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SR-106-025 (6) To: Mayor and City Council From: City Staff Subject: Proposed Services Agreement Between the City of Santa Monica and the Santa Monica Pier Restoration Corporation Introduction This report summarizes the background of the Santa Monica Pier Restoration Corporation and its 2000 Services Agreement with the City of Santa Monica, and recommends approval of a proposed new Services Agreement. Background The Santa Monica Pier has been an integral part of the recreational and visitor-serving commercial life of the City for more than ninety years. What is now known as Santa Monica Pier is in actuality two piers built side by side: the Municipal Pier, a public right of way extending Colorado Street built initially in 1908 and replaced in 1921; and the Pleasure Pier built in 1916 which featured the Looff Hippodrome and carousel, as well as a roller coaster and various other entertainment features, restaurants and fish markets. Through the 1920s and 1930s, Santa Monica Pier was a prominent regional entertainment outlet. The commercial popularity of the Pier declined through the 1950s and 1960s, and portions of the wooden pilings and deck structure fell into disrepair. In 1973 City Council authorized its demolition as part of a more comprehensive proposal to create a mixed-use offshore island development project. However, Santa Monica residents recognized the value of the structure as a public recreational asset and responded with a grass-roots initiative that forbade demolition of either the Municipal or the Pleasure Piers. Concerted plans for the Pier’s restoration began in 1981, when City Council appointed the 15-member Pier Restoration and Development Task Force, charged with preparing a comprehensive set of goals, objectives and policy guidelines for the physical, economic and functional improvement of the Pier. The City and the Task Force entered into an interim agreement for the development of a general plan and contract for the restoration and operation of the Pier. Following a series of public workshops conducted by the Task Force and funded by the State Coastal Conservancy, a 1982 document entitled “Pier Guidelines” was generated containing the overall objectives for future development of the Pier. In January 1983 a series of storms severely damaged the Pier, with the loss of more than 100,000 square feet of deck area and significant structural damage to much of the remaining support pilings and deck. In November 1983 City Council created the Santa Monica Pier Restoration Corporation (SMPRC) as a non-profit, public benefit corporation to oversee the reconstruction of the Pier and to continue implementation of the “Pier Guidelines”. The responsibilities and authority of the SMPRC were broadened and formalized in December 1985, with City Council approval of a Services Agreement with the SMPRC and by-laws for the corporation. In the 1985 Services Agreement, City Council delegated to the SMPRC the responsibility to develop, implement and maintain various programs for the operation, reconstruction and revitalization of the Pier including, but not limited to, authority to negotiate and administer all leases for commercial use of space on the Pier, review and approve plans for tenant improvements, and developing and implementing various promotional programs to enhance the commercial operation, economic performance and aesthetic quality of the Pier. Negotiations between the SMPRC and the City for a successor to the expired Services Agreement commenced in 1995, and focused primarily on the SMPRC’s role in developing a sponsorship and licensing program to promote the Pier and enhance SMPRC revenues, and in leasehold negotiations, lease management and legal services. As part of its budget considerations in June 1999, City Council concluded that lease negotiations and lease management responsibilities were to be transferred to the City’s Economic Development Division (EDD) staff supported by the Office of the City Attorney, and that commercial uses permitted on the Pier and basic lease terms and conditions should be subject to leasing guidelines approved by the SMPRC and City Council. Pier Leasing Guidelines were approved by City Council on February 13, 2001, and modified by City Council at its meeting held March 11, 2003. A new Services Agreement between the City and the SMPRC was approved by City Council at its meeting held December 19, 2000, for a two-year term with successive one-year extension periods. Under the new Services Agreement, City Council continues to delegate to the SMPRC, as it has since 1983, the obligation and responsibility to direct, supervise and coordinate development and implementation of policies and programs for the general commercial planning, promotion, advertising and marketing of the Pier. These activities are subject to City Council approval of an annual Business Plan and Budget setting forth SMPRC goals and objectives for the Pier in the ensuing fiscal year. City Council oversight of SMPRC activities arises through its appointment of members to the SMPRC Board of Directors, which currently consists of eleven members, and through its annual review and approval of the business plan and budget. Discussion The composition of the SMPRC Board and its management have changed significantly since City Council approval of the current Services Agreement, and the goals, objectives and responsibilities of the SMPRC have also been modified. Accordingly, it is timely and appropriate for a new Services Agreement to be concluded between the City and SMPRC to properly reflect these changes. The proposed new Services Agreement is for a two-year term commencing upon its execution by the City, and will continue for successive one-year periods thereafter unless terminated by either party upon thirty days’ notice. This agreement was approved by the SMPRC Board of Directors at its meeting held February 4, 2004 and will supercede the 2000 Services Agreement. Indemnification and insurance provisions in the proposed agreement have been reviewed and approved by the City’s Risk Manager and City Attorney. City Council will continue to delegate to the SMPRC responsibilities for developing and implementing policies and programs for general commercial planning promotions, advertising and marketing of the Pier. The SMPRC will continue to prepare and submit to the City for approval an annual Business Plan and Budget, and will continue to review and approve leases and licenses prepared by City staff with the legal assistance of the Office of the City Attorney. Major modifications in the proposed Services Agreement from that approved by City Council in December 2000 are summarized as follows: Street Performer Monitoring. The SMPRC had no defined role under the 2000 Services Agreement to assist the City in enforcement of the municipal code as it pertains to street performers on the Pier. The proposed Services Agreement provides that the SMPRC will serve as a liaison and coordinator to facilitate street performance, and monitor and promote the use of designated Pier street performance zones in a fair and equitable manner that follows the regulations set forth by City Council. Community Outreach. The SMPRC will continue its role in marketing, promotion and special events management. A new element in the proposed Services Agreement provides that the SMPRC will conduct community outreach programs, education programs and community-based events with the intention of enhancing utilization and enjoyment of the Pier by the community. The City will cooperate in the SMPRC’s production of special events that are free to the public by waiving parking rental fees. Indemnity by City. The SMPRC is obligated to carry insurance that provides primary coverage for any claim arising directly or indirectly from SMPRC’s performance of responsibilities under the Services Agreement. The City is also indemnified and covered as an additional insured. To the extent coverage from SMPRC’s insurance is exhausted or coverage has been denied, for example, for a claim arising from a cause outside of SMPRC’s responsibilities, the City Attorney’s Office will defend such claim. Budget and Financial Impact The City currently budgets for and funds anticipated costs of the Santa Monica Pier Restoration Corporation including salaries, supplies and other basic operating expenses through Economic Development Division, Resource Management Department Account Number 30625.577300. Approval of the proposed Services Agreement would not affect the fiscal year 2003-04 budgeted amount. Recommendation Staff recommends that City Council approve and authorize the City Manager to execute the proposed Services Agreement between the City of Santa Monica and the Santa Monica Pier Restoration Corporation based on the terms and conditions summarized in this report and in the attached Services Agreement. Prepared by: Jeff Mathieu, Director of Resource Management Elana Buegoff, Senior Administrative Analyst – Special Projects Attachment A: Services Agreement between the City of Santa Monica and the Santa Monica Pier Restoration Corporation SERVICES AGREEMENT BETWEEN THE CITY OF SANTA MONICA AND THE SANTA MONICA PIER RESTORATION CORPORATION SERVICES AGREEMENT THIS SERVICES AGREEMENT ("Agreement") is made as of this _____ day of______, 2004 (“Execution Date”), by and between the CITY OF SANTA MONICA, a California municipal corporation (“City”), and the SANTA MONICA PIER RESTORATION CORPORATION, a California non-profit public benefit corporation ("SMPRC"), with respect to the following: RECITALS City A. . City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of the City. Pier B. . City owns and operates that certain real property commonly known as the Santa Monica Pier and consisting of the entire pier platform and certain appurtenant structures, fixtures, improvements, utility lines and systems, public restrooms, public parking sites, stairways and common areas, and maintenance and equipment areas located thereon, including the leasehold space currently occupied by the Ocean Discovery Center and the Bubba Gump Shrimp Company Restaurant, all as more particularly described in Exhibit “A” attached hereto and incorporated herein by reference (collectively referred to as the “Pier”). SMPRC C. . SMPRC is a California non-profit public benefit corporation formed for the purpose of assisting City in the rehabilitation, preservation, protection, development, operation, and management of the Pier. As set forth in the SMPRCs Articles of Incorporation ’ and Bylaws, the City is the sole member of the SMPRC. SMPRC is governed by a board of directors (“SMPRC Board”) who are appointed by the City Council. Prior Services Agreement D. . City and SMPRC entered into that certain Services Agreement, dated as of January 27, 2001 (“Prior Agreement”), for the purpose of governing certain operational and management functions concerning the Pier. This Agreement is intended to supersede the Prior Agreement. Accordingly, upon the commencement of the term of this Agreement, the Prior Agreement shall terminate and be of no further force or effect. Agreement E. . City and SMPRC recognize and acknowledge that the Pier is a valuable recreational resource of City, which should be developed, protected, and preserved as a public resource. Accordingly, City desires to assign certain responsibilities to the SMPRC as set forth in this Agreement, and the SMPRC desires to accept such assignment, upon the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises and covenants contained herein, City and SMPRC agree as follows: 1. RECITALS The recitals are incorporated herein by reference into this Agreement. - 1 - 2. ASSIGNMENT AND AUTHORITY OF SMPRC The City hereby assigns to the SMPRC, and the SMPRC accepts the assignment, of certain responsibilities more particularly described in this Agreement to develop, implement, and maintain various programs and functions in connection with the operation and management of the Pier, including promotions, marketing, special events, sponsorship, licensing, filming and vendors. In addition, the SMPRC agrees to assist the City with the formulation of commercial development proposals, Pier improvements proposals, Pier leasing guidelines, sponsorship and event underwriting programs and community outreach. 3. GENERAL RESPONSIBILITIES 3.1 General SMPRC shall be responsible for the promotion and protection of public and commercial use of the Pier and for providing several project services (hereinafter called the “Work”) at the Pier. Such Work shall include the obligation to manage, advise, supervise, direct and coordinate: (a) the development, implementation, execution, and maintenance of policies and programs concerning general commercial planning, promotions, advertising, marketing, special activities and events, sponsorships, licensing, and filming at the Pier as set forth more particularly in Article 6, below; (b) the preparation and submission of Business Plans and Budgets for the City’s approval on an annual basis that sets forth its plans for the Pier for each fiscal year as set forth more particularly in Article 4, below; (c) the establishment of guidelines and policies for leasehold development at the Pier, as well as the review and approval of leases and lease modifications presented by the City, as set forth more particularly in Article 5, below; (d) providing recommendations to the City on matters related to health, public safety including but not limited to street performer ordinances of City and capital improvements on the Pier and adjacent public areas as set forth more particularly in Articles 6.9, 6.10, and 6.12 below; (e) the purchase of Pier supplies, materials, and parts from time to time as contemplated and authorized under the Business Plan as set forth more particularly in Article 9.3, below; (f) the hiring and discharging of SMPRC’s employees, suppliers, materialmen and subcontractors; (g) other services, labor and materials to adequately perform the work required pursuant to this Agreement; (h) the monitoring of street performers and pier street performer zones; - 2 - (i) the organization of community outreach efforts including the encouragement and protection of public use of the pier, and the conduct of volunteer programs and community awareness campaigns; and (j) other additional services in connection with the Pier as the parties may agree from time to time. 3.2 Standard of Care SMPRC shall furnish its best skill and judgment in the performance of the work so as to achieve a high degree of cost efficiency while maintaining quality performance, and shall cooperate with City in protecting and furthering the best interests of City regarding the management and protection of the Pier and its immediate environment. 4. BUSINESS PLAN AND PIER BUDGET 4.1 Annual Business Plan SMPRC shall prepare and submit to City for City’s approval, at least one hundred twenty (120) days prior to the commencement of each fiscal year, an overall operational, use, and business plan for all activities, policies, and business strategies to be implemented at the Pier by SMPRC for each upcoming fiscal year of City (“Business Plan”). City shall have the sole authority to review and approve each Business Plan, including the annual Pier Budget (as hereinafter defined) contained therein as necessary to implement each approved Business Plan. Each Business Plan shall include, without limitation, each of the following: (a) a summary and schedule for those activities, events, programs, and other areas of responsibility assigned to SMPRC in this Agreement, including, without limitation, those duties concerning Pier advertising, event management, planning and development, leasing guidelines and approvals, sponsorships and licensing, marketing and promotion, special events, film permitting, community outreach, service contracts and insurance; (b) as appropriate, recommendations to City to address traffic, vehicular and pedestrian circulation, parking, safety, and other community concerns arising in the vicinity of the Pier; (c) as appropriate, recommendations to City for any new ordinances or modifications to existing ordinances to improve the Pier and its environs; (d) as appropriate, recommendations to City for amendments or revisions to any plan for the development of the Pier and traffic, circulation and parking modifications affecting the Pier, and capital improvements and budgets therefor; (e) as appropriate, recommendations to City for product and/or service sponsorship programs for the Pier; (f) as appropriate, recommendations to City on levels of staffing for performance of City responsibilities relating to maintenance, repair and leasehold management; and - 3 - (g) a summary of advertising and marketing activities, events and programs to be undertaken by SMPRC on behalf of City if funds are available pursuant to Article 8.1 of this Agreement. 4.2 Annual Pier Budget Together with the annual Business Plan summarized in Article 4.1 above, SMPRC shall prepare and submit to City for Citys approval, at least one hundred twenty (120) days prior to ’ the commencement of each fiscal year, a pro forma operating budget and forecast of income and expenses for implementation and performance of those activities, events, programs, and other areas of responsibility assigned to SMPRC in this Agreement (“Pier Budget”). City shall have the sole authority to review and approve each Pier Budget in accordance Articles 4.2 and 9.1 of this Agreement. For each fiscal year, the Pier Budget shall include, without limitation, each of the following elements: (a) a pro forma forecast of income and expenses considered necessary by the SMPRC to implement the duties and responsibilities assigned to SMPRC in this Agreement including, without limitation, Pier advertising, event management, planning and development, leasing guidelines and approvals, sponsorships and licensing, marketing and promotion, special events, film permitting, community outreach, service contracts and insurance; and (b) a pro forma operating budget setting forth the cost of SMPRC’s operation including, without limitation, the cost of SMPRC’s staff salaries and benefits, out-of-pocket expenses, and costs associated with office operations. The operating budget shall also set forth the estimated cost of SMPRCs advertising and marketing activities which may be performed by ’ SMPRC on behalf of City if funds are available as set forth in Articles 4.2 and 9.1 of this Agreement. 4.3 Business Plan and Pier Budget Review City will consider the Business Plan and Pier Budget, and any recommendations of SMPRC regarding community concerns, ordinances, capital improvements, product and/or service sponsorship programs, and City performance of its responsibilities, and will consult with SMPRC in the period prior to the commencement of each subsequent fiscal year in order to agree upon each Business Plan and Pier Budget. The Pier Budget shall provide sufficient funds for the promotion, marketing, advertising and event management of the Pier in a manner appropriate for a public asset dedicated to recreational, mixed commercial and public uses, as determined in Citys sole discretion and consistent with the Business Plan. ’ 4.4 Implementation of Business Plan and Pier Budget Once approved by City, SMPRC shall implement the Business Plan and Pier Budget and, except as otherwise required by this Agreement or the Business Plan, shall be authorized without the need of further approvals to make the expenditures and incur the obligations provided for in such Business Plan. During any fiscal year, either party may propose an amendment to the Business Plan or Pier Budget based on changed circumstances, which amendment must be approved by City in writing. - 4 - 4.5 Performance Within Pier Budget SMPRC shall use diligence and employ all reasonable efforts to ensure that the actual costs of promoting, marketing and performance of its responsibilities on the Pier shall not exceed the Pier Budget either in total or in any accounting category. Where feasible, SMPRC shall attempt to reduce actual costs of performance of its responsibilities on the Pier below the amounts specified in the Pier Budget. All expenses must be charged to the proper account on the Pier Budget and no expense may be classified or reclassified for the purpose of not accounting for an excess in the annual budgeted amount of an accounting category. Any contract entered into by the SMPRC shall not exceed the length of the then current fiscal year, unless such contract specifies that contractual obligations beyond such fiscal year shall be subject to budgetary and programmatic approval of the City Council. 4.6 Accounts, Books and Records In order to facilitate the management of cash handling, the SMPRC shall maintain an account with the same financial institution utilized by the City (“SMPRC Account”). In addition, the SMPRC shall maintain its books and records in accordance with generally accepted ” accounting principles (“GAAP) will facilitate accurate preparation of necessary fiscal reports and in the form required by the Citys Director of Finance and reasonably acceptable to the City. ’ Such books and records shall be maintained by SMPRC at SMPRCs address set forth below or ’ at such other location as may be mutually agreed upon in writing, and shall be so maintained for a period of ten (10) years after the creation of such books and records (except in the event of an audit, litigation or other proceeding involving such books and records which is not complete within said ten (10) year period, in which case, the books and records shall be maintained until the conclusion of the proceeding), or for such other period as City and SMPRC shall agree. City and its representatives shall have the right of access to audit and to inspect all books and records maintained by SMPRC with respect to the Pier. All audits shall be at City's cost, shall be conducted during normal business hours and shall be conducted at SMPRCs office where such ’ books and records are located or at the Pier. Any audit may be conducted by City’s Director of Finance, City’s direct employees or by independent auditors engaged by City. SMPRC shall cooperate with City's auditors and accountants in any inspection and audit of the books and records and the preparation of financial statements and tax returns. Should an inspection or audit reveal material weaknesses or material errors in record keeping, SMPRC shall immediately correct such weaknesses or errors. SMPRC shall expend commercially reasonable best efforts to control accounting and financial transactions as is reasonably required to protect City’s assets from theft, error or fraudulent activity on the part of SMPRC’s associates or direct employees. 4.7 Accounting Monthly statements of SMPRC operations shall be provided to City within thirty-five (35) days after each month hereunder and shall show payments, collections, delinquencies, uncollectible items, and other matters pertaining to the promotion, marketing and operation of the Pier during the preceding month. The statements shall include a comparison of monthly and year-to-date actual income and expenses with the Pier Budget. SMPRC shall, on a quarterly basis, provide City with an analysis of any significant variances between budgeted and actual - 5 - amounts. Such statements and reports shall be in a form required by City’s Director of Finance or otherwise acceptable to City. 4.8 Copies of Books and Records SMPRC shall maintain, and shall supply to City upon request, copies of the books and records maintained by SMPRC for the Pier, including, but not limited to: (a) All bank statements, bank deposit slips and bank reconciliations; (b) Detailed cash receipts and disbursement records; (c) Detailed trial balance; (d) Paid invoices; (e) Summaries of adjusting journal entries; (f) Supporting documentation for payroll, payroll taxes and employee benefits; and (g) Vouchers, statements and records from all independent contractors engaged by SMPRC. 4.9 Miscellaneous Reports and Information SMPRC shall deliver to City copies of all notices, agendas, and minutes of SMPRC Board meetings, quarterly financial reports of expenditures, and semi-annual reports of all program and promotional activities. In addition, SMPRC shall prepare, from time to time, reports concerning such other matters relating to its responsibilities as City may reasonably request. 5. LEASING 5.1 SMPRC Leasing Responsibilities SMPRCs lease responsibilities shall include the following functions: ’ (a) SMPRC shall review and approve concepts, definitions and parameters from time to time concerning (i) opportunity sites available on the Pier for leasehold occupancy and development, (ii) uses for opportunity sites to be leased, (iii) design and operations standards for Pier lessees and their occupancies, and (iv) general policies for solicitation of tenants and review of leasehold proposals, all of which shall be subject to leasing guidelines prepared by SMPRC and approved by City (“Leasing Guidelines”). SMPRC shall submit to City for Citys approval ’ the Leasing Guidelines as soon as practicable, but in no event later than one hundred twenty (120) days after execution of this Agreement. City shall have the sole authority to review and approve the Leasing Guidelines; (b) SMPRC shall use its commercially reasonable best efforts to assist City to facilitate the leasehold occupancy of all available space on the Pier which is at any time unleased - 6 - during the term of this Agreement in accordance with the Leasing Guidelines. SMPRC shall promptly notify City of any prospective tenants for lease space on the Pier. City may, after consultation with SMPRC, issue requests for proposals for leasehold occupancy and development of available space on the Pier; (c) SMPRC shall keep City informed through periodic reports regarding the names and businesses of all prospective tenant contacts, including inquiries and offers from brokers, advertising and promotional activity, and similar activity and developments, all in such form and detail as City shall reasonably require; (d) SMPRC shall review each proposed lease or lease modification, and shall submit a memorandum to City stating whether the lease or lease modification is consistent with the Leasing Guidelines and approved by SMPRC. No lease or lease modification shall be effective without the prior approval of SMPRC, approval as to form by the City Attorney, and execution by City. However, in the event that any lease agreement becomes the subject of litigation, City shall have sole responsibility for all decisions in connection with the litigation and the requirements of lease review of the SMPRC shall not apply; (e) SMPRC shall review and approve concepts, definitions and parameters for a master vending program for the Pier as part of the Leasing Guidelines and which shall provide for the leasing and/or licensing of vendors to sell merchandise on the Pier (“Vendor Program”). In addition to any requirement of the SMPRC, any such vendors shall be required to comply with all other applicable laws, including the obligation to obtain business licenses and compliance with any other City rules and regulations. The Vendor Program shall specify the vendor solicitation and selection process and the relevant documentation to be used in connection therewith. 5.2 City Leasing Responsibilities SMPRC shall not be responsible for any of the following functions, which shall be the responsibility of City: (a) use commercially reasonable efforts to solicit proposals and identify prospective tenants for occupancy of available space on the Pier for purposes which are reasonably consistent with the Leasing Guidelines and in accordance with city process and policies; (b) negotiate leases and, as deemed necessary in its sole discretion, lease modifications for use of space on the Pier which are reasonably consistent with the Leasing Guidelines; (c) monitor the fulfillment of landlord and tenant obligations pursuant to tenant leases; identify and respond to tenant and landlord issues that arise in the course of the various tenants lease terms; ’ (d) use commercially reasonable efforts to enforce provisions of the tenant leases, and use commercially reasonable efforts to cause all tenants to comply with terms of all easements, restrictions or covenants affecting the Pier and all applicable laws affecting the Pier; - 7 - (e) respond to complaints and requests from tenants related to their leasehold occupancies on the Pier, and respond to complaints and requests from visitors to the Pier related to leasehold occupancies on the Pier; (f) secure from tenants any certificates of insurance, and renewals thereof, required to be furnished by the terms of the leases, and notify the Citys Business License Office in ’ writing of all leases in effect at the commencement of each fiscal year and upon the execution of any lease for occupancy on the Pier; (g) use commercially reasonable efforts to bill and to collect all rents and other charges which may become due at any time from any tenant or from others for services provided in connection with or for the use of the Pier, including tenant and employee parking, tenant storage, common area maintenance charges, and promotion fees; (h) pursue legal actions, as necessary, for the defense and prosecution of leasehold disputes involving the Pier, including, but not limited to, collection of rent or other amounts due to City, dispossession of tenants and other persons from the Pier, and breach of contract actions; (i) administer the solicitation and selection of vendors, and prepare, negotiate, and administer licenses for vendors pursuant to the Vendor Program. 5.3 No Commission No commission or compensation of any kind shall be payable to SMPRC in connection with any lease, sale, or other transfer of the Pier or any portion thereof. 6. SPECIFIC MANAGEMENT RESPONSIBILITIES SMPRC shall use its commercially reasonable best efforts in performing the following specific functions: 6.1 Planning and Development SMPRC shall establish short term and long term planning and development objectives for (a) leasing and continued development, activities, and (b) services to be performed by SMPRC concerning the operation, use, and development of the Pier which objectives shall be incorporated in the Annual Business Plan as set forth in Article 4.1 of this Agreement. 6.2 Sponsorship and Event Underwriting Programs SMPRC and City agree that it may be desirable to involve the Pier with one or more sponsorship or event underwriting programs so as to increase revenues or other resources that may be made available, including, without limitation, in-kind contributions in support of Pier operations, marketing, events and other functions. SMPRC shall be responsible for establishing appropriate concepts and general parameters for any sponsorship and event underwriting programs involving the Pier, and shall be in accordance with the Sponsorship Guidelines developed by SMPRC and approved by the City. Upon approval by the City of the Sponsorship Guidelines, SMPRC shall implement any sponsorship and event underwriting programs pursuant - 8 - to the Sponsorship Guidelines. SMPRC shall have the sole right to solicit, create, manage, and service all sponsorship and event underwriting programs. The sponsorship and event underwriting programs shall be in full compliance with all applicable laws, regulations and ordinances. SMPRC shall provide the City with a full and complete accounting of such revenues on at least a quarterly basis. 6.3 Marketing and Promotion SMPRC shall develop and implement various marketing programs from time to time to enhance the commercial operation and aesthetic quality of the Pier and adjacent areas and to emphasize the Pier's historical and recreational significance. These marketing programs, including without limitation, advertising, promotions, marketing, and media relations relating to the Pier, the Pier logo, and related products, will create public awareness of the various activities and special events relating to the Pier and future development plans concerning the Pier. The SMPRC shall establish appropriate concepts and general parameters for marketing programs involving the Pier, and shall prepare written guidelines (“Marketing Guidelines”) for review and approval by the City as soon as practicable upon the execution of this Agreement. Upon approval by the City of the Marketing Guidelines, SMPRC shall implement such programs. All advertising, promotional materials and marketing programs shall comply with all applicable laws, ordinances and regulations, and all tenant leases. All expenses incurred by the SMPRC related to marketing shall be in accordance with the Business Plan and Pier Budget. 6.4 Special Events SMPRC shall develop and implement various special events from time to time to enhance community participation and enjoyment of the Pier, taking advantage of the Pier's historical and public recreational significance. SMPRC shall establish appropriate concepts, fees and general parameters for special events involving the Pier, and implement such events and coordinate these events with appropriate marketing and promotional programs that meet community guidelines. All special events shall be in compliance with City ordinances, regulations and Special Event Guidelines. For free public events produced by SMPRC, City will waive pier parking lot rental fees and, if otherwise applicable, carousel rental fees, carousel deck rental fees and rental of other City managed event space on the pier deck. 6.5 Filming at the Pier SMPRC and City agree that it may be desirable to permit filming of and/or on the Pier from time to time to create revenues for the Pier and to bring attention to the Pier's historical and recreational significance. SMPRC shall solicit, negotiate, and manage filming rights at the Pier. SMPRC shall be responsible for establishing appropriate concepts, fees and general parameters for permitting such filming involving the Pier, and for implementing SMPRC policies to bring about appropriate filming at the Pier and coordinate any such filming with the daily operation of the Pier so that the interests of the public and the tenants are protected. All filming shall be in compliance with City ordinances, regulations and Filming Guidelines. - 9 - 6.6 Marks SMPRC shall be the exclusive agent for the City to conduct the licensing of the City’s service marks, copyrights, representations, names, logos, artwork, photographs, graphic depictions or other material related to the Pier and the sign affixed to the entrance of the Pier (collectively, the “Marks”). SMPRC shall establish and implement appropriate concepts, fees and general parameters for licensing the Marks consistent with the Marketing Guidelines. This provision is not intended to convey any proprietary interest in the Marks to the SMPRC, and the City shall remain the owner of all proprietary interest in the Marks throughout the term of this Agreement. SMPRC shall honor all currently existing licensing arrangements set forth in the tenant lease agreements. 6.7 Security (a) SMPRC Responsibility. SMPRC shall provide City with recommendations relating to security and public safety issues concerning the Pier. SMPRC shall not be responsible for policing the Pier or for administering any security plan. (b) City Responsibility. City, in its sole and absolute discretion, shall police the Pier and otherwise provide all security for the Pier and its environs. The foregoing shall not be construed to affect any tenant or licensee’s responsibility to provide security with respect to such tenant's premises at the Pier. 6.8 Janitorial/Custodial City shall be responsible for supervising and managing janitorial and custodial services for the Pier. SMPRC shall advise City on concepts and general parameters for such services. 6.9 Repairs and Maintenance The SMPRC shall suggest standards and general parameters for maintenance and repair of the Pier to the City. The City may, in its sole and absolute discretion, adopt the suggestions of the Pier; provided, however, that nothing in this Agreement shall obligate City to undertake or complete such repairs or maintenance. 6.10 Capital Improvements (a) SMPRC Responsibility. As part of or otherwise in accordance with the Business Plan and the goals and policies contained therein, SMPRC shall make recommendations and proposals concerning capital improvements to the Pier, and shall prepare such studies and reports as City may request related thereto. Such proposals shall contain and/or consider economic analyses, parking plans, community needs, and such other concerns as City may designate. (b) City Responsibility. City may, in its sole and absolute discretion, approve recommendations and proposals from SMPRC and implement any capital improvements so approved; provided, however, that nothing in this Agreement shall obligate City to undertake or complete any construction project at the Pier. City shall not implement any capital improvements on the Pier without prior written notice to the SMPRC. - 10 - 6.11 City Inspection SMPRC shall permit and facilitate inspection of the work by City, its representatives, and other public authorities at all times. Failure of City during the term of this Agreement to discover or reject unacceptable work, or work not in accordance with the terms of this Agreement, shall not be deemed an acceptance thereof nor a waiver of City's right to the proper execution of the work or any part of it by SMPRC. 6.12 Street Performer Monitoring SMPRC shall monitor and promote the use of designated Pier street performance zones in a fair and equitable fashion that follows the regulations set forth in the street performer municipal code as it applies to the pier. SMPRC will serve as a liason and coordinator with City. City is responsible for the enforcement of the municipal code. 6.13 Community Outreach SMPRC shall conduct community outreach efforts including but not limited to, volunteer programs, education programs, community fundraising, and community events. In addition SMPRC shall work to improve public awareness of pier history and resources available for public and community use. 7. METHODS OF OPERATION 7.1 Contracting All service contracts for expenditures included within the Pier Budget shall be paid by SMPRC from funds provided by City pursuant to this Agreement. Without relieving it of its obligations hereunder, SMPRC shall be entitled, at its expense, to enter in its own name into such subcontracts with third parties to perform any of the functions which are the subject of this Agreement and the Business Plan. However, all other contracts with respect to the Pier and all tenant leases shall be executed by City except (a) in the event that City directs SMPRC to act as agent for City for such purpose or (b) as otherwise set forth in the Business Plan. Upon any termination of this Agreement, SMPRC shall, if and to the extent requested by City, assign all assignable contracts executed by SMPRC to City. 7.2 Compliance with Laws (a) In performing all of the services provided by SMPRC pursuant to this Agreement and any exhibits hereto, SMPRC shall be responsible for compliance with: (i) all applicable federal, state and municipal laws, ordinances, regulations and orders; (ii) applicable laws and regulations relating to workers' compensation, social security, unemployment insurance, hours of labor, wages, working conditions and other employer-employee related subjects; and (iii) the rules, regulations or orders of the local Board of Fire Underwriters or other similar body. SMPRC shall promptly remedy any violation of any such law, ordinance, rule, regulation or order which comes to its attention. Expenses incurred by SMPRC in so complying and in correcting any such violation shall be included in the Pier Budget, provided, SMPRC shall be solely responsible for any fine or other cost or penalty imposed upon City stemming from - 11 - SMPRC's failure to comply with any law, ordinance, rule or regulation, provided that the City, in its fiduciary capacity, does not cause such violation (or prevent SMPRC’s compliance therewith). (b) SMPRC agrees that, for the purpose of compliance with the requirements of the Occupational Safety and Health Act of 1970, as amended (“OSHA”), work performed on the Pier by or under the supervision of SMPRC shall be deemed entirely within SMPRC’s responsibility. SMPRC will notify City promptly, in writing, if SMPRC observes an unsafe condition on the Pier, or if a charge of non-compliance with OSHA has been filed or to SMPRC’s knowledge threatened to be filed against SMPRC or City in connection with the Pier. 7.3 Employment of Personnel (a) In accordance with the Business Plan, SMPRC shall have in its employ at all times during the term of this Agreement a sufficient number of capable employees to enable it to properly, adequately and economically perform its responsibilities consistent with this Agreement and the standards contained herein. All matters pertaining to the employment, supervision, compensation, promotion and discharge of such employees, as well as union negotiation and compliance with laws and regulations dealing with employee matters, are the responsibility of SMPRC, which is in all respects the employer of such employees. SMPRC shall be responsible to City for the acts and omissions of its agents and employees, each acting within the scope of his or her relationship with SMPRC. If SMPRC enters into contracts with independent contractors, SMPRC shall require that each independent contractor comply with the provisions of Article 10, below, and be responsible to SMPRC and City for the acts and omissions of the independent contractor's agents and employees. For security purposes, SMPRC shall use commercially reasonable efforts to screen persons employed by SMPRC prior to employment and giving them access to the Pier. SMPRC shall ensure that all of its employees understand that they are the employees of SMPRC and not City. The wages, salaries and other compensation paid to employees and independent contractors of the SMPRC shall be paid by SMPRC from the Pier Budget. (b) SMPRC shall provide equal opportunity employment to all people without regard to race, religion, color, sex, marital status, national origin, age, disability, the condition of having AIDS and/or sexual orientation. SMPRC shall provide City with a copy of its personnel policies manual which sets forth the policies governing the transactions between employees and prospective employees and SMPRC relating to employment benefits and other personnel-related activities. 8. FINANCIAL MATTERS 8.1 SMPRC Account Funds shall be transferred from City into a SMPRC Account (“SMPRC Account”) in advance as requested by SMPRC from time to time, typically on a quarterly basis, sufficient to cover the amounts expendable pursuant to this agreement or the Business Plan. SMPRC shall also deposit all revenue and income received by or for the SMPRC from sponsorship fees, licensing fees, filming fees and event revenue into the SMPRC Account. SMPRC shall identify - 12 - all such revenue and income by source and provide a report to the City, on a quarterly basis, identifying the revenue and income. Under no circumstances shall the aggregate amount of draws from the SMPRC Account exceed the approved annual Pier Budget in any fiscal year. It is understood the periodic amounts deposited into the SMPRC Account may fluctuate, as income varies, provided all such funding shall be in accordance with the Business Plan and the approved Pier Budget. The SMPRC Account shall be in a separate bank account established by SMPRC at a bank utilized and approved by the City. All funds so deposited shall be held in trust for City, and shall be disbursed in accordance with this Agreement and the Business Plan. SMPRC shall pay from the SMPRC Account all expenses of the SMPRC for which it is responsible under this Agreement. 8.2 Payment of Bills SMPRC shall pay promptly all expenses it incurs in the performance of this Agreement and agrees to hold City harmless from and against any claim or liability on account of nonpayment of such expenses when properly due and payable and so long as there are sufficient amounts in the SMPRC Account to cover such expenses. Upon demand, or on expiration or earlier termination of this Agreement, SMPRC will pay over promptly to City any balance remaining in the SMPRC Account, after deducting any sums properly due and owing to SMPRC hereunder, subject to Article 10.3 hereof, and shall remove its name as a signatory on the SMPRC Account and shall submit an itemized accounting of such sums together with such supporting data as City may reasonably require. 8.3 Deposit of Revenues SMPRC shall deposit all revenue and income received by or for the SMPRC from parking fees for special events with Resource Management Department of the City no later than fifteen business days following receipt of such revenues and income. SMPRC shall identify all such income and revenue by source and provide a report to the City identifying the revenue or income. 8.4 Participation in Marketing Funds The term “Marketing Fees” shall mean and refer to funds deposited by SMPRC into the SMPRC Account from revenue and income received by the SMPRC from sponsorship fees and licensing fees in each fiscal year. During the term of this Agreement, City shall receive from the SMPRC an amount in any fiscal year based on the following: The amount equivalent to twenty-five percent (25%) of the Marketing Fees in excess of $100,000 in any fiscal year (the “Annual Marketing Payment”). The Annual Marketing Payment shall be payable within ninety (90) days after the end of each fiscal year. 9. FUNDING OF SMPRC 9.1 Funding City shall fund the SMPRC each fiscal year through Citys normal budgetary process as ’ necessary for SMPRC to perform its services pursuant to this Agreement. SMPRC shall submit - 13 - its budget requests annually with its Business Plan, allowing City staff adequate time to incorporate such request through Citys normal budget process, and City shall approve or ’ disapprove the same in a timely manner allowing SMPRC adequate time to avoid unnecessary disruption of regular SMPRC operations. Nothing herein shall be deemed to obligate City to approve funding for any particular expense or program. 9.2 Employee Compensation SMPRC shall pay for the compensation of its employees from the Pier Budget. SMPRC agrees to compensate its employees on the following basis: (a) The number, job classifications, general duties and salaries of employees of SMPRC shall be determined by SMPRC. All wages, salaries, and other compensation shall be reasonable in amount and shall be paid by SMPRC from funds provided by City pursuant to the Pier Budget and this Agreement. (b) SMPRC shall make disbursements and deposits for all compensation and other amounts payable with respect to persons employed by SMPRC in the performance of its responsibilities on the Pier. The amounts so payable shall include, but not be limited to, wages, salaries, and other compensation, unemployment insurance, social security, worker’s compensation, employee benefit packages, payroll processing, recruiting agency fees and other charges imposed by a governmental authority or provided for in a union agreement. SMPRC shall maintain complete payroll records. 9.3 Out-of-Pocket Expenses, Office and Other Services In accordance with the approved Pier Budget, SMPRC shall be entitled to funds from City for reasonable direct out-of-pocket expenses including, but not limited to, normal office expenses and business and local travel expenses associated with operating an on-site business office at the Pier. Further, in accordance with the approved Pier Budget, City shall provide for SMPRCs use an adequately furnished management office in the Pier, to be utilized directly for ’ the benefit of the Pier, together with telephone service, janitorial service, printed forms and customary office supplies and equipment (such as typewriters, computers, photocopying equipment and calculators). The method of furnishing and equipping such office, and the total cost thereof, shall be determined by City from time to time taking into consideration the recommendations of SMPRC and shall be set forth in the approved Business Plan and Pier Budget. 9.4 Payment and Record of Expenses Payment of the expenses of the SMPRC set forth in this Agreement, subject to the provisions of the Pier Budget, shall be made from the SMPRC Account described in Article 8.1 above. A detailed summary of such expenses shall be included on SMPRC’s regular accountings to City. - 14 - 9.5 Role of SMPRC The parties expressly acknowledge that SMPRC is not acting as a real estate broker or real estate agent for City, and the SMPRC is not providing any services for which a real estate broker's or salesperson’s license is required pursuant to the California Business and Professions Code. 9.6 Matters Beyond SMPRC Responsibility SMPRC shall not be responsible for the payment of any property taxes, assessments, or other costs associated with the ownership of the Pier, except as may be specifically required to be paid by SMPRC pursuant to this Agreement or the Business Plan or as otherwise required or approved and funded by City. 9.7 Reversion of Property Any assets, including without limitation furniture, equipment, and supplies, purchased with funds obtained by SMPRC from any source pursuant to the Pier Budget shall revert to City at the termination of this Agreement, unless a new agreement is entered into between City and SMPRC for a purpose similar to this Agreement. 10. INDEMNIFICATION AND INSURANCE 10.1 Indemnity by City It is understood between the parties that SMPRC insurance set forth in Section 10.2, Deleted: BDC below, shall be the primary insurance in connection with the Indemnified Claims defined below. To the extent that SMPRC insurance does not cover any such Indemnified Claim, the City agrees to indemnify, save, protect, defend and hold harmless SMPRC and its officers, directors, agents and employees (collectively, the “SMPRC Indemnitees”) from any liability, claim, action, proceeding, loss, damage, cost, expense, or injury to persons or property (collectively, “Indemnified Claim”) arising directly or indirectly from or in any manner related to this Agreement or the performance thereof. SMPRC shall promptly notify the City of any Indemnified Claim and cooperate with the City in connection with the defense of such Indemnified Claim. The SMPRC Indemnitees must first seek coverage for any defense and indemnity with respect to the Indemnified Claim from SMPRC’s insurer and must either exhaust such coverage or be denied such coverage. To the extent coverage from such insurer has been exhausted or coverage has been denied, the City shall defend the SMPRC Indemnitees from such Indemnified Claim, at the City’s sole cost and expense through the Santa Monica City Attorney’s Office, subject to any reservation of rights under this Agreement. Notwithstanding the foregoing, the City shall not be required to indemnify any SMPRC Indemnitee against any Indemnified Claim caused by the gross negligence or willful misconduct on the part of such SMPRC Indemnitee. 10.2 SMPRC’s Insurance SMPRC shall procure and maintain for the duration of this Agreement the following - 15 - insurance against claims for injuries to persons or damages to property which may arise from or in connection with SMPRC’s services performed under this Agreement. A. Minimum Scope and Limits of Insurance 1. Commercial General Liability - One million dollars ($1,000,000) per occurrence for bodily injury, personal injury and property damage. 2. Non-Profit Directors and Officers Liability - One million dollars ($1,000,000) per occurrence/$1,000,000 aggregate. 3. Workers’ Compensations and Employer’s Liability – limits as required by the Labor Code of the State of California and Employer’s Liability limits of one million dollars ($1,000,000) per accident. 4. Crime – a comprehensive crime coverage policy with a minimum limit of one hundred thousand dollars ($100,000). Coverage to include (i) employee dishonesty (to include employees and board members), (ii) monies and securities coverage both inside and outside premises, and (iii) depositors forgery coverage. 5. Property Insurance – “All Risk” policy in an amount no less than 100% full replacement value of SMPRC’s contents, inventory, and equipment. 6. Non-Owned and Hired Auto Liability – One million dollars ($1,000,000) per occurrence each accident. B. Other Insurance Provisions (General and Auto Liability Insurance Only). The City of Santa Monica, Members of its City Council, Boards and commissions, officers, agents, employees, and volunteers are to be covered as additional insured’s as respects liability arising from services provided by SMPRC under this Agreement. C. All Coverages 1. SMPRC’s insurance coverage shall be primary insurance as respects the City of Santa Monica, members of its City Council, boards and commissions, officers, agents, employees, and volunteers. Any insurance or self-insurance maintained by the City, its officials, employees, and volunteers shall be excess of SMPRC’s insurance and shall not contribute with it. 2. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be canceled, except after (30) days prior written notice by certified mail, return receipt requested, has been given to the City. D. Deductibles and Self-Insured Retentions. Any deductibles, or self-insured retentions must be declared to and approved by the City. - 16 - E. Waiver of Subrogation. The Insurer (for property and workers’ compensation insurance only) shall agree to waive all rights of subrogation against the City, its officers, officials, employees, and volunteers for losses arising from activities and operations of SMPRC. F. Acceptability of Coverage. Insurance is to be placed with insurers admitted to do business in the State of California. If non-admitted insurers are used, they must have an A.M. Best’s rating of A:6 or higher. G. Verification of Coverage. SMPRC shall furnish the City with certificates of insurance required by this clause. The certificates are to be signed by a person authorized by that insurer to bind coverage on its behalf. The certificates are to be on forms provided by the City and are to be received and approved by the City before the Agreement is effective. If the insurance company will not use the City forms, SMPRC may provide as an alternative complete copies of all required insurance polices, including endorsements effecting the coverage required by these specifications. H. Modifications to Insurance Requirements. The City’s Risk Manager must approve any modifications to the scope or amount of insurance required in this section, in writing and in advance. 10.3 Third Party Indemnity Except as otherwise approved in writing by the City, SMPRC shall require that all persons it employs hereunder (other than common law employees) indemnify and save City, its City Council, its boards and commissions, its agents, representatives, employees, and lenders designated by City, SMPRC and their respective officers, directors, agents, employees, and affiliates harmless from, and defend them against, all liabilities, losses and claims, and reimburse them for all expenses they incur (including the costs of litigation and reasonable attorneys' fees) on account of personal injury or death to persons and damage to property which occurs on the Pier, to the extent caused by the misconduct or wrongful or negligent act or omission of such independent contractor, or employees or agents of such independent contractor, arising from or related to the performance of work or services it performs on or about the Pier, or from such contractor's property. Each independent contractor that SMPRC employs hereunder shall pay for and defend any and all suits or actions threatened or instituted against SMPRC or City, its City Council, its boards and commissions, its agents, representatives, employees, and its lenders designated by City, and shall pay all reasonable attorneys' fees, litigation costs and all other expenses in connection therewith, and shall promptly discharge any judgments arising therefrom. These conditions shall also apply to any work or operations subcontracted by such contractors. Such provisions shall expressly survive the expiration of any contracts in which they are contained. 10.4 City’s Insurance City may self-insure or may carry, at its own expense, property damage and public liability insurance for the Pier if and to the extent that City determines in its sole discretion that such insurance is reasonably required. SMPRC and its officers, directors, and employees shall - 17 - be named insureds under these insurance policies to the same extent that the Councilpersons of the City Council of City are insured. 11. TERM OF AGREEMENT 11.1 Term The initial term of this Agreement shall commence upon the Execution Date, and shall continue for a period of two (2) years thereafter unless terminated earlier pursuant to Article 11.2. This Agreement shall automatically be renewed upon provisions identical to those contained herein (unless modified by mutual agreement of the parties) for successive periods of one (1) year each unless either SMPRC or City, in its discretion, elects not to renew this Agreement by written notice to the other party at least 30 days prior to the expiration of the initial term and of each renewal term of this Agreement. 11.2 Early Termination Notwithstanding the provisions of Article 11.1, this Agreement may be terminated prior to the expiration of the initial term or any renewal thereof upon the occurrence of any of the following events: (a) Either party may terminate this Agreement, without cause, upon six (6) months prior written notice; or (b) This Agreement shall terminate upon the closing of a sale or exchange by City of its entire interest in the Pier or City's right to collect the income therefrom, unless City's transferee elects prior to such closing, by written notice consented to by SMPRC, to assume the obligations of City pursuant to this Agreement; or (c) This Agreement may be terminated by City, by at least thirty (30) days’ written notice to SMPRC, upon the destruction of a substantial part of the Pier, or if the Pier is rendered untenantable in whole or in part, by fire or other casualty, provided that City does not thereafter proceed with the reconstruction of the Pier. If City does so proceed to commence the reconstruction of the Pier, or any portion thereof, within eighteen (18) months after such destruction, this Agreement shall immediately again become effective and binding on both parties; or (d) Upon thirty (30) days prior written notice to SMPRC, City may terminate this ’ Agreement at any time for "cause," as such term is hereafter defined. The term "cause" as used herein in connection with the termination of this Agreement shall mean: (1) The failure of SMPRC to comply with any provisions of this Agreement, where such failure is not cured by SMPRC within thirty (30) calendar days after written notice thereof from City (or such longer period of time as may be needed in the exercise by SMPRC of due diligence to effect a cure of such failure); (2) The material failure by SMPRC to exercise the level of managerial skill and efficiency required under this Agreement, where such failure is not cured by SMPRC - 18 - within thirty (30) calendar days after written notice thereof from City (or such longer period of time as may be needed in the exercise by SMPRC of due diligence to effect a cure of such failure); or (3) Fraud, misrepresentation or breach of trust or the intentional breach of a material provision of this Agreement by SMPRC. 11.3 Obligations Upon Termination Upon the termination of this Agreement by any means: (a) City shall remain bound by and indemnify SMPRC against obligations and expenses on all contracts, commitments and purchase orders placed or made by SMPRC within SMPRC’s authority hereunder, up to the effective date of termination. City shall remain obligated to SMPRC for all funding, payments, reimbursements, and other compensation due to SMPRC pursuant to the Business Plan and this Agreement up to the effective date of termination; provided, however, City may withhold such unpaid amounts if this Agreement is terminated because of the willful misconduct, fraud, misrepresentation, or breach of trust by SMPRC, pending resolution of damages City has incurred, if any, because of such act or omission by SMPRC. (b) Upon City's payment to SMPRC of all funding, payments, reimbursements, and other compensation due to SMPRC pursuant to the Business Plan and this Agreement through the date of termination, less any offset due City under Article 8.4, SMPRC shall have no further rights, duties, liabilities or obligations whatsoever under this Agreement and City shall have only those rights which may arise hereunder or at law or in equity due to a breach of this Agreement by SMPRC. (c) SMPRC shall remain obligated: (1) To render to City a final accounting of income and expenses of the Pier as provided in this Agreement. (2) To deliver to City all income and all security deposits from the Pier for which SMPRC is responsible hereunder, if any. If any dispute exists between City and SMPRC concerning the payment of unpaid amounts, payment or reimbursement of expenses or other amounts to be paid under this Agreement as of the date of termination, SMPRC shall deposit the disputed amount (if in SMPRCs possession) on the date of ’ termination into an escrow account with an independent escrow holder which requires the agreement of both City and SMPRC to release the funds. (3) To deliver to City all keys, records, contracts, receipts, unpaid bills and other documents relative to the Pier and in SMPRC’s possession at the date of termination and to assign to City all of its rights and obligations in purchase orders, contracts, warranties, and other commitments which City requests that it assign. (d) All personal property (including but not limited to equipment, hardware, trade and non-trade fixtures, materials and supplies) acquired pursuant to this Agreement - 19 - or the Business Plan, whether paid for directly by City or by way of reimbursement to SMPRC, shall become the property of City and shall remain on the Pier at the termination of this Agreement. This Article shall survive the expiration or earlier termination of this Agreement. 12. GENERAL PROVISIONS 12.1 Notices All notices, approvals, demands, reports and other communications provided for in this Agreement (individually, a “Notice”) shall be in writing and shall be given to such party at its address set forth below or such other address as such party may hereafter specify for the purpose by Notice to the other party listed below. Each Notice shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by certified or registered mail, return receipt requested, deposited with the United States Mail with first-class postage prepaid, seventy-two (72) hours after such Notice is deposited with the United States Mail, (c) if given by overnight courier with overnight courier charges prepaid, twenty-four (24) hours after delivery to said overnight courier, or (d) if given by any other means, upon delivery when delivered at the following address: If to City: Office of the City Manager of the City of Santa Monica 1685 Main Street, Room 209 Santa Monica, California 90401 Attention: City Manager with a copy to: City of Santa Monica Resource Management Department 3223 Donald Douglas Loop South Santa Monica, California 90405 Attention: Economic Development Manager and Santa Monica City Attorneys Office ’ 1685 Main Street, Third Floor Santa Monica, California 90401 Attention: City Attorney If to SMPRC: Santa Monica Pier Restoration Corporation 200 Santa Monica Pier Santa Monica, California 90401 Attention: Executive Director - 20 - 12.2 Attorneys’ Fees If any action, arbitration or proceeding be commenced (including an appeal thereof) to enforce any of the provisions of this Agreement or to enforce a judgment, whether or not such action is prosecuted to judgment ("Action"), (a) the unsuccessful party therein shall pay all reasonable costs incurred by the prevailing party therein, including reasonable attorneys' fees and reasonable costs, court costs and reimbursements for any other expenses incurred in connection therewith in an amount equal to the fair market value of legal services provided by attorneys (authorized to provide such services) employed by it as well as any attorneys fees actually ’ incurred for outside counsel by the prevailing party, and (b) as a separate right, severable from any other rights set forth in this Agreement, the prevailing party therein shall be entitled to recover its reasonable attorneys fees and costs incurred in enforcing any judgment against the ’ unsuccessful party therein, which right to recover post-judgment attorneys' fees and costs shall be included in any such judgment. The right to recover post-judgment attorneys fees and costs ’ shall (1) not be deemed waived if not included in any judgment, (2) survive the final judgment in any Action, and (3) not be deemed merged into such judgment. The rights and obligations of the parties under this Article 12.2 shall survive the termination of this Agreement. 12.3 Prohibition Against Transfers Except for the retention of consultants, contractors or other third parties to assist the SMPRC in providing the management services required hereunder, SMPRC shall not assign, hypothecate, or transfer this Agreement or any interest therein directly or indirectly, by operation of law or otherwise without the prior written consent of City, which may be withheld at the Citys sole discretion. Any attempt to do so without the Citys consent shall be null and void, ’’ and any assignee, hypothecatee or transferee shall acquire no right or interest by reason of such attempted assignment, hypothecation or transfer. This Agreement and the rights and obligations of the City hereunder shall not be assignable by the City, voluntarily or by operation of law. 12.4 Non-Discrimination Any contracts or agreements entered into or hiring by SMPRC shall comply with Title VI of the Civil Rights Act of 1964 (Public Law 88-352), as applicable. Any contracts awarded by SMPRC shall comply with the terms of this Article 12.4. 12.5 Amendments All amendments to this Agreement shall be in writing and executed by both parties. 12.6 Governing Law This Agreement shall be governed by and construed in accordance with the laws of the State of California. 12.7 Cooperation Should any claim, demand, action or other legal proceeding arising out of matters covered by this Agreement be made or instituted by any third party against a party to this - 21 - Agreement, the other party to this Agreement shall furnish such information and reasonable assistance in defending such proceeding as may be requested by the party against whom such proceeding is brought. 12.8 Waiver of Rights The failure of City or SMPRC to seek redress for violations, or to insist upon the strict performance of any covenant, agreement, provision or condition of this Agreement, shall not constitute a waiver of the terms of such covenant, agreement, provision or condition at any subsequent time, or of the terms of any other covenant, agreement, provision or condition contained in this Agreement. 12.9 Subordination This Agreement shall not provide SMPRC with any interest in the Pier or right of possession and shall be and remain absolutely and unconditionally subordinate to any valid recorded mortgage on the Pier whether already or hereafter recorded. The subordination of this Agreement shall require the execution of no further documentation, but SMPRC agrees to execute any reasonable subordination agreement or consent to any assignment of this Agreement for security purposes which City or any lender of City requests SMPRC to execute. 12.10 No Recourse Any other provisions of the Agreement notwithstanding, the parties agree that there shall be no recourse against any employee, officer, director, agent, representative or affiliate of City or SMPRC, including without limitation the City Council and the SMPRC Board, for any payments due, or the enforcement of any obligations under this Agreement; each party's liability under this Agreement shall be limited to the amount which can be recovered from such party’s assets. 12.11 Severability If any provision of this Agreement or the application thereof to any person or circumstances shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provisions to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. 12.12 No Third Party Beneficiary Without limiting the rights of any secured lender which receives an assignment of City's interest hereunder for security purposes, this Agreement is made solely and specifically between and for the benefit of the parties hereto, and no other person whatsoever shall have any rights, interest, or claims hereunder or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise. 12.13 No Lien This Agreement does not create a lien of any kind upon the Pier or any other real or personal property. - 22 - 12.14 Integration Subject to any currently existing Business Plan, this Agreement and any Exhibits attached hereto and made a part hereof set forth the entire agreement and understanding of the parties with respect to the subject matter hereof, supersede and take the place of any and all previous agreements entered into between the parties hereto relating to the subject matter of this Agreement. 12.15 Nuisance SMPRC shall not maintain, commit, or permit the maintenance or commission of any nuisance on the Pier in connection with the performance of services under this Agreement. IN WITNESS WHEREOF, City and SMPRC have executed this Agreement as of the day and year first above written. CITY OF SANTA MONICA, a municipal corporation By: _______________________________ SUSAN E. McCARTHY City Manager APPROVED AS TO FORM: ________________________________ MARSHA JONES MOUTRIE City Attorney ATTEST: ______________________________ MARIA STEWART City Clerk SANTA MONICA PIER RESTORATION CORPORATION, a non-profit public benefit corporation By: ________________________________ Name: _____________________________ Title: ______________________________ By: ________________________________ Name:______________________________ Title:_______________________________ - 23 - EXHIBIT "A" DESCRIPTION OF PIER - i - TABLE OF CONTENTS Page 1. RECITALS......................................................................................................................1 2. ASSIGNMENT AND AUTHORITY OF SMPRC...........................................................2 3. GENERAL RESPONSIBILITIES...................................................................................2 3.1 General..................................................................................................................2 3.2 Standard of Care.....................................................................................................3 4. BUSINESS PLAN AND PIER BUDGET........................................................................3 4.1 Annual Business Plan.............................................................................................3 4.2 Annual Pier Budget................................................................................................4 4.3 Business Plan and Pier Budget Review...................................................................4 4.4 Implementation of Business Plan and Pier Budget..................................................4 4.5 Performance Within Pier Budget............................................................................5 4.6 Accounts, Books and Records................................................................................5 4.7 Accounting.............................................................................................................5 4.8 Copies of Books and Records.................................................................................6 4.9 Miscellaneous Reports and Information..................................................................6 5. LEASING.......................................................................................................................6 5.1 SMPRC Leasing Responsibilities...........................................................................6 5.2 City Leasing Responsibilities.................................................................................7 5.3 No Commission......................................................................................................8 6. SPECIFIC MANAGEMENT RESPONSIBILITIES........................................................8 6.1 Planning and Development.....................................................................................8 6.2 Sponsorship and Event Underwriting Programs......................................................8 6.3 Marketing and Promotion.......................................................................................9 6.4 Special Events........................................................................................................9 6.5 Filming at the Pier..................................................................................................9 6.6 Marks...................................................................................................................10 6.7 Security................................................................................................................10 6.8 Janitorial/Custodial...............................................................................................10 6.9 Repairs and Maintenance......................................................................................10 6.10 Capital Improvements......................................................................................10 6.11 City Inspection.................................................................................................11 6.12 Street Performer Monitoring............................................................................11 6.13 Community Outreach.......................................................................................11 7. METHODS OF OPERATION.......................................................................................11 7.1 Contracting..........................................................................................................11 7.2 Compliance with Laws.........................................................................................11 i 7.3 Employment of Personnel....................................................................................12 8. FINANCIAL MATTERS..............................................................................................12 8.1 SMPRC Account..................................................................................................12 8.2 Payment of Bills...................................................................................................13 8.3 Deposit of Revenues.............................................................................................13 8.4 Participation in Marketing Funds..........................................................................13 9. FUNDING OF SMPRC.................................................................................................13 9.1 Funding................................................................................................................13 9.2 Employee Compensation......................................................................................14 9.3 Out-of-Pocket Expenses, Office and Other Services.............................................14 9.4 Payment and Record of Expenses.........................................................................14 9.5 Role of SMPRC...................................................................................................15 9.6 Matters Beyond SMPRC Responsibility...............................................................15 9.7 Reversion of Property...........................................................................................15 10. INDEMNIFICATION AND INSURANCE...................................................................15 10.1 Indemnity by City............................................................................................15 10.2 SMPRC’s Insurance.........................................................................................15 10.3 Third Party Indemnity......................................................................................17 10.4 City’s Insurance...............................................................................................17 11. TERM OF AGREEMENT.............................................................................................18 11.1 Term................................................................................................................18 11.2 Early Termination............................................................................................18 11.3 Obligations Upon Termination.........................................................................19 12. GENERAL PROVISIONS............................................................................................20 12.1 Notices.............................................................................................................20 12.2 Attorneys’ Fees................................................................................................21 12.3 Prohibition Against Transfers...........................................................................21 12.4 Non-Discrimination..........................................................................................21 12.5 Amendments....................................................................................................21 12.6 Governing Law................................................................................................21 12.7 Cooperation.....................................................................................................21 12.8 Waiver of Rights..............................................................................................22 12.9 Subordination...................................................................................................22 12.10 No Recourse.....................................................................................................22 12.11 Severability......................................................................................................22 12.12 No Third Party Beneficiary..............................................................................22 12.13 No Lien............................................................................................................22 12.14 Integration........................................................................................................23 12.15 Nuisance..........................................................................................................23 ii