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HomeMy WebLinkAboutCourseCo Mgmt Agree Signed 12.27.11SUN WILLOWS GOLF COURSE MANAGEMENT AGREEMENT Sun Willows Management Agreement TABLE OF CONTENTS SECTION PAGE NUMBER 1.0 DEFINITIONS ............................................................................ ..............................3 2.0 TERM ........................................................................................... ..............................7 3.0 MANAGEMENT OF GOLF COURSE .................................... ..............................8 4.0 APPROVALS ............................................................................. .............................23 5.0 ANNUAL PLAN ......................................................................... .............................24 6.0 MANAGEMENT FEE ............................................................... .............................29 7.0 FINANCIAL AND ACCOUNTING PROCEDURES ............ .............................30 8.0 BUSINESS RECORDS .............................................................. .............................33 9.0 INSURANCE AND INDEMNIFICATION ............................. .............................35 10.0 DEFAULT .................................................................................. .............................38 11.0 CONTRACT ENDING TRANSITION PROCEDURES ....... .............................42 12.0 WORK STOPPAGES, DAMAGE OR DESTRUCTION ...... .............................43 13.0 SUBMISSION OF PAYMENTS, REPORTS AND NOTICES ..........................45 14.0 DISPUTE RESOLUTION ........................................................ .............................46 15.0 MISCELLANEOUS PROVISIONS ......................................... .............................47 16.0 GUARANTEE .................................................. .............................50 17.0 AUTHORIZATION ........................................... .............................50 Sun Willows Golf Course Management Agreement THIS GOLF COURSE MANAGEMENT AGREEMENT between the City of Pasco, a Washington Municipal Corporation (hereinafter referred to as "City "), and Pasco Golf Corporation dba Sun Willows Golf Cours ., a Washington Corporation, (hereinafter referred to as "Contractor "), is entered into this _2.,,-_7 !ay of December, 2011 for the management and operation of the Sun Willows Municipal Golf Course (hereinafter referred to as "Golf Course ") according to the following terms and conditions WHEREAS, Contractor represents that it is a fully owned subsidiary of CourseCo Inc., a California Corporation, and has the necessary experience and qualifications to manage, operate and maintain the Golf Course in accordance with the terms and conditions of this Agreement; and WHEREAS, City is the owner of the Sun Willows Golf Course that includes an 18- hole golf course, a driving range, a snack bar /restaurant, a pro shop, maintenance facilities, and all appurtenances incident thereto; and WHEREAS, City desires to utilize the services of Contractor for the overall management, maintenance and operation of the Golf Course, collection of fees and other golf, food and beverage services provided at the Golf Course; and. WHEREAS, Contractor represents that it is a fully owned subsidiary of CourseCo Inc., a California Corporation, which has the necessary experience and qualifications through its subsidiary to manage, operate and maintain the Golf Course in accordance with the terms and conditions of this Agreement with CourseCo Inc., guarantying performance of the Contractor of its responsibilities under the Agreement; and WHEREAS, City and Contractor agree that the primary objectives for the Contractor's performance under this Agreement are to provide the high quality golf experience with food and beverage services, high quality maintenance practices and to generate revenues sufficient to cover all expenses of the Golf Course. NOW, THEREFORE, in consideration for the mutual promises hereinafter set forth, the parties hereto agree to as follows: 1.0 DEFINITIONS. The following terms shall be defined as follows for the purposes of this Agreement: 1.01 Affiliate. "Affiliate" is any and all corporations, partnerships, trusts and other entities directly or indirectly controlled by, controlling or subject to direct or indirect common control of an entity or person. 1.02 Capital Budget. "Capital Budget" is a budget submitted by the Contractor with the Annual Plan to set forth anticipated Capital Expenditures for that year. 1.03 Capital Expenditures. "Capital Expenditures" are any equipment or alteration, addition, improvement, repair, replacement, rebuilding or renovation to the Golf Course, the cost of which is equal to or exceeds Five Thousand Dollars ($5,000.00) and which has a useful life of more than one (1) year. 1.04 Cart Barn Storage. "Cart Barn Storage" is the area on the Golf Course to be used for storage of golf carts and related activities. 1.05 Lill: "City" is the City of Pasco and owner of the Golf Course. 1.06 City Manager. "City Manager" is the person holding the position of the City Manager of the City of Pasco or his or her designee. 1.07 Clubhouse. "Clubhouse" is the snack bar /restaurant/restroom building located on the Sun Willows Golf Course premises. 1.08 Combined Management Fee. "Combined Management Fee" is the Fixed Management Fee and Incentive Management Fee, which constitute the annual consideration paid to Contractor for the performance of services under this Agreement. 1.09 Comparable Facilities. "Comparable Facilities" shall mean other local course with similar green fee rates since green fees per round is best index of comparability. 1.10 Compensation. "Compensation" is the direct salaries and wages paid to or accruing for the benefit of the management staff and all other persons employed by Contractor at the Golf Course, together with all fringe benefits payable to or accruing for the benefit of such employees, 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, retirement, disability and other similar benefits. 1.11 Cost of Goods Sold. "Cost of Goods Sold" is defined as beginning Resale Inventory plus purchases for Resale Inventory minus ending Resale Inventory. 1.12 Crew. "Crew" is the Golf Course maintenance staff employed by Contractor. 1.13 Director. "Director" is the City Director of Administrative & Community Services, or such designee, that is responsible for the management of the golf course incident to their employment with the City. 1.14 Facilities. "Facilities" are the buildings, structures, improvements, irrigation system and controls, cart paths, fencing, fixtures, trade fixtures, furnishings and equipment, clubhouse, 2 maintenance facility, maintenance yard, parking lots, utility systems, snack bar /restaurant facilities, and such other existing and future components of the Golf Course. 1.15 Furnishings and Equipment. "Furnishing and Equipment" are all furniture, furnishings, trade fixtures, apparatus and equipment, including without limitation, course maintenance vehicles and equipment, golf carts, driving range pickers and pullers, mats, range ball baskets, cash registers, rental golf clubs and bags, ball washers, benches, uniforms, kitchen equipment, appliances, china, glassware, silverware, office equipment, computers, copy machines, facsimile machines, telephone systems (not including pay telephones), and other personal property used in or held in storage for use in the operation of the Golf Course, other than Resale Inventory. l .16 GCSAA. "GCSAA" is the Golf Course Superintendents Association of America. 1.17 General Manager. "General Manager" is an employee of Contractor who oversees the operations of the entire Golf Course and preference given to Class "A" PGA or LPGA golf professional, unless otherwise approved by the director. 1.18 Golf Course. "Golf Course" or "Premises" or "Course" is the municipal golf course owned by the City, including but not limited to the land, the driving range, the clubhouse, maintenance facility, maintenance yard, parking lots, utility systems, snack bar /restaurant facilities, and such other existing and future components of the Golf Course. 1.19 Golf Course Expenses. "Golf Course Expenses" are all costs and expenses incurred in the operation, management, and maintenance of the Golf Course, including: (a) all expenditures incurred by City for the benefit of the Golf Course; (b) the "Combined Management Fee" paid to Contractor pursuant to Section 6.01 of this Agreement; (c) all expenses specifically identified as " Direct Costs" in this Agreement; and (d) all other expenses incurred by Contractor in connection with the Golf Course or this Agreement, which expenses were not reasonably anticipated by the parties or otherwise provided in this Agreement and which are consistent with the operation of a golf course and were approved in writing by the Director. 1.20 Gross Revenues. "Gross Revenues" are all money received as a result of the operation of the Golf Course and the sale of goods and services at the Golf Course, determined on a modified accrual basis in accordance with generally accepted accounting principles consistently applied. The deposit of Gross Revenues shall include, but are not limited to all green fees; rental fees for golf carts, golf clubs and bags, and other rental items; range balls; resident card fees, reservation fees; fees for golf handicap service; rental and concession payments; food and beverage sales; liquor sales; revenue generated from space rentals and from golf- related meetings, banquets, parties, tournaments, and other group gatherings; merchandise sales; golf instruction fees; revenues from golf schools; gross receipts received by licensees or concessionaires; and all other revenues generated by the Golf Course. Gross Revenues shall be reduced by any cash refunds or credits allowed on returns by purchasers. Gross Revenues shall not include the following: (a) the amount of any gratuities to Golf Course employees, or service charges added to customer billings which represent gratuities to Golf Course employees (b) proceeds of any borrowings by Contractor or City; (c) initial operating funds in the Bank 5 Account and funds subsequently provided by City to satisfy the working capital needs of the Golf Course; (d) refunds for the value of merchandise, Supplies or equipment returned to shippers, suppliers or manufacturers; and (e) unearned or deferred revenues such as gift certificates /cards, nonrefundable tournament and event deposits, and pre -paid driving range fees f) proceeds from insurance; any amount received by Contractor in connection with any claim, demand, or lawsuit unless the amount recovered would have been included in gross revenue initially g) sales tax received or any other tax received from the customer. 1.21 Impositions. "Impositions" are all taxes and assessments (including without limitation real property taxes and assessments, possessory interest taxes, and personal property taxes), water, sewer or other similar rents, rates and charges, levies, license fees, permit fees, inspection fees and other authorization fees and charges, which at any time may be assessed, levied, confirmed or imposed on the Golf Course or the operation of the Golf Course 1.22 Insurance Requirements. "Insurance Requirements" are all requirements of each insurance policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to the Golf Course or the operation of the Golf Course. 1.23 Invitee. "Invitee" is anyone present on the Golf Course for golfing, dining or other lawful purpose. 1.24 Legal Requirements. "Legal Requirements" are 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 Golf Course or the operation of the Golf Course, including, but not limited to, the Americans with Disabilities Act and implementing regulations as well as other federal, state and local laws and regulations governing access and all federal, state and local laws and regulations pertaining to the storage, use and disposal of "hazardous or toxic wastes, substances or materials" as defined by applicable law. 1.25 Maintenance Yard. "Maintenance Yard" is the area utilized for the storage and maintenance of equipment and supplies including underground devices, storage facilities, and related items. 1.26 Maintenance Standards. "Maintenance Standards" are the standards generally accepted in the industry and as defined by this Agreement for the maintenance, care and protection of the Golf Course. 1.27 Operating Net Cash Flow. "Net Cash Flow" is the difference between the Gross Revenue and all expenses, including Direct Costs, other operating expenses, debt service for all debt in existence on the Effective Date, additional debt service to the extent agreed to in writing by both parties, and Fixed and Incentive Management Fees. 2 1.28 Operating Year. "Operating Year" is the period from the Effective Date of January 1, 2012 thru December 31, 2012 and each following twelve (12) calendar month period for the term of the Agreement. 1.29 PGA/LPGA. "PGA" is the Professional Golfers' Association of America. "LPGA" shall mean the Ladies Professional Golfers' Association of America. 1.30 Premises. "Premises" is the Golf Course as defined above. 1.31 Pro Shop. "Pro Shop" is the golf professional shop located in the Clubhouse. 1.32 Recognized Clubs. "Recognized Clubs" are those clubs that consider the Golf Course home. 1.33 Resale Inventory. "Resale Inventory" is Pro Shop merchandise and food and beverage items. 1.34 Senior Golfers. "Senior Golfers" are golfers who are at least sixty two (62) years of age. 1.35 Superintendent. "Superintendent" is an employee of Contractor who is in charge of Golf Course maintenance, is a Class A member of the GCSAA and has a State Applicator Certificate ( "QAC ") in categories B and F. 1.36 Supplies. "Supplies" are consumable items not for Resale and used in or held in storage for use in the operation of the Golf Course, including but not limited to, scorecards and cart tickets, driving range balls, locker room and bathroom supplies, towels, fuel, cleaning materials, fertilizers, pesticides, seed, maintenance parts and supplies, office supplies, and other similar items. 1.37 USGA. "USGA" is the United States Golf Association. 2.0 TERM. 2.01 Term. The initial term of this Agreement shall commence on January 1, 2012 (the "Effective Date ") and expire on December 31, 2014, unless it is terminated or extended pursuant to the terms of this Agreement. 2.02 Extension. 2.02.1 This Agreement shall be automatically renewed for two (2) consecutive five (5) year terms, upon the same terms and conditions as provided in this Agreement except Section 6, which shall be subject to mutual agreement of the parties. The City or Contractor may, however, give notice to the other of its intent not to automatically renew the extension of this Agreement by written notice to the other of its intent not to renew the extension of this Agreement not less than (12) months prior to the expiration VA of the current term. The parties shall negotiate diligently and in good faith, during the Exclusive Negotiating Period described in Section 2.02.2, to determine the Management Fee as provided in Section 6 below, applicable to the Renewal Period and extension of this Agreement in the event either party gives notice of their intent not to renew the extension of this Agreement, or the extension of the Agreement upon expiration of the original and renewal terms hereof, upon such terms and conditions as the parties may mutually agree. 2.02.2 Exclusive Ne otg iating Period. The negotiating period under this Agreement shall commence not later than twelve (12) months prior to the termination of the initial term of the Agreement. Either party may give written notice to the other parry of its interest in pursuing negotiations for the extension of the Agreement. Upon delivery of such notice, the parties shall enter into an exclusive good faith negotiating period (the "Exclusive Negotiating Period ") of up to one hundred and eighty (180) days (or such longer period as the parties may agree) from the date of notice to agree upon terms for an extension of the Agreement or to conclude that the Agreement will not be extended. During the Exclusive Negotiating Period, the City shall not solicit, market or negotiate with any other person or entities, other than the Contractor, regarding the services set forth under this Agreement, or solicit or entertain bids or proposals to do so. 2.02.3 Continuation of Agreement. if this Agreement is not extended, Contractor shall, if requested by City, continue to provide all services pursuant to this Agreement and subject to the then current terms and conditions of this Agreement on a month -to -month basis for up to twelve (12) months if determined necessary by City in order to give City sufficient time to select a new Contractor. City may terminate the month -to -month agreement by providing thirty (30) days written notice to Contractor. 3.0 MANAGEMENT OF GOLF COURSE. 3.01 Retention of Contractor. 3.01.1 Role of the Contractor. Subject to the terms of this Agreement, City hereby retains Contractor as an independent contractor, and Contractor agrees, to: (i) implement the policies, standards, and schedules for the operation and maintenance of the Golf Course and all matters affecting customer relations, in accordance with this Agreement, including; (ii) hiring, training, and supervising the General Manager, Golf Course Superintendent, and Food Service Manager (collectively "Management Staff') and all Golf Course employees; (iii) supervise and direct all phases of advertising, sales, and business promotion for the Golf Course; (iv) establish accounting and payroll procedures and functions for the Golf Course in accordance with City policies; and (v) procure such equipment as directed and authorized by the City, which shall be the sole property of the City, and to maintain all equipment in good working order and operate such as necessary and appropriate for the profitable and efficient operation of the Golf Course. The costs of undertaking the services above are reimbursed pursuant to Section 5 of this Agreement as a Direct Cost. Contractor agrees to work with the City to adjust Direct Cost budget, as necessary, to provide for a profitable operation and a positive Net Cash Flow. 3.01.2 Goal of Agreement. It is the intent and goal of the City of Pasco that the Golf Course be operated in a professional, efficient and productive manner that shall provide for the highest quality of experience for Invitees of the Golf Course and Food and Beverage Operations as found in the comparable golf courses, achieve the desired results of an effective maintenance program on the Golf Course and Clubhouse, and achieve the budgeted results for the Golf Course. 3.02 Overall Responsibilities of Contractor. Contractor shall perform the following services, or cause the same to be performed for the Golf Course, and all expenditures of Contractor and costs and expenses incurred by Contractor in performing these services shall be Direct Costs: a) Consummate arrangements with intended users of the Golf Course, subject to the terms of Section 3.03 below. b) Enter into such contracts no later than the effective date of this agreement for the furnishing of utilities and building maintenance and other services to the Golf Course; C) Make all repairs, decorations, replacements, additions, revisions, alterations and improvements to the Golf Course as shall be reasonably necessary for maintenance of the Golf Course in good order, condition and repair, subject to the terms of Section 3.05 of this Agreement; d) Incur such expenses as shall be necessary for the proper operation and maintenance of the Golf Course, including without limitation purchase or rental expenses for Furnishings and Equipment. Where contractor leases equipment on behalf of the City, with the City's prior written consent, but in contractor's name, City agrees to assume remaining payments if contractor's period of operation is less than the period of the lease so long as equipment remains in possession of the City. e) Maintain a level of Resale Inventory necessary for the effective operation of the Golf Course consistent with the terms of Section 3.03.1; f) Apply for, and obtain and maintain, all licenses and permits required of Contractor in connection with the operation and management of the Golf Course, including the on -sale liquor license which shall be obtained in the Contractor'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 Contractor in the application for, and obtaining and maintenance of, such licenses and permits; W g) Do, or cause to be done, all such acts and things in and about the Golf Course as shall be reasonably necessary to comply with all Insurance Requirements and Legal Requirements, and Contractor shall not knowingly permit any illegal activities to be conducted on or about the Premises; h) Pay all Golf Course Expenses, Impositions and insurance premiums, whether incurred by City or Contractor, when due; i) Implement the Marketing and Promotional Plan for the Golf Course described in Section 5.02(f); j) Maintain a level of Supplies necessary for the effective operation of the Golf Course consistent with the terms of Section 3.01.2. 3.03 Golf Professional Services. Contractor shall, as a Direct Cost, provide golf starter services; provide Course marshaling services; sell and rent golf equipment; sell golf - related clothing and supplies; provide instructional services in the playing of golf; rent golf carts; and operate the driving range. Such services shall be provided by or under the on- Premises direct supervision of the Golf Professional. 3.03.1 Pro Shop and Merchandise. The Pro Shop shall be open during the normal operating hours of the golf course. A. Inventory. Contractor shall procure and maintain in the Pro Shop such inventory of golf merchandise as deemed necessary or appropriate to adequately meet public demand and consistent with the goal in Section 3.01.2. B. Mark Down of Merchandise. Merchandise that can reasonably be classified as "stale" or "unsellable" may be marked down. After six (6) months, if Contractor determines that any aged merchandise in the Pro Shop cannot be sold or should not be sold because of the reputation or image of the Pro Shop, then Contractor may sell the merchandise at less than cost and include the payment for the merchandise in the Gross Revenues. 3.03.2 Golf Instruction. Contractor shall provide for golf instruction by qualified instructors supervised by the Golf Professional. All instructors shall be PGA or LPGA Class A golf professionals or apprentices, unless otherwise approved by Director. All golf instructors shall be employees of Contractor, unless Contractor proposes an alternative plan that is approved by the Director. Contractor shall cause all golf instructors to comply with the rules and regulations consistent with the goal in Section 3.01.2. It is expected that the Golf Professional and instructors will provide tips and mini- lessons at no cost to golfers as appropriate. 10 A. Availability. Contractor shall use best efforts to have a PGA or LPGA Class A golf professional or apprentice, available on the Premises to answer questions and address customer concerns during the primary golf season. B. City Recreation Classes. The Contractor shall work in conjunction with the Director to provide services for City golf programs at the driving range, putting greens and Course. C. Junior Golf Programs. The Contractor shall encourage and support junior golf programs such as LPGA Girls Golf and First Tee. 3.03.3 Golf Carts. Contractor shall procure by lease on behalf of the City and maintain in good condition power- driven golf carts in sufficient numbers to meet the public demand. The Director shall have the right, in Director's sole and absolute discretion, to require a change in the number or types of golf carts in use at the Golf Course; provided, however, that the City shall increase or decrease the applicable Direct Cost Budget(s) reasonably to account for resulting increased or decreased Direct Costs. Prior to procuring golf carts, Contractor shall give Director written documentation identifying the type of golf cart, features of golf carts, and proposed lease terms. Contractor shall lease golf carts in accordance with Director's written approval. All carts shall be 4- wheel, and shall be equipped with canopies and windshields. Contractor may prohibit the use of golf carts on the Golf Course whenever weather conditions expose the user to danger or the Golf Course to damage. Contractor shall either employ an on -site mechanic or secure by contract an available mechanic capable of promptly repairing and maintaining golf carts. 3.03.4 Driving Range. Contractor shall operate and manage all driving range operations, and procure and maintain all equipment and facilities necessary and appropriate to meet the goal set forth in Section 3.01.2. Driving range balls shall be of high quality, and all cracked and worn range balls shall be removed in a timely manner. 3.03.5 Golf Course Starter Services. Contractor shall render and provide Golf Course starter services including, but not limited to, collecting all green and tournament fees in accordance with City cash handling procedures, taking reservations from the telephone, online and at the Golf Course and recording the reservations on starter sheets, placing golfers' names on a call sheet as necessary and appropriate, sending golfers to the tee and starting them off at proper intervals, receiving requests from groups for tournaments, booking tournaments and collecting appropriate fees prior to each tournament's starting date, coordinating tournament food and beverage needs, taking all actions as necessary and appropriate to speed play on the Golf Course, entering each golfer's name on the automated tee sheet to the extent feasible, selling/issuing resident cards, verifying resident status when checking in golfers and issuing a receipt to each golfer upon payment of the applicable green fee. Contractor shall install a Point of Sale system that tracks all rounds played and fees collected by fee category on a daily basis. Such information shall be made available for review by the Director, as requested. 11 3.03.6 Marshaling Time. Contractor shall procure the services of marshals at such times and in such numbers as necessary and appropriate to expedite play and ensure compliance with all rules and regulations consistent with the provisions of Section 3.01.2. 3.03.7 Suspension of Play. Temporary suspension of play shall be determined by Contractor in cases where weather or other conditions expose the user to danger or the golf course to damage. 3.04 Facilities Maintenance Services. The parties acknowledge that the premises are public property which the City has a responsibility to ensure are used in a manner which effectively serves the public. Accordingly, the City has a greater interest than most landlords in ensuring the quality of the maintenance and operation of the premises. At all times, as a Direct Cost, Contractor shall maintain and operate the Clubhouse, including the banquet facilities, snack bar, pro shop, Clubhouse restrooms, on- course restrooms and cart barn and all other facilities and services offered in connection therewith in a manner equal to or better than comparable municipally -owned golf courses in the region, and furnish and maintain a standard of service at least equal to the class of similar businesses in the City and in adjacent communities during the entire term of this agreement. Contractor shall keep all fixtures, furnishings and equipment within the facilities clean, neat, safe, and sanitary, in good order and in a manner equal to or better than the comparable golf courses in the region. Contractor shall maintain and operate the Clubhouse and other facilities reasonably in accordance with the highest commercial standards of cleanliness and shall keep the Clubhouse and other facilities clean and free from rubbish. Contractor shall, during the term of this Agreement maintain and keep in good order, condition and repair the interior nonstructural portions of the Pro Shop, snack bar /restaurant, maintenance facilities, Clubhouse and other facilities, including, but not limited to, the following: the interior surface of exterior walls; all windows, doors, door frames, and door closures; all plate glass, storefronts and showcases; all carpeting and other floor covering; HVAC, all electrical systems, and equipment; the grease trap; and all interior plumbing and sprinkler systems, doors, door locks, plate glass, display windows, window casements, exterior restaurant light fixtures, light bulbs, ballast transformers and electrical panel if any, installed therein. Contractor expressly agrees that the use of roof areas shall be limited to ingress for maintenance purposes only, and that said roof areas shall not be used for storage of inventory or for any other use. All costs associated with cleaning and maintenance of the Clubhouse and other facilities shall be Direct Costs. Contractor agrees to enter into preventative and regular maintenance contracts, with providers approved by Director, for services to include, but not be limited to, pest control, refrigeration, window cleaning, carpet cleaning, hood cleaning, and grease trap. All costs associated with these service contracts shall be Direct Costs. 3.05 Grounds Maintenance Services. Contractor shall provide grounds maintenance services to the Premises in compliance with the City approved annual maintenance plan, 12 including, but not limited to, the obligation to mow, edge, trim, overseed, fertilize, aerate, sod, change cups, service tees, top - dress, raise divots, rake traps, spray, spot irrigate, syringe and renovate turf and shrub areas, as well as to provide weed, disease and pest control, litter control and rubbish removal, parking lot sweeping, tree maintenance, maintenance of irrigation systems including mainlines, pumps, boosters and controllers, to keep swales in good repair and to provide the necessary and appropriate maintenance of any appurtenant structures and equipment, and to maintain the lakes. Contractor shall replace or change any supplies, materials, or procedures used by Contractor that are found reasonably objectionable by Director, within five (5) calendar days after receipt of Director's written request for such replacement or change. Contractor shall comply with all applicable local, state and federal clean water regulatory requirements, including but not limited to all federal NPDES requirements. 3.05.1 Chemical Herbicides and Pesticides. Contractor shall ensure that employees are trained and knowledgeable about best management practices for using fertilizers, herbicides and pesticides to prevent any Hazardous Materials release and how to handle any such accidental release. Contractor shall obtain any required Washington State Department of Agriculture pesticide applicator licensing, permits and submit any required reports related to the use of permitted biocides, defoliants, chemical fertilizers, pesticides, herbicides or other agri - chemicals. If requested by the City, an Integrated Pest Management and Chemical Application Management Plan (IPM - CHAMP) will be jointly developed by the City and the Contractor. The cost to develop and implement the plan will be a Direct Cost. 3.05.2 Water. Contractor shall not cause any ponding on the Premises or any flooding on adjacent land. Unless otherwise specifically directed by City, Contractor shall not engage in any activity that causes any change, disturbance, fill, alteration or impairment to the bed, bank, canal or channel of any natural water course, wetland or other body of water on, in, under, or about the Premises; nor shall Contractor engage in any activity that would pollute or degrade the surface or subsurface waters or result in the diminution or drainage of such waters. 3.05.3 Protection of Utilities. At all times during the Term of this Agreement, Contractor shall use its reasonable best efforts to protect the facilities of utilities located on the Golf Course from any damage, injury or disturbance. If Contractor or any of its agents or Invitees damages, injures or disturbs any of the foregoing facilities, Contractor shall immediately notify City of that occurrence. 3.05.4 Trees and Other Plant Materials. Contractor shall maintain all trees and other plant materials on the Golf Course. Contractor shall not remove or destroy any tree or other plant materials on the Premises without the prior written approval of the Director. In the case that a tree, or portion of a tree, has fallen on the Golf Course and becomes a safety hazard, Director's verbal approval is acceptable for removal or pruning. All pruning shall be consistent with City guidelines and the International Society of Arboriculture Tree Pruning Guidelines. Contractor shall not plant any trees or other 13 plant materials on the Premises that are not included in the Course Maintenance Plan, without the prior written approval of the Director. 3.05.5 Maintenance Personnel. Contractor shall employ and maintain in its employ a Golf Course Superintendent and Crew at the Premises unless otherwise approved by the director. Contractor shall employ sufficient personnel to perform all work required. 3.06 Parking Lot Maintenance Services. Contractor shall keep all parking lots on the Premises in a clean and good condition, and shall provide normal (non- capital) parking lot maintenance services, including, but not limited to daily trash removal and landscaping maintenance. All costs of such parking lot maintenance will be Direct Costs. 3.07 Food and Beverage Services. Contractor shall have the exclusive right and obligation to provide food and beverage services at the Golf Course, the expenses for which shall be Direct Costs. The food and beverage service shall include operation of a snack bar, which includes a full service bar, indoor dining facility, and at least one mobile cart providing food and beverages on the Golf Course when usage dictates. Director shall also have the right to permit, upon such conditions as may be reasonably proposed, operation of an outdoor grill or other type of outdoor food service. Vending machines may be installed with Director's approval. Contractor shall not permit the sale of food and beverage at the Golf Course from outside entities without having first obtained Director's approval, which approval shall not be unreasonably withheld. 3.07.1 Hours of Operation. Contractor shall keep the Food Service Facilities open for business during the hours specified by the City. 3.07.2 Management and Other Food Service Staff. Contractor shall hire a professional manager ( "Food Service Manager ") to manage and conduct day -to -day operations at the Food Service Facilities. Contractor shall also hire other food service personnel in numbers sufficient to satisfy customer demands for food service. The Food Service Manager, or his or her designee, shall be present on the Premises during all times the Food Service Facilities are open for business. 3.07.3 Health Certificates. Contractor shall comply with all local, state and federal health laws, regulations and procedures that are applicable to operation of the Golf Course and Food Service Facilities. 3.07.4 Licenses. Contractor shall obtain and maintain for the term of this Agreement any and all permits and licenses required by any federal, state or local governmental agency in connection with the services to be provided by Contractor under this Agreement, including the on -sale general liquor license and a City business license. Acquisition of all licenses and permits shall be considered a direct cost that shall be reimbursed as part of the Direct Cost Budget. Contractor shall use its best efforts to notify all contractors and vendors of their obligation to obtain a City business license. 14 3.07.5 Quality of Service. The food and beverage services provided at the Golf Course shall be consistent with the goal set forth in Section 3.01.2. Contractor shall provide food and beverage service in accordance with all Legal Requirements and Insurance Requirements and reputable business standards. Contractor shall ensure that food and beverages are kept in stock sufficiently to meet customer demand. 3.07.6 Alcohol Sales from Cart(s). City reserves the right to prohibit or limit the sale of alcoholic beverages from the food and beverage cart(s) on the Golf Course if, in the Director's sole and absolute discretion, Director determines that such sales are leading to behavior which is disruptive to or inconsistent with the proper functioning of the Golf Course. 3.07.7 Existing Events. Contractor acknowledges that the current food and beverage service operator may have booked events or reserved dates for events occurring after the Effective Date. Contractor agrees to work in good faith with City to provide food and beverage services related to those events. Contractor acknowledges the commitment by the City to the Washington Interscholastic Activities Association to host the State cross country championships on an annual basis as scheduled by the WIAA and the City. 3.07.8 Future Events. Contractor agrees not to book any events at the Golf Course for dates after the initial term of this Agreement or any extension without the prior approval of the Director. 3.08 Personnel. 3.08.1 General. Contractor, as a Direct Cost, shall employ all of the employees of the Golf Course and set all terms and conditions of the employment. Contractor shall make all decisions relating to the hiring of employees, the employment of its employees and the direction of its work force. The number of Contractor's employees shall be no more than reasonably necessary to efficiently operate the Golf Course. Contractor shall recruit, hire, train, discharge, promote and supervise the Management Staff of the Golf Course defined as the General Manager, Superintendent of the Golf Course, Food Service Manager, and all other employees of the Contractor. All employees of the Golf Course shall be properly qualified for their positions. Contractor may at its expense assign management trainees to the Golf Course, who shall remain under supervision of the Contractor's on -site Management Staff. If the management trainee is performing work that would normally be performed by other personnel, the costs shall be a direct cost. Contractor shall provide reports showing all employees and their job titles, as requested by Director. Contractor's Management Staff shall not be assigned to work at other golf courses managed or operated by the Contractor without the written approval of the Director. Contractor shall retain at all times on the Premises during hours of operation a manager who will be responsible for the Golf Course in matters pertaining to the performance of the duties and obligations in this Agreement. Contractor shall during operating hours 15 have sufficient personnel on the Premises to provide a level of service in accordance with Section 3.01.02 and to provide a level of service customary in the industry. All employees shall be identifiable by wearing a shirt or jacket with a course logo and an easily readable name badge. Employees of the Contractor shall be courteous and neat in appearance at all times. If any employee fails to meet this standard, is negligent in performance of his/her responsibilities, and Contractor is unable after a reasonable period of time to bring the employee up to this standard, Contractor shall take reasonable actions to remove the employee from employment at the Golf Course. 3.08.2 Compensation. Compensation of Contractor's employees shall be no greater than that paid at other golf courses managed by Contractor, unless specifically approved by the Director, taking into consideration the budget, recognizable differences in scope of work and cost of living at other golf courses. All employees of Contractor, other than the Management Staff, shall use a time clock to keep track of the hours worked. 3.08.3 Employee Benefits. Contractor shall have the obligation to provide all legally mandated employee benefits to its employees plus standard company provided benefits for all full time employees included and fully disclosed in the Annual Approved Budget, or if not part of the budget, then upon prior written approval of the Director. The allocable share of such employee benefits accrued while working at the Golf Course shall be a Direct Cost. 3.08.4 Temporary Assignment of Other Contractor Personnel. If the positions of General Manager, Course Superintendent, or Food Service Manager are not filled for whatever reason, Contractor shall permanently fill those positions within 90 days of vacancy. Upon approval of the Director, Contractor may temporarily assign to these positions the staff of other golf courses and country clubs operated or managed by Contractor. During such time as these employees are temporarily assigned to the Golf Course, 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 Golf Course shall be a Direct Cost. 3.09 Management Staff. The Management Staff shall be the following positions, which may be combined with City approval, that will be solely dedicated to and resident at the Golf Course: 3.09.1 The General Manager, Golf Course Superintendent, and Food Service Manager. City shall approve, which approval shall not be unreasonably withheld, the Management Staff before hire and shall be informed prior to the termination, except termination for cause, or transfer of any of the Management Staff. Contact information (name, cell phone number and email address) for all Management Staff shall be provided, in writing, to the City and shall be current at all times. A. General Manager. The General Manager of the Golf Course shall be responsible for the day -to -day management and operation of the Golf Course. 16 The General Manager must have at least five (5) years of experience as a golf course operations manager or assistant manager. General Manager should have at least two (2) years of experience in supervising banquet operations; and have at least three (3) years of experience as a golf professional unless otherwise approved by the Director. The General Manager shall be reasonably available during normal working hours to meet with the Director. After normal working hours, the General Manager shall be reasonably available to appear at the Golf Course or City meetings, if deemed necessary by the Director. The General Manager shall be responsible for golf instruction, golf services, driving range operations and the Pro Shop. B. Superintendent. The Superintendent for the Golf Course shall have a Qualified Applicators Certificate ( "QAC ") in categories B and F unless otherwise approved by the director. Prior experience as a golf course superintendent is desired. The Superintendent shall be responsible for the maintenance of the buildings, equipment and grounds of the Golf Course. C. Food Service Manager. The Food Service Manager shall be responsible for the Food Service Facilities and providing food and beverage, tournament and banquet services. The Food Service Manager shall report directly to the General Manager. The Food Service Manager shall have at a minimum a two -year college degree or equivalent and at least two (2) years of food and beverage and banquet and catering supervisory experience. D. Notification to City of Defect or Illegal Activity. Contractor shall immediately notify City upon discovering a possible workmanship or material defect in any structure or improvement on the Golf Course or upon discovery of any unauthorized dumping, disposal or illegal use or activity on the Golf Course. 3.10 Equipment, Supplies and Materials. Contractor shall procure and maintain (as a Direct Cost) all necessary and appropriate equipment, supplies and materials of good quality and in sufficient number to fulfill the maintenance requirements of this Agreement, but expenditures, in total, shall not exceed the amounts allocated in the Annual Direct Cost Budget without the prior written notification to the Director. The required equipment, supplies and materials shall be the sole property of the City, and shall include, but not be limited to: a) All equipment necessary and appropriate to operate the Golf Course; b) All necessary and appropriate gas, oil, maintenance and operating supplies, and spare and replacement parts for all equipment used at the Golf Course; C) All necessary and appropriate topdressing, seed, fertilizers, pesticides, fungicides, insecticides and herbicides for maintenance of the Golf Course and other landscaped areas on the Premises and in compliance with Section 3.05; 17 d) Parts, supplies and equipment necessary for the repair and maintenance of all Golf Course irrigation systems; e) Tee towels, soaps, ball washers, putting green cups and flags, benches, trap rakes, tee markers, tee mats, trash receptacles, trash receptacle liners, cleat brushes, distance markers on sprinkler heads and all other pertinent golf course equipment; f) Materials for the installation and maintenance of French drains; g) Sand for traps on an as- needed basis; and h) Procurement of all necessary retail and concession inventory and consumable supplies such as janitorial cleaning supplies, paper products, soap, etc. This does not include Cost of Goods Sold. 3.11 Intrusions. Contractor shall treat non - invitee users with consideration and courtesy even when they may be wrongfully on the Premises, but shall have the right to deny use of the Premises for unauthorized purposes and to bar future access to the Golf Course for an indefinite or definite period of time. City reserves the right from time to time during the term of this Agreement, to promulgate such reasonable rules and regulations concerning the use of the Premises and any part or parts thereof, as City, in its sole discretion, shall deem appropriate. 3.12 Improvements. Except in the event of an emergency threatening imminent injury to persons or damage to property, Contractor shall make no improvements, additions, alterations or changes to the Golf Course ( "Improvements ") in excess of which would meet the definition of Capital Expenditure in Section 1.03, unless Contractor: (i) obtains the prior written approval of the Director, which approval may be granted or withheld in the sole and absolute discretion of the Director; (ii) complies with such terms and conditions as may be imposed by the Director; (iii) secures all applicable licenses, permits and other governmental approvals for the Improvements; and (iv) causes the Improvements to be designed and constructed so as to be consistent with the architecture and design of the currently- existing Golf Course, unless otherwise specifically approved by the Director in writing. Any such Improvements shall be shown on as -built drawings that shall be delivered to the Director within thirty (30) days of completion of the work. 3.13 Days and Hours of Operation. The minimum hours of operation shall be Dawn to Dusk. Contractor shall make no changes in the days and hours for operation of the Premises without the prior written approval of the Director. 3.14 Technology. 3.14.1 Technology Systems. Contractor, as a Direct Cost, shall procure and maintain as the sole property of the City, telephones, wiring, computers, software, licenses, data circuits, voice circuits, Internet circuits and all equipment necessary and appropriate to operate and support telephone communications to and within the Premises, automated 18 tee sheet and starter functions, Point -of -Sale for all Pro Shop and Food and Beverage operations, and a website which provides public, on -line access to golf reservations. Contractor shall use such systems to market, record all Golf Course and Food and Beverage sales, retain customer and sales transaction data and produce all documents and reports necessary to effectively operate the Golf Course and comply with the City's reporting and auditing requirements with capability for preparing monthly activity reports to be provided to the City. Technology systems shall satisfy City's and other government requirements for security and internal controls, including but not limited to, security of credit card and other customer data. Such requirements shall be communicated to Contractor and City shall make prompt final determination as to the extent of compliance required and approval for such costs. 3.14.2 Scoring Terminal. A scoring terminal shall be provided in a convenient location at the Clubhouse. 3.14.3 Security of Data. Contractor shall notify the City immediately upon any known or suspected loss, theft or disclosure of City data, including but not limited to loss of customer personal or credit data. 3.14.4 Security Procedures. Contractor will be solely responsible for the selection, implementation, and maintenance of security procedures, anti - virus, and similar defensive measures and policies that are sufficient to ensure that (a) Contractor's technology systems are secure and used only for authorized purposes; and (b) Contractor's business records and data, and any data kept on behalf of the City, are protected against improper access, use, loss, alteration or destruction. All credit card systems shall meet PCI standards to the extent available at a cost acceptable to the city. 3.15 Waste Disposal. Contractor shall provide adequate trash facilities on the Premises and shall promptly empty the containers regularly. Contractor shall not permit the burning, dumping or other disposal on, under or about the Premises of landfill, refuse, hazardous materials or other materials, with the exception of Golf Course clippings that can be dispersed on the Golf Course. Contractor shall dispose of all wastes in compliance with Legal Requirements and Environmental Laws. This disposal expense shall be a direct cost. 3.16 Emergency Services. Contractor shall provide City's Director with contact information for all Management Staff in order that they can respond to any emergency on a twenty -four hour basis. During periods of severe inclement weather conditions, Contractor will provide reasonably sufficient personnel for the purpose of performing tasks necessary to prevent serious damage to Golf Course improvements and Facilities. In the event either party becomes aware of an emergency, they shall promptly notify the other to determine immediate actions necessary and authorization for emergency expenditures. Costs for emergency services shall be a direct cost. 3.17 Nondiscrimination. During the performance of this Agreement, Contractor and its subcontractors shall not unlawfully discriminate against any employee or applicant for employment, or customer, because of race, color, ancestry, religion, sex, national origin, 19 marital status, age, physical disability, mental disability, medical condition or sexual orientation. Equal opportunity for employees extends to, but is not limited to, recruitment, compensation, benefits, layoff, termination, and all other conditions of employment. Contractor and subcontractor shall ensure that the evaluation and treatment of their employees, applicants for employment and Invitees are free of such discrimination. Contractor and subcontractors shall comply with the provisions of all applicable State and Federal laws. Contractor and its subcontractors shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other agreement. Contractor shall include the nondiscrimination and compliance provisions of this clause in all subcontracts to perform work under this Agreement. Contractor shall permit access by representatives of the Federal and State agencies, and City upon reasonable notice at any time during normal business hours, but in no case less than 24 hours' notice, to such of its books, records, accounts and other sources of information and its facilities as said Department or City shall require to ascertain compliance with this clause. 3.18 Drug Free Workplace. Contractor shall certify that it has complied with all State and Federal Drug Free Workplace guidelines and requirements. 3.19 Signs. Contractor, as a Direct Cost, shall be responsible for installing and maintaining all signage necessary for the Golf Course operations. Contractor shall not post outdoor signs at or on the Premises without the prior written approval of the Director, as well as the approval of the Community Development Department, as required by law, with the exception of temporary directional or advisory signs (e.g. "Front entrance closed; use side entrance "; "Temporary no parking area "; "Wet Steps. "). 3.20 Publicity. Any commercial advertisements, press releases, articles, or other media information not provided for in the Annual Marketing Plan and Budget shall be subject to the prior approval of City, which approval shall not be unreasonably withheld. 3.21 Utilities. Contractor shall ensure utility services, including but not limited to, water, gas, electricity, sewer, and waste disposal is provided to effectively operate the Golf Course. Contractor's costs for such utility service, as well as Contractor's costs incurred in correcting any defect, deficiency or impairment of any utility system, water system, water supply system, drainage system, water system, heating or gas system or electrical apparatus or wires serving the Premises, shall be Direct Costs. 3.22 Safety and Security. Contractor shall exercise caution at all times for the protection of persons and property. Contractor shall install adequate safety guards and protective devices for all equipment and machinery. Contractor shall post appropriate caution signs to alert personnel or the public of unsafe conditions. Contractor shall comply with all applicable laws relating to safety precautions. Contractor shall immediately contact director to discuss any unsafe condition of the Premises, as well any unsafe practices occurring thereon. Promptly after the occurrence of injury or damage to persons or property occurring on the Premises, Contractor shall submit to Director a report on the incident. Contractor shall cooperate fully with City in any further the investigation of any injury or damage to persons or property occurring on or about the Premises. The Golf Course contains appropriate security systems, security alarm 20 systems, motion detection sensors for after -hours control, and locks for the maintenance yard and perimeter gates. Contractor shall consult with the City to capitalize on opportunities to participate in City contracts for the above - mentioned security systems. The alarm system at the Golf Course shall be tied into an offsite monitoring station. City may require Contractor, as a Direct Cost, to install and maintain video monitoring in cash operation areas. If video monitoring is installed, Contractor shall comply with applicable records retention policies. 3.23 Use of Premises: Restrictions. Unless Contractor has obtained the prior written approval of the Director, which approval may be withheld or conditioned in the sole and absolute discretion of the Director, Contractor shall not conduct, authorize or permit any events or activities requiring the exclusive use of the Premises or any portion thereof, other than normal shotgun tournaments. Contractor shall cooperate with City in allowing City to have access to the Clubhouse for use for City recreation programs, provided that any costs to Contractor in doing so shall be Direct Costs and further provided that such use shall not negatively impact Gross Revenues. 3.24 Prices and Fees. 3.24.1 Goods and Services. Contractor shall at all times maintain a complete list or schedule of the prices charged for all food and beverage supplied to the public on or from the Premises. Such list or schedule of prices shall be provided to the Director with the Annual Plan. The prices shall be fair and reasonable based on the following considerations: (a) that the operation of the Premises is intended to serve the needs of the public for the goods and services, supplied at a fair and reasonable cost; (b) that the prices charged should be comparable to prices charged for similar goods and services in the general area; and (c) that the margin of profit should be reasonable considering the cost of providing the goods and services in compliance with the obligations of this Agreement. If the Director notifies Contractor that the prices being charged are not fair and reasonable, Contractor shall have the right to confer with the Director and justify such prices. Following reasonable conference and consultation thereon, Contractor shall make such price adjustments as may be ordered by the Director; provided, however, that in no event shall Contractor be required to price any item below its wholesale cost. 3.24.2 Golf Course Fees. City hereby reserves the right to establish the schedule for green, driving range, golf cart rental, lesson and resident card fees for the Premises which shall be in compliance with the City's approved annual plan. Further, City hereby reserves the right to establish the golf cart rental fees and other equipment rental fees that may be charged by Contractor. No changes in green fees, driving range fees, lesson fees, golf cart rental fees, or golf equipment rental fees may be made by Contractor without the advance written consent of City in City's sole and absolute discretion, however such fees shall determine the standard of comparable courses that Contractor is required to meet per section 1.09. From time to time, Contractor may discount fees as a promotion to build business with the Director's approval. 21 All fees must fall within the ranges specified in the City's approved annual plan, with the exact fees to be approved in advance in writing by the Director. If Contractor desires changes to the green fees, driving range fees and/or golf cart rental fees, Contractor shall submit a written request and analysis requesting the approval to change fees. 3.25 Meetings. Representatives of the Contractor and the Director shall meet on an as- needed basis (monthly if needed, and as least during each calendar quarter at a minimum) to review Contractor's performance under this Agreement, complies with the annual plan, review of the monthly financial reports submitted by Contractor, and the equipment maintenance plan, and to discuss any problems or matters concerning the Golf Course. The City reserves the right to enter the Golf Course premises for inspections and to meet with the Management Staff without prior notice. 3.26 Hazardous Materials. 3.26.1 Definition of Hazardous Materials. Hazardous Materials shall mean a) petroleum; b) asbestos; c) polychlorinated biphenyls; d) radioactive materials; e) any and all substances, products, by- products, waste or other materials of any nature or kind which is or becomes listed, regulated or addressed by any federal, state or local laws, statutes, ordinances, regulations, resolutions, decrees, rules, regulations, directives, orders, guidelines or court decisions (collectively "Environmental Laws "); f) any materials, substances, products, by-products, waste or other materials of any nature or kind whatsoever whose presence in and of itself or in combination with other materials, substances, products, by- products or waste give rise to liability under any Environmental Law or any statutory or common law theory based on negligence, trespass, intentional tort, nuisance, strict or absolute liability or under any reported decision of the state or federal court; or g) any substances, products, by- products, waste or other materials which may be hazardous or harmful to the air, water, soil, environment or affect industrial hygiene, occupational, health, safety or general welfare conditions. 3.26.2 Use and Storage of Hazardous Materials Prohibited. The use and storage of any Hazardous Materials on the Premises are prohibited except as follows: A. Contractor may park and use vehicles and equipment on the Premises in connection with Golf Course activities under this Agreement, which vehicles may contain gasoline, petroleum products, batteries, diesel fuel, and oil of those kinds and quantities normally contained in such vehicles and equipment. Contractor shall ensure that employees are trained and knowledgeable about best management practices for operating and maintaining such vehicles and equipment to prevent any Hazardous Materials release and how to handle any such accidental release. B. Fertilizers, herbicides, fungicides and pesticides on the Golf Course in a manner consistent with the Maintenance Standards outlined in Section 3.05 and 22 Environmental Laws. Biocides, defoliants, chemical fertilizers, pesticides, herbicides, fungicides or other agri - chemicals shall be stored in the Maintenance Yard in an appropriate structure or location designated by City. Contractor shall ensure that employees are trained and knowledgeable about best management practices for using fertilizers, herbicides and pesticides to prevent any Hazardous Materials release and how to handle any such accidental release. 3.26.3 Contractor's Responsibility. Contractor shall be responsible for the cleanup, removal and disposal for any Hazardous Materials release on the Premises or any Hazardous Materials release caused or exacerbated by Contractor's activities, including but not limited to a release of gasoline, petroleum products, diesel fuel or oil from vehicles or equipment parked or used on the Golf Course in connection with Contractor's activities, or releases of fertilizers, herbicides, fungicides or pesticides into the sewage or storm drain systems or into groundwater or any natural or man -made surface waters arising out of Contractor's operation and maintenance of the Golf Course. Contractor shall immediately notify the Director and all other applicable regulatory agencies of any Hazardous Materials release. Contractor shall timely comply with all requirements of regulatory agencies. If Contractor does not promptly commence and diligently pursue any required investigation, remediation or clean -up activities, City, in its discretion and in addition to any other rights or remedies that the City may have, may perform the investigation, remediation or clean -up activities. If the Contractor caused or exacerbated the need for the cleanup, removal and disposal of Hazardous Materials, Contractor shall reimburse City within five (5) days of City's demand for payment or City may deduct the amount from any amounts owing Contractor; otherwise such costs shall be reimbursed by City. If the Golf Course or a portion of it is closed in order to investigate, remediate or clean -up a Hazardous Materials release, then Director may require the cessation of some or all activities on the Golf Course and Contractor shall not be entitled to payment of any fees, expense or other compensation that would otherwise accrue during this period. 3.26.4 Indemnification for Hazardous Materials. Contractor shall indemnify, hold harmless and defend City, its officers, officials, employees, volunteers and agents from all loss, damage, liability and expense resulting from the presence, use or release of Hazardous Materials by the Contractor or arising from Golf Course operations under the control of Contractor. Contractor shall not be responsible for, nor shall it indemnify, hold harmless or defend City, its officers, officials, employees, volunteers and agents from any loss, damage, liability and expense resulting from the presence, use or release of Hazardous Materials prior to the earlier of the Effective Date or the date Contractor assumes responsibility for maintenance of the Golf Course. 4.0 APPROVALS. 4.01 Standard for Approvals. Wherever this agreement provides for the approval of the Director, such approvals shall be issued in writing. Except as otherwise provided in this Agreement, and, specifically, where this Agreement expressly provides that an approval or determination is within the sole and absolute discretion of Director, in which case this 23 paragraph shall not apply, a consent or approval referred to herein of either party shall not be unreasonably withheld or conditioned. In the event that either party refuses to give its consent or approval to any request by the other, such refusing party shall indicate by written notice to the other the reason for such refusal unless this Agreement permits the consent or approval to be withheld without cause or in the sole discretion of either party. 4.02 Other City Approvals. Neither City's execution of this Agreement nor any consent or approval given by City hereunder in its capacity as a party to this Agreement shall waive, abridge, impair or otherwise affect City's power and duties as a governmental body. Any requirements under this Agreement that Contractor obtain consents for approvals of City are in addition to and not in lieu of any requirements of law that Contractor obtain approvals or permits. However, City shall attempt to coordinate its procedures for giving contractual and governmental approvals so that Contractor's requests and applications are not unreasonably denied or delayed. 5.0 ANNUAL PLAN. 5.01 Preparation of the Annual Plan. Contractor shall submit to the City a proposed Annual Plan for the Golf Course for the next Operating Year ( "Annual Plan") no later than June 30 of each year unless otherwise approved by the director. The Director shall either approve the proposed Annual Plan or make reasonable changes to the proposed Annual Plan no later than July 31 of each year or 30 days after submittal date whichever is later. Once approved by the Director, the Annual Plan is subject to changes by City until the budget is approved by the City Council. In conjunction with this process, Contractor shall provide changes to the Annual Plan as requested by the Director. The Annual Plan for the first Operating Year, including start up costs, shall be submitted to the City no later than thirty (30) days after execution of this Agreement and shall be approved, subject to any reasonable changes, by the Director within thirty (30) days after submittal. 5.02 Contents of the Annual Plan. The Annual Plan shall include: a) Actual numbers for previous year, current year, current year revised and estimates for the next Operating Year, including the following items: (i) Gross Revenues separated into green fees, driving range fees, cart fees, lesson fees, merchandise revenue, resident cards, golf food and beverage revenue, banquet food and beverage revenue and tournament revenue, (ii) number of rounds played /projected. b) Operating budget (the "Direct Cost Budget ") showing Golf Course and Food and Beverage Expenses for previous year, current year, current year revised and estimates of all Golf Course Expenses for the next Operating Year, including, but not limited to expenditures for: (i) labor, (ii) operations and maintenance, (iii) repairs, replacements, and alterations which do not constitute Capital Expenditures, (iv) Furnishings and Equipment and Cost of Goods Sold, and (iv) advertising, sales, and business promotion; 24 c) Net Cash Flow Budget for previous year, current year, current year revised and projected for the next Operating Year. Net Cash Flow budget shall contain Gross Revenue and all expenses, including Direct Costs, and Fixed and Incentive Management Fees; d) Course Maintenance Plan including a report of maintenance activities undertaken during the current year for performance of the ground maintenance services as provided under Section 3.05, as well as projections for the next Operating Year; e) Annual staffing plan outlining the number of employees and positions for the previous year, current year, and the next Operating Year; f) Marketing and Promotion Plan for the Golf Course including a report of activities undertaken during the current year as well as projections for the next Operating Year; g) Capital Expenditures for previous year, current year and budget for proposed Capital Expenditures ( "Capital Budget "), as well as a proposed five (5) year capital investment plan; h) For the first Operating Year, start-up costs, if any; and i) All food and beverage menu prices and proposed changes. 5.03 Approval of the Annual Plan. The Director shall have final authority for approval of the Annual Plan as submitted by Contractor. 5.04 Compliance. Contractor shall comply with the applicable Approved Annual Plan. Without the prior consent of the Director, the actual amount expended for Direct Costs shall not exceed the program budget, including budget adjustments, approved by the City. Consent shall be presumed if identified and itemized separately within the expense projections provided to the city in monthly financial statements show total expenses in excess of budget and the director does not specifically direct Contractor to not spend beyond budgeted amounts so long as total expenses do not exceed the amount of the forecast by more than 5 %. 5.05 Ouarterly Review of Annual Plan. The Director and Contractor's Management Staff shall meet quarterly and discuss the operation and maintenance of the Golf Course. The parties shall agree upon any amendments or revisions to the Annual Plan to take into consideration variables or events that did not exist, or could not be anticipated by Contractor or City, at the time the Annual Plan was prepared. Any revisions to the Annual Plan shall require approval of the Director, who in his sole and absolute discretion may require further approval by the City. 5.06 Direct Costs. Direct Costs shall be those costs which are directly related to the resident staff, operation and maintenance of the Premises and which are established by the Direct Costs Budget, including, but not limited to the following: 25 a) Employee salaries and employee severance payments as approved by the director. b) Employee benefits including vacation, sick leave, health insurance, disability insurance, worker's compensation insurance and retirement benefits. C) Purchase, lease and/or rental of equipment necessary for the operation of the Premises. If Director determines that purchasing any item of equipment would be most cost - effective, then the annual Direct Cost associated with that equipment shall be Contractor's actual cost, provided the Director gives advance written approval of the amount of such cost, in the Director's sole and absolute discretion. d) Repair and maintenance of golf carts, irrigation systems and other equipment used solely in the operation of the Premises. e) Fuel, oil and lubricants. f) Fertilizers, pesticides, chemicals and grounds maintenance supplies as described in Section 3.05 of this Agreement. g) Uniforms, laundry and linens. h) Operating supplies, office supplies, cleaning supplies and other miscellaneous supplies. i) Accounting and audit expenses. j} Advertising and marketing expenses. k) Mileage reimbursement and travel related expenses. 1) Training expenses. m) Telephone, postage and freight. n) Fees for permits and licenses. o) Utilities, including natural gas, water, electric power, telephones, propane, garbage, trash collection and recycling. p) Insurance premiums. q) Accounting, credit card processing and related services. 26 r) Parking lot maintenance expenses. s). Cost of Resale Inventory. t) Lesson Expenses as defined in Section 5.10. u) Taxes and assessments arising out of Contractor's operations at the Golf Course, but only to the extent attributable to equipment and other items of personal property used exclusively at the Golf Course or Business and Occupation taxes levied on operator for reimbursements at any time in the future, if any. v) Professional (including approved legal services) and Consulting services. w) Contract services including removal of hazardous materials, trees and debris. x) Computer equipment and software. y) Cost of performance bond required, if any. z) Late fees when determined, that prior to written approval by the Director, to be in the best interest of the city or course.. 5.07 Excluded Costs. The following costs are not considered Direct Costs, shall not be reimbursed and shall not be included in the Direct Cost Budget: a) Any penalties or fines imposed by any governmental agency, except for those penalties or fines caused by the act or omission of City or not reasonably related to the acts or omissions of Contractor. b) Expense of Contractor's corporate office if any, except for any travel included in the approved annual budget and accounting services to be provided by Contractor's employee(s) at Contractor's office at a total cost of $1,000.00 per month for Year 1; with accounting services to be increased thereafter at the beginning of each Operating Year based on the Consumer Price Index Seattle CPI -U as of June 306' of the preceding Calendar Year with June 30`", 2011 as the base year for purposes of such calculation. c) Employee salaries or any Compensation of any corporate or regional employee of Contractor. 5.08 Direct Cost Budget. The Direct Cost Budget is the total sum budgeted annually for Direct Costs. Contractor is responsible for monitoring adherence to the Direct Cost Budget. 5.09 Lesson Expenses. All payment for lessons shall be processed through the Pro Shop cash register and shall be included in the daily Gross Revenue Deposits in accordance with the cash handling procedures which meet the City's security and internal control policies. Lesson 27 Expenses are defined as, and limited to, that portion of golf lesson fees that are paid to golf instructors and shall be paid twice monthly to the instructors, if they are Contractors of the Manager. The portion of the golf lesson fees that may be paid to the golf instructors shall not exceed 90% unless otherwise approved of by the Director. If the golf instructors are employees of the Contractor, the portion of the golf lesson fees that may be paid to the golf instructors in addition to salaries shall not exceed 95% of the golf lesson fees and shall be paid with the regular payroll. 5.10 Capital Expenditures. Capital Expenditures are expenditures for equipment, improvements to existing Facilities or construction of new Facilities, the cost of which is equal to or in excess of Five Thousand Dollars ($5,000) and have a useful life of more than one (1) year. a) All Capital Expenditures are in the City's sole control and discretion, and all costs and expenses of Capital Expenditures shall be paid from CITY funds. Contractor shall not make any Capital Expenditure prior to obtaining the written approval of the Director, in his or her sole and absolute discretion. Capital Expenditures shall not be included in any category of the Direct Cost budget, unless expressly approved by the Director in writing. b) Except in the event of an emergency threatening imminent injury to persons or damage to property, the parties acknowledge and agree that this Agreement imposes no responsibilities or obligations on the part of Contractor with respect to any aspect of a Capital Expenditure project, including design, construction, or supervision. In the event City desires Contractor to be involved in any capacity in a Capital Expenditure project, the parties will enter into a separate agreement setting forth the terms and conditions of such involvement, including without limitation fees to be received by Contractor for such involvement. 5.11 No Incentives or Disincentives. Contractor shall not be entitled to any portion of the savings if the level of Direct Costs is less than the Direct Cost Budget during an Operating Year, nor shall Contractor be required to pay any portion of cost overruns if the level of Direct Costs is more than the Direct Cost Budget during an Operating Year, unless required notifications and /or approvals were not obtained as defined elsewhere in this agreement. 5.12 Termination for Direct Cost Overruns. If the Direct Costs in any Operating Year are more than 10% higher than the Direct Cost Budget, except if the level of such cost overruns is greater than might reasonably be caused by increased levels of patronage of the Premises, results from causes beyond Contractor's reasonable control or if Contractor has given City written notice of the event(s) causing such cost overruns, City may terminate this Agreement in accordance with Section 10, subject to Contractor's right to cure such cost overrun by depositing Contractor's own funds in the Direct Cost Bank Account. City shall act reasonably in exercising its rights under this Section. 6.0 MANAGEMENT FEE. 6.01 Combined Management Fee. City shall pay to Contractor a Management Fee consisting of a Fixed Management Fee and an Incentive Management Fee. 6.02 Annual Fixed Management Fee. Annual Fixed Management fee shall be: Year One: $70,000 Year Two: $75,000 Year Three: $80,000 Fee to increase annually by CPIW West Coast Cities after Year Three, but not more than 5% per year. 6.03 Payment of Fixed Management Fee. The annual Fixed Management Fee shall be paid in 52 equal installments and be included with the payment of Direct Costs as listed in section 7.03. 6.04 Incentive Management Fee. The incentive is calculated as a percentage of the increase in Gross Revenues over the Base Year. The Base Year would be the average revenue for the years 2007 — 2010 as shown in Attachment #1. The incentive Fee percentages applied to increase in Gross Revenues over Base Year are as follows: Gross Golf Revenue (Green Fees, Carts, Range, Other Golf Revenue) = 10% Merchandise Revenue =3% Food & Beverage Revenue = 7.5% 6.05 Payment of Incentive Management Fee. The Incentive Fee is calculated and paid annually and would be limited such that the Incentive Fee could not exceed the percentage of the Total Fee (Base and Incentive Fee combined) allowable under IRS Revenue procedure 97- 13. 6.06 Correction to Gross Revenues and Incentive Management Fee. If an inspection or audit pursuant to Article 8.0 results in a correction of the amount of Gross Revenues: (a) City shall pay Contractor any additional Incentive Management Fee amount pursuant to Section 6.04 within thirty (30) days of receipt of notice of the correction, if the amount of Gross Revenues has been adjusted upward; or (b) Contractor shall refund to City the amount of any overpayment of the Incentive Management Fee pursuant to Section 6.04 within thirty (30) days of receipt of notice of the correction, if the amount of Gross Revenues has been adjusted downward. 6.07 Pro iect Management. If the City determines it is in its best interest to have the Contractor provide project management of capital improvements, a management fee shall be negotiated between the parties. `•L•: 7.0 FINANCIAL AND ACCOUNTING PROCEDURES. 7.01 Sank Account. The parties shall maintain two separate bank accounts. The City shall maintain a bank account into which all monies collected on behalf of the golf course shall be deposited. All ownership and rights to the money reside with the City. The Contractor shall create and maintain a separate account from which Contractor expenses related to the City of Pasco golf course, and only the City of Pasco golf course, shall be paid. All ownership and rights to the money in this account reside with the Contractor. Under no circumstances shall proceeds that belong to the City be deposited into this account or any other account other than the City account designated above. 7.02 Deposits. All monies received on behalf of the City golf course shall be deposited by the end of each day it was received into the City's bank account according to procedures approved by and on forms as prescribed by the City. All credit card transactions will be settled at the close of business on the same day. Variance from these deadlines may be approved at the city's discretion by the Director. 7.03 Payment of Direct Costs. Upon receipt of proper documentation (see Financial Reports section 7.06) by noon on Thursday, the City shall reimburse the Contractor by wire every Thursday afternoon for Contractor services. The cost of the wire shall be a City cost and not a Contractor cost. If Thursday is a holiday, then the processing day is moved to the Wednesday immediately prior. This weekly wire shall include payment for the weekly Fixed Management Fee (pursuant to section 6.03) as well as reimbursement for Direct Costs paid by the Contractor prior or equal to the wire date. The Contractor shall maintain purchasing and payment internal controls adequate to ensure all the materials have been furnished, the services rendered or the labor performed and that the claim for payment is just, due and an obligation of the City of Pasco golf course. Original invoices and receiving documentation shall be maintained on premise at the City of Pasco golf course for seven years, 7.04 Supplies, Inventory, Working Capital and Operating Equipment. All supplies, inventory, working funds and operating equipment belong to the City. 7.05 Working Capital Advance. The Contractor shall maintain adequate working capital in the Contractor's bank account to ensure disbursements from that bank account are adequately funded. Any and all fees related to maintaining the Contractor's bank account (including any returned items) are the responsibility of the Contractor and are not reimbursable by the City as a Direct Cost. The Contractor shall provide the City access to view activity to the Contractor bank account (as designated in section 7.01) at any time and to provide the city with a copy of the monthly bank statement within three business days of issuance by the bank. 7.06 Financial Reports. a) Daily reports. The Contractor shall deliver to the City Finance Division revenue and deposit reports by no later than 9:00 a.m. for the prior day's activities. Reports for Friday, Saturday and Sunday activities shall be prepared by individual day's activities and are due no later than 9:00 a.m. Monday. Variance im from these deadlines may be approved at the city's discretion by the City Revenue Accounting Lead, Financial Services Manager, Administrative & Community Service Director, Deputy City Manager or City Manager. The reports shall be prepared in a manner, form and content as approved by the City that meets the City's accounting and audit requirements. b) Weekly reports. The Contractor shall deliver to the City Finance Division Direct Cost reports. The reports shall be prepared in a manner, form and content as approved and amended by the City. c) Monthly reports. The Contractor shall deliver to the City Finance Division a listing of all journal entries recorded in the prior month showing accounts, amounts and explanation; a Balance Sheet and a Revenue & Expense Statement for the month and year to date; by no later than the 20th of the month following the reported month's activity. d) Annual reports. The Contractor shall deliver to the City Administrative & Community Service Director a preliminary annual budget report (for the next calendar year's activity) by .tune 30th of each year listing out in detail the next years' revenues and expense budgets. The Contractor shall deliver a final annual budget request to the City Administrative & Community Service Director by July 31 st of each year. See section 5.0 e) Reports upon request. The Contractor shall provide access to all accounting transactions, documents and records upon city request and within five business days from the date of request. 7.07 State of Washington Sales Tax, Use Tax and Excise Tax Reporting. The contractor is responsible for knowing and understanding the State of Washington sales, use tax and other excise tax laws and to properly record transactions and report in accordance with those laws. Revenue related transactions shall be recorded separately between revenues and sales tax in the point of sales system. The City shall prepare and submit excise tax returns to the Department of Revenue for City golf course revenue related activities. Use tax on purchase transactions shall be recorded on purchasing transactions in a manner similar to sales tax paid. The Contractor's amount of Direct Costs submitted to the City for payment shall include the appropriate use tax amount. The Contractor shall prepare and submit excise tax returns to the Department of Revenue to report and remit the use tax. Any Contractor calculation, reporting, payment deficiencies or penalties related to those deficiencies are the sole responsibility of the Contractor and are not reimbursable by the City. A copy of the report shall be submitted to the city within five business days of filing so the City can verify the Contractor is reporting timely. 7.08 Cash Registers. All sales, revenue, deposits, receivable collection and other applicable transactions shall be processed using City approved cash registers and point of sale systems; and in accordance to procedures approved by the City. 7.09 Contracts and Agreements. All third -party contracts relating to the operation and maintenance of the Golf Course (including without limitation golf professional contracts, contracts for maintenance and repair services, pest control, supplies, and landscaping services, and contracts for tournaments, banquets, and other group functions) shall abide by the requirements in this section and the City's Purchasing Policy and Procedures. Except as 31 provided in this Agreement, all leases and financing agreements for Furnishings and Equipment, and all contracts and agreements relating to the operation and maintenance of the Golf Course entered into during the term of this Agreement, shall be entered into by Contractor as the contracting party. If the term of the lease, financing agreement, or other contract or agreement is for more than one year or extends beyond the expiration date of this Agreement or if the date for performance under such contract is after the expiration date of this Agreement, then approval of the Director is required and the contract shall allow assignment to City without approval of the other parry. 7.09.1 Contracting Procedures A. Purchases over $10,000. If such purchases are included in the Approved Annual Budget, then no additional approvals are required. When not included in the Approved Annual Budget, then approval of the Director is required. B. Emergency Expenditures. Upon notice provided in Section 3.1.6 above, Contractor shall attempt to receive approval of director where expenditures are significant, but in any case shall expend minimum funds required to appropriately remedy the emergency situation and such expenditures shall be considered a direct cost. C. Purchases by Contractor for City's Account. Contractor shall make such purchases where possible and practical when requested in writing by the Director or as part of the Approved Annual Budget D. Trade Discounts, Rebates, Refunds and National Accounts. All such discounts, refunds etc. shall be refunded back to the course. E. Purchases from Contractor Affiliates. Any purchases of goods or services for the Golf Course made from or through an Affiliate of Contractor, or the sale, rental, or transfers of goods or services of the Golf Course, including equipment, materials, inventory, or other services provided to the Contractor's affiliates or other entities, shall require the prior written approval of the Director unless such purchases are specifically identified as purchases from Contractor's affiliates and included in the Approved Annual Budget. Any such charges for such goods or services, shall be on the same terms and prices as applicable to other golf courses and country clubs operated by the Contractor. 7.09.2 Approval of the City. If a contract has not been approved through the Annual Budget or exceeds the budgeted amount for the item or service, approval of the Director is required. 7.09.3 Requirements for Third -Party Contracts. Subcontractors, lessees, concessionaires, tenants and any other third -party contractors shall: 32 A. Maintain and carry insurance in the amounts set forth in Article 9.0 with the City named as additional insured by endorsement, unless covered by the Contractor's insurance. B. Comply with the requirements of this Management Agreement, including but not limited to the nondiscrimination provision set forth in Section 3.17, the drug free workplace provision in Section 3.18, which shall be included in all subcontracts, leases, concessionaire and other third -party contracts. 7.10 Reports. Contractor shall provide a list of all open contracts and agreements related to the Golf Course, with a brief description of the contract, term, dollar amount, contact name and phone number, as requested by Director. 8.0 BUSINESS RECORDS 8.01 Types of Records. Contractor shall maintain a modified accrual method of accounting that complies with generally accepted accounting principles for all the revenues and expenses (including without limitation, Gross Revenues, City- Assessed Fees and Direct Costs) in connection with the operation of the Premises. Contractor shall establish and implement adequate internal controls for the operation of the Golf Course. The accounting, books and records for the operation of the Golf Course shall be separate from the accounting, books and records for any other business operated or managed by Contractor. Such accounting, books and records shall include the keeping of at least the following documents: a) Regular books of account such as general ledgers showing all assets, liabilities including cash balances, accounts payable, deposits, accounts receivables, fixed assets and equipment inventory; b) Journals, including, without limitation, any supporting and underlying documents such as vouchers, checks, tickets, bank statements, etc.; C) Cash register reports that will enable identification of day -to -day sales; and d) Any other accounting, books and records for the operation of the Golf Course that City, in its sole discretion, deems necessary or appropriate for proper reporting of Gross Revenues and Direct Cost disbursements; e) Contractor shall maintain a computerized system, showing all information on the number and types of rounds of golf played and the corresponding revenues and fee categories, customer addresses and associated data, resident versus non- resident status, and the fee paid per round; and f) Logs showing the dates and times of golf play and lessons must be maintained and available at the site for inspection by City at any time. In the event driving 33 range equipment that tracks dates and times of play is not available at a price acceptable to Director, Contractor shall maintain and keep available documentation sufficient to facilitate an audit of driving range revenues. 8.02 Audit of Records. All documents, books and accounting and financial records kept by Contractor pursuant to this Article 8, and relating in any manner to the Premises, shall be open for inspection by City at any reasonable time during the term of this Agreement and for at least three (3) years thereafter. In addition, City or its authorized representatives may, from time to time, conduct an audit of the books of the operation of the Premises, observe the operation of the business and review internal controls, security, and cash handling procedures for adequacy. City shall use reasonable efforts to minimize the interruption to the normal operation of the Premises during any inspection or audit performed pursuant to the provisions of this Section. 8.03 Annual Financial Statements. If authorized by the Director, the Contractor may be required to submit audited, reviewed or other agreed upon procedures (AUP) financial statements for the operation of the Premises including an independent auditor's report and corresponding management letter to City within ninety (90) days after the end of each Operating Year when required. The audit, review or AUP shall be performed by an independent certified public accountant acceptable to City, and the cost of the audit or other procedure shall be included as a Direct Cost. 8.04 Public Records. All information obtained in connection with City's inspections of Contractor's records or audits, with respect to the Premises, may be or become subject to public inspection and /or reproduction as public records. 8.05 Comparable Market Data. Contractor undertakes a fiduciary role for the City, and covenants to treat City's Golf Course in an equitable manner vis -a -vis any other golf course it may lease or operate. With a reasonable request of City, Contractor shall provide non- confidential, comparable market data or information regarding a certain Golf Course Expense or Fee item. The market data or information may not specifically identify a particular golf course. If the information being provided is not a public record, then the City shall keep this information confidential to the extent allowed by law. 8.06 Monthly Financial Reports. Within twenty (20) calendar days after the end of each month, Contractor shall provide City with the following reports and documents: a) Year -to -date balance sheet and income and expense statement, including but not limited to, unearned and deferred revenues, all Direct Costs for that month and Gross Revenues for that month (itemizing each source of Gross Revenues including, without limitation, green fees, golf cart rentals, Pro Shop sales, golf food and beverage sales, lesson fees, banquet food and beverage sales, driving range operations, resident cards); b) Duplicate bank statement; c) Check register or equivalent report; 34 d) A reconciliation between the bank statement and the check register and year -to- date balance sheet; e) Consolidated sales report from Point of Sale system for the month reported; and f) Total number of golf rounds played by fee categories for the month reported and Operating Year to -date. g) Other financial information requested that is a reasonable request. 9.0 INSURANCE AND INDEMNIFICATION 9.01 Insurance. Contractor shall at all times during the term hereof, produce and continue in force Commercial General Liability Insurance, Automobile Insurance and Workers' Compensation Insurance as follows. A. Minimum Scope of Insurance. Coverage shall be at least as broad as: 1) Commercial General Liability Insurance. 2) Automobile Liability Insurance. 3) Liquor Liability Insurance. 4) Workers' Compensation insurance as required by the Industrial Insurance Laws of the State of Washington. 5) Contractor may provide any of the insurance herein required by means of an endorsement on a blanket liability policy or policies. B. Minimum Limits of Insurance. Contractor shall maintain policy limits no less than: 1) Commercial General Liability insurance shall be written with limits of no less than $2,000,000 per occurrence and shall cover liability arising from premises, operations, independent contractors, products - completed operations, stop gap liability personal injury and advertising injury and liability assumed under an insured contract, with a general aggregate of $2,000,000 which shall apply separately to this location and a $2,000,000 products- competed operations aggregate limit. The City shall be named as an additional insured. 2) Automobile Liability: $2,000,000 combined single limit per accident for bodily injury and property damage. 35 3) Liquor Liability: Contractor shall procure and maintain for the duration of the agreement Liquor Liability insurance in the amount of $1,000,000 each occurrence. The City is to be named as an additional insured on Liquor Liability insurance. C. Deductibles and Self Insured Retentions. Any deductibles in excess of Five Thousand Dollars ($5,000) or self - insured retentions must be declared to and approved by the City. At the option of the City, either the insurer shall reduce or eliminate such deductibles or self - insured retentions as respects the City, its officers, officials, employees and volunteers, or the city will approve in writing the appropriate deductible or self - insured amounts in relation to the cost of such coverage. Contractor shall guarantee payment of losses and related investigations, claim administration and defense expenses,as applied to deductible and self - insured retentions. D. Other Insurance Provisions. The policies shall contain, or be endorsed to contain, the following provisions: 1) City, its officers, officials, employees, agents and volunteers are to be covered as additional insured's as respects: (i) liability arising out of activities performed on behalf of the Contractor; (ii) products and completed operations of Contractor; (iii) premises owned, occupied, or used by Contractor (including the Common Areas); or (iv) automobiles owned, leased, hired or borrowed by Contractor. The Coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, officials, employees, agents, or volunteers. 2) Contractor's insurance coverage shall be primary insurance as respects the City, its officers, officials, employees, and volunteers. Any insurance or self - insurance maintained by the City, its officers, officials, employees, agents or volunteers shall be the excess of Contractor's insurance and shall not contribute with it. 3) Any failure to comply with reporting provisions of the policies shall not affect coverage provided to the City, its officers, officials, employees, agents, or volunteers. 4) Contractor's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. 36 5) The insurer shall waive all rights of subrogation against the City, its officers, officials, employees, and volunteers for losses arising from the acts, omissions or use of the premises by the Contractor. 6) Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either parry, reduced in coverage or in limits except after thirty (3 0) days' prior written notice by first class mail, return receipt requested, has been given to the City (except that ten (10) days' notice shall be sufficient for any cancellation due to non - payment by Contractor. 7) Insurance is to be placed with insurers with a Best's Insurance Reports rating of no less than B +:X. 9.02 Insurance Issuers and Policies. All insurance required to be carried by Contractor hereunder shall be issued by insurance companies, qualified to do the business of issuing the ap- plicable types of policies in the State of Washington and acceptable to City, City's lender and Contractor. Copies of all policies, and original endorsements evidencing the existence and amounts of such insurance, shall be delivered by each party to the other no later than the Delivery Date. No such policy shall be cancelable or substantially reduced in limits or coverage except after thirty (30) days written notice to the other party. Contractor shall, at least (30) thirty days prior to the expiration of such policy, furnish City with renewals or "binders" thereof together with original endorsements if available from insurer, or City may order such insurance and charge the cost thereof to Contractor, which amount shall be payable by Contractor upon demand. Any insurance required hereunder may be carried under so- called "blanket coverage" form of insurance policies. The coverage afforded will not be materially reduced or diminished or otherwise materially different from what would exist under a separate policy meeting all of the requirements of this Section 9.0. 9.03 Increases In Limits. Not more often than every three (3) years during the term of this Management Agreement, City may require increases in all of Contractor's insurance policy limits for all insurance to be carried by Contractor as set forth in this Article, if such increases are commercially reasonable. Neither party shall be required to carry earthquake insurance. 9.04 Commercial Crime Insurance. Contractor shall obtain and keep in full force and effect during the term of this Agreement a commercial crime policy which includes, without limitation, a blanket bond for all employee dishonesty in the amount of $ 250,000; coverage for theft, disappearance and destruction of monies and securities in or on the Premises or outside the Premises in an amount not less than $35,000; and depositor's forgery in the amount of $250,000. Contractor shall obtain Director's written permission before individually bonding any individual employee and if allowed shall be in an amount not less than $500,000. 9.05 Indemnification and Hold Harmless. Contractor shall fully defend, indemnify and hold harmless City and its elective and appointive boards, commissions, officers, agents, and employees, and volunteers from and against any and all damages, liabilities, claims, suits, costs 37 or expenses, including but not limited to reasonable attorneys' fees and costs, for economic damage to third parties, property damage or bodily injury, including but not limited to death: a) which result from any act or omission by Contractor or any officer, director, employee or subcontractor of Contractor in connection with Contractor's performance under this Agreement or operation of the Golf Course; b) which result from any action taken by Contractor relating to the Golf Course (i) that is prohibited by this Agreement, or (ii) that is not within the scope of Contractor's duties under this Agreement, or (iii) that is not within Contractor's delegated authority under this Agreement; C) which result from Contractor's violation of Insurance Requirements or Legal Requirements; or d) which City, by reason of any alleged breach of a "non- delegable duty," is subject to, because of the Contractor's violation of any national, state or local law, regulation or order which pertains to providing safe working conditions for Contractor's employees, or because of Contractor's failure to provide safe working conditions for Contractor's employees. The foregoing indemnification shall not apply to any damages or other liability caused by the sole negligence or willful misconduct of City, nor shall it limit any right of Contractor hereunder to pursue any remedy for City's failure to pay the Management Fee or to terminate this Agreement for any breach by City. Should a court of competent jurisdiction determine that this Agreement is subject to RCW 4.24.115, then, in the event of liability for damages arising out of bodily injury to persons or damages to property caused by or resulting from the concurrent negligence of the Contractor and the City, its officers, officials, employees, and volunteers, the Contractor's liability hereunder shall be only to the extent of the Contractor's negligence. It is further specifically and expressly understood that the indemnification provided herein constitutes the Contractor's waiver of immunity under Industrial Insurance, Title 51 RCW, solely for the purposes of this indemnification. This waiver has been mutually negotiated by the parties. The provisions of this section shall survive the expiration or termination of this Agreement. 9.06 Indemnification for Fines. Contractor shall fully defend, indemnify and hold City and its elective and appointive boards, commissions, officers, agents, and employees, harmless from and against any fines imposed by administrative or regulatory bodies for actions caused by Contractor or its officers, employees or agents. 10.0 DEFAULT 10.01 Contractor's Default. The occurrence of anyone or more of the following events shall constitute a material default and breach of this Management Agreement by the Contractor: t: a) Contractor's abandonment or vacation of the Premises for a period of twenty - four (24) hours. b) Contractor's expenditure of Direct Costs exceeds the Direct Cost Budget by 10% annually of, except if the level of such costs is greater than might reasonably be caused by increased patronage of the Premises, results from causes beyond Contractor's reasonable control or if Contractor has given CITY written notice of the event(s) causing such cost overruns. C) Contractor's Cost of Goods Sold for Pro Shop merchandise during any six (6) month period exceeds 80% of gross sales during that period and food and beverages during any six (6) month period exceeds 45% of gross sales during that period except if the level of such costs is greater than might reasonably be caused by increased levels of patronage of the Premises, required merchandise clearance events, results from causes beyond Contractor's reasonable control or if Contractor has given City written notice of the event(s) causing such cost overruns. d) Failure by the Contractor to timely pay, within sixty (60) days of the date due, any Direct Costs except for vendors where a bonafide dispute over payment, performance, or amount exists. When such a dispute exists and the amount exceeds $500, Contractor shall notify city of such dispute. This also would not include any situation where vendor offers terms beyond the due date stated on the invoice. e) Failure to observe or perform any of the other covenants, conditions or provisions of this Agreement where such failure continues for a period of thirty (30) days after written notice from the City, or an event of default occurs more often than once in a twelve (12) month period; provided, however, if more than thirty (30) days are reasonably required for a cure of a default, then Contractor shall not be deemed to be in default if Contractor commences such cure within said thirty (30) days, and thereafter, diligently prosecutes such cure to completion. f) Contractor's use of Bank Account funds for any purpose not expressly provided for by this Agreement or approved by the Director in writing. g) The levy of a writ of attachment or execution on this Agreement or on any of the property of Contractor located in or on the Premises and such levy or execution is not stayed prior to the enforcement of such writ of attachment or execution. h) An event of bankruptcy or insolvency including but not limited to: (i) Contractor applies for or consents to the appointment of a receiver, trustee or liquidator of Contractor or of all or a majority of its assets; (ii) Contractor files a voluntary petition in bankruptcy or commences a proceeding seeking reorganization, liquidation, or an arrangement with creditors; (iii) Contractor 39 files an answer admitting the material allegations of a bankruptcy petition, reorganization proceeding, or insolvency proceeding filed against Contractor; (iv) Contractor admits in writing its inability to pay its debts as they come due; (v) Contractor 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 Contractor a bankrupt or insolvent or approving a petition seeking reorganization of Contractor or appointing a receiver, trustee or liquidator of Contractor or of all or a majority of its assets, and such order, judgment or decree continues unstayed and in effect for any period of thirty (30) consecutive days. i) Failure to take advantage of prompt pay strategies except when approved by the Director as in the best interest of the Course to forego such prompt pay strategies. j) The assignment or attempted assignment or transfer of any or all interest of the Contractor in this Agreement, or the subcontracting of all or any portion of this Agreement without the prior written consent of the City. 10.02 City's Default. The City's breach of any provision of this Agreement, the failure to keep, observe or perform any material covenant including, without limitation, the covenant to pay the Management Fee, shall constitute a default and breach of this Agreement by City. 10.03 Curing Default. Except as otherwise expressly stated in this Agreement, the defaulting party shall have ten (10) days after receipt of written notice from the other parry to cure any monetary default under this Agreement. The defaulting party shall have thirty (30) days after receipt of written notice from the other party or the specific time permitted under this Agreement to cure any default under any other covenant, condition or agreement contained in this Agreement or, in the event that any such default is of a nature such that it cannot be cured within thirty (30) days, the defaulting party shall immediately commence to cure and thereafter diligently pursue such cure to completion. In the event of a second, or more, event of default within a twelve (12) month period of time, no further notice shall be required. Notwithstanding the foregoing, Contractor shall be in default under this Agreement, with or without written notice from City, in the event Contractor abandons or vacates the Premises for any period exceeding twenty -four (24) hours except if such abandonment or vacating results from a force majeure event or other cause beyond Contractor's control. 10.04 Remedies. 10.04.1 City's ability to do the work at Contractor's expense. In the event of Contractor's default as described in Section 10.01, if Contractor fails to cure the default by the date specified, City may elect to undertake the work that Contractor has failed to do or any work necessary or appropriate to diligently maintain the Premises. Should City elect to undertake such work, it shall serve Contractor written notice of its intent to enter the Premises and the exact nature of the work or correction it intends to perform. Contractor may void the notice and City's right to enter and perform the work by 40 promptly performing the work set forth in the City's notice. The performance of the foregoing work by City shall be at the sole expense of Contractor and shall not be included as a Direct Cost. If City undertakes work pursuant to these procedures, City shall make a demand upon Contractor for payment of its costs. If Contractor fails to pay the costs incurred by City within thirty (30) days of the date the demand is made, City may bring legal action to collect the sums due and /or may deduct such costs from the Fixed Management Fee and Incentive Management Fee otherwise payable to Contractor. If legal action is necessary or appropriate to collect the amounts expended by City, Contractor shall pay all City's attorneys' fees, including the fees of in -house counsel at the prevailing area rates, and costs, court costs, and staff costs together with interest from the date which is thirty (30) days after City has made demand for payment. Any actions taken by City pursuant to this Section 10.04.1.shall not cure any default by. 10.04.2 Termination of the Agreement. In the event the defaulting party fails to cure any default of this Agreement within the applicable cure period, the other party may terminate this Agreement upon expiration of the cure period by written notice to the defaulting party. If City terminates this Agreement pursuant to this Section, City shall have the following rights: a) to collect from Contractor any and all monies owing City under this Agreement; b) to take sole possession of the Bank Accounts; c) to take sole possession of all equipment and materials, and d) to pursue any and all other appropriate civil and criminal remedies. Contractor shall be entitled to any unpaid portion of the Fixed Management Fee attributable to performance that occurred prior to Contractor's default, less any damages incurred by City as a result of Contractor's default. If Contractor terminates this Agreement pursuant to this Section, Contractor shall have the right to collect from City any and all monies owing Contractor under this Agreement. 10.04.3 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. 41 10.05 Effect of Termination. The termination of this Agreement under the provisions of this Article 10 shall not affect the rights of the terminating party with respect to any 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. 11.0 CONTRACT ENDING TRANSITION PROCEDURES. 11.01 Contract Ending Transition Period. The "Contract Ending Transition Period" shall mean: (i) the six (6) month period immediately prior to expiration of the term; (ii) the period from the date CITY gives notice of default under Section 10.02 until the date of termination; 11.02 Contract Ending Transition Procedures. During the Contract Ending Transition Period: a) Contractor shall allow City and others to interview and discuss employment opportunities with Contractor's on -site employees. b) Contractor shall not transfer any without the consent of Director, said approval not to be unreasonably withheld. C) Contractor and City shall refrain from coercing, threatening or harassing any employee who expresses interest in being employed by City, Contractor or other party after the Agreement has expired, or has been terminated or cancelled. d) Contractor and City shall cooperate in good faith on post- contract support services, data management, inventory control, transfer of employees and other issues necessary and appropriate to ensure smooth transition of operating responsibilities from one party to another. Nothing in this paragraph shall be construed to require City or Contractor to hire additional personnel or spend additional monies. e) Contractor shall deliver to City all records and information related to tournaments, banquets and other events booked at the Golf Course for the Contract Transition Period or any time thereafter. f) Contractor shall deliver to City current copies of all contracts, permits and licenses affecting Golf Course operations, including without limitation, leases for golf carts and other Golf Course equipment. g) All real and personal property that is currently located at the Golf Course, together with any real or personal property purchased or leased in accordance with the Direct Cost Budget or otherwise with City funds is and shall remain the property of City. Contractor shall transfer possession of the Premises, Facilities, Furnishings and Equipment, supplies, software, databases, books, records and materials purchased, prepared or maintained under this Agreement to the new 42 operator or City, as City shall direct. If City determines that the Premises, any Facilities, Furnishings and Equipment or other item is not in an acceptable condition accounting for normal wear and tear and budget constraints, if any, Contractor shall have the burden of demonstrating that the item was properly maintained or that the item is useable and in good condition. Contractor shall reimburse City for the cost of repair or replacement of any item that is not in useable and good condition, normal wear and tear and budget constrains excepted. Contractor shall surrender the Premises in broom clean condition. h) Contractor shall transfer all keys, convey all alarm codes and vacate the Premises. 0 Contractor shall assign to City and City shall assume Contractor's obligations under any loans and leases incurred or entered into by Contractor with respect to Furnishings and Equipment or supplies then in use at the Golf Course, provided that the following conditions are met unless waived by the City: (i) Contractor shall have delivered to City written documentation acceptable to City showing that Contractor has fully performed its obligations under such loans and leases through the date City assumes such obligations, and (ii) with respect to any agreements in excess of one year or whose term extended beyond the expiration date of this Agreement, City shall have given its written approval to the agreement. j) Contractor shall promptly transfer the liquor license for the premises to the City's designee for the sum of $1.00. 12.0 WORK STOPPAGES, DAMAGE OR DESTRUCTION 12.01 Work Stoppages. In the event concerted activities by labor groups (e.g., picketing, strikes, etc.) result in Contractor's employees not entering and working at the Premises, Contractor shall, if Director so requests in writing, seek appropriate administrative or court orders to return operations to normal. During such period, Contractor shall operate the Premises on a best efforts basis until labor relations are normalized. If and only if Director gives Contractor a written request to seek administrative or court orders will the cost of doing so shall be a Direct Cost. If the city has provided approval to seek appropriate administrative or court orders to return operations to normal and Contractor's best efforts to operate the Premises is insufficient to maintain and operate the Golf Course in a manner satisfactory to the City, the City may enter the Premises and perform such maintenance and operation, at the sole expense of the Contractor, until operations are permitted to return to normal. 12.02 Damage or Destruction. Should the Golf Course be destroyed or substantially damaged by fire, flood, acts of God, or other casualty, City, by written notice to Contractor, shall have the right to cancel this Agreement pursuant to Article 12 on the basis that City does not choose to rebuild or restore the Golf Course, 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 cancellation. For 43 the purpose of this Section, the Golf Course shall be deemed to have been substantially damaged if the estimated length of time required to restore the Golf Course 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 cancelled in the event of damage to the Golf Course either because (a) the damage does not amount to substantial damage as described above, or (b) notwithstanding destruction of or substantial damage to the Golf Course, and the City elects, in its sole and absolute discretion, to restore the Golf Course, then City may proceed, at City's own expense, to commence and complete restoration of the Golf Course to its condition and character just prior to the occurrence of such casualty. If as a result of any damage or destruction to the Golf Course as provided in this Section, the responsibilities of Contractor under this Agreement are substantially changed, then the parties shall meet and discuss in good faith appropriate modifications to this Agreement including the Combined Management Fees. Any insurance proceeds made available after such damage or destruction shall be payable to City. 12.03 Eminent Domain. If all of the Golf Course shall be taken through the exercise of the power of eminent domain, or by agreement in lieu of the exercise of eminent domain, then upon the date that City shall be required to surrender possession of the Golf Course, 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. Likewise, if such a substantial portion of the Golf Course is taken through the exercise of eminent domain, or an agreement in lieu of the exercise of eminent domain, so to make it unfeasible, in the reasonable opinion of City, to restore and continue to operate the remaining portion of the Golf Course for the purposes contemplated in this Agreement, then upon the date that City shall be required to surrender a substantial portion of the Golf Course, 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 Golf Course shall not make it unfeasible, in the sole and absolute discretion of City, to restore and continue to operate the remaining portion of the Golf Course for the purposes contemplated in this Agreement, then this Agreement shall not terminate, and City may proceed, at City's own expense, to alter or modify the Golf Course so as to render it a complete architectural unit which can be operated as a golf course of substantially the same type and character as before. If as a result of any alteration or modification of the Golf Course, the responsibilities or rights of Contractor under this Agreement are substantially changed, then the parties shall meet and discuss in good faith appropriate modifications to this Agreement including the Combined Management Fee. Any award pursuant to a taking by right of eminent domain shall belong to and be paid to City. 12.04 Force Maieure Events. As used in this Agreement, the term "Force Majeure" means declared or undeclared war, sabotage, riot or acts of civil disobedience, acts or omissions of governmental agencies, accidents, fires, explosions, floods, earthquakes, or other acts of God, shortages of materials, or any other event not within the control of Contractor and not caused by the negligence or intentional wrongful conduct of Contractor or City. 44 If Contractor or City is unable by reason of Force Majeure to carry out any obligation under this Agreement, such obligation shall be suspended only so far as it is physically affected by such Force Majeure. The party unable to perform shall give the other party prompt notice of such Force Majeure with a detailed explanation and the probable extent to which it will be unable to perform or be delayed in performing such obligation. The party unable to perform shall use all possible diligence to remove such Force Majeure as quickly as possible. The requirement that any Force Majeure shall be removed with all possible diligence shall not require the settlement by the party unable to perform because of strikes, lockouts or other labor disputes or the meeting of any claims of or demands by any supplier or government entity which reasonably may be harmful to the best interests of the City or Contractor. Costs incurred as a result of a Force Majeure shall be reimbursed by the City, if the expenditure was approved in advance by the Director, which approval will not be unreasonably withheld. If as a result of the occurrence of a Force Majeure, the responsibilities of Contractor under this Agreement are substantially changed, then the parties shall meet and discuss in good faith appropriate modifications to this Agreement including the Combined Management Fee. 13.0 SUBMISSION OF PAYMENTS, REPORTS AND NOTICES 13.01 Payments and Financial Reports. Any payments and financial reports and documents required by this Agreement shall be submitted or emailed to: Director of Administrative & Community Services CITY OF PASCO 525 North Third Pasco WA 99301 acsadmin @pasco - wa.gov With copy to: Finance Manager CITY OF PASCO 525 North Third Pasco WA 99301 13.02 Other Notices. Any notice, demand, request, consent, approval or communication that either party desires or is required to give to the other party shall be in writing and shall be deemed given as of the time of hand delivery to the addresses set forth below, or three (3) days after deposit into the United States mail, postage prepaid, by first class mail. Unless notice of a different address has been given in accordance with this Article 13, all such notices shall be addressed as follows: 45 If to City: Director of Administrative & Community Services CITY OF PASCO 525 North Third Pasco WA 99301 With a copy to: Leland B. Kerr KERR LAW GROUP 7025 West Grandridge Blvd, Suite A Kennewick WA 99336 If to Contractor: CourseCo, Inc. PO Box 1019 Petaluma CA 94953 -1019 14.0 DISPUTE RESOLUTION 14.01 Controversies Subiect to Mediation. Any controversy between the parties regarding the construction or application of this Agreement, and any claim arising out of this Agreement or its breach, may first be submitted to a mediator mutually selected by the parties. 14.02 Mediation Schedule. The mediation shall take place before the mediator at the time and place selected by the mediator unless the parties agree otherwise. The mediator shall select the time and place promptly and shall give each party written notice of the time and place at least ten (10) days before the date selected; provided that the meeting shall take place not less than thirty (30) days after the request for mediation. 14.03 Cost of Mediation. Each party hereto shall bear the attorneys' fees, costs, and expenses incurred by it in connection with such mediation, and both parties shall share equally the costs and expenses attributable to the services of the mediator. 14.04 Other Proceedings. If mediation does not prove successful, either party may institute a proceeding in a court of competent jurisdiction with venue being placed in Pasco, Franklin County, Washington, or the parties may agree to nonbinding or binding arbitration pursuant to RCW 7.04A. M 15.0 MISCELLANEOUS PROVISIONS 15.01 Ownership. Ownership of the Golf Course, all Facilities, Furnishings and Equipment, Resale Inventory and Supplies acquired by City or acquired by the Contractor on behalf of City, and all alterations, additions or betterments thereto, shall remain the property of the City. 15.02 Warranties 15.02.1.1 Contractor Warranties. Contractor warrants and represents that it has full power and authority to enter into this Agreement and perform the obligations in this Agreement; that consummation of this Agreement will not create a default under any other agreement and will not violate any law, regulations, order, judgment, decree or rule; that Contractor has conducted its own review of the plans and specifications for the Golf Course prior to execution of this Agreement; and that Contractor is not relying on any representation of the City in connection with the execution of this Agreement. Contractor warrants and represents that it is authorized to transact business in the State of Washington and that all of Contractor's employees are properly licensed and trained for their respective positions and responsibilities. 15.02.2 City Warranties. City warrants and represents that it has full power and authority to enter into this Agreement and perform the obligations in this Agreement and that consummation of this Agreement will not create a default under any other agreement and will not violate any law, regulations, order, judgment, decree or rule. City warrants and represents that it is authorized to transact business in the State of Washington and that all of City's employees are properly licensed and trained for their respective positions and responsibilities. 15.03 Premises. 15.03.1 City's Right of Possession. This Agreement does not constitute a lease and the right of possession of the Premises shall at all times remain with City. City and its authorized representatives shall have the right to enter the Premises at any time without notice and for any purpose, including, without limitation, the following: (i) to determine whether the Premises are in good condition and whether Contractor is complying with its obligations under this Agreement; (ii) to do any necessary maintenance and to make any restoration to the Premises that City has the right to perform; to serve, post or keep posted any notices required or allowed under the provisions of this Agreement; (iii) to show the Premises to prospective brokers, agents, buyers, tenants, operators any time during the term of the Agreement; and (iv) to undertake emergency maintenance, repairs or restoration. City reserves the right to establish, grant or utilize easements or rights -of -way over, under, along and across the Premises. 15.03.2 Condition of Premises. Contractor acknowledges that, except as expressly set forth in this Agreement, City has made no representations or warranties concerning 47 the condition of the Premises and Contractor agrees to commence operations on the Premises on the Effective Date of this Contract, as determined by the Director. This Agreement is subject to all easements, liens and other interests affecting title to the Premises, whether or not they are of record. 15.04 Waiver. No delay or failure on the part of any party in exercising any right hereunder shall impair any such right or any remedy of the party so delaying or failing. No waiver of any provision of this Agreement shall be binding unless executed in writing by the party making the waiver. No waiver of any provision of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. 15.05 Integration. This agreement is the entire agreement between the parties, and supersedes all prior and contemporaneous agreements, representations and understanding of the parties concerning the subject matter hereof. 15.06 Modification of Agreement. No modification, amendment or supplement to this Agreement shall be binding unless executed in writing by both of the parties. 15.07 Severability. If any court of competent jurisdiction holds that any provision of this Agreement is void, voidable, illegal or unenforceable, or that this Agreement would be void, voidable, illegal or unenforceable unless any provision of it were severed, that provision shall be severable from and shall not affect the continued operation of the rest of this Agreement; provided that if the provision to be severed is a material part of this Agreement, the foregoing shall not apply, and the parties shall in good faith renegotiate such provision. 15.08 Time of the Essence. Time is of the essence in the performance of all obligations under this Agreement for which specific time periods have been specified. 15.09 Assignment. City shall have the right to assign its interest in this Agreement without limitation, except that City shall not have the right to assign its interests hereunder without Contractor's prior written agreement if, in the reasonable judgment of the Contractor, such an assignment will affect Contractor's performance of this Agreement or expose Contractor's confidential and proprietary information to a competitor. Upon any such assignment, City shall be relieved of any further obligation under this Agreement provided such assignee assumes all of City's obligations under this Agreement. Contractor acknowledges that City is entering into this Agreement in reliance on the unique skill and experience of Contractor and its employees. Contractor shall not subcontract or assign all or any part of its right or obligations under this Agreement, unless approved in writing by Director, said approval not to be unreasonably withheld. Any change in the control of Contractor, including, without limitation, any transfer or acquisition of a controlling percentage of Contractor's equity or stock or a controlling percentage of the equity or stock of CourseCo, Inc., shall constitute an assignment for purposes of this Agreement. 15.10 Time References. Except as otherwise specifically provided in this Agreement, all references to "days" herein shall mean calendar days and not business days. 48 15.11 No Third Party Beneficiaries. This Agreement is not intended for the benefit of any specific person, entity or third party beneficiary other than the named parties hereto and no person or entity who is not specifically named as a party herein shall have any right to enforce the provisions of this Agreement. 15.12 Golf Course Names. The Golf Course shall be known by Sun Willows Golf Course, or such trade name and/or trademark or logo as may from time to time be determined by City. The parties acknowledge and understand that the names, logos, and designs used in the operation of the Golf Course, together with appurtenant goodwill, are the exclusive property of City. Contractor may identify the Golf Course as a golf course managed and operated by Contractor. The City grants the Contractor the license to use the trade name "Sun Willows Golf Course" during the term of this Agreement. 15.13 Independent Contractor. Contractor shall at all times be considered an independent contractor under this Agreement. 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 Contractor and its successors and assigns, on the other part. Contractor agrees to be solely responsible for its own matters including payment of its employees, compliance with Social Security, withholding and other such personnel regulations. Contractor's employees shall not be entitled to any salary, fringe benefits, pension, workers' compensation, sick leave, insurance or any other benefit or right connected with employment with City. 15.14 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. 15.15 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. 15.16 Applicable Law. This Agreement shall be construed and interpreted in accordance with, and shall be governed by, the laws of the State of Washington. 15.17 No Presumption Re2ardins Drafter. The language of each and all paragraphs, terms and/or provisions of this Agreement, shall, in all cases and for any and all purposes, and in any way and all circumstances whatsoever, be construed as a whole, according to its fair meaning. City and Contractor acknowledge and agree that the terms and provisions of this Agreement have been negotiated and discussed between City and Contractor, 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 Contractor 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. Ma 15.18 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. 15.19 Authority. The parties represent for themselves that (a) such party is duly organized and validly existing, (b) the person or persons executing this Agreement on behalf of such party is /are duly authorized to execute and deliver this Agreement on behalf of such party, (c) by so executing this Agreement, such party is formally bound to the terms and provisions of this Agreement, and (d) the execution of this Agreement does not violate any provision of any other agreement to which such party is bound. 15.20 Conflict of Interest. Contractor shall avoid all conflict of interest or the appearance of conflict of interest in performance of this Agreement. The parties hereto hereby covenant that during the term of this Agreement they will not employ any person to administer any portion of this Agreement that has an interest, direct or indirect, which would conflict in any manner or degree with the performance of services required under this Agreement. 16.0 GUARANTEE. Contractor's performance under the terms and conditions of this Agreement are subject to a guarantee attached hereto as consideration and inducement for the City entering into this Agreement. 17.0 AUTHORIZATION. By signature below, each party warrants their authorization and authority to enter into this Agreement binding their respective principals as parties to this Agreement, and by signature below, create a conclusive presumption of such authority. IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the date first above written. CITY OF P C CONTRACT By: By: Gary ykr—ulnttieW i Manager APPROV) D A FORM: By: Leland B. Kerr, City Attorney 50 GUARANTEE OF PERFORMANCE As inducement for the City to enter the Management Agreement above, and as additional consideration for such Agreement, CourseCo Inc., a California Corporation, the parent company of Pasco Golf Corporation, "Contractor" in the attached Management Agreement as Guarantor, irrevocably and unconditionally guarantees prompt and satisfactory performance by the Contractor of all the terms and conditions of the attached Management Agreement. This includes all payments required thereunder be paid when due, and all other obligations and Iiabilities due and to become due to the City (or third parties) from the Contractor required under the above Management Agreement. Upon notice by the City of any default in performance or payment by the Contractor which remains uncured by the conclusion of the pay period provided in this Agreement, CourseCo Inc. shall promptly secure such performance or payment. CourseCo Inc., as Guarantor, shall pay to the City all damages, costs, and expenses that the City is entitled to recover from Contractor by reason of such default. This Guarantee shall continue in force until all obligations of the Contractor under the attached Management Agreement have been satisfied or until Contractor's liability to the City under the Management Agreement has been completely discharged, whichever first occurs. Guarantor shall not be discharged from liability hereunder as long as any claim by the City against the Contractor remains outstanding. CourseCo Inc., specifically waives notices of nonperformance of or demand on the Contractor, and such guarantee shall not be diminished or affected by amendments, modifications, or forbearance by either party under the terms of the Management Agreement. The undersigned warrants full authorization and specific authority on behalf of CourseCo Inc., to grant this guarantee. DATED this a-14" day of December, 2011. 51 rte. President Attachment #A IRIRevenue 2007 2008 2009 2010 Lease Agreement Greens Fees - Daily * $491,082.07 $531,269.04 $515,723.69 $493,351.50 Tournament Greens F * $57,599.26 $48,184.76 $48,425.68 $48,695.67 Season Passes - Golf * $280,745.06 $219,357.49 $228,884.50 $205,712.10 Preferred Player Pass * $60,900.00 $70,242.50 $77,475.00 $78,542.42 Total $890,326.39 $869,053.79 $870,508.87 $826,301.69 $43,452.69 $43,525.44 Range /Season Passes $46,821.99 $52,916.91 Concession Agreement - Golf Golf Cart Storage Rental Cart Fees - Daily 1 $154,408.60 $156,653.66 $157,575.31 $151,370.15 Tournament Cart Fees $26,642.04 $20,542.25 $16,483.76 $16,876.96 Season Passes - Carts $46,464.81 $39,020.00 $48,327.50 $42,264.59 Range Fees - Daily * $35,317.28 $36,404.32 $38,562.95 $68,164.03 Season Passes - Rang * $9,891.30 $10,417.67 $14,354.96 $13,468.94 Merchandise Sales $111,562.02 $114,224.81 $93,333.42 $82,979.45 Rental Income $1,778.81 $1,851.37 $241.75 $12.00 Gift Certificate /Sweeps $1,516.71 $7,458.73 - $24,104.05 - $20,785.69 Miscellaneous Revenue $0.00 $2,988.02 $825.58 $3.23 Lessons $3,135.94 $1,193.00 $6,129.00 $4,860.00 Total $390,717.51 $390,753.83 $351,730.18 $359,213.66 Minimum Rent -Annual Concession Agreement - F &B Grill Food 1 $102,633.27 $92,460.21 $71,748.00 $83,299.61 Tournament Food $21,698.29 $13,886.14 $0.00 Beverage Cart Food $3,607.45 $2,721.47 $436.17 $1,806.63 Other /Tobacco $91.25 $20.00 $9,426.93 $1.00 Non Tax Food/ Grill $6,461.73 $18,472.32 $58,502.58 $25,322.82 Grill Wine F $5,829.97 $6,149.20 $3,006.46 $2,557.43 Beverage Cart Wine $263.98 $473.92 $0.00 $44.50 Grill Beer 1 $77,944.07 $77,012.25 $71,698.94 $75,937.93 Beverage Cart Beer $11,856.02 $11,564.74 $7,705.24 $5,135.71 Grill Liquor $21,981.75 $30,061.44 $27,822.86 $23,241.89 Tournament Liquor $0.00 $0.00 $0.00 Beverage Cart Liquorl $4,636.08 $4,727.33 $2,083.76 $1,101.02 Discount Food - employee $0.00 $0.00 Total $257,003.86 $257,549.02 $252,430.94 $218,448.54 Total Revenue $1,538,047.76 $1,517,356.64 $1,474,669.99 $1,403,963.89 Base I Average Revenue for last 4 y s (excluding 2011) 1 $1,483,509.57