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White Nelson Diehl Evans LLP 2008 PROFESSIONAL SERVICES AGREEMENT FOR AUDITING SERVICES 4441 THIS AGREEMENT is made and entered into this ii day of June, 2008, by and between the CITY OF RANCHO PALOS VERDES, a municipal corporation, its Redevelopment Agency and its Joint Powers Improvement Authority, hereinafter referred to as "CITY", and DIEHL, EVANS & COMPANY, LLP, hereinafter referred to as "AUDITOR". IN CONSIDERATION of the covenants hereinafter set forth, the parties hereto mutually agree as follows: ARTICLE I SCOPE OF AUDITOR'S SERVICES AUDITOR shall perform auditing services and duties that are set forth in Exhibit "A" to this Agreement, which is attached hereto and incorporated herein by this reference. CITY shall notify AUDITOR on or before August 31, 2008, in writing, whether or not AUDITOR'S services shall include: (a) a single audit of federal financial assistance; and/or (b) preparation of CITY'S comprehensive annual financial report (CAFR); and/or (c) preparation of CITY'S State Controller's Reports; and/or(d) preparation of CITY'S State Street Report. Notwithstanding services described above, the CITY may request and AUDITOR may agree to perform other services. The scope of such services and compensation shall be agreed to in writing, signed by both parties and shall become a part of this Agreement. ARTICLE II PERFORMANCE OF SERVICES AUDITOR shall perform all services and duties pursuant to this Agreement in a professional and timely manner, at the direction of the Director of Finance & Information Technology, or his designee. All directives, instructions, or other communications from CITY to AUDITOR shall be through only the Director of Finance & Information Technology, or his designee. ARTICLE III TERM This Agreement shall commence on June , 2008, and shall terminate on upon PROFESSIONAL SERVICES AGREEMENT FOR AUDITING SERVICES Page 2 of 10 completion of audit services for fiscal years ending June 30, 2008 through June 30, 2010, as listed in Exhibit A. The term of this agreement may be extended to include audit services for fiscal years ending June 30, 2011 and June 30, 2012, with written authorization from the Director of Finance & Information Technology. ARTICLE IV COMPENSATION FOR SERVICES CITY shall pay AUDITOR for auditing services rendered and costs incurred pursuant to this Agreement in accordance with the amounts set forth in Exhibit "A". Notwithstanding any and all provisions of this Agreement, in no event shall compensation for the services exceed $50,000 each fiscal year, unless authorized in writing by the CITY and approved by the CITY Council. All payments due AUDITOR shall be paid to: Diehl, Evans & Company, LLP 5 Corporate Park, Suite 100 Irvine, CA 92606-5165 AUDITOR will submit invoices monthly for the percentage of work completed in the previous month. CITY agrees to pay all undisputed invoice amounts within thirty (30) days of receipt of the invoice. CITY agrees to use its best efforts to notify AUDITOR of any disputed invoice amounts within ten (10) days of the receipt of each invoice. However, CITY'S failure to timely notify AUDITOR of a disputed amount shall not be deemed a waiver of CITY'S right to dispute such amount or percentage. ARTICLE V PERSONNEL AUDITOR shall provide all personnel necessary to properly perform the services and duties required under this Agreement, and shall at all times direct such personnel in the performance of such services and duties. Robert J. Callanan shall serve as the principal liaison between CITY and AUDITOR. ARTICLE VI DUTIES OF CITY CITY shall provide or make available to AUDITOR, without charge or expense, all information, data, records, maps, reports, plans, equipment, or other material in its PROFESSIONAL SERVICES AGREEMENT FOR AUDITING SERVICES Page 3 of 10 possession necessary for carrying out the services and duties contemplated under this Agreement. ARTICLE VII OWNERSHIP OF DOCUMENTS CITY and AUDITOR agree that all records, data, reports or other documentation prepared by AUDITOR, in response to, or as a result of the performance of this Agreement shall be the sole property of AUDITOR. CITY and AUDITOR acknowledge and agree that all records, data, reports or other documentation prepared by AUDITOR pursuant to this Agreement shall be retained by AUDITOR for seven years after the date of the audit report. ARTICLE VIII CONFLICT OF INTEREST A. All information gained by AUDITOR in performance of this Agreement shall be considered confidential and shall not be released by AUDITOR without CITY'S prior written authorization excepting that information which is a public record and subject to disclosure pursuant to the Public Records Act (Government Code Section 6250 et seq.). AUDITOR, its officers, employees, agents, or subcontractors, shall not voluntarily provide declarations, letters of support, testimony at depositions, response to interrogatories or other information concerning CITY or cooperate in any way with a party who may be adverse to CITY or whom AUDITOR reasonably should know may be adverse in any subsequent litigation. AUDITOR shall incur no liability under this Agreement for material submitted by it, which are later released by CITY, its officers, employees, or agents. AUDITOR shall also incur no liability for statements made by it at any public meeting, or for any document released by it for which prior written CITY authorization was obtained. If AUDITOR or any of its officers, employees, or subcontractors does voluntarily provide information in violation of this Agreement, CITY has the right to reimbursement and indemnity from AUDITOR for any damages caused by AUDITOR'S conduct, including without limitation reasonable attorney's fees. AUDITOR shall promptly notify CITY should AUDITOR, its officers, employees, agents or subcontractors be served with any Summons, Complaint, Subpoena, Notice of Deposition, Request for Documents, Interrogatories, Request for Admissions or other discovery requests from any party regarding this Agreement PROFESSIONAL SERVICES AGREEMENT FOR AUDITING SERVICES Page 4 of 10 and the work performed hereunder, CITY retains the right, but not the obligation, to represent AUDITOR and/or to be present at any deposition, hearing, or similar proceeding. AUDITOR agrees to cooperate fully with CITY and to provide CITY with the opportunity to review any response to discovery requests provided by AUDITOR. However, CITY'S right to review any such response does not imply or mean the right by CITY to control, direct, or rewrite said response. CITY warrants that AUDITOR will have fully met the requirements of this provision by obtaining CITY'S written approval prior to providing documents, testimony, or declarations; Consulting with CITY before responding to a Subpoena or court order; in the case of depositions upon providing Notice to CITY of same; or providing CITY opportunity to review discovery responses prior submission. For purposes of this section, a written authorization from CITY shall include a "faxed" letter. B. AUDITOR covenants that neither it nor any officer or principal of its firm have any interest, nor shall they acquire any interest, either directly or indirectly, which will conflict in any manner or degree with the performance of their services hereunder. AUDITOR further covenants that in the performance of this Agreement, no person having such interest shall be employed by it as an officer, employee, agent, or subcontractor. AUDITOR further covenants that AUDITOR has not contracted with nor is performing any services, either directly or indirectly, with the developer(s) and/or property owner(s) and/or firm(s) and/or partnership(s) owning property in the CITY or the study area and further covenants and agrees that AUDITOR and/or its subcontractors shall provide no service or enter into any contract with any developer(s) and/or property owner(s) and/or firm(s), and/or partnership(s) owning property in the CITY and/or study area prior to completion of this Agreement. ARTICLE IX INDEMNIFICATION AND INSURANCE A. Indemnification. AUDITOR will defend, indemnify and hold harmless CITY, its City Council, Boards, Commissions and its officers, employees and agents (collectively "CITY"), against any claim, loss or liability that arises because of the sole or primary negligence or willful misconduct of AUDITOR, its agents, officers or employees, in performing any of the services under this Agreement. CITY will indemnify and hold harmless AUDITOR, its agents, officers or employees against any claim, loss or liability that arises because of the sole or primary negligence or willful misconduct of CITY personnel or its other agents or if AUDITOR is named as a party in a lawsuit simply because AUDITOR is performing work on CITY'S behalf and there is no allegation of any wrongdoing on the part of the AUDITOR. PROFESSIONAL SERVICES AGREEMENT FOR AUDITING SERVICES Page 5 of 10 B. General Liability. AUDITOR shall at all times during the term of the Agreement carry, maintain, and keep in full force and effect, a policy or policies of Commercial General Liability Insurance, with minimum limits of one million dollars ($1,000,000.00) for each occurrence and two million dollars ($2,000,000.00) in the aggregate, combined single limit, against any personal injury, death, loss or damage resulting from the wrongful or negligent acts by AUDITOR. An insurer admitted in the State of California and rated in Best's Insurance Guide with a rating A VI or better shall issue said policy or policies. C. Professional Liability. AUDITOR shall at all times during the term of this Agreement, carry, maintain, and keep in full force and effect a policy or policies of professional liability insurance with a minimum limit of three million dollars ($3,000,000.00). Said policy or policies shall be issued by an insurer admitted in the State of California and rated in Best's Insurance Guide with a rating of A VI or better. D. Automobile Liability. AUDITOR shall at all times during the term of this Agreement, carry, maintain, and keep in full force and effect a policy or policies of automobile liability insurance with a minimum limit of one million dollars ($1,000,000.00) per accident for bodily injury and property damage. Said policy or policies shall be issued by an insurer admitted in the State of California and rated in Best's Insurance Guide with a rating of A VI or better. E. Worker's Compensation. AUDITOR agrees to maintain in force at all times during the performance of work under this Agreement worker's compensation insurance as required by the law. AUDITOR shall require any subcontractor similarly to provide such compensation insurance for their respective employees. F. Notice of Cancellation. All insurance policies shall provide that the insurance carrier shall not cancel the insurance coverage without thirty (30) days prior written notice to CITY. AUDITOR agrees that it will not cancel or reduce said insurance coverage. ii. AUDITOR agrees that if it does not keep the aforesaid insurance in full force and effect, CITY may immediately terminate this Agreement. G. Certificate of Insurance. At all times during the term of this Agreement, AUDITOR shall maintain on file with the CITY Clerk certificates of insurance showing that the aforesaid policies are in effect in the required amounts. The commercial general liability policy or policies shall contain an endorsement PROFESSIONAL SERVICES AGREEMENT FOR AUDITING SERVICES Page 6 of 10 naming the CITY as an additional insured, which AUDITOR shall maintain on file with the CITY Clerk. H. Primary Coverage. The insurance provided by AUDITOR shall by primary to any coverage available to CITY in relation to the services provided under this Agreement. The insurance policies (other that worker's compensation and professional liability) shall include provisions for waiver of subrogation. ARTICLE X TERMINATION A. If, at any time during the term of this Agreement, CITY determines, at its sole reasonable discretion, that AUDITOR is not faithfully abiding by any term or condition contained herein, CITY may notify AUDITOR in writing of such defect or failure to perform; which notice must give AUDITOR ten (10) days to cure the defect or failure to perform. If AUDITOR has not performed the work or cured the defect to the satisfaction of CITY, CITY may terminate this Agreement immediately by written notice to the AUDITOR to said effect. B. If, at any time during the term of this Agreement, AUDITOR reasonably determines that CITY is not abiding by any material term or condition contained herein, AUDITOR may notify CITY in writing of such defect or failure to perform; which notice must give CITY thirty (30) days to cure the defect or failure to perform. If CITY has not performed the work or cured the defect to the satisfaction of AUDITOR, AUDITOR may terminate this Agreement immediately by written notice to the CITY to said effect. C. Notwithstanding the provision of the above, CITY and AUDITOR may terminate this Agreement upon completion of the services contained in Article I of this Agreement, upon providing the other party thirty (30) days written notice. Thereafter, neither party shall have any further duties, obligations, responsibilities or rights under this Agreement. In said event, AUDITOR shall be entitled to the reasonable value of its services performed from the beginning of the period in which the breach occurs up to the day of notice of termination, less any offset from such payment representing the CITY'S damages from such breach. CITY reserves the right to delay any such payment so as to permit a full and complete accounting of the cost of damages. In no event, however, shall AUDITOR be entitled to receive compensation in excess of the amount provided in this Agreement. Any and all obligations of AUDITOR'S surety shall remain in full force and effect, and shall not be extinguished, reduced, or in any manner waived by termination of this Agreement. PROFESSIONAL SERVICES AGREEMENT FOR AUDITING SERVICES Page 7 of 10 ARTICLE XI GENERAL PROVISIONS A. Fair Employment Practices/Equal Opportunity Acts. In the performance of this Agreement, AUDITOR shall comply with all applicable provisions of the California Fair Employment Practices Act(California Government Code Sections 12940-48) and the applicable equal employment provisions of the Civil Rights Act of 1964 (42 U.S.C. 200e-217), whichever is more restrictive. B. Non-discrimination. AUDITOR shall not discriminate as to race, creed, religion, gender, color or national origin in the performance of its services and duties pursuant to this Agreement, and will comply with all rules and regulations of the CITY relating thereto. C. Legal Action. i. Should either party to this Agreement bring legal action against the other, the case shall be handled in Los Angeles County, California. The party prevailing in such action shall be entitled to reasonable attorney's fees, which shall be fixed by the judge hearing the case, and such fee shall be included in the judgment. ii. Should any legal action about a project between CITY and a party other than AUDITOR require the testimony of AUDITOR when there is no allegation that AUDITOR was negligent, CITY shall compensate AUDITOR for its testimony and preparation to testify at the hourly rates in effect at the time of such testimony. D. Compliance with Applicable Law. AUDITOR and CITY shall comply with all applicable laws, ordinances and codes of the federal, state and local government. E. Assignment. This Agreement shall not be assignable by either party without the prior written consent of the other party. Notwithstanding the foregoing, AUDITOR may use the services of persons and entities not in its employ, when it is appropriate and customary to do so upon prior approval by CITY. AUDITOR'S use of others for CITY shall not unreasonably restrict additional services, provided AUDITOR notifies CITY in advance. F. Independent Contractor. AUDITOR is and shall at all times remain, as to CITY, a wholly independent.contractor. Neither CITY nor any of its agents shall have PROFESSIONAL SERVICES AGREEMENT FOR AUDITING SERVICES Page 8 of 10 control over the conduct of AUDITOR or any of AUDITOR'S employees, except as herein set forth. AUDITOR expressly warrants not to, at any time or in any manner, represent that it, or any of its agents, servants or employees, are in any manner the agents, servants or employees of CITY, it being distinctly understood that AUDITOR is, and shall at all times remain to CITY, a wholly independent contractor and AUDITOR'S obligations to CITY are solely such as are prescribed by this Agreement. G. Titles. That titles used in this Agreement are for general reference only and are not part of this Agreement. H. Extent of Agreement. This Agreement and Exhibit "A" hereto represent the entire and integrated Agreement between CITY and AUDITOR and supersede all prior negotiations, representations or Agreements, written or oral. This Agreement may be modified or amended only by a subsequent written Agreement signed by both parties. Legal Construction This Agreement is made and entered into in the State of California and shall in all respects be interpreted, enforced and governed under the laws of the State of California. ii. This Agreement shall be construed without regard to the identity of the persons who drafted its various provisions. Each and every provision of this Agreement shall be construed as though each of the parties participated equally in the drafting of same, and any rule of construction that a document is to be construed against the drafting party shall not be applicable to this Agreement. iii. The article and section, captions and headings herein have been inserted for convenience only, and shall not be considered or referred to in resolving questions of interpretation or construction. iv. Whenever in this Agreement the context may so require, each gender shall be deemed to refer to and include any other gender and the singular shall refer to and include the plural. J. The City of Rancho Palos Verdes, its Redevelopment Agency and the Joint Powers Improvement Authority will be required to sign an annual engagement letter as required by Governmental Auditing Standards. The terms of these Engagement Letters are incorporate by reference into this agreement. PROFESSIONAL SERVICES AGREEMENT FOR AUDITING SERVICES Page 9 of 10 K. Notices. All notices pertaining to this Agreement shall be in writing and addressed as follows: If to AUDITOR: Robert J. Callanan, CPA Diehl, Evans & Company, LLP 5 Corporate Park, Suite 100 Irvine, CA 92606-5165 If to CITY: Dennis McLean, Director of Finance & Information Technology City of Rancho Palos Verdes 30940 Hawthorne Boulevard Rancho Palos Verdes, CA 90275 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. DIEHL, EVANS & COMPANY, LLP By: Packf\%r (Title) Dated: 611VOY's CITY OF RANCHO PALlp RDES Ld- By: Mayor Dated: PROFESSIONAL SERVICES AGREEMENT FOR AUDITING SERVICES Page 10 of 10 Attest: &Ak i7plAgaA City Clerk RANCHO PALOS VERDES REDEVELOPMENT AGENCY . By: Chairman Dated: Attest: Agency Secretary RANCHO PALOS VERDES JOINT POWERS IMPROVEMENT AUTHORITY (JPIA) By: Chairman Dated: Attest: JPIA Secretary Exhibit A CITY OF RANCHO PALOS VERDES MAXIMUM PRICE SUMMARY Option Periods 2007-08 2008-09 2009-10 2010-11 -2011--12 City Audit(1) $ 20,760 $ 21,590 $ 22,454 $ 23,352 $ 24,286 Redevelopment Agency (RDA)Audit 6,995 7,275 7,566 7,868 8,183 Improvement Authority Audit 2,285 2,376 2,471 2,570 2,673 Single Audit(2) 3,170 3,297 3,429 3,566 3,708 Gann Limit Review Report 630 655 681 709 737 Subtotal 33,840 35,194 36,601 38,065 39,588 Optional Services: City: State Controller's Report 3,585 3,728 3,878 4,033 4,194 Street Report 1,745 1,815 1,887 1,963 2,041 RDA: State Controller's Report 1,045 1,087 1,130 1,175 1,223 Total all-inclusive maximum price $ 40,215 $ 41,824 $ 43,497 $ 45,236 $ 47,046 (1) Included in the City audit price is 12 hours (6 partner hours and 6 manager hours) of service related to communicating with the audit committee. (2) The price of the Single Audit contemplates compliance testing for only one major program. Should it be determined that the City has more than one major program in any given year, there would be an additional charge of$500 for each additional major program. - 2 -