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Bicentennial Center Management Agreement Legal Opinion816 -221 -1000 FAX: 816- 221 -I0IB WWW.GlLMOREBELL.COM City of Salina, Kansas Salina, Kansas GILMORE & BELL A PROFESSIONAL CORPORATION ATTORNEYS AT LAW 2405 GRAND BOULEVARD. SUITE 1100 KANSAS CITY, MISSOURI 64108-252t March 7. 2012 ST. LOUIS, MISSOURI WICHITA, KANSAS LINCOLN. NEBRASKA Re: $6,875,0000 original principal amount City of Salina, Kansas, General Obligation Internal Improvement and Refunding Bonds, Series 2010 -A, dated May 1, 2010 Ladies and Gentlemen: This opinion is being delivered to you in connection with the execution and delivery of the Management Agreement (the "Management Agreement'), dated as of March 1, 2012, between THE CITY OF SALINA KANSAS, a municipal corporation and political subdivision organized and existing under the laws of the State of Kansas (the "City "), and GLOBAL SPECTRUM, L.P., a Delaware limited partnership (the "Manager "). The above - captioned bonds (the "Bonds ") were issued by the City pursuant to Ordinance No. 10 -10540 and Resolution No. 10 -6726 adopted by the City on April 19, 2010 (collectively, the "Bond Resolution "), for the purposes described in the Bond Resolution, which purposes included financing a portion of the costs of improving, renovating and equipping an entertainment and conference center located at 800 The Midway, Salina, Kansas (the "Bicentennial Center "), consisting of a 7,583 - capacity arena, an 18,000 square foot exhibition hall and eight meeting rooms. The Management Agreement, attached to this opinion as Attachment 1, generally provides that Manager will manage and operate the Bicentennial Center on behalf of and for the benefit of the City. We have examined the law and such other documents as we deem necessary to render this opinion, including the Bond Resolution and the Federal Tax Certificate executed in connection with the issuance of the Bonds. As to questions of fact material to our opinion, we have relied upon the certified proceedings and the representations of the City and the Manager furnished to us without undertaking to verify the same by independent investigation. Based upon the foregoing, we are of the opinion that, under existing law, the execution and delivery of the Management Agreement will not adversely affect the exclusion from gross income of the interest on the Bonds for purposes of federal income taxation. We have not been requested to conduct, nor have we conducted, any investigation as to whether any events, facts or circumstances, other than execution and delivery of the Management Agreement, may have occurred or come into existence since the issue date of the Bonds which may have adversely affected or which taken together with the execution and delivery of the Management Agreement will adversely affect the income tax status of the interest on the Bonds. Therefore, we express no opinion as to whether the interest on the Bonds is excludable from gross income for purposes of federal income taxation, except as expressly set forth herein. March 7, 2012 Page 2 This opinion is given as of its date, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may come to our attention or any changes in law that may occur after the date of this opinion. Very truly yours, #�M f w r, (J. LKM GILMORE & BELL, P.C. ATTACHMENTI MANAGEMENT AGREEMENT between THE CITY OF SALINA, KANSAS and GLOBAL SPECTRUM, LP. FOR THE BICENTENNIAL CENTER Dated: As of March 1, 2012 MANAGEMENT AGREEMENT between THE CITY OF SALINA, KANSAS and GLOBAL SPECTRUM, L.P. FOR THE BICENTENNIAL CENTER Dated: As of March 1, 2012 TABLE OF CONTENTS Page RECITALS.................................................................................................. ..............................1 ARTICLE 1 — DEFINITIONS ................................................................... ..............................1 Section1.1 Definitions .................................................................................. ..............................1 ARTICLE 2 — SCOPE OF SERVICES ..................................................... ..............................7 Section2.1 Enga eg ment ............................................................................... ..............................7 Section 2.2 Limitations on Manager's Duties ............................................... ..............................7 Section 2.3 Standard of Care ........................................................................ ..............................8 ARTICLE 3 — COMPENSATION.... ....................................................................................... 8 Section 3.1 Fixed Management Fee .............................................................. ..............................8 Section 3.2 Incentive Fee .............................................................................. ..............................8 ARTICLE 4 — TERM; TERMINATION ................................................... .............................10 Section4.1 Term ............................................................................................ .............................10 Section 4.2 Termination Upon Default .......................................................... .............................10 Section 4.3 Termination Other Than Upon Default ...................................... ..............................1 l Section 4.4 Effect of Termination .................................................................. .............................12 ARTICLE 5 — OWNERSHIP; USE OF THE FACILITY ........................ .............................13 Section 5.1 Ownership of Facility, Data, Equipment and Materials ............. .............................13 Section 5.2 Confidentiality /Nondisclosure/Public Records Requests ........... .............................13 Section 5.3 Right of Use by Manager ............................................................ .............................14 Section 5.4 Observance of Agreements ......................................................... .............................14 Section5.5 Use by the Citv ............................................................................ .............................14 ARTICLE 6 — PERSONNEL ....................................................................... .............................16 Section6.1 General] v ...................... ---- .... ..................................................... ......................... 16 Section 6.2 General Manager; Other Management -Level Employees .......... .............................16 Section 6.3 Transitioning City Employees .................................................... .............................16 Section 6.4 Non- Solicitation/Non- Hiring ...................................................... .............................17 ARTICLE 7 — OPERATING BUDGET ..................................................... .............................18 Section 7.1 Establishment of Business Plan, Including the Operating Budget ..........................18 Section 7.2 Approval of Business Plan, Operating Budget ........................... .............................18 Section 7.3 Adherence to Operating Budget .................................................. .............................19 i ARTICLE 8 — PROCEDURE FOR HANDLING INCOME .................... .............................20 Section8.1 Event Account ...................................................................:......... .............................20 Section 8.2 Operating Account ...................................................................... .............................20 ARTICLE 9 — FUNDING ............................................................................. .............................20 Section 9.1 Source of Funding ....................................................................... .............................20 Section 9.2 Advancement of Funds ............................................................... .............................21 ARTICLE 10 — FISCAL RESPONSIBILITY; REPORTING ................. .............................21 Section10.1 Records ..................................................................................... .............................21 Section 10.2 Monthly Financial Reports ....................................................... .............................21 Section 10.3 Annual Audit ............................................................................. .............................22 Section10.4 Other Audit ............................................................................... .............................22 ARTICLE 11— CAPITAL IMPROVEMENTS ......................................... .............................22 Section 11.1 Schedule of Capital Expenditures; Facility Condition Audit ... .............................22 Section 11.2 Responsibility for Capital Expenditures ................................... .............................23 Section 11.3 Funds for Emergency Repairs ................................................... .............................23 ARTICLE 12 — FACILITY CONTRACTS; TRANSACTIONS WITH AFFILIATES .....23 Section 12.1 Existing Contracts ..................................................................... .............................23 Section 12.2 Execution of Contracts .............................................................. .............................23 Section 12.3 Transactions with Affiliates ...................................................... .............................24 Section 12.4 Naming Rights for the Facility ................................................. .............................24 ARTICLE 13 — FOOD AND BEVERAGE SERVICES ............................ .............................25 Section13.1 General lv ................................................................................... .............................25 Section 13.2 Concession Areas ...................................................................... .............................25 Section 13.3 Food and Beverage Duties ........................................................ .............................25 Section 13.4 Food and Beverage Revenue and Expenses .............................. .............................26 ARTICLE 14 — AGREEMENT MONITORING AND COMMUNITY PARTNERS ........ 26 Section 14.1 Contract Administrator ............................................................. .............................26 Section 14.2 Communitv Cultural Partners ................................................... .............................26 ARTICLE 15 — INDEMNIFICATION ....................................................... .............................27 Section 15.1 Indemnification by Manager ..................................................... .............................27 Section 15.2 Indemnification by the City ...................................................... .............................27 Section 15.3 Conditions to Indemnification ..........:....................................... .............................28 Section15.4 Survival ..................................................................................... .............................28 ARTICLE 16 — INSURANCE ...................................................................... .............................28 Section 16.1 Types and Amount of Coverage ............................................... .............................28 Section 16.2 Rating; Additional Insureds ...................................................... .............................29 ii ARTICLE 17 — REPRESENTATIONS, WARRANTIES AND COVENANTS ..................29 Section 17.1 Manager r Representations and Warranties ................................ .............................29 Section 17.2 City Representations, Warranties and Covenants ..................... .............................30 ARTICLE 18 — MISCELLANEOUS .......................................................... .............................30 Section 18.1 No Discrimination ..................................................................... .............................30 Section 18.2 Equal Opportunity ..................................................................... .............................30 Section 18.3 Affirmative Action to Insure Equal Opportunity ...................... .............................31 Section 18.4 Use of Facility Names and Logos ............................................. .............................32 Section 18.5 Facility Advertisements / Sponsorships ...................................... .............................32 Section 18.6 Force Majeure; Casualty of Loss .............................................. .............................32 Section -18.7 Assi ng ment ............................................................................... .............................33 Section18.8 Notices ...................................................................................... .............................33 Section18.9 Severabilitv ............................................................................... .............................34 Section 18.10 Entire Agreement .................................................................... .............................34 Section 18.11 Governing Law; Forum Sel ection ........................................... .............................34 Section18.12 Amendments ........................................................................... .............................34 Section 18.13 Waiver; Remedies ................................................................... .............................34 Section 18.14 Relationship of Parties ............................................................ .............................35 Section 18.15 No Third Party Beneficiaries .................................................. .............................35 Section 18.16 Attorneys Fees ........................................................................ .............................35 Section 18.17 Limitation on Damages ........................................................... .............................35 Section 18.18 Counterparts; Facsimile and Electronic Signatures ................ .............................36 EXHIBIT A — MANAGER DUTIES EXHIBIT B — EXISTING CONTRACTS EXHIBIT C — BUSINESS PLAN (I ST THREE OPERATING YEARS) EXHIBIT D — INSURANCE EXHIBIT E — DEPICTION OF FACILITY AND GROUNDS iii MANAGEMENT AGREEMENT This Management Agreement is made as of the I" day. of March, 2012 ( "Effective Date "), by and between the City of Salina, Kansas, a municipal corporation ( "City "), and Global Spectrum, LP, a Delaware limited partnership ( "Manager "). RECITALS .WHEREAS, the City owns an entertainment and conference center located in Salina, Kansas, consisting of an arena with capacity of up to 7,583, an 18,000 square foot exhibition hall known as Heritage Hall, and eight meeting rooms, collectively known as the Salina Bicentennial Center (the "Facility "); and WHEREAS, the City desires to engage Manager to manage and operate the Facility on behalf and for the benefit of the City, and Manager desires to accept such engagement, pursuant to the terms and conditions contained herein; and NOW THEREFORE, for and in consideration of the foregoing, the mutual covenants and promises hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows: ARTICLE 1 DEFINITIONS Section 1.1. Definitions. For purposes of this Agreement, the following terms have the meanings referred to in this Section: Affiliate: The term "Affiliate" shall mean any person or company that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, Manager. For purposes of this definition, "control" means ownership of equity securities or other ownership interests that represent more than 40% of the voting power in the controlled person or company. The parties acknowledge that as of the Effective Date, "Affiliates" include Front Row Marketing Services, L.P., Ovations Food Services, L.P., and Patron Solutions, L.P. (d/b /a New Era Tickets). Agreement: The "Agreement' shall mean this Management Agreement, together with all exhibits attached hereto (each of which are incorporated herein as an integral part of this Agreement). Business Plan: The "Business Plan" shall include (a) an Operating Budget, (b) to the extent not already included within the Operating Budget, estimated quantity and type of events (segregated by type and /or size of event) and related Revenues and Operating Expenses per each such event; general market and operations assumptions behind the operational strategies and Operating Budget, including without limitation assumptions about staffing and other Operating 1 Expenses; a projection of Operating Margin; and any other financial or market information supporting the Operating Budget or on which the Operating Budget is based, as mutually agreed by the parties to be included therein, (c) a Marketing Plan, and (d) a Capital Improvement Plan; provided that the Business Plan for the I" Operating Year shall not initially include a Marketing Plan or a Capital Improvement Plan. Capital Expenditures: All expenditures for building additions, alterations, repairs or improvements and for purchases of additional or replacement furniture, machinery, or equipment, where the cost of such expenditure is greater than $10,000 and the depreciable life of the applicable item is, according to generally accepted accounting principles, is in excess of five (5) years. Capital Improvement Plan: The "Capital Improvement Plan" shall mean a schedule of proposed capital improvements to be made to the Facility (i.e., improvements necessitating a Capital Expenditure), for the purpose of allowing the City to consider and plan for the funding of such projects. Such plan shall include a detailed recommendation for capital improvements at the Facility, the proposed timing and estimated cost of such capital improvements, and the reasons justifying or supporting the proposed capital improvements. City: The term "City' shall have the meaning ascribed to such term in the Recitals to this Agreement. Commercial Rights: Naming rights, pouring rights, advertising, sponsorships, the branding of food and beverage products for resale, premium seating (including suites, club seats and party suites) and memorial gifts at or with respect to the Facility and owned or controlled by the City. Community Cultural Partners: The term "Community Cultural Partners" shall include any non - profit organization with its principal place of business located in Salina, Kansas, with a primary commitment to the arts and culture, and which owns or operates a local venue that is used for the public performance of artistic, musical, theatrical, or other performing arts shows, events, or programs. Convention /Conference Attendee Nights: With respect to each conference or convention held at the Facility that lasts for two or more consecutive days, the number of nights between the first and last dates of attendance by registered attendees, multiplied by the number of confirmed attendees and vendors at such conference or convention. By way of example, a three -day conference or convention with one - hundred confirmed attendees would equal 200 Convention /Conference Attendee Nights (calculated by multiplying 2 nights by 100 attendees). For purposes of calculating Convention /Conference Attendee Nights, a "conference" or a "convention" shall include a gathering of people who have a common interest or profession to participate in discussions, listen to lectures to obtain information, or a combination thereof, or any other event which requires advance registration by attendees, but shall not be deemed to 2 include trade shows, sporting events, or any other event at which attendees may be admitted without advance registration. CPI: The "Midwest Urban Consumer Price Index ", as published by the United States Department of Labor, Bureau of Labor Statistics or, if no longer published by such Bureau, then as published by its successor. Effective Date: "Effective Date" shall have the meaning ascribed to such term in the opening paragraph of this Agreement. Event Account: A separate interest - bearing account in the name of the City and under the City's Federal ID number in a local qualified public depository, to be designated by the City, into which Manager shall deposit all revenue received from ticket sales and any advance deposits received from promoters /licensees which Manager receives in contemplation of, or arising from, an event, pending completion of the event. Event of Force Majeure: An act of God, fire not caused by either party's negligence or willful, misconduct, earthquake, hurricane, flood, riot, civil commotion, terrorist act, terrorist threat, storm, washout, lightning, landslide, explosions not caused by either party's negligence or willful misconduct, epidemic, inability to obtain materials or supplies due to widespread scarcity, accident to machinery or equipment, any law, ordinance, rule, regulation, or order of any public or military authority stemming from the existence of economic or energy controls, hostilities or war, or any other cause or occurrence outside the reasonable control of the party claiming an inability to perform and which by the exercise of due diligence could not be reasonably prevented or overcome. Event Revenue: All revenue related to events at the Facility, including but not limited to rental and license fee income, ticket surcharges, ticketing fees, merchandise and novelties income, parking income and any mark -up on expenses reimbursed by promoters and venue users (but not including any food and beverage revenue or Commercial Rights revenue). Existing Contracts: Service Contracts, Revenue Generating Contracts, and other agreements relating to the operation of the Facility existing as of the Effective Date, as set forth on Exhibit B attached hereto. Facility: The "Facility" shall have the meaning ascribed to such term in the Recitals to this Agreement, and shall be deemed to include the entire arena complex, including but not limited to the arena, suites, locker rooms, meeting rooms, box office, common areas, lobby areas, executive and other offices, storage and utility facilities, and the entrances, ground, sidewalks and parking areas immediately surrounding the Facility and adjacent thereto, as set forth on Exhibit E attached hereto. FF &E: Furniture, fixtures and equipment to be procured for use at the Facility. Fixed Management Fee: The fixed monthly fee the City shall pay to Manager under this Agreement, as more fully described in Section 3.1 of this Agreement. Food and Beverage Service: "Food and Beverage Service" shall have the meaning given to such term in Section 13.1 below. General Manager: The employee of Manager acting as the full -time on -site general manager of the Facility. Gross Food and Beverage Revenue: Gross receipts collected from the management and /or sale of food and beverage items at the Facility, net of applicable taxes (only). Incentive Fee: The contingent fee the City shall pay to Manager under this Agreement, if earned, as more fully described in Section 3.2 below. Laws: Federal, state, local and municipal laws, statutes, rules, regulations and ordinances. Management -Level Employees: The General Manager, Assistant General Manager, Business Manager (or employees with different titles performing similar functions), and any department head employed by Manager to perform services at the Facility (including employees performing the functions of the Director of Operations, Director of Sales and Marketing, Director of Security, Finance Director and Event Manager). Manager: The term "Manager" shall have the meaning ascribed to such term in the Recitals to this Agreement. Marketing Plan: A plan for the advertising and promotion of the Facility and Facility events, which may contain but not be limited to the following elements: (i) market research, (ii) market position, (iii) marketing objectives, (iv) marketing strategies, (v) booking priorities, (vi) targeted events - local, regional, national and international, (vii) targeted meetings, conventions and trade shows, (viii) industry advertising campaign, (ix) internal and external support staff, (x) advertising opportunities at the local, regional and national level, (xi) attendance at various trade shows, conventions and seminars, (xii) incentive formulas for multiple event presenters, (xiii) suite and club seat sales, (xiv) merchandising and retail, (xv) food and beverage, (xvi) a plan for the sale of commercial rights, including without limitation naming rights, pouring rights, advertising signage, sponsorships (including event sponsorships), branding of food and beverage products for resale, premium seating (including but not limited to suites and club seats), and memorial gifts, (xvii) a plan regarding national, regional and local public relations and media relations, (xviii) development of an in -house advertising agency, (xix) policies regarding the use of trade/barter; (xx) and coordination with local venues, including the Community Cultural Partners, for cross - promotional activities. 0 Operating Account: A separate interest - bearing account in the name of the City and under the City's Federal ID number in a local qualified public depository, to be designated by the City, where all Revenue is deposited and from which Operating Expenses are paid. Operating Budget: A detailed line item budget for the Facility that includes a projection of all Revenues and Operating Expenses, presented on a monthly and annual basis. Operating Expenses: All expenses incurred by Manager in connection with its operation, promotion, maintenance and management of the Facility, including but not limited to the following: (i) employee payroll, benefits, relocation costs, severance costs, bonus and related costs, except as otherwise specifically set forth herein (ii) cost of operating supplies, including general office supplies, (iii) advertising, marketing, group sales, and public relations costs, (iv) cleaning expenses, (v) data processing costs, (vi) dues, subscriptions and membership costs, (vii) the Fixed Management Fee, (viii) printing and stationary costs, (ix) postage and freight costs, (x) equipment rental costs, (xi) minor repairs, maintenance, and equipment servicing, not including expenses relating to performing capital improvements or repairs, (xii) security expenses, (xiii) telephone and communication charges, (xiv) travel and entertainment expenses of Manager employees, (xv) cost of employee uniforms and identification, (xvi) exterminator, snow and trash removal costs, if applicable (xvii) computer, software, hardware and training costs, (xviii) parking expenses, (xix) utility expenses, (xx) office expenses, (xxi) audit and accounting fees, (xxii) legal fees, (xxiii) the cost of maintaining the insurance referred to in Section 16 below, (xxiv) commissions and all other fees payable to third parties (e.g. commissions relating to food, beverage and merchandise concessions services and Commercial Rights sales), (xxv) cost of complying with any Laws, (xxvi) costs incurred under authorized Service Contracts and other agreements relating to Facility operations, (xxvii) Taxes, (xxiii) cost of food and beverage product and other expenses associated with the Food and Beverage Service, and (xxiv) costs incurred by Manager to settle or defend any claims asserted against Manager arising out of its operations at the Facility on behalf of the City, except where such claims were caused by the negligence or willful misconduct of Manager or its employees or agents, and except where Manager is entitled to be reimbursed for such costs by any third party, including but not limited to an insurance policy maintained by Manager under the terms of this Agreement; all as determined in accordance with generally accepted accounting principles and recognized on a full accrual basis; provided that the term "Operating Expenses" shall not include: (i) debt service on the Facility (ii) Capital Expenditures; (iii) the Incentive Fee; (iv) any expenses relating to Manager's personnel based in Manager's corporate headquarters in Philadelphia, Pennsylvania or its regional field locations (other than reasonable costs of travel by such corporate or regional personnel in connection with Manager's management of the Facility, which costs shall be Operating Expenses); (v) any costs or expenses for which the City has a right to be indemnified for pursuant to the terms of Section 15.1; (vi) expenses from any suit, action, or proceeding filed or instituted against the City by Manager and (vii) costs incurred due to the willful misconduct or gross negligence of the Manager, its employees, Affiliates, or those of its agents engaged to assist in the management services hereunder. 5 Operating Margin: " The term "Operating Margin" shall mean the extent by which Revenue exceeds Operating Expenses, or Operating Expenses exceed Revenues, as applicable, for the relevant time period, and may be referred to in the Business Plan as the "Net Operating Income (Loss) ", or such other term as the parties use to represent the bottom line number. .Operating Year: Each twelve (12) month period during the Term, commencing on January 1 and ending on December 31, except that the first (1s`) Operating Year shall commence on the Effective Date and end on December 31, 2012. Operations Manual: Document to be developed by Manager, in accordance with Section 2.1(c), which shall contains terms regarding the management and operation of the Facility, including detailed policies and procedures to be implemented in operating the Facility, as agreed upon by both the City and the Manager. Quantitative Component: The term "Quantitative Component" shall have the meaning ascribed to such term in Section 3.2 of this Agreement. Qualitative Component: The term "Qualitative Component' shall have the meaning ascribed to such term in Section 3.2 of this Agreement. Revenue: Any and all revenues of every kind or nature derived from owning, operating, managing, or promoting the Facility, including but not limited to event ticket proceeds income, rental and license fee income, merchandise income, Gross Food and Beverage Revenue, gross income from any sale of Commercial Rights, gross service income, equipment rental fees, box office income, revenues generated from separate agreements with Affiliates pertaining to the Facility, and miscellaneous operating income, but shall not include event ticket proceeds held by Manager in trust for a third party and paid to such third party. Revenue Generating Contracts: Vendor, concessions and merchandising agreements, user /rental agreements, booking commitments, licenses, and all other contracts or agreements generating Revenue for the Facility and entered into in the ordinary course of operating the Facility. Service Contracts: Agreements for services to be provided in connection with the operation of the Facility, including without limitation agreements for ticketing, web development and maintenance, computer support services, FF &E purchasing services, engineering services, electricity, steam, gas, fuel, general maintenance, HVAC maintenance, telephone, staffing personnel including guards, ushers and ticket - takers, extermination, elevators, stage equipment, fire control panel and other safety equipment, snow removal and other services which are deemed by Manager to be either necessary or useful in operating the Facility. 0 Target Operating Margin: The "Target Operating Margin" shall be as follows: I" Operating Year: - $725,000.00 2 "a Operating Year: 4550,000.00 P and each subsequent Operating Year: - $450,000.00 Taxes: Any and all governmental assessments, franchise fees, excises, license and permit fees, levies, charges and taxes, of every kind and nature whatsoever, which at any time during the Term may be assessed, levied, or imposed on, or become due and payable out of or in respect of, (i) activities conducted on behalf of the City at the Facility, including without limitation the sale of concessions, the sale of tickets, and the performance of events (such as any applicable sales and /or admissions taxes, use taxes, excise taxes, occupancy taxes, employment taxes, and withholding taxes), or (ii) any payments received from any holders of a leasehold interest or license in or to the Facility, from any guests, or from any others using or occupying all or any part of the Facility; but the term "Taxes" shall not include any income taxes owed by the Manager or any taxes which are not directly related to the operation of the Facility which are owed by the Manager or its Affiliates. Term: The term "Term" shall have the meaning ascribed to such term in Section 4.1 of this Agreement. ARTICLE 2 SCOPE OF SERVICES Section 2.1 Engagement. (a) City hereby engages Manager during the Term to act as the sole and exclusive manager and operator of the Facility, subject to and as more fully described in this Agreement, and, in connection therewith, to perform the services described in Exhibit A attached hereto. (b) Manager hereby accepts such engagement, and shall perform the services described herein, subject to the limitations expressly set forth in this Agreement. (c) Manager shall provide the City with a proposed Operations Manual addressing the day -to -day procedures within one hundred twenty (120) days of the execution of this Agreement. The Operations Manual shall be subject to the review and approval by the City. Upon such approval, the obligations in such Operations Manual shall become obligations of the Manager pursuant to this Agreement, and the Operations Manual shall not be amended except as provided in Section 18.12. Section 2.2 Limitations on Manager's Duties. Manager's obligations under this Agreement are contingent upon and subject to the City making available, in a timely fashion, the funds budgeted for and/or reasonably required by Manager to carry out such obligations during 7 the Term. Manager shall not be considered to be in breach or default of this Agreement, and shall have no liability to the City or any other party, in the event Manager does not perform any of its obligations hereunder due to failure by the City to timely provide such funds. Section 2.3 Standard of Care. Manager shall perform its obligations hereunder as necessary or appropriate to maintain, operate, manage, and promote the Facility in a manner consistent with Manager's policies and procedures and the operations of other similar first -class facilities. In providing services under this Agreement, Manager shall maintain the standard of care, diligence and professional competency as is customary in the industry, and shall commit itself and its employees to the highest level of integrity, professionalism, customer service and excellence, including, but not limited to, demonstrating honesty, responsiveness, functional proficiency, accurate representation, and full disclosure of information and material facts to the City. The Manager shall exercise its best efforts in managing and operating the Facility so as to (i) maximize Revenue while minimizing Operating Expenses, (ii) maximize the number of events and attendance at the Facility, (iii) minimize the legal liability and exposure of the City to the greatest extent possible, (iv) enhance the quality of experience for all patrons attending events at the Facility, (v) maximize the positive economic impact from the Facility to the City and the public, and (vi) make the Facility an attractive venue to promote and book a wide variety of events. Manager shall contractually require all of its consultants and contractors to provide services at the same standard of care, skill, diligence and professional competence required of Manager. ARTICLE 3 COMPENSATION Section 3.1 Fixed Management Fee. In consideration of Manager's performance of its services hereunder, the City shall pay Manger a Fixed Management Fee. Beginning on the Effective Date and continuing through the first (1") Operating Year, the Fixed Management Fee shall be Ten Thousand Dollars ($10,000) per month. Beginning in the second (2 "a) Operating Year, the Fixed Management Fee shall be increased over the Fixed Management Fee from the previous Operating Year in accordance with the percentage increase in the CPI over the previous twelve (12) month period (i.e., the difference, expressed as a percentage, between the value of the CPI published most recently prior to the commencement of the preceding Operating Year and the value of the CPI published most recently prior to the commencement of the Operating Year for which the CPI adjustment will apply) or by three percent (3 %), whichever is less. The Fixed Management Fee shall be payable to Manager beginning on March 31, 2012, and payable on or before the last day of each month thereafter (prorated as necessary for the first month and any subsequent partial months). Manager shall be entitled to pay itself such amount from the Operating Account. Section 3.2 Incentive Fee. In addition to the Fixed Management Fee, Manager shall be entitled to receive an Incentive Fee each full or partial Operating Year of the Term. The Incentive Fee shall consist of a quantitative component ( "Quantitative Component "), as described in Section (a) below, and a qualitative component ( "Qualitative Component "), as 8 described in Section (b) below. Notwithstanding anything to the contrary contained herein, in no event shall the aggregate Incentive Fee for any Operating Year exceed the Fixed Management Fee for such Operating Year. The Incentive Fee, if earned, shall be paid to Manager no later than ninety (90) days following the end of each Operating Year. (a) The Quantitative Component of the Incentive Fee shall be capped each Operating Year at eleven- twelfths (11/12`') of the total Incentive Fee available for Manager to earn in such year (i.e., 11 /12`h) of the Fixed Management Fee payable to Manager in such year). The Quantitative Component shall consist of three sub - components, as follows: (i) Food and Beverage Revenue. Manager shall be entitled to seven percent (7 %) of all Gross Food and Beverage Revenue in each Operating Year in excess of $500,000, which amount shall not exceed two - twelfths (2/12`h) of the total Incentive Fee available for Manager to earn in such year; (ii) Event Revenue. Manager shall be entitled to fifteen percent (15 %) of all Event Revenue in each Operating Year in excess of $300,000, which amount shall not exceed five - twelfths (5/12`h) of the total Incentive Fee available for Manager to earn in such year; and (iii)Convention/Conference Attendee Nights. Manager shall be entitled to receive $15 for each Con ference/Convention Attendee Night in excess of 3,500 in the first Operating Year; 4,000 during the second Operating Year; 4,500 during the third Operating Year; 5,000 during the fourth Operating Year (if applicable); and 5,500 during the fifth Operating Year (if applicable), prorated as necessary for the first and last Operating Year; which amount shall not exceed four - twelfths (4/12`h) of the total Incentive Fee available for Manager to earn in such year. The parties shall, at the commencement of this Agreement, mutually agree upon and designate a third -party to monitor and maintain all data relating to Convention/Conference Attendee Nights at the Facility, the cost of which, if any, shall be an Operating Expense. Each of the benchmarks referenced above (i.e., the $500,000 figure in subpart (i), the $300,000 figure in subpart (ii), and each of the Conference /Convention Attendee Night thresholds in subpart (iii)) shall be pro -rated for any Operating Years of less than 12 months by multiplying such benchmarks by a fraction, the numerator of which shall be the number of days elapsed in such Operating Year, and the denominator of which shall be 365. (b) The Qualitative Component of the Incentive Fee due Manager each Operating Year shall be capped at one - twelfth (1 /12`h) of the total Incentive Fee available for Manager to earn in such year (i.e., 1 /12`h of the Fixed Management Fee payable to Manager in such year). To determine the Qualitative Component, the City shall independently, in its reasonable discretion and acting in good faith, evaluate Manager's performance during each 9 Operating Year in each of the following qualitative categories, and award to Manager for its performance in each category an amount up to the percentage of the Fixed Management Fee corresponding to each category, as follows: (i) Maintenance /Care of the Facility — up to 1 /24`h of Incentive Fee; and (ii) Event/Convention Performance — up to 1/24`h of Incentive Fee. ARTICLE 4 TERM; TERMINATION Section 4.1 Term. (a) The term of this Agreement (the "Term ") shall begin on the Effective Date, and shall continue until the end of thirty -six (36) months after the Effective Date, unless earlier terminated pursuant to the provisions of Section 4.2 below. The City may elect to extend the Term on the same terms and conditions contained herein for two (2) additional twelve (12) month periods by giving not less than one - hundred twenty (120) days prior written notice of such extension to Manager. In no event shall the Term of this Agreement exceed a period of time that is greater than five (5) years following the Effective Date. (b) If the City elects to extend the Term under subsection (a) of this Section 4. 1, then„ at the request of either the City or the Manager at least six (6) months prior to the end of the Term, the parties shall engage in good faith discussions regarding a new agreement for the management and operation of the Facility following the end of the Term. This requirement to discuss and negotiate terms for a new management agreement shall not obligate either party to commit to any such new agreement or to the terms of any such new agreement. Section 4.2 Termination Upon Default. (a) If either party fails to perform or comply with any of the material terms, covenants, agreements or conditions hereof, then the other party may provide written notice requesting that such failure be cured within thirty (30) days, provided, however, if such failure cannot reasonably be cured within such thirty (30) day period, then a longer period of time shall be afforded to cure such breach, up to a total of ninety (90) days, provided that the party in default is diligently seeking a cure and the non - defaulting party is not irreparably harmed by the extension of the cure period. If such default has not been cured upon the expiration of the applicable cure period, then the non - defaulting party may terminate this Agreement by providing written notice to the defaulting party of its election to do so. 10 Section 4.3 Termination Other Than Upon Default. (a) The City shall have the right to terminate this Agreement, subject to Section 4.4(a) below, upon thirty (30) days written notice to Manager in the event of a permanent closure of the Facility, the fact of which is certified by the City in writing to Manager. (b) The City shall have the right to immediately terminate this Agreement upon the occurrence of Manager filing or having filed against it a voluntary or involuntary petition in bankruptcy or a voluntary or involuntary petition or an answer seeking reorganization, an arrangement, or readjustment of its debts, or for any other relief under the United States Bankruptcy Code, as amended, or under any other state or federal insolvency act or law, or any action by Manger indicating its consent to, approval of, or acquiescence to the appointment of a receiver or trustee for all or a substantial part of its property, or upon the occurrence of the liquidation, dissolution, or termination of the partnership existence of Manager. (c) Additionally, the City may terminate this Agreement upon at least thirty (30) days' prior written notice to Manager (which notice cannot be provided prior to the City's receipt of the annual audited financial statements for the applicable Operating Years and, if given, must be provided within ninety (90) days after the City's receipt of such annual audited financial statements), in the event that: (i) Manager fails to achieve at least eighty -five percent (85 %) of the Target Operating Margin in the first (l s) Operating Year, and Manager fails to achieve at least ninety percent (90 %) of the Target Operating Margin in the second (2 "d) Operating Year, so long as, in either the first (I") or the second (2 "d) Operating Year, the reason for Manager's failure to achieve such results is not due to factors beyond its reasonable control (including, for example, an Event of Force Majeure, or significant increases in costs outside its reasonable control, such as utilities or insurance); or (ii) Manager fails to achieve at least ninety percent (90 %) of the Target Operating Margin for two (2) consecutive Operating Years (including any Operating Years beyond the initial three (3) year Term, if the Agreement is extended by City pursuant to Section 4.1(a)), beginning with the second (2 "d) and third (3`d) Operating Years, so long as, in any such Operating Year, the reason for Manager's failure to achieve such results is not due to factors beyond its reasonable control (including, for example, an Event of Force Majeure, or significant increases in costs outside its reasonable control, such as utilities or insurance). 11 Section 4.4 Effect of Termination (a) In the event this Agreement is terminated by the City pursuant to Section 4.3(a) or Section 18.6(b), the City shall pay to Manager the sum of Seventy -Five Thousand Dollars ($75,000.00), representing full and final payment for any and all actual expenses incurred by Manager in withdrawing from the provision of services hereunder following such termination. In no event shall the City pay Manager for any costs or expenses that exceed the sum of Seventy -Five Thousand Dollars ($75,000.00). Except for the this payment, Manager shall have no other right or remedy, at law or in equity, against the City for a termination pursuant to Section 4.3(a), except that, in the event the Facility re -opens at any time during the Term (for purposes of this section, "Term" shall mean the initial three (3) year term, unless the Agreement is terminated pursuant to Section 4.3(a) beyond such period), this Agreement shall, at the option of Manager, once again become effective and Manager shall manage and operate the Facility under the terms hereof, except that the Term shall be extended for a period of time in which the Facility was closed. (b) Upon termination or expiration of this Agreement for any reason, (i) Manager shall promptly discontinue the performance of all services hereunder, (ii) the City shall promptly pay Manager all fees due Manager up to the date of termination or expiration (subject to proration if the Term ends other than at the end of the Operating Year), provided that the City shall be entitled to offset against such unpaid fees any .damages (actual, not consequential) directly incurred by the City in remedying any default by the Manager hereunder which resulted in such termination, (iii) Manager shall make available, to the City all data, electronic files, documents, procedures, reports, estimates, summaries, and other such information and materials with respect to the Facility as may have been accumulated by Manager in performing its obligations hereunder, whether completed or in process, and (iv) without any further action on the part of Manager or City, the City shall, or shall cause the successor Facility manager to, assume all obligations arising after the date of such termination or expiration, under any Service Contracts, Revenue Generating Contracts, booking commitments and any other 'Facility agreements entered into by Manager in furtherance of its duties hereunder, except to the extent that any such Service Contracts, Revenue Generating Contracts, booking commitments and any other Facility agreements were executed or entered into in violation of any of the restrictions herein applicable to Manager's right to execute or enter into the same. Any obligations of the parties that are specifically intended to survive expiration or termination of this Agreement shall survive expiration or termination hereof. (c) Upon termination or expiration of this Agreement for any reason, Manager shall immediately surrender and vacate the Facility upon the effective date of such termination. The Facility and all equipment, furniture, fixtures, and other materials shall be returned to the City in good repair, reasonable wear and tear excepted, to the extent funds were made available therefor by the City. All reports, records, including financial records, and documents maintained by Manager at the Facility relating to this Agreement, other than materials containing the Manager's proprietary information, shall be immediately surrendered to the City by Manager upon termination. 12 ARTICLE 5 OWNERSHIP; USE OF THE FACILITY Section 5.1 Ownership of Facility, Data, Equipment and Materials. The City will at all times retain ownership of the Facility, including but not limited to real estate, technical equipment, furniture, displays, fixtures and similar property, including improvements made during the Term, at the Facility. Any data, equipment or materials furnished by the City to Manager or acquired by Manager as an Operating Expense shall remain the property of the City, and shall be returned to the City upon the termination or expiration of this Agreement, or when no longer needed by Manager to perform under this Agreement. In addition, any assets acquired by Manager as an Operating Expense shall be added to the City's asset management system, and Manager agrees to cooperate with the City to ensure compliance in this respect. Notwithstanding the above, the City shall not have the right to use any third party software licensed by Manager for general use by Manager at the Facility and other facilities managed by Manager, the licensing fee for which is proportionately allocated and charged to the Facility as an Operating Expense; such software may be retained by Manager upon expiration or termination hereof. Notwithstanding the foregoing, if the licenses for any third party software used by Manager at the Facility expire and a new, license for any such software can be entered into in the name of the City, or any of the existing licenses are transferrable to the City, then Manager agrees to consult with the City to determine whether it is in the City's best interests to license such software in its own name. Furthermore, the City recognizes that the Operations Manual to be developed and used by Manager hereunder is proprietary to Manager, and shall belong to Manager at the end of the Term; City shall not use or maintain copies thereof upon the end of the Term. The assets of the City described herein shall not be pledged, mortgaged, encumbered, or otherwise alienated, assigned, or leased by Manager to any person or entity without the prior written approval of the City. Section 5.2 Confidentiality/Nondisclosure/Public Records Requests. (a) The parties hereto agree that each will use all reasonable efforts to maintain the confidentiality of all proprietary, confidential or privileged information of the other party, except as required by law. To the extent permitted by law, neither party shall divulge any such proprietary, confidential, or privileged information which any party marks or designates as "proprietary," "confidential," or "privileged," without the prior written consent of the other party. The parties agree to provide notice to each other of any known or suspected violations of this Section 5.2 and any requests for public records under the applicable law, including the Kansas Open Records Act, K.S.A. 45 -215, et seq. (b) Manager will use all reasonable efforts to maintain the confidentiality of all confidential information of the City on the Facility's operations and to prevent the unauthorized disclosure and dissemination of any of that confidential information to any such person or entity, except as may be required by law. 13 (c) Public records requests and planned responses will be documented and submitted to the City's contract administrator immediately upon receipt in order to proceed with the timely release of the necessary records Section 5.3 Right of Use by Manama. The City hereby gives Manager the right and license to use the Facility, and Manager accepts such right of use, for the purpose of performing the services herein specified, including the operation and maintenance of all physical and mechanical facilities necessary for, and related to, the operation, maintenance and management of the Facility. The parties recognize that Manager needs a sufficient amount of suitable office space in the Facility and such office equipment as is reasonably necessary to enable Manager to perform its obligations under this Agreement, and the parties agree to cooperate to ensure that Manager's needs are satisfied with respect to such office space and equipment. In addition, the City shall make available to Manager, at no cost, parking spaces adjacent to the Facility for all of Manager's full -time employees and for the Facility's event staff.. Section 5.4 Observance of Agreements. The City agrees to pay, keep, observe and perform all payments, terms, covenants, conditions and obligations under any leases, bonds, debentures, loans and other financing and security agreements to which the City is bound in connection with its ownership of the Facility. Section 5.5 Use by the City. (a) Subject to availability, the City shall have the right to use the Facility or any part thereof rent -fee for meetings, seminars, training classes or other non - commercial uses, provided that the City shall promptly reimburse Manager, for deposit into the Operating Account, for any out -of- pocket expenses incurred by Manager (such as the cost of ushers, ticket - takers, set -up and take -down personnel, security expenses and other expenses) 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 Manager for paying events, (ii) not consist of normally touring attractions (such as concerts and family shows), and (iii) be booked in advance upon reasonable notice to Manager pursuant to the Facilities' approved booking policies. Upon request of the City, Manager shall provide to the City a list of available dates for City use of the Facility. To the extent that Manager has an opportunity to book a revenue - producing event on a date which is otherwise reserved for use by the City, Manager may propose alternative dates for the City's event, and the City shall use best efforts to reschedule its event to allow Manager to book the revenue - producing event. For purposes of calculating Manager's Incentive Fee, Manager 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. (b) Manager recognizes that the City places great importance on its ability to use the Facility, including the parking lot, together with certain equipment located at the Facility, during the City's annual Smoky Hill River Festival. Accordingly, the Manager grants to the City during the Term the absolute priority right to use all or any portion of the Facility, including the parking lot, and any equipment at the Facility, during the Smoky Hill River Festival, unless 14 otherwise agreed by the City, in writing, in its sole and absolute discretion. In order to allow Manager to plan around the Smoky Hill River Festival, the City shall provide written notice to the Manager of the scheduled dates for the festival for the ensuing years, as soon as reasonably practicable, and in any event by the date Manager is required to develop the Operating Budget for the upcoming Operating Year. At Manager's request, and after its receipt of the scheduled dates for the upcoming Smoky Hill River Festival in any ensuing year, the parties shall meet and confer regarding the City's wishes and flexibility with respect to scheduling other events at the Facility during such dates. At the City's request, Manager shall waive rent for .this event, provided that the City shall reimburse Manager, for deposit into the Operating Account, for any out -of- pocket expenses incurred by the Facility in connection with the event, and Manager shall receive the "paper credit" described in Section 5.5(a) above with respect to such event. (c) Manager acknowledges that the City owns and operates Kenwood Cove Aquatic Park, which is adjacent to the Facility. Manager agrees that, provided that the Facility's parking lots are available and not otherwise being used in connection with an event in the Facility, the City and patrons of Kenwood Cove Aquatic Park may use all or any part of the Facility's parking lots when attending the Kenwood Cove Aquatic Park, and such use shall be without rent and free of charge. To the extent that Manager incurs out -of- pocket expenses from such use, then the City shall reimburse Manager for such expenses by deposit into the Operating Account. (d) In the event that an Event of Force Majeure or any epidemic or pandemic, as declared by the Salina/Saline County Health Department, requires the Facility to be used as a disaster shelter, Manager agrees to honor and facilitate the City's commitment for such use. The parties shall cooperate in good faith to minimize the disruption to all business activities and to postpone and reschedule events as necessary. Neither party shall be liable or responsible to the other party for any delay, loss, damage, failure, or inability to perform hereunder due to the use of the Facility as a disaster shelter. In the event the Facility is utilized as a shelter which results in a material decline in Revenue or a material increase in Operating Expenses in any Operating Year, the parties shall in good faith discuss changes to the Operating Budget for such Operating Year, as well as changes to the manner in which the Incentive Fee is to be calculated in such Operating Year, so that Manager is not financially harmed by such use. (e) Manager acknowledges that the City currently uses Room 10013 of the Facility (located in the storage area under the south side of the arena) for purposes of housing its Storage Area Network (SAN) equipment, and that the City also has in place two antennas on the roof of the Facility, in connection with the Salina Police Department's operations and administrative radio transmissions. Manager agrees that, during the Term of this Agreement, the City shall be entitled to continue to use these portions of the Facility for their current purposes, free of charge and without rent. In addition, Manager hereby grants the.City unrestricted access to these areas at all times. 15 ARTICLE 6 PERSONNEL Section 6.1 Generally. All Facility staff and other personnel shall be engaged or hired by Manager, and for all purposes shall be employees, agents or independent contractors of Manager (or an Affiliate thereof), and not of the City, and Manager shall be solely responsible for all personnel- related matters, including their supervision and daily direction and control and for setting, and paying as an Operating Expense, their compensation (and federal and state income tax withholding) and any employee benefits. Unless otherwise provided herein, all costs related to Manager's staff and personnel shall be an Operating Expense. Except as hereinafter provided in Sections 6.2 and 6.3, Manager shall select, in its sole discretion but subject to City's right to approve the Operating Budget, the number, function, qualifications, and compensation, including salary and benefits, of its employees and shall control the terms and conditions of employment (including without limitation termination thereof) relating to such. employees. Manager agrees to use reasonable and prudent judgment in the selection and supervision of such personnel. The City specifically agrees that Manager shall be entitled to pay its employees, as an Operating Expense, bonuses and benefits in accordance with Manager's then current employee manual, which may be modified by Manager from time to time in its sole discretion. Manager shall provide to the City a copy of Manager's current employee manual within sixty (60) days after the Effective Date, and provide an updated copy to City within ten (10) days of each modification thereto. Section 6.2 General Manager; Other Management -Level Employees. Personnel engaged by Manager will include an individual with managerial experience in similar facilities to serve as a full -time on -site General Manager of the Facility. Hiring of the General Manager by Manager shall require the prior approval of the City, which approval shall not be unreasonably withheld or delayed; provided, however, in the event of a vacancy in the General Manager position, Manager may, upon notice to the City, temporarily fill such position with an interim General Manager for up to ninety (90) days without the necessity of obtaining the City's approval. The General Manager will have general supervisory responsibility for Manager and will be responsible for day -to -day operations of the Facility, supervision of employees, and management and coordination of all activities associated with events taking place at the Facility. Manager shall have sole authority and responsibility for hiring an Assistant General Manager, a Director of Sales and Marketing, and a Food and Beverage Director, but Manager agrees to provide the City with advance notice, and to take the City's views into account, before hiring any individual for one or more of these positions. Section 6.3. Transitioning City Employees. (a) The parties contemplate that, on the Effective Date, the City's full -time employees at the Facility will transition from status as City employees to status as Manager employees. Such employees, together with any other previous City employee(s) hired by Manager on the Effective Date, shall collectively be referred to herein as the "Transitioning Employees ". In particular, it is agreed that, on the Effective Date, Manager will offer at -will 16 employment to the Transitioning Employees, at the Facility, for a probationary period of at least sixty (60) days, upon such terms and conditions as Manager, in its sole discretion, shall determine. All the Transitioning Employees shall permanently cease to be an employee of the City as of the Effective Date, and each individual shall become an employee of the Manager on the Effective Date, upon such terms and conditions as determined by Manager. Except as .provided in Section 6.3(b) all costs associated with such employees incurred after the Effective Date shall be an Operating Expense. The parties acknowledge that the purpose of the sixty (60) day probationary employment period shall be to evaluate such Transitioning Employees for consideration for permanent employment with Manager after the expiration of the sixty (60) day period. Upon the expiration of the sixty (60) day probationary period, Manager shall have the right, in its sole discretion, to offer permanent employment to any Transitioning Employees employed by Manager under this Section 6.3, upon such terms as Manager, in its sole discretion, shall determine; however, Manager shall have no obligation to maintain the employment of any such individuals for any time period, and therefore, following the expiration of the sixty (60) day probationary period, Manager may terminate such employees' employment at any time in Manager's sole discretion. (b) All costs and expenses associated with the Transitioning Employees, shall be an Operating Expense, unless otherwise specifically provided herein. Notwithstanding the foregoing (but subject to the last sentence of this Subsection 63(b)), in the event a claim or lawsuit is brought against Manager by an employee of Manager who is employed pursuant to Section 6.3(a) above, alleging wrongful termination arising out of a termination by Manager that occurred within or upon the expiration of the sixty (60) day probationary period of employment pursuant to Section 6.3(a) above, then the costs and expenses incurred by Manager to settle or defend such claims or lawsuits shall be deemed an Operating Expense in an amount not to exceed Twenty Five Thousand Dollars ($25,000.00) with respect to any one individual /employee. However, in no event shall more than Seventy -Five Thousand Dollars ($75,000.00) be characterized as an Operating Expense under this Section 6.3(b), it being understood and agreed that Manager shall be solely responsible for all costs and expenses relating to settling or defending any such claims or lawsuits after the sum of Seventy -Five Thousand Dollars ($75,000.00) has been attributed as an Operating Expense hereunder. Section 6.4 Non- Solicitation/Non- Hirine. During the Term and for a period of one (1) year after the end of the Term, City shall not solicit for employment, or hire, any of Manager's Management -Level Employees; provided, however, this provision shall not apply to Manager's Management -Level Employees who were previously employed by the City (if any). The City acknowledges that Manager will spend a considerable amount of time identifying, hiring and training individuals to work in such positions, and that Manager will suffer substantial damages, the exact amount of which would be difficult to quantify, if the City were to breach the terms of this Section by hiring, or soliciting for employment, any of such individuals. Accordingly, in the event of a breach or anticipated breach of this Section by the City, Manager shall be entitled (in addition to any other rights and remedies which Manager may have at law or in equity, including money damages) to equitable relief, including an injunction to enjoin and restrain the City from continuing such breach, without the necessity of posting a bond. 17 ARTICLE 7 BUSINESS PLAN AND OPERATING BUDGET Section 7.1 Establishment of Business Plan. Including the Operating Budget. Each Operating Year, the parties shall agree on a Business Plan covering a three (3) year period, which shall include an Approved Operating Budget for the next immediate Operating Year, as more fully set forth in this Article 7. The Operating Budget within each Business Plan shall include Manager's projection of Revenues and Operating Expenses, including Operating Margin, presented on a monthly and annual basis, for each applicable year within such Business Plan. The City agrees to provide Manager with all information in its possession necessary to enable Manager to develop each such Business Plan. (a) First Operating Year. Attached hereto as Exhibit C is the mutually agreed Business Plan for the first (1st) three (3) Operating Years, which shall be deemed an "Approved Business Plan" and shall include the "Approved Operating Budget" for the first (1st) Operating Year. The parties recognize that Manager has developed (and the City has approved) the Approved Operating Budget based on limited information, and the parties agree to review the Approved Operating Budget approximately four (4) months after the Effective Date to determine whether any changes to the Approved Operating Budget are appropriate. Any such changes shall only be made if mutually agreed by the City and Manager, in writing. The parties agree that, notwithstanding that the attached Business Plan covers a three (3) year period, the plans and budgets relating to the 2 "d and 3`d Operating Years are preliminary only and are not binding on the parties. The parties further agree that, although the Business Plan attached hereto as Exhibit C does not include a Marketing Plan, all future Business Plans prepared and submitted by Manager shall include a Marketing Plan. Manager further agrees to prepare and submit to the City a prorated Marketing Plan for the first (1st) Operating Year on or before July 1, 2012. (b) All Other Operating Years. Manager agrees that no later than November 1 of each Operating Year (beginning on November 1, 2012), Manager shall prepare and submit to the City its proposed Business Plan for the upcoming three (3) Operating Years. The parties agree that, the plans and budgets in a Business Plan relating to the second (2"d) and third (3`d) Operating Years therein will be preliminary only and shall not be binding on the parties. The parties further agree that the Operating Budgets within each Business Plan that relate to the second (2 "d) and third (3`d) Operating Years therein may be presented in summary form, without full line -item detail. Section 7.2 Approval of Business Plan, Operating Budget. Each annual Business Plan shall be subject to the review and approval of the City and its Board of City Commissioners, which approval shall not be unreasonably withheld or delayed. In order for the City to fully evaluate and analyze the Operating Budget within such Business Plan or any other request by Manager relating to income and expenses, Manager agrees to provide to the City such reasonable financial information relating to the Facility as may be requested by the City from time to time. No later than December 1 of such Operating Year, the City shall provide any comments it may have to the proposed Business Plan, and the parties shall then engage in good faith discussions 18 and use reasonable commercial efforts to attempt to agree on a final Business Plan no later than December 31 of such year. The Business Plan adopted through such procedure with respect to the next immediate Operating Year (only) is referred to herein as the "Approved Business Plan" and the Operating Budget within such Approved Business Plan is referred to herein as the "Approved Operating Budget ". In no event shall any Approved Operating Budget under this Section 7.2 be deemed to amend the Target Operating Margin for purposes of the City's termination rights under Section 4.3(c) above.. If for any reason the parties have not adopted a Business Plan by the start of the next immediate Operating Year, the parties shall operate under the Approved Business Plan for the preceding Operating Year until such time as the parties are able to adopt a new Business Plan for such year, but in no event shall the parties failure to adopt a Business Plan be deemed to negate the City's termination rights under Section 4.3(c) with respect to the Target Operating Margin. Manager may at any time submit a proposed amendment to such Approved Business Plan for review and approval by the City. Upon written approval by the City of such amended Approved Business Plan, the Approved Business Plan for such Operating Year shall be amended to incorporate such approved modifications. Section 7.3 Adherence to Operating Budget. Manager shall use all reasonable efforts to manage and operate the Facility in accordance with the Approved Operating Budget. However, the City acknowledges that notwithstanding the Manager's experience and expertise in relation to the operation of facilities similar to the Facility, the projections contained in each Approved Operating Budget are subject to and may be affected by changes in financial, economic and other conditions and circumstances beyond the Manager's control, and that Manager shall have no liability if the numbers within the Operating Budget are not achieved, except for the City's possible right of termination pursuant to Section 4.3(c) above. Manager agrees to notify the City within 30 days of any significant change or variance in the Operating Margin in the Approved Operating Budget, and any material increase in total Facility expenses from that provided for in the Approved Operating Budget. In either such case and if requested by the City, Manager agrees to work with City to develop and implement a plan (or changes to the then current plan) to limit Operating Expense to be incurred in the remaining months of such Operating Year with the goal of achieving the Approved Operating Budget. Without the prior consent of the City, Manager shall not exceed, commit or contract to expend any sums in excess of the aggregate amount allowed in the Operating Budget or otherwise approved by City, except if (i) such additional expenditure is necessary to perform an emergency repair (as defined in Section 11.3 below, or (ii) such additional cost is offset by a corresponding increase in Revenue, (iii) such additional costs are for services or utilities provided to the Facility by unaffiliated third parties, the cost of which is not within the reasonable control of Manager, such as the costs of utilities and insurance; or (iv) such additional costs relate to events scheduled pursuant to Section 5.5 that were not contemplated in the applicable Approved Operating Budget. 19 ARTICLE 8 PROCEDURE FOR HANDLING INCOME Section 8.1 Event Account. Manager shall deposit as soon as practicable following receipt, in the Event Account, all revenue received from ticket sales and any advance deposits received from promoters /licensees which Manager receives in contemplation of, or arising from, an event, pending completion of the event. Such monies will be held in escrow for the protection of ticket purchasers, the City and Manager, to provide a source of funds as required for payments to performers and for payments of direct incidental expenses in connection with the presentation of events that must be paid prior to or contemporaneously with such events. Promptly following completion of such events, Manager shall transfer all funds remaining in the Event Account, including any interest accrued thereon, into the Operating Account. Bank service charges, if any, on such account(s) shall be deducted from interest earned. Section 8.2 Operating Account. Except for revenue received from ticket sales and any advance deposits received from promoters /licensees in connection with an event (which revenues and deposits are initially deposited into the Event Account as provided in Section 8.1 above and transferred to the Operating Account in order to settle the event), all Revenue derived from operation of the Facility, from any source, shall be deposited by Manager into the Operating Account as soon as practicable upon receipt (but not less often than once each business day). The specific procedures (and authorized individuals) for making deposits to and withdrawals from such account shall be set forth in the Operations Manual, but the parties specifically agree that Manager shall have authority to sign checks and make withdrawals from such account, without needing to obtain the co- signature of a City employee or representative. ARTICLE 9 FUNDING Section 9.1 Source of Funding. Manager shall pay all items of expense for the operation, maintenance, supervision and management of the Facility from the funds in the Operating Account, which Manager may access periodically for this purpose. The Operating Account shall be funded with amounts generated by operation of the Facility (as described in Article 8 above), or otherwise made available by the City. The parties shall at the commencement of this Agreement agree on a specified minimum balance which is intended to be maintained in the Operating Account at all times during the Term. To ensure sufficient funds are available in the Operating Account, City will deposit in the Operating Account, on or before the Effective Date, the budgeted or otherwise approved expenses for the month beginning on the Effective Date, plus an additional amount up to the amount of the minimum balance, to serve as a "buffer" to ensure sufficient funds are available at all times to pay Operating Expenses. The City shall thereafter, on or before the I" day of each succeeding month following the Effective Date, deposit (or allow to remain) in the Operating Account the budgeted or otherwise approved expenses for each such month, and to at all times maintain the specified minimum balance agreed by the parties. If at any time the amounts in the Operating Account are not sufficient to pay anticipated Operating Expenses as and when they become due, Manager shall notify the City 20 and the parties shall develop and implement a plan to ensure that sufficient funding is provided by the. City (such plan to be subject to the City's approval). Manager shall have no liability to the City or any third party in the event Manager is unable to perform its obligations hereunder, or under any third party contract entered into pursuant to the terms hereof, due to the fact that sufficient funds are not made available to Manager to pay such expenses in a timely manner, provided that Manager shall notify the City in writing as promptly as reasonably possible if at any time it anticipates a cash flow shortfall preventing it from paying Operating Expenses hereunder. Section 9.2 Advancement of Funds. Under no circumstances shall Manager be required to pay for or advance any of its own funds to pay for any Operating Expenses. In the event that, notwithstanding the foregoing, Manager agrees to advance its own funds to pay Operating Expenses pursuant to the Approved Operating Budget, City shall promptly reimburse Manager for the full amount of such advanced funds, plus interest at a rate equal to LIBOR plus three percent (3 %). ARTICLE 10 FISCAL RESPONSIBILITY; REPORTING Section 10.1 Records. Manager agrees to keep and maintain, at its office in the Facility, separate and independent records, in accordance with generally accepted accounting principles, devoted exclusively to its operations in connection with its management of the Facility. Such records shall include, without limitation, books, ledgers, journals, and accounts, and shall contain all entries reflecting the business operations of Manager under this Agreement. The City or its authorized agent shall have the right to audit and inspect such records from time to time during the Term, upon reasonable notice to Manager and during Manager's ordinary business hours. The City may make copies of such records upon reasonable prior notice to Manager. In furtherance of the foregoing, Manager shall keep and preserve for at least three (3) years following each Operating Year copies of all such documents, and any other evidence of Revenues and Operating Expenses for such period for the Facility. Section 10.2 Monthly Financial Reports. Manager agrees to provide to the City, within thirty (30) days after the end of each month during the Term, financial reports for the Facility including a balance sheet, aging report on accounts receivable, and statement of revenues and expenditures (budget to actual) for such month and year to date in accordance with generally accepted accounting principles. All such financial reports shall be prepared in accordance with Generally Accepted Accounting Principles, consistently applied. In addition, Manager agrees to provide to the City a summary of bookings for each such month (occurred and not yet occurred), an event income statement, and separate cash receipts and disbursements reports for each event held at the Facility during such month. Additionally, Manager shall submit to the City, or shall cause the applicable public depository utilized by Manager to submit to the City, on a monthly basis, copies of all bank statements concerning the Event Account and the Operating Account. All accounting under this Agreement shall be on an accrual basis. In addition to the foregoing, 21 Manager shall within thirty (30) days following each Operating Year, provide to the City adjusted year -end financial projections for Revenue, Operating Expenses and Operating Margin. Section 10.3 Annual Audit. Manager agrees to provide to the City, within one hundred twenty (120) days following the end of each Operating Year, a certified audit report on the accounts and records as kept by Manager for the Facility. Costs associated with obtaining such certified audit report shall be an Operating Expense of the Facility. Such audit shall be performed by an external auditor approved by the City, and shall be conducted in accordance with generally accepted auditing standards. The audit shall contain an opinion expressed by the independent auditor of the accuracy of the financial records kept by Manager, and shall contain sufficient information as to allow the City to verify the Quantitative Components of the Incentive Fee due to Manager for the previous Operating Year pursuant to Section 3.2(a)(i -ii). Section 10.4 Other Audit. The City shall have the right at any time, and from time to time, to audit and /or cause nationally- recognized independent auditors to audit all of the books of Manager relating to Revenues, Gross Food and Beverage Revenues, and Operating Expenses for the Facility, including, without limitation, cash register tapes, credit card invoices, duplicate deposit tapes, and invoices. The cost of any such audits shall be borne solely by the City, and shall not be considered an Operating Expense. If any such audit demonstrates that Manager has been overpaid or underpaid the Incentive Fee, the parties shall make the appropriate adjustment by Manager paying back the City, or the City paying additional amounts to Manager, as the case may be. The City's right to have such an audit made with respect to any Operating Year and Manager's obligation to retain the above records shall expire three (3) years after termination of this Agreement. If an audit, litigation or other action involving such records begins before the end of the three year period, the records shall be maintained for three (3) years from the date that all issues arising out of the action are resolved. ARTICLE 11 CAPITAL IMPROVEMENTS Section 11.1 Schedule of Capital Expenditures; Facility Condition Audit. (a) Manager shall, within one - hundred twenty (120) days after the Effective Date, and annually thereafter at the time of submission of the annual Operating Budget to the City; provide to the City a Capital Improvement Plan covering a three (3) year period, for the purpose of allowing the City to consider such projects and to prepare and update a long -range Capital Expenditure budget. The Capital Improvement Plan shall be subject to review and approval by the City and its Board of City Commissioners, in the same manner as provided in Section 7.2 for the Operating Budget submitted by Manager. The Capital Improvement Plan adopted and approved through such procedure shall then be deemed a part of the Approved Business Plan for the 1" Operating Year included therein. However, the City shall be under no obligation to make any Capital Expenditures proposed by Manager or included in an Approved Business Plan, and Manager shall have no liability for any claims, costs or damages arising out of a failure by the City to make any Capital Expenditures. 22 (b) In conjunction with Manager's submission of a Capital Improvement Plan in the 1" and (if applicable) 4`h Operating Years, Manager shall prepare and submit to the City a facility condition audit report for the Facility, in a form substantially similar to that which has been presented to the City by Manager. Section 11,2 Responsibility for Capital Expenditures. The City shall be solely responsible for all Capital Expenditures at the Facility. Manager agrees to meet and confer with City regarding the plan for such project and, upon the City's request, and provided the Capital Expenditure project is within Manager's expertise as a facility manager (such as, for example only, the purchase and installation of a new scoreboard, but not including a structural addition to the existing Facility), Manager agrees to participate in the performance, direction, or supervision of a Capital Expenditure project which is authorized in writing by the City. Any reasonable expenses incurred by Manager in performing, directing and supervising authorized Capital Improvement projects shall be included as an Operating Expense or Capital Expenditure, as applicable. Section 11.3 Funds for Emergency Repairs. Notwithstanding the terms of Section 11.2 above, Manager shall have the right to make necessary expenditures for emergency repairs or improvements to conditions which, if not repaired or improved immediately, create an imminent danger to persons or property, or create an unsafe condition at the Facility that poses an imminent threat to persons or property. In such event, the City shall promptly reimburse Manager for the cost of such Capital Expenditure; provided, however, that in the event that any such emergency expenditure will exceed $10,000.00 in one occurrence, Manager must first obtain the written approval of the City before proceeding with such expenditure, unless it would be unreasonable to obtain such approval due to the circumstances of such emergency, in which case Manager must at least notify by telephone the City's contract administrator. In any event, as soon as Manager becomes aware of the emergency situation or of a potential emergency situation, Manager shall immediately inform the City of the situation and the proposed action to be taken. ARTICLE 12 FACILITY CONTRACTS; TRANSACTIONS WITH AFFILIATES Section 12.1 Existing Contracts. The City shall provide to Manager, on or before the Effective Date, copies of all Existing Contracts. To the extent copies are provided to Manager, Manager shall administer and assure compliance with such Existing Contracts. Section 12.2 Execution of Contracts. Subject to Sections 12.3 and 12.4, Manager shall have the right to enter into Service Contracts, Revenue Generating Contracts and other contracts related to the operation of the Facility, as agent on behalf of the City, under the following conditions: 23 (a) Any such material agreements shall contain indemnification and insurance obligations on the part of each vendor, licensee or service provider, as required by the City for the type of services or obligations being provided or performed by such parties. (b) Manager shall obtain the prior written 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, (i) can be terminated by Manager or City following expiration of the Term without any penalty, or (ii) is for a term of not more than two (2) years, and does not obligate the City or Manager to pay more than Ten Thousand Dollars ($10,000) over the course of such term. (c) Manager shall obtain the prior written approval of the City (which approval shall not be unreasonably withheld or delayed) before booking any event that could place the City or the Event Account at financial risk (meaning the City could lose money on the event), including any event that is co- promoted or in -house promoted by the Facility. In no event shall City's approval or disapproval of a proposed event pursuant to this Section 12.2(c) be construed as a waiver of the City's rights under this Agreement, including but not limited to, City's right to terminate this Agreement pursuant to Section 43(c). Section 12.3 Transactions with Affiliates. In connection with its obligations hereunder relating to the purchase or procurement of services for the Facility (including without limitation food and beverage services, ticketing services, Commercial Rights sales, web design services and graphic design services), Manager may purchase or procure such services, or otherwise transact business with, an Affiliate, provided that the prices charged and services rendered by such Affiliate are competitive with those obtainable from any unrelated parties rendering comparable services. To ensure compliance in this respect, Manager agrees to: (i) utilize competitive price proposal processes prior to purchasing or procuring services from, or otherwise transacting business with, one of its Affiliates; and (ii) to obtain the City's prior written consent before purchasing or procuring services, or otherwise transacting business with, one of its Affiliates. Manager shall, at the request of the City, provide all documents relating to its transactions with Affiliates, and /or reasonable evidence establishing the competitive nature of such prices and services at the time such agreement is proposed to be entered into, including, if appropriate, additional competitive bid information from other persons seeking to render such services at the Facility. In addition, Manager may license the use of the Facility or any part thereof to itself in connection with any event in the promotion of which Manager is involved, so long as the license fee charged is on prevailing rates and terms or such other rates and terms as the City approves in writing prior to such event. Section 12.4 Naming Rights for the Facility. Manager shall have the exclusive right to solicit and enter into agreements granting naming rights to have a name or names associated with all or any portion of the Facility, on the condition that: (a) Prior to entering into any such contract with respect to naming rights for less than all of the Facility, or for any component thereof, Manager shall obtain the City's written 24 approval of such contract (which approval shall not be unreasonably withheld or delayed). The parties agree that, in considering whether to approve any such contract, the City shall be entitled to consider its proposed term, potential to generate Revenue, aesthetic appeal (location, size, and design coordination), and other non - financial criteria as may be mutually agreed by the parties. (b) Prior to entering into any such contract with respect to naming rights for the entire Facility (i.e., renaming the Facility from its current name as the "Salina Bicentennial Center "), Manager shall obtain the prior written approval of such contract from the City and its Board of City Commissioners. ARTICLE 13 FOOD AND BEVERAGE SERVICES Section 13.1 Generally. Manager shall have the sole and exclusive right to manage and perform, and Manager hereby agrees to manage and perform, all food and beverage concession and catering service at the Facility ( "Food and Beverage Service "). Manager may engage sub- contractors to sell food and beverages at the Facility. Section 13.2 Concession Areas. Manager shall have the exclusive right to use the concession stands, novelty stands, customer serving locations, food preparation areas, vendor commissaries, kitchen and warehouse facilities, and other food service related areas of the Facility, together with the improvements, equipment and personal property upon or within such areas, for the purpose of providing the Food and Beverage Service (and providing other duties required of Manager hereunder). The City shall provide all smallwares and equipment, consistent with the Operating Budget, reasonably required by Manager to perform the Food and Beverage Service. Section 13.3. Food and Beverage Duties. In connection with its management and provision of the Food and Beverage Service, Manager shall: (a) Develop and implement all necessary policies and procedures for the food and beverage operations; (b) Engage, and control the terms of employment of, all employees necessary to perform the Food and Beverage Services; (c) Manage the Food and Beverage Service in compliance with and subject to all federal, state and local laws, ordinances and regulations (including, without limitation, health and sanitation codes and regulations with respect to the sanitation and purity of the food and beverage products for sale); (d) Arrange for all minor repairs and routine maintenance to the equipment used in the operation of the Food and Beverage Service; 25 (e) Keep the food and beverage facilities and equipment neat, clean and in a sanitary condition; (f) Undertake appropriate advertising, marketing and promotion of the food and beverage offerings at the Facility; (g) Develop menus, portions, brands, prices, themes and marketing approaches. Manager shall notify the City prior to making any material changes to the prices of food and/or beverage concession items. Changes to such prices may be made in Manager's discretion; (h) Order, stock, prepare, pay for (as an Operating Expense) and sell appropriate foods and beverages; and (i) Obtain and maintain all licenses and permits necessary for the operation of the Food and Beverage Service, including those required for the on- premise sale of alcoholic beverages. The City shall offer reasonable assistance to Manager in obtaining such licenses. Section 13.4. Food and Beverage Revenue and Expenses. All revenue derived from operation of the Food and Beverage Service at the Facility shall be included in Revenue, and shall be deposited by Manager into the Operating Account. All expenses incurred by Manager in connection with the provision by Manager of the Food and Beverage Service shall be Operating Expenses, payable by Manager with funds from the Operating Account. ARTICLE 14 AGREEMENT MONITORING AND COMMUNITY PARTNERS Section 14.1 Contract Administrator. Each party shall appoint a contract administrator who shall monitor such party's compliance with the terms of this Agreement. Manager's contract administrator shall be its General Manager at the Facility, unless Manager notifies the City of a substitute contract administrator in writing. City's contract administrator shall be Dion Louthan, unless the City notifies Manager of a substitute contract administrator in writing. Any and all references in this Agreement requiring Manager or City participation or approval shall mean the participation or approval of such party's contract administrator, unless otherwise provided herein. Section 14.2 Community Cultural Partners. Manager shall at all times use reasonable efforts to cooperate and coordinate with the Community Cultural Partners, with an aim toward complimenting and assisting the Community Cultural Partners with their efforts to market and utilize their respective facilities for events and shows; to enhance and broaden the market and audience pool for their respective facilities; to enhance the quality of experience for all patrons attending events at such facilities; to maximize the positive economic impact from their respective facilities to the Community Cultural Partners, the City and the public; and to make the facilities attractive venues to promote and book a wide variety of events. In furtherance of the 26 foregoing, and when practicable, Manager agrees to use reasonable efforts to: (i) keep the Community Cultural Partners informed as to holds, proposed bookings and event activities at the Facility, and communicate and coordinate with the Community Cultural Partners in regards to proposed scheduling of events at the Facility with an aim toward seeking to limit the occurrence of conflicting events at the Facility and the Community Cultural Partners' facilities; (ii) advise the Community Cultural Partners of possible events or rights to shows when Manager has access to such events or shows, but has elected not to pursue such events or shows with respect to the Facility; (iii) assist the Community Cultural Partners with the cross - promotion of shows and memberships; (iv) become an active member of the cultural roundtable in Salina, Kansas; (v) consider an annual opportunity to co- promote a show with the Community Cultural Partners; and (vi) review the ticketing systems of the Facility and the Community Cultural Partners to determine if all entities can benefit from the shared use of a ticketing system for the benefit of cross - promotion and packaged ticket sales. All costs incurred in connection with Manager's performance of this Section 14.2 shall be Operating Expenses. ARTICLE 15 INDEMNIFICATION Section 15.1 Indemnification by Manager. Manager agrees to defend, indemnify and hold harmless the City and its officials, directors, officers, employees, agents, successors and assigns against any claims, causes of action, costs, expenses (including reasonable attorneys' fees) liabilities, or damages (collectively, "Losses ") suffered by such parties, arising out of or in connection with (a) any negligent acts or omissions, intentional misconduct, fraud, or activities outside the scope of authority granted hereunder of Manager and/or its officers, employees, or agents; or any (b) breach by Manager of any of its representations, covenants or agreements made herein. Provided, however, the foregoing indemnification shall not extend to Losses to the extent such Losses arise out of the negligent acts or omissions or intentional misconduct of the City or any of its employees or agents, or any default or breach of this Agreement by the City. Section 15.2 Indemnification by the City. Only in the manner and to the extent permitted under applicable law, including but not limited to the Kansas Tort Claims Act, K.S.A. 75 -6101 et seq., the City agrees to defend, indemnify and hold harmless Manager, its directors, officers, employees, agents, successors and assigns, against any Losses suffered by such parties, but only to the extent the aggregate of such Losses arising out of a single occurrence or accident do not exceed applicable policy limits under the City's commercial general liability insurance policy, and only if such Losses arise out of or in connection with (a) any negligent act or omission, or intentional misconduct, on the part of City or any of its employees or agents in the performance of its obligations under this Agreement, (b) a breach by City of any of its representations, covenants or agreements made herein, including without limitation City's obligation to pay any budgeted or otherwise approved expenses in a timely manner, (c) failure by City to pay any amounts due by City or to otherwise perform any obligations of City under any third party contracts, licenses or agreements entered into by Manager in furtherance of its duties hereunder and as authorized hereby; (d) any environmental condition at the Facility or on or under the premises on which the Facility is located not caused by Manager, its employees or 27 agents, (e) any structural defect with respect to the Facility not caused by Manager, its employees, or agents; and (f) any act or omission carried out by Manager at or pursuant to the express written direction or instruction of City, its authorized agents or employees. Provided, however, the foregoing indemnification shall not extend to Losses to the extent such Losses arise out of the negligent acts or omissions, intentional misconduct, fraud, or activities outside the scope of authority granted hereunder of Manager and/or its officers, employees, or agents, or any default or breach of this Agreement by Manager. The parties agree that, for purposes of determining the City's indemnification obligations hereunder, "the extent permitted under applicable law" shall be determined as of the date on which the City receives written notice from Manager pursuant to Section 15.3 below. Section 15.3 Conditions to Indemnification. With respect to each separate matter brought by any third party against which a party hereto ( "Indemnitee ") is indemnified by the other party ( "Indemnitor ") under this Article 15, the Indemnitor shall be responsible, at its sole cost and expense, for controlling, litigating, defending and /or otherwise attempting to resolve any proceeding, claim, or cause of action underlying such matter, except that the Indemnitee may, at its option, participate in such defense or resolution at its expense and through counsel of its choice. In any event, Indemnitor and Indemnitee shall in good faith cooperate with each other and their respective counsel with respect to all such actions or proceedings, at the Indemnitor's expense. With respect to each and every matter with respect to which any indemnification may be sought hereunder, upon receiving notice pertaining to such matter, Indemnitee shall promptly (and in no event more than twenty (20) days after any third party litigation is commenced asserting such claim) give reasonably detailed written notice to the Indemnitor of the nature of such matter and the amount demanded or claimed in connection therewith. Section 15.4 Survival. The obligations of the parties contained in this Article 15 shall survive the termination or expiration of this Agreement. ARTICLE 16 INSURANCE Section 16.1 Types and Amount of Coverage. (a) Manager agrees to obtain insurance coverage in the manner and amounts as set forth in Exhibit D, attached hereto, and shall provide to the City promptly following the Effective Date a certificate of certificates of insurance evidencing such coverage. Manager shall maintain such referenced insurance coverage at all times during the Term, and will not make any material modification or change from these specifications without the prior approval of the City. Each insurance policy shall include a requirement that the insurer provide Manager and the City at least thirty (30) days written notice of cancellation or material change in the terms and provisions of the applicable policy. The cost of all such insurance shall be an Operating Expense. Should any insurance coverage obtained by Manager be part of a larger corporate policy of insurance, Manager may allocate as an Operating Expense only such costs as are attributable to the Facility, and such allocation must be reviewed and approved by City. Except 28 for the City's property insurance obtained under Section 16.1(b) below, all insurance procured by Manager in accordance with the requirements of this Agreement shall be primary over any insurance carried by the City and shall not require contribution by the City. (b) The City is to insure, at its discretion, the Facility and shall be responsible for any loss or damage to the building or its contents, including applicable deductibles. Manager, at its discretion, may insure any personal property owned by Manager and subject to its own deductible, which shall not be paid as an Operating Expense. A joint waiver of subrogation is to be applicable by both the City and Manager's property insurer. Section 16.2 Rating; Additional Insureds. All insurance policies shall be issued by insurance companies rated no less than A VIII in the most recent 'Bests" insurance guide, and licensed in the State of Kansas or as otherwise agreed by the parties. All such policies shall be in such form and contain such provisions as are generally considered standard for the type of insurance involved. The commercial general liability policy, automobile liability insurance policy and umbrella or excess liability policy to be obtained by Manager hereunder shall name City as an additional insured. The workers compensation policy to be obtained by Manager hereunder shall contain a waiver of all rights of subrogation against the City. Manager shall require that all third -party users of the Facility, including without limitation third -party licensees, ushers, security personnel and concessionaires, provide certificates of insurance evidencing insurance required by the City for the types of activities in which such user is engaged. If Manager subcontracts any of its obligations under this Agreement, Manager shall require each such subcontractor to secure insurance that will protect against applicable hazards or risks of loss as and in the minimum amounts designated herein, and name Manager and the City as additional insureds. Failure of Manager or its third -party users of the Facility to comply with these requirements shall not be construed as a waiver of these requirements or provisions and shall not relieve Manager of liability. ARTICLE 17 REPRESENTATIONS, WARRANTIES AND COVENANTS Section 17.1 Manager Representations and Warranties. Manager hereby represents, warrants and covenants to City as follows: (a) that it has the full legal right, power and authority to enter into this Agreement and to grant the rights and perform the obligations of Manager herein, and that no third party consent or approval is required to grant such rights or perform such obligations hereunder; and (b) that this Agreement has been duly executed and delivered by Manager and constitutes a valid and binding obligation of Manager, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar Laws affecting creditors' rights generally or by general equitable principles. 29 (c) that Manager, its officers, agents, and employees will comply with all Laws applicable to its management of the Facility, provided that Manager shall not be required to undertake any compliance activity, nor shall Manager have any liability under this Agreement therefor, if such activity requires any Capital Expenditure; and provided further, that Manager shall require every licensee, promoter, or user of any portion of the Facility to comply, and to be financially responsible for compliance, with Title III of the ADA in connection with any activities of such licensee, user, or promoter at the Facility. Section 17.2 Cites presentations, Warranties and Covenants. City represents, warrants and covenants to Manager as follows: (a) that it has the full legal right, power and authority to enter into this Agreement and to grant the rights and perform the obligations of City herein, and that no other third party consent or approval is required to grant such rights or perform such obligations hereunder. (b) that this Agreement has been duly executed and delivered by City and constitutes a valid and binding obligation of City, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally or by general equitable principles. (c) that to the best of City's knowledge, the Facility is, as of the Effective Date, in compliance in all respects with all applicable Laws relating to the construction, use and operation of the Facility (including, without limitation, Title III of the American with Disabilities Act), and that there exist no structural defects or unsound operating conditions at the Facility. ARTICLE 18 MISCELLANEOUS Section 18.1 No Discrimination. Manager agrees that it will not discriminate against any employee or applicant for employment for work under this Agreement because of race, religion, color, sex, disability, national origin, ancestry, physical handicap, or age, and will take affirmative steps to ensure that applicants are employed, and employees are treated during employment, without regard to race, religion, color, sex, disability, national origin, ancestry, physical handicap, or age.. Section 18.2 Equal Opportunity. In conformity with Section 13 -131 of the Salina Code, Manager and its subcontractors, if any, shall: (a) Observe the provisions of Chapter 13 of the Salina Code and shall not discriminate against any person in the performance of work under this Agreement because of race, sex, religion, age, color, national origin, ancestry or disability; Of (b) Include in all solicitations, or advertisements for employees, the phrase "equal opportunity employer," or a similar phrase to be approved by the City's human relations director ( "Director"); (c) Not discriminate against any employee or applicant for employment in the performance of this Agreement because of race, sex, religion, age, color, national origin, ancestry or disability; and (d) Include similar provisions in any subcontract under this Agreement. Section 18.3 Affirmative Action to Insure Equal Opportunity. (a) In conformity with Section 13 -132 of the Salina Code, Manager and its subcontractors, if any, shall: i. Take affirmative action to insure that employees are treated equally without regard to their race, sex, religion, age, color, national origin, ancestry or disability. Such affirmative action shall include, but not be limited to, the following: employment, upgrading, demotion or transfer, recruiting or recruitment, advertising, layoff or termination, rates of pay or other forms of compensation and selection for training, including apprenticeship; ii. Post, in conspicuous places available to employees and applicants for employment, notices to be provided by the Director setting forth provisions of Article VI of Chapter 13 of the Salina Code; and iii. Provide all affirmative action information and necessary documents to implement the compliance with the requirements of all federal, state and local laws and ordinances. (b) It shall be no excuse that Manager has a collective bargaining agreement with any union providing for exclusive referral or approval systems. The failure of Manager or its subcontractors to comply with the requirements of Article VI of Chapter 13 of the Salina Code shall be grounds for cancellation, termination, or suspension of this Agreement, in whole or in part, by the City until satisfactory proof with intent to comply has been submitted to and accepted by the City. (c) The City acknowledges that these contractual undertakings by the Manager fulfill the requirements of Salina Code Section 13 -133 relating to the submission of an affirmation action plan. 31 Section 18.4 Use of Facility Names and Logos. Manager shall have the right to use throughout the Tenn (and permit others to use in furtherance of Manager's obligations hereunder), for no charge, the name and all logos of the Facility, on Manager's stationary, in its advertising of the Facility, and whenever conducting business of the Facility, provided, that Manager shall take all prudent and appropriate measures to protect the intellectual property rights of the City relating to such logos. All intellectual property rights in any Facility logos developed by the Manager or the City shall be and at all times remain the sole and exclusive property of the City. Manager agrees to execute any documentation requested by the City from time to time to establish, protect or convey any such intellectual property rights. Section 18.5 Facility Advertisements /Sponsorships. (a) The City agrees that in all advertisements placed by the City for the Facility or events at the Facility, whether such advertisements are in print, on radio, television, the internet or otherwise, it shall include a designation that the Facility is a "Global Spectrum managed facility ". (b) For the reason of the family - friendly atmosphere that the City wishes to foster in the Facility, Manager agrees not to allow any sponsorships or advertisements in the Facility, without City's prior written approval, which advertise or promote: (i) Firearms or tobacco products; (ii) Sexually explicit products, materials, or activities; (iii) Gambling; (iv) Illegal activities; (v) A business primarily engaged in the sale or promotion of those products, materials, services, or activities listed in (a -e); or (vi) An "adult- oriented business" as defined by Salina Code. Section 18.6 Force Majeure; Casualty Loss. (a) Neither party shall be liable or responsible to the other party for any delay, loss, damage, failure or inability to perform under this Agreement due to an Event of Force Majeure; provided that the party claiming failure or inability to perform provides written notice to the other party within ten (10) days of the date on which such party gains actual knowledge of such Event of Force Majeure. Notwithstanding the foregoing, in no event shall a party's failure to make payments due hereunder be excusable due to an Event of Force Majeure, unless either party terminates this Agreement pursuant to Section 18.6(b) below. (b) Upon the occurrence of an Event of Force Majeure resulting in damage or destruction to a material portion of the Facility, which renders the Facility (or a material portion thereof) untenantable, the City shall use reasonable efforts to remedy such situation. If notwithstanding such efforts, such damage or destruction is expected to render the Facility (or a material portion thereof) untenantable for a period estimated by an architect selected by the City 32 at Manager's request, of at least one hundred eighty (180) days from the date of such fire, storm or other casualty loss, either party may terminate this Agreement upon written notice to the other, provided that, (i) the City shall pay to Manager its costs of withdrawing from services hereunder, as described in Section 4.4(a) above, and (ii) in the event the Facility once again becomes tenable at any time during the Term, this Agreement shall, at the option of Manager, once again become effective and Manager shall manage and operate the Facility under the terms hereof, except that the Term shall be extended for a period of time in which the Facility was closed. Section 18.7 Assignment. Neither party may assign this Agreement without the prior written consent of the other, except that Manager may, without the prior written consent of the City but upon at least 30 days' written notice to the City, assign this Agreement in connection with a sale of all or substantially all its assets or equity interests, and Manager may assign this Agreement to an affiliate, parent or subsidiary of Manager where such assignment is intended to accomplish an internal corporate purpose of Manager as opposed to materially and substantially altering the method of delivery of services to City, so long as Manager's proposed assignee possesses substantially the same degree of expertise, quality of personnel, and creditworthiness as originally provided under this Agreement. Any purported assignment in contravention of this Section shall be void, and shall be grounds for immediate termination of this Agreement by the City. An assignment by Manager of its interest in this Agreement shall not be effective unless and until the assignee assumes and agrees to be bound by the provisions of this Agreement, following which Manager shall be released from its obligations under this Agreement. Section 18.8 .Notices. All notices required or permitted to be given pursuant to this Agreement shall be in writing and delivered personally or sent by registered or certified mail, return receipt requested, or by generally recognized, prepaid, overnight air courier services, to the address and individual set forth below. All such notices to either party shall be deemed to have been provided when delivered, if delivered personally, three (3) days after mailed, if sent by registered or certified mail, or the next business day, if sent by generally recognized, prepaid, overnight air courier services. If to the City: The City of Salina, Kansas P.O. Box 736 Salina, KS 67402 -0736 Attn: Jason Gage, City Manager 33 If to Manager: Global Spectrum, L.P. 3601 S. Broad Street Philadelphia, PA 19148 Attn: Chief Operating Officer With a copy to: Greg A. Bengtson, Esq. Clark, Mize & Linville, Chartered P.O. Box 380 Salina, KS 67402 -0380 With a copy to: Comcast Spectacor, L.P. 3601 South Broad Street Philadelphia, PA 19148 -5290 Attn: General Counsel The designation of the individuals to be so notified and the addresses of such parties set forth above may be changed from time to time by written notice to the other party in the manner set forth above. Section 18.9 Severability. If a court of competent jurisdiction determines that any term of this Agreement is invalid or unenforceable to any extent under applicable law, the remainder of this Agreement (and the application of this Agreement to other circumstances) shall not be affected thereby, and each remaining term shall be valid and enforceable to the fullest extent permitted by law. Section 18.10 Entire Agreement. This Agreement (including the exhibits attached hereto) contains the entire agreement between the parties with respect to the subject matter hereof, and supersedes and replaces all prior negotiations, correspondence, conversations, agreements, and understandings concerning the subject matter hereof. Accordingly, the parties agree that no deviation from the terms hereof shall be predicated upon any prior representations, agreements or understandings, whether oral or written. Section 18.11 Governing Law; Forum Selection. The Agreement is entered into under and pursuant to, and is to be construed and enforceable in accordance with, the laws of the State of Kansas, without regard to its conflict of laws principles. Any dispute, controversy, or claim arising out of or relating to this Agreement shall be exclusively and finally resolved in the Saline County, Kansas District Court. Manager hereby irrevocably submits to the jurisdiction and venue of Saline County District Court and expressly waives any right to file in or remove to any other venue or jurisdiction any dispute, controversy, or claim arising out of or relating to this Agreement. Section 18.12 Amendments. Neither this Agreement nor any of its terms may be changed or modified; waived, or terminated (unless as otherwise provided hereunder) except by an instrument in writing signed by an authorized representative of the party against whom the enforcement of the change, waiver, or termination is sought. Section 18.13 Waiver; Remedies. No failure or delay by a party hereto to insist on the strict performance of any tern of this Agreement, or to exercise any right or remedy consequent to a breach thereof, shall constitute a waiver of any breach or any subsequent breach of such term. No waiver of any breach hereunder shall affect or alter the remaining terns of this Agreement, but each and every tern of this Agreement shall continue in full force and effect WJ with respect to any other then existing or subsequent breach thereof. The remedies provided in this Agreement are cumulative and not exclusive of the remedies provided by law or in equity. Section 18.14 Relationship of Parties. Manager and City acknowledge and agree that they are not joint venturers, partners, or joint owners with respect to the Facility, and nothing contained in this Agreement shall be construed as creating a partnership, joint venture or similar relationship between City and Manager. In entering into contracts, accepting reservations for use of the Facility, and conducting financial transactions for the Facility with funds from the Event Account or Operating Account, Manager acts on behalf of and as agent for City (but subject to the limitations on Manager's authority as set out in this Agreement), with the fiduciary duties required by law of a party acting in such capacity. However, for all other purposes, including the operation, maintenance, promotion, and management of the Facility, Manager acts as an independent contractor, and not as an agent of the City. As an independent contractor, Manager and its employees will not be within the protection or coverage of the City's workers' compensation insurance, nor shall Manager or its employees be entitled to any current or future benefits provided to employees of the City. Further, the City shall not be responsible for withholding social security, federal, and /or state income tax, or unemployment compensation from payments made by the City to Manager. Section 18.15 No Third Party Beneficiaries. Other than the indemnitees listed in Sections 15.1 and 15.2 hereof (who are third party beneficiaries solely with respect to the indemnification provisions in such sections), there are no intended third party beneficiaries under this Agreement, and no third party shall have any rights or make any claims hereunder, it being intended that solely the parties hereto (and the aforementioned indemnitees with respect to the indemnification provisions hereof) shall have rights and may make claims hereunder. Notwithstanding the fact that the indemnitees listed in Section 15.1 and 15.2 hereof are considered third party beneficiaries with respect to the indemnification provisions in such sections, the consent of such indemnitees shall not be required to effectuate any amendments to this Agreement under Section 18.12 hereof. . Section 18.16 Attorneys Fees. If any suit or action is instituted by either party hereunder, including all appeals, the prevailing party in such suit or action shall be entitled to recover reasonable attorney fees and expenses from the non - prevailing party, in addition to any other amounts to which it may be entitled. Section 18.17 Limitation on Damages. In no event shall either party be liable or responsible for any consequential, indirect, incidental, punitive, or special damages (including, without limitation, lost profits) whether based upon breach of contract or warranty, negligence, strict tort liability or otherwise, and each party's liability for damages or losses hereunder shall be strictly limited to direct damages that are actually incurred by the other party, provided that the foregoing shall not limit or restrict any claim by Manager for the management fees described herein upon a breach or default of this Agreement by City. 35 Section 18.18 Counterparts; Facsimile and Electronic Sienatures. This Agreement may be executed in counterparts, each of which shall constitute an original, and all of which together shall constitute one and the same document. This Agreement may be executed by the parties and transmitted by facsimile or electronic transmission, and if so executed and transmitted, shall be effective as if the parties had delivered an executed original of this Agreement. IN WITNESS WHEREOF, each party hereto has caused this Management Agreement to be executed on behalf of such party by an authorized representative as of the date first set forth above. GLOBAL SPECTRUM, L.P. By: Global Spectrum, Inc., its general partner By:_ Name: Its: CITY OF SALINA, KANSAS By: Samantha P. Angell, Mayor ATTEST: By: Lieu Ann Elsey, CMC, City Clerk 36 EXHIBIT A MANAGER DUTIES Manager's obligations under the Agreement shall consist of the following obligations, all of which are subject to the terms hereof and the controls and restrictions in the Operations Manual: (a) Manage all aspects of the Facility in 'accordance with the Operations Manual and the terms of this Agreement, including but not limited to managing the Food and Beverage Service, purchasing, payroll, fire prevention, security, crowd control, routine repairs, preventative maintenance, janitorial services, promotions, advertising, energy conservation, security, box office, admission procedures, parking (if applicable), and general user services. (b) Establish and adjust prices, rates and rate schedules for user, license, concessions, occupancy, and advertising agreements, and booking commitments. Manager may deviate from the established rate schedule when entering into any such agreements if determined by Manager, using its reasonable business judgment, to be necessary or appropriate with respect to the specific situation. (c) Procure, negotiate, execute, administer and assure compliance with Service Contracts, Revenue Generating Contracts, and other contracts related to the operation of the Facility. (d) Require that all material vendors and licensees of the Facility execute vendor /license agreements containing indemnification and insurance obligations, as required and approved by the City, on the part of each such vendor /licensee. (e) Provide standard form advertising and sponsorship contracts and user /rental agreements for use at or with respect to the Facility. Manager shall submit such form agreements to the City for review and comment, and the parties shall work together to finalize such forms. Once finalized, Manager shall use such forms in furtherance of its duties hereunder, and shall not materially deviate from the terms contained in such forms without obtaining the prior approval of the City (which shall not be unreasonably withheld). Manager's sole responsibility with regard to providing legal advice or assistance hereunder shall be to provide such standard form contracts. (f) Operate and maintain the Facility, including the equipment utilized in connection with its operation and any improvements made during the term of this Agreement, in the condition received, normal wear and tear excepted. (g) Arrange for and otherwise book events at the Facility in accordance with a booking schedule to be developed by Manager. (h) Hire or otherwise engage, pay, supervise, and direct all personnel Manager deems necessary for the operation of the Facility in accordance with Article 6 of the Agreement, and conduct staff planning, retention and training programs as determined to be necessary by Manager in its sole discretion. (i) Maintain detailed, accurate and complete financial and other records of all its activities under this Agreement in accordance with generally accepted accounting principles, which records shall be made available to the City upon request, in accordance with Section 10.1 of the Agreement. 6) Submit to the City in a timely manner financial and other reports detailing Manager's activities in connection, with the Facility, as set forth in Section 10.2 of the Agreement. (k) Prepare a proposed annual Operating Budget and submit such proposed budget to the City, both in accordance with Article 7 of the Agreement. (1) Pay all Operating Expenses and other expenses incurred in connection with the operation, maintenance, supervision and management of the Facility from the Operating Account or with funds otherwise made available by the City. To the extent such funds are made available by the City, all such Operating Expenses shall be paid on time, and Manager shall not withhold any payment for any reason without first consulting with the City. (m) Secure, or assist the City (or any other third party, as applicable) to secure, all licenses and permits necessary for the operation and use of the Facility for the specific events to be held therein, and for the general occupancy of the Facility, including without limitation all necessary food and liquor licenses, and renewals thereof. The City shall cooperate in this process to the extent reasonably required. All costs associated with this process shall be Operating Expenses. (n) Collect, deposit and hold in escrow in the Event Account any ticket sale revenues which it receives in the contemplation of or arising from an event pending the completion of the event, as more fully described in Section 8.1 of the Agreement. (o) Collect in a timely manner and deposit in the Operating Account all Revenue, as more fully described in Section 8.2 of the Agreement. (p) Subject to the City making available sufficient funds in a timely manner, pay all Taxes. (q) Plan, prepare, implement, coordinate and supervise all public relations and other promotional programs for the Facility. (r) Prepare, maintain and implement on a regular basis, subject to the City's approval, a Marketing Plan for the Facility. (s) Manage and oversee the sale of Commercial Rights at or in connection with the Facility. (t) On an annual basis, cause a written inventory to be taken of all furniture, fixtures, office equipment, supplies, tools and vehicles at the Facility, and deliver a written report of the foregoing to City. Manager shall document all major damage to, or loss in, such inventory during the Term as soon as such damage or loss is discovered by Manager, and Manager shall promptly notify City of any such damage or loss. (u) Purchase, on behalf of the City and with City funds, and maintain during the Term, all materials, tools, machinery, equipment and supplies necessary for the operation of the Facility. (v) As agent for the City, manage risk management and Facility insurance needs, as more fully described in Article 15 of the Agreement. (w) Make and be responsible for all routine and minor repairs, maintenance, preventative maintenance, and equipment servicing. Manager shall be responsible for ensuring that all repairs, replacements, and maintenance shall be of a quality and class at least equal to that of the item being repaired, replaced or maintained. Any replacement of an item in inventory, or any new item added to the inventory, which is paid for by the City, shall be deemed the property of the City. (x) Cause such other acts and things to be done with respect to the Facility, as determined by Manager in its reasonable discretion to be necessary for the management and operation of the Facility following the Effective Date, and which are generally consistent with the duties and authorities enumerated herein and in the Agreement. Pa Orkin Pest Control FASTbook Allied Insurance EXHIBIT B EXISTING CONTRACTS Qqest Software Systems Consolidated Printing Walt's Refrigeration Heating, & Air Conditioning AT &T Norman's Armored Car Service Salina Iron and Metal Company Coca -Cola Enterprise, Inc. U.S. Cellular Sunflower Bank, N.A. HHC Hotels, LLC TNA Entertainment, LLC Salina Sunflower Lions Club Salina Rotary Club Downtown Lions Club N.A.R.F.E. Club Saline County, Kansas USD #305 USD #305 USD #305 Great Plains Mfg., Inc. Kansas State Firefighters Relief Association Kansas Tournament of Champions No Till on the Plains Kansas Square Dance Association Salina Area Chamber of Commerce 1 Brief Description Pest control Annual maintenance and software license Alcohol license surety bond Time clock system Copier service contract Ice machine cleaning service Telephone service, Armored car service Trash service Beverage agreement Sponsorship agreement ATM lease Advertising agreement Event agreement for 3/2/12 wrestling event Civic club event agreement Civic club event agreement Civic club event agreement Civic club event agreement Lease for annual Tri- Rivers Fair Graduations through 2015 South vs. Central basketball game, 2013 Salina Invitational Basketball Tournament, 2012 -2013 2012 Christmas party Seminar, 2012 -2013 Annual Tournament, 2012 -2013 Annual conference, 2012 -2015 Annual convention, 2012 -2015 Annual banquet, 2013 EXHIBIT C BUSINESS PLAN (1sT — 3RD OPERATING YEARS) 2012 — 2014 Bicentennial Center Business Plan Global Spectrum is excited to be a part of the community and bring a diverse mix of events to the Bicentennial Center and residents of Salina! The corresponding profit and loss projection summarizes the next three years of the Bicentennial Center's annual operating budget. Our goals are to increase profitability, produce quality services, maximize the customer experience, and foster a positive work environment. One of our goals is to incorporate Global Spectrum's "How U Doin ?" customer service philosophy within our staff and clients. This philosophy's foundation is based on the golden rule, and asking questions to create a fun and safe atmosphere in order to keep our customers coming back for future events. It is important to note that FY2012 needs to be viewed as starting up a new business. Our industry promoters and agents have confirmed they've already routed most of their spring, summer, and fall shows. This gives us little time in 2012 to increase revenues with additional event income so we'll monitor indirect expenses closely. Global Spectrum's three year projections will decrease the city of Salina's deficit by hundreds of thousands of dollars annually, but our projections for FY2012 shows an increase in operating expenses from FY2011. The increase in operating expenses FY2012 will derive mostly from the addition of full time positions that have been vacant or expunged and Global Spectrum's management fee. These staff members will be essential to operate the Bicentennial Center in a proper manner especially when our event days increase. We'll use the remainder of 2012 to implement policies and procedures, and focus on identifying capital projects that will increase revenues and customer satisfaction. We'll create internal and external documents to advertise and maximize awareness of the facility. Finally, we'll drive awareness on a national level to get new bookings, and then market these events locally to drive ticket sales. Marketing to increase bookings: Global Spectrum will use its industry contacts to create a positive image of the Bicentennial Center on a national scale. This will help make Salina a stop for more tours between the surrounding markets. We will focus on the long history at the Center and the past acts that have played the building in the 70s, 80, and 90s. We will reintroduce the facility and market to promoters and agents by announcing the new management and leveraging our record in the industry. Global Spectrum's booking resources, including our new VP of Booking, will constantly communicate with these decision makers in order to increase the event activity needed to make the facility successful. National awareness will be created through: Meeting with promoters and agents to encourage use of the Bicentennial Center Development of an advertising campaign which targets industry professionals and national promoters through Pollstar and other industry publications Establishing active memberships in national industry association Identifying new promoters and agents to use the facility w r00, 5p v Co- promoting and purchasing talent of events when necessary Attending national industry conferences such as (AVIV National Conventions, the Arena Sales and Marketing Conference, Country Music Association, Pollstar Live, Box Office Manager International Conference and the Arena Managers Conference Marketing events locally It is imperative that all events, regardless of the rental structure, be marketed correctly by the management group. We will develop positive relationships with all media and advertising outlets in the market. We will conduct a Public Relations campaign in conjunction with Global Spectrum taking over the management of the building. We will utilize a local and national campaign to gain awareness of the new, positive direction of the Bicentennial Center. In addition to the PR campaign, the marketing director will set up event marketing procedures, which will be unique to Salina. This will include social media campaigns, traditional media outlets like newspaper, TV, and radio, direct mail, email campaigns to name a few. They will also develop and maintain a "fan club" email database in which this group will receive.event notifications, pre -sale opportunities, and many other perks. Full -time Position additions: Director of Marketing - Marketing is the key to increasing ticket sales. This position will work with show promoters to strategically market and ensure the success of current and prospective events to return to the Bicentennial Center. They will assist with the supervision of the arena's web site, social media forums, public relations and grass root marketing programs to maximize the arena's presence in the. community. Director of Finance —This position will oversee the finance department, box office, and be the human resources liaison between the venue and our corporate HR resources. Corporate Sales Manager —There is great potential for advertising and sponsorship within the Bicentennial Center. The potential demand is dependent upon the amount; of arena foot traffic so as the numbers of events increase, we will need to be prepared. We can leverage our current service providers, prep rate cards, and coordinate with our marketing efforts to maximize return on investments for current and prospective partners. Our team's efforts in this category will directly result in an increase in revenues. Conference Sales / Event Manager — Heritage Hall's recent renovations have made it more versatile to potential clients and meeting rentals while minimizing expenses for the promoter. This position will focus on increasing revenues and exposure for the conference center within the community. They will be responsible for finding new business, booking, and advancing event details to ensure the event promoter's satisfaction. We anticipate an increase of 17 event days in the arena in FY2013 and 20+ in FY2014. Prior to hiring these positions, we'll need to open an operating bank account for indirect expenses and another account for our ticketed events. We are recommending an initial deposit of $200,000 and maintaining a IS��. minimum monthly balance of $100,000 in the operating bank account. Facility Fee income is a feasible way to increase event income. These revenues are associated with the upkeep and restoration of the facility. They range from $1 in smaller cities to $4.50 in the largest tier markets. Currently it seems there is a $.50 fee per ticket sold. By studying regional norms throughout other Kansas facilities of our size and setting, we'll set a fee of $1 -$2 per ticket depending on the event type and demographic. This will increase revenues from $17,250 in FY2012, to $69,905 in FY2013, and $98,986 in FY2014. The staggered increase from year to year is correlated with the increase in paid attendance primarily from family shows and concerts that will begin in FY2013. Revenues from ancillary income will grow exponentially as our attendance_ numbers increase. One of the best ancillary revenue streams is our concession revenues. We will obtain patron testimonials and consult with our sister company, Ovations, to provide a menu that will work to increases profits, options, and a selection our guests will enjoy. We are forecasting an increase of approximately $53,000 in our net concession numbers in FY2012. Also, we anticipate a 60% increase in our concession numbers in FY2013. These numbers will continue to increase over 81% from our FY2012 projections in FY2014. Ticketing convenience fee income is another revenue source worth noting in our projections. As web based technology gets more convenient for ticket purchasers, the option to buy online becomes more appealing. Each ticket sold via the internet generates incremental revenue to cover the overhead and credit card expenses incurred by the ticketing provider. Convenience income also grows as we host more popular events because people will choose to buy online rather than risk preferred seating waiting in line. We'll look at regional and industry norms regarding rates in order to maximize revenues while maintaining affordability. We anticipate increasing these revenues by 76% from FY2012 to FY2014. Global Spectrum is the second largest private management company in the sport and entertainment industry. We pride ourselves on the expertise we can bring to our facility owners across the country and internationally. We understand that without the patron's happiness and enjoyment of our events, ticket sales will decrease. Our promoters and clients will elect not to return to our venue if there are no events. This domino effect directs us to price shows reasonably, market them to the right demographic, and make sure the patrons enjoy themselves when they are attending our events. Thank you for your selection of our company and we look forward to a longterm partnership in Salina. My Best, Christopher Bird Global Spectrum Cc: Rick Hontz Ken Wajda Todd Glickman c8��1, February 1, 2012 City of Salina 300 W. Ash Street Salina, KS 67401 Re: Operating Cash Fund for Global Spectrum We propose a minimum monthly balance of $100,000 in the Operating Cash Account. If the balance at the end of each month is less than the minimum balance, we will request the necessary funding to reach this level. Fund replenishment amounts will vary with the level of activity in the facility. Based on our expected event schedule during the remainder of 2012, we estimate needing the following funding through December, but actual amounts will be determined month to month: March $ 55,000 April $ 60,000 May $ 60,000 June $ 80,000 .July $ 80,000 August $ 70,000 September $ 60,000 October $ 51,000 November $ 50,000 December $ 50.000 TOTAL $616,000 Sincerely, Sheri Chase Jones, CPA Director of Finance A E e mI0 N N N N N N N N m m mm wwm mmwm m t .0 CIM QddG- Nip V u U L L t'ci V L u U l/1 N !n (O N 111 w l/l N N N VI UI fn fn N N [O N E � u _ E E o E Eo om. m � 3 oV roL m' ca` m c Uc a v -Nv w'E uo. 2• �`° E E �m a o k m w oB E Eu v N N c C ry �m y c c= n a N K W j Y c E `m °-'ux Qo'm `m 1- n `u o'm- �UNa °'"oF '�° E "- O `y U U Z a a L Q 2 J O a a N z '¢ W Z m a r z r 0 Q _ d E. F `o a v 'c v K a q 0 2 e O r yO d LL m J 0 E 0 O 2 r¢c Z z w ¢ c Q uwg o rc� m=N W Z W U J F QZ N w V J N d Q O N N OI W N N O O Ylm •O n m0 ' • •t7N• ' m NOS JJ O. 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Limit: $500,000 EXHIBIT E FACILITY AND GROUNDS DESCRIPTION Page 1 of 2 The northeast spot light bay in the arena houses two microwave links used by the Police Department for Operations and Administration radio transmissions. y Roan 100D located in the storage area under tie south side of the arena houses the Computer Technology Department's Storage Afea Network (SAN) equipment. EXHIBIT E FACILITY AND GROUNDS DESCRIPTION Page 2 of 2