THIRD AMENDED AND RESTATED
ARENA MANAGEMENT AGREEMENT
BY AND BETWEEN
THE CITY OF SAN JOSE
AND
SAN JOSE ARENA MANAGEMENT, LLC
EFFECTIVE DATE: JULY 1, 2025
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document. [i]
THIRD AMENDED AND RESTATED
ARENA MANAGEMENT AGREEMENT
TABLE OF CONTENTS
RECITALS 1
PART ONE – RELATIONSHIP OF THE PARTIES 5
SECTION 1 – GENERAL EFFECT OF AGREEMENT 5
1.1 – Recitals 5
1.2 – Effective Date and Execution Date 5
1.3 – Prior Agreements 5
1.4 – Related Agreements 5
1.5 – Defined Terms 5
1.6 – Section References 5
1.7 - Memorandum of Agreement 5
SECTION 2 – AUTHORITY, GUARANTY AND ASSIGNMENT 6
2.1 – Parties and Delegation of Authority 6
2.1.1 – Definitions 6
2.1.2 – Role of Arena Authority 7
2.1.3 – Delegation of Authority by City 7
2.1.4 – Delegation of Authority by Manager 8
2.2 – Guarantees by SSE and SJS LLC 8
2.3 – Assignment by Manager 8
2.3.1 – Requirements for Assignment 8
2.3.2 – City Approval of Assignee 8
2.3.3 – Form of Assignment 9
2.3.4 – Permitted Transfers 9
2.3.5 – Hypothecation by Secured Party 10
SECTION 3 – USE OF ARENA BY SPORTS TEAMS 10
3.1 – San Jose Sharks 10
3.1.1 – Definitions 10
3.1.2 – Hockey Use Agreement 11
3.1.3 – Compliance with NHL Rules 12
SECTION 4 – PROTECTION OF MARKET AREA 12
4.1 – Radius Clause 12
4.1.1 – Booking or Staging of Events 12
4.1.2 – Management or Operation of Similar Facilities 12 [ii]
4.1.3 - Management or Operation of Community Recreation Facilities 13
4.2 – Right of First Opportunity to Manage Other Facilities 13 4.2.1 – Right of First Opportunity 13
4.2.2 – No Right to Terminate Agreement 14
4.2.3 – Excluded Facilities 14
PART TWO – PRIMARY ECONOMIC TERMS 14
SECTION 5 – TERM 14
5.1 – Period of Agreement 14
5.1.1 – Dates 14
5.1.2 – Term Year (Fiscal Year) 14
5.2 – Manager’s Termination Rights 14
5.2.1 – Early Termination Right 14
5.2.2 – Extraordinary Termination Right 16
SECTION 6 – ARENA FEES 16
6.1 – Amount and Types of Payments 16
6.1.1 – Contributions towards Renovation Project Costs 16
6.1.2 – Capital Reserve Fund Contributions 16
6.1.3 – Community and City Events Fund 17
6.1.4 - San Jose Sharks Community Fund 17
6.1.5 - Consideration 17
6.2 – Fee Credits 17
6.2.1 – PIT Credit 17
6.2.2 – Cost Increase Credits 18
6.2.3 – Force Majeure Credits 18
6.2.4 – City Default Credit 18
6.3 – General Payment Terms 18
6.3.1 – Method of Payment 18
6.3.2 – Proration of Payments 18
6.3.3 – Refunds 18
SECTION 7 – CAPITAL RESERVE FUND CONTRIBUTIONS 19
7.1 – Maintenance of Capital Reserve Fund 19
7.1.1 – Control of Fund 19
7.1.2 – Interest 19
7.1.3 – Roll-Over 19
7.1.4 – Reporting 19
7.1.5 – Termination 19
[iii]
7.2 – Payments to Capital Reserve Fund 19
7.2.1 – Payments by Manager 19
7.2.2 – Payments by City 19
7.3 – Effect of Fee Credits 19
7.3.1 – PIT Credit 19
7.3.2 – Cost Increase Credits 20
7.3.3 –Force Majeure Credits 20
7.3.4 – City Default Credit 20
7.4 – Roll-Over Adjustments 20
7.5 – Effect of Termination Notice 20
7.6 – One Time Disbursement for Temporary Parking Facility 21 SECTION 8 – OPERATING EXPENSES 21
8.1 – Manager’s General Responsibility 21
8.1.1 – Manager Responsible for Operating Losses 21
8.1.2 – Limitation on City Obligations 21
8.2 – City’s Responsibility 21
8.2.1 – Arena Public Safety Costs 21
8.2.2 – Incremental TPMP Costs 21
8.2.3 – Arena TPMP Operations and Management 21
8.2.4 – Arena Authority and Administration of Agreement 22
8.2.5 – Insurance for Arena Facilities 22
8.2.6 – Pre-Existing Environmental Conditions 22
8.2.7 – Other City Obligations 22
8.3 – City Support for Reduction of Energy Costs 22
8.4 – Governmental Services 23
SECTION 9 – OPERATING REVENUES 24
9.1 – Manager’s General Benefit 24
9.1.1 – Manager Entitled to Operating Profit 24
9.1.2 – City Prohibited from Charging Fees 24
9.1.3 – New Revenue Sources 24
SECTION 10 – TAXES AND OTHER GOVERNMENTAL CHARGES 24
10.1 – General Obligation to Pay 24
10.1.1 – Notices 25
10.2 – Disallowed Tax Increases 25
10.2.1 – Definitions 25
10.3 – Possessory Interest Taxes 26
[iv]
10.3.1 – Cooperation by City 26
10.3.2 – Credit for City’s Allocation of Possessory Interest Taxes 26
10.3.3 – PIT Credit for 2018 AMA Term 27
10.4 – Living Wage Exemption 27
10.4.1 – Living Wage Policy 27
10.4.2 – Application of Living Wage Policy to Arena Facilities 27
10.4.3 – Credit for Living Wage Expenses 27
SECTION 11 – EXPENSES PAYABLE BY MANAGER FOR CITY AND COMMUNITY BENEFIT 28
11.1 – Community and City Events Fund 28
11.1.1 – City Events 28
11.1.2 – Community Events 28
11.1.3 – Historical Scheduling Practices 29
11.1.4 – Event Charges and Requirements 29
11.1.5 – Community and City Events Policy 29
11.2 – Council Discretionary Funds 30
11.2.1 – San Jose Sharks Community Fund 30
11.2.2 – Public Acknowledgement 30
11.3 – Hall of Fame 30
11.3.1 – Manager’s Responsibilities until HOF Display End Date 30
11.3.2 – Manager’s Responsibilities after HOF Display End Date 31
11.4 – City Use of Arena Facilities 32
11.4.1 – Determination of Arena Authority Office End Date 32
11.4.2 – Arena Authority and City Obligations after Receipt of Notice to Relocate 32
11.4.3 – Manager's Obligations Prior to Arena Authority Office End Date 32
11.4.4 – General Access to Building and On-Site Parking Facilities 33
11.5 – Luxury Suite and Event Tickets 33
11.5.1 – Suite P41 33
11.5.2 – Suite and Club Tickets 33
11.5.3 – Suite Relocation Option 34
11.5.4 – Voluntary Suite Agreements 35
PART THREE – GENERAL OPERATION AND MANAGEMENT 35
SECTION 12 – MANAGER’S GENERAL RIGHTS AND DUTIES 35
12.1 – Engagement of Manager 35
12.1.1 – General Scope of Management 36
12.1.2 – Management Duties 36
12.1.3 – Governing Standards 36
[v]
12.1.4 – Acceptance of Arena 37
12.1.5 – Person in Charge 37
12.2 – Specific Management Duties 38
12.2.1 – Arena Contracts 38
12.2.2 – General Requirements for Arena Contracts 39
12.2.3 – Other Specific Management Duties 39
12.2.4 – Record Keeping and Reports to City 40
12.3 – Compliance with Laws 41
12.3.1 – Applicable Permits 41
12.3.2 – Capital Projects 41
12.4 – Patents and Copyrights 41
SECTION 13 – ORDINARY MAINTENANCE AND REPAIRS 41
13.1 – Ordinary Maintenance and Repairs 41
13.1.1 – Manager’s Obligations 41
13.1.2 – On-Site Parking Facilities 42
13.1.3 – Other Exterior Areas 42
13.2 – Annual Maintenance Budget and Records 42
13.2.1 – Maintenance Budget 42
13.2.2 – Maintenance Records 43
SECTION 14 – APPLICABLE COMMUNITY STANDARD 43
14.1 – Where Conformance is Required 43
14.1.1 – Pricing 43
14.1.2 – Hiring Policies 43
14.1.3 – Entertainment in Premium Areas 44
14.1.4 – Smoking and Tobacco Advertising 45
14.1.5 – Alcohol Consumption and Advertising 45
14.1.6 – General Matters Related to Applicable Community Standard 45
14.2 – Effect of City Ordinances 46
14.2.1 – Definitions 46
14.2.2 – Restriction on Manager’s Rights 46
PART FOUR – ADVERTISING AND SIGNAGE 46
SECTION 15 – ADVERTISING AND NAMING RIGHTS 46
15.1 – General Rights 46
15.1.1 – Arena Advertising 46
15.1.2 – Media Distribution 47
15.1.3 – Naming Rights 47
[vi]
15.2 – Advertising Content Regulations 47
15.2.1 – Viewpoint Neutral Advertising Limitations 47
15.2.2 – Policy Concerning Commercial Advertising 49
15.3 – Naming Rights 49
15.3.1 – Definitions 49
15.3.2 – Exclusive Venue Naming Rights 50
15.3.3 – Approval of Venue Name and Venue Logo 51
15.3.4 – Use of Venue Marks by City 51
15.3.5 – Existing Naming Rights Agreement 52
15.3.6 – Signage Displaying Venue Marks 52
15.3.7 – Costs Related to Advertising, Naming Rights and Signage 53 SECTION 16 – ON-SITE SIGNAGE 53
16.1 – Interior Signage 53
16.1.1 – Definitions 53
16.1.2 – Manager’s Right to Install Interior Signage 54
16.1.3 – Aesthetic Requirements 54
16.1.4 – City Name and Graphics 55
16.1.5 – Miscellaneous Graphics 55
16.2 – Exterior Signage 55
16.2.1 – Permitted Permanent Signs 55
16.2.2 – Permitted Temporary Signs 57
16.2.3 – Governing Standards for Exterior Signage 57
SECTION 17 – OFF-SITE SIGNAGE 57
17.1 – Freeway Signs 57
17.1.1 – General Requirements 58
17.1.2 – Governmental Approvals 59
17.1.3 – Location of Freeway Sign Premises 59
17.1.4 – Lease of City Property 60
17.1.5 – Governing Standards for Freeway Signs 60
17.1.6 – Replacement of Freeway Signs 60
17.2 – Governmental Directional Signs 60
17.2.1 – City Signs 60
17.2.2 – Public Transportation Signs 60
[vii]
PART FIVE – PARKING AND TRAFFIC 61
SECTION 18 – ON-SITE PARKING; LOT D AND DELMAS WEST 61
18.1 – Description of On-Site Parking Facilities 61
18.1.1 – Number of Spaces
61 18.1.2 – Payment for On-Site Parking Facilities 61
18.2 – Lot D Lease 61
18.2.1 – Terms of Lot D Lease 61
18.2.2 – Effect on Minimum Off-Site Parking Requirements 62
18.2.3 – Termination of Google’s Replacement Parking Obligation 63
18.2.4 – Covenant re Use of Delmas Parking Lots 63
18.3 – Use and Control of On-Site Parking Facilities 64
18.3.1 – Permitted Uses 64
18.3.2 – Capital Enhancements 64
18.4 – Parking for City Purposes 65
18.4.1 – Convention Center Overflow 65
18.5 – Use for Public Parking, Including Transit Users 65
18.5.1 – Non-Event Days 65
18.5.2 – Event Days 65
18.5.3 – Other Restrictions 65
SECTION 19 – OFF-SITE PARKING 65
19.1 – Parking Spaces for Arena Customers 65
19.1.1 – Definitions 65
19.1.2 – City’s Obligations 68
19.1.3 – Development of Parking Spaces on Lot E and Milligan 69
19.1.4 – Adjustments for Changes to On-Site Parking Facilities 70
19.1.5 – Interim Reduction in Minimum Off-Site Parking Requirements 71
19.1.6 – Exceptions to 1/3 Mile Radius Area for Approved Parking Facilities 72
19.2 – Parking Spaces for Employees 73
19.2.1 – Number of Spaces and Location 73
19.2.2 – Transit Opportunities for Arena Employees 74
19.3 – Temporary Conditions 74
19.3.1 – Defined Terms 74
19.3.2 – Temporary Parking Agreements 75
19.4 – Development of Parking Spaces on Lot E 76
19.4.1 – Acquisition of Lot E Parcels 76
19.4.2 – Extension of Time to Complete Construction 76
[viii]
19.4.3 – Excluded Manager Parcels 77
19.4.4 – Ground Lease for Included Manager Parcels 78
19.4.5 – Future Arena Location Agreement 78
19.5 – Operation of New Parking Spaces by Manager 79
19.5.1 – Operating Agreement with Manager 79
19.5.2 – Priority for Arena Parking 79
19.6 – City Expenditures 79
SECTION 20 – PARKING SUPPLY AND UTILIZATION REPORTING; ADJUSTMENTS TO REQUIREMENTS 79
20.1 – Parking Supply and Forecast Reports 79
20.1.1 – Parking Supply Report 79
20.1.2 – Parking Forecast Report 80
20.2 – Parking Utilization Report and Adjustments to Requirements 81
20.2.1 – Parking Utilization Report 81
20.2.2 – Adjustments Based on Change in Utilization Rates 82 SECTION 21 – COORDINATION AND COOPERATION 84
21.1 – Definitions and Context 84
21.1.1 – Definitions 84
21.1.2 – Mutual Commitment 84
21.2 – Parking Matters 85
21.2.1 – Significant Land Use Decisions 85
21.2.2 – Shared Parking for Non-Residential Development 86
21.2.3 – DTW Vertical Improvements Conformance Review for Replacement Parking Facilities 86
21.2.4 – Enforcement of DTW Parking Requirements 87
21.2.5 – Parking Design Criteria 88
21.3 – Transportation Matters 89
21.3.1 – Transportation Projects 89
21.3.2 – TPMP’s 89
21.3.3 – Streets and Intersections 90
21.3.4 – Alteration of Sidewalks 90
21.3.5 – DTW Settlement Agreement Provisions re Configuration of Streets 90
21.3.6 – Transportation Objectives 91
21.4 – Coordination Meetings 93
21.4.1 – Meeting Participants 94
21.4.2 – Issues to be Addressed 94
21.4.3 – Quarterly Event Coordination with Google 94
[ix]
21.4.4 – Procedures for Review of DTW Project Applications 95 SECTION 22 – NOTICE AND CURE OF PARKING DEFICIENCY 95
22.1 – Notice of Parking Deficiency 95
22.1.1 – Definition of Parking Deficiency 95
22.1.2 – Delivery of Notice of Parking Deficiency 95
22.2 – Notice of Anticipated Parking Deficiency 96
22.2.1 – Definition of Anticipated Parking Deficiency 96
22.2.2 – Delivery of Notice of Parking Deficiency 96
22.3 – Notice of Self-Help Work 96
22.4 – City’s Written Response 96
22.5 – Purpose of Notice Provisions 96
SECTION 23 – TRANSPORTATION AND PARKING MANAGEMENT PLANS 97
23.1 – Arena TPMP 97
23.1.1 – Background 97
23.1.2 – Contents of Arena TPMP 97
23.1.3 – Modification of Arena TPMP 98
23.1.4 – Legal Effect of Arena TPMP 98
23.1.5 – Operations and Management under the Arena TPMP 98
23.1.6 – Legal Effect of Operations Manual 99
23.1.7 – Incremental costs of Implementing Arena TPMP 99
23.2 – Transit Project TPMP’s 101
23.2.1 – Definitions 101
23.2.2 – TPMP’s and Construction Mitigation Plan Required 101
23.2.3 – Event Operations Committee 102
PART SIX – SECURITY, POLICE AND SPECIAL EVENTS 102
SECTION 24 – SECURITY FOR EVENTS 102
24.1 – On-Site Security Services 102
24.1.1 – Staffing for Interior Security Positions 102
24.1.2 – Allocation of Costs for On-Site Security Services 102
24.1.3 – Emergency Situations 103
24.2 – Off-Site Traffic Control Services 103
24.2.1 – Staffing for Traffic Control Positions 103
24.2.2 – Allocation of Costs for Off-Site Traffic Control Services 104
24.2.3 – Emergency Situations 105
24.3 – Rules and Procedures for Traffic Control Positions 105
24.3.1 – Scheduling Process Memorandum 105
[x]
24.3.2 – Employment Terms and Conditions 105
24.3.3 – Efforts to Address Staffing Shortages 106
24.4 – Secondary Employment of Off-Duty Police Officers 107
24.4.1 – Secondary Employment Approval 107
24.4.3 – Indemnification Obligations 108
24.4.4 – Law Enforcement Liability Insurance 108
24.5 – Staffing Shortfall Tracker and Fee 109
24.5.1 – Staffing Shortfall Tracker 109
24.5.2 – Payment of Staffing Shortfall Fee 109
24.6 – Arena Public Safety Fund 110
24.6.1 – Allowed Uses and Accounting for Arena Public Safety Fund 110
24.6.2 – Reimbursements to Manager 111
SECTION 25 – SPECIAL EVENTS AND OTHER SECURITY MATTERS 112
25.1 – Community Special Events 112
25.1.1 – City Events Concierge 112
25.1.2 – Schedule Coordination for Conflicting Events 114
25.1.3 – Off-Duty Police Officer Services 114
25.2 – Protected Speech Events On or About Arena Facilities 114
25.2.1 – Use of Police for Free Speech Security 115
25.2.2 – No Public Forum 115
25.3 – Restrictions on Peddling Near Arena 115
25.3.1 – Importance of Prohibition 115
25.3.2 – Police Enforcement 115
25.3.3 – Manager’s Limited Role in Peddler Permit Ordinance Enforcement 116
25.4 – Security Improvements 116
SECTION 26 – SURVEILLANCE VIDEO 116
26.1 – Surveillance Video Footage Owned by Manager 116
26.2 – Access for Police Purposes 117
26.3 – Video Surveillance Costs 117
PART SEVEN – ENVIRONMENTAL COMPLIANCE 117
SECTION 27 – ENVIRONMENTAL COMPLIANCE 117
27.1 – Intent and Scope 117
27.1.1 – General Provisions 117
27.1.2 – Definitions 118
27.2 – Pre-Existing Hazardous Substances and Prior Remediation 120
27.2.1 – Arena Building and Lots A, B and C 120
[xi]
27.3 – City’s Responsibilities for Hazardous Substances 121
27.3.1 – City’s Investigation and Remediation Obligations 121
27.3.2 – Pre-Existing Hazardous Substances 121
27.3.3 – City Obligations upon Release or Notice of Governmental Action 122
27.3.4 – Conformance with Applicable Environmental Laws 122
27.3.5 – Indemnification by City 122
27.3.6 – Alterations to On-Site Parking Facilities 122
27.4 – Manager’s Responsibilities for Hazardous Substances 123
27.4.1 – Manager’s Investigation and Remediation Obligations 123
27.4.2 – Manager Obligations upon Release or Notice of Governmental Action 123
27.4.3 – Conformance with Applicable Environmental Laws 124
27.4.4 – Indemnification by Manager 124
PART EIGHT – CAPITAL ASSETS 124
SECTION 28 – CAPITAL REPAIRS, REPLACEMENTS AND ENHANCEMENTS 124
28.1 – General Provisions 124
28.1.1 – Definitions 124
28.1.2 – Allocation of Obligations between the Parties 128
28.2 – Capital Budget 129
28.2.1 – Prioritization of Funds 129
28.2.2 – Capital Budget Approval Process 129
28.2.3 – Capital Budget Limitations 130
28.2.4 – Reimbursement from Capital Reserve Fund 130
28.2.5 – Capital Budget on Early Termination 131
28.3 – Emergency Capital Repairs and Replacements 131
28.3.1 – Notification to City 131
28.3.2 – Performance of Work 131
28.3.3 – Reimbursement 132
28.4 – Code Upgrade Work 132
28.4.1 – Manager’s Obligations 132
28.4.2 – City’s Obligations 132
28.4.3 – Right to Contest 133
28.5 – Additional Capital Projects Outside of Budget Process 133
28.5.1 – Election to Use Own Funds 133
28.5.2 – Approval Outside of Capital Budget Process 133
28.6 – Implementation of Alterations Work 134
28.6.1 – Pre Construction Planning 134
[xii]
28.6.2 – Implementation Responsibilities 134
28.7 – Surety Bonds 135
28.7.1 – General Requirements 135
28.7.2 – Types of Surety Bonds Required 135
28.7.3 – Exception to Surety Bond Requirement 136
SECTION 29 – OWNERSHIP OF ASSETS 136
29.1 – Ownership and Surrender of Arena Facilities 136
29.1.1 – Exclusive Property of City 136
29.1.2 – Surrender upon Termination 136
29.2 – Pledge or Hypothecation; Lender Rights 137
29.2.1 – Agreement in Subordinate to Financing Leases 137
29.2.2 – Manager’s Right to Pledge or Hypothecate Operating Revenues 137
29.2.3 – Further Assurances 137
PART NINE – ALLOCATION OF RISK 138
SECTION 30 – CASUALTY INSURANCE 138
30.1 – Property Insurance 138
30.1.1 – Policy Coverages 138
30.1.2 – Course of Construction 138
30.1.3 – Personal Property Not Covered by City 138
30.1.4 – Loss Payable 139
30.2 – Business Interruption Insurance 139
30.2.1 – Manager's Election 139
30.2.2 – Loss Payable 139
30.3 – Cooperation 139
30.3.1 – City’s Obligation to Pursue Claims 139
30.3.2 – Information Requests 139
30.4 – Waiver of Subrogation 139
30.5 – Earthquake Insurance 140
30.5.1 – Option to Maintain Earthquake Insurance 140
30.5.2 – Loss Payable 140
30.6 – Terrorism Insurance 140
30.6.1 – City’s Option to Maintain Terrorism Insurance 140
30.6.2 – Manager’s Option to Maintain Terrorism Insurance 140
30.7 – General Property Insurance Requirements 140
30.7.1 – Annual Notification by Manager 141
30.7.2 – Annual Notification by City 141
[xiii]
30.7.3 – Further Actions 141
30.7.4 – Optional Coverages 141
30.7.5 – Survival 141
SECTION 31 – DAMAGE AND DESTRUCTION 141
31.1 – Casualty Defined 141
31.2 – City’s Obligation to Repair 141
31.3 – Time Period for City to Repair 142
31.4 – Notice by City of Election to Repair or Terminate 142
31.4.1 – Election to City 142
31.4.2 – Determination Date 142
31.5 – Manager’s Election to Repair or Terminate 142
31.5.1 – Election to Repair 142
31.5.2 – Election to Terminate 142
31.6 – Effect of Termination 142
31.6.1 – Parties’ Obligations 142
31.6.2 – Manager’s Right to Negotiate to Resume Management 143
31.7 – Waiver of Statutory Provisions 143
31.7 – Fee Credit for Casualty 143
SECTION 32 – LIABILITY INSURANCE 143
32.1 – Policy Requirements 143
32.1.1 – Required Coverages 143
32.1.2 – Exception for Liquor Liability Coverage 143
32.1.3 – Increases in Coverages 143
32.2 – Policies to be Maintained by Subtenants, Contractors and Other Third Parties 143
32.3 – Claims Administration 143
32.3.1 – Notice Procedure 143
32.3.2 – Duty to Cooperate 144
SECTION 33 – INDEMNIFICATION 144
33.1 – General Provisions 144
33.1.1 – Definitions 144
33.2 – Indemnification by Manager 144
33.3 – Indemnification by City 145
33.4 – Exception for Law Enforcement Activities 145
33.5 – Survival 146
[xiv]
SECTION 34 – EMINENT DOMAIN 146
34.1 – General Provisions 146
34.1.1 – Defined Terms 146
34.1.2 – Nature or Manager’s Interest 147
34.1.3 – Waiver of Statutory Provisions 147
34.1.4 – Notice 147
34.1.5 – Proceedings 147
34.1.6 – Separate Award to Manager or SJS LLC 147
34.1.7 – Survival 147
34.2 – Total Taking 147
34.2.1 – Automatic Termination 147
34.2.2 – Optional Termination 147
34.2.3 – Allocation of Award 148
34.3 – Partial Taking 148
34.3.1 – Agreement in Full Force 148
34.3.2 – Restoration by City 148
34.3.3 – Allocation of Award 148
34.4 – Temporary Taking 148
34.5 – Taking by City Authority 149
PART TEN – CONTRACT ENFORCEMENT AND REMEDIES 149
SECTION 35 – NEGATIVE COVENANTS 149
35.1 – Negative Covenants of Manager 149
35.2 – Negative Covenants of City 150
SECTION 36 – REPRESENTATIONS AND WARRANTIES 150
36.1 – Manager’s Representations and Warranties 150
36.1.1 – Economic Warranties 150
36.1.2 – Ownership Warranties 151
36.2 – City’s Representations and Warranties 151
36.3 – Mutual Representations and Warranties 151
36.4 – Effect of Representations and Warranties 152
36.4.1 – Material Inducement and Reliance 152
36.4.2 – Survival 152
SECTION 37 – FORCE MAJEURE 152
37.1 – Definition 152
37.2 – Delay in Performance 153
37.3 – Fee Credit 153
[xv]
SECTION 38 – DEFAULT AND REMEDIES 153
38.1 – General Procedures 153
38.1.1 – Definitions 153
38.1.2 – Procedure for an Insolvency Default 155
38.1.3 – Notice of Potential Event of Default 155
38.2 – Time Periods Allowed to Cure a Potential Event of Default 156
38.2.1 – Payment of Money 156
38.2.2 – Minimum Off-Site Parking Requirements 156
38.2.3 – Acquisition of Lot E Parcels 157
38.2.4 – Other Act or Omission 157
38.2.5 – Court Proceeding Pending Completion of Cure 157
38.3 – Remedies 157
38.3.1 – Injunctive Relief 157
38.3.2 – Stipulation for Entry of Judgment with Escrow Instructions 158
38.3.3 – Liquidated Damages for City’s Failure to Timely Fund City’s Renovation Costs Obligations 160
38.3.4 – Liquidated Damages for City’s Failure to Meet Minimum Off-Site Parking Requirements 160
38.3.5 – Monetary Damages 162
38.3.6 – Termination 162
38.3.7 – Self-Help 165
38.4 – Claims Procedures 166
SECTION 39 – MEDIATION 166
39.1 – Disputed Matters to be Submitted to Mediation 166
39.1.1 – Definitions 166
39.1.2 – Agreement not to Initiate Litigation During Mediation Period 167
39.1.3 – Tolling Agreement 167
39.2 – Mediation Procedures 167
39.2.1 – Selection of Mediator 167
39.2.2 – Schedule; Costs 167
39.2.3 – Confidentiality 168
SECTION 40 – [INTENTIONALLY OMITTED] 168
PART ELEVEN – MISCELLANEOUS PROVISIONS 168
SECTION 41 – GOVERNING LAW; VENUE 168
41.1 – Governing Law 168
41.2 – Venue 168
[xvi]
SECTION 42 – PARTIES BOUND 168
42.1 – Authority 168
42.2 – Binding on Successors 168
42.3 – Parties in Interest 168
SECTION 43 – INDEPENDENT CONTRACTOR RELATIONSHIP 168
43.1 – No Joint Venture 168
43.2 – No Agency 168
43.3 – Rights Coupled with an Interest 168
SECTION 44 – APPROVALS AND WAIVERS 169
44.1 – Approvals 169
44.2 – Waivers 169
SECTION 45 – INTEGRATION CLAUSE; AMENDMENTS 169
45.1 – Entire Agreement 169
45.2 – Amendments to be in Writing 169
45.3 – Further Assurances 169
SECTION 46 – ESTOPPELS; LENDER MODIFICATIONS 169
46.1 – Estoppel Certificates 169
46.2 – Modifications for Public Financing 169
SECTION 47 – INTERPRETATION AND CONSTRUCTION 169
47.1 – Joint Drafting 169
47.2 – Meaning of Certain Words and Phrases 169
47.3 – Captions 170
47.4 – Gender; Number Reference 170
47.5 – Invalidity of Particular Provisions 170
47.6 – Time is of the Essence 170
SECTION 48 – NOTICES 170
48.1 – Manner of Delivery 170
48.2 – Addresses for Notice 170
SECTION 49 – EXECUTION OF AGREEMENT 171
49.1 – Counterparts 171
49.2 – Electronic Signatures 171
SECTION 50 – ATTACHMENTS 172
50.1 – Incorporation by Reference 172
50.2 – List of Attachments 172
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document. {21893‐0114:00573752‐1} Page 1 of 17 2
THIRD AMEND
ED AND RESTATED
ARENA MANAGEMENT AGREEMENT
THIS THIRD AMENDED AND RESTATED ARENA MANAGEMENT AGREEMENT (“Agreement”) is made effective as of July 1, 2025 (“Effective Date”), by and between CITY OF SAN JOSÉ, a municipal corporation (“City”), and SAN JOSE ARENA MANAGEMENT, LLC, a Delaware limited liability company (“Manager”).
RECITALS
A. City and Manager (collectively, the “Parties” and individually, a “Party”) are parties to a Second Amended and Restated Arena Management Agreement executed as of August 15, 2018 (but effective retroactively to a “Commencement Date” of July 1, 2015), as amended by a First Amendment dated December 4, 2018 (“First Amendment to 2018 AMA”), and a Second Amendment dated June 8, 2021 (collectively, “2018 AMA”). As used in this Agreement, the phrase “2018 AMA Term” (or words to that effect) means the period of time from July 1, 2015, through June 30, 2025.
B. Under the 2018 AMA (and the other Prior Arena Agreements described below), Manager has been leasing, managing and operating a regional multi‐purpose sports and entertainment arena and related facilities (“Arena Facilities”) located in downtown San José, California. The Arena Facilities include the following:
(1) The legal parcels of land described on Attachment No . 1 (the “Arena Land”); (2) The building containing an approximately 18,000 seat arena, luxury suites, concession areas, offices, and related improvements, which building is located at 525 W. Santa Clara Street, San José, California 95113 (“Arena Building” or “Arena”), as shown on the site plan (“Site Plan”) attached hereto as Attachment No. 2; (3) The ramps, stairs, supports, loading and receiving areas, driveways, walkways, parking areas and other improvements located outside of the Arena Building, but within the boundaries of the Arena Land as shown on the SAP Center Boundary Exhibit attached hereto as Attachment No. 3 (“Arena Site Improvements”), expressly excluding all public streets, public sidewalks and related improvements located outside of the boundaries of the Arena Land (the “Public Right of Way”), as shown on the SAP Center Boundary Exhibit; (4) The parking lots located adjacent to the Arena Building and known as Lots A, B and C, together with the parking lot located so uth of Santa Clara Street across from the Arena Building and known as Lot D (collectively, “On‐Site Parking Facilities”), also as shown on the Site Plan; and
(5) Furnishings, trade fixtures, equipment, vehicles and other tangible property located on or about the other Arena Facilities and/or used in connection with the opera tion of such other Arena Facilities, as more specifically described in Section 28.1.1 below (“Arena FF&E”).
C. Manager (through its predecessors in interest) originally took possession of the Arena Facilities on or about August 20, 1993 (“Possession Date”), pursuant to an Agreement to Enter and a San Jose Arena Managemen
t Agreement, both dated October 24, 1991, as amended (collectively, “1991 AMA”). The 1991 AMA was superseded in its entirety by an Amended and Restated San Jose Arena Management Agreement dated December 19, 2000, as amended by several addenda DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document. {21893‐0114:00573752‐1} Page 2 of 17 2
and amendments thereto (collectively, “2000 AMA”). The 2000 AMA was superseded in its entirety by the 2018 AMA. The 1991 AMA, 2000 AMA and 2018 AMA are collectively referred to in this Agreement as the “Prior Arena Agreements.”
D. City and Sharks Ice, LLC are parties to that certain Second Am ended and Restated ice Centre Lease and Management Agreement dated as of October 1, 2020 (the “Ice Centre Lease”) for the use and operation of the Ice Centre of San José, which is located at 1500 S. Tenth Street in San José, and is currently known as Sharks Ice at San Jose and Tech CU Arena (“Ice Centre”). The term of the Ice Centre Lease expires on June 30, 2051.
E. The San Jose Sharks NHL hockey team, which is owned by San Jose Sharks, LLC, plays its home games at the Arena, and uses the Ice Centre as its practice facili ty. Manager, Sharks Ice, LLC, and San Jose Sharks, LLC are all subsidiaries of Sharks Sports & Entertainment LLC.
F. In addition to serving as the home venue for the San Jose Sharks, the Arena serves as a major public assembly facility for other sporting events, concerts, family‐friendly show s, conferences, corporate events, community events, and similar activities.
G. Throughout its possession of the Arena Facilities, Manager has demonstrated that it has the ability to bring significant specialized knowledge, expertise and experience to the management and operation of major public assembly facilities and to secure, devise and promote a broad range of sporting, cult
ural, educational, musical, recreational and other activities, events and entertainment at such facilities. In addition, the Arena has proven to be a major economic generator for the City, annually bringing over one million visitors to downtown San José and contributing tens of millions of dollars in economic impact, all at no risk to City for any operating losses.
H. From th
e opening of the Arena in 1993, City and Manager have spent tens of millions of dollars maintaining and improving the Arena Facilities, including a series of mechanical/electrical/plumbing (MEP) and technology upgrades, refreshes to finishes, selective space remodels , and safety improvements. Since 2013 alone, City has contributed approximately $22 million and Manager has contributed over $100 million to such improvements. However, the Arena is now the last remaining NHL venue that has not undergone a major renovation, and is currently not consistent with a number of NHL standards an d other industry norms.
I. In order to keep the Arena competitive with other sports and entertainment venues in Northern California, City and Manager have agreed to undertake a major renovation of the Arena Facilities (the “Renovation Project”), which is more specifically described in the Agreement for the Renovation of SAP Center at San José date
d concurrently with this Agreement and attached to
this Agreement as Attachment No. 21 (“Renovation Agreement”). City has agreed to contribute $350 million and Manager has agreed to contribute a minimum of $100 million towards the Renovation Project.
J. City and Manager also desire to extend Manager’s lease of the Arena Facilities until June 30, 2051, continuing the lease, management, and operation of the Arena Facilities by Manager in order to realize long term bene fits from their respective capital investment in the Arena, and to assure the continued status of the Arena as a major public assembly facility and economic asset for the City of San José.
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K. The Parties now wish to enter into this Agreement in order to formally memorialize the details of their agreement regarding the above matters. Rather than executing another amendment to the 2018 AMA, the Parties have elected to completely amend and restate the 2018 AMA in order to create a cohesive document that is easi er to read and interpret.
L. The Parties intend that this Agreement shall supersede and replace the 2018 AMA in its entirety effective as of the Effective Date, but that (1) Manager’s possession of the Arena Facilities shall be deemed to be continuous and uninterrupted from and after the Possession Date, and (2) th e relationship, duties and obligations of the Parties established in the Prior Arena Agreements shall continue as updated and modified in this Agreement, subject to the more specific terms and conditions set forth below.
M. City’s general goals and objectives for continuing and extending the relationship of the Partie s pursuant to this Agreement include the following:
(1) To provide a wide variety of cultural, educational, entertainment, sporting and other activities and events to promote and serve the public interest; (2) To retain the San Jose Sharks to play its home games in San José for the full term of thi s Agreement;
(3) To provide broad social and economic benefits to the City of San José and meet the demands of the local population;
(4) To promote as wide a use of the Arena Facilities as is practical and feasible, so that the citizens and public generally may enjoy and re ceive those benefits; (5) To stimulate the economy of the community by utilizing the City’s climatic, geographical, recreational, cultural, educational and commercial resources and advantages; (6) To retain a high level of management, operation and maintenance of the Arena Facilities, in order to protect the capital investment in the Arena Facili ties; (7) To provide for the addition of significant capital improvements to the Arena Facilities that meet a high standard for design and construction and are in the best interests of the citizens of the City of San José;
(8) To optimize the use of the Arena Facilities while m inimizing the net cost to City and avoiding City exposure to operating losses;
(9) To provide facilities and opportunities for groups and organizations from outside the greater San José community; and
(10) To assure the status of the Arena as a major public assembly facility in the City of San José.
N. Manager’s general goals and objectives for continuing and extendin g the relationship of the
Parties pursuant to this Agreement include the following:
(1) To keep the San Jose Sharks franchise in the City of San José, by retaining a facility for the team’s home games that meets all NHL requirements and has other features of a modern, first class pro
fessional hockey arena;
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(2) To continue to manage the Arena on behalf of the City on a financially successful basis, to protect Manager’s capital investment in the Arena Facilities and to continue as a major economic generator for San José’s downtown area;
(3) To consistently provide Arena customers with superior services and experiences, while maintainin
g a safe venue and environment that is inclusive and accessible to all San José residents and respects the community’s diversity;
(4) To ensure a source of funding for essential capital repairs and replacements, and for capital enhancements as needed to attract modern shows and other events, and to help keep the Arena co mpetitive during the full term of this Agreement; (5) To maintain uninterrupted sufficient parking supply and efficient venue access for customers from all modes of transportation, including automobiles and transit, as necessary to meet customer demand and ensure the continued vitality of the Arena; (6) To institute procedures to identify and address potential adverse impacts of future projects in
the Diridon Area with respect to parking, traffic and access, and endeavor to ensure that new projects will appropriately mitigate negative impacts on Arena operations;
(7) To enhance the connectivity and other technological capabilities of the Arena Facilities, to meet customer deman d and support successful Arena operations consistent with “state of the art” industry standards;
(8) To maintain and expand existing revenue sources and generate miscellaneous new sponsorship revenues from ancillary activities such as indoor and outdoor signage and specific area branding within the Arena;
(9) To increase the visibility of the Arena and pote ntial advertising opportunities by developing off‐site signage locations, including the establishment of at least two digital freeway signs; and
(10) To continue to serve the community by growing charitable giving through the Sharks Foundation, maintaining a City‐named sports franchise brand recognized around the world, and serving as a source of pride and inspiration for City residents.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, and in further consideration of the terms, covenants and conditions herein contained, the Parties mutually agree as follows:
PART ONE
RELATIONSHIP OF THE PARTIES
SECTION 1. GENERAL EFFECT OF AGREEMENT.
1.1 Recitals. The foregoing Recitals are hereby restated by reference and incorporated herein as terms and conditions of this Agreement.
1.2 Effective Date and Execution Date. This Agreement shall be valid and binding as of the last date that both Parties shall have signed this Agreement (the “Execution Date”), but the terms and conditions hereof shall be effective retroactive to July 1, 2025 (the “Effective Date”).
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1.3 Prior Agreements. By execution and delivery of this Agreement, the Parties hereby terminate certain prior agreements, amendments, addenda and other instruments between the Parties (the “Prior Agreements”) described on the Schedule of Prior Agreements attached hereto as Attachment No. 4. Such termination shall be effective as of the CommencementEffective Date without further action by the Parties. However, the Parties shall execute, deliver and record (where applicable) any instrument reasonably requested by either Party to specifically confirm the termination of any of the Prior Agreements.
1.4 Related Agreements. Prior to or concurrentlyIn connection with this Agreement, a number of related agreements, amendments, and other instruments (the “Related Agreements”) have been or shall be executed by the Parties or their Affiliates consistent with the terms and intent of this Agreement. A Schedule of Related Agreements is attached hereto as Attachment No. 5. (a) In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of any Related Agreements, the provisions of this Agreement shall control and govern.
1.5 Defined Terms. Capitalized terms used in this Agreement shall have the definitions provided in various sections of this Agreement. A Schedule of Defined Terms is attached hereto as Attachment No. 20.
(a) In the event of any discrepancies between the definitions set forth in this Agreement and the definitions given in the Schedule of Defined Terms, the definitions in this Agreement shall control and govern.
1.6 Section References. Section numbers referred to in this Agreement mean the corresponding numbered sections of this Agreement, unless otherwise specified herein.
1.7 Memorandum of Agreement. Concurrently with the execution of this Agreement, the Parties will execute a recordable Memorandum of Agreement in form and substance mutually agreeable to the Parties, which shall (i) amend and supersede that certain Amendment to Memorandum of Management Agreement recorded on August 16, 2018, in the Official Records of Santa Clara County as Document 24004426; and (ii) summarize the provisions regarding the Term of this Agreeme
nt. Manager shall cause the Memorandum of Agreement to be recorded in the Official Records of Santa Clara County within ten (10) days after the Execution Date of this Agreement.
Within thirty (30) days after the expiration or earlier termination of this Agreement, Manager shall execute and deliver to City a quitclaim deed in recordable form remising and releasing to City all of Manager's right, title and interest in and to the Arena Facilities and this Agreement, including the Memorandum of Agreement.
SECTION 2. AUTHORITY, GUARANTY AND ASSIGNMENT.
2.1 Parties and Delegation of Authority.
2.1.1 Definitions. In this Agreement, the following terms shall have the meanings given below:
(a) “Affiliate” means any person or entity that, directly or indirectly, controls, is controlled by, or is under common control with the entity in question, excluding the NHL or any member clubs of the NHL (other than SJS LLC or the San Jose Sharks). The term “control” (including the terms “controlled by” and “under common cont
rol with”) means the possession, direct or indirect, or the power to direct or cause the direction of the management and policies of an entity, DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document. {21893‐0114:00573752‐1} Page 6 of 172
whether through the ownership of Controlling Interests, by contract, or otherwise.
(b) “AHL” means the American Hockey League or any successor thereto. (c) “Arena Authority” means The San Jose Arena Authority, a California nonprofit public benefit corporation, established by City to perform certain responsibilities on behalf of City with respect to overseeing the ma nagement and operation of the Arena.
(d) “City” means the City of San Jose, a municipal corporation and charter city of the State of California, and its City Council and/or City Manager, as the context may require. The term “City” includes City’s predecessors and successors in interest. (e) “Controlling I
nterests” means voting rights, capital interests, or other interests or rights that give the holder thereof the ability to control, directly or indirectly, all material decisions that would affect the ability of SSE, SJAM or SJS LLC to comply with their respective obligations under this Agreement and the Ho ckey Use Agreement. For the avoidance of doubt, a party holding 50% or more of the Controlling Interests must retain the power to control all material decisions affecting the management and operations of SSE, SJAM or SJS LLC, as applicable. (f) “Manager” means SJAM.
(g) “NHL” means the National Hockey Le ague or any successor thereto. (h) “Owner(s)” means Plattner and the successors and assigns of the persons, trusts and entities comprising Plattner as may be approved or authorized pursuant to Section 2.3 below.
(i) “Permitted Transferee” has the meaning given in Section 2.3.4. (j) “Plattner” means, individually and coll ectively, Hasso Plattner and/or his spouse, siblings and such siblings’ spouses, lineal descendants of any of the foregoing, or trusts for the benefit of any of the foregoing, and their respective Affiliates. (k) “San Jose Barracuda” means the professional hockey team operating pursuant to an AHL franchise, the owner of which is Sharks Minor Holdings LLC (a subsidi ary of SJS LLC) as of the Execution Date.
(l) “San Jose Sharks” means the professional hockey team operating pursuant to an NHL franchise, the owner of which is SJS LLC as of the Execution Date. (m) “Sharks Ice” means Sharks Ice, LLC, a Delaware limi ted liability company, the sole member of which is SSE as of the Execution Date. The term “Sharks Ice” includes its predecessors and successors in interest.
(n) “SJAM” means San Jose Arena Management, LLC, a Delaware limited liability company, the sole member of which is SSE as of th e Execution Date. The term “SJAM” includes its predecessors and successors in interest.
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(o) “SJS LLC” means San Jose Sharks, LLC, a Delaware limited liability company, the sole member of which is SSE as of the Execution Date. The term “SJS LLC” includes its predecessors and successors in interest.
(p) “SSE” means Sharks Sports & Entertainment LLC, a Delaware limited liability company. Th e term “SSE” includes its predecessors and successors in interest.
2.1.2 Role of Arena Authority. City has established Arena Authority, whose purposes include performing an oversight role on behalf of City respecting the operation of the Arena Facilities and acting as a liaison to the broader community concerning neighborhood impacts and the operation of the Arena Facilities.
(a) City and Manager mutually acknowledge (i) the importance of Arena Authority in facilitating communications between the City and Manager, overseeing th e operations of the Arena (and other City‐owned sports venues), and acting as a liaison to the broader San Jose community; and (ii) the importance of the role of the Executive Director of the Arena Authority in the continuing success of this relationship.
(b) In light of th e foregoing, City agrees to consult with Manager prior to selecting any successor(s) to such Executive Director position, and to take Manager’s comments into consideration when selecting any such successor(s).
2.1.3 Delegation of Authority by City. From time to time City may delegate to Arena Authority, in whole or in part, such rights, obligations and functions of City hereunder as City shall deem appropriate, subject to such requirements and limitations as City may designate in its sole discretion.
(a) In addition to the rights, obligations and functions delegated to Arena Authority pursuant to the terms of this Ag reement, City may notify Manager from time to time in writing of any additional matters delegated to Arena Authority, whereupon Manager shall be entitled to rely without further investigation upon acts of Arena Authority within the scope of its delegated authority as set forth in such notification from City.
(b) Manager her eby acknowledges the delegation described above, and with respect thereto shall recognize Arena Authority for such purposes as acting on behalf of City hereunder.
(c) Unless otherwise provided, or the context requires otherwise, references in this Agreement to “City” shall include Arena Authority to the extent of its authority delegated to it by City purs uant to this Agreement or otherwise from time to time, of which Manager has been notified as provided above.
(d) The foregoing provisions shall not limit the authority of the City Manager to act on behalf of the City pursuant to any provision of this Agreement, or in accordanc
e with any City ordinance, City Council resolution, or other Applicable Laws.
2.1.4 Delegation of Authority by Manager. Manager has designated the following officers as Manager’s authorized representatives for purposes of this Agreement: President; Senior DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document. {21893‐0114:00573752‐1} Page 8 of 172
Vice President, SAP Center and Sharks Ice; and Senior Vice President, Chief Financial Officer. Instruments executed by any one of such officers in the name of or on behalf of Manager shall be deemed to be the acts of Manager for purposes of binding Manager to any obligation or duty hereunder.
(a) Manager may chang
e its designated representatives by giving written notice to City as provided in this Agreement.
(b) No officer, director or other representative of Manager shall have the authority to bind Manager except those designated by Manager as provided herein.
2.2 Guarantees by SSE and SJS LLC. All payment and per formance obligations of Manager under this Agreement (including payment of the Early Termination Fee (defined in Section 5.2.1(a) below) and performance under this Agreement and the Hockey Use Agreement) shall be guaranteed by SSE and SJS LLC pursuant to separate guaranty agreements to be executed by each of SSE (the “SSE Guaranty”) and SJS LLC (the “SJS Guaranty”) pri or to or concurrently with this Agreement in the forms attached hereto as Attachment No. 7‐1 and Attachment No. 7‐2, respectively. The obligations under this Section 2.2, and the obligations under the SSE Guaranty and SJS Guaranty, shall survive the termination of this Agreement. The SSE Guaranty and SJS Guaranty are Related Agreements as referenced in this Agreement.
2.3 Assignment by Manager.
2.3.1 Requirements for Assignment. Except as otherwise provided in Section 2.3.4 below with respect to Permitted Transfers, this Agreement may not be assigned, in whole or in part, by Manager or its Affiliates or Owners to any person or firm (an “Assignee”) unless all of the following requirements are satisfied:
(a) City has approved of the Assignee as set forth in Section 2.3.2; (b) Manager has concurrently assigned it
s rights under the Hockey Use Agreement
(described in Section 3.1.1 below) to the Assignee;
(c) Manager and the Assignee have executed written instruments approved by City as set forth in Section 2.3.3; and
(d) To the extent required by Applicable Laws, the Assignee shall be at all releva nt times duly qualified to do business in the State of California.
2.3.2 City Approval of Assignee. If Manager desires to assign its interest under this Agreement (and the Hockey Use Agreement) other than in connection with a Permitted Transfer, Manager shall first provide City with a written request for approval, including the name of each proposed Assignee and information regarding such proposed Assignee’s experience, financial condition, and proposed on‐site supervising manager. City’s approval of any proposed Assignee shall not be unre asonably withheld or delayed. (a) City may consider any or all of the following in providing or withholding its consent for a proposed Assignee:
(i) Financial capacity to fulfill all payment and performance obligations contemplated to be performed by Manager under this Agreement; (ii) Reputation as to integrity;
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(iii) Record and experience and qualifications in managing comparable arenas in the United States;
(iv) Record and reputation in dealings with local government and community concerns; or
(v) Acceptance of the employment, contracting and hiring provisions set out in Section 14.1.2.
If a proposed Assignee meets the above requirements, then approval of such proposed Assignee shall be grante
d.
(b) If Manager wishes to submit a list of prospective Assignees for approval by City, Manager shall provide City with at least 4 names of prospective Assignees together with the information described above, and shall indicate which two are Manager’s preferred choices. City may reject at most 2 of such prospecti ve Assignees, but not both of Manager’s preferred choices, on the basis stated in clause 2.3(a)(iv) above.
(c) All persons or firms that are not expressly disapproved by City in writing within 30 days after Manager delivers its request for approval shall be deemed approved.
2.3.3 Form of Assignment. To be a valid assignment u nder this Agreement, any Assignee
(including a Permitted Transferee) must agree, pursuant to written instruments that are reasonably satisfactory to City, that such Assignee shall: (i) succeed to all of the rights and interests of Manager under this Agreement and the Hockey Use Agreement, and assume all of the liabilities and obligations of Manager thereunder (including all operating losses of Manager under th
is Agreement), and (ii) agree to cure any prior Event of Default of this Agreement committed by Manager.
2.3.4 Permitted Transfers. Notwithstanding anything to the contrary in this Agreement, the transfers and assignments described below shall be permitted without the consent or approval of City (each, a “Permitted Transfer”), but shall be subject to the requirements of Section 2.3.3. Any new owner, assignee or other transferee resulting from a Permitted Transfer is referred to in this Agreement as a “Permitted Transferee”. (a) A transfer of the San Jose Sharks to a new owner approved by th e NHL, provided
that (i) the new owner signs a replacement guaranty agreement on terms equivalent to the SSE Guaranty and/or the SJS Guaranty, as applicable, and directly or indirectly assures or assumes (as the case may be) all monetary and performance obligations contempla
ted to be performed by Manager under this
Agreement and by SJS LLC under the Hockey Use Agreement, and (ii) at least two senior managers of SJAM (one of whom must be a facilities manager) remain in senior management positions following such sale for at least six mon ths, to provide transition services.
Upon the new owner’s execution of such replacement guaranty agreement(s), the original Guarantor shall be released from the SSE Guaranty and/or the SJS Guaranty, as applicable.
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(b) A transfer of the Controlling Interests in SSE, SJS LLC and/or SJAM to a new owner or owners approved by the NHL, provided that (i) SSE reaffirms the SSE Guaranty and SJS LLC reaffirms the SJS Guaranty, and (ii) at least two senior managers of Manager (one of whom must be a facilities manager) re main in senior management positions following such transfer for at least six months, to provide transition services.
(c) Any transfer by an Owner or Owners, individually or in the aggregate, such that after the transfer the applicable Ownership Warranties stated in Section 36.1.2 continue to be accurate.
(d) Any transfer by an Own
er or Owners, individually or in the aggregate, such that after the transfer Plattner owns, directly or indirectly, 50% or more of the Controlling Interests in SJAM and SJS LLC.
(e) The assignment of this Agreement to any other entity in which Plattner owns, directly or indirectly, 50% or more of the Controlling Interests.
2.3.5 Hypothe
cation by Secured Party. Neither a hypothecation approved or permitted as provided by Section 29.2.2 nor any exercise by the approved or permitted secured party of its remedies shall be deemed an assignment for purposes of this Section 2.3.
SECTION 3. USE OF ARENA BY SPORTS TEAMS.
3.1 San Jose Sharks.
3.1.1 Definitions. In this Agreement, the following terms shall have the meanings given below. (a) “Hockey Use Agreement” means the agreement, as amended from time to time as permitted by this Agreement, between Manager and SJS LLC governing the terms and conditions upon which the San Jose Sharks play their Home Games at the Arena, as further described below. The Hockey Use Agreement is a Relate d Agreement as referenced in this Agreement.
(b) “Home Game” means any hockey game designated by the NHL as a home game of the San Jose Sharks.
(c) “NHL Rules” means the constitution, bylaws, and all other rules, regulations, agreements, resolutions, policies, limitations, and interpretations of the NHL, as deter
mined by the NHL from time to time; any Collective Bargaining Agreement between the League and/or its members and other parties; each as in effect as of the Execution Date and/or hereafter enacted, made or enforced. (d) “Post Season” means the time period during each Term Year following the conclusion of the Regular Se
ason, during which NHL teams play the division semi‐
finals, division finals, conference championship and Stanley Cup Championship games conducted by the NHL.
(e) “Pre‐Season” means the time period during each Term Year prior to the start of the Regular Season, during which NHL teams play pre‐season games, includin g exhibition games during training camp.
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(f) “Regular Season” means the time period during each Term Year during which NHL teams play their regular schedule of games, as determined by the NHL.
3.1.2 Hockey Use Agreement. The Arena is used as the regular Home Game facility for the San Jose Sharks pursuant to the Hockey Use Agreement. The original Hockey Use Agreement was executed as of October 24, 1991, and was amended by instruments dated December 21, 2000, July 1, 2015, and July 1, 2025.
(a) Pursuant to the Hockey Use Agreement, as amended, the following material provisions (among others) are currently in eff ect:
(i) SJS LLC shall at all times during the term of the Hockey Use Agreement maintain an NHL team franchise in good standing named “San Jose Sharks” or such other name as shall be selected by SJS LLC, which in any event shall contain the name “San Jose .”
(ii) The Hockey Use Agreement shall expire on June 30, 2051; provided, however, that if this Agreement terminates prior to such date in accordance with the terms hereof, the Hockey Use Agreement shall terminate on the date that this Agreement terminates.
(iii) During the term of the Hockey Use A greement, the San Jose Sharks shall play at least one Pre‐Season Home Game and all Regular Season and Post‐Season Home Games at the Arena, with limited exceptions as scheduled or approved by the NHL.
(iv) Manager and SJS LLC shall abide by all materially applicable NHL Rules. (b) Notwithstanding anything to the contrary conta ined in the Hockey Use Agreement, Manager and SJS LLC may amend the Hockey Use Agreement from time to time; provided, however, that unless Manager first obtains City’s written consent, which consent shall not be unreasonably withheld, Manager shall not agree to any amendment to the Hockey Use Agreement that would:
(i) Allow SJS LLC to assign or otherwise tran
sfer its interests in the NHL team
franchise to another person or entity except as permitted by Section 2.3 of this Agreement or approved by City in accordance with the procedures and standards set forth in the Hockey Use Agreement;
(ii) Allow th
e name of the team to be changed unless it includes “San Jose” in the name;
(iii) Terminate the Hockey Use Agreement prior to the termination of this Agreement, or extend the Hockey Use Agreement beyond the termination of this Agreement;
(iv) Release SJS LLC from the obligation to maintai n an NHL member team that plays at least one Pre‐Season Home Game and all Regular Season and Post‐Season Home Games at the Arena, with limited exceptions as scheduled or approved by the NHL; or
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(v) Change any other provision such that it would be inconsistent with this Agreement or materially affect City’s rights or Manager’s obligations under this Agreement.
3.1.3 Compliance with NHL Rules. Manager is obligated to comply with the NHL Rules in connection with Home Games played by the San Jose Sharks at the Arena, including NHL Rules regarding alterations and improvements to the Arena Facilities, security measures, Home Game schedules, advertising and promotion, customer relations, website design and content, and so forth.
(a) Where applicable, the Parties shall exercise their respective rights and perfor m their obligations under this Agreement (and under the Hockey Use Agreement) in a manner that is consistent with the NHL Rules; provided, however, that nothing in the NHL Rules shall supersede or control over the express rights or obligations of City under this Agreement.
Section 4. PROTECTION OF MARKET AREA.
4.1 Radius Clause. The intent of this Section 4.1 is to focus Manager’s management and promotional efforts on events held in San Jose.
4.1.1 Booking or Staging of Events. During the Term, Manager shall not book or assist in the booking, promotion, copromotion or staging of events at sports or entertainment venues similar to the Arena and located within a 75 mile radius of the Arena Facilities, except that such restriction shall not apply to the following:
(a) Any event that is in conjunction with the promotion of the same or similar ev ent at the Arena;
(b) Any event at another facility located within the City of San Jose, including those owned by City (including the TechCU Arena operated by Sharks Ice) or San Jose State University; or
(c) Any event that is organized or sponsored by the NHL/AHL or other sports organization that involves or otherwise promotes the San Jose Sh arks or the San
Jose Barracuda; or
(d) Any other event that is approved in writing by City.
4.1.2 Management or Operation of Similar Facilities. During the Term, Manager shall not build, construct, manage or operate any substantially similar public assembly facility or facilities within a 75 mile radius of the Arena Facilities, unless Manager first obtains the express written approval of City as follows:
(a) City recognizes the changing circumstances in the market and consequently, City will review on a case‐by‐case basis an y proposal from Manager to promote, manage or operate a substantially similar public assembly facility or facilities within a 75 mile radius of the Arena Facilities.
(b) Authorization to proceed with such undertaking shall be decided promptly after a request is made by Manager, and will be based on an evalua tion by City as to whether the expanded operation (i) will protect or enhance Manager’s ability to DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document. {21893‐0114:00573752‐1} Page 13 of 172
secure first‐rate entertainment at the Arena, and (ii) will not adversely affect attendance achieved at non‐hockey events at the Arena.
(c) Information provided by Manager relating to its request, which is identified by Manager as confidential trade secret information, will be treated by City as such and will not be disclosed without pr ior written notice to Manager and an opportunity for Manager to prevent disclosure to others through any appropriate legal means.
4.1.3 Management or Operation of Community Recreation Facilities. Nothing in this Agreement shall be deemed to prohibit Manager’s involvement in (a) building, constructing, managing or operating community‐based sports and recreation facilities located within a 75 mile radius of the Arena Facilities, or (b) booking, promoting or staging events at such community‐based sports and recreation facilities.
4.2 Right of First Opportunity to Manage Ot her Facilities. The intent of this Section 4.2 is to protect Manager’s substantial investment in the Arena Facilities by helping to ensure the continuing success of the Arena through coordinated management of any competing facility that is financially supported by City.
4.2.1 Right of First Opportunity.
(a) During the Term, if City constructs, finances, financially supports (for example, by credit enhancement) or participates in the construction of an arena or comparable facility (including an amphitheater) having fixed seating capacity in excess of 5,000 located in San Jose which is to be used for events typically held in comparable major arenas (a “Competing Facili
ty”), then City shall grant (or cause
the grant) to Manager of the first opportunity to manage such Competing Facility. (i) Any action by City in its regulatory or police power capacity (e.g., planning, zoning, plan approval, code enforcement and inspection) shall not be construed as “parti cipation in construction” for purposes of this section.
(b) If Manager elects to exercise its right to manage the Competing Facility, Manager shall be compensated with a reasonable fee or with a profit and loss position as the Parties may agree. Any terms and/or conditions offered to Manager shall be the same as would be offered to a thir
d party manager.
(c) If Manager does not elect to exercise its right to manage the Competing Facility, City shall not execute a contract with a third party to manage such Competing Facility on terms more favorable than those offered to Manager without firs t offering those terms to Manager.
4.2.2 No Right to Terminate Agreement. City’s involvement in the construction or financing of a Competing Facility shall not give rise to any right on the part of Manager to terminate this Agreement under Section 38.3.6, provided that Manager has been offered the right to manage the Competing Facility as described above.
4.2.3 Excluded Facilities. This Section 4.2 shall not apply to (i) any outdoor stadium used for professional sports games such as football, soccer or baseball, or (ii) any facility used for recreation, entertainment, cultural or civic activities presented through City’s Parks and DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document. {21893‐0114:00573752‐1} Page 14 of 172
Recreation Department, Office of Cultural Affairs or community and cultural arts organizations, including school facilities, the Performing Arts Center, Civic Auditorium and the Convention Center.
PART TWO
PRIMARY ECONOMIC TERMS
SECTION 5. TERM.
5.1 Period of Agreement. The term of this Agreement (“Term”) shall be 26 years, subject to the following:
5.1.1 Dates. The Term shall commence as of the Effective Date (July 1, 2025) and terminate on June 30, 2051, subject to earlier termination in accordance with Section 5.2.1, Section
38.3.6, or other applicable provisions of this Agreement (“Termination Date”).
5.1.2 Term Year (Fiscal Year). A “Term Year” (also referred to as a “Fiscal Year”) shall consist of 12 consecutive calendar months during the Term, beginning on July 1st of a calendar year and ending on June 30th of the following calendar year. Each Term Year may be referred to by the last two digits of its beginning and ending calendar years or by only the last two digits of its ending calendar year. For example, the first Term Year may be referred to as “Term Year 25/26” or “FY 26” or similar designa tions.
5.2 Manager’s Termination Rights. Although SSE currently intends that the San Jose Sharks will remain in San Jose for the entire Term of this Agreement, the Parties acknowledge that an unforeseen change in circumstances may occur in the future such that SSE and/or SJS LLC may decide to relocate the San Jose Sharks to a different city in which case Manager would terminate this Agreement prior to expiration of the Term
.
5.2.1 Early Termination Right. Subject to Section 5.2.2., following the Renovation Project End Date (defined in the Renovation Agreement), but not before June 30, 2031, Manager, in its sole and absolute discretion, shall have the right (“Early Termination Right”) to vacate the Arena and terminate this Agreement (and Manager and SJS LLC may elect to terminate the Hockey Use Agreement) prior to the ex piration of the Term, upon Manager giving irrevocable notice of termination (“2‐Year Irrevocable Notice”) at least two (2) full Fiscal Years in advance of the early termination date designated in the notice “Early Termination Date”) (which Early Termination Date shall be at the end of a Fiscal Year); provided, however, that Manager shall have first gi
ven a revocable notice of its intent to
terminate (“3‐Year Revocable Notice”) at least three (3) full Fiscal Years in advance of the Early Termination Date. For example, if Manager wishes to terminate this Agreement (and the Hockey Use Agreement) on an Early Ter mination Date of June 30, 2043, then Manager must give City a 3‐Year Revocable Notice by June 30, 2040, and a 2‐Year Irrevocable Notice by June 30, 2041.
(a) Within twelve (12) months after giving its 2‐Year Irrevocable Notice (i.e., at least 12 months prior to th e Early Termination Date), Manager shall pay to City an early termination fee (“Early Termination Fee”) in accordance with the schedule shown on Attachment No. 6 (“Schedule of Financial Terms”), with the amount payable being the figure shown on the same line as the Term Year ending on the Early Termination Date. For example, if the Early Termination Date is June 30, DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document. {21893‐0114:00573752‐1} Page 15 of 172
2043, then the Early Termination Fee would be payable no later than June 30, 2042, in the amount of $119,552,750.
(b) Notwithstanding the foregoing, an Early Termination Fee will not be payable if Manager is expressly permitted to terminate this Agreement without payment of an Early Termination Fee pursuant to the terms of this Ag reement. (c) City and Manager acknowledge and agree that in determining the amount of the Early Termination Fee (i) they have exercised care to make a reasonable forecast of direct losses that may arise from the early termination of this Agreement and relocation of the San Jose Sharks to a different ci ty and, (ii) such reasonable forecast of direct losses is not exact given that it would be infeasible to estimate such losses with precision, including due to the intangible nature of some of such losses and the number of residents and businesses that rely upon the presence of the San Jo
se Sharks in the City, and (iii) they have considered (A) the City’s financial contributions to the Renovation Project; (B) the City’s loss of revenue streams attributable to the San Jose Sharks operations; and (C) the detrimental effects of an early termination of this Agreement and relocation of the Sa n Jose Sharks, including the loss of (1) intangible civic, social, and quality of life benefits, (2) national and international exposure, and (3) revenues and other direct and indirect economic and fiscal benefits.
(d) City and Manager further agree that Manager’s election to exercise its right to vacate the Ar ena and terminate this Agreement (and the Hockey Use Agreement) prior to the expiration of the Term shall not be an Event of Default under this Agreement. Therefore, Manager’s exercise of said Early Termination Right shall not entitle City to any injunctive relief, monetary damages, or any other remedies, other than th e right to receive the Early Termination Fee as and when required by this Agreement. However, in order to help ensure the enforceability of the Early Termination Fee, the Parties agree that for the purposes of this Agreement the Early Termination Fee shall be construed as liquidated damages and not as a penalty.
(e) Consistent with the foregoing, City and Manager agree that the Early Termination Fee is a reasonable estimate of the losses to City resulting from an early termination of this Agreement and relocation of the San Jose Sharks and that payment of such amount as liquidated damages is not inte nded as a forfeiture or penalty within the meaning of California Civil Code Sections 3275 or 3369, but is intended to constitute liquidated damages to City pursuant to California Civil Code Section 1671. If the City collects an Early Termination Fee hereunder in connection with an early termination of this Agreement and relocation of the Sa n Jose Sharks, the City hereby waives the right to collect, and shall not seek to collect, any additional monetary or other damages under this Agreement or the Hockey Use Agreement from SSE, Manager, or SJS LLC.
(f) As set forth in Section 38 below, if Manager fails to pay the Early Termination Fe e as and when required by this Agreement, such failure shall be an Event of Default as defined in Section 38.1.1, in which case City shall be entitled to immediately exercise its remedies under Section 38.3, including the right to the entry of a Stipula
ted Judgment as described in Section 38.3.2.
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5.2.2 Extraordinary Termination Right. Notwithstanding anything in this Agreement to the contrary, if (i) Manager or any other party develops a new arena located within the City’s jurisdictional limits, and (ii) SJS LLC enters into an agreement to have the San Jose Sharks NHL hockey team play its Home Games at such new arena on the terms and conditions set forth in Section 3.1.2 (a) of this Agreement, then Manager may terminate this Agreement on the date that the new arena is substantially completed, without giving a 3‐ Year Revocable Notice or a 2‐Year Irrevocable Notice.
(a) In the event of such termination of this Agreement, Manager shall not be required to pay an Ear ly Termination Fee; provided, however, that if the San Jose Sharks move their Home Games to a location outside of the City’s jurisdictional limits prior to June 30, 2047, then Manager shall be required to pay City an Early Termination Fee in accordance with the attached Schedule of Financial Terms.
Manager’s obligations under this Section 5.2.2(a) shall survive termination of this Agreement.
(b) The Parties a
nticipate that prior to construction of a new arena, other relevant terms and conditions regarding the disposition of the existing Arena Facilities and the use of the new arena will be determined.
SECTION 6. ARENA FEES.
6.1 Amount and Types of Payments. Subject to the terms and conditions of this Agreement, Manager shall make certain payments to or for the benefit of City (collectively, “Arena Fees”), as described below and depicted on the Schedule of Financial Terms (Attachment No. 6):
6.1.1 Contributions Towards Renovation Project Costs. Pursuant to Article V of the Renovation Agreement, Manager shall pay a minimum of One Hundred Million Dollars ($100,000,000) towards the Project Costs, as follows:
(a) Manager shall pay Twenty Five Million Dollars ($25,000,000) towards City’s debt service on financing obtained by City to fund the Project Costs, in accordance with Section 5.01 (B) 2 of the Renovation Agr eement.
(b) Manager shall pay at least Seventy Five Million Dollars ($75,000,000) towards directly funding the Project Costs, in accordance with Section 5.04 of the Renovation Agreement.
6.1.2 Capital Reserve Fund Contributions. Manager shall pay a total of Thirty Two Million Four Hundred Twenty Thousand Dollars ($32,420,000) to the Capital Reserve Fund, in accordance with Section 7.2.1.
6.1.3 Community and City Events Fund. Manager shall contribute a total of Two Million Six Hundred Thousand Dollars ($2,600,000) to the Community and City Events Fund, in accordance with Section 11.1.
6.1.4 San Jose Sharks Community Fund. Manager shall pay a total of Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000) to the San Jose Sharks Community Fund, in accordance with Section 11.2.
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6.1.5 Consideration.
(a) The consideration provided by Manager to City for entering into this Agreement, and for Manager’s rights to use, occupy, possess, control, brand, operate and generate revenue from the Arena Facilities (including the Arena FF&E) during the Term in accordance with this Agreement (collectively, “Possessory Interest Rights”), includes the following:
(i) The Ar
ena Fees payable by Manager as described above;
(ii) The grant by Manager of certain in‐kind benefits to City (the value of which is estimated to be over Eleven Million Dollars ($11,000,000) over the Term), including the use of space within the Arena for City purposes as provided in Se ctions 11.3 and 11.4, and the use of a luxury suite and related Event tickets and parking passes as provided in Section 11.5; (iii) The performance by Manager of its other obligations under this Agreement, many of which obligations are for the benefit of the downtown business area as well as the wider San Jose comm unity; and (iv) City’s rights of ownership in the Arena Facilities and all Renovation Improvements, Alterations and additions to the Arena Facilities (including Arena FF&E) as provided in Section 29.1.1.
(b) Except as otherwise expressly provided in this Agreement, Manager shall have no obligation to make any ot her payments of any type to City for its Possessory Interest Rights, regardless of whether such types of payments: (i) are characterized as rent, additional rent, cost reimbursements, naming rights payments, parking lot fees, ticket revenues, advertising revenues, hockey revenues, use fees, suite rentals, media distribution fees, or otherwise; or (ii) are common in the sports and entertainme
nt industry, now or in the future.
6.2 Fee Credits. Manager shall be entitled to a reduction in the amount of Arena Fees payable under this Agreement (in each case, a “Fee Credit”) under the circumstances described below. Following the determination of the amount of any Fee Credit, Manager may deduct the Fee Credit from Manager’s Capital Reserve Payments in accordance with Sections 7.3 and 7.4. Each Fee Credit described below is independent and cumulative of al l other Fee Credits or other remedies that may apply.
6.2.1 PIT Credit. Manager shall be entitled to a Fee Credit (“PIT Credit”) for City’s share of Possessory Interest Taxes as described in Section 10.3.
6.2.2 Cost Increase Credits. Manager shall be entitled to a Fee Credit (“Cost Increase Credit”) in each case for any of the following that may be applicable from time to time during the Term: (i) Disallowed Tax Increases as described in Section 10.2; and (ii) Living Wage Expenses as described in Section 10.4.
6.2.3 Force Majeure Credits. Manager shall be entitled to a Fee Credit (“Force Ma jeure Credit”) if Manager’s use of the Arena Facilities or any material portion thereof is blocked, reduced or restricted (either permanently or temporarily) for more than five calendar days due to any of the following events: (i) a Casualty as described in Section 31.1; or (ii) any other DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document. {21893‐0114:00573752‐1} Page 18 of 172
Force Majeure Event as described in Section 37.1. In each case, the amount of the Fee Credit shall be determined in accordance with the following:
(a) The amount of the daily Fee Credit shall be equal to the amount of Arena Fees payable for the Term Year in which the applicable ev ent occurs, divided by 365. (b) The number of days for which the daily Fee Credit shall apply shall be equal to the number of days (including the first five days) during which the Arena Facilities are rendered unusable as a public entertainment facility for hockey games and/or other forms of entertai nment as contemplated by this Agreement, with full seating, vending, concessions, advertising and on‐site parking capacity.
6.2.4 City Default Credit. Manager shall be entitled to a Fee Credit (“City Default Credit”) pursuant to Section 38.2.1 if City has committed an Event of Default that can be cured with the payment of money only, and City fails to make such payment within the Applicable Cure Period.
6.3 General Payment Terms. Manager’s obligation to pay the Arena Fees shall be subject to the following additional general terms:
6.3.1 Method of Payment. The Arena Fees shall be paid in US Dollars, by means of a check made payable to the City of San Jose and delivered to the Arena Authority, or by such other method of payment or to such other address as may be requested by City.
6.3.2 Proration of Payments. Unless otherwise provided in this Agreement (such as for an Event of Default), all Arena Fees and other obligations payable or calculated on the basis of a specified time period shall be equitably prorated if the actual time period is shorter or longer than the specified period.
(a) For example, if the Term terminates prior to June 30th of a Term Year (such as in the case of a Casualty), the Arena Fees for that Term Year shall be prorated based on the number of days from the start of the Term Year to the actual Termination Date.
(b) Where payment obligations vary based on the number of Event Days, such proration shall be based on the num
ber of Event Days in the applicable period
rather than calendar days.
6.3.3 Refunds. Any refunds due from City to Manager shall be payable within 180 days following receipt of a written statement from Manager to City with reasonable detail and supporting documents describing the reasons for the refund and the calculation of the amount of the refund.
SECTION 7. CAPITAL RESERVE FUND CONTRIBUTIONS.
7.1 Maintenance of Capital Reserve Fund. City shall continue to maintain a restricted fund named the “San Jose Arena Capital Reserve Fund” and designated by City as Fund 459 (“Capital Reserve Fund”) to provide a source of funding for Capital Projects as described in Section 28.1. As of the Effective Date the Capital Reserve Fund shall include the balance remaining in the Capital Reserve Fund un der the 2018 AMA, and thereafter shall be funded as described in Section 7.2.
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7.1.1 Control of Fund. City shall control the Capital Reserve Fund, but disbursements from the Capital Reserve Fund shall be made only for Capital Projects in accordance with Section
28.2 or as otherwise approved in accordance with the terms of this Agreement.
7.1.2 Interest. City shall maintain the Capital Reserve Fund in one or more interest‐bearing accounts with financial institutions selected by City from time to time in its reasonable discretion. All interest earned on such account shall be added to the Capital Reserve Fund.
7.1.3 Roll‐Over. Any monies in the Capital Reserve Fund (including interest earnings) not spent in any given Term Year shall remain in the account and constitute part of the Capital Reserve Fund without affecting City’s continuing obligation to make payments to the Capital Reserve Fund in subsequent Term Years.
7.1.4 Reporting. City shall keep reasonably detailed records of all deposits to and disbursements from the Capital Reserve Fund, in accordance with City’s standard practices and procedures. Manager shall have the right to inspect and/or receive copies of all records relating to the Capital Reserve Fund upon reasonable prior written request.
7.1.5 Termination. Upon termination of this Agreement, all monies in the Capital Reserve Fun d shall belong to City.
7.2 Payments to Capital Reserve Fund. The Parties shall make payments to the Capital Reserve Fund as follows:
7.2.1 Payments by Manager. Manager shall pay a total of Thirty Two Million Four Hundred Twenty Thousand Dollars ($32,420,000) to City, which City shall deposit into the Capital Reserve Fund to be used only for Capital Projects as described in Section 28. Such total amount shall be paid in installments that are due and payable on August 1, 2025, and on August 1 of each calendar year from 20 33 through 2049, in the amounts set forth on the Schedule of Financial Terms (“Manager’s Capital Reserve Payments”).
7.2.2 Payments by City. City shall contribute a total of Thirty Two Million Four Hundred Fifty Five Thousand Two Hundred Thirty Dollars ($32,455,230) to the Capital Reserve Fund, in installments that are due on August 1, 2025, and on August 1 of each calendar year from 2038 through 2049, in the amounts set forth on the Schedule of Financial Terms (“City’s Capital Reserve Payments”).
7.3 Effect of Fe e Credits. Notwithstanding the provisions of Sections 6.1.2 and 7.2, if Manager is entitled to a Fee Credit, then the Parties’ respective payments to the Capital Reserve Fund shall be modified as described below, subject to the provisions of Section 7.4.
7.3.1 PIT Credit. If Manager is entitled to a PIT Credit in accordance with Section 6.2.1, then Manager’s Capital Reserve Payments shall be reduced by the amount of such PIT Credit, and City’s Capital Reserve Payments shall be increased by the same amount, so that the total amount of payments for the applicable Term Year(s) remains the same.
7.3.2 Cost Increase Credits. If Manager is entitled to a Cost Increase Credit in accordance with Section 6.2.2, then Manager’s Capital Reserve Payments shall be reduced by the amount of such Cost Increase Credit, and City’s Capital Reserve Payments shall be increased by the same amount, so that the total amount of payments for the applicable Term Year(s) remains the same.
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7.3.3 Force Majeure Credits. If Manager is entitled to a Force Majeure Credit in accordance with Section 6.2.3, then Manager’s Capital Reserve Payments shall be reduced by the amount of such Force Majeure Credit, but City’s payments shall not change, so that the total payments to the Capital Reserve Fund for the applicable Term Year(s) shall be reduced by the amount of the Force Majeure Credit. However , nothing herein shall be deemed to be a waiver of Manager’s or City’s rights to seek recovery of its losses from insurance policies carried by either Party, in accordance with Part Nine of this Agreement.
7.3.4 City Default Credit. If Manager is entitled to a City Default Credit in accordance with Section 6.2.4, then Manager’s Capital Reserve Payments shall be reduced by the amount of such City Default Credit, and City’s Capital Reserve Payments shall be increased by the same amount, so that the amount of the total payments for the applicable Term Year(s) remains the same.
7.4 Roll‐Over Adjustments. If Manager is entitle d to any Fee Credits during any Term Year(s) in which Manager’s Capital Reserve Payments are not payable, or are otherwise insufficient in amount to cover the amount of such Fee Credits, then the following shall apply:
(a) The Fee Credits shall be accumulated and “rolled‐over” to the subsequent Term Years, and applied against Manager’s Capital Reserve Payments as and when the amo unt of such payments are sufficient to cover the amount of such accumulated Fee Credits. (b) For example, if during Term Years 26/27 through 32/33 the PIT Credits are an average of $30,000 per year, for a total of $210,000 for the seven years, then such PIT Credits will be applied in Fiscal Year 33/34 as follows:
(i) Manager’s Capital Reserve Payment shall be reduced fr om $500,000 to $290,000,
less any Fee Credit that applies for that Term Year; and (ii) City’s Capital Reserve Payment, which would otherwise be $‐0‐ for 33/34, shall be equal to the amount of the PIT Credits take n by Manager as described above. c) Without limiting the foregoing, any PIT Credits that accrue from the 2018 AMA Term (which are capped at $250,000 pursuant to Section 10.3.3), shall be “rolled‐over” to Term Year 25/26 (and subsequent Term Years, if necessary) and applied against Manager’s Capital Rese
rve Payments or Manager’s payments towards City’s debt service as described in Section 6.1.1 (a), whichever is due first.
7.5 Effect of Termination Notice. If for any reason this Agreement is terminated early (whether because Manager delivers to City an Early Termination Notice in accordance with Section 5.2.1, or the San Jose Sharks relocate to a new arena within San Jose as described in Section 5.2.2, or this Agreement is terminated in accordance with Section 38.3.5 due to an uncured Event of Default), then the Parties ’ obligatory payments to the Capital Reserve Fund shall be reduced proportionately to the amounts necessary to keep the Arena Facilities in good working condition for the remainder of the shortened Term. Such amounts shall be determined by the Parties in accordance with the procedures for agreeing on a Capital Budget as describ ed in Section 28.2.
7.6 One Time Disbursement for Temporary Parking Facility. Notwithstanding anything to the contrary in this Agreement, Manager shall be entitled to obtain a one‐time disbursement from the Capital Reserve Fund (subject to the availability of funds) to reimburse Manager for the costs of improving certain City‐owned parcels with a temporary parking lot pursuant to a separate
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Property Use Agreement between Manager and City. The procedure for Manager to obtain such reimbursement shall be the same as for other reimbursements from the Capital Reserve Fund, as described in Section 28.2.4.
SECTION 8. OPERATING EXPENSES.
8.1 Manager’s General Responsibility. Except as otherwise expressly provided in Section 8.2 or other applicable provisions of this Agreement, Manager shall be solely responsible for paying all costs and expenses reasonably necessary to perform Manager’s Management Duties as described in Section 12.1.2 and to pay for Ordinary Maintenance and Repairs as described in Section 13.1.1 (collectively, “Operating Expenses”). Expenses incurred for Capital Repairs and Re placements as described in Section 28.1.1 are not part of Operating Expenses, and shall be funded through the Capital Reserve Fund in accordance with Section 28.
8.1.1 Manager Responsible for Operating Losses. If Operating Expenses are greater than Operating Revenues (defined in Section 9.1), there will be cash losses (“Operating Losses”). Manager shall be solely responsible for obtaining funding from its own resources in order to cover such Operating Losses, such as cash contributions from Manager’s members, financing from third party lenders, and so forth.
8.1.2 Limitation on City Obligati ons. In no event shall City be obligated to pay or reimburse Manager for any Operating Losses. Further, except as otherwise expressly provided in this Agreement, City shall not be liable to any of the Manager Invitees, Manager’s lenders, sports franchisors, or other third parties for acts of Manager or for any other expenses arising out of Manager’s operation and maintenance of the Arena Facilities.
8.2 City’s Responsibility. The f
ollowing is a summary of certain Operating Expenses for which City is responsible. Payment for such Operating Expenses shall be made at City’s cost, from City’s own resources, subject to the terms and conditions of this Agreement.
8.2.1 Arena Public Safety Costs. City shall make payments to Manager from the Arena Public Safety Fund in accordance with Section 24.6, for Staffing Shortfall Fees (defined in Section
24.5.2, Peddler Permit Enforcement Costs (defined in Section 25.3.2) and Video Surveillance Equipment Costs (defined in Section 26.3).
8.2.2 Incremental TPMP Costs. If Manager incurs TPMP Costs for any Term Year in excess of $25,000 over the Baseline TPMP costs for that Term Year, City shall reimburse such Incremental TPMP Costs to Manager, all as defined in and in accordance with Section 23.1.7.
8.2.3 Arena TPMP Operations and Management. Subject to Sections 8.2.1 and 8.2.2 and other applicable provisions of this Agreement, during the entire Term, City shall implement the Arena TPMP as described in Section 23.1 in accordance with the Operations Manual established under the TPMP (all as modified from time to time in accordance with this Agreement), including operations and management of traffic and parking. Without limiting the f
oregoing, the Arena TPMP provides for implementation of the following:
(i) Signal Central staffing
(ii) Parking and code enforcement staffing
(iii) Neighborhood litter removal and clean up
(iv) Signal timing plan development
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(v) Traffic and parking studies
(vi) Traffic signal system upgrades
(vii) Traffic signage (static and portable)
(viii) Minor public capital improvements
(ix) Residential permit parking program
(x) Public information material
8.2.4 Arena Authority and Administration of Agreement. During the entire Term, City shall provide, at its sole cost, all funding for the Arena Authority (including personnel, program, office space and general operating expenses) and for all other services, facilities, infrastructure, and resources reasonably necessary to manage and implement City’s obligations under this Agreement; oversee Manager’s obligations under this Agreement; and coordinate communications between and among Manager, City, and third parties on all matters re
lating to the Arena or this Agreement; provided, however, that such obligation shall be subject to the following:
(a) A portion of such funding may be generated by Manager’s leaseback of the City Suite upon agreement by both City (through the City Manager) and Manager. (b) A portion of such funding shall be pai
d by Sharks Ice, LLC, under the Ice Centre
Lease.
8.2.5 Insurance for Arena Facilities. During the entire Term, City shall maintain, at its sole cost, property insurance covering the Arena Facilities, as described in Section 30.
8.2.6 Pre‐Existing Environmental Conditions. During the entire Term, City shall be solely responsible for all repairs to the On‐Site Parking Facilities that involve penetrations in or removal, replacement or breaking of the asphalt surfaces, and for Remediation of all Pre‐ Existing Hazardous Substances, as described in Section 27.
8.2.7 Other City Obligations. City shall also be solely responsible for all Operating Costs (if any) payable in connection with the fulfillment of City’s express obligations under this Agreement, including as described in Section 17.2.1 (maintenance of public roadway signs); Section 19.4 (fulfillment of City’s parking obligations); and 28.4.2 (Code Upgrade Work with respect to City’s Original Improvements).
8.3 City Support for Reduction of Energy Costs.
8.3.1. The Parties acknowledge and agree it is in their mutual best interests to reduce energy costs at the Arena, including by (i) installing solar power systems, fuel cells, battery storage systems, and other net positive energy production and storage facilities, where feasible; and (ii) taking advantage of special financing, grants, rebates, preferenti al rates, and other government‐sponsored assistance programs, where available.
8.3.2 To achieve the Parties’ shared energy cost reduction goals, City shall use best efforts to assist Manager in achieving energy cost savings whenever and wherever the City has a reasonable opportunity to do so (and where Manager needs City’s involvement or support to do so) by taki
ng actions such as the following:
(a) Participating in programs available to public agencies for low‐cost funding, incentives or credits for alternative power systems, electric vehicle infrastructure and equipment, battery systems, and similar energy efficient infrastructure;
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(b) If City establishes or permits the establishment of a centralized utility infrastructure system that provides electricity service to the area around the Arena, City shall use best efforts to allow Manager to participate in such system at a rate structure that provides Manager the lowest electrical power rates made available to larg e commercial customers;
(c) At Manager’s request, and with City’s approval, interceding with PG&E on behalf of Manager to address construction‐related priority needs as they arise from time to time; and
(d) Taking such other actions as reasonably requested by Manager to achieve reductions in energy costs at the Arena.
8.3.3 Subject to th
e terms set forth in this Section 8.3.3. and in Section 8.3.4. below, City shall have the right to be reimbursed by Manager for the reasonable out‐of‐pocket costs incurred by City in taking any of the actions described in Section 8.3.2 above. (a) Prior to ta king any actions under Section 8.3.2, City shall provide Manager for its review and approval an estimate of the out‐of‐pocket costs to be incurred by City in connection with such efforts. If Manger does not approve such estimate, the Parties shall meet and confer to try to resolve their differe nces and/or to determinate whether to proceed with the proposed actions. (b) If Manager approves the cost estimate and City proceeds with the action, Manager shall reimburse City for its out‐of‐pocket costs within sixty (60) days after receipt of an invoice or other evidence reasonably acceptable to Manager docume
nting the out‐of‐pocket costs incurred by City.
8.3.4 In addition to the foregoing, to the extent City utilizes City credits, grants, or other financial resources to achieve energy cost savings for Manager’s benefit, City shall have the right to receive other equitable financial compensation as may be agreed up on by the Parties at the time such cost savings measures are implemented.
8.3.5 For avoidance of doubt, nothing in this Section 8.3 shall be deemed to require City to directly provide for any energy systems or financial subsidies at City’s cost.
8.4 Governmental Services. Nothing in this Agreement shall mod ify City’s obligation to provide municipal services to or for the benefit of Manager, the Arena, and the customers of the Arena on the same basis (and for the same fees, if any) as such services are provided to other members of the public under similar circumstances, including emergency fire, medical and police services; off‐site street sweeping and trash removal; water, sewer and other utili ty services; crowd control for protected speech; and the like.
SECTION 9. OPERATING REVENUES.
9.1 Manager’s General Benefit. Except as otherwise expressly provided in this Agreement, as between City and Manager, Manager shall be entitled to all income, receipts, fees and other revenues generated by the operation of the Arena Facilities (“Operating Revenues”), including revenues from use or license agreements, subleases, concessions, food and beverage sales, On‐ Site Parking Facilities, retail sales, ticket sales, suite rentals, naming rights, im age rights, signage,
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advertising, broadcast or other media distribution rights, websites, social media platforms, mobile applications, special promotions, and the like.
9.1.1 Manager Entitled to Operating Profit. If Operating Expenses are less than Operating Revenues, there will be cash profits (“Operating Profits”). Manager shall be solely entitled to Operating Profits, if any, from the Arena operations.
9.1.2 City Prohibited from Charging Fees. City shall have no right to directly or indirectly impose any fees or charges against any of the Manager Invitees (defined in Section 27.1.1) in connection with the use and operation of the Arena Facilities, except to the extent expressly provided in this Agreement. This provision shall not be construed to prohibit the sponsors or organizers of City Events or Community Even ts from charging admission fees to such Events.
9.1.3 New Revenue Sources. Subject to future discretionary approvals by City where necessary (including amendments to City’s sign ordinance), and subject to conformance with the Governing Standards (defined in Section 12.1.3), Manager shall be entitled, at its cost (except as otherwise provided in this Agreement), to create new or expanded revenue sources and to retain all net Operating Revenues from such new or expanded revenue sources, whether or not f
unding for any prerequisite Capital Projects comes from the Capital Reserve Fund (if allowed under this Agreement) or from Manager’s own funds.
Examples of such Operating Revenues include the following:
(a) All revenues generated from digital signage structures installed by Manager along freeways in order to promote Arena Events, th e San Jose Sharks, and Manager’s other Affiliates (including SJS LLC) and their sponsors, as described in Section 17. (b) All revenues generated from new Capital Enhancements (such as an atrium bar), as defined in Section 28.1.1.
(c) All revenues generated from licensing of additional areas of the Arena Fa cilities for naming and branding rights, and the installation of new interior and exterior signage, as described in Section 16.
(d) All revenues generated from distilled spirits advertising in additional locations throughout the Arena Facilities pursuant to the Alcohol Advertising Plan, as described in Section 14.1.5.
(e) All revenues gen erated by any components of the Renovation Project, as described in the Renovation Agreement.
SECTION 10. TAXES AND OTHER GOVERNMENTAL CHARGES.
10.1 General Obligation to Pay. During the Term, Manager shall pay or cause to be paid, before delinquency, all applicable fees, charges and Taxes resulting from Manager’s possession, occupancy, management and use of the Arena Facilities, subject to the terms and conditions of this Section 10.
10.1.1 Notices. City shall promptly forward to Manager any notices or other information that City receives with respect to any Tax or proposed New Tax (defined below) applicable to the Arena Facilities, to the same extent that such information is delivered to City as the record owner of the Arena Land.
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10.2 Disallowed Tax Increases. Manager shall be entitled to deduct from the Arena Fees, as a Cost Increase Credit pursuant to Section 6.2.2, any Disallowed Tax Increases (defined below) that are payable by Manager or any of Manager’s Affiliates.
10.2.1 Definitions. For purposes of this Agreement, the following terms shall have the meanings given below:
(a) “Governmental Authority” means any federal, state, regional or local governmental entity, political subdivision, agency, district, department, board, bureau, commission, authority or other administrative or regulatory body having jurisdiction over the Arena or Manager.
(b) “City Authority” means City and/or any other Governmental Authority that is formed by or under the co ntrol of City, including the Arena Authority. (c) “City‐Approved Assessment District” means an assessment district in which any City Authority owns one or more parcels of real property, provided that the City Authority (as the owner of such property) has voted affirmatively for the assessments to be impose d by such district.
(d) “City Invitees” has the meaning given in Section 27.1.2. (e) “Manager Invitees” has the meaning given in Section 27.1.2. (f) “Manager Sponsored Activities” means any Special Events (defined in Section
25.1) or other outdoor endeavors or special activities sponsored, promoted or pursued by Manager or any of Manage
r’s Affiliates (defined in Section 2.1.1).
(g) “Possessory Interest Tax” means a property tax assessed under California law based on Manager’s property rights under this Agreement and the resulting taxable interest held by Manager in the Arena Facilities. (h) “Tax” means all of the foll owing:
(i) Any “general tax” or “special tax” as defined by Section 1 of Article 13C of the California Constitution, which is imposed by any Governmental Authority, regardless of the manner of imposition or the beneficiary, for the purpose of raising funds for general or specific governmental purposes; and
(ii) Any “assessment” as defi
ned by Section 2 of Article 13D of the California
Constitution, which is imposed upon real property by any Governmental Authority for a special benefit conferred upon the property; and (iii) A “fee” or “charge” as defined by Section 2 of Article 13D of the California Constitu tion, which is imposed upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a “property‐related service” as defined by Sections 2 and 6 of said Article 13D. Parking usage fees, charged by the City on any City‐owned and/or oper
ated parking facility, shall be established at City’s sole discretion and such fees, as adjusted from time to time, are excluded from the definition of “Tax” as contemplated in this Agreement.
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(i) “New Tax” means (i) any Tax that is not imposed as of the Commencement Date of the 2018 AMA, or (ii) that portion of any existing Tax that is extended or increased following the Commencement Date of the 2018 AMA. (j) “Disallowed Tax Increases” means any or all of the f ollowing New Taxes that are imposed or assessed by any City Authority or City‐Approved Assessment District, to the extent that any City Authority or City‐Approved Assessment District receives revenues or other funding therefrom:
(i) Any New Tax on tickets or other admission to sporting or entertainment events, to th e extent applicable to the Arena or to Manager Sponsored Activities;
(ii) Any New Tax on parking or other New Tax that principally targets the Arena, the use of the Arena, or Manager Sponsored Activities; (iii) Any New Tax on parking or other New Tax for which at least 25% of revenues are generate
d by Manager and/or Manager Invitees;
(iv) Any New Tax payable in connection with a special benefit district, maintenance district, business district, or other assessment district that includes the Arena and which is not expressly approved by Manager; (v) Any New Tax on gross receipts, income, capital gains, or sales gen erated by activities at the Arena and/or Manager Special Activities, unless such Tax is one of general application imposed or assessed against all applicable taxpayers within the jurisdiction of the relevant City Authority; and
(vi) Any New Tax on water, electricity, gas and local telephone services provided to the Arena.
10.3 Poss
essory Interest Taxes. Manager acknowledges that its interest under this Agreement (i.e., Possessory Interest Rights) may create a taxable property interest that is subject to Possessory Interest Tax, and that Manager shall be obligated to pay any such Tax, subject to the following:
10.3.1 Cooperation by City. City agrees to cooperate with Manager in future discussions or actions relating to valuation or assessment of any Possessory Interest Taxes imposed in connection with this Agreement.
10.3.2 Credit for City’s Allocation of Possessory Interest Taxes. To the extent that a Possessory Interest Tax is assessed and payable by Manager, Manager shall be entitled to deduct from Manager’s Capital Reserve Payments, as a PIT Credit pursuant to Section 6.2.1, any portion of such Possessory Interest Tax that is allocated to and received by City or any other City Authority.
10.3.3 PIT Credit for 2018 AMA Term. Notw ithstanding the foregoing, with respect to the Possessory Interest Taxes assessed and payable by Manager for the period of time from July 1, 2015 through June 30, 2025 (i.e., the 2018 AMA Term), the PIT Credit shall not exceed a total of Two Hundred Fifty Thousand Dollars ($250,000). Such amount is based on the current estimate of total Possess ory Interest Taxes due for said period of time.
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(a) To the extent that the PIT Credit for the 2018 AMA Term is known as of the Effective Date of this Agreement, then such PIT Credit shall be applied against the Capital Reserve Fund payments for Term Year 25/26, as follows:
(i) Manager’s Capital Reserve Payment for Term Year 25/26 shall be r educed from $1,420,000 to $1,170,000, or by a lesser amount dependent on actual Possessory Interest Taxes incurred by Manager; and (ii) City’s Capital Reserve Payment for Term Year 25/26 shall be increased from $2,300,000 to $2,550,000, or by a lesser amount dependent on actual Possessory Interest Taxes incurred by Manage r.
(b) To the extent that the PIT Credit for the 2018 AMA Term is not known as of the Effective Date of this Agreement, then once the actual amount of Possessory Interest Taxes for the 2018 AMA Term has been finally determined (following the results of any applicable appeals), Manager shall notif y City of the same, and City shall then calculate and notify Manager of the remaining amount of the PIT Credit due for the 2018 AMA Term. Such remaining PIT Credit shall then be applied against Manager’s future payments as provided in Section 7.4(c).
10.4 Living Wage Exemption. Manager shall be exe mpt from City’s living wage requirements, in accordance with the following:
10.4.1 Living Wage Policy. Council Policy 3‐3 (“Living Wage Policy”) requires that employers who are awarded certain service contracts with City or who receive certain levels of direct financial assistance from City must pay their employees a specified wage and provide other specified employment benefits. The Living Wage Policy does not apply to leases with tenants who have not been awarded service contracts with City through a compe
titive bidding process or who have not received direct financial assistance from City.
10.4.2 Application of Living Wage Policy to Arena Facilities. City hereby reaffirms that the Living Wage Policy does not apply with respect to (i) the use, operation, maintenance, repair, improvement, or management of the Arena Facilities, or (ii) the parking lot operatingmanagement agreement to be entered into by the Parties with respect to the Milligan Off‐Site Parking Facility, as described in Section 19.5.1.
10.4.3 Credit for Living Wage Expenses. If City’s living wage requirements are hereafter expanded, replaced, or otherwise amended such that Manager would become subject to the Living Wage Policy (or any substantially equivalent City ordinance) in connection with the activities contemplated by this Agreement, then Manager shall be entitled to deduct from the Arena Fees, as a Cost Increase Credit pursuant to Section 6.2.2, an equitab le amount based on the increase in Operating Expenses incurred by Manager as a result of such living wage requirements (the “Living Wage Expenses”).
SECTION 11. EXPENSES PAYABLE BY MANAGER FOR CITY AND COMMUNITY BENEFIT.
11.1 Community and City Events Fund. As part of the Arena Fees payable by Manager to City, Manager shall maintain a separate fund within its accounts (“Community and City Events Fund”) to which Manager shall credit $100,000 on each August 1st during the entire Term. Allocations from the Community and City Events Fund shall be made to partially offset Event Charges as described in
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Section 11.1.4 below. Any balance (up to a limit of $50,000) remaining in the Community and City Events Fund on July 31st of each year shall be carried over to the next Term Year. All carryover funds shall be added to the initial balance on August 1st of each Term Year so that the beginning balance on August 1st will be $100,000 plus any carryover amount (up to a total limit of $150,000).
Upon written request by City (but not more often than once each calendar quarter) Manager shall provide City with a year‐to‐date accounting of how the amounts in the Community and City Events Fund have been used du ring the applicable Term Year. Manager shall also provide to City, on an annual basis, a statement of sources and uses for the Community and City Events Fund.
11.1.1 City Events. The term “City Events” as used herein means Events pre‐qualified by the Arena Authority based on criteria established by City consistent with the Parties’ historical practices. City Events shall not include Events that are of a nature and on a scale that would otherwise be booked by Manager.
(a) Manager agrees to use its reasonable best efforts, consistent with the Parties’ historical scheduling practices, to provide up to ten (10) dates annually for City Events.
(b) Manager shall not charge facility rental fees for City Events. However, Manager shall be reimbursed for other Event Charges as described in Section 11.1.4.
11.1.2 Community Events. The term “Community Events” as used herein means Events that are not of the commercial nature otherwise generally booked by Manager, but (i) are otherwise appropriate for the Arena, (ii) are promoted by community organizations, and (iii) do not meet the criteria of a City Event.
(a) Manager agrees to use its reasonable best efforts, consistent with the Parties’ historical scheduling practices (described below), to provide dates for Community Events under guidelines established by Manager with City. (i) City recognizes Manager’s priority rights in booking and scheduling events including San Jose Sharks hockey games, and any other professional sports franchise games, family shows, and other sports and entertainment events.
(ii) Manager shall use its reasonable best efforts, consistent with historical scheduling practices, to accommodate Community Events to the extent possible within its then existing booking, scheduling, and rental rate policies, and to provide adequate lead‐time for organizers to successfully plan such Events.
(b) Manager shall be entitled to charge facility rental fees for Community Events, and shall be reimbursed for other Event Charges as described below.
11.1.3 Historical Scheduling Practices. The Parties acknowledge and agree that their historical scheduling practices include the following procedures, which the Parties shall continue to follow for the scheduling of both City Events and Community Events:
(a) Manager and the Arena Authority shall work cooperatively with the Event sponsor or organizer to select a few tentative dates for the Event. Manager shall place a te ntative hold on such dates up to one year in advance.
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(b) Approximately 45 days prior to the scheduled Event, Manager shall advise the sponsor or organizer in writing of the final date selected for the Event.
11.1.4 Event Charges and Requirements. Manager agrees to provide organizers of City Events and Community Events with an estimated budget for facility rental fees (for Community Events only) and other Event Charges that are likely to be billed in connection with the proposed City Event or Community Event.
(a) The term “Event Charges” shall mean any facility rental fees (if applicable) and any actual e xpenses incurred by Manager for set‐up, dismantling, cleaning, event staff, and other expenses over and above normal operation and maintenance of the Arena (such as incremental utility expenses).
(i) Manager agrees to consider special rate packages for Event Charges for City Events and Community Events. However, Manager shall not be obligated to financially support City Eve
nts or Community Events (outside
of the Community and City Events Fund) unless Manager agrees in advance, in Manager’s sole discretion.
(ii) If City does not provide written direction to draw Event Charges from the Community and City Events Fund, or if there are insufficient funds remaining in the a
ccount, Manager shall bill the sponsor or organizer of
the City Event or Community Event for Event Charges.
(b) The organizers of all City Events and Community Events shall be required to execute Manager’s standard license agreement and provide evidence of insurance in accordance with Manager’s standard mini mum requirements consistent with the provisions of this Section 11.1.
(c) The organizers of any City Event or Community Event that receives financial support from Manager (including waived facility rental fees and/or reimbursed Event Charges) shall be required to provide public acknowledgment of such support, by including Manager, the San Jose Shar ks and/or their Affiliates as sponsors of such Event on any promotional materials associated with the Event.
11.1.5 Community and City Events Policy. City has established a written policy for the administration of the Community and City Events program through the Arena Authority, including application procedures and priorities for the award of allocations from the Community Events Fund.
(a) Manager shall have no duty to familiarize itself with such policy, and shall incur no cost, expense or liability for any matters arising fr om or relating to said policy. (b) In the event of any inconsistency between the policy and this Agreement, the provisions of this Agreement shall control as between City and Manager.
11.2 Council Discretionary Funds.
11.2.1 San Jose Sharks Community Fund. As part of the Arena Fees payable by Manager to City, Manager and/or its Affiliates shall pay $375,000 to City on August 1st of each Term Year, which City shall deposit into restricted accounts, to be allocated for the following purposes:
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(a) $250,000 shall be allocated equally to each City Council District to be used to support educational, recreational and cultural purposes. (b) $125,000 shall be allocated for any public purpose as determined by the City Council from time to time, including constituent outreach, provided that these funds may not be used for capital ex penditures or City personnel expenses.
At the conclusion of each Term Year, any unspent monies provided for in this Section 11.2 shall be carried forward into the following Term Year to be used for their intended purposes.
11.2.2 Public Acknowledgement. City agrees to provide public acknowledgment of the contribution of such funds by Manager and/or its Affiliates, as well as transparency regarding the use of such funds, in accordance with the following:
(a) In City Council Agendas and Minutes, Budget reports and other City documents relating to the allocation or use of the foregoing funds (including proposed resolutions approving eve nts, services or activities funded in whole or in part by such funds), the source of such funding shall be identified as the San Jose Sharks Community Fund, the Sharks Community Fund, or Sharks Supported funding. (b) Promotional materials, signage, newsletters and other public communications regarding any event, service, or other activity fu nded in whole or in part by the $250,000 portion of the San Jose Sharks Community Fund shall specify the source of such funding to the extent practical.
(c) Manager and its Affiliates shall have the right to include, in their promotional materials and other public communications, information regarding their contrib
utions to the San Jose Sharks Community Fund and the uses for which the funds have been allocated.
11.3 Hall of Fame. Prior to the Effective Date, Manager has been providing wall space in the Arena for the San Jose Sports Hall of Fame (“HOF”) plaques and other program elements. However, due to the need to reclaim wall space as part of the Renovation Project, Manager’s responsibilities regarding the HOF program will terminate as of April 30, 2029 (“HOF Display End Date”), in accordance with the following:
11.3.1 Manager’s Re
sponsibilities until HOF Display End Date. From the Effective Date until the HOF Display End Date, Manager’s responsibilities shall be limited to the following:
(a) Manager shall be required to display only the following HOF elements on the publicly accessible walls of the Arena:
(i) Plaques for the individuals inducted into the HOF for the four (4) most recent years (on a rolling basis), not to excee d a total of twenty (20) individual plaques at any one time;
(ii) The Special Olympic Athlete of the Year plaque, the High School Athlete of the Year plaque, and the Amateur Athlete of the Year plaque, each of which contains the names of annual honorees; and
(iii) A sign directi ng viewers to the Sports Authority website, which contains the full list of HOF inductees over the years.
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(b) With respect to the HOF elements to be displayed, the following shall apply:
(i) City shall provide all plaques and signage at no cost to Manager; (ii) Manager install the elements at no cost to City;
(iii) Manager shall display the elements in locaƟons that are typically accessible to members of the public and others visiƟng the Arena; and (iv) Manager shall, as part of its Ordinary Maintenance and Repair duties, keep the elements in good, clean condition, ordinary wear and tear excepted.
(c) The HOF ele ments located at the Arena that are not required to be displayed (including plaques removed each year on a rolling basis to make room for the newer plaques) shall be handled as follows:
(i) At Manager’s expense, Manager shall remove the plaques from the Arena walls (and repair any damage to the walls), package each i ndividual plaque in a manner that is safe for shipping, and label each package with appropriate identification;
(ii) City shall work with the San Jose Sports Authority to locate an appropriate alternative custodian for each plaque, which may be the honoree’s school, team or other institution, the honoree’s home, or other pla
ce of significance to the honoree;
(iii) Manager shall ship each plaque to the new custodian as directed in writing by the San Jose Sports Authority or City; provided, however, that Manager will be responsible for shipping costs only for destinations within the Continental United States; and
(iv) Until ea
ch plaque is shipped, Manager shall store the plaques in a safe and secure location of its choice, at Manager’s expense.
11.3.2 Manager’s ResponsibiliƟes aŌer HOF Display End Date. AŌer the HOF Display End Date, Manager shall have no responsibility for the handling or display of the HOF plaques, subject to the following:
(a) Manager shall, at its cost, package and ship to City (at such locaƟon as directed by City) all plaques remaining in Manager’s possession as of the HOF Display End Date, including the plaq ues awarded for the prior four years, the Special Olympics, High School and Amateur Athlete plaques, and older plaques that have not yet been shipped to new custodians as described above.
(b) Manager shall not be responsible for any costs or expenses associated with finding a new locaƟon to displa y the HOF plaques, which locaƟon (if any) shall be selected by City in consultaƟon with the Sports Authority. (c) Manager shall not be responsible for any costs or expenses associated with the establishment of any new HOF display area or the installaƟon of the HOF elements in an
y new area.
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11.4 City Use of Arena Facilities. Prior to the Effective Date, Manager has been providing office space and common area facilities in the Arena for the Arena Authority’s use (collectively, the “Arena Authority Facilities”). However, as part of the Renovation Project, the Arena Authority Facilities (as well as Manager’s management offices) will need to be relocated to space outside of the Arena. Accordingly, Manager’s responsibilities regarding the Arena Authority Facili ties will terminate on a specified date (“Arena Authority Office End Date”) as set forth in a written notice given by Manager to City and Arena Authority in advance of such date, in accordance with the following:
11.4.1 Determination of Arena Authority Office End Date. The Arena Authority Office End Date will be determined by Manager based on the date that Manager needs to move the Arena Authority out of the Arena to reasonably accommodate the Renovation Project. Manager will give as much prior notice to City and Arena Authority as it reasonably can, but in any event not less than six (6) months’ no tice in advance of the Arena Authority Office End Date.
11.4.2 Arena Authority and City ObligaƟons aŌer Receipt of NoƟce to Relocate. (a) On or before the Arena Authority Office End Date, the Arena Authority shall, at no cost to Manager, vacate its offices and remove all of its furniture, office equipment, furnishings and other personal property from the Arena. (b) City and/or Arena Authority shall be responsible for finding a replacement office location for the Arena Authority, and for paying all costs associated with th e
leasing, housing, and/or furnishing of such office. Both Parties acknowledge and agree that it would be beneficial for the new Arena Authority office to be located in close proximity to Manager’s relocated management offices, but neither Party is obligated to do so.
11.4.3 Manager’s Obligations Prior to Arena A
uthority Office End Date. Until the Arena Authority
Office End Date, Manager shall continue to provide, at no charge to City or Arena Authority, the Arena Authority Facilities, along with substantially the same services as provided prior to the Effective Date, including as follows:
(a) Manager shall provide utilities, janitorial services, and general repair and maintenance for such Arena Authority Facilities. Ho wever, the Arena Authority shall be responsible for its own office equipment, furnishings, and supplies. (b) City Invitees shall also be provided with access the Arena Authority Facilities on an as‐needed basis, in connection with meetings and other events from time to time conducted by City.
11.4.4 General Acc ess to Building and On‐Site Parking Facilities. City Invitees, while in the performance of their duties, shall have reasonable access to the Arena at all times, subject to reasonable security measures as may be imposed by Manager. (a) Access by City Invitees to the Exclusive Use Areas as defined in Section 28.1.1 shall be limited to the extent necessary to perform City’s obligations under this Agreeme
nt or under circumstances where access to private property is generally permitted for City agents.
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(b) There shall be no charge for access (including parking) as described above even though such access may occur during Events; provided, however, that such access shall not entitle City Invitees to have viewing rights to Events except as otherwise expressly provided in this Agreement. Parking shall be in designated areas and shall be subject to availabil
ity.
11.5 Luxury Suite and Event Tickets. Prior to the Effective Date, Manager has been providing City with the exclusive right to use concourse level luxury suite C11, together with related Event tickets and parking passes, for all Events at the Arena. However, as part of the Renovation Project, the suite used by City will need to be relocated to the penthouse level. Accordingly, commencing on the Effective Date, Manager shall provide City, as part of the consideration for entering into thi s Agreement, admission rights to Events at the Arena, at no charge to City, in accordance with the following:
11.5.1 Suite P41. City shall have the exclusive right to use penthouse level luxury suite P41 (“Suite P41”) for all Events at the Arena where the penthouse level is open and available for use by Arena customers, subject to the following:
(a) Manager, at no charge to City, shall provide Suite P41 with standard maintenance and services provided to other suite holders, but City shall pay for foo d, beverages, and special services at Manager’s standard, non‐discriminatory rates. (b) Manager agrees that whenever Manager elects, at its own cost, to refurbish luxury suites that are similarly situated to Suite P41 (e.g., suites on the penthouse level), Manager shall refurbish Suite P41 such that the fixtures and furnishings provided in Suite P41 are generally as good as those provided in other similar ly
situated luxury suites
(c) City shall conform, and shall cause all of City Invitees to conform, to any non‐ discriminatory rules and regulations issued by Manager or SJS LLC regarding the use of the luxury suites.
11.5.2 Suite and Club Ti
ckets.
(a) Manager shall provide City, for each Event at the Arena where the penthouse level is open and available for use by Arena customers: (i) 21 tickets for access to Suite P41; (ii) at the request of the Arena Authority and to the extent reasonably available, up to 4 lower bowl ti ckets without access to the club; and (iii) up to 8 related parking passes allocable to Suite P41 ticket holders, and up to 2 related parking passes allocable to the lower bowl ticket holders, with the total number of parking passes not to exceed a total of 10 per Event. (b) To the extent the Even t promoter determines the penthouse level of the Arena will be closed for a particular Event, Manager shall provide City, in lieu of the tickets and passes listed above, the following: (i) at the request of the Arena Authority and to the extent reasonably available, up to 21 lower bowl ti ckets in place of the 21 Suite P41 tickets, plus up to 4 additional lower bowl tickets, all without access to the club, and (ii) up to 10 related parking passes allocable to such lower bowl ticket holders.
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(c) Arena Authority shall submit its request indicating the number of lower bowl tickets desired pursuant to (a) and (b) above, if any, at least 5 days prior to the Event. Any lower bowl tickets not requested by Arena Authority by such date may be offered for sale to the general public.
(d) All such ti
ckets and parking passes shall be provided directly to City, and shall be distributed by City (through the Arena Authority) for civic purposes in accordance with a written policy established by City in compliance with the Fair Political Practices Commission (FPPC) Regulation 18944.1.
(i) Manager shall have no du ty to familiarize itself with City’s ticket distribution policy, and shall incur no cost, expense or liability for any matters arising from or relating to said policy.
(ii) In the event of any inconsistency between the policy and this Agreement, the provisions of this Agreement shall control as between Ci ty and Manager.
(e) If Federal and/or State taxing authorities treat the distribution of tickets from Manager to City, or from City to the ultimate recipients, as taxable transfers or taxable compensation of any type, then City (and not Manager) shall be responsible for all reporting and withholding requirements related thereto.
11.5.3 Suite Re
location Option.
(a) The Parties acknowledge that Manager is currently exploring potential modernization improvements to the Arena’s penthouse level, which may include suites (including Suite P41), restrooms and terrace locations. To facilitate Manager’s ability to implement such penthouse level improvements, City agrees that Manager shall have the option (“Suite Relocation Option”), if reasonably necessary in conne
ction with such improvements, to substitute City’s rights to use of Suite P41 with the right to use a replacement suite within any level of the Arena (“Replacement Suite”), subject to the following:
(i) Such Replacement Suite shall have capacity for at least 21 seats and/or standing room only places ;
(ii) The Replacement Suite shall have sight lines to the Arena floor that are generally as good as the sight lines from Suite P41, to the extent reasonably available;
(iii) The Replacement Suite shall have fixtures and furnishings that are generally as good as those in Suite P41; and
(iv) City shall con
tinue to receive the same number of lower bowl tickets and parking passes per Event, and on the same terms, as set forth in Section
11.5.2. Manager shall have the right to exercise the Suite Relocation Option only by giving written notice thereof (the “Suite Relocation Notice”) to City not later th an sixty (60) days before the date that the relocation becomes effective (“Suite Relocation Date”), which notice shall be accompanied by a floor plan and photographs depicting the Replacement Suite
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and an explanation as to why the relocation is needed to implement the penthouse level improvements. City shall relinquish all rights to use Suite P41 as of the Suite Relocation Date. Upon request of either Party, City (through the City Manager) and Manager shall execute a memorandum of understanding or other w ritten agreement memorializing the substitution of Suite P41 with the Replacement Suite.
11.5.4 Voluntary Suite Agreements. Notwithstanding the foregoing, the City (through the City Manager) and Manager may at any time mutually agree to change the location of the City’s suite, change the number of tickets and parking passes provided to City, alter the amenities and services provided to the City’s suite, and modify any other aspect of the City’s suite and/or admission rights to Events, such as (by way of exampl e) for the following purposes:
(a) If, based on the phasing of work for the Renovation Project, Manager does not need to relocate the City’s suite immediately upon the Effective Date, then Manager may, by written notice to City, give City permission to continue using Suite C11 un
til such time as the Renovation Project necessitates moving the City to Suite P41.
(b) If during any Term Year City wishes to raise funds by granting back Suite P41 to Manager, then pursuant to a separate written agreement between City (through the City Manager) and Manager, City may grant back to Manager the ri ght to use Suite P41 in whole or in part, on such terms and conditions as the Parties may mutually agree.
PART THREE
GENERAL OPERATION AND MANAGEMENT
SECTION 12. MANAGER’S GENERAL RIGHTS AND DUTIES.
12.1 Engagement of Manager. Under the Prior Arena Agreements, City engaged Manager as the sole operator of the Arena Facilities, and subject to the terms of this Agreement City shall continue to engage Manager as the sole operator of the Arena Facilities. As such, Manager is the party with the sole responsibility, authority and right to operate, manage and maintain the Arena Facilities for the Term of this A greement. Manager hereby accepts such continuing engagement, and undertakes and agrees to act in such capacity in accordance with the terms of this Agreement, including performing the Management Duties described below and all other services and obligations of Manager expressly set forth in this Agreement.
12.1.1 General Scope of Mana gement. Manager shall operate the Arena Facilities as an independent contractor and not as an agent of or for City. Without limiting the express terms of this Agreement, Manager’s responsibilities, authority and rights shall include the following:
(a) Manager shall pay all Operating Expenses and shall be responsible for all Operating Losses, if any, as described in Section 8.1.
(b) Manager shall be enti tled to generate and receive all Operating Revenues and shall benefit from all Operating Profits, if any, as described in Section 9.1. (c) Manager shall carry out the Management Duties as described in this Section 12, including administration of Arena Contracts as described below.
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(d) Manager shall perform Ordinary Maintenance and Repairs as described in Section 13.
(e) Manager shall cause Capital Repairs and Replacements to be made as described in Section 28, subject to reimbursement from the Capital Reserve Fund.
12.1.2 Management Duties. Within the authority granted to Manager, Manager shall, except as otherwise expressly provided in this Agreement, at its sole cost and expense, perform and furnish, during the Term, all management services, labor and materials appropriate to carry out the following duties (collectively, “Management Duties”):
(a) All things reasonably necessary for the orderly and efficient administration, management, and operation of the Arena Facil ities consistent with their use as major public assembly facilities, including the specific duties listed in Section
12.2.3 below; and
(b) All bookings for the Arena, using reasonable good faith efforts, taking into account then‐current market conditions, competing venues, attendance patterns, and all other relevant facts and circumstances, to:
(i) Secure, arrange and promote Eve
nts at the Arena of a type and quality
that comparable managers would be willing to book at other arenas meeting the Applicable Performance Standard; and
(ii) Promote and optimize, to the greatest extent practical and feasible, the use of the Arena Facilities as major publ ic assembly facilities.
12.1.3 Governing Standards. In performing its Management Duties, Manager agrees to act (and cause Manager Invitees to act) in compliance with the terms of this Agreement and the following standards and requirements (collectively, “Governing Standards”):
(a) “Applicable City Policies and Guidelines,” which term shall mean policies and guidelines, including design guidelines governing additions and alterations to the Arena Facilities, established from time to time by City by an ordinan ce or resolution of the City Council, provided that Manager has been notified in writing of such policies and guidelines. Further, as used in this Agreement the term “Applicable City Policies and Guidelines” shall be limited to those policies and guidelines of the City that are in effect as of the Effective Date of this Ag reement and any new policies or guidelines that:
(i) Are consistent with, and in furtherance of the provisions of this Agreement;
(ii) Do not unreasonably interfere with, impede or impair the ability of Manager to effectively and soundly manage and operate (or of the San Jose Sharks to use) the Ar
ena Facilities;
(iii) Do not materially increase Manager's costs or other obligations under this Agreement; and
(iv) Do not substantially adversely affect a material source of revenue for the Arena or have a material effect on the operation of the Arena;
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(b) “Applicable Community Standard,” which term shall mean a standard with respect to the matters described in Section 14 (including pricing, the advertising and serving of alcoholic beverages and tobacco products, and the payment of wages) that is equal to comparable major arenas or stadiums in the San Francisco Bay Area, except as other wise expressly provided in this Agreement; (c) “Applicable Construction Codes,” which term shall mean all Applicable Laws governing physical design or condition of construction or requiring access and seating for individuals with disabilities;
(d) “Applicable Laws,” which term shall mean the applicable provisions of the San José Muni
cipal Code and all other applicable statutes, ordinances, laws, rules, regulations, orders and requirements of any Governmental Authority having jurisdiction respecting the use or manner of use of the Arena Facilities or the construction, maintenance and operation thereof, including Applicable Construction Codes;
(e) “Applicable Performance Standard,” which term shall mea n a standard of performance, operation (including bookings) and maintenance that is equal to or exceeding those generally applicable to comparable major arenas in the United States constructed contemporaneously with the Arena Facilities, at which NBA and/or NHL games are played, except for the matters governed by the Applicable Community S tandard; and
(f) “Applicable Permit Requirements,” which term shall mean the conditions of approval and other requirements imposed in connection with any permits, licenses or other governmental authorizations obtained by Manager or any Manager Invitees, or required to be obtained by Manager or Manager Invitees, with respect to the ma nagement, operation, use, maintenance, repair or improvement of the Arena Facilities, including any alcoholic beverage license, building permit, health permit, and the like.
12.1.4 Acceptance of Arena. Subject to all obligations, covenants, representations, warranties and indemnities of City under this Agreement, Manager shall accept the management and operation of the Arena in its present condition without any additional representation by City, its employees, representatives or agents.
12.1.5 Person in Charge. Manager agrees to employ, as the person in charge of supervising and implementing the Management Duties, a person experienced in the management of one or more comparable major arenas in accordance with the Applicable Performance Standard. Manager agrees to give City notice of the name and contact information for any such person selected by Manager from time to time.
12.2 Specific Management Duties. Su bject to the Governing Standards and except as otherwise expressly provided in this Agreement, Manager, at its sole cost and expense, shall have the following specific responsibilities, authority and rights.
12.2.1 Arena Contracts. Manager shall be solely responsible for negotiating, undertaking and administering all leases, licenses, use agreements, bookings, service contracts, sponsorship and advertising agreements, and other agreements pertaining to the use, operation, maintenance and occupancy of the Arena Facilities, including any amendments
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thereto (collectively, “Arena Contracts”), upon such terms and conditions as Manager may determine, subject to the requirements set forth in Section 12.2.2 below. Without limiting the foregoing, Manager may do the following:
(a) Lease certain areas in the Arena for the exclusive use of SJS LLC and their Affiliates as specified in th e Hockey Use Agreement;
(b) Lease, license, rent, use or permit the use of all or any part of the Arena Facilities for Events or other appropriate purposes, subject to certain uses and rights reserved by City as described in Section 11;
(c) Employ or contract for such workers, mec hanics, laborers, clerks, legal counsel, consultants, accountants and other employees and contractors as are reasonably necessary or appropriate in the management and operation of the Arena Facilities, including guards and ushers and janitorial services; (d) Enter into service contracts, supply contracts, and all other agreements for the procurement of such materials, services, supplies and equipment as are reasonably necessary or appropriate in the management and operation of the Arena Facilities, including contracts for electricity, gas, telephone, elevators, escalators, engineeri
ng services, and vermin extermination;
(e) Procure and maintain in force and effect public liability, workers’ compensation, and such other insurance and bonds as are required of Manager under this Agreement;
(f) Operate or grant concession privileges for the vending and sale of food and beverages (including alcoholic beverages), programs, blank ets, souvenirs, novelties, retail merchandise and similar articles, and other articles, or for the renting of any such articles;
(g) Enter into contracts for the promotion of Events booked by Manager for the Arena, and for the sale of tickets to such Events;
(h) Enter into sponsorship, scoreboard, advertising, and other promotional agreements, and sell and in
stall fixed and non‐fixed signs or advertising and other promotional materials on or about the Arena Facilities, all as permitted under this Agreement;
(i) Enter into agreements to permit, license or engage in the broadcast or transmission of all or any part of Events at the Arena, and sell e xclusive radio, cable, internet and television rights for such Events; and (j) Take and omit such other actions, enter into such other agreements, documents, and instruments, and engage in such other transactions, as are reasonably necessary or appropriate in connection with the management, operation, maintenance, improvement and administration of the Arena Fa cilities.
12.2.2 General Requirements for Arena Contracts. Except as otherwise expressly provided in this Agreement, all Arena Contracts shall be executed by Manager as manager of the Arena Facilities. In addition, the following terms and conditions shall apply to Arena Contracts:
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(a) All Arena Contracts shall be subject and subordinate to the terms of this Agreement.
(b) All of Manager Invitees operating under Arena Contracts shall be required to operate in conformance with the Governing Standards.
(c) Any Arena Contract that extends beyond the Term of this Agreement and that could not be termina ted by City upon 90 or fewer days’ notice without penalty, payment for early termination or other pre‐condition if this Agreement is terminated and City (or a third party) assumes the management and operation of the Arena, shall be made only with the prior written approval of City, which shall not be unr
easonably withheld or delayed.
(i) Upon the expiration or earlier termination of this Agreement, City (or a third party successor to Manager) shall have the right to terminate any Arena Contract unless City has previously approved it or otherwise agreed in writing.
12.2.3 Other Specific Management Duties. Without limi ting the generality of the foregoing, Manager shall undertake and perform the following services and responsibilities to the extent they are reasonably necessary and appropriate, consistent with the terms and purposes of this Agreement, the Governing Standards, and the use of the Arena Facilities as major public assembly facilities:
(i) Negotiating, executing and enforcing Arena Contracts, including developing rental rate sch
edules, user fees and services charges;
(ii) Event booking and promotion;
(iii) Box office services;
(iv) Developing equipment inventory systems;
(v) Developing marketing and advertising plans;
(vi) Employee recruiting, selection and training, and personnel management and supervision;
(vii) Formulating operating policies and preparing operating manuals; (viii) Developing a ccounting systems and controls, preparing annual budgets, and analyzing and evaluating annual budgets;
(ix) Developing computer software and systems;
(x) Developing food and beverage operations;
(xi) Developing security and crowd control plan;
(xii) Developing preventive and major maintenance plan; (xiii) Preparing maintenance reporting systems;
(xiv) Developing janitorial standards and procedures;
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(xv) Developing energy management operational systems; (xvi) Sponsorship marketing and development of a sales plan and advertising; (xvii) Marketing of club seats and spaces in premium areas such as club, bunker and loge suites, penthouse lounge areas, theater boxes, and other specially‐priced seating and viewing areas (“Premium Areas”); (xviii) Operating On‐Site Parking Facilities; and
(xix) Relate
d functions involved in operating and maintaining the Arena Facilities.
12.2.4 Record Keeping and Reports to City. Manager shall maintain business offices in the Arena, or an off‐site location in close proximity to the Arena, where it shall maintain current, accurate and reasonably detailed records relating to the management, operation and maintenance of the Arena, all in accordance with good accounting and management practices. Such records shall be maintained by Manager in either electronic or paper form, for at le
ast four years following the Term Year to which such records apply. (a) Upon reasonable request by City, City shall have the right to inspect, at Manager’s offices, such documents, reports or other information as may be reasonably required for City to confirm, support, explain or describe th e performance by Manager of its obligations under this Agreement, or for City to administer its specific rights of review, approval or enforcement of this Agreement. (i) If City does not inspect Manager’s records or give Manager written notice of any concerns or disagreements regarding such records within such four year period , City shall be deemed to have been waived any right to thereafter inspect or object to such records.
(ii) Each Party shall pay the cost of its agents, employees and contractors needed to conduct or make data available for such inspection. (b) In addition, Manager shall provide City with mon thly reports regarding the number and type of Events held at the Arena and the number of persons in attendance at each such Event. Such reports shall be provided within 30 days following the end of each calendar month during the Term. (c) To the extent it is able to do so und er Applicable Laws, City shall ensure the confidentiality of all records and other documents it receives that contain business, proprietary, or other confidential information of Manager or its Affiliates, to the reasonable satisfaction of Manager.
12.3 Compliance with Laws. Except as expressly provided to the contrary in this Agreement, Manager shall, throughout the Term, comply, at its sole cost and expense, with all Applicable Laws respecting the use or manner of use of the Arena Facilities or the construction, maintenance and operation thereof.
12.3.1 Applicable Permits. Manager shall obtain and keep in full force and effect all applicable permits and licenses and other authorizations required for the use and operation of the Arena Facilities, except that Manager shall have no obligation with respect to licenses or
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permits required or related to the City’s obligations under Section 27 (Environmental Compliance).
12.3.2 Capital Projects. Other than Manager's obligations under Section 27 (Environmental Compliance), this Section 12.3 shall not require any work requiring a capital expenditure by Manager even if a capital alteration, repair or change is required to conform the Arena Facilities to Applicable Laws, which work shall be governed by Section 28.4 (Code Upgrade Work).
12.4 Patents and Copyrights. In addition to the genera l contract requirements in Section 12.2.2, Manager shall require by contract that all persons holding or promoting Events at the Arena Facilities obtain all necessary approvals for or arising from the use of patented and/or copyrighted materials, equipment, devices, processes, or dramatic rights used on or incorporated in the conduct of any Events held at the Arena Facilities.
(a) Manager shall indemnify and hold City harmless from any breach of patent or copyright rights or patent or copyright infringements or violations of patent or copyright laws, except that this sentence shall not apply to City Events or Community Events.
(b) City shall indemnify and hold Manager harmless from any brea ch of patent or copyright rights or patent or copyright infringements or violations of patent or copyright laws with respect to City Events or Community Events.
SECTION 13. ORDINARY MAINTENANCE AND REPAIRS.
13.1 Ordinary Maintenance and Repairs. The ordinary maintenance and repair of the Arena Facilities shall be governed by the following provisions:
13.1.1 Manager’s Obligations. Manager, at its sole cost and expense, shall perform (or cause to be performed) all Ordinary Maintenance and Repairs needed to be made to the Arena Facilities (including the Arena FF&E) as shall meet or exceed the Applicable Performance Standard, but in any event not less than maintenance standards and requirements set forth in applicable manuals and specifications provided by equipment manufacturers and suppliers.
(a) As used in thi
s Agreement, the term “Ordinary Maintenance and Repairs” means work that is reasonably necessary to keep elements of the Arena Facilities in good working order (without materially improving or extending their useful life), consistent with the Parties’ historical practices. For example, Ordinary Maintenance and Repairs would include cha nging filters, belts or inexpensive motors; lubricating moving parts; painting walls; cleaning carpets; and fixing broken seats.
(b) The cost of Ordinary Maintenance and Repairs, including the purchase of expendable items needed for such work consistent with the Parties’ historical practices, shall be charged as an Operating Expense for wh ich Manager is responsible as described in Section 8.1. However, Manager shall not be responsible for the cost of Capital Repairs and Replacements as defined in Section
28.1.1, the cost of which shall be paid via disbursements from the Capital Reserve Fund.
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(c) Manager also shall not be responsible for Extraordinary Repair Work as defined in Section 28.1.1, which shall be performed by City at its sole cost and expense.
13.1.2 On‐Site Parking Facilities.
(a) Ordinary Maintenance and Repairs to be performed by Manager to the On‐Site Parking Facilities shall include general maintenance and care of the surface, resurfacing (including adding oil or aggregate on top of the asphalt), striping and signage and day to day sweeping and litter removal.
(b) Notwithstanding the foregoing, City shall perform all r epairs and replacements to the On‐Site Parking Facilities that involve penetrations in or removal, replacement or breaking of the asphalt surface (including all repaving necessary to repair any penetration). The costs of such repairs shall either be reimbursed from the Capital Reserve Fund or be borne solely by City, as provided in Sectio n
28.1.2; provided that Manager shall pay for all costs of repaving or repairs necessitated by acts of Manager or Manager Invitees.
13.1.3 Other Exterior Areas.
(a) After Arena Events, Manager shall perform and pay for the cost and expense of trash removal and sweeping of the Off‐Site Parking Facilities that Manager operates and the City public walkways and sidewalks immediately adjoining the Arena Facilities, to the extent that extraordinary debris results from customers of the Ar ena Facilities.
(b) City shall be responsible at its sole expense for street sweeping.
13.2 Annual Maintenance Budget and Records.
13.2.1 Maintenance Budget. For each Term Year, Manager shall prepare and submit to City, in a form reasonably satisfactory to City, a detailed programmatic budget (“Maintenance Budget”) describing the anticipated Ordinary Maintenance and Repairs for the Arena Facilities (including Arena FF&E) for that Term Year, including the anticipated costs thereof.
(a) Manager shall submit a preliminary Maintenance Budget to City no later than June 1 pre ceding the commencement of each Term Year. City shall have the right to review the preliminary Maintenance Budget for compliance with the provisions of this Section 13.2.
(b) Manager shall consider all comments provided by City, and both Parties shall use reasonable good faith efforts to resolve any differences regarding the Maintenance Budge
t prior to the commencement of the applicable Term Year. (c) Manager shall give City written notice of any material changes, modifications or other adjustments to the Maintenance Budget within a reasonable period of time after such adjustments are made.
(i) Within a reasonable period of time following the end of a Ter m Year, Manager shall give City a summary of the actual costs and expenses incurred for Ordinary Maintenance and Repairs for such Term Year.
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13.2.2 Maintenance Records. The records maintained by Manager in accordance with Section
12.2.4 above shall include reasonably detailed records of all Ordinary Maintenance and Repair work performed by Manager, including copies of estimates, purchase orders, contracts, invoices, receipts, and service reports. City shall have the right to inspect such records as provided above.
SECTION 14. APPLICABLE COMMUNITY STANDARD.
14.1 Where Conformance is Required. Manager shall co nform, and shall cause the Manager Invitees to conform, to the Applicable Community Standard as defined in Section 12.1.3 (a standard equal to comparable major arenas or stadiums in the San Francisco Bay Area) in connection with pricing, hiring, entertainment in Premium Areas, smoking, sale and consumption of alcoholic beverages, advertising, and certain other activities, subject to the following te rms and conditions:
14.1.1 Pricing. Upon reasonable request by the Arena Authority, Manager shall report to and consult with the Arena Authority in connection with Manager's establishment of prices for food and beverages and parking, and Event Charges for Community Events or City Events as described in Section 11.1.4. Subject to Section 39 (Mediation), City reserves the right to object to such Event Charges if they materially differ from th e Applicable Community Standard. If the Arena Authority notifies Manager of any disagreement regarding such Event Charges, the Parties shall meet and confer in good faith to address such disagreement. If the Parties cannot resolve the disagreement between them, the unresolved issues may be submitted to Mediation as a Disputed Matter un der Section 39.
14.1.2 Hiring Policies.
(a) Manager shall undertake reasonable good faith efforts to hire San Jose residents for Arena staff positions based on their experience and the requirements of the position. Manager shall encourage its service contractors to do the same. Among applicants who are comparably qualified for positions, a preference shall be given for those with San Jose addresses.
(b) In accordance with the Non‐Discrimination Policy attac hed as Attachment No. 8
to this Agreement, Manager has adopted and published a non‐discrimination policy on account of race, sex, color, age, religion, sexual orientation, actual or perceived gender identity, disability, ethnicity, or national origin. Manager shall include a provision prohibiting discrimination in all of its contracts with its contractors. Manager shall encourage all contrac tors to monitor and enforce their non‐discrimination policies.
(c) Manager shall pay its employees’ wages that are comparable to those paid to employees in comparable job classifications in other comparable major arenas and stadiums in the Northern California area.
(i) As set forth in Section 10.4.2, Manager is not subject to City’s Living Wage Policy as in ef
fect on the CommencementEffective Date.
(d) For Capital Projects implemented by Manager as described in Section 28.6.2, Manager shall comply with all Applicable Laws regarding the competitive bidding of contracts and the payment of prevailing wages (to the extent Applicable Laws
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impose such requirements on Manager), and will indemnify City against any claims made alleging a failure to so comply.
(e) To implement the above‐stated policies, Manager shall undertake the following steps:
(i) Employment policies will be conspicuously posted in areas accessible to employees;
(ii) General advertising for available positions will note that Manager is an equal oppor
tunity employer who gives a preference to San Jose residents;
(iii) Advertisements will be placed in media targeted at and circulated in San Jose among the local community; and
(iv) Any union or other employee group which becomes active at the Arena will be advised of Manager’s policies, and Manager will cooperate with the union or other em
ployee group to advance those policies.
(f) Manager shall make reasonable good faith efforts to develop, through cooperative efforts with qualified, experienced and reputable local agencies and organizations actively engaged in employment skills development, programs for the economically d isadvantaged, such as participating in a training program to develop a well‐trained, experienced workforce at the Arena.
14.1.3 Entertainment in the Premium Areas.
(a) Manager shall have the right to permit all forms of entertainment (including employee costumes) and dancing in the Premium Areas, subject to the following:
(i) City may regulate entertainment (including employee costumes) when minors are permitted access to the Premium Areas, and may regulate nudity at all times, in accordance wi th and subject to General City Ordinances (described in Section 14.2).
(ii) Except as provided in subpart (i) above, all entertainment (including employee costumes) shall be permitted, subject to General City Ordinances (and other Applicable Laws) proscribing criminal behavior. (iii) Dancing by customers shall be permitted subject to General City Ordinances.
(b) To the ex
tent (and only to the extent) expressly provided above, Manager’s rights under this Section 14.1.3 may be subject to further restrictions or limitations under General City Ordinances (defined below), without any compensation to Manager.
14.1.4 Smoking and Tobacco Advertising.
(a) The provisions of Chapter 9.44 of the San Jose Municipal Code (Regulation of Smoking) shall govern smoking in or around the Arena Facilities. Without limiting the foregoing, smoking shall be prohibited inside the Arena Building entirely, and
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shall be prohibited outside of the Arena Building except in certain designated smoking areas as permitted by Chapter 9.44.
(b) The distribution of tobacco products or samples shall be prohibited in or around the Arena Facilities.
(c) The advertising of tobacco products shall be prohibited in or around the Arena Facilities.
14.1.5 Alcohol Consumption and Advertising.
(a) Manager may serve beer, wine, and distilled alcoholic beverages anywhere in the Arena that may be permitted under Applicable Laws and Applicable Permits, including the Premium Areas, restaurant, concourse area, and Arena bowl seats. (b) Manager may, in Manager’s sole discretion, impose specific limitations on alcohol and sales such as pu rchase limits, size limits, and sale cut‐off times. In addition, Manager may prohibit alcohol sales in connection with certain types of Events, such as children’s shows and religious gatherings.
(c) Manager shall develop and implement a program to educate and train employees (including parking lot attendants, vendors, ticket takers, and security) to promote responsible al
cohol use at Events.
(d) Manager shall comply with the alcoholic beverage advertising requirements of Attachment No. 9 (the “Alcohol Advertising Plan”) and shall not allow advertising of alcoholic beverages in any locations within or about the Arena Facilities in any manner prohibited in the Alcohol Advertising Plan without the prior written consent of the City Manager, which consent shall not be unreasonably withheld based on conformance with the Applicable Community Standard.
14.1.6 General Matters Related to Applicable Community S tandard. (a) In addition to the foregoing specific limitations on the advertising of tobacco products and alcoholic beverages, the content of Arena Advertising shall be subject to the general restrictions and policies set forth in Section 15.2. (b) City and Manager agree to meet and confer from time to time for purposes of developing an
d maintaining effective noise and crowd control programs. (c) Manager may allow festival seating in the Arena if such seating is consistent with the Applicable Performance Standard and Manager determines it can be done safely for a given Event.
(d) Manager may impose more stringent restrictions than those set forth above, if it deems advisa
ble.
14.2 Effect of City Ordinances.
14.2.1 Definitions. As used in this Section 14 only, the following terms have the meanings given below:
(a) A “General City Ordinance” means an ordinance or resolution adopted by the City Council or other City Authority that (i) is generally applicable to all sports and
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entertainment or businesses operating within the City, OR (ii) is no more restrictive than the Applicable Community Standard.
(b) “Targeted City Ordinance” means an ordinance or resolution adopted by the City Council or other City Authority that (i) is not general in application, but rather is principally directed at or so lely applicable to the Arena; AND (ii) is more restrictive than the Applicable Community Standard.
14.2.2 Restriction on Manager’s Rights.
(a) A General City Ordinance that restricts or limits Manager’s rights under Section 14.1.3 (Entertainment in the Premium Areas) or Section 14.1.5 (Alcohol Consumption and Advertising) shall not be a breach of this Agreement, but if such Ordinance has a material adverse effect on Manager’s Operating Revenues, City agrees to negotiate in go od faith to establish an equitable Fee Credit to offset such economic impact.
(b) A Targeted City Ordinance that restricts or limits Manager’s rights under Section 14.1 shall be a breach of this Agreement, and in such case Manager shall be entitled to a remedy under Section 38 to compensate Manager for the economic har
m caused thereby.
PART FOUR
ADVERTISING AND SIGNAGE
SECTION 15. ADVERTISING AND NAMING RIGHTS.
15.1 General Rights. Subject to compliance with the other applicable provisions of this Agreement, Manager shall have the exclusive right to do the following (either directly or through licenses or other contract rights granted to third parties), and to retain, allocate and distribute all Operating Revenues therefrom, all on such terms and conditions as may be determined by Manager:
15.1.1 Arena Advertising. Manager shall have the e xclusive right to market, sell, license, post, exhibit, display, install, publish, and present all advertising, signage, trademarks and trade names, logos, slogans, sponsorship and promotional activities, designations, graphic displays, commercial announcements, and other commercial messages of every kind and nature within or about the Arena Facilities, or regarding the Events at the Arena (except City Events and Community Even ts), whether in audio, visual, physical, digital or other formats, and whether the type or mode of communicating the message now exists or is developed in the future (collectively, “Arena Advertising”).
15.1.2 Media Distribution. Manager shall have the exclusive right to control all broadcasts, reproductions, exhibitions, distributions, reports and transmittals of the pictures, videos, recordings, descriptions and accounts of all professional sports games and other Events at the Arena (except City Events and Community Events), whether in analog, digital or other formats; whether disseminated locally, nationally, or internationally; and whether disseminated by radio, television, telephone, cable, websites, str eaming services, mobile applications, social media platforms, or other method of transmission or communication.
15.1.3 Naming Rights. Manager shall have the exclusive right to name (or brand) the Arena as a whole in accordance with Section 15.3, and to name (or brand) any amenities comprising a part of the Arena Facilities, and to sell, license, distribute, display, publish, and present
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images of the same. Such right includes the right to display such names and/or related logos and slogans on Signage located on or in the Arena concourses, the entrances to the Arena, the exterior of the Arena or any other portions of the Arena Facilities, subject to Section 16.
15.2 Advertising Co ntent Regulations.
15.2.1 Viewpoint Neutral Advertising Limitations. The content of all Arena Advertising shall conform to the Applicable Community Standard and, where applicable, the Alcohol Advertising Plan.
(a) It shall be deemed to be a violation of the Applicable Community Standard for any Arena Advertising to contain content that:
(i) Promotes the sale or use of tobacco products, marijuana or cannabis related products (other than CBD Products as define d in subparagraph (c) below), including but not limited to depicting such products or images; (ii) Promotes the sale or use of firearms or other weapons or related products;
(iii) Promotes “adult” goods or services, including content that promotes, encourages or appears to promote or encourage a transaction related to, or uses bran
d names, trademarks, slogans or other materials which are identified with films rated “X” or “NC‐17”, video games rated M or AO, adult products, any adult book/video store, adult theater, or other form of adult entertainment, adult internet sites, and escort services as defined in Chapter 20.200 of the San Jose Muni cipal Code; (iv) Includes language or images of nudity or sexual acts, or language or images that are obscene, vulgar, or profane, or prurient sexual suggestiveness including content that described, depicts or represents sexual activities or aspects of the human anatomy in a way that the average adul
t, applying the Applicable Community Standard, would find appeals to the prurient interest of minors or adults in sex; (v) Depicts obscene material or image of nudity. Content shall be considered “obscene” if an average person would find that the material, taken as a whole, appeals to lewd curiosity; depi cts or describes, in an offensive way, sexual conduct or excretory functions; and taken as a whole, lacks serious literary, artistic, political, or scientific value. “Nudity” is construed as the depiction of a state of undress as to expose any part or portion of the pubic or anal region or genitalia of any person or any portion of the breast at or below the areola of any female person
;
(vi) Is false, deceptive or misleading;
(vii) Depicts unlawful content, violence or anti‐social behavior or relates to illegal goods or activities, or otherwise promotes, encourages, or appears to promote or encourage unlawful or illegal behavior or activities, or conten
t that portrays images or descriptions of graphic violence, including dead, mutilated or disfigured human beings or animals, the act
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of killing, mutilating or disfiguring human beings or animals, or intentional infliction of pain or violent action toward or upon a person or animal, or that depicts weapons, implements or devices used in an act or acts of violence or harm on a person or animal or that appear to be aimed or pointed at the viewer or observer in a mena
cing manner;
(viii) Promotes, encourages, or appears to promote or encourage the use or possession of unlawful or illegal goods or services;
(ix) Holds a person or group up to public ridicule, derision, embarrassment, or defamation, such that a reasonable person usi ng the Applicable Community Standard would interpret the material to ridicule or mock or be otherwise abusive or hostile toward or to debase the dignity or stature of an individual or group of individuals;
(x) Creates a clear‐and‐present danger of causing riot, disorder, or other imminent threat to publ ic safety, peace, or order;
(xi) Depicts content or images intended to promote a particular religion, religious idea or viewpoint;
(xii) Promotes or opposes a political party, promotes or opposes any state or local ballot measure or the election of any candidate or group of candidates for federal, state, judicial or lo cal government offices, or content that is political in nature or contains political messaging including advertisements involving political or judicial figures and/or advertisements involving an issue that is political in nature such that it directly or indirectly implicates the action, inaction, prospective action or policies of a governmental entity, or con tent that expresses or advocates an opinion, position or viewpoint on a matter of public debate about economic, political, religious or social issues; or
(xiii) Depicts City graphics, logos or representations without the express written consent of the City, or contains content averse and/or adverse to the commercial interests of the City of San Jose, or tends to dis parage City of San Jose services and/or government services generally. (b) The Parties agree that the above limitations are reasonable and necessary for the public welfare, are a material part of the consideration for this Agreement, and will not unreasonably restrict Manager’s ability to max imize Operating Revenues from Arena Advertising.
(c) City acknowledges that the advertising of CBD Products is not a violation of the Applicable Community Standard, and that therefore advertising of CBD Products is permitted, subject to reasonable restrictions where appropriate based on Applicable Laws. As used herein, the term “CBD Products” means foo ds, beverages, dietary supplements, veterinary products, cosmetics, and other similar products infused with and/or containing cannabidiol with a delta‐9 tetrahydrocannabinol concentration of no more than 0.3 percent on a dry weight basis.
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15.2.2 Policy Concerning Commercial Advertising. Except as expressly provided below, all Arena Advertising is intended to be for commercial purposes only, including both Off‐Site Commercial Speech and On‐Site Commercial Speech, in order to maximize Operating Revenues. For the purpose of this Section, a commercial purpose is one that promotes a commercial transaction, such as the sale or use of products, services and/o r entertainment for financial benefit, which is offered to the public generally. (a) This policy shall not prohibit Manager from displaying announcements, materials or information related to Events or other programs, services, or activities sponsored or promoted by Manager or Manager’s Affiliates. (b) This policy also shall not prohibit announcements, materials or information sponsored or promoted in whole or in part by any Governmental Authority in order to adva
nce public health, safety or welfare or other government purposes.
However, nothing herein shall be construed to permit any Governmental Authority (including City) to display or distribute any announcements, materials or information in, on or about the Are na Facilities without the prior written consent of Manager in Manager’s sole discretion.
(c) In adopting this policy, it is the Parties’ declared intent and purpose to prohibit the display or distribution of any announcements, materials or information that individually or in combination would cause any of the Arena F acilities to become a public forum for the dissemination, debate, and/or discussion of public issues, it being understood that Manager’s operation of the Arena constitutes a private property right.
15.3 Naming Rights. The Parties’ respective rights and obligations concerning Naming Right to the Arena Facilities shall be subject to the following:
15.3.1 Definitions. In this Agreement, the following terms shall have the meanings given below:
(a) “Approved Venue Sponsor” means a Sponsor that has been approved (or deemed approved) by the City Manager to hold the Naming Rights, pursuant to Section 15.3.3 below.
(b) “Naming Rights” means the right to determine the name of a structure, entrance, room, area or other amenity comprising a part of th e Arena Facilities. (c) “Sponsor” means a person, company, Governmental Authority, or other enterprise that has entered into an agreement with Manager or SJS LLC or one of their Affiliates pursuant to which such enterprise (i) leases, licenses or uses space, advertising assets or amenities within or about th e Arena Facilities; (ii) conducts or participates in promotions, public relations, or marketing activities within or about the Arena Facilities, (iii) provides products, goods, entertainment or services within or about the Arena Facilities, or (iv) actively promotes, advertises, displays, or offers its products, goods, entertainment or services within or about the Ar
ena Facilities.
(d) “Venue Logo” means a graphic design incorporating the Venue Name. The Venue Logo consists of a primary logo associated with the long name to be used on a
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regular basis, and an alternate secondary logo associated with the short name to be used for ancillary purposes.
(e) “Venue Marks” means the Venue Name, Venue Logo, and/or any stylized form or combination thereof.
(f) “Venue Name” means the official word, term or phrase by which the Arena is called. The V
enue Name consists of a long name to be used on a regular basis, and an alternate short name to be used where reference to the long name is not reasonably practical, as determined in good faith by Manager. (g) “Venue Naming Rights” means the right to determine the Ve nue Name and Venue Logos, and rights ancillary thereto, as described below. (h) “Venue Naming Rights Agreement” means a written agreement between Manager and an Approved Venue Sponsor pursuant to which Manager grants exclusive Venue Naming Rights to the Approved Venue Sponsor for a specified term.
15.3.2 Exclusive Venue Na ming Rights. City, as the owner of the Arena, has the ultimate right to determine the Venue Name. Subject to the terms and conditions of this Section 15.3, City hereby transfers and grants to Manager the exclusive right to determine the Venue Name, and to change the Venue Name from time to time during the Term of this Agreement, including through a sale of the Ve nue Naming Rights to an Approved Venue Sponsor pursuant to a Venue Naming Rights Agreement.
(a) Nothing in this Agreement shall be construed to give City any rights to share in Operating Revenues from the sale of the Venue Naming Rights or the Naming Rights to any other amenity comprising part of the Ar ena Facilities. (b) City shall not be a party to any Venue Naming Rights Agreement entered into after the CommencementEffective Date of this Agreement, and shall have no right to approve of any such agreement. However, Manager shall not enter into any Venue Naming Rights Agreement after the CommencementEffective Date of this Agreement that would be inconsistent with this Agreement, or would materially affect City’s rights or Manager’s obligations under this Agreement. (c) City shall have no approval rights as to the naming of any amenities comprising a part of the Arena Facilities, including interior components of the Arena Building and exterior componen ts of the Arena Building or the On‐Site Parking Facilities.
However, all Signage associated with the naming of such amenities shall comply with the provisions of Section 16.
15.3.3 Approval of Venue Name and Venue Logo. The Venue Name and Venue Logo shall be subject to approval by the City Manager as follows:
(a) City has the right, in its sole discretion, to prohibit a Venue Name other than “San Jose Arena,” unless the Venue Name is determined pursuant to a sale of the Venue Naming Rights to an Approved Venue Sponsor.
(b) Manager may from time to time pr esent one or more names of potential Venue Naming Rights Sponsors to the City Manager for approval. In determining
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whether to approve any potential Sponsors, the City Manager shall reasonably act in accordance with the Applicable Community Standard. The City Manager shall have 30 days from receipt of the proposed names to approve or disapprove of the same. No response from the City Manager within 30 days shall be deemed approval of the Sp
onsors whose names were submitted.
(c) Once Manager has decided to grant the Venue Naming Rights to an Approved Venue Sponsor, Manager shall work with the Approved Venue Sponsor to develop the proposed Venue Name and Venue Logos, which shall include the name “San Jose” in the long name and primary logo. Manager shall present the Venue Nam
e (both long and short versions) and Venue Logo (both primary and secondary versions) to the City Manager for approval, which approval shall not be unreasonably withheld or delayed. If the City Manager does not respond within 30 days from receipt of the request for approval, the Venue Name and Venue Logo shall be dee
med approved as submitted.
(d) Upon request by the City Manager, Manager shall meet with the Arena Authority in good faith to determine guidelines for the appropriate use of the short name and secondary logo, based on circumstances where it is not practi cal to use the long name and primary logo.
15.3.4 Use of Venue Marks by City.
(a) Following approval of a new Venue Name, City shall use its commercially reasonable efforts to use the Venue Name (and, where appropriate, the Venue Logo) in all of its applicable correspondence, websites, advertising, promotion, maps, press releases, and other communications referring to the Arena. (b) The City shall not have an y rights in the Venue Marks, or in any other marks owned by Manager or the Approved Venue Sponsor. However, Manager hereby grants to City (and shall cause the Approved Venue Sponsor to grant to City) a limited, non‐exclusive, royalty free, personal, non‐transferable license to use the Venue Marks for the sole pu rpose of City’s compliance with subsection (a) above.
15.3.5 Existing Naming Rights Agreement. As of the Effective Date of this Agreement, City has approved “SAP Center at San Jose” as the Venue Name and related Venue Marks and Signage pursuant to a Venue Naming Rights Agreement between SAP Global Marketing, Inc., a Delaware corporation (“SAP Global”), Manager and City dated effective as of July 1, 2023 (the “SAP Venue Naming Rights Agreement”), the ter m of which currently expires on June 30, 2028.
(a) In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of the SAP Venue Naming Rights Agreement, the following shall apply:
(i) As between SAP Global and Manager, and as between SAP Global and the City, th
e parties’ respective rights and obligations shall be governed by the SAP Venue Naming Rights Agreement.
(ii) As between Manager and the City, the Parties’ respective rights and obligations shall be governed by this Agreement.
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(b) Upon the reasonable request of either Manager or SAP Global, the City Manager shall execute and deliver, for and on behalf of the City, an amendment to the SAP Venue Naming Rights Agreement, an estoppel certificate, or other document for the purpose of clarifying the parties’ rights and obligations under the SAP Venue Naming Ri
ghts Agreement consistent with the provisions of this subsection (b). (c) Manager and SAP Global may from time to time extend the SAP Venue Naming Rights Agreement, or may terminate it, without notice to or approval by City. (d) Manager and SAP Global also may from time to ti me amend the SAP Venue Naming Rights Agreement without notice to or approval of City; provided, however, that unless Manager first obtains the City Manager’s written consent, which consent shall not be unreasonably withheld or delayed, Manager shall not agree to any amendment to the SAP Venue Naming Rights Agreement that woul d:
(i) Allow SAP Global to change the Venue Name, Venue Logo or exterior Signage;
(ii) Increase City’s obligations or burdens; or
(iii) Change any other provision such that it would be inconsistent with this Agreement, or would materially affect City’s rights or Manager’s obligations under this Agreement.
15.3.6 Signage Displaying Venue Marks. Th e approved Venue Marks may be displayed on Signage located within the Arena Building in compliance with Section 16.1, and on Signage located on the exterior of the Arena Building in compliance with Section 16.2.
15.3.7 Costs Related to Advertising, Naming Rights and Signage. (a) Manager, its Affiliates, and/or the applicable Sponsors shall be solely responsible for all costs incurred in connection with all Arena Advertising, Naming Rights, and related Signage, including:
(i) Sales commissions and expenses incurred in connection with marketing and sale of Naming Rights;
(ii) Design and production of branding and collateral ma terials; (iii) Design, construction, and erection of any Signage or other fixture intended principally to display the name, logo or other marks of any Naming Rights Sponsors; and
(iv) Annual maintenance and utility costs associated with the operation of any such Signage or other fixture.
(b) None of the costs set forth above shall be eli gible for payment from the Capital Reserve Fund.
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SECTION 16. ON‐SITE SIGNAGE.
16.1 Interior Signage.
16.1.1 Definitions. For purposes of this Agreement (including Section 17 below as well as this Section 16), the following capitalized terms shall have the meanings given below:
(a) “Commercial Speech” means an expression or expressive activity that in any way promotes a commercial transaction.
(b) “Off‐site Commercial Speech” means Commercial Speech that identifies or promotes any commercial activity, product, good or service that is c onducted, manufactured or offered on a site that is not the site on which the Commercial Speech is displayed and that is not otherwise included in the definition of On‐Site Commercial Speech.
(c) “On‐site Commercial Speech” means Commercial Speech to identify and promote (i) the presence of the com mercial activities, products, goods or services conducted, manufactured or offered within or about the Arena Facilities, or (ii) the activities, products, goods, or services promoted by Sponsors within or about the Arena Facilities.
(d) “Freeway Sign” means a large freestanding sign oriented to and designed to be viewed from a freeway.
(e) “Programmable Electron
ic Sign” means a type of animated sign capable of displaying words, symbols, figures, or images that can be electronically or mechanically changed by remote or automatic means. The elements may be internally illuminated or may be illuminated by reflected light. The sign may be part of a perm
anent sign that is not a programmable electronic sign. “Programmable Electronic Sign” includes sign display screens commonly known as liquid crystal display (LCD), plasma and digital displays, and their functional equivalents, including digital displays using LED lighting. This definition applies whether the display is used to produce a series of still ima ges, or images that appear to move on the display screen.
(f) “Signage” (also sometimes referred to herein as “sign” or “signs”) means any and all structures, displays, devices, balloons or graphics on or attached to any land, building or structure, property or materials that are used to graphi cally display or present Arena Advertising on a fixed, temporary or rotating basis, including letters, numbers, words, illustrations, decorations, decals, emblems, trademarks, logos and lights. “Signage” does not include noncommercial murals otherwise allowed under the Sign Code.
(g) “Sign Code” means Title 23 of the San Jose Municipa l Code. (h) “Supergraphic Sign” means a sign, other than a banner sign, which consists of flexible material attached flush to a building facade.
16.1.2 Manager’s Right to Install Interior Signage. Manager shall have the exclusive right to install and maintain (or to permit the installation and maintenance of) Signage in all
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interior areas of the Arena, in such locations, types and sizes as Manager may determine in Manager’s discretion, subject to the following:
(a) Examples of allowable interior signs include the following:
(i) The scoreboard, hockey dasher boards, and seating area fascia rings; (ii) Televisions, LED/LCD screens, interactive digital displays, light projections, an d other digitally‐enabled graphic presentations; (iii) Placards, wraps and stickers, sign boards and poles, menu boards, banners, suspension pendants, and wall‐mounted panels; and (iv) Tickets, magazines, programs, posters, schedules, stationery, napkins, uniforms, handout items, and merchandise.
(b) All Signage shall conform to the Governing Standards set forth in Section 12.1 .3, including Applicable Construction Codes, the applicable provisions of the Sign Code, and other Applicable Laws.
(c) All Arena Advertising displayed on Signage within or about the Arena Facilities shall comply with the Alcohol Advertising Plan (where applicable) and the content requirements of Section 15.2.1.
16.1.3 Aesthetic Requirements. Without limiting th e generality of the foregoing, the types and amounts of Signage in the Concourse and other areas visible to the general public, when viewed both individually and as a whole, shall conform to the Applicable Performance Standard then in effect.
(a) Manager recognizes City’s continuing strong public interest in the visual appearance of the Arena, and its desire to maintai n a “look and feel” compatible with the design aesthetics of the Arena as of the Execution Date. (b) City recognizes the expanding role of advertising and signage in the successful operation of comparable major arenas and stadiums in the San Francisco Bay Area, as well as Manager’s desire and right to gene rate additional Operating Revenues by expanding the types and amounts of Arena Advertising and related Signage utilized at the Arena, consistent with such comparable facilities. (c) If the Arena Authority notifies Manager of any concerns by Arena Authority or City regarding Arena Advertising or Signage, the Parties shall meet and confer in good faith to address such concerns. If th
e Parties cannot resolve any such
concerns between them, the unresolved issues may be submitted to Mediation as a Disputed Matter under Section 39.
16.1.4 City Name and Graphics.
(a) At Manager’s cost, Manager shall prominently feature the name “San Jose” in the following interior locations: (i) on the scoreboard; and (ii) during professional hockey games, under the ice.
(b) City currently maintains the following signs on the interior of the Arena: (i) the name “San Jose” and the City seal ha nging near the top of the South Entrance
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area; (ii) commemorative plaques in the South Entrance lobby containing the name “San Jose Arena” and the identification of City officials and other parties associated with the original construction of the Arena; and (iii) a large commemorative sign on the concourse at Section 101. In connection with the Renovation Project (and as part of the Renovation Costs), Manager shall have th e right to redesign and relocate some or all of such signs, and to modify the content of the commemorative signs to include information about the Renovation Project, all subject to the approval of the City Manager in the City Manager’s reasonable di scretion.
16.1.5 Miscellaneous Graphics. The regulation of Signage hereunder is not intended to limit Manager’s right to install and maintain the following in such quantities and locations as Manager may determine in its reasonable discretion: (i) safety, directional, accessibility and informational graphics; (ii) decorative graphics; and (iii) decorative or commemorative photos or artworks.
16.2 Exterior Signage.
16.2.1 Permitted Permanent Signs. Manager shall have the exclusive right to install and maintain (or to permit the installation and maintenance of) permanent or semi‐permanent Signage on the exterior of the Arena (including on or about the On‐Site Parking Facilities and pedestrian walkways) subject to the following:
(a) The permitted locations, types and sizes of such exterior Signage shall be consistent with the Ext erior and Freeway Signage Schedule attached as Attachment No. 10 to this Agreement (as may be modified by Manager following receipt of comments from staff), subject to any discretionary approvals needed from the City Council (including any necessary amendments to City Policy 6‐4 and the Sign Code).
(b) As soon as practicable following written request from Manager, the Parties shall meet and confer to establish a work plan for City’s re view and consideration of the Exterior and Freeway Signage Schedule, including a timeline for staff review, drafting of any potential amendments to the Sign Code and/or City Policy 6‐4, and CEQA clearance. Among other things, the work plan may provide for either concurrent or sequential evaluation of on‐site exterior signs and Freeway Si gns and engagement of mutually agreeable consultants and other resources to facilitate and expedite preparation and review. This work plan is intended to be completed prior to July 1, 2026.
(i) Upon mutual agreement of a work plan, but no sooner than July 1, 2026, Manager will develop and provide th e City with concept drawings in form and content reasonably acceptable to City, depicting the exterior signs desired by Manager (“Signage Plans”) as set forth in the Exterior and Freeway Signage Schedule.
(ii) City agrees to instruct its staff to devote sufficient time to promptly review and timely comm ent on the Signage Plans, prepare potential revisions to the Sign Code and/or City Policy 6‐4, and oversee the preparation of any documents required for CEQA clearance. Staff’s work
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will include evaluation of applicable technical matters, environmental concerns, legal considerations, and planning policy issues.. (iii) Manager shall be required to pay City’s standard cost‐recovery fees for such staff time and for consultant costs incurred for CEQA clearance and any other technical assistance deemed necessary by the City. (iv) At appropria te times during the course of the above work, staff and Manager will meet and confer in good faith to discuss any issues of concern (and potential resolutions for such concerns), as well as any recommendations by staff for modifications to the Signage Plans. (c) Upon completion of the work described above, M anager may request that a public hearing be scheduled for the City Council to consider approval of Manager’s Signage Plans, any proposed amendments to the Sign Code and/or City Policy 6‐4, and the applicable CEQA clearance documents. (i) As part of the Council’s approvals, if any, procedures will be in cluded pursuant to which Manager may submit requests to the City Manager from time to time for administrative approval of modifications to the Exterior and Freeway Signage Schedule and related Signage Plans, provided that such modified signage shall conform to the applicable Governing Standards (as may be modified pursuant to th e Council’s approvals) and all other applicable requirements under this Agreement. (ii) Nothing contained herein shall be construed as creating any obligation on the part of the City, its officers, employees, or agents to recommend, support, or approve any amendment or modification to the Sign Code and/or City Policy 6‐4, nor shall any provision of this Agreement be deeme
d or construed to bind or otherwise commit the City Council to approve any such amendment or modification.
(d) The installation and maintenance of the approved exterior Signage shall be subject to oversight by the City’s Public Works Department. (i) City agrees to use its bes t efforts, consistent with the exercise of its police powers, to promptly take such actions as may be reasonably necessary to cause the necessary authorizations to be issued to permit such exterior Signage to be installed.
(ii) Manager shall work with the Public Works Department to ensure tha t the installation and maintenance of the Signage conforms to all Public Works conditions and requirements.
(e) Exterior Signage may display the names, logos, slogans or other marks of any Naming Rights Sponsor; provided, however, that exterior Signage displaying the Venue Name or other Venue Marks shall require the approval of th e City Manager as described in Section 15.3.
(f) The signs described in the Exterior and Freeway Signage Schedule may also display Arena Advertising or other information appropriate to the use of the
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Arena Facilities as major public assembly facilities, subject to compliance with the content requirements of Section 15.2.1 and the requirements of this Section 16.
16.2.2 Permitted Temporary Signs. In addition to the foregoing, Manager shall have the exclusive right to display (or to permit the display of) temporary Signage on the exterior of the Arena Building (including on or about the On‐Site Parking Facilities), subject to the following:
(a) Such temporary Signage may consist of the following:
(i) Banners or projected light signs promoting or associated with Ev ents at the Arena or other events occurring in the San Jose area; (ii) Signs displayed in connection with permitted “Special Events” as described in Section 13.14.164 of the San Jose Municipal Code; and (iii) Supergraphic Signs displayed on the façade of the Arena Building meeting the requirements in Section 23.04.124 of the Sig n Code. (b) Such Signage shall be subject to electrical, fire, life safety and other reasonable requirements and regulations as may be imposed by the City’s Public Works Director.
16.2.3 Governing Standards for Exterior Signage. Exterior Signage shall conform to all other Governing Standards set forth in Section 12.1.3, including Applicable City Policies and Guidelines (including Council Policy 6‐4, if applicable), Applicable Construction Codes, the applicable provisions of the Sign Code, and other Applicable Laws. For purposes of the foregoing, all exterior Signage shall be deemed to be erected under contract to the City, by virtue of the requirements set forth in th
is Agreement.
SECTION 17. OFF‐SITE SIGNAGE.
17.1 Freeway Signs. As a material part of the consideration for this Agreement, Manager shall be permitted to do the following (either directly or through licenses or other contract rights granted to third parties), and to retain, allocate and distribute all Operating Revenues therefrom, all on such terms and conditions as may be determined by Manager:
17.1.1 General Requirements.
(a) Manager shall be permitted to install, maintain and operate no more than two (2) Freeway Signs, which may be Programmable Electronic Signs, on City Property along freeways within the City of San Jose in accordance with the Outdoor Advertising Act Arena Exemption (Section 5272(b) of the California Business & Professions Co de) (“Arena Exemption”) and/or any other Applicable Laws and Applicable City Policies and Guidelines, subject to the terms and conditions of this Section 17.1.
(i) For purposes of this Section 17.1, the term “City Property” means any property that is owned by City in fee or for a term of years (e.g., th rough a lease agreement), subject to approval by City Council of any necessary amendments to the Sign Code and Council Policy 6‐4 to allow offsite commercial advertising on property leased by the City. If the City does
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not approve any such necessary amendments, then “City Property” shall mean only property that is owned by the City.
(ii) Such Freeway Signs shall be limited to parcels within the urban service area as indicated on the general plan land use/transportation diagram. (iii) Such Freeway Signs shall be consistent with the applicable provisions of the Ex
terior and Freeway Signage Schedule attached as Attachment No. 10 to this Agreement.
(b) The purpose of the Freeway Signs is to:
(i) Promote Arena Events, the San Jose Sharks, other affiliated businesses, and their respective sponsors;
(ii) Disseminate urgent public service messages, including Amber Alerts and information about emergency situations; and/or
(iii) Any other purposes permitted under Council Policy 6‐4 and/or th e Sign Code, as applicable, including Commercial Speech.
(c) Nothing in this Agreement shall limit the right of Manager or its Affiliates to enter into separate agreements for the installation, operation or use of off‐site signage in addition to the two Freeway Signs contemplated herein, subject to such amendments to (or an override of) Council Policy 6‐4 where ne cessary.
(d) Manager or an Affiliate of Manager shall remain the sole owner and operator of all Freeway Signs and/or off‐site Signage contemplated herein and will be responsible for all capital costs, lease/rent payments, security, and utility services, as well as ge
neral operation, maintenance, and repair costs.
(e) So long as the Freeway Signs are on City Property, they shall be subject to the provisions of Section 15.2.1 regarding the content of Arena Advertising.
17.1.2 Governmental Approvals. Manager shall be responsible, at no material cost to City, for complying with all Applicable Laws and obtaining all required governmental permits, licenses and other approvals related to the Freeway Signs, including the following:
(a) Environmental clearance for the installation and operation of the Freeway Signs in accordance with the requirements of the California Environmental Quality Act (CEQA) and applicable City ordinances.
(b) Discretionary approvals from the Ci
ty Council, including any potential
amendments to the City’s Sign Code and/or Council Policy 6‐4. (c) City approvals related to excavation, grading, and construction. (d) Approvals from Caltrans, the FAA, and other Governmental Authorities.
17.1.3 Location of Freeway Sign Premises. Manager and City shall work toge ther in good faith to select two mutually agreeable properties along freeways upon which the Freeway Signs may be constructed.
(a) Such Freeway Signs may be located in any of the following locations:
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(i) Such locations as may be permitted by Applicable Laws and Applicable City Policies and Guidelines; or
(ii) Such locations as may be permitted by the Arena Exemption, subject to approval by the City Council in its discretion where such locations are not permitted by the Sign Code and Applicable City Polici es and Guidelines; or
(iii) Any other locations as may be permitted by the City in its sole discretion and/or under its regulatory authority.
(b) Manager shall apply for all necessary permits and approvals from Caltrans, City and other applicable Governmental Authorities for the installation of Freeway Signs on the agreed‐upo n properties, in the name of Manager or Manager’s designated representative. Manager shall pay City’s standard fees for processing the City applications, and City shall process Manager’s applications, but shall retain its full governmental discretion with respect to all such applications. (c) If Manager is unable to obtain the necessary permits or approvals for Freeway Signs on one or both of the selected properties, or if Manager should need to choose an alternate site du
e to physical constraints, title encumbrances or other
reasons, City shall use its reasonable good faith efforts to cooperate with Manager’s efforts to locate another property that is mutually acceptable to th e Parties for the installation of a Freeway Sign.
(d) If any property selected by mutual agreement of the Parties is not City Property (but is located within the City’s jurisdiction), then at Manager’s request and subject to City Council approval if needed, City will lease or purchase the prop erty provided that (i) the owner of the selected property voluntarily agrees to such lease or purchase; and (ii) Manager pays all costs and expenses associated with such acquisition. City shall then lease such property to Manager pursuant to a Freeway Sign Lease as described below.
(i) This su bpart (d) shall apply with respect to property leased by City only if the City approves any necessary amendments of the Sign Code and Council Policy 6‐4 to allow offsite commercial advertising on property leased by the City.
17.1.4 Lease of City Property.
(a) If a Freeway Sign is to be located on City Property, then subject to approval by the City Council, City and Manager shall enter into separate written lease agreement for such location (“Freeway Sign Lease”) on such commercially reasonable terms and conditions as the Parties may mutually agree. (b) The Freeway Sig n Lease shall set forth the amount of the rent (which shall be based on fair market rental value) and other specific provisions as may be customary for similar types of leases. For purposes of this Agreement, fair market value shall be based on comparable ground rents for unimproved land on a square footage basis, with the understanding that the rent will not be based on, or
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related to, revenues generated by the Commercial Speech on the Freeway Sign or the use of the property for the construction and operation of a Freeway Sign.
17.1.5 Governing Standards for Freeway Signs. The Freeway Signs shall conform to all Governing Standards set forth in Section 12.1.3, including Applicable City Policies and Guidelines (including the applicable provisions of Council Policy 6‐4), Applicable Construction Codes, the applicable provisions of the Sign Code, and other Applicable Laws.
17.1.6 Replacement of Freeway Signs. If Manager’s ability to maintain a Freeway Sign pursuant to a Freeway Sign Lease is terminated prior to the expiration of the term thereof due to a Taking or a Force Majeure Event, Manager shall have the right to replace such Freeway Sign with another Freeway Sign on other property in accordance with the applicable provisions of this Section 17.1.
17.2 Governmental Directi
onal Signs.
17.2.1 City Signs. As of the CommencementEffective Date, there are a number of existing public roadway signs referencing the Arena by the Venue Name, which signs are controlled by the City.
(a) City shall be responsible for maintaining, repairing and replacing such signs in the same manner that the City maintains, repairs and replaces other similar signs in the normal course of its business.
(b) Upon an approved change in the Venue Name as provided in Section 15.3.3, Manager shall be responsible for the cost of replacing the applicable signs to refer to the new Venue Name, and thereafter City shall be responsible for maintai ning, repairing and replacing them as provided above.
17.2.2 Public Transportation Signs. As of the CommencementEffective Date, there are also a number of existing public roadway and/or public transportation signs referencing the Venue Name, which signs are controlled by county, state and/or federal government agencies.
(a) Such signs are maintained, repaired and replaced by the respective agencies. (b) Upon an approved change in the Venue Name, to the extent the cost to replace the signs is not borne by the controlling agency, such cost will be borne by Manager. However, City shall coopera te, at no material cost to City, with any reasonable efforts by Manager to cause the controlling government agencies to bear such replacement costs.
PART FIVE
PARKING AND TRAFFIC
SECTION 18. ON‐SITE PARKING; LOT D AND DELMAS WEST.
18.1 Description of On‐Site Parking Facilities. As described in the Recitals to this Agreement, the Arena Facilities include improved parking areas adjacent to or across the street from the Arena
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defined therein as the “On‐Site Parking Facilities” and consisting of separate parking areas (“Lots A, B, and C” and “Lot D”) as shown on the Site Plan (Attachment No. 2).
18.1.1 Number of Spaces. As of the Effective Date, the On‐Site Parking Facilities provide a total of 1,650 parking spaces.
(a) Lots A, B and C provide a total of 1,422 spaces.
(b) Lot D provides a total of 228 spaces.
18.1.2 Payment for On‐Site Parking Facilities. The Arena Fees payable by Manager to City pursuant to Section 6.1 include consideration for use of the On‐Site Parking Facilities, as defined in this Section 18, and no separate payment shall be due to City for such use.
18.2 Lot D Lease. As contemplated by the First Amendment to 2018 AMA (defined in Section 19.1), City conveyed Lot D to Google, LLC (along with its successors and assigns, “Google”), and Google entered into a lease with Manager for Manager’s operation of Lot D as a public parking facility (the “Lot D Lease”), effective as of December 19, 2018. Capitalized terms used below have the meanings giv
en in Section 19.1.1 unless otherwise specified in this Section 18.
18.2.1 Terms of Lot D Lease. Consistent with the requirements of the First Amendment to 2018 AMA, the Lot D Lease provides as set forth in subparts (a) through (f) below, as more specifically set forth in (and governed by the terms and conditions of) the Lot D Lease.
The Parties acknowledge that City is not a party to the Lot D Lease, and the summary of the ter
ms in this Section 18.2.1 is intended to provide historical context that is relevant to this Agreement.
(a) The term of the Lot D Lease will continue until construction work on Lot D is ready to commence (when Google presents Manager with reasonable evidence that grading on Lot D is planne d to commence in the near future). (b) Google must give Manager at least 120 days’ notice before terminating the Lot D Lease, or longer as needed to avoid a termination in the middle of a hockey season.
(c) Prior to the termination of the Lot D Lease, Google must de liver to Manager (pursuant to an approved form of lease or license agreement) one or more lots approved by Manager containing a minimum of 228 Available Parking Spaces (the “Replacement Parking”), which must satisfy all of the following conditions:
(i) The parking lot(s) must allow for public parking, with priority for Arena Event‐r
elated parking (i.e., exclusive use for Arena customers for Events); (ii) The parking lot(s) must be improved with paving, striping, lighting and other features in accordance with the Applicable Parking Standard at no cost to Manager, and have access and circulation as reasonably approved by Manager;
(iii) The Available Parking Spaces that cou nt toward the 228 minimum must be new and not existing or planned as of the December 19, 2018 Effective
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Date of the Lot D Lease (e.g., not the parking spaces that City is obligated to construct as part of Lot E or Milligan); and
(iv) Manager must be given the opportunity to operate the parking lot(s) on commercially reasonable terms and conditions comparable to the terms and conditions of other similar arrangements in the Diridon Are a or downtown San Jose.
(d) Notwithstanding the foregoing, Google may designate Delmas West as Replacement Parking (even though the parking spaces on Delmas West are not new), subject to the Operating Covenant described in Section 18.2.4. (e) The Replacement Parking may be relocated again (if necessary fo r development purposes), so long as the relocated Replacement Parking meets the criteria in (c) above.
(f) Google’s obligations under the Lot D Lease are binding on its successors and assigns.
18.2.2 Effect on Minimum Off‐Site Parking Requirements. (a) During the term of the Lot D Lease, the 228 parking Spaces on Lot D shall continue to be deemed part of the On‐Site Parking Facilities for all applicable purposes under this Agreement.
(b) Upon the termination of Manager’s right to use Lot D, the Minimum Off‐Site Parking Re quirements shall be increased by 228 spaces within the 1/3 Mile Radius Area as provided in Section 19.1.4 (subject to further adjustment in accordance with this Agreement), which shall fully satisfy the City’s obligations as to the replacement of the Lot D On‐Site Parking Facilities. Thus, for example, during the Interi
m Relief Period described in Section 19.1.5, the Minimum Off‐Site Parking Requirements shall be increased from 2,850 Available Parking Spaces to 3,078 Available Parking Spaces within the 1/3 Mile Radius Area. (c) All parking spaces that constitute Available Parking Spaces within the Replacement Parking, or within new developments on Lot D or other parcel s (including shared spaces), shall count toward the Off‐Site Minimum Parking Requirements.
18.2.3 Termination of Google’s Replacement Parking Obligation. (a) Manager has notified City that Google has informed Manager that Google has designated Delmas West as the initial Replacement Parking. (b) Google’s obligation to provide the Replacement Parking (whether on Delmas West or on relocated Replacement Parking) will terminate upon the occurrence of either of the following, so long as City is then in co mpliance with the Minimum Off‐Site Parking Requirements:
(i) BART service to the Diridon Station Area is operational; or.
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(ii) There are at least 500 new (not existing as of December 19, 2018, or planned as part of Lot E) structured Available Parking Spaces within 1,200 feet of the South Entrance to the Arena; provided that if such 500 new spaces are shared spaces (i.e., not exclusively reserved for Arena customers) they must be designed such that all 500 vehicles can safely exit from the parking lot(s) onto the pub
lic streets within a period of 30
minutes.
18.2.4 Covenant re Use of Delmas Parking Lots.
(a) As required by the First Amendment to 2018 AMA, the Lot D Lease includes the following covenant (the “Delmas Operating Covenant”) from Google (as Landlord) for the benefit of Manager (as Tenant):
“As a material part of the consideration for Tenant’s agreement to enter into this Lease, Landlord hereby cov enants, promises and agrees to continue to keep all of the Delmas West Parking (not just the 228 Replacement Parking spaces) open for public parking, commencing on the Effective Date of this Lease and continuing until Landlord obtains a grading permit for its development project on Delmas West; provided, however, that notwithstanding the issuance of any such grading permit, Landlord shall, at a minimum, keep th e Delmas West Parking open until the earlier of the following:
a. City’s completion of its obligation to build‐out new parking lots containing at least 408 Available Parking Spaces (180 spaces required under the [Lot E] Settlement Agreement and 228 incremental spaces required under the First Amendment to the AMA) pursuant to the terms and conditions of Section 3 of the First Am endment; OR
b. Provided that the City is otherwise in compliance with its off‐site parking obligations under Section 19 of the Arena Management Agreement, when:
i. BART service to the Diridon Station area is operational; OR ii. Landlord has constructed at least 500 Available Parking Spaces as part of it s development project on Delmas East; provided, however, that if the 500 spaces are shared spaces (i.e., not exclusively reserved for Arena customers) they must be designed such that all 500 vehicles can safely exit from the parking structure onto the public streets within a period of 30 minutes.”
(b) City ack nowledges that (i) Manager’s consent to City’s sale of Lot D to Google was based on the promised fulfillment of City’s obligations under the First Amendment to 2018 AMA and Google’s obligations under the Lot D Lease, and more specifically the obligations related to maintaining an adequate supply of Available Parking Spa
ces for Arena Events; (ii) the fulfillment of such obligations is essential to ensuring that City will be able to meet the Minimum Off‐Site Parking Requirements; and (iii) the satisfaction of such Minimum Off‐Site Parking Requirements remains important to City’s goal of helping to ensure the continued
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vitality of the Arena, recognizing that the Arena is a major anchor for both downtown San Jose and the Diridon Station Area.
(c) In the context of the foregoing, City reaffirms that the Delmas Operating Covenant was required by the First Amendment to 2018 AMA, and agrees that as of the Effective Date of thi s Agreement the Delmas Operating Covenant remains in full force and effect and is binding on Google and any other party that may succeed to Google’s interest in Delmas West.
(i) To help ensure compliance with the Delmas Operating Covenant, City agrees that any permit it issues for a development project on De lmas West will include appropriate conditions of approval that reinforce the restrictions set forth above.
(ii) However, when interpreting the Delmas Operating Covenant, the number of parking spaces City is required to construct as referenced in subpart a. of the Delmas Operating Covenant shall be deemed to be reduced by th
e Parking Space Difference described in Section 19.4 below.
18.3 Use and Control of On‐Site Parking Facilities. Except as otherwise expressly provided in this Agreement, Manager exclusively shall (i) have the right and obligation to control, operate, and maintain the On‐Site Parking Facilities, (ii) be entitled to all Operating Revenues derived from the On‐Site Parking Facilities, and (iii) be obligated to pay all Operating Expenses related to the On‐ Site Parking Facilities.
18.3.1 Permitte d Uses. Manager shall be permitted to use the On‐Site Parking Facilities for all lawful purposes consistent with the use of the Arena as a major public assembly facility, subject to Manager’s obligation to provide parking as set forth below and compliance with all other applicable provisions of this Agreement. Such permitted uses may include temporary staging of event trailers and equipment, fan festivals, special me rchandise sales, press events, and other special events consistent with historical practices.
18.3.2 Capital Enhancements. Manager shall be permitted to construct or install, on or about the On‐Site Parking Facilities, such utility equipment, signage facilities, lighting, and other improvements as Manager may determine to be necessary or convenient for the operation of the Arena as a major public assembly facility, subject to approval of such improvements by City as required under Section 28 and compliance with all other applicabl
e provisions of this Agreement. Unless the improvements are required as a result of causes beyond Manager’s reasonable control (such as improvements required by Applicable Laws), any reduction in the number of parking spaces resulting from such improvements shall not increase the Minimum Off‐Site Parking Requirements as defined in Se
ction 19.1.1.
18.4 Parking for City Purposes. Personnel of City and other City Invitees (defined in Section 27.1.1) may park in the On‐Site Parking Facilities at no charge (including during Events) if and when their duties require their presence at the Arena. Such parking by City Invitees shall be subject to availability as determined by Manager, and shall be allowed only in locations designated by Manager.
18.4.1 Convention Ce nter Overflow. On non‐Event Days, but only to the extent available, City may reasonably use the On‐Site Parking Facilities for Convention Center overflow or other
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City parking, provided that such use shall not interfere with the San Jose Sharks or other Arena Events. Such use shall be at no cost to City, but City shall be responsible for any liability resulting from such use and for all costs of security and clean‐up.
18.5 Use for Publ ic Parking, Including Transit Users. Under the circumstances described below, Manager shall allow public parking in the On‐Site Parking Facilities, in locations designated by Manager, and for such charges as may be determined by Manager in its sole discretion.
18.5.1 Non‐Event Days. On non‐Event Days, public parking shall be allowed to the extent parking spaces are not needed for Arena Employees and other Manager Invitees, for City Invitees, and for set‐up or tear‐down activities in connection with Events.
18.5.2 Event Days. On Event Days, public parking shall be allowed subject to the same requirements as for non‐Event Days, with the additional requirement that Manager may restrict public parking as reasonably necessary to accommodate parking by Arena customers.
(a) Among other things, Manager may limit the number of spaces available for general public parking on Event Days and/or may require that public parkers vacate their parking spaces by a cer tain time on Event Days. (b) Vehicles parked in violation of restrictions or limitations imposed by Manager may be towed at the expense of the vehicle owner, assessed an overtime parking surcharge as determined by Manager, or denied any further privilege to park in On‐Site Parking Fa cilities.
18.5.3 Other Restrictions. Manager may temporarily close portions of the On‐Site Parking Facilities and/or the driveways and other areas of the Arena Facilities for any other uses or purposes permitted under this Agreement, including as reasonably needed for performing maintenance or repair work.
SECTION 19. OFF‐SITE PARKING.
19.1 Parking Spaces for Arena Customers. In addition to the number of parking spaces in the On‐Site Parking Facilities, a substantial number of parking spaces are needed for Arena customers in neighboring areas for the successful operation of the Arena.
19.1.1 Definitions. In this Agreement, the following terms shall have the meanings given below:
(a) “1/3 Mile Radius Area” or “1/3 Mile Ring” means the area within a radius of 1/3 mile from the South Entrance.
(b) “1/2 Mile Radius Area” means the area within a radius of 1/2 mile from the South Entrance, including the 1/3 Mile Radius Area.
(c) “1/2 Mile Ring” means the area within a radius of 1/2 mile from the South Entrance, excluding the 1/3 Mile Radius Area.
(d) “Accessible Parking Space” means a parking space that is intended for use by individuals with disabilities and meets the applicable design requirements of Applicable Construction Codes.
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(e) “Applicable Construction Codes” has the meaning given in Section 12.1.3(c), and includes Applicable Laws governing physical design or condition of construction or requiring access for individuals with disabilities.
(f) “Applicable Parking Standard” means a standard of design, operation, and maintenance that is equal to or exceeds the standard generally applicable to publi
c parking lots and garages permitted under Applicable Laws. (g) “Arena Employees” means persons engaged by Manager or Manager’s concessionaires, vendors, contractors, and licensees to work at the Arena before, during or after Events, including those who operate the On‐Site and Off‐Site Parking Facilities. “Arena Empl oyee Parking Spaces” means parking spaces located in Off‐Site Parking Facilities that are separately designated by Manager for parking by Arena Employees.
(h) “Available Parking Space” means a Qualified Parking Space that is unoccupied and available for Arena customers to park in upon their arrival on weekends an d after 6:30 p.m. on weekdays; provided, however, that for any parking garage constructed or placed in service following the Effective Date of this Agreement, the number of Available Parking Spaces in that new garage shall be limited to the number of cars that can enter within an approximate 60‐minute pe ak period prior to an Event and exit within an approximate 30‐minute peak period following an Event.
(i) “Delmas East” means the parcels currently designated as APN 259‐38‐128 and ‐ 142, located on the east side of Delmas Avenue south of W. Santa Clara Street in San Jose, Cali fornia, and depicted on Attachment No. 11‐1. As of the Effective Date, Delmas East is owned by Google.
(j) “Delmas West” means the parcels currently designated as APN 259‐38‐036, ‐039, ‐040, ‐041, ‐042, ‐109, ‐110, ‐145, ‐146, ‐147, and ‐148, located on the west side of Delmas Avenue south of W. Santa Clara Street, and also depicted on Attachment No. 11‐1. As of the Effective Date, Delmas East is owned G oogle. (k) “Delmas West Parking” means all parking spaces located on Delmas West, which as of the Effective Date is approximately 343 parking spaces. (l) “Event” means any sports, entertainment, educational, recreational, cultural, civic or other activity, gathering, performance, production, show or event conducted at the Arena for which admission is co ntrolled via a pass, ticket or other means.
(m) “Event Day” means a calendar day on which one or more Events occurs. (n) “First Amendment to 2018 AMA” means the amendment to the 2018 AMA dated December 4, 2018.
(o) “Interim Relief Period” has the meaning given in Se ction 19.1.5 below. (p) “Lot E” means the parcels designated as APN 259‐29‐001, ‐002, ‐003, ‐004, ‐005, ‐026, ‐027, ‐028, ‐029, and ‐091, located on the west side of N. Autumn Street north of Sharks Way (formerly W. Saint John Street) in San Jose, California, and
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depicted on Attachment No.11‐2. As of the Effective Date, Manager owns parcels ‐026 through ‐ 029, City owns parcels ‐ 001 through ‐ 003 and ‐ 091, and other parties own parcels ‐004 and ‐005.
(q) “Manager Parcels” means parcels ‐026 through ‐029 of Lot E, which are currently used for various Arena operations, including storage and staging. (r) “Milligan” means the parcels designated as APN 259‐29‐032, ‐ 033, ‐ 071, ‐ 072, and ‐102, and a portion of APN 259‐29‐101, located on the east side of N. Autumn Street north of Sharks Way, and also depicted on Attachment No. 11‐2. As of the Effective Date, Milligan is owned by City.
(s) “Minimum Off‐Site Parking Requirements” means the provision of at least 3,175 Available Parking Spaces within the 1/3 Mile Radius Area, and 6,350 Available Parking Spaces within the 1/2 Mile Radius Area (inclusive of the Available Parking Spaces within the 1/3 Mile Radius Area), subject to adjustments or modifications as provided in th
is Section 19 or in Section 20.
(t) “North Entrance” means the entrance to the Arena located on the north side of the Arena Building, closest to N. Montgomery Street.
(u) “Off‐Site Parking Facilities” means on‐street parking spaces and off‐street parking lots or garages owned by City or thir
d parties within close proximity to
the Arena and utilized by Arena customers or Arena Employees (excluding On‐ Site Parking Facilities).
(v) “On‐Site Parking Facilities” has the meaning given in Section 18.1. (w) “Qualified Parking Space” means a parking space that mee ts all of the following requirements, unless the Parties mutually agree otherwise as part of a Temporary Parking Agreement:
(i) The space is a marked space intended for use by passenger vehicles; (ii) The space is located in an Off‐Site Parking Facility in areas th at are lawfully entitled to be used for public parking;
(iii) The space is not chained off, blocked, reserved, or restricted; provided that (A) an Accessible Parking Space shall be a Qualified Parking Space unless it is otherwise reserved or restricted; and (B) a space that is normally reserved or restricted shall be a Qualified Parking Sp ace if there is reasonably clear signage notifying customers that such space is available for public parking;
(iv) The space is not designated for parking by Arena Employees; provided that for the purpose of counting the number of Qualified Parking Spaces, the total number of Arena Employee Parking Spaces in all Off‐Si te Parking Facilities shall not exceed 350 spaces for regular season hockey games and typical concerts or similar Events, or 400 spaces for playoff hockey games and other high attendance Events; and
(v) The space complies with Applicable Construction Codes and the Applicable Pa rking Standard.
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(x) “South Entrance” means the main entrance to the Arena located on Santa Clara Street.
(y) “Temporary Conditions” has the meaning given in Section 19.3.1 below. (z) “Temporary Parking Agreement” has the meaning given in Section 19.3.2.
19.1.2 City’s Obligations. Subject to the provisions of this Part Five, City shall tak e whatever actions may be necessary to ensure that Off‐Site Parking Facilities are maintained in such locations and in such quantities as shall be sufficient to satisfy the Minimum Off‐Site Parking Requirements in accordance with this Agreement. (a) If the number of Available Parking Spaces falls short of the Minimum Off‐Site Parking Requi
rements, City shall take whatever actions may be necessary to bring the number of Available Parking Spaces into compliance with this Agreement.
Such actions may include the acquisition of land and the construction of new parking facilities (in addition to City’s obligations under Section 19.4) or the improvement of streets ad jacent to parking facilities (to improve operational functionality by providing adequate ingress and egress to and from public streets), but less expensive alternatives may be used where appropriate consistent with the provisions of this Agreement.
(b) City shall use its best efforts to anticipate potential deficiencies in the supply of Available Parking Spa
ces based on planned Temporary Conditions, expected changes in parking supply or parking demand (including changes reflected in the Parking Forecast Report described below), and other conditions within the reasonable control or knowledge of City. In the event of any such anticipated deficiencies, City shall take action as reasonably appropriate to av oid the loss of Available Parking Spaces below the number needed to satisfy the Minimum Off‐ Site Parking Requirements.
(c) If any Temporary Conditions would result in a loss of Available Parking Spaces such that the Minimum Off‐Site Parking Requirements would not be met, City may employ temporary measu res as reasonably necessary to satisfy its parking obligations, subject to the provisions of a Temporary Parking Agreement as described in Section 19.3.2.
(d) City may replace or substitute particular parking spaces within each Radius Area from time to time as necessary, so long as the Available Parking Spaces within the 1/3 Mile Radi
us Area and the 1/2 Mile Radius Area each separately continue to satisfy the Minimum Off‐Site Parking Requirements as specified in this Agreement.
(e) The Minimum Off‐Site Parking Requirements may be modified pursuant to Sections 19.1.4, 19.4.3, or 20.2.2. Following any such modification, all references in this Ag
reement to “Minimum Off‐Site Parking Requirements” shall have the meaning specified in a written amendment or other written memorandum between the Parties.
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(f) City may own and operate any Off‐Site Parking Facilities, and may charge fees for Arena customers to park in those facilities as members of the general public. Such parking fees are not Taxes as defined in Section 10.2.1. (g) Manager may enter into separate agreements with the owners or operators of any Off‐Site Parking Fa
cilities (which may include City) pursuant to which Manager will operate such parking facilities either full time or on Event Days only.
Such separate agreements (including any agreements between City and Manager with respect to any City‐owned parking facilities) shall be on such terms and conditions as may be mutually agreed by the parties there to. Manager’s
operation or control over any such parking facilities shall not modify the Parties’ respective obligations under this Agreement.
19.1.3 Development of Parking Spaces on Lot E and Milligan. (a) The following is a summary of some key events that have occurred as of the Effective Date of this Agreement, which summary is only intended to provide historical context that is relevant to this Agreement.
(i) Pursuant to a Settlement Agreement and Release made by and between City, Sharks Sports & Entertainment LLC, and two Trammell Crow entities, dated December 1, 2016 (“Lot E Settlement Agreement”), City was obligated to use good faith efforts to acquire certain parcels within Lot E and construct at least 180 surface parki ng spaces on such parcels and on the Manager Parcels.
(ii) Such obligations were modified by the First Amendment to 2018 AMA, pursuant to which City was obligated to acquire all of the parcels within Lot E and Milligan (other than the Manager Parcels), and to construct a minimum of 408 new parking spaces thereon (equal to the 180 spaces required under the Lot E Settlement Agreement and the 228 spaces that will be eliminated once the Lot D Lease is terminated by Google). (iii) City has acquired all of the parcels comprising Milligan, as well as parcels 259‐29‐001, ‐002, ‐003 and ‐091 within Lot E. City has not yet acquired parcels ‐004 and ‐005 of Lot E.
(iv) City is currently in the process of constructing a surface parking lot on Milligan containing a total of approximately 302 passenger vehicle parking spaces, which parking lot is expected to be open for public parking by the end of October, 2025.
(b) The Parties now agree as follows:
(i) City’s obligations with respect to Lot E shall be extended and modified in accordance with Section 19.4 below.
(ii) City’s obligations with respect to construction of parking spaces on Milligan will be satisfied upon the final completion of the current construction project described above. Manager will manage and operate the completed Milligan parking lot as described in Section 19.5 below.
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(iii) Prior to construction of the Milligan parking lot, there were 138 vehicle parking spaces located on Milligan. If the Milligan parking lot, as constructed, contains 302 passenger vehicle parking spaces, then after completion of construction there will be a net increase of 164 new (incremental) parking spaces.
(iv) City shall remain obligated to construct a minimum of another 244 new (incremental) parking spaces on Lot E (408 ‐ 164 = 244), subject to any adjustment as provided in Section 19.4 or as otherwise mutually agreed by the Parties. Notwithstanding the preceding sentence, if the Parties mutually agree (with agreement not to be unreasonably withheld by either Party) on a Lot E parking lot design which includes fewer than 244 new parking spaces, City, upon completion of construction of the new Lot E parking lot in accordance with the approved design plans, shall be deemed to have fully satisfied its obligations with respect to construction of new (incremental) parking spaces on Lot E.
(v) For avoidance of doubt, any temporary parking spaces existing on Lot E prior to City’s Lot E construction shall not be considered existing spaces for purposes of determining the number of new spaces constructed by City on Lot E.
(c) The provisions of this Agreement shall supersede entirely the provisions of the Lot E Settlement Agreement and the First Amendment to 2018 AMA, which documents shall be terminated as of the Effective Date of this Agreement. It is the Parties’ mutual intention that any and all obligations relating to parking (including Lot E and Milligan) accruing from and after July 1, 2025 shall be governed exclusively by the provisions of this Agreement, including the Attachments hereto.
(d) All parking spaces that constitute Available Parking Spaces within the new parking lots constructed by City on Lot E and Milligan shall count toward the Minimum Off‐Site Parking Requirements.
19.1.4 Adjustments for Changes to On‐Site Parking Facilities. As of the Effective Date, the On‐ Site Parking Facilities provide a total of 1,650 parking spaces, including 228 spaces in Lot D.
(a) If the number of parking spaces in the On‐Site Parking Facilities is increased, the Minimum Off‐Site Parking Requirements for both the 1/3 Mile Radius Area and the 1/2 Mile Radius Area shall be reduced on a space for space basis. (b) Similarly, if the nu
mber of parking spaces in the On‐Site Parking Facilities is reduced as a result of causes beyond Manager’s reasonable control (for example, due to the loss of Lot D, or due to a Partial Taking as described in Se ction 34.3), the Minimum Off‐Site Parking Requirements for both the 1/3 Mile Radius Area and the 1/2 Mile Radius Area shall be increased on a space for space basis. (c) Except as required by Applicable Laws, eminent domain or other causes beyond the reasonable control of the Parties, and ex cept for the potential development of Lot D as contemplated by Section 18.2, no improvements or other Alterations
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shall be made to the On‐Site Parking Facilities unless such Alterations have been approved by both Parties and such Alterations are in compliance with all other applicable provisions of this Agreement.
19.1.5 Interim Reduction in Minimum Off‐Site Parking Requirements. Notwithstanding anything to the contrary in this Agreement, for an interim period of time described below (the “Interim Relief Period”), Manager shall grant City partial relief from the Minimum Off‐ Site Parking Requirements in accordance with the following terms and conditions:
(a) The Interim Relief Period shall commence on the Effective Date an d shall expire on December 31, 2026.
(b) During the Interim Relief Period, the number of Available Parking Spaces required to be provided by City within both the 1/3 Mile Radius Area and the 1/2 Mile Radius Area shall be reduced by 325. Therefore, subject to applicable adjustments or modifications as provided in this Agreeme nt, the number of Available Parking Spaces required within the 1/3 Mile Radius Area shall be reduced from 3,175 to 2,850, and the number of Available Parking Spaces required within the 1/2 Mile Radius Area shall be reduced from 6,350 to 6,025. (c) Upon the expiration of the In terim Relief Period, the full Minimum Off‐Site Parking Requirements shall resume without application of the relief provided by this Section 19.1.5.
(d) The tables below summarize the Minimum Off‐Site Parking Requirements during the Interim Relief Period and following the Interim Relief Period.
Requirements During
Interim Relief Period
July 1, 2025 Th rough
December 31, 2026
Required Number of
Off‐Site Available
Parking Spaces Prior to
Termination of
Lot D Lease
Required Number of
Off‐Site Available
Parking Spaces After
Termination of
Lot D Lease
Spaces within 1/3 Mile
Radius of South Entrance 2,850 3,078
Spaces within 1/2 Mile
Radius of South Entrance
(inclusive of 1/3 Mile
Radius)
6,025 6,253
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Requirements Following
Interim Relief Period
January 1, 2027
Through End of Term
Required Number of
Off‐Site Available
Parking Spaces Prior to
Termination of
Lot D Lease
Required Number of
Off‐Site Available
Parking Spaces After
Termination of
Lot D Lease
Spaces within 1/3 Mile
Radius of South Entrance 3,175 3,403
Spaces within 1/2 Mile
Radius of South Entrance
(inclusive of 1/3 Mile
Radius)
6,350 6,578
(e) Nothing herein shall modify the provisions of Section 19.3 (Temporary Conditions), Section 20.1 (Parking Supply and Forecast Reports), or Section 20.2 (Parking Utilization Report and Adjustment to Requirements). Both during and after the Interim Relief Period the Parties shall retain the ability to make further adjustments or modifications to the Mi nimum Off‐Site Parking Requirements in accordance with those provisions.
19.1.6 Exceptions to 1/3 Mile Radius Area for Approved Parking Facilities. (a) From time to time, City may submit a request to Manager to allow certain Available Parking Spaces outside of the 1/3 Mile Radius Area (but within 1/3 mile of the North Entrance to the Arena) be counted as if they were included within the 1/3 Mile Radius Area for purposes of satisfying the Minimum Off‐Site Parking Requirements. Manager agrees to consider each such request on a case‐by‐case basis, and shall not unreasonably withhold its consent thereto. (b) Factors that Manager may consider in determining whether to approve such a request may include the following, among others:
(i) The pedestrian experience along such route, including the condition and width of the sidewalks, lighting, the perception of safety, and aesthetic concerns;
(ii) The ease of ingress to and egress from such parking spaces and public streets for Arena Events (i.e., the operational functionality of the parking spaces, including the number of cars that can enter within an approximate 60‐minute peak period prior to an Arena Event and exit within an approximate 30‐minute peak period following an Event without undue queuing or congestion); provided that this factor will serve only to limit the number of Available Parking Spaces within a parking facility, and will not affect the number of Qualified Parking Spaces within that facility; (iii) How parking for Arena Events would be managed (for example, payment systems that allow for payment upon entry and free flow upon exit); (iv) Whether Manager would be allowed to operate the parking facility on Event Days (and brand the parking facility as SAP Center parking), and
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what the terms and conditions of such operating agreement would be; and
(v) The condition of the parking facility, which must be properly paved, striped, properly signed and have adequate lighting and drainage; and Notwithstanding the foregoing, parking spaces north of the Union Pacific Railroad right of way will not be approved under the above provisions and will not count as Available Parking Spaces within the 1/3 Mile Radius.
19.2 Parking Spaces for Arena Empl oyees.
19.2.1 Number of Spaces and Location. At no cost to City, Manager shall provide parking on Event Days for Arena Employees, in separately designated Off‐Site Parking Facilities, in accordance with the following:
(a) Manager may provide such number of Arena Employee Parking Spaces as Manager determines is reasonably required for Arena Employees. However, the number of Arena Employee Parking Spaces that may be excluded from the coun t of Qualified Parking Spaces will be limited to 350 spaces for regular season hockey games and typical concerts or similar Events, and 400 spaces for playoff hockey games and other high attendance Events.
(b) The location of the Arena Employee Parking Spaces shall be selected by Manager using Manager’s sole reasonable discretion, consi dering all relevant factors including the following:
(i) Whether such spaces comply with Applicable Construction Codes and the Applicable Parking Standard;
(ii) How long it takes to walk from the Arena Employee Parking Spaces to the Arena along the shortest route, considering that many Arena Employees are uncomfortable walking to and from parking tha t is more than 1/4 mile away from the Arena;
(iii) The pedestrian experience along such route, especially the condition and width of the sidewalks, lighting, and safety, considering that many Arena Employees walk back to their cars late at night;
(iv) The terms and conditions of the agreement with th e owner or operator of the parking facility, including the cost, length of the term, and the number of parking spaces that can be accommodated in one facility; and (c) In determining the location of Arena Employee Parking Spaces, Manager, to the extent reasonably feasible, shall e ndeavor to locate such spaces in a manner that does not impair City’s ability to satisfy the Minimum Off‐Site Parking Requirements.
(d) As of the Effective Date, Manager’s designated parking facility for Arena Employees is the Almaden Financial Plaza garage located at 350 W. Santa Clara Street. Manager shall endeavor to giv e City at least 30 days’ prior notice of any planned change in the location of parking for Arena Employees.
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(i) At the request of City, the Parties shall meet and confer to discuss any concerns City may have regarding the proposed change in location of the designated parking facility for Arena Employees.
(ii) Manager agrees to consider City’s concerns in good faith, but the decision regarding the location of parking for Ar ena Employees shall continue to be subject to Manager’s sole reasonable discretion.
19.2.2 Transit Opportunities for Arena Employees. Manager agrees to provide information to Arena Employees about various alternative modes of transportation that are available for their travel to and from the Arena, including public transit.
19.3 Temporary Conditions.
19.3.1 Defined Terms. In this Agreement, the term “Temporary Conditions” means any conditions (or series of conditions) that increase parking demand by non‐Arena users and/or cause a loss of Available Parking Spaces that Arena customers or Arena Employees otherwise could use. Temporary Conditions are further described as falling into one of the categories defined below:
(a) “Intermittent Conditions” are any conditions (or series of conditio ns) caused by events that occur periodically, likely for a period of many years, for which the customers or participants use the same Off‐Site Parking Facilities used by Arena customers, resulting in a reduction in the number of Available Parking Spaces.
Examples include events at Chase Center, Ora cle Park, PayPal Stadium, Levi’s Stadium, or Arena Green, as well as activities, uses or events that draw large crowds to the downtown area or that otherwise cause parking impacts on a recurring basis.
(b) “Long Term Temporary Conditions” are any conditions (or series of conditions) caused by construction pr ojects or other events that result in a reduction in the number of Available Parking Spaces for a cumulative period of time longer than 90 days but shorter than three years over the Term. Examples include High Speed Rail construction, Barack Obama Boulevard reconstruction, BART Phase II construction, and construction of other major development projects in the Diridon Statio
n Area, to the extent such projects in the aggregate do not result in a reduction in Available Parking Spaces for a period longer than three years. (c) “Short Term Temporary Conditions” are any conditions (or series of conditions) that result in a reduction in the num ber of Available Parking Spaces for a cumulative period of time of 90 days or less, excluding Intermittent Conditions.
Examples include short‐run performance events like Cirque du Soleil or Cavalia, or short‐term street improvement work.
19.3.2 Temporary Parking Agreements. If as a result of specific Te mporary Conditions, City is unable to comply with the Minimum Off‐Site Parking Requirements, City may employ temporary measures or utilize temporary parking facilities for the period of time reasonably necessary to address such Temporary Conditions, subject to the terms and conditions of a separate written agreement (“Temporary Parking Agreement”) mutually approved by the Parties. Su ch Temporary Parking Agreement shall not be deemed to be an amendment of this Agreement.
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(a) Upon request by either Party, the Parties shall meet and negotiate in good faith regarding a Temporary Parking Agreement that addresses any specifically identified Temporary Conditions and describes acceptable temporary measures that may be taken by City to fulfill the City’s parking obligations in lieu of satisfaction of the requirements descri bed in this Section 19. (b) If a Temporary Condition is reasonably foreseeable, City shall notify Manager of the expected Temporary Condition as far in advance of the anticipated commencement of the Temporary Condition as is reasonably possible, and shall propose a Temporary Parking Agreement (and take appropriate implementing actions) as early as ma y be necessary to ensure that there will be an uninterrupted supply of Available Parking Spaces as necessary to continuously satisfy City’s obligations under this Agreement.
(c) The terms and conditions of the Temporary Parking Agreement, including the nature, extent and length of the temporary measures, shall be reasonably deter
mined based on the nature, extent and length of the Temporary Conditions. (i) For example, the types of temporary measures that would be appropriate for an Intermittent Condition would not generally be appropriate for a Long Term Temporary Condition or even a Short Term Temporary Condition.
(ii) In the case of a Long Term Temporary C ondition, the Temporary Parking Agreement shall include a description of specific measures that City plans to take to ensure that the reduction in Available Parking Spaces caused by the Long Term Temporary Condition will be permanently remediated within a reasonable period of time.
(d) Any temporary measures employed by City shall be designed to preserve, to the greatest exte
nt reasonably possible, the overall access and parking ecosystem for the Arena existing as of the Effective Date of this Agreement. (e) Nothing in this Section 19.3 shall be deemed to relieve or excuse City of its obligations u nder Section 20.1.2 to prepare a Schedule of Parking Solutions in connection with a Parking Forecast Report as described in Section 20.1.2 below. (f) If the Parties fail to agree upon a Temporary Parking Agreement within 30 days after written request by one Party to the other, such matter may be submi tted to Mediation as a Disputed Matter pursuant to Section 39.
19.4 Development of Parking Spaces on Lot E.
19.4.1 Acquisition of Lot E Parcels. As a material part of the consideration for Manager’s execution of this Agreement, City agrees that it will take all necessary actions (including paying all sums of money) that may be necessary to acquire ownership or legal control over both parcel 259‐29‐004 and parcel 259‐29‐005 (“Parcels 4 and 5”) of Lot E as soon as reasonabl y possible, but in no event later than the date that Manager completes the refurbishment of Suite P41 (as described in Section 11.5.1(b) above), or by September 1, 2027, whichever is later (the “Lot E Acquisition Deadline”). Manager will give City written
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notice at least three (3) months prior to the estimated date of completion of such refurbishment.
(a) To the extent it has not already done so, City shall promptly obtain appraisals, make purchase or option offers, and diligently pursue completion of purchase or option negotiations with the owners of Parcels 4 and 5. If City is unable to successfully negotiate acquisition agreements for Parcels 4 and 5 through such efforts, City staff will promptly seek to obtain the City Council’s approval to use the power of eminent domain to complete such acquisitions, and to diligently prosecute such actions to completion. Whether by negotiated transfers or by eminent domain, the City must complete the acquisition of the applicable parcels by the Lot E Acquisition Deadline.
(i) Nothing herein shall be construed to mean that City will agree or has agreed to exercise its power of eminent domain, which shall remain in the sole discretion of the City Council and may be exercised only after the City has adopted a Resolution of Necessity and complied with all other legal requirements.
(b) City may not claim the right to a delay in the timely completion of its obligations hereunder based on any Force Majeure Event, unless the Force Majeure Event falls strictly within the definition in Section 37.1, in which case the length of the permitted delay shall be determined strictly in conformance with Section 37.2.
19.4.2 Extension of Time to Complete Constr
uction. City’s obligation to complete construction
of a surface parking facility on Lot E will be deferred until two (2) years from July 1 of any given year, provided that (i) on or before March 31 of that year, Manager shall have given City a written notice to proceed with the work (“Lot E Notice to Proceed”); (ii) such Lot E Notice to Proceed may be given only after Manager has deter mined that such parking is
reasonably necessary for City to be able to meet its Minimum Off‐Site Parking Requirements; and (iii) the earliest date that the Lot E Notice to Proceed may be delivered is March 31, 2028. Th e foregoing is further subject to the following:
(a) Once City receives Manager’s Lot E Notice to Proceed, it shall promptly submit to PG&E a request to disconnect its utility services, if necessary. If PG&E fails to disconnect its services within one (1) year from the date that City submi ts a disconnection request, then City’s deadline to complete construction of the parking lot shall be extended by the amount of time beyond one (1) year that PG&E takes to complete its disconnection.
(b) The Lot E Notice to Proceed will include notice as to whether Manager elects to excl
ude one or more of the Manager Parcels or portions thereof (the “Excluded Manager Parcels”) from the parking lot project pursuant to Section 19.4.3, which notice shall be irrevocable.
(c) Manager’s determination regarding the necessity of the parking spaces will be based on the factors described in the Parking For ecast Report under Section
20.1.2, including changes in the number of Available Parking Spaces that are predicted to occur during the ensuing time period based on anticipated new developments (including transit projects), the closure of parking facilities (including Lot D), the opening of new parking facilities within close proximity to
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the Arena, and other known or predicted conditions materially affecting parking demand and supply within the applicable area.
(d) Upon receiving the Lot E Notice to Proceed (with Manager’s notice as to any Excluded Manager Parcels), City shall promptly and diligently pursue all actions (including the payment of all sums of mon ey and the actions regarding PG&E described in subpart (a) above) that may be necessary to commence and complete design, permitting, contract procurement and construction of a surface parking facility on Lot E (as may be reduced by any Excluded Manager Parcels), containing the maximum number of parking spaces that can reasonably be constructed thereon.
(e) City shall improve the parking lot with a
sphalt paving, striping, lighting and other
features as mutually approved by City and Manager based on the Applicable Parking Standard, and shall provide access and circulation as reasonably approved by Manager. City shall also include Accessible Parking Spaces, relate d signage, and any other elements as required by Applicable Construction Codes. (f) Upon substantial completion of the Lot E parking lot, Manager will operate Lot E as an Off‐Site Parking Facility, with priority for Arena Event‐related parking, in accordance with an operating agreement as described in Section 19.5.
19.4.3 Excluded Manager Parcels. Manager shall have the right, in its sole discretion, to decide which of the Manager Parcels that it wants to exclude from the construction of the Lot E parking lot, subject to the following:
(a) At such time as Manager delivers the Lot E Notice to Proceed to City, Manager shall specify which, if any, of the Manager Parcels (but not the City‐owned parcels) that Manager wishes to exclude; provided that the Excluded Manager Parcels shall start with parcel 259‐29‐026 and add co ntiguous Manager Parcel(s) from there. Manager may also designate a portion of a Manager Parcel for exclusion, rather than a whole Manager Parcel, provided that the excluded portion is contiguous to other Excluded Manager Parcel(s). (b) City shall remain obligated to construct the maximum number of parking spaces that can reasonably be constructed on the reduced size/reconfigured Lot E.
However, the difference between (i) the number of parking spaces that could have been constructed on all of the Lot E parcels and (ii) the number of parking spaces that can be constructe
d without the Excluded Manager Parcels (the
“Parking Space Difference”) shall be deducted from the Minimum Off‐Site Parking Requirements, effective as of the commencement of construction of the Lot E parking lot improvements.
For example, if it is determined that 267 spaces could have been constructed on all of the Lot E parcels, but based on the Excluded Manager Parcels only 187 spaces can be constructed, the Parking Spa ce Difference is 80. Thus, the Minimum Off‐Site Parking Requirement for the 1/3 Mile Radius following the terminaƟon of the Lot D Lease would be reduced from 3,403 to 3,323. (c) CompleƟon of surface parking on Lot E in conformance with the foregoing requirements shall be deemed to saƟsfy City’s obligaƟon with respect to the total
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number of new parking spaces it is required to provide as described in SecƟon
19.1.3 above.
19.4.4 Ground Lease for Included Manager Parcels. At such time as Manager delivers the Lot E Notice to Proceed, Manager shall also deliver to City a proposed form of ground lease for the Manager Parcels (or portions thereof) that will be included in the Lot E surface parking lot (the “Included Manager Parcels”). Unless otherwise mutually agreed by the Parties, the terms of the ground lease will include the follow ing provisions:
(a) Rent for the Included Manager Parcels will be $1.00 per month. (b) The term of the ground lease will extend for the term of this Agreement (and will terminate if this Agreement terminates); provided, however, that either Party may terminate the ground lease upon thirty (30) days’ notice to the other Party if Lot E ceases to be used as a surface lot for pub lic parking. (c) Prior to City’s construction of the surface parking lot, Manager will demolish any structures on the Included Manager Parcels, and clear the Included Manager Parcels at Manager’s cost.
(d) Upon the termination of the ground lease, City shall have the right to continue to lease the Included Manager Parcels for the then fair market rental rate (determined by appraisal), but only for so long as Lot E is used as a surface lot for public parking.
(e) If Lot E ceases to be used as a surface lot for public parking (either because of the termination of the ground lease or for any other reason expressly permitted in this Agreement), then each Party shall retain all rights, title and interest in and to their respective parcels without th e burden of the ground lease or any other requirements of this Agreement. However, such rights, title and interest will be subject to the provisions of any executed formal agreement between the Parties regarding a future Arena location.
19.4.5 Future Arena Location Agreement. If City and Manager execute a formal agreement with respect to a future Arena location, the terms of such agreement will control with respect to City’s obligation to construct surface parking on Lot E and shall supersede any inconsistent provisions of this Agreement.
19.5 Operation of New Parking Spaces by Manager.
19.5.1 Operating Agreement with Manager. Pursuant to a separate operatingparking management agreement, Manager shall operate each of the new parking lots constructed by City on Lot E and Milligan as an Off‐Site Parking Facility. (a) As soon as practicable following the Effective Date of this Agreement, the Parties will work together in good faith to agree on a mutually acceptable form of operatingparking management agreement (which will be subject to approval by the City Manager on behalf of City).
(b) Operating revenues will first be applied to pay for Manager’s operating expenses for the parking lot, including a reasonable fee for management and share of overhead. Manager shall submit operating budget to City annually for review and
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approval, which approval will not be unreasonably withheld. The net revenues from such operation shall be paid to City.
19.5.2 Priority for Arena Parking. Each of the new parking lots will be used exclusively for parking, with priority for Arena Event‐related parking. (a) Notwithstanding the foregoing, at the request of either Party, the Milligan parking or Lot E parking lot may be used for other activations that do not conflict with Arena Events, subject to the reasonable approval of the other Party. (b) Any Qualified Parking Spa ces in either Lot E or Milligan that are applied to other uses on a permanent basis at the request of Manager (with City’s approval) shall be considered a Parking Space Difference that will reduce the Minimum Off‐Site Parking Requirements on a one for one basis.
19.6 City Expenditures. City shall be responsible to ma ke all expenditures necessary to fulfill City’s parking obligations set forth in this Agreement. City shall have no obligation to provide, obtain or pay for the costs of additional parking to serve the Arena or incur any other obligation to provide, obtain or pay for the costs of parking to serve the Arena or incur other capital costs related to parking beyo
nd the expenditures necessary to fulfill the City’s obligations set forth in this Agreement.
SECTION 20. PARKING SUPPLY AND UTILIZATION REPORTING; ADJUSTMENTS TO REQUIREMENTS.
20.1 Parking Supply and Forecast Reports.
20.1.1 Parking Supply Report. On or about the Effective Date, City and Manager shall jointly prepare a written report of the number of Qualified Parking Spaces and Available Parking Spaces located within the 1/3 Mile Ring and the 1/2 Mile Ring. Such report (“Parking Supply Report”) shall be reviewed by the Parties on an annual basis. Upon the request of either Party, but not more often than once each Term Year, the Parties shall wor k together in good faith to prepare a new Parking Supply Report to reflect then‐current counts for the 1/3 Mile Ring (and for the 1/2 Mile Ring, if requested). (a) Unless the Parties mutually agree otherwise, the methodology for determining the nu
mber of parking spaces reported in the Parking Supply Report shall be as follows:
(i) For each separate on‐street and off‐street parking area within the 1/3 Mile Ring (and the 1/2 Mile Ring, if applicable), the Parties will count and record the total number of Qualified Parking Spaces, without reference to the nu
mber of spaces that are unoccupied at 6:30 pm. These numbers will constitute the inventory of Qualified Parking Spaces presented in the Parking Supply Report.
(ii) Also, for each separate on‐street and off‐street parking area within the 1/3 Mile Ring (and the 1/2 Mile Rin g, if applicable), the Parties will count and record the number of Qualified Parking Spaces that are unoccupied at 6:30 p.m. on three to six representative weekday evenings when there are no events or Intermittent Conditions at the Arena. The data for each evening will be totaled and the totals will be averaged. Su ch average will
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constitute the number of Available Parking Spaces presented in the Parking Supply Report.
(b) Unless the Parties mutually agree otherwise, where a parking area is located partly in the 1/3 Mile Ring and partly in the 1/2 Mile Ring, each such portion of the parking area shall be separately listed and separately c ounted. (c) Unless the Parties mutually agree otherwise, Manager shall take primary responsibility for completing the Parking Supply Report, but shall use reasonable good faith efforts to schedule all counting work at times convenient to City, and shall provide City the opportunity to participate in and/or monitor the counting work performed by Manager.
(d) Manager shall deliver a copy of it to City within 30 days following completion of the counting work.
(i) If City requests any modifications to the Report, the Parties shall work together in good faith to make modifications that are acceptable to both Parties.
(ii) If City does not request any chang es to the Parking Supply Report within 60 days after receipt from Manager, City shall be deemed to have accepted the Report as presented, and the Parties shall be deemed to have stipulated to the accuracy of the Report, absent manifest error.
20.1.2 Parking Forecast Report. Upon the request of either Party, but not more often than once each Term Year, the Parties shall work together in good faith to jointly prepare a written forecast report (“Parking Forecast Report”) for the 1/3 Mile Ring (and the 1/2 Mile Ring, if requested). Such Report shall include a description of the changes in the number of Available Parking Spaces that are pr edicted to occur within the applicable area(s) during the ensuing five‐year period based on anticipated new developments, modifications to existing developments, the opening or closure of parking facilities, and other known or predicted conditions affecting parking demand and supply within the 1/3 Mile Ring (and the 1/2 Mile Ring, if appli cable).
(a) City shall provide Manager with information known to City regarding any planned or proposed new developments, modifications, or other relevant conditions that may affect the number of Available Parking Spaces during such five year period. (b) Unless the Parties mutually agree otherwise, City shall take primary responsibility for completi
ng the Parking Forecast Report, but shall confer with Manager in good faith regarding the applicable information to be included in the Report. (c) City shall deliver a copy of the Parking Forecast Report to Manager within 30 days following receipt of a request from Manager.
(i) If Manager requests any modifications to the Repo rt, the Parties shall work together in good faith to make modifications that are acceptable to both Parties.
(ii) If Manager does not request any changes to the Parking Forecast Report within 60 days after receipt from Manager, Manager shall be deemed to
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have accepted the Report as presented, and the Parties shall be deemed to have stipulated to the accuracy of the Report, absent manifest error. (d) If the Parking Forecast Report indicates that there may be shortages in the number of Available Parking Spaces during the ensuing five year period, City shall prepare and deliver to Ma
nager, within 90 days following its completion of the
Parking Forecast Report, a schedule of several alternative solutions (“Schedule of Parking Solutions”) that City would be able to pursue (subject to appropriate action by the City Council) in order to ensure that City will continue to mee t its parking obligations under this Agreement.
(i) If Manager requests any modifications to the Schedule of Parking Solutions, the Parties shall work together in good faith to make modifications that are acceptable to both Parties.
(ii) If Manager does not request any changes to the Schedule of Parking Solutions within 60 days after re ceipt from City, Manager shall be deemed to have accepted the Schedule of Parking Solutions as presented, and the Parties shall be deemed to have stipulated to the reasonableness of the Schedule of Parking Solutions.
20.2 Parking Utilization Report and Adjustments to Requirements.
20.2.1 Parking Utilization Report. Upon the request of either Party, but not more often than once every three Term Years, the Parties shall work together in good faith to jointly prepare a written report (“Parking Utilization Report”) to reflect the then‐current utilization, during San Jose Sharks hockey games, of Available Parking Spaces in each of the parking areas within the 1/3 Mile Ring (and th e 1/2 Mile Ring, if requested). Unless the Parties mutually agree otherwise, the methodology for determining such utilization shall be as follows:
(a) The Parties shall survey utilization of Available Parking Spaces during three San Jose Sharks games when no Short Term Temporary Conditions or Intermittent Conditions would skew the results (such as a special event on the same day), as mutually agreed by th
e Parties. Each survey shall be performed during the period of time commencing approximately 15 minutes before the start of the game and ending approximately 15 minutes after the start of the game. (b) For each separate Off‐Site Parking Facility (includi ng on‐street and off‐street parking areas), the Parties shall separately record the following information to be included in the Parking Utilization Report:
(i) Total number of Available Parking Spaces (which shall be based on the current Parking Supply Report as described above); and
(ii) Total nu mber of Available Parking Spaces occupied at the time of the survey (i.e., at approximately the same time as the start of the game) for each of the three nights, which totals shall be averaged. (c) The average percent of Available Parking Spaces occupied shall be deemed to be the utili zation rate (the “Utilization Rate”). The Parking Utilization Report shall list the Utilization Rate for each separate parking area within the 1/3 Mile Ring
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(and the 1/2 Mile Ring, if applicable) as well as for all parking areas within the 1/3 Mile Ring (and the 1/2 Mile Ring, if applicable).
(d) Unless the Parties mutually agree otherwise, where a parking area is located partly in the 1/3 Mile Ring and partly in the 1/2 Mile Ring, the Utilization Rat e shall be determined separately for each such portion of the parking area. (e) Unless the Parties mutually agree otherwise, Manager shall take primary responsibility for completing the Parking Utilization Report, but shall use reasonable good faith efforts to schedule all counting work at times convenient to City, and sh all provide City the opportunity to participate in and/or monitor the counting work performed by Manager.
(f) Manager shall deliver a copy of the Parking Utilization Report to City within 30 days following completion of the counting work.
(i) If City requests any modifications to the Report, the Parties shall work togeth
er in good faith to make modifications that are acceptable to both Parties.
(ii) If City does not request any changes to the Parking Utilization Report within 60 days after receipt from Manager, City shall be deemed to have accepted the Report as presented, and the Parties shall be deemed to have stipula
ted to the accuracy of the Report, absent manifest error.
20.2.2 Adjustments Based on Change in Utilization Rates. City and Manager agree that over time the parking needs of Arena customers may change, and that a significant, sustained change in the Utilization Rates over at least three Term Years may justify adjustments to the Minimum Off‐Site Parking Requirements. Unless the Parties mutually agree otherwise, the following procedures shall be used to determine whether any such adjustments should be ma
de:
(a) If any Parking Utilization Report indicates that the Utilization Rate for the Off‐Site Parking Facilities within the 1/3 Mile Ring (or the 1/2 Mile Ring, if applicable) is less than 75% of the Minimum Off‐Site Parking Requirements for such area, then upon the request of either Party, City an d Manager shall make reasonable good faith efforts to determine whether a decrease in the Minimum Off‐Site Parking Requirements is warranted and could be made without negatively impacting Arena operations.
(b) If any Parking Utilization Report indicates that the Utilization Rate for the Off‐Site Parking Fa
cilities within the 1/3 Mile Ring (or the 1/2 Mile Ring, if applicable) is more than 95% of the Minimum Off‐Site Parking Requirements for such area, then upon the request of either Party, City and Manager shall make reasonable good faith efforts to determine whether an increase in the Minimum Off‐Site Parking Requi
rements is warranted.
(c) In making the foregoing determination, the Parties shall take into account all relevant information regarding changes that have occurred or are anticipated to occur, such as the following:
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(i) Changes in average attendance and peak attendance for the San Jose Sharks games (to ensure sufficient Available Parking Spaces during times when the San Jose Sharks are expected to draw capacity crowds); (ii) Changes in the physical features and operational efficiencies of Off‐Site Parking Facilities, with consideration given to factors such as dista nce to the Arena; visibility and accessibility; ingress and egress times; quality of the improvements; perceived safety in the parking area as well as the pedestrian pathway between the parking area and the Arena, and other qualitative factors;
(iii) Decreases in parking demand due to increased use by Arena customers of other mo
des of transportation including public transit, ride sharing services, bicycles, or walking;
(iv) Increases in parking demand due to parking by construction workers, transit riders departing from Diridon Station, nearby development, or other non‐Arena sources;
(v) Decreases in the overall parking supply in the vicinity of the Arena, due to constructi
on projects, the conversion of exclusive use surface parking lots to shared use parking structures, and other factors; (vi) Changes in the location and dispersion of parking facilities serving Arena customers, as well as ingress and egress times to and from such facilities over public streets; and
(vii) Long term conditions such as major construction projects, sus tained
economic recessions, Force Majeure Events such as earthquakes or pandemics, or other situations that create anomalies in historical parking practices.
(d) If City and Manager both agree to make an adjustment in the Minimum Off‐Site Parking Requirements, they shall confirm their agreement in a written amendment to this Ag
reement signed by both Parties. The new Minimum Off‐
Site Parking Requirements shall remain in effect until any subsequent adjustments are made following the procedures described above. (e) Nothing herein shall be construed as obligating the Parties to agree to any adjustment to the Minimum Off‐Site Parking Require
ments. If the Parties do not
mutually agree upon an adjustment to the Minimum Off‐Site Parking Requirements, the then‐applicable Minimum Off‐Site Parking Requirements shall remain in effect, and there shall be no amendment to this Agreement.
SECTION 21. COORDINATION AND COO PERATION.
21.1 Definitions and Context.
21.1.1 Definitions. In this Agreement, the following terms shall have the meanings given below:
(a) “BART” or “BART Project” or “BART Phase II” means and refers to the Bay Area Rapid Transit public transportation project being implemented by VTA to bring
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BART service to the Diridon Area, pursuant to which a new BART station would be constructed immediately south of the Arena.
(b) “Diridon Area” or “Diridon Station Area” means the geographic area covered by the DSAP.
(c) “Diridon Station” means the central passenger rail depot and transit hub located along the railroad tracks at 65 Cahill Street in San Jose. (d) “DSAP” or “Diridon Plan” means the Diridon Station Area Plan adopted by the City Council on June 24, 2014, and amended by resolution of the City Council on May 25, 2021. The DSAP is a component of the City’s General Plan. (e) “DTW” or “Downtown West” means Google’s mixed‐use development project located on approximately 80 acres within the Diridon Area and approved by the City Council on May 25, 2021.
(f) “DTW Settlement Agreement” means the Settlement and Release Agreement dated May 25, 2021, pursuant to which the Parties and Google resolved disputes that had arisen between them in connection with the DTW project approvals and the DSAP amendment approvals. A copy of the DTW Settlement Agreement is attached hereto as Attachment No. 16 and incorporated herein by reference. For purposes of this Agreement, all references in the DTW Settlement Agreement to “SSE” shall mean and refer to Manager.
(g) “High Speed Rail” means the project being proposed by the California High Speed Rail Authority to construct a high speed train system that would include 21 miles of track through San Jose and use the Diridon Station as its passenger depot. (h) “Side Letter to 2018 AMA” means the Side Letter Regarding Future Discussions dated August 15, 2018, and executed concurrently with the 2018 AMA. (i) “VTA” means the Santa Clara Valley Transportation Authority.
21.1.2 Mutual Commitment.
(a) The Side Letter to 2018 AMA contains a general statement regarding the Parties’ mutual commitment concerning to the evolution of the parking and transportation “ecosystem” in the Diridon Station Area, as follows:
“OUR MUTUAL COMMITMENT
Following the execution of the AMA, City and Manager will continue to meet in good faith to discuss long‐term, integrated, and shared parking solutions for the benefit of the community and the key stakeholders in the Diridon Station Area, includi
ng transportation agencies and residential and corporate developers.
These meetings will include discussions addressing (i) the City’s desire to encourage construction and development projects in the Diridon Station Area; (ii) construction management plans, including mitigation of construction impacts; (iii) changes that may result from the new development; (iv) Manager’s access and parki
ng requirements in coordination with the transportation and development projects surrounding the SAP Center; and (v) alternative ways to
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achieve solutions for Manager’s parking operations as part of the development of these projects.
Such discussions will recognize one of the primary objectives of the Diridon Station Area Plan, which is to “ensure the continued vitality of the San Jose Arena, recognizing that the Arena is a major anchor for both Downtown Sa n Jose and the Diridon Station Area, and that sufficient parking and efficient access for Arena customers, consistent with the provisions of the Arena Management Agreement, are critical for the Arena’s on‐going success.”
Without limiting the foregoing, Manager is open to the future possibility of relocating, reconfiguring, restructuring or otherwise reorg anizing the parking facilities that serve the SAP Center, provided that any such reorganization is accomplished through a comprehensive plan that, on a holistic basis, preserves the access for SAP Center patrons and the overall quality of the parking ecosystem, including the operational and revenue‐generating aspects of the parking as des
cribed in the AMA.”
(b) City and Manager reaffirm such mutual commitment, and agree that the following provisions of this Section 21 include implementation measures and strategies designed to fulfill such commitment and to satisfy other obligations of the Parties under this Agreement.
(c) City and Manager also recognize that (i) one or more of the transit projects or development projects that have been planned to date may not proceed as anticipated, or may be substantially modified from what has been anticipated, and (ii) it is extremely difficult to predict what impact these projects may have on the operations of the Arena and the ingress to and from the Arena and the timing of that impact. Therefore, the Parties must be prepared to adapt the following implementation measures and strategies based on changing circumstances, keeping in mind that the overarching goal, as stated above, is to “ensure the continued vitality of the San Jose Arena.”
21.2 Parking Matters. City shall continuously monitor and evaluate development within the 1/2 Mile Radius, to help ensure that its parking obligations under this Agreement will continue to be met throughout the entire Term. Among other things, City shall have the following obligations:
21.2.1 Significant Land Use Decisions. City shall coordinate with Manager regarding significant land use and development decisions within the 1/2 Mile Radius, to ensure that the required number of Available Parking Spaces is maintained. Such coordination obligations shall include, but not be limited to, the following measures:
(a) City shall refer to Manager all development proposals on parcels within approximately 1/3 of a mile of the Arena that have off‐street public parking facilities, and are in excess of 25,000 square feet. Referrals shall include the cover letter, plan set, and other relevant materials the applicant provides as part of the project submittal. Referrals shall also include notification of preliminary review applications, initial studies, and environmental impact reports (including draft and final EIR’s, amendments and addenda) .
Staff shall provide comments received in a timely manner from Manager to the applicant and consider them in formulating initial comments the City may
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provide on the proposed project.
(b) For development proposals on parcels within approximately 1/3 of a mile of the Arena that have off‐street public parking facilities, and are in excess of 100,000 square feet of commercial space or in excess of 50,000 square feet of stand‐ alone retail/restaurant projects, City shall require the applicant to conduct a parking analysis for the project. These projects would be required to analyze and identify the projected parking demand, demand management strategies, and the parking supply to be provided by the project. The analysis would identify the impacts of the project on the existing parking supply within the Diridon Station Area, and suggest ways to mitigate the impact if it is deemed significant. The analysis would also include an assessment of spaces impacted or needed during construction.
(c) For the BART, High Speed Rail and/or Diridon Station redevelopment transit projects, the City shall request that the lead agency conduct a project parking analysis. The analysis should include a projection of parking demand, demand management strategies, recommended parking supply solutions, and potential impacts on th e existing parking supply within the Diridon Station Area, including suggested ways to mitigate the impact if it is deemed significant. The results of any parking analysis shall be provided to Manager for review and comment.
City shall consider Manager's timely feedback in formulating comments that City forwards to the lead agency as part of th e project development and approval process.
21.2.2 Shared Parking for Non‐Residential Development. For non‐residential development that would result in the substantial loss of Available Parking Spaces, and in compliance with Municipal Code Section 20.90.800 (Parking Minimums), City will strive to include shared parking as a condition of development if necessary to mitigate the loss of parking. The shared parking condition would require that the development’s parking facilities be available for the general public, with or without fees, at times when the parking facilities within the development are not being fully used by the development.
21.2.3 DTW Vertical Improvements Conformance Review for Replacement Parking Facilities. (a) Paragraph 2.d of the DTW Settlement Agreement recites that the DTW “Conformance Review Implementation Guide” has been revised to include the following provision:
“At least seven (7) business days before submitting a Conformance Review Application for Vertical Improvements (schematic level of design) that includes replacement parking facilities proposed by the project sponsor to be made available to [Manager], the project sponsor shall provide written notice to up to three [Manager] representatives, as identified by [Manager], of the anticipated Conformance Review Application. If within seven (7) business days of receiving such notice, [Manager] requests a meet and confer meeting (“Meet and Confer”) with the project sponsor and the City regarding the Conformance Review Application, then the project sponsor shall provide [Manager] with a copy of the project sponsor’s Conformance Review Application concurrent with its application submittal to the City.
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The project sponsor and City shall use commercially reasonable efforts to schedule and conduct the Meet and Confer with [Manager] within seven (7) business days following Conformance Review Application submittal. At the Meet and Confer, [Manager] may provide the project sponsor with comments on the applicable Conformance Review Application, which comments shall be (1) limited to the design and function of those parking facilities proposed to be publicly accessible, including for [Manager] and its patrons; and (2) focused on industry best practices relating to the design and function of such parking facilities. The City may in its discretion consider comments provided by [Manager] during the Meet and Confer as part of the City’s review of the Conformance Review Application pursuant to the [applicable] timelines …”
(b) City shall adhere to the foregoing procedures, and shall use reasonable efforts to ensure that Google (or a successor project sponsor) has timely provided Manager with the notices described above. In addition, City acknowledges that the reference to “industry best practices” above is to be interpreted in the context of the discussions with Manager regarding the operational functionality of the parking facilities for Arena Events, taking into consideration the Parking Design Criteria in Section 21.2.5 below.
21.2.4 Enforcement of DTW Parking Requirements. Attachment 1 to the DTW Settlement Agreement consists of a redlined version of Exhibit K to the Downtown West Development Agreement (the “Downtown West Parking Requirements”), which reflects amendments required by the DTW Settlement Agreement.
(a) City agrees to perform its obligations under the Downtown West Parking Requirements, and to enforce Google’s obligations thereunder, in accordance with the terms and conditions thereof.
(b) Notwithstanding the foregoing, City agrees as follows with respect to the interpretation of City’s parking obligations under this Agreement:
(i) City acknowledges and agrees that nothing in the Downtown West Parking Requirements modifies the obligations of the Parties under this Agreement.
(ii) Without limiting the foregoing, as between City and Manager, the definitions set forth in this Agreement shall control over any inconsistent definitions in the Downtown West Parking Requirements.
(iii) Further, any provision of the Downtown West Parking Requirements that gives City (through the Director of PBCE) the “sole discretion” to reduce the “Required Parking Ratio” for the Downtown West project shall not affect the Minimum Off‐Site Parking Requirements under this Agreement.
21.2.5 Parking Design Criteria. In furtherance of City’s obligation to provide Manager with an opportunity to review and comment on the design of new parking garages or other structured parking facilities that could include Qualified Parking Spaces, Manager has developed a set of design criteria (“Parking Design Criteria”) intended to maximize the operational functionality, safety and desirability of parking garages for Arena Events. City
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agrees it will consider these Parking Design Criteria in evaluating any proposed project that could provide Qualified Parking Spaces. The Parking Design Criteria are as follows:
(a) Use an approximately 8.5’ x 17’ standard stall size, with an approximately 26’ wide drive aisle, to achieve a minimum 60’ bay width for double loaded parking and 90‐degree circulation. If one‐way circulation is provided, use in dustry standard bay width for selected angle of parking. Align parking bays in the predominate direction of pedestrian travel.
(b) Provide safe and efficient traffic operation both within the garage and at the entrances and exits during both the arrival and departure peak hours for SAP Center Events. For the arrival peak period, ensure that th ere is adequate queueing space and that entering traffic is not disrupted or delayed by vehicles exiting during this period. For the departure peak period, ensure that motorists can exit within an approximate 30 minute window after the end of an Event. All the above operational provisions should be dem onstrated through calculations using industry standard methodologies. Design facilities for pay upon entry and free flow for exit.
(c) If the garage has a capacity of more than 500 spaces the ability to connect to more than one street or have two different entrance/exit locations should be considered if at all possible
, in order to provide redundancy.
(d) The number of lanes at a driveway entry/exit should take into consideration the movements on the street it connects to. Lanes into and out of a facility should provide access to more than one path to parking stalls upon entry to facilitate redunda
ncy of flow. Preferably drive entry and exits shall be part of an intersection with the street to enhance visibility and the ability to control traffic. (e) Exits should be designed with appropriate sight distance triangles that allow drivers approaching the exit to see pedestrians on the sidewalk an d vehicles on the street. Entries and exits should be designed to minimize curvatures, merges and weaving, all of which reduce the capacity of traffic flow. The width of entry and exit lanes should not be constrained to where flow will be reduced. Visibility to other vehicles and to the path of trav el shall be prioritized. (f) Strive to provide ramping systems that efficiently accommodate peak traffic flows, including no parking on ramps and minimizing the number of turns and parked vehicles that a car must pass by to get to other floors. Ramps connecting a maximum of 3 levels in one path should be utilized where f easible to best accommodate high peak flows. Redundant ramps to facilitate flow should be considered in any facility that exceeds 500 spaces. Ramps that exit to the street should be designed per the City of San Jose Department of Public Works typical driveway profiles for below grade parki ng at a minimum. Internal ramps should be designed with an 18% maximum slope with 9‐10% blends at the top and bottom.
(g) Provide high level of safety and security, including use of security cameras. For a stand alone structure, utilize glass back elevators and open stairs for safety.
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(h) Utilize materials that meet a standard for high quality façade, high durability and ease of maintenance.
(i) Provide high quality interior ambience, e.g. enhanced lighting, painted interiors, and satisfactory floor to floor height.
(j) Provide restrooms, which are open and monitored during Events. (k) Provide number and size of elevators and stairs to eff ectively accommodate peak pedestrian flows. Vehicles coming to an Event typically have an average of 3 persons per vehicle.
(l) Locate pedestrian entries, lobbies, elevators and stairs to conveniently accommodate pedestrian movements between parking facility and SAP Center, and avoid conflicts between major pedestrian movements and major vehicle movemen
ts at intersections and driveways.
(m) Use long span design if parking is in a stand‐alone parking garage. If under a building and using a short span design add 1’‐0” to stall width adjacent to columns to make it easier for cars to pull in and out, speeding up the flow. (n) Use mome
nt frames if parking is in a stand‐alone parking garage. Avoid moment frame columns at locations where cars need to turn. If under a building and shear walls are used, avoid walls within 30 ft. of the end of drive aisle or where it would block a driver
’s view at a turn. Avoid columns that impact turning maneuvers.
21.3 Transportation Matters. City shall coordinate with Manager regarding transportation projects, transportation plans, and other transportation matters in the vicinity of the Diridon Station Area or that may otherwise affect ingress to and egress from the Arena, including as follows:
21.3.1 Transportation Projects. For transportation projects such as BART and High Speed Rail, City will request that the lead agency conduct a transportation analysis that evaluates potential adverse impacts on traffic and parking in the vicinity of the Diridon Station Area, with the objective of ensuring that appropriate mitigation measures are included to protect the Arena’s operations from such adverse impacts. City shall also consider Manager’s timely feedback in formulating comments that City forwards to the lead agency as part of the project development and approval process.
21.3.2 TPMP’s. City and Manager shall coordinate regarding the Transportation and Parking Management Plan for the Arena as well as TPMP’s for the Arena Green, BART, High Speed Rail, and other major development projects, all as set forth in Section 23 below.
21.3.3 Streets and Intersections. City and Manager shall also coordinate regarding any material changes to the design, configuration or operation of the major streets and intersections in the vicinity of the Arena to the extent that they may have a direct impact on the safe and efficient flow of vehicular, bicycle, and pedestrian traffic to and from the Arena, including Barack Obama Boulevard and the intersection at Barack Obama Boulevard and Park Avenue.
(a) City shall give Manager advance notice of any such material changes, including copies of relevant plans and specifications, and shall meet with Manager in advance of any work in order to discuss Manager’s input and suggestions.
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(b) The Parties shall work together in good faith with the goal of achieving the best overall function of the streets and intersections for the benefit of both the Arena and all other development in the Diridon Area, taking into account the Transportation Objectives described in Section 21.3.6.
21.3.4 Alteration of Sidewalks.
(a) City shall not allow any Alteration of any sidewalks along Arena frontages at W.
Santa Clara Street or Barack Obama Boulevard without Manager’s consent that such Alteration does not materially negatively affect operations of the Arena (such as safety, security, crowd control, etc.). Manager’s consent shall not be unreasonably withheld, conditioned or delayed.
(b) Nothing herein shall affect City’s obligations under other applicable provisions of this Agreement concerning implementation of Alterations work, such as providing plans to Manager for Manager’s comments, coordinating with Manager regarding the work schedule, and complying with Governing Standards.
21.3.5 DTW Settlement Agreement Provisions re Configuration of Streets. Without limiting the foregoing, based on the terms of the DTW Settlement Agreement and the provisions of this Agreement, City confirms the following matters with respect to the proposed configuration of the streets near the SAP Center as affected by Downtown West:
(a) West Santa Clara Street near the SAP Center: No reductions in general traffic through lanes are being proposed or approved along West Santa Clara Street as part of the Downtown West project. Per the Diridon Station Area Plan, City and VTA were exploring potential public service lane configurations for transit and emergency vehicle service; however, this is a separate effort from Downtown West, and City will continue to coordinate discussions on this matter with area stakeholders, including Manager.
(b) Barack Obama Boulevard (between Santa Clara and San Fernando Streets): As shown on the DTW Vesting Tentative Map, the roadway (curb‐to‐curb space) includes two options:
(i) A dynamic lane on one side of the roadway and two through lanes; and (ii) A through lane on one side of the roadway, one center turn lane, and a second through lane on the other side of the roadway.
City will determine the final configuration of the public right‐of‐way, including this portion of the roadway, during the Conformance Review process (as defined in the DTW project approvals), including with ongoing input from Manager. (c) Manager acknowledges that City retains final decision‐making regarding all public rights‐of‐way, whether in connection with the DTW project or otherwise.
However, City agrees that when considering any reconfigurations or other material modifications, City will take into account the Transportation Objectives described below.
(d) Nothing in the DTW Settlement Agreement shall affect City’s obligations under other applicable provisions of this Agreement concerning coordination with
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Manager regarding transportation projects, transportation plans, and other transportation matters in the vicinity of the Diridon Station Area or that may otherwise affect ingress to and egress from the Arena. In the event of any conflict or inconsistency between the terms of the DTW Settlement Agreement and the terms of this Agreement, the terms of this Agreement shall control.
21.3.6 Transportation Objectives. In furtherance of City’s obligation to coordinate with Manager regarding transportation matters that may affect ingress to and egress from the Arena, City has developed a set of objectives (“Transportation Objectives”) that City agrees it will utilize in evaluating (i) any proposed construction management plans, traffic management plans, related encroachment permits or other similar approvals for any large development projects in the vicinity of the Arena, and (ii) any proposed City‐initiated modifications to the transportation ecosystem serving the Arena, including changes in road capacity for vehicles, ingress and egress to parking spaces, or wayfinding. Such Transportation objectives include (but are not limited to) the following Objectives specific to potential lane closures:
(a) To the maximum extent possible, avoid any lane closures on Santa Clara Street near Diridon Station and the SAP Center.
(b) If lane closures on Santa Clara Street are unavoidable from time to time during a construction project, seek to maintain four (4) through lanes for vehicles and buses (two westbound and two eastbound) for the duration of construction. The City will work with Manager and the project team to determine if and how to reconfigure the roadway to achieve this.
(c) To the maximum extent possible, avoid physical impact north of the outside curb on the north side of Santa Clara Street from Highway 87 to the west side of the entrance to Lot A. If it is not possible to avoid such impact, City will work with Manager and the project team to determine how to best mitigate the negative effects of such impact.
(d) To the maximum extent possible, avoid closure of Montgomery Street unless and until Barack Obama Boulevard is converted to two‐way conditions between Santa Clara Street and Park Avenue.
(i) Closing Montgomery Street will impact the southbound traffic headed from the SAP Center to 280; ensuring Barack Obama Boulevard as a two‐ way roadway is the only logical alternative.
(ii) If a construction project requires lane closures from time to time, then to the extent feasible, seek to maintain two lanes northbound and two lanes southbound on Barack Obama Boulevard during the construction period. (City will do some initial work regarding feasibility / desirability, given desired turning movements, signalization implications, and roadway space.)
(iii) This will require certain approvals with long lead times, and City will require project proponents to act accordingly when preparing designs and submitting applications.
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Manager acknowledges that there may be circumstances under which City may not have the legal authority or power to enforce the above TransportaƟon ObjecƟves or to determine the outcome of the above items. However, any lack of control over such outcomes shall not affect City’s obligaƟon to pa y for any Incremental TPMP Costs resulƟng from lane closures or other street network modificaƟons, pursuant to SecƟon 23.1.5 below.
More general objectives to mitigate construction‐related impacts:
(e) To help develop and refine construction and traffic management plans, convene a broad range of local stakeholders to provide input into the plans, including the Arena Authority and Manager, among others.
(f) Work cooperatively with transit partners to maximize transit usage, with the shared objective of increasing transit share from the roughly 7% of Event attend
ees at present to more than 20%, in order to minimize traffic near construction, increase sustainability and awareness of transit options, and prepare Event attendees for BART opening. In accordance with this objective, City and Manager, cooperatively, will seek to increase usage of transit and minimize vehicular traffic during constr uction by:
(i) During BART construction in the vicinity of the Arena, seeking to provide free or discounted VTA and Caltrain transit to people with a ticket to the SAP Center.
(ii) Jointly using best efforts to ensure transit and rail services (including Caltrain) are available for Arena custo mers after the conclusion of Events. (iii) Promoting/marketing free transit to games/events as a way to avoid construction‐related issues and measuring the use of transit to games/events.
(g) To offset impacts to Santa Clara Street and other common routes people use to walk to and from the SAP Center, f inancially support pedestrian‐oriented improvements to Sharks Way and other alternate pedestrian routes. (h) Pay similar attention to the quality of the trip to / from Diridon Station to ensure continued transit/rail usage and a safe, intuitive trip for people using the station. (i) Request that project sponsors focus on quali ty of conditions, even during construction (e.g., cleaned up work sites, quality conditions of interim/construction striping, wayfinding/signage, art and placemaking, etc.). (j) Request that project sponsors commit to high levels of customer service, coordination, and communication during construction. This includes close coordination with Events to ensure smooth load‐in/load‐out; a call li ne and office staffed at all hours to deal with emergency/unexpected situations; proactive quality graphics and information to communicate construction conditions and alternative routing/ transportation suggestions for patrons. (k) Request that project sponsors pay close attention to detail around the quality of construction materials and commit to a locally based program of art, wayfindin g,
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and local business promotion that enables fun, community‐based public spaces during construction (e.g., k‐rail with Sharks‐themed art); wayfinding and promotional signage; partnership with local arts and business groups. (l) Require project sponsors to create a clear contingency plan for emergencies caused by a specific transportation construction project and ma ke necessary preparations (e.g., battery backup systems, etc.).
(m) Require project sponsors to carefully evaluate hours of construction operation and the duration of construction, with trade‐offs transparently laid out as part of the collaborative decision‐making process. For Arena Events, preferred outcomes include:
(i) No construction in the public right of wa y from four hours prior to Event start until two hours after Event end; for a weekday, that typically would be between 3:30/3:45pm and midnight.
(ii) Avoid major construction in public right of way during the Hockey Season and large shows (which typically occur in August).
(iii) As described above, mai ntain a quality customer experience through clean, safe, and attractive worksites with local promotions and/or artwork.
(iv) Appoint a site‐based construction staff member as the operational coordinator with SAP Center Parking to allow small issues to be resolved quickly and on site.
21.4 Coordination Meetings. City and Manager agree that time is of the essence with respect to the obligations under this Agreement, and agree to use reasonable good faith efforts to meet and confer as often as necessary to prioritize and resolve parking, traffic and transportation issues in the vicinity of the Arena.
21.4.1 Meeting Participants. The City Manager’s office, with the assistance of the Arena Authority, will engage the appropriate City departments and other agencies and stakeholders to participate in meetings with Manager as necessary, including the Department of Transportation, the Police Department, the Planning Department, the Public Works Department, the VTA, and Google.
21.4.2 Issues to be Addressed. Issues to be addressed between the Parties shall include the following:
(i) The operation and management of Off‐Site Parking Facilities; (ii) The location and manner of providing parking for Arena Employees; (iii) Any Temporary Conditions that impact the Available Parking Spaces and any requested Temporary Parking Agreements;
(iv) Preparation of the Parking Supply Report, the Parking Forecast Report, and the Schedule of Parking Solutions, and any issues related thereto;
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(v) Preparation of the Parking Utilization Report, and any adjustments to the Minimum Off‐Site Parking Requirements based on the results of such Report;
(vi) The design, construction and operation of BART, High Speed Rail and other transportation projects, including associated parking facilities and traffic impacts;
(vii) Development projects with the 1/3 Mile Ring and the 1/2 Mile Ring; (viii) The identification and evaluation of sites for development of additional Off‐Site Parking Facilities as needed, including both surface lots and structured parking facilities;
(ix) Shared parking in the vicinity of the Arena;
(x) The extension and realignment of N. Autumn Street and/or Barack Obama Boulevard;
(xi) Revisions to the TPMP’s for the Arena, transportation projects, and other major projects; and
(xii) Other on‐site and off‐site transportation and parking issues.
21.4.3 Quarterly Event Coordination with Google. Under the DTW Settlement Agreement, City, Manager and Google have agreed as follows, with capitalized terms having the meanings given in the DTW project approvals unless otherwise defined herein:
(a) Following the completion and commencement of the use of Privately‐Owned Publicly Accessible Open Space and any Event/Conference Center space within the DTW project site, Google and Manager shall meet on a quarterly basis, or with such other frequency mutually agreed to between the parties, for the following purpose: (i) to identify special events anticipated to occur for the upcoming year or more on Privately‐Owned Publicly Accessible Open Space, Event/Conference Center space, City‐Dedicated Open Space, and at the SAP Center; and (ii) to coordinate on the special events to address any potential transportation and access issues that may impact Manager’s operation of the SAP Center or Google’s operation of the DTW project site.
(b) City shall facilitate the quarterly meetings described above.
21.4.4 Procedures for Review of DTW Project Applications. In accordance with the DTW Settlement Agreement, City shall implement the following procedural improvements in coordination with Manager:
(a) Establish an internal system within its development and project review system to notify City staff when a proposed project or permit request requires a review of this Agreement and/or coordination with Manager;
(b) Implement a process improvement to ensure that Construction Impact Mitigation Plans (CIMPs) for vertical and open space development within the vicinity of the SAP Arena are shared with Manager for feedback prior to building permit submission, allowing sufficient time for meaningful review and input; and
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(c) City acknowledges that under the Downtown West Parking Requirements, Google is required to meet and confer with Manager regarding the design of proposed DTW parking facilities prior to submitting an application to City’s Department of Transportation for approval of such design. City (though DOT) shall implement a procedure to ensure that DOT receives Manager’s comments regarding the parking facility design as part of the approval process.
The foregoing procedural requirements are in addition to all other requirements set forth in the DTW Settlement Agreement and other provisions of this Agreement.
SECTION 22. NOTICE AND CURE OF PARKING DEFICIENCY.
22.1 Notice of Parking Deficiency.
22.1.1 Definition of Parking Deficiency. In this Agreement, the term “Parking Deficiency” shall mean the situation that exists when the number of Available Parking Spaces in Off‐Site Parking Facilities is not sufficient to meet the Minimum Off‐Site Parking Requirements, taking into account any adjustments made pursuant to the express terms of this Agreement.
22.1.2 Delivery of Notice of Parking Deficiency. If Manager reasonably believes that there is a Parking Deficiency, Manager may deliver a written notice to City (“Notice of Parking Deficiency”) describing with particularity the nature and scope of the Parking Deficiency. (a) Manager may, but shall not be required to, include in the Notice of Parking Deficiency (i) Manager’s assessment of the apparent causes of the Parking Deficiency, and (ii) the actions and work that Manager believes City should take in order to cure the Parking Deficiency.
(b) Manager may not give City a Notice of Potential Event of Default (as described in Section 38.1.3) alleging a breach of City’s obligations with respect to Minimum Off‐Site Parking Requirements until 30 days after Manager gives City a Notice of Parking Deficiency.
22.2 Notice of Anticipated Parking Deficiency.
22.2.1 Definition of Anticipated Parking Deficiency. In this Agreement, the term “Anticipated Parking Deficiency” shall mean the situation that exists when a Parking Deficiency is anticipated to occur within the ensuing 6 month period, based on the anticipated supply of Available Parking Spaces in Off‐Site Parking Facilities, and the anticipated demand for the use of such spaces before, during and after Arena Even ts.
22.2.2 Delivery of Notice of Anticipated Parking Deficiency. If Manager reasonably believes that there is an Anticipated Parking Deficiency, Manager may elect to deliver a written notice to City (“Notice of Anticipated Parking Deficiency”) describing with particularity the nature and scope of the Anticipated Parking Deficiency. (a) Manager may, but shall not be required to, include in the Notice of Anticipated Parking Deficiency (i) Manager’s assessment of the apparent causes of the Anticipated Parking Deficiency, and (ii) the actions and work that Manager believes City should take in order to cure the Anticipated Parking Deficiency.
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(b) Manager’s delivery (or non‐delivery) of a Notice of Anticipated Parking Deficiency shall not affect Manager’s obligation to give a 30 day Notice of Parking Deficiency prior to delivering any Notice of Potential Event of Default regarding City’s parking obligations, as described in Section 22.1.2(b) above.
22.3 Notice of Self‐Help Work. Concurrently with delivery of a Notice of Parking Deficiency or a Notice of Anticipated Parking Deficiency, or at any time thereafter, Manager may give City a Notice of Self‐Help Work as described in Section 38.3.7 below. If Manager proceeds with any Self‐Help Work, the provisions of Section 38.3.7 shall apply.
22.4 City’s Written Response. Promptly after receipt of a Notice of Parking Deficiency, Notice of Anticipated Parking Deficiency or Notice of Self‐Help Work, City shall give Manager its written response to the same.
(a) If City objects to any claims, conclusions or other statements in any such notice, City shall describe with particularity the reasons for such objection. (b) If City elects to cure a Parking Deficiency or Anticipated Parking Deficiency identified by Manager, City shall describe with particularity the manner in which City intends to perform the necessary work and fund the costs of such work.
22.5. Purpose of Notice Provisions. The purpose of the notice provisions described above is to provide City with an additional notice and opportunity to cure any Potential Events of Default with respect to City’s parking obligations under this Agreement. Notwithstanding any notice given or response thereto, the determination as to whether there is in fact a Potential Event of Default, or whether any such Potential Event of Default has in fact been cured, shall be determined solely in accordance with the applicable provisions of Section 38 (regarding Default and Remedies).
Nothing in this Section 22 shall amend, abridge or waive any rights or remedies of either Party under Section 38. Any disputes between the Parties related to the matters above shall be subject to Mediation as provided in Section 39.
SECTION 23. TRANSPORTATION AND PARKING MANAGEMENT PLANS.
23.1 Arena TPMP. Manager and City have agreed to a traffic and parking management plan for the Arena, entitled “SAP Center Transportation & Parking Management Plan, 7th Edition,” a copy of which is attached as Attachment No. 13 to this Agreement (the “Arena TPMP”). Among other things, the Arena TPMP identifies goals and strategies for: (i) the operation and management of the On‐Site Parking Facilities; (ii) the provision of convenient Off‐Site Parking Facilities for Arena employees and customers; (iii) the safe and efficient ingress to and egress from the SAP Center by pedestrians, vehicles, and other mod es of transportation; and (iv) minimizing traffic congestion on surrounding roadways.
23.1.1 Background.
(a) The Parties agree that because of the lack of adequate On‐Site Parking Facilities, the success of the Arena is dependent on an effective TPMP to move people to and from the Arena.
(b) Manager and City agree to use reasonable good faith efforts to correct by appropriate means and met hods any material deficiencies in the provision of and effective use of the On‐Site Parking Facilities and Off‐Site Parking Facilities. This includes an obligation by the City to use its reasonable good faith efforts to
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devote sufficient operating funds and resources to make the movement of cars and people effective and efficient.
23.1.2 Contents of Arena TPMP. The Arena TPMP is intended by the Parties to address traffic, parking and pedestrian issues of concern to City, Manager, Arena customers and the surrounding neighborhoods arising from the usage of the Arena. The Arena TPMP includes strategies deemed necessary by the Parties to establish the means by which they shall implement their respective rights and obligations pertaining to traffic and parking, including strategies to address the follo
wing issues:
(i) ingress and egress to the Arena Facilities and Off‐Site Parking Facilities; (ii) coordinated traffic control procedures for signalization, pedestrian flow movement, vehicular flow movement, and coordination of conflicts between the same;
(iii) the provision, replacement and substitution of Off‐Site Parking Facilities by City;
(iv) the use and availability of On‐site and Off‐site parki ng spaces for Arena
Events;
(v) Off‐site traffic control (including personnel and Arena Employee parking, bus parking, parking payments and charges);
(vi) guide signs on regional and local roadways and San Jose freeways for motorists coming to the Arena, gui de signs for parking and pedestrians, public information promotion and signage; and
(vii) coordination with mass transit authorities.
23.1.3 Modification of Arena TPMP. The Arena TPMP shall be subject to modification as the Parties may agree from time to time.
(a) The Arena TPMP attached to this Agreement was updated effective as of July 1, 2025, to address significant changes in the Diridon Station Area since the date of the last update to the TPMP in 2005.
(b) The Arena TPMP is intended to be a w orking document and contains both the ability and the requirement to adjust to changing conditions, and to improve as the Parties may agree, provided that no such changes shall operate to limit or reduce the scope and purpose of the Arena TPMP.
(c) The Parties do not expect that the Arena TPMP will nee d to be updated very often, but agree to work together in good faith to update and revise the Arena TPMP upon the request of either Party if there is a significant change in conditions that warrants a revision.
23.1.4 Legal Effect of Arena TPMP. Neither th e Arena TPMP nor any modification thereto shall be construed to amend this Agreement, but the Arena TPMP may be used to help interpret the Parties’ intentions and respective obligations under this Agreement. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Arena TPMP, the terms of this Agreement shall control.
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23.1.5 Operations and Management under the Arena TPMP. In 1993, the City established the Arena Events and Operations Committee (“AEOC”), which is managed by City’s Department of Transportation (“DOT”) and which is comprised of representatives from Manager, the Arena Authority, DOT, other City departments, and other private and public organizations.
(a) The AEOC is responsible for developing and regularly updating a manual (“Operations Manual”) th at reflects the four traffic and parking management strategies currently described in the Arena TPMP, which strategies shall be subject to modification as described therein. The Operations Manual includes specific details about the traffic and parking plans (“Operations Plans”) to be implemented for different Arena Event scenarios based on the estima ted attendance level, day and time of the Event, and other features. Each of the Operations Plans includes ingress and egress plans, traffic officer positioning and functions, signage plans, parking strategies, and so forth. (b) The AEOC is also responsible for regularly monitoring the ongoing performance of the Op erations Plans, and recommending adjustments as needed. Manager and City shall consult with each other and act reasonably to agree on modifications to the Operations Manual and Operations Plans, taking into account the recommendations of the AEOC; provided, however, that any such modifications will be consistent with the common objective of imple menting measures that provide for the most effective use of the On‐Site Parking Facilities and Off‐Site Parking Facilities and the most effective security measures during Arena Events.
(c) The Parties agree to work together to review and update the Operations Manual by no later than July 1 of eac h year, and to make additional interim modifications whenever reasonably needed based on any material change in circumstances.
Each updated Operations Manual will include a page for Manager and City’s Director of Transportation to sign and date, acknowledging receipt and acceptance of such modified Operations Manual.
(d) The Operations Manual is not i ntended to be an attachment to the Arena TPMP, as it is a fluid document that is expected to be updated at least annually.
However, the Operations Manual should be consistent with the Arena TPMP in every material respect, and serve to implement the strategies set forth in the Arena TPMP.
23.1.6 Legal Effect of Op
erations Manual. Neither the Operations Manual nor any modification thereto shall be construed to amend this Agreement. However, the Operations Manual (and the Operations Plans included therein), as modified from time to time, shall be used as the basis for determining the appropriate level of staffing for Off‐Site Traffic Control Services as set forth in Section 24.2 below. In the eve nt of any conflict or inconsistency between the terms of this Agreement and the terms of the Operations Manual, the terms of this Agreement shall control.
23.1.7 Incremental costs of Implementing Arena TPMP.
(a) Definitions. As used in this Section 23.1.7, the following terms shall have the meanings given below
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(i) “CPI” means the Consumer Price Index ‐ All Urban Consumers for All Items (with a base period of 1982 ‐ 1984 = 100) for the San Francisco‐ Oakland‐Hayward Area published by the United States Department of Labor, Bureau of Labor Statistics. In the event the CPI Index is no longer publishe
d, another index published by either the State of California or a federal department or agency that is charged with the responsibility of measuring the cost of living in the geographical area that includes the City or comparable to the City.
(ii) “TPMP Costs” means all costs reasonably necessary to impleme nt the Arena TPMP, pursuant to the Operations Plans contained in the Operations Manual (as modified from time to time in accordance with this Agreement), including costs for Off‐Site Traffic Control Services (currently payable by Manager pursuant to Section 24.2 below) and costs to implement the following items (payable by City pursuan t to Section
8.2.3 above):
(1) Signal Central staffing
(2) Parking and code enforcement staffing
(3) Neighborhood litter removal and clean up
(4) Signal timing plan development
(5) Traffic and parking studies
(6) Traffic signal system upgrades
(7) Traffic signage (static and portable)
(8) Minor public capital improvements
(9) Residential perm it parking program
(10) Public information material.
(iii) “Baseline TPMP Costs” means the average of the annual TPMP Costs incurred by Manager for the three full Term Years prior to the onset of the COVID‐19 pandemic (i.e., Term Years 16/17, 17/18 and 18/19); provided, however, that (i) pr ior to calculating the average, the annual costs for Term Years 16/17 and 17/18 shall be increased by the equivalent percentage increase in the CPI for the applicable time period; and (ii) thereafter, the calculated average shall be further increased as of the end of each Term Year (starting in Term Year 19 /20) by the equivalent percentage increase in the CPI for the applicable time period.
The Baseline TPMP Costs are more precisely described and calculated in Attachment No. 12 to this Agreement, which shows that the calculated Baseline TPMP Costs are $437,817.45 as of the end of Term Year 18/19 and $517,088.05 as of the end of Term Year 23/24. (iv) “Incremental TPMP Costs” means, for purposes of this Section 23.1.7, the actual TPMP Costs incurred by Manager for any Term Year in excess of the Bas eline TPMP Costs for that Term Year.
(b) No Burden To Manager or its Customers. As a material part of the consideration for this Agreement, City agrees that neither Manager nor its customers shall be
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responsible for any Incremental TPMP Costs from and after the Effective Date of this Agreement (i.e., starting in Term Year 25/26).
(i) Notwithstanding the foregoing, Manager agrees to waive any claim for reimbursement of Incremental TPMP Costs that Manager incurs during any Term Year, to the extent that any such reimbursable amo unt is Twenty‐Five Thousand Dollars ($25,000) or less.
(ii) City shall pay for its share of Incremental TPMP Costs from a source that will not burden Manager or its customers. For example, the funding source may not include taxes or surcharges on parking fees payable by Manager or its customers, as those would effectively burden th em with the Incremental TPMP Costs.
(c) Reimbursement Procedures. If Manager is required to pay for TPMP Costs up front (such as for Off‐Site Traffic Control Services) or Manager agrees to pay for TPMP Costs up front (such as for equipment leased or purchased at City’s request), then to the extent that such TPMP Costs constitute Incremental TPMP Costs (in excess of the $25,000 deductible amount), City shall reimburse Manage r for those costs based on invoices submitted by Manager to City, accompanied by such records, receipts and other documents as City may reasonably request to verify the amount of the TPMP Costs and the calculation of Baseline TPMP Costs and Incremental TPMP Costs for the applicable Term Year. (i) Within thirt y (30) days after the end of each Fiscal Year quarter, Manager will provide City with a copy of Manager’s Staffing Shortfall Tracker (described in Section 24.5.1) showing, on a year‐to‐date basis, the number of requested Interior Security Positions and Traffic Control Positions that have not been filled for each applica ble Event. This will help the City anticipate the potential Incremental TPMP Costs for internal budgeting purposes.
(ii) Invoices from Manager to City for Incremental TPMP Costs incurred during any Term Year must be submitted to City within 18 months after the end of that Term Year in order to be el igible for payment. For example, invoices for Incremental TPMP Costs incurred during Term Year 31/32 must be submitted to City no later than December 31, 2033; otherwise, such invoices will be deemed stale and will not be paid. (iii) City shall pay all amounts due under timely submitted in voices within sixty (60) days following receipt of such invoices by City. (d) AMA Obligations. Nothing in this Section 23.1.7 shall affect City’s obligations under other applicable provisions of this Agreement to provide adequate traffic control systems, signage, and programs in accordance with the Arena TPMP or the Operations Manual, as modified from time to time.
23.2 Transit Project TPMP’s.
23.2.1 Definitions. In this Agreement, the following terms have the meanings given below:
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(a) “Transit Project” means the High Speed Rail project or station, or the BART project or station, or the Diridon Integrated Station project. (b) “Transit TPMP” means a transportation and parking management plan for a Transit Project.
23.2.2 TPMP’s and Construction Mitigation Plan Required. In addition to City’s other o bligations under Section 21 above, for any Transit Project in the Diridon Area, City shall use its best efforts to require a Transit TPMP, as follows:
(a) Each Transit TPMP shall adhere to the framework set forth on document entitled “Framework for Project Transportation and Parking Management Plans” attached as Attachment No. 14 to this A greement and incorporated herein by reference.
The Transit TPMP’s shall be coordinated with, be consistent with and not be in conflict with the Arena TPMP.
(b) The Transit TPMP’s will be reviewed on a periodic and as needed basis by a TPMP committee which will include representatives from the City, the entity operating the Transit Project, and M anager. Amendments and updates to the TPMP’s will be completed as needed in order to conform to changed circumstances, provided that any such amendment shall be consistent with and not in conflict with the Arena TPMP.
(c) The costs of administration and management of the Transit TPMP’s shall be addressed and provided for in the TPMP’s.
23.2.3 Event Opera
tions Committee. City and Manager will provide leadership and follow‐ through on the Arena Event Operations Committee to implement an extensive communications program for both Arena and other event producers to encourage parties to use routes and parking facilities that would minimize conflicts with each other.
PART SIX
SECURITY, POLICE AND SPECIAL EVENTS
SECTION 24. SECURITY FOR EVENTS.
24.1 On‐Site Security Services. At all times during the Term, Manager and City shall work together to provide ordinary day to day and Event security services in and about the Arena Facilities (“On‐Site Security Services”).
24.1.1 Staffing for Interior Security Positions. Subject to the terms and conditions of this Section 24, staffing for On‐Site Security Services shall be provided primarily by the San Jose Police Department (“SJPD”) through its Secondary Employment Unit, using both regular and reserve sworn officers (“SJPD Officers”).
(a) The number of positions needed for On‐Site Security Services for each Event (“Interior Security Positi ons”) and their report times shall be determined at Manager’s discretion based on NHL Rules and industry best practices, with input from SJPD.
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(b) City will use its best efforts to fill all Interior Security Positions for each Event with SJPD Officers, in accordance with a Scheduling Process Memorandum to be agreed upon by the Parties as described in Section 24.3.1 below. (c) If any Interior Security Positions for an Event are not filled by SJ PD Officers before the 26th of the month preceding the month in which the Event occurs (a “Staffing Shortfall”), then for each such unfilled Interior Security Position, Manager shall use commercially reasonable efforts to retain as many private security personnel as Manager determines would be needed to “make up” for such Staffing Shortfall (which typically would in clude 1 supervisor and up to 4 regular security guards for each Interior Security Position that is not filled by an SJPD Officer). The private security personnel shall be employees of a private security company that is selected by Manager and retained by Manager as an independent contractor.
Such private security com pany personnel shall report to Manager in coordination with SJPD.
24.1.2 Allocation of Costs for On‐Site Security Services. (a) Manager shall be responsible for paying all SJPD Officers who fill Interior Security Positions, without reimbursement by City, in accordance with the rules of the Secondary Employment Unit as described in Section 24.4. (b) If there is a Staffing Shortfall, then the following shall apply:
(i) Manager shall be responsible for payin g the fees for all private security personnel retained by Manager to provide On‐Site Security Services; and (ii) To compensate Manager for its costs and expenses (including internal management and supervisory time) associated with Manager’s efforts to retain private security personnel when there is a Staffing Shortfall, City shall pay Manager a Staff ing Shortfall Fee (defined in Section 24.5.2 below) for each Interior Security Position that is not filled by a SJPD Officer, as provided in Section 24.5.
24.1.3 Emergency Situations. Police response services provided by on‐duty SJPD Officers in connection with emergencies, calls for assistance, or crowd control for political speech are not included in the definition of On‐Site Security Services, and shall be provided at no charge to Manager so long as City does not impose charges on other persons or entities who seek similar types of assistance in si milar situations.
24.2 Off‐Site Traffic Control Services. At all times during the Term, Manager and City, through SJPD as well as City’s Department of Transportation (“DOT”), shall work together to provide traffic control services as reasonably needed before and after Events to direct pedestrians and vehicles, manually operate street intersections, and perform related services (“Off‐Site Traffic Control Services”), in compliance with the TPMP as may be mo dified from time to time in accordance with this Agreement.
24.2.1 Staffing for Traffic Control Positions. Subject to the terms and conditions of this Section 24, staffing for Off‐Site Traffic Control Services shall be provided by SJPD Officers (through the Secondary Employment Unit) to the greatest extent possible, with additional staffing to be provided by SJPD Community Service Officers (“CSOs”) as may be available
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and approved for service in this role, and DOT Parking and Traffic Control Officers (“PTCOs”) as may be necessary.
(a) The number of positions needed for Off‐Site Traffic Control Services for each Event (“Traffic Control Positions”) shall be determined by the applicable Operations Plan for the Arena in a ccordance with the Arena TPMP (described in Section 23.1.5) based on the size and type of event, with input from SJPD. (i) City and Manager agree to coordinate planning for Event traffic, traffic control, crowd control and other security issues as required by the TPMP, and will each designate a liaison for such pur poses.
(ii) City and Manager agree it is important to maintain continuity in the performance of the Off‐Site Traffic Control Services, and agree to cooperate and coordinate regarding staffing for Events and the planning of services for future Events as contemplated by the TPMP. (b) City will use it s best efforts to fill all Traffic Control Positions for each Event with SJPD Officers, in accordance with the Scheduling Process Memorandum. (i) SJPD Officers shall be given the first opportunity to fill Traffic Control Positions for each Event, within the time period described in the Scheduling Process Memorandum.
(ii) If any Traffic Control Positions are still available after SJPD Officers are given the fir
st opportunity to fill them, CSOs shall be given the next opportunity to sign up for such positions, within the time period described in the Scheduling Process Memorandum.
(iii) If any Traffic Control Positions are still a vailable after SJPD Officers and CSOs are given the prior opportunity to fill them, PTCOs shall be given the next opportunity to sign up for such positions, within the time period described in the Scheduling Process Memorandum
(c) If any Traffic Control Positions for an Event are not filled by SJPD Officers, CSOs or PTCOs bef
ore the 26th of the month preceding the month in which the Event occurs (also a “Staffing Shortfall”), then for each such unfilled Traffic Control Position, Manager shall use commercially reasonable efforts to retain as many private contract flaggers as Manager determines would be needed to “make up” for such Staffing Shortfall (which ty pically would include 1 flagger for each position that is not filled by an SJPD Officer, CSO or PTCO). The contract flaggers shall be employees of a private flagging company that is selected by Manager and retained by Manager as an independent contractor.
(i) The flagging company must be pre‐approved for such work by th e City pursuant to Municipal Code Section 11.12.050 and California Vehicle Code Section 21100. To be approved, any such company must meet the City’s reasonable requirements, including being certified, licensed and bonded for traffic direction in the City’s right‐of‐way (including direction of traffic and road closures), and being insured un der policies that are approved by the City’s Risk Manager.
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(ii) The contract flaggers shall work under the direction of SJPD, with coordination provided by Manager.
24.2.2 Allocation of Costs for Off‐Site Traffic Control Services. (a) Manager shall be responsible for costs and expenses of providing Off‐Site Traffic Control Services, subject to the following:
(i) City shall be obligated to reimburse Manager for Incremental TPMP Costs incurred by Manager as provided in Section 23.1.7.
(ii) Nothing in this Section 24.2 shall relieve City of its obligation to provide adequate tra
ffic control systems, signage, and programs in accordance with the Arena TPMP. Without limiting the foregoing, City shall be responsible for providing the physical supplies required for performance of the Off‐Site Traffic Control Services. If Manager purchases such supplies, City shall reimburse Manager for the actual cost of such supplies.
(b) If th
ere is a Staffing Shortfall with respect to Traffic Control Positions, then the following shall apply:
(i) Manager shall be responsible for paying the fees for any contract flaggers retained by Manager to provide Off‐Site Traffic Control Services; and (ii) To compensate Manager for its costs an d expenses (including internal management and supervisory time) associated with Manager’s efforts to retain private contract flaggers when there is a Staffing Shortfall, City shall pay Manager a Staffing Shortfall Fee (defined in Section 24.5.2 below) for each Traffic Control Position that is not filled by a SJPD Officer, CSO or PTCO, as provided in Se
ction 24.5.
(c) The definition of Off‐Site Traffic Control Services does not include the following:
(i) Actions by on‐duty SJPD Officers related to enforcement of the Peddler Permit Ordinance, which services shall be provided at no cost to Manager, in accordance with Section 25.3.2.
(ii) Activiti
es by Manager with respect to the operation of On‐Site or Off‐Site Parking Facilities, the costs of which shall be the responsibility of Manager or third party property owners, as applicable.
(iii) Services provided by the Secondary Employment Unit in connection with police staffing for Spe cial Events, the costs of which shall be the responsibility of Manager as described in Section 25.1.3.
24.2.3 Emergency Situations. Police response services provided by on‐duty SJPD Officers in connection with emergencies, calls for assistance, or crowd control for political speech are not included in the definition of Off‐Site Traffic Control Services, and shall be provided at no charge to Manager so long as City does not impose charges on other persons or entities who seek similar types of assistance in simi lar situations.
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24.3 Rules and Procedures for Traffic Control Positions.
24.3.1 Scheduling Process Memorandum. The specific process for scheduling SJPD Officers, CSOs and PTCOs (collectively, “Traffic Control Officers”) for Traffic Control Positions (as well as scheduling SJPD Officers for Interior Security Positions) shall be accomplished in accordance with a standard scheduling process to be agreed to by the Parties and confirmed in a written memorandum (“Scheduling Process Memorandum”) signed by Manager, th
e City’s Chief of Police and the City’s Director of Transportation. The Scheduling Process Memorandum shall be subject to modification from time to time as circumstances change, in which event an updated/revised Scheduling Process Memorandum will be signed by the Parties as indicated above.
24.3.2 Employment Terms and Conditions.
(a) Manager’s engagement of Traffic Control Officers to fill Traffic Control Positions for Arena Events will be structured as follows:
(i) Manager will engage SJPD Officers as independent contractors governed by City’s secondary employment ordinance as described in Section 24.4, which is administered by a special unit of SJPD (“Secondary Employment Unit”) under the authority of City’s Chief of Police. As such, Manager will pay each SJ
PD Officer directly.
(ii) Because CSOs are not eligible to participate in the Secondary Employment Unit, Manager will engage them as SJPD City employees on special assignment for Manager. Under this arrangement, CSOs who work as Traffic Control Off icers for Arena Events will be paid directly by City based on the terms of their standard compensation agreements. City will then invoice Manager for reimbursement of such employment expenses.
(iii) Manager will engage PTCOs as DOT City employees on special assignment for Manager. As with CSOs, PTCOs who work as Traf fic Control Officers for Arena Events will be paid directly by City based on the terms of their standard compensation agreements. City will then invoice Manager for reimbursement of such employment expenses.
(b) Whenever Manager retains the services of Traffic Control Officers, Manager shall pay for such services at the standard rates established by City on a non‐ discrimina
tory basis, including rates for regular and overtime pay (at 1.5 times the regular pay rate).
(c) Pay at double‐time rates will not be offered to any Traffic Control Officers unless both Parties mutually agree to do so in their sole dis cretion. (i) Under the current rules, if any staff are offered double‐time rates to work for an Event, all staff who work for that Event must be offered double‐ time pay.
(ii) Currently, PTCOs are not allowed to be paid at double‐time rates, and therefore any Even t at which double‐time pay is offered for SJPD Officers and CSOs will not be available for staffing by PTCOs.
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(d) Although Manager is ultimately responsible for selecting, engaging, paying and discharging all Traffic Control Officers, all such Traffic Control Officers shall serve under the supervision and direction of SJPD.
(i) All Traffic Control Officers engaged by Manager shall report to SJPD’s on‐ duty Sergeant or Lieutenant responsible for the Event or, failing that , to the Watch Commander on duty at that time. All Traffic Control Officers shall serve in their assigned SJPD, CSO or PTCO uniforms. (ii) City shall be responsible, at its cost, for hiring such persons as it desires to supervise and manage the Traffic Control Officers.
(iii) As part of th eir role in supervising and directing Traffic Control Officers, SJPD shall be responsible for initiating and maintaining all safety precautions and programs for the Traffic Control Officers. (e) In retaining Traffic Control Officers, Manager shall comply with all provisions of Attachment No. 8 (Non‐Discrimination Policy).
24.3.3 Efforts to Address Staffing Shortages. The Parties acknowledge that prior to the Effective Date of this Agreement, Manager has often been unable to fill the number of Interior Security Positions needed to ensure public safety for Arena Events and/or the number of Traffic Control Positions called for by the TPMP’s applicable Operations Plan. Under this Agreement, CSOs and PTCOs will now be included in the pool of Traffic Control Officers, which will hel
p alleviate the shortage of off‐duty SJPD Officers available to fill all needed Traffic Control Positions. However, CSOs and PTCOs are not qualified to fill Interior Security Positions. Moreover, SJPD Officers are preferred as they are more effective than other City personnel or private compani es in ensuring peace, order and public safety for Arena Events, both inside and outside the Arena. City agrees to implement the following strategies to increase the availability of off‐duty SJPD Officers and alleviate the existing Staffing Shortfall:
(a) SJPD shall allow reserve officers to work for the Se condary Employment Unit for up to seventy (70) hours per week (See Memo #2025‐009, Duty Manual Revision A 2939 – Maximum Number of Hours for Reserve Officers, as may be amended from time to time).
(b) As specified in Section 23.1.7(c), within thirty (30) days after the end of ea ch Fiscal Year quarter, Manager will provide City with a copy of Manager’s SJPD Staffing Shortfall Tracker showing the number of requested Interior Security Positions and Traffic Control Positions that have not been filled for each applicable Event. Upon request by Manager, City will meet and confer with Manager to review the information an
d discuss potential reasons and solutions for the Staffing Shortfall, such as (i) making appropriate revisions to the Scheduling Process Memorandum, (ii) minimizing Conflicting Events (defined in Section 25.1.2), and (iii) general recruitment efforts.
(c) If, notwithstanding diligent efforts to find ways to fill all needed Interior Security Positions and Traffic Control Positions with SJPD Officers, CSOs or PTCOs, as applicabl
e, Staffing Shortfalls continue to occur over a period of one year or more, City agrees to meet and confer to explore other potential solutions, including
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whether to implement a program that would allow sworn police officers from other jurisdictions to fill Interior Security Positions and Traffic Control Positions in situations where SJPD is otherwise unable to provide the number of off‐duty SJPD Officers needed for Arena Events, provided that (i) such program can be implemented under all Applicable Laws for a reasonable cost; and (ii) the City ca n obtain appropriate insurance covering the acts of such non‐City sworn officers for a reasonable cost. Such program shall ensure that any SJPD Officers who are available and willing to work for secondary employers are given the first opportunity to do so.
24.4 Secondary E
mployment of Off‐Duty Police Officers.
24.4.1 Secondary Employment Approval. In connection with retaining any SJPD Officers (including reserve officers) to provide either Interior Security Services or Off‐Site Traffic Control Services, Manager shall comply with the provisions of Municipal Code Chapter
8.16 (Secondary Employment Approval) as in effect upon the Effective Date, or as hereafter amended.
(a) As currently defined in said Chapter 8.16, a “secondary employer” incl udes any entity that retains off‐duty officers to provide private security services (including traffic control) regardless of whether the relationship between such entity and the officers is that of employer/employee, customer/independent contractor, or other relationship. Manager (as a secondary employer) has previously retained off‐duty officers as independent contractors, and shall conti nue that relationship throughout the Term to the fullest extent permitted by Applicable Laws. (b) Nothing in said Chapter 8.16 or in this Agreement shall be construed as a commitment or guarantee by City to supply Manager with off‐duty police officers.
Manager understands and agrees that Manager must con tract with each officer individually, and it is up to the individual officer to decide whether he or she wishes to provide services to Manager. Notwithstanding the foregoing, if for any reason there are any Staffing Shortfalls as defined in Section 24.1.1 or Section
24.2.1, City shall be required to pay Manager th e Staffing Shortfall Fee as described in Section 24.5.2.
(c) Except as provided above, City acknowledges and agrees that as of the Effective Date, no permits or licenses are required to perform the Off‐Site Traffic Control Services, including for street closures, special directional signage, and the like.
24.4.3 Indemnifica tion Obligations. The Parties acknowledge that Section 70 of the California Penal Code requires all secondary employers to enter into an indemnity agreement with city police departments as a condition of approving casual or part‐time employment of off‐duty law enforcement personnel.
(a) In accordance with the foregoing, Section 8.16.070 of the San Jose Municipal Code requires that Manager, as a se condary employer, agree to “indemnify and hold harmless the city, its officers and employees, from any and all damages, costs, attorneys' fees, expenses, losses or liabilities, arising out of the private security services performed by off‐duty San José police officers or San José reserve police officers for the secondary employer.” Such Section further provides tha
t the term “private security services” includes “private security
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guard, … traffic control, … or other security or law enforcement related services.” Manager acknowledges that the terms and conditions of secondary employer approval to be signed by Manager in connection with its annual SJPD Secondary Employment Unit application obligate Manager to indemnify and hold harmless the City, its officers and e mployees from any and all damages, costs, attorneys' fees, expenses, losses or liabilities, arising out of the private security services performed by SJPD Officers for Manager.
(b) Manager further agrees that any and all Claims made or brought against any City Indemnitees by third parties arising out of PTCOs or CSOs performa nce of Off‐Site Traffic Control Services shall be subject to Manager’s indemnification obligations set forth in Section 33.2.
24.4.4 Law Enforcement Liability Insurance. As a result of the California‐mandated indemnification obligations described above, City maintains (and will continue to maintain throughout the Term of this Agreement) a policy of law enforcement liability insurance (“LEL Policy”) providing protection against claims for damages or injuries caused or alleged to have been caused by the negligence or intentional misconduct of off duty SJPD Off icers engaged in performing services for secondary employers (a) Such LEL Policy shall have limits of not less than $2 million per occurrence, and shall provide defense costs.
(b) The insured parties under the LEL Policy shall include City and all individual SJPD Officers who participate in City’s secondary employment program. (c) City shall cause such LEL Policy to be endorsed to cover Manager and any Affiliates whose names are provided to City prior to July 1 of any given year as an additional insured.
(d) Any deductibles payable under the LEL Policy shall be the responsibility of City and/or the police officer involved in the applicable incident, and not Manager or other approved Secondary Employer.
(e) City shall provide Manager with at least 30 days’ written notice if the LEL Policy is cancelled or if City fails to renew and replace such LEL Policy.
24.5 Staffing Sh
ortfall Tracker and Fee.
24.5.1 Staffing Shortfall Tracker.
(a) Manager shall maintain and update, on a quarterly basis, a schedule showing, on a year‐to‐date basis, the number of requested Interior Security Positions and Traffic Control Positions that have not been filled for each applicable Event (the “Staffing Shortfall Tracker”).
(i) City shall use diligent, good faith efforts to ensure tha t each SJPD Officer, CSO and PTCO who signs up for an Interior Security Position or Traffic Control Position, as applicable, is capable of fulfilling the entirety of their work shift by, among other things, confirming that maximum allowable daily or weekly work hour limits will not be e xceeded mid‐shift.
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(b) Within thirty (30) days after the end of each Fiscal Year quarter, Manager will provide City with a copy of the Staffing Shortfall Tracker. City will promptly review the same, and notify Manager if City has any questions or proposed corrections. (i) If City requests any modifications to the Staffing Sh ortfall Tracker, the Parties shall work together in good faith to make any necessary corrections that are acceptable to both Parties.
(ii) If City does not request any corrections to the Staffing Shortfall Tracker within thirty (30) days after receipt from Manager, City shall be deemed to have accepted the information as pr esented, and the Parties shall be deemed to have stipulated to the accuracy of thereof, absent manifest error.
24.5.2 Payment of Staffing Shortfall Fee.
(a) Approximately thirty (30) days after delivering the Staffing Shortfall Tracker to City, Manager shall deliver to City an invoice for the total Staffing Shortfall Fees due for such quarter. For Term Year 25‐26 the “Staffing Shortfall Fee” shall be $850.00 for each unfilled Interior Security Position, and $425.00 for each unfill ed Traffic Control Position. The foregoing per position Staffing Shortfall Fee amounts shall increase annually on August 1, 2026, and each August 1st thereafter by the increase in CPI (defined in Section 23.1.5) over the preceding Term Year.
Manager’s Staffing Shortfall Fee invoice shall reflect any corrections made pursuant to the procedure descri bed in Section 24.5.1(b) above. (b) City shall pay Manager the total Staffing Shortfall Fee amount within sixty (60) days after receiving Manager’s invoice. City may take the funds for payment of the Staffing Shortfall Fee amount from the Arena Public Safety Fund. City’s obligation to pay Staffing Sh ortfall Fees in any given Fiscal Year shall not exceed the funds available in the Arena Public Safety Fund for such Fiscal Year. To the extent the Staffing Shortfall Fees payable by City in any given Fiscal Year exceed the amount of funds then available in the Arena Public Safety Fun d, the Parties shall meet and confer to explore options, including a potential increase in the amount of City’s annual Arena Public Safety Fund payment and strategies for increasing the number of sworn police officers (from both SJPD and other jurisdictions), PTCOs, and CSOs available for Traffic Control Positions and Interior Securi
ty Positions, as applicable, so that Staffing Shortfall Fee overages can be avoided in future Fiscal Years.
24.6 Arena Public Safety Fund. Promptly following the Effective Date, City shall deposit into a separate restricted account (the “Arena Public Safety Fund”) an amount of One Hundred Thousand Dollars ($100,000.00), and on or before March 1, 2026, City shall make an a dditional deposit into the Arena Public Safety Fund in the amount of Fifty Thousand Dollars ($50,000.00). On or before August 1 of each Term Year thereafter (commencing August 1, 2026 for the 26‐27 Term Year), City shall deposit into the Arena Public Saf ety Fund an amount equal to $100,000 as increased on August 1, 2027 and each August 1st thereafter by the increase in CPI (defined in Section 23.1.5) over the preceding Term Year.
24.6.1 Allowed Uses and Accounting for Arena Public Safety Fund.
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(a) The Arena Public Safety Fund monies shall be used only for the following:
(i) Reimbursement to City for the Staffing Shortfall Fee payable to Manager as described above;
(ii) Reimbursement to City or Manager for Peddler Permit Enforcement Costs that they have incurred, as provided in Section 25.3.2. Should Manager’s Peddler Permit Enforce ment Costs exceed the available Arena Public Safety Fund monies in any given Fiscal Year, Manager shall have the right to be reimbursed for such costs from City’s Arena Public Safety Fund deposits for future Term Years as provided in Section 24.6; (iii) Reimbursement to Manager for Video Surveillance Eq uipment Costs (defined in Section 26) for both SAP Center and Sharks Ice/Tech CU Arena.
City shall be responsible for reimbursing Manager for all Video Surveillance Equipment Costs which exceed available Arena Public Safety Fund monies and any such overage costs paid by City for this item shall in no way limi t the City’s obligation to reimburse Manager’s Peddler Permit Enforcement Costs pursuant to Section 24.6.1(a)(ii) or to fully fund the Arena Public Safety Fund each Term Year;
(iv) Training costs for Traffic Control Officers; and
(v) Any other costs related to public safety or security, as mutually agreed by the Parties.
(b) Subject to Se
ction 24.6.2, any amounts in the Arena Public Safety Fund that are not disbursed by the end of a Term Year shall roll over to the subsequent Term Year. Such roll‐over amounts, if any, shall not be credited towards City’s annual Arena Public Safety Fund f unding obligation for such subsequent Term Year. (c) Upon request by Manager (but not more often than once each calendar quarter) City shall provide Manager with a year‐to‐date accounting of how the amounts in the Arena Public Safety Fund have been used during the applicable Term Year. (d) City shall also provide to Manager, on an annual basis, a statement of sources and uses for the Arena Publi
c Safety Fund.
24.6.2 Reimbursements to Manager.
(a) Subject to the availability of Arena Public Safety Fund monies and the other provisions of this Subsection 24.6.2 below, Manager shall have the right to be reimbursed directly from the Arena Public Safety Fund for any of the following:
(i) Expenditures by Manager pursuant to Section 25.3 to cover Peddler Permit Enforcement Costs;
(ii) Expe
nditures by Manager pursuant to Section 26 to pay for Video Surveillance Equipment Costs; and
(iii) Any other expenditures by Manager which, pursuant to the mutual agreement of the Parties, may be reimbursed from the Arena Public Safety Fund.
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(b) Manager shall submit reimbursement requests in writing, together with reasonable documentation evidencing the advances or expenses that are eligible for reimbursement. City shall reimburse Manager out of available Arena Public Safety Fund monies within 60 days of Manager’s written demand therefor. For avoidance of doubt, City shall have no obligation to expend any Ci ty funds other than Arena Public Safety Fund monies to make such reimbursement payments. (c) To the extent Manager advances funds or incurs expenses for allowable expenditures that, but for exhaustion of Arena Public Safety Fund monies, would have been payable or reimbursable from the Arena Public Safety F und, such unreimbursed expenditures shall be carried over to future Term Year(s), subject to the limitations set forth below.
(i) The maximum amount of unreimbursed expenditures that may be carried over to any particular future Term Year shall not exceed Twenty Percent (20%) of the City’s Arena Public Safety Fund deposit for such future Term Year.
(ii) To the ex
tent that any unreimbursed expenditures exceed 20% of the Arena Public Safety Fund deposit for any Term Year, the balance (along with any additional unreimbursed expenditures for subsequent Term Years) shall continue to be rolled over to future Term Years in the same manner as de
scribed above, until paid in full.
(iii) Notwithstanding the foregoing, at the expiration or earlier termination of the Term, any remaining unreimbursed Manager expenditures shall be borne by Manager at its sole expense without any right to reimbursement (d) Subject to the limitations of subsection 24.6.2(c), City shall reimburse Manage r the allowable carry over amounts within 60 days following the date City deposits its Arena Public Safety Fund monies for the future Term Year(s).
SECTION 25. SPECIAL EVENTS AND OTHER SECURITY MATTERS.
25.1 Community Special Events. Manager may from time to time conduct street festivals, parades, and other similar events (“Special Events”) on public streets or in public parks outside of the Arena Facilities; provided, however, that Manager shall first obtain all permits required under San Jose Municipal Code Chapter 13.14 (Community Special Events) and other Applicable Laws, including paying all standard fees and providing all standard in surance coverages as may be required by City for other similar events.
25.1.1 City Events Concierge. To reduce costs and administrative burdens, and to facilitate Manager’s ability to quickly obtain permits for Special Events that may need to be scheduled on short notice, City agrees to the following:
(a) City shall appoint someone from the Office of Economic Development and Cultural Affairs (“OCA”) to act as Manager’s single point of contact (“Events Concierge”), who will coordinate with all applicable City departments and coordinate appropriate hand‐offs to partner agencies (including State Alcoholic Beverage Control and the County Environmental Health Dept.) to process the
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required applicaƟons and obtain the necessary permits on behalf of Manager for Special Events in the vicinity of the Arena (“Hockey Special Events”). (i) Such service will apply to no more than four Hockey Special Events per Term Year; provided, however, at the elecƟon of Manager, one of the fo ur Hockey Special Events may encompass all Special Events held by Manager during the NHL Post‐Season, without limitaƟon as to the number of such events.
(ii) For avoidance of doubt, any parades that encompass addiƟonal lands or rights‐of‐way will not be included in the Hockey Sp ecial Event permit that encompasses all Special Events held by Manager during the NHL Post‐ Season.
(b) For each of the Hockey Special Events, City (through the Events Concierge) will provide the services and benefits described below:
(i) To the extent feasible based on a similar footprint and format fo r the Hockey Special Events, the Events Concierge will obtain pre‐approval for a template permit applicaƟon package that includes a standard set of submiƩals and “playbook” instrucƟons for coordinaƟon among City departments.
(ii) OCA (through the Events Concierge) will, to the extent feasible, defer scheduling any thir d‐party Special Events that may impact Arena operaƟons (including impacts to the street network or parking lots serving the Arena) unƟl Manager schedules the Hockey Special Events for the applicable period of Ɵme. Manager agrees to schedule the Hockey Special Events as soon as pracƟcable following the NHL ’s release of the Regular Season schedule.
(iii) Without limiƟng the foregoing, during the enƟre period in which the NHL Post‐Season may occur, OCA (through the Events Concierge) will not schedule any third‐party Special Events that may impact Arena operaƟons unƟl Manager noƟfies the Ev ents Concierge as to which dates are available for such third‐party Special Events; provided, however, that this reservaƟon will not apply to Special Events associated with Cinco de Mayo (such as the “Salsa Fest and Parade”) or the San Jose Half Marathon (which starts and finishes at Santana Row), so long as (A) such events are required, to the extent feasible, to use race or parade routes tha t do not materially affect the streets that provide primary ingress and egress to and from the Arena, and (B) do not use the Arena Green Park as a staging or gathering area. Manager agrees to noƟfy the Events Concierge as soon as pracƟcable once the available Po st ‐Season dates are known to Manager, and to noƟfy the Events Concierge at the earliest reasonable opportunity of the date and Ɵme for any individual Special Events held during the NHL Post‐Season.
(iv) AŌer Manager confirms a Hockey Special Event date and Ɵme with the Events Concier ge, the Concierge will coordinate with all City departments to complete whatever steps are necessary to issue the necessary permits
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as soon as is reasonably possible, including iniƟaƟng permit requests of State Alcoholic Beverage Control and County Environmental Health. (v) Promptly aŌer Manager advises the Events Concierge of its desired dates for the Hockey Special Events, the Events Concierge will place such Special Events on OCA’s Events Calendar and will ta ke whatever steps may be necessary to avoid any ConflicƟng Event (defined in SecƟon 25.1.2). (c) For Special Events held by Manager that are not included within the four Hockey Special Events described above, the OCA, and to the extent reasonably pracƟcable the Events Concier ge, will process applicaƟons on behalf of Manager on the same basis as for other applicants.
(d) For all Special Events held by Manager or held in the vicinity of the Arena, the Events Concierge will designate a point of contact to provide “on call” coordinaƟon services to handle un foreseen problems that may occur during weekends and evenings, including for situaƟons involving any ConflicƟng Event as described in SecƟon 25.1.2.
(e) Term Year 25‐26 (starƟng July 1, 2025) shall be deemed a “pilot year” for the Hockey Special Events program. Prior to the end of the pi lot year, the ParƟes shall meet to review how the Hockey Special Events program worked, and to discuss ways that the program may be modified to more efficiently and effecƟvely provide the intended services and benefits of the program (consistent with City staffing re
sources). Provided both ParƟes conclude the pilot has been a success, and dependent upon City staffing resources, the ParƟes will cooperate with each other in good faith to make reasonable adjustments to the Hockey Special Events program as may be requested by either Party.
25.1.2 Sche dule Coordination for Conflicting Events. City will implement a process whereby the OCA will coordinate with Manager, and give deference to the Arena’s schedule, before approving one or more Special Events held by third parties that may conflict with regular Arena Events, including hockey games, concerts, family shows and other events, or outdoor Special Events, including Hockey Special Events, or create additional traffic congestion, parking bur
dens or other transportation problems that negatively impact the operations of, or access to and from, the Arena (“Conflicting Events”). (a) City (through OCA) and Manager commit to working together in good faith to help promote an activated and thriving Arena district that avoids Conflicting Events. (i) The Parties shall endeavo r to achieve at least a three‐hour difference between the ending and starting times of Arena Events, including Hockey Special Events, held by Manager and third‐party Special Events. The three‐hour time difference is intended to allow sufficient time for parking lots to substantially empty for the earlier event before the arrival of guests see
king to park in those same lots for the later event.
(ii) The Parties shall also work together in good faith to implement special procedures to address potential Conflicting Events involving Cinco de Mayo and the San Jose Half Marathon (which is held in June of each year).
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(b) Without limiting the foregoing, OCA shall implement the provisions of Section
21.4.3, pursuant to which City is obligated to facilitate quarterly meetings between Manager and Google in order to (i) coordinate regarding any Special Events planned to occur within the DTW project area, and (ii) address any potential transportation and access issues that may may arise as a result th ereof. (c) At Manager’s request, but subject to OCA’s notification process, OCA shall include Arena Events on its Events Calendar published on the OCA website.
25.1.3 Off‐Duty Police Officer Services. Any off‐duty SJPD Officers retained by Manager to provide security services for Special Events shall be done through City’s Secondary Employment Unit as described in Section 24.4.
25.2 Protected Speech Events On or About Arena Facilities. In order to address potential situations involving political speech or other protected “free speech” activities on or about the Arena Facilities, City and Manager shall, upon reasonable request by either of them, consult with each other to promulgate reasonable “time, place and manner” rules and regulations that preserve reasonable public access to limited areas for free speech pur poses without unreasonably interfering with Manager’s business activities or impairing the safety and security of Arena customers and employees. A copy of such rules and regulations shall be provided to SJPD.
25.2.1 Use of Police for Free Speech Security. As described in Section 24, City shall be responsible for paying for any police services required (as determined by City) in connection with political speech or free speech activities in the publicly accessible areas of the Arena Facilities. Manager may call for assistance from on‐duty SJPD Officers in such circumstances, rather than contracting for off‐duty SJPD Officers.
25.2.2 No Publi c Forum. Nothing herein shall be construed as an admission by City or Manager that any part of the Arena Facilities (including Lots A, B and C) constitutes a public forum.
As described above in Section 15.2.2(c), it is the Parties’ express intention that the Arena Facilities shall not become a public forum.
25.3 Restrictions on Peddling Near Arena. As of the Effective Date, San Jose Munici pal Code Section
6.54.215 prohibits peddling within certain specified areas, including within a specified distance from the Arena on Event Days.
25.3.1 Importance of Prohibition. San Jose Municipal Code Chapter 6.54 ‐ Peddler Permit Ordinance (“Peddler Permit Ordinance”) is of material importance to Manager because of its value to the safety and security of Arena customers and other Manager Invitees.
Among other things, the Peddler Permit Ordinance helps to (i) ensure safe exiting from the Arena in case of an emergency as required by the California Fire Code; (ii) facili tate the free movement of pedestrians and vehicles around the Arena, keeping safety corridors clear and reducing unnecessary congestion; (iii) reduce risks of injury or damage related to violations of health and safety regulations; (iv) curb unlawful behavior associated with unlicensed sales of alcoholic beverages; and (v) eliminate potential hindran
ces to security operations.
(a) City agrees to notify Manager in writing at least ten days prior to any City Council meeting at which any amendment to the Peddler Permit Ordinance will be considered.
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25.3.2 Police Enforcement. Consistent with the intent and purpose of the Peddler Permit Ordinance, City agrees that mobile peddlers and their carts or other equipment must not be allowed to block Arena exits (which is a violation of the California Fire Code) or to enter the On‐Site Parking Facilities (which creates unsafe pedestrian‐vehicle conflicts).
Therefore, in order to ensure the protection of the Ar ena operations and its customers, employees and other members of the public, the following shall apply:
(a) City agrees to use diligent efforts to ensure that SJPD will enforce the Peddler Permit Ordinance, as amended. If City reasonably determines it necessary in order to fulfill its obligations hereunder, such efforts may in clude utilizing the mobile unit impoundment enforcement mechanism (“Impoundment”) as set forth in Chapter 6.54.405 of the San Jose Municipal Code. (b) City also agrees to use diligent efforts to ensure that SJPD will enforce Chapter
10.20 (Offenses Against Property) of the San Jose Municipal Code and other Applica
ble Laws that prohibit trespassing on the Arena Land, including the On‐ Site Parking Facilities (the “No Trespassing Law”).
(c) If Manager requests special assistance from on‐duty SJPD Officers to address violations of the Peddler Permit Ordinance or the No Trespassing Law, the costs of such requested special police services (“Peddle r Permit Enforcement Costs”) shall be borne by City, to be paid from the Arena Public Safety Fund until such monies have been exhausted for any particular Term Year. Manager shall be responsible for reimbursing City for any Peddler Permit Enforcement Costs in excess of the amounts in the Arena Public Safety Fu nd for the then‐current Term Year; provided, however, Manager shall have the right to be reimbursed from City’s Arena Public Safety Fund deposits for future Term Years as provided in Section 24.6.
25.3.3 Manager’s Limited Role in Peddler Permit Ordinance Enforcement. From time to time, at the specific request and direction of SJPD, Manager (and its employees and contractors) may assist in City’s Impoundment efforts, including by moving unauthorized property to a nearby storage container managed by City, disposing of unauthorized food or alcohol, and taking other actions, all as specified in written operating procedures agreed to by the Parties and confirmed in a written m
emorandum (“Impoundment Procedures
Memorandum”) signed by Manager and the City’s Chief of Police. (a) When acting at the request of SJPD in accordance with the Impoundment Procedures Memorandum, Manager (and its employees and contractors) shall (i) be deemed to have acted under the di rection and supervision of SJPD, and (ii) shall be indemnified by City against any and all Claims resulting from such actions, to the extent provided for City’s indemnification of Manager Indemnitees under Section 33.3.
(b) Costs incurred by Manager in connection with its actions to assist SJPD as described in this Se ction 25.3.3 shall be considered part of the Peddler Permit Enforcement Costs, and shall be paid or reimbursed to Manager from the Arena Public Safety Fund in the same manner as described in 24.6.2(c).
25.4 Security Improvements. Subject to Applicable Construction Codes and the requirements of the Public Works Department where applicable, Manager shall have the right to install bollards or
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other vehicle barriers, metal detectors and other screening equipment, and other temporary or permanent improvements and equipment as may be required by the NHL Rules or Homeland Security regulations, or as may be consistent with the Applicable Performance Standard. Unless the Parties mutually agree otherwise, the cost of such improvements and equipment shall be paid or reimbursed to Manager out of th
e Capital Reserve Fund pursuant to Section 28, to the extent applicable.
SECTION 26. SURVEILLANCE VIDEO.
26.1 Surveillance Video Footage Owned by Manager. As of the Effective Date of this Agreement, Manager has installed and maintains closed‐circuit television/video cameras that record activities occurring in selected public spaces both inside and outside of the Arena Building. Such video surveillance is for public safety and security purposes. Any and all video surveillance footage recorded by Manager is private, is owned by Manager, and is not fo r public viewing or distribution.
26.2 Access for Police Purposes. City has requested that Manager allow SJPD to have access to Manager’s video surveillance system in connection with emergency situations, and to have access to video recordings in connection with police investigations and other law enforcement purposes.
Manager has agreed to allow limited access to its video system and recordings, subject to the terms and conditions of a separate Video Surveillance Access Agr eement between Manager and SJPD dated December 23, 2018, as may be amended or replaced from time to time. The Video Surveillance Access Agreement is a Related Agreement as defined in Section 1.4 and described in Attachment No. 5.
(a) Nothing in this Agreement or the Video Surveillance Access Agreement shall require Manager to continue to maintain any particular video surveillance equipment or systems, or to retain any video surveillance footage for any specific period of time. (b) Nothing in this Agreement or the Video Surveillance Access Agreement shall impose or create any li
ability on the part of Manager resulting from any failure of its video surveillance system to operate properly, or for failing to provide access to the system as contemplated by the Video Surveillance Access Agreement, or for City’s use and handling of the video surveillance system or recorded footage fr om the system.
26.3 Video Surveillance Equipment Costs. If Manager elects to modify its video camera system to allow direct access by SJPD, and in connection therewith Manager incurs expenditures for equipment or third‐party services (“Video Surveillance Equipment Costs”), then Manager shall be entitled to seek reimbursement for such expenditures (for both SAP Center and Sharks Ice/Tech CU Arena) from the Arena Public Safety Fund as provided in Section 24.6.1.
PART SEVEN
ENVIRONMENTAL COMPLIANCE
SECTION 27. ENVIRONMENTAL COMPLIANCE.
27.1 Intent and Scope.
27.1.1 General Provisions.
(a) The purpose and intent of the provisions of this Section 27 is to provide each Party with a total indemnification from the other Party for any Environmental Claims
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arising out of the existence of Hazardous Substances for which the indemnifying Party is responsible under the provisions of this Section 27. (b) Except for the purpose of defining the scope of such indemnification by each Party or as expressly provided in this Section 27, nothing in this Section 27 shall be constru
ed or applied to increase the obligations of a Party for Hazardous Substances beyond the obligations such Party would otherwise have under Environmental Laws.
(c) Except for indemnified persons specifically mentioned, no person shall be a third party beneficiary of the provisions of this Section 27 nor shall the provisions of this Se
ction 27 be deemed to create a standard of care or conduct with respect to any such person not specifically mentioned as an indemnified person. (d) The terms of this Section 27 shall survive the expiration or earlier termination of this Agreement.
27.1.2 Definitions. In this Agreement, the foll owing terms shall have the meanings given below:
(a) “City Indemnitees” means City and other City Authorities, their successors and assigns, and all of their respective directors, officers, employees, members, managers, representatives and agents.
(b) “City Invitees” means City Indemnitees and all other persons who enter the Arena Facilities under City’s control or supervision or with City’s authority or permission (includi
ng City’s contractors); provided, however, that persons who enter the Arena Facilities in connection with a City Event or Community Event (for which the sponsor or organizer must execute a license agreement with Manager as described in Section 11.1.4) shall be deemed to be Manager Invitees and not City Invitees.
(c) “Deed Restri
ction” means the document recorded against the Arena Land as described in Section 27.2.1(c), which describes prohibited uses and activities on the Arena Land.
(d) “Environmental Claims” as used in this Section 27 means any and all Claims as defined in Section 33.1, and shall al so include administrative and judicial proceedings and orders and any required Investigation or Remediation. (e) “Environmental Law” means any California or Federal law, or any court order or judgment, that regulates or directs activities regarding the generation, possession, storage, use, transportation or disposal of a Hazardous Substance, or the Investigation or Reme diation of a Hazardous Substance Release, including the laws described in subsection (g) below. The term “Environmental Law” as used in this Agreement shall also mean the enforceable provisions of any Deed Restriction recorded against the Arena Land.
(f) “Governmental Authority” has the meaning given in Section 10.2.1. As used in this Se
ction 27, the term “Governmental Authority” shall specifically include the following agencies and their respective predecessors and successors: California Department of Toxic Substances Control (“DTSC”); the Regional Water Quality
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Control Board, Santa Clara County Department of Environmental Health and the Santa Clara Valley Water District.
(g) “Hazardous Substances” means any substance, material, condition, mixture or waste that is:
(i) defined as a “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” or “restricted hazardous waste” under any provision of California or Federal law; (ii) radioactive;
(iii) designate
d as a “hazardous substance” pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Section 1251 et seq. (33 U.S.C. Section 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. Section 1317);
(iv) defined as a “hazardous waste” pursuant to the Resource Conservation and Recovery Act; 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903); (v) defined as a “hazardous substance” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601); (vi) determined to be a “hazardous chemical, substance or mixture” pursuant to the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.(15 U.S.C. Section 2605); or
(vii) identified for remediation, storage, containment, removal, disposal or treatment in any Remediation plan for the Arena Land as mandated or approved by any Governmental Authority.
(h) “Investigate” and “Investigation” means to observe, inquire, examine, monitor, analyze, explore, research, inspect, canvass, question, poll, and/or survey th e soil, soil gas, ground water, above and below ground structures and appurtenances of the Arena Facilities or Arena Land or adjacent or neighboring properties or any of them, to reasonably determine the presence or suspected presence, nature or extent of Hazardous Substances in, on, under or about the area of the Arena Facilities or Are
na Land or adjacent or neighboring properties.
(i) “Manager Indemnitees” means Manager and its Affiliates (including SJS LLC), their successors and assigns, and all of their respective lenders, directors, officers, employees, members, managers, representatives and agents. (j) “Manager Invitees” means Manager Indemnitees and all other persons who enter the Ar
ena Facilities under Manager’s control or supervision or with Manager’s authority or permission (including licensees, concessionaires, customers, and contractors), but excluding City Invitees. Persons who enter the Arena Facilities in connection with a City Event or Community Event (for which the sponsor or organizer must execute a lice nse agreement with Manager as described in Section 11.1.4) are included in the definition of “Manager Invitees” for purposes of this Agreement.
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(k) “Possession Date” means August 20, 1993, the date upon which Manager took possession of the Arena Facilities.
(l) “Pre‐Existing Hazardous Substances” means Hazardous Substances known by City Authorities to have existed on the Arena Land prior to development of the Arena Facilities, including lead, polycyclic aromatic hydrocarbons (PAH’s) an d various petroleum products.
(m) “Release” means any spilling, leaking, migration (including migration below the surface from other properties to the Arena Land or from the Arena Land to other properties), pumping, pouring, emitting, emptying, discharging, injecting, escaping (including into the air inside or outside of the Arena), leaching, dumping, or disposing in
to the environment (including the abandonment or discarding of barrels, containers, and other receptacles containing any Hazardous Substance). (n) “Remediate” and “Remediation” means any of those actions defined as removal and/or remedial actions under Section 101(23) and (24) of the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S .C. Section 9601 et seq.) and similar actions as defined under comparable state and local laws, and/or cleanup, removal, containment, monitoring, treatment, storage, disposal, or other mitigation or remediation of Hazardous Substances undertaken on, in, under or about the Arena Facilities or Arena Land or adjacent or neighboring properties.
27.2 Pre‐Existing Hazardous Substances and Prior Remediation.
27.2.1 Arena Building and Lots A, B and C. Prior to development of the Arena Building, Lots A, B and C and the surrounding property, it was discovered that prior uses on those sites resulted in soil and groundwater contamination.
(a) To mitigate the contamination, City Authorities completed Remediation work on the affected sites, including: (i) removal of underground storage tanks and oil/water clarifiers; (ii) installation of a slurry wall around th e footprint of the Building with a dewatering system to prevent migration of contaminated groundwater beneath the Arena Building; (iii) treatment of petroleum‐ contaminated soils with vapor extraction; (iv) removal of a portion of the contaminated soil, and (v) encapsulation of remaining contaminated soils beneath various portions of Lots A, B an d C, by covering them with layers of clay, clean backfill, base rock and/or asphalt paving, as the case may be (collectively, the “Cap”).
(b) In addition, City installed several groundwater monitoring wells around the site.
A site plan showing the approximate locations of the Cap and the groun dwater monitoring wells is attached as Attachment No. 15 to this Agreement. (c) A Deed Restriction entitled “Covenant to Restrict Use of Property ‐ Environmental Restriction” was recorded in the Santa Clara County Official Records on May 23, 2003, as Document 17062264. The provisions of such Deed Restriction, which are hereby incorporated by reference into this Agreement, include a description of prohibited uses and a ctivities at Sections 4.01 and 4.03 thereof.
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(d) In addition, Section 4.02 of the Deed Restriction contains soil management covenants that provide as follows:
(i) No soil‐disturbing activities (e.g., excavation, grading, removal, trenching, filling, earth movement or mining) shall be allowed anywhere on the Arena Land without a Soil Management Plan and a Health and Safety Plan approved by DTSC prior to the be
ginning of the activities;
(ii) Any contaminated soils brought to the surface by soil‐disturbing activities shall be managed in accordance with all Applicable Laws; and (iii) DTSC must be given written notice at least fourteen (14) days prior to any soil‐disturbing activities anywhere on th e Arena Land. (e) Section 4.04 of the Deed Restriction contains covenants for non‐interference with the Cap, as follows:
(i) Activities that may disturb the Cap (including the soil‐disturbing activities described above) shall not be permitted without prior review and written approval by DTSC. All uses and devel opment of the Arena Land shall preserve the integrity of the Cap. The Cap shall not be altered without prior written approval by DTSC.
(ii) DTSC must be notified within 10 working days of both the discovery of any damage to the Cap and the type and date of repair of such da mage. (f) City and Manager agree to comply with the provisions of the Deed Restriction and the requirements of DTSC in connection with their respective activities on the Arena Land.
27.3 City’s Responsibilities for Hazardous Substances.
27.3.1 City’s Investigation and Remediation Obligations. Except as provided in Section 27.4, City shall be responsible for Investigation and Remediation of any Hazardous Substances on or under the Arena Land (including Pre‐Existing Hazardous Substances) and any Hazardous Substances that are Released onto, in, under, over, from or about the Arena Land, including all costs associated with any such Investigation and/or Remediation. (a) City’s obligations un der this Section 27.3.1 shall apply to any properties later added to the definition of Arena Land under this Agreement. (b) Manager has no duty or right to Investigate, Remediate or assist in Remediating Hazardous Substances except as provided in Section 27.4. (c) Manager shall allow City access to the Arena Land as reasonably necessary to monitor and maintain equipment use
d for continuing City’s Investigation and/or
Remediation responsibilities.
27.3.2 Pre‐Existing Hazardous Substances. City shall have continued responsibility for the Remediation of Pre‐Existing Hazardous Substances under the supervision of applicable Governmental Authorities.
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(a) City shall submit periodic reports to DTSC regarding the environmental condition of the site, as required by DTSC or as elected by City. As of the CommencementEffective Date, such reports include the following:
(i) A five year review report (next report due in March 2028), to verify that the Remediation performed by City continues to be protective of public health, safety and the environment;
(ii) An annual groundwater monitoring well sampling report; and (iii) An annual site inspection report, to verify continuing compliance with the applicabl
e Deed Restriction and integrity of the Cap.
(b) City shall notify Manager of the ongoing status of such Remediation by providing Manager with copies all reports filed with DTSC or other Governmental Authorities. Copies of reports filed with DTSC are also available at the following website address:
https://www.envirostor.dtsc.ca.gov/public/profile_report.asp?global_id=43730007 (c) The possession, manage
ment and control of the Remediation of Pre‐Existing Hazardous Substances on the Arena Land and the subsurface of the Arena Land (excluding lower levels of the Building) shall remain exclusively the province of City, and Manager shall not take any action that disturbs or unreasonably interferes with said Remediation or subsurface.
27.3.3 City Obligations upon Release or Notice of Governmental Action. City shall promptly notify Manager in writing of any Release of Hazardous Substances which are known by City to be its responsibility hereunder and of any governmental action taken (or threatened) relating thereto.
(a) City, at its sole cost and expense, may contest any such governmental action, but shall use reasonable good faith efforts to re spond to any such governmental action so as to cause the least possible interference reasonably practical with Manager’s use and operation of the Arena Facilities.
(b) City, using reasonable good faith efforts, shall promptly undertake and diligently prosecute to completion any Investigation or Remediation for which City is responsible hereunder (whether through re pair, replacement or otherwise) in such manner as to cause the least possible interference reasonably practical with the use and operation of the Arena Facilities.
27.3.4 Conformance with Applicable Environmental Laws. City shall use reasonable good faith efforts to implement and complete the current and any future Investigation and Remediation for which City is responsible hereunder in conformance with Environmental Laws or as required by any Governmental Authority, or as necessary to abate an immediate risk to human health or safety.
(a) City shall comply with permits and licenses currently or hereafter issued to City in connection with any Investigation or Remediation of Hazardous Substances for which City is responsible under Section 27.3.1.
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27.3.5 Indemnification by City. City shall defend, hold harmless and indemnify Manager Indemnitees from any and all Environmental Claims arising from or relating to the following:
(i) The presence of, the Release of, costs of Investigation of, and/or the Remediation of Hazardous Substances that are City’s responsibility under Section 27.3.1; and
(ii) The costs of repairs, replacements and any capital modifications or improvements to the Arena Facili ties caused by or required as a result of any such Investigation and/or Remediation activities.
27.3.6 Alterations to On‐Site Parking Facilities. Because of the on‐going environmental Remediation and the presence of certain known Hazardous Substances on the Arena Land, Manager shall have no right or obligation to Investigate, comment upon, participate in the design of, or approve any plans or specifications for the On‐Site Parking Facilities or relating in any way to the Investigation and Remediation work to be im plemented and performed by City on the Arena Land.
(a) Notwithstanding the foregoing, access, striping, traffic flow and other design criteria of the On‐Site Parking Facilities shall be subject to Manager’s approval so long as Manager’s participation in determining such design will not affect the quality or process of Re mediation.
(b) Although Manager is responsible for Ordinary Maintenance and Repairs to the On‐Site Parking Facilities under Section 13.1.2, City is responsible for performing any work that involves penetrations in or removal, replacement or breaking of the asphalt surface (including all repaving necessary to repair any penetration), consistent with the provisions of this Section 27.3 . Accordingly, if Manager
wishes to do any work to the On‐Site Parking Facilities that may disturb the Cap, Manager will do the following prior to commencing any such work:
(i) Notify City (through the Environmental Services Department and Department of Public Works) of such proposed work, which notification should be giv
en at least 21 days prior to the start date of the work. (ii) Coordinate with City’s Environmental Services Department to notify the DTSC of the proposed work, and to submit a Soil Management Plan and Health and Safety Plan for DTSC’s approval as required by th e Deed Restriction.
(iii) Obtain City’s approval of the contractor(s) that will be doing the work, the scope of their work, and the allocation of costs for those aspects of the work involving disturbance of the Cap, which allocation will be based on the provisions of Section 28.1.2.
27.4 Manager’s R
esponsibilities for Hazardous Substances.
27.4.1 Manager’s Investigation and Remediation Obligations. Manager shall be responsible for Investigation and Remediation of any Hazardous Substances Released onto, in, under, over, from or about the Arena Land by Manager or other Manager Invitees, from and after
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the Date of Possession and continuing throughout the Term, including all costs associated with any such Investigation and/or Remediation.
27.4.2 Manager Obligations upon Release or Notice of Governmental Action. Manager shall promptly notify City in writing of any Release of Hazardous Substances which are known by Manager to be its responsibility hereunder and of any governmental action taken (or threatened) relating thereto.
(a) Manager, at its sole cost and expense, may contest any such governmental action, but shall use reasonable good faith efforts to respond to any such governmental action.
(b) Manager, using reasonable good faith efforts, shall promptly undertake and diligently prosecute to completion any Investigation or Remediation required of Manager hereunder (whether through repair, replacement or otherwise).
27.4.3 Conformance with Applicable Environmental Laws. Manager shall use reasonable good faith efforts to implement and complete any Investigation and Remediation for which Manager is responsible hereunder in conformance with Environmental Laws or as required by any Governmental Authority, or as necessary to abate an immediate risk to human health or safety.
(a) Manager shall comply with permits and licenses currently or hereafter issued to Manager in connection with any Investigation or Remediation of Hazardous Substan
ces for which Manager is responsible under Section 27.4.1.
27.4.4 Indemnification by Manager. Manager shall defend, hold harmless and indemnify City Indemnitees from any and all Environmental Claims arising from or relating to the following:
(i) The presence of, the Release of, costs of Investigation of, and/or the Remediation of Hazardous Substances that are Manager’s responsibility under Section 27.4.1; and
(ii) The costs of repairs, replacements and any capital modifications or improvements to the Arena Facili ties caused by or required as a result of any such Investigation and/or Remediation activities.
PART EIGHT
CAPITAL ASSETS
SECTION 28. CAPITAL REPAIRS, REPLACEMENTS AND ENHANCEMENTS.
28.1 General Provisions. Capital Repairs and Replacements, Capital Enhancements and other Alterations to the Arena Facilities shall be governed by the following general provisions:
28.1.1 Definitions. In this Agreement, the following terms shall have the meanings given below:
(a) “Alterations” means improvements, betterments, additions, installations, repairs or other alterations or fixtures that are permanently affixed to or have become an integral part of the Arena Land or other Arena Facilities (including Arena FF&E), including Capital Repairs and Replacements and Capital Enhancements, but excluding Renovation Improvements.
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(b) “Arena Building” or “Arena” means the multi‐purpose entertainment and sports facility described in Recital A(2), and includes the enclosed structure and all improvements on or in such structure.
(c) “Arena Facilities” means all of the following, including all Alterations made thereto: the Arena Land, the Arena Building (or Arena), the Arena Si te Improvements, the On‐Site Parking Facilities, and the Arena FF&E. (d) “Arena FF&E” means furnishings, trade fixtures, equipment, vehicles and other tangible property located on or about the other Arena Facilities and/or used in connection with the operation of the other Arena Facilities, excluding Manage r’s Personal Property, Sharks’ Personal Property, and other personal property owned by concessionaires, vendors, or other users of the Arena. (i) Examples of Arena FF&E include the scoreboard, Zambonis, hockey dasher boards and netting, basketball floor, metal detectors, office furniture, suite furniture, restaurant equipment, laundry equipment, lighting and sound equipment, video mon itors, signage systems, organ, service vehicles, and storage systems.
(ii) Arena FF&E does not include expendable items needed for Ordinary Maintenance and Repairs (defined in Section 13.1.1) that are classified as Operating Expenses consistent with the Parties’ historical practices. (e) “Arena Land” means the legal parcels of land described in Attachment No. 1. (f) “Arena Site Improvements” means the ramps, stairs, supports, loading and receiving areas, driveways, walkways, parking areas and other improvements located outside of the Arena Building, but within the boundaries of the Arena Land.
(g) “Capital Budget” means a schedule of Capital Projects that Manager proposes to complete during th e applicable Term Year, and the Capital Costs thereof, which when approved by City in accordance with Section 28.2 below shall constitute authorization for Manager to complete such Capital Projects (subject to the terms of this Section 28) and to obtain reimbursement of such Capital Costs from the Capital Reserve Fund.
(h) “Capital Co
sts” means costs that are charged as part of Capital Projects (rather than as Operating Expenses) consistent with the Parties’ historical practices, including the following:
(i) Sums paid or payable to contractors or suppliers for construction or purchase and installation of items of the Arena Facilities (including replacement or acquisitio
n of Arena FF&E), including costs of so‐called
“turnkey” contracts, purchases of goods and services, purchases of labor and materials, fees (including inspection, testing and plan check and permit fees), taxes, bonds and insurance included in prices charged by such contractors and suppliers;
(ii) Sums paid or payable to third‐party professionals (design, architectural, engine
ering, and other advisors and consultants) for design, code
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analysis, or descriptive work for the Arena Facilities; preparation of plans, bid specifications and change orders; and construction‐related supervision, inspection and testing; and
(iii) Reasonable costs incurred by City or Manager for services or other work performed by their own personnel for the review, inspection, implementation and/or delivery of specific Capital Pro jects, to the extent that such services or work would be considered Capital Costs under (i) or (ii) above if performed by third parties.
Except to the extent engaged to provide necessary services related to the review, inspection, implementation and/or delivery of a specific Capital Project, Capital Costs exclude costs incurred by City or Manage r for their own attorneys, managers, employees, and agents, or for their own administrative and overhead costs.
(i) "Capital Enhancements" means items of work that are not required to repair or replace faulty or worn out elements of the Arena Facilities, but are new improvements that are mad e to improve the quality, functioning, efficiency or competitiveness of the Arena Facilities (including Arena FF&E). For example, Capital Enhancements would include adding state‐of‐the‐art broadcast equipment; adding modern amenities to the suites; constructing new revenue‐ generating areas such as an atrium bar or expanded retail store; i nstalling cost‐ saving equipment such as fuel cells; and adding features to attract new acts, such as better dressing rooms.
(j) “Capital Projects” means either (i) Capital Repairs and Replacements (including Emergency Capital Repairs and Replacements or Parking Capital Repairs and Replacements where applicable), or (ii) Capital Enhancements. The term “Capital Projects” does not incl
ude Renovation Improvements, Code Upgrade Work,
Extraordinary Repair Work, or work needed to repair or replace Arena Facilities following a Casualty as described in Section 31.1.
(k) “Capital Repairs and Replacements” means renovation, repair, construction, acquisition or replacement of capital items included in the Arena Facilities (including Arena FF&E) which are subject to wearing out after a useful life, and therefore can be forecasted and budgeted for (except for Emergency Capital Repairs and Replacements). For example, Capital Repairs and Replacements would include replacement of roof coverings, carpeting, or mechanical equipment; replacement of worn out Zambonis; or replacement of seats by section du
e to normal wear and tear. The term “Capital Repairs and Replacements” does not include Renovation Improvements, Code Upgrade Work, Extraordinary Repair Work, or work needed to repair or replace Arena Facilities following a Casualty.
(l) “Capital Reserve Fund” means the fund described in Section 7.1, into which the Parties will mak
e deposits to provide a source of funding for reimbursement of the Capital Costs of Capital Projects.
(m) “City’s Original Improvements” means the items of the Arena Facilities originally constructed by or on behalf of City as described in Section 28.4.2.
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(n) “Code Upgrade Work” means Alterations work performed for the sole purpose of conforming either the City’s Original Improvements or the Manager’s Original Improvements to Applicable Construction Codes, including any changes thereto enacted after approval of design drawings therefor. For purposes of this Agreement, the term “Code Upgrade Work” shall not include (i ) Renovation Improvements, or (ii) Capital Repairs and Replacements that had been scheduled to be paid out of the Capital Budget within five years of the Term Year in which the work is performed, even if the work is accelerated in order to cure or correct any non‐compliance with Applica ble Construction Codes. (o) “Emergency Capital Repairs and Replacements” means Capital Repairs and Replacements that must be accomplished immediately to remove a hazard to health and safety, ensure the structural integrity of the Arena Facilities, or eliminate a condition that causes the Arena Facilities to be nonoperational. The term “E
mergency Capital Repairs and Replacements” does not include Code Upgrade Work, Extraordinary Repair Work, or work needed to repair or replace Arena Facilities following a Casualty as described in Section 31.1. (p) “Extraordinary Repair Work” means work needed to correct or cure any defect, corrosion, deterioration, subsidence, slippage, misalignment, crackin g, non‐ operation or breakage in items that are not expected to wear out during the life of the Arena Building (and therefore are not scheduled for repair or replacement) and that are reasonably necessary for the structural integrity and operational functioning of the Arena Facilities, including the following:
(i) Structural el ements such as the foundations, concrete platforms, building envelope, load bearing walls, girders, seismic joints, roof support systems, and underground slurry walls (installed to prevent migration of Hazardous Substances);
(ii) Mechanical, electrical and plumbing permanently installed infrastructure components that are not subject to normal preventative maintenance, such as the ventilation du ctwork system or pipelines or conduits; and (iii) The surface and sub‐surface components of the On‐Site Parking Facilities, including the asphalt (but only to the extent that damage is caused by subsidence or material construction‐related defects) and the Hazardous Materials Cap (as described in Section 27.2.1).
(q) "Governing St andards" means all of the following, as defined in Section 12.1.3:
(i) Applicable City Policies and Guidelines;
(ii) Applicable Laws;
(iii) Applicable Construction Codes;
(iv) Applicable Permit Requirements;
(v) Applicable Performance Standard; and
(vi) Applicable Community Standard.
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(r) “Manager’s Exclusive Use Areas” means the private executive office and conference areas occupied by Manager and Manager’s Affiliates and located within the Arena Building.
(s) “Manager’s Original Improvements” means the items of the Arena Facilities originally constructed by or on behalf of Manager as described in Section
28.4.1(a).
(t) “Manag
er’s Personal Property” means tangible personal property located within Manager’s Exclusive Use Areas and not needed for the operation of the Arena Facilities, including office computers and related office equipment such as copy machines (whether owned outright or leased from a third party), office artwork, business software, office supplies, and other person al effects. However, office furniture located within the Arena Building is part of Arena FF&E and is not Manager’s Personal Property.
(u) “On‐Site Parking Facilities” means (i) the improved parking areas known as “Lots A, B and C” and located on the same site as the Arena Buildi ng; and (ii) the improved parking area known as “Lot D” and located across the street from the Arena Building; all as more specifically described in Section 18. (v) “Parking Capital Repairs and Replacements” means Capital Repairs and Replacements made to the On‐Site Parking Facilities, excluding Extraordinary Repair Work.
(w) “Renovati
on Improvements” means the improvements, fixtures or other property constructed, modified or installed by Manager pursuant to the Renovation Agreement.
(x) “Sharks’ Exclusive Use Areas” means (i) the private locker/training facility (including coaches offices, laundry room, equipment room, and storage areas) located on the lower level of the Arena Building, and (ii) the retail mercha ndise stores and concession areas located within the Arena Building. (y) "Sharks’ Personal Property" means tangible personal property located within Sharks’ Exclusive Use Areas and not needed for the operation of the Arena Facilities, including team uniforms, team training equipment, retail store mercha
ndise and inventory, and other personal property used solely for the NHL hockey team operations.
28.1.2 Allocation of Obligations between the Parties. Subject to the other terms of this Section 28, the Parties shall have the following obligations:
(a) For Term Year 25‐26, Term Year 33‐34 and each Term Year thereafter, Manager and City shall agree upon a Capital Budget in accordance with Section 28.2. (b) Capital Projects (i.e., Capital Repairs and Replacements and Capital Enhancements) that are a pproved through the Capital Budget process shall be completed (and initially paid for) by Manager, and the Capital Costs therefor shall be reimbursed to Manager from the Capital Reserve Fund, except as provided in (c) below.
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(c) Unless otherwise mutually agreed by the Parties, Parking Capital Repairs and Replacements that are approved through the Capital Budget process shall be completed (and initially paid for) by City, including all work that involves penetrations in or removal, replacement or breaking of the asphalt surface, and the Capital Costs therefor shall be r eimbursed to City from the Capital Reserve Fund, except for those items that are included in the definition of Extraordinary Repair Work as described above.
(d) Unless otherwise mutually agreed by the Parties, City shall be solely responsible for completing and paying for any Extraordinary Repair Work, the costs of which shall not be r
eimbursed from the Capital Reserve Fund.
(e) Each Party shall be solely responsible for its own Code Upgrade Work, the costs of which shall not be reimbursed from the Capital Reserve Fund, unless otherwise mutually agreed by the Parties.
(f) Emergency Capital Repairs and Replacements shall initially be performed an d paid for by Manager or by City in accordance with Section 28.3, and the Capital Costs therefor shall be reimbursed to the Party performing the work if and to the extent provided in Section 28.3.
(g) Notwithstanding the foregoing, if either Party is entitled to the benefit of any construction or manufa
cturing warranties that cover any necessary repair or replacement work, such Party shall use all reasonable efforts to recover costs from such warranties. Any such recoveries shall be credited against amounts that would otherwise be recoverable from the Capital Reserve Fund.
28.2 Capital Budget.
28.2.1 Prioritization of Funds. Through the annual Capital Budget process, the Parties will agree on priorities for Capital Projects and utilization of funds in the Capital Reserve Fund, giving first priority to Capital Repairs and Replacements as needed to keep the Arena Facilities in good working condition, and secondary priority to Capital Enhancements. Priorities will be established pursuant to the annual Capital Budget process described below, with expenditures for Capital Projects to be based on the Capital Budget proposed by Manager and approved by City, which approval shall not be unreasonably withheld or delayed.
28.2.2 Capital Budget Approval Process.
(a) Prior to January 1 of each Term Year preceding a Term Year in which a Capital Budget is to be agreed upon, Manager shall prepare and submit to City for its approval a preliminary Capital Budget for the following Term Year which reasonably itemizes and estimates the Capital Costs for all Capital Projects that Manager anti
cipates will be completed for such Term Year.
(i) Except for Term Year 25‐26, the preliminary Capital Budget shall also include an estimate of the Capital Projects that Manager anticipates will be completed over an additional four succeeding Term Years and the estimated Capital Costs thereof, but such esti mates shall not be subject to approval and shall not constitute part of the Capital Budget.
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(ii) The Capital Budget shall identify each item of work as either a Capital Repair and Replacement or a Capital Enhancement.
(b) City shall review and approve the preliminary Capital Budget, which approval shall not be unreasonably withheld or delayed. Both Parties shall use reasonable good faith efforts to agree on a Capital Budg et.
(i) The reasonableness of any failure to approve the preliminary Capital Budget, including any dispute regarding Capital Project priorities or utilization of funds in the Capital Reserve Fund, shall be subject to Mediation in accordance with Section 39.
(c) The preliminary Capital Budget, as and when approved by City (including any agreed to revisions by City) shall constitute the final Capital Budget for the applicable Term Year. Manager shall take steps reasonably necessary to submit a final Capital Budget to City by March 1 of each Ter m Year, for the following Term Year.
(i) Notwithstanding the foregoing, City agrees to consider requests for increases in the Capital Budget during the applicable Term Year as may be reasonably requested by Manager, in accordance with City’s mid‐year budget adjustment processes.
28.2.3 Capital Budget Limitations. Except as otherwise expressly provided herein, the Capital Budget shall not exceed the balance in the Capital Reserve Fund that will be available to pay for budgeted amounts in the applicable Term Year, but any unspent funds (including interest earnings) will be carried forward to the next Term Year as provided in Section 7.1. (a) Neither Party shall be required by the other to make additional deposits to the Capital Reserve Fund, or to pay for budgeted items from its separate funds, without its prior written consent which may be withheld in it s sole and absolute discretion.
(b) Expenditures from the Capital Reserve Fund that are contemplated in the Capital Budget or otherwise approved in writing by the Parties shall be deducted from the balance in determining whether funds on hand are sufficient for additional Capital Projects.
28.2.4 Reimbursement from Capital Reserve Fu nd. Upon completion of a Capital Project approved pursuant to the Capital Budget, the Party performing the work shall be entitled to reimbursement of the approved Capital Costs from the Capital Reserve Fund. (a) Manager shall submit reimbursement requests and supporting documentation to City in accordance with the Parties’ historical practices. City shall make payment to Manager from th e Capital Reserve Fund within 60 days after receipt of an approved reimbursement request.
(b) Neither Manager nor City shall be entitled to reimbursement from the Capital Reserve Fund for any Capital Projects, other than Emergency Capital Repairs and Replacements or Self‐Help Work (as provided in Section 38.3.6), unless such Capital Projects are include
d in the Capital Budget (as may be increased pursuant
to a mid‐year budget adjustment) or otherwise approved in writing by the Parties,
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and the total amount of the Capital Budget is sufficient to cover the total amount of Capital Costs for such Capital Projects.
(i) Consistent with the Parties’ historical practices, deviations between budgeted costs and actual costs for specific line items shall not affect a Party’s right to reimbursement, provided that the tot al Capital Costs to be reimbursed during the applicable Term Year do not exceed the total expenditures authorized for that Term Year pursuant to the Capital Budget (as may be adjusted).
(ii) If the actual Capital Costs for all line items in the Capital Budget exceed the total expenditures authorized by the Capital Budget, the n an increase in the Capital Budget must be authorized by City before such excess costs may be reimbursed from the Capital Reserve Fund.
(c) If due to unexpected circumstances or mutual approval of the Parties, the Capital Costs of Capital Projects during any Term Year are in excess of the amount on hand, th
en the Party performing the work shall be entitled to recover such excess costs from Capital Reserve Fund deposits for future Term Years. (i) In no event shall Manager or City be required to fund Capital Projects in excess of the amount on hand in th e Capital Reserve Fund unless there is an expectation in such Party’s sole and absolute discretion that it will be able to recover such excess costs over the remaining Term from future Capital Reserve Fund deposits.
(d) In no event shall Code Upgrade Work or Extraordinary Repair Work be reimbursed from the Capital Reserve Fu
nd, unless mutually agreed by the Parties
in their sole discretion.
28.2.5 Capital Budget on Early Termination. Notwithstanding anything herein to the contrary, if this Agreement is terminated early pursuant to the terms of this Agreement, then in accordance with Section 7.4 the Parties’ contributions to the Capital Reserve Fund shall be reduced proportionately.
(a) In such event, the Capital Budget process shall be limited to determining what Capital Repairs and Replacements are necessary to keep the Arena Fa cilities in good working condition for the remainder of the shortened Term and the levels of funding necessary to complete such work.
28.3 Emergency Capital Repairs and Replacements.
28.3.1 Notification to City.
(a) City shall provide Manager with the names and telephone numbers of the City Manager's Office to contact in the event of an emergency involving the Arena Facilities.
(b) Unless any delay would present a material risk to human life or the structural integrity of the Arena Facilities or prevents the holding of a s cheduled Event, Manager shall notify the City Manager's Office at the emergency number provided to Manager, and receive the City's prior approval, or wait 24 hours
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without receiving a response, before commencing Emergency Capital Repairs and Replacements.
28.3.2 Performance of Work.
(a) City may make Emergency Capital Repairs and Replacements consistent with established City procedures for handling civil emergencies. (b) Alternatively, if City approves Manager's proposed action, or if City neither responds to Manager's notice nor performs the emergency work itself, then Manager shall be entitled to make the Emergency Capital Repairs and Replac
ements and City cannot contest the characterization of the work as Emergency Capital Repairs and Replacements.
28.3.3 Reimbursement.
(a) For the purpose of determining ultimate payment responsibility, Emergency Capital Repairs and Replacements shall be characterized, depending on their nature, as either Capital Repairs and Replacements or Extraordinary Repair Work. (i) For Capital Repairs and Replacements, reimbursement shall be made promptly from the Capital Reserve Fund; provided that if there are insufficient f
unds, Section 28.2.4(c) shall apply.
(ii) For Extraordinary Repair Work performed by Manager, reimbursement shall be made promptly to Manager from City’s own funds. (iii) Consistent with Section 28.2.4(a), City shall make payment to Manager for the above items within 60 days after receipt of a reimbursement request with supporting doc umentation.
(b) If any dispute exists regarding the source of or entitlement to payment, payment shall be made by the performing Party, with ultimate liability determined after the fact. Any such dispute that is not resolved through negotiation may be submitted to Mediation as provided in Section 39.
28.4 Code Upgrade Work.
28.4.1 Manager’s Obligations. Manager shall pay for (without reimbursement from the Capital Reserve Fund) and perform within the time periods required by Applicable Laws, all Code Upgrade Work that may be required with respect to the items of the Arena Facilities originally constructed by Manager or on behalf of Manager (“Manager’s Original Improvements”).
(a) For purposes of this provision, the Parties agree that Ma nager’s Original Improvements shall be deemed to include the original construction of the interior improvements for the Sharks’ Exclusive Use Areas; Manager’s Exclusive Use Areas; concourse suites; concourse and arena‐level concessions; restaurant and club; kitchen, pantries, commissary and related food‐preparation facilities; advertising systems; and all improvements within the entire skybox level.
28.4.2 City’s Obli
gations. City shall pay for (without reimbursement from the Capital Reserve Fund) and perform within the time periods required by Applicable Laws, all Code Upgrade
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Work with respect to the items of the Arena Facilities originally constructed by or on behalf of City (“City’s Original Improvements”).
(a) For purposes of this provision, the Parties agree that City’s Original Improvements shall be deemed to include all elements of the original construction of the Arena Facilities except for Manager’s Original Improvements, includi ng all “core and shell” and other structural elements; doors, elevators, ramps and stairways; public restrooms, drinking fountains and service areas; the arena bowl seating areas and related bowl facilities; press box; all major mechanical, electrical, plumbing, and other utility systems serving the Arena Building; fire and lif e safety systems; sound and lighting systems; directional and informational signage; and all parking and site improvements.
28.4.3 Right to Contest. Each party reserves the right to contest Applicable Construction Codes so long as such action does not result in the closure or limitation on the use of the Arena.
28.5 Additional Capital Projects Outside of Budget Process.
28.5.1 Election to Use Own Funds. Either Party may, at any time, propose additional Capital Projects (both Capital Repairs and Replacements and Capital Enhancements) that are not approved through the Capital Budget process (and reimbursed by the Capital Reserve Fund), but instead are intended to be paid for out of the proposing Party’s own funds or own sources of financing.
(a) Examples of additional Capital Projects that Manage r may propose to construct with Manager’s own funds include a new atrium bar; additional signage both inside and outside of the Arena Building; and additional concession or retail locations within the Arena.
(b) The proposing Party may request that the other Party contribute to the cost of additional Capital Projects . However, the other Party may deny the proposing Party’s request in such other Party’s sole and absolute discretion, in which case the proposing Party shall proceed (if at all) at such Party’s sole cost. (c) As provided in Section 9.1, Manager shall be entitled to retain all Operating Revenues dir ectly or indirectly generated by Capital Projects, including any Capital Projects funded by the Capital Reserve Fund or the Parties’ own funds.
However, the foregoing shall not apply where the Manager expressly agrees in writing to share such Operating Revenues with City, such as where City agrees to contribute towards the co st of the Capital Projects.
28.5.2 Approval Outside of Capital Budget Process. Regardless of whether or not the other Party agrees to contribute toward the cost of any additional Capital Projects outside of the Capital Budget process, the proposing Party shall not undertake any such additional Capital Projects without first obtaining the other Party’s written approval, including (in the case of Alterations) obtaining the other Party’s written approval of all applicable plans and spe
cifications. The other Party’s approval shall not be unreasonably withheld, conditioned or delayed, subject to the following:
(a) If City proposes a Capital Project, Manager shall have the right to disapprove the proposal if, in Manager’s reasonable opinion, such Capital Project would have a
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negative impact on the operational convenience and operational cost of the Arena, or if the construction work would unreasonably interfere with use of the Arena by Manager or SJS LLC or other Manager Invitees.
(b) If additional Capital Projects proposed by Manager outside of the annual Capital Budget process (i) do not affect any structural ele ments of the Arena, are not visible from the exterior of the Arena nor by customers in the public areas of the Arena, and cost less than $500,000; or (ii) are reasonably necessary to keep the Arena up to the Applicable Performance Standard with regard to non‐structural elements d
esigned for the comfort and convenience of Arena customers; then in those circumstances the scope of City’s approval rights shall be limited to confirming whether or not any applicable plans and specifications violate this Agreement or Applicable Construction Codes.
(c) Except as otherwise provided in this Agreement, City shall ha ve the sole and absolute discretion to withhold approval of any proposed Alteration that would add to, delete from, or in any way change the configuration or appearance of the exterior of the Arena, including any work that would permanently (i) change the color of, (ii) remove the foliage from, or (iii) appen d advertising material to the exterior of the Arena.
28.6 Implementation of Alterations Work.
28.6.1 Pre Construction Planning. Manager shall use its reasonable good faith efforts to plan and prepare for any construction project sufficiently in advance of commencing construction to allow adequate time for the development of complete plans and specifications for each project (to the extent applicable) and the selection of a contractor or construction manager.
28.6.2 Implementation Responsibilities.
(a) Manager shall implement the design and construction of Capital Repairs and Replacements, Capital Enhancements, and Code Upgrade Work related to Manager’s Original Improvements.
(i) To the extent this Agreement provides for Manager to be reimbursed the cost of such work from the Capital Reserve Fund, then Manager shall be reimbursed for Capital Co sts as defined in Section 28.1.1(i) above, but shall not be entitled to reimbursement of other costs such as Manager’s administrative overhead.
(b) City may elect to implement the design and construction of Extraordinary Repair Work, Code Upgrade Work related to City’s Original Improvements, and Capital Enhancements proposed by City, or may delegate such responsibility to Manage r.
Manager shall accept such responsibility as delegated to it by City. (i) City shall pay for all Capital Costs of such work directly to the professionals, contractors and material suppliers providing services or materials for the same, plus a reasonable fee to Manager fo r any implementation work provided by Manager pursuant to agreement of the Parties.
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(c) City shall implement, and shall not delegate to Manager, the design and construction of all Parking Capital Repairs and Replacements. (d) Where applicable, the Party implementing any Alterations under this Agreement shall:
(i) Comply with all Governing Standards related to the Alterations work, including payment of prevailing wages (but prevailing wages are required under this Agreement in the constr
uction of Capital Projects only to the
extent they are required by Applicable Laws or by the requirements set forth in the Non‐Discrimination Policy attached as Attachment No. 8); and
(ii) Exercise its supervisory responsibilities to ensure that all such work and materials utilized therein shall be of the highest quality appropriate to the uses to which such improvements and materials are intended and as are reasonably consistent with the nature of the Alterations, the amount budgeted therefor and the Appli cable Performance Standard.
28.7 Surety Bonds.
28.7.1 General Requirements. Except as provided in Section 28.7.3 below, any construction project carried out by Manager under this Agreement shall not commence without the provision of surety bonds of the types, in the amounts and for the purposes noted below, to the extent surety bonds are required by City for similar undertakings, unless the prior written approval of City (through the City Manager) has be en obtained to proceed without requiring such surety bonds.
(a) Such surety bonds shall be duly executed by a responsible corporate surety, authorized to issue such bonds in the State of California, and secured through an authorized agent with an office in California.
(b) Manager, or Manager's general construction cont ractor, shall pay all bond premiums, costs and incidentals as a part of the project cost. Each bond shall be signed by either Manager or Manager's general construction contractor and the Surety and shall name the City of San Jose and Manager as obligees. (c) Should any bond become insufficient, Manager or Manager's gen eral construction contractor shall renew the bond within 10 days after receiving notice from City.
(d) Should any Surety at any time be unsatisfactory to City, notice will be given to Manager to that effect and Manager or Manager's general construction contractor shall obtain a new Surety acceptable to Ci ty. (e) Manager shall require that changes in work within the scope of the original work, or extensions of time, made pursuant to the construction contract(s), shall in no way release the Surety from its obligations. Notice of such changes or extensions shall be waived by the Surety.
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28.7.2 Types of Surety Bonds Required. Manager, or Manager's general construction contractor, shall provide the following surety bonds for each construction project, to the extent surety bonds are required by City for similar undertakings. (a) A "Payment Bond" (Material and Labor Bond) in the amount of 100% of the contract price, for construction of the particular Alteration, which shall meet the requirements of California Civil Code Sections 95 50 and 9554, and shall be maintained in full force and effect until the particular Alteration is completed and a certificate of completion is recorded (to the extent required); and (b) A "Faithful Performance Bond," which shall be for 100% of the contract price for construction of the parti cular Alteration to guarantee faithful performance of all work in accordance with the approved plans and specifications, and that all materials and workmanship will be free from original or developed defects.
28.7.3 Exception to Surety Bond Requirement. City (through the City Manager) shall approve Manager's request to proceed without bonds if Manager provides to City a letter of credit or other assurance, reasonably acceptable to City to ensure that funds will be available to complete any work commenced by Manager.
SECTION 29. OWNERSHIP OF ASSETS.
29.1 Ownership and Surrender of Arena Facilities.
29.1.1 Exclusive Property of City. All of the Arena Facilities (as defined in Section 28.1.1) shall be held by and shall continue to be held by and shall be the exclusive property of City, subject to Manager’s Possessory Interest Rights (defined in Section 6.1.3), including the right to use, occupy, possess, control, brand, operate and make a profit from the Arena Facilities during the Term as provided in this Agre ement.
(a) All Renovation Improvements, Alterations made to the Arena Facilities (including Capital Enhancements), and all other work whatsoever that increases the value of the Arena Facilities (including Ordinary Maintenance and Repairs), shall be deemed to be a part of the Arena Facilities when made (and therefore owned by City), whether the costs therefor are rei mbursed from the Capital Reserve Fund, are paid for by Manager, or are paid for by City.
(b) During the Term, Manager shall not permanently remove any Arena FF&E or other Arena Facilities from the Arena Land, except as part of the Renovation Project or a Ca pital Project, or as otherwise approved by City in writing.
29.1.2 Surrender upon Termination. Upon the expiration or earlier termination of this Agreement in accordance with the terms hereof, Manager shall surrender (and shall cause SJS LLC and other occupants to surrender) possession of the Arena Facilities to City.
Thereafter neither Manager nor SJS LLC (nor any other party claiming under Manager) shall have any rights or interests in the Arena Facilities. (a) Manager shall own Manager’s Personal Property, and may remove such prop erty at any time during the Term up to and including the Termination Date. (b) SJS LLC shall own Sharks’ Personal Property, and may remove such property at any time during the Term up to and including the Termination Date.
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(c) To the extent provided by Section 30 (if an early termination is caused by a Casualty) or by Section 34 (if an early termination is caused by a Taking), Manager and SJS LLC shall each be entitled to recover compensation for their loss of use of the Arena Facilities, loss of investment in th e Arena Facilities, and other damages related to their rights and interests under this Agreement, including Manager’s Possessory Interest Rights.
29.2 Pledge or Hypothecation; Lender Rights.
29.2.1 Agreement is Subordinate to Financing Leases. City may from time to time lease, sublease, pledge or otherwise hypothecate all or a portion of the Arena Facilities to finance the development, repair, replacement, improvement or maintenance of the Arena Facilities, and for any other public purpose of City. Without limiting the foregoing, Manager acknowledges that City intends to cause the City of San Jose Financing Authority (the “Financi
ng Authority”) to issue one or more series of lease revenue bonds (together with any bonds issued to refund such bonds, “Lease Revenue Bonds”) to assist the City to finance Project Costs (as described in the Renovation Agreement). To support the payment of debt services on the Le ase Revenue Bonds, City and Financing Authority from time to time will enter into (i) one or more site leases pursuant to which City will lease the Arena Facilities to the Financing Authority (collectively, the “Financing Site Leases”), and (ii) one or more lease agreements pursuant to which Financing Authority will lease the Arena Fa
cilities back to City (collectively, the “Financing Lease Agreements” and together with the Financing Site Leases, the “Financing Leases”). Manager and City agree that Manager’s leasehold interest in the Arena Facilities pursuant to this Agreement shall be subject and subordinate to the leasehold interests of City and Fina ncing Authority under the Financing Leases. The rights of Manager and its Affiliates hereunder shall not be disturbed, except in accordance with Section 38.3 in case of an Event of Default by Manager that has occurred and is continuing. In the event of termination of, or other enforceme
nt action under, the Financing Leases by City, Financing Authority or any trustee of the Lease Revenue Bonds (“Bond Trustee”), the Manager shall attorn to the Bond Trustee or other lessor under the terms and conditions of this Agreement.
29.2.2 Manager’s Right to Pledge or Hypothecate Operating Revenues. Manager may fr om time to time pledge or otherwise hypothecate its interest in the Operating Revenues arising under this Agreement in connection with any loans to Manager or SJS LLC, the proceeds of which are used for Alterations to the Arena Facilities, for the acquisition or improvement of Off‐Site Parking Facilities, or for the operations of Manager or SJS LLC, provided tha
t any such pledge or other hypothecation shall be subordinate to this Agreement and any and all such Financing Leases, and shall not permit any lender to succeed to the rights of Manager or its Affiliates under this Agreement, except in accordance with the expr ess terms of this Agreement.
29.2.3 Further Assurances. In furtherance of the foregoing provisions of this Section 29.2, from time to time, each Party will execute and deliver such additional instruments, certificates or documents, and will take all such actions as the other Party may request, for the purposes of implementing or effectuating the provisions of Section 29.2.1 or 29.2.2, including, without limitation, executing and delivering one or more amendments to any memoranda recorded with the Re
corder’s Office of the County of Santa Clara, estoppel
certificates, and subordination, non‐disturbance and attornment agreements, as
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applicable and/or customary under the relevant circumstances.
PART NINE
ALLOCATION OF RISK
SECTION 30. CASUALTY INSURANCE.
30.1 Property Insurance. During the Term of this Agreement, City shall maintain a property insurance policy or policies insuring the Arena Facilities (including improvements and betterments constructed by City, Manager, or SJS LLC), in such forms and with such carriers as shall be within industry standards. The cost of such property insurance shall be borne solely by City, except to the extent expressly provided in this Se ction 30.
30.1.1 Policy Coverages. The property insurance policy shall at minimum include the following coverages:
(i) “All risk” coverage, such as that provided by ISO “Causes of Loss – Special Form” or the equivalent.
(ii) 100% Replacement Cost, except for coverage for natural hazard perils, for repair and reconstruction of the Arena Facilities, with a reasonable deductible to be determined by City in its sole discre tion. (iii) Wind, Flood, Boiler, and Sprinkler Leakage coverages, in such amounts as may be determined by City in accordance with established City practice. (iv) 100% Replacement Cost, except for coverage for natural hazard perils, for repair and reconstruction of improvements and betterments constructed by City, Manager, or SJS LLC once ins talled in the Arena Facilities (whether prior to or following the CommencementEffective Date); provided, however, that if the Arena Facilities are not repaired and reconstructed following a covered loss, the policies will provide for Actual Cash Value for damaged improvements and betterments.
30.1.2 Course of Construction. Notwithstanding the foregoing, for the Renovation Project and any other major construction project as reasonably determined by City, the following shall apply:
(a) Manager shall purchase (or cause its contractor(s) to purchase) builder’s risk or similar property insurance protecting against damage or loss to the work in progress, on such terms and conditions as shall be reasonably approved by City. (b) Manager shall mee
t with City’s designated property insurance loss prevention consultant as may be reasonably requested by City’s Risk Manager, to review design and construction details (generally at the 30% completion stage).
Manager agrees to meet and confer with City to discuss any recommendations made by such loss prevention consu ltant.
30.1.3 Personal Property not Covered by City. City shall not be required to insure for any losses to Manager’s Personal Property or Sharks’ Personal Property (each as defined above in Section 28.1.1), or any other personal property owned by Manager Invitees. Manager shall, at no cost to City, maintain (or cause Manager Invitees to maintain) property
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insurance policies covering such losses, in such forms and with such carriers as Manager may determine in its sole discretion.
30.1.4 Loss Payable. If a loss occurs that is insured under City’s property insurance policies, then subject to the provisions of Section 31 below, the Parties may either repair and reconstruct the Arena Facilities or terminate this Agreement. (a) If this Agreement is not terminated, all property insurance proceeds shall be used to pay for repair and reconstruction of the Arena Facilities and related work. (i) City shall be obligated to pay for any d eductible amount on property in which City has an insurable interest.
(b) If the Arena Facilities (including improvements and betterments constructed by City, Manager or SJS LLC) are not repaired and reconstructed following a covered loss, all property insurance proceeds payable with respect to such loss shall be paid to the part
y or parties entitled thereto as their interests may appear.
30.2 Business Interruption Insurance.
30.2.1 Manager’s Election. At Manager’s election, Manager may maintain its own policy of business interruption insurance or coverage in an amount specified by Manager, which shall insure the business losses of Manager in the event of damage to the Arena Facilities.
30.2.2 Loss Payable. In the event of a covered loss, all business interruption insurance proceeds, if any, shall be payable to and be the sole property of Manager, and may be used by Manager to pay for Annual Fees, Operating Expenses, or any other losses associated with the covered loss.
30.3 Cooperation.
30.3.1 City’s Obligation to Pursue Claims. With respect to amounts that are payable under the City’s property insurance policies, in the event that a covered loss occurs to the Arena Facilities, but City's insurance carrier denies coverage for such loss and/or business interruption, then City shall take all commercially reasonable actions against the insurance carrier as may be needed to pursue such claims against City's insurance carrier, as determ
ined by the City in its discretion taking into account all relevant facts and circumstances including: (i) whether pursuing such claim is likely to have continuing and/or additional material adverse impacts on the City beyond the specific claim in question, and (ii) whether such claim involves any larger policy issues of ma terial importance to the City.
30.3.2 Information Requests. In the event of a Casualty, the Parties will (i) meet and confer with each other to discuss the best course of action, (ii) cooperate to provide information reasonably requested by the insurance carrier or the other Party; and (iii) coordinate communications with representatives of the insurers, so as to help facilitate an appropriate and timely response to any claims.
30.4 Waiver of Subrogation. Notwithstanding anything to the contrary containe d in this Agreement, Manager and City hereby release the other Party and waive their entire right to recover damages
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against the other Party for loss or damage to the releasing Party’s property arising out of or incident to the perils defined in the respective property insurance policies that the Parties are required to maintain pursuant to this Section 30. The released Party shall not be liable to the releasing Party for any loss of or dama ge to the property, equipment, buildings or premises in which there is an insurable interest held by the releasing Party and arising out of or incident to any perils required to be covered by such Party’s own property insurance policy, notwithstanding the fact that such loss or damage may have resulted from the ne gligence of the City Invitees or the Manager Invitees (defined in Section 27.1.2), as the case may be. Each Party agrees to obtain from its insurance carriers an appropriate “waiver of subrogation” provision in all policies of property insurance as may be necessary in accordance with the in tent of this Section 30.4.
30.5 Earthquake Insurance.
30.5.1 Option to Maintain Earthquake Insurance. Either Party shall have the option to procure at its cost and maintain (or cause others to procure and maintain on its behalf) earthquake insurance for the Arena Facilities in such amounts, with such deductibles, and upon such other terms as the procuring Party may desire.
(a) The procuring Party shall not be obligated to name the other Party as loss paye e on any earthquake insurance obtained at the expense of the procuring Party. (b) Upon reasonable request by either Party, the other Party shall provide a summary of any earthquake insurance policies procured by such Party.
30.5.2 Loss Payable. If a loss occurs that is insured under any earthquake poli cy procured by a Party, then all proceeds from such policy shall be paid to such Party in accordance with the terms of the policy, and the non‐procuring Party shall have no claim or right to such proceeds.
30.6 Terrorism Insurance.
30.6.1 City’s Option to Maintain Terrorism Insurance. City may elect in its sole discretion to purchase insurance protecting against terrorism; provided, however, that if during the Term City obtains such insurance for other properties owned by City, City shall also obtain such insurance for the Arena Facilities.
30.6.2 Manager’s Option to Maintain Terrorism Insurance. If City fails to obtain terrorism coverage, or if such coverage is insufficient in Manager’s opinion, Manager shall have the right to obtain (or cause SJS LLC to obtain) such policies of terrorism insurance at no cost to City, in such amounts and upon such terms as Manager may elect.
30.7 General Property Insurance Requirements.
30.7.1 Annual Notification by Manager. Within 30 days following written request by City (to be delivered in April each year), but not later than June 1 of each year, Manager shall provide City with the following information, to the best of Manager’s knowledge:
(a) The cost of construction any improvements or betterments (i.e., Alterations) that have been made or are under contract to be made to th e Arena Facilities (including the Arena FF&E) for the 12‐month period commencing on the previous November 1 and ending on the following October 31; and
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(b) The estimated cost of any Alterations that Manager reasonably anticipates to be completed during 12‐month period of November 1 through October 31 immediately succeeding the period described in subpart (a) above.
30.7.2 Annual Notification by City. Promptly following the commencement of City’s annual property insurance policy period, City shall provide Manager with certificates of insurance with applicable endorsements, evidencing the insurance required to be carried by City under this Section 30.
30.7.3 Further Actions. Each Party shall take such further administrative actions and execute such further documents as may be reasonably requested by the other Party in order to preserve the Parties’ rights and claims under their respective insurance policies and to effectuate the terms and intentions of this Section 30.
30.7.4 Optional Coverages. Either Party may procure and maintain, at its own cost, such optional policies of insurance or special coverages as may be required under loans or other contractual obligations or as otherwise desired by such Party. Except as expressly provided in this Section 30, the non‐procuring Party shall have no right, claim or interest in any such optional insurance policy.
30.7.5 Survival. The terms of this Section 30 regarding the allocation and payment of insurance proceeds in the event of a Casualty and the obligation to pursue claims shall survive any termination of this Agreement.
SECTION 31. DAMAGE AND DESTRUCTION.
31.1 Casualty Defined. In this Agreement, the term “Casualty” means a fire, storm, flood, earthquake, civil commotion, act of terrorism, or other active physical peril that causes damage to, destruction of, or loss of use of the Arena Facilities or any material part thereof.
31.2 City’s Obligation to Repair. If all or any portion of the Arena Facilities (including the Arena FF&E) shall be damaged or destroyed by Casualty, City shall promptly repair and reconstruct the same (without reimbursement by Manager), unless one of the following circumstances exists:
(a) It is impossible, from a physical, engineering standpoint, to repair and reconstruct the damaged or destroyed Arena Facilities, or
(b) The Casualty occurs during the last three (3) years of the Ter m, and the estimated cost incidental to, arising out of, or required to repair the damage exceeds an amount equal to the product obtained by multiplying One Million Dollars ($1,000,000) by the number of months remaining in the Term, or (c) The estimated cost incide ntal to, arising out of, or required to repair the damage exceeds the sum of the following (which difference is referred to herein as the “Shortfall”):
(i) Insurance proceeds payable to City for 100% replacement cost and related work; plus
(ii) The amount of additional insurance proceeds that City wo uld have received above the amount indicated in subsection (i) above if City had purchased the property insurance required to be purchased by City under Section 30.1; plus
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(iii) The applicable deductible amount payable by City under City’s property insurance policy; plus
(iv) Any amount then held in the Capital Reserve Fund, to the extent that such amount previously had not been allocated for work already performed.
31.3 Time Period for Repair by City. If City is required pursuant to the above provisions to repair and reconstruct the Arena Facilities, City shall commence such work as soon as reasonably practicable following the date of the Casualty (but in all cases within 18 months after the Casualty, unless tolled by a Force Majeure Event) and shall diligently prosecute such work to completion.
31.4 Notice by City of Election to Repair or Terminate.
31.4.1 Election by City. If City is not required by the foregoing provisions to repair and reconstruct the Arena Facilities, then City shall elect, by written notice to Manager delivered by the Determination Date (defined below), to either: (i) repair and reconstruct the Arena Facilities, with any Shortfall to be paid by City from its separate funds, or (ii) terminate this Agreement. A failure by City to delive r such a notice by the Determination Date shall constitute an election not to repair and reconstruct the Facility.
31.4.2 Determination Date. As used herein, the “Determination Date” shall mean 60 days following City’s receipt of a reasonably detailed estimate of the costs of design and construction work necessary to repair and reconstruct the Arena Facilities; provided, however, that City shall use diligent, good faith efforts to obtain such information as soon as possible, but not later than sixteen (16) months after the date of the Casualty. In no event shall th
e Determination Date be later than sixteen (16) months following the date of the Casualty.
31.5 Manager’s Election to Repair or Terminate. If City is not required to repair and reconstruct the Arena Facilities under Section 31.2, and does not elect to repair and reconstruct the Arena Facilities under Section 31.4, then Manager shall have 150 days after receipt of City's written notice (or 150 days after the Determination Date, if City fails to deliver a notice) to elect to either:
(i) terminate this Ag reement (effective within 30 days after the date of Manager’s notice), or (ii) pay any Shortfall incurred by City to repair and reconstruct the Arena Facilities, or (iii) continue to occupy the undamaged portions of the Arena Facilities.
31.5.1 Election to Repair. If Manager elects to pay the Shortfall to have City repair and reconstruct the Arena Facilities, this Agreement shall not terminate, and City shall be required to repair and reconstruct the Arena Facilities as soon as is reasonably possible following City’s receipt insurance proceeds. City shall use all available insurance proceeds for the cost of rebuilding and related work (such as clean up, project man agement, demolition, environmental mitigation, etc.).
(a) From its separate funds, Manager shall pay City an amount equal to the Shortfall as defined above.
31.5.2 Election to Terminate. If Manager does not give notice of its election within said 150‐day period, then Manager shall be deemed to have elected to terminate this Agreement effective as of 30 days following the end of said 150‐day period.
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31.6 Effect of Termination.
31.6.1 Parties’ Obligations. Upon termination of this Agreement pursuant to this Section 31, each Party shall be released from all further obligations and duties to the other Party as of the date of the Casualty, except for obligations that expressly survive the termination of this Agreement.
31.6.2 Manager’s Right to Negotiate to Resume Management. If City elects to not repair and reconstruct the Arena Facilities and terminates this Agreement, and subsequently commences such repair and reconstruction within three (3) years after terminating this Agreement, then City and Manager agree to negotiate in good faith the right of Manager to resume managing the Arena (and the right of the San Jose Sharks to use the Arena) under the terms and condi
tions of this Agreement.
31.7 Waiver of Statutory Provisions. To the extent applicable to this Agreement, the Parties waive the provisions of California Civil Code Sections 1932 and 1933(4).
31.8 Fee Credit for Casualty. If as a result of a Casualty the Arena Facilities are rendered unusable as a public entertainment facility for hockey games and/or other forms of entertainment as contemplated by this Agreement, with full seating, vending, concessions, advertising and onsite parking capacity, then Manager shall be entitled to a Fee Credit against the Annual Fees payable during the Term, in accordance with Section 6.2.3.
SECTION 32. LIABILITY INSURANCE.
32.1 Policy Requirements.
32.1.1 Required Coverages. During the Term of this Agreement, to the extent available on reasonably prudent business terms, Manager shall procure and maintain in full force and effect policies of liability insurance containing not less than the coverages set forth in Attachment No. 17 attached hereto and incorporated herein by reference (“Liability Insurance Requirements Rider”). Manager shall be obligated to pay any deductible upon the occurrence of an insured event as may be required under such policy.
32.1.2 Exception for Liquor Liability Coverage. If Manager does not serve liquor in the Arena, and all liquor vendors have obtained the liquor liability coverage required under the Liability Insurance Requirements Rider, Manager may purchase excess liquor liability coverage in lieu of liquor liability coverage.
32.1.3 Increases in Coverages. The liability insurance coverages provided in the Liability Insurance Requirements Rider are subject to such upward adjustments from time to time as may be approved by Manager, provided the cost of such adjustments are within amounts budgeted therefor, and to such downward adjustments from time to time as may be mutually agreed upon in writing by City and Manager.
32.2 Policies to be Mai
ntained by Subtenants, Contractors and Other Third Parties. Manager shall cause its subtenants, concessionaires, service contractors and others performing work or services in or about the Arena Facilities to procure and maintain policies of insurance in accordance with the provisions of Section III of the Liability Insurance Requirements Rider.
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32.3 Claims Administration.
32.3.1 Notice Procedure. City agrees that promptly following its receipt of any claim against City and/or Arena Authority with respect to injuries or damages occurring on or about the Arena Facilities, City shall provide a full copy of such claim to Manager for handling as Manager deems appropriate.
(a) Within ten business days following receipt of any such claim, Manager shall notify City in writing as to wh ether Manager intends to resolve the claim itself or tender the claim to its insurance carriers. Upon City’s request, Manager shall provide City with copies of all relevant correspondence and other documents regarding the disposition of such claim.
(b) City agrees not to contact Manager’s insurance carriers directly, unless Manager fails to provide City with th
e written notification and related information required under subsection (a) above. City shall provide Manager with copies of all correspondence between City and Manager’s insurance carriers. (c) Nothing herein shall affect Manager’s indemnification obligations set forth in Section 33 below.
32.3.2 Duty to Cooperate. In the event of a cl aim, the Parties shall cooperate with each other and with the insurance carriers as reasonably necessary to comply with the requirements of the insurance policies.
SECTION 33. INDEMNIFICATION.
33.1 General Provisions.
33.1.1 Definitions. In this Agreement, the following terms shall have the meanings given below:
(a) “Claims” means any and all claims for damages or injuries of any kind, demands, liens, liabilities, fines, penalties, charges, causes of action or enforcement actions of any kind, judgments, losses, and all costs and expenses incurred in connection therewith, including actual attorneys’ fees, costs of defense, and consultants’ fees.
(b) “City Ind
emnitees” means City and other City Authorities (including the Arena Authority), their successors and assigns, and all of their respective directors, officers, employees, members, managers, representatives and agents. (c) “Manager Indemnitees” means Manager and its Affiliates (including SJS LLC), their successors and assigns, and all of their re spective lenders, directors, officers, employees, members, managers, representatives and agents.
33.2 Indemnification by Manager. Except as otherwise provided herein, Manager shall indemnify, defend and save harmless City Indemnitees from and against any and all Claims that are made or brought against any of the City Indemnitees by third parties arising out of or incurred in connection with any of the following:
(i) Any contracts, agreements, licenses, use permits or other obligations entered into by Manager;
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(ii) The lack of exercise of reasonable care by Manager in the employment of any of its employees or the lack of reasonable care in the direction and supervision of Manager's employees in the management, operation and maintenance of the Arena;
(iii) The willful or negligent act or omission of Manager, its agents, o fficers, employees, directors or others in privity with Manager (other than City Indemnitees); or
(iv) The failure or omission of Manager to observe and perform any of its material obligations, covenants and conditions to be observed and performed by it under this Agreement.
Manager’s obligations pursuant to the indemnity set forth abo ve shall not be limited to the amount of any insurance required of, or otherwise carried by, Manager. However, Manager shall not be required to indemnify City Indemnitees to the extent that any damages or injuries are ultimately determined to have been caused by the negligent, intentional or wrongful acts or omissions of City Indemnitees.
33.3 Indemnific
ation by City. Except as otherwise provided herein, City shall indemnify, defend and save harmless Manager Indemnitees from and against any and all Claims that are made or brought against any of the Manager Indemnitees by third parties arising out of or incurred in connection with any of the following:
(i) Any contracts, agreements, licenses, use permits or other obligations entered into by City or Arena Authority, including tho se relating to use of the Arena by City or Arena Authority;
(ii) The lack of exercise of reasonable care by City or Arena Authority in the employment of its employees or the lack of reasonable care in the direction and/or supervision of such employees with respect to any activities don
e in, on or in the vicinity of the Arena;
(iii) The willful or the negligent act or omission of City or Arena Authority, or any of their agents, officers, officials, members, employees or others in privity with City or Arena Authority (other than Manager Indemnitees); (iv) The failure or omission of City or Arena A uthority to observe and perform any of its material obligations, covenants and conditions to be observed or performed by it under the terms and provisions of this Agreement; (v) Any action or inaction by Manager in reliance on written instructions received by Manager from City or Arena Authority; or
(vi) Any ac
tion taken by Manager at the direction of City police, including in connection with the Impoundment of goods or equipment to enforce the No Peddling Law (as described in Section 25.3) or the release of video surveillance footage (as described in Section 26).
The obli
gations of City and Arena Authority pursuant to the indemnity set forth above shall not be limited to the amount of any insurance required of, or otherwise carried by, City. However, City shall not be required to indemnify Manager Indemnitees to the extent that any damages or
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injuries are ultimately determined to have been caused by the negligent, intentional or wrongful acts or omissions of Manager Indemnitees.
33.4 Exception for Law Enforcement Activities. Notwithstanding any of the foregoing provisions to the contrary, to the extent required by Applicable Laws, Manager shall indemnify City Indemnitees from any and all Claims arising out of On‐Site Security Services or Off‐Site Traffic Control Services provided by City’s Secondary Employment Unit, to the extent that such Claims are not covered by the LEL Policy as des cribed in Section 24.
33.5 Survival. The terms of this Section 33 shall survive the expiration or earlier termination of the Agreement.
SECTION 34. Eminent Domain.
34.1 General Provisions.
34.1.1 Defined Terms. In this Agreement, the following terms shall have the meanings given below:
(a) “Arena Facilities” has the meaning given in Section 28.1.1, and includes the Arena Land, the Arena Building, the Arena Site Improvements, the On‐Site Parking Facilities, and the Arena FF&E, all as altered from time to time. (b) “Award” means all compensation, damages, income, rent, awards, or any inter est therein whatsoever which may be paid or made in connection with a Taking, excluding any separate payments made for litigation costs, attorneys’ fees, and related expenses pursuant to a court order or settlement agreement. (c) “Date of Taking” means the earlier of (i) the date when a final order is enter ed conveying title to the subject property (or property interest) to the acquiring Governmental Authority, or (ii) the date that the acquiring Governmental Authority is authorized to take possession of the subject property (or property interest) per an order of possession.
(d) “Partial Taking” means a Taking of th e Arena Facilities that is not a Total Taking. (e) “Taking” means the exercise by any Governmental Authority (other than City) of the power of eminent domain or condemnation, and any purchase or other acquisition in lieu of condemnation, including a voluntary sale or conveyance in lieu of condemnation and acts const ituting inverse condemnation, pursuant to which any interest in the Arena Facilities (including a fee, leasehold, or easement interest) is conveyed to the Governmental Authority.
(f) “Temporary Taking” means a Taking, on a temporary basis, for a period not exceeding one (1) year.
(g) “Total Taking” means any of the followi ng:
(i) Any Taking of the entire fee interest in the Arena Facilities; (ii) A Taking of such a substantial part of the Arena Facilities that the Arena Facilities remaining after such Taking (even if restoration were made) are rendered economically unsuitable as a public entertainment facility for
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hockey games and/or other forms of entertainment as contemplated by this Agreement, with full seating, vending, concessions, advertising and access to the Arena Building and On‐Site Parking Facilities; (iii) Any Taking that prevents the playing of hockey consistent with the NHL requirements and schedule (allowing for mitigation by Manager and SJS LLC and repair or restoration by City).
34.1.2 Nature of Ma
nager’s Interest. For all purposes related to eminent domain, the interest of Manager under this Agreement shall be deemed the interest of a tenant under a lease.
34.1.3 Waiver of Statutory Provisions. To the fullest extent permitted by Applicable Laws, the Parties hereby waive Code of Civil Procedure Section 1265.130 and any other provision of California’s Eminent Domain Law (Title 7 of Part 3 of the Code of Civil Procedure, commencing with Section 1230.010 et seq.) that is contrary to the provisions of this Section 34, and agree that the provisions of this Section 34 shall control over any inconsistent provision of said Emine
nt Domain Law.
34.1.4 Notice. Any Party who becomes aware of any contemplated Taking or negotiations that might result in a Taking of any portion of the Arena Facilities or interests under this Agreement shall promptly give notice thereof to the other Party.
34.1.5 Proceedings. To the fullest extent permitted by Applicable Laws, each Party shall have the right, at its own expense, to appear in any action related to a Taking that arises prior to the expiration or earlier termination of this Agreement, and to participate in all hearings, trials and appeals relating thereto even if this Agreement has been terminated. (a) Neither Party shall settle or compromis e any right of the other Party to receive an Award.
(b) Each Party has the right to assert a claim for any Award with respect to (i) the value of its interest in the Arena Facilities, (ii) the loss of its rights under this Agreement (prior to any modification or terminatio n as a result of the Taking), and (iii) any other compensation or damages to which such Party may be entitled, giving consideration to any other rights and obligations of the Parties under this Agreement in the event of a Taking (collectively, “Condemnation Losses”).
34.1.6 Separate Award to Manager or SJS LL C. Nothing in this Agreement shall preclude Manager and/or SJS LLC from obtaining a separate Award for the loss of business goodwill, leasehold bonus value, relocation expenses, and/or for the Taking of their Personal Property, and City shall have no right to any portion of such Award.
34.1.7 Survival. The provisions of this Section 34 shall survive the expiration or earlier termination of this Agreement with respect to any claim arising prior to such termination.
34.2 Total Taking. If there is a Total Taking, other than a Temporary Taking, the following shall apply:
34.2.1 Automatic Termination. If there is a permanent Taking of the entire fee interest in the Arena Facilities, this Agreement shall automatically terminate as of the Date of Taking.
34.2.2 Optional Termination. If there is any other permanent Total Taking, Manager shall have the right to terminate this Agreement by written notice given to City within 120 days after the Date of Taking. However, if Manager does not exercise such right to terminate this
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Agreement, then the Taking shall be treated as a Partial Taking rather than a Total Taking, and the provisions of Section 34.3 shall apply.
34.2.3 Allocation of Award. Subject to Section 34.1.6 above, Any Award for a Total Taking shall be allocated and paid in accordance with the applicable court order, judgment, or settlement agreement.
34.3 Partial Taking. If there is a permanent Partial Taking, the following shall apply:
34.3.1 Agreement in Full Force. This Agreement shall remain in full force and effect as to the portion of the Arena Facilities remaining immediately after such Partial Taking.
34.3.2 Restoration by City. To the extent necessary, City shall promptly commence and complete restoration of the Arena Facilities as nearly as possible to their condition and character immediately prior to such Partial Taking, except for any reduction in area caused thereby. (a) City’s duty of restoration does not include replacing any onsite parking spaces lost as a result of the Taking of portions of the On‐Site Parking Facil ities. Rather, in accordance with the provisions of Section 19.1.4, a loss of spaces in the On‐Site Parking Facilities shall result in a corresponding increase in the Minimum Off‐Site Parking Requirements.
(b) City’s restoration work shall be performed in a good and workmanlike manner and u ndertaken in accordance with plans and specifications submitted to and approved by Manager in accordance with this Agreement.
34.3.3 Allocation of Award. Subject to Section 34.1.6 above, Awards received on account of a permanent Partial Taking shall be allocated and paid in the following order of priority:
(a) First, the Award shall be allocated to pay any costs necessary for restoration of the Arena Facilities; provided, however, that if restoration costs exceed the amount of the Award, City shall be obligated to pay the differ ence (without reimbursement from the Capital Reserve Fund). City shall furnish Manager with evidence reasonably satisfactory to Manager of the total cost of the restoration of the Arena Facilities.
(b) Second, the Award shall be paid to Manager in the full amount of Manager’s Condemnation Losses.
(c) Any remaining balance of the Award shall be dep osited into the Capital Reserve Fund.
34.4 Temporary Taking. If there is a Temporary Taking, the following shall apply:
34.4.1 Manager shall be entitled to receive the entire amount of the Award, except as provided in Section 34.4.2 below.
34.4.2 At the conclusion of the Temporary Taking, if the area temporarily occupied by the acquiring Governmental Authority is not restored by the acquiring Governmental Authority as nearly as possible to th eir condition and character immediately prior to such Temporary Taking, then:
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(a) City shall be responsible for such restoration work to the same extent and in the same manner as set forth in Section 34.3.2 above, and
(b) The Award shall be first allocated to City to pay for restoration costs as set forth in Section 34.3.3(a) above, with any remaining amounts to be pai d to Manager.
34.5 Taking by City Authority. Notwithstanding anything to the contrary in this Agreement, in the event of any Taking or attempted Taking by City or other City Authority, the following shall apply:
(a) Subject to Section 34.1.6 above, all Awards shall be allocated entirely to Manager or SJS LLC, in accordance with their respective Condemnation Losses, and no portion of such Award shall be allocated to City.
(b) If any Takin
g or attempted Taking by City causes or results in any breach of this Agreement by City (including a breach of any of City’s negative covenants or representations and warranties), such breach shall be deemed a Potential Event of Default as described in Section 38.1, and Manager shall have all rights and remedies rela
ted thereto.
PART TEN
CONTRACT ENFORCEMENT AND REMEDIES
SECTION 35. NEGATIVE COVENANTS.
35.1 Negative Covenants of Manager. Manager shall not do, or permit or authorize others to do, any of the following:
(a) Operate the Arena Facilities in any manner or for any purpose other than as permitted in accordance with this Agreement;
(b) Knowingly or intentionally engage in any act which would, to an ordinarily prudent person in the position of Manager, be reasonably foreseeable to cause substantial or ir reparable damage to the Arena Facilities;
(c) Abandon the Arena Facilities during the Term, subject to Manager’s right to terminate the Term in accordance with the provisions of this Agreement; (d) Knowingly use or occupy, or knowingly permit the Arena Facilities to be used or occupied, for any unlawful, disreputable or ultrahazardous use (incl uding the use, storage or disposal of Hazardous Substances other than as permitted in accordance with this Agreement);
(e) Operate or conduct the business of the Arena in any manner known to constitute or give rise to a nuisance of any kind; provided that the holding of Events in th e Arena that meet the Applicable Community Standard (defined in Section 12.1.3) shall not, in and of itself, constitute a nuisance;
(f) Make, authorize or permit any material Alterations to the Arena Facilities except as permitted in accordance with this Agreement;
(g) Authorize or permit fixed signs or advertising at any locations on the exterior of the Arena Facilities except as permitted in a
ccordance with this Agreement, or authorize or permit
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advertising content in or on the Arena Facilities except as permitted in accordance with this Agreement;
(h) Operate or permit the use of the On‐Site Parking Facilities in any manner or during any time not in conformity with the Arena TPMP described in Section 23.1; or (i) Knowingly allow or authorize, directly or through an Affiliate, any actions, inactions or amendments with respect to the Hocke
y Use Agreement in violation of Section 3.1.2.
35.2 Negative Covenants of City. City shall not do any of the following:
(a) Fail to make reasonable good faith efforts to make reasonably available for use in connection with Events or activities at the Arena those areas adjacent to the Arena (including public streets and parks) that are available for such use to the extent such areas remain within the control of City, subje ct to the applicable provisions of this Agreement; (b) Unreasonably interfere with Manager’s rights or benefits under this Agreement; (c) Take any action materially affecting or diminishing City’s title to the Arena Facilities; (d) Knowingly take any action that materially impairs or impedes implementation of the Arena TPMP; or
(e) Enter into any con tract, agreement, memorandum of understanding, or other arrangement with any third party that would cause a violation of any of City’s representations and warranties or contractual obligations under this Agreement.
SECTION 36. REPRESENTATIONS AND WARRANTIES.
36.1 Manager’s Representations and Warranties.
36.1.1 Economic Warranties. Manager, for itself, its Owners and Affiliates, makes the following representations and warranties (collectively, the “Economic Warranties”) to City:
(a) The San Jose Sharks NHL franchise is in good standing and will remain in good standing during the Term of this Agreement.
(b) There is no court action, arbitration, administrative proceeding, or NHL proceeding pending, or to the best of M anager’s current knowledge, threatened, on the Execution Date of this Agreement, or any basis for the foregoing, which would materially affect (i) the status of the San Jose Sharks franchise, (ii) the financial condition of Manager, its Owners, or Affiliates, (iii) the ability of Manager to perform its obligations under this Agreeme nt or any Related Agreements, (iv) the ability of SJS LLC to perform the obligations contemplated to be performed by SJS LLC under the Hockey Use Agreement or the SJS Guaranty; or (v) the ability of SSE to perform the obligations contemplated to be performed by SSE under the SSE Guaranty.
(c) Manager, its Owners and Affiliates, incl
uding SJS LLC, or any of them, do not have
an economic relationship with any person or entity that to Manager’s knowledge constitutes a prospective business advantage to that person or entity which advantage will be interfered with by this Agreement or the Related Agr eements
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or by any action leading to the formation of this Agreement or the Related Agreements.
(d) Manager has the capacity to fund or cause to be funded all obligations to be performed by Manager under this Agreement.
36.1.2 Ownership Warranties. Manager, for itself, its Owners and Affiliates, makes the following representations and warranties (collectively, the “Ownership Warranties”) to City:
(a) On the Execution Date of this Agreement, and thereafter subject to Section 2.3 regarding assignment, SSE owns and will continue to own 50% or more of the Controlling Interests in SJAM, which is the Manager of the Arena. (b) On th e Execution Date of this Agreement, and thereafter subject to Section 2.3 regarding assignment, SSE owns and will continue to own 50% or more of the Controlling Interests in SJS LLC, which is the owner of the NHL team. (c) On the Execution Date of this Agreement, and thereafter subject to Se ction 2.3 regarding assignment, Plattner owns and will continue to own 50% or more of the Controlling Interests in SSE.
36.2 City’s Representations and Warranties. City represents and warrants to Manager as follows:
(a) From and after the Possession Date, City will have good, marketable and insurable title to the Arena Facilities and Arena Land free and clear of any liens, encumbrances, security interests, liabilities, assessments, pending assessments, agreements, leases, judgments, claims, rights, easements, restrictions or other matters that would affect Manager’s rights under this A greement. If any claim of lien is filed against the Arena Land with respect to work performed by City, City shall use its reasonable good faith efforts to cause release of the same.
(b) There are no agreements or understandings to which City is a party relating to the Arena, the On‐Sit
e Parking Facilities or the Arena Land that will bind or affect the rights or interests of Manager, SJS LLC or their lenders, except for the exceptions listed in the Schedule of Permitted Title Exceptions attached to this Agreement as Attachment No. 18. (c) City has no notice or knowledge that any Governmental Authority considers the construction, operation or use of the Arena Facilities to have failed to comply with any Applicable Law or that any investigation has been commenced or is contemplated respecting any such possible failure of compliance.
(d) As of the Execution Date of this Agr eement, City has no information of any change contemplated in any Applicable Laws or any action by adjacent landowners, or natural or artificial conditions upon the Arena Land and Arena Facilities, or any other fact, circumstance or condition, financial or otherwise, which would prevent, limit, or impede Manager’s contem
plated use of the Arena Facilities.
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36.3 Mutual Representations and Warranties. Each Party represents and warrants to the other Party as follows:
(a) It has full power and authority to enter into this Agreement and the Related Agreements to which it is a party, and to assume and perform all of its obligations under this Agreement and the Related Agreements.
(b) It has obtained any and all approvals that may be required before it can exe cute and perform this Agreement and the Related Agreements to which it is a party, including approvals required by any loan documents, bond authorization, corporate articles and bylaws, city charter or state statute, regulation or court order. (c) The persons executing this Agreement and the Related Agreements on its beh alf have been duly authorized and are empowered to bind it to this Agreement and to the Related Agreements.
(d) The execution of this Agreement and the Related Agreements, and the performance by it of the actions anticipated by this Agreement and the Related Agreements neither breaches any con tract with any third party, nor constitutes any event, which, with the passage of time, or the giving of notice, or both, will breach any contract with any third party.
(e) This Agreement and the Related Agreements executed by it are or when fully delivered will be duly authorized, executed and delivere d by it and will be valid, binding and enforceable obligations of it.
36.4 Effect of Representations and Warranties.
36.4.1 Material Inducement and Reliance. The representations and warranties set forth above are a material inducement to the Parties to enter into this Agreement and the Related Agreements, and but for said representations and warranties, said Parties would not enter into this Agreement or the Related Agreements. The Parties are materially relying on the representations and warranties set forth above.
(a) In reliance on represe ntations and warranties by Manager set forth above, City has not fully investigated the legal status of Manager, its Owners, Affiliates (including SJS LLC) or the San Jose Sharks NHL franchise, the financial condition of Manager, its Owners, Affiliates (including SJS LLC), or any other matter relating to said representations and warranties. Manager agrees that City has no duty to condu
ct any additional investigation and may rely on the representations made herein.
(b) In reliance on the representations and warranties by City set forth above, Manager and other beneficiaries of such representations and warranties have not fully investigated title to the Arena Site , or the authority of City to perform its obligations under this Agreement and the Related Agreements.
36.4.2 Survival. The representations and warranties set forth in this Agreement and in the Related Agreements shall survive the execution and delivery of this Agreement and the Related Agreements, and shall continue in full force and effect until the termination of this Agreement and all the Related Agreements.
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SECTION 37. FORCE MAJEURE.
37.1 Definition. As used in this Agreement, the term “Force Majeure Event” shall mean any matter or condition beyond the reasonable control of a Party that prevents or delays a Party’s ability to perform this Agreement in accordance with provisions hereof, in whole or in part, including:
(a) War, civil disturbances or riots, acts of terrorism or threats of acts of terrorism, criminal activities, public emergency or calamity, epidemi cs, pandemics, quarantine restrictions, fire, earthquake, flood, and unusually severe and abnormal weather conditions that are not foreseeable.
(b) Strikes, lockouts or related work stoppages, labor disturbances, actions directly or indirectly affecting work or disrupting timely delivery of materials or supplies, inability to obtain labor or materials or reasonable substitutes therefor, and the failure of necessary utiliti
es serving the Arena Facilities.
(c) Governmental action or restriction or enactment or enforcement of any Applicable Law, except that enactment or promulgation of an ordinance, resolution, policy or guideline by City or other City Authority, or a default by City in its obligations under this A greement, shall not constitute a “Force Majeure Event” as applied to performance by City.
37.2 Delay in Performance. Performance of this Agreement by a Party affected by a Force Majeure Event shall be suspended or excused to the extent commensurate with such interfering occurrence, subject to the following:
(a) This Section 37.2 shall not apply with respect to any obligation to pay money, except in accordance with Section 37.3 below. In all other cases, monetary obligations shall not be excused by an y Force Majeure Event.
(b) The Party availing itself of this Section 37.2 shall notify the other Party within ten days of the occurrence of the Force Majeure Event.
(b) The time of suspension or excuse shall not extend beyond that reasonably necessitated by the occurrence of the Force Majeure Event.
37.3 Fee Credit. If use of the Arena Faciliti
es or any material portion thereof is blocked, reduced or restricted by a Force Majeure Event for more than five consecutive days, then Manager shall be entitled to a Fee Credit against the Arena Fees in accordance with Section 6.2.3.
SECTION 38. DEFAULT AND REMEDIES.
38.1. General Procedures.
38.1.1 Definitions. In this Agreement, the following terms shall have the meanings given below:
(a) “Applicable Cure Period” means the time period allowed for a Defending Party to cure a Potential Event of Default before it becomes an Event of Default, as described in Section 38.2.
(b) “Complaining Party” means the Party alleging that the other Party has committed a Potential Event of Defa ult or an Insolvency Default. (c) “Defending Party” means the Party that has committed or is alleged to have committed a Potential Event of Default or an Insolvency Default.
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(d) “Event of Default” means (i) the happening of a Potential Event of Default that is not cured within the Applicable Cure Period, or (ii) a failure by Manager to pay the Early Termination Fee as and when required under Section 5.2.1, following Manager’s delivery to City of a 2‐Year Irr evocable Notice. (e) “Insolvency Default” means the happening of any of the following events:
(i) Manager or City is adjudged a bankrupt or insolvent in a final judgment that is not appealable or is not appealed.
(ii) A receiver or trustee is appointed to take possession of all or any part of the business or mu
nicipal functions or property of Manager or City, where possession is not restored to such Party within 60 days after such appointment.
(iii) Manager or City makes any general assignment of its property for the benefit of creditors.
(iv) Manager or City files a voluntary pet ition in bankruptcy or insolvency, or applies for reorganization or arrangement with its creditors, under the state, federal or other bankruptcy or insolvency laws now in force or hereafter enacted.
(v) An involuntary petition of bankruptcy or insolvency under the state, federal or other bankruptcy or insolvency laws is filed against M anager or City and is not dismissed within sixty (60) days after the filing. (vi) Manager or City seeks a composition with its creditors by trust, mortgage or otherwise.
(f) “Notice of Anticipated Parking Deficiency” means a written notice from Manager to City as described in Section 22.2.
(g) “Notice of Pa
rking Deficiency” means a written notice from Manager to City as described in Section 22.1.
(h) “Notice of Potential Event of Default” means a written notice from or on behalf of a Complaining Party to the Defending Party as described in Section 38.1.3. (i) “Notice of Self‐Hel p Work” means a written notice from or on behalf of a Party to the other Party as described in Section 38.3.7.
(j) “Potential Event of Default” means a failure by Manager or City to perform or observe any of the covenants, terms, and provisions contained in this Agreement (includi
ng the sections of the Renovation Agreement referenced below) on its part to be performed or observed (other than the matters constituting an Insolvency Default), and includes the happening of any of the following:
(i) Manager fails to pay any part of the Arena Fees as and when required under this Agreement;
(ii) City has give
n Manager notice that it believes SJAM is planning to vacate the Arena and/or that SJS LLC is planning to relocate the San Jose Sharks
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to another city without giving the required advance notice or paying the Early Termination Fee, and within sixty (60) days after receipt of such notice Manager has not provided City with written adequate assurances (including reasonable evidence) that such vacation and/or relocation is not being planned;
(iii) There is a material breach of Manager’s represe ntations and warranties set forth in Section 36.1;
(iv) There is a material breach of the Hockey Use Agreement in violation of Section 3.1.2(b) of this Agreement;
(v) City fails to make a required payment of Renovation Costs as and when required under Article V of the Renovation Agreement;
(vi) City fails to reimburse Manager for Incre
mental TPMP Costs as and when
required under Section 23.1.7;
(vii) City fails to acquire ownership or legal control of Parcels 4 and 5 of Lot E by the Lot E Acquisition Deadline as described in Section 19.4.1; (viii) City fails to meet the Minimum Off‐Sit e Parking Requirements, the remedy for which is set forth in Section 38.3.4 below; or (ix) There is a material breach of City’s representations and warranties set forth in Section 36.2.
For avoidance of doubt, Manager’s exercise of its Early Termination Right and timely payment of the Early Ter mination Fee to City in accordance with the requirements of Section 5.2.1, shall not be considered a Potential Event of Default or an Event of Default under this Agreement.
38.1.2 Procedure for an Insolvency Default. If an Insolvency Default occurs with respect to a Party, then to the extent permitted by Applicable Law, the other Party may immediately avail itself of any of the remedies provided in Section 38.3 and need not give a Notice of Potential Event of Default.
38.1.3 Notice of Potential Event of Default. If either Manager or City believes that the ot her has committed a Potential Event of Default, then the Complaining Party may deliver a Notice of Potential Event of Default to the Defending Party in accordance with the following:
(a) The Notice of Potential Event of Default shall describe with particularity the following:
(i) The omissions, actions or practices of the Defending Party that the Complaining Party alleges to be a Potential Eve
nt of Default of this
Agreement;
(ii) The provisions of this Agreement that allegedly have been or are being breached;
(iii) The Applicable Cure Period with respect to each specific alleged breach; and
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(iv) The remedies that the Complaining Party desires with respect to each specific alleged breach.
(b) The Notice of Potential Event of Default shall also include, in bold face, capital letters at the top of the first page, the following statement:
THIS IS A NOTICE OF POTENTIAL EVENT OF DEFAULT UNDER SECTION 38 OF TH E THIRD AMENDED AND RESTATED ARENA MANAGEMENT AGREEMENT. A FORFEITURE OF YOUR RIGHTS (AND, IF APPLICABLE, A TERMINATION OF THE AGREEMENT) MAY OCCUR IF YOU FAIL TO CURE THE POTENTIAL EVENT OF DEFAULT WITHIN THE APPLICABLE CURE PERIOD.
(c) A Notice of Potential Event of Default may allege mul tiple, independent Potential Events of Default.
(d) A Party may serve additional Notices of Potential Event of Default while previously noticed default procedures are pending.
(e) Each alleged Potential Event of Default shall be treated as an independent breach for the purposes of administering the procedures and awarding the remedies provided in this Ag
reement.
(f) Manager may not deliver to City a Notice of Potential Event of Default alleging a breach of the Minimum Off‐Site Parking Requirements until 30 days following delivery to City of a Notice of Parking Deficiency as described in Section 22.1
38.2 Time Periods Allowed to Cure a Po tential Event of Default. Upon the delivery of a Notice of Potential Event of Default, the following Applicable Cure Periods shall apply:
38.2.1 Payment of Money. If the Potential Event of Default can be cured with the payment of money only, then the Defending Party shall make such payment within sixty (60) days following receipt of the Notice of Potential Event of Default. (a) If City is the Defending Party and fails to make a required payment as provided above, then in addition to all other rights and remedies to which Manager ma y be entitled, Manager shall have the right to a City Default Credit against Arena Fees as provided in Section 6.2.4.
(b) Without limiting the foregoing, where the monetary Event of Default involves City’s failure to make a required payment of Renovation Costs, then in addition to its right to recover Renovation Liquidated Damages as provi ded in Section
38.3.3 and all other rights and remedies to which Manager may be entitled, Manager shall have the further right to suspend payments for (i) Capital Reserve Fund contributions as described in Section 6.1.2; (ii) Community and City Events Fund as described in Secti on 6.1.3; and (ii) San Jose Sharks Community Fund as described in Section 6.1.4, until such time as the overdue payments are no longer in default.
38.2.2 Minimum Off‐Site Parking Requirements. If the Potential Event of Default arises from City’s failure to provide a sufficient number of Available Parking Spaces to meet the Minimum Off‐Site Parking Requirements (an “Available Parking Space Breach”), then City shall take such actions as necessary to fully cure the Available Parking Space Breach within
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sixty (60) days after receipt of the Notice of Potential Event of Default. If City fails to fully cure such Potential Event of Default within said 60‐day period, then pursuant to Section
38.3.4 Manager shall thereafter be entitled to receive Parking Liquidated Damages each month based on the deficiency in th e number of Available Parking Spaces until such time as City has fully cured the Available Parking Space Breach.
38.2.3 Acquisition of Lot E Parcels. If the Potential Event of Default arises from City’s failure to acquire Parcels 4 and 5 of Lot E by the Lot E Acquisition Deadline (“Lot E Parcel Breach”), the following shall apply:
(a) City shall be deemed to have timely commenced such cure if, within 60 days after receipt of a Notice of Potential Event of Default, (i) City staff presents a written repor
t to the City Council describing the specific actions and work that the City should take in order to cure the Potential Event of Default, and (ii) the City Council approves funding for the costs of such actions and work. (a) After approval by the City Council, City shall be de emed to have diligently pursued such cure to completion only if City actually completes said approved actions and work as quickly as reasonably possible.
38.2.4 Other Act or Omission. If the cure of a Potential Event of Default (other than an Available Parking Space Breach or a Lot E Parcel Breach) requires the cessation of action or requires the taking of action other than the payment of money only (or in addition to the payment of money), then the Defending Party shall take such action or cause the cessation of such action within sixty (60) da ys after receipt of the Notice of Potential Event of Default.
However, if more than 60 days is reasonably required to cure the Potential Event of Default (including the enforcement or termination of contracts, licenses or subleases with third parties who are causing the Potential Event of Default and effecting a cure to the maximu
m extent possible or their removal from the Arena Facilities), then the Defending Party shall commence such cure within the 60‐day period and diligently pursue such cure to completion.
(a) If the Defending Party fails to cure (or commence the cure) within said 60‐day period, then the Complaining Party shall have the ri ght to effect such cure by
performing work and taking other actions as may be reasonably necessary for such purpose, subject to compliance with all Applicable Laws and the applicable provisions of this Agreement. The costs incurred by the Complaining Party to effect such cure shall be payab
le by the Defending Party within 60 days following
delivery of a statement from the Complaining Party describing the costs incurred and providing reasonable supporting information for such costs.
38.2.5 Court Proceeding Pending Completion of Cure. The fact that a Defending Party has timely commenced a cure of the Potential Event of Default and/or is working to complete such cure shall not limit the Complaining Party’s right to bring a court action to obtain provisional or interim remedies.
38.3 Remedies. The Complaining Party shall have the following rights and remedies available at law or in equity with respect to an Event of Default (provided that such remedies were specified in the Notice of Potential Event of Default or any amended Notice of Potential Event of Default) or with respect to an Insolvency Default or other Event of Default for which no Notice of Potential Event of Default is requir
ed. All remedies may be specified as cumulative and alternative. The
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award of all remedies and the determination of whether the Complaining Party is entitled to any specific remedy shall be made by a court of competent jurisdiction.
38.3.1 Injunctive Relief. Both Parties acknowledge that the award of damages alone usually will be an unsatisfactory remedy for a nonmonetary Event of Default and will not fully protect a Complaining Party from harm caused by such non‐monetary Event of Default. For purposes of this Section 38.3, the Parties agree that any attempt by Manager or SJS LLC, directly or indirectly (through any of th eir Affiliates) to relocate the San Jose Sharks to a venue outside of the City of San Jose without first paying the Early Termination Fee if and when due under Section 5.2 (a “Disallowed Relocation”) shall be deemed a non‐ monetary Event of Default.
(a) City has numerous concerns both economic and noneconomi c in nature which relate to the image of City, the health and welfare of its citizens, potential loss to the general fund, loss to the community and the use of the Arena Facilities by the community. A Disallowed Relocation (or attempted Disallowed Relocation) by Manager would result in ir reparable harm to City due to loss of (i) intangible civic, social, and quality of life benefits, (ii) national and international exposure, and (iii) revenues and other direct and indirect economic and fiscal benefits, such that the damages to City resulting therefrom would be difficult or impossible to measure, (b) Manager has nu
merous concerns both economic and non‐economic in nature which relate to the image of the San Jose Sharks, SJS LLC’s relationship with NHL management and other NHL team owners, and the success of professional hockey in the Bay Area. The failure of City to perform its non‐monetary obligations u nder this Agreement would result in irreparable harm to Manager due to a reduction in attendance at Arena Events as a result of numerous decisions by the Event attending public, and damage to the image of the San Jose Sharks and SJS LLC’s relationship with NHL management and other NHL team owners, such tha t the damages to Manager resulting therefrom would be difficult or impossible to measure.
(c) For the reasons set forth above, the preferred remedy for any attempted Disallowed Relocation, and for all other non‐monetary Events of Default (in addition to reimbursement under Section 28.3.3 regarding Em ergency Capital Repairs and Replacements and under Section 38.3.7 regarding Self‐Help) is an order of a court of competent jurisdiction, ordering and enjoining the Parties to refrain from specified activities that would result in a breach of their obligations under this Agreement.
(i) Without limiting the generality of the f oregoing, City will be entitled to obtain an order, or pursue other litigation as allowed in this Agreement at its discretion, that prohibits Manager from vacating the Arena, and terminating this Agreement (or Hockey Use Agreement) prior to expiration of the Term, or relocating the San Jose Sharks to another city, without first paying the Early Termi
nation Fee if and when due under
Section 5.2.
38.3.2 Stipulation for Entry of Judgment with Escrow Instructions. To ensure that City will have an adequate remedy in the event of an attempted Disallowed Relocation, and to provide
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assurances to City that neither Manager nor SJS LLC (nor any of their Affiliates) will attempt to refute City’s right to an Early Termination Fee if and when it is due under Section 5.2, in any litigation initiated by City allowed under this Agreement, and further that the Parties will execute in cou nterpart and deposit with Bay Area Escrow Services (“Escrow Agent”) within 10 days following the Execution Date of this Agreement a Stipulation for Entry of Final Judgment and Injunction in the form attached hereto as Attachment 19 (“Stipulated Judgment”). The Stipulated Judgment orders that Manager and SJS LLC shall be prohibited from doing any of the following, either directly or indirectly (through any of their Affiliates): (i) vacating the Arena, (ii) terminating this Agreement or the Hockey Use Agreement, and/or (iii) relocating the San Jose Sharks to a venue outside of the City of San Jose; un less and until the Early Termination Fee is paid to the City. The Stipulated Judgment shall be held by Escrow Agent in accordance with an escrow agreement (“Escrow Agreement”) by and among City, Manager and Escrow Agent, in form and substance consistent with this Section 38.3.2 and mutually agreeable to th e Parties.
(a) The occurrence of any one or more of the following triggering events (“Triggering Events”) will entitle City to instruct the Escrow Agent to transmit the Stipulated Judgment to the City Attorney, who in turn will be entitled to deliver it to the Santa Clara County Superior Court for en try of the Stipulated Judgment, provided that the City Council has passed a resolution approving such action:
(i) Manager has delivered a 2‐Year Irrevocable Notice and has thereafter failed to pay the Early Termination Fee within the time provided in Section 5.2.1(a); or
(ii) City has given Manager a Notice of Pote ntial Event of Default with respect to the matter described in Section 38.1.1(j)(ii) (regarding Manager’s failure to give City adequate assurances that there are no plans to relocate the San Jose Sharks to another city), Manager has failed to cure such Potential Event of Default within the A pplicable Cure Period, and pursuant to the Notice of Potential Event of Default City has elected to terminate this Agreement; or
(iii) City has given Manager a Notice of Potential Event of Default with respect to the matter described in Section 38.1.1(j)(iii) (regarding a material breach of the Ownership Warranties), Manager has failed to cure such Potential Event of Default within the Applicabl
e Cure Period, and
pursuant to the Notice of Potential Event of Default City has elected to terminate this Agreement; or
(iv) City has given Manager a Notice of Potential Event of Default with respect to the matter described in Section 38.1.1(j)(iv ) (regarding a material breach of the Hockey Use Agreement), Manager has failed to cure such Potential Event of Default within the Applicable Cure Period, and pursuant to the Notice of Potential Event of Default City has elected to terminate this Agreement.
(b) Upon the occurrence of a Triggering Event and pri or to seeking transmittal by Escrow Agent of the Stipulated Judgment to the City Attorney or initiating
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litigation proceedings otherwise allowed in this Agreement, City shall give Manager written notice that (i) City intends to cause entry of the Stipulated Judgment or to initiate other litigation, and (ii) City will provide SSE with the opportunity, during a 60‐day period prior to the entry of such Stipulated Judgment or initiation of litigation, to negotiate with City in good faith for payment arra
ngements in lieu of entry of the Stipulated Judgment. Such notice shall be accompanied by a copy of the City Council’s resolution authorizing the entry of the Stipulated Judgment, or other litigation, and delegating to the City Manager the authority to negotiate alternative payment arrangements wit h Manager.
38.3.3 Liquidated Damages for City’s Failure to Timely Fund City’s Renovation Costs Obligations.
City’s failure to pay to Manager, when due, any installment of City’s payments towards Renovation Costs would result in irreparable harm to Manager due to (i) the resulting delays in needed upgrades to the Arena, and the difficulty in rescheduling any delayed work due to the unique nature of the Renovation Project; (ii) loss of revenues bec ause of lost booking opportunities and reductions in attendance at Arena Events; and (iii) resulting reputational injuries, such that the damages to Manager resulting therefrom would be difficult or impossible to measure. Therefore, the Parties agree as follows:
(a) In the event City fails to pay to Manager, when due, any i nstallment of its payments towards Renovation Costs, and such payment is not received within sixty (60) days after written notice from Manager, then City shall immediately pay Manager, as liquidated damages and not as a penalty, a sum of money (“Renovation Liquidated Damages”) in the am ount shown on the Schedule of Financial Terms attached as Attachment No.6. For example, if City fails to make the $70,000,000 payment that is due March 1, 2029, and such payment is not received within 60 days after written notice from Manager, then the Renovation Liquidated Damages amount would be $180,000,000.
(b) City and Manager acknowledge and agree that in determining the amount of Renovation Liquidated Damages (i) they have ex ercised care to make a reasonable forecast of direct losses that may arise from City’s failure to pay to Manager, when due, any installment of its payments towards Renovation Costs and, (ii) such reasonable forecast of direct losses is not exact given that it would be infeasible to estimate such losses with pre cision, including due to the intangible nature of some of such losses and the fact that reduction in attendance at Arena Events is a result of numerous decisions by the Event‐attending public, and (iii) they have considered (A) the unique nature of the Arena and the Renovation Project, (B) Manager’s financial contr ibutions to the Renovation Project, (C) the loss of revenue to Manager that would result from delays in needed upgrades to the Arena; and (D) the damage to the image of the San Jose Sharks and SJS LLC’s relationship with NHL management and other NHL team owners that would result from City’s fa ilure to timely pay any installment of its payments towards Renovation Costs.
(c) Consistent with the foregoing, City and Manager agree that the Renovation Liquidated Damages amount is a reasonable estimate of the damages to Manager resulting from City’s failure to pay to Manager, when due, any installment of
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City’s payments towards Renovation Costs and that payment of such Renovation Liquidated Damages is not intended as a forfeiture or penalty within the meaning of California Civil Code Sections 3275 or 3369, but is intended to constitute liquidated damages to Manager pursuant to California Civil Code Section 1671.
38.3.4 Liquidated Damages for City’s Failure to Meet Minimum Off‐Site Parking Re quirements.
City’s failure to meet the Minimum Off‐Site Parking Requirements at any time during the Term would result in irreparable harm to Manager due to (i) loss of revenues because of reductions in attendance at Arena Events resulting from customer dissatisfaction, thus interfering with Manager’s ability to achieve a return on its financi al contributions to the Renovation Project; and (ii) resulting reputational injuries, such that the damages to Manager resulting therefrom would be difficult or impossible to measure. Therefore, the Parties agree as follows:
(a) If, following Manager’s delivery of a Notice of Parking Deficiency and Notice of Potential Event of Default and expiratio n of the Applicable Cure Period set forth in Section 38.2.2, the number of Available Parking Spaces for any month (measured between the 10th and the 20th day of such month) is less than the number of Available Parking Spaces required to meet the Minimum Off‐Site Parking Requirements (i.e., there is a Parking Deficiency as defined in Section
22.1.1), then, within sixty (60) days following receipt of Manager’s written demand therefor, City shall pay Manager, as liquidated damages and not as a penalty, a sum of money (“Parking L
iquidated Damages”) in an amount equal to
the product of the Per Space Amount (defined below) multiplied by the deficiency in the number of Available Parking Spaces for such month. (i) The “Per Space Amount” shall be $450.00 in Ter m Year 25/26 and shall increase annually on the first day of Term Year 26/27 and the first day of each Term Year thereafter (each, an “Adjustment Date”) by the percentage increase in the CPI between the Adjustment Date and the date that is one year prior to the Adjus tment Date.
(ii) To the extent the Parking Deficiency continues for one or more subsequent months, City shall pay Manager the Parking Liquidated Damages for each such month calculated as provided above. (iii) Notwithstanding the foregoing, to the extent that City provides Manager with reasonable evidence that the Parking Deficiency was in effect for less than the entir
ety of any month, the Parking Liquidated Damages amount for such month shall be prorated on the basis of a 30‐day month. (b) City and Manager acknowledge and agree that in determining the amount of Parking Liquidated Damages (i) they have exercised care to make a reasonable forecast of di
rect losses that may arise from City’s failure to meet the Minimum Off‐Site Parking Requirements from time to time during the Term and, (ii) such reasonable forecast of direct losses is not exact given that it would be infeasible to estimate such losses with pre cision, including due to the intangible nature of some of such losses and the fact that reduction in attendance at Arena Events is a result of numerous decisions by the Event‐attending public, and (iii) they have considered (A) the loss of revenue to Manager that would result from an y
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deficiency in Available Parking Spaces below the Minimum Off‐Site Parking Requirements; and (B) the damage to the goodwill of Manager and the San Jose Sharks that would result from City’s failure to meet the Minimum Off‐Site Parking Requirements.
(c) Consistent with the foregoing, City and Manager agree that the Parking Liquidated Damages amount is a reasonable esti
mate of the damages to Manager
resulting from City’s failure to meet the Minimum Off‐Site Parking Requirements and that payment of such Parking Liquidated Damages is not intended as a forfeiture or penalty within the meaning of California Civil Code Sections 3275 or 3369, but is in
tended to constitute liquidated damages to Manager pursuant to California Civil Code Section 1671.
(d) If City fails to meet the Minimum Off‐Site Parking Requirements at any time during the Term such that City is required to pay Parking Liquidated Damages to Manager, the Parties shall mee t and confer on a monthly basis (or other frequency as mutually agreed by the Parties) in an effort to determine the length of time the Parking Deficiency is likely to continue and potential solutions to minimize, if not eliminate, the Parking Deficiency. To the extent the Parking Deficiency is eliminated mid‐month, th e Parking Liquidated Damages for such month shall be prorated as provided in Section 38.3.4(a)(iii).
38.3.5 Monetary Damages.
(a) Awarded by Court. Subject to the terms of Sections 38.3.2, 38.3.3, and 38.3.4 and the express limitations below, monetary damages (including costs and interest at the legal rate) may be awarded by a court of competent jurisdiction as the sole remedy, or in conjunction with other remedies, or as interim damages. (b) Limitation on Monetary Damages. In the case of a Lot E Parcel Breach, Manager shall not be entitled to an award of monetary damages. Rather, Manager’s remedies in such case shall be limited to (i) termination of this Agreement under Section 38.3.6(c), or (ii) self‐help under Section 38.3.7. (c) Consequential Damages. Except as otherwise provided in this Section 38, in making an award of damages, the Parties agree that damages for lost profits or other consequential damages shall be recoverable only upon a failure of the Defending Party to cure a Potential Event of Default within the Applicable Cure Period.
38.3.6 Termination.
(a) Termination for Insolvency Default. Subject to all requirements under Applicable Laws, either Party may terminate this Agreement after an Insolvency Default by the other Party.
(b) Termination by City for Event of Default by Manager. Subject to all requirements under Applicable Laws, City may terminate this Agreement after an Event of Default by Manager, provided that all of the following events in (i) through (iii) below shall have occurred:
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(i) Manager has failed to cure (or commence to cure, where applicable) such Event of Default within the Applicable Cure Period provided in Section 38.2;
(ii) City sought termination as a remedy in its Notice of Potential Event of Default; and
(iii) At least one of the Events of Default that is not cured is one of the following:
(A) Manager has agreed to a change or wa
iver of the obligations of
SJS LLC under the Hockey Use Agreement without prior approval by City, if City’s prior approval is required under Section 3.1.2, and the obligation constitutes any of the following:
(1) Any shortening of the term of the Hockey Use Agreeme
nt, or
(2) Any waiver or release of the duty of SJS LLC to perform its operating covenant;
(B) Manager has failed to maintain liability insurance as required by Section 32;
(C) Manager has refused, on a recurrent basis, to schedule or perm it the use of the Arena Facilities for City Events or Community Events in accordance with Section 11.1;
(D) Manager has assigned Manager’s interest under this Agreement, and if City’s consent is required for such assignment in accordance with Section 2.3, Manager has either failed to ask for City’s consent or City has reasonably withhel d its consent as provided in this Agreement;
(E) Manager has failed to comply with its material duties and obligations under this Agreement on a recurrent basis, which clearly demonstrate a pattern and practice of uncooperativeness with City and inadequate performance; or
(F) Manager has willfully or i ntentionally failed to comply with the results of a court order or injunction relating to the cure of an Event of Default.
(c) Termination by Manager for Event of Default by City. Subject to all requirements under Applicable Laws, Manager may terminate this Agreement after an Event of Default by City, provided that all of the following events in (i) through (iii) below shall have occurred:
(i) City has failed to cure (or commence to cure, where applicable) such Event of Default within the Applicable Cure Period provided in Section 38.2;
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(ii) Manager sought termination as a remedy in its Notice of Potential Event of Default; and
(iii) At least one of the Events of Default that is not cured is one of the following:
(A) City has developed or assisted in the development of a Competing Facility as described and prohibited in Section 4.2, and has refused to permi
t Manager to manage such facility as
required in Section 4.2;
(B) City, on a recurrent basis and in bad faith, has interfered with Manager’s use and operation of the Arena Facilities as permitted in accordance with this Agreement;
(C) City has specifically singled out th e Arena in prohibiting Manager from conducting any activity that is permitted in accordance with this Agreement (including prohibition by means of an action that constitutes a valid exercise of City’s police power), which substantially adversely affects a material source of revenue for the Arena and which has a material effect on th e operation of the Arena;
(D) City has failed to comply with its material duties and obligations under this Agreement on a recurrent basis, which failure materially adversely affects Manager’s use and operation of the Arena, and which clearly demonstrate a pattern and practice of uncooperativeness with Manager and in adequate performance; (E) City has willfully or intentionally failed to comply with the results of a court order or injunction relating to the cure of an Event of Default; or
(F) City has failed to take all reasonable actions (including paying all sums of money) that may be necessary to acquire ownership or legal con
trol over both Parcels 4 and 5 of Lot E on or before the Lot E Acquisition Deadline.
(d) Notice of Termination. A Complaining Party entitled to termination as specified in subsection (a), (b), or (c) of this subsection 38.3.6 may effect a termination of this Agreement by delivering to the Defending Party a written notice of termination specifying the date on which the Complaining Party intends to terminate this Agreement, which may be any date that is at least sixty (60) day s following the date of the written notice of termination. For avoidance of doubt, the provisions of Section 5.2 above, including the provisions regarding 3‐Year Revocable Notice, 2‐Year Irrevocable Notice, and payment of the Early Termination Fee, shall not apply to an early termination of the Agreement under this Se
ction 38.3.6.
(i) Following delivery of such notice, the “Termination Date” under this Agreement shall be deemed to be the date specified in such notice.
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(ii) Upon early termination due to a Party’s Event of Default, all applicable terms and conditions of this Agreement shall continue to apply until such new Termination Date.
(iii) In the event of an early termination under this Section 38.3.6, City shall use good faith, diligent efforts to cooperate with Manager, SJ S LLC, and SSE to facilitate transition of the San Jose Sharks to a new arena in a new location selected by SSE. City’s obligation to cooperate with such transition efforts shall survive the expiration or termination of this Agreement.
(e) Termination Awards. In addition to other damages that may be owing and determined hereunder, if this Agreement is terminated by Manager for an Event of Default by City, Manager shall be entitled to payment equal to the following:
(i) The unamortized cost of the improvements and fixtures constructed or installed by Manager at Manager’s own cost, assuming a useful life of the lesser of 15 ye ars or that specified under generally accepted accounting principles; and
(ii) A prorated portion of the Arena Fees that have been prepaid by Manager, based on a ratio equal to the number of days of the Term Year prior to termination over 365.
38.3.7 Self‐Help.
(a) Right to Perform Self‐Help Work. If a Party believes that the other Party has committed or is likely to commit a Potential Event of Default and that its substantial interests in the operation of the Arena Facilities would be materially impaired by waiting for the notice and cure procedures provided above, or if a Party reasonably believes that it can mitigate its damages by acting qui ckly, then such Party shall have the right to take whatever actions or perform whatever work it determines to be reasonably necessary to cure an alleged Potential Event of Default and/or mitigate such Party’s damages (“Self‐Help Work”). Such Self‐ Help Work shall comply with all other applicable provisions of this Agreeme nt and all requirements under Applicable Laws, and may be performed either prior to the issuance of the Notice of Potential Event of Default, or while the notice and Applicable Cure Periods provided in this Agreement are pending. (b) Notice of Self‐Help Work. A Party who elects to perfo rm Self‐Help Work shall give the other Party a Notice of Self‐Help Work which shall include the following:
(i) A description of the particular Self‐Help Work proposed to be performed; and
(ii) A statement to the effect that such Party believes that such Self‐Help Work would serve to cure a Potential Event of Default (or an anticipated Potential Event of Default), or mitigate its damages, and that its substantial interest in the operation of the Arena Facilities would be materially impaired by waiting until the expiration of the Applicable Cure Period.
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(c) Time for Delivery of Notice.
(i) In the event of an emergency or other urgent, unforeseen circumstance, no advance notice shall be required prior to commencement of the Self‐ Help Work. However, a Notice of Self‐Help Work shall be given to the other Party as soon as is reasonably practicable.
(ii) With respect to Self‐Help Work relating to the City’s parking obligations under this Agreement, Manager may no
t give a Notice of Self‐Help Work
unless Manager first gives either a Notice of Parking Deficiency or a Notice of Anticipated Parking Deficiency.
(iii) In all other circumstances, a Party shall give the other Party a No tice of Self‐Help Work at least 10 days prior to commencing the Self‐Help Work. (d) Amendment of Notice of Potential Event of Default. If a Party proceeds with Self‐ Help Work as described above, then such Party may issue or amend its Notice of Potential Event of Default for the costs and expenses incurred in connection with the Self‐Help Work.
38.4 Claims Procedures. The provisions of this Section 38 shall govern the presentation, by or on behalf of Manager, of any or all claims arising out of or related to this Agreement and the consideration and payment of such claims, as contemplated by California Government Code Section 930.2. Therefore, in order to make a claim against City arising out of or related to this Agreement, Manager shall not be required to prese nt any written notice to City other than the notices described in this Agreement.
SECTION 39. MEDIATION.
39.1 Disputed Matters to be Submitted to Mediation. Notwithstanding any provision of this Agreement to the contrary, any Disputed Matter (defined below) that is not resolved between the Parties through negotiations may be submitted by either Party to non‐binding mediation (“Mediation”) with a neutral third party as described below.
39.1.1 Definitions. In this Agreement, the following terms shall have the meanings given below:
(a) “Demand for Mediation” means a written notice of a Party’s intent to mediate, describing the Disputed Matter(s) to be mediated and the relief sought. (b) “Disputed Matter” means, subject to the carveouts set forth below, any dispute, claim or controversy arising out of or related to this Agreement or the breach, enforceme
nt or interpretation of any provision hereof, including:
(i) A disagreement as to whether a Party is in breach or noncompliance with the terms of this Agreement;
(ii) A disagreement regarding the respective rights, remedies and obligations of the Parties under this Agreement;
(iii) A disagreement regarding the ac tions that must be taken by City to ensure that the Minimum Off‐Site Parking Requirements are satisfied as described in Section 19.1.2; and
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(iv) Any other matter upon which the Parties have been unable to mutually agree as required or contemplated under this Agreement.
Notwithstanding anything in this Section 39.1.1. to the contrary, Disputed Matters shall not include any dispute, claim or controversy arising out of or related to:
(A) Manager’s failure to pay th e Early Termination Fee as and when required under Section 5.2.1, following Manager’s delivery to City of a 2‐Year Irrevocable Notice; or
(B) City’s failure to pay to Manager, when due, any installment of its payments towards Renovation Costs.
(c) “JAMS” means the alternative dispute resolution organization by that nam e, or its successor.
(d) “Mediation Period” means the time period commencing with the delivery of a Demand for Mediation and ending 45 days thereafter.
39.1.2 Agreement not to Initiate Litigation During Mediation Period. The Parties hereby agree that during the Mediation Period, neither of them shall initiate litigation or other legal proceedings related to this Agreement, except to pursue a provisional remedy. However, this limitation is inapplicable to a Party if the other Party refuses to participate in good faith in the Mediation process during the Mediation Period. (a) If a Party ini
tiates legal proceedings prior to the delivery of a Demand for Mediation, this Section 39 shall not apply.
(b) If a Party initiates legal proceedings after the expiration of the Mediation Period, the Mediation may continue if both Parties so desire.
39.1.3 Tolling Agreement. All applicable statutes of li mitation and defenses based upon the passage of time shall be tolled during the Mediation Period and for 15 days thereafter.
The Parties shall confirm such tolling agreement in a separate writing if requested by either Party, but the failure to execute a formal tolling agreement shall not affect the enforceability of this Section 39.1.3.
39.2 Mediation Pr ocedures. Either Party may commence Mediation by delivering to the other Party a Demand for Mediation. A copy of the Demand for Mediation shall be delivered to JAMS, and the Mediation shall be administered through JAMS, unless otherwise mutually agreed by the Parties.
39.2.1 Selection of Mediator.
(a) The Parties shall use reasonable good faith efforts to cooperate with each other to select a mutually acceptable mediator as soon as reasonably practicable after the Demand for Mediation has been served. If the Parties cannot agree on a mediator within 15 days after the date of the Demand for Mediation, the mediator shall be selected in accordance with the JA
MS Rules.
(b) The selected mediator must be a former judge of the Superior Court of California unless both Parties mutually agree otherwise.
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39.2.2 Schedule; Costs. The Mediation shall be scheduled as soon as reasonably practicable following the date the mediator is appointed. The Parties agree that they will participate in the Mediation in good faith and that they will share equally in its costs.
39.2.3 Confidentiality. All offers, promises, conduct and statements, whether oral or written, made in the course of the Mediation by any of the Parties, their agents, employees, experts and attorneys, and by the mediator or any JAMS employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any legal proceeding involving the Parties; provided, however, that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non‐discover able as a result of its use in the Mediation.
SECTION 40. [Intentionally omitted.]
PART ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 41. GOVERNING LAW; VENUE.
41.1 Governing Law. This Agreement shall be governed by and construed in accordance with the Applicable Laws of the State of California, the County of Santa Clara, and the City of San José.
41.2 Venue. In the event that suit shall be brought by either Party hereunder, the Parties agree that trial of such action shall be exclusively vested in a State court in the County of Santa Clara, or where appropriate, in the United States District Court for the Northern District of California, San José, California.
SECTION 42. PARTIES BOUND.
42.1 Authority. The persons who have executed this Agreement represent and warrant that they are duly authorized to execute this Agreement in their individual or representative capacity.
42.2 Binding on Successors. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective heirs, legal representatives, successors and assigns.
42.3 Parties in Interest. Nothing in this Agreement, express or implied, is intended to confer (nor shall be construed as conferring) under or by virtue of this Agreement, any rights or remedies on any person or entity, other than (i) the Parties hereto; (ii) SJS LLC; (iii) any lender taking actions permitted under Section 29.2; and (iv) all of their respective successors and assigns.
SECTION 43. INDEPENDENT CONTRACTOR RELATIONSHIP.
43.1 No Joint Venture. It is understood that Manager is an independent contractor with respect to City. City and Manager hereby renounce the existence of any form of joint venture or partnership between them, and agree that nothing contained in this Agreement or in any document executed in connection herewith shall be construed as making City or the Arena Authority, on the one hand, and Manager, its Ow ners or Affiliates, on the other hand, as joint venturers or partners.
43.2 No Agency. No approval or review by City or Arena Authority (or any right of approval or review by City or Arena Authority) hereunder as to any matter or under any circumstances shall be deemed to constitute Manager as an agent for or acting on behalf of City or Arena Authority.
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43.3 Rights Coupled with an Interest. Manager’s rights under this Agreement are coupled with an interest arising from Manager’s significant capital investment in the Arena Facilities. The Parties acknowledge that City has negotiated and executed this Agreement in consideration for Manager's capital investment and its Affiliate's hockey franchise as well as for Manager's management skills.
SECTION 44. APPROVALS AND WAIVERS.
44.1 Approvals. Except as otherwise expressly provided herein, whenever a provision of this Agreement requires a review, determination or approval of a Party, such review, determination or approval (or notice of disapproval) shall be in writing and shall not be unreasonably withheld or delayed (except where such review, determination or approval is expressly made subject to the sole discretion or determination of a Party), and shall in an y event be made within any time limit specified therefor or within 30 days if no time limit is specified.
44.2 Waivers. No consent or waiver, express or implied, by either Party to or of any breach of any covenant, condition or duty of the other, shall be construed as a consent to, or waiver of, any other breach of the same, or any other covenant, condition or duty.
SECTION 45. INTEGRATION CLAUSE; AMENDMENTS.
45.1 Entire Agreement. Except as otherwise expressly stated or referenced herein, this Agreement including all Attachments hereto, and the Related Agreements, constitute the entire integrated agreement of the Parties. No other agreement, oral or written, prior or contemporaneous, shall be deemed to exist between the Parties.
45.2 Amendments to be in Writing. No subsequent agreement or any amendment of this Agreement shall be binding upon the Parties unless it is contained in a written document executed by properly authorized representatives of each Party.
45.3 Further Assurances. In addition to the requirements set forth in Section 29.2.3, each Party shall, without further consideration, execute and deliver such additional documents and take such other actions as may be reasonably requested by the other Party in order to fully effectuate all of the terms and provisions of this Agreement.
SECTION 46. ESTOPPELS; LENDER MODIFICATIONS.
46.1 Estoppel Certificates. Each Party shall promptly execute and deliver estoppel certificates and attornment agreements reasonably requested by lenders, sponsors, concessionaires, or other third parties in connection with the activities of each of the Parties hereto and the performance by the respective Parties of their obligations pursuant to this Agreement, provided such certificates and agreements are satisfactory to such Party in its reasonable discretion.
46.2 Modificati
ons for Public Financing. City may request reasonable modifications to this Agreement in connection with any public financing by City as described in Section 29.2.1.
SECTION 47. INTERPRETATION AND CONSTRUCTION.
47.1 Joint Drafting. This Agreement is the result of the joint efforts and negotiations of the Parties hereto, and no single Party is the author or drafter hereof. All of the Parties assume joint responsibility for the form and position of each and all of the contents of this Agreement and they agree that this Agreement shall be interpreted as though each of the Parties participated in the composition of this Agr
eement and each and every part thereof.
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47.2 Meaning of Certain Words and Phrases. As used in this Agreement, the following words and phrases shall be interpreted as described below, unless the context clearly indicates that another meaning is intended:
(a) The word “including” shall mean “including without limitation.” (b) The word “herein” shall mean “in this Agreement” and the word “hereunder” shall mean “under this Agreement.”
47.3 Captions. The part captions and section headi ngs in this Agreement are for convenience only and are not a part of this Agreement. Such part captions and section headings shall not be referred to in construing or interpreting this Agreement.
47.4 Gender; Number Reference. Whenever the context of this Agreement requires, the masculine, feminine and neutral gender includes the other genders, and the singular or plural number includes the other.
47.5 Invalidity of Particular Provisions. If any term or provision of this Agreement or the application thereof to any person or circumstance, to any extent, shall be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of th is Agreement shall be valid and be enforced to the fullest extent permitted by law.
47.6 Time is of the Essence. Time is of the essence of this Agreement, and is deemed to be a part of each applicable provision hereof.
SECTION 48. NOTICES.
48.1 Manner of Delivery. Unless otherwise provided herein, any notice to be given hereunder by either Party to the other Party shall be in writing and shall be delivered by one of the following methods: (i) personal delivery, including messenger service or overnight courier; (ii) registered or certified mail, postage prepaid, return receipt requested; or (iii) any other delivery method allowed by law. Such notice shall be de emed delivered upon receipt or refusal to accept delivery at the addresses specified below, provided with respect to any notice delivered by email, receipt may not be evidenced by an email reply that is automatically generated. Each Party may change its address by written notice given in accordance with this Section 48.1.
48.2 Addresses for Notice. Notices shall be addressed as follows, with a copy to be given to such other parties of as directed by each respective Party by written notice as provided herein.
City: Office of Economic Development and Cultural Affairs Real Estate Services Division
200 E. Santa Clara St., 17th Floor
San José, CA 95113
Attn: Director of Real Estate
Tel: (408) 535‐8197
Email: [email protected]
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With a copy to: Office of City Attorney
200 E. Santa Clara St., 16th Floor
San José, CA 95113
Attn: Real Estate Attorney
Tel: (408) 535‐1900
Email: [email protected]
Manager: San Jose Arena Management, LLC
525 West Santa Clara St.
San José, CA 95113
Attn: Jon Gustafson, Sr. Vice President
Tel: (408) 999‐6751
Email: [email protected]
With a copy to: San Jose Arena Management, LLC
525 West San
ta Clara St.
San José, CA 95113
Attn: General Counsel
Tel: (408) 287‐7070
Email: [email protected]
SECTION 49. EXECUTION OF AGREEMENT.
49.1 Counterparts. This Agreement may be executed in any number of counterparts, and by different Parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, but all of which counterparts, taken together, shall constitute one and the same instrument.
49.2 Electronic Signatures. This Agreement and any amendments hereto may be executed and delivered by electronic means or in electronic formats, and such electronic signatures shall be deemed originals for all purposes under this Agreement.
SECTION 50. ATTACHMENTS.
50.1 Incorporation by Reference. All attachments and exhibits referred to in this Agreement, and any attachments or exhibits that may from time to time be referred to in any duly executed amendment to this Agreement, are by such reference incorporated herein and shall be deemed a part of this Agreement as if fully set forth herein; provided, however, that in the event of any conflict or inconsistency be tween the provisions of this Agreement and the provisions of any such attachments and exhibits, the provisions of this Agreement shall control.
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50.2 List of Attachments. The Attachments referred to in this Agreement are as follows:
Attachment
Number Description Section Reference
1 Legal Description of Arena Land Recital B(1)
2 Site Plan of Arena Facilities Recital B(2)
3 SAP Center Boundary Exhibit Recital B(3)
4 Schedule of Prior Agreements 1.3
5 Schedule of Related Agreements 1.4
6 Schedule of Financial Terms 5.2.1
7‐1 Form of SSE Guaranty 2.2
7‐2 Form of SJS Guaranty 2.2
8 Non‐Discrimination Policy 14.1.2
9 Alcohol Advertising Plan 14.1.5
10 Exterior and Freeway Signage Schedule 16.2.1
11‐1 Map of Delmas East and Delmas West 19.1.1
11‐2 Map of Lot E and Milligan 19.1.1
12 Baseline TPMP Costs 23.1.7
13 Arena Transportation and Parking Management Plan
(TPMP) 23.1
14 Framework for Project Transportation and Parking
Management Plans 23.2.2
15 Encapsulation Areas and Monitoring Wells on Arena
Land 27.2.1
16 DTW Settlement Agreement 21.1.1
17 Liability Insurance Requirements Rider 32.1.1
18 Schedule of Permitted Title Exceptions 36.2
19 Stipulated Judgment 38.3.2
20 Schedule of Defined Terms 1.5
21 Renovation Agreement Recital I
[Signatures appear on next page.]
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SIGNATURES TO
ARENA MANAGEMENT AGREEMENT
IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates inserted below, but this Agreement shall be effective retroactively to the Effective Date shown on the first page of this Agreement.
APPROVED AS TO FORM:
________________________
Cameron Day
Sr. Deputy City Attorney
Date Sig
ned: ______________
“City”
CITY OF SAN JOSÉ,
a California municipal corporation
By __________________________
Toni J. Taber, CMC
City Clerk
Date Signed: _________________
APPROVED AS TO FORM:
________________________
Lucy A. Lofrumento
Strategy Law, LLP
Attorneys for Manager
Date Signed: ______________
“Manager”
SAN JOS
E ARENA MANAGEMENT, LLC
a Delaware limited liability company
By _____________________________
Jonathan D. Becher
President
Date Signed: _________________
Attachment No. 1
Legal Description of Arena Land