HomeMy WebLinkAbout12/3/2003 - STAFF REPORTS (11) DATE: December 3, 2003
TO: City Council
FROM: Assistant City Manager-Administration
SUBJECT: Agreement with SMG for Management of the Palm Springs Convention Center
RECOMMENDATION:
It is recommended that the City Council approve an agreement with SMG for management of the Palm
Springs Convention Center.
SUMMARY:
The City has retained the services of a private management company to manage and operate the Palm
Springs Convention Center. The City's agreement with the current management company, SMG,
expired on June 30, 2003. Prior to the expiration of that agreement, the City and SMG agreed to extend
the agreement for an additional period of time in order to enable the parties to negotiate a new and
restated agreement to replace the existing management agreement. The parties have since reached
agreement on the principal business terms and have prepared a new and restated agreement for Council
consideration.
BACKGROUND:
Since 1992, the City has delegated the responsibility for the management and operation of the Palm
Springs Convention Center to a private management company with experience and expertise in the
management, operation and marketing of such facilities.
The City's agreement with its current management company, SMG, expired on June 30, 2003. Prior to
the expiration of the existing management agreement, the City and SMG had reached a tentative deal on
the principal business terms for the successor agreement. However, due to the complexities of drafting a
successor agreement, the parties agreed to extend the existing management agreement to September
30, 2003. Unfortunately, the parties were unable to finalize a new and restated agreement by the end of
September. As a result, the City Council agreed to extend the existing agreement for an additional 90
days.
The parties have finally reached consensus on all of the outstanding issues and have drafted a new and
restated agreement. A copy of this agreement is attached. The principal business terms of the new
agreement, which the parties had previously reached agreement on in June, are as follows:
Contribution: Upon execution of a successor agreement, SMG will make a $400,000
contribution to the City for marketing of the Convention Center. SMG will be allowed to amortize
(on a straight-line basis) the contribution over ten years such that, should the Agreement remain
in effect for ten years, the City will not be obligated to reimburse SMG for the contribution. In the
event of a default and termination of the Agreement, the City will not be obligated to repay SMG
the unamortized portion of the Note. If the Agreement (a) expires or (b) is terminated prior to the
full amortization of the Contribution (i.e. prior to the balance on the Note being zero), then the City
or a successor management company, if any, shall pay the remaining unamortized portion of the
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Note within ninety days of the date of such expiration or termination. Finally, if the City terminates
the Agreement prior to full amortization of the Note and does not retain a successor management
company, then the City and SMG have agreed to a meet and confer process to discuss a
payback schedule of the remaining unamortized amount of the Note. If the parties cannot agree
on a payback schedule, the City is obligated to pay the remaining amount of the Note in three
equal annual installments on the anniversary date of the Agreement.
• Term: The initial term is for a period of five years. The City shall have the right to cancel the
Agreement without penalty at the end of the third year or at any time thereafter upon one hundred
eighty (180) days prior written notice to SMG. The City may extended the initial term for an
additional five years to September 30, 2013 provided that the City is fully satisfied with SMG's
performance under the Agreement and City determines that it is in the best interest of the City to
approve an extension for such time.
• Management/Incentive Fee: As part of the new management agreement, the City and SMG have
negotiated a new base and incentive fee schedule (Table 1).
Table 1
Base Incentive Fee
Management Fee
Year 1 $225,000 $175,000
Year $225,000 $175,000
Year 3 $185,000 $185,000
Year $188,700 $188,700
Year $192,474 1 1 $192,474
Under the new fee schedule, the base management fee will be reduced from its current amount
of$384,352 (fiscal year ending 2003) to $225,000 for the first two years of the agreement. The
base management fee will be further reduced to $185,000 in year three. For the remaining two
years of the agreement, the base management fee will be subject to a 2% cost of living
adjustment.
In addition to the Base Fee, SMG may be eligible to receive an Incentive Fee based on their
performance. The Incentive Fee is broken down into three categories as follows:
(1) 60% Room Night Goal
Must achieve room night
goal to qualify for financial (2) 30% Financial Performance
performance incentive.
(3) 10% Customer Satisfaction
In order to receive the Room Night Goal, SMG must meet or exceed the number of Room Nights
per the applicable Fiscal Year as indicated in Table 2.
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Table 2
Fiscal Year Room Nights
2003-2004 60,000
2004-2005 80,000
2005-2006 100,000
2006-2007 105,000
2007-2008 110,000
To earn the financial performance portion of the Incentive Fee (i.e. 30% of the Incentive Fee) for
a particular Fiscal Year, SMG must: (i) manage the Convention Center such that the Adjusted
Operating Loss is less than the Assumed Operating Deficit reflected in Table 3.
Table 3
Fiscal Year Ending Assumed Operating Deficit
June 30, 2004 ($1,600,000)
Juie 30, 2005 ($1,500,000)
June 30, 2006 ($1,200,000)
June 30, 2007 ($1,100,000)
June 30, 2008 ($1,000,000)
If SMG fails to meet the Room Night Goal during any Fiscal Year, they will not be eligible for
either (i) the Room Night or (ii) the Financial Performance Incentive Fee for that Fiscal Year.
The Customer Satisfaction goal is measured independently of the other two categories. In order
to achieve the customer satisfaction goal, SMG must meet or exceed the established
performance criteria, which requires that they achieve an approval rating of eighty-five percent
(85%) or better, on an annual Meeting Planner Survey. This survey will be sent to all meeting
planners that have contracted to use with the Convention Center during the prior twelve-month
period. SMG has agreed to allocate any incentive amount that is paid by City for achieving the
Customer Satisfaction goal directly back to the Convention Center to be used as a financial
reward to employees of the Convention Center.
Under the proposed Management/Incentive Fee schedule, SMG could potentially earn, with
incentive, as much as $400,000 in compensation in years 1 and 2, $370,000 in year 3, $377,400
in year four, and $384,948 in year five. The Management/Incentive Fee schedule for the
additional five-year term, if applicable, is subject to negotiations between the parties.
• Performance Review: The proposed Agreement contains an annual performance review
requirement. Under this requirement, the City may require SMG to provide and/or conduct any or
all of the following elements: (i) Annual Stakeholder Report, (ii) Meeting Planner Survey, (iii)
Facility Inspection, (iv) Financial Performance Review, and (v) a service review. The purpose of
the performance review is to assure that the services that are being provided by SMG are of the
highest quality that the Convention Center is being operated at a superior level and that SMG is
performing under the terms and conditions of the Agreement. The results of the Performance
Review will be consolidated into a written report and presented to the City Council. If SMG's
performance is found to have substantial deficiencies, the parties shall meet and confer to
prescribe corrective measures. These measures may include the establishment, if agreed by the
parties, of financial consequences for repeated future violations including temporary reductions in
the Base Fee until performance corrections have been achieved, fines or similar matters. If the
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City determines that SMG has repeatedly failed to take the agreed upon corrective actions, City
may terminate the Agreement.
• Food and Beverage Contract: The existing food and beverage contractor, Savoury, has had a
long relationship with both the City and SMG. The City believes that there is a public interest in
maintaining this relationship. In order to prevent SMG from unilaterally changing contractors or
modify the existing contract, the City has incorporated a provision into the proposed Agreement
that requires SMG to obtain written consent from the City prior to any changes in the food and
beverage contract.
The principal business terms of the agreement have been reviewed and approved by a subcommittee of
the City Council (Oden and Kleindienst) and the general managers of the group meeting hotels. The
Agreement itself was prepared and approved by both the City Attorney and SMG's corporate legal
counsel. Staff believes that this agreement represents a marked improvement over the prior
management agreement and may be looked upon as a model agreement for other public agencies with
convention facilities. If the City Council approves this agreement, the terms and conditions will be
retroactive to July 1, 2003.
Q- . d
Troy . Butzlaff, s ant City Manager-Administration
APPROVED—
City Manager
Attachments:
1. Draft Agreement with SMG for Management of the Palm Springs Convention Center
4
MANAGEMENTAGREEMENT
FOR THE
PALM SPRINGS CONVENTION CENTER
PALM SPRINGS, CALIFORNIA
BETWEEN
THE CITY OF PALM SPRINGS
AND
SMG
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MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT ("Agreement') is made effective as of
the 1st day of July, 2003 ("Effective Date"), by and between SMG, a Pennsylvania
general partnership ("Manager"), and the CITY OF PALM SPRINGS, a municipal
corporation of the state of California("City").
RECITALS
The parties enter into this Agreement with reference to the following facts and
objectives:
City desires that the Facility (as hereinafter defined) be managed, operated,
marketed and promoted in a professional manner with the objectives of providing a venue
for international, national and regional conventions, meetings, exhibitions and other
comparable purposes such as cultural, educational, entertainment, professional, social,
corporate and other activities to maximize the utilization of the Facility and to stimulate
the economy of the City; and
City has determined that it is in its best interests to delegate the responsibility for
the management and operation of the Facility to a private management company with
experience and expertise in the management, operation and marketing of facilities such as
the Facility; and,
Manager is an organization whose principals have substantial experience and
expertise in the management, operation and marketing of facilities such as the Facility;
and
City is desirous of retaining and engaging Manager to manage, operate, promote
and market the Facility to assist in meeting the objectives as above-stated and Manager is
desirous of accepting said engagement, all on the terms and conditions herein contained.
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:
ARTICLE 1
DEFINITIONS AND CONTRACT INTERPRETATION
1.1 Definitions. In addition to other terms which are defined elsewhere in
this Agreement, the following terns, for purposes of this Agreement, shall have the
meanings set forth in this Section:
"Actual Room Nights Realized" shall mean that amount of room nights blocked
by meeting planners when booking the Facility, plus those room nights blocked as a
result of a lead supplied by Manager as indicated by pick-up reports received from
participating hotels plus ten percent (10%), which additional percentage is intended to
1003/024/27892 v4 2 /
compensate for the fact that many attendees will stay outside of the room block and
cannot be tracked.
"Additional Excluded Operating Expenses" shall mean those expenses
described on Exhibit "A" (immediately below the Assumed Operating Deficits), which
shall be treated as Operating Expenses for purposes of this Agreement but shall be
excluded from the calculation of Operating Loss through the definition of Adjusted
Operating Loss.
"Adjusted Operating Loss" shall be the Operating Loss for a given Fiscal Year
reduced by the actual Operating Expenses (i.e. an amount equal to each such expense is
added back so as to reduce the Operating Loss) incurred for (i) utilities, (ii) insurance,
(iii) other expenses which are beyond the reasonable control of Manager, and (iv) the
Additional Excluded Operating Expenses.
"Affiliate" of a specified person means a person that directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under common
control with, the specified person. For purposes of this definition"control" shall mean the
ownership, either directly or indirectly, of equity securities or other ownership interests
which represent more than fifty percent (50%) voting power in the controlled entity.
"Agreement" shall mean this Management Agreement.
"Anniversary Date" shall mean July I of any year.
"Assumed Operating Deficit" shall mean the amount of projected Operating
Loss per Fiscal Year of this Agreement, as set forth under the colurmr headed "Assumed
Operating Deficit"in Exhibit A.
"Authorized Representative" shall mean any officer, agent, employee of or
independent contractor retained or employed by either party, acting within the scope of
authority given such person by such party.
"Base Fee" shall mean that portion of the Manager's annual compensation which
is guaranteed.
"Base Room Night Amount" shall mean:
Room Nights Fiscal Year
60,000 2003-2004
80,000 2004-2005
100,000 2005-2006
105,000 2006-2007
110,000 2007-2008
"Budget" shall mean any Budget relating to the Facility which is prepared by
Manager pursuant to Article 4 hereof.
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1003/024/27892 v4 3
"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
$1,000.00.
"Capital Improvements" shall mean all improvements paid for by Capital
Expenditures.
"Capital Improvements Budget" shall mean the budget submitted by Manager
to City pursuant to Section 4.5.
"City" shall mean the City of Palm Springs.
"City Savings" shall be the amount by which the Assumed Operating Deficit
exceeds the Adjusted Operating Loss.
"Cumulative Incremental TOT" shall mean that amount equal to the aggregate
of all prior years Incremental TOT.
"Cumulative City Savings" shall be the amount equal to the aggregate of all
prior years City Savings.
"Depository" shall mean the place in which Manager shall maintain its bank
accounts for the funds required to be maintained under this Agreement.
"Emergency Expenditure" shall mean any Capital Expenditure, which is not
included in the then applicable Capital hmprovements Budget, necessary to correct any
condition that jeopardizes the structural soundness of the Facility or the public safety.
"Event of Default" shall have the meaning provided in Section 12.1.
"Facility" shall mean any and all portions or parts of the Palm Springs
Convention Center, all furniture, fixtures and equipment, all appurtenances and all
parking ancillary to and in connection therewith.
"Fiscal Year" shall mean the year beginning July 1 and ending June 30.
"General Manager" shall be the chief operating officer of Manager at the
Facility.
"Incentive Fee" shall mean that portion of the Manager's potential annual
compensation which shall be based upon Room Night Sales, Customer Satisfaction and
Financial Performance as provided in Section 7.3.
1003/024/27892 A 4
"Incremental TOT" shall mean an amount calculated annually in arrears equal to
the product of (i) the number of Actual Room Nights Realized in excess of the Base
Room Night Amount applicable in the then applicable Fiscal Year; (ii) the average daily
room rate of one hundred dollars ($100.00); and (iii) the City's TOT percentage.
"Legal Requirement" shall mean the laws, rules and regulations (including
statutory and judicial interpretations) of the United States of America, the State of
California and all other governmental bodies having jurisdiction over the Facility.
"Management Fee" shall mean the combination of the Base Fee and the
Incentive Fee which is payable by City to Manager as set forth in Article 7.
"Manager" shall mean SMG and its permitted successors and assigns.
"Minimum Room Night Amount" means sixty-seven percent (67%) of the Base
Room Night Amount in any Fiscal Year, as defined above.
"Net Operating Income" shall mean the positive difference between Operating
Revenue and Operating Expense.
"Operating Expenses" shall mean and include all expenditures or obligations of
whatever kind or nature incurred (directly or indirectly) or accrued by Manager in any
specified period during the Tenn of this Agreement, within (or reasonably believed by
Manager to be within) the scope of Manager's authority or responsibility under this
Agreement, including but not limited to, all payments made or liabilities incurred to
obtain Operating Revenues; salaries, wages, applicable taxes, benefits, costs and
expenses of personnel working at the Facility or otherwise related to the Facility; contract
labor; maintenance and repairs (whether ordinary or extraordinary, and whether foreseen
or unforeseen); utilities; telephone; telescreen and/or marquee operations;
telecormmunications and broadcast facilities; dues, memberships and subscriptions;
security; audit and accounting fees; legal fees; other professional fees; fees payable to
concessionaires or other subcontractors; refuse removal; cleaning; sales and other
applicable taxes; building supplies; ticket cormnissions; 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 Manager properly allocable to the performance of Manager's obligations under this
Agreement not to exceed $25,000 each Fiscal Year without City Manager's prior written
consent; travel (economy class), lodging and related out-of-pocket expenses of
employees of the Facility conducting business on behalf of the Facility; Management
Fees; ticket/box office expenses; charges for fidelity bonds; expenses incurred in
complying with all Legal Requirements; and all other costs and expenses incurred in
accordance with the terns of this Agreement by or for the account of City reasonably
related to Manager's performance of this Agreement, including, without limitation, all
damages, losses or expenses suffered or paid by Manager or its agents or employees as
the result of any and all claims, demands, suits, causes of action, proceedings,judgments
1003/024/27892 v4 5 6
and liabilities, including court costs and attorneys' fees, incurred or sustained by or
against Manager; including, without limitation, those damages, losses and expenses
described in Exhibit "A" (immediately below Assumed Operation Deficits); but
excluding (a) any portion of any Capital Expenditures expended, (b) any portion of any
loss or danage including court costs and attorneys fees suffered by Manager or its agents
or employees as a result of (1) any act or omission of Manager made in bad faith or
involving negligence or intentional misconduct; (2) any transaction from which Manager
derives an improper personal benefit; or, (3) any Event of Default on the part of Manager
aid/or (c) non-cash expenses such as depreciation. Operating Expenses shall not include
and Manager shall not be responsible for the payment of any ground lease payments or
any debt service relating to the constriction, expansion or development of any portion of
the Facility.
"Operating Fund" shall mean a fund maintained by Manager under Section 5.1.
"Operating Loss" shall mean the anount by which Operating Expenses for any
specified period exceed the Operating Revenues for such period.
"Operating Revenues" shall mean all cash received or collected by Manager:
(a) For the rental of, use of or admission to the Facility;
(b) For the right to sell, or in respect of the sale of, any product (including,
without limitation, food, beverages, novelties and merchandise) or advertisement in the
Facility;
(c) From interest on or proceeds of investment of any accounts required to be
maintained by the Manager under Article 5;
(d) For use of Facility equipment, and all fees for all user services rendered at
the Facility, including but not limited to decorating, utilities, cleaning, audiovisual
equipment and parking; but excluding, in all events, sums received or collected by
Manager for and on behalf of a user of the Facility or other third party and any sums
received as disbursements from the Working Capital Fund; and
(e) Other forms of revenue as determined by the City's Director of Finance.
"Performance Standards" shall mean those standards of performance, set out
with particularity at Section 3.2, to which Manager will be subject in performing its
obligations under this Agreement.
"Term" shall mean that period commencing as of the Effective Date of this
Agreement and ending as of June 30, 2008.
"TOT" shall mean transient occupancy tax.
"Working Capital Fund" shall mean the fund required to be established pursuant
to Section 5.2.
1003/024/27892 v4
1.2 Interpretation.
a. Gender and Plurality. Words of the masculine gender mean and
include correlative words of the feminine and neuter genders, and vice versa. Words
importing the singular number mean and include the plural number, and vice versa,
unless the context demands otherwise.
b. Headings. Any captions or headings following the exhibit,
Section, Subsection, paragraph and Article number and preceding the operative text
hereof shall be for convenience of reference only and shall not in any way control or
affect the scope, intent, meaning, construction, interpretation or effect hereof.
C. References to Parts. References to Sections and Articles refer to
Sections and Articles hereof, unless specified otherwise. References to exhibits refer to
exhibits attached hereto.
d. Examples. Uses of examples are for purpose of illustration only.
In the event of any ambiguity or conflict between the examples and the provisions which
they illustrate, the provisions shall govern.
1.3 Integration. This Agreement contains the entire Agreement between the
parties with respect to the transactions contemplated hereby. This Agreement shall
completely and fully supersede all prior understandings and agreements between the
Parties with respect to such transactions, including those contained in any documents as
part of the contract negotiations completed on the Effective Date. All exhibits and
attachments referenced herein are incorporated by reference.
1.4 Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of California (without giving effect
to the State's principles of conflicts of laws). Venue for suit shall be the County of
Riverside and the Central District of the United States District Court.
1.5 Consistency with Law and Severability. The authority granted by City
to Manager by this Agreement shall be interpreted to be consistent with all applicable
state and federal laws, now in effect or adopted during the term of this Agreement, and
the scope of this Agreement shall be limited by all applicable current and developing
laws and regulations. If due to inconsistency with law, any clause, sentence, provision,
subsection, Section or Article hereof or exhibit hereto shall be determined to be invalid,
whether ruled invalid in any judicial proceeding, or be deemed likely to be invalid due to
legislative, administrative or judicial precedent, then the Parties shall:
a. Promptly meet and negotiate in good faith a substitute for such
provision which shall, to the greatest extent legally permissible, affect the intent of the
parties therein.
b. If necessary or desirable to accomplish preceding item (a) above,
apply to the court or administrative body having declared such invalidity, for a
construction of the substituted portion of this Agreement.
1003/024/27892 v4 7
CONVENTION CENTER MANAGEMENT AGREEMENT
REVISED LANGUAGE SECTION 1.7
1.7 Contribution. Within fifteen (15) business days of the Effective Date,
Manager shall make a "Contribution"to the City in the amount of Four Hundred
Thousand Dollars ($400,000). In exchange for the Contribution, City shall provide
Manager with a ten-year interest-free Promissory Note ("Note") in substantially the
same form as Exhibit C, attached hereto and incorporated herein by this reference.
The Contribution shall be used for marketing of the Facility. Manager shall be
allowed to amortize (on a straight-line basis) the Contribution over ten (10) years
such that, should this Agreement remain operational for ten (10) years, the City
shall have no obligation to reimburse Manager for the Contribution. In the event of
termination of this Agreement where (i) there is an Event of Default of Manager
pursuant to Section 12.1 (Events of Default) of this Agreement, (ii) the Manager has
failed to cure such default as provided herein, and (iii) the City has terminated this
Agreement, the outstanding balance on the Note shall be forgiven. In the event of(a)
expiration of this Agreement or (b) termination of this Agreement prior to the full
amortization of the Contribution (i.e. prior to the balance on the Note being zero),
and if City selects a successor management companyExr ir btxf+xe 11 Frr E any
of#ke-datewithin twelve (12) months ("Twelve Month Period") of such expiration or
termination, then the City or a successor management company, (the City agrees to
cause any such successor manager to take on such obligation), shall pay the
remaining An-tin-amortized portion of the Note within ninety (90) daysefth
annivff-raid-&Ic—o€ uehexpiiatitnt-er tenninatierrfollowine the selection of a successor
management company. However, if the Agreement is terminated or expires and the
City does not retain a successor management company within the Twelve (12)
_Month Period following such expiration or termination, the City shall pay the un-
amortized portion of the Note in three equal annual installments beginning on the
next succeeding Anniversary Date following the expiration of the Twelve (12) Month
Period.
AGENDA ITEM #6A
12/3/2003 Draft
C. Negotiate such changes in, substitutions or additions to the
remaining provisions hereof as may be necessary in addition to and in conjunction with
preceding items (a) and (b) above to affect the intent of the patties in the invalid
provision.
To the extent possible, the invalidity of such provision shall not affect any of the
remaining provisions hereof, and this Agreement shall be construed and enforced as if
such invalid provision did not exist.
1.6 Construction of Terms. This Agreement shall be interpreted and
construed reasonably and neither for nor against either party, regardless of the degree to
which either party participated in its drafting. The terms and provision of this Agreement
shall be construed in accordance with the meaning of the language used and in a manner
which carves out the purposes of this Agreement. Manager acknowledges that it
determined to participate in the procurement of this Agreement upon its choice and
initiative with full knowledge of the terms, conditions and risks of participation. The
patties have negotiated this Agreement at anus length and with advice of their respective
attorneys, and no provision herein shall be construed against the City solely because it
prepared this Agreement in its executed fonn.
1.7 Contribution. Within fifteen (15) business days of the Effective Date,
Manager shall make a "Contribution" to the City in the amount of Four Hundred
Thousand Dollars ($400,000). -In exchange for the Contribution, City shall provide
Manager with a ten-year interest-free Promissory Note ("Note") in substantially the same
form as Exhibit C, attached hereto and incorporated herein by this reference. The
Contribution shall be used for marketing of the Facility. Manager shall be allowed to
amortize (on a straight-line basis) the Contribution over ten (10) years such that, should
this Agreement remain operational for ten (10) years, the City shall have no obligation to
reimburse Manager for the Contribution. In the event of(a) expiration of this Agreement
or(b) termination of this Agreement prior to the full amortization of the Contribution (i.e.
prior to the balance on the Note being zero), and if City selects a supervisor or
management company within ninety (90) days of such expiration or termination, then the
City or a successor management company, (the City agrees to cause any such successor
manager to take on such obligation), shall pay the remaining un-amortized portion of the
Note within ninety (90) days of the date of such expiration or termination. However, if
the Agreement is terminated or expires and the City does not retain a successor
management company within said 90 days, then City shall meet and confer with Manager
as provided for in Section 6.9 of the Agreement regarding the payback schedule for
payment of the remaining unamortized portion of the Note. If the Manager and City are
unable to reach an agreement as to the payment schedule for the payment of the
remaining unainortized portion of the Note, the City shall pay the unamortized portion of
the Note in three equal annual installments on the anniversary date of the Agreement. In
the event of termination of this Agreement where (i) Manager is in default of a provision
of this Agreement, (ii) the Manager has failed to cure such default as provided herein,
and (iii) the City has terminated this Agreement the outstanding balance on the Note shall
be forgiven.
1003/024/27892 v4 8 S
1.8 Master Lease. Manager acknowledges that the Facility is located on a
portion of a parcel of land which is 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 Facility. 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 docurnents and reporting requirements. A
copy of the Master Lease is attached hereto and incorporated herein as Exhibit C.
ARTICLE 2
GRANT OF AUTHORITY AND TERM OF AGREEMENT
2.1 Grant of Authority. Following the Effective Date and for the Tenn
provided for herein, City hereby grants to Manager, and Manager hereby accepts, the
exclusive right and obligation to manage, operate, use, possess, occupy, promote, and
market the Facility on behalf of City and, in connection therewith, to perform and
furnish, or cause to be performed and furnished, all management, operation, promotion,
marketing and administration of the Facility in accordance with all Legal Requirements,
all on the terms and subject to the limitations of this Agreement.
2.2 Acceptance and Effective Date. Manager shall accept this Agreement on
the terns and conditions set forth in this Agreement, and the grant of authority shall be in
force upon the last to occur of the following:
a. Approval by City Council at a regularly scheduled meeting;
b. Execution by both parties;
C. Filing of certificates of insurance;
d. Payment of the capital contribution required pursuant to Section
1.7; and
e. Filing with the City Clerk of written acceptance by Manager.
The foregoing conditions must be satisfied within thirty (30) days of the approval
of the Agreement by City Couuicil or the authority granted hereunder will be null and
void. Notwithstanding the foregoing, upon satisfaction of the above conditions, the date
of commencement of the Agreement shall be deemed to be July 1, 2003, the Effective
Date.
2.3 Nature of Relationship. The parties agree that the only relationship
created by this Agreement is and shall be that between City as owner of the Facility, and
Manager, as an independent contractor, providing management, marketing, promotional
and operating services, and not as agent, employee, joint venturer, partner or lessee of
City.
Neither the City nor any of its employees shall have any control over the manner,
mode or means by which Manager, its agents or employees, perform the services required `
1003/024127892 A 9 !n A /J{
herein, except as otherwise set forth herein. City shall have no voice in the selection,
discharge, supervision or control of Manager's employees, servants, representatives or
agents, or in fixing their number, compensation or hours of service. Manager 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. Manager shall not at any time or in any manner represent that it
or any of its agents or employees are agents or employees of City. City shall not in any
way or for any purpose become or be deemed to be a partner of Manager in its business
or otherwise or a joint venturer or a member of any joint enterprise with Contractor.
2.4 Term. The "Term" of this Agreement shall begin on the Effective Date
(July 1, 2003) and shall expire at the close of business on June 30, 2008. Notwithstanding
the foregoing, City shall have the right to cancel this Agreement without penalty at the
end of the third (3i0) Anniversary of this Agreement or on the Anniversary thereafter
upon one years' prior written notice to Manager. The Tenn may be extended once for
five (5) years, at the City's sole option, provided that the City is fully satisfied with
Manager's performance under the Agreement and City determines that it is in the best
interest of the City to approve an extension for such time, by giving Manager written
notice of City's election to extend this Agreement at least one hundred eighty (180) days
prior to the Anniversary Date; however, should City elect to exercise its option to extend
the Agreement, City shall have the right to terminate the Agreement at the end of the
third Anniversary of such renewal Tern by giving Manager written notice at least one
hundred eighty (180) days prior to the third Anniversary of such extension. Accordingly,
the City has no obligation to extend the Tenn.
Should City elect to extend the initial Tenn of this Agreement, City shall, within
thirty (30) days of its notice to extend, provide Manager with the applicable Room Night
Goal arnounts, Base Fee amounts and a revised Exhibit "A" with Operating Deficit
amounts to be used during the renewal Tenn, and any similar arnounts, which amounts
shall be approved by Manager and memorialized in a writing signed by both patties. In
the event the parties fail to reach agreement on such provisions, this Agreement shall not
be extended.
2.5 Special Obligations of City Regarding Manager's Employees. City
hereby agrees that, for a period of twenty four (24) months following termination of this
Agreement for any reason, City will not employ or hire, or attempt to employ or hire the
General Manager, the Director of Operations, the Director of Sales and Marketing or the
Director of Finance and Administration for the Facility, without first obtaining the prior
written consent of Manager.
2.6 City's Authorizing Representative; Approval.
a. City hereby designates the City Manager to be its Authorized
Representative who shall act as a liaison and contact person between City and Manager in
all matters concerning this Agreement. City shall have the right, from time to time, to
change the person who is its Authorized Representative by giving Manager written notice
thereof.
1003/024/27892 v4 10 (n I
b. Except for Budget approvals, if Manager desires to do any act
hereunder which requires City's prior consent thereto or prior approval thereof, Manager
shall submit to the City's Authorized Representative a written summary of the proposed
act and a request for City's consent thereto or approval thereof. City shall respond to such
request within thirty(30) days.
2.7 General Manager Approval. Manager shall select a General Manager in
the manner described in this Section to act as the principal and representative of Manager
on its behalf with respect to the work specified herein and to make all decisions in
connection therewith. The General Manager's duties include, but not are not limited to,
the supervision of Manager's compliance with all duties and obligations imposed upon
Manager under this Agreement. The current General Manager is Jim Durm.
It is expressly understood that the experience, knowledge, capability and
reputation of the General Manager is a substantial inducement for City to enter into this
Agreement. Therefore, the General Manager shall be responsible during the terrn of this
Agreement for directing all activities of Manager and devoting sufficient time to
personally supervise the services hereunder. For purposes of this Agreement, the General
Manager may not be replaced nor may their responsibilities be substantially reduced by
Manager without the express written approval of City.
Should Manager need to replace Mr. Drum as the General Manager, a new
General Manager shall be selected in the following mauler:
In response to solicitation for the position of General Manager to oversee the
operations of the Facility, City and Manager will obtain a significant number of
applications and/or resumes for such position;
Manager, in conjunction with the City Manager's designated representatives, will
consult with and select prospective candidates who have submitted their application
and/or resumes to City and Manager and purport to have qualifications necessary to
oversee the operations of the Facility in the manner, extent and pursuant to the quality
standards required under this Agreement;
After the consultation and selection of a prospective candidate, as required above,
Manager shall recommend to the City Council such prospective candidate to oversee the
operation of the Facility as required under this Agreement, at which time, or as soon
thereafter as the City Council may act, the City Council shall, in its sole discretion, duly
approve or disapprove such prospective candidate; and
If the City Council disapproves of the prospective candidate pursuant to the
above, Manager shall consult with another prospective candidate and resubmit such
selection to the City Council. Manager shall continue the process required render this
Section until such time as the City Council approves a prospective candidate.
2.8 Authority of Manager. Except as otherwise specifically provided in this
Agreement, Manager shall have the exclusive right and authority to exercise, or delegate
the exercise of, all rights, powers and duties conferred or imposed on Manager in this
/,)
1003/024/27892 v4 I I S
Agreement. The powers of Manager with respect to the Facility shall be complete,
subject only to the limitations expressly set forth in this Agreement.
2.9 Employees. Employees hired by Manager shall be employees of Manager
and not of City. Manager shall have complete and absolute discretion and authority with
respect to the number, functions, qualifications, compensation and other terns and
conditions relating to its employees, subject only to the provisions of Section 13.4 of this
Agreement.
2.10 Contracting For Facility Use and Purchase of Supplies and Services.
Manager shall have full authority and discretion as to contracting for the use of the
Facility and the purchase of all equipment, materials, supplies and inventories reasonably
required by Manager hereunder. All equipment, materials and supplies purchased by
Manager shall be property of the City. Manager and shall be prudent when purchasing all
equipment, supplies and materials to be used at the Facility.
2.11 Food and Beverage Agreement. Manager acknowledges that it proposes
to enter into a separate contract with Savoury's relating to food and beverage services to
be provided at the Facility. Manager agrees that, as part of its obligations under this
Agreement, Manager shall undertake the supervision of such contract and assume
responsibility for any and all negotiations, renewals, or extensions of such contract.
Written consent from the City shall be required prior to any revisions or cancellation of
the agreement between Manager and Savoury's. Written consent of the City shall also be
necessary prior to the execution of any agreement to hire another caterer.
2.12 Representations and Warranties.
Each party represents and warrants to the other that (i) it has the full power and
tight to enter into and fully perform this Agreement, (ii) it is under no contractual or other
legal obligation, and there exists no lien or claim which will in ally way interfere with its
full, prompt and complete performance hereunder, and (iii) the individual executing this
Agreement on its behalf has the authority to do so.
2.13 Cooperation in Promotion.
a. City acknowledges that in order to successfully manage and
market the Facility, it is necessary to have a stable relationship with Manager for
continuity and good client relations. City agrees to use its reasonable best efforts to
cooperate, and coordinate with Manager to promote, market and maintain the Facility as
a first-class facility comparable to other facilities providing similar services throughout
the United States.
b. City or its designee will continue to provide existing services in
connection with the use of the Facility including, but not limited to, marketing the
Facility, locating housing and arranging transportation and other convention-related
services for individuals and convention delegates attending events at the Facility and
other related services which directly affect the operation and success of the Facility.
1003/024/27892 0 12 / fl l.�
2.14 Use by City. Manager agrees to provide the Facility to City rent-free for
City's use for official business purposes. All days requested by City shall be subject to
availability due to prior event scheduling. All event-related expenses including, but not
limited to, event attendants, ushers, ticket-takers, security, utilities and other expenses
incurred in connection with the use of the Facility by City shall be tracked by Manager at
the prevailing rate for purposes of calculating a default by Manager as well as Manager's
eligibility for an Incentive Fee, as described in Section 7.3. This means that the
prevailing non-profit rate will be applied as revenue earned at the Facility for all
applicable financial benchmarks under this Agreement. The prevailing non-profit rate for
expenses shall be equal to Manager's actual costs for expenses incurred in connection
with the use of the Facility plus ten percent (10%). Use by the City shall include, but is
not limited to, (1) events sponsored by the City, and (2) events co-sponsored by the City.
ARTICLE 3
RESPONSIBLITIES OF MANAGER
3.1 Responsibilities of Manager. From the Effective Date of this Agreement
through the end of the Tenn or such other termination date made pursuant to the terms of
this Agreement, Manager shall, consistent with this Agreement and subject to the then
applicable Budget:
a. Manage, operate and maintain the Facility and contract for its use
in a manner that is consistent with other comparable facilities providing similar services
throughout the United States;
b. Negotiate, execute and perforn contracts, use agreements, licenses
and other agreements: (1) with persons who desire to schedule events, performances,
telecasts, broadcasts or other transmissions in, from or to the Facility or who desire
otherwise to use the Facility or any part thereof; or (2) that otherwise pertain to the use,
operation, marketing, promotion and occupancy of the Facility or any part thereof;
C. Coordinate all advertising, licensing, promotional activities,
marketing, and public relations for the Facility;
d. A written marketing plan for the year commencing upon the
Effective Date must be submitted by Manager no later than December 31, 2003 for
approval by City, which approval shall not be unreasonably withheld or delayed.
Subsequent marketing plans will be submitted to City's Authorized Representative by no
later than June 1 of each year for the marketing plan. Manager's marketing plan shall be
subject to City's approval, which approval shall not be unreasonably withheld or delayed.
The marketing of the Facility and all marketing plans shall be consistent with the
following requirements:
1. The marketing plans shall be consistent with the policy that
the primary role of the Manager's convention sales division is to market and sell space in
the Facility and related tourism facilities.
2. The City's Authorized Representative shall have the
1003/024/27892 v4 13 ��
authority to approve each marketing plan and shall retain the exclusive right to approve
subsequent revisions to the same.
3. The marketing plan shall include, but not be limited to, a
description of the proposed program of action for the upcoming Fiscal Year. It shall
contain a specific numerical goal regarding the bookings for the Facility and quantifiable
goals against which success may be measured. In addition, the annual Operating Budget
submitted by Manager shall be presented in such a way as to associate direct costs, where
applicable, to the programs presented in the marketing plan. The marketing plan shall
contain marketing goals and programs relating to the Facility. In addition, the marketing
plan shall include association and group business activities. Upon approval of the
marketing plan by the City's Authorized Representative, Manager shall implement the
plan and allocate funds within budgeted limits without further action on the part of City.
e. Negotiate, execute and perform contracts, use agreements, licenses
and other agreements: (i) for all sponsorships, including, but not limited to, the use of
advertising space in or about the Facility and all advertising rights of whatever kind or
nature related to the Facility, and (ii) for the sale, promotion, marketing slid use of all
names, trademarks, trade names, logos and similar intangible property relating to the
Facility;
f. Operate, procure or cause to be operated: (i) concessions within
the Facility for the sale of food, beverages, souvenirs, novelties and programs, and (ii)
clubs and restaurants within the Facility. Manager shall cooperate with City and keep
City informed of Manager's selection process in the selection of concessionaire(s).
Manager shall submit its choice of caterer (but not other concessionaires) to City's
Authorized Representative who shall within thirty (30) days of receipt of Manager's
notice of its selection notify Manager of its approval or disapproval of Manager's choice;
g. Establish and maintain consistent procedures for cost estimating
and reporting, maintenance and payment of invoices, including preparation of Budgets
and reports as contemplated by Article 4;
h. Plan, coordinate and administer operation of the Facility;
L Retain legal counsel in connection with Manager's duties herein to
respond to all claims made in connection with Manager's Operation of the Facility;
j. Monitor actual and projected Operating Expenses;
k. Furnish all services, personnel, materials, tools, machinery,
equipment and other items necessary to accomplish the foregoing requirements of this
Section 3.1; and
I. Devise and implement procedures reasonably designed to keep the
Facility in good order and condition, subject to ordinary wear and tear, and maintain the
Facility in such order and condition.
1003/024/27892 A 14 [ `�
m. `Not later than ninety (90) days after the end of each Fiscal Year,
Manager shall furnish to City, a balance sheet, an income statement and a statement of
changes in financial condition for the Facility, prepared in accordance with generally
accepted accounting principles and accompanied by an auditor's report containing an
opinion of the independent certified public accountant preparing the report, which shall
be a firm selected by Manager. All costs incurred in complying with this Section shall be
included in the Manager's Operating Expenses.
n. City shall have the right to conduct a financial audit, at its sole cost
and expense, at any time during Manager's normal business hours, of the books and
records of Manager which specifically relate to the Facility and no others. Manager shall
account separately for the receipts and expenditures related to each of the following
activities: (i) relating to the management and operation of the Facility, (ii) relating to the
marketing of the Facility, (iii) relating to any data required by Lessor to determine
payments under the Master Lease and (iv) other services performed upon City's
reasonable request. The Manager shall make the records relating to the handling and
expenditure of funds under this Agreement available to the City's Authorized
Representative or a person designated by City, excluding Manager's competitors or
potential competitors.
o. Attend semiannual meetings with the Palm Springs Hotel and
Hospitality Association and with the City Manager to establish and evaluate goals and
activities for group business as well as to assist in the promotion of tourism within the
City.
p. Within six (6) months of the approval by the City Council of this
Agreement, Manager shall compile an inventory of all furniture, fixtures and equipment
which are part of the Facility or have been otherwise paid for by or on behalf of the City
with a minimum initial purchase of$1,000. Every three (3) years during the Tenn of this
Agreement, Manager shall be required to update the inventory, 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
Armual Audit required pursuant to Section 4.3.
3.2 Performance Standards. Manager agrees to:
a. Manage and operate the Facility so as to minimize Operating
Expenses and maximize Operating Revenues; provided, however, that Manager, in
establishing and implementing its booking policies, may schedule not only those events
that generate substantial direct revenue to the Facility, but also those events that produce
less direct revenue but, in the Manager's good faith judgment, generate either a
significant economic, cultural or other benefit to City or otherwise serve the public
interest;
b. Not permit the use of the Facility without charge for such use,
absent City's prior written consent;
1003/024/27892 v4 15 L A
C. Maintain the Facility in good condition, reasonable wear and tear
excepted, and continue maintenance procedures which will keep the Facility 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
Facility are important to client relations, promotions and marketing of the Facility.
Consistent therewith, Manager shall perform general routine maintenance of the entire
Facility consistent with a first-class facility comparable to other facilities providing
similar services throughout the United States, and, in particular, Manager 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;
d. Require that all events, performances and other uses of the Facility
shall be in keeping with the purposes described in the Recitals of this Agreement for
which the Facility is to be used;
e. Require that all persons using the Facility or attending events
therein comply with all Legal Requirements of all governmental authorities having
jurisdiction over the Facility, and that the use of the Facility complies with all applicable
laws including, but not limited to, civil rights statutes and the American Disability Act;
L Perform its obligations under this Agreement and conduct the
management and operation of the Facility at all times in conformance with the standard to
which a good operator would operate given the monetary limits set forth in the approved
Budgets then in effect;
g. Perform its obligations under this Agreement in accordance with
the Legal Requirements of all governmental authorities having jurisdiction over such
obligations, or any part thereof; provided, however, that if any Legal Requirement
enacted after the execution hereof necessitates any structural change to the Facility, City
shall be responsible, at its sole cost and expense, for complying with such Legal
Requirement; and
h. Promptly and filly discharge and pay all of its obligations under
this Agreement at or prior to the times specified for performance or payment; provided,
however, that nothing herein shall prohibit Manager from reasonably contesting the
validity of any claim against Manager (any such claim due and owing to be promptly
paid by Manager upon the conclusion of such dispute by final non-appealable judgment
or otherwise).
i. Manager shall properly account for all Operating Revenues so that
City can determine its rental obligations to the Lessor in a timely fashion, and shall not
engage in conduct which would deprive Lessor of any monies due to Lessor.
1003/024/27892 v4 16 �� • I
ARTICLE 4
RECORDS, ACCOUNTS AND REPORTS
4.1 Books. Manager shall maintain, in accordance with GAAP, adequate
books of account with respect to its management and operation of the Facility and shall
maintain such books on the premises of the Facility.
4.2 Access to Information. City shall have the right to obtain from Manager
any information relevant to Manager's management and operation of the Facility, and to
inspect such books and records during nonnal business hours. Manager shall notify all
parties with whom Manager enters into contracts in connection with the Facility that the
Facility is owned by the City, a public entity, such that all contracts and data gathered by
Manager and City are subject to disclosure. Manager shall timely provide City with any
information required by City to meet the requirements of the Public Records Act.
4.3 Annual Audit. As soon as practicable at the close of each Fiscal Year but
no later than ninety(90) days after the close of each Fiscal Year, Manager shall furnish to
City a balance sheet, a statement of profit or loss; and a statement of cash flow prepared
in accordance with GAAP and accompanied by an independent auditor's report
containing an opinion of the independent certified public accountant preparing the report,
which shall be a reputable firm selected by Manager. Manager shall inform City of its
selection of the independent certified public accountant promptly after its selection. If
City notifies Manager that it objects to Manager's selection, Manager shall select a
different independent certified public accountant. Managers shall fully and timely
cooperate with the preparation of any audit required by Lessor.
4.4 Monthly Reports. Within twenty (20) days after the end of each month,
Manager shall furnish to City a report in the general fonn as approved by the City's
Director of Finance. The reports shall, at a minimum, provide information in the
following categories: (i) revenues from Facility rental, food and beverage commissions,
parking, and audio/visual commissions and (ii) expenses shall include
compensation/benefits, utilities, sales and marketing, general and administrative, repairs
and maintenance, and professional services. The list of categories may be revised by the
City's Department of Finance.
4.5 Capital Improvements Budget; Emergency Expenditures.
a. Ninety (90) days before the begimiing of each Fiscal Year,
Manager shall submit to City, for its approval, a Budget for projected Capital
Expenditures for such Fiscal Year. This Budget shall be subject to the procedures
customarily employed in connection with the development, approval and implementation
of capital budgets for City. City acknowledges and agrees that Manager shall have no
obligation hereunder to make any Capital Expenditures and, therefore, City shall be
responsible for and shall repair, provide and maintain, at its own expense, from funds set
aside for the Capital Improvements Budget, all Capital Improvements as set forth in this
Article 4, including, without limitation, the exterior and structural portions of the Facility,
together with all mechanical, HVAC and electrical systems contained therein.
1003/024/27892 0 17 l if C ),
Notwithstanding the foregoing, Capital Improvements may be performed by Manager
utilizing monies fi-om the Operating Fund upon written agreement between City and
Manager.
b. In addition, if Manager at any time becomes aware of any
condition that jeopardizes the structural soundness or operational capability of the
Facility, the public safety, or the ability of Manager to perform its obligations under this
Agreement, Manager shall have its opinion verified by such engineer as City may from
time to time designate, shall so advise City, and, to the extent allowable by law, City shall
make available the funds necessary for the Emergency Expenditures to correct such
condition, within such time as is reasonable under the circumstances or shall indemnify,
defend and hold Manager harmless for any loss sustained by Manager as a result of City's
failure to approve or fund an Emergency Expenditure.
4.6 Annual Operating Budget. Not later than ninety (90) days before the
beginning of each Fiscal Year, Manager shall submit to City, for its approval, an annual
operating budget for the Fiscal Year ("Annual Operating Budget"), listing all projected
Operating Revenues and Operating Expenses by category. Manager shall have the
discretionary authority to modify individual line items of the Annual Operating Budget
without the consent of City provided that Manager shall give the City's Authorized
Representative three (3) days prior written notice of such modifications. Such
modifications shall not in the aggregate result in an increase in the total approved Amival
Operating Budget.
4.7 Budget Approval.
a. City shall promptly review all proposed Budgets, and promptly
communicate to Manager any comments or suggested revisions thereto to the extent
necessary or needed to conform such Budget to the policy guidelines of the City. City
shall, in any event, complete its review of any such Budget, and deliver its comments no
later than the first day of each Fiscal Year, or failing to act by such time, City shall
continue to fund this Agreement at the prior Fiscal Year's Budget level by a continuing
resolution.
b. Within twenty (20) days of City's approval of any and all Budgets,
City shall cause its treasurer to issue a statement to Manager indicating that the fiinds
required by such approved Budget are or will be timely available, and have been or will
be timely set aside, for such Budget.
4.8 Expenditures in Excess of Budget. Manager shall not, without written
authorization by City, knowingly incur in any Fiscal Year obligations for Operating
Expenses in excess of the total Operating Expenses contemplated by the then applicable
Annual Operating Budget approved by City. In the event Manager becomes aware of any
such obligations, Manager shall immediately inform City in writing of the nature, amount
and due date for such obligations, and written instructions as to how to proceed.
1003/024/27892 v4 18 ��
ARTICLE 5
FUNDS AND ACCOUNTS
5.1 Operating Fund. Manager shall collect all Operating Revenues and
deposit them in an Operating Fund in an account maintained by Manager in its name in
the Depository. Manager shall have complete control and authority as to the Operating
Fund, subject only to the provisions of this Article 5. 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, Manager shall disburse such
excess to City on or before the fifteenth (I5th) day of such month.
5.2 Working Capital Fund. In order to provide the working capital necessary
for Manager to perform its obligations hereunder with respect to Operating Expenses not
funded by the Operating Fund during the Tenn, City shall advance to Manager for
deposit in an interest-bearing account in the Depository to be held and administered by
Manager in Manager's name ("Working Capital Fund"), a minimum amount equal to the
aggregate of the projected Operating Losses which shall be deemed to be an arnomit
equal to budgeted Operating Expenses for three (3) months of the Annual Operating
Budget, as applicable, then in effect, as provided below:
a. Working Capital Fund: By no later than the Effective Date
hereof and the first day of each Fiscal Year during the Term, City shall advance to
Manager such amount as is necessary to replenish the Working Capital Fund to a
minimum amount equal to the aggregate of projected Operating Losses as set out in the
initial three (3)months of the approved Annual Operating Budget then in effect.
b. Application to Unfunded Operating Loss: If, after the first day
of any month during the Tenn, the amount of monies on deposit in the Operating Fund
which are available for such purpose shall be insufficient for the payment of Operating
Expenses then due or budgeted to become due during such month, Manager shall advance
the arnount of such insufficiency from the Working Capital Fund to the Operating Fund.
City shall promptly, but in no event later than the thirtieth (30th) day after such advance,
restore to Manager the amount of such advance for deposit in the Working Capital Fund.
5.3 Security for and Investment of Funds. All fiends and accounts required
to be maintained by Manager under this Article 5 shall be maintained in the Depository,
which shall be a bank or branch located in City. Manager shall require of the Depository
that all funds held in any account maintained under this Article 5 be secured to such an
extent and in such a manner as is required by applicable law in connection with the
deposit of funds of City. Money on deposit in the Operating Fund and Working Capital
Fund shall be retained on deposit in fully secured interest-bearing demand deposit
accounts or may be invested, to the extent and only if permitted by applicable laws, in the
following obligations or securities, maturing at such time or times so as to enable
1003/024/27892 v4 19 b ' 7 D-�
disbursements to be made for the payment of Operating Expenses, other obligations and
securities that are lawful investments for funds of City pursuant to City's approved
investment policy.
5.4 No Obligation of Manager to Advance Funds. Notwithstanding any
provision of this Agreement to the contrary, Manager shall not be obligated to make any
advance to or for the account of City or to pay any sums incurred for the perfonnance of
City, nor shall Manager be obligated to incur any liability or obligation for the account of
City, nor shall Manager be responsible for the failure of its perfonnance of its obligations
hereunder as a result of City's failure to provide sufficient funds as herein set forth.
Further, notwithstanding any other provision of this Agreement, Manager shall be
obligated to perform its duties, responsibilities and obligation hereunder only to the
extent that funds are made available to Manager for such purpose.
5.5 Manager's Negligence. The parties agree that in the event that Manager
is obligated to indemnify the City under Article 8, such obligation shall be paid by money
from its funds and shall not be treated as an Operating Expenses hereunder.
ARTICLE 6
PERFORMANCE REVIEW
6.1 Time for Performance Review. Manager's perfonnance shall be subject
to review as set forth in this Article 6. This review shall be referred to as the
"Performance Review" and shall be performed amivally.
6.2 Components of Performance Review. Performance Review may consist
of any or all of the following elements: (i) Annual Stakeholder Report, (ii) Meeting
Planner Survey, (iii) Facility Inspection, and (iv) Financial Performance Review, and (v)
a service review, as described in the following sections. The results of the Performance
Review shall be incorporated into a written report and shall be presented to the City
Council.
6.3 Annual Stakeholder Meeting. Manager shall conduct an annual meeting
of key stakeholders to update stakeholders on the programs and perfonnance of the
Facility, and to solicit feedback on services provided by Manager. "Stakeholders"
include, but are not limited to, representatives from the group meeting hotels, the Palm
Springs Desert Resorts Convention and Visitor Authority, and the City. This meeting
shall include a review of(i) room night booking performance, (ii) financial performance,
(iii) customer satisfaction responses, including the Meeting Planner Survey pursuant to
Section 7(3)(a)(3), and (iv) the status of current sales and marketing programs.
Manager shall provide City with a written report sunmmarizing the comments
received at the meeting within thirty (30) days of the meeting. City shall evaluate the
results of the Stakeholder meeting and incorporate it into its annual written Performance
Review.
6.4 Meeting Planner Survey. Manager's perfonnance shall be subject to a
survey of all convention meeting planners that have utilized the Facility during the prior /�C!
1003/024/27892 A 20 6 /f , /
twelve (12) month period. The goal for these surveys is to measure the client's
satisfaction with key aspects of their use of the Facility. Manager shall obtain City's
approval of the survey content, format, and mailing list 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.
Within thirty (30) days of the conclusion of each event, Manager shall contact
clients of the Facility to conduct the Customer Satisfaction Survey. The infonnation
gathered shall be compiled into an annual report summarizing the feedback received.
The survey report may contain:
a. Responses to any issues which have been raised concerning services
performed by Manager,
b. As warranted, specific plans for improvements to address meeting planner
concerns, and/or
6.5 Facility Inspection. A report shall be submitted to City detailing the
results of an annual building and facilities inspection, including landscaping, along with
the list of recommended repairs and replacements to be accomplished in the upcoming
Fiscal Year. This assessment shall be conducted by an independent contractor, who shall
be hired and paid for as an Operating Expense. The assessment shall include a
description of the methods of maintenance and their adequacy, recommendations as to
changes in maintenance procedures and physical improvements recommended for the
coming year and an opinion as to the quality of the Facility and Manager's procedures. A
representative of the City shall accompany the independent contractor on the physical
inspection. The consultant's report shall be sent directly to the City, with a copy to
Manager.
6.6 Financial Performance Review. A financial performance review shall
review all information relevant to Manager's services provided under this Agreement, as
well as all information relating to Minimum Room Night Goals, the Assumed Operating
Deficit and all Incentive Fees.
Manager shall gather and provide to the City all information necessary for City
to conduct the financial perfortnaice review. The infonnation shall include:
a. Calculations relating to attainment of Incentive Fees.
b. The Annual Audit report for the Facility.
C. Manager's financial goals for the current Fiscal Year.
64a
1003/024/27892 0 21
6.7 Service Review.
The service review shall consist of a meeting between City and Manager which
shall consider the services provided, the feasibility of providing new services, customer
complaints and Manager's response to customer complaints, and the survey of customer
satisfaction. The information gathered shall be compiled into an annual report
surmnarizing the feedback received. The survey report may contain:
a. Recormnended changes and/or new services to decrease Operating
Expenses and Operating Losses or to Increase Operating Reviews.
b. Specific plans for provision of changed or new services by
Manager.
C. Responses to any issues which have been raised concerting
services performed by Manager.
Manager may submit any relevant performance information and reports
for consideration. In addition, City may request that Manager submit any other specific
information relating to its performance.
The purpose of a service review is to assure that services are provided of
the highest quality, that the Facility is operated to be superior to the average facility in its
competitive market, both as to size and region, and is in full compliance with the terns of
this Agreement.
6.8 Preparation of Annual Performance Review.
a. Time to Prepare. The Facility Inspection shall be conducted
between February 1 and February 15 every year on a date mutually agreed by the parties
so that all the findings can be incorporated in the City's budget process. All other
components of the Performance Review shall be submitted to the City within ninety (90)
days following the conclusion of the Fiscal Year.
b. Response by City. Upon receiving the materials submitted by
Manager, City may schedule a meeting with Manager to review the materials and all
components of the Performance Review. Within forty-five (45) days of the submittal,
City shall prepare a written draft Performance Review and submit the same to Manager
for Manager's review and comment. Manager's comments shall be submitted within
fifteen (15) days of Manager's receipt of the City's draft Performance Review, and such
comments shall be considered by City before the City's Authorized Representative
finalizes the Performance Review.
As a result of the Performance Review, City may conclude that Manager's
performance in the prior Fiscal Year: (i) was excellent, (ii) raises issues of concern to be
monitored in the current Fiscal Year, or (iii) was substantially defective. In the event the
Performance Review finds issues of concern, the report shall identify proposed corrective
actions to be taken. (tom
1003/024/27892 A 22
C. Deficiencies. If Manager's performance is found to have
substantial deficiencies, the parties shall meet and confer to prescribe corrective
measures. These measures may include the establishment, if agreed by the parties, of
financial consequences for repeated future violations including temporary reductions in
the Base Fee until performance corrections have been achieved, fines or similar matters.
Should City require, and Manager agree, to expanded or new services as a remedy for
Manager's failure to perform its obligations hereunder, no additional compensation shall
be due for such services. If the City determines that Manager is repeatedly failing to take
the agreed upon corrective actions, City may terminate the Agreement pursuant to Article
12. However, in the first three (3) years of this Agreement, City play only tenninate the
Agreement for an Event of Default.
6.9 Meet and Confer Process. Whenever the parties are required to meet and
confer pursuant to the terms of this Agreement, the parties shall have thirty (30) days
from the receipt of written notice from the other party to meet and confer in person, and
in good faith, in an attempt to resolve the dispute between the parties. Failure to comply
with this obligation shall constitute default pursuant to Article 12.
6.10 New or Expanded Services. As a result of its findings following any
Performance Review, the parties may agree for Manager to provide improved, expanded
or new services within a reasonable time. If the reason that the City requests new or
expanded services is not remedial, Manager may request additional compensation for
such services if they are beyond the scope of this Agreement.
6.11 Service Materials Belong to City. All data, reports, documents,
brochures, survey materials, and other computerized, written, printed, or photographic
materials developed by City or Manager in correction with the services, whether
developed directly or indirectly by City or Manager, shall be and shall remain the
property of City without limitation or restriction on the use of such materials by City.
Manager shall not use such materials in connection with any project not comiected with
this Agreement without the prior written consent of City.
ARTICLE 7
COMPENSATION
7.1 Manager Compensation. Manager shall be entitled to receive
compensation for services rendered under this Agreement from the City based on the
agreed upon Base Fee plus an Incentive Fee, should Manager earn the Incentive Fee.
Payment of the Base Fee presumes that Manager achieves the Minimum Room Night
Goal per Fiscal Year as set forth herein. If Manager exceeds the Minimum Room Night
Goal and exceeds financial and customer satisfaction thresholds, as described below,
Manager shall be entitled to Incentive Fees as described herein.
7.2 Base Fee. For services to be performed by Manager during each Fiscal
Year of this Agreement, the City shall pay to Manager the annual Base Fee set forth in
this Section 7.2, payable at the rate of one-twelfth (1/12) of the per annum compensation
1003/024/27892 A 23 ��
per month, within thirty (30) days of the monthly billing received from Manager for
services provided during the Tenn. The Base Fee is as follows:
Fiscal Year Base Fee
2003-2004 $225,000
2004-2005 $225,000
2005-2006 $185,000
2006-2007 $188,700
2007-2008 $192,474
If Manager fails to meet the Minimum Room Night Goal for a Fiscal Year, the
matter maybe addressed during the performance review provided in Article 6.
7.3 Incentive Fee. In addition to the Base Fee payable to Manager, Manager
shall be eligible for an Incentive Fee which, if earned, shall be payable to the Manager
annually in arrears on or before the thirtieth (30th) day following the date on which
Manager has given the City the Annul Audit report for the subject year as contemplated
by Section 4.3, which amount shall, in no event, exceed the fee schedule outlined in
Section 7.3(a). If Manager fails to meet the Room Night Goal described in this Section
7.3 during any Fiscal Year, Manager shall not be eligible for either(i) the Room Night or
(ii) the Financial Performance Incentive Fee for that Fiscal Year.
a. Incentive Fee Calculation. The potential Incentive Fee will be
based on Manager's performance in three (3) categories: Room Night Sales shall
constitute sixty percent (60%), financial performance shall constitute thirty percent (30%)
and customer satisfaction shall constitute ten percent (10%) of the hlcentive Fee
calculation of the maximum Incentive Fee allowable as set forth herein:
Fiscal Year Incentive Fee
2003-2004 $175,000
2004-2005 $175,000
2005-2006 $185,000
2006-2007 $188,700
2007-2008 $192,474
1003/024/27892 v4 ! �I
24
1. Room Night Goal (60%): Manager must meet or exceed
the following number of Room Nights per the applicable Fiscal Year ("Room Night
Goal"):
Fiscal Year Roorn Ni is
2003-2004 60,000
2004-2005 80,000
2005-2006 100,000
2006-2007 105,000
2007-2008 110,000
Room Night achievement will be calculated based on pick-up reports received
from participating hotels plus ten percent (10%) in recognition that many attendees
carm7ot be tracked as they will stay outside of a room block. In each Fiscal Year that
Manager meets or exceeds its Room Night Goal, Manager will receive sixty percent
(60%) of that year's maximum Incentive Fee, as determined above, as part of its
Incentive Fee.
The Parties acknowledge that, at the time that this Agreement is being executed,
the Facility is under construction for expansion with an estimated completion date of
March 1, 2005. Because the Room Night Goals were negotiated in anticipation of the
construction being completed within ninety (90) days of March 1, 2005, should the
expansion construction completion date be delayed more than the anticipated ninety (90)
days, the Room Night Goal for the affected Fiscal Year(s), if any, will be adjusted by pro
rating the applicable Room Night Goal as stated above for such Fiscal Year over twelve
(12) months and only requiring that the Room Night Goal be met in those months
subsequent to completion of the expansion constriction.
2. Financial Performance (30%): To earn the financial
performance portion of the Incentive Fee (i.e. 30% of the Incentive Fee) for a particular
Fiscal Year, Manager must: (i)manage the Facility such that the Adjusted Operating Loss
in such Fiscal Year sisless than the Assumed Operating Deficit for such Fiscal Year as set
forth in Exhibit A, and (ii) meet the Room Night Goal. The Financial Performance
portion of the Incentive Fee, if earned, shall be equal to the lesser of: (a) thirty percent
(30%) of the maximum Incentive Fee for such Fiscal Year set forth above in this Section
7.3(a) or (b) the amount of the actual operating deficit which is less than the Assumed
Operating Deficit for such Fiscal Year.
3. Customer Satisfaction (10%): To achieve the customer
satisfaction goal, Manager must meet or exceed the established perfornance criteria,
which requires achieving an average of eighty-five percent (85%) or better, approval on
the Meeting Planner Survey, and shall be used by Manager to fiind performance based
incentive bonuses payable to Facility employees pursuant to a plan developed and
approved by both parties. The Meeting Planner Survey shall be a survey of all meeting
planners that have contracted to use with the Facility during the prior twelve (12) month
period. Within thirty (30) days of the conclusion of such event, Manager shall contact
1003/024/27892 v4 25 6 , 4 ;. l
clients of the Facility to conduct the Meeting Planner Survey. The goal for these surveys
is to measure the client's satisfaction with each aspect of their use of the Facility.
Manager shall obtain City's approval of the survey content, format, and mailing list 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. Prior to utilizing the Survey, Manager shall
meet with the City to detennine how the scoring will be evaluated to establish an overall
average off an eighty-five percent (85%) satisfaction level.
b. Incentive Fee General Principles. In each Fiscal Year that
Manager achieves the Minimum Room Night Goal, Manager shall receive the Room
Night Goal Incentive Fee for that year. In each Fiscal Year that Manager achieves the
Customer Satisfaction Goal, Manager shall receive the customer satisfaction incentive
fee. The right to receive these incentive fees are each independent of each other as well
as the Financial Performance Incentive. However, for Manager to be eligible for the
Financial Performance Incentive Fee in any Fiscal Year, Manager must also achieve the
Minimum Room Night Goal for such Fiscal Year. In each Fiscal Year that Manager
earns all of the incentive fees available under Sections 7.3(a)(1), (2) and (3), Manager
shall receive one hundred percent (100%) of the Incentive Fee applicable to that Fiscal
Year.
Notwithstanding the foregoing, the Incentive Fees payable to Manager pursuant to
this Section 7.3: (i) shall not exceed an amount equal to the Base Fee payable to the
Manager pursuant to Section 7.2, (ii) shall not be payable to the extent that such payment
would cause a Cost Savings Failure pursuant to Section 11.1(b). However, in such case,
Manager shall be paid that portion of such Incentive Fee that does not cause a Cost
Savings Failure.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification of City. Manager agrees that it shall protect, defend,
indemnify and hold harmless City, its elected officials, officers, employees, volunteers
and agents from and against any and all losses, liabilities, fines, penalties, claims,
damages or judgments, including attorneys fees and costs ("Claims"), arising out of or
resulting in any way from City's grant of this authority to Manager or Manager's exercise
of the authority including the provision of services under this Agreement, unless such
obligations:
a. arise from the sole negligence or willful acts of City, its elected
officials, officers, employees, agents or contractors, or
b. arise from any breach or default by the City of its obligations
hereunder or under any agreement between the City and a third party,
C. are of the type that are or would normally be covered by
1003/024/27892 v4
26
commercial insurance covering (A) the Facility and its premises and the City's personal
property located therein for physical damage or other Loss, and (B) business interruption
and extra expenses, irrespective of the decision of the City to carry or not to carry such
insurance, or
d. are caused by or arise out of the services provided by the
architects, engineers and other agents (other than Manager) retained by the City in
connection with capital improvements or capital equipment purchases at the Facility.
Subject to the scope of this indemnification and upon demand of the City made by
and through the City Attorney, in the event that Manager is obligated to indemnify,
defend and hold the City harmless hereunder, Manager shall (i) protect City and appear
and defend the City, its elected officials, officers, employees, volunteers and agents, in
any Claims by third parties, whether judicial, administrative or otherwise, arising out of
the exercise of this Agreement by Manager or claims by other entities disputing the rights
and privileges granted by City in this Agreement, and (ii) agree to confer following any
trial to decide jointly whether to appeal, or to oppose any appeal.
Notwithstanding the foregoing, in the event a claim or liability is due to actual
negligence or intentional misconduct by Manager, or arises from an Event of Default,
Manager shall be solely liable for the cost of defense and any judgment thereon, without
contribution by City, and such expense shall not be an Operating Expense payable by
City.
8.2 Survival of Indemnification. The indemnification resulting from
services during the Tenn shall survive the termination of this Agreement.
ARTICLE 9
INSURANCE
9.1 Insurance to be Maintained by City. City shall at all times maintain in
effect the following policies of insurance:
a. Property Insurance. Arm "All Risk of Physical Loss" form of
policy (with Replacement Costs Endorsement), insuring all movable and immovable
property constituting the Facility 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 terns and conditions of the insuring agreements, including coverage for loss or
damage by earthquake and flood. Such insurance shall name Manager as an additional
named insured. Coverage shall be on a broad "All Risk of Physical Loss" form. The
Facility and its contents shall be insured to full replacement value.
b. Comprehensive General Liability. Public liability and property
damage insurance with a combined single limit of at least $10,000,000 insuring against
all liability of the City and its Authorized Representatives arising out of, and in
connection with, the use or occupancy of the Facility. Such insurance shall name
Manager as an additional named insured.
1003/024/27892 v4 27
69.2 Insurance to be Maintained by Manager. Manager shall at all times
maintain in effect the following policies of insurance:
a. Workers' Compensation. Such workers' compensation insurance
coverage as may be required by law, including employer's liability coverage of at least
$3,000,000 per person per occurrence.
b. Crime and Fidelity Coverage. At least $100,000 per occurrence
of coverage for (i) employee dishonesty; (ii) forgery or alteration; (iii) theft,
disappearance and destruction inside and outside the Facility; and (iv) robbery and safe
burglary inside and outside the Facility. Such insurance shall name City as additional
named insured.
C. Comprehensive General Liability. Public liability and property
damage insurance with a combined single limit of at least $10,000,000 insuring against
all liability of the City and its Authorized Representatives arising out of, and in
connection with, the use or occupancy of the Facility. Such insurance shall name
Manager as an additional named insured.
d. Other Insurance. Such other coverages as Manager, in its
discretion, may deem prudent or necessary.
e. Other Insurance Provisions. The insurance required by this
Agreement shall be with insurers which are Best A-rated or better. The City shall be
included as an additional insured on each of the policies and policy endorsements
required to be maintained by Manager. Manager shall obtain the written consent of the
City's Risk Manager prior to changing insurers providing insurance under this
Agreement, which consent shall not be withheld unreasonably. The following language
will be made a part of all insurance polices required by this Section:
1. "The City of Palm Springs, its employees, agents,
franchisees and officers are hereby added as additional insureds with respect to liability
arising out of activities performed by or on behalf of Manager."
2. "This policy shall be considered primary insurance with
respect to any other valid and collectible insurance the City of Palm Springs may possess
including any self-insured retention the City of Palm Springs may have, and any other
insurance the City does possess shall be considered excess insurance and shall not
contribute with it."
3. "This policy shall act for each insured as though a separate
policy had been written for each. This, however, will not act to increase the limit of
liability of the insuring company."
4. "Thirty (30) days' prior written notice by certified mail,
return receipt requested, shall be given to the City of Palm Springs in the event of
suspension, cancellation, reduction in coverage or in limits or non-renewal of this policy
for whatever reason. Such notice shall be sent to the City Manager, City Attorney and
1003/024/27892 A 29 / ' 3
City Clerk."
9.3 Insurance Policies. The insuring party as specified in this Article 9 shall
deliver to the other party copies of policies of such insurance or certificates evidencing
the existence and amounts of such insurance as required to be maintained hereunder. The
parties specifically acknowledge that obtaining such insurance policies will not limit their
liability hereunder for amounts in excess of such policies or diminish their respective
duties to indemnify each other as specifically set forth in this Agreement.
ARTICLE 10
TRANSFER AND ASSIGNMENT
10.1 City Approval of Transfer or Assignment Required. The City, in
entering into this Agreement, has placed a special value, faith and confidence in the
experience, background and expertise of the Manager in operating, marketing and
managing the Facility. Such faith and confidence being a substantial consideration int eh
granting of this Agreement, the parties therefore agree that no transfer or assignment of
Manager's interest hereunder may occur without the express written approval of City
granted as provided hereunder, and any transfer without such approval shall be void.
10.2 Transfer. As used hereunder, transfer shall be broadly construed to
include any change in ownership or control, any transfer of stock in the Manager's
business, the delegation or assignment of duties, and the entering into subcontracts, with
and to persons, firms or entities who are not existing shareholders or members of the
immediate families of existing shareholders in a cumulative amount greater than thirty
percent (30%) of such ownership or control. The City's consent shall be based upon the
prospective owner's financial capability, background, reputation, experience and
expertise in the field of waste disposal, as described below. In addition, Manager shall
not change its General Manager, who is identified in Section 2.7, without the prior
written consent of the City, which shall not be unreasonably withheld. To assist the City
in determining whether to grant its consent, as required by this Section, Manager shall
provide City with reasonable information concerning the knowledge, experience and
background of any proposed transferee.
10.3 Assignment. Neither Manager nor City shall voluntarily assign or
encumber its interest in this Agreement, without first obtaining the other parry's consent.
Any assignment or encumbrance without the other party's consent shall be voidable and,
at the other party's election within thirty (30) days of actual knowledge of an assignment
or encumbrance, shall constitute a default which shall be an Event of Default unless the
assignment or encumbrance is rescinded within thirty (30) days after the other party has
given the assigning party notice of its election to treat the assignment or encumbrance as
an Event of Default; provided, however, that no such consent is or shall be required in the
case of an Approved Assignment, as hereinafter defined. Manager agrees that at all times
during the Tenn of this Agreement, an Affiliate, or any person or entity that purchases all
or substantially all of the assets of Manager or an Affiliate, shall possess the power to
direct or cause the direction of the management and policies of the Manager.
/1
1003/024/27892 v4 29
a. For purposes hereof, an "Approved Assigmnent" shall mean:
1. A party's pledge, mortgage, or other assignment of the
revenues or fees which it is entitled to be paid under this Agreement (but not including
the assigmnent of any other rights under this Agreement) in connection with any credit
facilities that may be obtained by either party or any of their Affiliates, it being the
express intent hereunder that Manager shall have the right to pledge only its Management
Fees and no other fees or revenues hereunder;
2. The assignment of this Agreement by the Manager to any
Affiliate; or
3. The acquisition by a person or an entity of any equity or
other beneficial interest in, or all or substantially all of the assets of, the Manager or any
Affiliate.
b. Except with respect to catering services as discussed below, the
provisions of this Section shall not prohibit or restrict the Manager from entering into
contracts, concessions or licenses for the operation of any portion of the Facility, subject
to the terms of this Agreement; provided, however, that any such agreements shall be
assignable to the City upon termination of this Agreement and for any such agreements
which have a non-cancelable tern beyond one (1) year from the date of the tennination
of this Agreement, the City shall have an option, to be exercised within sixty (60) days of
the termination of this Agreement, to cancel any such agreement upon at least six (6)
months prior notice unless:
1. The agreement received the prior approval of the City
pursuant to this Agreement or otherwise; or
2. The City has a non-disturbance and attormnent
arrangement (or the like) with respect to such agreement.
Notwithstanding any provisions herein to the contrary, the City shall approve any
contract for catering services and any such contract not approved in writing by City is
void. Pursuant to this Agreement, the City hereby approves Savoury's for said catering
services. In addition, the approval herein of Savoury's is void if there is a transfer of
ownership or control of Savoury's, meeting the requirements of Section 10.2, in which
case such transfer shall be approved as provided hereunder.
10.4 Required Information. Manager shall submit its request for City consent
to a transfer or assignment to the City together with the following documentation and any
other documentation the City may request:
Assignee's audited financial statement for the immediately preceding three (3)
operating years indicating that the proposed assignee's financial status is acceptable to
City and adequate to provide the services hereunder.
r
1003/024/27892 v4 30
a. Satisfactory proof that the proposed assignee has at least ten (10) years of
experience operating, marketing and managing convention facilities on a scale equal to or
exceeding the scale of operations conducted by Manager.
b. Satisfactory proof that the proposed assignee has at all times conducted its
operations in a conscientious fashion.
C. Any other infonnation required by City to ensure the proposed assignee
can fulfill the terms hereof in a timely, safe, and effective manner.
10.5 Transfer or Assignment of Fees. Any application for a change of
ownership, a transfer or assignment shall be made in a maimer prescribed by the City
Manager and Manager shall make a deposit with City to cover City's reasonable
expenses related to the transfer or assigmnent payable prior to City's consideration of the
transfer or assigrnment request. The deposit shall be used to pay City its reasonable
expenses for attorneys' fees and investigation costs necessary to investigate the suitability
of any proposed transferee or assignee, and to review and finalize any documentation
required as a condition for approving any such assigmnent. City shall document the
expenditure of all fiends from the deposit and shall reimburse all surplus funds to the
Manager. Manager shall supplement the deposit within ten (10) days of City's request
therefore, in the event additional funds are required. The Transfer shall be approved by
Resolution of the City Council.
10.6 Subcontractors. The use of a subcontractor to perform services under
this Agreement shall not constitute delegation of Manager's duties provided that Manager
has received prior written City approval to subcontract such services and the City by its
City Manager has approved in writing the subcontractor. Manager shall be responsible
for directing the work of Manager's subcontractors and any compensation due or payable
to Manager's subcontractors shall be the sole responsibility of Manager. City shall have
the right to require the removal of any approved subcontractor.
ARTICLE 11
TERMINATION.
11.1 Termination. This Agreement may be terminated for the reasons stated
hereunder. Should either party elect to terminate this Agreement, the parties shall
nevertheless comply with all of the provisions of this Article. Grounds for termination
include,but are not limited to:
11.2 Performance Failure. A Performance Failure shall occur if following a
performance review pursuant to Article 6, Manager should fail to undertake all corrective
actions specified by City.
11.3 Cost Savings Failure. A Cost Savings Failure shall occur if:
a. The Adjusted Operating Loss in any given Fiscal Year is
greater than the Budgeted Operating Deficit for that Fiscal Year; and
& /f
1003/024/27892 v4 31
b. The amount of the Adjusted Operating Loss in excess of
the Assumed Operating Deficit is greater than the sum of (a) the Cumulative City
Savings, plus (b) the Cumulative Incremental TOT.
11.4 Minimum Room Night Failure. A Minimum Room Night Failure shall
occur if, for any consecutive two-year period during the tenn of this Agreement the
Actual Room Nights Realized is less than two times (2x) the Minimum Room Night
Amount. If Manager fails to meet the applicable Room Night Goal in any Fiscal Year in
which the Room Night Goal is modified as contemplated in Section 7.3(a)(1) as the result
of a delay in the completion of the expansion of the Facility, the Minimum Room Night
Failure shall not be applicable during such Fiscal Year.
11.5 Termination of the Master Lease. This Agreement shall immediately
terminate and be null and void upon termination of the Master Lease.
11.6 Expiration of Term. This Agreement shall immediately terminate and be
null and void upon expiration of its term of this Agreement has not been extended prior to
such expiration.
11.7 Expiration for Default. This Agreement shall terminate and be null and
void in the event of and Event of Default, as provided in Article 12.
11.8 Notice and Right to Cure. hi the event of termination for any of the
reasons provided in this Article, City shall give Manager written notice of the grounds for
termination. If, in the reasonable opinion of the City, the cause for tennination can be
corrected by Manager, City may provide a reasonable period as specified in the Notice to
Manager to remedy the cause and, in the event that a cause is not susceptible to cure
within such prescribed period, then Manager shall be given a greater period of time (but
in no case more than one hundred twenty (120) days) to cure the breach if, in the sole
discretion of the City, Manager is diligently pursuing such cure.
11.9 Surrender of Facility and Improvements. Upon expiration or
tennination of this Agreement for any reason, Manager shall promptly surrender the
Facility to City, leaving all furniture, equipment, supplies, books and records, manuals
and inventories that are part of the Facility, or are otherwise the property of City, or that
have been purchased with Operating Revenues or from funds made available by City. All
funds and accounts maintained by Manager in the Depository required to be maintained
under this Agreement shall be transferred to City within five (5) business days of the
expiration or tennination of this Agreement.
Upon the expiration or termination of this Agreement, all improvements made to
or upon the Facility by Manager and all equipment, materials, supplies and inventories
purchased by Manager with Operating Revenues or with fluids made available by City
shall be promptly surrendered to City and title thereto shall vest in City, to the extent not
earlier vested in City, without any further compensation therefore from City.
Manager shall surrender the Facility in good and first class condition, reasonable
wear and tear excluded. Manager shall cormnit no waste or destruction of the Facility.
1003/024/27892 v4 32 67 ' 1
Prior to delivery of possession to City, the parties shall arrange a joint inspection and
Manager shall fully compensate City for any repairs and clean up required hereunder.
11.10 Continuation of Performance. In the event of termination of this
Agreement, Manager, at City's option, shall continue to perform under the provisions of
this Agreement (at the then current level of compensation) for a period of up to six (6)
months to enable City to make arrangements for a successor as operator of the Facility;
provided, however, that Manager shall not be required to perform for a period of time to
its detriment or for a period during which Manager's actual Operating Expenses exceed
actual Operating Revenues, unless such deficit is promptly and timely funded and paid by
City.
11.11 Damage or Destruction. In the event of(i) partial or total destruction
of the Facility during the tern of this Agreement which requires repairs to the Facility or
(ii) the Facility being declared unsafe or unfit for occupancy by any authorized public
authority for any reason other than Manager's use or occupation, which declaration
requires repairs to the Facility, City shall forthwith make said repairs provided Manager
gives to City thirty (30) days written notice of the necessity therefore. No such partial
destruction (including any destruction necessary in order to make repairs required by any
declaration made by any public authority) shall in any way annul or void this Agreement,
except that Manager shall be entitled to a proportionate reduction of Minimum Room
Nights, such proportionate reduction to be based upon the extent to which the making of
such repairs shall interfere with the business carried on by Manager in the Facility.
However, if during the last two (2) years of the tenn of this Agreement the Facility is
damaged as a result of fire or any other insured casualty to an extent in excess of twenty-
five percent (25%) of the then replacement cost (excluding foundations), City may within
thirty (30) days following the date such damage occurs terminate this Agreement by
written notice to Manager. If City, however, elects to make said repairs, and provided
City uses due diligence in making said repairs, this Agreement shall continue in full force
and effect, and the Minimum Room Nights shall be proportionately reduced while such
repairs are being made as hereinabove provided. Nothing in the foregoing to the contrary
withstanding, if the Facility is darnaged or destroyed at any time during the term hereof to
an extent of more than twenty-five percent (25%) of the then replacement cost (excluding
foundations) as a result of a casualty not insured against, City may within thirty(30) days
following the date of such destruction terminate this Agreement upon written notice to
Manager. If City does not elect to terminate because of said uninsured casualty, City
shall promptly rebuild and repair the Facility and the Minimum Room Nights shall be
proportionately reduced while such repairs are being made as hereinabove provided. If
City elects to terminate this Agreement, all rentals shall be prorated between City and
Manager as of the date of such destruction. In respect to any partial or total destruction
(including any destruction necessary in order to make repairs required by any such
declaration of any authorized public authority) which City is obligated to repair or may
elect to repair under the terms of this Section, Manager waives any statutory right it may
have to cancel this Lease as a result of such destruction.
11.12 Payment Upon Termination by City. In the event of termination by
City in accordance with this Agreement, City shall pay Manager all fees eared to the
1003/024/27892 v4 33 ��
date of City's termination as well as the unamortized amount of the Contribution, as set
forth in Section 1.7. "Fee earned to date" shall be limited to the pro rata portion of the
Base Fee earned for that Fiscal Year. Manager shall not be entitled to any portion of an
Incentive Fee for any Fiscal Year in which the Agreement is terminated due to Manager's
breach or default of this Agreement, otherwise, the parties shall in good faith determine
the portion of the Incentive Fee (principally by annualizing Manager's performance on a
basis consistent with past performance, using the parties' reasonable judgment) earned by
Manager and the City shall pay Manager such Incentive Fee. City shall have no other
liability for damages incurred by Manager as the result of the termination of this
Agreement.
11.13 Waiver of Liability. hi the event Manager is tenminated in accordance
with the terns of this Agreement, Manager expressly waives any claim against City for
any loss, damage, cost expense arising therefrom, including future loss of the Base Fee,
any unearned incentive fee, any damages for business interruption or lost profits, and any
other consequential or related damages of any kind whatsoever.
ARTICLE 12
DEFAULT
12.1 Events of Default. Each of the following shall constitute an "Event of
Default"under this Agreement:
a. Failure to pay when due any amount required to be paid under this
Agreement, if the failure continues for five (5) business days after notice has been given
to the defaulting party;
b. Failure, as described in Section 6.8(c) of this Agreement, of
Manager to follow an approved plan of action as agreed upon by the parties after meeting
and conferring; or
C. Failure to perform any other material obligation under this
Agreement (including, without limitation, Manager's failure to meet the responsibilities
of Manager set out in section 3.1 and the Performance Standards set out in Section 3.2), if
the failure to perform is not cured within thirty (30) days after written notice has been
given to the defaulting party, except that if the default carmot reasonably be cured within
thirty (30) days, an Event of Default shall not be deemed to have occurred if the
defaulting party begins to cure the default within the thirty (30) day period and diligently
and in good faith continues to pursue the cure of the default.
12.2 Default Notices. The non-defaulting party shall promptly notify the
defaulting party of any acts or omissions believed by the non-defaulting party to be an
Event of Default under this Agreement. In order to be effective for purposes of Section
12.1, such notice must state that it is a notice of default, specify in detail the acts or
omissions alleged to constitute a default of this Agreement, and must specify in detail the
acts necessary to cure the default.
1003/024/27892 v4 34
12.3 Rights of Non-Defaulting Party. If an Event of Default occurs and is not
waived in writing by the non-defaulting party, then the non-defaulting pally shall have
the following remedies which are not exclusive but cumulative in addition to any other
remedies now or later allowed by law:
I The light to reasonably cure, at the defaulting party's cost and
expense, any default;
b. The right to sue to collect any sums not paid when due;
C. The right to terminate this Agreement; and
d. The right to seek specific performance of the defaulted obligation.
12.4 Waivers.
a. City Waiver of Breach. City's waiver of any breach or Event of
Default shall not be deemed to be a waiver of any other breach or Event of Default,
including ones with respect to the salve obligations hereunder. City's subsequent
acceptance of any damages or other money paid by Manager shall not be deemed to be a
waiver by City of any pre-existing or concurrent breach or Event of Default.
b. Manager Waiver of Defenses. Manager acknowledges that it is
solely responsible for providing the services under this Agreement and hereby
irrevocably and unconditionally waives defenses to the payment and performance of its
obligations hereunder based upon failure of consideration; contract of adhesion;
impossibility or impracticability of performance; commercial frustration of purpose; or
the existence, non-existence, occurrence, or non-occurrence of any foreseen or
unforeseen fact, event or contingency that may be a basic assumption of Manager with
regard to any provision hereof.
ARTICLE 13
MISCELLANEOUS
13.1 Notices. Unless expressly otherwise provided elsewhere in this
Agreement, any election, notice or other communication required or permitted to be
given under this Agreement shall be in writing and deemed to have been duly given if
and when delivered personally (with receipt acknowledged), the fourth (4th) day after
mailing (by certified mail return receipt requested) with proper postage prepaid, by
facsimile transmission with evidence confirming transmission, or when delivered by a
national cormnercial courier service (such as Federal Express) for expedited delivery, to
be continued in writing by such courier.
To City: City Manager
City of Palm Springs
3200 East Tahquitz Carryon Way
Palm Springs, CA 92262
Fax: (760) 323-7701 /
1003/024/27892 v4 35
With a copy to: David J. Aleshire, Esq.
Aleshire &Wynder, LLP
18881 Von Karnan Avenue, Ste. 400
Irvine, CA 92612
Fax: (949) 223-1180
To Manager: SMG
Attn: General Manager
Palm Springs Convention Center
277 North Avenida Caballeros
Palm Springs, CA 92262
Fax: (760) 322-6921
With a copy to: SMG
701 Market Street, 4Ih Floor
Philadelphia, PA 19106
Attention: President
Telecopy: (215) 592-6699
With a copy to: Stradley, Ronon, Stevens &Young
2600 One Commerce Square
Philadelphia, PA 19103
Attention: William R. Sasso, Esq. or
Steven A. Scolari, Esq.
Telecopy: (215) 564-8120
13.2 Amendments. This Agreement may be amended only by the written
consent of the parties.
13.3 Successors. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective heirs, executors, successors, and, permitted
assigns but this provision shall not be deemed to permit any assignment by a party of any
of its rights or obligations under this Agreement except as expressly provided herein.
13.4 Discrimination Prohibited. Manager shall not discriminate against any
employee or applicant for employment because of age, race, creed, sex, color or national
origin or any other basis prohibited by Legal Requirements, and Manager shall take
affirmative action to ensure that any employee or applicant for employment is afforded
equal employment opportunities without discrimination because of age, race, creed, sex,
color or national origin. Such action shall be taken with reference, but not be limited to,
recruitment, employment, job assignment, promotion, upgrading, demotion, transfer,
layoff or termination, rates of pay or other forms of compensation in selection for training
or retraining, including apprenticeship and on the job training. Manager shall comply
with applicable affirmative action policies of City and shall participate in City's
affirmative action programs.
1003/024/27892 v4 36 �� VD
13.5 Reasonableness. Whenever by the teens of this Agreement, a party has
the right or power to grant or withhold its consent or approval, such party agrees not to
withhold or delay such consent or approval unreasonably, unless this Agreement
specifically provides one party with sole discretion on an issue.
13.6 Entire 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
for in this Agreement.
13.7 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.
13.8 Limitation of Liability. City agrees that no partner, co-venturer,
employer, agent, director, officer, shareholder or employee of Manager shall be
personally liable to City or anyone claiming by, through or wider City, by reason of any
default by Manager under this Agreement or for any amount that may become due to City
by Manager under the teens of this Agreement or otherwise.
Manager agrees that no officers, agents, or employees of City shall be personally
liable to Manager or anyone claiming by, through, or under Manager by reason of any
default by City under this Agreement, or for any amount that may become due to
Manager by City under the tenns of this Agreement or otherwise.
13.9 Force Majeure. Neither party shall be liable or responsible to the other
party for any delay, damage, loss, failure or inability to perform, and the time for
performance hereunder may be extended during the tern of such delay only, due to
unforeseeable causes beyond the control and without the fault or negligence of the
Manager, including, but not restricted to, acts of God or of the public enemy, unusually
severe weather, fires, earthquakes, floods, epidemics, quarantine restrictions, riots,
strikes, freight embargoes, wars, litigation, and/or acts of any governmental agency,
including the City, if the Manager shall within five (5) days of the commencement of
such delay notify the City Manager in writing of the causes of the delay. The City
Manager shall ascertain the facts and the extent of delay, and extend the time for
performing the services for the period of the enforced delay when and if, in the judgment
of the City Manager such delay is justified. The City Manager's determination shall be
final and conclusive upon the parties to this Agreement. In no event shall Manager be
entitled to recover damages against the City for any delay in the performance of this
Agreement, however caused, Manager's sole remedy being extension of the Agreement
pursuant to this Section.
13.10 Authority to Execute. The persons executing this Agreement on behalf
of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they 1003/024/27892 A 37 6 /� r/
1 I
are duly authorized to execute and deliver this Agreement on behalf of said party, (iii) by
so executing this Agreement, such party is fonnally 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 said party is bound.
t003/024/27892 v4 38
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
CITY:
CITY OF PALM SPRINGS
By:
David Ready
City Manager
ATTEST:
City Clerk of the City of Palm Springs
APPROVED AS TO FORM:
CITY OF PALM SPRINGS
David J. Aleshire, Esq.
City Attorney
MANAGER:
SMG, a Pennsylvania general partnership
By:
Authorized Representative
1003/024/27892 v4 39 �Q • I J
EXHIBIT A
ASSUMED OPERATING DEFICITS
Fiscal Year) ndine Assumed OperatingD eficit
June 30, 2004 ($1,600,000)
June 30, 2005 ($1,500,000)
June 30, 2006 ($1,200,000)
June 30, 2007 ($1,100,000)
June 30, 2008 ($1,000,000)
Any Claims incurred by Manager arising from, or in connection with, the following shall
be treated as an Operating Expense for purposes of this Agreement but effectively
excluded from the calculation of Operating Loss by the definition of Adjusted Operating
Loss:
1. the breach or default of the City of its obligations under the Agreement or
under an agreement between the City and a third party, and not arising from Manager's
breach or default under the Agreement,
2. a condition on, above,beneath or arising from the premises occupied by
the Facility giving rise to liability, under any Law, or which would or may require any
"response," "removal" or"remedial action" (as such terns are defined under the
Comprehensive Environmental Response, Compensation and Liability Act, as amended
by the Superfund Amendments and Reauthorization Act), and not caused by the negligent
act or omission of Manager,
3. the physical structure, design or build-out (including any renovations
thereto) of the Facility is not in compliance with applicable laws,including,but limited
to, the Americans with Disabilities Act, 42 U.S.C. Sections 12101-12213 as amended by
the Civil Rights Act of 1991 (42 U.S.C. Section 1981(a)), as it now exists and as it may
be amended in the future by statute or judicial interpretation, or the existence of a
structural defect or unsound operating condition, and not caused by the negligent act or
omission of Manager, or
4. any additional written instructions, obligations or requirements imposed
upon Manager by the City not specifically covered by this Agreement and where, due to
Manager acting properly and in full compliance upon such instruction, obligation or
requirement, Manager incurs Claims.
1003/024/27892 v4 A-1
EXHIBIT B
MASTER LEASE
1003/024/27892 v4 B-1
EXHIBIT C
PROMISSORY NOTE
1003/024/27892 v4 C-1
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS AND CONTRACT INTERPRETATION ........................... 2
1.1 Definitions.......................................................................................................... 2
1.2 Interpretation.................................................................................................... 7
1.3 Integration......................................................................................................... 7
1.4 Governing Law.................................................................................................. 7
1.5 Consistency with Law and Severability.......................................................... 7
1.6 Construction of Terms...................................................................................... 8
1.7 Contribution...................................................................................................... 8
1.8 Master Lease.................................................................................................. 999
ARTICLE 2 GRANT OF AUTHORITY AND TERM OF AGREEMENT...................... 9
2.1 Grant of Authority............................................................................................ 9
2.2 Acceptance and Effective Date. ....................................................................... 9
2.3 Nature of Relationship...................................................................................... 9
2.4 Term................................................................................................................. 10
2.5 Special Obligations of City Regarding Manager's Employees................... 10
2.6 City's Authorizing Representative; Approval.............................................. 10
2.7 General Manager Approval........................................................................... 11
2.8 Authority of Manager............................................................................. 114--R+
2.9 Employees........................................................................................................ 12
2.10 Contracting For Facility Use and Purchase of Supplies and Services....... 12
2.11 Food and Beverage Agreement...................................................................... 12
2.12 Representations and Warranties................................................................... 12
2.13 Cooperation in Promotion.............................................................................. 12
2.14 Use by City............................................................................................... 13431-2
ARTICLE 3 RESPONSIBLITIES OF MANAGER ........................................................ 13
3.1 Responsibilities of Manager........................................................................... 13
3.2 Performance Standards.................................................................................. 15
ARTICLE 4 RECORDS, ACCOUNTS AND REPORTS ....................................... 17471!
4.1 Books........................................................................................................ 174=l6
4.2 Access to Information..................................................................................... 17
4.3 Annual Audit................................................................................................... 17
4.4 Monthly Reports ............................................................................................. 17
4.5 Capital Improvements Budget; Emergency Expenditures. ........................ 17
4.6 Annual Operating Budget.............................................................................. 18
4.7 Budget Approval............................................................................................. 18
4.8 Expenditures in Excess of Budget. ................................................................ 18
ARTICLE 5 FUNDS AND ACCOUNTS ................................................................ 194-94-9
5.1 Operating Fund....................................................................................... 191-948
5.2 Working Capital Fund................................................................................... 19
5.3 Security for and Investment of Funds........................................................... 19
5.4 No Obligation of Manager to Advance Funds...................................... 202049
5.5 Manager's Negligence..................................................................................... 20
1003/024/27892 v4 B-2 / , ,µ y
ARTICLE 6 PERFORMANCE REVIEW........................................................................ 20
6.1 Time for Performance Review....................................................................... 20
6.2 Components of Performance Review............................................................ 20
6.3 Annual Stakeholder Meeting......................................................................... 20
6.4 Meeting Planner Survey................................................................................. 20
6.5 Facility Inspection........................................................................................... 21
6.6 Financial Performance Review...................................................................... 21
6.7 Service Review............................................................................................... 212
6.8 Preparation of Annual Performance Review....................................... 22�1
6.9 Meet and Confer Process................................................................................ 23
6.10 New or Expanded Services.............................................................................. 23
6.11 Service Materials Belong to City................................................................... 23
ARTICLE 7 COMPENSATION ...................................................................................... 23
7.1 Manager Compensation................................................................................. 23
7.2 Base Fee............................................................................................................ 23
7.3 Incentive Fee.................................................................................................... 24
ARTICLE 8 INDEMNIFICATION.................................................................................. 26
8.1 Indemnification of City................................................................................... 26
8.2 Survival of Indemnification ...........................................................................27
ARTICLE 9 INSURANCE............................................................................................... 27
9.1 Insurance to be Maintained by City.............................................................. 27
9.2 Insurance to be Maintained by Manager...................................................... 28
9.3 Insurance Policies............................................................................................ 29
ARTICLE 10 TRANSFER AND ASSIGNMENT........................................................... 29
10.1 City Approval of Transfer or Assignment Required................................... 29
10.2 Transfer ........................................................................................................... 29
10.3 Assignment....................................................................................................... 29
10.4 Required Information..................................................................................... 30
10.5 Transfer or Assignment of Fees..................................................................... 31
10.6 Subcontractors ................................................................................................ 31
ARTICLE 11 TERMINATION........................................................................................ 31
11.1 Termination..................................................................................................... 31
11.2 Performance Failure....................................................................................... 31
11.3 Cost Savings Failure....................................................................................... 31
11.4 Minimum Room Night Failure...................................................................... 32
11.5 Termination of the Master Lease .................................................................. 32
11.6 Expiration of Term......................................................................................... 32
11.7 Expiration for Default.................................................................................... 32
11.8 Notice and Right to Cure................................................................................ 32
I L9 Surrender of Facility and Improvements..................................................... 32
IL10 Continuation of Performance. ................................................................... 33
11.11 Damage or Destruction............................................................................... 33
11.12 Payment Upon Termination by City......................................................... 33
11.13 Waiver of Liability...................................................................................... 34
ARTICLE12 DEFAULT ................................................................................................. 34
12.1 Events of Default............................................................................................. 34 /
1003/024/27892 v4 3 i` W
�
12.2 Default Notices ................................................................................................ 34
12.3 Rights wf Non-Defaulting Party................... ................................. ............... 35
12.4 Waivers. ......................................................... ................................................. 33
ARTICLE l3 MISCELLANEOUS .,—,....—.—.—.—.—.—.—.—..,.—.—..... ]5
13] Notices.................................................. ............................ .. ......................... 35
13.2 Amendments..`....^.,...^.^—^—.—.—.—.—.`.`.'.—^—.—.-- 36
13.3 Successors. ....................................................................................................... ]h
13.4 Discrimination Prohibited.............................................................................. 36
13] Reasonableness................................................................................................ S7
13.6 Entire Agreement....,....—........,.,.—.—.................. 37
13.7 Counterparts. .................................................................................................. 37
llX Limitation of Liability...—.—........—.—..,..—.—...—.—....... 37
13.4 Force Mojomro......................................... ....................................................... 37
13.10 Authority t*Execute................................................................................... 37
1003/024/27892 V4 4 ��// - ��, " V
MINUTE ORDER NO.
APPROVING AN AGREEMENT WITH SMG FOR THE
MANAGEMENT OF THE PALM SPRINGS CONVENTION
CENTER
---------------
I HEREBY CERTIFY that this Minute Order, approving an Agreement with SMG for the Management of
the Palm Springs Convention Center was adopted by the City Council of the City of Palm Springs,
California, in a meeting thereof held on the third day of December, 2003.
PATRICIA A. SANDERS
City Clerk
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