HomeMy WebLinkAboutC2012-372 - 10/16/2012 - ApprovedMANAGEMENT AGREEMENT
FOR THE
AMERICAN BANK CENTER
BETWEEN
CITY OF CORPUS CHRISTI
AND
SMG
MANAGEMENT AGREEMENT
2012 -372
10/16/12
M2012 -183
SMG
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INDEXED
THIS MANAGEMENT AGREEMENT ( "Agreement ") is made and entered into effective as
of Vim, , 201 y and between SMG, a Pennsylvania general partnership ( "Operator"
or "SMG ") the CIT OF CORPUS CHRISTI, a Texas home rule municipal corporation
( "City ").
RECITALS
1. The City, acting through its duly authorized City Manager ( "City Manager "),
owns and has constructed a Multi- 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 1901 North Shoreline
Boulevard, which, together with all facilities, machinery, attachments and appurtenances now or
hereafter attaching thereto, is hereafter referred to as the "Facility" and also known as the
"American Bank Center."
II. The Operator is an organization whose principals 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 December 18, 2001, as amended by (i) that certain First
Amendment to the Pre - Opening Services and Management Agreement, authorized October 14,
2003 by City Council; and as further amended by (ii) that certain Second Amendment dated May
18, 2004; (iii) that certain Third Amendment, dated August 17, 2004; (iv) and that certain Fourth
Amendment, dated August 1, 2006 (collectively, the "Original Agreement "), pursuant to which
SMG provides management services for the Facility on the terms and conditions set forth
therein. The Convention Center portion of the Original Agreement expires July 31, 2009, and the
Arena portion expires November 30, 2009.
IV. On February 24, 2009, the City Council authorized the City Manager or his
designee to negotiate a five year agreement with SMG to operate and manage the American
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 SMG's duties the duty to manage all food and beverage
services at the Facility, including management of all alcoholic beverage services; (ii)
acknowledging that SMG shall be assigned both the Food and Beverage Services Agreement
with Centerplate and the Alcohol Service Management Agreement with the Corpus Christi
International Seamen's Center; (iii) stating that, immediately following the third year of the
Agreement, the City shall solicit and entertain proposals from private venue management firms
to operate and manage the American Bank Center; and (iv) giving the City the right, immediately
following the third year, to terminate the agreement, with or without cause, by providing no more
than ninety (90) days' notice to SMG, without the payment of any penalty, fee or premium.
V. The City and Operator are parties to that certain Management Agreement
effective August 1, 2009, authorized July 21, 2009 by City Council by Motion #2009 -207 ( "The
Management Agreement "), pursuant to which SMG provides management services for the
Arena, the Convention Center and the Selena Auditorium (collectively, the "Facility ") the terms
and conditions of which included: (i) SMG's duty and exclusive right to manage all food and
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beverage services at the Facility, including management of all alcoholic beverage services as
well as the Food and Beverage Services Agreement with Operator and the Alcohol Service
Management Agreement with the Corpus Christi International Seamen's Center; (ii) stating that,
immediately following the third year of the Agreement, the City shall solicit and entertain
proposals from private venue management firms to operate and manage the American Bank
Center; and (iii) giving the City the right, immediately following the third year, to terminate the
agreement, with or without cause, by providing no more than ninety (90) days' notice to SMG,
without the payment of any penalty, fee or premium. The Management Agreement expires
September 30, 2014 unless sooner terminated under the provisions of the Management
Agreement.
VI. Pursuant to The Management Agreement, on or about May 4, 2012, the City
solicited and entertained proposals from private venue management firms to operate and manage
the American Bank Center, of which the Operator was the successful bidder. As a result, the
City and the Operator desire to enter into this Agreement to: (i) grant SMG the exclusive right to
manage all food, beverage and alcoholic beverage services at the Facility using the vendor(s) of
their choice; (ii) provide for a five (5) year term; (iii) give the City the right, immediately
following the third year of the Agreement, to terminate the agreement, with or without cause, by
providing no more than ninety (90) days' notice to SMG, without the payment of any penalty,
fee or premium; (iv) state a management fee to be paid to the Operator; (v) state a performance -
based incentive fee to be paid to the Operator upon performance; (vi) other terms and conditions
as stated herein.
VII. Pursuant to the Management Agreement, the City terminated the Management
Agreement that was effective August 1, 2009 and authorized July 21, 2009 by City Council, with
said termination effective J 3l , 2013.
VIII. The Operator is a party to that certain Food and Beverage Services Agreement
with Service America Corporation, d/b/al Centerplate ( "Centerplate "), effective August 1, 2009
(the "Food & Beverage Contract "), pursuant to which Centerplate provides food and beverage
services at the Facility. The Food and Beverage Contract expires July 31, 2014 unless sooner
terminated as a result of the termination of the Management Agreement under the provisions of
the Management Agreement by providing no more than ninety (90) days' notice to Operator.
IX. 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, social and other activities) to area residents and visitors;
attracting events (e.g., conventions and tradeshows) that generate economic and fiscal activity
thereby stimulating the economy; minimizing financial operating requirements required from
public funds; anal, 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:
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AGREEMENT
ARTICLE 1
DEFINITIONS
The following words, unless the context otherwise requires, have the meanings ascribed to them below.
"Affiliate" means, with respect to any corporation, partnership or other entity, any other such entity
which is and at all times remains Controlled (as hereinafter defined) by, under common Control with or
which Controls the first such entity, and (ii) "Control" means direct or indirect ownership of not less than
10 of all the voting stock of a corporation or not less than 10% of the legal and equitable interest in a
partnership or other entity or the ability to direct management, operations or policy decisions of such
corporation, partnership or other entity.
"Agreement" has the meaning ascribed above, as amended from time to time.
"Architects" means the architects of record, whether one or more, engaged by the City to prepare the
plans and specifications for the Facility with regard to any future improvements/renovations.
"Arena" means the approximate 9,500 seat (8,000 fixed and 1,500 movable/ 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 bonds used to finance the Facility or the Bonds that
will further finance the Facility, the interest on which is or will be excludable from the bondholder's gross income
for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended.
"Budget" 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 Operator to and approved in
writing by the City (including any amendment thereto approved in writing by the City). With respect to
each Budget referenced in this Agreement, a separate Budget shall be established for the Arena and the
Convention Center and Operator shall operate each of the Arena and the Convention Center in accordance
with such separate Approved Budgets, as provided by Article 4 and more specifically by Section 4.8 of this
Agreement.
"Capital Expenditures" means all expenditures for building additions, altercations, renovations,
repairs or improvements, and for purcbases of additional or replacement fiuniture, fixtures, machinery or
equipment, the depreciable life of which, according to generally accepted accounting principles, is in excess of
one (1) year and the value of which is equal to or greater than $5,000.
"Catering" means functions where payment is received in advance from one party for prearranged
Foodservices, 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 Code.
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"Concessionaire" shall mean the party or parties selected by Operator to manage any or all of the
Foodservices on site, excluding Outside Catering.
"Concessions" means Foodservices where payment is made at the time that food and beverage services
and products are served or delivered. An example of this includes an individual purchasing items at a
concession stand or from a cash bar.
"Contract Administrator" means any officer, agetit, employee of, or 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 more, the general contractor(s) selected by the City to repair,
replace, improve, remove, renovate or modify the Facility.
"Convention Center" means and refers collectively to the Bayfront Plaza Convention Center and the
Selena Auditorium.
"Customer Satisfaction Goals" means the mutually agreed to customer satisfaction rating as
measured by the results of a combination of "secret shopper surveys" and customer satisfaction
surveys that shall be conducted by Operator and the City (or, in the case of the City, their
designee), The rating shall be the average of the customer satisfaction ratings for the following
categories of customers: (i) attendees of Events held at the Facility; (ii) suite holders and
premium suite clients; and (iii) the Major Users of the American Bank Center. The City and
Operator shall agree on forms of survey /questionnaire, survey content, and the events at which
the surveys shall be issued. The City (or designee) shall be responsible for initiating the secret
shopper surveys and Operator and the City (or designee) shall be responsible for distributing and
collecting the customer satisfaction surveys following designated Events, and providing to the
City copies of the surveys, together with a summary tabulation of the ratings of each
survey. Operator shall be considered to have met the incentive eligibility criteria if, based on all
responses received during the Fiscal Year from the customers, the aggregate average customer
satisfaction score is better than "7.5" on a scale of "0" to "10."
"Depository" means the place selected by the City in which the bank accounts for the funds required to be
maintained under this Agreement are to be deposited.
"Emergency 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 or material damage to the Facility.
"Event" refers to all events held at the Facility including, but not limited to, concerts, sporting events,
family shows, tradeshows, consumer shows, banquets, receptions, meetings, seminars, and any other
functions held at the Facility consistent with this Agreement.
"Event Expenses" means any and all espenses incurred or payments made by Operator in connection
with the occurrence of events at the Facility, including but not limited to costs for event staffing including
ticket takers, security and other event staff, and costs relating to setup and cleanup.
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"Facility" means, collectively, the Arena, the Convention Center, and the Selena Auditorium-
"First-Class" means quality of the best; the finest; the highest class, grade, or rank; and highest
distinction with respect to the operation, management, marketing, and promotion of the Facility, including but
not limited to:
• professional promotion and marketing efforts;
• service - oriented guest and tenant services;
• premium food and beverage services;
• timely repairs, maintenance, and cleaning ofbuilding, equipment, and grounds;
• positive, safe and secure Facility for patrons and employees;
• state-of-the-art technology to patrons; and
parking services
"Fiscal Year" means, at the time of this Agreement's execution, a period of time beginning on
August 1 and ending on the immediately following July 31, inclusive. The City may change its Fiscal Year,
in which case the City must notify Operator of the change in writing at least 120 days before the end of
the Fiscal Year in which the change will occur, and the definition of Fiscal Year in this Agreement
shall automatically change to reflect the new definition of the City's Fiscal Year.
"Foodservices" means planning, preparation, service, accounting and management of food and
beverage services to be provided hereunder, including without limitation, Catering and Concessions,
vending machines, staffung and liquor license procurement and maintenance in accordance with the laws of
the Texas Alcoholic Beverage Code and regulations promulgated by the Texas Alcoholic Beverage
Commission
" Foodservice Premises" means all areas, improvements, fixtures, and trade fxtures on the Facility's
premises that are or may in the firitue be used in connection with the operation of the Foodservices, including
adequate storage and office space, as described in Exhibit "B" hereto. The Foodservice Premises may not
be changed without the prior written approval of the City, which shall not be unreasonably withheld or
delayed.
"Food Products" means all food and beverages, and shall include without limitation,
alcoholic beverages, candy, tobacco, and confections, except that as long as the Anticipated
Arrangement remains in effect, "Food Products" will not include alcoholic beverages, except
where sold pursuant to a catering permit.
"General Manager" means the chief operating officer of the Operator at the Facility.
"Licensee" means a person or entity entering into a written agreement to host an Event at the Facility.
"Maintenance/Capital Goals" means the mutually agreed to building quality and safety rating
as measured by a (frequency) performance assessment conducted by the City. The City and
Operator shall agree on the performance assessment form, the assessment content, and the
frequency at which the assessment shall be conducted. Operator shall be considered to have met
the incentive eligibility criteria if, based on all assessments conducted during the Fiscal Year, the
aggregate average score is better than "8.0" on a scale of "0" to "10."
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"Major 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 (30) days during any Fiscal 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 forth on the year end audited financial statements, for
such Fiscal Year.
"Net Operating Loss" means with respect to a Fiscal Year, the excess, if any, of Operating Expenses for
such Fiscal Year over Operating Revenues as set forth in the year end audited financial statements, for
such Fiscal Year.
"Net Operating Income/Loss Benchmark' is equal to the average of the actual combined Net
Operating Income /Loss for the rolling three (3) year period immediately preceding the current contract year
"Operating Expenses" means all expenditures or obligations of whatever kind or nature made or
incurred by SMG in promoting, operating, maintaining, marketing and managing the Facility, and
providing food and beverage services, during any specified period during the term of this Agreement, a ll
contract labor; all Reimbursable Expenses; all fees paid to Operator under this Agreement; maintenance
and repairs; utilities; deposits for utilities; telephone; telescreen and/or 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 for insurance
maintained under Article 8; data processing; advertising; marketing; public relations; pest control; travel,
lodging and related out -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 entertainment; 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 (or, 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 or sustained; and fees and commissions paid to any third party
engaged by the City (or, upon the City's written request, by Operator) to provide services with respect to
advertising, nanri ng rights, pouring rights, the marketing and sale of luxury boxes or the sale of personal seat
licenses; but excludes any SMG Capital Contributions and Capital Expenditures, costs for corporate
overhead, indemnity obligations and damage payments owed to the City, amortization (including the SMG
Capital Contribution), depreciation and other non-cash charges and any debt service on the Bonds.
Expenses shall be calculated separately for the Arena and the Convention Center. Solely for purposes of
the submission of the budgets hereunder and the calculation of Net Operating Income and Loss, the Net
Operating Income/Loss Benchmark, and SMG's incentive fees hereunder, the fees payable to SMG
under this Agreement shall not be included therein.
"Operating Fund" means a fund maintained under Section 5.1.
"Operating Revenue Account" has the meaning ascribed by Section 5.1.
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"Operating Revenues" means all receipts (including, without limitation, seat license fees and
surcharges, rental revenues, use license 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 or collected (1) for the use of, operation, or admission to, the Facility or any
portion thereof, (2) for the right to sell, or in respect of the sale of, any product or advertisement in the
Facility including all rents, royalties, and concessions from tenants, concessionaires, and licensees (but
specifically excluding the gross receipts of such concessionaires, tenants, and licensees); (3) for rental or
use of the Facility equipment; or (4) as fees for services rendered at the Facility. Excluding from Operating
Revenues in all events are, any portion of ticket sales payable to the performers in or promoters of any event
in 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 on behalf of and actually paid to a user of the Facility;
applicable excise, sales occupancy and use taxes, or similar government taxes, duties, levies, or charges
collected directly from patrons or guests, or as a part of the sales price of any goods, services or displays,
such as gross receipts, admission, cabaret, or similar or equivalent taxes; 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 property acquired and held for
investment; receipts from awards or sales in connection with any taking, from other transfers in lieu of and
under the threat of any taking, and other receipts in connection with any taking, proceeds of any insurance,
including the proceeds of any business income insurance (provided that the proceeds of business income
insurance shall be included to the extent the same reimburse the City for revenues actually lost);
proceeds of advances 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 interdepartmental funding from other departments of the City in the
nature of reimbursements or otherwise), discounts or credits of a similar nature (not including charge or credit
card discounts, which shall not constitute a deduction from revenues in dete Operating Revenues,
but shall constitute Operating Expenses in dete Operating Income or Operating Loss). Operating
Revenues shall be calculated separately for 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 Manual" means a document developed by Operator which contains terms regarding
the management and operation of the Facilities, including detailed policies and procedures to be
implemented in operating the Facilities, as agreed upon by both the City and the Operator. The parties
acknowledge that to the extent that such manual contains any proprietary information of SMG (e.g.,
SMG -wide (not Facility- specific) operating policies, procedures and/or software), such information shall
remain the property of SMG and shall not be kept at the Facility after the expiration or termination of this
Agreement.
"Outside Caterers" means any caterer, other than Operator or a Concessionaire for all
Foodservices at the Facilities with whom Operator may contract, entering into an Outside Catering
Agreement provide Catering services at the Facilities for a single event. The Operator will establish
minim Commissions and/or fees, insurance and security deposits required in order for an Outside
Caterer to operate at the Facilities. Outside Caterer will pay Operator immediately following their Catering
event based on the Outside Catering Agreement with that Outside Caterer and the Operator.
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"Outside Catering Agreement" means the written agreement between the Operator and an Outside
Caterer for a single Event to be held at the Facilities.
"Parking Lots" means any and all existing and future parking facilities that serve the Facilities, as shown
in Exhibit "C" which the parties may amend from time to time.
"Prompt Payment Act" means Chapter 2251 of the Government Code in force in the State of
Texas.
"Reimbursable Expenses" means all of the following expenses incurred by the Operator in
perfor its services under this Agreement to the extent (but no further) the same are provided for in
an Approved Budget or are incurred as part of an Emergency Expenditure, salaries, wages, and benefits of
Operator's personnel working at the Facility; payments made by Operator to unrelated parties from its own
funds or 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 entertainrrrent expenses.
"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 naming rights for the Facility.
"TAB C" means the Texas Alcoholic Beverage Commission.
"Utilities" means electrical, water, and gas services. Operator is responsible for utilities. For the
electricity invoices that the City pays directly, the City will make every effort to submit the invoices to
Operator for reimbursement in atimely manner, but in no case later than ten (10) calendar days after City makes
the direct payment to electricity provider. Operator shall pay all invoices within fifteen (15) calendar days
from the date of the invoice, in accordance with Section 5.3 of this Agreement.
ARTICLE 2
INTRODUCTION
2.1 Grant of Authority. To enable Operator to perform its obligations Linder this Agreement,
the City hereby grants to the Operator, and the Operator hereby accepts, the exclusive right and obligation
subject to the provisions of Section 3.7 and the other terms and provisions of this Agreement, in its own name,
as an independent contractor and not as an agent of the City, to manage and operate the Facility.
2.2 Exclusive Rights Granted. The City hereby grants to Operator, subject to the terms and
conditions of this Agreement, the "Exclusive Right" to operate themselves or to contract with outside
concessionaires for vending machines and for 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 Facilities, subject to any limitations contained in this Agreement concerning
Catering at the Convention Center. 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
Facility.
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2.3 Exclusion from Exclusive Rights. The following shall be excluded from the Exclusive
Right to provide Foodservices:
(a) Fairs or Festivals. Foodservices provided at fair or festival -type Events at the Facility may
be excluded i� 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 Food and Beverage Services shall
not prevent or prohibit an exhibitor from distributing without charge a sample portion of the type of
food or merchandise manufactured and distributed m the normal course of the exhibitofs
business, or from selling food items intended for consumption offthe premises.
2.4 Nature of Relationship. The parties agree that the only relationship created by this
Agreement is that between the City, as owner, and the Operator, as an independent contractor, for
management and operating services and that the Operator is an independent contractor, not an agent, employee,
joint venturer or partner of the City.
2.5 Term. The term of the Agreement begins on Qr I 2013, which is the
date following the effective date of termination of the previous Manag lnent Agreement that was
effective August 1, 2009 and authorized July 21, 2009 by City Council, (the "Effective Date ") and
ends on the last day of the fifth (5 full year following the Effective Date unless sooner terminated under
the provisions of this Agreement. The City may, effective the last day of the tbi_rd year and anytime
thereafter, terminate this Agreement with or without cause and without payment of any penalty, fee or
premium in accordance with Article 10 of this Agreement.
2.6 Contract Administrator. Each party must appoint a contract administrator who shall
monitor such party's compliance with 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 adnnistrator in
writing. City shall notify Operator of the name of its contract administrator within thirty (30) days of
execution hereof. Any and all references in this Agreement requiring Operator or City participation or
approval shall mean the participation or approval of such party's contract admmministrator.
ARTICLE 3
RESPONSIBILITIES OF OPERATOR
3.1 Standard of Care
(a) Subject to the hnutations on Operator's authority set forth in this Agreement and subject to
the Approved Budget, the Operator shall exercise its diligent, good faith efforts in managing
and operating the Facilities so as to minimiz Operating Expenses and maximize Operating
Revenues. In this connection, the parties agree that the Operator, in recommending and
implementing booking policies approved by the City, may schedule not only those events
that generate substantial direct revenue to the Facilities, but also those events that produce less
direct revenue but in the Operator's good faith judgment, generate either a significant economic,
cultural, or other benefit to the City or otherwise serve the public interest; provided that except
where provided under Sections 3.8 and 3.9, no use of the Facilities shall be permitted without a
reasonable charge or reimbursement of costs of operation of the Facilities, as may be prudent
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under the circumstances, for such use with respect to the Arena and/or Convention Center, as
applicable.
(b) Subject to the limitations set forth in this Agreement, the Operator "H do the following (or
cause the same to be performed):
(i) Manage and operate the Facilities and contract for its use in a manner that
will promote and maximize the use to further the purposes for which the
Facilities is to be constructed, as set forth in the Recitals to this
Agreement;
(ii) Manage all aspects of the Facilities in accordance with the Operations
Manual and the terms of this Agreement, including but not limited to cost
containment, revenue generation, profit maximization, promotions,
advertising, energy conservation, security, box office admission
procedures and general user services;
(iii) Maintain the Facility in accordance with the Operations Manual and the
terms of this Agreement, including but not limited to routine repairs,
preventive maintenance, janitorial services, grounds keeping services,
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 basis, and maintenance of all the Parking Lots to city codes and
standards;
(iv) Update, and further develop as necessary, the Operations Manual for the
Facility for the City's review and approval no later than December 31,
2012, and regularly thereafter as appropriate;
(v) Manage the Foodservices, including alcoholic beverage services, at the
Facility. Negotiate and enter into contracts, if any, at and for the Facility
for the sale of food, beverages, souvenirs, novelties and programs, as
provided by Article 2 and Article 6B, as applicable (including without
limitation the execution and delivery of such contracts in Operator's name
as an independent contractor);
(vi) Negotiate, execute, and perform contracts, use agreements, licenses and
other agreements (A) with persons who desire to schedule events,
performances, telecasts, broadcasts or other transmissions in, from or 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 Sections 6.4, 6.6, 6.8, and 6.13,
as applicable (including without limitation the execution and delivery of
such contracts in Operator's name as an independent contractor);
(vii) Market the sale of luxury suites or boxes and personal seat licenses, as
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provided in Sections 6.4, 6.6, 6.8, and 6.13, as applicable (including,
without limitation the execution and delivery of such contracts in
Operator's name as an independent contractor);
(viii) Coordinate and negotiate contracts for all advertising, licensing,
promotional activities, marketing, and public relations for the Facility, as
provided in Sections 6.4, 6.6, 6.8, and 6.13, as applicable (including,
without limitation the execution and delivery of such contracts in
Operator's name as an independent contractor);
(ix) Coordinate the efforts of advertising, promotional activities, marketing,
and public relations at the Facility of City activities and efforts, as
requested by the City, from time to time.
(x) Manage other facilities and projects at the request of the City, as these
opportunities arise, and coordinate such new efforts by meeting with the
City to agree to the scope of and other terms related to such management.
(xi) Coordinate the efforts of all parties involved in the operation of the
Facility and establish and maintain consistent procedures for cost
estimating and reporting, maintenance and payment of invoices, including
preparation of Budgets and reports as contemplated by Article 4;
(xii) Plan, coordinate, and administer operation of the Facility and continue to
identify, select, and train the Facility's staff;
(xiii) Retain legal counsel in connection with the discharge of its duties
hereunder and cause such counsel to coordinate with the City's legal
department where necessary or appropriate. Operator acknowledges that
the City's legal department shall at all times represent the interests of the
City;
(xiv) Coordinate the work of all parties performing work in connection with the
operating of the Facility;
(xv) Monitor actual and projected Operating Expenses and Operating Revenues
and advise the City, in a timely fashion as part of its Monthly Report, if
projected costs exceed the amounts set forth in the Approved. Budgets, as
provided in Section 6.12, as well as the reasons for the discrepancy;
(xvi) Furnish all services, personnel, materials, tools, machinery, equipment and
other items necessary to accomplish the foregoing requirements of this
Paragraph, Article 3, and other provisions of this Agreement;
(xvii) Devise and implement procedures (including preventive and predictive
maintenance procedures) reasonably designed to keep the Facility in good
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order and condition, subject to ordinary wear and tear, and maintain the
Facility in such order and condition; and
(xviii) Require that all persons using the Facility or attending events therein
comply with all legal requirements of all governmental authorities having
jurisdiction over the Facility;
(xix) Not create, assume or suffer to exist any mortgage, pledge, lien, charge or
security interest or other encumbrance of any nature whatsoever relating to
this Agreement or its rights and obligations under this Agreement, except
any pledge or other encumbrance of the fees due Operator pursuant to this
Agreement;
(xx) Promptly and fully discharge and pay all of its obligations under this
Agreement at or prior to the time specified for performance or payment
thereof, including without limitation, the payment of all Operating
Expenses from the fiulds available for that purpose under Article 5.
Operator shall have the right to- contest its obligations to make payments to
third parties so long as (x) Operator does so in good faith, diligently and
by appropriate proceedings, and (y) such contest does not subject the City
to any potential civil or criminal liability or constitute a breach of any law,
rule, code or regulation applicable to the City;
(xxi) Develop a comprehensive marketing plan and brochure, a booking
policy, and a complimentary sales responsibilities plan with the
Convention and Visitors Bureau of the City and begin implementation
thereof as soon thereafter as the same is approved by the City;
(xxii) 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 terms of this Agreement, for
the naming rights of the Facility, and maximize additional naming rights
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
( xxiii) Operator will be required to use its best efforts to implement energy
efficiency and conservation measures, consistent with those established by
the City of Corpus Christi, in an effort to meet and achieve a 5% annual
reduction in electricity consumption. In order to 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 City to improve the energy
performance of the Facility.
Page 13 of 49
(c) Section 3.1 and each provision in the above subsection "b" shall be subject to the Approved
Budget.
32 Compliance with the Law; Duty. The Operator shall comply with all applicable laws,
rules, regulations, ordinances ( "Laws ") relating to the use and operation of the Facility and the employment
of its employees. The Operator shall perform its obligations hereunder in good faith and in conformity with
the standard to which a good 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 for the
expenditure of funds necessary. to cause the Facility to comply with such applicable Laws, then the
Operator may terminate this Agreement upon ninety (90) 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 (x) the failure to comply with such applicable Laws subjects the Operator to potential civil or
criminal liability, and (y) the City fails, within such ninety (90) day period, to make provision for the fiends
necessary to correct such violation, in accordance with Section 5.3 of this Agreement.
3.3 No Construction or Design Responsibilities. Notwithstanding Operator's review of
and recommendations, upon request by the City, in respect to any Facility's design, improvements or
renovations, the Operator will not have responsibility to the City or any other person for or authority
concerning any final plans and specifications for the Facility's design, improvements or renovations, and
will not supervise or be responsible in any manner for construction, if any, of said improvements 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.
3.4 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 good 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.
3.5 Funding Limitations,. The City recognizes and agrees that performance by Operator of
its responsibilities under Article 3 and otherwise under this Agreement is subject to the City's provision of
funds to Operator for such purposes as hereinafter provided, and is limited by the Approved Budgets.
3.6 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 present fairly the Operator's financial position as of the
date thereof, and that (ii) to the best of Operator's knowledge there has been no material adverse change in
Operator's financial position from that reflected in the Financial Statements.
3.7 Certain Excluded Services. Notwithstanding the foregoing, the City reserves the right to
have parties other than Operator negotiate contracts for naming rights related to the Facility. Operator shall,
Page 14 of 49
however, after execution of a contract for naming rights be responsible for insuring that all obligations of the
City and the other parties thereto are duly and timely performed; provided, however, in so doing Operator
shall not have to accept any liability or obligation therefor not already provided for in this Agreement.
3.8 Use of 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 Corpus 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 3.9,
below, if such use will conflict with paying events booked 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 3.9,
below, a rent or use fee which otherwise would be chargeable for 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 7 hereof.
3.9 Use of Facilityby City. Subject to availability, the City shall have the right to use the
Facility or any part thereof rent free for meetings, seminars, training classes or other noncommercial uses,
provided that the City shall promptly reimburse Operator, for deposit into the Operating Revenue Account, for
any incremental out -of- pocket expenses incurred by Operator (such as the cost of ushers, ticket - takers, set -up
and takedown personnel, security expenses and other expenses) not included in the Approved Budget in
connection with such use. Such non-commercial 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 conceits and family shows); and
(iii) be booked in advance upon reasonable notice to Operator pursuant to the
Facility's Policies and Guidelines as approved or modified by the City. Upon
request of the City, Operator shall provide to the City a list of available dates
for City's use of the Facility. To the extent that Operator has an opportunity to book
a revenue - produces event on a date which as otherwise reserved for use by the City,
Operator may propose alternative dates for the City's event, and the City shall use
commercially reasonable efforts to reschedule its event to allow Operator to book
the revenue- producing event. 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 Manager had a bona
fide opportunity to book a revenue- producing event.
ARTICLE 4
RECORDS, ACCOUNTS AND REPORTS
Page 15 of 49
4.1 Books. 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 shall 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.
4.2 Access to Information. The City shall have the unqualified right to obtain from the
Operator (and/or from 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 Term of the Agreement
4.3 Annual Audit. As soon as practicable at the close of each Fiscal Year, but not later than
90 calendar days after the end of the Fiscal Year, the Operator shall furnish to the City a balance sheet, a
Schedule of Revenues, Fxpenditures and Changes in Fund Balance, prepared in accordance with generally
accepted accounting principles and accompanied 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 Monthl Reports. Not later than thirty (30) days after the end of each month daring the
Period, the Operator shall furnish to the City a report in the same format as SMG has provided under the
Original Agreement.
4.5 Daily Event Flash and Other Reports. At City's request, from time to time, Operator
shall furnish to the City other reports, including but not limited to a daily event "flash" report.
4.6 Capital Improvements Budget. Not later than 120 days before the beginning of each
Fiscal. Year (after the first year of the Agreement), the Operator shall submit a Budget for projected Capital
Expenditures for such Fiscal Year. This Budget shall be subject to the procedures customarily
employed in connection with the development, approval, and implementation of capital budgets for the
City and shall in all cases be subject to the approval of the City.
4.7 Annual Budd Not later than 120 days prior to the beginning of each Fiscal Year after
the frst Fiscal Year, the Operator shall submit an annual Budget for such upcoming Fiscal Year, listing all
projected Operating Revenues and Operating Expenses (including Reimbursable Expenses) by
category. The Operator may at any time submit to the City for its consideration amendments to a Budget to
reflect unanticipated revenues or expenses or other changes. The Annual Budget must be consistent with
City policy. Separate Budgets shall be submitted for the Arena and the Convention Center.
4.8 Budget Ap rp oval. The City shall promptly 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
comments in accordance with the City's budget calendar. Final approval of any Budget shall,
except for amendments thereto that are not material, be completed in accordance with
Page 16 of 49
procedures applicable to the general City budget which is to be adopted by the end of each
immediately preceding Fiscal Year. In the event a proposed Budget has not been approved in a
manner which permits its incorporation into the general City budget for approval on or before 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 Reimbursable Expenses shall be deemed increased by an amount equal to the
increase in the Index (defined below) on the first day of such period over the Index in effect as
of the same day of the immediately preceding year. Each Budget shall be considered approved
only upon written approval thereof by the City. Each Budget, once approved in writing by the
City, and each capital Budget, once approved in writing by the City, shall constitute an
"Approved Budget." Operator shall operate and manage the Facilities in accordance with the
Approved Budget and in no event (other than 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 6, below. Not later than sixty (60) days after the Effective
Date of the Agreement, Operator 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 or withheld by the City
in the City's sole and absolute discretion.
The base for computing the adjustment described in the opening paragraph of this
Section is the Consumer Price Index for the Houston - Galveston - Brazoria, TX area, all Urban
Consumers (base year 1984 = 100), published by the United States Department of Labor,
Bureau of Labor Statistics ( "Index "). The Index published most 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 portion of the Budget to be adjusted as
provided for in the opening paragraph of this Section shall be set by multiplying the then
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 so 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 Operating Expenses based upon the Operator's best, good faith
judgment and may also be predicated upon the assumptions set forth therein with regard to the
matters described below in this Section. In the event that Operating Revenues and Operating
Expenses assumptions are, for any reason other than Operator's default under this Agreement,
overstated, the parties agree to promptly meet and attempt to agree upon revisions to the Budgets.
ARTICLE 5
Page 17 of 49
FUNDS AND ACCOUNTS
5.1 Operating Revenue Account. After the Effective Date the Operator shall collect all
Operating Revenues and deposit them in separate accounts (one for each of the Arena and Convention Center)
maintained in the Depository in the name of the City (each, an "Operating Fund "). The Operator shall have
authority to withdraw proceeds from the Operating Fund. Moneys 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 for 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 for the first month of the ensuing year, the Operator shall, at the request of the City, disburse such
excess to the City on or before the fifteenth (15) day of such month.
(a) Operating Account for Convention Center. To the extent that the City subsidizes the
operations of the Convention Center, and in order to provide the funding necessary to afford
Operator to perform its obligations hereunder with respect to Expenses not fimded by the
Operating Revenues deposited in the Operating Revenue Account for the Convention
Center, the City shall deposit into the Operating Revenue Account an amount equal to
111P the amount of the subsidy in the Approved Annual Budget to the Operator for 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
(b) Advancing of Funds for Convention Center. If at any time during a particular month, the
amount of monies on deposit in the Operating Fund and available for that purpose shall be
insufficient for the payment of Expenses then due or budgeted to become due during such
month, the Operator may request that the City advance the amount 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) A pplication to Emer enc Needs. 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 to the Operator to make such Emergency Expenditure or, at the City's
option, the City may elect to pay for the Emergency Expenditure directly from City
moneys. If the Emergency 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, and reimburse the Operator for such expenditure within five (5)
days of receipt of formal approval.
5.2 Security for and Investment of Funds. All funds and accounts required to be maintained
by the Operator under this 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 Corpus Christi, Texas. The Operator shall require
of the Depository that all finds held in any account maintained under this Article 5 be secured to
such an extent and in such a manner as is required by applicable law in connection with the deposit of
fluids of the City. Money on deposit in the Operating Fund may be retained un- invested and on deposit
in fully secured demand deposit accounts or may be invested in accordance with guidelines provided by
Page 18 of 49
the City from time to time
5.3 No Obligation of Operator to Advance Funds. The City is solely responsible for 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
Rinds to or for the account of the City or to pay any sums incurred for the perfornnance of services or
goods delivered to the Facilities. Nothing in this Section shall, however, limit, modify, or impair Operators
indemnification obligations hereunder or Operator's liability to the City for Operator's breach of this
Agreement.
5.4 Capital Contribution. SMG shall pay to the City, no later than December 31, 2012, the
sum of Two Hundred Fifty Thousand Dollars ($250,000.00) ( "SMG Capital Contribution "), which may
be used at the City's discretion for improvements to the Facilities, including for cosmetic improvements to
the exterior of the Facilities. If the City terminates the Agreement early, the City would owe SMG
$50,000 for each of the unrealized years of the Agreement. Without affecting the foregoing, the parties
understand and agree, however, that SMG's Capital Contribution of $250,000.00 is not a loan to the City,
and the teams of this Agreement shall not be interpreted to construe or treat the Capital Contribution as a loan to
the City to be repaid to SMG by the City. The payment of any such unamoitized amounts shall be made to
SMG no later than thirty (30) days following the effective date of such expiration or termination.
ARTICLE 6
POWER AND FUNCTIONS
6.1 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 Sale of Property Although the Operator shall have authority to sell or otherwise
dispose of all movable property that is surplus to the needs of the Facilities (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 sale of property by the City), the Operator shall
otherwise have no authority to sell or otherwise alienate any portion of the Facilities or any equipment
therein. All proceeds from the sale of property shall be deposited into the Operating Revenue Account.
6.3 No Ca it�provements. The Operator shall have no authority to make any alterations
or any capital improvements to the Facilities without the prior written consent of the City (capital
improvements reflected in an Approved Budget shall be deemed approved by the City).
6.4 Contracts. The Operator shall have no authority, without the prior written consent of the
City, to enter into any contract for the provision of goods and services to the Facilities at any time
beyond the date for the expiration of the term of this Agreement, including the City's unilateral early
termination rights under Section 10.4 hereof Operator shall have the right to enter into, execute, and
deliver contracts with users of the Facilities which extend beyond or relate to dates falling after the expiration
of the term oftbis Agreement, subject to the written approval thereof by the City. The Operator's authority with
regard to contracts with Major Users shall, however, be as set forth in Section 6.13 below. All contracts
entered into by Operator requiring the consent of the City under this Agreement shall contain an express
Page 19 of 49
provision acknowledging 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 for any reason, Operator shall assign
to the City and the City shall assume in writing, all then outstanding contracts affecting the Facilities
entered into by Operator in accordance with the authority granted Operator hereunder, provided, however, the
City shall not be obligated to assume any contracts or 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.
6.5 Rights Retained by the City. City retains the following rights which must be cited in
Operator's new Food & Beverage Contract with the Concessionaire:
(t) Final approval of menu items, portions and pricing, that is competitive in the
marketplace.
(ii) Require Operator and Concessionaire to manage Foodservices in a First Class
manner in terms of service levels as well as the quality and variety of the offerings.
(iii) Require Operator and Concessionaire to comply with all governmental rules
and regulations, including City recycling and sustainability issues, as well as City
approved MBEIWBE/DBE directives and goals.
(iv) Require Operator to ensure that all of their employees and employees of any of their
agents or subcontractors such as the Concessionaire, represent the City in a respectful
and First Class manner.
(v) 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 or inactions.
6.6 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 Facilities, on behalf of the City, acting as independent contractor. Any material
agreements relating to the Facilities 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 Facilities for which the City's approval is required hereunder (Le.,. contracts with
any Major User, and any contract described in the last sentence of this section), the City will determine
with its bond counsel if any such contract needs to be compliant with Revenue Procedure 97 -13 and
will so 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 or delayed) 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 following
expiration of the Term without any penalty.
Page 20 of 49
67 Transactions with Affiliates. Subject to this Article 6, transactions with Affiliates in
connection with its obligations hereunder relating to the purchase or procurement of services (other than
Foodservices) for the Facilities (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 competitive 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. Without limiting the foregoing but subject to the terms under this Agreement,
the parties specifically agree that Operator may engage its Affiliate(s) to provide ticketing services for the
Facilities, to provide Commercial Rights marketing services for the Facilities, on terms to be approved
by the City, such approval not to be unreasonably withheld. Prior to Operator engaging any other of its
Affiliates, Operator shall notify the City, and the City may require Operator to obtain at least two other
competitive bids from unrelated parties to ensure that such services are being provided on competitive terms.
6.8 Employees.
(i) All employees needed to operate and manage the Facilities 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,
wages, salary, benefits, and the costs of complying with local, state, and federal
employment laws) shall be part of the Reimbursable Expenses. The Operator shall
have complete and absolute discretion and authority with respect to the number,
functions, qualifications, compensation and other terms and conditions relating to its
employees.
(ii) City shall have the right (but not the obligation) of reasonable approval of the
individuals (and their successors) proposed by the Operator for the following Facilities
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 owned, managed, or operated by Operator without the
prior consent of City.
(iii) The City covenants and agrees that neither it nor its Contract Administrator shall
d uring the term hereof or for a period of 18 months following termination of this
Agreement hire, employ, solicit for hire, or engage in any manner or for any purpose of
any person who has served as General Manager or Contract Administrator during the
term of this Agreement or any other of Operator's "senior personnel." "Senior personnel
means and refer to the personnel of Operator who report directly to the General
Manager, but shall not include the chief engineer.
6.9 Purchase of Su lies and Services. The Operator shall have full authority a
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
Page 21 of 49
and the sources of supply whenever possible as part of a volume purchase by the Operator. Operator
shall, for the purchase of all equipment, materials, supplies, services, and inventories in excess of
$10,000 for any single item or more than $50,000 in the aggregate in any one purchase order, utilize
a competitive bidding process similar to that used by the City in the purchase of its supplies and
services common to the market in which Operator shall seek the same. Under such circumstances,
Operator shall, to the extent practicable and feasible, solicit three (3) competitive bids. 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 ensure compliance in this respect, Operator
agrees to obtain at least two (2) 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.
All purchases by Operator of f uniture, fixtures, and equipment and all capital improvements
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.
6.10 No Expenditures in Excess of Budget. The Operator shall not, without advance written
authorization by the City, incur in any Fiscal Year obligations for Expenses at either the Facilities
aggregating in excess of the amount of total Expenses set forth in the Approved Budget for the
Facilities, as the case may be, except for (i) Emergency Expenditures, and (ii) expenses for services
provided to the Facilities 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 with increases in revenue generation and usage.
Operator shall have the right, however, to expend savings achieved in any line item of the Approved
Budget (but not more than an amount not less than 10% and not more than 15% 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 those expenses not
within 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 own funds.
With respect to Emergency Expenditures, Operator shall have the right to make the same, up to
an amount agreed upon by the parties (but in no event less than $15,000 nor more than $50,000) per item,
without 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 Operator for an Emergency Expenditure within 24 hours from the
receipt of the request therefor, or within such lesser time as is appropriate under the circumstances.
For those expenditures in Excess of Budget that have been approved by the City, if those
amounts will cause the Operator to exceed the total Approved Budget amount for the year, then the
Operator shall present a proposed budget amendment to the City for consideration and further
Page 22 of 49
approval by City Council prior to the end of the Fiscal Year.
6.11 Major Users. Operator shall negotiate contracts with Major Users. Operator shall
submit any such contract, after negotiation thereof to the City for the City's approval or disapproval of the
same. The City agrees to respond to such request within ten (10) business days following 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 all 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.
6.12 Settlement of Claims. Operator has been advised by the City (and 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 (to the extent related to the Facilities), the City, or with respect to the
Facilities. Operator agrees to comply with such settlement claims and procedures as it has been advised
in writing by the City. All costs and expenses thereof, including the settlement thereof, penalties, and
interest thereon, shall be deemed an Operating Expense in accordance with the terms and provisions of
this Agreement unless the cause therefor is Operator's (or its employees) negligence or willful
misconduct or is the result of Operator's breach of this Agreement, in which event Operator shall
bear all such costs, penalties and settlement.
6.13 Bond Financing. Operator acknowledges that the Facilities is to be financed in large
part with the proceeds of one or more series of City bonds ( "Bonds ") the interest on which is intended
to be excluded from gross income for federal income tax purposes. In order to assist the City in
preserving the tax - exempt nature of the Bonds (the City hereby agreeing that Operator shall have no
responsibility to the City or any other party if the tax treatment of the Bonds should be different than
that intended by the City), Operator acknowledges and agrees as follows:
(a) In determining whether to grant or withhold any approval of a contract for which approval
of the City is required under this Agreement, the City may consider the effect of such contract
for federal tax purposes on the exclusion of interest on the Bonds for federal income tax
purposes.
(b) Each of the following described contracts must be approved by bond counsel to the City before
execution thereof by Operator.
(i) Any contract relating to the Facilities which grants a leasehold interest, term for
years, or other real estate interest in the Facilities (other than a revocable license),
or grants a long term right to use the Facilities on a basis different from that of
the general public.
(ii) Any contract for the provision of services related to the Facilities must, to the extent
applicable, comply with the provisions of Revenue Procedure 97 -13 and the
interpretations thereof.
(iii) Any contract for the use of the Facilities for shows, progr conventions and other
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events unless such contracts provide for use on a fixed fee basis (excluding the
sale of merchandise or concessions in respect thereto which may be on a
percentage of merchandise or concession revenues), determined on an event by
event basis and where the right of the user to the Facilities are those of a transient
occupant rather than full legal possessory interest in the Facilities 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 City or counsel to the underwriters, Operator agrees to make
modifications to this Agreement so that the same is, in the opinion of such counsel, a qualified
management contract for purposes of Revenue Procedure 97 -13 promulgated by the Internal
Revenue Service. In the event such modifications 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 (90) days prior written notice to the City which
notice must be provided to the City within ten (10) business days after Operator is requested by the
City in writing to enter into an amendment or modification hereof pursuant to this paragraph. If
Operator timely exercises its right of termination under this paragraph, Operator shall continue to
perform its obligations hereunder through the date of termination and the City shall continue to
pay Operator therefor in accordance with this Agreement; upon termination, neither party shall
have any obligations accruing thereafter hereunder.
ARTICLE 6B
FOOD AND BEVERAGE SERVICES
613.1 Foodservices Operation and Management. Operator shall operate themselves or shall
contract with Concessionaires (which may include affiliates of Operator) other than Operator to
operate and provide the Foodservices and oversee the provision of those services by such
Concessionaires, if any. Any agreement with a Concessionaire other than Operator must comply with
the provisions of Revenue Procedure 97 -13 and the interpretations thereof.
6B.2 Operator, upon request, shall provide the City a copy of all agreements, if any,
entered into between Operator and Concessionaires other than Operator, and each of these
agreements shall provide that in the event the City terminates this Agreement with Operator, the
agreements between Operator and Concessionaires other than Operator are likewise terminated or,
at the City's request, assigned to a party designated by the City. The City may contact the
Concessionaires other than Operator directly with respect to matters associated with the services
subject to the agreement between Operator and said Concessionaire.
6B.3 Alcoholic Beverages.
a. The sale of alcoholic beverages will be permitted and conducted in accordance
with regulations established by the City and the Texas Alcoholic Beverage Code ( "Code ") and the
Texas Alcoholic Beverage Commission's regulations under the Code, as such regulations may be
amended from time to time.
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b. Operator and/or its designated Concessionaire shall work expeditiously to apply
for, obtain and maintain all appropriate licenses and permits under the TABC Regulations and
any other applicable law in order to store, sell and serve alcoholic beverages at event at the
Facilities. The costs of obtaining and maintaining such licenses and permits shall be an
Operating Expense.
C. Alcoholic beverages may not be served at any Event;
(i) If the Licensee desires that no alcoholic beverages be served at the Event;
or
(ii) If the General Manager determines that it is not appropriate for alcoholic
beverages to be served at a particular Event; or
(iii) if any service of alcoholic beverages at the Event would result in violation
of any law or regulation.
d. All employees of Operator or a Concessionaire other than Operator who are
involved in the serving of alcoholic beverages must be certified through a TAM or ABC -
approved program.
613.4 Catering Operator is hereby granted the Exclusive Right to provide Catering
services at the Facilities; however, Catering services provided for Events held at the Convention
Center may be provided by any Outside Caterer approved by Operator, provided that the
Licensee has requested the Outside Caterer's services and that the Outside Caterer enters into an
Outside Catering Agreement. Operator agrees to facilitate the use of the Convention Center with
any Outside Caterer and to require Outside Caterer to provide proof of any and all licenses,
permits and insurance required for Outside Catering services.
a. Catering by Outside Caterers at the Convention Center shall be on a single event
basis, and Outside Caterers servicing multiple Events will enter into an Outside Catering
Agreement for each Event. Outside Caterers will be allowed to use the old catering kitchen
located in the Convention Center, so long as it is available for use, and their use of any
equipment belonging to the City is to be addressed in the Outside Catering Agreement.
b. Operator will facilitate the use of Outside Caterers at the Convention Center,
which may include, but is not limited to the following:
(i) the preparation of a standard Outside Catering Agreement to be used by
Operator;
(ii) obtaining of certificate(s) of insurance from Outside Caterers;
(iii) arranging for use of City -owned equipment if desired by an Outside
Caterer and addressed in the Outside Catering Agreement;
(iv) inspecting the old catering kitchen before and after an Event when it is
used by an Outside Caterer; and
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(v) collecting and accounting for equipment rental and catering fees, which
will be turned over to Operator after each Event.
C. With regard to Catered Events at the Facilities, Operator will be the "default"
caterer.
613.5 Duties of Operator
d. Operator shall conduct the Foodservices so that all persons at the Facilities shall
have a reasonable opportunity to purchase the Food Products sold at all Events held at the
Facilities. It is understood and agreed by the Parties that it is not always feasible to operate all of
the Concession facilities for each and every Event held at the Facilities, and Operator shall have
the right not to operate one or more of the Concession facilities at any Event held at the
Facilities, as Operator reasonably determines to be appropriate for the efficient and cost - effective
performance of Foodservices hereunder.
e. Operator shall use its reasonable best efforts to operate the Concessions services
so that all customers at the Facilities shall be promptly and satisfactorily served the Food
Products sold by way of Concessions. All Food Products sold by Operator in providing the
Foodservices shall be of the highest standard of quality and purity, and shall be appropriately
prepared and appropriately served. All Food Products and Foodservices shall conform to all
requirements of applicable federal, state, county, and municipal laws and ordinances.
f. Unless otherwise agreed between the parties, Operator, as an Operating Expense,
shall procure and maintain during the Term of this Agreement all appropriate licenses and
permits which may be required for the operation of the Foodservices; provided, however, that the
City shall provide Operator with the assistance as it shall reasonably request in connection with
any application by Operator for any license or permit, or the renewal thereof.
g. Operator shall not take, and shall use its reasonable best efforts not to permit any
other person, firm or entity to take any action that is inconsistent with, or would constitute a
violation of, any of the terms and conditions of Operator's on -site liquor license for the
Facilities, or any other license or permit obtained by Operator in connection with the operation of
the Concessions hereunder.
h. Operator shall pay and discharge when due all sales, use, excise and other taxes
imposed on Operator's sales of all Food Products and Foodservices at the Facilities.
i. Operator, as an Operating Expense, shall hire all employees reasonably necessary
to conduct the Foodservices. On being hired, the employees shall be subject to any and all legal
requirements in connection with the employment by Operator. All persons hired by Operator
shall be employees of Operator and not employees of the City. Operator shall comply with all
applicable federal, state, county, and municipal laws and ordinances pertaining to wages and
hours of employment for all its employees at the Facilities. Operator shall not discriminate
against any employee or applicant for employment because of race, creed, sex, color, national
origin, age, or disability in violation of any applicable federal, state, county, or municipal law or
ordinance; provided, however, that the City hereby acknowledges and agrees that a successful
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claim by any employee or applicant under any law or ordinance specified in this Article shall not
be considered a breach or default by Operator under this Agreement.
j. Operator, as an Operating Expense, shall at all times maintain the Foodservice
Premises in a neat, clean, and sanitary condition. Employees of Operator shall deposit trash and
garbage resulting from the Foodservices into suitable containers provided by Operator for waste
removal. Operator shall make all arrangements for the collection of waste products from the
Facilities.
k. Operator, as an Operating Expense, shall be responsible for repairing and
maintaining all Foodservice equipment, including cleaning supplies, used in the operation of the
Foodservices as well as interior areas the Foodservice Premises. Operator, as an Operating
Expense, shall provide all uniforms for its employees.
1. Operator, as an Operating Expense, shall provide sufficient managerial and
customer service personnel to provide first class Foodservices at the Facilities.
m. Operator shall keep all records relating to the Foodservices on file for a period of
three (3) years following the end of the Fiscal Year to which they apply, including the last Fiscal
Year of the Term. Operator shall maintain suitable books of account, showing Gross Receipts,
Operating Expenses, with respect to Foodservices at the Facilities, and the books shall be
available for inspection by the City during regular business hours, upon reasonable advance
notice to Operator. The City shall make reasonable efforts to ensure that the inspection shall not
interfere with Operator's operation of the Food Services.
n. Operator agrees that its employees and agents will comply with and observe all
rules concerning conduct of its employees at the Facilities which the City may from time to time
impose on SMG's employees and agents at the Facilities, subject to restrictions imposed on
Operator by any federal, state or local statute, law, code or regulation, or by any collective
bargaining agreement or other contract affecting the employee or agent.
o. At all times during the Term of this Agreement, Operator shall maintain its
practices of employment and services to the patrons of the Facilities in full compliance with all
applicable federal, state and local laws, regulations and governmental orders.
P. Subject to the limitations on Operator's authority under this Agreement, and
subject to the limits ; of any Approved Budget, Operator shall exercise its diligent, good faith
efforts in managing and operating the Foodservices at the Facilities so as to minimize Operating
Expenses and to maximize Gross Receipts, while maintaining a level of service that is
satisfactory to the City.
q. As an Operating Expenses, Operator will advertise, promote activities, market,
and conduct public relations for the Foodservices. Operator covenants and agrees, subject to the
reasonable consent of the City, to develop all intellectual property rights required for the
advertisement, promotional activities, marketing, and public relations for the Foodservices, the
cost of all of which shall be an Operating Cost.
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r. Subject to the limitations set forth in this Agreement, Operator shall do the
following (or cause the following to be performed) throughout the Term:
(i) Manage and operate the Foodservices at the Facilities in a manner that will
promote and further the purposes for which the Facilities exists, as set forth in the
Recitals to this Agreement;
(ii) Negotiate, execute, and perform contracts, use agreements, licenses and
other agreements for food and beverage services with persons who desire to schedule
Events at the Facilities ( "Licensees ");
(iii) Negotiate contracts for and operate at and for the Facilities, concerning the
sale of Food Products and Novelties, as allowed under this Agreement;
(iv) Plan, coordinate, and administer the Foodservice operation at the Facilities
and continue to identify, select, and train the Foodservice staff;
(v) Retain legal counsel in connection with the discharge of its duties
hereunder (to the extent, and no further, Operator considers it appropriate in its sole
discretion) and cause the counsel to coordinate with legal counsel for the City where
necessary or appropriate. Operator acknowledges that the legal department or outside
legal counsel of the City shall at all times represent the respective interests of SMG and
the City;
(vi) Coordinate the work of all parties performing work in connection with the
Foodservices. This includes facilitating services provided by Outside Caterers and
collecting the Catering fees from Outside Caterers.
(vii) Monitor actual and projected Operating Expenses and advise the City if
projected Operating Expenses exceed the amounts set forth in the Approved Budgets;
(viii) Furnish all Foodservices, personnel, materials, tools, machinery,
equipment and other items necessary to accomplish the foregoing requirements of this
Agreement;
(ix) Devise and implement procedures (including preventive and predictive
maintenance procedures) reasonably designed to keep the Foodservice equipment at the
Facilities in reasonably good order and condition, subject to ordinary wear and tear, and
maintain the Foodservice Premises at the Facilities in the same order and condition; and
(x) Not create, assume or suffer to exist any mortgage, pledge, lien, charge or
security interest or other encumbrance of any nature whatsoever relating to this
Agreement, or its right and obligations under this Agreement, except any pledge or other
encumbrance of the Management Fees due Operator under this Agreement; and
(xi) Promptly and fully discharge and pay all of its obligations under this
Agreement at or before the time specified for performance or payment thereof, including
without limitation, the payment of all Operating Expenses. Operator shall have the right
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to contest its obligations to make payments to third parties so long as (a) Operator does so
in good faith, diligently and by appropriate proceedings, and (b) the contest does not
subject the City to any potential civil or criminal liability or constitute a breach of any
law, rule, code, or regulation applicable to the City.
6B.6 Compliance with the Law Operator shall comply with all applicable laws, rules,
regulations, ordinances relating to the use and operation of the Foodservices and the employment
of persons in providing the services. Operator shall perform its obligations hereunder in good
faith. If compliance with applicable laws, rules, regulations, or ordinances with regard to the
condition of the Facilities requires funds not provided for in an Approved Budget and SMG
refuses to consent to amendment of the Approved Budget providing for expenditure of funds
necessary to cause the Facilities to comply with the applicable laws, rules, regulations, or
ordinances, then Operator may terminate this Agreement on ninety (90) days' prior written
notice to SMG (which notice shall describe with specificity the applicable laws, rules,
regulations, or ordinances violated and the actions needed to remedy the violations) if (a) the
failure to comply with the applicable laws, rules, regulations, or ordinances subjects Operator to
potential civil or criminal liability, and (b) SMG fails, within the ninety (90) day period, to
provide the fluids necessary to correct the violation.
6B.7 Funding Limitations The City recognizes and agrees that performance by
Operator of its responsibilities under this Agreement is limited by the Approved Budgets and
approved Emergency Expenditures.
ARTICLE 7
FEES AND EXPENSES
7.1 Facilities Base Management Fee. As base compensation to Operator for providing the
services herein specified during the Term with regard to the Facilities, the City shall pay Operator
during the Term, an annual fixed fee of One Hundred Twenty Five Thousand ($125,000) which amount
shall be adjusted upward on the first day of each Fiscal Year, other than the Fiscal Year ending July 31,
2013, during the term hereof by the percentage change in the Consumer Price Index — All Urban
Consumers (CPI -U) for the Houston - Galveston - Brazoria, TX 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.
Department of Labor, or of any revised or successor index hereafter published by the Bureau of Labor
Statistics or other City of the United States Government succeeding to its functions (as adjusted, the "Fixed
Fee ")_ In consideration of its services with regard to the Facilities, the Operator will be paid a monthly
management fee which shall be deemed earned as of the first day of each month of the tern following the
Effective Date but which shall be due and payable in arrears following receipt by the City of Operator's
monthly report reflecting results from operations at the Facilities for the prior month, such payment to be
made within the time periods prescribed by the Prompt Payment Act, The amount of monthly
management fee is fixed and shall be 1/12' of the Fixed Fee.
7.2 Facilities 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 in any such Fiscal
Year (i) the Net Operating Income is an improvement over the Net Operating Income/Loss Benchmark, and
(ii) the food and beverage operating profit margin is 34.5% or greater; and (iii) Operator meets mutually
agreed upon Customer Satisfaction Goals (defined herein.); and (iv) Operator meets mutually agreed upon
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Maintenance and Capital Goals (defined herein) The Net Operating hlcomelLoss Benchmark is equal to
the average of the actual combined Net Operating Income for the rolling three (3) year period immediately
preceding the current contract year. The Incentive Fee shall be equal to 18.8% of the amount by
which the Operating Revenues for such Fiscal Year exceed the Revenue Benchmark (which is
the projected revenue in the Approved Budget for the Facilities); and in no event shall the
annual Incentive Fee for any Fiscal Year under this Section 7.2(a) exceed 100% of the Base
Management Fee payable pursuant to Section 7.1(a) for such Fiscal Year. In the event that the
Net Operating Income in a Fiscal Year does not surpass the Net Operating Income /Loss
Benchmark, Operator shall not be entitled to receive the Incentive Fee described in this Section
7.2(a). Additionally, but solely for purposes of calculating such Incentive Fee, Operating
Revenues shall not include the revenues related to the sale of naming rights for the Facilities.
The Incentive Fee shall be paid to Operator no later than thirty (30) days following the
completion of the annual audit by the City.
ARTICLE 8
INSURANCE
8.1 Insurance to be Maintained by -the City, The City shall provide property
insurance for the Facilities and for City - owned contents.
8.2 Insurance to be Maintained by Operator. The Operator shall obtain and maintain
(or cause to be obtained and maintained) in effect the following policies of insurance, the cost of
which shall be a Reimbursable Expense:
(a) Workers' Compensation. Such workers' compensation insurance
coverage as may be required by law, including employer's liability
coverage of at least $500,000 per person per occurrence and $500,000 per
person per disease, and $500,000 aggregate disease;
(b) Commercial General Liability. Commercial general liability and property
damage insurance with a combined single limit of at least $5,000,000 per
occurrence and $5,000,000 aggregate insuring against all liability of the
Operator and its General Managers and /or Contract Administrators
arising out of and in connection with the Operator's use or occupancy of
the Facilities, and premises liability;
(c) Liquor Liability. Contingent Liquor liability insurance with a combined
single limit of $1,000,000 and $5,000,000 in the aggregate;
(d) Business Automobile Policy. At least $1,000,000 of coverage, including bodily
injury and property damage, arising out of the operations, maintenance or use of
owned and non -owned automobiles, hired, or other vehicles;
(e) Excess Liability Inst=ce. At least $9,000,000 of excess liability on a per
occurrence basis and $9,000,000 aggregate basis;
Page 30 of 49
(f) Crime and Fidelity Coverage. At least $500,000 per occurrence of coverage for
(i) employee dishonesty forgery or alteration, (iii) theft, disappearance and
destruction inside and outside the Facilities; and (iv) robbery and safe burglary
inside and outside the Facilities;
(g) Operator and any subcontractors are responsible for all damage to their own
equipment or property.
8.3 Insurance Requirements. All insurance required under this Agreement shall be issued
by insuran 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 Reports, shall be issued as a primary
policy, shall contain an endorsement requiring sixty (30) days written notice from the insurance companies
to the City and the Operator before cancellation, non - renewal, termination, or change in the coverage, scope
or amount of any policy, and shall, in the case of the Commercial General Liability Insurance, name the
City as an additional insured.
8.4 American Bank, N.A. Operator must name American Bank, N.A. (as naming rights
sponsor) as an additional insured on all insurance required hereunder, excluding any worker's compensation
insurance coverage or crime and fidelity coverage.
8.5 Waiver of Subrogation. The parties release each other from any claims for damage
caused by or resulting from risks insured against under any insurance policies carried by the parties under
this Agreement. The parties agree to cause the issuers of the insuran policies maintained by them
hereunder to include waivers of the rights of recovery and subrogation.
8.6 Proceeds of Casualty Insurance. If either the Facilities or any part 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 (120) days following the date of such damage or
destruction. All proceeds of any casualty insuran paid for by the City shall be the exclusive property of
the City and Operator shall have no rights to receive any sums therefrom. If the City elects not to repair or
restore, the City shall have the right to terminate this Agreement with respect to the Facilities (whichever has
been damaged), without penalty, premium or fee, by notice to Operator. If the City elects not to restore
the Facilities (whichever has been damaged) but within one (1) year following termination of this
Agreement decides to restore the same, the City shall give written notice thereof to Operator whereupon
Operator shall have a period of thirty (30) days in which to elect to enter into, and actually enter into, a new
contract with the City for operation of the same following its restoration which contract shall be on the same
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. It on the other hand, the City elects to repair and restore, payments
of the base management fee attributable to the Facilities, as the case may be, shall be equitably reduced
(taking into account the volume of services provided by Operator during reconstruction) until the
Facilities, as the case may be, is reopened to the public; however, the City shall continue to reimburse Operator
for Reimbursable Expenses until the Facilities (whichever has been damaged) is re- opened to the public.
8.7 INDEMNIFICATION AND HOLD HARMLESS. Operator, its officers,
agents, and employees ( "Indemnitor ") shall indemnify and hold the City of Corpus Christi,
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its officers, agents, employees and representatives ( "Indemnitees "), harmless and defend
with counsel retained by Operator, from and against any third party action, cause of
action, suit, debt, cost, directly - related reasonable expense (including reasonable
attorneys' fees, court costs or investigation costs), claim, or demand brought or asserted by
any third party whomsoever (collectively, "Claims"), including but not limited to claims
on account of personal injuries or death or damage to property, at law or in equity, which
any Indemnitees may suffer or sustain or which may be asserted or instituted against any
of Indemnitees resulting from or in connection with (I) the negligence or willful
misconduct of Operator or its agents, contractors or employees; (ii) any breach or default by
Operator of any of its warranties, representations, covenants, or obligations made in this
Agreement; or (iii) the violation of any copyright, patent, service mark, trade name or
trademark by the Operator; provided, however, that the foregoing indemn�flcation shall not
extend to Claims to the extent such Claims (A) arise from any breach or default by the City
of any of its warranties, representations, covenants or obligations made in this Agreement, as
determined by a court of competent jurisdiction, (B) are caused by or arise out of the services
provided by the architects, engineers and other agents (other than Operator) retained by the
City in connection with capital improvements or capital equipment purchases at the
Facilities, (C) arise from the fact that at any time prior to, as of, or after the commencement
of the term hereof the Facilities and its premises are not or have not been, in compliance
with all federal, state, local and municipal regulations, ordinances, statutes, rules, laws and
constitutional provisions including, but not limited to, all handicap accessibility laws, rules
and regulations, (D) arise from any obligation or liability under or in respect of any
contract, agreement or other instrument executed by Operator as authorized herein unless
Operator's acts or omissions in administration thereof are the basis for such liability, as
determined by a court of competent jurisdiction, or (E) arise from any act or omission
carried out by Operator at or pursuant to the express direction or instruction of the City's
Contract Administrator (but only if Operator advises the City's Contract Administrator in
writing, promptly following such direction, that Operator believes such direction to be
imprudent). City agrees to promptly notify Operator of any Claim received by the City. This
indemnity specifically includes any Claims brought by Operator's officers, agents, contractors,
or direct employees. This indemnity specifically includes any Claims brought relating to the
sale or service of alcoholic beverages This indemnity shall continue notwithstanding the
termination of this Agreement with respect to any act or occurrence preceding the
termination.
ARTICLE 9
EQUAL EMPLOYMENT OPPORTUNITY
9.1 Discrimination Prohibited. Neither the Operator, nor any Affiliate of the Operator
performing services under this Agreement, shall knowingly discriminate against any employee or applicant
for employment because of age, race, creed, sex, color, disability, or national origin, and the Operator and its
Affiliates shall take affinnative action to ensure that any employee or applicant for employment is afforded
equal employment opportunities without discrimination because of age, race, creed, sex, color or national
origin. Such action shall be taken with reference, but not be limited to, recruitment, employment, job
assignment, promotion, upgrading, demotion, transfer, layoff or teraiination, rates of pay or other forms of
compensation in selection for training or rubmiing, including apprenticeship and on the job training. Subject to
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compliance with such obligations, the Operator shall have plenary power with respect to the hiring and
discharge of its employees.
9.2 MWDBE. The Operator and its subcontractors shall comply with applicable City
minority, women and disadvantaged business enterprise policies in performing 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 (25 %) minority participation in Operator's employment
practices and in respect to contractual relations for the provision of goods and services for the Facilities
designated by the City.
ARTICLE 10
CERTAIN MATTERS REGARDING TERMINATION
10.1 Surrender of Improvements. Upon expiration or sooner termination of this Agreement,
Operator shall promptly surrender the Facilities to the City, leaving to the City all equipment, supplies,
manuals, books, records, and, inventories that are the property of the City or that have been purchased from
Operating Revenues or from funds made available by the City, and Operator hereby quitclaims, transfers,
sells, assigns, and conveys to the City, without recourse, representation, or warranty, all right, title, and interest
that Operator may have to all improvements made to the Facilities and all equipment, materials, supplies,
inventories and all other. property 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.
10.2 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 for a reasonable time
as determined by the parties to enable the City to make arrangements for a successor as operator of the
Facilities; provided, however, that Operator shall not be required to perform for a period of time during which
the Operator's actual Expenses and the management fees payable under this Agreement are not promptly
and timely funded and paid by the City and in no event for more than six (6) months following such
termination.
10.3 Termination by the Ci . for Lack of Funding, Should the City elect to terminate
funding for the operation and maintenance of the Facilities, the City shall have the right to terminate this
Agreement with regard to the Facilities, upon written notice to Operator, such termination to be effective on
the ninetieth (90th) day after such election to terminate. In such event, the City shall pay to Operator all fees
and other sums due to Operator hereunder through and including the date of termination with respect to the
Facilities; otherwise, such termination by the 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 Center the City's annual budget or other budget process results in a 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 Facilities by written notice to the
City given within sixty (60) days following Operator's receipt of notice of the reduction in funding.
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Should funding be restored by the City for operation and maintenance of the Facilities, after this
Agreement has been terminated due to termination or reduction in fi )dmg, the City shall provide written
notice thereof to Operator whereupon Operator shall have the first right to enter into a new contract on the
same terms and conditions set forth herein. In the event Operator elects to exercise such right and option,
Opmtor and the City shall promptly thereafter execute and enter into an amendment to this Agreement as to
the Facilities, reinstating the same to its original terms and conditions_
10.4 Termination at Will. The City may, effective the last day of the third year and
anytime thereafter, terminate this Agreement with or without cause upon providing ninety (90) 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 tennuiation, 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.
10.5 Termination by the City The parties have agreed that a material condition to
SMG's engagement under this agreement is the improved financial performance of the American
Bank Center. As such, SMG's incentive compensation is based on SMG surpassing the Net
Income/Loss Benchmark for each contract year. In addition, notwithstanding anything to the
contrary contained in this Agreement, if SMG's performance under this Agreement results in the
increase of Actual Operating Expenses over the Budgeted Operating Expenses (i) in any
Contract Year, then within fifteen (15) days of SMG's submission of the Annual Report, SMG
shall provide to the City an explanation of the reasons for such failure and a plan to address such
failure for the next Contract Year (but in no event shall such explanation and plan be delivered
later than seventy -five (75) days following the end of such Contract Year); and (ii) in any two (2)
consecutive years, then the City shall have the right to terminate this Agreement upon ninety (90)
days written notice to SMG. However, if Actual Operating Expenses have increased over the
approved budgeted expenses and there are corresponding revenues to offset such increase then it
will not trigger this provision.
ARTICLE 11
BREACH
11.1 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 (10) clays 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 (30) days after notice has been given to the breaching party;
(ii) Failure to perform any other obligation under this Agreement (including Operator's
failure to meet the standards of performance hereunder), if the failure to perform
is not 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
Page 34 of 49
continues to pursue the cure of the breach and actually cures the same within
sixty (60) days following such notice.
Interest on Delinquent Payments. Interest shall accrue on any sums not paid
when due in accordance with the Prompt Payment Act.
(iv) Non - Curable Material Breach byOperator. Each of the following shall
constitute a non - 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
(vi) The Operator shall (A) admit in writing its inability to pay its debts as they become
due or (B) file a petition in bankruptcy or for the reorganization or for the
adoption of an arrangement under the Bankruptcy Code as now or in the
future amended, or file a pleading asking for such relief, or have or suffer to
be filed an involuntary petition in bankruptcy against it which is not contested and
discharged within sixty (60) days, or (C) make an assignment for the benefit of
creditors, or (D) consent to an appointment of a trustee or receiver for all or a
major portion 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 court order, any federal or
state law appointing a receiver or trustee for all or a major part of its property or
ordering the winding up or liquidation of its affairs, or approving a petition filed
against it under the Bankruptcy Code, as now or in the future amended., which
order, if not consented to by it shall not be vacated, denied, set aside or stayed
within sixty (60) days after the date of its entry, or (G) suffer the entry of a final
judgment for the payment of money and the same shall not be discharged or a
provision made for its discharge within thirty (30) days from the date of entry
thereof or an appeal or other appropriate proceeding for review thereof shall not
be taken within said period and a stay of execution pending such appeal shall not
be obtained, or (I) suffer a writ or warrant of attachment or any similar process to be
issued by any court against all or any substantial portion of its property and such
writ or warrant of attachment or similar process is not stayed or is not released
within forty -five (45) days after its entry or levy or after any stay is vacated or set
aside, or (1) suffer the placing of a judgment lien on its property and failure to
cause such lien to be released and discharged within forty-five (45) days from
the date such lien took effect; or
(vii) Operator shall conceal, remove or permit to be concealed or removed, any part
of its property with the intent to hinder, delay or defraud its creditors or shall
make any transfer of any of its property to, or for the benefit of a creditor at a time
when other creditors similarly situated have not been paid, or suffer or permit
while insolvent any creditor to obtain alien. upon its property through legal
proceedings, which lien is not vacated within thirty (30) days from the date thereof,
or
Page 35 of 49
( viii) Operator breaches the provisions of Section 6.10 (ii) above or the provisions of
Article 14 below.
11.2 Breach Notices. Each parry shall promptly notify the other of any acts or omissions
believed to be a breach by the other under this Agreement. In order to be effective for purposes of Section
11.1 or 11.2, 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 acts or omissions alleged to constitute a breach of this Agreement.
11.3 Rights of Non - Breaching Party. If a breach occurs and is not waived in writing by the
non breaching party, then 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:
(i) The right to cure, at the breaching party's cost and expense, any breach; l
(ii) The right to sue to collect any stuns not paid when due, together with interest accrued
thereon as provided in Section 11.2;
(iii) The right to sue to collect damages suffered by the non breaching parry 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 12
MISCELLANEOUS
12.1 Notices_ Unless expressly otherwise provided elsewhere in this Agreement, any election,
notice or other communication required or permitted to be given under this 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 DBL Worldwide Express) for expedited delivery, to be
confirmed in writing by such courier, or when telecopied, telegraphed or telexed to a parry, 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. Ronald L. Olson
City Manager
City of Corpus Christi
1201 Leopard
P.O. Box 9277
Corpus Christi, Texas 78469 -9277
Phone: 361 -880 -3220
Fax: 361 -880 -3839
Page 36 of 49
With copy to:
Mr. Armando Chapa
City Secretary
City of Corpus Christi
1201 Leopard
P.Q. Box 9277
Corpus Christi, Texas 78469 -9277
Telephone. 361-880-3105
Fax: 361 - 880 -3113
Mr. Carlos Valdez
City Attorney
1201 Leopard
P.O. Box 9277
Corpus Christi, Texas 78469 -9277
Telephone: 361-880-3361
Fax: 361 -880 -3239
If to Operator:
Mr. Wes Westley
SMG
300 Four Falls Corporate Center
300 Conshohocken State Road
West Conshohocken, Pennsylvania 19428
Telephone: 610- 729 -7900
Fax: 610 -729 -1590
With copy to:
Mr. Steven A. Scolari, Esq.
Stradley, Ronon, Stevens & Young, LLP
30 Valley Stream Parkway
Malvern, PA 19355 -1481
Telephone: 610- 640 -8005
Fax. 610.640 -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. or any day which is not a
business day, be deemed received on the next following business day. Notwithstanding the
foregoing, for 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.
12.2 Amendments. This Agreement may be amended only in a written instrument
signed by both parties.
12.3 Tile and Ca tiu ons. All articles or section titles or captions in this Agreement are
for convenience of reference only. They should not be deemed to be part of this Agreement or to
Page 37 of 49
in any way define, limit, extend, or describe the scope or 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.
12.4 Pronouns and Plurals. Whenever the context may require, any pronoun used in
this Agreement shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice versa.
12.5 Right of Ingress and Egress. Operator acknowledges that the City shall have the
right to enter the Facilities and grant to others the right of ingress and egress to and from the
Facilities for the purpose of inspection thereof or the conduct of capital improvements and for
other purposes. The City agrees to coordinate such entry with Operator so as to minimize
interference with scheduled activities at the Facilities.
12.6 Intellectual Property Rights.
0) Pursuant to the terms of this Agreement, the Operator has agreed to advertise, promote
activities, market and conduct public relations for the Facilities. Operator covenants and agrees,
subject to the reasonable consent of the City, to develop all intellectual property rights required for
the advertisement, promotional activities, marketing and public relations for the Facilities, 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 Facilities, shall be the sole and exclusive property of the City, subject to
paragraph (u) below. Operator hereby conveys to the City, 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 law, copyrights, rights of copyright renewal, trademarks and
trademark rights, and Operator agrees to execute any documentation reasonably required by the City
to evidence such transfer.
(H) The City hereby grants to Operator a license during the term of this Agreement to use and to
grant to others the right to use the intellectual property rights in connection with the advertising, promotional
activities, marketing and public relations for the Facilities.
12.7 Severability. Each provision of this Agreement shall be considered to be severable
and, if, for any reason, any such provision or any part thereof, is determined to be invalid and contrary to
any existing or future applicable law, such invalidity shall not impair the operation of or affect those portions of
this Agw=ent that are valid, but this Agreement shall be construed and enforced in all respects as if the
invalid or unenforceable provision or part thereof had been omitted.
12.8 Successors. This Agreement shall be binding upon and insure to the benefit of the
patties and their respective heirs, executors, successors, and assigns but this provision shall not be
deemed to pennit any assignment by a party of any of its rights or obligations under this Agreement except
as expressly provided herein.
12.9 Assignment. Operator shall not voluntarily assign or encumber its interest in this
Agreement without first obtaining the City's consent. Any assignment or encumbrance without the City's
consent shall be voidable and, at the City's election within thirty (30) days of actual knowledge of an
Page 38 of 49
assignment or encumbrance, shall constitute a breach which shall be a breach unless the assignment or
encumbrance is rescinded within thirty (30) days after the City has given the Operator notice of the City's
election to treat the assignment or encumbrance as a breach. The Operator shall, however, have the right
without the City'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 in form reasonably acceptable to the City assuming the
Operator's obligations hereunder, whether arising prior to or after the date of such assignment; or (ii) to any
entity with which the Operator has merged or consolidated or to a purchaser of all or substantially all
of the Operator's assets, if the assignee executes an in form reasonably acceptable to the City assuming
the Operator's obligations hereunder, whether arising prior to or after the 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.
1210 Further Action. Each party, within ten (10) 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 force and effect as modified, and stating the modifications, and the other party is 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.
12.11 Gratuities. It shall be a breach of Operator's obligations hereunder to offer, give, or agree
to give any employee or former employee of the City a gratuity or offer of employment in connection
with any decision, approval, disapproval, recommendation, preparation of any part of any purchase
request, influence in the consent of any specification or procurement standard, rendering of advice,
investigation, auditing, or in any other advisory capacity in any proceeding or application, request for
ruling, determination, claim or controversy or other particular matter, p ertaining to or solicitation of any
contract or proposal therefor by Operator from the City.
12.12 No Solicitations. Operator shall not accept any solicitations, requests for services,
contributions, gifts, favors, tickets, gratuities or other benefits from any parry or any person on behalf of the
City who seeks to do or is doing business with the Facilities.
12.13 Entire Agreement; Attorneys' Fees. This Agreement, including the attached exhibits,
contains the entire agreement of the parties and supersedes all prior and contemporaneous agreements
and understandings, oral or otherwise, among the parties with respect to the matters contained in this
Agreement and may not be modified or amended except as set 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 attomeys' fees and costs incurred by such party in preparing for and
participating in such litigation.
12.14 Counterparts. This Agreement may be executed in one or more counterparts and each of
such counterparts, for all purposes, shall be deemed to be an original, but all of such counterparts together
shall constitute but one and the same instrument, binding upon the parties, notwithstanding that ali of the
parties may not have executed the same counterpart.
12.15 Applicable Law. 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.
Page 39 of 49
12.16 Limitation of Liability. Notwithstanding any contrary provision hereof, the City agrees
that no partner, co- venturer, employer, agent, director, officer, shareholder, or Affiliate of the Operator shall
be personally liable to the City or anyone claiming by, through or under the City, by reason of any default
by the Operator under this Agreement, any obligation of Operator to the City, or for any amount that may
become due to the City by the Operator under the terms of this Agreement or otherwise.
12.17 No Representation as to Operations Results. The City recognizes that Operating
Revenues for the Facilities 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 from the ownership and operation of the Facilities
including, without limitation, the Operating Revenues, or Operating Expenses or 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 no way responsible
or liable if the actual expenditures and revenues are more or less than that projected (unless such situation
is the results of a breach of this Agreement by Operator).
12.18 Force Ma
jeure. Neither party shall be in default hereunder or liable to the other for
failure to perform where such default or failure is the result of acts of God, war, or any other
similar cause outside of the reasonable control of the party who asserts that default or failure to
perform is excused under this Section; provided, that in no event shall the provisions of this
Section extend to any default or failure to perform due to labor shortages or strikes or
economic hardship. In the event of a delay in performance excused by the operation of this
Section, such delay shall only be for the period which the party claiming the delay was actually
delayed in the performance of its obligation by the event outside of its reasonable control.
ARTICLE 13
CONSULTING SERVICES
13.1 General Consulting services. The City owns, in addition to the proposed
Facilities, certain other public facilities. The Operator, for 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 14
NON - COMPETITION
During the term hereof, Operator agrees that it shall not, directly or indirectly, own,
manage or provide consulting or other management, consulting, marketing or promotions
services, whether as a principal, partner, joint venturer, officer, director, member, employee,
consultant, agent, independent contractor, or stockholder of any company or business engaged
in operating, managing, marketing, promoting or providing consulting services with respect to,
public assembly or other arena -type Facilities located within a 100 -mile radius of the Facilities
which competes with the Facilities. The foregoing restriction and covenant shall not, however,
Page 40 of 49
(x) apply to facilities which are within the restricted area which 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, or (y) be deemed breached by Operator's
participation as a promoter, sponsor, or co- promoter of events at any facilities if either (a) the
same event has been scheduled to appear at the Facilities within 12 months of its occurrence at
such other Facilities or (b) the same has not been scheduled to appear at the Facilities because
the participants (i.e., the promoter of the event in question or the principal performer of the
event in question) in such event refuse or decline to appear at the Facilities (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 14, the City may collect from the Operator, as liquidated damages
and not as a penalty (a) reimbursement of all actual costs incurred by the City to replace Operator's
management team plus (b) all fees paid to Operator hereunder during the 12 -month period
immediately preceding'such termination.
Operator hereby stipulates and agrees that the foregoing restrictions on Operator are
reasonable in light of the services which Operator will render hereunder both in terms of
geography and duration. Operator further 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. The
undersigned have executed this Agreement as of the date first set forth above.
[Signature Page Follows]
Page 41 of 49
CITY OF CORPUS CHRISTI, TEXAS .
ATTEST: Cityhfr-orpus Christi
AIL-
Armando Chapa U Monald. L. Ol
City Secretary City Manage
EXECUTED IN DUPLICATE ORIGINALS this j
L day of ".c-- , 2012.
SMG, a Pennsylvania general partnership
By: o �.
Name: John F. Bums
Title:
Chief Financial Officer
114.1a
EXECUTED IN DUPLICATE ORIGINALS this
day of , 2412.
Page 42 of 49
EXHIBIT
INSURANCE REQUIREMENTS
L SUCCESSFUL OPERATOR'S LIABILITY INSURANCE
A. Successful Operator shall not commence work under this agreement until all insurance
required herein has been obtained and approved by the City's Risk Manager or designee.
Successful Operator must not allow any subcontractor to commence work until all similar
insurance required of the subcontractor has been so obtained.
B. Successful Operator shall furnish to the Risk Manager or designee two (2) copies of
Certificates of Insurance and applicable policy endorsement(s), showing the following
minimum coverage by an insurance company(s) acceptable to the Risk Manager or
designee. The City must be named as an additional insured for the General Liability
policy, and a waiver of subrogation is required on all applicable policies.
TYPE OF INSURANCE
MINIMUM INSURANCE COVERAGE
30 -Day Notice of Cancellation required on all
Bodily injury and Property Damage
certificates or by policy endorsement(s)
Per Occurrence / aggregate
COMMERCIAL GENERAL LIABILITY includii
$5,000,000 per occurrence
1. Broad Form
$10,000,000 aggregate
2. Premises — Operations
3. Products /Completed Operations Hazard
4. Contractual Liability
5. Broad Form Property Damage
6. Independent Contractors
EXCESS LIABILITY (To follow form)
$10,000,000 per occurrence
LIQUOR LIABILITY
$1,000,000 per occurrence
$5,000,000 aggregate
CRIME POLICY (including)
$500,000 per occurrence
1. Employee Dishonesty
2. Computer Fraud
3. Forgery or Alteration
4. Theft
5. Robbery and Safe Burglary
BUSINESS AUTOMOBILE LIABILITY
$1,000,000 Combined Single Limit
1. Owned
2. Hired & Non -owned
WORKERS' COMPENSATION
Which complies with the Texas Workers Compensation
paragraph IIi of this exhibit.
Page 43 of 49
EMPLOYER'S LIABILITY
PROPERTY INSURANCE
$500,000 I $500,000 I $500,000
Operator shall purchase property insurance to cover damat
Operator owned contents.
C. In the event of accidents of any kind, Successful Operator shall furnish the Risk Manager
with copies of all reports of such accidents within ten (10) days of the accident.
ARTICLE 2II. ADDITIONAL REQUIREMENTS
A. Successful Operator must obtain workers' compensation coverage through a licensed
insurance company in accordance with Texas law. The contract for coverage must be
written on a policy and endorsements approved by the Texas Department of Insurance.
The coverage provided must be in amounts sufficient to assure that all workers'
compensation obligations incurred will be promptly met. If workers' compensation
coverage is not written in accordance with Texas law, "All Other States" endorsement
must be indicated on the certificate of insurance.
B. Successful Operator's financial integrity is of interest to the City, therefore, subject to
Successful Operators right to maintain reasonable deductibles in such amounts as are
approved by the City, Successful Operator shall obtain and maintain in full force and
effect for the duration of this agreement and any extension hereof, at Successful
Operator's sole expense, insurance coverage written on an occurrence basis, by
companies authorized and admitted to do business in the State of Texas and with an A.M.
Best's rating of no less than A- VII.
C. The City shall be entitled, upon request and without expense, to receive copies of the
policies, declarations page and all endorsements thereto as they apply to the limits
required by the City, and may require the deletion, revision, or modification of particular
policy terms, conditions, limitations or exclusions (except where policy provisions are
established by law or regulation binding upon either of the parties hereto or the
underwriter of any such policies). Successful Operator shall be required to comply with
any such requests and shall submit a copy of the replacement certificate of insurance to
City at the address provided below within 10 days of the requested change. Successful
Operator shall pay any costs incurred resulting from said changes. All notices under this
Article shall be given to City at the following address:
City of Corpus Christi
Attn: Risk Management
P_O. Box 9277
Corpus Christi, TX 78469 -9277
Fax: (361) 826 -4555
Page 44 of 49
D. Successful Operator agrees that with respect to the above required insurance, all
insurance policies are to contain or be endorsed to contain the following required
provisions:
• Name the City and its officers, officials, employees, volunteers, and elected
representatives as additional insured by endorsement, as respects operations and
activities of, or on behalf of, the named insured performed under contract with the
City, with the exception of the workers' compensation policy;
• Provide for an endorsement that the "other insurance" clause shall not apply to the City of
Corpus Christi where the City is an additional insured shown on the policy;
• Workers' compensation and employers' liability policies will provide a waiver of
subrogation in favor of the City; and
• Provide thirty (30) calendar days advance written notice directly to City of any
suspension, cancellation, non - renewal or material change in coverage, and not less than
ten (10) calendar days advance written notice for nonpayment of premium.
E. Within five (5) calendar days of a suspension, cancellation, or non - renewal of coverage,
Successful Operator shall provide a replacement Certificate of Insurance and applicable
endorsements to City. City shall have the option to suspend Successful Operator's
performance should there be a lapse in coverage at any time during this contract. Failure
to provide and to maintain the required insurance shall constitute a material breach of this
agreement.
F. In addition to any other remedies the City may have upon Successful Operator's failure to
provide and maintain any insurance or policy endorsements to the extent and within the
time herein required, the City shall have the right to order Successful Operator to stop
work hereunder, and/or withhold any payment(s) which become due to Successful
Operator hereunder until Successful Operator demonstrates compliance with the
requirements hereof.
G. Nothing herein contained shall be construed as limiting in any way the extent to which
Successful Operator may be held responsible for payments of damages to persons or
property resulting from Successful Operator's or its subcontractor's performance of the
work covered under this agreement.
H. It is agreed that Successful Operator's insurance shall be deemed primary and non-
contributory with respect to any insurance or self- insurance carried by the City of Corpus
Christi for liability arising out of operations under this agreement.
I. It is understood and agreed that the insurance required is in addition to and separate from
any other obligation contained in this agreement.
Page 45 of 49
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EXHIBIT A -4 - EXISTING FACILITIES - AR
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EXHIBIT A -7 EXISTING FACILITIES - LANDSCAPING
Page 46 of 49
MEWUITE
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Page 47 of 49
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Page 48 of 49
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For inftxnmbm cormEming paridng within the
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contact Alan Bean or Mario Rodriguez at 361-826
EXHIBIT (
Page 49 of 49