HomeMy WebLinkAboutC2022-222 - 9/20/2022 - Approved FOOD AND BEVERAGE SERVICE AGREEMENT
This Food and Beverage Service Agreement (this "Agreement") is made as of the 20th day of
September 2022 by and between Ovations Food Services of Texas, LLC, a limited liability company
organized under the laws of the State of Texas ("OVG"), and The City of Corpus Christi, Texas, a Texas
home-rule municipality("Owner").
RECITALS
WHEREAS, Owner owns a sports and entertainment complex consisting of a 2,500-seat
auditorium,a 76,500-sq.foot convention center,and a 10,000-seat multi-purpose arena,currently known
as the American Bank Center located at 1901 N.Shoreline Blvd., Corpus Christi,Texas(the"Facility");and
WHEREAS, OVG is in the business of managing and operating food, beverage, novelty and
merchandise concessions services and catering services at indoor and outdoor single and multi-purpose
facilities; and
WHEREAS,Owner desires to grant to OVG the exclusive right and privilege to manage and operate
the food, beverage, novelty and merchandise concessions services and catering services at the Facility,
except that OVG agrees to allow outside food and beverage sales for the previously booked events as
shown in the attached Exhibit B (the"Excluded Events");
WHEREAS, OVG desires to accept the right and privilege to exclusively manage and operate such
concessions and catering services at the Facility, subject to the terms and conditions contained herein;
and
WHEREAS, Owner and OVG entered into a Food and Beverage Agreement dated June 14, 2022,
for the short term provision of food and beverage services at the Facility(the"Short Term Agreement"),
and beginning on the Effective Date, this Agreement shall supersede and replace the Short Term
Agreement in respect of OVG's provision of food and beverage services as set forth herein.
NOW THEREFORE,for and in consideration of the foregoing,the mutual covenants and promises
hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged,the parties, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement and not defined elsewhere in this Agreement shall have
the following meanings:
"Agreement" This Food and Beverage Agreement, together with all exhibits attached hereto,
each of which are incorporated herein as an integral part of this Agreement.
"Buyout Amount"shall have the meaning given to such term in Section 3.1 of this Agreement.
SCANNED
"Capital Improvements" shall mean permanent improvements to the Facility, including any
construction as defined by Texas Labor Code §406.096 and replacement of permanent structures and
their components. Capital Improvements include any work that requires the use of an architect or an
engineer in accordance with the Texas Occupations Code. This definition includes the remodel,
replacement, or alteration of permanent improvements at the Facility, and any repair of any piece of
equipment,structure,or other item that costs in excess of$50,000, but does not include routine,day-to-
day maintenance and repair.
"Effective Date"shall have the meaning given to such term in Section 4.1 of this Agreement.
"Food and Beverage Areas" shall have the meaning given to such term in Section 2.1(b) of this
Agreement.
"Food and Beverage Fee"shall mean 7%of Gross Receipts.
"Food and Beverage Services"shall mean the business of managing and providing(or causing to
be provided)food,food products,candy, non-alcoholic and alcoholic beverages, novelties,souvenirs and
merchandise in the concession areas, seating bowl, picnic areas, luxury boxes, restaurants, lounges,
banquet rooms, catering areas, and all other areas of the Facility. For the sake of clarity, Food and
Beverage Services shall include all food and beverage concessions and catering services at the Facility.
"General Manager"shall have the meaning given to such term in Section 5.1(b)of this Agreement.
"Gross Receipts" shall mean the total of all amounts received by OVG from the operation of the
Food and Beverage Services, including the management charge, any service charges and gratuities,
whether such amounts are evidenced by cash,check, credit, charge account, exchange or otherwise, less
only retail sales taxes and other direct taxes imposed upon receipts collected from the consumer. Gross
Receipts shall include amounts received from the sale of goods at the Facility as well as amounts received
from orders taken or received at the Facility(regardless of where such orders are filled).
"Improvements and Equipment"shall have the meaning given to such term in Section 3.2 of this
Agreement.
"Initial Investment"shall have the meaning given to such term in Section 3.2 of this Agreement.
"Losses"shall have the meaning given to such term in Section 10.1 of this Agreement.
Management-Level Employees:The General Manager, Head/Executive Chef(or employees with
different titles performing similar functions), and any department head employed by OVG to perform
managerial Food and Beverage Services at the Facility.
"Merchandise"shall mean all non-edible souvenirs,novelties,articles of clothing and publications
sold at the Facility.
"Monthly Accounting Period" shall mean each approximately 4 week period during the Term
ending on the last Wednesday of each month.
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"Notice of Underperformance" shall have the meaning given to such term in Section 2.2 of this
Agreement.
"Operating Account"shall have the meaning given to such term in Section 9.1 of this Agreement.
"Operating Expenses" shall mean the cost to OVG of the sale of food and beverage and
Merchandise items and the performance of OVG's duties under this Agreement, including without
limitation (i)personnel and payroll costs,including applicable taxes,benefits, relocation costs,severance,
and bonuses with respect to all on-site management, administrative staff, independent contractors,
consultants and all other on-site employees, (ii) product costs, (iii)cost of permits and licenses, including
without limitation the cost of securing all alcohol permits and licenses,(iv)all taxes paid by OVG hereunder
on the sale of concession items,as described in Section 8.3 below, (v)equipment rental costs, (vi)cost of
equipment repairs and maintenance performed by OVG or a contractor of OVG, (vii) insurance costs to
the extent they are required by OVG specifically for this Agreement (which shall be allocated by OVG to
the Facility in a reasonable and equitable fashion) and bonding costs, including, without limitation, the
cost of premiums, and the cost of any coverage deductibles, coinsurance penalties or self-insured
retentions, (viii)office supplies, printing costs and postage,(ix)telephone charges,(x)cost of utilities,(xi)
cost of cleaning supplies and pest control, (xii) laundry costs, (xiii) armored car and other vehicle
expenses,(xiv)legal,accounting,accounts payable processing and audit fees,(xv)cost of serviceware and
paper supplies, (xvi) trash removal costs, (xvii) dues, subscriptions and membership fees, (xviii) travel,
food and lodging costs, (xix)security expenses, (xx)computer costs, (xxi)uniform costs, (xxii)advertising
and marketing costs, (xxiii) cost of ice, (xxiv) payments to sub-contractors engaged by OVG hereunder,
(xxv) decorating costs, (xxvi) bank charges, (xxvii) temporary housing and relocation expense (xxviii)
employment agency fees, (xxix) bad debt expense, (xxx) PCI-DSS compliance costs; (xxxi)time and labor
management system costs, and (xxxii) any other miscellaneous expenses related to the foregoing. The
parties specifically acknowledge that the term "Operating Expenses" shall not include Capital
Improvements, debt service, and any expenses incurred in order to provide an initial inventory of food
and beverage serviceware and/or equipment, the cost and expenses for which shall be borne solely by
Owner (or if paid for by OVG, shall be reimbursed to OVG by Owner upon submission of invoice or
otherwise as specifically set forth herein).
"Performance Measures" shall have the meaning given to such term in Section 2.2 of this
Agreement.
"Renewal Investment" shall have the meaning given to such term in Section 3.2 of this
Agreement.
"Shortfall" shall have the meaning given to such term in Section 9.2 of this Agreement.
"Short Term Agreement" shall have the meaning given to such term in the recitals of this
Agreement.
"Term"shall have the meaning given to such term in Section 4.1 of this Agreement.
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"Upgrades" shall mean new, updated equipment and replacement of any non-permanent
improvements to the Facility.This definition does not include routine,day-to-day maintenance and repair.
ARTICLE 2
GRANT OF RIGHTS;SCOPE OF SERVICES
Section 2.1 Concession Services.
(a) Owner hereby grants to OVG the exclusive right and privilege to provide Food
and Beverage Services at the Facility,except that OVG agrees to allow outside food and beverage sales
for Excluded Events. OVG covenants and agrees to exercise the full Food and Beverage Services rights
granted hereunder at all events in the Facility in such manner and with such number of personnel as are
necessary to provide adequate supplies and service of the food, beverage and other products described
herein to patrons of the Facility. Owner agrees that it will not,without the prior written consent of
OVG,grant to any party other than OVG or a sub-contractor mutually agreed by Owner and OVG,the
right to perform any Food and Beverage Services at or upon the Facility. The exclusive right to provide
Food and Beverage services shall not prevent or prohibit an exhibitor from distributing without charge a
sample portion of the type of food or Merchandise manufactured and distributed in the normal course
of the exhibitor's business,or from selling food items intended for consumption off the premises.
(b) In connection with the foregoing grant of exclusive rights to provide services,
Owner hereby grants to OVG the exclusive use of the concession stands,souvenir and gift shops, novelty
stands,customer serving locations,food preparation areas,vendor commissaries,kitchen and warehouse
facilities, and other areas related to the foregoing and/or reasonably required by OVG to perform the
Food and Beverage Services at the Facility("Food and Beverage Areas"),together with the improvements,
equipment, and personal property upon or within such areas, along with the non-exclusive right to use
the concourses,spectator seating areas,parking areas,common areas, loading areas,walkways,and other
public areas of the Facility, solely for the purpose of providing Food and Beverage Services. OVG agrees
to operate the Food and Beverage Areas with respect to all events at the Facility, during hours as may be
reasonably requested by Owner to adequately meet public demand.
(c) Prior to the Effective Date, Operator shall, at no cost to OVG, provide for use by
OVG a turnkey operation for the provision of Food and Beverage Services, equipped with equipment,
smallwares, and other tools of the trade reasonably required by OVG to provide the Food and Beverage
Services at the level required by this Agreement.
Section 2.2 Performance Measures. In performing its obligations hereunder, OVG agrees to
be evaluated based on the performance measures 1 through 3 listed in Exhibit A (the "Performance
Measures"). OVG agrees that, during each Operating Year, it will use commercially reasonable efforts,
subject in all instances to Owner's continued performance hereunder (including, without limitation,
funding a mutually agreed Operating Budget, each Operating Year) to meet the Performance Measures
as mutually agreed by Owner and OVG during the budget process each Operating Year. For purposes of
Performance Measures 1 and 3, OVG will be considered to have met that goal if it achieves at least 80%
of the stated number or dollar amount. If OVG fails to meet at least two of the three Performance
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Measures in any Operating Year, and such failure is not due in whole or in party to Force Majeure or any
other cause reasonably outside of OVG's control,the Owner may provide written notice to OVG outlining
with reasonable detail and substantiation any missed Performance Measures within 90 days of the end of
such Operating Year(a"Notice of Underperformance")with such notice to include an outline of how OVG
may improve its performance under such Performance Measures during the following Operating Year. If,
during such following Operating Year OVG again fails to meet at least two of the three Performance
Measures, Owner may terminate this Agreement in accordance with and subject to Section 4.2(d) below.
ARTICLE 3
COMPENSATION; PAYMENT TERMS; INVESTMENT; BUDGET
Section 3.1 Fees.
(a) As consideration for the performance by OVG of its duties hereunder,OVG shall
be entitled to the Food and Beverage Fee, which amount shall be paid to OVG on a monthly basis as set
forth in Section 3.1(b) below.
(b) On or about the 20th day following the end of each Monthly Accounting Period,
OVG shall remit to Owner the Gross Receipts remaining following deduction by OVG of Operating
Expenses,the Food and Beverage Fee,any Shortfall advanced by OVG pursuant to Section 9.2 below,and
any other amounts due to OVG hereunder, from such Monthly Accounting Period, together with the
statements described in Section 9.4 below.
Section 3.2 OVG Investment. During the Initial Term,OVG will make a capital contribution of
up to US$600,000 (the "Initial Investment") in connection with various improvements and investments
at the Facility as mutually agreed by the parties, including without limitation, for equipment and other
related tangible personal property(collectively,the "Improvements and Equipment"). If this Agreement
is extended for the Renewal Term,OVG will,during the Renewal Term, invest an additional total of up to
US $250,000 (the "Renewal Investment" and, as and if applicable, together with the Initial Investment
the "Investment") in connection with various additional Improvements and Equipment at the Facility, as
mutually agreed by the parties.The Initial Investment shall be amortized on a straight-line, monthly basis
over 120-month period commencing on the Effective Date. The Renewal Investment (if applicable)shall
be amortized on a straight-line, monthly basis over a 60-month period beginning on the first date of the
Renewal Term. All Improvements and Equipment, including any replacements or substitutions thereof,
shall be owned by OVG until payment of the Buyout Amount (as described below), and Owner agrees to
execute such documents as OVG shall reasonably request evidencing OVG's ownership interest in such
Improvements and Equipment, including financing statements, so long as all documents are in a form
reasonably approved by the Owner's City Attorney. For the sake of clarity, nothing in this paragraph shall
be construed as requiring OVG to replace any equipment or other personal property at its own cost.
Section 3.3 Buyout Amount. Within 30 days of the expiration or early termination of this
Agreement (for any reason whatsoever, including without limitation if due to a breach, default, or
bankruptcy event by or affecting OVG),Owner shall immediately pay to OVG the unamortized amount of
the Investment (the "Buyout Amount"). In the event that Owner fails to pay OVG the Buyout Amount
when due, the Buyout Amount shall accrue interest in accordance with the Texas Prompt Payment Act.
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In such event, and without limiting any other rights or remedies available to it, OVG may reenter the
Facility,with or without process of law, and remove in a commercially reasonably manner any portion of
the Improvements and Equipment and retain or dispose of such Improvements and Equipment as OVG
sees fit. In such event, OVG shall retain its right to receive the Buyout Amount, but any proceeds from
the sale of such Improvements and Equipment, less the cost to OVG of removing,storing,and selling such
Improvements and Equipment, shall reduce the Buyout Amount. Owner covenants and agrees not to
permit any liens or encumbrances to attach to the Improvements and Equipment purchased with the
Investment, and hereby waives any right to attach any claim, lien, or attachment to such Improvements
and Equipment. Once the Investment is fully amortized or the Buyout Amount is paid in full to OVG,title
to the Improvements and Equipment will become vested in Owner, and OVG agrees to execute all
necessary documents to evidence same. The rights of OVG set forth in this Section shall be in addition to
any other rights of OVG at law or in equity.
Section 3.4 Procurement Process.Once identified,the specific Improvements and Equipment
shall be set forth in a writing to be signed by the parties and updated by the parties from time to time as
necessary to reflect any replacements or substitutions thereof. The parties shall mutually agree on a
procurement process in connection with the specific Improvements and Equipment to be purchased and
Owner represents that such process and OVG's disbursement of the Investment in compliance therewith
will comply with all applicable laws, rules, and regulations, including without limitation any state-specific
procurement guidelines applicable to Owner.
Section 3.5 Establishment of Operating Budget. Attached hereto as Exhibit D is the Operating
Budget for the first Operating Year,which Operating Budget is hereby approved by both OVG and Owner.
OVG agrees that it will work with the Owner in setting the Operating Budget each year and that, at least
120 days prior to the commencement of each subsequent Operating Year in respect of such year, it will
prepare and submit to Owner its proposed Operating Budget for such Operating Year,except that,so long
as OVG is in communication with the Owner regarding its Operating Budget, it will not be in default under
this Agreement if it does not provide a full and complete proposed Operating Budget by the deadline.
Each annual Operating Budget shall include OVG's good faith projection of Gross Receipts and Operating
Expenses, presented on a monthly and annual basis,for the upcoming Operating Year. Owner agrees to
provide OVG with all information in its possession necessary to enable OVG to prepare each Operating
Budget.
Section 3.6 Approval of Operating Budget. Each annual Operating Budget shall be subject to
the review and approval of Owner's City Council and/or the Corpus Christi Business and Job Development
Board (the "Type A Board") in its sole discretion. In order for Owner to fully evaluate and analyze such
budgets or any other request by OVG relating to income and expenses, OVG agrees to provide to Owner
such reasonable financial information relating to the Facility as may be requested by Owner from time to
time. If events occur during any Operating Year that could not reasonably be contemplated at the time
the corresponding Operating Budget was prepared, OVG may submit an amendment to such budget for
review and approval by Owner's City Council and/or the Type A Board. Owner agrees to present the
requested items to the City Council and Type A Board, but cannot guarantee approval of the funding by
either governing body. If Owner's City Council or Type A Board fails to approve any annual Operating
Budget (or any proposed amendment thereto), then, to the extent such governing body provided
reasoning for the action, Owner shall promptly provide OVG the specific reasons therefor and its
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suggested modifications to OVG's proposed Operating Budget or amendment in order to make it
acceptable. OVG will not be responsible for any failure to perform to the extent such failure is directly
related to a failure of the Owner's City Council or Type A Board to approve a requested amendment to
the Operating Budget.
Section 3.7 Adherence to Operating Budget. OVG shall use all reasonable efforts to manage
and operate the Facility in accordance with the Operating Budget. However, Owner acknowledges that
notwithstanding OVG's experience and expertise in relation to the operation of facilities similar to
the Facility,the projections contained in the Operating Budget are subject to and may be affected by
changes in financial, economic and other conditions and circumstances beyond OVG's control, and
that OVG shall have no liability if the numbers within the Operating Budget are not achieved. Any
variances that require appropriation of additional funds require a budget amendment, which could
require approval of both the Owner's City Council and the Type A Board;provided Owner will promptly
present such requested appropriations to the City Council and/or the Type A Board, and ensure that to
the extent modifications are needed, it shall attempt to identify available funding to accommodate such
modifications.OVG will not be responsible for any failure to perform to the extent such failure is directly
related to a failure of the Owner's City Council or Type A Board to approve a requested amendment to
the Operating Budget.
ARTICLE 4
TERM;TERMINATION
Section 4.1 Term;Renewal. The term of this Agreement shall begin effective October 1,2022
("Effective Date")and conclude on September 30, 2027 (the "Initial Term"). Owner shall have the right
to extend this Agreement for an additional 5-year period beginning October 1, 2027 and ending
September 30, 2032 (the "Renewal Term") by providing written notice to OVG on or before March 1,
2027. The Initial Term, together with the Renewal Term (as applicable)shall be referred to herein as the
"Term."
Section 4.2 Termination. This Agreement may be terminated:
(a) by either party upon 30 days written notice, if the other party fails to perform or comply
with any of the material terms,covenants,agreements or conditions hereof,and such failure is not cured
during such 30 day notification period, provided, however, if such failure cannot reasonably be cured
within such 30 day period,then a longer period of time shall be afforded to cure such breach, up to a total
of 90 days, provided that the party in default is diligently seeking a cure and the non-defaulting party is
not irreparably harmed by the extension of the cure period;
(b) by either party immediately by written notice upon the other party being judged bankrupt
or insolvent, or if any receiver or trustee of all or any part of the business property of the other party
shall be appointed and shall not be discharged within 120 days after appointment, or if either party shall
make an assignment of its property for the benefit of creditors or shall file a voluntary petition in
bankruptcy or insolvency,or shall apply for bankruptcy under the bankruptcy or insolvency Laws now in
force or hereinafter enacted, Federal, State or otherwise, or if such petition shall be filed against either
party and shall not be dismissed within 120 days after such filing;
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(c) by Owner upon 30 days written notice, and subject to payment of the Buyout Amount
prior to the effective date of termination, if during any fiscal year, Owner fails to allocate appropriate
funds sufficient to fund the full Operating Budget for the following fiscal year;provided if such funds are
subsequently allocated within 60 days following such termination,then such termination right shall be
voided,and the Agreement shall remain in full force and effect;
(d) by Owner upon 120 days written notice, and subject to payment of the Buyout Amount
prior to the effective date of termination if OVG fails to meet the requisite Performance Measures during
at least 2 consecutive Operating Years, as set forth in Section 2.2; provided that Owner must exercise
such right within 6 months of the conclusion of the second Operating Year or shall be deemed to have
waived such right; or
(e) as otherwise specifically provided for herein.
4.3 Effect of Termination. Upon expiration or termination of this Agreement,for any reason,
the following shall apply:
(a) OVG shall promptly discontinue the performance of all services hereunder, and make
available to Owner all data, electronic files, documents, procedures, reports, estimates, summaries, and
other such information and materials with respect to the Facility as may have been accumulated by OVG
in performing its obligations hereunder, provided that (i) OVG shall own and may retain all employment
files/records relating to employees of OVG during the Term,and (ii)OVG may retain copies of all materials
pertinent to its operation of the Facility during the Term, such as materials documenting its performance
and those relating to claims or potential claims that have been or may be asserted related to OVG's
operation of the Facility, including contracts and event incident reports.
(b) Owner shall promptly pay OVG (i) all fees due OVG up to the date of termination or
expiration, including the Food and Beverage Fee through the last month in which OVG provides services;
and (ii) all Operating Expenses incurred by OVG through the end of the Term that have not previously
been paid by Owner or reimbursed to OVG, including the cost of accrued but unused vacation time to the
extent due under OVG's policies to any employees whose employment is ceasing with OVG as a result of
expiration or termination of this Agreement.
(c) Owner shall reimburse OVG for any actual ordinary and necessary expenses incurred by
OVG in withdrawing from the provision of services hereunder following such termination. Such ordinary
and necessary expenses shall include,without limitation,the following:(i)to the extent any Management-
Level Employee's employment with OVG will cease as a result of the termination or expiration of this
Agreement, Owner shall reimburse OVG for any severance paid to such employees, not to exceed 4
months per employee, and (ii) other reasonable costs actually incurred by OVG in withdrawing from the
provision of services hereunder. Owner's payment of such expenses will occur only after OVG has
provided reasonable evidence of the incurrence of such expenses.
(d) Owner shall pay to OVG, unconditionally and without set-off, the Buyout Amount as
further described in Section 3.2.
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ARTICLE 5
PERSONNEL
Section 5.1 Generally.
(a) OVG shall employ, train and supervise personnel with appropriate qualifications
and experience, in sufficient number to provide all the services appropriate for the duties of such party to
be performed under this Agreement. All such personnel shall be employees, agents or independent
contractors of OVG (or a subsidiary or affiliate thereof),as applicable,and not of Owner. OVG shall select
the number, function, qualifications, and compensation, including salary and benefits, of its employees
and shall control the terms and conditions of employment relating to such employees. OVG agrees to use
reasonable and prudent judgment in the selection and supervision of such personnel, and shall strive to
employ persons who are courteous and efficient,and who will not use improper language or act in a loud
or boisterous manner while performing duties at the Facility. OVG agrees that it will not discriminate
against any employee or applicant for employment for work under this Agreement because of race,
religion, color, sex, disability, national origin, ancestry, physical handicap, or age. Except as specifically
set forth in Section 5.1(b)below,Owner shall have no right to supervise or direct the hiring or firing of any
such personnel.
(b) OVG shall employ as part of its personnel at the Facility an individual with
managerial experience to serve as a full-time general manager of Food and Beverage Services ("General
Manager"). Hiring of the General Manager by OVG shall require the prior approval of Owner, which
approval shall not be unreasonably withheld or delayed. The General Manager will have general
supervisory responsibility for OVG at the Facility and will be responsible for day-to-day operations of the
Food and Beverage Services, supervision of OVG employees, and management and coordination of all
activities associated with the Food and Beverage Services.
(c) OVG shall ensure that its non-management employees performing the duties of
OVG at the Facility shall be neatly attired in clean,commercially-attractive uniforms which shall be subject
to the approval of Owner. OVG shall train all such employees so that they are aware of the high standards
for cleanliness,courtesy and service required by OVG.
(d) All personnel engaged by OVG to work at the Facility shall be admitted to the
Facility without payment of any admission fee, at an entrance to be designated by Owner. All such
personnel shall have the right to park at the Facility without charge in areas designated by Owner.
Section 5.2 Non-Solicitation. During the Term and for a period of one (1)year after the end
of the Term, Owner and its affiliates shall not, without the prior written consent of OVG, solicit for
employment by Owner, or encourage to cease rendering services to OVG, any Management-Level
Employee of OVG with whom Owner has had dealings by virtue of the engagement of OVG hereunder. In
the event of a breach of this provision, OVG will be entitled (in addition to any other rights and remedies
which OVG may have at law or in equity, including money damages) to equitable relief, including an
injunction to enjoin and restrain Owner from continuing such breach. Notwithstanding the foregoing,the
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parties acknowledge and agree that this Agreement will not prohibit non-targeted solicitations through
advertising or other publications of general circulation and employment resulting thereof.
ARTICLE 6
INVENTORY;EQUIPMENT;SPONSORSHIPS; UTILITIES;PCI COMPLIANCE
Section 6.1 Inventory. OVG shall order,stock, prepare,pay for and sell quality food,beverage
and other concession and catering products. Consumables shall be first quality, wholesome and pure,
and all food and beverage and Merchandise on hand shall be stored and handled with due regard for
sanitation. OVG shall have sufficient amounts of product prepared and an inventory on the premises so
as not to run out of product during an event at the Facility. For the avoidance of doubt, OVG may retain
any and all benefit derived from any rebates associated with its purchase of food, beverage and other
concession and catering products during the Term. During all events at the Facility, OVG shall post signs
and provide menus displaying the prices of items offered for sale. Such signs and menus shall be subject
to the reasonable approval of Owner. At the end of the Term,Owner shall purchase (or shall require the
successor food and beverage company at the Facility to purchase) from OVG any remaining food and
beverage,and consumable goods(e.g.,cups, napkins,etc.),inventory on hand at the Facility,for the price
paid by OVG for such inventory, as evidence by written invoices or receipts. Notwithstanding the
foregoing,Owner shall not be obligated to purchase(or to have the successor food and beverage manager
purchase) any such inventory that is branded with the OVG name or logo, or to the extent purchase
thereof would be in violation of applicable law. Additionally, Owner or its successor food and beverage
manager will not be required to purchase any inventory or other items that were purchased as Operating
Expenses or paid for out of the Operating Account.
Section 6.2 Brands/Prices. The brands and price of all products sold by OVG shall be
determined by OVG, subject to the reasonable approval of Owner. Provided price, quality, market
acceptability, service and other terms are generally competitive, OVG agrees to give preference to and
feature at the Facility suppliers of products designated by Owner who purchase advertising from Owner
(or, if applicable,an agent or licensee of Owner) so long as the giving of such preference does not violate
applicable laws, rules or regulations and the features of such product and terms of such transaction are
reasonable(as determined by OVG in its sole discretion).
Section 6.3 Equipment. OVG shall have the right to use during the Term, all equipment
owned or controlled by Owner existing within the Food and Beverage Areas as of the date hereof and/or
subsequently added by Owner or OVG to such areas during the Term. Owner represents that all such
equipment is in good working order (unless otherwise disclosed by Owner), and OVG agrees to exercise
reasonable care when using such equipment, so as to avoid any damage to such equipment. Any
equipment, whether purchased by Owner, OVG, or an agent of the Owner will remain the property of
Owner.
Section 6.4 Utilities. Owner,or Owner's agent managing the Facility,shall provide to OVG all
utilities necessary for OVG's operation of the Food and Beverage Services(e.g.,electricity,gas and water).
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Section 6.5 PCI Data Security Standards Compliance. For Payment Card Industry Data
Security Standards ("PCI-DSS") compliance purposes, Owner will provide, on a segmented network, an
appropriate number of wired data connections to the Internet for OVG's Point of Sale ("POS") devices.
Owner shall be responsible for the security of its network, including, without limitation, applicable PCI-
DSS compliance. To the extent provided for in the Investment,OVG shall be responsible for procuring and
installing POS payment systems that are compliant with the latest PCI-DSS requirements. A POS payment
system may include, but is not limited to, POS terminals, payment card swipers, on-premise servers, and
additional network hardware. OVG shall be responsible for the PCI-DSS compliance of its POS systems.
OVG will work with the City's IT Department to confirm that all equipment and software complies with
Owner's security requirements.
Section 6.6 Food Voucher.OVG agrees to use best efforts to provide a$500 food voucher for
every event the Owner attends at the Facility for use within a designated premium seating location as
agreed between the parties.The parties agree that the cost of food and beverage subject to the voucher
will be an Operating Expense only at cost,with no markup.
ARTICLE 7
MAINTENANCE;CAPITAL IMPROVEMENTS;SALE OF PROPERTY
Section 7.1 Maintenance; Sanitation.
(a) OVG shall perform minor, routine servicing on all fixtures, equipment, furniture
and other property installed, furnished or supplied by or for the benefit of OVG so that such items are
kept in good order and repair, except that for any repair that has an aggregate cost in excess of$1,200, if
funding is not available in the current Operating Budget, OVG may seek funding from Owner and will not
be obligated to complete such work unless and until such funding is made available to OVG,and any failure
of OVG to perform as a result thereof shall not be deemed a default hereunder. OVG shall further make
all necessary repairs thereto, provided that any Capital Improvements and Upgrades will be handled in
accordance with Section 7.2, 7.3,and 7.4.
(b) OVG will maintain the Food and Beverage Areas in a clean and neat condition by
cleaning,on a day-to-day basis,the interiors of the Food and Beverage Areas and bars,concession stands
and vending stations under its control at the Facility (and within a 5-foot perimeter of such stands and
stations). OVG shall further clean, as needed,the walls, windows, ceilings, light fixtures and equipment
located within the Food and Beverage Areas. OVG shall deposit in receptacles provided by Owner's
management agent for the Facility all waste,garbage and refuse which shall accumulate in the Food and
Beverage Areas. OVG shall also provide extermination services as may be necessary for the Food and
Beverage Areas.
(c) OVG shall comply with and observe all federal, state and local laws, ordinances
and regulations as to sanitation and the purity of food and beverages or otherwise relating to its
operations under this Agreement.
Page 11 of 29
Section 7.2 Schedule of Capital Improvements and Upgrades. OVG shall provide to Owner a
schedule of proposed Capital Improvements and Upgrades (including any Improvements and Equipment
to be purchased with the Investment) to be made at the Facility by February 1 of each year, for the
purpose of allowing Owner to consider such projects and to prepare and update a long-range Capital
Improvement budget.
Section 7.3 Responsibility for Capital Improvements.Owner shall be solely responsible for all
Capital Improvements at the Facility; provided, however, Owner shall be under no obligation to make any
Capital Improvements proposed by OVG, and provided further that OVG shall have no liability for any
claims, costs or damages arising out of a failure by Owner to make any Capital Improvements. OVG may
not make any Capital Improvements to the building without specific authorization from the Owner.
Section 7.4 Responsibility for Upgrades. In accordance with the terms of the Owner's
separate management agreement with its management contractor,Owner and/or Owner's management
contractor will have the responsibility to complete Upgrades at the Facility, provided, however, that
neither Owner or Owner's management contractor shall be under obligation to complete or procure any
Upgrades proposed by OVG, and provided further that OVG shall have no liability for any claims,costs or
damages arising out of a failure by Owner and/or Owner's management contractor to complete or procure
any Upgrades. OVG may not make or procure any Upgrades without specific authorization from the
Owner.
Section 7.5 Sale of Obsolete or Unusable Equipment and Machinery. If OVG determines that
any equipment, machinery, or other item of Owner's property at the Facility is no longer of use to the
Facility,OVG shall provide a memo to the Owner detailing the desire to sell the equipment, machinery,or
other item, stating the apparent value of the equipment, machinery, or other item, and detailing the
proposed method of sale. In all events, OVG must adopt a method of sale that is consistent with City of
Corpus Christi Code of Ordinances §17-6. OVG may not sell any of Owner's property without explicit
permission of the Owner. In selling property, OVG will use its best efforts to get the best price for the
property. Proceeds from any sale of Owner's property must be deposited in the Operating Account.
Revenue from sale of Owner's property will not be included in the calculation of Gross Receipts for
purposes of calculating the Food and Beverage Fee,except that any revenue in excess of fair market value
(with such value to be mutually agreed by the parties)shall be included in Gross Receipts for purposes of
the Food and Beverage Fee calculation.
ARTICLE 8
LICENSES;ALCOHOLIC BEVERAGES;TAXES
Section 8.1 Permits and Licenses. OVG shall use reasonable commercial efforts to secure and
maintain throughout the Term all licenses and permits necessary for the operation of the Food and
Beverage Services,including those required for the sale of alcoholic beverages at the Facility. Owner shall
cooperate with OVG in connection with filing applications for, and securing and maintaining in good
standing, any and all licenses and permits and renewals thereof needed by OVG to fulfill its obligations
hereunder.
Page 12 of 29
Section 8.2 Alcoholic Beverages. In connection with the sale of alcoholic beverages
hereunder by OVG, OVG agrees to strictly comply with the laws of the state where the Facility is located
regarding the sale of such beverages to minors. OVG agrees to adopt an identification policy to verify the
age of potential purchasers of alcoholic beverages. OVG further agrees that it will endeavor not to sell
alcoholic beverages to customers who are visibly intoxicated. OVG will institute and conduct training
programs for OVG employees at the Facility on the proper standards to use to avoid selling alcoholic
beverages to customers who are or who appear to be intoxicated.
Section 8.3 Taxes. OVG shall collect and pay all taxes imposed upon the sale of concession
items hereunder,as required by Federal,State or local law. OVG shall be responsible for and pay all social
security, unemployment insurance, old age retirement and other federal and state taxes that are
measured by the wages,salaries,or other remuneration paid to persons employed by OVG. Owner shall
be responsible for any and all possessory interest or leasehold taxes which may be levied or are in effect
during the Term, which shall be treated as an Operating Expense, and which will be paid by OVG as
directed by Owner.
ARTICLE 9
OPERATING ACCOUNT; REPORTING;TEXAS PUBLIC INFORMATION ACT
Section 9.1 Establishment of Operating Account. OVG shall establish and maintain, in its
name, separate commercial bank account(s) for the Facility ("Operating Account") and shall deposit all
Gross Receipts in such account.
Section 9.2 Payment of Expenses; Shortfall. OVG shall pay all Operating Expenses from the
Gross Receipts generated under this Agreement. In the event at any time during the Term,Gross Receipts
are insufficient to cover agreed and approved Operating Expenses consistent with the annually-approved
Operating Budget as may be amended (a "Shortfall"), OVG may at its option and in its sole discretion
from time to time, either (i) advance its own funds to cover such Shortfall, in which case OVG shall be
reimbursed from the first dollars otherwise due and owing to the Owner under Section 3.1 of this
Agreement,or(ii) notify Owner of such Shortfall in which case Owner shall be required,within 30 days of
receiving such notice,to pay to OVG sufficient funds to cover such Shortfall until it is anticipated that no
further Shortfall shall exist, so long as Owner has funds available and appropriated to be used for this
purpose.Any advances made by OVG that remain outstanding at the end of the Term shall be paid to OVG
within 5 days of the end of the Term and, if not paid when due, shall accrue interest in accordance with
the Texas Prompt Payment Act. OVG shall be entitled to offset any amounts owing to it by Owner
hereunder against any amounts otherwise payable to Owner under this Agreement. For the avoidance of
doubt,the parties agree that any Shortfalls(otherwise known as net losses) shall be the responsibility of
Owner and not OVG.
Section 9.3 Books and Records. OVG agrees to maintain separate and independent books
and records, in accordance with generally accepted accounting principles, relating to its operations in
connection with its management of the Food and Beverage Services, as applicable. Such books and
records shall contain documentation regarding the deposit of all Gross Receipts in the Operating Account,
and the incurrence by OVG of all Operating Expenses, including copies of invoices of all products and
Page 13 of 29
materials purchased by OVG hereunder, and copies of payroll summaries, deposit receipts and bank
statements relating to the Operating Account. Owner or its designee shall have the right to inspect such
books and records from time to time upon reasonable notice during the ordinary business hours of OVG.
Section 9.4 Financial Reports. OVG shall provide to Owner,within twenty(20)days following
the end of each Monthly Accounting Period,financial reports regarding its provision of Food and Beverage
Services during such Monthly Accounting Period, including a statement showing Gross Receipts and
Operating Expenses for the applicable period. Additionally, OVG shall provide to Owner,within 24 hours
following each event at the Facility,a daily Gross Receipts report in a form to be mutually agreed upon.
Section 9.5 Audit. OVG shall cooperate with the Owner's management contractor in the
preparation of the portion of its annual audit related to the Facility and provide access to any and all
financial records necessary to finalize that audit. Not more than once each calendar year, Owner shall
have the right, at its sole cost, to engage an independent third party to audit the books and records of
OVG for the preceding 12-month period,for the purpose of confirming that the amounts remitted by OVG
to Owner hereunder are the proper amounts due Owner. Such audit shall be completed by Owner or its
representatives at OVG's corporate office,on reasonable advance notice to OVG,and on dates and times
mutually agreed to by the parties. In the event such audit reveals any underpayment to Owner,OVG shall
promptly pay to Owner the amount of such deficiency. If such audit reveals any overpayment to Owner,
Owner shall promptly pay to OVG the amount of such overpayment
Section 9.6 Texas Public Information Act. OVG acknowledges that, under current law, it is
subject to the Texas Public Information Act, Chapter 552, Texas Government Code (the "Open Records
Act"). Specifically, OVG understands that the requirements of Subchapter J, Chapter 552, Government
Code, apply to this Agreement and agrees that the Agreement can be terminated if OVG knowingly or
intentionally fails to comply with a requirement of that subchapter. If OVG receives a request under the
Open Records Act for any information pertaining to the Facility or Owner, in connection with this
Agreement or the services to be provided hereunder (including, without limitation, with respect to any
personnel files or the management by OVG of their accounts and accounting and legal services or in
connection with any of the food and beverage operations of the Facility), prior to releasing any
information, OVG shall notify Owner of such request in writing within 5 business days of receipt of such
request,in which case it shall promptly and timely inform Owner if any of the requested information might
constitute confidential, proprietary or trade secret information of Owner and/or OVG which may be
exempted from disclosure under the Open Records Act,and further shall notify Owner in writing whether
OVG intends to request a determination from the Texas Attorney General as to whether the requested
information must be disclosed pursuant to the Open Records Act. If OVG decides to seek an open records
determination from the Texas Attorney General as to whether the requested information is excepted from
public disclosure, OVG must seek an Attorney General decision ("Open Records Determination")to the
extent and within the deadlines required by law. OVG must also identify any possible third party whose
privacy or property interests may be involved, and they will,to the extent OVG determines appropriate,
timely furnish to any such third party any statutory notice required by the Open Records Act. Further,
should Owner receive a request for disclosure of information in its possession related to OVG or its
services under this Agreement pursuant to the Open Records Act, Owner will promptly provide OVG
notice of such request in accordance with Section 552.305 of the Texas Government Code so that OVG
may avail itself of any opportunities to establish reasons why the information should be withheld prior to
Page 14 of 29
disclosing such information.The burden of establishing the applicability of exceptions to the disclosure of
confidential information under the Open Records Act resides with OVG.Should OVG be unable to establish
a valid exception from disclosure or exclusion from the Open Records Act, then Owner may release the
information,solely to the extent necessary to comply with the Open Records Act.
Section 9.6 Attendance at Open Meetings. OVG acknowledges that Owner is subject to the
Texas Open Meetings Act and that the funding for activities at the Facility may come from multiple
different sources that require OVG's attendance at public meetings. Upon Owner's request,and provided
that such request is made with reasonable notice,OVG agrees that its Management-Level Employees will
attend meetings of the City Council,the Type A Board,and other City boards and commissions to discuss
activities at the Facility and make budget or funding requests as reasonably requested and noticed in
advance;provided that to the extent any Management-Level Employee is unavailable for such meetings
the parties shall agree on such other employees to attend. Further, OVG agrees not to engage with a
quorum of any City governing body, including the City Council and the Type A Board, outside of any
properly posted open meeting. In the event that OVG is contacted by a City Council member or a member
of the Type A Board or any other City Board regarding the terms of this Agreement or requesting a formal
meeting,OVG will direct the person to contact the Owner.
ARTICLE 10
INDEMNIFICATION
Section 10.1 Indemnification by OVG. OVG agrees to defend, indemnify and hold harmless
Owner, its parents, subsidiaries and affiliates, and their respective successors and assigns, and all
agents, employees, directors, officers and partners of the foregoing, against any third-party claims,
causes of action, costs, expenses (including reasonable attorneys' fees) liabilities, or damages
(collectively,"Losses")suffered by such parties,arising out of or in connection with any(i)negligent act
or omission, or intentional misconduct, on the part of OVG or any of its employees or agents in the
performance of its obligations under this Agreement,or(ii)breach by OVG of any of its representations,
covenants or agreements made herein;provided that the foregoing indemnity shall not apply for any
Losses arising out of or relating to Owner's negligence,gross negligence,or willful misconduct,violation
of any law, rule, or regulation, or a condition of the Facility not solely caused by OVG. This
indemnification specifically applies to liability related to the sale of alcohol which is otherwise covered
by the foregoing.
Section 10.2 Conditions to Indemnification. The party seeking indemnification shall give
prompt written notice to the other party of each third-party claim giving rise to an indemnification
obligation under this Agreement (and in any event not more than 10 business days after any third-party
litigation is commenced asserting the claim giving rise to an indemnification obligation hereunder),
specifying the amount and nature of any such claim. The party seeking indemnification shall not settle or
compromise any claim by a third party for which it is entitled to indemnification hereunder without the
prior written consent of the indemnifying party,which consent shall not be unreasonably withheld. The
party seeking indemnification shall cooperate in the indemnifying party's defense of such claim at the sole
cost of the indemnifying party.
Page 15 of 29
Section 10.3 Limitation on Indemnity. To the extent that OVG maintains the required
insurance for the term of the Agreement and the insurance complies with all of the City's requirements
in Section 11.1 and Exhibit C. OVG's liability under the indemnification is limited to the amount of the
aggregate insurance coverage under that applicable insurance policy.
Section 10.4 Legal Costs. Notwithstanding the other provisions of this Agreement,if legal costs
associated with operation of the Food and Beverage Services are being incurred by OVG (but excluding
any incurred in connection with a third party claims for which Owner is claiming indemnity by OVG or
incurred in connection with any claims by OVG against the Owner) such costs shall be considered an
Operating Expense;provided that to the extent any such legal costs are associated with a third party claim
relating to the Food and Beverage Services, such legal costs shall be subject to Owner's prior approval,
not to be unreasonably withheld.
Section 10.5 Survival. The obligations of the parties contained in this Article 10 shall survive
the termination or expiration of this Agreement and continue on indefinitely.
ARTICLE 11
INSURANCE
Section 11.1 Insurance. Insurance requirements are as stated in Exhibit C, the content of
which is incorporated by reference into this Agreement as if fully set out here in its entirety.
Notwithstanding anything to the contrary herein, the cost of all insurance required specifically for this
Agreement shall be an Operating Expense including, without limitation, the cost of premiums, and the
cost of any coverage deductibles, coinsurance penalties or self-insured retentions.
ARTICLE 12
MISCELLANEOUS
Section 12.1 Authorization.
(a) OVG represents and warrants that it has the full right and legal authority to enter
into this Agreement and to grant the rights and perform the obligations of OVG herein, and that, except
as otherwise set forth herein, no third-party consent or approval is required to grant such rights or
perform such obligations hereunder.
(b) Owner represents and warrants that it is the owner of the Facility,and that it has
the full right and legal authority to enter into this Agreement and to grant the rights and perform the
obligations of Owner herein, and that no other third-party consent or approval is required to grant such
rights or perform such obligations hereunder.
Section 12.2 Force Maieure. In the event that a party is prevented or delayed in the
performance of any of its obligations under this Agreement (not including any payment obligation
hereunder) due to circumstances beyond its control, including but not limited to, (a) fire, earthquake,
Page 16 of 29
hurricane, wind, flood, act of God, riot, or civil commotion occurring at the Facility, or (b) any law,
ordinance, rule, regulation, or order of any public or military authority stemming from the existence of
economic or energy controls, hostilities, war, or governmental law and regulation, or (c) labor dispute
which results in a strike or work stoppage affecting the Facility or services described in this Agreement
(each,a "force majeure"event),then, performance hereunder by the affected party shall be excused for
the period of delay. If either party's obligation is affected by any of the causes of force majeure,the party
affected shall promptly notify the other party in writing,giving full particulars of the force majeure as soon
as possible after the occurrence of the cause or causes relied upon.
Section 12.3 Assignment. Neither party may assign this Agreement without the prior written
consent of the other, which consent shall not be unreasonably withheld or delayed; however, OVG or
Owner may, without the prior written consent of the other, assign this Agreement and/or its rights and
obligations hereunder(i)to any person or entity who succeeds(whether by merger,consolidation or sale
of assets or equity or the like)to all or substantially all of the business and properties of such party,or(ii)
in connection with a corporate restructuring,to any person who is an owner,parent,subsidiary or affiliate
of such party, and who carries on the business of such party in substantially the same manner. Any
assignee of OVG or Owner pursuant to the preceding sentence must agree in writing to assume the
assignor's obligations hereunder, in whole or in part (as applicable), in order for such assignment to
become effective. This Agreement shall be binding on the parties'successors and permitted assigns.
Section 12.4 Notices. All notices required or permitted to be given pursuant to this Agreement
shall be in writing and delivered personally or sent by registered or certified mail, return receipt
requested, or by generally recognized, prepaid, overnight air courier services, to the address and
individual set forth below. All such notices to either party shall be deemed to have been provided when
delivered, if delivered personally,three(3)days after mailed,if sent by registered or certified mail,or the
next business day, if sent by generally recognized, prepaid, overnight air courier services.
If to Owner: If to OVG:
City of Corpus Christi OVG Hospitality
1201 Leopard St 150 Rouse Blvd
Corpus Christi,TX 78401 Philadelphia, PA 19112
Attn: Assistant City Manager Attn: President
With a copy to: With a copy to:
City of Corpus Christi OVG Hospitality
1201 Leopard St. 150 Rouse Blvd
Corpus Christi,TX 78401 Philadelphia, PA 19112
Attn: City Attorney Attn: Legal Department
The designation of the individuals to be so notified and the addresses of such parties set
forth above may be changed from time to time by written notice to the other party in the manner set
forth above.
Page 17 of 29
Section 12.5 Severability. If a court of competent jurisdiction or an arbitrator determines that
any term of this Agreement is invalid or unenforceable to any extent under applicable law,the remainder
of this Agreement (and the application of this Agreement to other circumstances) shall not be affected
thereby, and each remaining term shall be valid and enforceable to the fullest extent permitted by law.
Section 12.6 Prior Agreements. This Agreement (including the exhibit(s) attached hereto)
constitutes the entire agreement of the parties with respect to the subject matter hereof,and supersedes
all prior and contemporaneous negotiations, correspondence, conversations, agreements, and
understandings concerning the subject matter hereof. Accordingly, the parties agree that no deviation
from the terms hereof shall be predicated upon any prior representations,agreements or understandings,
whether oral or written.
Section 12.7 Governing Law. The Agreement is entered into under and pursuant to and is to
be construed and enforceable in accordance with, the laws of the State of Texas, without regard to its
conflict of laws principles and such form and venue for any disputes is the appropriate district,county,or
justice court in and for Nueces County,Texas.
Section 12.8 Amendments. Neither this Agreement nor any of its terms may be changed or
modified, waived, or terminated (unless as otherwise provided hereunder) except by an instrument in
writing signed by an authorized representative of the party against whom the enforcement of the change,
waiver,or termination is sought.
Section 12.9 Waiver; Remedies. No failure or delay by a party hereto to insist on the strict
performance of any term of this Agreement, or to exercise any right or remedy consequent to a breach
thereof,shall constitute a waiver of any breach or any subsequent breach of such term. No waiver of any
breach hereunder shall affect or alter the remaining terms of this Agreement, but each and every term of
this Agreement shall continue in full force and effect with respect to any other then existing or subsequent
breach thereof. The remedies provided in this Agreement are cumulative and not exclusive of the
remedies provided by law or in equity.
Section 12.10 Relationship of Parties. OVG is engaged by Owner hereunder as an independent
contractor to perform the services described herein, and nothing contained in this Agreement shall be
deemed to create, whether express or implied, a partnership, joint venture, employment, or agency
relationship between Owner and OVG,except as otherwise expressly set forth in this Agreement.
Section 12.11 Counterparts; Faxed or Emailed Signatures. This Agreement may be executed in
counterparts,each of which shall constitute an original,and all of which together shall constitute one and
the same document. This Agreement may be executed by the parties and transmitted by facsimile or
electronic mail, and if so executed and transmitted, shall be effective as if the parties had delivered an
executed original of this Agreement.
Page 18 of 29
ARTICLE 13
FEDERAL TAX REQUIREMENTS
Section 13.1 Compliance with Federal Tax Requirements. OVG understands that, as of the
Effective Date,all or a portion of the Facility has been financed on a tax-exempt basis(such financing,the
"Tax-Exempt Bonds")and,as a result,until such time as the Facility is no longer financed under such Tax-
Exempt Bonds, Owner must comply with the Internal Revenue Code of 1986, as amended, and certain
treasury regulations promulgated thereunder (collectively, the "Code"), with respect to the use of the
Facility by OVG or any other service provider that may be engaged by Owner or OVG with respect to all or
a portion of the Facility. OVG agrees to cooperate with Owner in complying with the requirements of the
Code with respect to private business use of property financed with the Tax-Exempt Bonds at the Facility
and maintaining the safe harbor conditions provided in Revenue Procedure 2017-13 (as modified,
amplified and/or superseded,the"Rev.Proc."),and acknowledges that,as of the Effective Date,the Rev.
Proc. includes the following safe harbor conditions that ensure that the Tax-Exempt Bonds will maintain
their tax-exempt status:
(a) No third-party service provider shall take a tax position with respect to the Facility or any
services agreement that is inconsistent with being a service provider to Owner that provides services at
the Facility, including, without limitation,taking any depreciation or amortization, investment tax credit
or deduction for any payment as rent with respect to the Facility.
(b) In connection with any third-party service providers services at the Facility and as
described in the Rev. Proc.,Owner will approve: (i)each disposition of any portion of the Facility,(ii)rates
charged for the use of all or any portion of the Facility,and (iii)and the general nature and type of use of
the Facility by OVG.
(c) Owner bears risk of loss of the Facility.
(d) No third-party service provider shall have any role or relationship with Owner that, in
effect,substantially limits Owner's ability to exercise its rights under any management agreement.
OVG agrees to cooperate in good faith with Owner in order to ensure that this Agreement and OVG's
services hereunder comply the requirements of the Code with respect to private business use of property
financed with the Tax-Exempt Bonds at the Facility and maintaining the safe harbor conditions provided
in the Rev. Proc(collectively,the"Private Use Requirements"). If Owner reasonably determines that any
of OVG's services or actions hereunder violate the Private Use Requirements, OVG shall reasonably
cooperate (without expenditure of material funds) to cease such services or actions following notice
thereof from Owner. If following a good faith negotiation period of not less than 90 days (a"Negotiation
Period"),Owner continues to reasonably determine that OVG's services or actions hereunder violate the
Private Use Requirements notwithstanding OVG's reasonable cooperation efforts,Owner may terminate
this Agreement in its sole discretion and without penalty for a period of 30 days following the end of the
Negotiation Period;provided Owner shall be responsible for all costs of OVG in connection therewith as
set forth in Section 4.3(c). If Owner does not terminate this Agreement during such 30-day period, such
termination right shall expire.
Page 19 of 29
If Owner reasonably determines that the terms of this Agreement violate the Private Use Requirements,
the parties shall proceed in accordance with Section 13.2 below as if Changes (as defined below) had
occurred.
Section 13.2 Future Changes in Federal Tax Requirements. OVG agrees to negotiate in good faith
with Owner to amend this Agreement from time to time (an "Amendment") to address any
interpretations, modifications or other changes in federal tax requirements regarding tax-exempt bonds,
which may include any modifications and amplifications of the Rev. Proc. or requirements superseding
the Rev.Proc.taking place after the Effective Date(collectively,"Changes")to ensure that the tax-exempt
status of the Tax-Exempt Bonds utilized to finance all or a portion of the Facility is maintained.The parties
acknowledge and agree that the terms of an Amendment shall be limited to modifying this Agreement in
order to (i) maintain the tax-exempt status of the Tax-Exempt Bonds notwithstanding such Changes, and
(ii) ensuring that the financial arrangements under this Agreement are materially maintained.
Notwithstanding anything herein to the contrary, if following a Negotiation Period this Agreement is
unable to be amended to the satisfaction of Owner with respect to clause (i)above,or OVG with respect
to clause(ii)above,then this Agreement may be terminated by the applicable dissatisfied party in its sole
discretion and without penalty for a period of 30 days following the end of the Negotiation Period;
provided Owner shall be responsible for all costs of OVG in connection therewith as set forth in Section
4.3(c). If neither party terminates this Agreement during such 30-day period, such termination right shall
expire.
Section 13.3 Remedies. Owner acknowledges and agrees that OVG is not responsible for
determining whether this Agreement or the services hereunder comply with the Code or the Rev. Proc.
or otherwise with the requirements of the Tax-Exempt Bonds, and is relying on Owner's good-faith,
reasonable determinations as to such matters. As such, OVG shall bear no responsibility with respect to
maintaining the tax-exempt status of the Tax-Exempt Bonds, under no circumstances shall OVG be liable
for any failure by Owner to maintain the tax-exempt status of the Tax-Exempt Bonds, notwithstanding
anything to the contrary in this Agreement (including in connection with OVG's indemnification
obligations set forth in Article 10),and Owner's sole remedies under this Agreement in relation to the Tax-
Exempt Bonds or pursuant to this Section 13 shall be termination of the Agreement as set forth in Sections
13.1 and 13.2 above.
Section 13.4 Severability. If at any time during the Term, Owner elects to re-finance the Facility
with bonds that are not tax-exempt and therefore no longer subject to the Private Use Requirements,
then the foregoing Article 13 shall be deemed deleted from this Agreement after the date any Tax-Exempt
Bonds are no longer outstanding on the Facility.
IN WITNESS WHEREOF,each party hereto has caused this Food and Beverage Agreement
to be executed on behalf of such party by an authorized representative as of the date first set forth above.
[Signature Page Follows]
Page 20 of 29
THE CITY OF CORPUS CHRISTI, OVATIONS FOOD SERVICES OF TEXAS, LLC
a Texas home-rule municipality
By: Ovations Food Services, L.P. its sole member
• By:
By: Name. rian Rothenberg
Nam . tie n Title: President, Ovations Food Services, LLC,
Title: CA Itt Mc-A..Sc.. general partner of Ovations Food Services, L.P.
A roved as to form:iu15/22OAA-A4A, Ceit„,--Ae-vi
C;(4-1944'
A A'�TE6T, REBECCA HUERTA _...
CITY SECRETARY
Assistant City Attorney
For City Attorney G
'U5.0 3a 0 -AUTHUK L b
SY MUNCH..2.....1.1.. P
4.L5L
SF1,RiTA0v
Page 21 of 29
Exhibit A
Performance Measures
1. Customer Satisfaction Scores. OVG shall demonstrate quality service to customers of the Facility on
evaluations related to food and beverage service at the Facility,acknowledging that customer satisfaction
in food and beverage servicing is difficult to reasonably measure. Owner and OVG shall cooperate in
determining the form and components of the food and beverage service evaluations and the process for
administering such service evaluations. No more than 60 days following the start of each Operating Year,
the parties shall mutually agree in writing(email shall be sufficient) upon the Customer Satisfaction Score
Goal for the Operating Year.
2. Maintenance Implementation. OVG shall demonstrate quality maintenance of the Food and Beverage
Areas and equipment therein, normal wear and tear excepted. OVG shall demonstrate compliance
with the provision of this Agreement based upon an annual review and quarterly walkthroughs by the
Contract Administrator, inspections of the Food and Beverage Areas by the health department, and an
annual report from OVG on the maintenance and repairs of the Food and Beverage Areas. If there is a
dispute as to whether OVG provided quality maintenance and operation of the Food and Beverage Areas
sufficient to meet this Performance Measure, then Owner may hire a mutually agreeable third party to
conduct a review of the Food and Beverage Areas(which shall be paid for by Owner).
3. Revenue. OVG shall work to increase the food and beverage revenue at the Facility (both in the Arena
and the Convention Center/Auditorium). No more than 60 days following the start of each Operating Year,
the parties shall mutually agree in writing(email shall be sufficient) upon the Gross Receipts goal for the
Operating Year.
In the event the parties cannot mutually agree in good faith on a Performance Measure for#1 or#3 above
for any Operating Year then the Performance Measure shall remain the same from the previous Operating
Year.
Page 22 of 29
Exhibit B
Excluded Events
Event Name Date Event Client
Buc Days Multiple Dates and Events Buccaneer Commission
during each Operating Year
of the Term of this
Agreement between
Owner and OVG.
New Wave Xpo Comic Con 10/21/22—10/22/22 _ New Wave Xpo
Feast of Sharing 12/22/22—12/24/22 HEB Grocery Company
Anime Corpus Christi 2/23/23—2/26/23 High Tide Events LLC
TEMA Conference 4/25/23—4/28/23 Texas Energy Managers Association
DPS Challenge 6/26/23—6/27/23 Texas Trucking Association
Coastal Bend Creator Con 8/18/23—8/19/23 Coastal Bender Creator Con
Page 23 of 29
Exhibit C
Insurance Requirements
OVG'S LIABILITY INSURANCE
A. OVG must not commence work under this Agreement until all insurance required has been
obtained and such insurance has been approved by the Owner. OVG must not allow any
subcontractor to commence work until all similar insurance required of any subcontractor has
been obtained.
B. OVG must furnish to the Owner's Risk Manager and Contract Administer one (1) copy of
Certificates of Insurance (COI) with applicable policy endorsements showing the following
minimum coverage by an insurance company(s) acceptable to the Owner's Risk Manager. The
Owner must be listed as additional insureds on all applicable policies, except for Workers'
Compensation and Crime coverage,by endorsement,or by coverage through a blanket additional
insured endorsement offering additional insured coverage as required by written contract. A
waiver of subrogation is required on all applicable policies. Endorsements, where blanket
coverage is not provided, must be provided with COI. Project name and or number must be listed
in Description Box of COI.
TYPE OF INSURANCE
Commercial General Liability Including: $5,000,000 Per Occurrence
1. Commercial Broad Form $5,000,000 Aggregate
2. Premises—Operations
3. Products/Completed Operations
4. Contractual Liability
5. Independent Contractors
6. Personal Injury-Advertising Injury
Auto Liability Including: $1,000,000 Combined Single Limit
1. Owned
2. Hired and Non-Owned
3. Rented/Leased
Worker's Compensation Statutory and complies with Part II of this
(All State's Endorsement if OVG is not domiciled Exhibit C.
in Texas)
Employer's Liability
$500,000/$500,000/$500,000
Crime/Employee Dishonesty $1,000,000 Per Occurrence
Contractor shall name the City of
Page 24 of 29
Corpus Christi,Texas as Loss Payee.
Liquor Liability $1,000,000 Combined Single Limit
$5,000,000 Aggregate
OVG and Any Subcontractors Are
Responsible for All Damage to Their
Own Equipment or Property
C. In the event of accidents of any kind related to this agreement, OVG must furnish the Risk
Manager with copies of all reports of any accidents within 10 days of the accident.
II. ADDITIONAL REQUIREMENTS
A. Applicable for paid employees, OVG must obtain workers' compensation coverage through a
licensed insurance company. The coverage must be written on a policy and endorsements
approved by the Texas Department of Insurance. The workers'compensation coverage provided
must be in an amount sufficient to assure that all workers'compensation obligations incurred by
OVG will be promptly met.
B. OVG shall obtain and maintain in full force and effect for the duration of this Contract, and any
extension hereof, as an Operating Expense, insurance coverage written on an occurrence basis,
by companies authorized and admitted to do business in the State of Texas and with an A.M.
Best's rating of no less than A-VII.
C. OVG shall be required to submit a copy of the replacement certificate of insurance to Owner at
the address provided below within 10 days of the requested change. OVG shall pay any costs
incurred resulting from said changes.All notices under this Article shall be given to Owner at the
following address:
City of Corpus Christi
Attn: Risk Manager
P.O. Box 9277
Corpus Christi,TX 78469-9277
D. OVG agrees that with respect to the above required insurance,General and Liquor liability,Auto
Liability, and Excess Liability, are to contain or be endorsed to contain blanket additional
insured status to Owner as required by written contract the following required provisions:
• List the Owner and its officers, officials, employees, volunteers, and elected representatives as
additional insureds by endorsement, as respects operations, completed operation and activities
of,or on behalf of,the named insured performed under contract with the Owner;
Page 25 of 29
• Workers' compensation and employers' liability policies will provide a waiver of subrogation in
favor of the Owner; and
• Provide 30 calendar days advance written notice directly to Owner of any, cancellation, non-
renewal, reduction of insured limits below the minimums required herein, or termination in
coverage and not less than 10 calendar days advance written notice for nonpayment of premium.
E. Within 5 calendar days of a cancellation, non-renewal, material change or termination of
coverage,OVG shall provide a replacement Certificate of Insurance and applicable endorsements
to Owner.Owner shall have the option to suspend OVG's performance should there be a lapse in
coverage at any time during this contract. Failure to provide and to maintain the required
insurance shall constitute a material breach of this contract.
F. In addition to any other remedies the Owner may have upon OVG's failure to provide and
maintain any insurance or policy endorsements to the extent and within the time herein required,
the Owner shall have the right to order OVG to withhold any payment(s) if any, which become
due to OVG hereunder until OVG demonstrates compliance with the requirements hereof.
G. Nothing herein contained shall be construed as limiting in any way the extent to which OVG may
be held responsible for payments of damages to persons or property resulting from OVG's or its
subcontractor's performance of the work covered under this agreement.
H. It is agreed that Manager's insurance shall be deemed primary and non-contributory with respect
to any insurance or self-insurance carried by the City of Corpus Christi for liability arising out of
operations under this agreement.
It is understood and agreed that the insurance required is in addition to and separate from any
other obligation contained in this agreement.
2021 Insurance Requirements
Ins. Req. Exhibit
Contract for Management of American Bank Center
4/6/2022—ALA Legal Dept.
Page 26 of 29
Exhibit D
Operating Budget
City of Corpus Christi- Budget
Visitors Facilities Fund 4710
Original Amended
Account Actuals Budget Budget Estimated Proposed
Number Account Description 2020-2021 2021-2022 2021-2022 2021-2022 2022-2023
Beginning Balance $ 8,832,813 $ 3,053,775 S 10,660,901 S 10,660,901 S 6,910,209
Revenues:
302350 Special events permits $ 5,000 $ 12,750 9 12,750 $ 13,700 5 9,500
311500 Multicultural Center rentals 32,510 32,845 32,845 17,540 16,765
311510 Heritage Park maint contract 40,646 22,200 22,200 39,954 42,876
311600 Operating Revenues-Convention Center 2,479,722 2,542,684 2,542,684 2,120,639 2,460,950
311760 Operating Revenues-Arena 1,714,500 2,002,388 2,002,388 1,800,000 2,699,581
312000 Pavilion rentals 11,465 2,500 2,500 6,550 2,500
360030 HOT Reimbursements 2,499,996 3,000,000 3,000,000 3,000,000 1,000,000
340900 Interest on investments 17,421 5,829 5,829 25,727 137,109
340995 Net Inc/Dec in FV of Investments (1,982) - - - -
341000 Interest earned other than Investments 459 2,990 2,990 1,236 -
344000 Miscellaneous 55 -
TOTAL REVENUES $ 6,799,791 $ 7,624,186 $ 7,624,186 $ 7,025,345 $ 6,369,281
Intet-fund Charges:
352000 Transfer from Arena/General Fund S 6,680,812 $ 3,723,705 $ 3,723,705 $ 3,723,705 S 1,043,886
TOTAL INTERFUND CHARGES $ 6,680,812 $ 3,723,705 $ 3,723,705 $ 3,723,705 $ 1,043,886
Total Funds Available $ 22,313,416 $ 14,401,666 $ 22,008,797 $ 21,409,951 S 14,323,376
Expenditures:
12930 Bayfront Arts&Sciences Park 748,432 978,272 1,068,839 916,412 -
13600 Convention Ctr/Auditorium Ops 4,090,895 4,665,963 4,805,228 4,243,639 4,122,591
13610 Arena Capital 3,571,172 2,282,085 8,333,187 6,051,102 4,231,908
13615 Arena-Marketing/Co-Promotion 130,720 650,000 1,540,000 100,000 650,000
13616 Convention Ctr Content Development 20,000 -
125,000 - -
13625 Arena Operations 2,510,674 2,697,641 2,711,145 2,513,401 3,449,479
13710 Cultural Facility Maintenance 164,132 180,420 304,878 275,738 170,647
50010 Uncollectible accounts 3,673 - - - •
60010 Transfer to General Fund 229,781 216,198 216,198 216,198 236,736
60130 Transfer to Debt Service 183,036 183,252 183,252 183,252 182,100
10830 Cash Management - 2,990 2,990 - -
TOTAL EXPENDITURES S 11,652,515 $ 11,856,821 $ 19,290,717 $ 14,499,742 $ 13,043,461
Gross Ending Balance 1 10,660,901 $ 2,544,845 $ 2,718,075 $ 6,910,209 S 1,279,916
Encumbrances 8,358,226
Net Ending Balance 5 2,302,675 $ 2,544,845 6 2,718,075 S 6.910,209 S 1,279,916
Note:Funding source is from Convention and Arena operations,as well as transfers from Arena Fund and HOT Fund.
Page 27 of 29
City of Corpus Christi - Budget
Hotel Occupancy Tax Fund 1030
Original Amended
Account Actuals Budget Budget Estimated Proposed
Number Account Description 2020-2021 2021-2022 2021-2022 2021-2022 2022-2023
Beginning Balance $ 2,280,777 S 1,938,977 S 5,702,259 S 5,702,259 S 4,517,197
Revenues:
300500 Hotel occupancy tax S 13,834,119 S 12,752,148 $ 12,752,148 S 13,492,631 $ 13,491,825
300501 Hotel occ tx-cony exp 3,962,499 3,643,289 3,643,289 3,849,504 3,854,615
300530 Hotel tax penaltles-current yr 45,394 36,000 36,000 70,777 60,072
300531 Hotel tx penalties CT-cony exp 12,959 10,285 10,285 19,792 17,163
340900 Interest on Investments 1,568 233 233 13,463 135,256
340995 Net Inc/Dec In FV of Investment (542) - - - -
TOTAL REVENUES S 17,855,997 S 16,441,955 S 16,441,955 S 17,446,168 S 17,558,931
Total Funds Available S 20,136,774 S 18,380,932 S 22,144,214 S 23,148,427 $ 22,076,128
Expenditures:
11305 Administration S 107,784 S 150,000 S 150,000 S 136,225 $ 150,000
12930 Bayfront Arts&Sciences Park - - - 995,537
13010 Special Events - - - 20,000
13012 Texas Amateur Athletic Federation-Games of Texas 300 250,000 250,000 250,000
13013 Museum of Science&History 48,899 550,000 550,000 550,000 550,000
13492 Art Museum of South Tx 350,000 350,000 350,000 350,000 375,000
13495 Botanical Gardens 40,000 65,000 65,000 65,000 70,000
13601 Convention Center 2,499,996 3,000,000 3,000,000 3,000,000 1,000,000
13605 Convention Ctr.Malnt 202,911 250,000 347,676 347,676 250,000
13606 Convention Ctr.Capital 514,812 1,275,000 2,573,771 1,298,771 3,275,000
13616 Group Incentive Program(GIP) 228,482 575,000 730,825 575,000 575,000
13616 Seawall Programming - 100,000 100,000 50,000 100,000
13640 Harbor Playhouse - 15,000 15,000 - -
13641 Heritage Park-Historic Tour Guides - 6,000 6,000 - -
13800 Convention promotion 5,299,473 5,570,077 5,570,077 6,386,812 5,933,586
13812 Texas State Aquarium 300,000 300,000 300,000 300,000 310,000
13815 Arts Grants/Protects 17,950 200,000 200,000 200,000 300,000
13816 Multicultural Services Support 358,860 378,318 378,318 378,318 365,084
13817 City Wide Waytinding - 500,000 500,000 50,000 450,000
13818 North Beach Plaza Historical Signs 6,396 100,000 107,753 92,625 -
13826 Baseball Stadium Including Insurance - 175,000 350,000 175,000 358,653
13835 Beach Cleaning(HOT) 1,950,000 1,950,000 1,950,000 1,950,000 1,950,000
15100 Economic Development - 225,000 225,000 201,000 225,000
60010 Transfer to General Fund 166,191 136,715 136,715 136,715 214,668
60130 Transfer to Debt Service 2,342,460 2,138,088 2,138.088 2,138,088 2,097,312
TOTAL EXPENDITURES S 14,434,515 S 18,259,198 $ 19,994,224 $ 18,631,230 5 19,564,840
Gross Ending Balance S 5,702,259 S 121,733 $ 2,149,991 S 4,517,197 $ 2,511,287
Encumbrances 3,682,476 • - - -
Net Ending Balance 5 2,019,733 5 121.733 5 2,149,991 $ 4,517,197 $ 2.511.237
I'._: 7.3, `79
OVG 360
AMERICAN BANK CENTER- CUMULATIVE
PRO FORMA OPERATING STATEMENT
Year 1
Number of Events 261
Total Attendence 415,750
Arena Event Revenue $ 2,302,801.00
Convention Center Event Revenue $ 2,304,450.00
Total Event Revenue $ 4,607,252.00
Total Sponsorships&Premium Seating $ 446,280.00
In Kind Revenue $ 297,000.00
TOTAL OPERATING REVENUE $ 5,350,532.00
Indirect Operating Expenses
Total Indirect Operating Expenses $ 6,091,752.00
Net Before Management Fee $ (741,221.00)
OVG 360 Management Fee $ (144,000.00)
OVG Hospitality F&B Annual Fee $ (240,000.00) "Assumpti
Net After Management Fee $ (1,125,221.00)
Page 29 of 29
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