HomeMy WebLinkAbout07-080 CC Resolution
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RESOLUTION NO. 07-80
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF TEMECULA APPROVING THAT CERTAIN
AGREEMENT ENTITLED "OPERATING COVENANT
AGREEMENT (PROFESSIONAL HOSPITAL SUPPLY) BY
ANO BETWEEN THE CITY OF TEMECULA AND
PROFESSIONAL HOSPITAL SUPPLY, INC."
THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE
AS FOLLOWS:
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1. Recitals. The City Council does hereby find determine and declare that:
A. The City and Professional Hospital Supply, Inc. ("PHS") propose to
enter into that certain agreement entitled: "Operating Covenant Agreement
(Professional Hospital Supply) by and between the City of Temecula and Professional
Hospital Supply, Inc." ("Agreement") that will provide for the deferral of approximately $2
million in development fees to the City in return for PHS expanding its facility in
Temecula, adding additional employees and agreeing to maintain its point of sale for
sales taxes in the City of Temecula.
B. Professional Hospital Supply, Inc., ("PHS") is a California
corporation engaged in the commercial business of supplying, packaging,
manufacturing, distributing, and delivering medical and surgical supplies. PHS currently
services the southern California market area from facilities located in the City at 41980
Winchester Road, 41995 Zevo Drive, and 43225 Business Park Drive and, at which it
employs 1,100 persons, and from which it generates substantial sales tax revenue for
the City.
C. As part of PHS's ongoing efforts to expand its operations in
southern California, it plans to relocate its operations to a new facility ("Temecula
Facility") to be built on approximately 32 acres within the City, generally located at the
corner of Winchester Road and Dendy Parkway, pursuant to a Development Agreement
between the City, Temecula Properties LLC, and PHS, dated as of September 25,
2007. The estimated cost of the Temecula Facility is $59 million.
D. PHS expects to employ an additional approximately 300 persons at
the Temecula facilities over the next five (5) years above and beyond those persons it
currently employs in the City.
E. PHS and the City desire to provide for PHS' continued operation of
its business within the City.
F. The City Council finds and determines that performance of the
City's obligations under this Agreement and the undertakings of PHS required by this
Agreement will promote the public health, safety, and welfare of the citizens of the City
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and will be of substantial economic benefit to the City as the Agreement will: (1)
generate new short term and long term quality employment opportunities within the City;
(2) generate new tax revenues that will assist the City in funding public services for the
residents and businesses within the City; (3) preserve and enhance the job/housing
balance described in the City's General Plan and various regional plans; (4) develOp
new and expanded commercial and business facilities; (5) expand and enhance the
City's tax base through increased property values and consumer purchasing; and (6)
promote the stability and diversification of the City's economy.
G. The City Council further finds and determines that the Agreement is
a lawful and valid exercise of the City's powers under the laws of the State of Califomia.
H. This Agreement places no obligation on the City beyond the year of
its execution unless and until: (1) PHS or the Developer become obligated to pay any
Development Impact Fee related to the Temecula Facility, and (2) PHS continues in
business and maintains its Transaction Point for all PHS Business in the State of
California within the City.
I. On September 25, 2007 the City Council adopted Resolution No.
07-76 entitled: "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TEMECULA APPROVING A MITIGATED NEGATIVE DECLARATION FOR THE
TEMECULA PROPERTIES LLC/PROFESSIONAL HOSPITAL SUPPLY PROJECT ON
AN 84-ACRE SITE LOCATED AT THE NORTHWEST CORNER OF DENDY
PARt<JNAY AND WINCHESTER ROAD AS A FUTURE SPECIFIC PLAN AREA (APN
909-370-018 AND 909-370-032) WHICH CONSISTS OF PLANNING APPLICATIONS
NO. PA07-0048, A GENERAL PLAN AMENDMENT, PA07-0220, A DEVELOPMENT
AGREEMENT; PA06-0370, A TENTATIVE MAP, AND PA06-0369 AND PA07-0090, A
DEVELOPMENT PLAN WITH A MINOR EXCEPTION." This Resolution approved the
Mitigated Negative Declaration for the physical development of the property described
therein, including the PHS Facilities. No further action under the California
Environmental Quality Act is required for the Agreement as the Agreement pertains only
to financial matters associated with the physical development described in the Mitigated
Negative Declaration.
J. All legal prerequisites to the adoption of this Resolution have
occurred.
K. This Agreement is a contract within the meaning of Section
53511 (a) of the California Government Code and therefore subject to a validation action
pursuant to Section 860 of the California Code of Civil Procedure.
2. Aooroval of Aareement. The City Council of the City of Temecula hereby
approves that certain agreement entitled "Operating Covenant Agreement (Professional
Hospital Supply) by and between the City of Temecula and Professional Hospital
Supply, Inc." ("Agreement"), with such changes to the Agreement as may be mutually
agreed upon by PHS and the City Manager and which are in substantial conformance
with the form of such Agreement attached hereto as Exhibit A. The Mayor is hereby
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authorized to execute the Agreement on behalf of the City. A copy of the final
Agreement when executed by the Mayor and PHS shall be placed on file in the Office of
the City Clerk.
3. Authority of City Manaaer. The City Manager (or his designee), is hereby
authorized, on behalf of the City, to take all actions necessary and appropriate to carry
out and implement the Agreement and to administer the City's obligations,
responsibilities and duties to be performed under the Agreement, including but not
limited to, approval and execution on behalf of the City of acceptances, certificates,
certificates of completion and such other implementing agreements and documents as
contemplated, necessary or described in the Agreement.
4. Certification. The City Clerk shall certify to the adoption of this Resolution.
This Resolution shall take effect upon its adoption.
PASSED, APPROVED, AND ADOPTED by the City Council of the City of
Temecula this 25th day of September, 2007.
Chuck
ATTEST:
[SEAL]
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STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss
CITY OF TEMECULA )
I, Susan W. Jones, MMC, City Clerk of the City of Temecula, do hereby certify that
the foregoing Resolution No. 07-80 was duly and regularly adopted by the City Council of
the City of Temecula at a meeting thereof held on the 25th day of September, 2007, by the
following vote:
AYES: 5
COUNCIL MEMBERS:
Comerchero, Edwards, Naggar, Roberts,
Washington
NOES: 0
COUNCIL MEMBERS:
None
ABSENT: 0
COUNCIL MEMBERS:
None
ABSTAIN: 0
COUNCIL MEMBERS:
None
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. Jones, MMC
City Clerk
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OPERATING COVENANT AGREEMENT
(Professional Hospital Supply)
by and between the
CITY OF TEMECULA,
a California municipal corporation and general law city,
and
PROFESSIONAL HOSPITAL SUPPLY, INC.,
Dated as of September 25, 2007 for reference purposes only.
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CITY OF TEMECULA
OPERATING COVENANT AGREEMENT
(professional Hospital Supply)
THIS OPERATING COVENANT AGREEMENT (Professional Hospital Supply) (this
"Agreement") is entered into by and between the CITY OF TEMECULA, a California municipal
corporation and general law city (the "City"), and PROFESSIONAL HOSPITAL SUPPLY,
INC., a California corporation ("PHS"). This Agreement is dated as of September 25, 2007, for
reference purposes only (the "Reference Date").
RECITALS
The City and PHS enter into this Agreement with reference to the following recited facts
(each a "Recital"):
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A. PHS is a California corporation licensed to do business in this state and is
engaged in the commercial business of supplying, packaging, manufacturing, distributing, and
delivering medical and surgical supplies. PHS currently services the southern California market
area from facilities located in the City at 41980 Winchester Road, 41995 Zevo Drive, and 43225
Business Park Drive and, at which it employs 1,100 persons, and from which it generates
substantial sales tax revenue for the City.
B. As part of PHS's ongoing efforts to expand its operations in southern California,
it plans to relocate its operations to a new facility ("Temecula Facility") to be built on
approximately 32 acres within the City, generally located at the comer of Winchester Road and
Dendy Parkway, pursuant to a Development Agreement between the City and Temecula
Properties LLC ("Developer"), dated as of September 25, 2007. The estimated cost of the
Temecula Facility is $59,000,000.
C. PHS expects to employ an additional approximately 300 persons at the Temecula
facilities over the next five (5) years above and beyond those persons it currently employs in the
City.
D. PHS and the City desire to provide for PHS' continued operation of its business
within the City.
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E. The City Council finds and determines that performance of the City's obligations
under this Agreement and the undertakings of PHS required by this Agreement will promote the
public health, safety, and welfare of the citizens of the City and will be of substantial economic
benefit to the City as the Agreement will: (l) generate new short term and long term quality
employment opportunities within the City; (2) generate new tax revenues that will assist the City
in funding public services for the residents and businesses within the City; (3) preserve and
enhance the joblhousing balance described in the City's General Plan and various regional plans;
(4) develop new and expanded commercial and business facilities; (5) expand and enhance the
City's tax base through increased property values and consumer purchasing; and (6) promote the
stability and diversification of the City's economy.
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F. This Agreement places no obligation on the City beyond the year of its execution
unless and until: (I) PHS or the Developer become obligated to pay any Development Impact
Fee related to the Temecula Facility, and (2) PHS continues in business and maintains its
Transaction Point for all PHS Business in the State of California within the City.
G. This Agreement is a contract within the meaning of Section 53511(a) of the
California Government Code l!JItl therefore subject to a validation action pursuant to Section 860
of the California Code of Civil Procedure.
AGREEMENT
NOW, TIffiREFORE, IN CONSIDERATION OF THE PROMISES SET FORTH IN
THIS AGREEMENT, THE CITY AND PHS AGREE, AS FOLLOWS:
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I. Definitions. All initially capitalized terms used in this Agreement shall have the
meanings set forth in this Section lor, if not set forth in this Section I, where such terms first
appear in this Agreement, unless the context of usage requires another meaning.
1.1 "Actual City Damages" means, following a Default by PHS under Section 3 of
this Agreement, an amount determined by subtracting the Taxable Sales Revenue from the
Maximum City Damages.
1.2 . "Affiliate" of any Person means any other Person Controlling or Controlled by or
under cornmon Control with the Person. "Affiliated" shall have the correlative meaning.
1.3 "Annual Report" means a written report stating the PHS Taxable Sales for a
particular Operating Year.
1.4 "Annual Report Date" means the date that is ninety (90) days following the last
day of the immediately preceding Operating Year.
1.5 "City" means the City of Temecula, a California municipal corporation and
general law city.
1.6 "City Manager" means the City Manager of the City or his or her designee or
successor in function.
1.7 "City Parties" means, collectively, the City, its elected officials, employees,
attorneys, and other agents.
1.8 "City Party" means, individually, the City, its elected officials, employees,
attorneys, or other agents.
1.9 "Control" means possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether by ownership of Equity
Interests, by contract, or otherwise.
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1.10 "Controlling" and "Controlled" mean exercising or having Control.
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1.11 "Default" is dermed in Section 8.
1.12 "Damages Calculation Date" means, with the respect to the calculation of
Actual City Damages upon PHS's or its transferee's relocation of the Transaction Point outside
of the City prior to the expiration of the Transaction Point Maintenance Period, the date of such
relocation.
1.13 "Developer" means Temecula Properties LLC, a Caiifomia limited liability
company.
1.14 "Development Agreement" means that certain development agreement between
the City ofTemecula and Temecula Properties LLC dated as of September 25, 2007, 2007.
1.15 "Development Fees" means those development impact fees and other fees and
charges imposed by the City against PHS or the Developer in connection with the issuance of
permits, entitlements and other approvals required in connection with the development and
operation of the Temecula Facility, including application fees, inspection fees, building permit
fees, and capital facilities fees.
1.16 "Effective Date" is defined in Section 2.1.
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1.1 7 "Eqnity Interest" means all or any part of any direct or indirect equity or
ownership interest(s) (whether stock, partnership interest, beneficial interest in a tnJst,
membership interest in a limited liability company, or other interest of an ownership or equity
nature) in any entity, at any tier of ownership, that directly or indirectly owns or holds any
ownership or equity interest in a Person.
1.1 8 "Federal" means of orrelated to the government of the United States of America.
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1.1 9 "Fee DeCerral" means the postponement of any obligation that PHS has to pay
. Development Fees for the Temecula Facility in accordance with Section 4.1 of this Agreement.
1.20 "Fee Forgiveness" means the City's forgiveness of any obligation that PHS has
to pay deferred Development Fees in accordance With Section 4.3 of this Agreement.
1.21 "Indemnify" means, where this Agreement states that any Indemnitor shall
"indemnify" any Indemnitee from, against, or for a particular matter, that the Indemnitor shall
indemnifY the Indemnitee and defend and hold the Indemnitee harmless from and against any
and all loss, cost, claims, liability, penalties, judgments, damages, and other injury, detriment, or
expense (including reasonable attorney fees, interest and penalties) that the Indemnitee suffers or
incurs: (a) from, as a result of, or on account of the particular matter; or (b) in enforcing the
Indemnitor's indemnity obligation.
. 1.22 "Indemnitee" means any Person entitled to be Indemnified under this Agreement
and its agents, directors, employees, shareholders, officers and elected officials.
1.23 "Indemnitor" means a Party that agrees to IndemnifY any other Person.
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1.24 "MaIimum City Damages" means an amount detennined by multiplying five
(5) times the then-current amount of the Fee Deferral as of the Damages Calculation Date.
1.25 "Negotiation Period" means the forty-five (45) day period commencing on the
effective date of any Notice of dispute given pursuant to Section 5.2(a).
1.26 "Notice" means any approval, consent, demand, designation, election, notice, or
request relating to this Agreement, including any Notice of DefaUlt or tennination of this
Agreement. Notices shall be delivered, and shall become effective, only in accordance with
Section 17.
1.27 "Notify" means give a Notice.
1.28 "Operating Year" means each twelve (12) month period during the Transaction
Point Maintenance Period commencing on each July I and ending on each June 30 of the
following calendar year, with the first Operating Year commencing on July 1,2007 and ending
on June 30, 2008. The first Operating Year is sometimes referred to as "Operating Year I," with
each succeeding Operating Year, thereafter, being consecutively numbered, concluding with a
maximum of "Operating Year 8.'~
1.29 "Outside Effective Date" means November I, 2007.
1.30 "Parties" means, collectively, PHS and the City.
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1.31 "Party" means, individually, PHS or the City, as applicable.
1.32 "Person" means any association, corporation, govemmental entity or agency,
individual, joint venture, joint-stock company, limited liability company, partnership, trust,
unincorporated orgamzation or other entity of any kind.
1.33 "PHS" means Professional Hospital Supply, Inc., a California corporation, its
Affiliates and its successors, assigns and transferees of either the PHS Business or the T emecula
Facility.
1.34 "PHS Business" means the business of supplying, packaging, manufacturing,
distributing, and delivering medical and surgical supplies by PHS or such other business as may
be lawfully conducted in the Temecula Facility and which generates Taxable Sales.
1.35 "PHS Parties" means, collectively, PHS, its Affiliates, shareholders, members,
partners, directors, officers, employees, attorneys or other agents.
1.36 "PHS Party" means, individually, PHS, its Affiliates, shareholders, members,
partners, directors, officers, employees, attorneys, or other agents.
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1.37 "PHS Taxable Sales" means all Taxable Sales generated from the operation of
the PHS Business for which the Transaction Point is within the City.
1.38 "State" means the 'State of California.
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1.39 "Taxable Sale" means any transaction subject to imposition of sales or use .tax
pursuant to the Bradley-Bums Unifonn Sales and Use Tax Law (commencing with Section 7200
of the California Revenue and Taxation Code), or any successor law.
1.40 "Taxable Sales Generation" means, with respect to the calculation of Actual
City Damages, the aggregate amount of PHS Taxable Sales generated by PHS or its transferee(s)
from and after July 1,2007 through the Damages Calculation Date.
1.41 "Taxable Sales Revenue" means an amount detennined by multiplying the
Taxable Sales Generation by 1% (.01).
1.42 "Temeeula FacUlty" means that certain office and distribution facility of
approximately 602,000 square feet to be developed at 42500 Winchester Road, Temecula,
California, 92590 for use by PHS.
1.43 "Transaction Point" means the physical location that, for the purposes of
allocation of sales or use tax revenues to taxing entities from a PHS Taxable Sales transaction, is
the place where the subject personal property is detennined to have been sold or first
functionally used, as applicable, pursuant to the Bradley Bums Unifonn Local Sales and Use Tax
Law (Revenue and Taxations Code Sections 7200, et seq.), and the associated regulations at Title
18 California Code of Regulations Sections 1800, et seq., as such laws or regulations may be
amended from time to time. .
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1.44 "Transaction Point Maintenance Period" is July 1,2007 to June 30, 2015.
1.45 "Transfer" of any right, obligation or property means any of the following,
whether by operation of law or otherwise, whether voluntary or involuntary, and whether direct
or indirect: (a) any assignment, conveyance, grant, hypothecation, mortgage, pledge, sale, or
other transfer, whether direct or indirect, of all or any part of such right, obligation or property,
or of any legal, beneficial, or equitable interest or estate in such right, obligation or property or
any part of it (including the grant of any easement, lien, or other encumbrance); (b) any
conversion, exchange, issuance, modification, reallocation, sale, or other transfer of any direct or
indirect Equity Interest(s) in the owner of such right, obligation or property by the holders of
such Equity Interest(s); (c) any transaction described in "b" affecting any Equity Interest(s) or
any other interest in such right, obligation or property or in any such owner (or in any other
direct or indirect owner at any higher tier of ownership) through any manner or means
whatsoever; or (d) any transaction that is in substance equivalent to any of the foregoing. A
transaction affecting Equity Interests, as referred to in clauses "b" through "d," shall be deemed a
Transfer by a Person even though that Person is not technically the transferor. A "Transfer"
shall not, however, include any of the foregoing (provided that the other Party to this Assignment
has received Notice thereof) relating to any Equity Interest: (a) that constitutes a mere change in
fonn of ownership with no material change in beneficial ownership and constitutes a tax-free
transaction under Federal income tax law lII1d the State real estate transfer tax; (b) to member(s)
of the immediate family(ies) of the transferor(s) or trusts for their benefit; or (c) to any PerSon
that, as of the Effective Date, holds an Equity Interest in the Person whose Equity Interest is .
being transferred.
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1.46 "Unavoidable Delay" means a delay in either Party performing any of its
obligations under this Agreement, except payment of money, arising from or on account of any
cause whatsoever beyond the Party's reasonable control, despite ,such Party's reasonable diligent
efforts, including industry-wide strikes, labor troubles or other union activities (but only to the
extent such actions do not result from the negligence or willful misconduct of the Party),
casualty, war, acts of terrorism or riots. Unavoidable Delay shall not include delay caused by a
Party's financial condition, illiquidity, or insolvency.
2. Effective Date.
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2.1 Definition. This Agreement shall not become binding on either Party, unless and
until the first date on which all of the following occur, if at all (the "Effective Date"):
(a) Execution and Delivery of Agreement by PHS. This Agreement is
executed by PHS and delivered to the City;
(b) Approval of Agreement by City Council. This Agreement is approved by
the City Council of the City at a public meeting of the City Council, following all legally
required notices and hearings, and such approval is evidenced by a resolution duly adopted by
the City Council of the City; and
(c) Execution and Delivery of Agreement by City. This Agreement is
executed by the authorized representative(s) of the City and delivered to PHS.
2.2 TermiDation on Failure to Occur. If all of the conditions precedent to the
Effective Date set forth in Section 2.1 are not satisfied on or before the Outside Effective Date,
then no part of this Agreement shall become binding on or enforceable against either Party and
any prior signatures or approvals of this Agreement by either the City or PHS shall be void and
of no further force or effect.
3. Operation Covenant. PHS covenants to the City to maintain, or to cause to be
maintained, the Transaction Point for all Taxable Sales by the PHS Business to points within the
State of California in the City continuously throughout the Transaction Point Maintenance
Period.
4. DeveloDlllent ImDact Fee Deferral and Fomveness.
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4.1 Fee DeCerral. Following the Effective Date, whenever in a given Operating
Year, PHS or the Developer becomes obligated to pay any Development Fees for the Temecula
Facility, the City shall defer such obligation until the first day of the subsequent Operating Year.
If on the first day of a given Operating Year, the Transaction Point for all Taxable Sales by the
PHS Business within the State of California is in the City and has been so for the entirety of the
preceding Operating Year, then the City shall defer any and all previously deferred obligation for
an additional year. The maximum total amount that may be deferred in this manner is Two
Million Dollars ($2,000,000), Notwithstanding anything in this Section to the contrary, no
Development Fee obligation shall be deferred past the first day after the end of Operating Year 8,
at which time the deferred fees shall be forgiven as provided in Section 4.3,
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4.2 Fee Reimbursement. If prior to the Effective Date the Developer or PHS pays
any Development Impact Fees for the Temecula Facility that would have been subject to the Fee
Deferral had it come due after the Effective Date, the City shall reimburse the amount of any
such payment in full to the Developer or PHS, as applicable, within thirty (30) days following
the Effective Date, and any amount so reimbursed shall be counted towards the maximum
amount of the Fee Deferral.
4.3 Fee Forgiveness. If PHS maintains or causes to be maintained the Transaction
Point in the City for the entirety of the Transaction Point Maintenance Period, or pays the Actual
City Damages pursuant to Section 9, the City shall forgive any obligation of PHS or any other
party to pay any and all Development Fees that have been deferred pursuant to this Agreement.
5. Annual Reoorts.
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5.1 Reporting. On or before each Annual Report Date, PHS shall deliver the
applicable Annual Report to the City.
5.2 Dispute Resolution.
(a) Negotiation Period, Within thirty (30) days following the earlier of: (i)
the City's receipt of the Annual Report for a particular Operating Year; or (ii) the Annual Report
Date for such Operating Year, the City may give Notice of any dispute regarding the amount of
PHS Taxable Sales reported by PHS in the Annual Report for the particular Operating Year.
Any such Notice of dispute shall stale all bases for the City's disagreement with the Annual
Report, in detail. Any grounds for disagreement not stated in such Notice shall be waived. If the
City does not give Notice of a dispute regarding the amount of PHS Taxable Sales reported by
PHS in the Annual Report for the particular Operating Year within thirty (30) days following the
applicable Annual Report Date, the City shall have waived any objection to the amount of PHS
Taxable Sales reported by PHS for the particular Operating Year. If the City gives Notice of its
objection to an Annual Report, the Parties shall immediately commence good-faith negotiations
to resolve the dispute(s) stated in the Notice. The Parties shall continue such negotiations until
the earlier of: (1) the end of the Negotiation Period; or (2) the dispute is resolved by a written
agreement between the Parties. Notwithstanding any other part of this Section 5, the Parties may
agree in writing to extend the duration of the Negotiation Period for any amount of time.
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(b) ARBITRATION OF DISPUTES. ANY DISPUTE RELATING TO THE
AMOUNT OF PHS TAXABLE SALES REPORTED BY PHS IN AN ANNUAL REPORT
FOR A PARTICULAR OPERATING YEAR SHALL BE SETILED BY ARBITRATION
ADMINISTERED BY THE AMERICAN ARBIlRA TION ASSOCIATION IN
ACCORDANCE WITH ITS COMMERCIAL ARBITRATION RULES, WHICH SHALL BE
COMMENCED WITHIN SIXTY (60) DAYS FOLLOWING THE END OF THE
APPLICABLE NEGOTIATION PERIOD. WITHIN FIFTEEN (15) DAYS AFTER THE
COMMENCEMENT OF ARBITRATION, EACH PARTY SHALL SELECT ONE PERSON
TO ACT AS AN ARBITRATOR. THE TWO SELECTED ARBITRATORS SHALL SELECT
A THIRD ARBITRATOR, WITHIN TEN (10) DAYS FOLLOWING THEIR APPOINTMENT.
IF EITHER PARTY FAILS TO SELECT AN ARBITRATOR. THEN THE ARBITRATOR
SELECTED BY THE OTHER PARTY SHALL ARBITRATE THE DISPUTE, WITHOUT
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ANY OTHER ARBITRATOR. IF THE ARBITRATORS SELECTED BY THE PARTIES
ARE UNABLE TO OR FAIL TO AGREE UPON A THIRD ARBITRATOR, THE THIRD
ARBITRATOR SHALL BE SELECTED BY THE AMERICAN ARBITRATION
ASSOCIATION. EACH ARBITRATOR SHALL BE A MEMBER OF THE STATE BAR OF
CALIFORNIA, ACTIVELY ENGAGED IN THE PRACTICE OF LAW FOR AT LEAST TEN
(10) YEARS, OR A RETIRED JUDGE OF THE SUPERIOR COURT OF THE STATE OF
CALIFORNIA. THE PLACE OF ARBITRATION SHALL BE THE CITY OF TEMECULA,
CALIFORNIA. EACH PARTY SHALL SUBMIT TO THE ARBITRATOR(S) AND
EXCHANGE WITH EACH OTHER, IN ADVANCE OF THE ARBITRATION HEARING,
THEIR LAST, BEST OFFERS. THE ARBITRATOR(S) SHALL BE LIMITED TO
A W AROING ONLY ONE OR THE OTHER OF THE TWO FIGURES SUBMITTED. EACH
PARTY SHALL BEAR ITS OWN COSTS AND EXPENSES AND AN EQUAL SHARE OF
THE ARBITRATOR(S)' AND ADMINISTRATIVE FEES OF ARBITRATION. THE
PARTIES SHALL HAVE THE RIGHTS OF DISCOVERY PROVIDED FOR IN
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1283.05, WHICH IS
INCORPORATED INTO THIS AGREEMENT BY THIS REFERENCE. EXCEPT AS MAY
. BE REQUIRED BY LAW, NEITHER PARTY NOR AN ARBITRATOR MAY DISCLOSE
THE EXISTENCE, CONTENT OR RESULTS OF ANY ARBITRATION UNDER THIS
AGREEMENT, WITHOUT THE PRIOR WRITTEN CONSENT OF BOTH PARTIES. TH~.
DECISION OF THE ARBITRATOR(S) SHALL BE BINDING ON BOTH PARTIES AND NO
APPEAL OR OTHER SUBSEQUENT LEGAL PROCEEDING OR ACTION SHALL BE
TAKEN BY EITHER PARTY REGARDING SUCH DECISION OR A WARD.
(c) ARBITRATION NOTICE. NOTICE: BY INITIALING IN THE SPACE
BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE
MATTERS INCLUDED IN THIS 'ARBITRATION OF DISPUTES' PROVISION DECIDED
BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE
GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED
IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE
GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE
RIGHTS ARE SPECIFICALLY INCLUDED IN THE 'ARBITRATION. OF DISPUTES'
PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO
THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR
AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.
(d) ARBITRATION CONSENT. WE HAVE READ AND UNDERSTAND
THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE
MATTERS INCLUDED IN THE 'ARBITRATION OF DISPUTES' PROVISION TO
NEUTRAL ARBITRATION.
INITIALS OF AUTHOrozED CITY
REPRESENT A TIVE(S)
6. Adeauate Consideration.
INITIALSOFAUTHOrozEDPHS
REPRESENT A TIVE(S)
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RVPUBIMORAN1\73OS67.4 Final 9/1712007
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6.1 Exchange of Consideration. The Parties have determined and agreed that: (i)
the Fee Deferral and Fee Forgiveness represents fair consideration to PHS for entering into and
performing its covenants and other obligations under this Agreement; and (ii) that PHS'
performance of its covenants and other obligations under this Agreement represent fair
consideration to the City for the Fee Deferral and Fee Forgiveness and performance of the City's
other obligations under this Agreement.
6.2 No Unstated Consideration. Both Parties acknowledge and agree that neither
Party will receive any compensation under this Agreement other than expressly set forth in this
Agreement. Neither Party shall be entitled to any reimbursement or other compensation from the
other. Party . for any costs incurred by such Party in performing or preparing to perform its
covenants or other obligations under this Agreement.
7. Coooeration.
7.1 Permits and Authorizations. The City agrees to process all applications to the
City by PHS or the Developer for authorizations, consents, permits or Approvals regarding use
or development of the Temecula Facility in an expeditious manner. The City shall not charge
additional fees relating to expeditious processing of such applications. The City further agrees to
reasonably cooperate with PHS and/or the Developer, at no cost to the City, in securing any
County, State, Federal permits, authorizations or consents that may be required regarding use or
development of the Temecula Facility. The cooperation obligations of the City under this
Section 7.1 shall not require the City to make any economic contribution or incur any material
cost or expense.
7.2 Industrial Development Bonds. If requested by PHS, the City agrees to
reasonably cooperate with PHS or the Developer regarding the issuance of induStrial
development bonds, as may be allowed by State or Federal law.
7.3 Timing. The agreements and obligations of the City under this Section 8 shall
not be limited to the Transaction Point Maintenance Period, but shall continue as long as the
PHS Business is located within the City.
8. Defaults. Subject to any extensions of time provided for in this Agreement for
Unavoidable Delay, the occurrence of any of the following events shall constitute a "Default":
8.1' Monetary Default. The failure by any Party to perform any obligation of such
Party under this Agreement for the payment of money, if such failure is not cured within fifteen
(15) days after the non-performing Party's receipt of Notice from the injured Party that such
obligation was not performed, as and when due; or
8.2 Non-Monetary Default. The failure by any Party to perform any of its
obligations set forth in this Agreement, other than obligations subject to .section 8.1 if such
failure is not cured within thirty (30) days after the non-performing Party's receipt of Notice
from the injured Party that such obligation was not performed, as and when due, or, if such '
failure is of a nature that cannot reasonably be cured within thirty (30) days, the failure by such
Party to commence such cure' within thirty (30) days after receipt of such Notice and to,
, thereafter, diligently prosecute such cure to completion.
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RVPUBIMGRANn730S67.4 Final 911712007
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9. Citv Damal!es for PHS's Breach of Section 3 Oblil!:ation.
9.1 Subject to the Notice and opportunity to cure requirements of Section 8 and
notwithstanding any other provision of this Agreement to the contrary, as its sole and exclusive
remedy for PHS's Default of its obligation under Section 3 of this Agreement, the City shall
receive from PHS an amount equal to the Actual City Damages computed as of the Damages
Calculation Date. An illustration of the calculation of Actual City Damages, using hypothetical
amounts, is attached hereto as Exhibit "A".
9.2 Waiver. THE CITY ACKNOWLEDGES THAT IT IS AWARE OF THE
MEANING AND LEGAL EFFECT OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH
PROVIDES:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS
OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM OR HER WOULD HA VB
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR.
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9.3 Intent to Limit Remedies. CALIFORNIA CIVIL CODE SECTION 1542
NOTWITHSTANDING, IT IS THE INTENTION OF THE CITY TO BE BOUND BY THE
LIMITATION ON DAMAGES AND REMEDIES SET FORTH IN THIS SECTION 9, AND
THE CITY HEREBY WAIVES AND RELEASES ANY AND ALL OTHER' CLAIMS
AGAlNST PHS FOR MONETARY DAMAGES OR OTHER LEGAL OR EQUITABLE
RELIEF RELATED TO ANY DEFAULT OR BREACH OF THIS AGREEMENT BY PHS,
EXCEPT AS SPECIFICALLY PROVIDED IN SECTION 9.1, WHETHER OR NOT ANY
SUCH WAIVED OR RELEASED CLAIMS WERE KNOWN OR UNKNOWN TO THE CITY
AS OF THE EFFECTIVE DATE OF THIS AGREEMENT. THE CITY WAIVES THE
BENEFITS OF CALIFORNIA CIVIL CODE SECTION 1542 AND ALL OTHER STATUTES
AND JUDICIAL DECISIONS (WHETHER STATE OR FEDERAL) OF SIMILAR EFFECT
WITH REGARD TO THE LIMITATIONS ON DAMAGES AND REMEDIES AND
WAIVERS AND RELEASES OF ANY SUCH DAMAGES AND REMEDIES CONTAINED
IN THIS SECTION 9.
INITlALS OF AUTHORIZED CITY
REPRESENT A TlVE(S)
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10. PHS' Remedv.
10.1 Recovery of Fee Waiver. Subject to the Notice and opportunity to cure
requirements of Section 8 and notwithstanding any other provision of this Agreement to the
contrary, PHS' sole and exclusive remedy regarding a Default by the City of its obligations
concerning the Fee Deferral or Fee Forgiveness shall be (i) recovery of an amount in monetary
damages equal to the Development Fees for which it or the Developer is actua1ly liable in
connection with the Temecula Facility, up to a maximum amount of Two Million Dollars
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RVPUBlMGRAN1\730S67.4 Fina19/17flOO7
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($2,000,000) and/or (ii) or a judicial declaration of PHS's right to such Fee Deferral or Fee
Forgiveness.
10.2 Waiver. PHS ACKNOWLEDGES THAT IT IS AWARE OF THE MEANING
.AND LEGAL EFFECT OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH
PROVIDES:
,.
A itiNERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS
OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM OR HER WOULD HAVE
MA TERlALL Y AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR
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10.3 Intent to Limit Remedies. CALIFORNIA CIVIL CODE SECTION 1542
NOTWITHSTANDING, IT IS THE INTENTION OF PHS TO BE BOUND BY THE
LIMITATION ON DAMAGES AND REMEDIES SET FORTH IN THIS SECTION 10, AND
PHS HEREBY WAIVES AND RELEASES ANY AND ALL OTHER CLAIMS AGAINST
THE CITY FOR MONETARY DAMAGES OR OTHER LEGAL OR EQUITABLE RELIEF
RELATED TO ANY DEFAULT OR BREACH OF THIS AGREEMENT BY THE CITY,
EXCEPT AS SPECIFICALLY PROVIDED IN SECTION 10.1, WHETHER OR NOT ANY
SUCH WAIVED OR RELEASED CLAIMS WERE KNOWN OR UNKNOWN TO PHS AS
OF THE EFFECTIVE DATE OF THIS AGREEMENT. PHS WAIVES THE BENEFITS OF
CALIFORNIA CIVIL CODE SECTION 1542 AND ALL OTHER STATUTES AND
JUDICIAL DECISIONS (WHETHER STATE OR FEDERAL) OF SIMILAR EFFECT WITH
REGARD TO THE LIMITATIONS ON DAMAGES AND REMEDIES AND WAIVERS AND
RELEASES OF ANY SUCH DAMAGES AND REMEDIES CONTAINED IN THIS
SECTION 10.
INITIALS OF AUTHORIZED PHS
REPRESENT A TIVE(S)
11. Indemnification.
11.1 Obligations. PHS shall Indemnify the .City Parties against any wrongful
intentional act or negligence of the PHS Parties relating to performance of this Agreement. The
City shall Indemnify the PHS Parties against any wrongful intentional act or negligence of the
City Parties relating to performance of this Agreement.
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11.2 Indemnitee Negligence. Notwithstanding anything to the contrary in this
Agreement, no Indemnitor shall be required to Indemnify any Indemnitee to the extent of the
Indemnitee's wrongful intentional acts or negligence.
11.3 Indemnification Independent of Insurance. The Parties' indemnification
obligations under this Agreement shall not, in any way, be restricted or limited to and are
independent of any insurance carried by a Party.
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11.4 Survival of Indemnification and Defense Obligations. The indemnification and
defense obligations of the Parties under this Agreement shall survive the expiration or earlier
termination of this Agreement, until all claims against any of the Indemnitees involving any of
the indemnified matters are fully, fmally, absolutely and completely barred by applicable statutes
oflimitations.
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11.5 Independent Duty to Defend. The duty to defend under this Agreement is
separate and independent of the duty to Indemnify. The duty to defend applies regardless of
whether the issues of negligence, liability, fault, default or other obligation on the part of the
Indemnitor or the Indemnitee have been determined. The duty to defend applies immediately,
regardless of whether the Indemnitee has paid any sums or incurred any detriment arising out of
or relating (directly or indirectly) to any claims. It is the express intention of the Parties that an
Indemnitee be entitled to obtain summary adjudication or summary judgment regarding an
Indemnitor's duty to defend the Indemnitee at any stage of any claim or suit within the scope of
the Indemnitor's indemnity obligations under this Agreement. .
11.6 Indemnification Procedures. Wherever this Agreement requires any Indemnitor
to Indemnify any Indemnitee:
(a) Prompt Notice. The Indemnitee shall promptly notify the Indemnitor of
any claim. To the extent, and only to the extent, that the Indemnitee fails to give prompt notice
of a claim and such failure materially prejudices the Indemnitor in providing indemnity for such
claim, the Indemnitor sha1I be relieved of its indemnity obligations for such claim.
(b) Selection of Counsel. The Indemnitor shall select counsel reasonably
acceptable to the Indemnitee. Counsel to Indemnitor's insurance carrier that is providing
coverage for a claim shall be deemed reasonably satisfactory. Even though the Indemnitor shall
defend the action, Indemnitee may, at its option and its own expense, engage separate counsel to
advise it regarding the claim and its defense. The Indemnitee's separate counsel may attend all
proceedings and meetings. The Indemnitor's counsel shall actively consult with the
Indemnitee's separate counsel. The Indemnitor and its counsel shall, however, fully control the
defense, except to the extent that the Indemnitee waives its rights to indemnity and defense for
such claim.
(c) Cooperation. The Indemnitee shall reasonably cooperate with the
Indemnitor's defense of the Indemnitee, provided the Indemnitor reimburses the Indemnitee's
actual out of pocket expenses (including attorney fees) of such cooperation.
(d) Settlement. The Indemnitor may, with the Indemnitee's consent, not to be
unreasonably withheld, settle a claim. The Indemnitee's consent shall not. be required for any
sett1ement by which all of the following occur: (i) the Indemnitor procures (by payment,
settlement or otherwise) a release of the Indemnitee from the subject c1aim( s) by which the
Indemnitee need not make any payment or other performance to the claimant; (ii) neither the
Indemnitee nor the Indemnitor on behalf of the Indemnitee admits liability; and (Hi) the
continued effectiveness of this Agreement is not jeopardized in any way.
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12. City Contract Administration. The City Manager shall administer this Agreement on
behalf of the City. The City Manager may designate any member or members of the City staff to
carry out such responsibilities. Except as otherwise expressly provided iri this Agreement, the
City Manager has the authority to approve or consent to those matters in this Agreement
requiring the City's approval or consent and to make all other decisions on behalf of the City,
subject to the City Manager's retained and reserved sole and absolute discretion to seek City
Council approval of any such matter.
13. Govemine: Law. The substantive and procedural laws of the State shall govem the
interpretation and enforcement of this Agreement, without application of conflicts of laws
principles.
14. Transfer. PHS may Transfer, in whole or in part, its rights or obligations under this
Agreement to one or more transferees with the prior written consent of the City, which will not
be unreasonably withheld, delayed, or conditioned, and which shall be given if the proposed
transferee(s) agree(s) to operate a lawful business generating Taxable Sales from the Temecula
Facility and assume(s) PHS's obligations under this Agreement pursuant to a written agreement
mutually and reasonably acceptable to the City, PHS and the transferee(s). The City's approval
sha1I be deemed irrevocably given if the City fails to approve or disapprove (a) proposed
transferee(s) within thirty (30) days following PHS's written request for approval.
15. Non-liability of City Officials and EmDlovees. No elected official, officer, contractor,
consultant, attorney, employee or agent of the City shall be personally liable to PHS, any
voluntary or involuntary successor or assign of PHS, or any lender or other Person holding an
interest in the Temecula Facility or PHS, in the event of any Default or breach of this Agreement
by the City, or for any amount that may be or become due to PHS or its successors or assigns
under this Agreement, or on any obligations arising under this Agreement No shareholder,
member, partner, principal, officer, attorney, employee or agent of PHS shall be personally liable
to the City, any voluntary or involuntary successor or assign of the City, or any lender or other
. Person holding an interest in this Agreement or the Temecula Facility, in the event of any
Default or breach of this Agreement by PHS, or for any amount that may be or become due to
the City or its successors or. assigns under this Agreement, or on any obligations arising under
this Agreement
16. Notices.
16.1 Deliverv. Any and all Notices submitted by either Party to the other Party
pursuant to or as required by this Agreement shall be in writing and addressed to the City or PHS
(and their designated copy recipients) as set forth in Section 16.2. Notices (including any
required copies) shall be delivered personally, by Federal Express, United Parcel Service or other
nationally recognized overnight (one-night) courier service or by registered or certified United
States mail, return receipt requested and postage prepaid, to the addresses set forth in Section
16.2, in which case they shall be deemed delivered on the date of delivery (or when delivery has
been attempted twice, as evidenced by the written report of the courier service) to such
address(es) or on the fourth (4lh) day following deposit with the United States Postal Service for
delivery. Either Party may change its address for delivery of Notices by Notice in compliance
with this Agreement. Notice of a change of address shall be effective only upon receipt. Any
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Party giving a Notice may request that the recipient acknowledge receipt of such Notice. The
recipient shall promptly comply with any such request, but failure to do so shall not limit the
effectiveness of any Notice. Any attorney may give any Notice on behalf of its client
16.2 Addresses. The following are the authorized addresses for the submission of
Notices, demands or communications to the Parties, under this Agreement, as of the Reference
Date:
To City:
City ofTemecula
43200 Business Park Drive
. Temecula, CA 92590
Attention: City Manager
Richards, Watson & Gershon
355 South Grand Avenue
Los Angeles, CA 90071
Attention: Peter M. Thorson
With a copy to
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With a copy to:
~
Professional Hospital Supply, Inc.
41980 Winchester Road
Temecula, CA 92590
Attention: John Augustine, CFO
Best Best & Krieger LLP
P.O. Box 1028
Riverside, CA 92502
Attention: Michael Grant
To PHS:
17. Jurisdiction. and Venue.. The Parties each acknowledge and agree that this Agreement is
entered into and is to be fully performed in the City of Temecula, County of Riverside, State of
California, and that all legal actions arising from this Agreement shall be filed in the Superior
Court of the State of California in and for the County of Riverside, California, or the United
States District Court with jurisdiction in the County of Riverside, California.
18. Incorooration of Recitals. The Recitals of fact set forth preceding this Agreement are
true and correct and are incorporated into this Agreement, in their entirety, by this reference.
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19. Princioles of Interoretation. No inference in favor of or against any Party shall be drawn
from the fact that such Party has drafted any part of this Agreement. The Parties have both
participated substantially in the negotiation, drafting, and revision of this Agreement, with advice
from counsel and other advisers of their own selection. A term defined in the singular in this
Agreement may be used in the plural, and yice versa, all in accordance with ordinary principles
of English grammar, which also govern all other language in this Agreement The words
"include" and "including" shall be construed to be followed by the words: "without Iirnitation."
Each collective noun shall be interpreted as if followed by the words "(or any part ofit)," except
where the context clearly reqnires otherwise. Every reference to any document, including this
Agreement, refers to such document as modified from time to time (excepting any modification
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RVPUBIMGRAIffi730S67.4 FinaI9/17/2007
o
that violates this Agreement), and includes all exhibits, schedules, addenda and riders to such
document. The word "or" includes the word "and."
20. CounterDart Orilrinals: Intel!l'lllion. This Agreement may be executed in multiple
counterpart originals, each of which is deemed to be an original, but all of which taken together
shall constitute one and the same instrument. This Agreement and the exhibits attached to this
Agreement represent the entire understanding of the Parties and supersede all previous
negotiations, letters of intent, memoranda of understanding or agreements between the Parties
with respect to all or any part of the subject matter of this Agreement.
21. Severabilitv. If any term or provision of this Agreement or its application to any Party or
circumstance shall to any extent be invalid or unenforceable, then the remainder of this
Agreement or the application of such term or provision to Persons or circumstances, except those
as to which it is invalid or unenforceable, shall not be affected by such invalidity. All remaining
provisions of this Agreement shall be valid and be enforced to the fullest extent Law allows.
22. No Waiver. Failure to insist on anyone occasion upon strict compliance with any of the
terms, covenants or conditions of this Agreement shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any rights or powers under this
Agreement at anyone time or more times be deemed a waiver or relinquishment of such right or
power at any other time or times.
o
23. Time is of the Essence. Time is of the essence in the performance of the Parties'
obligations under this Agreement.
24. Unavoidable Delav: Extension of Time of Performance.
24.1 Notice. Subject to any specific provisions of this Agreement stating that they are
not subject to Unavoidable Delay, performance by either Party under this Agreement shall not be
deemed, or considered to be in Default, where any such Default is due to an Unavoidable Delay.
Any Party claiming Unavoidable Delay shall Notify the other Party: (a) within ten (10) days
after such Party knows of any such Unavoidable Delay; and (b) within five (5) days after such
Unavoidable Delay ceases to exist. To be effective, any Notice of an Unavoidable Delay must
describe the Unavoidable Delay in reasonable detail. The extension of time for an Unavoidable
Delay shall commence on the date of receipt of Notice of the occurrence of the Unavoidable
Delay by the Party not requesting an extension of time to perform due to such Unavoidable
Delay and shall continue until the end of the condition causing the Unavoidable Delay. The.
Party seeking to be excused from performance Shall exercise its best efforts to cure the condition
causing the Unavoidable Delay, within a reasonable time.
o
24.2 Assumption of Economic Risks. ANYlHING IN 1HIS AGREEMENT TO
1HE CONTRARY NOTWI1HSTANDING, 1HE PARTIES EXPRESSLY ASSUME 1HE
RISK OF UNFORESEEABLE CHANGES IN ECONOMIC . CIRCUMSTANCES AND/OR
MARKET DEMAND/CONDITIONS AND WAIVE, TO 1HE GREATEST LEGAL EXTENT,
ANY DEFENSE, CLAIM, OR CAUSE OF ACTION BASED IN WHOLE OR IN PART ON
ECONOMIC NECESSITY, IMPRACTICABILITY, CHANGED . ECONOMIC.
CIRCUMSTANCES, FRUSTRATION OF PURPOSE, OR SIMILAR 1HEORlES. EACH
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PARTY AGREES THAT ADVERSE CHANGES IN ECONOMIC CONDITIONS, EITHER OF
SUCH PARTY SPECIFICALLY OR THE ECONOMY GENERALLY, OR CHANGES IN
MARKET CONDITIONS OR DEMANDS, SHALL NOT OPERATE TO EXCUSE OR
DELAY THE STRICT OBSERVANCE OF EACH AND EVERY OF THE OBLIGATIONS,
COVENANTS, CONDITIONS AND REQUIREMENTS OF THIS AGREEMENT. THE
PARTIES EXPRESSLY ASSUME THE RISK OF SUCH ADVERSE ECONOMIC OR
MARKET CHANGES, WHETHER OR NOT FORESEEABLE AS OF THE REFERENCE
DATE.
INITIALS OF AUTHORIZED CITY
REPRESENTA TIVE(S)
INITIALS OF AUTHORIZED PHS
REPRESENT A TIVE(S)
25. No Third Party Beneficiaries. The perfonnance of the Parties' respective obligations
under this Agreement is not intended to benefit any Person other than the City and PHS, except
as may be expressly provided otherwise in this Agreement. No Person not a signatory to this
Agreement shall have any rights or causes of action against any Party to this Agreement as a
result of that Party's perfonnance or non-perfonnance under this Agreement, except as otherwise
expressly provided in this Agreement.
o
26. No Other Reoresentations or Warranties. Except as expressly set forth in this Agreement,
no Party makes any representation or warranty material to this Agreement to any other Party.
27. Warranties Aaainst PaYment of Consideration for Al!reement. PHS represents and
warrants that PHS has not employed or retained any Person to solicit or secure this Agreement
upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee,
excepting bona fide employees of PHS. PHS further represents and warrants that no gratuities,
in the fonn of entertainment, gifts or otherwise have been or will be given by PHS or any of its
agents, employees or representatives to any elected or appointed official or employee of the City
in an attempt to secure this Agreement or favorable tenns or conditions for this Agreement.
Breach of the representations. or warranties of this Section 27 shall automatically terminate this
Agreement, without further notice to or action by either Party, and PHS shall immediately refund
any Fee Waiver made prior to the date of any such termination.
28. RelationshiD of Parties. The Parties agree and intend that the City and PHS are
independent contracting entitles and do not intend by this Agreement to create any partnership,
joint venture, or similar business arrangement, relationship, or association between them.
29. Survival of Al!reement. All of the provisions of this Agreement shall be applicable to
any dispute between the Parties arising from this Agreement, whether prior to or following
expiration or termination of this Agreement, until. any such dispute is finally and completely
resolved between the Parties, either by written settlement, entry of a non-appealable judgment or
expiration of all applicable limitations periods and all terms and conditions of this Agreement
relating to dispute resolution and limitations on damages or remedies shall surVive any expiration
or termination of this Agreement.
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[Signatures OD foUowing page)
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RVPUBlMORANn730S67.4 Final 9/] 712007
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SIGNATURE PAGE
TO
OPERATING COVENANT AGREEMENT
(professional Hospital Supply)
CITY:
PHS:
PROFESSIONAL HOSPITAL SUPPLY,
INC., a California corporation
CITY OF TEMECULA, a California
municipal corporation and general law city
By:
Chuck Washington
Mayor
By:
Name:
Its:
By:
Name:
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Its:
ATTEST:
Susan Jones, MMC
City Clerk
APPROVED AS TO LEGAL FORM:
By
Peter M. Thorson
City Attorney
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EXHIBIT A
ILLUSTRATION OF CALCULATION OF ACTUAL CITY DAMAGES,
USING HYPOTHETICAL AMOUNTS
MAXIMUM CITY
DAMAGES:
CURRENT AMOUNT OF
FEES DEFERRED
MUL TIPUER .
TOTAL
TAXABLE SALES
REVENUE:
PHS TAXABLE SALES
THROUGH DAMAGES
CALCULATION DATE
RATE
TOTAL
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ACTUAL CITY DAMAGES
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RVPl)BIMORANn730S67.4
EXAMPLE 1
$ 2,000,000
5
10,000,000
SOO,OOO,OOO
1.0%
5 000 000
$ 5 000 000
A-I
EXAMPLE 2
$ 1,700,000
5
8,SOO,OOO
700,000,000
1.0%
7 000,000
$ 1 500 000