Exhibit 10.4
A G R E E M E N T
The Professional Golfers' Association of America
LML Development Corp. of California
THIS AGREEMENT is made this 5th day of March, 1984, by and between
THE PROFESSIONAL GOLFERS' ASSOCIATION OF AMERICA (hereinafter the "PGA") and LML
DEVELOPMENT CORP. OF CALIFORNIA (hereinafter "Landmark").
WHEREAS, Landmark currently owns or controls approximately 1600
acres of land located near La Quinta, California, currently known as the Xxxxxxx
Ranch, which land is more fully described on Exhibit "A" attached hereto and
made a part hereof (hereinafter the "Xxxxxxx Ranch Property"); and
WHEREAS, Landmark intends to develop and operate the Xxxxxxx Ranch
Property by, inter alia, constructing and selling residential, commercial,
hotel, office and other facilities and, incidental thereto, developing and
operating golf courses, golf clubs and related golf facilities (hereinafter
collectively the "Xxxxxxx Ranch Property Development"); and
WHEREAS, the PGA is desirous of establishing offices in the area
near La Quinta, California, in order to better enable the PGA to perform
services for its members on the West Coast of the United States; and
WHEREAS, the PGA is the owner of the initials "PGA" and certain
other identifications, logos and tradenames containing such initials and is the
owner of certain registered trademarks with respect to such initials
(hereinafter all such initials, logos, tradenames and registered trademarks are
referred to as the "PGA Marks"); and
WHEREAS, the PGA has the right to license the use of the PGA Marks
in connection with, inter alia, the promotion, sale, development and operation
of the Xxxxxxx Ranch Property Development, including, but not limited to, the
right to license the use of the PGA Marks in combination with the word "West"
for such purposes;
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, the PGA and Landmark hereby agree as follows:
1. (a) The PGA hereby grants to Landmark during the term of this
Agreement an exclusive right and license (hereinafter the "License") to use the
PGA Marks in combination with the word "West" (provided the word "West" is not
significantly smaller than the word "PGA") in connection with the sales,
promotion, advertising, development and/or operation of the Xxxxxxx Ranch
Property (and any additional land adjacent to
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or in the immediate vicinity of the Xxxxxxx Ranch Property that may hereafter be
added by Landmark to the Xxxxxxx Ranch Property Development). In furtherance
thereof, during the term of this Agreement, (i) the PGA shall not permit any
other golf course, resort or real estate development located within the States
of California or Arizona to utilize the words or names "PGA, or "PGA of American
in its name or to otherwise use the words or names "PGA" or "PGA of America" in
connection with the advertising or promotion thereof (except as used in
conjunction with (x) the word "Tour" or (y) the name of a local PGA Section
which covers the states of California or Arizona); and (ii) the PGA shall not
permit any other golf course, resort or real estate development located within
the United States to utilize the words or name "PGA West" in its name or to
otherwise use the words or name "PGA West" in connection with the advertising or
promotion thereof. The PGA agrees to take whatever legal or other action that
may be necessary to prevent or prohibit another golf course, resort or real
estate development from using the names or words "PGA," "PGA of America" and/or
"PGA West" as stated above; and Landmark agrees to cooperate with the PGA in any
such action provided the PGA reimburses Landmark for any reasonable expenses
incurred by Landmark in connection therewith.
(b) Landmark shall have the right to develop a PGA West emblem or
logo for use in connection with the Xxxxxxx Ranch Property Development; however,
the PGA shall have the prior right to approve any such emblem or logo, which
approval shall not be unreasonably withheld. Subsequent to the Termination Date
(as hereinafter defined), any emblem or logo developed by Landmark that contains
the words "PGA West" shall no longer be used by either party hereto.
2. Once an appropriate championship caliber golf course and related
golf facilities are developed to the PGA's reasonable satisfaction at the
Xxxxxxx Ranch Property Development, the PGA agrees to negotiate in good faith to
make all necessary arrangements to conduct some or all of the following events
at the Xxxxxxx Ranch Property Development:
(1) a PGA Championship;
(2) a PGA Seniors Championship;
(3) a Club Professional Championship;
(4) the Ryder Cup Matches; and
(5) the PGA Cup Matches.
Holding any or all of the foregoing events at the Xxxxxxx Ranch
Property will depend on the execution of a mutually acceptable financial
agreement between the PGA and Landmark.
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3. The PGA shall exert reasonable and best efforts to promote and
advertise the golf clubs and other developments now or hereafter located upon
the Xxxxxxx Ranch Property so as to further the success of the same; and, in
connection therewith, the PGA agrees to utilize those periodicals, television
times and other mediums of exposure at its disposal to effect such promotion.
4. Landmark agrees to pay to the PGA, as consideration for the
License, the sums set forth on Exhibit "B" attached hereto and made a part
hereof, which sums shall be due and payable within thirty (30) days subsequent
to a closing of a sale by Landmark of a residential unit or residential lot
located upon the Xxxxxxx Ranch Property to an original retail third party
purchaser. Notwithstanding, sales of residential units and/or residential lots
to developer(s) or builder(s) for further construction or development shall not
be deemed sales of residential units or residential lots for the purposes of
this paragraph; however, subsequent sales by such developer(s) or builder(s) of
fully improved residential units or residential lots to original retail third
party purchasers shall trigger the obligation of Landmark to pay to the PGA the
sums set forth on Exhibit "B." In addition, beginning in the calendar year 1986,
and continuing each successive year thereafter until all residential lots and
residential units located upon the Xxxxxxx Ranch Property have been sold,
Landmark shall guarantee that, by the end of each such calendar year, the PGA
will have received from fees generated from sales as aforesaid, on a cumulative
basis, the sums set forth on Exhibit "C" attached hereto and made a part hereof.
In the event sales of residential units and/or residential lots on the Xxxxxxx
Ranch Property do not generate such guaranteed sums, then Landmark shall pay to
the PGA such monies as may be necessary to cover the amount so guaranteed for
that particular year; and such monies so paid by Landmark shall be credited to
sums due from Landmark on sales of residential lots or residential units
occurring during subsequent years. Provided Landmark is using the name "PGA
West" in the name of any golf club(s), golf course(s), hotel(s) and/or any other
commercial, office or residential developments then located on the Xxxxxxx Ranch
Property at such time that all of the residential units and residential lots
located upon the Xxxxxxx Ranch Property have been sold, Landmark shall
thereafter incur the obligation to pay unto the PGA the sum of $100,000.00 per
year until the Termination Date (as hereinafter defined). As used herein, the
term "Termination Date" shall mean the later of (a) the date on which all of the
residential units and residential lots located on the Xxxxxxx Ranch Property
have been sold, or (b) the date on which Landmark ceases to use the name "PGA
West" in the name of any golf club(s), golf course(s), hotel(s) and/or any other
commercial, office or residential developments then located on the Xxxxxxx Ranch
property. As used herein, the terms "residential units" and "residential lots"
shall not be deemed to include property and/or improvements which
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are or shall be utilized for hotel, motel or other transient accommodations,
apartment use or the like.
5. (a) Landmark agrees that, prior to the Termination Date, members
of the PGA shall have (i) a non-exclusive right to use certain golf clubhouse
facilities designated by Landmark and located upon the Xxxxxxx Ranch Property,
and (ii) priority with respect to the booking of tee times on an 18-hole golf
course designated by Landmark and located upon the Xxxxxxx Ranch Property, which
priority shall begin seven (7) full days and end three (3) full days prior to
the date of such tee time. Members of the PGA shall be charged prevailing greens
fees and cart fees in effect at the time for such golf course unless otherwise
agreed between the parties hereto. In addition, members of the PGA shall have
the right to purchase golf club memberships upon prevailing terms and conditions
in effect at the time for such golf club unless otherwise agreed between the
parties.
(b) The PGA shall have the right to request that a golf course
located upon the Xxxxxxx Ranch Property be closed to non-PGA players for PGA
competitive events. Landmark shall reasonably comply with such requests,
provided (i) such request is made at least ninety (90) days prior to the
intended play date, (ii) a golf course (to be designated by Landmark) located
upon the Xxxxxxx Ranch Property has not been previously booked and is available
for play on the requested play dates, and (iii) the PGA guarantees a minimum
number of one hundred (100) players per day, who will pay such cart fees, range
fees and greens fees as may be agrees upon between the PGA and Landmark.
6. (a) At such time that all required governmental approvals have
been obtained, Landmark agrees, upon the request of the PGA, to construct for
the PGA an office structure (hereinafter the "PGA Building") containing at least
12,000 square feet but no more than 20,000 square feet (unless a larger
structure is mutually agreed upon). The PGA Building shall be constructed on a
mutually agreeable location on the Xxxxxxx Ranch Property in conformance with
mutually agreeable plans, specifications, construction cost estimates and
construction timeframes, but the exterior of the PGA Building shall be subject
to final architectural approval by Landmark to ensure harmonious design with the
remainder of the Xxxxxxx Ranch Property Development. At such time as the PGA
Building is fully constructed and ready for occupancy by the PGA, the PGA
Building, together with the legal parcel upon which it is locates (which shall
be at least two acres) (such legal parcel, together with the PGA Building,
hereinafter referred to as the "PGA Property"), shall be deeded unto the PGA
free and clear of any liens or encumbrances which would materially adversely
affect the intended use of the PGA Property for office purposes.
Notwithstanding, it is agreed that the following restrictions shall be set forth
in the transfer instrument of the PGA Property to the PGA:
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(i) the PGA Property shall be restricted to use by the PGA and its
staff and shall not be leased or subleased to third parties without the
prior written consent of Landmark;
(ii) the PGA Property shall not be subdivided nor shall any other
building or structure be constructed thereon without the prior written
consent of Landmark;
(iii) Landmark, for itself, its legal representatives, successors
and assigns, shall have, along with the PGA, its employees, guests and
invitees, a non-exclusive parking and access easement over and across any
parking lots or other parking facilities located upon the PGA Property;
and
(iv) in the event an acceptable offer is made to the PGA, by a bona
fide third party, to purchase or acquire the PGA Property or any portion
thereof or interest therein (hereinafter the "Purchase Offer"), the PGA
shall deliver a copy of the Purchase Offer to Landmark, and Landmark shall
thereafter have the exclusive prior right, for a period of thirty (30)
days after receipt of a copy of the Purchase Offer, to purchase or acquire
the estate or interest in or to the PGA Property designated in the
Purchase Offer, on the terms of the Purchase Offer, by delivering to the
PGA during said thirty (30)-day period, notice of Landmark's intention to
exercise its first refusal rights (except that if the Purchase Offer price
consists in whole or in part of consideration other than cash or a
deferred payment, the fair market value of such other consideration shall
be deemed payable in Cash). The first refusal rights of Landmark set forth
in this clause "(iv)" shall not apply to transfers of the PGA Property, or
portion thereof, to any parent corporation of the PGA or any subsidiary or
sub-subsidiary thereof.
Notwithstanding the above, Landmark's obligations set forth in this Paragraph
"6" shall be expressly conditioned upon the execution of a mutually agreeable
financial agreement between the PGA and Landmark as to the repayment to Landmark
of actual costs incurred in the construction of,the PGA Building (it being
understood that the raw land costs relative to the PGA Building site shall be
borne by Landmark and not passed on to the PGA).
(b) The PGA Property shall be maintained by the PGA, at its sole
cost and expense, in a good and attractive condition; however, in the event
Landmark, its employees, guests or invitees utilize their rights to park on the
PGA Property, Landmark agrees to bear its fair share (based on usage) of the
maintenance costs of such parking lots or other parking facilities on the PGA
Property. In the event the PGA does not so maintain the PGA Property, Landmark
shall have the right to notify the PGA of such breach and if the same is not
cured within a reasonable time, Landmark shall have the right to perform all
necessary
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maintenance and to deduct the cost thereof from payments due to the PGA under
this Agreement.
7. Nothing contained herein shall be construed to restrict in any
way the right of Landmark to contract with or enter into an agreement with any
person, corporation, entity or other organization (including, without
limitation, the PGA Tour) with respect to any participation by such person,
corporation, entity or other organization in the advertising, sales, promotion,
development and/or operation of the Xxxxxxx Ranch Property.
8. This Agreement may not be assigned by either party hereto without
the prior written approval of the other party, which approval shall not be
unreasonably withheld. Notwithstanding the above, either party hereto may assign
this Agreement to its parent corporation or any subsidiary or sub-subsidiary
thereof without the prior written consent of the other party. In addition,
notwithstanding the above, Landmark shall have the exclusive right and option to
sublicense the use of the name "PGA West" in connection with the Xxxxxxx Ranch
Property Development without the prior written approval of the PGA. In this
regard, the PGA acknowledges that Landmark intends to sublicense the name "PGA
West" with respect to one or more hotels and other commercial, office and
residential developments in the Xxxxxxx Ranch Property Development.
9. (a) The PGA shall be consulted with regard to the design and
operation of golf courses and golf clubhouses which are to be located on the
Xxxxxxx Ranch Property (hereinafter the "Golf Facilities"). Landmark shall be
obligated to maintain the Golf Facilities up to standards of top rated country
clubs in the area and the PGA shall have the right to notify Landmark in the
event such standards are not being maintained. In addition, the PGA shall have
the right, upon at least 24 hours prior written notice to Landmark and at
reasonable intervals and during reasonable business hours, to inspect the Golf
Facilities and other facilities owned and operated by Landmark and to which the
name PGA West applies. In the event the PGA determines that goods or services
sold or performed under this Agreement by Landmark or its sublicensees do not
meet reasonable PGA standards of good quality, the PGA shall immediately notify
Landmark in writing of those items to which it specifically objects in order
that Landmark may take such steps as are reasonably necessary to cure such
objections, provided the PGA hereby agrees that it shall not unreasonably object
to any such goods or services or otherwise unreasonably exercise its quality
review powers hereunder.
(b) In the event an acceptable offer is made to Landmark, by a bona
fide third party, to purchase or acquire the Golf Facilities or any portion
thereof or interest therein (hereinafter the "Golf Facilities Purchase Offer"),
Landmark shall deliver a copy of the Golf Facilities Purchase Offer to the
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PGA and the PGA shall have the exclusive prior right, for a period of thirty
(30) days after receipt of the copy of the Golf Facilities Purchase Offer to
purchase or acquire the estate or interest in or to the Golf Facilities
designated in the Golf Facilities Purchase Offer, on the terms of the Golf
Facilities Purchase Offer, by delivering to Landmark, during said thirty
(30)-day period, notice of the PGA's intention to exercise its first refusal
rights (except that if the Golf Facilities Purchase Offer price consists in
whole or in part of consideration other than cash or a deferred payment, the
fair market value of such other consideration shall be deemed payable in cash).
The first refusal rights of the PGA set forth in this subparagraph "(b)" shall
not apply to transfers of the Golf Facilities, or any portion thereof, (i) to
any parent corporation of Landmark or any subsidiary or sub-subsidiary thereof,
or (ii) to members or the membership of a "golf club" or "country club"
utilizing the Golf Facilities or portion thereof so transferred.
10. A breach of this Agreement shall consist of a material failure
by either party to comply with its obligations set forth in this Agreement. Upon
any breach hereunder, the injured party shall provide notice in the manner set
forth in this Agreement to the breaching party, which notice shall specify in
detail the nature of the breach, together with the recommended cure or remedy
therefor. In the event the breach described in the notice is not cured within
sixty (60) days after notice is sent (or if such breach cannot reasonably be
cured within said sixty (60)-day period, then within such extended period of
time as may be reasonably necessary to cure the same) then the injured party
shall have, as its sole and exclusive remedy hereunder, the right to collect
from the breaching party all actual damages incurred as a result of such breach.
Notwithstanding, in the event the PGA breaches this Agreement, Landmark's right
and license to the use of the name "PGA West" as stated herein shall continue in
full force and effect in accordance with the terms of this Agreement.
11. Landmark agrees to defend the PGA and its officers, directors,
agents and employees and to hold each of them harmless from any and all damages,
claims, demands or causes of action arising solely from the use by Landmark of
the PGA Marks pursuant to the terms of this Agreement, provided Landmark is
given timely notice of, and shall have the opportunity to participate in the
defense of, any such claim, demand or cause of action. Notwithstanding the
above, the PGA agrees to defend Landmark and its sublicensees, their officers,
directors, agents and employees, and to hold them harmless from damages, claims,
demands or causes of action for trademark infringement or other similar claims
relating to the right of the PGA to license the PGA Marks or to the right of
Landmark to use the PGA Harks as authorized in this Agreement, provided the PGA
is given timely notice of, and shall have the opportunity to participate in the
defense of, any such claim, demand or cause of action.
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12. Any notices contemplated hereunder shall be given by letter
addressed to the respective addresses shown below by depositing such letter in
the United States mail, postage prepaid, return receipt requested; and such
notice shall be deemed received on the third day thereafter. Any change of
address shall be furnished to the other party by notice as provided herein.
As to the PGA:
100 Avenue of the Champions
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Executive Director
As to Landmark:
Xxxx Xxxxxx Xxx 0000
Xx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxxxxx, Xx., and Xxxxxx X. Xxxxxxx
13. This Agreement shall be governed and construed in accordance
with the laws of the State of California.
14. This Agreement contains the entire agreement of the parties and
may not be altered or amended except in writing duly signed by the parties
hereto. This Agreement shall supersede all previous communications,
representations or agreements, either verbal or written, between the parties,
including the letter agreement dated January 6, 1984, executed on January 8,
1984.
15. Nothing herein shall be construed to make the parties hereto as
partners or as Joint venturers, or either as agent of the other; and neither
party shall have any power to obligate or bind the other in any manner
whatsoever, except as expressly provided herein. Subject to any restrictions on
assignment or sublicensing contained herein, this Agreement shall be binding on
3 all legal representatives, successors or assigns of either party.
16. If any provision or any portion of any provision of this
Agreement shall be held to be void or unenforceable, the remaining provisions of
this Agreement and the remaining portion of any provision held void or
unenforceable in part shall continue in full force and effect.
17. This Agreement may be executed in one or more separate
counterparts, each of which, when so executed, shall be deemed to be an
original. Such counterparts shall, together, constitute and be one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto, by their duly authorized
officers, have executed this Agreement as of the date and year first above
written.
THE PROFESSIONAL GOLFERS'
ASSOCIATION OF AMERICA
By:
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LML DEVELOPMENT CORP. OF CALIFORNIA
By:
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