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EXHBIT 10.6
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is executed as of the
13th day of October, 1998, by and between SILVERLEAF RESORTS, INC., a Texas
corporation (hereinafter called "Owner"), and EAGLE GREENS LTD., a Georgia
corporation (hereinafter called "Manager").
R E C I T A L S:
A. Pursuant to that certain Contract of Sale by and between J.
Philip Ballard, Jr., Manager and Owner dated February 25, 1998, Owner has
agreed to purchase certain real property (the "Site") located in Habersham
County, Georgia, and more particularly described on Exhibit "A" attached hereto
and made a part hereof, which Site is improved by a golf course commonly
referred to as Hollywood Hills Golf Course located thereon (the "Property").
B. Manager and Owner desire to enter into this Agreement for the
purpose of establishing the obligations of Owner and Manager with respect to
the Property in an effort to continue to operate the Property in a manner that
is consistent with the current operation of the Property as a public daily fee
golf course. Owner and Manager desire to maintain the Property in a manner
that is consistent with or better than the current condition of the Property.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, including the
mutual benefits to Owner and Manager, the receipt and sufficiency of which is
hereby acknowledged, Owner and Manager hereby agree as follows:
ARTICLE I
OBLIGATIONS OF OWNER AND MANAGER
Section 1.1. Obligations of Owner. Upon the transfer of ownership of the
Property from Manager to Owner, the following shall be Owner's obligations with
respect to the Property:
(a) all current employees of the Property shall become employees
of Owner or an entity designated and controlled by Owner;
(b) Owner shall assume responsibility for all existing vendor
accounts and the transfer of same into Owner's name;
(c) Owner shall assume responsibility for all accounting functions
including, but not limited to, accounts payable, accounts
receivable and payroll;
(d) Owner shall provide an operating budget for the Property;
(e) Owner shall provide a capital budget for the Property;
(f) Owner shall provide operating policies for the Property that
are consistent with its existing policies or will consent to
the use of and adopt management policies currently in effect
for the operation of the Property;
(g) Owner shall provide copies of its employee policies and/or
handbooks which include information concerning employee
behavior, work hours, general rules,
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performance reports and all other policies and procedures
normally associated with employees who work at a golf course;
(h) Owner shall provide a "petty cash account" in an amount that
is adequate and consistent with other similar golf course
properties;
(i) Owner shall provide complimentary golf privileges to Manager
and Manager's family members and guests, which golf privileges
shall be consistent with the policy in effect at the time of
the transfer of ownership of the Property;
(j) Owner shall provide Manager with a reporting format, software
forms, etc., that Owner intends Manager to use in reporting
the interim results of operations to Owner which reporting
formats, software forms, etc., shall include the following:
1. Point of sale software and hardware Owner
desires Manager to use for daily operations;
2. Types of payment acceptable to Owner and
details of electronic reporting of credit card sales;
3. Procedures for daily deposits and the banking
relationship Owner intends to use to accomplish the deposits;
and
4. Any other reporting forms Owner intends to
use for periodic reporting from Manager.
(k) Owner shall provide Manager with a current copy of a
Certificate of Insurance providing for the following
insurance:
1. Comprehensive General Liability insurance in
an amount not less than $1,000,000, with Manager named as an
additional insured on the policy.
2. Workers' Compensation insurance for employees
meeting the statutory requirements for the State of Georgia
with Manager named as an additional insured on the policy; and
3. Property coverage with limits meeting Owner's
objectives;
(l) Owner shall provide any and all proposed list of fees and
charges or will ratify the fees and charges as proposed by
Manager;
(m) Owner shall provide Manager with information regarding the
proposed use of the Property by customers associated with the
surrounding Apple Mountain Development and/or Silverleaf
Resorts; and
(n) Owner shall delegate to Manager full authority to supervise
and manage all employees working directly on the Property.
Section 1.2. Obligations of Manager. The following shall be Manager's
obligations subsequent to the date of the transfer of ownership of the Property
from Manager to Owner:
(a) Manager shall provide oversight and management duties of all
of the Property's employees and staff.
(b) Manager's upper level management structure shall include the
following:
1. the President of Manager;
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2. the Chief Financial Officer of Manager;
3. the General Manager of Manager; and
4. the Marketing Director of Manager;
(c) Manager shall include the managers of the Property in staff
meetings and training sessions consistent with other property
locations owned by Manager;
(d) Manager shall participate in the development of an annual
monthly budget for the operation of the Property;
(e) Manager shall monitor and report compliance with Owner's
budget for the Property;
(f) Manager shall monitor compliance with Owner's adopted policies
and procedures relating to the operation of the Property;
(g) Manager shall provide input regarding capital budgeting and
improvement issues relating to the Property;
(h) Manager shall provide interim financial reporting to Owner as
desired by Owner and mutually agreed upon by both parties;
(i) Manager shall provide Owner with a current copy of a
Certificate of Insurance providing for Comprehensive General
Liability Insurance in an amount not less than $1,000,000;
(j) Manager's primary contact shall be with the Chief Financial
Officer of Manager.
(k) Manager shall provide Owner with the following items:
1. A detailed listing of open accounts payable
items.
2. A detailed listing of all pro shop inventory.
3. A Golf Course Maintenance Plan and Schedule for
1999; and
(l) Manager shall provide Owner with a copy of the resume and
qualification of the current Pro/Manager and Superintendent;
and
(m) Manager shall inform Owner of any significant personnel issues
involving the Superintendent and Pro/Manager, who shall report
directly to Manager, and shall consult Owner prior to any
disciplinary actions or other actions involving those
positions. The Superintendent and Pro/Manager shall have full
authority to supervise and manage all employees designated or
assigned to them and under their direction.
Section 1.3. Compensation.
A. Amount. Owner agrees to pay Manager an amount equal to
$3.00 per round of golf played on the Property for Manager's services provided
to Owner pursuant to this Agreement. The number of rounds of golf shall be
determined from the daily sign-in sheets and shall include all rounds played by
Apple Mountain Resort customers, guests, employees and guests of Owner. All
players shall be required to register. All complimentary rounds played by
Manager, its family and friends, shall be excluded from the determination of
Manager's compensation.
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B. Payment. Manager's compensation shall be payable on a
monthly basis and shall be based upon the number of rounds of golf shown from
the previous month's daily play sheets. If the total annual rounds played
falls below 30,000 for any reason not caused by Manager's negligence, then the
minimum annual compensation shall be $90,000. If this Agreement is terminated
prior to the annual renewal date, as provided hereinbelow, then the Manager's
compensation shall be prorated according to the number of months in the year
this Agreement has been performed.
C. Incidental Expenses. Owner shall reimburse Manager for
all incidental and out-of-pocket expenses not associated with the normal
management duties described in this Agreement. Manager shall make all
reasonable efforts to identify all incidental and out-of-pocket expenses to
Owner prior to those expenses being incurred by Manager.
Section 1.4. Indemnification of Owner. Owner and Manager shall indemnify
and hold each other harmless from any and all damages, liabilities, costs,
claims, or expenses, including attorneys' fees, arising out of or in connection
with the operation of the Property herein, due to the gross negligence, wilful
misconduct or violation of any legal requirement by the other party. If the
damage, liability, costs, claim or expense is attributable to Manager's gross
negligence, wilful misconduct, violation of any legal requirements or breach of
this Agreement, the cost of such indemnification shall be borne solely by
Manager. If the damage, liability, cost, claim or expense is attributable to
Owner's gross negligence, wilful misconduct, violation of any legal
requirements or breach of this Agreement, the cost of such indemnification
shall be borne solely by Owner. Notwithstanding the foregoing, it is
understood and agreed that the indemnification obligation of Owner and Manager
as set forth in this Section shall apply only to claims, damages, losses and
expenses for which insurance has not been obtained or is not applicable. The
provisions of this Section 1.4 shall survive the expiration or earlier
termination of this Agreement.
ARTICLE II
MISCELLANEOUS
Section 2.1. Term and Termination. The term of this Agreement shall
commence upon the mutual execution and delivery of this Agreement by the
parties hereunder and shall continue in full force and effect for a period of
one (1) year, unless this Agreement is terminated by either party notifying the
other at least forty-five (45) days prior to the end of the term of its intent
to terminate this Agreement. This Agreement shall automatically renew upon the
anniversary date of each term, unless notice of termination is given by either
party in accordance with this Section.
Section 2.2. Successors and Assigns
A. Assignment by Manager. Manager shall not have the right
to assign its rights and obligations under this Agreement without the prior
written consent of Owner, which consent may be arbitrarily withheld. It is
understood and agreed that any approval given by Owner to any assignment shall
not be deemed a waiver of the covenant herein contained against assignment in
any subsequent case. Any assignee who succeeds to the interests of Manager
hereunder (or to the interest of any assignee of Manager hereunder) shall be
deemed to be Manager hereunder for all purposes.
B. Assignment by Owner. Owner shall have the right to
lease, sell, hypothecate or convey the Property or any portion thereof, or to
assign its interest in this Agreement, without obtaining the approval of
Manager. Any assignee shall expressly assume in writing the obligations of
Owner hereunder.
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C. Binding on Successors. The terms, provisions,
covenants, undertakings, agreements, obligations and conditions of this
Agreement shall be binding upon and shall inure to the benefit of its
successors and interests of the assigns of the parties hereto with the same
effect as if mentioned in each instance where the party hereto is named or
referred to.
Section 2.3. Notices. All notices to be given hereunder shall be given in
writing and shall be deemed given when delivered by messenger or by U.S. Mail
(and if by mail, shall be deemed received two (2) business days after the
postmarked date thereof) with postage prepaid, registered or certified and, if
intended for Silverleaf Resorts, Inc., delivered or addressed to:
Silverleaf Resorts, Inc.
1221 Riverbend, Suite 120
Dallas, Texas 75247
Attention: Robert E. Mead
Telephone No. (214) 631-1166
Facsimile No. (214) 905-0514
And, if intended for Manager, delivered or addressed to:
Eagle Greens Ltd.
117 Foster Street
P.O. Box 520
Cornelia, Georgia 30531
Telephone No. (706) 778-7062
Facsimile No. (706) 778-7061
Either party may change the address for Notices hereunder by
such party giving notice of such change to the other party hereto in the manner
hereinabove provided.
Section 2.4. Applicable Law. This Agreement shall be governed in all
respects by the internal laws of the State of Georgia.
Section 2.5. Survival and Continuance. Notwithstanding the termination of
this Agreement or Manager's management of the Property in accordance with this
Agreement, all terms, provisions and obligations of either party contained
herein, which in order to give them effect and accomplish their intent and
purpose need to survive such termination shall survive and continue until they
have been fully satisfied or performed.
Section 2.6. Entire Agreement. This Agreement constitutes the entire
understanding of the parties and supersedes all prior understandings, whether
written or oral, between the parties with respect to the subject matter of this
Agreement.
Section 2.7. Severability of Provisions. If any term or provision of this
Agreement is illegal or invalid for any reason, such illegality or invalidity
shall not affect the validity or enforceability of the remainder of this
Agreement.
Section 2.8. Headings. No heading or caption contained in this Agreement
shall be considered in interpreting any of its terms or provisions.
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Section 2.9. Execution in Counterparts. This Agreement and any amendments
may be executed in any number of counterparts, with the same effect as if all
parties had signed the same document.
Section 2.10. Attorneys' Fees. If any action at law or in equity, including
any action for declaratory relief, is brought to enforce or interpret the
provisions of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs and expenses of litigation from the
other party, which amounts may be set by the court in the trial of such action
or may be enforced in a separate action brought for that purpose, and which
amount shall be in addition to any other relief which may be awarded.
Section 2.11. Amendment. No amendment, modification or alteration of the
terms of this Agreement shall be binding unless in writing, dated subsequent to
the date of this Agreement, and executed by the parties.
Section 2.12. Strict Construction. This Agreement shall not be strictly
construed against any party hereto.
Section 2.13. Effective Date. This Agreement is executed on the date set
opposite the signatures below, but effective as of the 13th day of October,
1998.
OWNER:
SILVERLEAF RESORTS, INC., a Texas
corporation
Date: 10-15-98 By: /s/ Robert E. Mead
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Name: Robert E. Mead
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Its: Chief Executive Officer
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MANAGER:
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EAGLE GREENS LTD, a Georgia corporation
Date: 10/13/98 By: /s/ J.P. Ballard
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J. Philip Ballard, Jr., Pres.
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