation, the following generated at the Facility: all green fees; rental fees for golf 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 24 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A meetings, banquets, parties, receptions, tournaments, and other group gatherings; merchandise sales; instruction fees; vending sales (or, it applicable, receipts from vending companies); and proceeds from business interruption insurance. Gross Revenues shall not include the following:
(a) Cash refunds or credits allowed on returns by customers; (b) 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 to the appropriate taxing authority, whether added to or included in the selling price; Fees charged by a golf professional functioning as an independent contractor for the teaching of golf lessons and instruction to the extent the Facility operation does not receive revenue from such golf lessons
d) Receipts in the form of refunds from, or the value of merchandise, supplies or equipment returned to, shippers, suppliers or manufacturers; (e) The amount of any gratuities paid or given by customers to Facility employees;
(f) Proceeds of insurance other than business interruption insurance or similar types of insurance;
(g) Any interest earned on any City provided bank account or funds; (h) The actual uncollectible amount of any check or bank draft received as payments for goods or services and returned from a bank as being uncollectible; and (i) The actual uncollectible amount of any sale of merchandise or services for which a credit card was accepted.
Legal Requirements means all laws, statutes, ordinances, orders, rules, regulations, permits, licenses, authorizations, directives and requirements of all governments and governmental authorities, which now or hereafter may be applicable to the Facility and the operation of the Facility.
Major Capital Improvements has the meaning set forth in Article 10.
Operating Expenses means utility costs, costs of purchasing Operating Inventory, Compensation and expenses of the management staff and other employees directly employed at the Facility, advertising and promotion, ordinary repairs, replacements, alterations and maintenance, cart and equipment lease payments, insurance premiums, the Management Fee, taxes and all other expenses relating to the operation of the Facility and/or payable under the Annual Plan that would be expensed in accordance with GAAP, except as provided in the next paragraph. Operating Expenses shall not include principal and interest payments on any promissory note or other debt instrument and payments under a deed of trust or mortgage (if any); depreciation; amortization; costs incurred as a result of any assignment of this Agreement or sale of the Facility; income taxes paid or payable by City on the income from the Facility. 25 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A Operating Inventory means consumable items used in or held in storage for use in the operation of the Facility, including scorecards and cart tickets, driving range balls, professional shop merchandise, food and beverages, paper and plastic ware, fuel, cleaning materials, fertilizers, pesticides, linens, glassware, sanitation supplies and other similar items.
Operating Year means any 365 day period during the Term beginning on the Commencement Date or any anniversary of the Commencement Date.
Other Manager Facilities means all other golf course facilities within the United States owned, leased, managed and/or operated, directly or indirectly, by Manager. 26 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A
EXHIBIT C
ANNUAL PLAN FOR
INITIAL OPERATING YEAR
Shandin Hills Golf Club Capex Spreadsheet
Prepared by: Chad Hackman
Date: 4/12/23
Clubhouse Projects Estimated Cost
Clubhouse Roof Replacement $100,000.00
Parking Lot Renovation $60,000.00
Asphalt Road / Path Repair $50,000.00
Maintenance Facility Lighting Repair $10,000.00
Clubhouse HVAC Project $100,000.00
Clubhouse & Golf Shop Patio Cover Project $50,000.00
Clubhouse & Banquet Entry Door Project $12,000.00
Clubhouse Painting Project $65,000.00
Clubhouse Projects Total $447,000.00
Golf Course Projects Estimated Cost
Hole #15 Lake Renovation Project $250,000.00
Tee Leveling Project $22,500.00
Golf Course Stump Removal Project $14,000.00
Golf Course Projects Total $286,500.00
Total Capex Project Estimated Cost $733,500.00
27 Shandin Hills Country Club
Monthy Operating Budget
Summery
January - December 2023
Account Name Jan Feb Mar Apr May Aug Sep Oct Nov Total
Revenue
Golt Sm Fees/Cans/kangs veronanos
Tennis.
Food and Beverage
Clubhouse/Pool Tennis
General & Administrative. 9,750 .9.750 9.750. 9,750 9,759 9,759 9,750 9750. 9,750 97.60 9.750 8759. 117,000 Total Budget Revenue 2023
Prior Year 2022. 2 0 027 0 10 100 100 120 130 1020 1020 3220 100 12020 Actual Revenue 2023
Cost of Sales
Golf Meschandise... 5,896 5,896 70,754
Food and Bexerane. 4846226586 21.242 21.242 256,518
Total Cost of Sales 2023 27,138 27,138 327 272
Prior Year COS 2022 14,968 22,594 201,240
Actual COS 2023 28
Gross Profit 2023 224,9071
Gross Profit Prior Year 2922 110.000
Actual Gross Profit 2023
Operating Expenses.
Solt Stop/Outside Services. 31.539 31.069 31,509 31,669 31,669 32.069 S5,b50 31.002 31,869 32.008 31.963 42.056 389,028.
Golf Course Maintenance 50,808 49208 52,508 60/208 50,608 56,508 58,811 49.708 58,608 57,7B3 .56.611 51,508 652,479 Food and Revereee, 39,142 38.842 .38,842 38,942 38,842 39.142 45,655 38,342 38,842 .36.942 .39,042 45,315 480,398 19,127 19.027 19.027 19,027 19,1273 20.027 22.027 19.027. 19.127. 19.027 .19.027 29,027 242.624 Chuchouse/Pool/ Tennis. 7.75B 7.733 7.733 7.733 7,933 7,983 8,983 8,483 8,493 8433 7,733 7.733 97.717 Total Operating Expenses 2023. 148,704 157,579 148,179 154,729 175,352 147,729 156,929 156,254 154,282 175,649 1,872,244 Prior Year Expenses 2022. 85,835 86,719 110,997 112,962 103,594 118,622 109,820 107,188 1,278,103 Actual Expenses 2023.
Net Opereting Income 2023. 76.103 1L 828 74.928 67,228 1438 70,888 50,265 1E.B8B $8.018 68.553 70.525. 49.158 828,823 Prior Year Net Operating Income 2022 14 167 27,818 16,513 64,311 48,150 63.387 37,365 24,250 14.659 25,785 17.763 57,842 442,020 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A Actual Net Operating Income 2023.
Fixed Expenses 2023 10,500 7,500 7,500| 8,300| 7,500 7.510 7.500| 7,500 107,110 Prior Year Fixed Expenses 2022 14,275 14,512 11,262 15,727 19,111 23,929 28,152 24,857 21,282 17,974 11,702 230,185 Actual Fixed Expenses 2023
Total Capital 2020
Fountain
Aerifier
Aerway
Equipment Maintenance
Basketball Court
Horse Shoe Tl
Pool Repair
Stucco Repair
Tennis Repair
Capital Improvement
Actual Cumulative Cash Flow
541,713 515,055 467,030 420,987 375,458 324,080 298,615 257,227 202,2BB 158,360 105,932 50,609 Cumulative Cash Flow / Reservé Add: Cash recd
Less: Cash Reed
Actual 2021
541,715 26,658 48,025 46,043 45,518 51,388 24,465 42,388 54,938 43,928 52,428 55,32B 50,603 Cash Flow after Debt Service 180,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 16,000 15,000 15,000 MANAGEMENT FEE 211,835 46,140 (211)) 4,503) 19,803 (3,892) 9,961 39,458 29,039 45,5B4 5,251l 13,30G (108)| Prior Year Cash Flow 2022 721.713 41,658 63.025 61,043 60,518 65 385 39,465 57,338 69,830 58,828 67.428 70.525 35,603 NET INCOME 2023 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A
EXHIBIT D
SCHEDULE OF REQUIRED INSURANCE
Property and Business Interruption Insurance.
A. All risk property insurance for the full replacement value covering physical loss or damage to all buildings and improvements now existing or hereafter erected upon or above the Facility, which shall include extended coverage against such perils of fire, lightning, windstorm, collapse, and sprinkler leakage. Such policy shall also provide (a) comprehensive boiler and machinery coverage, including pressure vessels, air tanks, boilers, machinery pressure piping, heating, air conditioning, (b) earthquake coverage, if applicable and available at commercially reasonable rates in the region where the Facility is located, and (c) flood coverage in an amount not to exceed $1,000,000 if the Facility is not in a special flood hazard zone, and, if the Facility is in a special flood hazard zone, flood coverage in an amount available at commercially reasonable rates through the applicable governmental agency. Such policy shall also cover all equipment, fixtures, motors, machinery, furnishings and furniture installed and owned or leased by Owner and used in connection with the Facility or with the buildings and improvements upon or above the Facility, including all alterations, rebuilding, replacements and additions thereto (as hereinafter defined) at the option of City. If any insurer, or any governmental agency or authority having jurisdiction over the Facility, shall at any time require that the foundations be insured in order to relieve the insured from the responsibility as a co-insurer or for any other purpose, the obligations with respect to insurance herein shall henceforth be increased to the extent so required.
B. Business Interruption Insurance providing coverage in an amount equal to twelve (12) months of net operating income at the Facility, or such other amount as is mutually satisfactory to Manager and City.
II. Liability Insurance.
A. Commercial general liability insurance against claims for bodily injury, death, property damage and sexual abuse and molestation occurring on, in or about the Facility with a combined single limit of not less than Two Million Dollars ($2,000,000); Employee Benefits Liability insurance with a combined single limit for each occurrence involving personal injury, death or property damage (including any loss of use resulting therefrom) in an amount not less than that generally provided with respect to the Comparable Facilities, but in no event shall the limits of such coverage be less than One Million Dollars ($1,000,000) per location and per single occurrence and Two Million Dollars ($2,000,000) in the aggregate per location. For the avoidance of doubt, this policy shall be a location based policy.
B. Liquor liability insurance having coverage terms at least as broad as those found in standard ISO forms. Such policy shall have an aggregate limit of at least One Million Dollars ($1,000,000) per single occurrence and in the aggregate. Manager shall be entitled, from time to time, to designate such higher limits as it deems reasonably necessary (or as required under any loan and/or plan documents). In the event that Manager, or Manager's Affiliate, holds the liquor 30 DocuSign Envelope ID: A077C4A0-D3FC-4025-9526-E70A7475CD1A license for the Facility, Manager shall be the named insured (and City shall be an additional insured) with respect to the foregoing insurance coverage.
C. Automobile liability insurance on vehicles operated in conjunction with the Facility against claims for damages on owned vehicles, non-owned vehicles, and uninsured motorist coverage (where required by statute), with a combined single limit for each occurrence involving personal injury, death or property damage (including any loss of use resulting therefrom in an amount not less than that generally provided with respect to the Comparable Facilities, but in no event shall the limits of such coverage be less than One Million Dollars ($1,000,000) per occurrence.
D. Umbrella liability insurance with limits of not less than Ten Million Dollars ($10,000,000) per single occurrence and in the aggregate.
E. Pollution insurance policy (including, but not limited to Herbicide and Pesticide coverage) with a limit of not less than One Million Dollars ($1,000,000) per single occurrence, including coverage for on-site and off-site clean up as well as third party coverage for on-site and off-site third party claims for bodily injury and property damage.
Privacy liability insurance covering employee and member/guest data at the Comparable Facilities with limits as determined by Manager and City. This coverage does not apply to computers at facilities not on the Manager network or networks managed by Manager.
III. Workers Compensation and Employer's Liability (provided that Manager employs the employees).
A. Workers' compensation and Employer's liability insurance as may be required under applicable laws covering all of Manager and its Affiliates' employees employed at the Facility.
Comprehensive crime insurance covering Manager employee theft and dishonesty with a limit of at least One Million Dollars ($1,000,000) per occurrence.
C. Employment practices liability insurance covering Manager employees with a limit of at least One Million Dollars ($1,000,000) per occurrence. 31