HomeMy WebLinkAboutRes 06-11 C24810 Kemper SportsC24810
CITY OF PALM DESERT
STAFF REPORT
REQUEST: APPROVAL OF RESOLUTION NO. 0611 OF THE CITY COUNCIL APPROVING
A MANAGEMENT AGREEMENT WITH KEMPER SPORTS MANAGEMENT, INC.
SUBMITTED BY: DAVID YRIGOYEN, DIRECTOR OF REDEVELOPMENT / HOUSING
DATE: JANUARY 26, 2006
CONTENTS: CITY OF PALM DESERT RESOLUTION NO. 0611
MANAGEMENT AGREEMENT WITH KEMPER SPORTS MANAGEMENT, INC.
Recommendation:
By Minute Motion, that the City Council approve Resolution No. 0611 authorizing the
City Manager to execute a management agreement with Kemper Sports Management,
Inc.
Executive Summary:
The attached resolution of the Palm Desert City Council approves a new management agreement with
Kemper Sports Management, Inc.
Discussion:
Kemper's current management agreement expires on June 30, 2006. This resolution approves a new
management agreement with Kemper, extending the term to June 30, 2008 with two one-year options
to extend the contract, at the City's discretion. The two-year contract with two one-year options is required
so the City and RDA remain in compliance with the bond issued and used for the acquisition and
construction of Desert Willow Golf Resort. Bond Counsel has reviewed and concurs with the new terms
of the agreement.
The agreement is essentially similar to the other agreements in that Kemper agrees to operate the day-
to-day activities of the whole facility to include the proshop, restaurant, golf course, and the golf course
learning center. They agree to maintain the facilities in a manner and standard equal to other top rated
golf facilities. Administratively, Kemper agrees to employee, train and provide qualified employees within
all facets of the facility. Kemper also agrees to cover any cash shortages recognized by Desert Willow
and maintain a cash balance of five -hundred thousand ($500,000) in the accounts at all times. The new
monthly fixed management fee will increase from $65,507 to $69,570 ; a monthly increase of $4,063. This
increase will cover the additional costs of key employees provided by Kemper to Desert Willow. The Key
employees are the General Manager, Golf Course Superintendent, Restaurant Manager, Pro shop
manager, and the Sales Director. In substance, the other provisions of the contract remain the same.
It is staff's recommendation to approve the resolution executing the agreement with Kemper Sports
Management, Inc. Their experience with the facility and expert knowledge in the golf industry has allowed
Desert Willow to continue to hold market share in the local golf industry.
H:\WPDOCS\Interoffice Memos\Desert Willow 2006\012606kemperapreementfinal.wpd
Res. No. 06-11
C-24810
Submitted by:
ave Yr( n,
Director Redevelopment/Housing
Approval:
McCarthy, ACM/
pment
Approval:
Paul S. •sort'Dire
H:\W PDOCS\Interoffice Memos\Desert Willow 2006\012606kemperagreementfinal.wpd
RESOLUTION NO. 06-11
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT APPROVING A MANAGEMENT AGREEMENT WITH KEMPER
SPORTS MANAGEMENT, INC.
THE CITY COUNCIL OF THE CITY OF PALM DESERT HEREBY FINDS,
DETERMINES, RESOLVES AND ORDERS AS FOLLOWS:
Section 1. The Management Agreement by and among the City of Palm
Desert, the Palm Desert Golf Course Facilities Corporation, and Kemper Sports
Management, Inc., substantially in the form presented to the City Council at this
meeting, is hereby approved, and the Mayor and City Clerk are hereby authorized and
directed, in the name and on behalf of the City of Palm Desert, to execute such
Agreement for the Fixed Management Fee set forth in Section 6.1 in the amount of
$834,840.
PASSED, APPROVED AND ADOPTED this 26th day of January 2006, by the
following vote to wit:
AYES:
NOES:
ABSENTS:
ABSTAINS:
Jim Ferguson, Mayor
Attest:
Rachelle D. Klassen, City Clerk
m
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made and
entered into this day of January, 2006 by and among the CITY OF PALM DESERT,
a charter city, organized and validly existing under the Constitution and laws of the State
of California (the "City"), the PALM DESERT RECREATIONAL FACILTTiES
CORPORATION, a California nonprofit public benefit corporation ("PDRFC") and
KEMPER SPORTS MANAGEMENT, INC., an Illinois corporation ("Kemper").
PRELIMINARY STATEMENT
A. The City is the owner of certain real property located in the City of
Palm Desert, California, which is improved with two 18-hole golf courses and related
facilities (the "Golf Resort"), as defined herein.
B. The City desires to utilize the services of Kemper to operate and
manage the Golf Resort, upon the terms and conditions set forth in this Agreement.
C. The City and the PDRFC have entered into that certain Lease
Agreement dated as of March 14, 1997, as amended (the "Lease Agreement") pursuant to
which the City leases the restaurant premises at the clubhouse to PDRFC.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the City, PDRFC and Kemper hereby agree as follows:
ARTICLE I
DEFINITIONS
Definitions. As used in this Agreement, the following terms shall have the
respective meanings indicated below:
A�encv - The Palm Desert Redevelopment Agency, a public body,
corporate and politic, duly organized and validly existing under the Constitution and laws
of the State.
Affiliate - Any and all corporations, partnerships, trusts, and other
entities directly or indirectly controlled by, controlling, or subject to direct or indirect
common control of an entity or person.
Capital Improvements - Any alteration, addition, improvement,
repair, replacement, rebuilding, or renovation to the Golf Resort, the cost of which
exceeds �5,000.00.
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Cause - The failure of any party to keep, observe or perform any
material covenant, agreement, term or provision of this Agreement to be kept, observed
or performed by such party.
City - The City of Palm Desert, a charter city, duly organizcd and
validly existing under the Constitution and laws of the State.
City Manager - The person holding the position of City Manager of
the City.
Compensation - The direct salaries and wages paid to or accruing for
the benefit of the management staff and all other persons employed by Kemper at the
Golf Resort, together with all fringe benefits payable to or accruing for the benefit of
such employees, including employer's contribution under the Federal Insurance
Contributions Act ("FICA"), unemployment compensation, or othcr cmploymcnt taxcs,
pension fund contributions, worker's compensation, group life and accident and health
insurance premiums, retirement, disability and other similar benefits; provided, however,
compensation shall be in general conformity with that paid at other golf courses operated
by Kemper, taking into account geographic and project specific differences, and industry
standards.
CPI - The CPI shall mean the Consumer Price Index for All Urban
Consumers for the Los Angeles - Anaheim - Riverside area (1982-84 = 100), as
published by the United States Department of Labor, Bureau of Labor Statistics. Should
the Unitcd States Department of Labor, Bureau of Labor Statistics discontinuc the
publication of the CPI or publish the CPI less frequently or vary the method of
calculating the CPI, then the parties shall agree upon a substitute index or substitute
procedure which reasonably reflects and monitors consumer prices and most closely
matches the CPI initially provided herein.
Furnishin�s and EQuipment - All furniture, furnishings, trade
fixtures, apparatus and equipment, including without limitation course maintenance
vehicles and equipment, golf carts, driving range pickers and pullers, mats, range ball
baskets, cash registers, rental golf clubs and bags, ball washers, benches, uniforms,
kitchen equipment, appliances, china, glassware, silverware, office equipment,
computers, copy machines, facsimile machines, telephone systems (not including pay
telephones), and other personal property used in or held in storage for use in the operation
of the Golf Resort, other than Operating Inventory.
Golf Resort - The Golf Resort is the Desert Willow Golf Course at
Palm Desert, owned by the City and which includes two 18-hole golf courses, a
clubhouse, pro shop, driving range, maintenance facility and related facilities.
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Golf Course Committee - The Golf Course Committee is the group
of individuals appointed by the City Manager. The composition of the Golf Course
Committee may, from time to time, be altered in size or membership by the City
Manager.
Golf Resort Expenses - All costs and expenses incurred in the
operation, management, and maintenance of the Golf Resort, including (a) all
expenditures incurred by Kemper in the performance of its obligations under this
Agreement on behalf of the City or expenditures incurred by the City for the beneft of
the Golf Resort; (b) all expenses specifically identified as "Golf Resort Expenses" in this
Agreement; and (c) all other expenses incurred by Kemper in connection with the Golf
Resort or this Agreement, which expenses were not reasonably anticipated by the parties
or otherwise provided in this Agreement and which expenses, if assumed by Kemper,
would be consistent with the role of a golf resort manager; provided, however, any such
unplanned expense which exceeds $5,000.00 must have prior written approval from the
City Manager, which approval shall be acted upon within 15 days and shall not be
unreasonably withheld. Golf Resort Expenses shall not include any expenses of
Kemper's corporate office or the Compensation of any employee of Kemper except as
otherwise provided in Section 3.4.3 of this Agreement.
Gross Revenues - Gross Revenues has the meaning set forth in
Section 6.3 hereof.
Impositions - All taxes and assessments (including without
limitation real property taxes and assessments, possessory interest taxes, and personal
property taxes), water, sewer or other similar rents, rates and charges, levies, license fees,
permit fees, inspection fees and other authorization fees and charges, which at any time
may be assessed, levied, confirmed or imposed on the Golf Resort or the operation of the
Golf Resort.
Insurance Requirements - All requirements of each insurance policy,
and all orders, rules, regulations and other requirements of the National Board of Fire
Underwriters (or any other body exercising similar functions) applicable to the Golf
Resort or the operation of the Golf Resort.
Intrawest Clubhouse - The Intrawest Clubhouse is a discrete portion
of the clubhouse on the Golf Resort, to which admission is limited to members and guests
of Intrawest Resort Ownership Corporation, or another operator of a resort club or
timeshare project on the property adjacent to the Resort Course.
Kemper - Kemper Sports Management or any successor to Kemper's
interest under this Agreement as provided in Section 9.2 of this Agreement.
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Kev Employees - The on-site general manager, the golf course
superintendent, the director of sales, the food and beverage director, and the head golf
professional are Key Employees of Kemper.
Learnin� Center - The Learning Center is a free-standing facility,
located adjacent to the driving range, providing golf services to the Golf Resort
independent of Clubhouse facilities.
Le�al Requirements - All laws, statutes, ordinances, orders, rules,
regulations, permits, licenses, authorizations, directives and requirements of all
governments and governmental authorities, which now or hereafter may be applicable to
the Golf Resort or the operation of the Golf Resort.
Operating Inventory - Consumable items used in or held in storage
for use in the operation of the Golf Resort, including score cards and cart tickets, driving
range balls, golf pro shop merchandise, food and beverage inventory, kitchen supplies,
paper and plastic ware, locker room and bathroom supplies, towels, fuel, cleaning
materials, fertilizers, pesticides, seed, maintenance parts and supplies, office supplies, and
other similar items.
Oneratin� Year - An Operating Year shall be a 12 month period
during the term of this Agreement commencing on July 1 and continuing through and
including the following June 30; provided, however, the first Operating Year shall
commence on the Commencement Date and shall end on June 30 of the next following
year.
Resident - A Resident is a person whose primary residence is the
City.
State - The State of California.
Threshold Amount - The term "Threshold Amount" is the amount
set forth in Section 6.2" hereof.
ARTICLE II
TERM OF AGREEMENT
2.1 Term.
A. The term of this Agreement shall commence on July 1, 2006 (the
"Commencement Date") and continue through June 30, 2008 (the "Termination Date").
Notwithstanding the foregoing, however, either party may terminate this Agreement for
Cause at any time by delivery to the other party of written notice (the "Initial Notice")
60 days prior to the date of termination, which Initial Notice shall specify the Cause and
provide for the action required to remedy the Cause within 30 days of the notice (the
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"Cure Period"). If the non-terminating party performs the required action to remove thc
Cause within the Cure Period to the sole satisfaction of the terminating party, then this
Agreement shall remain in full force and effect. If the non-terminating party fails to
remove the Cause to the terminating party's satisfaction within the Cure Period, then this
Agreement shall terminate on the specified date of termination set forth in the Initial
Notice. In addition, either party may terminate this Agreement, in its sole and absolute
discretion, on or after June 30, 2007, by delivery to the other party of written notice 60
days prior to the date of termination.
B. The City , at its option, may extend the term of this Agreement for
one year by giving written notice of the exercise of such option to Kemper prior to
January 1, 2008. In the event of the exercise of such option by the City, all other terms of
this Agreement shall remain the same, except "July 1, 2009", shall be the new
Termination Date in Section 2.1 A hereof. In the event that the City exercises the option
described above in this paragraph B, the City at its further option, may extend the term of
this Agreement for a second year by giving written notice of the exercise of such option
to Kemper prior to January 1, 2009. In the event of the exercise of such second option by
the City, all other terms of this Agreement shall remain the same, except "July 1, 2010,"
shall be the new Termination Date in Section 2.1.A hereof.
ARTICLE III
OPERATING RESPONSIBILITIES
3.1 Management of the Golf Resort bv Kemper. The City hereby contracts
with Kemper to manage and operate the Golf Resort pursuant to the terms of this
Agreement, and Kemper agrees it shall manage and operate the Golf Resort pursuant to
the terms of this Agreement. Subject to the terms of this Agreement, Kemper shall have
the authority and responsibility to: (a) determine, establish, and implement the policies,
standards, and schedules for the operation and maintenance of the Golf Resort and all
matters affecting customer relations; (b) hire, train, and supervise the general manager,
course superintendent, and all Golf Resort employees; (c) supervise and direct all phases
of advertising, sales, and business promotion for the Golf Resort; and (d) establish
accounting and payroll procedures and functions for the Golf Resort. The City agrees it
shall cooperate with Kemper to permit and assist Kemper to carry out its duties under this
Agreement; provided, however, that the City Council's annual resolution setting rates and
the season schedule shall govern to the extent of its terms. All policies and procedures of
Kemper relating to the Golf Resort including but not limited to those set forth in clauses
(a) through (d), above, shall be subject to the approval of the designee of the City and the
designee of the City may, from time to time, recommend other policies or procedures,
which Kemper shall follow and implement.
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3.2 Annual Plans.
3.2.1 Preparation and Approval. Kemper shall submit to the City
Manager on or before execution of this Agreement by the City and on or before March l,
of the fscal year the annual plan (the "Annual Plan") for the Golf Resort for the next
Operating Year. The Annual Plan shall include an operating budget containing estimates
of all Golf Resort Expenses for the next Operating Year, including expenditures for
(a) property operation and maintenance, (b) repairs, replacements, and alterations which
do not constitute Capital Improvements, (c) Furnishings and Equipment and Operating
Invcntory, and (d) advertising, sales, and business promotion. The Annual Plan shall also
include the course maintenance plan and the marketing and business plan for the Golf
Resort for the next Operating Year. The parties agree that they shall use their best efforts
to limit any increase in Golf Resort Expenses during the term of this Agreement to an
annual average of three and one-half percent or the percentage increase in the CPI for
such period, whichever is greater. The parties understand that, as provided in Article IV
of this Agreement, recommendations and budgets for Capital Improvements will be
treated separately and will not form part of the Annual Plan. The Annual Plan shall be
subject to the prior written approval of the City, which approval shall not be
unreasonably withheld. The City agrees to examine each Annual Plan submitted by
Kemper and it is contemplated by the parties that the Annual Plan will be agreed upon by
the parties not later than July 1 of each year. Each Annual Plan may contain a
contingency item equal to five percent of the total projected Golf Resort Expenses.
In the event of a dispute with regard to the Annual Plan, pending the
resolution of such dispute, Kemper shall continue to manage and operate the Golf Resort
in accordance with the standards set forth in this Agreement at a level of expenditures
comparable to those of the preceding Operating Year plus up to an additional three and
one-half percent of such amount or an amount equal to the percentage increase in the CPI
over such period, whichever is greater. This amount shall apply to actual costs, not to the
Fixed Management Fee described in Section 6.1.
3.2.2 Compliance. Kemper shall comply, to the extent reasonably
and commercially practicable, with the applicable Annual Plan. Kemper shall not spend
for Golf Resort Expenses in excess of the amount budgeted in the Annual Plan without
the prior written consent of the City Manager. Notwithstanding the foregoing sentence,
Kemper shall be entitled to make additional expenditures not authorized under the then
applicable Annual Plan in the event of an emergency or in order to comply with any
applicable Insurance Requirements or Legal Requirements.
3.2.3 Quarterlv Review of Annual Plan. The general
manager of the Golf Resort shall meet not less frequently than quarterly with the City
Manager and discuss the operating results of the Golf Resort, and the parties shall agree
upon any amendments or revisions to the Annual Plan to take into consideration variables
or events that did not exist, or could not be anticipated by Kemper or the City, at the time
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the Annual Plan was prepared. Any material amendments or revisions to the Annual Plan
shall be subject to the prior approval of the City.
3.3 Responsibilities of Kemper. Without in any way limiting Kemper's
right to manage and operate the Golf Resort in accordance with the terms of this
Agreement, Kemper shall perform the following services, or cause the same to be
performed for the Golf Resort, and all expenditures of Kemper and costs and expenses
incurred by Kemper in performing these services shall be Golf Resort Expenses:
3.3.1 consummate arrangements with concessionaires, licensees,
tenants of the City or subtenants of the City, or other intended users of the Golf Resort;
3.3.2 enter into such contracts for the furnishing of utilities and
maintenance and other services to the Golf Resort, subject to the terms of Section 3.6
below;
3.3.3 make all repairs, decorations, replacements, additions,
revisions, alterations and improvements to the Golf Resort as shall be reasonably
necessary for maintenance of the Golf Resort in good order, condition and repair, subject
to the terms of Article IV of this Agreement;
3.3.4 incur such expenses as shall be necessary for the proper
operation and maintenance of the Golf Resort, including without ]imitation rental
expenses for leased Furnishings and Equipment;
3.3.5 maintain a level of Operating Inventory deemed appropriate
by Kemper and the City Manager for supplying the needs of the Golf Resort and its
customers;
3.3.6 apply for, obtain and maintain, all licenses and permits
required of Kemper and the City in connection with the operation and management of the
Golf Resort; and the City agrees to execute any and all applications and such other
documents as shall be reasonably required and to otherwise cooperate, in all reasonable
respects, with Kemper in the application for, and obtaining and maintenance of, such
licenses and permits;
3.3.7 use commercially reasonable efforts to do, or cause to be
done, all such acts and things in and about the Golf Resort as shall be reasonably
necessary to comply with all Insurance Requirements and Legal Requirements;
3.3.8 pay all Golf Resort Expenses, Impositions and insurance
premiums, whether incurred by the City or Kemper, when due;
3.3.9 implement a marketing, advertising, and promotional plan for
the Golf Resort;
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3.3.10 purchase Furnishings and Equipment on behalf of the City
necessary to operate and maintain the Golf Resort in the manner provided in this
Agreement.
3.4 Personnel.
3.4.1 General. Kemper shall recruit, hire, train, discharge,
promote and supervise the management staff of the Golf Resort (i.e., the general
manager, the course superintendent, and other Key Employees), and Kemper shall
supervise through the management staff the recruiting, hiring, training, discharge,
promotion and work of all other employees of Kemper at the Golf Resort. The general
manager of the Golf Resort shall confidentially inform the City Manager of all
terminations and the reason therefor. All employees of Kemper at the Golf Resort shall
be properly experienced and qualified for their positions. Kemper may at its expense
assign its management trainees to the Golf Resort. From time to time, Kemper shall
provide safety training to its employees, including but not limited to training with respect
to the California Occupational Safety and Health Act. Kemper shall hire and maintain
the Key Employees, and the compensation of such Key Employees shall be at Kemper's
expense.
3.4.2 Pension and Benefit Plans. Subject to written approval by the
City Manager, Kemper shall have the right to provide the non-management employees of
the Golf Resort with pensions and other employee retirement benefits and disability,
health and welfare benefits, and other benefit plans at customary levels now or hercafter
available to similarly situated employees of other golf courses and country clubs operated
by Kemper, and the allocable share of such employee benefits accrued while working at
the Golf Resort shall be a Golf Resort Expense.
3.4.3 Temporary AssiQnment of Other Kemper Personnel. If the
positions of Key Employees are not filled for whatever reason, Kemper may temporarily
assign to these positions the staff of other golf courses and country clubs operated by
Kemper. During such time as these employees are temporarily assigned to the Golf
Resort, all such employees will be paid their regular Compensation.
3.4.4 Mana�ement Staf£ The general manager of the Golf Resort
shall be responsible for the day to day management and operation of the Golf Resort.
The name and telephone number (both home and business) of the general manager shall
be provided, in writing, to the City Manager and shall be current at all times. The general
manager shall be reasonably available during normal working hours to meet with the City
Manager. After normal working hours, the general manager shall be reasonably available
to appear at the Golf Resort if deemed necessary by the City Manager. The course
superintendent for the Golf Resort shall be a member in good standing of the Golf Course
Superintendents Association. The director of golf for the Golf Resort shall be a current
Class "A" member in good standing of the Professional Golf Association of America.
P6402\0001 \832395.2
The City Manager shall have the right to approve the individuals whom Kemper intends
to hire to fill the positions of General Manager, Golf Course Superintendent Director of
Marketing, and Assistant Superintendent.
3.4.5 Kev Emplovees. It is understood and agreed by the City that
the City shall not employ, seek to employ or discuss employment opportunities with any
Key Employees during the term of this Agreement or for a period of two years after the
termination of this Agreement.
3.5 Specific Operating Procedures. In addition to the more general
responsibilities of Kemper as manager of the Golf Resort as provided in this Article,
Kemper shall operate and manage the Golf Resort in accordance with the following
operating procedures:
3.5.1 Golf Resort Hours of Operation. Except upon the occurrence
of the events described in Article X of this Agreement, the Golf Resort shall be kept fully
open to adequately serve the public utilizing the Golf Resort, except for instances in
which normal maintenance requires temporary closure, as determined by Kemper and the
City in such parties' reasonable discretion. After seven days prior written notice to the
City, the golf courses and the driving range may be closed at the same time for winter
overseeding. The inside food and beverage services of the Golf Resort clubhouse shall
be open all year, except as otherwise approved in writing by the City Manager. The
hours of food and beverage services in the clubhouse restaurant shall be adequate to serve
the general public, subject to the approval of the City Manager.
3.5.2 Fees and Char�es. Kemper shall recommend, and the City
shall establish annually (or more frequently and in all cases consistent with resolutions
and orders of the City Council) all fees and charges for use of the golf course, golf carts,
bag storage, club rental and driving range. All other fees, charges, and prices for services
at the Golf Resort shall be set by Kemper and shall be comparative and competitive with
other first class golf resorts in the Coachella Valley.
3.5.3 Dress Code. Bathing attire, cut-offs and short shorts, halter
tops, tube tops, running outfits, and similar types of recreational wear are not considered
proper dress on the golf courses and shall not be permitted. Shirts and shoes shall be
worn at all times at the Golf Resort. This dress code shall apply to all visitors, golfers,
and employees.
3.5.4 Handicap Service. During the term of this Agreement,
Kemper shall implement a United States Golf Association golf handicap service for
golfers who patronize the Golf Resort. Kemper shall make the necessary anangements to
implement such a handicap system. The fee charged to golfers by Kemper for such
handicap service shall be an annual fee and shall not exceed two times the fee charged to
the Golf Resort by Southern California Golf Association or United States Golf
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Association, as the case may be, for providing the handicap service. The handicap
service shall not include as part of its benefits any privileges to use the golf courses, other
than the privileges otherwise available to the public.
3.5.5 Starter Service and Marshals. Starter services shall be
provided in the golf pro shop, and shall include the assignment of tee times and carts and
the collection of fees. While the golf courses are open for play, marshals shall closely
monitor and control the speed of play and assist the slower golfers in order to maintain
golf play at acceptable levels, in a manner to be determined by Kemper in its reasonable
judgment.
3.5.6 Club Cleanin�. Golf club cleaning services shall be provided
to golfers immediately upon their completion of golf play. There shall be no charge to
the golfers for golf club cleaning services. Appropriate Golf Resort employees may
accept gratuities from golfers for such services.
3.5.7 Tee Times. The tee time schedule for the golf courses shall
be recommended by Kemper and approved by the City Manager. "Starter" tee times
shall not be reserved, and the starter shall not work in groups if it will result in not
remaining "on schedule" throughout the day.
3.5.8 Fivesome Play. It shall be the policy of the Golf Resort not to
permit fivesomes. However, Kemper may permit fivesomes, when appropriate, at its
reasonable discretion.
3.5.9 Tournaments. Consecutive tee times, shotgun starting
formats, and modified shotgun starting formats shall be acceptable forms of reservations
for tournaments. During the appropriate seasons and provided the weather conditions
permit such an arrangement, when a full shotgun (use of all 18 holes) starting procedure
is used, it shall be timed in such a manner so as to potentially accommodate two full
shotguns per day - one in the morning and one in the afternoon. In preparation for a
tournament, Kemper shall, if necessary, prepare tee settings, spectator areas, and tents for
judges and players and shall mark hazards and damaged turf areas. Kemper shall provide
player identification cards for golf carts, and if necessary provide "closest to the pin" and
"longest drive" markers and scoring forms. If requested, Kemper shall arrange for food
and beverage services including box lunches and beverage carts. Kemper may charge a
separate fee if the tournament group wants any additional services, including but not
limited to: prior reservations, bag handling, merchandise, food and beverage services,
scoring, shuttle service between hotels and the Golf Resort, videotaping, portraits, shoe
cleaning services, or club cleaning services.
3.5.10 Golf Pro Shops. The golf pro shops shall be open for
business in accordance with the provisions of Section 3.5.1. Kemper shall employ a
qualified person for the golf pro shops, who will be responsible for promoting and
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increasing sales at the golf pro shops. Kemper shall employ qualified personnel to work
in the golf pro shops each day that the golf courses are open for play. Merchandise that
can reasonably be classified as "stale" or "unsalable" may be marked down. If Kemper
determines that any aged merchandise in the golf pro shops should not be sold, wheiher
on a discounted basis or otherwise, because of the reputation or image of the golf pro
shops, then with the approval of the City Manager, Kemper may purchase with its own
funds (and not from the Golf Resort Accounts) such merchandise at cost for purposes of
selling such merchandise at other golf courses operated by Kemper. Space shall be
provided in the golf pro shops for merchandise that the City may develop as part of its
marketing programs.
3.5.11 Learnin� Center. Kemper may operate a Learning Center on
the designated Learning Center Area on the Golf Resort. The City shall have the right, at
the City's sole discretion, to issue a request for proposals and/or make other arrangements
for awarding a Learning Center operating contract to a party other then Kemper, at any
time. If the City issues the contract to a third party, then Kemper shall, upon 30 days
notice from the City, remove itself from the Learning Center area and cease Learning
Center operations.
3.5.12 Golf Instruction. Kemper shall either employ or shall retain
as independent contractors golf instructors to provide golf lessons and golf instruction at
the Golf Resort. All golf instructors must be certified Professional Golf Association or
Ladies Professional Golf Association golf professionals or apprentices, and shall be
certified by the director of golf at the Golf Resort. All golf instruction fees shall be
handled as a cash register transaction and reported in the same manner as green fees.
Kemper shall develop a golf instructional program that will offer individual and group
lessons, video insh-uction, golf clinics, junior golf clinics, and golf schools. This golf
instructional program shall be used to complement golf package promotions offered by
the owner of the timeshare projects and hotels adjacent to the Resort Course. A golf
professional shall only be allowed to conduct golf lessons at the Golf Resort if he or she
has first obtained the approval to do so by Kemper; such approval may be conditioned on
payment of an appropriate fee.
3.5.13 Golf Drivin� Ran�e. The driving range property shall be
open in accordance with the provisions of Section 3.5.1. The driving range building shall
be staffed appropriately by Kemper. Driving range balls shall be of reasonable and
appropriate quality, and all cracked and worn range balls shall be removed daily. A
driving range fee shall be recommended by Kemper and set by the City Manager.
3.5.14 Golf Club Rentals and Bag Stora�e. Rental golf clubs and
bags shall be available for customers of the Golf Resort. Storage space for golf bags
shall be made available, and bag tags shall be placed on all golf bags stored at the Golf
Resort with the name of the player printed on the bag tag. The fcc for golf bag storage
shall be recommended by Kemper and set by the City Manager.
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3.5.15 Golf Carts. Golf cart rentals shall be required for all golfers
on the golf courses. Kemper shall not permit the use of private golf carts on the golf
courses. A minimum of 160 electrically powered golf carts per golf course shall be
maintained at the Golf Resort. Golf carts shall be new when acquired and shall be
manufactured by a reputable firm. The entire golf cart fleet shall be replaced with new
units upon Kemper's recommendation and when approved by the City Manager. All golf
carts shall be four-wheel vehicles, and shall be equipped with canopies, windshields,
coolers, and sand and seed containers and holders. Kemper shall employ a mechanic who
is qualified to repair and maintain the golf carts.
3.5.16 Food and Bevera�e Operations. The Golf Resort shall
include a restaurant located in the clubhouse and a snack bar. Temporary food stands
shall not be installed on the golf courses except for special events. If permitted by
applicable law, with the prior written consent of the City Manager, Kemper may establish
an on-course cart food and beverage service. Kemper shall comply with all requirements
of state and local law governing the sale and distribution of alcoholic beverages. Kemper
shall obtain and maintain all permits frorn the County of Riverside Department of Health
for all food and beverage operations at the Golf Resort. Kemper shall obtain all
necessary licenses required for operation of the restaurant and snack bar. Kemper shall
comply with all regulations of the County of Riverside Department of Health and all
other present and future health laws and regulations as may be established by all federal,
state, and local governmental agencies and their instrumentalities. All food service
employees shall possess valid food handler cards, and a copy of these cards shall be
maintained in the administrative office at the Golf Resort. Kemper shall comply with the
City's municipal code as it relates to tuberculosis testing, and other health and disease
testing as now or hereafter required by applicable law, for all food and beveragc
employees. Prices of food and beverages sold at the Golf Resort shall be comparable to
prices charged at other first class golf resorts in the Coachella Valley.
3.5.17 Office Onerations. Kemper shall employ an administrative
staff at the Golf Resort to accomplish the administrative functions as required by this
Agreement. The Golf Resort shall be equipped with all necessary equipment to allow for
the efficient administration of the Golf Resort business. Upon the written request of the
City Manager, Kemper shall provide the City with a written job description for each
management position at the Golf Resort. The City shall keep these job descriptions in
strict confidence, subject to applicable public records disclosure laws.
3.5.18 Safetv and Securitv. Kemper shall take all commercially
reasonable action to cause the Golf Resort to comply with all safety regulations of
federal, state, and local governmental agencies and their instrumentalities, including
without limitation any requirements imposed by California Labor Code Sections 1720
et s�. and 6300 et se�. and regulations promulgated with respect thereto, and applicable
federal occupational, health, and safety laws and regulations. Kemper sha11 take all
12
P6402100011832395.2
reasonable actions to protect the safety of all Golf Resort employees, customers and
visitors. The Golf Resort shall contain appropriate security systems as determined by
Kemper and the City Manager. Kemper shall keep for 60 days computer back-up tapes
for all accounts payable and accounts receivable information. All records at the Golf
Resort shall be kept by Kemper in fireproof files.
3.5.19 Customer Forms. Forms shall be visible and readily available
to customers of the Golf Resort to present their comments or complaints regarding the
Golf Resort. Completed forms shall be made available to the designee of the City upon
request.
3.6 Contracts and Agreements. Except as provided below, all leases and
financing agreements for Furnishings and Equipment, and all contracts and agreements
relating to the operation and maintenance of the Golf Resort (including without limitation
golf professional contracts, contracts for maintenance and repair services, pest control,
supplies, and landscaping services, and agreements for tournaments, banquets, and other
group functions), entered into during the term of this Agreement shall be entered into by
Kemper as the contracting party, on behalf of the City unless mutually agreed upon to thc
contrary. If the term of the lease, financing agreement, or other contract or agreement
extends beyond the expiration date of this Agreement or if the date for performance under
such contract is after the expiration date of this Agreement, then the City (and not
Kemper) shall be the contracting party to such contract. The preceding sentence shall not
apply to agreements for tournaments, banquets, and other group functions to take place
after the expiration date of this Agreement, and such agreements shall be entered into by
Kemper on behalf of the City. Upon the expiration or earlier termination (for whatever
rcason) of this Agreement, the City agrees to assume all contracts and agreements cntcrcd
into in accordance with this Section 3.6.
3.7 Alterations to Buildin�s. Kemper shall not make any alterations,
additions, or changes to the exterior appearance or the structural nature of the clubhouse,
golf pro shop, maintenance building, or other buildings located at the Golf Resort without
the prior consent of the City.
3.8 Operating and Maintenance Standards. The parties acknowledge and
agree that the Golf Resort shall be operated and maintained as a first class golf resort. In
addition to all other responsibilities of Kemper under this Agreement, Kemper agrees that
at all times during the term of this Agreement, the Golf Resort shall be operated and
maintained in accordance with the standards set forth in the "Standards for Operation and
Maintenance" which shall be prepared and completed by Kemper within 180 days of the
date of approval of this Agreement by the City and thereafter maintain copies of such
Standards in the office of the City Clerk. Kemper shall obtain the prior written approval
of the City Manager of such Standards within 179 days of the date of approval of this
Agreement by the City Manager. The City Manager, may, from time to time, inspect the
Golf Resort for purposes of compliance with the terms of this Section 3.8. The City
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Manager, shall act reasonably and in good faith in making the determination whether the
Standards for Operation and Maintenance have been satisfied, and if not, the City
Manager shall provide Kemper with a list of written deficiencies. Kemper shall correct
such deficiencies within 30 days of receipt of such written list of deficiencies.
In particular, Kemper is aware that there is a concern with respect to the
maintenance of the "desert-scape" portion of the Golf Course, and maintenance standards
for the desert-scape, which are now on file in the office of the City Clerk, shall be
included with such Standards.
Except as provided below, if a particular Corrective Action Item has not
been corrected, improved, or repaired within 30 days after receipt of the report containing
the Corrective Action Item, then the City shall have the right to declare a default
hereunder and terminate this Agreement. The following items shall be excluded from the
Evaluation Form for purposes of determining whether a Corrective Action Item has been
corrected, improved, or repaired within such 30 day period: (a) any outstanding
Corrective Action Item that Kemper is diligently and timely correcting in accordance
with the time schedule jointly prepared by the City Manager and the general manager of
the Golf Resort, as provided above, (b) any item in disagreement between the parties as
provided in the immediately following paragraph, (c) any Corrective Action Item in
which the correction, improvement, or repair is considered a Capital Improvement, and
(d) any Corrective Action Item that Kemper is unable to correct, improve, or repair
because of the occurrence of a"Force Majeure Event" (as defined in Section 10.3 of this
Agreement).
In the event Kemper disagrees with the results of any Evaluation Form or in
the event the parties disagree as to whether any Corrective Action Item has been properly
or timely corrected, improved, or repaired, then the parties shall submit the matter in
disagreement to the Golf Course Committee. The parties agree that Kemper shall comply
with the recommendations made by the Golf Course Committee as to the correction,
improvement, or repair of any Corrective Action Item in accordance with Kemper's
responsibilities under this Agreement. With regard to any matter in disagreement, during
the period of time that such matter has been submitted to the City Manager as provided
above, the penalty applicable to such matter shall be suspended until such matter has
been finally resolved and no additional damages for such matter shall accrue during the
period of time that such matter has been submitted to the City. If Kemper does not agree
with the recommendation of the Golf Course Committee, then Kemper and the City shall,
within 15 days after the date of the recommendation, select an independent third party to
make such decision. If Kemper and the City cannot agree on such third party, then the
matter shall be submitted to the local Judicial Arbitration and Mediation Services office
for resolution.
3.9 Contract Administration. The City has designated the City Manager as
the individual who is responsiblc for administering this Agreement on behalf of the City.
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The City Manager may designate any member or members of his or her staff or other
person to carry out the City Manager's responsibilities in administering this Agreement.
Kemper has designated J. Tobin Davis, Vice-President, as the individual who is
responsible for administering this Agreement on behalf of Kemper. Kemper shall notify
the City in writing if another individual has replaced J. Tobin Davis as the person
responsible for administering this Agreement on behalf of Kemper. The parties
acknowledge that except as otherwise expressly provided herein (a) the City Manager has
the authority to approve or consent to those matters identified in this Agreement as
requiring the City's approva] or consent and to make all other decisions on behalf of the
City regarding the administration of this Agreement (except where approval by the City
Council is expressly required herein), and (b) J. Tobin Davis or such other individual
designated by Kemper has the authority to approve or consent to those matters identified
in this Agreement as requiring Kemper's approval or consent and to make all other
decisions on behalf of Kemper regarding the administration of this Agreement. The
City's management direction to Kemper shall be given by the City Manager.
3.10 Meetings with Golf Course Committee. The General Manager of the
Golf Resort shall attend all meetings of the Golf Course Committee and discuss all
standards, changes, policies and other matters required to be discussed.
3.11 Compliance with Environmental Laws. In performing its
responsibilities under this Agreement, Kemper shall comply with all federal, state, and
local laws and regulations pertaining to the storage, use, and disposal of "hazardous or
toxic wastes, substances, or materials" as defined by applicable law, to the extent such
"hazardous or toxic wastes, substances, or materials" are within Kemper's control or
under Kemper's management. The City shal] not exercise any remedies to terminate this
Agreement in the event of non-material breach hereo£ Kemper agrees to indemnify the
City for any costs, fees, fines or losses that may result from environmental contamination
or natural resource damage on the subject property if caused by Kemper's performance in
storing, using or disposing of hazardous or toxic substances or materials or wastes such
as, but not limited to, herbicides, pesticides, algicides or other water treatment chemicals.
The City acknowledges and agrees that the City shall be responsible for any legal or other
liability or damage arising out of the presence of environmental contamination or natural
resource damage on the subject property by any cause other than Kemper's performance
in storing, using or disposing of hazardous or toxic substances or materials or wastes such
as, but not limited to, herbicides, pesticides, algicides or other water treatment chemicals.
3.12 Cooueration with other Citv A�reements. Kemper agrees to honor
and cooperate with the City in all agreements between the City and third parties
concerning the use of the Golf Resort, including agreements by which the City offers
special privileges to Residents of the City of Palm Desert, to owners of interests in the
timeshare development adjacent to the Golf Resort, and to guests of any hotels adjacent
to the Golf Resort. To the extent that such agreements impact on the operation of the
P6402\00011832395.2
15
Golf Courses, Kemper shall have the right to review and comment on such agreements
prior to their approval by the City. The City may approve or disapprove of any such
agreements in its sole and absolute discretion.
3.13 Radius Restriction. During the Term of this Agreement, neither
Kemper nor any affiliate or subsidiary of Kemper shall manage, own or operate another
golf course within a 20 mile radius of the Golf Resort, without first obtaining the City's
prior written consent.
3.14 Good Standin�. Kemper shall be a management company
recognized in the golf course management community as a first-class manager of high-
quality golf courses and shall be authorized to conduct business in the City.
ARTICLE IV
CAPITAL IMPROVEMENTS
4.1 Capital Improvement Plans. Kemper shall submit to the City on or
before April 1 of each year during the term of this Agreement, commencing a"Capital
Improvement Plan" for the Golf Resort for the next Operating Year, which shall include
Kemper's recommendation of Capital Improvement projects for the next Operating Ycar
and the estimated costs of such Capital Improvement projects.
4.2 Implementation of Capital Improvement Proiects. The parties
acknowledge and agree that all Capital Improvement projects are in the sole control and
discretion of the City, and all costs and expenses of Capital Improvement projects shall
be paid from City funds. The costs and expenses of Capital Improvement projects shall
not be considered Golf Resort Expenses. The parties acknowledge and agree that this
Agreement imposes no responsibilities or obligations on the part of Kemper with respect
to any aspect of a Capital Improvement project, including design, construction, or
supervision. In the event the City desires Kemper to be involved in any capacity in a
Capital Improvement project, the parties will enter into a separate agreement setting forth
the terms and conditions of such involvement, including without limitation fees to be
received by Kemper for such involvement.
ARTICLE V
INSURANCE
5.1 Covera�e. Kemper agrees to procure and maintain, on behalf of the
City as a Golf Resort Expense, at all times during the term of this Agreement, a minimum
of the following insurance:
5.1.1 insurance on the contents of the buildings located at the Golf
Resort and other personal property located at the Golf Resort, which contents and
personal property are owned or leased by the City or Kemper, against loss or damage by
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fire, lightning and/or any other perils insurable under the form of "all risk" coverage then
available (including speciiically irrigation and/or sprinkler system leakage damage,
vandalism and malicious mischief, if available), in an amount no less than $5,000,000, or
such other amount as the parties may agree in writing. The City and the Agency shall be
named as a loss payees. The parties agree that Kemper shall not be responsible for
procuring or maintaining "all risk" insurance coverage on the buildings, structures, or
other improvements located at the Golf Resort and the contents and personal property
owned by the City, and the City shall either procure or maintain such insurance coverage
or shall self-insure for such risks.
5.1.2 if requested by the City, if available, business
interruption insurance covering actual losses sustained due to fire, lightning and other
perils insurable under the form of "all risk" coverage then available (including
specifically irrigation and/or sprinkler system leakage damage, vandalism and malicious
mischief, if available) in an amount equal to the annual value of lost business. The City
and the Agency shall be named as a loss payees to the extent of the thcir interests under
this Agreement.
5.1.3 commercial general liability insurance including
without limitation bodily injury, personal injury, property damage, products liability,
innkeeper's liability, contractual liability covering the provisions of this Agreement, and
liquor liability, in an amount not less than � 10,000,000.00 single limit per occurrence.
The City and the Agency and their officers, officials, employees, agents, representatives,
and volunteers (collectively, "City Personnel"), shall be named as an additional insureds.
5.1.4 automobile liability insurance in an amount not less
the $10,000,000.00 single limit per occurrence. The City and the Agency shall be named
as additional insureds.
5.1.5 workers' compensation insurance covering all Golf
Resort employees who are Kemper's ernployees in an amount at statutory limits of
$1,000,000, and employer's liability insurance in an amount not less than $500,000.00 or
as required by law covering all Golf Resort employees who are Kemper's employecs.
The City may decrease the limits of insurance for innkeeper's liability.
Kemper shall have the right to increase (but not to decrease without the prior written
consent of the City) the minimum amount of any insurance to be maintained by Kemper
with respect to the Golf Resort under this Section 5.1 in order to make such coverage
comparable to the amount of insurance carried with respect to other golf courses and
country clubs operated by Kemper, taking into account the size, character, and location of
the Golf Resort. The types of insurance and the coverage amounts specified in this
Section 5.1 are the requirements of the City in connection with the operation of the Golf
Resort. The City acknowledges and understands that Kemper has made no
representations or warranties that such insurance is adequate to protect the City or the
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Agency. Any losses, damages, liability, or expenses that may not be covered by any of
the insurance specified in this Section 5.1 shall be a Golf Resort Expense.
5.2 Policies and Endorsements.
5.2.1 Policies. All insurance coverage provided for under
Section 5.1 above shall be secured through policies issued by insurance companies of
good reputation and of sound and adequate financial responsibility having a general
policy holder's rating of not less than "A" and a financial rating of not less than Class
VIII in the most current edition of Best's Rating Guide, unless such requirements are
waived in writing by the City. Such insurance companies shall be qualified to do
business and in good standing in California. Prior to the Effective Date, Kemper shall
deliver to the City certificates of insurance with respect to all of the policies of insurance
to be maintained by Kemper pursuant to Section 5.1 and the City shall have approved
(which approval shall not unreasonably be withheld) such certificates of insurance. In the
case of insurance about to expire, Kemper shall deliver to the City certificates of
insurance with respect to renewal policies not less than ten days prior to the respective
dates of expiration. All certificates of insurance shall be signed by a person authorized
by the insurance company to bind coverage on its behalf. In the event any subcontractors
perform work for Kemper under this Agreement, Kemper shall include such
subcontractors as insureds under the policies of insurance to be maintained by Kemper
pursuant to Section 5.1 or in the alternative, Kemper shall obtain from such
subcontractors separate certificates of insurance that satisfy the requirements of
Section 5.1 unless otherwise waived by the City. Neither the procuring of insurance by
Kemper pursuant to Section 5.1 nor the delivery by Kemper to the City of certificates of
insurance evidencing such insurance coverages shall be construed as a limitation of
Kemper's indemnity obligations under Section 11.3.1 of this Agreement.
5.2.2 Endorsements. All policies of insurance to be maintained by
Kemper pursuant to Section 5.1 shall, to the extent obtainable, have attached an
endorsement that such policy shall not be canceled or materially changed without at least
30 days prior written notice to the City by certified mail, return receipt requested. If such
endorsement is not obtainable from the insurer(s), Kemper shall provide to the City the
required 30-day prior written notice in the manner set forth in this Section 5.2.2.
5.2.3 Blanket policies. Any insurance policies provided by Kemper
under this Article V may be effected under policies of blanket insurance which cover
other properties in addition to the Golf Resort, and in such case an allocable portion of
the premiums for such blanket policies of insurance shall be considered a Golf Resort
Expense.
5.2.4 Workers Compensation Insurance. Prior to the Effective
Date, Kemper shall deliver to the City a certiiicate of workers compensation insurance
indicating that such insurance complies with aIl requirements of California law. This
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certificate shall contain endorsements naming the City, the Agency, and the City
Personnel as additional insureds, and providing that such policy shall not be canceled or
materially changed without at least 30 days prior written notice to the City by certified
mail, return receipt requested. Kemper shall require all subcontractors performing work
for Kemper under this Agreement to maintain workers compensation insurance covering
such subcontractors' employees. Prior to the Effective Date, Kemper shall file with the
City the following signed certification:
"The undersigned is aware of, and will comply with,
Divisions 4 and 5 of the California Labor Code by securing,
paying for, and maintaining in full force and effect for the
duration of the Agreement, complete workers compensation
insurance, and shall furnish a certificate of insurance to the
City prior to the commencement of the term of the
Agreement."
The City, the Agency, and the City Personnel shall not be responsible for
any claims in law or equity occasioned by the failure of Kemper to comply with this
Section 5.2.4 or with the provisions of California law relating to workers compensation
insurance.
5.3 Waiver of Subrogation. Neither Kemper nor the City shall assert
against the other, and Kemper and the City hereby waive with respect to each other, any
claims and rights of recovery for any losses, damages, liability or expenses (including
attorneys' fees) incurred or sustained by either of them on account of injury to persons or
damage to property arising out of the ownership, operation, and maintenance of the Golf
Resort to the extent that the same are covered by the insurance required under this
Article V. The City and Kemper hereby grant to each other, on behalf of any insurance
company providing insurance covering the Golf Resort, a waiver of any right of
subrogation which any insurer or party may acquire against the other party by virtue of
payment of any loss under any insurance policy. The City and Kemper shall give notice
to the insurance companies providing insurance under this Agreement of the mutual
waiver of subrogation contained in this Section 5.3.
5.4Insurance Maintained bv Kemper. Any insurance maintained by
Kemper under this Article V may contain deductible provisions and self-insurance or
self-assumption provisions in such amounts as are approved by the City Manager. The
parties acknowledge and understand that as of the Effective Date the following applies to
insurance to be maintained by Kemper: (a) $5,000.00 deductible per occurrence for
property damage insurance, and (b) �250.00 self-insured retention per occurrence for
comprehensive public liability insurance, automobile liability insurance. The City
understands and agrees that with respect to all policies of insurance required under this
Article V, the portion of any claim, loss, or damage subject to a deductible amount or a
self-insurance or self-assumption amount shall be a Golf Resort Expense. Kemper shall
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obtain the City's consent in writing of the City Manager at least 30 days prior to any
increase in the deductible amount or self-insured or self-assumed amounts for the
insurance coverage maintained by Kemper under this Article V. Any failure to comply
with reporting or other provisions of the policies incIuding breach of warranties shall not
affect coverage provided to the City, the Agency and City Personnel.
5.5 Claims Review Procedures. Kemper and the City shall mutually
establish a claims review process for the coordination of all claims under this Article V.
ARTICLE VI
MANAGEMENT FEES TO KEMPER
6.1 Fixed Mana�ement Fee. For the period from the date of this Agreement
to the expiration of the Term, Kemper shall receive a"Fixed Management Fee" of sixty
nine thousand five-hundred seventy �69,570.00 per month.
The Fixed Management Fee shall be paid monthly, in advance, on the first day of cach
calendar month.
6.2 Percenta�e Mana�ement Fee. In addition to the Fixed Management
Fee, for the period from the date of this Agreement to the expiration of the Term, Kemper
shall receive a"Percentage Management Fee" equal to five percent of the amount by
which the Gross Revenues of the portions of the Golf Resort operated by Kemper
exceeds the Threshold Amount; provided that in no event shall the Percentage
Management Fee in any one Operating Year, when added to other compensation paid to
Kemper hereunder or derived by Kemper hereunder, exceed the Fixed Management Fce
in such Operating Year. The Threshold Amount is the sum of $6,000,000.00.
The Percentage Management Fee shal] be paid to Kemper annually, in
arrears, within 45 days following Kemper's delivery to the City of the annual statement
required by Section 7.7.2, below, and shall be based on the Gross Revenues for the
Operating Year covered by such statement.
In the event of any corrections to any monthly or annual statements, the
parties shall promptly make the necessary adjustments between themselves.
Any Percentage Management Fee owing as of the expiration or earlier
termination of this Agreement shall be payable concurrently with the delivery to the City
of the final statement per Section 7.7.2 hereof.
6.3 Gross Revenues Defined. For the purpose of determining the Percentage
Management Fee, the term "Gross Revenues" means all money received as a result of the
operation of the Golf Resort and the sale of goods and services at the Golf Rcsort,
determined on a cash basis in accordance with generally accepted accounting principles
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consistently applied. Gross Revenues shall include all green fees; rental fees for golf
carts, golf clubs and bags, and other rental items; bag storage fees; range balls;
reservation fees; fees for golf handicap service; rental and concession payments; food and
beverage sales; liquor sales; revenue generated from space rentals and from mectings,
banquets, parties, receptions, tournaments, and other group gatherings; merchandise
sales; golf instruction fees; and revenues received by the City from golf schools operated
by the City or Kemper. The following shall be excluded from Gross Revenues:
6.3.1 Cost of goods returned to suppliers.
6.3.2 Monies and or credits received in settlement of claims for loss
or damage to goods, wares, food, or merchandise.
6.3.3 Compensation paid to golf pros providing lessons and related
services, who are not employees of Kemper.
6.3.4 Revenues from the Learning Center, unless operated by
Kemper.
6.3.5 The amount of cash refunded or credit allowed on
merchandise or gift certificates returned by customers, or the amount of cash refunded or
credit allowed in lieu of Kemper's acceptance therefor.
6.3.6 Receipts in the form of refunds from, or the value of
merchandise, supplies or equipment returned to, shippers, suppliers or manufacturers.
6.3.7 Credit card carrying charges.
6.3.8 All sales taxes, admissions taxes, use taxes, so-called luxury
taxes, entertainment taxes, value added taxes, excise taxes, gross receipt taxes, and
similar taxes, whether imposed under any existing or future rules, regulations, laws or
ordinances, upon the sales of food, beverages, merchandise or services, and whether or
not added to or included in the selling price;
6.3.9 Delivery charges.
6.3.10 Interest, service or sales carrying charges paid by customers
for extension of credit on sales.
6.3.11 Any receipts from the transfer of goods, wares or
merchandise from the Golf Resort to any other store owned by the City.
6.3.12 Bad debts and bad checks.
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6.3.13 Proceeds of insurance, except business interruption insurance
proceeds.
6.3.14 Receipts from vending machines, telephones, lottery ticket
sales, stamp machines, and the like.
6.3.15 Revenues and receipts from sales of food, beverage, and
merchandise at the Intrawest Clubhouse, unless the Intrawest Clubhouse is operated by
Kemper.
6.3.16 Receipts from sales to employees at a discount.
6.3.17 Proceeds from the sale of fixtures or equipment or of all or of
a substantial part the stock-in-trade and merchandise at a sale other than at retail, or the
sale of the business as a whole.
6.3.18 Proceeds from the bulk sale of any merchandise (i.e., a sale
not made in the ordinary course of business).
6.3.19 Gross receipts received by licensees or concessionaires,
except to the extent any portion of such receipts is received by the Golf Resort.
6.3.20 The amount of any gratuities paid or given by customers to
Golf Resort employees, or service charges added to customer billings which represent
gratuities to Golf Resort employees.
6.3.21 Proceeds of any borrowings by Kemper or the City.
6.3.22 Any amount received by Kemper in connection with any
claim, demand, or lawsuit.
6.3.23 Initial operating funds in the Golf Resort Accounts and funds
subsequently provided by the City, if any.
ARTICLE VII
ACCOUNTS; WORKING FUNDS; DISBURSEMENT OF FUNDS;
RECORDS AND REPORTS
7.1 Golf Resort Accounts.
7.1.1 The City shall cause to be established bank accounts for
the Golf Resort at a banking institution or institutions (which banking institution or
institutions shall have branches located in the City and in close proximity to the Golf
Resort), such accounts to be in the City's name or the City's name (the "Golf Resort
Accounts"). Kemper will collect and deposit daily in the Golf Resort Accounts
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designated by the City all monies received from the operation of the Golf Resort. One
account shall be an Operating Account in which the sum of $500,000 shall be maintained,
as described in more detail in Section 7.4. Kemper shall have check writing privileges
with respect to the Operating Account, subject to a limit of �5,000.00 per check, for the
purpose of disbursement of the payment of Golf Resort Expenses as set forth in Section
below. The City shall have the right to require additional controls on check writing
privileges. Notwithstanding the provisions of the foregoing sentence, subject to the
City's approval, Kemper shall be entitled to maintain funds in reasonable amounts in
"cash register banks" or in petty cash funds at the Golf Resort.
7.1.2 All revenues generated by the Golf Resort shall be the
property of the City. Revenue collection procedures shall be in accordance with the
method approved by the City. The deposit shall be made with the bank no later than the
next business day following the date on which the revenues are collected. A duplicate
copy of the deposit receipt identifying the amount collected by Kemper and its deposit
with the bank shall be delivered by Kemper (or designated representative) to the City
Manager at the address set forth below, on a weekly basis, or, at the option of the City,
Kemper shall provide the City with a weekly bank deposit report via a computerized "on-
line" reporting system.
7.1.3 Until such monies or other things of value have been
deposited in the City's account and verified by the bank in accordance with this
Agreement, Kemper bears all risk of loss therefore, including, but not limited to, damagc,
destruction, disappearance, theft, fraudulent or any dishonest or unlawful act, or other
hazard, irrespective of location and whether by Kemper's employees or any other person
or entity. Should such an event or act occur, Kemper shall notify as soon as possible the
City Manager and the County Sheriff and Kemper shall prepare a report of such incidcnt.
Kemper shall notify the City of any operational changes deemed necessary by Kemper to
safeguard the City's monies or things of value.
7.1.4 Kemper shall require of the bank holding the City's funds
that all funds be secured to such an extent and in such a manner as is required by
applicable law in connection with the deposit of funds of a public entity.
7.2 Accountin� Svstem. Kemper shall design, establish, implement and
maintain procedures for the accounting and control of the revenues from the time of their
collection by Kemper to the time of deposit at the bank. This shall include a system of
internal controls to account for all gross revenues. Such procedures shall include each of
the accounting and cash control processes identified recommended by Kemper and
approved by the City Manager, which approval shall not unreasonably be withheld.
7.3 Disbursements from Operating Account. Frorn the Operating Account
(or, if applicable, from "cash register banks" or petty cash funds available at the Golf
Course), Kemper is authorized to pay all Golf Resort Expenses when incurred, except for
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fees due to Kemper under Sections 6.1 and 6.2", which shall be paid by the City from
other Golf Resort Accounts.
7.4 Operatin� Account. Kemper shall maintain at all times, in the
reasonable judgment of the City and Kemper, sufficient funds in the Operating Account
to satisfy the daily working capital needs of the Golf Resort, including the timely
payment of Golf Resort Expenses. To this end, upon the commencement of the Term
hereof, the City shall deposit into the Operating Account the amount of �500,000. If at
any time, or from time to time, the Golf Resort Expenses are greater than the operating
income of the Golf Resort, to the point that funds equal to less than the amount of
�500,000 are on deposit in the Operating Account, then Kemper shall advance into the
Operating Account, monthly, within 15 days after the last day each calendar month, an
amount sufficient to restore the Operating Account to an amount equal to $500,000. All
net operating income shall be retained in the Operating Account until the Operating
Account is restored to an amount equal to $500,000; and after the Operating Account has
been restored to an amount equa� to $500,000, then the next amounts of net operating
income shall be used to reimburse Kemper for any unreimbursed amounts that Kemper
advanced to the Operating Account pursuant to the preceding sentence. The City shall
have the right to withdraw and retain any net operating income in excess of the amounts
required for maintaining the Operating Account or reimbursing Kemper as described in
this Section. The City shall pay to Kemper on May 15 of each year the investment
earnings, if any, on amounts deposited by Kemper into the Operating Account and
remaining unspent as of the immediately prior April 30. Upon termination of this
Agreement, amounts deposited by Kemper into the Operating Account and remaining
unspent, together with investment earnings thereon, if any, shall be paid to Kemper.
Investment earnings shall be those as calculated by Union Bank of California (or such
other depository of moneys in the Operating Account as selected by the City) based upon
deposits in the Highmark Money Market Account (or such other money market or other
account selected by the City).
7.5 Books and Records. Kemper shall maintain in accordance with GAAP
(Generally Accepted Accounting Principles) adequate books of account with respect to
its management and operations of the facilities and shall maintain such books at its local
offices in Palm Desert, California. Kemper shall keep full and accurate books of account
and such other records as are necessary to reflect the results of the operation of the Golf
Resort. For this purpose, Kemper agrees it will make available to the City at all times all
books and records in Kemper's possession relating to the Golf Resort, including contract
documents, invoices and construction records. A11 accounting records shall be
maintained in accordance with generally accepted accounting principles and shall be
maintained in a cash format for each Operating Year. All such books, records, and
reports shall be maintained separately from other facilities operated by Kemper. Kemper
agrees to maintain reasonable and necessary accounting, operating, and administrative
controls relating to the financial aspects of the Golf Resort, and such controls shall
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provide checks and balances designed to protect the Golf Resort, Kemper, and the City.
Kemper shall maintain all financial and accounting books and records for a period of at
least three years after the expiration or earlier termination of this Agreement, and the City
shall have the right to inspect and audit such books and records during such period as
provided in Section 7.6, below.
Kemper shall provide the City with a verification and accounting
system as directed by the City for all monies, gross receipts, revenues, fees, and charges
collected at the Golf Resort. Such systern shall include:
(a) Recordation of all sales by means of a cash register,
which will display the amount of each sale and automatically issue a customer's receipt.
The cash registers used by Kemper shall be approved by the City. Said cash registers
shall in all cases have locked in sales total transaction counters that are constantly
accumulating and which cannot, in any case, be reset, and in addition, a tape loaded
within the cash registers on which transaction numbers and sales details are imprinted.
Beginning and ending cash register readings sha11 be made a matter of daily record. In
the event of a mechanical or electrical failure of cash register, Kemper shall record by
hand all collections and issue a customer receipt in like manner.
(b) Entry of each and every player or golfer's name on a
starter sheet.
(c) Totalling of golfers' starter sheets at the end of each
day's play and reconciliation of fee category totals on cash register detail tapes.
(d) Maintenance of a daily log book detailing the number
of rounds played by fee category and total amount of cash collected by fee category.
7.6Insnection. The City or its authorized agents, auditors, or
representatives shall have the right during normal business hours to review, inspect,
audit, and copy the books, records, invoices, deposit receipts, canceled checks, and other
accounting and financial information maintained by Kemper in connection with the
operation of the Golf Resort. All such books and records shall be made available to the
City at the Golf Resort, unless the City and Kemper agree upon another location. The
City, at its own expense, shall have the right to retain an independent accounting firm to
audit the books and records of the Golf Resort on an annual basis. The City's rights
under this Section shall continue after termination of this Agreement.
7.7 Reports to Citv. Kemper shall deliver to the City the following
financial statements, in a form reasonably acceptable to the City:
7.7.1 Within 20 days after the end of each calendar month, a
statement of profits, losses, and Gross Revenues, showing the results of operation of the
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Golf Resort for such month and for the Operating Year to date, which statement shall
include sufficient detail to reflect all Gross Revenues, Golf Resort Expenses and the
Fixed Management Fee. Such statements shall include a budget comparison, a variance
report, and such other customary reports as may reasonably be requested by the City.
Such statement shall be certified as correct by an authorized financial officer of Kemper.
Such statement shall be in a form reasonably acceptable to the City; and
7.7.2 Within 30 days after the end of each Operating Year, a
statement of profits, losses, and Gross Revenues, showing the results of operation of the
Golf Resort for such Operating Year which statement shall include sufficient detail to
reflect all Gross Revenues, Golf Resort Expenses, the Fixed Management Fee, and the
Percentage Management Fee (if applicable) for such period. Such statement shall be
certified as correct by an authorized officer of Kemper. Such statements shall include a
budget comparison, a variance report, and such other customary reports as may
reasonably be requested by the City Manager. If requested by the City Manager, and at
the sole expense of the City, these financial statements shall be certified by an
independent certified public accountant acceptable to the City Manager and provided to
the City within 90 days after the end of the Operating Year. Kemper shatl provide to the
City Manager, within 30 days of end of each calendar month, that calendar month's
payroll register by department and individual.
If Kemper fails to provide to the City any monthly or annual statement at the time and in
the manner specified in this Agreement, this failure shall constitute a material default
under this Agreement and the City shall have the right, in addition to any other rights or
remedies it may have under this Agreement, to conduct an audit to determine these sales,
and Kemper shall immediately reimburse the City for the cost of the audit on written
demand by the City. If the actual monthly or annual Gross Revenues shown by any audit
of the City (whether hereunder or under Sections 7.5 or 7.6) is found to be three percent
or greater than the amount of the Gross Revenues shown on the statement provided by
Kemper, or if there are any other material irregularities, the overstatement or such
irregularities shall be deemed willful and the City may terminate this Agreement upon
written notice given at any time within 60 days after receipt of the audit by the City. If at
any time Kemper causes an audit of Kemper's business at the Golf Resort to be made by
an independent accountant, Kemper shall furnish the City a copy of the report of this
audit at no cost to the City, within ten days after Kemper's receipt of the audit report.
7.8 Kemper Pavroll and Accountin� Software. Kemper shall provide the
City with all computerized data in a DBF format, or another format acceptable to the
designee of the City Manager.
P6402\0001 \832395.2
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ARTICLE VIII
TERMINATION RIGHTS
8.1 Termination bv the Citv. In addition to the City's option to terminate
this Agreement pursuant to Section 2.1, the City shall have the right to terminate this
Agreement, without further compensation to Kemper, other than as to amounts
theretofore accrued, upon the occurrence of any one of the following events:
8.1.1 Kemper has misappropriated any funds of the City;
8.1.2 Kemper fails to perform its operation and maintenance duties
described in Section 3.8 and the expiration of the cure periods described therein;
8.1.3 Kemper fails to comply with the provisions of Section 3.4.1
or 7.7.2.
8.1.4 Kemper fails to keep, observe or perform any other material
covenant, agreement, term or provision of this Agreement to be kept, observed or
performed by Kemper, and such default continues for a period of 30 days after written
notice of such default by the City; or
8.1.5 (i) Kemper applies for or consents to the appointment of a
receiver, trustee or liquidator of Kemper or of all or a substantial part of its assets;
(ii) Kemper files a voluntary petition in bankruptcy or commences a proceeding seeking
reorganization, liquidation, or an arrangement with creditors; (iii) Kemper files an answer
admitting the material allegations of a bankruptcy petition, reorganization proceeding, or
insolvency proceeding filed against Kemper; (iv) Kemper admits in writing its inability to
pay its debts as they come due; (v) Kemper makes a general assignment for the benefit of
creditors; or (vi) an order, judgment or decree is entered by a court of competent
jurisdiction, on the application of a creditor, adjudicating Kemper a bankrupt or insolvent
or approving a petition seeking reorganization of Kemper or appointing a receiver, trustec
or liquidator of Kemper or of all or a substantial part of its assets, and such order,
judgment or decree continues unstayed and in effect for any period of 90 consecutive
days.
8.2 The City's right to terminate this Agreement pursuant to this Section 8.
shall be exercised upon written notice to Kemper given at any time. The City's
termination notice shall specify the effective date of such termination, which may be
effective immediately, but which date shall not be more than 30 days after the date of thc
City's termination notice.
8.3 Termination bv Kemper. Kemper shall have the right to terminate this
Agreement if the City fails to keep, observe, or perform any other material covenant,
agreernent, term or provision of this Agreement to be kept, observed or performed by the
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City, and such default continues for a period of 30 days after notice of such default by
Kemper to the City. Kemper's right to terminate this Agreement pursuant to this
Section 8.2 shall be exercised upon written notice to the City given at any time after the
applicable grace period has expired. Kemper's termination notice shall specify thc
effective date of such termination, which date shall not be less than 90 days after the date
of Kemper's termination notice.
8.4 Curin� Defaults. Any default by Kemper or the City under the
provisions of Section 8.1 or 8.2, as the case may be, which is susceptible of being cured
shall not constitute a basis for termination of this Agreement if the nature of such default
will not permit it to be cured within the grace period allotted; provided that within such
grace period the alleged party in default shall have given notice of its intent to cure, has
commenced to cure such default, and is proceeding to complete the cure in good faith and
with reasonable diligence, and such cure is effected, in any event, within 90 days of the
date of the notice of default.
8.5 Effect of Termination. The termination of this Agreement under the
provisions of this Article VIII shall not affect the rights of the terminating party with
respect to any damages it has suffered as a result of any breach of this Agreement, nor
shall it affect the rights of either party with respect to any liability or claims accrued, or
arising out of events occurring, prior to the date of termination.
8.6 Remedies Cumulative. Neither the right of termination, nor the right to
sue for damages, nor any other remedy available to a party under this Agreement shall be
exclusive of any other remedy given under this Agreement or now or hereafter existing at
law or in equity.
ARTICLE IX
TITLE MATTERS; ASSIGNMENT
9.1 Ownership of Improvements and Personal Propertv. All
improvements to the Golf Resort made during the term of this Agreement and all
Furnishings and Equipment and Operating Inventory purchased by Kemper during the
term of this Agreement shall be property owned by the City at such time as the
improvements are made or the Furnishings and Equipment or Operating Inventory are
purchased.
9.2 Assignments. The City may assign its rights and obligations
hereunder to another governmental entity without Kemper's consent, and upon thc
effective date of such assignment and the assignee's assumption of the City's obligations
hereunder, the City shall be released from any obligations hereunder accruing from and
after the effective date of such assignment. Except for an assignment of this Agreement
by the City to another nonprofit corporation or to a governmental entity, neither party
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shall assign this Agreement without the prior written consent of the other party, which
consent may be granted or withheld in the sole and absolute discretion of the other party.
It is understood and agreed that any consent granted by a party to any such assignment
shall not be deemed a waiver of any consent required under this Section 9.2 as to any
future assignment. Any assignment by either party of this Agreement in violation of the
provisions of this Section 9.2 shall be null and void and shall result in the termination of
this Agreement. In addition to any other remedies available to the parties, the provisions
of this Section 9.2 shall be enforceable by injunctive proceeding or by suit for specifc
performance.
9.3 Successors and Assi�ns. Subject to the foregoing, this Agreement
shall inure to the benefit of and be binding upon the parties and their respective heirs,
legal representatives, successors and assigns.
ARTICLE X
DAMAGE OR DESTRUCTION;
EMINENT DOMAIN; FORCE MAJEURE EVENTS
10.1 Dama�e or Destruction. Should the Golf Resort be destroyed or
substantially damaged by fire, flood, acts of God, or other casualty, the City shall have
the right to tertninate this Agreement, by written notice to Kemper given within 60 days
following the occurrence of such event, and in such event neither party shall have any
further obligation to the other party under this Agreement, except with respect to
liabilities accruing, or based upon events occurring, prior to the effective date of such
termination. For the purpose of this Section 10.1, the Golf Resort shall be deemed to
have been substantially damaged if the estimated length of time required to restore the
Golf Resort, or any portions thereof, substantially to its condition and character just prior
to the occurrence of such casualty shall be in excess of six months, as indicated by an
architect's certificate or other evidence reasonably satisfactory to Kemper. If this
Agreement is not terminated in the event of damage to the Golf Resort either because
(i) the damage does not amount to substantial damage as described above, or
(ii) notwithstanding destruction of or substantial damage to the Golf Resort, the City, or
the City on behalf of the City elects to restore the Golf Resort, then the City shall
proceed, at the City's own expense, with all due diligence to commence and complete
restoration of the Golf Resort to its condition and character just prior to the occurrence of
such casualty. If as a result of any damage or destruction to the Golf Resort as provided
in this Section 10.1, the responsibilities of Kemper under this Agreement are substantially
changed, then the parties shall meet and discuss in good faith appropriate modifications
to this Agreement including the Management Fees.
10.2 Eminent Domain. If all of the Golf Resort (or such a
substantial portion of the Golf Resort so to make it unfeasible, in the reasonable opinion
of the City, to restore and continue to operate the remaining portion of the Golf Resort for
the purposes contemplated in this Agreement) shall be taken through the exercise (or by
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agreement in lieu of the exercise) of the power of eminent domain, then upon the date
that the City shall be required to surrender possession of the Golf Resort or of that
substantial portion of the Golf Resort, this Agreement shall terminate and neither party
shall have any further obligation to the other party under this Agreement except with
respect to liabilities accruing, or based upon events occurring, prior to the effective date
of such termination. If such taking of a portion of the Golf Resort shall not make it
unfeasible, in the reasonable opinion of the City, to restore and continue to operate the
remaining portion of the Golf Resort for the purposes contemplated in this Agreement,
then this Agreement shall not terminate, and the City shall proceed, at the City's own
expense, with all due diligence to alter or modify the Golf Resort so as to render it a
complete architectural unit which can be operated as a golf resort of substantially the
same type and character as before. If as a result of any alternation or modification of the
Golf Resort as provided in this Section 10.2, the responsibilities of Kemper under this
Agreement are substantially changed, than the parties shall meet and discuss in good faith
appropriate modifications to this Agreement including the Management Fees.
10.3 Force Maieure Events. As used in this Agreement, the term "Force
Majeure Event" means declared or undeclared war, sabotage, riot or acts of civil
disobedience, acts or omissions of governmental agencies, accidents, fires, explosions,
floods, earthquakes, or other acts of God, strikes, labor disputes, shortages of materials,
or any other event not within the control of Kemper and not caused by the gross
negligence or intentional wrongful conduct of Kemper. For purposes of this Agreement,
any disruption of the operation of the Golf Resort caused by a Capital Improvement
project shall also constitute a Force Majeure Event. If as a result of the occurrence of a
Force Majeure Event, the responsibilities of Kemper under this Agreement are
substantially changed, then the parties shall meet and discuss in good faith appropriate
modifications to this Agreement including the Management Fees.
ARTICLE XI
GENERAL PROVISIONS
11.1 Purchases bv Kemper. In connection with any purchases made by
Kemper or an Affiliate of Kemper for the account of the City, or the City on behalf of the
City, it is understood that Kemper or such Affiliate may perform services as a
representative of the manufacturer to secure the benefits of lower costs, and that any
resulting savings shall be passed on to the City, including representatives' fees. In
addition, all trade discounts, rebates and refunds pertaining directly to purchases for the
Golf Resort shall accrue to the benefit of the City.
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11.2 Purchases from Kemper Affiliates. If any purchases of goods or
services for the Golf Resort are made from or through an Affiliate of Kemper, the charges
to the Golf Resort for such goods or services shall be on the same terms as those made to
other golf courses and country clubs operated by Kemper and such charges shall not
exceed the market prices for such goods and services. Before consummating such
transaction, Kemper shall notify the City Manager in writing of any such purchase,
including the type of inerchandise and services to be purchased and the price and fees
therefore.
11.3Indemnities.
11.3.1 Kemper's Indemnitv. Kemper agrees to indemnify,
defend (with counsel reasonably satisfactory to the City Manager), protect, and hold
harmless the City, the Agency, and all City Personnel from and against any and all
claims, demands, actions, lawsuits, proceedings, damages, liabilities, judgments,
penalties, fines, attorneys' fees, costs, and expenses:
(a) which result from any action taken by Kemper
relating to the Golf Resort (i) that is expressly prohibited by this Agreement, or (ii) that is
not within the scope of Kemper's duties under this Agreement, or (iii) that is not within
Kemper's delegated authority under this Agreement; or
(b) which result from any violations by Kemper or
Kemper's agents, employees, invitees, contractors, subcontractors or assignees of any
law, ordinance, rule or regulation governing or otherwise affecting the business
operations of Kemper or Kemper's performance of services and obligations under this
Agreement; or
(c) which result from any injury or death of any person
(including, without limitation, injury or death of Kemper's employees, agent, visitors,
invitees, assignees, contractors or subcontractors within Kemper's control) or damage or
destruction of the property of any person or entity which occurs by reason of the
negligent actions or omissions or willful misconduct of Kemper or Kemper's agents,
employees, invitees, contractors, subcontractors, or assignees, or material breach or
default by Kemper or Kemper's agents, employees, invitees, contractors, subcontractors,
or assignees, in performance of Kemper's services under this Agreement or otherwise
caused by the negligent actions or omissions or willful misconduct of Kemper or
Kemper's agents, employees, invitees, contractors, subcontractors, or assignees; or
(d) which result from Kemper's material breach of the
covenant contained in Section 3.11 of this Agreement; or
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(e) which result from any other act or omission not
enumerated above constituting the negligence or willful misconduct by Kemper or any
officer, director, or employee of Kemper.
(� for any costs, fees, fines or losses that may result
from environmental contamination or natural resource damage on the subject property if
caused by Kemper's performance in storing, using or disposing of hazardous or toxic
substances or materials or wastes such as, but not limited to, herbicides, pesticides,
algicides or other water treatment chemicals
This indemnity provision shall survive the expiration or termination of this
Agreement. Kemper hereby stipulates and agrees that no condition precedent to its
indemnification obligations stated herein, whether by way of notice or otherwise, exists
or shall constitute a defense to its obligation to defend, indemnify and hold harmless the
Agency and the City, and the City Personnel in any of such circumstances.
Kemper's indemnity obligations under this Section 11.3.1 shall not apply to
any acts or omissions taken (or in the case of omissions, not taken) either at the direction
of the City or with the approval of the City.
11.3.2 Citv's Indemnitv. The City agrees to indemnify, defend
(with counsel reasonably satisfactory to Kemper), protect, and hold harmless Kemper and
its owners, officers, directors, and employees from and against any and all claims,
demands, actions, lawsuits, proceedings, damages, liabilities, judgments, penalties, fines,
attorneys' fees, costs, and expenses arising from (i) any act or omission to the extent
caused by the negligence or willful misconduct by the City or any officer, director,
employee, or agent of the City, (ii) the ownership, leasing, organization, development or
construction of the Golf Course, (iii) any environmental contamination conditions that are
the result of the presence of hazardous or toxic substances or materials or wastes that
were pre-existing before the original agreement between Kemper and the City first
executed, and which may be uncovered or discovered during or after the term of this
Agreement, or if present on the Golf Resort by any cause other than Kemper's
performance in storing, using or disposing of hazardous or toxic substances or materials
or wastes, such as, but not limited to, herbicides, pesticides, algicides or other water
treatment chemicals, (iv) any other actions or omissions of City, the Agency, the City
Personnel or others for whom any of them are responsible.
11.4Bonds. In connection with the Agency's issuance or refunding of any
bonds or certificates of participation, Kemper shall have the right to approve, which
approval shall not be unreasonably withheld, any description of Kemper or any
description of this Agreement or of the City's relationship with Kemper under this
Agreement, which description is contained in any prospectus or similar materials
delivered in connection with such bonds or certificates of participation. The City agrees
32
P6402\0001 \832395.2
to furnish to Kemper copies of all such materials for such purpose not less than 20 days
prior to the delivery of such materials to the public.
11.5 Golf Course Names. The Golf Resort shall be known by such trade
name and/or trademark or logo as may from time to time be determined by the City. The
parties acknowledge and understand that the names, logos, and designs used in the
operation of the Golf Resort, together with appurtenant goodwill, are the exclusive
property of the City. Kemper may identify the Golf Resort as a golf resort managed and
operated by Kemper.
11.6Notices. All notices, demands, requests, consents, approvals, replies
and other communications ("Notices") required or permitted by this Agreement shall be
in writing and may be delivered by any one of the following methods: (a) by personal
delivery; (b) by deposit with the United States Postal Service, postage prepaid to the
addresses stated below or (c) by deposit with an overnight express delivery service.
Notice deposited with the United States Postal Service in the manner described above
shall be deemed effective three business days after deposit with the Postal Service.
Notice by overnight express delivery service shall be deemed effective upon receipt.
Notice by personal delivery shall be deemed effective at the time of personal delivery.
For purposes of Notices hereunder, the address of the City shall be:
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, California 92260
Attention: City Manager
For purposes of Notices hereunder, the address of Kemper shall be:
Kemper Sports Management, Inc.
500 Skokie Boulevard
Suite 444
Northbrook, Illinois
Attention: President
Each party shall have the right to designate a different address within the
United States of America by the giving of notice in conformity with this Section 11.6.
11.7Independent Contractor. Kemper shall at all times be considered an
independent contractor under this Agreement. Nothing contained in this Agreement shall
be construed to be or create a partnership or joint venture between the City and its
successors and assigns, on the one part, and Kemper and its successors and assigns, on
the other part.
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11.8 Modification and Chan�es. This Agreement may be amended or
modified only by a writing signed by both parties.
11.9Understandin�s and A�reements. This Agreement constitutes all of the
understandings and agreements of whatever nature or kind existing between the parties
with respect to Kemper's management and operation of the Golf Resort, and this
Agreement supersedes all prior understandings and Agreements, whether written or oral,
between the City and Kemper pertaining to the management and operation of the Golf
Resort.
11.10 Headin�s. The Article, Section and Subsection headings contained
in this Agreement are for convenience and reference only and are not intended to define,
limit or describe the scope or intent of any provision of this Agreement.
11.11 Survival of Covenants. Any covenant, term or provision of this
Agreement which in order to be effective must survive the termination of this Agreement
shall survive any such termination.
11.12 Third Parties. None of the obligations under this Agreement of
either party shall run to or be enforceable by any party other than the party to this
Agreement or by a party deriving rights under this Agreement as a result of an
assignment permitted pursuant to the terms of this Agreement.
11.13 Waivers. No failure by Kemper or the City to insist upon the strict
performance of any covenant, agreement, term of condition of this Agreement or to
exercise any right or remedy consequent upon the breach of this Agreement shall
constitute a waiver of any such breach or any subsequent breach of the same covenant,
agreement, term or condition. No covenant, agreement, term or condition of this
Agreement and no breach of this Agreement shall be waived, altered or modified except
by a written instrument. A waiver of any breach of this Agreement shall only affect this
Agreement to the extent of the specific waiver, and all covenants, agreements, terms and
conditions of this Agreement shall continue in full force and effect.
11.14 Applicable Law. This Agreement shall be construed and interpreted
in accordance with, and shall be governed by, the laws of the State of California. The
parties agree that the Superior Court of the State of California, County of Riverside shall
have jurisdiction of any litigation between the parties relating to this Agreement.
11.15 No Presumption Re�ardin� Drafter. The City and Kemper
acknowledge and agree that the terms and provisions of this Agreement have been
negotiated and discussed between the City and Kemper, and that this Agreement reflects
their mutual agreement regarding the subject matter of this Agreement. Because of the
nature of such negotiations and discussions, it would be inappropriate to deem either the
34
P6402\0001 \832395.2
City or Kemper to be the drafter of this Agreement, and therefore no presumption for or
against the drafter shall be applicable in interpreting or enforcing this Agreement.
11.16 Enforceability of Any Provision. If any term, condition, covenant, or
obligation of this Agreement shall be determined to be unenforceable, invalid, or void,
such determination shall not affect, impair, invalidate, or render unenforceable any other
term, condition, covenant, or obligation of this Agreement.
11.17 United States Currencv. All amounts payable pursuant to this
Agreement shall be paid in lawful money of the United States of America.
11.18 Counterparts. This Agreement and any amendment may be executed
in counterparts, and upon all counterparts being so executed each such counterpart shall
be considered as an original of this Agreement or any amendment and all counterparts
shall be considered together as one agreement.
11.19 Attorneys' Fees. In the event of a dispute involving the non-
performance by a party hereto of its obligations under this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees and all other expenses (including fees
and costs related to discovery) reasonably incurred in connection with such dispute,
whether or not litigation is commenced, in addition to all other relief to which the party is
entitled. If the successful party recovers judgment in any legal action or proceeding, the
attorneys' fees and all other expenses of litigation shall be included in and made a part of
any such judgment.
11.20 Easements. Kemper shall recognize all easements of record
affecting the Golf Resort.
11.21 Publicitv. Any commercial advertisernents, press releases, articles,
or other media information using the City's or the Agency's name shall be subject to the
prior approval of the Agency or the City (as the case may be), which approval shall not
be unreasonably withheld.
11.22 Covenants Against Discrimination. Kemper agrees that in
connection with its performance under this Agreement, there shall be no discrimination
by Kemper against any person on account of race, color, creed, religion, sex, marital
status, national origin or ancestry. Kemper agrees to include a provision similar to this
Section 11.22 in all subcontracts entered into by Kemper in connection with work being
performed under this Agreement.
11.23 Time of the Essence. Time is of the essence of this Agreement. The
parties understand that the time for performance of each obligation has been the subject
of negotiation by the parties.
P6402\0001 \832395.2
35
11.24 Authority. The parties represent for themselves that (a) such party is
duly organized and validly existing, (b) the person or persons executing this Agreement
on behalf of such party is/are duly authorized to execute and deliver this Agreement on
behalf of such party, (c) by so executing this Agreement, such party is formally bound to
the terms and provisions of this Agreement, and (d) the execution of this Agreement docs
not violate any provision of any other agreement to which such party is bound.
1 l.25 Possessory Interest. Pursuant to California Revenue and Taxation
Code Section 107.6, the City hereby informs Kemper that this Agreement may create a
possessory interest subject to property taxation, and in such event Kemper may be subject
to the payment of property taxes levied on such interest. The parties agree that in the
event possessory interest property taxes are levied against Kemper in connection with this
Agreement, such taxes shall be considered a Golf Resort Expense and shall be paid from
the Golf Course Accounts.
11.26 Conflict of Interest. The parties hereto hereby covenant that during
the term of this Agreement they will not employ any person to administer any portion of
this Agreement that has an interest, direct or indirect, which would conflict in any manner
or degree with the performance of services required under this Agreement.
11.27 Supercede and Replace. This Agreement supercedes and replaces
any and all agreements regarding the management, operation and maintenance of the
Golf Resort by Kemper.
ARTICLE XII
CLUBHOUSE RESTAURANT
12.1 Restaurant Operations.
12.1.1. The City hereby assigns to PDRFC, and PDRFC hereby
assumes, all rights and obligations of the City set forth herein, to the extent applicable to
the restaurant at the clubhouse.
12.1.2. The parties agree that the Lease Agreement shall have no
effect on Kemper's management obligations or rights set forth in this Agreement, except
as herein specified to the contrary. To that end, Kemper shall continue to have the
obligation to manage and operate the restaurant as provided, inter alia, in Sections 3.5.1
and 3.5.16 hereof.
12.1.3. Notwithstanding the foregoing, the parties agree that
PDRFC shall be obtain the license to sell alcoholic beverages from the restaurant, and
Kemper shall assist PDRFC in receiving such license.
12.1.4. Kemper agrees to attorn to PDRFC with respect to
36
P6402\0001 \832395.2
performance of the management, operation and maintenance obligations with respect to
the restaurant. The City Manager shall have oversight responsibilities over the restaurant
as with the oversight responsibilities over management, operation and maintenance of the
other portions of the Golf Resort.
12.1.5. Pursuant to the PDRFC's Articles of Incorporation, and a
resolution of the PDRFC, all income from the restaurant is payable to the City, and
Kemper may aggregate the amounts payable to PDRFC together with other amounts
payable to the City, on the same terms as are provided in this Agreement.
37
P6402\0001 \832395.2
IN WITNESS WHEREOF, the parties have executed or caused this Agreement to
be executed as of the day and year first written above.
CITY:
CITY OF PALM DESERT
:
Attest:
PDRFC:
Mayor
City Clerk
PALM DESERT RECREATIONAL
FACiLITIES CORPORATION
:
Its: President
By:
Its: Secretary
KEMPER:
KEMPER SPORTS MANAGEMENT,
IN .
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