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R-04-06-10-13A1 - 6/10/2004RESOLUTION NO. R -04-06-10-13A1 WHEREAS, the City of Round Rock desires to retain professional consulting services relating to the valuation of Forest Creek Golf Course, and WHEREAS,PricewaterhouseCoopers LLP has submitted an Agreement for Professional Consulting Services to provide said services, and WHEREAS, the City Council desires to enter into said agreement with PricewaterhouseCoopers LLP, Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the Mayor is hereby authorized and directed to execute on behalf of the City an Agreement for Professional Consulting Services with PricewaterhouseCoopers LLP, a copy of same being attached hereto as Exhibit "A" and incorporated herein for all purposes. The City Council hereby finds and declares that written notice of the date, hour, place and subject of the meeting at which this Resolution was adopted was posted and that such meeting was open to the public as required by law at all times during which this Resolution and the subject matter hereof were discussed, considered and formally acted upon, all as required by the Open Meetings Act, Chapter 551, Texas Government Code, as amended RESOLVED this 10th day of June, 2004. Aof A NYL,% �' ELL, Mayor City - Round Rock, Texas CHRISTINE R. MARTINEZ, City Secret @PFDesktop\::ODMA/WORLDOX/O:/WDOX/RESOLUTI/R40610A1.WPD/sc CITY OF ROUND ROCK AGREEMENT WITH PRICEWATERHOUSECOOPERS LLP FOR PROFESSIONAL CONSULTING SERVICES THIS AGREEMENT for professional consulting and valuation services relating to the City of Round Rock's Forest Creek Golf Course (the "Agreement") is made by and between the City of Round Rock, a Texas home -rule municipal corporation, with offices located at 221 East Main Street, Round Rock, Texas 78664-5299, (the "City") and PricewaterhouseCoopers LLP (the "Consultant"), with offices located at 2020 Main Street, Suite 400, Irvine, California 92614. RECITALS: WHEREAS, City has determined that there is a need for the delineated services; and WHEREAS, City desires to contract for such professional services; and WHEREAS, the parties desire to enter into this Agreement to set forth in writing their respective rights, duties and obligations hereunder; NOW, THEREFORE, WITNESSETH: That for and in consideration of the mutual promises contained herein and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, it is mutually agreed between the parties as follows: 1.01 EFFECTIVE DATE, DURATION, AND TERM This Agreement shall be effective on the date this Agreement has been signed by each party hereto, and shall remain in full force and effect unless and until it expires by operation of the term indicated herein, or is terminated or extended as provided herein. The term of this Agreement shall be until full and satisfactory completion of the work specified herein is achieved, but in no event later than three (3) months from the effective date of this Agreement. City reserves the right to review the project at any time, including at the end of any deliverable or phase, and may elect to terminate the project with or without cause or may elect to continue with the next deliverable or phase. 1.02 CONTRACT AMOUNT In consideration for the professional consulting and valuation services to be performed by Consultant, City agrees to pay Consultant a total sum not to exceed Twenty-four Thousand and 1 EXN161i "p" No/100 Dollars ($24,000.00), in payment for services and the Scope of Work deliverables as delineated in Section 1.03. This amount does not include expenses which otherwise are reimbursable under this Agreement as delineated in Section 1.04. 1.03 SCOPE OF WORK COMPONENT I: "AS IS" BASE CASE ANALYSIS Component I represents the core evaluation and analysis of the subject property, which will serve as the foundation for the subsequent analyses. Component I essentially consists of an in- depth golf market analysis and "as is" fair market valuation of the golf course, and includes the following scope of services: Physical Inspection — Golf Course and Local/Regional Market Area Neighborhood and Regional Economic and Demographic Analysis Golf Market Analysis (a) Existing course inventory and market overview (b) Future supply (c) Identification of primary comps (d) Ranking matrix — based on evaluation criteria (i) Evaluation criteria — location, access, quality, amenities, etc. (e) Course demand segmentation — existing competition (i) Demand percentage — public, member, tournament, etc. (i) Market potential for golf (g) Forest Creek fair share analysis/estimate (4) Fair Market Valuation (a) (b) "As is" Summary Appraisal Report format (i) Based upon the scope of work to be done, the Uniform Standards of Appraisal Practice allows Consultant to provide City with three types of appraisals: 1) Restricted Letter Appraisal, 2) Summary Appraisal, or 3) Self -Contained Appraisal. The primary difference between the types of appraisal reports is based on the amount of reporting required. The Self -Contained Appraisal requires significantly more reporting than the Summary Appraisal, and the Summary Appraisal requires more than the Letter Appraisal, thus the fee associated with the report selected varies. It is the understanding of the parties hereto that a complete Summary Appraisal Report is required. 2 COMPONENT II: ALTERNATE OPERATING STRUCTURE ANALYSIS The focus of Component II will be to identify reasonable and probable alternate operating scenarios for the golf course, and provide market research and analysis of the various scenarios. Additionally, capital expenditures necessary to effect a conversion to an alternate operating type will be estimated, based on available market data. (1) Identification of Possible Alternate Operating Scenarios Matrix (a) City vs. third party management vs. third party lease (b) Daily fee, semi private, or other (c) Renovation/improvement enhancements vs. no enhancements (2) Market Research of Alternate Scenarios (3) Capital Expenditure and Operating Improvements Analysis (a) Identification and ranking of operating improvements (b) Identification and ranking of capital expenditure improvements (c) Assessment of capital expenditures necessary to achieve alternate scenario (d) Market support and cost estimate of capital expenditure improvements COMPONENT III: BENCHMARKING AND OPERATIONS EVALUATION Component III will focus on an analysis of the historical financial performance of the golf course by providing operating benchmarks, and also provide an analysis of local golf course management structures and compensation. (1) Benchmarking Analysis (Historical Operations) (2) Comparison of Operation and Maintenance Costs Between Subject Golf Course and Other Comparable Golf Courses in the Central Texas Market (3) Compensation Structure and Contracts Analysis (4) Competing Course Management Structure (a) Self -manage, management contract, or lease (5) Estimate of Market Compensation for Lease vs. Management 3 COMPONENT IV.• CONCLUSION/ALTERNATIVES ASSESSMENT (1) Assessment of the Various Options: (a) Sell outright (b) City operation (c) Management company operates via contract (d) Management company operates via lease RESULTING DRAFT REPORT The resulting draft report derived from all preliminary studies necessary to the performance of the Scope of Work shall be delivered to City to be appropriately considered, clarified, and possibly revised. RESULTING FINAL REPORT The resulting final report derived from performance of the entire Scope of Work shall be a concise, thorough evaluation of the golf course and its competitive market, and shall provide City with the necessary market data and analysis to determine the appropriate course of action for the golf course. For purposes of this Agreement, Consultant has issued its Scope of Work for the assignments delineated herein, and such Scope of Work is recited herein. This Agreement shall evidence the entire understanding and agreement between the parties and shall supersede any prior proposals, correspondence or discussions. Consultant shall satisfactorily provide all services and deliverables described under the referenced Scope of Work within the contract term specified in Section 1.01. Consultant's undertakings shall be limited to performing services for City and/or advising City concerning those matters on which Consultant has been specifically engaged. Consultant shall perform its services in accordance with this Agreement and in accordance with the referenced Scope of Work. Consultant shall perform its services in a professional and workmanlike manner and, where not in conflict, in accordance with the AICPA Guidelines for Consulting Services. Appraisals are to be performed and written reports are to be prepared in accordance with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation and with the Appraisal Institute's Standards of Professional Appraisal Practice and Code of Professional Ethics. Consultant shall not undertake work that is beyond the Scope of Work set forth in Section 1.03. However, either party may make written requests for changes to the Scope of Work. To be effective, a change to the Scope of Work must be negotiated and agreed to in all relevant details, and must be embodied in a valid Supplemental Agreement as described in Section 1.05 hereof. 4 1.04 PAYMENT FOR SERVICES; REIMBURSABLE EXPENSES Payment for Services: In consideration for the consulting and valuation services to be performed by Consultant, City agrees to pay Consultant the following "Payment for Services:" Fees for the listed deliverables in the total amount of Twenty-four Thousand and No/100 Dollars ($24,000.00) shall be paid by City in the following manner: (1) Upon presentation of all preliminary findings and conclusions regarding the golf course and alternate uses, including a benchmarking analysis of the golf course's historical operations (Components I, II, III, and IV), City shall be invoiced by Consultant and City shall thereupon make a progress payment of twenty-five percent (25%) of the total "Payment for Services;" (2) Upon delivery of the Resulting Draft Report, City shall be invoiced by Consultant and City shall thereupon make a progress payment of an additional twenty-five percent (25%) of the total "Payment for Services;" (3) Upon delivery of the Resulting Final Report, City shall be invoiced by Consultant and City shall thereupon make a final payment of the remaining fifty percent (50%) of the total "Payment for Services." Payment for Reimbursable Expenses: Payment for customary reimbursable expenses, including administrative charges and out-of-pocket expenses, shall not exceed the maximum sum of Four Thousand and No/100 Dollars ($4,000.00). City shall pay Consultant for reimbursable expenses, as appropriately invoiced and documented, at actual cost. Reimbursable expenses shall include but shall not be limited to such items as the following: (1) Transportation charges; (2) Hotel charges; (3) Subsistence charges; and (4) Routine administrative expenses including but not limited to such items as long distance telephone calls, facsimiles, courier services, postage, and photocopy charges, which shall be invoiced on a flat fee basis of $6.25 per hour of chargeable time spent. Not -to -Exceed Total Payment for Services: Unless subsequently changed by Supplemental Agreement to this Agreement, duly authorized by City Council Resolution, Consultant's total compensation for consulting and valuation services hereunder shall not exceed Twenty-four Thousand and No/100 Dollars ($24,000.00), and Consultant's total reimbursement for allowable reimbursable expenses shall not exceed Four Thousand and No/100 Dollars ($4,000.00). This amount represents the absolute limit of City's liability to Consultant hereunder 5 unless same shall be changed by additional Supplemental Agreement, and City shall pay, strictly within the confines of the not -to -exceed sum recited herein, Consultant's professional fees and reimbursable expenses for work done on behalf of City. Deductions: No deductions shall be made for Consultant's compensation on account of penalty, liquidated damages or other sums withheld from payments to Consultant. Additions: No additions shall be made to Consultant's compensation based upon project claims, whether paid by City or denied. 1.05 SUPPLEMENTAL AGREEMENT The terms of this Agreement may be modified by written Supplemental Agreement hereto, duly authorized by City Council Resolution, if City determines that there has been a significant change in (1) the scope, complexity, or character of the services to be performed; or (2) the duration of the work. Any such Supplemental Agreement must be executed by both parties within the period specified as the term of this Agreement. Consultant shall not perform any work or incur any additional costs prior to the execution, by both parties, of such Supplemental Agreement. Consultant shall make no claim for extra work done or materials furnished unless and until there is full execution of any Supplemental Agreement, and City shall not be responsible for actions by Consultant nor for any costs incurred by Consultant relating to additional work not directly authorized by Supplemental Agreement. 1.06 INVOICE REQUIREMENTS; TERMS OF PAYMENT Invoices: To receive payment following delivery of all deliverables, Consultant shall prepare and submit detailed progress invoices to City, in accordance with the delineation contained herein in Section 1.04, for services rendered. Such invoices for professional services shall track the referenced Scope of Work, and shall detail the services performed, along with documentation for each service performed. Payment to Consultant shall be made on the basis of the invoices submitted by Consultant and approved by City. Such invoices shall conform to the schedule of services and costs in connection therewith. Reimbursable expenses shall be invoiced with the final billing, and shall be paid along with the final payment of the remaining fifty percent (50%) of the total "Payment for Services." Should additional backup material be requested by City relative to either service deliverables or reimbursable expenses, Consultant shall comply promptly. In this regard, should City determine it necessary, Consultant shall make all records and books relating to this Agreement available to City for inspection and auditing purposes. Payment of Invoices: City reserves the right to correct any error that may be discovered in any invoice that may have been paid to Consultant and to adjust same to meet the requirements of this Agreement. Following approval of an invoice, City shall endeavor to pay Consultant promptly, but no later than the time period required under the Texas Prompt Payment 6 Act described in Section 1.10 herein. Under no circumstances shall Consultant be entitled to receive interest on payments which are late because of a good faith dispute between Consultant and City or because of amounts which City has a right to withhold under this Agreement or state law. City shall be responsible for any sales, gross receipts or similar taxes applicable to the services, but not for taxes based upon Consultant's net income. 1.07 REQUIRED DRAFT REPORT AND FINAL REPORT Consultant agrees to provide City with a draft report and a detailed final written report, together with all information gathered and materials developed during the course of the project. Additionally, Consultant agrees to provide City with any necessary oral presentations of such written reports, at City's designation and at no additional cost to City. Consultant agrees to provide City with two (2) color copies of the final report, one (1) black -and -white copy of the final report, and a version of the final report in digital format. Should City request additional final reports, Consultant shall make same available to City for the agreed price of Two Hundred and No/100 Dollars ($200.00) for each color copy, and One Hundred Twenty-five Dollars and No/100 ($125.00) for each black -and -white copy provided. 1.08 LIMITATION TO SCOPE OF WORK Consultant and City agree that the scope of services to be performed is enumerated in Section 1.03 herein, and may not be changed without the express written agreement of the parties. Notwithstanding anything herein to the contrary, the parties agree that City retains absolute discretion and authority for all funding decisions, such to be based solely on criteria accepted by City which may be influenced by but not be dependent on Consultant's work. 1.09 NON -APPROPRIATION AND FISCAL FUNDING This Agreement is a commitment of City's current revenues only. It is understood and agreed that City shall have the right to terminate this Agreement at the end of any City fiscal year if the governing body of City does not appropriate funds sufficient to purchase the services as determined by City's budget for the fiscal year in question. City may effect such termination by giving Consultant a written notice of termination at the end of its then current fiscal year. 1.10 PROMPT PAYMENT POLICY In accordance with Chapter 2251, V.T.C.A., Texas Government Code, payment to Consultant will be made within thirty (30) days of the day on which City receives the performance, supplies, materials, equipment, and/or deliverables, or within thirty (30) days of the day on which the performance of services was complete, or within thirty (30) days of the day on which City receives a correct invoice for the performance and/or deliverables or services, whichever is later. Consultant may charge a late fee of one percent (1 %) for payments not made in accordance with this prompt payment policy; however, this policy does not apply to payments made by City in the event: 7 (1) There is a bona fide dispute between City and Consultant concerning the supplies, materials, or equipment delivered or the services performed which causes the payment to be late; or (2) The terms of a federal contract, grant, regulation, or statute prevent City from making a timely payment with federal funds; or (3) There is a bona fide dispute between the parties and subcontractors or between a subcontractor and its suppliers concerning supplies, materials, or equipment delivered or the services performed which causes the payment to be late; or (4) Invoices are not mailed to City in strict accordance with instructions, if any, on the purchase order or the Agreement or other such contractual agreement. 1.11 TERMINATION; DEFAULT Termination: It is agreed and understood by Consultant that City may terminate this Agreement for the convenience of City, upon fifteen (15) days' written notice to Consultant, with the understanding that immediately upon receipt of said notice all work being performed under this Agreement shall cease. Consultant shall invoice City for work satisfactorily completed and shall be compensated in accordance with the terms hereof for work accomplished prior to the receipt of said notice of termination. Consultant shall not be entitled to any lost or anticipated profits for work terminated under this Agreement. Unless otherwise specified in this Agreement, all data, information, and work product related to this project shall become the property of City upon termination of this Agreement, and shall be promptly delivered to City in a reasonably organized form without restriction on future use. Should City subsequently contract with a new consultant for continuation of service on the project, Consultant shall cooperate in providing information. Termination of this Agreement shall extinguish all rights, duties, and obligations of City and the terminated party to fulfill contractual obligations. Termination under this section shall not relieve the terminated party of any obligations or liabilities which occurred prior to termination. Nothing contained in this section shall require City to pay for any work which is unsatisfactory as determined by City or which is not submitted in compliance with the terms of this Agreement. Default: City may terminate this Agreement, in whole or in part, for default if City provides Consultant with written notice of such default and Consultant fails to cure such default to the satisfaction of City within ten (10) business days of receipt of such notice (or a greater time if permitted by City). 8 If Consultant defaults in performance of this Agreement and if City terminates this Agreement for such default, then City shall give consideration to the actual costs incurred by Consultant in performing the work to the date of default. The cost of the work that is useable to City, the cost to City of employing another firm to complete the useable work, and other factors will affect the value to City of the work performed at the time of default. Consultant shall not be entitled to any lost or anticipated profits for work terminated for default under this Agreement. The termination of this Agreement for default shall extinguish all rights, duties, and obligations of City and the terminated party to fulfill contractual obligations. Termination under this section shall not relieve the terminated party of any obligations or liabilities which occurred prior to termination. Nothing contained in this section shall require City to pay for any work with is unsatisfactory as determined by City, or which is not submitted in compliance with the terms of this Agreement. 1.12 INDEPENDENT CONTRACTOR STATUS Consultant is an independent contractor, and is not City's employee. Consultant's employees or subcontractors are not City's employees. This Agreement does not create a partnership, employer-employee, or joint venture relationship. No party has authority to enter into contracts as agent for the other party. Consultant and City agree to the following rights consistent with an independent contractor relationship: (1) Consultant has the right to perform services for others during the term hereof. (2) Consultant has the sole right to control and direct the means, manner and method by which services required by this Agreement will be performed. (3) Consultant has the right to hire assistants as subcontractors, or to use employees to provide the services required by this Agreement. (4) Consultant or its employees or subcontractors shall perform services required hereunder, and City shall not hire, supervise, or pay assistants to help Consultant. (5) Neither Consultant nor its employees or subcontractors shall receive training from City in skills necessary to perform services required by this Agreement. (6) City shall not require Consultant or its employees or subcontractors to devote full time to performing the services required by this Agreement. (7) Neither Consultant nor its employees or subcontractors are eligible to participate in any employee pension, health, vacation pay, sick pay, or other fringe benefit plan of City. 9 1.13 NON -SOLICITATION Except as may be otherwise agreed in writing, during the term of this Agreement and for twelve (12) months thereafter, neither City nor Consultant shall offer employment to or shall employ any person employed then or within the preceding twelve (12) months by the other or any affiliate of the other if such person was involved, directly or indirectly, in the performance of this Agreement. This provision shall not prohibit the hiring of any person who was solicited solely through a newspaper advertisement or other general solicitation. 1.14 CITY'S RESPONSIBILITIES Full information: City shall provide full information regarding project requirements. City shall have the responsibility of providing Consultant with such documentation and information as is reasonably required to enable Consultant to provide the services called for. City shall cause its employees and any third parties who are otherwise assisting, advising or representing City to cooperate on a timely basis with Consultant in the provision of its services. Consultant may rely upon written information provided by City and its employees and agents as accurate and complete. Consultant may rely upon any written directives provided by City or its designated representative concerning provision of services. Required materials: Consultant's performance requires receipt of all requested information reasonably necessary to provision of services. City shall furnish information which includes but is not limited to access to the property, preliminary information and/or data regarding the golf course and surrounding property (if applicable), pertinent correspondence with other local municipal and planning officials, previous market analyses or feasibility studies, and other pertinent information. Consultant agrees, within ten (10) days of the effective date of this Agreement, to provide City with a comprehensive and detailed information request list. 1.15 CONFIDENTIALITY; AND MATERIALS OWNERSHIP Any and all programs, data, or other materials furnished by City for use by Consultant in connection with services to be performed under this Agreement, and any and all data and information gathered by Consultant, shall be held in confidence by Consultant as set forth hereunder. Each party agrees to take reasonable measures to preserve the confidentiality of any proprietary or confidential information relative to this Agreement, and to not make any use thereof other than for the performance of this Agreement, provided that no claim may be made for any failure to protect information that occurs more than three (3) years after the end of this Agreement. The parties recognize and understand that City is subject to the Texas Public Information Act and its duties run in accordance therewith. All data relating specifically to City's business and any other information which reasonably should be understood to be confidential to City is confidential information of City. Consultant's proprietary software, tools, methodologies, techniques, ideas, discoveries, 10 inventions, know-how, and any other information which reasonably should be understood to be confidential to Consultant is confidential information of Consultant. City's confidential information and Consultant's confidential information is collectively referred to as "Confidential Information." Each party shall use Confidential Information of the other party only in furtherance of the purposes of this Agreement and shall not disclose such Confidential Information to any third party without the other party's prior written consent, which consent shall not be unreasonably withheld. Each party agrees to take reasonable measures to protect the confidentiality of the other party's Confidential Information and to advise their employees of the confidential nature of the Confidential Information and of the prohibitions herein. Notwithstanding anything to the contrary contained herein, neither party shall be obligated to treat as confidential any information disclosed by the other party (the "Disclosing Party") which: (1) is rightfully known to the recipient prior to its disclosure by the Disclosing Party; (2) is released by the Disclosing Party to any other person or entity (including governmental agencies) without restriction; (3) is independently developed by the recipient without any reliance on Confidential Information; or (4) is or later becomes publicly available without violation of this Agreement or may be lawfully obtained by a party from any non-party. Notwithstanding the foregoing, either party will be entitled to disclose Confidential Information of the other to a third party as may be required by law, statute, rule or regulation, including subpoena or other similar form of process, provided that (without breaching any legal or regulatory requirement) the party to whom the request is made provides the other with prompt written notice and allows the other party to seek a restraining order or other appropriate relief. Subject to Consultant's confidentiality obligations under this Agreement, nothing herein shall preclude or limit Consultant from providing similar services for other clients. Neither City nor Consultant will be liable to the other for inadvertent or accidental disclosure of Confidential Information if the disclosure occurs notwithstanding the party's exercise of the same level of protection and care that such party customarily uses in safeguarding its own proprietary and confidential information. Notwithstanding anything to the contrary in this Agreement, City will own as its sole property all written materials created, developed, gathered, or originally prepared expressly for City and delivered to City under the terms of this Agreement (the "Deliverables"); and Consultant shall own any general skills, know-how, expertise, ideas, concepts, methods, techniques, processes, software, or other similar information which may have been discovered, created, developed or derived by Consultant either prior to or as a result of its provision of services under this Agreement (other than the Deliverables). Consultant's working papers and Consultant's Confidential Information (as described herein) shall belong exclusively to Consultant. City shall have a non-exclusive, non -transferable license to use Consultant's Confidential Information for City's own internal use and only for the purposes for which they are delivered to the extent that they form part of the Deliverables. 11 1.16 WARRANTIES Consultant warrants that all services performed hereunder shall be performed consistent with generally prevailing professional or industry standards, and shall be performed in a professional and workmanlike manner. Consultant shall re -perform any work not in compliance with this warranty. CONSULTANT DISCLAIMS ALL OTHER WARRANTIES EXPRESS OR IMPLIED INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 1.17 LIMITATION OF LIABILITY Should any of Consultant's services not conform to the requirements of this Agreement, then and in that event City shall give written notification to Consultant; thereafter, (a) Consultant shall either promptly re -perform such services to City's satisfaction at no additional charge, or (b) if such deficient services cannot be cured within the cure period set forth herein in Section 1.11, then this Agreement may be terminated for default. In no event will Consultant be liable for any loss, damage, cost or expense attributable to negligence, willful misconduct or misrepresentations by City, its directors, employees or agents. In no event shall Consultant be liable to City, by reason of any act or omission relating to the services provided under this Agreement (including the negligence of Consultant), whether a claim be in tort, contract or otherwise, (a) for any consequential, indirect, lost profit, punitive, special or similar damages relating to or arising from the services, or (b) in any event, in the aggregate, for any amount in excess of the total professional fees paid by City to Consultant under this Agreement, except to the extent determined to have resulted from Consultant's gross negligence, willful misconduct or fraudulent acts relating to the service provided hereunder. 1.18 INDEMNIFICATION Consultant and City each agree to indemnify, defend and hold harmless the other from and against any and all amounts payable under any judgment, verdict, court order or settlement for death or bodily injury or the damage to or loss or destruction of any real or tangible personal property to the extent arising out of the indemnitor's negligence in the performance of this Agreement. Consultant agrees to indemnify, defend and hold harmless the City from and against any and all amounts payable under any judgment, verdict, court order or settlement for Third Party claims of infringement of any trade secrets, copyrights, trademarks or trade names alleged to have occurred and arising from the deliverables provided by Consultant to City in connection with the performance of this Agreement. Should City's use of such deliverables be determined to have infringed, Consultant may, at its option: (i) procure for City the right to continue using such deliverables provided or (ii) replace or modify them to make their use non -infringing while yielding substantially equivalent results. If neither of the above options are or would be available on a basis that is commercially reasonable, then Consultant may terminate this 12 Agreement, the City shall return such deliverables provided, and Consultant will refund to City the fees paid for the deliverables provided. This infringement indemnity does not cover claims arising from the combination of such deliverables with products or services not provided by Consultant; the modification of such deliverables by any person other than Consultant; deliverables complying with or based upon (1) designs provided by or at the direction of City or (2) specifications or other information provided by or at the direction of City; or use of systems, materials or work performed in a manner not permitted hereunder or by another obligation of City to Consultant. The indemnities in this section are contingent upon: (1) the indemnified party promptly notifying the indemnifying party in writing of any claim which gives rise to a claim for indemnification hereunder; (2) the indemnifying party being allowed to control the defense and settlement of such claim; and (3) the indemnified party cooperating with all reasonable requests of the indemnifying party (at the indemnifying party's expense) in defending or settling a claim. The indemnified party shall have the right, at its option and expense, to participate in the defense of any suit or proceeding through a counsel of its own choosing. 1.19 ASSIGNMENT AND DELEGATION The parties each hereby bind themselves, their successors, assigns and legal representatives to each other with respect to the terms of this Agreement. Neither party may assign any rights or delegate any duties under this Agreement without the other party's prior written approval, which approval shall not be unreasonably withheld. 1.20 LOCAL, STATE AND FEDERAL TAXES Consultant shall pay all income taxes, and FICA (Social Security and Medicare taxes) incurred while performing services under this Agreement. City will not do the following: (1) Withhold FICA from Consultant's payments or make FICA payments on its behalf; (2) Make state and/or federal unemployment compensation contributions on Consultant's behalf; or (3) Withhold state or federal income tax from any of Consultant's payments. If requested, City shall provide Consultant with a certificate from the Texas State Comptroller indicating that City is a non-profit corporation and not subject to State of Texas Sales and Use Tax. 1.21 INSURANCE Insurance. Consultant, at Consultant's sole cost, shall have and maintain during the term of this Agreement professional liability insurance coverage in the minimum amount of 13 One Million Dollars from a company authorized to do insurance business in Texas and otherwise acceptable to City. Subconsultant Insurance. Without limiting any of the other obligations or liabilities of Consultant, Consultant shall require each subconsultant performing work under this Agreement to maintain during the term of the Agreement, at the subconsultant's own expense, the same stipulated minimum insurance required in the immediately preceding paragraph, including the required provisions and additional policy conditions as shown below. As an alternative, Consultant may include its subconsultants as additional insureds on its own coverages as prescribed under these requirements. Consultant's certificate of insurance shall note in such event that the subconsultants are included as additional insureds. Consultant shall obtain and monitor the certificates of insurance from each subconsultant in order to assure compliance with the insurance requirements. Consultant must retain the certificates of insurance for the duration of this Agreement, and shall have the responsibility of enforcing these insurance requirements among its subconsultants. City shall be entitled, upon request and without expense, to receive copies of these certificates of insurance. Insurance Policy Endorsements. Each insurance policy hereunder shall include the following conditions by endorsement to the policy: (1) Each policy shall require that thirty (30) days prior to the expiration, cancellation, non -renewal or any material change in coverage, a notice thereof shall be given to City by certified mail to: City Manager, City of Round Rock 221 East Main Street Round Rock, Texas 78664 Consultant shall also notify City, within twenty-four (24) hours of receipt, of any notices of expiration, cancellation, non -renewal, or material change in coverage it receives from its insurer. (2) Companies issuing the insurance policies shall have no recourse against City for payment of any premiums or assessments for any deductibles which all are at the sole responsibility and risk of Consultant. (3) Terms "City" or "City of Round Rock" shall include all authorities, boards, commissions, departments, and officers of City and individual members, employees and agents in their official capacities, or while acting on behalf of the City of Round Rock. (4) The policy clause "Other Insurance" shall not apply to any insurance coverage currently held by City, to any future coverage, or to City's Self -Insured Retentions of whatever nature. 14 (5) Consultant and City mutually waive subrogation rights each may have against the other for loss or damage, to the extent same is covered by the proceeds of insurance. Cost of Insurance. The cost of all insurance required herein to be secured and maintained by Consultant shall be borne solely by Consultant, with certificates of insurance evidencing such minimum coverage in force to be filed with the City. 1.22 COMPLIANCE WITH LAWS, CHARTER AND ORDINANCES Consultant, its consultants, agents, employees and subcontractors shall use best efforts to comply with all applicable federal and state laws, the Charter and Ordinances of the City of Round Rock, as amended, and with all applicable rules and regulations promulgated by local, state and national boards, bureaus and agencies. Consultant shall further obtain all permits, licenses, trademarks, copyrights, and the like required in the performance of the services contracted for herein, and same shall belong solely to City at the expiration of the term of this Agreement. 1.23 FINANCIAL INTEREST PROHIBITED Consultant covenants and represents that Consultant, its officers, employees, agents, consultants and subcontractors will have no financial interest, direct or indirect, in the purchase or sale of any product, materials or equipment that will be recommended or required under this Agreement. 1.24 DESIGNATION OF REPRESENTATIVES City hereby designates the following representative authorized to act in its behalf with regard to this Agreement: Rick Atkins Assistant Director, Parks and Recreation Department 301 West Bagdad, Suite 250 Round Rock, Texas 78664 Telephone: 512-218-5540 Facsimile: 512-218-5548 Email: rick(a,round-rock.tx.us Consultant hereby designates the following representative authorized to act in its behalf with regard to this Agreement: Cary Lannin, Manager PricewaterhouseCoopers LLP 15 Telephone: 312-298-2360 Facsimile: 813-741-6138 Email: cary.a.lannin@us.pwc.com 1.25 NOTICES All notices and other communications in connection with this Agreement shall be in writing and shall be considered given as follows: (1) When delivered personally to recipient's address as stated herein; or (2) Three (3) days after being deposited in the United States mail, with postage prepaid to the recipient's address as stated in this Agreement. Notice to Consultant: Notice to City: City Manager, City of Round Rock 221 East Main Street Round Rock, TX 78664 AND TO: Stephan L. Sheets, City Attorney 309 East Main Street Round Rock, TX 78664 Nothing contained in this section shall be construed to restrict the transmission of routine communications between representatives of City and Consultant. 1.26 APPLICABLE LAW; ENFORCEMENT AND VENUE This Agreement shall be enforceable in Round Rock, Texas, and if legal action is necessary by either party with respect to the enforcement of any or all of the terms or conditions herein, exclusive venue for same shall lie in Williamson County, Texas. This Agreement shall be governed by and construed in accordance with the laws and court decisions of the State of Texas. 16 1.27 EXCLUSIVE AGREEMENT The terms and conditions of this Agreement, including exhibits and Consultant's Engagement Letter dated April 27, 2004, as amended, constitute the entire agreement between the parties and supersede all previous communications, representations, and agreements, either written or oral, with respect to the subject matter hereof. The parties understand and expressly agree that, in the event of any conflict between the terms of this Agreement and Consultant's Engagement Letter, as amended, this Agreement shall prevail. No modifications of this Agreement will be binding on any of the parties unless acknowledged in writing by the duly authorized governing body or representative for each party. 1.28 DISPUTE RESOLUTION If a dispute arises under this Agreement, the parties agree to first try to resolve the dispute with the help of a mutually selected mediator. If the parties cannot agree on a mediator, City shall select one mediator and Consultant shall select one mediator and those two mediators shall agree upon a third mediator. Any costs and fees, other than attorney fees, associated with the mediation shall be shared equally by the parties. City and Consultant hereby expressly agree that no claims or disputes between the parties arising out of or relating to this Agreement or a breach thereof shall be decided by any arbitration proceeding, including without limitation, any proceeding under the Federal Arbitration Act (9 USC Section 1-14) or any applicable state arbitration statute. 1.29 FORCE MAJEURE Notwithstanding any other provisions of this Agreement to the contrary, no failure, delay or default in performance of any obligation hereunder shall constitute an event of default or a breach of this Agreement, only to the extent that such failure to perform, delay or default arises out of causes beyond control and without the fault or negligence of the party otherwise chargeable with failure, delay or default; including but not limited to acts of God, acts of public enemy, civil war, insurrection, riots, fires, floods, explosion, theft, earthquakes, natural disasters or other casualties, strikes or other labor troubles, which in any way restrict the performance under this Agreement by the parties. Consultant shall not be deemed to be in default of its obligations to City if its failure to perform or its substantial delay in performance is due to City's failure to timely provide requested information, data, documentation, or other material necessary for Consultant to perform its obligations hereunder. 1.30 SEVERABILITY The invalidity, illegality, or unenforceability of any provision of this Agreement or the occurrence of any event rendering any portion of provision of this Agreement void shall in no way affect the validity or enforceability of any other portion or provision of this Agreement. Any 17 void provision shall be deemed severed from this Agreement, and the balance of this Agreement shall be construed and enforced as if this Agreement did not contain the particular portion of provision held to be void. The parties further agree to amend this Agreement to replace any stricken provision with a valid provision that comes as close as possible to the intent of the stricken provision. The provisions of this Article shall not prevent this entire Agreement from being void should a provision which is of the essence of this Agreement be determined void. 1.31 STANDARD OF CARE Consultant represents that it is specially trained, experienced and competent to perform all of the services, responsibilities and duties specified herein and that such services, responsibilities and duties shall be performed, whether by Consultant or designated subconsultants, in a manner according to generally accepted business attraction practices. 1.32 GENERAL AND MISCELLANEOUS The section numbers and headings contained herein are provided for convenience only and shall have no substantive effect on construction of this Agreement. No delay or omission by either party in exercising any right or power shall impair such right or power or be construed to be a waiver. A waiver by either party of any of the covenants to be performed by the other or any breach thereof shall not be construed to be a waiver of any succeeding breach or of any other covenant. No waiver of discharge shall be valid unless in writing and signed by an authorized representative of the party against whom such waiver or discharge is sought to be enforced. This Agreement may be executed in multiple counterparts, which taken together shall be considered as one original. City agrees to provide Consultant with one (1) fully executed original Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement on the dates hereafter indicated. City of Round Rock, Texas Attest: By: Nyle Maxwell, Mayor Christine R. Martinez, City Secretary Date Signed: Date Signed: PricewaterhouseCoopers LLP By: Title: Date Signed: 18 PR10EWATERHOU5F(JWPERS PricewaterhouseCoopers LLP 2020 Main Street, Suite 400 Irvine, CA 92614 Telephone (949) 437-5886 RightFax (831) 375-7530 April 27, 2004 Mr. Rick Atkins Assistant Director Round Rock Parks & Recreation City of Round Rock 301 W. Bagdad, Suite 350 Round Rock, TX 78664 Re: Consulting & Valuation Services — Forest Creek Golf Course City of Round Rock, Texas Dear Mr. Atkins: Thank you very much for taking the time recently to discuss with us the opportunity to provide consulting and valuation services relative to the Forest Creek Golf Course. We very much appreciate the opportunity to present our proposal for professional services to you and the City of Round Rock. In accordance with your request, PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") is pleased to submit this proposal to you. This proposal sets forth the objective and scope of our work, and the time requirements and fees associated with our services. We invite any questions you may have about this proposal. ❑ OBJECTIVE / PURPOSE AND SCOPE OF THE ASSIGNMENT As we understand it, the Forest Creek Golf Course is owned by the City of Round Rock, and managed by a third party under a contract agreement. This contract expires within the next year, and the City wishes to evaluate their options upon cessation of the contract. As discussed, the scope of our engagement will consist of essentially 4 components: Component I - As Is - Base Case Analysis Component I represents the core evaluation and analysis of the subject property, which will serve as the foundation for the subsequent analyses. Component I essentially consists of an in-depth golf market analysis and "as is" fair market valuation of the golf course, and includes the following scope of service: ❖ Physical Inspection — Golf Course & Local/Regional Market Area PRJCLWATERHOUSFCWPERS Mr. Rick Atkins April 27, 2004 ❖ Neighborhood & Regional Economic & Demographic Analysis •3 Golf Market Analysis ➢ Existing course inventory & market overview ➢ Future Supply ➢ Identification of primary comps ➢ Ranking Matrix - Based on Evaluation Criteria • Evaluation Criteria - Location, access, quality, amenities, etc. ➢ Course Demand Segmentation - Existing Competition • Demand % - Public, member, tournament, etc. ➢ Market Potential for Golf ➢ Forest Creek Fair Share Analysis / Estimate ❖ Fair Market Valuation ➢ "As Is" ➢ Summary Appraisal Report Format Based on the scope of work to be done, the Uniform Standards of Appraisal Practice (USPAP) which governs all appraisers allows us to provide clients three types of appraisals: 1) Restricted Letter 2) Summary and 3) Self -Contained. The primary difference between the types of appraisal reports is based on the amount of reporting required. The Self -Contained Appraisal requires significantly more reporting than a Summary Appraisal and the Summary more than the Letter, thus the fee associated with the report selected varies. It is our understanding that a Complete and Summary Appraisal Report is required. Component II — Alternate Operating Structure Analysis The focus of Component II will be to identify reasonable and probable alternate operating scenarios for the subject golf course, and provide market research and analysis of the various scenarios. Additionally, capital expenditures necessary to effect a conversion to an alternate operating type will be estimated, based on available market data. ❖ Identification of Possible Alternate Operating Scenarios Matrix ➢ City vs. third party management vs. third party lease ➢ Daily Fee, Semi -Private, or Other. ➢ Renovation / Improvement Enhancements vs No Enhancements ❖ Market Research of Alternate Scenarios PricewaterhouseCoopers PAGE 2 f'R!OEWATERHOUSE(JWPERS a Mr. Rick Atkins April 27, 2004 ❖ Capital Expenditure & Operating Improvements Analysis > Identification and Ranking of Operating Improvements > Identification and Ranking of Capital Expenditure Improvements > Assessment of Capex Necessary to Achieve Alternate Scenario ➢ Market Support & Cost Estimate of Capex Improvements Component III — Benchmarking & Operations Evaluation Component III will focus on an analysis of the historical financial performance of the golf course, by providing operating benchmarks, and also provide an analysis of local golf course management structures and compensation (as available). ❖ Benchmarking Analysis (Historical Operations) — A comparison of the operation and maintenances costs of FCGC to those of other comparable courses in the Central Texas Market ❖ Compensation Structure and Contracts Analysis ❖ Competing Course Management Structure > (Self -manage, management contract or lease?) ❖ Estimate of Market Compensation for Lease vs Management Component IV — Conclusion /Alternatives Assessment Component IV will provide an assessment (pros and cons) of the various alternatives considered, including the capital expenditures necessary for each. ❖ Assessment of the various options: ➢ Sell Outright ➢ City Operation ➢ Management Company Operates — via Contract ➢ Management Company Operates — via Lease The resulting report will be a concise, yet thorough, evaluation of the golf course and its' competitive market, and provide the City of Round Rock with the necessary market data and analysis to determine the appropriate course of action for the golf course. PricewaterhouseCoopers PAGE 3 /R!CLWATERHOUsECcoPEPs Mr. Rick Atkins April 27, 2004 ❑ CLIENT We understand that you will use the consulting services for internal decision-making purposes, and not for any other purpose. We request that you seek our written authorization before releasing any written reports to any other party, which authorization will not be unduly withheld. We also request that if the name of PricewaterhouseCoopers, LLP is used in any memorandum or like -document, that we have review of the documents in advance; we will provide authorization at that time for use of our name. Payment for these services is not contingent upon the outcome of any external event. For purposes of payment the client will be the authorized person that signs this proposal. ❑ TIMING We are available to begin the analysis within two weeks of receipt of the signed engagement letter and applicable retainer. Based on the anticipated scope of services, the engagement will be completed within seven to eight weeks of the start date of the engagement. ❑ REQUIRED MATERIAL The timing of the engagement is conditioned upon the receipt of all requested information from the client. Given the scope of these services, this information will include, but not be limited to access to the property, any preliminary information and/or date regarding the course and surrounding project (if applicable), all pertinent correspondence with other local municipal and planning officials, previous market analyses or feasibility studies, and other pertinent information. A detailed information request list will be forwarded upon authorization of the engagement. ❑ FEES & BILLING PricewaterhouseCoopers' professional fees are based on our estimate of the engagement's complexity and the staff time required. Our cost and ultimately our fees, are heavily dependent upon your cooperation and assistance in obtaining the information required to complete this engagement. The fee for our professional services for the scope of services as outlined herein will be $24,000; submitted-with4he signed engagement letter. The above will include issuance of 2 color copies of our report, and 1 black -and -white copy. If additional copies are required, they may be purchased for $200 for each color copy and $125 for each black -and -white. PricewaterhouseCoopers PAGE 4 /)R!CEWATFRHOUSECWPERS 0 Mr. Rick Atkins April 27, 2004 All actual out-of-pocket expenses incurred will be billed separately at our cost. Out-of-pocket expenses include transportation, hotel, subsistence, telephone, postage, facsimile, photocopy and any other engagement -related expenses. In lieu of routine administrative expenses such as long distance telephone calls, faxes, courier, postage and photocopies, you will be charged on the basis of a flat fee of $6.25 for each hour of chargeable time spent on the engagement. We are willing to "cap" these additional administrative charges and out-of-pocket expenses at $4,000. up to the date of deposit of the stop work with PriccwatcrhouscCoopers LLP. In the event of cancellation by client, PriccwatcrhouscCoopers LLP agrees to refund to client any surplus from Upon completion of this assignment, a final bill for any balance including expense assignment, a monthly service charge of 1.0 percent will be added to the unpaid balance. Any flrovitleEl otherwise rendered. ❑ ENGAGEMENT TEAM For purposes of this engagement, Cary Lannin (Manager) will be the principal consultant for the client. In situations where leveraging other professional staff is appropriate, certain research will be completed by other associates at the direction of, and reviewed by Mr. Lanvin, thereby ensuring a consistent and high level of service, quality, and timeliness. ❑ CONDITIONS OF OUR WORK This proposal is subject to the standard PricewaterhouseCoopers client and assignment acceptance procedures. PricewaterhouseCoopers PAGE 5 PRJCEWATERHOUSECDPERS Mr. Rick Atkins April 27, 2004 ❑ CONFLICT OF INTEREST We have undertaken a reasonable review of our records to determine PricewaterhouseCoopers' professional relationships with the following persons or entities you identified: City of Round Rock, Texas. We are not aware of any conflicts of interest or relationships that would preclude us from performing the above work for you or your client. ❑ TERMS AND CONDITIONS In performing the Services, PwC will be acting solely for the purpose of assisting the City of Round Rock as set forth herein. The attached Terms and Conditions set forth the rights and responsibilities of the parties with respect to the Services. The Terms and Conditions provide that, among other things, that the client will indemnify us against claims brought by any third party and that our aggregate liability to you or your Client whether in contract, tort or otherwise, will be limited to the amount paid by you in respect of the Services. By signing this engagement letter, you acknowledge that you have read and agree to the Terms and Conditions. This Agreement and the rights and obligations hereunder shall not be assignable or transferable by any party hereto without the prior written consent of the other party(ies). The consulting report will be prepared in accordance with and is subject to our Standard Conditions as defined in Attachment A. Special Conditions unique to the project may be added as required. This proposal is subject to the standard PricewaterhouseCoopers client and assignment acceptance procedures. ❑ ACCEPTANCE PROCEDURES We appreciate the opportunity to submit this proposal for our services. We invite any questions you may have about the scope and detail of this proposal. Please acknowledge your acceptance, and the acceptance of your Client, of the terms of the Engagement by signing the confirmation below and returning copies to us at the above address. If you have any questions regarding this letter or the Terms and Conditions, please do not hesitate to contact Doug Main at (800) 832-6484. Sincerely, Ae.ctiotteedi4iAgatuilatu.4) PrP PricewaterhouseCoopers LLP By: Pat Leardo, New York, NY PricewaterhouseCoopers PAGE 6 pR!CEWATERHOU5EcDPERS Eil Mr. Rick Atkins April 27, 2004 Confirmation of Terms of Engagement Having read both the above Letter of Engagement from PricewaterhouseCoopers LLP and the Terms and Conditions attached thereto, we agree to engage PricewaterhouseCoopers LLP upon the terms set out therein. City of Round Rock, Texas By: Name: Title: Date: PricewaterhouseCoopers PAGE 7 ATTACHMENT A Consulting Engagements — Standard Conditions STANDARD CONDITIONS Use of the Report: The analysis applies only to the property or market area described and for the purpose so stated and should not be used for any other purpose. PricewaterhouseCoopers acknowledges that its report may be subject to local or state government public disclosure laws. As such, the addressee shall not distribute the report to third parties without providing PricewaterhouseCoopers prior notice and an opportunity to take legal action to withhold any proprietary or other information which may cause it competitive harm. In the event public disclosure is required, addressee or third party shall agree to hold PricewaterhouseCoopers harmless relative to third party's use of the report. Neither our report, nor its contents, nor any reference to the analysts or PricewaterhouseCoopers, may be included or quoted in any offering circular or registration statement, prospectus, sales brochure, appraisal, loan or other agreement or document without our prior written permission. Permission will be granted only upon meeting certain conditions. Generally, PricewaterhouseCoopers will not agree to the use of its name as a "named expert" within the meaning of the Securities Act of 1933 and the Securities Act of 1934. Unless otherwise required by local or state government disclosure laws, neither the report nor any portions thereof (especially the identity of the analysts or PricewaterhouseCoopers) shall be disseminated to the public through public relations media, news media, advertising media, sales media or any other public means of communication without the prior written consent and approval of the appraisers and PricewaterhouseCoopers. The date(s) to which the conclusions apply is set forth within the body of the report. The financial analysis is based on the purchasing power of the United States dollar as of that date. Deliverables Client shall notify Consultant, in writing within 10 working days following receipt of any Deliverable for which Consultant has responsibility for delivery, if it is not acceptable. Such notice shall specify in reasonable detail the reasons such Deliverable has been deemed unacceptable. Acceptance by the City shall not be unreasonably withheld. The passage of 10 working days without notice of non-acceptance following delivery to or use by the City of such Deliverable shall constitute acceptance by the City. If the notice of non-acceptance is not sufficiently detailed to allow Consultant to determine why such Deliverable is unacceptable, Consultant may request in writing that the City provide sufficient additional information. The passage of 10 working days from the date of such request without the provision of such additional information shall constitute acceptance of such Deliverable by the City. Consultant will either fix problems in such a Deliverable within 15 days after receipt of sufficient notice or present the City with a plan to fix such problems within a period of time that is reasonable under the circumstances. Except as otherwise expressly stated in this Agreement, all Deliverables hereunder are solely for the City's internal use and benefit and are not intended to nor may they be relied upon by any other party ("Third Party"). Neither the Deliverables nor their content may be distributed to, discussed with, or otherwise disclosed to any Third Party without our prior written consent, and the City agrees not to otherwise discuss the fact or substance of this engagement with Third Parties without the prior written consent of Consultant. Consultant accepts no liability or responsibility to any Third Party who benefits from or uses the Services or gains access to the Deliverables. Consultant and the City may have discussions regarding this project; however, information or advice provided verbally should not be relied upon or attributed to Consultant unless Consultant confirms such information or advice in writing. Any draft reports that Consultant may provide will not constitute its definitive opinions and conclusions. These will be contained solely in Consultant's final written report. Because these Services and Deliverables are solely for the internal use and benefit of the City, the City agrees (without limiting any other indemnification provision set forth in this Agreement) to indemnify and hold harmless Consultant from any and all Third Party claims, liabilities, costs, and expenses, including reasonable attorneys fees, arising from or relating to the Services and/or Deliverables under this Agreement, except to the extent finally determined to have resulted from the gross negligence, willful misconduct or fraudulent behavior of Consultant relating to such Services and/or Deliverables. Terms of the Engagement: Assignments are accepted with the understanding that there is no obligation to furnish services after completion of the original assignment. If the need for subsequent service related to a specific assignment (e.g., testimony, updates, conferences, reprint or copy service) is contemplated, special arrangements acceptable to PricewaterhouseCoopers must be made in advance. The working papers for this engagement have been retained in our files and are available for your reference. It is your responsibility to determine the adequacy of the work to be performed for your due diligence investigations. We make no representations as to whether these procedures are sufficient for your purposes. Our work will not constitute an audit conducted in accordance with generally accepted auditing standards, an examination of internal controls, or other attestation or review services in accordance with standards established by the AICPA. Accordingly, we will not express an opinion or any other form of assurance on the financial statements of the Company or any financial or other information, or operating and internal controls of the Company. Our work will be based primarily on information supplied by the management of the Company and will be carried out on the basis that such information is accurate and complete. We will not subject information to checking or verification procedures, except to the extent expressly stated to form part of the scope of our work. Where our work expressly includes consideration of prospective financial information, we will comment on the bases and assumptions adopted by the management of the Company, but our work will not constitute an examination, compilation or agreed-upon procedures in accordance with standards established by the AICPA, and we will not express any opinion or provide any assurance (in the sense in which "opinion" and "assurance" are used in the AICPA standards). Because events and circumstances frequently do not occur as expected, there will usually be differences between predicted and actual results, and those differences may be material. We will take no responsibility for the achievement of results predicted by the management of the Company. We will assume no responsibility and make no representations with respect to the accuracy or completeness of information provided by the Company. Moreover, our work cannot provide assurance that matters of significance to the financial information or to your due diligence investigation will be disclosed. Further, our work is not designed to and is not likely to reveal fraud or misrepresentation by the management of the Company. Advice and comments that we may provide regarding the accounting and tax treatment of the proposed transaction should not be viewed as a formal accounting or tax opinion of PricewaterhouseCoopers LLP. If such opinions are desired and we determine that such an opinion can be issued, the terms of that engagement will be subject to a separate written engagement letter. Our work does not include the provision of legal advice and we make no representations regarding questions of legal interpretation. To the extent that we are requested and we perform due diligence work on tax or tax advisory work that involves the interpretation of tax law, we will report or advise on the basis of our understanding of the proper interpretation of tax legislation, court decisions, regulations and interpretations of the law in existence at the time services are performed. Changes in the law and/or its interpretation may take place before our advice is acted upon, or may be retrospective in effect; we accept no responsibility for changes in the law or its interpretation which may occur after the provision of such services. Relationships with Other Parties: Clients engage the respective PricewaterhouseCoopers Firms every day and an individual PricewaterhouseCoopers Firm may be asked to provide services to other clients regarding the possible purchase/sale of the Company that may be in competition with you or whose interests may conflict with your own. We and the other PricewaterhouseCoopers Firms will not be prevented or restricted by virtue of our relationship with Addressee under this engagement from providing services to other clients. Except as required by law or professional regulations, we will maintain the information obtained during the course of this engagement confidentially and will not communicate such information to any other PricewaterhouseCoopers personnel who are providing services to such other clients. Other Matters: Addressee agrees that it will not, directly or indirectly, agree to assign or transfer any claim against PricewaterhouseCoopers LLP arising out of this engagement to anyone. Engagement Letter Addendum: Notice Pursuant to California Business & Professions Code, Section 5079(a)(5) PricewaterhouseCoopers LLP is owned by professionals who hold CPA licenses as well as by professionals who are not licensed CPAs. Depending on the nature of the services we provide, non -CPA owners may be involved in providing services to you now or in the future. If you have any questions about this matter, please do not hesitate to ask. ATTACHMENT B Standard Conditions — Appraisal Engagements STANDARD CONDITIONS The following Standard Conditions apply to real estate appraisals by PricewaterhouseCoopers LLP ("PricewaterhouseCoopers"). Special Conditions are added as required. Report Content: Appraisals are performed and written reports are prepared in accordance with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation and with the Appraisal Institute's Standards of Professional Appraisal Practice and Code of Professional Ethics. Unless specifically stated, the value conclusion(s) contained in the appraisal applies to the real estate only, and does not include personal property, machinery and equipment, trade fixtures, business value, goodwill or other non -realty items. The appraisal report covering the subject is limited to surface rights only, and does not include any inherent subsurface or mineral rights. Income tax considerations have not been included or valued unless so specified in the appraisal. We make no representations as to the value changes that may be attributed to such considerations. The appraisal assumes market conditions as observed as of the current date of our market research stated in the letter of transmittal. These market conditions are believed to be correct; however, the appraisers assume no liability should market conditions materially change because of unusual or unforeseen circumstances. No opinion is rendered as to property title, which is assumed to be good and marketable. Unless otherwise stated, no consideration is given to liens or encumbrances against the property. Sketches, maps, photos, or other graphic aids included in appraisal reports are intended to assist the reader in ready identification and visualization of the property, and are not intended for technical purposes. It is assumed that legal, engineering, or other professional advice, as may be required, has been or will be obtained from professional sources and that the appraisal report will not be used for guidance in legal or technical matters such as, but not limited to, the existence of encroachments, easements or other discrepancies affecting the legal description of the property. It is assumed that there are no concealed or dubious conditions of the subsoil or subsurface waters including water table and flood plain, unless otherwise noted. We further assume there are no regulations of any government entity to control or restrict the use of the property unless specifically referred to in the report. It is assumed that the property will not operate in violation of any applicable government regulations, codes, ordinances or statutes. This report is not intended to be an engineering report. We are not qualified as structural or environmental engineers, therefore we are not qualified to judge the structural or environmental integrity of the improvements, if any. Consequently, no warranty or representations are made nor any liability assumed for the structural soundness, quality, adequacy or capacities of said improvements and utility services, including the construction materials, particularly the roof, foundations, and equipment, including the HVAC systems, if applicable. Should there be any question concerning same, it is strongly recommended that an engineering, construction and/or environmental inspection be obtained. The value estimate(s) stated in this appraisal, unless noted otherwise, is predicated on the assumptions that all improvements, equipment and building services, if any, are structurally sound and suffer no concealed or latent defects or inadequacies other than those noted in the appraisal. We will call to your attention any apparent defects or material adverse conditions which come to our attention. In the absence of competent technical advice to the contrary, it is assumed that the property being appraised is not adversely affected by concealed or unapparent hazards such as, but not limited to asbestos, hazardous or contaminated substances, toxic waste or radioactivity. Information furnished by others is presumed to be reliable, and where so specified in the report, has been verified; but no responsibility, whether legal or otherwise, is assumed for its accuracy, and it cannot be guaranteed as being certain. No single item of information was completely relied upon to the exclusion of other information. Appraisal reports may contain estimates of future financial performance, estimates or opinions that represent the appraiser's view of reasonable expectations at a particular point in time, but such information, estimates or opinions are not offered as predictions or as assurances that a particular level of income or profit will be achieved, that events will occur, or that a particular price will be offered or accepted. Actual results achieved during the period covered by our prospective financial analyses will vary from those described in our report, and the variations may be material. Any proposed construction of rehabilitation referred to in the appraisal is assumed to be completed within a reasonable time and in a workmanlike manner according to or exceeding currently accepted standards of design and methods of construction. Any inaccessible portions of the property or improvements not inspected are assumed to be as reported or similar to the areas that are inspected. It should be specifically noted by any prospective mortgagee that the appraisal assumes that the property will be competently managed, leased, and maintained by financially sound owners over the expected period of ownership. This appraisal engagement does not entail an evaluation of management's or owner's effectiveness, nor are we responsible for future marketing efforts and other management or ownership actions upon which actual results will depend. The Americans with Disabilities Act ("ADA") became effective January 26, 1992. PricewaterhouseCoopers has not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since PricewaterhouseCoopers has no direct evidence relating to this issue, PricewaterhouseCoopers did not consider possible non-compliance with the requirements of ADA in estimating the value of the property. The report, the final estimate of value and estimates of future financial performance included therein, are intended for the information of the person or persons to whom they are addressed, solely for the purposes stated therein, and should not be relied upon for any other purpose. The addressee shall not distribute the report to third parties without prior permission of PricewaterhouseCoopers. Before such permission shall be provided, the third party shall agree to hold PricewaterhouseCoopers harmless relative to their use of the report. Neither our report, nor its contents, nor any reference to the appraisers or PricewaterhouseCoopers, may be included or quoted in any offering circular or registration statement, prospectus, sales brochure, other appraisal, loan or other agreement or document without our prior written permission. Permission will be granted only upon meeting certain conditions. Generally, PricewaterhouseCoopers will not agree to the use of its name as a "named expert" within the meaning of the Securities Act of 1933 and the Securities Act of 1934. The valuation applies only to the property described and for the purpose so stated and should not be used for any other purpose. Any allocation of total price between land and the improvements as shown is invalidated if used separately or in conjunction with any other report. Unless otherwise required by law, neither the report nor any portions thereof (especially any conclusions as to value, the identity of the appraisers or PricewaterhouseCoopers, or any reference to the Appraisal Institute or other recognized appraisal organization or the designations they confer) shall be disseminated to the public through public relations media, news media, advertising media, sales media or any other public means of communication without the prior written consent and approval of the appraisers and PricewaterhouseCoopers. The date(s) of the valuation to which the value estimate conclusions apply is set forth in the letter of transmittal and within the body of the report. The value is based on the purchasing power of the United States dollar as of that date. Terms of the Engagement: Appraisal assignments are accepted with the understanding that there is no obligation to furnish services after completion of the original assignment. If the need for subsequent service related to an appraisal assignment (e.g., testimony, updates, conferences, reprint or copy service) is contemplated, special arrangements acceptable to PricewaterhouseCoopers must be made in advance. The working papers for this engagement have been retained in our files and are available for your reference. Unless otherwise stated, no effort has been made to determine the possible effect, if any, on the subject property of energy shortage or future federal, state or local legislation, including any environmental or ecological matters or interpretations thereof. We take no responsibility for any events, conditions or circumstances affecting the subject property or its value, that take place subsequent to either the effective date of value cited in the appraisal or the date of our field inspection, whichever occurs first. PricewaterhouseCoopers does not, as part of its valuation, perform an audit, review or examination (as defined by the AICPA) of any of the historical or prospective financial information used, and therefore does not express any opinion with regard to same. ATTACHMENT C Definition of Market Value For the purpose of this report, Market Value is defined as follows. The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and acting in what they consider their best interests; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.' "Uniform Standards of Professional Appraisal Practice" (Washington, D.C.: The Appraisal Foundation, 1996), p. 10. DATE: June 4, 2004 SUBJECT: City Council Meeting - June 10, 2004 ITEM: 13.A.1. Consider a resolution authorizing the Mayor to execute an Agreement for Professional Consulting Services with PricewaterhouseCoopers, L.L.C. regarding a Forest Creek Golf Course market study and property valuation. Department: Staff Person: Justification: Parks and Recreation Rick Atkins, Assistant Director of Parks and Recreation A comprehensive look at the long-range future of the City's best interest and Forest Creek Golf Course (FCGC). Funding: Cost: $24,000.00 Source of funds: Golf Course Revenue Bonds Outside Resources: Background Information: Public Comment: N/A PricewaterhouseCoopers, L.L.C. The FCGC was constructed in 1990 and opened for play in 1991. Since that time the FCGC has been operated as an upper -end daily fee course. The City has chosen to use a management company to run the course during that time. The current agreement with "On Course Strategies" is due to expire at the end of April 2005. With that in mind, the City staff feels that it would be beneficial to have an out firm take a comprehensive look at the long-range future of the City's best interest and FCGC. Executed Document Follows CITY OF ROUND ROCK AGREEMENT WITH PRICEWATERHOUSECOOPERS LLP FOR PROFESSIONAL CONSULTING SERVICES THIS AGREEMENT for professional consulting and valuation services relating to the City of Round Rock's Forest Creek Golf Course (the "Agreement") is made by and between the City of Round Rock, a Texas home -rule municipal corporation, with offices located at 221 East Main Street, Round Rock, Texas 78664-5299, (the "City") and PricewaterhouseCoopers LLP (the "Consultant"), with offices located at 2020 Main Street, Suite 400, Irvine, California 92614. RECITALS: WHEREAS, City has determined that there is a need for the delineated services; and WHEREAS, City desires to contract for such professional services; and WHEREAS, the parties desire to enter into this Agreement to set forth in writing their respective rights, duties and obligations hereunder; NOW, THEREFORE, WITNESSETH: That for and in consideration of the mutual promises contained herein and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, it is mutually agreed between the parties as follows: 1.01 EFFECTIVE DATE, DURATION, AND TERM This Agreement shall be effective on the date this Agreement has been signed by each party hereto, and shall remain in full force and effect unless and until it expires by operation of the term indicated herein, or is terminated or extended as provided herein. The term of this Agreement shall be until full and satisfactory completion of the work specified herein is achieved, but in no event later than three (3) months from the effective date of this Agreement. City reserves the right to review the project at any time, including at the end of any deliverable or phase, and may elect to terminate the project with or without cause or may elect to continue with the next deliverable or phase. 1.02 CONTRACT AMOUNT In consideration for the professional consulting and valuation services to be performed by Consultant, City agrees to pay Consultant a total sum not to exceed Twenty-four Thousand and 1 -©U1-Ola-ID-/3R 1 No/100 Dollars ($24,000.00), in payment for services and the Scope of Work deliverables as delineated in Section 1.03. This amount does not include expenses which otherwise are reimbursable under this Agreement as delineated in Section 1.04. 1.03 SCOPE OF WORK COMPONENT I: "AS IS" BASE CASE ANALYSIS Component I represents the core evaluation and analysis of the subject property, which will serve as the foundation for the subsequent analyses. Component I essentially consists of an in- depth golf market analysis and "as is " fair market valuation of the golf course, and includes the following scope of services: (1) Physical Inspection — Golf Course and Local/Regional Market Area (2) Neighborhood and Regional Economic and Demographic Analysis (3) Golf Market Analysis (a) Existing course inventory and market overview (b) Future supply (c) Identification of primary comps (d) Ranking matrix — based on evaluation criteria (i) Evaluation criteria — location, access, quality, amenities, etc. (e) Course demand segmentation — existing competition (i) Demand percentage — public, member, tournament, etc. (f) Market potential for golf (g) Forest Creek fair share analysis/estimate (4) Fair Market Valuation (a) "As is " (b) Summary Appraisal Report format (i) Based upon the scope of work to be done, the Uniform Standards of Appraisal Practice allows Consultant to provide City with three types of appraisals: 1) Restricted Letter Appraisal, 2) Summary Appraisal, or 3) Self -Contained Appraisal. The primary difference between the types of appraisal reports is based on the amount of reporting required. The Self -Contained Appraisal requires significantly more reporting than the Summary Appraisal, and the Summary Appraisal requires more than the Letter Appraisal, thus the fee associated with the report selected varies. It is the understanding of the parties hereto that a complete Summary Appraisal Report is required. 2 COMPONENT II: ALTERNATE OPERATING STRUCTURE ANALYSIS The focus of Component II will be to identify reasonable and probable alternate operating scenarios for the golf course, and provide market research and analysis of the various scenarios. Additionally, capital expenditures necessary to effect a conversion to an alternate operating type will be estimated, based on available market data. (1) Identification of Possible Alternate Operating Scenarios Matrix (a) City vs. third party management vs. third party lease (b) Daily fee, semi private, or other (c) Renovation/improvement enhancements vs. no enhancements (2) Market Research of Alternate Scenarios (3) Capital Expenditure and Operating Improvements Analysis (a) Identification and ranking of operating improvements (b) Identification and ranking of capital expenditure improvements (c) Assessment of capital expenditures necessary to achieve alternate scenario (d) Market support and cost estimate of capital expenditure improvements COMPONENT III: BENCHMARKING AND OPERATIONS EVALUATION Component III will focus on an analysis of the historical financial performance of the golf course by providing operating benchmarks, and also provide an analysis of local golf course management structures and compensation. (1) Benchmarking Analysis (Historical Operations) (2) Comparison of Operation and Maintenance Costs Between Subject Golf Course and Other Comparable Golf Courses in the Central Texas Market Compensation Structure and Contracts Analysis Competing Course Management Structure (a) Self -manage, management contract, or lease Estimate of Market Compensation for Lease vs. Management (3) (4) (5) 3 COMPONENT IV: CONCLUSION/ALTERNATIVES ASSESSMENT (1) Assessment of the Various Options: (a) Sell outright (b) City operation (c) Management company operates via contract (d) Management company operates via lease RESULTING DRAFT REPORT The resulting draft report derived from all preliminary studies necessary to the performance of the Scope of Work shall be delivered to City to be appropriately considered, clarified, and possibly revised. RESULTING FINAL REPORT The resulting final report derived from performance of the entire Scope of Work shall be a concise, thorough evaluation of the golf course and its competitive market, and shall provide City with the necessary market data and analysis to determine the appropriate course of action for the golf course. For purposes of this Agreement, Consultant has issued its Scope of Work for the assignments delineated herein, and such Scope of Work is recited herein. This Agreement shall evidence the entire understanding and agreement between the parties and shall supersede any prior proposals, correspondence or discussions. Consultant shall satisfactorily provide all services and deliverables described under the referenced Scope of Work within the contract term specified in Section 1.01. Consultant's undertakings shall be limited to performing services for City and/or advising City concerning those matters on which Consultant has been specifically engaged. Consultant shall perform its services in accordance with this Agreement and in accordance with the referenced Scope of Work. Consultant shall perform its services in a professional and workmanlike manner and, where not in conflict, in accordance with the AICPA Guidelines for Consulting Services. Appraisals are to be performed and written reports are to be prepared in accordance with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation and with the Appraisal Institute's Standards of Professional Appraisal Practice and Code of Professional Ethics. Consultant shall not undertake work that is beyond the Scope of Work set forth in Section 1.03. However, either party may make written requests for changes to the Scope of Work. To be effective, a change to the Scope of Work must be negotiated and agreed to in all relevant details, and must be embodied in a valid Supplemental Agreement as described in Section 1.05 hereof. 4 1.04 PAYMENT FOR SERVICES; REIMBURSABLE EXPENSES Payment for Services: In consideration for the consulting and valuation services to be performed by Consultant, City agrees to pay Consultant the following "Payment for Services:" Fees for the listed deliverables in the total amount of Twenty-four Thousand and No/100 Dollars ($24,000.00) shall be paid by City in the following manner: (1) Upon presentation of all preliminary findings and conclusions regarding the golf course and alternate uses, including a benchmarking analysis of the golf course's historical operations (Components I, II, III, and IV), City shall be invoiced by Consultant and City shall thereupon make a progress payment of twenty-five percent (25%) of the total "Payment for Services;" (2) Upon delivery of the Resulting Draft Report, City shall be invoiced by Consultant and City shall thereupon make a progress payment of an additional twenty-five percent (25%) of the total "Payment for Services;" (3) Upon delivery of the Resulting Final Report, City shall be invoiced by Consultant and City shall thereupon make a final payment of the remaining fifty percent (50%) of the total "Payment for Services." Payment for Reimbursable Expenses: Payment for customary reimbursable expenses, including administrative charges and out-of-pocket expenses, shall not exceed the maximum sum of Four Thousand and No/100 Dollars ($4,000.00). City shall pay Consultant for reimbursable expenses, as appropriately invoiced and documented, at actual cost. Reimbursable expenses shall include but shall not be limited to such items as the following: (1) Transportation charges; (2) Hotel charges; (3) Subsistence charges; and (4) Routine administrative expenses including but not limited to such items as long distance telephone calls, facsimiles, courier services, postage, and photocopy charges, which shall be invoiced on a flat fee basis of $6.25 per hour of chargeable time spent. Not -to -Exceed Total Payment for Services: Unless subsequently changed by Supplemental Agreement to this Agreement, duly authorized by City Council Resolution, Consultant's total compensation for consulting and valuation services hereunder shall not exceed Twenty-four Thousand and No/100 Dollars ($24,000.00), and Consultant's total reimbursement for allowable reimbursable expenses shall not exceed Four Thousand and No/100 Dollars ($4,000.00). This amount represents the absolute limit of City's liability to Consultant hereunder 5 unless same shall be changed by additional Supplemental Agreement, and City shall pay, strictly within the confines of the not -to -exceed sum recited herein, Consultant's professional fees and reimbursable expenses for work done on behalf of City. Deductions: No deductions shall be made for Consultant's compensation on account of penalty, liquidated damages or other sums withheld from payments to Consultant. Additions: No additions shall be made to Consultant's compensation based upon project claims, whether paid by City or denied. 1.05 SUPPLEMENTAL AGREEMENT The terms of this Agreement may be modified by written Supplemental Agreement hereto, duly authorized by City Council Resolution, if City determines that there has been a significant change in (1) the scope, complexity, or character of the services to be performed; or (2) the duration of the work. Any such Supplemental Agreement must be executed by both parties within the period specified as the term of this Agreement. Consultant shall not perform any work or incur any additional costs prior to the execution, by both parties, of such Supplemental Agreement. Consultant shall make no claim for extra work done or materials furnished unless and until there is full execution of any Supplemental Agreement, and City shall not be responsible for actions by Consultant nor for any costs incurred by Consultant relating to additional work not directly authorized by Supplemental Agreement. 1.06 INVOICE REQUIREMENTS; TERMS OF PAYMENT Invoices: To receive payment following delivery of all deliverables, Consultant shall prepare and submit detailed progress invoices to City, in accordance with the delineation contained herein in Section 1.04, for services rendered. Such invoices for professional services shall track the referenced Scope of Work, and shall detail the services performed, along with documentation for each service performed. Payment to Consultant shall be made on the basis of the invoices submitted by Consultant and approved by City. Such invoices shall conform to the schedule of services and costs in connection therewith. Reimbursable expenses shall be invoiced with the final billing, and shall be paid along with the final payment of the remaining fifty percent (50%) of the total "Payment for Services." Should additional backup material be requested by City relative to either service deliverables or reimbursable expenses, Consultant shall comply promptly. In this regard, should City determine it necessary, Consultant shall make all records and books relating to this Agreement available to City for inspection and auditing purposes. Payment of Invoices: City reserves the right to correct any error that may be discovered in any invoice that may have been paid to Consultant and to adjust same to meet the requirements of this Agreement. Following approval of an invoice, City shall endeavor to pay Consultant promptly, but no later than the time period required under the Texas Prompt Payment 6 Act described in Section 1.10 herein. Under no circumstances shall Consultant be entitled to receive interest on payments which are late because of a good faith dispute between Consultant and City or because of amounts which City has a right to withhold under this Agreement or state law. City shall be responsible for any sales, gross receipts or similar taxes applicable to the services, but not for taxes based upon Consultant's net income. 1.07 REQUIRED DRAFT REPORT AND FINAL REPORT Consultant agrees to provide City with a draft report and a detailed final written report, together with all information gathered and materials developed during the course of the project. Additionally, Consultant agrees to provide City with any necessary oral presentations of such written reports, at City's designation and at no additional cost to City. Consultant agrees to provide City with two (2) color copies of the final report, one (1) black -and -white copy of the final report, and a version of the final report in digital format. Should City request additional final reports, Consultant shall make same available to City for the agreed price of Two Hundred and No/100 Dollars ($200.00) for each color copy, and One Hundred Twenty-five Dollars and No/100 ($125.00) for each black -and -white copy provided. 1.08 LIMITATION TO SCOPE OF WORK Consultant and City agree that the scope of services to be performed is enumerated in Section 1.03 herein, and may not be changed without the express written agreement of the parties. Notwithstanding anything herein to the contrary, the parties agree that City retains absolute discretion and authority for all funding decisions, such to be based solely on criteria accepted by City which may be influenced by but not be dependent on Consultant's work. 1.09 NON -APPROPRIATION AND FISCAL FUNDING This Agreement is a commitment of City's current revenues only. It is understood and agreed that City shall have the right to terminate this Agreement at the end of any City fiscal year if the governing body of City does not appropriate funds sufficient to purchase the services as determined by City's budget for the fiscal year in question. City may effect such termination by giving Consultant a written notice of termination at the end of its then current fiscal year. 1.10 PROMPT PAYMENT POLICY In accordance with Chapter 2251, V.T.C.A., Texas Government Code, payment to Consultant will be made within thirty (30) days of the day on which City receives the performance, supplies, materials, equipment, and/or deliverables, or within thirty (30) days of the day on which the performance of services was complete, or within thirty (30) days of the day on which City receives a correct invoice for the performance and/or deliverables or services, whichever is later. Consultant may charge a late fee of one percent (1 %) for payments not made in accordance with this prompt payment policy; however, this policy does not apply to payments made by City in the event: 7 (1) There is a bona fide dispute between City and Consultant concerning the supplies, materials, or equipment delivered or the services performed which causes the payment to be late; or (2) The terms of a federal contract, grant, regulation, or statute prevent City from making a timely payment with federal funds; or (3) There is a bona fide dispute between the parties and subcontractors or between a subcontractor and its suppliers concerning supplies, materials, or equipment delivered or the services performed which causes the payment to be late; or (4) Invoices are not mailed to City in strict accordance with instructions, if any, on the purchase order or the Agreement or other such contractual agreement. 1.11 TERMINATION; DEFAULT Termination: It is agreed and understood by Consultant that City may terminate this Agreement for the convenience of City, upon fifteen (15) days' written notice to Consultant, with the understanding that immediately upon receipt of said notice all work being performed under this Agreement shall cease. Consultant shall invoice City for work satisfactorily completed and shall be compensated in accordance with the terms hereof for work accomplished prior to the receipt of said notice of termination. Consultant shall not be entitled to any lost or anticipated profits for work terminated under this Agreement. Unless otherwise specified in this Agreement, all data, information, and work product related to this project shall become the property of City upon termination of this Agreement, and shall be promptly delivered to City in a reasonably organized form without restriction on future use. Should City subsequently contract with a new consultant for continuation of service on the project, Consultant shall cooperate in providing information. Termination of this Agreement shall extinguish all rights, duties, and obligations of City and the terminated party to fulfill contractual obligations. Termination under this section shall not relieve the terminated party of any obligations or liabilities which occurred prior to termination. Nothing contained in this section shall require City to pay for any work which is unsatisfactory as determined by City or which is not submitted in compliance with the terms of this Agreement. Default: City may terminate this Agreement, in whole or in part, for default if City provides Consultant with written notice of such default and Consultant fails to cure such default to the satisfaction of City within ten (10) business days of receipt of such notice (or a greater time if permitted by City). 8 If Consultant defaults in performance of this Agreement and if City terminates this Agreement for such default, then City shall give consideration to the actual costs incurred by Consultant in performing the work to the date of default. The cost of the work that is useable to City, the cost to City of employing another firm to complete the useable work, and other factors will affect the value to City of the work performed at the time of default. Consultant shall not be entitled to any lost or anticipated profits for work terminated for default under this Agreement. The termination of this Agreement for default shall extinguish all rights, duties, and obligations of City and the terminated party to fulfill contractual obligations. Termination under this section shall not relieve the terminated party of any obligations or liabilities which occurred prior to termination. Nothing contained in this section shall require City to pay for any work with is unsatisfactory as determined by City, or which is not submitted in compliance with the terms of this Agreement. 1.12 INDEPENDENT CONTRACTOR STATUS Consultant is an independent contractor, and is not City's employee. Consultant's employees or subcontractors are not City's employees. This Agreement does not create a partnership, employer-employee, or joint venture relationship. No party has authority to enter into contracts as agent for the other party. Consultant and City agree to the following rights consistent with an independent contractor relationship: (1) Consultant has the right to perform services for others during the term hereof. (2) Consultant has the sole right to control and direct the means, manner and method by which services required by this Agreement will be performed. (3) Consultant has the right to hire assistants as subcontractors, or to use employees to provide the services required by this Agreement. (4) Consultant or its employees or subcontractors shall perform services required hereunder, and City shall not hire, supervise, or pay assistants to help Consultant. (5) Neither Consultant nor its employees or subcontractors shall receive training from City in skills necessary to perform services required by this Agreement. (6) City shall not require Consultant or its employees or subcontractors to devote full time to performing the services required by this Agreement. (7) Neither Consultant nor its employees or subcontractors are eligible to participate in any employee pension, health, vacation pay, sick pay, or other fringe benefit plan of City. 9 1.13 NON -SOLICITATION Except as may be otherwise agreed in writing, during the term of this Agreement and for twelve (12) months thereafter, neither City nor Consultant shall offer employment to or shall employ any person employed then or within the preceding twelve (12) months by the other or any affiliate of the other if such person was involved, directly or indirectly, in the performance of this Agreement. This provision shall not prohibit the hiring of any person who was solicited solely through a newspaper advertisement or other general solicitation. 1.14 CITY'S RESPONSIBILITIES Full information: City shall provide full information regarding project requirements. City shall have the responsibility of providing Consultant with such documentation and information as is reasonably required to enable Consultant to provide the services called for. City shall cause its employees and any third parties who are otherwise assisting, advising or representing City to cooperate on a timely basis with Consultant in the provision of its services. Consultant may rely upon written information provided by City and its employees and agents as accurate and complete. Consultant may rely upon any written directives provided by City or its designated representative concerning provision of services. Required materials: Consultant's performance requires receipt of all requested information reasonably necessary to provision of services. City shall furnish information which includes but is not limited to access to the property, preliminary information and/or data regarding the golf course and surrounding property (if applicable), pertinent correspondence with other local municipal and planning officials, previous market analyses or feasibility studies, and other pertinent information. Consultant agrees, within ten (10) days of the effective date of this Agreement, to provide City with a comprehensive and detailed information request list. 1.15 CONFIDENTIALITY; AND MATERIALS OWNERSHIP Any and all programs, data, or other materials furnished by City for use by Consultant in connection with services to be performed under this Agreement, and any and all data and information gathered by Consultant, shall be held in confidence by Consultant as set forth hereunder. Each party agrees to take reasonable measures to preserve the confidentiality of any proprietary or confidential information relative to this Agreement, and to not make any use thereof other than for the performance of this Agreement, provided that no claim may be made for any failure to protect information that occurs more than three (3) years after the end of this Agreement. The parties recognize and understand that City is subject to the Texas Public Information Act and its duties run in accordance therewith. All data relating specifically to City's business and any other information which reasonably should be understood to be confidential to City is confidential information of City. Consultant's proprietary software, tools, methodologies, techniques, ideas, discoveries, 10 inventions, know-how, and any other information which reasonably should be understood to be confidential to Consultant is confidential information of Consultant. City's confidential information and Consultant's confidential information is collectively referred to as "Confidential Information." Each party shall use Confidential Information of the other party only in furtherance of the purposes of this Agreement and shall not disclose such Confidential Information to any third party without the other party's prior written consent, which consent shall not be unreasonably withheld. Each party agrees to take reasonable measures to protect the confidentiality of the other party's Confidential Information and to advise their employees of the confidential nature of the Confidential Information and of the prohibitions herein. Notwithstanding anything to the contrary contained herein, neither party shall be obligated to treat as confidential any information disclosed by the other party (the "Disclosing Party") which: (1) is rightfully known to the recipient prior to its disclosure by the Disclosing Party; (2) is released by the Disclosing Party to any other person or entity (including governmental agencies) without restriction; (3) is independently developed by the recipient without any reliance on Confidential Information; or (4) is or later becomes publicly available without violation of this Agreement or may be lawfully obtained by a party from any non-party. Notwithstanding the foregoing, either party will be entitled to disclose Confidential Information of the other to a third party as may be required by law, statute, rule or regulation, including subpoena or other similar form of process, provided that (without breaching any legal or regulatory requirement) the party to whom the request is made provides the other with prompt written notice and allows the other party to seek a restraining order or other appropriate relief. Subject to Consultant's confidentiality obligations under this Agreement, nothing herein shall preclude or limit Consultant from providing similar services for other clients. Neither City nor Consultant will be liable to the other for inadvertent or accidental disclosure of Confidential Information if the disclosure occurs notwithstanding the party's exercise of the same level of protection and care that such party customarily uses in safeguarding its own proprietary and confidential information. Notwithstanding anything to the contrary in this Agreement, City will own as its sole property all written materials created, developed, gathered, or originally prepared expressly for City and delivered to City under the terms of this Agreement (the "Deliverables"); and Consultant shall own any general skills, know-how, expertise, ideas, concepts, methods, techniques, processes, software, or other similar information which may have been discovered, created, developed or derived by Consultant either prior to or as a result of its provision of services under this Agreement (other than the Deliverables). Consultant's working papers and Consultant's Confidential Information (as described herein) shall belong exclusively to Consultant. City shall have a non-exclusive, non -transferable license to use Consultant's Confidential Information for City's own internal use and only for the purposes for which they are delivered to the extent that they form part of the Deliverables. 11 1.16 WARRANTIES Consultant warrants that all services performed hereunder shall be performed consistent with generally prevailing professional or industry standards, and shall be performed in a professional and workmanlike manner. Consultant shall re -perform any work not in compliance with this warranty. CONSULTANT DISCLAIMS ALL OTHER WARRANTIES EXPRESS OR IMPLIED INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 1.17 LIMITATION OF LIABILITY Should any of Consultant's services not conform to the requirements of this Agreement, then and in that event City shall give written notification to Consultant; thereafter, (a) Consultant shall either promptly re -perform such services to City's satisfaction at no additional charge, or (b) if such deficient services cannot be cured within the cure period set forth herein in Section 1.11, then this Agreement may be terminated for default. In no event will Consultant be liable for any loss, damage, cost or expense attributable to negligence, willful misconduct or misrepresentations by City, its directors, employees or agents. In no event shall Consultant be liable to City, by reason of any act or omission relating to the services provided under this Agreement (including the negligence of Consultant), whether a claim be in tort, contract or otherwise, (a) for any consequential, indirect, lost profit, punitive, special or similar damages relating to or arising from the services, or (b) in any event, in the aggregate, for any amount in excess of the total professional fees paid by City to Consultant under this Agreement, except to the extent determined to have resulted from Consultant's gross negligence, willful misconduct or fraudulent acts relating to the service provided hereunder. 1.18 INDEMNIFICATION Consultant and City each agree to indemnify, defend and hold harmless the other from and against any and all amounts payable under any judgment, verdict, court order or settlement for death or bodily injury or the damage to or loss or destruction of any real or tangible personal property to the extent arising out of the indemnitor's negligence in the performance of this Agreement. Consultant agrees to indemnify, defend and hold harmless the City from and against any and all amounts payable under any judgment, verdict, court order or settlement for Third Party claims of infringement of any trade secrets, copyrights, trademarks or trade names alleged to have occurred and arising from the deliverables provided by Consultant to City in connection with the performance of this Agreement. Should City's use of such deliverables be determined to have infringed, Consultant may, at its option: (i) procure for City the right to continue using such deliverables provided or (ii) replace or modify them to make their use non -infringing while yielding substantially equivalent results. If neither of the above options are or would be available on a basis that is commercially reasonable, then Consultant may terminate this 12 Agreement, the City shall return such deliverables provided, and Consultant will refund to City the fees paid for the deliverables provided. This infringement indemnity does not cover claims arising from the combination of such deliverables with products or services not provided by Consultant; the modification of such deliverables by any person other than Consultant; deliverables complying with or based upon (1) designs provided by or at the direction of City or (2) specifications or other information provided by or at the direction of City; or use of systems, materials or work performed in a manner not permitted hereunder or by another obligation of City to Consultant. The indemnities in this section are contingent upon: (1) the indemnified party promptly notifying the indemnifying party in writing of any claim which gives rise to a claim for indemnification hereunder; (2) the indemnifying party being allowed to control the defense and settlement of such claim; and (3) the indemnified party cooperating with all reasonable requests of the indemnifying party (at the indemnifying party's expense) in defending or settling a claim. The indemnified party shall have the right, at its option and expense, to participate in the defense of any suit or proceeding through a counsel of its own choosing. 1.19 ASSIGNMENT AND DELEGATION The parties each hereby bind themselves, their successors, assigns and legal representatives to each other with respect to the terms of this Agreement. Neither party may assign any rights or delegate any duties under this Agreement without the other party's prior written approval, which approval shall not be unreasonably withheld. 1.20 LOCAL, STATE AND FEDERAL TAXES Consultant shall pay all income taxes, and FICA (Social Security and Medicare taxes) incurred while performing services under this Agreement. City will not do the following: (1) Withhold FICA from Consultant's payments or make FICA payments on its behalf; (2) Make state and/or federal unemployment compensation contributions on Consultant's behalf; or (3) Withhold state or federal income tax from any of Consultant's payments. If requested, City shall provide Consultant with a certificate from the Texas State Comptroller indicating that City is a non-profit corporation and not subject to State of Texas Sales and Use Tax. 1.21 INSURANCE Insurance. Consultant, at Consultant's sole cost, shall have and maintain during the term of this Agreement professional liability insurance coverage in the minimum amount of 13 One Million Dollars from a company authorized to do insurance business in Texas and otherwise acceptable to City. Subconsultant Insurance. Without limiting any of the other obligations or liabilities of Consultant, Consultant shall require each subconsultant performing work under this Agreement to maintain during the term of the Agreement, at the subconsultant's own expense, the same stipulated minimum insurance required in the immediately preceding paragraph, including the required provisions and additional policy conditions as shown below. As an alternative, Consultant may include its subconsultants as additional insureds on its own coverages as prescribed under these requirements. Consultant's certificate of insurance shall note in such event that the subconsultants are included as additional insureds. Consultant shall obtain and monitor the certificates of insurance from each subconsultant in order to assure compliance with the insurance requirements. Consultant must retain the certificates of insurance for the duration of this Agreement, and shall have the responsibility of enforcing these insurance requirements among its subconsultants. City shall be entitled, upon request and without expense, to receive copies of these certificates of insurance. Insurance Policy Endorsements. Each insurance policy hereunder shall include the following conditions by endorsement to the policy: (1) Each policy shall require that thirty (30) days prior to the expiration, cancellation, non -renewal or any material change in coverage, a notice thereof shall be given to City by certified mail to: City Manager, City of Round Rock 221 East Main Street Round Rock, Texas 78664 Consultant shall also notify City, within twenty-four (24) hours of receipt, of any notices of expiration, cancellation, non -renewal, or material change in coverage it receives from its insurer. (2) Companies issuing the insurance policies shall have no recourse against City for payment of any premiums or assessments for any deductibles which all are at the sole responsibility and risk of Consultant. (3) Terms "City" or "City of Round Rock" shall include all authorities, boards, commissions, departments, and officers of City and individual members, employees and agents in their official capacities, or while acting on behalf of the City of Round Rock. (4) The policy clause "Other Insurance" shall not apply to any insurance coverage currently held by City, to any future coverage, or to City's Self -Insured Retentions of whatever nature. 14 (5) Consultant and City mutually waive subrogation rights each may have against the other for loss or damage, to the extent same is covered by the proceeds of insurance. Cost of Insurance. The cost of all insurance required herein to be secured and maintained by Consultant shall be borne solely by Consultant, with certificates of insurance evidencing such minimum coverage in force to be filed with the City. 1.22 COMPLIANCE WITH LAWS, CHARTER AND ORDINANCES Consultant, its consultants, agents, employees and subcontractors shall use best efforts to comply with all applicable federal and state laws, the Charter and Ordinances of the City of Round Rock, as amended, and with all applicable rules and regulations promulgated by local, state and national boards, bureaus and agencies. Consultant shall further obtain all permits, licenses, trademarks, copyrights, and the like required in the performance of the services contracted for herein, and same shall belong solely to City at the expiration of the term of this Agreement. 1.23 FINANCIAL INTEREST PROHIBITED Consultant covenants and represents that Consultant, its officers, employees, agents, consultants and subcontractors will have no financial interest, direct or indirect, in the purchase or sale of any product, materials or equipment that will be recommended or required under this Agreement. 1.24 DESIGNATION OF REPRESENTATIVES City hereby designates the following representative authorized to act in its behalf with regard to this Agreement: Rick Atkins Assistant Director, Parks and Recreation Department 301 West Bagdad, Suite 250 Round Rock, Texas 78664 Telephone: 512-218-5540 Facsimile: 512-218-5548 Email: rick@,round-rock.tx.us Consultant hereby designates the following representative authorized to act in its behalf with regard to this Agreement: Douglas Main, Director Cary Lannin, Manager PricewaterhouseCoopers LLP 2020 Main Street, Suite 400 15 Irvine, California 92614 Telephone: 949-437-5886 Facsimile: 949-437-5898 Email: douglas.f.main@us.pwc.com Email: cary.a.lannin@us.pwc.com 1.25 NOTICES All notices and other communications in connection with this Agreement shall be in writing and shall be considered given as follows: (1) When delivered personally to recipient's address as stated herein; or (2) Three (3) days after being deposited in the United States mail, with postage prepaid to the recipient's address as stated in this Agreement. Notice to Consultant: Douglas Main, Director Cary Lannin, Manager PricewaterhouseCoopers LLP 2020 Main Street, Suite 400 Irvine, CA 92614 Notice to City: City Manager, City of Round Rock 221 East Main Street Round Rock, TX 78664 AND TO: Stephan L. Sheets, City Attorney 309 East Main Street Round Rock, TX 78664 Nothing contained in this section shall be construed to restrict the transmission of routine communications between representatives of City and Consultant. 1.26 APPLICABLE LAW; ENFORCEMENT AND VENUE This Agreement shall be enforceable in Round Rock, Texas, and if legal action is necessary by either party with respect to the enforcement of any or all of the terms or conditions herein, exclusive venue for same shall lie in Williamson County, Texas. This Agreement shall be governed by and construed in accordance with the laws and court decisions of the State of Texas. 16 1.27 EXCLUSIVE AGREEMENT The terms and conditions of this Agreement, including exhibits and Consultant's Engagement Letter dated April 27, 2004, as amended, constitute the entire agreement between the parties and supersede all previous communications, representations, and agreements, either written or oral, with respect to the subject matter hereof. The parties understand and expressly agree that, in the event of any conflict between the terms of this Agreement and Consultant's Engagement Letter, as amended, this Agreement shall prevail. No modifications of this Agreement will be binding on any of the parties unless acknowledged in writing by the duly authorized governing body or representative for each party. 1.28 DISPUTE RESOLUTION If a dispute arises under this Agreement, the parties agree to first try to resolve the dispute with the help of a mutually selected mediator. If the parties cannot agree on a mediator, City shall select one mediator and Consultant shall select one mediator and those two mediators shall agree upon a third mediator. Any costs and fees, other than attorney fees, associated with the mediation shall be shared equally by the parties. City and Consultant hereby expressly agree that no claims or disputes between the parties arising out of or relating to this Agreement or a breach thereof shall be decided by any arbitration proceeding, including without limitation, any proceeding under the Federal Arbitration Act (9 USC Section 1-14) or any applicable state arbitration statute. 1.29 FORCE MAJEURE Notwithstanding any other provisions of this Agreement to the contrary, no failure, delay or default in performance of any obligation hereunder shall constitute an event of default or a breach of this Agreement, only to the extent that such failure to perform, delay or default arises out of causes beyond control and without the fault or negligence of the party otherwise chargeable with failure, delay or default; including but not limited to acts of God, acts of public enemy, civil war, insurrection, riots, fires, floods, explosion, theft, earthquakes, natural disasters or other casualties, strikes or other labor troubles, which in any way restrict the performance under this Agreement by the parties. Consultant shall not be deemed to be in default of its obligations to City if its failure to perform or its substantial delay in performance is due to City's failure to timely provide requested information, data, documentation, or other material necessary for Consultant to perform its obligations hereunder. 17 1.30 SEVERABILITY The invalidity, illegality, or unenforceability of any provision of this Agreement or the occurrence of any event rendering any portion of provision of this Agreement void shall in no way affect the validity or enforceability of any other portion or provision of this Agreement. Any void provision shall be deemed severed from this Agreement, and the balance of this Agreement shall be construed and enforced as if this Agreement did not contain the particular portion of provision held to be void. The parties further agree to amend this Agreement to replace any stricken provision with a valid provision that comes as close as possible to the intent of the stricken provision. The provisions of this Article shall not prevent this entire Agreement from being void should a provision which is of the essence of this Agreement be determined void. 1.31 STANDARD OF CARE Consultant represents that it is specially trained, experienced and competent to perform all of the services, responsibilities and duties specified herein and that such services, responsibilities and duties shall be performed, whether by Consultant or designated subconsultants, in a manner according to generally accepted business attraction practices. 1.32 GENERAL AND MISCELLANEOUS The section numbers and headings contained herein are provided for convenience only and shall have no substantive effect on construction of this Agreement. No delay or omission by either party in exercising any right or power shall impair such right or power or be construed to be a waiver. A waiver by either party of any of the covenants to be performed by the other or any breach thereof shall not be construed to be a waiver of any succeeding breach or of any other covenant. No waiver of discharge shall be valid unless in writing and signed by an authorized representative of the party against whom such waiver or discharge is sought to be enforced. This Agreement may be executed in multiple counterparts, which taken together shall be considered as one original. City agrees to provide Consultant with one (1) fully executed original Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement on the dates hereafter indicated. City of Round Rick, Texas By: N 2'_ ell, ayor Date igned: `p /Q _D L 18 Date Signed: — U / Christine R. Martinez, City Sec tar h l 3— PricewaterhouseCoopers LLP By: Pat Leardo, New York, NY Title: Partner Date Signed: June 7, 2004 madke aSeP 19 JOEWATERHOUSECWPER5 � PricewaterhouseCoopers LLP 2020 Main Street, Suite 400 Irvine, CA 92614 Telephone (949) 437-5886 RightFax (831) 375-7530 April 27, 2004 Mr. Rick Atkins Assistant Director Round Rock Parks & Recreation City of Round Rock 301 W. Bagdad, Suite 350 Round Rock, TX 78664 Re: Consulting & Valuation Services — Forest Creek Golf Course City of Round Rock, Texas Dear Mr. Atkins: Thank you very much for taking the time recently to discuss with us the opportunity to provide consulting and valuation services relative to the Forest Creek Golf Course. We very much appreciate the opportunity to present our proposal for professional services to you and the City of Round Rock. In accordance with your request, PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") is pleased to submit this proposal to you. This proposal sets forth the objective and scope of our work, and the time requirements and fees associated with our services. We invite any questions you may have about this proposal. ❑ OBJECTIVE / PURPOSE AND SCOPE OF THE ASSIGNMENT As we understand it, the Forest Creek Golf Course is owned by the City of Round Rock, and managed by a third party under a contract agreement. This contract expires within the next year, and the City wishes to evaluate their options upon cessation of the contract. As discussed, the scope of our engagement will consist of essentially 4 components: Component I - As Is - Base Case Analysis Component I represents the core evaluation and analysis of the subject property, which will serve as the foundation for the subsequent analyses. Component I essentially consists of an in-depth golf market analysis and "as is" fair market valuation of the golf course, and includes the following scope of service: ❖ Physical Inspection — Golf Course & Local/Regional Market Area PRICEWATERJ-IOUSECWPERS ei Mr. Rick Atkins April 27, 2004 Neighborhood & Regional Economic & Demographic Analysis ❖ Golf Market Analysis ➢ Existing course inventory & market overview D Future Supply ➢ Identification of primary comps ➢ Ranking Matrix - Based on Evaluation Criteria • Evaluation Criteria - Location, access, quality, amenities, etc. D Course Demand Segmentation - Existing Competition • Demand % - Public, member, tournament, etc. D Market Potential for Golf ➢ Forest Creek Fair Share Analysis / Estimate ❖ Fair Market Valuation ➢ "As Is" ➢ Summary Appraisal Report Format Based on the scope of work to be done, the Uniform Standards of Appraisal Practice (USPAP) which governs all appraisers allows us to provide clients three types of appraisals: 1) Restricted Letter 2) Summary and 3) Self -Contained. The primary difference between the types of appraisal reports is based on the amount of reporting required. The Self -Contained Appraisal requires significantly more reporting than a Summary Appraisal and the Summary more than the Letter, thus the fee associated with the report selected varies. It is our understanding that a Complete and Summary Appraisal Report is required. Component II — Alternate Operating Structure Analysis The focus of Component II will be to identify reasonable and probable alternate operating scenarios for the subject golf course, and provide market research and analysis of the various scenarios. Additionally, capital expenditures necessary to effect a conversion to an alternate operating type will be estimated, based on available market data. •S Identification of Possible Alternate Operating Scenarios Matrix ➢ City vs. third party management vs. third party lease ➢ Daily Fee, Semi -Private, or Other. ➢ Renovation / Improvement Enhancements vs No Enhancements ❖ Market Research of Alternate Scenarios PricewaterhouseCoopers PAGE 2 JCEWATERHOU5EWPERS 0 Mr. Rick Atkins April 27, 2004 ❖ Capital Expenditure & Operating Improvements Analysis ➢ Identification and Ranking of Operating Improvements ➢ Identification and Ranking of Capital Expenditure Improvements ➢ Assessment of Capex Necessary to Achieve Alternate Scenario ➢ Market Support & Cost Estimate of Capex Improvements Component III — Benchmarking & Operations Evaluation Component III will focus on an analysis of the historical financial performance of the golf course, by providing operating benchmarks, and also provide an analysis of local golf course management structures and compensation (as available). ❖ Benchmarking Analysis (Historical Operations) — A comparison of the operation and maintenances costs of FCGC to those of other comparable courses in the Central Texas Market ❖ Compensation Structure and Contracts Analysis ❖ Competing Course Management Structure ➢ (Self -manage, management contract or lease?) ❖ Estimate of Market Compensation for Lease vs Management Component IV — Conclusion /Alternatives Assessment Component IV will provide an assessment (pros and cons) of the various alternatives considered, including the capital expenditures necessary for each. ❖ Assessment of the various options: ➢ Sell Outright ➢ City Operation ➢ Management Company Operates — via Contract ➢ Management Company Operates — via Lease The resulting report will be a concise, yet thorough, evaluation of the golf course and its' competitive market, and provide the City of Round Rock with the necessary market data and analysis to determine the appropriate course of action for the golf course. PricewaterhouseCoopers PAGE 3 PR10EWATERHOUSECWPERS � Mr. Rick Atkins April 27, 2004 ❑ CLIENT We understand that you will use the consulting services for internal decision-making purposes, and not for any other purpose. We request that you seek our written authorization before releasing any written reports to any other party, which authorization will not be unduly withheld. We also request that if the name of PricewaterhouseCoopers, LLP is used in any memorandum or like -document, that we have review of the documents in advance; we will provide authorization at that time for use of our name. Payment for these services is not contingent upon the outcome of any external event. For purposes of payment the client will be the authorized person that signs this proposal. U TIMING We are available to begin the analysis within two weeks of receipt of the signed engagement letter and applicable retainer. Based on the anticipated scope of services, the engagement will be completed within seven to eight weeks of the start date of the engagement. U REQUIRED MATERIAL The timing of the engagement is conditioned upon the receipt of all requested information from the client. Given the scope of these services, this information will include, but not be limited to access to the property, any preliminary information and/or date regarding the course and surrounding project (if applicable), all pertinent correspondence with other local municipal and planning officials, previous market analyses or feasibility studies, and other pertinent information. A detailed information request list will be forwarded upon authorization of the engagement. ❑ FEES & BILLING PricewaterhouseCoopers' professional fees are based on our estimate of the engagement's complexity and the staff time required. Our cost and ultimately our fees, are heavily dependent upon your cooperation and assistance in obtaining the information required to complete this engagement. The fee for our professional services for the scope of services as outlined herein will be $24,000; The above will include issuance of 2 color copies of our report, and 1 black -and -white copy. If additional copies are required, they may be purchased for $200 for each color copy and $125 for each black -and -white. PricewaterhouseCoopers PAGE 4 JOEWATERHOU5EWPERS e Mr. Rick Atkins April 27, 2004 All actual out-of-pocket expenses incurred will be billed separately at our cost. Out-of-pocket expenses include transportation, hotel, subsistence, telephone, postage, facsimile, photocopy and any other engagement -related expenses. In lieu of routine administrative expenses such as long distance telephone calls, faxes, courier, postage and photocopies, you will be charged on the basis of a flat fee of $6.25 for each hour of chargeable time spent on the engagement. We are willing to "cap" these additional administrative charges and out-of-pocket expenses at $4,000. Upon completion of this assignment, a final bill for any balance including expcnse previded othe nde oa Cl ENGAGEMENT TEAM For purposes of this engagement, Cary Lanvin (Manager) will be the principal consultant for the client. In situations where leveraging other professional staff is appropriate, certain research will be completed by other associates at the direction of, and reviewed by Mr. Lannin, thereby ensuring a consistent and high level of service, quality, and timeliness. ❑ CONDITIONS OF OUR WORK This proposal is subject to the standard PricewaterhouseCoopers client and assignment acceptance procedures. PricewaterhouseCoopers PAGE 5 PR10EWATERHOUSECWPERS 0 Mr. Rick Atkins April 27, 2004 ❑ CONFLICT OF INTEREST We have undertaken a reasonable review of our records to determine PricewaterhouseCoopers' professional relationships with the following persons or entities you identified: City of Round Rock, Texas. We are not aware of any conflicts of interest or relationships that would preclude us from performing the above work for you or your client. ❑ TERMS AND CONDITIONS In performing the Services, PwC will be acting solely for the purpose of assisting the City of Round Rock as set forth herein. The attached Terms and Conditions set forth the rights and responsibilities of the parties with respect to the Services. The Terms and Conditions provide that, among other things, that the client will indemnify us against claims brought by any third party and that our aggregate liability to you or your Client whether in contract, tort or otherwise, will be limited to the amount paid by you in respect of the Services. By signing this engagement letter, you acknowledge that you have read and agree to the Terms and Conditions. This Agreement and the rights and obligations hereunder shall not be assignable or transferable by any party hereto without the prior written consent of the other party(ies). The consulting report will be prepared in accordance with and is subject to our Standard Conditions as defined in Attachment A. Special Conditions unique to the project may be added as required. This proposal is subject to the standard PricewaterhouseCoopers client and assignment acceptance procedures. ❑ ACCEPTANCE PROCEDURES We appreciate the opportunity to submit this proposal for our services. We invite any questions you may have about the scope and detail of this proposal. Please acknowledge your acceptance, and the acceptance of your Client, of the terms of the Engagement by signing the confirmation below and returning copies to us at the above address. If you have any questions regarding this letter or the Terms and Conditions, please do not hesitate to contact Doug Main at (800) 832-6484. Sincerely, AI.Aitottifeich-easeatiolag440 (7MP PricewaterhouseCoopers LLP By: Pat Leardo, New York, NY PricewaterhouseCoopers PAGE 6 JCEWATERflOUSECWPERS 0 Mr. Rick Atkins April 27, 2004 Confirmation of Terms of Engagement Having read both the above Letter of Engagement from PricewaterhouseCoopers LLP and the Terms and Conditions attached thereto, we agree to engage PricewaterhouseCoopers LLP upon the terms set out therein. City of Round Rock, Texas By: Name: Title: Date: LE ei))4Xt,J ECL mP yok2 6-io-oy PricewaterhouseCoopers PAGE 7 ATTACHMENT A Consulting Engagements — Standard Conditions STANDARD CONDITIONS Use of the Report: The analysis applies only to the property or market area described and for the purpose so stated and should not be used for any other purpose. PricewaterhouseCoopers acknowledges that its report may be subject to local or state government public disclosure laws. As such, the addressee shall not distribute the report to third parties without providing PricewaterhouseCoopers prior notice and an opportunity to take legal action to withhold any proprietary or other information which may cause it competitive harm. In the event public disclosure is required, addressee or third party shall agree to hold PricewaterhouseCoopers harmless relative to third party's use of the report. Neither our report, nor its contents, nor any reference to the analysts or PricewaterhouseCoopers, may be included or quoted in any offering circular or registration statement, prospectus, sales brochure, appraisal, loan or other agreement or document without our prior written permission. Permission will be granted only upon meeting certain conditions. Generally, PricewaterhouseCoopers will not agree to the use of its name as a "named expert" within the meaning of the Securities Act of 1933 and the Securities Act of 1934. Unless otherwise required by local or state government disclosure laws, neither the report nor any portions thereof (especially the identity of the analysts or PricewaterhouseCoopers) shall be disseminated to the public through public relations media, news media, advertising media, sales media or any other public means of communication without the prior written consent and approval of the appraisers and PricewaterhouseCoopers. The date(s) to which the conclusions apply is set forth within the body of the report. The financial analysis is based on the purchasing power of the United States dollar as of that date. Deliverables Client shall notify Consultant, in writing within 10 working days following receipt of any Deliverable for which Consultant has responsibility for delivery, if it is not acceptable. Such notice shall specify in reasonable detail the reasons such Deliverable has been deemed unacceptable. Acceptance by the City shall not be unreasonably withheld. The passage of 10 working days without notice of non-acceptance following delivery to or use by the City of such Deliverable shall constitute acceptance by the City. If the notice of non-acceptance is not sufficiently detailed to allow Consultant to determine why such Deliverable is unacceptable, Consultant may request in writing that the City provide sufficient additional information. The passage of 10 working days from the date of such request without the provision of such additional information shall constitute acceptance of such Deliverable by the City. Consultant will either fix problems in such a Deliverable within 15 days after receipt of sufficient notice or present the City with a plan to fix such problems within a period of time that is reasonable under the circumstances. Except as otherwise expressly stated in this Agreement, all Deliverables hereunder are solely for the City's internal use and benefit and are not intended to nor may they be relied upon by any other party ("Third Party"). Neither the Deliverables nor their content may be distributed to, discussed with, or otherwise disclosed to any Third Party without our prior written consent, and the City agrees not to otherwise discuss the fact or substance of this engagement with Third Parties without the prior written consent of Consultant. Consultant accepts no liability or responsibility to any Third Party who benefits from or uses the Services or gains access to the Deliverables. Consultant and the City may have discussions regarding this project; however, information or advice provided verbally should not be relied upon or attributed to Consultant unless Consultant confirms such information or advice in writing. Any draft reports that Consultant may provide will not constitute its definitive opinions and conclusions. These will be contained solely in Consultant's final written report. Because these Services and Deliverables are solely for the internal use and benefit of the City, the City agrees (without limiting any other indemnification provision set forth in this Agreement) to indemnify and hold harmless Consultant from any and all Third Party claims, liabilities, costs, and expenses, including reasonable attorneys fees, arising from or relating to the Services and/or Deliverables under this Agreement, except to the extent finally determined to have resulted from the gross negligence, willful misconduct or fraudulent behavior of Consultant relating to such Services and/or Deliverables. Terms of the Engagement: Assignments are accepted with the understanding that there is no obligation to furnish services after completion of the original assignment. If the need for subsequent service related to a specific assignment (e.g., testimony, updates, conferences, reprint or copy service) is contemplated, special arrangements acceptable to PricewaterhouseCoopers must be made in advance. The working papers for this engagement have been retained in our files and are available for your reference. It is your responsibility to determine the adequacy of the work to be performed for your due diligence investigations. We make no representations as to whether these procedures are sufficient for your purposes. Our work will not constitute an audit conducted in accordance with generally accepted auditing standards, an examination of internal controls, or other attestation or review services in accordance with standards established by the AICPA. Accordingly, we will not express an opinion or any other form of assurance on the financial statements of the Company or any financial or other information, or operating and internal controls of the Company. Our work will be based primarily on information supplied by the management of the Company and will be carried out on the basis that such information is accurate and complete. We will not subject information to checking or verification procedures, except to the extent expressly stated to form part of the scope of our work. Where our work expressly includes consideration of prospective financial information, we will comment on the bases and assumptions adopted by the management of the Company, but our work will not constitute an examination, compilation or agreed-upon procedures in accordance with standards established by the AICPA, and we will not express any opinion or provide any assurance (in the sense in which "opinion" and "assurance" are used in the AICPA standards). Because events and circumstances frequently do not occur as expected, there will usually be differences between predicted and actual results, and those differences may be material. We will take no responsibility for the achievement of results predicted by the management of the Company. We will assume no responsibility and make no representations with respect to the accuracy or completeness of information provided by the Company. Moreover, our work cannot provide assurance that matters of significance to the financial information or to your due diligence investigation will be disclosed. Further, our work is not designed to and is not likely to reveal fraud or misrepresentation by the management of the Company. Advice and comments that we may provide regarding the accounting and tax treatment of the proposed transaction should not be viewed as a formal accounting or tax opinion of PricewaterhouseCoopers LLP. If such opinions are desired and we determine that such an opinion can be issued, the terms of that engagement will be subject to a separate written engagement letter. Our work does not include the provision of legal advice and we make no representations regarding questions of legal interpretation. To the extent that we are requested and we perform due diligence work on tax or tax advisory work that involves the interpretation of tax law, we will report or advise on the basis of our understanding of the proper interpretation of tax legislation, court decisions, regulations and interpretations of the law in existence at the time services are performed. Changes in the law and/or its interpretation may take place before our advice is acted upon, or may be retrospective in effect; we accept no responsibility for changes in the law or its interpretation which may occur after the provision of such services. Relationships with Other Parties: Clients engage the respective PricewaterhouseCoopers Firms every day and an individual PricewaterhouseCoopers Firm may be asked to provide services to other clients regarding the possible purchase/sale of the Company that may be in competition with you or whose interests may conflict with your own. We and the other PricewaterhouseCoopers Firms will not be prevented or restricted by virtue of our relationship with Addressee under this engagement from providing services to other clients. Except as required by law or professional regulations, we will maintain the information obtained during the course of this engagement confidentially and will not communicate such information to any other PricewaterhouseCoopers personnel who are providing services to such other clients. Other Matters: Addressee agrees that it will not, directly or indirectly, agree to assign or transfer any claim against PricewaterhouseCoopers LLP arising out of this engagement to anyone. Engagement Letter Addendum: Notice Pursuant to California Business & Professions Code, Section 5079(a)(5) PricewaterhouseCoopers LLP is owned by professionals who hold CPA licenses as well as by professionals who are not licensed CPAs. Depending on the nature of the services we provide, non -CPA owners may be involved in providing services to you now or in the future. If you have any questions about this matter, please do not hesitate to ask. ATTACHMENT B Standard Conditions — Appraisal Engagements STANDARD CONDITIONS The following Standard Conditions apply to real estate appraisals by PricewaterhouseCoopers LLP ("PricewaterhouseCoopers"). Special Conditions are added as required. Report Content: Appraisals are performed and written reports are prepared in accordance with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation and with the Appraisal Institute's Standards of Professional Appraisal Practice and Code of Professional Ethics. Unless specifically stated, the value conclusion(s) contained in the appraisal applies to the real estate only, and does not include personal property, machinery and equipment, trade fixtures, business value, goodwill or other non -realty items. The appraisal report covering the subject is limited to surface rights only, and does not include any inherent subsurface or mineral rights. Income tax considerations have not been included or valued unless so specified in the appraisal. We make no representations as to the value changes that may be attributed to such considerations. The appraisal assumes market conditions as observed as of the current date of our market research stated in the letter of transmittal. These market conditions are believed to be correct; however, the appraisers assume no liability should market conditions materially change because of unusual or unforeseen circumstances. No opinion is rendered as to property title, which is assumed to be good and marketable. Unless otherwise stated, no consideration is given to liens or encumbrances against the property. Sketches, maps, photos, or other graphic aids included in appraisal reports are intended to assist the reader in ready identification and visualization of the property, and are not intended for technical purposes. It is assumed that legal, engineering, or other professional advice, as may be required, has been or will be obtained from professional sources and that the appraisal report will not be used for guidance in legal or technical matters such as, but not limited to, the existence of encroachments, easements or other discrepancies affecting the legal description of the property. It is assumed that there are no concealed or dubious conditions of the subsoil or subsurface waters including water table and flood plain, unless otherwise noted. We further assume there are no regulations of any government entity to control or restrict the use of the property unless specifically referred to in the report. It is assumed that the property will not operate in violation of any applicable government regulations, codes, ordinances or statutes. This report is not intended to be an engineering report. We are not qualified as structural or environmental engineers, therefore we are not qualified to judge the structural or environmental integrity of the improvements, if any. Consequently, no warranty or representations are made nor any liability assumed for the structural soundness, quality, adequacy or capacities of said improvements and utility services, including the construction materials, particularly the roof, foundations, and equipment, including the HVAC systems, if applicable. Should there be any question concerning same, it is strongly recommended that an engineering, construction and/or environmental inspection be obtained. The value estimate(s) stated in this appraisal, unless noted otherwise, is predicated on the assumptions that all improvements, equipment and building services, if any, are structurally sound and suffer no concealed or latent defects or inadequacies other than those noted in the appraisal. We will call to your attention any apparent defects or material adverse conditions which come to our attention. In the absence of competent technical advice to the contrary, it is assumed that the property being appraised is not adversely affected by concealed or unapparent hazards such as, but not limited to asbestos, hazardous or contaminated substances, toxic waste or radioactivity. Information furnished by others is presumed to be reliable, and where so specified in the report, has been verified; but no responsibility, whether legal or otherwise, is assumed for its accuracy, and it cannot be guaranteed as being certain. No single item of information was completely relied upon to the exclusion of other information. Appraisal reports may contain estimates of future financial performance, estimates or opinions that represent the appraiser's view of reasonable expectations at a particular point in time, but such information, estimates or opinions are not offered as predictions or as assurances that a particular level of income or profit will be achieved, that events will occur, or that a particular price will be offered or accepted. Actual results achieved during the period covered by our prospective financial analyses will vary from those described in our report, and the variations may be material. Any proposed construction of rehabilitation referred to in the appraisal is assumed to be completed within a reasonable time and in a workmanlike manner according to or exceeding currently accepted standards of design and methods of construction. Any inaccessible portions of the property or improvements not inspected are assumed to be as reported or similar to the areas that are inspected. It should be specifically noted by any prospective mortgagee that the appraisal assumes that the property will be competently managed, leased, and maintained by financially sound owners over the expected period of ownership. This appraisal engagement does not entail an evaluation of management's or owner's effectiveness, nor are we responsible for future marketing efforts and other management or ownership actions upon which actual results will depend. The Americans with Disabilities Act ("ADA") became effective January 26, 1992. PricewaterhouseCoopers has not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since PricewaterhouseCoopers has no direct evidence relating to this issue, PricewaterhouseCoopers did not consider possible non-compliance with the requirements of ADA in estimating the value of the property. The report, the final estimate of value and estimates of future financial performance included therein, are intended for the information of the person or persons to whom they are addressed, solely for the purposes stated therein, and should not be relied upon for any other purpose. The addressee shall not distribute the report to third parties without prior permission of PricewaterhouseCoopers. Before such permission shall be provided, the third party shall agree to hold PricewaterhouseCoopers harmless relative to their use of the report. Neither our report, nor its contents, nor any reference to the appraisers or PricewaterhouseCoopers, may be included or quoted in any offering circular or registration statement, prospectus, sales brochure, other appraisal, loan or other agreement or document without our prior written permission. Permission will be granted only upon meeting certain conditions. Generally, PricewaterhouseCoopers will not agree to the use of its name as a "named expert" within the meaning of the Securities Act of 1933 and the Securities Act of 1934. The valuation applies only to the property described and for the purpose so stated and should not be used for any other purpose. Any allocation of total price between land and the improvements as shown is invalidated if used separately or in conjunction with any other report. Unless otherwise required by law, neither the report nor any portions thereof (especially any conclusions as to value, the identity of the appraisers or PricewaterhouseCoopers, or any reference to the Appraisal Institute or other recognized appraisal organization or the designations they confer) shall be disseminated to the public through public relations media, news media, advertising media, sales media or any other public means of communication without the prior written consent and approval of the appraisers and PricewaterhouseCoopers. The date(s) of the valuation to which the value estimate conclusions apply is set forth in the letter of transmittal and within the body of the report. The value is based on the purchasing power of the United States dollar as of that date. Terms of the Engagement: Appraisal assignments are accepted with the understanding that there is no obligation to furnish services after completion of the original assignment. If the need for subsequent service related to an appraisal assignment (e.g., testimony, updates, conferences, reprint or copy service) is contemplated, special arrangements acceptable to PricewaterhouseCoopers must be made in advance. The working papers for this engagement have been retained in our files and are available for your reference. Unless otherwise stated, no effort has been made to determine the possible effect, if any, on the subject property of energy shortage or future federal, state or local legislation, including any environmental or ecological matters or interpretations thereof. We take no responsibility for any events, conditions or circumstances affecting the subject property or its value, that take place subsequent to either the effective date of value cited in the appraisal or the date of our field inspection, whichever occurs first. PricewaterhouseCoopers does not, as part of its valuation, perform an audit, review or examination (as defined by the AICPA) of any of the historical or prospective financial information used, and therefore does not express any opinion with regard to same. ATTACHMENT C Definition of Market Value For the purpose of this report, Market Value is defined as follows. The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and acting in what they consider their best interests; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.' 1 "Uniform Standards of Professional Appraisal Practice" (Washington, D.C.: The Appraisal Foundation, 1996), p. 10. PtICEWATERHOUsECW PERS