AMENDMENT NO. 3 TO AGREEMENT NO. 13.038 Page 1 of 5
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AGREEMENT NO. __________________
AMENDMENT NO. [3] TO
AGREEMENT NO. 13-038
This AMENDMENT NO. 3 TO AGREEMENT NO. 13-038 is made and entered into on ________________, by and between the CITY OF BAKERSFIELD, a municipal corporation (referred to herein as “CITY”), and ASM Global / AEG MANAGEMENT BAKERSFIELD, LLC , a limited liability company authorized to do business in California (referred to herein as “ MANAGER”) and AEG FACILITIES, LLC, a limited liability company authorized to do business in California.
R E C I T A L S
WHEREAS, City currently owns and operates the Dignity Health Arena, Theater, and Convention Center ("ATC"); the Valley Children’s Hospital Ice Center ("Ice Center"); and the Dignity Health Amphitheatre ("Amphitheatre") (the ATC, Ice Center, and Amphitheatre may be individually referred to as "Facility" or collectively referred to as "Facilities"); and
WHEREAS, on March 20, 2013, CITY and MANAGER entered into Agreement No. 13-038 regarding the management and operation of the Facilities; and
WHEREAS, CITY granted the MANAGER authority and responsibility to manage, operate, and market the Facilities in accordance with the terms of Agreement N o. 13 -038 based on MANAGER’S qualifications to staff, manage, operate, and maintain the Facilities in order to achieve the stated goals and objects outlined in MANAGER’S Request for Proposals; and
WHEREAS, on July 13, 2020, the parties entered into Amendment No. 1 to Agreement No. 13 -038 to temporarily stay the CITY’S reimbursement to MANAGER until January 2021 due to the COVID-19 pandemic; and
WHEREAS, on January 25, 2023, the parties entered into Amendment No. 2 to Agreement No. 13 -038 to exercise the extension of the Term of the Agreement to June 30, 2028, pursuant to Section 6.1.2 of Agreement No. 13-038; and
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AMENDMENT NO. 3 TO AGREEMENT NO. 13.038 Page 2 of 5
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WHEREAS, CITY and MANAGER now desire to amend Agreement No. 13- 038, a third time to extend the Term and to amend certain terms and conditions of the Agreement.
NOW, THEREFORE, incorporating the foregoing recitals herein, CITY and MANAGER mutually agree as follows:
1. Section 4.1 of Agreement No. 13-038 entitled “Base Fee” is hereby deleted and replaced with the following language:
4.1 Base Fee . Beginning July 1, 2025, CITY will no longer pay MANAGER a base fee.
2. Section 4.2 of Agreement No. 13-038 entitled “Incentive Payments” is hereby deleted and replaced with the following language:
4.2 Incentive Payments. CITY and MANAGER have agreed that the original structure of the Incentive Payments in Agreement No. 13 -038, which separated each Facility individually, with a benchmark and percent improvement from benchmark, will no longer exist. The new Incentive Payment will be made based on the totality of the Net Operating Income from the three venues referred to as Facilities, which are the Dignity Health Arena, Theater, & Convention Center ; the Valley Children’s Ice Sports Center ; and the Dignity Health Amphitheatre. Beginning July 1, 2025, CITY shall pay the MANAGER an annual incentive payment equal to FIFT Y PERCENT (50%) of Net Operating Income generated by the Facilities, with the CITY retaining the balance. For this Agreement, Net Operating Income is defined as Operating Revenues less Operating Expenses.
3. Section 5 of Agreement No. 13-038 entitled “NET LOSS GUARANTEE” is hereby amended to read as follows:
5. NET LOSS GUARANTEE . Beginning July 1, 2025, MANAGER will assume ONE HUNDRED PERCENT (100%) of the Aggregate Net
Operating Loss responsibility, if any, resulting from the operation of the Facilities . Should operation of the Facilities result in a Net Operating Loss requiring MANAGER to fund such losses( referred to herein as Shortfall Funding) , during any fiscal period, the annual incentive payment shall be adjusted to allow the MANAGER to receive ONE HUNDRED PERCENT (100%) of Net Operating Income during future fiscal periods until the MANAGER’s Shortfall Funding has been fully recaptured. After MANAGER recaptures the Shortfall Funding, the annual Incentive Payment to the MANAGER will revert Docusign Envelope ID: 0DBE575A-DF21-42F0-ACC6-8D4E88CDF686
AMENDMENT NO. 3 TO AGREEMENT NO. 13.038 Page 3 of 5
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back to an amount equal to FIFTY PERCENT (50%) of the Net Operating Income.
4. Section 6 of Agreement No. 13-038 entitled “ TERM AND TERMINATION” is hereby amended to read as follows:
6.1. Term. T his Agreement will commence on the Effective Date and terminate on June 30, 2033 (“Term”).
(Sections 6.1.1. and 6.1.2. of Agreement No. 13 -038 were removed in Amendment No. 2 dated January 25, 2023)
6.2 Termination for Cause . Either party may terminate this Agreement for cause upon thirty -days written notice if the other party commits a Material Breach, as defined below. In addition, Manager shall have the right to terminate this Agreement immediately if ownership or possession of all or a major portion of the Facilities is transferred to a third party, or the ownership thereof is otherwise materially altered, or the City provides for a material change in the use of the Facilities or otherwise significantly and materially impairs (in Manager's reasonable discretion) Manager's ability to operate the Facilities.
6.3. Automatic Termination. This Agreement will terminate automatically, without action or notice by either party, if any of the following occurs:
6.3.1. Manager files or has filed against it a voluntary or involuntary petition in bankruptcy or a voluntary or
involuntary petition or an answer seeking
reorganization;
6.3.2. In connection with a bankruptcy proceeding, an
arrangement or readjustment of Manager's debts is
made or for any other relief under the Bankruptcy
Code, as amended, or under any other state or
federal insolvency act or law not dismissed within sixty days thereof;
6.3.3. Any action by Manager indicating its consent to, approval of, or acquiescence to the appointment of
a receiver or trustee for all or a substantial part of its property;
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AMENDMENT NO. 3 TO AGREEMENT NO. 13.038 Page 4 of 5
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6.3.4. Any assignment of Manager's property for the benefit of creditors;
6.3.5. Manager's inability or admission in writing of its inability to pay its debts as they mature; or
6.3.6. The liquidation, dissolution, or termination of the corporate or partnership existence of Manager.
6.4 Effect of Termination. In the event this Agreement expires or is terminated pursuant to the termination rights contained herein, (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 applicable accounts, and to the extent such funds are not sufficient, City shall pay all such Operating Expenses and shall indemnify and hold Manager harmless therefrom and (ii) City shall promptly pay Manager (or Manager shall be entitled to retain out of the Operating Fund, as applicable) the following: (a) the Base Fee and Incentive Payments (subject to proration) and (b) the unamortized portion of the Capital Contribution as set forth in Section 3.8.1 and (c) in the event of an early termination of this Agreement, all amounts remaining in the Event Development Account as set forth in Section 3.8.2.5. Upon a termination pursuant to Sections 6.2 or 6.3 hereof, all further obligations of the parties hereunder shall terminate except for the obligations in this Sections
6.4 and 9 hereof; provided, however, and without limiting any rights or remedies of the parties available at law or equity, that if such termination is the result of a default, the nondefaulting party exercising its right to terminate this Agreement shall be entitled to seek recovery for damages for breach arising from such default. Notwithstanding the foregoing, in the event that this Agreement is terminated as a result of a Material Breach by City, in addition to the Manager retaining the Base Fee and Incentive Payments (subject to proration) as well as the unamortized portion of the Capital Contribution, the Net Loss Guarantee shall not be in effect, and Manager shall not be required to make any Aggregate Net Loss Payment, for the Fiscal Year in which the termination occurs.
6.5. Non-Operational Facility. If for any reason one or more of the Facilities becomes non -operational during the term of this Docusign Envelope ID: 0DBE575A-DF21-42F0-ACC6-8D4E88CDF686
AMENDMENT NO. 3 TO AGREEMENT NO. 13.038 Page 5 of 5
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Agreement, CITY and MANAGER will mutually work together to adjust the terms of the Agreement to account for the interruption.
5. Except as amended herein, all provisions of Agreement No. 13-038 as amended shall remain in full force and effect.
IN WITNESS WHEREOF , the parties hereto have caused this Amendment No. 3 to Agreement No. 13 -038 to be executed the day and year first above written.
“CITY” “MANAGER”
CITY OF BAKERSFIELD ASM GLOBAL, LLC
By: ____________________________ By: ________________________________
KAREN GOH TIM LAMORIELLO
Mayor General Counsel
APPROVED AS TO CONTENT: AEG MANAGEMENT BAKERSFIELD, LLC CITY MANAGER’S OFFICE
By: ________________________________
ZACHARY AUGUSTINE
By: ____________________________ Vice President
CHRISTIAN CLEGG
City Manager
APPROVED AS TO FORM:
VIRGINIA GENNARO
City Attorney
By: ____________________________
City Attorney
COUNTERSIGNED:
By: ____________________________
RANDY MCKEEGAN
Finance Director
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