HomeMy WebLinkAboutSMG Agreement
MANAGEMENT AGREEMENT
BETWEEN
THE CITY OF MIAMI BEACH, FLORIDA
AND
SMG
FOR THE MIAMI BEACH CONVENTION CENTER
AND
JACKIE GLEASON THEATER OF THE PERFORMING ARTS
Dated as of IS7t {llotdl,.2oo3
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TABLE OF CONTENTS
1 . DE FIN IT ION S ............ .............. ....................... .................... .............. .................... ................ 2
2. ENGAGEMENT OF SMG; SCOPE OF SERVICES. .....................................................6
2. 1 EN GAGEM ENT . . ........... ............... ........... ....................... .............. ......... .............. .............. 6
2.2 SCOPE OF SERVICES. ..................................................................................................... 6
2.3 SP ECI FI C SERVI CES. ........ ................................ ................. ................. ....................... ...... 7
2.4 FIVE YEAR PLAN........ ............................. .................... .............. .......................... .......... 12
2.5 RIGHT OF ENTRY RESERVED........................................................................................ 13
3. MANAGEMENT TERM AND RENEWAL TERM. ........................................................13
4. SMG' S COM PENSA TI ON. ............................................................................................... 13
4.1 MANAGEMENT FEE AND EXECUTIVE COMPENSATION................................................. 13
4.2 EXECUTIVE EMPLOYEE BENEFIT/BoNUS AMOUNT. ....................................................14
4.3 IN CE NTIVE FEE...... .............. ............................. ................. ................. ........................... 14
4.4 LI MIT A TION. ... .............. ............................. .................... ................. .............................. 17
5. FUNDING; BUDGETS; BANK ACCOUNTS. ............................................................... 17
5.1 OPERATING FUN OS. ...................................................................................................... 17
5.2 No N -F U N 01 N G... ........... ....................... ............... ........ .............. .................... ................. 17
5.3 ANNUAL BUDGET: CASH FLOW BUDGET. ................................................................... 18
5.4 BUDGET MODIFICATIONS INITIATED BY SMG.............................................................. 19
5.5 BUDGET MODIFICATIONS INITIATED BY THE CiTy........................................................ 19
5.6 RECEIPTS AND DISBURSEMENTS. ................................................................................ 20
5.7 TICKET SALES REVENUES............................................................................................20
5.8 CAPITAL IMPROVEMENTS: CAPITAL EQUIPMENT. .......................................................21
5.9 LIMITATION OF SMG LIABILITY. ................................................................................... 21
5.10 SMG CAPITAL CONTRIBUTIONS. ................................................................................. 21
6. RECORDS, AUDITS AND REPORTS. .......................................................................... 22
6.1 RECORDS AND AUDITS. ................................................................................................ 22
6.2 AN N UAL PLAN. ..... .............. .......................... ................. .............. .................... ............. 23
6.3 REPORTS. ....... ........... .......................... ....................... ........... ................. ...................... 23
7. EM P LO YE E S.. ........... .............. ............................. ................. .............. .................... ........... 24
7.1 SMG EMPLOYEES. .......................................................................................................24
7.2 No SOLICITATION OR EMPLOYMENT BY CITY. ............................................................. 25
8. IN DEMNIFICA TION AND INSURANCE. ....................................................................... 25
8.1 I N OEM N I FI CATION. ............ .......................... .................... ........... ....................... ............. 25
8.2 LIABI L1TY INS U RAN C E. ...................... ....................... ........... ................. ......................... 25
8.3 WORKERS COMPENSATION INSURANCE. ..................................................................... 27
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8.4 FIDELITY BOND AND SURETY AND PERFORMANCE BOND. ......................................... 27
8.5 PROP ERTY I NSU RAN C E. .............. .......................... ........... .............. .............................. 27
8.6 CERTAIN OTHER INSURANCE. ...................................................................................... 28
9. OWNERSHIP OF ASSETS. ............................................................................................. 28
9. 1 OWN E RSH I P. ..... .......... .............................. .................... .......... .............................. ........ 28
9.2 CITY 0 BLI GA TIO NS. ...................... .......................... ........... ................. ............... ........... 29
10. ASSIGNMENT; AFFILIATES. ..................................................................................... 29
1 0.1 ASSIGNMENT . ................................................................................................................ 29
1 0.2 S M G AFFI L1A TES....... .......................... ....................... .............. ............................. ....... 29
11. LAWS AND PERMITS. ................................................................................................. 30
11.1 PERMITS. LICENSES. TAXES AND LIENS. ..................................................................... 30
11.2 GOVERNMENTAL COMPLIANCE. ................................................................................... 30
11.3 No DISCRIMINATION IN EMPLOYMENT; AFFIRMATIVE ACTION.................................... 30
12. TE RM I NA TIO N. .............................................................................................................. 31
12.1 TERMINATION UPON DEFAULT. .................................................................................... 31
12.2 TERMINATION OTHER THAN UPON DEFAULT............................................................... 31
12.3 EFFECT OF TERMINATION. ............................................................................................31
12.4 SURREN DER OF PREMISES. .......................................................................................... 32
13. M ISCE LLAN E OU S. ....................................................................................................... 32
13.1 USE OF FACILITY AT DIRECTION OF CITY. ................................................................... 32
13.2 VENUEIWAIVER OF JURY TRIAL................................................................................... 32
13.3 No PARTNERSHIP OR JOINT VENTURE. ....................................................................... 32
13.4 E NTI RE AGREEM E NT .. ......... ........... .......................... .............. ....................... ................ 33
13.5 WRITTEN AMENDMENTS. .............................................................................................. 33
13.6 F ORC E MAJ E U RE. ..... ....................... .......................... ........... ....................... ................. 33
13.7 BINDING UPON SUCCESSORS AND ASSIGNS; No THIRD-PARTY BENEFiCIARIES...... 34
13.8 N OTIC ES. ., ........ .............. ....................... ..................................... .......................... ......... 34
13.9 SECTION HEADINGS AND DEFINED TERMS. .................................................................35
13.10 COUNTERPARTS. ...................................................................................................... 36
13.11 SEVERABILITY. .......................................................................................................... 36
13.12 NON -WAIVER. ........................................................................................................... 36
13.13 CERTAIN REPRESENTATIONS AND WARRANTIES. ................................................... 36
13.14 GOVERNING LAW. ..................................................................................................... 36
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MANAGEMENT AGREEMENT
. _rl T}iIS MANAGEMENT AGREEMENT (this "Agreement") is dated as of the _
day of I~u, ()L.7lJIb6/l-, 2003, by and between the CITY OF MIAMI BEACH, County
of Miami-Dade, a municipal corporation organized and existing under the laws of the
State of Florida, and having its principal office at City Hall, 1700 Convention Center
Drive, Miami Beach, Florida 33139 (the "City"), and SMG, a Pennsylvania general
partnership, whose current address is 701 Market Street, 4th Floor, Philadelphia, PA,
19106 ("SMG"),
BACKGROUND
The City is the owner of the Miami Beach Convention Center (the
"Convention Center") and the Jackie Gleason Theater of the Performing Arts (the
"Theater"), including, without limitation, all adjacent grounds, sidewalks, rights-of-way
and marshaling areas, but not including the adjacent parking lots (collectively with the
Convention Center and Theater, the "Facility") located in the City of Miami Beach,
Florida,
SMG is engaged in the business of providing management services,
including operations and marketing services for public assembly facilities, and is
currently a party to that certain Management Services Agreement with the City, effective
as of October 1, 1998, as extended by the City and as acknowledged by SMG pursuant
to a November 30, 2001 letter of SMG to the City (collectively, the "Current
Management Agreement"), wherein SMG manages, promotes and operates the Facility,
The Current Management Agreement will expire pursuant to its terms on September 30,
2003.
In anticipation of the expiration of the Current Management Agreement,
the City issued on February 24, 2003 Request for Proposals No. 33-02/03 for the
management and operation of the Facility after September 30, 2003. Following receipt
and consideration of responsive proposals thereto, the City selected SMG as the
successful proposer and authorized its representatives to negotiate a new management
agreement with SMG, which agreement will have an initial term commencing October 1,
2003 and ending on September 30, 2006, with two (2) optional one year renewal terms.
Accordingly, the City and SMG desire to engage SMG, and SMG desires
to accept such engagement, to provide management services for the Facility on the
terms and conditions set forth herein. The City intends to work in mutual accord with
SMG in order to ensure provision of first class high quality management services,
thereby enhancing the use and enjoyment of the Facility.
NOW, THEREFORE, in consideration of the mutual premises, covenants
and agreements herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
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1. Definitions
For purposes of this Agreement, the following terms have the meanings
referred to in this Section 1:
"Additional Capital Contribution" - as defined in Section 5.10(a),
"Advisory Board" -- the Miami Beach Convention Center Advisory Board.
"Affiliate" -- a person that directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with, a specified
person, For purposes of this definition, "control" means ownership of equity securities
or other ownership interests which represent more than 40% of the voting power in the
controlled person.
"Applicable Percentage" -- as defined in Section 4.3(a) of this Agreement.
"Approved Budget" -- any budget submitted by SMG, as approved by the
City pursuant to Section 5 hereof.
"Capital Equipment" -- any and all furniture, fixtures, machinery or
equipment, either additional or replacement, having a per item original cost of $500 or
more or an expected useful life of more than one year.
"Capital Improvements" -- any and all building additions, alterations,
renovations, repairs or improvements that have an initial dollar cost of not less than
$500 per project.
"City" -- as defined in this first paragraph of this Agreement.
"City Agreements" -- those agreements between the City and a third party
relating to the Facility and listed on Exhibit "A" attached hereto.
"City Manager" -- the chief executive officer of the City as from time to time
appointed by the Mayor and the City Commission, or such person as may from time to
time be authorized in writing by such administrative official to act for him/her with
respect to any or all matters pertaining to this Agreement.
"Convention Center" -- as defined in the Background section of this
Agreement.
"Event Expenses" - any and all expenses incurred or payments made by
SMG in connection with the occurrence of events at the Facility, including but not limited
to costs for event staffing including ushers, ticket takers, security and other event staff,
and costs relating to setup and cleanup,
"Executive Compensation Amount" - as defined in Section 4.1(b).
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"Executive Employee Benefit/Bonus Amount" - the aggregate amount of
bonuses payable to, and the cost of benefits accruing to, Executive Level Employees of
SMG and any Related Party of SMG at the Facility for a Fiscal Year, which amount shall
be determined and set in writing by the City and SMG as part of the development of
each annual operating budget for a Fiscal Year pursuant to Section 5.3 below.
"Executive Employee Salaries" - salaries and wages of Executive Level
Employees of SMG and any Related Party of SMG at the Facility for a Fiscal Year.
"Executive Level Employees" - unless otherwise determined by bond
counsel for the City in good faith that the term "Executive Level Employees" shall
include and/or exclude other employees, "Executive Level Employees" shall include the
General Manager, Director of Operations, Director of Finance, Director of Marketing,
Director of Sales, Director of Event Services, and Theater Director.
"Facility" -- as defined in the Background Section of this Agreement, which
(i) for the Convention Center includes the exhibit halls, meeting rooms, common areas,
lobby areas, executive offices and utility facilities related thereto and (ii) for the Theater
includes the lobby areas, common areas, audience chambers, back stage areas,
dressing rooms, stage areas and rehearsal hall related thereto. If during the
Management Term or any Renewal Term, the City elects to have SMG manage,
promote and operate other City cultural facilities pursuant to Section 2,2(b) hereof (the
"Additional Facilities"), such other facility or facilities shall be deemed included within the
definition of Facility hereunder,
"Fiscal Year" -- a one year period beginning October 1 and ending
September 30.
"Initial Capital Contribution" - as defined in Section 5.10(a).
"Management Fee" - as defined in Section 4.1 (a)(i).
"Management Term" -- the period commencing on October 1, 2003 and
ending on September 30, 2006.
"Net Operating Loss/Profit" -- with respect to a Fiscal Year, the excess, if
any, of Operating Expenses for such Fiscal Year over Operating Revenues for such
Fiscal Year, in the case of a loss, and the excess, if any, of Operating Revenues for
such Fiscal Year over Operating Expenses for such Fiscal Year, in the case of a profit.
"Operating Expenses" - (a) any and all expenses and expenditures of
whatever kind or nature incurred, directly or indirectly, by SMG in promoting, operating,
maintaining and managing the Facility, including, but not limited to: employee
compensation and related expenses (e.g" base salaries, bonuses, severance and car
allowances), employee benefits and related costs (e.g" relocation and other related
expenses pursuant to SMG's relocation policy (a copy of which will be provided upon
request), parking and other fringe benefits) (including, without limitation, Executive
Employee Salaries and the Executive Employee Benefit/Bonus Amount), supplies,
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material and parts costs, costs of any interns and independent contractors, advertising,
marketing and public relations costs and commissions, janitorial and cleaning expenses,
data processing costs, dues, subscriptions and membership costs, the amortized
amount of the SMG Capital Contributions, the costs of procuring and maintaining the
insurance and surety and performance and fidelity bonds referred to in Section 8 below,
amounts expended to procure and maintain permits and licenses, charges, taxes,
excises, penalties and fees, professional fees, printing and stationery costs, Event
Expenses, postage and freight costs, equipment rental costs, computer equipment
leases and line charges, telephone switch and telecommunications services, repairs
and maintenance costs (e.g., elevators and HVAC), security expenses, utility and
telephone charges, travel and entertainment expenses in accordance with SMG's
policies, the cost of employee uniforms, safety and medical expenses, exterminator and
waste disposal costs, costs relating to the maintenance of signage inventory and
systems, the cost of annual independent audits of the Facility, the cost of compliance
with laws and regulations, the internal service charges assessed by the City to the
Facility pursuant to Approved Budgets which charges include without limitation property
insurance premium costs, sewer charges, and communicationlinformation technology
charges, costs incurred under agreements, commitments, licenses and contracts
executed as provided in Section 2.3(c) hereof, and the Management Fee payable to
SMG pursuant to Section 4.1 (a)(i) below, all as determined in accordance with generally
accepted accounting principles and recognized on a full accrual basis; provided that
Operating Expenses shall not include expenses or expenditures in connection with
Capital Improvements and Capital Equipment purchases, the incentive fee payable
pursuant to Section 4.3 below and any expenses relating to SMG personnel based in
SMG's corporate headquarters in Philadelphia, Pennsylvania or its regional field
locations (other than the reasonable costs of travel by such corporate or regional
personnel in connection with SMG's management of the Facility, which costs shall be
Operating Expenses).
(b) Solely for purposes of calculating Net Operating Loss/Profit
and SMG's incentive fee hereunder, (i) the internal service charges assessed by the
City to the Facility pursuant to Approved Budgets (which charges include, without
limitation, property insurance premium costs, sewer charges,
communicationlinformation technology charges), and (ii) emergency expenditures
pursuant to Section 2.3(p) below to the extent not included in the Approved Budgets,
shall not be deemed Operating Expenses hereunder. In addition, for purposes of (i)
calculating Net Operating Loss/Profit and SMG's incentive fee hereunder and (ii)
identifying Operating Expenses which will be budgeted in Approved Budgets, Operating
Expenses shall exclude (A) all extraordinary expenses and all interest, income tax,
depreciation and amortization expenses, and (B) the Management Fee,
"Operating Revenues" - any and all revenues of every kind or nature
derived from owning, operating, managing or promoting the Facility, including, but not
limited to: license, lease and concession fees and rentals, revenues from merchandise
sales, advertising sales, equipment rentals, utility revenues, revenues from operation of
the Facility's telephone switch and telecommunications services, box office revenues,
parking revenues, food service and concession revenues (however, if such revenues
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are collected in the first instance by and retained by the concessionaire, the amount of
such revenues paid by the concessionaire to the Facility shall be included as Operating
Revenues), commissions or other revenues from decoration and set-up, security and
other subcontractors (however, if such revenues are collected in the first instance by
and retained by such subcontractors, the amount of such revenues paid by such
contractors to the Facility shall be included as Operating Revenues), miscellaneous
operating revenues, revenues generated from separate agreements with SMG Affiliates
pertaining to the Facility, and interest revenues, all as determined in accordance with
generally accepted accounting principles and recognized on a full accrual basis, For
the sake of clarity, the parties acknowledge that revenues from the sale of tickets for
events at the Facility are not Operating Revenues, but are instead revenues of the
promoter and/or performer of each such event. To the extent that SMG collects such
ticket sale revenue on behalf of such promoter and/or performer, such ticket sale
revenue shall be the source of funds from which SMG collects the rental charges and
other event reimbursements due by such promoter and/or performer for use of the
Facility, which such charges and reimbursements are Operating Revenues hereunder,
(b) Solely for purposes of (i) calculating Net Operating
Loss/Profit, (ii) identifying Operating Revenues which will be budgeted in Approved
Budgets, and (iii) calculating SMG's incentive fee hereunder, Operating Revenues from
all event activity at the Facility will be calculated to exclude sales taxes generated in
connection with such activities. In addition, for purposes of (i) calculating Net Operating
Loss/Profit and (ii) calculating SMG's incentive fee hereunder, any Convention
Development Tax Monies and any interest earned thereon shall be excluded from the
definition of Operating Revenues.
"Related Party" or "Related Parties" has the meaning provided in S 1.150-
1 of the Income Tax Regulations promulgated by the United States Department of the
Treasury pursuant to the Code.
"Renewal Term" -- the one-year periods from October 1, 2006 to
September 30, 2007 and from October 1, 2007 to September 30, 2008, for which this
Agreement may be renewed at the option of the City in accordance with Section 3,1
hereof beyond the Management Term.
"Renewal Term Capital Contribution" - as defined in Section 5.1 O(a).
"SMG" -- as defined in the first paragraph of this Agreement.
"SMG Capital Contributions" - collectively, the Initial Capital Contribution,
the Additional Capital Contribution, if any, and the Renewal Term Capital Contribution, if
any.
"Theater" -- as defined in the first paragraph of the Background section of
this Agreement.
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2. Engagement of SMG; Scope of Services.
2.1 Enoaoement.
(a) General Scope. The City hereby engages SMG to operate,
manage, promote, sell and market the Facility during the Management Term and the
Renewal Term, if any, upon the terms and conditions hereinafter set forth, and SMG
hereby accepts such engagement.
(b) Manaoer of the Facility. Subject to the terms of this Agreement,
SMG shall be, as agent for the City, the sole and exclusive manager of the City to
manage, operate and promote the Facility during the Management Term and the
Renewal Term, if any, In such capacity, except as otherwise reserved for the City
and/or its approval, SMG shall have exclusive authority over the day-to-day operation of
the Facility and all activities therein; provided that SMG shall follow all policies and
guidelines of the City hereafter established or modified by the City that the City notifies
SMG in writing are applicable to the Facility (including without limitation any
methodology pertaining to the allocation of any costs and expenses by the City to the
Facility as permitted herein); provided further that to the extent that such policies or
guidelines hereafter established or modified by the City adversely affect revenues or
expenses at the Facility, then and in that event, the incentive fee methodology in
Section 4.3 below shall be correspondingly adjusted so that it reflects the additional
costs or reduced revenues resulting from such established or modified policies or
guidelines,
2.2 Scope of Services.
(a) General. SMG shall perform and furnish such management
services systems and materials as are appropriate or necessary to operate, manage,
supervise, maintain and promote the Facility in a manner consistent with the operations,
management, and promotion of other similar first-class facilities.
(b) Additional Facilities. The City may elect, upon thirty (30) days prior
written notice to SMG, at any time during the Management Term or any Renewal Term
to have SMG operate, manage and promote other City cultural facilities (including,
without limitation, the Byron-Carlyle Theater, the Acorn Theater, the bandshell and/or
the Colony Theater; such facilities are referred to herein, individually and/or collectively,
as elected by the City, as the "Additional Facilities") subject to the City's policies and
directives and under the City's general guidance for programming, Such election will be
memorialized as an amendment to this Agreement upon the same terms and conditions
provided herein, Upon the effective date of such election, the Management Fee
payable to SMG pursuant to Section 4.1 (a)(i) hereof shall increase by a mutually agreed
upon amount not to exceed $50,000 (which amount shall be subject to CPI adjustment
as provided in Section 4.1 (a)(i) hereof).
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If City elects to have SMG manage the Additional Facilities, SMG will hire a
dedicated Cultural Facilities Manager, subject to City approval, to manage, operate and
program and promote said Additional Facilities,
(c) Bookino Policies. The Greater Miami Convention and Visitors
Bureau (GMCVB) is responsible for marketing the Convention Center for conventions
and trade shows, and to carry out this responsibility, will have control over all bookings
more than twenty-four (24) months in advance; however, all such bookings shall be
coordinated with SMG before commitment. SMG will assist the GMCVB on an as-
needed basis by providing resource people to work with the GMCVB and, when
reasonably requested, accompany them in their solicitation efforts, provided that the
GMCVB assists SMG in minimizing the cost of such travel. The GMCVB will also book
conventions and trade shows into the Convention Center with less than twenty-four (24)
months' lead time if the dates have not been confirmed to other users, and with the
approval of SMG, which approval shall not be unreasonably withheld. Additionally,
subject to compliance with the Convention Center Booking Policies, attached as Exhibit
B hereto, and as amended from time to time, SMG may also book non-convention and
trade show events in the Convention Center with more than twenty-four (24) months'
lead time if the dates have not been confirmed to other users, and with the approval of
the GMCVB. Dates booked in this manner shall be considered tentative until approved
by the GMCVB.
SMG shall have the sole authority, subject to the Booking Policies set forth as
Exhibit B, to approve the scheduling of any event in the Convention Center within the
twenty-four (24) month booking window, and all events in the Theater. Events of a non-
traditional nature, including multi-year user contracts of a non-traditional nature, and
events requiring or having co-promotions, shall be subject to the prior review and
recommendation of the Advisory Board prior to scheduling,
2.3 Specific Services.
Without limiting the generality of the foregoing, SMG shall have, without
(except as otherwise expressly noted herein) any prior approval by the City, sole right
and authority to:
(a) employ, supervise and direct its employees and personnel
consistent with the provisions of this Agreement;
(b) administer relationships with all third parties that are parties to City
Agreements (including, without limitation, the food and beverage concessionaire at the
Facility, which is currently Centerplate), initiate and participate in any and all
negotiations, renewals and extensions (to the extent SMG and/or the City deems any of
the foregoing to be necessary or desirable) relating to such City Agreements, and
enforce the City Agreements, SMG shall also provide, or cause to be provided to the
Advisory Board, periodic status reports as to Centerplate's performance and
recommendations for improvements under the City Agreement with Centerplate,
Additionally, if City requires, SMG will include within its management team a member
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with Food & Beverage background to supervise, monitor and ensure consistent
performance and quality standards in compliance with the City Agreement with
Centerplate, the costs of which member shall be an Operating Expense hereunder;
(c) negotiate, execute in its name as agent for the City, deliver and
administer any and all licenses, occupancy agreements, rental agreements, booking
commitments, concession agreements, supplier agreements, service contracts
(including, without limitation, contracts for cleaning, decorating and set-up, emergency
services, general maintenance and maintenance and inspection of HVAC systems,
elevators, stage equipment, fire control panel and other safety equipment, staffing and
personnel needs, including guards and ushers, telephone, extermination and other
services which are necessary or appropriate) and all other contracts and agreements in
connection with the management, promotion and operation of the Facility, (1) provided
that (A) if any such license, agreement, commitment or contract (other than those
involving the license, lease or rental of the Facility in the ordinary course) has a term
that extends beyond the remaining Management Term or Renewal Term, as the case
may be, and/or is of a non-traditional nature (such as co-promotion agreements), such
license, agreement, commitment or contract shall be approved and executed by the City
Manager, and (B) if any service agreement is to be renewed or entered into at the
commencement of a Fiscal Year, such service agreement shall be reviewed in
conjunction with the annual budget review process described in Section 6.1 below, (2)
provided further that SMG shall have the sole authority (subject only to the Booking
Policies set forth as Exhibit "B" attached hereto) to approve the scheduling of any event
in the Convention Center occurring within twenty-four (24) months from the date of
scheduling and any event to be held at the Theater, and (3) any contract entered into
between SMG and a subsidiary and/or affiliate company shall be at terms and for prices
customarily charged by such subsidiary and/or affiliated company for comparable goods
and services elsewhere and are competitive within the industry, subject to submittal of
documentation evidencing the competitive nature of the goods submitted. The terms of
any license, occupancy, or rental agreement shall comply with Internal Revenue Service
regulations, rulings, notices or procedures issued prior or subsequent to the date of this
Agreement, governing the management of governmental facilities financed with the
proceeds of tax-exempt bonds, and in particular any such requirements which
implement Section 1301(e) of the Tax Reform Act of 1986;
(d) SMG will collaborate with City in connection with any advertising,
promotion, socialization or sponsorship opportunities in connection with the Facility.
SMG shall follow the Convention Center's established booking policies, in the operation
of the Facility and hold the master set of all booking records and schedules, SMG shall,
from time to time, review the Booking Policies and recommend changes, if any, in the
Booking Policies to the City. SMG's recommended changes shall be subject to the
review and recommendation of the Advisory Board, but any changes and or other
amendments to the Booking Policies shall be subject to final approval by the City
Commission;
(e) to the extent that Operating Revenues or funds supplied by the City
are made available therefore, maintain the Facility in the condition received, reasonable
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wear and tear excepted; provided that the City shall be responsible for, with direction,
cooperation and assistance of SMG, undertaking all Capital Improvements and Capital
Equipment purchases as provided in Section 5,8, subject to the SMG Capital
Contributions as provided in Section 5,10;
(f) to the extent that Operating Revenues or funds supplied by the City
are made available therefore, rent, lease or purchase all equipment and maintenance
supplies necessary or appropriate for the operation and maintenance of the Facility,
provided that the City shall be responsible for, with direction, cooperation and
assistance of SMG, undertaking all Capital Improvements and Capital Equipment
purchases pursuant to Section 5.8, subject to the SMG Capital Contributions as
provided in Section 5.10;
(g) establish and adjust prices, rates and rate schedules for the
aforesaid licenses, agreements and contracts and any other commitments relating to
the Facility to be negotiated by SMG in the course of its management, operation and
promotion of the Facility. In determining such prices and rate schedules, SMG shall
evaluate comparable charges for similar goods and services at similar and/or competing
facilities in order to establish a range of prices and rates, and shall consult with the
Advisory Board and the GMCVB on any rate adjustments at the Facility. SMG shall
also consult with the City Manager about any adjustments to the rate schedules at the
Facility to be made by SMG. Any proposed rate adjustments involving a rate increase
shall be reviewed by the Advisory Board and the GMCVB, prior to final approval of
same by the City Commission;
(h) pay, when due, on behalf of the City, all Operating Expenses from
accounts established pursuant to Sections 5.6 and 5.7 of this Agreement;
(i) after consultation with the City Manager and the City Attorney, and
subject to approval by the City Attorney or his designee, institute as agent for the City
and at the reasonable expense of the City, such legal actions or proceedings necessary
or appropriate in connection with the operation of the Facility, including, without
limitation, to collect charges, rents or other revenues due to the City or to cancel,
terminate or sue for damages under, any license, use, advertisement or concession
agreement for the breach thereof or default thereunder by any licensee, user,
advertiser, or concessionaire at the Facility;
U) maintain a master set of all booking records and schedules for the
Facility;
(k) provide day-to-day administrative services in support of its
management activities consistent with such supervisory services to ensure that the
Facility and services shall be operated in a first class manner and with standards
comparable to similar first class facilities pursuant to Approved Budgets and annual
plans described herein, including, but not limited to, the acquisition of services,
equipment, supplies and facilities; internal budgeting and accounting; maintenance and
property management; personnel management; record-keeping; collections and billing;
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and similar services; however, subject to appropriation and funding, at no time shall the
maintenance of the Facility fall below the minimum standards required by Exhibit E,
attached hereto;
(I) engage in such advertising, solicitation, and promotional activities,
as SMG deems necessary to market the Facility for conventions, trade shows and
public entertainment shows. SMG shall not actively engage in the selling of advertising
inventory and product rights for the Facility without the prior written approval of the City
Manager or his designee. SMG shall work with the GMCVB and/or other appropriate
facility providers as determined by the City Manager or his designee, to market the
Facility and engage in all future activities necessary to develop and maintain current
and relevant strategic marketing plans. In addition to the foregoing, SMG shall, from
time to time, revise the marketing plan specifically for the Facility as SMG determines is
necessary or appropriate to maintain the currency of such plan, and SMG shall solicit
comments from the City and the appropriate various boards and committees outlined in
Section 2.3(n) below. SMG also shall submit to the City not later than October 31,2003
(i) a strategic five (5) year plan for the marketing and promotion of the Convention
Center, addressing those items as more particularly set forth on Exhibit "C" attached
hereto, and (ii) a strategic five (5) year plan for the marketing and promotion of the
Theater, addressing those items as more particularly described on Exhibit "D" attached
hereto; and implement the recommendations and findings contained therein,
In connection with its activities under the terms of this Agreement, SMG will be
permitted to use the logo and brand identity of the City of Miami Beach and the Facility,
as approved by the City Manager or his designee.
(m) operate the Facility's telephone switch and telecommunications
services;
(n) provide to the City's Contract Administrator complementary tickets
as per City of Miami Beach Resolution No. 93-20694 for each event held at the Theater;
(0) maintain on ongoing relationship with various boards and
committees of the City, which would include, but not be limited to, the Convention
Center Capital Projects Oversight Committee, and the Convention Center Advisory
Board;
(p) maintain on ongoing relationship with the GMCVB;
(q) act as a collection agent for the City on sales taxes and remit to the
State of Florida such sales taxes;
(r) maintain the Facility in the most efficient manner consistent with
other similar first class facilities and immediately inform the City of any condition of
which SMG becomes aware which SMG believes impairs the structural soundness or
sound operating condition of the Facility or otherwise adversely affects the ability of
SMG to perform under this Agreement. It is understood that the City will make its own
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determination as to the structural soundness of the Facility or any defect that might be
noted by SMG and as to the necessity for repair. The City will, subject to appropriation,
make available funds necessary to correct such condition within such time as is
required under the circumstances and as the City deems any repair or correction
necessary;
(i) SMG shall have the right to act with consent of the City in
situations which SMG determines to be an emergency with respect to the safety,
welfare and protection of the general public, including spending or committing funds
held in the Facility accounts described in Section 5.6 below even if such expenses are
not budgeted, provided, however, SMG shall have no obligation under any
circumstance to spend or commit funds other than funds then available in such Facility
accounts for any such purpose. Immediately following such action, SMG shall inform
the City of the situation and the action taken and the City shall pay SMG, for deposit into
such Facility accounts, the amount of funds, if any, spent or committed by SMG
pursuant to this subparagraph (i) in excess of budgeted amounts.
(ii) It is hereby acknowledged by SMG and the City that SMG
has heretofore provided to the City a five (5) year long range Capital Equipment and
Capital Improvement Project Plan ("Capital Projects Plan") for the Facility for the Fiscal
Year period commencing Fiscal Year 2003-04 and ending Fiscal Year 2007-08. SMG
shall assist the City in the planning, oversight, and administration of such Capital
Projects Plan,
(iii) In accordance with the "Analysis of the Potential Expansion
of Convention Facilities in Greater Miami and the Beaches" study dated November 5,
2001, SMG will assist with initial discussions relative to design and operational
consulting in connection with any proposed Convention Center Expansion Project; any
more extensive engagement will be subject to a mutually agreed upon agreement in
writing relating to the same.
(s) SMG shall act as a collection agent for the City on the $1.00 (one
dollar) surcharge on all tickets sold for performances held at the Theater. Further, SMG
shall work with the Advisory Board on the administration of the surcharge in accordance
with the City Resolution, attached as Exhibit F hereto. Said surcharge shall not be
included in Operating Revenues for the Facility; and
(t) Except as otherwise approved by the City, SMG shall not sub-lease
any portion of the Facility to other than short-term users. Without limiting SMG's and/or
the City's rights to require any and all necessary agreements and documentation from
users of the Facility, SMG shall require that all users of the Facility provide certificates
of insurance evidencing appropriate insurance, as required by "Insurance Requirements
for Users/Lessees of the Facility" (attached as Exhibit B - Part 1). Copies of these
certificates are to be furnished to the City's Contract Administrator. Such insurance is to
be kept in force at all times by all licensees, users, lessees and concessionaires. All
such liability policies shall name the City and SMG as additional insureds, SMG shall
also require all users of the Facility to execute, among the terms of the license,
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agreement or occupancy agreement, to defend the City, the form of said clause to be
subject to the City's approval.
2.4 Five Year Plan,
As set forth in Section 2.3(r)(ii), 5.3(e) and 2.3(1), SMG has agreed to
submit a strategic five (5) year plan that addresses the Facility capital needs, operating
budget and marketing and promotional strategy, respectively.
As part of this five (5) Year Plan, SMG will collaborate with City on the
development of a comprehensive marketing plan inclusive of vision and mission, goals,
objectives, tactical strategies and action plans that demonstrate the highest degree of
due diligence and research analysis to position the first class destination and its
competitive advantage as destination of choice for conventions, trade shows, corporate
meetings, consumer shows, events and other key customer targets identified in the
plan, Additionally, in the future, this collaborative, interactive methodology will identify
stakeholder resources and define related roles and responsibilities for implementation of
approved plans and identify related progress performance measures that reasonably fall
within the purview of SMG. Fulfillment of the strategic marketing plan will further SMG's
commitment to maximize sales and marketing outreach areas for the Facility and will be
mindful of the City's priority goal to mitigate potential adverse affects from the opening
of the Downtown Miami Performing Arts Center as it relates to SMG's strategic
marketing plan for the Theater.
Pursuant to the City's direction, SMG will execute initiatives as set forth in
the Scope of Services contained in RFP No. 33-02/03 and SMG's proposal in response
thereto, dated March 26, 2003; both as attached as Exhibit G hereto.
This 5 year plan will also position the Facility in anticipation of the
completion and opening of the new Performing Arts Center in Downtown Miami.
SMG shall promote, solicit and/or produce on its own, in association with
or through a local or regional promoter, an annual series of concerts and special
entertainment events during the summer season (the period from May 1 - September
30) at the Theater. Such annual series shall contain a minimum of five (5) separate and
distinct, major entertainment events. The cost of such series shall not be included as
an Operating Expense of the Facility, but SMG shall be entitled to use funds on deposit
in the promotional fund established by SMG for co-promotion purposes to offset costs of
such series.
SMG shall, from time to time, revise the marketing plan for the Facility as
SMG determines is necessary or appropriate to maintain the currency of such plan, and
SMG shall solicit comments from the City, the Advisory Board, the GMCVB, and such
other agencies, boards and committees as may be deemed necessary by the City,
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2.5 Riqht of Entry Reserved.
Representatives of the City shall have the right, upon reasonable advance
notice to SMG and at appropriate times, to enter all portions of the Facility to inspect
same, to observe the performance of SMG of its obligations under this Agreement, to
install, remove, adjust, repair, replace or otherwise handle any equipment, utility lines,
or other matters in, on, or about the premises, or to do any act or thing which the City
may be obligated or have the right to do under this Agreement or otherwise. Nothing
contained in this Section is intended or shall be construed to limit any other rights of the
City under this Agreement. The City shall not interfere with the activities of SMG
hereunder, and the City's actions shall be conducted such that disruption of SMG's work
shall be kept to a minimum. Nothing in this Section shall impose or be construed to
impose upon the City any independent obligation to construct or maintain or make
repairs, replacements, alterations, additions or improvements or create any independent
liability for any failure to do so.
3. Management Term and Renewal Term.
The Management Term of this Agreement shall commence on October 1, 2003
and end at midnight on September 30, 2006, unless earlier terminated pursuant to the
provisions of this Agreement. The City shall have the right, at its sole option and
discretion, to extend this Agreement for two (2) successive one (1) year terms (each, a
"Renewal Term") by giving written notice to SMG of such intention not less than ninety
(90) days prior to the expiration of the Management Term or an exercised Renewal
Term.
4. SMG's Compensation.
4.1 Manaqement Fee and Executive Compensation.
(a) As consideration to SMG for providing the services herein specified
during the Management Term and any Renewal Term, the City shall pay SMG during
the Management Term and the Renewal Term, if any, the amounts described in (i) and
(ii) below in this Section 4.1 (a):
(i) an annual management fee for the performance of the
services hereunder with respect to each Fiscal Year in the amount of $295,000 (the
"Management Fee"), which Management Fee shall be adjusted upward on the first day
of each Fiscal Year, other than the first Fiscal Year ending September 30, 2004, during
the term hereof by the percentage change in the Consumer Price Index - All Urban
Consumers (CPI-U) - U.S, City Average - All Items, during the one year period ending
September 30 immediately preceding such Fiscal Year, as published by the Bureau of
Labor Statistics of the U.S, Department of Labor, or of any revised or successor index
hereafter published by the Bureau of Labor Statistics or other agency of the United
States Government succeeding to its functions ("CPI"); and
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(ii) the Executive Compensation Amount in respect of each
Fiscal Year.
(b) As part of the development of each annual operating budget for a
Fiscal Year pursuant to Section 5.3 below, the City and SMG agree to determine and
set in writing the amounts of Executive Employee Salaries for Executive Level
Employees of SMG and any Related Party of SMG at the Facility to be paid in any such
Fiscal Year, which amounts shall be binding against the City and SMG (the "Executive
Compensation Amount"),
(c) The Management Fee shall be payable in equal monthly
installments due on or before the last day of each month during the Fiscal Year, and
SMG shall be entitled to draw such amounts from the account described in Section 5.6.
The Executive Compensation Amount shall be paid to applicable Executive Level
Employees from the account described in Section 5.6 on the same basis as those of
other employees of SMG at the Facility are paid.
(d) The Management Fee will be subject to further upward adjustment
as provided in Section 2.2(b) above in the event the City elects to have SMG operate,
manage and promote other City cultural facilities (such as the Byron-Carlyle Theater,
Rotunda, the Acorn Theater, the bandshell and/or the Colony Theater).
4.2 Executive Emplovee Benefit/Bonus Amount.
The Executive Level Employees of SMG and any Related Party of SMG at
the Facility shall be entitled to receive the Executive Employee Benefit/Bonus Amount,
which Amount shall be paid or shall accrue, as applicable, to the Executive Level
Employees, on the same basis as those of other employees of SMG at the Facility are
paid or accrue. Under no circumstances shall any portion of the Executive Employee
Benefit/Bonus Amount be based to any extent on the net profits of the Convention
Center or any other cultural facilities of the City managed by SMG.
4.3 Incentive Fee.
(a) Amount. In addition to the Management Fee, the Executive
Compensation Amount, and the Executive Employee Benefit/Bonus Amount, SMG shall
be entitled to, and shall receive from the City, an annual incentive fee ("Incentive Fee")
with respect to each Fiscal Year during the Management Term and Renewal Term, if
any, in an amount equal to the product of (x) the aggregate amount of the Management
Fee for such Fiscal Year and (y) the Applicable Percentage (as hereinafter defined).
The Applicable Percentage shall be a percentage equal to the sum of the percentage
credits which SMG earns pursuant to subparagraphs (i) through (iii) below with respect
to such Fiscal Year, provided that in no event shall the Applicable Percentage for any
Fiscal Year exceed 100%. Promptly following the end of each Fiscal Year during the
term hereof, the City shall total the percentage credits which SMG has earned during
the preceding Fiscal Year and provide SMG with a written report with respect thereto.
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(i) Maintenance of Facility and Capital Eauipment. The City
shall award SMG up to twenty (20) percentage credits for a Fiscal Year if SMG has met
or exceeded the maintenance goals set forth in the approved and adopted maintenance
and operation manual for the Facility (including the comprehensive preventive
maintenance program). Such evaluation shall take into account the quarterly review of
the City's Property Management Department and a yearly review by an outside
independent party.
(ii) Financial Performance. The City shall award SMG up to
thirty (30) percentage credits for a Fiscal Year based on the actual Net Operating
Loss/Profit for the Facility when compared to the Net Operating Loss/Profit for the
Facility reflected in the Approved Budget for the Fiscal Year in question based on the
table below, not taking into account (in either the actual or budgeted calculation of Net
Operating Loss/Profit) the internal service charges assessed by the City to the Facility
pursuant to the Approved Budgets which charges include, without limitation, property
insurance premium costs, sewer charges, and communication/information technology
charges.
Attainment of Net Operating Loss/Profit
reflected in Approved Budget
10 points
Improvement of 5% over Net Operating
Loss/Profit reflected in Approved Budget
Improvement of 10% over Net Operating
Loss/Profit reflected in Approved Budget
20 points
30 points
(iii) Customer Satisfaction, The City shall award SMG up to
twenty (20) percentage credits for customer satisfaction based on customer evaluations
(the form of which shall be mutually agreed upon by both parties) and thresholds to be
mutually agreed upon in writing by both parties.
Customer surveys - SMG shall, with input and approval from the City, develop a
customer satisfaction research program from which incentive program will be
administered.
Included in the City's evaluation pursuant to this subsection (iii) will be SMG's
supervision and monitoring of the food and beverage operations in the Facility, attention
to quality controls, levels of service and performance standards.
(iv) Bookina Events at the Facility. The City shall award SMG up
to twenty (20) percentage credits for booking events at the Facility based on the
following table:
Convention Center - up to 10 points
65 actual events held during a Fiscal Year
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or 48% Occupancy Rate
2.5 points
70 actual events held during a Fiscal Year
or 52% Occupancy Rate
5 points
75 actual events held during a Fiscal Year
or 56% Occupancy Rate
7.5 points
80 actual events held during a Fiscal Year
or 60% Occupancy Rate
10 points
As used herein, the term "Occupancy Rate" shall mean a fraction expressed as a
percentage, the numerator of which shall be equal to the total number of uses of the
four (4) halls at the Convention Center, with an event held in anyone (1) hall on a given
day constituting one (1) use, and the denominator of which shall be equal to 1,460.
Theater - up to 10 points
180 use days held during a Fiscal Year
3 points
195 use days held during a Fiscal Year
6 points
210 use days held during a Fiscal Year
10 points
The parties shall meet to adjust in good faith, the point allocation for the
Theater and the corresponding requisite use days upon the opening of the Miami
Performing Arts Center.
(v) Discretionary. The City shall award SMG up to ten (10)
percentage credits as determined by the City in its sole discretion. The City may take
into account, but not be mandated by, the following: extraordinary quantifiable and
measurable creative initiatives that directly result in SMG securing new City-wide
business for the City of Miami Beach during the off season period; and/or demonstration
and integration of new strategic SMG technically advanced corporate resources to the
benefit of the tourism and/or cultural community of Miami Beach; and/or serves to
development of new or enhanced revenue streams for Facility use and services, as
otherwise determined by City.
(b) Pavment. The incentive fee determined pursuant to Section 4.3(a)
above shall be payable to SMG within 120 days of the end of a Fiscal Year. SMG will
thereupon be entitled to deduct the amount of such fee from the account described in
Section 5.6 below, provided that to the extent that SMG projects that such a deduction
would leave insufficient funds in such account to cover Operating Expenses for the
remainder of the then-current fiscal quarter, SMG shall be entitled not to deduct all or a
portion of such fee from such account, and, upon notice thereof from SMG, the City
shall promptly pay SMG the amount of the fee that has not been deducted from such
account.
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4.4 Limitation. Notwithstanding anything to the contrary set forth herein, in no
event shall the sum of (i) the Incentive Fee, plus (ii) the Executive Employee
Benefit/Bonus Amount payable with respect to any Fiscal Year exceed the sum of (x)
the Management Fee, plus (y) the Executive Compensation Amount payable with
respect to such Fiscal Year.
5. Funding; Budgets; Bank Accounts.
5.1 Ooeratinq Funds.
Subject to Section 5.2, following the approval of the annual operating
budget for a Fiscal Year (including, without limitation, any annual operating budget
applicable to the first Fiscal Year during the term hereof), the City shall make available
to SMG all funds necessary to pay all Operating Expenses incurred or accrued in such
Fiscal Year. To the extent that Operating Revenues during a calendar month are
insufficient, or expected to be insufficient, to cover Operating Expenses and with
respect to the first quarter of a Fiscal Year, the amount of the projected incentive fee
payable pursuant to Section 4,3 for the prior Fiscal Year ("Cash Flow Shortfall") for such
period, the City shall advance funds to SMG as follows. Within thirty (30) days following
the end of a month, SMG will submit to the City for its approval a statement/invoice
summarizing the deficit or surplus in the Facility accounts described in Section 5.6
below over the agreed upon imprest combined Facility account balance for the
Convention Center and Theater. Such imprest amount will continue to be $500,000,
and will represent the combined balance of both the Facility accounts for the
Convention Center and the Theater at the end of each month. If, at the end of such
month, the combined operating balance is greater than $500,000, the surplus amount
over $500,000 will be given back to the City in the form of a check, accompanied by a
statement/invoice with appropriate bank reconciliations for both operating accounts as
back up. If, at the end of such month, the combined operating balance is less than
$500,000, the deficit and the appropriate bank reconciliations documenting such deficit
will be invoiced to the City for payment. Such payment shall not be unreasonably
withheld.
5.2 Non-Fundinq.
(a) The City shall have no obligation to provide funds for the payment
of Operating Expenses incurred or committed for after the date SMG receives written
notice (an "Appropriation Deficiency Notice") of the fact that insufficient funds or no
funds have been appropriated for the Facility.
(b) If the Appropriation Deficiency Notice is of insufficient funds, the
City shall pay all Operating Expenses incurred or committed for after such date which
are within the aggregate level of appropriated funds specified in the Appropriations
Deficiency Notice. The City shall pay all Operating Expenses incurred or committed for
prior to the date SMG receives the Appropriation Deficiency Notice. Any failure by the
City to provide funds (beyond the aggregate level of appropriated funds) for the
payment of Operating Expenses incurred or committed for after SMG receives an
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Appropriation Deficiency Notice shall not be a breach of or default under this Agreement
by the City.
(c) If the City appropriates funds at (or reduces appropriated funds to)
a level that, in SMG's judgment, renders the management of the Facility not feasible,
SMG may, at its option, either (i) continue management of the Facility at a reduced level
consistent with anticipated Operating Revenues and available funding or (ii) terminate
this Agreement pursuant to Section 12.2 (with the effect set forth in Section 12.3).
Following such termination, SMG shall have the right to resume management of the
Facility at such time as the City shall first restore appropriated funds to reasonable
levels.
5.3 Annual Budqet: Cash Flow Budqet.
(a) As part of the annual plan described in Section 6.2 herein, on or
before the date specified by the City Manager each year on reasonable advance notice,
SMG will prepare an annual operating budget for the next Fiscal Year to meet the scope
of services and objectives under this Agreement. Such budget shall contain appropriate
line items for revenues and expenses and the projected net operating deficit or surplus,
Each such budget shall be submitted together with details, including, without limitation,
salary ranges for each Fiscal Year occurring during the Management Term and any
Renewal Term hereof, and the benefits package to be offered to SMG employees and
funded by the City as an Operating Expense. No such benefit package shall exceed
comparable benefits packages offered in similar-sized facilities and/or industry
standards.
(b) SMG shall prepare and submit to the City Manager prior to October
1 of each Fiscal Year an annual cash flow budget for the succeeding Fiscal Year based
upon the approved operating budget for such Fiscal Year. The City shall transfer to
SMG, on a monthly basis, those funds so approved and necessary for the operation,
management, maintenance, and promotion of the Facility (including, without limitation,
the Operating Expenses for such month), and SMG shall deposit such funds, together
with Operating Revenues of the Facility collected by SMG in the Facility accounts. The
City specifically reserves the right to withhold or delay the monthly funds referenced
above if the previous monthly audited findings have not been satisfactorily resolved.
(c) The annual budgets referred to in subparagraphs (a) and (b) above
shall be reviewed and are subject to approval by the City Manager and the Mayor and
the City Commission, SMG recognizes that the City is a municipal corporation created
pursuant to the laws of the State of Florida and is bound by general and special statutes
pertaining to the budget process and the appropriation and expenditures of funds.
Therefore, SMG shall participate in the City's budget process, including, but not limited
to, an Administrative Review, a review by the City's Budget Advisory Committee, City
Commission review, and review and comment by citizens at two public hearings in the
month of September, prior to approval of a proposed operating budget. During the term
of this Agreement, the City Manager and the Mayor and the City Commission shall
notify SMG of any changes to the annual operating budget and the cash flow funding
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budget for the succeeding Fiscal Year proposed by SMG and with such changes, if any,
as are made by the City prior to October 1st of each Fiscal Year, such budgets shall be
the Approved Budgets for the following Fiscal Year, provided that if the annual operating
budget or the annual cash flow budget as proposed by SMG are modified by the City in
a manner which, in SMG's judgment, could materially interfere, impede or impair the
ability of SMG to manage, operate or promote the Facility, SMG shall have the right to
terminate this Agreement pursuant to Section 12.2 (with the effect set forth in Section
12.3).
(d) On or prior to the date hereof, SMG has given City its comments
and observations on the preliminary annual operating budget for the first Fiscal Year
hereof prepared by the City. SMG has submitted to the City Manager and the Mayor
and the City Commission its proposed annual operating budget for the first Fiscal Year
hereof; such proposed budget shall be treated in the same manner and create the same
rights as obtain following the submission of annual budgets as described in
subparagraph (c) above,
(e) On or prior to August 31, 2003, SMG will submit to the City
Manager or the Mayor and the City Commission a five (5) year financial proforma
setting forth a projected annual operating budget for the next five (5) full Fiscal Years.
For sake of clarity, the parties hereto hereby acknowledge and agree that the foregoing
five (5) year budget projection shall not be used in the calculation of SMG's annual
incentive fees (Financial Performance category) under Section 4.3(a)(ii).
5.4 Budqet Modifications Initiated by SMG.
SMG may submit to the City Manager for approval by the City Manager
and the Mayor and the City Commission at any time prior to the close of a Fiscal Year a
supplemental or revised annual operating budget or cash flow budget for such Fiscal
Year. Upon the approval of the City Manager and the Mayor and the City Commission
of such supplemental or revised budget, the Approved Budgets for such Fiscal Year
shall be deemed amended to incorporate such supplemental or revised budget. The
Approved Budgets may only be amended as set forth in Section 5.5 below or in the two
preceding sentences except that SMG shall have the right to amend the Approved
Budgets as may be necessary or appropriate as the result of the scheduling by SMG of
additional events or activities at the Facility (and the incurrence of additional Operating
Expenses arising from the scheduling of additional events or activities at the Facility) as
long as prior to the scheduling of such events or activities, SMG has a reasonable
expectation that the projected Net Operating Loss/Profit for the Fiscal Year as set forth
in the Approved Budgets would not be increased as a result of such additional events or
activities.
5.5 Budqet Modifications Initiated by the City.
In the event that it appears reasonably likely, in any year during the term
hereof, that the actual Net Operating Loss/Profit for such Fiscal Year will be larger than
projected in the annual operating budget for such Fiscal Year, the City Manager or the
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Mayor and the City Commission may request from SMG a plan for reduction of
Operating Expenses to a level consistent with the budgeted Net Operating Loss/Profit
amount. SMG shall forthwith comply with any such expense reduction requested by the
City and the approved budgets for such Fiscal Year shall be modified accordingly,
provided that if the annual operating budget or annual cash flow budget is modified in a
manner which, in SMG's judgment, could materially interfere, impede or impair the
ability of SMG to manage, operate or promote the Facility, SMG shall have the right to
terminate this Agreement pursuant to Section 12.2 (with the effect set forth in Section
12.3) and provided further that SMG shall not be construed to have breached its
obligations under this Agreement if such alleged breach has been caused by the
limitations in the Fiscal Year's budgets.
5.6 Receipts and Disbursements.
SMG shall establish and maintain in one or more depositories designated
by the City's Chief Financial Officer one or more operating, payroll and other bank
accounts for the promotion, operation and management of the Facility, in the name of
the City, with SMG as agent and with signature authority in such employees of SMG as
SMG shall determine. All revenues collected by SMG from the operation of the Facility
shall be deposited into such accounts and Operating Expenses (other than Operating
Expenses to be paid from an account described in Section 5.7) shall be paid by SMG as
agent for the City from such accounts. All revenues collected by SMG arising from
operation of the Facility, including revenues from box office sales, facility or equipment
rentals, utility rental agreements, food and beverage concessions, or any other source,
are the sole property of the City, held in trust by SMG for the City for application as
provided herein. Any amounts remaining in such accounts upon termination of this
Agreement for any reason, after payment of all outstanding Operating Expenses, shall
be promptly paid by SMG to the City.
5.7 Ticket Sales Revenues.
SMG shall hold in a separate interest-bearing account in a banking
institution depository in Miami Beach any ticket sale revenues which it receives with
respect to an event to be held at the Facility pending the completion of the event. Such
monies are to be held for the protection of ticket purchasers, the City and SMG, and to
provide a source of funds, as required for such payments to performers and promoters
and for such payments of Operating Expenses in connection with the presentation of
events as may be required to be paid contemporaneously with the event. Following the
satisfactory completion of the events, SMG shall make a deposit into the operating
account(s) established pursuant to Section 5.6 above of the amount in such account
and shall pay from the operating account Event Expenses and provide the City with a
full event settlement report, Interest which accrues on amounts deposited in the
operating account(s) referred to in Section 5.6 and the ticket account referred to herein
shall be considered Operating Revenues, Bank service charges, if any, on such
account(s) shall be considered Operating Expenses, Upon receipt thereof from the
depository bank, SMG shall promptly submit to the City, copies of all bank statements
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concerning the account(s) established by SMG pursuant to Section 5.6 and the ticket
account referred to herein.
5.8 Capital Improvements; Capital Eauipment.
The obligation to pay for, and authority to perform, direct and supervise
Capital Improvements and Capital Equipment purchases shall remain with the City,
except as otherwise provided in Section 5.10, and will not be considered Operating
Expenses, The annual plan submitted pursuant to Section 6,2 shall include SMG's
recommendation for Capital Improvements and Capital Equipment purchases to be
accomplished during the year and shall be accompanied by an estimate of the cost of
all such items and projects and a request that the City budget funds therefore, The City
shall retain the sole discretion to determine whether and to what level to fund Capital
Improvements and Capital Equipment purchases to the Facility.
5,9 Limitation of SMG Liabilitv.
Notwithstanding any provision herein to the contrary and except for SMG's
express indemnification undertakings in Section 8.1 and its express reimbursement
undertakings in Section 6.1 (b), SMG shall have no obligation to fund any cost, expense
or liability with respect to the operation, management or promotion of the Facility.
5.10 SMG Capital Contributions.
(a) Upon the execution and delivery of this Agreement, SMG shall pay
to the City the sum of One Hundred Fifty Thousand Dollars ($150,000) (the "Initial
Capital Contribution"), and an additional Sixty Two Thousand, Five Hundred Dollars
($62,500) (the "Additional Capital Contribution") (if the City elects within the first year,
and if not on a prorated basis thereafter based on the number of years remaining in the
current Management Term, pursuant to Section 2.2(b) hereof, to have SMG operate,
manage and promote the Additional Facilities), which sums shall be used at the sole
discretion of the City. In the event the City exercises its right pursuant to Section 3,1
above to extend this Agreement for anyone or more Renewal Terms, SMG shall pay to
the City the sum of Fifty Thousand Dollars ($50,000) (the "Renewal Term Capital
Contribution") for each Renewal Term granted to SMG.
(b) Amortization of the SMG Capital Contributions. The amount of the
Initial Capital Contribution shall be amortized on a non-cash basis over a period of
thirty-six (36) months during the Management Term. The Additional Capital
Contribution, if any, shall be amortized on a non-cash basis over a period equal to the
remainder of the Management Term and Renewal Terms, if any, The Renewal Term
Capital Contribution shall be amortized on a non-cash basis over a period equal to the
remainder of such Renewal Term to which the Renewal Term Capital Contribution
relates. In the event of the expiration or termination of this Agreement for any reason,
the City shall pay, or cause any successor management company to pay, to SMG
unconditionally and without set-off the unamortized amount of each of the Initial Capital
Contribution, Additional Capital Contribution (if any), and the Renewal Term Capital
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Contribution(s) (if any) existing as of such expiration or termination. The payment of
any such unamortized amounts shall be made to SMG upon the effective date of such
expiration or termination.
(c) Scholarships. SMG shall contribute Ten Thousand Dollars
($10,000) annually during the Management Term of the Agreement, and any Renewal
Term thereof, towards the establishment of a scholarship fund for qualifying in-need
Miami Beach residents pursuing a career in Facility Management and/or the Hospitality
and Tourism Industry, Said fund will be administered by the City and applicants will be
reviewed and recommended by SMG.
6. Records, Audits and Reports.
6.1 Records and Audits.
(a) SMG shall keep full and accurate accounting records relating to its
activities at the Facility in accordance with generally accepted accounting principles.
SMG shall maintain a system of bookkeeping adequate for its operations hereunder.
SMG shall give the City's authorized representatives access to such books and records
maintained at the Facility during reasonable business hours and upon reasonable
advance notice. SMG shall keep and preserve for at least three (3) years following
each Fiscal Year or for as long as such records are required to be retained pursuant to
Florida Public Records Law, all sales slips, rental agreements, purchase order, sales
books, credit card invoices, bank books or duplicate deposit slips, and other evidence of
Operating Revenues and Operating Expenses for such period. In addition, on or before
October 31st following each Fiscal Year for which SMG is managing the Facility
hereunder (beginning October 31, 2003), SMG shall furnish to the City a balance sheet,
a statement of profit or loss and a statement of cash flows for the Facility for the
preceding Fiscal Year, prepared in accordance with generally accepted accounting
principles and accompanied by an independent auditor's report of a nationally
recognized, independent certified public accountant. The audit shall contain an opinion
expressed by the independent auditor of the accuracy of financial records kept by SMG
and of amounts due to the City. Unless otherwise agreed by the parties hereto, the
audit shall also provide a certification of Operating Revenues and Operating Expenses
as defined in this Agreement for such Fiscal Year. The audit shall be conducted by a
reputable firm selected by SMG, with the City's prior approval. The City shall not
withhold or delay such consent or approval unreasonably. Notwithstanding anything to
the contrary herein, the costs of such audit shall be deemed Operating Expenses.
(b) The City Manager shall have the right at any time, and from time to
time, to cause nationally recognized independent auditors to audit all of the books of
SMG relating to Operating Revenues and Operating Expenses, including, without
limitation, cash register tapes, credit card invoices, duplicate deposit tapes, and
invoices, No costs incurred by the City in conducting such audit shall be considered an
Operating Expense. If any such audit demonstrates that the Operating Revenues or
Operating Expenses reflected in any financial statements prepared by SMG and audited
as specified in the foregoing subparagraph (a) are understated (in the case of Operating
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Expenses) or overstated (in the case of Operating Revenues), in either case by more
than five percent (5%), SMG shall pay to the City the reasonable cost of such audit and
shall promptly refund to the City any portion of the incentive fee paid for such Fiscal
Year which is attributable to the overstatement or understatement, as the case may be.
The City's right to have such an audit made with respect to any Fiscal Year and SMG's
obligation to retain the above records shall expire three (3) years after SMG's statement
for such Fiscal Year has been delivered to the City.
6.2 Annual Plan.
(a) SMG shall provide to the City on or before June 1 of each year, an
annual management plan, which shall include the annual operating budget described in
Section 5.3 for the next Fiscal Year. The annual plan shall include information
regarding SMG's anticipated operations for such Fiscal Year, including planned
operating maintenance activities by SMG, requested Capital Improvements and Capital
Equipment purchases and an anticipated budget therefore, anticipated events at the
Facility, anticipated advertising and promotional activities, and planned equipment and
furnishings purchases. The annual plan shall be subject to review, revision and
approval by the City Manager or the Mayor and the City Commission. Following review
and revision by the City Manager or City Commission, SMG shall have thirty (30) days
to incorporate the City's revisions into its plan, Upon approval by the City, such annual
plan shall constitute the operating program for SMG for the following Fiscal Year.
6.3 Reports.
(a) By the twenty-fifth day of each month, SMG shall provide to the City
a written monthly report in a form approved by the City and similar to that used in other
SMG-managed facilities setting out the Facility's anticipated activities and financial
condition for the upcoming month and reporting on the prior month's activities and
finances. Such monthly report shall include, without limitation:
(i) Copies of records and reports related to the receipts and
expenditures with respect to all events occurring during the previous month at the
Facility. Such records and reports shall include a comparison of Operating Revenues
and Operating Expenses for the corresponding months in the prior two (2) Fiscal Years;
(ii) SMG shall submit, within twenty-five (25) days following the
close of each month or as reasonably prescribed by the City, copies of records and
reports related to the receipts and expenditures with respect to all events occurring
during such month at the Facility. Such records and reports shall be in a form
customarily prepared by SMG at other SMG-managed facilities and shall include a
comparison of revenues and expenses for the corresponding months in the prior two (2)
Fiscal Years. The City and SMG shall resolve any issues with respect to expenses
within thirty (30) days of report of same by SMG,
(iii) Information as to the status of pending user agreements, in
addition to a summary of all exit conferences at the Convention Center, A copy of this
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portion of the monthly report also shall be provided to the Advisory Board and shall be
used as part of the basis for the evaluation of SMG's customer satisfaction under
Section 4.3(a)(iii) hereof;
(iv) A report with respect to the Comprehensive Preventive
Maintenance Program and the maintenance of Capital Equipment in accordance with
the minimum operating and maintenance standards attached hereto as Exhibit _' A
copy of this portion of the monthly report also shall be provided to the Advisory Board
and shall be used as the part of the basis for the evaluation of SMG's maintenance of
facilities and equipment under Section 4.3(a)(i) hereof,
(b) SMG shall also provide, or cause to be provided, to the City and the
Advisory Board quarterly status reports as to the food and beverage concessionaire's
performance under its food and beverage concessions agreement for the Facility.
(c) On or before July 30th of each year during the term hereof, SMG
shall provide, or cause to be provided, to the City an inventory of Capital Equipment of
the Facility.
(d) Upon receipt thereof from a depository bank described in Section
5.7 below, SMG shall provide, or cause to be provided, to the City, as requested, copies
of all bank statements concerning ticket sales revenues.
7. Employees.
7.1 SMG Emplovees.
(a) SMG shall select, train and employ at the Facility such number of
employees as SMG deems necessary or appropriate to satisfy its responsibilities
hereunder; SMG shall use its best efforts to recruit employees who will be proficient,
productive, and courteous to patrons consistent with standards employed at comparable
first class facilities, and, SMG shall have authority to hire, terminate and discipline any
and all personnel working at the Facility.
(b) SMG shall assign to the Facility a competent, full-time general
manager. From time to time the general manager may provide assistance in connection
with the consulting and/or management services provided by SMG or any of its Affiliates
at other facilities managed, owned or leased by SMG or any of its Affiliates, provided
that (i) such assistance does not affect in any material respect the responsibilities and
duties of the general manager to the Facility and (ii) the cost of the salary and benefits
of the general manager for the time spent in connection with providing such assistance
shall be reimbursed by SMG to the operating account of the Facility, Prior to SMG's
appointment of such general manager, SMG shall consult with the City Manager with
respect to the qualifications of the general manager proposed by SMG.
(c) The General Manager and/or any and all other SMG employees at
the Facility shall not for any purpose be considered to be employees of the City, and
SMG shall be solely responsible for their supervision and daily direction and control and
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for setting, and paying as an Operating Expense or Employee Expense, as applicable,
their compensation (and federal income tax withholding) and any employee benefits.
(d) On or before August 31, 2003, SMG shall submit to the City a
report detailing SMG's proposed staffing at the Facility, together with SMG's analysis of
the effect of reducing the such staff expenses by five percent (5%).
7.2 No Solicitation or Employment by City.
During the period commencing on the date hereof and ending one (I) year
after the termination of this Agreement, except with SMG's prior written consent, the
City will not, for any reason, solicit for employment, or hire, any of the senior
management personnel employed by SMG at the Facility, including, without limitation,
the general manager, director-level employees and department heads (including,
without limitation, the Food and Beverage Manager, In addition to any other remedies
which SMG may have, specific performance in the form of injunctive relief shall be
available for the enforcement of this provision.
8. Indemnification and Insurance.
8.1 Indemnification.
(a) SMG shall indemnify, hold harmless and defend the City, its
officers, agents, servants and employees from and against any claim, demand or cause
of action of whatsoever kind or nature arising out of error, omission or negligent act of
SMG, its agents, servants or employees in the performance of services under this
Agreement.
(b) In addition, SMG shall indemnify, hold harmless and defend the
City, its officers, agents, servants and employees from and against any claim, demand
or cause of action of whatever kind or nature arising out of any conduct or misconduct
of SMG not included in the paragraph above and for which the City, its officers, agents,
servants or employees are alleged to be liable.
8.2 Liability Insurance.
(a) SMG shall secure and deliver to the City Manager prior to the
commencement of the Management Term hereunder and shall keep in force at all times
during the term of this Agreement, a commercial liability insurance policy, including
public liability and property damage, covering the premises, the operations hereunder,
in the amount of One Million Dollars ($1,000,000.00) for bodily injury and One Million
Dollars ($1,000,000,00) for property damage, including products and completed
operations and independent contractors. SMG shall also maintain Umbrella liability
insurance with a limit of Five Million Dollars ($5,000,000).
(b) SMG shall also maintain Comprehensive Automotive Bodily Injury
and Property Damage Insurance for business use covering all vehicles operated by
SMG officers, agents and employees in connection with the Facility, whether owned by
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SMG, the City, or otherwise, with a combined single limit of not less than One Million
Dollars ($1,000,000.00) per occurrence (including an extension of hired and non-owned
coverage).
(c) Commencing with the Management Term and continuing thereafter
during the term hereof, SMG shall also maintain:
(i) professional liability insurance with coverage of at least One
Million Dollars $1,000,000,00) for claims of negligent errors, acts or omissions by SMG;
(ii) employment practices liability insurance with coverage of at
least One Million Dollars $1,000,000.00) for claims relating to the employment practices
of SMG at the Facility pertaining to its employees;
(iii) contingent liquor liability insurance in the amount of One
Million Dollars ($1,000,000.00); and
(iv) personal advertising liability insurance in the amount of One
Million Dollars ($1,000,000.00).
(d) SMG shall be the named insured under all such policies. The City
shall be an additional insured under the insurance policies described in Section 8.2(a)
and (b) above, as its interests may appear, and all of the insurance policies described in
this Section 8.2 shall contain a provision covering the parties' indemnification liabilities
to each other.
(e) Certificates evidencing the existence of the above policy, or
policies, all in such form as the City Manager or City Commission may reasonably
require, shall be delivered to the City Manager or City Commission prior to the
commencement of the Management Term. Notwithstanding the provisions of this
Section 8.2, the parties hereto acknowledge that the above policies may contain
exclusions from coverage which are reasonable and customary for policies of such type.
Each such policy or certificate shall contain a valid provision or endorsement stating,
"This policy will not be canceled or materially changed or altered without first giving
thirty (30) days' written notice thereof to the City Manager, 1700 Convention Center
Drive, Miami Beach, FL 33139, sent by certified mail, return receipt requested."
(f) A renewal binder of coverage (or satisfactory evidence of such
renewal) shall be delivered to the City Manager at least twenty (20) days after a policy's
expiration date except for any policy expiring on the termination date of this Agreement
or thereafter.
(g) Except as provided in Sections 8.5(b) and 8.6, all insurance
procured by SMG in accordance with the requirements of this Agreement shall be
primary over any insurance carried by the City and not require contribution by the City,
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8.3 Workers Compensation Insurance.
SMG shall at all times maintain worker's compensation insurance
(including occupational disease hazards) with an authorized insurance company or
through the Florida State Compensation Insurance Fund] or through an authorized self-
insurance plan approved by the State of Florida, insuring its employees at the Facility in
amounts equal to or greater than required under law. The foregoing is not intended to
require SMG to cover occupational related diseases of any City employees who provide
any services at the Facility as a part-time employee of SMG except to the extent that
such disease is demonstrated to be directly related to their work at the Facility.
8.4 Fidelity Bond and Surety and Performance Bond,
(a) SMG shall provide, during the term of this Agreement, to the City a
Fidelity Bond covering all of SMG's personnel under this Agreement in the amount of
Five Hundred Thousand Dollars ($500,000,00) for each loss, to reimburse the City for
losses experienced due to the dishonest acts of SMG's employees,
(b) During the term of this Agreement, SMG shall also provide to the
City a surety and performance bond in the amount of Five Hundred Thousand Dollars
($500,000) to protect the City against loss due to the inability or refusal of SMG to
perform under this Agreement.
8,5 Property Insurance.
(a) The City shall, subject to Section 5.2, maintain its current property
insurance covering the premises of the Facility and its personal property located
thereat. In addition, the City shall, with respect to the Losses covered by such property
and hazard insurance and business interruption and extra expenses insurance, waive
any subrogation rights that it may have against SMG, its partners and their respective
officers, employees and agents, whether or not the City self-insures for the Losses
covered by such insurance. Nothing in this Agreement is intended to require SMG to
maintain property and hazard insurance covering the premises at the Facility, the City's
personal property located thereat or business interruption insurance covering the
interruption of operations by or for whatever cause at the Facility,
(i) The original or a certified copy of the above policy, or
policies, referred to in Section 8.5(a) (with all required policy endorsements), plus
certificates evidencing the existence thereof, all in such form as SMG may reasonably
require, shall be delivered to SMG prior to the commencement of this Agreement.
Notwithstanding the provisions of this Section 8,5(a), the parties hereto acknowledge
that the above policies may contain exclusions from coverage which are reasonable and
customary for policies of such type, Each such policy or certificate shall contain a valid
provision or endorsement stating, "This policy will not be canceled or materially changed
or altered without first giving thirty (30) dats' written notice thereof to "SMG, Risk
Management Director, 701 Market Street, 41 Floor, Philadelphia, PA, 19106, sent by
certified mail, return receipt requested."
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(ii) A renewal binder of coverage (or satisfactory evidence of
such renewal) shall be delivered to SMG at least twenty (20) days after a policy's
expiration date except for any policy expiring on the termination date of this Agreement
or thereafter.
8.6 Certain Other Insurance.
If any of the City Agreements consist of agreements with independent
contractors to provide services in respect of the Facility, the City shall use reasonable
efforts to cause such contractors to name SMG as an additional insured under any
insurance maintained by such contractors pursuant to the terms of such City
Agreements and in such event to deliver to SMG promptly after request therefore a
certified copy of such policy and a certificate evidencing the existence thereof, In
addition, if SMG enters into any agreements during the term of this Agreement with any
independent contractors for the provision of services hereunder, SMG shall have the
right to require such contractors to name SMG as an additional insured under any
insurance required by SMG thereunder and to deliver to SMG prior to the performance
of such services a certified copy of such policy, plus a certificate evidencing the
existence thereof, which policy contains the same type of endorsements and provisions
as provided in Section 8.5(a)(i) and (ii),
9. Ownership of Assets.
9.1 Ownership.
The ownership of buildings and real estate, technical and office equipment
and facilities, furniture, displays, fixtures, vehicles and similar tangible property located
at the Facility shall remain with the City. Ownership of and title to all intellectual
property rights of whatsoever value, held in the City's name shall remain in the name of
the City. The ownership of consumable assets (such as office supplies and cleaning
materials) purchased with Operating Revenues or City funds shall remain with the City,
but such assets may be utilized and consumed by SMG in the performance of services
under this Agreement. The ownership of data processing programs and software
owned by the City shall remain with the City, and the ownership of data processing
programs and Software owned by SMG shall remain with SMG. SMG shall not take or
use, for its own purposes, customer or exhibitor lists or similar materials developed by
the City for the use of the Facility, unless written consent is granted by the City
Manager. Ownership of equipment, furnishings, materials, or fixtures not considered to
be real property and other personal property purchased by SMG with City funds for use
at and for the Facility shall vest in the City automatically and immediately upon
purchase or acquisition. The assets of the City as described herein shall not be
pledged, Iiened, encumbered or otherwise alienated or assigned without the prior
written approval of the City.
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9.2 City Obliaations.
Except as herein otherwise set forth, throughout the term of this
Agreement, the City will maintain full beneficial use and ownership of the Facility and
will pay, keep, observe and perform all payments, terms, covenants, conditions and
obligations under any bonds, debentures or other security agreements or contracts
relating to the Facility to which the City may be bound. In addition, the City shall provide
SMG with necessary office space in the Facility and such equipment as is currently
available in the Facility. Furthermore, the City shall provide SMG with unrestricted
egress and ingress to the Facility and shall make available to SMG at no cost parking
spaces adjacent to the Facility or located on City property in the immediate environs.
All parking lots and garages adjacent to the Facility are excluded from the scope of this
Agreement.
10. Assignment; Affiliates.
10.1 Assianment.
Neither this Agreement nor any of the rights or obligations hereunder may
be assigned by either party hereto without the prior written consent of the other party
hereto.
10,2 SMG Affiliates.
(a) Transactions with Affiliates. In connection with its management
responsibilities hereunder relating to the purchase and/or procurement of equipment,
materials, supplies, inventories, and services for the Facility, SMG shall have the right,
but not the obligation, to purchase and/or procure from, or otherwise transact business
with, an Affiliate of SMG. In the event SMG purchases and/or procures from, or
otherwise transacts business with, an Affiliate of SMG as contemplated by the foregoing
sentence, the City's approval must be obtained, which approval shall not be
unreasonably withheld. In addition, SMG, as agent for the City, may license the use of
the Facility or any part thereof to itself in connection with any event in the promotion of
which SMG is involved, so long as the license fee charged is on prevailing rates and
terms or such other rates and terms as the City Manager or the Mayor and the City
Commission approves.
(b) Conflicts of Interest. The City acknowledges that SMG manages
other public assembly facilities which may, from time to time, be in competition with the
Facility. The management of competing facilities will not, in and of itself, be deemed a
conflict of interest or breach of SMG's duties hereunder; provided, however, in all
instances in which the Facility is in competition with other public assembly facilities
managed by SMG for the solicitation of certain events, SMG shall not involve its
principal office (currently in Philadelphia, Pennsylvania) on behalf of any such other
facility in an attempt to influence the decision-making process regarding the selection of
a site by such events.
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11. Laws and Permits.
11.1 Permits. Licenses. Taxes and Liens.
SMG shall be solely responsible for procuring any permits and licenses
required for the business to be conducted by it hereunder. The City shall cooperate
with SMG in applying for such permits and licenses. SMG shall deliver copies of all such
permits and licenses to the City Manager. SMG shall pay promptly, out of the accounts
specified in Section 5.6, all taxes, excises, license fees and permit fees of whatever
nature arising from its operation, promotion and management of the Facility. SMG shall
not let any mechanic's or materialman's or any other lien from becoming attached to the
premises or improvements at the Facility, or any part or parcel thereof, by reason of any
work or labor performed or materials furnished by any mechanic or materialman, so
long as the work, labor or material was provided at SMG's direction and the City has
supplied funds for the payment of charges therefore in accordance with this Agreement.
11,2 Governmental Compliance,
SMG, its officers, agents and employees shall comply with all federal,
state, county and municipal regulations, ordinances, statutes, rules, laws and
constitutional provisions (collectively, "Laws") applicable to SMG's management of the
Facility hereunder, including without limitation Title III of the ADA and the provision of
such auxiliary aids or alternate services as may be required by the ADA. Nothing in this
Section 11.2 or elsewhere in this Agreement shall, however, require SMG to undertake
any of the foregoing compliance activity, nor shall SMG have any liability under this
Agreement therefore, if (a) such activity requires any Capital Improvements or Capital
Equipment purchases, unless the City provides funds for such Capital Improvements
and Capital Equipment purchases pursuant to Section 5.8 hereof, or (b) any City
Agreement fails to require any licensee, lessee, tenant, promoter or user of any portion
of the Facilities to comply, and to be financially responsible for compliance, with Title III
of the ADA in connection with any activities of such licensee, lessee, tenant, promoter
or user at the Facilities. Furthermore, SMG shall have the right to require any licensee,
lessee, tenant, 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, lessee, tenant, promoter or user at the Facility.
11.3 No Discrimination in Emplovment; Affirmative Action.
In connection with the performance of work under this Agreement, SMG
shall not refuse to hire, discharge, refuse to promote or demote, or to discriminate in
matters of compensation against, any person otherwise qualified, solely because of
race, color, religion, gender, age, national origin, military status, sexual orientation,
marital status or physical or mental disability.
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12. Termination.
12.1 Termination Upon Default.
Either party may terminate this Agreement upon a default by the other
party hereunder. A party shall be in default hereunder if (i) such party fails to pay any
sum payable hereunder within thirty (30) days after same is due and payable, or (ii)
such party fails in any material respect to perform or comply with any of the other terms,
covenants, agreements or conditions hereof and such failure continues for more than
sixty (60) days after written notice thereof from the other party. In the event that a
default (other than a default in the payment of money) is not reasonably susceptible to
being cured within the sixty (60) day period, the defaulting party shall not be considered
in default if it shall within such sixty (60) day period have commenced with due diligence
and dispatch to cure such default and thereafter completes with dispatch and due
diligence the curing of such default.
12.2 Termination Other than Upon Default.
(a) SMG shall have the right to terminate this Agreement upon sixty
(60) days written notice to the City (i) under the circumstances described in Sections
5,2, 5,3 or 5.5 hereof, or (ii) if the City fails to make Capital Improvements or Capital
Equipment purchases at the Facility or to correct any condition at the Facility noted by
SMG pursuant to Section 2.3(r) above to the extent that such omission materially
interferes with, impedes or impairs the ability of SMG to manage the Facility effectively.
(b) Either party shall have the right to terminate this Agreement under
the circumstances specified in Section 13.6(d).
12.3 Effect of Termination.
In the event this Agreement expires or is terminated, (i) all Operating
Expenses incurred or committed for prior to the date of expiration or termination shall be
paid using funds on deposit in the account(s) described in Sections 5.6 and 5.7 and to
the extent such funds are not sufficient, the City shall pay all such Operating Expenses,
(ii) the City shall promptly pay SMG all fees earned to the date of expiration or
termination (the fees described in Section 4 hereof being subject to proration), 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 SMG
hereunder which resulted in such termination (other than the fees or expenses of any
replacement manager for the Facility), and (iii) the City shall pay, or cause any
successor management company to pay, to SMG unconditionally and without set-off the
unamortized amount of the SMG Capital Contributions existing as of such expiration or
termination as provided in Section 5.10 hereof. Upon the expiration of this Agreement
or a termination pursuant to Section 12.1, 12.2, or 12.3, all further obligations of the
parties hereunder shall terminate except for the obligations in this Section 12,3 and in
Sections 7.2, 8.1 and 12.4.
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12.4 Surrender of Premises.
Upon termination of this Agreement (termination shall, for all purposes in
this Agreement, include termination pursuant to the terms of this Section 12 and any
expiration of the term hereof), SMG shall surrender and vacate the Facility upon the
effective date of such termination, The Facility and all equipment and furnishings 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 and SMG has complied with its
obligations under Sections 2.3(r) and 6.2 above. All reports, records, including financial
records, and documents maintained by SMG at the Facility relating to this Agreement
other than materials containing SMG's proprietary information shall be immediately
surrendered to the City by SMG upon termination.
13. Miscellaneous.
13.1 Use of Facilitv at Direction of City.
(a) The City shall have the right to use the Facility or any part thereof,
upon reasonable advance notice and subject to availability, for such purposes as
meetings, seminars, training classes or other uses without the payment of any rental or
use fee (or at a reduced fee), except that direct out-of-pocket expenses incurred in
connection with such uses shall be paid by the City,
(b) The City shall not schedule use of the Facility pursuant to
subparagraph (a) above if such use will conflict with paying events booked by SMG and
shall in all instances be subordinate thereto in terms of priority of use of the Facility.
13.2 Venue/Waiver of JUry Trial.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Florida, both substantive and remedial, without regard to
principals of conflict of laws. The exclusive venue for any litigation arising out of this
Agreement shall be Miami-Dade County, Florida, if in state court, and the U.S. District
Court, Southern District of Florida, if in federal court. BY ENTERING INTO THIS
AGREEMENT, CITY AND SMG EXPRESSLY WAIVE ANY RIGHTS EITHER PARTY
MAY HAVE TO A TRIAL BY JURY OF ANY CIVIL LITIGATION RELATED TO, OR
ARISING OUT OF, THIS AGREEMENT.
13.3 No Partnership or Joint Venture.
Nothing herein contained is intended or shall be construed in any way to
create or establish the relationship of partners or a joint venture between the City and
SMG. None of the officers, agents or employees of SMG shall be or be deemed to be
employees of the City for any purpose whatsoever.
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13.4 Entire Aqreement.
This Agreement contains the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings with respect thereto. This Agreement is specifically intended to
supercede RFP No. 33-02/03, and SMG's proposal in response thereto, No other
agreements, representations, warranties or other matters, whether oral or written, will
be deemed to bind the parties hereto with respect to the subject matter hereof.
13.5 Written Amendments.
This Agreement shall not be altered, modified or amended in whole or in
part, except in a writing executed by each of the parties hereto.
13.6 Force Maieure.
(a) No party will be liable or responsible to the other party for any
delay, damage, loss, failure, or inability to perform caused by "Force Majeure" if notice
is provided to the other party within ten (10) days of date on which such party gains
actual knowledge of the event of "Force Majeure" that such party is unable to perform,
The term "Force Majeure" as used in this Agreement means the following: an act of
God, strike, war, public rioting, lightning, fire, storm, flood, explosions, epidemics,
landslides, lightening storms, earthquakes, floods, storms, washouts, civil disturbances,
explosions, and any other cause whether of the kinds specifically enumerated above or
otherwise which is not reasonably within the control of the party whose performance is
to be excused and which by the exercise of due diligence could not be reasonably
prevented or overcome (it being acknowledged that under no circumstances shall a
failure to pay amounts due and payable hereunder be excusable due to a Force
Majeure).
(b) Neither party hereto shall be under any obligation to supply any
service or services if and to the extent and during any period that the supplying of any
such service or services or the provision of any component necessary therefore shall be
prohibited or rationed by any Law.
(c) In the event of damage to or destruction of the Facility by reason of
fire, storm or other casualty or occurrence of any nature or any regulatory action or
requirements that, in either case, is expected to render the Facility materially
untenantable, for a period of at least one hundred eighty (180) days from the happening
of the fire, other casualty or any other such event, either party may terminate this
Agreement upon written notice to the other. In the event that the Facility becomes
either wholly or partially untenantable as a result of any of the foregoing, appropriate
adjustments to the Expense and Revenue Benchmarks shall be made,
(d) SMG may suspend performance required under this Agreement,
without any further liability, in the event of any act of God or other occurrence, which act
or occurrence is of such effect and duration as to effectively curtail the use of the
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Facility so as to effect a substantial reduction in the need for the services provided by
SMG for a period in excess of 180 days; provided, however, that for the purposes of this
subsection, SMG shall have the right to suspend performance retroactively effective as
of the date of the use of the Facility was effectively curtailed, "Substantial reduction in
the need for these services provided by SMG" shall mean such a reduction as shall
make the provision of any services by SMG economically impractical. No payments of
the Management Fee otherwise due and payable to SMG shall be made by the City
during the period of suspension. In lieu thereof, the City and SMG may agree to a
reduced Management Fee payment for the period of reduction in services required.
(e) In the event of a material increase in any Operating Expense not
reasonably within the control of either party (including, by way of example and not by
limitation, an increase in the cost of insurance or utilities), the parties shall mutually
negotiate and agree upon in good faith an adjustment to the Net Operating Loss/Profit
Benchmarks to take into account such increased cost.
13.7 Bindinq Upon Successors and Assiqns; No Third-Partv Beneficiaries,
(a) This Agreement and the rights and obligations set forth herein shall
inure to the benefit of, and be binding upon, the parties hereto and each of their
respective successors and permitted assigns.
(b) This Agreement shall not be construed as giving any person, other
than the parties hereto and their successors and permitted assigns, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any of the
provisions herein contained, this Agreement and all provisions and conditions hereof
being intended to be, and being, for the sole and exclusive benefit of such parties and
their successors and permitted assigns and for the benefit of no other person or entity,
13.8 Notices.
Any notice, consent or other communication given pursuant to this
Agreement will be in writing and will be effective either (a) when delivered personally to
the party for whom intended, (b) on the second business day following mailing by an
overnight courier service that is generally recognized as reliable, (c) on the fifth day
following mailing by certified or registered mail, return receipt requested, postage
prepaid, or (d) on the date transmitted by telecopy as shown on the telecopy
confirmation therefore as long as such telecopy transmission is followed by mailing of
such notice by certified or registered mail, return receipt requested, postage prepaid, in
any case addressed to such party as set forth below or as a party may designate by
written notice given to the other party in accordance herewith,
To the Citv:
City of Miami Beach
City Manager
1700 Convention Center Drive
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Miami Beach, FL 33139
Attn: Jorge Gonzalez, City Manager
T elecopy:
AND
City of Miami Beach
City Attorney
1700 Convention Center Drive
Miami Beach, FL 33139
Telecopy:
To SMG:
SMG
701 Market Street, 4th Floor
Philadelphia, PA 19106
Attention: President
Telecopy: (215) 592-6699
AND
SMG
General Manager
1901 Convention Center Drive
Miami Brach, FL 33139
T elecopy:
AND
Stradley, Ronon, Stevens & Young
2600 One Commerce Square
Philadelphia, PA 19103
Attention: William R. Sasso, Esq, Or
Steven A. Scolari, Esq.
Telecopy: (215) 564-8120
13.9 Section HeadinQs and Defined Terms.
The section headings contained herein are for reference purposes only
and shall not in any way affect the meaning and interpretation of this Agreement. The
terms defined herein and in any agreement executed in connection herewith include the
plural as well as the singular and the singular as well as the plural, and the use of
masculine pronouns shall include the feminine and neuter. Except as otherwise
indicated, all agreements defined herein refer to the same as from time to time
amended or supplemented or the terms thereof waived or modified in accordance
herewith and therewith.
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13.10 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original copy of this Agreement, and all of which, when taken
together, shall be deemed to constitute but one and the same agreement.
13.11 Severabilitv.
The invalidity or unenforceability of any particular provision, or part of any
provision, of this Agreement shall not affect the other provisions or parts hereof, and this
Agreement shall be construed in all respects as if such invalid or unenforceable
provisions or parts were omitted.
13.12 Non-Waiver.
A failure by either party to take any action with respect to any default or
violation by the other of any of the terms, covenants, or conditions of this Agreement
shall not in any respect limit, prejudice, diminish, or constitute a waiver of any rights of
such party to act with respect to any prior, contemporaneous, or subsequent violation or
default or with respect to any continuation or repetition of the original violation or default.
13.13 Certain Representations and Warranties.
(a) The City represents, warrants, and covenants to SMG the following:
(i) all required approvals have been obtained, and the City has full legal right, power and
authority to enter into and perform its obligations hereunder; and (ii) this Agreement has
been duly executed and delivered by the City and constitutes a valid and binding
obligation of the 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.
(b) SMG represents and warrants to the City the following: (i) all
required approvals have been obtained, and SMG has full legal right, power and
authority to enter into and perform its obligations hereunder, and (ii) this Agreement has
been duly executed and delivered by SMG and constitutes a valid and binding
obligation of SMG, 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,
13.14 Governinq Law.
This Agreement will be governed by and construed in accordance with the
internal laws of the State of Florida, without giving effect to otherwise applicable
principles of conflicts of law,
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first abov ritte
ACH, FLORIDA
ATTEST:
~ f ltt-cb
Robert Parcher, City Clerk
SMG
By:
Name:
Title:
it.w~
/-I, ;.Jes .fIe,,?
'PfZe~ I cJ.e;,J""1
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
,)...:)- 6f
37
DoC. #343643v,10
EXHIBIT "A"
CITY AGREEMENTS
A-1
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EXHIBIT "B"
BOOKING POLICY
(Please see attached)
B-1
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EXHIBIT "C"
Strateaic Marketina and Sales Plan
For Convention Center
The Strategic Marketing and Sales Plan is intended to competitively position the
Convention Center and shall include the following:
o Review of business mix for the past five years
o Review of industry trends for specific business types, to include:
· Conventions
· Trade Shows
· Corporate Meetings
· Consumer Shows
· Other Events
o Identification of business type responsibilities
· SMG
. Consumer Shows
. Trade Shows
. Corporate Meetings
. Other Events
· GMCVB
. Conventions
. Trade Shows
. Corporate Meetings
o Identification of "most desirable event" parameters
· Citywide impact
· Facility Impact
o Outline of sales support efforts for GMCVB responsibilities
· FAM Trips
· Industry event attendance
· Sales blitzes
· Proposal responsiveness
o Outline of sales efforts for SMG responsibilities
o Review of five year calendar and development of strategy for addressing
open booking windows
o Review of advertising and promotion strategies, and further
enhancements of same
o Review of technological tools available for marketing
· Email
· Websites
o Review of ancillary services and projected enhancements
· Service enhancements
· Revenue enhancements
o Review and development of sales incentives available
C-1
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. Review and development of parameters for offering
. Review and development of information required for evaluation
. Clarify approval process for same
o Review of availability of integration of initiatives with other City functions
. Marketing of City attractions to MBCC users
. Use of additional City venues for functions
. Coordination of event planning with City departments
o Develop a marketing strategy for potential Convention Center Expansion.
C-2
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.n __urnt... III 11_1111...... 1f-!llIi-Il.I-HTlAnl nIJSlnA!=;;~-
EXHIBIT "0"
Strateaic Marketina and Sales Plan
For Theater
The Strategic Marketing and Sales Plan is intended to competitively position the
Theater and shall include the following:
o Review of business mix for the past three years
o Review of industry trends for specific business types, to include:
· Conventions/Corporate Meetings
· Concerts
· Family Shows
· Performing Arts
· Broadway
· Television
· Other Events
o Identification of "most desirable event" parameters
· Citywide impact
· Facility Impact
o Review of five year calendar and development of strategy for addressing
open booking windows
o Review of advertising and promotion strategies, and further
enhancements of same
o Review of technological tools available for marketing
· Email
· Websites
o Review and development of incentives available
. Review and development of parameters for offering
. Review and development of information required for evaluation
o Review and development of promotion and co-promotion strategies
o Development of strategy for impact from Miami Performing Arts Center
. Review of current business mix and likelihood to use PAC
. Establish dialogue with PAC for cooperative efforts
. Identification of potential replacement business
o Review and development of service, affinity programs
· Gleason Concierge
· Gleason Gourmet
o Review of relationships to local arts organizations
o Review of synergies available for other City facilities
o Review of availability of integration of initiatives with other City functions
. Coordination of marketing/PR efforts
. Use of additional City venues for functions
. Coordination of event planning with City departments
. Coordination of industry sales efforts with City industry liaisons
D-1
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. Film and Print
. Television
o Aggressively and effectively market and maximize use of Theater, In
accordance therewith.
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