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Home My WebLink About2003-033 RESOLUTION NO. 2003-33 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE MAYOR TO EXECUTE A SETTLEMENT AGREEMENT AND GENERAL RELEASE WITH IN TOUCH COMMUNICATIONS, INC., CONCERNING UTILITY USER'S TAX. BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: SECTION 1. The Mayor of the City of San Bernardino is hereby authorized and directed to execute on behalf of said City the Settlement Agreement and General Release with In Touch Communications, Inc" a copy of which is attached hereto, marked Exhibit "A" and incorporated herein by reference as though fully set forth at length, SECTION 2. The authorization to execute the above referenced agreement is rescinded if the parties to the agreement fail to execute it within sixty (60) days of the passage of this resolution, III III III III III III III III III III III 8 9 10 11 12 13 14 15 16 17 18 19 2003-33 1 2 3 4 5 6 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE MAYOR TO EXECUTE A SETTLEMENT AGREEMENT AND GENERAL RELEASE WITH IN TOUCH COMMUNICATIONS, INC., CONCERNING UTILITY USER'S TAX. I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor jt. and Common Council of the City of San Bernardino at a reg. meeting thereof, held on the 7 21stdayof January ,2003, by the following vote, to wit: Council Members: AYES NAYS ABSTAIN ABSENT ESTRADA x LIEN LONGVILLE x MCGINNIS x DERRY x SUAREZ x ANDERSON x MCCAMMACK x \)aYldA {l;YflldL~t1) City Clerk 20 The foregoing resolution is hereby approved this /7'7fJ day of January ,2003 21 22 23 24 25 26 27 28 NeilDerr yor Pro Tem City of San Bernardino Approved as to Form and legal content: JAMES F, PENMAN, Citycey ~ By: '7, o :1" . ~ .... ',' . 2003-33 SETTLEMENT AGREEMENT AND GENERAL RELEASE THIS WRITING REPRESENTS THE SETTLEMENT AGREEMENT AND GENERAL RELEASE ("Agreement") between THE CITY OF SAN BERNARDINO ("CITY") and IN TOUCH COMMUNICATIONS, INC" a California corporation, referred to herein as "Service Provider. " WHEREAS, Service Provider has been in the business of providing telephone services to customers in CITY since 1998 to the present; WHEREAS, CITY imposes a telephone users tax upon every person in CITY using telephone communication services which the Service Provider has a duty to collect and remit in a timely manner to CITY; WHEREAS, the Service Provider is obligated to collect and remit to CITY from such persons a telephone users tax for tax periods from December 1998, through December 2001, inclusive; WHEREAS, the Service Provider failed to collect or remit to the Cities any telephone users tax for tax periods from December 1998, through December 2001, inclusive; WHEREAS, the Service Provider contends that it has valid defenses that would excuse or limit its liability for such failure to collect or remit telephone users tax for such periods; WHEREAS, the Service Provider and CITY desire to settle fully and finally all differences between them arising from Service Providers failure to remit to CITY telephone users tax for tax periods from December 1998 through December 2001; NOW THEREFORE, in consideration of the promises and mutual promises contained 1 2003-33 herein, it is agreed as follows: 1. The current Utility Users Tax Ordinance and any amendments thereto is herein incorporated by reference in their entirety, 2, Service Provider shall pay to CITY the total tax amount of $55,602,76, as follows: Service Provider shall pay to CITY percent (10%) of the total tax specified herein on or before March 16,2003; Service Provider shall pay to CITY fifteen percent (15%) of the total tax specified herein on or before December 16, 2003; Service Provider shall pay to CITY twenty percent (20%) of the total tax specified herein on or before December 16, 2004; Service Provider shall pay to CITY twenty-five percent (25%) of the total tax specified herein on or before December 16, 2005; and Service Provider shall pay to CITY thirty percent (30%) of the total tax specified herein on or before December 16, 2006, at which time the total tax should have been paid in full, 3, All payments referenced in paragraphs 2, are due on the sixteenth day of the month, In the event a payment is not received within ten days of its due date, at the option of the CITY, any balance remaining unpaid shall become immediately due and payable, and suit for the recovery of such unpaid installment and the remaining balance due may be instituted without any additional written or verbal notice or demand of any kind, 4, The total payment 01'$55,602,76 referenced in paragraph 2 above represents the total principal amount oftelephone users taxes exclusive of penalties or interest that Service Provider contends it owed to CITY for tax periods from December 1998 through December 2001, inclusive, 2 ~. . 2003-33 5, Following execution of this Agreement, CITY shall have the right, upon reasonable notice to Service Provider, to conduct during normal business hours at its own expense a reasonable audit of the books and records of Service Provider to verify the amount of taxable receipts relating to telephone user charges that apply to CITY and upon which the tax is due and owing, to verify the Service Provider's method of calculation of the tax due, and to verify the Service Provider's financial condition and cash status as represented to CITY in prior negotiations, If, pursuant to such audit, CITY reasonably determines that additional taxes, not including interest and penalties, are owed to CITY in excess of the principal amount stated above for the tax periods from December 1998 through December 2001, inclusive, or that the Service Provider has materially and unreasonably misrepresented its financial condition and cash status, CITY retains the right to file suit to recover the additional amounts it claims are owed, including penalty and interest accruing to such amounts as provided in the applicable City Municipal Code sections, In the event CITY files such suit, neither this Agreement, nor anything contained herein, shall be construed as an admission by Service Provider of any fact or liability relating to such lawsuit, and Service Provider shall have the right to interpose any defenses it may have to such lawsuit, without limitation, except a statute of limitations defense, which shall be tolled for the tax periods from December 1998 through December 200 I, inclusive, 6, This Agreement resolves only the dispute regarding telephone users taxes allegedly owed by Service Provider to CITY for tax periods from December 1998 through December 3 " '.: . 2003-33 2001, inclusive; this Agreement does not resolve the liability of Service Provider for any other taxes, debts, or obligations that may be owed to CITY, nor does this Agreement resolve the liability of Service Provider for telephone users taxes that may be owed CITY for telephone user tax periods other than those occurring from December 1998 through December 2001, inclusive, 7, The Service Provider represents to CITY that since January 2002, inclusive, the Service Provider has timely and fully paid and will continue to timely and fully pay all telephone users taxes due CITY for all subsequent tax periods, 8, No party to this Agreement admits wrongdoing, and nothing in this Agreement shall be deemed to be an admission ofliability, 9, Should the Service Provider file for federal bankruptcy protection prior to the time that the total obligations of this Agreement to CITY are paid in full, whether such bankruptcy is voluntary or involuntary, any remaining balance due and owing CITY shall be considered and classified as an unsecured priority excise tax obligation under II U,S,C.A. !j507(a)(8)(C) by the Service Provider without further proof of claim by CITY. 10, The payment of any money to CITY shall not operate as a waiver of any provision of this Agreement or of any right under the Agreement. 11, Except by judgment following a trial, if the Service Provider settles, stipulates, or agrees with any other city or county taxing authority, or their agents or representatives, to pay a portion of the penalties and interest on the telephone user tax due any other taxing 4 \' . 2003-33 jurisdiction for any of the tax periods from December 1998 through December 2001, inclusive, then the Service Provider shall immediately disclose this information to CITY and pay the same proportion of the penalties and interest on the telephone user taxes due to CITY for the same inclusive months, The intent of this paragraph is to assure CITY that the Service Provider will not voluntarily pay any taxing jurisdiction more than the principal tax owing, unless the Service Provider also pays CITY herein a similar proportionate amount oflate penalties and interest. This paragraph 11 shall not apply in the case of any settlement, stipulation, or agreement with any city or county taxing authority following the institution of a lawsuit in a court of competent jurisdiction to collect telephone user taxes allegedly owed by Service Provider for any of the periods from December 1998 through December 200 I, inclusive, when the principal amount of the tax allegedly owed for such period is $5,000,00 or less, In the event that a city or county taxing authority to whom the principal amount of telephone user taxes allegedly owed by Service Provider exceeds $5,000,00 brings a lawsuit in a court of competent jurisdiction to collect such taxes, Service Provider may enter into a settlement, stipulation, or agreement with such city or county taxing authority that includes payment of penalties or interest without incurring proportionate liability to CITY for penalties and interest under this paragraph 11 if: (i) Service Provider notifies CITY, in advance, of the proposed settlement, stipulation, or agreement; and (ii) the two municipalities to whom the largest principal amounts of telephone user taxes 5 7 ..', 2003-33 allegedly owed by Service Provider for such periods, which the parties agree shall be conclusively presumed to be the City of Los Angeles and the City of Long Beach, both consent in writing, to such settlement, stipulation, or agreement. 12, In the event proceedings are instituted to interpret or enforce this Agreement or to protect or establish any rights or remedies hereunder, the prevailing party shall be entitled to its costs and expenses, including reasonable attorney's fees and court costs, 13, This Agreement shall be governed and construed in accordance with the laws of California, In the event that any provision of this Agreement is held by a court of competent jurisdiction or other regulatory body having jurisdiction herein, to be unenforceable or invalid, such holding shall not render unenforceable any other provision of this Agreement, each provision being expressly severable and independently enforceable to the fullest extent permitted by law, 14, This Agreement is intended by the parties to benefit themselves only and is not in any way intended or designed to or entered into for the purpose of creating any benefit or right for any person or entity of any kind that is not a party to this Agreement. 15, Except as required by the California Public Records Act or other applicable municipal, state or federal law, the identity of the Service Provider, the terms of this Agreement, and the total amount of the telephone users tax paid to the Cities shall remain confidential between the parties, 16, This Agreement shall become effective as to CITY at such time as it is fully executed by both the Service Provider and the City official with authority to bind CITY. This 6 .... ..+- , 2003-33 Agreement may be signed in counterparts by the parties for all purposes, WE, THE UNDERSIGNED, HEREBY CERTIFY THAT WE HAVE READ THIS ENTIRE AGREEMENT AND HAVE HAD THE TERMS USED THEREIN AND THE CONSEQUENCES THEREOF EXPLAINED BY OUR RESPECTIVE ATTORNEYS. WE FULLY UNDERSTAND THE TERMS AND CONSEQUENCES OF THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE. IN TOUCH COMMUNICATIONS, INC. Dater ~/ S-~.3 . . THE CITY OF SAN BERNARDINO By: I , President Date: / - ,;)f} -,;2003 (~ By: Neil Derry, APPROVED AS TO FORM AND LEGAL CONTENT: Dated: James ?~ APPROVED AS TO FORM: Dated: ).- - '1. b"3 ~-~ u L CLARK, Esq, GOODIN, MACBRIDE, SQUERI, RITCHIE & DAY, LLP Attorneys for IA [ () v..eA...W ~.......- 7