ASME Contract Guidelines LTC 2009

Prepared by Elvira Espada, Manager, Contracts & Legal

Negotiate the best deal.

Read your contract carefully.

We’re ready to seal the deal. Contact Info: Elvira Espada Telephone #: (212) 591-7848 Email address: espadae@asme.org

1

ASME Contract Guidelines LTC 2009

Prepared by Elvira Espada, Manager, Contracts & Legal

1. Background ASME commits to thousands of contracts each year for hotel, meeting, food & beverage services, consulting, maintenance and other products and services. Various parties participate in the contract negotiation and execution processes. The purpose of these guidelines is to provide information that will be helpful to you in understanding the process, negotiating and developing an agreement in ASME’s best interest.

2. Definition of Contract

A contract is an agreement to exchange “consideration” (usually money) in return for goods or services. A contract may alternatively be referred to as an agreement, memorandum of understanding (MOU), purchase order, letter of intent, and may include proposals.

3. Signature Authority

According to ASME By-Law B4.4.8, only three people are authorized to sign/execute contracts on behalf of ASME, the Assistant Treasurer, Second Assistant Treasurer and Executive Director. The Director of Purchasing may execute purchase orders. The dollar volume of a contract is not relevant--no contract is too small to warrant an exception.

4. Reasons for Centralization The contract review and signature process is centralized in order to Coordinate and control, to the extent possible, ASME commitments Manage your personal liability and ASME’s liability exposure Use ASME’s full leverage to bear on the agreement

5. Apparent Authority

The rule of apparent authority asserts that a party (staff or volunteer) of ASME who, to the other party in the contract, has apparent authority to sign contracts on behalf of ASME. Although you’re not officially authorized to sign a contract, your signature on the contract may bind ASME to the contract, all its commitments and liabilities. Signing a contract for ASME without signature authority, make you in violation of ASME By-Laws and may increase your personal liability and ASME’s liability exposure. If you are aware of such a violation, inadvertent or otherwise, immediately contact the Assistant Treasurer or the Manager, Contracts & Legal.

2

6. Negotiation

Contracts are generally negotiated by people other than the Executive Director, Assistant Treasurer and Second Assistant Treasurer. Prior to submitting your contract for review and signature, please ensure that you have already negotiated the best deal possible. If you are uncomfortable negotiating aggressively, or would like advice or help with the negotiation, ask your Unit Support person, respective representative of the Executive Management Committee, Assistant Treasurer, Second Assistant Treasurer or Executive Director. Negotiating = asking for something before a contract is signed Begging = asking for something after you signed the contract Don’t assume you can straighten things out after a contract is signed. Vendors are less likely to be agreeable. Be willing and prepared to walk away from a deal if satisfactory terms cannot be reached. Having alternatives ready or allowing yourself sufficient time to identify alternatives is the key to successful negotiation.

7. Contract Review and Approval Process Contracts should be provided to your Unit Support Person for review (i.e., for Knowledge & Community, Burton Dicht). They will attach a Contract Routing Sheet. The purpose of the Contract Routing Sheet is to ensure appropriate reviews have been completed to communicate important, relevant issues to contract signers, provide information about the event/meeting, and provide history data on previous related meetings. This gives an overall picture of the event. The only exceptions to the Contract Routing Sheet are “boilerplate” contracts that have been pre-approved by the Assistant Treasurer. If there are any changes to a boilerplate/standard agreement, they should be brought to the attention of the Manager, Contracts & Legal. The Unit Support person will forward the contract to the Manager, Contracts & Legal for review. Contracts are generally reviewed within 48 hours, dependent on the schedules of the officers. Once an officer signs the agreement, it will be returned to your unit support person. You or your unit support person is responsible for sending the signed contract to your vendor. Contracts may require multiple rounds of communication to complete the signature process, so you are urged to plan accordingly. Occasionally, because of the volume of contracts, travel, or other commitment, the initial review process may require more time. The Assistant Treasurer signs most contracts. In some cases, the Assistant Treasurer may also consult with the Executive Director, Second Assistant Treasurer, and/or ASME’ outside legal counsel, and thus requires more time.

3

8. Order of Signature

By convention, the originator of a proposed contract (the party preparing the contract) signs last. If ASME is the originator, you may request the Manager, Contracts & Legal, your EMC representative or Assistant Treasurer review the proposed contract before sending it to the other party.

9. Records Retention

You should submit two copies of the proposed contracts for signature. The Manager, Contracts & Legal will retain one copy and the other will be returned to you to send to the vendor/other party. Please retain a copy for your files. In some cases, a vendor may want 2 sets to sign. They will keep one original set and return the other original set to us. In this case, please keep a copy for follow-up. A fully executed copy, containing both parties’ signatures, must be returned to the Manager, Contracts & Legal.

10. Insurance Requirements The vendor and/or ASME may be required to provide proof of adequate insurance in certain cases. If ASME must provide proof of insurance, contact the Controller’s Office in the Service Center, allowing at least a week for an insurance certificate to be produced. We will require certificates of insurance from any vendor providing transportation, doing work on the premises, providing labor (i.e. registration support, security on-site). The vendor’s certificate of insurance must be provided with the contract; the contract will not be signed without it.

11. ASME Contract Clauses for Hotels & Other Venues ASME, in consultation with legal counsel, has developed some standard clauses to be included in contracts with hotels, conference centers, and other venues. The ASME Addendum that includes these clauses is attached as Appendix 1. This is a working document. Therefore, if some of these clauses are already included in your contract, then they should not be duplicated; they should be deleted from the addendum. If you need an electronic version of the addendum, you can contact your Unit Support person or the Manager, Contracts & Legal. Many hotels welcome receiving this addendum during negotiation. Some hotels include our clauses as part of their agreement; others prefer to attach the addendum to the contract. Here’s an explanation of some of these clauses: Compliance with Applicable Laws: This provision requires that the hotel/facility is complaint with all Fire and Safety Laws, as well as, but not limited to the Americans with Disabilities Act. The ADA was enacted by the federal government and applies to facilities in the U.S. Many hotels make this a mutual responsibility. We are responsible for making the hotel/facility aware of any special accommodations required for any of our guests.

4

Force Majeure: This provision allows ASME or the hotel/facility to cancel the event without penalty for unforeseen, catastrophic events, often referred to as “acts of God.” They may include sever weather, earthquakes, act of war or terrorism, and strikes. Mutual Indemnification: The purpose of this provision is to provide for reasonable protection of the parties to the contract from acts of the other party. This clause promises to keep each party whole (financially) if a third party decides to sue either party. Note that the dollar volume of the contract is usually not relevant; a contract for minimal money can carry a tremendous potential liability. In some cases, particularly with government and municipal entities, the other party may refuse to sign the mutual provision, but insist on their sole protection. You should attempt to have the provision included, or consider other alternatives. In some cases, we may opt to delete the indemnification clause altogether, rather than have only one party protected. Concessions/Free Rooms: The industry standard for free rooms is one per 50 room-nights actually used. The free rooms may sometimes be aggregated to provide for room upgrades, free suites, and/or free or reduced rates on meeting room space. Guest Walk Clause: For our attendees’ protection, we require that the hotel promise to make concessions if they do not honor a room for one of our guests. Construction: This provision requires that the facility notify you in advance if any construction is taking place during the time of your event. It requires that they allow you the option of seeking out another facility without penalty. Minimize Noise and Disturbance: The “Minimize Noise and Disturbance” provision helps to ensure that your meeting or event can be conducted without unreasonable noise or other interference due to things such as guests and construction. Attrition: Most hotel agreements include an attrition clause. The hotels includes this provision in case the group does not fulfill its room-block commitment, they would seek damages. We require that the hotel allow us to adjust the room block without penalty up to a certain date before the meeting/event. Attrition fees should only be charged to the group based on a shortfall from the “guaranteed” portion of the final room block, factoring all of the group’s attendees at the hotel. In addition, we require that the hotel mitigate our damages by reselling any unoccupied rooms, and that any attrition fees be calculated on the basis of the hotel’s lost profit, not lost revenue.

5

Cancellation: The cancellation provision usually provides for some amount of liquidated damages to be paid by ASME to a hotel, or other venue, if the event is cancelled. The amount is usually expressed as a percentage of the anticipated revenue. The percentage increases as the meeting date draws closer. Hotels are very aggressive with their cancellation clauses, usually charging 100% of the anticipated revenue, within 90 days of the meeting/event date. The amount of guaranteed revenue is usually expressed as some percentage of the total room block (usually 80%). This is the amount against which cancellation and attrition penalties are usually applied. You should attempt to reduce the percentages because the hotel profit (contribution margin) is less than 100%, these are industry averages: Guest Rooms 75-85% Food 25-35% Alcoholic Beverage Functions 80-85% Keep track of key cancellation dates to avoid inadvertently missing a key date in the cancellation period the may subject you to a greater cancellation charge. It’s a good idea to use an electronic calendar reminder tool to help you keep track of these crucial dates. If the contract does not include a cancellation clause, do not offer one. If it does contain a cancellation provision, then you should also include the mitigation clause. Mitigation: The mitigation provision recognizes that in the event ASME does not fill its room block, the hotel may still sell rooms (or food & beverage) to another party. This clause provides credits against the liability if ASME cancels or does not fulfill its room block commitment. Lowest Rate: ASME negotiates room pricing; usually well in advance of the event, base upon prevailing rates. Economic or other conditions may lower those base prices in the future, and attendees may be able to obtain lower rates than those available in the ASME room block. This often occurs through late deals available through various online services. If this occurs, ASME suffers in two ways. First, ASME is potentially embarrassed by not having the lowest rate. Second, we may not fulfill our room block requirements, because the word gets around that there is a lower rate being offered online, and thereby, ASME would be subject to penalties.

6

Deposits and Payments: It has become very common for hotels to require a deposit. ASME has a long history of successful hotel relationships. Do your best to have that requirement waived. Hotels sometimes request interest charges or other penalties on balances due more than 30 days. The term “except for disputed charges” should be embedded in such provision. ASME will not pay for charges that are still in question and being disputed. Alcohol: Alcohol should never be the focal point of any ASME event. When alcohol is served, it must be served by a vendor, not ASME, responsibly and in compliance with all laws. Whenever alcohol is served, non-alcoholic beverages must also be available, and food should generally be made available. Illegal substances are never permitted at an ASME function. Transportation: Any event requiring transportation (i.e, buses, tours) will require that the vendor provide ASME with an insurance certificate. The amount of insurance is somewhat subjective. It might be helpful to use your best judgment as to whether the amount of insurance is adequate by dividing the value of the insurance policy by the number of people to be covered. Consider if you would be satisfied with that amount as a settlement for your injury or death. Boats provide a challenging insurance situation. Many boat companies are reluctant to provide adequate coverage. ASME can obtain additional insurance (“riders”) at a cost, but not for boats exceeding approximately 20 feet in length. If possible, avoid events on boats or ships, especially if adequate insurance cannot be provided. You may be required to seek additional insurance, at a cost, for risky events (i.e, car races).

12. Agreements – General Contract Terms ASME handles many other types of agreements, i.e., Memorandum of Understanding (MOU), agreements with other organizations, co-sponsorship agreements for conferences, etc. Terms: ASME contract terms as usually set for an annual period, and require that the vendor notify ASME well in advance of the term end. At that time, ASME would review the terms of the agreement and the services provided and determine whether to renew or terminate the agreement. Indemnification: As in hotel agreements, ASME requires mutual indemnification clauses in other agreements. Issues with having indemnification included in a contract should be addressed with the Manager, Contracts & Legal or the Assistant Treasurer.

7

Insurance Requirements: ASME will require proof of insurance from vendors like, audio visual providers, security services, labor such as administrative, registration services and any service or maintenance companies. If ASME is asked to provide proof of insurance, please contact the Controller’s Office in the NJ Service Center, allowing at least a week for processing. Your certificate of insurance must be included with your contract before it can be signed. Intellectual Property: Ownership and rights of use of intellectual property must be clearly defined. Use of ASME Trademarks (Trademark Usage): Use of the ASME name and logo by a third party shall only be permitted by contract and according to the provision of Policy P-12.15, Intellectual Property Rights. Privacy: In order to comply with privacy laws, ASME will include a Privacy clause in contracts sharing any personal data, mailing list, registration data, etc. If your contract states that we will share ASME mailing list with a vendor or third party, then your vendor will be required to sign a Privacy Addendum (Appendix 2) and a Suppression Confidentiality Agreement (Appendix 3). The Privacy Agreement protects ASME data and requires the vendor to promise that they will take the necessary steps to abide by privacy laws when using the data we provide to them. The Suppression Confidentiality Agreement ensures that the vendor is aware that they will receive a mailing list/data in which certain individuals have opted out and prefer not to receive any promotional/advertising material. The vendor hereby agrees to respect those wishes and suppress those names from their mailing.

13. Questions: We’re here to help you plan successful events and develop contracts in ASME’s best interest. If you have any questions while developing your contracts, please contact your Unit Support person, or Elvira Espada, Manager, Contracts & Legal (212) 591-7848, email address: espadae@asme.org.

8

Appendix 1

Addendum to Contract Between American Society of Mechanical Engineers (ASME) and Facility/Vendor

Re: Date(s): Compliance with Applicable Laws – Facility/Vendor represents and warrants that as a place of public accommodation, it is in compliance with all laws and regulations applicable to it, including but not limited to the Americans with Disabilities Act. Force Majeure: The parties’ performance under this contract is subject to acts of God, war, government regulation, terrorism, disaster, strikes, civil disorder, curtailment of transportation facilities, or any other emergency beyond the parties’ control, making it inadvisable, illegal or which materially affects a party’s ability to perform its obligations under this contract. Either party may terminate this contract for any one or more of such reasons upon such notice to the other party as is reasonable under the circumstances. Indemnification and Hold Harmless Obligation of Facility/Vendor - Facility/Vendor shall indemnify, defend and hold harmless the ASME and its officers, directors, employees and agents and each of them from any and all claims, actions, causes of action, demands, liabilities of whatsoever kind and nature including judgments, interest, attorney's fees, and all other costs, fees, expenses and charges which ASME, its officers, directors, employees, agents and each of them, may incur arising out of the negligence, gross negligence or willful or wanton misconduct of Facility/Vendor, its officers, directors, employees or agents or the failure by any of them to comply with any applicable law or the terms of this contract. Obligation by the ASME - ASME shall indemnify, defend and hold harmless Facility/Vendor and its officers, directors, employees and agents and each of them from any and all claims, actions, causes of action, demands, liabilities of whatsoever kind and nature including judgments, interest, attorney's fees, and all other costs, fees, expenses and charges which Facility/Vendor, its officers, directors, employees, agents and each of them, may incur arising out of the gross negligence or willful or wanton misconduct of the ASME, its officers, directors, employees or agents. Guest Walk Clause If a guarantee and confirmed reservation is not honored because a room is unavailable at check-in, the hotel will relocate the guest to another hotel. The hotel will pay for the guest’s transportation to and from the other hotel, a phone call by the guest to advise those concerned of his or her new location, and return the guest to the original hotel as soon as a room is available. The hotel will pay for the guest’s first night stay at the other hotel, as well as any rate differential for additional nights that the guest cannot be accommodated at the hotel. Construction Facility/Vendor shall notify ASME, as far in advance as possible, of any construction or remodeling to be performed in the Facility/Vendor over the meeting dates and Facility/Vendor shall use all commercially reasonable efforts to insure that any such occurrence shall not materially interfere in any way with ASME’s use of the Facility/Vendor. Should construction or remodeling be reasonably determined by ASME to materially interfere with ASME’s meeting, ASME shall have the right to terminate this contract without liability with written notice to Facility/Vendor as long as such notice is given within (30) days of ASME’s receipt of notice of such construction or remodeling. Minimize Noise and Disturbance The Facility/Vendor shall be responsible for ensuring that ASME’s use of all function space is free from noise, distractions, disturbances and interruptions within the reasonable control of the Facility/Vendor. In the event ASME’s use of any function space is so disturbed despite these efforts, the Hotel agrees:

9

To make every reasonable effort to eliminate the noise or disturbance immediately upon notification by the ASME meeting planner and; To provide reasonable compensation to ASME if the noise or disturbance was within the reasonable control of the Hotel but could not be eliminated and such noise or disturbance had a material negative effect on the meeting or function. Lowest rate It is understood that during the dates the Agreement is in effect, ASME will have the lowest rate in-house, excluding previously negotiated volume corporate business and/or government accounts, crew rooms and other similar agreements. This applies to rates made available to the general public, either through the Facility/Vendor Reservation Department, 800 Reservation Service, or any airline reservation system or via the Internet. If the hotel books rooms at a lower, discounted rate, the difference between our rate and the discounted rate will be credited to ASME. Cancellation/Mitigation

(a) The cancellation fee will be waived if the Hotel and ASME book a conference of equal or greater value, and such conference is held within one year of the cancellation.

(b) If the full cancellation fee is not waived because clause (a) above is not applicable, this clause (b) shall apply. Facility/Vendor shall undertake all reasonable efforts to resell any unused or canceled rooms, food and beverage commitments, and any unused or canceled function space under contract to ASME and will credit those revenues against any penalties, performance clause fees, payments, or liquidated damages, which amounts, if any, shall be due and payable 30 days after the dates of the convention/meeting, provided Facility/Vendor provides proof of its efforts to mitigate such penalties, fees, payments, or damages and proof that rooms and space being held for ASME’s convention/meeting or its attendees and guests remained unsold. ASME shall not owe any penalties, fees, payments, or liquidated damages (or shall only owe such monies proportionately on a net basis) if Facility/Vendor meets or exceeds its average occupancy level for the week of the convention/meeting. Facility/Vendor shall credit ASME for rooms that are charged to other groups. Facility/Vendor shall deduct rooms that are out-of-order, off market, or are held for sale for the hotel’s “preferred customer” program or similar program or promotion. Facility/Vendor shall assume the obligation of demonstrating that, but for ASME’s attrition or cancellation, Hotel would have achieved its average occupancy level for that period, and of demonstrating that rooms being held for ASME and its attendees were unsold. An audited statement of actual room usage for each day of the convention/meeting will be provided to the ASME upon request.

Accepted By: ______________________________________________________ Facility/Vendor Date _______________________________________________________ ASME Date By: Michael K. Weis, Assistant Treasurer

10

Appendix 2 Privacy Addendum to Agreement between

___________________________ And

The American Society of Mechanical Engineers

In accordance with its obligations under the agreement effective ____________________ (“Agreement”) among The American Society of Mechanical Engineers (“ASME”), and _______________________ (“name of company” or “you”), ASME will provide you with _____________________________. By signing this Addendum, you agree that you will use the _______________________ solely for the purposes detailed in the contract and will take all reasonable security measures to keep the Data safe from unauthorized access, use or disclosure. You will not use the ____________________Data for any other purposes without the applicable individual’s prior written consent, unless otherwise permitted by applicable laws governing data security and privacy protection. You will indemnify (and if requested, defend) ASME, its successors and assigns, and their respective directors, officers, employees and agents (the “Indemnified Parties”) from and against all damages, liabilities, losses, costs and expenses (including reasonable attorneys’ fees) that the Indemnified Parties may incur as a result of any claims or actions arising out of or related to your breach of your obligations under this Addendum.

You may be required to sign a Suppression File Confidentiality Agreement before any mailing list or other personal data is provided to you. This privacy addendum has been signed and agreed to by authorized parties of each of the contracting parties. Accepted By: ______________________________________________________ Company Name: Date By: ______________________________________________________ ASME Date By: Michael Weis, Assistant Treasurer

11

Appendix 3 SUPPRESSION FILE CONFIDENTIALITY AGREEMENT LIST: ORDER SCHEDULED DEPLOYMENT: In compliance with commercial e-mail laws, ASME will provide an “Opt-Out Suppression File” of all e-mail addresses for which ASME has received a request not to receive commercial e-mail messages (opt-out requests). ASME will not provide the Opt-Out Suppression File directly to List Managers or List Owners unless a separate agreement has been negotiated. ASME will provide this Opt-Out Suppression File to the List Broker, who will then send it to a third-party service bureau, mailhouse or other marketing firm/agency as approved by ASME (now referred to as the “Third Party”). ASME utilizes commercially reasonable measures for collecting and maintaining their data. ASME makes every effort to ensure that they are in compliance with current applicable law, and agrees that the Opt-Out Suppression File is complete and accurate as of the date it is provided to the Third Party (or List Manager/List Owner). The Third Party (or List Manager/List Owner) and the List Broker agree that it will treat the Opt-Out Suppression File as confidential information of ASME, and use it only for the purpose of complying wit the law. The data will not be shared, transferred or copied in any manner at any time. Prior to the deployment date above, the Third-Party (or List Manager/List Owner) shall suppress (match and eliminate) the applicable Opt-Out Suppression File of all e-mail addresses provided by ASME against the email list mentioned above. The Third Party (or List Manager/List Owner) will then purge the Opt-Out Suppression List from its system within 10 business days following completion of the deployment, unless otherwise agreed to in writing by ASME. Agreed to on this ___ day of _____________, 200___ LIST MANGER/LIST OWNER THIRD PARTY DEDUPER (if applicable) Company Name: Company Name: Name: Name: Title: Title: Address: Address: Phone: Phone: Email: Email: Signature: Signature: LIST BROKER Company Name: Name: Title: Address: Phone: Email: Signature:

te l 1 .212 .591 .7000 fax 1 .212 .591 .7674 www.asme.o rg

Three Park Avenue New York, NY 10016-5990 U.S.A.

12

ASME Contract Guidelines LTC 2009

Quick Reference

1. Negotiate the best contract you can. During negotiation, explain to the

hotel/facility representative that you are doing a site selection for your meeting and negotiating the terms of the agreement. Tell them you will need to submit the agreement to an officer authorized to sign contracts for ASME.

2. Provide the hotel/facility with the ASME Contract Addendum during negotiation. This opens the dialogue of what clauses they’re willing to accept and which clauses they have questions about. They may opt to incorporate the clauses as part of their agreement or ask you to attach the Addendum to the contract.

3. Check the requirements of your contract. Do we need to provide them with a certificate of insurance? Do they need to provide us with a certificate of insurance (i.e. bus tour)? Contact your Unit Support person for help. Certificates of Insurance are requested through the Controller’s Office, NJ Service Center.

4. Please do not sign the contract yourself. Keep in mind that only three ASME Officers can sign contracts.

5. Submit your contract to your Unit Support person for review and processing by the Managing Director, Knowledge & Community (K&C).

6. The Managing Director, K&C will prepare a Contract Routing Sheet that provides information about your meeting and points out any areas of concern.

7. The Managing Director, K&C will submit your contract to the Manager, Contracts & Legal for review. If there are any items of concern, the Manager will contact the Managing Director, K&C or you directly.

8. Once the review is complete, the contract is submitted to an ASME Officer for signature.

9. Once an Officer signs the contract, it will be returned to your staff contact or Unit Support person.

10. It is the responsibility of the staff contact/Unit Support person or you to return the signed contract to the hotel/facility.

11. Please ensure that the Manager, Contracts & Legal receives a fully signed agreement either from you or the Unit Support person.

12. Questions regarding contracts should be directed to your Unit Support person or Elvira Espada, Manager Contracts & Legal. You can reach Elvira at (212) 591-7848; or via email: espadae@asme.org.