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HomeMy WebLinkAboutA8309 - AEG MANAGEMENT PALM SPRINGS - TOURISM AND MANAGEMNT SERVICES - BUREAU OF TOURISM AND VISITORS CENTERADDENDUM NO.1 TO AGREEMENT FOR TOURISM AND MANAGEMENT SERVICES BY AND BETWEEN The City of Palm Springs, A California charter city and municipal corporation AND AEG Management Palm Springs, LLC This "Addendum No.1" to that certain "AGREEMENT FOR TOURISM AND MANAGEMENT SERVICES BY AND BETWEEN the City of Palm Springs, a California charter city and municipal corporation and AEG Management Palm Springs, LLC, a Delaware limited liability company," (the "Agreement"), is made, entered into, and effective as of December 31, 2020, by and between the CITY OF PALM SPRINGS, a California charter city and municipal corporation ("City") and AEG Management Palm Springs, LLC, a Delaware limited liability company ("AEG") and AEG's affiliate, SMG, a Pennsylvania general partnership ("SMG"). RECITALS WHEREAS, City and AEG entered into the Agreement, dated on or about July 27, 2019, pursuant to which AEG has provided Management Services and Tourism Services at Palm Springs Convention Center; and WHEREAS, the City pursuant to an Agreement for Tourism and Management Services dated as of October 1, 2013 (the "Prior Management Agreement") had contracted with SMG for the provision of Management Services and Tourism Services during the period October 1, 2013 through July 26, 2019; and WHEREAS, AEG's parent company, AEG Facilities, and SMG on or about October 1, 2019, both became subsidiaries and operating divisions of ASM Global Parent, Inc,, and therefore AEG and SMG are now affiliates; and WHEREAS, by to the Prior Management Agreement, SMG pursuant to Section 5 thereof contributed an investment of $S00,000, which amount was amortized over a period of ten years, with the unamortized portion thereof being payable by the City to SMG in the event that the Prior Management Agreement ended prior to June 30, 2023. WHEREAS, the Prior Management Agreement ended on July 26, 2019, leaving an unamortized balance of approximately $196,000 (the "SMG investment Balance) consequently payable by City to SMG; WHEREAS, subsequent to October 1, 2019, AEG and the City discussed disposition of the SMG Investment Balance, and it was agreed that AEG and its affiliate SMG would contribute the SMG Investment Balance to the City in consideration of the City's agreement to extend the term of the Agreement for an additional year; NOW, THEREFORE, in consideration of the mutual covenants, conditions, and promises herein contained, the receipt and sufficiency of which Is expressly acknowledged and confessed, the parties hereby agree as follows: 1. Extension of Agreement. Based upon the true and correct recitals reflected above and incorporated by this reference herein as the basis for this Addendum No. 1, the first sentence of Section 3 of the Agreement is deleted and replaced with the following: This Agreement shall commence upon the Effective Date and shall continue for six (6) contract years teach a "Contract Year) expiring at 5:00 p.m. (PST) on the anniversary of the sixth (6th) Contract Year, unless terminated prior to this date pursuant to the provisions of this Agreement, (hereafter the "Term"). 2. SMG Investment Balance. The Parties agree that all amounts owed by the City to SMG pursuant to Section 5 of the Prior Management Agreement shall be converted to a contract rights payment in connection with the Agreement and In exchange for the extension of the Agreement as specified in the foregoing paragraph no. 1, and accordingly, the City does not owe any payment to SMG (or AEG) under Section 5 of the Prior Management Agreement. 3. Relationship between Agreement and Addendum No. 1. Except as expressly provided herein, all terms and conditions of the Agreement shall remain in full force and effect by and between the parties. To the extent that there is any conflict or Inconsistency between the Agreement and this Addendum No. 1, the terms of this Addendum No. 1 shall prevail and supersede the Agreement. Capitalized terms of art in the Agreement shall have the same meaning In this Addendum No. 2 unless otherwise specified and re -defined herein. IN WITNESS WHEREOF, the Parties executed this Addendum No. 1 as of the day and year first above written. SMG, ns lvania General Partnership CITY OF PALM SPRINGS By: By; Bruce Hans , cretary w City Maria r AEG Ma nt Palm Springs, LLC /V�,By: Bruce Han o , Se retary APPROVED BY CITY COU►" 5/ov./2o2 / By: J. Melia,vll}4C, City APPROVED AS TO FORM By: Jeff Ballinger, City A torney 0 PUBLIC INTEGRITY DISCLOSURE APPLICANT DISCLOSURE FORM I- Name of Entity AEG Facilities, LLC 2. Address of Entity (Principle Place of Business) 800 W. Olympic Blvd., Suite 305, Los Angeles, CA 90015 3. Local or Calffornia Address (if different than #2) 4. State where Entity is Registered with Secretary of State Delaware If other than Calitomia is the Entity also registered in Caliromia? Yes Fl No 5. Type of Entity ❑ Corporation (XLimited Liability Company ❑ Partnership ❑ Trust ❑ Other (please specify) 6. Officers, Directors, Members, Managers, Trustees, Other Fiduciaries (please specify) Note: If any response is not a natural person, please identify all of —ers, directors, members, managers and other fiduciaries for the member, manager, trust or other entity Dan Beckerman [3Officer ❑ Director ❑ Member (] Manager [name] ❑ General Partner ❑ Limited Partner ❑ Other Robert Newman [$Officer ❑ Director ❑ Member ❑ Manager [name] ❑ General Partner ❑ Limited Partner ❑ Other Chuck Steedman [N Officer ❑ Director ❑Member ❑Manager (name) ❑ General Partner [-]Limited Partner ❑ Other CITY OF PALM SPRINGS - PUBLIC INTEGRITY DISCLOSURE APPLICANT DISCLOSURE FORM Page 1 of 2 (Revised 09 23 181 7. Owners/Investors with a 5% beneficial interest in the Applicant Entity or a related entity EXAMPLE LANE DOE 5096 A8C COMPANY, Inc. [name of owner/investor] [percentage of beneficial interest in entity and name of entity] A. Anschutz Entertainment Group, Inc. 51% [name of owner/Investor] [percentage of beneficial interest in entity and name of entity] 8. Facilities Holdings, LLC 49% [name of owner/investor] [percentage of beneficial interest in entity and name of entity] C. [name of owner/investor] [percentage of beneficial interest in entity and name of entity) D. [name of owner/investor] [percentage of beneficial interest in entity and name of entity] E. [name of owner/investor] [percentage of beneficial interest in entity and name of entity] I DECLARE UNDER PENALTY OF PERJURY UNDER THE LAWS OF THE STATE OF CALIFORNIA THAT THE FOREGOING IS TRUE AND CORRECT. Si r ng Party, Printed Name, Title Date cared ,t• � 4/I6/19 1 N AZ jobftag. CITY OF PALM SPRINGS— PUBLIC INTEGRITY DISCLOSURE FORM APPLICANT DISCLOSURE FORM Page 2 of 2 (Revised 09 23.18) City of Palm Snrinss Public Integrity Disclosure Form #6. Officers, Directors. Members. Managers, Trustees, Other Fiduciaries (continued]. Rob Reed Chief Financial Officer Theodore Fikre Vice President & Secretary John Keenan Vice President & Assistant Secretary Dan Beckerman Director Steven A. Cohen Director Theodore Flkre Director Jay Marciano Director AGREEMENT FOR TOURISM AND MANAGEMENT SERVICES BY AND BETWEEN THE CITY OF PALM SPRINGS, a California Charter City AND AEG MANAGEMENT PALM SPRINGS, LLC, a Delaware Limited Liability Company DATE 7 �7 2019 Page 1 of 37 55575.38190132220183 1 THIS AGREEMENT FOR TOURISM AND MANAGEMENT SERVICES, (the "Agreement"), dated July?, 2019, by and between AEG Management Palm Springs, LLC, a Delaware limited liability company, ("AEG"), and the CITY OF PALM SPRINGS, a municipal corporation and Charter City of the state of California ("City"). RECITALS A. The City is the owner of the Palm Springs Convention Center located at 277 N. Avenida Caballeros, the Jackie Lee Houston Plaza located at the southwest corner of Amado Road and Calle Alvarado, and the East Lot (also known as the 10 acre parcel located at the southeast comer of Avenida Caballeros and Amado Road) (the "Facilities"), and AEG is an organization with substantial experience and expertise in the management, operation, and marketing of public assembly facilities such as the Facilities (collectively referred to as "Management Services"). B. The Palm Springs Bureau of Tourism, and the Palm Springs Visitors Center currently located at 2901 N. Palm Canyon Dr, Palm Springs, CA 92262 ("BoT") is a City entity to be managed on behalf of the City by AEG. C. The City is the owner of the Welwood Murray Memorial Library, located at 100 S. Palm Canyon Dr., Palm Springs, CA 92262 ("WMML"), and operates as a digital library and as an extension of the Palm Springs Visitors Center, and is to be managed on behalf of the City by AEG. D. The City evaluated all of the proposals submitted in response to the REQUEST FOR PROPOSALS (RFP) 10-18 FOR CONTRACT MANAGEMENT SERVICES OF THE PALM SPRINGS CONVENTION CENTER AND BUREAU OF TOURISM and determined AEG as the most qualified firm to provide the Management Services to the City. E. City and AEG now desire to enter into a Management Agreement, whereby the City will engage AEG, and AEG accepts such engagement to manage the BoT, manage the WMML, and provide Management Services of the Facilities on such terms and conditions as set forth in this Agreement. NOW, THEREFORE, in consideration of the promises and mutual benefits which will result to the Parties in carrying out the terms of this Agreement, it is mutually agreed as follows: AGREEMENT 1. Definitions. In addition to the terms which are defined elsewhere in this Agreement, the following terms have the meanings set forth in this Section: "Agreement" shall mean this Agreement for Tourism and Management Services. Page 2 of 37 55575.381 W32220183.1 "Business Day" shall mean a day in the week in which the City's City Hall is open to the public for governmental purposes. "Capital Expenditures" shall mean all expenditures for building additions, alterations or improvements, and for purchases of additional or replacement furniture, machinery or equipment, the depreciable life of which, according to accepted accounting principles, is in excess of one (1) year and expenditures for repairs (normal wear and tear excepted) or replacements which extend the useful life of the assets being repaired or replaced for a period in excess of one (1) year with a minimum purchase price of $25,000.00. "Capital Improvements" shall mean all improvements paid for by Capital Expenditures. "City" shall mean the City of Palm Springs. "City Council" means the City Council of the City. "City Manager" means the City Manager of the City or the City Manager's designee or designees. "Consumer Price Index" means the Consumer Price Index for All Urban Consumers (CPI-U): Riverside -San Bernardino -Ontario as published by the United States Department of Labor on its website at https://www.bis.gov. The Base Fee and Targeted Gross Revenues hereunder shall be reviewed and adjusted on an annual basis on each anniversary of the Effective Date to reflect any increases in the Consumer Price Index. The Base Fee and Targeted Gross Revenues will be multiplied by the percent increase in the Consumer Price Index during each twelve (12) month Contract Year; provided, however, the Consumer Price Index shall be limited to the lesser of (i) the Consumer Price Index, and (ii) two and one tenth percent (2.1 %) per Contract Year. In no event shall the annual increase exceed two and one tenth percent (2.1%) per Contract Year. If publication of the Consumer Price Index ceases, the parties will mutually agree upon the use of an appropriate substitute index published by the United States Department of Labor or any successor agency. "Convention Center" shall mean the Palm Springs Convention Center located at 277 North Avenida Caballeros, Palm Springs, CA 92262. "Customer Satisfaction Benchmark" means, with respect to a Fiscal Year, the benchmark score for the Customer Satisfaction Surveys established by City and AEG for the Facility in such Fiscal Year and set forth in the Annual Plan for that Fiscal Year. "Customer Satisfaction Survey" means the customer satisfaction surveys to be agreed to by City and AEG for each Fiscal Year and set forth in the Annual Plan for that Fiscal Year. Page 3 of 37 55575.38190132220183.1 "Effective Date" means sixty (60) days after the City executes the Agreement, the date on which AEG shall officially assume responsibility for all Management Services of the Facilities, the BoT, and the WMML, from the City's current operator, SMG. "Expenses" shall mean and include all expenditures or obligations of whatever kind or nature incurred (directly or indirectly) or accrued by AEG in any specified period during the Term of this Agreement, within (or reasonably believed by AEG to be within) the scope of AEG's authority or responsibility under this Agreement and the Budget as approved and reviewed by the City under Section 15 of this Agreement, including salaries, wages, applicable taxes, benefits, costs and expenses of personnel working at the Facilities or Visitor Center or otherwise related to the Facilities or Visitor Center; contract labor; maintenance and repairs (whether ordinary or extraordinary, and whether foreseen or unforeseen); utilities; telephone; telescreen and/or marquee operations; telecommunications and broadcast facilities; dues, memberships and subscriptions; security; audit and accounting fees; legal fees except those fees provided for in Section 23(I); fees payable to concessionaires or other subcontractors; refuse removal; cleaning; sales and other applicable taxes; building supplies and materials; ticket commissions; premiums for insurance; data processing; advertising; marketing and market research; pest control; office supplies; employment fees; freight and delivery; lease of equipment; Master Card, VISA and other credit card fees and charges and telecheck fees and expenses; travel (economy class), lodging and related out-of- pocket expenses of officers, directors and corporate personnel of AEG properly allocable to the performance of AEG's obligations under this Agreement not to exceed $25,000 each Fiscal Year without City Manager's prior written consent; ticket/box office expenses; charges for fidelity bonds; and the fixed Base Fee payable to AEG pursuant to Section 17 of this Agreement; and all other costs and expenses incurred in accordance with the terms of this Agreement by or for the account of City reasonably related to AEG's performance of this Agreement. Expenses shall not include costs of salaries and benefits of employees of AEG, unless such costs are included in the Approved Budget, and any expenses relating to AEG personnel based in its Los Angeles headquarters or any regional field locations. a. Meal and lodging expenses should be reasonable. Expenses for food and lodging must be based upon actual, reasonable expenses incurred. Original cash register or credit card receipts for all meals and lodging expenses greater than $50 must be maintained and listed in the reports to City as provided in sections 11 and 12 herein. Charges for meals or services on hotel bills should be entered separately from the room charge. b. AEG and its employees may rent automobiles when other transportation is not available, or when such use is considered the most reasonable and economical mode of travel under the circumstances. Any long-term car lease (one week or more) by AEG or its employees shall not be considered an Operating Expense of AEG. Whenever possible, AEG should use rental companies which provide the lowest rates. In order to minimize costs, travelers should choose economy -class cars whenever possible. Page 4 of 37 55575.38190132220183.1 C. In no event shall the total annual expenditures exceed the total expenditures provided and allowed under the approved Budget except as provided for herein, with City Manager written approval. "Facilities" shall mean any and all portions or parts of the Palm Springs Convention Center located at 277 N. Avenida Caballeros, the Jackie Lee Houston Plaza located at the southwest corner of Amado Road and Calle Alvarado, and the East Lot (also known as the 10 acre parcel located at the southeast corner of Avenida Caballeros and Amado Road), Visitors Center, WMML, all furniture, fixtures and equipment, all appurtenances and all parking ancillary to and in connection therewith. The Facilities shall be operated as a public facility. "Fiscal Year" shall mean the year beginning July 1 and ending June 30. "General Manager" shall be the AEG employee responsible for Management Services as defined herein. "Gross Revenue" means with respect to the applicable period, the amount of revenue generated by the Facilities, as determined in accordance with GAAP, including but not limited to all revenue from rentals, services provided, ancillary income from all concessions, subcontractors and third party vendors, other operating income and outside catering. "Headquarter Hotel" shall mean the hotel property with the City of Palm Springs with largest number of rooms committed to the room block for an event. "Incentive Fee" shall mean and include each of the two compensation incentive programs identified in Section 17(a) of this Agreement paid annually. "Revenues" means any and all revenues of every kind or nature derived, directly or indirectly, from owning, operating, managing, or promoting the Facilities or Visitor Center, all as determined in accordance with generally accepted accounting principles, consistently applied. "Transition Period" has the meaning set forth in Section 2(e). "Visitor Center" shall mean any and all portions or parts of the Palm Springs Visitor Center, and all furniture, fixtures and equipment contained therein. At the time of execution of this Agreement, the Visitor Center is located at: 2901 N. Palm Canyon Drive. The Visitor Center is owned by the City and operated by AEG on behalf of the City. The Visitor Center shall be operated as a public facility. The net cost to operate the Visitor Center is paid from the BoT Budget as herein defined. "Welwood Murray Memorial Library" or "WMML" shall mean any and all portions or parts of the WMML, and all furniture, fixtures and equipment contained therein. At the time of execution of this Agreement, the WMML is located at: 100 S. Palm Canyon Drive. The WMML shall be operated as a public facility. The net cost to operate the WMML is paid from the BoT Budget as herein defined. Page 5 of 37 55575.381 W32220183.1 2. Scone of Work. a. Management- Services. Subject to the terms and conditions set forth in this Agreement, City hereby engages AEG on an exclusive basis to provide Management Services including the management, operation, use, possession, occupation and promotion of the Facilities, during the Term of this Agreement ("Management Services"). AEG hereby accepts such engagement. Except as otherwise provided herein, the operation of the Facilities shall be under the exclusive supervision and control of AEG, which, except as otherwise specifically provided herein, shall be responsible for the proper and efficient operation of the Facilities. In fulfilling its obligations under this Agreement, AEG shall act as a reasonable and prudent manager consistent with the standard of quality and performance provided in facilities of comparable size, age and use. AEG hereby accepts such engagement, and shall perform the services described herein, subject to the limitations expressly set forth in this Agreement. The Management Services to be provided by AEG shall include those described on Exhibit "A" attached hereto and by reference made a part of this Agreement. b. Bureau of Tourism Services. Subject to the terms and conditions set forth in this Agreement, City hereby engages AEG to provide Bureau of Tourism Services ("BoT Services") during the Term of this Agreement. AEG hereby accepts such engagement. Without limiting the generality of the foregoing, the BoT Services to be provided by AEG shall include those described on Exhibit "B" attached hereto and by reference made a part of this Agreement. C. Welwood Murray Memorial Library (WMML) Services. Subject to the terms and conditions set forth in this Agreement, City hereby engages AEG to provide services with respect to the Welwood Murray Memorial Library (the "WMML Services") during the Term of this Agreement. AEG hereby accepts such engagement. Without limiting the generality of the foregoing, the WMML Services to be provided by AEG shall include those described on Exhibit "C" attached hereto and by reference made a part of this Agreement. d. City's Approval/City Manager Approval. AEG shall request written instructions from City with respect to any matter contemplated by this Agreement where the approval of City or City Manager is required, and AEG shall defer action thereon pending receipt of such written instructions. City shall promptly respond to any such request for written instructions and City Manager shall respond to any such request for written instructions or requested approvals within five (5) business days. Actions taken by AEG, its officers, employees or representatives in accordance with the written instructions of City or City Manager, or failures to act by such persons pending the receipt of such written instructions, shall be deemed to be proper conduct in accordance with and within the scope of AEG's authority under this Agreement and shall not constitute AEG's breach, negligence or willful misconduct. e. Transition Services. During the Transition Period, defined as the sixty (60) day period beginning with the date upon which the City executes this Agreement, AEG shall provide the Transition Services in accordance with Exhibit D Page 6 of 37 55575.3819M32228183.1 attached hereto. AEG shall, subject to the terms and conditions of this Agreement, begin providing Management Services on the Effective Date immediately after the sixty (60) day Transition Period ends. 3. Tenn and Renewal Tenn. This Agreement shall commence upon the Effective Date, and shall continue for five (5) contract years each a "Contract Year") expiring at 5:00 p.m. (PST) on the anniversary of the fifth (5) Contract Year, unless terminated prior to this date pursuant to the provisions of this Agreement, (hereafter the "Term"). The Term of this Agreement may be extended once at the request of the City and by mutual agreement of the parties for an additional five (5) Contract Years subject to the same terms and conditions of the original Term (except as specifically identified herein this Section 3) (the "Extended Term"). The parties shall meet and confer to reset and establish a new Targeted Gross Revenue to be used for the Financial Performance Incentive Fee eligible to AEG for the Extended Term, as specified in Section 17 of this Agreement; all other terms and conditions of this Agreement shall remain unchanged for the Extended Term, unless otherwise agreed to in writing by the parties. Any Extended Term shall be approved by the City Council, amending: (1) the Term for an additional five (5) Contract Years, and (2) the amount of the Target Gross Revenue for the Extended Term. Either party shall have the right to terminate this Agreement during the Term or any Extended Term without penalty after the third (3rd) Contract Year of the Term or the third (3`d) Contract Year of the Extended Term as applicable, by providing not less than one hundred and eighty (180) calendar days prior written notice to the other party. Should neither party exercise this right to terminate in either the Term or Extended Term, the Agreement shall continue in full force through the remainder of the Term or Extended Term as applicable 4. Investment. Within ten (10) days of City's written request, AEG will make available to the City up to $150,000 in funds to secure various consulting services related to the future planning for the Facilities, or other research targeting the convention and visitor industry for the City to be utilized by the City within its sole discretion and timing after close consultation with AEG on the use of these funds. 5. Independent Contractor. Neither the City nor any of its employees shall have any control over the manner, mode or means by which AEG, its agents or employees perform the services required herein, except as otherwise set forth herein. AEG shall perform all services required herein as an independent contractor of City and shall remain at all times as to City a wholly independent contractor with only such obligations as are consistent with that role. Employees or contractors of AEG are not City employees, and employees of City are not employees or contractors of AEG. Neither party shall at any time or in any manner represent that it or any of its agents or employees are agents or employees of the other party. Each party shall be solely responsible for compliance with State and Federal Law with respect to the wages, hours, benefits, and working conditions of its employees, including requirement for payroll deductions for taxes. Page 7 of 37 55575.38190132220183.1 6. Assignment. Subcontractina and Other Third -Party Agreements. a. Assignment. Neither party to this Agreement may transfer, assign, convey, hypothecate or encumber this Agreement, or any interest therein, whether voluntarily or by operation of law, whether for the benefit of creditors or otherwise, without prior written approval of the other party to this Agreement, which may be reasonably withheld based on experience, financial status, reference checks and for other grounds in the City's sole discretion. b. Subcontracting. If AEG subcontracts any part of this Agreement, AEG shall be responsible to City for the acts and omissions of its subcontractor(s). Nothing contained in this Agreement shall create any contractual relationships between any subcontractor and City. City will deal directly with and will make all payments to AEG. C. Other Agreements. AEG shall have all concession agreements, services contracts and subcontracts in excess of an annual value of $25,000 in the aggregate reviewed and approved by the City Manager prior to execution by AEG. 7. Master Lease. AEG acknowledges that the Convention Center, Jackie Lee Houston Plaza, and East Lot are located on parcels of land which are leased from certain allottees ("Lessors") who are members of the Agua Caliente Band of Cahuilla Indians, and that the City is the "Master Lessee" for the land underlying the Convention Center, Jackie Lee Houston Plaza, and East Lot. The "Master Lease" is administered by the Bureau of Indian Affairs ("BIA" ). The parties hereto agree to comply with the Master Lease, specifically with regard to inspection of documents and reporting requirements. A copy of the Master Lease has previously been provided to AEG and is on file in the Office of the City Clerk. 8. Use of the Facilities By City. AEG agrees to provide the Facilities to City rent-free or as mutually agreed to by the parties for City's uses as outlined below pursuant to the terms of this Section 8. Use of the Convention Center by the City shall solely constitute (1) the Palm Springs Film Festival and the Well in the Desert (each a "City Sponsored Event") and (2) City governmental purposes (such as meetings of the City Council or Planning Commission or personnel testing, town hall meeting or other governmental purpose) (collectively "City Governmental Purposes"). a. All requests by City for City Sponsored Events shall be subject at all times to availability due to prior confirmed event scheduling for the Facilities. The terms and conditions related to the payment of any rent, costs or expenses by the City with respect to such City Sponsored Events shall be mutually agreed upon by the parties by way of operating memoranda setting forth the applicable rental terms. The parties further agree that such terms shall be substantially consistent with those contained in the 2018 agreements with the City related to each applicable City Sponsored Event. b. Use by the City for City Governmental Purposes shall be rent-free, shall be limited to two events per month and City shall not reimburse AEG for rents and all Page 8 of 37 55575.38180132220183.1 actual costs and expenses incurred for labor, equipment, food and beverage, audio- visual and other customary expenses associated with the City's use of the Facilities. The food and beverage cap for use by the City for City Governmental Purposes shall be $25,000 annually and shall be at the cost of the food and beverage subcontractor not AEG. 9. Intentionally Omitted 10. Intentionally Omitted 11. Reports and Audits. a. Maintenance of Records. AEG shall keep adequate records relating to its operations of the Facilities. AEG shall maintain a system of bookkeeping adequate for its operations hereunder and shall submit such system to City no later than thirty (30) calendar days after execution of this Agreement. The systems and procedures used to maintain these records shall also include a system of internal controls that is in accordance with sound business procedures. AEG shall keep and preserve for at least five (5) years following each Fiscal Year all records, including all service orders, work orders, sales slips, rental agreements, purchase orders, sales books, cash register tapes, credit card invoices, duplicate deposit tapes and invoices, bank accounts, cash receipts and cash disbursements, bank books, and other evidence of Operating Revenues and Operating Expenses for such period. AEG shall cause its vendors, subcontractors and affiliates to keep and maintain all such Records in accordance with this Section 11(a)). b. Audit. As soon as possible after June 30 and in no event later than August 15 of each Fiscal Year, AEG shall deliver to City a Balance Sheet, a Statement of Profit or Loss and a Statement of Cash Flows for the Facilities for the preceding Fiscal Year, all prepared in accordance with generally accepted accounting principles, accompanied by an independent auditor's report prepared by an independent certified public accountant licensed by the State of California, retained by AEG and approved by City (the "Annual Audit"). Such Annual Audit shall contain an opinion expressed by the independent auditor of the accuracy of Records kept by AEG and of amounts due to City under this Agreement and shall also provide a certification of Operating Revenues, Operating Expenses and the Net Operating Deficit/Surplus for such Fiscal Year. As part of the Annual Audit, City also shall require of the independent auditor and AEG shall deliver to City an Internal Control Memorandum and Management Letter ("Internal Control Memo") reporting on accounting controls and procedures of AEG related to this Agreement at the end of each Fiscal Year. C. Final Audit. On or before the 120th day following the day on which this Agreement expires or is terminated, AEG shall cause an audit comparable to that described in Section 11(b) covering that portion of the Fiscal Year from July 1 up to and including the date of expiration, cancellation or termination to be prepared and submitted to City (the "Final Audit"). This Final Audit shall be reviewed and accepted by City before any Management Fees, Incentive Fees or expenses shall be remitted to AEG pursuant to Section 17 or otherwise. This paragraph shall survive the expiration or sooner termination or cancellation of this Agreement. Page 9 of 37 55575.38190132220183.1 d. Access to Records. AEG shall give City and City's authorized representatives access to review AEG's records pertaining to their management of the Facilities operations, during normal business hours and upon reasonable advance notice, provided such review does not unreasonably interfere with AEG's day to day business and management of the Facilities. Should any of the records be maintained on a computerized system, AEG shall provide City with appropriate and necessary access, during normal business hours upon reasonable notice, to such records generated by the computerized system. AEG shall maintain their records in the City of Palm Springs. AEG agrees to provide any auditors retained to conduct the Audit (including the Final Audit) the reasonable right to review and test any proprietary software and its documentation used by AEG for bookkeeping and the production of the reports. AEG shall fully and timely cooperate with the preparation of any audit required by Lessors. 12. Monthly Re orts. Within twenty-five (25) calendar days after the end of each month, AEG shall furnish to City a monthly report in the general form and with content as approved by the City Manager. The monthly reports shall, at a minimum, provide information in the following categories: a. Management Services: (1) Financial, including without limitation a rolling forecast of revenue and expenses, an income statement, a balance sheet, and a statement of cash flow; (2) Bookings, including without limitation the number of groups and room nights booked for the Convention Center during the preceding month and a year-to-date comparison with the previous year; and (3) Sales and Marketing Activities, including without limitation sales and marketing efforts during the preceding month. b. Tourism Services: (1) Financial, including without limitation an income statement, a balance sheet, and a statement of cash flow; (2) Budget, including without limitation a comparison of actual operating expenses to the applicable Tourism Budget, and (3) Activities, including without limitation marketing efforts during the preceding month and efforts related to achieving efficiencies with other destination marketing entities that are beneficial to the City. 13. Other Reports. The City Manager, in the City Manager's reasonable discretion, may request that AEG prepare any other reports related to AEG's Page 10 of 37 55575.38190132220183.1 management of the facilities other than those specifically required by this Agreement. The City Manager shall provide AEG a reasonable amount of notice and time to prepare any report requested pursuant to this Section. 14. Performance Review. AEG shall be subject to a performance review at the close of each Fiscal Year. The performance review shall include those components as identified by the City as communicated to AEG, and included in annual sales and marketing plans, and in the incentive fee structure outlined in Section 17 of this Agreement. 15. Budget. a. Management Services. Each Fiscal Year, AEG shall make a presentation to the City Council regarding the proposed Management Services Budget ("Management Services Budget„) for the Convention Center for the upcoming Fiscal Year, and the total Management Services Budget will be incorporated into and adopted by the City Council as part of its Fiscal Year Operating Budget. Each new annual Management Services Budget is subject to and contingent upon funds being appropriated therefore by the City Council for each Fiscal Year covered by the Agreement and shall be in the amount appropriated by the City Council for any such Fiscal Year. City shall pay the Management Services Budget funds in monthly installments to AEG, except as otherwise expressly provided in this Agreement. Under no circumstances, except pursuant to Section 15(f)(4), shall AEG be required to advance any funds hereunder. Failure to meet the annual proposed Management Services Budget and failure to meet any financial projections or expectations of the City shall not be deemed a an Event of Default or a breach of this Agreement by AEG. The parties agree and acknowledge that within thirty (30) days of the Effective Date, the City and AEG will meet to discuss any suggested modifications within the Budget approved for 2019-2020 that AEG may suggest after reviewing the Budget AEG is inheriting from the prior management services provider. (1) Progosed Budget. No later than March 1 of each year of the Term of this Agreement, AEG shall submit to City a proposed Management Services Budget for the Facilities for the upcoming Fiscal Year listing all projected revenues and expenses for the Facilities, including without limitation any anticipated Incentive Fees. AEG shall have the discretionary authority to reasonably modify individual line items of this Management Services Budget (excluding amounts attributed to the Incentive Fee) provided that AEG shall provide the City Manager with ten (10) Business Days prior written notice of such modifications, and shall be subject to the City Manager's approval if in an amount of $25,000 or greater. Such modifications shall not in the aggregate result in an increase in the total approved Management Services Budget. Page 11 of 37 55575.38190\32220183.1 (2) Working Capital. In order to provide the working capital necessary for AEG to perform its obligations hereunder, City shall advance to AEG a minimum amount equal to budgeted operating expenses for three (3) months of the then - applicable Management Services Budget, no later than July 10 of each year of the Term of this Agreement. AEG may use working capital to pay expenses when revenues are insufficient to cover such expenses. The City shall reimburse any working capital used by AEG to pay expenses no later than thirty (30) calendar days after an expenditure of working capital by AEG. (3) Operating Fund. AEG shall collect all Revenues from the Facilities and deposit them in an operating fund. Monies in the operating fund and any interest thereon shall be applied first to the payment of Management Fees accrued through the end of the prior month and thereafter to any other operating expenses then accrued. The balance shall be retained in the operating fund as reserve for payment of future operating expenses. If at the end of any Fiscal Year there shall be a balance in the operating fund in an amount in excess of the anticipated working capital and operating expenses for the first month of the ensuing year, AEG shall disburse such excess to City on or before the fifteenth (15th) of such month. AEG's duties and obligations hereunder are subject to the City's performance and funding of the operating fund. b. Tourism Services. Each Fiscal Year, AEG shall make a presentation to the City Council regarding the proposed Tourism Services Budget for the upcoming Fiscal Year, and the total Tourism Budget will be incorporated into and adopted by the City Council as part of its Fiscal Year Operating Budget (the "Tourism Services Budget). The Tourism Services Budget for the 2019-2020 Fiscal Year shall be $2,086,504. Each new annual Tourism Services Budget is subject to and contingent upon funds being appropriated therefore by the City Council for each Fiscal Year covered by the Agreement and such annual Tourism Services Budget shall be in the amount appropriated by the City Council for the then current Fiscal Year. City shall pay the Tourism Services Budget in monthly installments to AEG. (1) Line Item Budget. No later than March 1 of each year of the Term of this Agreement, AEG shall provide the City with a proposed Line Item Budget for the Tourism Services Budget for the upcoming Fiscal Year. The Line Item Budget shall be prepared in accordance with the City's budgetary practices and applicable laws and regulations. The Line Item Budget will be considered by the City Council prior to award and implementation of the Tourism Services Budget for the ensuing year. AEG shall adhere to the Line Item Budget, Page 12 of 37 55575.38180132220183.1 provided AEG may reallocate funds between budget categories when, in AEG's good faith judgment, such reallocation is prudent, provided that a written justification shall be prepared prior to any reallocation of ten percent (10%) or more of any line or budgeted item, and that written justification shall be approved in writing by the City Manager in advance of the reallocation. (2) All funds earned by the Visitor Center are revenue to the City and should be accounted for as such and reinvested in the promotion of tourism to the City. C. WMML Services. Each Fiscal Year, AEG shall make a presentation to the City Council regarding the proposed WMML Services Budget for the upcoming Fiscal Year, and the total WMML Budget will be incorporated into and adopted by the City Council as part of its Fiscal Year Operating Budget. The WMML Services Budget for the 2019-2020 Fiscal Year shall be $85,750. Each new annual WMML Services Budget is subject to and contingent upon funds being appropriated therefore by the City Council for each Fiscal Year covered by the Agreement and such annual WMML Services Budget shall be in the amount appropriated by the City Council for the then current Fiscal Year. City shall pay the WMML Services Budget in monthly installments to AEG. (1) Line Item Budget. No later than March 1 of each year of the Term of this Agreement, AEG shall provide the City with a proposed Line Item Budget for the Tourism Services Budget for the upcoming Fiscal Year. The Line Item Budget shall be prepared in accordance with the City's budgetary practices and applicable laws and regulations. The Line Item Budget will be considered by the City Council prior to award and implementation of the Tourism Services Budget for the ensuing year. AEG shall adhere to the Line Item Budget, provided AEG may reallocate funds between budget categories when, in AEG's good faith judgment, such reallocation is prudent, provided that a written justification shall be prepared prior to any reallocation of ten percent (10%) or more of any line or budgeted item, and that written justification shall be approved in writing by the City Manager in advance of the reallocation. d. Expenditures in Excess of the Budget. AEG shall not, without written authorization by City Manager, knowingly incur in any Fiscal Year obligation in excess of the total then applicable Budget approved by City. In the event AEG becomes aware of any such obligations, AEG shall immediately inform City in writing of the nature, amount and due date for such obligations, and request written instructions as to how to proceed. Page 13 of 37 55575.38190132220183.1 e. Reduction I Elimination of City Revenue Source. In the event of any significant reduction or elimination of City tax and fee revenue sources, such as sales tax, property tax, transient occupancy tax and other similar taxes, the parties shall meet to discuss a proportionate reduction in the then -applicable Budget. If the parties fail to reach an agreement on any such reduction, the City may terminate the Agreement within thirty (30) calendar days of the date on which the parties fall to reach an Agreement. AEG's inability to perform services hereunder or discharge any of its responsibilities hereunder or under any Third Party Agreement related to the Facility to the extent of City's failure to fund expenses reasonably required to perform such services or responsibilities shall not be considered a breach of this Agreement or Event of Default under this Agreement by AEG and shall be without penalty, additional payments, or other charges to AEG of any kind whatsoever. Capital Expenditures Budget/Emergency Capital Expenditures. (1) The City desires to provide quality convention facilities in order to attract valuable meeting and convention business to the City of Palm Springs to generate positive economic impact through the generation of room -nights and increased visitor traffic to the City's shopping, dining and attraction stakeholders. The City and AEG agree that the Facilities must be consistently maintained and upgraded as necessary to meet and exceed the expectations of current and future users of the facility and provide competitive "state of the art" facilities and services to attract and retain valuable meeting and convention business. (2) AEG shall undertake an internally conducted facility capital study identifying existing capital and operating equipment, systems, technology, building components, aesthetics and facility finishes to catalog and determine current condition, remaining useful life and an appropriate action plan for each item or area. AEG shall also review current facility technology and services to determine any recommended upgrades in order to meet expected industry standards for the Facilities. Any out of pocket expenses incurred in the undertaking of such study shall be considered an expense of the Facilities with prior written approval from the City Manager as to the scope and cost of the study. AEG shall provide the City Manager with a prioritized long-term capital plan with recommended annual budget allocations for the completion of recommended projects. Should the City request a more detailed or comprehensive facility capital study and report to be conducted by a third party expert, such study and report shall be at the City's sole cost and expense. City acknowledges and agrees that AEG shall have no obligation hereunder to make any capital expenditures and, therefore, City shall be responsible for Page 14 of 37 55575,38190\32220183.1 and shall repair, provide and maintain, at its own expense, all capital improvements as set forth in this Section, including, without limitation, the exterior and structural portions of the Facilities, Visitor Center, and WMML, together with all mechanical, HVAC and electrical systems contained therein. Notwithstanding the foregoing, capital improvements may be performed by AEG and/or through a third -party contractor approved by the City Manager and supervised by AEG, upon written agreement between City and AEG, utilizing those funds as agreed upon by City and AEG. (3) Each Fiscal Year AEG will present a proposed annual capital project budget ("Capital Improvements Budget") for the upcoming Fiscal Year to the City Council and the annual Capital Improvements Budget will be incorporated into and adopted by the City Council as part of its Fiscal Year Operating Budget. Each new annual Capital Improvements Budget is subject to and contingent upon funds being appropriated therefore by the City Council for each Fiscal Year covered by the Agreement. If such appropriations are not sufficient to fully fund a new annual Capital Improvements Budget, such annual Capital improvements Budget shall be equal to the amount appropriated by the City Council for any such Fiscal Year. AEG and the City shall mutually agree on the actual projects to be funded each Fiscal Year based upon the amount appropriated by the City Council. Unfunded projects will be carried over to subsequent Fiscal Year budget proposals. In the City's sole discretion, in lieu of payment to City of any excess operating funds at the end of each Fiscal Year, such excess operating funds may be reserved for and allocated to the Capital Improvements Budget. (4) AEG shall have the right to make Emergency Expenditures. An "Emergency Expenditure" is defined as an expenditure necessary to correct or repair an emergency condition of the Facilities which in the reasonable judgment of AEG, if not corrected or repaired immediately, would create an imminent danger to persons or property, an unsafe condition threatening persons or property, or render the Facilities unusable, unsuitable or unable to host events, to the extent such expenditure is not included in the Approved Budget for that Fiscal Year. Where practicable, AEG shall obtain prior verbal or written approval from the City Manager before making any Emergency Expenditure; provided that if prior verbal or written approval of an Emergency Expenditure is Page 15 of 37 55575.3819M32220183.1 not reasonably obtainable from the City Manager, AEG shall immediately notify the City Manager of the situation and upon such notification and consent by the City Manager, is thereafter authorized to incur an Emergency Expenditure to correct the situation on a temporary basis in an amount not to exceed $50,000. An Emergency Expenditure to correct the situation on anything other than a temporary basis or in an amount in excess of $50,000 shall require written approval from the City Manager. Immediately following such action taken by AEG pursuant to this Section 15(f)(4), AEG shall inform City of the action(s) taken, and City shall pay into such account(s) the amount of funds, if any, spent or committed by AEG pursuant to this Section 15(f)(4). 16. Bank Accounts. AEG shall deposit all Revenues in an account maintained by AEG in the name of City, with AEG as an agent with signatory authority, in a bank or branch located within the City. AEG shall require that all funds held in this account shall be secured to such an extent and in such a manner as is required by applicable law regarding the deposit of City funds. Any monies in this account, and any interest thereon, shall be applied first to the payment of Management Fees accrued through the end of the prior month and thereafter to any other Operating Expenses then accrued. The balance shall be retained in the Operating Fund as reserve for payment of future Operating Expenses. If, at the end of any Fiscal Year, there shall be a balance in this account in excess of the anticipated working capital required for, and Operating Expenses projected for, the first month of the ensuing year, AEG shall disburse such excess to City on or before the fifteenth (15th) day of such month; alternatively, in the City Manager's sole discretion, any such excess may be reserved for and allocated to the Capital Improvements Budget. 17. Compensation. a. Management Services. AEG shall receive compensation for the Management Services rendered under this Agreement based upon the agreed Base Fee plus an Incentive Fee ("Incentive Fee"), if so earned by AEG. (1) Base Fee. For services performed by AEG during each Fiscal Year of this Agreement, the City shall pay AEG the annual Base Fee set forth in this Section 17(a)(1), payable at the rate of one -twelfth (1112) of the per annum per month, within thirty (30) calendar days following the monthly billing provided by AEG for such services. The Base Fee shall be $225,000 per year for the Term of the Agreement ($18,750 per month). The Base Fee shall be prorated for the first Fiscal Year of this Agreement, taking into account the Effective Date of this Agreement, with the first monthly payment of $11,875. Commencing October 1, 2019, the monthly payment of $18,750 shall be paid, for a total Base Fee of $180,625 for the first Fiscal Year of this Agreement. Page 16 of 37 55575.381 W32220183.1 Notwithstanding the foregoing, the Base Fee shall increase annually by the Consumer Price Index. (2) Incentive Fees. In addition to the Base Fee payable to AEG, AEG shall be eligible for an Incentive Fee, which, if earned, shall be payable to AEG annually in arrears on or before the thirtieth (30th) day following the date on which AEG has given the Annual Report to the City. The Incentive Fee will be based on AEG's performance in two (2) separate categories: KPI Incentive Fees which include Achievement of Room Night Goal and Customer Satisfaction; and Financial Performance Inventive Fees (collectively the "Incentive Fees"). The right to receive these incentive fees and the calculation of each are separate and independent of each other, and the KPI Inventive Fees shall not be included in measuring AEG's performance with respect to achieving and/or exceeding the budget for Gross Revenue as detailed below. The Incentive Fees for the first Fiscal Year of this Agreement shall be prorated to an amount equal to eighty percent (80%) of the total Incentive Fees otherwise available, taking into account the Effective Date of this Agreement. (a) KPI Incentive Fees. L Room Night Goal. At the end of each Fiscal Year during the Term of this Agreement, AEG will receive a total of $1.00 for each room night generated by events held at the Convention Center during the preceding Fiscal Year, on the condition that at least a minimum of 50,000 room nights are generated. By way of example, if only 49,999 room nights are generated, AEG would receive $0 incentive. However, if 50,000 room nights are generated, AEG would receive $50,000 plus $1 for every room night booked thereafter. For purposes of this Agreement, Room Night Goal Achievement shall be based on the confirmed written contracts entered into by (1) the Headquarter Hotel or (2) contract to use the Convention Center during the preceding Fiscal Year. Specifically, Room Night Goal Achievement shall be measured by the number of rooms reserved at hotels paying Transient Occupancy Tax to the City. ii. Customer Satisfaction. To achieve the customer satisfaction goal, AEG must achieve an average of eighty-five percent (85%) or better, approval on the meeting planner surveys described Page 17 of 37 55575.38190132220183.1 herein. If the 85% threshold is met, the customer satisfaction incentive fee will be $33,000. If a 95% or better customer satisfaction level is achieved, the customer satisfaction inventive fee will increase by $67,000 for a maximum incentive payment of $100,000. The meeting planner surveys shall be a survey of meeting planners, conducted by a third - party with expertise in the convention industry and approved by the City Manager, that have contracted to use the Convention Center during the prior twelve (12) month period. Within thirty (30) days of the days of the conclusion of any such event, the third -party firm shall contact clients of the Convention Center to conduct a meeting planner survey. The goal is to measure the client's satisfaction with each aspect of the client's use of the Convention Center. AEG shall obtain City's approval of the survey content and format prior to its distribution. Areas for measurement of quality and service as mutually agreed upon by both parties, may include, but shall not be limited to (i) site selection and sales process; (H) event coordination; (iii) food and beverage; (iv) audio visual; (v) quality of facilities; and (vi) responsiveness of staff. The parties shall mutually agree to determine how the scoring will be evaluated. (b) Financial Performance. The Financial Performance portion of the Incentive Fee shall be based upon AEG's operation of the Facilities and the "Gross Revenue" (as identified by the audited financial statements for the most recently completed Fiscal Year) (such amount, the "Actual Gross Revenue"), as compared to the "Targeted Gross Revenue" for the relevant Fiscal Year. The initial Targeted Gross Revenue for the initial 5-year Term of this Agreement is $2,900,000 per Fiscal year. Notwithstanding the foregoing, the Targeted Gross Revenue shall increase annually by the Consumer Price index. AEG shall receive the following Financial Performance portion of the Incentive Fee for each Fiscal Year in the following amounts: (1) For each successive $500,000 increment generated above the current Targeted Gross Revenue, AEG will receive a percentage of that incremental revenue for the respective increment (Le. not retroactive to the first dollar) (these figures Page 18 of 37 55575.38190132220183 1 represent the calculation in the initial year only and will be adjusted by the then current Targeted Gross Revenue: - 22.5% of the first $500,000 (between $2,900,001 and $3,400,000); and, - 25% of the next $500,000 (between $3,400,001 and $3,900,000); and, - 27.5% of the next $500,000 (between $3,900,001 and $4,400,000); and, - 30% of the any Gross Revenue above $4,400,001. (2) Byway of example: (i) Actual Gross Revenue of $3,685,000 (an increase of $785,000) would produce a Financial Performance Incentive of $184,750 (22.5% times $500,000 plus 25% times $285,000) (ii) Actual Gross Revenue of $4,100,000 (an increase of $1,200,000) would produce a Financial Performance Incentive of $292,500 (22.5% times $500,000 plus 25% times $500,000 plus 27.5% times $200,000) (3) For the avoidance of doubt, AEG shall not be subject to any penalty or reduction in any Fees to be paid hereunder should the Actual Gross Revenue be less than the Target Gross Revenue Loss. (4) Pursuant to Section 3 of this Agreement, to the extent the parties agree to enter into the Extended Term, the parties shall meet and confer to reset and establish a new Targeted Gross Revenue to be used for the Financial Performance Incentive Fee eligible to AEG for the Extended Term. The new Targeted Gross Revenue shall be evaluated on the basis of the Actual Gross Revenue incurred by the City annually during the initial Term of this Agreement. b. Tourism and WMML Services. AEG shall receive no remuneration for providing Tourism andlor WMML Services under this Agreement. 18. Insurance. Page 19 of 37 55575.3819=2220183.1 a. Insurance To Be Maintained By AEG. AEG shall procure and maintain, at its sole cost and expense, the insurance described below. The insurance shall be for the Term of this Agreement and includes any extensions, unless otherwise specified in this Agreement. The insurance shall be procured in a form and content satisfactory to City. The insurance shall apply against claims which may arise from AEG's performance of Management Services and related work under this Agreement, including AEG's agents, representatives, or employees. In the event the City Manager determines that the work or Management Services to be performed under this Agreement creates an increased or decreased risk of loss to the City, AEG agrees that the minimum limits of the insurance policies may be changed accordingly upon receipt of written notice from the City Manager or his designee. AEG shall immediately substitute any insurer whose A.M. Best rating drops below the levels specified in this Agreement. If any insurance is written on a claims -made basis, such insurance shall be maintained for a minimum of three (3) years subsequent to the expiration of this agreement, or a three (3) year extended reporting period endorsement shall be purchased. The minimum amount of insurance required shall be as follows: (1) Workers' Compensation. AEG shall obtain and maintain, in full force and effect throughout the Term of this Agreement, workers' compensation insurance in at least the minimum statutory amounts, in compliance with all other statutory requirements, as required by the State of California. AEG agrees to waive and obtain endorsements from its workers' compensation insurer waiving subrogation rights under its workers' compensation insurance policy against the City and shall endeavor to use commercially reasonable efforts to require each of its subcontractors, if any, to do likewise under their workers' compensation insurance policies. (2) Crime Fidelity Coverage. At least $100,000.00 per occurrence of coverage for (i) AEG employee dishonesty; (ii) forgery or alteration; (iii) theft, disappearance and destruction inside and outside the Facilities, Visitor Center, or WMML; and (iv) robbery and safe burglary inside and outside the Facilities, Visitor Center, or WMML. (3) Commercial General Liability. AEG shall obtain and maintain, in full force and effect throughout the Term of this Agreement, a policy of commercial general liability insurance written on a per occurrence basis with a combined single limit of at least five million dollars ($5,000,000.00) for bodily injury and property damage including coverages for contractual liability, personal injury, independent contractors, broad form property damage, products and completed operations. Any Page 20 of 37 55575.38180132220183.1 combination of primary and umbrella liability policies shall satisfy this requirement. (4) Employer's Liability Coverage. AEG shall obtain and maintain, in full force and effect throughout the Term of this Agreement, a policy of employer's liability insurance written on a per occurrence basis with a policy limit of at least one million dollars ($1,000,000.00) for bodily injury or disease. (5) Professional Liability (Errors and Omissions) Insurance. AEG shall obtain and maintain in full force and effect throughout the Term of this Agreement, standard industry form professional liability (errors and omissions) insurance coverage in an amount of not less than one million dollars ($1,000,000.00) per claim and two -million dollars ($2,000,000.00) annual aggregate, in accordance with the provisions of this section. (a) AEG shall certify in writing to the City that AEG is unaware of any professional liability claims made against AEG and is unaware of any facts which may lead to such a claim against AEG. (b) The policy shall be continued in full force and effect during the Term of this Agreement, or until completion of the Management Services and related work provided for in this Agreement, whichever is later. In the event of termination of the policy during this period, new coverage shall immediately be obtained to ensure coverage during the entire course of performing the Management Services and related Work under the terms of this Agreement. b. Deductibles and Self -Insured Retentions. Any deductibles or self - insured retentions must be declared to and approved by the City Manager or his/her designee prior to commencing any work or Management Services under this Agreement, such approval not to be unreasonably withheld. AEG guarantees payment of all deductibles and self -insured retentions. C. Other Insurance Requirements. The following provisions shall apply to the insurance policies required of AEG under this Agreement: (1) For any claims related to this Agreement, except for Professional Liability, Crime and Workers' Compensation/Employer's Liability, AEG's coverage shall be primary insurance with respect to the City and its officers, council members, officials, employees, agents, and volunteers. Any insurance or self-insurance maintained by Page 21 of 37 55575.38190132220183.1 the City and its officers, council members, officials, employees, agents, and volunteers shall be in excess of AEG's insurance and shall not contribute with it. (2) Commercial General Liability insurance coverage and limits provided by AEG and available or applicable to this Agreement are intended to apply to each insured, including additional insureds, against whom a claim is made or suit is brought to the full extent of the policies. Nothing contained in this Agreement or any other agreement relating to the City or its operations shall limit the application of such insurance coverage. (3) AEG agrees to require its commercial auto liability, commercial general liability and workers' compensation insurers to provide a notice of cancellation to the City Manager. Regarding all other insurance policies, AEG agrees to provide the City Manager with thirty (30) days' notice of cancellation, except for ten (10) days' notice of cancellation for non-payment of premium. It is AEG's obligation to ensure timely compliance with all insurance submittal requirements as provided in this Agreement. (4) AEG agrees to endeavor to ensure, if commercially reasonable, that subcontractors, and any other parties involved with the scope of Management Services and related Work provided pursuant to this Agreement, who are brought onto or involved by AEG, provide the same minimum insurance coverage required of AEG. AEG agrees to monitor and review all such coverage and assumes all responsibility for ensuring that such coverage is provided in conformity with the requirements of this section. AEG agrees that upon request, all agreements with subcontractors and others engaged in the performance of services hereunder this Agreement will be submitted to the City for review. (5) AEG acknowledges and agrees that any actual or alleged failure on the part of the City to inform AEG of non- compliance with any insurance requirement in no way imposes any additional obligations on the City nor does it waive any rights in this or any other regard. (6) AEG shall provide proof that policies of insurance required in this Agreement, expiring during the Term of this Agreement, have been renewed or replaced with other policies providing at least the same coverage. Proof that such coverage has been ordered shall be submitted prior to expiration. Page 22 of 37 55575 38190132220183.1 Endorsements as required in this Agreement applicable to the renewing or new coverage shall be provided to City prior to the policy expiration and/or renewal date. (7) Requirements of specific insurance coverage features or limits contained in this section are not intended as limitations on coverage, limits, or other requirements, or as a waiver of any coverage normally provided by any given policy. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue, and is not intended by any party or insured to be limiting or all-inclusive. (8) The requirements in this section supersede all other sections and provisions of this Agreement to the extent that any other section or provision conflicts with or impair the provisions of this section. (9) AEG agrees to provide immediate notice to City of any claim or loss against AEG arising out of the Management Services and related Work performed under this Agreement and for any other claim or loss which may reduce the insurance available to pay claims arising out of this Agreement. City assumes no obligation or liability by such notice, but has the right (but not the duty) to monitor the handling of any such claim or claims if they are likely to involve City, or to reduce or dilute insurance available for payment of potential claims. (1 a) AEG agrees that the provisions of this section shall not be construed as limiting in any way the extent to which the AEG may be held responsible for the payment of damages resulting from AEG's activities or the activities of any person or person for which AEG is otherwise responsible. d. Sufficiency of Insurers. Insurance required in this Agreement shall be provided by authorized insurers in good standing with the State of California. Coverage shall be provided by insurers admitted in the State of California with an A.M. Best's Key Rating of A-, VII, or better, unless such requirements are waived in writing by the City Manager or his designee due to unique circumstances. e. Verification of Coverage. AEG shall furnish City with both certificates of insurance and endorsements, including additional insured endorsements, affecting all of the coverages required by this Agreement. The certificates are to be signed by a person authorized by that insurer to bind coverage on its behalf. All proof of insurance is to be received and approved by the City before Management Services commence. Additional insured endorsements are not required for Errors and Omissions and Workers' Compensation policies. Verification of Insurance coverage may be provided by; (1) an approved General and/or Auto Liability Endorsement Form for the Page 23 of 37 55575.3819D132220MA City of Palm Springs or (2) an acceptable Certificate of Liability Insurance Coverage with an approved Additional Insured Endorsement with the following endorsements stated on the certificate: (1) "The City of Palm Springs, its officials, employees, and agents are named as an additional insured..." ("as respects City of Palm Springs Contract No. " or "for any and all work performed with the City may be included in this statement) for General and Auto Liability policies. (2) "This insurance is primary and non-contributory over any insurance or self-insurance the City may have..." ("as respects City of Palm Springs Contract No. " or "for any and all work performed with the City' may be included in this statement) for General and Auto Liability policies. (3) "Except for Professional Liability, should any of the above described policies be canceled before the expiration date thereof, the issuing company will mail 30 calendar days written notice to the Certificate Holder named." (4) Both the Workers' Compensation and Employers' Liability policies shall contain the insurer's waiver of subrogation in favor of City, its elected officials, officers, employees, agents, and volunteers. In addition to the endorsements listed above, the City of Palm Springs shall be named the certificate holder on the policies. All certificates of insurance and endorsements are to be received and approved in writing by the City before Management Services commence. All certificates of insurance must be authorized by a person with authority to bind coverage, whether that is the authorized agent/broker or insurance underwriter. Failure to obtain the required documents prior to the commencement of work shall not waive AEG's obligation to provide them. f. Insurance To Be Maintained By City. During the entire term of this Agreement, and any extension thereof, the City shall at all times maintain in effect the following policies of insurance or shall self -insure: (1) Property Insurance. An "All Risk of Physical Loss" form of policy (with Replacement Costs Endorsement), insuring all movable and immovable property constituting the Primary Visitor Center and Convention Center, respectively, excluding the foundation (including the expense of the removal of debris of such property as a result of damage by an insured peril), subject to the terms and conditions of the insuring agreements, The Primary Visitor Center and the Facility, and their respective contents, shall be insured to full replacement value. Page 24 of 37 55575 38190132220183.1 (2) Comorehensive General Liabilily. The City will maintain excess public liability and property damage insurance with a combined single limit of at least $10,000,000.00 insuring against all liability of the City arising out of, and in connection with, the use or occupancy of the Visitor Center or Facilities. 19. Indemnification and Reimbursement. (a) To the fullest extent permitted by law, AEG shall defend (at AEG's sole cost and expense), indemnify, protect, and hold harmless City, its elected officials, officers, employees, agents, and volunteers (collectively the "Indemnified Parties"), from and against any and all liabilities, actions, suits, claims, demands, losses, costs, judgments, arbitration awards, settlements, damages, demands, orders, penalties, and expenses including legal costs and attorney fees (collectively "Claims") to the extent arising out of or relating to (i) any negligent act or omission, or intentional misconduct, on the part of AEG or any of its employees or agents or any person under its direction or control in the performance of its obligations under this Agreement, or (ii) breach or default by AEG of any of its representations, covenants or agreements made herein under this Agreement, except and to the extent such Claims arise out of, relate to or are in connection with the negligence, intentional or willful misconduct of the City, its elected officials, officers, employees, agents, independent contractors, consultants and volunteers. Under no circumstances shall the insurance requirements and limits set forth in this Agreement be construed to limit AEG's indemnification obligation or other liability under this Agreement. AEG's indemnification obligation shall survive the expiration or earlier termination of this Agreement until all actions against the Indemnified Parties for such matters indemnified are fully and finally barred by the applicable statute of limitations or, if an action is timely filed, until such action is final. This provision is intended for the benefit of third party Indemnified Parties not otherwise a party to this Agreement. (b) To the fullest extent permitted by law, the City shall defend (at City's sole cost and expense), indemnify, protect, and hold harmless AEG, its, officers, employees, agents, and representatives (collectively the "AEG Indemnified Parties"), from and against any and all "Claims" to the extent arising out of or relating to (i) any negligent act or omission, or intentional misconduct, on the part of the City or any of its employees or agents or any person under its direction or control in the performance of its obligations under this Agreement, or (ii) breach or default by the City of any of its representations, covenants or agreements made herein under this Agreement except to the extent such Claims arise out of, relate to or are in connection with the negligence, intentional or willful misconduct of AEG, its officers, employees, agents, independent contractors and consultants. Under no circumstances shall the insurance requirements and limits set forth in this Agreement be construed to limit City's indemnification obligation or other liability under this Agreement. City's indemnification obligation shall survive the expiration or earlier termination of this Agreement until all actions against the AEG Indemnified Parties for such matters indemnified are fully and finally barred by the applicable statute of limitations or, if an action is timely filed, until such action is final. This provision is intended for the benefit of third party Indemnified Parties not otherwise a party to this Agreement. Page 25 of 37 55575.38190132220183.1 20. Ownership of Documents. All data, reports, documents, brochures, survey materials, and other computerized, written, printed, or photographic materials developed by City or AEG in connection with the services which are the subject of this Agreement, whether developed directly or indirectly by City or AEG, shall be and shall remain the property of City without limitation or restriction on the use of such materials by City. AEG shall not use such materials in connection with any project not connected with this Agreement without the prior written consent of City. All equipment, materials and supplies purchased by AEG under this Agreement shall be property of the City. AEG shall make all purchases of equipment, materials and supplies at the best available price. 21. Enganement and Outreach Requirements. a. City Council. AEG shall hold up to two (2) meetings per year with the City Council and the City's invitees to: (a) discuss any new sales programs proposed by AEG or identified by AEG as being of interest to the City or City stakeholders; and (b) discuss any other upcoming programs or events identified by AEG as being of interest to the City or City stakeholders. AEG must provide a corporate representative to attend the entirety of each such meeting. b. Community Outreach. AEG shall prepare a Community Outreach Plan as part of its Annual Plan. The Community Outreach Plan shall identify the types of meetings, presentation, workshops and other initiatives to be undertaken to ensure that the Palm Springs convention and visitor industry stakeholders are informed as to the BoT and Facilities initiatives being undertaken to generate positive impact to local stakeholders, and to solicit their feedback to help inform future initiatives. C. Periodic Review: Meet and Confer. AEG and City shall have the option, not more frequently than every three (3) months during the Term, to request a review (the "Periodic Review") to evaluate, among other things, the extent to which AEG is complying with its obligations under this Agreement. Within five (5) calendar days following notice of any Event of Default, City staff and AEG shall meet and confer to seek mutual resolution of areas of concern covered in the Periodic Review or any Event of Default, as applicable, and to come to a mutual agreement to move forward together. If disagreements between the Parties are not resolved, then the Parties shall attempt to resolve such disagreements through mediation. If such disagreements are not resolved through third -party mediation within one hundred twenty (120) days after the commencement of mediation, then either Party may pursue other available legal options such as a request for arbitration or litigation. 22. Enforcement of Agreement. a. California Law and Venue. This Agreement shall be construed and interpreted both as to validity and as to performance of the Parties in accordance with the laws of the State of California. Legal actions concerning any dispute, claim, or matter arising out of or in relation to this Agreement shall be instituted in the Superior Court of the County of Riverside, State of California, or any other appropriate court in Page 26 of 37 55575,38190\32220183.1 such County, and Contractor covenants and agrees to submit to the personal jurisdiction of such court in the event of such action. b. Interpretation. This Agreement shall be construed as a whole according to its fair language and common meaning to achieve the objectives and purposes of the Parties. The terms of this Agreement are contractual and the result of negotiation between the Parties. Accordingly, any rule of construction of contracts (including, without limitation, California Civil Code Section 1654) that ambiguities are to be construed against the drafting party, shall not be employed in the interpretation of this Agreement. The caption headings of the various sections and paragraphs of this Agreement are for convenience and identification purposes only and shall not be deemed to limit, expand, or define the contents of the respective sections or paragraphs. C. Waiver. No waiver of any provision of this Agreement shall be effective unless in writing and signed by a duly authorized representative of the Party against whom enforcement of a waiver is sought. Any waiver by the Parties of any default or breach of any covenant, condition, or term contained in this Agreement, shall not be construed to be a waiver of any subsequent or other default or breach, nor shall failure by the Parties to require exact, full, and complete compliance with any of the covenants, conditions, or terms contained in this Agreement be construed as changing the terms of this Agreement in any manner or preventing the Parties from enforcing the full provisions. d. Ri-ghts and Remedies Cumulative. Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the Parties are cumulative and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. e. Legal Action. In addition to any other rights or remedies, either Party may take legal action, in law or in equity, to cure, correct, remedy or recover damages for any default, to compel specific performance of this Agreement, to obtain declaratory or injunctive relief, or to obtain any other remedy consistent with the purposes of this Agreement. f. Attorney Fees. If either party to this Agreement commences an action against the other party arising out of or in connection with this Agreement or its subject matter, each party shall bear its own costs and attorney's fees. Page 27 of 37 55575.38190132220183.1 23. Termination. a. Termination of the Master Lease. This Agreement shall immediately terminate and be null and void upon termination of the Master Lease. b. Expiration of Term. This Agreement shall immediately terminate and be null and void upon expiration of its Term if this Agreement has not been extended prior to such expiration. C. Default. Further, either party may terminate this Agreement if the other party to this Agreement is in default under this Agreement. A party shall be in default if: (a) such party fails to pay any sum payable under this Agreement within forty- five (45) calendar days after the same is due and payable; or (b) such party fails in any material respect to perform or comply with any of the other terms, covenants, agreements, or conditions of this Agreement and such failure continues for more than thirty (30) calendar days after written notice from the other party ("Event of Default"). In the event that such a default (other than a default in the payment of money) is not reasonably susceptible to being cured within the thirty (30) day period, the defaulting party shall not be considered in default if it shall within such thirty (30) day period have commenced with due diligence to cure such default and thereafter completed with due diligence the curing of such default. In the event of an Event of Default, the party may, in its sole discretion, (a) extend the time for the other party to perform the applicable obligation(s) hereunder for a period of time acceptable to such Party beyond the cure period set forth in this Section 23(c), or (b) terminate this Agreement by giving written notice (as required under Section 23(d)) of such termination to the other party. d. Termination: (1) Payment of Fees to AEG Upon Termination. In the event of termination of this Agreement prior to the expiration of the Term as set forth in Section 3, City shall pay AEG all fees earned to the date of City's termination. "Fees earned to date" shall be limited to the pro rata portion of the Base Fee earned for that Fiscal Year and the Room Night Goal set forth in Section 17(2)(a)(i). AEG shall not be entitled to any portion of an Incentive Fee for any Fiscal Year in which the Agreement is terminated due to AEG's breach or Event of Default of this Agreement, otherwise, the parties shall in good faith determine the portion of the Incentive Fee earned by AEG and the City shall pay AEG such Incentive Fee. (2) Surrender of Premises. Upon termination or expiration of this Agreement, AEG shall surrender and vacate the Facilities, Visitor Center, and WMML. The Facility, Visitor Center, WMML, and all equipment and furnishings therein shall be returned to the City in good repair, reasonable wear and tear excepted. All reports, records, including financial records, and documents maintained by AEG at the Facilities, Page 28 of 37 55575.38180132220183.1 Visitor Center, and WMML relating to this Agreement, other than materials containing AEG's proprietary information or property shall be immediately surrendered to City upon termination or expiration of this Agreement. 24. City Officers and Employees: Non -Discrimination a. Non -liability of City Officers and Emplovees. No officer or employee of the City shall be personally liable to AEG, or any successor -in -interest, in the event of any default or breach by the City or for any amount which may become due to the AEG or to its successor, or for breach of any obligation of the terms of this Agreement. b. Conflict of Interest. AEG acknowledges that no officer or employee of the City has or shall have any direct or indirect financial interest in this Agreement nor shall AEG enter into any agreement of any kind with any such officer or employee during the term of this Agreement and for one year thereafter. AEG warrants that AEG has not paid or given, and will not pay or give, any third party any money or other consideration in exchange for obtaining this Agreement. C. Covenant Against Discrimination. In connection with its performance under this Agreement, AEG shall not discriminate against any employee or applicant for employment because of actual or perceived race, religion, color, sex, age, marital status, ancestry, national origin (i.e., place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition (each a "prohibited basis"). AEG shall ensure that applicants are employed, and that employees are treated during their employment, without regard to any prohibited basis. As a condition precedent to City's lawful capacity to enter this Agreement, and in executing this Agreement, AEG certifies that its actions and omissions hereunder shall not incorporate any discrimination arising from or related to any prohibited basis in any AEG activity, including but not limited to the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship; and further, that AEG is in full compliance with the provisions of Palm Springs Municipal Code Section 7.09.040, including without limitation the provision of benefits, relating to non- discrimination in city contracting. 25. Miscellaneous Provisions. a. Patent and Copvriaht Infringement. To the fullest extent permissible under law, and in lieu of any other warranty by City or Contractor against patent or copyright infringement, statutory or otherwise: (1) It is agreed that AEG shall defend at its expense any claim or suit against City on account of any allegation that any item furnished under this Agreement by AEG, or the normal use or sale arising out of the performance of this Agreement by AEG, infringes upon any presently existing U.S. letters Page 29 of 37 55575.38190\32220183.1 patent or copyright and AEG shall pay all reasonable costs and damages finally awarded in any such suit or claim, provided that AEG is promptly notified in writing of the suit or claim and given authority, information and assistance at AEG's expense for the defense of same, and provided and to the extent such suit or claim solely arises out of, pertains to, or is related to the negligence, recklessness or willful misconduct of AEG. However, AEG will not indemnify City if and to the extent the suit or claim results from: (1) City's alteration of a deliverable, such that City's alteration of such deliverable created the infringement upon any presently existing U.S. letters patent or copyright; or (2) the use of a deliverable in combination with other material not provided by AEG when it is such use in combination which infringes upon an existing U.S. letters patent or copyright; or (3) any negligence, recklessness or willful misconduct of the City. (2) AEG shall have sole control of the defense of any such claim or suit and all negotiations for settlement in the event City fails to cooperate in the defense of any suit or claim, provided, however, that such defense shall be at AEG's expense. AEG shall not be obligated to indemnify City under any settlement that is made without AEG's consent, which shall not be unreasonably withheld. If the use or sale of such item is enjoined as a result of the suit or claim, AEG, at no expense to City, shall obtain for City the right to use and sell the item, or shall substitute an equivalent item acceptable to City and extend this patent and copyright indemnity thereto. b. Integrated Agreement. This Agreement, including the attached exhibits, contains the entire agreement of the parties and supersedes all prior and contemporaneous agreements and understandings, oral or otherwise, among the parties with respect to the matters contained in this Agreement and may not be modified or amended except as set forth in this Agreement. C. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be invalid under the applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the reminder of that provision, or the remaining provisions of this Agreement. d. Amendments. This Agreement shall not be altered, modified, or amended in whole or in part, except in a writing executed by both the City and AEG. Page 30 of 37 55575.38190132220183.1 e. Successors in Interest. This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, executors, successors and assigns as permitted herein. f. Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be personally delivered, sent by registered or certified mail, postage prepaid, return receipt requested, or delivered or sent by electronic transmission, and shall be deemed received upon the earlier of: (i) the date of delivery to the address of the person to receive such notice if delivered personally or by messenger or overnight courier; (ii) five (5) business calendar days after the date of posting by the United States Postal Service if by mail; or (c) when sent if given by electronic transmission. Any notice, request, demand, direction, or other communication sent by electronic transmission must be confirmed within forty-eight (48) hours by letter mailed or delivered. Notices or other communications shall be addressed as follows: To City: City Manager City of Palm Springs 3200 East Tahquitz Canyon Way Palm Springs, CA 92262 With a copy to: City Attorney City of Palm Springs 3200 East Tahquitz Canyon Way Palm Springs, CA 92262 Jeff.ballinger-c@palmspringsca.gov To: AEG: AEG Attn: General Manager Palm Springs Convention Center 277 North Avenida Caballeros Palm Springs, CA 92262 Fax: (760) 778-4102 With a copy to: Charles Steedman Chief Operating & Development Officer AEG Facilities, LLC 800 West Olympic Blvd. Los Angeles, CA 90015 g. Counterparts. This Agreement may be executed in one or more counterparts and each of such counterparts, for all purposes, shall be deemed to be an original, but all of such counterparts together shall constitute but one and the same instrument, binding upon the parties, notwithstanding that all of the parties may not have executed the same counterpart. h. Waiver. No waiver of any provision of this Agreement shall be effective unless in writing and signed by a duly authorized representative of the Party Page 31 of 37 55575.38180132220183.1 against whom enforcement of a waiver is sought. Any waiver by the Parties of any default or breach of any covenant, condition, or term contained in this Agreement, shall not be construed to be a waiver of any subsequent or other default or breach, nor shall failure by the Parties to require exact, full, and complete compliance with any of the covenants, conditions, or terms contained in this Agreement be construed as changing the terms of this Agreement in any manner or preventing the Parties from enforcing the full provisions hereof. i. No Partnership or Joint Venture. Nothing herein contained is intended or shall be construed in any way to create or establish the relationship of partners or a joint venture between City and AEG. Force Maieure and Casually. (i) Force Maieure. The performance of each party's obligations under this Agreement shall be extended because of any delays due to unforeseeable causes beyond the control and without the fault or negligence of the affected party (financial inability excepted) if the affected party, within ten (10) calendar days following the commencement of such delay, notifies the other party in writing of the causes of the delay. Unforeseeable causes include, but are not limited to any event beyond the reasonable control of either party including, acts of God or of the public enemy, unusually severe weather, fires, earthquakes, floods, epidemics, quarantine restrictions, riots, strikes, freight embargoes, wars, and/or acts of any governmental agency, including the City. (ii) Casualty. In the event of damage or destruction to a material portion of the Facilities by reason of fire, storm or other casualty loss that renders the Facilities (or a material portion thereof) untenable ("Casualty Loss"), and the City elects not to remedy such situation such that such damage or destruction is expected to render the Facilities (or a material portion thereof) untenable for a period estimated by an architect selected by the City at AEG's request, of at least one hundred eighty (180) days from the date of such Casualty Loss, either party may terminate this Agreement upon written notice to the other, provided that (a) while the City shall not be required to pay any compensation to AEG during the period that the Casualty Loss continues, including pursuant to Section 17(a); provided however, that the City shall not be relieved of its obligation to pay to AEG its Fees due under Section 17(a) for the period leading up to date of the Casualty Loss; and (b) in the event the Facilities once again become tenable at any time during the Term, this Agreement shall, at the option of AEG, once again become effective and AEG shall manage and operate the Facilities under the terms hereof for the remainder of the original Term. k. Compliance with Law. AEG warrants and covenants that all Services rendered shall be performed in accordance with all applicable federal, state, and local laws, statutes, ordinances lawful orders, rules, and regulations. I. Independent Legal Counsel and Tax Advice. Each Party acknowledges that is has been represented by independent legal counsel of its own choice and has obtained its own tax advice throughout all of the negotiations that Page 32 of 37 55575.38190132220183.1 preceded the execution of this Agreement or has knowingly and voluntarily declined to consult legal counsel or obtain tax advice, and that each Party has executed this Agreement with the consent and on the advice of such independent legal counsel or other tax advisor. M. No Third Party Beneficiaries. Except as may be expressly provided for in this Agreement, nothing contained in this Agreement is intended to confer, nor shall this Agreement be construed as conferring, any rights, including, without limitation, any rights as a third -party beneficiary or otherwise, upon any entity or person not a party to this Agreement. n. Time of Essence. Time is of the essence in the performance of the provisions of this Agreement as to which time is an element. o. Rights and Remedies are Cumulative. Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the Parties are cumulative and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. P. Responsibilities of the Parties. Both parties agree to use reasonable care and diligence to perform their respective obligations under this Agreement. Both parties agree to act in good faith to execute all instruments, prepare all documents and take all actions as may be reasonably necessary to carry out the purposes of this Agreement. Unless specified herein, neither party shall be responsible for the service of the other. q. Corporate Authority. Each of the undersigned represents and warrants that (i) the Party for which he or she is executing this Agreement is duly authorized and existing, (ii) he or she is duly authorized to execute and deliver this Agreement on behalf of the Party for which he or she is signing, (iii) by so executing this Agreement, the Party for which he or she is signing is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement does not violate any provision of any other Agreement to which the Party for which he or she is signing is bound. r. Incorporation of Recitals. The above -referenced Recitals are hereby incorporated into the Agreement as though fully set forth in this Agreement and each Party acknowledges and agrees that such Party is bound, for purposes of this Agreement, by the same. S. Plastic and Styrofoam Use. The City is in the process of developing citywide regulations for use of plastics and Styrofoam. Once the City municipal code has been modified, then AEG shall comply with those provisions. In the interim, the following restrictions apply to single -use food ware associated with food service operations at the Facilities: Page 33 of 37 55575.38190132220183.1 1. Materials made of expanded polystyrene (EPS) foam are prohibited. 2. Plastic straws are generally prohibited. A limited number should be kept on hand to be distributed on request to individuals that may need it to accommodate disabilities. 3. Single -use food ware that is biodegradable is encouraged wherever possible. 4. If single -use plastic food ware is necessary, it will be limited to PET and HDPE (codes 1 and 2). 26. Minor Modifications/Additional Terms to Be Finalized. The provisions of this Agreement require a close degree of cooperation between the parties and "Minor Changes" to this Agreement may be required from time to time. "Minor Changes" mean changes to this Agreement that do not result in a change to the Section 17 Compensation (except for the definition of Consumer Price index which shall be considered subject to Minor Changes) in effect on the Execution Date, including but not limited to those terms and conditions still under discussion between the parties and yet to be finalized which are contained in Exhibit E attached hereto. Accordingly, the parties may mutually agree they will cooperate in good faith to make "Minor Changes" to this Agreement to be evidenced by their approval and execution of an "operating memorandum" reflecting such Minor Changes including but not limited to those terms and conditions referred to on Exhibit E attached hereto. To the extent permitted by Applicable Law: a. Neither the Minor Changes nor any Operating Memorandum shall require public notice or hearing. b. The City Attorney and City Manager shall be authorized to determine whether proposed modifications and refinements are "Minor Changes" subject to this Section 26 or more significant changes requiring amendment of this Agreement. C. The City Manager may execute any Operating Memorandum without City Council action and provide notice to the City Council. The parties acknowledge and agree that this Agreement is subject to the parties finalizing the term and conditions in Exhibit E and should the parties fail to come to a final agreement on the terms and conditions in Exhibit E, this Agreement shall be null and void. Page 34 of 37 55575.38190132220183.1 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the dates stated below. "CITY" City of Palm Springs Date: David H. Ready, PhD City Manager APPROVED AS TO FORM: ATTEST By: -J� By: J ffr . er Balli g City Attorney APPROVED BY CITY COUNCIL: Date: Agreement No. Corporations require two notarized signatures. One signature must be from Chairman of Board, President, or any Vice President. The second signature must be from the Secretary, Assistant Secretary, Treasurer, Assistant Treasurer, or Chief Financial Officer. "AEG" AEG Management Palm Springs, LLC, a Delaware limited liability company By4eature By--10� Signature ro V r I " M -aML� Page 35 of 37 55575.38190132220183.1 Printed Name/Title 3Q( , APPROVED 8Y CITY COUNCIL Af3 ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness,. accuracy, or validity of that document. State of Calomia County of Q,, On id a� before me, L141amui (insert name and titld of the r) personally appeared who proved to me on the basis of satisfactory evidence to be the subscribed to the within instrument and sacknowled ed to me that i Itii kir authorized capacito), and that byl llt lti r sigl personjQ, or the entity upon behalf of which the personKacted, � whose nameNarw toy executed the same in on the instrument the the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. CHMSTINE DAVIE WITNESS my hand and officlat seal. Comm. #2161840 Notary Public• Callfornio Los Angeles County Comm. EXPIM Aug 31, =0 Signatur (Seal) ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of Cal- omia County of l'6e LfNJ On ao before me, e } f (insert name and title of the o r) personally appearedy41 Y ) F , K CIM j .111- who proved to me on the basis of satisfactory evidence to be the personN whose namets4hw subscribed to the within instrument and acknowledged to me than lsi @/iy executed the same in i)*/d*r authorized capaclty(b , and that byi e*lt6gir signature`( on the instrument the person` or the entity upon behalf of which the personcted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. CHRISTINE DAVIE WITNESS my hand and official seal. act.,ffi Comm. #2161840otary Public • California Los Angeles Counom. Expires Aug 31, 20E0 Signatuf (Seal) 11 ► _li_2 1 ► The Management Services to be provided by AEG, include, but are not necessarily limited to the following: 1. Manage, operate, maintain and promote the Convention Center in a manner that is consistent with other comparable facilities providing similar services throughout the United States; 2. Plan, coordinate and administer operation of the Facilities; 3. Negotiate, execute and perform contracts, use agreements, licenses and other agreements: (a) with persons who desire to schedule events, performances, telecasts, broadcasts or other transmissions in, from or to the Facilities or who desire otherwise to use the Facilities or any part thereof; or (b) that otherwise pertain to the use, operation, marketing, promotion and occupancy of the Facilities or any part thereof vendors and subcontractors providing services within the Facilities such as food and beverage, utility distribution, Wi-fi, data, etc. subject to review and written approval by the City Manager; 4. Negotiate, execute and perform contracts, use agreements, licenses and other agreements: (a) for all sponsorships, including, but not limited to, the use of advertising space in or about the Facilities and all advertising rights of whatever Kind or nature related to the Facilities, and (b) for the sale, promotion, marketing and use of all names, trademarks, trade names, logos and similar intangible property relating solely to the Facilities; 5. Operate, procure or cause to be operated: (a) concessions within the Facilities for the sale of food, beverages, souvenirs, novelties and programs, and (b) clubs and restaurants within the Facilities. AEG shall endeavor to solicit local businesses to the extent possible for all concessions, and shall cooperate with City and City Manager shall have final approval regarding the selection of concessionaire(s). S. Furnish all services, personnel, materials, tools, machinery, equipment and other items necessary to accomplish the foregoing requirements including hiring, training, paying and supervise all personnel hired at the Facilities; 7. Devise and implement procedures reasonably designed to keep the Facilities in good order and condition, subject to ordinary wear and tear, and maintain the Facilities in such order and condition; A-1 55575.38190\32220183.1 8. Coordinate all advertising, licensing, promotional activities, marketing, and public relations for the Facilities in coordination with the Tourism Services to be provided under this Agreement; 9. Within one -hundred twenty (120) days of assuming control of Facilities, submit a five-year strategic plan for the Facilities 10. Submit a written business/sales plan (henceforth referred to as the "Plan") for the year commencing on or before June 1 of each Contract Year of the Term of this Agreement for approval by City, which approval shall be exclusive to the City and shall not be unreasonably withheld or delayed. The sales plans shall be consistent with the policy that the primary role of AEG's convention sales division is to sell space in the Facilities. The Plan shall include, but not be limited to: a. A summary of actual performance against goals for the previous Fiscal Year, including reasons for significant divergence from goals. b. A summary of the impact of competitive destinations and facilities, including enhancements to the convention product made in these destinations during the previous Fiscal Year. C. An overview of the strengths, weaknesses, opportunities and challenges with respect to the Palm Springs convention destination, focusing on changes occurring during the previous Fiscal Year. d. A description of the action plan for the upcoming Fiscal Year. e. A statement of goals for the upcoming year. Goals should include all areas tied to incentive fees, as well as other goals that can include but are not limited to events by type, attendance by type, occupancy, and economic impact. 11. Establish and maintain consistent procedures for cost estimating and reporting, maintenance and payment of invoices; 12. Monitor actual and projected expenses; 13. Within six (6) months following the approval by the City Council of this Agreement, AEG shall compile an inventory of all furniture, fixtures and equipment which are part of the Facilities or have been otherwise paid for by or on behalf of the City with a minimum initial purchase of $1,000. AEG shall be required to update the inventory on the third anniversary of the Effective Date, in accordance with generally accepted accounting principles (GAAP) for fixed assets. The updated inventory may capitalize the assets and shall be presented to the City concurrent with the Annual Audit required pursuant to Section 11. A-2 55575.38190132220183.1 14. Meet monthly with primary hotel partners to discuss cooperative sales efforts, the status of current sales prospects, and to report on business currently booked at the Facilities. 15. Manage and operate the Facilities so as to minimize expenses and maximize revenues; provided, however, that AEG, in establishing and implementing its booking policies, may schedule not only those events that generate substantial direct revenue to the Facilities, but also those events that produce less direct revenue but, in AEG's good faith judgment, generate either a significant economic, cultural or other benefit to City or otherwise serve the public interest; 16. Not permit the use of the Facilities without charge for such use, absent City Manager's prior written consent; 17. Maintain the Facilities in good condition, reasonable wear and tear excepted and continue maintenance procedures which will keep the Facilities in good condition and working order, reasonable wear and tear excepted. Without limiting the foregoing, the parties acknowledge that the overall appearance and maintenance of the Facilities are important to client relations, promotions and marketing of the Facilities. Consistent therewith, AEG shall perform general routine maintenance of the entire Facilities consistent with a first-class facility comparable to other facilities providing similar services throughout the United States, and, in particular, AEG shall provide specialized maintenance for the air conditioning chiller units in accordance with the recommendations and/or schedules of the manufacturer, using competent, properly trained personnel; and 18. Require that all persons using the Facilities or attending events therein comply with all legal requirements of all governmental authorities having jurisdiction over the Facilities, and that the use of the Facilities complies with all applicable laws including, but not limited to, civil rights statutes, the Americans With Disabilities Act, and specifically, Palm Springs Municipal Code 7.09.040 "Non-discrimination in contracting." AEG shall prepare appropriate facility rental 1 use application forms requiring applicants to certify and confirm compliance with all applicable laws, including PSMC 7.09.040. 19. Select a General Manager. AEG shall identify and the City shall approve any selected General Manager to be assigned to the Convention Center upon execution of this Agreement. In the event AEG requests to substitute the General Manager during the term of this Agreement, AEG shall first coordinate with the City Manager and provide a list of persons with requisite experience and references as the selection of the new General Manager. The City Manager shall have final approval of any replacement or substitute. approval by the City Manager. A-3 55575.38190132220183.1 20. Ensure compliance with all City policies defined in the Palm Springs Municipal Code including but not limited to local preferences, non- discrimination, and locally -owned businesses. A-4 55575.38190%32220183.1 EXHIBIT B SCOPE OF TOURISM SERVICES The Tourism Services to be provided by AEG, include, but are not necessarily limited to the following: 1. Manage and operate the Palm Springs Visitor Center. 2. Advertise and otherwise promote tourism to the City of Palm Springs, including, but not limited to: a. Generating positive awareness of the City as a destination choice for leisure travelers; b. Stimulating interest and desire on the part of domestic and international customers to take action and visit; C. Planning special events as the City Council may from time to time request; d. Creating positive awareness, support and participation in the City's tourism marketing programs. 3. Prepare an annual business marketing plan as follows: a. Each year during the Term, except during the initial year of the Agreement, on or before June 1, AEG shall submit to the City the "Annual Business Plan," which is a proactive business marketing plan which includes a detailed list of each of the programs and duties AEG shall perform pursuant to this Agreement for the next Fiscal Year. In the initial year of this Agreement, AEG shall be required to submit its Annual Business Plan no later than December 1, 2019. AEG shall perform its obligations under this Agreement as authorized pursuant to the approved Annual Business Plan. b. Each Annual Business Plan shall include the following: (1) An Executive Summary; (2) A statement, restatement or update of AEG's marketing mission as applicable; (3) A discussion of the prior Annual Business Plan, if any, the extent to which the objectives were achieved, and an B-1 55575.38190132220183.1 explanation thereof including, but not limited to, the challenges of the prior year; (4) A list of all major objectives for the upcoming year; (5) Planned events and activities for the new year; (6) An analysis of the challenges projected for the upcoming year including, but not necessarily limited to, marketplace complications which act as or are perceived to be impediments to success, which include major challenges, such as competitive city hotel inventories, other marketing budgets, economic conditions, and other conditions which may unfavorably impact AEG's ability to create customer share of mind and market; (7) An explanation of the results expected to be achieved in the upcoming year including projected goals in firm numbers; (8) An update on any additional research gathered in the previous year; (9) A market analysis of travel trends and visitor trends for the upcoming year, including, but not limited to, relevant national trends; (10) An analysis of the market segments to be targeted in the upcoming year; (11) Major strategies to be undertaken including, but not necessarily limited to: (a) Advertising; (b) Public relations; (c) Direct marketing; (d) Direct sales; and (e) Promotional and cooperative opportunities, including, but not limited to, trade shows and sales forums; (12) A comprehensive marketing calendar indicating the implementation of all major strategies by month; (13) A detailed budget; and 1-IN 5 5 57 5.3819 01322 20183.1 (14) Strategies to modify and improve the operation of the Visitor Center aimed at making it more efficient, accessible and informative to international, national and regional visitors. C. Any significant change in the Annual Business Plan shall first be approved by the City Manager. 4. In conjunction with the City and community stakeholders, provide public relations and promotional support for special events as requested by the City. 5. Maximize marketing funds and results by leveraging increased marketing support and synergism with other principal partners, including the Convention Center and the Greater Palm Springs Convention and Visitors Bureau. 6. Establish a tracking system that identifies and measures key activities performed by AEG including productivity and return on investment. 7. Maintain a community relations plan that encourages stakeholder input and consensus. 8. Negotiate, execute and perform contracts, use agreements, licenses and other agreements that pertain to the operation, marketing or promotion of the Visitor Center and/or tourism within Palm Springs subject to those restrictions set forth in this Agreement. 9. Establish and maintain consistent procedures for cost estimating and reporting, maintenance and payment of invoices, including preparation of the Tourism Budget, a line item budget and reports as described herein. 10. Monitor actual and projected operating expenses incurred by AEG in the performance of its duties under this Agreement. Make prompt payment of all expenses from funds made available for that purpose. 11. Maintain a website designed to promote the City as a tourist destination. All City owned and/or operated amenities shall appear first on any listing or categorization of such amenities on said webpage. 12. Maintain the Visitor Center in good condition, reasonable wear and tear excepted and continue maintenance procedures which will keep the Facilities in good condition and working order, reasonable wear and tear excepted. B-3 55575.38190132220183.1 13. Select a Director of Tourism. It is anticipated that the current Director of Tourism will continue in that role as of the time of the Effective Date. In the event that there is a need to identify a new Director of Tourism, AEG shall identify and the City shall approve any selected Director of Tourism. In the event AEG requests to substitute the Director of Tourism during the term of this Agreement, AEG shall first coordinate with the City Manager and provide a list of persons with requisite experience and references as the selection of the new Director of Tourism. The City Manager shall have final approval of any replacement or substitute. 14. The Director of Tourism shall outreach to and involve the broad spectrum of tourism within the City, including representatives of large hoteliers, medium hoteliers, small hoteliers, vacation rentals, gay tourism, the Uptown Design District merchants association, the Mainstreet association, restaurateurs, the Convention Center, significant attraction venues, and other similar groups or persons as identified by the City Manager. Such outreach and involvement may include the formation of an advisory committee consisting of representatives of this broad spectrum of tourism. The Director may refer issues to this advisory committee for comment and advice relating to the promotion of Palm Springs as a tourist destination, including, but not limited to, marketing, coordination of activities with Palm Springs businesses, the Annual Performance Review, and other responsibilities of AEG provided in the Agreement. In the event the City Council by ordinance or resolution establishes a committee, commission, or board to advise the City and/or the Director on tourism matters, the Director shall serve as Secretary, and shall provide all necessary or appropriate staff support, to such body. M 55575.38190=201831 EXHIBIT C SCOPE OF WELWOOD MURRAY MEMORIAL LIBRARY SERVICES The Welwood Murray Memorial Library ("WMML") Services to be provided by AEG, include, but are not necessarily limited to the following: Provide tourism and related services at the WMML during normal operating business hours, 9AM to 9PM daily, including holidays (except New Year's Day, Thanksgiving Day, and Christmas Day) unless otherwise modified at the discretion of the City Manager. AEG shall assign two employees to cover WMML operations. AEG staff shall arrive 30 minutes prior to opening and stay 15 minutes after closing to handle day -today opening/closing procedures. 2. The City's Library Director may dedicate one City employee to be in responsible charge of the daily management of the WMML, who will oversee AEG's assigned employees at the WMML. 3. AEG's employees assigned to WMML shall share library duties in the WMML, particularly printing, computer assistance, issuing restroom keys, newspaper and magazine processing, sorting mail, cash reconciliation, and purchasing, order and stocking basic office supplies (at AEG expense). 4. AEG shall maintain brochure rack spaces for itself, the City Library and the Historical Society. AEG shall maintain one designated display case for the Visitor's Center. 5. AEG may collect and retain revenue from printing to cover its costs for same. 6. AEG shall coordinate with the City's Library staff on the reservation and use of the Cornelia White Community Room, and provide assistance with opening and closing the room for scheduled meetings, and for operating the City's audio and visual equipment (as required). All revenue from room rentals shall be coordinated directly with the City's Library staff. 7. AEG shall assume responsibilities for compliance with City or County regulations when WMML is designated as a "Cooling Center" (activated when high temperature will reach or exceed 97°F, June 1 through October 15), requiring distribution of water and snacks (furnished by County). 8. AEG shall provide the City Library staff with a monthly report showing door counts and total visitors, with comparison to prior year, issues of interest or concern, or other information as requested by the City. D-1 55575.38190132220183.1 During the Transition Period, AEG shall, subject to the terms and conditions of this Agreement, provide the following services in accordance with the Transition Services Agreement at no cost to the City (the "Transition Services"): (1) Review, provide suggested revisions to and confer with the City on suggested revisions to the 2019-2020 Budget; (2) establish and develop operating plans, practices and procedures for Facilities operations; (3) start to build and develop brand marketing strategies with respect to the Facilities, for the industry; (4) establish, implement and monitor the accounting, security, human resources, marketing and regulatory compliance systems; (5) establish benchmark standards and build reporting platforms with respect to the operation of the Facilities; (6) recruit, select and hire Facility Personnel and implement necessary procedures, techniques and training programs to obtain and evaluate qualified applicants; (7) conduct, or assist with, relevant background checks relating to suitability standards and other matters, for potential Facility Personnel; (8) build and implement financial reporting systems, cash management plans and Event settlement mechanisms; (9) undertake risk assessment, underwriting and claims management systems; (10) build safety, security and risk policies and procedure operating manuals and liaise with applicable Governmental Authorities with respect to the foregoing; (11) coordinate the Facility's food and beverage and concessions operator(s); (12) in connection with the foregoing, (i) assign a direct individual representative of AEG (the "AEG Representative") who will attend in -person meetings and general consultations during 55575.38190132220183.1 the Transition Period and (ii) to the extent necessary, marshal other resources of AEG's affiliates; provided that City shall reimburse AEG for the expenses of AEG Representatives and any other resource that is required to travel to Facilities or to meet with Owner, in each case as incurred in connection therewith during the Transition Period. 55575.3819M32220183.1 EXHIBIT E ADDITIONAL TERMS TO BE FURTHER DISCUSSED AND NEGOTIATED BY THE PARTIES All provisions agreed upon and inserted into the body of the Agreement 56676.381 90\322201 83.1 • OPERATING MEMORANDUM NO. I TO AGREEMENT FOR TOURISM AND MANAGEMENT SERVICES BY AND BETWEEN AEG MANAGEMENT PALM SPRINGS,LLC AND TI-IE CITY OF PALM SPRINGS The purpose of this Operating Memorandum No. 1 is to correct the Welwood Murray Memorial Library(W MML)Budget for 2019-2020. A. Authority 1. This Operating Memorandum No. 1 ("Operating Memorandum') is entered into as of January 22020, by and between the CITY OF PALM Springs (the "City') and AEG MANAGEMENT PALM SPRINGS,LLC,a Delaware limited liability company("AEG'). 2. This Operating Memorandum is entered into in accordance with the terns of Section 26 of the AGREEMENT FOR TOURISM AND MANAGEMENT SERVICES, dated July 10,2019(the"Agreement'). Section 26 of the Agreement expressly authorizes the parties to enter into this Operating Memorandum in order to make mutually acceptable refinements and adjustments with respect to the performance of the Agreement. Capitalized terms used but not defined in this Operating Memorandum shall have the meanings given in the Agreement. B. Background and Facts. This Operating Memorandum is entered into with reference to the following background and facts: 1. The City has received invoices relating to the operation and management of the Welwood Murray Memorial Library(WMML)from AEG,included as Exhibit "A",and realized a discrepancy; 2. AEG identified an annual budget of$97,200,consistent with their 2019-2020 budget for"Other Income"as approved by the City Council on July 10,2019; 3. Section 15(c)of the Agreement provides for an annual budget of$85,750, reflecting the prior management agreement's adjusted base amount; 3. AEG and the City desire to update the Agreement to reflect the approved budget amount. C. Agreement. City and AEG hereby agree that the amount of$97,200 shall be reflected in Section 15(c) of the Agreement in the place of$85,750. D. Counterparts. This Operating Memorandum may be executed in counterparts, which when executed by the parties shall together constitute one and the same document. 55575.38190\325%3",1 1 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the dales stated Mow. "CITY" City of Palm Springs Date: B David H.Ready,PhD City Manager APPROVED AS TO FORM: ATTEST B By: khmyS. Aallingd' thony Mejt City Attorney City Clerk APPROVED BYCUY COUNCIL �CIL. � "AEG" AEG Management Palm Springs, LLC,a Delaware limited liability company By: By: Signature Signature Rdoer_+ sJftmaln ftesielepik- Printed 1,ame/Title Printed Namelfitle 555/s1oW\32596344 1 2 v u Palm Springs Visitor Information Center Summary Draft Budget 2019-2020 Forecast Budget Budget Variance F/(U) 07/01/18- 07/01/18- 07/O1/19- To Prior O6/30/19 06/30/19 06/30/20 Budget %Change Income Advertising Ad Sales 72,400 70,000 72,000 2,000 3% Total Advertising Revenue 72,400 70,000 72,000 2,000 3% Gift Shop Gift Shop Merchandise 224,D00 224,000 224,000 - 0% Cost of Goods Sold (114,000) (114,000) (114,000) 0% Net Gift Shop Revenue 130,000 130,000 110,000 - 0% Other Income 85,750 85,750 97,200 11,450 13% Total Income 268,150 265,750 279,200 13,450 5% Expenses Wages and Benefits 343,522 350,000 375,000 25,000 7% Contract Services 21,018 21,478 23,000 1,522 7% General and Administrative 30,082 29,763 30,000 237 1% Repairs and Maintenance 2,818 2,885 3,000 115 4% Supplies 3,725 3,000 4,000 1,000 33% Utilities 32,666 24,600 34,000 9,400 38% Total Expenses 433,831 431,726 469,000 37,274 9% Operating Excess(Deficit) (165,681) (165,976) (189,800) (23,824) 14% Capital Expenditure from Operatons - - - - Total Draw Requirement (165,681) (365,976) (189,800) (23,824) 14% VA M 6 f Convention Center & Bureau of Tourism CALIFORNIA Like no place else.- Palm Springs Bureau of Tourism Palm Springs Visitors Center and Wehvood Murray Memorial Library Proposed Budget Variances 2019-2020 Budget vs 2018-2019 Budget Revenues: Overall 8%Increase in Total Revenue Expenses: Overall 0%Increase in Total Expenses Emolovee Wages and Benefits-$38k Increase Bureau-$13k increase, estimated 3%growth in wages and benefits. Visitors Center-$14k increase due to increase in mandatory state minimum wage rate. Library-$11k increase due to increase in mandatory state minimum wage rate. Fulfillment- $1 Ok Decrease Bureau—Decrease based on 20182019 activity. General Marketing- $40k Decrease Bureau-Reduction in marketing to offset other increased expenses. Travel and Trade Shows-$4k Increase Bureau—Increase based on 2018/2019 activity. Fam Trips and Missions- $l5k Increase Bureau—Increase based on 208/2019 activity. Utilities—$9k Increase Visitors Center—$7k over budget in electricity for fiscal year 2018/2019.Projecting 4% increase in electricity over 2018/2019 actual. 277 N Avenida Caballeros,Palm Springs,CA 92262(760)325-6611 Fax(760)778-4102 w .palmspringscc.com and w .visitpalmsprings.com Convention Center & Bureau of Tourism CALIFORNIAI Like no place else.- March 28,2019 City of Palm Springs Mr.David Ready 3200 E Tahquitz Canyon Way Palm Springs, CA 92262 Dear Mr.Ready, Transmitted herewith for your review and consideration are the Palm Springs Convention Center, Palm Springs Bureau of Tourism and Palm Springs Visitors Center proposed budgets for fiscal year 2019/2020. Please let us know if you have any questions regarding the proposed budgets. Sincerely, James Canfield Executive Director Eileen Reilly Director of Finance cc: Nancy A.Pauley 277 N Avenida Caballeros, Palm Springs,CA 92262(760)325-6611 Fax(760)778-4102 w .palmspringsccxom and w .visitpalmspringsxom VAM Convention Center & Bureau of Tourism CALIFORNIA Like no place else Proposed Budget Fiscal Year 2019/2020 277 N Avenida Caballeros, Palm Springs,CA 92262(760)325-6611 Fax(760)778-4102 www.paimspringscc.com and www.visitpaimsprings.com MW Contents Palm Springs Convention Center Summary Draft Budget PSCC Proposed Budget Variances Palm Springs Bureau of Tourism Tourism Summary Draft Budget Visitor Information Center Summary Draft Budget PSBOT/PSVIC Proposed Budget Variances Palm Springs Convention Center Summary Draft Budget 2019-2020 Forecast Budget Budge Variance F/(0) 07/01/18- 07/01/18- 07/01/19- To Prior O6/30/19 06/30/19 06/30/20 Budget %Change Income Direct Event Income Rental 936,329 1,047,377 1,043,499 (3,878) 0% Services 188,344 174,124 194,500 20,376 12% Total Direct Event Income 1,124,672 1,221,501 1,237,999 16,498 1% Ancillary Income Audiovisual 289,035 240,794 288,219 47,425 20% Information Technology 119,857 148,638 149,753 1,115 1% Concessions 99,885 103,665 95,8g5 (7,780) -8% Catering 811,817 687,940 974,311 186,371 27% Parking 64,713 69,740 79,937 10,197 15% Electrical 80,695 84,600 86,381 1,781 2% Total Ancillary Income 1,466,002 1,335,377 1,574,486 239,309 18% Total Direct and Ancillary Income 2,590,674 2,556,879 2,812,485 255,607 10% Other Income Outside Catering 30,149 38,000 30,000 (8,000) -21% Other Operating Income 117,554 112,000 117,000 5,000 4% Total Other Income 147,703 150,000 147,000 (3,000) -2% Total Income 2,738,377 2,706,878 2,959,485 252,607 9% Expenses Wages and Benefits 2,401,063 2,478,600 2,505,743 27,143 1% Contracted Services 459,106 465,657 487,157 21,500 5% Operations 55,038 45,715 48,174 1,459 3% Repairs and Maintenance 163,440 102,730 124,359 21,629 21% Supplies 56,018 56,200 56,200 - 0% Insurance 41,051 56,387 49,616 (6,771) -12% utilloes 137,139 132,016 141,496 9,480 7% Marketing 228,540 245,629 239,591 (6,038) -2% General and Administrative 182,242 205,006 210,337 5,331 3% SMG Management Fee 230,439 230,438 237,812 7,374 3% Total Expenses 3,954,075 4,019,379 4,100,485 81,107 2% Operating Excess(Deficit) (1,215,698) (1,312,500) (1,141,000) 171,500 -13% Convention Center & Bureau of Tourism CALIFFORNIA1 Like no place else'- Palm Springs Convention Center Proposed Budget Variances 2019-2020 Budget vs 2018-2019 Budget Revenues: Overall$253k Increase in Total Income Direct Event Income-$16k Increase Due to increase in event activity. Ancillary Income-$239k Increase Due to increase in event activity. Other Income-$3k Decrease $8k decrease in Outside Catering and$5k increase in advertising revenue based upon 18/19 trend. Expenses: Overall$8lk Increase in Total Expenses Employee Wages and Benefits-$27k Increase Estimated 3%growth in wages/benefits including mandatory state minimum wage increases. Contract Services-$22k Increase Increased Security,Landscaping and Night Cleaning due to mandatory state minimum wage increases. Operations-$Ik Increase No significant variance from prior year budget Repairs and Maintenance—$22k Increase Increase in building repairs due to age of facility and equipment. Supplies-$Ok Increase No significant variance from prior year budget. Insurance-$7k Decrease Decrease in insurance premiums due to SMG negotiations with carriers. Utilities-$9k Increase Increased water and gas consumption due to increase in event attendance along with 4% projected rate increases. 277 N Avenida Caballeros, Palm Springs,CA 92262(760)325-6611 Fax(760)778-4102 www.palmspringscc.com and www.visitpalmsprings.com Marketing-$6k Decrease Decrease due to decrease in advertising costs. General and Administrative-$5k Increase Increased payroll processing fees due to new regulations,increased credit card processing fees due to volume, increased supply costs and audit fees. SMG Management Fee-$7k Increase Increase based on CPI annual percentage increase of 3.2%at Jan 31,2019. 277 N.Avenida Caballeros,Palm Springs,CA 92262(760)325-6611 Fax(760)778-4102 palmspringscc.com (00 Palm Springs Bureau of Tourism Summary Draft Budget 2019.2020 Forecast Budget Budget Variance F/(U) 07/01/18- 07/01/18- 07/01/19- To Prior 06/30/19 06/30/19 06/30/20 Budget %Change Income Advertising Ad Sales 45,529 42,000 45,500 3,500 8% Other Income 6,537 6,000 6,500 Sao 8% Total Income 52,066 48,000 52,000 4,000 8% Expenses Marketing Advertising 753,203 750,000 750,000 - 0% Fulfillment 92,306 106,253 95,741 (10,512) -10% General Marketing 206,235 227,707 188,200 (39,507) -17% International Marketing 128,024 132,000 128,024 (3,976) -3% In-Market 9,640 10,000 9,640 (36D) 4% Trade&Travel Shows 72,928 57,ID0 60,928 3,828 7% Fam Trips&Missions 98,367 71,000 86,367 15,367 22% Visitors Center 165,538 165,976 189,800 23,824 14% Total Marketing 1,526,241 1,520,036 1,508,700 (11,336) -1% General Wages and Benefits 474,862 479,723 492,300 12,577 3% Contracted Services 95,204 93,643 95,000 1,357 1% General and Administrative 38,995 37,118 39,000 1,882 5% Utilities 2,764 3,480 3,000 (480) -14% Total General 611,825 613,964 629,300 15,336 2% Total Expenses 2,138,066 2,134,000 2,138,000 4,0D0 0% Operating Excess(Deficit) (2,086,000) (2,086,000) (2,086,000) - 0% Capital Expenditure Total Draw Requirement (2,086,000) (2,086,000) (2,086,000) - 0% AGREEMENT FOR TOURISM AND MANAGEMENT SERVICES BY AND BETWEEN THE CITY OF PALM SPRINGS, a California Charter City AND AEG MANAGEMENT PALM SPRINGS, LLC, a Delaware Limited Liability Company DATE 7 2019 Pagel of 37 55575.38190\32220183.1 THIS AGREEMENT FOR- TOURISM AND MANAGEMENT SERVICES, (the "Agreement"), dated July 2Z, 2019, by and between AEG Management Palm Springs, LLC, a Delaware limited liability company, ("AEG'), and the.CITY OF PALM SPRINGS, a municipal corporation and Charter City of the state of California ("City"). RECITALS A. The City is the owner of the Palm Springs Convention Center located at 277 N. Avenida Caballeros, the Jackie Lee Houston Plaza located at the southwest corner of Amado Road and Calle Alvarado, and the East Lot (also known as the 10 acre parcel located at the southeast corner of Avenida Caballeros and Amado Road) (the "Facilities"), and AEG is an organization with substantial experience and expertise in. the management, operation, and marketing of public assembly facilities such as the Facilities (collectively referred to as "Management Services"). B. The Palm Springs Bureau of Tourism, and the Palm Springs Visitors Center currently located at 2901 N. Palm Canyon Dr, Palm Springs, CA .92262 ("BoT") is a City entity to be managed on behalf of the City by AEG. C. The City is the owner of the Welwood Murray Memorial Library, located at 100 S: Palm Canyon Dr., Palm Springs, CA 92262 .("WMML"), and operates as a digital library and as an extension of the Palm Springs Visitors Center, and is to be managed on behalf of the City by AEG. D. The City evaluated all of the proposals submitted in response to the REQUEST FOR PROPOSALS (RFP) 10-18 FOR CONTRACT MANAGEMENT SERVICES OF THE PALM SPRINGS CONVENTION CENTER AND BUREAU OF TOURISM and determined AEG as the most qualified firm to provide the Management Services to the City. E. City and AEG now desire to enter into a Management Agreement, whereby the City will engage AEG_, and AEG accepts such engagement to manage the BoT, manage the WMML, and provide Management Services of the Facilities on such terms and conditions as set forth in this Agreement. NOW, THEREFORE, in consideration of the promises and mutual benefits which will result to the Parties in carrying out the terms of this Agreement, it is mutually agreed as follows: AGREEMENT 1. Definitions. In addition to the terms which are defined elsewhere in-this Agreement, the following terms have the meanings set forth in this Section: "Agreement" shall mean this Agreement for Tourism and Management Services. Page 2 of 37 55575.38190\32220183.1 "Business Day" shall mean a day in the week in which the City's City Hall is open to the public for governmental purposes. "Capital Expenditures" shall mean all expenditures for building additions, alterations or improvements, and for purchases of additional or replacement furniture, machinery or equipment, the depreciable life of which, according to accepted accounting principles, is in excess of one (1) year and expenditures for repairs (normal wear and tear excepted) or replacements which extend the useful life of the assets being repaired or replaced for a period in excess of one (1) year with a minimum 'purchase price of$25,000.00. "Capital Improvements" shall mean all improvements paid for by Capital Expenditures. "City" shall mean the City of Palm Springs. "City Council" means the City Council of the City. "City Manager" means the City Manager of the City or the City Manager's designee or designees. i . "Consumer Price Index" means the Consumer Price Index for All Urban Consumers (CPI-U): Riverside-San Bernardino-Ontario as published by the United States Department of Labor on its website at https://www.bls.gov. The Base Fee and Targeted Gross Revenues hereunder shall be reviewed and adjusted on an annual . basis on each anniversary of the Effective Date to reflect any increases in the Consumer Price Index. The Base Fee and Targeted Gross Revenues will be multiplied by the percent increase in the Consumer Price Index during each twelve (12) month Contract Year; provided, however, the Consumer Price Index shall be limited to the lesser of (i) the Consumer Price Index, and (ii) two and one tenth percent (2.1%) per Contract Year. In no event shall the annual increase exceed two and one tenth percent (2.1%) per Contract Year. If publication of the Consumer Price Index ceases, the parties will mutually agree upon the use of an appropriate substitute index published by the United States Department of Labor or any successor agency. "Convention Center" shall mean the Palm Springs Convention Center located at 277 North Avenida Caballeros, Palm Springs, CA 92262. "Customer Satisfaction Benchmark" means, with respect to a Fiscal Year, the benchmark score for the Customer Satisfaction Surveys established by City and AEG for the Facility in such Fiscal Year and set forth in the Annual Plan for that Fiscal Year. "Customer Satisfaction Survey" means the customer satisfaction surveys to be agreed to by City and AEG for each Fiscal Year and set forth in the Annual Plan for that Fiscal Year. Page 3 of 37 55575.38190\32220183.1 } "Effective Date" means sixty (60) days after the City executes the.Agreement, the date on which AEG shall officially assume responsibility for all Management Services of the Facilities, the BoT, and the WMML, from the City's current operator, SMG. "Expenses" shall mean .and include all' expenditures or obligations of whatever kind or nature incurred (directly or indirectly) or accrued by AEG in any specified period during the Term of this Agreement, within (or reasonably believed by AEG to be within) the scope of AEG's authority or-responsibility under this Agreement and the Budget as approved and reviewed by the 'City under Section 15 of this Agreement, including salaries, wages, applicable taxes, benefits, costs and expenses of personnel working at -the Facilities or Visitor Center or otherwise related to the Facilities or Visitor Center; contract labor; maintenance and repairs (whether ordinary or extraordinary, and whether foreseen or unforeseen); utilities; telephone; telescreen and/or marquee operations; .telecommunications and broadcast facilities; dues, memberships and subscriptions; security; audit and accounting fees; legal fees except those fees provided for in Section 23(1); fees payable to concessionaires or other subcontractors; refuse removal; cleaning; sales and other applicable taxes; building supplies and materials; ticket commissions; premiums for insurance; data processing; advertising; marketing = and market research; pest control; office supplies; employment fees; freight and delivery; lease of equipment; Master Card, VISA and other credit card fees and charges and telecheck fees and expenses; travel (economy class), lodging and related out-of- pocket expenses of officers, directors and corporate personnel of AEG properly allocable to the performance of AEG's obligations under this Agreement not to exceed $25,000 each Fiscal Year-without City Manager's prior written consent; ticket/box office expenses; charges for fidelity bonds; and the fixed Base Fee payable to AEG pursuant to Section 17 of this Agreement; and all other costs and expenses incurred in accordance with the terms of this Agreement by or for the account of City reasonably related to AEG's performance of this Agreement. Expenses shall not include costs of salaries and benefits of employees of AEG, unless such costs are included in the Approved Budget, and any expenses relating to AEG personnel based in its Los Angeles headquarters or any regional field locations. a. Meal and lodging expenses should be reasonable. Expenses for food and lodging must be based upon actual, reasonable-expenses incurred. Original cash register or credit card receipts for all meals and lodging expenses greater than $50 must be maintained and listed in the reports to City as provided in sections 11 and 12 herein. Charges for meals or services on hotel bills should be entered separately from the room charge. b. AEG - and its employees may rent automobiles when other transportation is not available, or when such use is considered the most reasonable and economical mode of travel under the circumstances. Any long-term car lease (one week or more) by AEG or its employees shall not be considered an Operating Expense of AEG. Whenever possible, AEG should use rental companies which provide the lowest rates. In order to minimize costs, travelers should choose economy-class cars whenever possible. Page 4 of 37 55575.38190\32220183.1 C. In no-event shall the total annual expenditures exceed the total expenditures provided and allowed under the approved Budget except as provided for herein, with City Manager written approval. "Facilities" shall mean any and all portions or parts of the Palm Springs Convention Center located at 277 N. Avenida Caballeros, the Jackie Lee Houston Plaza located at the southwest corner of Amado Road and Calle Alvarado, and the East Lot (also known as the 10 acre parcel located at the southeast corner of Avenida Caballeros and Amado Road), Visitors Center, WMML, all furniture, fixtures and equipment, all appurtenances and all parking ancillary to and in connection therewith. The Facilities shall be operated as a public facility. "Fiscal Year" shall mean the year beginning July 1 and ending June 30. "General Manager" shall be the AEG employee responsible for Management Services as defined herein. "Gross Revenue" means with respect to the applicable period, the amount of revenue generated by the Facilities, as determined in accordance with GAAP, including but not limited to all revenue from rentals, services provided, ancillary income from all concessions, subcontractors and third party vendors, other operating income and outside catering. "Headquarter Hotel" shall mean the hotel property with.the City of Palm Springs with largest number of rooms committed to the room block for an event. "Incentive Fee" shall mean .and include each of the two compensation incentive programs identified in Section 17(a) of this Agreement paid annually. "Revenues" means any and all revenues of every kind or nature derived, directly or indirectly, from owning, operating, managing, or promoting the Facilities or Visitor Center, all as determined in accordance with generally accepted accounting principles, consistently applied. "Transition Period" has the meaning set forth in Section 2(e). "Visitor Center" shall mean any and all portions or, parts of the Palm Springs Visitor Center, and all furniture, fixtures and equipment contained therein. At the time of execution of this Agreement, the Visitor Center is located at: 2901 N. Palm Canyon Drive. The-Visitor Center is owned by the City and operated by AEG on behalf of the City. The Visitor Center shall be operated as a public facility. The net cost to operate the Visitor Center is paid from the BoT Budget as herein defined. "Welwood Murray Memorial Library" or "WMML" shall mean any and all portions or parts of the WMML, and all furniture, fixtures and equipment contained therein. At the time of execution of this Agreement, the WMML is located at: 100 S. Palm Canyon Drive. The WMML shall be operated as a public facility. The net cost to operate the WMML is paid from the BoT Budget as herein defined. Page 5 of 37 55575.38190\32220183.1 - 2. Scope of Work. a. Management Services. Subject to the terms and conditions set forth in this Agreement, City hereby engages AEG on an exclusive basis to provide Management Services including -the management, operation, use, possession, occupation and promotion of the Facilities, during the Term of this Agreement ("Management Services"). AEG hereby accepts such engagement. Except as otherwise provided herein, the operation of the Facilities shall be under the exclusive supervision and control of AEG, which, except as otherwise specifically provided herein, shall be responsible for the proper and efficient operation of the Facilities. In fulfilling its obligations under this Agreement,.AEG shall act as a reasonable and prudent manager consistent with the standard of quality and performance provided in facilities of comparable size, age and use. AEG hereby accepts such engagement, and shall perform the services described herein, subject to the limitations expressly set forth in this Agreement. The Management Services to be provided by AEG shall include those described on Exhibit "A" attached hereto and by reference made a part of this Agreement. b. Bureau of Tourism Services. Subject to the terms and conditions set forth in this Agreement, City hereby engages AEG to provide Bureau of Tourism Services ("BoT Services") during the Term of this Agreement. AEG hereby accepts such engagement. Without limiting-the generality of the foregoing, the BoT Services to be provided by AEG shall include'those described on Exhibit "B" attached hereto and by reference made a part of this Agreement. C. Welwood Murray Memorial Library (WMML) Services. Subject to the terms and conditions set forth in this Agreement, City hereby engages AEG to provide services with respect to the Welwood Murray Memorial Library (the "WMML Services") during the Term of this Agreement. AEG hereby accepts such engagement. Without limiting the generality of the foregoing, the WMML Services to be provided by AEG shall include those described on Exhibit "C" attached hereto and by reference made a part of this Agreement. d. City's Approval/City Manager Approval. AEG shall request written instructions from City with respect to any matter contemplated by this Agreement where the approval of City or City Manager is required, and AEG shall defer action thereon pending receipt of such written instructions. City shall promptly respond to any such request for written instructions and City Manager shall respond to any such request for written instructions or requested approvals within five (5) business days. Actions taken by AEG, its officers, employees or representatives in accordance with the written instructions of City or City Manager, or failures to act by such persons pending the receipt of such written instructions, shall be deemed to be proper conduct in accordance with and within the scope of AEG's authority under this Agreement and shall not constitute AEG's breach, negligence or willful misconduct. e. Transition Services. During the Transition Period, defined as the sixty (60) day period beginning with the date upon which the City executes this Agreement, AEG shall provide the Transition Services in accordance with Exhibit D Page 6 of 37 55575.38190\32220183.1 attached hereto. AEG shall, subject to the terms and conditions of this Agreement, begin providing Management Services on,the Effective Date immediately after the sixty (60) day Transition Period ends. 3. Term and Renewal Term. This Agreement shall commence upon the Effective Date, and shall continue for five (5) contract years each a "Contract Year") expiring at 5:00 p.m. (PST) on the anniversary of the fifth (5t ) Contract Year, unless terminated prior to this date pursuant to the provisions of this Agreement, (hereafter the "Term"). The Term of this Agreement may be extended once at the request of the City and by mutual agreement of the parties for an additional five (5) Contract Years subject to the same terms and conditions of the original Term (except as specifically identified herein this Section 3) (the "Extended Term"). The parties shall meet and confer to reset and establish a new Targeted Gross Revenue to be used for the Financial Performance Incentive Fee eligible to AEG for the Extended 'Term,.as specified in Section 17 of this Agreement; all other terms and conditions of this Agreement shall remain unchanged for the Extended Term, unless otherwise agreed to in writing by the parties. Any Extended Term shall be approved by the City Council, amending: (1) the Term for an additional five (5) Contract Years, and (2) the amount of the ,Target Gross Revenue for the - Extended Term. Either party shall have the right to terminate this Agreement during the Term or any Extended Term without penalty after the third (3rd) Contract Year of the Term or the third (3rd) Contract Year of the Extended Term as applicable, by providing not less than one hundred and eighty (180) calendar days prior written notice to the other party. Should-neither party exercise this right to terminate in either the Term or Extended Term, the Agreement shall continue in full force through the remainder of the Term or Extended Term as applicable 4. Investment. Within ten (10) days of City's written request, AEG will make available to the City up to $150,000 in funds to secure various consulting"services related to the future planning for the Facilities, or other research targeting the convention and visitor industry for the City to be utilized by the City within its sole discretion and timing after close consultation with AEG on the use of these funds. 5. Independent Contractor. Neither the City nor any of its employees shall have any control over the manner, mode or means by which AEG, its agents or employees .perform the services required herein, except-as otherwise set forth herein. AEG shall perform.all services required herein as an independent contractor of City and shall remain at all times as to City a wholly independent contractor with only such obligations as are consistent with that role. Employees or contractors of AEG are not City employees, and employees of. City are not employees or contractors of AEG. Neither party shall at any time or in any manner represent that it or any of its agents or employees_ are agents or employees of the other party. Each party shall be solely - responsible for compliance with State and Federal Law with respect to the wages, hours, benefits, and working conditions of its employees, including requirement for payroll deductions for taxes. Page 7 of 37 55575.38190\32220183.1 6. Assignment, Subcontracting and Other Third-Party Agreements. a. Assignment. Neither party to this Agreement may transfer, assign, convey, hypothecate or encumber this Agreement, or any interest therein, whether voluntarily or by operation of law, whether for the benefit of creditors or otherwise, without prior written approval of the other party to this Agreement, which may be reasonably withheld based on experience, financial status, reference checks and for other grounds in the City's sole discretion. b. Subcontracting. If AEG subcontracts any part of this Agreement, AEG shall be responsible to City for the acts and omissions of its subcontractor(s). Nothing contained in this Agreement shall create any contractual relationships between any subcontractor and City. City will deal directly with and will make all payments to AEG. C. Other Agreements. AEG shall have all concession agreements, services contracts and subcontracts in excess of an annual value of $25,000 in the aggregate reviewed and approved by the City Manager prior to execution by AEG. 7. Master Lease. AEG acknowledges that the Convention Center, Jackie Lee Houston Plaza, and East Lot are located on parcels of land which are leased from certain allottees ("Lessors") who are members of the Agua Caiiente Band of Cahuilla Indians, and that the City is the "Master Lessee" for the land underlying the Convention Center, Jackie Lee Houston Plaza, and East Lot. The "Master Lease" is administered by the Bureau of Indian Affairs.("BIA"). The parties hereto agree to comply with the Master Lease, specifically with regard to inspection of documents and reporting requirements-. A copy of the Master Lease has previously been provided to AEG and is on file in the Office of the City Clerk. 8.- Use of the Facilities- By City. AEG agrees to provide the Facilities to - City rent-free or as mutually agreed to by the parties for City's uses as outlined below pursuant to the terms of this Section 8. Use of the Convention Center by the City shall solely constitute (1) the Palm Springs Film Festival and the Well in the Desert (each a - "City Sponsored Event") and (2) City governmental purposes (such as meetings of the City Council or Planning'Commission or personnel testing, town hall meeting or other governmental purpose) (collectively"City Governmental Purposes"). a. All requests by City for City Sponsored Events shall be subject at all times to availability due to prior confirmed event scheduling for the Facilities. The terms and conditions related to the payment of any. rent, costs or expenses by the City with respect to such City Sponsored Events shall be mutually agreed upon by the parties by way of operating memoranda setting forth the applicable rental terms. The parties further agree that such terms shall be substantially .consistent with those contained in the 2018 agreements with the City related to each applicable City Sponsored Event.. b. Use by the City for City Governmental Purposes shall be rent-free, shall be limited to two events per month and City.shall not reimburse AEG for rents and all Page 8 of 37 55575.38190\32220183.1 actual costs and expenses incurred for labor, equipment, food and beverage, audio- visual and other customary expenses associated with the City's use of the Facilities. The food and beverage cap for use by the City for City Governmental Purposes shall be - $25,000 annually and shall be at the cost of the food and beverage subcontractor not AEG. 9. Intentionally Omitted 10. Intentionally Omitted 11. Reports and Audits. a. Maintenance of Records. AEG shall keep adequate records relating to its operations of the Facilities. AEG shall maintain a system of bookkeeping adequate for its operations hereunder and shall submit such system to City no later than thirty (30) calendar days after execution of this Agreement. The systems and procedures used to maintain these records shall also include a system of internal controls that is in accordance with sound business procedures. AEG shall keep and preserve for at least five (5) years following each Fiscal Year all records, including all service orders, work orders, sales slips, rental agreements, purchase orders, sales books, cash register tapes, credit card invoices, duplicate deposit tapes and invoices, bank accounts, cash receipts and cash disbursements, bank books, and other evidence of Operating Revenues and Operating Expenses for such period. AEG shall cause its vendors, subcontractors and affiliates to keep and maintain all such Records in accordance with this Section 11(a)). b. Audit. As soon as possible after June 30 and in no event later than August 15 of each Fiscal Year, AEG shall deliver to City a Balance Sheet, a Statement of Profit or Loss and a Statement of Cash Flows for the Facilities for the preceding Fiscal Year, all prepared in accordance with generally accepted accounting principles, accompanied by an independent.auditor's report prepared by an independent certified public accountant licensed by the State of California, retained by AEG and approved by City (the "Annual Audit"). Such Annual Audit shall contain an opinion expressed by the independent auditor of the accuracy of Records kept by AEG and of amounts due to City under this Agreement and shall also provide a certification of Operating Revenues, - Operating Expenses and the Net Operating Deficit/Surplus for such Fiscal Year. As part of the Annual Audit, City also shall require of the independent auditor and AEG - shall deliver to City an Internal Control Memorandum and Management Letter ("Internal Control Memo") reporting on accounting controls and procedures of AEG related to this Agreement at the end of each Fiscal Year. C. Final Audit. On or before the 120th day following the day on which this Agreement expires or is terminated, AEG shall cause an audit comparable to that described in Section 11(b) covering that portion of the Fiscal Year from July 1 up to and including the date of expiration, cancellation or termination to be prepared and submitted to City (the "Final Audit"). This Final Audit shall be reviewed and accepted by City before any Management Fees, Incentive Fees or expenses shall be remitted to AEG pursuant to Section 17 or otherwise. This paragraph shall survive the expiration or sooner termination or cancellation of this Agreement. Page 9 of 37 55575.38190\32220183.1 d. Access to Records. AEG shall give City and City's authorized. representatives access to review AEG's records pertaining to their management of the Facilities operations, during normal business hours and upon reasonable advance notice, provided such review does not unreasonably interfere with AEG's day to day business and management of the 'Facilities. Should any of the records be maintained on a computerized system, AEG shall provide City with appropriate and necessary access, during normal .business hours upon reasonable notice, to such records - generated by the computerized system. AEG shall maintain their records in the City of Palm Springs. AEG agrees to 'provide any auditors retained to conduct the Audit (including the Final Audit) the reasonable right to review and test any proprietary software and its documentation used by AEG for bookkeeping and the production of the reports. AEG shall fully and timely cooperate with the preparation of any audit required by Lessors. 12. Monthly Reports. Within twenty-five (25) calendar days after the end of each month, AEG shall furnish to City a monthly report in the general form and with _ content as approved by the City Manager. The monthly reports shall, at a minimum, provide information in the following categories: a. Management Services: (1) Financial, including without limitation a rolling forecast of revenue and expenses, an income statement, a balance sheet, and a statement of cash flow; (2) Bookings, including without limitation the number of groups and room nights booked for the Convention Center during the preceding month and a year-to-date comparison with the previous year; and (3) Sales and Marketing Activities, including without limitation _ sales and marketing efforts during the preceding month. b. Tourism Services: (1) Financial, including without limitation an income statement, a balance sheet, and a statement of cash flow; (2) Budget, including without limitation a comparison of actual operating expenses to the applicable Tourism Budget, and (3) Activities, including without limitation marketing efforts during the preceding month and efforts related to achieving efficiencies with other destination marketing entities that are beneficial to the City. 13. Other Reports. The City Manager, in the City Manager's reasonable discretion, may request that AEG prepare any other reports related to AEG's Page 10 of 37 55575.38190\32220183.1 management of the facilities other than those specifically required by this Agreement. The City Manager shall provide AEG a reasonable amount of notice and time to prepare any.report requested pursuant to this Section. 14. Performance Review. AEG shall be subject to a performance review at the close.of each Fiscal Year. The performance review shall include those components as identified by the City as communicated to AEG, and included in annual sales and marketing plans, and in the incentive fee structure outlined in Section 17 of this Agreement. 15. Budget. a. Management Services. Each Fiscal Year, AEG shall make a presentation to the City Council regarding the proposed Management Services Budget ("Management Services Budget") for the Convention Center for the upcoming Fiscal _ Year, and the total Management Services Budget will be incorporated into and adopted by the City Council as part of its Fiscal Year Operating Budget. Each new annual Management Services Budget is subject to and contingent. upon funds being _ appropriated therefore by the City Council for each Fiscal Year covered by the Agreement and shall be in the amount appropriated by the City Council for any such Fiscal Year. City shall pay .the Management Services Budget funds in monthly installments to AEG, except as otherwise expressly provided in this Agreement. Under no circumstances, except pursuant to Section 15(f)(4), shall AEG be required to _ advance .any funds hereunder. Failure to meet the annual proposed Management Services Budget and failure to meet any financial projections or expectations of the City shall not be deemed a an Event of Default or a breach of this Agreement by AEG. The parties agree and acknowledge that within thirty.(30) days of the Effective Date, the City and AEG will meet to discuss any suggested modifications within the Budget approved for 2019-2020 that AEG may suggest after reviewing the Budget AEG is inheriting from the prior management services provider. (1) Proposed Budget. No later than March 1 of each year of the Term of this Agreement, AEG shall submit to City a proposed Management Services Budget for the Facilities for the upcoming Fiscal Year listing all projected revenues and expenses for the Facilities, including without limitation any anticipated Incentive Fees. AEG shall have the discretionary authority to reasonably modify individual line items of this - Management Services Budget (excluding amounts attributed to the Incentive Fee) provided that AEG shall provide the City Manager with ten (10) Business Days prior written notice of such modifications, and shall be subject to the City Manager's approval if in an amount of $25,000 or greater. Such modifications shall not in the. aggregate result in an increase in the total approved Management Services Budget. Page 11 of 37 55575.38190\32220183.1 (2) Working Capital. In order- to provide the working capital necessary for AEG to perform its obligations hereunder, City shall advance to AEG a minimum amount equal to budgeted - operating expenses for three (3) months of the then- applicable Management Services Budget, no later than July 10 of each year of the Term of this Agreement. AEG may use working capital to pay expenses when revenues are insufficient to- cover such expenses. The City shall reimburse any working capital used by AEG to pay expenses no later than thirty (30) calendar days after an expenditure of working capital by AEG. (3) Operating Fund. AEG shall collect all Revenues from the Facilities and deposit them in an operating fund. Monies in - _ the operating fund and any interest thereon shall be applied first to the payment of Management Fees accrued through the end of the prior month and thereafter to any other operating expenses then accrued. The balance shall be retained in the operating fund as reserve for payment of future operating expenses. If at the end of any Fiscal Year there shall be a balance in the operating fund in an amount in excess of the anticipated working capital and operating expenses for the first month of the ensuing year, AEG shall _ disburse such excess to City on or before the fifteenth (15th) of such month. AEG's duties and obligations hereunder are subject .to the City's performance and funding of the operating fund. b. Tourism Services. Each Fiscal Year, AEG shall make a presentation to the City Council regarding the proposed Tourism Services Budget for the upcoming Fiscal Year, and the total Tourism Budget will be incorporated into and adopted by the City Council as part of its Fiscal Year Operating Budget (the "Tourism Services Budget"). The Tourism Services Budget for the 2019-2020 Fiscal Year shall be $2,086,504. Each new annual Tourism Services Budget is subject to and contingent upon funds being appropriated therefore. by the City Council for each Fiscal Year covered by the Agreement and such annual Tourism Services Budget shall be in the amount appropriated by the City Council for the then current Fiscal Year. City shall pay the Tourism Services Budget in monthly installments to AEG. (1) Line Item Budget. No later than March 1 of each year of the - Term of this Agreement, AEG shall provide the City with a proposed Line Item Budget for the Tourism Services Budget for the upcoming Fiscal Year. The Line Item Budget shall be prepared in accordance with the City's budgetary practices _ and applicable laws. and regulations. The.Line Item Budget will be considered by the City Council prior to award and implementation of the Tourism Services Budget for the ensuing year. AEG shall adhere to the Line Item Budget, Page 12 of 37 55575.38190\32220183.1 provided AEG may reallocate funds between budget categories when, in AEG's good faith judgment, such reallocation is prudent, provided that a written justification shall be prepared prior to any reallocation of ten percent (10%) or more of any line or budgeted item, and that written justification shall be approved in writing by the City Manager in advance of the.reallocation. (2) All funds earned by the Visitor Center are revenue to the City and should be accounted for as such and reinvested in the promotion of tourism to the City. C. WMML Services. Each Fiscal Year, AEG shall make a presentation to the City Council regarding the proposed WMML Services Budget for the upcoming Fiscal Year, and the total WMML Budget will be incorporated into and adopted by the City Council as part of its Fiscal Year Operating Budget. The WMML Services Budget for the 2019-2020 Fiscal Year shall be $85,750. Each new annual WMML Services Budget is subject to and contingent upon funds being appropriated therefore by the City Council for each Fiscal Year covered by the Agreement and such annual WMML Services Budget shall be in the amount appropriated by the City Council for the then current Fiscal. Year. City shall pay the WMML Services Budget in monthly installments to AEG. (1) Line Item Budget. No later than March 1 of each year of the Term of this Agreement, AEG shall provide the City with a proposed Line Item Budget for the Tourism Services Budget - for the upcoming Fiscal Year. The Line Item Budget shall be prepared in accordance with the City's budgetary practices and applicable laws and regulations. The Line Item Budget will be considered by the City Council prior to award and implementation of the Tourism Services Budget for the ensuing year. AEG shall adhere to the Line Item Budget, provided AEG may reallocate funds between budget categories when, in AEG's good faith judgment, such reallocation is prudent, provided that a written justification shall be prepared prior to any reallocation of ten percent (10%) or more of any line or budgeted item, and that written justification shall be approved in writing by the City Manager in advance of the reallocation. d. Expenditures in Excess of the Budget. AEG shall not, without written authorization by-City Manager, knowingly incur in any Fiscal Year obligation in excess of the total then applicable Budget approved by City. In the event AEG becomes aware of any such obligations, AEG shall immediately inform City in writing of the nature,, amount and due date for such obligations, and request written instructions as to how to proceed. Page 13 of 37 55575.381 W32220183.1 e. Reduction / Elimination of City Revenue Source. In the event of any significant reduction or elimination of City tax and fee revenue, sources, such as sales tax, property tax, transient occupancy tax and other similar taxes, the parties shall meet to. discuss a proportionate reduction in the then-applicable Budget. If the parties fail to reach an agreement on any such reduction, the City may terminate the Agreement within thirty (30) calendar days of the date on which the parties fail to reach an Agreement. AEG's inability to perform services hereunder or discharge any of its responsibilities hereunder or under any Third Party Agreement related to the Facility to the extent of City's failure to fund expenses reasonably required to perform such services or responsibilities shall not be considered a breach of this Agreement or Event of Default under this Agreement by AEG and shall be without penalty, additional payments, or other charges to AEG of any kind whatsoever. f. Capital Expenditures Budget/ Emergency Capital Expenditures. (1) The City desires to provide quality convention facilities in order to attract valuable meeting and convention business to the City of Palm Springs to generate positive economic impact through the generation of room-nights and increased visitor traffic to the City's shopping, dining and attraction stakeholders. The City and AEG agree that the Facilities must be consistently maintained and upgraded as necessary to meet and exceed the expectations of current and future users of the facility and provide competitive "state of the art" facilities and services to attract and retain valuable meeting and convention business. (2) AEG shall undertake an internally conducted facility capital study "identifying existing capital and operating equipment, systems, technology, building components, aesthetics and facility finishes to catalog and determine current condition, remaining useful life and an appropriate action plan for each item or area. AEG shall also review current facility technology and services to determine any recommended - upgrades in order to meet expected industry standards for _ the Facilities. Any out of pocket expenses incurred in the undertaking of such study shall be considered an expense of the Facilities with prior written approval from the City Manager as to the scope and cost of the study. AEG shall provide the City Manager with a prioritized long-term capital plan with recommended annual budget allocations for the completion of recommended projects. Should the City request a more detailed or comprehensive facility capital study and report to be conducted by a third party expert, such study and report shall be at the City's sole cost and expense. City acknowledges and agrees that AEG shall have no obligation hereunder to make any capital expenditures and, therefore, City shall be responsible for Page 14 of 37 55575.381 W32220183.1 U and shall repair, provide and maintain, at its own expense, all capital improvements as set forth in this Section, including, without limitation, the exterior and structural portions of the Facilities, Visitor Center, and WMML, together with all mechanical, HVAC and electrical systems contained therein. Notwithstanding the foregoing, capital improvements may be performed by AEG and/or through a third-party contractor approved by the City Manager and supervised by AEG, upon written agreement between City and AEG, utilizing those funds as agreed upon by City and AEG. (3) Each Fiscal Year AEG will present a proposed annual capital project budget ("Capital Improvements Budget") for the upcoming Fiscal Year to the City Council and the annual Capital Improvements Budget will be incorporated into and adopted by the City Council as part of its Fiscal Year Operating Budget. Each new annual Capital Improvements Budget is subject to and contingent upon funds being appropriated therefore by the City Council for each Fiscal Year covered by the Agreement. If such appropriations are not sufficient to fully fund a new annual Capital Improvements Budget, such annual Capital improvements Budget shall be equal to the amount appropriated by the City Council for any such Fiscal Year. AEG and the City shall mutually agree on the actual projects to be funded each Fiscal Year based upon the amount appropriated by the City - . Council. Unfunded projects will be carried over to subsequent Fiscal Year budget proposals. In the City's sole discretion, in lieu of payment to City of any excess operating funds at the end of each Fiscal Year, such excess operating funds may be reserved for and allocated to the Capital Improvements Budget. (4) AEG shall have the right to make Emergency Expenditures. An "Emergency Expenditure" is defined as an expenditure necessary to correct or repair an emergency condition of the Facilities which in the reasonable judgment of AEG, if not corrected or repaired immediately, would create an imminent danger to persons or property, an unsafe condition threatening persons or property, or render the Facilities unusable, unsuitable or unable to host events, to the extent such expenditure is not included in the Approved Budget for that Fiscal Year. Where practicable, AEG shall obtain prior verbal or written approval from the City Manager before making any Emergency Expenditure; provided that if prior verbal or written approval of an Emergency Expenditure is Page 15 of 37 65575.38190\32220183.1 not reasonably obtainable from the City Manager, AEG shall immediately notify the City Manager of the situation and upon such notification and consent by the City Manager, is thereafter authorized to incur an Emergency Expenditure to correct the situation on a temporary basis in an amount not to exceed $50,000. An Emergency Expenditure to correct the situation on anything other than a temporary basis or in an amount in excess of $50,000 shall require written approval from the City Manager. Immediately following such action taken by AEG pursuant to this Section 15(f)(4), AEG shall inform City of the action(s) taken, and City shall pay into such account(s) the amount of funds, if any, spent or committed by AEG pursuant to this Section 15(f)(4). 16. Bank Accounts. AEG shall deposit all Revenues in an account maintained by AEG in the name of City, with AEG as an agent with signatory authority, in a bank or branch located within the City. AEG shall require that all funds held in this account shall be secured to such an extent and in such a manner as is required by applicable law regarding the deposit of City funds. Any monies in this account, and any interest thereon, shall be applied first to the payment of Management Fees accrued through the end of the prior month and thereafter to any other Operating Expenses then accrued. The balance shall be retained in the Operating Fund as reserve for payment of future Operating Expenses. If, at the end of any Fiscal Year, there shall be a balance in this account in excess of the anticipated working capital required for, and Operating Expenses projected for, the first month of the ensuing year, AEG shall disburse such excess to City on or before the fifteenth (15th) day of such month; alternatively, in the City Manager's sole discretion, any such excess may be reserved for and allocated to the Capital Improvements Budget. 17. Compensation. a. Management Services. AEG shall receive compensation for the Management Services rendered under this Agreement based upon the agreed Base Fee plus an Incentive Fee ("Incentive Fee"), if so earned by AEG. (1) Base Fee. For services performed by AEG during each Fiscal Year of this Agreement, the City shall pay AEG the annual Base Fee set forth in this Section 17(a)(1), payable at the rate of one-twelfth (1/12) of the per annum per month, within thirty (30) calendar days following the monthly billing provided by AEG for such services. The Base Fee shall be $225,000 per year for the Term of the Agreement ($18,750 per month). The Base Fee shall be prorated for the first Fiscal Year of this Agreement, taking into account the Effective Date of this Agreement, with the first monthly payment of $11,875. Commencing October 1, 2019, the monthly payment of $18,750 shall be paid, for a total Base Fee of $180,625 for the first Fiscal Year of this Agreement. Page 16 of 37 55575.38190\32220183.1 Notwithstanding the foregoing, the Base Fee shall increase annually by the Consumer Price Index. (2) Incentive Fees. In addition to the Base Fee payable to AEG, AEG shall be eligible for an Incentive Fee, which, if earned, shall be payable to AEG annually in arrears on or before the thirtieth (30th) day following the date on which AEG has given the Annual Report to the City. The Incentive Fee will be based on AEG's performance in two (2) separate categories: KPI Incentive Fees which include Achievement of Room Night Goal and Customer Satisfaction; and Financial Performance Inventive Fees (collectively the "Incentive Fees"). The right to receive these incentive fees and the calculation of each are separate and independent of each other, and the KPI Inventive Fees shall not be included in measuring AEG's performance with respect to achieving and/or exceeding the budget for Gross Revenue as detailed below. The Incentive Fees for the first Fiscal Year of this Agreement shall be prorated to an amount equal to eighty percent (80%) of the total Incentive Fees otherwise available, taking into account the Effective Date of this 'Agreement._ (a) KPI Incentive Fees. i. Room Night Goal. At the end of each Fiscal Year during the Term of this Agreement, AEG will receive a total of$1.00 for each room night generated by events held at the Convention Center during the preceding Fiscal Year, on the condition that at least a minimum of 50,000 room nights are generated. By way of example, if only 49,999 room nights are generated, AEG would receive $0 incentive. However, if 50,000 room nights are generated, AEG would receive $50,000 plus $1 for every room night booked thereafter. For purposes of this Agreement, Room Night Goal Achievement shall be based on the confirmed written contracts entered into by (1) the Headquarter Hotel or (2) contract to use the Convention Center during the preceding Fiscal Year. Specifically, Room Night Goal Achievement shall be measured by the number of rooms reserved at hotels paying Transient Occupancy Tax to the City. ii. Customer Satisfaction. To achieve the customer satisfaction goal, AEG must achieve an average of eighty-five percent (85%) or better, approval on the meeting planner surveys described Page 17 of 37 55575.38190\32220183.1 herein. If the 85% threshold is met, the customer satisfaction incentive fee will be $33,000. If a 95% or better customer satisfaction level is achieved, the customer satisfaction inventive fee will increase by $67,000 for a maximum incentive payment of - $100,000. The meeting planner surveys shall be a survey of meeting planners, conducted by a third- party with expertise in the convention industry and approved by the City Manager, that have contracted to use the Convention Center during the prior twelve (12) month period. Within thirty (30) days of the days of the conclusion of any such event, the third-party firm shall contact clients of the Convention Center to conduct a meeting planner survey. The goal is to measure the client's satisfaction with each aspect of the client's use of the Convention Center. AEG shall obtain City's approval of the survey content and format prior to its distribution. Areas for measurement of quality and service as mutually agreed upon by both parties, may include, but shall not be limited to (i) site selection and sales process; (ii) event coordination; (iii) food and beverage; (iv) audio visual; (v) quality of facilities; and (vi) responsiveness of staff. The parties shall mutually agree to determine how the scoring will be evaluated. (b) Financial Performance. The Financial Performance portion of the Incentive Fee shall be based upon AEG's operation of the Facilities and the "Gross Revenue" (as identified by the audited financial statements for the most recently completed Fiscal Year) (such amount, the "Actual Gross Revenue"), as compared to the "Targeted Gross Revenue" for the relevant Fiscal Year. The initial Targeted Gross Revenue for the initial 5-year Term of this Agreement is $2,900,000 per Fiscal year. Notwithstanding the - foregoing, the Targeted Gross Revenue shall increase annually by the Consumer Price Index. AEG shall receive the following Financial Performance portion of the Incentive Fee for each Fiscal Year in the following amounts: (1) For each successive $500,000 increment generated above the current Targeted Gross Revenue, AEG will receive a percentage of that incremental revenue for the respective increment (i.e. not retroactive to the first dollar) (these figures Page 18 of 37 55575.38190\32220183.1 \) l represent the calculation in the initial year only and will be adjusted by the then current Targeted Gross Revenue: - 22.5% of the first $500,000 (between $2,900,001 and $3,400,000); and, - 25% of the next $500,000 (between $3,400,001 and $3,900,000); and, - 27.5% of the next $500,000 (between $3,900,001 and $4,400,000); and, - 30% of the any Gross Revenue above $4,400,001. (2) Byway of example: (i) Actual Gross Revenue of $3,685,000 (an increase of $785,000) would produce a Financial Performance Incentive of $184,750 (22.5% times $500,000 plus 25% times $285,000) (ii) Actual Gross Revenue of $4,100,000 (an increase of $1,200,000) would produce a Financial Performance Incentive of $292,500 (22.5% times $500,000 plus 25% times $500,000 plus 27.5% times $200,000) (3) For the avoidance of doubt, AEG shall not be subject to any penalty or reduction in any Fees to be paid hereunder should the Actual Gross Revenue be less than the Target Gross Revenue Loss. (4) Pursuant to Section 3 of this Agreement, to the extent the parties agree to enter into the Extended Term, the parties shall meet and confer to reset and establish a new Targeted Gross Revenue to be used for the Financial Performance Incentive Fee eligible to AEG for the Extended Term. The new Targeted Gross Revenue shall be evaluated on the basis of the Actual Gross Revenue incurred by the City annually during the initial Term of this Agreement. b. Tourism and WMML Services. AEG shall receive no remuneratiori for providing Tourism and/or WMML Services under this Agreement. 18. Insurance. Page 19 of 37 55575.38190\32220183.1 a. Insurance To Be Maintained By AEG. AEG shall procure and maintain, at its sole cost and expense, the insurance described below. The insurance shall be for the Term of this Agreement and includes any extensions, unless otherwise specified in this Agreement. The insurance shall be procured in a form and content satisfactory to City. The insurance shall apply against claims which may arise from AEG's performance of Management Services and related work under this Agreement, including AEG's agents, representatives, or employees. In the event the City Manager determines that the work or Management Services to be performed under this Agreement creates an increased or decreased risk of loss to the City, AEG agrees that the minimum limits of the insurance policies may be changed accordingly upon receipt of written notice from the City Manager or his designee, AEG shall immediately substitute any insurer whose A.M. Best rating drops below the levels specified in this Agreement. If any insurance is written on a claims-made basis, such insurance shall be maintained for a minimum of three (3) years subsequent to the expiration of this agreement, or a three (3) year extended reporting period endorsement shall be purchased. The minimum amount of insurance required shall be as follows: (1) Workers' Compensation. AEG shall obtain and maintain, - in full force and effect throughout the Term of this Agreement, workers' compensation insurance in at least the minimum statutory amounts, in compliance with all other statutory requirements, as required by the State of California. AEG agrees to waive and obtain endorsements from its workers' compensation insurer waiving subrogation rights under its workers' compensation insurance policy against the City and shall endeavor to use commercially reasonable efforts to require each of its subcontractors, if any, to do likewise under their workers' compensation insurance policies. (2) Crime Fidelity Coverage. At least $100,000.00 per occurrence of coverage for (i) AEG employee dishonesty; (ii) forgery or alteration; (iii) theft, disappearance and destruction inside and outside the Facilities, Visitor Center, or WMML; and (iv) robbery and safe burglary inside and outside the Facilities, Visitor Center, or WMML. (3) Commercial General Liability. AEG shall obtain and maintain, in full force and effect throughout the Term of this Agreement, a policy of commercial general liability insurance written on a per occurrence basis with a combined single limit of at least five million dollars ($5,000,000.00) for bodily injury and property damage including coverages for contractual liability, personal injury, independent contractors, broad form property damage, products and completed operations. Any Page 20 of 37 55575.38190\32220183.1 combination of primary and umbrella liability policies shall satisfy this requirement. (4) Employer's Liability Coverage. AEG shall obtain and maintain, in full force and effect throughout the Term of this Agreement, a policy of employer's liability insurance written on a per occurrence basis with a policy limit of at least one million dollars ($1,000,000.00) for bodily injury or disease. (5) Professional Liability (Errors and Omissions) Insurance. AEG shall obtain and maintain in full force and effect throughout the Term of this Agreement, standard industry form professional liability (errors and omissions) insurance coverage in an amount of not less than one million dollars ($1,000,000.00) per claim and two-million dollars = ($2,000,000.00) annual aggregate, in accordance with the provisions of this section. (a) AEG shall certify in writing to the City that AEG is unaware of any professional liability claims made against AEG and is unaware of any facts which may lead to such a claim against AEG. (b) The policy shall be continued in full force and effect during the Term of this Agreement, or until completion of the Management Services and related work provided for in this Agreement, whichever is later. In the event of termination of the policy during this period, new coverage shall immediately be obtained to ensure coverage during the entire course of performing the Management Services and related Work under the terms of this Agreement. b. Deductibles and Self-Insured Retentions. Any deductibles or self- insured retentions must be declared to and approved by the City Manager or his/her designee prior to commencing any work or Management Services under this Agreement, such approval not to be unreasonably withheld. AEG guarantees payment of all deductibles and self-insured retentions. C. Other Insurance Requirements. The following provisions shall apply to the insurance policies required of AEG under this Agreement: (1) For any claims related to this Agreement, except for Professional Liability, Crime and Workers' Compensation/Employer's Liability, AEG's coverage shall be primary insurance with respect to the City and its officers, council -members, officials, employees, agents, and volunteers. Any insurance or self-insurance maintained by Page 21 of 37 55575.38190\32220183.1 the City and its officers, council members, officials, employees, agents, and volunteers shall be in excess of AEG's insurance and shall not contribute with it. (2) Commercial General Liability insurance coverage and limits provided by AEG and available or applicable to this Agreement are intended to apply to each insured, including additional insureds, against whom a claim is made or suit is brought to the full extent of the policies. Nothing contained in this Agreement or any other agreement relating to the City or its operations shall limit the application of such insurance coverage. (3) AEG agrees to require its commercial auto liability, commercial general liability and workers' compensation insurers to provide a notice of cancellation to the City Manager. Regarding . all other insurance policies, AEG agrees to provide the City Manager with thirty (30) days' notice of cancellation, except for ten (10) days' notice of cancellation for non-payment of premium. It is AEG's obligation to ensure timely compliance with all insurance submittal requirements as provided in this Agreement. (4) AEG agrees to endeavor to ensure, if commercially reasonable, that subcontractors, and any other parties involved with the scope of Management Services and related Work provided pursuant to this Agreement, who are brought onto or involved by AEG, provide the same minimum insurance coverage required of AEG. AEG agrees to monitor and review all such coverage and assumes all responsibility for ensuring that such coverage is provided in conformity with the requirements of this section. AEG agrees that upon request, all agreements with subcontractors and others engaged in the performance of services hereunder this Agreement will be submitted to the City for review. (5) AEG acknowledges and agrees that any actual or alleged failure on the part of the City to inform AEG of non- compliance with any insurance requirement in no way imposes any additional obligations on the City nor does it waive any rights in this or any other regard. (6) AEG shall provide proof that policies of insurance required in this Agreement, expiring during the Term of this Agreement, have been renewed or replaced with other policies providing at least the same coverage. Proof that such coverage has been ordered shall be submitted prior to expiration. Page 22 of 37 55575.38190\32220183.1 Endorsements as required in this Agreement applicable to the renewing or new coverage shall be provided to City prior to the policy expiration and/or renewal date. (7) Requirements of specific insurance coverage features or limits contained in this section are not intended as limitations on coverage, limits, or other requirements, or as a waiver of any coverage normally provided by any given policy. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue, and is not intended by any party or insured to be limiting or all-inclusive. (8) The requirements in this section supersede all other sections and provisions of this Agreement to the extent that any other section or provision conflicts with or impair the provisions of this section. (9) AEG agrees to provide immediate notice to City of any claim - or loss against AEG arising out of the Management Services and related Work performed under this Agreement and for any other claim or loss which may reduce the insurance available to pay claims arising out of this Agreement. City assumes no obligation or liability by such notice, but has the right (but not the duty) to monitor the handling of any such claim or claims if they are likely to involve City, or to reduce or dilute insurance available for payment of potential claims. (10) AEG agrees that the provisions of this section shall not be construed as limiting in any way the extent to which the AEG may be held responsible for the payment of damages resulting from AEG's activities or the activities of any person or person for which AEG is otherwise responsible. d. Sufficiency of Insurers. Insurance required in this Agreement shall be provided by authorized insurers in good standing with the State of California. Coverage shall be provided by insurers admitted in the State of California with an A.M. Best's Key Rating of A-, VII, or better, unless such requirements are waived in writing by the City Manager or his designee due to unique circumstances. e. Verification of Coverage. AEG shall furnish City with both certificates of insurance and endorsements, including additional insured endorsements, affecting all of the coverages required by this Agreement. The certificates are to be signed by a person authorized by that insurer to bind coverage on its behalf. All proof of insurance is to be received and approved by the City before Management Services commence. Additional insured endorsements are not required for Errors and Omissions and Workers' Compensation policies. Verification of Insurance coverage may be provided by: (1) an approved General and/or Auto Liability Endorsement Form for the Page 23 of 37 55575.38190\32220183.1 City of Palm Springs or (2) an acceptable Certificate of Liability Insurance Coverage with an approved Additional Insured Endorsement with the following endorsements stated on the certificate: (1) "The City of Palm Springs, its officials, employees, and agents are named as an additional insured..." ("as respects City of Palm Springs Contract No. " or "for any and all work.performed with the City' may be included in this statement) for General and Auto Liability policies. (2) "This insurance is primary and non-contributory over any insurance or self-insurance the City may have..." ("as respects City of Palm Springs Contract No. " or "for any and all work performed with the City' may be included in this statement) for General and Auto Liability policies. (3) "Except for Professional Liability, should any of the above described policies be canceled before the expiration date thereof, the issuing company will mail 30 calendar days written notice to the Certificate Holder named." (4) Both the Workers' Compensation and Employers' Liability policies shall contain the insurer's waiver of subrogation in favor of City, its elected officials, officers, employees, agents, and volunteers. In addition to the endorsements listed above, the City of Palm Springs shall be named the certificate holder on the policies. All certificates of insurance and endorsements are to be received and approved in writing by the City before Management Services commence. All certificates of insurance must be authorized by a person with authority to bind coverage, whether that is the authorized agent/broker or insurance underwriter. Failure to obtain the required documents prior to the commencement of work shall not waive AEG's obligation to provide them. f. Insurance To Be Maintained By City. During the entire term of this Agreement, and any extension thereof, the City shall at all times maintain in effect the following policies of insurance or shall self-insure: (1) Property Insurance. An "All Risk of Physical Loss" form of policy (with Replacement Costs Endorsement), insuring all movable and immovable property constituting the Primary Visitor Center and Convention Center, respectively, excluding the foundation (including the expense of the removal of debris of such property as a result of damage by an insured peril), subject to the terms and conditions of the insuring agreements, The Primary Visitor Center and the Facility, and their respective contents, shall be insured to full replacement value. Page 24 of 37 55575.38190\32220183.1 (2) Comprehensive General Liability. The City will maintain excess public liability and property damage insurance with a combined single limit of at least $10,000,000.00 insuring _ against all liability of the City arising out of, and in connection with, the use or occupancy of the Visitor Center or Facilities. 19. Indemnification and Reimbursement. (a) To the fullest extent permitted by law, AEG shall defend (at AEG's sole cost and expense), indemnify, protect, and hold harmless City, its elected officials, officers, employees, agents, and volunteers (collectively the "Indemnified Parties"), from and against any and all liabilities, actions, suits, claims, demands, losses, costs, - judgments, arbitration awards, settlements, damages, demands, orders, penalties, and expenses including legal costs and attorney fees (collectively "Claims") to the extent - arising out of or relating to (i) any negligent act or omission, or intentional misconduct, on the part of AEG or any of its employees or agents or any person under its direction or control in the performance of its obligations under this Agreement, or (ii) breach or default by AEG of any of its representations, covenants or agreements made herein under this Agreement, except and to the extent such Claims arise out of, relate to or are in connection with the negligence, intentional or willful misconduct of the City, its elected - officials, officers, employees, agents, independent contractors, consultants and volunteers. Under no circumstances shall the insurance requirements and limits set - forth in this Agreement be construed to limit AEG's indemnification obligation or other liability under this Agreement. AEG's indemnification obligation shall survive the - expiration or earlier termination of this Agreement until all actions against the Indemnified Parties for such matters indemnified are fully and finally barred by the applicable statute of limitations or, if an action is timely filed, until such action is final. This provision is intended for the benefit of third party Indemnified Parties not otherwise a party to this Agreement. (b) To the fullest extent permitted by law, the City shall defend (at City's sole cost and expense), indemnify, protect, and hold harmless AEG, its, officers, employees, agents, and representatives (collectively the "AEG Indemnified Parties"), from and against any and all "Claims" to the extent arising out of or relating to (i) any negligent act or omission, or intentional misconduct, on the part of the City or any of its employees or agents or any person under its direction or control in the performance of its obligations under this Agreement, or (ii) breach or default by the City'of any of its representations, covenants or agreements made herein under this Agreement except to the extent such Claims arise out of, relate to or are in connection with the negligence, intentional or - willful misconduct of AEG, its officers, employees, agents, independent contractors and consultants. Under no circumstances shall the insurance requirements and limits set forth in this Agreement be construed to limit City's indemnification obligation or other liability under this Agreement. City's indemnification obligation shall survive the expiration or earlier termination of this Agreement until all actions against the AEG Indemnified Parties for such matters indemnified are fully and finally barred by the applicable statute of limitations or, if an action is timely filed, until such action is final. This provision is intended for the benefit of third party Indemnified Parties not otherwise a party to this Agreement. Page 25 of 37 55575.38190\32220183.1 20. Ownership of Documents. All data, reports, documents, brochures, survey materials, and other computerized, written, printed, or photographic materials developed by City or AEG in connection with the services which are the subject of this Agreement, whether developed directly or indirectly by City or AEG, shall be and shall remain the property of City without limitation or restriction on the use of such materials by City. AEG shall not use such materials in connection with any project not connected with this Agreement without the prior written consent of City. All equipment, materials and supplies purchased by AEG under this Agreement shall be property of the City. AEG shall make all purchases of equipment, materials and supplies at the best available price. 21. Engagement and Outreach Requirements. a. City Council. AEG shall hold up to two (2) meetings per year with -the City Council and the City's invitees to: (a)- discuss any new sales programs proposed by AEG or identified by AEG as being of interest to the City or City stakeholders; and (b) discuss any other upcoming programs or events identified by AEG as being of interest to the City or City stakeholders. AEG must provide a corporate representative to attend the entirety of each such meeting. b. Community Outreach. AEG shall prepare a Community Outreach Plan as part of its Annual Plan. The Community Outreach Plan shall identify the types of meetings, presentation, workshops and other initiatives to be undertaken to ensure that the Palm Springs convention and visitor industry stakeholders are informed as to the BoT and Facilities initiatives being undertaken to generate positive impact to local stakeholders, and to solicit their feedback to help inform future initiatives. C. Periodic Review, Meet and Confer. AEG and City shall have the option, not more frequently than every three (3) months during the Term, to request a review (the "Periodic Review") to evaluate, among other things, the extent to which AEG is complying with its obligations under this Agreement. Within five (5) calendar days following notice of any Event of Default, City staff and AEG shall meet and confer to seek mutual resolution of are of concern covered in the Periodic Review or any Event of Default, as applicable,-and to come to a mutual agreement to move forward together. If disagreements between the Parties are not resolved, then the Parties shall attempt to resolve such disagreements through mediation. If such disagreements are not resolved through third-party mediation within one hundred twenty (120) days after the commencement of mediation, then either Party may pursue other available legal options such as a request for arbitration or litigation. 22. Enforcement of Agreement. a. California Law and Venue. This Agreement shall be construed and interpreted both as to validity and as to performance of the Parties in accordance with the laws of the State of California. Legal actions concerning any dispute, claim, or matter arising out of or in relation to this Agreement shall be instituted in the Superior Court of the County of Riverside, State of California, or any other appropriate court in Page 26 of 37 55575.38190\32220183.1 such County, and Contractor covenants and agrees to submit to the personal jurisdiction of such court in the event of such action. b. Interpretation. This Agreement shall be construed as a whole according to its fair language and common meaning to achieve the objectives and purposes of the Parties. The terms of this Agreement are contractual and the result of negotiation between the Parties. Accordingly, any rule of construction of contracts (including, without limitation, California Civil Code Section 1654) that ambiguities are to - be construed against the drafting party, shall not be employed in the interpretation of this Agreement. The caption headings of the various sections and paragraphs of this Agreement are for convenience and identification purposes only and shall not be deemed to limit, expand, or define the contents of the respective sections or paragraphs. C. Waiver. No waiver of any provision of this Agreement shall be effective unless in writing and signed by a duly authorized representative of the Party against whom enforcement of a waiver is sought. Any waiver by the. Parties of any - default or breach of any covenant, condition, or term contained in this Agreement, shall not be construed to be a waiver of any subsequent or other default or breach, nor shall failure by the Parties to require exact, full, and complete compliance with any of the covenants, conditions, or terms contained in this Agreement be construed as changing the terms of this Agreement in any manner or preventing the Parties from enforcing the full provisions. d. Rights and Remedies Cumulative. Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the Parties are cumulative and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. e. Legal Action. In addition to any other rights or remedies, either Party may take legal action, in law or in equity, to cure, correct, remedy or recover damages for any default, to compel specific performance of this Agreement, to obtain declaratory or injunctive relief, or to obtain any other remedy consistent with the purposes of this Agreement. f. Attorney Fees. If either party to this Agreement commences an action against the other party arising out of or in connection with this Agreement or its subject matter, each party shall bear its own costs and attorney's fees. Page 27 of 37 65575.38190\32220183.1 i 23. Termination. a. Termination of the Master Lease. This Agreement shall immediately terminate and be null and void upon termination of the Master Lease. b. Expiration of Term. This Agreement shall immediately terminate and be null and void upon expiration of its Term if this Agreement has not been extended prior to such expiration. C. Default. Further, either party may terminate this Agreement if the other party to this Agreement is in default under this Agreement. A party shall be in default if: (a) such party fails to pay any sum payable under this Agreement within forty- five (45) calendar days after the same is due and payable; or (b) such party fails in any material respect to perform or comply with any of the . other terms, covenants, agreements, or conditions of this Agreement and such failure continues for more than thirty (30) calendar days after written notice from the other party ("Event of Default"). In the event that such a default (other than a default in the payment of money) is not reasonably susceptible to being cured within the thirty (30) day period, the defaulting party shall not be considered in default if it.shall within such thirty (30) day period have commenced with due diligence to cure.such default and thereafter completed with due diligence the curing of such default. In the event of an Event of Default, the party may, in its sole discretion, (a) extend the time for the other party to perform the applicable obligation(s) hereunder for a period of time acceptable to such Party beyond the cure period set forth in this Section 23(c), or (b) terminate this Agreement by giving written notice (as required under Section 23(d)) of such termination to the other party. d. Termination: (1) Payment of Fees to AEG Upon Termination. In the event of termination of this Agreement prior to the expiration of the Term as set forth in Section 3, City shall pay AEG all fees earned to the date of City's termination. "Fees earned to date" shall be limited to the pro rata portion of the Base Fee earned for that Fiscal Year and the Room Night Goal set forth in Section 17(2)(a)(i). AEG shall not be entitled to any portion of an Incentive Fee for any Fiscal Year in which the Agreement is terminated due to AEG's breach or Event of Default of this Agreement, otherwise, the parties shall in good faith determine, the portion of the Incentive Fee earned by AEG and the City shall pay AEG such Incentive Fee. (2) Surrender of Premises. Upon termination or expiration of this Agreement, AEG shall surrender and vacate the Facilities, Visitor Center, and WMML. The Facility, Visitor Center, WMML, and all equipment and furnishings therein shall be returned to the City in good repair, reasonable wear and tear excepted. All reports, records, including financial records, and documents maintained by AEG at the Facilities, Page 28 of 37 55575.38190\32220183.1 Visitor Center, and WMML relating to this Agreement, other than materials containing AEG's proprietary information or property shall be immediately surrendered to City upon termination or expiration of this Agreement. 24. City Officers and Employees: Non-Discrimination a. Non-liability of City Officers and Employees. No officer or employee of the City shall be personally liable to AEG, or any successor-in-interest, in the event of any default or breach by the City or for any amount which may become due to the AEG or to its successor, or.for breach of any obligation of the terms of this Agreement. b. Conflict of Interest. AEG acknowledges that no officer or employee of the City has or shall have any direct or indirect financial interest in this Agreement nor shall AEG enter into any agreement of any kind with any such officer or employee during the term of this Agreement and for one year thereafter. AEG warrants that AEG has not paid or given, and will not pay or give, any third party any money or other consideration in exchange for obtaining this Agreement. C. Covenant Against Discrimination. In connection with its performance under this Agreement, AEG shall not discriminate against any employee or applicant for employment because of actual or perceived race, religion, color, sex, age, marital status, ancestry, national origin (i.e., place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition (each a "prohibited basis"). AEG shall ensure that applicants are employed, and that employees are treated during their employment, without regard to any prohibited basis. As a condition precedent to City's lawful capacity to enter this Agreement, and in executing this Agreement,"AEG certifies that its actions and omissions hereunder shall not incorporate any discrimination arising from or related to any prohibited basis in any AEG activity, including but not limited to the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship; and further, that AEG is in full compliance with the provisions of Palm Springs Municipal Code Section 7.09.040, including with limitation the provision of benefits, relating to non- discrimination in city contracting. 25. Miscellaneous Provisions. a. Patent and Copyright Infringement. To the fullest extent permissible under law, and in lieu of any other warranty by City or Contractor against patent or copyright infringement, statutory or otherwise: (1) It is agreed that AEG shall defend at its expense any claim or suit against City on account of any allegation that any item furnished under this Agreement by AEG, or the normal use or sale arising out of the performance of this Agreement by AEG, infringes upon any presently existing U.S. letters Page 29 of 37 55575.38190\32220183.1 .tee patent or copyright and. AEG shall pay all reasonable costs and damages finally awarded in any such suit or claim, provided that AEG is promptly notified in writing of the suit or claim .and given authority, information and assistance at AEG's expense for the defense of same, and provided and to the.extent such suit or claim solely arises out of, pertains to, or is related to the negligence, recklessness or willful misconduct of AEG. However, AEG will not.indemnify City if and to the extent the suit or claim results from: (1) City's alteration of a deliverable, such that City's alteration of such deliverable created the infringement upon any presently existing U.S. letters patent or copyright; or (2) the use of a deliverable in combination with other material not provided by AEG when it is such use in combination which infringes upon an existing U.S. letters patent or copyright; or (3) any negligence, recklessness or willful misconduct of the City. (2) AEG shall have sole control of the defense of any such claim or suit .and all negotiations for settlement in the event City fails to cooperate in the defense of any suit or claim, provided, however, that such defense shall be at AEG's expense. AEG shall not be obligated to indemnify City under any settlement that is made without AEG's consent, which shall not be unreasonably withheld. If the use or sale of such item is enjoined as a result of the suit or claim, AEG, at no expense to City, shall obtain for City the right to use and sell the item, or shall substitute an equivalent item acceptable to City and extend this patent and copyright indemnity thereto. b. Integrated Agreement. This Agreement, including the attached exhibits, contains the entire agreement of the parties and supersedes all prior and contemporaneous agreements and understandings, oral or otherwise, among the parties with respect to the matters contained in this Agreement and may not be modified or amended except as set forth in this Agreement. C. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be.invalid under the applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the reminder of that _provision, or the remaining provisions of this Agreement. d. Amendments. This Agreement shall not be altered, modified, or amended in whole or in part, except in a writing executed by both the City and AEG. Page 30 of 37 55575.38190\32220183.1 e. Successors in Interest. This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, executors, successors and assigns as permitted,herein. f. Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be personally delivered, sent by registered or certified mail, postage prepaid, return receipt requested, or delivered or sent by electronic transmission, and shall be deemed received upon the earlier of: (i) the date of delivery to the address of the person to receive such notice if delivered personally or by messenger or overnight courier; (ii) five (5) business calendar days after the date of posting by the United States Postal Service if by mail; .or (c) when sent if given by electronic transmission. Any notice, request, demand, direction, or other communication sent by electronic transmission must be confirmed within forty-eight (48)' hours by letter mailed or delivered. Notices or other communications shall be addressed as follows: To City: City Manager City of Palm Springs 3200 East Tahquitz Canyon Way Palm Springs, CA 92262 With a.copy to: City Attorney City of Palm Springs 3200 East Tahquitz Canyon Way Palm Springs, CA 92262 Jeff.ballinger-c@palmspringsca.gov To: AEG: AEG Attn: General Manager Palm Springs Convention Center 277 North Avenida Caballeros Palm Springs, CA 92262 Fax: (760) 778-4102 With a copy to: Charles Steedman Chief Operating & Development Officer AEG Facilities, LLC 800 West Olympic Blvd. Los Angeles, CA 90015 g. Counterparts. This Agreement may be executed in one or more counterparts and each of such counterparts, for all purposes, shall be deemed to be an original, but all of such counterparts together shall constitute but one and the same instrument, binding upon the parties, notwithstanding that all of the parties may not have executed the same counterpart. h. Waiver. No waiver of any provision of this Agreement shall be effective unless in writing and signed by a duly authorized representative of the Party Page 31 of 37 65575.38190\32220183.1 f - against whom enforcement of a waiver is sought. Any waiver by the Parties of any default or breach of any covenant, condition, or term contained in this Agreement, shall not be construed to be a waiver of any subsequent or other default or breach, nor shall failure.by the Parties to require exact, full, and complete compliance with any of the covenants, conditions, or terms contained in this Agreement be construed as changing the terms of this Agreement in any manner or preventing the Parties from enforcing the full provisions hereof. i. No Partnership or Joint Venture. Nothing herein contained is intended or shall be construed in any way to create or establish the relationship of partners or a joint venture between City and AEG. j. Force Maieure and Casualty. (i) Force Maieure. The performance of each party's obligations under this Agreement shall be extended because of any delays due to unforeseeable causes beyond the control and without the fault or negligence of the affected party (financial inability excepted) if the affected party, within ten (10) calendar days following the commencement of such delay, notifies the other party in writing of the causes of the delay. Unforeseeable causes include, but are not limited to any event beyond the reasonable control of either party including, acts of God or of the public enemy, unusually severe weather, fires, earthquakes, floods, epidemics, quarantine restrictions, riots, strikes, freight embargoes, wars, and/or acts of any governmental agency, including the City. (ii) Casualty. In the event of damage or destruction to a material portion of the Facilities by reason of fire, storm or other casualty loss that renders the Facilities (or a material portion thereof) untenable ("Casualty Loss"), and the City elects not to remedy such situation such that such damage or destruction is expected to render the Facilities (or a material portion thereof) untenable for a period estimated by an architect selected by the City at.AEG's request, of at least one hundred eighty (180) days from the date of such Casualty Loss, either party may terminate this Agreement upon written notice to the other, provided that (a) while the City shall not be required to pay any compensation. to AEG during the period that the Casualty Loss continues, including pursuant.to Section 17(a); provided however, that the City shall not be relieved of its obligation to pay to AEG its Fees due under Section 17(a) for the period leading up to date of the Casualty Loss; and (b) in the event the Facilities once again become tenable at any time during the Term, this Agreement shall, at the option of AEG, once again become effective and AEG shall manage and operate the Facilities under the terms hereof for the remainder of the original Term. k. Compliance with Law. AEG warrants and covenants that all Services rendered shall be performed in accordance with all applicable federal, state, and local laws, statutes, ordinances lawful orders, rules, and regulations. I. Independent Legal Counsel and - Tax Advice. Each Party acknowledges that is has been represented by independent legal counsel of its own choice and has obtained its own tax advice throughout all of the negotiations that Page 32 of 37 55575.38190\32220183.1 preceded the execution of this Agreement or has knowingly and voluntarily declined to consult legal counsel or obtain tax advice, and that each Party has executed this Agreement with the consent and on the advice of such independent legal counsel or other tax advisor. M. No Third Party Beneficiaries. Except as may be expressly provided for in this Agreement, nothing contained in this Agreement is intended to confer, nor shall this Agreement be construed as conferring, any rights, including, without limitation, any rights as a third-party beneficiary or otherwise, upon any entity or person not a party to this Agreement. n. Time of Essence. Time is of the essence in the performance of the provisions of this Agreement as to which time is an element. o. Rights and Remedies are Cumulative. Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the Parties are cumulative and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. p. Responsibilities of the Parties. Both parties agree to use reasonable care and diligence to perform their respective obligations under this Agreement. Both parties agree to act in good faith to execute all instruments, prepare all documents and take all actions as may be reasonably necessary to carry out the purposes of this Agreement. Unless specified herein, neither party shall be responsible for the service of the other. q. Corporate Authority. Each of the undersigned represents and warrants that (i) the Party for which he or she is executing this Agreement is duly authorized and existing, (ii) he or she is duly authorized to execute and deliver this Agreement on behalf of the Party for which he or she is signing, (iii) by so executing this Agreement, the Party for which he or she is signing is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement does not violate any provision of any other Agreement to which the Party for which he or she is signing is bound. r. Incorporation of Recitals. The above-referenced Recitals are hereby incorporated into the Agreement as though fully set forth in this Agreement and each Party acknowledges and agrees that such Party is bound, for purposes of this Agreement, by the same. S. Plastic and Styrofoam Use. The City is in the process of developing citywide regulations for use of plastics and Styrofoam. Once the City municipal code has been modified, then AEG shall comply with those provisions. In the interim, the following restrictions apply to single-use food ware associated with food service operations at the Facilities: Page 33 of 37 55575.38190\32220183.1 1. Materials made of expanded polystyrene (EPS) foam are prohibited. 2. Plastic straws are generally prohibited. A limited number should be kept on hand to be distributed on request to individuals that may need it to accommodate disabilities. 3. Single-use food ware that is biodegradable is encouraged wherever possible. 4. If single-use plastic food ware is necessary, it will be limited to PET and HDPE (codes 1 and 2). 26. Minor Modifications/Additional Terms to Be Finalized. The provisions of this Agreement require a close degree of cooperation between the parties and "Minor Changes" to this Agreement may be required from time to time. "Minor Changes" mean changes to this Agreement that do not result in a change to- the Section 17 Compensation (except for the definition of Consumer Price Index which shall be considered subject to Minor Changes) in effect on the Execution Date, including but not limited to those terms and conditions still under discussion between the parties and yet to be finalized which are contained in Exhibit E attached hereto. Accordingly, the parties may mutually agree they will cooperate in good faith to make "Minor Changes" to this Agreement to be evidenced by their approval and execution of an "operating memorandum" reflecting such Minor Changes including but not limited to those terms and conditions referred to on Exhibit E attached hereto. To the extent permitted by Applicable.Law: a. Neither the Minor Changes nor any Operating Memorandum shall require public notice or hearing. b. The City Attorney and City Manager shall be authorized to determine whether proposed modifications and refinements are "Minor Changes" subject to this Section 26 or more significant changes requiring amendment of this Agreement. C. The City Manager may execute any Operating Memorandum without City Council action and provide notice to the City Council. The parties acknowledge and agree that this Agreement is subject to the parties finalizing the term and conditions in Exhibit E and should the parties fail to come to a final agreement on the terms and conditions in Exhibit E, this Agreement shall be null and void. Page 34 of 37 55575.38190\32220183.1 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the dates stated below. "CITY" City of Palm Springs Date: By. David H. Ready, PhD City Manager APPROVED AS TO FORM: ATTEST By: By: J ffr . Balli ger ony Meji City Attorney City Clerk APPROVED BY CITY COUNCIL: Date:bI , — Agreement No. 83�� Corporations require two notarized signatures. One signature must be from Chairman of Board, President, or any Vice President. The second signature must be from the Secretary, Assistant Secretary, Treasurer, Assistant Treasurer, or Chief Financial Officer. "AEG" AEG Management Palm Springs, LLC, a Delaware limited liability company a.— BYJW4 By: ature Signature fb rinted Nam itle Printed Name/Title APPROVED BY CITY COUNCIL A 4'3 Cg SA _�... Page 35 of 37 55575.38190\32220183.1 ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the.identity of the individual who signed the document to which this certificate is attached, and not the truthfulness,"accuracy, or validity of that document.. State of Cali ornia County of OS nc�e hs On a(0 Q0 before me, Chr - /o Pui C' —� (insert name and titld of the o er) personally appeared who proved to me on the basis of satisfactory evidence to be the person s)whose name subscribed to the within instrument and acknowledged to me that 1%keMM executed the same in &hw/thir authorized capacity�i ), and.that by hi Re`/ter signatureKon the instrument the person 'or the entity upon behalf of which the person acted, executed the instrument. [certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. DAVIE WITNESS-my hand and official seal. � -,�s: comRm. #2161840 Notary Public•California;; Los Angeles County r T'Comm.Expires Aug 31,.2020 Signatur (Seal) �_... ...,.. �.?'v:it:lit?V .�. .�i�•%} f ' ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached,and not the truthfulness,.accuracy, or validity of that document. State of California County of dS 4�Y)aeuS ) On 'S l U a0 1 before me, _4l a (insert-name and title of the off r) personally appeared �SU El �&nan ,-LJ_L_ , who proved to me on the basis of satisfactory evidence to be the person'N whose nameN46r.@ subscribed to the within instrument and acknowledged to me thaKb/s�e/t)Wy executed the same in /h1et/tlkr authorized capacity(ie0,and that b hi h�e�r/tF it si Fi'i gnature on the instrument the personX, or the entity upon behalf of which the person�s,)acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. "._�••, CHRISTINE DAVIE Comm. #2161840 WITNESS my hand and official seal. , m Y Notary Public•California Los Angeles County Comm.Expires Aug 31,2020 Signature& a,�tu, - (Seal) EXHIBIT A SCOPE OF MANAGEMENT SERVICES The Management Services to be provided by AEG, include, but are not necessarily limited to the following: 1. Manage, operate, maintain and promote the Convention Center in a manner that is consistent with other comparable facilities providing similar services throughout the United States; 2. Plan, coordinate and administer operation of the Facilities; 3. Negotiate, execute and perform contracts, use agreements, licenses and other agreements: (a) with persons who desire to schedule events, performances, telecasts, broadcasts or other transmissions in, from or to the Facilities or who desire otherwise to use the Facilities or any part - thereof; or (b) that otherwise pertain to the use, operation, marketing, promotion and occupancy of the Facilities or any part thereof vendors and subcontractors providing services within the Facilities such as food and beverage, utility distribution, Wi-fi, data, etc. subject to review and written approval by the City Manager; 4. Negotiate, execute and perform contracts, use agreements, licenses and other agreements: (a) for all sponsorships, including, but not limited to, the use of advertising space in or about the Facilities and all advertising rights of whatever kind or nature related to the Facilities, and (b) for the sale, promotion, marketing and use of all names, trademarks, trade names, logos and similar intangible property relating solely to the Facilities; 5. Operate, procure or cause to be operated: (a) concessions within the Facilities for the sale of food, beverages, souvenirs, novelties and programs, and (b) clubs and restaurants within the Facilities. AEG shall - endeavor to solicit local businesses to the extent possible for all concessions, and shall cooperate with City and City Manager shall have final approval regarding the selection of concessionaire(s). 6. Furnish all services, personnel, materials, tools, machinery, equipment and other items necessary to accomplish the foregoing requirements including hiring, training, paying and supervise all personnel hired at the Facilities; 7. Devise and implement procedures reasonably designed to keep the Facilities in good order and condition, subject to ordinary wear and tear, and maintain the Facilities in such order and condition; A-1 55575.381 90\322201 83.1 8. Coordinate all advertising,licensing, promotional activities, marketing, and public relations for the Facilities in coordination with the Tourism Services to be provided under this Agreement; 9. Within one-hundred twenty (120). days of.assuming control of Facilities, submit a five-year strategic plan for the Facilities 10. Submit a written business/sales plan (henceforth referred to as the "Plan') for the year commencing on or before June 1 of each Contract Year of the Term of this Agreement for approval by City, which approval shall be exclusive to the City and shall not be unreasonably withheld or delayed. The sales plans shall be consistent with the policy that the primary role of AEG's convention sales division is to sell space in the Facilities. The Plan shall include, but not be limited to: a. A summary of actual performance against goals for the previous Fiscal Year, including reasons for significant divergence from goals. b. A summary of the impact of competitive destinations and facilities, including enhancements to the convention product made in these destinations during the previous Fiscal Year. C. An overview of the strengths, weaknesses, opportunities and challenges with respect to the Palm Springs convention destination, focusing on changes occurring during the previous Fiscal Year. d. A description of the action plan for the upcoming Fiscal Year. - e. A statement of goals for the upcoming year. Goals should include all areas tied to incentive fees, as well as other goals that can include but are not limited to events by type, attendance by type, occupancy; and economic impact. 11. Establish and maintain consistent procedures for cost estimating and reporting, maintenance and payment of invoices; 12. Monitor actual and projected expenses; 13. Within six (6) months following the approval by the City Council of this Agreement, AEG shall compile an inventory of all furniture, fixtures and equipment which are part of the Facilities or have been otherwise paid for by or on behalf of the City with a minimum initial purchase of$1,000. AEG shall be required to update the inventory on the third anniversary of the Effective Date, in accordance with generally accepted accounting principles (GAAP) for fixed assets. The updated inventory may capitalize the assets and shall be presented to the City concurrent with the Annual Audit required pursuant to Section 11. A-2 55575.38190\32220183.1 14. Meet monthly with primary hotel' partners to discuss cooperative sales efforts, the status of current sales prospects, and to report on business currently booked at the Facilities. 15. Manage and operate the Facilities so as to minimize expenses and maximize revenues; provided, however, that AEG, in establishing and implementing its booking policies, may schedule not only those events that generate substantial direct revenue to the Facilities, but also those events that produce less direct revenue but, in AEG's good faith judgment, generate either a significant economic, cultural or other benefit to City or otherwise serve the public interest; 16. Not permit the use of the Facilities without charge for such use, absent City Manager's prior written consent; 17. Maintain the Facilities in good condition, reasonable wear and tear - excepted and continue maintenance procedures which will keep the Facilities in good condition and working order, reasonable wear and tear excepted. Without limiting the foregoing, the parties acknowledge that the overall appearance and maintenance of the Facilities are important to client relations, promotions and marketing of the Facilities. Consistent therewith, AEG shall perform general routine maintenance of the entire Facilities consistent with a first-class facility comparable to other facilities providing similar services throughout the United States, and, in particular, AEG shall provide specialized maintenance for the air conditioning chiller units in accordance with the recommendations and/or schedules of the manufacturer, using competent, properly trained personnel; and 18. Require that all persons using the Facilities or attending events therein comply with all legal requirements of all governmental authorities having jurisdiction over the Facilities, and that the use of the Facilities complies with all applicable laws including, but not limited to, civil rights statutes, the Americans With Disabilities Act, and specifically, Palm Springs Municipal Code 7.09.040 "Non-discrimination in contracting." AEG shall prepare appropriate facility rental / use application forms requiring applicants to certify and confirm compliance with all applicable laws, including PSMC 7.09.040. 19. Select a General Manager. AEG shall identify and the City shall approve any selected General Manager to be assigned to the Convention Center upon execution of this Agreement. In the event AEG requests to substitute the General Manager during the term of this Agreement, AEG shall first coordinate with the City Manager and provide a list of persons with requisite experience and references as the selection of the new General Manager. The City Manager shall have final approval of any replacement or substitute. approval by the City Manager. A-3 55575.38190\32220183.1 1 20. Ensure compliance with all City policies defined in the Palm Springs Municipal Code including but not limited to local preferences, non- discrimination, and locally-owned businesses. A-4 55575.38190\32220183.1 EXHIBIT B SCOPE OF TOURISM SERVICES The Tourism Services to be provided by AEG, include, but are not necessarily limited to the following: 1. Manage and operate the Palm Springs Visitor Center. 2. Advertise and otherwise promote tourism to the City of Palm Springs, including, but not limited to: a. Generating positive awareness of the City as a destination choice for leisure travelers; - b. Stimulating interest and desire on the part of domestic and international customers to take action and visit; C. Planning special events as the City Council may from time to time request; d. Creating positive awareness, support and participation in the City's tourism marketing programs. 3. Prepare an annual business marketing plan as follows: a. Each year during the Term, except during the initial year of the Agreement, on or before June 1, AEG shall submit to the City the "Annual Business Plan," which is a proactive business marketing plan .which includes a detailed list of each of the programs and duties AEG.shall perform pursuant to this Agreement for the next Fiscal Year. In the initial year of this Agreement, AEG shall be required to submit its Annual Business Plan no later than December 1, 2019. AEG shall perform its obligations under this Agreement as authorized pursuant to the approved Annual Business Plan. b. Each Annual Business Plan shall include the following: (1) An Executive Summary; (2) A statement, restatement or update of AEG's marketing mission as applicable; (3) A discussion of the prior Annual Business Plan, if any, the extent to which the objectives were achieved, and an B-1 55575.38190\32220183.1 explanation thereof including, but not limited to, the challenges of the prior year; (4) A list of all major objectives for the upcoming year; (5) Planned events and activities for the new year; (6) An analysis of the challenges projected for the upcoming - year including, but not necessarily limited to, marketplace complications which act as or are perceived to be impediments to success, which include major challenges, such as competitive city hotel inventories, other marketing budgets, economic conditions, and other conditions which may unfavorably impact AEG's ability to create customer share of mind and market; (7) An explanation of the results expected to be achieved in the upcoming year including projected goals in firm numbers; (8) An update on any additional research gathered in the previous year; (9) A market analysis of travel trends and visitor trends for the upcoming year, including, but not limited to, relevant national trends; - (10) An analysis of the market segments to be targeted in the upcoming year; (11) Major strategies to be undertaken including, but not necessarily limited to: (a) Advertising; (b) Public relations; (c) Direct marketing; (d) Direct sales; and (e) Promotional and cooperative opportunities, including, but not limited to, trade shows and sales forums; (12) A comprehensive marketing calendar indicating the implementation of all major strategies by month; (13) A detailed budget; and B-2 55575.38190\32220183.1 (14)- Strategies to modify and improve the operation of the Visitor Center aimed at making it more efficient, accessible and informative to international, national and regional visitors. C. Any significant change in the Annual Business Plan shall first be approved by the City Manager. 4. In conjunction with the City and community stakeholders, provide public relations and promotional support for special events as requested by the City. 5. Maximize marketing funds and results by leveraging increased marketing .support and synergism with other principal partners, including the Convention Center and the Greater Palm Springs Convention and Visitors Bureau. 6. Establish a tracking system that identifies and measures key activities performed by AEG including productivity and return on investment. 7. Maintain a community relations plan that encourages stakeholder input, and consensus. 8. Negotiate, execute and perform contracts, use agreements, licenses _ and other agreements that pertain to the operation, marketing or , promotion of the Visitor Center and/or tourism within Palm Springs subject to those restrictions set forth in this Agreement. 9. Establish and maintain consistent procedures for cost estimating and reporting, maintenance and payment of invoices, including preparation of the Tourism Budget, a line item budget and reports as described herein. 10. Monitor actual and projected operating expenses incurred by AEG in the performance of its duties under this Agreement. Make prompt . payment of all expenses from funds made available for that purpose. 11. Maintain a website designed to promote the City as a tourist destination. All City owned and/or operated amenities shall -appear first on any listing or categorization, of such amenities on said webpage. 12. Maintain the Visitor Center in good condition, reasonable wear and tear excepted and continue maintenance procedures which will keep the Facilities in good condition and working order, reasonable wear and tear excepted. B-3 55575.38190\32220183.1 13. . Select a Director of Tourism. It is anticipated that the current Director of Tourism will continue in that role as of the time of the Effective Date. In the event that there is a need to identify a new Director of Tourism, AEG shall identify and the City shall approve any selected Director of Tourism. In the event AEG requests to substitute the Director of Tourism during the term of this Agreement, AEG shall first coordinate with the City Manager and provide a list of persons with requisite experience and references as the selection of the new Director of Tourism. The City Manager shall have final approval of any replacement or substitute. 14. The Director of Tourism shall outreach to and involve the broad spectrum of tourism within the City, including representatives of large hoteliers, medium hoteliers, small hoteliers, vacation rentals, gay tourism, the Uptown Design District merchants association, the Mainstreet association, restaurateurs, the Convention Center, significant attraction venues, and other similar groups or persons as identified by the City Manager. Such outreach and involvement may include the formation of an advisory committee consisting of representatives of this broad spectrum of tourism. The Director may refer issues to this advisory committee for comment and advice relating to the promotion of Palm Springs as a tourist destination, including, but not limited to, marketing, coordination of activities with Palm Springs businesses, the Annual Performance Review, and other responsibilities of AEG provided in the Agreement. In the event the City Council by ordinance or resolution establishes a committee, commission, or board to advise the City and/or the Director on tourism matters, the Director shall serve as Secretary, and shall provide all necessary or appropriate staff support, to such body. B-4 55575.38190\32220183.1 i EXHIBIT C SCOPE OF WELWOOD MURRAY MEMORIAL LIBRARY SERVICES The Welwood Murray Memorial Library ('VVMML") Services to be provided by AEG, include, but are not necessarily limited.to the following: 1. Provide tourism and related services at the WMML during normal operating business hours, 9AM to 9PM daily, including holidays (except New Year's Day, Thanksgiving Day, and Christmas Day) unless otherwise modified at the _discretion of the City Manager. AEG shall assign two employees to cover WMML operations. AEG staff shall arrive 30 minutes prior to opening and stay 15 minutes after closing to handle day-to-day opening/closing procedures. 2. The City's Library Director may dedicate one City employee to be in responsible charge of the daily management of the WMML, who will oversee AEG's assigned employees at the WMML. 3. AEG's employees assigned to WMML shall share library duties in the WMML, particularly printing, computer assistance, issuing restroom keys, newspaper and magazine processing, sorting mail, cash reconciliation, and purchasing, order and stocking basic office supplies (at AEG - expense). 4. AEG shall maintain brochure rack spaces for itself, the City Library and the Historical Society. AEG shall maintain one designated display case for the Visitor's Center. 5. AEG may collect and retain revenue from printing to cover its costs for same. 6. AEG shall coordinate with the City's Library staff on the reservation and use of the Cornelia White Community Room, and provide assistance with opening and closing the room for scheduled meetings, and for operating the City's audio and visual equipment (as required). All revenue from room rentals shall be coordinated directly with the City's Library staff. 7. AEG shall assume responsibilities for compliance with City or County regulations when WMML is designated as a "Cooling Center" (activated when high temperature will reach or exceed 97°F, June 1 through October 15), requiring distribution of water and snacks (furnished by County). 8. AEG shall provide the City Library staff with a monthly report showing door counts and total visitors, with comparison to prior year, issues of interest or concern, or other information as requested by the City. - D-1 55575.38190\32220183.1 EXHIBIT D TRANSITION SERVICES AGREEMENT During the Transition Period, AEG shall, subject to the terms and conditions of this Agreement, provide the following services in accordance with the Transition Services Agreement at no cost to the City (the "Transition Services"): (1) Review, provide suggested revisions to and confer with the City on suggested revisions to the 2019-2020 Budget; (2) establish and develop operating plans, practices and procedures for Facilities operations; (3) start to build and develop brand marketing strategies with respect to the Facilities, for the industry; (4) establish, implement and monitor the accounting, security, human resources, marketing and regulatory compliance systems; (5) establish benchmark standards and build reporting platforms with respect to the operation of the Facilities; (6) recruit, select and hire Facility Personnel and implement necessary procedures, techniques and training programs to obtain and evaluate qualified applicants; (7) conduct, or assist with, relevant background checks relating to suitability standards and other matters, for potential Facility Personnel; (8) build and implement financial reporting systems, cash management plans and Event settlement mechanisms; (9) undertake risk assessment, underwriting and claims management systems; (10) build safety, security and risk policies and procedure operating manuals and liaise with applicable Governmental Authorities with respect to the foregoing; (11) coordinate the Facility's food and beverage and concessions operator(s); (12) in connection with the foregoing, (i) assign a direct individual representative of AEG (the "AEG Representative") who will attend in-person meetings and general consultations during 55575.38190\32220183.1 j the Transition Period and (ii) to the extent necessary, marshal other resources of AEG's affiliates; provided that City shall reimburse AEG for the expenses of AEG Representatives and any other resource that is required to travel to Facilities or to meet with Owner, in each case as incurred in connection therewith during the Transition Period. 55575.38190\32220183.1 EXHIBIT E ADDITIONAL TERMS TO BE FURTHER DISCUSSED AND NEGOTIATED BY THE PARTIES All provisions agreed upon and inserted into the body of the Agreement 55575.38190\32220183.1 nza0Ct Ac"RH CERTIFICATE OF LIABILITY INSURANCE �b ✓ DAraIDDfyYYY) 1113012022TE(M THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endomement(s). PRODUCER CONTACT NAME' MARSH USA INC. PRONE f� 1717 Arch Street No): E-MAIL Philadelphia, PA 19103-2797 ADDRESS: INSURE S AFFORDING COVERAGE NAIC0 INSURER A: Federal Insurance Company 20281 CN130180009-ASMG-CRIME-22-23 INSURED ASM GLOBAL PARENT, INC. INSURER B : - INSURER C : 300 CONSHOHOCKEN STATE ROAD SUITE 450 AND 700 W. CONSHOHOCKEN, PA 19428 INSURER D: INSURER E INSURER F: COVERAGES CERTIFICATE NUMBER: CLE-00587738245 REVISION NUMBER: 4 THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR TYPE OF INSURANCE ADDL U POLICY NUMBER MWDDIMY MMIDD/riYY LIMITS COMMERCIAL GENERAL LIABILITY EACH OCCURRENCE S CLAIMS -MADE ❑ OCCUR PREMISES Me owarerce S MED EXP (Any one person) $ PERSONAL a AOV INJURY S GENL AGGREGATE LIMIT APPLIES PER. GENERAL AGGREGATE S POLICY ❑ PRO- ❑ LOC JECT PRODUCTS-COMP/OP AGO $ S OTHER AUTOYOBILELUIBILRY COMBINED SINGLE LIMB Es eccitlecl S BODILY INJURY (Per person) $ ANY AUTO OWNED SCHEDULED AUTOS ONLY AUTOS BODILY INJURY (Per acodent) S PROPERTYDAMAGE Par aceidanl S HIRED NON -OWNED AUTOS ONLY AUTOS ONLY S UMBRELLA UAB OCCUR EACH OCCURRENCE S AGGREGATE $ EXCESS LIAR CLAIMS -MADE DELI I I RETENTIONS $ WORKERSCOMPENSATKON ANDEMPLOYERS'LIABILITY YIN I PER OTH- STATUTE ER _ ANYPROPRIETORIPARTNER/EXECUTIVE E.L. EACH ACCIDENT $ OFFICERIMEMBER EXCLUDED' NIA (Mandatory In NH) E. L. DISEASE -EA EMPLOYE $ 0 yes, describe under DESCRIPTION OF OPERATIONS babes E.L. DISEASE -POLICY LIMB $ A CRIME 8261-2867 12101/2022 12/01/2023 LIMIT 5,000.000 SIR 100,000 DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES (ACORO 101, Addmonal Remarks Saha kae, may IM attached if more space Is requimcf) PALM SPRINGS CONVENTION CENTER, FACILITY OWNER AND SMG IS A LOSS PAYEE AS RESPECTS THE SMG VENUE MANAGEMENT OPERATIONS AT THE PALM SPRINGS CONVENTION CENTER. CITY OF PALM SPRINGS RECEIVED SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE ATTN: CITY CLERK THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN 3200 E. TAHQUfZ CANYON WAY DEC 082022 ACCORDANCE WITH THE POLICY PROVISIONS. PALM SPRINGS, CA 92262 City Hall AUTHORIZED REPRESENTATIVE Reception Desk ZdS__V %"c, © 1988-2016 ACORD CORPORATION. All rights reserved. ACORD 25 (2016103) The ACORD name and logo are registered marks of ACORD 0002312 SP 0487-001-P0231V CITY OF PALM SPRINGS ATTN: CITY CLERK 3200 E. TAHOUITZ CANYON WAY PALM SPRINGS, CA 92262 s N87-01-00-0002312-0001-W04837 =3: i'x 1'4&bi nza0Ct Ac"RH CERTIFICATE OF LIABILITY INSURANCE �b ✓ DAraIDDfyYYY) 1113012022TE(M THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endomement(s). PRODUCER CONTACT NAME' MARSH USA INC. PRONE f� 1717 Arch Street No): E-MAIL Philadelphia, PA 19103-2797 ADDRESS: INSURE S AFFORDING COVERAGE NAIC0 INSURER A: Federal Insurance Company 20281 CN130180009-ASMG-CRIME-22-23 INSURED ASM GLOBAL PARENT, INC. INSURER B : - INSURER C : 300 CONSHOHOCKEN STATE ROAD SUITE 450 AND 700 W. CONSHOHOCKEN, PA 19428 INSURER D: INSURER E INSURER F: COVERAGES CERTIFICATE NUMBER: CLE-00587738245 REVISION NUMBER: 4 THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR TYPE OF INSURANCE ADDL U POLICY NUMBER MWDDIMY MMIDD/riYY LIMITS COMMERCIAL GENERAL LIABILITY EACH OCCURRENCE S CLAIMS -MADE ❑ OCCUR PREMISES Me owarerce S MED EXP (Any one person) $ PERSONAL a AOV INJURY S GENL AGGREGATE LIMIT APPLIES PER. GENERAL AGGREGATE S POLICY ❑ PRO- ❑ LOC JECT PRODUCTS-COMP/OP AGO $ S OTHER AUTOYOBILELUIBILRY COMBINED SINGLE LIMB Es eccitlecl S BODILY INJURY (Per person) $ ANY AUTO OWNED SCHEDULED AUTOS ONLY AUTOS BODILY INJURY (Per acodent) S PROPERTYDAMAGE Par aceidanl S HIRED NON -OWNED AUTOS ONLY AUTOS ONLY S UMBRELLA UAB OCCUR EACH OCCURRENCE S AGGREGATE $ EXCESS LIAR CLAIMS -MADE DELI I I RETENTIONS $ WORKERSCOMPENSATKON ANDEMPLOYERS'LIABILITY YIN I PER OTH- STATUTE ER _ ANYPROPRIETORIPARTNER/EXECUTIVE E.L. EACH ACCIDENT $ OFFICERIMEMBER EXCLUDED' NIA (Mandatory In NH) E. L. DISEASE -EA EMPLOYE $ 0 yes, describe under DESCRIPTION OF OPERATIONS babes E.L. DISEASE -POLICY LIMB $ A CRIME 8261-2867 12101/2022 12/01/2023 LIMIT 5,000.000 SIR 100,000 DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES (ACORO 101, Addmonal Remarks Saha kae, may IM attached if more space Is requimcf) PALM SPRINGS CONVENTION CENTER, FACILITY OWNER AND SMG IS A LOSS PAYEE AS RESPECTS THE SMG VENUE MANAGEMENT OPERATIONS AT THE PALM SPRINGS CONVENTION CENTER. CITY OF PALM SPRINGS RECEIVED SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE ATTN: CITY CLERK THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN 3200 E. TAHQUfZ CANYON WAY DEC 082022 ACCORDANCE WITH THE POLICY PROVISIONS. PALM SPRINGS, CA 92262 City Hall AUTHORIZED REPRESENTATIVE Reception Desk ZdS__V %"c, © 1988-2016 ACORD CORPORATION. All rights reserved. ACORD 25 (2016103) The ACORD name and logo are registered marks of ACORD A AC R" CERTIFICATE OF LIABILITY INSURANCE Dov3112023DnYYY) THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER CONTACT NAME' MARSH USA INC. _ PNDN AND 1717 Arch Street No Exll PHILADELPHIA, PA 19103-2797 E-MAIL Ater: PHILADELPHIA.CERTS@MARSH.COM ADDRESS: INSUPIER(Sl AFFORDING COVERAGE NAIC 0 INSURER A: AIG Specialty Insurance Company 26883 CN130160W9-ASMG-PROF-23-24 INSURED ASM GLOBAL PARENT, INC. INSURER B INSURERC: 300 CONSHOHOCKEN STATE ROAD SUITE 450 AND 700 W. CONSHOHOCKEN, PA 19428 INSURER D : — - INSURER E : INSURER F : COVERAGES CERTIFICATE NUMBER: CLE-005709323-56 REVISION NUMBER: 7 THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR TYPEOFINSURANCE ADDL SUER POLICYNUMBER POLICY EFF MWODIYYYY POLICY EXP LIMITSMWDW1'YYY COMMERCIAL GENERAL LIABILITY EACH OCCURRENCE $ CLAIMS -MADE 1:1OCCUR DAMAGE TO RENTED PREMISES Ea occurrence $ MED EXP (Any one person) $ PERSONAL &ADV INJURY $ AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $ GEN'L POLICY ElPRO- JECT ❑ LOC PRODUCTS - COMP/OP AGG $ $ OTHER: AUTOMOBILELUMILITY COMBINED SINGLE LIMIT Ea accident $ BODILY INJURY (Per person) $ ANY AUTO OWNED SCHEDULED J AUTOS ONLY AUTOS BODILY INJURY (Pan accident) $ PROPERTY DAMAGE Per axident $ I HIRED NON -OWNED 'III AUTOS ONLY AUTOS ONLY UMBRELLA LIAR OCCUR EACH OCCURRENCE $ AGGREGATE $ EXCESS LIAB CLAIMS -MADE $ OEDFT RETENTION WORKERS COMPENSATION ANDEMPLOYERS'LIABILITY YIN PER OTH- TAME ER ANYPROPRIETOTBPARTNERIEXECUTIVE E.L. EACH ACCIDENT $ OFFICER/MEMBEREXCLUDEDT N/A E.L. DISEASE - EA EMPLOYEE $ (Mandetwy in NH) Ayes, desc under -0ESCRIPTION OF OPERATIONS below E.L. DISEASE - POLICY LIMIT $ A PROFESSIONAL LIABILITY 02-382-44-76 01/3012023 01/30/2024 LIMIT 2,000,000 SIR 250,000 DESCRIPTION OF OPERATIONS / LOCATIONS/ VEHICLES (ACORD 101, Additional Remarks Schedule. may be adached it more speee is required) RECEIVED FEB 0 7 2023 City Hall Reception Desk CERTIFICATE HOLDER CANCELLATION CITY OF PALM SPRINGS SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE 3200 E TAHQUITZ CANYON WAY THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN PALM SPRINGS, CA 92262 ACCORDANCE WITH THE POLICY PROVISIONS. AUTHORIZED REPRESENTATIVE �y.1���� /�e�/� I/GR1L¢`L IZ�TC 496LC, ACORD 25 (2016/03) 01988-2016 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD 0003624 SP 0037 LOt-P03620-1 CITY OF PALM SPRINGS 3200 E TAHQUITZ CANYON WAY PALM SPRINGS, CA 92262 f'J 0 73 1-0a0003624-0001-0007502 0002312 SP 0487-001-P0231V CITY OF PALM SPRINGS ATTN: CITY CLERK 3200 E. TAHOUITZ CANYON WAY PALM SPRINGS, CA 92262 s N87-01-00-0002312-0001-W04837 =3: i'x 1'4&bi ADDENDUM NO.1 TO AGREEMENT FOR TOURISM AND MANAGEMENT SERVICES BY AND BETWEEN The City of Palm Springs, A California charter city and municipal corporation AND AEG Management Palm Springs, LLC This "Addendum No.1" to that certain "AGREEMENT FOR TOURISM AND MANAGEMENT SERVICES BY AND BETWEEN the City of Palm Springs, a California charter city and municipal corporation and AEG Management Palm Springs, LLC, a Delaware limited liability company," (the "Agreement"), is made, entered into, and effective as of December 31, 2020, by and between the CITY OF PALM SPRINGS, a California charter city and municipal corporation ("City") and AEG Management Palm Springs, LLC, a Delaware limited liability company ("AEG") and AEG's affiliate, SMG, a Pennsylvania general partnership ("SMG"). RECITALS WHEREAS, City and AEG entered into the Agreement, dated on or about July 27, 2019, pursuant to which AEG has provided Management Services and Tourism Services at Palm Springs Convention Center; and WHEREAS, the City pursuant to an Agreement for Tourism and Management Services dated as of October 1, 2013 (the "Prior Management Agreement") had contracted with SMG for the provision of Management Services and Tourism Services during the period October 1, 2013 through July 26, 2019; and WHEREAS, AEG's parent company, AEG Facilities, and SMG on or about October 1, 2019, both became subsidiaries and operating divisions of ASM Global Parent, Inc,, and therefore AEG and SMG are now affiliates; and WHEREAS, by to the Prior Management Agreement, SMG pursuant to Section 5 thereof contributed an investment of $S00,000, which amount was amortized over a period of ten years, with the unamortized portion thereof being payable by the City to SMG in the event that the Prior Management Agreement ended prior to June 30, 2023. WHEREAS, the Prior Management Agreement ended on July 26, 2019, leaving an unamortized balance of approximately $196,000 (the "SMG investment Balance) consequently payable by City to SMG; WHEREAS, subsequent to October 1, 2019, AEG and the City discussed disposition of the SMG Investment Balance, and it was agreed that AEG and its affiliate SMG would contribute the SMG Investment Balance to the City in consideration of the City's agreement to extend the term of the Agreement for an additional year; NOW, THEREFORE, in consideration of the mutual covenants, conditions, and promises herein contained, the receipt and sufficiency of which Is expressly acknowledged and confessed, the parties hereby agree as follows: 1. Extension of Agreement. Based upon the true and correct recitals reflected above and incorporated by this reference herein as the basis for this Addendum No. 1, the first sentence of Section 3 of the Agreement is deleted and replaced with the following: This Agreement shall commence upon the Effective Date and shall continue for six (6) contract years teach a "Contract Year) expiring at 5:00 p.m. (PST) on the anniversary of the sixth (6th) Contract Year, unless terminated prior to this date pursuant to the provisions of this Agreement, (hereafter the "Term"). 2. SMG Investment Balance. The Parties agree that all amounts owed by the City to SMG pursuant to Section 5 of the Prior Management Agreement shall be converted to a contract rights payment in connection with the Agreement and In exchange for the extension of the Agreement as specified in the foregoing paragraph no. 1, and accordingly, the City does not owe any payment to SMG (or AEG) under Section 5 of the Prior Management Agreement. 3. Relationship between Agreement and Addendum No. 1. Except as expressly provided herein, all terms and conditions of the Agreement shall remain in full force and effect by and between the parties. To the extent that there is any conflict or Inconsistency between the Agreement and this Addendum No. 1, the terms of this Addendum No. 1 shall prevail and supersede the Agreement. Capitalized terms of art in the Agreement shall have the same meaning In this Addendum No. 2 unless otherwise specified and re -defined herein. IN WITNESS WHEREOF, the Parties executed this Addendum No. 1 as of the day and year first above written. SMG, ns lvania General Partnership By: Bruce Hans , cretary AEG Ma nt P/V�,alm Springs, LLC By: Bruce Han o , Se retary APPROVED BY CITY C: ►� . 5//w/Za2I CITY OF PALM SPRINGS By: M,1 Tya na f J. Melia,vwc, City APPROVED AS TO FORM_ By: / Jeff Ballinger, City A.torney 0 PUBLIC INTEGRITY DISCLOSURE APPLICANT DISCLOSURE FORM 1. Name of Entity AEG Facilities, LLC 2. Address of Entity (Principle Place of Business) 800 W. Olympic Blvd., Suite 305, Los Angeles, CA 90015 3. Local or Calffornia Address (if different than #2) 4. State where Entity is Registered with Secretary of State Delaware If other than Calitomia is the Entity also registered in Caliromia? Yes Fl No 5. Type of Entity ❑ Corporation (XLimited Liability Company ❑ Partnership ❑ Trust ❑ Other (please specify) 6. Officers, Directors, Members, Managers, Trustees, Other Fiduciaries (please specify) Note: If any response is not a natural person, please identify all of —ers, directors, members, managers and other fiduciaries for the member, manager, trust or other entity Dan Beckerman [3Officer ❑ Director ❑ Member (] Manager [name] ❑ General Partner ❑ Limited Partner ❑ Other Robert Newman [$Officer ❑ Director ❑ Member ❑ Manager [name] ❑ General Partner ❑ Limited Partner ❑ Other Chuck Steedman [N Officer ❑ Director ❑Member ❑Manager (name) ❑ General Partner [-]Limited Partner ❑ Other CITY OF PALM SPRINGS - PUBLIC INTEGRITY DISCLOSURE APPLICANT DISCLOSURE FORM Page 1 of 2 (Revised 09 23 181 7. Owners/Investors with a 5% beneficial interest in the Applicant Entity or a related entity EXAMPLE LANE DOE 5096 A8C COMPANY, Inc. [name of owner/investor] [percentage of beneficial interest in entity and name of entity] A. Anschutz Entertainment Group, Inc. 51% [name of owner/Investor] [percentage of beneficial interest in entity and name of entity] 8. Facilities Holdings, LLC 49% [name of owner/investor] [percentage of beneficial interest in entity and name of entity] C. [name of owner/investor] [percentage of beneficial interest in entity and name of entity) D. [name of owner/investor] [percentage of beneficial interest in entity and name of entity] E. [name of owner/investor] [percentage of beneficial interest in entity and name of entity] I DECLARE UNDER PENALTY OF PERJURY UNDER THE LAWS OF THE STATE OF CALIFORNIA THAT THE FOREGOING IS TRUE AND CORRECT. Si r ng Party, Printed Name, Title Date cored ,t• � 4/16/19 1 N AZ jobftag. CITY OF PALM SPRINGS— PUBLIC INTEGRITY DISCLOSURE FORM APPLICANT DISCLOSURE FORM Page 2 of 2 (Revised 09 23.18) City of Palm Snrinss Public Integrity Disclosure Form #6. Officers, Directors. Members. Managers, Trustees, Other Fiduciaries (continued]. Rob Reed Chief Financial Officer Theodore Fikre Vice President & Secretary John Keenan Vice President & Assistant Secretary Dan Beckerman Director Steven A. Cohen Director Theodore Flkre Director Jay Marciano Director AGREEMENT FOR TOURISM AND MANAGEMENT SERVICES BY AND BETWEEN THE CITY OF PALM SPRINGS, a California Charter City AND AEG MANAGEMENT PALM SPRINGS, LLC, a Delaware Limited Liability Company DATE 7 �7 2019 Page 1 of 37 55575.38190132220183.1 THIS AGREEMENT FOR TOURISM AND MANAGEMENT SERVICES, (the "Agreement"), dated July?, 2019, by and between AEG Management Palm Springs, LLC, a Delaware limited liability company, ("AEG"), and the CITY OF PALM SPRINGS, a municipal corporation and Charter City of the state of California ("City"). RECITALS A. The City is the owner of the Palm Springs Convention Center located at 277 N. Avenida Caballeros, the Jackie Lee Houston Plaza located at the southwest corner of Amado Road and Calle Alvarado, and the East Lot (also known as the 10 acre parcel located at the southeast comer of Avenida Caballeros and Amado Road) (the "Facilities"), and AEG is an organization with substantial experience and expertise in the management, operation, and marketing of public assembly facilities such as the Facilities (collectively referred to as "Management Services"). B. The Palm Springs Bureau of Tourism, and the Palm Springs Visitors Center currently located at 2901 N. Palm Canyon Dr, Palm Springs, CA 92262 ("BoT") is a City entity to be managed on behalf of the City by AEG. C. The City is the owner of the Welwood Murray Memorial Library, located at 100 S. Palm Canyon Dr., Palm Springs, CA 92262 ("WMML"), and operates as a digital library and as an extension of the Palm Springs Visitors Center, and is to be managed on behalf of the City by AEG. D. The City evaluated all of the proposals submitted in response to the REQUEST FOR PROPOSALS (RFP) 10-18 FOR CONTRACT MANAGEMENT SERVICES OF THE PALM SPRINGS CONVENTION CENTER AND BUREAU OF TOURISM and determined AEG as the most qualified firm to provide the Management Services to the City. E. City and AEG now desire to enter into a Management Agreement, whereby the City will engage AEG, and AEG accepts such engagement to manage the BoT, manage the WMML, and provide Management Services of the Facilities on such terms and conditions as set forth in this Agreement. NOW, THEREFORE, in consideration of the promises and mutual benefits which will result to the Parties in carrying out the terms of this Agreement, it is mutually agreed as follows: AGREEMENT 1. Definitions. In addition to the terms which are defined elsewhere in this Agreement, the following terms have the meanings set forth in this Section: "Agreement" shall mean this Agreement for Tourism and Management Services. Page 2 of 37 55575.381 W32220183.1 "Business Day" shall mean a day in the week in which the City's City Hall is open to the public for governmental purposes. "Capital Expenditures" shall mean all expenditures for building additions, alterations or improvements, and for purchases of additional or replacement furniture, machinery or equipment, the depreciable life of which, according to accepted accounting principles, is in excess of one (1) year and expenditures for repairs (normal wear and tear excepted) or replacements which extend the useful life of the assets being repaired or replaced for a period in excess of one (1) year with a minimum purchase price of $25,000.00. "Capital Improvements" shall mean all improvements paid for by Capital Expenditures. "City" shall mean the City of Palm Springs. "City Council" means the City Council of the City. "City Manager" means the City Manager of the City or the City Manager's designee or designees. "Consumer Price Index" means the Consumer Price Index for All Urban Consumers (CPI-U): Riverside -San Bernardino -Ontario as published by the United States Department of Labor on its website at https://www.bis.gov. The Base Fee and Targeted Gross Revenues hereunder shall be reviewed and adjusted on an annual basis on each anniversary of the Effective Date to reflect any increases in the Consumer Price Index. The Base Fee and Targeted Gross Revenues will be multiplied by the percent increase in the Consumer Price Index during each twelve (12) month Contract Year; provided, however, the Consumer Price Index shall be limited to the lesser of (i) the Consumer Price Index, and (ii) two and one tenth percent (2.1 %) per Contract Year. In no event shall the annual increase exceed two and one tenth percent (2.1%) per Contract Year. If publication of the Consumer Price Index ceases, the parties will mutually agree upon the use of an appropriate substitute index published by the United States Department of Labor or any successor agency. "Convention Center" shall mean the Palm Springs Convention Center located at 277 North Avenida Caballeros, Palm Springs, CA 92262. "Customer Satisfaction Benchmark" means, with respect to a Fiscal Year, the benchmark score for the Customer Satisfaction Surveys established by City and AEG for the Facility in such Fiscal Year and set forth in the Annual Plan for that Fiscal Year. "Customer Satisfaction Survey" means the customer satisfaction surveys to be agreed to by City and AEG for each Fiscal Year and set forth in the Annual Plan for that Fiscal Year. Page 3 of 37 55575.381 W32220183.1 "Effective Date" means sixty (60) days after the City executes the Agreement, the date on which AEG shall officially assume responsibility for all Management Services of the Facilities, the BoT, and the WMML, from the City's current operator, SMG. 13Expenses" shall mean and include all expenditures or obligations of whatever kind or nature incurred (directly or indirectly) or accrued by AEG in any specified period during the Term of this Agreement, within (or reasonably believed by AEG to be within) the scope of AEG's authority or responsibility under this Agreement and the Budget as approved and reviewed by the City under Section 15 of this Agreement, including salaries, wages, applicable taxes, benefits, costs and expenses of personnel working at the Facilities or Visitor Center or otherwise related to the Facilities or Visitor Center; contract labor; maintenance and repairs (whether ordinary or extraordinary, and whether foreseen or unforeseen); utilities; telephone; telescreen and/or marquee operations; telecommunications and broadcast facilities; dues, memberships and subscriptions; security; audit and accounting fees; legal fees except those fees provided for in Section 23(I); fees payable to concessionaires or other subcontractors; refuse removal; cleaning; sales and other applicable taxes; building supplies and materials; ticket commissions; premiums for insurance; data processing; advertising; marketing and market research; pest control; office supplies; employment fees; freight and delivery; lease of equipment; Master Card, VISA and other credit card fees and charges and telecheck fees and expenses; travel (economy class), lodging and related out-of- pocket expenses of officers, directors and corporate personnel of AEG properly allocable to the performance of AEG's obligations under this Agreement not to exceed $25,000 each Fiscal Year without City Manager's prior written consent; ticket/box office expenses; charges for fidelity bonds; and the fixed Base Fee payable to AEG pursuant to Section 17 of this Agreement; and all other costs and expenses incurred in accordance with the terms of this Agreement by or for the account of City reasonably related to AEG's performance of this Agreement. Expenses shall not include costs of salaries and benefits of employees of AEG, unless such costs are included in the Approved Budget, and any expenses relating to AEG personnel based in its Los Angeles headquarters or any regional field locations. a. Meal and lodging expenses should be reasonable. Expenses for food and lodging must be based upon actual, reasonable expenses incurred. Original cash register or credit card receipts for all meals and lodging expenses greater than $50 must be maintained and listed in the reports to City as provided in sections 11 and 12 herein. Charges for meals or services on hotel bills should be entered separately from the room charge. b. AEG and its employees may rent automobiles when other transportation is not available, or when such use is considered the most reasonable and economical mode of travel under the circumstances. Any long-term car lease (one week or more) by AEG or its employees shall not be considered an Operating Expense of AEG. Whenever possible, AEG should use rental companies which provide the lowest rates. In order to minimize costs, travelers should choose economy -class cars whenever possible. Page 4 of 37 55575.38190132220183.1 2. Scone of Work. a. Management- Services. Subject to the terms and conditions set forth in this Agreement, City hereby engages AEG on an exclusive basis to provide Management Services including the management, operation, use, possession, occupation and promotion of the Facilities, during the Term of this Agreement ("Management Services"). AEG hereby accepts such engagement. Except as otherwise provided herein, the operation of the Facilities shall be under the exclusive supervision and control of AEG, which, except as otherwise specifically provided herein, shall be responsible for the proper and efficient operation of the Facilities. In fulfilling its obligations under this Agreement, AEG shall act as a reasonable and prudent manager consistent with the standard of quality and performance provided in facilities of comparable size, age and use. AEG hereby accepts such engagement, and shall perform the services described herein, subject to the limitations expressly set forth in this Agreement. The Management Services to be provided by AEG shall include those described on Exhibit "A" attached hereto and by reference made a part of this Agreement. b. Bureau of Tourism Services. Subject to the terms and conditions set forth in this Agreement, City hereby engages AEG to provide Bureau of Tourism Services ("BoT Services") during the Term of this Agreement. AEG hereby accepts such engagement. Without limiting the generality of the foregoing, the BoT Services to be provided by AEG shall include those described on Exhibit "B" attached hereto and by reference made a part of this Agreement. C. Welwood Murray Memorial Library (WMML) Services. Subject to the terms and conditions set forth in this Agreement, City hereby engages AEG to provide services with respect to the Welwood Murray Memorial Library (the "WMML Services") during the Term of this Agreement. AEG hereby accepts such engagement. Without limiting the generality of the foregoing, the WMML Services to be provided by AEG shall include those described on Exhibit "C" attached hereto and by reference made a part of this Agreement. d. City's Approval/City Manager Approval. AEG shall request written instructions from City with respect to any matter contemplated by this Agreement where the approval of City or City Manager is required, and AEG shall defer action thereon pending receipt of such written instructions. City shall promptly respond to any such request for written instructions and City Manager shall respond to any such request for written instructions or requested approvals within five (5) business days. Actions taken by AEG, its officers, employees or representatives in accordance with the written instructions of City or City Manager, or failures to act by such persons pending the receipt of such written instructions, shall be deemed to be proper conduct in accordance with and within the scope of AEG's authority under this Agreement and shall not constitute AEG's breach, negligence or willful misconduct. e. Transition Services. During the Transition Period, defined as the sixty (60) day period beginning with the date upon which the City executes this Agreement, AEG shall provide the Transition Services in accordance with Exhibit D Page 6 of 37 55575.3819M32228183.1