01-100 ACI Real Properties - Consultants for Apple Tax incentive (x-ref 97-024 and 07-091)1- .~ ~ E.,
AGREEMENT FOR
CONSULTATION SERVICES
WHEREAS, ACI Real Properties, Inc., a Delaware corporation (hereinafter "Consultant")
has submitted a proposal to the City of Cupertino (hereinafter "City") to provide City with
consulting services consisting of the assessment and creation of new sales and use tax revenue
sources for City to be derived from Apple Computer, Inc., a California corporation, and its
subsidiaries (hereinafter collectively referred to a;. "Apple"); and
WHEREAS, it is intended by Consultant ~~nd City that said services will be automatically
self-funding because Consultant is willing to re:ceive its compensation for said services on a
contingency basis solely and entirely derived from new sales or use tax revenue generated by
Apple for the benefit of City which City would not otherwise realize; and
WHEREAS, Consultant and City wish to enter into this Agreement for the purposes
described above:
NOW, THEREFORE, IT IS HEREBY AC7REED AS FOLLOWS:
Services to be Performed by Consultant
Consultant shall perform the following services (collectively, the "Services") under this
Agreement:
(a) Assess and detail the current sales and use tax revenue received by City from
Apple.
(b) Recommend new methodologies to increase the sales or use tax for City to be
developed and implemented throul;h corporate reorganization efforts at Apple.
(c) Provide to City a detailed analysis and description of any new local sales and use
tax revenue received by City from Apple.
2. Compensation to be Received by Consult~mt
As consideration for Consultant's perfonriance of the Services, as described in Paragraph
1, above, Consultant shall receive the following compensation for each City fiscal year
during the term covered by this Agreement, as follows:
(a) If, for any fiscal year during the term covered by this Agreement, new local tax
revenue equals any amount less than Two Hundred Fifty Thousand Dollars
($250,000), then in such event (:onsultant will receive no compensation with
respect to such fiscal year.
(b) If, for any fiscal year during the germ covered by this Agreement, new local tax
revenue equals Two Hundred Fift}~ Thousand Dollars ($250,000), then Consultant
will receive the sum of Sixty-Two Thousand Five Hundred Dollars ($62,500) as
compensation with respect to such fiscal year.
PagE~ 1
(c) If, for any fiscal year during the ~:erm covered by this Agreement, new local tax
revenue exceeds Two Hundred Fifty Thousand Dollars ($250,000) but is less than
Five Hundred Thousand Dollars (`.6500,000), then Consultant will receive the sum
of Sixty-Two Thousand Five Hundred Dollars ($62,500) plus an amount equal to
twenty-five percent (25%) of all ;such additional new local lax revenue between
Two Hundred Fifty Thousand Dollars ($250,000) and Five Hundred Thousand
Dollars ($500,000).
(d) If, for any fiscal year during the ~:erm covered by this Agreement, new local tax
revenue exceeds Five Hundred Thousand Dollars ($500,000) but is less than One
Million Dollars ($1,000,000), then Consultant shall receive the sum of One
Hundred Twenty-Five Thousand L>ollars ($125,000) plus an amount equal to forty
percent (40%) of all such new loc,~l tax revenue between Five Hundred Thousand
Dollars ($500,000) and One Million Dollars ($1,000,000).
(e) If, for any fiscal year during the germ covered by this Agreement, new local tax
revenue exceeds One Million Dollars ($1,000,000), then Consultant shall receive
the sum of Three Hundred Sixty-Two Thousand Five Hundred Dollars ($362,500)
plus an amount equal to fifty percent (50%) of all such new local tax revenue in
excess of One Million Dollars ($1,000,000).
Sole Compensation
Both City and Consultant expressly ackn~~wledge and agree that Consultant will receive
no compensation for any Services rendered under this Agreement other than the
compensation described in Paragraph 2, nor shall Consultant be entitled to any
reimbursement from City for any costs or expenses incurred by Consultant in performing
or preparing to perform any Services under and pursuant to this Agreement.
4. Payment Schedule
Not later than thirty (30) days after the slate on which City receives from the Board of
Equalization of the State of California, a total of $250,000 or more of new local sales tax
revenue which accrued from sales taxes :paid by Apple during a fiscal year covered by
this Agreement, City shall pay the Consultant the compensation described in Paragraph 2
of this Agreement. Within 30 days, after the City receives from the State of California
additional new local sales tax revenue paid by Apple within the same fiscal year as the
initial payment, City shall pay to the Consultant additional compensation as described in
Paragraph 2 of this Agreement.
5. Definitions
As used in this Agreement, the following germs shall have the following meanings:
"Local sales tax revenue" means that portion of the total sales and use tax paid by Apple
which is actually received by City.
"New local sales tax revenue" means total sales and use tax paid by Apple which is
actually received by City, as calculated for each fiscal quarter, minus the sales tax from
Apple's Company Store located as of the date of this Agreement on Apple's R&D
campus in the City of Cupertino and minus use tax on purchases by Apple, in each case
calculated for the quarter m question.
Pages 2
6.
7
9.
Term
This Agreement shall commence on July 1, 2002 and shall apply to the City's 2002-03,
2003-04, 2004-05, 2005-06 and 2006-07 fiscal years. This Agreement shall expire on
June 30, 2007, and will have no further force or effect; provided, however, that
Consultant shall be entitled to receive an~/ compensation due to it under this Agreement
for the City fiscal year expiring on June 30, 2007, which compensation shall be paid as
provided in Paragraph 7, below.
Fiscal Year
For purposes of this Agreement, City and Consultant agree City's fiscal year begins on
July 1 of each calendar year and ends on J~.me 30 of the succeeding calendar year.
Indemnification; City's Warranty and Representation
Consultant agrees to indemnify, defend (if so requested by City, and with counsel of
Consultant's choice but reasonably acceptable to City), and hold City, its officers and
employees, harmless from any claim, action, or lawsuit brought or maintained by any
third party against City as a result of any activity of either party in performing any acts
under this Agreement, except to the exte~it that any such claim, action or lawsuit arises
out of or in connection with any negligence or willful misconduct on the part of any of
the said indemnified persons. Consultant: will also defend (if so requested by City, and
with counsel of Consultant's choice but reasonably acceptable to City) City, its officers
and employees from any legal action challenging the validity of this Agreement. If any
court of competent jurisdiction orders the return to City of any funds paid to Consultant
by City as compensation for Consultalllt's performance of the Services under this
Agreement, Consultant shall hold City, its officers, and employees harmless from any
claims Consultant may have for reimbur~;ement or contribution with respect to any said
sums.
Integration Clause; Modification of Agreement
:~ _ -
The provisions of this Agreement contain the entire understanding of City and Consultant
related to the subject matter of this Agreement. No oral agreements, understandings or
promises made by the parties or their agents which are not contained in this Agreement
are binding. This Agreement may only 'be modified by written agreement executed by
both parties.
IN WITNESS WHEREOF, Consultant acid City have executed this Agreement by their
duly authorized representatives, on the dates set firth below, to be effective as provided, above.
CI F C E TINO
Date: ~ ` ~ . ~ ~ I3y ,
City Manager, City of Cupertino
Date: ~~ ~~ -~, '~
ACI REAL PROPERTIES, INC.,
a Delaw oration
I3 , ~i .~
Fri-~~~1
Chief Financial Officer & Senior Executive
Vice President
Page 3