Management Agreement (3/1/2017 to 3/1/2020) MANAGEMENT AGREEMENT
between
THE CITY OF SALINA, KANSAS
and
GLOBAL SPECTRUM, L.P.
FOR THE BICENTENNIAL CENTER
Dated: As of March 1, 2017
TABLE OF CONTENTS
Page
RECITALS 1
ARTICLE 1 —DEFINITIONS 1
Section 1.1 Definitions
ARTICLE 2 —SCOPE OF SERVICES 7
Section 2.1 Engagement 7
Section 2.2 Limitations on Manager's Duties 8
Section 2.3 Standard of Care 8
ARTICLE 3—COMPENSATION 8
Section 3.1 Fixed Management Fee 8
Section 3.2 Incentive Fee 9
ARTICLE 4—TERM; TERMINATION 10
Section 4.1 Term 10
Section 4.2 Termination Upon Default 10
Section 4.3 Termination Other Than Upon Default 11
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
Section 5.5 Use by the City 14
ARTICLE 6—PERSONNEL 16
Section 6.1 Generally 16
Section 6.2 General Manager: Other Management-Level Employees 16
Section 6.3 Non-Solicitation/Non-Hiring 17
ARTICLE 7—OPERATING BUDGET 17
Section 7.1 Establishment of Business Plan. Including the Operating Budget 17
Section 7.2 Approval of Business Plan. Operating Budget 18
Section 7.3 Adherence to Operating Budget 18
ARTICLE 8—PROCEDURE FOR HANDLING INCOME 19
Section 8.1 Event Account 19
Section 8.2 Operating Account 19
ARTICLE 9—FUNDING 19
Section 9.1 Source of Funding 19
Section 9.2 Advancement of Funds '0
ARTICLE 10—FISCAL RESPONSIBILITY; REPORTING �0
Section 10.1 Records 20
Section 10.2 Monthly Financial Reports 20
Section 10.3 Annual Audit 21
Section 10.4 Other Audit
ARTICLE 11 —CAPITAL IMPROVEMENTS '1
Section 11.1 Schedule of Capital Expenditures; Facility Condition Audit 21
Section 11.2 Responsibility for Capital Expenditures
Section 11.3 Funds for Emergency Repairs 22
ARTICLE 12—FACILITY CONTRACTS; TRANSACTIONS WITH AFFILIATES 12
Section 12.1 Existing Contracts
Section 12.2 Execution of Contracts ?3
Section 12.3 Transactions with Affiliates 23
Section 12.4 Naming Rights for the Facility '4
ARTICLE 13—FOOD AND BEVERAGE SERVICES '4
Section 13.1 Generally 24
Section 13.2 Concession Areas 14
Section 13.3 Food and Beverage Duties 24
Section 13.4 Food and Beverage Revenue and Expenses �5
ARTICLE 14—AGREEMENT MONITORLNG AND COMMUNITY PARTNERS )5
Section 14.1 Contract Administrator 25
Section 14.2 Community Cultural Partners 26
ARTICLE 15—INDEMNIFICATION /6
Section 15.1 Indemnification by Manager 26
Section 15.2 Indemnification by the City 16
Section 15.3 Conditions to Indemnification '7
Section 15.4 Survival 27
ARTICLE 16—INSURANCE 28
Section 16.1 Types and Amount of Coverage 78
Section 16.2 Rating; Additional Insureds 28
ARTICLE 17—REPRESENTATIONS, WARRANTIES AND COVENANTS ''9
Section 17.1 Manager Representations and Warranties ''9
Section 17.2 City Representations, Warranties and Covenants '/9
ARTICLE 18—MISCELLANEOUS 30
Section 18.1 Non-Appropriation 30
Section 18.2 Equal Opportunity 30
Section 18.3 Use of Facility Names and Logos 31
Section 18.4 Facility Advertisements/Sponsorships 31
Section 18.5 Force Majeure: Casualty of Loss 31
Section 18.6 Assignment 32
Section 18.7 Notices 32
Section 18.8 Severability 33
Section 18.9 Entire Agreement 33
Section 18.10 Governing Law: Forum Selection 33
Section 18.11 Amendments 33
Section 18.12 Waiver: Remedies 34
Section 18.13 Relationship of Parties 34
Section 18.14 No Third Party Beneficiaries 34
Section 18.15 Attorneys Fees 34
Section 18.16 Limitation on Damages 35
Section 18.17 Counterparts: Facsimile and Electronic Signatures 35
EXHIBIT A—MANAGER DUTIES
EXHIBIT B—BUSINESS PLAN (l"THREE OPERATING YEARS)
EXHIBIT C—INSURANCE
EXHIBIT D—DEPICTION OF FACILITY AND GROUNDS
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MANAGEMENT AGREEMENT
This Management Agreement is made as of the ls` day of March, 2017 ("Effective
Date"), by and between the City of Salina. Kansas, a municipal corporation ("City"), and Global
Spectrum, LP, a Delaware limited partnership doing business as Spectra Venue Management
('Manager').
RECITALS
WHEREAS, the City owns an entertainment and conference center located in Salina.
Kansas, consisting of an arena with capacity of approximately 7,500, 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. (d/b/a
Spectra Food Services & Hospitality) and Paciolan. LLC (d/b/a Spectra Ticketing & Fan
Engagement).
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
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(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
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.
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
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 thc namc of thc 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.
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 D attached hereto.
FF&E: Furniture, fixtures and equipment to be procured for use at the Facility.
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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.
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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.
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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 I and ending on December 3I, except that the first (In) Operating Year shall commence
on the Effective Date and end on December 31, 2017.
Operations Manual: Document developed by Manager, in accordance with Section
2.1(c), which contains terms regarding the management and operation of the Facility, including
detailed policies and procedures to be implemented in operating the Facility, as agreed upon by
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.
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Target Operating Margin: The '`Target Operating Margin" shall be as follows:
1 s`Operating Year: -$500,000.00
2nd Operating Year: -$475,000.00
3rd Operating Year: -$450,000.00
The Target Operating Margin for the fourth (4th) and Fifth (5th) Operating Years shall be
established pursuant to Section 4.3(c) of this Agreement.
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 has provided the City with a proposed Operations Manual
addressing the day-to-day procedures, and the Operations Manual has been reviewed and
approved by the City. The obligations in such Operations Manual shall be obligations of the
Manager pursuant to this Agreement, and the Operations Manual shall not be amended except as
provided in Section 18.12.
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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
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 FourHundred Sixteen and 67/100 Dollars ($10,416.67) per month.
Beginning in the second (2nd) 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, 2017, 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.
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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
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 (11/12th) of the total Incentive Fee available for Manager to
earn in such year (i.e., 1 1/12`s 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`s)
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 (5/12th) 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 Conference/Convention Attendee Night in excess of
2,500 in the first Operating Year; 2,575 during the second Operating Year:
2,652 during the third Operating Year; 2,732 during the fourth Operating
Year (if applicable); and 2,814 during the fifth Operating Year (if
applicable), prorated as necessary for the first and last Operating Year;
which amount shall not exceed four-twelfths (4/12th) 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.
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(b) The Qualitative Component of the Incentive Fee due Manager each
Operating Year shall be capped at one-twelfth (1/12`^) of the total Incentive Fee available for
Manager to earn in such year (i.e.. 1/12th 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
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 1/24th of Incentive Fee; and
(ii) Event/Convention Performance—up to I/24th 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. Upon expiration of the initial
Term, the Term shall be automatically extended on the same terms and conditions contained
herein for one (I) additional twenty-four (24) month period, unless the City delivers written
notice to Manager not less than one-hundred twenty (120) days prior to the expiration of the
initial Term. 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 Term is extended 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
extended 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
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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.
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 pctition or an answcr 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 Manager fails to achieve at least one-hundred and ten
percent (110%) 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)), 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). For the sake of clarification and by way of
example only, if the Target Operating Margin in a Contract Year is a loss of$500,000, then the
actual Operating Margin in such year would need to be a loss of at least $550,000 for Manager to
have failed to achieve at least one-hundred and ten percent of the Target Operating Margin in
such year. The parties acknowledge and agree that, in calculating the Operating Margin for the
first Operating Year for purposes of this Section, the Operating Margin shall be deemed to
include all Revenue and Operating Expenses for the Facility from January I, 2017 through
December 31. 2017. The Target Operating Margin for the fourth (4th) and Fifth (5'") Operating
Years (which shall only apply if the Agreement is extended pursuant to Section 4.1(a) of this
Agreement), shall be described in a supplemental agreement between the City and the Manager,
to be executed on or before December 17, 2018.
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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
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Manager's proprietary information, shall be immediately surrendered to the City by Manager
upon termination.
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 whcn
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
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unauthorized disclosure and dissemination of any of that confidential information to any such
person or entity, except as may be required by law.
(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 Manager. 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.
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(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
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
confcr 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 IOOD of the
Facility (located in the storage area under the south side of the arena) for purposes of housing its
Disaster Recover), software and hardware 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
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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.
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 Section 6.2, 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. The parties
acknowledge and agree that Manager has provided to the City a copy of Manager's current
employee manual, and Manager shall 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.
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Section 6.3. Non-Solicitation/Non-Hiring. 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.
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 B is the mutually agreed
Business Plan for the first(11 three (3) Operating Years. which shall be deemed an "Approved
Business Plan" and shall include the "Approved Operating Budget" for the first (11 Operating
Year. 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 31d Operating Years are preliminary
only and are not binding on the parties.
(b) All Other Operating Years. Manager agrees that no later than November I
of each Operating Year (beginning on November I, 2017), 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 (31d)
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.
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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 I 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
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 rcfcrrcd 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
18
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.
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
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City shall thereafter, on or before the 1" 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
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 timc it anticipatcs 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.'joumals. 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);
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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,
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) At the time of Manager's submission of the annual Operating Budget to
the City, Manager shall 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
21
Improvement Plan adopted and approved through such procedure shall then be deemed a part of
the Approved Business Plan for the P 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.
(b) In conjunction with Manager's submission of a Capital Improvement Plan
in the 1St and (if applicable) 4th 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
previously 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. Manager acknowledges that it has received and is in
possession of all Existing Contracts. 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:
(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 4.3(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.
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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
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 propertyupon 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
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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;
(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 Steve
Hardesty, Deputy Director of Parks and Recreation, 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.
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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
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
proposcd scheduling of events at the Facility with an aim toward socking 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
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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
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 authorizcd agcnts 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 Indemnitors
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.
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ARTICLE 16
INSURANCE
Section I6.1 Types and Amount of Coverage.
(a) Manager agrees to obtain insurance coverage in the manner and amounts
as set forth in Exhibit C 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
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
domiciled 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.
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ARTICLE 17
REPRESENTATIONS,WARRANTIES AND COVENANTS
Section 17.1 Manager Representations and Warranties. Manager hereby represents,
wan-ants 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.
(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 City Representations. 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.
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ARTICLE 18
MISCELLANEOUS
Section 18.1 Non-appropriation. The City is subject to Kansas budget and cash basis
laws, and operates on a calendar fiscal year. In the event that this Agreement involves financial
obligations spanning multiple fiscal years for the City, it is subject to annual appropriation by the
City's governing body for future fiscal years. If the City's governing body does not appropriate
the funds necessary to fulfill the City's financial obligations pursuant to this Agreement, the City
shall so notify Manager and this Agreement shall be null and void for purposes of the fiscal
year(s) affected by the decision of the governing body not to appropriate. If the City's governing
body does not appropriate the funds necessary to fulfill the City's financial obligations pursuant
to this Agreement, the City will make all reasonable efforts to promptly provide noticc to
Manager of the non-appropriation; provided, however, the effect of the governing body's non-
appropriation is not preconditioned upon notice of the non-appropriation by the City to the
Manager.
Section 18.2 Equal Opportunity.
(a) In conformity with the Kansas act against discrimination and Chapter 13 of the Salina
Code, Manager and its subcontractors, if any, agree that:
(1) Manager shall observe the provisions of the Kansas act against discrimination and
Chapter 13 of the Salina Code and in doing so 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;
(2) Manager shall 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;
(3) If Manager fails to comply with the manner in which Manager reports to the Kansas
human rights commission in accordance with the provisions of K.S.A. 44-1031 and
amendments thereto, Manager shall be deemed to have breached this Agreement and it
may be canceled, terminated or suspended, in whole or in part, by the City;
(4) If Manager is found guilty of a violation of Chapter 13 of the Salina Code or the Kansas
act against discrimination under a decision or order of the Salina human relations
commission or the Kansas human rights commission which has become final Manager
shall be deemed to have breached this Agreement and it may be canceled, terminated or
suspended, in whole or in part, by the City;
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(5) Manager shall 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
(6) Manager shall include similar provisions in any subcontract under this Agreement.
Section 18.3 Use of Facility Names and Logos. Manager shall have the right to use
throughout the Term (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 I8.4 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 managed by "Spectra
Venue Management".
(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 (i-iv); or
(vi) An "adult-oriented business" as defined by Salina Code.
Section 18.5 Force Maieure: 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
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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(6) 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
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 18.6 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 18.7 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.
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If to the City: If to Manager:
The City of Salina, Kansas Global Spectrum, L.P.,
d/b/a Spectra Venue Management
P.O. Box 736 3601 S. Broad Street
Salina, KS 67402-0736 Philadelphia, PA 19148
Ann: Jason Gage, City Manager Attn: Chief Operating Officer
With a copy to: With a copy to:
Greg A. Bengtson, Esq. Comcast Spectacor, L.P.
Clark, Mize & Linville, Chartered 3601 South Broad Street
P.O. Box 380 Philadelphia, PA 19148-5290
Salina, KS 67402-0380 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 18.8 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 18.9 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 18.10 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 18.11 Amendments. Neither this Agreement nor any of its terms may be
changed or modified, waived, or terminated (unless as otherwise provided hereunder) except by
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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 18.12 Waiver; Remedies. No failure or delay by a party hereto to insist on the
strict performance of any term of this Agreement, or to exercise any right or remedy consequent
to a breach thereof, shall constitute a waiver of any breach or any subsequent breach of such
term. No waiver of any breach hereunder shall affect or alter the remaining terms of this
Agreement, but each and every term of this Agreement shall continue in full force and effect
with respect to any other then existing or subsequent breach thereof. The remedies provided in
this Agreement are cumulative and not exclusive of the remedies provided by law or in equity.
Section 18.13 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 18.14 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 18.15 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.
34
Section 18.16 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.
Section 18.17 Counterparts: Facsimile and Electronic Signatures. This Agreement may
be executed in counterparts, each of which shall constitute an original, and all of which together
shall constitute one and the same document. This Agreement may be executed by the parties and
transmitted by facsimile or electronic transmission, and if so executed and transmitted, shall be
effective as if the parties had delivered an executed original of this Agreement.
35
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.
d/b/a Spectra Venue Management
By: Global Spectrum. Inc.. its general partner
Name: ricer- Anat4e /
Its: no/. j,eft,"
CITY OF SALINA. KANSAS
'sr like_ . • A -' _ .�•i
Kaye J. .wfo I. i .a 'or
‘I
ATTEST: ,�� 1I
By: `" 11( WlW[.Y3
Shandi Wicks, 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.
(0 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.
(j) Submit to the City in a timely manner financial and other reports detailing
Managcr'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.
(I) 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.
3
EXHIBIT B
BUSINESS PLAN (IST-3RD OPERATING YEARS)
EXHIBIT C
INSURANCE
• At all times during this Agreement, Manager shall:
(a) maintain commercial general liability insurance, including products and
completed operations, bodily injury and property damage liability, contractual liability,
independent contractors' liability and personal and advertising injury liability against claims
occurring on, in, or about the Facility, or otherwise arising under this Agreement;
(b) maintain liquor liability insurance (included in general liability or in a separate
policy); .
(c) maintain umbrella or excess liability insurance;
(d) maintain commercial automobile liability insurance, including coverage for the
operation of owned, leased, hired and non-owned vehicles;
(e) maintain appropriate workers compensation and employer's liability insurance as
shall be required by and be in conformance with the laws of the State of Kansas; and
(t) maintain professional liability insurance and self-insured employment practices
liability coverage;
(g) maintain crime coverage, covering the City's funds in Manager's care, custody, or
control, and covering all of Manager's personnel under this Agreement for losses experienced
due to the dishonest acts of Manager's employees, dishonesty, forgery or alteration, theft,
disappearance and destruction.
• Such liability insurance shall be maintained in the following minimum amounts throughout the
Term:
Commercial General Liability
$1,000,000 per occurrence
$1,000,000 personal and advertising injury
$1,000,000 products-completed operations aggregate
$1,000.000 liquor liability (may be included in general liability or in a separate policy)
4
Automobile Liability
$1,000,000 per accident (BI and PD combined single limit)
$1,000,000 uninsured/underinsured motorist
Umbrella or Excess Liability
$5,000,000 per occurrence and aggregate
Workers Compensation
Workers Compensation: Statutory
Employer's Liability: $100,000 each accident-bodily injury by accident
$500,000 policy limit-bodily injury by disease
$100.000 each employee-bodily injury by disease
Professional Liability/Errors & Omissions (Claims Madel
$1;000,000 each occurrence/aggregate
Policy is to include:
• Entity Coverage
Crime Insurance
Coverage on all on-site Manager employees. including coverage on the City's funds in
Manager's care, custody, or control. Limit: $500,000
EXHIBIT D
FACILITY AND GROUNDS DESCRIPTION
Page 1 of 2
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The northeast spot fight bay in the arena houses two microneve finks used by the Police Department far
0‘ Lard Operations end Fdrdristradm radio transmissions.
Fri Room 1000 located in the storage area under the south side of the arena houses the Computer Technology Departments
Storage Area Network(SAN)equipment.
EXHIBIT D
FACILITY AND GROUNDS DESCRIPTION
Page 2 of 2
Exhbit E
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