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HomeMy WebLinkAbout22-City Administrator . , , ' CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: Fred Wilson, 0 n , ~ I H " L City Administrator h i ivl i I ~ ri Date: January 11, 2001 Subject: Resolution of the Mayor and Common Council authorizing the Mayor to execute an agreement with the BCI Coca-Cola Bottling Company, doing business as the Coca Cola Bottling Company, for the purpose of establishing a Public Private Partnership. Dept: Administration Synopsis of Previous Council Action: 9/16/99 - Resolution #1999-227 Mayor and Common Council authorized a services agreement with Public Enterprise Group for the purpose of developing public-private partnerships with private corporations and other entities and persons. 01/10101- Ways and Means Committee referred the item to Council for approval subject to the vending machine liability issue being resolved. Recommended Motion: Adopt Resolution ~ ~'---" , Signature Contact person: TAri R::IkAr Phone: Axt 51?? Supporting data attached: Staff report. resolution. Ward: All agreement FUNDING REQUIREMENTS: Amount: Anticipated revenue $74,480 annually or $744,800 over the life of the ten year agreement Source: (Acct. No.) CJOI-QJ(J-Ll9J1 (Ar.d nA!':r.riptinn) (ri:"tMl.- PIANO m,~. (.lJ. Finance: ~~~ I Council Notes: ) ,I 'J-z) f) I Agenda Item No. :J..J- CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION Staff Report SUBJECT Resolution of the Mayor and Common Council authorizing an agreement with the BCI Coca- Cola Bottling Company of Los Angeles, doing business as the Coca Cola Bottling Company, for the purpose of establishing a public-private partnership. BACKGROUND On September 7, 1999, the Mayor and Common Council approved a resolution authorizing a services agreement with the Public Enterprise Group (PEG) for the purpose of developing public-private partnerships with private corporations and other entities and persons. PEG, based in Huntington Beach, is a privately owned partnership that was formed with the primary mission of creating mutually beneficial business arrangements between corporations and municipalities. PEG has negotiated successful partnerships for other cities such as Huntington Beach and Garden Grove. PEG was higWy recommended by those cities. As part of that agreement, the consultant developed a list of potential partners for three categories of partnerships. Those categories include beverage, banking, and technology. Additionally. the consultant developed a marketing brochure on behalf of the City and developed a list of entities that potentially could become corporate partners. Under the terms of the PEG contract with the City, PEG is eligible to receive 12% commission on revenues generated by the first partnership agreement. Since the agreement was approved in September of 1999, the consultant has concentrated his efforts on soliciting proposals in the beverage category through a proposal process. Proposals were solicited from Coca-Cola and Pepsi-Cola. Coca-Cola initially declined the offer to submit a proposal because of a policy against dealing with cities and other entities represented by agents. Because of that policy. the consultant agreed to remove himself from the negotiating process between Coca-Cola and the City. This decision eliminated the consultant's potential commission on any agreement between the City and Coca-Cola, but opened the door for the City to work directly with Coca-Cola. PEG will continue to negotiate other types of a public-private partnership agreements on the City's behalf. The agreement with PEG will expire in September of2001. Comoarison of Peosi-Cola and Coca-Cola Prooosals: Pepsi-Cola proposed placing 34 vending machines on City property. The proposal offers the City a first year guarantee of $50,000 and an annual cash guarantee of $10,000 thereafter, for nine years. The proposal also offers a growth incentive (commission) of $6 - $8 per case above a benchmark level (benchmark rises approximately I % per year). Pepsi-Cola estimates that the growth incentive would average $7500 per year. The guaranteed ten year total of the Pepsi agreement is $140.000, with a potential growth incentive of $75,000 ($215,000 total, including guarantee. over ten years). Utility costs to the City would be approximately $10 per month per vending machine. Additionally. PEG would receive 12% commission on any agreement Staff Report- Coca-Cola Agreement January 16, 2001 Page I between the City and Pepsi-Cola, thus lowering the City's revenue by $26,000 over a ten-year agreement. The Pepsi-Cola proposal is summarized on a table in Attachment A. The Coca-Cola proposal offers a two year guarantee of $40.000 in revenue and estimates that the City's commission would provide an additional $34,800 annually during the two year period. The guaranteed total revenue of the Coca-Cola agreement is $80.000. with potential commissions of $664,800 ($744.800 total, including guarantee, over ten years). This estimate is based on the placement of 90 vending machines, eight cases per vending machine per month at City facilities. Vending machine placement will be mutually agreed upon by the City and Coke. All vending machines will be installed at no cost to the City. The Coca-Cola proposal is summarized on a table in Attachment A. Coca-Cola will also provide the following promotional items: Powerade Parks and Recreation Athletic Kit ($500 value) for every Powerade vendor placed (sport beverage drinks); an annual donation of 100 free cases of 12 ounce Coca-Cola products; and one recycling barrel for the plastic bottles and cans for every pair of vending machines placed. Additionally, the agreement offers a "Friends of the Park Program". Under this program, Coca-Cola would. at minimum, and subject to approval by the City, improve one park per year by replacing basketball backboards. Based on the 2 proposals received in the beverage category, staff recommended that the Mayor and Common Council approve the partnership agreement with Coca-Cola Bottling Company. The proposed partnership agreement between Coca-Cola and the City was referred to the Ways and Means Committee in October 2000. The Ways and Means Committee met three times between October and January to address contract terms and conditions. At those meetings, the committee discussed and resolved several issues regarding the proposed partnership agreement. The last remaining issue was a liability issue regarding vending machines. Since the issue was resolved to the satisfaction of the City Attorney's Office. the agreement is now before the full Council for final approval. The term of the proposed agreement with Coca-Cola is ten years and includes a "thirty day without cause" termination section for both parties. The agreement also includes category/exclusivity rights of Coca-Cola, product points of sale, maintenance of vending machines, commission payment schedules, and commission calculations. FISCAL IMPACT If this agreement with Coca-Cola is approved, the vending machines will be placed within 45 days. Quarterly guarantee (up-front) payments of $10,000 will begin March 15, 2001. Guarantee payment dates will be on 3/15, 6/15. 9/15. and 12/15 of each year thereafter. Commissions will be calculated and paid quarterly as well. Commission payments will begin on April 30, 2001. Commission payment dates will be on 1/31,4/30,7/31. and 10/30 of each year thereafter. Revenue to the General Fund FY 2000-0 I is expected to be $28.600 ($20,000 in guarantee plus $8,600 in potential commissions). Estimated utility charges for the remainder of this fiscal year will be $3600, which will be absorbed within the existing utility budget. Staff Report - Coca-Cola Agreement January 16, 200 I Page 2 Over the ten year term of the agreement, expected revenue will be $74,480 annually or $744,480 over the life. Utility charges are estimated to be $10,800 annually. Anticipated revenue from public-private partnerships was included in the adopted FY 2000-2001 budget. If the guaranteed revenue and expected commissions from this agreement exceed $50,000 in any given year, staff will bring forth a recommendation to Council to allocate a portion of the excess revenue to park improvements. RECOMMENDATION It is recommended that the Mayor and Common Council adopt the resolution and approve the proposed agreement the Coca-Cola Bottling Company. Staff Report- Coca-Cola Agreement January 16, 200 I Page 3 '" .. .. .. <'II e e =' '" - <'II '" o -( 0 ... .. =ll.. .. <'II e- ..c:: 0 <J~ <'II .. :t: '" -( .. ll.. "Cl = <'II <'II - o U , <'II " o U ~ -( ~ ;:J '" ~ '" o ll.. o Qii ll.. -( "'" o u , -( u o u '" e =' ... .. "Cl = .. Coo ~... 0 ~ 0 0 f!!:l' 00 ~ 0 ClCl ..'" , '<I" 00 I<:) =' '" 0 ..;: ~ 0 ..l = .. , .. <'II r- - I<:) .. .. '" '" "" ..> Qii - <'II =' = = -( '" e .e .. "Cl .. = 0 0 <::0 0 0 <'II .. 0 00 ~ 0 ClCl .. Co 0 '<I" 00 I<:) ...~ 0 ..;: :-.; 0 ..l Mtal '<I" <'l K - I<:) '" '" .... '" "" =' = .. ~ Qii '" e =' ... .. 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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT WITH BCI COCA-COLA BOTTLING COMPANY OF LOS ANGELES, DOING BUSINESS AS THE COCA-COLA BOTTLING COMPANY, FOR THE PURPOSE OF ESTABLISHING A PUBLIC PRIVATE PARTNERSHIP. BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE 6 CITY OF SAN BERNARDINO AS FOLLOWS: 7 8 9 10 11 12 13 14 15 SECTION 1. The Mayor and Common Council of the City of San Bernardino is hereby authorized and directed to execute on behalf of said City an agreement with Coca- Cola Bottling Company, a copy of which is attached hereto, marked Exhibit "A" and incorporated herein by reference as fully as though set forth at length. SECTION 2. This resolution is rescinded if the parties to the Agreement fail to execute it within sixty days of the passage of this resolution. 1/1 III 16 III 17 18 III 19 III 20 11/ 21 III 22 III 23 III 24 III 25 11/ 26 27 11/ 28 V'LllO I di-7.:L RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT WITH BCI COCA-COLA BOTTLING COMPANY OF LOS ANGELES, DOING BUSINESS AS THE COCA-COLA BOTTLING COMPANY, FOR THE PURPOSE OF ESTABLISHING A PUBLIC PRIVATE PARTNERSHIP. 1 2 3 4 5 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor 6 and Common Council of the City of San Bernardino at a meeting thereof, held on the 7 8 9 10 11 12 13 14 15 16 17 18 19 20 2001. _ day of ,2001. by the following vote, to wit: Council Members: AYES NAYS ABSTAIN ABSENT ESTRADA LIEN MCGINNIS SCHNETZ SUAREZ ANDERSON MCCAMMACK City Clerk The foregoing resolution is hereby approved this day of 21 22 23 24 Approved as to Form and legal content: 25 JAMES F. PENMAN. 26 City A orney 27 28 Judith Valles, Mayor City of San Bernardino Exhibit A LONG TERM PARTNERSIDP AGREEMENT BETWEEN THE CITY OF SAN BERNARDINO AND BCI COCA-COLA BOTTLING COMPANY OF LOS ANGELES DOING BUSINESS AS THE COCA-COLA BOTTLING COMPANY THIS AGREEMENT entered into this day of ,2001, by and between BCI COCA-COLA BOTTLING COMPANY OF LOS ANGELES DOING BUSINESS AS the COCA-COLA BOTTLING COMPANY of South em California, a Delaware Corporation ("COMPANY") and the CITY OF SAN BERNARDINO ("CITY"). WITNESSETH: WHEREAS. CITY owns, operates or is responsible for libraries, police and fire stations, and other facilities such as sports and recreation facilities, parking lots, bus shelters and city events; and WHEREAS, COMPANY wishes to establish a strategic alliance and long-term partnership with CITY for funding of amenities, security, and improvements, and the promotion and sale ofCOMPANY'S beverage products. NOW, THEREFORE, the parties hereto agree as follows: Section 1. General Scone of Services. The City shall grant to Coca-Cola the exclusive beverage sales and vending rights at all City locations as these may be defined in this Agreement. In consideration for the exclusive beverage sales and vending rights to the City, Coca-Cola shall provide, install, 1 and maintain all equipment necessary to facilitate the continued sale of beverage products, and shall pay commissions as set forth herein. Section 2. Territorv/Catel!:orv Exclusivitv. City grants to Company the right of "Territory Exclusivity," for non-alcoholic beverage rights subject to the limitations set forth herein. For the purposes of this Agreement, "Territory Exclusivity" is defined as exclusivity as to all properties owned by City and within the City limits, including City parks & recreation facilities, City offices, other public and municipal facilities. City grants to Company the right of "Category Exclusivity," subject to the limitations set forth herein. For the purposes of this Agreement, "Category Exclusivity" is defined as insuring that Company is the only company provided exclusivity with respect to all carbonated and non-carbonated, non-alcoholic beverages of any kind, including without limitation soft drinks, juices, juice drinks, teas, isotonics, water and frozen beverages. Section 3. Al!:reement Monitorinl!: Company designates the Coca-Cola Los Angeles Southern California Rancho Cucamonga Office shall represent it and be its sole contact and agent in all consultations with City during the performance and implementation of this Agreement throughout the entire term of the Agreement. Company also designates the Coca-Cola Los Angeles Southern California Rancho Cucamonga Office will be available to answer all questions regarding maintenance and repairs and who will visit the City of San Bernardino on a monthly basis. The Rancho Cucamonga Office will supervise the delivery and service 2 personnel assigned to the City and will be responsible for maintaining all vending machines in an aesthetically pleasing and operable condition. City hereby designates the City Administrator of San Bernardino, or hislher designee, who shall represent it and be its sole contact and agent in all consultations with Company during the performance and implementation of this Agreement throughout the entire term of the Agreement. Section 4. Term. The term of this Agreement shall be for 10 years unless sooner terminated as herein provided. The term shall commence upon placement of all vending machines and equipment within the City. All vending machines and equipment shall be delivered, installed, and operational within forty five (45) days from the execution of this Agreement. Section 5. Points of Sale. City shall make its best effort to provide Company with the following points of sale for its beverage products: · All designated vending locations by City, with a minimum of ninety (90) vending locations throughout the Term; a). Vendinl! machine locations: Company shall have access to all vending machine locations designated by City. With regard to vending machine locations, Company will provide the power hook-up of electrical utility to all vending machine locations (at a cost not to exceed $300), which do not already have available electrical hookup. Company shall have the responsibility to connect the vending machines to the stub-out sites and City shall pay for any electricaVutility charges incurred for the operation of the vending machines. Vending machines will be installed by Company at no cost to the City. Company will provide one Powerade Parks & Recreation Athletic Kit. with a retail value of $500.00, for every Powerade vending machine (sport drinks) placed (while supplies last). Company will provide 100 free cases of 12 oz. cans on a yearly basis to City. 3 Company will also provide one recycling barrel for every pair of vending machines placed. b). City Locations: During the term of this Agreement, Company shall have the exclusive right to sell beverages at City locations excluding those locations where the City is currently under contract with a third party for the supply of beverages. No other third party agreements shall be entered into during the Term of this Agreement. Upon expiration of any such third party agreement, the City shall include those locations and/or facilities as part of the locations for purposes of this Agreement. c) Exclusivity exclusions: This exclusive right to sell beverages at City locations shall not include the right to sell such beverages at events, which are not solely sponsored by the City. Notwithstanding the language in this section or this Agreement, regardless of sponsorship this exclusion specifically applies to the Route 66 Rendezvous. Section 6. Friends of the Park Prol!:ram Coca- Cola will implement a "friends of the Park Program", under which Coca- Cola will, at minimum, and subject to prior approval by the City, improve one (I) park per year by replacing basketball backboards. Section 7. Annual Commission. In consideration of the rights and privileges provided to Company under this Agreement, Company agrees to pay City guaranteed annual commission of $40.000. paid in quarterly payments of $1 0,000, for the first two (2) years of this Agreement. The guaranteed payments shall commence the first quarter after all vending machines are in place, as provided in Section 2. Coca-Cola will pay the remaining amount of eamed commissions "Other Commission" at the end of the quarter based upon actual sales. Commencing in the third year, and continuing through the remainder of this agreement, Coca-Cola agrees to pay to the City upon the beginning of each quarter one half of the estimated commissions ("Up front Commission"). Additionally, Coca-Cola will continue 4 to pay the remaining amount of "Other Commission" at the end of the quarter based upon actual sales. Total commission to the City is set at 40% of actual sales, net of taxes and CRY. Company estimates that City's commission will total $744,768 over the term of this agreement, as set forth in the formula provided in attachment A, which is incorporated herein in its entirety by reference. Company will take out CRY and sales tax before the commission is calculated. The commissions specified in this Section shall be paid by Company to the City Treasurer at 300 North 'D' Street, San Bernardino, CA. 92418-0001 or at such other place or places as City may from time to time designate by written notice delivered to Company. The quarterly guaranteed payments for the first two years of this agreement and "Up Front Commission" for the remaining eight years of this agreement shall be due on December 15. March 15. June 15, and September 15 of each year until the agreement term is completed. "Other Commission" payments shall be calculated and due at the end of each quarter. Quarterly growth incentive payments shall be due on January 30, April 30, July 31. and October 31 of each year until this agreement is fully executed. Commission payments are calculated as set forth in the formula provided in Attachment A; which is incorporated herein in its entirety by reference. Section 8. Financial Statements On or before the 25th day of each calendar month during the term hereof, commencing upon execution of this agreement, and extending through the remainder of this agreement, Coca-Cola shall submit to the City at the place where payments are to be 5 made under this Agreement, a written statement, on a form approved by the City and subscribed and certified to by Coca-Cola, showing an itemization of gross beverage and vending sales for the preceding calendar month, together with a certified statement as to all items of inventory. Coca-Cola agrees to permit the City and its agents and representatives at reasonable intervals at any and all times upon reasonable advance notice during Coca-Cola's usual business hours, to inspect all books, records and accounts for the gross sales and inventories provided to City locations. Section 9. Maintenance ofvendinl!: machines and other eauiDment. Company agrees to maintain its vending machines, signs and other equipment installed and/or operated pursuant to this Agreement in good order and repair at Company's own cost and expense during the entire term of this Agreement. Company shall perform at its own cost and expense (within 48 hour response time) any required maintenance and repairs, and should Company fail, neglect or refuse to do so, City shall have the right to perform such maintenance or repairs for Company, and Company agrees to promptly reimburse City for the cost thereof, provided, however, that City shall first give Company seven (7) days written notice of its intention to perform such maintenance or repairs for Company for the purpose of enabling Company to proceed with such maintenance or repairs at its own expense. City shall not be obligated to make any repairs to. nor maintain. any vending machines, signs or other equipment installed and/or operated by Company pursuant to this Agreement. City will assist the Company in expediting the required permit and inspection process that may be necessary for installation of the vending machines. Company agrees that vending machines shall be specially designed for outdoor service, and are vandal resistant. Company agrees to re- 6 stock vending machines as often as needed and to adjust route service as necessary during peak business periods. Company agrees to remove any graffiti on vending machines on a weekly basis. City shall be responsible for any damage to machines directly caused by its employees or contractors. Section 10. Insurance. While not restricting nor limiting the foregoing, during the term of this Agreement, Company shall maintain in effect policies of comprehensive public, general and automobile liability insurance. in the amount of$ 1 ,000,000.00 combined single limit, and statutory Worker's compensation coverage, and shall file copies of said policies with the City's Risk Manager prior to undertaking any work under this Agreement. City shall be set forth as an additional named insured in each policy of insurance provided hereunder. The Certificate ofInsurance furnished to the City shall require the insurer to notify City of any change or termination in the policy. Section 11. Indemnitv. Company shall indemnify, defend and hold hannless the City, its officers, employees and agents (including, without limitation, reasonable costs of defense and reasonable attorney's fees) arising out of or related to Company's negligence in its performance of this Agreement, except that such duty to indemnify, defend and hold hannless shall not apply where injury to person or property is caused by City's willful misconduct or negligence. The costs, salary and expenses ofthe City Attorney and members of his office in enforcing this Agreement on behalf of City shall be considered as "attorney's fees" for the purposes of this paragraph. 7 Section 12. No emplovment. Company shall perform work tasks provided by this Agreement; but for all intents and purposes, Company shall be an independent contractor and not an agent or employee of the City. Company shall not receive any salary, bonuses, nor employment benefits from the City. Section 13. Termination Provisions. A) The term of this Agreement shall be for ten (10) years, from the date above. B) Any time after ninety (90) days following the execution of this Agreement, this Agreement may be terminated without cause upon ninety (90) days written notice by either Company or City. C) In the event Company or any employee of Company breaches this Agreement, City shall have the right to terminate this Agreement immediately upon written notice to Company. City shall have no obligation to pay any costs to Company (i.e. removal of equipment). Termination of this Agreement by City shall not limit any other right or remedy which City may have under this Agreement, at law or in equity. D) In the event of any early termination of this Agreement by the CITY, CITY shall pay to COMPANY all pre-paid but unearned commissions or Up-Front commissions. Commissions shall be earned based on formula set out in section 7 above. Unearned or Up-Front Commissions shall be returned to Company within 30 days of City receiving final financial statement from Company, as provided in Section 8 herein. Section 14. Removal ofvendine: machines and other equipment and loss of rie:hts after termination. Within ninety (90) days after this Agreement is terminated for any 8 reason, Company shall remove all vending machines, and other equipment or signs that Company installed and/or operated pursuant to this Agreement, if City so desires, except as expressly excepted by City in writing. If Company fails to remove the above vending machines. signs, and equipment within this ninety (90) day period, City may: (a) Continue this Agreement in effect. in which event City shall be entitled to enforce all of its rights and remedies under this Agreement, including the right to recover the annual fee specified in this Agreement; or (b) Remove the above vending machines, signs and equipment at Company's sole cost and expense and recover any amount necessary to compensate City for all detriment proximately caused by Company's failure to perform its obligations under this Agreement. In addition. all rights granted to Company under this Agreement including, but not limited to, Territory Exclusivity, Category Exclusivity, rights to conduct sampling activities within the city limits of San Bernardino. and rights to participate in City events, shall cease upon the termination of this Agreement. Company agrees that immediately after termination of this Agreement, City shall have the right, and Company waives any claims against City, to enter into another similar type contract with a competitor of Company. Section 15. Entire A2reement IAmendment. This Agreement comprises the entire agreement of and between the parties with respect to the subject matter hereof. This Agreement may be amended or supplemented only by written agreement of City and Company. Section 16. Waiver of Breach. Any failure of Company and City to comply with any provision of this Agreement may be expressly waived in writing, but such waiver shall not be construed as a waiver of or an estoppel with respect to any subsequent or other breach. 9 Section 17. Assil!:nment: Successors and Assil!Ds. Company shall have no right to assign, sell, transfer or delegate. whether involuntary or by operation of law, any right or obligation under this Agreement without the prior written consent of City. Any purported assignment, transfer or delegation in violation of this section shall be null and void. Subject to the foregoing limits on assignment and delegation, this Agreement shall be binding and shall insure the benefits of the parties and their respective successors and assigns. Section 18. Controllinl!: Law. The validity, interpretation, and performance of this Agreement shall be controlled by and construed under the laws of the State of California. Section 19. Notices. Any notice to be given pursuant to this Agreement shall be deposited with the United States Postal Services, postage prepaid and addressed as follows: 10 TO THE CITY: City Administrator's Office 300 North "0" Street San Bernardino, CA 92418 Facsimile (909) 384-5138 TO THE COMPANY: Coca-Cola Bottling Company 10607 Sixth Street Rancho Cucamonga, CA. 91730 Facsimile (909) 476-1628 Notice may also be given by facsimile ("fax") during regular business hours to the numbers listed above, and such notice shall be deemed given upon receipt as reflected in a transmission verification. Nothing in this paragraph shall be construed to prevent the giving of notice by personal service. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and date first above written. Date: .2001 BCI Coca-Cola Bottling of Los Angeles, Doing Business as the Coca-Cola Bottling Company of Southern California City of San Bernardino B~ By: Date: Date: A TrEST: Rachel Clark, City Clerk Approve As To Form And Legal Content: James F. Penman, City Attorney Bcf-l~ 11 Attachment A COMMISSION BREAKDOWN FOR THE CITY OF SAN BERNARDINO Vend Rate- 20oz. $1.00 x 24 Bottles $24.00 7.75% Tax -$ 1.86 CRV -$ .60 $21.54 Commission @ x40% Profit 1 case = $8.62 Net Profit to City Per Case Estimated Commissions: 1. At 8 Cases per month = $68.96 x 12 mo. = $827.52 x 90 vendors = $ 74,476.80 Potential Commissions per year 10 YEARS = $744,768.00 Potential Comm. @ 8 Cases per vendor per month. 2. At 12 Cases mo. = $103.44 x 12 mo. = $1241.28 x 90 vendors = $111,715.20 Potential Commissions per year 10 YEARS = $1,117,152.00 Potential Comm. @ 12 Cases per vendor per month. 3. At 15 Cases mo. = $129.30 x 12 mo. = $1,551.60 x 90 vendors = $139,644.00 Potential Commissions per year 10 YEARS = $1,396,449.00 Potential Comm. @ 15 Cases per vendor per month. January 26,2001 Steve Letco Cold Drink Manager Coca-Cola Bottling Company 10607 Sixth Street Rancho Cucamonga, CA 91730 Dear Mr. Letco, At the Mayor and Common Council meeting of January 22, 2001. the City of San Bernardino adopted Resolution 2001-23 - Resolution authorizing the Mayor to execute an agreement with BCI Coca-Cola Bottling Company of Los Angeles, doing business as the Coca-Cola Bottling Company, for the purpose of establishing a public private partnership. Enclosed is one (1) original agreement. Please sign in the appropriate location and return the original agreement to the City Clerk's Office, Attn: Michelle Taylor. P.O. Box 1318, San Bernardino, CA 92402, as soon as possible. Please retain a copy of the agreement for your files. Please be advised that the resolution and agreement wiD be nun and void if not executed within 60 days, or by March 23, 2001. If you have any questions. please do not hesitate to contact me at (909)384-5002. Sincerely, Michelle Taylor Senior Secretary CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: Fred Wilson, City Administrator Dept: Administration 0 R ; C : ; : A L , Date: August 17, 2000 Subject: Resolution of the Mayor and Common Council authorizing the Mayor to execute an agreement with the Coca- Cola Bottling Company for the purpose of establishing a Public Private Partnership. Synopsis of Previous Council Action: 9/16/99 - Resolution #1999-227 Mayor and Common Council authorized a services agreement with Public Enterprise Group for the purpose of developing public-private partnerships with private corporations and other entities and persons. Recommended Motion: Adopt Resolution P6t"~ Contact person: Tp.ri R::Ikp.r Phone: P.xt !i1?? Supporting data attached: Staff report. resolution. Ward: All agreement FUNDING REQUIREMENTS: Amount: No net eost (see staff report) Source: (Aeel. No.) (Ar:d n""'r:riptinn) Finance: fiAj.{J../?l/~-f1aj;/ Council Notes: 'fllg//)o , I Agenda Item No. ~ 7 CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION Staff Report SUBJECT Resolution of the Mayor and Common Council authorizing an agreement with the Coca-Cola Bottling Company for the purpose of establishing a public-private partnership. BACKGROUND On September 7, 1999, the Mayor and Common Council approved a resolution authorizing a services agreement with Public Enterprise Group (PEG) for the purpose of developing public- private partnerships with private corporations and other entities and persons. PEG, based in Huntington Beach, is a privately owned partnership that was formed with the primary mission of creating mutually beneficial business arrangements between corporations and municipalities. PEG has negotiated successful partnerships for other cities such as Huntington Beach and Garden Grove. PEG was highly recommended by those cities. As part of that agreement, the consultant developed a list of potential partners for three categories of partnerships. Those categories include beverage, banking, and technology. Additionally, the consultant developed a marketing brochure on behalf of the City and developed a list of entities that potentially could become corporate partners. Under the terms of the PEG contract with the City, PEG is eligible to receive 12% commission on revenues generated by the first partnership agreement. Since the agreement was approved last year, the consultant has concentrated his efforts on soliciting proposals in the beverage category through a proposal process. Proposals were solicited from Coca-Cola and Pepsi-Cola through a proposal process. Coca-Cola initially declined the offer to submit a proposal because of a policy against dealing with cities and other entities represented by agents. Because of that policy, the consultant agreed to remove himself from the negotiating process between Coca-Cola and the City. This decision eliminated the consultant's potential commission on any agreement between the City and Coca-Cola, but opened the door for the City to work directly with Coca-Cola. PEG will continue to negotiate other types of a public-private partnership agreements on the City's behalf. The agreement with PEG will expire in September of 200 1. Comparison of Pepsi-Cola and Coca-Cola Proposals: Pepsi-Cola proposed placing 34 vending machines on City property. The proposal offers the City a first year guarantee of $50,000 and an annual cash guarantee of $1 0,000 thereafter for nine years. The proposal also offers a growth incentive (commission) of $6 - $8 per case above a benchmark level (benchmark rises approximately I % per year). Pepsi-Cola estimates that the growth incentive would average $7500 per year. The guaranteed ten year total of the Pepsi agreement is $140.000, with a potential growth incentive of $75,000 ($215,000 total, including guarantee, over ten years). Utility costs to the City would be approximately $10 per month per vending machine. Additionally, the PEG would receive 12% commission on any agreement Staff Report - Coca-Cola Agreement August 17. 2000 Page] between the City and Pepsi-Cola, thus lowering the City's revenue by $26,000 over a ten-year agreement. The Pepsi-Cola proposal is summarized on a table in Attachment A. The Coca-Cola Company's proposal offers $40,000 in guaranteed annual revenue, but estimates the City's commission would provide an additional $34,800 annually. This estimate is based on the placement of 90 vending machines, eight cases per vending machine per month at City facilities. Vending machine placement will be mutually agreed upon by the City and Coke. Additionally, Coca-Cola will provide the following promotional items: Powerade Parks and Recreation Athletic Kit ($500 value) for every Powerade vendor placed (sport beverage drinks); an annual donation of25 free cases of 12 ounce Coca-Cola products; and one recycling barrel for the plastic bottles and cans for every pair of vending machines placed. All vending machines will be installed at no cost to the City. The term of the agreement is 10 years. The guaranteed ten year total of the Coca-Cola agreement is $400.000, with potential commissions of $344,800 ($744,800 total, including guarantee, over ten years). The Coca-Cola proposal is summarized on a table in Attachment A. Additionally, Coca-Cola offers a "Friends of the Park Program". Under this program, Coca-Cola would, at minimum, and subject to approval by the City, improve one park per year by replacing basketball backboards. Based on the 2 proposals received in the beverage category, staff recommends that the Mayor and Common Council adopt the resolution approving a partnership agreement with Coca-Cola Bottling Company. The term of the proposed agreement with Coca-Cola is ten years and includes a thirty day without cause termination section for both parties. The agreement also includes category/exclusivity rights of Coca-Cola, product points of sale, maintenance of vending machines, and the annual fee. FISCAL IMPACT If this agreement with Coca-Cola is approved, the vending machines will be placed within 30 days. Quarterly payments of $10,000 will begin September 30, 2000. Commissions will be calculated and paid quarterly. Revenue to the General Fund FY 2000-01 will be $40,000 and potential revenue from commissions for the remainder of this fiscal year of $17,300. Estimated utility charges for the first year are $8100, which will be absorbed within the existing utility budget. Revenue received from this agreement for FY 2001-02 through FY 2009-10 will be $40,000 guaranteed annually, and $34,480 annually in potential. Utility charges are estimated to be $10,800 annually. Anticipated revenue from public-private partnerships was included in the adopted FY 2000-2001 budget. If the guaranteed revenue and expected commissions from this agreement exceed $50,000, staff will bring forth a recommendation to Council at mid-year to allocate a portion of the excess revenue to park improvements. Staff Report - Coca-Cola Agreement August 17, 2000 Page 2 RECOMMENDATION It is recommended that the Mayor and Common Council adopt the resolution and approve the proposed agreement with Coca-Cola Bottling Company. Staff Report - Coca-Cola Agreement August 17. 2000 Page 3 Attachment A Pepsi-Cola and Coca-Cola Proposal Summaries COCA-COLA PROPOSAL SUMMARY 1~' YEAR REVENUEIEXPENDITURES ANNUAL REVENUEIEXPENDITURES Guaranteed Revenue $40,000 Guaranteed Revenue $40,000 Potential $17,300 Potential $34,480 Commissions Commissions Sub Total Revenue $57,300 Sub Total Revenue $74.480 Less Utility $ 8,100 Less Utility $10,800 Expenditure Expenditure Total Expected $49,200 Total Expected $63,680 Revenue 151 Year Revenue Annually PEPSI-COLA PROPOSAL SUMMARY 1" YEARREVENUEIEXPENDITURES ANNUAL REVENUEIEXPENDITURES Guarantee $50,000 Guarantee $10,000 Potential Revenue $ 7,500 Potential Revenue $ 7,500 Sub Total Revenue $57,500 Sub Total Revenue $17,500 Less Utility $ 3,060 Less Utility $ 4,080 Expenditure Expenditure Less 12% commission $ 6,900 Less 12% commission $ 2,100 to PEG to PEG Total Expected $47,540 Total Expected $ 11,320 Revenue 151 Year Revenue Annually 1 2 3 4 5 6 7 8 9 10 11 12 13 14 RESOLUTION NO. RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT WITH COCA-COLA BOTTLING COMPANY FOR THE PURPOSE OF ESTABLISHING A PUBLIC PRIVATE PARTNERSHIP BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: SECTION 1. The Mayor and Common Council of the City of San Bernardino is hereby authorized and directed to execute on behalf of said City an agreement with Coca- Cola Bottling Company, a copy of which is attached hereto, marked Exhibit "A" and incorporated herein by reference as fully as though set forth at length. SECTION 2. This resolution is rescinded if the parties to the Agreement fail to execute it within sixty days of the passage of this resolution. III III 15 16 III 17 1/1 18 1/1 19 1/1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT WITH COCA-COLA BOTTLING COMPANY FOR THE PURPOSE OF ESTABLISHING A PUBLIC PRIVATE PARTNERSHIP I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and Common Council of the City of San Bernardino at a meeting thereof, held on the _ day of , 2000, by the following vote, to wit: Council Members: AYES NAYS ABSTAIN ABSENT ESTRADA LIEN MCGINNIS SCHNETZ SUAREZ ANDERSON 16 MCCAMMACK 17 18 City Clerk 19 20 2000. 21 22 The foregoing resolution is hereby approved this day of Judith Valles, Mayor City of San Bernardino 23 Approved as to 24 Form and legal content: 25 26 27 28 JAMES F. PENMAN, City Attorney By: Exhibit A LONG TERM PARTNERSHIP AGREEMENT BETWEEN THE CITY OF SAN BERNARDINO AND THE COCA-COLA BOTTLING COMPANY THIS AGREEMENT entered into this day of September, 2000, by and between the COCA-COLA BOTTLING COMPANY, a California Corporation ("COMPANY") and the CITY OF SAN BERNARDINO ("CITY"). WITNESSETH: WHEREAS, CITY is responsible for libraries, police and fire stations, and other facilities such as sports and recreation facilities, parking lots, bus shelters and city events; and WHEREAS, CaMP ANY wishes to establish a strategic alliance and long-term partnership with City for funding of amenities, security, and improvements. NOW, THEREFORE, the parties hereto agree as follows: Section 1. Companv Exclusivity Riehts . City, in consideration of the Agreement hereinafter stated, grants to Company for the purposes stated herein, rights and privileges to certain territory exclusivity, category exclusivity, access to special City held events, and provisions of exclusive vending locations on City property as further described herein. Section 2. Aereement Monitorine Company designates Steve Letco, Cold Drink Manager, who shall represent it and be its sole contact and agent in all consultations with City during the performance and implementation of this Agreement throughout the entire term of the Agreement. I Company also designates Joe Melot, Cold Drink Account Representative, who will be available to answer all questions regarding maintenance and repairs and who will visit the City of San Bernardino on a monthly basis. David Liams, Full-Service Manager, will supervise the delivery and service personnel assigned to the City. Robert Turman, Vending Machine Technician, will be responsible for maintaining all vending machines in an aesthetically pleasing and operable condition. City hereby designates the City Administrator of San Bernardino, or his/her designee, who shall represent it and be its sole contact and agent in all consultations with Company during the performance and implementation of this Agreement throughout the entire term of the Agreement. Section 3. Territorv/Catel!:orv Exclusivitv. City grants to Company the right of "Territory Exclusivity." for non-alcohol beverage rights subject to the limitations set forth herein. For the purposes of this Agreement, "Territory Exclusivity" is defined as exclusivity as to all properties owned by City and within the City limits, including City parks & recreation facilities, City offices, other public and municipal facilities. City grants to Company the right of "Category Exclusivity," subject to the limitations set forth herein. For the purposes of this Agreement, "Category Exclusivity" is defined as insuring that Company is the only company provided exclusivity with respect to all carbonated and non-carbonated, non-alcoholic beverages defined as soft drinks, juices, juice drinks, teas. isotonics, water and frozen beverages. Section 4. Term. The term of this Agreement shall be for 10 years from the date of this Agreement, 2 unless sooner terminated as herein provided. Section 5. Points of Sale. City shall make its best effort to provide Company with the following points of sale for its beverage products: . All designated vending locations by City, with a minimum of ninety (90) vending locations; . Exclusive City sponsored special events a). Vending machine locations: Company shall have access to all vending machine locations designated by City. With regard to vending machine locations, Company will provide the power hook-up of electrical utility to all vending machine locations (at a cost not to exceed $300), which do not already have available electrical hookup. Company shall have the responsibility to connect the vending machines to the stub-out sites and City shall pay for any electrical/utility charges incurred for the operation of the vending machines. Vending machines will be installed by Company at no cost to the City. Company will provide one Powerade Parks & Recreation Athletic Kit, with a retail value of $500.00, for every Powerade vending machine (sport drinks) placed (while supplies last). b) Exclusive City Soonsored Soecial Events: City grants Company the right to participate creatively in all exclusive City sponsored special events through beverage sales, sampling activities, signage at mutually agreed upon locations and event marketing, all of which are subject to the prior written approval of City. Company will provide 25 free cases of 12 oz. cans on a yearly basis to City. Company will also provide one recycling barrel for every pair of vending machines placed. Section 6. Friends of the Park Proeram Coca- Cola will implement a "Friends of the Park Program", under which Coca- Cola will, at minimum, and subject to prior approval by the City, improve one (I) park per year by replacing basketball backboards. Section 7. Annual Commission. In consideration of the rights and privileges provided to Company under this Agreement. Company agrees to pay City guaranteed annual commission of $40.000. paid in quarterly payments of $10,000, for each ofthe 10 years ofthis Agreement 3 (payment commences September 30, 2000, with final payment to be made on September 30, 2009). The fee specified in this Section shall be paid by Company to the City Treasurer at 300 North 'D' Street, San Bernardino, CA. 92418-0001 or at such other place or places as City may from time to time designate by written notice delivered to Company. The quarterly fee shall be due on September 30, December 31, March 31, and June 30 of each year until the agreement term is completed. Additionally, Company estimates there will be $344,800.00 in potential growth incentive commissions to City over ten years. Total growth incentive commission to the City is set at 40% of actual sales. Company will take out CRY and sales tax before the commission is calculated. Growth incentive payments shall be calculated and due at the end of each quarter. Quarterly growth incentive payments shall be due on January 1, April 1 , July 1, and October 1 of each year until this agreement is fully executed. Section 8. Maintenance of vend in I! machines and other equipment. Company agrees to maintain its vending machines, signs and other equipment installed and/or operated pursuant to this Agreement in good order and repair at Company's own cost and expense during the entire term of this Agreement. Company shall perform at its own cost and expense (within 48 hour response time) any required maintenance and repairs, and should Company fail, neglect or refuse to do so, City shall have the right to perform such maintenance or repairs for Company, and Company agrees to promptly reimburse City for the cost thereof, provided, however, that City shall first give Company seven (7) days written notice of its intention to perform such maintenance or repairs for Company for the purpose of enabling Company to proceed with such 4 maintenance or repairs at its own expense. City shall not be obligated to make any repairs to, nor maintain, any vending machines, signs or other equipment installed and/or operated by Company pursuant to this Agreement. City will assist the Company in expediting the required permit and inspection process that may be necessary for installation of the vending machines. Company agrees that vending machines shall be specially designed for outdoor service, and are vandal resistant. Company agrees to re- stock vending machines as often as needed and to adjust route service as necessary during peak business periods. Company agrees to remove any graffiti on vending machines on a weekly basis. Section 9. Insurance. While not restricting nor limiting the foregoing, during the term of this Agreement, Company shall maintain in effect policies of comprehensive public, general and automobile liability insurance, in the amount of$I,OOO,OOO.OO combined single limit, and statutory Worker's compensation coverage, and shall file copies of said policies with the City's Risk Manager prior to undertaking any work under this Agreement. City shall be set forth as an additional named insured in each policy of insurance provided hereunder. The Certificate of Insurance furnished to the City shall require the insurer to notify City of any change or termination in the policy. Section 10. Indemnitv. Company shall indemnify, defend and hold harmless the City, its officers, employees and agents (including, without limitation, reasonable costs of defense and reasonable attorney's fees) arising out of or related to City's performance of this Agreement, except that such duty to indemnify, defend and hold harmless shall not apply 5 where injury to person or property is caused by City's willful misconduct or gross negligence. The costs, salary and expenses of the City Attorney and members of his office in enforcing this Agreement on behalf of City shall be considered as "attorney's fees" for the purposes of this paragraph. Section 11. No emplovment. Company shall perform work tasks provided by this Agreement; but for all intents and purposes, Company shall be an independent contractor and not an agent or employee of the City. Company shall not receive any salary, bonuses, nor employment benefits from the City. Section 12. Severabilitv. A) The term of this Agreement shall be for ten (10) years, from the date above. B) Any time after ninety (90) days following the execution of this Agreement, this Agreement may be terminated without cause upon thirty (30) days written notice by either Company or City. C) In the event Company or any employee of Company breaches this Agreement, City shall have the right to terminate this Agreement immediately upon written notice to Company. City shall have no obligation to pay any costs to Company (i.e. removal of equipment). Termination of this Agreement by City shall not limit any other right or remedy which City may have under this Agreement, at law or in equity. Section 13. Removal of vend in I! machines and other equipment and loss of ril!hts after termination. Within ninety (90) days after this Agreement is terminated for any reason, Company shall remove all vending machines, and other equipment or signs that Company installed and/or operated pursuant to this Agreement, if City so desires, except 6 as expressly excepted by City in writing. If Company fails to remove the above vending machines, signs, and equipment within this ninety (90) day period, City may: (a) Continue this Agreement in effect, in which event City shall be entitled to enforce all of its rights and remedies under this Agreement, including the right to recover the annual fee specified in this Agreement; or (b) Remove the above vending machines, signs and equipment at Company's sole cost and expense and recover any amount necessary to compensate City for all detriment proximately caused by Company's failure to perform its obligations under this Agreement. In addition, all rights granted to Company under this Agreement including, but not limited to, Territory Exclusivity, Category Exclusivity, rights to conduct sampling activities within the city limits of San Bernardino, and rights to participate in City events, shall cease upon the termination of this Agreement. Company agrees that immediately after termination of this Agreement, City shall have the right, and Company waives any claims against City, to enter into another similar type contract with a competitor of Company. Section 14. Entire Al!reement Amendment. This Agreement comprises the entire agreement of and between the parties with respect to the subject matter hereof. This Agreement may be amended or supplemented only by written agreement of City and Company. Section 15. Waiver of Breach. Any failure of Company and City to comply with any provision of this Agreement may be expressly waived in writing, but such waiver shall not be construed as a waiver of or an estoppel with respect to any subsequent or other breach. 7 Section 16. Assil!Dmeut: Successors and Assil!Ds. Company shall have no right to assign, sell, transfer or delegate, whether involuntary or by operation of law, any right or obligation under this Agreement without the prior written consent of City. Any purported assignment, transfer or delegation in violation of this section shall be null and void. Subject to the foregoing limits on assignment and delegation, this Agreement shall be binding and shall insure the benefits of the parties and their respective successors and assigns. Section 17. Controllinl! Law. The validity, interpretation, and performance of this Agreement shall be controlled by and construed under the laws of the State of California. Section 18. Notices. Any notice to be given pursuant to this Agreement shall be deposited with the United States Postal Services, postage prepaid and addressed as follows: TO THE CITY: City Administrator's Office 300 North "D" Street San Bernardino, CA 92418 Facsimile (909) 384-5138 TO THE COMPANY: Coca-Cola Bottling Company 10607 Sixth Street Rancho Cucamonga, CA. 91730 Facsimile (909) 476-1628 Notice may also be given by facsimile ("fax") during regular business hours to the numbers listed above, and such notice shall be deemed given upon receipt as reflected in a transmission verification. Nothing in this paragraph shall be construed to prevent the giving of notice by personal service. 8 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and date first above written. Date: September ,2000 Coca-Cola Bottling Company City of San Bernardino By: By: Date: Date: ATTEST: Rachel Clark, City Clerk Approve As To Form And Legal Content: James F. Penman, City Attorney By: 9 , , ** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT ** RESOLUTION AGENDA ITEM TRACKING FORM Meeting Date (Date Adopted): I - 'Z. 2. -~ \ Item # Vote: Ayes I-I) Nays ..f'T Change to motion to amend original documents: ?.. L. Resolution # 2.00 \ - '23 Abstain -0-' Absent --6- Reso. # On Attachments: ,/ Contract term: - 3-2'3-()( NullNoid After: too OA<j's Note on Resolution of Attachment stored separately: -==- Direct City Clerk to (circle I): PUBLISH, POST, RECORD W/COUNTY Date: - See Attached: -= Date Sent to J~ Date of Mayor's Signature: Date of~DC Signature: \-;:J<'\-O\ \- ;Y; -0\ 1-';15'-\:)\ Reso. Log Updated: Seal Impressed: ,/ v" Date MemolLetter Sent for Signature: / - .? (,., -D \ 60 Day Reminder Letter Sent on 30th day: 90 Day Reminder Letter Sent on 45th day: See Attached: ,/' Date Returned: '::' - ;). -0 \ See Attached: See Attached: Request for Council Action & Staff Report Attached: Updated Prior Resolutions (Other Than Below): Updated CITY Personnel Folders (6413, 6429, 6433,10584, 10585, 12634): Updated CDC Personnel Folders (5557): Updated Traffic Folders (3985, 8234, 655, 92-389): Yes ,/' No By Yes No / By Yes No / By Yes No V By Yes Not By_ Copies Distributed to: City Attorney / Parks & Rec. Code Compliance Dev. Services EDA Finance Others: f',{}rr\\l" . MIS Police Public Services Water Notes: BEFORE FILING. REVIEW FORM TO ENSURE ANY NOTATIONS MADE HERE ARE TRANSFERRED TO THE YEARLY RESOLUTION CHRONOLOGICAL LOG FOR FUTURE REFERENCE (Contract Term. etc.) Ready to File: ~ Date: ~ -5-0 \