Loading...
HomeMy WebLinkAboutC2009-260 - 7/21/2009 - ApprovedF ~ f ' ~ f ~ ~ i 4~ ~ I ~ANAEENTAREEMENT FAR THE AME~I~AN BANK CENTER BETWEEN QTY ~F ~RPU C~IRITI AND M ~~09~20 IV~~0~9-~~7 07I~11~9 SMG Page 1 of 38 iNDE;X~ ~ ~ , , ~# ~ ~i f r ~ ~A~L~ ~F CDNTENI` RECITAL AGREEMENT ARTICLE 1 ~EFINITIQN Affil~~te ......... ............... ..... .................................................................,....., ~ ~~ rL~1 1 I~~t ... ... ... ... .. ! . , . . .. ... ... . • . ... .. Y .. . , . ... ... ... ... ... • . r . ! . . ! Y Y . , • r Y ! 1 Y ~ . ~ . ! ! a Y . Y Y a Y .. Y . ! . ... ...... it Archlte~ts .............................................. ...............,......•............ .•... 2 Arena ... ... ... ... ... .....••. .,............~.......... . .!l...,.~..~.•....•!•!!!..•.~....r!!!Y•,!!.!•.lYY.l.,......... fr ~~1 1~ , . .. ~ .. ~ . ~ . ... ... ... ... . ... , .. ... ... ... ... ..... . , . ... , .. ... ... ... ... ... ... ... .. • ... ... .. • ... , !~ Budget ......~ .............•..l ... ... .., ... ... ... ... ... .... ,,.......... ... ... ... ... ... ... ... ... ..•.... ... VVV •i .!• .l .IYY! F ~pit~~ Expenditures .............•....• .........,...,.,.......!• ,...•.l.1!!.!!•.l.............•........,..... ~ te~I~~M .. a .. ... ... ... ....~..•. ... ..•... ,..Y. ,.. ... ... ... ... ... ... .1 ... .,, ..Y.. .,..., ... ... ... ... ..~... ... ....... V ~y Vltf . .ll . ,., .~ . ... ... ... ... ... •.•... . .. .. ....,.... ... ... ... ....~ ........,1..~..,.i... ... ,.. ... ~.. ....•.... ... ... Code ... ... ... •.. ... ... ... ...... ... ... ... ... ... ....•....• ......., ... ... ... ~.. ... ... ......... .. • 1 . ! . . ! ~ . . ! • . ! ! ! A • . ! . . Conces~onaire• ..... ......................... .,.......................... •. ... ... Cantra~ctA~,i,l~l~fr~t~r.•a•••li•~•,.Y,•.....,•.•..•.•..••....••al..,,.,.,•.,.~.,•.•......•..~•.•.••.....•....~•~.• Cont~actor ...............••....•!!..l,,...................,.•....•..... ..lY,.,,,......,...,........•............. ~ Convention enter!l1,~l ..........................•..... .........,....,.........,....•.............•. Depo~tory..•l...~...1l ...................~............. .. ,......•.........~..•...... ... . . 1 . ! ! . ~ ! , • F . ! ! . • ! . . ! ! Y . Y Y Emergency Expenditure Event .!..,!l.r ......................•....!••..•..!!!.!„~..,...................... ~ Event Expenses•.........1.!l,...~ ....................................l.l.l..l.l.,............,.................. ~ Facilit~ ...............••... ..,,,......,..,....................... ..,..............•........................ F~rst~Class ..........................•... •F!!.!!!. .lFY.Yl~,..................•...Y..!lY~..,.,.l.Y. r.. .., ... .....,. Fiscal Year,..........•....•......••...1l.l11l,l,~.l ............................•.l.ll1,Y,..,.......•................ 4 Foods~rvices,.!!!l .....................................•......l.l....,..,.........................l..!•!!., ...lY 4 F V ~~~ rv~ V~.1 V V 1 1 11 1 1~~ ~ til ~ ~ ~ 1 l~ 1 ~L .. l 1 1 • ! ! Y ! ! l r 1 ~! l . , ... . , . ... • .. ... ... ... ... ... ! ! Y . l . Y Y . , .. . , . .. , ... ... ... Foadservice Frernises . ! ... ! ! , ...... ! . , Y . , . , ....... Y ........................ .1 ! ! , ............................... 4 enerel Managerl,.....•..,...•.......•......•......•..~••...•lFY..l.,......~........••..••.!•Y!!r!F!!!!.!r!!.!. ~.~censee ................•....•....!•.•...l1!!!•!l1.r.l~llr.l...l...................,,!!.•!!.Fl.lYr...............,.. Mayor ~e~r ! ! ! . ! ! 1 a ! .. ... ... ... ... ... ... ... ... ... ... ... ... ... ... . ! ! 1 ! ! , ~ ... ! a Y ... ... ... ... ... •!•.l t. .!~!!r l~r Yr! M~negement Fees........... • . , ...... .......... • ..... ............ . . .... • ... ................. . !. .~. ! ~• .1 r! 1 ~Y. ~,! 4 it [f~J e/y' r~y_'/~r ~^y ~~` V ~~~t~~y InMV~V! l ~ ~ Ir !!. .. ... ... Y.. ... ..Y . Y .... ... ... ... ... ... ... ....!! ! lY Y.. .., ... ... ... ... ... ... ... ... 111 ~~~ ~ /+ ~ / ~ ~\/t V ~e~~~~~ I n#/VR l I V ~../~n4~~~~~~ . . . .. . .. . .. . . . . • . . . . . . . . . .. . .. ... .. . . . , Net V p~~~t~~~ `~ ... . F . • r . ! Y F ! ! ! Y F ~ ~ ! ! F r .. i ~ r ! . 1 ! F . ! Y Y ! Y ! . ... ... ... ... ...... ... r r . Y ! ! ~ Y ! ... ... ... .. , ... ... .. 44M ~~ ~ N4/t ~~Y/~r~t~l 1 ~~ ~~~~I~n~~~~ ... . .. ... ... ... ... ... ... ... Y F . ! . • . ~ ! ~ 1 ! Y ! ... ... ... ... ... ... . ! . ! ... ! F ! . ! ! Y ~ Y a Y V operating Expenses•.......f.!!!!l...AF•.!.l..l......l.4~1i!l... .....................~l1A1!!lF..,.............. ~perat~nFund.!lY .......................................••...••....•••...!!,l..................,!!.!!1!lY.lYl.!! 5 ~pera`~nM R~~~! IM~ ~~Vti/~{ It... ... .. • ... ... ... ... ... ... ... ! . ~ ! ! . ! ! ! ! Y . Y ! ! ... ... ... ... ! . Y ! ! a ! r Y 1 .. ... ... , .. .... operating Revenues,r.!!••F.!l..,,..,l.l.l~.....1lF,1,.....Y ................1.!!•!.~l..l.........•........... •. ~peratorY r 1 ! F • ! 1 r ... , .. ... ... • .. ... ... ... ... ... ... ... ... ... ... ... ... ... ! .. ... ! F ~ ... ... ... ... • .. .. ! . r ! ! F . ... ... , .. ... perat~ans Manu~i......... •.• ... !,! 1!. ••• ...!!•.......l., ,...l ................. ••...• •!.!.! .,,................ ~utstde ~~terersll ..................•..•...........,.........•......•....... ,........•.......•....,!!Yl..r,l,!!! fi ~uts~de ~tenng Agreer~ent.,. •.........•......,.....•....•....•........F....•......••.... •r.!l .............. ~ Perking Lots ..............•..• .......••l...•.... •.•..............•....!l......,.....•..•...l...l,............, .... 6 Prompt Payment Act .... . .......... .. . ......... , ............ .. , ................. l.a. .!!. .r .Y .~, .lv. .r!!!.!!!.!! fi Reimbursable Expenses .................. . ...... . ............... • ........................... ! - ! .. , .... • ! • . ! .. fi ~~.y+ ~+/ /~~y ! en~ ! at~ons ... ... ... ... ... . ! ! Y .. ! ! ~ ! .. ... . • a ! ! r .. ... ... ... ! • . ! ! 1 ! F . .. ! ! ! ! r ... ! ... ! • ! Y ! ! ! ... , .. . , . ... ... ... ... ... ~V r~nL1~ ~V~~~~~r~.. . .... .., 1.. .,. ~.. r., ..l ~•.....1. 1. Y .lr l.• ,.! ! ~ Y 1, l ... ..l ... ~ .. ...... ... ... ..1 ..r ... ... ... UtiIItlVs ...........•....•....• ...............~.... ,., Y.. ... .l. ,.!l...!l...,l, rsl. . ..,. ... ... ... ..•....l. ,.. .l..l F.. f 1 ~ + 4 ! i ART~LE ~ INTRODUCTION i ~ 1 ~ ~.~ grant of Authority .............. .................. ...... ............~, ,,, :...,........,.... ,.. ~ . ~ Excius~ve Rights Granted ....... . . . .. . ............ . . ..... . ......... . .... . . ~ ... , ........... ~ .~ Exclusion from Exclusive Rights ............. , .. , , ......... ............... ~ ~.4 Nature of Relat~onsh~p~,.~ ................................ ...a~~........,................,.. ~ ~.~ I~r~'t'1 .......................~....,....,........F.,..,,.......... .....~~.,......,................ ~ ~. Contract Administrator ... . ............ . ..... ~ , , ..... , ...... , ... , ........................ , . 8 ART~LE RESPONBIBILITIE OF OPERATOR .~ Standard of Care ......................~.......,.............,....,.....,..,........,........ 8 ~.~ pmplienceith the Lam; Duty ....................... .......~~......................... 11 3 Nc Contruct~vn or Design Respons~b~l~t~es... , ~ ....... ~ .............. ~ . , ........... 1 ~ ,4 Dut}r end L~ab~iity.~~ ..................................................~...........,..,......, 1~ rll Funding Limitations....~~~ .....................................................~,...,.,...... ~~ . Financial Statements......... , .. . . . .................................. , . , ........... , ... 'I ~ .~ \F \/! #M~n E~V~Li LI A.rM i./r~IVL~ ....... ... ... .. i , ~ . ~ . F , ~ , ~ , , ~ ~ i , . ~ i .. .. , , .. , .. ... ... ... ... ... ... . l ~.8 Use of Facility at Direction of City..... ..........................., .. , , ... , , , .......... , . , ~ ~ ~.9 Use of Facility by City. ~ . .... . .......................................... . ....... . .... . .... . ... ~ ~ ART~LE 4 RECORDS, ACCOUNTS AND REPORTS ~. ~ ~~ ~ 1 A . . . . ... ... .. . ... . . . ... ... ... ... ... ... ... ... ... ... ... .. F . , , .. , . ... , .. . , . ... ... ~ .. ... ... .... 4.~ Access to lnfprmat~on ................... F,....,,.....~.,...,................................ ~3 ~~~ Annual Aud~t....~...~ ....... ... ... ... ~.. ... ... ~.~Fi.~ . ,.,.. ... ... ... ... ... ... ... ~.. ... .... ~~ ~~~ I~Vnt~lf I~~pY~~ ......................~..i....~.......r~i.~,~., .~. ... ... ... ... ..~... ... ... .... ~~ 4. ~ Daily Event Flash and Other Reports, ... .............. . . .. ~ ..... , .......... , ........... ~ 3 4. Capital Improvements Budget ............................................................ ~3 4.~ Annual Budget ......................................~F...,,........,................,......... 13 4. S Budget Approval ............................ ~ ~ ...... ~ ... ~ , ... , ........ , ....... , ............. ~ 4 4.9 Estimated Budgets....,.....,~,....~ ....................................................... 14 ARTiLE 5 FUNDS AND AOOUNTB ~J. ~ Operating Revenue Account ............. . . . ............. . F . , ~ ~ ~ , ~ ~ ~ , ........ '~ ~ ~.~ Security for and Investment of Funds .......... . .......... . ........ . . . . . ~ 5 . ~ No Obligation of Operator to Advance Funds .............. . .. . . .. . .. . .. . ~ ~ .4 Capital Contr~but~on ........................ . ................. ~ ~ , ..... , , ..... ~ fi ART~LE ~ . POUVER AND FUNCTIONS ~•~ Authority of Operator .................~.....,.~~...~F....~............~..~,,..,.............. ~~ 5.~ No Sale of Property .........................................~....,....,..................... ~~ ~ ~ r/-' /~~y /~~y 'yyr `/~' N V ~M p ItM I ~ rl 1 prV ~~m ~nt,~ .. , .. , ~ .. i F ~ . . ... .. F r .. ~ .. ... .. ~ .. ... .. ~ i s . r i F ~ .. ... ... .... .... 5.4 Contracts.~,....,~...,.,..,~,....................... .............................~............ 1? ~. lnter~rnAgreement ........................ ..~....,,....,....~~.........................,... ~~ ~. Negotiation and Execution of near Food & Beverage Contract. ~ . ~ .... . ......... .~ ~~ ~ 7 ~ I ~ ~ ~ I + i ti ~ + ~ i . ~ Rights Retained by the City . . . . . ..... . ........................... . ...................... ~ $ ~.$ Execution of contracts ..... ............. ....................~~....,,..,..............,.. ~8 .9 Transecticns vuith Affiliates ...... . .......... . .... ~ .... , . , ........ , ........ ~ a .... , ..... ~ 8 .'1~ Employees ............. ........................,.... ....,.......... ...,.... ~9 .1 ~ Purchase of Supplies and Services .. . . . ........... . ...... . . ....................... ~ ~ ,1 ~ No Expenditures in Excess of I~udget . . ........... . . . ..... . . ......... . ... . . ... . . ... . ~a . ~ Major CJsers...... ~ ................... . .... . ..... ~ . , ... , ... , ................. ~ ................ ~~ .1 ~ Settlement of Claims ............ . . F, ........................., . , ............... , .......... ~~ 5.1 Bond Financing ............... ~..,.~ .................,...,................................ ~1 ARTICLE ~ FEES ANA EXPENSES 7.1 Base Management Fee........ ~ ~ ... . ........ . ... ~ , ........ , ............................. ~~ ~a} Arena Base Management Fee ....... . ............... . ............... ~ fib} Convention Center Base Management Fee .................. ... ~~ 7.~ Incenti~re Fee.......... ......, ....... ..................... ~2 ~a} Arena I ncentEVe Fee . . . .... . ... . .... ~ . , ~ ............ , ................. ~~ fib} Convention Center Incentive Fee . . .. . . . ..... . .......... . .......... ~3 ARTICLE 8 INSURANCE S~~ Insurance to be Maintained by the City ................................................ ~3 ~,~ Insurance to be Illlaintained by operator . . .......... . , ............. , ,.............. 23 8, Insurance Requirements ...................................~~~,.............~............ ~4 8.~ Ar~erican Bank, N.A. ................. . ...................................... , ........ ~4 8. VlJaiver of Subrogation........... , ~ ...................... ..... . . . ........ F, . , ....... , ...... ~4 8.G Proceeds of Casualty Insurance .. . . ...... . ...... . ..... . . . ............ . .... . ........ .. ~4 8.~ INUEMNIFICATI~N ANU HELD HARMLESS ...................................... ~5 ARTICLE 9 EQUAL EMPLOI~MENT ~PP~RTUNITY ~F~~~,. .1 Discrimination Prohibited .................... ............................ ~~ IUIIIIJDBE ...............~~F................................ ~.......... F~~,.,........ ....... ~~ . ~ . ART~LE ~ 0 CERTAIN MATTERS RECARDIIV TBRMINATI~N 10. ~ Surrender of I mpravements ..................................... . . . ............ . ....... ~ ~ ~. ~ Continuation of Performance, F ................. . ............ . .... . ~ , ............ ~ . ~ ..... ~ ~a. Termination by the City for Lack of Funding ......................................... ~~ ~Q.4 Termination at lllf~ll ...................................... .......................... ~....... 27 i ~ ~ ~ t 1 j ' ~ I ~ 1 ARTICLE 11 BREACH . ~ Breach • 1 / • . . • • . . • • • .. • . • • ~ ~ ~ , / • • . . • • • • • • ~ • • . . . i • • • • ~ . .. . ~ ~ • ~ . , 4 ~ .. ~ • • . • . . • . . . • • . ! • • . • 1 1 . 1 ~~ ~~.2 B~ea~h Notices.......•...•.1.1,....• ......... ............../. ,.1 ... ... ,.. ... ...•.•..... . . ~8 ~ 1. ~ Rights of Ncn-Breaching Parley........ , .. . , , , .... ..... . . . . ............... . .. ~8 ARTICLE ~~ MICELLANE~U f . ~ ^ l~tl~~• .. . . . . ~ . . . . . ~ . .. . . . . . . . . • . . . • . . . • . • . . . . . ~ . . . . . . ~ . . . . . . . • . .. . . . . . . . 11 . • 1 Y . f • ~ . . Iq/~ iY Y Y ~ + ! , ~ n ~ , , ! ~ n t ~ . . ~ • 1 • . . • . . . . . . . . . . . ~ . . ~ . . ~ • 1 • , . . ~ , . . ~ . • . . . . . . ~ . • . . , . . . . . ~ . . . . . . . . .. . . . • • 1 / 1 . . . ~ V ~.~ Title any Capt~~ns•.••.•.•••..•.••••~••11,,.,•.•~•..~•.•.•..•...~.........~......./.i.l Yl... t Y# ~ ~ .4 Pronouns an ~ PI YI r~l. 1 . . . . . .. . . . . . . . . . • • • . . . . r . , . ~ . . ~ ~ , . 1 . • / . , . . . . . . . . ~ . . . . . . . . . . . . • • . ~ 1 / ~Y 1 Right of ~ egress and Egress ... . .............. • • • . , ...... • .... • • . . 1 , , .. , ................ ~ 1 .~ I nteliectual Property Rights. • • .. / 1 . ................ . ................ . • ... 1 , . . . 1 . . . . . . . . . ~~ ~.~ ~1YrM~~~fY~..,.... ... •.. ... .... ,.~..1~.~ ..............•....... ... ... ... ~••..111..~. ... ... .... Y~ ~~.~ ~ c~~ssors.l..••,....~ .,.... ... ..~ ... ..~ • .1 ..~ .., ••• • •~ ~•• ... ... ... ... ..• ... •.a ••. 11. /1• • T~ iF . Y f i ~ ~ ~ n ~ ~ n t • . . . . . • • • . 1 1 . , . , . ~ . . . . , . .. . . . • . . . ~ . . • . . • . . . . 1 , 1 . 1 1 1 1 / . • Y • / . . • . . , . • . . . ~ . .. . . . . . . . ~.1~ F~.I~rtherAct~on..•......•.,.••...•a• .•..,,...• ...................•........•.11.1,..,.,....... ~ ! ~ ~ + ate it~es . • • . . . . • • • . . . • • • . . . . . . • • . . . .. • . • • h . • • • ~ • • . . . . • . • . . • ~ . • • . • . . • . ~ • • . • . . a • . • . Y . i . . • . .. • . ~~ ~ ~! ~ Entire Agreement; Attorneys' Fees, , . 1 . . . ..... . ................. • .... • • . 1 • , ... , .... ~~ ~~.~4 Counterparts ........................:..•.••.. ,..,~...,...,.......,...................••/.~/..., 3~ '1~.''I Appiicabie La~v.........,...,......,.......•••.....11,,... . .11 .............•.........•1••.1. 2 1 .1 Limitation of Liabiiity...... • • ..... • . . . . . 1 • • 1 1 1 ... . . . . . . . . . . . . . . . . . . .. . . • . .. 1 • . , .. / 1.. , ..... ~ 1 . ~ 7 Na Representation as to operations Results ..... . . . .................... ! 111.. . 1 . , .. ~~ ~!•~Y F1/IY~ I~~~~Mr~....~.. ~.. ~ .. ... ... ... ... ... ... •.. ... ,•. ..., ....~. ... ... ... ... •.. ../11.11, ARTICLE ~ CONI~LTIN BERIlICE ~i I~r~l ~n~ltl n~ ~• f ~ Y Y. 1 Y 1 . . . . , . . , . 1 . • . . . , . , . • . .. ~ . . . . . . 1 . • . . • . 1 / . 1 1 . . , . • . .. . . . • . Y Y ARTICLE ~ ~ NN'C~I~PETiTI~N Nan-Competition..l ....................................................:.......111,...,................1.1.111., iv r ~ ~ t ~ i a HE~ClLE schedule .~a ~cey Personnel .......................................................«......,.,,,,,,....,,. Bch, 5,~a E~C~IBIT Exhibit A -1 Existing Facilities - lUlap of Existing Facilities - Aerial llie . ..... . .. ... .. . ... . .. . . Ex. A-1 Exhlblt A - ~ Ex~st~ng Fa~lllt~e - Qr~11e11~IDn enter, ~ st l=lour . .................... . .. . ........... Ex. A-~ Exhibit A - ~ Existing Facilities - convention tenter, ~~ Floor .................................... Ex. A- Exhibit A - 4 Existing Facilities -Arena, ~ ~~ F#oor ............................ . ......................... Ex. A~~ Exhibit A - 5 Existing Facilities -Arena, 2~~ Floor ......................... . ..... . ...... . ........... . ... Ex, A~~ Exhibit A - B Existing Facilities ~ Arena, ~~ FIoQr ........... . ........ . ... . ...... . . . .... . . . .. . ... . . . .... Ex. A-5 Exhibit A ~ ?Existing Facilities -Landscaping Areas ................................................. Ex. A-7 Exhibit B ~- ~ Foodservice Premises ~ Arena First Floor .... . .. . ..:.. . ... . ...... . ...... . . . . ......... Ex. B-~ Exhibit B -- 2 Foadserviaes Premises -Arena ~ecand Floor ................................. ....... Ex. B-2 Exhibit B - ~ Foodservices Premises -Arena Third Floor ........................................... Ex, E- Exhibit E ~- 4 Foodservices Prerrtises - convention tenter First Flour ........................... Ex. B-~ Exhibit B - Foodervices Premises - onventiun tenter second FlQUr ............... ...... .. Ex. B-5 Exhibit ~ ~ Parking Lots.... , .. , . .............................................................................. Ex. C v I ~ ~ t MANAEMENTACREEMENT THIS MANAGEMENT AGREEMENT ~"Agreement""} is made and entered into effective as of !, ~0~9 by and between AMC, ~ Pennsylvania general parknership ~"operator'' or "MC"} and the CITY DF CCRPU CHRISTI, a Texas home rule municipal corporation ~"City"}. RE~~TAL I. The City, acting through its duly authorized City Manager ~"City Manage'}, owns and has constructed aMulti-purpose Arena ~"Arena"}, the Bayfront Plaza Convention Center and the Selena Auditorium ~"the latter two collectively defined in this Agreement as "the Convention Center"} located in the City of Corpus Christi, Texas, at 1Q~ North Bhvreline Boulevard, which, together with all facilities, machinery, attachments and appurkenances now or hereafter attaching thereto, i hereafter referred to as the "Facility„ and also known a the "American Bank Center." ll. The Operator is an organization whose principa#s have substantial experience and expertise in the management, operation, and marketing of public assembly facilities. III. The City and Operator are parties to that certain Pre-opening services and Management Agreement dated ~ecer~ber 18, ~a~1, as amended by ~i} that certain First Amendment to the Pre-opening Bervices and Management Agreement, authorized October 14, ~~03 by City Council; and as further amended by iii}that certain ecand Amendment dated May ~ S, ~aa4; viii}that certain Third Amendment, dated August ~ 7, 2a04; Div}and that certain Fourth Amendment, dated August ~ , ~~~~ collectively, the "original Agreement"}, pursuant to which AMC provides management services for the Facility on the terms and conditions set Earth therein. The Convention Center portion of the original Agreement expires July 31, ~aa9, and the Arena portion expires November a, ~Oa9. 111. n February ~4, ~aa9, the City Council authorized the City Manager ar his designee to negotiate a five year agreement with BMA to operate and manage theAmerican Bank Center under new fees, terms, and conditions, and with the negotiated agreement to include but not be limited to a term: ~i} adding to M's duties the duty to manage all food and beverage services at the Facility, including management of all alcoholic beverage services; iii} acknowledging that AMC shall be assigned bath the Food and Beverage Bervices Agreer~ent with Centerplete and the Alcohol service Management Agreement with the Corpus Christi International Beamen's Center; viii}stating that, immediately following the third year of the Agreement, the City shall solicit and entertain proposals from private venue management firms to aperateand r~anage the American Bank Center; and ~iv~ giving the City the right, imr~ediately fallowing the third year, to terminate the agreement, with or without cause, by providing no more than ninety ~~0~ days native to M, without the payment of any penalty, fee or premium. V. The City is a party to that certain Food and Beverage services Agreement with service Arnerioa Corporation, dlblal Centerplete ~{`Centerplete"}, dated January 1, 2004 the i4Faod ~ Beverage Contract"~, pursuant to which Centerplete provides food and nonalcoholic beverage services at the Facility. The Food and Beverage Contract expires at the close of business at the Facility on July 31, X009. Page 1 of 3fi t ~ ~ r Vl. The City i a parlor to that certain Alcohol Service License Agreement with the Corpus Christi International Seamen's Center, a Texas ~O~~c}~3} nonprofit corporation ~"Seamen's tenter"}, dated ~lovember, ~a04 the "Alcohol License Contract"~, pursuant to which the Seamen's Center provides alcoholic beverage services at the Facility. The Alcohol License contract is on a month-ta-month basis pursuant to an existing agreement between the City and the seamen's Center. VII. It is the City's intention that the Facility be operated in a First-Class and fiscally responsible manner with the objectives of offering diverse event activity ~e.g,, cultural, educational, entertainment, sporting} racial and other activities} to area residents end visitors; attracting events ~e.g., conventions and tradeshows~ that generate economic end fiscal activity thereby stirnulatir~g the economy; minimizing financial operating requirements required from public funds; and, in general, maximizing the utilization of the Facility for the benefit of the City, while minimizing, to the extent practical, the net cost to the City. The parties accordingly agree as follows: AORFFI~BNT ARTILY 1 ~FFINITION The fallowing words, unless the context otherwise requires, have the meanings ascribed to them below. "A~filiate" means, with respect to any corparatian, partnership ar other entity, any other such entity which is and at all times remains Controlled has hereinafter defined} by, under common Control with or which Controls the first such entity, and iii} "antrol" means direct or indirect ownership of not less than 1 D°lo of all the voting stock of a corporation ar not less than 1 ~°lo of the legal and equitable interest in a partnership or other entity arthe ability to direct management, operations or policy decisions of such corparatian, partnership or other entity. "Agreement" has the meaning ascribed above, as amended from time tv time. "Arc~~tects" means the architects of record, whether one or mare, engaged by the City to prepare the plans and specifications for the Facility with regard to any future i provement~renavatians. "Arena" means the approximate 9,5D0 seat ~8,0~~ fixed and 1,50 mavablel portable}, multi-purpose arena, together with all facilities, machinery, attachments and appurtenances now or hereafter attaching thereto. "Bonds" mean and refer collectively to the City bands used tv finance the Facility ar the Bands that will further finance the Facility, the interest on which is ar wi11 be excludable from the bondholder's grass income far federal income tax purposes under section ~ a3 of the Internal Revenue Code of 1 gB, as amended. "B~dget" means any budget to be prepared by Operator under the provisions of Article 4 of this Agreement. An "Approved Budget}' means any Budget submitted by Operatorto and approved in writing by the City including any amendment thereto approved in writing by the City}. Vllith respect to each Budget referenced in this Agreement, a separate Budget shall be Page ~ of 3~ ' ~ ~ r established far the Arena and the Convention Center and Operator shall operate each of the Arena and the Convention Center in accordance v~rith such separate Approved Budgets, as provided by Article 4 and mare specifically by Bectian 4.8 of this Agreement. "Capital Expe~rditure" r~eans all expenditures far building additions, alterations, renovations, repairs ar improvements, and far purchases of additional or replacementfurniture, fixtures, machinery or equipment, the depreciable life of which, according to generally accepted accounting principles, is in excess of one ~~ }year and the value of which is equal to or greater then ~,gaa. "Catering" means functions where payr~ent is received in advance from one party far prearranged Foadservices, including but not limited to, dinners, banquets, and receptions and hosted bars. "City" shall have the meaning assigned to it in the opening paragraph above. `Code" means the Texas Alcoholic Beverage Oode. ;`Concessionaire" shall mean Centerpiate ar subsequent parley selected by Operator to rnar~age all of the Foodservices on site+ excluding Outside Oatering. "Concessions" means Faodservices where payment is made at the time that food and beverage services and products are served ar delivered. An example of this includes an individual purchasing items at a concession stand arfram a cash bar. "Cor~traotAdmirtitrator" means any officer, agent, employee af, ar independent contractor retained or employed by either party, acting within the scope of authority given such person by such party. "Contractor' means, whether one or mare, the genera! cantractar~s} selected by the City to repair, replace, improve, rernave, renovate ar modify the Facility. "Convention Center" r~ens and refers collectively to the Bayfront Plaza convention Center and the Selena Auditorium. "Depository" means the place selected by the Oity in v~hich the bank accounts far the funds required to be maintained under this Agreer~ent are to be deposited. "Err~ergency Expenditure" means any expenditure to the extent not included within an Approved Budget and not expected by the Operator to be incurred but which is necessary to correct any condition that poses an imminent threat to public safety ar material damage to the Facility. "Event" refers to ail events held at the Facility including, but not limited ta, cancerks, sparking events, family shows, tradeshaws, cansurner shows, banquets, receptions, meetings, seminars, and any other functions held at the Facility consistent with this Agreement. "Event Expenses" means any and all expenses incurred or payments made by Operator in connection with the occurrence of events at the Facility, including but not limited to casts far event staffing including ticket takers, security and other event staff, and costs relating to setup and cleanup, ' "Facility" means, collectively, the Arena, the Convention Center, and the Selena Auditorium. Page ~ of 3~ "First-Gass" means quality of the best; the finest; the highest clan, grade, or rank; and highest distinction with respect to the operation, management, marketing} and prornotivn of the Facility, including but not limited ta: • professional promotion and marketing efforks; • service~oriented guest and tenant services; ~ premium faad and beverage services; • timely repairs, maintenance, and cleaning of building, equipment, and grounds; • positive, safe and secure Facility for patrons and employees; • state-of-the~ark technology to patrons; and • parking services "Fiscai Year' means, at the time of this Agreement's execution, period of time beginning on August 1 and ending on the immediately following July ~, inclusive. The pity may change its Fiscal Year, in which case the pity must notify ~peratar of the change in writing at least 1 ~~ days before the end of the Fiscal Year in which the change gill occur, and the definition of Fiscal Year in this Agreement shall automatically change to reflect the new definition of the pity's Fiscal Year. "Foodservice"means planning, preparation, service, accounting and management of faad and beverage services to be provided hereunder, including without limitation, Catering and Concessions, vending machines, staffing and liquor license procurement and maintenance in accordance with the laves of the Texas Alcoholic Beverage Code and regulations promulgated by the Texas Alcoholic Beverage Commission. "Foodservice Commissions and Fees" means the commissions laid by the Concessionaire or outside Caterer and included in operating Revenues. should operator negotiate a managerent fee agreement with the Concessionaire, then only the operating Income from the Concessionaire will be included in FQOdservice Commissions and Fees. No operating Expenses will be recorded by the ~peratar for Faodservice. "Foodservice Premises" means all areas, improvements, fixtures, and trade fixtures on the Facili#y's premises that are or may in the future be used in connection with the operation of the Foodservices, including adequate storage and affoe spade, as described in E~hihit iiB" hereto. The Foodservice Premises may not be changed without the prior written approval of the City, which shell not be unreasonably withheld or delayed. "General Manager" means the chief operating officer of the ~peratar at the Facility. "Licensee" means a person or entity entering into a written agreement to host an Event a# the Facility. "lVlajor User' means any professional sports team, franchise or university using the Facility as the site of its home games, as well as any event traditionally held at the Facility whose use thereof consists of more than thirty ~~g} days during any Final Year. {`management Fees" means those fees payable to the operator under Article 7. "Net operating Income" means with respect to a Fiscal year, the excess, if any, operating Revenues for such Fiscal Year over operating Expenses, as set forkh on the year end audited financial statements, far such Fiscal Year. "Net operating Income Benchmark" means the projected Net operating Income in the Approved Budget for that particular Fiscal Year. Page ~ of 36 "Net Operating Loss" means with respect to a Fiscal Year, the excess, if any, of Operating Expenses far such Fiscal Year aver Operating Revenues as set for#h in the year end audited financial statements, for such Fiscal Year. "Net Operating Loss Benchmark'} means the pra~ected Net Operating Loss in the Approved Budget for that Fiscal Year far the Convention Center. "Operating expenses" means all expenditures or obligations of whatever kind ar nature made ar incurred by MO xn promoting, operating, maintaining, marketing and managing the Facility during any specified period during the term of this Agreerent, all contract labor; all reimbursable Expenses; all fees paid to Operator under this Agreement; maintenance and repairs; utilities; deposits far utilities; telephone; telescreen andlor scoreboard operations; security; fees payable to subcontractors; refuse removal; cleaning; sales use, or any other taxes or impositions applicable to the operation of the Facility; building supplies; ticket commissions; premiums far insurance maintained under Article 8; data processing; advertising; marketing; public relations; pest control; travel, lodging and related cut-of-pocket expenses; audit fees; legal fees and other professional fees; professional development and training expenses for the benefit of the Facility, and Facility related enterkainment; office supplies; employment fees; freight and delivery; lease of equipment; Master Card, VISA and other credit and debit facilities and telecheck fees and expenses; bank fees, all damages, losses or expenses suffered or paid by the City for, at the City's written direction, by Operator} as the result of any and all claims, demands, suits, causes of action, proceedings, judgments and liabilities, including reasonable attorneys fees incurred in litigation or otherwise, assessed, incurred ar sustained; and fees and commissions paid to any third parley engaged by the City for, upon the City's written request, ~y Operator} to provide services with respect to advertising, naming rights, pouring rights, the marketing and sale of luxury boxes or the sale of personal seat licenses; but excludes any SMO Capital Contributions and Capital Expenditures, casts far corporate overhead, indemnity obligations and damage payments owed to the City, amarkization including the SMC Capital Contribution}, depreciation and other non-cash charges and any debt service on the Bands. Expenses shall be calculated separately far the Arena and the Convention Center, D eratin ~~cpenses shall not include any expenses attributable to Foodservices at the.Facility. Solely for purposes of the subrnissian of the budgets hereunder and the calculation of Net Operating Income and Lass, the Net Operating Incarne Benchmark, the Net Operating Loss Benchrark, and SMG's incentive fees hereunder, the fees payable to SMO under this Agreement shall not be included therein. "Operating Fund" meaf~s a fund maintained under Section , ~ . "Operating Revenue Account" has the meaning ascribed by Section ~ 1. "operating Revenues" means all receipts including, without limitation, seat license fees and surcharges, rental revenues, use license fees, Foodervice Commissions and Fees, merchandise sales revenue, advertising sales revenues, box office income, suite sales, sponsorship revenues, promotional fees, and equipment rental fees}, revenues, income, and cash received ar collected ~~ }far the use af, operation, ar admission to, the Facility ar any portion thereof, ~~} for the right to sell, ar in respect of the sale of, any product or advertisement in the Facility including all rents, royalties, and concessions from tenants, concessionaires, and licensees abut specifically excluding the grass receipts of such concessionaires, tenants, and licensees}; ~}for rental ar use of the Facility equipment; ar ~4} as fees far services rendered at the Facility. Excluding from Operating Revenues in all events are, any portion of ticket sales payable to the performers in or prornaters of any event its the Facility or the portion of such ticket sales, if any, payable as a commission to any entity or person providing ticket distribution services, for and an behalf of and actually paid to a user of the Facility; applicable excise, sales Page 5 of 3 y occupancy and use taxes, or similar government taxes, duties, levies, or charges collected directly from patrons or guests, ar as a part of the sales price of any goods, services or displays, such as gross receipts, adrnissian, cabaret, arsimilarorequivalenttaxes; receipts from financing, receipts from the sale or other disposition of capital assets and other items not in the ordinary course of the Facility's operations and income derived from securities and other properky acquired and held far investment; receipts from owords or sales in connection v~ith any taking, from othertransfers in lieu of and underthe threat of any taking, and other receipts in connection with any taking; proceeds of any insurance, including the proceeds of any business income insurance ~pravided thatthe proceeds of business income insurance shall be included to the extent the same reimburse the City far revenues actually lost}; proceeds of odvances made by the City to fund net operating deficits from the operation of the Facility and funds advanced for capital expenditure; rebates including tax rebates from the City, state of Texas or other governmental authorities and any interdepartmento! funding from other departments of the City in the nature of reimbursements or othen~ise}, discounts or credits of a similar nature knot including charge or credit card discounts, which shall not constitute a deduction from revenues in determining Operating Revenues, but shall constitute Operating Expenses in determining Operating Income ar Operating Loss}. Operating Revenues shall be calculated separately far the Arena and the Convention Center and, in no event, shall Operating Revenue ever be deemed to include the proceeds of any hotel occupancy taxes. "Operator" has the meaning assigned to it in the opening paragraph above. "Operations Manua!" means a document developed by Operator which contains terms regarding the management and operation of the Facility, including detailed policies and procedures to be implemented in operating the Facility, as agreed upon by bath the City and the Operator. The porkies acknowledge that to the extent that the such manual contains any proprietary information of MG {e.g., M-wide gnat Facility-specific} operating policies, procedures andlor software, such information shall remain the property of and shall not be kept at the Facility after the expiration or termination of this Agreement. "Outside Caterers" means any catererotherthan Centerplate entering into an Outside Catering Agreement provide Catering services at the Convention Center far a single event. The Operator will establish r~inirnurn Commissions andlor fees, insurance and security deposits required in order far an Outside Caterer to operate at the Convention Center. Outside Caterer wili pay Operator immediately fallowing their Catering event based an the Outside Catering Agreement vuith that Outside Caterer and the Operator. "outside Catering Agreement" means the written agreement between the Operator and an Outside,Catererfor a single Event to be held of the Auditorium or the convention Center. "Parking Lots" means any and all existing and future parking facilities that serve the Facility, as Shawn in Exhibit "C" which the parties may amend from tune to time. "Prompt Payment Act" means Chapter~2~~ of the Government Code in force in the state of Texas. "reimbursable Expenses" means all of the following expenses incurred by the Operator in performing its services under this Agreement to the extent abut nv further} the same are provided for in an Approved Budget arare incurred as part of an Emergency Expenditure, salaries, gages, and benefits of Operator's personnel working at the Facility; payments made by Operator to unrelated porkies from its own funds ar liabilities incurred by Operator for actual and direct expenses under contracts related to the operation of the Facility but then only if entered into by Operator in accordance with this Agreement; travel, lodging, and entertainment expenses. Page 5 of 3~ I "Renovations" means any renovations of the Facility that may be undertaken by the City. "Revenue Benchmark" means the projected operating revenues in the Approved Budget for the Facility and excludes the sale of Warning rights for the Facility. "TABC" means the Texas Alcoholic Beverage Commission. "Utilities" means electrical, water, and gas services. Operator is responsible far utilities. For the electricity invoices that the City pays directly, the City will make every of#ark to submit the invoices to Operator for reimbursement in a timely manner, but in no case later then ten ~~ ~} calendar days after City makes the direct payment to electricity provider. Operator shall pay all invoices within fifteen ~1 } calendar days from the date of the invoice, in accordance with section . of this Agreement. ARTICLE ~ INTRODUCTION ~.'~ Crant of Authority. To enable Operator to perforr~ its obligations under this Agreerr~ent, the City hereby grants to the Operator, and the Operator hereby accepts, the exclusive right and obligation subject to the provisions of section ~.7 and the other terms and provisions of this Agreement, in its own Warne, as an independent contractor and not as an agent of the City, to manage and operate the Facility. ~.~ Exclusive Rights Oranted. The City hereby grants to Operator, subject to the terms and conditions of this Agreement, the "Exclusive Right" to contract v~rith outside concessionairesfcr the provision of the Foodservices, to oversee the provision of those services by such concessionaires, and to allow such concessionaires the exclusive use of the Foodservice Premises at the Facility, subject to any limitations contained in this Agreement concerning Catering at the Convention Center. v~ith regard to the Arena only, Operator is granted the Exclusive Right to contract with a concessionaire to exclusively provide Foodservices. The City grants Operator the exclusive rights to sell novelties, souvenirs, programs, records, tapes, clothing and gifts collectively, "Novelties"} at all Events held at the Foci I ity. 2.3 Exclusion from Exclusive Rights. The following shall be excluded from the Exclusive Right to provide Food and Beverage Bervices: ~a} Fairs or Festivals. Foal and Beverage Bervices provided at fair or festival~type Events at the Facility may be excluded if, in the opinion of the City, the selling of the items from booths is an important part of the Event. Additionally, the Exclusive Right to provide Foad ar~d 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 ceiling food items intended for consumption off the premises. ~.4 ,Nature of Relationshi .The parties agree that the only relationship created by this Agreement i that between the City, as owner, and the Operator, as an independent contractor, far management and operating services and that the Operator is an independent contractor, not an agent, employee, joint venturer or partner of the City. Page l of 3fi ~.~ Term. The term of the Agreement begins on August ~, X009 the "Effective Date"}and ends on the last day of the fifth ~~t~~ full year fallowing the Effective Date unless sooner terminated under the provisions of this Agreement. The City ray, effective the last day of the third year and anytime thereafter, terminate this Agreement with or v~rithout cause and without payment of any penalty, fee or premium in accordance with Arkicle ~ a of this Agreerr~ent. The parties acknowledge that during the third ~~r~} gear of this Agreement, the City shall solicit proposals from venue management firms for operation and management of the Facility. ~.~ Contract Administrator. Each party must appoint a contract administrator who shall monitor such party's cor~pliance utirith the terms of this Agreement. Operator's contract administrator shall be its general Manager at the Facility, unless Operator notifies City of a substitute contract administrator in writing. City shall notify Operator of the name of its contract administrator within thirty ~~~ days of execution hereof. Any and all references in this Agreement requiring OperatororCity participation arapproval shall r~ean the participation or approval of such party's contract administrator. ARTICLE REPONIBILITIE ~F OPERATOR 3.1 standard of Care ~a~ subject to the limitat#ons on Operator's authority set forth in this Agreement and subject to the Approved Budget, the Operator shall exercise its diligent, good faith efforks in managing and operating the Facility sa as to minimize Operating Expenses and r~axir~ize Operating Revenues. In this connection, the parties agree that the Operator, in recon~r~ending and implementing booking policies approved by the City, may schedule not only those events that generate substantial direct revenue to the Facility, but also those events that produce less direct revenue but, in the Operator's gaud faith judgment, generate either a significant economic, cultural, ar other benefit to the City or otherwise serve the public interest; provided that, except where provided under sections .~ and 3~9, na use of the Facility shall be permitted without a reasonable charge or reimbursement of costs of operation of the Facility, as may be prudent under the circumstances, for such use with respect to the Arena andlor Convention Center, as applicable. (b) Subject to the limitations set forth in this Agreement, the Operator shall da the following {or cause the same to be performed}: {i} Manage and operate the Facility and cantractfor its use in a mannerthat will promote and maximize the use to furkhr the purposes for which the Facility is to be constructed, a set forth in the Recitals to this Agreement; ~i~} Manage all aspects of the Facility in accordance with the Operations Manual and the terms of thisAgreement, including but not limited to cost containment, revenue generation, profit maximization, promotions, advertising, energy conservation, security, box office admission procedures and general user services; viii} Maintain the Facility in accordance with the Operations Manual and the terms of this Agreement, including but not lirr~ited to routine repairs, preventive maintenance, janitorial services, grounds keeping services, Page 8 of ~ maintenance of all interior and exterior walls of the Facility, maintenance of the landscaping around the Facility; walking inspections of the Facility on a daily bosis, and maintenance of all the Parking Lats to city codes and standards; ~Jpdate, and furtherdevelop as necessary, the Operations Manuel for the facility for the City's review and approval no later than December ~1, gg9, and regularly thereafter as appropriate; ~~v~ Manage the Faad and Beverage services, including alcoholic beverage services, at the Facility. Negotiate and enter into contracts at and for the Facility far the sale of food, beverages, souvenirs, novelties and programs, as provided by Article ~, and by Article ~, as applicable including without limitation the execution and delivery of such contracts in Operator's nave as an independent contractor}; ~v} Negotiate, execute, and perform contracts, use agreements, licenses and other ogreements ~A} with persons who desire to schedule events, performances, telecasts, broadcasts or other transmissions in, Pram ar to the Facility or who desire otherwise to use the Facility or any part thereof or ~B}that otherwise pertain to the use, operation and occupancy of the Facility or any part thereof, as provided in ectians fi.4, ~.fi, ~.8, and ~. ~ , as applicable including without limits#ion the execution and delivery of such contracts in Operator's name as an independent contractor}; Zvi} Market the sale of luxury suites or boxes and personal seat licenses, a provided in ectians ~.~, S.B, 5.8, and ~. ~ ~, ass applicable ~including+ without limitation the execution and delivery of such contracts in Operator's name as an independent cantroctar~; vii} Coordinate and negotiate contracts far all advertising, licensing, promotional activities, marketing, and public relations for the Facility, as pravialed in ectians .4, G., .8, and ~. ~ , as applicable including, without limitation the execution and delivery of such contracts in Operator's name a an independent contractor}; Coordinate the efforts of advertising, promotional activities, marketing, and public relations at the Facility of City activities and efforts, as requested by the City, Pram time to time. ~viii~ Manage other facilities and projects at the request of the City, as these opparkunities arise, and coordinate such new efforts by meeting with the City to agree to the scope of and other terms related to such management. fix} Coordinate the efforts of all porkies involved in the operation of the Facility and establish and maintain consistent procedures for cast estimating and reparking, maintenance and payment of invoices, including preparation of Budgets and reports as contemplated by Article 4; fix} Plan, coordinate, and administer operation of the Facility and continue to identify, select, and train the Facility's staff; Page 9 of 3G ~x~} Retain legal counsel in connection with the discharge of its duties hereunder and cause such counsel to covrdlnate with the City's legal deparkrnent where necessary or appropriate. Operator acknowledges that the City's legal department shall at all tunes represent the interests of the City; ~xii~ Caardintethe work of all parties performing work in connection with the operating of the Facility} ~xi~i} Manitar actual and projected Operating Expenses and Operating Revenues end advise the City, in a timely fashion as part of its Monthly Report, if projected oasts exceed the amounts set farkh in the Approved Budgets, as provided in section ~.1~, as well as the reasons for the discrepancy; ~xiv} Furnish all services, personnel, materials, tools, machinery, equipment and other items necessary to accomplish the foregoing requirements of this Paragraph} Article , and other provisions of this Agreer~ent; (xv} Devise and implement procedures {including preventive and predictive maintenance procedures} reasonably designed to keep the Facility in good order and condition, subject to ordinary wear and tear, and maintain the Facility in such order and condition; and ~xv~} Require that all persons using the Facility ar attending events therein comply with all legal requirements of all governmental authorities having jurisdiction aver the Facility; ~xv~i} Not create, assume or ufferta exist any r~ar#gage, pledge, lien, charge ar security interest ar other encumbrance of any nature whatsoever relating to this Agreement ar its rights and obligations under this Agreement, except any pledge ar other encumbrance of the fees due Operator pursuant to thisAreement; ~xviii~ Promptly and fully discharge and pay all of its obligations under this Agreement at ar prior to the time specified far performance or payment thereof, including without limitation, the payment of all Operating Expenses from the funds available for that purpose under Article 5. Operator shall have the right to contest its obligations to make payments to third parties sa long as fix} Operator does so in gaud faith, diligently end by appropriate proceedings, and ~y} such contest does not subject the City to any potential civil ar criminal liability or constitute a breach of any lava, rule, code ar regulation applicable to the City; ~xix} Develop a comprehensive marketing plan and brochure, a booking policy, and a complir~entary sales responsibilities plan with the Convention and Visitors Bureau of the City and begin impler~entation thereof as soon thereafter as the same is approved by the City; ~xx} Manage the current Naming Rights Agreement between Operator and the American Bank Center, and seek, negotiate and enter into contracts with future naming rights partners subject to the terns of this Agreement, far the naming rights of the Facility, and r~axir~ize additional narr~ing rights Page 10 of ~ revenue at the Facility to the extent not under the scope of the current Naming Rights Agreement to the maximum extent possible, not in conflict with the current Naming Rights Agreement} and ~xxi} Operator gill be required to use its best efforts to implement energy efficiency and conservation measures, consistent with thane established by the City of Corpus Christi, in an effort to meet and achieve a ~°lo annual reduction in electricity consumption. In orderta meet these goals, Operator will propose capital improvement projects to increase energy efficiency at the Facility. The goal of this requirement is to achieve sustainability and to reduce the operating costs at the Facility. Operator must facilitate the City's energy audits of the Facility, review the results of the energy audit and make recommendations to Cityta improve the energy performance of the Facility. ~c} ectian , ~ and each provision in the above subsection "b" chalk be subject to the Approved Budget. ~.~ Car~plian,ce with the Law; Duty. The Operator shall cor~ply with all applicable laws, rules, regulations, ordinances ~"Laws"~ relating to the use and operation of the Facility end the ernployr~ent of its employees. The Operator shall perform its obligations hereunder in goad faith end in conformity with the standard to vuhich a goad operator would operate in similar circumstances. If compliance with applicable Laws with regard to the condition of the Facility requires funds not provided for in an Approved Budget and the City refuses to consent to amendment to the Approved Budget providing forthe expenditure of funds necessary to cause the Facility to comply with such applicable Laws} then the Operator may terminate this Agreement upon ninety X90} days prior written notice to the City which notice shall described with specificity the applicable Laws violated and the actions needed to remedy the same} if fix} the failure to comply with such applicable Laves subjects the Operator to potential civil or criminal liability, and ~y} the City fails, within such ninety X90}day period, to make provision for the funds necessary to correct such violation, in accordance with section of this Agreement. ~.~ No Construction or Desi n Res ansibilities. Notwithstanding Operator's review of and recor~mendations, upon request by the City, in respect to any Facility's design, ir~provernents or renovations, the Operator will not have responsibility to the City or any other person for or authority concerning any final plans and specifications forthe Facility's design, improvements or renovations, and will not supervise or be responsible in any manner for construction, if any, of said irr~prover~ents or renovations. The City acknowledges that Operator's recommendations are based solely upon Operator's practical experiences in the operation of public assembly facilities similar to the Facility. The City agrees to look to the Contractor, subcontractors, Architects, engineers and other design professionals for all matters related to design and construction of any work and not to Operator. ~ ~4 Duty and Liability. The Operator shall owe to the City a duty to perform its obligations under this Agreement and to conduct the management and operating of the Facility at all times with integrity and gaol faith and in a manner which is in the best interests of the Facility and the City and consistent with the terms of this Agreement. .~ Funding Limitations. The City recognizes and agrees that performance by Operator of its responsibilities underArticle 3 and othen~rise underthis Agreement is subject to the City's provision of funds to Operator for such purposes as hereinafter provided, and i limited by the Approved Budgets. Page ~ 1 v~ 3G Financial Statements. At the City's request, Operator shall provide the City with the opportunity to review certain financial statements of Operator the "Financial Statements"~. In connection with such financial statement review, Operator shall represent and warrant to the City that ~i~ such Financial Statements were prepared in accordance with generally accepted accounting principles consistently applied and are true and correct in all material respects and presentfairly the Operator's financial position as of the date thereof; and that iii} to the best of Operator's knowledge there has been na material adverse change in Operator's financial position from that reflected in the Financial Statements. ~.~ Certain Excluded Services. Notwithstanding the faregoir~g, the City reserves the right to have parties other than Operator negotiate contracts far naming rights related to the Facility. Operator shall, however, after execution of a contractfor naming rights be responsible far insuring that all abligatians of the City and the other parties thereto are duly and timely performed; provided, however, in o doing Operator shall not have to accept any liability or obligation therefor not already pravided for in this Agreement. ~,$ Use_af Facility at Direction of City. ~a} At the direction of the City Manager, upon reasonable advance notice and subject to availability, Operator shall provide use of the Facility or any part thereof to civic, special interest groups and nonprofit organizations located in Carpus Christi area at reduced rates below the published rate schedule. ~b~ Subject to the Policies and Guidelines established by Operator and approved or modified by the City, the City shall not schedule use of the Facility pursuant to subsection ~a} and Section .9, below, if such use will conflict with paying events banked by Operator and shall in all instances be subordinate thereto in terms of priority of use of the Facility. In instances when the Facility, or part thereof, is to be used at the City's request or by the City pursuant to subsections ~a} and Section ~,9, below, a rent or use fee which otherwise would be chargeable far such event shall be deemed to have been paid and such deemed payment shall constitute Operating Revenues for the purpose of calculating Operator's incentive fee pursuant to Article ?hereof. Use of Faoility by City Subject to availability, the City shall have the right to use the Facility ar any part thereof rent-free far meetings, seminars, training classes ar other non- commercial uses, provided that the City shall promptly reimburse Operator, far deposit into the Operating Revenue Account, far any increrr~ental out-of-pocket expenses incurred by Operator such as the cast of ushers, ticket-takers, set-up and take-dawn personnel, security expenses and other expenses} not included in the Approved Eudget in connection with such use. Such non-co~nr~ercial use of the Facility by the City shall (i} not compete with or conflict with the dates previously booked by Operator for paying events; (ii) not consist of normally touring attractions (such as concerts anc! family shows}; and viii} be banked in advance upon reasonable notice to Operator pursuant to the Facilit~r's Policies and Guidelines as approved ar modified by the City. Upon request of the City, O,peratar shall provide to the City a list of available dates far City's use of the Facility. To the extent that Operator has an opportunity to book arevenue-producing event on a date which is otherwise reserved far use by the City, Operator may propose alternative Page ~2 of ~ dates forthe City's event, and the City shall use cornmerciaily reasonable efforts to reschedule its event to allow Operator to bank the revenue- producinwent. For purposes of calculating Operator's Incentive Fee, Operator shall receive a "paper" credit for an amount equal to the difference between the published Facility rate and the rate {if any} charged to the City for such use of the Facility only in the event that the lUlanager had a bona fide opportunity to book arevenue-producing event. ARTICLE 4 RECORDS, ACCOUNTS AND REPORTS 4.1 Baoks. The Operator shall maintain at the Facility books of account with respect to its management and operation of the Facility in accordance with generally accepted accounting principles and industry standards. Operator shalE maintain such books and records for a period of three (3) years following the expiration or sooner termination of this Agreement. Separate books of account shall be maintained for the Arena and the Convention Center. 4.~ Access to Information. The City shell have the unqualified right to obtain from the Operator ~andlorfram any of Operator's subcontractors}, at any reasonable time upon request, such information and to inspect and audit such books and records concerning the management and operation of the Facility as may be deemed necessary or desirable by the City, It is the City's intent to conduct a performance audit during the Tartu of theAgreement. ~ ~ Annual Audit, As loan as practicable at the close of each Fiscal Year, but not later than 9D calendardays afterthe end of the Fiscal Year, the Operator shall furnish to the City a balance sheet, a Schedule of Revenues, Expenditures and Changes in Fund Balance, prepared in accordance with generally accepted accounting principles end accor~panied by an auditor's report containing an opinion of the independent certified public accountant preparing the report, which shall be a firm selected by the City, paid directly by the Operator. 4.4 I~onthl Re orts. Nat later than thirty ~0} days after the end of each month during the Period, the Operator shall furnish to the City a report in the same format as SII~C has provided under the Original Agreement. 4.5 fail Event Flash and Other Re orts. At City's request, from time to time, Operator shall furnish to the City other reports, including but not limited to a daily event "flesh" repork. 4. Ca ital Im ravements Bud et~ Not later then 1 ~a days before the beginning of each Fiscal Year rafter the first year of the Agreement, the Operator shall submit a Budget for projected Oapital Expenditures for such Fiscal Year, This Budget shall be subject to the procedures customarily employed ~n connection with the develapr~ent, approval, and implementation of capital budgets far the City and shall in all cases be subject to the approval of the City. 4.~ Annual Budget. Not later than 1 ~a days prior to the beginning of each Fiscal Year afterthefirt Fiscal Year, the Operator shall submit an annual Budget for such upcoming Fiscal Year, listing all projected Operating Revenues and Operating Expenses including Reimt~ursable Expenses} by category. The Operator may at any time submit to the City for its consideration amendments to a Budget to reflect unanticipated revenues ar expenses ar other changes, The Annual Budget must be consistent with City policy. Separate Budgets shall be submitted for the Arena and the Convention Center. Page 13 of 6 ~.8 Bud ec~t A~pra~ral. The City shall prorr~ptly review all proposed Budgets and amendments thereto and promptly communicate to the operator any comments or suggested revisions thereto. The City shall, in any event, complete its Budget review and deliver its comr~ents in accordancewith the City's budget calendar. Final approval of any Budget shall, exceptfor amendmentstheretothat are not material, be completed in accordance with procedures applicable to the general City budget which is to be adopted by the end of each in~n~ediately preceding Fiscal Year. In the event a proposed Budget has not been approved in a rnannerwhich permits its incorporation intothe general City budget far approval on orbefore the end of each immediately preceding Fiscal Year, the Budget for the previous period shall continue to control except that the portions thereof relating to salaries, wages, and benefits included as part of Reimbursabie Expenses shall be deemed increased by an amount equal to the increase in the Index defined below} an the first day of such period aver the Index in effect as of the same day of the immediately preceding year. Each Budget, once approved in writing by the City, and each capital Budget, once approved in writing by the City, shall constitute an iiAppr~Ved Budget." ~peratar shall operate and manage the Facility in accordance with the Approved Budget and in no event ~otherthan in connection with an Emergency Expenditure} may Operator incur costs or expenses in excess of the amounts budgeted therefor, except as otherwise provided for in Article , below. blot later than sixty ~GO~ days after the Effective Date of the Agreement, ~peratar shall submit an Amended Budget to reflect any changes required by the new terms of this Agreement. Operator recognizes that approval of the Budgets shall be made ar withheld by the City in the City's sale and absolute discretion. The base far computing the adjustment described in the opening paragraph of this Section is the Consumer Pride Index for the Houston-alvetan-Brazaria, TIC area, all Urban Consumers abase year 1984 = ~ 0~}, published by the United States Department of Lobar, Bureau of Labor Statistics ~"Index'"}. The Index published mast immediately preceding the adjustment date in question ~"Interim Index"'} is to be used in determining the amount of the adjustment. If the Interim Index has increased over the Index as of the date the previous Approved Budget was approved the "Initial Index"}, the porkion of the Budget to be adjusted as provided for in the opening paragraph of this Section shall beset by multiplying thethen applicable base by a fraction, the numerator of which is the Interim Index and the denominator of which is the Initial Index. If the Index is changed sa that the base year differs from that in effect as provided above, the Index shall be converted in accordance with the conversion factor published by the United States Department of Labor, Bureau of Labor Statistics. If the Index is discontinued or revised during the term, such other government index or computation with which it is replaced shall be used in order to obtain substantially the same result as would be obtained if the Index had not been discontinued or revised, 4,9 Estimated..Budgets. The City recognizes that each Approved Budget shall reflect operating Revenues and ~peratir~g Expenses based upon the operator's best, good faith judgrrrent and ray also be predicated upon the assumptions set Earth therein with regard to the rnetters described below in this Section. In the event that operating Revenues assumptions are, for any reason other than ~peratar's default under this Agreement, overstated, the parties agree to promptly meet and atter~pt to agree upon revisions to the Budgets. Page ~4 of G ARTICLE FUNDS AND ACCOUNTS 5. ~ ~ eratin~Revenue Account. After the Effective Date the Operator shall collect all Operating Revenues and deposit them in separate accounts done for each of the Arena and Convention Center} maintained in the Depositary in the Warne of the City {each, an "Operating Fund"}. The Operator shall have authority to withdraw proceeds from the Operating Fund. l~lone~rs in the Operating Fund and any interest thereon shall be applied first to the payment of Operating Expenses. Any balance shall be retained in the Operating Fund as reserve far payment of future Operating Expenses. If, at the end of any Fiscal Year, there shall be a balance in the Operating Fund in an amount in excess of the anticipated Operating Expenses farthe first month of the ensuing year, the Operator shall, atthe request ofthe City, disburse such excess to the City on ar before the fifteenth X15}day of such month. {a} Operating Accountfar Convention Center. To the extent that the City subsidizes the operations of the Convention Center, and in order to provide the funding necessary #o afford Operator to perform its obligations hereunder with respect to Expenses not funded by the Operating Revenues deposited in the Operating Revenue Account for the Convention Center, the City shalt deposit into the Operating Revenue Account an amount equal to ~ I~ ~#~' the amount of the subsidy in the Approved Annual budget to the Operatorfor the operations of the Convention Center no later than the fifth ~5~~~ working day of each month of the Fiscal Year in which a subsidy has been included in the Approved Annual Budget. fib} Advancing of Funds far Convention Center. If at any time during a parkicular month, the amount of monies an deposit in the Operating Fund and available for that purpose shall be insufficient far the payment of Expenses then due or budgeted to become due during such month, the Operator may request that the City advance the ar~aunt of such insufficiency from the approved budgeted subsidy scheduled to be paid in the succeeding month. This advanced amount will then be subtracted from the scheduled deposit for the succeeding month. ~c~ Application to Emergency Ne~d~. If at any time or from time to time, by reason of any occurrence of an Emergency Expenditure, moneys on deposit in the Operating Fund are insufficient to pay an Emergency Expenditure the Operator may request the City to provide monies tv the Qperatar to make such Emergency Expenditure or, at the City's option, the City may elect to pay far the Emergency Expenditure directly from City moneys. If the Er~ergency Expenditure is in an amount which will require the City to seek either City Council or Board approval prior to the outlay of such expenditure, the City will take such action, end reimburse the Operator for such expenditure within five {} days of receipt of formal approval. ~. Securit for and investment of Funds. All funds and accounts required to be maintained by the Operator underthis Article 5 are and shall be the property of the City and shall be maintained in the Depository, which shall be a bank or branch located in Carpus Christi, Texas, The Operator shall require of the Depositary that all funds held in any account maintained underthis Article ~ be secured to such an extent and in such a manneras is required by applicable law in connection with the deposit of funds of the City. Laney on deposit an the Operating Fund may be retained un-invested and on deposit in fully secured der~and deposit accounts or may be invested in accordance v-rith guidelines provided by the City from time to time. Page ~ 5 of 3~ No Obligation of Operator to Advance Funds. The City i solely responsible far and shall promptly pay, or provide funds to the Operator to enable the Operator to pay, all operating Expenses, Emergency Expenditures, and Capital Expenditures, and to otherwise to comply with its obligations under this Agreement. The Operator shall not be obligated to make any advance of its own funds to or farthe account of the City orto pay any Burns incurred for the performance of services ar goods delivered to the Facility. No#hing in this section shall, hov~rever, limit, modify, or impair Operator's indemnification obligations hereunder or Operator's liability to the City for~perator's breach of this Agreement. ~.4 Capital Contribution. M shall provide to the Facility the sum of Cne I~undred Thousand Dollars ~140,~0~.00} ~"flli Capital Contribution"} for Capital Improvements and Capital Equipment purchases, utirhich maybe used at the City's discretion far improvements to the Facility, including far cosmetic improvements to the exterior of the Facility. If appropriate ~i.e., such improvements and purchases are for several different items}, MC will prepare and submit to the City, in accordance with section 4., a budget of the Capital Improvements and Capital Equipment purchases to be funded with such Contribution, along with the scope of work to be performed thereunder, the supervision of tasks and the estimated time frames forthe projects listed in such budget. uoh budget will take into account the Capital Improvements and Capital Equipment purchases to be funded by the City pursuant to Section 4.~. O shall be in charge of implementing such budget and proposed scope of work and tasks and of overseeing the estimated time frames far completion. The amount of the SNAG Capital Contribution shall be amortized aver a period of thirty-six ~~} months during the Terrn on a straight-line, non-interest bearing, non-cash basis. In the event of the expiration or termination of this Agreement for any reason, the City shall pay, ar cause ar~y successor management company to pay, to M unconditionally and without set-off the unamortized amount of the M Capital Contribution existing a of such expiration orterminatian. 1~vithout affecting the foregoing, the parties understand and agree, however, that I'd's Capital Contribution of 100,~~~.0~ is not a lawn to the City, and the terms of this Agreement shall not be interpreted to construe or treat the Capital Contribution as a loan to the City to be repaid to M by the City. The payment of any such unamorti~ed amounts shall be made to SIC no laterthan thirty ~D} days following the effec#ive data of such expiration or termination. ARTICLE G POIIVER AND FUNCTIONS ~. ~ Authority of Operator. The Operator shall have the right and authority to exercise all rights, powers and duties conferred or imposed on the Operator in this Agreement. 6.2 No Safe of Prapertv. Although the Operator shall have authority to sail or otherwise dispose of all movable property that is surplus to the needs of the Facility (so long as the same is accomplished in accordance with procedures established by the City of which Operator has been advised in writing and that apply generally to the safe of property by the City}, the Operator shall otherwise have no authority to sell or otherwise alienate any portion of the Facility or any equipment therein. All proceeds from the sale of property shall be ckeposited in#o the Operating Revenue Acca~ant. No Capital lmprovemenf. The Operator shall have no authority to make any alterations or any capital improvements to the Facility without the prior written consent of the City capital improvements reflected in an Approved Budget shall be deer~ed approved by the City}. Page 1fi of 3fi .~ Contracts. The Operator shall have nv authority, without the prior written consent of the City, to enter into any contract farthe provision of goods and services to the Facility at any time beyond the date far the expiration of the term of this Agreement, including the City"s unilateral early terr~inatian rights under Section ~ 0.4 hereof. Operator shall have the right to enter into, execute, and deliver contracts with users of the Facility which extend beyond ar relate to dates falling afterthe expiration of the term of this Agreement, subject to the written approval thereof by the City. The Operator's authority with regard to contracts with flllajor Users shall, however, be as set farkh in Section 6.13 below. All contracts entered into by Operator requiring the consent of the City under this Agreement shall contain an express provision acknowiedging that the same is subject to the City's approval. All contracts entered into by Operator shall provide that the same are assignable to the City and, notwithstanding any contrary provision hereof, upon termination or expiration of this Agreement far any reason, Operator shall assign to the City and the City shall assume in writing, all then outstanding contracts affecting the Facility entered into by Operator in accordance with the authority granted Operator hereunder; provided, however, the City shall not be obligated to assume any contracts ar agreements entered into by Operator in violation of this Agreement. Furthermore, notwithstanding the foregoing, the City shall not assume and shall not have responsibility for any acts or omissions of Operator with regard to such contracts or agreements prior to the termination of this Agreement except as a consequence to the City's failure to provide funds under this Agreement. ~.5 Interim A~reen~ent. To the extent that the Food and Beverage Contract expires prior to reaching a new agreement, Operator must enter into an interim agreement necessary to continue to provide the existing services of food and beverages to the Facility during the period after the Faad and Beverage Contract expires and before execution of the new Food & Beverage Contract . Such interir~ agreement must comply with the provisions of Revenue Procedure ~~1 ~ and the interpretations thereof. ~~~ Negotiation and Execution of new Food & B~vprage ~ntract. Operator shall negotiate v~rith Centerplate in goad faith to execute and enter into a Food & Beverage Contract under new terms and conditions which are reasonable and consistent with industry standards for similar facilities. The new Food & Beverage Contract shall include the service of alcoholic beverages with all Faadservices. The City desires that Centerplate continue to be the private firm engaged and contracted as the Facility's Concessionaire. if Operator and Centerplate are unable to reach a new agreement within sixty X64} days of execution of this Agreement, Operator shall notify City that it is unable to reach an agreement. The City will consider whether Operator may solicit proposais from foal and beverage management service firms by issuing a Request For Proposals RFP}. Operator must conduct any such RFP process in the same ar similer manner as the City's own RFP process, and rrrust publish notice of the RFP in the same manner as required by the state procurement caws under the Local Government Cade, as amended. The selection panel to select a food and beverage services provider must include one or more representatives from the City. The individuals to represent the City on the selection panel shall be determined solely by t#~e City hJlanager or designee and the City's Contract Administrator. However, the porkies agree and understand that the City shall not have prior approval authority of selection and award of the food and beverage services provider selected. Operator, its companies, subsidiaries, and Affiliates shall not provide food and beverage services at the Facility and are disqualified from parkicipating in any RFP for Foodservices. The parties understand and agree that any private firm selected to provide Foadservices to the Facility rust be wholly and completely independent of SIVIG and its Affiliates.ln connection with such new Food Beverage Contract, SIUIG shall use its best efforks to have the annual Commissions ar Fees payable by the Concessionaire to be between ~8°l~ to 3°I~ of gross Foodservice sales; if such Commissions or Fees will be less than ~8°l~, the prior written approval of such by the City is required. Page ~ 7 of ~~ fi.~ Rights Retained by,the City. City retains the fallowing rights which must be cited in Operator's new Food Beverage Contract with the Concessionaire: * Final approval of menu items, portions and pricing, that is competitive in the rr~arketplace. • Require Operator and Concessionaire to manage Foodservice in a First Class manner in terms of service levels as well as the quality and variety of the offerings. • Require Operator and Concessionaire to comply with all governmental rules and regulations, including City recycling and sutainability issues, as veil as City approved I~BEVBEIDBE directives and goals. • Require Operatorta ensure that all of theiremployees and employees of any of their agents or subcontractors such as the Concessionaire, represent the City in a respectful and First Class manner. • To establish minimum acceptable insurance levels that Operator and all of the subcontractors, including the Concessionaire must carry, naming the City as an additional insured and indemnifying the City from Operator, its contractors' or subcontractors' actions ar inactions. .8 Execution of Contracts. subject to the paragraph above, and under terms consistent with terms of this Agreement, Operator shall enter into service contracts, Foodservice Agreements and other contracts related to the Facility, on behalf of the City, acting a independent contractor. Any material agreements re#ating to the Facility shall contain the standard indemnification and insurance obligations on the part of each vendor, licensee, or service provider. Additionally, with respect to any contract relating to the Facility fcrwhich the City's appraval is required hereunder~i.e,, the Foad & Beverage Contract, contracts with any Mayor User, and any contract described in the last sentence of this section}, the City gill determine with its bend counsel if any such contract needs to~ be compliant with Revenue Procedure g7-~ and gill o advise Operator of such requirement in connection with its response to such approval request. Operator shall also obtain the prior approval of the City which approval shall not be unreasonably withheld ordeiayed} before entering into any such contract with a term that expires after the Term of this Agreement, unless such contract, by its express terms, can be terminated by Operator or City fallowing expiration of the Term without any penalty. ~.9 Transactions with Affiliates. As provided in this Article fi, Operator shall not enter into Foodervice contracts with Affiliates. Bubject to this Article 6, transactions with Affiliates in connection with its obligations hereunder relating to the purchase or procurement of services bother than Foodservices}for the Facility including ticketing services, Commercial Rights sales, web design services and graphic design services}, Operator may purchase or procure such services, or otherwise transact business with, an Affiliate of Operator, provided that the prices charged and services rendered by such Affiliate are car~petitive with those obtainable from any unrelated parties rendering comparable services. Operator shall, at the request of the City, provide reasonable evidence establishing the competitive nature of such prices and services. 1lVithout limiting the foregoing but subject to the terms under this Agreement, the parties specifically agree that Operator may engage its Affiliates} to provide ticketing services for the Facility, to provide Commercial Rights marketing services for the Facility, on terms to be approved by the City, such appraval not to be unreasonably withheldF Prior to Operator engaging any other of its Affiliates, Operator shall notify the City, and the City may require Page ~8 of fi Operator to obtain at least two other competitive bids from unrelated parties to ensure that such services are being provided on competitive terms. ~. ~ D Em Iv ees~ {i} Ail employees needed to operate and manage the Facility shall be hired by Operator. Employees hired by the Operator shall be employees of the Operator and not of the City, although the employment costs of such employees including, without limitation, gages, salary, benefits, and the costs of complying with local, state, and federal employment laws} shall be park of the Reimbursable Expenses. The Operator shall have complete and absolute discretion and authority with respect to the number, functions, qualifications, compensation and ether terms and conditions relating to its employees. iii} City shall have the right {but not the obligation} of reasonable approval of the individuals hand their successors} proposed by the Operator forthe following Facility positions: General Manager, assistant general manager, director of sales and marketing, controller, director of operations, human resources director and chief engineer. The Operator will not, in any year, re-assign more than two of such personnel to other properties awned, managed, or operated by Operator without the prior consent of City. viii} The City covenants and agrees that neither it nor its Contract Administrator shall during the term hereof or for a period of 1 months following termination of this Agreement hire, employ, olicitfor hire, or engage in any manner orforany purpose of any person who has served as General Manager or Contract Administratvrduring the term of this Agreement or any other of Operator's "senior personnel," „Senior personnel'" means and referto the personnel of Operatorwha rpork directly to the General Manager, but shall not include the chief engineer. {iv) Attached hereto as Schedule 6.10 is a chart reflecting the positions of the key personnel of Operator described in Section 6.10(ii) above. 11 Purchase of Supplies end Services. The Operator shall have full authority and discretion as to the purchase of all equipment, materials, supplies and inventories reasonably required by it but shall endeavor to make all such purchases at the best price available as known to the Operator, considering the quantities required and the quality desired, at the time available for the delivery and the sources of supply whenever possible as park of a volume purchase by the Operator. Operator shall, for the purchase of all equipment, rr~ateriai, supplies} services, and inventories in excess of $10,00 for any single item or mare than ~~,00~ in the aggregate in any one purchase order, utilise a competitive bidding process similar to that used by the City in the purchase of its supplies and services common to the rrrarket in which Operator shall seek the same. ~lnder such circumstances, Operator shall, to the extent practicable and feasible, solicit three ~3} competitive bide. Notwithstanding such procedures, Operator shall not be obligated to accept the lowest bid but shall be entitled to take into account, in the award of any such contract, the quality of the service or product and award the contract accordingly. The Operator may acquire property or services from or otherwise transact business with its Affiliates for any of the goods to be purchased or services to be performed by it under this Agreement but only if the prices charged and services rendered are competitive with those obtainable from others rendering comparable services in the field To insure compliance in this respect, Operator agrees to obtain at least two ~~} other competitive bids from persons other than the Operator's Affiliates, whenever the Operator considers transacting business with an Affiliate for providing goods or services under this Agreement. Page ~ 9 ~f fi All purchases by Operator of furniture, fixtures, and equipment and all capital improverrrents shall be made in the name of the City. Operator shall establish an inventory control system to account for all such purchases. The City shall have the right to inspect the books and records of Operator to verify Operator's compliance with the provisions of this section. 5. ~ ~ No Expenditures in Excess of Budget. The Operator shall not, without advance written autharizetion by the City, incur in any Fiscal Year obligations for Expenses at either the Facility aggregating in excess of the amount of total Expenses set forth in the Approved Budget for the Facility, as the case may be, except for ~i} Emergency Expenditures, and iii}expenses far services provided to the Facility by third parties the costs of which is not within the reasonable control of Operator such as, by way of illustration but not limitation, costs of utilities, costs of insurance and necessary and reasonable expenses which vary utirith increases in revenue generation and usage. Operator shall have the right, however, to expend savings achieved in any line item of the Approved Budget abut not mare than an amount not less than 1 ~°la and not more than ~ 5°l0 of such line item, the percentage, within such range, is to be agreed upon between the City and the Operator} to offset any overruns in other line items of the same Approved Budget. If Operator incurs any expense not provided for in the Approved Budget, excluding Emergency Expenditures and thane expenses not w~th~n the reasonable control of Operator as aforesaid, and the same is not approved by the City, Operator shall be responsible for such excess expenditure from Operator's awn funds. vllith respect to Emergency Expenditures, Operator shall have the right to make the same, up to an amount agreed upon by the parties abut in no event less than $15,aaa nor mare than ~O,~DO} per item, ~rithout prior approval from the City. If any Emergency Expenditure will exceed the agreed upon maximum, Operator shall submit the same to the City for the City's prior written approval. The City agrees to respond to any request of Operatarfor an Emergency Expenditure within ~4 hours from the receipt of the request therefor, ar within such lesser time as is appropriate under the circumstances. Far thane expenditures in Excess of Budget that have been approved by the City, if thane amounts will cause the Operator to e~cceed the total Approved Budget amount far the year, then the Operator shall present a proposed budget amendment to the City far consideratiar~ and further approval by City Council prior to the end of the Fiscal Year. ~.1 Major Users. Operator shall negotiate contracts with Magyar Users. Operator shall submit any such contract, after negatiatian thereof, to the City forthe City's approval ar disapproval of the same. The City agrees to respond to such request within ten X10} business days follov~ring receipt of such request, failing which the City shall be deemed to have disapproved the same. The City shall have the right to participate in ell negotiations with Major Users including, without limitation, attending all meetings and participating in all other negotiations. To that end, Operator shall provide the City's Contract Administrator reasonable advance notice of the time and date of any such negotiations. fi,14 settlement of Claims. Operator has been advised by the City hand the City shall continue to keep Operator apprised of} the City's procedures and requirements with respect to settlement of third party claims filed against Operator eta the extent related to the Facility}, the City, ar with respect to the Facility. Operator agrees to comply with such settlement claims and procedures as it has been advised in writing by the City, All casts and expenses thereof, including the settlement thereof, penalties, and interest thereon, shall be deemed an Operating Expense in accordance with the terms end provisions of this Agreement unless the cause therefor is Operator's for its employees} negligence or willful misconduct ar is the result of Operator's breach of this Agreement, in v-rhich event Operator shall bear all such casts, penalties and settlement. Page ~a of 3fi ~. ~ Band Financing. Operator acl~nowledges that the 1=acility is to be financed in large part vuith the proceeds of one ar more series of pity bonds ~'}Bands"}the interest on which i intended to be excluded from grass income far federal income tax purposes. In order to assist the pity in preserving the tax-exer~pt nature of the Bands {the City hereby agreeing that Operator shall have na responsibility to the pity ar any other party if thetaxtreatment of the Bonds should be different than that intended by the pity}, Operator acknowledges and agrees as follows: ~a} In determining whether to gran# or virithhald any approval of a contract for which approval of the pity is required under this Agreement, the pity ray consider the effect of such contract far federal tax purposes on the exclusion of interest an the Bands for federal income tax purposes, (b) Each of the following described contracts must be approved by band counsel to the City before execution thereof by Operator: {i} Any contract relating to the Facility which grants a leasehold interest, term far years, or other real estate interest in the Facility (other than a revocable license}, or grants a long term right to use the facility on a basis different from that of the general public. (ii) Any contract for the provision of services related to the Facility must, to the e~ctent applicable, comply with the provisions of Revenue Procedure 97-13 and the interpretations thereof. ~i~i} Any contract far the use of the Facility for shauus, programs, canventians and other events unless such contracts provide for use an a fixed fee basis excluding the sale of r~erchndise or concessions sn respect thereto which may be an a percentage of r~erchandise orconcession revenues}, determined on an event by event basis and where the right of the user to the Facility are those of a transient occupant ratherthan fu#I legal possessory interest in the Facility as a lessee. (c) Any approval of a contract by the City required under this Section shall be given within ten (10) business days following receipt by the City of a request for approval, failing which the City shall be deemed to have disapproved the same. ~d} If required by bond counsel to the pity ar counsel to the underwriters, Operator agrees to make modifications to this Agreement o that the same is, in the opinion of such counsel, a qualified management contract far purposes of Revenue Procedure 9~~13 promulga#ed by the Internal Revenue service. In the event such madificatior~s shall materially increase Operator's obligations hereunder or materially decrease Operator's rights hereunder, then Operator shall have the right to terminate this Agreement upon not less than ninety X90} days prior written native to the pity which notice must be provided to the pity within ten ~~ a} business days afker Operator is requested by the pity in writing to enter into an ar~endment ar modification hereof pursuant to this paragraph. If Operator timely exercises its right of termination under this paragraph, Operator shall continue to perform its vbligatians hereunderthraugh the date of termination and the pity shall continue to pay Operator therefor in accordance with this Agreement; upon termination, neither party shall have any obligations accruing thereafter hereunder. Page ~1 of 3~ ARTICLE ~ FEES AND E~CPENE ~.~ Base Management Fee. ~a} Arena Base ~ana~ement Fee. As base compensation to Operator for providing the services herein specified during the Term with regard to the Arena, the City shall pay Operator during the Tern} an annual fixed fee of 1 a4,4ag which amount shall be adjusted upward on the first day of each Fiscal Year, other than the Fiscal Year ending July 3~ , ~0~ a, during the term hereof by the lower of 4°la or the percentage change in the Consumer Price Index --~ All Urban Cansur~ers CPI-U} for the Houston-Galveston-Bra aria, T~ area -All Items, during the one year period immediately preceding such Fiscal Year, as published by the Bureau of Labor Statistics of the U.S. Departr~ent of Labor, ar of any revised ar successor index hereafter published by the Bureau of Labor Statistics ar other City of the United Mates Government succeeding to its functions has adjusted, the "Fixed Fee"}. Inconsideration of its services with regard to the Arena, the Operator will be paid a monthly manager~ent fee which shall be deemed warned as of the first day of each month of the term following the Effective Date but which shall be due and payable ire arrears following receipt by the City of Operator's monthly repork reflecting results from operations at the Arena for the prior month, such payment to be rude v~rithin the time periods prescribed by the Prompt Payment Act. The ar~ount of monthly management foe is fixed and shall be ~ I~ nth of the Fixed Fee. fib} Conve~ti~n _enter Base Mana~ernent Fee. As base compensation to Operator far providing the services herein specified during the Term with regard to the Convention Center, the City shall pay Operator during the Term, an annual fixed fee of ~5,~Q0 which ar~aunt shall be adjusted upward an the first day of each Fiscal Year, other than the Fiscal Year ending July 1, X01 ~, during the farm hereof by the lower of 4°l~ or the percentage change in the Consumer Price Index -All Urban Consumers {CPI-U} far the Houston- Galvestan-Brazoria, TX area -All Items, during the one gear period immediately preceding such Fiscal Year, s published by the Bureau of Labor Statistics of the U.S, Department of Labor, ar of any revised ar successor index hereafter published by the Bureau of Lobar Statistics or other City of the United States Government succeeding to its functions has adjusted, the "Fixed Fee"}. Inconsideration of its services with regard to the Convention Center, the Gperator will be paid a monthly managen~entfee which shall be deer~ed earned as of the first day of each month of the term following the Effective Date but which shall be due and payable in arrears fallowing receipt by the City of Operator}s month#y report reflecting results from operations at the Convention Center for the prior month, such payr~ent to be made within the time periods prescribed by the Prompt Payment Act. The amount of monthly management fee is fixed and shall be ~11~th of the Fixed Fee. 7.~ Incentive Fee. (a) Arena Incentive Fee. In addition to the Base Management Fee, Operator shall be entitled to an annual Incentive Fee with respect to each Fiscal Year during the Term if ~n any such Fiscal Year the Net Operating Income is equal to or an improvement over the Net Operating Income Benchmark {which is the projected Net Operating Income in the Approved Budget far the Arena}. The Incentive Fee shall be equal to twenty-five percent (25%) of the amount by which the Operating Revenues for suci~ Fiscal Year exceed the Revenue Benchmark {which is the projected revenue in the Approved Budget for the Arena); provided, Page ~~ of 3fi however, that {i} in no event shall the annual Incentive Fee for any Fiscal Year underthis section 7.~~a~ exceed ~ 00°l~ of the Base Management Fee payable pursuant to ectian ~'. ~ ~a~ for such Fiscal Year. In the went that the Net Operating Incorr~e in a Fiscal Year i not equal to or an improvement of the budgeted Net Operating Income far such Fiscal Year, Operator shall not be entitled to receive the Incentive Fee described in this section ~.2{a}. Additionally, but solely for purposes of calculating such Incentive Fee, Operating Revenues shall not include the revenues related to the sale of Warning rights for the Facility. The Incentive Fee shall be paid to Operator no laterthan thirty {a} days following the completion of the annual audit by the pity. {b} ~anventian Oenter incentive Fee. In addition to the Base Management Fee, Operator shall be entitled to an annual Incentive Fee with respect to each Final Year during the Term if in any such Fiscal Yearthe Net Operating Lass is equal to or an improvement over the Net Operating Loss Benchmark which is the projected Net Operating Loss in the Approved Budget for the Oonvention Oenter}. The I ncentive Fee shall be equal to twenty-five percent {~~~1~} of the amount by which the Operating Revenues far such Fiscal Year exceed the Revenue Benchmark which is the projected revenue in the Approved Budget for the Oonvention Oenter}; provided, however, that {i} in na event shall the annual Incentive Fee far any Fiscal Year under this ectian ?.~~b~ exceed 10a~1o of the Fixed Fee payable pursuant to Bectian 7.1~b}for such Fiscal Year. In the event that the Net Operating Lass in a Fiscal Year i not equal to or an improverent of the budgeted Net Operating Lass far such Fiscal Year, Operator shall not be entitled to receive the Incentive Fee described in this section ~.2{b~. Additionally, but solely for purposes of calculating such Incentive Fee, Operating Revenues shall not include the revenues related to the sale of naming rights far the Facility. The Incentive Fee shall be paid to Operator no later than thirty {30} days fallowing the completion of the annual audit by the Oity. ARTICLE 8 INBIJRANCE 8.1 Insurance to,be ~llaintained by the Cit~r. The Oity shall provide property insurance for the Facility and for Oity-awned contents. ~,~ Insurance to be Maintained b, eratar. The Operator shall obtain and rnaintain for cause to be obtained and maintained} in effect the fallowing policies of insurance, the cost of which shall be a Reimbursable Expense: ~} v1#orkers' Oampensation. such workers' compensation insurance coverage as may be required by law, including employer's liability coverage of at least ~Oa,Oaa per person per occurrence and 5aa,a00 per person per disease, and ~gg,a0a aggregate disease; fib} Oommercial General Liability. Oomrnercial general liability and property damage insurance with a combined single limit of at least $5,004,a0a per occurrence and ~,OgO,aaa aggregate insuring against all liability of the Operator and its general Managers andfar Oontract Administrators arising out of and in connection with the Operator's use or occupancy of the Facility, and premises liability; ~c} Liquor Liability. contingent Liquor liability insurance with a combined single limit of 1,aa0,aaa and $,a0a,aaa in the aggregate; Page ~3 of ~~ ~d} Business Automobile Policy. At least ~ ,aa~,0aa of coverage, including bodily injury and properky damage, arising out of the operations, maintenance ar use of owned and non-awned automobiles, hired, or other vehicles; {~} Excess Liability Insurance. At least 9,~aa,OD~ of excess liability on a per occurrence basis and $~,Oaa,Oaa aggregate basin {f} Crime and Fidelity Coverage. At least $500,000 per occurrence of coverage for (i) employee dishonesty, (ii) forgery or alteration, (iii) theft, disappearance and destruction inside and outside the Facility; and (iv} robbery and safe burglary inside and outside the Facility; (g} Operator and any subcontractors are responsible for all damage to their awn equipment or property. ~. Insurance Requirements. All insurance required under this Agreement shall be issued by insurance companies licensed to do business in the state of Texas with the financial rating of at least A-vii status as rated in the most recent edition of Best's Insurance Repots, shall be issued as a primary policy, shall contain an endorsement requiring sixty ~0} days written notice from the insurance companies to the City and the Operator before cancellation, non-renev~ral, termination, or change in the coverage, scope ar amount of an~r policy, and shall, in the case of the Commercial General Liability Insurance, name the City as an additional insured $.~ American Bank hl~A. Operator must Warne American Bank, N.A. has naming rights sponsor} as an additional insured on all insurance required hereunder, excluding any worker's compensation insurance coverage ar crime and fidelity coverage. y~laiver of Subro~ atc~~ion. The parties release each other from any claims far damage caused by orresulting from risks insured against underany insurance policies carried by the parties under this Agreement. The parties agree to cause the issuers of the insurance policies maintained by them hereunder to include waivers of the rights of recovery and subrogation. $, Proceeds of Casualty Insurance, If either the Facility or any park is damaged or destroyed by fire or other casualty, the City will determine whether or not repairs and restoration are practicable and feasible and will inform Operator in writing of its election to make or not make any such repairs and restoration within one hundred twenty ~~ ~0} days following the date of such damage ar destruction. All proceeds of any casualty insurance paid far by the City shall be the exclusive properky of the City and Operator shall have no rights to receive any sums therefrorn~ If the City elects not to repair or restore, the City shall have the right to terminate this Agreement with respect to the Facility whichever has been damaged}, without penalty, premium or fee, by native to Operator. If the City elects not to restore the Facility whichever has been damaged} but within one ~1 }year fallowing termination of this Agreement decides to restore the same, the City shall give written notice thereof to Operator whereupon Operator shell have a period of thirky X30}days in which to elect to enter into, and actually enter into, a new contract v~rith the City far operation of the same following its restoration which contract shall be an the sane terms and conditions described herein except that the term shall be only for the portion of the term hereof lost due to termination under this Section, If, on ,the other head, the City elects to repair and restore, payments of the base management fee attributable to the Facility, a the case may be, shall be equitably reduced staking into account the volume of services provided by Operator during reconstruction} until the Facility, as the case may be, is Page ~4 of 3G reopened to the public; however, the City shall continue to reimburse Operator for Reimbursable Expenses until the FacElity (whichever has-been damaged) is re-opened to the public. 8 . l 11~D~N1fllFlOA TIO~V ~4N~ ~#O~D I~AR~III~~. Operator, i#s officers, agerr#, and employees ~"lndemnitar"} shall indemnr'fy and hold the pity of carpus Chris#i, its officers, agents, ernplayees and representatives ~~`lndernnitees"~, harmless and defend with counsel re#ained by Opera#or, frorrx and against any third arty ~tion, cause of ac#ian, sui#, debt, cos#, directly~related reasonable expense including reasonable attorneysf fees, caur# co# ar investiga#ian cas#s}, claxrnf or de~tana~ brau~h# or ~s~rted b y any third:party whomsoever ~collec#ively, "Clairrrs "~, including bu# riot lirrrited to cla%s on account of personal injuries or dea#h or damage #o property, at law ar in equi#y, which any lndemrri#ees may suffer ar sustar'rr ar which may be asserted ar r'nstituted again# airy of lndemni#ees resultr"ng fram ar in connection with ~i) the negligence or willful miscanduc# of Operator ar its agen#, contractors or employees; {ii} any breach ar default by Operator of any of its warranties, representations, covenants, or obligations made in this ~4greernen#; or {iii) the viola#ian of any copyrightf paten#~ service mark, trade name or #rademark by the Operator; provr`ded, however, that the foregoing indenrnifica#iorr shall not ex#end #a cairns #a the ex#errf suc~i claims {A~ arise fram any breach or default by the pity of any of its warranties, representations, covenan#s or obligations made in this Agree~rerr#, as determined by a court ofcon~petent jurisdiction, ~B) are paused by ar arr'se out of the services provided by the archi#ects, engineers and other agents bother than Operator} retained by the pity r'n conrrectiarr with capital irnprovernen#s or capital equtprnen# purchases a# the Facility, (~ arise from the fac# #ha# at any time prior to, as of, ar after the commerrcernent of the term hereof the pacili#y acrd its premises are not or have riot been, irr compliance with all federal, s#~te, local and n~urricipal regulations, ordirrarrces, statutes, rules, laws and cans#r'tu#ional provisions including, but not limited to, all handicap accessibility laws, rules end regulatr"ons, ~D} arise from airy obligation ar liability under or in respect of any contract, agreement or other instrument executed b y Operator a authorized herein unless Operator's acts ar ornissians in admr'nistration thereof are the basis far such liabilr'ty, as determined by a court of competent jurisdictr"on, or ~~~ arise franc any act or omission carried out by Operator a# or pursuant to the express direction or instruction of the pity's ~antract Administrator abut only if Operator advises the pity's ~onfract Administrator irr writing, promptly fallowing such direc#iorr, #ha# Operator believes such direction to be impruden#~. City agrees to promptly notify Operator of any lar`rn received by the ~i#y. xhis irrdernrrity specifically includes any claims brought by operator's officers, agents, pantrac#ars, or direct employees: "his indemnity steal! continue notwithstanding the termination of #his ~4greement uvi#h respect to airy act or occurrence preceding the tern~inatiorr. - gage ~5 of 3 ARTICLE 9 EQUAL EMPLOYMENT OPPORTUNITY g.1 Discrimination Prohibited. hleitherthe Operator, nor any Affiliate of the Operator perfarr~ing services under this Agreement, shall icnov~ringiy discriminate against any employee ar applicant for employment because of age} race, creed, sex, color, disability, or national origin, and the Operator and its Affiliates shall take affirmative action to ensure that any employee or applicant far employment is afforded equal employment opportunities without discrimination because of age, race, creed, sex, color ar national origin. such action shall betaken with reference, but not be limited to, recruitment} employment, job assignment, promotion, upgrading, devotion, transfer, layoff or termination, rates of pay ar otherfarms of corr~pensatian in selection fartraining ar retraining, including apprenticeship and on the jab training. ubjectta compliance with such obligations, the Operator shall have plenary power with respect to the hiring and discharge of its evplayee. 9.~ MyUDBE. The Operator and its subcontractors shall cor~ply with applicable City r~inarity, woven and disadvantaged business enterprise policies in perfarrning Operator's services hereunder, which policy consists of an obligation on the part of Operator to use its commercially reasonable efforts to achieve a level of at least twenty-five percent {~°l~} minority participation in Operator's employment practices and in respect to contractual relations for the provision of goods and services for the Facility designated by the City. ARTICLE ~ a CERTAIN MATTERS REOARDINQ TERMINATION ~ ~. ~ surrender of Ivprovevents. Upon expiration or sooner termination of this Agreement, Operator shall promptly surrender the Facility to the City, leaving to the City all equipment, supplies, rnanuals, banks, records, and, inventories that are the properky of the City or that have been purchased from Operating Revenues arfrom funds made available by the City, and Operator hereby quitclaims, transfers, sells, assigns, and conveys to the City, without recourse, representation, ar warranty, all right, title, and interest that Operator may have to all improvements made to the Facility and all equipment, materials, supplies, inventories and all other properky so purchased. All such items including equipment shall be returned in their original condition less only normal wear and tear. Operator agrees to execute any and all documents necessary to evidence such transfer promptly upon request therefore by the City. Operator shall also deliver all documents, records, and other work product generated by Operator for the City during the term of this Agreement, ~ 0~~ Continuation of Performance. In the event of termination of this Agreement, Operator, at the City's option, shall continue to perform under the provisions of this Agreement far a reasonable time as determined by the parties to enable the City to make arranger~ents for a successor as operator of the Facility; provided, however, that Operator shall not be required to perform far a period of time during which the Operator's actual Expenses and the management fees payable under this Agreement are not pror~ptly and timely funded and paid by the City and in no event for mare than six ~} vanths fallowing such termination. ~0. Termination by the City for Lac#c of Funding. should the City elect to terminate funding for the operation and maintenance of either the Arena or the Convention Center, the City shall have the right to terminate this Agreement with regard to the Arena or Convention Center, as the case maybe, upon written notice to Operator, such termination to be effective an the ninetieth ~90th~ day after such election to terminate. In such event, the City shall pay to Operatorall fees and othersums dueto Operator hereunderthraugh and including the date of termination with respect to the Facility, as the case may be; otherwise, such termination by the Page 2G o~ 36 City shall be without penalty or liability. In the event in lieu of termination of all funding for operation and maintenance of the Arena or Convention CentertheCity's annual budget ar other budget process results in ~ reduction of the funds available to be paid to Operator hereunder, Operator shall have the right to either accept such reduced funding or, at Operator's election, to terminate this Agreement as to the affected facility by written notice to the City given v~rithin sixty ~~D} days following Operator's receipt of notice of the reduction in funding. should funding be restored by the City far operation and maintenance of the Arena or Convention Center, as the case may be, after this Agreement has been terminated due to termination or reduction in funding, the City shall provide written notice thereof to Operator whereupon Operator shall have the first right to enter into a new contract on the sane terms and conditions set forth herein. In the event Operator elects to exercise such right end option, Operator end the City shell promptly thereafter execute and enter into an amendment to this Agreement as to the Arena or Convention Center, as the case ray be, reinstating the same to its original terms and conditions. 1D,4 Termination at vllill. The City may, effective the last day of the third year and anytime thereafter, terminate this Agreement with or without cause upon providing ninety ~9~} days prior written notice to that effect to Operator, such termination to be without the payment of any penalty, fee or premium. In the event of termination, however, the City shall pay Operator any base management fees accrued but unpaid as of the date of termination and any earned but unpaid portion of the incentive fees described in section 7.3 above. - ARTICLE 1~ BREACH 'I'1.1 Breach. Each of the following shall constitute a breach under this Agreement: ~i} Failure to pay when due any amount required to be paid under this Agreement, if the failure continues for, in respect to any regularly scheduled payment due hereunder, ten ~1 a} days after notice has been given to the breaching party, or in respect to any payment due hereunder which is not a regularly scheduled payment, thirty ~~0} days after notice has been given to the breaching party; (ii) Failure to perform any other obligation under #his Agreement (including Operator's failure to meet the standards of performance hereunder), if the failure to perform is nat cured within thirty (30) days after notice has been given to the breaching party, except that if the breach cannot reasonably be cured within thirty days, a breach shall not be deemed to have occurred if the breaching party begins to cure the breach within the thirty {30) day period and diligently and in good faith continues to pursue the cure of the breach and actually cures the same within sixfy (60} days fo4lowing such notice. {iii) Interest on Delin uent Pa meets. Interest shall accrue on any sums eat paid when due in accordance with the Prompt Payment Act. Page ~~ of 3~ (iv) Non-Curab#e Material Breach by Operator. Each of the following shall constitute anon-curable breach of Operator under this Agreement: (v) Any representation or warranty of Operator contained herein which shall be knowingly false or misleading in any material respect as of the date made or deemed to have been made; or Zvi} The Operator shall ~A} admit in writing its inability to pay ats debts as they became due or ~B} file a petition in bankruptcy or far the reargani~ation orfar the adoption of an arrangement under the Bankruptcy bode as now or in the future amended, or file a pleading asking far such relief, or have ar suffer to be filed an involuntary petition in bankruptcy against it which is not contested and discharged within sixty ~6a} days, or ~~ make an assignment for the benefit of creditors, or ~D} consent to an appointment of atrustee or receiverforall ora major parkian of its property, or ~E} be finally adjudicated a bankrupt or insolvent under any federal or state law, or {F} suffer the entry of a caurk order, any federal or state law appointing a receiver or trustee far all or a major part of its property or ordering the winding up or lipuidation of its affairs, or approving a petition filed against it underthe Bankruptcy bode, as now ar in the future arr~ended, which order, if not consented to by it shall not be vacated, denied, set aside or stayed within sixty AGO} days after the date of its entry, or ~~ suffer the entry of a final judgment for the payment of r~oney and the same shall not be discharged or a provision made for its discharge within thirty ~~} days from the date of entry thereof or an appeal ar other appropriate proceeding for reviewthereof shall not be taken within said period and a stay of execution pending such appeal shall not be obtained, or ~H~ suffer a writ or warrant of attachment or any similar process to be issued by any courk against all or any substantial porkion of its property and such grit or warrant of attachment or similar process is riot stayed ar is not released within forky-five ~4}days after its entry ar levy or after any stay is vacated or set aside, or ~I~ suffer the placing of a judgment lien on its property and failure to cause such lien to be released and discharged within forty~five ~4b} days from the date such lien took effect; or ~vii~ Operator shall conceal, remove or permitto be concealed or removed, any part of its property with the intent to hinder, delay or defraud its creditors ar shall make any transfer of any of its property ta, or for the benefit of a creditor at a tirr~e when other creditors similarly situated have not been paid; or suffer or permit while insolvent any creditor to obtain a lien upon its property through legal proceedings, which lien is not vacated within thirty ~~}days from the date thereof; ar {viii} Operator breaches the provisions of Bection G.1g ii above orthe provisions of Arkicle ~ 4 below, ~ ~ .2 Breach Notices. Each party shall promptly notify the other of any acts or omissions believed to be a broach by the other under this Agreement. In order to be effective for purposes of section ~ 1.~ or 1 ~.2, a notice of a breach must be timely given, must state that it is a notice of breach and must specify in reasonable detail the cots ar omissions alleged to constitute a breach of this Agreement. ~ ~.~ Ri hts of Non-Breachin Park . If a breach occurs and is not waived in writing by the non-breaching party, t#~en the non-breaching party shall have the following remedies which are not exclusive but cumulative in addition to any other remedies now or later allowed by law: Page ~8 of ~6 ~~~ The right to cure, at the breaching parley" rust and expense, any breach; iii} The right to sue to collect any sums not paid when due, together with interest accrued thereon as provided in Section ~ ~ .~; (iii) The right to sue to collect damages sufferer! by the non-breaching party by reason of the occurrence of a willful breach other than breach in the payment of money; (iv) The right to terminate this Agreement; or (v) The right to seek specific performance of the breached obligation. ARTICLE ~ ~ MICELLAhIEOU 1 ~. ~ Notices. Unless expressly otherwise provided elsewhere in this Agreement, any elution, notice orothercamrnunication required or permitted to be given underthis Agreement shall be in writing and deemed to have been duly given if and when delivered personally with receipt acknowledged} or otherwise actually received by the intended recipient, or three ~3~ days after mailing the same ~bY certified mail, return receipt requested} with proper postage prepaid, or when sent by a national commercial courier service {such as Federal Express or I~HIr. vvorldwide Express} for expedited delivery, to be confirmed in writing by such courier, or when telecopied, telegraphed or telexed to a party, at such party's address set forth below or at such other address as a party may designate by notice given to the other in accordance with the foregoing. To the City: Mr. Angel R. Escobar, P.E. City Manager City of Carpus Christi ~ 2Q 1 Leopard P~ ~. Box 9277 Corpus Christ, Texas 749-9277 Phone: ~~1-88a-220 Fax: G1-88a-389 With copy to; Mr. Armando Chapa City Secretary City of Carpus Christi 120 Leopard P.q. Box 9277 Corpus Christi, Texas 7849-9277 Telephone: ~ -880-~ a5 Fa~c: ~ 1-880~~ ~ ~ 3 Page 29 of 3 Ms. Mary ~Cay Fischer City Attorney 1 X01 Leopard . P.~. Box 9~7~ Corpus Christi} Texas 78489-9~~~ Telephone; ~~ ~ -880-~~~ Fax: 381-880-3239 If to Operator: Mr. UVes vllestley SM 300 Four Falls Corporate Center X00 Conshohocken State Road vlJest Conshohocken, Pennsylvania ~ 94Z8 Telephane: 61 D-?~9-7900 Fax: ~~ 0-729-1590 with copy to: hllr. Steven A. Scolari, Esq. Stradley, Ranon, Stevens & Young, LLP 3011a11ey Stream Parkway Malvern, PA 19355-1481 Telephone: 610-840-8005 Fax: 810-840-1965 Notice shall, in all events, be effective upon receipt by the addressee except that notice by facsimile electronic transmission shall, if received after 5:00 p.m. ar any day which is not a business day, be deemed received on the next following business day. Notwithstanding the foregoing, #ar purposes of approval of Budgets and contracts requiring the approval of the City, the City shall be deemed to have received the same only upon the City's actual receipt thereof, 1 ~.~ Amendments. This Agreement rrray be amended only in a written instrument signed by both parties. ~ ~,~ Title and Cations. All articles or section titles or captions in this Agreement are far convenience of reference only. They should not be deemed to be part of #his Agreement or to in any v~ray define, limit, extend, or describe the scope ar intent of any provisions of this Agreement. Except as specifically otherwise provided, reference to "Articles," „Sections,,' and „Schedules" are to Articles and Sections of and Schedules to this Agreement. 1 ~.4 Pronouns and Plurals. vVhenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuterforms, and the singularforrn of nouns, pronouns and verbs shall include the plural and-vice versa. ~ 2. Right v~ I n. ress and Egress. Qperator acknowledges that the City shall have the right to enter the Facility and grant to others the right of ingress and egress to and from the Facility for the purpose of inspection thereof ar the conduct of capital improvements and far other purposes. The City agrees to coordinate such entry with Operator sa as tv minimize interference v~rith scheduled activities at the Facility. gage ~~ of 35 ~.~ Intellectual Properky Rights. ~i} Pursuant to the terms of thisAgreement, the Operator has agreed to advertise, promote activities, market and conduct public relations far the Facility. Operator covenants and agrees, subject to the reasonable consent of the pity, to develop all intellectual property rights required for the advertisement, promotional activities, marketing and public relations farthe Facility, the cost of all of which shall be an Expense. Any and all intellectual property rights including, without limitation, all names and logos for the Facility, shall be the sale and exclusive property of the Oity, subject to paragraph iii} below. Operator hereby conveys to the pity, without recourse, representation or warranty, any right, title and interest that Operator may have in and to any such intellectual property rights, including, without limitation, all rights of common lava, copyrights, rights of copyright renewal, trademarks and trademark rights, end Operator agrees to execute any documentation reasonably required by the Oity to evidence such transfer. (ii} The Csty hereby grants to Operator a license during the term of this Agreement to use and to grant to others the righ# to use the intellectual property rights in connection witF~ the advertising, promotional activities, marketing and public relations for the Facility. ~ ~.l everabili~. Each provision of this Agreement shall be considered to be severable and, if, for any reason, any such provision or any part thereof, is deterrr~ined to be invalid and contrary to any existing ar future applicable law, such invalidity shall not impair the operation of ar affect those portions of this Agreer~ent that are valid, butthis Agreement shall be construed and enforced in all respects as if the invalid or unenforceable provision ar part thereof had been orr~itted. ~12.$ uccessars. This Agreement shall be binding upon and insure to the benefit of the parties and their respective heirs, executors, successors, and assigns but this provision shall not be deemed to permit any assignment by a parley of eny of its rights or obligations under this Agreement except as expressly provided herein. ~ ~,~ Assignment. Operator shall not voluntarily assign ar encumber its interest in this Agreement without first obtaining the pity's consent Any assignment ar encumbrance without the pity's consent shall be voidable and, at the Oity's election within thirty ~~}days of actual knowledge of an assignment or encumbrance, shall constitute a breach which shall be a breach unless the assignr~ent or encumbrance is rescinded within thirty fig} days after the Oity has given the Operator notice of the pity's election to treat the assignment arencumbrance as a breach. The Operator shall, however, have the right without the pity's consent but upon prior notice to the City, to assign this Agreement ~i} to any Affiliate of Operator if such Affiliate executes an agreement inform reasonably acceptable to the pity assuming the Operator's obligations hereunder, whether arising prior to or afterthe date of such assignment; or iii} to any entity with which the Operator has merged ar consolidated or to a purchaser of all ar substantially all afthe Operator"s assets, if the assignee executes an in farm reasonably acceptable to the pity assuming the Operator"s obligations hereunder, whether arising prior to or afterthe date of such assignment. No such assignment shall release or relieve Operator from any of the obligations of the Operator hereunder, whether arising prior to or after the date of such assignment. ~ 2,1 D Further Action. Each party, within ten ~1 g} days after notice from the other party, shall execute and deliver to the party a certificate stating that this Agreement is unmodified and in full force and effect, or in full farce and effect a modified, and stating the Page 31 of 3~ modifications, and the other party i not, to the best of the party's knowledge, in breach under this Agreement or stating the exact nature of any breach alleged to have occurred. ~ 2.11 Gratuities. It shall be a breach of Operator's obligations hereunder to offer, give, or agree to give any employee ar farmer employee of the City a gratuity ar offer of ernployment in connection with any decision, approval, disapproval, recornmendatian, preparation of any part of any purchase request, influence ire the consent of any specification or pract~rement standard, rendering of advice, investigation, auditing, or in any other advisory capacity in any proceeding or application, request far ruling, determination, claim or controversy or other particular matter, perkaining to or solicitation of any contract or proposal therefor by Operator from the City. ~ ~ F ~ ~ No solicitations. Operator shall not accept any solicitations, requests for services, contributions, gifts, favors, tickets, gratuities or other benefits from any parley or any person on behalf of the City who seeks to do or is doing business with the Facility. 12.1 ~ Entire Agreement; Attorneys' Fees. This Agreer~ent, including the attached exhibits, contains the entire agreement of the parties and supersedes all prior and contemparaneousogreements and understandings, oral or otherwise, ar~ong the parties with respect to the matters contained in this Agreement and may not be modified or amended except asset forth in this Agreement. The prevailing party in any litigation arising out of this Agreement or relating hereto shall be entitled to recover, in addition to any award made in such dispute, reasonable attorneys' fees and casts incurred by such party in preparing for and parkicipating in such litigation. 1 , ~ 4 Counterparts, This Agreement may be executed in one or mare counterparts and each of such counterparts, far all purposes, shall be deemed to be are original, but all of such counterparts together shall constitute butane and the same instrument, binding upon the parties, natwithstandingthot all of the parties may not have executed the same counterpart. ~ 2. ~15 Applicable Lai. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of Texas. The district courts of Nueces County, Texas shall be the exclusive place of venue for any disputes arising under or with respect to this Agreement ~ ~. ~ Limitation of Liabi~[. Notwithstanding any contrary provision hereof, the City agrees that na partner, coRventurer, employer, agent, director, officer, shareholder, or Affiliate of the Operator shall be personally liable to the Oity or anyone claiming by, through ar under the City, by reason of any default by the Operator under this Agreement, ar~y obligation of Operator to the City, ar for an~r amount that may become due to the City by the Operator under the terms of this Agreement ar otherwise. 12.1 Na Re resentation as to ~ erations Results. The City recognizes that Operating Revenues for the Facility are incapable of being estimated with reasonable certainty given that the entertainment industry as a whole fluctuates based upon general economic conditions, current trends in entertainment, available income of patrons, competitive facilities} and a variety of rapidly changing factors beyond the control of Operator. Operator has made no and disclaims any purported or actual representation or warranty as to the results which can be expected frarn the ownership and operation of the Facility including, without limitation, the Operating Revenues, ar Operating Expenses ar the accuracy of its projections and estimates thereof. The City recognizes and accepts that all Budgets and projections represent Operator"s estimate of the expected expenditures and revenues and that Operator is in noway responsible or liable if the actual expenditures and revenues are more ar less than that projected sunless Page 32 0~ G such situation is the results of a breach of this Agreement by Operator). ~ ~. ~ 8 Force I~a~eure. Neither parley shall be in default hereunder ar liable to the other for failure to perform where such default or failure i the result of acts of cad, war, or any other similar cause outside of the reasonable control of the party who asserts that default or failure to perform is excused underthis section; provided, that in na event shall the provisions of this ectian extend to any default orfailure to perform due to labor shortages or strikes or ecanor~ic hardship. In the event of a delay in perfarr~ance excused by the operation of this ectian, such delay shall only be far the period which the porky clair~ing the delay was actually delayed in the performance of its obligation by the event outside of its reasonable control. A~TIC~.E ~ ~ ~o~uuLTIN~ ERICE 1 . ~ oeneral Consultin services. The City awns, in addition to the proposed Facility, certain other public facilities. The Operator, far the consideration and other fees recited hereinabove, agrees to provide certain consulting services to the City with regard to such facilities upon request therefor by the City. ARTICLE ~4 NON-COIUlPET1TloN During the terra hereof, operator agrees that it shall not, directly or indirectly, awn, manage ar provide consulting or other management, consulting, marketing orprarnotions services, whether as a principal, parkner, joint venturer, officer} director, member, employee, consultant, agent, independent contractor, arstockholderaf any company ar business engaged in operating, managing, marketing, promoting or providing consulting services uwrith respect to, public assembly or other arena-type facility located within a 100-mile radius of the Facility which competes with the Facility. The foregoing restriction and covenant shall not, however, ~x~ apply to facilities which are within the restricted area ~rhich operator is managing under a contract in effect as of the date hereof, such facilities being listed on schedule 14 attached hereto and made part hereof for all purposes, ar ~}r} be deemed breached by operator's parkicipation as a promoter, sponsor, or ca-promoter of events at any facilities if either {a} the same event has been scheduled to appear at the Facility within 1 ~ months of its occurrence at such other facility ar ~b}the same has not been scheduled to appear at the Facility because the participants ~i.e., the prar~oter of the event in question orthe principal performer cf the avant in question} in such event refuse ar decline to appear at the Facility upon request, Operator shall provide the City's Contract Administrator reasonable evidence thereof}. In addition to its rights to terminate this Agreement should operator breach the provisions of this Article ~4, the City may collect from the operator, as liquidated damages and not as a penalty ~a} reirnbursernent of all actual casts incurred by the City to replace operator's management teary plus fib} all fees paid to operator hereunder during the 12-month period immediately preceding such termination. Operator hereby stipulates and agrees that the faregaing restrictions an operator are reasonable in light of the services which operator will render hereunder both in terms of geography and duration. operator furkher agrees that the stipulated, liquidated damages set forth in the preceding paragraph hereof are reasonable due to the uncertainty to Owner of the amount of damages owner will actually incur should Operator breach such provisions, operator hereby stipulating and agreeing the owner will actually incur damages in such event. Page 3 of 3G The undersigned have executed this Agreement as of the date first set forkh above. CITY ~f= CARPUS Cf~f~ITf, TEAS r g~: ' F . Escobar, ~, E., Cit~r Manager A raved a to form: ~~~-'~', # ~~. , ~, ~ ~ ~u AU Veronica canal ~~~IL ~ F w ,w*. Assistant C~t~ Attorney ~~~' ~It Attorne [~ ...~ .~.~.....r ~~~~ , fUI, a Pennsylvania general partnership Name. SokN ~. SRN S Titls: C ~v chedufes Schedule ~.1 ~ - i~Cey Personnel Exhibits Exhibit A ~- ~ Existing Facilities - lUlap of Existing Facilities -Aerial View Exhibit A - ~ Existing Facilities - Con~rention Center, ~ ~~ Floor Exhibit A - ~ Existing Facilities - Convention Center, ~~~ FfQOr Exhibit A - ~ Existing Facilities -Arena, 1 ~# Floor Exhibit A - Existing Facilities -~ Arena, ~~a Floor Exhibit A - ~ Existing Facilities -~ Arena, ~'~ Flair Exhibit A - ~ Existing Facilities - La~ndsaping Areas Exhibit ~ -1 Foodservices Premises -Arena First Floor l~xhibit B ~ ~ f=aodser~rices Premises -Arena second Floor Exhibit B - Foodservices Premises -Arena Third Floor Exhibit B - 4 Foodservfces Premises ~-Convention Center First Floor Exhibit B - ~ Foodservices Premises -Convention Center Second Flair Exhibit -Parking Lots Page 34 of ~ SCHEDULE ~.~~ Key Personnel Vice President or higher er~era~! Man~geror Directorcf Technical service at the Arena ~inanciel Analyst ar~d Technical support services at the Arena enerel Manager or Director of Technical ervi~e at the Convention Center ierica! Assistant er~eral Manager , Anyone v`rho reports directly to the General Manager orAsistant general Manager, except the Director of operations. Sch. 6. 10 'f f i r I I ti~ Q ~~ / .. ~ ~ ~ r ~ r ~ ~ '~ ~ ~~ { P(}~tT ~~ ~ ~ , ~~~ H~~ ~~ ~~ '~~, ~s- ~f,,.i . .. 'r 3. .~a~ '.. ' - .~1 +~~ }l ~;' '`~~'445-'-'- '~ L13.: ` _ ~Y, 411 _ ±r,:{'~i, f~~„- ~ _~~~:~ ~~-~ ~~~ ~~ ~x~ A-~ W J Q W Q N w J V L¢L z N X w O a Q N w J U Q C~ Z H- N X w i Q m 2 X w 0 0 J LL F- N W H W U Z O F=- o, Z w Z O V w J U Q C~ Z H N X w N 1 Q m X w Ex. A-2 ~ r~n`~ ~run~unuc ~... ., ,,.._fr. ...~~ ~ _ti. ~ fi ~ J 1 f-• ~5 ~~.~~ f ~ ~ s ~ } t :.e ! ~ € ,t ~i ,i ..z.....~._.Y.~ .. t~, ~.~~...~ } a ~ ~~ if. ,~;~.. k 'fir'- -.~~ ..~ ~ -s, ~~~1- ~ ~ t ~ .. ~-._ ~ _ ~ :. ~ _~ ~ , ~ ,M ,~ ~ ~ ~..-..~.~.d~ ~ ~~,.~r. ~. . ~,. 3 ~ ~ ~. ~~ ~~~-~; ~} ~ m ~ '~ ~ i C I t M ~ E~ '~ 4 + F r. ~ ~ S4 .' F 1 ~ J ,~ ~ ti,+ 't J ~ s !. k{EIII f... 1 ~ yl ;~ ., ~ ~i i { V'__~ Wr.. . 0 0 J L.L Z N W H z W V z z W Z U i N w J U Q C~ Z H X w M Q ~--- m ..... 2 X w Ex. A-3 ~I I L-' `' ~ 3sano~r.o~^ - ~, <~/ r, - ~ ~~ ~~ ~ ~ ~~ ~~ h u '- ~ a~i z ~.~ 4 ~"^ + / alt Y ~~ ~~ a i ~ ' •. ~~ ~. ~` ~` ~. r4l ~ : ~~ ~~ ~ ~ ~ ~ ~ .~ ~ ~ I ~ i~ ~~~ q~~~ ~ ~~ ~w~ ~~~ ~~~ r ~ r r- ~ 0 J L.L H l/'} Q z W Q W J V Q C~ Z H r d- Q H m Z W Ex. A-4 ~~ 0 0 J L.L 0 z N Q z W Q N W H J C..J Q f> Z N L!) f Q H m W ~~ Ex. A-5 0 0 0 M Q Z w Q N J U Q C7 Z u.i c.4 i Q H m 2 Ex. A-6 ' ~ I ~ ~l~~l l ~ "~ } ~~v~~r~s r x ~ ~ _ ~~~~~ ~~ ~~ ~ o ~~~~ ~ ~ ~ ~ ~ ,~ r ~.y ~~ L 'fir ~F# ~ ~ ~ ~ ~ f ~~ s xy ~+'lf Yl~c ~r! i F Y~~ ~ ~~ r ~~ ~ ~: ~~ o ~ ~ r '. ~ YOR7` ~~ . ~ n ~ ~ ~p~ ~ ~ ~ ie: O ~~ ~ ~~ ~- ~ ~, ~ ~ I I w~ ~, ~r; ;~ ~ --s~_,.--~~--- ~~ ~ ~ w ~ ~ ~ ~ ~ ~ ~ ~ (~i I W ~~ ~M~ ~• z p ~ ~ ~, n ~l ~l I~ i n { h' 4f~~ ~!: a3 ~ II1 ti'. i h~5 `'.Y ~. t ~~ ~~ LLJ ~ Q Ex. A-7 ~~ ~~~ ~~~ ~ ~ ~ ~ ~~ u ~x ~ ~ 1 ~. ti. ~~ J ~ ~ ~ J e ~~ n ~° ~~r~~ar~rl~ ~~ ~ ~ ~- n ~~ ~~° ~. ~! ,~ ~ ~ rr ~ L.. ...1 .j .~ ,~ ~ ~ ~ ~0 J ~~ ~~, ~ ~ ~~ ... ~ I'~ m l ? ~, ~ - i~ ~~ L r~ LI 1 ~~ ~. ~ ~ ~~ 1 ff V/ L! ~ ~ ~ ~ ~ ~ ~ 1 n ~ ~ Q ...~ - ~ ~ ~' ~ ~• ~' a utlt ed in Black = ~~ ' `~ OU ~"YIC~S ~~'~I1~1S~~ 1~ ~ I I i '~ L J L a . ~ Exhibit ~ -1 .. ~ ~i~es Presses ~~ Arena first Floor ~. ~ ~~ ~ ~ ~~ M ~G ,} 1 ' . ~ ~ ~ Ex. B-1 _'L~_ ~ a .~ ~. ~: ~ ~: ~: 1 Ex~ibi~ B - 2 Faodserv~~e Prerrzi~e~ Arena Se~and ~'loar fix. ~-2 r ~ i Exhibit B - 3 Fo~d~r~ic~s Premiss ~ren~ Third Floor Ex. B-3 T~ exhibit ~ - ~ ~DC~~~'V1C~S ~r~ml~e~ or~~e~tion Center Fir~~ Floor Ex. B-4 ~ J } ~ '~ !!:I1f11'S~V ~TT ~{4V J ~YL~ ~~ h~ ~ ~ ~ r~ ' Li l k ~- .-..r ......: :1 ... ~ :~l ~ x °m ~ ~ ~ ~~ ., ~ _ r~ a rn ~ ,~ ~ h i } ~ :r - 1 { ' f !. .1 ~ I i Y i 1! 1 1 1 ~ 1 rn~ ~~ m r I 1 ~ ~ . r~^',R~~'4~ f, ~ry I ^ '~ ~'~' /+' l~ fff( fff ~ ~3 S `[ Ill} ' s' . t f ~. ~~ ~ ~ ~ ti~ y ! f~2~ ~ i ;`~•~ ~ ti: Exh~bi~ B - 5 F~odser~ic~ P~ernise~ an~ent~on en~ex ~cand Floor Ex. B-5 uni riurt i 1{L-, vnvlwl, ` ~.. _ t ti ' •~ i ~ ~~I'1~ ~I Cent' ~~ 0 r e O °i ~ ~~ ~~ ~~ r. .~ -:.f1 ~' ~ :3 __ S. :~ .~ ,, ~~ i~ i ~ ~ A M ~ ~ ~ ~ ~ ~ W ~ .C ~ 1 ~ ~ ~ ~ E ~ ~ ` ~ ~ ~ F ~ ~ ~ .~ V~ ~ ~ ~ ~ ~~ ~ .~~~ ~ ~ ~i L~ ~ ~+ C~ ~ U ~ P111VAT0.YOF~tA1~D P ~.~ ' `Y.'~~,7. ;{~ ~~ ~ ~ o ~ ~ ~ ~~ ~~ ~ ~ ~. ~ ~ ~~ ~~~ 4 fl. ~ y ~ .~ A ~• ~ aye ~~ ~ ~ r ~~ ~~ ~' {f; NNI y4 ~ ~'~ 0 c~ z U H m 2 Ex. C